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A BEGINNER’S GUIDE TO FOREX
A person new to Forex trading may seem bewildered by the terms involved and what questions to ask when getting started. In this article, I try to better equip the novice currency traders with the knowledge they need to start off right.
Every new field has its own terminology. Forex trading is no different with distinctive words and phrases. Some of the key terms are defined below:
Forex - It's an acronym for (foreign) (ex) change.
Spot - This is the cash market price for a currency. Options and futures contracts trade at the spot price plus or minus some differential.
Currency pair - A currency pair has a top term and a bottom term. Consider the euro vs. the U.S. dollar, or EUR/USD. The top term is the value of the currency in terms of the bottom term. In this case, how many dollars are worth one euro.
If EUR/USD is 1.00, then the euro would be equal to the dollar. If the euro rose in value and EUR/USD is quoted as 1.25, then the euro would be worth more than the dollar, specifically $1.25. This also means the inverse, that $1 can purchase only euro0.80.
The top term of the currency pair is also called the base currency. The second is the counter or quote currency. On a chart of currency prices, the direction of the chart is tracking the top term. So, in a chart of the EUR/USD if the price is rising, the euro is getting stronger.
PIP - this is an acronym for Price Interest Point. It refers to the minimum move that is tracked by the Forex market. Currency pairs are expressed in four decimal places, such as 1.0000. Thus, a one-pip move would be from 1.0000 to 1.0001. The value of a pip is $10 for the EUR/USD and GBP/USD because these relationships are quoted in dollars.
The Big Six - These are the currency pairs that are most traded. They are:
* EUR/USD: euro vs. the U.S. dollar
* GBP/USD: pound sterling vs. the U.S. dollar
* USD/CHF: the U.S. dollar vs. the Swiss franc
* USD/CAD: the U.S. dollar vs. the Canadian dollar
* AUD/USD: the Australian dollar vs. the U.S dollar
* USD/JPY: the U.S. dollar vs. the Japanese yen
Cross pairs - This is a currency relationship that does not involve the U.S. dollar. Examples of cross pairs would be EUR/GBP (euro vs. the pound), EUR/CHF (euro vs. the Swiss franc), EUR/JPY (euro vs. the yen), JPY/AUD (yen vs. the Australian dollar).
Bid/ask - Forex prices are quoted as a bid/ask. The value of any currency pair is therefore a representation of where the market is willing to sell and where it is willing to buy. As an individual trader, if you want to sell immediately, you will have to sell at the lower bid price, and if you want to buy immediately, you will have to buy at the higher ask price.
Spread - This is the difference between the bid and the ask price. The firm quoting the spread makes money based on the size of this spread. Spreads can widen with volatility and when markets are not that liquid.
Margin and leverage - A currency account is ready for trading once cash is deposited in the account. This cash is considered margin money, the amount that needs to be in the account to trade one currency lot. Traditionally, a lot means $100,000 in the foreign currency. So, if the firm permitted margins of 1% that would mean account holders could trade $100,000 in EUR/USD with just $1,000 of cash in their accounts.
Rollover charge - These charges may occur when a position is held overnight. Firms are charged interest that is prorated. The brokerage firm will pass that charge to traders, calculated from the close of the London session. If the base currency has a higher interest rate than the paired currency, the trader will be charged interest. Although the amount charged each day is very small, it can add up over time.
Mini accounts - These provide an ability to trade smaller sized lots. They are a more conservative option than high leverage for traders without much speculative capital. A $10,000 size lot is commonly quoted for mini accounts. This lot size would be valued at $1 per pip move in the EUR/USD. Mini accounts offer an opportunity to get a feel for trading Forex without much exposure to loss. Additionally, they are used by larger, experienced traders to test trading strategies in real markets with relatively little risk.


TOP THREE MISTAKES MADE IN FOREX TRADING
There are more than 48 million household traders in the United States and an increasing number of them are participating in Forex trading. Given the fact that Forex trading is still young compared to stocks, there are some common pitfalls that the traders need to be aware of. In this article, I present the top three mistakes that can be made in Forex trading.
Mistake #1Trade against the trend
Though it might sound counterintuitive, trading against the trend is one of the most common mistakes made by the investors. The phrase "the trend is your friend" has certainly shown itself to be a good mantra over the years and it is strongly recommended for traders in all kinds of securities and not just for Forex. The key to trading lies in recognizing that the trend represents the underlying momentum of the market and you should orient your trades in that direction as well.
One should wait for a trend to begin, and then take the plunge. If the trend extends over a period of time, and you stick with the trend, you can make huge profits over a period of time. On the other hand, if the trend fails, as some will, with a well planned timing strategy you can exit to cash, or reverse your position with only a small loss.
The one strategy you should never adopt is to take a contrary position and hope for a trend reversal. Such strategies never work and yet many traders try them and lose a lot of money!
Similarly, one should never react to trade surges and rather take cover and adopt a wait and watch strategy. Trading during an announcement or amid some turmoil results in distorted technical indicators and it is advisable that one waits for a confirmation of the new direction and acts accordingly. As an example, crash of the airplane in Queens on November 12th resulted in a currency surge which retracted within a short period of time.
Mistake #2Trading based on the advise of the so-called experts!
In the trading world, there are market makers with one goal – make a fair and orderly market for a specific security. In any exchange, the one reason that the price goes up is because there are more buyers than sellers and the reason the price goes down is that there are more sellers than buyers. Thus, there is an inherent conflict of interest amongst the experts as the companies they work for are also market makers and own stocks. Thus, the opinions of these experts should be considered after factoring any conflict of interest or ulterior motive they might have.
Similarly, many times apparently straight forward news from government actually serve to advance a specific policy agenda. Such news in the Forex markets is used as a tool to affect the investment psychology of the Forex traders. Thus, one should be extremely careful and always be on guard. Remember, that in Forex trading, how the event is reported is as important as the event itself!
Mistake #3Over analysis and trading with dozen indicators
It is a common folly to keep adding indicators and trying to analyze every single of those to determine the next trend or trade. One should understand that analyzing additional indicators does not add much value as it will either have redundant information or the information would already have been captured in an earlier indicator that you have already analyzed. The key indicators to consider should be the ones that provide clues to trend direction, support, resistance and buying and selling pressure.
How to deal with mistakes Like in other parts of your life, you need to deal with the mistakes you make in Forex trading and if done properly, you can be a much more wiser and prudent trader. Every mistake is a learning experience and rather than feeling frustrated one should approach mistakes in a positive manner and determine the cause of the mistake.
The first step is to define the mistake as it will prevent you from making the same mistake again. Next, identify the consequences of making that particular mistake - both good and bad and develop a strategy to change your behavior so that you are no longer prone to making the same mistake again. Make sure you become “this-mistake-proof” and turn every mistake into a small part of success in your trading career.


