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.

Currencies are traded in dollar amounts called "lots". One much equals $ 1,000, which controls $ 100,000 in foreign currency. This is what is known as the "margin". You can control $ 100,000
currency value of only $ 1,000. This is what is known as "high leverage".

Currencies are always traded in pairs in the FOREX. The couples have a unique notation that expresses what currencies are marketed. The symbol for a currency pair is always be in the form ABC / DEF. ABC / DEF is not a real currency pair, is an example of a symbol for a currency pair. In this example, ABC is the symbol of a countries currency and DEF is the symbol of another currency countries.

Here are some common symbols used in the Forex:

USD - U.S. Dollar

EUR - The currency of the European Union "EURO"

GBP - Pound Sterling

JPN - Japanese Yen

CHF - The Swiss franc

AUD - Australian Dollar

CAD - Canadian Dollar

There are symbols for other currencies, but these
are the most commonly traded.

A currency can not be traded by itself. It can not growing trade in euros for himself. Always compare an currency with another currency to make change possible.

Some of the most common pairs are:

EUR / USD Euro / U.S. Dollar

"Euro"

USD / JPY U.S. Dollar / Japanese Yen

"Dollar Yen"

GBP / USD British Pound / U.S. Dollar

"Cable"

USD / CAD U.S. Dollar / Canadian Dollar

"Dollar Canada"

AUD / USD Australian Dollar / U.S. Dollar

"Aussie Dollar"

USD / CHF U.S. Dollar / Swiss Franc

"Swiss franc"

EUR / JPY Euro / Japanese Yen

"Euro Yen"

The list of currency pairs above look like a fraction. The numerator (top of the section or "left" of the / however they want to see) is called the base currency. The denominator (bottom of the fraction or "Right" / As you will see) is called the counter currency. When you place an order to buy the EUR / USD, for example, are actually buying the EUR and sell USD. If would sell the pair, it would sell the euro buying the USD. So if you buy or sell a currency pair, which is buying / selling the base currency. They are always doing the opposite of what he did with the base currency with the currency.

If this seems confusing then you're in luck. You can always get by with just thinking about the couple all as an element. Then just buy or sell that item one. Thought still allows you to place trades. Only
should be aware of the concept of base / counter Fundamental Rights Topics of analysis.

Why is it important to know about the base / counter currency? The base / currency concept illustrates
what is really happening in a foreign exchange transaction. Some of you reading this, know that short selling was limited in the stock market * (Short-selling is where you sell a stock / cash / item / product and then try to buy back to a lower price later). But in the FOREX is Always buy a currency (base) and selling another (Counter). If you sell the pair you are simply turning one who buys and sells. The transaction is essentially the same. This allows you to sell short without restrictions.

Countries devalue their currencies only when they have no way to correct past economic mistakes - whether their own or mistakes committed by their predecessors. The ills of a devaluation are still at least equal to its advantages. It is true that encourage exports and discourage imports of some extensions and for a limited period of time. As the devaluation is manifested in higher inflation, even this temporary relief is eroded. In a previous article of this article describes what governments use such a drastic measure. This article looks at how they do.

A government may be forced to devalue an ominous trade deficit. Thailand, Mexico, Czech Republic - all devalued strongly, willingly or unwillingly, after their trade deficits exceeded 8% of GDP. You may decide to devalue as part of an economic package of measures is likely to include the freezing of wages, government spending and the rates charged by the government for the provision of public services. This in part has been the case in Macedonia. In extreme cases and when the government refuses to respond to market signals of economic difficulties - that can be subject to devaluation. International and local speculators will buy foreign currency by the government until its reserves are depleted and has no money even to import basic foodstuffs and other necessities. Thus compelled, the government has no choice but to devalue and buy back dearly the change that has been sold cheaply to speculators.

In general, there are two known types of systems change: the floating and fixed it. In the floating system, the local currency is allowed to fluctuate freely against other currencies and the exchange rate is determined by market forces within a loosely regulated foreign exchange of national (and international) market. Such coins may not necessarily be fully convertible but some degree of free convertibility is a sine qua non.

In the fixed, rates are centrally determined (usually by the Central Bank or the Monetary Board which replaces the function of the Central Bank). The rates are determined periodically (usually daily) and revolve around a "bonding" with very small variations.

Life is more complicated than any economic system, there is no "pure cases".

Even in systems of floating exchange rate, central banks intervene to protect their currencies or to move them to a favorable exchange rate considered (the economy) or "fair." The market's invisible hand is often handcuffed by "we know better," central bankers. This often leads to disastrous (and breathtakingly costly) consequences. Suffice it to mention the collapse of sterling in 1992 and billions of dollars made by overnight arbitrageur-speculator Soros - both a direct result of that misguided policy and hubris.

