PDF is the popular file format for the electronic books (or e-books) and Forex traders always search for Forex PDF to read about the currency trading from their own PC without having to buy a physical book or installing some additional software for e-book reading. Of course, there are many strictly proprietary e-books that aren’t available in PDF format, but there are also free e-books that allow reading about Forex in PDF format.

There are several sources of the Forex PDF books on-line. Some of them are great and feature tens of interesting and useful e-books; others aren’t that cool but still allow downloading one or two free Forex PDF books:

• Forex E-Books from EarnForex.com list more than 70 free PDF e-books that can be freely downloaded. All the books are divided into 6 thematic categories.


• Trading Naked Library — the site isn’t too visitor-friendly but it has ton of Forex PDF and other financial trading e-books.


• Phildun’s Forex Trading Library is a great source of free Forex PDF books but it lists them without descriptions and the download process isn’t very easy from this website.


• The Forex Village has four categories of free Forex PDF books with a lot of rather rare strategy descriptions.


• FX1618 lists a lot of interesting e-books but, unfortunately, only few of them are about the actual Forex trading.


• Forex-Book.org — the majority of the listed books are paid but there are also several free ones there (not too great).


• Forex Newbies Library - 9 carefully picked newbie-friendly Forex PDF books. Nice choice if you don't want to spend a lot of time to go through the dozens of them to find what you really need.

When you set yourself into a Forex trading, it’s very important to have a good level of knowledge in the markets. Downloading and reading at least some of these e-books can be a good start before your open your real money account and buy some real books on trading.

If you know some other good on-line sources of free Forex PDF e-books, please, feel free to mention them in the comments.

Update: One more source added.

Trading with leverage is extremely popular among the Forex traders. High leverage is considered dangerous because of the risks associated with the fast moving money and poor money management tactics practiced by the majority of the traders. Besides the well known danger of multiplying your losses, there is another evil hiding behind the leverage, which can wipe your trading account easily.

High leverage is advertised by many brokers. Some traders believe that the higher their leverage is the faster they will become rich and the Forex brokers that offer ridiculously high leverage are even praised. But in fact, there is a very practical and mercantile reason for the Forex brokers to offer high leverage — higher earnings.

The higher is the leverage the more money is paid by the trader to the broker in the form of the rates spread. The value of the pip that trader wins, loses or pays as a spread depends on the leverage. With 1:100 leverage a 2 pips spread for the 1 standard lot of the USD based currency pair is worth $20. That’s not a big amount if you have $100,000 account, but if your total trading account is just $2,000? That’s 1% lost despite the fact if you win or lose this position. With 1:10 leverage that spread would worth you only $2. Without leverage the spread payment to your broker would be as low as 20 cents.

Remember that the leverage comes with a price, which is quite high and which is often overlooked by the traders. If you want to learn trading profitably on a real account, try to the leverage as low as possible. Switch to the higher leverage only if you really know what you are doing. Don’t try to become rich quick with the help of the leverage. It won’t allow you.

Support and resistance is the one of the most popular and widely used methods of technical analysis in Forex. It’s simple, easy to understand and doesn’t even require any additional analytical tools except the bare chart of the currency pair. Support and resistance levels form when the price action creates the distinct peaks and plateaus on the chart. Support level acts as a barrier for the rate that falls, while the resistance is the level that prevents rate from growing farther. Buying when the resistance is broken and selling when the support level is broken is an easy Forex technique that made thousands of traders rich. If you plan to trade using support and resistance, don’t forget these important facts:

1. When the support level is broken it becomes a resistance level, the vice versa is also correct.
2. Breaking the support and resistance levels isn’t an exact math. False breakouts are possible.
3. Real breakouts are usually marked with a bar closed below/above the support/resistance level.
4. Check your charts on the different (larger) timeframes. Some important support and resistance levels can only be seen on the long-term charts.
5. If the rate bounces off the support or resistance that level becomes stronger. The stronger support and resistance level is the more profit can be gained when it’s broken.

