Posts Tagged ‘Australian Dollar’

Big profits from Currency Trading

January 24th, 2010 No Comments

If you want to make big profits from currency trading, you need to lock into and follow the longer-term trends.

The art of contrary thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.

What is the Art of Contrary Thinking?

Humphrey Neills book, “the art of contrary thinking, the best known work on the subject, is based on a simple powerful idea that:

“When everybody thinks alike, everybody is likely to be wrong”

The art of contrary thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior.

Why Contrary Trading Works

By spotting situations when the consensus of a currency is either extremely bullish or bearish, means that a trend change is imminent, as it is likely the emotions of greed and fear have pushed prices too far away from true value.

If you can step aside from the crowd and take a contrary view at these turning points, you can make big currency trading profits. Contrary thinking can be used in any market and is highly effective in currencies.

Contrary thinking can be used to make really big currency trading profits and if used selectively, when markets are extremely over bought or oversold, you can be in right at the start of the trend for maximum profitability.

In any currency you look at – The Yen, Euro, British Pound Swiss Franc Canadian or Australian dollar and many others, there are always occasions where a currency trend in the news is forecast to continue, due to overwhelming evidence in its favor and it then promptly collapses!

Big profits from currency trading can therefore be made by using the art of contrary thinking when the market is extremely bullish or bearish.

Why? Because everyone who has bought has taken positions and there are no buyers left. Prices have moved away from fair value. When there is no more buying to enter the market, a trend change is imminent.

It is clear that to succeed and make big profits in currency trading you need to think independently of the majority at important market turning points.

You can make big profits in currency trading from trend following, but you can with a little practice spot potential turning points in currencies as well which will help you bank profits, tighten stops or open new trades right on the turn, for maximum profitability.

Contrary trading will not only make you big profits in currency trading but in ANY market and has worked for centuries, as human nature never changes.

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Beginning Forex (Currency) Trading

January 11th, 2010 No Comments

Foreign exchange (forex) currency trading, the largest financial market in the world, requires a minimum of capital to invest and the profits can be substantial. Once you have learned the basics of forex, youre on the way to making money through the simultaneous buying or selling of currencies. Forex trading is instantaneous; as soon as you click the mouse, its done. The most commonly traded currencies, easiest to liquidate, are the U.S. dollar, Japanese yen, British pound, Swiss Franc, the Canadian dollar, Australian dollar, and the Eurodollar.

Unlike the stock market, forex trading has no central exchange. With forex, you can make a profit whether the market is up or down vs. only making money when the stock market is on the rise. By taking the long position with a pair of currencies, the forex trader buys at one price and sells when it reaches a higher price. The other option for the forex trader is to go short by selling currencies, anticipating depreciation, and then buying back when the value falls. The forex trader can pick either direction, long or short, and if correct, he will generate a profit. You can also set up a certain point (limit order) based on the amount of profit you want to earn to automatically limit the order. In the same way, you can stop or close an order to automatically liquidate if the currency trade is going against you.

In general, the strength of a countrys economy determines the value of its currency. Other factors to take into consideration in forex trading are the political and social status of the country, interest and employment rates, and the overall stability of its government. You will learn to see patterns or trends as you become more familiar with the ins and outs of forex trading.

The Forex market is a 24-hour trading place, Sunday through Friday, giving you the option of trading at any time of the day or night. Unlike the stock market, it doesnt close with the ringing of the bell. Forex online firms provide demos, guidance, and market news for the beginning investor. You can practice your skills in forex trading before actually investing real capital. Once youve learned the basics, a minimum investment is made, sometimes as low as $200.00. These mini-trading accounts are a good way to begin forex trading and often there is no commission attached to your trading. You dont have to be a seasoned market analyst or economist to learn, enjoy, and make money with forex currency trading.

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Beginning Forex (Currency) Trading

January 4th, 2010 No Comments

Foreign exchange (forex) currency trading, the largest financial market in the world, requires a minimum of capital to invest and the profits can be substantial. Once you have learned the basics of forex, youre on the way to making money through the simultaneous buying or selling of currencies. Forex trading is instantaneous; as soon as you click the mouse, its done. The most commonly traded currencies, easiest to liquidate, are the U.S. dollar, Japanese yen, British pound, Swiss Franc, the Canadian dollar, Australian dollar, and the Eurodollar.

