Category Archives: Start Forex Trading / FX Trading Beginners Guides

Types of Economic Indicators

In Forex trading, investors utilize fundamental analysis to help make those all-important trade decisions.  This type of analysis looks at various economic indicators (and political ones as well) to help determine trends in the Forex market, which can then be utilized in developing Forex market strategies.  Without this knowledge, Forex trades would be made in a vacuum, which could ultimately spell trouble.  These vital economic indicators can be divided into three main groups, as shown below.

Leading indicators

Leading indicators are exactly what the name suggests – they lead, or predict future events before they actually occur in the economy.  It’s the stuff that economists love to use to make those famous economic predictions that you often hear in the news.  In other words, if a leading indicator shows decline, then the economy will often decline.  If, however, a leading indicator suddenly improves, then the state of the economy will probably improve.

So what exactly are some common leading economic indicators?  A few of the tops ones are the U.S. housing market (specifically new home sales, building permits, and housing starts) and stock market returns.  For instance, if new home sales plummet in three straight months, it could signal a trend that consumers will be spending less overall, for such things as home furnishings and mortgages.  That, in turn, would negatively affect the economy, and eventually a nation’s currency exchange rate.

Lagging indicators

These types of indicators lag behind changes that occur in the economy.  Even though it might seem pointless to monitor these kinds of indicators (since the economy has already turned), they are valuable for confirming trends.  For example, one of the more important lagging indicators, the unemployment rate, might show a positive change only three or four quarters after an improvement in the economy.  This would then certainly confirm a continuing positive trend in the economy.

Coincident indicators

Coincident indicators occur about at the same time of an economic change.  They don’t predict or confirm economic events.  However, they can still be useful in confirming a particularly new economic movement or event in its first few weeks.  An example of a coincident indicator is personal income:  a higher than average personal income would coincide with a strengthening economy.  The Gross Domestic Product (total market value of goods and services for a country) is another example of a coincident indicator.

Sponsored by: Online Forex trading system platforms provide investors the chance to invest in the largest investment market around.

Recommended FX Trading Learning and Study Materials

Recommended Tradining Materials from the Online Trading Academy

Home Study Videos and E-Books

Professional Trader Plus DVD Library Part 1 Online Trading Academy is delighted to announce that the first 3-day section of the famous on-location 7 day trading fundamentals course is now being released. Section 1 of the Professional Traders Series is 16 DVDs containing 24 hours of pro trader education.

Professional Trader Plus DVD Library Part 2 Online Trading Academy is delighted to announce that the second part of the famous on-location 7 day trading fundamentals course. Section 1 of the Professional Traders Series is 16 DVDs containing 24 hours of pro trader education. This second, continuation of the course is approximately 28 hours over the last 4 days in 16 DVD’s.

Introduction to Day Trading Video This award-winning interactive CD allows you to learn trading at your own pace, starting from the ground up. Interactive quizzes at the end of each section allow to test your knowledge and determine what you need to focus on.

E-Book: Electronic Trading Guide for NASDAQ, Level 2 A manual to teach investors how to electronic trade the NASDAQ using the now popular Level 2 screen. This manual is designed to get right down to business and is followed closely in our Professional Trader courses.

Home Study Value Packs

The Ultimate Professional Trader Plus CD Library Receive over 38+ hours (24 CD’s) of our highest quality trading education in one package! Order all of our trading education CDs at an astonishingly low price! Get the education you need to increase your trading profits!

Professional Trader Value Pack for Direct Access Stock Traders Receive over 30 hours (16 CD’s) of our best direct access trading education in one package! Our new trading value pack focuses on the core aspects of direct access stock trading. A great place to start your trading education!

Professional Trader Education Value Pack for Emini Traders Receive 15 hours (9 CD’s) of high intensity Emini trading education in one package! From core trading techniques applicable to all types of trading, to Emini-specific training, this 15 hour value pack has what you need to learn Emini trading at it’s best.

Professional Trader Education Value Pack for Forex Traders Receive over 15 hours (8 CD’s) of our best Forex trading education in one package! Containing the newest Advanced Forex CD, this education pack focuses on exactly what you need to know to become a successful Forex Trader.

