Forex Trading Guide v2.0 -Online Foreign Exchange Traders

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1. What is Forex all about?

What is Forex:

Forex means FOReign EXchange and it is a global market where the worldscurrencies are traded, one currency against another. Central Banks, CommercialBanks, Large and Small Corporations, Institutional Investors, Individual Traders andCommon Tourists occasionally need to exchange one currency for another.

Examples:

Take for example an importer who is based in the US and wants to import 5Mercedes Trucks from Germany. He must exchange US Dollars for the EuropeanCurrency (EUR) in order to pay for his import, so he must make a transaction in theForex Market.

Importer Buys EUR and sells USD

In the opposite example, a tourist from Germany wants to visit New York so in orderto pay for his hotel he must exchange Euros for US Dollars. This transaction will alsobe made in the Forex market.

Tourist Buys USD and sells EUR

Forex Currency Pairs & Main Categories

Currencies are traded in pairs, you buy one and at the same time you sell anothercurrency. In any currency pair (in the above example EURUSD) the purchasedcurrency is called the Base Currency (EUR) and the sold currency is called the QuoteCurrency (USD).

There are three Main Categories of Forex Currencies:

i) Forex Majors (the most popular and traded pairs: EURUSD, GBPUSD,USDJPY, USDCHF, USDCAD, AUDUSD and NZDUSD)

ii) Forex Minors (less popular pairs and thus more expensive to trade)iii) Forex Exotics (no-popularity and thus very expensive to trade)


What is a Forex Lot?

A Forex Lot is the standard unit size of a Forex transaction. There are 3 different lotsizes:

Micro Lot Size (equals $1,000) Suitable for Forex Beginners

Mini Lot Size (equals $10,000) Suitable for Semi-Advanced Forex Traders

Standard Lot Size (equals $100,000) Suitable for Advanced and Pro Traders

But where is the opportunity to make money after all?

Currencies are not traded in fixed prices -instead they are part of a free floatingtrading system. Every order for buying / selling a Forex currency is a factor creatingeither demand or supply in the market. Even tiny fluctuations in this free-floatingsystem can be transformed into huge profits using the ability of trading leverage (asit will be described afterwards in Chapter-3).

Where is the Forex Market Situated?

All currency transactions take place within the Forex Market. Where is Forexsituated? Actually nowhere specifically, Forex operates as a non-centralized networksuch is the World Wide Web. All transactions are executed within the ElectronicNetwork of Banks (called the ECN network). There are of course several physicalFinancial Centers around the world. These financial centers are found in majorcapital cities such is New York, London, Tokyo, Sydney etc.

Today Foreign Exchange is by far the largest market in the world. Forex hasbecome so huge that volumes exceed today 5 trillion USD only in a singleday.

Forex Market Trading Hours

The Foreign Exchange market is open 24/5 between Mondays to Fridays. The Forexdaily activity is divided into 4 separate sessions:

(1) New York Session, 8:00 am to 5:00 pm EST(2) Tokyo Session, 7:00 pm to 4:00 am EST(3) Sydney Session, 5:00 pm to 2:00 am EST(4) London Session, 3:00 am to 12:00 noon EST


Forex Market Overlaps

Forex overlaps occur when two of the above sessions are opened simultaneously.Here are the three Forex Session Overlaps:

(i) New York and London Session Overlap: 8:00 am to 12:00 noon EST(ii) Sydney and Tokyo Session Overlap: 7:00 pm to 2:00 am EST(iii) London and Tokyo Session Overlap: 3:00 am to 4:00am EST

During these overlaps, both trading activity and market liquidity are maximized.Many traders select to execute orders only during these overlaps.To highlight the importance of time when trading Forex, just think that there areautomated systems trading exclusively the London and Tokyo Overlap. That meansthat during the other sessions remain inactive.

Moreover, there are automated systems trading only as the Asian Session begins.These short-trading systems are commonly scalping the market. Many of theseScalping Systems are presented in Chapter-7.

So what is Forex Scalping Then?

Scalping is a promising way of trading Forex based on the assumption that you holdstate-of-the-art trading technology and the right system to do the job. ScalpingForex means opening and closing trading positions lasting less than one minute andtargeting returns as low as 0.001%. Those traders who scalp the market are calledscalpers. This is a common trading style and you may find more trading styles atChapter-6.

Why should anyone targeting tiny returns of 0.01%?

Wait until the next chapter, the chapter about trading leverage, and you willunderstand the reason why.


Online Forex Platforms

What is a Forex Trading Platform?

A Forex Trading platform is simply your ticket to Online Forex Trading. A TradingPlatform is working like a bridge between you and your Forex Broker. When youexecute a trading order (for example selling British Sterling against the US Dollar)this order is passing instantly from your platform to your broker. Then again almostinstantly it is passing to the Forex Market.

The fantastic thing is that almost all Forex Trading Platforms (Desktop and Mobile)are offered for free to download and to use. Freeware and open source softwarematters when you trade Forex. The industrys standard platform is the MetaTrader4platform from Metaquotes. This platform is called also MT4 and allows manual andautomated trading in both desktop and mobile devices.

Almost all Trading Platforms today offer features such is the use of indicators,technical analysis tools, trading on charts, 1-click-trading, news alerts etc.

Learn the basics about Forex Trading at the web-site What-is-Forex.com What-is-Forex.com Learning

Here is some basic information and download links of popular Forex Platforms:

WEBTRADER FOREX PLATFORM

Info: The easiest-to-use category of Forex Platforms. Forex brokers provide theirown Web-Traders. As the name suggest its 100% web-based and no softwareinstallation is required. The disadvantage of a web-trader platform is that it can notperform complicated tasks as automated trading and Expert Advisors. Moreover thevariety of trading orders is usually limited to basic order types. Download: Each Broker offers its own web-trader (photo: HotForex WebTrader) Experience Level: Beginners and Semi-Advanced Traders

http://www.what-is-forex.com/


METATRADER-4 or MT-4

NINJA TRADER FOREX PLATFORM

Info: Very advanced Forex platform offering high technology and rich chartingcapabilities. The disadvantage here is that only a few Forex brokers support it. Ingeneral keep in mind that the wide popularity of any platform means also a lot ofproviders supporting it. NinjaTrader has everything except popularity. Download: Download here NinjaTrader Experience Level: Advanced and Professional Traders

Info: MT4 is a clear Forex industry standard. Every broker that respects himselfmust offer MT4 or at least a MT4 bridge. This platform is essential for complicatedtasks as Forex Robots (EAs). The disadvantage of MT4 is mainly found on whatconcerns the money management. Beginners will find it really difficult to execute theright order sizes. It is highly recommended for beginners to use MT4 in micro-lotaccount sizes so that they will be able to learn how to use MT4 in tiny risk. Download: Download here for free at MetaQuotes Experience Level: Advanced and Professional Traders

http://www.metatrader4.com/tradershttp://www.ninjatrader.com/


cTRADER FOREX PLATFORM

Info: The same as NinjaTrader. cTrader offers exceptional capabilities includingadvanced charting, market depth etc. As concerns popularity not many Forex brokerssupport it but it is more popular than NinjaTrader. Download: Download cTrader here Experience Level: Advanced and Professional Traders

Delays on Execution -The Slippage Factor

The delay between the time you press the button on your PC and the time yourorder is actually executed in the Forex Market is called the slippage. If we measurethis delay in real time we might say that this delay is between 0.1 seconds to 1.5seconds. Slippage is generating price manipulation and that is why it is measured inpips. One pip equals commonly 0.0001 of the value of a currency pair. The averageslippage in the market today is between 1-2 pips.

