When you're looking at forex signals, one of the most vital questions is whether they are based on technical or fundamental research. Some providers may say that they use both but they will generally be basing their forex alerts on one kind of research and then cross checking against the other.

Both techniques have their advantages but as a trader you are probably going to prefer one or the other. If your signals provider isn't working on the proposition that you like, it is possible that you'll distrust the alerts that you are receiving and not use them in the simplest way. That's why this is crucial.

Let us look now at these two very different techniques of analyzing the currency market, and also at one signals provider Forex Mutant.

Technical analysis

This first technique is popular with a larger number of traders. It does not require any special understanding of the economic or political forces that underpin the global currency trading markets, so it is simpler for noobs to pick up.

All you need to do is understand the charts and indicators that are provided by the currency exchange software that you are using, and apply them to the market to make profit-making trading choices. Well okay it may not be quite as straightforward as that to make money, but it is within the grasp of any person with a logical or analytical turn of mind, and that is generally the kind of person who is attracted to something similar to currency trading.

Fundamental analysis

Fans of fundamental analysis tend to claim that what truly drives the foreign exchange market is world economics and therefore it is crazy to make trading decisions based on anything else. They point out that charts and indicators ( particularly lagging indicators based primarily on moving averages ) are giving you a picture of the past, not the future. It could be the recent past but still, the time has passed.

They would say that it doesn't seem sensible to trade on the presumption of what the market was doing five mins or an hour back. You need to know what is going to happen next. However , this can be hard to do if you're not working in the thick of the financial world. So perhaps it would be helpful to receive signals that would advise you of these forex market movements.

We previously said that it can be a distraction to get forex alerts that don't suit your trading style. However, these 2 systems of analysis can complement each other very well, so provided you are mindful of what is happening, in a few cases it can be particularly helpful to just do that and order forex signals that are based on a technique that you would not use yourself.

That way, you can cover both of the bases while only needing to defeat one yourself. You could rely on the signals to warn you of important developments in the other methodology, and then check them against your own way of working. This is something to take into account when picking a currency exchange signals provider.

This article has been republished with permission of the original author.  All links have been preserved.

This Easy Forex review takes a detailed look at the brokerage services offered by this popular Europe-based broker.

Let us take the small print first because when you are considering signing up with a broker, your first task must be to test how long they've been established and whether they hold membership of any regulatory bodies. The majority of our information comes from the company's internet site but we have checked up on some info independently. However , changes may happen without warning and you must always do your due groundwork before investing with any money service.

Easy Forex is an international broker with separate internet sites for traders in USA, UK, Australia and rest of the world. The company operates as a currency market maker offering trading services to residents over 150 countries. They have been in business since 2003 and have offices in 9 states including the States, UK and Australia.

the corporation's registered address is in Cyprus, which is a member of the ECU, but as forex brokers they are controlled in many different countries. They are registered with the CCFC and NFA in the usa, the Cyprus securities & Exchange Commission to cover the EU, and they hold an Australian Financial Services Licence with the Australian securities & Investments Commission. So this is a well established international broker.

Thanks to the high level of regulation in countries like the US and EU with stern financial services legislation, they do require evidence of identity before you can withdraw. To avoid delays when you desire your cash, get the paperwork fixed as fast as you sign up.

All major currency pairs are offered. In addition Easy Forex allows trading on a {tiny low} number of commodities such as oil and gold. Currency pairs and commodities can vary depending on your area, so check out the web site for what is provided in your neighborhood.

Tools include the usual range of charts, a finance calendar showing upcoming business indicators, Reuters reports feed, IRs and currency rates, plus SMS alerts for certain events. As well as viewing your own account, you may also broadly see what other traders are doing on the platform : which are the popular pairs, whether most traders are taking long or short positions, etc .

Additionally they offer coaching in technical research through webinars, videos and live one-on-one training.

There is also a demo trading methodology called the Trade Simulator, so you can become familiar with the platform and test systems. The platform may take some getting used to if you are switching from another broker who uses MT4. This is very different. Be certain to spend a little time in the Trade Simulator before going live.

Easy Forex make their money through the spread, with no upkeep costs and no fees on deposits or withdrawals. Current spreads are shown on the website. Spreads are reasonably high but this indicates that the spread may truly be their source of income so they haven't any need to trade against you as some market makers do.

Instead of charging interest, they charge a fee on day trading deals that are held over to the following day. Avoid this by not opening trades right before midnight in their time sector (GMT +2).

