Q1: When you consider that the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily, where does it go from here?

A1:The FX market is unique, in the UK there is no central exchange, we trade via the inter bank market. With more and more private individuals taking up margin trading and new forex brokers setting up, I can only see the market grow in the near future.

Q2: Other than great liquidity, what are the principal benefits attached to the forex market?

A2: There is less to consider when trading the forex markets, there are only a number of variables that affect the pricing.

Main advantages include

Forex Market allows 24 hour trading

Greater leverage - with most brokers offering 100 – 1,

Less starting capital required,

More Liquidity - day trading has to have enough volume to make it worth our while. The currency market is more liquid than all the world stock markets put together. Currencies are always in action,

Free trading systems

Better for shorting - There are artificial controls built into the market to prevent it from going down too fast. The reason is that we live in a biased world that likes to see things go up instead of down. One of these artificial contraptions is the "uptick rule," which comes into play when shorting stocks, making it more difficult to sell a stock short than to buy it. This is unheard of in the currency market. Selling currencies short while day trading is just as easy as buying them.

Ideal for Short Term Traders -

Q3: Limited market access, liquidity issues-after market hours, commission fees, capital requirements and short selling/stop restrictions are just some of the issues investors face when considering other markets. Given that the forex market removes many of these traditional barriers and therefore does not restrict the forex traders' ability to make a trade at the right time, are we likely to see an increase in trading volumes this year?

A3: With all these advantages, traders are finding it hard not to trade currencies, online trading volumes across all products is increasing at a substantial rate, however FX trading, predominantly amongst retail investors is becoming very popular.

Q4: There is stiff competition amongst online forex service providers for retail forex traders with some claiming to offer the same degree of technical analysis enjoyed by the world's largest banks and institutional traders. Is this possible?

A4: Technical Analysis has come a long way, more and more forex provides now have partnerships with firms who provide analysis. However the banks still have an advantage, the markets are still not under perfectly competitive economic model. The banks will always have access to information that is not readily available, ISX FX currently sources its information from a number of banks to fill this gap.

Q5: Do you subscribe to the theory that forex is less volatile than stocks because the market is much deeper?

A5: As a bet on the direction of a national economy, no currency has ever dropped 25 percent in a day, or imploded as rapidly and completely as an Enron or a Parmalat. In the wake of those scandals, many companies are meting out information more cautiously, making it harder to get the real "scoop" on stocks one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. If you treat forex trading like a business, including proper money management, you have a better chance of success."
Q6: U.S. interest rates-decade lows; global trade wars and terrorism fears have dominated the headlines recently. What impact has this had on retail volumes?

A6: The above factors have all led to a decline in the dollar. This coupled with tighter regulation of brokers has given investors more confidence in brokers. Also the stock market crash has driven individuals to look at the profit opportunities offered by forex.

Q7: Stateside the Commodity Futures Trading Commission (CFTC) has brought 58 actions against firms, since its new powers were awarded in 2000. Given that certain brokers continue to abuse the system, with investor money sometimes not being traded in the markets promised. What can investors do protect themselves?

A7: The retail forex market is in essence betting, as with any bookmaker there is always a risk that you will not get your winnings, or the odds will be highly stacked against you. With tighter regulation and increased competition, this risk of default has largely disappeared. The risk of price manipulation still exists and this will never really go away. Investors need to ensure that they have an independent price source and trade with a broker who offers true one click dealing. Most brokers work on the basis of the law of large numbers, acting like the bucket shops of 50 years ago, they do not hedge any positions and are directly competing against there clients. This will always lead to price manipulation and further actions by authorities will inevitably be taken.

Q8: What is this best way for "currency rookies" to get involved in the market?

A8: Like with any new form of trading you need to know what you are doing, especially as there is margin involved. Take all the time you need to learn this new trading skill well -- practice everything you learn with a demo account before you consider going 'live' with your own money. Investors should read books, attend seminars and paper trade until they are comfortable with there strategy.