The Importance of Tiny Segments of Time

But why should a trader even care about such a tiny delay of less than 2 seconds?Think about that. There are numerous arbitrage systems today that are tradingForex in timeframes measured in million-seconds. These systems constitute the socalled Million-Second Forex Market.

One (1) second for a scalping system equals 1 month for a regular trader.Furthermore if you trade the news (News-Trader) 1 second is the difference betweenmaking a huge profit and suffering a huge loss. News-Trading is one of the sixtrading styles presented in Chapter-6.

Time is the most disputed issue in the mens history

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Find full reviews and multiple comparisons regarding Scalping Forex TradingSystems at ForexAutomatic.com: Forex Robots and other Automated Systems

http://forexautomatic.com/


2. Two Categories of Forex Brokers -TheNeed for Reliable and Regulated Partners

In order to trade Forex you need also a broker. Forex Brokers operate asintermediaries between a trader and the aggregate Forex Market (The ECN networkmentioned before). Basically there are two main categories of Brokers based on theirexecution model, the Dealing Desk and the No-Dealing Desk Brokers.

Two (2) General Categories of Forex Brokers

(a) Dealing Desk Brokers (DD) or Agents or Market Makers

These brokers operate as a Dealing-Desk, meaning that they are making their ownmarket within the Forex market. In simple words, Market Makers sum all the buyingand selling orders of their clients and execute trades instantly on both sides. Actuallythey accept all orders from opposite sides and earn money by staying in the middle,without risk. Sometimes Market Makers are trading against their clients just to fill alltheir orders.

Professional traders dont like the fact of trading against their brokers and that iswhy they are constantly avoiding Dealing Desk Brokers. Dealing Desk Brokers orMarket Makers are not considered as pure Forex Brokers

Dealing Desk Brokers offer usually a wide asset index including Forex, Stocks,Indices, Commodities and Energy trading. In general, Dealing-Desk Brokers areconsidered a good choice only for beginners and semi-advanced traders. Thisperception exists as Dealing-Desk Brokers offer currency pairs in wide spreads.EURUSD for example can be found usually at 2 pips minimum. Moreover Dealing-Desk Brokers provide trading with slippage and re-quotes. The only importantadvantage of trading with a Dealing Desk Broker is the Forex Bonus offered. Dealing-Desk Brokers offer very high welcome bonuses up to 100% (find Forex BonusPromotions later in this eBook).

Tip: If you want to trade with a Market Maker, choose a broker offeringwithdrawable bonus. Trade your bonus as many times required and then withdrawyour funds and your bonus. It is the best chance you have to win.

(b) No-Dealing Desk Brokers (NDD) -ECN or STP Forex Brokers


In this category we find brokers that are transferring their client orders directly tothe Forex Market, meaning transferring orders directly to the Electronic Network ofBanks (ECN). The great advantage of trading with an ECN/STP broker is the lowtransactional cost and the very fast order execution. Transaction cost in ForexTrading is deriving mainly from spreads And from trading commissions charged onvolume. Cost may be also the outcome of slippage. ECN/STP brokers offer by rulethe lowest slippage in the market.

The ECN/STP Forex brokers are the only choice of professional and advanced Forextraders and the only choice for all those wishing to trade Forex via automated-trading systems (explained in Chapter-7).

Note: Not all ECN/STP brokers offer good trading terms to their clients. There aregood, medium and bad performers as in every other industry.

Here are two examples of an ECN/STP Broker offering EURUSD:

i) EURUSD spread at 1.4 pips without any trading commissionsii) EURUSD spread at 0.4 pips plus $3.5 commission per $100,000 volume

The Essence of Trading with Regulated Forex Companies

Reliability is priority number one when your industry is the Online Financials.Everyone who wants to trade the worlds currencies needs a reliable Forex Broker.There are hundreds of Forex Brokers available in the market, but it is extremelyimportant to trade only with those that are high regulated and reliable. Regulationmeans that a company is supervised and controlled by external independent bodies.Regulation works as a great incentive for any broker to behave ethically and respecthis clients interests. Another factor that adds reliability to a Forex Company is theexistence of Segregated Client Bank Accounts. That means that when you make adeposit your funds are safely deposited in an external bank. The country where aForex Broker is situated also matters, avoid companies situated in offshore countries.Offshore countries are providing weak legislative frameworks regarding corporations,and that is not good for any online trader.

Here is a list with some High-Regulated Forex Brokers offering also segregated BankAccounts to their Clients:


REGULATED FOREX BROKERS LIST (NO-US CLIENTS LIST)

Here is a list of regulated Forex Brokers offering funds safety via segregated clientbank accounts.

FOREXBROKER

REGULATED

SEGREGATEDBANK

ACCOUNTS

MINIMUMDEPOSIT

WELCOMEBONUS

INFORMATION

XeMarkets

STP MODEL

FSA UK,CySECCyprus,ASICAustralia

Yes $5030% up to10,000USD

Review Broker

XeMarkets Web

HotForex

ECN / STP

MiFIDEurope andCySEC

Yes $50 30-100%

Review Broker

HotForex Web

IronFx

ECN / STP

ASICAustralia,FCA UK,CySECCyprus

Yes $500 50%

Review Broker

Ironfx Web

AvaTrade

DEALINGDESK

ASICAustraliaand CBIIreland

Yes $10050% up to10,000USD

Review Broker

Avatrade Web

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Forming the Profile of the Perfect Forex Broker -For theAverage Trader

Here are some characteristics of the Ideal Forex Broker:

(i) Offering maximum safety of trading funds (high regulation and segregated clientbank accounts)

(ii) Offering minimal transaction cost (low spread, low commissions, no re-quotes)

(iii) Offering a wide asset index containing more than 60 currency pairs (majors,minors and exotic pairs as mentioned before)

(iv) Offering fast order execution with minimal delays and no price manipulation

(v) Offering a good variety of trading platforms allowing mobile trading, automatedtrading and scalping

(vi) Providing a variety of different deposit / withdrawal methods by not chargingcommission on withdrawals or on inactive accounts

(vii) Providing fast and reliable customer service (emai, live chat and phone support)

Rating Brokers Formula by TradingCenter.org -The New andRevolutionary Way of Rating Financial Services

Based on recent research, most of the user ratings found in the Internet today arefake. This is happening as Online Companies pay outsiders to rate them favorably inuser-rating sites. In this uncomfortable environment the Rating Formula Series wasdesigned to provide a completely objective framework of rating financial services.

