Archives: 2008 April

The words forex currency trading are a bit redundant as forex stands for forex exchange and of course currencies are foreign exchange. Still many forex traders use the term forex currency trading when speaking of their trading activities so I suppose that the term is quite acceptable.

When trading forex you are always trading a currency pair. For example, you might be buying the Euro and at the same time selling US dollars. You have a pair of currencies. Or you might be buying Yen and selling US Dollars.

Or it could be that you live in London and are taking a trip to Japan. At some point along the way you are probably going to want to sell some British Pounds and buy Japanese Yen so that you will have the needed local currency for your trip.

In this way many travelers are involved in the foreign exchange market without even realizing it. Many billions of currencies change hands daily by international travelers selling their local currency for the currency that they will require at their destination. And again, each transaction involves a pair of currencies.

Trillions of dollar are exchanged daily as part of normal international business. For example, an English exporter may be sending goods to Japan and wishes to be paid in British Pounds. The Japanese importer will be required to sell Yen and buy Pounds to pay for the goods.

Trading Forex in volatile forex and stock markets is easy. Just about anyone can do it. But trading forex at a profit under the highly volatile market conditions of today, well, that is a bit more difficult.

The main thing to consider is in trading forex is that cash is also a position. That is, you should not always be in the forex market. You can increase your odds of making a successful forex trade, especially in volatile forex markets, by trading forex within the major trend and by entering the market on reactions (corrections) within that trend. Jumping into the forex market without a good reference point is always risky.

The Meta4 forex trading platform gives you very good tools and visual displays to help you to accomplish this. With the aid of the charting and indicator service you can quickly generate a visual picture of optimum areas at which you can enter and exit forex trades.

You can run a Google search for Meta4 forex trading platform and quickly find several brokers who offer a free demo account with the Meta4 forex trading platform. This is a good way to review the Meta4 forex trading platform and to learn how to set up and trade at a high winning percentage on your forex trades.

I am happy to report that my forex trading robot report after one week is an encouraging one. My experimental forex trading account starting from a small $800 base more than doubled after the first week of trading. To be exact I ended the week at a balance of $1707.53. So I am pleased at the first week of results.

However, I must confess that I cheated. Let me explain. I started out trading the Euro and had two successful trades right away, one for a $48 gain, the other for a $50 gain. However, since the forex trading robot I’m using is optimized for trading the dollar against the Euro and I saw a Yen trade that I wanted to make I turned off the expert advisor (the robot) and manually entered the Yen trade.

Most of my weekly earnings came from selling dollars against Yen. That is buying Yen. This move cut short my robot experiment for the week but was profitable enough so that I didn’t mind too much. I’m sure that you can understand.

After only a week trading the robot in demo mode and a week in live mode I can’t yet offer a complete picture of the robot performance. However, I have seen enough to make a few comments.

The forex robot is an impressive piece of software. It integrates very well into the Meta4 trading platform. However, there is a tricky key setting that you must decide upon. The “take profits” setting is really crucial. Since this is a set number of pips you must decide if the 20 pip default setting is right for current market conditions. The higher you go with the setting the larger profit you will have on trades. So if the market is strongly trending you might want to increase this setting.

The US dollar remains under pressure on forex markets as the US recession begins to take its toll on the economy.

Late Friday’s NFP report could not have been good news for dollar bulls. The loss of 80,000 jobs was the third in a row of negative job creation numbers. The high probability is that the Federal Reserve bank will once again cut interest rates, probably by 50 basis points, at its meeting later this month.

The only thing worrying about forecasting a further significant drop in the US dollar is that it just looks like too easy of a call. But with a high probably that the US recession will get much worse before it gets better it is difficult to see a turnaround for the dollar anytime soon.

Of course, at some point the dollar will turn and probably very swiftly at that. But I expect that this will be at least a few months down the road. Before the dollar makes a true turn we will likely have at least a few days of true panic selling first. Perhaps a final moon shot where the Euro shoots up 1000 pips or so over just a few trading days. This could happen should a major US financial institution fail.

The current and probable near term actions of the Fed suggest that the US inflation rate will continue to accelerate. Only when it reaches a high enough level to frighten the Fed, perhaps to double digits even on the governments “friendly” CPI nonsense official indicator, will the Fed be likely to start to increase interest rates. At the first rate increase the dollar will likely make a true turn and race to the upside.