Forex Training: Probably The Most Important Lesson Of All

Many beginners start out their Forex training by gradually building up a plethora of indicators with charts obliterated with every signal imaginable. No wonder such new traders often freeze with indecision as one signal seems to contradict another.



There is however a very simple indicator, that when fully understood, forms the backbone of all future Forex training and trading! What is it?



Before revealing it, guard against a typical reaction such as: "Is that it? I know all about that!"



This indicator, due to its simplicity, is often under-valued and insufficient time is spent by new traders in their Forex training sessions really getting to grips with it.



Probably The Most Powerful Indicator Of All



Now, what is it?



Support and Resistance!



To state it clearly, your Forex training will only start to really move ahead when you fully understand the impact that support and resistance have on market action. Here is a key principle to understand:



Support becomes resistance. Resistance becomes support.



Why is understanding this so crucial?



Because the thousands of traders in the global market place, handling billions of dollars for the big institutions, are constantly monitoring where price has been before.



If price reached a peak some days ago and has since retraced, that level that was reached becomes a key level of resistance. If you enter a trade anywhere near that level, understand that it will take major buying pressure to get price above that level.



Conversely, if price fell to a deep low within the last week or few days, for price to continue on down there is going to have to be intense selling pressure to pass that level which has now become support.



An Interesting Market Behavior Pattern



But now here is an interesting market behavior pattern you must drill into your brain as part of your Forex training:



Once price does break through that key level of resistance, it now becomes a level of support. If it is a key level of resistance that is broken, once price has moved on through by 20, 30 or 40 pips, it can become major support. What does that mean for the trader?



It is often possible to enter a trade at an optimal point by simply waiting for price to come back to test that strategic level that was broken.



So rather than chasing price and hastily putting a trade in once the market has started to move in a certain direction, wait for price to pull back to that key level that was broken. Put an entry order in at the level and wait for price to pull you in to the trade.



It may continue in the direction for 5-10 pips putting you in deficit but if you have done your research properly and identified this as a key level using other indicators such as Fibonacci or pivot levels, you need not fear. Price will quickly pull back, cover your dealing spread, and from there on you can enjoy the satisfaction of seeing price move toward your price target.



Time and time and time again the market behaves in this pattern. Exercising patience while you undergo your Forex training, and looking out for this particular market pattern can yield huge results.



Understanding support and resistance will give you an unbelievable edge on understanding how the market works. This in turn will help you enter and manage your trades to a highly accurate degree with minimal stops and reasonable, reachable targets.



Rather than trying to hit the home run, by looking at the next key level of support or resistance where price is likely to stall, you can walk away with a reasonable profit by setting your price target accordingly.



Look Under Your Feet



Rather than searching for some complicated, 'advanced' trading system, why not concentrate on what is right under your feet.



Get to grips with support and resistance, learn to quickly identify these levels once you open a chart, draw lines where you can see major support and resistance, especially on the higher time frames, and everything else you learn during your Forex training will fall into place.

Forex Trading Training: Rules For Placing Orders

If you have started your Forex trading training you may initially have a challenge with understanding how orders are placed. I remember when I first started reading about the Forex and practicing in a demo account, it took me a while to understand how stops and limits worked in relation to price.



This article sets out the main rules governing the placement of orders with a free graphic download in the resource box at the end which you can keep on your desktop and refer to at anytime until the rules have 'sunk in'. You will find this lesson extremely important if you are in the early stages of your forex trading training.



Here are the basics:



1. In each currency pair, the first currency is the base currency which you either buy or sell. For example, in the case of EUR/USD, if you believe the euro is going to strengthen against the US dollar you would place a BUY order (go long). If you believe the dollar will strengthen against the euro, you would place a SELL order (go short) for the EUR/USD currency pair.



