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How Seasonal Patterns Effect Forex Markets?

July 22nd, 2009
by Ahmad Hassam

Most forex traders analyze and predict the future direction of currencies using fundamental or technical analysis. The craftier among them use the combination of both to predict direction of forex markets.

Fundamental analysis studies the long term effect of economic forces on currency markets whether financial or socio political using various economic indicators. Technical analysis is based on the premise that all available information is already compounded into the prices and the future prices can be predicted based on past prices.

If you have been trading stocks, you must be familiar with the term: The January Effect. It has been observed over a long period of time that stocks tend to perform very well between the last week of December and the first week of January.

The explanation of the January Effect is simple. During the last few days of the year, many investors are concerned about their tax returns. They try to realize capital gains or losses to file their tax returns. Many corporations also use the end of the year to face lift their balance sheets favorably at the end of the year.

Seasonality is not peculiar to the stock markets. In fact forex markets also tend to exhibit strong seasonal effects. Seasonality can be defined as a pattern that occurs at a particular period of the year.

The January Effect also takes place in forex markets because most of the investors who are liquidating their stock positions try to convert their local currencies into dollars at that time.

However, dollar may show stronger January Effect with some currencies as compared to others. It has also been studied that dollar shows a summer seasonality when it tends to rise in USD/JPY and USD/CAD in the month of July and give back its gains in the month of August.

There are other seasonal patterns that have been studied in other parts of the year. Now, it does not mean that these seasonal effects take place exactly the same way every year.

Seasonality in currency pairs only means that there is a strong probability that during a particular time of the year, the chances of a particular currency pair going up or down are high.

Forex traders should keep these seasonal patterns at the back of their minds while trading during that period.

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading; stocks and forex. Know These Forex Broker Tricks. Learn Currency Trading!

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Fundamental Trading Strategies in Currency Markets (Part I)

July 20th, 2009
by Ahmad Hassam

As a forex trader you should use a combination of trading strategies in developing your forex system. This will hedge your risk and maximize return. There are a few strategies based on fundamental analysis and others are based on technical analysis. You can use a fundamental trading strategy that is based on big macroeconomic events for swing trading that may last from a few weeks to a few months.

Short term forex traders and day traders try to focus only the economic news release of the week and how it will impact their day trading. This works well for many traders. Learn forex nitty gritty, a method based on only 20 minutes trading a day.

Fundamental trading strategy based on macroeconomic events can make few thousand pips for you in a matter of a few weeks or months. You should not lose sight of the big macroeconomic events that may be bubbling in the economy or for that matter in world. Large scale macroeconomic events have the potential and ability of moving the forex markets big time for a long time.

The impact of big macroeconomic events has the ability and potential to change the fundamental perception about a currency not only for a few days but for a long time. Events such as natural disaster, political uncertainty, wars and international meetings have widespread physical and psychological impact on forex markets.

Therefore, by keeping on top of the global developments, understanding the underlying market sentiments before and after these global events and trying to anticipate them could be very profitable for you. At least it can help prevent significant losses in your currency trading.

You may ask what type of big events affects the currency markets in the long term. Important world summits, major central bank meetings, potential changes to the currency regimes, possible default by large countries, G-8 Finance Minister meetings, Presidential and Parliamentary elections in big countries, possible wars, FED Chairman semiannual testimony to the Congress. These are only a few examples of big events that make the currency markets jittery and may have a long term impact.

For example, 2004 and 2008 US Presidential elections were hotly contested. Candidates had different stances on the growing budget deficit and how to deal with the recession engulfing the US economy. This resulted in the overall USD bearishness.

G-8 meetings also tend to leave a long lasting impact on the currency markets. Combined these eight countries account for the two third of the world GDP. So whatever decisions that are taken during these G-8 meetings usually leave a short term as well as a long term impact on the global forex markets.

For example, the US Dollar collapsed after the September 2003, G-8 Finance Minister meeting in which the finance ministers wanted to see more flexibility in the exchange rates of the member countries. This meeting was also important as the US Trade Deficit was ballooning and going out of control at that time.

EUR/USD bore the burnt of the dollar depreciation. China and Japan intervened aggressively to stabilize their currencies. USD had already begun to sell off leading up to the meeting. The trend continued for many months after the meeting.

Therefore, the long term impact of these events is much more significant that the short term impact and the event itself have the ability to change the overall market sentiments.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Know These Forex Broker Tricks. Learn Currency Trading!

