Canadian Dollar Rises :

The Canadian dollar gained today as crude oil traded near its record levels and the Canadian employers added jobs for the seventh consecutive month according to the analysts’ estimates.

Crude oil traded near $82.46 per barrel on NYMEX after it jumped to $82.97 per barrel, the highest level in almost three months. Crude oil is the main export for Canada. The analysts estimated that 12,500 jobs were added to the payrolls in the previous month, following the 93,200 increase in June. The Standard & Poor’s 500 index rose 0.3 percent.

The Canadian dollar is the best-performing currency today, a very good result considering how underperformed it was the last month. The main reason for the slack performance was the slower economic growth in the US, to which Canada ships near three quarters of its exports. Considering today’s good economic data from the US, the future looks bright for the loonie, but some economist recommend to be cautious about the loonie’s rally, as previous month gave too much reasons for the concerns to easily believe that the economy suddenly became much more stable.

Japanese Currency got Benefits :

The Japanese yen strengthened today the stocks dropped and the number of the jobless claims in the US rose more than expected, driving the investors to seek the safety of Japan’s currency.

The analysts estimated previously that the jobless claims decreased last week. The actual figure shook the markets, as it demonstrated the increase by 19,000 to 479,000. The Standard & Poor’s 500 Index declined by 0.4 percent and the Stoxx Europe 600 Index went down 0.3 percent.

The uninspiring data today reignited the speculation that the Federal Reserve would perform the monetary easing to support the struggling economy. Considering the pessimism, caused by today’s news, it’s not surprising that the yen shines in its role of the safe currency under such conditions.

USD/JPY fell to 85.87 from 86.27 as of 18:21 GMT. In the same time, EUR/JPY traded near 113.19, while GBP/JPY dropped to 136.37.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

The essential facts and what to know about forex magin trading:

Forex margin trading involves using a margin account to purchase and sell foreign exchange transactions. A margin account essentially allows an investor to borrow money to increase the possible return on an investment. When an investor wants to control a larger position than they normally could with their own invested capital, they leverage borrowed money to invest in equities. These margin accounts are generally settled daily and are operated by a brokerage firm. Margin accounts can also be utilized to trade currency in the forex market. Due to the risks involved, margin trading is not for everyone and caution should be taken when implementing it into ones own forex strategy.

The first step to properly enact forex margin trading is to sign up with either a full-service brokerage firm or an online discount broker who is capable of performing trades in the forex market. The next step to the process is to establish a margin account. The forex margin accounts are nearly identical to equities margin accounts in that the broker supplies a short-term loan for investment. The amount of leverage the investor is taking on is equal to the amount of the loan.

Depending on the margin percentage in the agreement between the investor and the broker, a money deposit needs to be made into the margin account. This process allows the investor to make actual trades. Trades that equal 100,000 currency units or more generally require a margin percentage of either one to two percent. For example, if the investor wants to trade $100,000, one percent of the transaction, in this case $1000 must be deposited into the account. The broker provides the remainder. Contract sizes for these arrangements are generally large. Since the broker will leverage 99 percent of the risk, the investor can trade in large volumes of foreign currency. The agreement also includes a delivery date, in which the investor must return the borrowed money to the broker. The broker generally does not charge interest on the borrowed amount, however, if the delivery date is not met and the account needs to be rolled over, most brokers will charge an interest rate. This rate varies and depends partially on the investor's long or short term position as well as the interest rate of the currencies themselves.

The broker has many rights in forex margin trading in regards to their interests. The $1000 is used as a security in the margin account. If a position worsens for the investor, the broker has the right to institute a margin call. When the investor's deposit depreciates and it begins to approach $1000 in losses, the broker instructs the investor on his or her options. First, the investor can deposit more money into the account to make up for the losses. Otherwise, the investor can close the account. This will limit the risk of further loss and secure the broker's loan from depreciation. Most of these options are established upon the opening of the margin account.

Foreign currency is defined in trading units of U.S. dollars (USD). This occurs most commonly in increments of 10,000 USD or 100,000 USD, which are known in the industry as lots. If a single U.S. dollar is worth 130 Japanese Yen (JPY), then 10,000 USD means 1.3 million JPY. 100,000 would be 13 million. A forex margin trader purchases the currency in the form of these lots. The trader leverages the broker's added funds, so that they can potentially make more money from the trading of these currency lots. This means that the investor can make more money from a larger trade than what was invested into the margin account, especially on revaluation gains. However, a larger loss can also be true. Essentially, each movement, either up or down, is amplified by 100.

Forex margin trading is a very specialized product offered by financial companies. It differs from foreign currency deposit in that the level of speculation is very high. Margin trading can be a lucrative, but highly dangerous market in which to invest. The potential for large scale gain is great, but many investors loose large amounts of money due to the fluctuations in world currency. Despite professional analysis, forex margin trading is at the mercy of other countries and the global economy – both of which can change overnight. Because of the number of risks involved, most investors recommend forex margin trading only for those using funds that can be exposed to risks. Investments made with retirement funds or pensions are viewed as irresponsible by most brokerage firms. Investors should always read the terms and conditions of the margin account and loan before trading.

