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Commodity Forex Online Trading – Commodity Forex Online Trading Secrets

September 3rd, 2010 by admin in Forex Analysis with 0 Comments

Commodity Forex Online Trading

What is commodity forex online trading? To a new forex trader, the idea of trading commodities and trading currencies at the same time is confusing. Surely currency is the thing that we are trading? What do commodities have to do with it?

The answer lies in economics. Commodity forex trading is based on a specialized type of fundamental analysis of the forex markets. It is a strategy that recognizes that the economies of some countries are heavily dependent on certain imports or, more often, exports of raw materials such as oil, precious metals, agricultural products that contribute to an individual nation’s GDP (Gross Domestic Product). Therefore, the price of those countries’ currencies will be linked to rises and falls in the price of those particular commodities, and foreign currency traders can profit from following those prices.

Many of the smaller economic powers, especially in the developing world, are heavily dependent on the export of one or more raw materials. However, most currency traders would avoid those minor currencies since the political situation is often unpredictable, liquidity is low and fluctuations can be extreme.

This leaves us with three major commodity currencies that a trader might want to get involved with namely the Canadian, Australian and New Zealand dollars. Commodity Forex Online Trading

The Canadian dollar (CAD) is probably the most popular commodity currency for forex traders. Canada is the world’s second largest exporter of oil, so it is obvious that significant changes in oil prices will affect the value of the Canadian dollar. When you combine this with the fact that the USA is a huge importer of oil, it is clear that the price of the USD/CAD pair is likely to react strongly to a major shift in oil prices.

Australia’s major commodity export is gold. You could make a study of gold prices and their effect on AUD currency pairs but at the very least, if you are involved in any forex trades that include AUD you should keep an eye on gold prices. New Zealand’s commodity exports are more varied so if you trade an NZD pair you will need to watch the general commodity price index (CRB). Commodity Forex Online Trading

It is important to understand that even where the link is very strong, currency values will not always respond to a change in commodity prices. Normal fluctuations tend to be ignored by the forex market. However, predictions or announcements of significant changes in the price of oil, for example, will likely be followed by a shift in USD/CAD. What is more, this does not necessarily happen right away, so a knowledgeable forex trader can get in on the action just as the trend is forming.

Of course, other factors will also affect prices. It is important not to concentrate on commodity values to the exclusion of all else, or you could be caught out. However, for certain currency pairs it can certainly pay well to understand commodity forex online trading. It is very important to keep your eyes open for any economic news affecting these nations and it would be wise to check out the economic news calendar at Forex Factory. Commodity Forex Online Trading

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Fundamental Analysis should not be Forgotten in Forex

August 31st, 2010 by admin in Forex Analysis with 0 Comments

Before starting on the foreign exchange market, we must understand some basic precepts of forex. Among the concepts essential to know, next to the carry trade or the technical analysis is the fundamental analysis.

Again, it should be noted that fundamental analysis is inseparable from the technical analysis, and vice versa, because they allow when combined to make investment choices, if not wiser, at least more thoughtful . Fundamental analysis is based on the evaluation of an economic indicator. These include employment figures or the publication of the index of activity in Chicago.

The main economic indicators

Of all the economic indicators, some have a bigger impact on other currencies. Thus, the index of activity in Chicago, when published, had less influence on the exchange rate of the dollar as the publication of unemployment figures. In fact, to know what the economic indicators are the most important, you only need a little experience. However, beginners in the foreign exchange market can go, at least, the principle that there are four economic indicators do not miss when it appears on the economic calendar this week. It is the interest rate, the unemployment rate, the rate of inflation and the consumer confidence index. These four economic indicators generally affect investment decisions of many traders.

The importance of the irrational

However, we must always keep in mind that financial markets are, by nature, thank you for the irrational behavior. Thus, even if the decision of a central bank to lower its rates or not, for example, often plays on the currency rates, one should keep in mind that nothing is gained. We must take account of market expectations, which can be met or satisfied, and the aversion to risk may go completely unnoticed to the publication of economic indicators.