We have checked user feedback across the web and it is really positive for a broker with ahuge massive high} number of amateurs among the customer base. Easy Forex are praised particularly for their beneficial and friendly buyer service, which sets them above many comparable brokers.

One or two users have been unpleasantly surprised to receive margin calls on their cards. Margin calls are less commonly found in currency exchange than in stock trading but they can occur and beginners are commonly not prepared for this. You can stop unexpected charges if you deposit your funds by bank wire transfer. This takes longer of course, 3 to a few days is normal, but you will always be in a position of approving any future payments. Of course you may still have responsibility for a margin call and you should be using stop losses anyway to ensure that a losing trade will not even come near to threatening your whole balance, but we will all make mistakes and infrequently with small accounts this is difficult. Using wire transfer will avoid surprises.

This is a well established and regulated forex market maker with a large range of services and good feedback from current users. A sensible choice for day traders, especially for newbs or those wishing to move from another mini foreign exchange account broker. On the basis of this Easy Forex Review we can highly recommend Easy Forex.

It is essential in Forex trading that you know the kind of orders that you can use to your advantage, as well as learn best forex trading strategies on when to use these orders. You should also be aware of the proper ways of using different orders. With this simple knowledge, you can have a great chance of making it in the market. If you use these orders improperly, it could cost you a lot of money.

These are the distinct respective order types one should know in Forex trading.

Market Order: This is the most commonly used type of order. This is a type of order which enables you to have the right timing and coordination on when to enter and exit in the market at the present costing. In the event that you need to sell, you will have to carry on at the offered price and in the event that you need to purchase, you will have to carry on at the requested price.

Limit Order: This allows you to buy or sell at a certain limit. It is an order type which helps to offer or buy a pair at a price. A purchase limit order is needed to determine the given cost if the market is even or it is at a lower given cost. On the other hand, a sell limit is given when the market is even or at higher than the limit price.

Stop Order: It is used for limitation of losses of a trader in a losing situation. This order type is held when offering or purchasing a pair at a certain price. A purchase stop order will only be extended when the forex market is even or beyond the stop price. A sell stop order as well only extends if the market trade is at the stop price or lower.

By learning the best forex trading strategies, you will be able to secure your place in the trading world.

Day trading is the white-knuckler of the speculating world. It?s fast and furious and the rewards or consequences are nearly immediate. For every trader there comes a time when they just can?t resist the temptation of jumping in and out of the market to try and catch some lightning quick roller-coaster profits. If you?ve already worn out that impulse, good for you. If not, I suggest you go ahead and get your hands dirty. You?ll never be over the curiosity until you?ve dug in and given it a try? at least just a little. Allow me to offer this brief day trading guide.

First of all, if you?re interested in trying your hand at day trading, don?t bother to paper trade. I know I?ll get flamed for saying that, but I?m serious. The truth is day trading is 90% emotional control at least, and perhaps more. You can have all the knowledge and great strategies in the world, but when the market starts to hum and you have to make split-second decisions, you?ll quickly find that you must live or die by your wits. You need to first determine if you have the emotional makeup for the fast lane, and you can?t do that without risking real money.

The funny (and very fortunate) thing is that you don?t need to use much money at all. Try this: Get yourself an account that allows you to trade .01 standard lot increments (equivalent to .1 mini lots). Then set a daily budget of just $10. You will try to gain $10 before you lose $10. When you?re up $10, you quit ? when you?re down $10, you quit. You trade only .01 to .05 lots at a time (that?s 10 to 50 cents per pip). It?s a pittance, I know, but you?ll be absolutely astonished at how strong the emotions will be even with just that tiny amount of pocket change. You?ll win $1.50 and you?ll feel like Warren Buffet? then you?ll lose $1.75 and you?ll feel like crawling under the desk. It?s perfectly normal, and it just goes to show how powerful the emotions of day trading can be. Until you are able to master those emotions, they will be a constant source of trouble for you.

So, keep up the $10 (plus or minus) a day ritual until it bores you, which is a great sign that you?ve managed to numb the emotions somewhat. Then kick it up to $20 a day or even $50. Then $100. Then??? If you keep going that way one of two things will happen. Most likely you?ll wear yourself out from the emotional bull ride and decide to take your trading elsewhere, like a nice peaceful trend following system. OR, you?ll do well enough and become jaded enough to the emotions that you?ll start to feel a sense of confidence ? even power about your dealings with the market. You?ll develop a sense of the flow of market action and you?ll find yourself making trades almost instinctively ? and winning! If you?re in the small minority who reach this elite plateau, congratulations! You have the rare makings of a true Day Trader!

