FOREX ARTICLES

So you want to learn about the Forex market, and trading internationally but you are risking your personal wealth if you jump in before knowing all about how trading takes place. Online, you will find many games and simulations while learning the methods involved in forex market trading. The forex markets include countries from around the world, where all countries involved are using different currencies, and when faced against each other are worth more or less than the original valued currencies that are being traded. The forex markets are used to build wealth in, for governments, banks, and brokers, and for many countries.

To get started in learning about forex trading, you will need to locate the forex trading software, education-learning system you want to use. As you find the games, as they are called, you will enter information about yourself, about what you are interested in learning and then you will download software to your computer. In following the 'game', you will learn how to make and lose money in the forex market. This type of game is going to make you more aware of what happens daily, how the markets open and close, and how different the various countries currencies really are.

You will open an online 'account' using the gaming system. You will then be able to read the news, find and compare markets, and you will be able to make 'fake' trades so you can watch your money build or be eaten away in losses. As you learn the system, using it a few times a week, you are going to be more prepared, more educated and you will be ready to use the forex trades to make money. Of course, you may still need the aid of broker or a company to make your transactions happen but you will better understand the process, what will happen, and what calls you may want to make when you read about the news, the markets, and the currencies in other countries.

The forex market is also referred to as the FX market. If you are interested in joining the millions who are making money in the forex markets, you want to ensure you are dealing with a reputable banker or company involved in forex trading. With the spur of interest in the forex markets, there are many types of companies that are popping out on the Internet appearing to be genuine forex trading companies but in reality, they are not. Forex trading can be completed through a broker, a company that deals in the funds, and from within your own country. For example, the US has many regulations and laws regarding forex trading and what companies are permitted to work with the public dealing with international trading and markets.

So you want to learn about the Forex market, and trading internationally but you are risking your personal wealth if you jump in before knowing all about how trading takes place. Online, you will find many games and simulations while learning the methods involved in forex market trading. The forex markets include countries from around the world, where all countries involved are using different currencies, and when faced against each other are worth more or less than the original valued currencies that are being traded. The forex markets are used to build wealth in, for governments, banks, and brokers, and for many countries.

To get started in learning about forex trading, you will need to locate the forex trading software, education-learning system you want to use. As you find the games, as they are called, you will enter information about yourself, about what you are interested in learning and then you will download software to your computer. In following the 'game', you will learn how to make and lose money in the forex market. This type of game is going to make you more aware of what happens daily, how the markets open and close, and how different the various countries currencies really are.

You will open an online 'account' using the gaming system. You will then be able to read the news, find and compare markets, and you will be able to make 'fake' trades so you can watch your money build or be eaten away in losses. As you learn the system, using it a few times a week, you are going to be more prepared, more educated and you will be ready to use the forex trades to make money. Of course, you may still need the aid of broker or a company to make your transactions happen but you will better understand the process, what will happen, and what calls you may want to make when you read about the news, the markets, and the currencies in other countries.

The forex market is also referred to as the FX market. If you are interested in joining the millions who are making money in the forex markets, you want to ensure you are dealing with a reputable banker or company involved in forex trading. With the spur of interest in the forex markets, there are many types of companies that are popping out on the Internet appearing to be genuine forex trading companies but in reality, they are not. Forex trading can be completed through a broker, a company that deals in the funds, and from within your own country. For example, the US has many regulations and laws regarding forex trading and what companies are permitted to work with the public dealing with international trading and markets.

Lately, I’ve been asked a lot about where I see the U.S. dollar going in 2009. So let address this for a moment.

Specifically, I think the dollar will gain against the Japanese yen (USD/JPY pair will rise) throughout 2009.

While formerly, the yen and dollar rose as the Dow crashed, you will notice that the yen is backing off quite a bit even as the Dow sits on its lows as of this writing. Yet the dollar still rises as the Dow falls.

Therefore, I think for the dollar/yen pair, the bias will be in the favor of the dollar and against the yen overall throughout 2009 no matter what the stock market does from here.

HOWEVER, when it comes to how the dollar does against most other currencies such as the Euro, Australian dollar, etc. it will very much hinge on how stocks hold up.

If the Dow breaks to fresh lows and holds below them, then it is likely that the dollar will continue its strength against these foreign currencies BUT if the Dow and other U.S. indices halt their slide and head higher overall from here, then I think risk aversion dies down and that will hurt the U.S. dollar and cause foreign currencies to rise up against it once again.

So right now, I’m bullish on the USD/JPY pair and even bullish on gold. However, stocks are on the fence right now. They can’t stay there forever. So we’ll have a break one way or the other, sooner rather than later.

