Learn How to to trade on Forex market

Welcome to the lucrative world of Forex trading.
This is Globally decentralized financial market for trading
currencies round the world round the clock. A particular
quantity(lot) of one currency pair is purchased/sold in the
speculation on changes in the value of them. It conjectures the
relative gap in the values of different currencies by comparing
them.

The modern foreign exchange market began forming during the
1970s after three decades of government restrictions on foreign
exchange transactions.
The Forex Market, was considered to be the playground of large
institutions, hedge funds, extremely wealthy individuals,
governmental institutions operating under central banks,

Due to the development of the internet over the last few years,
small(retail) investors can now take advantage of this market, at large.
Present situation of Forex:
• Huge trading volume
• Average daily turnover : $4 trillion
• High liquidity
• Geographical dispersion round the globe
• Continuous operation: 24 X 5
• Use of leverage to enhance profit and loss margins
• Investors can respond to currency fluctuations caused by
Economic, Political And Social Events at the time they occur,
without having to wait for respective exchange to open

• It gained popularity due to its fast paced movements and its high
returns.
• Number of ways for investors to get in:
o Spot
o Swaps
o Spread Betting
o Options
o Futures
o Forwards
o Contracts For Difference
Modest portfolios with high potential

Symbol Currency Country
USD ($) Dollar USA
EUR (€) Euro Eurozone Members
JPY (¥) Yen Japan
GBP (£) Pound Great Britain
CHF Franc Switzerland
AUD Australian Dollar Australia
NZD New Zealand Dollar New Zealand
Main Currency Symbols

The US dollar is by far the most traded currency in the world – with almost 85%
of all reported transactions. The euro comes next, followed by the yen, and then
the pound. For this reason the rates of all currencies against the dollar are
referred to as major rates (USD/JPY) and the rest are cross rates (e.g.
EUR/JPY).

Forex exchange traders would typically look at the currencies available and
buy the strongest currency while selling the weakest. So, for example, if after
reading the news, you thought the euro was strong and the US dollar was
weak, you could buy the euro while selling the dollar.
Because you are comparing one currency to another, Forex is always quoted
in Pairs. Therefore, an example of a EUR/USD quote would be 1.4650. This
means that one euro is worth 1.4650 US dollars at that moment in time. If this
rate fell to 1.4422, then this would mean the euro is getting weaker and the
US dollar is getting stronger.
Within a Forex pair, the first currency is referred to as the Base Currency and
the second currency is referred to as the Quote Currency. When you buy or
sell a currency pair, you are performing an action on the base currency.

Pip
Stock indices have "points", however Forex has pips.
The smallest price change that a given exchange rate can make. Since most major
currency pairs are priced to four decimal places. Every fourth decimal point that the
currency pair moves is 1 pip of movement.
For example, if GBP/USD was to move in price from 1.6339 to 1.6340, this would
be a movement of 1 pip, and if it moved from 1.6339 to 1.6329, then this is a
movement of 10 pips.
The monetary value of one pip can vary according to the size of your trade and the
base currency you are trading in.

Forex Leverage
One of the advantages of Forex trading is that you can trade more than your
initial deposit. This is called Leverage. Leverage of 50:1 allows you to trade
with $10,000 in the market by having a deposit of $200. This means that you
can take advantage of the smallest movements by controlling more money
than your initial deposit, allows you to maximize your potential profits.
Leverage Amount Traded Required Margin
100:1 $100,000 $1000
200:1 $100,000 $500
500:1 $100,000 $200

Lot
The standard unit size of a transaction. Typically, one standard lot is equal to
100,000 units of the base currency, 10,000 units if it's a mini, or 1,000 units if
it's a micro.
Mini Lot Size No. of Units
0.01 1,000
0.1 10,000
1.0 100,000
Max Lot Size No. of Units
8.0 800,000

Long Position
Long position is buying the lot of currency pair
Example:
If You decide to buy the euro against the dollar and the quote is
1.4422/1.4423, and you buy 1 Standard Lot of the same at 1.4423
The value of your position is 100,000 x 1.4423 = $144,230.00
To open the position you have to deposit (margin) of just 1% of the position
in your account.
Your deposit is therefore 1% of $144,230.00 = $1442.30
Leverage Percentage Deposit
100:1 1%
200:1 0.5%
500:1 0.2%