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Understanding How the Forex Brokers Make Profits

July 18th, 2009
by Ahmad Hassam

When you open a forex trading account, you will be told by your forex broker that there are no commissions involved in currency trading. Most of the new traders take their broker words as true. They think that the cost of trading is minimal.

Forex brokers also called FCMs (Futures Commission Merchants) make profits through the bid-ask spread they offer to their clients for each currency pair. This bid-ask spread is the trading cost for you and the profit for your FCM.

Lets take a practical example. Bid/ask spreads are usually overlooked by the individual traders as the price they have to pay for trading. So lets calculate what your cost of trading can be in a year.

Suppose you are a day trader. You trade 5 times a day. Taking away the weekends, when you cant trade, there are 250 trading days.

As a day trader, you open and close your position before the end of the day. That means each position is traded 2 times.

Suppose; your start with an account size of $50,000. You are using a leverage of 4 only, you are cautious. So this $50,000 deposit will control (50,000) (4) = $200,000 for you.

Your Annual Turnover will be; (5) (250)(2)(200,000)= $500 M. Huge! Now lets calculate how much your broker will make and what your spread cost is. Spread Cost= (Annual Turnover) (spread)/2.

Suppose further, the bid/offer spread charged by the broker is 3 pips. 3 Pips Spread Cost= (500M) (0.0003)/2= $75,000.

Suppose, the spread offered by the broker is only 2 pips. 2 Pip Spread Cost= (500M) (0.0002)/2= $50,000.

You can see now, the cost of trading with a 3 pips spread versus a 2 pips is $25,000. Huge for you, this is 50% of your account equity. You see now that a 1 pip difference can result in $25,000 more as trading cost for you.

You will need to make a profit of $75,000 in a year simply to breakeven with a 3 pips spread. Trading costs are one of the most important reasons most active traders fail in the long run.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Know These Forex Broker Games. Learn Forex Trading.

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Article Marketing Secrets

May 2nd, 2009
by Hass67

Article marketing is the best way to attract massive publicity to your website. In article marketing you write articles on the topic of your choice. Then submit them to article directories, ezines and announcement groups.

You dont need to be great writer in order to succeed at article marketing. Article marketing is being used by regular every day people for driving traffic to their websites.

This is the free and best way to build massive back links to your site. These backlinks will count with the search engines and will increase ranking of your site on the search engines. You only require giving not more than an hour of your time everyday writing an article.

Suppose you are afraid to write. You consider yourself not a good writer. Believe me, if you can write letters to your friends, you can also write good articles with a little bit of practice and good advice.

Your article should not be too long or too short. It should be between 400-700 words for best results. When you write an article avoid talking about your business or your website in the body. Try to give your reader information that has value in an interesting manner.

In the beginning, write one article per day. Next day, again read the article you wrote the previous day. This way you will be able to take a fresh look at it and make it even better. Then submit it to article directories.

The title should be enticing enough for people to click on it. Start your article in an interesting and lively manner that compels the reader to continue reading till the end.

At the end of the article there is a resource box. You can talk about yourself here. It is the most important part of the article in addition to the title and the body.

In the resource box, you can talk about yourself. Try to tell the reader about yourself in third person. Here you can sell your business and your website.

Your resource box should be compelling enough for the reader to click on the link and visit your website. A good article tends to leave a positive impression in the mind of the reader and builds trust. It also establishes you as an expert in your niche.

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. His hobby is internet marketing. Discover Web Traffic Machines. Read about an Article Marketing Network comprising 12,000 blogs. Make Money Online

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More On Forex Brokers Scams

April 22nd, 2009
by Hass67

You as a retail forex trader need to understand that forex brokers are in the end above all marketing machines. Since more than 90% of the new traders dont survive long and give up trading after losing their hard earned money, forex brokers need a constant flow of new clients.

To entice new traders, vast sums of money are spent on advertising. Just Google, any keyword related to forex and you will find so many ads by forex brokers giving you so many incentives to start trading forex.

Forex brokers want you to trade more. They use many methods as incentives to make you do that. One of the methods is to hold a Forex Trading Contest by announcing cash prizes of $2000, $1000 and $500 for the top three.

In order to win, many small traders get wiped out losing their money. This is just a trick forex brokers use to make you trade more. The more you trade, the more money your broker makes. This trick is similar to a lottery.

