FOREX TRADING

Is there a secret to becoming a successful trader?

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There is a method that all successful traders use, and it’s no secret. It’s called
money management.

Money Management
Money management is not some vague industry lingo – it simply means the knowledge and skill of managing your Forex trading account. As simple as that may seem, it’s the key to a long and successful trading career. And yet it is often forgotten or neglected in the thrill of the trade. We’d like to take this opportunity to lay out some ground rules by which you can effectively manage your account. Don’t go looking for the Big Win; it will most likely result in a big loss. Successful trading means consistent trading, where small wins amount to large long term profits. Never assume that all your trades will be profitable, and plan on losses. You should only risk a small percentage of your total account balance on each trade. This simply minimizes your risk, so that even if you end up losing your entire investment on a trade, it doesn’t have a critical effect on your account balance. The recommended amount is 2% of your account balance per trade. More aggressive traders go as high as 5%, but never higher than that. It is a very important rule to keep, since the lower your account balance drops, the harder it is to rebuild it.

Using Limit Orders
Learn to use the Stop Loss and Take Profit orders effectively. These orders protect your investment and realize your profits. They are very simple tools that can make all the difference to your account balance.

Size of Trades
You are suggested to open small trades, because in the case of a losing trade, you can then open the opposite trade with a bigger investment or higher leverage, thus compensating for losses.

Practice with Virtual Money
Use virtual money mode for practice. One of the unique features of eToro is that our platform provides you with a practice environment. Virtual money mode works exactly the same as real trading mode and uses the same real time rates, with the small difference of no risk involved. We recommend using the practice mode to get to know the platform and gain Forex trading experience. And even after you’ve begun trading with real money, it is the perfect place to try
out your trading strategies. There is no point in risking your money to test out a possible theory, when you can do so with the same success minus the risk. After seeing that your strategy is consistently successful with virtual money, you can try it out for real.

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Hedging Risks and Rewards
Forex trading is a risky business. This chapter will explain the usage of Stop Loss
(SL) and Take Profit (TP) orders. These are used for hedging your risks and
rewards, realizing your profits and minimizing your losses.
eToro places an automatic Stop Loss order on all your trades to prevent you from
losing more than you’ve invested. If the rate of your open trade drops below
what’s covered by your investment, the trade is closed by the automatic Stop
Loss. This means the maximum amount you can lose on a trade is almost always
limited to the initial investment of the trade.
Still, there is no reason why you should wait until you lose your entire investment
to close the trade. By setting a Stop Loss order you make sure that the value of
your trade doesn’t drop below a certain level. This way you control the maximum
amount that you are willing to lose on a trade, without having to monitor each
trade around the clock.
Take Profit orders are similar to stop loss orders, only referring to profits. Take
Profit orders make sure that once your trade reaches a certain level of profit it will
be closed.
For instance, imagine that you’ve opened a Long EUR/USD trade for at the rate of
1.5400. After a few hours the rate rises to 1.5500, but an hour later drops to
1.5300. Without a Take Profit order, you might miss the rise in the rate, and end
up with a loss on your hands.
If you had set a Take Profit order, the potential profit of the trade would have
been realized, without you having to monitor the trade around the clock.

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A Simple Trade Example
Are you ready? It's time to trade!
Here is a to‐do list of actions to be taken as you open a trade:
‐ Identify the pair to buy/sell
‐ Decide on the initial investment amount
‐ Choose the appropriate leverage
‐ Consider applying trade limits (covered in the next chapter)
‐ Open trade
Let’ say that after spending some quality time on gazing at the charts of several
currencies, you’e concluded that:
1) The EUR is trending up
2) The USD is trending down
Now, what is the reasonable decision based on this conclusion?
Clearly you can profit by first selling USD and buying EUR, and then buying
cheaper USD and sell expensive EUR.

