Beginner’s Overview of Foreign Currency Exchange

Foreign currency exchange trading can be very rewarding, but can also be very intimidating to a beginner. To get started, you will need to know some basics:

1. What is foreign currency exchange?
2. How is it traded?
3. What are the benefits?
4. What are the risks?
5. How can I get started?

What is Foreign Currency Exchange?

The Foreign currency exchange (FOREX) market is a cash (or “spot”) market for currency. Unlike the stock exchange, the FOREX market is not located on a trading floor or centralized on an exchange. Instead, it is entirely electronic within a network of banks and runs 24 hours per day Sunday evening (5:00 pm EST) through Friday evening (4:00 pm EST), excluding some holidays. The fact that it is all electronic means that you can tap into it from your computer.

How is it traded?

FOREX is traded in currency pairs, for example EUR/USD is the Euro base currency and the US dollar counter (or quote) currency. There are six major pairs: EUR/USD, GBP/USD (Great Britian pound vs. US dollar), USD/JPY (US dollar vs. Japanese yen), USD/CAD (US dollar vs. Canadian dollar), AUD/USD (Australian dollar vs. US dollar), and USD/CHF (US dollar vs. Swiss Franc).

Currencies are traded in dollar amounts called lots. For a “standard” account, one lot (called a standard lot) is $1,000 and controls $100,000 in currency. For example, when you place an order to buy one lot of EUR/USD, you are buying the EUR and simultaneously selling the USD. The margin you must put up to place the order is $1000 (for a standard lot). You are going long the EUR and expecting it to strengthen against the USD. For every increase of $0.0001 in the EUR, you make one “pip” (price interest point) equivalent to $10 per lot traded.

Similarly, for a “mini-account” when you place an order to sell one mini-lot (one-tenth of a standard lot) of EUR/USD, you are selling the EUR and simultaneously buying the USD. You are going short the EUR and expecting it to weaken against the USD. The margin requirement is $100.00 per mini-lot. For every decrease in the EUR of $0.0001 you make one pip equivalent to $1 per mini-lot traded.

Note that unlike trading stocks, there are absolutely no restrictions on short-selling in FOREX. Short-selling is exactly like buying – except that you’re selling of course.

The pip value and amount per pip per lot differs when the USD is not the counter or quote currency. For example, when buying the USD/JPY pair with a ask price of 109.00 (meaning 1 USD equals 109.00 yen), a change in the Japanese yen of 0.01 yen is equivalent to 1 pip or $9.17 per pip per lot traded ($9.17 = $100,000 x 0.01 / 109.00).

The broker makes money off the spread which is the difference in the quotation ask and bid prices. You buy the base currency at the ask price and sell it at the bid price. Generally, the major currency pairs have relatively low spreads. The EUR/USD is commonly two to three pips and the GPD/USD is commonly four to five pips. For example, the current bid/ask price for EUR/USD is quoted at 1.2322/1.2324. This means that you can buy 1 EUR (the base currency) for $1.2324 USD (the counter-currency). You buy at the ask price. You can sell 1 EUR for $1.2322 USD (you sell at the bid price). You will pay the broker the spread or $1.2324 - $1.2322 = $0.0002 = 2 pips. For a standard lot, the broker fee (in this example) is $10 x 2 pips = $20 per standard lot for a roundtrip trade (1 buy and matching sell or 1 sell and matching buy). For a mini-lot, the fee would be $1 x 2 pips = $2 per mini-lot for a roundtrip trade. The broker fee is automatically deducted from your account.

Obviously, if you buy (go long) a currency pair, you expect the base currency to increase in price. Your objective is to sell later at a price higher than you purchased and make a profit. On the flip side, if you sell (go short) a currency pair, you expect the base currency to decrease in price. Your objective is to buy later at a price that is lower than the price you originally sold, and thus make a profit off the difference.

There’s more to it than can be explained in this overview, but you should get the basic idea.

What are the benefits?

1. With FOREX trading, there is no inventory, no employees, and no customers. Your overhead can be as minimal as a home computer with internet access.

