World Forex Analysis

The Forex trading market is an around-the-clock cash forex market where the forex currencies of nations are bought and sold, typically via forex brokers. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. Forex prices can change at any moment in response to real-time events, such as political unrest, crude oil prices, inflation, import and export prices, or industrial production.

Currency market players typically use “World Forex analysis” as a tool in predicting currency price movements. Forex analysis itself is divided into two types: fundamental and technical. A fundamental analysis uses economic and political factors as a means of predicting currency movements. A technical analysis uses reliable historical data as a means of forecasting these movements. The purpose of this article is to discuss the basic principles of fundamental and technical analysis.

A fundamental analysis uses economic and political factors, such as housing starts, the unemployment rate, or inflation, as a means of predicting currency movements. Fundamental analysis is concerned with the reasons or causes for currency movements. Many Forex traders who rely on fundamental analysis plan their forex trading strategies around a number of key U.S. Government economic indicators. Some of these indicators are the Gross Domestic Product (GDP), Foreign Exchange Rates, Import and Export Prices, Industrial Production/Capacity Utilization, the Composite Index of Leading Indicators, Consumer Credit, the Consumer Price Index (CPI), Retail Sales, Housing Starts, the Employment Cost Index, and Consumer Confidence.

All of these Federal economic indicators have a marked effect on both the stock market and Forex. Some of these indicators are released weekly, while others are released monthly or quarterly. Their sources include the Federal Reserve Board, the U.S. Bureau of Labor Statistics, the U.S. Department of Agriculture, the U.S. Bureau of Economic Analysis (BEA), and the U.S. Census Bureau.

Forex traders must take other economic indicators into consideration as well. The world’s leading economies (for example, the United Kingdom, Japan, France, and Germany) also release their own economic indicators that will have an impact on the Forex market. For example, leading economic indicators in the United Kingdom include Housing Prices, Gross Domestic Product (GDP), Vehicles per 1,000 People, Telephones per 1,000 People, and the Percentage of People Employed in Agriculture.

A technical analysis uses historical data as a means of predicting currency movements. The technical analyst believes that history repeats itself over and over again. Technical analysis is not concerned with the reasons for currency movements (for example, interest rates or inflation). Instead, it believes that historical currency movements are a clear indication of future ones.

For example, during the back-to-school buying season, the technical analyst might observe that more people are going into clothing stores than into stores selling flowers. Likewise, the technical analyst might observe that more men are going into stores selling flowers on Valentine’s Day than into clothing stores.

Here is another example. Oil prices dramatically increase, thus creating inflation. Interest rates rise as a means of controlling inflation. One historical result of higher interest rates is less money to spend, thus slowing economic growth. Another historical result is increased foreign investment in the forex currency affected by the higher interest rates, thus strengthening it.

The technical analyst typically uses charts as a tool for predicting currency forex price movements. The three most popular kinds of charts are line charts, vertical bar charts, and candlestick charts.

Some Forex traders depend on fundamental analysis while others depend on technical analysis. However, many successful Forex traders use a combination of both strategies. However, the important point to remember here is that no one forex strategy or combination of forex strategies is 100% certain.

Top Forex Tips

The currency trading market is the largest in the world and one of the most busiest. Billions of dollars are transacted every day. It is also the only market which is open round the clock, throughout the year. What this also means is that it offers plenty of more opportunities to make money , when compared to other forms of trading. It is not surprising then that hundreds and thousands of investors are trying entering the field every passing day. If you are an aspiring trader then you could very well do with some handy forex tips.

There are various sources from where you can get forex tips. Experienced traders are perhaps the best source. You can get to learn a lot from them. Similarly, the Internet is another place where you can find plenty of useful information on foreign exchange. You can also find many useful publications on the topic these days, which will help you keep yourself abreast of the latest happenings in this line.

When it comes to forex tips, one of the best ones that anyone can give you is to concentrate on trading pairs and not currencies. You should be knowledgeable about the different pairs of currencies. You should make sure that you understand the basics of the trading process. Similarly, you should also keep tab on the latest political and business news from different parts of the world. This is what will help you make the most of your investment.

Another one of the most important forex tips is to not to hurry things. You should always aim to make a gradual transition from a smaller account to a bigger one. This way you will ensure that you are learning all along the way, while not having to worry about losing too much money in the process. Once you keep these simple aspects in mind, then the entire trading process becomes a lot simpler.

A Winning Forex Strategy

Developing a winning forex investment plan is not unlike piecing together winning strategies for other asset classes. First and foremost, you must assess what kind of investor you are. Are you hoping to catch big profits from day-trading? If day-trading isn't your cup of tea, perhaps you're a swing trader that wants to be in a trade for a few days or few weeks. Or maybe you're a longer-term forex investor, in which case currency Exchange Traded Funds (ETFs) or a managed futures account may work best to help you accomplish long-term financial goals.

Remember that an investment strategy is NOT a system. Trading systems are mechanical and rigid. Even the good ones can only be altered so much. On the other hand, an overall investment plan or strategy should be fluid and be able to change as your investment objectives change. A winning forex strategy should be able to deliver profitable results in a variety of market conditions. Knowing that, let's take a look at a few ways to develop a top-flight forex strategy.

What Currencies Are You Going To Invest In?

As the forex market has grown, so have the available options for traders. Even rookie forex traders know about the major currencies. These are the US dollar, the Euro, the Japanese yen, the British pound, the Swiss franc and the dollars of Australia, Canada and New Zealand. Forex investors now have access to more currencies known as exotics. These include the Mexican Peso, Brazilian Real, Thai Baht and South African Rand.

