Forex Trading Insight

I'm going to give you some of my forex trading insight that should help you become a much better trader. This is the largest market in the world with over three trillion dollars a day in trades, so there is a huge potential for each person out there to make a profit.

The first piece of advice I'll give you is to stay up to date on the economic news that comes out. There is a lot of this and it really has an effect on currency. The value of a currency is held up by the economic policies, stability and current conditions, so it is imperative for you to understand what is going on. When you hear news about the GDP and unemployment rates, you can tell how this will effect the currency if they're good or not. You should also pay attention to any interest changes by the central bank. Essentially when interest rates change, the supply of currency will change. This change causes the price to change as well.

My next piece of advice is to trade during those high volume times. The reason is because the volume is high enough to keep things stable. There is no one trader that can come in and manipulate the market. This is a very common occurrence during low volume times. Large banks will make big trades which will cause the price of currencies to rapidly change, even going in opposite directions.

Lastly, you'll want to get yourself some automated software to look over your trades. You can't always be in front of the computer watching everything, so it's nice to have software watching it for you.

I'm currently giving a 7 day free forex course. Newbies and experienced are all welcome. If you're interested in participating, check out the Casual Forex Trader.

Reuters - A team from the U.S. Securities and Exchange Commission (SEC) is in India to meet the new board of fraud-hit outsourcer Satyam Computer Services on Thursday, the Times of India paper said, citing sources.

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Forex Trading Methods - Scalping Vs Day Trading

It's best to go over some short definitions and descriptions of each of these two forex trading methods.

Scalping

Scalping is basically short period trading. These periods where a trader holds a position can vary from seconds to minutes. Scalping is effectively trading the minutest moves in the market for usually a small profit.

To give an example a leveraged trading account with 100,000 EUR/USD position will earn/lose $10 per pip movement. That means a small 3 pip movement either way will add $30 to or lose $30 of the traders deposit.

Even though effective scalping involves highly leveraged positions the exposure to risk is lessened to some degree by the amount of 'time' that a trader holds his/her position so large movements are rarer (but beware can occur).

Scalping is a popular method of trading practiced by 'newbies' thrilled with the cat and mouse game of the market and some traders make a good living out of it but most traders, in fact close to 90% either break even or lose their deposits.

An added factor to consider is that brokerage houses do not like scalpers. Why? The reason is simple. When a position is taken by a trader the broker has the opposite position and needs to cover that position especially if the broker feels that the traders position is the right one for market conditions. If the broker then covers that position and a few seconds/minutes later the position is squared then the broker has a currency exposure and brokers are companies that generally don't like exposure. Most make their money on spreads and trading against their clients positions. Those scalpers that make money consistently find that most brokerage houses terminate their accounts. That doesn't mean to say that it will happen immediately but when a trading pattern does arise of scalping don't be surprised if your broker 'divorces' you!

Day Trading

Day trading is not really referring to the holding of positions by traders for a day but is more descriptive of the type of forex trader that prefers to hold on to a position for a longer period of time than a few minutes at most. These positions usually last for more than an hour, few hours and in some cases days.

A day trader is a 'different animal' to the scalper in that he/she is more comfortable with exposure to the risk of larger currency fluctuations. It's not because they have fatter wallets it's usually down to having more experience and a different trading temperament.

The profit motive for a day trader is also different. A day trader will look for larger moves within a single trade and be aware of and use for example greater technical analysis to calculate the best entry and exit levels.

Brokers tend to prefer these traders as they can do two things, firstly trade against their client by covering their exposure and go the other way if they have an opposing view or square (net out) the position.

Again there are a lot of losers in the day trade market due primarily to inexperience and a 'gambling' mentality that many participants in the forex market have.

The people who consistently make profits understand the market through experience of trading and knowledge acquired and are persistent and understand forex trading methods that are available and in what situations to use them.

To find out more how you can become a profitable trader on a consistent basis sign up to my Free Weekly Newsletter Here you will learn valuable tips to help you make money. Join Forex4Traders.com here to receive all the benefits.

Peter Burke MBA has been writing Journals and Articles for academic publications for over 7 years and is Managing Director of a Consulting Company in the United Kingdom and has 15 years of trading experience.

Reuters - Macy's Inc said on Monday it would slash about 7,000 jobs and cut its quarterly dividend as it forecast earnings for fiscal 2009 that fell far below Wall Street expectations, sending its shares down 4 percent.

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