Saturday, 15 March 2014


         Swap is another basic term in the forex market. It represents the difference between the interest rates of different countries. For example, the bank of Japan's interest rate is 0.5%, whereas the Australian interest rate is 6.25% . This means that it is much more profitable to deposit money with an Australian bank rather than with a Japanese one. The difference between the interest rates is of importance in the Forex market and is expressed in terms of SWAP. When opening a new trade position, you sell one currency and buy  another one. Let us get back to the national currencies of Australia and Japan, and give you an example with the Australian dollar and the Japanese yen. When we open a position in AUD/JPY, the swap is positive and we take profit 

Friday, 14 March 2014

What is Slippage

   The slippage means is the time you place an order to buy or sell a currency on that time that your order is filled i.e the time your transaction is completed. In most of the cases the fast moving volatile market such as EUR/ USD from the time you will place an order until the time it is filled an exchange rate will often change anywhere from $.0002 to $.0003 from the price you saw and wanted to get when you placed your order, even with the fastest automatic electronic ordering software. If you  are trading by hand , i.e., sending your order to your broker via a non- automatic signal generating platform, then you can expect slippage to be as much as $.00010 to $.0015!
       So, lets say you placed an order with you market maker broker to buy Euros at $1.2825. If the market
exchange rate is changing moderately fast when you place your order, your order might not get filled before the rate has changed to $1.2827. The difference between the two rates, in this case $.0002, is called the slippage on the trade and would, if you were trading regular lots, translate to a different of $20.00; $.0015 slippage would translate to a difference of $150.00. slippage is very common in trading Forex and in some cases can make a trading system that appears to be a winning system on paper, actually lose money. Even though a properly evaluated trading system will take into account slippage and project it as a  part of every trade, unscrupulous system developers do not make allowances for and do not take into account slippage when stating the profitability of a system. All Winning Forex Systems take into account and make  a realistic allowance for slippage before determining that system's profitability.

Friday, 7 March 2014


Spread is the difference between the price the market maker is willing to pay for a currency and the price the market maker is willing to accept at a certain period of time. The spread is the difference between the bid and the ask prices of a currency. For example , if the bid price of usd/chf is 1.2212 and the ask price of usd/chf is 1.2215 at 10:30 a.m, then the spread equals to three PIPS. It is necessary to take spread into consideration while developing a trading strategy as different currencies have different spreads.

Thursday, 6 March 2014


 Trend is the direction of the market. There are three types of trend; uptrend, downtrend and ranging market or flat. The last trend type is when the price change is insignificant and tends to balance in a narrow range.
              Prices mover upwards in an uptrend and downwards in a downtrend. Sometimes instead of these terms people say that the market is"bullish" when the trend is up, or that the market is "bearish" when the trend is down. In practice, professional traders use the terms bullish and bearish often. These   terms have historic  origins. At the beginning of the first century AD, people organized bull and bear fights for entertainment. People  began to notice the habits and characteristics that the bulls and bears had when attacking  their  opponents. The bull attacks with his head down and horns up thrusting the opponent, i.e  he makes a bottom-up movement. The bear swipes down trying to knock his opponent down, i.e  he makes his movement top-down.
                The bullish trend is considered to describe the  prices  moving up and the bearish trend describes the prices moving down. These terms are widely used today. Basically, the market participants are divided into two groups depending on their expectations and the direction of the transactions they conduct:
             BULLS are those who expect the prices to go up, which is why they are buying the market.
             BEARS  are those who expect the prices to go down,  which  is why they are selling market.


Pip is the another basic term in Forex trading. It stands for Percentage In Point and is essentially  the smallest change in the exchange rate. For example, if the exchange rate of the U.S dollar against the Swiss frank USD/CHF is 1.2212 and the price rises to 1.2213, it means that the exchange rate has changed by one PIP, i.e 0.0001. The result of a deal, i.e profit or loss, is determined by the number of pips the price has passed since you have had your position opened. Together, the absolute result of your trade depends on the amount of money involved to open a position.


Individual Forex trading has become very popular during the last 10 years. The  development of financial services and trade on margin has contributed to the growing  Forex popularity. Under these circumstances, every person willing to trade the Forex market is able to trade Forex having some guaranteed amount of money in his or her account. In reality, if a person is willing to trade the Forex market, he or she has to have 100,000 units of some  currency in his or her account. Very often it is an overwhelming sum of money for most individual traders. However, thanks to the leverage provided by brokers, traders are able to execute operations with currencies having far less money in their accounts. What is leverage and how is it provided? As a rule, a broker provides leverage for his or her clients enabling individual traders to gain access to the Forex market. If a broker provides  ratio of 1:100 leverage (or 1%), it means that a trader is able to make transaction. For example, if a trader opens a position using $1,000 of his or her  account balance it means that in reality he or she can conduct a $100,000 transactions.

Saturday, 1 March 2014

The Forex Market Today

    The foreign exchange market has existed since the 1970s, when the fixed exchange rates were substituted by the floating exchange rates enabling thousands of individual investors and companies to profit by the change in the exchange rates. The foreign exchange market is usually referred to as the forex market, or simply forex.
                   Forex is probably the most liquid financial market in the world. The average daily turnover  in the foreign exchange market is estimated at $ 6 trillion. high liquidity means that every moment every person is willing to buy some currency, there is person willing to sell that same currency. sometimes but very seldom, a gap between prices is possible. It shows a price range where no actual trading occurs, making the price jump in the necessary direction. Price gaps seldom occur and are considered an exception. Moreover  But every forex beginner should be aware of and realize all the potential risks involved in trading forex