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Economic Importance
This global market, which is essentially interchange is the second market of the world in terms of overall volume, behind the interest rates. It is nevertheless the most concentrated and the first for the liquidity of the most treaties, such as the euro / dollar.

To give an idea of liquidity in circulation, the daily volume of trade in 2004, 1 900 billion U.S. dollar, namely:
600 billion in spot transactions and 1 300 billion in futures almost solely in transactions over the counter, according to the three-year study of the Bank for International Settlements (BIS).

Transaction volume, were 53% between banks;
33% between a bank and a fund manager or a non-bank financial institutions;
and finally to 14% between a bank and a non-financial.
In every major bank, the operators (the traders) are the 3 × 8, though generally in different locations. A team based in Asia or Australia succeeds another located in Europe and a third located in North America, and so on.

However, despite the global nature and the release schedule between continents, a large (31% of total volume, according to the BIS) of market activity is still physically located in London.

In its latest triennial review, the BIS (Bank of International Settlements) has shown that an increasing number of individuals choose to invest in the Forex. Although they still represent a very small minority of transactions and volumes, a dedicated private investors has grown in parallel. Simply record the number of trading platform available to them on the internet as well as tools for real-time information once reserved for professional traders in the rooms. Now, the active trader of foreign exchange market can invest minimum amounts and due to the existence of leverage-trader in almost (!) Similar to those of the professional trader. Information tools in real-time broadcast news and information forex fundamental (economic indicators) and offer individuals the possibility of trading conditions in real time.

The foreign exchange market has existed in its present form, called floating exchange rate regime since March 1973 and the abandonment of fixed exchange rates of various currencies
against the dollar standard Bretton Woods in 1944.

Treated products

Spot
Cash (called spot), the main parities were processed in 2004, according to BIS:

the euro / dollar – 28%
the dollar / yen – 17%
the sterling / dollar (cable said in English) – 14%
Despite the strong development of the euro, the dollar remains the dominant center, present in 89% of transactions (37% against the euro, 20% for the yen and 17% for the pound sterling, all on a total of 200% since each transaction involves two currencies). For a non-European currency XXX, a transaction between the euro and the currency is usually split into a EUR / USD and USD / XXX.

Change Term
The exchange term is divided into two products, both interbank term dry (it is said outright in English), rather little treaty, and foreign exchange swaps. Unlike other financial markets, futures held were never imposed on the foreign exchange market and remain marginal.

Options Exchange
Finally, the options market exchange is the most diverse and most inventive of the options markets. He is responsible for virtually all forms of so-called exotic options or second generation (barrier options, Asian options, options on options, etc..).

Trading and Foreign Exchange

Coverage (hedging)
The principle is to take opposite positions in order to cancel the risks.

Forecasting
This is to anticipate the movements of the market through a more or less advanced financial environment, economic and political. The advantage of anticipating the movements of foreign exchange speculation. For this, many information sources available to the forex trader (Reuters, Telerate, Bloomberg LP) to access to all quotes and financial information for trading. It also has access to economic indicators of major countries and global financial information. It is capable of forming an opinion on prices or rates and to anticipate future movements.

Arbitration
It is to try to take advantage of price discrepancies or occasional courses on the same medium, the same currency on 2 different markets. The diverter can perform these operations on a single market such as spot-on or several markets such as foreign exchange swaps. Powerful tools (called pricers) allowing it to calculate different prices or interest in a transaction arbitration. This strategy requires a response and stress management in real time from the trader.

Exchange Rates
Electronic exchange rate between monnaies.Le exchange rate of a currency (a currency) is the price (ie price) of that currency relative to another. Also referred to as the “parity of a currency.”

Exchange rates, listed on the exchange markets, vary continuously, they also vary depending on the place of listing.

Examples
For example, the exchange rate of the euro dollar will be noted: EUR / USD = 1.3120 and the dollar rate will be noted in yen USD / JPY = 89.4454.

