Economic Calendar (August 2007)

GMT	EST	Reg.	Event
August 1
7:55	3:55	GER	Manufacturing PMI (CIPS)
8:00	4:00	EMU	Manufacturing PMI (CIPS)
8:30	4:30	UK	Manufacturing PMI (CIPS)
12:15	8:15	USA	ADP Employment Change
14:00	10:00	USA	ISM Manufacturing Index
14:00	10:00	USA	ISM Manufaturing Prices
14:00	10:00	USA	Pending Home Sales
14:30	10:30	USA	Crude Oil Inventories
20:00	16:00	USA	Motor Vehicle Sales
23:50	19:50	JPN	Monetary Base
August 2
7:30	3:30	SWZ	SVME PMI
8:30	4:30	UK	Construction PMI (CIPS)
9:00	5:00	EMU	Producer Price Index
11:00	7:00	UK	BoE Interest Rate Statement
11:45	7:45	EMU	ECB Interest Rate Announcement
12:30	8:30	USA	Jobless Claims
12:30	8:30	EMU	ECB President Trichet Speaks
14:00	10:00	USA	Factory Orders
23:30	19:30	AUS	Services PMI (CIPS)
00:30	20:30	AUS	TDMI Inflation Gauge
August 3
5:45	1:45	SWZ	Consumer Price Index
7:55	3:55	GER	Services PMI (CIPS)
8:00	4:00	EMU	Services PMI (CIPS)
9:00	5:00	EMU	Retail Sales
12:30	8:30	USA	Average Hourly Earnings
12:30	8:30	CAN	Building Permits
12:30	8:30	USA	Nonfarm Employment Change
12:30	8:30	USA	Unemployment Rate
14:00	10:00	USA	ISM Non-Manufacturing Index
14:00	10:00	USA	ISM Non-Manufacturing Prices
14:00	10:00	CAN	Ivey PMI
August 6
8:30	4:30	UK	Industrial Production
August 7
4:00	0:00	AUS	Unemployment Rate
12:30	8:30	USA	Labor Costs q/q
12:30	8:30	USA	Labor Productivity q/q
18:15	14:15	USA	FOMC Interest Rate Statement
19:00	15:00	USA	Consumer Credit
August 8
9:30	5:30	UK	BOE Quarterly Inflation Report
14:00	10:00	USA	Wholesale Inventories
August 9
8:30	4:30	UK	Trade Balance
12:30	8:30	USA	Jobless Claims
12:30	8:30	CAN	New Housing Price Index
August 10
11:00	7:00	CAN	Unemployment Rate
12:30	8:30	USA	Import Prices
18:00	14:00	USA	Treasury Budget
August 13
8:30	4:30	UK	Producer Price Index Input
8:30	4:30	UK	Producer Price Index Output
12:30	8:30	USA	Retail Sales
12:30	8:30	USA	Retail Sales excl. Autos
14:00	10:00	USA	Business Inventories
August 14
8:30	4:30	UK	Consumer Price Index
8:30	4:30	UK	CPI excl. Volatile Items
8:30	4:30	UK	Retail Price Index m/m
9:00	5:00	EMU	Gross Domestic Product
9:00	5:00	EMU	Industrial Production
12:30	8:30	USA	Producer Price Index
12:30	8:30	USA	PPI excl. Food and Energy
12:30	8:30	USA	Trade Balance
12:30	8:30	CAN	Trade Balance
August 15
8:30	4:30	UK	Average Earnings Index and Bonus q/y
8:30	4:30	UK	BOE Meeting Minutes
8:30	4:30	UK	Claimant Count Change
8:30	4:30	UK	Unemployment Rate
12:30	8:30	USA	Consumer Price Index
12:30	8:30	USA	CPI excl. Food and Energy
12:30	8:30	USA	Empire Manufacturing Index
12:30	8:30	CAN	Manufacturing Shipments
12:30	8:30	CAN	New Motor Vehicle Sales
13:00	9:00	USA	Monthly Net TIC Flow
13:15	9:15	USA	Capacity Utilization Rate
13:15	9:15	USA	Industrial Production
14:00	10:00	USA	New Home Sales
August 16
8:30	4:30	UK	Retail Sales
9:00	5:00	EMU	Consumer Price Index
12:30	8:30	USA	Building Permits
12:30	8:30	USA	Housing Starts
12:30	8:30	CAN	International Securities Transactions
12:30	8:30	USA	Jobless Claims
16:00	12:00	USA	Philadelphia Fed Index
August 17
12:30	8:30	CAN	Wholesale Sales
14:00	10:00	USA	Consumer Sentiment (p)
August 20
9:00	5:00	EMU	Trade Balance
14:00	10:00	USA	Leading Indicators
August 21
9:00	5:00	EMU	ZEW Economic Sentiment
11:00	7:00	CAN	Consumer Price Index
11:00	7:00	CAN	CPI excl. Volatile Items
12:30	8:30	CAN	Leading Indicators
12:30	8:30	CAN	Retail Sales
12:30	8:30	CAN	Retail Sales excl. Autos
August 22
8:00	4:00	EMU	Current Account
9:00	5:00	EMU	Industrial New Orders
August 23
		CAN	Enterprise Profits q/q
12:30	8:30	USA	Jobless Claims
August 24
12:30	8:30	USA	Durable Goods Orders
14:00	10:00	USA	New Home Sales
August 27
14:00	10:00	USA	Existing Home Sales
August 28
14:00	10:00	USA	Consumer Confidence
18:00	14:00	USA	FOMC Meeting Minutes
August 30
12:30	8:30	CAN	Current Account
12:30	8:30	USA	GDP Deflator
12:30	8:30	USA	Gross Domestic Product
12:30	8:30	USA	Jobless Claims
12:30	8:30	NZ	Producer Price Index
12:30	8:30	JPN	Raw Materials Price Index
August 31
9:00	5:00	EMU	Unemployment Rate
9:00	5:00	EMU	Business Climate Indicator
9:00	5:00	EMU	Consumer Confidence
9:00	5:00	EMU	Industrial Confidence
12:30	8:30	USA	Personal Income
12:30	8:30	CAN	Gross Domestic Product
12:30	8:30	USA	Personal Spending
12:30	8:30	USA	Core PCE Price Index
14:00	10:00	USA	Consumer Sentiment (f)
14:00	10:00	USA	Chicago PMI
14:00	10:00	USA	Factory Orders

