Successful Traders Trade by the ’3 to 4′ Rule

Whether trading the eMini’s, ForEx, Commodities, Metals and Oil, ETF’s, or Stocks, successful traders set up their trades by adhering to the ’3 to 4′ Rule. The Rule gives traders the confidence they need to recognize and respond quickly to the best trading opportunities offered during any given day.

The power of the ’3 to 4′ Rule is certainly its simplicity in helping traders gather and organize their thoughts and intelligence on an instrument they desire to trade. Upon implementing the ’3 to 4′ Rule, they can quickly decide if the trading opportunity is supported from time-frames that may affect the outcome of their trade.

Simply stated, the ’3 to 4′ Rule is an incremental assessment of the trading instrument’s ability to move in the desired direction within the following designated forward looking time-frames: 3-4 weeks, 3-4 days, 3-4 hours, 3-4 minutes. The trader then has the ability to review the information for completion of a trade within a 3-4 second time-interval.

Of importance to note is that assessments of the time-frames are forward looking. Since traders do not have a ‘crystal ball’ to foretell the future, the forward looking assessments must be derived from technical analysis of current indicators and patterns.

Traders can assess the first two forward looking time-frames (3-4 weeks and 3-4 days) before the trading day begins. Once the time-frames are assessed, the trader opens the day with the focus that matters most during the trading day. That is, a focus on the dynamics that will move the trading instrument during the time-interval of the trade.

Traders assess the next two time-frames (3-4 hours and 3-4 minutes) as the day unfolds. The assessments of the time-frames hold the final key to placing a successful intra-day trade.

When all of the forward-looking time-frames (3-4 weeks, 3-4 days, 3-4 hours, and 3-4 minutes) show support for the trade, the trader responds astutely to the ‘golden moment’-the 3-4 second window of opportunity-when the trader surmises that all the time-frames (longest to the shortest) align to support the trade.

To understand the ’3 to 4′ Rule further, let’s take a look at the kind of methods a trader can use to assess each of the time-frames within the Rule.

3-4 Week Time-Frame. Considering information that pertains only to the next 3-4 weeks, the trader can weed out all the extraneous ‘noise’ he/she is bombarded with that may confuse the decision to trade. A trader’s perspective can become quite clear when considering only information that affects the instrument within the upcoming 3-4 week time-frame.

Effective methods to assess the 3-4 week time-frame are Elliott wave analysis on a 6-month chart pattern and monitoring the intermediate-term trend of the instrument.

3-4 Day Time-Frame. Being ‘in-tune’ to the natural swing of the market/trading instrument that may transpire within the next 3-4 days is essential for the trader to align his/her trade with prevailing direction and momentum.

Effective methods to assess the 3-4 day time-frame are the Taylor Trading Method 3-day cycle, Elliot Wave analysis on a 1-month chart pattern, and monitoring the short-term trend of the instrument.

3-4 Hour Time-Frame. Being ‘in-tune’ to the intra-day swing of the trading instrument with respect to direction, momentum, and duration is very beneficial for grasping the upcoming 3-4 hour time-interval. The trader can monitor the intra-day direction using a variety of tools.

Effective tools to monitor an instrument’s intra-day direction are the use of potential daily extreme values generated by the Taylor Trading Method and Average True Range (ATR) values for derivation of an instrument’s potential daily range.

In addition, monitoring the instrument’s price action to its Value Area can generate reliable signals with regard to changes in intra-day price direction. Considering where to place a trade with respect to the instrument’s Support/Resistance Levels and Pivot Points is also beneficial in successfully timing the trade.

3-4 Minute Time-Frame. Being ‘in-tune’ to the immediate direction and momentum of the instrument’s price gives the trader the advantage of ‘heading in the right direction’ within moments of placing the trade.

There are many useful tools to assess immediate direction of the instrument. Some tools to consider are monitoring the instrument’s price to its 20-day Moving Average and evaluating its 14-day Average Directional Index (ADX), 10-day Relative Strength Index (RSI) and 5/4-day Stochastics.

3-4 Second Time-Frame. The ’3 to 4′ Rule guides the trader to systematically evaluate each trade so when the ‘golden moment’ presents itself, he/she can confidently respond within a 3-4 second time-interval. At that moment, the trader systematically confirms the appropriateness of the trade by reviewing and verifying its 3-4 week time-interval (1- second lapse), 3-4 day time-interval (2-second lapse) 3-4 hour time-interval (3-second lapse) and 3-4 minute time-interval (4 second lapse) and seizes the moment.

In summation, following the regimen of the ’3 to 4′ Rule conditions the trader to be prepared for each and every trade. In today’s information-rich trading environment, thoughtful preparation is the successful trader’s advantage over those who blindly place a trade according to a few, predetermined signals that embrace a limited trading perspective.

