In the spot forex market, all trades must be completed within two business days. A rollover is the process of closing open position for today's value date and the opening in the same position for the next value date at a price that reflects interest rate differentials between two currencies.

According to international banking practice, the Forex broker automatically cancel all open positions at a later date at 17:00 EDT for settlement.

Rollover involves changing the position held for the position following the completion date expires. For example, for surgery on Monday, the date is Wednesday.

However, if the position is opened on Monday and held overnight, the present value on Thursday. The only exception is the open position and held on Wednesday night. Normal exchange date will Saturday, because the bank is closed on Saturday the true value of the following Monday. Since the weekend, positions held during the night or the support to get two extra days of interest Wednesday.

Trade with a value date that falls on a holiday will also incur or earn additional interest. Merchants can earn interest on rollovers, depending on their position and direction of interest rate differential between two currencies involved.

For example, the main interest in the UK is much higher than in Japan, if a trader buys GBP, he / she will earn interest at 5 pm. On the other hand, if he / she sells GBP in this currency pair, he / she must pay interest at 5 pm ET.

Overnight interest / rollover automatically paid to the customer after buying a currency with higher interest rates in the nation, on behalf of a client if the country issuing the currency rate of major concern.

The market today is very different from the future of the future of the 19th century. The current market is the future of the world, including manufactured goods, currency and finance charges, and agricultural products.

Speculating about the future is not real property contracts rather speculate about the product is marketed as a value. Every futures contract includes a buyer and seller. The following is an example of a futures speculation: A farmer agrees to deliver 1,000 tons of corn to a baker at a price of $ 5.00 per bushel. If the daily price of corn futures fell to $ 4.00 per bushel, farmers account credited with $ 1,000 ($ 5.00 - $ 4.00 per 1,000 bushels) and the baker's account is charged the same amount. Deposit accounts completed each day.

Using this as an example here is how the completion of a contract to play for: If the price of corn futures is still at $ 4.00 the farmer will make $ 1000 in the futures contract and the baker had lost the same amount. However, the baker can now buy wheat on the open market at $ 4.00 per bushel - $ 1000 less than the original contract, so the amount lost in the futures contract is formed by the lower cost of corn. In addition, farmers had to sell grain on the market opened at a cost of $ 4.00 per bushel, less than he expected when entering the futures contract, but the profits generated by the futures contract is the difference.

Speculators profit by daily fluctuations in futures markets choose to buy the seller (buying short-term) or the buyer (buying long).

The foreign exchange market has advantages over the futures market. FOREX is the largest financial market in the world. It is a liquid market and stop orders can be implemented more easily and with less slippage in other markets. Forex market is open 5 days a week, 24 hours a day. Operators can take advantage of opportunities as they become available. Foreign exchange transactions are usually instantly executed. Foreign currency transactions are commission free. Agents make money on the spread.

Some investors believe that because of the construction ensures that Forex is safer than futures.

With the events of the day, more people are interested to invest their money to grow faster. The problem is that few people are willing to risk investment because of the risk, so some of them just leave the money in the bank routine. Not that there's something wrong with the bank, except that they have a low level and money is time to grow. If you want real money, you have to take risks. Get money for cash, the risk is always present, if you want money fast and high.

One of the largest sites where you can invest your savings is Forex. Forex trading has been around for decades, and is considered the largest financial forum in the world with approximately $ 3.1 billion in volume every day. Forex (Foreign Exchange) trading is open 24 hours and never sleep. Transactions conducted around the world via telephone and computer, money changes hands in their millions in a matter of seconds. Forex trading consists of thousands of individual banks and forex trading which oversees development around the world, developments that could affect the value of its currency. Forex trading refers to trading currencies from different countries. The idea is to determine the rise and fall of the value of certain currency and trade when he sees fit.

Forex trading for small operations, managed accounts are ideal, they care, because we engage in less risky. Here, you entrust your investment with other forex brokers have a reliable, honest and ethical. Forex broker uses extensive knowledge and long experience and the use of strategies to develop your money, for a price, of course.

With the advent of the Internet, Forex trading can be done at the click of a mouse. Money moving through space and children all the time. Computers have greatly helped in the growth of foreign exchange transactions can now be done anytime anywhere. Because someone at a certain time every day around the world, will never lose someone to trade.

There are two fundamental and important to analyze and evaluate the currency. There are technical analysis and fundamental analysis. There is a difference between the two. In fundamental analysis, analysis and Forex broker to consider the causes of market fluctuations. Causes may include the political status of countries, laws and regulations, financial policies, growth rates and other factors. Technical analysis of Forex trading involves graphs, charts and other methods for measuring past data to see the indication of the rise and fall of currencies. Get all the information they need and use it to calculate and predict the likelihood of a particular currency.

There is much to learn about Forex trading, even an experienced rider to learn something new every day. Forex trading involves substantial benefits at a glance if you catch the right time and transaction costs. But remember there is a risk, forex trading can be speculative, especially if you're a poor prognosis. Before investing your money in a company, try to learn about their history and their history in forex trading.
Market knowledge and ability to understand further analysis in forex trading but without the courage to actively compete risking your own money in the process can never be a successful trader.

Large amount of money bet on the market is very sensitive to change is likely to cause a range of opposing emotions, fear, excitement and anxiety to name a few. Battling your emotions to complete a successful transaction is one of the biggest hurdles to overcome if you become the operator can reach an agreement and to obtain large amounts of money. If you can overcome or even to use emotions to make trades in Forex then a successful career can be exciting, but to do so will almost certainly cost you large sums of money and end the persistent desire to advance in the animated world of commercial exchange.

Early and close the trade at the right are the backbone of becoming a successful trader. If someone can not execute the agreement in a timely manner, psychological and financial damage can be overwhelming. Lost a major trend or sitting for a long time for a good price, can be a daunting experience, but many are in a career in forex trading.

Enter the time to do one thing correctly, but if you can not leave on time or keep them quiet during operation, the consequences are serious. Such as accepting a small loss before leaving the market can lead to terrible proportions a large margin of profit / loss. Just sit on the price of the currency is in free fall for too long can be financially crippling. Understanding the Forex market and have faith in your ability to assess trends will pay dividends if you hold your nerve, back at the wrong time could be disastrous mistake.

The fear generated by investing your own money is the main thing that must be addressed. Guilty of failure are so many stories of people who can not cope with their anxiety investing unwisely, pulling at the wrong time, the lack of overall improvement, all the results in a failure and is caused by fear. Acceptance of this fear and use it to its full potential will make you a stronger trader, able to trade freely and enjoy the excitement of change. Fight will get you nowhere, understanding and improvement are the best solution to this emotion-based.

Trading strategies will help you through the tough times and enjoy the good. Sometimes, just take a step back and accept the losses will be given the strength and knowledge to attack a currency with a new spirit, and make some serious profits. Accept that sometimes you lose, you should be able to take the punches and roll with the punches, there are no guarantees in the commercial market, to be able to move and start again is a very important skill to produce success.