2. In your dealing station you will notice two prices quoted for each currency pair, a BID price and an ASK price. The difference in the two prices is known as the pip spread the dealer takes from every trade. For the major currency pairs this can be between 3-5 pips. NOTE: When you place a BUY order you will enter the trade at the ASK price. When you place a SELL order you will enter the trade at the BID price.



3. There are two types of orders you can use to enter a trade:



* Market Order

* Entry Order



A market order is an order to buy or sell at the market price the moment you enter the trade by clicking your mouse button.



An entry order is an order to buy or sell when the market price reaches a certain target or level you anticipate from your technical analysis.



Note: Avoid market orders as they seldom give you the best entry point unless you really understand the market. An entry order allows you time to analyze key price levels and set the order to be executed only if price pulls back or reaches that level. This way you enter the trade at an optimum level.



Stops and Limits



Once you have calculated your trade and anticipated how far you think price will go, you need to enter a limit order so the trade will automatically exit at that profit level. In the case of a buy order, your limit will be set above the entry price. In the case of a sell order, your limit will be set below the entry price.



For your protection you then need to set a stop order. If price goes against you your trade will exit at a loss according to the number of pips you have calculated that you can afford to lose taking into account your equity. In the case of a buy order, your stop would be below the entry price. If the case of a sell order, your stop would be above the entry price.



As part of your Forex trading training, it is important to get very familiar with the software you are provided with from your online broker. Practice, practice, practice, making entry orders, and setting the entry price and the stop and limit levels.



It is easy in the early days of Forex trading training to get mixed up with direction. You may wish to place an entry order to sell (go short) and inadvertently put a buy order in instead only to get a shock when you see a minus figure under the pip column steadily growing.



The details explained above are available in a graphic you can keep on your desktop and refer to at any time you are trading. Just go to the link in the resource box below and get a copy.



Then as part of your daily Forex trading training, refer to it each time you place a trade in your demo account until your understanding of the rules of order entry, bid and ask price, stops and limits, come automatically without thinking.



You will be laying a solid foundation for more advanced Forex trading training steps so you can concentrate your mental energies on price and chart analysis rather than being sidetracked by confusion over basic order rules.

The Tweezer Forex Signal: How To Trade It

Certain formations on Japanese candlestick charts can provide a reliable Forex signal if you interpret them right and realize the limitations of candlesticks in the foreign exchange market.



Candlestick formations work particularly well in some markets where there are clearly defined opening and closing periods such as the futures and equity markets. The Forex on the other hand is a 24 hour market place that runs for nearly six days a week and therefore it doesn't have the distinct open and close timings that make Japanese candlestick formations such significant indicators.



However, there is a significant candlestick formation that can be used as a Forex signal taking into account the open closing times of various markets (New York, European, Asian sessions) and the overlapping times when market reaction is more pronounced.



This Forex signal is commonly called the Tweezer shape. It consists of two candles side by side with short bodies at the base and long wicks that extend upward. The two candles can be either identical in shape or they may simply have approximately the same size body and wick. Conversely they can be the other way, a short body at the top with long wicks extending downward.



WHY can the tweezer candle formation be a significant Forex signal?



It helps to understand what is represented by a candlestick. There is a need to go behind the scenes and perceive what is actually going on in the market.



Every candle represents a battle between the bears and the bulls, struggling to gain dominance. In the case of a tweezer candle formation at the top of a price move, the bulls took price up to a certain level but were unable to hold it and price came back.



In the second candle period, the bulls again tried to take price up but only succeeded in reaching the high of the previous candle and again their efforts failed with price coming back. A new high was reached, then an attempt made to pass it which failed, the bears wresting control from the bulls.



If a tweezer formation is seen at the end of a large downward move in price, then the opposite is true. The bears have not been able to maintain new lows and the bulls have wrested control.



The tweezer candlestick formation as a reliable Forex signal is conditional however on other factors.



WHEN can the tweezer candle formation be a significant Forex signal?



