If you want to learn foreign exchange, you can find plenty of courses. These courses are mostly designed to help the novice traders. They are designed in a way that they train your systematically. You will not have to worry about setting a schedule and learning according to that. A good learning course will always ensure that you are learning the right amount each day without giving you too much to grasp in a day. This will ensure that you are learning things efficiently without wasting time and money.

However, if you do not want to spend money on these courses, you can always take the traditional route of using the world wide web to dig into the free information acquirable over the internet. You can easily search the world wide web for everything that you need to know and can find it out. However, before doing this, just make sure that you have prepared a list of concepts and strategies that you want to learn. By doing this, you will learn systematically and will have easier time researching.Many new traders change and quit business within first few days. There are various reasons for that. one of the major reasons is their demand of understanding of forex trading strategies. The problem is that when you do not comprehend different strategies, you can't define your strategy successfully. If you begin experimenting too much, you will not only be risking your money but will also be wasting a lot of time. Therefore, the ideal way to refrain unfortunate is to comprehend different strategies and then develop your own strategy.

You can also speed up your learning process by following the forums and blogs that are dedicated to forex trading information. By subscribing to these forums and blogs, you will receive regular updates of any activity that goes on that platform. You will have the chance to communicate with others interested in the same business. Moreover, you will have a chance to keep yourself updated with the latest information without having to search for it each other day. You will continue getting this information in your email inbox unless you unsubscribe.

And among the most commonly asked question among those wishing to explore what forex has to offer would be “How exactly does forex trading work?” While there are many different ways to trade in forex, there are certain basic components to the process. Here is a look at those processes:On the most basic of all levels, forex trading entails the buying and selling of currency at a profit. Forex is an anachronism for Foreign Exchange Market and the “market” is essentially the entire globe. Essentially currency can be bought (exchanged actually) in any and all manner of varieties.

For example, Canadian dollars would be exchanged for Italian lira. This is done with the hope that the exchange will be a profitable one at the end of the closing day. In short, if you “purchase” lira anp the value of the exchange back is 15% more that your entry into the market, you will have prefabricated a profit.

That is, the $1000 Canadian is exchanged for lira and the return exchange would be for $1150 Canadian. Obviously, if the exchange at the end of the day were 15% then the trade would be a loss. Since you will be working with a broker and a trading platform to make trades, you will need to cover the fees associated with your operations.

Most importantly, it is necessary to point out here that forex trading is exactly that – day trading. You will not be acquiring the currency to hold onto for the long term. That would just be another mode of investing which is fine – but it is not trading which means it might never come with the large profit potential that a day trade offers.
Because of this you need to be sure that you are making wise trading decisions in order to cover all costs and risks.

One way this can be done is through employing a reliable and effective trading strategy. The other method would be to follow along with movements on the charts showing activity which trades can be based on. Making the appropriate entries and exits in the market also contribute to such goals.

In order to enhance the potential of effective outcomes, it would be ideal to work with a reliable trading platform which can help you make the most effective use of your trading capital.

Market size and liquidity

The foreign exchange market is one-of-a-kind because of:

* its trading volume,
* the extreme liquidity of the market,
* the massive number of, and variety of, traders in the market,
* its geographical dispersion,

* its long trading hours – 24 hours a day (except on weekends).

* the variety of factors that affect exchange rates,Average regular international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study Triennial Central Bank Survey 2004

* $600 billion spot
* $1,300 billion in derivatives, ie
* $200 billion in outright forwards
* $1,000 billion in forex swaps
* $100 billion in FX options.

Exchange-traded forex futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. Forex futures volume has grown rapidly in current years, but only accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Top 10 Currency Traders % of overall volume, Might 2005 Rank Name % of volume 1 Deutsche Bank 17.0 2 UBS 12.5 3 Citigroup 7.5 4 HSBC 6.4 5 Barclays 5.9 6 Merrill Lynch 5.7 7 J.P. Morgan Chase 5.3 8 Goldman Sachs 4.4 9 ABN AMRO 4.2 10 Morgan Stanley 3.9

The ten most active traders statement for nearly 73% of trading volume, according to The Wall Street Journal Europe, (2/9/06 p. 20). These massive international banks continually wage the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell (“ask”, or “offer”) and the price at which a market-maker will purchase (“bid”) from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually only 1-3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203. Minimum trading size for most deals is usually $1,000,000.

