Archive for November 7, 2007

The Mindset of The Successful Currency Trader

Let me begin by saying that if you want to get into forex or currency trading online, DO NOT begin by buying a guide or a training course.

Too many low-life’s out there pander to the uninformed by selling them overpriced guides and manuals, sometimes for a few thousand dollars each.

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Major Forex Currency Pairs

Forex currencies are always traded in pairs. For example, EUR/USD, which means Euro over US dollars, would be a typical pair. In this case, the Euro, being the first currency can be called the base currency. The second currency, by default USD, is called the counter or quote currency. As mentioned, the first currency is the base, therefore in a pair you can refer the amount of that currency as being the amount required to purchase one unit of the second currency. So, if you want to buy the currency pair, you have to buy the EURO and sell the USD simultaneously. On the other hand, if you are looking to sell the currency pair, you have to sell the EURO and buy the USD. As a part of forex trading strategies the most important thing is to understand the currency pairs, or more precisely in a Forex transaction, what currency you will be selling or buying. Having good knowledge of major currencies of the world is important while learning forex trading.

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Basic Money Management for Forex Trading

There can be and are whole books written on the topic of money management, but I like to keep things simple so I will just give you a few simple rules that you can follow to implement successful money management in your forex trading.

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Forex Currency Trading - How Does Forex Currency Trading Work?

Foreign exchange trading, or often referred to as Forex (FX) currency trading, is simply the trading of foreign currencies in a forex market. This form of trading was initiated by the event of the Breton Woods Agreement in 1944. This agreement was an effort to keep cash from draining out of the war-ravaged Europe. The U.S. Dollar served as the basis for currency values, which was pegged to the price of gold. When this agreement had collapsed, the modern era of foreign exchange then emerged in 1971. By then the U.S Dollar was no longer convertible to gold, signaling an increase in currency market volatility and trading opportunities, however, during the collapse of the Smithsonian and European Joint Float agreements in 1973, the true free-floating currency exchange began to transpire. With the aid of the computer technology, the reach of the exchange marketplace was extended. Values of major word currencies today have become independent of each other.

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The British Pound At An All Time High

The British pound has recently been enjoying its status in the forex trading system as it reached an all time high in September 2007, hitting $2.03 conversion against the dollar. As the oldest currency used in the world today, the British pound has a valid status that no other currency has, but its strength has cemented its status as one of the most important currencies on the foreign exchange market today. However, financial crises and the rate of inflation looks set to propel it upwards yet again in the near future, or so financial experts are suggesting.

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The Euro At An All Time High

Having been launched in 1999 and in general circulation since 2002, the Euro is one of the most prominent currencies in the world at the moment. With over 360 million people using it across Europe, the Euro is one of the best-known currencies and, as such, plays a large part in the forex trading system. At the moment, owing to several factors and events that have effected world currencies on the whole, the Euro is at an all time high, thus throwing many individuals’ currency trading strategies into disarray!

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The US Dollar At An All Time Low

It is no secret that the US dollar is at an all time low because there has been so much press on the subject in recent months. It does not take forex information in abundance to work that out. Although recent levels of over $2 against the pound are by no means alarming dips because it has declined steadily over the last few months, the fact it has reached an all time low is especially problematic for the global economy give that the currency was introduced in 1785.

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