With the CPI data to be released tomorrow, the U.S. Dollar looked to being doing very well in the forex currency trading market all across the board but particularly against the weak Euro. The EUR/USD forex currency trading rate fell to $1.3566 though it has since recovered somewhat to $1.3628 at the moment and the same is true for the Aussie which fell as low as $0.8951 in the AUD/USD forex currency trade rate but has since recovered to $0.90050.

The forex currency trading market has been in turmoil throughout February with regards the Euro which as we have mentioned before is very uncertain due to the lack of support and concrete plans for a bailout for Greece if required. Furthermore rising tensions between Greece and other Euro nations, in particular Germany have aided in further causing uncertainty regarding the Euro in the forex currency trading market.

Oil prices fell below US $77 a barrel today as the rising U.S. Dollar in the forex currency trading market and high inventories once again came into effect.

Gold prices meanwhile also fell as price of the U.S. Dollar rose at the back of strong economic data on Wednesday. Further downward pressure on gold prices came into effect as IMF announced its resolution to sell almost 200 tonnes of gold into the open-market perhaps because of week off-market demand from the various Central Banks of the world. The IMF however made it clear that it means to sell the gold in a phased manner over time. Gold prices later stabilized to about $1,100 an ounce.

The forex currency trading rate for the U.S. Dollar have however now started falling against other currencies after reports released today showed that jobless claims rose above market expectations. The weakening of the U.S. Dollar in the foreign exchange market though not serious was further compounded by a higher than expected PPI.

Analysts now await the CPI report to be released tomorrow to see what the outlook for the economic recovery for the U.S. will be as well as the performance of the U.S. Dollar in the forex currency trading market.

A pip is one unit of the smallest figure in a currency pair and as currencies are normally quoted to four decimal places, i.e. 0.1234 therefore a 1 pip change would mean that the four would instead be a 5. Take the EUR/USD exchange rate in the current forex currency trading market for example, it currently stands at 1.3585 and a one pip increase in the EUR/USD rate would mean that the rate would change to 1.3586.

This change in the example above would mean that if you had the base currency (in this case the Euro) and this appreciation of 1 pip happened then you could trade your Euros for U.S. Dollars (the quoted currency in this case) and have 0.0001 more per Euro than you would have had before the increase.

Now there are two main ways to trade forex. The first and most common method of forex currency trading is simply to purchase and sell currencies, to go long on one currency and short on another. The other forex currency trading method is for more experienced traders and involves purchasing and selling derivatives such as options and futures.

To go long on a currency pair means that you are hoping that the price of the currency rises after you have purchased the currency pair in the forex currency trading market. Our earlier example for pips is a good example of this. If you had purchased Euros by selling U.S. Dollars then you would be going long on the EUR/USD pair by hoping that it would rise in the forex trading market. As the EUR/USD pair did rise by one pip, you would then stand to make a profit.

In the next we will discuss what type of orders are available to you as a holder of a forex currency trading account and what the uses of these orders are.

The forex currency trading market arises due to mainly one thing, the need to exchange currencies to purchase foreign goods. Suppose you live in the Kingdom of Nowhere and decide to purchase a Japanese product. Now if you were to offer the Japanese trader the amount he asks for in your local currency (lets call them Nones) instead of Yen he would most likely refuse to sell his product to you because he will be unfamiliar with your currency and he will not know what he might be able to purchase using the Nones.

Therefore there exists a need for importers and exporters to exchange local currency for foreign exchange or different currencies to make international transactions easier. One of the great things about the foreign exchange market is that it is open at any time of the day during the weekdays because even while the markets in the United States might be closed for the day, the markets in Japan would be operating due to the time difference.

The first and most commonly traded forex market is the spot market. The spot market as its name suggests refers to the trade of currencies at the current or on the spot price. This price as you may well know is determined by a number of factors including: political conditions, economic conditions, exchange rate regime and of course market psychology. When a trade is agreed upon it is known as a “spot deal” and the agreed upon sums based upon the decided forex rate are traded in cash. In actuality however these “spot deals” may take up to two days for settlement (mainly because this is the amount of time that banks require to make the necessary transactions).

The forwards forex currency trading market refers to the trade based on contracts between any two parties who decide upon the terms of trade and most importantly the foreign exchange rate of themselves.

