Forex or foreign exchange is the simultaneous exchange of the currency of one country by another.

The way it works is an investor wanting to buy or sell one currency for another in hopes of making a profit when the value of the currencies change in favor of the investor. This can happen either from market news or events happening around the world. For example, if you bought currency and the price appreciates in value, then you make a profit by closing your position. By doing this, and sell the currency back in order to lock in profits, which are actually buying the currency against the couple. In pairs currency trading, currency value against another, a rate of worth has been established. The reason is that a country's currency has value only in relation to the currency of another country.

There are many different tools that can help a Forex trader out. Advanced graphics programs are an important tool, as well as FOREX traders guide. With these tools, global interactive training rooms with live video and the daily world bank FOREX report help investors take advantage of the forex market.

Everybody hates to lose and unfortunately no one has been blessed with foresight, therefore losses are an unavoidable part of trading. When we enter a trade, will give the reason or not, and even if we separate, but still be classified as bad - as nobody enters into a
fair trade to break even! When unsuccessful traders encounter a series of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing.

This article brings to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you are already involved in these patterns hopefully this article can help you get back on track as quickly as possible.

Destructive patterns

If you are caught in a series of losses or a bad performing week / month be sure to monitor their behavior. It is during this time will be at your most vulnerable. You will begin to enjoy activities that at first seem harmless, but excessive use (or time), begin to cause physical harm to their health.

Ask yourself the following question: during the withdrawal periods abuse I am more of these activities:

> Food (especially junk food -. For example, chocolate, ice cream, chips)?

> Sex (includes viewing pornography)?

> Alcohol?

> Drugs (includes excessive consumption of snuff)?

> Sloth (difficulty getting up in the morning)?

> Entertainment?

All the above taken in excessive doses can be harmful to their physical health (some even in small doses!).

These activities mentioned during the losing only covering up the pain of confronting the real issue, and your body tries to rid the emotional pain by trying to "fix" with physical pleasures. Unfortunately, going about it the wrong way, so what should you do?

First ... Realize what you are doing and Basta!

You need to realize what you're doing and you have to stop immediately! You can decide to stop or he was forced to stop when your body over time
breaks and prevented any movement. It will be much more beneficial to you in the long run if you decide to stop * now *.

Once you have left now is to find a way to solve the pain - not to cut or set aside, but looking into her face. Bring your problems to light, be honest with yourself. There can be no growth without pain, which is experiencing emotional pain, now is the time to find the error and therefore growth.

Start your experience

The review process begins in two separate areas: You and your system. Here are some lists for you to go through to find the source of the problem could be:

"THE SYSTEM" LIST

> Was your system thoroughly tested before the trade (or paper traded if you do not have the ability to program the system into backtesting software)?

Impulse shopping day can be very profitable if done correctly ...

Day trading momentum stocks can be a very risky adventure. You can lose big money when you pick the wrong opportunities.

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We know that day trading stocks with momentum is not the only way to make money investing in stock market. But it may be faster when you do it right. We also understand that a lot of people shy away from stocktrading moment and think that only a few online stock traders can benefit from it. It's true. Only those traders with proven knowledge have the ability to gain steady momentum stocks.

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One way to acquire discipline in trading ...

"Hey Joe! When we are taught in our Forex office in Florida, the emphasis on discipline. Our chief of operations emphasizes discipline. What I know is if discipline can be purchased or is it just something that be born? I'm having trouble finding myself. "- Trader -

Personally, I believe that discipline can be learned, although it is sometimes very painful. When trading began, I was a very undisciplined. However, trade and the markets forced me to be disciplined. Was the discipline already there and just needed to be removed? Or do you really learn? I can not really be sure.

One of the biggest trading companies held their offices near Yeshivas. A yeshiva is a rabbinical school that produces rabbis of the Jewish religion. Students who leave the yeshiva were highly disciplined and excellent merchants. It was the innate discipline of students at the yeshiva? Or what they learned under the strict supervision of the rabbis who control their lives? I think I learned.

I mentioned earlier that can help keep a journal, if you want to learn discipline. The journal I kept was very basic and includes the operations that I did during the day and my reasons for entering the trade. It's what I did with the magazine that helped me to be disciplined. Anyone can make journal entries. I let the contents of my journal keep me in line. It became my supervisor. I took to heart what I wrote there. No longer maintain such a magazine as it has served its purpose in making discipline a habit in the way that trade.

If you want to be a successful trader, you should make sure they do not deny reality in any phase of their trade. You can not deny losses, price direction, mistakes you make, are undercapitalized, or a whole series of things you would prefer not to think.

Many traders think that the best way to deal with unpleasant ideas, events, or defects of personal character is close your eyes and pretend it does not exist.

Let's face it, trading can be difficult, sometimes very difficult, it is essential that you focus on reality. Denial has its focus on the thing you need to concentrate on price action, regardless of time. Your mind must be clear so you can watch the market and see what is really there.

The way we learned to handle denial was to simply write down and address all possible ideas I had trouble accepting. Some reflections that could fix and others who simply had to accept. But faced with the truth of what and who you are is the only way to deal with denial. You have to realize that most of the only things you can change yourself. Other things you just have to accept. We must accept the reality of slipping, for example. You have to realize that indicators often give false signals and there is no magic moving average nor a magical oscillator.

You have to realize that some winning trades are the operations of luck and had nothing to do with his skill as a trader. Similarly, we also experience the bad luck of having prices make a sudden and unexpected move against him.

Instead of spending your time in denial, concentrate your mental energies on improving yourself and improving your negotiating skills. Work on improving your ability to observe. Realize that you have to survive the markets in order to benefit from the experience of the markets.

There is really only one real problem with trade-that the problem is you! However, the problem manifests itself in two ways: 1. Market conditions have changed and it is not. 2. You are no longer doing what he did when he was winning. It has come out. That are not consistent.

