Forex Day Trading System

Most people who get involved with forex day trading system do not realize how significant to the global financial markets the US Non-Farm Payroll happens to be. I often get the question , " why does the US jobs number each month cause the market to bounce up and down after it has been released ?" To provide an answer to the question it is important to look at what is represented by the US jobs number . Then we will have our insights as to why it makes the markets move like nothing else .

The US Non-Farm payroll report is released on the first Friday of every new month . The US Bureau of Labor and Statistics is the one to release it and the things that it does measure, is the number of new jobs, outside of farming , created in the prior month by the US economy . It is of such importance because the health of the US and global economy are both reflected . In reality , this economy is the world’s largest and within the US the main component happens to be consumer spending; this actually totals at least 70% !  So , in forex day trading system, because a country’s interest rates is the number one factor affecting the strength or weakness of its currency , one must look to what drives the actual interest rates themselves ; or the US Federal Reserve policy on interest rates. Probably the most important data for the Fed to use is this job report to set short term interest rates and because of this, this report can and usually does , can lead to market volatility.
Why does the jobs report have anything to do with where the Federal Reserve sets short term interest rates ? Great question ! If the jobs report comes out strong usually it means that people have employment and the utilization of resources is high . This means workers are being hired by companies and workers, or consumers, are spending money on things like eating out, shopping for clothes, etc and the economy is driven by these things ; they help to heat or grow the economy. When the economy is growing, this means that there is more money circulating and inflation must be kept in check by the Federal Reserve . They can keep inflation in check and lower inflation by raising the short term interest rates, which cools the economy down , or they heat up the economy by lowering the short term rates to help raise inflation . So you see , so the job number is a huge factor , beneath the surface driving this .
So next time you are preparing for your forex day trading system week or the next day, look closely at the information that is going to be released on the events calendar. If you’re in the first week of the month then you’ll have the Non-Farm Payrolls report to look forward to on Friday of that first week since that’s always when it’s released . If you’re looking to take advantage of the volatility that comes after the release of the jobs report , simply keep the following formula in mind : If the number of jobs are stronger than anticipated, it usually means the economy is stronger which means short term interest rates will go higher, strengthening the currency . Conversely , if the jobs report comes out weaker than expected usually you’ll get short term interest rates that are lower, causing weakness of currency . Of course it’s not always this cut and dry or black and white , but this knowledge can give you a bit of an advantage over your competitors who are trading alongside you.

Forex day trading system allows just about anyone to make a quality living. And what better way to do it than waking up in the morning , having a cup of coffee , and then setting up your upcoming trading day while still in your boxer shorts ? Pretty easy ! Well wait a minute because although it can be relaxing as well as easy most people quickly find out that it is not that easy at all . That’s why this article is going to look at principles of money management – because if you have your money management game-plan in place success is more likely for you.
Why , if this is such an important area of money management , do many people choose to ignore or overlook this? That’s a great question and one you need to take a hard, long look at if you intend on succeeding in this market . I think that this aspect of trading is skipped by people, money management basics , because it’s not something that is "sexy". After all , how many accountants that are interesting do you know? That’s what money management is all about; more and more boring numbers.
In reality, it is only boring if you chose to think about it and approach it as such . If you look at it as a drag then it will be a drag and it’s something you won’t want to do. If you have the attitude that this is an important part of becoming a forex day trading system professional and the possible success ahead if only you’ll take enough time to think through your money management tactics …. it really can get quite exciting .
Now you know you really have to focus on this. Great ! What is it all about then anyway ? Here are the keys in order of importance , follow these and you’ll be off to a great start : over leveraging yourself should never be done, be consistent with the amount of leverage you use on every trade , add to the winners but not the losers. That is all . Sure there are tributaries to all the above but even alone they are powerful .
When you are trying to figure out why your trading level hasn’t advanced the way you hoped it would , remember the keys to managing your money . One final aspect that is important to consider is this : unimaginable psychological benefits can be provided by good money management. And these psychological benefits will improve your trading beyond what you ever thought was possible . Why? If you have no fear of losing money, or you know you have a solid plan in place that will ensure you’re always around to trade another today , then your view of the markets will be relaxed and clear and for your efforts you’ll add some serious dividends.
Forex day trading system can be incredibly challenging and rewarding at the same time. Keep in mind that the best keys to success are usually the most simple and probably uninteresting things staring you right in the face . You’ve wanted to find the holy grail of trading for so long – and money management is the key.

Forex day trading system has been quite volatile lately as a result of the sovereign debt crises currently unfolding in Greece . Many fear that this crisis in Greece is going to spread to other EU countries that are deep in debt such as Spain, Portugal and Italy . As a result of what has happened , against the US Dollar the Euro currency has dropped about 11% . A few questions should be asked when taking a look at the situation: Is the end of the Euro sell off here and is the US dollar strength due to United States strength or Euro weakness ? These questions are very important because the answer to the second one will greatly impact how we answer the first .

I would argue that the US Dollar is simply benefiting right now only because of the weakness of the Euro . Steam has only been picked up in the spending driven US economy because for some time the rates have been near 0% from the Federal Reserve . When there is a forced raising of rates, what will happen ? Will the US economy be able to withstand that kind of head-wind ? The answer is likely no . Also, it is important to keep in mind that consumers are spending more right now because they are not paying credit card payments, automobile payments, mortgage payments, and more . This means that consumers have income that they usually don’t have and so they can spend more money on things such as clothing, new electronic items, and meals out . Again consumers are going at it like crazy. The last Federal Reserve boom that was inflated was not sustainable and it will not be sustainable this time . The only options for the US Dollar in the next few years are default or inflation and those two things can only mean disaster for the Greenback .