A Couple Points You Should Know About Forex Trading

Forex trading is hugely profitable, but it is not without its' pitfalls. If you're interested in a forex trading career, you will need to employ winning strategies that both ensure capital preservation as well as maximize returns. A Forex trader needs to be organized and needs the requisite tools in his toolset to be successful. Among these tools are:

1) A reliable internet connection - you do not want to be locked out during a crucial trade due to a faulty internet connection 2) A reliable computer - the machine needs to perform and not "freeze up". You need adequate hardware to run any Forex charting or signal software you may way to run. 3) A Dealing Station - this software serves as an interface between you and your broker and allows you to make trades with a few clicks of your mouse. 4) Real-Time Exchange Rates - rates update thousands of times daily, you must have up to the minute quotes 5) Executable Quotations - quotes you can click on and then instantly execute your trade

These basic tools are required, but are no guarantee of success. You will also need to develop a number of personal characteristics in order to succeed. Chief among these is the development of self-discipline. You will need to stick very carefully to a trading plan in order to forge a successful Forex trading strategy. You need to have the discipline to stick with your plan and execute it faithfully. You will need conviction in your beliefs, which will require you constantly seeking more information to augment your intuition. Forex markets move fast, and the best method for fast action on your part is having a plan of action planned, and then seeing it through to the end.

When you begin trading Foreign exchange currencies, you must always limit your downside. Get in the habit of trading only with money you can honestly afford to lose. This way, if you suffer losses, although they may be painful, they will not be completely devastating. Being able to handle your losses in way that doesn't destroy you mentally, emotionally, or financially, is a sure sign of long-term success. All traders experience losses, but great Forex traders keep their impact to a minimum because of careful tactics.

Forex is considered to be one of the most consistent trending markets in the world. Following trends closely can be your best ally in your quest for profits. To against the trend is to invite sudden and total disaster. There are a great number of indicators you will need to follow, although this treatise is too short to cover them. But once you know your indicators inside and out, once your intuition is aligned with the help of technical tools, and above all else, once you have defined and followed your perfect Forex trading strategy, you will know the joys of hugely profitable Forex trading. Good luck in your efforts.

A Beginners Guide to FOREX

FOREX is the abbreviation for the Foreign Exchange market. FOREX is basically an international exchange market where currencies from all over the world are bought and sold for profit. The market today began in the 1970s. FOREX is a very unique market because it is not based in any particular place, and it also has very few qualifications for investing. FOREX is also free of external controls, and the investors (participants in the market) largely determine how much a currency is worth based on demand. Almost anyone can invest in FOREX, and there are strategies for investors who want to have long-term gains, and strategies for investors who desire short-term gains. The vast array of investors makes FOREX quite unique in the financial community.

The Workings of FOREX

FOREX is not centered at one place like the NYSE. The specific hours for FOREX trade are 24 hours a day from Sunday afternoon to Friday afternoon. FOREX transactions can take place at almost any time, anywhere, all over the world. There are FOREX dealers in almost all of the time zones, and it is simple to find them. Many dealers can be found online. All an investor does is decide what currency he or she wants to purchase, contact the dealer, and then makes the purchase. Many investors purchase using a credit line (money they do not have). This is called marginal trading.

What is Marginal Trading?

Marginal trading is a term used for trading with borrowed capital. FOREX investments can be made without actually having the money. All an investor needs to do is borrow the money for a certain currency. The investor wants to choose a currency that will increase in value quite rapidly. Once the currency increases, the investor pays back the money he or she borrowed and makes sheer profit. This is a high-risk investment, but the rewards are great (as with most high risk investments).

Two Types of FOREX Analytics

FOREX traders often have to analyze the market. Like all investments, FOREX involves a certain amount of calculated risk. Two ways to calculate these risks are though Technical Analysis and Fundamental Analysis.

Technical Analysis is based on the idea that trends through history will continue. A FOREX investor will notice that a certain currency is very strong and seems to be rising at a normal rate. The same investor will also suppose that the currency will not decline in value, and will continue to rise, as it has done in the past. The investor then purchases a large amount of that currency and expects to make a profit. This investment entails a large assumption but is relatively safe.

Fundamental Analysis is an analysis of an entire countries situation. Investors utilizing this technique look at the situation of the country in which the currency finds its base. Factors such as the countries economic status, political status, and global status are taken into account. For example, a Fundamental Analysis investor would not invest in currency from a country that just overthrew its leader and is in political shambles. Although this investment seems logical, it does not take into account one of the fundamental elements of FOREX trading. FOREX currency values are largely determined by the investors. That being said, Fundamental Analysis assumes that other FOREX traders will view a countries situation in the same way and respond accordingly.

Benefits of FOREX

FOREX can be very beneficial to a variety of people. FOREX trading can gain investors a large amount of money either over a long period of time, or in a short period of time. Investors who choose to invest in FOREX are generally well informed about the market and understand the current situations in many countries of the world. Investing in FOREX is simple and highly recommended for anyone who wants to enjoy profits from top-notch investments.