Concluding all that was said above I should also warn you that using support and resistance in your daily trading will become profitable over the time as this method requires a lot of real experience and becomes more powerful with each trading success or failure.

If you want to be profitable in Forex it’s vital to know how to trade. But knowing when to trade is also a very important condition to succeed in Forex. The market behaves differently depending on the time of the day and the day of week. It’s well known fact to the experienced Forex traders that it’s better to trade when the market is busy and it moves in the large and predictable waves. But when the trading is slow and the volatility decreases, the market itself becomes unpredictable and it’s easy to lose your money. If you want to trade when the market is the most active then learn these three simple rules:

1. There are several major regional Forex trading sessions — Tokyo (0:00-9:00 GMT), London (8:00-17:00 GMT) and U.S (13:00-22:00 GMT).
2. The market becomes more active when those sessions overlap: Tokyo and London (8:00-9:00 GMT) and London and U.S. (13:00-17:00 GMT).
3. The trading is more active in the middle of the week — particularly Tuesday and Wednesday. Friday is the worst day to trade.
   

So, to trade with the best market conditions available you just need to trade on Tuesday and Wednesday from 8 to 9 AM GMT and from 1 to 5 PM GMT. Of course, not everybody can trade during these time periods. In this case, I’d recommend setting up stop and limit orders to catch the most juicy price movements.

The technical indicators of the Forex market don’t take information from the air; they are all based on some of the market’s parameters and the appropriate calculation methods. Each indicator is calculated according to its own rules and there is no need to describe them all. In this article I’ll try to describe only the actual Forex market parameters that can fully describe the technical side of the Forex trading.

1. Trend — a direction of the price movement. Forex market can be in some kind of trend or go sideways. The trend itself can be measured by its direction, starting/ending point, ranges and the inner volatility.
2. Volatility — a statistical measure of the number of the price changes over a certain period of time.
3. Momentum — a measure of price movement strength in a term of pips per tick.
4. Cyclicality — it’s hard to be measured, but it still exists on the financial markets (and on Forex too) and describes the cyclical nature of some price movement.
5. Volume — the number of the transactions (price changes for Forex) in a given amount of time.
6. Support and resistance levels — they can be hard to spot, but Forex market generally bounces off of them or breaks them with a significant price action.
7. Traders’ expectations — they can’t be seen from charts, but they are the part of the technical picture of the market. Stop and limit orders are the important parameters of the market that should be taken seriously.
   

Some technical indicators use only one or two of these parameters; very few of the standard MetaTrader 4 indicators use more than two technical parameters. And I don’t know any indicators that are based on cyclicality or trader’s positions.

What is leverage in Forex trading? Every on-line Forex broker offers trading with certain leverage, which usually varies from 1:2 to 1:500 with the most popular being 1:100. Leveraged trading is also called margin trading, because you only need to have a margin to back your position while the rest is offered by your broker. Margin trading is considered to be more risky, but it also offers high-yielding opportunity which is sought by many Forex traders. If you trade on Forex without leverage you have to spend a big deposit to open a position — you’d have to deposit $100,000 to open a position of 1 standard lot. When you trade with a leverage you can use just a fraction of that money to open the same positions — the rest of the money is «borrowed» from the Forex broker. That means that with just $1000 and 1:100 leverage you can open $100,000 positions and gain $10 from each pip of difference you gain. Of course, you’ll also lose $10 for each pip if the price goes against you. Remember that your margin goes for margin requirement and is held by the broker for the whole period of time while your position is opened. That means that your available margin on account declines usually by 100% of the margin required for holding the position — e.g. $1,000 for $100,000 position on 1:100 leverage. Don’t forget that your position opens with a little floating loss caused by the broker’s bid/ask spread. That means that if you had only that $1,000 in account your position would be immediately closed out by margin call. So, always remember to keep enough available margin to cover your losses, because your broker won’t be losing its own money, it will close your positions instead, if the free margin level falls critically low.