Tips, suggestions and ideas on how Trade Forex Like a Master

Welcome to ForexMaster.com! The website that is tailored to give forex traders tips, ideas and suggestion on how to maximize profits and minimize loss by improving their overall foreign exchange strategy.

Even though the reverse may seem to be true, spending any amount of time in the stock market can create a feeling of trepidation in even the most seasoned forex expert. In fact it is perhaps that experience that creates fear and hesitation. In the world of forex, however, hesitation kills—deals.

Step Out of Your Comfort Zone

Over time a forex trader can build walls of self defense that defeat their forex strategies. Their heart tells them to move but their mind slams on the brakes. The battle of mind over heart may only last a second but it's that split second that any experienced foreign exchange trader knows will lose any profits. It is time to realize those comfort zones for what they are, barriers of fear.

Trust Your Instincts

When a fx trader has spent years in the market and studied charts, signals, pips and different strategies endlessly it only makes sense they have not only amassed a great deal of knowledge they have also honed their instincts. Yet human nature and fear that is built in to protect us from hazards both real and perceived keep us from acting on them.

The basics of intelligent trading are based on several truisms in the industry:

• No currency is inherently 'bad'. The fluctuation of foreign currency means you must keep an eye on what it is doing at the moment and know when to get in and out.

• Don't follow the leader. This isn't a child's game. Besides fear, humans have another basic instinct, to follow the pack. If a forex expert sees one person buying, and then another, the thought is that there must be a reason and they better go too. Suddenly you have hundreds of people buying or selling for reasons they aren't even aware of, it just 'seems right.' Nothing makes less sense in currency trading.

• If you don't jump in you won't get wet. Any forex expert who has overcome their fear will tell you that anticipating profits and acting on that anticipation is the best way to profit. Waiting until your prediction has been realized is often too late.

• Listening is good in a relationship but can be deadly in foreign exchange trades. This falls under both the second guessing catgory and the follow the leader category. Listening to every forex expert around you instead of what you think yourself can leave you more confused and hesitant that ever. Know what you know and use it to your advantage. Even lemmings don't make out well when they jump off the cliff after the others.

• Learn from your failures. Every forex expert has them but only the foolish forget them. It may be easier to keep your confidence level up if you turn a blind eye to losses but you can't keep from making the same mistakes if you don't study what and why you lost out.

• Don't hesitate but wait. Knowing the difference between hesitation and waiting for the right opportunity is the real facet that separates the forex experts from the dabblers. Having the confidence to wait and the courage to jump at it when it comes is the most sure way to long-term success in the foreign exchange market.

• Learn to control your emotions. Human beings are emotional beings regardless of how strong they may wish others to think they are. Forex trading is no place for raw emotional impulses though. Becoming a forex expert means knowing how to act from strategy and knowledge rather than gut impulses.

Foriegn exchange market:

The forex is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies*. It is estimated that 3 to 5 trillion dollars worth of business is transacted every day on the forex**.

The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import European goods and pay Euros, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies***.



Diversification for your PortfolioOne of the keys to successful investing is to diversify your holdings. When diversifying many people simply invest in stocks that are spread through a range of different tolerance levels, and economic sectors, and even put some money in mutual funds. However, this isn't really a diversified portfolio because the positions are still 100% based on stock market fluxuations. A truly diversified account will have stocks, bonds, mutual funds, commodities, perhaps some real estate and most definitely have a position in the forex.

The forex is unique because it offers the trained trader opportunities to realize profits and returns on investment in any economic condition. Even when the NASDAQ, Dow Jones or S&P 500 are plummeting, the forex can produce profitable returns. Poor interest rates on bonds and low commodity prices still do not affect the forex and its potential profitability. In the forex market you can make trades on both upward and downward trends.

As with any investment, there exists the possibility of loss on all or part of your investment.

Make monet trading forex;