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Tactical usage of Leverage
If you’ve been at all exposed to the world of Forex you’ve probably heard the
word “Leverage” being tossed around. But what exactly is “Leverage”?
Leverage is a very important part of Forex trading, and it’s critical that you know
exactly how it works and how to use it. It is the term Forex traders use to refer to
the ratio of invested amount related to the trade's actual value.
Forex brokers usually provide their customers with the option to trade on
borrowed capital, so that traders don’t have to invest tens of thousands of dollars
for the chance to make any real profit. When you trade at a leverage of 1:100, or
X100, it means that for every $1 that you invest in the market, the broker invests
$100. As a result, you can control an amount of $10,000 by investing $100. eToro
provides traders with the opportunity of trading at up to 1:400 leverage.
It probably won’t surprise you when we say that with greater opportunity for
profit comes greater risk. Just like slight fluctuations in currency rates can make
you significant amounts of money, it can also cause you to lose your money very
quickly. The higher the leverage, the larger the profit that you stand to make and
the quicker you might lose your investment. A leverage of 1:400 can make you
more money than a leverage of 1:100, but it also puts your initial investment at
more risk.
If you trade with a leverage of 1:100 the market would have to move 100 pips
against you for your position to be wiped out. On the other hand, if you trade with
a leverage of 1:400 the market would only have to move 25 points against you for
your position to be wiped out.
We recommend first opening a position with a low 1:100 Leverage, and only once
you see that you’ve hit a strong trend, consider opening one with a 1:400
leverage

The Trend is Your Friend

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Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future. Although this may seem pretty basic, being able to identify when a pair is in a trend and when it isn't will help you to increase your chances to profit consistently in the Forex market.

When you can identify a trend, you can estimate what direction the rate of a currency pair is going to go in. You should exploit the direction of the trend you identify by placing a trade in that direction.
If it’s an uptrend, meaning that the rate is increasing, buying the currency pair will give you a better probability for profit. If it’s a downtrend, meaning that the rate is decreasing, selling the currency pair will give you a better chance of making money.

How do I identify a trend? What are the characteristics of a trend? The simplest way to identify a trend is through the distinct patterns that the price forms. These can tell you if the market is moving in an uptrend or downtrend.

Identifying a Forex Trend
When a trend is taking place in a Forex pair, the price movements start to form peaks and valleys in the chart of that pair, which are easily identified. In an uptrend, the price movements form a series of higher peaks and higher valleys.

(Higher Highs and Higher Lows.)
Since a picture’s worth a thousand words, lets look at the following chart: This chart suggests that the trader should buy the currency pair (and close the trade by selling at profit after the rate rises).

Profitability

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It doesn’t take a financial genius to figure out that the biggest attraction of any market, or any financial venture for that matter, is the opportunity of profit. In the Forex market, profitability is expressed in a number of ways.

First of all, just to set the record straight, you don’t have to be a millionaire to trade Forex. Unlike most financial markets, the Forex market allows you to start trading with relatively low initial capital. At eToro, you can start trading Forex with as little as $25!

Right about now you’re probably asking yourself: “What chance do I have of profiting with such a low initial investment?” The Forex market doesn’t require Large initial investments because it allows you to use leveraged trading. Leveraged trading lets you open positions for tens of thousands of dollars while investing sums as small as $25. This means that Forex trading has the profit (and loss) potential of tens and even hundreds of percent a day!

What is also unique about the Forex market is that any sort of movement is an opportunity to trade. Whether a currency is crashing or soaring, there is always room for speculation, since you always have the option of buying or selling the currency of your choice. Unlike the stock market, you are not limited to speculating on rising stocks, and a falling market is just as good for business as a rising market.

Having said all that, it is important to remember that as profitable as the Forex market is, it still carries all the risks involved with financial trading. You should always be aware of the risk, and never risk money that you can’t afford to lose.

Why Forex?

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If you are reading this guide, you have most likely taken some sort of interest in
the Forex market. But what does the Forex market have to offer you?

Accessibility – It’s no wonder that the Forex market has the trading volume of 3 trillion a day ‐ all anyone needs to take part in the action is a computer with an internet connection.

