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Hello there, I would like to take just a minute to congratulate you on your choice to learn more about trading Forex. The Forex markets are a wild and wonderful place to be, and if you are new to it, it can be also be very frustrating. I hope to help smooth out the bumpy road that lies ahead of you. If you have some experience with trading the Forex markets, you might find these few initial blog posts to be old news to you, but if you are new to trading, these posts will help to familiarize you with the markets. Whatever the reason is that brings you here, you are about to begin a fabulous journey. The Forex markets can be a source of income for many, and for some, it’s a source of incredible riches. I would like for this blog to help get you turn trading into a source of income, and with a little extra work, become a source of incredible riches. There is no reason that trading Forex can’t be how you get “rich”, but it won’t be an easy road to travel. This is a road fraught with frustrations and an occasional sense of “what the hell am I doing here”. If you are willing to but in a little work and a little time, together we will turn you into a successful Forex trader. My goal through this blog is to teach you everything you need to know about trading Forex. You will what to do and what not to do. You will learn how to read the charts and how to take profitable trades. You will learn about money management and how to handle your losses. This is an exciting time, I wish you the best of successes! Best Regards Russ

Now that you have considers trading the Forex markets, it might be a good idea to know what it is you are trading. The word Forex is short for Foreign Exchange. Known as the Forex market, FX, and Currency markets, what you are trading is the exchange rate between 2 currencies. Let’s look at an example of this. Let’s say you are traveling from the US to Canada. While at the airport you decide to change your 100 US dollars to Canadian dollars. In return for your US dollars you receive 100 Canadian dollars (this conveniently occurred when the two currencies are even). You tour Canada and finally it’s time to go back to the US. You forgot that you had the 100 Cad in your pocket as your Canadian host was generous enough to pay your way. While at the airport you exchange your 100 Canadian dollars back to Us dollars, but because the exchange rate has changed while you were away, you now get 101 US dollars back. You made $1 by selling one currency (US dollars) and buying another (CAD dollars), holding on to it as the exchange rate changed, and then buying back your US dollars. You’re a currency trader and didn’t even know it! Buying and selling currencies and waiting for the exchange rates to change between the two is how we make money in the Forex markets. The amount of change is small, we wait for 100ths of a cent change, but this is enough to make big money in the markets. We use leverage to magnify these small changes and we use chart analysis (generally) to determine when to buy or sell. These market changes happen every second. There is always movement in the markets and there is always an opportunity to make money. We can choose from a list of currencies we want to compare, we call these “Currency Pairs”. We can trade the US Dollar against the Great Britain Pound, we would then be trading the USD/GBP. We will get into the details of this in a future post, but for know you have a very good idea what the Forex markets are all about. Best regards Russ

In order to trade in the Forex markets we need something that increases or decreases in value. Pairing 2 currencies together gives us this market value fluctuation we are looking for. Each currency can be exchanged for another currency, and this rate of exchange changes on a per second basis. The changes are very small, only 100ths of a cent, but that is all we need to make money trading the Forex markets. When two currencies are paired together, we are looking for the rate of exchange to change in comparison with one another. As one gets stronger, the other one weakens in comparison. As they say, it’s all relative. It’s a kind of tug of war between the currencies that are paired together. Let’s use the US dollar against the Canadian Dollar as an example. The US dollar is denoted as USD and the Canadian Dollar is denoted CAD. Paired together it looks like this: USD/CAD. The first currency is called the Base Currency. The second currency is called the Quote Currency When you have a price associated with a currency pair, the Base Currency is always valued at 1 and the quote currency is the price. For example, the pair USD/JPY is at the price of 82.23. What that means is 1 US dollar will buy you 82.23 Japanese Yen. Currently, the GBP/USD is 1.6113. This means that 1 Great Britain Pound will buy you 1.6113 US Dollars. These values are the current rate of exchange, or exchange rate, or price. There are Major pairs and Cross pairs. The major pars, or “Majors”, all include the USD.  Often, a major currency pair will be referred to as the currency without the US Dollar. If the price quote for the Euro is x.xxxx, that will, be default, mean the EUR/USD. Currency pairs that do not include the US Dollar are known as Cross Currencies. Some examples are the EUR/GBP. The GBP/JPY, and the AUD/CAD. Best regards Russ