Examples:

1. With 1:500 leverage and $1,500 in your trading account you can open a position of 5 standard lots and still have $500 left for loss toleration. But with each pip of loss costing you $50 your position will be automatically closed when its loss reaches 10 pips. After that you have $1,000 remaining in your account.
2. With 1:50 leverage and $10,000 in your account you open 1 standard lot position and $2,000 from your account goes for margin. $8,000 left is enough to hold 800 pips of loss.
3. With 1:2 leverage and $100,000 in your trading account you can open 1 standard lot position with $50,000 secured as margin and $50,000 left to tolerate up to 5000 pips of loss prior to margin call.

At some point of the trading experience traders that don’t reach a very successful level with their own skills start to think about using a managed Forex account. Of course, exceptional traders can earn themselves after just a little practice and learning, but for the majority of the beginning Forex participants the frustration of the losses and the inability to learn over a certain period of time leads to the conclusion that they should use Forex account management services. There is nothing wrong with that, but there is something these Forex investors should know:

1. Earnings may still fluctuate and become losses. When you rely on a managed Forex account the mechanics of your earnings isn’t much different from that when you trade yourself. The traders that manage your account can still experience losses and you may find that your earning is actually negative during some months.
2. There are many scam-shops in the managed Forex account industry nowadays. With the rising popularity of the on-line Forex trading, the number of the scams in the managed account industry grows exponentially. Try to avoid shady managing companies and sites. It’s always preferable to use the account in the reputable broker with a trading access for the managing side.
3. The performance of the managed account can be too conservative. Managed Forex trading accounts can turn out to be not as profitable as you might expect. The majority of the account managers use the conservative strategies that tend to protect your assets more than gain profit. So, don’t expect 100% yield in one month or even a year.
4. Don’t forget about management commission, transfer fees and withdrawal delays and limitations. When you trade with your own money you can do almost everything you want with them at any given moment. When your account is under the management you’ll have to wait before you can withdraw some money or change the management. You tie up your own money with the manager. The management fees can be costly — don’t forget to find out the real amount of money you will give away as a commission to your managing company.
   

One shouldn’t forget that it’s possible to trade yourself and at the same moment have investments in several of the managed Forex accounts. Diversification is always great and even highly successful traders don’t miss the opportunity to invest into the well-managed Forex accounts.

Fundamental analysis is widely used in trading for thousands years. In stock trading fundamental analysis of the companies prevails over the technical analysis in the long-term investing. But in Forex technical analysis is more popular, because of the volatile and short-term nature of the foreign exchange market. Nevertheless, fundamental analysis has its fans and many professionals use it to earn profit. What are the common pitfalls that can wipe the Forex trader’s account if he relies on the fundamental analysis?

Relying on a news effect. You can’t rely on the specific news effect that will be caused on a specific currency pairs. For instance, good news on the U.S. economy not always make dollar go up, while bad news not always make it go down. Additionally there might be a very high volatility period after such releases that would make all your fundamental assumptions fails. Although, this is generally true for the U.S. related fundamental indicators, sometimes the same happens with the other currencies and countries.

Intraday fundamental trading. Intraday use of the fundamental analysis is probably something unique to Forex market, but I know a lot of traders that are fond of it. Nevertheless, majority of them fail greatly, because fundamental analysis usually doesn’t work that way. Fundamental indicators set long-term trends and the short-term change they are causing is volatile and unstable, which may lead to the big losses.

Confusing good for currency and good for economy. More than often economic indicators that are good for the currency of the particular country are hurting its economy and vice versa. This happens because weak currency is often a boon the country’s exporting companies, while a strong currency usually hurt the trade balance and the manufacturing industries. So, remember that not all «good» indicator releases are good for the currency you buy

I use fundamental analysis in my Forex trading, but I am aware of its possible problems. If you want to trade using mainly fundamental analysis — then fine, just don’t forget to be careful with this tool.

Trading with the exotic currency pairs is less popular than with the major currencies pairs such as EUR/USD and USD/JPY, but the mechanics of trading is the same. Both technical and fundamental analysis works the same for exotics and the same strategies that work for the major pairs can generate signals for the exotic currency pairs. But what to do when your broker doesn’t support trading with the specific exotic pair? Changing broker to open a position isn’t a good idea, but there is a way to trade some pairs on the brokers that don’t have them.