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to state 1.2100 / 1.2300 for transfers, or state 1.2000 / 1.2400 for banknotes or travelers’ cheques. Spot prices at market makers vary, but on EUR/USD are usually no more than 5 pips wide (i.e. 0.0005). Competition has greatly increased with pip spreads shrinking on the majors to as tiny as 1 to 1.5 pips.

Trading characteristics

There is no single unified foreign exchange market. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are traded. This implies that there is no such thing as a single dollar rate – but rather a number of different rates (prices), depending on what bank or market maker is trading. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs.

Top 6 Most Traded Currencies Rank Currency ISO 4217 Code Symbol 1 United Says dollar USD $ 2 Eurozone euro EUR € 3 Asian yen JPY ¥ 4 British pound sterling GBP £ 5-6 Swiss franc CHF – 5-6 Australian dollar AUD $

The main trading centers are in London, New York, and Tokyo, but banks throughout the world participate. As the Asian trading session ends, the European session begins, then the US session, and then the Asian start in their turns. Traders can react to news when it breaks, rather than inactivity for the market to open.

There is tiny or no ‘inside information’ in the foreign exchange markets. Exchange rate fluctuations are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in GDP growth, inflation, interest rates, budget and trade deficits or surpluses, and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the massive banks have an important advantage; they can see their customers order flow. Trading legend Richard Dennis has accused central bankers of leaking information to hedge funds. [1]

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.

On the spot market, according to the BIS study, the most heavily traded products were:

* EUR/USD – 28 %
* USD/JPY – 17 %
* GBP/USD (also called cable) – 14 %

and the US currency was involved in 89% of transactions, followed by the euro (37%), the yen (20%) and sterling (17%). (Note that volume percentages should add up to 200% – 100% for all the sellers, and 100% for all the buyers). Even though trading in the euro has grown considerably since the currency’s creation in Jan 1999, the foreign exchange market is thus still largely dollar-centered. For instance, trading the euro versus a non-European currency ZZZ will usually involve two trades: EUR/USD and USD/ZZZ. The only exception to this is EUR/JPY, which is an established traded currency pair in the interbank spot market.

Market participants

According to the BIS study Triennial Central Bank Survey 2004

* 53% of transactions were strictly interdealer (ie interbank);
* 33% involved a dealer (ie a bank) and a fund manager or some other non-bank financial institution;
* and only 14% were between a dealer and a non-financial company.

Banks

The interbank market caters for both the majority of commercial turnover and massive amounts of speculative trading apiece day. A massive bank might trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank’s own account.

Until recently, foreign exchange brokers did massive amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems, such as EBS, Reuters Dealing 3000 Matching (D2), the Chicago Mercantile Exchange, Bloomberg and TradeBook(R). The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

Commercial Companies

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade evenhandedly small amounts compared to those of banks or speculators, and their trades often have tiny short term impact on market rates. Nevertheless, trade flows are an important bourgeois in the long-term direction of a currency’s exchange rate. Some multinational companies can have an unpredictable impact when very massive positions are covered due to exposures that are not widely known by other market participants.

Central Banks

National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves, to stabilize the market. Milton Friedman argued that the ideal stabilization strategy would be for central banks to purchase when the exchange rate is too low, and to sell when the rate is too high – that is, to trade for a profit. Nevertheless, central banks do not go bankrupt if they make massive losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times apiece year in countries with a dirty float currency regime. Central banks do not always achieve their objectives, however. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992-93 ERM collapse, and in more current times in South East Asia.

Investment Management Firms

Investment Management firms (who typically manage massive accounts on behalf of customers such as pension funds, endowments etc.) use the Foreign exchange market to assist transactions in foreign securities. For example, an investment manager with an international equity portfolio will need to purchase and sell foreign currencies in the spot market in order to pay for buys of foreign equities. Since the forex transactions are secondary to the actual investment decision, they are not seen as speculative or aimed at profit-maximisation.

Some investment management firms also have more speculative specialist currency overlay units, which manage clients’ currency exposures with the aim of generating profits as well as limiting risk. The number of this type of specialist is quite small, their massive assets under management (AUM) can lead to massive trades.