There is no check on the forex brokers. They can quote any rate to you. Forex brokers do this by adding 2 3 or even more pips to the interbank market pip spread

Just imagine by acting only as middlemen between the interbank market and retail forex trader, forex brokers make risk free profits of 3 to 4 pips on a round trip trade.

There is a practice used by forex brokers called Price Shading. For example, if the broker is convinced that Euro is on an uptrend and its price is going to rise, the broker will shade his price quote slightly higher to take advantage of the likely increase in Euro price.

If the broker sees that many traders have placed stop orders at a certain price level, he will mount a sudden attack to take out all the stop order by momentarily spiking his price feed.

You cant do anything. It was a momentary spike, so small that it only tripped the stop losses.

Since, there is no central exchange to compare moment by moment prices, your broker can offer any excuse like there was sudden large order in the market or the broker feed is much faster and reflects true interbank rates.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in investing, stock and forex trading. Discover a revolutionary new broker buster Forex Robot. Read about Semi Automatic Forex Engine.

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Learn Forex Trading

April 21st, 2009
by Hass 67

Many people are turning towards forex trading after losing their money in the recent stock market crash. In fact, forex trading is the best work from home opportunity. Forex trading can be done anywhere from the world if you have a computer and an internet connection. Forex trading is the answer to the today’s global recession.

Forex and stock markets work differently in many ways. Forex market is highly liquid as compared to the stock market. Stocks are basically a long term investment method where ordinary people buy stocks either individually or through mutual funds and wait for these stocks to rise in order to build their retirement portfolios.

Forex markets are open 24 hours, five days a week except on weekends. You can trade forex online anytime of the day. On the other hand stock markets are open only from 9 AM to 5PM. After the stock market closes, you have no way to buy or sell a stock.

Forex trading is a highly liquid market. Most of the participants in the forex markets are either hedgers or speculators. Big institutions are looking for hedging their forex exchange risk whereas small traders are looking for speculating opportunities and willing to take on risk. Stocks are considered to be a long term investment.

In the US stock markets there are more than 50,000 stocks listed on the different stock exchanges. As compared to that in forex markets, mostly five major currency pairs are traded: USDEURO, USDGBP, USDCHF, USDJPY, USDASD.

Another major advantage of forex trading over stock trading is the lower trading cost. In forex trading, brokers don’t charge any commission. They make their profit by the difference between the bid ask spread. In stock trading, the brokers charge a fixed percentage as commission per trade.

Stock Market Crash of 2008 was terrible. More than $11 trillion of wealth was wiped out in 2008 alone. Many people lost more than 60% of their retirement savings. Even investments in blue chip stocks considered to be safe lost considerable value.

It is feared that sotck markets will take 2-3 years at least to recover. This bear market has wiped out many investors. But there is always a bull market in forex. Even a small change in dollar or euro exchange rate may be an opportunity for you to make a fortune.

Daily more than $3 trillion get traded on the forex markets. If you combine all the stock markets of the world, even then they cannot the match the size of the forex market. Forex markets are so huge that even governments and central banks are unable to control them.

Many people have lost most of their retirement savings in the stock market of 2008. They still don’t know how they are going to recover their retirement accounts again…

Learn forex trading. Yes, forex trading is the answer to this recession. It is not difficult to learn forex trading. If you are willing to give two hours daily to forex training, I believe in 2 months, you can become a forex trader. Take forex trading as your passion or hobby. You are not going to regret it.

You can read my blog where I give many forex trading methods. Most of these methods are risk free. You can try them on your demo account before actually implementing them on your live account. I want you to try one method that works on autopilot and you can try it risk free for 60 days.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Know more about Forex Autopilot Turbo. Visit his blog for Auto Forex Trading.

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Trading Forex Online Risk Free

April 19th, 2009
by Hass67

Many people want a home based business opportunity that can generate good income for them part time. During the recent stock market crash, many have burned their fingers. So, most of them are afraid of investing in stocks. People dont know that forex trading is the best home based business. Even if they know, they think that it is not them being too difficult.

Learning something new is always an effort and without a little bit of commitment you wont succeed. You will have to learn forex trading with some commitment in the beginning. But once you have learned it, you will be happy to have done so.

Always learn a new thing with commitment. Make a conscientious decision that you are not going to quit until you succeed. With this approach you are surely going to emerge a winning forex trader.

