If you look at the adverts online there all about how easy it is to learn currency trading and it is - ANYONE can do it but paradoxically 95% of traders get wiped out so why is this and how can you avoid the errors of the majority?

Let's look at the reasons why most forex traders lose. The first reason is they believe forex myths and here are the main ones:

- You can predict forex prices

- You can follow a forex robot with a simulated track record and make money

- You trade news stories

- You can day trade or scalp the market for regular profits

- You take expert advice

- You believe the markets move to a scientific theory

Believe any of the above and you will kiss goodbye to your equity.

Now let's assume you don't believe any of the above, you're sensible, level headed and want to win now, you still have one major obstacle to hurdle:

Applying your forex trading strategy with discipline.

Discipline is really what sets apart the winners from the losers.

Its talked about a lot - but most traders don't realize how hard it is ( until they do it ), to keep executing your trading signals when your losing and the market makes you look a fool - its hard, very hard.

Most traders lack the discipline to keep their losses small - but have even more problems accepting big gains. Again, this may sound like a paradox - as we all want big gains.

So why can't we accept them?

Let's look at an example:

A trader gets a profit and is pleased and the bigger it becomes the more he wants to take it "before it gets away" what happens open equity eats into his open profit and it becomes too much, he moves the stop up to close and gets taken out the market by random volatility.

What happens next?

The position goes back the way he though piling up huge profits and the trader's not in, because he didn't have the discipline or courage, to hold the position and accept short term losses to get the bigger prize.

Look at a forex chart and you will see forex trends last for weeks, months or years and many can make you tens of thousands of dollars for you on a small deposit - but you must have the discipline to lock into them and hold them - its hard - but it can be done.

You need a robust simple forex trading system you have confidence in which you have the courage to apply with discipline.

If you want to make forex profits you can and a lot of them and its achievable - but don't be deceived, it's not easy and you wouldn't expect it to be with the rewards on offer.

This article has given you a brief insight in what the majority 95% do wrong and what you can do right to enter the elite 5% who pile up the big forex profits year in year out - Want to joint them? Well if you do, we hope this article has helped put you on the road to currency trading success.

If you are trading forex, you want to make big profits and if you are new or not enjoying the success you want, then these simple forex trading tips will help you increase your profitability.

Some of the tips below are not commonly held beliefs by the majority of forex traders - but don't let that worry you the majority lose!

Here are your simple ways to supercharge your profits.

1. Learn the 80 - 20 Rule

If you don't know what it is then in essence its 80% of your results come from just 20% of your efforts.

In marketing many sales forces see 20% of their clients produce 80% of their revenue; forex trading is similar and for most traders the next statement is true:

80% of your profits come from 20% of your trades.

The fact is many traders trade to much - don't make this mistake!

Be patient and wait for the best opportunities.

There is no correlation between trading frequency and profits.

Trade less. I know traders who make 100% + annual profits and trade less than once a month.

2. Load The Trade

I hear a lot about risking just 2% if your equity - ok if your trading a seven figure sum - but for smaller traders, taking such a small risk means their guaranteed to be stopped out by normal volatility.

If you have a trade that looks good, load it up.

Risk 10 - 20% and go for it.

This is not being rash, its taking a calculated risk, when the odds are in your favour. Better to trade one great trade and risk more, than risk less on marginal trades, where you're almost guaranteed to lose.

3. Don't Diversify

Diversification is the buzz word of the investment community, it can cut risk but it also cuts profits to.

Again the small trader (under $100,000) shouldn't bother, just pay attention to points 1 and 2!

4. Don't Trail Stops to Quickly!

A common error. If you do this you will NEVER get a big forex trend profit.

I see people looking for 10 and 20 pips -compete waste of time. When I trade I go for at least a few hundred and on a big trend can bank a 1,000.

I am prepared to trail my stop way behind volatility, that short term can drop my equity - but I have my eyes on the bigger prize.

I use a 40 day moving average a lot of the time and don't mind giving a bit back at the end. Keep in mind forex trends ( the big ones) last for months or years and if you caught just 50% of them, you would make a lot of money.

As you can gather forex trading with the above tips is all about taking risks - not being rash but taking calculated risks at the right time when the odds are in your favour.

Forex trading involves risk - learn to love it not be frightened of it and forex trading success can be yours.

Financially Fatal is the best way to describe this particular mistake that 95% of all traders make. It is the primary reason that even though traders are generally smarter than average, the failure rate is incredibly high in trading.

This is the one reason that so many traders fail even though they certainly have the ability and the aptitude to trade successfully. Because of the other factors that come into play, why this happens is very understandable, and it is not very foreseeable on the part of the trader.