7 Reasons To Start Trading On The Forex Currency Market

If you have time or money, there are lots of ways to earn additional income like from active involvement in multi-level marketing, website development, property investment, residential construction security, etc. Trading in Forex (foreign exchange) is also another way of making that extra income.

In the Forex currency market, you have the flexibility of trading from any location (home, hotel, etc.) and at any time as long as you have a laptop and internet connection for your portable computer.

There are no specific requirements or experience necessary in this particular online income generating trading business. Just by attending a Forex training course should be adequate enough for you commence trading in Forex. Why trade in Forex?

Below are 7 reasons why people should trade in Forex:

1. Forex trading offers monetary leverage. Meaning that you can trade with a low capital outlay to control a large currency position. You can trade a standard of $100,000 currency lot by investing with a small capital of only $1000. However, some Forex brokerage firms permit even less that that by giving you up to 200 times the leverage. That is, with only $100 capital outlay you can control a 200,000 unit currency position.

2. Online Forex trading has low transaction charges even though if you have a mini account or trade in small volumes.

3. Forex market transparency is an advantage since there are no hidden figures. You get what you see and thus there is no unexpected surprise. Therefore, it enables you to manage your risk and you can execute your order within seconds if you want to stop further losses in a particular trade.

4. You can trade by buying or selling in the Forex market in either direction, i.e. when it is going up or down.

5. Flexible time is one of the advantages in Forex trading. The Forex market never shuts as it is an incessant electronic currency exchange taking place globally. Since it is worldwide, involving in diversity of currencies of various nations that float their currencies in the world Forex market, it operates 24 hours daily, allowing you to enter or exit a trade whenever you like. In this regards, you can trade whenever you have the free time and as long as there is an internet available anywhere.

6. As you accumulate your personal experience you can earn you extra income by profiting from this sort of online trading in foreign currency. If you trade smartly with the use of technical analyzing tools, you can profit from a trade by predicting the outcome of a trade based on observing the changing trend of a currency which normally repeatedly shows up in predictable cycles.

7. There is unlimited earning potential when you participate in Forex trading for it has a daily trading volume in excess of 1.5 trillion. That makes it the largest financial market worldwide when compared with the equity and futures markets of 50 billion and 30 billion respectively.

6 Criteria for a Good Online Forex Trading System

If you are a trader and you have tried to find a forex trading system that might work for you and have curiously looked up the words forex trading system in Google, havent you been surprised and annoyed at the amount of rubbish and useless material on this subject out there? I know I have.

It seems everybody is a forex expert these days. Or a Internet Marketer? difficult to decide.

If you are genuine in your quest to make money currency trading, you cannot trade without a system or without a plan. It is true that these systems are important and valuable. As a retail trader you are competing against institutions with armies of risk analysts, risk managers, portfolio supervisors - all contributing to their efforts and their profits. You as an individual you do not have this luxury, so you must be professional about your approach.

So how do you differentiate between good online forex trading systems and poor ones? I have selected 6 criteria to sort out the quality from the rubbish. If you are a forex trader or a beginner looking to buy an online forex trading system, make sure that it has all of these attributes.

1. Choose a forex trading system which is suited to the individual: either risk profile or trading style. Some traders are swing traders others day traders

for example. Make sure that the system can cater for both styles.

2. Choose a trading system which has a strong focus on money management and risk management techniques. Money management is the golden rule of successful traders.

3. Choose a system which is promoted by professionals with proven years of trading experience. Don't buy anything off anyone!

4. Choose forex trading systems which are simple, easy to understand and based on sound logic. Only these will force you into discipline when it comes to implementation.

5. Choose a system which will ultimately give you the tools to develop skills and your own online forex trading system and strategy that works for You!

6. Lastly choose a system which is value for your hard earned money dont pay anything over $US150. You will find a good forex trading system with all these qualities for $150 or less if you choose wisely.

5 Useful Tips For Your Success In Forex Trading

1. Implement a trading plan.

A trading plan is especially crucial in Forex trading to stay in-control against the emotional stress in speculative situation. Often, your emotions will blind and lead you to the negative sides: greed causes you to over-ride on a win while fear causes you to cut short in your profits. Hence, a well organized operation has to be predetermined and strictly followed. Always remember: If you fail to plan, you plan to fail.

2. Trade within your means

If you cannot afford to lose, you cannot afford to win. Losing is a not a must but it is the natural in any trading market. Trading should be always done using excess money in your savings. Before you start to trade in Forex, we suggest you to put aside some of your income to set up your own investment funds and trade only using that funds.

3. Trade along side with the majorities

Trade on popular currency pairs and avoid thin market in Forex. The lack of public participation will cause difficulties in liquidate your positions. If you are beginners, we suggest the big five: USD/EUR, USD/JPY, USD/GBD, USD/CHF, and EUR/JPY. Avoid trading in too many markets as you may end up confusing yourself by all sorts of currency studies. Go for the major currency pairs and drill down your research in it.

4. Avoid emotion trading

If you do not have a trading plan, make one. If you have a trading plan, follows it strictly! Never ever attempt to hold your weakened position and hope the market will turn back in your favor direction. You might end up losing all

your capital if you keep holding. Move on, stay within your trading plan, and admit your mistakes if things do not turn as you want.

5. Love the trends

Trends are your friends. Although currency values fluctuate but from the big picture it normally goes in a steady direction. If you are not sure on certain moves, the long term trend is always your primary reference. In long run, trading with the trends improves your odds in the Forex market.

Forex trading is getting more and more popular among small investors nowadays. Main reasons are mostly because of its high money liquidity, high leverage value with Forex brokers, and 24-7 trading time. However, being as a popular market does not mean that Forex trading is easy. In fact, trading in Forex involves high risks and the market is much volatile compare to other conventional trading markets.

