There are always 2 different prices quoted in the forex market – the bid and the ask.

Bid – price you sell at

Ask – price you buy at

The bid will almost always be the lower of the 2 quotes. Therefore, a trader will always sell at the lower price (bid) and buy at the higher price (ask).

The difference between the 2 prices is called the ‘spread’ (or often called ‘pip spread’). This is your cost of doing business, and is also how the broker makes its money. There are often no commissions in the forex market, making the spread the largest cost per transaction. A “pip” is one ten-thousandth of a point – or the fourth decimal place. Currency exchange rates often change in very small increments – often measured in “pips.” Traders can take advantage of these small changes by using technical analysis tools that predict these changes and by utilizing leverage which allows a trader to control a large contract of currency – eg: a standard lot of $100,000 with a much smaller amount of money in their margin account – often 100 times less than the currency contract.

However, this increased leverage also brings with it significant risk and potential for loss.
Reading Price Quotes

Currencies are designated by a 3 letter standardized code, and the order a currency appears in – either first or second – helps understand the price that is being quoted. The value of the first currency is always 1, and the price being quoted is for the second currency pair listed.

Take a quote on the EUR/USD for example. A price quote of 1.4321 means €1.00 EUR (EUR being the first currency listed in the pair) can be purchased for $1.43 USD.

If an investor were to buy a mini contract at this price (a mini contract is commonly known as a 10,000 currency contract), the investor would purchase €10,000 EUR in exchange for $14,321 USD. For the sake of example, assume the price appreciated to 1.4350; the same €10,000 EUR owned by the investor is now worth more US Dollars – $14,350 USD – thus making a profit of $29 on the transaction – less the pip spread which we’ll cover shortly.
Price Interest Point

Forex prices and profits are often referred to in ‘PIPs’, which is the last digit seen in a price: 1.4321. From the previous example, the trader saw a profit of 29 pips (also simply known as ‘points’):

1.4350 – 1.4321 = 0.0029
What Influences Price?

Forex markets and prices are mainly influenced by international trade and investment flows. It is also influenced, but to a lesser extent, by the same factors that influence the equity and bond markets: economic and political conditions, especially interest rates, inflation, and political stability, or as if often the case, political instability. Though economic factors do have long term effects, it is often the immediate reaction that causes daily price volatility, which makes Forex trading very attractive to intra-day traders.

Currency trading can offer investors another layer of diversification. Trading currencies can be viewed as a means to protect against adverse movements in the equity and bond markets, movements that of course also impact mutual funds. You should bear in mind that trading in the off-exchange foreign currency market is one of the riskiest forms of trading and you should only invest a small portion of your risk capital in this market.

Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.

Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.

Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market?

There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.

A few things that separate the top traders from the rest are:

Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.

Forex trading system – Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.

Price behavior – They have incorporated price behavior into their trading systems. They know price action has the last word.

Money management – Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.

Trading psychology – They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.

These are, among others, the most important factors that influence the success rate of Forex traders.

We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results?

It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.

Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.

Martin Chandra

http://www.articlesbase.com/finance-articles/what-you-should-know-about-forex-trading-81022.html

In today’s rocky economic climate, many people are becoming interested in learning to trade Forex. There is a lot of money to be made trading currency, and if you know what you are doing it can be both very lucrative and relatively safe. Here are some things you should take into consideration if learning currency trading is on your to-do list.

Learning To Trade Forex Takes Time

Trading Forex is a skill. And like any skill you try to master, it is going to take time to learn properly. And unless you are willing to risk your hard earned money during this learning process, you aren’t going to be making any money while learning to trade Forex.

It starts like this…

First, you know you know nothing and need to learn. Then, things start to make sense to you. In stage three, you have a good idea what you are doing, but you must still make a conscious effort. It is not until the forth stage that you are comfortable with what you are doing. And you don’t want to invest any real money until you are comfortable with the process… meaning you are a long way off from seeing your first profitable trade.

And here’s the important thing to remember. Even if you learn to trade Forex effectively (you get to the fourth stage), you are still human. No matter how much knowledge you have, you are still open to the emotions of greed, fear and lack of confidence. These are not emotions you want guiding your Forex trading.

Actually Trading Forex Takes Time

Even if you learn everything there is to know about trading Forex, you still have to do it. This means being glued to your computer at all hours day and night, placing orders based on the activity you see on the charts. And your success is determined if you interpret the charts correctly, and are at your computer at the time to make the trade.

