Earn Money Forex: November 2011

Friday, 18 November 2011

The Forex Market and the World Economic Crisis

Forex market during crisis

The Forex Market and the World Economic Crisis

The recent world economic crisis started in 2008, triggered by a liquidity shortfall in US banks after the collapse of the US housing market. The crisis then spread around the world, thanks to securitisation of sub-prime mortgages. Securitisation is where debt is mixed together and sold on as a new financial instrument.

Securitisation was supposed to reduce risk, but in practice it became impossible to separate good and bad debt and to understand the true exposure. This led to a loss of confidence in exposed banks around the world; some of them had to be bailed out to prevent an economic meltdown.

The global recession which followed caused high unemployment and declines in economic output. While most countries have now returned to anaemic growth, new crises loom. One of the most concerning is eurozone sovereign debt; Ireland, Portugal and Greece have already received massive bailouts, and others such as Spain and Italy are at risk.

Turbulent economic times cause volatility in the forex market:

Confidence ebbs and wanes with every piece of news
Panic selling occurs on both fact and rumour
Central banks pour liquidity into the market to prop up currencies and financial institutions

Forex traders make money when currency values change, so today's economic turbulence is an opportunity for profit. At the same time, market uncertainty creates additional risk:

Long-term traders are less affected, as short-term variations tend to even out
Short-term traders need to take particular care to avoid large losses

For forex traders, economic crisis is not a time for poverty, but for creating wealth. Take care, though; you want to end up a winner, not a casualty.

Is it true? earn money from forex.com?

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Your question is not very clear.

Do you mean "earn money" like from a CD or savings account?

If you're talking about Forex, you're talking about trading. You're talking high risk trading. You're talking about months and years of study and developing your skills and learning discipline and conquering your fears.

Yes, it is true. If you make money trading, you will definately earn it.

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Forex market during crisis

The Forex Market and the World Economic Crisis

Turbulent economic times cause volatility in the forex market:

Confidence ebbs and wanes with every piece of news
Panic selling occurs on both fact and rumour
Central banks pour liquidity into the market to prop up currencies and financial institutions

Forex traders make money when currency values change, so today's economic turbulence is an opportunity for profit. At the same time, market uncertainty creates additional risk:

Long-term traders are less affected, as short-term variations tend to even out
Short-term traders need to take particular care to avoid large losses

For forex traders, economic crisis is not a time for poverty, but for creating wealth. Take care, though; you want to end up a winner, not a casualty.

Forex market participants

All operations on financial market are done via the system of special institutions: central banks, commercial banks, dealers and brokers. Every Forex participant has its own volume of deals on the currency market. For example, central banks have the biggest turnover that exceeding hundreds of millions US dollars a day. Commercial banks and dealers have smaller turnover. Daily turnover of brokers is considered to be about 25-30 millions of US dollars that makes 2% from the general volume of all Forex trading.

Central banks of countries

These banks regulate money and credit flows with instruments defined by law. The main functions of central banks are emission (issue) of money, carrying out of monetary and credit policy and national currency policy. For example if a bank carries out currency intervention it may lead to the rise or fall of the national currency rate.

Commercial banks

These are financial intermediaries that accept deposits from legal and private persons, take advantage of investing this money, return it to depositors, close and operate bank accounts. Every country has some big commercial banks that are able to influence currency rates. In 2006 the Deutsche Bank turnover was of 19.26% from the whole Forex market turnover

Brokers

Brokers are legal or private persons that represent agents or negotiators in trading who meet buyer and seller of securities or currency together. Broker works in the name, by order and at the expense of his client and may provide some additional services. Broker gets a commission bonus for fulfilling customer's orders. Forex market tips.

Dealers

Dealers are companies or private persons that operate on the market at their own expense and in their own name, in other words they sell and buy currencies or any other assets with their own money.

Forex market participants

Central banks of countries

Commercial banks

Brokers

Dealers

Dealers are companies or private persons that operate on the market at their own expense and in their own name, in other words they sell and buy currencies or any other assets with their own money.

Forex currency market

The word value comes from the Latin “valeo”, “I stand”.

Valuable currencies today are:

Monetary units of countries with indication of type (paper, gold, silver);
Monetary units of a number of foreign countries, including payment and credit documents expressed in such monetary units and usable for international accounts (cheques, bank bills etc.)

Basically, the Forex currency market is the sum of all transactions made by its participants (banks, exchanges, funds, investment, brokerage and external trading firms, as well as private persons, i.e. traders) to exchange some types of currency. Each second, the Forex market processes thousands of transactions, bringing profit to participants.