Hedge Funds

Hedge funds, such as George Soros’s Quantum fund have gained a reputation for aggressive currency speculation since 1990. They control billions of dollars of equity and might borrow billions more, and thus might overwhelm intervention by central banks to support nearly any currency, if the economic fundamentals are in the hedge funds’ favor.

Retail Forex Brokers

Retail forex brokers or market makers handle a minute fraction of the total volume of the foreign exchange market. According to CNN, one retail broker estimates retail volume at $25-50 billion daily, which is about 2% of the whole market. CNN also quotes an official of the National Futures Association “Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically.”

All firms offering foreign exchange trading online are either market makers or assist the placing of trades with market makers.

In the retail forex industry market makers often have two separate trading desks- one that actually trades foreign exchange (which determines the firm’s own net position in the market, serving as both a proprietary trading desk and a means of offsetting client trades on the interbank market) and one used for off-exchange trading with retail customers (called the “dealing desk” or “trading desk”).

Many retail FX market makers claim to “offset” clients’ trades on the interbank market (that is, with other larger market makers), e.g. after buying from the client, they sell to a bank. Nevertheless, the massive majority of retail currency speculators are novices and who lose money, so that the market makers would be giving up massive profits by offsetting. Offsetting does occur, but only when the market maker judges its clients’ net position as being very risky.

The dealing desk operates much like the currency exchange counter at a bank. Interbank exchange rates, which are displayed at the dealing desk, are adjusted to incorporate spreads (so that the market maker will make a profit) before they are displayed to retail customers. Prices shown by the market maker do not neccesarily reflect interbank market rates. Arbitrage opportunities might exist, but retail market makers are efficient at removing arbitrageurs from their systems or limiting their trades.

A limited number of retail forex brokers offer consumers direct access to the interbank forex market. But most do not because of the limited number of clearing banks willing to process small orders. More importantly, the dealing desk model can be far more profitable, as a massive portion of retail traders’ losses are directly turned into market maker profits. While the income of a marketmaker that offsets trades or a broker that facilitates transactions is limited to transaction fees (commissions), dealing desk brokers can generate income in a variety of ways because they not only control the trading process, they also control pricing which they can skew at any time to maximize profits.

The rules of the game in trading FX are highly disadvantageous for retail speculators. Most retail speculators in FX demand trading experience and and capital (account minimums at some firms are as low as 250-500 USD). Massive minimum position sizes, which on most retail platforms ranges from $10,000 to $100,000, force small traders to take imprudently massive positions using extremely high leverage. Professional forex traders rarely use more than 10:1 leverage, yet many retail Forex firms default client accounts to 100:1 or even 200:1, without disclosing that this is highly uncommon for currency traders. This drastically increases the risk of a margin call (which, if the speculator’s trade is not offset, is pure profit for the market maker).

According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) “Even people running the trading shops warn clients against trying to time the market. ‘If 15% of day traders are profitable,’ states Drew Niv, chief executive of FXCM, ‘I’d be surprised.’ “

In the US, “it is unlawful to offer foreign currency futures and option contracts to retail customers unless the offeror is a regulated financial entity” according to the Commodity Futures Trading Commission. Legitimate retail brokers serving traders in the U.S. are most often registered with the CFTC as “futures commission merchants” (FCMs) and are members of the National Futures Association (NFA). Potential clients can check the broker’s FCM position at the NFA. Retail forex brokers are much less regulated than stock brokers and there is no endorsement similar to that from the Securities Investor Protection Corporation. The CFTC has noted an increase in forex scams.

Speculation

Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, many economists (e.g. Milton Friedman) argue that speculators perform the important function of providing a market for hedgers and transferring risk from those people who don’t wish to bear it, to those who do. Other economists (e.g. Joseph Stiglitz) however, might think about this argument to be based more on politics and a free market philosophy than on economics.

Large hedge funds and other well capitalized “position traders” are the main professional speculators.

Currency speculation is considered a highly suspect activity in many countries. While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not, according to this view. It is simply gambling, that often interferes with economic policy. For example, in 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 150% per annum, and later to devalue the krona. Former Malaysian Prime Minister Mahathir Mohamad is one well known proponent of this view [7]. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.