Floating exchange rates are considered a protection against deterioration of the trade.

If export prices fall or import higher prices - the exchange rate is adjusted to reflect the new flows of currencies. The resulting devaluation will restore the balance.

Floating exchange rates are also good for protection against "hot" (speculative) foreign capital looking to make a quick profit and disappear. As you buy the currency, speculators will have to pay more due to an upward adjustment in exchange rates. On the contrary, when they will try to collect their benefits should be punishable by a new exchange rate.

Therefore, floating rates are ideal for countries with volatile export prices and speculative capital flows. This characterizes most emerging economies (also known as the Third World).

It seems surprising that only a very small minority of these states have until one recalls their high rates of inflation. Nothing like a fixed interest rate (along with consistent and prudent economic policies) to quell inflationary expectations. The fixed rates also help maintain a constant level of foreign reserves, at least as long as the government does not stray from sound macroeconomic management. It is impossible to overestimate the importance of stability and predictability, which are the result of fixed exchange rates: investors, entrepreneurs and traders can plan ahead, protect themselves by hedging and concentrate on long-term growth.

Not that a fixed exchange rate is forever. Coins - in all types of rate determination systems - move against one another to reflect the new economic realities or expectations regarding such realities. Only the rate of change in exchange rates is different.

Countries have invented numerous mechanisms to cope with fluctuations in exchange rates.

Many countries (Argentina, Bulgaria) have currency boards. This mechanism ensures that all local currency in circulation is covered by foreign exchange reserves in the coffers of the Central Bank. All government and Central Bank alike - can not print money and must operate within the straitjacket.

Other countries peg their currency to a basket of currencies. The composition of this basket is supposed to reflect the composition of the country's international trade. Unfortunately, rarely does and when it does, rarely updated (as is the case of Israel). Most countries peg their currencies to arbitrary baskets currencies in which the dominant currency is a "hard and good reputation" of currencies like the U.S. dollar. This is the case with the Thai baht.

In Slovakia the basket is composed of only two currencies (40% in dollars and the 60% DEM) and the Slovak koruna is free to move 7% up and down around the basket-PEG.

Some countries have a "crawling peg". This is an exchange rate linked to other currencies, which is slightly daily. The currency was devalued at a rate set in advance and made known to the public (transparent). A close variant is the "corridor" (used in Israel and some South American countries). The exchange rate is allowed to move within a band above and below a central parity that itself depreciates daily at a preset rate.

The default rate reflects a real higher expected devaluation rate of inflation.

It denotes the country's intention to encourage its exports without rocking the boat money. It also signals to the markets that the government is committed to controlling inflation.

Therefore, there is disagreement among economists. It's clear that systems have a fixed interest rate down inflation almost miraculously. The example of Argentina is important: 27% per month (1991) 1% a year (1997)!

The problem is that this system creates a growing disparity between the stable exchange rate - and the level of inflation lower slowly. This in effect is the opposite of devaluation - the local currency appreciates, becomes stronger. Real exchange rates strengthened by 42% (Czech Republic), 26% (Brazil), even 50% (Israel until recently, despite the exchange rate system there is hardly fixed). This has a disastrous effect on the trade deficit: balloons and consumes 10.4% of GDP.

This phenomenon does not occur in non-fixed systems. Especially benign are the crawling peg and crawling band systems which keep pace with inflation and not let the currency appreciate against the currencies of major trading partners. Even then, the important question is the composition of the basket of attachment. If the exchange rate is linked to a major currency - the currency to appreciate and depreciate the major currencies. In a way the inflation of the currency most important is what matters through the mechanism of change. This is what happened in Thailand when the dollar strengthened on world markets.

In other words, the design of the system of pegging the exchange rate and is the crucial element.

In a crawling band system - the wider the band, the lower the volatility of the exchange rate. The European Monetary System (EMS - ERM), known as "The Snake", had to line up a couple of times during the 1990 and each time the solution was to widen the bands in which exchange rates can fluctuate. Israel had to do it twice. On 18 June, the band was doubled and the Shekel can go up and down by 10% in each direction.

But fixed exchange rates offer other problems. The strengthening real exchange rate attracts foreign capital. This is not the type of foreign capital, countries are looking for. Not the Foreign Direct Investment (FDI). It's hot money, hot in pursuit of increasing returns. Its aim is to benefit from the stability of the exchange rate - and high interest rates paid on deposits in local currency.

Let us study an example: if a foreign investor are converted to 100,000 Israeli shekels DM last year and invest in a liquid reservoir with an Israeli bank - the finished earning an interest rate of 12%. The exchange rate did not change appreciably - so he would need the same amount of Shekels to buy back DEM. In his Shekel deposit he would have earned between 12-16%, all net profits, tax free.