Professional Trader Education Value Pack for Options Traders Receive over 16 hours (9 CD’s) of our best Options trading education in one package! From our beginner to our more advanced courses, this package will work synergistically to increase your trading knowledge and propel you to trading success.

Trading on Target Home Study Course Developed over a 14 year period by an expert Trader’s Coach, this program gives step-by-step solutions to problems that traders have with discipline. Includes CD’s, Videos, Audio Tapes, Workbooks and Hardcover Books.

The Complete Trading Education Package Completely revolutionize your trading education with this combination of The Professional Trader CD Library (24 CD’s / 38+ Hours) AND the Trading on Target Home Study Course! (Includes CD’s, Videos, Audio Tapes, Workbooks and Hardcover Books.)

Professional Trader Plus DVD Library Part 1 Online Trading Academy is delighted to announce that the first 3-day section of the famous on-location 7 day trading fundamentals course is now being released. Section 1 of the Professional Traders Series is 16 DVDs containing 24 hours of pro trader education.

Professional Trader Plus DVD Library Part 2 Online Trading Academy is delighted to announce that the second part of the famous on-location 7 day trading fundamentals course. Section 1 of the Professional Traders Series is 16 DVDs containing 24 hours of pro trader education. This second, continuation of the course is approximately 28 hours over the last 4 days in 16 DVD’s.

EMini Trading Home Study Courses

Professional Trader Education Value Pack for Emini Traders Receive 15 hours (9 CD’s) of high intensity Emini trading education in one package! From core trading techniques applicable to all types of trading, to Emini-specific training, this 15 hour value pack has what you need to learn Emini trading at it’s best.

E-Mini CD 1 – E-Mini Derivative Futures Get more bang for your buck through the leverage of E-minis! Mike McMahon takes you through the ins and outs of trading this highly liquid financial instrument.

E-Mini CD 2 – E-Mini Derivative Futures Once you understand the “mechanics” of the E-Mini’s, you are now ready to step up to the actual trade plans and begin making REAL money! Use these advanced strategies to leapfrog you to the next level!

Technical Analysis for the Professional Trader CD (Part 1) This CD contains critical information to help you learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits.

Technical Analysis for the Professional Trader CD (Part 2) Further refine your ability to use S&R lines, trend lines, candlesticks, continuation patterns and more.

Technical Analysis for the Professional Trader CD (Part 3) Learn how to truly understand and use Indicators for what they were designed for.

Fibonacci CD – Use Mathematical Magic for Better Profits from Each Trade Learn how to use Fibonacci Retracement, Extension and Projection Analysis to maximize your profits and tightly control the losses.

Trading as a Business CD – Trader Tax Strategies Learn to keep your trading profits with this excellent new CD, co-produced by Online Trading Academy and Traders Accounting.

Stress Management CD – Turn Yourself into that Successful Trader That is Inside Learn how to reduce stress in your life as a trader – remain cool under pressure and take the profits as they come.

10 Laws of Risk Management CD This course will take you through the 10 basic laws of Risk Management that will solidify your success as a trader.

Forex Trading Home Study Courses

Professional Trader Education Value Pack for Forex Traders Receive over 15 hours (8 CD’s) of our best Forex trading education in one package! Containing the newest Advanced Forex CD, this education pack focuses on exactly what you need to know to become a successful Forex Trader.

Forex CD 1 – The Fantastic World of Forex Learn Forex Trading from a pro with this Brand New CD – by Mike Mc Mahon – pips, leverage, which currencies to trade – it’s all here!

Forex CD 2 – Advanced Forex Trading Strategies Learn the more advanced Forex Trading techniques from a pro with this Brand New CD – step-by-step instructions through high probability entries, exits and the necessary stops to give you maximum profitability and capital preservation.

Technical Analysis for the Professional Forex Trader CD (Part 1) Learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits.