Luckily, this situation is one that can be rectified before a person is completely done for in trading. The earlier in a trader's career one can become aware of the phenomenon, the faster that person will reach a level of proficiency and consistent profitability.

Here is an explanation of what happens and what the individual trader can do to turn the odds in their favor.

The Root of the Problem

Trading is very much like other professions in that there is a considerable body of knowledge involved in the activity. While the core concept of trading is very easily understandable by most, trading as an occupation has a substantial body of knowledge to absorb and certain skills that are required to trade profitably and consistently.

As with most professions, there is a gradient to the body of knowledge in trading. There are many different concepts to be learned which are prerequisite for the full understanding of other more complex or in-depth subjects.

To illustrate the problem, let's look at a familiar example: mathematics.

Math begins with simple counting and quantifying, then moves into adding, subtracting, multiplying and dividing. Next come algebra, geometry, and trigonometry. These provide the necessary concepts to then move into such higher math as calculus, differential equations, La Place transforms and others.

If a person were to try to go directly to algebra without a full grasp of basic math, they would be lost. If one enters calculus without a reasonably strong base in algebra, working the problems is difficult at best, and often impossible.

The Fatal Mistake Traders Make

What many traders do is go straight to intermediate level trading without the foundational concepts well developed. They jump way ahead on the gradient.

Now the problem is that when this situation occurs, it affects more than just the ability to assimilate new information. It also creates a physiological effect that interferes with already developed functions because of what is going on in the brain. Effectively it is almost like short-circuiting your brain when trying to operate under these conditions.

This is one explanation why very successful business people will often make decisions in their trading that they wouldn't make anywhere else in their business life. Outside of trading they are brilliant, and are very wise in the ways of money management. In trading they will cause their own losses of thousands or even millions of dollars.

So why does this happen, and why is it so common? In the book, "The Subtle Trap of Trading," the author explains in detail the five factors that come into play that set so many intelligent people on the road to ruin in the world of trading.

There are documented studies on the obstacles to learning that have found that there are specific physiological reactions when a person encounters this particular situation, that of starting too high up in a learning gradient or missing foundational knowledge while trying to grasp concepts at a given level.

This is the fundamental mistake that many traders make, and they are generally consciously unaware of this particular situation and its ramifications. Many people begin active trading without the foundational knowledge to trade at the level where they become active. When this happens, this creates a considerable obstacle to adequate learning within an efficient time frame. Subsequently, the trader often winds up taking a severe financial beating, often depleting their entire account before they have established a sufficient knowledge and skill base to trade proficiently.

Understand, the individual traders are not to blame. This is a problem of the system that unfortunately most have to go through. There is no certification or training required before a person is allowed to put themselves and their money at real risk, so the high failure rate in trading is primarily the result of inadequate warning and preparation for what trading entails.

Avoiding the Mistake (and What to do if you've made it)

Those that are fortunate a enough to pursue the proper guidance and help are the ones that can minimize the effects of this phenomenon which is so prevalent in the trading world. If one can find a mentor that recognizes this particular obstacle and the others that are present in the development of a trader, then chances are likely for a good trading experience. Most however choose to do it themselves or simply make it on sheer persistence alone, while learning the lessons of trading the hard way, through personal experience and substantial losses.

Rather than fall prey to this mistake, as many do, you have the option to save yourself considerable time, losses and personal anguish. This begins with backing up so to speak and making sure that you've got the basics fully covered, and then proceeding forward with a focus on mastery and development.

Pick up any book on trading and you'll find that discipline is an absolutely critical element of profitable forex currency trading. This particular aspect of trading is also one of the biggest obstacles for most traders, even sometimes for those that have been trading the currency markets for quite a long time.

Utilize 3 simple steps to double your discipline almost immediately. Don't dismiss this method. Even though it won't solve every discipline challenge you may run into, it will take you in the right direction and you really can double your discipline very quickly.

Step one: Be aware while you're in the moment. At the moment when you feel the urge to deviate from your trading plan, ask yourself this simple question: "Am I acting on emotion here or would this be in alignment with my better judgment?" Being aware of how you're feeling - at the time - is what is key, and then asking yourself the question. Often, the mistake happens because we simply are allowing our emotions to drive our actions and the simple act of staying alert to the emotional surge will help to keep matters in perspective. Awareness is only the first step though.

Step two: Realize the real cause of the problem. Usually the urge to deviate from your trading plan is because of a fear. Here are a couple examples.

