Forex Transactions and Wall Street - A Terse Account

By Margaret Haveaheart

Approximately 25 percent of large companies that are exposed to foreign currency fluctuations don't do anything to hedge their risk. Larger companies however do hedge in the currency markets.

For an US based company, when the dollar is strong during their reporting period, accounting for its foreign earned revenue can result in a negative performance. That's because foreign-currency denominated revenue will exchange for fewer dollars when converted and reflect negatively for the accounting period. Having a Wall Street Journal subscription will help find this data.

The daily cycle of converting one currency to another for goods and services account for 5% to 10% of Forex activities as generated exclusively by governments and businesses. The other 90 or so percent is pure speculation.

The foreign exchange markets have been the playground of governments, corporations, banks as well as high-profile traders such as Warren Buffet and George Soros. Many speculators have made consistent net profits. For instance, George Soros "broke the Bank of England" by shorting the pound and walked away with a cool $1-billion profit in a single day.

Since the currencies are traded 24 hours there are certain times that are more liquid than others for the various currency pairs. For instance, between the hours of 8 AM and 5 PM EST, New York Wall Street accounts for about 15% to 17% of all Forex transactions. On the other side of the globe, 10% of Forex transactions take place between Tokyo's trading hours from 7 PM to 3 AM EST.

Make money in Forex is made by having a formula that predicts price movements of a currency pair. Have an exit strategy that is effective can capture a profit often a few times a day.

Professional Wall Street traders usually use a system that allows them to place trades several times a day. Because they trade several times a day, they are called day traders.

There are many financial news services to choose from. The Wall Street Journal's reputation for acute accurate market coverage is legendary. In order to stay abreast of the constantly changing financial landscape, it pays to subscribe to the Wall Street Journal. - 23204

About the Author:

Acquiring timely economic intelligence you know is dependable as well as profit from on is foremost on the minds of traders. Secure a Barrons subscription or buy Wall Street Journal subscription now. Barrons, Investors Business Daily and the Wall Street Journal deliver honest, no-fluff news and analysis. Your subscription gets you miles ahead of the crowd.

Forex Money Management 101: 4x Trading Made Simple

By Phil Jarvie

Gambling with 4x trading, God complexes of chasing losses, emotional investing - all the hallmarks of forex losers. The fact is that 4x trading is neither easy or hard. It is simply different to what we find in other parts of life. Most novices and experienced players came from share trading. This has barely any resemblance to 4x trading at all. So, to bring clarity to this different market, rule number 1 of 4x trading is:

Forex Money Management means not losing money. Forget for now all issues of making huge profits. The first rule is all about not losing money.

The 4x market turns over more cash in 1 week than the whole USA economy does in 1 year. But add to that concept, how much does every up and down tick in the market all add up to? How many pips movement in a day do we miss? Forget about it. There is no such thing as Albert Einstein and the theory of everything with 4x trading. No super computer can help you. 4x robot software is useful but clumsy at the micro level. Missing opportunities is a big part of forex trading. The real heart of the matter is not losing money. Profit is about making profitable trades only.

Forex Money Management comes down to a simple rule of never risking more than 2% on a trade.

Let me give you an example. Assume I have $10,000 in my account. 2% of $10,000 is $200. If I trade with full lots where 1 pip is worth $10, then I am allowed 20 pips for my stop loss. Sounds fair enough in principle, but I make most of my money in huge rebounds or retracements that happen after a break out on highly volatile days. Meaning, I often trade with 5 lot orders - so 2% of my money is now down to 4 pips for stop losses. If 20 pips is nothing, imagine only being able to to be wrong by less than 4 pips.

How can I trade 5 lots in a highly volatile trading market and only be able to let the trade breath by 4 pips? Quite easily actually. Follow the 1 hour chart for EURUSD for 19th August, 2009. Go on, open up your trading platform now to see the history for that day or I am wasting my time writing this article. You will see that in 3 hours the USD crashed on bad news with the Euro appreciating from 1.4111 to 1.4265 - all in 3 hours. That's a hefty move.

To get on board a long position by following the news is what would have happened for many smart 4x traders. But I was lucky enough to already be on long from a few hours earlier when I picked up the trade on a dip at 1.4080. It was a wild day. Was I lucky or stupid to be ridding 5 lots with a 4 pip stop loss while I went shopping?

To me, the market looked ripe for a rise in the Euro. And my trading signals were confirming this. And so that I was free to go shopping with the girlfriend, I entered 2 pending orders for 5 lots, each hedging the other. That is, 5 lots buy limit at 1.4080 was matched equally by 5 lots of pending sell short order at 1.4080. If the market dipped to pick up these orders, then whatever happened, each would balance the other trade.