Hey, I want to make as much money as possible from trading currency. But I certainly don’t want to spend Monday through Friday glued to the computer screen. After all, I have a life and other things I do to make money. Plus, I want to enjoy the money I make Forex Trading with my family! So, I went about learning to trade Forex a different way.

Learning To Trade Forex As You Earn

I got into trading currency by using a EA or Expert Advisor. This is a script that attaches to the Forex Trading Platform (like Metatrader4), that keeps an eye on the currency market and makes trades automatically depending on certain indicators. This is fantastic because everything happens automatically based on professionally determined indicators that are programmed into the software. Plus, it takes the human emotion out of trading that can get in the way.

So, I learned Forex trading by watching the “robot” do its work. First, I set the script up on a Demo account. This is how you can make sure the EA is making more good trades than bad, which is its job. (After all, nothing is perfect… even a robot!) Then, when I am confident the automatic Forex robot is trading in a way that is profitable, I switch to a live account with real money. Basically, I’m learning more about trading in the Forex market as I earn real money!

Without a doubt, once you see how profitable Forex trading can be you’ll want to learn and understand more. But don’t let the time it takes to learn Forex deter you from getting started immediately. Using a software program to automate your trading makes profiting in currency trading accessible to just about anyone by dramatically reducing the learning curve. So, if you don’t want to spend years learning before you see your first dime of profit, then using a Forex trading robot is the way to go.

Edward Lomax
http://www.articlesbase.com/finance-articles/learning-to-trade-forex-is-it-really-necessary-686795.html

If you want to become a Forex trader and enjoy success then you need to follow the 3 points enclosed, the fact is most traders don’t and that’s why 95% of traders lose. If you want a great second income or financial freedom and you’re serious about making money this article is for you…

Lets make it clear from the start – the way not to make money is do what the bulk of traders is which is buy a junk Forex Robot or follow some get rich quick system.

If Forex trading was that easy 95% of people wouldn’t lose! Just like in all areas of life, success requires that you have a mindset to succeed and you’re prepared to learn skills, so the first trait needed is.

1. Work Smart and Get the Right Education

You can easily learn Forex trading in a few weeks and be ready to trade. Forex is essentially simple to learn and simple systems work best, as they are more robust than complicated ones.

It doesn’t take long to learn Forex trading but this is the easy part; now let’s look at the harder part of trading.

2. Learning to Lose Cheerfully

If you want to win you need to learn to lose. The big mistake, most traders make is thinking that they won’t or losses don’t last long.

While you can win long term, it’s the way you handle your losses that’s important and any trader will face a few weeks of them. You must keep them small, take them and stay on track, until you hit a home run. This requires the trait that most traders can never master – discipline.

3. Discipline the Key to Success

If you cannot execute your system with discipline, you simply don’t have one!

You can have a good trading method but you have to execute it and that’s the problem that many traders face, they can’t do it. Their emotions get involved and they either throw in the towel or deviate from the system rules.

Anyone who tells you discipline is easy, probably has never traded. Its hard and relies on rock solid confidence and a sound Forex education, so you know what your doing and can keep going, with discipline until you hit a home run.

Why You can Win

Everything about Forex trading can be learned and you can see that mindset is just as important as method – in fact it’s more important. Most people could learn if they wanted to but take the lazy route and believe they can make money with no effort which of course is not true.

Spend a few weeks and you can become a successful Forex trader from home. learn your system; get confidence in it and then trade with discipline and you could be on the way to great second income or even a life changing one. Take Forex trading seriously and you will be well rewarded for your efforts.

Kelly Price
http://www.articlesbase.com/currency-trading-articles/become-a-forex-trader-and-enjoy-financial-freedom-in-3-simple-steps-706604.html

Have you ever been all too interested in trying your hand at forex options trading and currency trading only to be discouraged by all the hard-to-understand terminologies and technicalities? That is because there is rarely a material that puts forex options and currency trading in simplest terms.

In all probability, you are left to do your learning on your own grappling for resources aimlessly. Now, that is no way to learn anything, is it? The best way to learn forex, as in anything else, is to do it a step at a time. Go back to the way you learned how to spell, how to count, how to add, and how to subtract. It was easy for you to learn because it was simple enough for your young mind to comprehend. It is this kind of education that you need to effectively learn how to do forex options and currency trading rather than be discouraged by it.