The exotic currency pairs are also often called cross pairs, because in reality they are often nothing more than the derivatives from the major currency pairs. That opens a possibility to substitute such pairs with majors. For example, you want to sell NZD/JPY, but your broker has no such pair, though it offers NZD/USD and USD/JPY. So, all you need to do is to sell NZD/USD and NZD/JPY, the resulting positions will give you the same combined profit as the NZD/JPY short position would give you. Another example: if you want to buy EUR/AUD, but your broker only offers EUR/USD and AUD/USD then you just need to buy EUR/USD and sell AUD/USD. The general rule is the following: to go long on cross X/Y — buy major with X in the first position or sell one with X in the second and sell major with Y in the first position or buy it if Y is in the second position. To go short — do the same but vice versa.

Unfortunately this technique has two important disadvantages:

1. You can’t set stop-loss and take-profit level like with a single currency pair position. You depend on two positions combined and the majority of the Forex brokers doesn’t support combined stop-losses or take-profits on two orders.
2. Position size uncertainty makes it difficult manage your risks in such trades, because the base currency for those positions can be different.
   

If you don’t trade exotics too often and you like your current broker, then you probably wouldn’t want to change your broker to get more currency pairs. But if you open such positions more than once a month then this technique isn’t something you need. In this case I’d recommend changing your broker.

Choosing a Forex broker is an important step to a success in the Forex trading. Whether you are a beginning trader looking for your first broker or an experienced trader seeking to switch brokers, you'll have to be careful in this selection. With the current abundance of the on-line Forex brokers offering dozens of services, bonuses and high quality execution, one need to look for the exact features that would fit his trading style, capital requirements and level of legal regulation. Here's the short list of things for which to look when you choose your Forex broker:

1. Terms of Service. The first thing at which trader needs to look before joining a broker is its Terms of Service. They should be free from anything that would put trader's money in danger and should give him freedom to manage his account without any serious obstacles. Don't forget to check ToS to know if the broker forbids your trading style - e.g. scalping, news trading, etc.
2. Trading platform. Trading via a Forex broker with some lousy platform is a real pain for any trader. Check if the broker's platform is good enough (through the demo trading) before registering a real account. MetaTrader 4 platform is offered by many Forex brokers and it's one of the best of the available platforms for the on-line trading.
3. Regulation. If the broker claims to be from U.S. or U.K. or any other country with high level of Forex brokerage regulation then check the local authorities to see if they are really regulated. Checking offshore companies is almost useless and trading with the offshore broker has its own advantages and disadvantages as well.
4. Spread. Spread will be your main payment to the broker for using its services. Don't overpay for anything - try to find a broker which offers low spreads. For example, trading with a Forex broker with 7 pips spread on EUR/USD currency pair is really stupid, while the average spread for this pair on other brokers is 2 pips. If you find a broker that offers spreads below average, don't forget to read its ToS to see if there are any hidden commissions in it.
5. Payment methods. Most of the traders deposit and withdraw their trading funds via wire transfer. But there are plenty of other methods of payment that can be used to trade Forex; PayPal and WebMoney are among them. If you prefer electronic payment systems choose a Forex broker that accepts them.
6. Minimum deposit. Trading with small amounts of money won't make you rich, but it's a good way to check your broker's real account handling before trading big, so the minimum deposit amount for the Forex broker shouldn't be too high. Some of them accept deposits only from $10,000 and higher - that's not a very good practice, since many traders would prefer trading with just hundreds of dollars before depositing such amounts.
7. Additional services. Almost every broker offers additional services nowadays. Personally I prefer brokers that allow extra instruments for trading except Forex pairs - like metals, indexes or some CFD. For example, if you trade not very often and prefer long-term trading you'd seek a broker that pays interest on your free margin and offers good interest rate difference payments for your open positions.

