The Best Time to Day Trade the Forex Market

By: Cynthia Macy

The three major forex trading 'sessions' are as follows (all in Eastern Standard Time):

1. New York open 7:00 AM to 4:00 PM
2. Japanese/Australian open 7:00 PM to 3:00 AM
3. London open 3:00 AM to 11:00 AM

** Often, the best times to trade is at the beginning 3-5 hours of the above mentioned opening times, because the major currency pairs tend to move the most in a particular direction. Especially when there are economic news releases.

THE ABSOLUTE BEST TIME TO TRADE IS FROM 3 AM TO 11 AM EST.

The New York and London trading sessions overlap between 7 and 11 am EST. The volatility is much higher and trading opportunities are much more frequent with bigger moves, especially in these four hours.

The currency pair that moves the most during these hours are the Usd/Chf (#1), then the Gbp/Usd, then the Eur/Usd, then the Usd/Jpy.

This is when you can make 30-100 pips trading in just a few minutes or hours, using any of our strategies in any time frame, especially around news releases.

If you need help in converting EST time zone to your time zone, please use this world time zone converter:

http://www.worldtimezone.com OR
http://timeanddate.com/worldclock

DAILY FORECAST WEBSITES

First thing in the morning, I go to http://www.fxstreet.com to check out some forecasts and news release times for the day. I always check before I start trading and I write down the support/resistance, trend, trading range, target highs & lows, news release times, etc. on my Daily Trading Sheet, which is provided in the Day Trade Forex Advanced course.

This is an interesting forecast site that I also like:

http://www.fxstreet.com/nou/content/107780/content.asp?menu=technicalanalysis

Another place to find out when the world economic news releases are: http://www.forexnews.com and scroll down to the bottom of the website for the list of the current week news releases that impact the Forex markets.

Most often, the economic news release is scheduled for 8:30 AM EST. If you are in a trade at this time, make sure you have your stop loss at a place you are happy with.
The volatility is scary and fast, but if you aren't already in a trade, you can jump in once you see the major trend, usually after the first 5-15 minutes. Look at a 30 min chart to see the major trend.

IMPORTANT NOTE: Most of the forex brokerages have now stopped guaranteeing their stops during fundamental news release times, as the volatility is so extreme, that the price can often move faster than their servers can keep up with. Thus, please be very aware that getting into and out of a trade when you want, can sometimes be next to impossible. You can possibly encounter several things during news release times: whipsaw of the price, slippage, freezing of the platform, disconnects, re-quotes of price, loss of money, etc. Don't bother calling up any dealing desk to complain, as they are all now distancing themselves from this problem, and they all have a disclaimer on their websites. It is a buyer-beware type of situation. If you choose to play the news, you have to be aware of it's risks. The rewards can be very great in just a few minutes, or it can go against you. Make sure that you immediately put in your stop.

EU Stimulus No Help to Euro

The European Union has unveiled an economic stimulus package to match the US, as the two economies continue to mirror each other's strategies for fighting the credit crisis. Given the evident lack of effectiveness of the US plan, it is no surprise that analysts reacted pessimistically to the policy proposal. At this point, investors and consumers alike appear resigned to the inevitability of economic recession in both economies. In other words, there isn't much that government can achieve, as their respective efforts will certainly be undermined by increased saving. Besides, investors (including currency traders) remain focused on the financial aspects of the credit crisis, rather than the economic aspects. Accordingly, the theme of risk aversion continues to dominate, as part of a trend that favors the Dollar. Reuters reports:

Analysts said that the plan marked a step in the right direction, but uncertainty about its efficacy, and general concerns about a deep slowdown in the global economy were keeping investors in the mood to sell risky assets.

Read More: EU stimulus package raises concerns

US Bailout Highly Inflationary

The Treasury Department's most recent attempt to stabilize credit markets involves an injection of $800 Billion into the banking sector. According to one estimate, the total amount of Federal money committed so far (in the form of investments, guarantees, and loans) now exceeds $7 Trillion, and shows no signs of abating. In theory, the possibility exists that such investments could prove profitable, in which case the bailout wouldn't end up costing taxpayers a cent. In all likelihood however, a significant portion of these investments will have to be written off, causing a net increase of trillions of dollars to the money supply. In the long-term, this is certain to be highly inflationary. It seems currency traders have finally begun to take note of this inevitability, and the Dollar rally has stalled accordingly. The New York Times reports:

The Federal Reserve and the Treasury... [are] sending a message that they would print as much money as needed to revive the nation’s crippled banking system.

