Potentially Lower Portfolio Risk with a Managed Forex Account

By Kareen Pollard – A managed Forex account works in much the same way as a traditional mutual fund; an outside trader (CTA) is managing the accounts transactions on behalf of the account owners. The Forex trader (CTA) watches the market and attempts to create profitable trading opportunities for the individuals.

The Forex market include countries from around the world therefore, it is important to understand the regulations and laws regarding Forex trading and what companies are permitted to work with the public dealing with managed Forex accounts. This is another benefit of a managed Forex account verses going it alone as a CTA is responsible for understanding the Forex industry regulations and staying in compliance with them.

Even though using a managed Forex account can be beneficial, it can also be very risky. It is your responsibility to research and select the best investment organization or other experienced individual CTA to manage your account. Past history, rate of average loss and general reputation of the amount of profit yielded are all factors that should be taken into consideration when doing your research.

As with most things, there is a cost associated with a managed account. The cost or payment structure for a managed Forex account will vary based upon the CTA. Most managed Forex accounts are set up to keep a portion of the profits that are made from trading. This type of an arrangement usually works best for new investors. With this payment arrangement, the CTA does not make any money unless he is successful in the market. The percentage of the profit kept can be large. In some cases, the CTA will keep upwards of 30 percent of the profit.

Managed Forex accounts are for those who don’t have the time to devote to the markets rapid pace. It’s also for those who don’t have the expertise to deal in the foreign exchange market. Professional CTAs and investment firms are there to help manage your account. Leverage their experience and potentially lower your overall portfolio risk and enhance your overall portfolio returns.

About the Author

This article was provided by Franklin Global Capital LLC, NFA member (#0391263), a Spot Forex management and investment research firm. They specialize in providing investors alternative market opportunities to diversify portfolio risk. For more information about all of their services, please visit their new website at: www.franklinglobalcapital.com

An In-Depth Look At The Japanese Yen In Forex

By James McKee

Japan has a very respectable position in the world’s economy as possessing the world’s third largest GDP. This gives Japan the predominant identity of an exporting nation, which it is. Any rise in the value of the Yen makes Japanese exports less appetizing to importing nations because those imports become more expensive. The bank of Japan has recently been making large efforts to reduce the value of its currency wherever possible in an effort to boost export rates. Forex exchange traders have been watching the bank of Japan issues a semi annual report in April and October that detail their upcoming predictions with regard to several possible developments for the Yen.

The overall Outlook Report makes predictions about where the interest rate is headed and speculates on the overall GDP of the country for the upcoming 6 months. The CPI is the consumer price index or the price increase experienced by consumers. Industrial production refers to the overall number of products produced in factories in the country. Increased levels of production indicate a growing economy, while a decrease indicates a possible slowdown for that economy. The Japanese economy overall has suffered tremendous problems in regard to its currency increasing in value and as a result has suffered a decreased rate of exports.

Japan is responsible for many of the world’s high tech innovations including hybrid cars, advanced computers and electronics and many other items. Due to this the Japanese Yen is incredibly vital within the Forex market. Its inherent sensitivity with regard to import/export levels fluctuating makes the Japanese Yen a great currency to pair. The bank of Japan’s recent intervention measures have been clear indicators to Forex traders that it is time to examine the currency closely and pair it a stable currency such as the Canadian Dollar. Happy Trading!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

Trend Reversal Patterns: Head-and-Shoulder & Reverse Head-and-Shoulder

By Taro Hideyoshi

By getting started with reversal patterns, we should start with the most basic patterns because it is easier for you to recognize them in charts. Therefore in previous article, I introduced you to the most basic and well-known reversal patterns; Double Top and Double Bottom.

In this article, I am going to introduce you to another popular reversal patterns among traders; Head-and-Shoulder and Reverse Head-and-Shoulder patterns.


The head-and-shoulder pattern shows up less often and also harder to detect than double top.

In an uptrend, the price goes up. Then sellers come in at the highs make the prices slow down and roll over that form the left shoulder (beginning neckline).

Buyers soon return and push the price through the left shoulder’s high which at first glance appears as a bullish new high. However, the new highs are quickly turned back and form the head (continuing neckline).

A trend line for this pattern is drawn from the beginning neckline to the continuing neckline.