Short Position
Short position is selling the lot of currency pair
Example:
Suppose, a few hours later in the previous example, EUR/USD has
risen to 1.4639/1.4640 and you decide to book your profit by selling the same
1 lot at 1.4639
Long Position: 1 Std. Lot = 100,000 x 1.4423 = $144,230.00
Short Position: 1 Std. Lot = 100,000 x 1.4639 = $146,390.00
Note: you can Open a position either by
Long/Short transaction, but when you
book your profits with the same
transaction/deal, you have to
Close that transaction

Spread
Spread is the difference between the Bid price and the Ask price. Depending
on the currency pairs & type of trading account, the spread will vary.
Bid Price: The price at which a trader is willing to buy the currency price
Ask Price: The price at with an investor, trader or institution is willing to sell
the currency price.

Profit Calculation
Once a position is opened, the value of each PIP varies depending on your
position size.
Example:
€ 10,000*1.4363(ask price) = $14,363
€ 10,000*1.4364(ask price) = $14,364
$00,001 = Each pip is worth $1
€ 50,000*1.4363(ask price) = $71,815
€ 50,000*1.4364(ask price) = $71,820
$00,005 = Each pip is worth $5
Note: This calculation will always give you the value of each PIP
in the secondary currency.

Simple formulas
1) (Deal size)/10,000 = value of each PIP (in the secondary currency)
(This formula is only for currencies with 4 digits after the decimal point)
Example: EUR/USD € 10,000/10,000 = $1 per PIP
2) (Deal size)/ 100 = value of each PIP (in the secondary currency)
(This formula is only for currencies with 2 digits after the decimal point)
Example: USD/JPY $10,000/100 = ¥100 per PIP
Note: Calculations can be adjusted to the desired currency accordingly.

PIP values that are not in USD can be easily converted to the currency
requested by using the relevant pair.
Example:
Step 1) USD/JPY Bid price = 114.23 Ask price = 114.29
Step 2) USD/JPY $10,000/100 = ¥100
Step 3) PIP value/ Bid price = value of PIP in desired rate
¥100 /114.23 = $0.8754
It is always advisable to calculate your potential profits and losses before
taking the trade.

Margin:
A margin is collateral that the holder of a financial instrument has to deposit
to cover some or all of the credit risk of their counterparty (most often their broker or
an exchange).
Types of margins:
Initial Margin: It is the amount required to be collateralized in order to open a
position. It is expressed as a percentage of the total value of a position and it changes in
real time with the changes of the position's price.
Maintenance Margin: It is the minimum amount to be collateralized in order to keep
an open position until the position is closed. This is also known as Daily Margin.
Margin Call
When the margin posted in the margin account is below
the minimum margin requirement, the broker or exchange issues
a margin call. The investors now either have to increase the margin
that they have deposited or close out their position. They can do this
by selling the instrument.

Rollover:
It is the interest, paid or earned by the trader for holding a position overnight.
The interest rates vary depending on the currency pair. This is also known as swapping.
If the interest rate on the currency you bought is higher than the interest rate of the
currency you sold, then you will earn rollover.
If the interest rate on the currency you bought is lower than the interest rate on the
currency you sold, then you will pay rollover.
Scalping:
This is a trading strategy that attempts to make many profits on small price
changes in financial instruments in a single day. Traders who implement this strategy are
known as scalpers.
The main goal is to open a position & close it soon on little changes in the prices for
making small profits.
Traders who implement this strategy place 10 or 100 trades in a single day in the belief
that small moves in currency price are easier to catch than large ones.

Stop Loss:
A stop-loss is an order to buy or sell an instrument, once the price
of the stock reaches a specified price chosen by the trader, known as the stop
price. When the stop price is reached, a stop loss order becomes a market
order, it will automatically close a losing position before your account
balance is depleted.
A stop loss order is a way to protect trader from runaway losses in the worst-
case scenario.
Example:
If you open a position of 1 standard(1.0) lot in GBP/USD at $1.50
but wished not to lose more than $250 on this single trade, you would set
your stop loss 25 pips below the price at which you entered the trade, i.e.
$1.4975.
Note: Amount of loss depends upon the size of the deal

Take Profit:
Take profit orders are the opposite of a stop loss. The take profit is
a price at which you would like to close your previously opened position at a
price more profitable to book a profit, above or below the current price of the
currency, in the event the rate moves in a favourable direction.
More specifically, if you long a currency pair position and believe the price
will rise to a certain level, but are unsure what it will do beyond that level,
place a take-profit order at that point will automatically close out your
position allowing you to lock in profit.
Example:
Buy $100 worth of yen at 107.4 yen per dollar = 100*107.40 =
10,740 yen. Place a take-profit order at 108.80. Price then rises from 107.40
to 108.80 Take-profit order automatically executed to sell $100 and buy
10,880 yen. Profit of 140 yen realized.