At the School of Pipsology, learning forex means going back to grade school. As a beginner forex learner, you are taken through the basics of the currency market enough to build a solid foundation for successful forex trading. From Kindergarten level to 5th Grade level, you will learn about the rudiments of currency trading. You will first be introduced to the types of trading and the forms of charts used in analyzing the forex trading market. Then you will be taught how to read candlestick charts, support and resistance levels, Fibonacci levels, moving averages, and common chart indicators. All these are important for you to learn as these will be your basis for reading the forex trading market.

Learning about forex trading in the School of Pipsology is much like going through grade school. After you have successfully finished the 5th Grade, you can move on to middle school to learn more about putting these forex indicators together for better reading of when to place your buy and sell orders.

Timothy Stevens
http://www.articlesbase.com/currency-trading-articles/forex-trading-grade-schooling-for-forex-718129.html

Capitalize on the opportunity to learn forex trading so you can begin the process of branching your portfolio out of domestic stocks and into the global market. Any financial advisor worth his weight will tell you that it is important to diversify your investment portfolio and this is by far the largest volume market in the world. Daily, it does nearly four times the volume of trading than the New York Stock Exchange does.

Anyone who holds a basic understanding of how money is converted and exchange rates work can learn forex trading. The sale or trading of currency is at the heart of what forex is. Using one currency to buy another means that your counterpart is using their currency to buy yours. As exchange rates fluctuate and the economies of nations surge and recede, these investments in cash behave in value very much like a traditional stock.

As with any new venture, you will need to master the vocabulary that is an inherent part of forex. When you begin to learn forex trading you will be introduced to terms like pip, spread, cross, base currency and trade currency. Foreign exchange trading does have some unique terminologies. While they may be new to you, you will learn them quickly because they describe certain parts of forex quotes that you will need to understand in order to trade.

There are quite a few resources available to those who wish to learn forex trading. The reliability of internet access has opened the door to online forex trading, which means that more investors have the ability to participate in trading activity. Since the foreign exchange trade is considered a spot market, the ready availability of internet access is crucial. Business is done on the “spot,” thus the name.

You can capitalize on many benefits when you learn forex trading. The availability of a 24-hour a day market is one. Since forex involves the trade of currency at banks across the globe, the market never closes. The market is also remarkably liquid, meaning that you will never have trouble finding trading partners. Since most of your trading partners are banks and the medium is cash, you will never be at a loss for customers. Another benefit is the lack of commissions. Since you make the trades on your own, you don’t have to spend part of your profit on brokerage commission fees.

Taking the time to learn forex trading opens one more investment door for you. As you continue to realize the importance of diversifying your investment portfolio, it may be a good idea to begin looking at what kinds of opportunities are available to you in foreign exchange trading. You may be surprised to see who else is capitalizing on this market and just how easy it is.

Lorna Goldsborough
http://www.articlesbase.com/finance-articles/learn-forex-trading-to-expand-opportunities-131595.html

Traditionally, stock market games were only for people with money since only they could afford the fees of brokers who managed their stocks portfolio. However, with the advent of the Internet and online trading sites like Forex it is easier for the middle class individuals inclined towards business to invest in the stock market and reap some good benefits. Forex has made it possible for anyone to begin investing in stock market and earn money as a stock or currency trader.

However, it is the self-directed investors who can make the most of websites like Forex. It is not for the chicken-hearted. If you wish to invest you should be able to take some amount of risk. Forex is predominantly a currency trader, unlike other trading sites that trade in stocks. You get access to the foreign exchange market through an account that allows you to invest in one form of currency or another, and gain profits from the way currency values fluctuate.

Forex acts as a platform from where you can access the foreign exchange and make trades in the foreign currency market. It also helps you make wiser and better informed-decision through its various trade information and decision making tools. However, the point to be remembered here is that the website does not take any responsibility or liability for any losses you incur in the open market trading. Like most of the online trading website, Forex charges a commission or a flat rate for each transaction.

One of the tools available to users of Forex is the learning center. It is full of information about the foreign currency market. This section is written for people who are not familiar with the currency trade, and it is very helpful, as it explains how the market works and how to read the market.

Before you decide what to do you must learn how to watch the market, read quote board, understand the bid and ask and figure out the highs and lows of the market. These special tutorials add on to the knowledge you gain at the learning center and help you understand the working of Forex. This Forex trading section is a very good tool to understand the trends of trading in the foreign currency market.