24 Hour Market ‐ The Forex market is open 24 hours a day, so that you can be right there trading whenever you hear a financial scoop. No need to bite your fingernails waiting for the opening bell.

Narrow Focus – Unlike the stock market, a smaller market with tens of thousands of stocks to choose from, the Forex market revolves around more or less eight major currencies. A narrow choice means no rooms for
confusion, so even though the market is huge, it’s quite easy to get a clear picture of what’s happening.

Liquidity ‐ The foreign exchange market is the largest financial market in the world with a daily turnover of just over $3 trillion! Now apart from being a really cool statistic, the sheer massive scope of the Forex market is also one of its biggest advantages. The enormous volume of daily trades
makes it the most liquid market in the world, which basically means that under normal market conditions you can buy and sell currency as you please. You can never be in a jam for currency to buy or stuck with currency that you can’t unload.

The Market Can’t Be Cornered ‐ The colossal size of the Forex market also makes sure that no one can corner the market. Even banks don’t have enough pull to really control the market for a long period of time, which makes it a great place for the little guy to make a move.

Introdiction To Forex

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It is no secret that the foreign currency exchange (FOREX) market is a market full with crocodiles that you will lose your hard-earned money in a fraction of second. Yes, that's right! If you wanna make money in Forex trading, you either have to build up the network with so-call insiders (which seems a wasteful of time and energy to us); or, educate yourself well enough.

If you ever wish to get into this trading game, you better LEARN Forex trading before you start trading Forex. Forex market is definitely not a game for newbie and you need to brush up your skills before getting your hands wet.

A very brief intro on Forex trading
Foreign currency exchange (Forex) market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily. The figure is nearly 30 times larger than the total volume of equity trades in United States.
Forex is a very unique market.

Trades are always done in pairs, traders are basically buying and selling money in the same time. Beside of trading in pairs, Forex is also very special as it has no centralized trade location and trades are done around the clock.

Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.

Now you've briefly know what's Forex trading, next we'll look at the advantages of FX (why we FX is good financial vehicle to fetch you) as well as how to read Forex bid/ask quotes.

Advantages of Forex

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Why trade in foreign currency exchange market?
Why trade Forex instead of stocks, futures, commodities, or options? Why more and more people nowadays started trading Forex at home?

Perhaps the list of advantages in Forex trading has the answer.
In this chapter of Forex 101 Classroom, we will take a look on advantages in Forex trading.

Advantages in Forex currency trading
Equal Prospective in Rising or Falling Market Trend There is no structural bias to the market and there are no restrictions on short selling in FX market. Trading in Forex gives you an equal prospective in rising and falling market.

As trades are always done in pair of currency pairs, Forex traders can always find chance to make money in anytime, regardless on the fall or rise period of one single country currency.

Trade Forex 24 hours a day
Forex market never sleeps. In Forex trading, you do not need to wait the market to open, you can always response to world latest movement and news immediately. Every Sunday 5.00pm in New York, Forex market starts its week from Sydney, followed by Tokyo, Singapore, Hong Kong, London, and New York. In Forex tradng, you can always response to the market trend a lot faster than in any other trading market. Also, with the flexibility of Forex market trading time, you can work on your trade in Forex during your free time. This means you can start small and work as part time trader before going full time on FX trading.

High Leverage Margin
Forex brokers offer trade margin of 50, 100, 150, or even 200 to 1 of trade margin. Forex traders often find themselves controlling a huge sum of money with little cash outlay on the table. For example, a $1,000 in a 150:1 Forex account will gives you the purchase power of $150,000 in the currency market.While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool. Rather than merely loading up on risk as many people incorrectly assume, leverage is essential in the Forex market. This is because the average daily percentage move of a major currency is less than 1%, whereas a stock can easily have a 10% price move on any given day.Table below demostrate how a high trading margin can impact on the trades ROI.

