AN INTRODUCTION TO FOREIGN EXCHANGE RATE

Cost of Money

Modern economies are dependent upon their national currency. It allows the determination of the value of goods across all countries. The foreign exchange rate can be termed as the cost of one currency compared to another currency. For example if you require US dollars and you have British pounds, you can exchange one British pound for $1.52.

The History of U.S. Foreign Exchange Rates

All the world currencies used to be determined by gold reserves. It meant that any paper money issued by a government had to be equivalent to the same amount of gold held in reserve by that government. During the 1930s, the United States set the dollar’s value at a level of $35 to an ounce of gold. After the Second World War, other countries started basing their currency’s value on the US dollar. Since the U.S. had a set value to their dollar, it was simple for other currencies to use the same calculation.

The U.S. inflation rate increased, lowering the value of its currency. This made other currencies more valuable compared to the dollar and the US had to make a decision regarding their currency’s value. It was then determined that the value of the dollar would be reduced and the value of an ounce of gold was placed at $70. The U.S. removed the gold standard completely in 1971. This meant that its currency value was determined by market forces only.

Exchange Methods

Governments of different countries make use of two main systems to determine its exchange rate. These are pegged and floating currency exchange rates.

Floating Rate

• A floating exchange rate is determined by market factors. This means that a country’s currency is valued at the rate buyers are prepared to pay for it. The basis for this valuation is supply and demand which has driving forces such as inflation, foreign investment and other economic factors. This is not a perfect system as countries with unstable economies often suffer under the supply and demand economic law.

Pegged Rate

• A pegged rate is a fixed system whereby the rate is set and maintained artificially by a government. This rate generally suffers no fluctuation.

• National banks have to hold huge amounts of foreign currency to ride the waves of supply and demand. In the event that there is a sudden demand for a specific currency, the central bank has to release sufficient currency to meet that demand.

There are many determining factors related to foreign exchange rates. Those who wish to trade in this market should be aware of these factors.

Automated Currency Trading – An Indispensable Tool In Earning Consistent Profits

Forex is the shortened word derived from two words: Foreign Exchange. The Foreign Exchange is the exchange of one currency for another. Hence, Forex currency trading is the exchange of a foreign currency. The understood part is ‘in order to make significant profits.’

Forex currency trading wasn’t always as easy to get into as it is today. Before the barriers were broken down and tossed aside in the Forex market, smaller investors who wanted to compete in Forex currency trading couldn’t.

It was the banker’s world and wannabe traders weren’t even allowed to play on the same playground by reason of lack of funds and lack of the tools needed to find success with Forex currency trading.

By now, when you surf the Internet and see the word Forex, you may also see the words currency pair along with it. Just know that the currency pairs are what Forex currency trading consists of. You are taking pairs of currency – and they are always in pairs, never singles – and you’re either buying those currencies or you’re selling them.

Some currency pairs are more popular than other currencies and you may see those referred to as the ‘majors.’ This is information that you will need to know a lot about when you want to be a part of Forex currency trading, so learn as much as you can about currency pairs.

Learn all the currency pairs, but concentrate mainly on the ones that trade most often and then when you’re ready to start in Forex currency trading, trade only those currencies you have become knowledgeable enough to trade.

Your main focus in Forex currency trading should be obtaining a currency that is going to go up above the other currency. It’s sort of like a horse race. When you’re at the track, you want to bet on the horse that you know the history on and feel is a winner. The same principle applies to Forex currency trading. You want the pair that’s going to come in a winner.

How do you know which currency is going to come in the winner? You go over your charts, you study trends until the images are imprinted on your eyelids when you fall asleep. A strong trend is what the banks knew and followed in the beginning when other smaller investors weren’t trading and the trend is what you need to follow as well in Forex currency trading.

Automated Currency Trading – Advantages of Using Automated Currency Trading to realize your dreams

Automated Currency Trading is a very common way of learning how the Forex markets work.

Many people who have tried trading Forex themselves have either given up completely due to the amount of money they have lost, of simply because trading Forex is not as simple and straight forward as they thought it would be.

Not to worry though! Before you get those sweaty palms and that distinct twitch in your right cheek thinking about your personal experience with Forex trading, there is another way!

Im sure you have heard or read about Automated Currency Trading? Nope?
Well to make a long story short, Automatic Forex Trading in basic terms means you are using advanced, but simple to use software to make the buying and selling decisions for you.
So, basically you do not have to trade yourself. Just let the machine do it for you…

Im sure if you Traded Forex before you might have some doubts or concerns, even questions like: “Does this really work?”
The answer is YES it does work. However – don’t you just love that word sometimes? – there is a catch to it!