Once we get a decisive breakout, then we have our new found direction on the dollar. Therefore, my focus will remain on being long (buying) the USD/JPY pair until stocks get off the fence and make a distinctive move to either side. Once this happens, then the trend will be in place for the dollar for the remainder of the year minimally.

This past year, one of the few financial instruments in the world was headed to the moon. Which one was that? The yen!
Yeah, the carry trade unwound which caused money to flow away from high yielding currencies and back into low yielding currencies like the yen.
Investors became risk adverse with their money. They poured it into things that had been beaten down for years because it seemed to be a safe place to run to. Thus the yen was a huge beneficiary during this ultimate “fear factor”.
However, recently I started talking to you about a possible turn coming in the yen and that the yen party was about to come to an end soon.

Things go from “Bad to Worse” in Japan

Since then, things in Japan have continued to unravel. They’ve had a 12 percent slide off in their GDP. The yen has risen 23 percent against the dollar which is killing their exporters. Toyota, Sony and Honda are all either doing layoffs or are about to do layoffs. In fact, Honda has even mentioned that if the yen stays at 100 to the dollar or under, that they may be forced to move some of their operations out of Japan. So this is serious stuff!
If that we’re enough, when the Japanese Finance Minister showed up at the latest G-7 meeting in Rome, he was accused of being drunk and unable to properly participate due to his inability to understand the questions being posed to him.
This caused him to have to step down from power just days later. This makes several finance ministers that Japan has gone through in just a short time. Governmental instability is never good for a currency. So these were all of the reasons lately that have surfaced as to why the party may be ending for the yen (in particularly against the U.S. dollar).

120 Billion Reasons to Sell Short the Yen and Stop Shorting Other Asian Currencies!

But now there’s a new reason to close out any long positions in the yen and to reverse course by shorting it. Why? 13 Asian nations announced on the 22nd of this month that they were forming a $120 billion currency pool in order to defend their currencies.
This is a powerful alliance as these countries team up together. This should send a building wave of confidence across these Asian countries as they see governments teaming up and banding together for the support of their own currencies.
Japan, China and South Korea will provide about 80 percent of the funds for the pool and the other 10 countries will fund the remainder.
While many of these currencies have weakened significantly and funds may have to be used to buy their currencies, the Japanese could always use any extra resources to sell their strong currency.
With these countries banding together in such a strong, united way…it shows that the story may be about to change. Formerly in 2008 and up until now, you’ve had most of these currencies across Asia weakening unduly and the yen having an unreasonably high strength.
I think you are going to see this tide turn. These things happen like ships turning and not like speed boats. However, I think the yen is starting its turn even now and it won’t be long before these other Asian currencies start to strengthen once again.
I also think this massive currency pool could help to prevent another Asian contagion like happened in 1997-1998 as many of the Asian countries used of most all of their foreign reserves trying to defend their currencies and had to finally turn to the IMF for help.
It was a horrid problem that ended up causing a ripple effect all around the world. So they are being very preemptive this time around in trying to stop something like this before it gets that far.

USD/JPY “Prepares for Takeoff” on Yen Weakness!

Therefore, I think the sentiment is going to shift away from a strong yen while other currencies finally start to strengthen. You will likely see the yen weaken across the board but I’m most confident in the prospects for the USD/JPY exchange rate going up overall throughout the remainder of the year due to this new vote of confidence and also due to all of the previous problems plaguing Japan.
At the end of the year, I think you will find that the USD/JPY is back up over 100 and headed higher. This will help Japan’s economy, especially its exporters that are such household names here in America.
So get ready for more yen weakness and dollar strength against it. Also, it won’t be long before other Asian currencies start to strengthen as the yen starts to weaken.

Have you ever seen someone make a mistake and not only do they suffer for it but someone else does as a result also? Well, this is exactly what’s happening to Canada right now.

You see, most of last year, you could say that the Canadian dollar was falling because of falling commodity prices. Since Canada exports so many widely used commodities like oil and lumber, when prices fall, so do their profit margins. It costs them about the same amount to produce the product but what they can get for it in the market is determined by where those commodities are trading at the time.

USD/CAD Pushes Towards 1.30 Once Again!


Last Year the Commodities Crash Killed the Canadian dollar. This Year it’s the U.S. Economic Crash that’s Killing Them!

So that was what hurt them much of last year. Now we roll into 2009, and they get killed by another dynamic: the increasing slowdown of the U.S. economy!

For three months in a row now, the U.S. economy has shed around 600,000 jobs or more back to back! The unemployment rate seems to be going somewhat parabolic at this point. It jumped from 7.6% previously to 8.1% now.