Trade Forex anywhere from the world virtually
A computer with Internet connection plus an active Forex account are sufficient for you to execute a trade in Forex market. Professional Forex traders have the privilege to travel around the world but yet still connected to the market anytime, anywhere. The freedom of this is something you could not get else where by being an employee of a cooperation.
High Liquidity Market
Turnover value in Forex is $1.9 trillion per day. It is the largest trade market in the world and the liquidity of the market is huge. Traders can easily cash in or cash out their capital in Forex market.
Learning and Investing in Forex trading
Wrapping things up, we believe that Forex trading give a whole new option to individual traders to success financially. Learning Forex and listing Forex trading into one of your financial plans is a must.

Forex Quotes

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Quoting Foreign Currency

Currencies are always quoted in pairs. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed.
The first currency in the quotes act as the 'base currency'.

For example USD/JPY, EUR/GBP, and GBP/AUD, in such cases, USD, Euro Dollar, and Britain Pound are acting as the base currency. Base currency in a Forex quote will always has a value of 1. USD/JPY indicates how much Japanese Yens you can buy with 1 United States Dollar; similarly EUR/GBP indicates the exchange rate of Great Britain Pound with 1 Euro Dollar.

FX Quoting: Bid/Ask and Spread
There are sometimes that you can only see one price but often currency exchange price are display in pairs with 'bid price and ask price'. For example EUR/USD 1.2385/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called 'spread'. You might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall 'spread') is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time.)

What's a pip?
A pip is the smallest value in a Forex quote. Take our example earlier on EUR/USD. If the exchange rate goes from 1.2385 to 1.2386; that's one pip. In mathematical definition, a pip means the last decimal place of a quotation.

Note that as each currency has its own value, the value of a pip is different from one another. Say USD/JPY rate at 120.75, a pip would be 0.01 (the second decimal place); while for EUR/USD 1.2385, a pip would be 0.0001 (the fourth decimal place). Example of Forex QuotesConfused about the quotes? Don't worry too much about it, you'll get used to them as soon as you move on and start your trades.

For the beginners, here are some quick examples. Try not look at the answer and determine the value of bid price, ask price, spread value, and the pip value.

EUR/USD 1.2385/1.2390

Base currency= Eur
Bid price= 1.2385; Ask price= 1.2390
When selling Euros, 1 Euro = USD$1.2385; when buying Euros, USD$1.2390 = 1 Euro.
Spread = 1.2385 - 1.2390 = 0.0005
Pip value= 0.0001

EUR/JPY 127.95/128.00

Base currency= Eur
Bid price= 127.95; Ask price= 128.00
When selling Euros, 1 Euro = JPY127.95; when buying Euros,
JPY128.00 = 1 Euro.
Spread = 127.95 - 128.00 = 0.05
Pip value= 0.01

GBP/USD 1.7400/10

Base currency= GBP
Bid price= 1.7400; Ask price= 1.7410
When selling Pound, 1 Pound = USD$1.7400; when buying Pound, USD$1.7410 = 1 Pound.
Spread = 1.7400 - 1.7410 = 0.001
Pip value= 0.0001
Base currency= USD
No bid-ask price is displayed, spread value not available.
Pip value= 0.1

Getting used to the quotes now? Well, don't feel down if you're still slow... you'll be picking up on reading them as you move along.

Margin Trade in Forex

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Leverage Upto 200:1 in Forex Trading
Margin trading refers to the leverage amount given to the traders to trade in the market.
One of the best features in Forex trading is that traders are able to trade foreign currencies with high margin.

You get 1:1 margin for stock exchanges, 2:1 margin for equity trading, 15:1 margin for futures market; but in Forex, normal trade margins are 100:1 and 150:1, or even 200:1 trade margins.
Typically the broker will require a minimum account size, also known as account margin or initial margin. Once you have deposited your money you will then be able to trade. The broker will also specify how much they require per position (lot) traded.

For example, for every $1,000 you have, you can trade 1 lot of $100,000. So if you have $5,000 they may allow you to trade up to $500,000 of Forex.

The minimum security (margin) for each lot will vary from broker to broker. In the example above, the broker required a one percent margin. This means that for every $100,000 traded, the broker wants $1,000 as a deposit on the position.