Technical Analysis for the Professional Forex Trader CD (Part 2) Learn to use Support & Resistance in combination with proper Trend Line drawing to mark on the high probability Entry/Exit. You learn how to “Stay In” a trade as we explore continuation patterns and the use of Moving Averages.

Technical Analysis for the Professional Forex Trader CD (Part 3) Learn to use Technical Indicators for the trading of Forex. We will explore their proper use and evaluation and dispel many of the bad beliefs many have been given by the “guru’s”.

Technical Analysis for the Professional Trader CD (Part 1) This CD contains critical information to help you learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits.

Technical Analysis for the Professional Trader CD (Part 2) Further refine your ability to use S&R lines, trend lines, candlesticks, continuation patterns and more.

Technical Analysis for the Professional Trader CD (Part 3) Learn how to truly understand and use Indicators for what they were designed for.

Fibonacci CD – Use Mathematical Magic for Better Profits from Each Trade Learn how to use Fibonacci Retracement, Extension and Projection Analysis to maximize your profits and tightly control the losses.

Trading as a Business CD – Trader Tax Strategies Learn to keep your trading profits with this excellent new CD, co-produced by Online Trading Academy and Traders Accounting.

Stress Management CD – Turn Yourself into that Successful Trader That is Inside Learn how to reduce stress in your life as a trader – remain cool under pressure and take the profits as they come.

10 Laws of Risk Management CD This course will take you through the 10 basic laws of Risk Management that will solidify your success as a trader.

Options Trading Home Study Courses

Professional Trader Education Value Pack for Options Traders Receive over 16 hours (9 CD’s) of our best Options trading education in one package! From our beginner to our more advanced courses, this package will work synergistically to increase your trading knowledge and propel you to trading success.

Options CD 1 – Opting for Options Trading Get introduced to the flexible world of Options trading and how to use them to manage risk in your trading.

Options CD 2 – Understanding the Greeks Get the real story behind the “Greek” letters and how they affect options!

Options CD 3 – Mastering Options Volatility Volatility in Options Trading is singly the most important aspect when calculating a high probability profit. In other words, master this concept, and watch your trading account increase!

Technical Analysis for the Professional Trader CD (Part 1) This CD contains critical information to help you learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits.

Technical Analysis for the Professional Trader CD (Part 2) Further refine your ability to use S&R lines, trend lines, candlesticks, continuation patterns and more.

Technical Analysis for the Professional Trader CD (Part 3) Learn how to truly understand and use Indicators for what they were designed for.

Fibonacci CD – Use Mathematical Magic for Better Profits from Each Trade Learn how to use Fibonacci Retracement, Extension and Projection Analysis to maximize your profits and tightly control the losses.

Trading as a Business CD – Trader Tax Strategies Learn to keep your trading profits with this excellent new CD, co-produced by Online Trading Academy and Traders Accounting.

Stress Management CD – Turn Yourself into that Successful Trader That is Inside Learn how to reduce stress in your life as a trader – remain cool under pressure and take the profits as they come.

10 Laws of Risk Management CD This course will take you through the 10 basic laws of Risk Management that will solidify your success as a trader.

Stock Trading Home Study Courses

The Ultimate Professional Trader Plus CD Library Receive over 38+ hours (24 CD’s) of our highest quality trading education in one package! Order all of our trading education CDs at an astonishingly low price! Get the education you need to increase your trading profits!

Professional Trader Value Pack for Direct Access Stock Traders Receive over 30 hours (16 CD’s) of our best direct access trading education in one package! Our new trading value pack focuses on the core aspects of direct access stock trading. A great place to start your trading education!

Advantages of Direct Access Trading with NASDAQ Level II CD This CD is a must if you want to understand the New Tools of the Trade and the problems the common investor or Online Electronic Trader are faced with.

 

Fibonacci CD – Use Mathematical Magic for Better Profits from Each Trade Learn how to use Fibonacci Retracement, Extension and Projection Analysis to maximize your profits and tightly control the losses.

8 Key Times of the Market Day CD You will learn when to be in the market and when it is more profitable to stay out.

Technical Analysis for the Professional Trader CD (Part 1) This CD contains critical information to help you learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits.