Unlike the stock market, forex trading has no central exchange. With forex, you can make a profit whether the market is up or down vs. only making money when the stock market is on the rise. By taking the long position with a pair of currencies, the forex trader buys at one price and sells when it reaches a higher price. The other option for the forex trader is to go short by selling currencies, anticipating depreciation, and then buying back when the value falls. The forex trader can pick either direction, long or short, and if correct, he will generate a profit. You can also set up a certain point (limit order) based on the amount of profit you want to earn to automatically limit the order. In the same way, you can stop or close an order to automatically liquidate if the currency trade is going against you.

In general, the strength of a countrys economy determines the value of its currency. Other factors to take into consideration in forex trading are the political and social status of the country, interest and employment rates, and the overall stability of its government. You will learn to see patterns or trends as you become more familiar with the ins and outs of forex trading.

The Forex market is a 24-hour trading place, Sunday through Friday, giving you the option of trading at any time of the day or night. Unlike the stock market, it doesnt close with the ringing of the bell. Forex online firms provide demos, guidance, and market news for the beginning investor. You can practice your skills in forex trading before actually investing real capital. Once youve learned the basics, a minimum investment is made, sometimes as low as $200.00. These mini-trading accounts are a good way to begin forex trading and often there is no commission attached to your trading. You dont have to be a seasoned market analyst or economist to learn, enjoy, and make money with forex currency trading.

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Apply the Secret To Forex Trading Success

January 3rd, 2010 No Comments

The Forex market is the largest trading network in the world with $1.8 trillion dollars being exchanged every day. There are dozens of different currencies traded but the big players to focus on are all traded with the US dollar and include: EUR (Euro), GBP (British pound), JPY (Japanese yen), CHF (Swiss franc), AUD (Australian dollar), NZD (New Zealand dollar), and the CAN (Canadian dollar). Each of these currencies is exchanged with the currency of other nations at different exchange rateswhich are always in a state of flux because the market trades around the clock (Sunday through Friday). The volatility and sheer size of the market means that there is ample fluctuation to produce big profitsand losses. The challenge for the investor, as always, is to predict which direction the rates of currency pairs will fluctuate.

The beginning point in any investment strategy is determining what type of analysis will be used to help guide enter and exit decisions. Investors who use fundamental analysis look at a nations interest rates and other economic indicators when deciding to enter or exit a position. Fundamental investors tend to trade based upon news releases and economic data from the nations involved in the currency pair.

Briefly, technical analysis involves the interpretation of price performance and chart patternsall historical data. Some technical indicators used in this type of analysis include:

Moving averages including Simple & Exponential
Breakout Points
Lines of Support & Resistance

Technical traders do not believe that the past necessarily predicts the futurebut that long and short term trends can be identified and exploited to help guide current decisions on entry and exit points on positions. Technical traders try to identify current trends in the Forex market to determine entry and exit points. If they are correct, they can ride a trend (in either direction) for a profit until an exit point is reached (when the trend is ending).

The most successful traders on the Forex tend to look for long-term trends and favor technical analysis. Fundamental traders have to enter and exit positions very quickly in order to capitalize in price fluctuations caused by news events (interest rate changes, release of economic data, etc.) and are therefore more vulnerable due to excessive trading. If there truly was a secret to trading success on the Forex, the top investors all tend to agree on the following:

1.Choose currency pairs involving U.S. dollar (has volume to produce the price fluctuations necessary for big profits and the liquidity to enter/exit positions at will)
2.Find currency pair through backtesting that has most profit potential (pip movement) and least volatility through use of technical analysis
3.After determining trends, set stops and exit points for both protection and maximum profitability
4.Review charts once per day (overtrading and day trading can hurt your portfolio)
5.Remain patient and exit positions once technical decision point has been reached

If there really is a secret to trading success on the Forex it has to be patience. Trading strategies are never perfect because the market will never be predictable 100% of the time. There will be times when any strategy fails and stop points are reached before profits are realized. Continuous back testing, remaining patient, and setting stops are the true secrets of Forex success.