In the foreign exchange market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.
The object of forex trading is to exchange one currency for another in the expectation that the price will change so that the currency you bought will increase in value compared to the one you sold.
How to Read Forex Quote
Currencies are always quoted in pairs, such as EUR/USD or USD/CHF. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultanesouly buying one currency and selling another. Here is an example of a foreign exchange rate of the British pound versus the U.S. dollar:
GBP/USD = 1.7500
The currency to the left of the slash ("/") is called the base currency (in this example, the British pound) and the one on the right is called the quote currency or counter currency (in this example, the U.S. dollar).
When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound.
When selling, the exchange rate tells you how many units of the quote currency you get for selling one of the basis currency. In the example above, you will receive 1.7500 U.S. dollar when you sell 1 British pound.
The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.
You would buy the pair if you belive the base currency will appreciate relative to the quote currency. You would sell the pair if you think the base currency will depreciate relative to the count currency.
Long/Short
First, you should determine whether you want to buy or sell.
If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position". Just remember: long = buy.
If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Short = sell.
Bid/Ask Spread
All Forex quotes include a two-way price, the bid and ask. The bid is always lower than the ask price.
The bid is the price in which the dealer is willing to buy the base currency in exchange for the quote currency. This means the bid is the price in which you the trader will sell.
The ask is the price at which the dealer will sell the base currency in exchange for the quote currency. This means the ask is the price in which you the trader will buy.
The difference between the bid and the ask price is popularly know as the spread.
Let's take a look at an example taken from a trading software:
On this EUR/USD quote, the bid price is 1.2293 and the ask price is 1.2296. Look at how this broker makes it so easy for you to trade away your money. If you want to sell EUR, you click "Sell" and you will sell Euros at 1.2293. If you want to buy EUR, you click "Buy" and you will buy Euros at 1.2296.
In the following examples, I am going to use fundamental analysis to help us decide whether to buy or sell a specific currency pair. If you always fell asleep during your economics class or just flat out skipped economics class, don’t worry, we will cover fundamental analysis in a later lesson. For right now, try to pretend you know what’s going on.
EUR/USDIn this example euro is the base currency and thus the “basis” for the buy/sell.
If you believe that the US economy will continue to weaken, which is bad for the US dollar, you would execute a BUY EUR/USD order. By doing so you have bought euros in the expectation that they will rise versus the US dollar. If you believe that the US economy is strong and the euro will weaken against the US dollar you would execute a SELL EUR/USD order. By doing so you have sold euros in the expectation that they will fall versus the US dollar.
USD/JPYIn this example the US dollar is the base currency and thus the “basis” for the buy/sell.
If you think that the Japanese government is going to weaken the Yen in order to help its export industry, you would execute a BUY USD/JPY order. By doing so you have bought U.S dollars in the expectation that they will rise versus the Japanese yen. If you believe that Japanese investors are pulling money out of U.S. financial markets and coverting all their U.S. dollars back to Yen, and this will hurt the US dollar, you would execute a SELL USD/JPY order. By doing so you have sold U.S dollars in the expectation that they will depreciate against the Japanese yen.
GBP/USDIn this example the GBP is the base currency and thus the “basis” for the buy/sell.
If you think the British economy will continue to do better than the United States in terms of growth, you would execute a BUY GBP/USD order. By doing so you have bought pounds in the expectation that they will rise versus the US dollar. If you believe the British's economy is slowing while the United State's economy remains vibrant, you would execute a SELL GBP/USD order. By doing so you have sold pounds in the expectation that they will depreciate against the US dollar.
USD/CHFIn this example the USD is the base currency and thus the “basis” for the buy/sell.
If you think the Swiss franc is overvalued, you would execute a BUY USD/CHF order. By doing so you have bought US dollars in the expectation that they will appreciate versus the Swiss Franc. If you believe that due to instability in Iraq and in U.S. financial markets the dollar will continue to weaken, you would execute a SELL USD/CHF order. By doing so you have sold US dollars in the expectation that they will depreciate against the Swiss franc.
I don't have enough money to buy $10,000 EUR. Can I still trade?
You can with margin trading! Margin trading is simply the term used for trading with borrowed capital. This is how you're able to open $10,000 or $100,000 positions with $50 or $1,000. You can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital.
Margin trading in the foreign exchange market is quantified in lots. We will be discussing "lots' more in-depth on our next lesson. For now, just think of the term "lot" as the minimun amount of currencies you have to buy. When you go to the grocery store and want to buy an egg, you can't just buy a single egg, they come in dozens or "lots" of 12. In Forex, it'd be foolish to buy or sell $1 EUR, they usually come in "lots" of $10,000 or $100,000 depending on the type of account you have.
For Example:You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot ($100,000) for buying the Pound with a 1% margin at the price of 1.5000 and wait for the exchange rate to climb. This means you now control $100,000 worth of British Pound with $1,000. Your predictions come true and you decide to sell. You close the position at 1.5050. You earn 50 pips or about $500. (A pip is the smallest price movement available in a currency). So for an initial capital investment of $1,000, you have made 50% return. Return equals your $500 profit divided by your $1,000 you risked to trade.
Your Actions
GBP
USD
Your Money
You buy 100,000 pounds at the GBP/USD exchange rate of 1.5000
+100,000
-150,000
$1,000
You blink for two seconds and the GBP/USD exchange rate rises to 1.5050 and you sell.
-100,000
+150,500**
$1,500
You have earned a profit of $500.
0
+500
When you decide to close a position, the deposit that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.
We will also be discussing margin more in-depth in the next lesson, but hopefully you're able to get a basic idea of how margin works.
Rollover
No, this is not the same as rollover minutes from your cell phone carrier. For positions open at 5pm EST, there is a daily rollover interest rate that a trader either pays or earns, depending on your established margin and position in the market. If you do not want to earn or pay interest on your positions, simply make sure it is closed at 5pm EST, the established end of the market day.
Since every currency trade involves borrowing one currency to buy another, interest rollover charges are an inherent part of FX trading. Interest is paid on the currency that is borrowed, and earned on the one that is purchased. If a client is buying a currency with a higher interest rate than the one he/she is borrowing, the net differential will be positive (i.e. USD/JPY) – and the client will earn funds as a result. Ask your broker about specific details regarding rollover.