It is probably unwise to just take a tweezer formation as an instant Forex signal to go long if the tweezers form at the top of a run up in price or short in a drop in price. A reliable Forex signal involves many factors not just one.



Here are some key points to keep in mind:



* Tweezer formations on higher time frames (1 hour, 4 hour) are more significant. At times a tweezer on a 15 minute chart can provide a good Forex signal if it coincides with other factors mentioned below.



* Tweezer formations can be significant when they come at a key level of resistance or support, or if they are on a pivot line, or a Fibonacci retracement or extension level.



* Tweezer formations are not such a reliable Forex signal if they come in a consolidation pattern when price is caught in a channel.



* Tweezer formations can be significant if they come at the end of a major run in price that is equal to or exceeds the average daily range. If you pull up your Average True Range indicator and see what the average price movement has been for that currency pair for the last five days and compare it with the current price movement, if price has already moved by the average number of pips and you now see a tweezer formation, there is a higher probability you can safely enter a trade in the opposite direction.



* Tweezer formations can also be a reliable Forex signal if you take into account the average daily range and the time of day when the tweezer formation appears. If it appears at the close of the London session for example, or the end of the New York session, it is unlikely price is going to go much farther for the remainder of that day. The likelihood is price will retrace and that is where you can catch some good pips.



Trying to find the perfect Forex signal is a futile exercise as no such signal exists. However, there are certain indicators that when put together can constitute a reliable Forex signal that works more times than it fails.



Learn to recognize the tweezer candlestick formation. Take note of where it appears in relation to price action, check the time of day, look at your other favorite indicators, and if they all line up, pull the trigger!

Online Forex Currency Trading - How To Boost Confidence And Discipline

Consistently profitable online currency trading requires both confidence and discipline to first achieve and then maintain a reasonable level of success. For virtually all traders, these two aspects of trading are responsible for their success or lack of it: having confidence as a trader, plus the discipline to stick to their orrex currency trading system.



Most traders that struggle with their discipline do so for a very simple reason and this is something that can be very easily addressed and rather quickly.



Ask any frustrated or struggling trader what their biggest problem is and it will boil down to a lack of confidence and / or discipline in one form or another. Traders who have both are the ones the that are doing fine and enjoying their trading.



Even the veteran traders will tell you that the primary reason for any rough spells they have occasionally experienced were from when they had a lapse or breakdown in their confidence or their discipline, but once they got it back all was well.



So how do you go about building these two emotional pillars for successful currency online trading? Or regaining them if they've waned?



The 80/20 Solution



One of the fastest and most effective ways to give yourself that boost is to intentionally create a disruption in the UNsuccessful pattern that has been established. Now this applies whether you've known success and temporarily lost it or if you haven't found it yet.



The most powerful way to disrupt the pattern is through stepping back and making an assessment of your current day online trading. Now, this doesn't have to be a lengthy or monumental task. There are two parts to this process and it generally follows the 80/20 rule with which you're already familiar.



Good news for you is that the first part is the 20% of your effort that will yield 80% of the results. Even better is the fact that you can do this within the next hour or two and see results that fast. Here's what you do:



Step 1. Effort = 20%, Yield = 80%



Step 1, part 1 is to take your recent trading results and run your metrics on your current trading. So which metrics are going to give you confidence and discipline-building information?



* Your real winning percentage * Your actual profit-to-loss ratio * The true size of your average winner * The true size of your average losing trades * Your actual number of winning trades * Your actual number of losing trades * Your REAL ROI from your trading efforts in both time and $ * Your projected annual income from your trading - based on real numbers from your current trading



So how does this help with your confidence if the numbers don't look so great? Especially if you haven't yet experienced a level of success that you desire?



Well, very specifically these numbers give you a very clear reference point to work with regarding the factors in your trading that make the bottom line what it is. Rather than going on hope and wishful thinking, you now know the particular aspects of your trading on which to focus your efforts - a realize results. It brings a great deal of clarity to the exact direction for you to take.