Analysis and graphics can only go so far. First, you need to master these things, and can correctly interpret these figures to identify trends and make your move. But all that means nothing if you do not have the courage his conviction. If you are afraid to buy and do not know when to sell and then a successful career in market transactions is likely to run away. "The trend is your friend", but it has no meaning if the first one you can not see and others do not have the courage to save. Knowledge, and strategies to overcome the fear of maybe 3 to be the best way to open the door to become a successful trader. Without the 3 more often than not take off, to prepare, train and evaluate everything before taking the decision into the complex world of Forex trading.

The foreign exchange market is the most vulnerable investment platform, which is strongly influenced by the news from around the world. Therefore, learn to take advantage of Forex news, investors can avoid the costly mistakes many businesses and increase profits. In fact, the ability to predict and analyze Forex news is what separates a novice forex investors with experience.

Tips for using Forex News

The first thing to consider commercial Forex news, is that while the press itself has little importance. The most important is the analysis of the same. Remember, the trader can draw different conclusions from the same news. Forex news analysis is not objective, the safest thing to do is have a new image and draw your own conclusions. To work as a professional through Forex news, just check the news and evaluate how to move in exchange rates. Monitoring the evolution of potential trends, which usually happens when the news is not optimistic to push prices up or down the news did not lower the price.

In addition to trade like a pro Forex news, watch high-impact press releases. Do not waste your time discussing trivial events related currencies. Press releases, high-impact are those that have a high probability:

  • Moving the market: All events can move the market. Note that sometimes the feeling is driven currency. As a result, the news could not have an impact significant enough to alter the dominant trend of the currency market.
  • Predictable response: Based on the reaction history, press releases, high-impact move a currency pair usually for a few pips (or points). Therefore, while the trade is very important to collect Forex news press release relating to the trade.

Events affecting the value of major currencies such as the U.S. Dollar, Euro and Pound are also considered high-impact news. This is due to the location and movement of this currency, directly and indirectly affect the value of most currencies in the forex market.

While the foreign exchange market by Forex news is the best strategy, which is important to note is that, for forex news is often too late to be fully captured. Often times, when high-impact news becomes available to merchants in general, have been analyzed by many professional traders and financial institutions, which increases vulnerability to personal and institutional bias.
Forex trading is now one of the most sought after jobs for many people of all ages around the world. This is because the major advantages over other capital markets and high yield potential among these advantages is that it is very easy to access the trading platform best forex brokerage firms, with the internet, and therefore, you will see that the currency has a high liquidity, combined with high leverage.

However, brokerage firms and have a good trading platform is only part of what you should do your Forex trading career a winning and profitable. You must have the knowledge and skills necessary to accurately predict what the market will do. One technique used to predict the behavior of the Forex market is that based on Bollinger Bands.

Bollinger Bands This is what is called a bargaining tool and techniques are widely used in capital markets (including Forex) and was created by John Bollinger in the early 1980s. This band technique was developed based on the need for adaptive trading bands and the discovery that market volatility was dynamic, not static, like a thought at this time.

Bollinger Bands consist of a panel of three curves corresponding plucked currency prices. Band in the middle is the size of a medium-term trend and is usually a simple moving average, which is the basis for the upper and lower bands. The interval between the lower and middle band is determined by market volatility, typically the standard deviation of the same data used for the moving average. The default setting is 20 periods and two standard deviations above and below the middle band, of course, this can be customized to fit your needs.

In short, the purpose of Bollinger Bands is to provide a relative definition of high and low prices. By definition, the price is considered high by touching the upper and lower bands when you touch the lower band. Relative definition can be used by Forex traders to compare prices and stock as a useful indicator of the operator when the purpose is to buy and sell decisions strictly.
What is Forex or foreign exchange market: It is the largest financial market in the world with a volume of over 1.5 trillion dollars every day, it's money. Unlike other financial markets, the forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

What prediction: predict market trends and the future by using existing data and facts. Analysts rely on technical and fundamental statistics to predict the direction of the economy, the stock market and individual values.

For those who trade on the Forex, or foreign currency exchange, knowing how to forecast the Forex can be the difference between commercial success and the loss of money. When you start to learn about Forex trading, it is imperative that you understand how to predict the Forex market.

There are several methods used in the currency forecasting. Each system is used to understand how the forex market works and how it may affect fluctuations and foreign exchange dealers. The two-most commonly used is called technical analysis and fundamental analysis. The two methods differ in their way, but everyone can help the Forex trader understand how they affect the rate of currency trading. Most of the time, experienced traders and brokers know the method and use a mix of both to trade Forex.

One of the methods used to predict the exchange rate is known as technical analysis. This method uses the predictions of trends in the forex charts and graphs of recent events on the market. The system is based on solid facts which actually existed in the Forex in the past. Many traders and agents are based on the experience of this system as it follows the trend of reality and can be quite reliable.

In reviewing the technical analysis in forex, there are three basic principles that are used to make projections. These principles are based on market action with respect to timeliness, currency movements and price trends of history. When he saw action in the market, while supply and demand, current policies and market conditions currently being studied. It is generally agreed that the real price of money is a direct reflection of the news.

The trend of price movement is another factor in the use of technical analysis. This means that there are trends in market behavior has been known to be a factor in Forex. This model is usually repeated over time and can often be a constant factor in predicting the currency market. Another factor to consider when forecasting the Forex is history. There is no specific model on the market and is usually confidence factors. There are some graphics that should be considered when forecasting the Forex market using technical analysis. Five categories are indicators, number theory, waves, gaps and trends.

Most of them can be very difficult for novices to the Forex. Most professional Forex brokers understand the tables and have the ability to offer its customers well-informed advice on forex trading.

Another way that experienced brokers and traders in the currency used to predict the trend of so-called fundamental analysis. This method is used to predict future price movements based on events that have not yet arrived. This can range from political changes, environmental factors and natural disasters, even. Important factors and statistics that are used to predict how it will affect the supply and demand and the level of the currency. In most cases, this method is not a reliable factor alone, but used in conjunction with technical analysis to form an opinion on the changes in the Forex market.

For those interested in participating in Forex trading, a basic understanding of how the system is very important. Understanding prediction systems and two way to predict market trends will help Forex traders with its commercial success. The most experienced operators and agents involved in the Forex use a system of technical and fundamental when deciding on the Forex market. When used together, can provide investors with useful information on trends of change, where they go.

