US Dollar Hits Key Resistance - Nearing a Turning Point?

Written by Terri Belkas, Currency Strategist

The outlook for the greenback for the next few weeks may hinge upon whether or not the drop signals a reversal or ultimately yields a break higher. Looking ahead to this coming week, there will be a handful of events that US dollar traders will need to watch as increased volatility could trigger sharp moves in the currency.

The US dollar ended the week mostly higher, despite big losses on Friday, as the DXY Index pulled back from resistance at the 2008 highs. The outlook for the greenback for the next few weeks may hinge upon whether or not the drop signals a reversal or ultimately yields a break higher. Looking ahead to this coming week, there will be a handful of events that US dollar traders will need to watch as increased volatility could trigger sharp moves in the currency.

On February 24 at 10:00 ET, the Conference Board’s consumer confidence index for the month of February is forecasted to reach a fresh record low of 36.0, down from 37.7. With record keeping having begun in 1967, the plunge in sentiment makes the extent of the recession even more clear. However, with Federal Reserve Chairman Ben Bernanke due to testify before the Senate on the economic and Fed policy at the same time, the consumer confidence result may have little impact on the markets. Instead, traders will be listening closely for more detailed outlooks on growth, unemployment, inflation, and the financial markets. Bearish commentary could weigh heavily on risk appetite, and as a result it will be important to keep an eye on the link between the currency markets and stocks, as the US dollar hasn’t been responding as strongly to shifts in equities but could still benefit from flight-to-quality.

On February 26 at 8:30 ET, signs that domestic demand is showing no sign of recovery should continue to emerge as US Durable Goods Orders are forecasted to have dropped 2.3 percent and even excluding transportation is anticipated to fall 2.0 percent. All told, this would mark the sixth straight month in which the headline reading failed to rise, and while this will have the most impact on forex trading, the markets should keep an eye on non-defense capital goods orders excluding aircraft, as this number serves as a leading indicator for business investment.

Finally, on February 27 at 08:30 ET, the preliminary reading of Q4 GDP for the US is forecasted to be revised even lower after initial estimates showed the index down 3.5 percent. The latest results may show a sharp 5.4 percent contraction, which would still be the worst since Q1 1982. The National Bureau of Economic Research (NBER) has already declared that the US has been in recession since December 2007, but a plunge in GDP in line with expectations will only suggest that the contraction in growth will continue to be worse than previously expected.

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It is not really surprising to see the Forex trading market emerge as a leader in the world trade scenario. The response to these markets has been overwhelming with popularity touching the sky. Forex trading is the premier way to earn extra bucks in today's world. So it is just Forex all investors are looking up to now.

Forex trading is taking over stock trading which was perhaps the most preferred form of investment until a few years back. Stock and other related commodities are becoming more difficult to trade because of a very unstable economy at the present moment.

The Forex market is characterized by its steadiness and has thus risen to become the most sought after trading business among all investors. Moreover, forex is a market where you can earn profit both with price increase and decrease.

Forex trading is about trading one currency against another to make profit. The market is highly liquid as the currencies can be traded very quickly and you can earn huge profits within a short period of time. Moreover, the Forex market being operative 24 hours of the day traders are at an advantageous position to trade at whichever time is convenient for them from Sunday evening till Friday evening.

Online Forex trading facilitates a beginner to operate with a demo account and can continue to do so until he/she has gained some experience in the business.

Doing so the investor need not worry about incurring any losses as the trade is carried out with virtual money. The investor can also learn the details of Forex trading and after gaining confidence can graduate to open a standard or a mini account.

Online Forex market is coming up as a safer investment option compared to the stock trading business. It involves much lesser initial cost and you can start with a very nominal amount. Forex trading is also likely to bring in a steady income for every dollar you invest.

There is no commission too for online trading. Hence, every individual can be a part of this business and aim to make some extra money. That's not all. Many people have succeeded in such a way that they have given up their full time jobs for Forex trading!

So, Forex is undoubtedly the most profitable business to put your money on. In a volatile economy like ours under the prevailing circumstances, going with Forex trading is certainly the call of the day.

Forex Day Trading vs. Forex Swing Trading by James Smith

You heard all the stories about the millions of dollars that you can make by day trading the forex markets, how it's easier to make money with forex because it trends much better than stocks and there is more liquidity with over $7 Trillion dollars traded a day. You've seen the advertisements asking you to sign up for a broker with only $25 to start and your imagination begins running wild about

The truth is that the foreign exchange markets are a traders dream in the same way that Las Vegas can be a gamblers dream. It's open 24 hours 6 days a week, so there's always action and there's always a trade that can be made. But just like Las Vegas it can quickly turn into a nightmare.