Posted by sanjay at 9:42 AM

The foriegn exchange market:

The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.[1]

The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import European goods and pay Euros, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.[2]

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency.

The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of its

* huge trading volume, leading to high liquidity
* geographical dispersion
* continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday
* the variety of factors that affect exchange rates
* the low margins of relative profit compared with other markets of fixed income
* the use of leverage to enhance profit margins with respect to account sizeAs such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3]

average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, as of April 2007. $3.21 Trillion is accounted for in the world's main financial markets.The $3.21 trillion break-down is as follows:
* $1.005 trillion in spot transactions
* $362 billion in outright forwards* $1.714 trillion in foreign exchange swaps
* $129 billion estimated gaps in reporting

Posted by sanjay at 9:40 AM

Very bad forex mistakes that assure failure:

Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.


First of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.


If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.


Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.


Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.


Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.


Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.


By applying every point outlined in this Forex training guide, you will almost assure your failure in your Forex trading journey. Do the opposite, and you will have the possibility to achieve what every trader is looking for: consistent profitable results.

How to take a loss and benefits:

There are quite a few books written on how to make money in the market. Some of them are even written by people who have made money as traders! What you don't see often, however, are books or articles written on how to lose money. "Cut your losers and let your winners run" is commonsensical advice, but how do you determine when a position is a loser? Interestingly, most traders I have seen don't formulate an answer to this question when they put on a position. They focus on the entry, but then don't have a clear sense of exit-especially if that exit is going to put them into the red.

One of the real culprits, I have to believe, is in the difficulty traders have in separating the reality of a losing trade from the psychological sense of feeling like a loser. At some level, many traders equate losing with being a loser. This frustrates them, depresses them, makes them anxious-in short, it interferes with their future decision-making, because their P & L is a blank check written against their self-esteem. Once a trader is self-focused and not market focused, distortions in decision-making are inevitable.
A particularly valuable section of the classic book Reminiscences of a Stock Operator describes Livermore 's approach to buying stock. He would sell a quantity and see how the stock responded. Then he would do that again and again, testing the underlying demand for the issue. When his sales could not push the market down, then he would move aggressively to the buy side and make his money.

What I loved about this methodology is that Livermore's losses were part of a grander plan. He wasn't just losing money; he was paying for information. If my maximum position size is ten contracts in the ES and I buy the highs of a range with a one-lot, expecting a breakout, I am testing the waters. While I am not potentially moving the market in the way that Livermore might have, I still have begun a test of my breakout hypothesis. I then watch carefully. How are the other averages behaving at the top ends of their range? How is the market absorbing the activity of sellers? Like any good scientist, I am gathering data to determine whether or not my hypothesis is supported.

Suppose the breakout does not materialize and the initial move above the range falls back into the range on some increased selling pressure. I take the loss on my one-lot, but then what happens from there?

The unsuccessful trader will respond with frustration: "Why do I always get caught buying the highs? I can't believe "they" ran the market against me! This market is impossible to trade." Because of that frustration-and the associated self-focus-the unsuccessful trader does not take any information away from that trade.

In the Livermore mode, however, the successful trader will see the losing one-lot as part of a greater plan. Had the market broken nicely to the upside, he would have scaled into the long trade and likely made money. If the one-lot was a loser, he paid for the information that this is, at the very least, a range-bound market, and he might try to find a spot to reverse and go short in order to capitalize on a return to the bottom end of that range.

Look at it this way: If you put on a high probability trade and the trade fails to make you money, you have just paid for an important piece of information: The market is not behaving as it normally, historically does. If a robust piece of economic news that normally sends the dollar screaming higher fails to budge the currency and thwarts your purchase, you have just acquired a useful bit of information: There is an underlying lack of demand for dollars. That information might hold far more profit potential than the money lost in the initial trade.

I recently received a copy of an article from Futures Magazine on the retired trader Everett Klipp, who was dubbed the "Babe Ruth of the CBOT". Klipp distinguished himself not only by his fifty-year track record of trading success on the floor, but also by his mentorship of over 100 traders. Speaking of his system of short-term trading, Klipp observed, "You have to love to lose money and hate to make money to be successful.It's against human nature what I teach and practice. You have to overcome your humanness."

Klipp's system was quick to take profits (hence the idea of hating to make money), but even quicker to take losses (loving to lose money). Instead of viewing losses as a threat, Klipp treated them as an essential part of trading. Taking a small loss reinforces a trader's sense of discipline and control, he believed. Losses are not failures.

So here's a question I propose to all those who enter a high-probability trade: "What will tell me that my trade is wrong, and how could I use that information to subsequently profit?" If you're trading well, there are no losing trades: only trades that make money and trades that give you the information to make money later.