Always leave the forecasting to the professionals unless you are playing the Forex as a hobby and have invested a lot of money ... Or you're like most people learn the hard way.
Many people have been 'burnt' from scam operations on the Internet. Their sites may look so perfectly legitimate that you doubt they would have gone through all that trouble building a trading platform just to steal your money. Be careful.The first thing I look for is the broker location. If I find they are based in a country where the financial sector is, in my opinion, relatively unregulated, and not, I quickly forget to sign up. This is bad news for honest brokers in those countries, but your job as a trader is to protect your capital. If you lose, you can not negotiate. The onus is on them to convince you they will do the right thing by you as an investor.I started with a broker in Australia. I am currently using an American. I have not tried to negotiate based on the UK, but the British financial industry is one of the best.Companies based in countries like Japan, Germany and France could also, if their website speaks your language.Note the license number they may have registered with a regulatory body that acts as a government watchdog overseeing the financial sector and investment. This is an organization that has strict rules to protect your investment. Some of these rules may include requirements that all funds brokers' client funds separate operating company.Your money is needed to put in a very reputable bank and the funds are withdrawn from these accounts on specific withdrawal requests.Note that there are some fake regulatory bodies being thrown around in cyberspace as well. Look how long they have been operating. Try to find comments or observations about them. See if you can find forums where traders discuss their broker.Here is a list of things to keep in mind to help you avoid becoming a victim of a scam:Stay away from opportunities that sound too good to be trueThere are people who have recently acquired a large amount of money just and recently are the same and go around safe investment vehicles. They may be retirees who have access to their pension funds. It is easy to see why retirees would be interested in high yield, low risk investments. This is also what makes them very vulnerable. If you identify with one of those people, be careful. Many crafty character of your money. Furthermore, only a small amount of money you allocate to trade until you can begin to grow. Not everyone can successfully negotiate, so it's a business, you need to take arbitrary. This is your savings at risk.Prevent individuals or organizations that claim to predict or guarantee Great AdvantagesAny form of trading is difficult. Currency trading is no different. Be wary of statements that make it look easy. Statements such as:"Whether the market moves up or down, in the currency market, you will make a profit";"Make $ 1,000 a week, every week";"We outperform 90% of the investment in the country";"You will make a profit of 70% per year";"This is a strategy without risk."If they can get such results, why did they bother to tell you about it.Businesses are wary of the risks discouraging investmentBrace yourself and purse zipper bag when companies say that written agreements risk disclosure are routine formalities imposed by the government. Be careful with statements like:"With a deposit of $ 10,000, the maximum you can lose is $ 200 to $ 250 a day";"We will recover the losses you have."Beware of companies claim to trade in the "interbank market"Do not believe when some people say they have access to the "interbank market" or they can give you access to trade in this market because it is cheap can be obtained.This is not true. The "interbank market" is not a place, it's not a physical building. This is just a loose network of currency transactions negotiated between big financial institutions and other large companies.Ethnic minorities are often targetedEthnic newspapers and infomercials' are sometimes used to draw the Russian TV, Chinese and Indian minorities. Sometimes these ads offer so-called employment opportunities "for account executives to trade foreign exchange," where "executives recruited into account" are expected to use his own money for currency trading and are often encouraged to recruit members as friends and family do the same thing.Search for Company HistoryCheck the information you receive to ensure that the company they claim to be. If possible, try to get the background of the company's operations. Do not rely on verbal statements and promises made by company employees.If you are in doubt, it is not worth risking your moneyIf after trying to seek information and at the end of it all, you are still uncertain about the beliefs of a given society, my advice is to start looking elsewhere.You can find more information by calling the "watchdog" of government because they keep abreast of trends and reports of fraud and other fraudulent activity. Please see the Resources section of this site for more information on the agency that regulates the securities industry, sorted by country. There is also a list of brokers that you may want to see.This is an excerpt, modified from the book: The currency trader part time.
The origin of the FOREX trading traces its history to long time ago. Different currencies and the need for change existed since the Babylonians. He is credited with the first use of paper notes and receipts. Speculation hardly ever happened, and of course an enormous speculative activity in the market today would have liked.

At that time, the value of output expressed in terms of other goods (also known as the barter system). Obvious limitations of the system is required to build an exchange more generally accepted. It was important that the common base value can be determined. In some countries, such things as teeth, feathers even stones served this purpose, but soon various metals, gold and silver, established themselves as some form of payment accepted and reliable store of value . Trade between the peoples of Africa, Asia, etc. through this system.

Originally printed in metal parts and elections in a stable political system, the introduction of the role of public debt during the Middle Ages also gained acceptance. Types I.O.U. intrusion more success than through persuasion and is now the basis of modern currencies.

Before World War I, most central banks supported their currencies with convertibility to gold. However, the gold exchange standard is a weakness of boom-bust pattern. As an economy strengthened, it will import a large quantity abroad until it ran its gold reserves required to support the money, therefore, decreases the money supply, interest rates have and increased economic activity slowed to the point of the recession. Ultimately, prices have hit bottom, appearing attractive to other nations, to be held in a buying frenzy that is injected into the economy with gold to increase its money supply, the rate of lower interest and wealth in restoring the economy .. However, for this type of gold exchange, not necessarily the central bank to the extent of government's exchange reserves. It does not happen very often, but when a group mentality promoted the idea of ​​a disaster convert gold in mass, panic resulted in so-called "bank run" The combination of increased supply of paper money without gold cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a meaningful peace in the Forex market activity. From 1931 to 1973, experienced a series of changes in the Forex market. These changes greatly affect the global economy at the time and speculation in the Forex market is still weak.

To protect local national interests, increased foreign exchange controls to prevent market forces from punishing monetary irresponsibility.

Towards the end of World War II, the Bretton Woods agreement was reached on the initiative of the United States in July 1944. Conference held in Bretton Woods, New Hampshire, rejected the suggestion of John Maynard Keynes to a global reserve currency in favor of a system built on the U.S. dollar. International institutions like the IMF, World Bank and GATT were created in the same period emerged victorious from World War II to find a way to avoid a crisis of stable exchange leads to war. Bretton Woods fixed exchange rate generates the return of the gold standard, in part, is set at $ 35.00 USD per ounce of gold and the establishment of major currencies against the dollar, initially intended to be Standing.

Bretton Woods system was under increasing pressure as national economies have taken different directions in 1960. Some rearrangement of the system are kept alive for a long time but eventually Bretton Woods collapsed in early 1970 after President Nixon suspended the gold convertibility in August 1971. The dollar is no longer adequate as the international currency at that time was under heavy pressure from increasing U.S. budget and trade deficits.

Recent decades have seen foreign exchange market became the largest in the world. Restrictions on capital flows have been eliminated in most countries, allowing market forces free to adjust the exchange rate according to their perceived values.

European Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. Search continues in Europe for currency stability with the 1991 signing of the Maastricht Treaty. This is not only to fix the exchange rate, but also actually replace many of them in the euro area in 2002. London, and remains the main market abroad. In the 1980s, became an important center in the Eurodollar market when British banks began dollars of credit as an alternative to the pound to maintain its leading position in global finance.

In Asia, the lack of sustainability of fixed exchange rates has gained new relevance to events in Southeast Asia during the second half of 1997, when it devalued the currency after currency against the U.S. dollar . States., Leaving other fixed exchange rate changes, especially in South America also looking very vulnerable.

While commercial companies have to deal with the foreign environment is much more volatile in recent years, investors and financial institutions have found a new field. Forex currency market worked initially at the central bank and government institutions, but later accommodate the various institutions, now also includes the boom of the dot-com and the World Wide Web. Size of the Forex market is now far superior to other investment markets. The foreign exchange market is the largest financial market in the world. About 1.9 billion traded daily on the forex market. It is estimated that more than Rs 1,200 million traded daily. Can we say easily that FOREX market is a lucrative opportunity for modern intelligent investor.
Despite the powerful U.S. dominates many markets most of Spot Forex is still traded through London in the UK. So for our next description we will use the time in London. Offering the best in foreign exchange transactions done on time. SPOT offers almost always due to settlement two business days later. This is known as the value date or delivery date. At that time, counterparties theoretically take delivery of the currency have been sold or purchased.

In Spot FX the most part the end of a business day is 21:59 (London time). The positions are open at this time is automatically extended until the next business day, which in turn ended in 21:59.

