The Best Way To Be Successful in Forex?

What are the best ways to become a successful forex trader? These results are taken from a Moneytec poll that had over 6,000 respondents and are ordered by most votes first. My comments follow each result.

1.Study by yourself and get experience - Over 45% of the respondents said this was the best way. I have to totally agree with this and is what I've been doing for the last year. One point I'd like to make is that you don't have to do it all by yourself. If you can find a trading partner who has the same drive and motivation as yourself, this could be even more beneficial.

2.Develop your own system - Over 25% voted for this but I think this goes hand in hand with #1. If you are studying by yourself and want to get more experience, developing your own system is an absolute must even if you never use it.

3.Learn from a mentor - 15% said this. I think I've stated my views on mentors clearly in previous posts. Mentors are what you make of them.

4.Open a managed account and monitor it for education - 5% voted for this. I personally have never tried this method. I did just hear last week that you can open a managed account with Raghee Horner called Autotrade FX. You open your own account at TradeDirectFX and it mirrors her every buy and sell order. Interesting concept but I think difficult to learn from. You see all the buy and sell orders but no rationale behind them.

5. Hire a portfolio manager - This was voted as the best way by 2.65% of respondents. I don't get it. I'd rather be self-sufficient and how do you know who to trust.

6.There is no way to become continually profitable in forex - 1.51% negative respondents to this one. The jury is still out on this for me personally. I hope I don't come to this conclusion.

7.Get signal alerts by subscription or live from a guru - 1.09% voted for this. I don't know if this helps or not. I don't like it though. Who do you trust with the never-ending list of scammers out there. If you want to listen to someone else though, there are plenty of sites where you can get free trade calls and technical analysis. In fact, there are just too many out there to choose from.

8.Get Analytical reports and Make your Judgement - Less than 1% chose this response. Sound very similar to #7. The analytical reports are basically going to tell you which way to trade so making judgment calls here is probably kept to a minimum. Not for me.

9.Buy Software or Strategy Description - Less than 1% chose this response probably because this too is very similar to #2, developing your own system. If you are going to trade forex with TA, you need software and you need a strategy.

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The Brokers Commission

Forex Pips and Spreads

The pip is the smallest measure of price move used in forex trading.

For instance, if the currency pair EUR/USD is trading at 1.3000 and then changes to 1.3010, the pair is said to move by 10 pips. It is an acronym for Percentage in Point (pip).

In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one/10,000th of an exchange rate or in USD/JPY, it is one/100th, likewise you can find for others.

Spread on the other hand is the difference between buy (long) or sell (short) for a currency pair. The bid/offer spread is the difference between the buying (bid) and selling (offer) price. The ask prices are the immediate execution prices for quick buyers or traders and bid prices are for quick sellers.

In Forex market you will find brokers who generally do not charge any commission from you. But they get their money by charging you a spread. As spread is the difference between the bid price and the ask price for any currency being traded, the broker will add this spread onto the price of the trade and keep it as their fee for trading.

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Foreign Exchange Trading

In a tide of new regulatory measures issued by the Commodity Futures Trading Commission (CFTC) most of the unscrupulous Forex firms have now disappeared or been forced to change their tune and marketing tactics ~ some have even gone underground. In the present climate of new regulations, is it time to take a new look at FX trading and the aspiring traders who are making Forex a profitably managed alternative investment?

Most US based hedge funds agree~ IT IS TIME! During an interview with a US based futures trader that worked for an overseas "fund", I learned some very interesting things... There are small private groups of investors that are formed outside the purview of the CFTC or other countries regulatory agencies that are currently making 20-30% per month, each and every month ~ and have been for the last 11 months. One of these groups initially began in Germany for small investors and was marketed under the new business slang of a High Yield Investment Program (HYIP) which has since been sold to a Grant Andrews and other "e-gold" enthusiasts (mostly tax protesters)...