2. You can get started with a “mini-account” investing as little as $300.

3. Currency prices tend to repeat in relatively predictable cycles creating strong trends. Once you learn how to trade properly, you can compound your money, and potentially turn a little into a lot.

4. You can trade for a few hours per week, or much more if you want to. It’s all up to you.

5. The FOREX market is very liquid, with trillions of dollars traded every day. On its slowest day, orders can usually be placed within a few seconds if you stay with the major currencies. Instantaneous execution (1 to 2 seconds) is the norm during normal trade volume days (for the major currencies).

6. You can trade from just about anywhere as long as you have a computer with internet access to your account.

What are the risks?

1. The market can be very volatile, especially during times of major news releases, also known as “fundamental announcements.” The time of these announcements is usually known in advance. Many traders simply stay out of the market during these announcements and wait until market volatility has settled back down.

2. If you use too much margin or risk too much on any one trade, your account could suffer badly on a trade that doesn’t go your way. Proper risk management, including sound placement of stops and not risking more than 2 percent of your account on any one trade, can alleviate this risk. Do not risk more money than you can afford to lose.

3. A major world event could trigger a huge volatility swing that could wipe out your account (or even more). However, some brokers limit the loss to the amount in your account. (Of course, a major world event could also cause the trade to go your way.)

4. Trader psychology (fear and greed) can play a big role in your success or failure as a trader. Trading education is one of the keys to overcoming these human flaws.

5. You could fail to place a stop loss with your order. A change in price could force a liquidation of your trade if your account falls below the required margin maintenance. To alleviate this risk, always set a stop loss when you place an order.

This list is not meant to be inclusive. There are other risks.

How can I get started?

You can easily open an online account by selecting one from many available FOREX brokers. You can, and should open a demo account to practice (and learn) for several months for free. The practice account makes simulated trades using real-time data. This is called “paper trading.” You should not trade your real account until you have proven to yourself that you can be profitable in your demo account.

Once you get started, you can trade currencies from just about anywhere. About all you need is a computer with internet access to your trading account. Many brokers also provide free charting software.

Jim McCabe

How to Advertise Your way to Success?

I’ve read about all kinds of ways to advertise. And they all are promising. But, the truth is, There is only one way to advertise Successfully... So, what are the best ways to advertise?

Remember the one who advertises the most, makes the most money.

Think of advertising like going fishing:
1. You need good equipment (website, products to sell)
2. The best bait (ads, sales letter, advertising)
3. Know where the fish are biting (target the right prospects, every where)
4. Patience (relax and wait for a bite. Then reel them in)

The ABC’s of successful advertising:
A. Advertise
B. Business
C. Continuously

Advertising is the very heart beat of your business. No matter what business you’re in, doctor, lawyer, babysitter, painter, internet entrepreneur, etc. Why are some businesses so successful? Is it their products? Maybe, but I don’t think so. The main reason is not their products, it’s their advertising.

I’m here to tell you. Advertising is the key to your success. Stop or slow down on your advertising and your business will soon die. I guarantee!

You have to be dedicated to advertising 90% of the time and the other 10% should be used to find other products to sell, or creating better ads or sales letters.

Have you ever stop to think about all the advertising around you every single day?
Pick up anything around you right now, and you will see the brand name or logo of the company on it.. Any thing from remote controls, magazines, toys, ink pens, pencils, clocks, etc. Hey, what about your vehicle you drive, see the advertisement, Chevrolet, Ford, Toyota, etc. Tires have Goodyear, Firestone, and so on. Coffee, tea, bread, milk, bottled water, etc.
What about driving down the highway? Billboards, store fronts, semi trucks (company name on side of them.) Ups, FedEx, Cex, Pam, J. B. Hunt, etc.. What about tv, radio, the internet... Lets face it advertising is powerful and the way to your success.

Now, I’m going to knock you for a loop.. Did any of these advertisement have a single prospect in mind? No, they flashed their message before everyone..Why, because like fishing you just don’t know which fish are hungry and which ones will bite at any given moment... So you always have to be prepared for a bite from the strangest places...

