Trading Forex - Who Makes Money Trading Forex?

Practically everybody entering trading arena has one objective- to make money. While there are some people who trade for challenge or other "purist" reasons, they are decisive minority. For almost all traders, pulling money out of the markets is a primary motivation.

We have all seen TV infomercials that make it sound so easy. What you need to do is to attend some seminar, purchase a piece of software with some crossing lines or colorful arrows. Just follow these buy and sell signals and you are on your way to untold reaches.

Can it really be that simple?

Reality is quite different. There are statistics claiming that 90-95% of traders lose money. How accurate this number is, may be debatable, but what is not, is the fact that more people lose money than make it. These kind of statements often stress they apply to small speculators or beginner traders. This could be understandable. Most people get themselves into trading in a haphazard way. They don't commit enough time to education, follow questionable advice, luck discipline, are insufficiently funded. The list can go on.

Then there are professional traders. Money managers, hedge funds, bank traders, CTA's. How well do they do trading Forex? Logic would dictate this group of traders makes a lot of money. After all they employ best talent, have best market access, use sophisticated trading tools, have best trading terms, certainly are not under capitalized. In other words, these market participants are best positioned for consistent profitability. Strangely enough, that doesn't guarantee superior results.

Barclay, well known financial powerhouse, compiles Barclay's Currency Trader Index (CTI). Data for this index comprises of results from 114 managed money programs, both spot Forex and currency futures. Since 2000 there was only one year when this index gained more than 10%- 11.08% in 2003. Index suggests that money managers as a group have been losing money for last few years. In 2005 results were -1.21%, 2006 witnessed a loss of -0.12%. Returns for 2007 to date are not much more impressive, just 0.89% gain through August. The outlook for the rest of the year is no better. Other indexes tracking currency trading funds show similar results- marginal gains at best.

These results maybe shocking to many people. If the best positioned market participants can't achieve meaningful returns, is it possible at all to extract profits from Forex trading? What chance does a small speculator have if large players don't seem to get anywhere?

Well, smaller traders do have some advantages over large institutions. While every trader should create and stick to his trading plan, he/she is not bound by myriad of rules and limitations that institutional trader must adhere to. For one, leverage. Money managers are not allowed to use large leverage. They may be limited to how big percentage of total funds can put in any one market. Individual trader is not. Most importantly, perhaps, money management companies can not just cash out 100% and sit on the sidelines when things don't go right. Individuals have this luxury, which, at times, maybe the smartest thing to do.

With proper market education and solid trading plan, every market participant can be successful. Outside of extremely short term scalping, where institutions have an edge in cost of trading, disciplined and patient individual can be the one who makes money. On regular basis.

Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on http://www.spectrumforex.com . Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at kulej@spectrumforex.com

Learn FOREX - How A Connected World Can Help You Make Money Trading FOREX

Markets do not exist in isolation and to learn FOREX well you must understand that stocks & shares, bonds, futures, indices, commodities, and FOREX are all interrelated. The world is becoming more and more connected. It is very easy for individual traders and large trading institutions to move money between different tradeable items. The economies of the world are also tightly bound as was demonstrated very effectively in the recent crash from 2008.

There is a whole branch of trading called inter-market analysis where traders study the relationships between different trading instruments. The intention is to find correlations that can help predict the future movement in the markets and to make money. Many of the correlations are related to the perception of risk and where money is moved at any one time. The big players can transfer their investments very quickly to where they believe they will get higher returns or safer.

What kinds of correlations are there and why do they work?

Well let's take some examples.

Inflation & Gold

If there is a perception in the market that price inflation is increasing then the value of traders' money is decreasing unless they do something. One of the favored instruments to invest in at this time is Gold. You can see this presently (April 2011) where the price of Gold is rising steadily because it is seen as a hedge against inflation. In other words investors are buying Gold so as to offset the value of their money as it decreases over time.

Oil versus US Dollar

There is an inverse relationship between the value of the US dollar and oil, or at least there seems to be. Why would this happen? Well there are many theories such as:

a) As the value of the dollar drops, the price of dollar denominated commodities has been boosted.

b) If the price of oil goes up, and a country is a net importer of oil such as the US, the this will worsen their balance of trade deficit, and this weaken the value of their currency.

c) The dollar is coming under pressure as the reserve currency for purchasing oil, with other alternatives such as the euro becoming more prominent. This has started to undermine the value of the dollar.

I suspect is could be a mixture of all these examples and others. The important point is that as a trader we can take advantage of this as we trade. There is also a correlation between the Canadian CAD and the oil price as well due to the fact that Canada is a major oil exporter.

AUD (Australian Dollar) and GOLD

The AUD has a relationship with the price of GOLD because Australia is a major exporter of Gold. Therefore the more the country can sell the better its trade deficit will be and the value of its currency will rise. Because the New Zealand economy is so inter-related with the Australian there is also a strong correlation between the value of the NZD with the price of Gold.

To summarise, its important to understand these relationships because they can help you fortify your analysis on a particular currency pair. This is another conjunction; if your charts are telling you the EURUSD is dropping and you can see that the price of oil is going up then that is more supporting evidence. For more information click on the link below.

Want to learn how to trade FOREX safely and profitably? Come and visit my website at http://www.firststepsinforex.com and I will send you a FREE manual and videos to get you started!

How to Use Money to Make Money: Trading Currencies

Use money to make money and you will gain financial independence. If you work for money your earnings will always be restricted by the amount of labor you can realize, no matter how big your paycheck is. On the other hand, if you make your money work hard your income potential has no limit. You will have earnings while you are sleeping or on a vacation.

