Study each Forex Broker in detail and seek additional information from each Forex Brokers website. Review the ones you find interesting and then continue to next section. I have included the NFA ID to the companies where it applies. You can make a search by going to NFA's website and enter the Regulatory ID of your chosen broker. After your search is completed, you can check if any complaints have been filed and their outcome.

Adjusted Net Capital (definition available in my Forex Dictionary) gives you information about the size of the FOREX Broker. However, for some brokers it doesn't show only Forex activities but might be for all the company activity. Adjusted Net Capital data as of report filed 31 August, 2008.

For the accounts, Institutional Account and Standard Account, the figures refer to as follows: Minimum Account Size/Leverage/Contract Size.

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Disclaimer: We have made every effort to ensure the accuracy of these tables. We accepts no liability for any errors contained therein. Please visit respective firm's website for complete and up-to-date information.

FX Fundamental Analysis

FOREX Fundamental Analysis

FOREX Fundamental analysis can be said to be the evaluation of macro economic indicators, political forces and asset markets and their relation to and effect on foreign exchange markets. By macro economic indicators we mean such measurements as GDP or Money Supply. Political forces could for example be perceived political stability or elections, while by asset markets we mean for example the bond market or real estate market.

The exchange of foreign currencies can be traced back to at least antique times or about 1000 BC. After World War II the US Dollar replaced the British Pound as the leading currency, due to the fact that USA was the only remaining economic power not scarred by war. By the early 1960s this was a firmly established fact. But it was not until Nixon in 1971 abandoned the US Dollar fix to gold that the modern FOREX market was born. Since then all major currencies are free-floating.

As you probably know by now, the Foreign Exchange Market is the largest in the world today, with an estimated daily turnover of US$1.9 trillion. Opposite to the commodities and equity markets, the FOREX market is not traded on an exchange, i.e there is no fixed marketplace or trading floor, sometimes called OTC (Over-The-Counter). Rather an intertwined, global network of buyers and sellers of different currencies make up the marketplace, hooked up via phone and computer. Since it is not regulated by an exchange it is a free and global 24 hour market (well, only laissez-fair capitalism would guarantee a truly free market).

The reason we have a Foreign Exchange Market include capital flows from trade, foreign investment and speculation. Foreign Exchange is an integrated part of our lives and without it, as we know it now, international trade wouldn't be possible. Otherwise, how could a Swedish car maker sell its products on the US market. The Swedish car maker (Seller) is quoting its cars in Swedish Krona (SEK) but the car importer (Buyer) is paying in US Dollar (US$). The FOREX market is providing us with a place where we can exchange the different currencies, thus facilitating trade between foreign counterparts with different base currencies.

Nowadays transactions initiated through trade or investment is very small and speculation is the major part of all currency transactions. However, do not think that the speculator (i.e you) is not a necessary part of the market. It is the speculator that provides most of the liquidity of the market, so that international trade and foreign investment can get a quick and fair quotation. In return for providing liquidity, the speculator seeks a profit.

Since the US Dollar is the major currency for international trade, a currency is generally quoted against the US Dollar. Actually over 90% of all currencies are traded against the US Dollar. Since the introduction of the EUR, it is common for major currencies to be quoted against the EUR as well. Other major currencies are the Japanese Yen (JPY), Pound Sterling (GBP) and Swiss Franc (CHF) and to some extent Canadian Dollar and Australian Dollar.

Historically London has been the leading foreign exchange center of the world and this is also true today. The majority of the FOREX volume is going through London and to some extent also through the financial centers of USA, Germany and Japan.

When you go through the different economic indicators, you will notice that the ones with high impact are usually the same:

• Interest Rate Announcement
• Gross Domestic Product (GDP)
• Unemployment Rate
• Consumer Price Index (CPI)
• Trade Balance

Current Accountforex fundamental analysisEvery country have a few high impact indicators that are special for that particular country, for example ZEW Survey for the Euro-zone or the Treasury International Capital (TIC) in the US. These you need to learn and understand what they mean. Keep yourself up to date on my FOREX economic calendar page for changes in market impact. Who knows, perhaps a few months from now an indicator rated moderate or low might have been promoted to high market impact.

Every economic indicator must be put into context, i.e not only do you need to look at the absolute and relative value of the indicator itself, but also how the indicator relates to the general consensus about the state of the economy and currency. Try to put the indicator into the big picture. Unfortunately the importance of each indicator changes over time and overall economic performance of a country as well, so the job in a way never ends.