Fundamental
Analysis
Technical
Analysis

Economical
Political
Social
Fundamental analysis is the analysis of
economic, social, and political forces that
affect the supply, demand and prices of
currency.
It includes the changes in the rates of
inflation, unemployment, saving &
investment patterns, GDP, Political
ideology & stability, interest rates.
All these factors determine the strength
(intrinsic value) of a particular currency.
The traders should keep a vigil on the
changes in these indicators and analyze
their impact on the currency prices.

Technical analysis is the analysis of price
movements by plotting the data on a chart. The
past price trends are identified with the tools of
technical analysis to forecast future price
levels.
This is a method of evaluating currency by
analyzing statistics generated by market
activity, such as past prices and volume.
Technical analysts do not attempt to measure a
security's intrinsic value, but instead use charts
and other tools to identify patterns that can
suggest future activity.

Types of charts
Line
Chart
Bar Chart
Charts:
A price chart is a sequence of prices drawn over a specific time
frame. Technical analysts and investors use charts to analyze the
wide range of currencies in order to forecast future price
movements.
Any currency with price data over a period of time can be studied
with the help of a chart. Charts can be shown in a variety of time
scales like: hourly, daily, weekly & monthly charts.

Candle Stick Chart:
Originating from Japan, a candle stick chart is made up of
separate blocks or candles. Each block (candle) represents a time interval,
e.g. 5min, 1hour, 1day, 1month, 1year, etc. If the closing price is higher than
the opening price, within the selected time interval, then the block's colour is
green; otherwise it's red.
The thin line coming out of the top of each block indicates the highest price
of the time period, and the line coming out of the bottom indicates the lowest
price of the time period. These thin lines are called shadows or tails. The
body of the candle will vary according to the intraday volatility.

Trend line:
A trend line is formed diagonally between two or more Price Pivot
Points. They are commonly used to judge Entry and Exit Investment Timing
while trading. It can also be referred to a Dutch line as it was first used in
Holland.
A trend line is a bounding line for the price movement of a currency pair,
also used to confirm the price trend. It is drawn over pivot highs or under
pivot lows to show the prevailing direction & speed of price movement.
Trend lines are a visual representation of support and resistance in any time
frame.

Pivot Point:
A pivot point is a price level of significance. This is a predictive
technical indicator of market movement derived by calculating the numerical
average of a particular stock's high, low and closing prices from prior trading
period.
If the market, in the following period, trades above the pivot point it is
usually evaluated as a Bullish sentiment, whereas trading below the pivot
point is seen as Bearish.

A support level is a price level where the price tends to find support as it is
going down. This means the price is more likely to "bounce" off this level rather than
break through it. However, once the price has passed this level, by an amount
exceeding some noise, it is likely to continue dropping until it finds another support
level.
A resistance level is the opposite of a support level. It is where the price
tends to find resistance as it is going up. This means the price is more likely to
"bounce" off this level rather than break through it. However, once the price has passed
this level, by an amount exceeding some noise, it is likely that it will continue rising
until it finds another resistance level.
Price support and resistance levels are key trading tools in any market. It is
customary to calculate additional levels of support and resistance, below and above the
pivot point, respectively, by subtracting or adding price differentials calculated from
previous trading ranges of the market. In pivot point analysis, three levels are
commonly recognized below and above the pivot point.

where,
P = Pivot Point
H = High Price
L = Low Price
R = Resistance Level
S = Support Level

A support trend line is formed when a currency’s price decreases
and then rebounds at a pivot point that aligns with at least two previous
support pivot points.
A resistance trend line is formed when a currency’s price
increases and then rebounds at a pivot point that aligns with at least two
previous resistance pivot points.