On top of this, to buffer the blow of the slowdown, Canada’s central bank had to lower interest rates once again (to 0.50%) which put it at the lowest their interest rates have EVER been!

While this is a dynamic that will eventually be good for their economy, it hurts their currency right now for sure.

They also stated that they may implore “Quantitative Easing”. What the heck is that? Well, in simple terms it means that they will print money out of thin air and load up the banks with so much excess cash that they are more likely to lend money and thus spur economic growth.

While that may eventually give their economy a boost, it kills their currency. Why? Look at it this way. Anytime something becomes more abundant, it becomes worth less. Anytime something becomes scarce, it becomes more valuable. (This is why a Corvette in the 1960’s may have gone for $3,000 then and would sell for $30,000 to $60,000 today. These days, they are scarce…yet they weren’t back then).

So when the market is flooded with more money (Canadian dollars), that money gets devalued and is worth less. Therefore it takes more (Canadian) dollars to buy the same amount of goods.

The U.S. is Printing Money too, but Right Now they are Saved Because they are the World’s Reserve Currency (and thus a “Safe Haven”).

Now, you may say but isn’t the U.S. doing the same thing? After all, their economy is slowing down. They are printing money too.

I would say, while I won’t deny that point, the U.S. dollar presently benefits from what is called the “safe haven bid”. What does that mean? It means that investors all over the globe are running to the safety of the U.S. dollar because it’s the world’s reserve currency right now.

In other words, if there’s one currency on the face of the earth that you are most likely to keep and continue to use, it’s the one that most of the goods are priced in all over the world. For example, gold, oil, wheat, soybeans, lumber, etc. are all priced in U.S. dollars.

Therefore in crazy times like this, it enjoys the benefit of being the world’s reserve currency. However, once the global economy finally does return to normal, then this “benefit” will suddenly go away and the dollar will just have to stand on its own fundamentals once again. We all know that once that happens, the buck doesn’t have that much to stand on. Therefore, the “dollar party” may come to an end ONCE the global economy normalizes.

In the mean time, Canada’s currency (and economy) will continue to suffer as the U.S. lays off more workers and continues to slow down. Remember, they derive about 79% of their exports from the U.S. That’s huge! In fact, it’s so huge…it’s the largest trading relationship between two countries according to Canada’s trade department.

This really is huge, because the U.S. hasn’t had three back to back months of layoffs this big since they started keeping records on it back in 1939. So from at least as far as our records go back, this has never happened on this scale before!

So when you add all of this up, you come up with the fact that the U.S. dollar has a high probability of continuing to rise against the Canadian dollar. So with that said, I think you may find the USD/CAD rate to break the 1.30 barrier in the coming weeks to months.

Therefore, if you would like to take advantage of this situation and profit from the pressure on the Canadian dollar, then take these three steps:

1. Get Educated about Currencies and What Makes them go up and down: You can get your $19.99 online education here that comes with LIVE instructors that are there to answer your personalized questions AND comes with a money back guarantee if you are not satisfied.

2. Get a FREE demo account here that comes with REAL TIME quotes and charts. This way you can learn how to place trades before risking one cent of your money in the currency market.

3. Then once you’ve gotten educated over the course of 8-10 days in your course and you are familiar with your demo trading station, then open up your live trading account here. If you start with a micro account, then I would suggest putting in $300 to $2,000 in the account. Start small. If you choose to start with a mini account, then you might fund your live account with $2,000 to $10,000. Start with enough capital to be practical while trading only 1-2 lots per trade at first.

During the course of an economic cycle, interest rate increases are used to restrain rapid inflation or growth during a bullish market, while rate cuts are used during market mayhem (a bearish market), in hope that the declining rates will encourage consumer consumption, returning the economy to a normal and healthy state.

Throughout this cycle 2003-2009, the Fed has used numerous methods apart from its standard rate cuts to propel the economy. The recent one has been quantitative easing, where central banks have participated in the bond market, while injecting money into the financial system.

Over a year and a half ago, analysts thought the claim that a market recession reaching the scales of the 1930’s depression is ‘farfetched’. To date those investor’s thoughts are quite different as exploitation of the housing sector has caused a snow-ball affect throughout the world economy, forcing government officials to make coordinate efforts to redeem the world’s economy.

Over the last couple of months government interference in the markets has intensified as numerous banks and large caps have been nationalized, to help prevent further loses across the globe. In addition, economic data continues to pour out showing a deteriorating economy, forcing officials to come out with new creative methods.