The forces that drive the value of a currency is demand and supply. When we trade a currency we trade a currency pair, for example EURUSD. In this way we have a double effect, because two currencies are involved. If the Euro-zone economy is strong, the demand for EUR would also be strong and the EURUSD should appreciate. If we at the same time have a weak US economy then the pressure on the USD is heavy and this should further appreciate the EURUSD (in effect depreciate the USD). When you go through the economic indicators, think in terms of demand and supply. If the Euro-zone GDP is rising, what effect does that have on the EURUSD (or any other EUR pair) exchange rate?

Depending on what type of trader you are (or want to be), your interest in economic indicators vary. If you are a technical trader (using first and foremost technical analysis) then you focus on the high market impact indicators and then keep a close eye on time of release so that you don't get caught on the wrong side. If you are a news trader or a trader using mainly fundamental analysis then you need to get a deeper understanding about Fundamental Analysis and each economic indicator's market impact, which is not covered here.

Another thing that is important to understand is Consensus and Expectations. I have also put together some information regarding Intermarket Effects. Please read both articles, they are important.

Regarding the Economic Indicators, I have organized them according to Currency Pair and Market Impact as you can see below. I have tried to keep the information as concise as possible, giving you what you need to know only at a glance. It wouldn't surprise me if someone have objections regarding the way I have organized the different Economic Indicators. The thing is though that the market changes and with it the Economic Indicators it considers more important than others. A classical example are the housing indicators that when not in vogue are demoted to Low Impact and then when the market takes interest again are promoted to High Impact.

Legend

= High Market Impact

= Moderate Market Impact

= Low Market Impact

Economic Indicators

Economic Data affecting USD pairs

Since the US Dollar is so dominating in world trade, data coming out from the US is extremely important. All commodities, like oil, copper, or wheat, is quoted in USD. When an importer in Europe is buying finished goods from China the goods are quoted in USD. The worlds biggest economy is the US, there is no escaping the USD and the impact economic data released from the US has on us traders.forex fundamental analysis

• High Market Impact
• Moderate Market Impact
• Low Market Impact
  
  

Economic Data affecting EUR pairs

Since its physical introduction in 2002, the EUR has made quite some progress, although in the very beginning it was put under pressure and received a lot of criticism. The EU is a very large common market (and expanding) and the influence of the EUR is increasing.forex fundamental analysis

• High Market Impact
• Moderate Market Impact
• Low Market Impact
  
  

Introduction

In FOREX Technical Analysis we are not trying to forecast the market. Rather we are aiming at decoding the market by viewing it from different aspects. In my FOREX Trading Course “7 Steps To Profitable FOREX Trading” I make a nautical analogy that I will expand upon here. If you are trading without technical analysis, you are sailing without a crew, compass and a nautical chart. It needs an enormous amount of experience to be able to navigate correctly in this way. Naturally one could only navigate in known waters. It is, however, possible. But why make it difficult and excruciatingly time-consuming?

FOREX Technical Analysis gives us solid reference points, enabling us to understand approximately where we are. Judging distance or knowing where you are at open sea is very difficult because of the absence of reference points. With the help of reference points (land masses, light houses etc) we can map out on our nautical chart where we are, our destination and how we will get there. The same is true for technical indicators, the help us navigate to our final destination, a net profit.

Of course it is not that easy, any sailor knows that there are many unknown factors that can severely interfere with your laid out route. The weather (or market conditions in our case) can change fast, putting you in a precarious situation (this is where Trade Management enters).

Indicators are just that - indicators. They indicate where we are on the chart giving us information about a different aspect of raw price action as seen through that particular indicator. Different indicators return different aspects. Remember though that all of them are using the same source, raw price. There is only so much information you can extract from it. Keep this in mind when reviewing each indicator.

Financial time-series like FOREX price data are dynamic, non-linear, non-stationary and chaotic. All indicators mentioned below are static and linear, ie not very good at modeling the data we have at hand. Some have developed adaptive (dynamic) versions, but I can honestly say that their efforts are crude and not very impressive. Don't believe claims about a super indicator that is ultra easy to trade and that will make you a millionaire in a week. We simply do not have the technology to accurately model financial time-series at this time of writing (2007). That doesn't mean we cannot profitably trade the markets, only that it takes more effort and time to reach our goal.

FOREX Technical Analysis in itself does not say anything about future prices. Actually, I have found it impossible to know exactly when the market will turn and how far the move will extend. However, when we build a Trading System we use indicators to create rules that identify high probability areas of entry and exit. So in a Trading System we are in a sense forecasting the market. Otherwise, how can we know if we want to go long or short?