It is necessary to avoid the actual delivery of currencies. As Spot FX is predominantly speculative most traders do not want time to take delivery of the currency. Be informed to always clear the position of broker.

Many brokers are already automatically and in policies and procedures. Act to shoot the currency pair is called, which means tomorrow and the next day.

Only to talk about it, your agent will automatically rollover your position unless you tell them that you really want the delivery of the currency. Another thing to note is that most leveraged accounts can not actually deliver the currency as there is no shortage of capital to complete the transaction.

Remember that if you are trading on margin, you must apply for a loan from your broker for the amount under negotiation. If you have a property that the agent has advanced $ 100,000 despite not actually $ 100,000. Brokers usually charge the interest rate differential between two currencies if you rollover your position. This problem usually occurs only if you rolled over the position and if the positions are opened and closed on the same day.

To calculate the interest of the agent normally close your position at the end of the workday and again reopen a new position almost simultaneously. It opens a lot ($ 100,000) EUR / USD position Monday, May 15 at 11:00 in the exchange rate of 0.9950.

Levels fluctuate during the day and at 22:00, this figure is 0.9975. Broker closes your position and reopens a new position with a different value date. The new position is open from 0.9976 to 1 pip difference. Respect of a pip reflect differences in interest rates between U.S. dollar and the euro.

In our example, which are long and short Euro U.S. Dollar. As the U.S. dollar in the sample had a higher rate of the euro to pay a premium of 1 pip.

Now the good news. If you have reversed the position and were from dollars to euros in the short and long will the interest rate differential of 1 pip. If the first named currency has interest rates below those of a day in the second currency, then pay the interest differential if you bought that currency. If the first named currency has an interest rate higher than the second currency then you will get the interest rate differential.

To simplify the above. If you are long (bought) a particular currency and the currency has a higher interest rate that you get overnight. If you are short (sold) the currency with higher interest rates last night, you lose the difference.

I want to emphasize here that although we some depth to explain how it works, the agent calculates for you. The purpose of this paper is just to give you an idea of ​​how the forex market.

The foreign exchange market in general, the broader trends that the stock market as a whole. Why? Equity market, which is really an individual fellowship, governed by the dynamics of certain micro-enterprises. The foreign exchange market, by contrast, is driven by macroeconomic trends can sometimes take years to develop. The best trends are manifested by the lead partner and the currencies of commodity block. Here we see this trend, analyze where and why they occur. Then I also see this type of tide offers the best opportunity for the range for commercial purposes.

Major Currencies

There are only four major currencies currency pairs, which makes it very easy to follow on the market. They are:

  • EUR / USD - Euro / U.S. Dollar
  • USD / JPY - Dollar Yen U.S. / Japanese
  • GBP / USD - British Pound / U.S. Dollar
  • USD / CHF - U.S. Dollar / Swiss Franc

It is easy to understand why the United States, European Union and Japan have the money the most active and liquid market in the world, but why the UK? After all, in 2005, India has a larger GDP ($ 3.3 trillion compared to $ 1.7 trillion for the United Kingdom), while Russia's GDP (1.4 million) and the GDP of Brazil (1.5 million) is roughly the total economy of the United Kingdom. Explanation, which applies to many foreign exchange market, it's tradition. English is the first time in the world economy for the development of capital markets and sophisticated at the same time was the British pound and U.S. dollar, which serves as a global reserve currency. Because of this heritage and the supremacy of London as a center of world trade currencies, the pound is still considered one of the major world currencies.

Swiss franc, meanwhile, took its place among the big four known that Swiss neutrality and fiscal prudence. At a time when the Swiss franc is 40% backed by gold, but for many traders in the forex market is still known as "liquid gold". In times of crisis or economic stagflation, traders turn to the Swiss franc as a safe haven.

The main partner of the largest - in fact, most liquid financial instruments in the world, is the EUR / USD. This pair is trading nearly 1 billion per day of notional value from Tokyo to London to New York 24 hours a day, five days a week. The two pieces are the two largest economic entities in the world: United States, with a GDP of U.S. $ 11 billion and the euro area, with a GDP of about $ 10.5 billion.

Although U.S. economic growth was much better than the euro area (3.1% vs.1.6%), the Eurozone economy generates net trade surplus, while the U.S. has a chronic trade deficit. Superior balance sheet of the euro area and the size of the euro area economy has made the euro an attractive alternative reserve currency to the dollar. Thus, central banks, including Russia, Brazil and South Korea have diversified some of their reserves in euros. Obviously, this is a time the diversification process has so many events or changes that affect the currency market. This is why one of the main attributes of a positive trend in the forex market is a long-term.

Long-term observation of the importance
To see the importance of long-term perspective, we look at Figure 1 and Figure 2, using three simple moving average (three SMA) filter.
Figure 1 - EUR / USD exchange rate of March 1 to May 15, 2005. Consider the price action suggests choppiness and the possibility of a downward trend since the beginning of each line of three in each other SMA.
Figure 2 - EUR / USD exchange rate from August 2002 to June 2005. Each bar represents one week and one day (as in Figure 1). And in the long-term chart, a completely different view has emerged - the uptrend remains intact every time down to nothing more than provide a starting point to new heights.
Three-SMA filter is a good way to measure the strength of the trend. The basic premise of this filter is that if the trend of short-term (seven days SMA) and the medium-term trend (20 day SMA) and long-term trend (65 day SMA) are going in one direction, then the trend is strong.

Some merchants may ask why we use the moving average of 65. An honest answer? Do we take this idea to John Carter, a futures trader and educator, as these are the values ​​used. But the importance of the three secondary filters are not in the values ​​of a particular school, but in the interaction of short-term trends, medium and long term provided by the school. While using a reasonable approximation for each of these trends, three SMA filter provide valuable insight.

See the EUR / USD from both points of view of time, we can see how various trends may be a sign. Figure 1 shows the daily changes for the month of March, April and May 2005, showing the jerky movement with a clear downward trend. Figure 2, however, charts the weekly data for 2003, 2004 and 2005 and shows a very different picture. According to Figure 2, the EUR / USD is still in a clear uptrend despite some very strong corrections along the way.

Warren Buffett, the investor famously known for trading long-term trend, has been widely criticized for holding a long position on EUR / USD has suffered losses along the way. Looking to the creation of Figure 2, however, it becomes much clearer why Buffet may have the last word.

Currency Block Commodity

The three commodity currencies higher liquidity in the forex market is the USD / CAD, AUD / USD and NZD / USD. Canadian dollar, known as the "loonie", the Australian dollar as the "Aussie" and the New Zealand dollar as a "kiwi". The three countries are commodity exporters and extraordinarily strong tendency often in conjunction with the application of each of its major exports.