Of course, this list is far from full, as there are many other parameters for which to judge the broker and they vary from trader to trader. But you can use this list as a checklist next time you are going to choose your new broker or register with an old one with which you've been trading on demo account for years.

Trading on the Forex news is a popular strategy that is generally adopted among both professional and barely experienced traders. Apart from the standard high volatility accompanying important economic releases, Forex traders try to earn by predicting the outcome of the news, successfully forecasting the market’s reaction. However there are three important points every news trader should know before reacting on the Forex news:

1. Generally it’s a good idea to set the entry orders before the actual news release. Use stop and limit orders to make the entry to trigger automatically and at the desired levels even on a very volatile market.
2. Setting stop and limit orders for entry is a good way to automate the news trading, but it’s also a good idea to stay near your trading platform during the news release. Sometimes the market demands your personal reaction and your own understanding of the current situation to bring you profits and save you from losses.
3. You should know beforehand if your broker allows news trading. Many Forex brokers forbid trading during the news of the high importance to the Forex market. They can do it either via their terms of service or via some technical obstacles. Some brokers widen their spreads to extreme values during the news, while the others just stop reacting to the trader’s orders. Don’t even try earning from the news trading if your broker doesn’t allow it.

Don’t be scared to trade on the Forex news. It’s a good tactic for every kind of trader and will work on the most Forex brokers. Just try to avoid the common mistakes associated with this trading strategy.

Carry trade is the kind of Forex trading where low-yielding currency is sold for the high-yielding one and the produced difference between the yields is gained by the trader; usually it’s also multiplied by the margin leverage. So what are the yields of the currencies? Each currency has an overnight interest rate associated with it. If you trade via a broker you buy and sell currencies without a physical delivery, so when you buy a currency you should get paid an interest from a broker, because he gets to «store» and «use» that currency, while you hold the position. If you sell a currency you should pay an interest because you «hold» and «use» the currency you sold, while the position is open. Because in Forex you trade the currencies in pairs you will get the difference between the long currency’s interest rate and the short currency’s interest rate. If you sell GBP/JPY pair and Bank of England’s interest rate is 5.00%, while Bank of Japan’s is 0.50% you’ll lose 4.50% interest on this position, if you buy this pair you gain this difference. In reality, brokers apply some commission to these differences, so you’ll lose more on negative interest and earn less on positive.

These rate differences wouldn’t be so attractive if it wasn’t high leverage that multiplies the gain by tens and hundreds. With 1:100 leverage you get 450%/year holding a long GBP/JPY position. With a higher leverage and a higher rate difference the results are even more impressive. South African rand has 12.0% interest rate associated with it. Buying ZAR/JPY with 1:400 leverage would yield 4600% a year.

No surprise that from 2001 to mid-2007 Forex carry trades were extremely popular. Such currency pairs as GBP/JPY, EUR/JPY, AUD/JPY and NZD/JPY brought thousands percents of profit through the interest rate difference only; considering that those pairs also rose tremendously during that period, such positions made many people rich.

So what happened in 2007 and why carry trade positions aren’t very popular now? Global economy crisis spurred by mortgage lending crisis in U.S. triggered the growth of the global volatility. Central banks stopped raising interest rates and started to focus on growth, while high-yielding currencies started a correction. Higher yields are always associated with the higher risks, so when the global risks increased, the carry traders started to close their positions and spurred a wave of decline on those currency pairs. Currently all those popular carry trade pairs are moving sideways with a little downward slope.

Carry trades didn’t vanish from the Forex market they just became much less popular and no longer last for years. Now carry traders prefer to buy at the local bottoms and hold the pair for weeks or even days to gain their interest rate difference. And this situation will probably last while the global economic growth remains in danger.