LEVERAGE IN FOREX TRADING
Most of the Forex traders trade using financial leverage. Traders can open a margin account which provides financial leverage allowing the traders to execute trades of the order of ten times or more than the size of the cash invested in the margin account. A margin account is a leverage account in which Forex can be purchased for a combination of cash or collateral. The loan is collateralized by the initial margin and if the value of the trade drops below a limit, the broker can either request for a deposit increase or liquidate a portion of your position.
It should be noted that the amount of leverage you can have in your margin account depends upon the broker and his comfort with you. A typical leverage is requiring a margin of 1% which means that you could trade $500,000 with only $5,000. Usually, the broker has a minimum account size (an account margin or initial margin) and one can begin trading once the initial margin has been deposited with the broker.
A broker can initiate a margin call if he thinks that your position is in risk of substantial loss. For example, if you have a position of $500,000 with a margin of one percent ($5,000) and your losses are nearing the margin ($5,000), he can either ask you to deposit more cash in your margin account or can close your position to limit the risk. It is advisable to have the broker in confidence and co-ordinate with him when making large trades. Some brokers require a higher margin at the weekends. For example, while they may require a 1% margin during the week, in order to hold a position over the weekend, they may require a 2% or higher margin. Typically, a high leverage (say 400:1) is provided small accounts (say $200 - $1000) and as an account grows bigger than the margin threshold, the margin reduces to 200:1 then 100:1 to 50:1. With the reduction in the leverage, the broker’s exposure to risk reduces.
Another key concept related to margins is - Variation Margin. Variation margin is the profit or loss your account is showing on open positions at any given point in time. For example, if you have a deposit of $10,000 with your broker and you decide to trade in 5 lots of USD/JPY which is $500,000. In order to execute this, the broker will require $5,000 (1%) in margin. Assuming the trade does not work out to your expectations and you lose $5010. This might result in your broker initiating a margin call even though you still have $4,990 in your account. The broker is motivated to initiate the call as he needs the security and protection from risk. Investing in Forex market is much more cost efficient as compared to investing in the stock or commodity markets when it comes to commissions and transaction fees. For example, while commissions for stock trades range from $7.95-$29.95 per trade and are in direct proportion to the services provided, the commission charged by Forex brokers is significantly lower. For example, brokers like AlaronFX, charge low fees, while still offering traders access to all relevant market information.
In addition, one can open a Forex trading account with a relatively low equity. While to open a day trading account for stocks, regulations require a minimum account size of $25,000, Forex accounts can be opened for as low as $200. Low minimums also give traders an opportunity to set up an “educational” account and learn while limiting their risk.
While leverage can be a good thing as it lets you enter into trades with smaller deposits, it also has its share of risk. The extent to which you are willing to leverage your portfolio depends upon your risk profile and comfort level.


TRENDS IN FOREX
Of all the sayings in the trading world, the one that you would hear most often is trend is your friend. Unfortunately, this is heard mostly when a trader has taken a countertrend position and suffered a loss. To avoid being in such a situation, one needs to understand the drivers behind the trends in a Forex market and equip themselves with analytical tools that enable trend analysis so that you can indeed make trend your friend.
Though Foreign currency markets are predictable, one can only predict them with a certain level of accuracy for part of the time. Estimating and predicting trends in the Forex market for an extended period of time and on a regular basis is fraught with errors which can prove to be extremely costly. Even so, off all the securities, trading currencies is the most trending of all markets.
The interplay between any two economies big or small and the high and low between their currencies are for most times relatively stable as far as short term fluctuations are concerned. Once there is a net movement of currency from one country to another, it typically maintains its trend for a long time. So once a trend has been established, it tends to last for months and even years. This makes the Forex market attractive to long term participants. However, this is not good news for the short term trader because a single day's currency move can be completely erratic, with little to no reason to justify and explain the logical economic reason for the move. That is why, when observing currency charts, the shorter the time frame, the more erratic the action appears. However, when viewing weekly or monthly charts, wild swings are evened out and consistent trends emerge with slight variations.
Determining the period of a trend is anybody’s guess. It can be safely assumed that the trend will continue till there is a significant shift in economic condition / environment of the two countries or there is an event external to the countries that impact the Forex rate. For a trader, the only thing that matters is that their position is on the right side of the trend and that they change their position when the trend ends.
Let's say during any given period the U.S. dollar drops 40% against the euro. One thing that can be assumed with certainty is that at some point earlier, the US dollar was down only 15%. Thus, to go from -15% to -40%, the US dollar had to make its intentions clear through the trend lines and moving averages. A good way to establish guidelines for trend analysis is to first select a moving average that you want to analyze. Whether it is 20 days or 100 days will depend on your time horizon. A moving average provides a set of different numbers. Assume that the moving average is the average and that the other points are deviations from that average. Any time prices retreat to the average (moving average), change your position to be in the direction of the average.
Do not approach currency trading with the attitude that you want to "beat the market." You cannot out-guess the market consistently. Instead, approach your trading with the objective of being in synch with the market. You will be rewarded. You will also discover that the longer your time horizon, the better your chances of success.
When you look at a chart and you cannot draw a trend line, whether up or down, the market is telling you it is going nowhere. When you draw a moving average and individual readings dance around it, the market is telling you it is marking time, and so should you.
What contributes to successful trading in forex is to know yourself. Accept losses as part of the game, but keep those losses small and let your profits run. Realize that you should only be in the market part of the time. Do not over trade. Instead, under trade, and keep your ego out of it. And, practice, practice, practice. It likely was a forex trader who coined the phrase, "short term to learn, lifetime to master."


