Employ Flexibility with FOREX

Because of 24-hour trading those participating in foreign exchange
market would not wait to react on some events as happens on the stock markets. On other markets you wait to react but the FOREX market is a 24 hour market.

Unlike other financial markets the Forex market has no
physical location, like the stock exchanges.
An electronic network of banks, computer terminals or by phone are the operation modes of the currency exchange markets. The very lack of
physical exchanges lets the Forex market operate on a 24-hour basis.
It spans one zone to another across the major financial centers (Sydney,
Tokyo, Hong Kong, Frankfurt, London, New York etc). In every major financial
center there are dealers, who buy and sell currencies 24 hours a day
each business week. Trading session starts in Far East, in Wellington then Sydney, Tokyo, Hong Kong, Singapore, Moscow,
Frankfurt-on-Maine, London and ends in New York and Los Angeles.
Truly a 24 hour world market.

Best FX Traders

Robert Aguilar of Best FX Traders wrote an excellent article about how
to spot forex scams. You will find it at the bottom of his homepage
along with other articles that are worth reading.

Best FX Traders

As Robert is a well known source of investing and FOREX education it is worth getting on his list to have access to his knowledge. He is cautious and trades low risk and low leverage. He sends out emails that are worth getting. Robert tells is as he sees it.

Beginners forex - what is a stop loss ?

• Stop Loss Order – When an order is put in position it can be automatically stopped at a specific price and is commonly known as a stop/loss order. Stops are used keep the exposure to losses at a minimum if the market moves against an investor's position. For example, if an investor is long (investors purchasing position at lowest cost) at USD132.45 you may put in a preset stop loss order just in case the dollar drops. It can be set for any amount you wish but for example lets use USD131.55 as what we will set to minimize losses, that is if the dollar drops below your purchasing position. What we are aiming for here is for the dollar value to rise, but just on the off chance it drops the stop/loss order is a safety net.

• The only thing you can control in Forex is when you buy and when you sell so having set a stop loss order gives you a very small chance of control over losses keeping them to a minimum. Naturally this is something you are not aiming for as selling below your cost brings a deficit……hence the name stop/loss.

The Magic of Leverage

Currency rate changes are very very small and measured in pips. If you wish to make large profits in foreign exchange a large sum of money must be invested.
As most of the larger amounts invested are only available to banks and and large financial institutions and corporations, a private individual must use a FOREX broker.

These brokers are allied with the large financial institutions and lend to individuals as leverage and is also called the margin.
The difference between loaned capital and invested capital is known as leverage
(margin) and this is the key to smaller investors entering the markets.

If you have $100 to invest with then the ratio of leverage is 100:1. This means that your $100 will allow you to trade with $10000 through your broker. As discussed previously because of the minute movements ( PIPS ) larger funds are needed to make significant profits and leverage via the brokers allows this to happen.

This is where education and extreme caution should be placed as you can make good profits or lose all your money. Forex brokers have margin agreements to put stop orders on leveraged funds allowing both them and you protection from losing your shirt !

Study the margin agreement your broker sends you, thoroughly and understand all the details you have signed up for. This is for your protection.

Beginners Forex – Currencies

FOREX (Foreign Exchange) can be described as buying and selling two different currencies simultaneously.

BUY ONE CURRENCY – SELL ANOTHER

For example : USD /AUD

This is known as a currency pair. The USD is the base currency in our example and the AUD is the counter or quote currency. The base currency is the “basis” for the buy or the sell.

If you buy USD /AUD this simply means that you are buying the base currency and simultaneously selling the quote currency.

In Forex trading we exchange one currency for another in the expectation that the price will change, so that we hope the currency we bought will increase in value compared to the one we sold.

An exchange rate is simply the comparison of one currency valued against another currency. For example, the USD/AUD exchange rate indicates how many U.S. dollars can purchase one Australian Dollar, or vice versa.

The MAJOR Currencies traded are :

* USD (US Dollar)

* EUR (Euro Dollar)

* JPY (Japanese Yen)

* GBP ( British Pound Sterling)

* CHF (Swiss Franc)

* CAD (Canadian Dollar)

* AUD (Australian Dollar)

* NZD (New Zealand Dollar)

Some of these are traded to a lesser degree but are still traded as major currencies in FOREX.