For example, see Figure 3 showing the relationship between the Canadian dollar and oil prices. Canada is the largest exporter of oil to the United States and nearly 10% of Canada's GDP includes the areas of energy exploration. USD / CAD trades inversely, the strong Canadian dollar so that creates a downtrend in the pair.
Figure 3 - This table shows the relationship between the Canadian dollar and oil prices. The economy of Canada is a rich source of oil reserves. The graph shows that oil price increases, it becomes more affordable for people who have dollars to buy Canadian dollars.
Although Australia does not have a lot of oil reserves, the country is very rich source of precious metals and is the largest exporter of gold the second largest in the world. In Figure 4 we can see the relationship between the Australian dollar and gold.
Figure 4 - The graphic aspect of the relationship between Australia and the gold price (U.S. dollars). Notice how the rise of gold from December 2002 to November 2004, coinciding with a strong upward trend in Australian dollars.
The Crosses are The Best for The Range

Unlike Major League Baseball and the currencies of commodity block, offering traders the opportunity of the strongest trend and more, which shows a cross currency swap is the best jump. In Forex, the cross is defined as the currency pair that does not have the dollar as part of the couple. EUR / CHF is a cross, and perhaps best known for the range of commercial partners. One reason, of course, there is little difference between the growth rate of the European Union and Switzerland. The two areas of current account surpluses and stick to a prudent fiscal policy.

A strategy for operators is to determine the parameter range of coverage for the spouse, divide the parameter with the center line and just below the middle of buying and selling there. Classification is determined by the parameters of high and low prices fluctuate during the given period. For example, the EUR / CHF, traders can go, for the period May 2004 to April 2005, set at the 1, 5550 1.5050 top and bottom of the range of 1.5300 to the axis of the delineation of areas of buying and selling. (See Figure 5).
Figure 5 - This chart EUR / CHF (May 2004-April 2005), with 1.5550 as the upper and lower range of 1.5050 and 1.5300 as the midline. A comprehensive strategy trading involves the sale in the mean and median purchase below.
Remember range traders are agnostic about the address. They want to sell under relatively overbought and oversold conditions on purchase.

Cross currency is so attractive to the time range of strategies as they represent the two cultures and economies of these countries, the imbalances between currencies, as it often returns to equilibrium. It's hard to imagine, for example, that the Swiss will go into depression, while the rest of Europe is growing briskly. The same tendency toward equilibrium, however, can not say that the share of a similar nature. It is easy to imagine how, for example, General Motors could go bankrupt, even though Ford and Chrysler continue to do business. Because currencies represent macroeconomic forces that are not vulnerable to risks that occur at the micro level, as stocks of individual companies. The currency is because it is safer from trade.

However, the risk is present in all the speculation, and the merchant has no pair trading range without a stop loss. A reasonable strategy is to use a stop in half the total amplitude range. In the case of the range of CAD / CHF is defined in Figure 5, stops above the seeds 250 below top and bottom 250. In other words, if the pair reached 1.5800 1.4800 or, the merchant must be stopped outside the store because of the high probability of damage.

Interest Rates - Final Part
While the USD / CHF has a relatively narrow range of 500 pips in recent years is shown in Figure 5, a pair like GBP / JPY has a much wider range in 1800 nuggets, shown in Figure 6. Interest rates are the reason why there is a difference.

The interest rate differential between the two countries affecting trade in the range of its currency pairs. For the period shown in Figure 5, the Swiss interest rate by 75 basis points (bp) and the rate of the euro area is 200 basis points, creating a spread of only 125 points basis. However, for the period represented in Figure 6, however, interest rates in the UK is 475 basis points, while in Japan - which is held by deflation - 0 bps rate, 475 basis points overcome the difference between the two countries. The golden rule in the Forex is a differential interest rates higher, the more stable partner.
Figure 6 - This chart of GBP / JPY (December 2003-November 2004). Consider the pair reach almost 1800 pips!
To further demonstrate the relationship between trade and the interest rate, the following is a table of different crosses, their interest rate spreads and the maximum pip movement up and down during the period May 2004 to May 2005.

Currency Pair Central Bank Rates (in basis points) Interest Rate Spread (in basis points) 12-Month TradingRange (in pips)
AUD/JPY AUD - 550  / JPY - 0 550 1000
GBP/JPY GBP - 475 /  JPY - 0 475 1600
GBP/CHF GBP - 475 / CHF - 75 400 1950
EUR/GBP EUR - 200 / GBP - 475 275 550
EUR/JPY EUR - 200 / JPY - 0 200 1150
EUR/CHF EUR - 200 / CHF - 75 125 603
CHF/JPY CHF - 75 / JPY - 0 75 650

Although the relationship is not perfect, is certainly big enough. Notice how the couple with a wider interest rate spreads typically trade in a wider range. Therefore, when reviewing the strategy in the range of forex trading, traders should be aware of differences in volatility and interest adjustments. Without taking into account the interest rate differential can change the range of ideas to lose potentially valuable proposals.

The forex market is very flexible, adaptable to both trend and range traders, but as with any successful business, the right knowledge is the key.

You'll love this lesson. Using pivot points as a trading strategy has been around a long time and was originally used by floor traders. This is a fun and easy way for merchants floor to get an idea of ​​where the market is heading during the day, with only a simple calculation.

The pivot point is the speed at which changes in market direction for the day. Using some simple arithmetic and the previous days high, low and close, a number of perspectives. These points can be critical support and resistance. Pivot levels level support and resistance calculated from what are collectively known as pivot levels.

Every day, the market must follow the fence open, high, low and to date (in some markets like forex are 24 hours but generally use 17 hours EST on open and closed). This information basically contains all the information needed to use pivot points.

The reason pivot points are so popular is that they are predictive rather than delay. It uses information from the previous day to calculate potential turning points for the day is going to trade (today).

Because many traders follow pivot points you will often find that the market reacts at these levels. It gives you the opportunity to negotiate.

If you prefer single axis shows the formula used is:

Resistance 3 = High + 2 * (Pivot - Low)
Resistance 2 = Pivot + (R1 - S1)
Resistance 1 = 2 * Pivot - Low
Pivot Point = (High + Low + Close) / 3
Support 1 = 2 * Pivot - High
Support 2 = Pivot - (R1 - S1)
Support 3 = Low - 2 * (High - Pivot) As you can see from the above formula, just by having the previous days high, low and close you eventually finish with 7 points, 3 resistance levels, 3 levels support and the pivot points real.

If the market opens above the pivot point, then through the day is long positions. If the market opens below the pivot point, then through the day is short for retailers.

The three pivot points are the most important R1, S1 and the actual pivot point.

The general idea behind the pivot point of negotiation to find a change or a break of R1 or S1. When the market reaches R2, R3 or S2, S3 the market already overbought or oversold and these levels should be used to leave the place of entry.

Ideally, the entire market opening above the pivot level and then slightly since then to R1 and R2. You go to a break of R1 with the aim of R2 and if the market is almost half is very strong in the R2 and R3 stations with the rest of his position.

Unfortunately life is not that simple and we must deal with each trading day the best way possible. I chose at random the day of the week and what follows are some ideas on how you can be traded that day with the pivot points.

On August 12, 04 Euro / Dollar (EUR / USD) as follows:
High - 1.2297
Low - 1.2213
Close - 1.2249

This gives us:

Resistance 3 = 1.2377
Resistance 2 = 1.2337
Resistance 1 = 1.2293
Pivot Point = 1.2253
A = 1.2209 support
Support 2 = 1.2169
Support 3 = 1.2125

A glance at the map below 5 minutes

The green line is the pivot point. The blue lines are resistance levels R1, R2 and R3. The red lines are support levels S1, S2 and S3.

There are many ways to trade today with the pivot points, but I will walk through some of them and explain why it is not good in certain situations and why some are bad.