EVOLUTION OF FOREX MARKETS
? MARKET STRUCTURE AND PARTICIPANTSSince their inception, the Forex markets are largely unregulated markets where the trading is done over the counter without a central clearing house. As such, the Forex market assumes a two-tiered market structure whereby,
The first tier market - consists of sell side dealer banks trading amongst themselves for profits or on behalf of the buy side clients whereas,
The second tier market - consists of trading between sell side dealer banks and the buy side clients’ i.e. institutional investors, small & medium sized banks & corporations, which trade to support their Forex transaction/activities and to hedge against equity.The instruments traded in a Forex market ranges from basic spot and forward transactions to more sophisticated currency swaps and options.
? TRADING MECHANISMThere are primarily three trading mechanisms employed within the Forex market, which are outlined as under:
? TELEPHONE TRADINGo Traditional Trading Mechanismo Involves telephonic conversation by brokers for trade and exchange of currency quoteso Trade positions are settled at banks back office on specified dates depending upon the type of the Forex instrument involvedo Promotes personal relationships and exchange of valuable informationo The use of verbal orders and multiple disparate IS creates a system plagued with inefficiencies which is prone to costly errors vis-à-vis the electronic broking system
? INTERDEALER ELECTRONIC BROKINGo Refers to an Electronic Broking Mechanism for the first tier market (i.e. inter dealer market)o Promotes speed, accuracy, productivity and narrow spreads in the Forex transactionso Reduces average transaction time by an order of magnitudeo The aggregate impact of electronic broking has improved the operational and market efficiencyo Reuter Monitor Dealer Service (RDS) and Electronic Broking ServicesLtd.(EBS) are defacto standards accounting for approximately 90% interbank trading in major currencies.
? eFXo Can be understood as an internet based multicounterparty systems, commonly known as eFX portalso Developed to enhance the trading efficiencies for the second tier market or the buy side client process and lag created by adoption of electronic broking system by the first tier market or the dealer bankso First emerged as proprietary applications developed by banks directly linked to clients, creating switching costs and lock in

With the growing needs of the buy side clients for automated trade and availability of updated information, three types of eFX Systems arose namely:
Single Bank Sponsored Multi Bank Systems, Independents and Bank Consortia Systems
• Single Bank Sponsored Multi Bank Systems? Owned and operated by one bank (sponsor) which acts as a counter party in the exchange? Permits other banks to participate and compete for business alongwith the sponsor? Conducts unique market research to provide information relating to daily volumes, price swings, cross country flows to asset managers and institutional clients? State Streets Fx Connect launched in 1996 is the pioneer and market leader which is the Forex component of its Global Link financial portal? State Streets Fx has demonstrated a synergy among IT enabled core businesses and monetizing information to generate a resource pool of strategic information coupled with process automation, that provides the adoption incentive for institutional investors
• Independents? A multi bank platform without a sponsor and a counterparty? Client firms are attracted to independents eFX systems because of owners are not controlled by banking interests ? Suffers from resource limitations which are essentially required for creating a sustainable electronic market such as lack of brand awareness, trust, liquidity, and complimentary service offerings? Currenex was the first independent provider, which started trading in April 2000. However the failure of independent CFO Web clearly depicts the difficulty in developing a successful independent platform
• Bank Consortia? A multi bank platform constituting of a consortium of banks? Prerequisite required is a successful cooperative relationship amongst partners? Inherent Market advantage in terms of liquidity, trust and customer relationships? Subject to potential breach of trust between bitter rivals sharing the common platform. Eg. Atriax was formed when Chase, CitiBank, Deutsche Bank withdrew from talks with 13 rivals and subsequently formed FXall platform? The consortium platform is generally affected by factors such as over heightened competition, narrower spreads and waning profits


FOREX: TO TRADE OR NOT TO TRADE
Forex trading today is a fast catching trend. Almost all the multinational corporations today are indulging in this practice not only to hedge their currency exposures but also to add value to their company. Some have also gone as far as to turn their forex groups into unabashed profit centers by aggressively speculating in foreign exchange.
The Catch 22 Situation: Despite the strong potential of profit most of the organizations tend to be wary of forex trading and tend to refrain from it because of its frightening downside. Even the companies which admit to indulging in forex trading generally claim that they do it solely to minimize their currency losses. Only once in a while do they actually venture beyond hedging to take advantage of a good trading opportunity. The companies are attracted to the foreign exchange trading because it is highly lucrative if the risks are controlled but the major problem is that these risks are almost impossible to control. Still the gradual entry of the companies in this field seems entirely natural. Without at least hedging their losses due to the foreign exchange rates they feared they would not be able to compete in the international market. With the increase in global markets the forex trade had the capability to give the company a cost edge. Gradually the hedging evolved to a sophisticated procedure in which the corporate treasury department took responsibility of the complete hedging process. The whole process changed around 1980 with new regulations coming into play the forex market became volatile. Trading volumes increased tremendously as new players flooded the market.
The Risk Taker: The temptation to be actively involved in this market for the sole purpose of profit grew as the company balances grew due to strong economic growth. Besides the obvious benefits of profit another positive of active trade is that it gives you the intelligence in the currency matters which can be used to make crucial decisions like the timing of contract. The size of the organization is no criteria for deciding how much of active forex trading is done by a company. The only thing that matters is the corporate risk taking personality of the company, specially its senior managers because it puts the companies own assets at risk. The commitment to forex trading should be made considering not just the risks but also the costs of a good trading operation. There has to be a basic technology needed for trading, screens and tie lines to banks, news and forex price services, technical analysis services and customized trading software among other things. Also needed is the technology to minimize the losses and the risks.
The Approach: Along with the right hardware for forex trading another important amenity is the right people. Good traders who actually understand the market are really difficult to find and even if you find one, they have to be paid highly to retain them. The profit driven corporations can be basically put into two categories. The first is the category of proudly profit conscious players who have a free hand with the trading. They especially employ about thirty full time traders and are active round the clock working with the ten major currencies of the world. These have a high volume of trading almost as much as that of a midsize bank. These are the companies which do forex trading for the sole purpose of profit. The second category is of the companies which use a less aggressive approach of flexible hedging. They time their hedging and periodically put on and lift hedges according to the market view. Their main aim is not to gain profits by forex trading but rather to limit their losses by seizing trading opportunities as they arise. They generally tend to make long term investments in the currencies in contrast to the first category that make short term investments.
Sad Endings: The exact profit or loss percentage is really difficult to measure. This fact makes most of the active traders want to seek anonymity. The huge fluctuations involved in the market also leave horror stories of huge losses in this market. The basic fact remains that only the highly committed and the very regular companies can make meaningful amounts of money. This is the reason the number of regular players of this market remains small and constant.
New Strength: Recently there have been some changes in the current markets. These changes have dampened the currency volatility. This has lowered the enthusiasm of all the forex traders and some of them have left this market because with this new found stability of the markets profits are fat becoming a thing of the past.


