Beware Of The Typical Forex Trading Scam

It’s very easy for new forex trading investors to get taken in by some sort of forex scam or another. This can include just about any idea under the sun that scammers can come up with. Usually the realm of forex scams can include, software and e-books that ‘guarantee’ a profit in the forex market, an unscrupulous market maker that spikes costumer accounts so they can get their fees, general false advertising, and even those with fake sites that just take your money and disappear.

The nature of the currency market tends to leave new investors vulnerable to such scams, simply because it fluctuates a lot and little is known about the market by the general population. It’s up to investors to educate themselves on forex trading, just as they would before making any other investment if they expect to do well. This includes being aware of common scams. In 2001 the US Commodity Futures Trading Commission (CFTC) released nine tips investors in the forex market should keep in mind when looking for a broker:

• Stay Away From Opportunities That are Too Good To Be True
• Avoid Any Company that Predicts or Guarantees Large Profits
• Stay Away From Companies That Promise Little or No Financial Risk
• Be Wary of Trading on Margin Unless You Know What That Means
• Be Wary of Those Claiming To Trade in the "Interbank Market" because Its ‘Safer’
• Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise
• Scams Often Target Members of Ethnic Minorities
• Get the Company's Performance Track Record
• Anyone Who Won't Give You Their Background Isn’t Worth the Risk

Many forex scams, as is common with other types of scams, rely on getting dollar signs to appear in their victims eyes in order to pull off the scam. If at any point in the decision making process you start to feel yourself getting overly excited by the prospect of making what seems like easy money, then set your plans aside for the time being and come back to them later. You’ll be much calmer and in a better position to decide if the broker or deal you are interested in is really worth it.

One of the most common scams simply involves selling a product or system online that will ‘guaranteed’ make you profits in forex trading. Be careful of online advertisements for these products, after all most of them contain information about the forex market that you can obtain by reading any other book on forex trading. It will give you information on the forex market if you are doing research, but it probably won’t give you the guaranteed secret to success.

Most traded currencies in Forex

Currencies are traded in dollar amounts called “lots”. One lot is equal to $1,000, which controls $100,000 in currency. This is what is known as the "margin". You can control $100,000 worth of currency for only 1,000 dollars. This is what is called “High Leverage”.

Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.

Here are some of the common symbols used in the Forex:

USD - The US Dollar EUR - The currency of the European Union "EURO" GBP - The British Pound JPN - The Japanese Yen CHF - The Swiss Franc AUD - The Australian Dollar CAD - The Canadian Dollar

There are symbols for other currencies as well, but these are the most commonly traded ones.

A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.

Some of the common PAIRS are:

EUR/USD Euro / US Dollar "Euro"

USD/JPY US Dollar / Japanese Yen "Dollar Yen"

GBP/USD British Pound / US Dollar "Cable"

USD/CAD US Dollar / Canadian Dollar "Dollar Canada"

AUD/USD Australian Dollar/US Dollar "Aussie Dollar"

USD/CHF US Dollar / Swiss Franc "Swissy"

EUR/JPY Euro / Japanese Yen "Euro Yen"

The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.

If this seems confusing then you’re in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.

So why is it important to know about the base/counter currency? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions.

You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.

Forex Trading Exponential Moving Average (EMA)

The Forex trading Exponential Moving Average was developed because the simple and weighted moving average indicators failed to predict buy and sell signals properly. By assigning more weight to the most recent price data, the prediction of currency price is made more accurate, and this is the basis of exponential moving average (EMA).
To calculate a regular weighted moving average, a 10 day MA for example, you would take the closing price for the 10th day and multiply it by 10, the 9th day price multiplied by 9, and so on till the 1st day price. This total would be divided by the sum of multipliers - meaning for 10 days - 55. The EMA has helped make Forex trading technical analysis more accurate and flexible.
The exponential moving average is similar, only it is not linear, and it is adjustable by the trader, so he can give more or less weight to the recent prices..
One possibility for learning about the EMA more profoundly is using a forex trading system course, even though most traders usually get the basic idea of the indicators in pages like these, and then learn everything else while trading in demo accounts.

Global Forex Trading

Global Forex Trading is a large and highly liquid market, which presents an opportunity for those individuals who are seeking to exchange the currencies of the world. It's much less about the Forex market as compared to the raw material and added the stock market. Global Forex Trading is not as good as stock trading is known, in fact, it is actually much smaller than the stocks and the commodity markets. But since he like it was also traded more than 2 trillion U.S. dollars closer to 3 trillion U.S. dollars in currency each day on the global foreign exchange market. The beauty of it to see that the market is global, it can be fairly traded 24 / 7.