As a long-standing supporter and practitioner of the long-term Forex trading it's hard for me judge this style of trading objectively, but pointing out the advantages is an easy task in this case. Apart from the obvious subjective advantages that are appealing to the certain features of the trader's character, long-term Forex trading has some features that are good for everyone:

1. Spread economy. If you trade on the long-term periods you tend to get more than 100-200 pips from every position, if you trade on the short-term periods your trades will rarely go beyond 50 pips in profit. Assume a broker with 2 pips spread and you make 2,000 pips a month with it (more optimism!). With 10 profitable trades yielding 200 pips each you get 2,000 pips of profit minus 20 pips paid in spread to your broker — that's 1 percent. With 100 trades yielding 20 pips each you get 2,000 pips minus 200 pips left to broker in spreads — that's 10 percent.
2. Resistance to the short-term volatility. Long-term Forex traders don't have to worry about stop-hunting or the intraday spikes. Their positions are safe from the usual daily market volatility. If you trade long-term you always have enough time to change your position's parameters when something important happens.
3. Long-term trading is simple. To trade successfully on the long time periods you have to forecast the general trend and the possible exit points and on the long-term charts that's not a difficult thing to do usually. And since you trade rarely you won't need to make the decisions too often, while in short-term trading you have to develop the complex strategies to succeed.

I can't make you switch to the long-term Forex trading if you don't like it and the majority of the traders enjoy the short-term trading, but now at least you know the advantages of the other trading style. If you experience difficulties trading inside the day you could always switch to the long-term trading.

Trading on the short-term periods at the Forex market is often considered a more popular practice than the long-term trading. In short-term trades your positions usually don't last longer than a day, while in the long-term trading they can remain open for years. Although, I prefer to trade on the long-term charts and hold my positions open for the long periods of time, the short-term Forex trading has its advantages:

1. You can trade on thousands of opportunities when the currency rates change with a high volatility. You can capture every swing — up or down, trade inside the ranges and channels. Even the sideways market can be traded in short-term. When you trade long-term you miss these opportunities.
2. You don't have to tie up your funds for the long periods of time. Your margin capital is locked only for the short periods and you can even get it out of the trading account if you really need it and then put it back and continue trading without any problems. In long-term trading your money gets caught into positions for months.
3. The majority of the Forex trading signals work only for the short-term trading. Usually both technical and fundamental signals are played out in several hours of trading on the Forex market. The number of signals and events that influence currency rates on the long-term scale is really minimal.

This is what you get if you like to trade inside the day and use such techniques as breakout trading, scalping, news trading, range trading and any other short-term strategy. Of course there are also some disadvantages in the short-term trading, but they are not the topic of this post.

Retail Forex market became very popular after the development of the on-line trading technologies. Millions of new traders are attracted to Forex each year. They try to earn profits trading the currencies, developing the new intraday strategies and gaining on the long-term trends. But why does the retail FX market exist? Is it only a way to earn money for the brokers and some lucky traders? Here is the list of some functions — obvious and not — that are performed by the retail Forex market:

1. Earning opportunity — this is probably the most popular, obvious and important function of the retail Forex market. It provides the earning opportunity to traders, brokers, affiliates, webmasters, marketing companies and a lot of other on-line industries. Without a promise of profits retail Forex market would be limited to a simple exchange of the physical or current-account money.
2. Extra liquidity — this is definitely a positive function of the retail currency market. Although, not many traders use huge amounts of cash on Forex, the total sum of the money provided by the retail customers adds a good chunk of liquidity to the Forex market.
3. Extra volatility — a not very positive function at a first glance. Retail Forex market makes the rate movement less smooth and more volatile as the traders prefer short-term trading, which leads to the sharp reactions on the daily news and technical signals. Excess volatility is bad for the long-term traders, but it can be good for those who know how to benefit from such markets.
4. Social function — many communities were formed around the Forex trading. Traders prefer to get help from other traders and they also like to share the knowledge that is related to Forex.
5. Technical strategy development — popularity of the Forex trading and especially the on-line and automated versions of this trading led to the creation of thousands of the automated trading strategies. Based on technical analysis some of such strategies can be applied not only in Forex trading but in many other industries.

Of course, this list can't be considered as full and complete, but these functions are the main attributes of the contemporary retail Forex market, in my opinion.