The first aspect of the problem is the observation of the poor. The market has changed and has not changed him. Observation of the poor comes from a variety of minor problems, but very important. He married a market, or a trade. You may have allowed his ego to the best of you and you are no longer humble. I called a couple here. I challenge you to think of many things that can distract from seeing the market conditions have changed. Make a list of things and deal with them.
The second aspect of the problem stems from inconsistency. Again, you should make a list of those things that make it inconsistent.
"Maybe I was a good trader at one time, but market conditions have changed and may not be able to keep my reputation up." This is an issue that all traders face at some point: keep your reputation. When a trade makes large profits, it is tempting to neighbors and friends how well you are doing. It's great when you're making big profits, but keeping up appearances is often falling to the most astute trader. Once again, negating the need for fame and glory, or pretending that you can maintain an unrealistic reputation, reduce their psychological energy and interfere with your ability to concentrate. Huge profits tend to go to the poor, so do not try to build your reputation. Admit that you have difficulty keeping up appearances and just quit.
One fact that traders wrestle with continuously is the notion that "Trade is not a legitimate job."

Many traders struggle with the legitimacy of the negotiation. Some traders find that you can simply remind themselves, "Trading provides liquidity and helps control prices." Other traders, however, that this is not enough and need to find more meaning in their daily business activities. For example, you can focus on how trade helps support his family, or plan to donate part of their profits to charities they view as personally
valuable. The point is, do not deny the possible truth of these ideas. You better recognize and work with them, and then just move on. Deny that, on the other hand, consume time and energy.

Unacceptable beliefs tend to be located in the back of your mind. Remain there, lurking, and when they are vulnerable, that can powerfully influence your outlook. Therefore acknowledge unacceptable ideas, and once you admit the possible validity of such ideas, will neutralize their potential influence. This will free up limited psychological resources, allowing you to focus your energy on trading profitably and consistently.

The following situation happens quite often to many traders. Look again and see if it has happened to you:

You have been faithfully following your trading plan and rules established for the trade. Behind them, which is now in a trade that does not look so good. At the same time, following its business plan is that you missed a beautiful move in a different market, I could have done a lot of money.

You are a bad deal and you missed a great trade. You become dissatisfied. You think to yourself that your trading plan must not be so great. You think there must be a better methodology to be used to prevent this from happening. You think to yourself, "Yes, that's all I'm going to change my way of doing things." This creates a new rule or modify an old way that such a rule would let you capture the traffic that failed and prevent it took. Have you been making this mistake?

Here's another way it can happen: One is a trade, and rules of their cause was stopped out with little or no gain. Shortly after leaving the trade according to plan, prices take off and move to where you had been, who have obtained substantial benefits. The decision leaves sitting there thinking they are stupid. That the reason that there must be something wrong with the way things are done.

Your rules, your plan, or both, must be correct. So change what you are doing, or make a new rule for the next time this happens, you will not be left behind.

You just leave all the hard work we have done previously allowed to operate a successful future. Who has abandoned his education and learning. Has abandoned the wisdom that allow you to be consistently successful as an entrepreneur. You just start trading history, and it is assumed that the negotiation on the future price movement. You are negotiating what happened, not what will happen. Not being willing to be outdone, are preparing to be left out.

If you have been having thoughts or have acted as described above, which has a terrible problem with greed. Why? Because greed can never get enough. You can not satisfy their greed. Greed wants more, and even more.

Not all trade is trade. Not every business has to work for you. You have to be satisfied with getting a reasonable share of the operations that fit the description of a good change. Some of the offices in turn, be a great trade, others are good trades, and a certain percentage of their operations will be bad. No way around it.

Not every good trade will become a big business. When you enter a trade according to their rules and trading plan, have no idea whether or not it will become a good business, much less a great trade. The reality of trading is that however much you may be, can not know the future.

Every time we lose a big move and then try to find some pattern, indicator, rationale, or modification to do what we are doing for the next time you will not miss the "big" move is a part of the search of something magical - a continuation of our search for the holy grail of trading.

What a terrible mistake to let you do. Winning as a trader is to make some small profits and some more profit on a regular basis. Obviously, there will be some losses. Regularly want to keep small losses, but there are times when the loss will be away from us and become larger than desired.

If adversity makes you become unhappy, then you really need to examine their thinking and practices. Your trading plan should take into account the disappointment and loss.

You have to believe in what you are doing and be able to operate from the knowledge that when you follow your rules and your plan, you will make money with your trade.
When you become dissatisfied and begin to change your plan, your rules, or both, you are preparing for almost certain failure, and the worst that can happen to a trader - you lose the courage of his convictions. Without it can not negotiate with any level of confidence.

That is why we encourage you to write the reasons and rationale for each deal you make, even if you have to do after completing the operation. You must develop a keen appreciation of the crafts that are its operations. Enter your trading plan every day and each transaction is intended to do. If you do not have time to plan each operation, be sure to check who made unplanned. You can then get back on their operations and be able to see why and when it succeeds.

Reminder: Here are some steps to take before the market opening.

See the main formations in the lists of future intends to trade. See the possible areas of congestion, the big picture from the charts in the long term.

List all possible entries as you see in the chart.

You have to go through this exercise every day you trade. This requires discipline. However, this will help you develop the kind of habits that will mold into a great trader.

If you are too busy to be disciplined, then you are too busy to trade. If you do not discipline, will soon disappear from the commercial scene.

Throughout our course on futures trading, we have tried to point out to you that there is a difference between having an attitude of investors and be a merchant. There are also many similarities. In a sense, a trader is someone who invests in its own bargaining power. Therefore, in the sense that trade is investment. Trade and investment are interrelated. You realize through this experience.

For the most part, the focus of trade comes from a much shorter term, thinking that the mentality of an investor. Can also be much more based on technical information on critical information. But here again we encounter a dilemma. What exactly is the technical information? What exactly is the basic information? Where the two overlap, is not it? Are they related? Of course they are. But, again, is through experience to learn and develop an appreciation for these concepts.

TECHNICAL VS FUNDAMENTAL?

As futures traders, you get to hear some very strange things, and as writers and teachers in the business of educating people about futures trading. One of the strangest things is the opportunity to listen when people try to separate trade in either technical or fundamental. Why, oh why, everything has to be put in a box? Someone please explain how to separate from each other? Is it possible or is there a middle ground that can not be classified as technical or fundamental?

For example, how to classify trade the news? You would not say that news of fundamental information, right? A friend of ours tells of a time in January when he heard a commentator on CNBC to explain that the price of coffee had risen because of the freeze in Brazil. The only downside to the story is that January is summer in that country. It was news worthy of the basics of name?

What about the trades of the season? Are they technical or fundamental? Certainly not based on facts. Who knows if tomorrow will bring a season like the previous one? Who knows what the weather will be the same this summer as the last?