When doing forex day trading system our goal is naturally to make money . We have no biases. We only want to use our foresight for a profit . So the second question’s answer is that there will be a point when the Euro bottoms out because it has been over sold. Probably around 1.2300-2400 . After all , do you think that the world’s 3rd largest economy, Germany , will allow the currency to fail? Probably not. More than likely they won’t. This is the reason they aren’t printing out more Euros and helping with a Greece bailout . The problems in Greece will cause the Euro to become even more sound as a currency. The investors world wide will realize that the Euro is a safe option because when there is trouble they take the short term loss in order to preserve long term health . Thus , their economy may be having problems, but their unit of money will end up being better. The opposite is true in the United States situation . Money is being printed to avoid short term problems , but this only causes a problem with the long term health of our money and economy .
All that being said, we soon will be to a point where you will get a great bargain from the Euro that you should take advantage of in your own forex day trading system. Not just for the previously mentioned reasons, but simply take a look at the market psychology. Professionals buy when there is a free fall in the market and the average person hears about the crisis and comes in to short the move that has occurred already . This is a pattern that has happened repeatedly , and as long as limbic systems are part of human physiology it will continue to occur .

Forex day trading system can be done in a variety of ways and for so many different reasons that just figuring out where to begin is tough . Do you need to start an account with a brokerage specializing in this type of trading , or is a brokerage that allows you to exchange traded funds, trade options, stocks, and futures a better idea? Not only is this an overwhelming decision , then you have to go on to figure out whether to use FX trading as a speculative tool or a hedging tool, long term or short term, aggressive or conservative, etc . There are, needless to say, many things that one must consider before starting out .

While the questions we just mentioned are enough to start up a multi volume response, we’ll focus on the basics for the sake of clarity and simplicity in this article . The simplest way for you to begin feeling comfortable with the FX trading world is to go ahead and open your account with a fx trading specialist brokerage . Which broker should you go with? That is a topic that is better left for another article. Just ensure you do some research before you deposit any money !

Once your Forex day trading system is working and you are getting started , you need to learn more about what you are involved in . In this example , we’re suggesting that because you started with a brokerage account at a broker who specializes in this area , cash contracts or spot contracts are what you’ll start trading . Without making this complicated , all this means is that you are trading the current price as it sits in the open, global market at that very second . If on the brokerage screen you see Eur/Usd Pair trading at 1.3200 that means that you can sell Euros against US Dollars at that rate or you can buy US Dollars and sell Euros at that rate . The price you see will have a small spread built in and when you take the trade this will be the cost of entry. Look for a broker going with a spread of 2-3 pips and nothing more .

Since speculating can be quite challenging at times , even for professionals such as myself , let’s say that you are starting out with the goal of hedging your stock portfolio in the United States . Because U.S. Dollars is the denomination of your stock portfolio if the stocks go up in US Dollars, you may make money but your gains can be cancelled if the US Dollar weakens. You want to hedge this part of the portfolio and you have decided in your brokerage account to purchase Euros against US Dollars . This way as against the Euro the US Dollar weakens and your portfolio starts to suffer because of this weakening, your forex gains that you are experiencing as a result of buying Euros are serving to hedge your downside risk .

The above is probably one of the easiest and most basic ways of adding a forex day trading system component to your portfolio . There will be several other articles in the future that talk about more advanced ways to speculate in this global market , but this should serve as a good starting place .

When speaking with those who haven’t tried forex day trading system before, even if they come from the world of stocks, bonds, or futures , I’m reminded that even the basics of this global market need to be explained . Let’s get started looking at pairings and everything having to do with them in the forex market.

Currency pair. What is it? First we’ll look at the Eur/Usd which has against the Euro, the US dollar as the bas currency within this pair. When I see a price quote of 1.3200 on the Eur/Usd, what does it mean ? The easiest way to remember the answer is this : take the base currency pair , in this case the US Dollar , take a look at the 1.3200 price quote , and then say , "it will take 1.3200 US Dollars for me to buy 1 Euro ." This is what that price quote really means. If you check the price quote a couple of months later and now it is 1.4000 this tells you that the US Dollar is now weaker when compared to the Euro because it now takes 1.4000 US Dollars to buy 1 Euro . Conversely , if you find the price quote is 1.2500 down the road, then the US dollar is getting stronger since purchasing one Euro will only take you 1.2400 US dollars .

Forex day trading system can become even more challenging when you see a price quote of say 100.50 on the Usd/Jpy pair for example . Using the above method , you take the Jpy base currency and look at the 100.50 price quote and that is how many Jpy it will take to buy 1 US Dollar . Pretty easy huh ? You should no longer have problems figuring out the price quote on a pair when you see a quote window or chart screen .

Since you know can read price quotes , what are the main pairs and cross pairs ? You’ll find the main pairs happen to be the strongest world economies paired versus the US dollar. A few of these pairs are Eur/Usd, Gbp/Usd, Aud/Usd, Usd/Cad, Usd/Jpy, and Nzd/Usd . A cross pair is a pair not involving the US Dollar such as Eur/Jpy, Gbp/Jpy or Eur/Gbp to name a few of the more popular ones .

Hopefully this brief article will be helpful to you if you have been intimidated by the forex day trading system landscape in the past . It can take a while to get used to it with all of the different currency pairs, time zones, and economies . After you start understanding how everything falls together it’s really not that bad – and to many, this is a whole lot of fun!