Despite the negative data and gloomy outlook the markets have recently increased, making investors question as to whether the recent rally is a change in trend or just a simply a bullish rally in a bearish market.
While it is too early to determine any change of trend, one must take into consideration the following:

1) Interest rates reductions or increases can take up to 9 months to leak through the system, affecting the economy.
2) The markets work on expectations; therefore if government officials are aiming for a market turnaround towards the end of this year, the indices will price it in beforehand.
3) Once the indices retrace a fair part of their losses, demand will increase on positive sentiment, driving the markets even higher.
4) Low interest rates will eventually spark demand across the board as consumers will take advantage of the low rates, especially as rates like these might not last.

Last week’s trading session presented mixed signals as the U.S housing sector suddenly showed signs of slight improvement. According to the National Association of Homebuilders, single family homes increased for the first time in seven months, adding an increase of 4.7% to new-home sales. In addition, over the last two weeks of trading the U.S government has addressed the market, stating that it intends to buy back government bonds and the far end of the curve, in an effort to reduce the costs of home purchasing. By taking a look at the homebuilder’s index one can see the recent increase, caused by the improving data and overall market momentum.



Will the Market Rally Continue?

While there is quite a lot of market moving data coming out this week, including the G20 meeting and unemployment results from the U.S on Friday, one must not steer away from the housing sector (the cause of the current economic situation).

Following this week’s U.S manufacturing data, housing figures are expected to be released and could show a further improvement in the sector. In addition unemployment data is expected to show another 656,000 job losses in the month of March. While one might think that the figures are devastating, the markets could react in a completely different way.

During the U.S ‘s last recession (2003-2003) the U.S unemployment rate continued to rise and Non-farm Payrolls decreased, while the markets were forming a bottom. The unemployment rate peaked during the middle of 2003, when the U.S indices were far off their lows.

With the G20 meeting coming up, an interest rate decision from Europe and employment data coming out, the markets could see some profit taking around current levels, accompanied by an increase in market volatility. Just keep in mind that the markets could surprise, especially when investors are already expecting further bad news. A ‘higher-low’ will give confirmation like in 2003.

After Monday's massive drop, due to fears that the Auto-Industry is heading for bankruptcy, the major U.S stock indices bounced back during yesterday's session, closing with gains of approximately 1.5%. Many analysts classed yesterday’s rally as a “buy-up rally”, something that normally happens towards the last few days of the quarter, in order to show profits on balance sheets.

The closely watched financial sector soared compared to the other sectors, increasing by over 5.51%. The sector that weighed on the intraday bullish momentum was the Energy sector, closing the session down by -0.85%.

Economic data didn’t really have much of an impact during yesterday’s stock session, even though the released data continued to show a deteriorating economy. Consumer confidence for the month of March dropped further than expected, showing a result of 26.0, while the S&P/Case Shiller 20-city Composite Home Price Index showed a worse than expected result of 19%, exceeding analysts’ estimate of 18.6%.

Tension should increase across the board today as President Obama is scheduled to attend the G20 summit in England. While many topics will be discussed regarding the economy, including further stimulus actions to restore the world’s economy back onto a healthy track, China will also have it say, especially as officials from China are now suggesting that the U.S Dollar should no longer be classed as the world’s reserve currency.

To date the U.S deficit is reaching enormous levels, on GDP terms. Many economies are now questioning whether the U.S will be able to repay its debt. China is especially concerned, as they are currently holding $740 billion worth of government bonds.

Dollar at 50% Fibonacci Trading level

On the Forex market the Dollar index failed to break resistance of 86 points. The recent surge in the Dollar occurred after the index touched major trend line support. From a fundamental point of view, further economic problems have recently surfaced, justifying the recent rally, sending investors rushing back into the Dollar Safe Haven. When observing the following chart one can see that the Dollar is now fighting with its 50% Fibonacci level, a price that could act as minor resistance.



On individual pairs the major mover of the day was the USD/JPY jumping higher, breaking minor trend line resistance. Japan’s Tankan index plummeted in the first quarter, showing investors that the gloomy economy is far from a turnaround. The index came out at -58, exceeding analysts’ expectations of -55.

In addition Australia’s Retail Sales sparked movement on the AUD crosses, as the retail sector showed further contraction coming out at -2.00%.

Gold is Converging

After breaking its major trend line, Gold has been presenting lackluster sessions, hanging around the $920 level, when observing the chart carefully one can see that the precious metal is coming close to a break out. With the G20 meeting coming up and important employment data being released towards the end of the week, traders should observe the breakout.

Market Data to Watch Out For

Even though Europe is scheduled to release its unemployment rate later today, major movement will circle around the U.S’s ADP employment survey. The report is expected to show another 660k job losses in the month of March. In addition the ISM Manufacturing Prices are expected to show an increase, while housing data could show signs of further stability. Construction Spending is expected to shrink by only 1.7%, while pending home sales could show an increase of 0.3%