Note the first two letters stand for the country and the last letter is for the name of the currency.

All other currencies are known as MINOR currencies.

For a standardised and convenient list of all currencies go here.

For a more comprehensive list of currencies go to Wikipedia.

Would you like to make 400 million yen ?

"In this world nothing can be said to be certain, except death and taxes."
Benjamin Frankin - Works of Benjamin Franklin - 1789.


As plain as the nose on our face nothing changes.
I came across this interesting and slightly amusing article.
But no matter how amusing, she must be a clever
lady, with her use of foreign exchange.
I have only put in excerpts here so for the full article go to
The Yomiuri Shimbun site at the end of the article.
Four hundred million yen converts to 3.3 million US dollars.
My greatest chuckle came from the last line. Just love you Yukiko !

With thanks to - The Yomiuri Shimbun

'Woman hid 400 million yen made from forex trading'

The Tokyo Regional Taxation Bureau has filed a complaint with the Tokyo District Public Prosecutors Office against a housewife who allegedly failed to pay 130 million yen in taxes by not declaring 400 million yen in income earned through foreign exchange margin transactions over the three years to 2005, sources said Thursday.

Foreign exchange margin transactions are popular among individual investors as they can bring in high profits with a low initial investment. But many investors do not declare their earnings.

This is the first time an individual investor has been accused of not paying his or her taxes on such earnings.

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The taxation bureau judged that Ikebe intentionally evaded taxes as she declared most of her earnings from commodity futures dealings, but did not file tax returns for money made through the margin transactions.

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In foreign exchange margin dealings, investors buy and sell foreign currencies, making money from the fluctuation in value and interest rate differences.

Since investors can buy or sell foreign currency up to 100 times the value of the invested principal, they can potentially make a fortune--though at great risk.

With the yen lingering at a low level, the foreign exchange margin trading has become popular among investors, with annual transactions thought to total more than 300 trillion yen.

Ikebe refused to comment on the charges, but her husband said she had reflected on her wrongdoing and had revised her income declaration.

(Apr. 13, 2007)

THE YOMIURI SHIMBUN

Beginners FOREX – Trader comparisons in an historical sense.

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“A foundation must be first laid…..It must receive the greatest care, and be made stronger than any other part.” James Allen

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The Foreign Currency (FOREX ) market has no centralised physical location or central exchanger although London has the greatest amount of activity. London’s geographic location is fortuitous being between the Asian and American markets.

The process of foreign exchange (FOREX) is electronic through a network of banking systems with companies/corporations, financial institutions, brokers, dealers and individual traders executing currency exchanges.

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FOREX is relatively new in its current form where individuals may trade alongside the large corporations. Forex was once a reserve only for the wealthy.

1971 was the pivotal year when exchange rates began their free float on the world stage. Some would disagree with me there citing the incident of 1967 in which, a Chicago bank refused a college professor, Milton Friedman a loan in pounds sterling because he had wanted to use the funds to short the British currency. He had reckoned sterling to be priced too high against the dollar, and wanted to sell the currency, then later buy it back to repay the bank after the currency declined, thereby making a quick profit. The bank did not give him the loan due to the Bretton Woods Agreement, established twenty years earlier, which fixed national currencies against the dollar, and set the dollar at a rate of $35 per ounce of gold. The Bretton Woods Agreement, set up in 1944, aimed at installing international monetary stability by preventing money from escaping across the nations, and restricting speculation in the world currencies.

Currency trading (FOREX) continues to escalate in popularity and with the event of the internet new sites proliferate in this exciting but sometimes dangerous (to your pocket) form of earning. This is the new “Golden Goose”!

See the previous post and the quote above …foundation, foundation ……foundation.

Today FOREX , using leverage, allows the small, individual trader and even beginners to take their position alongside even the largest investment banks and corporations (scaled ….of course).

It would be good to read a little of the history of FOREIGN EXCHANGE.

You may do so at Wikipedia which gives a detailed description of the international economic system that kept control of the currencies in such a way as to set fixed exchange rates. HISTORY HERE