some plus points of forex market

Foreign Exchange Market is a market where traders buy and sell currencies with the hope of making a profit when the values of the currencies change in their favor. People are making vast amounts of money from Forex trading. The Forex Market has a big potential for everyone, ranging from large corporate firms to ordinary, everyday people like you and me.

It is a very exciting trade with a huge money-making potential. Just imagine yourself sitting comfortably in your pajamas at your computer you turn on the internet and make a few quick transactions and by the time that you get up to get a cup of coffee, you are several hundred dollars rich! Would you like that? I would!!

I can hear you say, Wait a minute!! This sounds just like another one of those confusing markets like stocks, options or traditional futures, so what makes this market any different?

Aaah! Good question! So, in answer to your question, here are 10 good (if not great) reasons to enter the Forex Trade:

1. First and foremost, Forex trading allows for small investments. You do not have to be able to invest thousands of dollars to get started with this trade. You can start trading Forex with as little as $300 to $350 and could be well on your way to earning more than that on your first day.

2. The Forex markets are always open! You are able to trade anytime and from anywhere in the world. No waiting for the stock exchange to open. The market is ongoing, with generally only minor breaks on the weekends.

3. The funds that you invest are liquid; you can cash them anytime you want. No waiting for days to get your stocks converted into hard cash.

4. The value of the Forex Trading market is COLOSSAL: it is 30 times larger than all of the US equity markets combined. It is the largest market in the world with daily reported volume of 1.5 to 2.0 trillion dollars. This massive value makes it a lucrative and desirable trade to invest in.

5. It is a highly stable trade and offers greater

strength over other markets. Countries and people are ALWAYS going to need currency. Although the value of different currencies goes up and down, the fluctuations are not as dramatic as stock prices and generally follow a predictable trend.

6. You do not have to worry about commissions, exchange fees nor any hidden charges when you trade Forex. Forex brokers make only a small percentage of the bid and there are very respectable and free brokers available as well. Is that not wonderful for you?

7. You make profits no matter which way the currency is going. You will not worry about a falling currency value if you know what to do with it and make good gains.

8. Forex is a very transparent market. Unlike equity markets, where analysts have an unfair advantage over the layman because of their insider knowledge, the relevant information for Forex is equally available to every one through international news. Therefore, all Forex traders are in a position to make pertinent decisions according to the current market situations.

9. Forex market is extremely quick! It takes not more than 1 to 2 seconds to complete your transactions because it is all done electronically, online and in Real Time.

10. The final good news is that you do not need any formal education, licensing, diploma or degree to trade Forex. All you need is the know-how of how it works, trading strategies and some tips and techniques and you can be on your way to earn big profits.

Forex trading online may be the fastest path to financial freedom and an end to all your financial worries. It truly is an excellent, if not THE best home business opportunity for ordinary people. You owe it to yourself to give it a try!!! Prosperity and happiness to all!

Forex: Venturing Into Non-Dollar Currencies

Although it is highly advisable for American investors not to rely too much on the domestic market, any investments in non-dollar currencies entail exchange-rate risks. Nonetheless, these risks can be managed and even turned into opportunities. Read on to learn about how to manage the risk in foreign investments.

Essential Diversification – But At a Price
The positive side of foreign investments is that they are an important and often essential part of portfolio diversification. Making foreign investments, however, does not mean that the investor is speculating in foreign currencies, although the risk may still be substantial. After all, a low American dollar, for example, is bound to rise at some point, which will substantially reduce the value of money coming back into the U.S. On the other hand, a high U.S. dollar means the exact opposite to non-American investors because they will be looking to take their money out of the U.S. and return it to their home countries, where it will be more valuable.

Currency Fluctuations
For example, in early 2000, the dollar was worth 1.25 euros, but by the end of 2004, it was worth only 0.73 euros. During this period, foreigners investing in America saw the effective value of their investments decline by 40%. (

Then there is the issue of yen loans. For years, the incredibly low Japanese interest rates encouraged people to borrow yen to invest elsewhere. However, if the yen were to rise substantially before such a loan is repaid, the borrower could be in trouble. The gains from low interest rates can rapidly be wiped out and worse. In fact, many Austrians took out yen loans in the '90s and some of them wound up with losses of up to 50%, as interest rates moved substantially over time. (

Another good example of the risks that arise in foreign investments is illustrated by what can happen to immigrants. For example, retired people on fixed incomes from South Africa living in the U.S., became very poor very fast in the '80s when the South African rand weakened and the capital they held in their home countries was devastated.

Despite the risk and volatility, however, foreign diversification remains a necessary part of the investment process. Currency fluctuations are a fundamental element of such investments. However, if investors on one side of the Atlantic lose 40%, those on the other side gain precisely the same amount. If you decide to add foreign investments to your portfolio, you need to manage you risk by setting yourself up to benefit from a thriving currency.