No wonder that foreign exchange reserves of Israel doubled in the last 18 months. This phenomenon occurred throughout the world, from Mexico to Thailand.

This type of foreign capital expands the money supply (which is converted to local currency) and - when it suddenly evaporates - prices and wages collapse. Therefore, it tends to exacerbate the natural inflation-deflation cycles in emerging economies. Control measures such as capital flows, taxes are useless in a global economy with global capital markets.

Also deter foreign investors and distort the allocation of economic resources.

The other option is "sterilization": selling government bonds and thereby absorb the excess money or maintaining high interest rates to prevent capital flight. Both measures have adverse economic consequences, tend to corrupt and destroy the banking and financial infrastructure and are expensive while bringing only temporary relief.

When flotation systems are applied, wages and prices can move freely. Market mechanisms are trusted to adjust exchange rates. In systems of fixed interest rate, taxes move freely. The State, voluntarily relinquished one of the tools used in fine-tuning the economy (exchange rate) - must resort to fiscal rigor, tightening fiscal policy (= collect more taxes) to absorb liquidity and curb demand when foreign capital is flowing in

In the absence of fiscal discipline, a fixed exchange rate will explode in the face of decision makers either in the form of forced devaluation or in the form of massive outflows of capital.

After all, what is wrong with volatile exchange rates? Why should they be fixed, except for psychological reasons? West has never prospered as it does today in the era of floating exchange rates. Trade, investment - all areas of economic activity that is supposed to be influenced by exchange rate volatility - are experiencing a continuous big bang. That daily small fluctuations (even in a devaluation trend) are better than a big devaluation in restoring investor and business confidence is an axiom. There is no such thing as a pure floating rate system (Central Banks always intervene to limit what they see as excessive fluctuations) - also agreed that all economists.

That exchange rate management is not a substitute for good practice of macro and micro-economic and political - is the most important lesson. After all, a currency is a reflection of the country is legal tender. Stores all data about that country and its evaluation. A coin is a unique package of past and future, with serious consequences in the present.

You may wonder "How can one begin to trade profitably as a currency trader?".

First, it is important to closely monitor foreign equity markets to try to predict or model how their respective currencies will perform against other currencies, ideally, currencies that are not closely related, nor proportional to the ancient coin.

For example, Mexico's economy is closely related to the U.S. economy in some respects, but in other respects, are not directly proportional since Mexico's economy is improving as a result of consumer finance increased, a greater number of remittances from relatives in the U.S., and other factors.

Back to our point of origin, when you start to notice that a stock market is about to become bullish, it may be a sign that the country's currency is based on the stock market you are looking may be about to rise. Conversely, if the market turns bearish, which may be a bad sign for the respective currency of the country. However, you may still be able to take advantage of falling markets and economies by short-selling a currency pair. This is a distinctive feature in currency trading: you can bet against the economy of a country (including yours!) By betting against the respective currency of that country.

Other currency fundamentals to consider are the interest rates of a country, the deficit, exports and imports, as well, and is probably very important, the oil prices. Look at the recent OPEC meeting affected oil prices and how they in turn had a significant effect on the DJIA.

For the first time in several years the U.S. dollar has managed to gain value against other world currencies. During the first three months of 2009, the U.S. dollar is approximately five percent against both the yen and the euro. The gains for the dollar should be considered significant when considering that the U.S. still faces a growing trade imbalance. So far this year, currency traders have shifted their focus of trade in the United States and large current account deficits to high rates of return offered on U.S. debt. The recent strength shown in the dollar has somewhat shifted sentiment in financial markets about the future direction of the currency. A Bloomberg survey released earlier this week shows that the major currency traders expect to see dollar weakness resume later this year, but the sentiment among dollar bears is much weaker than it was in the beginning of year.

The strength shown in the U.S. currency until the year 2009 should be as short duration. The strong gross domestic product (GDP) over the last eighteen months is beginning to show signs of approaching more normal levels over the next two months. Signs of slower economic growth will likely cause a change in sentiment among currency traders to the fundamental problems facing the U.S. economy. The U.S. trade and current account deficits show no signs of abating in the short term. In fact, we expect the trade figures which goes to show further deterioration in the trade balance during the coming months. Most industrialized countries outside the United States continue to experience anemic economic growth. This is putting more pressure on the U.S. dollar as the U.S. consumer continues to buy goods made in Europe, Japan and China.

Although we expect the dollar to resume its gradual decline against other major currencies, the major wild card in our forecast is, of course, China. Recent information from decision makers of China indicates that the Chinese are in no hurry to set the current value of the yuan-dollar relationship. In the event that talks about a possible revaluation arise later this year, the downward pressure on U.S. dollarcould accelerate the currency traders to buy the Japanese yen and other currencies in Asia free trade, which would probably benefit from a revaluation.