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Why Are Forex Robots Not Always Advisable For Inexperienced Traders?

Many people within the forex trading industry will avoid using forex robots altogether, whilst others will be more than willing to invest in any expert advisor that appears to be profitable. So are forex robots worth using or are they a waste of time and money, and should you have some experience of forex trading before you start using them?

Well these are difficult questions to answer because my opinion of them changes all the time, but I would say that you should only start using them if you have some experience of forex trading already. This is because you need to know all about forex trading and how the markets move in order to weigh up how well a robot actually works in reality.

Plus if you see how the robot actually trades and what kind of trading conditions need to be met in order to enter and exit a trade, you can then tweak these rules yourself and maybe come up with a manual system that you can use. That way you can increase your overall profits.

Problems start arising when inexperienced traders start using these robots because they are often very naive about the kind of drawdowns that they may experience. For instance an expert advisor can go along very steadily for a few months, slowly building your account, and then all of a sudden you can experience huge drawdowns when the market suddenly moves dramatically against you. In some cases you may even be wiped out completely if the running losses become too great.

Of course we would all like to put these robots to work straight away because the sales pages of these products explain just how profitable they have been in the past using backtested data. They will also give you live trading accounts as proof of their profitability. However it is often a completely different story when you start trading them yourself using real money. Plus you have to remember that market conditions can change very easily, so just because one of these expert advisors has made money in the past, does not mean that it will continue doing so in the future.

So overall I would say that you shouldn’t disregard these forex robots completely as there are a few good ones out there that will increase your trading capital slowly and steadily. However most of them will not be as profitable as they claim to be, and they are certainly not recommended for people new to forex trading. A little bit of knowledge will help you evaluate these robots and tweak them if necessary. Plus this will also help you to set your own stop losses in order to keep you out of trouble.

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What moves the dollar index in the currency market?

There are several investment vehicles but one of the world largest participants is the U.S. bond market where over $800 billion on average is traded daily and in the worldwide market overall is $80 trillion is traded. When the U.S. session opens early in the morning eastern standard time and the actual data is released from the economic indicators, you will see immediately the volatility in the volume of buying and selling pressures that weigh heavily on the dollar index. An example of this could be – “the country is in an inflationary market pressure or deflationary market pressure. Is there more hawkish or dovish comments from the central banks?” Another example is when following the 10-year treasuries which has a direct relation to the dollar index. This will start a rally on a positive non-farm payroll figure which could cause a better than expected result, therefore a huge surge in demand for U.S. dollars.

Who are the participants? World Governments, i.e. the U.S. Treasuries, Japanese Government Bonds, Euro Bunds, British Gilts; Government pension funds, Hedge funds, Private Equity, institutional investors, and traders. The liquidity in the bond market attracts all broker-dealers and large institutions worldwide.

Why look at the bond market? Other countries buy and sell on a daily basis, which merges throughout all the 4 major market session’s i.e. U.S., Asia, Europe, and London. The volume on these transactions can move the market significantly. For example, Japan would sell the Japanese Yen and buy U.S. dollars to make a purchase of the U.S. bonds. This can fuel the demand for U.S. dollars and the dollar index will appreciate. In turn, the U.S. can sell U.S. dollars and buy Euro’s to make a purchase of the Euro Bunds creating a surge in the Euro currency.

Following the bond market conditions and understanding the data released from the U.S. economic indicators can give you an insight on how the dollar index moves. This is just one of the investment vehicles and a good leading indicator on how the traders sentiment on the market conditions.

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Forex Trading in Nigeria

An exciting market with enormous money making potential, Forex trading is extremely popular all over the globe. You can make money trading forex even if you do not have a Wall Street experience. You can access forex trading and make money via online brokers anywhere in the world as long as you have Internet connection. However, it is important to know what restrictions (if any) are placed on forex trading in your country. This article will explore forex regulations in Nigeria and provide a short guide to what Nigerians should consider when choosing a forex broker.

Unlike some other countries, forex industry in Nigeria is not over-regulated. It enjoys a truly free market economy environment. According to the Central Bank of Nigeria, everyone can participate in foreign exchange trading as long as the trading is conducted via a bank or a broker. There is no specific registration required for forex brokers who want to operate in Nigeria, therefore many well- known brokers accept Nigerian customers.

It is impossible to underestimate the importance of doing the due diligence when selecting a forex broker. One should look for reputable brokers with at least several years of market experience and check the conditions offered to see if they suit your trading needs and meet your trading goals. Check the currency pairs offered and the spreads. Lower spreads mean higher profit for you. Professional brokers always offer low spreads on majors: less than 2 pips on EURUSD, the most popular currency pair.