But the Main trading group has gone on to become a legitimate trading company in the United States with the most experienced trader becoming the manager and director of operations. Accepting investments as low as $250 is undoubtedly an enticement to the retail investment sector and a maximum investment of $25,000,000 deservedly an enticement for accredited investors. As of this writing (November 10, 2003) the company has began operations as an Forex Pool conducting it's trading business ONLY with registered FCM's in the US.

I was personally honored to grace the hallowed halls of a VERY PRIVATE trading operation managed from the State of Missouri (of all places), witnessed an incredible spectacle of 6 traders making a bit over 8% on a Monday in a period of 4.5 hours or so and was delightedly impressed to say the least.

They told me it was happening long before it actually did... What do they know that I don't? It turns out that the Director has over 18 years of trading experience in private (what WAS he doing there?) for his own knowledge, interest and experience. It turns out that he and a few colleagues found a way to express a trending market BEFORE the market actually began to trend... Now that is something to read about...

Although the knowledge wasn't overly remarkable in percentage terms on a monthly basis (these are professional traders making 5-50% per month ya' have to understand...) the utilized trading system is a combination of money management techniques and market volatility measures which, when combined in certain combinations... provide a steady flow of profit while limiting drawdowns (losses), limiting risk and increasing profitability...

Can it be true?... 17% per month for 11 months now and I'm told it's increasing to 20-25% with an essential programming change that doesn't change the past trading except, if it had been done in the past, it would have returned the higher amounts... the software wasn't capable of doing so and now it is! Incredible... Do I believe it? I like the 17% per month... My stocks are killing me! It turns out that there are Three (3) groups of two (2) traders utilizing different trading styles - which together provide a stable rate of return according to ones own risk profile, whether it be conservative, moderate or aggressive... Even after the 25% incentive fees are deducted each week...

They are also interviewing other traders, some claiming returns way out there in ga-ga land... But don't sweat it, the Director has his feet on the ground, his interest is long-term and stable minded. So, it turns out that 25% per month is possible - with just Forex trading... mix in a certain management style that limits risk by guaranteeing your principal and feeds a reserve fund for contingencies... and twalah! You've got yourself the very best in Alternative Trading Capital Management... Extra funds to actually live life with! And isn't that what this is all about?

[Partnership With ForexGen]

ForexGen offers three types of business partnerships:

*Introducing Broker
*White label
*Money Manager

ForexGen Introducing Brokers, White Label and Money Manager holders are recognized as a strategic business partners. The main focus of our service is to satisfy our partner's needs in order to deal with a qualified service and gain a huge income sharing plan.

[ForexGen] provide appropriate services satisfying the needs of all business partner's specified situation and requirements.

Choosing Forex Broker

With currency trading becoming ever more popular, the number of brokers is growing at a rapid rate. What should one look at when deciding which broker to open live account with? These are the important points to consider.

Spread

Because currencies, unlike futures and stocks, are not traded through a central exchange, the spreads can be different depending on the broker you use, so it's well worth checking a few out before you open an account. Most brokers publish live or delayed prices on their websites so you can compare spreads, but check if the spread is fixed or variable. A fixed spread means exactly that - it will always be the same no matter what time of day or night it is. Some brokers use a variable spread, which might appear to be nice and small when the market is quiet, but when things get busy they can widen the spread which means the market must move more in your favor before you start to make a profit. Fixed spreads are generally slightly wider than the variable spreads are when at their narrowest, but over the long term fixed can be safer.

Execution

Some brokers will show live prices on their trading platform, but will they honor them when it comes to pushing the Buy or Sell button? The best way to find out is to open a demo account and give them a test drive. This will also give you the opportunity to see what the speed of execution is like - when you want to buy, you want to buy now, not sit around waiting for ten minutes whilst your order is confirmed!

Trading Platform

Good trading software will show live prices that you can actually trade at, not just indicative quotes. It will offer Limit and Stop orders, and ideally will let you attach these to your entry order. One-Cancels-Other orders are another useful feature - they mean you can set up your trade and then leave the software to get on with it. And the most important feature of all - can you actually understand the platform? Having all the bells and whistles is of no use if you can't use them, so again, get a demo account and give it a go.