* Getting into or staying in a trade when you know that you shouldn't often comes from the fear of missing an chance to profit. What is often incorrectly attributed to greed is often a scarcity mindset coming into play. The failure to say "No" shows the fear that there "isn't another bus coming soon". When you don't have the certainty that there are numerous profitable opportunties to be capitalized on and that you have the ability to take advantage of them, then the fear arises in the moment.

* Hesitating to pull the trigger is often the fear of screwing up more so than the fear of loss. Superficially it feels like the fear of loss, but the risk on any given trade can be foreseen. This one is an issue of self-doubt stemming from previous mistakes.

In reviewing the examples above, you may have noticed a common underlying factor. There is a way to eliminate fear, and the 3rd step is to address this specifically.

Step three: the most effective way to counter fear is through building your confidence. Your daily life is full of risk and yet you can function will amidst this risk without any fear all. Why? Because you have the confidence to deal with it effectively. When you drive your car, go out in public, walk down a flight of stairs, you have no fear. You have developed the skills to perform these activities and do them well and without getting hurt. The potential for harm is there, but you have the confidence to handle these situations.

Forex currency trading is a fairly simple activity compared with other professions, particularly with the tools available in today's world. It is certainly within your abilities, and as you broaden your knowledge of and develop your skills, you'll find that your fears subside as your confidence grows. The challenge then becomes how to properly go about building your confidence - real confidence, not just bravery.

True confidence comes from awareness, education, competence, practice, measurement of results and feedback for continuous improvement. Forex currency trading involves a significant body of knowledge and a respectable skill set to be developed to trade confidently. Unfortunately, many traders are not given the information when they start out to even know what they need to work on to become that successful trader that they envisioned at the beginning of their Forex trading career.

Failing to stick to your system is but one of the many mistakes Forex traders make that create losses and anguish. By knowing the cause of the mistakes and having specific actions to take to avoid them, you are empowered to be a more consistent and profitable trader. There are numerous trading mistakes listed in the book, "The Subtle Trap of Trading" along with specific actions you can take to avoid them. When you see where mistakes originate, you will find that your forex currency trading is both more consistent and much less stressful.

Your choice of online forex brokers is no longer limited to firms that allow you to start trading with a $1000 or even $250 account. Forex dealing firms, known as forex brokers, that will let you open a trading account with such small sums of money may not be a good choice. Why is this? Because most forex brokers who accept such small amounts of opening deposits are not entering your forex orders into the international forex market place.

These firms are often acting on their own behalf with orders and are taking your trades directly onto their own books. They are acting as the counter party to your trade. They know that forex traders starting out with such small amounts of money will probably end up losing that money. Since they are the counter parties to your trade when you lose they win.

This is very much the way a gambling casino works. In a casino you are always playing against the house and the house always enjoys a small edge. Over time that small edge means that the casino will end up with your money unless you are extremely lucky. Not only do you have to be extremely lucky to win over the long run but you also have to be smart and disciplined enough to quit after a big win.

Since many online forex brokers work in this manner you need to be careful when opening an online forex trading account. If you want to give forex trading a go and only have a small amount of risk capital to open an account with you may want to go ahead and select a broker that accepts small deposits. Just be forewarned that the playing field will not be as level as is desirable for your financial health.

In recent years with the popularity of online forex trading growing large highly reputable banks have established forex trading facilities for smaller forex traders. While the starting capital is larger, usually in the $3,000 to $10,000 range, you will benefit from working with first class dealers and players in the international forex markets.

Spreads will be tight and you can trade fast moving markets without frequent requotes taking away the advantage of speedy executions. In addition, you will benefit from the free use of advanced forex trading platforms.

You can now open a retail account with the number one forex dealing bank in the world. The minimum account size is $5,000. The bank also offers a $50,000 play money demo account that will allow you to test their trading platform.

The bank feeds real-time streaming prices into their trading station. Prices update dynamically tick by tick with the slightest market move. The dealing rates you see are not an indication of where the market is trading, but of actual prices at which the currency pair can be bought or sold on the trading station. Spreads are offered from as low as 2 pips under normal market conditions.

To find major banks that welcome smaller retail forex trading business run a Google search for "forex trading banks" or "forex retail dealing banks" and the like. If you plan to make forex trading into a business venture that has a good prospect for success you will gain an edge by using the services of first class forex dealers and forex brokers.

Candlestick patterns are used by each and every kind of trader. Day trading and swing trading utilize candlesticks as a way to read chart patterns quickly and efficiently, while getting the same data offered by bar and HLOC charts. Professional traders love candlesticks because they can be read much quicker than a bar chart, while also allowing a different kind of technical analysis known as candlestick reading.