--------------------------------------------------------------------------------

Brett N. Steenbarger, Ph.D. is Director of Trader Development for Kingstree Trading, LLC in Chicago and Clinical Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY. He is also an active trader and writes occasional feature articles on market psychology for a variety of publications. The author of The Psychology of Trading (Wiley; January, 2003), Dr. Steenbarger has published over 50 peer-reviewed articles and book chapters on short-term approaches to behavioral change. His new, co-edited book The Art and Science of Brief Therapy is a core curricular text in psychiatry training programs. Many of Dr. Steenbarger's articles and trading strategies are archived on his website,



Benefits:

Trading the Forex market has become very popular in the last years. Why is it that traders around the world see the Forex market as an investment opportunity? We will try to answer this question in this article. Also we will discuss some differences between the Forex market, the stocks market and the futures market.

Some of the benefits of trading the Forex market are:

Superior liquidity
Liquidity is what really makes the Forex market different from other markets. The Forex market is by far the most liquid financial market in the world with more than 3 trillion dollars traded everyday. This ensures price stability and better trade execution. Allowing traders to open and close transactions with ease. Also such a tremendous volume makes it hard to manipulate the market in an extended manner.

24hr Market
This one is also one of the greatest advantages of trading Forex. It is an around the click market, the market opens on Sunday at 3:00 pm EST when New Zealand begins operations, and closes on Friday at 5:00 pm EST when San Francisco terminates operations. There are transactions in practically every time zone, allowing active traders to choose at what time to trade.

Leverage trading
Trading the Forex Market offers a greater buying power than many other markets. Some Forex brokers offer leverage up to 400:1, allowing traders to have only 0.25% in margin of the total investment. For instance, a trader using 100:1 means that to have a US$100,000 position, only US$1,000 are needed on margin to be able to open that position. Remember leverage is like a double sword, it could work in your favor as well as against you.


Low Transaction costs
Almost all brokers offer commission free trading. The only cost traders incur in any transaction is the spread (difference between the buy and sell price of each currency pair). This spread could be as low as 1 pip (the minimum increment in any currency pair) in some pairs.

Low minimum investment
The Forex market requires less capital to start trading than any other markets. The initial investment could go as low as $300 USD, depending on leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level.

Specialized trading
The liquidity of the market allows us to focus on just a few instruments (or currency pairs) as our main investments (around 80% of all trading transactions are made on the seven major currencies). Allowing us to monitor, and at the end get to know each instrument better.

Trading from anywhere
If you do a lot of traveling, you can trade from anywhere in the world just having an internet connection.


All these benefits make the Forex market very attractive to investors and traders. But I need to make something clear though, even when all these benefits of the Forex market are notorious; it is still difficult to make a successful career trading the Forex market. It requires a lot of education, discipline, commitment and patience.

Price action:perfect trading sysytem

Trading the Forex market has become very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.


Most Forex trading systems are made off technical indicators (a moving average (MA) crossover, overbought/oversold conditions in an oscillator, etc.) But what are technical indicators? They are just a series of data points plotted in a chart; these points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.


There is an important implication on this definition of technical indicators. The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as “the MA crossover made the price go up,” but it happened the other way around, the MA crossover signal occurred because the price went up. Where I’m trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.


Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again a long signal generated by a MA crossover as the market approaches an important resistance level. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesn’t want to go up. Most of the time, under this circumstances, the market will continue to fall down, disregarding the MA crossover.


Don’t get me wrong here, technical indicators are a very important aspect of trading. They help us see certain conditions that are otherwise difficult to see by watching pure price action. But when it comes to pull the trigger, price action incorporation into our Forex trading system will definitely put the odds in our favor, it will generate higher probability trades.

So, how to create a perfect Forex trading system?
First of all, you need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you. Make sure you know the nature of whatever technical indicator used.


Secondly, incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.


Third, and most importantly, you need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

Things that you should know about forex trading:

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.


Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.


Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.


Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.


A few things that separate the top traders from the rest are:


Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.


Forex trading system: Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.


Price behavior: They have incorporated price behavior into their trading systems. They know price action has the last word.


Money management: Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.


Trading psychology: They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.


These are, among others, the most important factors that influence the success rate of Forex traders.


We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.


Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.

Things that you should know about forex trading:

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.


Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.


Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.


Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.


A few things that separate the top traders from the rest are:


Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.


Forex trading system: Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.


Price behavior: They have incorporated price behavior into their trading systems. They know price action has the last word.


Money management: Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.


Trading psychology: They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.


These are, among others, the most important factors that influence the success rate of Forex traders.


We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.


Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.

What is margin and how can i calculate how much i need?

Margin the amount of money required in your account in order to open a trade. Margin is a simple calculation based on the current market quote of the base currency vs USD, the volume requested, and the leverage level you have selected when opening your account. The dealing software will not allow you to open a position if you do not have sufficient free margin available.
Your free margin is indicated in the MT4 trading terminal.
To calculate the margin requirement required to open a trade, please use the following formula:
(Market Quote * Volume) / Leverage = $Margin required
eg.
You want to open 0.1 (10,000 base currency) lots of EUR/USD at the current market quote of 1.4177 and with a leverage level of 1:200.
(1.4177 * 10,000) / 200 =$70.89
As you can see from this example, you need at least $70.89 free margin at 1:200 leverage to open the trade. This shows you the power of the leverage offered by FXOpen. If you choose 1:1 leverage (or no leverage) you would need $14,177 free margin instead of $70.89 just to open this trade!