The Forex currency market has the following classification of currency types:

Freely convertible currencies have no limit on financial transactions of any kind, may be used by residents and non-residents of a country, and can be converted into any foreign currency;
Partially convertible currencies are usually those with a number of restrictions on use by non-residents and a specific range of allowed transactions. Thus, most Western European currencies are partially convertible; restrictions on use by non-residents were removed in 1958, and now any amount on an account in such currencies may be converted to a freely convertible equivalent;
Non-convertible currencies have restrictions for both residents and non-residents barring a number of financial transactions. They are not convertible and are used only inside their specific countries. For instance, non-convertible currencies are used in developing and dependent countries, and tied to the currency of a metropolitan country that sets exchange rates to give itself an advantage. Non-convertible currencies are not used on the Forex market.

The Forex currency market has two types of operations: buy and sell; each currency has demand and supply, allowing transactions with no real restrictions on volume or time. The Forex currency market also entails regulation of the exchange rates of various countries by balancing supply and demand.

The Forex currency market has a number of so-called primary currencies – most daily transactions are conducted in these:

USD – the U.S. dollar. No doubt the backbone of the Forex market. Traders often call the USD the buck, the greenback, the dolly.

EUR – the euro, common currency for the European space, second on Forex in terms of popularity. Before the euro, the DEM Deutschmark, Germany’s national currency, took its place.

GBP (Great Britain Pounds) – the pound sterling, Britain’s national currency. Financier slang also includes the names sterling, pound, and cable.

CHF – the Swiss franc. The slang term swissy is used alongside the official name.

JPY – the Japanese yen.

The Forex currency market also uses:

AUD – the Australian dollar, often referred to as the aussie by financiers.

СAD – the Canadian dollar.

NZD – the New Zealand dollar, also known as the kiwi among Forex currency market traders.

Another incredibly important concept on the currency market is the currency exchange, which is a key link in the chain of currency market trading services.

Essentially, the currency exchange is a place where transactions are made. In this case, the currency is in free trade, shaping the process of constant currency exchange fluctuations. The main characteristic of the currency exchange is that exchange rates are shaped and noted as part of its operation, through the effect of supply and demand on the selling and buying of currencies. This very process is the main objective of the Forex currency exchange: shaping the exchange rates based on objective effects of the economic factors of specific countries. The currency exchange essentially regulates exchange rates.

With the development of technology, more and more people today use the currency exchange online, trading in real time via an internet connection. The online currency exchange fulfils a number of functions besides affecting exchange rates: it lays the technical groundwork for free trade, creates and applies the rules for trading participants to enter (covering e.g. funds, business reputation), and creates the conditions and rules for making the transactions themselves. The obligation of monitoring observance of these conditions lies with the currency exchange as well.

The largest currency exchanges are in London, New York and Tokyo. Thus, the online currency exchange can cover practically the entire world and provide nearly equal conditions for all currency market participants. This has made the Forex currency exchange the largest exchange in the world, with a turnover of more than several trillion dollars per day.

What is forex?

One of the questions we get asked all the time is “What is forex trading?” When did it start? How big is it? Who are the major players? What makes currency rates change?

Here are the answers to all your questions!

What is forex?

Forex is the international market for the free trade of currencies. Traders place orders to buy one currency with another currency. For example, a trader may want to buy Euros with US dollars, and will use the forex market to do this.

The forex market is the world's largest financial market. Over $4 trillion dollars worth of currency are traded each day. The amount of money traded in a week is bigger than the entire annual GDP of the United States!

The main currency used for forex trading is the US dollar.

When did forex start?

As the world continued to tear itself apart in the Second World War, there was an urgent need for financial stability. International negotiators from 29 countries met in Bretton Woods and agreed to a new economic system where, amongst other things, exchange rates would be fixed.

The International Monetary Fund (IMF) was established under the Bretton Woods agreement, and started to operate in 1949. All exchange rates changes above 1% had to be approved by the IMF, which had the effect of freezing these rates.

By the late 1960's the fixed exchange rate system started to break down, due to a number of international political and economic factors. Finally, in 1971, President Nixon stopped the US dollar being converted directly to gold, as part of a set of measures designed to stem the collapse of the US economy. This was known as the Nixon shock, and lead to floating rate currency markets being established in early 1973. By 1976, all major currencies had floating exchange rates.

With floating rates, currencies could be traded freely, and the price changed based on market forces. The modern forex market was born.

Who trades on the forex market?