There are 2 major ways to analyze the markets to make our decisions to enter a trade. They are: 1. Fundamental analysis 2. Technical analysis There is nothing saying that you have to analyze the markets in only one of these ways, you can combine the 2 and get a better overall feel for what the markets will do. Let’s talk a little about each kind of market analysis. Fundamental Analysis This way of evaluating market movement is based on what is going on in the world. Taking a look at the economic, political and social forces will give you a good idea how the market will move. As a country’s employment numbers drop, the value of their currency will also drop. If a country has a record month in regards to exports, that county’s currency will rise in value. Weighing all the different economic factors give you an impression of the strength or weakness of a currency. In a nutshell, fundamental analysis is a way of analyzing a currency through the strength or weakness of that country’s economy. There are regular new releases that are marked on Forex financial calendars, in fact there are websites devoted just to these fundamental economic new releases. It’s good to be aware of these upcoming news releases before you trade. They are scheduled and shouldn’t be a surprise when they happen. Some of these news releases can make the markets react very quickly as opposed to the longer term economic data that move the markets slowly and over a longer period of time. One of my favorite places to go for these regularly scheduled fundamental news releases is Forex Factory. http://www.forexfactory.com/calendar.php The tell you when the release will happen, what country it comes from (US news will affect the US dollar) and what significance the report will have on the markets behaviour (ranging from a strong influence to no influence). Technical Analysis Technical analysis is the study if the markets past price. This is usually done on a chart. Looking at historical price data can give you an idea of where price is likely to move in the future. Viewing a chart shows you where price has been and using chart analysis, you can determine where price is going. You can see where the market had a tough time moving, or where the market turned around. You can see if the market is currently trending or if it is undecided and just bouncing up and down. Using this information, trades have developed methods to interpret future price movements and profit from it. In the above example, you can see where price was having a hard time getting any higher. If we connected the tops, we would have a “trendline”. This is a common tool in technical analysis. As the price broke through the line, there is a good chance the price would continue to go farther. Some good technical analysis there! Technical analysis is preferred by almost all traders. It’s instant and it works on all timeframes. If you want to be in and out of the market within a day for short term gains, technical analysis is the only good way to do that. The tools at the disposal of a technical trader are called “indicators” and they are out there by the thousands. More isn’t always good, especially when it comes to technical analysis, but that is a topic for another blog post. Best regards Russ

One of the biggest attractions to the Forex markets is the leverage FX brokers are able to provide. Traders are leaving Stocks and Futures to trade Forex because the leverage is so attractive. So what is leverage? Leverage is a magnifier. It takes the money you want to put up to trade and magnifies its value. Trading currencies means you are buying and selling with the expectation that the exchange rate changes in your favour. These changes are 100ths of a cent so they don’t amount to much, but with the power of leverage you can make a small change magnify into a larger change. Right now in the US, brokers are able to offer you leverage of 50:1 What this means is your buying power is magnified 50 times. If you want to trade $1000 worth of currency (1 micro lot), you only need to trade with $20 of your own money (margin). This $1000 of currency equates to roughly 10 cents per pip of movement. With the power of leverage you can really make a trade worth something. Outside of the US, brokers are able to offer you up to 500:1 leverage!! This means to control the same $1000, all you need is $2! They call it “lending” or “borrowing” from your broker, but there isn’t any money that really gets borrowed or lent. Beware! Leverage works great when a trade goes your way, but it’s equally as powerful when the market moves against you. If you can gain 10 cents a pip, you can lose 10 cents a pip. The more you read about Forex, you will find many sites call leverage a “ Double Edged Sword” and this really is the case. Leverage is what can make trading currencies so profitable, but please, use its power wisely! Best regards Russ