We're all familiar with money. It's a big part of our lives from early childhood right up to our later years. It's the thing we strive for and the thing that makes our lives possible, but we generally only think of it in the conventional sense – as something we earn then spend within our own country and culture. We seldom consider money on a global scale or how the money from one place is related to money from another.

In fact, the relationship between different currencies of different countries is a vital issue, and one that becomes more and more important as we continue to expand the scope of the world wide commercial markets. Every company that sells its products to another country needs to be concerned with the relationship of their own money and its value to the value of their partner country's currency. When they sell their products in Japan, say, a British company will be paid in Japanese Yen, but they need to convert those Yen to the local currency (traditionally the Pound, but these days it's the Euro) so they can use it to pay their workers and purchase more raw goods. If the value of the Euro goes up vs. the Yen a British company will find that the money it receives from its Japanese customers is not as great, and they may need to consider raising their prices. Conversely, if the value of the Pound declines against the Yen, they will enjoy increases in their profits even if they leave their prices unchanged. They may in fact consider cutting their prices to increase their Japanese sales.

Converting the currencies in this way between one country and another is a multi-trillion dollar a day industry, and the fact that prices of currencies are in almost constant state of change creates an opportunity for profit. You can buy and sell currencies on the Foreign Exchange, or Forex market. With Forex, currencies are offered in pairs, for instance to trade the Pound against the Yen as we discussed above, you would trade the Pound/Yen, or GBPJPY as it?s notated.

If you think the value of the pound will rise against the Yen, you would ?buy the GBPJPY?, which is equivalent to buying British Pounds and paying for them with Japanese Yen. Later you would close your position essentially by selling back the Pounds you bought and accepting Yen in exchange. If you were right, and the Pound rose against the Yen, you would receive more Yen than you originally paid and the difference would be your profit. If, however, you were incorrect and the Pound fell against the Yen, you would have lost money, because you would receive fewer Yen than you originally paid.

That?s the idea in a nutshell. There are a lot of details involved in really understanding the Forex market. I?ll cover other aspects such as brokers, order types and leverage in future posts.

It's easy to think about all the money you'll make if your trades go well, but much harder to focus on all the money you could lose if things don't turn out so well.  A savvy trader knows that how you avoid losing your cash is a far more important concern than how you go about getting more.  The primary tool in the arsenal of any serious trader is the stop loss order.

Stop loss orders serve two main functions.  One is to get you out of Dodge before your balance is zeroed when your trade decisions go wrong, but the other is to keep you in a trade long enough to ride out the inevitable roller coaster whipsaws that will often plague even a good trade before it finally becomes profitable.  It's very important to remember the need to meet both of these goals when setting your stop losses.  Here's an important adage I try to keep in mind:

A stop loss is like a call to 911.  It's not designed to prevent you from pain or injury, but to keep you from dying.

Too many traders are prone to be over-optimistic and to assume that a good trading signal means the market will just take off in their chosen direction.  They set their stops just a bit behind their entry points and enjoy the warm, comfortable feeling of knowing that they won't lose very much if the market moves against them.  Then they see their stops hit (for a small loss) just before the market turns around and steams off in the direction they were originally looking for.  They see the profit they should have had slipping away while they are left with their ‘warm, comfortable' loss.  This will tend to happen often enough that these traders almost never make money.

The mistake they make is in not realizing that a stop loss saves your life, not prevents pain.  If you decide to enter a trade, you must accept that you may need to suffer some pain, either in the short run before your trade develops, or in the end when your trade craps out on you.  Pain and losing are an unavoidable part of market speculation, and you must learn to accept them and to deal with them in a realistic fashion.

The best strategy is to make your stop losses conform to what you see on the charts.  You need to find a stop loss level that makes sense from the standpoint of the technicals that got you interested in the trade in the first place.  Triggering a stop loss is an event that should occur when the market movement nullifies your previous sentiment.  It should be a screaming red flag that says "You were wrong, and the reason you entered the trade is no longer valid!"

Consider as simple support level trade.  If you saw price bounce off of a long-standing support level and begin moving up, you may have decided that is was a good time to buy.  This could be a fine trade, but if the price moves down below that previous support level the importance of that support is significantly weakened, and the likelihood is now that the support is broken and the market will now head downward.  Clearly that's the time to call it quits and take your loss.  In this example you would recognize that a breaking of the support level you were depending on would remove the technical justification for your long trade, and you would place your stop loss a few pips below that support level – far enough to avoid short term market spikes.