The truth of the matter is that it is difficult making money in forex and it is even more difficult making money consistently by day trading the forex markets. The reason being that most people cannot think quickly and calmly enough to make the split second decisions needed to be successful at day trading. In his book Blink, Malcolm Gladwell details a computer generated war simulation competition set up between day traders and battle field generals. Surprisingly the day traders faired quite well against the battle-hardened soldiers at making split-second decisions that could cost thousands of simulated soldiers their digital lives. If you regard your trading capital as your soldiers and the goal is to go out and capture the enemy soldiers or other people's capital, then the analogy is a pretty good one. Not surprisingly the two groups got along quite well with one another after testing their mettle on the digital battlefields. What they found is that to be successful in either profession required a similar set of skills, namely being able to make split second decisions, the ability to take in and process lots of information at one time and disregard extraneous unimportant information, and obviously the ability to deal with pressure calmly and cooly. Most people lack these requisite skills to be successful as day traders.

Swing trading is a much easier and less stressful way to get into the markets, and you won't even have to sit in front of your computer screen for hours at a time watching indicators and squiggly lines. It's a gentler pace in which the trader can set limit, or stop orders and wait for the markets to come to them. In addition instead of having to make decisions at such a frenetic pace a swing trader can be more thoughtful and deliberate in the process.

There is money to be made in the forex markets, but it is not for everyone. If you are going to tempt these treacherous waters there are a few things that you should know first-

1.Have a well thought out trading plan, preferably one that has been back tested and has some statistical significance. 2.Make sure to use stop losses and you should also use a trailing stop loss 3.Don't use the rent money to trade with, or other money that you need to pay the bills. If you do then you will always make bad decisions.

If you'd like to find out more about forex trading and sign up to receive free trading signals please click on the link in resource box below.

Learn Forex Trading - Facts All Novice Traders Need to Know to Avoid the Losing Majority by Kelly Price

If you want to learn Forex trading correctly and win you need to be aware of the facts enclosed or you will join the 95% of losers. Here are your essential facts...

The first fact to be aware of is an obvious one

Fact - Forex trading Success is not easy

Of course you wouldn't expect it to be with the rewards on offer and the facts state 95% of traders lose and that's a high percentage. If you think you are going to make money with no effort, then save your money and don't try trading Forex, as you will join the majority of losers.

The good news is if you make an effort, you can win as Forex trading is a specifically learned skill.

Fact - Forex Robots and Expert Advisors Don't Work

There are numerous robots sold and all claim better track records than the world's top fund managers but they don't work. If you seriously believe that you are going to make money by spending $100 or so you are going to end up losing all your money.

If you want to win, you need to learn skills so leave the forex robots to the lazy and naïve traders and get yourself a solid Forex education.

Fact - Forex Markets Don't move to Science

Many people think that Forex markets move to some higher force which can be predicted but if you predict, you are simply hoping or guessing and that will see you lose. If you want to win at Forex trading, you need to trade the reality of price change and trade the odds.

Fact - Money Management is the Key to Success

Most people think if they have a good method they will win but its not enough, you need strong money management. You are going to lose at times even the best traders do and that means you have to take and keep your losses small until you hit profits.

Money management is the key to success but most traders cant keep losses small which leads to the next and most important fact about Forex trading.

Fact - Discipline is the Key to Forex Trading Success

You are going to have to take and keep losses small and trade with discipline until you hit a home run and this is hard.

The reason its hard is your emotions will come into play, as no one likes losing money, looking like a fool and the market will do both to you. During losing periods you must execute your trading system with discipline and ride out losing periods until you hit a home run.

Fact - Forex Trading is Simple to Learn But

You need to be aware that forex trading is not just about having a good method, you need the discipline to apply it - if you can't execute a trading method with discipline, you don't have one!

Anyone can learn to trade Forex but getting the right mindset is the key to Forex trading success.

So if you want to learn Forex trading you can and you can put together a simple, robust method in a few weeks and then you need the ability to be disciplined and execute your system correctly. Sounds simple? It is but most traders cant do it, if you can, big profits await you.

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What FOREX is and how to make money from it! by Jay Charles

I have tried numerous ways to generate a little extra pocket change but all of it was never worth the time and effort as to how much I actually made, until I found out about Forex.