Tentative buying re-emerges and the market rallies once more, but fails to take out the previous high. Ultimately, buying dries up and the market tests the downsides yet again to form the right shoulder and complete the pattern by breaking the neckline.

The key points

– It indicates that bear is coming
– If the price tumbles through neckline support, it will probably initiate a downtrend.
– If you are holding a long position, cover it now! If you are targeting to open a short position, wait for the price traded below the neckline support to confirm the pattern.

Reverse Head-and shoulder

The reverse head-and-shoulder pattern is a reverse version of head-and-shoulder as its name. Of course, it shows up less often and also harder to detect than double bottom.

The key points

– It indicates that bull is coming
– If the price rises through neckline resistance, it will probably initiate an uptrend.
– If you are holding a short position, cover it now! If you are targeting to open a long position, wait for the price traded above the neckline resistance to confirm the pattern.

In head-and-shoulder & reverse head-and-shoulder pattern, Volume has a great importance.

Generally volume follows the price higher on the left shoulder. However, the head is formed on diminished volume indicating the buyers are not as aggressive as they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head, signaling that the buyers may have exhausted themselves.

These patterns take trained eyes to detect them. However, with a little practice, you will learn to locate them.

About the Author

Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.

If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.

Forex weekly analysis: 31-10-2010


Daily graph: http://www.real-forex.com/charts-daily/011110W/EUR_DAILY_011110.JPG

The pair is currently navigating between 1.4058 (resistance) and 1.3702 (support). This navigation started about 3 weeks ago after a serious uptrend.

Actually the pair is on its way to the upper level. Our analyses suggest that the resistance will be tested again. There are several possible interpretations once the resistance will be reached:

  1. On a daily graph, a vain breach occurs, indicating a reversal which should last until the support mentioned earlier. This should create an opportunity to go “Short” until 1.3702.
  2. The pair is reaching the resistance, without crossing it. In this case, waiting at least a session and a half and, once a descending configuration is identified on one-hour graph, and, only after, going “Short” could be a good option.
  3. The resistance is crossed and broken. It may be better to go “Long” only after the breach and its correction, by looking for an increasing configuration in one-hour graph.


Daily graph: http://www.real-forex.com/charts-daily/011110W/GBP_DAILY_011110.JPG

A clear navigation between 1.6020 (resistance) and 1.5658 (support), started a few weeks ago, is identifiable on this daily graph. However, during the last session, the navigation may have been stopped since the pair crossed the resistance mentioned and closed above it on the resistance 1.6040.

Our actual hypothesis: the navigation stopped and a new uptrend started. Nevertheless, this hypothesis has to be confirmed in order to beneficiate from this new situation. We would wait to the following template:

  • The pair keeps growing.
  • Technical correction which won’t cross the support of 1.6020 (daily support) downward.
  • Renewal of the increasing process trough the identification of an increasing configuration, vain breach or reversal template.

Once the above template occurred, an opportunity to go “Long” may be created.

Daily graph: http://www.real-forex.com/charts-daily/011110W/CHF_DAILY_011110.JPG

The last three weeks corrected the previous bearish trend , until the resistance of 0.9933. As you can see on graph, this is quite an important resistance zone. The pair stopped exactly on the resistance and started to decrease back. After such a correction (~ 450 pips), our analysts anticipate the renewal of the original downtrend.

The pair is likely to reach the last low occurred at 0.9462 and to test it.

We suggest being careful with longer term transactions in order to avoid potential losses in case of suddenly reversal of the trend.


Daily graph: http://www.real-forex.com/charts-daily/011110W/JPY_DAILY_011110.JPG

The last three sessions show a clear navigation between 81.96 (resistance) and 80.42 (support). Actually, the pair is on the low point of the navigation. There are two possible ways to approach the situation:

  1. Vain breach (test) below the support, followed by an uptrend until the high level of the navigation, creating the opportunity to go “Long”.
  2. The support is crossed and broken downward, closing a daily session below what is appearing to be the new resistance. The best attitude to adopt here could be waiting for a technical correction, and after that, try to enter a “Short” position.

Reminder: Night trading on Sunday when markets open is not recommended since some unexpected movement can occur.

Have a profitable week!

Real-forex team.