Trading Forex in huge margin with allows traders to control a large sum of money with little cash put on the tables. This in turns magnify the ROI dramatically.

Margin Trades and ROI in Forex
Example below shows how margin tradings in Forex can magnify your investment ROI.

Taking $1,000 in a 100:1 margin account as example, you are now granted the purchase power of $100,000.

Say that you execute the trade between USD/JPY: Long Japanese Yen in USD/JPY 109.2 (meaning buying 109.2 Yens with 1 USD) and short JPY at the price of USD/JPY 109.0.

Trading without margin

If you are trading without margin, you have only $1,000 of buying power. The the max you can go is buying (1000 x 109.2) Yens = 109,200 Yens. Later when you sell off your Japanese Yen in higher price (USD/JPY 109.0), the returns you are getting back is $1001.8.

Profit made in the trade: $1.8

ROI of the trade: 1.8/1000 x 100% = 0.18%

Trading with margin

Now in case you are trading with margin of 100:1, the calculation of the trade will be giving you a total different picture:

Buying Japanese Yen when USD/JPY 109.2:

Long Japanese Yen = (100 x 1000 x 109.2) Yens = 10,920,000 Yens; Short USD $100,000.Selling of Japanese Yen when USD/JPY 109.0:

Short Japanese Yen = 10,920,000; Long USD = (10,920,000 / 109) = $100,183.5.

Profit made in the trade: $183.5.ROI of the trade: 183.5/1000 x 100% = 18.35%

Trading Margin vs Return of Investment: A Quick View

Managing a Margin Forex Account
Although the example given is much simpler than what's happening in real market situation. But it cleary illustrates that trading in can easily magnify trade's ROI in a dramatic way. Although trading on margin sounds extremely easy to gain profits, but it is important that traders understand well the risks they are undertaking.

Traders should be very aware of the margin call and should always avoid them at all cost. Note that in the event that money in your account falls below predetermined threshold (Margin Call), the positions in the account could be partially or totally liquidated, even it's in a highly volatile, fast moving market. Also, traders should always monitor own margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.
In most cases, you might need a computer aided trading tools to determine the entry point as well as stop loss order.

Major Currency

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Major Currencies Traded in Forex Market
The most traded currency in Forex market (the major seven) are United States dollar, Eurozone Euro , Japanese Yen , British Pound Sterling, Swiss Franc, Australian dollar , and Canadian Dollars.

Forex market is much USD-centered, where United States currency is involved in more than 80% of the trades. Major traded pairs in FX market are EUR/USD, which yields 28% from total trades. USD/JPY and GBP/USD come second and third, with take up 17% and 14% from the global forex trading respectively.

United States Dollar (USD)
The U.S. dollar uses the decimal system, consisting of 100 (equal) cents (symbol ¢). In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in the Coinage Act of 1792 for the denomination of ten dollars, and subsequently was used in naming gold coins. In the second half of the 19th century there were occasional discussions of creating a $50 gold coin, which was referred to as a "Half Union," thus implying a denomination of 1 Union = $100.

However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10¢, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices.
When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes (with the exception of gold, silver and platinum coins valued up to $100 as legal tender, but worth far more as bullion). (Both one-dollar coins and notes are produced today, although the note form is significantly more common.)

In the past, paper money was occasionally issued in denominations less than a dollar (fractional currency) and gold coins were issued for circulation up to the value of 20 dollars.
Pound Sterling (GBP)

The pound (symbol: £; ISO code: GBP), divided into 100 pence, is the official currency of the United Kingdom and the Crown dependencies.
The slang term "quid" is commonly used in place of "pound(s)". The official full name pound sterling (plural: pounds sterling) is used mainly in formal contexts and also when it is necessary to distinguish the currency used within the United Kingdom from others that have the same name.

The currency name — but not the names of its units — is sometimes abbreviated to just "sterling", particularly in the wholesale financial markets; so "payment accepted in sterling", but never "that costs five sterling". The abbreviations "ster." or "stg." are sometimes used. The term British pound is commonly used in less formal contexts, although it is not an official name of the currency.