Using a market maker allows you to choose the best conditions for trading, to use the quotes available, and enter large transactions with a minimal initial outlay. Usually, you are able to buy/sell currency contracts equal to $100,000 with only $1000 used as a margin, in other words, use the 1:100 leverage. However, some brokers provide leverage of up to 1:500. Higher leverage is riskier, but it gives greater trading flexibility and increases potential profit.

One should also pay attention to country-specific nuances. In addition to the general rules described above, every Nigerian trader should pay attention to the following:

Check Customer Support Hours

You obviously do not want to be in a situation when you need help and you are unable to get it. You want to receive quality help and attention from your broker whenever you need it, even if you are in a different time-zone. Your best option is to sign up with a broker that has support staff available to help you anytime you have a question or a problem. Remember: services provided by reputable brokers are backed by free 24-hour support on weekdays, when the market is open. Check if they offer Skype, ICQ, online chat support in addition to basic phone and email support.

Check Payment Options available to Nigerians

Most forex brokers accept deposits by bank wires and credit cards. In addition to that, many brokers will allow you to fund your trading account via PayPal, Moneybookers, and various e-currencies, such as Liberty Reserve, pecunix, c-gold, etc. With so many funding options available, you may think that any broker will be convenient for a Nigerian trader. You are mistaken. First of all, you would be surprised at how many brokers accepting credit cards will not allow Nigerian traders to use cards for account funding. Secondly, Nigerians either simply do not have access to some payment options offered by a broker (PayPal, for example) or find them expensive to use (international bank wire).

If you are in Nigeria, your best bet is to find a forex broker accepting e-currencies for deposits. It is faster (even instant with some brokers) and cheaper than bank wires. If you want to use your credit card, make sure you ask your broker in advance if they accept credit cards from Nigerians.

Get information about the fees involved: ask if you will be charged a fee for funding your account and for getting the funds out. Find out how long it usually takes to fund your trading account and to process your withdrawal request. Ask if there’s a minimum amount required to make a withdrawal.

Education

The size and volatility of forex market provides excellent opportunities for making profits, however one should always remember about the risk factor when entering the foreign exchange market and understand the importance of forex education. You need a broker providing free educational tools, economic calendar, real-time exchange rates, forex market analysis, charts, and forecasts. Many brokers will allow you to sign up for free online seminars, also called “webinars”, and some may even hold free educational seminars in your country.

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3 Consequences Of Choosing The Wrong Forex Broker

Most traders are eager to open an account with a forex broker as soon as they have learnt all about forex trading. However this is not a decision to be taken lightly. Even if you only intend trading with small stakes, you should still spend a significant amount of time choosing the right forex broker.

The wrong choice of forex broker could end up costing you money. The reason for this is because for a start there are lots of brokers out there that are not fully regulated. Therefore what this means is that if you deposit money into your account, you may not necessarily see this money again, regardless of whether you generate any profits or not. This is pretty rare but can happen if you go with an unregulated company, particularly one that’s based overseas in an offshore location.

Regarding actually trading forex, another problem you may face concerns spreads. Ideally you want to choose a broker that offers spreads of no more than 2 or 3 points on the major currency pairs and certainly no more than 4. If you are a long-term trader then these larger spreads won’t affect your profits too much, but if you are a short-term trader you will find that these large spreads can really eat into your profits.

For instance let me demonstrate this point by comparing 2 different brokers. Company A has spreads of 2 points and Company B has spreads of 4 points for a particular pair. Now if you were to have 5 winning trades of 10 points each (before accounting for the spreads) in a given day, you would have made 40 points profit trading with Company A and just 30 points with Company B.

So it’s fairly obvious that this is a significant difference, and in the long run these larger spreads can have a huge impact on your overall profits.

Finally another consequence of choosing the wrong broker is that you may quickly come to the conclusion that they do not offer some of the features that you need to be a successful trader. For instance you may open an account with a broker only to find that they offer only the most basic of charting software or that they are very unstable during the busiest times of the day, for example.

So the message I want to get across is that you should spend a great deal of time researching the various different forex brokers before you commit yourself to one in particular. If you don’t you may find yourself becoming upset with your current broker and having to switch to another one soon afterwards.

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New Zealand Dollar Devlopments On the Forex Currency Exchange

Amid recent trials and tribulations the US Dollar has suffered significantly on the Forex currency exchange for many different reasons leaving the New Zealand Dollar to rise against it. These gains were made possible in light of recent quantitative easing done by the Federal Reserve that made gains in the stock market possible but caused severe losses in the Forex market. New Zealand’s labor market report has made it even more of a bullish currency as time goes on. Pairing the USD with a currency rising in value such as the New Zealand dollar is a no brainer for any trader.