There are many different players in the forex market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services. The participants include the following:

Government central banks
Commercial banks
Investment banks
Brokers and dealers
Pension funds
Insurance companies
International corporations
Individuals

When is the forex market open?

Unlike stock exchanges, which have limited opening hours, the forex market is open 24 hours a day, five days a week. Banks need to buy and sell currency around the clock, and the forex market has to be open for them to do this.

What factors influence currency exchange rates?

As with any market, the forex market is driven by supply and demand:

If buyers exceed sellers, prices go up
If sellers outnumber buyers, prices go down

The following factors can influence exchange rates:

National economic performance
Central bank policy
Interest rates
Trade balances – imports and exports
Political factors – such as elections and policy changes
Market sentiment – expectations and rumours
Unforeseen events – terrorism and natural disasters

Despite all these factors, the global forex market is more stable than stock markets; exchange rates change slowly and by small amounts.

What are the advantages of the forex market?

The forex market has many advantages. These include the following:

It's already the world's largest market and it's still growing quickly
It makes extensive use of information technology – making it available to everyone
Traders can profit from both strong and weak economies
Trader can place very short-term orders – which are prohibited in some other markets
The market is not regulated
Brokerage commissions are very low or non-existent
The market is open 24 hours a day during weekdays

How to make profit?

One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.

Here are the answers!

How do you make money?

Let's take an example based on the graph below:

You open an Classic Account with €2,000
You think the Euro will go down against the US dollar
You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
There is no margin left in your account at this point
The Euros you sold are worth $257.000 US dollars
You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
The Euro ask price reaches 1.2750 US dollars and you buy
This costs $255,000 US dollars
You have now sold 200.000 Euros for $257.000 and bought them for $255,000
The difference is $2,000 US dollars or €1568 Euros
Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!

Here's another example:

This time you think the Euro will go up
You open a Cent Account with 20 US dollars
You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
It does and the cost is $1912.50
Because you have 1:100 margin this only costs you $19.12 – we provide the rest
The Euro then goes up to 1.2850 US dollars
You sell your 1500 Euros for $1927.50
Your profit is $15.00 – a 75% return on your $20 investment!

How do we make money?

You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?

Notice in the example above that we talked about bid prices and ask prices. These aren't the same:

The bid price is what you pay when you're buying currency
The ask price is what you get when you're selling - and is less than the bid price

The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.

Managing your risk

In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:

Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
Manage your money by spreading it over several investments

Use a number of other risk management methods

Thursday, 17 November 2011

What Is Forex and How to Make Money with It?

GBP/JPY price chart with three indicators: RSI and MACD
What Is
Forex

Forex is the knowledge and business of making money through trading currencies against each other. Forex is not a new business and its history is as old as the history of money.
What is forex is a question that people ask a lot these days. There are people who have been making money through Forex from many years ago. Fortunately, with the help of computer and internet, Forex trading has become much easier. You can sit at your personal computer and trade from home without having to make any phone call or referring to any bank.
How is it possible?
There are brokerage companies that enable you to buy and sell different currencies through the Internet and some simple softwares. For any trade that you make, you pay a small commission to the brokerage company that you are trading through.
You need to find a good, reliable and well-known brokerage company and sign up for an account with it. Then you have to fund your account. You use the money you have in your account to trade. Any profit that you make, will be added to your account and visa versa. Then you can withdraw the money you have made.
What currencies can you trade?
In Forex, you deal with currency pairs. There are four main currency pairs: British Pound and USD (GBP/USD), Euro and USD (EUR/USD), USD and Japanese Yen (USD/JPY), USD and Swiss Frank (USD/CHF).
In each currency pair, the first currency works as commodity and the second one works as money. For example when you choose GBP/USD to trade, if you buy, you buy British Pound against USD and if you sell, you sell British Pound against USD. It doesn’t matter what currency you have in your account. The trading software takes care of the exchanges and transactions automatically.
How can you make money?
Buying low and selling high or selling high and buying low is the base of making money in Forex. For example If you buy GBP against USD when each GBP is equal to $1.9554USD and then sell it when it is $2.0235USD, you have made a profit. I don’t want to focus on more details in this article and explain how the profits and the money you make will be calculated. I will talk about these topics in other articles.
But the big question is that how you can find out the best time to buy and how you can predict that if you buy, the price will go up and you will make a profit? This is the most important question that makes you a successful trader.
There are two methods to know the optimum time to buy and sell: Technical and Fundamental Analysis.
In technical analysis, you can predict the direction of the price using the the price chart analysis and also with the help of some special tools that are called Indicators.