FOREX: THE SAVVY INVESTOR’S INTRIGUE
The market of Forex plays out in a way quite different to other markets. A change as small as a fluctuation in currency value can have a quite an effect on the social, political and economic conditions, so much so that it may even shake the entire political structure. With the common people, the impact of fluctuations in Forex market is immediate, with sudden inflation in middle class commodities such as cars and houses.
Today investors, financial gurus or world leaders talk about Forex exchange, which speaks a lot about its coming of age in last two decades. Since 1965, Berkshire Hathaway fund has realized 22% average increase in book value annually. This fund is owned by Buffet who in his letter to the shareholders has announced that he had, on a large scale, entered the foreign exchange market in 2002 and increased his position in 2003. The reason for this move, he said, was the growing US trade and government deficit. He said that he was less at risk after owning foreign-exchange contracts. He said that because the US dollar was weak, there was more risk with US assets amounting billions of US dollars.
In future, it will not generally be in the US where there will be more growth opportunities. Forex is an investing opportunity. One may profit from this, or suffer loss. It may also give hedge for a portfolio and provide important information which can be quite useful for those who want to explore options outside the US for their growth, or those who are looking for global investing environment.
The market of Forex is quite interesting and volatile. It is also intensified by leverage. People may make or lose money when the markets fluctuate. Risky as it is, there always are great trading opportunities. One can see how the value of some currencies changed between January 2001 and February 2004, how the dollar index changed in that period. The rising of Australian dollar by nearly 50 percent, the British pound sterling 24 percent, and the yen rose by 22 percent. The rise in the South Korean won was more than 10 percent. However, the currencies may not move against each other always. In such situations, investors can leverage small fluctuations. This they can do by taking a position with small money and leveraging it into a position ten times it. If markets move in a direction that benefits the original position, then it is great. But if the markets don’t move in a beneficial direction, investors may suffer huge losses.
There is yet another advantage of trading in Forex: the education and experience that the investor gets in international investing. This can prove to be a vital asset in the long run. History tells us how the Americans learnt from the oil shocks of 1970s and the international economic crises of the 1990s that however diverse and giant US economy may be, it depends of the world economy as much as the world depends on it. Smart traders are now expanding their investment areas because of these reasons: a lessening of dollar’s presence, good speculative returns from emerging markets and general sideways movement of US markets. This perspective is important because an investor who doesn’t have it will miss great opportunities. Moreover, the exposure that Forex offers is not only pertaining to portfolio, but also the investing brain. The investor becomes aware of how the world economies are developing, how the changes in social, political and economic environment affects the US economy and how these changes cause losses and profits in the US. Next 50 years will see most of the economic growth not in the US, but outside it and a Forex investor will take part in that, not the one that stays home. Bund, SET and yuan will be some of the terms that will become common in the new trade.
Though there is little doubt that the economists and market managers are taking note of Forex, the political leaders have more than criticized it, so much so that President Chiraq of France reportedly called too much foreign exchange as AIDS of the economies. The Wall street journal though is all praise for Forex; the politicians are never wary of calling it the worst thing that happened to the markets. No matter what, Forex is here to stay in the markets and with rapidly growing globalization phenomenon, its importance is only going to increase.


IDIOSYNCRACIES OF THE FOREX MARKET
Forex market unlike other securities has its own set of unique features or idiosyncrasies. The Forex market is unique in many aspects. On of the most obvious feature of this market is that it is a seamless and continuous twenty four hour market. Unlike the stock market, Forex market does not have any secondary measures like upside or downside volume figures and Price to Earning ratios.
Another unique aspect of currency markets is central banks openly declare their intentions and impact trends by intervention. In a typical equity market, projections are calculations that have become necessary as the investors have become used to equity analysis. For example, company ABC is projected to earn X million dollars and at a multiple of 25 will result in a price objective of Y. the Forex market does not have any such guidelines for the currency pairs. The key fundamentals in Forex are:
• gross domestic product growth• inflationary expectations• current account measures• interest rate differentials
Depending on the economic environment and the availability and reliability of the information, any of these measures can be emphasized to suit the current emotional landscape.
Predicting the ratio of the currencies of countries can be a daunting task as it entails incorporating several economic projections of various countries along with the expected emotional state of speculators. The complexity of the econometric and financial models, ambiguity in the available data makes Forex trading challenging and exciting.
The only objective measure of valuing currency pairs is rarely mentioned these days. It is the purchasing power parity (PPP). This factors the price of buying several identical items from two different countries and is computed by adding the total cost of purchasing a basket of goods in the two countries and taking the ratio of the costs. The resulting ratio is the true "theoretical" parity at that point in time.
More important, in Forex, a dealing quote may be posted without any trade ever having been executed at that level, but the quote is posted as having been the high or low for that period. Arbitrary parameters that include fictitious levels do not make for a dependable chart. Other technical tools such as various chart formations can be very useful, but require that the practitioner spend a long time getting acquainted with them, because at an advanced level the practice becomes more of an art.
In situations when currency markets are news-driven, the dilemma is that there is no way of knowing how much a piece of news has been discounted. You can be right on the news but wrong on the market's reaction. And that can be costly. If the event is favorable for a currency but the quote fails to respond positively, that is usually a tip-off to sell that currency. So, if fundamental analysis is selective, technical analysis is arbitrary or subjective and news may or may not be discounted.
In addition, the technical’s also differ between the currency and the equity markets. In equity markets, participants play within levels defined by clear support or resistance parameters. This can work well as the movement in stock prices is usually limited to a few percentage points at any point in time. Even in a relatively worst case scenario, the loss is still within manageable limits as the biggest portion of the assigned capital is still available. However, in Forex trading, traders are highly leveraged and a minimal shift in price can have a significant impact on their portfolio.
A commodity market does not have any stop loss mechanism. Given the inherent nature and definition of commodities, they run the risk of a complete loss under adverse market situations as is exemplified in the cattle market. The US cattle market was struck by the mad cow disease in late 2003 and those who were long cattle futures were locked in for three consecutive limit down days.
With these differences between equity, commodities and Forex, the Forex trader is limited in his ability to use and benefit from the function of a stop loss order. To make matters more complicated, each trade has its own leverage position and thus requires a unique consideration and strategy.
As discussed above, the Forex market is significantly different from the equity and the commodities market and has its own set of risks and challenges which the trader has to work with and mitigate.


