Introduction To FOREX Trade

The Forex markets are open 24-hrs a day during most of the week, allowing forex traders a huge flexibility to enter their trades. And as long as the markets are open the prices will be constantly fluctuating as can be easily seen by looking at the forex charts. And it’s thanks to this fluctuations that traders can have profitable trades the whole day.

The charting software interprets the constantly changing prices by dividing this data into various time intervals. For each of these intervals the chart will show you the open and close price, along with the high and low price during the interval. Most software packages will allow you to see this price data by clicking on the spot of the chart where you want to check these values.

One very interesting feature of these forex charts is that they will allow you to choose the time interval under which you will be trading. You may look at charts with time intervals going from ticks, 1 min, 5 min, 10 min, 15 min, 30 min and 1 day.

What of these time intervals you use will depend mostly on the amount of time you want to spend monitoring your trade.

For example if you want to monitor the trade for only a few hours you should use the 15 min charts. If you would like to enter a trade that will last for an entire day then you should better use the 30 min charts.

And if you want to have a trade that stays open during days you should choose whole day charts.

Of course the lengths of the trades can vary, and the time interval you see is only a first approximation indicator of how long your trade will stay open.

One more issue with the length of the intervals is how much you will make, in average, per trade.

The longer the interval the most profitable the trade will be compared with a short interval.

But on the other hand shorter intervals allow for a greater ybe surpass the profitability of the lonumber of trades that will compound and manger intervals.

Forex Definition

Forex Expert Adviser. Add-on software used with a MetaTrader currency trading platform. A Forex EA is used to automatically generate trading signals on the forex trader's behalf. Some software also allows for automatic trades under given conditions, and may include trailing stops so that currency traders can maximize on trends and not lose out on profit making opportunities. These programs tend to follow popular technical indicators like MACDs, moving averages and stochastics.

Currency Trading

The foreign exchange market (currency, forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. [1]FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system until 1971.

Presently, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.[3]

The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as the US Dollars, Euro, Japanese yen, Pound Sterling, etc..., and the need for trading in such currencies.

Another Forex Definition

Forex Definition There are more and less popular pairs of exchange in the forex market.Euro Dollar is one of the most important pairs and you are likely to see it written in the form of EUR/USD on all forex display screens. There are of course other tradable pairs such as GPB/USD (British Pound/ American dollar), USD/JPY (American dollar/Japanese Yen), USD/CHF (American dollar/Swiss Franc). Yet, they are far less popular than the EUR/USD pair.

What are Forex benefits?

First of all, forex market comprises the biggest number of participants with the largest daily transaction volume. All the transactions are conducted within seconds, following online quotes. Forex market is opened 24 hours a day, 7 days a week and can easily be accessed from anywhere within a computer environment. A trader is his own boss he can open a position for any period of time he wants without any fees attached. The only thing he will need to extra pay is the difference between buying and selling prices. Yet, one of the greatest forex benefits is that a trader has an opportunity to profit much more than he originally invested.

How can forex trading be rendered?

In the past, forex trading could only be rendered through banks. Today, with the ushering of new electronic revolution, there are myriad of options. Many online forex trading companies have emerged and started offering a wide range of services for traders all over the world, by means of online forex trading platforms. These platforms can easily be accessed if one has a computer and an Internet connection.

Practice OR Demo Account

Why Practice Account?

Learn how to make trades and to use trading platforms.

Trade under real market conditions, real market quotes, with no risk and no obligation.

Test-drive trading strategies and experience the excitement of Forex trading.

Short-Term Forex Technical Outlook: GBP/CHF

WEDNESDAY, 29 JULY 2009 04:59:45 GMT

Written by David Song, Currency Analyst

The British pound advanced against the Swiss franc this week, with the rally supported by the rising trending in the 50-Day moving average, and the GBP/CHF may continue to push higher over the remainder of the week as the economic docket is expected to reinforce an improved outlook for the U.K.