Rumors say they enter, exit at the facts. Is it technical or fundamental? Or is it just common sense?
This chapter discusses the experience, but here's the catch: You have to survive as a trader enough to gain experience. Experience shows that trade can not be placed in a box. The experience led him to conclude that some of the best trades you will ever make come from experience, gut feelings and common sense. Experience will show you that many large businesses are obtained by paying attention and learning to be an opportunist. The experience will take you to the point where it will be a smattering of what others may call "basics" along with a hint of what some call "technical analysis" and combine it with a spoonful of knowledge to succeed in make your life in the markets.

FUNDAMENTALS

Our understanding is that they have to do with the fundamentals of facts and published and published information on the underlying commodity or instrument you want to negotiate. Because the statistics lie, lie knowingly governments with the statistics, or sometimes do without realizing it, they can afford and also has a need to spend tons of money doing your own research to reach its body of fundamental knowledge. This includes collecting information and statistics about anything imaginable that could affect the underlying. That production research, marketing, culture conditions, financial conditions, etc, all you can find information about the underlying. They can even make personal visits to farms, mines, or financial institutions for discussions on the underlying. Then combine this knowledge with what they find credible as dictated by the various reporting agencies.

Even with real-time data is not economic to compete with these giants with respect to the amount of fundamental knowledge that can afford and are able to muster.

TECHNIQUES

Technical analysis in its purest form it is assumed that everything he knows about the markets affecting the markets may see a price chart. We believe that to be true. But that's where reality and the type of technical analysis that we now act as the company. What we mean is, in general, what technical indicators show that normally can not see with both eyes through reading and graphical analysis of pure? Certainly there are a few things. We have never denied that as an indicator Bollinger Bands can show the location of two standard deviations. You can not tell visually where the amount of deviation in prices would be without the bands. However, most technical indicators wipe away the very things we see. They take your focus away from what is really happening to the price.
By smoothing, which aimed at eliminating "noise." But the noise that we, as traders, and especially as day traders, most want to see. The noise is what tells us the reality of what is happening.

REALITIES

Fundamentals, in the purest sense, are beyond what the individual trader can be treated. Most individual traders simply do not have time to conduct the necessary research. But that does not mean they can not use this information in case of pass to run into him. Technical analysis in the purest sense are fine, but how they have bastardized the indicators virtually meaningless nonsense. The latest craze is the technical indicators of the performance and mechanical trading systems. The use of mechanical systems is the height of the undisciplined mind. That is an admission that no longer has the discipline to exercise self-control, shall be subject to harsh discipline forced on you by an indifferent, unfeeling machine. While trying to escape the trade self-discipline, mechanical strength of a discipline even more horrible about that now you have to sit and grit my teeth through the pain yourself for the mechanical aspect of the system. Mechanical trading is not without discipline, but places the discipline in the wrong profession. Instead of putting the emphasis on planning, organization, direction and control of trade, the trader is in the midst of a mechanical signal and then forced to suffer through trade in order to discipline - a discipline often do not understand based on a system that does not understand and that may have been derived entirely outside the realm of reality.

Market realities are many. The markets are affected by many things that can not be measured by the fundamental or technical analysis is. In addition to seasonality, news, rumors, time and observation of common sense, we must take into account market conditions at the time a transaction is entered. Is the market quickly? The market is thin? Tick ​​size is abnormal? Market makers are moving the market? It's options expiration day? Is the eve of a holiday? It is an important dignitary is going to make a speech? The market has entered a state of hysteria or euphoria? Will you be buying or selling? The sum, the organization and the perception of these and even other criteria that constitute the reality of trading.

Commercial Reality

We believe that the best way to trade should be called "Trading Reality?". In fact, we are so convinced that we have marked the trade name for future use. Trading reality seen in the market as a whole entity, a living, breathing reality that includes the fundamentals, technical analysis, and realities, such as news, rumors, seasonal trends, common sense observations, and market conditions.

Let's look at a possible change based on realities. Let's say this is an operation that has been good almost every year in the last 15 years. Let's say the trade is to buy wheat in March between September and December this year.

First, check to see if March wheat futures behave normally. What does the March wheat futures hits that look as if this trade is going to work?

We started seeing the March wheat futures in the first week of September for the possible entry between that date and the last week of November. We are not particularly interested in what the March wheat futures appear before September, but according to previous models of the season, not to late September in a downtrend. The normal pattern of wheat futures at this time of year is that wheat prices begin to rise or at least remain flat. Falling prices may indicate an excess supply of wheat. The output or the plain may have begun earlier, or it may begin later, but not before the end of September. Most importantly, do not want to see is the price of wheat falls after September. If wheat prices are falling in the period mentioned above, then we have a normal year for these future and want to prevent this trade. Nobody knows for sure what weather will be between the first week of September and the time of the inventory data of wheat known. No one knows if the exports are up, down or flat compared to the previous year. Season is the anticipation of which must support the price of wheat futures.

Obviously, this type of technique could be applied to any goods affordable to expect that experience the greatest seasonal activity.

Consider: As a trader you are in a business. Your strongest opponent has plenty of capital. He follows a program and does so without emotion. He is fully aware of the fact that nobody knows where the tick next fall. While usually has good ideas about the main forces driving the market, do not be fooled into thinking that may explain the inclusion of vagrancy intraday price movements or even overnight. He knows that nobody can really.

The successful trader has learned his lessons from commercial reality. This is a business driven by fear, greed and selfishness, and pointers that are worth a few are given out by the industry, traders, or the myriad of business gurus call that plague the pages of magazines trade and the pages of their websites. The most valuable information is closely guarded and not often put in books or web pages. Learn about trade is a 'forever' experience.

As markets change and as we adjust to them, we learn. Learning is continuous. He stops only when non-commercial. During the time that trade can always improve.

One of the best kept secrets in trading is that of reduced margin spreads. Can not name a trading method that provides more security and greater return on margin carries a margin small margin, while also being one of the least time forms of commerce. Have you ever wondered why many of the larger spreads most powerful traders trade? I will show why!

What is a narrow range roll?

Due to the perceived lower volatility, exchanges grant reduced margins on certain types of spreads. Spreads are to be provided in one or more contracts in a market and short in one or more contracts of the market, but in different months, an expansion Intramarket or be long in one or more contracts of a contract market to short and one or more of a different market, and in the same or different months and a differential Intermarché.

