The Nature of Forex Market

As far as forex is concern this is the most liquid and dynamic market on the planet. There are billions of money are traded every second or minutes as you can notice on the volatility of the chart movement. This volatility creates great opportunities for traders to make money as quickly within minutes of trading. The opposite also true as traders can lose their money within minutes. Our goals as traders are to minimize risks and maximize profits with the help of all the tools and experiences available to master the dynamic market.

There are no 100% precise or exact setups any traders can make in their trading activities. The reason behind this is because trading involves emotions as reflected on the candlestick chart designated by the tails of the candles. Everyone has their own analytical formula and amount of money they going to spend on the trading, thus there is no way we can predict when and how much money they are going to use for trading. As a result any trader will never have 100% setup otherwise only by chance sometimes.

Fortunately today every trading platform is equipped with many technical tools available to help traders to analyze the market physic. And most importantly using these technical tools we are able to estimate the size of the entire market volume dynamically and therefore be able to determine the ultimate limit of every movement. I shall discuss further on this in the later chapter of this blog on technical analysis tools.

An interesting historical event called “Black Wednesday” has taken place in September 1992, where George Soros a CEO of hedge fund company has ripped a profit of $1 Billion USD by shorting/selling the GBP-USD pair which a day period. And the Bank of England went panic as they loss 3.4 Billion Pound Sterling to the currency speculators and most of the money goes to Soros of course. Read more of this story from wikipedia "Black Wednesday"

This one event to remind us all no matter how good we are there are always aware of the unexpected danger that traders are facing in the forex market. Even a great financial institution like Bank of England has been through this experience.

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Chart Types

There are three different forms of common chart used to display the currency market movement which include the line chart, bar chart, and the famous candlestick chart. Despite of the same usages traders are very particular in selecting their chart to use in trading due to certain used.

The Line Chart

The line chart simply reflects the market in its general movement as shown below. It is rather more general compare to bar chart and candlestick chart. Therefore traders have less preference in using it for their trading.

The Bar Chart

The bar chart is actually the simplify version of the candlestick chart. Instead of using colored body as In the candlestick chart line the bar line is used to represent high, low, open, and close of the market movement.

The Candlestick Chart

Sometimes it is called Japanese candlestick chart, the most popular chart used by the Japanese traders. In its early days this type of chart was not very popular to the western traders until it is popularized by a book author named “Steve Nison”. Today the candlestick chart is used worldwide by any traders, and in fact it is one of the most powerful tools to aid traders in their technical analysis. In the later stage i will discuss about this powerful charting techniques used by traders to aid them in their trading activities.

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Introduction to Forex Part 2

Before Enter Live Trading!!

If you have not seen how the forex is traded before then you should have yourself get the touch of it by applying for demo account to any forex brokers available. This will provide you an experience of familiarizing yourself of the forex trading works and also getting to know the available tools to help you in trading. Usually brokers demo account will provide you some amount of practice money $10,000 or $100,000 for you to try their platforms. They are all FREE of CHARGE

Open your demo account to any of the following brokers

1. Marketiva - $10,000 Practice money + $5 Free Live Trading
2. OANDA - $50,000 Practice money
3. FXCM - $50,000 Practice money
4. InterbankFX
5. North Finance
6. DukasCopy

There are many more other brokers you can search online or choose from the following sites FxStreet & ForexTV

What do you need to start trading?

1. Internet Connection & Computers
   
2. Money
3. Brokers
   

After getting some experiences from the demo trading now that you should have the touch and familiarity of how the forex trading works. If you are interested about forex trading the first thing you need is the money of course!. Then select a suitable broker you want to trade with, register with them, and deposit some money into your trading account which you will use for live trading later on. That's it!! You are on your way to make money on forex trading.

There are pros and cons in all forex brokers usually determine by their trading platform effectiveness, spreads charge, customer support services, etc. You can read more about selecting brokers at this site Fxstreet.

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Introduction to Forex Part 1

What is Forex?

Forex is the short form for Foreign Exchange or it is most commonly known as currency market among savvy traders. It is the most liquid market on the planet with at least 1.5 trillion traded daily. And it is relatively similar to stocks trading as in the Wall street, and the only difference by the simplicity to apply for the trading. Usually stocks will require physical brokers to help the client to execute and manage their activities but forex are totally control by the client themselves. Therefore the process of trading are much simpler especially after the emerging of internet technology available today to provide live trading service on your PC.

The currency market is available for trading 24 hours five days in a week from Monday to Friday.

Anyone is eligible to join trading as long as they have the money!!

How to make money by trading forex?

Very simply!! When the market/chart go up you buy (long) you will make profits. If the market go to the opposite direction you make losses. Other wise when the market go down you sell (short) in order to make profits and if the market go to the opposite direction upside you make losses.

In simple: UP = BUY | DOWN = SELL

What cause the market to go ups and downs?

The fluctuation ups and downs of the market are the results of traders activities of buying and selling the forex. Traders make their transaction activities after analyzing the market based on fundamental and technical analysis available. Different traders will make different decisions based on their logical analysis however the results can be gaining or losing depending on which side the majority they are. If they joint the majority with the most money they will be the winning party or otherwise losing. Thus all the activities created a patterns reflected on the chart as you can see below.

Forex Terminology

Bull => The market is bullish when the trend is moving upwards direction

Bear => The market is bearish when the trend is moving downwards direction

Pips = Pip or sometimes call point is the measure of profit and loss in forex trading. It is approximately 1% of the money traded. For example if you trade $1000 and earn 1 pip that means you will make profit $10. That means if you make 100 pips you will earn $1000 which is 100% of traded amount.

Long/Buy => The term use when trader decide to make a buy position where he/she expect the market to go up.

Short/Sell => The term use when trader decide to make a sell position where he/she expect the market to go down.

Candlestick => Candlestick is one form of chart which designated by 2 colors usually black and white. Unlike line chart which is very general, candlestick can show details of traders emotions. Therefore some traders especially the Japanese use this candlestick as their analytical tool which give it a name as Japanese Candlestick charting.

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