2Bull Forex Blog

Forex trading for novices can seem confusing so here I am going to give you a system you can learn in under an hour and immediately target 100% gains or more – its simple and it’s effective so let’s reveal it.

The first point to make is – although I write articles, I am a trader and have been for 5 years. I am not a self proclaimed expert, so here what I say as I walk the walk, rather than just talk the talk.

I have tried lots of ways of trading and this is the simplest method I use and probably one of the most effective.

I am going to call it Fundo-Tech trading, because that’s exactly what it is.

If you read much of the information on the net, you will hear lots of stories how you can predict currency prices with scientific accuracy, all for a few hundred bucks! Well, call me a sceptic (or a realist) but they don’t work and never will and if they did, people wouldn’t sell them to you; they would be to busy making money.

So what is Fundo-Tech trading?

Exactly what it sounds like, a blend of fundamentals and technical inputs. The first for defining strong currencies the second, for timing entry.

Currencies move to the long term fundamentals, we all know that but their hard to trade, as humans see the facts they’re there for all to see but you, me and millions of others, draw our own conclusions from what we see.

In simple terms we have this equation:

Fundamentals + Human Perception = Price direction.

That’s not too difficult to understand is it?

Now let’s take economies with strong currencies – this is the fundamental bit.

Currencies that rise tend to have good interest rate earnings, strong economies, and budget surpluses and export more than they import.

Let’s take the US dollar first – The American economy is swimming in debt (and so is the population) and the budget deficit is huge and finally, it has to import raw materials that are rising in price.

Now let’s take a strong currency – the Canadian dollar.

Canada has huge amounts of commodities including oil it sells, has a huge budget surplus and has good interest rate earnings.

The Canadian dollar therefore should rise against the US Dollar and it has.

In fact if you check out my other articles I stated this months ago and I made some great gains.

Now you may be saying – that sounds simple!

Well yes and no.

Picking the direction is easy, entering the trade with good risk reward is a different matter however this is not to complicated either, lets look at how to enter correctly and another great currency trading opportunity.

Resistance forms and simply means supply and demand are in equilibrium below the price and when prices break to a new high supply and demand are out of synch.

Notice here, we are looking to buy new highs NOT lows – this is called breakout trading and it’s a fact that most of the biggest moves come from new highs not lows so forget all the buy low sell high is a great way to trade its not.

A few weeks ago when we saw the Canadian dollar break important resistance – we bought it and enjoyed the ride!

Now let’s look at another opportunity shaping up right now and it involves buying the dollar and our victim is the Japanese Yen.

Why?

Because the yen has interest rates at just 0.5%, a sluggish economy and is a bigger importer of commodities than America.

Last week we saw the dollar consolidate above significant resistance at 117.00 and were targeting 119.00 and maybe as high as 130.00.

We will now just sit back and wait as we did with the Canadian dollar.

We have lined up the technical with the long term fundamentals and timed our entry as the dollar has broken up outside of a trading range. If were wrong, our stop is tight under the recently broken resistance which is now support.

Does this method sound simple?

Yes it is, but that doesn’t mean it doesn’t make money – it worked in the Canadian dollar and you follow the yen for yourself.

Currency trading is simpler than many people believe.

Currencies do reflect the fundamentals, you just have to careful of your timing but that’s easy enough -use support, resistance and a few momentum indicators to time your entry and you’re all set.

You don’t need to trade often either, these trades tend to last for weeks or months, we did well in the Canadian Dollar now lets see how this one goes.

Forex brokers can either be individuals or agencies who will do their best to help you profit from the market and cover the risk of the investment that you made. You Forex trading will largely depend upon your broker as he or she will help you to succeed in the Forex market.

The broker does several things: helps you to manage your accounts, executes your orders and keeps you informed of market trends. You will need to take a look at the forex broker rating before you decide to choose a broker.

If you have Internet access, then you will find many website that suggest forex broker ratings. Some of the important things to know is what the minimum amount is to open an account, will there be any commission charges, etc.

You must make sure that your Forex broker has the right qualifications. Now that your list has been narrowed, it is time to research your choices. One good idea is to send some e-mails out to your customer service people and see how long it takes for them to respond.

When considering a forex broker, find out just how fast it takes him to execute an order. You should also find out how much slippage you can expect.

Here are some other key points to consider when looking for a forex broker:

1. Available currency pairs – Each forex broker will have, at the minimum, the seven major currencies.

2. Transaction costs – The forex broker is paid based on the bid ask spread. There should be no other hidden charges or fees. If the spread is smaller, that means it is better for you. Pip spreads vary from broker to broker so do some competitive shopping.

3. Free analysis tools – You will need to have some charts and technical analysis tools to be able to spot trends and plan your entry and exit points. Most brokers offer their basic services at no charge. If you require something over and beyond the basic service, there may be an additional charge.

4. Immediate execution of orders – You will need a broker who will be able to consistently execute your trade swiftly.

5. Superior customer service – If you need assistance, your forex broker should respond quickly and efficiently to any question that you may have. Representatives should be available around the clock either by telephone or e-mail.

6. Margin requirement – If you want to have more leverage, choose a low margin requirement. You can use margin to your advantage to produce huge profits.

7. Minimum account balance – Since you are a small individual investor, you must try to find a forex broker who does not require a hefty balance to open an account.

8. User-friendly trading platform – Before deciding to go with one particular broker, choose a few forex brokers and ask to sign up for a free demo account.

You would do well to trade with play money while you are deciding which broker and which program works best for you.