Technical Analysis for the Professional Trader CD (Part 2) Further refine your ability to use S&R lines, trend lines, candlesticks, continuation patterns and more.

Technical Analysis for the Professional Trader CD (Part 3) Learn how to truly understand and use Indicators for what they were designed for.

Trading as a Business CD – Trader Tax Strategies Learn to keep your trading profits with this excellent new CD, co-produced by Online Trading Academy and Traders Accounting.

Stress Management CD – Turn Yourself into that Successful Trader That is Inside Learn how to reduce stress in your life as a trader – remain cool under pressure and take the profits as they come.

Learn To Think Differently CD – How to Profit from Market Trend Changes Profit with contrarian indicators by identifying market tops and bottoms.

Short Positions – How to Trade Profitably by Going Short Most traders go long quite often – but in a flat or bear market, knowing how to go short will spell the difference between success and failure!

10 Laws of Risk Management CD This course will take you through the 10 basic laws of Risk Management that will solidify your success as a trader.

6 Psychological Biases CD – Who are you really? One the biggest causes of trading failure is a lack of understanding of what drives each of us to act in certain ways. This course will help you explore why, what and how to overcome these “pitfalls of the mind”.

Mastering Nasdaq TotalView Data System CD (Part 1 & 2) Learn how the new cutting edge TotalView system can help you enhance your trading results.

Power Trading in Globalization 3.0 CD This excellent CD will show you a true perspective on the chaotic world of finance, debt bubbles and how to protect yourselves, loved ones and finances.

Broad Market Analysis With Fernando Gonzalez Adaptation is the name of the game in long term trading success. Join Fernando Gonzalez and Mike Mc Mahon in a key educational CD that will show you how to analyze the big picture of the market and how to continually adapt yourself and your trading to it.

Mind, Method and Market With Mike Mc Mahon Discover how to overcome personal characteristics and “hard-wire” successful responses in your trading. Controlling your emotions is a huge part of trading success!

How to Trade without losing any money ever

Trade Online.. and never lose money they claim..How can this be possible? Let us show you the only way we know how..

We all read the stories of people losing millions trading the markets (or recently the Socgen losses in the billions) and in recent times (2007 Oct – the losses in the “Credit Crunch” are Billions of pounds.. it boggles the mind. Ok so it’s clear, you can lose a lot of money if you don’t know what you’re doing.

On the flip side, we hear of traders earning vast sums, and the excesses of the city. So what is reality? and how can you get the good without the risk. Well here’s one solution.

So are you ready now to let us show you the how you can learn to trade without losing any money.

The secret is simple: Don’t trade with real money!! We told you it was simple.

Most only trading companies have great free games and trials where you can trade, with all the fun, excitement, and experiences of the real world onlne trading platform. They are often a 100% free, and don’t usually require you to send in any paperwork or give you credit card details (if they do we’d recommend you check the fine print very very carefully – after all why would they need these details?) So then you can learn to trade and all without risking any real world money.

As with many things in life, you can only become better through hard work and practice, (unless you’re a natural genius, which many of us aren’t) so “Practice Makes Perfect”.

So what to to look for:

  • Using real world price feeds for the trading game
  • Ability to run a position for a long time, (weeks, months)
  • The ability to have multiple demo accounts
  • Don’t put in any bank details to play the game

There’s a great one here

Paddy Power Trading

Things we’ve found help when you’re learning/practicing:

  • Try and behave as if the money is real (losing £100k, shouldnt’ just mean you reset the account as if nothing went wrong, in the real world that would not be the case)
  • Come up with your strategy, and trial it over a steady piece of time. Test it, and re-test it.
  • Do research different markets
  • Do research trading strategy, regulations, laws and taxes.
  • Do enjoy learning.. it is a game, and you can’t lose any money as you’ll be trading in a simulation, also you learn better when the mind is stimulated and having fun. (for getting the mindset try nlp).

Summary: Learn to trade in a Game/Simulated Environment

So it’s fairly clear, that by learning to trade in a simulated “game” environment, where you use real market data and the same online platforms, you can build up experience and learn how to start online trading.