FOREX (Foreign Exchange) is the network in which one nation's currency is exchanged for that of another. Currently FOREX is among the largest of financial markets in the world with more than $1.9 trillion in transfers daily. FOREX lacks the physical exchange that most investments have which enables FOREX a 24/7 operation.

Started in 1970, this exchange system used to only be available to millionaires, but with change over time, and stabilization it is becoming more and more easy for smaller investors to join in on the riches, you no longer have to conjure up large lump sums to take advantage.

I just recently started in the FOREX trade, all the while I still don't fully understand it, I just know how to make profit from it. I learned from two separate systems and they both work. I'm still not rich, but I've almost doubled my yearly salary, which is pretty damn worth it if you ask me.

The first system I tried, in which I use the most, is the E75 FOREX system. Everything is in black and white, easy to understand, and it takes a lot of hassle on figuring out what to do, how to do it, and when.

The second one I tried was a system built by Michael Chase. I will say that the system Michael Chase built has a lot more info, and many endorsements, but I still prefer the E75 because of its simplicity.

Bolster Success with Fundamental FOREX Analysis

In fundamental FOREX analysis, you are basically valuing either a business, for equity markets, or a country, for FOREX. If you think it's hard enough to value one company, you should try valuing a whole country. It can be quite difficult to do, but there are indicators that can be studied to give insight into how the country works. A few indicators you might want to study during your FOREX analysis are: Non-farm payrolls, Purchasing Managers Index (PMI), Consumer Price Index (CPI), Retail Sales, and Durable Goods.

Most traders in the FOREX market only use fundamental FOREX analysis to predict long-term trends. However, some traders do trade short-term based on the reactions to different news releases. There are also quite a variety of meetings where you can get quotes and commentary that can affect markets just as much as any news release or indicator report. These meetings are often discuss interest rates, inflation, and other issues that have the ability to affect currency values.

Even changes in how things are worded in statements addressing these types of issues, such as the Federal Reserve chairman's comments on interest rates, can cause volatility in the market. Two important meetings that you should watch for are the Federal Open Market Committee and the Humphrey Hawkins Hearings.

Just by reading the reports and examining the commentary, a FOREX fundamental analyst can get a better understanding of most long-term market trends. Keeping up on these developments will also allow short-term traders to profit from extraordinary happenings. If you do decide to follow a fundamental strategy, you will want to keep an economic calendar handy at all times so you know when these reports are released. Your broker may also be able to provide you with real-time access to this kind of information for use in your FOREX analysis.

Trading by Numbers: Eighteen FOREX Tips to Help You Succeed

You can never have too many FOREX tips or tricks up your sleeve when you are trading. Most of the tips I’m including here are received wisdom, trading truisms that you should remember. They apply to all markets, but are particularly useful in a volatile and technical market like the FOREX

1. Pay attention to the market. Exit and enter trades based on market information. Don’t wait for a price you think the currency should hit when the market has changed direction on you.



2. There are times when, due to a lack of liquidity or excessive volatility, you should not trade at all. On a similar note, never trade when you are sick. You can’t count on yourself to be alert to the shifts of the markets, and make good decisions.



3. Trading systems that work in an up market may not work in a down market, and a system that works for trending markets, or for range bound markets may not work in other markets. Have a system for each type of market.



4. Up market and down market patterns are ALWAYS there, but you have to look for the dominant trends. Always select trades that move with the trends



5. During the blowout stage of the market, either up or down, the risk managers are usually issuing margin call position liquidation orders. They don't generally check the screen to see what’s overbought or oversold; they just keep issuing liquidation orders. Make sure you stay out of their way.



6. Trust your instincts. If something feels wrong about a trade, don’t make it. It’s better to be superstitious than to loose money.



7. Rumour is king. Buy when you hear the rumour, sell when you hear the news.



8. The first and last ticks are always the most expensive. Get in the market late, and out early. And never trade in the direction of a gap, either opening or closing.



9. When everyone else is in, it's time for you to get out. If a stock or currency is overbought, it’s time to exit your position.



10. Don’t worry about missing out on an opportunity to trade. There will always be another good one just around the corner. If the trade you are considering doesn’t meet all your entry signals but it seems to good to pass up, remember, you’re never going to run out of trades you can make.



11. Don’t get too confident is another useful FOREx tip. No one can predict the market with 100% accuracy. You need to always expect the unexpected. If you become uneasy, or the market becomes choppy, exit your trades.



12. Don't turn three losing trades in a row into six. When you’re off, turn off the screen, do something else. Often the best way to break a streak of consecutive loses is to not trade for a day.