The Rating Formula Series includes all the major factors forming the ideal Broker.This innovative rating formula is designed by TradingCenter.org. Here are the four(4) generic rating categories forming the maximum rating value of 100%.

http://tradingcenter.org/index.php/library/rating-forex-formula


FORMULA v.4.0 TOTAL RATING(The structure of Rating Formula v4.0)

WEIGHT (%)

Factor-1: Safety of Funds 26.0% Rating +

Factor-2: Trading Cost 28.0% Rating +

Factor-3: Available Trading Options 26.0% Rating +

Factor-4: Technology 20.0% Rating =

100% max

Here are the First Rating Results using the Formula 4.0 at FxPros.net:

RATING ASPECTS TRADING STYLES

FOREX BROKEROverall

Rating

Funds

Safety

Trading

Cost

Trading

OptionsTechnology Beginners Advanced Pros

FULLRATING

XEMarkets 80.76% 81.78% 71.43% 100% 67.50% 71.63% 72.70% 68.99% Rating

LQDMarkets 83.38% 81.26% 78.57% 91.35% 82.50% 71.00% 82.21% 84.73% Rating

Alpari UK 79.40%96.74% 60.71% 85.58% 75.00% 72.51% 75.69% 75.25% Rating

HotForex 77.78% 63.59% 66.07% 97.12% 87.50% 80.64% 81.76% 78.98% Rating

AvaTrade 76.47% 84.50% 58.93% 92.31% 70.00% 70.10% 66.71% 60.42% Rating

InstaForex 65.46% 47.92% 44.64% 100% 72.50% 54.99% 62.28% 63.42% Rating

eToro 59.71% 84.46% 41.07% 54.81% 60.00% 60.44% 55.35% 49.50% Rating

Learn more about the Rating Formulas

These are the latest versions of the Rating Formula series:

Rating Formula v5.0 Forex Brokers, at TradingCenter.org

Rating Formula v4.0 Forex Brokers, at TradingCenter.org

Rating Formula v3.5 Binary Options Brokers, at BinaryValue.com

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3. Why so many People Trade in theForex Market? The Profit Potential

Two factors are forming the great Profit Potential of Forex Trading, liquidity andtrading leverage. Here is a short analysis of these two trading factors.

2.1 Forex Market Huge Liquidity and Low Cost of Transactions

As it was mentioned before the Foreign Exchange Market is really huge with dailyturnovers of more than 5 trillion US dollars. That means that there are tens ofthousands of currency buyers and currency sellers at any given second. Thatenormous volume activity pushes the distance between buyers and sellers (called thespread) in minimal ranges. The average spread on EURUSD for example is less than2 pips. That means that if the first buyer is at 1.3800 then the first seller is at1.3802. This distance in the example given is just 0.002, or else 2 pips spread.

Why is this fact so important? This is important because you can open and close atrading position with an extremely low transaction cost. (i)

2.2 Multiplying Funds via the Use of Leverage

Forex trading provides the unique advantage of huge trading leverage. What doestrading leverage means? Trading leverage means that you can trade more funds thatyou really hold. But what makes that advantage astonishing is the number of timesyou may leverage your funds.

Most Forex Brokers today offer leverage up to 500:1. Therefore, if you open anaccount with $1,000 you may trade theoretically $500,000. (ii)

By combining minimal transaction cost and high trading leverage {(i) and (ii)} it isobvious what makes Forex Trading so lucrative and popular in a global scale.

Example:

If you open a position worth $500,000 and you gain 1.0% then your earnings arecalculated as: Earnings Computation = $500,000 X 1.0% - Hypothetical Cost of Transaction =$5,000 - $300 = $4.700 Your Initial investment was $1,000, so you gained 370% on your investment withjust 1.0% currency movement

Be aware that this procedure incurs high risks too, as you may win or lose money,especially if you are not familiar with this process. This example is given to highlightthe profit potential and why Forex Trading attracts so many people worldwide.


2.3 The Leverage Formula (Semi-Advanced Traders)

The rate of capital leverage defines in a high extend which trade will prove profitableand which not.

When you constantly use high trading leverage you are very vulnerable to marketvolatility while you are forced to place your stop-loss orders really close.

I created this simple equation to highlight how the trading leverage can be optimizedin any trade. The following leverage formula aims to provide a simple framework forunderstanding the attractiveness of each individual trade and therefore chooserespectively the ideal leverage ratio.

Here is the formula (it is briefly explained below):

Leverage Formula= [ (P/L) * (1/Spread) * (R/2) ] %

Where:

(P/L) = Profit to Loss Ratio (Profit derives from Take Profit and Loss from Stop LossOrders)

(Spread) = The difference between Ask and Bid Price (First Seller and First Buyer)

(R) = Risk Tolerance (values 1-100, equals your overall risk acceptance as apercentage %)


4. Forex Welcome Bonus -Another GreatAdvantage of Forex Trading

High Deposit Bonus and No-Deposit Bonus

Forex Welcome Bonus The Difference between a Credit Bonus and aWithdrawable Bonus

Forex Brokers in order to attract new clients offer promotions that are called ForexBonuses. A common welcome bonus is 30% but it can be up to 100%.

What means 100% welcome bonus on deposit?

It means that if you are a new client and you deposit 1,000USD then the broker willadd you another 1,000USD in your account as an extra trading capital.

There are two types of Forex welcome bonus:

i) Withdrawable Bonus (usually 30% on new deposit)ii) Credit Bonus (usually 50-100% on new deposit)

You may withdraw a Withdrawable Bonus by trading it several times according to theTerms & Conditions of any promotion.

From the other hand, you can not withdraw a credit bonus but you may stillwithdraw the gaining generated by a credit bonus.

Risk-Free Trading via a No-Deposit Bonus Account

Additionally, Forex Brokers in order to make traders more familiar with theirplatforms offer also the so called No-Deposit Forex Bonuses. That means that youget a bonus amount between 20-100USD just by confirming your email or phone andwithout depositing any funds at all. That is an excellent risk-free way to get in touchwith Forex Trading for the first time.

Where is the Catch?

Be aware that you may withdraw a No-Deposit Forex Bonus but you must first tradeit at least 20-25 times. Anyway that is a great way to start trading without any risk.


NO-DEPOSIT BONUS & BROKER

(1) AvaTrade offers $50 No-Deposit Bonus Review Broker and Information | Claim $50 Free Bonus

(2) InstaForex No Deposit Bonus Review Broker and Information | InstaForex Free Bonus

(3) XeMarkets offers $20 for joining the innovative Trading Contest Arena Review Broker and Information | XeMarkets Free Bonus

(4) Markets.com $25 No-Deposit Forex Bonus Review Broker and Information | Markets.com $25 Free Bonus

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Binary Options Trading Bonus

Binary Options constitute a relative new instrument to Trade Forex and otherFinancial Markets. These are some Binary Option Brokers and their bonus offerings.Be aware that trading binary options is considerably risky.