Read More: U.S. Details $800 Billion Loan Plans

Currency Pegs back in Style

Having endured years of abuse from free-market advocates and the International Monetary Fund, fixed exchange rate regimes are officially back in vogue. This is because the sole currencies not to have been affected by the recent surge in forex volatility are those that are pegged to the US Dollar, namely the Chinese Yuan and Hong Kong Dollar. Both countries have stood by calmly as other emerging market economies have witnessed speculators lay waste to their currencies, driving them down by 5% or more per day. Fortunately, both HK and China have significant stockpiles of foreign exchange reserves, which virtually eliminates any possibility of a speculative attack. Iceland, meanwhile, was forced to abandon a half-hearted attempt at a currency peg when it ran out of cash to defend it. Of course, a fixed currency can also be a disadvantage, as exports may become expensive relative to competitors that experience declines in their currencies. Given the current economic climate, however, it seems HK is happy to give up this potential upside in favor of stability. The Wall Street Journal reports:

Like Japan, Hong Kong was a source of funds for the carry-trade. Turbulent markets have taken that strategy apart, and investors who borrowed in Hong Kong are pulling money back into the territory at a rapid clip.

Read More: Hong Kong Loves Its Currency Peg

Free Online Forex Trading Courses

by: Ricky Lim

Over recent years online Forex trading has now become big business and certainly in the financial sector this is the biggest market of all in the world. The reason why this market has grown compared to the many other financial markets is because of the rise in the number of traders working online rather than using the more traditional method of trading by using the phone. Because of this increase there are a number of sites which are now offering to people the chance of learning about this through taking free online Forex trading courses.

However as with a lot of things in life today sometimes the best things in life are not for free and certainly the same could be said for many of these courses. When you are considering taking an online forex trading course, there are a number of things that you will need to take into consideration.

1. Who is offering this course?
2. Just why is it they are offering to provide you with a book to learn about Forex trading for free?
3. Are they actually offering this course because they are promoting a particular trading site and then want you to enroll on it?
4. Once you begin to read the book do you find that they are being extremely pushy when it comes to actually getting you to use a particular website to invest your money in?

The answers that you provide to the above questions will help to show you just how honest the information being provided to you for free is.

One way of discovering if the free online forex trading course that you are looking at is of the highest standard is by looking at how much of the information contained within it is replicated elsewhere. You will soon learn that a lot of the information you find in some of the free online forex trading course books can easily be found when you search the net.

So rather than using these books or courses to teach you how to trade on the Forex market instead use the advice and articles about the subject that are being offered on other sites. Plus why not join one of the many forums that have been set up and discuss your issues with some of the people here. They are people who have been trading on the Forex market for some time and will often offer you the best advice when it comes to finding a suitable course for learning about Forex trading.

Certainly the better free online Forex trading courses are those that do not limit themselves to telling you about how one company trades. Rather it should be providing you with views of all the sites that are available and which are run by established companies. Any such courses should be prepared to provide you with everything that you need to know about the world of Forex trading and not restrict you to using the services of just one or the abilities of one company.

Six Forex Trading Tips for Newbies

by: Gerald Njuguna

You have decided to be a trader in the forex market, and you have no idea on how to begin. Let's first start by defining what the forex market is and what it does.

The term "forex", also known as the foreign exchange is a market for the sale and purchase of all kinds of currencies. It originated in the early 1970's when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the ones who set the value of one type of currency against another.

Nowadays, the market forces determine the value of a currency against another. One unique aspect of the Forex market is that very little trading qualifications are required of anyone intending to trade therein.

Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency.

In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

1. The first thing you need to do is open a forex account. You will have to fill an application form which includes a margin agreement stating if the broker will be allowed to intervene with any trade when it appears too risky. Since most trades are done using the broker's money, it is only logical that he protect his interests. However, once you have established an account, you can fund it and begin trading in the forex market.

2. Adopt a trading strategy, that has proven to be successful for you. Remember that strategies will work differently for different traders, so don't try to adopt a strategy that works well for another trader. It might backfire on you. The two available approaches are either technical analysis or fundamental analysis. A combination of the two is a more preferred choice for experienced traders.

3.Understand that prices move by trends. Forex has a popular saying, “The trend is your friend.” There are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie’s will look to trade in any direction, when they should be trading with a trend.