Learn how forex trading:

Good day forex trading koalas,

it is the weekend again and now is the time to reflect on our past performance.

In the last review, we noted that the EUR/USD held it’s ground despite a number of negative issues. This was probably due to the greater number of negative data streaming out from the US. Investors were starting to question how robust the recovery of the US economy is.

From a technical point of view, the 1.3 line will probably be a center of activity as the market consolidates and determine it’s next course of action.



Look at the EUR/USD daily chart, the bullish moment is a pretty strong one for the month of July.

***

Early week saw the bullish momentum continuing on. Most of the economic data from the Euro Zone were good and this brought sentiments up as investors felt that the worst is probably over. Although the US CB Consumer Confidence came out worst then expected, the market only suffered a temporary dip before the bullish climb resumed.

Towards the midweek, the EUR/USD continued to range around the 1.3 line. Over at the Euro Zone, the German Prelim CPI came just as expected. On the contrary, the US releases were generally worst than expected. The core durable goods orders were down and it caused investors to be concerned about the US economy.

As the end of the week approached, continued positive data from the Euro Zone brought the EUR/USD up. The German unemployment change indicated a drop of unemployment in Germany and this was welcomed by the investors. Having said so, we saw a new round of strikes in Greece as truck drivers protest against the government plans to open up the freight industry. This is inevitable as this was part of the condition upon accepting the loan package from the EU / IMF. The protest caused shortages of fuel and tourism is affected. We need to remember that the Euro Zone crisis is not over yet.

On Friday, we received a double blow as the US Advance GDP and the German Retail Sales came out worst than expected. This brought back risk aversion causing the day to end bearish.

***

I read a report with regards to the cooling of the US economy. As the jobs market continued to be depressed, big ticket spending will continue to be scarce and hence economic stimulation will be low. Once again the US continues to face challenges including the massive deficit. More and more economic experts are warning that we may be hitting past the point of no return which is definite default of the US.

Having said so, the Euro Zone is not without it’s problems. With the recent blessings of numerous economic data, sentiments are good and hence no one rains on the party. Now if any adverse event happens, the market may just fall like stumbling blocks.

From a technical point of view, we face two interesting factors now.


The 1.3 line may continue to remain as a center of activity and make the forecast of direction difficult.
The 200 EMA of the EUR/USD daily chart lies just above the current price action. Historically, the price often react with the EMA. Now the tricky part is if the EMA will function as a resistance or a clear break will result suggesting continued bullish momentum.
Next week brings us numerous important data releases including the Euro minimum bid rate and the crazy margin call event US non farm payroll. You can find the list of the various economic releases in the Economic Calender below.

If you are on Facebook, i urge you to joinTheGeekKnows.com page. Discussions on forex concepts, ideas and trades can be found there. It is a helpful community page for forex that i created and it has over 500 participants now

Caution is advised. Trade safely.

Chart Analysis:

What Are Charts?
A price chart is a sequence of prices plotted over a specific timeframe. In statistical terms, charts are referred to as time series plots, usually containing the open, high, low, and closing prices.

Chart Patterns:
Much of our understanding of chart patterns can be attributed to the work of Richard Schabacker. His 1932 classic, Technical Analysis and Stock Market Profits, laid the foundations for modern pattern analysis. In Technical Analysis of Stock Trends (1948), Edwards and Magee credit Schabacker for most of the concepts put forth in the first part of their book. We would also like to acknowledge Messrs. Schabacker, Edwards and Magee, and John Murphy as the driving forces behind our understanding of chart patterns.

Pattern analysis may seem straightforward, but it is by no means an easy task. Schabacker states: §The science of chart reading, however, is not as easy as the mere memorizing of certain patterns and pictures and recalling what they generally forecast. Any general chart is a combination of countless different patterns, some being continuation patterns and some reversal patterns, and its accurate analysis depends upon constant study, long experience and knowledge of all the fine points, both technical and fundamental, and, above all, the ability to weigh opposing indications against each other, to appraise the entire picture in the light of its most minute and composite details as well as in the recognition of any certain and memorized formula.

To name just a few there are; Double tops and bottoms, Head and Shoulder tops and bottoms, Wedges, Flags, Triangles, Channels, Gaps (four types), Key Reversals, Island reversals, and more. There are also Candlestick charts which provide a different way of looking at, and analyzing, the same basic price data, open, high, low, and close.

A few other tools used on charts are Trend Lines, Support and Resistance areas, percentage retracements, Fibonacci retracements, Time cycles, Elliot Wave Theory Analysis, Gann Analysis, and more. Technical Indicator Analysis:

There are many ways to crunch the numbers and endless combinations.