The pound was originally the value of one pound Tower weight of sterling silver (hence "pound sterling"). The currency sign is the pound sign, originally ₤ with two cross-bars, then later more commonly £ with a single cross-bar. The pound sign derives from the black-letter "L", from the abbreviation LSD – librae, solidi, denarii – used for the pounds, shillings and pence of the original duodecimal currency system. Libra was the basic Roman unit of weight, which in turn derived from the Latin word for scales or balance.

The ISO 4217 currency code is GBP (Great Britain pound). Occasionally the abbreviation UKP is seen, but this is incorrect. The Crown dependencies use their own (non-ISO) codes. Stocks are often traded in pence, so traders may refer to Pence sterling, GBX (sometimes GBp), when listing stock prices. Euro (EUR) The euro (currency sign: €; banking code: EUR) is the official currency of the Eurozone (also known as the Euro Area), which consists of the European states of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain, and will extend to include Cyprus and Malta from 1 January 2008. It is the single currency for more than 317 million Europeans. Including areas using currencies pegged to the euro, the euro directly affects more than 480 million people worldwide.

With more than €610 billion in circulation as of December 2006 (equivalent to US$802 billion at the exchange rates at the time), the euro surpasses the U.S. dollar in terms of combined value of cash in circulation.

While all European Union (EU) member states are eligible to join if they comply with certain monetary requirements, not all EU members have chosen to adopt the currency. All nations that have joined the EU since the 1993 implementation of the Maastricht Treaty have pledged to adopt the euro in due course. Maastricht obliged current members to join the euro; however, the United Kingdom and Denmark negotiated exemptions from that requirement for themselves. Sweden turned down the euro in a 2003 referendum, and has circumvented the requirement to join the euro area by not meeting the membership criteria.

Several small European states (The Vatican, Monaco, and San Marino), although not EU members, have adopted the euro due to currency unions with member states. Andorra, Montenegro, and Kosovo have adopted the euro unilaterally.

Japanese Yen (JPY)

The yen or en is the currency of Japan. It is also widely used as a reserve currency after the United States dollar, the euro and the pound sterling. The ISO 4217 codes for the yen are JPY and 392. The Latinised symbol is ¥ while in Japanese it is also written with the kanji 円. While not a usage specific to currency, large quantities of yen are often counted in multiples of 10,000 in the same way as values in the United States are often quoted or rounded off to hundreds or thousands.

The yen was introduced by the Meiji government in 1870 as a system resembling those in Europe. The yen replaced the complex monetary system of the Edo period, based The New Currency Act of 1871 stipulated the adoption of the decimal accounting system of yen, sen, and rin, with the coins being round and cast as in the West.

The yen was legally defined as 0.78 troy ounces (24.26 g) of pure silver, or 1.5 grams of pure gold. The same amount of silver is worth about 1181 modern yen while the same amount of gold is worth about 3572 yen. The Act also moved Japan onto the gold standard. (The sen and the rin were eventually taken out of circulation at the end of 1953.)

Knowing the Currency Symbol
When starting in Forex trading, it would be wise to start trading with the major seven. It is also recommended to start with your own country currency if you are living in one of the major seven country as you are in a better position to judge the value of the currency.
You should be aware that currencies are normally stated in a three-alphabate symbol in FX market.

For the major seven, currency symbol are as below:

Forex currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency. These symbols and names are set according to ISO4217 standard. For more information on world currency symbols and numeric codes, visit official website of ISO-4217 Standard.

Fundamental FX trading

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Fundamental analysis, in short, is referring to the dynamic studies of distinct plans, erratic behaviors and unforeseen events that influence the economic of certain entity.

The focus of fundamental analysis mainly lies on the political, social, and economic force that drives the supply/demand trends the currency. Government policies, bank policies, natural disasters, social stability, overall economic trends are some of the major factors that draw a fundamentalist’s attention.

Fundamental analysis comes very handy in making mid-long term invesment decisions. However as the analysis method is mainly focus on the major thing, it will not be a good tool for Forex day traders.