Currency Pair: GBP/CHF
Chart: 60 Min Charts

Short-Term Bias: Bullish

Analysis:

The British pound advanced against the Swiss franc this week, with the rally supported by the rising trending in the 50-Day moving average, and the GBP/CHF may continue to push higher over the remainder of the week as the economic docket is expected to reinforce an improved outlook for the U.K. After reaching a high of 1.8976 in November, the pound-franc slipped to a low of 1.5124 on 12/29 as investors curbed the appetite for risk, but the turnaround in market sentiment has led the pair higher throughout the first half of year, and the pair is likely to hold the rising trend over the near-term as investors speculate the Bank of England to tighten policy over the next 12 months. Credit Suisse overnight index swaps shows investors are pricing a 100bp rate hike by the BoE next year and expectations for higher borrowing costs may continue to drive the British pound higher against its currency counterparts over the near-term. Over the next few hours of trading, we may see the pair continue to push higher as U.K. mortgage approvals are expected to rise in June, and we may see the pair continue to retrace the sell-off from earlier this month as the economic outlook for Great Britain improves. However, as risk trends continue to drive price action in the foreign exchange market, a rebound in risk aversion could weigh on the GBP/CHF and may lead the pair to fill-in the gap from the 120-SMA as the low-yielding currency continues to benefit from safe haven flows. Be sure to check out other Reports.

Fundamental Outlook for US Dollar

Though price action for the world’s reserve currency remained extraordinarily volatile this past week; the heightened activity wouldn’t translate into direction. Aside from the Japanese yen, the dollar’s exchange rates with its major counterparts were ultimately little changed from the previous Friday’s close, reflecting a general lack of market-moving economic data and a tempered interest in risk appetite as the G8 deliberated on the path the world’s financial leaders will take in tending to the global recovery. Looking ahead, the dollar will start the new week in a relatively tight range with its most liquid pairings, looking for the fundamental spark that can encourage a breakout and reignite a trend. What could be that motivating factor? There are more than a few notable indicators populating the docket, fine tuning forecasts for the pace of recovery; but as usual, the true driver will likely come through sentiment and risk appetite.

Over the past month, risk appetite has leveled off and is even threatening to retrace the rally in optimism that began back in March. There are two considerations here for those trading the dollar. First, determine what is will drive sentiment; and then determine how the greenback will respond to the shift. It shouldn’t come as a surprise that the currency’s reaction will depend on what is moving the market. Should the global financial markets be thrown into panic, the dollar will take on the title of safe haven. On the other end of the scale, if there is a broad recovery in investor sentiment, it will be a more discriminating scale. Looking out over the coming week, there are few critical events scheduled – but this sort of thing usual comes out of the blue. More likely, the market’s bearing will feed off bigger trends. Carry over from the G8 meeting over the second half of this past week has increased the rivalry to be the first country to see positive growth and financial stability. In its comments, the group suggested there were early signs of economic “stabilization,” yet there were still hurdles and the commitment would remain with “fiscal sustainability.” This has been the motto for a few months now which only further breeds speculation. Should the calls to recapitalize “viable” banks and deal with distressed debt be taken seriously, the US is already ahead of the curve. However, beyond the short-term, America’s budget deficit dwarfs most of its counterparts; and policy officials remained staunchly opposed to moving on to the next step for a recovery – the government’s graceful exit from the financial markets.