The New Zealand Dollar is very close to breaking the long held value of .8000 against the USD. This is incredibly significant because this level has never been broken and once it has been this pair will be the new favorite of many traders indeed. Betting against the United States Dollar has just taken on new meaning as things shape up to bear hearty pips to traders in the know. New Zealand’s central bank is keeping interest rates very attractive at the moment, this coupled with rising employment rates are a sure sign that the NZD|USD pair will continue to be bullish for a couple more weeks.

The Federal Reserve Bank in the United States has weakened the dollar to new extremes through supposed quantitative easing measures over the last couple weeks. These measures will continue for the next several months causing global devaluation of the United States dollar gradually. The global economy in all likelihood will completely shed the USD as its reserve currency in the near future. This eventual reality will change the face of the United States to the rest of the world and will usher in a new era of US fiscal policy. The New Zealand Dollar is just the beginning.

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JPY On The Rise In The Forex Market

Just when you thought it was going to look appetizing for importers to again seek out goods from Japan the Japanese Yen began an ascent against nearly every major currency, except of course for the US dollar which is in a tailspin. Much of the pair’s current underpinnings with regard to the Japanese Yen not making gains against the dollar have to do with recent US quantitative easing being done by the Federal Reserve. Such “easing” has caused the dollar to lose value even against the Japanese Yen, which might be a celebrated event among Japanese exporters but for traders it signals an all ballgame.

Everything certainly seems to be going upside down where the Forex market is concerned and we are all certainly not accustomed to these trends but we had better learn quickly. I suppose it goes back to my favorite saying “The first step in knowing everything is admitting that you know nothing” and in this market that certainly is the case is it not folks? However the Japanese are not a nation to be out done in the fiscal arena (or any other for that matter) and are doing their own QE.

In a short while the Bank of Japan will begin to purchase 5 trillion Yen in an effort to ease its own beleaguered economy. Of course whether or not any of these efforts prove effective is anyone’s guess at this point. Vigilance and due diligence at this point will be a trader’s best friend in assessing the USD|JPY for many months to come it seems. The Japanese Yen will almost certainly continue to rise against all other currencies except for the USD due to its impending retracement and improved domestic market conditions. Indeed the United States is still in bad shape, Japan just happens to be in worse shape.

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How To Begin Trading CFDs

CFD trading is pretty straightforward in the sense that you purchase at the top level of the quote when you feel the market is going to rise and sell at the lowest point of the quote when you believe market is headed for a fall. CFD or Contract For Difference is an agreement to exchange difference in value of a share between that time when the agreement is made and the time when it is terminated. When this difference is negative, the seller will receive the difference from the buyer but if the difference is positive, the seller must pay the buyer. It is similar to conventional trading except that it is more flexible. CFD trading is also held as more reliable and safe than ordinary share trading and can guide you in exploiting your investments to the fullest.

How To Trade CFDs:

* You need to make well-researched decision on exactly how to trade CFDs. CFD trading always begins with the correct choices you can make- if your choices are uninformed you may be taking a great risk. Research well about your CFD supplier to find out his commission rates, exit policies and fees.

* Keep abreast with market reports in order to trade in CFDs to know which the right ones to invest in are.

* Research on the right CFD trading strategy to suit your needs.

Why CFD Trading Is Popular:

* Earning both “short” and “long” positions which means you can profit from rise and fall in markets. * Engaging in pairs trading to counter market risks and trade on the differences between two stocks.

* Freedom to place orders when market is open or closed – this gives you the chance to plan your entry, stop loss and exit the evening before and the system takes care of the rest.

* CFDs get traded on leverage – so a trader having a small float can still make good profit from the stock market through CFD trading.

* Costs are far less when compared to stocks and not subjected to VAT, stamp duty or other trading-related charges on an exchange.

* CFD trading allows you to automatically set “buy” and “sell” orders or even “stop losses” so that it takes you lesser time to trade and you can exit as soon as the stop is hit.

Forex trading happens when you trade currencies from various nations against each other. A typical example would be buying Euro while selling US dollar at the same time. Online forex trading has gained popularity in recent times and today is perhaps one of the biggest global liquid financial markets.

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How Can Live Currency Trading Charts Help You

Many professional and amateur traders consider live currency trading charts the most essential tools of their systems. Some of them will tell you that once you are able to master the live charting techniques, then you will be able to accurately predict how the price of one currency pair will evolve. The truth is that even if live Forex charts are some great tools you can take advantage of, you will need more than these if you want to become a profitable trader on the long run.

One essential thing everybody should know about charting information is that this is one of the many factors that can help make a well-versed guess on the progress of the price. However, there is a lot to learn about these charting patterns. The most common concepts you have to master are the double and triple bottoms, triangles, and head and shoulders. As interpreting these formations is a very subjective process, you cannot rely too much on them when making important trading decisions. If you have already taken a few Forex courses, you have definitely learned what actions are suggested when you recognize a particular chart pattern. You may have noticed however, there can be different recommended actions on the exact same pattern. The point is that you cannot rely on charting patterns that require the trader’s interpretation. You should avoid making any decisions based on this type of hints, as they will not generally help you to become a very proficient trader.