So just like when you learnt to pass your driving test, you didn’t first go onto the motorway in rush hour by yourself, so it is with learning to trade online.

How about winning real money.. without risking any

There are also competitions out there that pay real world money to the winners of their trading games. Now that is a great trade! You can find a list of current competitions here

Paddy Power Trading

Glossary of Forex Trading Terms

Glossary of FX trading terms. Highlighting the main ones used with the currency markets. If in doubt, double check or ask questions. It’s the wise man who knows what he doesn’t know.

  • American Option – An option that may be exercised at any time prior to its expiration date.
  • Ask – The price at which a currency pair may be purchased. Also called the offer, ask price or ask rate. (also see Bid – e.g. Bid/Ask Spread)
  • Base Currency – The first currency in a trading pair. In the case of a trade involving the U.S. and the Australian Dollar (USD/AUD), the U.S. Dollar would be the Base Currency. Also called the primary currency. The U.S. Dollar is the most common base currency
  • Bearish – Defines a market where prices are declining. Also known as a Bear Market.
  • Bid – The price that a currency pair can be sold at. Also known as a bid price or bid rate. (see Offer)
  • Bid/Ask Spread – The difference in points between the bid and ask price. Also called the Bid/Offer Spread.
  • Bullish – Defines a market where prices are rising. Also known as a Bull Market.
  • Call – A call option gives the buyer the right, but not the obligation, to purchase a specific currency pair at a pre-agreed price. An option to Buy.
  • Cross-rate – The exchange rate between two currencies, neither of which are the U.S. dollar.
  • Currency Pair – The two currencies comprising the FX rate. The USD/AUD represents a currency pair.
  • Dealer – A trading firm that is the other party in a FX transaction.
  • Euro – The official currency of many European countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. The Euro is also the official currency of Montenegro and Kosovo, Andorra, Monaco, San Marino, the Vatican, and these French territories: Martinique, Guadalupe, Reunion.
  • European Option – An option that can only be exercised on the date it expires.
  • Expiration – The date on which an option must be exercised or offset. (or maturity)
  • Forward Transaction – An agreement for actual delivery and payment for currency to occur at a specific date in the future.
  • Interbank Market – Currency transactions that are negotiated between banks or between large financial organizations. An individual can not trade on the Interbank Market directly.
  • Leverage (or Gearing) – A trader’s ability to control a large amount of currency with a relatively small amount of capital invested.
  • Long – A position that is expected to appreciate in value as the market increases. (compare with Short)
  • Limit Order – An order which is placed with some pre-condition, usually the maximum price the trader is willing to pay.
  • Margin – The amount of money required before anyone can open or maintain a position. Also called a Security Deposit.
  • Offer – The price at which a currency pair may be purchased. Also called the ask price or ask rate.
  • Open position – Any transaction which has not been closed out by an opposite transaction. This is a position at “risk”
  • Pip – The smallest FX currency unit of price movement.
  • Premium – The priced paid by an option buyer. Does not include commissions.
  • Profit – The difference between the selling and the buying price. Not a profit may be realised (ie safe), and unrealised (i.e. exposed to risk – e.g. on an open position)
  • Put – A Put option gives the buyer the right, but not the obligation, to sell a specific currency pair at a pre-agreed price. The opposite of a Put is a Call.
  • Quote Currency – The second currency in a trading pair. In the case of a trade involving the U.S. and the Australian Dollar (USD/AUD), the AUD would be the Quote Currency Also called the secondary or counter currency.
  • Rollover – The act of extending the settlement date for an open position until the next settlement date.
  • Resistance – A price level beyond which the currency finds it difficult to move.
  • Settlement – The delivery of the currency upon the trade’s maturity date. Trades can settle 1,2,3,or x days after trade date.
  • Short – The act of selling a currency that the trader believes will decline in value. The trader need not actually own the currency being sold. It can be borrowed from the broker and repaid at a future date when the price is more advantageous. (Short Selling)
  • Spot Market – A transaction where payment and delivery of currency is immediate.
  • Spread – The pip difference between the ask and bid price of a currency pair. The smaller the spread the better, when you are trading as otherwise any profits are reduced by trading costs.
  • Stop Loss – A standing order which instructs the broker to liquidate an open position if the price falls to a pre-specified level. In essence “Stopping any further losses”
  • Strike Price – The exchange rate at which the buyer of a call or the seller of a put can exercise a trade. Also called the exercise price.
  • Support – The price level at which traders feel comfortable enough to buy.
  • Trend – The direction in which the market is heading. The three categories of trends are: major, intermediate and short-term. Trends move in one of three directions: up, down, sideways.
  • Turning point – The point where a market ceases being though of as being bullish or bearish and moves in the opposite direction.