Without a doubt, Forex trading needs much more than just a few guidelines or tips to be successful. Experience, knowledge, capital, fortitude, and even some help of luck are all crucial in ones success in the FX market. if you lose in a trade, do not lose the experience in it. Learn from your mistakes and regain your position in the next trade.

200 EMA Forex Strategy Easy For Beginners

A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.

Using the 200 EMA can help solve the problem.

The 200 EMA is a very popular indicator and for that reason alone is worth noting due to the psychological effect on the market place price can have when hovering around the 200 EMA.

To use this forex strategy, create charts on 3 time frames: the 4 hour, the 1 hour, the 15 minute.

Now plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.

Preferably tile the 3 windows containing your 3 charts into a vertical fashion so you can see the 3 time frames next to each other. It will squeeze up the information on the charts somewhat but for the purpose of this strategy that doesnt matter.

Now scroll through the various currency pairs you like to trade. If you prefer to trade only pairs with a smaller pip spread, they amount to about 9. They are: EUR/USD; GBP/USD; USD/CHF; USD/JPY; EUR/JPY; USD/CAD; AUD/USD; NZD/USD; EUR/CHF

What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart. So for example, look at the EUR/USD pair and note the position of price relative to the 200 EMA on the 3 time frames. If price is well above the 200 EMA on the 4 hour chart, well above the 200 EMA on the 1 hour chart, but BELOW the 200 EMA on the 15 minute chart, price is bucking the trend.

The overall trend is up, price has temporarily gone against the trend

and is currently in a retracement.

Using the fundamental trading principle of buy the dips in an uptrend, sell the rallies in a downtrend, look for a suitable entry point. In the example give above you would look for an opportunity to buy the EUR/USD, perhaps watching for a candle signal that price has exhausted its downward momentum, bucking the 15 minute chart 200 EMA and will soon resume its upward momentum.

This is an easy exercise and it can be done once or twice a day, taking just a few minutes.

Once you see price bucking the 200 EMA on the 15 minute chart, whereas it is on the opposite side on the 4 hour and 1 hour charts, sit up and take note. Watch carefully and grab the opportunity to get in and make a few pips!

Calculating Profit and Loss in Foreign Currency Trading

The foreign exchange market, or Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from economic and political events. Using a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading.

To understand how the exchange rate can affect the value of your Forex investment, you need to learn how to read a Forex quote. Forex quotes are expressed in pairs and usually in five-digit numbers. In the following example, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, means that one U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the "/" (USD in this example) is referred to as base currency and its value is always 1. The currency to the right of the "/" (CAD in this example) is referred to as the counter currency. In this example, one USD can buy 170.50 CAD, because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex market, and it is always treated as the base currency in any Forex quote where it is one of the pairs.

Let's go now to our hypothetical Forex investment to show how you can profit or come up short in Forex trading. In this

example, your pair of currencies are the U.S. Dollar and the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which means that one U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had bought 1,000 Euros on that date, you would have paid $1,085.70.

One year later, the Forex rate of EUR/USD was 1.2083, which means that the value of the Euro increased in relation to the USD. If you had sold the 1,000 Euros one year later, you would have received $1,208.30, which is $122.60 more than what you had started with one year earlier.

Conversely, if the Forex rate one year later had been EUR/USD = 1.0576, the value of the Euro would have weakened in relation to the U.S. Dollar. If you had sold the 1,000 Euros at this Forex rate, you would have received $1,057.60, which is $28.10 less than what you had started out with one year earlier.

As with stocks and mutual funds, there is risk in Forex trading. The risk results from fluctuations in the currency exchange market. Investments with a low level of risk (for example, long-term government bonds) often have a low return. Investments with a higher level of risk (for example, Forex trading) can have a higher return. To achieve your short-term and long-term financial goals, you need to balance security and risk to the comfort level that works best for you.

5 Reasons to Trade Forex Instead of Stocks

While Forex trading is becoming more popular in the United States, the vast majority of investors still do not understand the massive advantages offered in the foreign currency market when compared to equities or fixed income trading. When you fully grasp the following concepts, you'll understand why you might want to reconsider your current investment strategies.

1. Currency prices are not heavily influenced by institutional investors. In stock trading, there is a limited amount of volume on a daily basis. Each stock has a specific number of shares on the open market and trade prices are governed by the number of people attempting to buy or sell shares at a specific point in time. This makes the market vulnerable to price swings when a large investor is attempting to buy up or unload large amounts of shares. For example, if some pension fund owns 10% of a company and suddenly decides to liquidate their position, the market is now flooded with sell orders. Since the amount of shares attempting to be sold will outnumber the amount of buy orders, the price of the stock will start to drop as the number of buyers days up. This creates losses for the remaining shareholders. On the other hand, the forex market is so massive and has so many investors that no single investor can possibly have a major impact on pricing. There are too many units of Euros, Dollars, Yen, etc for any single institution to hold even close to a controlling interest in any currency.

2. Margin requirements are significantly lower in forex trading than equity trading. While the exact amount of margin allowed is determined by each broker, the restrictions are usually much less stringent when trading forex. Margin allows the investor to "play with house money." In essence, you're borrowing money from the broker to invest in your own account. While this can be risky, it can also be insanely profitable. For example, let's say you have $10,000 of your own money to invest. If you open up a margin account at an equity broker, you can usually margin up to 50% of the value of stock. So if you buy $10,000 in Microsoft stock, you can borrow another $5,000 to own a total of $15,000 in value. With your forex account, the margin requirement is often as low as 1%. Which means that if you buy $10,000 in Euros, you can use your broker's money to buy another $1,000,000. So you now own over $1 million in Euros. Now lets say that the value of each investment increases 10%. Your $15,000 in Microsoft stock is now worth $16,500. You sell it, pay back the $5,000 you borrowed, and you pocket $1,500 in profit (minus any fees or interest). Your return on investment is 15%. If your Euros went up 10%, your $1 million is now worth $1.1 million. After selling and repaying your broker, you profit $100,000 before any interest. That's a return on investment of over 1,000%. Of course, you need to be extra careful when trading on margin. Imagine if the transaction went the other way. You'd be in a much bigger hole in the forex scenario. But the potential for enormous gain is there and is one of the major reasons why forex trading is so attractive to serious investors.