Lastly, the futures market is also like the forwards market based on trade of contracts however the contracts bought and sold are future contracts and more importantly perhaps where the forwards market utilizes “over the counter” trading, the futures markets relies on formalized public commodities markets such as Euronext.liffe or the Tokyo Financial Exchange.

These are the forms in which the forex currency trading market operates though we are mostly concerned with spot trading.

With the recent slew of bad news for the Euro monetary bloc, its a surprise that there has been a let-up in the fall of the Euro despite efforts made by governments, governing bodies and now the G7 to stall its falling forex rate and to instill confidence in traders. The G7 meeting hosted in Canada witnessed European finance ministers assuring their non-European counterparts that they would ensure that Greece follows through with its claim to make drastic cuts in their budget gap.

Forex currency trading analysts meanwhile claimed that the Euro bloc needs to do more than say words and perhaps even form an agreement to provide support for Greece in these troubling times. The host country’s Central Bank (the Bank of Canada) meanwhile has re-asserted its commitment to ensuring low interest rates at a record rate of 0.25% until June as long as the inflation remains within check.

The Aussie meanwhile has made a strong recovery after news this past week that the RBA (Reserve Bank of Australia) would not be raising interest rates. The forex trading rate at the moment stands at 0.86920 (at the moment of writing) for AUD/USD; having risen whilst this post was being written. This rise in the Aussie forex currency trading rate has mostly been a result of an announcement made by an Australian coal and iron-ore mining company Resourcehouse.

The Japanese Yen meanwhile made some significant gains against the U.S. dollar before being brought back under control. Analysts claim that the rise in the forex currency trading rate of the Yen was mainly due to investors buying the Yen as a “safe haven”. A “safe haven” is a forex trading term used to describe a currency or in the case of gold a commodity that is considered to be a safe means of maintaining value whilst other currencies or commodities are in turmoil or falling in value.

Is this not unnecessary repetition you ask? Should you not just take a look at a well reputed site and learn all about it from them? Well first of all most of these guides are the bare basics to foreign exchange and currency trading. You should look at as many as possible so that you can compare and in some ways reinforce what is being said. Next, not all of the sites that you will find are being run by people genuinely experienced in the forex trade and may as well be writing gobbledygook.

There are of course to those with experience sites that are genuine and provide trusted information, but how should an outsider know which of these sites to visit and which of them to trust? Therefore, visit as many as possible, confirm your knowledge, clearly what is said by more than  one source cannot be false knowledge.

Forex currency trading is a serious and risky business, to do so without being armed with as much knowledge as possible is akin to giving away everything you own (which might turn out to be less stressful and embarrassing).

Learn as much as possible about forex trading from these sites, try if it is possible to contact other users and gain their opinions regarding the sites they are using. Do not immediately download various forex trading software programs that promise you riches in minutes.

Again, refer to multiple sources, gain opinions and then make a decision, speaking of which this advice may well apply to forex trading as well, just be sure to make a decision in time so that the opportunity is not lost!

Other than the worries regarding the Greek governments abilities to make such drastic cuts in spending to lower the budget gap, political tension in Portugal over a planned treasury bill placement being canceled caused further investor concern regarding the Euro. Spain and Portugal are both being tipped to have problems similar to Greece in the future by analysts and therefore forex traders are once more resorting to the safe haven US dollar further strengthening the US dollars forex rate.

Ian Stannard, a currency strategist at BNP Paribas (one of the world’s largest banking groups), predicted that the Euro forex rate would fall further despite some fluctuations upwards.

Forex currency trading for the GB Pound Sterling however rose on the back of the news that the Bank of England has halted its 11-month long government bonds purchase as part of a program to induce growth in the economy.

However, interest rates were left unchanged by both the Bank of England (BoE) and the European Central Bank and so investors will be looking to take advantage of the extremely low interest rate (0.5% bank rate set in England) and thus cause a rise in the GBP forex currency rate. The BoE however has re-affirmed its position of continuing to make purchase of private sector assets using the issue of treasury bills to finance them in the future.