Breakout Trade

In the early days we were at the pivot point, so our tendency is for short operations. Channel formed so you would be out of the channel, preferably downward. In this trade must sell entry order just below the bottom line of canal with a stop order just above the upper channel line and the goal of S1. The problem today is that, S1 was very close to the breakout level and there is enough meat in the trade (13 pips). This is a good entry technique for you. This does not correspond to these days, does not mean it does not come the next day.

Decrease in trade

This is one of my favorite game. The market through S1 and then deleted. A control input is placed below support, which in this case is the last low before the withdrawal. A stop is placed above the back (the most recent high - high) and the target set for S2. The problem once again, that day is that the target of S2 is closed, and the market did not support previous, which tells us that the market sentiment began to change.

Overcoming resistance

As the day progresses, the market began to return to S1 and formed a channel (congestion area). This is another good game to trade. An input command is placed just above the upper duct line, with stops just below the bottom line of the channel and the target will be the first pivot axis. If trade in more than one position, then cover with half of its market position is close to the pivot axis, tighten the market action from the top, then look at this level. As it happened, the market never stopped and the second goal became R1. Also be obtained easily and closes the rest position to this level.


As I mentioned earlier, there are many ways to trade with pivot points. A more sophisticated method is the use of a cross of two moving averages as a confirmation of the break. You can even use a combination of indicators that will help you make the decision. Perhaps the crossing of two ways, but also MACD must be in buying mode. Waste time with some of your favorite indicators but remember that the signal is the rest of the confirmation of the level and the only indicator.

Even in models around pivot levels or failures but that's not the point of this lesson. I just want to introduce another possible way to negotiate.

Happy Trading!

As you know, the currency market (Forex / FX) is an unregulated market is not traded on exchanges, which means that the price you see and get a dealer may vary from those of other riders . There are mainly two types of runners. One type is the ECN (Electronic Communications Network) and other market-maker.

Market makers "make" or set prices on their systems based on what they think is best for themselves as compensation. This is because every time you sell, you should buy, and when you buy, have to sell. That is why we can offer fixed spreads, as it is setting the supply and demand prices. Many of them, then it is to "protect" or "cover" in order to transmit it to others, however, some may decide to take your order, and thus trade against them. This can lead to a conflict of interest between the retailer (you) and market makers.

NEC, however, delivered prices of some banks and market makers and other traders in the ECN, and display the best bid / offer on the basis of this input. That's why sometimes you can get no spread in the NEC, especially in a highly liquid currency pair. How to make money ECN? They still charge you a commission for each transaction.

Here are some pros and cons of ECNs and market makers:

Market makers


  • Usually provide free graphics software and news service
  • The price may "soften" and less volatile than ECN prices (this can be a disadvantage if the resale or trading very short)
  • Often has an interface more user friendly trading and analysis


  • They may trade against them. In this case, there will be a conflict of interest between you and them
  • The bid price may be worse than what could be in REC
  • It is possible that can trigger stops or not let your trade reaches its target level of profits by manipulating prices
  • During the stories, there will usually be a large amount of slip, the system can also lock or impossible to put in hours of high volatility
  • Many of them to prevent damage and to resellers in "manual execution", which means that orders can not be met in the price you want



  • Generally, you can get a better supply / demand, because they come from various sources
  • The differential between supply and demand can not spread or spread small, sometimes
  • If they are true ECN, they will not work against you, but you deliver your order to a bank or other clients at the end of the transaction.
  • You will be able to offer a price between supply and demand with the possibility of filling
  • If they support Stop-Limit Order, may prevent it from slipping during the news, to ensure that your order will be executed at the price you want or not at all
  • The price may be more volatile than it would be better for scalping


  • Many do not offer integrated graphics
  • Many did not offer new integrated
  • Many of the trading platform is less easy to use
  • Variables because of differences (between supply and demand), may be more difficult to calculate stop loss and profit target in pips in advance.


It is important that you observe carefully the pros and cons of each broker before choosing the one that best suits your needs. You can also have a number of brokerage accounts to reduce risk, and so you can compare supply / demand and trade in the hallway the best price for the direction you want to trade. Due to the unregulated nature of forex, U.S. officials are not required to keep your money in an intangible asset that you can access if they collapsed. As customers of Refco (was one of the largest brokers in the world) found that reporting unprotected unsecured creditors, and therefore tend to get their money than those who had obtained loans to Refco. What this means is that customers' money to pay other creditors.

Moral of this story:

Less money deposit with your broker that you need to trade and take profits when they exceed a certain amount. Keep the rest of your trading capital in your own bank account can be provided by the government.

The last time I say that with the use of clarity, we must distinguish between what is available (100:1, 200:1, 400:1, 500:1) and what you can choose to use. I show how the marketing people deceive operations assistant with very high leverage, and assured them that this is a good thing. These people are not aware of the adverse effects of leverage on your account. It's like speeding on a mountain pass, but I think they are on the floor. You can terminate a way ... disaster.
We conclude that:
  • What is commonly known as leverage is really necessary margin expressed as a ratio if you use all the power brokers will allow you to borrow.
  • The real influence is determined by dividing the capital into the value of your position.
  • Real influence will vary from trade to trade and promote trade with the simultaneous (open position).
  • The margin requirement has no effect on the risk, if the trade properly with modest influence within your means and should not be used as a principle for calculating the risk margin.
I also want to cover, on the more fundamental question of leverage, ie the exact calculation.
Leverage is about to borrow money. To calculate the leverage you need to know first how much you have, and then divide the amount to be negotiated with (a measure of where purchased, or in substance, loans).
Say you have € 20,000 and make a change (buy EURUSD 100,000). The lever is 100,000 / 20,000 = 5.1. For each € 1.00 you really trade with € 5.00.
Now, more precisely, the euro is one example I want to make sure they understand the difference between "leverage operator" and "use the teacher". I saw this in part 1, but only in passing, and this is important because I want to make very sure you understand what I mean.
I think many readers BWILC (book) has adopted Part 3 - "All that Jazz" or flipping quickly and missed the part where I explain leverage. Also may have lost a very important little paragraph in the base currency and exchange agreements. Distributors for real money in the room of the bank comes to these things are very important and it is second nature to them, but for some reason, to retail currency speculators see as less important and therefore creates a major error in the calculation of risk.
You see, if you look at the operations to leverage on the futures market or the stock market is really the only calculation - as in the example above. If you live in India and make a leveraged transaction in the stock market of India and the rupees you got a few rupees and you trading stocks listed on the stock exchange. This is a very obvious calculation: divide what you have in the value of your offer. But things are not so simple in the currency market.
Minor complication is making sure you know what you have. In other words, the currency of your account? Suppose the U.S. dollar. (I think a lot of traders in the United States should diversify their trading accounts to other currencies as a way to reduce the risk of having all your eggs in one basket.)
The problem with the calculation of debt in foreign currency must be divided apples to apples. Accordingly, you should express the base currency of the currency pair you are trading in the currency of your account.
So, back to basics. What the hell is the base currency? This is not the currency of your account. The base currency is the currency called for the first time in the quote currency. When we say that EURUSD, Euro is the base currency. When we say USDJPY, the U.S. dollar is the base currency.
When we say that the price of the EURUSD is 1.2755 / 8, then it means that for every dollar you have to pay U.S. $ 1.2758 if you buy euro and sell euro if you do, you will receive 1.2755 U.S. dollars. Say it with a $ 10,000 account to trade our money to buy a "standard lot" of (€ 100,000) EURUSD. The value of transactions in U.S. dollars is $ 127, 580. We have $ 10 000 and because our loan is 127580/10000 = 12.75:1. For every dollar that we are negotiating $ 12.75 - made use of, or 12.75 hours directed to our account. (There is no difference between "influence" and "loan".)
However, it has become commonplace in the world of Forex retail to express this operation just to get leverage of 10:1. This ignores the fact that there are two apples and pears and divide only 10K to 100K. It is interesting to ask why it has become common practice, and I take the time to explain why I think it is.
A little history
In December 2003, the U.S. regulator, TFCC, which in terms of the Commodity Futures Modernization Act (2000) began to oversee the OTC (Over The Counter) rules on the exchange of foreign bank issued new requirements. I think so far assistant advertising marketing leverage of 100:1 or 200:1 (or a margin requirement of 1%) without understanding what is the base currency of a particular transaction has a significant impact on the the margin they need. They do not care. All the money in U.S. dollars and charge only 1% of the total 100,000 units of currency and U.S. dollar both. At that time, most of the currencies traded in the pair - EURUSD - worth less than a dollar per euro, this has no effect, because the margin was more than 1% of the contract value. For example, when negotiating EURUSD at 0.9250 a contract valued at $ 92 500 and $ 1,000 more than the 1% ($ 925).
That changed when the euro has significantly increased in value by $ 1.00 per euro, and suddenly the margin they charge less than 1%. CFTC also issued rules in 2003 that the margin requirements for retail Forex broker OTC (OTC vs exchange-traded) must be compatible with currency futures. This caused a stir because of the margin required to be up 4% - 8% and minds marketing wizards who lose money to companies that are not regulated.
The objections which they work (as we all know now), because the margin requirement is only 0.25% depending on the size of the transaction, the most common of about 1%. What the regulator does the force calculation (exact) in the right margin as a percentage of the amount of the basic contract.
Understanding the initial amount is fairly substantial trade, people will think. You might also think that retailers pay a good price for business advice, or training, e-book for a classroom course or courses of study at home, receive the proper guidance in this area . Unfortunately, this rarely happens.