But, when the financial seas are quiet and speculation over some other region is accelerating its exit strategy is settled, the fundamental crowd will turn back to benchmarking the United States’ relative pace of economic recovery. It is important to remember that it doesn’t necessarily matter how quickly one economy returns to positive growth or its pace thereafter. What is important is whether the US is going to pull itself out of recession and push up the throttle on expansion before its global counterparts. For this purpose, we have a slew of economic releases filling out the economic calendar. The most encompassing report to cross the wires will be the FOMC minutes. While their multi-year growth and inflation forecasts are not expected to be updated until the minutes released in August; this will nonetheless provide the short-hand version of their opinion on growth and financial markets. Less comprehensive – but more likely to stir volatility – are advanced retail sales, industrial production and housing starts. These three indicators will offer a status report on three of the most essential regions of growth. Also, though it may be under the radar, an eye should be kept on the monthly budget. The government’s ability to fund its stimulus efforts and the amount of debt they ultimately take on are critical at this point. – JK

Looks like we’re in for a quiet one

own a bit, up a bit and then back down a bit. That's the story for the JPY crosses and I would suggest that the remainder of the session will be quiet. Technical resistance in the form of the previous bullish trendline in EUR/JPY is holding thus far. The major level to watch now is 94.50 in USD/JPY- if that level can be broken then many non-believers such as myself start to take notice of the bear argument.

Gold 'Remains Bid' But Slips With Stocks, Oil & Emerging Currencies As Dollar & Yen Signal Risk Aversion

Spot Gold prices fell to a new two-week low lunchtime Wednesday in London, dropping 1.5% from this week's start to bounce off $918.50 an ounce. US stock futures meantime held flat after Tuesday's sell-off, while stock markets across the Far and Middle East ended the day lower.

Gold Falls As The Dollar Gains Strengthen And Inflation Is Steady

Gold prices are falling at the moment as the dollar remained firm, sapping gold's appeal as an alternative investment, and on easing inflation fears as oil prices weakened. Gold has been hurt by the dollar's strength as investors have recently preferred the U.S. currency to bullion as a safe store of value amid fears over the economic outlook. 'At the moment, gold prices have been driven heavily by the movement in the U.S. dollar, but if we get down toward $900, we might see some opportunistic buying,' said David Moore, a commodities analyst at the Commonwealth Bank of Australia. Gold is trading at $920 as of 9:18am, London Time. Gold's Pool-Position is 42% Long, meaning that most Finotec clients are Selling the precious metal.

Economic Calendar 7/9/09

GMT Ccy Events Actual Consensus Previous Revised
1:00 AUD Consumer Inflation Expectation Jul 3.20% -- 2.80%
1:30 AUD Employment Change Jun -21.4K -20.0K -1.7K -5.1K
1:30 AUD Unemployment Rate Jun 5.80% 5.90% 5.70%
6:00 EUR German Trade Balance (EUR) May 9.2B 9.4B
6:00 EUR German CPI M/M Jun F 0.40% 0.40%
6:00 EUR German CPI Y/Y Jun F 0.10% 0.10%
8:00 EUR ECB Publishes Monthly Report Jul -- --
8:30 GBP Visible Trade Balance (GBP) May -6.7B -7.0B
11:00 GBP BoE Interest Rate Decision 0.50% 0.50%
12:15 CAD Housing Starts Jun 130.0K 128.4K
12:30 USD Initial Jobless Claims 608K 614K
14:00 USD Wholesale Inventories May -1.00% -1.40%
14:30 USD Natural Gas Storage -- 70B

Forex Trading the Bank of England Interest Rate Decision

The central bank in the U.K. kept the benchmark interest rate unchanged at 0.50% in June, and maintained its GBP 125B asset purchase program in an effort to stimulate the ailing economy. The Bank of England minutes showed the board voted unanimously to carry out its current policy objects in place, with the MPC stating ‘that the second-quarter decline in consumption would be less than the committee had previously anticipated.’

BANK OF ENGLAND REFRAINS FROM INCREASING QUANTITATIVE EASING

After a six-day selloff, the British Pound is finally attracting buyers. Fundamentally this market has been getting beat-up since June 30th when an economic report showed that the U.K. economy had its worst quarter since 1958. Since then there have been signs that the economy is improving. The service sector is beginning to show growth, housing prices have stabilized and inflation is running ahead of the Bank of England’s target.



Despite these small signs of recovery, the Bank of England announced early this morning that it had decided to leave interest rates at their historically low level of 50 basis points.