Managing the Risks
Currency risk can be limited but this may also come at a price, which may come in the form of increased cost or complexity.

Foreign Funds
The simplest way to avoid currency risk is to invest in a fund that is denominated in dollars. This way, you will have the diversification advantage of a foreign fund with a reduced currency risk. This risk is instead assumed by the issuer of the fund. (

Options and Futures
A more complicated way of avoiding currency risk is though options or futures. To do this, you either need a lot of financial knowledge or a good advisor. In plain English, the basic method is to cancel out currency risk by taking out an opposing investment. For instance, if you purchase an investment in euros (effectively buying the currency), you can arrange to sell the same amount of euros at a later date, so that the gains from the one transaction will match the losses of the other. You are then left with just the investment itself and no gamble on the exchange rate. As you can imagine, this is not as straightforward in practice and some of the instruments used are very sophisticated. (

Forex: Wading Into The Currency Market

Whenever you devote money to trading, it is important to take it seriously. Many traders are getting into the forex (FX) market for the first time and are basically starting from square one. But new traders don't have to be left in the dark when it comes to learning to trade currencies; unlike with some of the other markets, there are a variety of free learning tools and resources available to light the way. You can become FX-savvy with the help of virtual demo accounts, mentoring services, online courses, print and online resources, signal services and charts. With so much to choose from, the question you're most likely to ask is, "Where do I start?" Here we cover the preliminary steps you need to take to find your footing in the FX market.

Finding a Broker
The first step is to pick a market maker with which to trade. Some are larger than others, some have tighter spreads and others offer additional bells and whistles. Each market maker has its own advantages and disadvantages, but here are some of the key questions to ask when doing your due diligence:

Where is the FX market maker incorporated? Is it in a country such as the U.S. or the U.K., or is it offshore? Is the FX market maker regulated? If so, in how many countries? How large is the market maker? How much excess capital does it have? How many employees? Does the market maker have 24-hour telephone support?

In order to ensure that the money you are sending will be safe and that you have a jurisdiction to appeal to in the event of a bankruptcy, you want to find a large market maker that is regulated in at least one or two major countries. Furthermore, the larger the market maker, the more resources it can put toward making sure that its trading platforms and servers remain stable and do not crash when the market becomes very active. Third, you want a market maker with a larger number of employees so that you can place a trade over the phone without having to worry about getting a busy signal. Bottom line, you want to find someone legitimate to trade with and not a bucket shop.

Checking Their Stats
In the U.S., all registered futures commission merchants(FCMs) are required to meet strict financial standards, including capital adequacy requirements, and are required to submit monthly financial reports to regulators. You can visit the website of the Commodity Futures Trading Commission (an independent agency of the U.S. government) to access the latest financial statements of all registered FCMs in the U.S.

Another advantage of dealing with a registered FCM is greater transparency of business practices. The National Futures Association keeps records of all formal proceedings against FCMs, and traders can find out if the firm has had any serious problems with clients or regulators by checking theBackground Affiliation Status Information Center NFA's (BASIC) online.

Test Drive
Once you've found a broker, the next step is to test drive its software by opening a demo account. The availability of demo or virtual trading accounts is something unique to this market and one that you want to exploit to your advantage. Your goal is to learn how to use the trading platform and, while you're doing that, to find the trading platform that suits you best. Most demo accounts have exactly the same functionalities as the live accounts, with real-time market prices. The only difference, of course, is that you are not trading with real money.

Demo trading allows you not only to make sure that you fully understand how to use the trading platform, but also to practice some trading strategies and to make money in the paper account before you move onto a live account funded with real money. In other words, it gives you a chance to get a feel for the FX market. (

Do Your Research
When you trade, you never want to trade impulsively. You need to be able to justify your trades, and the way to find justification is by doing your research. There are many books, newspapers and other publications with information about trading the FX market. When choosing a source to consult, make sure it covers:

The basics of the FX market Technical analysis Key fundamental news and events

Since the FX market is primarily a technically-driven market, the best book that you can read as a new trader is one on technical analysis. The better you get at technical analysis, the better you can trade the FX market from a speculative perspective. (

When it comes to newspapers, seasoned foreign exchange traders typically refer to the Financial Times and the Wall Street Journal simply because they contain international news. Trading FX involves looking beyond mere economics, since politics and geopolitical risks can also affect a currency's trading behavior. Therefore, it's also important to keep up with major non-financial news sources such as the International Herald Tribune and the BBC (online, on TV or on the radio) for the big stories of the day.

Forex Leverage: A Double-Edged Sword

One of the reasons why so many people are attracted to trading forex compared to other financial instruments is that with forex, you can usually get much higher than you would with stocks. While many traders have heard of the word leverage, few have a clue about what leverage is, how leverage works, and how leverage can directly impact their bottom line.

