How important are technical indicators?

In earlier posts (January 5th, 6th, 8th) we mentioned the two types of analysis that we use to predict currency movements - Technical Analysis and Fundamental Analysis. We said that you can use either or both. However you have to remember that neither is a magic bullet. They are tools that you need to keep as part of your personal trading tool kit. For instance, we said technical analysis is one of the most reliable ways of predicting price movements, and it is. But you have to learn to use technical indicators in the context of the market.

For instance, the usual advice is : don't use technical indicators to go against a trend. Look at the prices. If the EUR/USD is at 1.3443, then goes to 1.3440, then 1.3333, then 1.3329, you can see the market is in a down trend. In this context, indicators showing what the market will do next or what it SHOULD do are of no use. You must stay with the trend. To work out the price action of a currency pair, you have to be concerned with what the market IS doing, not what it MIGHT do. Look at the prices to tell you.

Having said this, there is one Forex trading system that has a unique way of teaching you how to trade AGAINST the trend under certain circumstances - that is the 5EMAS Forex trading system. By doing this you have a great chance of making a profit - IF you do it right. Of course if you don't do it exactly right you will lose badly. So look at the 5EMAS system to find a great way of trading Forex and getting one up on your competition!

And there is lots more to learn at http://www.bizwrite.co.uk/Forex/forexindex.html

5EMAS Forex System - some more good points

If you have had any experience at all of the Forex market, you know how extremely volatile it is. There can be huge price swings literally within a few minutes - because currency prices reflect what is going on in the "real world"!
The 5EMAS Forex system takes advantage of these price swings MORE THAN ANY OTHER SYSTEM does. It teaches you how to profit directly from the price swings, PLUS it is able to identify the trades with the highest profit potential.
As you know you can't make a profit in Forex trading without a method of predicting currency movements. Most Forex training systems teach you methods of analysis to help you predict market movements, but the 5EMAS system has its own secret method of predicting currency movements, which it will teach you. This alone is worth many times the price of purchasing the package because it virtually guarantees you will make a profit.
Have a look at the 5EMAS System and see for yourself what it can do for you. And if you want to find out more about Forex trading generally, visit
http://www.bizwrite.co.uk/Forex/forexindex.html

How do I decide if a currency will go up or down?

In the last couple of posts I mentioned using Technical Analysis and/or Fundamental Analysis to decide if a currency pair is likely to go up or down.

I said "and/or" because the two are not mutually exclusive. The majority of those who are successful in Forex trading make use of both types of analysis. However, there are some who much prefer technical analysis, while others are big supporters of Fundamental analysis.

Technical analysis is a method of predicting price movements and future market trends by using charts to identify what has already happened. It is concerned with actual price movements, not the reasons for them. Fundamental analysis uses more wide-ranging factors such as political or environmental events, or anything in the country concerned that could have an effect on currency movements.

Technical analysis is without doubt the easiest and most precise method of foreign exchange trading. It is based on three principles:
1. The price of a currency already reflects everything that is known to the market that could affect it.
2. Prices move in trends, so analysing the patterns of current behavior is very effective.
3. Patterns repeat themselves.

If you get into Forex trading with the 5EMAS system, which I consider is the best way to do it, you will learn how to do both types of analysis. You will soon find out which one you prefer, or whether you are happy with both. But you can't do Forex trading without at least one of them! Take a look at 5EMAS if you haven't already - you will have to take the plunge some time.

And learn more about Forex trading at http://www.bizwrite.co.uk/Forex/forexindex.html

Making a profit on Forex - a selling trade

Yesterday we traced exactly what happens when you make a BUYING trade in Forex trading ("going long"). Today we will turn it the other way round and look at a SELLING trade - "going short".

You take a SELL position, or go short, on a currency pair if you believe EITHER that the base currency will fall against the quote currency, OR that the quote currency will rise against the base currency. You use your methods of Technical Analysis and/or Fundamental Analysis to come to this conclusion.

Take the Currency Pair USD/JPY. You see that the price at this particular moment is:
USD/JPY 104.41/104.45
This means that at this moment you can sell 1 US dollar for 104.411 Japanese Yen or buy 1 US dollar for 104.45 Yen.

Because you believe that the dollar is going to fall against the Yen, you take a SELL position. You might sell $100.000 USD, simultaneously buying 10,410,000 Yen. At a 1:100 margin, your initial margin deposit would be only $1000.

Then you wait for the dollar price to fall. As you expected, the USD/JPY pair falls to 103.41/103.45. This means you can now buy 1 USD for 103.45 Yen and sell 1 USD for 103.41 Yen. You now buy dollars and sell back your Yen to make your profit. If you buy $100,000 USD at the current rate of 103.45, it now costs you 10,345,000 Yen. Since you bought 10,410,000 Yen, you have made a profit of 65,000 Yen. Use the currency exchange to see what this is in dollars.

Can you see how exciting this can get? With the 5EMAS Forex System's unique step-by-step tuition, you are guided to the trades that are most likely to make you a profit. You can make substantial profits in quite a short time after starting trading, and become hooked into the bargain! Go to 5EMAS for more information.