13. This brings us to another valuable FOREX tip. Don't stop trading when you’re on a winning streak.



14. Measure your success by the profit made in a day, not on a trade. It’s even better to measure it over two or three days. A successful trader’s goal is to make money, not to win on every trade.



15. Scalpers reduce the number of variables affecting market risk by being in a position only for a few seconds. Day traders reduce market risk by being in trades for minutes. If you convert a scalp or day trade into a position trade, you probably didn’t analyze the risks of the trade properly.



16. Realizing there is no secret to understanding the market is one of the FOREX tips most successful traders learn as they become more successful. You can spend much of your valuable time and money looking for these kinds of secrets. It’s better to take the time to create a solid trading system, and realize that the secret to success is hard work.



17. Never ask for someone else's opinion, they probably didn’t do as much homework as you did anyways.



18. When the market is going up, say it out loud. When the market is going down, say that out loud too. This FOREX tip is extremely valuable because you’ll be amazed at how hard it is to say what is going on right in front of you when you want the market to be doing something else.

Forex Day Trading Demands well Educated and Skillful Traders willing to Accept Risks for the Rewards

Day trading the Foreign Exchange Markets (Forex) or (FX) adheres to the same concept of other styles of currency trading but differs slightly in the terms of execution, functionality and risk tolerance levels. Each day numerous traders worldwide indulged in trading substantial sums of money on the various stock exchanges and foreign currency exchanges in an attempt to profit from it. essentially means an investor purchases a currency intending to make a profit that day, with no intention of holding the currency at the end of the trading period.

The trader will sell the currency at a loss if need be, in order to avoid the risk of an event happening somewhere in the world that could have an adverse affect on the currency they purchased. A few examples of the circumstances that could cause a decrease to a currencies value could be one of the following; a geopolitical event, a governmental report released regarding a countries economy or an increase in the price of a commodity, such as oil or gold. By day trading the currency investor has substantially decreased their risk of an occurrence out of their control happening and not being able to react to it immediately.

A currency day traders system could either be manual or software based, although the present statistics show vast majority on all FX traders utilize a computer based trading system and this is growing yearly, not only for day traders but all traders. The day trader’s style will usually based on either signals or trends or a combination of both. They assemble the information in the form of fundamentals, utilization of various charting systems, technical analysis and gathering of news coverage.

Day trading is usually conducted in either a highly volatile market or once a trend in a currency had been determined. Each and every professional currency day trader has developed their own specific personality towards trading and might have found another market form they prefer to trade in.

A highly volatile market offers the day a huge upside for profits where as their downside risk is controlled and considerable less than the upside gain potential. They control the downside risk through the use of a Stop Loss (SL,) which the trader will set when initiating the trade or anytime the trade is still open. The SL is usually set very low, so even the slightest downside in the currency could force a sale. One huge advantage the currency trader has over a stock trader is this is a highly liquid market where the sale of the currency occurs instantly in most circumstances. Where as a stock investor could put in a SL and since their market is so much smaller there is a possibility nobody will purchase stock at the SL price, which often times leads to substantial losses which rarely happen to the currency trader.

The other type of market day traders like to concentrate on are markets where a trend in a particular currency has been established thus ensuring profits. A trend by definition is an established movement that is predictable. The day traders usually are the first ones to recognize the trends starting and the first to realize a trend changing. The ability to get in at the beginning of the trend line and getting out at the end of the trend line almost always leads to substantial profits for the trader.

To the novice entering the currency market day trading can certainly facility your success in a timely fashion. Unfortunately, recognizing the starting or ending of a trend line is not an easy process. In order to trade in a highly volatile market the concept of SL must be understood at the highest level. There are numerous commercial Forex training courses and currency trading software systems that have been developed especially for the day trader. The cost of these products is not that expensive and will certainly improve the learning curve as well as your wild adventure in becoming a profitable currency day trader.

Learn Currency Trading if you Want to Make Money in the Forex Markets, It is That Simple

I can only assume you are reading this article because you desire to become a profitable investor and trader in the Forex markets. The number one mistake new investors to the FX markets make is failing to learn currency trading from the ground floor up. I have no idea, why somebody would start investing there hard earned money in something they know nothing about, but they do time after time.

Look, it is really simple, you want to make money in the markets there is a tried and true formula to follow and you can virtually guarantee your success. The first thing you need to do is invest in yourself and education. Knowledge is the key to success in virtually in field anybody has ever entered and the currency markets are no different.