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Chart Forex Trading – Winning Strategy With Forex Trading Charts

August 29th, 2010 by admin in Forex Analysis with 0 Comments

Chart Forex Trading

Currency exchange on an online trading platform has revolutionized the FX market. With the advent of online trading, FX trading has become the most attractive home based business. These trading platforms facilitate the trader to easily interpret the changes in the market.

How is it possible to easily carry out the online trade? The answer lies in the variety of graphical representation or charts provided by these platforms. But prior to understanding these charts, it is equally essential for the trader to understand the two elemental aspects viz. Fundamental analysis and the Technical Aspects.

In case of Fundamental analysis, charts deployed are used as secondary reference as it scrutinizes political and economic indicators. On the other hand, prediction of price swings by analysis of historical price activity is termed as Technical Analysis.

Representation of relationship between price and time is given priority under Technical Analysis. These charts contain either two directional axis or three directional axis. One currency is represented through one axis, let’s say X-axis, whereas the other currency is represented through other axis, that is Y- axis. This helps the trader to easily interpret the value of one currency compared to another on the left hand side. Chart Forex Trading

The time and price scale are represented horizontally across the bottom of a chart and vertically along the right hand edge of the chart. The technical analyst rests upon the relationship between the time and price and to help the traders both the two are set in all caps.

Candlesticks and Candlewicks are the most favored Forex charts. It is easy to interpret and work on. These two come in different sizes. Price ranges determine the length of the chart and the length of the stick or wick. The top most level of the stick or wick represents the highest price for the respective currency while its bottom level represents the lowest price.

Charts are the graphical representation of the real-time changes happening in the currency market. It is very easy for the trader to check these charts on a time to time basis. The burden of prediction is eased up for those who rely on historical accuracy. Traders are more interested on selecting a trading platform which facilitates them to get updates on currency activity.

Charts are also used to carry out probability calculations, correlations and regression analysis between different types of indicators prevalent in the market. Chart Forex Trading

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Forex Fundamental Analysis Books – What Do You Need to Start Forex Trading?

August 22nd, 2010 by admin in Forex Analysis with 0 Comments

Forex Fundamental Analysis Books

Trading can be both rewarding and profitable but what will you need to succeed in this high stakes game? Forex Fundamental Analysis Books

Firstly, you need boundless enthusiasm: a strong initial desire will keep you going when the going gets tough. Trading is like an art so you need to be as passionate about your charts as Van Gogh was about his paintings.

Next you need capital and a brokerage account. Not much capital is required to start as there are broker out there who provide small lot sizes for accounts as small as $20, just Google it for more information. To make a living from trading, however, you will need more capital, perhaps at least $100,000 to begin with. This is to cover the cost of early losses while you learn and to discount the emotional toll of taking bigger risks.

Next you need somewhere to trade, an internet connection and a computer. It’s probably best not to start trading on your iPhone until you are more experienced. Find a comfortable place – if you are trading full time you will be spending a lot of time there, particularly in the beginning.

Some say you need a mentor. Whether or not this is necessary you will need some initial training. There are plenty of course providers out there who are quite happy to explain how their training programme works. Shop around before you choose as they tend to be expensive. Forex Fundamental Analysis Books

It is also a good idea to read as many books about trading as you can. Mug up on technical analysis, fundamental analysis, economics and the psychology of trading. Keep reading and learning like the best traders do.

Finally you need a tough mind. Trading is particularly mentally challenging for 3 reasons. Firstly, the lack of certainty – even brilliant traders have losing runs – and unlike carpentry, where the nature of your working material ie wood is unlikely to change from one day to the next, in trading the markets change all the time and proven strategies may stop working suddenly.

Secondly you are dealing with money which is deeply tied to our self-worth. As you make and lose it, it can be an emotional rollercoaster.

Thirdly, like gambling you need to be able to control your emotions – or even better develop a heightened awareness of them. After a string of wins its important to stay your hand and after a string of loses don’t miss a golden opportunity because you are afraid to trade!

Finally, if you think it’s for you then good luck – trading can be one of the most rewarding and profitable occupations out there – so good luck and happy trading. Forex Fundamental Analysis Books

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