Modify for Your Style

Your trading style has much to do with whether or not candlesticks can become a part of your everyday trading technique. Developing a trading plan around candlesticks can be difficult, and thus, it is best to use candlesticks to supplement an already complete trading plan. There are many trading seminars put on by professional traders to study the key to candlestick investing and why chart patterns exist.

Candlesticks are just one of many tools to make consistent profits. Just as Japanese traders have used for hundreds of years, candlesticks can show chart patterns before they happen. For example, a large wick with a small downward body at the end indicates indecision, or that the market may be ready for a reversal. It would be hard even for a professional trader to see this without the graphical display that candlesticks give to an investor.

Use Your Own Plan

Investing is difficult enough without the use of candlesticks. Many traders prefer to use their own basic trading plan and then incorporate candlestick chart patterns as a confirmation. The day trader prefers these candlestick chart patterns because scalping and other short term positions have very small windows of opportunity. Candlesticks let you read and comprehend more data in less time.

A complete trading plan should allow for some candlestick patterns and other chart formations. A well worked strategy can handle the addition of a candlestick confirmation, while less complex strategies might not be diverse enough to accompany candlesticks. Many profitable trading strategies use a mix of both, straight technical analysis mixed with candlestick reading to produce consistent profits.

Use a Planner

A trading plan planner will help you throw in a mix of candlesticks without overdoing your strategy with too many variables. For the most part, a candlestick chart is just like a bar chart, but is also its own technical indicator. For instance, a small cross-like candlestick often means the bottom or the top of a chart, thus buying or selling should ensue depending on current momentum.

Market tops are extremely profitable for short sellers. Tops are usually much more exaggerated than bottoms and last only for a short amount of time. This presents a small “window of opportunity” for investors to take notice.

Short Interest

Proven strategies are nothing compared to watching short interest. When the market is forming a top on a chart, the amount of short interest tells traders how many shares are sold short – essentially how many people think the stock price will drop. Watching short interest will improve your trading and help you meet your trading goals.

Technical Analysis

Technical analysis, such as RSI topping or divergence, can help predict weakness in the market. As tops come to an end, RSI charts usually make a double peak, the second lower than the first. If the RSI and price are moving in different directions, the price is likely to fall. Technical analysis is best applied in each timeframe to gauge how big each movement will be.

Strategies for Gapping Down

A true top is made definite by a gap down, indicating that sellers are pushing the price down. Develop your own strategies for gapping down to profit heavily. Many traders use technical analysis, and then use a gap down to confirm. Gaps are the biggest indicator of sentiment; if a stock prices gaps down, it’s probably about to enter a down trend.

Look Back at Historical References

What happened the last time the stock topped? When it was $50 a share? Watching horizontal trendlines is a great way to improve your trading. If the stock dropped after reaching $50 a year ago, it probably will act similarly again. This should always be confirmed first by technical analysis or your own custom indicators. Either way, history is a great way to predict the future.

Investor Sentiment

Another great way to predict long term tops is to see how everyone else is reacting. When the media started showing stories of the great wealth achieved in real estate, the market failed just a few months later. Indeed, the media is one of the best indicators of a top. When it seems that everyone is involved in the upswing, the only logical response is that investors will flood out. This was true with the 1990 housing bubble and the tech bubble.

The widespread use of broadband Internet services has transformed forex trading from an activity limited to banks, hedge funds, and investors with deep pockets and good banking relationships, into an activity that almost anyone can undertake from their home or office computer.

Online forex dealing firms now offer the small retail trader free access to trading platforms and live data feeds that just a few years ago would have cost hundreds, even thousands, of dollars a month in fees. This and the prospect of making large returns on investment has lead to an explosion of online forex trading activity. Forex trading accounts can be opened for as little as $250 and free demo accounts are readily available.

Unfortunately, just because it is now easy to participate in forex trading doesn't mean that smaller investors should attempt to trade forex. Starting out with small sums of money almost guarantees that the trader will end up losing that money. A more realistic sum to start trading with is $5,000, not $250. Even then traders who start out with larger amounts of money should take care not to over leverage their positions.

Forex trading is a highly professional undertaking. In order to win you have to know what you are doing and/or be extremely lucky. The small trader who starts trading with limited knowledge is at a tremendous disadvantage as forex trading is a zero sum game and the competition is fierce. After all currency trading is the biggest financial trading medium in the world with trillions of dollars of forex changing hands daily. With so much money up for grabs no wonder the competition is so strong. Successful traders, people like Jim Rogers and George Soros, become very wealthy.