Here is a list of some of the more popular Technical Indicators:

Accumulation Distribution
Advance-Decline lines and ratios
Arms Index (TRIN)
Bollinger Bands
Commodity Channel Index
Moving Averages (of various types)
Moving Average Convergence Divergence
McClellan Osc
Momentum
On Balance Volume
Parabolic SAR
Relative Strength Index (RSI)
Stochastic (fast and slow)
Volatility

The thing which moves forex:
Foreign Exchange is affected by various economic and political factors. The largest fluctuations in currency prices usually occur during Central Bank intervention, when governments trade in huge amounts forex in an attempt to either raise or lower the value of their own currency. This, aswell as many other factors such as interest rate changes, economic figures, political instability and large lot transactions by hedge funds can move the market.

How can you predict the future fx moves?
There are two major ways to analyze financial markets: fundamental analysis and technical analysis. Fundamental analysis is based upon underlying economic conditions, while technical analysis uses historical prices to predict future movements. There is an ongoing debate as to which methodology is more successful. Short-term traders prefer to use technical analysis, focusing their strategies primarily on price action, while fundamental traders focus their efforts on determining a currency's proper valuation, as well as future valuation. It is important to take into consideration both strategies, as fundamental analysis can explain technical analysis movements such as breakouts or trend reversals. Technical analysis can explain fundamental analysis, especially in quiet markets, causing resistance in trends or unexplainable movements.

Fundamental analysis
Fundamental analysis comprises the examination of macroeconomic indicators, asset markets and political considerations when evaluating a nation’s currency in terms of another. Macroeconomic indicators include figures such as growth rates; as measured by Gross Domestic Product, interest rates, inflation, unemployment, money supply, foreign exchange reserves and productivity. Asset markets comprise stocks, bonds and real estate. Political considerations impact the level of confidence in a nation’s government, the climate of stability and level of certainty.

Aside from technical analysis, another primary approach to analyzing currency market fluctuations is called fundamental analysis. Fundamental analysis is the examination of economic indicators, asset markets and political considerations when evaluating a nation's currency in terms of another. The key to fundamental analysis is to gather and interpret this information and act before the information is incorporated into the currency price. The lag time between an event and its resulting market response presents a trading opportunity for the fundamentalist.

Here some major fundamental factors that can affect currency prices:

Decisions on interest rates made by central banks such as the US Federal Reserve or the European Central bank (ECB) monthly.
Quarterly GDP figures. Only preliminary national GDP figures generally have the effect of changing market sentiment.
Market sentiment data. Market expectations are formed from one week to two days before the event. Participants establish positions based on expectations, and realize the results after the figures are released.
Political Events. National elections, the September 11th attacks, and the war in Iraq are examples of events that have affected currency values.
Major indices. Inflation indices, Institute of Supply Management (ISM) in the US and the Purchasing Management Index (PMI) in Europe are also carefully followed by traders.
National industrial production figures.
US nonfarm payrolls (indicating new jobs created), Michigan sentiment figures in the US, the western German business climate or IFO index, and the Tankan quarterly survey in Japan.

Currency interventions have a notable and oftentimes temporary impact on forex markets. A central bank could undertake unilateral purchases/sales of its currency against another currency; or engage in concerted intervention in which it collaborates with other central banks for a much more pronounced effect. Alternatively, some countries can manage to move their currencies, merely by hinting, or threatening to intervene.

Technical Analysis
Technical analysis examines past price and volume data to forecast future price movements. This type of analysis focuses on the formation of charts and formulae to capture major and minor trends, identify buying/selling opportunities assessing the extent of market turnarounds. Depending upon your time horizon, you could use technical analysis on an intraday basis (5- minute, 15 minute, hourly), weekly or monthly basis

Money managers, traders and investors who seek ways to outperform the market must also remain flexible and innovative. A method that works today does not mean it will work tomorrow.

The Beginning of Technical Analysis
At the turn of the century, the Dow Theory laid the foundations for what was later to become modern technical analysis. Dow Theory was not presented as one complete amalgamation, but rather pieced together from the writings of Charles Dow over several years.

Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, investors, portfolio managers, market strategist, technical analysts, fundamental analysts and many others. It would be folly to disagree with the price set by such an impressive array of people with impeccable credentials. Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.

A technician believes that it is possible to identify a trend, and market turning points, invest or trade based on the trend and make money as the trend, or turning points unfolds. Because technical analysis can be applied to many different timeframes, it may be possible to spot both short-term and long- term trends.

What is more important than Why?
It's been said, "A technical analyst knows the price of everything, but the value of nothing". Technicians, as technical analysts as they are called, are only concerned with two things:

What is the current price?
What is the history of the price movement?

The price is the end result of the battle between the forces of supply and demand for any particular item. The objective of analysis is to forecast the direction of the future price. By focusing on price and only price, technical analysis represents a direct approach. Fundamentalists are concerned with 'why' the price is what it is. For technicians, the 'why' portion of the equation is too broad and many times the fundamental reasons given are highly suspect. Technicians believe it is best to concentrate on 'what' and never mind why. Why did the price go up? It is simple, more buyers (demand) than sellers (supply). After all, the value of any item is only what someone is willing to pay for it. Who needs to know why? You may never know why.