Gregory Millman reports on an opposing view, comparing speculators to “vigilantes” who simply help “enforce” international agreements and expect the effects of basic economic “laws” in order to profit.

In this view, countries might develop unsustainable financial bubbles or otherwise mishandle their national economies, and forex speculators only prefabricated the inevitable collapse happen sooner. A relatively swift collapse might even be preferable to continued economic mishandling. Mahathir Mohamad and other critics of speculation are viewed as trying to deflect the blame from themselves for having caused the unsustainable economic conditions.

The FOREX market involves two or more countries; it usually takes place on a worldwide scale. Most of all transactions in the FOREX market are done through a broker, such as a bank.Forex trading has seen an astounding increase over the last few years and is also turning out to be the go to make money from home business for many people who had never heard of forex until recently. Also on the rise as of late is options trading, these two trading activities are the hottest thing going on the internet. The depressing part is many of these new traders are going to lose their money for demand of knowing even the fundamentals of how to trade, online or offline.What does the FOREX market consist of?

There are many different transactions that occur within the FOREX market. The people involved in the FOREX market are usually trading massive amounts of money and are quite usually involved and interested in the trade of liquid assets that one can either sell or purchase at a fast speed. This makes the FOREX market quite larger than the stock market. Through the FOREX market, investors are healthy to trade daily, even twenty-fours a day and even in the rare occasion, trading can be done on weekends.

Lots of money traded

In the year 2004, an estimated 2 trillion dollars was released as being the average regular trading volume within the FOREX trading market alone. This as you can see is an extremely massive number for any regular transactions taking place, this is also leaves a picture of a lot of money changing hands apiece and each day! If you have never thought about online trading maybe you should take a look at what it has to offer you and your future.

Merits of Applying Technical Indicators

So many investors this day are encouraged to trade via the aid of some of these technical indicators. We find apiece technical indicator being governed by some mathematical formula. It is clear at this point that these technical indicators are accurate but at the same time do not give the detailed analysis. What we get with these tools is that they can pinpoint various faults within the market and we can act based on those.The sole purpose of each trader in the market is to make profit and create wealth. It is important to take note of the fact that the currency market is very volatile. What this achieves is by creating a rapidly changing price adjustment volatility can occur at any time. This leads us to the fact that only technical tools can give us a clear understanding on when to purchase or sell a financial instrument.

Getting used to these technical indicators can mean a wide range of defineable data, as you should have it in your mind that most of the computation involves derivations. This explains simply that the theory isn’t clear enough. For this reason we continue to advise traders to check on other technical indicators in a bid to get a clearer picture of market movements. This is a huge step towards knowing how accurate your position choice would turn out.

Simple Truths about Technical Indicators

The financial market is a broad spectrum; hence whichever market you selected on trading, it would be wise to get a firm foundation that directs your path going forward. We recommend that you choose technical indicators that have been proven to yield positive results for clients and also would suit your trading personality.

Pattern Indicators: This are moving averages, PSAR and Moving Average Convergence &Divergence are just a few within that category. Using technical indicators of this type requires that you critical analyze the movements and tendencies of the given currency, thus shaping your trading decisions.

Momentum Indicator: These types of indicators are oscillators and are used in defining lower oversold zones and upper over-bought regions. You can as well derive some other information like dictating signals for new trend. Some indicators found on this category include Relative Strength Index, Stochastic, CCI et al.

Volume Indicators: This type of indicators measures the volume in the market. Some examples of volume indicators include Power index, Money Movement Index, and a lot more.

Volatility Indicators: Indicators in this group scout for ranges that pinpoint the amount that sits under the movements and price action. Bollinger Bands and the Envelopes are in this category.

Getting to know the various types of technical indicators out there would go a long way in fermenting your trading prowess.

A pip is really a percentage in point that is a transferable unit associated with measure, much more useful with regards to comparison than the dollar profit number. It is utilized in price quotes so that a measure from the change in foreign currency prices might be understood.