4. Ensure you know which are the top five currencies pairs in the foreign exchange. These are USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

5. For newbies, it is advisable to maintain two accounts to ensure you learn to play the trading game. Keep one real account, one that you will actually use to trade real money; and the second account should be a demo, one that you can use to test alternative moves in the trading game. You can easily use your demo account to shadow the trades in your real account so you can widen your stops to see if you are being too conservative or not.

6. Always examine the one hour, four hour and daily charts that concern your trades. Although you can trade at 15 and 30 minute time intervals, doing so requires a handful of dexterity.

How To Choose a Forex Trading System That Works and Suits You

by: Bret Freak


There are so many different trading systems you could use to trade the forex market, some better suited to certain people than others. For example some people may find it easier to comprehend and take into account fundamental factors as opposed to looking at a screen covered in technical indicators, and vice-versa.

The first logical step in determining what type of trading system would best suit you is actually being aware and understand the widely known methods of analysis used in trading the currency market. Once you are aware of the tools that are available, you can generally tell what type of analysis suits you. For example some of the main technical analysis methods which are popular include:

Pivot points

Chart patterns

Fibonacci retracements

Candlestick patterns

And some fundamental factors which are widely used include analyzing:

Interest rates

Trade balances

Unemployment rates

Gross domestic product (GDP)

You may now actually be able to develop your own system by combining certain methods of analysis together, giving you a method which you are comfortable with. On the other hand you may decide that you would like to trade someone else’s system, either way, that brings us to the next step which is determining the profitability of a trading system.

Determining Profitability

Most people would think that back testing is the best way to determine a systems profitability. However back testing doesn’t always give you a true idea of how profitable a system is. The reason for this is because when you’re back testing your system on historical charts, you are only seeing the obvious setups which have occurred, and not always seeing the ones that are less obvious. These less obvious ones sometimes can produce losses, which is why back testing isn’t always the best method to implement.

A better method of determining profitability is by trading your system in real-time with a demo account. This would give you a true understanding of what your system is capable of. This would also allow you to familiarize yourself with your trading platform at the same time. When determining profitability you must look at it in terms of expectancy and opportunity.

Expectancy & Opportunity

These two factors together will be able to tell you what you could expect to make over a period of time. Expectancy is calculated with the following formula:

(Probability of winning × average win) – (Probability of losing × average loss)

This will give you a figure which is the average amount you can expect to make per trade. This shouldn’t be a negative amount, if it is you should look at some other method of trading since you cannot make money on a system that produces a negative expectancy. Obviously the higher this figure is the better. Now to the opportunity factor.

The opportunity factor is how often you are able to trade using your system. By multiplying your expectancy figure with your opportunity factor it will tell you how much you could expect to make over a period of time. The more opportunity you have to trade, the more money you should expect to make. This now brings us to the last component of a trading system, money management.

Money Management

Without proper money management you will end up as a statistic. In other words one of those 90%+ of traders who loose their money. Money management tells you how much of your account balance to risk per trade. The whole point of money management is to ensure your survival over the long term, and to preserve your capital.

The most common form of money management is the percent risk model which tells you not to risk more than x percent of your account balance on any one trade. A range between 1-3% is generally an accepted amount which has been a reliable percentage to use in order to make money in the long term.

Conclusion

By taking into consideration the above factors you will be able to determine if a trading system best suits you, and with some simple mathematical calculations you will be able to determine its profitability.

Currency Exchange Terms Every Forex Trader Should Know

by: Andrew Daigle

Before jumping into the forex market, you need to arm yourself with some terminology that will be used in any course or software on this subject. The following set of terms were put together with the idea of providing the novice forex trader with the fundamental concepts of the forex trading business. While they sound technical, most are easy to understand and apply.

Let us begin with the instruments that are traded in the forex markets. Currencies are traded in pairs so the instrument will always be in this double denomination. The reason for this is simple; the basis of forex currency trading is to exchange one currency for another. So if the pair is the Euro and the US Dollar, and the forex trader is taking a long position or buying the Euro in hopes that it will appreciate, effectively the trader is also selling US Dollars to buy the Euros. The most widely traded pairs are the Great Britain Pound and the US Dollar (indicated as GBP/USD), the Euro and the US Dollar (the EUR/USD pair), the Aussie Dollar and the US Dollar (AUD/USD pair), the USD and the Japanese Yen (USD/JPY pair), and the Canadian Dollar and the USD (USD/CAD pair). These pairs account for well over 80% of the total volume of the trading in the forex market. The advantage to trading in these currency pairs is that they are highly liquid and allow the investor to convert their portfolio to cash very quickly to realize a profit.