Just this simple step alone with give you a substantial boost, and part 2 will really bring about a transformation.



Step 1 Part 2.



In this part, you simply backtest your system (whatever it is) very specifically according to the rules of the system using recent historical market data for the markets you trade.



You then run the metrics and compare the two. This information is incredibly powerful in two ways for building both your confidence and your discipline to stick with your system. Here's how this works for you.



By backtesting your system with historical data, this can give you a very clear measure of what your forex currency trading system is capable of delivering for you. If your current trading is not delivering the profits that you want, you need to knowif the problem is with the system or if it in your execution of the system.



If your current trading results are comparable to the backtesting results, then you know immediately that you need to take a closer look at the system you're using.



If your backtest results are good, but your current results with your system are not, then you know that you need to focus on your execution.



Most importantly, if your system doesn't backtest well, then you know straightaway that you need to consider changes to the system you're using, either a new system altogether or changes to the one you've got.



Directly for confidence and discipline, if your system tests well, then your confidence in it should go way up, along with your discipline to stick to it - because you are providing PROOF to yourself of its capabilities and limitations and with real numbers.



Plus you can see its limitations and more easily get through short losing streaks and drawdowns while maintaining confidence in your system, thus making the discipline part of sticking with it much easier.



Step 2. The More Intensive Process



If you have gone through the process in Step 1 and find that your system is good but your execution is where you need to focus and you need assistance working through other possible emotional management issues, then you need to seek out resources specifically for finding the core issues to address. Go to Inside Out Trading for resources specifically created to help you with these.



In conclusion, confidence comes from thorough understanding and successful experience. Once you have a system in which you can have confidence, then the discipline to stick to it gets much much easier.



Analyzing your current trading then backtesting your system can provide a great deal of confidence and thus make sticking to your system considerably easier by knowing the particulars of how it makes your bottom line what it is and what your system is capable of delivering.

Forex Day Trading: Top 7 Checklist When Using Support And Resistance

Why are support and resistance levels crucial when participating in the Forex day trading market?



Simply put, they represent key, strategic price points at which traders processed orders involving millions or even billions of dollars. No wonder price at times has a hard time getting past a previous high or low. Those levels are being fiercely defended by traders who have large amounts of money at stake and who do not want to see price break those levels.



For this reason anyone who engages in Forex day trading should learn how to trade support and resistance. The following checklist provides crucial guidelines:



1. Support and resistance levels are much more significant on the higher time frames. Pay particular attention to price highs and lows on the daily chart as this time frame is commonly used by big traders.



2. A price high or low has more significance when it has a number of candles either side of it which are lower (in the case of a price high) or higher (in the case of a price low).



3. Before you consider Forex day trading at a support or resistance level, see if there are more factors that would indicate this is a key price level.



For example, does a trendline intersect at the same point? Does the support or resistance line match up with a Fibonacci level, either a retracement or an extension? Does the support or resistance level coincide with a pivot point if you are in the practice (and it's a wise one) of calculating pivot levels when Forex day trading?



4. Has a key support resistance level been broken? Then look to see if price will come back to test that level. Remember, resistance once broken can become support in the future and support once broken can become resistance in the future.



These Forex day trading scenarios can present excellent trading opportunities as you put an entry order in at the key level and wait for price to come back and pull you in. Within a short time your dealing spread is covered and you are in profit.



5. The market spends most of its time in trading ranges or consolidation channels. You need to accept that this is a characteristic of Forex day trading and adjust your mindset accordingly. Identify the high and low of the trading channel and manage your trades accordingly.



6. After identifying a trading channel or range and you see a trading opportunity, set your entry level at the base of the channel if you are going long or at the top of the channel if you are going short.



