Trading in Currency

Daily turnover in the world's currencies comes from two sources:

• Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.
• Speculation for profit (95%).

Most traders focus on the biggest, most liquid currency pairs. "The Majors" include US Dollar, British Pound, Swiss Franc, Japanese Yen, Euro, Canadian Dollar and Australian Dollar.

In fact, more than 85% of daily forex trading happens in the major currency pairs.

Moving Averages

Types of Moving Averages

One of the most widely used indicators - moving averages, help traders verify existing trends, identify emerging trends, and view overextended trends about to reverse. As the name suggests, these are lines overlaid on a chart that "average out" short-term price fluctuations, so you can see the long-term price trend.

A simple moving average weighs each price point over the specified period equally. The trader defines whether the high, low, or close is used, and these price points are added together and averaged, forming a line.

An exponential moving average weighs more recent price data in a different way. An exponential moving average multiplies a percentage of the most recent price by the previous period's average price.

A weighted moving average gives more emphasis to the latest data. It smoothes out a price curve, while making the average more responsive to recent price changes.

It can take a while to find the best combination of moving average and period length for your currency pair. The right combo will make the trend you're looking for clearly visible, as it develops. Finding that optimal fit is called curve fitting.

Usually traders start by comparing a few time frames for their moving averages over a historical chart. Then you can compare how well and how early each timeframe signaled changes in the price data as they developed, then adjust accordingly.

When you've found a moving average that works well for your currency pair, you can consider this as a line of support for long positions or resistance for short positions. If prices cross this line, that often signals a currency is reversing course.

Here's an example of how it works :

Longer-term moving averages define a trend, but shorter-term MAs may signal its shift faster. That's why many traders watch moving averages with different timeframes at once. If a short-term MA crosses your longer-term MA, it can signal your trend is ending - and time to pare back your position.

I hope this helps ! See below video for more info.

What is Forex Trading

Interesting two part video on Youtube on forex trading for beginners.

I hope you find them useful and informative :)

Part I



Part II

Forex for Beginners

Foreign Exchange or Forex is a globally trusted market used for the trading or exchange of currencies of different countries. It is the world’s largest financial market.

Tons of people from all walks of life are an active part of Forex or foreign exchange market. With the passage of each year, the Forex market is growing in size and becoming more accessible to the common people. It is the market of 21st century and people from all over the world are relaying on it to achieve their financial goals.

With the advancement in the technology and communication science, Forex has become a huge market but still it has more potential of growth and rise. In the years to come, it may become the trade of choice for many traders. The new generation of traders and investors is seeking exciting opportunities in Forex trade.

Foreign Exchange Education

Forex or foreign exchange trading is a very tricky and risky task. Without having proper training and education, one has very limited chances of success. The most important cause for the failure of Forex traders is their lack of Forex training and knowledge. A quality Forex Education or Training helps the Forex traders to improve their trading abilities and skills. Only a well educated or trained Forex trader understands the complexities and subtleties of Forex trade. Proper Forex training teaches the trader a sound trading strategy and an effective approach to currency trading. A qualified Forex trader can explore the opportunities much easily and extensively.

What should be done before forex market opens ?

A quality Forex training focuses on the market timing effect on trading and liquidity. The time when London market starts its proceedings is the busiest time of the market. The forex market’s startup time has a great effect on Forex market. No education or training system can neglect the importance of analyzing the effect of any Forex market’s opening and closing.

There is no hard and fast rule for Forex education. Success with Forex trading comes with experience, practice and learning new skills. With getting experienced, a trader get more disciplined and controlled in his emotions which is a must trait for Forex trader.