BINARY OPTIONS

BROKERUS TRADERS TRADING

MINIMUM

DEPOSIT & BONUSINFORMATION

GOptions Yes

Max Payout:90%70+ Assets

$20025-100% Bonus

ReviewBroker

Web-Site

CapitalOption NoMax Payout:85%90+ Assets

$100100% Bonus

ReviewBroker

Web-Site

StockPair

Max Payout:82%120+Assets

$20040% Bonus

ReviewBroker

Web-Site

OptionRally NoMax Payout:78%70+ Assets

$20030% Bonus

ReviewBroker

Web-Site

OptionsXo NoMax Payout:89%40+ Assets

$100Up to 100%

Bonus

ReviewBroker

Web-Site

Banc DeBinary No Max Payout:75%90+ Assets

$25050% Bonus

ReviewBroker

Web-Site

Note: Brokers Features & Promotions presented in this eBook may change any time.

Information, Reviews and Comparisons about Binary Options at Binaryvalue.com

No

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5. Forex Trading Rebates Promotionsdesigned for Advanced Traders

What is a Forex Trading Rebate?

A Forex trading rebate means making money from your trading volumes. Forexample if you have joined a rebate plan offering $5 per lot (lot = $100,000), andduring a certain month you have traded 20 lots, you earned $100. A trading rebatehas nothing to do with your overall trading performance, only volumes matter.

Where is the Catch?

There is no catch here. Simply Forex Brokers provide rebates to ProfessionalInvestment Consultants as an incentive to introduce them new clients. A part of thisrebate is given back from those professionals to real traders. This circle of money iscalled a Forex Trading Rebate.

Automatic Forex Rebates The best way to Trade Forex

An automatic Forex Rebate means a rebate that is earned directly to your tradingaccount without any interventions. You need again a Professional InvestmentConsultant as the intermediary.

Here are three Trading Rebate Plans from advanced ECN Brokers and informationhow you can join them. All three rebates are fully automated and 100% free of anycharge (sign or other fee). Furthermore all your other trading terms on these brokerswill remain exactly the same.

ECN BROKER REBATE PLANUS

CLIENTSMINIMUMDEPOSIT

FUNDMETHODS

INFO

HotForex

ECN / STPForex Broker

AutomaticRebate

No $50

Bank Wire,CreditCards,MoneyBookers, andmoremethods

Learn morehereFind moreInformation

AutomaticRebate Link

XeMarkets

STP ForexBroker

$7.0 / lot

AutomaticRebate

No $50

Bank Wire,CreditCards,MoneyBookers, andmoremethods


ManualRebate Link

$5.6 / lot

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FUNDMETHODS

INFO

FinFx

ECN FinnishBroker

FinFx $0.6 /lot discount onECN Accounts

The same$0.6 / lot forECN ProAccounts

AutomaticRebate

Or 0.25 pipsmanual rebatefor MicroAccounts

$150

Bank Wire,CreditCards,MoneyBookers


AutomaticECN Rebate LinkMinimum deposit$1,000

DukascopyBank

ECN SwissBroker

Dukascopy30% Rebateon allcommissionscharged

AutomaticRebate

No $5,000Bank Wire,Credit Cards

DUKASCOPYBANK Learn morehere

During theregistrationprocess at thestep KNOW USFROM indicate8410 as yourIntroducing Agent Register atDukascopy Bank-IndicatingKnown us fromIB 8410

DukascopyEurope

ECN BranchofDukascopy

Dukascopy10% Rebateon allcommissionscharged

No $100Bank Wire,Credit Cards

DUKASCOPYEUROPE Learn morehereDuring theregistration

No

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FUNDMETHODS

INFO

Bank AutomaticRebate

process at thestep KNOW USFROM indicate IB-8411 as yourIntroducing Agent

AutomaticRebate link

Other Web-Sites with Forex Promotions

(1) Binaryvalue.com (Binary Options Bonus)

(2) You may also find promotions in the Facebook page Visit Facebook/OnlineFx

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6. Six Different Forex Trading Styles Select your Own Style

These are the six main categories of Forex Traders (Trading Styles):

1. Curry Traders (Long Traders)

WHAT THEY DO?

They open positions lasting from 1 month to 9 months and aim to exploitinefficiencies in the level of interest rates between two economies. They usually liketo buy currencies offering huge interest rates (10-15%) and at the same time sellcurrencies offering lower interest rates. This difference can be transformed into hugeprofits for those who know how and when to trade it.

REQUIREMENTS:

When you open a position in the Forex Market that remains open more than 1 dayyou pay or get paid what is called as the Swap value. Swap charges are calculatedbased on the level of interest rates between two currencies. These interest ratedifferences can sometimes work for you and some other times against you.Therefore if you trade long you need a Forex Broker offering the best terms asconcerns the swap charges. Additionally you need a broker offering a wide assetindex. An asset index is the portfolio of currency choices that you will be able totrade. This asset index varies depending on your broker. The more currency choicesyou have the easier it will be for you to exploit interest rate inefficiencies. When youtrade long, you dont care about the spreads, the technology, delays etc.

It is essential that a long-trader must be able to understand fundamental analysisand the correlation between inflation, interest rates and the current Forex currencyrates. I would need another eBook just to explain this correlation furthermore.

2. Swing Traders

WHAT THEY DO?

They open and close positions lasting from 1 day to 15 days. They aim to exploitmid-term trends because 1 week is considered mid-term in Forex Trading. Swingtraders are some of the most successful Forex Traders there is. They avoid tradingintraday as they dont like the so called market noise of intraday trading.

REQUIREMENTS:


Swing trading is one of the best ways to trade Forex. In order to evolve as a SwingTrader you need a little bit about everything. You need narrow spreads, reasonableswap charges, relative good technology and also a broker offering a wide assetindex. Swing traders are using both technical and fundamental analysis.

3. Intraday / Short Traders

WHAT THEY DO?

They open and close positions in the same day. This type of Forex traders is focusingsolely on technical analysis. Short-traders use either their own system to trade orthey pay a monthly subscription to an external signaling service. The alerts ofsignaling services are delivered via SMS, email, Facebook, Members Area etc.Information about Live Forex Signaling Systems is found in Chapter-7.

REQUIREMENTS:

Basically two things really matter. First of all you need the perfect technology withminimal delays. Secondly you need a Forex Broker offering very tight spreads andsmall trading commissions. Short-Trading is all about paying minimal cost. If youwant to evolve as an Intraday Trader, think about joining a trading rebate plan too.A trading rebate can minimize your trading cost. You may find three ECN rebateplans at the Chapter-5 of this eBook.

4. News Traders

WHAT THEY DO?

They are trading important news and events, perfect information and top technologyare considered absolutely a must for News-Traders.

REQUIREMENTS:

The same requirements needed as the Intraday Traders (News-Traders are IntradayTraders too).

5. Forex Scalpers

WHAT THEY DO?

As it was mentioned in Chapter-1, scalpers open and close positions in tinytimeframes lasting less than one minute. They aim to scalp the market and earn 2-10 pips.