There are a multitude of exceptional currency courses than have been on the market for years. During that time the developers of these Forex programs have expanded there products significantly, by refining them, enhancing the knowledge gained and by staying up to date with the latest most sophisticated investing and trading techniques.

If your not sure if this is something for you at this time and want to read a little more material on it, that is also possible. There are many websites that offer free tutorials, articles and other information that will help you learn the basics of Forex trading to help you decide if it is for you. There is even one Forex mentoring program, which in fact is one of the best sites on the internet for learning everything there is to know about the markets that allows you to take the first course for free. The name of there site is Straight Forex.

Many of the Forex brokerage firms will offer free training as well as a wealth of learning materials. The purpose of these materials is to help you decide if you really want to do this. The quality of all of these free products will not provide with sufficient knowledge to be a profitable investor.

It only takes a little time to research the top rated Forex courses that will help you learn currency trading at a level that will make it possible for you to be a profitable investor in a rather quick fashion. I wish you the best of luck; remember it is not that hard if you know what you doing, in fact is quite easy to tell you the truth. New investors are creating wealth for themselves in every country on the globe because of the Forex markets, and you too could become one of them.

The Worst FOREX BRokers Destroy Profits

broker that meets all of these needs should be a good broker for you, but you still need to be certain that they are honest. Dishonest brokers can be prone to prematurely buying or selling near preset points (commonly referred to as sniping and hunting) or may indulge in other habits that will cost you money. Understanding the traits of some of the worst FOREX brokers will help you learn which brokers to avoid.

Obviously, no broker admits to performing actions comparable to the worst FOREX brokers, but there are ways to know if they have. The best ways to find out more about your potential broker is to talk to fellow traders. There is no actual list or organization that reports dishonest activity, but a visit to online discussion forums, or a simple conversation will often reveal who is an honest broker.

You should also watch to see if a broker has strict margin rules. Since you are trading with borrowed money, your broker has a say in how much risk you are able to take. You agree to this when you sign a margin agreement for your account. This means your broker can buy or sell at his discretion, to cover the brokerage firm’s interests, which could have repercussions for you.

Say you have a margin account, and your position takes a headlong nosedive before it begins to rebound to all-time highs. Even if you have enough cash to cover it, some brokers will liquidate your position on a margin call at that low point. This action on their part can cost you dearly. You can only find out whether the firm is prone to this kind of activity by talking to other traders.

When this occurs repeatedly, it means that your broker is showing tight spreads but is effectively delivering wider spreads. Rejected trades, delayed execution, slipping, and stop hunting are strategies that some brokers use to get rid of the promise of tight spreads.

Spreads should always be considered in conjunction with depth of book. Oddly enough, when it comes to economies of scale, FOREX doesn't even act like most other markets. On the inter-bank market, for example; the larger the ticket size, the larger the spread is. So when you see a 1-pip spread on an ECN platform, you have to wonder if that spread is valid for a $2M, $5M or $10M trade, which it probably isn’t. In many cases, the tight spread that is offered applies only to a capped trade sizes that don’t work for most of the common trading strategies.

Spread policies change a great deal from broker to broker, and the policies are often difficult to understand. This makes comparing brokers difficult. Some brokers actually offer fixed spreads that are guaranteed to remain the same regardless of market liquidity. But since fixed spreads are traditionally higher than average variable spreads, you can end up paying an insurance premium during most of the trading day so that you can get protection from short-term volatility.

Other brokers offer traders variable spreads depending on market liquidity. Spreads are tighter when there is good market liquidity but they will widen as liquidity dries up. When it comes to choosing between fixed and variable rates, the choice depends on your individual trading pattern. If you trade primarily on news announcements that you hear, you may be better off with fixed spreads. But only if the quality of execution is good.

One trait of some of the worst FOREX brokers is to base the spreads they offer their clients on the type of account the client has. For example; those clients that have larger accounts or those who make larger trades may receive tighter spreads, while the clients that are referred by an introducing broker might receive wider spreads in order to cover the costs of the referral. Other brokers offer the same spreads to everyone.

It is often difficult to get information on a company’s spread policy or its order book depth. Because of this, many traders get caught up in the promises they hear, often take a broker's words at face value. This can be dangerous. The only real way to find out what a company’s policy really is and avoid some of the worst FOREX brokers, is to try out various brokers or talk to those who have.

Forex trading examples

An investor has a margin deposit with Saxo Bank of USD 100,000.

The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.

The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.

Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.

Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.

Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.

Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.

As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.

