Fundamentals of Forex and Forex Market

Forex stands for Foreign Exchange Market. It denotes a marketplace which is marked for its physical diffusion. Often truncated as FX, Forex is a likely platform where currencies from all over the world are bought and sold for earning large profits. Forex market is not protected in any particular place and of course free from external controls. The investors or the participants of the market are real players in forex, who in many ways responsible for accelerating the market and its growth. The forex is open for all. It welcomes investors of all sizes and income level. Thus anyone with a lust for trading and with a sound knowledge of forex market can participate in investing to get profit. The transaction at forex can take place anytime from anywhere in the world. The market is busy and remains alert 24 hours except weekends. While trading in forex market, you can either decide to trade your own money or you can choose for a broker, who will trade the same on behalf of you. In both the cases, it is suggested to take a strong position of your self. If you are participating in the forex, its better to move with a strategy knowing every latest updates about forex market and your currency. Now if you are moving with a broker, wait and watch. Let him do the job but keep yourself updated about the activities. Forex traders need to analyze the market at first for the market involves certain calculated risks. Now while analyzing the market, traders can think over over two important aspects namely technical analysis and fundamental analysis. Technical analysis is the interpretation of facts and data based on the data generated by the market. Fundamental analysis seeks to trace out the factors and conditions which influence the market economy and play a key role in altering opinions. Several economic, political, social events affect the forex and its workings. A perfect trader in forex is one who can understand these factors and feel the pulse of the market before striking gold. Forex is beneficial provided you trade well. It can give large profit within a short time frame or in a long run. The whole process of forex revolves around the situation of market, value of currency and of course ideas of investors

Why so Many Traders Fail at Forex

The old battlefields of the middle ages are not gone, they have merely changed form. Hundreds of years ago normal men would set out to build their empires by victorious lands through the force of arms. Today, normal men like you and I set out to build our financial empires by victorious markets throught the force of self. The blood soaked battlefields of yesterday have made way for the cash soaked commercial battlefields of today, with the large private armies of Family warlords making way for large pools of family capital. Just as armies were needed to shape empires of the past, so too is capital needed today in order to put modern commercial plans of downfall into action.

In there, lies the reason as to why many forex traders fail. They go into battle risking too many soldiers (capital) and without the knowledge of strategy needed to win the fight.

Let’s look at that again. 1. They risk too much capital, 2. They do not understand Forex markets.

Many traders both successful and fed-up have made these mistakes, the main reason for me writing this article is so you can learn this lesson here and do not have to make this mistake and lose money, or at the very least be cautious enough to minimise your losses.

No general will risk a majority of his men in a battle that he has no plan for and where he has no idea about his enemy. So my question to you is, why would you risk your capital in market conditions you know nothing about? Luckily two remedies exist for the forex general who finds himself in this situation.

1. Make it a rule to only risk 1% of your capital in any one trade. This is to minimise your losses.

2. Educate yourself so you can recognize your chance to strike but also recognize when it is necessary to withdraw. Learn to read the conditions of the forex battlefield. Great generals of the past would spend years learning battlefield tactics, luckily we can achieve this in a couple of months.

So in summary only risk 1% of your capital in any trade, and educate yourself about how forex markets work.

economic expectations

Japan’s Tankan Survey revealed that large manufacturers’ economic expectations improved for the second consecutive quarter in the three months to September, with the forward-looking Outlook gauge rising to -21, the highest in a year. Non-manufacturing firms also saw an improvement in their three-month forecast, with that metric up to -17, the highest since the end of last year. Both figures remain in negative territory however, which means pessimists continue to outnumber optimists among the firms polled for the survey, albeit by a smaller margin. Perhaps most tellingly, an index of capital investment fell -10.8% in the third quarter, the most in nearly 10 years, showing that firms continue to slim down their operations on expectations of lackluster demand. Indeed, the survey showed that sales are expected to fall -10.5% through the 2009 fiscal year (12 months ending April 2010), more than doubling the drop in FY2008.
Retail Trade added 1% in August, bringing the annual pace of contraction to -1.8%, the lowest since November of last year, and Large Retailers’ Sales shrank at a slower than expected -6.8%. This makes sense considering consumer confidence rose for the eighth consecutive month in August, but sentiment has closely tracked the Nikkei benchmark stock index and so is highly vulnerable to any downward reversal in risky assets. Shares will be left wanting for a catalyst considering the sales outlook implied by the Tankan report, pointing to disappointing earnings and a downward reversal in equities and by extension in consumer confidence and retail activity. Rising unemployment also presents a considerable hurdle, with the jobless rate set to approach 6% by mid-2010.
Broadly speaking, today’s data flow is supportive of the minutes from Augusts’ meeting saw policymakers conclude that the pace and sustainability of any economic recovery remains “highly uncertain” after the effects of fiscal stimulus and the inventory restocking cycle run their course, while domestic consumption remains weak.

The housing market of United States

The housing market should continue to show the way in the United States. Housing starts rose 1.5% in August, while existing home sales declined 2.5%, but they remained well above the low registered in November. In effect, during last week FOMC¡¦s meeting, the Fed appeared more optimistic about the economic growth, albeit activity should remain subdued for some time. Durable good orders fell 2.4% (+0.5%) in August, after having increased 4.8% in July. Orders are up overall for the quarter, capital goods orders (excluding aircraft and defense) increased almost 9.0% annualized over the three months, but activity is not strong enough to relief the unemployment rate from the bottom yet. As a result, rates will remain low for now and an exit strategy will be implemented as soon as the economics¡¦ turnaround becomes sustained. The Federal Reserve postponed the timeline for the purchase of mortgage-backed and agency debt to the end of the first quarter of 2010. However, current recovery should be mild, since recapitalization is still in process. The huge deficit will weight on U.S. growth and limit the American economic potential. Unemployment will remain high and savings will increase. Americans are adapting to the new reality, characterized by tight credit and increasing commodity prices, by reducing spending and tempering debt. The strong expansionary cycles of the past are history