REQUIREMENTS:


Scalpers need perfect technology and minimal transaction cost -But all that is neededin a much higher extend than the case of the usual intraday trader. Usually scalpersare not trading Forex manually but instead they trade via the use of an automatedsystem (copier or Robot). You can learn about automated scalping systems in theChapter-7 of this eBook.

Keep in mind that usually scalpers trade exclusively three currency pairs. The reasonis that these 3 pairs enjoy high liquidity and therefore minimal transaction cost:i) Euro against the US Dollar (EUR/USD)ii) British Pound against the US Dollar (GBPUSD)iii) US Dollar against the Japanese Yen (USD/JPY)

6. Copy Traders / Social Traders

WHAT THEY DO?

Following (copying) the trading activity of other traders. This procedure is also calledas Social Trading (nothing to do with common Social Media).

REQUIREMENTS:

Social trading is booming nowadays. In order to make money from this type oftrading you need a social trading platform, for example ZuluTrade and MirrorTrader.Social trading platforms are again free to download and to use.

The ZuluTrade Platform

Furthermore you need good technology too, but most importantly you need anexcellent instinct to select the perfect signal provider. All social trading platformsoffer the chance of monitoring the past performance of any signal provider. You canalso compare providers based on your criteria.

http://tradingcenter.zulutrade.com


7. Live Forex Trading Signals & ForexRobots

(i) Live Forex Trading Signals

What is a Live Forex Trading Signal?

A Live Forex trading signal is an alert for buying or selling a Forex Currency Pair. Thisalert can be delivered either manually or automatically. Manual alerts are deliveredvia classic methods as email, Facebook, SMS, twitter, members area etc. Automaticalerts are delivered via a signal copier. Usually automated trading signals are basedon MetaTrader4.

Which are the Criteria When Choosing a Forex Signaling Service?

A Forex signaling service is provided usually for a monthly subscription between 50-150 USD. First of all you must focus on a service that is able to cover all your needs(manual or automated trading, delivery method, frequency of signals etc).Furthermore, it is important to focus also on the past performance of each service.Sometimes, these services offer also a trial period of a few days.

Here is a list with popular Forex Signal Providers:

SIGNALPROVIDER

STYLE TRADING COST INFORMATION

SIGNALS &MENTORINGCLUB

AutomatedTrading ManualTrading NewsTrading SocialTrading Forumswith Reports Learning

ForexCurrencies GoldTrading Stocks &IndicesTrading

77 USDper month

Review System

Visit Web

http://fxpros.net/index.php/fx-signals/vladimir-forex-signals-clubhttp://4476fagbo8pl0kcrn1knxa2me3.hop.clickbank.net/?tid=QZKGWK65http://4476fagbo8pl0kcrn1knxa2me3.hop.clickbank.net/?tid=QZKGWK65


SIGNALPROVIDER

STYLE TRADING COST INFORMATION

TRADE MINER

DesktopTradingSoftware ManualTrading

ForexCurrencies FuturesTrading StocksTrading Metals

97 USDfor one-time

Review System

Visit Web

MBFXTRADING

ManualTrading SMS Alerts

ForexCurrencies GoldTrading StocksTrading

97 USDfor one-time

Review System

Visit Web

AUTO BINARYOPTIONSSIGNALS

ManualTrading SMS Alerts eMail Alerts

BINARYOPTIONSTRADING

ForexCurrencies Stocks &IndicesTrading

120 USDfor one-time

Review System

Visit Web

ELITESIGNALS

AutomatedTrading ManualTrading

ForexCurrencies GoldTrading

49 USDper month

Review System

Visit Web

FX TRENDYTRADINGSYSTEM

ManualTrading eMail Alerts

ForexCurrencies

37 USDevery 3-months

Review System

Visit Web

Find Signal Providers and Trading Systems Reviews at FxPros.net

Expert Advisor Reviews at ForexRobots.net

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(ii) Forex Robots (Expert Advisors)

What is a Forex Robot?

A Forex Robot (or else an Expert Advisor) is a piece of software that plugs in aTrading Platform in order to trade Forex automatically. These systems are usuallyrunning on Metatrader4. If you want to trade using a Forex Robot you need toptechnology and probably a VPS hosting service (explained later).

The Criteria When Choosing a Forex Robot

A Forex Robot is designed to perform a very difficult task so there are manyparameters defining your best choice. Here are some important factors that must betaken into consideration:

(1) Past Performance of the Robot(2) Who is the Developer?(3) What is the average frequency of trading?(4) Is there any Money Management Mechanism (spread and slippage control etc.)(5) What is the Price of this system? Can I use it in more than one Live Account?(6) Does my broker allow the use of a Forex Robot? (usually ECN /STP brokers allowtrading via the use of Forex robots)(7) Is my broker suitable for automated trading? (spreads, execution speed etc)(8) Will I need a VPS hosting service? (probably the answer is yes)Furthermore:(9) Test always any system in a demo account before using it in a real tradingaccount.(10) Never mix the use of a Forex robot with other trading activity, it may confusethe robots Money-Management System


POPULAR FOREX ROBOTS (EXPERT ADVISORS)

Here is a list with popular Forex Robots (Expert Advisors):

FOREX ROBOT STYLE PLATFORMONE-TIME

COSTINFO

FAP TURBOFOREX ROBOT

Scalpingmany ForexCurrenciesin the M15Chart

MetaTrader4

149 USDfor one-time FreeLifetimeUpdates 1 ForexLicense

Review System

Visit Web

WALLSTREETROBOT

Scalping:EUR/USD,GBP/USD,USD/JPY,USD/CHF,AUD/USD,NZD/USD

MetaTrader4

MetaTrader5

299 USDfor one tine 3 ForexLicenses Free theOmegaIndicator

Review System

Visit Web

GPS FOREX

Scalpingmanycurrenciesduring theAsianSession

MetaTrader4

MetaTrader5

149 USDfor one time 1 ForexAccountLicense

Review System

Visit Web

VOLATILITYROBOT

ScalpingonlyEUR/USD,GBP/USD

MetaTrader4

190 USDfor one time 1 ForexAccountLicense

Review System

Visit Web

FXMEGADROID

ScalpingonlyEURUSD

MetaTrader4

ZuluTrade

67 USDfor one time

Review System

Visit Web

Find Expert Advisors and Trading Systems Reviews at ForexAutomatic.com

What is a VPS Hosting Service?

In order a Forex Robot to trade effectively it requires to remain active 24 hours perday. This problem can be solved via the use of a VPS. A VPS is an external hostingservice that allows the Robot to trade 24 hours per day without having your PC,Laptop or Tablet turned on.A VPS usually costs about $40 per month but certain brokers offer that service forfree.

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8. Forex Trading Resources

(i) Major Currency Symbols

CURRENCY CODE SYMBOL FOREX SLANGUS DOLLAR USD $ Dollar Buck

EUROPEAN EURO EUR Fiber

SWISS FRANC CHF CHF Swissy

BRITISH STERLING GBP CableJAPANESE YEN JPY Yen

CANADIAN DOLLAR $ Loonie

AUSTRALIAN DOLLAR AUD $ Aussie

NEW ZEELAND DOLLAR NZD $ Kiwi

(ii) Six (6) Main Types of Trading Orders

These are the six (6) important order types when trading Forex:

(1) Market Order

Buying or selling a currency pair at the current market price.