DIFFERENTIAL distortions

There are some distortions on trade in the voices that need to be clarified. If you take them out of the way, I can show trade has expanded advantages over other forms of commerce.

It is said that spreads do not move as much as the absolute future. I agree 100% with that statement. However, the trend spreads more often than the absolute future, the trend much more dramatically than the absolute future, and the trend for longer periods of time that the future of the total. For these reasons it can make much more money with spreads than the overall winner.

The second distortion on trade of propagation is the following: ". You have to pay double commissions when trading spreads" Yes! You have to pay two fees for each extension you enter in the market. So what? We are negotiating two contracts instead of one. To pay two commissions, since they are negotiating two separate contracts, one in one place and another in a totally different place. The payment of two commissions for two separate operations is not unfair. Let me tell you what is wrong, the payment of a commission to turn an option expires worthless. Why not hear people complaining about? You pay for a ride, and get only half a lap. It makes perfect sense, right?

SPREAD TRADE BENEFITS

There are many advantages to differential low margin trading, which I hope will not run out of space here before I can tell them all. Let's start with the return at the margin, ie the performance.

Performance: As I write this, the scope for trade a position of total soybean futures is $ 1,050, while trade dissemination of soybeans requires only $ 250, only 23% at most. If soybean futures move a point, that move is worth $ 50. If an extension of soybeans move a point, that move is worth $ 50. That means either a 5 point favorable move in soybean futures or a 5 point favorable move in an area of ​​soybean trader wins $ 250. However, the difference in performance margin is extraordinary: In the future return is $ 250 / $ 1.050 = 23.8%. For diffusion, the refund is $ 250 / $ 250 = 100%. Think about it!

Leverage: This brings us to the next benefit of the spread trade with the same amount of margin, it could have negotiated 4 soy spreads instead of a soybean futures. How's that for influence? Instead of $ 250 on a five-point move that could have made $ 1,000. Narrowing of scope to offer a much more efficient use of your money to spare.

Trend: Earlier I said that spreads tend to trend much more dramatically than futures contracts altogether. Not only that, but the trend more often than the future of the total. I have not space here to display dozens of strong trend that extends normally present in the markets, so we'll have to settle for a recent one. You'll have to take my word that this type of trend often occurs when trading spreads.

Opportunities: Because the spreads tend to trend more often and more dramatically than total futures contracts, offer more opportunities to make money, and do so without the interference and noise caused by the continuous market, resellers, and engines the market. It extends to avoid "noise" in the markets. There are numerous opportunities to reduce spread margin, enough to keep almost any merchant busy. And the lack of interference by market makers and shakers who leads one of the most important advantages of the margins of negotiation, either to reduce the margin or total margin.

Invisibility: One of the main problems with any type of negotiation in the winner, either forward or actions, is to stop running. Inside information is love when you can see its end. Even if your entry or exit takes place mentally, they know where you are. They are well aware that people place their orders. That's why traders love Fibonacci and Gann. They know exactly where people place their orders. The same is true for anyone who uses one of the indicators most commonly known. Insiders fade moving average crossovers, and so-called overbought and oversold, regardless of whether the indicator is used to show one of these conditions. They know that prices have reached the outer limits of the Bollinger Bands, and of course knows the location of support and resistance, etc, but spreads have no idea of ​​the location of their orders. You are always in one market and short the other. His position is invisible to those inside. They can not run your stop, as it has one. You can not put a stop order on the market when trading spreads! His starting point is totally mental, which exists solely in his head. In this regard, trade media is a purer form of negotiation. It's the closest in trade for a level playing field. Could this be why we almost never hear about spread trading?

Liquidity: The attempt to trade in "thin" illiquid markets is one of the surest ways to stop running and serious encounter strange price movements. However, apart from occasional problems with filling, spread trading is not suffering from a lack of liquidity, which in itself creates more business opportunities. I would never consider taking an open position in beef. Feeders are a thin market, liquidity is usually best left to professional interests. However, a small margin (beef cattle) - (live animals) spread is something I'm looking all the time. Some of the moves in this shot in particular is amazing. They are worth hundreds or even thousands of dollars for the extension, several times a year. They are highly seasonal in nature due to the light and the cycles of growth in cattle. The same is true of the spread of livestock and food against the lean hogs. These margins are seasonal, which leads to great advantage by spread trading - seasonality.

Seasonality: while seasonality is not always carried out as planned, ie, the seasonality may be early, late, or not, but when it's happening, you can see. It is obvious that a seasonal trade is working as expected. Seasonality is not subject to the whims of man. Seasonality is one of the strongest reasons for the commercial extensions. Crops are planted within a specified period of time. Calves and piglets are born according to the cycle of birth and growth according to their growth cycle. Even the future based on financial instruments are seasonal, and many offer reduced margin spreads.

Backwardation, seasonality comes along with the enormous benefits that can be made when you go into backwardation underlying. This is true for any agricultural product, and any other financial instrument. I have not space here to explain backwardation, but when it happens, it is commonplace, the differential between the front and back months greatly expands, which offers wonderful opportunities for profit for the dealer spread. As if that were not enough, the same opportunity is available at the end of the period of backwardation and the relationship between the months before and after return to normal.

Odds: If we eliminate the offices in the winner in you also make a market whipsawed to the side and may gain or lose a little, the real chance of winning on any trade is 50%. If you are long and prices move down, you lose. Conversely, if you are short and prices rise, you lose. No matter how accurate the selection of trade, the conclusion is that your chances of being right once you enter a trade is one of two. However, when entering an area that are not primarily concerned with the direction of prices. Their main concern is with the direction of propagation.

With an extension you can make money when the two parties of the spread moves up, the legs move down when the legs move sideways, but one more for the other, or better yet, when the is long leg is moving and the leg is cut down moves! As long as the leg is much better than moving the leg is missing, you have a winning trade. There is only one situation where you can lose with a difference, and that will be completely wrong on both legs. Thus, with an extension that can win even if you were wrong about the direction of price movement, as long as you're very wrong. The figure gives an idea of ​​what I'm talking about. Two months of this trade in natural gas moves down, but the difference was growing and ascend.