And to learn more about Forex trading in general, visit
http://www.bizwrite.co.uk/Forex/forexindex.html

Making a profit on the Forex market

Obviously, you are in Forex trading in order to make a profit!

The simplest way to look at it is, that you enter the market as EITHER a "buy position", or "going long" or in a "long trade"

OR a "sell position", or "going short", or in a "short trade".

For instance, suppose you have been using Technical Analysis and/or Fundamental Analysis to conclude that the Euro is going to rise against the US dollar. So you want to BUY the EUR/USD pair - that means, you simultaneously buy euros, which in this pair are the base currency, and sell dollars. So when you enter the market, you may see that the pair is trading at:

EUR/USD: 1.4322/25

The price to the left of the stroke is the "bid price" - what you obtain in USD when you sell one Euro. The sum to the right of the stroke is the "ask price" - what you pay in USD if you buy Euro.

As you have concluded that the Euro is going to go higher against the dollar, you want to enter a BUY Position or a LONG TRADE. Suppose you buy one lot at 1.4325. Assuming you are right and the price goes higher, you can sell it back at a higher price and bingo! you've made a profit!

Tomorrow we will do an illustration of a "sell position" or a "short trade". But I hope you are beginning to see that there is absolutely no reason why you can't make money in Forex trading. Make a start with a highly recommended system like the 5EMAS Forex System and believe me you will very soon find out just how exciting it can get!

Find out more at http://www.bizwrite.co.uk/Forex/forexindex.html

More again about trading currencies in Forex

Currencies are traded on a price interest point (pip) system. Each currency pair has its own pip value. Since we have a listed currency PAIR (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a FOREX price quote, you'll see something listed like this:
USD/JPY: 118:46/51
The first bit (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.46. The second bit (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.51. The difference between the bid and the ask price is referred to as the spread (how brokers REALLY allow you to trade commission-free). In the example above, the spread is 0.05, or 5 pips.

Sometimes you won't see a two-sided quote, consisting of a 'bid' and 'offer'. But, rather, you'll see something like:
USD/JPY: 123.50
When you see a Forex currency pair price quote, like the one above, just remember that the last digit of the price is referred to as the *pip*. So if you see a quote (123.50)and then a quote in one minute of (123.51), the price rose 1 pip. Similarly, if you see a price quote of 187.50 and then after 5 minutes it's (187.58), the price rose 8 pips. The pip is always the last decimal place of the currency price quote.

Your goal in Forex trading is to capture as many profitable pips as possible.

Since the US dollar is the centerpiece of the Forex market, it is normally considered the 'base' currency for quotes. In the "Majors" (this includes USD/JPY, USD/CHF and USD/CAD) and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. In the example above, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen. When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote above increases to 124.01, the dollar is stronger because it will now buy more yen than before. The three exceptions to this rule are the British pound(GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars. In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar. In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but it works exactly the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

I hope this will help you if you are unsure about Forex trading works. The more you get into it the more familiar with the terminology you become and the easier you find it! Of course it works the same whichever Forex trading system you are using. But if you are using the
5EMAS Forex System you will find you are at a big advantage, because it tells you EXACTLY what to do step-by-step, to have the best chance of making a profit! So do have a look at the 5EMAS system and see what you think. And find out more about Forex trading from
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More about how currencies are traded in Forex

Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded.

Here are some of the common symbols used in the Forex: USD - The US Dollar; EUR - The currency of the European Union "EURO"; GBP - The British Pound; JPy - The Japanese Yen; CHF - The Swiss Franc; AUD - The Australian Dollar; CAD - The Canadian Dollar. There are symbols for other currencies as well, but these are the most commonly traded ones.

A currency can never be traded by itself. So you can't ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible. Some of the common pairs are:
EUR/USD Euro / US Dollar"Euro"
USD/JPY US Dollar / Japanese Yen"Dollar Yen"
GBP/USD British Pound / US Dollar"Cable"
USD/CAD US Dollar / Canadian Dollar"Dollar Canada"
AUD/USD Australian Dollar/US Dollar"Aussie Dollar"
USD/CHF US Dollar / Swiss Franc"Swissy"
EUR/JPY Euro / Japanese Yen"Euro Yen"

The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / - however you want to see it) is called the base currency. The denominator (bottom of the fraction or "right" of the/ - however you want to see it) is called the counter currency. When you place an order to buy the EUR/USD, for instance,you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did to base currency with the counter currency.

If this seems confusing don't worry. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. (You only need to be aware of the base/counter concept for Fundamental Analysis reasons - i.e. using various factors to predict currency movements.)

If you are using the 5EMAS Forex system you have even less reason to worry, as the e-book will guide you through all the initial steps and explain the terms. They will then guide you to placing a trade using their unique system. So give the 5EMAS Forex system a try and once you find you are making profits, you'll get hooked like the rest of us!

Plus you can learn more at http://www.bizwrite.co.uk/Forex/forexindex.html