In every pair, the first currency is called the base currency, over which the second one is countered to imply the price of the pair, or commonly referred to as the "cross currency". The second is therefore called the quote currency and the pair price is recorded in terms of the units of the quote currency required to buy one unit of the base currency. Thus, assuming the price of the GBP/USD pair is 1.5, this implies that 1.5 USD will buy 1 GBP.

Every pair is quoted in terms of a bid ask spread. The bid price is the rate at which your forex broker bids to buy the currency at, while the ask price is the rate the forex broker is asking to sell the currency to the forex trader. The bid price will always be less than the ask price and the forex trader will buy at the ask price and sell at the bid price. The bid ask price will be quoted as: GBP/USD 1.532/5, meaning the bid price is 1.532 and the ask price is 1.535.

A pip price interest point), as it is commonly called, is the smallest incremental change a currency pair will experience, for instance, a change in the GBP/USD price from 1.532 to 1.542 is a change of 10 pips. A trading margin is a deposit which is a minimum amount or a small percentage of your traded amount that you have to put up. The remaining amount is supplied by your broker. This amount can vary from 1% to 0.25%, also referred to as 100:1 and 400:1. Most often, forex brokers will offer 100:1 or 200:1 to most clients. This is risky but enables the trader to leverage a large amount that he or she would not otherwise have access to.

Finally, a margin call can happen when the forex trader allows the balance in the trading account to go below the margin deposit percentage agreed upon with the forex broker. The broker will automatically sell your long positions or buy your short positions and clear the entire trading account, returning the margin amount to the trader to protect the trader from losing more money than they have.

Forex Trading: Learn How To Read A Forex Quote

by: Gregory DeVictor

Forex is an abbreviated name for "foreign exchange." The Forex market is a non-stop cash market where the currencies of nations are bought and sold, typically via brokers. For example, you buy Euros, paying with U.S. Dollars, or you sell Euros 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 often result from economic and political factors, such as the price of oil or political unrest. To better understand how the exchange rate can affect the value of your Forex investment, this article shows you how to read a Forex quote.

Forex quotes are always expressed in pairs. In the following example, your "pair" of currencies are the U.S. Dollar (USD) and the Euro (EUR). The Forex quote, USD/EUR = 265.50, means that one U.S. dollar is equal to 265.50 Euros. The currency to the left of the / (USD in this case) is referred to as base currency and its value is always 1. The currency to the right of the / (EUR in this case) is referred to as the counter currency. In this example, one USD can buy 265.50 EUR, since it is the stronger of the two currencies.

Because the U.S. dollar is regarded as the central currency of the Forex market, it is always treated as the base currency in any Forex quote where it is one of the pairs. Incidentally, the U.S. Dollar is involved in nearly 90% of all Forex transactions.

In this example, your "pair" of currencies are the Japanese Yen (JPY) and the Euro (EUR). The Forex quote, JPY/EUR= 175.10, means that one Japanese Yen is equal to 175.10 Euros. The currency to the left of the / (JPY in this case) is referred to as base currency and its value is 1. The currency to the right of the / (EUR in this case) is referred to as the counter currency. In this example, one JPY can buy 175.10 EUR, since it is the stronger of the two currencies.

The goal of any Forex trading system is to profit from foreign currency movements. This requires adequate training in basic Forex principles, such as performing a Technical Analysis, using Forex charts and Stop/Loss tools, and keeping up-to-date with economic and political events. In a sense, Forex training never ends.

Forex Currency Trading Systems

by: Andrew Daigle

While the market is swamped with websites and books offering advice on the ‘best' and ‘newest' forex currency trading systems, it is important to do a thorough check of the system to ensure that it really works. There are a large number of such forex trading systems that are completely fraudulent or simply do not work, and have been created with the sole intention of making a quick buck. But despite this, there are plenty of forex currency trading systems out there that do work and can be quite reliable if used in a disciplined and consistent manner.

Everyone is looking for a forex trading system that works and gives them high and continuous profitability over a period of time. One must be realistic in searching for a good system, and keep in mind some essential factors when selecting a forex trading system. Firstly, it is critical to fully understand the logic on which the trading system is based. Only a complete understanding will enable you to use the system effectively over a long period of time. Not only grasping the basic logic, but also agreeing with the forex trading system it is important. The forex trading system of your choice must seem logical and intuitive to you or else you will find it impossible to stick with it.