There are not many people who can use live currency trading charts and a couple of indicators to make profit. Most of us have to choose another way to go, especially those people who prefer a black and white method to make money with currency or stock trading. Live charts have their place, as they help us determine the trends of certain currency pairs. Even this is not something complicated, it is probably the most important indication you can get off using charts. For short term traders, charts are very effective when buying and selling with the trend. Trading against them is never indicated.

Weekly charts for example are very helpful to determine whether the trend of a currency pair is going up or down. After you determine the trend, you can look to see if one pair is trending in the exact same direction on the hourly chart, which usually indicates a safe trade.

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Diverse Financial Portfolio With CFD Trading

A good financial portfolio is very important for investors. They mostly look for diverse portfolios that would fetch them good returns. CFD trading is a recent development in the investing circles. It is widely used by many to invest in various instruments like stocks and shares, forex, commodities like gold, silver, and oil, and exchange traded funds. CFD stands for Contract for Difference. The advantage of CFD trading over others is that here the buyer need to invest only a certain percentage of the cost of the item to make the purchase. When selling it, he or she gets the difference in prices. This lets them invest in many items at the same time as entire costs need not be borne by them at the time of investment. There are many platforms on which CFD trading can be done like online trading, iPhone trading, mobile trading, and trading through agents and middlemen.

Forex Market

One of the most popular investment markets these days is forex. Forex trading involves the forecast of the rise and fall of the value of certain currencies and investing in them accordingly. This too can be done through CFDs. Forex trading is usually done in pairs like EUR-USD, AUD-USD, USD-JPY, and so on. These pairing means that the investor expects the former currency to rise in value and the later to fall in value.

CFDs are leverage products. As such they come with inherent risks. A person venturing into it must fully understand what he or she is getting into. Otherwise, there is always the risk of making wrong moves and losing a lot of money. Therefore, investors need to proceed with caution and try not to go overboard with the investment. But, it can be said that due to the low investments required, CFD trading enables investors to have a diverse portfolio.

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Forex Trading – Avoid The Pitfalls

Some forex trading pitfalls are easier to spot than avoid. If you can recognise them you will be able to avoid if you follow a disciplined trading plan.

Overleveraging Your Forex Account

Overleveraging your forex account is when you take out too large a position in relation to your available margin. Even a small market move will cause you position to be liquidated due to insufficient margin.

Just because forex brokers offer generous leverage ratios or 100:1 or even 200:1 does not mean you should use it all at once. Don’t base your trades on your potential margin leverage but on trade specific factors based on your fundamental and technical analysis.

Failing To Adapt Your Forex Trading

Failing to adapt your forex trading to changing market conditions is another common forex trading mistake.

Market conditions are always changing and you therefore must be flexible in your trading approach and understand how forex trades are affected. Evaluate overall market conditions on an ongoing basis. A range trading style won’t work if a trending move is under way and vice-versa.

Use technical analysis to determine which trading conditions prevail and be aware that you must adapt your technical indicators to match the market conditions as well.

Being Unaware Of Current Events

You must be aware of current events and how forex trading rates are affected. You need to keep abreast of the fundamentals of current events and when and if they are likely to influence the forex markets.

Spotting a great likely trend in your technical analysis may be undone by a major upcoming economic announcement in the country of either currency in a pair.

It’s best to keep a calender of likely events and announcements and review this on a daily and weekly basis. Keep a forward looking mindset and plan for those events that you do know about as they will be enough that will crop up that you don’t.

Defensively Trading Forex

Defensively trading forex is another common trading mistake. All traders experience losses and have losing streaks. After such a spell it is perhaps natural to trade defensively, trying to avoid further losses.

Take a step back and examine what went wrong with those trades and the refocus on finding winning opportunities.

And be realistic! You are not going to retire on the proceeds of a single forex trade. Be happy with a less than 100% trading plan and lock in profits when you can.

Conclusion

Avoiding these common forex trading pitfalls means being realistic and not over ambitious. Keep abreast of current events and trade according to your forex trading plan.

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Getting Started Trading Forex

Looking for forex trading advice? If you wish to get started trading forex then you are going to need to understand the market. Gathering information on the main global economies and their currencies is essential.

It is a good idea to develop an extensive collection not only of a currency’s rate fluctuations but also a county’s history on interest rate fluctuations, economic and political history and all of which can and will have a significant influence on strength of a particular currency against another. Remember with forex trading you are always trading one currencies price fluctuations in relation to another currency.