(EUR = Euro, USD = U.S. dollar, yen JPY =, GBP = pound sterling by International Monetary coding, ISO 4217 distinguishing each currency by a three-letter abbreviation, cf. Complete list)

Exchange rate fixed or floating
This exchange rate of a currency is:
Either fixed, ie constant relative to a reference currency (usually the U.S. dollar or the euro), by decision of the State that issues that currency. The rate can not be amended by a decision of devaluation (or revaluation) of that State. A State may decide not to adopt any exchange rate of its currency. If the fixed exchange rate at a level too high or too low, the exchange rate could be “attacked” on the foreign exchange market. If monetary authorities are unable to cope (through their foreign exchange reserves), they should change their parity.

Is floating and determined for each transaction by the balance between supply and demand in the foreign exchange market. This is a global interbank currency, less centralized places specific quotation and trade, as based on links between banks.

The exchange rate:
is an “spot”, ie “spot” for immediate purchases and sales of currencies. Generally the deadline for delivery of foreign currency is less than 2 days.
is a course forward, “ie” forward “for foreign exchange transactions due to future, more than 2 days. The mission is to manage the risk. It is an agreement today to set the price at which we buy / sell the currency.

Factors affecting the exchange rate:
The exchange rate is determined by supply and demand of both currencies: if demand exceeds supply, the price increases.

Since the currency of a country is essentially a claim held on the central bank of this country, detention of a foreign currency can be seen as holding a claim to “view” on the country that has issued.

In the short term
The exchange rates vary widely during a single day, these variations can not be explained by the theory of Purchasing Power Parity (PPP) previously described. Within this framework of short-term analysis, it is necessary to refer to other explanations.

These daily changes based on the concept of early return of deposits in foreign currencies. Economic agents will determine their demand for different currencies depending on the return they expect deposits in these currencies.

In the long term
Recovery rate of euro-dollar exchange rate from January 1972 to January 1999 from the exchange rate of the franc french or Deutschemark. In the long term, currencies should theoretically be closer to equilibrium parities obtained from structural parameters. Imbalances and, more rarely, the balances in the valuation of currencies, are measured on the basis of purchasing power parities (PPP). It is a complex statistical exercise, which is to compare over time the purchasing power of a consumer model in a country and a range of consumer products up with another consumer-type in a different country and for a range of consumer goods desired close, but correspond to other local practices in terms of lifestyle and cost structure. In practice, generally the U.S. dollar as currency of the joint index and true each time compare the purchasing power of a consumer-type of country X and that of a typical American consumer.

The purchasing power parity, if it is useful for international comparisons of living standards, where margins of error of a few percent are not significant, its use in analysis of the foreign exchange market should be done with the utmost caution.

Currency crisis
A country will suffer a currency crisis when the capacity to repay external debt (public and private) denominated in foreign currency of the country is highly in doubt (crisis of confidence). The outflow of capital in the short term then drop the exchange rate of the currency, making repayment even more difficult.

Economic role of exchange rates
Exchange rates (and interest rates, which are closely related) are of course on import prices and export. They have an influence on the direction of capital flows between economic areas.

As a result, countries and economic areas may be tempted to influence exchange rates, often under the pretext of preventing speculation (in fact these manipulations tend to encourage), and in order to improve (lower rate).

Operation of foreign exchange markets

Case of the euro / dollar
The exchange rate says euro / dollar is the euro figures in U.S. dollars, hence the slash (not to be confused with Eurodollars).

Financial instrument is the most active and most addressed the world: 27% of total spot transactions. Its value is an indicator monitored not only by economic and financial circles, but also by the media, both specialized and general, throughout the world.

This definition is in fact, the external value of the euro against the U.S. dollar.

Profession (FX)
Those who conduct foreign exchange transactions are called professional traders.

Banks in particular have teams of traders, both to do the clean of these institutions on the market to meet the changing needs of their clients, for example on business, for their international trade. They act as market makers, ie that they “are prices” for a quantity is specified as standard, and provide both when they buy (bid, in English) and to whom they sell (ask in English), for example: 1 EUR = 1.2343 / 1.2346 USD.