For example with our recently post on gold prices falling below the $1,100 mark, we predicted that they would fall further and the price for gold today is at the time of writing listed at $1060.55. So prices of gold are plummeting at the moment, but will they recover? If so, should an investment be made right now or should you wait for prices to fall further? These are exactly the kind of questions you should ask yourself to define for yourself a good entry strategy. Forex trading depends a great deal on your timing, both for purchasing a lot for a certain currency and for selling it. This will determine whether the risk and the amount of pips you earn on any forex trade be it online, through automated software and with the aid of EAs (Expert Advisers) or through regular forex brokers.

There is no hard and fast rules for entry and exit strategies, but if you plan on staying in the black and minimizing risk and losses, most experienced forex brokers would tell you to exit early. This is not a rule of thumb, some forex traders prefer to wait it out and see a a currency reach its peak before cashing in on their pips, others prefer to take half their lot(s) out once they have made a decent gain and leave the other half until a peak is reached. Everyone has their own techniques but be sure to define your strategies and stick by them because if you don’t you may find yourself down by a significant amount and expect a turnaround which may never come.

Forex currency trading is a risky business and should never be treated as a game or thought of as gambling. Lots of online forex brokers offer free demo accounts where you can test out your forex currency trading skills and work out strategies that are effective for you and enable you to make gains.

Simply said, marginal trading is forex currency trading done by borrowing capital (usually from the broker). So how does it work? Essentially you open up a margin account either with a regular broker or an online forex trading broker and a margin percentage is agreed upon.

Say for example that you set up a forex trading account with an online broker with a margin percentage of 1%, this means that if you wish to trade 100,000 currency units then you have to (as a security) deposit 1,000 of those currency units from your own money holdings. So if you were wishing to trade in say 100,000 Japanese Yen then you would have to first provide 1,000 Japanese Yen and deposit them in your account before you could start foreign currency trading.

The advantage of marginal trading is that there is no interest charged, unless you fail to close out within the agreed upon time period (say one month, also known as the delivery date) for the margin account (in essence its a short term loan). This is also known as trading upon leverage in the forex market with the obvious advantage of allowing you to earn far more than what you would otherwise be able to with the amount of capital you invest in the forex trade market.

The official interest rates in Australia stand at 3.75 but an official at the RBA in December pointed out that it is believed that the effective (or actual) interest rates were higher partially due to mortgage rates being raised faster by Australian banks in general as compared to increases in the Central Bank’s own cash rate.

Despite the immediate fall in the AUS/USD exchange rate, analysts predict that over the course of the year the Aussie will continue appreciating as strong demand from India and China for exports and expected rises in interest rates by the RBA continue to make its effect felt on the Aussie forex rates. And this post also goes to show that forex trading and news go hand in hand.

There are many forex trading software or programs that help you make decisions on whether to buy or sell a particular currency, how do they do this? It is a rather complicated process, the program picks up data such as foreign exchange rates, trends, commodity prices, inflation rate, etc from all over the world and records it, then through statistical analysis it presents you with an answer in the form of buy, sell or hold. This is a very simplified process but does reflect accurately what these software do.

People on the other hand are not computers, and cannot assimilate information from all over the world that is changing by the second, record it, analyze it, process it and draw conclusions from it without taking a very long time. So much so in fact that by the time one arrives at a conclusion, the opportunity to make gains by trading foreign exchange has already gone.

Now this does not mean that we must rely on computers and forex software programs to make decisions or currency trading strategies for us. What this means is that one must always try to be up to date to news and if possible (and legal) should be aware of what is about to happen in the immediate future (through announcements or otherwise). This way one may be sure to be in tune with the forex market because amongst other things the forex currency trading market is also influenced by speculation. It is not clear how much forex trading speculators affect the market but it is considered to be a significant factor that determines the market value of any currency.

Other important forex rates determining factors include political conditions in a country (in general the more unstable a country is politically the worse the forex rate for that currency), economic conditions (an obvious example would be that if a country is in recession its currency is likely to depreciate) and the exchange rate regime chosen by the Central Bank of a particular country.

Thus for example, an announcement made by the Central Bank of a country that it shall devalue the currency from its current price to a lower level will result in people trying to purchase foreign exchange as soon as possible (although the Central Bank is almost certain to take measures to prevent people from doing so). Thus news and forex currency trading are inseparable and to not be up to date before making forex trading decisions is a very risky thing to do.