How do banks determine the price?
Bank dealers will determine their prices based upon a variety of factors including, the current market rate, how much volume is available at the current price level, their views on where the currency pair is headed and their inventory positions. If they think that the euro is headed higher, they may be willing to offer a more competitive rate for clients who want to sell euros because they believe that once they are given the euros, they can hold onto them for a few pips and offset at a better price. On the flip side, if they think that the euro is headed lower and the client is giving them euros, they may offer a lower price because they are not sure if they can sell the euro back to the market at the same level at which it was given to them. This is something that is unique to market makers that do not offer a fixed spread.

How does a bank offset risk?
Similar to the way we see prices on an electronic forex broker’s platform, there are two primary platforms that interbank traders use: one is offered by Reuters Dealing and the other is offered by the Electronic Brokerage Service (EBS). The interbank market is a credit-approved system in which banks trade based solely on the credit relationships they have established with one another. All of the banks can see the best market rates currently available; however, each bank must have a specific credit relationship with another bank in order to trade at the rates being offered. The bigger the banks, the more credit relationships they can have and the better pricing they will be able access. The same is true for clients such as retail forex brokers. The larger the retail forex broker in terms of capital available, the more favorable pricing it can get from the interbank market. If a client or even a bank is small, it is restricted to dealing with only a select number of larger banks and tends to get less favorable pricing.

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Most forex brokers allow you to open a demo account prior to funding a full account or mini account. Be sure to try out each broker’s charting software during their trial periods to help you better decide which broker is the best for you.

Which forex charting software provides the best charts of foreign currencies? Because the software from each forex broker is so different, the answer is very personal.

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Here is an article by Jim Wyckoff of Synergistic Trading by Trader Planet on support and resistance. Jim is a stock market kind of guy. But after reading his article I believe his suggestions may apply to Forex currency charts as well.

CLICK HERE! to go to the complete article by Jim Wyckoff.

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

This is one of the best articles I’ve come across about the benefits of using a solid Forex risk/reward system. The article is written by Scott Barkley from Synergistic Trading by TraderPlanet.com.

Scott writes about “retail traders break no trading rules more than the rules regarding risk and reward. We traders talk about risk and reward, and we say we trade with proper risk and reward, but reality is that we break these rules daily.”

“The simplest risk and reward rule is that you never trade greater than a 1:1 reward for risk ratio. This means that if your risk is 30 pips using a technical stop, then you must have a target that is at least 30 pips away from your entry even to entertain the thought of taking the trade. Obviously, a 1:2 or 1:3 ratio is better, but traders break the 1:1 rule all the time. How? We place a trade “thinking” there is a 1:1 ratio. For example, we risk 30 pips and the minute it falters or retraces (which it most certainly will do the vast majority of the time), we click out for 5 pips. We pat ourselves on the back having “conquered the market one more time” with a winning trade. We feel great – we are a winner!”

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Here is an article by Kevin Klombies of Synergistic Trading by Trader Planet.

Kevin explains “The basic point is that the trends are almost identical. The China growth theme interlocks with the commodity price theme. The trend for the Hong Kong stock market reflects the trend for energy and base metals prices which, in turn, go directly with the trends for the commodity currencies.

If the Hang Seng Index continues to resolve higher then we could still see a renewed burst of cyclical strength that could carry us through the balance of the year.

The point that we are attempting to make today is that we remain on somewhat shaky ground. We have argued the ‘decade theme’ on too many occasions to ignore it at this juncture.”

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

“The non-farm payroll (NFP) report is a key economic indicator for the United States. It is intended to represent the total number of paid workers in the U.S. minus farm employees, government employees, private household employees and employees of nonprofit organizations.”

Not that I recommend trading Forex currency news events but if you do you might want to read this article on trading the Non Farm Payroll Report by Cory Mitchell which was posted on Investopedia.com.

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

The forex currency (FX) market has many similarities to the equity markets; however, there are important differences. This article by by Justin Kuepper at Investopedia.com will show you those differences and help you get started in forex trading.

Topics Covered;

Choosing a Broker: Quality Institution,Extensive Tools and Research, Wide Range of Leverage Options,Account Types

Things To Avoid: Sniping or Hunting, Strict Margin Rules

Define a Basic Forex Strategy: Fundamental Analysis,Technical Analysis

Finding Your Strategy – Most successful traders develop a strategy

Things to Remember: Open a demo account, Trade without emotion, The trend is your friend

The Bottom Line – “The forex market is the largest market in the world, and individuals are becoming increasingly interested in it. But before you begin trading it, be sure your broker meets certain criteria, and take the time to find a trading strategy that works for you. Remember, the best way to learn to trade forex is to open up a demo account and try it out. (Ready to try forex trading without risking your money)”?

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

The Wall Street Journal has just announced in an article written by Tom Lauricella and Dave Kanas that “Currency trading volume around the world has hit $4 trillion a day, fueled by investors in the wealthiest nations looking to diversify beyond their home markets in a time of economic turmoil”.

“The $4 trillion mark represents a 20% gain from $3.3 trillion in 2007, the last time the global foreign-exchange markets were surveyed, according to the Bank for International Settlements. While the survey found continued growth in currency trading, it did reflect a slowdown in the market’s growth from the prior survey, when trading volumes had soared 69% from $1.9 trillion in 2004.”

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

A form of arbitrage that involves switching from a domestic currency that carries a lower interest rate to a foreign currency that offers a higher rate of interest on deposits. There is a foreign exchange risk implicit in this transaction since the investor or speculator will need to convert the foreign currency deposit proceeds back into the domestic currency some time in the future. In other words if your chosen currency goes down in value against your domestic currency more than the positive interest rate difference you could lose. The term “uncovered” in this arbitrage refers to the fact that this foreign exchange risk is not covered through a forward or futures contract.

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

If you invest in currencies, it is likely that you have heard of the term carry trade. This strategy has generated positive average returns since the 1980s, but only in the past decade has it become popular amongst individual investors and traders.

What Is The Carry Trade?
Mechanically, putting on a carry trade involves nothing more than buying a high yielding currency and funding it with a low yielding currency, similar to the adage “buy low, sell high.”

The most popular carry trades involve buying currency pairs like the Australian dollar/Japanese yen and New Zealand dollar/Japanese yen because the interest rate spreads of these currencies pairs are very high. The first step in putting together a carry trade is to find out which currency offers a high yield and which one offers a low yield.

One needs to be careful; if your chosen currency goes down in value against your low interest yielding currency more than the positive interest rate difference you could lose.

To read the full article by Kathy Lien go to Investopedia.com .

I hope the above currency trading article was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.