By James Chen

This foreign exchange booklet presents readers with actual, sensible details on find out how to alternate the foreign currencies industry successfully. It starts off by way of overlaying introductory details at the currency industry, together with uncomplicated buying and selling mechanics and some great benefits of foreign currency trading, after which is going directly to describe particular currency exchange tools and talents in step by step aspect. This comprises hugely functional details on technical and basic research, hazard and cash administration, and robust foreign currency trading concepts. those ideas have confirmed tremendous potent in supporting investors play the foreign money video game to win.JAMES CHEN, CTA, CMT (Montville, NJ) is leader Technical Strategist at FX options, a number one foreign currencies dealer. knowledgeable on foreign currency trading and technical research, he's additionally a registered Commodity buying and selling consultant (CTA) and a Chartered marketplace Technician (CMT). Mr. Chen writes day-by-day forex research, leads foreign currency trading seminars, and has authored quite a few articles on forex method and technical research for significant monetary courses. those comprise Forbes.com, Futures journal, Technical research of shares and Commodities journal, and shares, Futures and techniques (SFO) journal.

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This consists of simply closing an open trade at the current market price, much like a trader would open a trade at the current market price with a market order. Relying on manual exits instead of preset exits can be a dangerous practice for beginners. Much like traders who over rely on market orders may be prone to opening positions haphazardly because of emotions like greed or fear, traders using manual exits may fall into the same type of trap. indd 31 1/13/09 9:56:19 AM B a s i c F o r e i g n E x c h a n g e Tr a d i n g M e c h a n i c s does not actually set the stop loss—fall into the category of manual exits.

To be long EUR/USD, for example, is to simultaneously buy euro and sell dollar. To be short EUR/USD, on the other hand, is to simultaneously sell euro and buy dollar. So whether one is long or short any given currency pair, one is always long one of the currencies in the pair, and short the other. This concept may seem foreign to traders used to dealing with stocks and/or futures, but it essentially means that no matter what position a trader takes in the currency markets, that trader is always both bullish (financially optimistic) on one currency while simultaneously bearish (financially pessimistic) on another.

If demand for a currency increases (and/or supply decreases) as a result of one or a combination of these factors, that currency’s exchange rate will generally increase in relation to other currencies. Conversely, if demand for a currency decreases (and/or supply increases) as a result of one or a combination of the factors above, that currency’s exchange rate will generally decrease in relation to other currencies. It is a simple concept, but one that is not so simple to utilize in attempting to forecast market directions.

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