QUESTIONS TO ASK AN E-FOREX MANAGER
With the growing e-forex market a plethora of traders are seeking professional help to manage their accounts. This may entail allowing a person the power of attorney over the account or it may involve engaging the services of a money manager. Thomas F. Plaut a seasoned e-forex manager having managed millions of dollars in the market says that the biggest issue in this market is the track record and only the advisors with a minimum of three years of verified and audited track record should be considered. Another major point to be kept in mind is that most of the managers tend to hide the accounts showing a loss and just put in front of you the ones with profit. So a bit of caution is advisable when looking at the accounts.
Another factor to be kept in mind while deciding the manager is the leverage they provide, this may be as much as hundred to one but is generally a little less in professional accounts. Professional accounts generally provide a leverage of about three to seven percent to your account. Basically a leverage of three percent will produce a loss of three percent of the account value when the market moves down one percent.
According to Plaut the standard fee for an e-forex managed account is similar in nature to a normal managed account. An e- forex manager generally demands a two percent of the account balance per year as the managing fee, a 20% incentive for new equity highs and a small transaction fee.
This is a complicated area but to guide you on your search for the right e-forex manager here are some questions which are sure to come in handy.
What fraction of deals happen during the day session?The answer to this question will help you realize if your manager is exploiting all the available market opportunities. The markets of different countries open at different times and if the trades are concentrated in a particular time then it is an indication that the market opportunities are not being exploited optimally. Also too much trading is not an asset so basically a right balance has to be maintained.
What proportion of trades went down considerably before recovering to break even or gains? A low drawdown in this case does not necessarily reflect badly on the manager but rather signals the risk. The lower the drawdown is seen to correspond with lower expected returns. Basically currency trading is a volatile business and this volatility affects everyone.
What inter-market indicators are referred by the manager?To study the currencies it is imperative to study the countries economy. So the dollar index, Dow Jones industrial average, Nasdaq 100, Nikkie, gold and oil are some factors which will affect the index significantly and thus should be featuring prominently in the managers list of frequently studied markets.
What is the worst performance of the manager?Each manager at some time makes the mistake of being completely wrong. It teaches him a lot and makes him humble. If your manager has not undergone this experience you need to be a little careful of his arrogance.
What percentage of the profits is reinvested by the manager? The money managers have a general tendency to reinvest all the profits that they make. This leads to a higher risk coefficient because of the uncertainty of the success of the subsequent investment. If the following investment fails it might lead to massive losses. As a result a good manager would be one who distributes the profits that have been made. A small percentage of profits should be moved a separate segregated account to control the risk and this practice is also advisable as it will return the primary balance back to you.
What’s the action plan for the worst situation? The good money manager has to have a contingency plan in case of continuous disinvestments. Making a bad investment does not make a manger a bad manager but what makes a good manager is the ability to handle the worst situations. These plans may be hedging or rotating to new currency pairs.
What profits can you anticipate? Paradoxically a good manager will never answer this question of yours. He will never try and return an expected amount but rather take advantage of the opportunities as they present themselves. No creditable answer to this question exists so be vary of managers who promise you a certain return.


E – Forex: Currency Trading
E – Forex is such a big revolution in foreign exchange trading that it has become an industry overnight. Now an average individual can trade in this market with as ease as large traders with multi million dollars accounts and connections at big banks do.Firms that didn’t exit some time before, are now growing at 20% per month and also provide free charts, signals, quotes, technical analysis, full simulation platform, and even financing to open an account. E- accounts enable trading of, say, $100,000 worth of foreign currency in one-lot with only 2% or $2,000 cash in the account.
To trade in foreign exchange market one needs to understand market and how it operates, as it is different from future trading. Differences are: - There is no official price for spot currency and it is negotiated between buyers and sellers. It has no available volume data. The market is not accessible to retail public as OTC options on spot currencies are limited to large accounts and equity firms don’t offer e-forex. There is little broker assistant trading resulting in total self learning and news is fragmented and difficult to access.
Currencies and Economic FundamentalsAn e-forex trader must be well versed with fundamental knowledge and must know how to use basic technical tools. The strengths and weaknesses of the country’s economy are reflected by currency’s prices. Like the boom of the US economy is reflected by the strength of the Dollar. Traders of any currency should also have the knowledge of macroeconomic fundamentals. Forex traders i.e. euro traders know that the currency market swing in relationship with and in reaction to the equity markets. For ex: - Forex trading while disrupted in New York but it didn’t stop when US equity markets were closed. It is important for the currency traders to develop global perspective and intermarket relationship. Interest rate is the most important external information source. For ex: - If the US Federal Reserve cuts rates, then the dollar should weaken but if European Central Bank (ECB) do the same, interest rates trends will converge and value of the currency may not change at all. Currency trader should also track gold prices; as if it rises in given currency it reflects weakness there in. It signals an end to global deflation trends faster.
Technical FactorsCurrencies trend is trendier then stock or physical commodities, and should be understood from both fundamental and technical point of view. The factors relating to two economies or two sets of interest rates are more persistent than, say, weather factors in grains. Currencies cant reverse trends so easily as economies don’t reverse quickly relative to one another. Trading tools improvement let forex trader to approach movement of data and offer better analytics. Like Killney Investments offer a platform that allows advanced back testing of indicators. A successful trader guess how fundamental and technical can combine to indicate a trend reversal. Software is made for currency trend analysis at http://www.profittaker.com/ to project moving averages of currency features.
Trading GuidelinesGuidelines and steps that are used in framing price action in currencies are: - 1. Track price chart action daily and also the action of euro, Swiss franc, British Pound and Yen against Dollars. Act on simple signal as the crossover of 200- day moving averages. Buy when it goes up sell when it goes down.2. Go through the banks currency analyses report. www.ecommerzbank.de/free/tech.pdf gives a good summary of major currency market.3. Construct a 60- minute chart, which gives some important insights on price action. Note a highs and lows of each 60- minute period, but a good start can be a 13-/50 minute period average crossover. Buy when the 13- period average crosses above the 50- period average and sell when it crosses below.4. Traders sometimes get in and out of positions quickly, for that they look 15- minutes chart. This is called scaling. This is a kind of action but some objectivity and use of indicators are also there.
Trading and risk managementBeginning trader needs to take care of position size. Trading with one lot is popular but it is better to add a second lot. One lot can be used to trade on the basis of cash management and emotion and the second lot on technical indicator. Stops are also of much importance than a person assumes initially.
Ongoing ImprovementBiggest challenge faced today is to educate the currency trader as e-forex platform is designed to execute trade only. Digital dashboard is necessary for the traders to bring analysis and news without browsing the web. Today, e-forex trader has an access to demo, paper trading and accounts from which demo is most popular and advantageous.