Which leads us to the reason I wrote this article.

What are the best places to advertise? Everywhere online, offline. Make up some flyers, index cards, business cards. And place them at laundry matts, bulletin boards at the super market. In magazines while you wait at the doctors office, dentist office. Be creative.

Should you use free or paid advertising? Use both at all times. When you can’t afford to pay for any more ad postings, start placing free ads.

Hey, did you ever think about exit signs along the highway. Those signs are a sort of advertising. They are advertising the most popular exit. Which one is the most popular exit you ask? It’s the one your looking for to get off the highway.

Now, I know this may sound off the wall, but I don’t think so. Even nature itself advertises. Yes, it’s true. Say you are driving down a road and see a beautiful sunset.. And you say I would like to have a picture of a sunset hanging on my wall... What about pets nature gave us. Say you see a certain breed of cat, and you say I want a cat just like that one. What about dogs, You see a collie and you say man I would love to have a collie.. What about trees, You see a beautiful pecan tree and you go and buy one and have it planted in your back yard.. See what I’m trying to say here, advertising is every where.. You can’t escape it.. If you tried you would only run into another one. So, you also should be advertising every where you can.

Hey, check your cell phone. What brand is it? You might be that companies sales person and not even know it. How? By word of mouth. Say someone says to you, Wow, I really like the look of your phone, it looks cool. What kind is it, and you tell them. And now that person goes out and buys a phone just like yours. See what happened. You advertised that companies brand of phone by word of mouth.. And that company just got free advertising...

See how important advertising is. It’s like a river flowing free.. Until someone builds a dam and stops its flow.. How can we stop our cash flowing in, from our business? By stop advertising (we just built a dam.) And our river will dry up...(cash flow.) I can say from experience. If you follow this advise I’m offering you here, you will in time become successful.. Just wait and see. Don’t be a quieter, be a doer.. Stay focused and advertise everywhere...

Now here is another example: Say you are going on a trip to see someone Or vacation. Make sure you take some flyers, index cards, and business cards along with you..
Leave them in all kinds of places. Leave one on the table at a restaurant with the tip... How about placing business cards in the envelopes when you pay your bills.

Don’t just place 100 ads and say your done. You are never done placing ads. This is the life line of your business, your success depends upon it.

My moto is: The one who advertises the most, makes the most money.

When I can’t sleep. I get up and start placing ads. I look at it this way. If I get up only to watch TV, I’m spending money. But if I place ads I’m making money. I guess you can tell I’m so focused on advertising I even carry a small recorder with me at all times. This way if I think of a new title for a sales letter or ad. I just record it and come back to it later and write the ad. This works great for those with busy schedules. You have to be an aggressive advertiser to become successful at your business.

Tip for today: Start searching the web for new places to advertise. New ones pop up every day.
I even give my customers a free gift for just letting me know where they seen my ad...

Copyrighted 2006 & Beyond John Arrington. Reprint rights granted to all so long as this article and by-line are reprinted intact and all links made live.

66 Ways To Promote Your product or Services

Some guru sells his program because he has 60 ways of marketing. One Dentist was asked about his marketing he said he had 100 ways and use them all. Well I came up with 66 so far. I will work on more sometime after tax season or you can email me with ones I might have missed.


The true is you can’t use them all. Some are too costly for many of us. Some won’t work. Try as many as you like and find the ones that work and work them till they stop working or you stop working, whichever comes first.

Here they are:

