Forex Signals

Most forex traders lose and the reason they do, is they don't understand the simple equation for forex trading success enclosed in this article.

So learn it as part of your forex trading education and get on the road to currency trading success. Here is the equation and we will discuss its significance in a moment. Robust Logical System + Confidence in = Discipline to Apply = Forex Trading Success Now that's nice and simple - but most traders fail to understand it's significance.

Pip Values

In most cases, a pip is equal to .01% of the quote currency, thus, 10,000 pips = 1 unit of currency. In USD, 100 pips = 1 penny, and 10,000 pips = $1. A well known exception is for the Japanese yen (JPY) in which a pip is worth 1% of the yen, because the yen has little value compared to other currencies. Since there are about 120 yen to 1 USD, a pip in USD is close in value to a pip in JPY. (See Currency Quotes; Pips; Bid/Ask Quotes; Cross Currency Quotes for an introduction.) Because the quote currency of a currency pair is the quoted price (hence, the name), the value of the pip is in the quote currency. So, for instance, for EUR/USD, the pip is equal to 0.0001 USD, but for USD/EUR, the pip is equal to 0.0001 Euro. If the conversion rate for Euros to dollars is 1.35, then a Euro pip = 0.000135 dollars.

Converting Profits and Losses in Pips to USD

To calculate your profits and losses in pips to your native currency, you must convert the pip value to your native currency. The following calculations will be shown using USD as an example. When you close a trade, the profit or loss is initially expressed in the pip value of the quoted currency. To determine the total profit or loss, you must multiply the pip difference between the open price and closing price by the number of units of currency traded. This yields the total pip difference between the opening and closing transaction. If the pip value is USD, then the profit or loss is expressed in USD, but if USD is the base currency, then the pip value must be converted to USD, which can be found by dividing the total pip profit or loss by the conversion rate.

Example—Converting Pip Values to USD.

You buy 10,000 Canadian dollars with USD, with conversion rate USD/CAD = 1.100. Subsequently, you sell your Canadian dollars for 1.1200, yielding a profit of 200 pips in Canadian dollars. Because USD is the base currency, you can get the value in USD by dividing the value by the exit price of 1.12. 10,000 CAD x 200 pips = 2,000,000 pips total. Since 2,000,000 pips = 200 Canadian dollars, your profit in USD is 200/1.12 = 178.57 USD.
For a cross pair not involving USD, the pip value must be converted by the rate that was applicable at the time of the closing transaction. To find that rate, you would look at the quote for the USD/pip currency pair, then multiply the pip value by this rate, or if you only have the quote for the pip currency/USD, then you divide by the rate.

Example—Calculating Profits for a Cross Currency Pair

You buy 100,000 units of EUR/JPY = 164.09 and sell when EUR/JPY = 164.10, and USD/JPY = 121.35. Profit in JPY pips = 164.10 – 164.09 = .01 yen = 1 pip (Remember the yen exception: 1 JPY pip = .01 yen.) Total Profit in JPY pips = 1 x 100,000 = 100,000 pips.Total Profit in Yen = 100,000 pips/100 = 1,000 Yen Because you only have the quote for USD/JPY = 121.35, to get profit in USD, you divide by the quote currency’s conversion rate:
Total Profit in USD = 1,000/121.35 = 8.24 USD.

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What Is Hedging ?

Basically, hedging involves the buying (or selling) of currency pair(s) in order to protect the hedger against unwanted currency fluctuations. Traditionally, hedging was used to protect the profits of multinational companies from unfavourable currency fluctuations.Hedging is a great way for these companies to protect their profits, but unfortunately many inexperienced Forex traders have incorrectly applied the same principles to their trading activities.Here’s how a Forex trader may try to hedge his position:Imagine that I buy the EUR/USD currency pair, and the market immediately moves against my position (i.e. prices went down). At this moment, I would be facing an unrealized loss. In order to ‘protect’ myself against further losses, I might sell the EUR/JPY currency pair in the hopes that any gain in the latter pair will partially offset the losses of the former pair.Essentially, I’ll be holding on to two simultaneous ‘long’ and ‘short’ positions for the Euro currency. Hedgers hope that the results of both positions will partially cancel each other out.