Forex: futures and e-forex
Today, the significance of trading in currencies can be gauged from the fact that the amount of investment taking place in them everyday is more than 3.5 trillion. What follows is some information on speculative forex markets and how it can be useful to you.
First launch of ForexIt was in 1998 when forex was first launched. It went through a phase of consolidation for one year after which there was a burst of equity bubble. Then the euro came on its own and went to grow more.
Ease of analysis of currency marketsCurrencies are quite popular and the reason behind that is that its analysis using the various technologies is more consistent and recognizable than other markets and the patterns are more understandable.
Forex flowNot only does a weakening dollar cause a rise in exports, but also, and more interestingly, it leads to an impact on import prices of products like crude oil. Furthermore, when the values of other currencies are more than that of dollar, the cost of vacation abroad and therefore, the business level is also affected. The trading of Forex goes on for 24 hours a day: the brief break is on the weekend.
Currencies have a significant role when the governments of various nations feel it is affecting their economic relations. Suppose Japan finds that its yen is growing stronger and this is causing a loss in its exports. In this case, Japan would sell its yen aggressively and would buy US dollar.
How Forex originated?Forex originated in 1971, when President Nixon established a floating exchange rate for major currencies. Leo Melamud was the chairman of Chicago Mercentile Exchange and he, in 1971, was responsible for creating the International Monetary Fund. The retail cash forex was exploding with growing dot-com and online trading. Then the Commodity Futures Modernization Act of 2000 was introduced and this gave powers to Commodity Futures Trading Commission to control it.
Advantages of E-forexE-forex comes with its advantages. There is no commission fee or exchanges fee. Access to the market is online with a lot of liquidity. Plus, one may trade using credit cards and debit cards and PayPal accounts. Small accounts are permitted with high leverage. One may also customize ones position to ones needs. For example, you don’t necessarily have to trade in the sizes of $1 million, $10 million or $100 million, but in any figure of your choice. Free real-time charts and One-Cancels-Other (OCO) are also some features provided by some brokers.
Where futures score higherThere are many cases where investing in future forex would be the smarter move than in e-forex. Because of the flexibility offered, e-forex would suit the smaller traders who are not interested in long term investments. Moreover, in the bid-ask spread in e-forex one has to pay more. This is because with e-forex, the only prices that are displayed in the platform of your broker are only his. He doesn’t need to display the prices of other brokers. Not so in futures. Also, future forex is cheaper in NFA, commissions and exchange, too. In e-forex, the settlement of all trades must be completed in two business days at 5 pm (EST). In case you hold the e-forex for more than this duration, you have to pay a slight cost.
Single standard trading instrument is there in futures. The values of these are based on the US dollar as against other currencies. An example is US dollar index futures contract at the New York Board of Trade. A trade-weighted geometric average of six different countries is found out and this is how this is calculated. Another example is CME$ index. In this the geometric average is of seven different currencies.
Which one to choose?Both e-forex and futures forex market gives customized trading facilities to the traders. E-forex is more suited to players who seek short term (or extremely long term) gains, or who trade in small amounts. It is also more suitable for investors who take more risks because of the flexibility. However, long term investors and investors who have a more conservative approach to trading would rather choose to invest in futures as these are better regulated. People who trade in intermediate amount too would prefer futures to e-forex.
The advancement in trading technology and its expansion has lead to a great competition in investment and this is providing tremendous opportunities to the market players. This is best demonstrated by today’s e-forex markets.



FOREX: TRADING IN THE NEW MILLENIUM
Market Globalization-An Introduction
The economic world is growing together at a very fast pace and the growth and progress of the ever increasing networked world economy is being driven by the efficiency of international financial markets as well as by information and communication technology. With the recent developments in technology and communication, goods and services are being traded at an ever increasing speed, the process broadly being known as ‘Globalization’. As a consequence of Globalization, the forex market has increased in size and has become more accessible to public.
Globalization and International business
Currencies bind the world together, form the bedrock of globalization, and are the means of exchange of world trade and investment. One can see globalization and trading today in cities all around the world.
Significant shifts have occurred in the structure and direction of world trade and financial flows in the last decade. We live in a globalized world where operations of the multinationals from all parts of the world have changed the character of international business.
The Forex Market Scenario
We witness an enormous rise in Forex trading by both speculators and users. The Forex market reflects the fundamental market needs in today’s environment.
This market grew out of itself, out of the human need to trade for goods that one society had but the other didn’t. It grew out of the desire to make a profit for themselves.
A progressive market must meet two criteria. The market must be global, and should not be controlled by a single entity. ‘The Forex market is truly global- It does not have a center and does not obey the rules of any one nation.’
International Forex Market for traders and Investors
The opportunities in Forex are in plenty for the new breed of traders and investors.
The market consists of brokers, bankers, traders and trading terminals to carry out transactions in the international market.
The vast flow of money across the borders has created an enormous opportunity for investing. The International market is old, but for the first time in history, due to a revolution in communication, technology and credit, this market is available to small investors also.
The Participants in the International Trade are from all over the world, be it New York, London, Tokyo, Bombay, Rio de Janeiro. Trillions of dollars are traded and move back and forth across national borders every hour—and in today’s world, the trade is not just limited to exchange via hand or voice, they also occur at the click of a button..
Globalization of Consumer markets
It isn’t just the investors and traders who trade in foreign exchange on a daily basis.
On a global scale people are being influenced by key trends such as increase in share of manufactured exports by newly industrialized countries, advances in telecommunication technologies. These trends are influencing consumption behaviour in many ways.
Many consumer products are becoming global in nature such as consumer electronics, automobiles, fashion. Many of these products cut across natural and cultural boundaries.
Example: Life of a typical resident of Colorado begins with a cup of coffee made in the US with beans imported from South America, he wears a suit manufactured in France, and a pair of shoes assembled in Italy. He hops onto a car that has a Japanese transmission, a Canadian steel frame and gas refined in Florida that is most likely from Saudi Arabia. Once at work, he works on his computer that has the components assembled as far as Indonesia, Thailand, Taiwan or China.
In the cited case where a number of goods are being purchased from the consumer market, a major portion of the purchase would be converted into the currency of the country of origin. Thus, dollars would be traded for euros, yen, baht and yuan.
So, we conclude that without the currency market, a resident would be unable to get through the day for lack of foreign exchange. In summary, foreign exchange has quickly become a part of our day to day lives as it impacts us in more ways than one.