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6 Advantages Of Trading Forex

December 18th, 2009 No Comments

Forex is the popular term for foreign exchange markets. The banks and brokerage firms are linked via electronic network to do business in the stock markets. The network allows them to convert currencies worldwide.

It became the chief and largest liquefied financial market around the globe. Take for instance, the volume of dollar currencies can rapidly increase in trillions of dollars within a day in currency markets. It even goes beyond the total volume of the total equities in the U.S. as well as future markets.

Forex trading is dominated often by commercial banks, investment banks, and government central banks. This is the main reason why many private investors are dealing on currency exchanges. They find it easier to access the market through technological innovations such as the internet.

It also provides the needed information in the stocks market regarding trading forex. The currencies which are widely traded include British Pound, US Dollar, Japanese Yen, Swiss Franc, Australian Dollar, and Canadian Dollar. Forex trading is done 5 days within a week and the traders can have constant access to various dealers all around the world. The trading does not mainly focus on any exchange or physical location and the transaction happens between two persons via electronic network or a phone line.

Forex trading has grown rapidly on the global market. The restrictions on the flow of capital have even been put off in various countries. This factor leads to market independence settling the forex rates on its perceived values. There are different reasons why forex trading is very popular. It include utmost liquidity, available leverage, lower trading costs.

There are different advantages of forex trading in the stock markets. Traders are making bigger sums of money by selling and buying foreign currencies. However, some people might ask of its advantages on the stock market.

1. Liquidity. Forex market can handle transactions even if it reaches 1.5 trillion dollars every day. Take note, this is a very large volume. It only denotes that sellers and buyers are always available regardless of the currency types. So, if the trader wanted to buy, there is always an available seller, and if the trader wanted to sell, there is always an available buyer.

2. There is no insider in the trading systems. Remember, constant value fluctuations of several currencies are caused by economic change. Some traders may obtain the information before others get it. So, they can sell or buy it within the stock markets. However, the nations economy is accessible to every trader so nobody can take an inside advantage to anyone.

3. It has accessibility. It is operational for five days within a week and accessible for twenty four hours. Trading can be made during this period.

4. It has more predictability. It always follow the market trends even the trends that are well established.

5. It can allow smaller investments. The potential traders can open mini accounts even for a few bucks of dollars. Forex trading has high leverage which is around 100:1. It only signifies that your assets can be controlled 100 times over your invested money.

6. It has no commissions. The forex trading brokers can earn money through setting their spreads where they weigh the process between selling and buying currencies.

Forex trading can be one of the best systems in day trading. Since it deals with currency trades, it can have the largest volumes of trading. Although it can be labeled as high risks trading systems, it can bring the traders higher returns within minutes.

However traders should be aware that forex trading needs a thorough research before starting it. Never confine yourself with only one source. Always make it a part of your plan to research first before engaging yourself in the real forex trading. It is not enough to know its advantages. As a trader, you need to clearly understand the systems involved in forex trading. It is helpful if you read the latest forums posted in the community boards.

It is also important to find the best forex trading systems. In this manner, you can incorporate a course, software, or method developed by forex trading experts. Take note, there are various system types that are available. It is important to find the right system that will fit in your goals in the industry of trading forex to achieve success.

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How To Start Trading The Forex Market? (Part

December 7th, 2009 No Comments

How To Start Trading The Forex Market? (Part 5)

What are *PIPS* ?

Currencies are traded on a price/ point (pip) system. Each currency pair has its own pip value.

When you see a FOREX price quote, you’ll see something listed like this:

EUR/USD 1.2210/13

Explanation:

a) If you want to BUY the EUR/USD ( meaning you BUY EUROS and SELL US$ ) you buy 100,000 EUROS and you SELL 122,130 US$, or in other words you receive
122,130 US$ for 100,000 EUROS.