1. Direct to Consumers
2. Party plan
3. Rack Jobbers
4. Wholesalers
5. Mail Order House
6. Resident Buyers
7. Fairs and Exposition
8. Chain Stores
9. Discount Stores
10. Lease Departments
11. Supermarkets
12. Free Publicity
13. Sales People
14. Franchising
15. Co Party
16. U.S. Government
17. Direct Mail
18. Co-op Mailing
19. Trade shows
20. Advertising Specialties
21. PX’s
22. Premiums
23. Classifieds:
24. In Papers
25. In Magazine
26. On the net
27. In Special papers
28. Articles
29. Ezine
30. Emails
31. Sig files
32. Radio
33. Television
34. Seminars (paid to You)
35. Bill Boards
36. Flyers
37. Brochures
38. Seminars you give free
39. Telephone
40. Referrals
41. E.books
42. Free Search Engines
43. Paid Search Engines
44. Post cards
45. Yellow Page ad
46. Cross Selling with others
47. Joint Ventures
48. Telemarketing
49. Take out Boxes with ads on
50. Posters
51. Booth at Mails or stand at mall
52. Man or Women with sign about your business
53. Window Display
54. Outside Signs
55. Articles for directories on the net
56. Free downloads with ads about your business products or services
57. Free Recording
58. Free Video
59. Free CD
60. Free Report
61. Free Samples
62. Special Events
63. Contests and Sweepstakes
64. Column in a Newspaper
65. Editorial writing by you
66. Free Phone Messages

Let me know at Joetrevis@aol.com if you would like me to explain any of these in a report that your interest in. It will be at least 2 pages with a lot of information.

Currency Trading Tips! Get Rich!

What are you really selling or buying in the currency market?

The short answer is nothing. The retail FX market is purely a speculative market. No physical exchange of currencies ever takes place. All trades exist simply as computer entries and are netted out depending on market price. For dollar-denominated accounts, all profits or losses are calculated in dollars and recorded as such on the trader's account.

The primary reason the FX market exists is to facilitate the exchange of one currency into another for multinational corporations who need to trade currencies continually (for example, for payroll, payment for costs of goods and services from foreign vendors, and merger and acquisition activity). However, these day-to-day corporate needs comprise only about 20% of the market volume. Fully 80% of trades in the currency market are speculative in nature, put on by large financial institutions, multi-billion dollar hedge funds and even individuals who want to express their opinions on the economic and geopolitical events of the day.

Meaning of Trading in Pairs

Because currencies always trade in pairs, when a trader makes a trade he or she is always long one currency and short the other. For example, if a trader sells one standard lot (equivalent to 100,000 units) of EUR/USD, she would, in essence, have exchanged euros for dollars and would now be short euro and long dollars. To better understand this dynamic, let's use a concrete example. If you went into an electronics store and purchased a computer for $1,000, what would you be doing? You would be exchanging your dollars for a computer. You would basically be short $1,000 and long 1 computer. The store would be long $1,000 but now short 1 computer in its inventory. The exact same principle applies to the FX market, except that no physical exchange takes place. While all transactions are simply computer entries, the consequences are no less real.

Great Returns in Currency Trading

The opportunities for unmatched returns and investment protection in the brave new world of foreign currency investing are second to none. In Foreign Currency Trading, financial executives Russell Wasendorf, Sr., and Russell Wasendorf, Jr., describe foreign currency trading in plain terms, and help you understand the risks, benefits, and operational requirements that you will need to take advantage of this market’s tremendous potential. Look to Foreign Currency Trading for clear explanations on the mechanics of foreign currency trading, in-depth discussion of all pertinent foreign exchange rules and regulations, and a comprehensive glossary with literally hundreds of terms essential to forex trading. With formerly imposing currency trading restrictions having been struck down in recent court rulings, the world of foreign currency trading is an exciting and rapidly-expanding field.

Forex : How To Handle A String Of Investment Losses

Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing.

Bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible.

What are the destructive patterns?

If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health.

Ask yourself the following question: during drawdown periods do I find myself over-indulging in these activities:

Food (especially junk food - e.g. chocolate, ice-cream, chips)?

Sex (includes viewing pornography)?

Alcohol?

Drugs (includes excessive smoking)?

Laziness (find it difficult to wake up in the morning)?

Entertainment?

All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!).

These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do?

Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT!

You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*.

Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain; you are experiencing the emotional pain, now it is time to find the error and therefore your growth.

Begin Your Review

The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie:

"YOUR SYSTEM" CHECKLIST

Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to program your system into back testing software)?

Did you test with out-of-sample data?

Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable??

Is your system's code correct?

Did you over-optimize your system? (What have we discussed about over-indulging?)