Other Information:
Candle length shows no. of movements (volatility) in particular time period.
Stick length shows the highest & lowest price hit by the particular currency
pair in particular time period.
Candle stick will change to the next one after completing the particular time
period.
In calculation of pivot point, Closing Price is the Current Market Price.

Bar Chart:
The chart is made up of a series of vertical lines that represent each
data point. This vertical line represents the high and low for the trading
period, along with the closing & opening price.

Line Chart:
This is the most basic form of charts because it represents only the
closing prices by connecting them over a set period of time. Line charts do
not provide visual information of high, low and opening prices. Nevertheless,
the closing price is often considered to be the most important price in stock
data compared to the high and low for the day and this is why it is the only
value used in line charts.

Moving Average:
The Moving Average indicator is one of the oldest and the
most often used indicator in technical analysis. It is used to identify and indicate
the changes in trend of prices for a given period of time. A moving average is an
average of a shifting data.
Example:
A 10-day moving average is calculated by adding closing prices for the
last 10 periods being measured and dividing by 10. The term "moving" is used as
only the last 10 days are used in the measurement. That is why the data body is
averaged shifted forward with every next trading day.
Formula for the Simple Moving Average (SMA):
MA = ∑ P / n
where
P - price of i-bar;
n - MA period.

Relative Strength Index:
Relative Strength Index (RSI) is a momentum oscillator
that measures the speed and change of price movements. RSI oscillates between zero
and 100. This is a technical momentum indicator that compares the magnitude of
recent gains to recent losses in an attempt to determine overbought and oversold
conditions of an asset.
It is calculated using the following formula:
RSI = 100 - 100/(1 + RS*)
*Where RS = Average of x days' up closes / Average of x days' down closes.
An asset is deemed to be overbought once the RSI approaches the 70 level, implying
that it may be getting overvalued and is a good candidate for a pullback.
Likewise, if the RSI approaches 30, it is an indication that the asset may be getting
oversold and therefore likely to become undervalued.

Elliot Waves:
The Elliott Wave Principle is a detailed description of how groups of
people behave. It reveals that mass psychology swings from pessimism to optimism
and back in a natural sequence, creating specific and measurable patterns. in the
financial markets, where changing investor psychology is recorded in the form of
price movements.
Elliott Wave Principle measures investor psychology, which is the real
engine behind the currency markets. When people are optimistic about the future of
a given issue, they bid the price up and vice-versa.
The whole theory is classified into two parts:
• Impulsive Waves: The impulse pattern consists of 5 waves. The five waves are
in both directions, up & down. (Labelled 1-5)
• Corrective Waves: The corrective pattern consists of 3 waves.
(Labelled A-C)

Fibonacci Study:
Fibonacci Study is not intended to provide the primary
indications for timing the entry and exit of a stock; however, they are useful for
estimating areas of support and resistance. Fibonacci study is divided in 4 parts:
1. Fibonacci Retracement
2. Fibonacci Arcs
3. Fibonacci Fans
4. Fibonacci Time Zones
Many people use Fibonacci studies in the combinations of other technical indicators
to obtain a more accurate forecast. Like fibonacci studies are often used with Elliott
Waves to predict the extent of the retracements after different waves.

NordFX provides you with a trading platform customized to meet your
trading experience and volume activity.
For trading, you 1st need to download Meta Trader 4 on your system by
complying the following steps:
Open NordFX website
Click on trading platform
Choose the platform you
want to trade on
Click on download
Complete downloading
procedure

Open Demo A/c:
Login Procedure:
Open
MT 4
File
Open
An A/c
Fill
Details
Finish
Open
MT4
File Login
Fill
Details
Change
Server
Login

Trade Currency
Pair F9 Order
window
Buy/sell Ok
Servers:
Open a Deal:
Real 1 • Micro
Real 2 • Standard
Real 3 • Welcome
Real 4 • Zulu

Close the Deal:
In order to gain from the Forex market, one must be constant with her/his
trading rules. Building strategies are essential for success. Begin trading on
your demo account while gradually opening live positions simultaneously.
Once more confident, enjoy the trends while seeing your portfolio grow.
Double click on profit
side of particular deal
Order window Click on close

Get More Info on Forex Trading:
http://bit.ly/15oQp9M

Learn How to to trade on Forex market

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Learn How to to trade on Forex market