Nearly all amateur traders want to make loads of money, today! So did I when I started trading.
If you speak to any seasoned Forex trader you will find that it is not about making massive amounts of money right from the start. That is the easiest and best way to go broke quickly!
The ultimate goal is to make consistent gains first. Once you understand and apply that, it’s only a matter of increasing the leverage in order to make more money.

For example, of the two methods below, which one would you say is the safest way to make say 100pips per day:
1. Make 1 trade and take your 100 pips in one go.
2. Make 5 trades and take 20pips ( plus the spread ) on each trade during the day.

Well, I think option 2 is much safer than option 1! What do you think? If you can get option 2 right, as I said, it’s just a matter of increasing your leverage ( $ per pip ) and you are making more money straight away.
when I lost money or did not make money, my mentor always said: “sloooowly catch a monkey…” Which means, take your time and get the basics right first before you try and make a lot of money.

“So how does this tie in with Automatic Forex Trading?” you may ask…
Well simply put, learning to trade Forex is not as down-to-earth as it may sound, no matter who says what or what you may have read on the internet!

You either need a mentor who will charge you whatever he is not making in the markets while showing you how to trade, or you need something that is going to cost you much less, like Automated Currency Trading software. And again, there are loads to choose from so be warned: Not all of them work!
There are a couple of tried and tested Automated Currency Trading software packages many people are using with much success. I will give you some examples in a moment, but first I want to tell you WHY they might be the right starting place for you!

Automated Currency Trading Software allows you to:

-Use multiple systems at the same time. ( What a great idea! ) This is like having a pair of specialist traders instead of just one. Not all of these systems have been programmed to work the same way, so putting all of your money on one is just silly in my opinion. Spread the risk between a couple of them, or start using one Automated Currency Trading System and use only a small % of your capital AFTER you have tested it on a demo account. Invest in a second system when you start making money.

-You do not need any trading experience. The software is designed to do the work for you. Install it and let it run. ( Having some Trading experience or at least knowing what it is about does help, and this is where the software will help you loads. )

-Automated Currency Trading Software is unaffected by the traders psychology. If you have ever tried Forex trading yourself you would know how much more difficult it is trading real money oppose to a demo account. Automatic Forex Trading Software removes these emotions entirely and executes profitable trades without you having to do anything.

-Take the guess work out of the equation with Automatic Forex Trading! The software knows what it should do and does not miss a trade wondering if it should take it or not.

-Ideal if you want to learn how to trade Forex by studying what it is doing when taking a trade.

-24 Hour trading! The markets never sleep and there is no reason why you cannot let your own computer do the work for you while you are away watching TV, at work or even asleep in bed!

In general most people who are looking into buying an Automated Currency Trading System simply want to make sure they know what they are doing and that they will be making money, not losing it.

And that is great. I like that too. But, as with anything in life, you test any system yourself before throwing lots of money at it allowing it to buy and sell as it pleases. I use to start out with a demo account first and make sure everything works well before putting real money on the line. Something to consider.

Most new traders make the same mistake. They jump into the guts of a new system without understanding how it works. After they have failed, again, they sit back and wonder why they have lost their money…
Most of these Automated Currency Trading Systems come with online and telephone support. Use it! Why would you waste time and money if you do not have to? Someone else already has done that so you cant skip that part and get right to making money. There is a system to it so use it and be patient. Remember: “slooowly catch a monkey…”

To recap what we have covered then:

There are plenty of Automatic Forex Trading software on the market. Many work, many do not. Do your homework very well before you buy or have a look at the ones I mentioned here.

If you want to learn how to trade and you do not have the time to sit in front of a computer for 8+ hours per day, especially if you do not have loads of cash you can chuck at your brokers, then Automatic Forex Trading might be the way you want to go.

Even when you do get yourself one of these systems, make sure you test them before you start trading real money. Learn how the software and settings work and use the support they give you if you are not sure.

The History Of Forex Exchange

The lack of sustainability in fixed foreign exchange rates continues to be a potential hardship for commercial companies that do business globally. However, for investors and financial institutions it continues to represent significant new opportunities. The size of foreign exchange markets today is bigger than the world’s stock and bond markets combined, with more than $ 3 billion US traded daily.

Mankind has been buying, selling and exchanging goods and services for thousands of years. In the beginning, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged the establishment of more generally accepted means of exchange at a fairly early stage in history. In different economies, beads, produce, stones and so on served this purpose at various times, but before long metals- mainly gold and silver- established themselves as an accepted means of payment as well as a reliable indices of value.