In addition you need to become skilled at technical analysis, studying the minutae of price movements using charts, and trending tools. Most forex trading, unlike stock trading, is relatively short term. Day trading is far more common but remember in the currency market a day is 24 hours. More than ever then, you need a trading plan. A plan that you can implement and manage 24 hours a day. You have to sleep some time.

The risks can be much greater in forex trading as well. Trading takes place on large multiple of the margin held in your trading account (anything up to 200X) and whilst this allows you to trade in very large sums, losses and gains are magnified.

With the many technological advances that have taken place in this decade it is now possible for people to trade forex online from their own computers via an online forex broker. Many people are now looking to do this as a full time ‘work from home’ career or perhaps just for some extra cash. Indeed, there are now a flood of so called ‘robots’ that you can buy that will trade the market for you, while you sleep. If that sounds too good to be true, that’s because it probably is. However some of the robots have merit, at least in being able to assist you.

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What moves the currency market?

The Forex Market trades $3.2 trillion dollars in volume each day. This fact alone shows the liquidity in this market and there are always buyers and sellers in the market 24 hours a day, 6 days a week. There are four major sessions in the U.S., Asian, European and London markets.

Who are the participants? Central Banks i.e. Fed’s, BOJ, ECB, BOE, and other countries; Large Institutions/Corporations, Bond Market (treasuries), Private Equity, Hedge Funds, Large Sovereign Buyers, Banks/Remittance, Clearing Houses, and Retailers.

In the U.S., the economic indicators are signals for the health of the economy. They show the signs of inflationary or deflationary market sentiment. Inflation is good for the economy and show signs of a stronger dollar. Deflation is a negative sentiment for the economy and show signs of a weaker dollar. These are the basic fundamentals for a strong or weak dollar in the U.S. compared to other countries and their fundamental analysis.

The market sentiment is the fundamental analysis i.e. economic indicators being released during each sessions and then being measured by the weakness or the strength of the actual number forecasted by the previous number. The market conditions are the volume pressures of buyers/sellers moving the trend in one market direction.

Majority of the currencies are against the U.S. dollar either indirect or direct with the dollar. So in conclusion what moves the currency market is the relative strength or weakness on the fundamental news. This will move the currency market and the volume pressures of buyers/sellers will move the currency market also.

About EMCFX Emerging Market Capital FX is recognized as one of the most dedicated and hard working independent providers of forex managed funds to individuals from low to high wealth portfolios. They offer transparent real time platforms for peace of mind. EMCFX can be your alternative source for forex managed funds. Headquartered in Houston, Texas, EMCFX provides forex managed accounts to all size portfolios.

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Currency Transfer Companies are Subject to Strict Regulations

By Justin Thomas – To many, it is banks alone that adhere to legislation related to customer protection, anti-fraud and money laundering legislation. For this very reason, they tend to call banking institutions the most trustworthy financial outlets. This is a popular fallacy and banks do not take much effort to undeceive their clients by saying that most governments around the globe have imposed strict regulations covering all financial companies processing money orders, money transfers and currency exchange operations.

In countries like the U.S. and all member states of the European Union (EU) not only banks but also currency brokers providing payment and similar services are subject to tight supervision. In the U.K. these companies are regulated by the Financial Services Authority (FSA), which ensures that they provide reliable and legitimate service to their customers. Since 1 November 2009, all British currency transfer companies have to follow the regulations of the Payment Service Regulations.

To customers it is important to know that under these regulations currency transfer companies must safeguard client money, must show ongoing capital adequacy, and all directors and shareholders holding stakes larger than 10% in the company must pass a test by the FSA. Another guarantee for customers”?? money is a requirement for these companies to present detailed governance and risk management procedures. All these procedures and regulations apply to currency transfer brokers who transact more than ^3 million a month. Companies with a lower turnover are allowed to bypass some of the above mentioned regulations but are required to register with the FSA.

Both types of companies, known as “??payment institutions”?? are regulated by the Conduct of Business rules, which is meant to guarantee that customers receive the service offered in a proper and high quality way.

Moreover, payment institutions are subject to even stricter regulation by the EU, namely Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. The directive covers not only financial and credit institutions but also certain legal and natural persons who are involved and working in the financial sector, including providers of goods (when cash payments in excess of ^15,000 are made).

This directive and all related European legislation ensure that financial institutions, including payment institutions, conduct their business in a proper way and according to the best business practices. National governments within the EU are bound to incorporate the EU law so it is really difficult to bypass these regulations related to currency transfer operations.

Some companies may complain against such complicated regulations but it is good for customers because they can choose their financial service provider in a more informed way and get higher protection against frauds and bad business practices. In addition, payment institutions are obliged, at least in the U.K., to safeguard client money so customers must be glad to get additional guarantees that their precious funds will be managed responsibly.