FX Rates and Graphs

There are lots of FX rates available online and free graphing of “live” fx rates.

Many of these come from trading platforms, others via exchanges, and other information providers.

Consider the source of your data

It’s important to consider:

  • Why they are providing the data
  • The cost of the data
  • Whether the data is live, delayed, indicative, tradeable
  • The display of the data
  • The currency of the prices
  • The timezone of the data (London, Paris, Tokyo, New York – what is 9am?)

Also consider why you are looking at the currency

  • Are you doing a short term trade
  • A long term currency play
  • Ensure you review both the short term (mins, hours) and long term (weeks, months, years) trends

What’s the base currency?

Currency rates are usually displayed with the USD cuurency as the base currency. It’s important to know what the currency you are looking at is being quoted against.

Example of Graphs

This is an example of a Candle Graph showing the GBPUSD at 15minute intervals, and below 1 minute intervals. Notice the difference in the graphs.

The Dangers of FX trading and Forex for Beginners And How To Remove Them

When you begin trading fx, you have new dangers to face. Learn about some of these dangers and what you can do about them.

When trading forex, it’s important to remember that there are dangers.

When you start trading forex, those dangers are at their greatest. You lack experience, your understanding of the forex market, forex trading strategies and the factors that influence currencies might be relatively small… and mistakes can be very expensive!

When you’re just starting out in the forex markets then, bear in mind the following:

The danger — The forex market moves fast and you can lose your money just as quickly. And because it moves constantly, 24 hours a day, you can even lose it while you sleep, waking up to a giant loss.

The solution — Prepare well before you start trading forex. Take a forex trading course, make dummy trades using the sort of amounts that you’ll be investing and make sure before you create your first position that you know exactly how the forex market works.

The danger — Because forex trading by the public is relatively new, a number of unscrupulous traders have sprung up who operate illegally or scam their clients. There aren’t many of them, but they do exist and you do want to avoid them.

The solution — Make sure that your trading firm is accredited and legal, and read the small print in the website terms or contract carefully. They might not be the most interesting read in the world, but they should be read.

The danger — Place a bet on a roulette wheel or on a horse and the amount you put down is the amount you stand to lose. Take a position in the forex market, and it’s might not be completely clear how much you’re risking. Leverage, in which small amounts of money control large units of currency, make those risks even greater.

The solution — Use strategically placed stop-losses to minimize your risks and ensure that a losing position is ended before the losses grow too large.

There are risks in any form of investment. Understand the risks of the forex market — and how to reduce them — and while you won’t be able to remove them entirely, you should be able to protect yourself.

Don’t be too scared though.. try this in practice in a demo account for example at paddypowertrader.com

Protect your trades – Stop Loss Orders and Take Profit Orders

Protecting Yourself When Trading Forex by Knowing the risks and preparing for them

Like any investment system, trading in the forex markets carries risks. It is possible to suffer losses as well as gains. Lose more than you can afford and it’s unlikely that you’ll get a second chance. Those risks are particularly acute when you’re starting to trade forex and have yet to gain experience.

Fortunately, there are a number of tools that you can use to reduce your risks and minimize any losses that you might suffer.

You can’t watch the markets all the time, what if even if you worked out correclty what the market was going to do.. you’re waiting to trade.. then the phone rings.. oops.. well .. you can set up automated orders to keet you safe.. Stop Loss Orders and Take Profit Orders.