Forex – Carrying forward your position
Talking about the market, the mighty US dominates many markets but Spot Forex is still traded through London, Great Britain. Maximum percentage of deals that are carried out in Forex are done as Spot deals. The question that arises here is what are Spot Deals? Spot Deals are settlements made after two business days, starting a day after the deal is carried out. This is termed as value date or delivery date and in simple words, this is the day the counterparties take delivery of the currency they have sold or bought.
In the Spot FX market, the end of the business day is mostly at 21:59(London time) and any position left open at that time are automatically carried forward to the next day, which would again finish at 21:59. This is done in order to avoid the actual delivery of the currency. In order to counterfoil the market speculation, most of the time the trades never wish to actually take delivery of the actual currency and instructs the brokerage to always rollover their stance. This reveals the tentative nature of Spot FX. Currently, most of the brokers do this automatically and at times have this mentioned in their policies and procedures. The act of rolling the currency pair is referred as tom.next (tomorrow and the next day). This cycle keeps on moving unless you instruct your broker to deliver the currency. The vulnerable nature of the market is witnessed in such a scenario, as most of the leveraged accounts are unable to actually deliver the currency due to lack of capital to cover the transaction.
Further elaborating through an example - if you are trading on margin, you have actually got a credit from your broker for the amount you are trading. This would mean that if you have 1 lot position, your broker has advanced you $100,000 even though you did not actually have $100,000 in your pocket. In return, the broker will charge you the differential interest between the two currencies, whenever you decide to rollover you position. This is a case of rolling over the position and does hold valid when the position is opened and closed within the same business day.
Let’s carry out some mathematics in order to make it more explanatory. Usually, every broker closes client position at the end of the business day and again re-open a new position almost side-by-side. This is done to calculate broker’s interest. Suppose an investor has a 1 lot (of $100,000) EUR/USD position on Wednesday 20th at 10:00 AM at an exchange rate of 0.9750. During the day, the business goes on and the market keeps fluctuating in its effect and ends at 22:00 at a rate of 0.9775. So in order to roll over your position, the broker reopens a new position with a different value date. The new position will be opened at 0.9776, a 1 pip difference. The difference between the two currencies is used to determine the 1 pip deference. In the above instance, the client has long Euro and short US Dollar and since the latter has a higher rate of interest than the former, investor needs to pay a premium of 1 pip.
In case the reverse of this would have happened, (i.e. you are short Euros and long US dollars), the investor would actually gain the differential interest of 1 pip. In other words, if the first named currency has lower interest than the second currency, then all investors who have bought that currency will have to pay that interest differential, while if the first named currency has a higher interest rate than the second currency, then all such buyers will gain the interest differential.
In nutshell, all those investors will gain who have long positions (bought) in a particular currency which is having a higher overnight interest rate, regardless of being any particular currency; while all those investors will lose the difference who have short positions (sold) in a certain currency and that currency has a higher overnight interest rate, again regardless of being any particular currency.
Although the calculations involved are bit tricky and time consuming, the good news for investors is that practically all this work is done by the broker. The investors just needs to sit back and let his broker carry out all the mathematics – he just needs to decide whether he would like to carry forward his position or would he like to close it.


Guide to be A Successful Forex Trader
The first and foremost strategy that would lead to a successful forex trading experience is to select a long term or a short term trend. Although there is no specific time for which the trends must be observed but the trader can start with observing the long term trends and then moving on to observing the short term trends in the market. The long term trends, which can very well be analyzed by the daily charts, could be upwards, downwards, or sideways in nature.
It may be the situation when the long term charts might fail to show any distinctive trends. In such a situation a 180 or 60-minute chart can be looked up for more precise trends. Even the super active traders refer to the same for their entry and exit signals. For an early entrant in the trade it is advisable to follow the trend rather than anticipating it.
FOREX runs completely on the world financial markets and the international and domestic news, and hence it becomes of utmost importance to the trader to be updated about every thing that concerns his trade. And if the trader is entering into the market prior to a potential piece of news he must be sure of it and must have the stops placed at the right places. It is also recommended to know about the active currency pairs prior to entering the market because it gives quiet a fair idea of how the news is going to effect the market, thereby increasing the traders insight about the market and helping in maximizing the profits.
After having realized the trends and keeping pace with the latest news, the support and resistance levels come in as a handy tool for determining the entry and exit prices, as well as setting stop loss and limit orders. As has been frequently noticed, trend reversals are followed by a bounce-off a major support or a resistance level price. In fact proper analysis of these price levels can explain why the prices of certain currency changes so often.
The use of studies and indicators for correct entry into the market serve to provide profitable trade by helping the trader take better decisions regarding buy or sell. For a buyer it is very necessary to confirm that a couple of indicators show similar trends and a situation where the trends give a mixed response must be avoided. Indicators like moving average convergence and divergence (MAC/D), the relative strength indicator (RSI), and the scholastic indicator could be referred to in the long or short term trends to identify overbought or oversold signals. The currency support is for most of the situations a very strong index but there may be situations when there might be no support or resistance price level. The pair might itself be in an overbought or over sold position. This result in the reversal of the trends a rare possibility.
The rule that sets the basic fundamentals of trading is buying at dip-bottoms and selling at rally-tops. By now we have observed that the market moves in trends, similarly it has some small retracement periods which are identified as the dip bottoms and the rally tops, and to maximize the profits one must enter into the market at dip bottoms and sell while at rally top. This way the trader is capable of entering the stop limits for a trend reversal and can avoid being stopped out by a retracement. Here again the support and resistance levels will assist the trader with identifying the retracements and possible entry points. Tools such as Fibonacci retracement help us in determining a buy or sell price and finding out the currency pairs retracement potential.
Just to top it all, the one strategy that would ensure success would be the proper management of money. Where on one hand it minimizes capital losses, on the other hand it maximizes the profits. More important, is trading with sufficient capital which allows us to stay in a comfortable position and not sell and buy under financial pressure. Determination of the risk to reward ratio that will ensure long term profits should be looked out for. Losses must be taken with grace and the same rules be followed at all times of trading. It is not a wise decision to enter the FOREX market if you do not have money to spare. This might end up making you an emotional trader which could create potential losses in the times to come.


Forex: Moving Average
Moving AverageMoving average is the average price of a security at a given time. When calculating a moving average, you specify the time span to calculate the average price (e.g., 25 days). Note that a moving average cannot be calculated until you have "n" time periods of data. For example, you cannot display a 25-day moving average until the 25th day in a chart. The classic interpretation of a moving average is to use it to observe changes in prices. Investors typically buy when a security's price rises above its moving average and sell when the price falls below its moving average.
There are basically 3 types of moving average techniques
1) Simple Moving Average2) Weighted Moving Average3) Exponential SmoothingSimple moving average: It is calculated by adding the security's prices for the most recent "n" time periods and then dividing by "n." For example, adding the closing prices of a security for most recent 25 days and then dividing by 25. The result is the security's average price over the last 25 days. This calculation is done for each period in the chart. Simple, in other words, arithmetical moving average is calculated by summing up the prices of instrument closure over a certain number of single periods (for instance, 12 hours). This value is then divided by the number of such periods.Position Using MA is the simplest of the moving average systems. The system needs to be combined with a system that identifies ranging markets, when price whipsaws back and forth across the Moving Average, resulting in losses.• Go long when price crosses to above the moving average from below. • Go short when price crosses to below the moving average from above.Weighted moving averages: It has been developed to address the objection raised by Simple Moving Average. Instead of just adding up the measurements for a sequence of days and dividing by the number of days, in a weighted moving average each measurement is first multiplied by a weight factor, which differs from day to day. The final sum is divided, not by the number of days, but by the sum of all the weight factors. If larger weight factors are used for more recent days and smaller factors for measurements further back in time, the trend will be more responsive to recent changes without sacrificing the smoothing a moving average provides. A weighted moving average is designed to put more weight on recent data and less weight on past data. A weighted moving average is calculated by multiplying each of the previous day's data by a weight. The weight is based on the number of days in the moving averageExponential Moving Average: It is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. It is also known as "exponentially weighted moving average". This type of moving average reacts faster to recent price changes than a simple moving average. The 12- and 26-day EMAs are the most popular short-term averages, and they are used to create indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 50- and 200-day EMAs are used as signals of long-term trends
Relative Strength IndicatorsThe Relative Strength Index compares upward movements in closing price to downward movements over a selected period. Wilder originally used a 14 day period, but 7 and 9 days are commonly used to trade the short cycle and 21 or 25 days for the intermediate cycle. Please note that Wilder does not use the standard moving average formula and the time period may need adjustment.Trading SignalsDifferent signals are used in trending and ranging markets. The most important signals are taken from overbought and oversold levels, divergences and failure swings. Use trailing buy- and sell-stops to time entry into trades.Ranging MarketsFor example, set the overbought level at 70 and Oversold at 30.• Go long when RSI falls below the 30 level and rises back above it or on a bullish divergence where the first trough is below 30.• Go short when RSI rises above the 70 level and falls back below it or on a bearish divergence where the first peak is above 70.Trending MarketsOnly take signals in the direction of the trend.• Go long, in an up-trend, when RSI falls below 40 and rises back above it.• Go short, in a down-trend, when RSI rises above 60 and falls back below it.


