The Money Market

The money market is a market in which the cash requirements of market participants who are long cash are met along with the requirements of those that are short cash. This is identical to any financial market; the distinguishing factor of the money market is that it provides for only short-term cash requirements. The market will always, without fail, be required because the needs of long cash and short cash market participants are never completely synchronized. The participants in the market are many and varied, and large numbers of them are both borrowers and lenders at the same time. They include:   As well as government agencies and the central bank or reserve bank, commercial banks, mortgage institutions, insurance companies, and finance companies,   small savers;  

A money market exists in virtually every country in the world, and all such markets exhibit the characteristics we describe in this book to some extent. For instance, they provide a means by which the conflicting needs of borrowers and lenders can achieve equilibrium, they act as a conduit for financing of all maturities between one day and one year, and they can be accessed by individuals, corporations, and governments alike. In addition to national domestic markets, there is the international cross-border market illustrated by the trade in Eurocurrencies. 1 Of 1 A Eurocurrency is a currency that is traded outside of its national border, and can be any currency rather than just a European one. course, there are distinctions between individual country markets, and financial market culture will differ. For instance, the prevailing financial culture in the United States and United Kingdom is based on a secondary market in tradable financial assets, so we have a developed and liquid bond and equity market in these economies. While such an arrangement also exists in virtually all other countries, the culture in certain economies such as Japan and (to a lesser extent) Germany is based more on banking relationships, with banks providing a large proportion of corporate finance. The differences across countries are not touched upon in this book; rather, it is the similarities in the type of instruments used that is highlighted. Infrastructure of the marketplace, such as derivatives exchanges. Intermediaries such as money brokers, banking institutions, etc.; individual private investors, such as high net-worth individuals and corporations of all types; financial institutions such as the large integrated investment banks, the sovereign authority, including the central government ("Treasury"),

Automated Forex Trading

If you use a 100% mechanical system you can literally put your computer doing all the work for you.  An automated Forex system searches for trades, and places trades on your broker. So, if you feel comfortable with this kind of system, you just need to leave your computer turned on 24 hours a day, and he'll be trading for you.

If you intend to use a 100% mechanical trading system to trade for you, you can develop one in a platform like MT4 (http://www.metaquotes.net/). MT4 is a great platform and allows you to build virtually any kind of trading system.

If you're not a programmer, you can look for automated Forex systems. These systems can be back-tested, and trade for you. Usually, you can define the maximum amount you're comfortable to risk, and the system trades accordingly with your instructions. When you have everything in place, you just need to leave your computer on, and it'll do all the work.

Some of the most reputable mechanical systems on the market are Fap Turbo, Forex Autopilot, and Forex Auto Run. These are the only profitable automatic systems. 

Be Patient and Realistic

You need to be patient and have realistic expectations about the Forex Market. The truth is that Forex is a difficult market, and unless you work hard on it, you won't achieve consistent results. You need to treat Forex trading as a business and you need to be patient. In order to become a professional trader you'll need some time.

Don't set unrealistic goals. If you do so, you'll be frustrated when you realize that you weren't above to achieve them.

When you define your goals in Forex trading, define ambitious goals but, at the same time, goals that you can accomplish. If you're just starting in the Forex market, define as a goal achieving a profit at the send of the month. It doesn't matter if it's a big profit or not, but if you can start with a profit, you're on the right track. If you're just starting and define goals like "I'll make $ 20K by the end of the month", you're just dreaming. This is the kind of unrealistic expectations that destroy most beginners in Forex. Since they define unrealistic goals, they start taking huge risks in order to believe that they will achieve their goal. The worst part is when the huge risks destroy their account, and they find out that Forex trading is not a get rich quick opportunity.

Patience and realistic goals are really important for a Forex trader. If you define good goals and you have the patience to work and improve your strategy, you're on the right track.

Moving Averages

Moving Averages are one of the most popular and easy to use indicators available in Forex. They smooth a data series and make it easier to spot trends, something that is especially helpful in volatile markets. They also form the building blocks for many other technical indicators and overlays.

The two most popular types of moving averages are as below;

SMA (Simple Moving Average)

EMA (Exponential Moving Average)

A Simple Moving Average (SMA) is formed by computing the average (mean) price of the security over a specified number of periods. While it is possible to create moving averages from the Open, the High and the Low data points, most moving averages are created using the closing price. For example: a 20-day simple moving average is calculated by adding the closing prices for the last 20 days and dividing the total by 20.

In order to reduce the lag in simple Moving Averages (SMAs), technicians often use Exponential Moving Averages (EMAs). EMAs reduce the lag by applying more weight to recent prices relative to older prices. The shorter the EMAs period is the more weight will be applied to the most recent price.

The simple moving average obviously has a lag, but the exponential moving average may be prone to quicker breaks. Some traders prefer to use exponential moving averages for shorter time periods to capture changes quicker. Some investors prefer simple moving averages over long time periods to indentify long-term trend changes.