If that stop loss position looks to be too far away, don't give in to the temptation to raise it. just adjust your trade size downward to reduce the overall loss risk.  I cover trade sizing more in another post.

The second part of this article talks about playing one currency pair against another. This is very different from the type of arbitrage discussed in the previous part and in many ways can be more profitable. It takes some time to set it up but it's based on time-honored concepts of market movement.

Mean Reversion Arbitrage
This method is based on finding two currency pairs that are well-correlated. That means that they have a strong tendency to move up and down in sync. There is usually a good fundamental reason why two pairs would be well correlated, so that correlation will tend to remain in place over long periods of time. But there will be times when they seem to move independently of one another, and those are the times when money can be made by trading them against each other.

Here's the theory: Because the two currency pairs maintain their correlation over time, one can assume that when they start to move independently, it will be a temporary event, and that at some point they will return to their old ways of moving in sync with one another. After they have moved apart by a certain amount, we simply ‘bet' that they will move back together again in the future.

For instance, if the EURUSD and the GBPUSD are seen to be closely correlated, they will generally both move up and down more or less together. This can often be seen by studying the charts. Should a time come when the EURUSD moves up but the GBPUSD moves down, they will separate, and we will trade based on the assumption that in time they will come back together. In this case we would short the EURUSD and buy the GBPUSD, so that we can gain overall if the EURUSD falls or the GBPUSD rises, or both. It's not a perfect strategy (what is?) but statistics have borne out its valued over the years.

Caveats to heed: First, be aware that it's never certain how far two currency pairs will pull apart before they revert to their correlation, so you might ride a fairly decent loss (particularly on one side) before you see the gains developing. Also it's typical to end up losing money on one side of the hedge even if you make a greater amount on the other side. It's not too common to make money on both sides, but it does happen. Finally, there are times when currency pairs will pull apart a significant amount, then instead of coming back together they simply begin tracking their up and down movements without ever really reverting to their original mean. This is when you must simply take a loss and move on to the next trade.

I haven't gone into the math required for this technique at all, but it's important that you understand how to do the necessary calculations before you attempt this strategy. Perhaps I'll tackle that in another post.

Arbitrage is basically a way of working one aspect of a market against another, typically to exploit small discrepancies and make small profits. There are several different ways to apply the concept of arbitrage in the Forex market. I'll talk about two of them here.

Interest Rate Arbitrage
When trading Forex, you are borrowing from (or lending to) your broker by way of trading on margin. If you buy a certain pair, you may need to pay some interest, but if you sold that pair you would be paid interest in turn. Because different brokers charge different amounts of interest it's sometimes possible to find a discrepancy between two brokers such that if you buy a pair from one and sell the same pair to another, you'll earn more from the paying broker than you pay to the collecting broker. This is a rare instance, but it can occasionally happen.
More prevalent is trading an interest free account against a typical interest bearing account. In this scenario, you trade with the interest bearing broker in one direction – say long the EURUSD – so that you can earn interest for holding the position for a while. Then you hedge that position buy selling the EURUSD with the interest free broker. Since you won't pay interest on your short position, you will profit from the interest paid by the long position – and the two positions themselves will cancel each other out.
This strategy allows you to earn money consistently from interest regardless of what direction the prices move. The downside is that interest free accounts are typically only available to Islamic traders, and they exist because of a tenet of Sharia law which forbids charging or collecting interest. The other considerations are that you must make pretty large trades in order to gain any decent amount from the interest and of course you need to have two accounts instead of one.

Next installment – Mean Reversion Trading.

In the previous post of this series I discussed what a Moving Average is and how it's calculated.  Now let's get to the good stuff and talk about how to trade using it.

The first way we'll discuss is to simply view the moving average as a general trend direction indicator.  This is one of the very first methods of MA trading to become popular.  With this method the trader compares the current price to the Moving Average trace to see which is higher.  Because the Moving Average lags behind the price (see the previous post) it will always be below the price during times when the price is rising (an up trend) and it will always be above the price during times when the price is falling (a down trend).  That's the basic principle, but there are some other things to consider.