Secondly, you should embrace a good forex currency trading system for the long term, and put in the appropriate amount of research and trial based on this idea. A solid system will tap in to long term patterns and the potential for sustained success of any system in the short term is negligible. Thirdly, be ready for a hit. Be financially prepared for a downturn and based on the assumption that at some point you will face this event, plan for your staying-afloat strategy. Emotionally and money-wise, be ready for the big one when it comes.

When you commit to a forex currency trading system, ensure that you give the system adequate time to start showing profitability. This may be not be months, but possibly years, since every system experiences a time when it produces losses or lowered returns. Give your selected system a fair trial and try to trade consistently and logically. Additionally, some systems will not offer real trading data, but will be simulations that are based on a particular logic and work with historical data. As long as the logic is solid, there is no reason to reject these systems outright.

The simplest forex trading systems tend to work most effectively in a rapidly shifting market place. Just because a system seems complicated, there is no reason to think that it will perform better. Pick something user friendly and intuitive that appeals to you. Identify the major trends that affect a currency and select a forex trading system that works in tandem with it. Finally, a cardinal rule of the trade: Always use on a trading system that is disciplined and rational. Do not be swayed by emotions. This has spelled the downfall of some of the most influential and successful forex traders, including the pros, and must be avoided at all costs. While it may seem unlikely to you now, once you are in the midst of your forex trading experience, you will find it easy to be moved by your emotions.

The biggest advantage of a forex trading system is that it works completely without emotions and if it can be followed mechanically, it will be the key towards a long term profitable career in forex trading.

Why Trade the FOREX?

by: Susan Walker

My purpose for writing this article is to demonstrate to you the advantages of trading on the FOREX market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote “If It Doesn’t Go Up, Don’t Buy It”. He said “Everyone who invests is a trader, only the time period is different.” It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, let’s compare features of currency trading to those of stock and commodity trading.

Liquidity - The FOREX market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times – The FOREX market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage – Depending on your FOREX account size, your leverage may be 100:1, although there are FOREX brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the FOREX market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.

Trading costs – Transaction costs in the FOREX market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment – You can open a FOREX trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.

Focus – 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

Trade execution – In the FOREX market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the FOREX market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

Forex Currency Trading, A Great Work At Home Opportunity.

by: Adrian Pablo

Everyday more and more people looking for a work at home opportunity and the possibility of braking free from the corporate world without losing their current lifestyle and even improving it, realize that the world of forex currency trading could be the answer to what they have been looking for.

Some of the great reasons why FOREX trading is such a great way of entering the capital markets are; it's easy accessibility thanks to the widespread use of the internet, the fact that currency trading is all commission-free and also the low transaction costs involved. All the best forex brokers will facilitate you a trading account with these characteristics and even Mini Forex traders (i.e., traders starting with accounts having a capital as low as $250), who are just starting in this field, can buy and sell currencies online always commission-free.

When trading the forex markets you don't have to worry everyday about fees you may have to pay your broker; there are also none of the usual fees to which futures and equity traders are used to pay every day the enter a trade; no exchange or clearing fees, no NFA or SEC fees.

You may be asking how forex brokers make money if they don't charge you fees for placing trades. They make money thanks to one characteristic of currency markets, this is, they are over-the-counter markets and trading them involves a bid/ask spread and that's how the brokers make money. Thankfully the currency markets are capable of offering you a round-the-clock liquidity and this way you will receive tight, competitive spreads both in intra-day and night trades, without worrying about having big spreads in prices.

Once you have decided to enter and learn how to trade forex, always remember that practice and more practice makes the master and one of the best ways to get a feel for the market is to paper trade. No one wants to experiment with their own hard earned money; this is why many brokers came up with an innovative idea that would take all the risk from trying out forex trading. This way of trading is called simulation trading or paper trading as mentioned above, and the premise is simple. The program is an exact copy of the broker or trading systems real-time trading program. The main difference is that they allow you to “play” the market just as you would if you were actually investing, but obviously without the persistent worry of losing your money. You can do a simulation trade with a set amount of money, usually around $50,000 dollars. You can practice setting bid and ask prices, and using their various analysis tools provided by the broker software, which is the same you would have in a real account.

From all these facts you can see there are many advantages, and lots of money to be made, if you decide to enter the world of forex currency trading and learn the basics of the markets behavior.