B) If you want to SELL the EUR/USD ( meaning you SELL EUROS and BUY US$ ) you buy 122,100 US$ and sell 100,000 EUROS, or in other words you receive 100,000 EUROS for 122,100 US$.

The difference between the bid and the ask price is referred to as the spread. In the example above, the spread is 3 or 3 pips.

Since the US dollar is the centerpiece of the FOREX market, it is normally considered the ‘base’ currency for quotes. In the “Majors”, this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair.

For example a quote of USD/CHF 1.3000 means that fore one U.S. dollar you receive 1.30 Swiss Francs. or in other words, you receive 1.30 Swiss Franc for each 1 US$.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/CHF quote above increases to 1.3050 the dollar is stronger because it will now buy more Swiss Franc than before.

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as EUR/USD 1.2080, meaning that for EURO you receive 1.2080 U.S. Dollars.

In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one Euro, British pound or an Australian dollar.

In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but the calculation is the same. For example, a quote of EUR/JPY 134.50 signifies that one Euro is equal to 134.50 Japanese yen.

HOW TO BUY ( going LONG )and SELL ( going SHORT ) in the FOREX Market?

Keep in mind 2 very important rules:

RULE # 1) Cut your LOOSING trades and let your WINNING trades RUN

YOU WILL HAVE LOSING TRADES. Every FOREX trader has. The secret is, that a consistent, disciplined trader, at the end of the day, adds up more winning trades than losing trades.

When you and see on your charts, without any doubt, that you are in a losing trade, don’t keep losing money. Most of the novice traders are lowering their stop loss just to prove they are right or hoping that the market will reverse. 99% of these trades, are ending up with more losses. Most of the profitable trades are usually “right” immediately.

Remember, smart traders know there are many other opportunities. CUT your losses short and compound those winning positions.

RULE 2) NEVER EVER trade FOREX without placing a Stop Loss Order.

PLACE a STOP order, right along with your ENTRY order, via your online trading station, to prevent potential losses.

Before initiating any trade, you have to calculate at what point ( price) you would be wrong, because the market changed direction, and would want to cut your losses.

To make profits, in the FOREX, a trader can enter the market with a *buy position* (known as going “long”) or a *sell position* (known as going “short”).

As an example let’s assume you’ve been studying the EURO. The EURO is paired first with the U.S. dollar or USD.

Your trading methods, rules, strategies, etc., tell you that the EURO will rice in the next 2 weeks, So you buy the EUR/USD pair meaning you will simultaneously buy EUROS, and SELL dollars).

You open up your excellent trading station software (provided to you for free by Fenix Capital Management, LLC www.fenixcapitalmanagement.com ) and you see that the EUR/USD pair is trading at:

EUR/USD: 1.2010/1.2013

As you you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market.

As an example, lets say you bought one lot EUR/USD at 1.2013. As long as you sell back the pair at a higher price, then you make money.

To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:

REMEMBER Selling (”going short”) the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).

HOW TO CALCULATE PROFIT OR LOSS?

The Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you’ve never been in the FOREX market before, but this process is continually calculated through your broker trade station (software). I show you this process below so you can SEE how a PROFIT might occur.

The current bid/ask price for USD/JPY is 107.50/107.54, meaning you can buy $1 US for 107.54 YEN, or sell $1 US for 107.50 YEN.

Suppose you think that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.

Your trade would be the following: you sell 1 lot USD (US $100,000) and you buy 1 lot JPY (10,754.000 YEN). (Remember, at 0.25 % margin, your initial margin deposit for this trade would be $ 250.)

As you expected, USD/JPY falls to 106.50/106.54, meaning you can now buy $1 US for $106.54 Japanese YEN or sell $1 US for 106.50.

Since you’re short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.

You buy US $100,000 at the current USD/JPY rate of 106.54, and receive 10,654,000 YEN. Since you originally bought (paid for) 10,754,000 YEN, your profit is 100,000 YEN.

To calculate your P&L in terms of US dollars, divide 100,000 by the current USD/JPY rate of 106.54

Total profit = US $938.61

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