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GM Stock Rally=USD Jetfuel

Despite the fact that the USD is undergoing some serious devaluation and the DJIA is also having some serious issues there is some temporary relief in sight. As GM began to sell its 478 million shares it was thought that $30.00 was optimistic and now the price has climbed to $33.00. This is a huge turnaround for GM who was more or less in bankruptcy just six years ago. This remarkable IPO is the second largest ever and as GM’s stock continues to gain strength the DJIA will recover some of its losses. This will of course have a positive corollary effect on the USD as well so traders on the forex currency exchange should certainly take note of this and stay alert.

GM still has an awful lot of debt to pay back to the US government however it is on the right track and has posted record profits this year and last. Much like a national government GM cut half of its brands and laid off many employees in an effort to make the company economically viable. So far so good as GM’s stock sale has proven fruitful and the government is dialing back its ownership of the company. In a few more years the government should be out of the company altogether.

Since the USD has been falling lately against the Euro and other stable currencies it is a good time to examine trades with this and other pairs. Gains made by the Euro and the Japanese Yen are sure to be shrugged off to an extent over the next 48 hours as the US stock market rallies. These are definitely not intraday trades and should be made with conservative SL/TP figures. Utilize proper pivot points to avoid taking losses on this trade and never make any assumptions on the Forex market.

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What is Forex Online Software?

Forex is a multinational currency trading market. On a good day, traders can make profits ranging in tens of thousands to even millions. However, trading in currencies is not simple. It involves mastering several techniques and keeping track of changes of international magnitude. This is where forex online software comes to the rescue. Such software offers a unique set of applications, each providing a functionality that can simplify forex trading. Listed below are two of the most useful ones:

Forex Online Software: Metatrader 4

Metatrader 4 is the latest in a wide range of Metatrader products. It has web-based architecture, which allows traders to access multiple accounts from anywhere, anytime. The accounts are stored at the servers managed by the brokers. One such server is capable of catering to up to 10,000 traders at a time. For reliability of service, the traders can attach their terminals to a Data Center. This also prevents the server from going into a Distributed Denial of Service Mode.

Another capability of Metatrader 4 is predicting the next good move. Its expert advisors run complex data analysis on previous market trends to predict future movements. In fact, a large number of people on Yahoo! Groups are actively working to enhance this functionality. In short, it is a complete brokerage solution in itself.

Forex Online Software: Trading Robots

Trading in forex is a lot about long calculations and market analysis. So, if you believe that computers are better at both, in comparison to humans, then forex trading robots are the tools for you. They do exactly what a skilled trader does. They study the current market trends, compare them with past trends and with the aid of hefty calculations, make the trades that will result in profits. The added advantage is that this auto trading feature can be turned off if one desires. Installing trading robots is very simple; they automatically attach themselves to the trader’s Metatrader 4 terminal and start functioning immediately. Each product has a unique market analysis parameter, which is in synch with other functions so as to limit losses and ensure profits.

Both the above forex online software products have one thing in common. Together they have highly simplified forex trading. Now even an inexperienced trader can expect to generate profits without any expertise in all the tricks of the trade.

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Proper Money Management Will Make Forex More Mainstream

With stock portfolios, people are advised to have diversity – putting some money in solid stocks, some in small cap stocks, some in bonds, etc. High risk portfolios usually consists of a larger portion for “up and coming” stocks.

Even with such portfolios, the chance of having one of these stocks erase all their value is quite rare. With no leverage, the chance of erasing all the portfolio is even more rare.

In forex, the story is different. Receiving the infamous margin call is quite common. With most traders losing, they rarely withdraw their funds after a few bad trades. Burning out the account is much more common.

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Entry and Exit Points

Trading in forex is a risky business. In fact, 90% of the traders in forex suffer losses each day. The reasons can be traced to bad decision making, terrible luck or due to the lack of training and knowledge of the forex market. However, each day sees more and more people investing in currencies with the dream of making it big. Trading here is not so simple. It requires complete knowledge of where to invest the money and, more importantly, when to invest it and when to take it back. Such entry and exit points can be found by using ‘Pivot Points’.

Such pivot points can be used by a trader to figure out when to enter a particular trade and when to exit it, in order to attain maximum profits out of that trade. Recognizing such points is not so easy and often requires a lot of practice.

Using Pivot Points for Determining Forex Entry and Forex Exit

Pivot levels can be calculated by using indicators like the MACD, CCI or RSI. All these indicators are freely available online. These indicators work by reading old market trends and support resistance levels of currencies.

Support resistance levels are often used to determine forex pivot points. Here support levels are the places where the price of the currency is expected to rise while resistance levels are used to mark the places where supply surpasses the demand of that currency. Once a resistance level is broken, the bid/ask price of the currency tends to surge upwards. Based on this, pivot points can be used to predict entry and exit points in a trade.