Support

Forex is a 24 hour market, so your broker should offer 24 hour support. You might not be trading at 3am, but that could be what time it is in your brokers head office on the other side of the planet, so make sure there will be somebody there to pick up the phone if things go wrong. You should also check if you can close positions over the phone - essential in case your PC or internet connection crash at a critical moment.

Backing

Finally, before opening an account do a little homework and find out about the company. Forex brokers are regulated, but that doesn't mean they all have equal backing. If the market collapses, you want to know that they've got the reserves to cope with it and will still be around when you decide to withdraw your cash. If a broker is elusive when it comes to questions about their parentage and financial backing, then steer clear.

In Conclusion

Choosing a forex broker isn't difficult, but don't rush the decision. Check out a few, and always get a demo account first to make sure you're happy with the way everything works before sending off your opening balance.

[ForexGen Money Manager]

An individual who is responsible for the entire financial portfolio of another individual or another entity. A money manager receives payment in exchange for choosing and monitoring appropriate investments for the client.

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Commodity Dollars Slip as Risk Appetite Wanes, Canadian Unemployment Rate Hits 3-Year High

The commodity currencies - which include the Canadian dollar, New Zealand dollar, and Australian dollar – all fell back on Friday on a variety of factors. Waning risk appetite sapped demand for carry trades, which hurt commodities like oil and higher-yielding currencies, while benefiting lower-yielding currencies, such as the Japanese yen and US dollar. Disappointing data certainly did not help to prop the Canadian dollar higher, as the Canadian economy lost 34,400 workers during December after a loss of 70,600 workers in November. Furthermore, the unemployment rate jumped more than expected to a 3-year high of 6.6 percent from 6.3 percent, suggesting that domestic demand, and thus expansion, is bound to slow further.

Looking ahead to next week, most of the event risk will be contained to the US dollar and euro, but on January 14, the Australian unemployment rate is anticipated to pick up to 4.5 percent from 4.4 percent while the net employment change is forecasted to fall negative for the second straight month by 20,000. The latter report tends to have a greater impact on the Aussie since the figure rarely meets expectations and can lead to volatile short-term price action for the Australian dollar immediately following the news at 19:30 EDT. The other important thing to watch is the status of risk, as an increase in market-wide volatility could send the commodity bloc diving lower.

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US Dollar, Euro at Risk Ahead of Speech by Fed's Bernanke, ECB Rate Cut

The euro, US dollar, and Japanese yen face hefty event risk next week as the European Central Bank is anticipated to cut interest rates and Federal Reserve Chairman Ben Bernanke is scheduled to speak on the financial crisis and policy response. Based on past experience, comments by central bank chiefs tend to be some of the biggest market-movers out there, which should keep forex, stock, and fixed income traders on their toes.

* Federal Reserve Chairman Bernanke Speaks on Crisis, Policy Response - January 13

Federal Reserve Chairman Ben Bernanke is scheduled to speak in London at 08:00 ET on the financial crisis and policy response, and this could prove to be one of the biggest market-movers of the week due to its potential impact on risk sentiment. If Chairman Bernanke is bearish on prospects for the financial markets and global economy, his comments could have very negative repercussions for the stock markets, and we could see flight-to-quality spark demand for Treasuries, the US dollar, and Japanese yen. On the other hand, if he announces a new type of policy action or if he manages to inspire confidence that conditions will not get significantly worse, risky assets could rally.

* US Advance Retail Sales (DEC) - January 14

No surprises here: the Commerce Department is forecasted to report that US retail sales fell negative for the sixth straight month in December. This is particularly negative because the holiday shopping season is supposed to be a boon for retailers, but even the most aggressive discounting wasn’t able to offset the impact of a deteriorating labor market, tighter credit conditions, and a year-long recession. More specifically, advance retail sales are anticipated to have contracted 1.2 percent during the month, and excluding auto sales are expected to have slumped 1.3 percent. We’ve already heard disappointing results from a variety of sources, including Mastercard’s SpendingPulse survey, which showed that holiday spending tumbled 4 percent in December from a year earlier (excluding gasoline). As a result, another contraction in advance retail sales is likely, and these may mark a rather consistent trend through the first half of 2009 as well. As we saw with US non-farm payrolls, the impact of a disappointing result may be limited, as the Federal Reserve has already cut the fed funds target to a record low range of 0.0 percent - 0.25 percent and has no room to cut further.