Practicing on the demo accounts before moving on to the real money trading is an obvious requirement for successful participating on the Forex market. It’s always better to lose virtual money while you are learning new market theories, developing your trading system or improving your practical Forex skills. But is it right to jump from the virtual account to a big real money one when you suddenly realize that you manage to be profitable for a long period of time in your demo trading? Here are some reasons to move on to just a small real account before risking a lot of hard-earned money on Forex:

1. Real trading is different from virtual, because you get real emotions when you lose or earn money. Trading with $100 on real will get you more real feeling than trading with $10,000 on demo. It’s better to lose $50-$100 to learn controlling those emotions than several thousands dollars.
2. Know your broker’s real account servers’ behavior. With some brokers virtual trading is smooth and fast, while real account bring unpleasant surprises with order delays, requites, refusals, slippage and stop-hunting. Trading with a small real account can save you big money if you are unlucky to stumble upon a bad broker.
3. Know your broker’s funds handling practice. Don’t risk depositing thousands dollars before trying small deposits to see how smooth transfers go with this broker. Pay attention to user support if you encounter some problems with the depositing or withdrawing your money. If your broker doesn’t take seriously small money deposits/withdrawals than you should be careful with it, since it may treat big amounts the money in the same way.
4. Practicing on small real account has another advantage before the demo trading – you get the real rewards when you trade right and you get real losses when you do something wrong. This way you’ll quickly learn to do everything right and won’t be doing the same mistakes again and again.
   

Demo trading is one of the greatest tools to learn Forex trading, just don’t forget that nothing will teach you better than trading on a real account. But why risk big before being confident in your skills, when you can start with a small-size real account?

Perhaps, the first indicator you’ve seen and used when you first started to trade Forex was Moving Average. For me it was that. Moving averages come in several forms — simple, weighted, exponential, smoothed, etc. And they present the most basic way to measure the current trend direction and to spot its change. At a first glance simple moving average indicator looks like a miraculous tool that is easy to use and can tell you where to enter a position and where to exit one. Let’s try to understand this indicator — is it really as good as it seems?

What moving average shows? No matter if it’s a simple, exponential or any other form of MA the only thing it’s showing is the average rate of the currency pair over a certain period of time, hence the name. For example, MA with a period set to 7 on a daily chart for any given bar will show the average price over the previous 7 bars (days). That’s not a magic, right? Various forms of moving average just influence the way to calculate the average value (to make the line look more smooth or sharp, or to throw out spikes), but in the end we get the averages of the previous periods.

So what happens when the current price crosses MA? Faster MA crosses slower MA? 3 MAs cross each other? The cross of the MA and a price or other MA (or any amount of other MAs) is usually considered as the buy/sell signal or at least a partial signal. Why? Because they really show a change in the trend. The problem is that the change could have happened long ago (up to the MA’s period bars ago). When the moving average is crossed by the price chart from below that simply means the current price became higher than the average price for the last N bars (where N is the period of MA) — that’s it and nothing else. If MA with a period of 7 days crosses MA with a period of 14 days from below that means that the average price in the last 7 days is higher than the average price during the last 14 days (the actual trend change here could happen up to 14 days ago). Some strategies employ even 5 moving averages cross — that won’t change the fact that the only thing you’ll know when such cross occurs is the ratio of the average price over 5 different periods.

So is there any point to use moving average? Yes, I think that the moving average is a good indicator, but not as a signal producer or a trend change indicator. What does it do best? It indicates the average price. So, it’s better to use it when you want to know the average price over a certain period. You can compare current price to the moving average to consider overbought/oversold state, measure the volatility comparing the price action with the large-period MAs, use the long-term moving averages as the support and resistance levels (because so many traders and even institutional traders use it in this way), etc.

Maybe that’s not a pleasant thing to know if you base your trading strategy on moving averages’ crosses, but the facts don’t lie and with more trading experience it becomes clear that moving averages can’t do magic and shouldn’t be used as an easy way to create another Forex strategy.