The pip might be the smallest measure of movement within the quoted price. Prices for many currencies are offered to four decimal locations, so one pip is actually 0. 0001 units of the quote currency. (The exception might be the Asian yen that is much less valuable and it is therefore quoted in order to 0. 01 yen.)The quote currency might be the second of the 2 currencies in a couple. So for example within the pair EUR/USD, the quote currency might be the US dollar.Some brokers are actually beginning to estimate to five decimal places and there is certainly some argument among traders regarding whether a pip after that becomes 0. 00001, or whether this will just be complicated, since it means that some brokers’ pips had been 10 times as massive as others.

If you go to Forex forums you will notice traders all the time talking about their own profitable trades when it comes to pips. They probably tell you the number of dollars they created, because that depends upon their position size which someone else would not always replicate. Speaking in conditions of pips does mean that they need not reveal the size of the account.

For example you might see a trader talking about making 200 pips profit on the trade in EUR/USD. They could become an amateur that traded a micro pip or perhaps a professional bank investor who traded hundreds and hundreds of pips. Each might have prefabricated 200 pips, however the value of those pips might have been vastly various.

To know just how much it would imply to you when it comes to profit and reduction, you simply grow by 0. 0001 depending on the currency. The result would be the profit in the actual quote currency.

The quote foreign currency for EUR/USD might be the US dollar. So when the trader is in standard plenty of $100, 000, 1 pip is 0. 0001 by $100, 000, or $10 for apiece pip. If he or she prefabricated 200 pips revenue, that is $2, 000 for apiece pip. But if he or she uses $10, 000 from the profit of $200, and a $1, 000 minuscule pip, it’s just $20 profit.

Nevertheless, if you presume 100 times influence, he has only needed to place up $10 regarding his $20, $100 regarding his $200 revenue or $1, 000 regarding his $2,000 revenue. So it’s a evenhandedly good return with no wonder he is actually haunting the discussion boards to boast relating to this trade!

Anyway, you can notice how it is an advantage in order to talk in conditions of pips.
Additionally, of course, the actual currency itself might vary. The quote currency probably always is the actual dollar. If that example trade was at EUR/GBP then the actual 200 pip profit will be 20, 200 or even 2, 000 UK pounds. If you wished to know what that was in US dollars you will need to add another step to the calculation, multiplying through the current exchange price.

This might sound confusing in the beginning but when you start trading, even within a demo account, you are going to soon comprehend how to talk in Forex trading pips.

One of the biggest factors that effect the exchange rates are interest rates. Interest rates are set by the Bank of England and affect not only your savings accounts but also the amount you would pay back if you were to take a loan out. The Bank of England assess whether or not the interest rates should be increased once a month and effects the exchange rates because when it rises, people start to move their financial assets and investments to that country in order to get the highest rate of return. It’s hard to keep up-to-date with these changes but a currency calculator will show you the value of a certain currency against another one. As they do that, the value of the currency rises because of the increased demand for it whilst the supply remains the same. Likewise if the interest rates fall, individuals and companies will move assets away from that country which means selling the currency.

The CPI, or Consumer Price Index, is another indicator which measures the change in value of goods and services. CPI is separate into two sections, the core-CPI and non-core CPI. The former is the most commonly tracked report and does not include food and fuel costs as these fluctuate massively apiece month. Similarly, the Consumer Confidence Index (CCI) is another report that is released monthly and is a massive survey of approximately 5,000 American consumers that is used to assess the direction that economy is going. As consumer spending accounts for around half of the majority of economies, it is a major indication of the health of the economy.One of the more common things that effect exchange rates is the Gross Domestic Product aka GDP that is released in three separate reports. The first stage is the release the advance numbers followed by the preliminary numbers and then lastly the final numbers with the latter coming out on the final day of apiece quarter. This is another example of an indicator that is used to view the health of the economy and find out the rate at which it’s growing which would obviously have on a knock effect on the exchange rates.

The final important indicator are the trade balances, a set of statistics with regards to the trade balances with nearly each country. This is important because the larger the volume a country exports, the greater the demand for it’s currency. Similarly, the more a country imports from a particular country, the greater the value of that nations currency.

