An Introduction to Forex Trading

I'm sure you've already heard of Forex trading. It is certainly one of the hottest topics around these days. But what exactly is it, and how can the average person make good money in Forex?

Forex, also called "FX", is short for foreign exchange. The foreign exchange doesn't get the big press like stocks, options, and commodities. But the foreign exchange is the biggest market in the world and it offers investors an incredible opportunity for profit.

When you trade on the foreign exchange, you don't trade in stocks or bonds, but in currency.
Simply put, Forex trading is just the buying of one currency and the selling of another. As exchange rates go up and down, you either make or lose money.

With Forex, you're not investing in a single company or even a group of companies. You're investing in the economy of nation. You are betting that the overall economic health of one nation will improve in relation to that of a second nation.

For example, let's say you are analyzing the US Dollar and the Japanese Yen. Your research seems to indicate that the US dollar is undervalued and is due for a rise in price, and at the same time you expect the Japanese Yen to lose value.
In this case you would execute a trade to buy US dollars and sell Japanese yen.
If you are correct and the exchange rate rises, you make a profit!

So its a cinch, right?
Well no, not really.
Currency prices can be incredibly difficult to forecast because there are so many factors that can contribute to a change in exchange rates. And you must remember that in currency trading you always trade in pairs. You buy one currency and sell another. So you can't just look at one nation's economy; you must look at two.

Of course, you do not have to limit yourself to only one pair of currencies. There are dozens of different currencies to choose from. But if you are just starting out, I suggest sticking to the seven major currencies:

USD - US Dollar

EUR - the Euro

GBP - British Pound

JPY - Japanese Yen

CHF - Swiss Franc

AUD - Australian Dollar

CAD - Canadian Dollar

Pakistan Open Market Forex Rates

Aug 30 2009, 12:50 PST
Australian Dollar AUD 68.8 69.8
Bahrain Dinar BHD 218.25 221
Canadian Dollar CAD 75.3 76.3
China Yuan CNY 12 13.5
Danish Krone DKK 15.8 16.2
Euro EUR 118 119.5
Hong Kong Dollar HKD 10.55 10.9
Indian Rupee INR 1.7 1.8
Japanese Yen JPY 0.87 0.88
Kuwaiti Dinar KWD 284.4 287
Malaysian Ringgit MYR 23 24.5
NewZealand $ NZD 56.2 57.2
Norwegians Krone NOK 13.7 14.1
Omani Riyal OMR 213.85 217
Qatari Riyal QAR 22.6 22.9
Saudi Riyal SAR 21.92 22.12
Singapore Dollar SGD 56.9 57.9
Swedish Korona SEK 11.6 12
Swiss Franc CHF 77.6 78.6
Thai Bhat THB 2.4 2.6
U.A.E Dirham AED 22.42 22.62
UK Pound Sterling GBP 134 135.5
US Dollar USD 82.6 83

Fundamental Analysis: Introduction

So, you want be a stock analyst? Perhaps not, but since you're reading this we'll assume that you at least want to understand stocks. Whether it's your burning desire to be a hotshot analyst on Wall Street or you just like to be hands-on with your own portfolio, you've come to the right spot.

Fundamental analysis is the cornerstone of investing. In fact, some would say that you aren't really investing if you aren't performing fundamental analysis.Because the subject is so broad, however, it's tough to know where to start. There are an endless number of investment strategies that are very different from each other, yet almost all use the fundamentals.

The goal of this tutorial is to provide a foundation for understanding fundamental analysis. It's geared primarily at new investors who don't know a balance sheet from an income statement.While you may not be a "stock-picker extraordinaire" by the end of this tutorial, you will have a much more solid grasp of the language and concepts behind security analysis and be able to use this to further your knowledge in other areas without feeling totally lost.

The biggest part of fundamental analysis involves delving into the financial statements. Also known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and all the other financial aspects of a company. Fundamental analysts look at this information to gain insight on a company's future performance. A good part of this tutorial will be spent learning about the balance sheet, income statement, cash flow statement and how they all fit together.

But there is more than just number crunching when it comes to analyzing a company. This is where qualitative analysis comes in - the breakdown of all the intangible, difficult-to-measure aspects of a company. Finally, we'll wrap up the tutorial with an intro on valuation and point you in the direction of additional tutorials you might be interested in.