Round lots
The traders expressed the unity of listing an exchange rate on a currency pair in dots called pips. Pip stands for “price interest point” or a “swap” in french. At the outset, as its name suggests, it meant the unit “off” or “report” of the exchange term, but eventually be applied to the unity of the market. It refers to the last decimal used: in the case of the euro, the fourth decimal place. A listing on three “pips,” which is standard on the interbank market of the euro / dollar, will in the first example (EUR / USD = 1.3120) of paragraph 1 above: EUR / USD = 1.3120 (bid ) / 1.3123 (ask). Is a spread of 3 pips in the case of the yen, it will be the second decimal, and a listing four “pips” will be, again to the above example, USD / JPY = 89.4454 (bid) / 89.4654 (ask ).

The pip represents a different percentage and not fixed for each parity. This difference depends on the currency in which we choose by convention to express the exchange rate (the “uncertain” of the comparison), the other being taken for unit of goods (the “certain”), the number of decimal listing.
These differences between the current “buyer” and “seller” of a currency against another are much less of an individual can see when they wish to conduct a foreign exchange transaction in a pharmacy exchange (or his bank) for a modest amount.

In the first instance, the percentage (minimum) to a foreign exchange on Forex of 100 000 euros (the standard transaction is not in the tens of millions), it should be noted that for such a pip amount exchanged is 10 dollars. In the second example, the percentage of a foreign exchange of 100 000 dollars a pip for that quantity is 1 000 yen (about $ 9).

Exchange rate mechanism European
The exchange rate mechanism in Europe, or ERM, is an exchange rate mechanism introduced by the European Community in 1979 to statibiliser prices of European currencies, to prevent risks and increase confidence in the currency in the medium and long term inflation and promote trade and activity in the intra-EU trade.

Originally named “European Monetary System,” it was considerably revised in its operation by the Maastricht Treaty was ratified in 1992 establishing the European Union, in preparation for its economic and monetary union and single currency.

Since the introduction of the euro on 1 January 1999, was revised and replaced by the ERM II and is an agreement between the ECOFIN Council, bringing together all member countries of the European Union, the European Central Bank and banks central banks of the Member States of the European Union outside the euro area.

ERM II
For Member States not participating in the European single currency, a second exchange rate mechanism in Europe, said ERM II, was put in place. During the negotiation of the Maastricht Treaty by the 12 EU members, and 3 new buyers (Finland, Sweden and Austria), it was expected that all members of the previous ERM and all new members join the Union must be in EMU (if eligible) or in ERM II. ERM has ended, but Sweden (despite his signing of the Treaty) and the United Kingdom (which has chosen to retire but was not allowed to do so) have not joined the ERM II. Such exemptions are no longer permitted for new candidate countries, who must first accept the convergence of their economies and participation in ERM II (and the EMU as soon as conditions are met) with a timetable set out in the Accession Treaty.

ERM II is based on the euro only, ie on the common unit of the only countries which joined the euro (and not on the ECU which was calculated on all currencies the European Union) and tolerates a difference of 15% around an initial exchange rate between the currency and the euro. This reduction of basis for determining rates of exchange from outside also should help stabilize and distribute the budget on a more equitable. However, this reduction of the base included a risk to the fixing of this budget, if insufficiently European countries joining the euro. This was not the case, and almost all countries of the European Union have all joined since the launch of the euro, which helped to end at the same time to the ECU and therefore also in ERM (at least formally, some financial institutions have continued to calculate until approximately 2001, as a index, but considering the weight of the euro in the old basket of currencies, although the composition of the euro has changed since then, and the methods of calculating contributions to the EU budget).

Since the introduction of the euro on 1 January 1999, the parity between the euro and the former national currencies of member countries joining the euro became fixed and irrevocable. Other countries have ratified the Treaty of Maastricht (or its successor) are committed to converge their economies in order to avoid economic distortions related to their exchange rate, not to resort to devaluation, let the market set the price of their currency in terms of their economic performance. To achieve to keep exchange rates stable around a pivot defined by membership in ERM II, the maximum fluctuation of ± 15%, they pursue a common policy of economic convergence criteria, and a healthy managing their public finances in the short and long term.