Prior to World War I, most central banks supported their currencies with convertibility to gold (known as the “Gold Standard”). Although paper money could always be exchanged for gold, in reality this did not occur often. This fostered among some elements of society the (incorrect) notion that there was not necessarily a need for full cover in the central reserves of the government. At times, a sudden increase in the supply of paper money without gold to back it led to rampant inflation and resulting political instability (Germany in the early 1920’s was a famous example of this). To protect local national interests, foreign exchange controls were increasingly introduced in a (usually futile) attempt to prevent market forces from punishing fiscal irresponsibility.

Near the end of World War II, the Bretton Woods agreement was reached in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as a way to avoid the destabilizing monetary crises that were a feature of economic life prior to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD 35/oz and fixing the other main currencies to the dollar.

However, this system came under increasing pressure as national economies moved in different directions during the 1960s. While efforts were made to keep the system functioning as intended, eventually it collapsed, The decision of the Nixon administration to take the US off the gold standard in August of 1971 meant that the dollar was no longer suitable as the sole international currency at a time when it was under severe financial pressure as the result of large increases in domestic spending and the expense of pursuing the Vietnam War.

Nonetheless, the idea of fixed exchange rates of some kind continues to live on. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, known as the European Monetary System. This system all but collapsed in 1992-93 however, when economic pressures forced the devaluation of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro starting in 2001.

Robotic Forex Trading: Brokers Review

A number of companies offer you automatic foreign currency brokerage products and services. In the following post, you will find a brief reviews:

What forex trading brokers deliver automatic solutions?

GFT Forex trading is definitely an automatic foreign currency brokerage, whose DealBook FX 2 computer software supplies the investor both a demo and also a reside currency trading investing device within the currency marketplace. This foreign exchange investing software program supplies the investor direct admission to some of the tightest spreads, via a well balanced, standalone foreign currency dealing system, 24 hours each day.

The DealBook FX2 computer software shows stay, dealable charges, real time data, cost-free real-time global and economical news, foreign exchange charts, far more than 65 specialized indicators, and the ability to create the investor’s very own indicators.

GCI Economic Ltd., yet another automatic foreign currency brokerage, presents investing computer software that tracks real time rates in 20 main currencies, live charts, and instant earnings and reduction account tracking. The software program is offered being a demo also. Industry orders are confirmed in seconds at price ranges clicked on or accepted through the customer.

The FX3K can be an on-line automatic dealing and dealing program utilised by automatic foreign currency dealers. The FX3K on the web dealing surroundings involves instant quotes, charting, specialized analysis resources, and news. FX3K integrates the customer, dealer, back workplace and program administrator functions. Merchandise functions consist of higher speed execution off customer orders and the capacity to monitor instant margin availability, net exposure and revenue and reduction on all open positions. FX3K has chat capabilities to enable trader- trader conversations.

The COESfx Level 1 trading Program is utilized by automatic currency trading brokerage service as an Electronic Currency Network for your execution off best prices for buyers and sellers of foreign exchange. It provides traders live and executable prices, thereby resulting in making every single participant a market maker. Traders acquire access to “greatest bid/best offer” quotes directly from price providers and other traders. COESfx pricing is based on a number of partners from the network like banks, Futures Commission Merchants (FCM’s), Introducing Brokers (IB’s), fund managers and other traders on its Electronic Currency Network.

 

Forex Strategy System

Exchange of a nation’s currency for that of another is Foreign Exchange (FOREX). The foreign exchange market is a largest non-stop financial market in the world where currencies of different nations are traded. This Forex market is bigger than three times the aggregate amount of the US Equity and Treasury markets combined. This is not the traditional market as there is no physical location or central trading location. It is operated on a global network of banks, corporations and individuals trading one currency for another. Foreign exchange market conditions can change at any time in response to real-time events.
The purpose of investing in Forex trading is to earn profits from foreign currency movements. Forex trading is always done in currency pairs. Two currencies that make up an exchange rate are called currency pair. Investors who trade currency pairs need very fast buy and sell Forex signals. Without these Forex trading signals, it is difficult to decide market conditions in terms of entry or exit in the market. These Forex signals and trade alerts will indicate you for going out or coming into the market. Many Forex companies, who have been involved in this kind of business, have developed forex sms signal services. Several Forex signal providers got a “free test” also that is really beneficial.
Initial investors don’t go for in details; they often rely upon one or two technical signals to decide when to buy and when to sell a currency pair. When they get a good understanding of Forex market, they start to use Forex signal software to decide when to pick up a forex entry point and forex exit point. It is not very difficult to find a automatic Forex signal indicating when to buy and when to sell a currency. An investor should compare his investment to alternative options. It is wise to buy currency you expect an increase in value relative to the currency you are selling. In an open trade, a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position
To gain high profits in a Forex trading, you should use a Multi-Target Exit Strategy. This strategy is based on providing the customers with multiple acquiring profit and stopping losses.  This Forex trading strategy allows you to enter multiple Take Profit and Stop Loss levels.  This Forex strategy also requires that the trader follows the trade in real time.  A Forex trading strategy with a high profit percentage rewards you mentally also as it will boost you up for further trade and will make it enjoyable. A string of profits will increase your morale.
In Forex trading system, it’s not obligatory to buy some currency to sell it later. There are situations for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD). A technical analysis is also made that presumes all the information about the market and further fluctuations in prices. They too consider factors, economic, political or psychological.