If you are building a Trading System it is important that you know your indicators. Study the pages below diligently and it will be much easier. I have made a small FOREX Charting course with live charts. Have look at it!

For simplicity I have divided up FOREX Technical Analysis in several different categories or chapters, as can be seen below. Go through each chapter and study in detail the contents. And as always, you have to provide Mind and Motivation!

Table of Contents

Data Fields
FOREX Chart Types
Bar Frequency
Candlestick Patterns
Forex Pivot Points
Trendlines
Moving Averages
Graphical Indicators
Chart Patterns
Chart Studies
Oscillators

You have now graduated from my FOREX Trading Training. This stage is one of the most pleasant and I think you would agree. However, your Forex Trading traing actually never ends, continue to learn and progress. Until now we have put in a lot of work in order to create a profitable and tradable system and it is time to enjoy the fruits of our labor. If you can continue like this for a few months with consistency, you can start living the dream of a truly free and fulfilling lifestyle. Don't think you can trade from the beach (that's for unrealistic dreamers), but cutting down weekly working hours to 30 or less and thus spending more time with your family and/or hobbies is a true blessing. What we all want from life is true fulfillment. With Mind and Motivation you can live the ultimate dream.

There are a few things I would like to mention:

Trader Psychology

In my opinion Trader Psychology is the biggest obstacle for any trader on their road to profitability. Some traders have it naturally and some just cannot make it no matter what they do. Why is that? Well, going back to my the beginning of this FOREX Trading Training I list the three Pillars to Profit.

• 
  The Right Trading System, i.e a validated Trading System that produces consistent profits
  
• The Right Psychology, i.e a Psychology that supports your trading effort towards consistent profits
• The Right Experience, i.e an Experience that promotes confidence in your Trading System

As you have learned, all are needed for success. Forex Trading training doesn't come easy, work on it. Compare the three and you will see that Trader Psychology is the only one which is unmeasurable, i.e we cannot apply common scientific methods in order to study it and therefore find a simple solution. It is very difficult (impossible?) to know what is lurking deep down there in your subconscious. Several methods have been developed to deal with the subconscious. You could try NLP (Neuro-Linguistic-Programming) or hypnosis, just to mention a few. If you have a seriously stubborn mind (like me) it might take up to a year of daily sessions before you have a breakthrough. There is always a solution to your problem, you just need to find it. Don't be a quitter, with Mind and Motivation you will make it!!!!

Losing streaks

Losing streaks are very common in trading and it has nothing to do with you. Unto this day I have not seen a system without losing streaks. Losing streaks are due to changing market conditions. Sometimes the market changes in our favor sometimes to our disadvantage. The markets are in a constant state of flux and you can not do anything other than accept it as fact. Remember, go with the flow. The only recommendation I have is to reduce your lot size for some time until you see that things are improving. Sometimes it is advisable to take some time off, just to let some steam off. It's better with zero income than negative income, right??

Personal issues

Life throws at us a whole bunch of stuff, whether we like it or not. Certain issues will affect you psychology and your trading negatively. Trading needs 100% attention especially if you are trading intraday on a high resolution (e.g. 5 min bars). As an employee you get your paycheck even if your attention is partly elsewhere, this is not the case in trading where you could actually lose money. It is better to deal with the issue that is bothering you and pass on trading, if only for a couple of days. The sooner the issue is solved the sooner you will be back trading making money.

Incorporation

When you have been consistently profitable for at least a few months, I suggest you incorporate, if you haven't already. Rich people do not own anything, they control everything (through corporations). The biggest advantage is that corporate tax is lower than personal tax and that a corporation is taxed on its profit not income. Another advantage is that a corporation gives a better shield against litigation (unfortunately we live in a litigious society). The best is always to incorporate in the country where you live.

Disclaimer: I am not a lawyer and cannot give you legal advice. Always check with a tax lawyer and accountant before making any decisions about incorporation.

Vacation

In a profession like trading it is never wise to take vacation longer than 2 weeks. It is much better to take four individual weeks spread throughout the year than four consecutive weeks of vacation. The reason is two-fold:

• The longer you stay away from trading, the harder it will be to get back in. Then you will make mistakes and lose money, affecting your confidence negatively.
• It is always good to let the mind focus on something else for a few days (not weeks) and then get back fresh and ready for action. Doing this on a regular basis might actually improve your trading.

If you plan to make an extended vacation, take a laptop with you and check the status of the markets just to keep up and not lose touch. Whatever your trading style this takes max 30 min per day. If you trade daily bars, one or two times per week is enough.

