How To Go About Learning How To Trade The Forex

  In spite of the fact that the majority of people have heard of Forex trading, relatively few people understand precisely what it is all about and will almost certainly feel that it is something for 'big business'. Well, nothing could be farther from the truth and more and more individuals of quite modest means are trying their hand today.

There are many hundreds of world currencies but only a few of these are traded on the Forex or FX market which concerns itself in the main with seven major currencies. Forex trading is the buying and selling of these currencies in pairs so that you could for instance buy Euros by selling Japanese Yen. The principle is to buy a currency when its price is low and then to sell it again when the price rises so that you make a profit. Naturally this sounds simple enough but, in the real world, it is not of course as simple as that and you will need a fair amount of knowledge before venturing into the marketplace.

The FX market is the world's biggest financial market and is open twenty four hours a day around the globe, which is one reason why such a large number of people are attracted by it. In the past currency trading was the territory of the major banks and financial institutions but today even individuals can join the fray provided they do so through an accredited broker.

Thus, if you are considering joining the fun then you need to begin by looking for some education and either find yourself a good training course or begin by apprenticing yourself to a seasoned trader.

It is crucial that you understand how the currency market operates before jumping in as it is an unpredictable market with few boundaries and barriers and it is easy to lose the shirt off your back if you do not know what you are doing.

You will have to begin by understanding the psychology of trading because even the most successful traders make and lose money as the market moves up and down and it can be a roller-coaster ride at times both financially and mentally.

You will also need to get to grips with the tools of the trade such as charting and mapping which are performed nowadays using quite complicated software. As with the majority of software the results you get out are very much a product of the data which you put in and it will take time to learn how to master these tools.

Discipline is yet another crucial aspect of trading and is something which does not come naturally to most of people. It is all too simple to find yourself getting carried away when you are trading profitably and to over-extend yourself only to be brought back to earth with a bump. Establishing a set of rules and trading principles is one of the foundations of your financial success.

If you are tempted to leap in head first then take a moment to have a good hard think before you do do. Very few beginners who attempt to go it alone without the necessary training are successful and, even when they do meet with success in the short term, they almost always see their fortunes reversed in the long term.

There is nothing better than a sound grounding in the basic principles of Forex trading and the confidence which it will leave you with will be reflected in the success which you have.

Visit LearningForexTradingOnline.com to learn to trade foreign exchange and discover details of creating a Forex trading strategy

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How To Go About Learning How To Trade The Forex by DONALD SAUNDERS

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Trading Forex - what is next for Australian Dollar.

  This is a follow up to an article "Australian Dollar top" from late May this year. That article pointed to a major top forming on longer term charts and a strong possibility of a meaningful correction to 0.8600-0.8500 area in the AUD-USD pair. This target has been achieved in a very short time indeed.

At the time previous article was published, AUD was still a high flying currency. Most other ones had already slipped off of their highs against the US Dollar. New Zealand Dollar, Canadian Dollar, Swiss Franc and British pound had weakened a few weeks, or even months, before. By contrast, Australian Dollar was still making new higher highs. Ultimately, AUD also fell and did it by loosing 1200 pips in about five weeks. That's some move.

What is important to mention is that Aussie didn't simply join other currencies and weakened just against the USD. It was sold off broadly in all its crosses. Some of these losses were very large. EUR-AUD ran up over 1000 pips, AUD-JPY fell about 1000 pips as well. Even less moving crosses like AUD-CAD and AUD-CHF dropped 700+ and 500+ pips respectively. Perhaps most telling of all is the slide in AUD-NZD- over 800 pips!

All this despite interest rates of 7.25%, which gives AUD a positive rate differential in comparison with most other major currencies. As we have noticed, however, this hasn't been a strong factor in Forex trends this year. This is true for most other currency pairs, not just Australian Dollar crosses. One undeniable reasons behind AUD fall are softening prices for physical commodities. Oil, grains, gold and other metals have all retreated from their highs. Aussie, being a "commodities currency" was certainly influenced by these developments.

What can we expect next? From a fundamental point of view, this currency should continue its downward momentum. General consensus is that prices for raw materials should soften even more. Most major countries are reporting slowing down of their economies. This will put even more pressure on prices of commodities, leading to a cool down of Australian markets and farther weakness of AUD.

Fundamental analysis are very helpful in identifying broad trends, but of not much use to place actual trades. In order to decide on a potential trade parameters, like entry price, stop level and target, one has to use technical analysis. More precisely- charts. At the very least, fundamental outlook should be employed in conjuncture with charts, not as a stand alone tool.

As of this writing AUD-USD is just above 0.8600 level. This pretty much completes the first leg of the of the down move. Weekly and daily charts indicate sideways movement, with a correction of perhaps to as high as 0.9000 area, before the bear market resumes. Once that happens, second leg of the down move should resume with prices ultimately heading as low as 0.7800-0.7700 level. Projected time frame for this move is 4-6 months.

If the price progresses as expected, situation should be reevaluated once that level is reached. In the meantime there may be plenty opportunities to trade both sides of the market. As long as one remembers that longer term bias is to the down side. When that move comes it might just be as fast and steep as the last one. Stop loss is a must for any buy trades.

Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on www.spectrumforex.com . Spectrum Forex LLC offers numerous services to individual traders. He also publishes trading blog www.fxmadness.com . With questions and comments e-mail him at kulej@spectrumforex.com.

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Trading Forex - what is next for Australian Dollar. by MIKE KULEJ

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