Did you paper trade your system prior to placing capital on it?

Did you trade with a small amount of capital prior to placing the rest of your funds on it?

Do you know the system's limitations?

Did you properly drill your system? (See our blog article on why I am the system designer from hell)

"YOU" CHECKLIST

Is the current drawdown you are exhibiting with your system normal?

Are you comfortable with your system's historical drawdown performance?

Are you fully aware of the risks involved with your system and the instrument(s) you are trading?

Are you trading with funds that you are comfortable risking?

Are you relying too heavily on your performance?

Have you set realistic goals?

As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance.

Your Answers = Change = Your Growth

What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors.

If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person.

Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it

Forex Facts

There are many benefits and advantages for trading currencies on the Foreign Exchange, better known as Forex.

The Forex Exchange was established in 1971. This market grew at a steady rate throughout the 1970’s, but in the 1980’s Forex grew from trading $70 billion per day to over $1.5 trillion each day.

There are many huge players in Forex, but it is accessible to the individual trader. Each lot traded is worth approximately $100,000. By using leverage, an individual trader is only required to have a $1000 investment in the trade. This is a 100:1 leverage. No other market offers this amount of leverage.

Forex is also an extremely liquid market. Because it is so large, you can buy or sell in only seconds where your trade is only a mouse click away. You can also preset an automatic close for your position. This means you don’t have to sit and watch your position, just place the trade, set an exit point and go what you want.

Forex trades virtually 24 hours, 7 days a week. It only closes from Friday afternoon until Sunday evening. This makes it possible to set your own trading hours. If you trade part time and want to place your trade at 3am, log into your account and trade. If you are a full time trader, the same applies. No other market lets you pick the hours you trade.

There are no commissions charged on Forex, only a small transaction fee. This is not possible in any other market, as brokers charge a commission on each trade in all other markets.

Because currencies are traded in pairs, so you are buying one currency and selling the other. For example, if an investor believes the US dollar will gain against the euro, you would buy the US dollar and sell the euro. It’s just that simple.

The potential for profit is good as there is always movement between currencies. Even a small change can result in substantial profits because of the large amount of money involved in the transaction.

First and foremost, before just opening an account and blindly making some trades, you need proper training. Study the market, learn the terms used in trading, set up a demo account with a currency broker. Then, and only then, use real money to trade.

What Is Forex? Get Rich!

Although forex is the largest financial market in the world, it is relatively unfamiliar terrain to retail traders. Until the popularization of internet trading a few years ago, FX was primarily the domain of large financial institutions, multinational corporations and secretive hedge funds. But times have changed, and individual investors are hungry for information on this fascinating market.

What makes the relative value of Currency fluctuate?

There are two reasons the relative value of a currency fluctuates. The first is because of a 'real' market: as outside investors or visitors wish to buy things within a country, they are forced to convert their domestic currency into the currency of the country they are buying within. Similarly, as money leaves the country, people must sell their currency for the foreign currency they will need to spend or invest abroad.

The second force for currency fluctuation is speculation. As investors feel a given currency will act strongly or weakly, they will buy or sell accordingly. This speculation can have drastic consequences on a national currency and consequently on a country's economy. During the East Asia Crisis in 1997, for example, as nations in Asia began facing economic downturns, speculators used currency trading to realize enormous profits and in many analysts' view helped to exacerbate the problem.

Benefits of Currency Trading

Currency trading has many very real benefits over equity trading like the stock exchange. The spreads for currency trading are extremely low, making the cost to a trader very low as well. The volatility of the currency market is extremely high, which means that a trader can generate enormous return on a given exchange. The ratio of volatility to spread is approximately 500:1 for the currency trading market, as compared to 100:1 for even the most ideal of stocks.

Until recently, the currency trading market was very closed to small investors. Banking conglomerates and large multinationals were the main movers of this market place. In the past few years, however, new technologies have opened the doors to investors of all stripes. It is difficult to miss the enormous benefit of this 'new' market for the individual investor: higher returns with lower risk given the same amount of market knowledge have a very small downside.