Technical Analysis is a science and if you want to start working on Forex, you have to learn it properly, especially if you want to work as an intraday trader. It is not too hard to learn the technical analysis. If you are a focused and a serious person, you can learn technical analysis in a few months. There are a lot of free resources over the web that you can use to learn. There are some expensive training courses, but those who sign up for them are not happy and believe that they have learned nothing. So don’t waste your money. If you are serious to learn, there are a lot of free resources over the Internet. You can also visit this weblog every now and then or subscribe for my RSS feed. I will try to share my experiences with you.

The other method is the Fundamental Analysis. This method is used to predict the future movements of currencies’ prices, according to the economic and even political situation of the world and important developed countries like USA, UK, Germany, Japan and… .

Fundamental analysis has a long term usage but good traders can predict the sudden changes that happen after releasing an important news about economic situation of an important country. For example when the news says that economic situation of USA is improved for 5% in comparison to the last month, USD will become stronger and people start buying it. So the value of USD will go up because of the sudden increase of demand. If you know the effect of the news on the price, you can take the proper position and make money. Of course there are two sides in this story which means if you take the wrong position, you will lose.

Experienced and professional traders take the advantage of both technical and fundamental analysis whereas 99% of traders are dependent on the technical analysis.

Some good things about Forex:

1- Forex is an online home based business that doesn’t need referring, recruiting and advertising. You only deal with the currencies through the Internet. So you will not have to reply any email, make any phone call and spend any money on advertising.

2- If you learn Forex trading properly, you can make a lot of money. Forex can be your full time job that makes thousands of dollars for you every month. I have to emphasize again that if you start working on Forex before you learn it properly, it can be risky and you will lose your money. It is like driving. If you drive a car, before you learn to drive properly, you will hurt yourself and others but if you learn it properly first, it will be pleasant and funny.

3- You can make a lot of money by spending a small amount of money. Unlike other investments like stock market that you have to invest a lot of money to make a reasonable profit, you can make a good income through investing small amount of money. For example, with a $5000 account, you can make about $5000 per month. Of course it highly depends on the way that you trade and the strategy that you follow but good and experienced traders can double their money every month.

4- Forex - and of course stock market - are the only businesses that competition has positive impact on them. It is amazing, isn’t it? Competition is the biggest problem in all other businesses but in Forex, it helps the traders to make more money. Why?

Supply and demand are the factors that determine the price in any market. When there are too many buyers and sellers, price volatility will be much higher and market will be more dynamic. Price will go up and down more frequently and this is what we need to make money. When price goes up we buy and when it goes down we sell and make profit.

So if you choose Forex as your business, you will not have to be worried about competition.

What is Forex? If you are looking for a business to make money full time or part time, Forex is the best option. It can make reasonable decent income for you and on the other hand, you will not have to be worried about the problems like marketing, advertising, referring and recruiting and even you will not have to be worried about competition.

OK!

Have you decided to try forex, right? Then you are already on the best place. Forexoma has everything for you to learn and trade forex:

How You Make Money in Forex

In the forex market, you buy or sell currencies.
Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.
The object of forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.
Example:

Trader's Action	EUR	USD
You purchase 10,000 euros at the EUR/USD exchange rate of 1.1800	+10,000	-11,800*
Two weeks later, you exchange your 10,000 euros back into U.S. dollar at the exchange rate of 1.2500	-10,000	+12,500**
You earn a profit of $700	0	+700

*EUR 10,000 x 1.18 = US $11,800
** EUR 10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read a Forex Quote

Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction, you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:

The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).
When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.51258 U.S. dollars to buy 1 British pound.
When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.51258 U.S. dollars when you sell 1 British pound.
The base currency is the "basis" for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency. In caveman talk, "buy EUR, sell USD."
You would buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

Long/Short

First, you should determine whether you want to buy or sell.
If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position." Just remember: long = buy.
If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Just remember: short = sell.

Read more: http://www.babypips.com/school/how-you-make-money-in-forex.html#ixzz1e1eouOh7

Friday, 18 November 2011

Forex market during crisis

The Forex Market and the World Economic Crisis

Is it true? earn money from forex.com?

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Source(s):

The Forex Market and the World Economic Crisis

Central banks of countries

Commercial banks

Brokers

Dealers

Central banks of countries

Commercial banks

Brokers

Dealers

What is forex?

When did forex start?

Who trades on the forex market?

When is the forex market open?

What factors influence currency exchange rates?

What are the advantages of the forex market?

How do you make money?

How do we make money?

Managing your risk

Thursday, 17 November 2011

How to Read a Forex Quote

Long/Short