Real-Forex team

The Future Of The USD In The Forex Currency Exchange

By James McKee – To be sure the current market is not a favorable one where the USD is concerned, this year’s G20 summit is sure to shake things up further despite recent prosperity in the DJIA. Doubts have risen regarding the US Dollar’s future and the recent uptrend, many traders believe the recent G20 summit points to further gains regarding the USD but I wouldn’t bet on it. The G20 summit of 2010 included with action taken to increase involvement of “emerging” economies in IMF policies, such involvement would go against the best interest of the US economy.

For the time being it looks as if the USD will be riding high on fictionalized pipe dreams in the Forex currency exchange, these “false” gains will likely rupture sometime in the next couple months. Until then I’m sure the coming fluctuations will total out to a hundred pips in either direction for the dollar, but nothing severe. The lesson learned here is that with enough propaganda and political maneuvering you can turn an elephant into a mouse and shove the elephant into a closet. What is ultimately important though is that the elephant grows, and it becomes angry and does it really make sense to put an angry elephant into a closet?

By continuing to deny the extreme issues the US economy currently faces and continuing to pile on the debt the US dollar is facing a blowout of epic proportions in the years to come. There was a time as a boy in school that I saw a picture of an Italian man in the 1920s with a wheel barrel full of Lira and I asked my mother “Did he just win the lottery?” “No he is going to the store to buy a loaf of bread.” Such facts put things into perspective for me as a child and they still do today, the value of currency is a very important thing to keep under control.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

How To Start Forex Trading – Very Useful For Forex Beginners Who Have Low Budget To Start!

By Frank Silvester – Every forex beginner knows what is forex trading but the only one question for them is to how to start. As of now there are many tools, trading systems and software that are in use in daily trading. The big mistake that every beginner does is that they get tempted to the hype of forex trading robots or to some forex trading software and they start trading and finally end up with loss.

I am not against to the forex trading robots or to any software, but my point here is that it is not the right time to use a forex trading robot or a software when you are as beginner. We can use the robots and software at a later stage.

Here is a step by step plan on “How To Start Trading”. So let’s start.

Plan For The First 15 Days – Phase 1:

Before you start trading you should always know the basics of forex trading and the terminology related to the forex market. This is not a big problem. If you google it, you can get lot information which you can’t even digest. Or visit my website and subscribe to the free e-course in which you will be provided with all the needed knowledge and information on forex trading. At this stage nothing to hurry up, first finish off the basics of forex trading. Normally 10 to 15 days of time is really good enough for any average joe to be ready with basics. But we shall put it to 15 days of time.

Note: At this stage my kind request is not to get tempted to start real trading. Please do not start.

When you start learning basics in the first 15 days, along with it you also need to get register with any forex brokerage firm which is in this industry for a long time and very reliable. I suggest you to go for Easy Forex Brokerage firm or Forex Yard Brokerage firm as they are very reliable and the registration is completely free. After registering you can use their demo accounts for your practice and they will never force you to start real trading. So you can take enough time to practice on their demo accounts. Practice on the demo accounts as much as possible until you feel comfortable with them and this practice is really needed.

Be patient. There is still a long way for us to go and do not start real trading!

Plan for the Next 10 Days – Phase 2:

Now in phase 2, you need to learn when to start a trade by finding the entry points and also need to learn when to exit the trade by finding the exit points. For this you need to learn in depth of what technical analysis is and what fundamental analysis is. You can google them, but you cannot put them in an order to learn. If you subscribe to our forex beginner course, you will also be provided with free e-books on technical analysis and fundamental analysis at the end of forex basics course. I kindly request you to go through all of those e-books steadily, but do not hurry up. This is very critical phase which you need to concentrate a lot because this is the point where you exactly learn what is the real forex trading and this phase leads you to become a forex winner. To learn about all the useful technical analysis methods and fundamental analysis methods, normally 10 days is good enough.

Even now please do not start real trading.

Plan For The Next 15 Days – Phase 3:

The next 15 days you need to apply what you have learned till now and practice on demo accounts of either Easy Forex Broker or Forex Yard Broker.

Watch any of the TV channels such as NBC News, CNN Money, Forex News Channel, etc which provides you the Forex news. Now pick the points in the forex news. Now start co-relating the news with what you have learned in technical analysis and fundamental analysis and you need to find the entry and exit points for a trade.

