Forex Trainning Series

Non Forex traders are generally under the impression that the math involved with Forex trading is more complicated than in other forms of trading. Truth is the math involved in currency trading is exactly the same as in any other form of trading. We use the same addition, subtraction, multiplication and division we learned in grade school.

In stock trading the evening news anchor announces the Dow gained 30 “points” today, and in Forex trading we hear the US Dollar is up 30 “pips.” Well that’s fine, but points and pips won’t pay our rent. So let’s convert “points” and “pips” using the basics of Forex math into what it means to us – money. This section will cover basic, but very important principles we utilize in our daily trading activities - prices.

The first thing that you’ll notice about the prices in most currency pairs is they have a couple extra numbers in them compared to a stock quote, or the actual currency exchange rate listed in the travel guide. A typical stock quote looks like “Sprint = 5.71” in the financial section of your local paper; and the published Canadian Dollar to US Dollar exchange rate looks like 1 US Dollar = .98 Canadian Cents. But the traded currency pair rate we use in the Forex market for the same currency is USD/CAD = 0.9887.

Two main reasons exist for breaking down the unit of currency past the .01 cent level. First - the sheer volume of trading on the currency market. The Forex market trades more money in one day than all the stock markets combined trade in a month. Second - the size of the lots we trade in Forex. Stocks typically trade in 100 share standard lots, whereas one standard lot of a currency pair is 100,000 units of the base currency. A full one cent move on a currency pair is a very large movement when considering the huge amount of money being shifted; hence we need to monitor currency prices down to the sub penny level, usually four decimal places out.

Ression On Forex Trading

I’ve seen the dreaded “R” word rear its ugly head in a few choice financial columns that I loyally read. Not many; but enough to make my spider senses tingle a bit. Seems as if some feel conditions are beginning to line up in such a way to cause at least some thought be given to the issue of a possible recession in our business decisions. And my business is retail Forex trading.

When we talk about recession as currency traders we must discern the type of recession we are talking about. Most of the time we are looking at the economy of an individual nation or group of economically entwined nations. Rarely do you hear the term “global recession” mentioned, as this occurrence is rare due to the nature and vastness of the global economy (but not impossible). Generally speaking, if some countries economies are contracting, others are expanding to fill the void.

This puts us in excellent position as currency traders. Since a trade on the forex market differs from stock trading in that, instead of buying or selling one equity, we simultaneously buy one currency and sell the other (or vice versa). Further, stock traders have special conditions placed on them in order to sell, or short, stocks that can be limiting and annoying at best. Conditions like higher margin minimums and the “up tic” requirement constantly nag and erode possible profits. Currency traders have no such requirements since every trade has a sell, or short, involved with one of the two currencies being traded.

Our objective as currency traders on the forex market focuses on which nations are struggling with recession, and which nations will prosper from that struggle. If a nation’s economy enters a recession - sales recede, profits decline, jobs decline and price of goods decline. This also adversely affects national trade balances, research investment levels and venture capital, all of which are vital to economic expansion. When this happens, governments and financial institutions must free up credit and monetary supply by reducing interest rates; making the currency less attractive to investors. This switching from low interest currencies to higher interest currencies on the Forex market is also known as the carry trade. In carry trades, investors borrow currencies whose countries have lower interest rates, such as Japan and Switzerland, to buy higher-yielding assets.

Forex Myth

Forex trading online has become more and more popular in recent years, due in large part to the popularity of stock trading on the internet. But along with this popularity comes the inevitable hype, myths, and at times, complete untruths. While many of these myths are relatively harmless - they do cast doubts on the Forex industry, and some can actually be costly to beginning currency traders as well. Here is the list of the most common Forex myths:

· Forex trading is easy. First the truth. It is easy to start Forex trading and it is easy to buy and sell currencies online. But succeeding and making money is anything but easy. It takes education, time and practice. Of course, there are talented traders that learn very fast, but generally speaking, starting traders should dedicate part of their time to educating themselves, practicing and developing strategies.

· Forex is gambling. This is a myth and is often heard about all forms of trading; whether it's stocks, bonds, futures, options etc. In reality Forex is the epitome of macro economics in the purest form, even more so than other types of market trading as it deals solely with the performance, structure, and behavior of national or regional economies as a whole, and their interrelationships with each other. If this were true, then all the national economic administrators, advisors, consultants and students are the world's best gamblers. Rather we are all students of economics, technical analysis, fundamental analysis and psychology.

Important Forex Trading Terms

• Spread
  The spread is the difference between the price that you can sell currency at ( Bid ) and the price you can buy currency at ( Ask ). The spread on majors is usually 5 pips under normal market conditions. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.
  