One of the big attractions of forex trading is that large sums of currencies can be controlled with small amounts of money. Leverage of 100 to 1 is easily available. A professional trader would never use that amount of leverage. When you trade forex at 100 to 1 leverage it means that you would double your margin money with only a 1% move in your favor but sadly you would lose 100% of your money with a 1% move against your position.

When you trade at extremely high leverage you reduce the business of forex trading to gambling. You may want to still give it a go using the high leverage that is available but at least be aware that you are gambling using the forex markets to do so. It is better to learn what you are doing and to go for the long haul. Few if any businesses anywhere offer the kinds of returns available to skillful forex traders.

Finding the right Forex trading strategy can be difficult, as there is so much information out there on the web. Some of it is really good information, and some of it is thick complicated garbage that is actually designed to be confusing enough that you won't be able to clearly see that it's a rip off until it's too late. It can be hard to figure out which trading systems can actually make you profitable trading the Forex, and which are a bunch of garbage being sold from modern day snake oil salesmen.

To have an effective Forex trading strategy, you need to first understand the basics of how the Forex market works. Get yourself as much free information as possible. No matter what a trading strategy says, there are certain ways the Forex market works, and certain ways it simply does not.

Having specific knowledge will help you be able to analyze what each sales pitch is promising and even throw up some red flags if a Forex trading system you're looking at seems to employ a strategy that doesn't make sense compared to what you've read about the markets. Having knowledge can also help you when you realize that terms like "martingale" and "anti-martingale" can be translated to "gambling theory" and "non gambling theory." Makes a big difference in which one you want to trust in a volatile market, doesn't it?

At the very least you should understand the difference between technical analysis and fundamental analysis, and get an idea of how each views the Forex market. The two are very different ways of analyzing currency pairs, and both have their obvious ups and downs. Many professional traders use a combination of both methods.

At this point, what you want is not a home made Forex trading strategy, but an established and effective Forex trading system that you can rely on to guide you to making a killing in the Forex market. They are out there, and whether or not you profit almost always comes down to how effective your system is.

Finding a great strategy that can trade the market when it is trending, counter-trending, and in breakout modes will help to ensure that your forays into the Forex market will result in a growing bank account and a growing smile on your face. Remember, when finding the right Forex trading strategy, you're looking for a proven Forex trading system.

Online Forex trading is really the only way to go when trading in Forex and is, in fact, the only way to get into currency trading in the Forex market. Unlike the stock market and local commodity markets, the world wide Forex market doesn't have a market floor where you can go and put in an order. There is no opening and closing time because each nation doesn't have their own market. The Forex is truly a global market, and can be traded from any time zone at any time, making the Internet the only way to trade the Forex.

The changing of technology over the last twenty years, especially with the Internet advancing enough to allow online trading, has really opened the Forex market for any trader anywhere to be able to trade the Forex.

Online Forex Trading is made possible through Forex trading platforms and software that allow traders to track currencies, analyze the charts and graphs, and make buy and sell decisions for currency pairs based on that information. Since the world market is always open somewhere, you can trade currency at virtually any time of the day or night, any day of the week. There is always someone looking to make a trade, and if you want to bet on the market directly opposite of them, you have a trading partner.

Aside from finding a trustworthy and reliable online Forex platform that you can use to trade online, you will also want to have a successful, established, and reliable Forex trading system that will help guide you in how to buy and sell, go short or long, and make a lot of profit doing it. The Forex platform, the Forex system, and the Forex software all have to work together to assure you of the best possible chance of beating the market in online Forex trading. Since the entire market is online, you will want to make yourself comfortable with it before jumping in for real trades.

The combination of these factors is what will determine whether or not you are poised for success as a Forex trader. Failing to have even one down can make it very difficult to make a profit, and the old adage goes perfectly with the Forex: "Where there is great risk, there is great reward." There are great possible awards to trading the Forex, but let no one kid you, there is plenty of risk left, as well.

It's not enough just to have the best Forex platforms or software, but you need a trading system that you know is profitable and won't let you down. After all, it's your money on the line.

Finding a profitable and established Forex trading system can be a difficult thing to do. This can be frustrating to many traders, because without a trading system that they can trust, without that time tested strategy, their chances of making solid profits consistently are next to nothing.

The Forex market is extremely volatile, and while leverage can turn that volatility into a gold mine for a successful trader, it can also cut out the legs from even the most seasoned traders. The Forex offers great potential reward, but also just as much risk to go with it.

One of the first things to look for is a system that adapts to market movements. If a system claims one strategy to be used all the time, it's hard to believe that you're making profits in sideways markets if you are trading a trend system. But if you have a Forex trading system that has strategies that adapt to changing markets, that can be a good sign of having a system that will make you profit over the long haul.