What is leverage?
Leverage involves borrowing a certain amount of the money needed to invest in something. In the case of forex, that money is usually borrowed from a broker.Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up - and control - a huge amount of money.

To calculate margin-based leverage, divide the total transaction value by the amount of margin you are required to put up.

Margin-Based Leverage =	Total Value of Transaction
	Margin Required

For example, if you are required to deposit 1% of the total transaction value as margin and you intend to trade one standard lot of USD/CHF which is equivalent to US$100,000, the margin required would be US$1,000. Thus, your margin-based leverage will be 100:1 (100,000/1,000). For a margin requirement of just 0.25%, the margin-based leverage will be 400:1, using the same formula.

Margin-Based Leverage Expressed as Ratio	Margin Required of Total Transaction Value
400:1	0.25%
200:1	0.50%
100:1	1.00%
50:1	2.00%

However, margin-based leverage does not necessarily affect one's risks. Whether a trader is required to put up 1% or 2% of the transaction value as margin may not influence his or her profits or losses. This is because investor can always attribute more than the required margin for any position. What you need to look at is the real leverage, not margin-based leverage.

To calculate the real leverage you are currently using, simply divide the total face value of your open positions by your trading capital.

Real Leverage =	Total Value of Transaction
	Total Trading Capital

For example, if you have $10,000 in your account, and you open a $100,000 position (which is equivalent to one standard lot), you will be trading with a 10 times leverage on your account (100,000/10,000). If you trade two standard lots, which is worth $200,000 in face value with $10,000 in your account, then your leverage on the account is 20 times (200,000/10,000).

This also means that the margin-based leverage is equal to the maximum real leverage a trader can use. And since most traders do not use their entire accounts as margin for each of their trades, their real leverage tends to differ from their margin-based leverage.

Leverage in Forex Trading
In trading, we monitor the currency movements in pips, which is the smallest change in currency price, and that could be in the second or fourth decimal place of a price, depending on the currency pair. However, these movements are really just fractions of a cent. For example, when a currency pair like the GBP/USD moves 100 pips from 1.9500 to 1.9600, that is just a $0.01 move of the exchange rate.

This is why currency transactions must be carried out in big amounts, allowing these minute price movements to be translated into decent profits when magnified through the use of leverage. When you deal with a large amount like $100,000, small changes in the price of the currency can result in significant profits or losses.

When trading forex, you are given the freedom and the flexibility to select your real leverage amount based on your trading style, personality and money management preferences.

Risk of Excessive Real Leverage
Real leverage has the potential to enlarge your profits or losses by the same magnitude. The greater the amount of leverage on capital you apply, the higher the risk that you will assume. Note that this risk is not necessarily related to margin-based leverage although it can influence if a trader is not careful.


Both Trader A and Trader B have a trading capital of US$10,000, and they trade with a broker that requires a 1% margin deposit. After doing some analysis, both of them agree that USD/JPY is hitting a top and should fall in value. Therefore, both of them short the USD/JPY at 120.

Trader A chooses to apply 50 times real leverage on this trade by shorting US$500,000 worth of USD/JPY (50 x $10,000) based on his $10,000 trading capital. Because USD/JPY stands at 120, one pip of USD/JPY for one standard lot is worth approximately US$8.30, so one pip of USD/JPY for five standard lots is worth approximately US$41.50. If USD/JPY rises to 121, Trader A will lose 100 pips on this trade, which is equivalent to a loss of US$4,150. This single loss will represent a whopping 41.5% of his total trading capital.




Trader B is a more careful trader and decides to apply five times real leverage on this trade by shorting US$50,000 worth of USD/JPY (5 x $10,000) based on his $10,000 trading capital. That $50,000 worth of USD/JPY equals to just one-half of 1 standard lot. If USD/JPY rises to 121, Trader B will lose 100 pips on this trade, which is equivalent to a loss of $415. This single loss represents 4.15% of his total trading capital.

Refer to the chart below to see how the trading accounts of these two traders compare after the 100-pip loss.

-	Trader A	Trader B
Trading Capital	$10,000	$10,000
Real Leverage Used	50 times	5 times
Total Value of Transaction	$500,000	$50,000
In the Case of a 100-Pip Loss	-$4,150	-$415
% Loss of Trading Capital	41.5%	4.15%
% of Trading Capital Remaining	58.5%	95.8%
Figure 1: All figures in U.S. dollars

Excessive Leverage Can Kill
With a smaller amount of real leverage applied on each trade, you can afford to give your trade more breathing space by setting a wider but reasonable stop and avoiding risking too much of your money. A highly leveraged trade can quickly deplete your trading account if it goes against you as you will rack up greater losses due to bigger lot sizes. Keep in mind that leverage is totally flexible and customizable to each trader's needs. Having an aim of trading profitably is not about making your millions by the end of this month or this year.