Daily try to find at least 8 to 10 profitable entry points and exits points and start trading on your demo account. Make a note of all the entry points which have given you the profits and also remember the factors depending upon which you have derived that profitable entry point. Practice this for at least 15 days and at the end of 15th day you will be able to find at least 5 best profitable entry and exit points a day. Finding the best profitable trades is nothing but building a forex strategy for your trading.

So end of 40th day you will be in a position to trade forex on real account. Till now you have practiced the trades on a demo account so there will not be any involvement of emotions but once you start trading with real account emotions come in and they may lead you into loss. So you need to control your emotions and need to exit the trades as per your calculated exit points. Now you can go little advanced and try some automated tools such automated forex trading signal software which can generate the entry and exit points for you.

All the hard work in 40 days needs to be done by you as there won’t be any mentor for you other than yourself. Right now there are some online forex mentors who can mentor you such as FAP Winner as they are the best till now in mentoring the beginners. But they will charge you around $300 a one time payment. It is up to you to decide it or practice by yourself.

About The Author

We have researched, tested & reviewed 100s of Forex Courses, Software Systems and Brokerage Firms which we only list our TOP 10 to help you LEARN FOREX TRADING. For 100s of FREE FOREX TUTORIALS please visit LEARN CURRENCY TRADING. Good Luck! I look forward to seeing you on the trading floor making money! Frank Silvester.

For more information, Visit => http://www.forex-trading-pro.info/

Frank has been an active participate in markets as both a trader and researcher in excess of twenty years.

Bank Seizures and The USD

By James McKee

138 banks seized this year in the United States signals a still-dismal outlook for the upcoming fiscal year. With all the effort made to stabilize the economy the banks are still failing and being seized by the FDIC that then has to cover any losses a bank customer sustains over $100,000.00 assuming the bank is insured. Smaller banks are especially at risk due to their lower holdings and overall lack of outside support. While not as crucial to the overall economy as larger banks smaller community based banks offer specialized services to their customers and are more likely to support small business.

Small businesses in America are suffering more at the moment than in any time in history since the great depression, by allowing these small banks to fold we are encouraging further damage to small businesses. As this happens the value of US currency would of course drop as well. I would also like to point out that as small businesses and small banks fold their property and market share is consumed by larger entities, once these entities have a monopoly prices will rise exponentially. The supposed goal of capitalism is to foster the ability for anyone to be able to pursue their dreams if they work hard and play by the rules.

It is the goodwill of other people and businesses that enable those suffering through hard times to persevere. It is this ideal that has enabled many businesses to survive in the United States. By allowing these support systems to collapse we are encouraging a very dark time for the United States and its currency. As traders we should look upon the upcoming G20 summit and the results therein as encouraging because any change is good change, however I think everyone would breathe a sigh of relief if the little guy could win once in a while, I know I would. Happy trading.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

Importance of Big Figures in Forex Trading

By John M Bland

Those who have followed me over the years know the importance I place on “big figures” (otherwise referred to as “round numbers”) in forex trading. There is a technical, fundamental and psychological component to big figures that make them significant. While this isn’t always quantifiable, pivotal big figures are often the ones that drive expectations and currency forecasts.

What is a big figure in forex trading? A big figure (or “round number”) is a forex rate that ends in 00, such as x.xx00 or xx.00. Examples are EUR/USD 1.3400, 1.3500, 1.3600, etc and USD/JPY 89.00, 90.00, 91.00, etc. Market convention is to drop the 00 and refer to big figures without them, such as EUR/USD 1.34, 1.35, 1.36 or USD/JPY 89, 90, 91.

Not all big figures should be treated the same. Some big figures have more significance than others in forex trading. I refer to these as pivotal big figures, which are ones that end in 2, 5, 8 and 0. For example, EUR/USD 1.32, 1.35, 1.38 and 1.40 are more significant than EUR/USD 1.31, 1.33, 1.34, 1.36, 1.37 and 1.39. The pivotal big figures ending in 0 and 5 are most significant. The way I look at it, if a pivotal big figure is broken, the risk is for the next round number as long as it trades below it. For example, if EUR/USD 1.40 is broken, next target would be 1.38. If that level is broken, I then divide the 1.35-1.38 range in half and use 1.3650 as the next target with the broader risk for 1.35. Note these are not support or resistance levels so I give leeway around pivotal big figures and look for whether they are established as support or resistance.