Forex features a unique tool to get to know the foreign currency market and practice trading in it. The Forex website offers free practice account tool. Using this tool you can open a mock account stocked with practice money. You can read the quotes and the charts, and buy and sell. Then finally analyze your performance of how much money you made or lost. It is a good warm up before you actually foray into the market with actual money. It surely reduces the risk you would be taking.

Finally, it is very nice to have all of the charts and investing tools available on the Forex Web site. Once a member with an active account (which you can open with as little as $250), you have access to the advanced charts and tools offered by the site. Charts include real-time charting and research. Your Forex training will help you read the charts and make use of the research.

You can get direct access to the currency exchange market through Forex and also get some good tutorials on how to deal in the market and earn good money for a vacation or for retirement.

David Neehly
http://www.articlesbase.com/finance-articles/forex-start-to-learn-about-online-stock-trading-50085.html

If you are new to forex trading, do you know which types of technical indicators are for what kinds of usage? And if you are already an experienced forex trader, are you using the correct combinations of technical indicators to help you profit consistently in the forex market? If you are still not sure, we’ll discuss the following 4 different types of forex technical indicators below:

1. Trend Indicators – Also known as Directional Indicators. I have always reminded my students, ‘Trend is your best friend and always trade in the direction of a trend’. A forex trend may be quite subjective to different traders as they may have different views on trendiness. So those trend indicators out there in the forex market can help traders detect the starting and ending of a trend. Some of the more popular trend following indicators includes MACD (Moving Average Convergence Divergence), MA (Moving Average), Parabolic SAR. Depending just on trend indicators is not enough, you may need Momentum Indicator(s) to enter and/or exit a trade.

2. Momentum indicator – Also known as Strength Indicators. It is described as the speed of a move in price over a period of time. They are oscillators which are able to indicate whether the forex market is in the overbought or oversold regions. If they have risen to the overbought zone, there is high possibility that the price will be going down, and if they have fallen to oversold zone, there is high possibility price will be going up. Some of the more popular oscillating indicators in forex trading include Stochastic, Momentum, RSI (Relative Strength Index), CCI (Commodity Channel Index).

3. Volatility indicators – Also known as Bands Indicators. Often, a change in volatility will lead to a change in price. Therefore, we can see how active the forex market is just by looking at the price ranges. You may want to trade when there is a dramatic change in price movements, which suggests that the market is actively trading forex. Some of the more popular Volatility Indicator includes BB (Bollinger Bands), ATR (Average True Range), Envelopes.

4. Volume indicator – They are used to show the volume of forex trading and are useful to confirm the direction of a trend, a reversal or a breakout. Price movements increase when the volume increases, low volume may warn of a reversal in a forex trade. If a currency pair trades from a narrow range and then breaks out on high volume, this is a strong signal and may suggest a breakout. Some of the more widely used Volume Indicator includes Demand Index, Chaikin Money Flow, Money Flow Index, Ease Of Movement, OBV (On Balance Volume).

I’m sure that after the above discussions, you should have a better idea of the different types of forex technical indicators. While they can greatly help you in technical analysis and make trading decisions, I want to stress that NO forex indicators is holy grail. The indicators are just a confirmation of history and a guide for the future. Most importantly, you need to know the right combination of the forex technical indicators to get you profitable consistently in the long haul. You can find a forex trading system which has a very good combination of indicators in my forex ebook which I give for FREE. Good trading to all.

Daniel S.
http://www.articlesbase.com/currency-trading-articles/learn-to-trade-forex-successful-using-the-4-types-of-forex-trading-indicators-730048.html

Do you think that forex trading is easy or difficult? If you are like most people, you would feel that forex trading is a risky and difficult financial game.

If you think it this way, how can a game with only two options (buy and sell) be so difficult?

It has lesser commands than your typical Xbox360 game! The reasons why most traders can keep losing money are that they are not following the simple rules that have made the top traders so rich. Now learn to trade forex with these 5 simple and powerful trading rules that the top traders use.

1. Obey the trend or else they will kill you

People say that trends are friends. Well, I would say trends are like wave of tsunami that sweeps anyone away who goes against it. Do not try to trade against trend or you will surely get killed.

Trends are so powerful because they are directed by the majority of the traders. They all have the same opinion where the prices should go. So learn to trade forex by following the trend. It will greatly improve your net profits in the long term.

2. Stick to your trading plan and embed it into your DNA

If trend is like a tsunami wave, a trading plan would be the actions to get you out safety and profitably.