These criteria are assessed by the Council of Finance Ministers of the Union, ECOFIN, in collaboration with the European Central Bank and national central banks of EMU members. If the economic convergence criteria are met for a minimum period of 2 years, the participants receive the approval of the ECOFIN Council to enter the euro, and their national central banks (NCBs) can adhere to the ECB, and finally, when this integration is achieved (by the filing of the signatures of instruments of ratification and financial conditions, the approval of representatives of the NCBs and the money to convert, and the revenue guarantee funds deposited at the ECB), ECB fixed in accordance with the ECOFIN Council, the irrevocable conversion rate between their currency and the euro, taking into account the recent fixations official foreign exchange markets and adjustments based on the assets and international financial commitments of the NCB adhering to the day of closing.

All the countries aspiring to join the euro must first subscribe to the ERM II. This was the case for Greece in 2000 and 2001 before joining the euro. This is already the case of Estonia, Lithuania, Latvia, Malta and Cyprus, as well as in Slovakia since November 2005. By integrating the euro zone, Slovenia left the ERM II on 1 January 2007.

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Have a minimum of knowledge. (Forex Training), (Books on Trading):
Getting Started on Forex without knowledge, without training comes to play at the Casino and risk losing its entire capital. Trading rules are not complex, but one should know.

Develop strategies (Trading Rules by William Delbert Gann) (Dow Theory):
Using a demo account to develop a strategy and find your own style of trading, depending on your ability to manage stress, you choose to make the trading day by engaging a larger portion of your capital over a short or swing trading for the medium and long term. Traders winners that they will provide if the market behaves in a particular way while the losers are trying to predict what the market.

Always be informed (Economic Calendar):
The economic statistics may have a strong influence on the currency markets, stay alert to figures such as the unemployment rate, decisions on interest rates, gross domestic product, industrial production price index consumption, retail sales etc. ..

Set the Amount of loss prior to Intervene (Money Management):
Before opening a position to determine your target gains and losses up. Develop a method which allows to open positions that winning is impossible. It is therefore very important to keep these losses as small as possible

Secure your winnings:
Using a stop order or Trailing Stop following the evolution of the course.

Trader daily the same hours (Hours suitable for Trading):
The behavior of different pairs, the liquidity and volatility are changing depending on the time period and days of the week. Avoid trader at the opening or closing of the market.

Let run your winning positions and cut your losses:
The difference between a professional trader and a beginner will be more in the acceptance of loss. The sooner you learn to lose the faster you earn money.

Follow the trend:
Act against the market trend is suicidal, do not determine the future trend but follow the trend and identify the phase inversion. We must recognize the trend in the time interval where it operates.

Control your emotions (The psychology of traders):
Trading is a case of cold-blooded, big traders are successful because they control their emotions and act wisely.

The market is always right, not your ego:
After a series of losses or gains, stop your day trading not to take positions and not impulsive thought, take back and analyze your strategy.

Have enough capital:
The capital is the tool of the Trader. More capital you have, the more you can cope with the inevitable loss on forex.

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The ads would be very glossy, and it showed that the platform had hundreds, if not thousands of bells and whistles at its disposal. When you are a new trader, how could you not be impressed by that kind of stuff? But as you get more experienced in trading, the truth really starts to become clear, which is that none of that stuff is actually necessary.

This is why so many people struggle with forex trading . They are tricked into thinking that all these gadgets actually provide some kind of insight to the market. Nothing could be further from the truth.

As a matter of fact, they are interfering with you. They are blocking your view to the importance of price action. Truthfully, you could trade the market just by looking at a simple bar or candlestick chart.

You can just use one of the many free trading platforms that are available on the market, like Metatrader. There are dozens of brokers that offer free downloads to Metatrader charts.

Just pull up a basic bar and candlestick chart, and follow the price of your favorite currency pair, and eventually you will start to notice inherent support and resistance points in the market.

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These mistakes are in no order of importance, there all important.

1. Trusting Forex Robots and Expert Advisors.

If you think you will get rich with one of the above systems for a hundred dollars or so think again – if these systems made money, then a lot more traders would win. The fact is these systems, always lose money but the naïve or greedy trader will continue too buy them.

If you want to make money in any venture in life, you need to learn skills. You need to do your homework and get confidence in what you’re doing, that’s the way to success in Forex trading and always has been.

2. You Need different Skills in Forex Trading

Forex trading is simple and you only need a simple system to win – but many traders make the following errors which are rooted in their mindset, regarding normal behaviour in everyday society.