For someone with zero experience and knowledge in the Forex market, getting started in the trading can be an overwhelming task. Various pitfalls, such as huge losses, can discourage even the most experienced trader. Since Forex trading can be a confusing business, you need to follow several guidelines to success.

First, learn Forex trading by choosing the most qualified brokerage firm. Although some firms are better than others are, you have a ton of options in terms of age, reputation and courses to offer. Generally, you should choose a well-established company with a good reputation that is tied to banks or various financial institutions. To ensure that a brokerage firm is legitimate, check if the company is registered with the Commodity Futures Trading Commission.
To learn Forex trading effectively, the brokerage firm should provide you with multiple research tools, such as charts, real-time quotes, trading techniques and research reports. You should choose a firm that offers its account holders as much information as possible. Be aware that the more knowledgeable you are with Forex trading, the more successful you can become in the market. Lastly, choose a highly regarded brokerage form with favorable spread. Be aware that a company with a good spread means that the firm takes off the top of each trade, translating into more profit for you.

In order to learn Forex trading, you need hands-on courses that allow you to experience the market firsthand. Of course, investing money without proper knowledge can lead to disastrous losses, so opening up a demo account should be your next move. With this demo account, you learn Forex trading firsthand because you will be given a pretend balance, which you could use to play around and experience the feel for Forex trading before using real money.
Most demo accounts are free-of-charge for an entire month. During this time, you can learn Forex trading and all its features, techniques and tricks without losing any money. Plus, you are able to master the software, which enables you to make fast trades when the time comes to trade. It is important not to rush the 1-month trial period because this is the most important phase of your trading course.

Once you learn Forex trading and experience a whole month's worth of market experience, then you can now use a real account with actual money. However, never invest large amounts of money; start small and try not to break the bank when getting started in the market place. By choosing a good broker, maximizing the benefits of a demo account and taking your investment one-step at a time, you learn Forex trading can be a fulfilling experience when executed the right way.

Any investor would be genuinely attracted by the Forex market due to its superiority over other financial markets. Some obvious attractions are the superior liquidity, better execution, 24 hours market and lots more. For details on the superiority of forex over other financial markets, you would love the "Why Forex?" article.



Making money in the Forex market might appear a cake walk to outsiders.





Does this mean that it is easy as pie to make money on the Forex market? Absolutely not! Since we now know that it is not as easy as it seems to make money on the Forex market, why do some traders succeed while others fail? That is not an easy question to answer. Something does set apart the profitable traders. They do not follow the crowd. These traders think independently from the crowd. How long does it take to see consistent profitable results in the Forex market? This, too, is not an easy question to answer. It varies from person to person. One thing is for sure - this cannot be done in a short time frame. It is a process that could take years to see desired profits.





Here are a few things to consider if you decide to trade in the Forex market that may hasten the process of realizing a profit: have a trading system in place, education, use money management, be aware of psychological issues and have the proper discipline to follow your trading system as well as your trading plan. Benefits of Online Forex Trading Thanks to the Internet being available to almost everyone, the Forex market may be accessed with ease. Computers are now able to make complex charts that are very beneficial when you go to trade in the Forex market. Forex traders can do business 24 hours a day no matter what their geographical location may be. Daily transactions in the Forex market have increased to two trillion USD. It is quite easy to open a forex trading account. There are even free practice accounts that can be set up which allow you to test your skills before you make any transactions with real money. Traders can trade with different currencies in different markets at the same time and not have a problem doing it.





Online forex trading touts a lot of liquidity and flexibility. The trader can trade and access quotes in real time when he deals with online forex transactions. A very important benefit is that forex trading has virtually eliminated the bears and bulls of the trade. This is the only trade market that does not have these elements. There are no commissions, exchange fees or any other hidden costs involved with online forex trading. The trade is done very quickly and there is no delay of any kind. It literally takes just seconds to execute a trade or fill or confirm the same. Small traders have more leverage in the Forex market. There are indeed many benefits to online forex trading, but you also have to look at the other side of the coin. Online forex trading is risky. You should not invest any more money than you are willing to lose. Remember, it takes education, patience and practice to become good at forex trading.