Using very strong trading career kills potentially promising

Leverage amplifies the volatility in the market trading account with leverage by leverage.
Let me explain this with the story of two friends, Frank Buck and Sterling brands.
Frank was a professor of history and do a PhD on ancient civilizations and Buck is a computer programmer. Annual leave, Frank decides to visit Stonehenge in England, and has consulted Buck began exploration in currency trading, helped by the eBook "Forex Trading for idiots."
They went to a free seminar, but Frank is not decided by him. Buck, but branched over $ 1500 for a weekend, with free prices, charts, without that, and the system is to raise $ 3,000 to $ 1,500 for trading days through the open book "in London "thereof.
Buck struggled at first, but recently, they have no control and earn less than $ 70,000 demo. Frank Buck asked a little surprised at how well he did and what the essence of this system. Bucks respond? "The rules of the game to their friends, the leverage effect". (I should also add that Buck had a gambling $ 50,000.)
So Frank, consciously delayed his trip to England to ask Buck to let you know when it is best to change money per pound and requires Buck, he showed 5 minutes, 15 minutes and 60 minutes, when the current graph was to buy sterling - stochastix screaming "buy" and Fantastix promises of wealth. At the top of the hour, Frank was quick to the Exchange Office and pay $ 1.88 for each of its 5,000 pounds. Global paid $ 9400. Buck, who wrote a software demo money on your Easy-Forex has just 15,000 pounds of money overnight. Frank becomes jealous.
Buck explained to Frank that the crocodile was reversed with a white flag hanging from the rope that hung Doji yesterday, the resistance is the launch of their weapons, while support is building new bases close to the action on the daily chart, and lucky star was in the right iliac fossa, because the Czar became paralyzed right hand brake. Translated, the Frank Buck said, means that if Frank bought another € 5000 when I was in what he will make a small profit, because "" the trend is the pound sterling and the trend is your friend "said Buck paging through Forex for idiots.
Frank rushed to the Exchange Office and others to buy £ 5000. Buck is right now, Frank paid $ 1.89 per pound. Total income: $ 18 850 to 10,000 pounds. At the time of Frank on the plan, Buck launched the careers of real money trading, commission free funds, two pips on the majors, commercial accounts 200:1 leverage Capital Partners money to a deposit of $ 20,000.00 clock.
A few weeks later, Frank had a wonderful time in England and decided to revisit one week before the Arlington Racecourse and play the horses. USD is currently trading at 1.95. Of course, Frank Buck think rolling in money - the trend is a friend. Frank has his fortune and win £ 10,000 by Long Shot Pick Six after winning 6 races with a wet nose.
At home a few days later change (10,000 euros) for a dollar at the airport to the level of 1.92. Frank has received $ 19 200. He made $ 350 after a holiday. Not bad. Buck, however, have to be a millionaire today!
First day back at work by Frank Buck is absorbed into a computer program. Trade in the second blank screen.
"You're right," Frank said with admiration. "The trend is your friend." He put the gift on the desktop brand of Arlington. "I have an exciting vacation and after that I was in the dark, thanks to you are a genius .. What the book trade at the moment?"
"I do not know," said Chief Buck.
Frank asked a little surprised by the Tsar paralyzed, if the resistance is still building a base, and if the executioner was very busy. "I do not know," says Buck, "I'm not interested." He looks sad. Wed to Frank.
"How much is lost Buckey?"
"Twenty-K". Frank Buck was surprised to delete an answer.
"The rules of the game to their friends, the leverage effect".
Then, a conversation between two with more detail and reveals the sad story. Buck said:
"The problem is that at first I was a little too conservative I made a bargain with a leverage of 50:1 few .. In other words, I made $ 100.00 per pip . Success 1.9500 pounds, I have $ 40 000. So I decided to up the ante a bit and I took advantage of the 40K 80:1, in other words, I will 320.00 $ per pip. I have to put the stop bit closer, because it is the work of an idiot Money Management. So I put a stop 15 pips idiot, what happens first? I can get 3 times the same day, U.S. $ 14.400 in the tube .. What happens next market turned? and head toward me, just after he leaves aside. In fact, my third stop took place in the march down and 20 minutes of the last two I will be trading in the money ".
"Well, the next day and bought the tendency of 80:1 Now another 30K, 240.00 per pip then I realize that this is a bit volatile EUR - The King and I always stop, this time Well call 30 pips stop me .. I did for only 5 pips This is worth $ 7200, I realized that the double top at 1.95 and has a sign that the trend has changed - .. Parabolic SAR. . min 15 is very clear to me ..... time selling $ 200 per pip.
So what happens then? I'm not sure at some point, I was 50, then all hell broke loose and good, I left the road well. It is $ 6000 and from there more or less long. I have to use a tight stop because I did not do much in my account and is thus held time and again. I began to realize that the volatility of the real money is a bit different from the volatility in the money demo. I can not explain, it seems larger. I stopped looking like a magnet attracts the market. Ping! Order, the market turned and went my way. Well, two days after he left 3K. The Capital Partners own cash-for-clock the rest.
Let me tell you something Frank, leverage is a double edged sword -. It is the bloody guillotine and my head on the block"
Buck has faced changes in your account has been created by market volatility and amplified by leverage. Frank apparently kicked the ball, and Buck lost money in a hostile market. In fact, both are games of chance, the only difference is that Frank knew that his victory in the horse is a matter of luck. This is part of our psychology that we do well when you consider that with our talent and when we do wrong is supposed to bad luck. Often it is just luck, nothing more and nothing less.