(Also, although it's not required, you might find it helpful to read our Investing 101 tutorial, as well as our tutorial on Stock Basics, before starting.)

Forex Tips to Increase Profits and Decrease Risk!

If you have never considered sing Forex Options then you should. They can simply overcome the major problem most Forex traders face - getting stopped out by short term volatility... A Forex Option gives you unlimited profit potential and your risk is simply the price you paid for the option. This means, prices can go anywhere in the short term but so long as the option trades above the price you bought it at, in rising market or below in a falling market you make money. How many times have you been stopped out by short term volatility, only see the price go right back the way you thought they would, make thousands of dollars and your not in the trade? It happens to most traders! Picking the direction of the long term trend is easy; balancing the risk reward in the short term is the hard part. You want to be in the trend - but you don't want to have to worry about short term risk. Staying power is the key advantage Forex options give you.Options are a great tool to limit short term risk - but you need to use them correctly and here are two simple tips. 1. Always Buy at or in the Money Options. Never buy way out of the money options, as these are long shot bets. Sure the profit potential is bigger, if the strike price is hit but the key word here is "if"; out of the money options, are the equivalent of outsider bets and the outsider doesn't normally win!2. Get Time on your SideThe closer the option is to expiry, the more time decay plays a role in option value. Never buy options with less than 3 months to expiry, so you have plenty of time on your side. Options the Ultimate Risk Control Tool!Forex options are a powerful tool any Forex trader should look at to deal with volatility and gain staying power. The problem most of the time is not deciding where a currency will go long term but where to place your stop and options take care of this problem, by giving you staying power. If you don't know much about options, then make them part of your essential Forex education and add a valuable tool, to your armoury for bigger Forex profits.

Short Term Options Trading

Many traders consider options and warrants to be long term trading markets (i.e. swing and position trading), but options and warrants can also be traded short term (i.e. day trading). Trading options short term is not dramatically different from trading any other market (e.g. futures, individual stocks, etc.), but there are a couple of options specifics that need to be taken into account.
My short term options trading article provides a discussion of short term options trading, and explains how various options and warrants trades can be used to make various underlying trades. Trading options and warrants short term is most suitable for stock index and individual stock traders, so even if you are not usually an options trader, trading options short term could be a useful addition to your trading.

How far can the dollar go down?

Theoretically, the US Dollar can go to zero. While unlikely, it should be remembered that nearly every currency that has ever existed throughout history, eventually has a crash that destroys 90% of absolute value, or more.Won't foreign Central Banks support the dollar?Why should they? If you are hungry, and your 600 lb. neighbor (who is now so fat he can't even walk anymore he needs to use one of those little carts) missed a few meals, which happen to be 5x expensive as yours, would you finance his dessert? Of course not. You are thinking many things, but supporting his habit of overeating isn't one of them. The US consumes over 25% of the world's resources but produces less than 10%. Economists may not care for such a crude analogy, but the situation with the US Dollar is very, very simple, and should not be overcomplicated. The USD has been a reserve currency for the post WW2 world, but since Nixon abandon gold standard, the USD is backed by only the belief and faith in US Government. We are seeing a commodity boom, not because of a bubble in commodity asset prices, but because of a decline in the USD, the world's reserve currency in which many commodities (especially Oil and Gold) are priced. In any event, it's not likely that foreign central banks will bail out the dollar, because that would in effect make them eat a realized loss in their current account. Moderately wealthy nations cannot afford to take the loss of the US, the largest and wealthiest economy in the world. The US has been a financial big brother who have bailed out other failing economies but the US has no big brother to lean on, except maybe Russia, although that wouldn't go over too well in Washington. So if the US Defaults, who can come to the rescue?

Currency Trading Tutorial

We have tested some of the most popular Forex automated trading software systems in the marketplace and below are the results of our tests.
If you are new to forex, then one of these tools would be an excellent way of teaching you the forex market. It will also save you the heartache of losing money when you first start out.
Graded On :
Easy To Use Software.
Accurate Forex Forecasting.
Easy To Setup.
Makes You Money.