Highly Recommended reading:

Bird Watching in Lion Country By Dirk du Toit aka Dr Forex

What Dirk has to say about his book

a. Winners and losers are separated on day one, even before any buttons were pressed. To change from a losing trader to a winning trader you need to make a paradigm shift. The difference between these two groups, the winners and the losers, is their attitude and mental approach to trading. Successful traders have self-discipline and control over their emotions, resulting in an ability to change their minds instantly whenever it is necessary.
What makes for the successful attitude and approach cannot be taught before you enter the market. It has to be experienced and learned by practising and developing the correct mental attitude and discipline. Good, successful traders have mastered these attitudes and disciplines, but usually find it very hard to convey how they do what they do to others.
Books help, but the ultimate way to acquire these essential elements of day trading success lies in the practice.
The purpose of this rehabilitation programme is to guide you and assist you to confront the inefficiencies in your approach and attitude and to change what needs to be changed in order for you to make money.
I have written a book, Bird Watching in Lion Country - Retail Forex Trading Explained, which serves as a guide help you to make the necessary changes, the needed paradigm shift.

b. It is one thing to be a successful trader. It is a completely different thing to be a mentor or trainer of would-be successful traders. Some people can trade successfully but can’t teach how they do it. Many can teach but can’t trade. A few can do both, and it is very important, when considering a mentor, to find this rare combination.
Most novices, or struggling traders have had some experience of a short training course, usually slapdash and inadequate. Courses such as these tell you just enough to make you a danger to yourself: a little bit on technical analysis tools, a bit of fundamental analysis, a sketch of market dynamics, a touch on trading psychology.
The trader then goes off, trades, and crashes. Your chances of becoming a successful forex trader will be enhanced enormously if you have the benefit of guidance from someone who has the• Skills and experience of trading profitably over a long period • Skills and experience of teaching others to trade profitably over a long period The rehabilitation programme we offer is primarily for novice day traders. If you are a novice trader, who went through an instant get-rich course, and you are not performing, you should seriously consider doing the complete rehabilitation programme.

Consider this: Only 25% of forex professionals use technical analysis as their primary tool in their ‘decision-making package’. The rest use it in a supporting role only. Were you told otherwise by a marketing wizard? Are you finding that your charts are not telling the full story? Timing off - again and again? Stop too close - again and again? Dollar fell on 'good' news - how could it - again?
This book helps you to think and trade like the market movers, the big banks, the institutions that affect price. If you go up against them, you will be lion food. The big boys learn to ‘listen’ to every word the market is telling them. You need to too.
Bird Watching will teach you how.Successful traders have a few things in common. Simplicity of the system is one. A broad understanding of the markets is another. They understand the deep-down basic simplicity of what gives them profits. They have / had a specific mentor (worthy of the name) and they first trade in a very discretionary manner before moving towards a more mechanical system (only after it paid profits over a long period of time) and some then move on to full automation.
These days with the prolific pace of IT development it is even easier to move towards full automation, but you can't skip the basics. Having said that I describe in 'Bird Watching' what I believe are the main reasons why many do end up losing instead of making money early on and struggle to turn it around. There are basic mistakes that you don't associate with highly intelligent, rational, informed success-orientated people. If you know what these basic mistakes are and if you adapt your system to exclude them you must be in an excellent position to be a part of the successful traders, however small the percentage.”


What other people have to say about Bird watching in Lion country


a. “I am a forex market veteran with years and years of experience in several large banks and now that I am retired and am leading a leisured life I have turned to assisting individuals with their trading problems. As a result I work with many people that came from all sorts of training backgrounds and DrForex's BWILC is like a wonder cure for the majority of trading diseases and ailments. Not only is it so comprehensive, so insightful and so "alternative" that it immediately grips you as being an original but it is, considering the prices out there for any form of information, a steal at the price. E-books can sometimes be a bit on the thin side. You've got your reading cut out for you on this one. It is not a typical e-book. It is rather a book in e-format.Many people have spent hundreds and even thousands of dollars for much less. And even then the path is not clear. “
- Steve Pickering, ForexTraderMentor

b. “Since April of this year and the week I have read BWILC I have been profitable every week except one. I have very high hopes now on my future trading and I am on schedule to make my goals.A book so delightful you won't want to stop reading it, but you won't want it to end either.”
-B Martinez, Nexum Capital

c. "Bird Watching in Lion Country" is a great read, very clear & understandable. I learned a great deal from it, even after 3 years following the forex market. I would recommend it to anyone.I was mentored by Dirk (still on going with his daily briefings) and following his 4 x 1 strategy. The good thing is he does not make any promises and explains the FX market realistically.”
- FX Max, MoneyTec Forum

d. “Bird Watching in Lion Country really changed the way I approach the Forex marketplace. Before reading it I found it very difficult to trade with any consistency and found myself jumping from system to system. Dirk du Toit does a great job of explaining what the Forex market is all about, why it can be difficult for the retail trader to get ahead. I have read many books on trading and would place this among the best of them. This is a must read for anyone considering trading or investing in the Forex markets.”
- William,Tulsa, OK

e. “Hello DrForex,I just finished reading and re-reading BWILC. It is worth its price many times over.”
- RedDuke, Moneytec FX Traders Forum

More information about Bird Watching in Lion Country Click Here!

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