There are opportunities in trade media, including requiring full margin differential. You can trade spreads with stock indexes, sector funds, and future actions. Did you know that can daytrade stock index spreads? These are topics for another day and another time.

Unfortunately, whether by accident or by design, much of the truth of the spread of trade has been lost in recent years. There are many aspects to it that I have played here. In addition, there are some wonderful and inexpensive tools that make a delicious spread trade. Spread trading is one of the most relaxed trade. Rarely takes more than 1-2 hours of your time each day and more often than not, we're talking only a few minutes a day to find and trade the wonderful opportunities that are available in reduced margin spreads.

Do you think adaptation to the realities of the market is most important?

Many times in the past I have written about the need to adapt, the need to be able to change their behavior in relation to the market because the markets are constantly changing.
He stated that mechanical systems can be viable, but only for a short time in relation to the life of the markets. You must learn to operate what you see and understand what is seen in a picture.

When you first began trading there was no such things as futures contracts on foreign currencies. Why there? Because there was no need for them! In the 1970's everything changed when the U.S. dollar abandoned the gold standard and began to float against other currencies. Then, the Chicago Mercantile Exchange began to create currency futures to provide a place where currency traders could hedge the risks associated with foreign exchange trading. Some of these risks are direct and some indirect. Direct risk is involved for those who work directly in foreign currency. Indirect risk involves companies who export or import and receive payments or make payments in the currency of another country.
Since the currency futures were created, which have been in a state of flux. More recently, the effects of futures trading, money exchange have focused on a massive movement away from currency futures to more direct trading in the currency markets. Currency futures, while maintaining its volume and open interest figures, are actually less liquid than it was before. Volume and open interest do not reveal the image of what is happening in the currency futures pits. Levels of volume and open interest are held by fewer and fewer futures traders.

In the period from 1992 to the present, we have witnessed currency futures moving from "red" to "cool" and now hot again insofar as speculators are concerned. Currencies, which in 1992 was one of the best plays, first turned dull and then back to the exciting.
This has occurred can be seen in the areas of which most futures traders are ignorant. Five years ago, currency traders were paid huge salaries and anyone with a history could practically name his price. After this, currency traders were no longer in great demand. Now, again, there is a huge demand for successful currency traders.
Currency futures are just a small representation of the exchange market $ 1.5 trillion foreign dollars. The professional forex traders use forex, broadcasting contracts, derivatives of all kinds, and future wells to deploy their various trading and hedging strategies. You see only the future is like the blind trying to say what an elephant is like by feeling only the tusks.

In recent years, foreign exchange desks at banks, insurance companies, brokers and other institutions were closing down and laying off hundreds of employees. Today, they are again looking for currency traders.
In the 1990's, Midland Bank closed its office in New York foreign dismissal of dozens of people. Frankfurt had retired from the Bank of New York and Tokyo exchange closed its office. At that time, the world's largest currency trader was Citicorp. In the D-Mark alone fell from 39 traders working in 17 different locations around the world to 4 D-Mark traders all working in a room. Note that these were merchants who had been in a greater or lesser extent with currency futures. The result then was that there were fewer big fluctuations in currency futures once the benefits were and therefore much less.

However, today the opposite is happening. Central banks are now making much greater intervention in currency markets. They have stopped publishing targeted exchange rates. Such action by central banks leaves currency speculators at a loss for what to do, and the result has been a huge increase in currency trading.
Because Forex brokers today are abundant and active marketing of the idea of ​​currency speculation, which is having a profound effect on foreign exchange planning of individuals, businesses and nations.

If some day the major currencies would be the U.S. dollar, yen and euro-J, which takes thousands of merchants to trade? Would be far fewer currency misalignments to provide a basis for trade. But that's not the way the world is moving. The picture just presented ignores the rise of China as a major economic force on the world stage. Almost certainly, the Chinese currency will become a major commercial vehicle. The same is true for other emerging countries. Some of them undoubtedly have major currencies from the point of view of world trade. But these currencies are traded in futures markets or in forex?

The changes in this area only one? currency trading? are an example of how quickly things change and point to the need for traders to adapt. There are, indeed, been many changes in recent years. The advent of electronic markets has generated all the markets of a completely different kind. Computers have brought the ability to trade in various time frames. New exchanges have created new markets and new contracts? many, in fact, it is difficult to know exactly where to direct the efforts of the business. It is now possible to trade virtually all day. It seems that somewhere, some market is trading.

The dinar's exchange rate against major currencies Macedonian hard the world has remained stable in recent years. Due to restrictions of the IMF, local Národná (Central) Bank does not print money and there is no physical dinars in the economy and local banks.

Therefore, even if people want to buy foreign currency on the black market, or directly from banks - have no dinars to do with them.

The total amount of dinars (M1, in professional financing lingo) in the economy is about $ 200 million, according to official figures. This translates into $ 100 per capita. Thus, although each and every citizen of Macedonia decided to convert all your dinars DM - would still be able to buy 150 DM each, on average. These small quantities are not sufficient to raise the rate at which DMs are exchanged for dinars (= the price of DMs in dinars).

But this situation will last forever?

According to economic theory, scarcity raises the price of premium. If dinars are rare - their price will remain high in DM terms, ie not be devalued against the stronger currency. The longer the Central Bank does not print dinars - the longer the exchange rate is maintained.

However, a strong currency (the dinar, in this case) is not always a good thing.

The Denar is not strong because Macedonia is rich. The country is in dire economic problems. The banking system is dangerous and unstable. Foreign exchange reserves are minimal - less than $ 30 million.

The currency is stable due to restrictions imposed from outside and artificial manipulation of the money supply.

Moreover, a strong currency makes goods produced in relatively expensive in foreign markets, exports Macedonia. Therefore, it is difficult for Macedonian growers and manufacturers to export. When they sell their products in Germany, receiving DM for them and when they convert these receipts in dinars - become less and they would have if the Denar reflected the true relative strengths of the two economies: the German and the Macedonian one.

To pay expenses (eg wages to their workers, rent, utilities) in dinars. These expenses grow all the time that the real inflation grows (as opposed to the official rate of inflation which is suspiciously low) - but they still receive the same amount of dinars to its products and the products when they convert the DMs which has to them. On the other hand, imports of Macedonia become relatively cheaper: it takes less dinars to buy goods in DM in Germany, for example.