A currency calculator is a useful online tool that grants you to check the value of the currency against that of other nations. By using this currency calculator you can check regular or even hourly to ensure that you know exactly what it is worth and can even use the currency calculator in order to try and profit from the volatile market. Other sources of information when it comes to currency conversion are online comparison sites which will grant you to compare what apiece bourgeois is willing to give you for the money they are offering.It can be difficult for small businesses in particular to manage the risks associated with foreign exchange and dealing with companies abroad. Whilst a currency calculator will wage you with the changing values of any particular currency, it can not predict whether it’s value will rise or start during the period you will be affected. It is doable to secure you rates using foreign exchange contracts which involves making an agreement to purchase or sell a currency at a future date, at the price it is at now. This provides you with the endorsement that you might need to ensure that falling values won’t take into your profits but on the other hand does guarantee that you won’t benefit should the prices change in your favor. Many companies do this to refrain taking what is essentially a gamble on the outcome.

The forex market is undoubtedly the biggest marketplace on earth. I mean, where on connector can you find a market that has 4.1 trillion dollar turnover on a regular basis? Also, the crazy thing about this market is it’s open around the clock from Monday to Friday. Do you comprehend what those things mean? It simply means there are numerous people doing transaction at any given time during the earth’s rotation. As a result, you can see people from different background making money (and losing money). The bad news is there are a lot of people claiming to be a pro and trying to sell you their knowledge/service and this makes finding a real pro much more difficult. Separating a real professional trader from the regular profitable traders takes time, a lot of time. This is especially true because we don’t actually see those traders in mortal unless we live nearby the residence of the trader because we can then verify his whether his reputation is real or fake.Is there a way to find a great forex trader with great reputation? Of course there is. One of the ways to swiftly refer a great trader is through his credibility. If you want to evaluate a trader’s credibility you should begin with trying to find out whether the trader have worked in some huge companies or not. If the trader has worked in a hedge fund or other financial company it means the trader already have a study in this industry and of course many people have entrusted their money to this trader in the past. Televised appearance is another way of knowing whether the trader have a great reputation is good or not. You might think having appeared in TV does not guarantee that the trader is good or not. That way of thinking is valid but you will most likely find the answer yourself. Will you go with a profitable trader with great reputation or with a regular profitable trader? You should also remember that if you stick with great people you have a chance to become great too and that’s the rule in life. Moreover, if the trader is acknowledged by other huge obloquy in the industry you know that you are dealing with world-class mentor. The success rate of his students is also another way to know for sure whether the mentor is great or not. You know the rule, great instructor produces great student.

Getting a great trader as your mentor is crucial in your forex trading success because things are usually much easier to do when you do it the right way from the very beginning. If you get yourself an average profitable trader you might end up average or even less but if you stick with great mentor you have a chance to also end up great or at least superior than average. In the business world you will get what you pay for. If you are only willing to pay for less money you will get yourself a one bed hotel room but if you are willing to pay for top dollar you will get a VIP room and enjoy all the benefits that the other rooms don’t offer.

Traders use this method when they anticipate the continuation of current price movement or trend, or to take advantage of swift spikes in price at the release of news information.

The basic concept of straddle trading is very straightforward – you move for price to consolidate into a tight range (as it usually does before news releases), then you place a pending purchase order just above the range and a pending sell order just below the range and you move for one of them to trigger when the price breaks out of the range. The intent is that price will move sharply in one direction when the news is releases and because you have pending orders in both directions, you will make a profit no matter which direction the breakout occurred to.This sounds like a great strategy in theory, but unfortunately it’s never that easy in practice. The biggest problem with this strategy is the false breakout, where the price breaks out slightly in one direction to trigger your trade and then suddenly reverses and breaks out in the other direction. This happens way too often and it’s usually the downfall of straddle trading strategies. In the case of news releases, false breakouts usually occur because you either put the pending orders too soon (ie. not close enough to the release of the news) or because the news release did not have enough of an impact on the market to cause a sharp move in the currency.

The latter occurs when the figures that are released are very close to what’s expected, for example – if all the analysis’s anticipate the unemployment figures to be x and the actual released figure is x, then there’s no major impact on the currencies, but if the released figures are dramatically different to what the analysis expected, it usually results in sharp movements (or corrections) in the currencies. The saint is to straddle the market when the variance between the expected and the actual figures is huge enough to cause strong spikes in the charts, but unfortunately this all happens way too swiftly for the manual trader.

The StraddleTrader Pro system was developed to help reduce some of the issues associated with the straddle method.