Fundamental Analysis & Trading during data releases

Can one make money in forex trading using fundamental analysis? In my opinion, "No". Fundamentals don't really work in forex trading. I can give 100s of examples. Fundamentally speaking a currency should strengthen when the interest rate of a country rises. But we normally see market moving in opposite direction.

How many times have we seen market moving in opposite direction after the data? How many times have we seen a positive US data making US dollar weak or negative US data making US dollar strong? We normally read in the financial journals "US Dollar strengthened due to..." or " US dollar weakened due to growing concern over Job market" I agree that if a job less rate is going up it signifies that the economic condition of a country is deteriorating. But why does currency get stronger next day after the data? Does economy stop shrinking in a day? We read in news wire that Euro and GBP fell due to Dubai crisis.

But next day both started moving upwards. Is the crisis over in 1 day? USD fell after 9/11 attack. But after few hours the uptrend continued. I can give 1000s of examples for market moving in opposite direction of the data. This clearly shows how dangerous it is to trade based on fundamentals. I did not mean that one must ignore data releases. We always see good movement after data releases. I have listed some of the data that can move market well. One may ignore the data but not the timings. Use the data effect for taking a position or closing the positions. Move stop loss closer to market and secure your profits.

We hardly see any data changing the mid term trend of the market. We can only see data and news changing the short term trend. In forex short term means few minutes to 1 or 2 days. I do many 'low risk high reward' trades during data. If there is an important data from UK, I may sell GBP seconds before the data with 20 pips stop loss and 100 pips target. That is if mid term trend of GBP is down. If data is good, my stop may get stopped and I may lose 20 pips and if data is bad, I may make 100 pips or more. Be prepared for a sudden big move during data releases.

Either move the stop close to market to avoid a big loss or remove profit limit and go for big profits.

Trading using Expert Advisors or Robots

Emotional Management is the toughest job in forex trading and failure is the reason for most of the losses. Panic and frustrations cause more losses than the market moving against one's trades. Expert Advisor or Trade robot is a solution for those who wish to automate the trading. Meta Trader platform allows trades to automate trades using Expert Advisors. Many programmers have developed their own Expert Advisors to trade automatically.

If you search online for Expert advisors you may find 100s of Expert Advisors and many of them claim huge profits in short duration. If a robot can make quick profits, they can make quick losses too. One should choose a robot carefully and should not become a victim of scams. EA (as expert advisor is known) is normally a small file that is copied into the expert folder inside the MT4 folder. This runs at the background and opens and closes trades automatically. I have designed my own EA. I will be explaining how my robot works and the method to use the EA. This will be helpful to use other EAs in the market too.

EA is a small EX4 file. This is not an executable file. You can not install it. You just need to copy paste the file into the experts folder inside the meta trader folder. Normally MT4 gets installed inside program files in the C drive. So you need to click on my computer first and select C drive and then click on Program Files. You will find the platform folder there. Click on that and you will see a folder by name 'Experts' click on that and paste the .ex4 file into this folder. Restart the Trade Station.

You will see the ex4 file you copied under experts in the navigator window. If you don't see the ex4 file, click on the + sign next to Expert Advisor. You can attach the EA to all the currency pairs. Creator of the EA tells you to which currency pair the EA should be attached and which time frame the chart should be in. My EA can be attached to all the currency pairs and timeframe I recommend is 4 hours. To attach the EA to a currency pair, right click on the currency pair in market watch window and select Chart window. A chart will be opened.

If chart is already there in the chart window you may skip this step. Change the time frame by clicking on H4. Right click on the EA and select attach to a chart. Do the selection as seen in the image and click on OK.To run the EA make sure your Expert Advisor is turned on. If it is in Green, it means EA is running. If it is in red, it means EA is turned off.

Why do people lose in forex trading?