This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.

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Example 2:

The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).

The dealer quotes 112.05-10. The investor sells EUR at 112.05.

Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.

He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.

Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.

The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.

This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.

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Example 3

The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:

He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.

Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.

After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.

Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.

Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61.

The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.

How to Trade Forex

rading foreign exchange is exciting and potentially very profitable, but there are also significant risk factors. It is crucially important that you fully understand the implications of margin trading and the particular pitfalls and opportunities that foreign exchange trading offers. On these pages, we offer you a brief introduction to the Forex markets as well as their participants and some strategies that you can apply. However, if you are ever in doubt about any aspect of a trade, you can always discuss the matter in-depth with one of our dealers. They are available 24 hours a day on the Saxo Bank online trading system, SaxoTrader.

The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.

The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.

Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type. Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements

TRADING PSYCHOLOGY

Trading is an emotional rollercoaster

It is a very natural human tendancy to want to stay in a losing trade in the hope that the market will turn in your favour and you can regain your losses to close your trade at a more financially acceptable level. Similarly, when you are making a profit it is very hard not to grab what you can get while you're up, instead of riding out the trend even if the market temporarily turns against you.

However, as our basic principles state, the only way to make money in forex trading is to let your profits ride and to cut your losses quickly. This is because there is a very narrow margin between making an overall profit and blowing your account since you will have a large number of losing trades, no matter how good your trading system is or how lucky you are. How you manage your losses and gains makes the difference between a successful and unsuccessful trader.

In our opinion, the only way to control your emotion is to trade according to a system or set of rules. Your system should be comprehensive enough to cover any eventuality arising in the markets so that you never need to make any decisions while in a trade. You simply follow a set of predetermined rules.

Chat Forums

Forex trading is a very lonely occupation as you sit behind a computer terminal all day, isolated from the world. This in itself is enough to make you feel very depressed and despondent. Subscribing to forex chat forums will help to alleviate some of the loneliness. At least then you get some insight into the lives of other traders around the world and you can get an opportunity to interact with them.

Free Trading Guide

1. Trading is an investment not an income.

It is important to have a realistic expectation of what you can achieve through forex trading. The nature of trading is such that you may make a good return on your initial capital over an annual period, but during that period you may have a number of consecutive losing months, with only a few bumper months in between. Therefore, even daytraders cannot claim to make a fixed amount per month which equates to a salary. You need to have another source of income to support yourself while trading forex. NEVER borrow money to trade with.

2. You can't predict the forex markets.

The forex markets are influenced by billions of traders, economic and political events. You simply cannot predict the direction and manner in which the markets will move.

Technical and fundamental analysis does much to provide a more educated guess than a simple coin toss but it is important to realise that each of these techniques will have a large failure rate. You will lose a large percentage of the time. Sometimes you will lose on more trades than you gain on. However, it is still possible to make money under these conditions by employing sound money management forex principles.

3. Let profits ride and cut your losses

The only way to make money from forex trading (or any form of trading) is by making enough money on your winning trades to cover your losses and to gain additional profit to grow your capital. This means letting your profitable trades ride and cutting your losses early. It is harder to put into practice than it sounds as psycologically it is much easier to "marry" your losing trades in the hope that the market will turn in your favour and grabbing your profit too soon when you see your hard earned gains slipping away as the market temporarily turns against you.
4. Trade according to a tried and tested system

This is one of the most important forex principles. The only way to cut out emotion in trading and adopt a more business-like and informed approach is to use a system of rules that have been developed and tested on market data. In this way, all the trade decisions have already been made before you even enter the forex market. This is a much less time consuming and less stressful way to trade for a living.

5. Employ a sound money management strategy

In our opinion, money management is the single most important aspect of any trading system and is badly neglected by forex beginners. It enables the trader to fully utilise their capital to grow their money as fast as possible while protecting them from excessive losses and final account blow out.
6. Don't ignore the fundamentals

Fundamental economic principles drive the foreign exchange rates of the world over the long term. However, they have minimal effect over the short-term and are thus not reliable to use for daytrading decisions.

Having said that, economic announcements sometimes have a profound effect on the markets, causing movements of hundreds of pips in a matter of hours. Therefore forex beginners ignore them at their peril!

7. Don't put your faith in the expert's recommendations and comments

There are literally hundreds of forex companies providing trading signals, daily commentary and trading recommendations. While it may be useful to read some of these to get an outside opinion, it can just be information overload for newcomers to the forex market, creating indecision and stress! Believe in your system and trade accordingly.