(2) Limit Order

Buying or selling a currency pair at a pre-determined (limited) price.

(3) Stop-Loss Order

A stop-loss is the most important order type. A stop-loss sets a limit to the maximumamount you are willing to risk in any trade.

(4) Target Profit Order

This common order sets your targeted price level. It pre-determines your profitpotential.

(5) Limit Entry & Stop-Entry

Buy or sell a currency pair below or above the market at a pre-specified level.

(6) OCO Order

OCO means One-Cancels-Other. Based on this order if a trade is executed thenanother trade is automatically cancelled.

(7) GTC Order

GTC means Good-Till-Cancelled. A GTC order remains in the market active until it iseither filled or cancelled.


(iii) Currency Pairs and Changes in Historic Volumes

Source: Aite Group Global FX Market Update 2013: Increased Market Transparency, More Competition


(iv) Forex Calendar / Heat Map

This Forex Heat Map Table is based on statistics between the years (2000-2013).The full research was published on www.TradingCenter.org.

Source: ForexAutomatic.com / TradingCenter.org

http://www.tradingcenter.org/


9. Forex Trading Glossary

AADX (Average Directional Index)

ADX is a technical analysis indicator measuring the strength of a trend.

Appreciation of a Currency

A currency is appreciated when it earns value against another currency. This may bedue to fiscal or monetary developments or simply due to market psychology. Amonetary policy aiming domestic currency appreciation is called a Hard-CurrencyPolicy. The opposite situation is called currency depreciation.

Arbitrage

Arbitrage is a short-term trading type that aims to take advantage of marketinefficiencies. That means buying an asset in a particular market and at the sametime selling the same asset in another market.

Ask and Bid

Ask means the price that you may buy a financial traded asset and bid means theprice that you may sell it.

Example: Buying at 80.00 (bid) and Selling at 80.02 (ask)

Aussie

Aussie is a slang name that is used for the Australian dollar (AUD).

B

Bank of Canada (BOC)

Bank of Canada is the Central Bank of Canada responsible for the Canadianmonetary policy.

Visit the Bank of Canada

Bank of England (BOE)

Bank of England is the Central Bank of England responsible for the UK monetarypolicy.

Visit the Bank of England

http://www.bankofcanada.ca/http://www.bankofengland.co.uk/


Bank of Japan (BOJ)

Bank of Japan is the Central Bank of Japan responsible for the Japanese monetarypolicy.

Visit the Bank of Japan

Balance of Trade

Balance of Trade measures the difference between the value of imports and exportsof a country for a particular time frame (usually monthly or annually). When theoutcome is negative Trade Deficit is created and when it is positive Trade Surplus isachieved.

Bank Rate

A Bank rate is the interest rate charged by the central bank of a particular countrywhen it lends capital to the domestic commercial bank institutions. It is used bycentral banks as a tool to control money supply in the economy.

Bar Chart

A Bar Chart is a very popular chart type where prices are indicated as bars and lines.

Base Currency

In a currency pair, the base currency corresponds to the first quote.

Bear Market or Bearish Market

Bear or Bearish market is a market that is expected to trend downwards.

Beige Book

The Beige Book is a collection of US FED (Federal Reserve) reports containingimportant reviews regarding the US economy.

Breakout

Broker

A broker is the market participant who operates as the middleman between tradersand commercial institutions. A broker may execute buy and sell orders on behalf ofhis clients charging a predefined commission.

Compare Forex Brokers using the Rating Formula v4.0

Breakout is technical analysis term describing the breakdown of a trend belowsupport levels or above resistance price level. When a breakout occurs usuallytraders react nervously and the result is high volatility and high trading volume.

https://www.boj.or.jp/en/http://fxpros.net/index.php/forex-ratings/compare-forex-ratings


Brokerage

Brokerage is the act of a buying and selling financial assets on behalf of third parties.

Bull Market or Bullish Market

Bull Market or Bullish Market is a market that is expected to trend upwards. Theopposite is a bearish market.

Bundesbank

Bundesbank is the Central Bank of Germany. As Germany is a member of eurozone,Bundesbank is coordinated with the policies of European Central Bank (ECB).

Visit the German Bundesbank

CCable

Cable is a Forex slang used for the British Pound against US Dollar (GBP/USDcurrency pair).

Candlestick Chart

A Candlestick chart is a technical analysis chart where prices are indicated usingJapanese Candles.

Carry Trade

Carry trade means keeping a trading position with a positive overnight interestreturn. Individuals who are practicing curry trading are called curry traders.

Cash Flow

It is the difference between cash inflow and cash outflow of a company during aparticular period from one month to one year. Cash flows are indicating the ability ofa company to generate money and are highly valued by all investors.

Categories of Forex Pairs

There are three Main Categories of Forex Currencies:iv) Forex Majors (the most popular Forex pairs)v) Forex Minors (expensive to trade)vi) Forex Exotics (very expensive to trade)

The Forex majors include: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD,AUD/USD and NZD/USD.

http://www.bundesbank.de/


CCI (Commodity Channel Index)

CCI is a cyclical technical indicator identifying when a market is overbought /oversold.

Central Banks

Central Banks are authorized institutions by governments to regulate and to controlthe domestic banking sector. In addition central banks are implementing the nationalmonetary policy.

CFD (Contract for Difference)

A contract for difference is a specialized trading instrument that provides speculationon stocks, indices, commodities and other financial assets.

Chain Store Sales Indicator

It is an economic indicator for measuring the dynamics of retail sales.

Clearing Process

Clearing is the process of trade settlement.

Collateral

The term collateral describes the amount that is deposited by a trader as insurancein order to trade.

Commission

Trading Commissions are charged by brokers in order to offer their brokerageservices. Some brokers do not charge commissions as they gain profits from thespread between bid and ask.

Confirmation

Confirmation in technical analysis is the process when some indicators are used toconfirm the results of another indicator.

Correction

Correction means a pullback of the price of an asset after a strong movement hasoccurred. A normal correction should count no more than 10% of the mastermovement.

Counter Currency

In Forex trading the counter currency is the second currency of a Forex pair. Forexample in EURUSD, the counter currency is USD.


CPI

CPI stands for consumer price index. CPI is the statistical measure of inflation and itis based upon the changes of prices of a specified goods and services.

Currency Option

A Currency Option is an option contract that has as its underlying asset a Forexcurrency pair (for example GBPUSD). In general a currency option provides its holderwith the opportunity but not the obligation to buy or to sell one currency for anotherat an agreed quote and within an agreed time period.