3. Forex trading is open 24 hours a day. Unlike the U.S. stock markets, you can trade forex any time of day from Monday through Friday. If a major news story breaks when you're holding stock, and it's after hours, you're stuck holding onto your position until the market opens the next day. By the time this happens, everyone else knows the news and there's thousands of buy/sell orders waiting when the opening bell rings. This will dramatically influence your trade price and negate any advantage you might have had by being one of the first to react. Keep in mind that many corporations withhold major news such as earnings reports and personnel moves until after the market closes. They do this to minimize emotional trading, which is smart for them to do but also hurts savvy investors. Since Forex trading is open 24 hours, you can place your trade order whenever major events occur.

4. The foreign exchange market is more liquid than the equity market. Forex is the largest market in the world. Every day, an average of $1.4 trillion dollars is traded, and the amount of securities (foreign currencies) is minuscule when compared to the number of companies traded in the equities market. This means that there are always buyers to be matched with sellers, which means that you'll have a much better chance to get a fair and accurate price on your trade than if you were trading a low volume stock where the bid and ask spreads can be very large.

5. Forex trading offers the advantage of limited risk. This is one of the large advantages over the futures market. When you buy a futures contract, you are obligated to buy or sell a specific amount of a specific commodity at a specific time for a specific price. Which means that if disaster hits, you're out of luck. For example, lets say you buy a futures contract to sell corn. If news breaks that reports an outbreak of deaths caused by a pesticide used in corn crops, the price on your contracts will drop through the floor, limits will drop, and you could be stuck in your position and end up taking massive losses. This would not happen in the forex market since you can leave your position at any time.

Forex Trading - Advantages and Disadvantages

Advantages of forex trading

Leverage. Huge leverage is available in Forex trading, often up to 100:1 meaning that large profits can be generated from small margin deposits.

Liquidity. The enormous size and global trading of the forex markets means that the markets in the major currency pairs are very liquid making trade executions almost instant with little slippage.

Ability to go short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means a trader has equal potential to profit in a rising or falling market.

Trends. Fundamentally, the value of a country's currency is determined by interest rates and the strength of the economy in relation to other countries.

Currencies, therefore, have a greater tendency to trend until the fundamentals change.

Disadvantages of forex trading

Leverage. With huge leverage available to forex traders the danger is that positions which carry too much risk for the account size can be taken on, leading to margin calls. Effective money management rules must be adhered to.

Brokers. Retail traders must use a broker rather than dealing directly in the interbank market. The broker will be the counterparty in all transactions and is, effectively, making the market. They can, therefore, widen spreads or even refuse to trade during volatile trading conditions. To avoid dealing with brokers an alternative to forex is to use futures. See online futures trading for more details.

Spreads. As the retail trader must use a broker to trade, they cannot deal at the interbank rates. A broker will generally quote a fixed spread of 3-20 pips depending on the currency pair. The underlying interbank rate might be as little as 1 pip.

Forex is a very large market but for most retail traders dealing with brokers the odds are shifted against them. Online futures trading provides a much more level playing field for most traders who want to take part in forex trading.

Tim Wreford operates Online Futures Trading, a website that provides information and resources for traders. Tim also provides an article detailing the development of a day trading system, the results of which are updated daily on the site.

10 Good Reasons Why YOU Should Jump into Trading FOREX

Foreign Exchange Market is a market where traders buy and sell currencies with the hope of making a profit when the values of the currencies change in their favor. People are making vast amounts of money from Forex trading. The Forex Market has a big potential for everyone, ranging from large corporate firms to ordinary, everyday people like you and me.

It is a very exciting trade with a huge money-making potential. Just imagine yourself sitting comfortably in your pajamas at your computer you turn on the internet and make a few quick transactions and by the time that you get up to get a cup of coffee, you are several hundred dollars rich! Would you like that? I would!!

I can hear you say, Wait a minute!! This sounds just like another one of those confusing markets like stocks, options or traditional futures, so what makes this market any different?

Aaah! Good question! So, in answer to your question, here are 10 good (if not great) reasons to enter the Forex Trade:

1. First and foremost, Forex trading allows for small investments. You do not have to be able to invest thousands of dollars to get started with this trade. You can start trading Forex with as little as $300 to $350 and could be well on your way to earning more than that on your first day.

2. The Forex markets are always open! You are able to trade anytime and from anywhere in the world. No waiting for the stock exchange to open. The market is ongoing, with generally only minor breaks on the weekends.

3. The funds that you invest are liquid; you can cash them anytime you want. No waiting for days to get your stocks converted into hard cash.

4. The value of the Forex Trading market is COLOSSAL: it is 30 times larger than all of the US equity markets combined. It is the largest market in the world with daily reported volume of 1.5 to 2.0 trillion dollars. This massive value makes it a lucrative and desirable trade to invest in.

5. It is a highly stable trade and offers greater

strength over other markets. Countries and people are ALWAYS going to need currency. Although the value of different currencies goes up and down, the fluctuations are not as dramatic as stock prices and generally follow a predictable trend.