* Australian Employment Change (DEC) - January 14

The Australian labor markets have tightened substantially over the past few years, as the unemployment rate dropped to multi-decade lows of 3.9 percent in February. However, after the Reserve Bank of Australia left interest rates at a 16-year high of 7.25 percent for much of 2008, the labor markets have shown signs of deterioration, along with domestic demand in general. While the RBA has since cut rates by 300 basis points to 4.25 percent, and will likely continue to cut rates through the end of the year, the Australian unemployment rate is anticipated to pick up to 4.5 percent from 4.4 percent while the net employment change is forecasted to fall negative for the second straight month by 20,000. The latter report tends to have a greater impact on the Aussie since the figure rarely meets expectations and can lead to volatile short-term price action for the Australian dollar immediately following the news at 19:30 EDT.

* European Central Bank Rate Decision - January 15

The decline in Euro-zone CPI estimates below the European Central Bank’s 2.0 percent target, steady increases in unemployment, and increasingly pessimistic consumer and business confidence all suggest that the central bank will do as the market’s expect: cut interest rates by 50 basis points to 2.00 percent to match the 2005 record low. This easily leaves the 7:45 ET announcement as one of the most important pieces of event risk this week, but traders will also have to look out for comments by ECB President Jean-Claude Trichet during his post-meeting press conference at 8:30 ET. Mr. Trichet is one of the most opinionated central bank chiefs around, and suggestions that the ECB will continue to cut rates have the potential to lead the euro far lower. On the other hand, if the ECB goes the route of the BOE and signals that they may leave rates unchanged during their next meeting, the currency could actually rally.

* US Consumer Price Index (DEC) - January 16

The release of the December reading of the US Consumer Price Index (CPI) could lead the term “deflation” to be used abundantly in coming weeks and months (one that became very popular in November, according to Google Trends). Indeed, CPI is forecasted to have plunged 0.9 percent during December while the annual rate is anticipated to have fallen negative for the first time since 1955 by 0.1 percent. Excluding volatile food and energy prices, though, core CPI may have risen a slight 0.1 percent during the month, leaving the annual rate to edge down to a more than 4-year low of 1.9 percent from 2.0 percent. Overall, the news could weigh on the US dollar if CPI does indeed fall negative.

[Partnership With ForexGen]

ForexGen offers three types of business partnerships:

*Introducing Broker
*White label
*Money Manager

ForexGen Introducing Brokers, White Label and Money Manager holders are recognized as a strategic business partners. The main focus of our service is to satisfy our partner's needs in order to deal with a qualified service and gain a huge income sharing plan.

[ForexGen] provide appropriate services satisfying the needs of all business partner's specified situation and requirements.

New Zealand Dollar Interest Rate Outlook Weakens Further

The New Zealand dollar pushed higher against the greenback for the fifth consecutive week as oil prices crossed above $50 a barrel for the first time in nearly a month. The rise in crude drove the commodity-based currency to test 0.6000 during the week, but the sharp pullback in global commodity prices paired with the lack of momentum to close above the psychological resistance continues to favor a bearish forecast for the kiwi-dollar.

The New Zealand dollar pushed higher against the greenback for the fifth consecutive week as oil prices crossed above $50 a barrel for the first time in nearly a month. The rise in crude drove the commodity-based currency to test 0.6000 during the week, but the sharp pullback in global commodity prices paired with the lack of momentum to close above the psychological resistance continues to favor a bearish forecast for the kiwi-dollar.

Meanwhile, deteriorating fundamentals paired with financial uncertainties is likely to weigh on growth for the $128B economy throughout the first half of the year, and as the Reserve Bank of New Zealand is widely expected to continue their easing cycle, the interest rate outlook could drag on the kiwi going forward.

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