In my humble opinion, no one loses in forex trading because of the market moving against them. I cannot think of any other reason for people losing money in forex trading but for the reasons stated below: *

Over Trading. Opening too many positions or opening large quantity is considered as over trading. Do not open more than 3 currency pairs at a time. *

Trading with high leverage. If you trade with leverage of 1:50 or more chances are very high that you make big profits and lose everything in no time *

Buy High Sell Low. Traders take too much time to decide on the trade and when the currency pair reaches day high, all indicators may point northwards giving a buy signal. Never buy close to day high and never sell close to day low. I have heard many traders saying "I am very unlucky. The moment I buy the currency starts falling and the moment I sell it starts going up'. They experience this because they buy high and sell low, not because they are unlucky. *

Taking high risk for small profits. This is a very common mistake made by most of the forex traders. They keep taking small profits and when the market moves against them they hold on to the positions. They lose profits of 10 trades in 1 loss making trade *

Getting married to a position. Holding a loss making position for long time is called getting married to a position. Most of the people do this in equity market too. They may buy something at Rs. 100 and may hold on to it when it falls through 90,80,70,60...3,2,1 They will never cut loss. *

Scalping. Scalpers make too many trades and go for very small profits. They get in and out very quickly. I have never come across any scalper making money consistently in forex trading.. If you don't commit the above mistakes, you can be a sure winner in forex trading

Buying And Selling In The Forex Market

Today I would like to talk with you about a few very important rules of investing in the Forex market. If you follow these rules, you will most surely come out on the winning side in the long run.

Rule number 1 is never risk more money than you can afford to lose. No trader is perfect, you are going to have losing trades. There is no system you can learn that wins all the time. So expect to lose some money.

Rule number 2 is to cut your loses short and let your winners compound to greater gains. The secret to not losing your shirt is to use stop loss orders consistently and not let your emotions rule your trading. It's better to lose a little and get out of a trade than to hope that things will turn around and suffer a devastating loss. If you are using the proper techniques and strategies on how to trade, you can usually tell right away if your trade is going in the right direction. If it's not, get out of the trade. There are always more opportunities to get into the market and try again. So be a smart trader, not an emotional one.

Rule number 3 and probably the most important rule in trading Forex is to always use stop loss orders. Before you even consider starting any trade, you should have a good idea in your mind of the point at which you think a trade might be going in the wrong direction and set your stop loss order there, along with your entry order. This way you automatically prevent a potential loss from going too far. Stop loss orders are free. They don't cost you anything and they may save more than your piece of mind.

Rule number 4 is to know what your exit point will be before you get into a trade. There are many good reasons for this. It's easy to get sidetracked when you are doing live trading and get caught up in all the excitement. Chances of making bad decisions go up dramatically if you do not have a predetermined exit point.

Rule number 5 is to know when to quit. Don't become a gambler with your money. If you start having a streak of bad luck, get out of live trading and go practice with a demo account until you gain back your confidence.

Forex-FX intro

The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends.

The purpose of the foreign exchange market is to assist international trade and investment. The foreign exchange market allows businesses to convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars. Some experts, however, believe that the unchecked speculative movement of currencies by large financial institutions such as hedge funds impedes the markets from correcting global current account imbalances. This carry trade may also lead to loss of competitiveness in some countries.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

• trading volume resulting in market liquidity
• geographical dispersion
• continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 UTC on Sunday until 22:00 UTC Friday
• the variety of factors that affect exchange rates
• the low margins of relative profit compared with other markets of fixed income
• the use of leverage to enhance profit margins with respect to account size

As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks.According to the Bank for International Settlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion.Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

• $1.005 trillion in spot transactions
• $362 billion in outright forwards
• $1.714 trillion in foreign exchange swaps
• $129 billion estimated gaps in reporting

Sterling Falls in Forex Trading

Pound Sterling latest: Currency trading on the FX marketThe sterling is down in forex trading today as risk aversion becomes the story of the day.
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The GBPUSD is down 0.304% at 3pm GMT with 1 GBP fetching 1.6046 USD.The US stock market has opened lower, and that is pulling some of the fuel out of the fire for the risk trade, thus hurting the Pound. Pound Sterling is also suffering as financing worries become more apparent. GFT's Boris Schlossberg reports in GFTs FX360 on the issues facing the U.K. pound in currency trading on the FX market:

Cable was also kneecapped by yet another rejection by Cadbury of the Nestle takeover offer that weighed negatively on M and A flows. The rise of risk aversion weighed heavily on sterling which is highly sensitive to risk flows given UK economic dependence on capital markets. The fears of a financing crisis is the one factor that could scuttle the nascent recovery in UK economy especially at a time when the BoE considers the possibility of exiting its 200 Billion pound quantitative easing program.

