To make a profit, in the FOREX, a trader can enter the market as a *buy position* (known as going “long”) or a *sell position*(known as going “short”).

For discussion, let’s assume you’ve been studying the EURO.

Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars).

You open up your handy trading station software (provided to you for free by the online broker), which resides on your desktop, and you see that the EUR/USD pair is trading at:

<< EUR/USD: 1.3242/45 >>

REMEMBER: the quote to the left of the / (1.3242) refers to the bid or “sell” price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or “buy” price (what you have to pay in USD if you buy EUR).

So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicities sake, let’s say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money.

But, no worries. This seemingly elaborate process is handled, and even calculated for you, via the broker’s software mentioned above. The chart software and the quote board are in agreement with all sides of the currencies.

To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:

REMEMBER ~ Selling (”going short”) the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).

NOTE: while the Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you’ve never been in the FOREX market before, trust us when we say, “this process is nearly seamless through your broker trade station (software). We’re just showing you this thought-process below so you can SEE how a PROFIT occurs even when

SELLING a currency pair.

The current bid/ask price for USD/JPY is 105.26/105.30, meaning you can buy $1 US for 105.30 Japanese YEN or sell $1 US for 105.26 YEN.

Suppose you decide that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.

So you make the trade: selling US $100,000 and purchasing 10,526,000 YEN. (Remember, at 1% margin, your initial margin deposit would be $1,000.)

As you expected, USD/JPY falls to 104.26/104.30, meaning you can now buy $1 US for $104.30 Japanese YEN or sell $1 US for 104.26

Since you’re short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.

You buy US $100,000 at the current USD/JPY rate of 104.30, and receive 10,430,000 YEN. Since you originally bought(paid for) 10,526,000 YEN, your profit is 96,000 YEN.

To calculate your P&L in terms of US dollars, simply divide 96,000 by the current USD/JPY rate of 104.30.

Total profit = US $920.42

Author: Omar Vargas

Once you have decided to enter the Forex trading world, one of the first things you will have to do is downloading the trading station provided by your chosen forex broker for free. When you open your trading station software, you will find there are two main ways to enter a market or, said in another way, there are two ways to place an initial order to buy or sell any currency pair.

“Market order”; this is an order to buy or sell a currency pair at the market price the instant that the order is received and processed (within seconds of hitting the “OK” button on your screen). When a market order is placed, you are simply saying “I’ll buy or sell the currency pair at whatever price it is at when my order gets processed.”

“Entry order”; this is an order to buy or sell a currency pair when it reaches a certain price target. This can be any price in theory. You could set an entry order for the low price of a time period, or the high price of a time period. As an example, one usual recommendation is that you must always set an entry order to be the same price as the ‘open price” of the time period. When you place an “entry order” to buy, for example, you are simply saying “I want to buy this currency pair at a certain price, if it never reaches that price, I don’t want to purchase the pair.” More information here: http://www.1-forex.com

After your “entry order” is placed, you can set a stop and/or limit order if you desire, and for your own security. Stop and Limit orders are two different ways to exit a trade, automatically (i.e., without closing out your position via the click of your mouse – manually), after the trade is entered.

A “stop order” (something I will always recommend you) is used to stop losses. A “limit order” (recommended if you can’t monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order.

Remember; a “stop order” is always placed below the current market value of that currency pair when you are in a long (buy) trade. And a “limit order” is always placed above the current market value of that currency pair when you are in a long (buy) trade.
Author: Adrian Pablo

Do you ever consider the possibility that the money you work so hard for could be gone from your pocketbook in the next few years?

Quicker then you might think, currency as we know it, is changing. Necessity for efficiency is transforming the flow of cash into a digital form.

The use of e-currency is quickly spreading throughout the world. Everyday, more and more people are making purchases online. These purchases are being facilitated by companies like Paypal, E-Bullion, E-Gold and Net Pay. The digital age is definitely upon us, and with the new forms of commerce, comes new forms of opportunity.

With the advent of these E-currency companies, trade between different countries is suddenly becoming easier and more profitable. New products and services are quickly filling the need for the flow of money. The one constant still remaining is the ever present, currency exchange rates. To avoid these fluctuations and exchange fees, companies have facilitated their transactions with the global currency of gold.