That being said, you should be able to adapt relatively easily. If the system takes twenty pages of text to explain how to make a "minor adjustment" according to what the Forex markets are doing, then you're probably looking at the wrong system for what you need to do. Most of the best systems are either sold with the understanding that they're only there for use with a specific type of market (which in a way, actually disqualifies those from being among the best systems) and the other has "multi-pronged" approaches that allows you to trade whether the market is in trend, counter-trend, or breakout.

There are many Forex trading systems out there, not all of them can deliver on promises. There are several things you should look for when considering purchasing a Forex trading system. Some of these questions include:

Is there a money back guarantee? Reputable systems should allow for you to get your money back if you're not satisfied.

How well established is this system? Has the company been around for years? Does it fit your style? If you're strong into fundamentals and long term trades, you don't want a system designed for quick day trading or scalping. Likewise with the roles reversed.

If you take these factors into consideration and find a good Forex trading system that adapts to market conditions (like the Triad), you will be all set to make a killing in the Forex market!

Because you have to change your money into the currency of the country you wish to make a purchase of the house or whatever, it is prudent to know something about foreign currency exchange.

It is also important to make sure when you are ready to exchange your currency that you chose the best quote regarding the rates of exchange, as this can make a big difference.

There are a number of foreign currency exchange companies that will quote you much better prices than the high street banks, so look around.

We often hear about a currency pair. This describes two different currencies. The first mentioned, is the base currency. The second of the two currencies is the counter or quote currency.

Thus, in an example quote of EUR / USD 1.59 it means that for 1 EUR you have to give 1.59 USD

Since currencies move up or down all the time, the position can change and a EUR / USD quote may alter to EUR / USD 1.5910 meaning that the Euro went up in value. But, if for instance EUR / USD went to 1.5890 it would mean, that the dollar went up in value.

There are many currencies being traded, but the most traded ones are called Majors.
These are EUR / USD, GBP / USD, USD / JPY, USD / CAD, USD / CHF, AUD / USD

Pairs, where the euro is involved, are known as Euro Crosses. A currency pair where the USD is not included is called Cross Rates.

The bid price is the one at which the broker is prepared to buy, and the offer or asking price, is the one the broker is prepared to sell at.

Currency deposits are usually moved from one bank to the other by the use of the electronic transfer system (Society for Worldwide Interbank Financial
Telecommunication) SWIFT for short. This is a very fast and simple way to make the transfer.

Foreign Exchange is often known as Forex or FX.

Bull Market is a period of time when prices are seen to be rising.

Bear Market is a period of time when prices are seen to be falling.

Market Rate is an up to date quote for a currency pair.

Cable is a slang expression for Sterling / US dollar exchange rate.

It is as well to remember that the foreign exchange market is basically slotted in two levels. One is the retail level and the other is the wholesale level.

On the retail side, the smaller agents buy and sell foreign exchange taking the reading from the reference rates. These are adjusted constantly as events unfold in the market.

The wholesale level is an informal network of hundreds of brokerage companies and banks, who deal between themselves as well as very large corporations. It is this trade which is the one, when the newspapers make a reference to the foreign exchange.

These days, people are faced with several permutations. On one hand, they are watching the position of Sterling which has been under pressure lately for many reasons. They are also watching the prices of houses in the UK, and getting nervous
noting they depreciate more and more. This of course, makes them think it may be worth to buy abroad and sell in the UK before the prices do start to fall further.

On the other hand, prices of property abroad in some cases are also falling, but selling now would mean that with the Sterling depreciation, they could get a good exchange rate and eventually buy a house in the UK, especially if the prices get lower and lower.

But then of course, there is the other way of looking at it. For instance, the Euro might depreciate in due course versus the USD, and might push Sterling higher in relation to the Euro. It needs thinking about. One way or the other, it opens up possibilities of making money especially if catching things right.

Forex price movement what makes the price a simple question? Yes but most traders get it wrong, they either think its supply and demand fundamentals or prices move to some higher god on charts - neither is true.

Prices move based upon the sentiment of the people trading - they all come together to make a price so the equation for price movement is:

Supply and demand Fundamentals + investor Perception of them = Price

Lets look at why technical analysis and fundamental analysis have limitations and two great sentiment indicators you can use to add to help you judge sentiment and make bigger profits.

You can't trade the fundamentals in isolation. Why?

Because all the facts are there for people to see - but we all draw different conclusions from what they mean colored by our emotions. You can't trade them we all have the information now in a split second and it depends on sentiment toward them which way they go.

Charts don't move to a scientific theory that many people believe.

You will find many chartists claim that because human nature is constant, there is a scientific formula for market movement - but that's rubbish!