Therefore, the end result is a growing preference for imports and a decline in exports. In the long term, increasing unemployment. Export is the largest force driving the creation of jobs in modern economies. In its absence, economies stagnate and decline and people lose their jobs.

However, a realistic exchange rate has at least two additional side effects:

One - as a rule, various sectors of the economy to borrow money to survive and expand.

If you expect the local currency is devalued - will refrain from taking long term credits denominated in hard currencies. They prefer credits in local currency or short term credits in foreign currency. They will be afraid of sudden and massive devaluation (such as happened in Mexico overnight).

Their lenders will also be afraid to lend money, because these lenders can not be sure that borrowers have the extra dinars to pay for the credits in case of a devaluation. Naturally, a devaluation increases the amount of dinars to pay for a loan in foreign currency.

This is bad, both from the standpoint macro-economic (the economy as a whole) - and from the micro-economic point of view (that of the single firm).

From the point of view micro-credit short-term economic need to be returned long before companies that have matured to the point lent of being able to repay the money. These short-term debt load that can alter its financial statements for the worst and sometimes their very viability at risk.

Since macro-economic point of view, it is always better to have more time with maturities of debt to pay less each year. The longer the credits a country (individual companies are part of a country) has to return - the better your credit standing with the financial community.

Another aspect: foreign credits are a competition for loans granted by the local banking system. If companies and individuals do not take loans from abroad for fear of a devaluation - they help create a monopoly of local banks. Monopolies have a way to set the highest price possible (interest rates) for their merchandise (= the money they lend). Access to foreign credits reduces interest rates through competition with the local credit providers (banks =).

It would be easy to conclude, therefore, is an important interest of a country open to foreign financial markets and provide their businesses and citizens with access to foreign credit.

One important way to encourage people (and companies are people) to do things - is to allay their fears. If people fear devaluation - a responsible government can not promise not to devalue its currency. Devaluation is a very important policy tool. But the government can insure against devaluation.

In many Western countries, you can buy and sell insurance contracts called forwards. They promise the buyer a certain rate of change in a certain date.

However, many countries have no access to these highly sophisticated markets.

Not all the coins can be secured in these markets. The Macedonian Denar, for instance, is not freely convertible, and that is not liquid: there is enough dinars to meet the needs of a free market. Therefore, no assurance can be given to these contracts.

These less privileged countries establish special agencies which provide (mainly export) firms with insurance against changes in exchange rates in a given period of time.

For example:

The company buys MAK harvesters and tractors from Germany. You have to pay in DM.

An international development bank offered to MAK a loan repayable in 7 years time in DM.

Today, MAK would be so afraid of devaluation, preferring to pay the equipment supplier as soon as it has cash. This creates liquidity problems at MAK: wages are not paid on time, raw materials can not be bought, production stops, MAK loses its traditional markets - all in order to avoid the risks of devaluation.

But - if the right government agency existed?

If government insurance against devaluation existed - MAK certainly take the loan of 7 years. It would take, say, 10 million DM.

MAK apply to the government agency with its business.

It would pay the government agency insurance an annual fee of 2.5% of the remaining loan (as is amortized and reduced with each monthly payment). This would be considered a proper financing expenditure and the company may deduct from their taxable income.

The government will provide MAK with an insurance policy. An exchange rate (say, 30 dinars to the DM) include in the policy.

Yes - at the time that MAK had to make a payment - the rate has been above 30 dinars to the DM - the government will pay the difference to MAK in DM. This will enable MAK to meet its obligations to its creditors.

MAK may cancel this insurance at any time. If, for example, suddenly signs a major contract with a German buyer of its products - will have income in DM which can be used to repay the loan. Then the government insurance will no longer be necessary.

This simple government assistance will have the following effects:

It will encourage businesses to obtain foreign credits.
It will create competition for local banks, reduce interest rates and foster a wider and better range of services offered to the public.
It will encourage foreign financial institutions to give loans to local firms once the risk of re-payment problems due to the devaluation is minimized.
Put Macedonia in the ranks of developed countries and export-oriented world.
It will facilitate activities with more long-term loans (such as modernization of plants for which longer terms of payment are required).

As time passes, the private sector can step in and provide their own insurance against devaluation.

Insurance companies in the world does - why not in Macedonia which needs it more than many other countries?

Below I will describe three basic principles that can be useful for forex traders. They are very easy to implement and potentially take advantage of as we shall see.

Principle 1

Some currency traders find it useful to always trade a currency pair at the same time every day. The reasoning for this is that most of the other traders buying or selling that currency pair may also trade at the same time. Principal negotiating wells may also work in the exact same shift every day. This technique can be especially useful for currency traders who exploit technical analysis. Again, the reasoning for this is that it may be possible to normalize the conditions for negotiation if the operations during the same time every day, if only for a little bit. However, that small bit of standardization may produce several pips of dollars in profits. However, it is quite obvious that the foreign exchange market can be very volatile and random.

Principle 2

Some currencies trade with a certain volatility at a given time. Once you've finished practicing your trading skills on a demo account and decides to test the waters with its equity investment, you may want to minimize the amount of liquidity and volatility to hedge its risk. Alternatively, you may want to increase the risk and possibly increase your earning potential. (Note that the risk is too heavy to participate under any circumstances.)

The currency market follows the sun around the world moving from the U.S. to Australia and New Zealand to the Far East, Europe and finally back to the United States. In general the volume of foreign trade in currency is determined by what markets are open and the overlap of the times that these markets are open. Currency trading volume is relatively high 24 hours a day, but there are significant peaks in activity when the British, European and U.S. are open simultaneously, which is 1 pm to 4 pm GMT GMT. Markets in the Pacific Rim, including Japan and Hong Kong, show a drop in trading volume, while there is a large volume in the U.S. market at the same time. However, it is still possible to perform technical analysis on Pacific Rim currencies. For trade for a certain period of time, one may be able to minimize or maximize both the level of volatility (and risk) for a given currency pair.

Principle 3

Although this is a general statement about the activity volume for certain currencies may be a good idea to try to capture the level of volatility in currency pairs. That can potentially use Bollinger bands, a tool used by technical analysts, to quantify volatility. Bollinger bands compare volatility and relative price levels over time. Some currency traders can not trade a day in your life without using Bollinger bands, while others can not find any use for them is really up to you to decide whether Bollinger bands are of some use for situation.