Forex Trading Legal Way for Individual Resident Indians

They are all fools of Axis Bank who lacks the knowledge. Go through several officers in a bank and all will give you different varying decisions. Then go to other bank and there also talk to several officers. I also did similar as you did and marked that 100% confidence was not found in anyone's answers. I have my own account in Axis Bank and challenged them in open to come out and debate on this matter. They were so much worried when I sent the complaint to their bank's corporate department and then they personally with Head of Bank too came to my house and begged in front of me to take back the complaint. I just don't talk like you, I believe in pratical results and evidence. So, I hereby confirm that forex trading is allowed if you have account in any country other then India. Because the jurisdiction of India cannot interfere niether the RBI can interfere with the matter which does not falls in their jurisdiction. As far as it concerns to having an online account with a broker in any country other then India, I am 100% percent sure that no one can stop any individual. RBI or you are not GOD who whatever says is final. Understood? So stop arguing and accept it. That's all !This was about forex trading. Now let's talk of remittance which is different subject then forex trading subject. Remittance as per the Liberalized Remittance Scheme(LRS) is allowed. In LRS, there are several articles and sections under which you can remit money to foreign countries. Once you send money to foreign country then over there again the jurisdiction changes. After the remittance is once successfull , then RBI or Indian Law cannot interfere in the matter, as what ways and where is the money remitted from India was used. Once it's gone then whether you throw it anywhere or use at any place will only be applicable to the law of that particular jurisdiction and then niether Indian Constitution nor RBI is allowed to take any action in matters of foreign jurisdictions.Here is an example of legal way of forex trading for Indian Citizens:Open an online share trading or forex trading or currency trading account whose registered Regulatory office is based anywhere out side Indian Jurisdcition. Then open an International Personal Banking Account in the same country bank where you hold trading account and I would like to say that it is allowed as per the LRS scheme FAQ point number 36 mentioned on http://www.rbi.org.in/scripts/FAQView.aspx?Id=53Once you open a trading account AND also an international personal banking account in jurisdiction which falls outside India, then you can first of all send the money to you international personal banking account using the LRS scheme. And once it's remitted the powers of Indian jurisdiction is over. Then from that bank account simply transfer to your trading account which is also in the same country and does not falls in Indian Jurisdiction. This is the way and legal way to do forex trading using the LRS scheme and within legal limits.

How does one profit in Forex

Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general, Easy-ForexT offers trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.

About Currency Trading

As we know, there is only one way to make money trading; buy lower and sell higher (or sell higher and buy back lower for short sales). To buy lower and sell higher prices must trend higher from where you bought (or lower from where you sold). If prices never trended there would never be an opportunity to make a profit! Furthermore, without up and down price movements institutional traders (hedgers) would have no need to insure themselves from price changes and trading volume would disappear! What this means is that price trends are the essence of all-profitable trading.
The realization that trends are the essence of profitable trading makes the idea of trading currencies very exciting, because currencies are the worlds best trending markets! Countless studies of trend following systems prove that currency trends are the most consistent and often the most profitable. Regardless of the type of trend following system used; long term, intermediate term or short term, currencies invariably outperform all other markets including stocks, bonds and other commodities. It should come as no surprise that some of the worlds' most successful traders are currency traders.
One-reason currencies trend better than every other market is because of their macro-economic nature. Unlike many commodities whose supply and demand fundamentals can literally change with the weather, currency fundamentals are often less random and more predictable.
In summary, Forex Trading is not conducted on a regulated exchange and as a result there are additional risks involved, and this type of trading may not be suitable for all individuals, but currencies remain one of the best all around markets. Currencies represent the worlds' largest market place, and have the most powerful and persistent price trends.