Many people stay away from forex trading thinking that they will have to lose money in the beginning in order to learn forex trading. Now, the best thing is this that you can learn forex trading without losing a single cent of your hard earned money.

Start with selecting a good forex trading course just to educate yourself about the forex markets in general, what is forex trading, forex trading method, how to enter/exit a trade, technical analysis etc,. Buy a course that comes with a money back guarantee. So, that if you dont like the course, you can ask for a refund and go for another course.

Go through the course thoroughly step by step. In my opinion, you should be able to master the material in the course in less than two weeks.

Once you have mastered the forex trading course, open a demo account. You can easily open a demo account online in five minutes. It is as easy as that.

Start practicing the strategies that you have learned in the course. Practice and practice to figure out what works for you and what does not, demo account gives you the opportunity to do so. On the demo account, you trade with fake money or virtual money but the data is real. So you are trading in the real world but using fake money.

As you have been practicing with fake money, you are not losing your real money but you are getting valuable practical experience of trading forex. Since you are no using real money, you are not going to lose even a single cent of your hard earned money but you will be getting valuable experience trading forex. Now many people have stopped trading forex manually. They trade forex on autopilot with a robot.

The development of Metatrader platform by forex brokers opened up the possibility of developing programming scripts known as forex robots that could trade forex on auto.

In the last two years, a number of very good forex trading robots have hit the market. A few of them are very good. Do your research and select one. Buy a forex robot that comes with a money back guarantee. Install it on your Metatrader demo account. Let it run for a few weeks. See its performance.

Only buy a forex robot that gives you a money back guarantee. This will help you test it by installing it on your Metatrader demo account and running it for a few weeks. If after a few weeks you find that it has multiplied your money, keep it. If it has not multiplied your money or has given you a loss, simply ask for a refund. Since, you have been using fake money; you are not losing a single cent of your hard earned money.

Dont you like this risk free method of trading forex? Why dont you give it a try? Forex trading is the best home business. Dont miss it! You can start trading forex with $300 or even less so dont hesitate to try it. It may make you rich!

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in investing, stock trading and forex trading. Discover Forex MegaDroid-A Revolutionary New Forex Robot.

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London Forex Rush Strategy

April 17th, 2009
by Hass67

Forex market is a totally different beast as compared to the stock market. Stock market is open only for a fixed times usually from morning to the evening. After that it closes and trading stops. But forex markets never close. They are open 24 hours a day, 5 days a week except on weekends.

This continuous 24 hour trading makes forex markets somewhat confusing for the beginners. Forex is traded Over the Counter (OTC) and there is essentially no open and close of the market, many new traders find it hard to adjust.

Now, how to provide a open and close session for each day so that you dont have to sit in front of your computer all day getting yourself exhausted. An ingenious way is to divide the day into three eight hour session.

Divide each session into two by using 4 hour charts. Since only three major money centers are responsible for most of the turnover in the forex markets, this will help you to see each regions risk appetite and make your trading day more manageable.

The three major money centers that affect the forex markets everyday are namely: Asia, London and New York. We will call our three trading sessions, the Asian, the London and the New York Session.

Asian Session: Most of the turnover in this market session is handled by Sydney, Tokyo, Hong Kong and Singapore. Main players are the commercial exporters and the respective central banks. Since most of these central banks are in competition with one other, the price action during this session is jumpy and unsustainable.

London Session: London is still the forex capital of the world with deep and highly liquid forex market. Paris, Geneva and Frankfurt also are players in this session. The moves that originate in this session are very important keeping in view the amount of money needed to move a market this deep. These moves give you a lot of information about the market sentiments and positions.

New York Market Session: New York is second to London. Both New York and London overlap in the morning when New York is opening and London is closing. This is the best time of the day for savvy traders to trade as there is a lot of price action during this time.

These timings are important for you to know: 00:00 GMT-Sydney starts trading. 11:00 GMT-London trading starts. 15:00 GMT- London trading becomes very active. 17:00 GMT- London trading is active and New York trading opens. 18:00 GMT- London and European trading closes! 19:00 GMT- New York and Chicago traders getting ready for a close!

The overlap between London and New York is when major price moves take place. London is in fact the trend setter in forex as well as fashion.

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in Options and Forex Trading. Discover a revolutionary new Forex Robot.