This news came as no surprise since investors do not expect the BoE to touch interest rates until it is absolutely sure that the U.K. economy is well on its way to recovery. Although these are small signs of a recovery, credit issues still exist with lending to businesses well down from recent peaks. Mortgage approvals are also down which is a common problem around the world.



Interest rates may not be an issue at this time, but rumors that the Bank of England would increase the level of funds available for quantitative easing helped trigger a sharp sell-off in this market since Sunday night. Quantitative easing, which is essentially the printing of money, is an economic program in which the central bank buys government assets. It is a very dangerous maneuver because it can lead to an inflationary environment which will lead to a debasing of the economy.



The GBP USD surged to the upside following the news that the Bank of England would refrain from increasing the amount of funds available for the purchase of government assets. This came as a surprise to traders who had factored in an increase in the amount of funds available for quantitative easing.



Technically, the British Pound is in a down trend, however it may be short-term oversold. This means that this market may retrace 50% of its recent break back to 1.6362 to 1.6452.



At this time the current up move looks like a simple counter-trend retracement. This means that this market is likely to attract sellers on the first test of the retracement zone at 1.6362 to 1.6452. Traders will have to watch this market carefully while this zone is being tested to determine if new shorts start to build positions.



It may take a couple of days to determine whether this market is going to resume the uptrend or start a serious retracement to the downside.

European Economic Preview: U.K. Producer Price Data Due

(RTTNews) - Friday, a number of key statistical reports are due from European economies.

At 2.00am ET, wholesale price data for the month of June is due from Germany's Federal Statistical Office.

At the same time, the Statistics Finland would be releasing a report on building cost index for June and another report on manufacturing new orders for May. Industrial output data for May is also scheduled to release.

At 2.45am ET, French industrial and manufacturing output data is due from the INSEE. Economists forecast a monthly increase of 0.4% and an annual drop of 17% in manufacturing output and a 0.2% monthly fall in industrial production.

At the same time, French current account data and central government balance report for May are due.

Inflation figures for June is slated to be out from the Spanish statistical office at 3.00am ET.

Italian industrial production data is scheduled to release from the ISTAT at 4.00am ET. On a monthly basis, production is expected to fall 1.1%.

Half an hour later, U.K.'s Office for National Statistics is likely to release a report on industrial producer prices. Producer input prices are forecast to rise 0.8% month-on-month and to fall by 12.1% year-on-year.

Output prices are expected to grow 0.3% on a monthly basis, while it may fall .8% annually. Core output price index is likely to rise 0.2% month-on-month and 1.1% year-on-year.
Friday, a number of key statistical reports are due from European economies. At 2.00am ET, wholesale price data for the month of June is due from Germany's Federal Statistical Office.

Japan's Corporate Goods Prices Drop At Record Pace In June

(RTTNews) - Japan's corporate goods prices dropped by the steepest year-over-year pace on record in June, mainly due to a dip in petroleum and coal prices and the prices of scrap and waste products, a report by the Bank of Japan showed Friday.

The corporate goods price index dipped 6.6% year-on-year in June, after falling a revised 5.5% in the previous month, revised from a 5.4% drop. Economists expected prices to fall 6.4%. This was the also the sixth consecutive month that producer prices fell.

In June, petroleum and coal product prices dipped 41.7%, while that of scrap and waste products fell 60.6%. Double digit declines were also seen for chemicals and related products as also for non ferrous metals.

Month-on-month, the corporate goods prices were down 0.3% in June, slower than a revised 0.5% decline in the preceding month, but faster than economists' estimates of a 0.1% drop. The producer prices on a monthly basis have been declining continuously since September last year.

Iron and steel products contributed to a 0.16 percentage points decline in the prices month-on-month, the largest negative contribution among the commodity groups. Iron and steel prices were down 2.5%. Utility prices fell 3.1% and subtracted 0.15 percentage points from the index. Moreover, processed foodstuffs, electrical machinery and equipment made negative contributions. However, petroleum and coal products, scrap and waste as also non ferrous metals made positive contributions.