First, you need to be sure that you're trading trends that are longer than the period of your Moving Average by at least a factor of two.  For instance, if you are using a Moving Average that is calculated using the most recent 20 bars (Period = 20) you need to be looking for trending moves that will last at least 40 bars.  Shorter moves than that will not be detected by the Moving Average because it's filtering them out – remember that a Moving Average smooths out rapid price movements to expose the longer term trends.

Second, you must have a clear idea of what it means to say that the price is ‘above the Moving Average' or below it.  Most traders use the Close price of the bar as their point of comparison, but others use measures such as the average price ((Close + Open + High + Low) / 4) or the midrange price ((High + Low) / 2).  Pick the price value you wish to work with and stick to it.  Then consider that short term, spiky movements can make the price jump back and forth across the Moving Average trace instead of clearly crossing it in one direction or another.  Try to develop a rule for determining when the price has truly crossed the Moving Average trace – such as requiring the an entire bar is on one side or the other, or waiting until the Close price is at least X pips beyond the MA line.

Third, you must consider the slope of the price line, that is, how steeply it is moving up or down.  As a general rule, you should prefer to trade when the price is moving more steeply, as this will often indicate a strong, rather than a weak and uncertain trend.

Then finally bear in mind that the best time to catch a trend is early, so if the price crossed the MA many bars ago, you may have missed most or all of the movement, and you should consider waiting until the next crossing.

Watching to see which side of the MA trace the price is on has been a winning strategy for over 100 years, but it must be applied intelligently, and as always, with a healthy dose of good money management.

Way too much time is spent worrying about leverage.  Traders sweat over questions like "Do I have enough leverage?", "How can I take the most advantage of my leverage?", and "Do I have too much leverage to be safe?"  Not that these aren't important considerations in their own light, but the truth is a prudent trader never needs to worry about leverage.

Why?  Because even a ‘low leverage' trading account – with, say, 50:1 leverage is more than you should ever need.  If you follow a reasonable risk management strategy you will have plenty of headroom to play with.  Let's start with a quick summary of what leverage is.

Margin (sometimes referred to as leverage) is when a broker lets you buy (or sell) more currency than you actually have money for.  If you have 50:1 leverage, you can buy $50 of currency by using only $1 of your account balance.  This gives you the ability to make far more money than you otherwise would be able to if you had no leverage, but it also makes it possible to lose far more money if your trade decisions don't pan out.  Likewise, if you have 200:1 leverage (I've seen as high as 500:1) you can buy $200 of currency with your $1 of account balance.  Basically you're borrowing the extra money from the broker (which leads to interest rate charges, which I'll cover in another post).  They're not at risk, though, because they have full control of your trading positions.  They will close your trades for you if you incur enough loss to wipe out (or come close to wiping out) your account.  This is called a margin call.  If you trade correctly, you will never have a margin call.  Avoid them at all cost.

Now let me explain why you need not worry about margin with a quick trip to Forex School:  You should set the size of your trades as a percent of your balance – typically 5% maximum – and that ensures that you will never risk so much money that you will be in danger of a margin call, and therefore you have no need to be concerned about leverage.  Here's an example.

Your balance is $5,000.  You want to risk 3%, which is a risk of $150.  When you decide to make a trade, you should select a stop loss which makes sense in the current market.  That is, you need to choose a price which tells you "You made a wrong decision, get out!"  When the price hits that point, it no longer makes any sense to stay in your trade and you should close the trade immediately.  Now, size your trade so that you will lose no more than $150 if that stop loss price is hit.  If you choose 100 pips for a stop loss in EURUSD, you will size your trade to be equal to $1.50 per pip.  That works out to a trade size of .15 mini-lots.  That's all you should trade.

Since a mini-lot is worth $10,000 you have a total trade value of $1500.  Since you're only paying 1/50 of that amount (50:1 leverage) your account will only see a hit of $30 to enter this trade.  You have $5,000, so obviously you're not coming close to running out of money even with a low margin account.  So much for worrying about not having too much.  Now consider what happens if you have a high leverage account of say 500:1.  This is no greater risk, because the risk you take is based on how large your trade is and how wide your stop loss is.  These values have nothing to do with your leverage, so having a high leverage account does not equate to having a higher risk.

So, in summary, the key to controlling your trading and maintaining safety is to plan your trades prudently, with a known risk amount.  When you do this, you find that forex margin is essentially irrelevant.  If you're running out of leverage, you're trades are too large.  If you are at high risk in a high leverage account, again it's because you're trades are too large.  Make a prudent plan and stop worrying about margin.