The cost of debt

This story, with different nuances, but the same theme, repeated every day, as on behalf of a prospective forex trader on the fire.
Besides the fact that high leverage to force him to stop coming - the bread and butter income forex broker - and dramatically increase your chances of being victim of a random very short-term foreign currency market, but also cost you a stroke.
Many traders think that there is no cost to trade because of the spread does not look good, other than loss or glitches glitches they do. This is wrong because the transaction has two parts. The cost and income below. Cost is the amount deducted from its capital account, if you close your trade is opened immediately, without any change in market prices.
Say you have an appointment GBPUSD 1.8650/55. You buy at 55 and if you sell will sell quickly at 50. The cost of management is 5 points. His agent sold to 55 and you buy at 50. We can say that the real market is 5 points from your position. You can not ask spread, unless you perform a winner - if the market moves in your direction, it becomes widespread. But if you make a losing trade is 5 pip cost, in addition to what has been lost due to adverse price movements. The higher the cost of distributing more debt than you are, bleeding money from your account
Let me give you a concrete example. Currency speculators leveraged very detail will jump at the opportunity to use the trading system is not 35% of the time, but due to reduce losses and run profits are sure will succeed. They are wrong.
If you're anti-leverage, the only way you can lose all your money if you keep the currency loses value.
Operating expenses from the perspective of Frank, when he bought it possible to pay £ 15 pips on the Office of images. Because he lost all his money on something that would have happened in sterling made him lose all their value - a meteor in the sky to eliminate England. It's impossible. Thus, the value of GBP Frank remains relatively stable. But when you add a lever to strengthen their own, creating instability, as the story of Frank Buck and illustrated.
But what I really want is this: If you take a high degree of leverage from a dealer who is not on, say, in the 40 months of trading on the leverage of 20:1, the real cost of trading before gains or losses due to price fluctuations start to play a role. Mathematics is as follows: trade 40 pips x 5 x 20 (min) = $ 4,000 lot. If he had used the wrong trading system for 35% of the time (which stands for a short stop) costs which can not afford the $ 1.400 or 14% of its capital. This is a direct cost to your business, and it is these costs that the attack - this is the "head" is very questionable if you think that trade is a business.
If a trader uses a trading system equilibrium point is a very good operator. But in the long run end up losing support, in addition to everything he does, which deplete the account.
If you understand the randomness of you know that are 35% of the trading loss can come at any time. They can be the first 14 months of negotiations. The impact of the loss of high indebtedness of operator actions, once by running very bad, can destroy your account. To maintain the "system" that it should drop the size of your transactions, especially after a difficult period. Therefore, there will be many more to make a loss. In this process, despite their small transactions, leverage its always the same (very high), because of its low margins.
If you really want to work with you, then you have to work the back, is not expressed as a percentage of their range, but as a percentage of the value and the total cost of the transaction.
Leverage amplifies everything in your account - at the same time, we have not changed much in the market.
Another consequence of the influence is that it strengthens its capital variance account. And it (the variance) has nothing to do with an ongoing lucrative business.
In the short term, days, weeks, months, (some would say a few years) if you see the results of the company, there is a good possibility that everything you see is random variation hidden under the appearance of the system commercial smart. The data are insufficient to show that what you see is the result of any edge or skills you have.
Go absolutely crazy for Frank, after a visit to Arlington, to begin a career as a bet. But as it was just a little less naive Buck thought he had broken several weeks of positive change in the demo account.
If you know something about the possibilities that you know the chances are very high that a series of coin tosses will expire 50/50, either heads or tails. But did you know that if you take a series of 100 develop the range of 50/50 will be mainly between the 38/62 with very little outside of this parameter.
Unfortunately, it seems part of human nature (behavioral psychology has shown that) that we tend to see a model or series that do not exist. And we used to do on the basis of insufficient data. Novice traders who so dearly want to do well are very likely to read a brief set of benefits that have a certain edge and the edge of the success of long-term career in commerce. Once you open a real account, the possibility of lifting the head and bite.
I want to be very practical.
8:01 p.m. Say you use the lever to all trade shows and reached a circulation of good luck and a positive end, so that 20% this month. Remove the harness and reinforces the variance of the equity in your account and earnings may be 2% - and is good for the short term. What if you have a longer period, say, four months with three "bad"? Where are you from. If you maintain a high degree of leverage that will be losses in bad times that may outweigh the benefits for good racing.
With the task of deciding the final good leverage height is now ready for real trade is exactly the kind of thing that Capital Partners money-for-clock wants you to do, because they know they will receive money for jam - of you.
What I mean is how the change in the strength of your account after changing your thought patterns and negative. You can not focus on the market, which is a trader should always be done. Instead, they are obsessed with the clutter in your account. What is the price you have, what factors you should know about? I do not know. Your energy is used in the wrong place altogether. In short, you have lost a kind of perspective you need to trade successfully.
You are in a situation where you can not manage the natural changes that occour and setbacks in market trends.
The variance of this magnitude due to the increase not only steal from your cash account, which deprives them of the opportunity to negotiate meaning. In short, be able to buy low and sell high, you must have an idea of what is base and which is high on the market. But, is that you lose perspective, paralyzed by fear of further losses on their own instead of "losses" in other currency markets.

Can you make money trading with low leverage?

Well, some would say, with low leverage of the system, do not miss much, but can you really make money? The value of your time? I think I can, and most of the trajectory in BWILC where I show how I do 74% in two months because of trade with low leverage, which can show how others are doing. To make the strategy forex money trading should be based on the original edge to overcome the possibility of 50/50 on a commercial basis.
I developed a strategy that offers benefits. I call my strategy 4x1: one currency, one way, a lot-one percent. This is my E = mc2 and Einstein's formula was like some of the things taken for granted the positive side, this formula is the kind of orthodoxy and wisdom in books sold as Forex trading for idiots.
The following is an interesting story, if one of my clients. When he started with the mentoring program to answer the question - assuming that you fought so far, what do you think of that? - East:
Most of the struggles that I have to believe what I read in the trading system. The biggest problem was stopping too close to random price moves to limit my risk% of the general account. You are the first to expose this madness to me. However, now worry about how to make "real" money with so little gear.
That was in January 2006. In March 2006, funded a trading account of $ 5,000 in late August 2006 and his account is already high. After five months of negotiation, using the above formula and low leverage right saw an annual return of 278%. Your actual result is 129% - in the book to all who should be considered as money "real".
Oh, and accuracy of their trade is 90% (eg 10% loss of trade), operating loss is generally higher than the typical commercial profit and the biggest benefit is 4% of capital investment original, indicating that there is a real advantage, not a one night stand on a large scale operation which ensures the "brightness" had just discovered.