There are several reasons why pivotal big figures are important:

1) Psychological – There is a strong psychological component to pivotal big figures. This is hard to quantify but there is clearly an emotional impact. Think about your trading and how your sentiment changes when a big figure ending in 2, 5, 8 or 0 is firmly broken or holds. As an example in the current market, the EUR/USD failure at 1.38 (correction high was 1.3790) was followed by 1.35 coming under attack. This pivotal big figure was briefly broken (low of 1.3444) but so far not conclusively as EUR/USD has been unable to stay below it. A firm 1.35 break would raise a risk for 1.32 and 1.30 while a move back above 1.38 would put 1.40 in play again. In another example, a recent failure above USD/JPY 92 has seen the upside stall and 90 subsequently tested. Note, the use of pivotal big figures is just one tool and should be used in conjunction with other tools and indicators that make up your analysis.

2) Options Barriers – Options barriers are often placed at big figures and this often leads to talk of a defense of these levels. When a barrier is at a pivotal big figure it often has a bigger attraction as stops are also often placed at those levels. I am not sure why anyone would use a big figure as an options strike but this is often the case. A discussion of options and the impact on spot forex trading will be left to a future article. The point here is that options strikes are often set at big figures.

3) 10 Big Figure Ranges – Central bank and finance officials often talk in terms of 10 big figure ranges. This is especially true in USD/JPY and in the EUR/USD as well. These ranges usually start and end with a 0 or 5, such as USD/JPY 85-95, 90-100, 95-105. This may be a reason why pivotal big figures ending in 0 and 5 have taken on more significance over the years. In the years when central banks were more openly interventionist, the market assumed a defense of these ranges and often put this to a test. In the current market, the Swiss National Bank (SNB) openly defended EUR/CHF 1.50 (pivotal big figure) as the bottom of the range for many months. The SNB then abandoned a defense of this level and this saw EUR/CHF drop below it. The market is now focused on 1.45 (another pivotal big figure) as the next line of defense and the SNB appears to be currently defending 1.46 to prevent a run at 1.45.

4) Stops – Despite big figures being obvious targets for the market, there are still traders who place stops at or just above/below these levels. This is an invitation to getting stopped out of a position as these round numbers can be like waving a red flag at a charging bull. We refer to stops as JUBBS, which are stops at obvious levels. For a description of a JUBBS stop, visit the Global-View.com website and search under JUBBS. Sometimes the market feels compelled to test big figures, especially pivotal ones, to see if there are stops or bid/offers at these levels.

5) Congestion Around Pivotal Big Figures – Sometimes congestion around a pivotal big figure will take place as the market battles in a tug-of-war to establish on one side or the other. This often sees a narrowing range as the market trades on both sides of a pivotal big figure each day. Those on GVI Forex have seen me point out these patterns when a big figure, especially a pivotal one, prints each day. This offers a chance to trade on both sides as long as this pattern persists. However, the longer this pattern goes on, the more momentum is drained from the market and the greater the risk of a directional move once this pattern is broken.

To sum up, pivotal big figures can be a useful tool for forex trading. Pivotal big figures can be a good guide to the market bias and to potential targets. Central banks and financial officials often think in terms of round number ranges and this helps guide market expectations as well. The use of pivotal big figures can offer trading opportunities during periods of congestion and then signal directional moves when the pattern is broken. Whatever the case, it pays to be aware of pivotal big figures and the ways it can impact trading.

About The Author

John M. Bland has been involved in the forex market for more than 30 years . He is a co-founder of www.global-view.com,the leading forex discussion site and home of the original forex forums. Global-view is a place where forex traders come for currency trading, the latest rumor , breaking news and forex trading flows.

Forecasting Fundamental Factors Affecting Exchange Rates and Currency Transfers

By Justin Thomas

A currency transfer depends on exchange rates and you must yourself be a currency expert or consult a professional to choose the right timing and the right currency

Today”s currency exchange rates are driven by a set of complex factors, which require expert knowledge and a lot of practice for one to able to forecast how they will be fluctuating in the short and/or long run. Every college student in finance knows that the exchange rate represents how a particular currency is quoted against a foreign national counterpart. However, not many realise that in fact the exchange rate is a price; moreover, it is the most volatile price on the market. If your everyday day work does not require watching exchange rate fluctuations closely, taking decisions in seconds, or if you lack financial expertise, you should better consult a currency exchange expert before deciding on the rate for your currency transfer.