Valuating a Currency Option:

As in the case of every other Option Contract the valuation relies on:

(i) Intrinsic Value (The difference of the Current Exchange Rate and the Pre-AgreedExchange Rate)

(ii) Time to Maturity (More time adds value)

(iii) Volatility (The greater the volatility of the underlying asset the greater the valueof the option contract)

Currency Pair

A currency pair is a quote of two currencies. In any currency pair the purchasedcurrency (First) is called the Base Currency (EUR) and the sold currency (Second) iscalled the Quote Currency.

Currency Rate

A currency rate is the price rate of a particular currency against another particularcurrency.

Currency Symbol

A Currency Symbol (i.e. USD, NZD) is indicating a particular currency.

D Day Order

A Day Order is an order to buy or to sell a financial traded asset that will stay activeuntil the end of the trading day.

Divergence

Divergence in technical analysis means that the charts produced by indicators differfrom price charts.


Double Top / Bottom Formation

This is a technical analysis pattern which occurs when the price of an asset reachestwice a certain price level and then reverses its trend. There is also the Triple Top /Bottom Formation.

E

Economic Indicator

An Economic indicator is a fundamental indicator describing important trends in aneconomy (GDP change, unemployment, inflation etc).

ECN Broker

An ECN broker is a Forex brokerage company that is able to provide its clients withdirect access to the Electronic Network of Banks (ECN). ECN brokers usually offer thebest terms to trade Foreign Exchange (tight spreads and no price manipulation). Inaddition most ECN brokers allow Forex scalping and hedging. ECN brokers don'ttrade against their clients as market makers and in general they are considered asthe best choice to trade Forex.

Efficient Market Theory

It is a market theory which assumes that all important economic and other factorsare already incorporated in the current prices.

European Central Bank (ECB)

The European Central Bank is the financial institution authorized by the EuropeanUnion to regulate Eurozone and implement Europes monetary policy.

Visit the European Central Bank

Exchange Rate

In Forex an exchange rate is the rate that a currency can be bought or sold foranother.

Expert Advisor

An Expert Advisor (EA) is a piece of software (script) that plugs into a tradingplatform and it is designed to open and close positions automatically without humancontrol.

FAP Turbo Forex Bullet Proof ForexGrowth Robot

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F

Fed

FED or Federal Reserve Bank is the central bank of the United States of America.

The FEDs web-site

Fibonacci Retracement

The Fibonacci Retracement is a popular technical analysis tool for trading Forex,Stocks, Indices etc. The Fibonacci Retracement indicates the crucial levels for a trendbreak or bounce. These levels are calculated as the 23.6%, 32.8%, 50.0% and61.8% of the current trend range.

Flat Market

A Flat Market is a market without a particular direction. Flat markets are commonphenomenon at periods when trading activity is minimized (for example during Julyor August).

The Fibonacci Levels: 23.6% | 32.8% | 50.0% | 61.8%

ForexForex means FOReign EXchange and it is a global market where the worldscurrencies are traded, one currency against another. Central Banks, CommercialBanks, Large and Small Corporations, Institutional Investors, Individual Traders andCommon Tourists occasionally need to exchange one currency for another.

Free Float

Free Float in stocks trading is the number of free shares available to the investingpublic as a percentage of the total shares capital outstanding.

Fundamental Analysis

Fundamental Analysis is the financial analysis which is based only on fundamentalnews and events. Fundamental Analysis includes economic factors such is thechange of inflation, GDP, unemployment, interest rates etc.

G

G8

G8 is a group of the 8 most developed countries in the world, including the US,Japan, United Kingdom, Germany, Russia, France, Italy and Canada.

http://www.federalreserve.gov/


Gap

A Gap is the price difference between the previous period's closing and the nextperiod's opening. Usually gaps are occurring after weekends (Friday's closing priceand Monday's opening price).

GDP

The Gross Domestic Product (GDP) is measuring the aggregate value of goods andservices produced by an economy during a certain time period. The Gross DomesticProduct is a very important economic figure.

GNP

The Gross National Product (GNP) is measuring the total gross domestic product(GDP) plus income, gained from investments or work abroad.

Greenback

Greenback is the Forex slang for the US Dollar.

HHard-currency policy

A monetary policy imposed by Central Banks aiming the domestic currencyappreciation against other currencies. This policy is achieved usually via the increaseof the level of domestic interest rates.

Hedge Funds

Hedge Funds are investment funds that hedge their investment positions againstrisk.

Find Hedge Funds at Capitalinvestor.org

Hedging

Hedging is a method of diversifying risk when trading the worlds Financial Markets.Practical it means opening and maintaining a certain market position in order tooffset the risk of another trading position. For example if you are long (buy shares)on Apples stock you may short (sell) the whole Nasdaq Index. Professional tradersare always trying to hedge against their portfolio risk and avoid trading naked.

Home Sales Indicator

It is a macroeconomic indicator measuring the sales of real estate at the secondaryhousing market.

http://capitalinvestor.org/index.php/investing/hedge-funds


Housing Starts and Permits

It is an index measuring the current number of houses under construction and thecurrent number of construction permits.

I

IFO

IFO is the German business optimism index measured by the German Institute ofEconomic Research.

Visit the German Institute of Economic Research

Industrial Production Index

It is an important macroeconomic index measuring the total output of industrialproduction in a certain time period.

Interbank Rates

Interbank Rates are the currency rates imposed by large International Banks in orderto lend capital to other banks.

Intraday High

It is the highest price of trading activity in a particular day.

Intraday Low

It is the lowest price of trading activity in a particular day.

Intraday Trading

Intraday-Trading or Day-Trading means buying and selling a financial traded asset(for example a currency pair) during the same day.

Inflation

Inflation is an economic index measuring changes in the level of prices of goods andservices. Inflation is often called as the hidden tax as it diminishing the purchasingpower of consumers. In general, higher levels of inflation constitute bad news forthe economy.

JJapanese Economy Watchers Survey

It is a survey measuring the business climate in Japan.

http://www.diw.de/en


Japanese Machine Tool Orders Indicator

It is an indicator measuring the total value of new orders placed with machine toolmanufacturers.

Jobless Claims

It is an important macroeconomic indicator measuring the number of registeredunemployed.

KKiwi

Kiwi is the Forex slang of the NZD (New Zealand Dollar).

Knock-Ins Strategy

It is an options trading strategy that requires the underlying asset to reach a certainprice level before a previously bought option becomes active.

L

Leading Indicators

By Leading Indicators we are referring to an index containing the most crucialmacroeconomic indicators.

Leverage

Leverage Rate describes the ratio between the owned capital and the total capitalinvested. The total capital invested incorporates the owned capital plus the borrowedcapital.

Stocks Trading: Leverage usually 2:1

Forex Trading: Leverage usually 200:1

Liquidity / Liquid Market

A liquid market is a market that a lot of buyers and sellers are participating. Thathigh market activity is generating high trading volumes. Liquid markets offer the bestterms for short-trading (tight spreads, easy entry, easy exit).

Long

Go Long means buying a financial asset. The opposite of Go Long is to Go Short(Selling).