Shorter moving averages will be more sensitive and generate more signals. The EMA, which is generally more sensitive than the SMA, will also be likely to generate more signals. However, there will also be an increase in the number of false we signal. Longer moving averages will mover slower and generate fewer signals. These signals will likely prove more reliable, but hey also may come late.

Each investor or trader should experiment with different moving average lengths and types to examine the trade-off between sensitivity and signal reliability, because moving average follow the trend, they work better when a currency pairs is trending and are ineffective when a currency pair more in a trading range.

A-Trend Identification and Confirmation

If the price is above a moving average and this moving average is moving up, we're in an uptrend but if the moving average is moving down and the price is below the moving average, we're in a downtrend.

You can also use 2 different Moving Averages to spot the trend. For example, if you use a 10 and a 20 moving averages. If the SMA10 is above the SMA20, you're in an uptrend. If the SMA10 is below the SMA20 you're on a downtrend.

B-Support and Resistance Levels

Another use of moving averages is to indentify support and resistance levels. This is usually accomplished with one moving average and is based on historical precedent. As with trend identification, support and resistance level identification through moving averages works best in trending markets.

This strong support area can be used as an entry point.  There are even some more trading systems build solely on moving averages. On this kind of systems, when the price crosses the moving average to the upside is a buy and when it crosses below the moving average is a sell. On Strong trends, this kind of trading systems work well. However, during choppy markets, there are plenty of false signals for this kind of systems. 

Disclaimer

Forex Trading is a very high degree of risk involved trading. In any market where a potential for profit exists, there exists also a risk of loss. Forex trading is a risky business. You should only trade with money that can afford to lose. In case of loss, the amount should not affect your lifestyle and your family's in anyway.

None of the information on our website nor any information or education provided to the client by any means assures that the client will make money in the Forex market. 

Neither the author nor the publisher will be responsible for the use or misuse of the information contained herein. The information contained in this eBook is for information purposes only. It is not intended as professional advice or a recommendation to act. Before engaging in any activity mentioned in this eBook, seek the advice and consultation of a competent professional.

All trademarks mentioned herein are the property of their respective trademark owners. 

Forex Demo Account

The first thing you should do if you are a beginner in Fores Trading is to open a forex demo account. This will give you the opportunity to learn and practice forex trading without the risk of losing money in the process. Additionally you can use a demo account to test different trading systems.

If you are a novice in foreign exchange industry, and have no idea what is happening around them, better go and find information online. There is plenty of information obtained, and it is best that you have knowledge of the fundamentals. There are websites that offer commercial electronic books to its customers only. Do you want your bargaining skill developed? Do not worry! Just find a site that offers to create an online demo account Forex.

It will give you practice in the trade and you will find very useful. There are also forex trading software that provides practice in trade. Account is like having a real live demonstration of the currency and is in the market today. Better find commercial software that can run on any computer.

When you have your demo account of the currency, and portability of the software is there, if you are traveling on the road or just stay home, you will have access to everything that is happening in the currency markets. You will always be updated with current news of negotiation. Forex demo account would be the way online forex trading system.

For Beginners

In order to become a competent participant of FOREX market, i.e. a professional trader, it is necessary to pass through inevitable stages, acquiring the skills and knowledge which are essential for working on FOREX.

To be a novice trader - does not mean to incur losses. Owing to the fact that the accounts of InstaForex do not have limits to the volume of minimal lot, you can start working with any sum, having the opportunity to reduce risks. Getting more experienced, you expand the volume of trading operations, thus increasing risks as well as the opportunity of collecting higher profit.

1 Step. Training on DEMO-account.

Every person can open Demo account and learn how to operate the trading terminal and trading strategies for unlimited period of time and absolutely free. Even without having any idea about FOREX market you can try yourself as a trader, opening a DEMO-account. In spite of the fact that all deals on DEMO-accounts appear virtual and are not put on FOREX, you have exactly the same conditions as on live accounts. On a DEMO-account a trader can conduct deals as if he or she were trading on a real account.

No matter how many questions arise, you can try to find the answers working on a DEMO-account, without risks and having the opportunity to open any number of such accounts totally free. Moreover, 24/5 support department is available by ICQ, chat, telephone or e-mail.

2 Steps. Trading on the live account.

Having got the hand in working with terminal and learning the main trading strategies, you can try yourself on the real account, limiting your risks. Owing to the absence of limits on minimal deal’s volume you can trade according to the principle "risk=profit", when you define the volume of your investments.

Working on a live account lets you understand and learn more in comparison with a DEMO-account, no matter how seriously you take the virtual trading. Working with real, even minimal funds, you start to feel the connection between your profit and currency movements. This experience is very important for raising to the next level of trader’s development.

3 Steps. Professional work.

Having obtained the necessary knowledge, a trader is able to work independently on the currency market, using his own or borrowed trading strategies for collecting profit from currency movements. A professional trader develops the style of his trading and chooses the instruments which are more suitable for his strategy.

Not all new coming traders are able to reach this level, but InstaForex Company guaranties that our team bends every effort in order to help each client to go forward and get professional support if any problems arise.