6. You do not have to worry about commissions, exchange fees nor any hidden charges when you trade Forex. Forex brokers make only a small percentage of the bid and there are very respectable and free brokers available as well. Is that not wonderful for you?

7. You make profits no matter which way the currency is going. You will not worry about a falling currency value if you know what to do with it and make good gains.

8. Forex is a very transparent market. Unlike equity markets, where analysts have an unfair advantage over the layman because of their insider knowledge, the relevant information for Forex is equally available to every one through international news. Therefore, all Forex traders are in a position to make pertinent decisions according to the current market situations.

9. Forex market is extremely quick! It takes not more than 1 to 2 seconds to complete your transactions because it is all done electronically, online and in Real Time.

10. The final good news is that you do not need any formal education, licensing, diploma or degree to trade Forex. All you need is the know-how of how it works, trading strategies and some tips and techniques and you can be on your way to earn big profits.

Forex trading online may be the fastest path to financial freedom and an end to all your financial worries. It truly is an excellent, if not THE best home business opportunity for ordinary people. You owe it to yourself to give it a try!!! Prosperity and happiness to all!

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Forex Trading Conduction

Forex trading is conducted in the foreign exchange market, otherwise referred to as the forex or FX market. This is the largest financial market in the world, with an estimated daily average turnover well in excess of US$1 trillion. A foreign exchange rate is the relationship between two currencies, which means the amount of one currency that would be required to buy (or sell) one unit of another currency. Currencies are quoted in pairs, e.g. Euro/US$ = EUR/USD, US$/Japanese Yen = USD/JPY, etc. Forex trading involves a foreign exchange transaction, defined as the simultaneous buying of one currency and selling of another currency.

The foreign exchange market entered a new phase in 1971 when the Bretton Woods accord, which was characterized by fixed forex trading rates, was abandoned. This led to a new forex trading system of floating rates and opened a new world in foreign exchange.

Forex trading is said to be a 24-hour, 5 day a week market, starting each day in Wellington, NZ and then moving around the globe as the business day commences in the next financial center. This rotation includes Tokyo, London, and New York. This allows foreign exchange market participants to react to news, whether it be economic political or social, 24 hours per day. Unlike other markets, such as stocks or futures, forex trading does not involve a central exchange and is considered to be an over the counter market known as the interbank market. Most forex transactions are conducted between two counterparties via the telephone or over an electronic network, such as the internet.

Forex trading, once the province of commercial, investment and central banks has evolved over the years as other players took on a greater role in foreign exchange. This has seen forex trading evolve as multi-national companies, hedge funds, fund managers, individual speculators and private investors took on a greater influence. The evolution of the internet has further opened forex trading to the independent currency trader who can follow the market on a 24-hour basis and trade foreign exchange online.

Factors that have attracted the retail currency traders to forex trading include the ability to trade 24 hours, 5 days per week, a high level of foreign exchange market liquidity, the ability to benefit in both bull and bear markets, narrow bid-offered spreads by historical standards, low margin requirements and general market volatility.

On the other hand, anyone considering forex trading should first carefully evaluate the risks beforehand. Jay Meisler, a partner in Global-View.com, says one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. "Those who treat forex trading as if they were in a casino will see the same long-term results as when they go to Las Vegas," he says, adding: "If you treat forex trading like a business, including proper money management, you have a better chance of success." - Newsweek International, March 15, 2004

Forex Pairs Trading Defined and Explained

Simply put, Forex Trading is the simultaneous buying of one currency, and selling of another currency. Any Forex trading strategy should be based on accurate data, sound advice, and realistic forecasts. There are websites and publications centered on trading, in particular the increasingly popular Forex markets.

Forex Pairs Trading Software

Forex software has become the trader’s greatest tool in a bid to make consistent profits. The foreign exchanges have been traded in one way or another for centuries. Live trading and tracking can be completed without having intimate, physical knowledge of the trading floor or the major brokers.

There are basically two options regarding the Forex software that traders have access to:

• Online Forex trading software, or web based applications, provides increased security and instant streaming prices and updates. Online software prevents outside parties from being able to gain access to personal data. However, this can be a problem with some desktop packages. To gain full advantage of internet based software, it is better to connect to the internet via a broadband connection. This means that Forex data can be transferred much quicker, enabling real time prices to be more accurate and trades to be completed as required.

• Desktop Forex trading software usually still requires an internet connection to update data and receive live price and trade feeds. However, the nature of the software means that even those with a slower internet connection have the ability to use powerful tracking and trading software. The major concern with most offline Forex software packages is security. Because all the information is stored directly on the user’s desktop, it is open to attack from viruses and hackers. However, more recent packages are much more secure.

Most Forex software packages offer the benefit of some automated analytical tasks. In the case of VantagePoint, users are privy to some of the most powerful and accurate predictions available. These forecasts enable users to make trades early enough and with enough confidence to avoid disappointment. As well as providing a forecast of the next day’s prices, VantagePoint Forex software can accurately predict days into the future.

Traders must rely not only on the timely presentation of information, but also on the analysis and forecasting that VantagePoint offers. Charting and tracking can be done quickly enough that trades can be completed before the expected move in prices. This is invaluable to any successful trader looking to take advantage of a probable move.

Forex Pairs Trading Information

The Internet is the largest resource of information in the world. Billions of people put this resource to use every single day for various reasons. Those who wish to learn Forex can do so quickly and easily using the internet, offering various benefits over the more traditional brick and mortar approach to education. Forex trading is an extremely hands on practice, and in order to really get a grasp of the theories, the analysis, and other information involved, it is a good idea for students to set up a practice account.

The most important point to consider before beginning trading Forex is that the driving forces behind the market are constantly changing. This means that any Forex course or other form of education can only teach the theories and the basics. Traders are constantly learning new tips and new patterns that can either prove fruitful or bear no relevance to prices.