Another important factor to consider is stop-loss. This is a value below the initial buying price of any security that is pre-determined. If a market falls, then the securities are automatically sold on reaching the stop loss limit. Its value depends directly on the risk taking capability of the trader.

Forex Entry Points:

In a market uptrend, if the prices break above the pivot levels, it is advisable to enter the market with a Long position and stop-loss below the pivot level.

Similarly, in a market downtrend, if the prices are repelled by pivot levels it is advisable to enter the market with a Short position and stop-loss above the pivot level.

Forex Exit Points:

In Long trade, with prices above the pivot level, it is advised to aim for profit of only 10-15 pips below the next higher pivot level.

Similarly, in a short trade with prices repelled by the pivot level, it is advised to exit once the prices reach half the pivot length.

These are only tips for effective trading using pivot points to determine entry and exit in forex. However, it is important to remember that they do not always guarantee success.

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Tips on Forex Trading in New Zealand

New Zealand is an industrialized country and is fast growing into an international competitive market economy. Its Gross Domestic Product (GDP) has grown from US$97.39 billion in 2005 to US$119.549 billion in 2010. This rapid growth has boosted income and led to technological advancements. This can be seen from the fact that the nation’s per capita income stood at US$31,067 in 2010.

New Zealand is a country rich in agricultural resources and a majority of its income comes from trading such resources. In fact, the agriculture sector accounts for 20% of its GDP. New Zealand’s major trading partners are Australia, China, Japan and the USA.

Forex Trading in New Zealand: An Overview

The Reserve Bank of New Zealand (RBNZ) is the country's central bank. Its policies are driven to maintain the stability of the financial system and to satisfy the currency needs of the public, while maintaining inflation between 1 to 3 percent. The RBNZ also functions as the Forex Regulatory Authority of New Zealand.

Factors Affecting Forex Trading in New Zealand

Here are some things to keep in mind while trading in New Zealand
1) The country has a very small population and therefore even a slight increase in migration has severe effects on the economy.
2) Its GDP relies heavily on the export of agricultural produce. However, the island nation is also affected by severe weather conditions. For example, the recent droughts have heavily injured its economy.
3) New Zealand’s economic stability is directly connected to the economic conditions in Australia. Therefore, if the markets drop in Australia, a fall in New Zealand is expected as well.
4) New Zealand Dollar (NZD) is a commodity linked currency. Thus, an increase in commodity prices results in the appreciation of the NZD.
5) Much like the Australian dollar, the NZD enjoys the status of a carry trade amongst forex traders. This is due to the high interest rates prevalent in New Zealand.

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Forex 101: Understanding Forex Pips

While trading on the forex trading floor, one is bound to come across dialogues like:
“I made a 25 pip profit on my trade” or “I lost around 123 pips in the market crash.”
So, what are forex pips and what does their value represent in the forex world?

Definition of Forex Pips

Pip is the short form for Percentage in Point. It is used to represent the smallest value of measurement for currencies being traded in the forex market. Almost all major currencies in the world are measured only up to two decimal places, although, in forex, the calculations are done till the fourth decimal place. (The only exception being the Japanese Yen, which is only calculated up to two decimal places.) Therefore, the smallest move that can be made by a pip is .0001, which is commonly referred to as 1 basis point.

Calculating Forex Pip Values

The value of forex pips changes with fluctuations in the market. However, calculating them is not very difficult. For example, let us look at the pip calculations for the USD as both base and quote currency:

USD as the Base Currency: The formula here is simple: 1 Pip = 0.0001/exchange rate

Therefore, if one buys the standard lot of 100,000 pairs for USD/CHF and the exchange rate is 1.2490, then the pip value will be 0.0000800640 and equivalent forex pip value will be 8.0064

USD as the Quote Price: The pip value is always one.

Trading with Forex Pips and Leverages

The currency fluctuations in the forex market only bring about minute changes in the currency values. Like in the above example for the USD/CHF pair, the value of 1 pip is very small. So how do the big traders make millions on such small pips?

The answer lies in leverages. Forex brokers allow traders to deal with leverages as high as 100:1 or 500:1. This implies that in order to buy a standard lot of $100,000, the trader will have to deposit only $500 with a broker offering leverage of 200:1.

Let’s see the difference that leverages can bring about in a trade:

If the USD/CHF currency pair is worth 1.1535, then:

On investing $1,000 without leverage:
Profit = (.0001 / 1.1535) x 1000 = 0.0867

On investing $1,000 with 100:1 leverage:
Profit = (.0001 / 1.1535) x 100000 = 8.6692

However, trading through leverages is considered risky, as it amplifies the volume of both profit and loss.

READ MORE - Forex 101: Understanding Forex Pips