If the market did not dip and execute these pending orders, nothing was lost. If I returned from shopping to find the market did pick them up, then I would be in profit on one trade to the same amount of the loss on the other trade. So far so good, I came back to find the orders now live trades and it was the long position that was in a loss position. But that was OK, no forex money management rules were broken because the short position was in profit to the same amount. By closing both positions I could only lose the 0.9 pips spread. Within an hour, I closed out the short position at break even, and let the long position continue to stay in profits.

After closing out the short position at break even and with the long position in profits, then the next few hours was all about protecting that profit. I was never at risk of losing my 2%. When it profits were high enough, I set the trade to a 20 pips trailing stop and let the trade play out. $8,250 or 82.5% profit on the day. Never was the forex money management rule ever broken. By using hedging, my account was protected.

First rule of Forex money Management: Don't Lose Money. Never risk more than 2% of your capital. Hedging. - 23204

About the Author:

Phil Jarvie is a professional forex trader expert in 4x trading, 4 software and using 4x hedging for forex money management and may wish to visit his website to consider his reviews on trade foreign currency

Is Forex Currency Trading Different to Currency Market Trading?

By Phil Jarvie

Currency Market Trading and Forex Currency Trading for all intents and purposes are the same thing. People don't trade US dollars for US dollars, except to make change at a bank for a retail shop. So the terms are referring to international currency being exchanged for a different country's money. Fact is, you can also call it 4x trading, 4x currency trading, fx currency trading, fx exchange - they all are referring to the same thing.

Many people do get confused about the names. This comes from the fact that many people know so little about forex currency trading, and so the general confusions they have about currency market trading extends to all the different names for it. People know about the Internet, and with that came the stock market's day traders dealing in shares, options and warrants. And all brokers had to deal with the Internet allowing them to be bypassed as software enabled people to place buy and sell orders direct.

With the Internet and very smart and fast software programs, currency market trading was finally liberated from the monopolies held by large banks, brokerage firms and International trading corporations. The Internet brought forex currency trading potential to the masses. But in fact most investors focused only on stock market trading shares, options and warrants.

What is interesting is that in fact the forex currency trading market is massively bigger than the stock market. The Forex Currency Market has a higher cash turnover each week than the entire USA economy does in one year - and that is before the USA collapsed into recession.

When something like forex currency trading is 50 times bigger than the USA economy, it is impossible to centrally control. If collectively the World cannot agree on such an important issue as climate control, it is even more difficult to imagine forex control and so it will always be totally dependant on free market forces to control currency market trading.

Forex currency trading is so huge that big business and the criminal element cannot manipulate it as they often and easily do with the stock market. There are no corporate raiders or takeovers in forex, no corporate lawyers leading stock market proxy fights. Currency market trading is simply the constant process of matching one currencies value against another currency in real time.

Let's assume a Middle Eastern Prince enters the market with 5 Billion Euros which he backs the Euro against the dollar. Yes, such a heavy-weight move may push up the value of the Euro by about 1 cent or a bit more over about 3 hours. But his timing had better be on the back of some bad news coming out of the USA, because the currency market trading volumes are so large that the 5 billion Euros could just as easily become 4 billion in that same 3 hours. Forex currency trading is so large that 5 billion Euro is nothing really considering the 2,500 billion euros traded each and every day, 5 days a week.

So if big business and Governments seem powerless to manipulate forex currency trading, what chance does the small, mini or micro investor have? This is the beauty of currency market trading, because the operation of the free market allows for astute money management and strategic trading positions to be taken (like hedging). Add to this the very smart 4x trading software trading live at your desktop provides you with; even the modest forex trader can do very well indeed.

Feel free to visit my website where I go into great detail about currency market trading, the many forex robots and expert advisors available, and also what forex strategy can do for your forex currency trading. - 23204

About the Author:

Phil Jarvie writes extensively on 4x trading related matters and is an experienced forex trader. Feel free to visit his free website for details on forex trading robots, EA expert advisors, 4x software, 4x trading and forex currency trading, fx exchange and currency market trading articles.

Investing Knowledge Equals Success In The Stock Market

By Jens Jackson

Investing is not easy as anyone that has been around for awhile will tell you. You put your own hard earned money on the line and when you get it wrong, it hurts. You need other traders to share with you their investing knowledge. It is very expensive to learn the hard way all the lessons that you need to learn. You can find an online investing message forum or blog. There is a lot of free information that would cost you money elsewhere but that is free on the Internet. You need to hook up with the right people to learn how to make money investing in stocks.