Don't chase after price once it breaks out of the channel (although many who engage in Forex day trading do so). You will not get the optimal entry point. Waiting for price to take you in either at the top or bottom of the channel means you can have a smaller stop and your price target is closer.



7. Pay particular attention to the previous day's high and low. Price will often hesitate and retrace at these levels. If you are a Forex day trading scalper, you can often grab a nice pull back of 10 pips or more at these strategic levels.



Note: Although there are various ways to calculate the previous 24 hour period depending on where you live, using GMT as a standard is often beneficial. Midnight GMT is a time when the market is generally very quiet and unlikely to make new highs or lows.



Succeed Or Fail?



It is unlikely you will succeed at Forex day trading if you fail to understand or take into consideration support and resistance. This indicator is that crucial! Yes there may be fancy indicators out there with all the bells and whistles, but this simple indicator, marking where price reached a high or low during previous trading sessions, can be one of the most powerful and effective Forex day trading tools available.



Be sure you spend sufficient time studying it, examining your charts, marking off the key levels each time you begin a new Forex day trading session.

A Beginner's Guide to Forex Analysis

Support and resistance is such a powerful Forex signal that without understanding its impact on the market, a trader will probably never master the skills necessary to make profits on a consistent basis.



This Forex signal simply registers where price reached a peak or a low. On a higher time frame these price levels can have huge significance. Why?



Getting Behind The Scene



We need to understand what is going on behind candle patterns and price movements. Imagine thousands of traders coming to their desks each day all around the world and processing orders involving billions of dollars worth of currency.



The price at which they bought the currency now represents a key level for them. They do not want to see price go in the opposite direction or they will be at a loss. So what happens? They do everything possible to protect that price level.



The daily chart is of particular importance when considering support and resistance as a Forex signal. Traders associated with big institutions often refer to the daily chart rather than lower time frames. So price highs and lows on a daily chart can represent key, strategic price levels.



If price reached a high within the last few days, you can be sure a number of traders have millions or even billions of dollars worth of currency tied up at around that level or below it. For price to go above that high there is going to have to be considerable buying pressure from the bulls. Obviously the converse is true when price reaches a new low.



So look at the higher time frames like the daily, and 4 hour charts and identify these key levels of support and resistance. They form a major Forex signal.



Where Price Spends Most Of It's Time



Here is another factor regarding support and resistance that makes it such a critical Forex signal.



Most of the time price moves in a consolidation channel or range. Depending on the time frame you are looking at, it may be a 40 or 50 pip range on the higher levels, and within these larger levels are small trading ranges of 10 to 20 or 30 pips.



Some estimates put the amount of time the market is in consolidation around 60-80%. This means only 20-40% of the time price is actually trending, making new highs and lows.



This piece of information is critical. Once you have identified a trading range (it helps to put lines on your charts marking the high and low of the trading range) you can now manage trades much more effectively.



If you are considering going long and you see price is in a consolidation channel, you will not want to enter near the top of the channel. Wait for price to come back to the bottom of the channel by putting in an entry order and get taken into the trade. This way your stop is closer and your profit potential is greater.



Once price has moved through a major level of resistance, that level now becomes future support. Once price has moved through a major level of support, that level now becomes future resistance.



Include This In Your Daily Preparation



Every day when you open your charts look for this simple yet powerful Forex signal. Mark out your lines of support and resistance on each time frame you use. For example, if you customarily use daily, 4 hour, 1 hour, and 15 minute charts, mark out the key levels of support and resistance. Remember the more candles there are either side of the high or the low, the more significant that level becomes.



Then compare the various time frames and see if any of the levels you have marked coincide. Then look for suitable trading opportunities accordingly.



An effective Forex signal does not have to be complicated. Understanding how support and resistance works can make a huge difference to your consistency as a trader.



Don't pass over it because it is so simple. Remember, in the minds of the traders who pushed price to key levels, and who are defending positions involving billions of dollars, levels of support and resistance are hardly inconsequential!