Forex Trading characteristics

There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are traded. This implies that there is not a single dollar rate but rather a number of different rates (prices), depending on what bank or market maker is trading. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs instantaneously. A joint venture of the Chicago Mercantile Exchange and Reuters, called FxMarketSpace opened in 2007 and aspires to the role of a central market clearing mechanism.

The main trading centers are in London, New York, Tokyo, Hong Kong and Singapore, but banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.

There is little or no 'inside information' in the foreign exchange markets. Exchange rate fluctuations are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in GDP growth, inflation, interest rates, budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.3045 dollar. Out of convention, the first currency in the pair, the base currency, was the stronger currency at the creation of the pair. The second currency, counter currency, was the weaker currency at the creation of the pair.

Effective Advice for Forex Trading Beginners

Not everyone familiar with forex trading. Actually, most people think that when you talk about forex trading, it has something to do with stocks or bonds. But forex trading is different from stocks or bonds. It is about the trading of currency pairs

Currencies are traded in pairs, and you can’t find a particular currency without a pair. The major currencies being traded are chosen above the rest because they are stable and have a greater value than other foreign currencies.

Whenever a new comer arrives in the market, the very first ones to take notice of them are what you call frauds. That is why, if you’re new in forex trading, you need to take some advice. It would be convenient to ask for advice from the ones who are already engaged in forex trading. In fact, you can make use of their advice for your own good, and even to your advantage.

Given that forex trading is globally available, it is not strange that some frauds are able to infiltrate the financial market. To safeguard people from these frauds, they must be made aware of these growing fact, so that they will be able to protect their trading career.

The opportunities that forex trading provides for different individuals, firms, and organizations is increasing rapidly every year. And accompanying this growth is the widespread growth of different scams related with forex trading. But there is no need to worry about it because there are a lot of legitimate companies or firms that can help you in forex trading.

The best you can do is to find these legitimate companies to stay away from fraudulent ones. However, most new traders become victims these scammers because of their savory offers.

A piece of advice: stay away from companies or firms which advertise high profits for minimal risks. In today’s financial market, if you want to earn high profits, you will probably have to run high risks as well. These things always go together.

Always stay on the safe side. If you’re looking for a forex trading broker, and of course, each broker is part of a certain company, make sure that you choose a government registered company. When signing any contract with them, double check if they are registered or certified brokers. This is a good step to undertake in order to prevent any adversity that you might encounter in the future.

It is your job reducing the risk, not that of the broker; so if the company offers or promises little risks, guaranteed profits, and something like that, that is a sure sign that they are there to make a fool out of you.

Professional trader or not, the use common sense can go a long way.

Before doing any forex trade, do your homework. Research all the necessary details about trading. Ever heard of inter-bank market? Stay away from companies which attacks you into trading in the inter-bank market because the currency transactions are negotiated in a unstable network of large companies and financial institutions.

If a certain company does not disclose any information about their background, that should serve as a red flag. It means that you should not keep on doing transactions with them. It is also inadvisable to transfer/send cash through the mail or the internet. Practice caution in everything you do, and you’ll be more than sure that you are always safe.

Fraudelent companies often solicit services and advertise soaring pressure tactics to attract you in participating or joining their services. Stay away from offshore companies which guarantees no risk and return of profit. Always be skeptical and don’t jump in to any instant offer that comes your way.

You can decide for yourself. After all these pieces of advice, it will be up to you whether you will apply it or not. You are the one who will be subject to fraudulent individuals or companies. If you want to protect your forex trading career, carefully consider these things.

With patience and a little attention, you can expect for a successful forex trading career.

Forex Secrets

There are lots of people who claim they know Forex secrets but the fact is 95% of traders lose and the real secret of success is very simple and enclosed in this article in fact, you you can see its correct by the Forex fact enclosed.

The fact is that since trading began over 90% of traders lose money and this is despite all the advances we have seen in trading news and trading technology. We have more news than ever, prices at the click of a mouse and computers with awesome number crunching ability - but 90% of traders or more still lose today, just as they did 100 years ago - so why has this number remained constant?

The number of traders who lose has remained constant because human nature has. While it is fashionable to think you can beat the markets with technology it remains a fact that simple Forex trading systems work best and always will, because they are more robust than complex ones.

Forex trading is really simple and anyone can learn a simple method which can make money but the real secret of success is learning how to apply a system with discipline.

The secret of success for any trader is within and it's adopting a mindset which is disciplined and can keep losses small. In Forex trading, the market doesn't beat the trader, the trader beats himself by allowing his emotions to get involved.

The losing trader fails to keep his losses small when he knows he should and he fails to run his profits and banks them early and this leads to an equity wipeout.