He described three basic principles that can potentially be useful for forex traders in the forex market. They are very easy to implement and can reap the rewards (or lack thereof) depending on market conditions. Hopefully these principles will help you reach your own success strategies for the currency market in the currency market.

In recent years, the popularity of online currency trading has grown substantially. Every day, online brokerage firms attract new investors FX - each lined with a twinkle in his eyes, lured by promises of easy money. Most of these companies allow you to register for a free demo account that allows you to place trades using their simulation trading platform to get an idea of ​​the excitement of currency trading. In the informal world of free demo accounts - many young traders find they are able to reap impressive benefits without a significant amount of effort. It almost seems too good to be true. However, transferring this success from a demo account real account is far less common. Why is this? The actual trading platform behaves the same way, the market does not care if you're a demo or real trader - What has changed? It is you who has changed. Not your personality, not even your trading style - but the factors affecting it are different.

What is the key factor for business success?

The search for the "Holy Grail" of trading has been a common theme throughout the history of the markets. A variety of different techniques. Those who are inclined towards number crunching and pattern recognition prefer technical analysis, while more focused on the big picture, logical macro perspective prefer fundamental analysis. Then there are specific methodologies like swing trading, trend following or even more esoteric ideas, such as Elliot wave theory. What is the best? There are examples of very successful traders using each methodology.

Like most new traders lose money - perhaps the more appropriate question to ask is, "What is the key factor for the failure of trade?"

Greed and fear

Trade is an atmosphere rich in porous emotions of greed and fear. The current price of a particular security or financial instrument at any moment can be considered as a confluence of greed (bulls) and fear (bears). These two emotions are the core of humanity itself. When released market information, trade can be a high intensity. Sensing danger, your body releases adrenaline which acts to accentuate both his greed (fight) and fear (flight). Because these emotions are so strong they can cause to act irrationally, ignore the system, said set of rules or trading plan and act on their impulses. In fact, this is a genetically programmed response - but it is often also the collapse of the merchants, especially when he is playing much better capitalized, more sophisticated enemies and experienced know how to manipulate emotions.

When you are a trader - you're always under the influence of at least one of these two emotions, even if it has operations.

Impact of fear and greed in trading

If the market goes up and you are in - greed is telling you to buy more and fear is telling you to take your profits while you still can. If you are going down, fear of being wrong makes you hold onto a losing position - and then greed sometimes convinces "average down" position (and buy more) so it will be easier for you to return.

If the market goes up and you're not invested - fear is telling you that losing money is easy, but it is greed that makes him come in just after the greatest increase (just when its about to reverse the course). If the market goes down and you're not invested - greed is telling you to go because the price is cheap, while fear reminds you that you will lose this opportunity if we do not act quickly.

Maybe if we feel like greed, or just feel the fear that they would be able to control our emotions a little better. But when these two little devils whispering in our ears at the same time - it is often impossible not to hear.

The emotion of greed

The first time you try FX trading - will feel the emotion of greed. It is an ecstatic experience, your brain neurotransmitters and flush your mind giddy with visions of untold riches about to be harvested. Greed is bold, aggressive and incredibly exciting. It may take hold of you, both mentally and physically. Imagine the possibilities!

This greed that leads to currency trading in the first place - the dream of easy money and 100:1 or 200:1 margin rates. It inspires us and leads us to abandon rational thought in favor of a reckless abandon. In the movie Wall Street, Gordon Gecko says: "Greed is good", but also very dangerous - especially if you are unable to recognize when greed is the speaker. Greed is also one of the techniques used to manipulate people. Each scheme to get rich quick, with the promise of untold riches without payment takes advantage of his natural disposition to throw all logic and sense out the window when greed pays a visit. The argument starts to appear very convincing and ignore what would otherwise be clear warning signs. Like drunk goggles, greed can mislead and when they finally wake up, are often in a very precarious situation.

The fear of losing

Fear can be so dangerous. The most powerful and easy to handle fear is the fear of admitting they are wrong. Fear of having your precious ego bruised. This fear can make people do incredibly stupid things. The funny thing about this world is that everyone thinks they're right. Most people would rather lose thousands of dollars to admit they are wrong. It's easy to feel ashamed of trading losses and live in denial, but this is self-destructive behavior. By denying the existence of the problem, you can not take measures to address and ensure that only continue in the future.

Trade Show

Demo trading is a good way to get started in currency trading. It is identical to the actual negotiation, and you're using "pretend" money. Operations demo will give an idea of ​​what kind of market moving events and how they move. You are encouraged to learn more about geopolitics, macroeconomics and finance and all these things are very positive.

Operations show also introduces you to the ecstasy of greed. Trade is a means of one of the most pure, raw and powerful forms of greed. The point of negotiation is to make money and more money you make - becomes the stronger the force of greed. It is intoxicating and can take complete control of you. But demo trading does not feed the fear. There is no fear when you are trading demo. It's like having a perpetual card to get out of jail free. If you start losing badly on a demo account - simply start a new one. There is no accountability for their business failures and only recognition of its commercial success.

As your demo account does not teach you how to handle the emotion of fear. This emotion is most likely going to lead to his downfall. Greed can get overextended, but fear prevented him from cutting their losses. You may think that the fear of losing the money you would cut your losses, but the strongest emotion is fear of being wrong and makes you hold on to your losing position - until everything is gone.

There is also the question of the size of the account. Many demo accounts will give $ 50,000 to play. This type of capitalization allows you to buy 5 lots (500K) of EURUSD quite easily. If it goes up 20 pips you've made $ 1000. Bonito. But when you open your real account - it's more likely that you put $ 5000 or $ 10000 in it to begin with. Now you're dealing with a lot of 50K, which means to make $ 100 a movement of 20 pips. But mentally they are accustomed to receiving $ 1000 for the movement so they usually end up risking more. Next thing we know - your 200K position has turned against you 50 pips and lost $ 1000. That's real money you just lost. You can not just start another account.

The capitalization of the demo account is enough to keep the losses and still come out on top. But his real account is likely to be undercapitalized and if you are trying to obtain yields similar to what you have in your demo account - it's going to explode soon.