You have probably heard the cliche two heads are better than one, and that three heads are better than two. Imagine having thousands of people with a common interest in investing to share knowledge with. Think about just how much you can learn by sharing and listening to stories from fellow investors, experienced and inexperienced alike. I am not only talking about investing with respect to this learning: you may be surprised with how much you can learn from other people, never mind the fact that they are only online and not communicating personally. Socializing, at any level, is the spice of life, so why not integrate something as complicated as investing with the simple act of communicating with other people? Investing blogs make sure that you learn, while enjoying the benefits that socializing brings as well.

Make sure you read the rules for the website or blog before joining. Each website will have its own set of rules they want you to follow. Also, you should check out a website's reputation with other traders. If you see comments being deleted on a regular basis, stay away from that website. Websites that put amateur moderators in charge are usually bad websites to be on. The reason is that they restrict the free flow on information and knowledge. Anyone who exercises the power of deletion as a moderator is someone who does not care about giving everyone their right to free speech. If they are willing to trample free speech, what else are they willing to do: take money from your trading account? So take some time researching a stock blog or message forum before getting addicted to their content.

My personal favorite is to join stock trading blogs that require no account whatsoever to read and learn from the materials posted. In the end, what website, message forum, or blog you decide to read is up to you but just make sure you do it because the learning curve to becoming a successful and profitable trader is a lot shorter when you have other stock traders to help you.

Make sure you do not become the victim of a pump and dump small cap stocks scam. Look at the stocks the club, message forum, or blog is constantly focusing on. Are they small caps? Small caps have low liquidity which means they are the easiest stocks to push up. You should make sure that they are not buying small caps then hyping those small caps and selling after your buying pushes the stock higher. - 23204

About the Author:

Written by Jens Jackson. When are you finally going to get tired enough of losing money in the stock market to do something about it? Make sure you visit Lance Jepsen's awesome free stock blog at investing

Trading Decreased Volatility Breakout (Part II)

By Ahmad Hassam

Third Stage-Aging Trend: Aging trend is the period of consolidation as the trend comes to maturity. This is the period where lot of profit taking will take place. As the momentum of the trend exhausts itself, volatility tends to decrease at this stage of the trend.

Both the bulls and the bears are hesitant to make daring moves at this stage of the trend. Experienced traders try to get out of their trades at this stage of the trend by closing their positions. This satisfies the appetites of inexperienced traders as they consolidate their positions.

Currency prices have moved by a large amount in the previous period of high volatility. This is the period of consolidation and the prices tend to stay calm during this period. The trend takes a short break and the volatility is low during this stage of the trend.

End of Trend: This is the last stage of the trend and this is the time when the prevailing trend ends and reverses itself after some new information is revealed about a currency that changes the opinion of the crowd. As the market players tend to absorb the information, this results in the rapid adjustment of prices within a short time.

Traders become desperate to get out of their positions especially if they have been caught on the wrong side of the market. Many stops will get triggered during this stage of the trend.

The trend now reverses itself. There is a sharp follow through of the prices in the reversed direction during this stage of the trend. Now you understand and know that within a trend, currency prices can experience decreased volatility followed by increased volatility which is again followed by decreased and increased volatility as the crowd psychology keeps on changing.

Decreased volatility can be found during trending or ranging phases. Traders with open positions during this low period of volatility are the most vulnerable to unanticipated news.

During this time gains can be made from the unsuspecting players and this is known as the Decreased Volatility Breakout Strategy. Deceased volatility provides an excellent opportunity to traders to prepare and profit from an imminent change from low to high volatility.

But the success of this strategy lies in measuring the volatility of the forex market correctly. There are several technical indicators that can help you visualize the volatility in the currency prices.

One such is the triangle patterns. Though they maybe difficult to identify for new traders but with experience you can learn how to identify the triangle patterns on price charts. You can use triangle patterns as one of the best indicators of decreasing price volatility in the currency price charts. Combine the triangle patterns with technical indicators to confirm or deny decreasing price volatility. Two of the most useful indicators that can help you measure the volatility of the currency prices are: 1) Moving Averages and 2) Bollinger Bands.

You can take advantage of the decreasing price volatility in the forex market through identifying the triangle formations. When a particular type of triangle has been identified by the trader, a high probability trade may be in sight. All triangles show decreasing price volatility in the forex market. - 23204

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Get Netpicks Forex Signals Free. Learn Forex Trading!