• Pips
  A pip is the smallest unit by which a cross price quote changes. When trading forex you will often hear that there is a 5-pip spread when you trade the majors. This spread is revealed when you compare the bid and the ask price, for example EURUSD is quoted at a bid price of 0.9875 and an ask price of 0.9880. The difference is USD 0.0005, which is equal to 5 "pips". On a contract or position, the value of a pip can easily be calculated. You know that the EURUSD is quoted with four decimals, so all you have to do is the cancel-out the four zeros on the amount you trade and you will have one pip. Thus, on a EURUSD 100,000 contract, one pip is USD 10. On a USDJPY 100,000 contract, one pip is equal to 1000 yen, because USDJPY is quoted with only two decimals.

Trading on Margin

Trading on margin means that you can buy and sell assets that represent more value than the capital in your account. Forex trading is usually done with relatively little margin since currency exchange rate fluctuations tend to be less than one or two percent on any given day. To take an example, a margin of 2.0% means you can trade up to $500,000 even though you only have $10,000 in your account. In terms of leverage this corresponds to 50:1, because 50 times $10,000 is $500,000, or put another way, $10,000 is 2.0% of $500.000. Using this much leverage gives you the possibility to make profits very quickly, but there is also a greater risk of incurring large losses and even being completely wiped out. Therefore, it is inadvisable to maximise your leveraging as the risks can be very high. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.

Trading Forex

A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a cross (for example, the Euro/US Dollar, or the GB Pound/Japanese Yen.). The most commonly traded currencies are the so-called "majors" - EURUSD, USDJPY, USDCHF and GBPUSD.

The most important forex market is the spot market as it has the largest volume. The market is called the spot market because trades are settled "immediately" or on the spot. In practice this means within two banking days.

Foreign Exchange

This short introduction explains the basics of trading Forex online, a brief explanation of the markets and the major benefits of trading Forex online. There are also two scenarios describing the implications of trading in a bear as well as bull market to better acquaint you with some of the risks and opportunities in the largest and most liquid market in the world.

As an additional aid for those who are new to Forex, there is also a glossary at the bottom of this text which explains some of the terms used in connection with currency trading.

Rules To Get Success In Forex Tade

Being a successful Forex trader takes more then just having money, time and desire. The more you realize it, the better are your chances of making it big in this wonderful business. Throughout the years I learned many valuable lessons that today I apply to my Forex trading. Here are some of these lessons. I hope you don’t take them lightly, I guarantee you that these are true gems product of trial and error (something I hope to shorten for you!).

1.Your psychological state of mind is more important than your dollars. Yes, that is correct. For example, entering a trade when you know you should not enter it and ultimately losing money on it will cause you a financial loss which hurts but can be recovered in the next trade or two. However, it will also cause you a psychological loss in the form of future fear and insecurity. This, will take more than one or two trades to recover!

2.This one is simple but you would not believe how many traders do not follow it. In bear markets sell the markets that show most weakness. Don’t try to outsmart the market. If the market is telling you "I am weak" don’t argue and just follow! If the market tells you "I am strong", BUY and continue BUYING!

3.Don't ever try to pick absolute tops and bottoms. I know of traders that have an addiction with this. They always look to pick the absolute bottom or top and ride the market on the reversal. They succeed one or twice but eventually suffer a big hit. If you can't help it and you want to try and look for those huge turning points in the market at least use some sort of confirmation. Don't just guess "this is the top" or "this is the bottom".

Forex in Nepal

Encouraging aspects of Nepal's small but developing economy are as follows:-

• Population 26 million people
• Area 56,827 sq miles, compared with Great Britain 94,000 sq miles
• Transport - increasing number of independent airlines operating in Nepal
• Telecommunications - an excellent telephone service
• Geographical location - between India and China, two of the fastest growing economies
• Climatic range - from coldest to hottest
• Greatest Bio-diversity - potential 'garden' for the region
• Hydro Electric potential - probably greater than any other country / continent
• Spectacular tourist attraction
  For more information visit: http://www.welcomenepal.com/
• IT skills
• Manufacture of high quality carpets / garments and other products
• Remittances from Gurkha soldiers and other non-resident Nepalese
  For more information visit: http://www.thegurkhamuseum.co.uk/ & http://www.nrn.org.np/
• Candidate for membership of WTO (World Trade Organisation) in 2007

If your company would like to do business with or in Nepal we would strongly recommend that you join the Chamber - the first step in building relationships with the business community there