If there were, we would all know the price in advance and there would be no market!

Charts are useful however in showing sentiment as short time price spikes never last for long and prices always correct back to fair value, this is easy to see on a chart looking backwards - but how do you judge sentiment to back up what you see on a chart?

Answer:

Use sentiment indicators and here are 2 that if you use them, will help you spot market tops and bottoms and improve your market timing.

% Bullish

Been around for decades and is simply a poll but a very useful one.

If over 80% of people polled are bullish, sentiment is at a bullish extreme and a correction is likely and if the figure is below 20%, prices are at a bearish extreme and a rally is likely.

The above represents opinions not action and while it's useful, it becomes even more useful when used with the Commitment of Traders Report issued by the CFTC which shows action in the market place and allows you to top the worlds best traders.

How would you like to see what some of the smartest traders are doing with a track record of warning of every major top and bottom? Well you can, with this report and it's FREE.

While it is used in the futures market it's a great indicator for FX trend changes.

There are 3 groups of investors that are logged.

Commercials - smart money they own the currency and are hedging and know the long term fundamentals.

Big Speculators - Mostly large funds

(The above two groups under law have to report there positions)

Small Speculators - Everyone else.

What you need to do is watch when the commercials are buying or selling heavily and the other two groups are going the opposite way.

The commercials are hedging so only move on big spikes against their position, there not leveraged and only move when price extremes occur.

If you see a big rally and the commercials are selling, while the other two groups are buying and they are at an extreme position against each other - a trend change is at hand.

You can then look for clues too enter on your charts and get confirmation there.

People move markets not by science - but by greed and fear learn to sell extreme greed and buy extreme fear and you can catch every major trend change.

The two services above help you gauge sentiment and allow you to get market timing on your forex charts.

Forex trading is a game of odds and having the sentiment behind the chart movements is a huge advantage in seeing forex price action as it is and where it may go next.

There more popular than ever and greedy investors think they are going to get rich quickly with no effort. The reality check is almost all robots will destroy your account equity quickly...

95 - 98% of robots I see on the net have not even been traded!

The track record has this disclaimer on it.

Look for it in the small print if you see it and read it you will understand why it probably will fail miserably:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity.

then of course the statement that makes the track record no use at al in determining profitability:

Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

Now what is the logic of having a track record that has never been traded and what does it tell you?

Does it indicate anything about the profitability of the system - NO

Of Course it doesn't and it's a wonder that these track records are allowed to be used to sell to the public. Most of the time the traders buying the system don't dig to deep and are generally trusting throw in some good copy and there soon buying the system.

I always read about how these forex robots are sold by ex bank traders etc - there not, there sold by marketing companies looking to tap into the huge market in forex trading products.

You can make money in forex but an automated trading system that has never been traded is not the way to do it. Let's make one point clear:

Forex trading is NOT as easy as giving a few hundred dollars and buying success in a box - life isn't like that!

You need to get the right forex education and do your homework - if you want to buy a forex trading system you can find some good ones with track records if you shop around - but never ever buy one with a simulation.

You could trying writing to the vendor and ask for his track record audited over say 2 years and see if you get a reply but don't hold your breath.

Many people new to forex trading start by just trading one single timeframe, whether it's 5 minute charts, 4 hour charts, or daily charts, for example. However is this really the best way to make money from forex trading?

Well in my opinion you're much better off using two or three different timeframes to assist you with your trading decisions. This way you're always fully aware of the longer term trend, whereas if you're trading using just one timeframe, then you're oblivious to the wider picture.

For example, if you notice that a particular currency pair is trending downwards on both the 4 hour and 1 hour charts, then you don't really want to be taking long positions on the 15 minute charts.

Ideally you always want to trading in the same direction as the overall longer term trend. So even if you're a scalper and trading the 1 minute charts, it's still a good idea to consult the 5 minute and even the 15 minute chart as well for an indication of the wider trend.

I personally like to trade the 4 hour charts using EMA crossovers, but I always make sure I consult the daily chart before taking a position. So if the daily trend is bullish, I will make sure I only take long positions and vice versa. This ensures that I'm always trading with the trend and not against it.

If you always trade with the overall trend, then you are always ensuring that the odds are in your favour, and so your entry points do not necessarily have to be as precise as the longer term trend will often come to your rescue.

For instance if you like to trade the 15 minute charts, you could use the 1 and 4 hour charts as well to indicate the overall trend. If the trend is upwards on both the 1 and 4 hour charts, then you would want to be looking for oversold positions on the 15 minute chart so you could take a long position because the odds are clearly in your favour that you will see a continued upwards move.