Intermarket analysis considers the effects that other traded markets may have on the Forex market. For example, Intermarket analysts may look at price trends in the oil market compared to the trends that followed in the Forex market. If any indicators were found, then the trader would act accordingly. Some Intermarket analysts, considered to be technical analysts, may use charts to spot these trends. On the other hand, fundamental analysts may use the news associated with one market and determine its effect on the other.

The existence of Intermarket relationships is still contested between many parties, but there are a number of analysts and heavy traders who are insistent on its effectiveness. Either way, it would certainly be a folly to ignore it as a potential indicator, especially when beginning to learn Forex indicators.

Indicators for the Forex market are defined as PIPs. A pip, which stands for "price interest point," represents the smallest fluctuation in the price of a currency pair. The value of a pip depends on whether a person's primary currency (e.g., USD for a U.S. citizen) is the base currency or the counter currency.

The Major Forex Pairs VantagePoint software predicts are in the following categories:

US Dollar/Canadian $	USD/CAD
US Dollar/Jap Yen	EUR/JPY
US Dollar/Swiss Franc	EUR/CHF
Aust $/US Dollar	AUD/USD
Euro $/US Dollar	EUR/USD
B-Pound/US Dollar	GBP/USD
Aust $/Jap Yen	AUD/JPY
B-Pound/Jap Yen	GBP/JPY
B-Pound/Swiss Franc	GBP/CHF
Euro $/B-Pound	EUR/GBP
Euro $/Canadian $	EUR/CAD
Euro $/Jap Yen	EUR/JPY
NZD $/US Dollar	NZD/USD
Euro/Swiss Franc	EUR/CHF

forex basics

Off-exchange Foreign Currency Trading is the simultaneous buying of one currency and selling of another. The foreign exchange market (FOREX) is the largest financial market in the world, with a volume of over $1.5 trillion daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another across the major financial centers.

Traditionally, investors' only means of gaining access to the foreign exchange market was through banks that transacted large amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971.

STP/ECN definitions--News Trading

Trading economic news releases is one of the highest-risk styles of trading in the forex markets. While EFX will never discourage anyone from trading with us based on any style of trading, Traders should be aware of the fast market during the news announcement and should keep expectations realistic.

Because we are not a deal desk, our platform depends on liquidity provided by some of the largest banks in the world. Just like a retail trader wants to “catch” a spike on news, banks may not want to be buying and selling at prices half a second before the market is trading at a substantially different level. Therefore, it is possible for the banks to “lighten” the liquidity that they are displaying ahead of major economic numbers that include, but are not limited to, the US CPI, Non-farm Payrolls, and Trade Balance numbers, which come out monthly. During the seconds after a news release, all banks are scrambling to react to the news just as much as a trader would be. Therefore, the ability to get a fill can be severely compromised in some instances.

Our belief is that people trading on news need to have realistic expectations about their chances. Therefore, understanding the difference type of orders could be helpful during the time of major news releases. For example, a market order is an order for immediate execution at current market prices. With a market order, an execution is guaranteed; however, the price is not. Once the order is placed, the customer has no control over the price at which the transaction is executed. In fast-moving markets, the price paid or received may be different from the price quoted.

A limit order is an order to buy or sell a security at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. With a limit order your order may never be executed because the market price could quickly surpass your limit before your order can be filled. The benefit of using a limit order is that you can protect yourself from an unfavorable fill during a fast market

If you wish to learn more about how to use our wide array of order types to your advantage, consider viewing one of our on-line webinars (link to Webinar page), viewing our order type tutorial (link to Tutorial page), or contacting our customer support team to walk you through them.

News trading is a high-risk endeavor. While we have created a platform that is designed to make active trading possible, you cannot get a fill where no fill exists in a true market. Please consider this when placing trades.

STP/ECN definitions

STP (Straight Through Processing)

The practical application of this term is that it is the component of our platform that gives our customers the ability to route orders directly to liquidity pools of major banks.

By definition, just like clearing arrangements in the stock world, the FCM is still the counterparty to your trade. Your forex trades are cleared internally by MBTF, which means that we take all of the transactions between our customers and the banks in our system, compile them, pass the money between ourselves and the banks at the end of the day, and make sure our customer accounts reflect the executions that they received. A CUSTOMER does not have an agreement with the Interbank system. A platform like ours (EFX) has the agreement with the Interbank system. A customer simply runs trades, and the monies are cleared between banks and the platform once per day, with your execution being placed directly in your account. The fact that you can see where the liquidity lies, execute a trade immediately, and have that execution from the true market end up in your account is what makes the platform STP.

ECN (Electronic Communications Network)

The practical application of this term is that it is the component of our platform that allows our customers to directly interact with each other anonymously and post bids and offers at limits that reflect within our internal order book. These orders can be placed down to the tenth of a pip, thus cutting considerably into the spread.

In more specific terms, just like in the stock world with ARCA and ISLD, a Forex ECN allows client orders to see and execute against other customer orders anonymously. The benefit of having an ECN technology is that it eliminates the need to only fill orders against bank quotes which give our customers greater flexibility. For example, on our ECN, we allow our customers to place and execute orders against each other at increments down to the tenth of a pip. We often see STP platforms discussed as if they were ECN platforms. To be a true ECN, a platform must let customers show their own size in the system, make it visible to other customers, and allow those customers to hit those orders. This should facilitate “best execution”, be much smoother, and generates price competition.

Tax tips for traders

Know What You Trade to Avoid Tax Traps¹

The dynamics of the forex markets can be lucrative to skilled traders, but when income tax time rolls around, currency traders receive special treatment from the Internal Revenue Service, the subtleties of which can sometimes trip up the unsuspecting.

