Tested Forex Strategies

Introduction

Instead of spending thousands of dollars, or reading 300 page books, you can learn the realistic essentials of trading in dramatically less time. This is not watered down with short cuts. The guide contains the techniques that professional and successful traders use. These concepts have been tested and backed by client testimonials from my seminars.

My firm awards a trading diploma based on these techniques that has been adopted by several universities.

What is Forex?

In this chapter we will examine the foreign exchange market, the participants, what makes the market move, and why you should want to trade it. 

So what is Forex (Foreign Exchange) or FX as many people call it? , it is the world’s most liquid market. The average daily turnover is over 3 trillion US Dollars. This is a huge number, but to put it in perspective, one day of FX is roughly 2 to 3 months of trading volume on the New York Stock Exchange. This is powerful, it means a lot of liquidity and that a lot of people are involved in it.

It is OTC traded, meaning over the counter with no central exchange, in contrast to the equity or commodity markets where there are central exchanges that buyers and sellers meet. With FX, it is just you and your broker/dealer.

It is open for 24/5 trading, from Sydney 5 AM on Mondays to New York 5 PM on Fridays. Plenty of time, allowing for round the clock trading.

Centers and Participants

Who are the people that are involved in this FX phenomenon?

First we will take a look at the FX centers. The main centers of FX are the UK, US, and Japan. They are responsible for the bulk of the trading.  Australia, Singapore and Switzerland are also important players in the market, but the main players remain US, UK and Japan.

Banks and Financial Institutions

It is primarily major banks and financial institutions, they account for roughly 50% of the transactions. They trade electronically amongst themselves.

The central banks are also involved and their role is to intervene in an attempt to influence the value of their currencies.

Let us take a closer look at this. Maybe the most famous of central banks, the Federal Reserve Board, they and also the Bank of Japan, are at times known to be active participants in the market in an attempt to influence the strength or weakness of their currencies. A FX trader must be aware of the roles that they play.

Additional Participants

There are now FX hedge funds, years ago if you mentioned FX hedge funds most people would not know what you were talking about, because they did not exist. There are funds that trade either one particular currency or regional currencies, and for