It is easy to understand that fundamental skills are useful in forecatsing currency overall trends but in term of detailing job, technical analysis seems to be more appropriate.

Economy Indicators
Fundamental analysis involve a lot of analysis on the macroeconomic situation.
Thus, economy indicators of the country such as GDP growth rates, unemployment rates, retail sales, and interest rate are used heavily in when valuating a country's currency. Some of the frequent used economy indicators in Forex trading are as below (Click in each for detail explanations):

The Gross Domestic Product (GDP
Retail Sales
Interest Rates
Unemployment Rate

Besides those listed above, other fundamental factors used to analysis the currency strength include Industrial Production Reports, Consumer Price Index (CPI), Manufacturing PMI-ISM, and Manufacturing Production. We will cover each of these indicators from time to time.
How are indicators used in Forex fundamentals trading?
A country's economic situation refelects directly onto the currecny trading world. Hence, it is important for a Forex traders to keep an close eye on the financial clalender release by it country itself or private sectors. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation.
Also, it is recommended to study the fundamental aspects of several country whenever trading in the forex market. For those countries that have strong political/economical connection, currencies value flux hand-in-hand. Thus researching a few countru in a trade is necessary.
Some useful tips when implementing fundamentals analysis in Forex trading are:

Economic calendar: When and where. Currency values response sharply to certain release of economy indicators. Keep an close eyes on the currency price trend whenver there is a release on related economy indicators.
Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.

From Fundamentals to Technicals in FX Market
Pure fundamental trading is very problematics. Without a doubt the analysis is very effective in predicting the overall economic condition and the market behavior.
It gives clear picture on general economy health of certain entity (a country in case of Forex) and shows how economy situation become what it is now as well as predicting the overall economic growth trend in the future.
However, information obtained thru fundamental studies often fails to signify short term fluctuation in Forex market. Thus, it is wise to apply precise techniques to convert fundamental study’s results into accurate entry/exit price indicators.
This will then bring us to the topic of Technical Analysis in Forex trading.

Technical Analysis

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What is Technical Analysis?
Technical Analysis is an effort to forecast price movements by analyzing market data such as historical price trends, volumes, open interest, etc. Technical analysis is conducted based on the principal of 'history repeats itself', it does not result in absolute predictions about the future.
Instead, indicators generated by technical analysis will help investors anticipate what is "likely" to happen to prices over time.
Ever heard of Japanese candle stick? Fibonacci numbers? Relative Strength Index? Moving averages? Pivot points? Elliot Wave? These are some of the charting method that FX traders like to use during trades.

Technical Indicators in Forex
Unlike fundamentals, technical trading relies heavily on graphs and charts. Practically, a technical trader will need at least one charting software to read and plot the related charts for his own references.
As in our case, we will include some common technical indicators in Forex trading as well as its brief explanations. Charts and graph examples will be provided from time to time for the usage of learning.

Simple Moving Average (SMA)
Relative Strength Index (RSI)
Moving Average Convergence/Divergemce (MACD)
Parabolic SAR
Fibonacci Numbers

List of major technical indicators in trading.
Limitations on Technical Tradings
Technical analysis looks secure with proven tracks in the past times, however, trading Forex purely based on Technical Indicators would be extremely unsafe as we all knew thatt 'future does not equal to the past'.

A lot of unexpected variables are not considered in Technical Analysis: change of country leaders, change of government, natural disasters, change of bank policies, investor’s mood, war, or even terrorism attacks migh affect the currency value dramatically. These incidents are most likely not happening in the past thus Technical Analysis is not effective enough to predict the price movement.
Trading Forex Purely Based on Technical Analysis
A combined of two approaches (Fundamental and Technical) is always encourage to get the optimum plots on your investment plan. Read about Fundamental Analysis in Forex trading here.

