Forex Trading Strategies-interest rate strategy

By forexreport

With a host of strategies employed in Forex Trading , the question is where do we start?

The first strategy I would like to discuss is a longer term one, in the time frame of a few weeks to a few months. This particular strategy will exploit the fact that a country currency value will appreciate with a hike in the interest rate and vice versa.

Based on the macro economic conditions of a country, the central bank shall decide which of the two, inflationary pressure or market downturn (credit crunch, poor employment data) is of a greater concern to the economy of the country. If the concern on high prices outweighs bad economic situations, then the central bank will hike the interest rate.

If the central bankers are more worried about the credit crunch in the markets than inflation, then the central bank shall go into rate cutting exercise. Normally, central bank will have the same bias in a direction for at least a few weeks or months. The central banks of most countries would not be changing its bias abruptly once a decision is made and announced to the world. Therefore, a central bank will continue to raise it interest rate in a row. The opposite is true for a rate cutting exercise.

So the strategy is to look for economies that are in rate hiking direction and another one in a rate cutting direction. Then long (buy) the currency of the country having the rate hiking tendency and short (sell) the currency of the country having the rate cuts. Beware that this strategy is for longer term, therefore, it is prudent to use extremely low leverage or no leverage at all. The advantage of this strategy is that a trader does not need to monitor the market every single minute other than keeping abreast about the relevant countries monetary / fiscal policy may be once a day.

Observe the rise in rate of Euro against USD in the chart below while USA FED was in the rate cutting mode and then European Union Central Bank was in rate hiking mode in the chart below. European Union Central Bank started the rate hiking exercise from 2005, raising the interest rate from 2.00 to 4.25. So make sure that you look back at the rate cutes and you will see how this affects the movements in currencies.

What if now all countries are in rate cutting mode? How can this strategy work? The exchange rate is determined by the relative value of each currency. Therefore, a potential twist to this strategy is to determine which country is having higher interest rate now, and therefore having the higher potential of bigger cuts than those having low interest rate. With the economic slowdown we are seeing countries cutting rates, all over the world. So make sure you pay particular attention to what is happening. The strategy is then to short (sell) a currency with higher interest rate, where the country is likely to cut interest rate (again) and long the currency having low interest rate. One good example (for discussion purpose only and not a recommendation for trade) of country having high interest rate is Australia. It started rate cutting last year from 7.5% to 6.5%. If credit crunch is getting worse in Australia, the potential of big rate cut is obviously higher than Japan that is having an official interest rate at 0.3 For more information or strategies feel free to CFD FX REPORTIt is a real time trading tool that offers clients free trading reports, with trading ideas, stock market and forex market education as well helping them with. Also if you are looking for a Forex Broker, then feel free to visit our broker section as we recently reviewed all the forex brokers and have found the best on the market. - 23208

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Forex Trading- What is support and Resistance

By FOREXREPORT

The supporting reason to buy that you can't resist. When you are a trader the two basic patterns to all trading is support and resistance. You may hear and read a lot about these strategies. So what do they really mean, and can I make money from this knowledge.

How can you resist it:

In theory resistance means selling is sufficient enough in volume to stop the price of the stock or currency from moving high. Meaning it has hit a ceiling.

Resistance is what is found at the peak of the upward trend. This is when the selling takes over to cause a counter trend. It may also mean that a stock starts to trade within a particular partner. Stocks and currencies can then encounter major problems trying to break through these levels. So make sure that you have tight stop losses or guaranteed stop losses if you current broker doesn't offer them change them, here is who we suggest BEST BROKERor email support@cfdfxreport.com

The supporting argument:

Support is therefore the opposing concept of what resistance is, where there is sufficient volume to stop prices of the stock or currency falling. You'll often see prices bounce from important support levels. This is why you will see a lot of traders looking for the support and resistance so they can trade the breakouts.

How can I can find out where the support and resistance is. Well something very important to consider when you are looking to evaluate where the support or resistance line is how often a share price has been rejected at that line. The more often the trend has been reversed the more powerful the level of support or resistance. It then becomes much harder for that stock to be able to break through these, if the do it can be then a great break out trade.

Markets don't tend to forget too quickly, so these levels come into play quiet a lot. This is why having a great BEST BROKER is very important.

So if you see a support or resistance line occurs straight away after a steep price movement it is likely that this level will be a reliable level of support or resistance. The stock or currency price will simply not have the force to able to break through this level following a sharp upward movement or downward spiral.

Make sure that you are always looking at the volume at the support and resistance lines as this is also very important. For example if they fail to break through these lines on strong volume the stronger these lines become. So they may not break these lines.

Make sure that you learn where the support and resistance lines are as it may just save or make you a lot of money. Sometimes you maybe better off waiting for these to be broken, and they can then be a great spot to put your stop loss.

Happy Trading. - 23208

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BEST BROKER if you are looking for when see CFD FX Report, also grab the latest forex reports.

Forex Trading- The 3 Biggest Lies

By fxtrade

Everyone that is involved in Forex Trading for awhile would have all heard these 3 misconceptions about Forex Trading, but beginner traders continue to fall for them. These are also some of the reasons why many Forex Traders end up going broke.

So how can we avoid these common traps and make money from Forex Trading? Firstly lets look at the 3 areas to avoid when you are starting out Forex Trading.

Making Regular income and Profit:

This is misconception number 1.

Think about this for a moment how can you make regular income from something that changes as frequently as the Forex Market. No matter how great the system is the market simple changes all of the time, how often have you been in a well trending trade only to see something strange occur and a nice profit turns to a break even or worse a loss? So the next time you see or hear of someone saying 'make x% profit every month' run!

Ability to Predict Forex Prices in Advance This is the biggest crowd puller, think about it can you see into the future? No. No matter how great the theory, how well it has been back tested you still cannot have a theory that works 100% of the time.