Now, it may sound intriguing and alluring to play the exotics, but be assured that the risks and the costs are higher. When you trade a major pair like the euro/US dollar (EUR/USD) you might have a bid/ask spread of just one or two pips simply because this is a highly liquid pair and one that thousands of investors trade every day. On the other hand, if you invest in a more exotic pair like the US dollar/Thai Baht, you may see a spread of five pips or more and that's your cost to enter the trade. In addition, it's harder to get off an exotic trade because the exotic currencies are far less liquid than their major counterparts. So proceed with caution if you're considering investing in exotic currencies.

Keeping Your Losses Small, Let Your Winners Run

Seems simple doesn't it? Yes, it does, but it's surprising how many investors don't follow this advice. This applies to trading asset class, but especially to forex where the use of leverage puts the investor who isn't cautious at risk of losing more than his initial investment. So how do you keep your losses small? Regardless of what type of forex investor you are, assess your risk BEFORE you get into the trade. Decide how much you are willing to lose and if the trade goes against you, don't let it go any further than your pre-determined loss threshold. Don't turn a losing trade into a disastrous investment.

On the flip side, we don't want to cut a winning trade short or let it turn against us. The way to do this is by using protective stops. Once your profit goal is reached, set a protective stop at that price and let the trade ride. The worst thing that can happen is that the trade goes against you, but you've already locked in some profit. If the trade keeps going your way, move your stop order to lock in even more profits.

Know Why You're Investing In A Particular Currency

While many investment experts believe the market acts at random, that doesn't mean you should pick currencies to invest in at random. Since the forex market is more volatile than stock or bond markets, we cannot hold forex investments for months or years as we might be able to do with stocks and fixed income. This makes investment selection critical. Are you going long on the Canadian dollar because oil prices are rising? That's a sound investment thesis, but if you're just buying a currency because you think it's going to do what you want it to, you might be better off heading to a casino and gambling. When you buy stocks, you probably have a reason. Forex should be no different.

Research And Test Your Strategies

With all the advancements in technology, it is possible for investors to test their forex strategies on demo accounts without risking a penny. This is a wise move, especially for those new to forex investing. In conjunction with testing your strategy, there are plenty of free resources available for you to research how various currencies act during a variety of market conditions. Since these market conditions invariably repeat themselves over history, it is worth looking back to get a leg up on the future.

Strategy for Gaining 10 Pips a Day

Even a relatively new and inexperienced trader can consistently gain 10 or more pips a day on average -- by trading during the daily New York Close, or from 2 p.m to 4 p.m. U.S. Eastern time.

The Forex market does have certain habits and frequently repeats daily patterns of activity. As a new trader, and even as an experienced trader, if you spend enough time observing the market movements with respect to time of day, you will begin to see some regular predictable patterns.

One of the habits occurs in the New York afternoon, after 2 pm EST and into the final New York daily closing. This pattern is most frequently observed in the EUR/USD. At this time of the day, trading flows are commonly light with low volatility. If a trader observes regularly at this time, it becomes apparent that there tends to be a pivot which occurs sometime just after 2 pm EST. By "pivot," I am referring to a "pullback" or "retracement" from the overall daily trend.

In other words, if the trend of the day for the EUR/USD has been rising, then between 2 pm and 3:30 pm EST, the market will typically see a pullback lower, usually around 20 to 30 pips. On the other hand, if the daily trend for the EUR/USD has been downward, then after 2 pm a retracement of 20-30 pips higher is often observed.

By checking the market or checking the charts in the New York afternoon around 2 pm Eastern time, a new and even an inexperienced trader may recognize this pattern and then safely execute a high probability trade. If a person is available to trade at this time of day on a consistent basis, they could expect to gain an average of 10 or more pips a day with a fair amount of ease.

In closing, I must state the obvious disclaimer - that trading forex is a risky endeavor with no guarantees. Always trade with caution and never trade more than you can afford to lose. Spend time observing the market to recognize its patterns so you may make smart, high probability trades and minimize risks.

Analysis for the Professional Forex Trader 2010

• 1) Read charts the way professional Forex traders do
• 2) Determine support and resistance and how it will affect your Currency Pairs
• 3) Use trend lines to predict better trade exit points in combination with S&R.
• 4)Increase the probability of creating profitable trades, each and every time you hit the order button.
• The Technical Analysis 1 is part of the “Professional Forex Trader Library”-entire Forex education in one package!

Product Description
Learn the charting secrets the Pro Forex Traders use!

Technical Analysis for Forex offers many insights into how the Currency market works. You will benefit greatly from a good foundation in each type of insight and, perhaps, a specialty in one or two. This course is designed to teach you classic Technical Analysis and form a rock solid decision support program, the foundation for everyone when it comes to trading.

You will learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits. Mike Mc Mahon will take you through the steps to creating high probability FX trades, using Charts, Trend lines, Support & Resistance and combining them so you have a clear picture of price, time, volume and the market expectations.

The Technical Analysis 1 is part of the “Professional Forex Trader Library”-entire Forex education in one package!

Technical Analysis I for the Professional Forex Trader 2010

Latest Forex Market Analysis

The EUR USD opened the New York Session sharply higher following the release of better than expected economic reports out from France and Germany. The reports showed surprise improvements in French manufacturing and German services. This news set the table for a spike to the upside until Fed Chairman Bernanke declared that the U.S. economy was on the verge of emerging from the recession. His statement sent equity markets and the Dollar soaring putting downside pressure on the Euro.

Bernanke’s comments also helped weaken the GBP USD. The British Pound was trading slightly higher early in the trading session as it piggy-backed the move in the Euro. Fundamentally this currency pair remains weak because of the growing U.K. deficit and expansion of the Bank of England’s quantitative easing program.