Do you want to quit the rat-race? Use what Albert Einstein called the most powerful force in the Universe, compound interest, in your favor.

You need...

1. - Money.

You cannot make money out of nothing, you need a start-up capital. The good news is you don't need a lot of money to get started. In the forex market the required money to open and fund a new account is very low.You might be able to start trading with only $10 dollars.

Obviously the more money you are able to save and invest the better. The bigger your account the sooner you will be able to achieve the desired results. Make a commitment to save 10% of your monthly income.

2. - A good rate of return.

You can't gain financial independence with a low rate of return. When you settle for low rates you are leaving a lot of money on the table. For example, over a period of 10 years a starting capital of $1000 dollars would grow:


5% rate - $1,628.89
10% rate - $2,593.74
15% rate - $4,045.56
20% rate - $6,191.74

The forex market is a great alternative that will help you achieve better results; 15%-20% gains every year are not uncommon, if you trade with a good system and in a disciplined way.

3. - Time to let your money grow.

How much time do you have to let your money grow? Longer periods represent bigger profits. Start saving and investing today and you will have a fortune before you realize it.

If you have less time to let your money grow you will have to improve your rate of return, just be aware, this is not an invitation to trade recklessly.

Compound interest is like a snow ball, when your account grows it will attract money like a magnet.

I love the Forex market because it allows me to gain good rates of return on my money, in up and down markets. I don't consider it a job because it only takes me 30 minutes once a week to manage my trades. Some other very profitable systems can be traded checking your positions once a day.

Would you like to learn how to automatically reap a golden harvest of wealth and prosperity almost beyond belief? Go to http://www.howtoinvestforprofit.com and http://www.shortcutforexsystem.com where we explain step-by-step, in crystal clear language, what to do and how to do it.

Forex Trading Systems - Do They Make Money?

A Forex trading system or strategy is a set of mechanically formulated rules set out in writing on how to enter and exit trades in the Forex market.

There are thousands of systems available on the Internet for trading financial markets. I feel that the best way for you to find an appropriate system to trade is to look at your personality. I know this is not what you expected to hear. By finding a system that matches your personality you will be more inclined to enjoy the experience and putt the effort and time in that is required to become successful. For example do like to do things quickly, if so a shorter time frame chart would suit. If you would like to only check your trades once a day then you require a daily or weekly chart and system to suit. There are many combinations and systems to trade, please think about how you would like to trade before choosing a system.

Some of the common trading systems, scalper where the trader is trying to take a profit of between one to five pips in a very short time frame. Day trading where all positions are closed at the end of day. Swing trader, positions are held until your profit target is achieved and many more.

Yes trading Forex systems can make money. The system must have a positive expectancy with good money management and risk management rules.A good system should come complete with a manual explaining all the requirements needed to trade correctly. For example entry and exit rules, money management, risk reward management and a complete set up for the charts and indicators that are required. Once you have the ability to apply the system with consistency and discipline your account balance will headed in the right direction.

There are also thousands of fully automated trading systems available for the Forex Market. Many of the fully automated systems also referred to as EAs ( expert advisor ) or trading robots of which many are scams. For this reason it is very important that once you purchase a system you trade it on a demo account which is virtual money. Once again depending on your personality and risk tolerance this will determine the amount of time you need to trade on the demo account until you're comfortable with the trading platform and your results.It is very important that you take the time to trade on a demo account for you must understand the system and have complete faith in it before you have the ability to become consistent.

This is just a quick review of trading systems on the Forex market. If you are looking to move forward and trade the markets with a positive outcome, I would suggest heading over to [http://www.tradingforexcurrencysystems.com].

Enjoy the journey and have a great day. All the best Trader Steve

3 Key Steps To Make Money Trading Stocks in the Stock Market

Stocks in the Stock Market

We feel the first key question that needs to be asked is how to save enough capital so the investor has enough capital or money to invest that money into the stock market and trading stocks in the market. Whether it be buying stocks, mutual funds or ETFs, they first step is to save enough money so that you can obtain a meaningful return on your investments within the stock market. The first key step in answering the question of how to save, is living within your means and putting some money away on a monthly basis. Be it $250, $500, $5000/month, it is crucial to have a decent source of capital and it requires money to make money.

After you have accumulated enough money to be able to deploy a meaningful amount of money into the stock market, they next question that needs to be answered is how to trade stocks within the stock market. Our first answer to this is, you need to expand into all investment products that reside on a given stock market and these include commodities, ETFs, mutual funds and other investment products. The next step is to determine your risk appetite as if you are looking to generate an annualized 8 to 10% return and have a lower risk tolerance you should probable look at large cap stocks, yield stocks, bonds, mutual funds and certain ETFs. Whereas is you are willing to take on risk and are looking to hit the homerun, we would suggest you look at small cap stocks, penny stocks, leveraged ETFs and commodities. Even if your rick appetite is extreme, we strongly suggest a diversified portfolio. Once you narrow down your investment product, stocks, bonds, etfs, mutual funds, we suggest you analyze valuation multiples, yields and growth potential as even though the current market appears beaten up, there continue to be numerous stocks which we feel are over-valued in relation to their peers.

The third and final question is likely the most important and it is when do I sell. Whether it is a stock, a mutual fund, an ETF or any other investment product, we strong suggest taking money off the table when you have reached your targeted rate of return. We suggest, at the time you buy the stock, mutual fund or ETF in question that you set a threshold whereby you will liquidate all or a portion of your investment.

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