Lot

Lot is the standard unit size of a transaction. As concerns Forex Trading there arethree lot sizes:

Micro Lot Size which equals $1,000

Mini Lot Size which equals $10,000

Standard Lot Size which equals $100,000

M

Margin and Margin Call

Margin is the minimum capital that an investor is obligated to keep in his tradingaccount as insurance in order to maintain a trading position. If a position worth$10,000 and the margin level is 50% then the investor must maintain $5,000 cashon his account. If this position is losing money then his broker may issue a MarginCall which means demand for more cash in order the position to remain active.

Momentum

Momentum is technical analysis term which means that the price of a financial assetshows strength to move in a particular direction (uptrend or downtrend).

Moving Average (MA)

Moving Average is one of the most popular technical analysis indicators. The movingaverage is calculated as the average price of a series of periods. The most commonmoving averages are calculated by the average price of 50 and 200 periods. Thereare a lot of different ways to calculate a Moving Average:

1- Simple Moving Average

2- Exponential Moving Average

3- Weighted Moving Average

4- Cumulative Moving Average

N

Net Factory Orders

Net Factory Orders are measuring the net change of industrial activity (industrialorders).


Nonfarm Payrolls

The Nonfarm Payrolls measure the aggregate number of employees on the payroll inan economy except the agricultural sector.

O

Old Lady

Old Lady is a Forex slang which corresponds to the Bank of England (BOE).

Open Order

An open order is an order that will stay active until it is filled or canceled

Open Position

An open position is an active trading position.

Oscillator

An Oscillator is a technical analysis tool used for price movement forecast.

Output Index

An output index is an index measuring the production volume output.

PPAMM Account

PAMM means Percentage Allocation Management Module and it is an account typeoffered by some brokers allowing Professional Asset Managers to manage otherstrading funds. PAMM accounts offer reliability and security on behalf of traders asMoney Mangers cant withdraw their funds.

Compare PAMM Accounts at Forex Automatic

Personal Spending Indicator

The personal spending indicator measures the change of individual spending in aneconomy. When individual spending is increased then the market expects highergrowth and higher inflation in the future.

Pip

A Pip is the minimum level that a price can change. In Forex Trading a pip is the lastdigit of an exchange rate

if GBP/USD rate is 1.5001 then 1 pip equals 0.0001.

http://forexautomatic.com/index.php/explore/layout/forex-brokers/forex-pamm


Pivot Point

A Pivot Point is an average price that is calculated based on the previous High, Lowand Close and it is considered as an important support / resistance level.

PPI (Producer Price Index)

PPI is the index of producer prices. When PPI increases it means bad news for thecorresponding economy.

Premium

A premium measures the amount at which future prices will surpass the current spotprices. The opposite of a premium is a discount.

Price Channel

A price channel is a range that sets the limits of price movement.

QQuotation

Quotation is the process of indicating the value of a currency in the units of anothercurrency.

Quote

Quote is a market price.

Quote Currency

In Forex Trading, the quote or counter currency is the second currency in a currencypair. For example, in EURUSD, USD is the quote currency.

RRetail Price Index (RPI)

It is a UK macroeconomic indicator measuring the change of retail prices.

Rollover

Rollover has many meaning in finance, when trading derivatives it means moving thedelivery date forwards.


RSI

RSI means Relative Strength Index and it is a very popular technical analysisindicator that measures the strength of a price movement and indicates overboughtand oversold levels.

Overbought above RSI=70 | Oversold below RSI=30

SScalping

Scalping is a Forex Trading technique that means opening and closing manypositions in tiny segments of time (maximum 1-2 minutes) and targeting returns of5-20 pips. Those traders who scalp Forex are called Forex Scalpers.

Slippage

Slippage on execution of an order means opening or closing a trading position indifferent price than expected. It is a delay on order execution that can highly disturbshort-term traders and especially scalpers.

Spot

Spot is a transaction that is carried out immediately but the payment is settled withintwo days.

Spread

Spread is the difference between ask and bid of the price of an asset and it ismeasured in Pips.

Square

It is a situation when the total profits materialized in a certain trading period areequal to the total losses.

Sterling

Sterling corresponds to the British Pound (GBP).

STP Execution

STP means Straight-Through-Processing and it is a type of Forex Execution thatdoesnt involve manual intervention or order execution.

Support & Resistance

Resistance is a price level of important expected supply and support is a price levelof important expected demand.


Swap

SWAP charge is the overnight value for holding a trading position. In Forex trading,the SWAP value may be negative or positive based on the level of interest rates ofthe two currencies you buy and sell.

Swissy

Swissy is the Forex slang name for Swiss Franc (CHF).

TTake-Profit Order

A Take Profit Order is a trading order that will close a certain trade when it willreaches a particular price level.

Technical Analysis

Technical Analysis is a popular method of forecasting the future price direction of anasset or a market based on historic price data and chart examination.

Thin Market

A thin Market is a market suffering from limited liquidity.

Tick

Tick is the minimum one time price change of a financial traded asset.

Time Cycles

Time Cycles are used to describe the repetition of price movements forming apattern in particular time frames.

Trader

A trader is an individual who is buying and selling financial assets in order to make aprofit.

Trading platform

A Trading platform is a software program that can be used for trading the financialmarkets.

Compare Trading Platforms at ForexAutomatic.com

http://forexautomatic.com/index.php/explore/layout/forex-platforms/platforms


Trailing-Order

A trailing order is an order that changes as the price changes. This could be a trailingstop-loss or a trailing take-profit order.

Transaction Cost

Transaction cost is the incorporated trading cost when buying or selling a financialasset.

Trend

A Trend is a strong market direction that may be either an Uptrend or a Downtrend.

UUncovered Transaction

An uncovered position is a position that isnt yet filled (open position).

Unemployment Rate

The unemployment rate is a very important macro-economic figure which indicatesthe percentage of unemployed population against the total number of labor-ablepopulation in an economy.

Uptick

An uptick is called the new price quote if it higher than the previous price quote.

Uptrend

An uptrend is an ascending price trend which is usually found in bullish markets

VValue Date

Value date is the date of settlement of a spot or a rward deal.

Value Spot

Value Spot means a settlement after two working days from today.

Volatility

Market Volatility is a statistical measure that calculates the number of price changesin a market for a given period of time.

Volume


Volume measures the level of trading activity in a financial market.

VPS

VPS means Virtual Private Server and it is a method of hosting a software applicationon an external server. VPS is commonly used for trading Forex via Expert Advisors(Forex Robots). The advantage of a VPS hosting is that it allows trading 24/5 withouthaving your PC open.

W

Wash-Trade

Wash Trade means a trade with neutral results, no profit no loss.

Wholesale Prices Index

Wholesale Prices Index is a macroeconomic index measuring the rate of change inthe wholesale prices.

Y

Yard

Yard in Forex Trading is a slang that means 1 billion US Dollars.

ZZEW

ZEW is the Center of European economic research. It was found in 1990 and it islocated in Germany (Hamburg).

Visit the ZEW

http://www.zew.de/


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Economy & Finance

Forex Trading Guide v2.0 -Online Foreign Exchange Traders