Be honest with yourself

Ultimately, while providing an excellent introduction to FX trading - demo accounts do not accurately predict if you real money trading success. The markets are dominated by psychology, and often go against what fundamental logic or technical indicators suggest that it should happen. The most critical factor in business success is your ability to control their emotions of greed and fear. These emotions cloud your view and make trade recklessly. Demo accounts submitted to the emotion of greed, but by their very nature, are risk free and therefore there is no fear involved. It is also likely to be better capitalized than their real money account, which misleads you with respect to the number of statements that can win.

For all these reasons, demo accounts allow you to avoid being honest with yourself and this is perhaps the most important of all. You need to know your limits and knowledge and to know these - you have to be honest with yourself.

That said, demo accounts are still very entertaining and educational and I highly recommend opening one to anyone interested in obtaining a sample of the exciting world of forex trading. It's a good way to learn more about the economy, global politics and yourself.

Introduction

The exchange rate refers to the value of the U.S. dollar against the values ​​of the currencies of other countries. This rate helps determine how much to pay for imported goods and services, and the amount you receive as exports, among other things. When the value drops U.S. dollar, imports become more expensive, and tend to reduce the volume of our imports. At the same time, other countries pay less for some of our products which tend to increase export sales. If imports and exports are an important part of the economy of a country such as Canada, the exchange rate plays an important role in our economy. The exchange rate between the currencies of both countries is especially important if the two countries are heavily involved in trade.

What factors affect the rate of change?

Exchange rate of a country is usually affected by supply and demand for the currency of that country in exchange markets. Normally, this is known as a floating exchange rate. If demand, say dollars, exceeds supply, then the dollar will rise. However, if the supply of dollars exceeds demand, then its value will fall. A huge amount of money is bought and sold in international currency markets for many different currencies.

Several factors influence the supply and demand for the currency of a country.

If interest rates are higher, for example, U.S. in other countries, then investors will choose to invest in the U.S., increasing demand for the dollar, provided that the expected rate of inflation is higher in the U.S. among our trading partners. If interest rates are lower in the U.S. in other countries, investors choose not to invest in the U.S., decreasing demand for the dollar.

If the U.S. inflation rate is higher, investors are less likely to prefer the U.S., even with higher interest rates due to the expectation that the dollar will be eroded by inflation. If our inflation rate is lower, investors are more likely to prefer the U.S. because there will be no hope that the dollar is eroded.

Trade balance also has an effect on the currency of a country. If world prices which increased its exports compared with the cost of imports from that country, the country will gain more by exports than it pays for its imports. The more demand there is for the currency of that country, the better the deal is done. If investors are confident that the U.S. economybe strong, they are more willing to buy U.S. assets, pushing up the dollar. If investors are not so sure that the economy will be strong, be less likely to buy the assets of the country, increasing the dollar down.

Recent disturbances in global financial markets were quelled by the immediate intervention of both international financial institutions like the IMF and the nationals of developed countries like the U.S. Federal Reserve. The danger seems to have passed, though recent tremors in South Korea, Brazil and Taiwan do not augur well. We face a new crisis of the same or larger now.

What are the lessons to be learned from the last crisis to avoid the next?

The first lesson, it seems, is the short and long term capital flows are two different phenomena with very little in common. The former is speculative and technical in nature and has little to do with the fundamental reality. The latter is investment oriented and committed to increasing the welfare and wealth of their new home. It is therefore a mistake to speak of "global capital flows." There are investments (including portfolio investments, including long-term and risk capital)? and not speculative, "hot" money. While "hot money" is very useful as a lubricant in the wheels of liquid capital markets in rich countries? can be destructive in less liquid, immature economies or in economies in transition.

The two phenomena should be treated differently. While long-term capital flows should be completely liberalized, encouraged and welcomed? In the short term "hot money" type must be controlled and discouraged, even. The introduction of capital controls-oriented fiscal (as Chile has implemented) is one possibility. The springs in Malaysia less attractive model of the mind. It is less attractive because it penalizes both the short and long term financial players. But clearly an important and integral part of the new international financial architecture should be the control of speculative money in pursuit of increasing returns. There is nothing inherently wrong with high yields? but capital market returns are related to economic depression and falling prices through the mechanism of short selling and using certain products. This aspect of things must be neutered or at least countered.

The second lesson is the importance of central banks and other financial authorities play in precipitating the financial crisis? or its extension. Financial bubbles and inflation of asset prices are the result of euphoric and irrational exuberance? Said Federal Reserve Chairman United States, the legendary Mr. Greenspun and who can deny? But the question that was delicately sidestepped: Who is responsible for financial bubbles? Expansionary monetary policies, very timely signals on interest rates markets, liquidity injections, currency interventions, international salvage operations? are coordinated by central banks and other central or international institutions. Official inaction is so favorable to the inflation of financial bubbles as is official action. By refusing to restructure the banking system, establishing adequate bankruptcy, corporate transparency and good corporate governance, by engaging in protectionism and isolationism, by avoiding the application of legislation against the competition? many countries have fostered the vacuum within which financial crises breed.

The third lesson is that international financial institutions can be of any help? when not governed by political or geopolitical and when not married to a dogma. Unfortunately, these are rare cases. Most of the international financial institutions? particularly the IMF and to a lesser extent, the World Bank? are politicized and doctrinaire. It is only lately and following the recent mega-crisis in Asia, that IFIs began to "reinvent" themselves, their doctrines and their recipes. This conceptual and theoretical flexibility led to better results. It is always best to tailor a solution to customer needs. Perhaps this should be a major step in evolution:

International financial institutions shall consider the countries and governments within their remit as inefficient and corrupt beggars, in constant need of financial infusions. Rather, one should consider these countries as customers, customers who need the service. After all, that is, exactly, is the essence of free market? and it is from IFIs that such countries should learn the ways of the free market.

In general, there are two types of emerging solutions. One type is market oriented? intervention and others. The first type requires the free market, specially designed financial instruments (see the example of the Brady bonds) and a global "laissez faire" environment to solve the problem of financial crises. The second approach regards the free market as the source of the problem rather than its solution. Calls for domestic use and that needed intervention and assistance in resolving financial crises.

Both methods have their advantages and both should be applied in various combinations on a case by case basis.

In fact, this is the greatest lesson of all:

There are no magic bullets, final solutions, right ways and only recipes. This is aa trial and error and the war should not be limiting their arsenals. We will use every weapon at our disposal to achieve the best outcomes for all involved.