The Simplest Way To Trade Foreign Exchange Using Mechanical Signals

It was not till lately the average financier could take part in the forex market. Over 1.5 trillion bucks are traded on a regular basis in the foreign exchange market, which makes it terribly interesting for any financier. The reality is only 95% of Foreign exchange traders ever see a penny when it comes to currency trading.

The majority of the cash is soaked up by massive speculators and central banking institutions. Whether or not you are new to the foreign exchange market or are a longtime Foreign exchange trader , traders are always looking for new trading methods and systems. There’s always a large amount of different viewpoints when it comes to trading systems offering exit and entry points. A large amount of them don’t work, but yet at the same time a large amount of them do. Automated currency trading occurs for one or two reasons. One, not everybody is in front of there PC twenty-four hours per day and able trade at the most vital times.

Second , any one new to Currency exchange who finds it tricky to observe the foreign-exchange markets may be looking out for a way to automate the process so they don’t have to work out the foreign exchange market for themselves. Often Foreign exchange signals suppliers send their signals thru email, SMS, or thru a charting software program. Once the signal is received, if the account is a managed one, the signal will immediately execute the trade, if not a telephone call to the trading desk or a click of the mouse from a dealing system will also execute the trade. What to have a look for in a definite Foreign exchange trading method. When looking for a trustworthy Currency exchange signals supplier, the first thing to test for is an excellent history of success.

If there is not any hard information showing their trading success, then there likely isn’t much money to be made and there signals are not worth the money anyway. A telephone number to call for support or to raise questions is good too. Having a telephone number listed shows credibility in the trading programme and they are prepared to share with you real results and their experiences. There are lots of trustworthy currency trading systems available. Finding the best one could be a challenging task.

Ensure there is lots of support as well as an exemplary record. There’s nothing else daunting than using a trading program that doesn’t generate results.

Trading the foreign exchange market has become highly regarded in the previous couple of years. But how troublesome is it to be successful in the foreign exchange trading arena? Or let me rephrase this question , how many traders achieve consistent worthwhile results trading the Currency exchange market? Unfortunately few, only five % of traders achieve this goal. One of the most important reasons of this is as Currency exchange traders focus in the wrong info to make their trading calls and fully forget the most vital factor : Price behaviour. Most currency trading systems are made off technical indicators ( a moving average ( MA ) crossover, overbought / oversold conditions in an oscillator, and so on. ) But what are technical indicators? They’re just a collection of info points plotted in a chart ; these points come from a mathematical formula applied to the cost of any given currency pair.

To paraphrase, it is a chart of price plotted in an alternative way that helps us see other facets of cost. There’s a crucial implication on this definition of technical indicators. The proven fact that the readings acquired from them are primarily based on price action. Take as an example a long MA crossover signal, the price has gone up enough to make the brief period MA crossover the long period MA generating a long signal. Most traders see it as “the MA crossover made the price go up,” but it occurred the other way around, the MA crossover signal took place as the price went up. Where I am attempting to get here is that at the end, price behavior dictates how an indicator will act, and this could be considered on any trading call made. Trading choices based mostly on technical indicators without taking price action under consideration will give us less correct results. For instance, again a long signal generated by a MA crossover as the market approaches a very important resistance level. If the price suddenly starts to bop back off that significant level there isn’t any point on taking this signal, price action is enlightening us the market does not want to go up. The majority of the time, under this circumstances, the market will keep falling down, disregarding the MA crossover. Don’t misunderstand what I’m saying here, technical indicators are an important facet of trading. They help us see certain conditions that are otherwise hard to see by watching pure price action. But when it comes to tug the trigger, price action incorporation into our foreign exchange trading system will certainly put the odds in our favor, it’ll generate higher chance trades.