Most traders get confused in the trading market due to the zig zag manner in how the prices move. These are noises in the market and will often interfere with your emotions to trade properly. In this kind of situation, you need to follow your trading plan to keep calm.  Learn to trade forex like a robot who only follows the trading plan.

3. Trade with the money you simply do not care

Money is the holy idol of many people. Nothing wrong about that but the temporary loss and gain of it during trading will constantly affect you to trade properly.

If you are having this problem, treat your money as a business inventory instead. It is simply an expendable business inventory that you have to sacrifice to make you more money.In order to do that, you should allocate money that you can afford to lose without any pain. Learn to trade forex without any pain and then you can follow your trading plan faithfully!

4. Trade the currencies that is world is looking

Noise is a killer in forex trading. It causes traders to exit or enter at the wrong time. The noise level in thin currencies is the worse. Big traders can manipulate the currencies easily to hit your stoploss before continuing your intended direction.

We do not want to put ourselves in difficult spot so we only trade the major currencies. These currencies are traded by most the forex traders in the world and thus they follow a steady trend.

Learn to trade forex using the big 5 currencies only: USD/EUR, USD/JPY, USD/GBD, USD/CHF, and EUR/JPY. They have high liquidity as they are traded by the majority of the traders.

5. Make Forex dull and professional

Make forex trading another dull routine of yours. Every day you simply fulfill this routine by following your trading plan.

Excitement and any kind of emotions do not make you any money. They are merely making you ineffective in trading. If you are trading with the money you can lose without any pain, there is absolutely nothing in forex trading that can cause your emotions to go wild.

Once you learn to trade forex without any emotions, the sky is the limit to how wealthy you can be.

Mike
http://www.articlesbase.com/currency-trading-articles/learn-to-trade-forex-5-simple-yet-powerful-trading-rules-723127.html

Did anyone tell you that making money in forex is about avoiding making mistakes?

I am sorry to say it is not about doing the right things. Even if you are doing the right things in forex, you are not guaranteed to make money as forex market is unpredictable. However if you make mistakes while you are trading, you will more than likely to lose money.

Do you understand why most traders cannot make money now? The reason is our optimistic nature does not allow us to focus on avoiding mistakes. We rather look at doing the right things. So if you are not profitable in your trading now, it is time to look at your mistakes. Focus on correcting them today and you will see your trading results improving.

Below are 2 out of 5 common deadly mistakes that you should avoid. Correcting them will shorten your learning curve and accelerate your trading success.

1.    Trading on free or paid signals  – Following the so called gurus

Sometimes it is tempting to follow the signals from some so called gurus.  When they say buy, you buy. When they say sell, you sell. Now I am not saying they are not good but are you able to follow their picks for the next 10 years till you become wealthy.

The problem with following signals is that you cannot miss out on any single trade. The trade you miss could the biggest winning trade of the entire year. This trade could cover up for all the previous losses.  Moreover, do you have the discipline or confidence to follow every trade? I am sure you like to have your own opinions about trading and thus you may not follow every trade.

You see trading is about profiting over a large sample of trades.  What you need to learn is the strategies they used to trade instead. Then you would have the confidence, discipline and consistent to trade every signal that your strategy tells you.

2. Trading News– Guessing how the market will react

It is true that the currency prices follow the fundamentals of the currencies. Fundamentals do come in the form of news but when the news are out, the market have mostly priced in the news.

Besides that, if market rises or drops sharply after a new, it tends to reverse sharply as well. You could have lost a lot of money if you are on the wrong side. We simply cannot predict how the market will react to the news. I have seen market dropping 200pips these minute and rising 200 pips the next minute. It is like gambling on casino!

So do yourself the favor by not trading during the news hour. There is plenty of chance to make money based on the trend itself. Remember that if you want to make a lot of money in forex trading, you must focus on avoiding your mistakes. It is the difference whether your profits are fantastic or just breaking even.

Now do you understand why most traders cannot make money now?  Start taking out your log book now and look at your losing trades. Just imagine not making this mistakes or turning them into profitable trades would mean a few more zeros behind your profits.

Please note that this article is divided into two articles for a quick 5 minutes digestion. You can find the part 2 in my author profile.Did anyone tell you that making money in forex is about avoiding making mistakes?

I am sorry to say it is not about doing the right things. Even if you are doing the right things in forex, you are not guaranteed to make money as forex market is unpredictable.

Mike
http://www.articlesbase.com/currency-trading-articles/learn-to-trade-forex-avoid-these-5-common-deadly-mistakes-part-1-724508.html