Some online e-currency companies now tout that their holdings are 100% backed by gold. This no longer is true for any of the national currencies now in existence. The United States for example, has not had 100% of their currency backed by gold, since the end of the gold standard in 1914. The value of the U.S dollar continues to decline, as the value of gold rises steadily.

Due to national inflation, the cash you hold in your hand will continue to lose value. Unfortunately, there is not nearly enough gold to cover all of the paper money holdings. That money you hold in your hand is basically a loan from the government. The tenet of many governments, when they fall on hard times, is to print more money. This fact has led to the desire for more worldwide corporations to embrace the idea of a worldwide currency.

To accommodate the demand to trade goods and services between Countries, many companies have been created. The increased need for exchanging has created lucrative opportunities within the e-currency exchanging markets. A global currency exchange is evolving that knows no boundaries or national borders.

While gold remains the standard for many worldwide transactions, there still exists a need to transfer funds from, existing national currency, into gold and vice versa. There also exists the need for different e-currencies to be exchanged among themselves. This need has created a void that has enabled average people to cash in on.

Trading e-currency has filled the demand for these transactions to be completed efficiently, while enabling certain people in the know, a lucrative business opportunity. Those people who understand the system can leverage their funds to facilitate the transactions while pocketing a sizable commission.

The future is unknown for paper money as we know it. However, one thing is certain, those who are the market-makers of the new system that evolves will be the biggest winners of the new millennium.
Author: Matt Sherborne

Since the US dollar is the centerpiece of the market, it is normally considered the ‘base’ currency for quotes. In the “Majors”, this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote listed above were to increase to 124.01, that would mean that the dollar is stronger because it will now buy more yen than before.

Some exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, which means that one British pound equals 1.4366 U.S. dollars. In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

So if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening. Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.
Author: Chuck Cox

My father, who owns a small parts store and garage for vintage British sports cars, called me up recently and droned on and on about how he is getting killed by the Euro. Confused as to how the Euro could possibly be affecting his small and seemingly insignificant business, I asked him how. “Because of the Euro!”

He went on to explain, after calming down of course, that the distributor that he orders his vintage parts from had increased their prices by roughly 30% due to the dollar’s poor performance against the Euro. Apparently, it takes about $1.30 USD to buy the same merchandise that may be acquired with 1 Euro.

Essentially, the relationship between the dollar and the Euro is the same as we have always had with the Canadians—only we have become the Canadians in this bizarre scenario!

After getting off the phone with dad I decided to investigate this currency exchange question a lot further and came to one startling but very true realization—the stock market is for chumps! Foreign Exchange is where it’s at.

The act of exchanging the legal tender of one country for that of another. People who play the currency exchange market (Forex) do precisely that! With the same amount of analysis or less in most cases, people anticipate the rate at which one currency will convert into another and Presto!—profits please!

So if one anticipates that the Euro will be stronger next week compared with the dollar and I convert $50,000 into Euros, then next week when the Euro does in fact rise I can convert those Euros back into more dollars than I initially invested only a few days earlier—or even the previous day! Why have your money tied up for extended periods of time praying for a good quarterly earnings report or being grateful for the peanuts thrown to you in the form of a dividend?

My father’s misfortune illuminated a new world for me. Trading currencies is simply better than playing the stock market and more profitable. Just as with the stocks, you learn which indicators to track and the fundamental principles which propel the market in one direction or the other. There are of course programs and courses out there offered by people who have played this game for years and who are now sitting back in luxury while the rest of us have seen our retirement plans devastated by that volatile mistress known as the stock market. So I ordered a Forex course and learned what I had to in order to start cashing in on this phenomenon. I stopped waiting on earnings reports and praying for those stocks to go up and started making money daily on in the currency exchange market!

My actual startup costs were only $300. Of course I already had my computer and internet connection, but for me the possibility of working only an hour a day from home and earning an extra few hundred dollars a week was amazing.

The course I ordered was Peter Bain’s Commercial Currency Trading Secrets. I just liked the idea of having a Successful Trader at my side at all times. And Peter’s course allowed me to do that through his DVD’s.

This for me is a great way to earn extra income. I might even quit my job one day soon and do this full time. Learn more about this extremely profitable business for yourself. Just go to: http://tinyurl.com/8udgt and check it out for yourself.
Paul Sanford