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Fundamental & Technical Analysis for Forex Trading

April 16th, 2009
by Hass67

People are leaving stocks and turning towards forex in droves. Forex trading is the new fad. Many new gurus have appeared who are paddling their forex trading courses to the general public. If these gurus had made their fortunes from trading forex they need not sell courses. These gurus are only making money from the sales of their course.

According to these gurus, forex trading is easy. Buy the course and everything will be explained in an easy and step by step manner. These gurus are only selling their courses. No doubt, internet has made forex trading possible from anywhere in the world. But is it easy.

No guru will ever tell you that only 5% of the new traders ever succeed in the long term. 95% will quit after a few months or within a year. Forex markets are like a battlefield. Only the best survive. There is no room for inexperienced traders. Forex markets are brutal and unforgiving to those who dont know how to swim.

Why 95% of the new traders fail? Simple, because they assume that by reading one or two eBooks, they will understand forex markets. Forex markets are far more complex and complicated to understand in one or two eBooks. You cannot succeed at forex trading until you start living and breathing it.

I am not saying that you should not trade forex. What I mean is that if you are serious about forex trading then learn it properly first. Try to understand how forex markets work. What are the factors that move the currencies in the markets? How can you predict market movements?

Learn fundamental and technical analysis. Some people say both are exclusive and require different strategies. But I say both supplement each other. Fundamental analysis can help you predict the general trend in the forex market in the medium to long run. Fundamental analysis studies the underlying economic factors that affect the currency markets.

Technical analysis studies the past behavior of prices to predict the future behavior of prices. You need to master technical analysis if you are thinking of becoming a day trader. Technical analysis is ideally suited to forex markets.

Technical analysis uses a number of indictors to predict the movement of currency pairs. Understand how to properly use these indicators to determine whether the market is trending or ranging and what is the best entry/exit.

If you have been previously trading stocks than you can switch to forex trading much faster. But always remember as long as you dont make forex trading passion of your life, you wont succeed at it. Learn everything about forex, make it a passion and you will develop into a winning trader.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in investing, futures and forex trading. Read about Forex Profit Accelerator. Know more Forex Strategies.

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Forex Options Trading Strategy

April 14th, 2009
by Hass67

Have you heard about George Soros; The legendary manager of Quantum Hedge Fund who had made a cool $1 Billion profit from a single bet. In the early 1990s, one day he was sitting in his office discussing currency markets with his associate. Both of them were of the opinion that the British pound was overpriced and Bank of England could not sustain its price for long.

Acting on his hunch, he told his associate to purchase $10 Billion put and call options on British Pound and German Mark. It was a huge bet. He was in fact swaggering all the assets under his control on a single bet that may or may not pay off.

George Soros had perfect knowledge of the currency markets. He was sure of his bet and had the conviction that the Bank of England could not prop the overpriced British pound for long. His conviction was shared by other currency speculators. The only difference between him and them was the huge amount of the bet he placed. Bank of England was forced in just of 24 hours to take the British pound out of the European Monetary System and let it float freely. His gamble had paid off.

The value of British pound plunged. George Soros gamble paid off. He is now famously called the Man who broke the Bank of England.

Daily more than $3 trillion are transacted in the currency markets. You as a forex trader can profit from the volatility in the currency markets using a number of methods. Forex options is one of the methods

As a retail forex trader you can trade any of these contracts: spot, futures and options. Forwards and swaps are two contracts that are also traded in the forex interbank market between large institutions like banks, corporations and hedge funds.

What are forex options? Options are derivative instruments that allow you to buy or sell an underlying asset at a price known as exercise price before or on a certain date called strike date. There is no obligation on you to actually buy/sell the currency like that in futures.

Currency is the underlying asset in forex options. You can purchase a forex options on payment of a certain premium. This is the price that you pay for getting the right but not the obligation to buy/sell a certain currency.

You may or may not exercise your right to buy/sell the currency. If the market price of the currency is above/below your strike price, you can buy/sell that currency by exercising your option.

However, in case, the currency market price is below/above the strike price of the forex options; you need not exercise your right to buy/sell. By not exercising the forex options contract, you only lose the premium.

There is a very good forex options strategy that lets you profit from the currency markets in whatever direction it is moving. You can profit regardless of the direction of the market.

This method is guaranteed to give you profits with an ROI of 30-50%. Try this method. It is risk free.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in investing, options and forex trading. Read more about Forex Options Non Direction Trading System. Discover a revolutionary new Forex Robot

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