You can get a disciplined mindset and it comes from leaving your ego out of your trading and taking your losses then, having the confidence to run your profits and not bank them to early.

So there you have the secret of success, there is no way to beat the market but you can win, because the secret of Forex trading success lies within you.

Forex automated trading system

Forex automated trading system, it calls Prophet1 Forex Expert Advisor. It is design for the Metatrader 4 (MT4) and to work for GBP/USD currency pair and they have good results, over 90% profitable trades, growing the balance from $1,000 to over $42,000

Benifits Of Forex Trading Software

Forex trading software has a number of benefits. It can automate many of the common tasks that you will need to perform when investing. Using such a program will allow its user to look at trends and statistical analysis so that users can make better decisions. It also allows you to trade online directly and overall, simplifies the investing process.

If you choose to invest on your own, the process can get pretty redundant and sometimes confusing, especially for someone who is just starting out. Forex trading software will make the process much easier and streamlined. Simply log into your computer, execute trades, look at the past transaction history and get advice. This can prove to be extremely helpful and may give you the little extra something that you need to make bigger profits.

The ability to look at trends, your personal history and perform statistical analysis allows you to take a much more educated and deliberate approach to investing. In this way, its investor will be able to do much more then simply making guesses.

Instead, with the tools in hand, it will help you reap more profits and have greater success. Your personal information and that of the market will be presented in a well formatted and easy to read manner. This will allow you to know exactly where your investment portfolio stands, when and if there are any profits and how the market is performing.

Forex trading software will also allow you to trade directly online. In many cases, you will be able to do just about everything needed in order to get your trading career started and on track.

Overall, the biggest advantage of this type of applications is that it simplifies the entire process. Most of the analytical tools that are built into the program will give its user the greatest chance of being successful in making profitable trades. Of course, this will require that one picks the right product. The wrong one will have absolutely no benefit and may cause you to lose money.

Want to take the guesswork out of Forex trades? Read this detailed review on the most popular and profitable forex trading robots that are making successful trades on autopilot for their traders.

Determinants Of Forex Rates

The following theories explain the fluctuations in FX rates in a floating exchange rate regime (In a fixed exchange rate regime, FX rates are decided by its government):

(a) International parity conditions viz; purchasing power parity,interest rate parity, Domestic Fisher effect, International Fisher effect. Though to some extent the above theories provide logical explanation for the fluctuations in exchange rates, yet these theories falter as they are based on challengeable assumptions [e.g., free flow of goods, services and capital] which seldom hold true in the real world.

(b) Balance of payments model (see exchange rate). This model, however, focuses largely on tradable goods and services, ignoring the increasing role of global capital flows. It failed to provide any explanation for continuous appreciation of dollar during 1980s and most part of 1990s in face of soaring US current account deficit.

(c) Asset market model (see exchange rate) views currencies as an important asset class for constructing investment portfolios. Assets prices are influenced mostly by people’s willingness to hold the existing quantities of assets, which in turn depends on their expectations on the future worth of these assets. The asset market model of exchange rate determination states that “the exchange rate between two currencies represents the price that just balances the relative supplies of, and demand for, assets denominated in those currencies.”

None of the models developed so far succeed to explain FX rates levels and volatility in the longer time frames. For shorter time frames (less than a few days) algorithm can be devised to predict prices. Large and small institutions and professional individual traders have made consistent profits from it. It is understood from above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of demand and supply. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demandfactors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.

Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economic factors, politicalconditions and market psychology.

Foreign Exchange Reserves

Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreigncurrency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it is more accurately termedofficial international reservesor international reserves. These are assets of the central bank held in different reserve currencies, mostly the US dollar, and to a lesser extent theeuro, theUK pound, and the Japanese yen, and used to back its liabilities, e.g. the local currency issued, and the variousbank reserves deposited with the central bank, by thegovernment or financial institutions.

Forex Economics Factors

These include: (a)economic policy, disseminated by government agencies and central banks, (b)economic conditions, generally revealed through economic reports, and other economic indicators.

1. Economic policy comprises government fiscal policy(budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
2. Economic conditions include:

   Government budget deficits or surpluses

   The market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.

   Balance of trade levels and trends

   The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.

   Inflation levels and trends

   Typically a currency will lose value if there is a high level ofinflation in the country or if inflation levels are perceived to be rising [. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.

   Economic growth and health

   Reports such as GDP, employment levels, retail sales,capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.

   Productivity of an economy

   Increasing productivity in an economy should positively influence the value of its currency. Its effects are more prominent if the increase is in the traded sector [3].

Free Forex Demo accounts

Most Forex brokers offer free demo accounts which allow you to start practicing with virtual money. This way you can learn Forex without risking your money.