The best time for an extended vacation (i.e 2 weeks) would be the last week in August and the first week or two in September (around US Labor Day), as well as the weeks around Christmas/New year. Liquidity and volatility is usually the lowest around these dates. Actually, the decision not to trade during these periods could prove beneficial to your account.

I wish you the best of the best. May the good trades be with you.

I advice you to continue your Forex Trading Training by having an open mind and never take anything for granted.

Step 6: Improve Through Feedback

In this step we start trading with real money. Our purpose here is to get experience and in general improve our performance towards the optimal. Since we have a system that we have developed, backtested, validated and traded on a demo account successfully, we have laid down a solid foundation on which to build our trading career. We are thus breeding confidence and expelling confusion, in other words exactly what is needed for success.

If you have any weaknesses, like doubt or hesitation, the market will make use of this to your disadvantage. It is not exactly that the market is sinister, but rather the way it works. If you think about it for a minute, you will understand that the market couldn't work any other way. For the minority to make money, the majority needs to lose and the market will take every chance it has to keep it that way. It will force its way. This is also the reason it is always the best to go with the flow of the market and not to try to push it your way. This can be really difficult in the beginning, since many of you have learned to get what you want through exhaustion of the counterpart (for example yelling and screaming as a child). The market will always be the winner, no matter how much you complain or beat your head in the wall. The market sets the rules and the tone so you better start playing by them. Let go and go with the flow!

Since the mind has a tendency to remember the good trades and “forget” (or suppress) the bad ones we must keep a trading diary.

I have prepared design for you please sned your request to my email towermcs@gmail.com. A trading Diary allows us to analyze each and every trade looking for strength and weakness. Once again we are trying to improve our performance trough feedback and gain confidence. Although most Trading Platforms today have integrated trade management, it is very useful and definitely a tool that promotes discipline and sound trading practices. I have found that it cements my understanding of a Trading System and fuels good trading habits.

The Trading Diary is simple to use. Just jot down the facts into the different fields and you are done. Fill in after you have entered the trade with your stop-loss and then again after the exit and give the trade your final grade. Note what went well and what went wrong. After every ten trades or so, go through them and check for things well done and mistakes. Look for patters. Ask yourself how you can repeat the good things you are doing and avoid the mistakes.

It is not advisable to add another indicator to your Trading System just because it doesn't go your way, believing you can filter out the bad trades. Usually you only introduce new ones. Besides when you alter the system, confidence plummets since it is not the same system anymore. And that is the last thing we want to happen. Don't fiddle with the system!!!!!

Keep a part of you mind on outlook for subconscious trade traps when you are trading. These are trades triggered by the subconscious to put you off course due to some unresolved subconscious issue. They can be very subtle and difficult to notice but usually the have a sort of a irrational or whimsical feeling about them, usually trades taken in a rash manner without confirming the validity of the trade. On the surface they may look like another trade, but a detailed examination will reveal their flaws.

It takes a little bit of practice to notice these trade traps. If you think you have a problem with subconscious trade traps then I suggest you imagine a famous, successful FOREX trader sitting behind you, looking over your shoulder, watching every trade you make, and making comments as you put on your trades. The imaginary trader will work as a detached second consciousness, evaluating each of your trades from a different view, the view of an experienced successful trader. Allow him/her to speak up when you are about to screw up. This method can also be useful even if you are not having a problem with subconscious trade traps as a way of keeping your thinking straight during trading.


Tip: At one time or another you will experience boredom. This usually happens when there is little action on the charts and sometimes this can go on for days, in very rare cases for weeks. Do not fall into the trap of taking boredom trades, they will most likely be losers. Don't trade just because you want to make money or because your fingers are itching to put on a trade. Remember, we want to make good trades, i.e. trades executed according to our validated plan. Countless trades have fallen into this trap of this self-defeating behavior. Trade your plan!


Action Step: This is a continuation of the previous Action Step. When you were writing down your goal story, did you notice feeling uncomfortable or any other negative feeling (boredom, frustration, loss of energy etc). These feelings can be very subtle. If you did, chances are that your subconscious is having reservations against your goal or some part of it. Usually you just need to rephrase it. Since the subconscious is having objections, we will let the subconscious come up with a reasonable solution. Simply ask your subconscious to provide a solution to the words or phrases that triggered the negative feeling. Sometimes a solution will come immediately, sometimes it make take days before it will pop into your conscious mind. Try to have faith in the process and let go. Everyday read through your story to keep your mind focused on your goal and write down your trading achievements in the Trading Diary and how they correspond to your goal.


Go to the next part, Step 7.