Similarly you could use daily, weekly and monthly charts in the same way if you are a long term forex trader. The important point is that whatever system you use, it's always a good idea to use multiple timeframes. This way you will ensure that you are always trading with the trend and not against it, which is one of the golden rules of profitable forex trading.

If investors want to buys stocks or bonds, they can call up their brokers and quickly make the purchase. They can also buy stocks online with the push of a button. Commodities such as gold and silver, however, are more difficult to buy because of the the complicated way in which they trade through futures and options markets.

Whatever the current price of gold is, many people wish to learn how to invest in gold. Metals such as gold and silver are called commodities and they are more complicated than stocks for the normal investor because there are different ways you can invest in them.

Luckily, investing in gold is one of the easier commodities to invest in. One option is that you can invest in gold coins that are obtained from a dealer and from some banks. If you do this, though, you will have to find a safe way to store the gold. Many people who have gold store it in bank safe deposit boxes. This seems to be the most secure method of storage.

The second way to invest in gold is to buy an ETF. Exchange traded funds work much like stocks and they can be bought and sold any time the stock market is open. These funds mirror the price of gold and so even though you do not directly own any gold, you have a fund that has exposure to it. Investing in gold through ETF's is probably the easiest method and the most recommended method of gold investment for the average investor.

The third and most complicated way to invest in gold is to trade futures and options in the commodities market. This takes a lot of knowledge and experience to know what you are doing and it is not advised for the normal investor. Trading futures and options is something that you learn how to do over time and it is not usual for most gold investors to take this route.

Investing in gold is not as intimidating as it sounds. Usually people can easily buy ETF's and this is by far the most popular way. As the current price of gold fluctuates, these ETF funds go up and down correspondingly. If you like to have the physical gold in your hands you can always buy it but then the safety issue comes into play. Whichever method or methods you use for your investments in gold, you will still have the benefits of owning the most treasured metal in earth's history.

You would probably have to have been living on a remote desert island for the better part of two years to not see any signs of the slowdown in the economy of the United States. Since August of 2007, the real estate market has been reeling from plummeting house prices, due primarily to increasing defaults on sub-prime mortgages. While these mortgages were issued to millions of borrowers with patchy or relatively poor credit ratings over the past several years, interest rates remained unusually low before the Federal Reserve began to increase rates over 2005-2006.

Up until late 2006, this process was self-reinforcing, mainly due to the delayed impacts of interest rate changes, not to mention encouraging profits for lenders, who would often repackage the loans into securities which could be sold to investors globally. Many analysts called it a new era in risk management, justifying the arcane nature of many of these new investment entities with ever-larger profits.

But just as higher interest rates began to take their deflationary effects on the larger economy, millions of sub-prime mortgages began to reset, their rates immediately dependent on available credit. Moreover, many borrowers were not made aware of the insidious nature of their home loans.

Often, their interest rates are artificially low for some period of time, usually one to two years, and then change to reflect market rates afterward. These "teaser" rates were designed to lure more potential homeowners, and they worked: all estimates of the amount of sub-prime mortgages number in the millions, and many consumer advocacy groups have decried the skyrocketing incidence of "predatory loaning" leading up to the credit crunch. Defaults have continued to increase, which has forced the financial institutions which invested in mortgage-backed securities to write down billions, eventually leading to the spectacular collapse earlier this year of Bear Stearns, formerly Wall Street's fifth-largest investment bank.

Since the securities made from these increasingly worthless mortgages have been so widespread, any effort towards recovery must first be focused on stabilizing borrowers, who are increasingly behind on payments. In this respect, the government has taken several different courses of action. In an effort to stop unnecessary foreclosures, the US Treasury has begun an initiative to freeze mortgage payments at current levels for qualified recipients. However, its restrictions make less than 5% of homeowners eligible for the program.

In addition, the Treasury has introduced a plan to reorganize and regulate the lending industry over the next several years, which should help streamline the financial system in the future. However, its greatest effect so far has been to distract from more immediate economic problems.

By far, the greatest player in the recovery effort has been the Federal Reserve, which reversed its previously hawkish view to drop mortgage interest rates multiple times, from 5.25% last summer to 2.25% now, with a further cut of 25 basis points highly likely at the next meeting. They have also taken the unprecedented move of making its "discount window" rate loans available to investment banks. This access has historically only been available for commercial banks up until this point as a matter of last resort, but by bailing out Bear Stearns, the Fed made a commitment to help troubled investment banks weather the credit crisis. A recovery will require a combination of liberal monetary policy, further government intervention on behalf of mortgage holders, and enforceable regulation in order to prevent another bubble.