Many technicians employ a broad-based, longer term, macro, long-term analysis first. The larger parts are then broken down to base the final step on a more focused/micro short-term, perspective. Such an analysis might involve three steps:

Broad market analysis through the major indices such as the S & P 500, Dow Industrials, NASDAQ and NYSE Composite, or Commodity Futures Index, or other broad indexes of various types.
Group analysis to identify the strongest and weakest groups within the broader market groupings, i.e. Indexes, Meats, Grains, Currencies, Metals, Energies, etc.
Individual analysis to identify the strongest and weakest within each group.

The beauty of technical analysis lies in its versatility. Because the principles of technical analysis are universally applicable, each of the analysis steps above can be performed using the same theoretical background. You don't need an economics degree to analyze a market index chart or commodity group. Charts are charts. It does not matter if the timeframe is 2 days or 2 years. It does not matter if it is a, market index, currency or commodity. The technical principles of support, resistance, trend, trading range and other aspects can be applied to any chart. While this may sound easy, technical analysis is by no means easy. Success requires serious study, dedication and an open mind. Technical analysis can be as complex or as simple as you want it.

Overall Trend:
The first step is to identify the overall trend. "The trend is your friend". This can be accomplished with trend lines, or moving averages, or both. A Moving Average (MA) is an average of data for a certain number of time periods. It "moves" because for each calculation, we use the latest "x" number of time periods' data. As long as the price remains above its uptrend line, or selected moving average or previous lows, the trend should be considered bullish. The trend theory holds that an uptrend remains intact as long as each successive intermediate high is higher than those preceding it and each reaction low stops and holds at a higher point than did earlier reaction lows. Conversely, a downtrend prevails when each intermediate decline allows prices to fall below previous lows and rallies fall short of earlier rally highs.

Support and Resistance Areas:
Support and resistance levels are unquestionably among the most important of all technical considerations. They are areas, which prices are expected to have difficulty moving above and beyond (resistance and support), and they therefore deserve especially careful considerations in buying and selling decisions. Support areas are areas of price congestion or previous lows, below the current price, which mark support levels. A break below support would be considered bearish. Resistance areas are areas of congestion or previous highs above the current price which mark resistance levels. A break above resistance would be considered bullish. The basic idea behind resistance and support theory is simply that price levels that were significant in the past will have significant impact on price action in the future.

Random Walk Theory:
The basic "random walk premise" is that price movements are totally random. Prices move at random and adjust to new information as it comes available. The adjustment to this new information is so fast that it is virtually impossible to profit from it. Furthermore, news and events are also random and trying to predict these (fundamental analysis) is also a lesson in futility. While there are some good points to be gleaned from the random walk theory, it appears to be a bit dated and does not accurately reflect the current investment climate. Random walk theory was introduced over 25 years ago when institutions dominated the market. These institutions had superior access to resources and the individual was at the mercy of the large brokerage houses for quality research. With the advent of online trading, power and influence are shifting from the institutions to the individual. Resources are now widely available to all at minimal cost, if not free. Not only can individuals access information, but the internet ensures that everyone will receive it almost instantaneously. They also have access to real time data and can trade like the pros. With the availability of real time data and almost instant executions, individuals can act on information like never before.

Attractive features of forex:
Liquidity:
the market operates the enormous money supply and gives absolute freedom in opening or closing a position in the current market quotation. High liquidity is a powerful magnet for any investor, because it gives him or her the freedom to open or to close a position of any size whatever.

Promptness:
with a 24-hour work schedule, participants in the FOREX market need not wait to respond to any given event, as is the case in many markets.

Availability:
a possibility to trade round-the-clock; a market participant need not wait to respond to any given event.

Flexible regulation of the trade arrangement system:
a position may be opened for a pre-determined period of time in the FOREX market, at the investor’s discretion, which enables to plan the timing of one’s future activity in advance.

Value:
the Forex market has traditionally incurred no service charges, except for the natural bid/ask market spread between the supply and the demand price.

One-valued quotations:
with high market liquidity, most sales may be carried out at the uniform market price, thus enabling to avoid the instability problem existing with futures and other forex investments where limited quantities of currency only can be sold concurrently and at a specified price.

Market trend:
currency moves in a quite specific direction that can be tracked for rather a long period of time. Each particular currency demonstrates its own typical temporary changes, which presents investment managers with the opportunities to manipulate in the FOREX market.

Margin:
the credit “leverage” (margin) in the FOREX market is only determined by an agreement between a customer and the bank or the brokerage house that pushes it to the market and is normally equal to 1:100. That means that, upon making a $ 1,000 pledge, a customer can enter into transactions for an amount equivalent to $ 100,000. It is such extensive credit “leverages”, in conjunction with highly variable currency quotations, which makes this market highly profitable. but also highly risky.