Use Stop Loss Orders (Stop Losses)

The first is a stop-loss. A stop-loss automatically closes your position in the forex market when the bid or offer price of a currency you’re holding reaches a set level. For example, you might place a stop-loss just below the purchase price of your currency. If that currency were to fall dramatically, you would only lose up to the amount of the stop-loss.

For people just starting to trade forex, stop-losses can be very useful ways to remove the confusion that can slow a decision — and increase losses — when a currency suddenly drops.

Guaranteed stop-losses are similar to stop-losses but provide an extra level of protection. Occasionally, a currency can fall so fast that it skips past the price set for the stop-loss. A guaranteed stop-loss ensures that your currency will be sold at the price you have set, even if the market has fallen beneath that level.

Take Profit Orders

Profit caps are similar to stop-losses in that they also trigger an automatic sell. In this case though, they’ll trigger a sale intended to guarantee a profit rather than to protect against a loss.

You can think of profit caps as tools to snatch opportunities at times when you’re not alert to them. If a currency you’re holding spikes at some time on the 24-hour forex market when you’re not watching it, you’ll still be able to benefit.

So you can protect yourself against a free-falling currency, and you can earn from a suddenly rising currency. But the best way to protect yourself when trading forex is to manage your money carefully. Place no more than 10 percent of your available funds in any one trade and never invest more than you can afford to lose

You can find out more at paddypowertrader.com

How to Avoid Forex Trading Scams

Be careful out there – tips and guidance to avoid scams in the FX Trading World. Our tips and suggestions on avoiding Forex Trading Scams

More and more people have started forex trading in the last few years and while many of them have done very well, a few have become victims of the increasing numbers of forex scammers. Tempted by the promises of easy profits at little risk playing a market they know little about, some new forex traders have lost money to con-artists who knew an easy mark when they saw one.

Don’t be one of them. Get educated, and don’t become a scam victim.

There’s NO such thing as a FREE lunch

The easiest way to spot a forex scam is by its promises.

There’s no such thing as a high profit and low risk investment. Anyone who tells you there is is likely to be generating a few high profits for himself… and running the risk of going to jail. Really if there was an easy fool proof way to make unlimited money with no effort and no risk, then you can bet that the people doing it wouldn’t share the secret for $99.99. Why would they bother..? They could train you for free if money wasn’t an issue, or simple give out money to worthy causes, couldn’t they..

IIf a forex deal looks too good to be true — like anything — it probably is.

Steer clear too of highly leveraged margin trading, at least when you’re starting to trade forex. As you can find yourself easily wiping out completely over small market movements.

Margins are similar to deposits. They let traders commit to larger deals in the future, and allow unscrupulous traders to gamble with other people’s money without fully explaining to them what they’re risking. An investor might believe that he or she has only risked $1,000 when in fact they’ve committed to a trade several times that figure. If the trade becomes unprofitable, the victims of such forex scams could find themselves with much larger losses than they anticipated.

Another sign that a trader might be looking to take you for a ride is if they claim that they can trade in the Interbank Market. This is a network of currency transactions involving banks and other large organizations. Because the volumes are much higher, prices can be higher too. It’s not usually the sort of place where small investors tend to trade so being told by a trader that he can put your money there is a little like buying a watch from a man in a bar: there’s a good chance the person you’re dealing with isn’t the most honest.

Forex scams have become more common but they’re still pretty rare. The best protection is an understanding of the forex market and a lot of common sense.

Key Points to remember:

  • Get educated – don’t be the rabbit..
  • Question everything – even what I tell you (Buddhist idea)
  • There’s no such thing as a free lunch
  • If the sales pitch involves pictures of guys with swimming pools, cars, beaches.. it’s probably not real – just that a sales pitch
  • Start with FREE demo accounts – no risk – no loss
  • Check who regulates the company
  • Check where the company is based
  • Can you call them? if not why not? What if something goes wrong.. what would you do
  • Ask your independent financial advisor
  • Check the trading forums, search engines and sites like StartTradingFx.co.uk

List of FX Trading Companies