- Hard work Equals Success

In many jobs this is true but not in Forex. You only get rewarded for the accuracy of your trading signal and that’s it; it can take you 5 minutes or 5 hours but you are judged on solely on the profits you make.

- Being Clever is an Advantage

In many jobs in everyday life this is true but not in Forex trading, as the best systems are simple, complicate a system and try and be to clever and your system, will simply have too many elements to break.

People see computers make our lives easier in everyday life and assume this is true in Forex but it isn’t and that why, despite all the advances in technology over the last 50 years, the ratio of winners to losers remains the same at 95%, complexity and technology have not helped increase this ratio and never will.

- You Need to Trade in Isolation

In everyday life, we don’t want to be seen as loners and on our own. Man is a pack animal and since stone age times, has grouped together for survival but run with the pack in Forex and you will lose. The majority lose and you need to stand alone and have a different view to the majority.

3. Discipline is the Key to Success

Sure you can have a good method but if you don’t have the discipline to execute your method – you don’t have one! Discipline is hard because at some point you are going to face losses and you must hold your discipline and keep your losses small.

Most traders cannot accept this and run losses get angry frustrated or throw in the towel. If you want to win at Forex treading, you need to keep your emotions out of your trading and this comes from accepting, that you can’t win every trade and you have confidence in what you’re doing so you know you will ride out these periods and make big gains over time.

Now you know the Forex mistakes to avoid, you can get yourself a good Forex education
, get confidence and put yourself on the road to a great second or even life changing income – good luck!

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People think that there is something out there that will NEVER lose and you could become rich overnight just by trading it. Let me put an end to this right now. THERE IS NO HOLY GRAIL!!!

Sorry I didn’t meant to shout. But sometimes I get so frustrated with traders. They somehow feel like there is something that they can just slap on their charts that will unlock the key to the greatest secrets of technical trading. It’s absurd.

This is the reason why you have so much garbage being sold nowadays. If I had a dime for every magical indicator out there that will tell you exactly when to buy and sell, I’d have more money than Bill Gates.

This “holy grail” syndrome is exactly the reason why so many traders spend thousands of dollars on trading robots, that will essentially trade the markets for you. Does this not sound ridiculous to anybody else???

If the markets could be programmed, then why would anybody on wall street even go to work? They can just hit the “play” button on their trading robots and go to the beach instead.

Please don’t fall for anything that claims to be the holy grail. Better yet, just get the idea out of your mind. You’ll be a lot more successful in trading, once you put these ridiculous myths out of your head.

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The claims make by these systems is you are going to get a track record of gains which would make the true trading greats like Warren buffet, look average and all you pay is a couple of hundred dollars or less – it seems to good to true and it is.

These systems never present a track record of gains which have been verified by an independent source; you just get figures from the vendor or a meaningless, back tests across back data, knowing the closing prices ( not exactly hard!) and that doesn’t inspire confidence.

The fact is when you look behind the clever copy, catchy names and look at the systems trading algorithim, you see systems which have been made to fit past data in simulations and money management suffers as result. The systems soon get taught some respect by the markets and the trader, who was naïve to believe he would get the track record of a super trader, for a few hundred dollars ends up with a loss.

It’s a nice fantasy, doubling your money each month, while your robot works for you, as you have a beer, sleep or take the dog for a walk – but if Forex trading was a simple as these systems would lead you to believe, 95% of Forex traders wouldn’t lose money.

If you want to make money in any business in life, you need to do the basics and learn skills and Forex trading is the same but if you do make the effort and you have a desire to succeed, you can make a lot of money. So get yourself a decent Forex education and do your homework, you will be well rewarded for your efforts.

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Equity trades, simply put, are just stocks in regular companies that represent a share of ownership in the business. No fancy derivatives or options trading, just a basic slice of a company. An equity trader must know and understand these companies to make educated choices and usually tends to specialize in a few different sectors (like banking, pharmaceuticals or technology) in order to diversify their clients. It’s best to know a little bit about a whole lot of different areas, but that takes wisdom and experience to achieve. It doesn’t just happen overnight for an equity trader.