Consumer prices are also seeing a deflationary trend. Reflecting the weakness in the economy, consumer prices in the economy dropped 1.1% annually in May, sharper than a 0.1% drop in the preceding month, the Ministry of Internal Affairs and Communications said last month. At the same time, the core consumer prices, excluding food, dropped at a record pace of 1.1% in May.

Moreover, the Ministry said the jobless rate in the economy was 5.2% in May, which is the highest level since September 2003, following the 5% rate in April.

However, there were signs that the worst was over for the Japanese economy as the Bank of Japan upgraded its regional economic assessment for the first time in three years. The central bank said economic conditions in the economy continued to remain severe, but the pace of deterioration had slowed.

The bank said developments in inventory adjustments helped increase exports and production, although they remained at a low level. Further, the central bank said the financial system had become calmer, reflecting an improvement in the commercial paper and corporate bond markets.

Meanwhile, a report from the Cabinet Office also showed signs of improvement in the economy. The leading index, measuring signs of future economic activity climbed to 77 in May from 76.2 in April. The coincident index increased to 86.9 from 86 in the preceding month.

Japan's corporate goods prices dropped by the steepest year-over-year pace on record in June, mainly due to a dip in petroleum and coal prices and the prices of scrap and waste products, a report by the Bank of Japan showed Friday.

Japan Domestic CGPI -6.6% On Year

(RTTNews) - An index measuring the prices of domestic corporate goods fell 6.6 percent on year in June, the Bank of Japan said on Friday, marking the fastest pace of decline on record.

Analysts had been expecting a fall of 6.4 percent on year following the revised 5.5 percent decline in May. Originally, the decline had been reported at 5.4 percent.

On a monthly basis, the prices for corporate goods eased 0.3 percent versus expectations for a 0.1 percent decline. The May reading was revised from -0.4 percent to -0.5 percent.

CURRENCIES: Dollar Edges Higher Against Most Major Rivals

(By Lisa Twaronite)

The dollar was higher against most other major currencies in Asian trade Friday, taking its cues from rising risk aversion as most stock markets across the region traded with a weaker tone.

The dollar bought 93.03 yen, slightly up from 92.99 yen in late North American trading on Thursday, holding well above a more-than-four-month low of 91.81 hit Wednesday.

"The correlation between risk aversion and currencies has decreased over recent weeks. We continue to expect risk aversion to play an important role in driving currencies, but it will not be as dominant a factor as it has been over the past year," said analysts at Calyon

"Our expectations of improved risk appetite over the coming months point to further U.S. dollar weakness," they said in a research note.

The dollar index (DXY), a measure of the greenback against a trade-weighted basket of six major currencies, was at 80.181, up from 79.879 in late North American trading on Thursday.

The euro bought $1.3963, down from $1.4036 late Thursday. The British pound was at $1.6282, down from $1.6338 late Thursday.

The Australian dollar bought 78.11 U.S. cents, down from 78.46 U.S. cents Thursday.

On the data front, Japan's domestic corporate goods price index, the nation's benchmark measure of wholesale prices, fell a record 6.6% in June from the year-ago period, the Bank of Japan said Friday. The report had a muted effect on currency trading, but suggested that deflationary pressures persist in Japan.

The Bank of Japan is scheduled to hold a regular policy meeting next week, and could extend some of its programs designed to add liquidity to the nation's financial markets.

US Dollar Looking For a Catalyst to Break Congestion

Though price action for the world’s reserve currency remained extraordinarily volatile this past week; the heightened activity wouldn’t translate into direction. Aside from the Japanese yen, the dollar’s exchange rates with its major counterparts were ultimately little changed from the previous Friday’s close, reflecting a general lack of market-moving economic data and a tempered interest in risk appetite as the G8 deliberated on the path the world’s financial leaders will take in tending to the global recovery.