Here's a look at the tax landscape for forex traders, and why it may be a good idea to have a Traders Accounting tax professional help guide you through the twists and turns.

Futures and Cash Forex

Forex is traded in two ways: as currency futures on regulated commodities exchanges, which fall under the tax rules of IRC Section 1256 contracts, or as cash forex on the unregulated interbank market, which fall under the special rules of IRC Section 988. Many forex traders are active in both markets.

Because futures and cash forex are subject to different tax and accounting rules, it is important for forex traders to know which category each of their trades fall into so that each trade can be reported correctly to receive optimum tax advantage.

Section 1256: The Advantageous Split

Forex traders receive a significant tax advantage over securities traders under Section 1256: reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles) allows you to split your capital gains on Schedule D, with 60% taxed at the lower long-term capital gains rate (currently 15%) and 40% at the ordinary or short-term capital gains rate of up to 35%. That combined rate of 23% amounts to a 12% advantage over the ordinary (or short-term) rate.

If you trade exclusively in forex futures, it's smooth sailing come tax time; your trades fall under Section 1256 and automatically receive the 60/40 split.

But things get a little more complicated tax-wise if you dabble in cash forex, which is subject to Section 988 (Treatment of Certain Foreign Currency Transactions).

Section 988: To Opt Out or Not?

Section 988 was enacted as a way for the IRS to tax companies that earn income from fluctuations in foreign currency exchange rates as part of their normal course of business, such as buying foreign goods. Under this section, such gains or losses are reported and treated as interest income or expense for tax purposes, and do not receive the favorable 60/40 split.

Because forex futures do not trade in actual currencies, they do not fall under the special rules of Section 988. But as a currency trader, you are exposed daily to currency rate fluctuations, hence your trading activity would fall under the Section 988 provisions.

But because currency traders consider these fluctuations part of their capital assets in the normal course of business, the IRS enables you to opt out of Section 988, and thereby retain the favorable 60/40 split for these gains under Section 1256.

The IRS requires that you note "internally" your intention to opt out of Section 988 before making the trades; you are not required to notify the IRS. Obviously, some traders bend this rule based on their year-end outcome, and there seems little inclination on the part of the IRS to crack down, at least so far.

As a rule of thumb, if you have currency gains, you would benefit (reduce your tax on gains by 12 percent) by opting out of Section 988. If you have losses however, you may prefer to remain under Section 988's ordinary loss treatment rather than the less favorable treatment under Section 1256.

Tax Time: Tougher for Currency Traders

Forex futures traders tend to breeze through tax time; their brokerage firm sends them an IRS Form 1099, on which their aggregate profit or loss is listed on Line 9.

But since currency traders don't receive 1099s, you are left to find your own accounting and software solutions. Don't be tempted to simply lump your currency trades in with your Section 1256 activity, a common temptation; these trades need to be separated into Section 988 reporting, and in cases of loss, you could wind up paying more tax than necessary.

1. EFX Group does not offer tax advice. All information relating to taxes was obtained from Traders Accounting, Inc., 14040 N Cave Creek Rd, Suite 302, Phoenix, AZ 85022. As a fast-growing market segment, forex trading is almost certain to come under greater IRS scrutiny in the future. An experienced Traders Accounting tax professional can help you file in full compliance with IRS rules and make the most of your tax advantages. Call Traders Accounting at 800-938-9513 if you have questions or would like to discuss this in further detail.

forex risks

Trading off-exchange foreign currencies is a challenging and potentially profitable opportunity for educated and experienced investors. However, before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose.

There is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. Moreover, the leveraged nature of FX trading means that any market movement will have an effect on your deposited funds proportionally equal to the leverage factor. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin call within the time prescribed, your position will be liquidated and you will be responsible for any resulting losses. Investors may lower their exposure to risk by employing risk-reducing strategies such as 'stop-loss' or 'limit' orders.

There are also risks associated with utilizing an internet-based execution software application including, but not limited to, the failure of hardware or software. There is also a chance that communication lines go down.

The Forex Market is the largest and most liquid financial market in the world. Since macroeconomic forces are one of the main drivers of the value of currencies in the global economy, currencies tend to have the most identifiable trend patterns. Therefore, the Forex market is a very attractive market for active traders, and presumably where they should be the most successful. However, success has been limited mainly for the following reasons:

Many traders come with false expectations of the profit potential, and lack the discipline required for trading. Short term trading is not an amateur's game and is not the way most people will achieve quick riches. Simply because Forex trading may seem exotic or less familiar then traditional markets (i.e. equities, futures, etc.), it does not mean that the rules of finance and simple logic are suspended. One cannot hope to make extraordinary gains without taking extraordinary risks, and that means suffering inconsistent trading performance that often leads to large losses. Trading currencies is not easy, and many traders with years of experience still incur periodic losses. One must realize that trading takes time to master and there are absolutely no short cuts to this process.

The most enticing aspect of trading Forex is the high degree of leverage used. Leverage seems very attractive to those who are expecting to turn small amounts of money into large amounts in a short period of time. However, leverage is a double-edged sword. Just because one lot ($10,000) of currency only requires $100 as a minimum margin deposit, it does not mean that a trader with $1,000 in his account should be easily able to trade 10 lots. One lot is $10,000 and should be treated as a $100,000 investment and not the $1000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves (get in with a position that is too big for their portfolio), and as a consequence, often end up forced to exit a position at the wrong time

For example, if your account value is $10,000 and you place a trade for 1 lot, you are in effect, leveraging yourself 10 to 1, which is a very significant level of leverage. Most professional money managers will leverage no more then 3 or 4 times. Trading in small increments with protective stops on your positions will allow one the opportunity to be successful in Forex trading.