Think about it if there was a theory that worked 100% of time we could predict future results. So the theory would need to take into account, all interest rates cuts and rises, speeches from the banks and monetary authorities as you can see highly unlikely. No Impossible.

Make Massive Profits minimal Exposure: Many of us would have seen systems advertising the make 100% gains and have less than 1% drawdown. This is not reality and you can see the real results to support this outrageous growth rate to drawdown that has been audited.

So consider this and Improve your chances!

The common fact to trading is that over 95% of all traders will lose their money and the ones that do believe at least one of the above

So how you can become successful as a forex trader is understand that you can make profits in the long term, that making money is going to be up and down and that Forex trading is a game of odds not certainties. They also understand that to make money you need to take risks, the old saying of risk versus reward.

If you want to get involved in Forex trading and win you can, by getting a good solid Forex education and good Forex mentoring. In some cases you can find a Best Forex Brokerthat can assist you. If you are looking for a great Forex Broker, look at the CFD FX Report they have recently researched all the Forex Brokers and have come back with who they believe to be the best.

You can win and enjoy huge rewards for your effort, if you understand the challenge of Forex trading and what the reality really is. If you understand this, you're on your way to long term currency trading success. Also make sure that you have a good trading plan and stick to that trading plan. - 23208

About the Author:

The CFD FX REPORT is a real time trading tool that offers clients free trading reports, with trading ideas, stock market and forex market education as well helping them with. Also if you are looking for a Forex Broker, then feel free to visit our broker section as we recently reviewed all the forex brokers and have found the best on the market.

Forex Trading- Home Business Idea

By fxtraderoz

We have all heard and read how much money we can make from Forex Trading, so what are the real rules and tips that will make us money from Forex Trading? Below we will uncover the real tips for Success. Below are the 5 Tips to Help make you big money, they are not listed in order of importance.

1. Never buy a Forex Robot. This is simple if you had a program that would make real money would you sell it? No.. You would keep it. The simple truth is most of these people are selling these programs and that is how they make the money not from Forex trading. So beware. If you are looking for a great forex broker or some free forex educational lessons please feel free to visit the CFD FX REPORT. They can point you in the right direction for Free.

2. Get Educated and Learn Fast

Anyone can learn Forex trading and anyone can make money, you don't have to be a genius. You don't need to spend long doing it either and you should be able to learn everything you need to know, in a couple of weeks and then your all set to trade. You should make sure that you have a trading plan and some rules.

3. The Best Proven Systems are Simple:

Make it simple, use some indicators and support and resistance. Forget trying to be clever or complicated, simple systems are far more robust than complicated ones and work. People will more often than not try and complicate things.

4. Make sure you have Risk and Money Management Rules

Success is built on money management and risk management and you need to learn about volatility and standard deviation of price and if you have no idea what it is make it part of your essential Forex education.

5. The Golden Rule is Discipline- Set the Rules and Stick to THEM

No matter how great of a trader you are you will have losses, so you need to ride them out and have discipline, which means having rules and sticking to them

Discipline comes from knowledge of what you are doing and the ability to keep your emotions under control. Holding discipline is the key to success

Anyone can Do It.

Anyone can make money from Forex trading and the effort you need to put in, will be well rewarded, as you get a great second or maybe even a life changing income. So don't forget that SIMPLE rules, simple strategy will make you the MOST MONEY FROM Forex Trading - 23208

About the Author:

The CFD FX REPORT is a real time trading tool that offers clients free trading reports, with trading ideas, stock market and forex market education as well helping them with. Also if you are looking for a Forex Broker, then feel free to visit our broker section as we recently reviewed all the forex brokers and have found the best on the market.

What is Forex Trading?

By Jean Dirlin

Whether you are simply curious after hearing the term or you want to carve out your own area of investing you will want to find out as much as possible about Forex trading . When you are first starting out, it can sound a bit complicated. However, you will discover that the biggest reason that so many individuals enjoy Forex trading is because it is straightforward in its approach.

Understanding what happens when currencies travel between businesses is the most essential aspect of understanding Forex trading. For example, let us say you have someone with goods they want to sell in a foreign country. Upon getting to that particular country, you find that you will have to trade your countries currency for that of the local currency. You will not be able to spend your local money while in a foreign country.

When you are looking at Forex trading it is first important to understand what happens to currencies when it needs to travel between companies. For instance, say that you are someone who has goods that they would like to sell in a foreign country. When you get to that country, you will find that trading your own currency into the local currency is something that you have to do. You wouldn't be able to use your local money in a foreign country.

The safest and most straightforward way to play the Forex market is on the spot market, where currencies are bought and sold according to what they are worth that day. The price is determined in many factors, but essentially, it is two parties exchanging different currencies of equivalent amount.

When dealing in the forwards market, both traders figure their own terms between themselves. When dealing in the futures market both traders will exchange future contract that have a basis in the information of each public commodities market.

The Forex market is a liquid financial market; it involves transactions in transferring currencies from one country with that of another. When you consider that there is more than 2000 billion USD in trading daily, the foreign exchange market is even bigger than the stock market. Since there is no real central location for dealing.

Forex trading has grown in popularity. The majority of trading happens over the counter or OTC, by means of using the internet. This means you can trade on the Forex from home rather than being in any type of large metropolis area such as New York or Tokyo.

You may be interested in Forex trading since the market is an unpredictable, liquid market that offers both great losses and great rewards. It is essential that you know where you stand. Consider you real options and then consider where these types of exchanges may benefit you as a Forex trader. - 23208

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Author: Jean Dirlin - An Active Forex Trader Live Forex Trading Strategies & Signals Learn to trade currency like a Pro - Real Traders Real Trades Real Success