Here is an example: if you don”??t know what the difference between nominal and real exchange rates is, you have little chance to get a favourable exchange rate by applying your own skills alone. Banks, non-banking institutions and brokers are the players who know the “??Forex market,”?? which is the market where all currency exchange fluctuations happen and where the nominal exchange rates are established. To play successfully on these markets, one should have profound knowledge and be on the constant watch of the ever changing economic and financial data like the level of exports, imports, trade balance, etc., of a particular country to determine if its national currency will gain in strength or will fall.

Interest rate on government bonds and securities is another factor involved in currency exchange rates and in the cost of a currency transfer, respectively. Add inflation, the “??one price law”?? (which states that the price of a certain good should be the same everywhere in the world) and multiply it by sometimes absolutely unpredictable market behaviour and you will get an idea how complicated the Forex market is.

A currency exchange expert will also take into account the political situation in the country and the current economic situation. A good currency transfer company can make you benefit from expected currency exchange fluctuations even if your home or destination currency is weak at the moment. Choosing the right date, even the right hour, to transfer money can be crucial to get an advantageous exchange rate when transferring money from one currency into another, or abroad. But you have to be very familiar with the currency fluctuations at the moment.

Did you know that on 3 August 2010 the British pound reached a five-month minimum against the U.S. dollar? Currency exchange professionals knew this would happen even before the news hit newspaper headlines because that is what they do for a living. What is important for a person who wants to conduct a currency transfer is that these experts know in advance when a particular transaction in two particular currencies must be executed. Thus, one can make a profit even in a situation when some fundamental factors are against him by conducting a currency transfer just on time.

Recognizing Trendlines in the Forex Market

By Andrew Daigle

Many a forex trader has proclaimed the foreign exchange market as ‘volatile’, especially after a large unexpected movement in the currency exchange rate. However, volatility doesn’t necessarily mean random, just that it is difficult to predict. Free of any forex indicators this is true, but with the help of trendlines you can navigate the uncertain waters of the forex market with relative ease. Simply put, trendlines are used to show the general direction and speed of the currency exchange rate.

The key to success in the foreign exchange market is learning how to identify market trends and act on them. Finding a trend and exploiting it over several hours, days, or weeks can create a financial return that satisfies even the most ambitious forex trader. Regardless of what forex trading strategy you use, mapping trendlines will help you exploit trends for maximum profit. Whether its stop loss limits, buy and hold high, or great and small thematic investing, trendlines can be a forex trader’s best friend.

The most important aspect of relying on trendlines in the currency exchange market is following the trend. Under no circumstances should you fight, or trade in the opposite direction of the trend. A common mistake made by newcomers to the forex market, is to trade in the wrong direction, which can lead to an unfortunate loss. Following trendlines, is just as important as using them. Stay away from any forex trading strategy that doesn’t require software that utilizes trendlines, because it can be the difference between trading tomorrow and going broke today.

For an inexperienced trader, trendlines provide a quick and easy illustration of when to buy or sell shares. If you’re looking for a low risk start to your career on the foreign exchange market, get acquainted with identifying and understanding trendlines. When dealing with potentially large sums of money, trendlines allow the currency trader to base his decisions on technical analysis, not just emotions like fear and anxiety. Success in the forex market depends on good decision-making, and trendlines allow your decisions to be analytical and accurate.

Identifying what the trend lines are telling you is the second most important step for any forex trading strategy. An uptrend illustrates the movement of a currency exchange rate when the overall direction is going up. This lets you know that the demand for your currency is greater than the supply, giving you a unique opportunity for financial gain. Officially, an uptrend occurs when each peak and trough is higher than those identified in earlier trendlines. Your goal is to exploit a strong uptrend until signs arise that it is about to reverse.

Just as important as identifying an uptrend, so too is recognizing a downtrend. A downtrend occurs when each peak is lower than the ones found in an earlier trend, which means that more people are selling a currency than are buying it. However, when a forex trader notices that an exchange rate is heading toward a downtrend, it is his duty to be cautious about entering any new positions that could adversely affect current investments.

About the Author

Andrew Daigle owns many successful websites including ForexBoost , a free Forex educational site to learn Forex trading strategies and also endorses Supraforex as one of the best automated trading systems.