Geting Started In FX

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Starting your own actions in Forex Trading

It's really not that hard to get started in Forex trading. The key factor is to keep going - keep going on your learning and on your training with a dummy account. Here are the steps we recommend you to follow on getting started with Forex trading.
Learn, learn, learn, and learn.
Paper trade Forex in demo account.
Maximize your FX trading tools and systems.
Selecting a Forex broker.
Avoid Forex trader's common mistakes.
Keep investing in your trading education.

1. Learn how to trade Forex
Nope, reading a few articles online or browsing every page in www.golearnforex.net is not what we call learning Forex trading.
To win and maximize your profits in foreign currency exchange market you definitely need to do more than that! Attend seminars and trading courses organized by professionals. Learn from the experience and form your network with other FX traders to exchange information and latest trading strategies.
A good place to start with is to register yourself in Peter Bain's Forex trading course.

2. Paper trade Forex in demo account
Start your Forex trading with 'play-money'!
Many FX noobs go into the Forex market too soon and lose a lot of money due to margin trading. The best way to learn Forex, traders are always encouraged test their skills first and to build up their confidence level with demo account before committing their own capital. Register a Forex account here with FinoTec .

3. Maximize your FX trading tools and systems.
It is very important for Forex traders to know their trading tools well. Various FX brokers offers an array of tools that are used for trading the Forex markets.
Practically, traders often use one or more than one trading system/software to trade Forex online. These software are often come in a package when you open an account with Forex brokers.

In brief, this is how this software works: The Forex trading software is connected to the broker’s system via Internet, currency prices are updated live, and you make your call on trade via the software. Such trading software often requires minimum computer powers thus it can be run on most home computers nowadays as long as it is connected to the Internet.

In normal case, automated trade order functions are embedded in Forex trading software. For Forex trading, stop loss order and limit order are the two most used function. Limit orders:As a trader, you can place these orders when you wish to buy/sell the currency at a better price compare to current market. Limit orders are often used to take win automatically when the price reaches certain level. For example, current EUR/USD is at 1.2693 and your predetermined limit order is to sell all at 1.2700. The order will auto-execute whenever the price reach 1.2700.It is important to learn that limit orders can be only placed at least the minimum distance from the current market price. Also, such order can be cancelled or modified anytime by you as long as the limit order price tag is set further than the minimum distance allowed.Stop orders:Stop orders, or sometimes known as stop loss orders, are automated orders used to restrict and limit the losses of an open position. It can also be used to lock on a profit in your trade when the market is going in your favored direction.Stop orders work similarly to limit sell orders, it predetermine what is the lowest price to sell in certain deals. For example, EUR/USD 1.2693 with stop order at 1.2685, the system will sell your portion of USD if the price touches the 1.2685 level. The price 1.2685 is guaranteed on such case, meaning even if the market sink too fast and it falls below 1.2685, you still can sell your money in the price that you set earlier.
Recommended Forex trading software DashBoard FX is one of the best trading software you can have online. It provides real-time FX currency signals, trade alerts, as well as a well-designed FX trading software (DashBoard FX).

4. Selecting a Forex broker
There are many Forex brokers to choose from, just as in any other market. When you are browsing for Forex, ask questions below:

Does the FX broker offers low spread value?
Is the FX broker registered with related authorizations such as FCM?
What kind of tools does the FX broker provides?
What kind of margin options are there?
Does the FX broker provides live customer supports?
Does the FX broker offers demo account for beginner traders?
If you do not have sufficient capital, check whether the FX broker offers mini account that
Requires low startup funds.

5. Avoid Forex trader's common mistakes.
Avoid trading with your emotions, avoid over trading your account, avoid over-staying at your positions, avoid bad money management, avoid risking what you cannot afford in Forex trading ...Forex trading involved a lot of risks and traders are always advise to trade and learn in the same time.
Get aware of common mistakes done by most Forex traders and set your own rules during trading in FX market. Trade with discipline and always prepare to learn new concepts from others.

6. Keep investing in your trading education.
We just cannot resists to keep stressing that investment education is always the most crucial things in starting your trade in Forex market. If you are new to Forex trading; learn, get hands-on experience and read as much FX books as you can to educate yourself regarding FX market