The life of an equity trader can be an early bird business depending on where they live. All life for equities begins when the NYSE opens at 9:30 a.m. EST. For the west coasters, that means in the office with the computer on before 6:30 a.m. The rest of the day is divided between researching financials and industry news from analysts and meeting with clients or potential clients to understand their financial planning needs. It’s not all fun and games to pick stocks like some of the TV pundits might bring you to believe. It takes a team of research to make informed choices.

While it may seem like it’s all lunches in fancy restaurants or golf outings in the afternoon, a lot of business happens before the sun even comes up for an equity trader. And, research is the key to success.

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FAP Turbo has been receiving praise from critics and users alike. For those who are not familiar with this program, basically this is an automated trade program which means that rather than you initiating the trades, it steps in and places trades on your behalf. It both makes use of mathematical algorithms to know when and what to trade effectively, as well as also following trades which it places for you to ensure that you stay on the winning side.

What makes FAP Turbo the best automated forex trading option is that it focuses entirely on lower risk/reward trades. Consequently it practically never loses on a trade because it never goes for the large but risky payout. Because of this, a better way to think of FAP Turbo than a get rich quick or overnight scheme is to think of it as a reliable way to bring in real income.

Critics praise automated trading like this because it completely eliminates guesswork and emotions from your trading because again each trade placed is done so entirely based on how the market fluctuates and nothing else. It’s also a great deal cheaper than hiring a full service broker but it does the same things without charging you fees or commissions, as you can get it for a one time charge of just over $100 with an 8 week full guarantee return policy which states that if FAP Turbo doesn’t make you the kind of money that you want, then you’ll get your money back in full. And very importantly is that you get this service 24/7 which is a major advantage to have considering the long hours and nature of the market.

I want to again note that FAP Turbo isn’t for anyone expecting to get rich overnight, nor is it a get rich quick scheme. But if you are interested in earning some realistic and reliable money which anyone can benefit from without having to learn everything or anything about the forex market, this can be an invaluable source of income, one which I continue to use religiously today.

If any aspect of this sounds too good to be true, please do not take my word for it and instead try it risk free for 60 days by clicking through this link for the best forex automated trade program known as FAP Turbo. Trade within the confines of a free practice account using virtual money to see it work before you invest any real money to make the entire transaction completely risk free. You won’t be disappointed.

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When dealing with leverage, you must make it work for you and that means cutting your losses and running your profits. All the great football teams have great defense and they know if they don’t concede points, there offense will get the chances to win the game and it’s the same in Forex.

Lose 50% and you have to make 100%, just to break even and the moral is:

If you lose money, you have to work even harder to get it back so let’s look at how to keep your equity intact.

1. All Trades are Equal in terms of Risk

Never make the mistake of calculating your target minus your stop as your risk reward! This is just an opinion and in terms of money management always assume the worst and things can only get better. All trades are the same in there potential to lose money.

On risk per trade you will hear a lot of people tell you that you should only risk 2% but on small account you need to risk more so do 5 – 10% and also don’t diversify, do one trade at a time.

2. Trade Breakouts

Breakout trading, means buying new breaks to chart highs and lows all trades start and continue from these breaks, good breakouts offer the best risk to reward in Forex trading. Your stop, is simply behind the breakout point, so it’s tight and on the best breakouts, you see huge moves so you have great risk to reward.

3. Place Stops Outside of Random Volatility

A key mistake by many traders is to place there stops inside random volatility and day traders do it and lose. Why do they lose? Because all volatility in daily time frames is random so you may as well flip a coin. Focus on the bigger trends and bigger profits so your stop can be further away but the odds of a triple digit gain are higher.

To make money you need to give the market room to breathe so don’t try and restrict risk so much you create it – its no point in having a stop close, if its odds on to be hit.

4. Do a 50 – 50

This is my favourite money management trick. We all know the big trends last for weeks, months or years but it’s very hard to sit on a long term trend as they always recoil back into open equity profit and eat it. Try this, as soon as the market moves to over bought in a bull trend bank 50% and leave 50% in the market. Then wait for the next breakout or pullback to support, to put the other 50% back in and keep doing it.

This keeps you in the trend and if you do it correctly, you can milk the trend for more money and cushion your core equity at the same time.

All the above Forex money management tips are easy to do and not only will they help you protect your equity, they will help you make bigger overall profits.

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