Why Hedging is A Bad Idea for Retail Traders ?

This method of hedging is a deathtrap waiting to spring. The original purpose of a hedge was to reduce the uncertainty of company profits.To the retail trader, however, this does the exact opposite!Such a hedging strategy simply leaves too many factors open to risk. Although the Euro price fluctuations may be some what muted, the ‘retail hedger’ now has worry about the USD and JPY currencies too! The EUR/USD and EUR/JPY pairs are not highly correlated and may end up causing an even larger total loss in the end.Many people like to hedge because they don’t want to admit that they made a bad trading decision. They try to ‘safely’ hold on to a losing position for as long as possible in this manner, but don’t realize that they’re actually exposing themselves to even greater risks!

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There are certain features that make forex trading extremely appealing to individual traders as well as to other financial institutions and banks. These are:

• The market is open for 24 hours and for 5½ days in a week.
• It offers highest liquidity with ease of transaction with almost all major currencies of the world.
• Widespread volatile presenting huge profit opportunities.
• Can potentially cover risk exposures with various standalone instruments.
• You earn profit from rates going up as well as down.
• Good leverage with low margin requirements present high profit potential.
• Various options available for zero-commission trading.

How Price is Quoted

In forex trading , currency prices are always quoted in pairs. For example, on a particular date, the rate of EUR/USD is 1.0856 and if you buy 1000 Euros on that particular date, you will have to pay 1085.60 U.S. dollars. But, at a later date if this rate becomes 1.2082, which implies that the value of euro increased in relation to the USD, you can sell 1000 Euros and will receive 1208.20 dollars.

Therefore, you make a net profit of $122.60. So, as an investor, your aim should be to buy currencies at low price and sell those in future in higher prices. If you buy or sell a currency but do not sell or buy back the equivalent amount, it would be referred as open trade or open position.

Major Currencies Traded in Forex

In Forex trading, most of the currencies are traded against USD. The other prominent currencies are Euro or EUR, the Japanese yen or JPY, the British pound sterling or GBP, and Swiss franc or CHF. These five currencies are known as the Majors. The pairs are quoted like USD/EUR or CHF/JPY, where the first one is referred to as the base and the second as the counter or quote currency. The value of the base currency is always 1. All trading is done with currency pairs.

Pips and Spreads

Prices in Forex are quoted to the fourth decimal point (leaving JPY, which is quoted till second decimal point) and in pips or percentage in point. It is the smallest price increment and one pip is equal to 0.0001. When the bid for EUR/USD is 1.0856 and offered rate is 1.0859, it has a spread of 3 pips. Spread, in simple terms, is the difference between the bid and the ask price. The forex market is mainly operated by the brokers who do not charge a commission for their services. And, it is the spread with which they make their profit. For investors, therefore, the lower the spreads the more saving is made.

Margin

Margin is the minimum security that ensures that the investor can pay back the amount in case of losses. It is a deposit that covers any future currency trading losses. With margin, you can hold larger positions than you have in your account.

Leverage

The concept of leverage is also quite common in forex trading, which is the ratio of total available capital to actual capital. If, for example, the leverage is said to be 200:1, it means the Forex broker will lend you $200 for every $1 of your actual capital investment. Though leverage is very important for your trading, higher leverage exposes your investment to higher risks.

Common Methods of Forex Trading

There are three methods for common investors to trade in forex market. They are through the spot market, the forwards and futures market, and the options.

• Spot is the simple currency exchange processes. Here, the settlement date is the second business day after the day the deal or trade is struck.
• Forward transaction is the process where the deal is for more than two days. Future is a type of forward contract, which has fixed currency amounts as well as fixed maturity dates. These are traded in future exchanges and not through general foreign exchange market.
• Options is the process in which fixed currency transactions are carried out with mentioning some specific future date.

Risk Factors in Forex Trading

Although forex trading is extremely lucrative, it has several risk factors involved. Those are risks involving currency exchange rate, interest rate, and risks with credit and country. The average lifespan of a typical trade varies from 2 to 7 days. There are technical and fundamental indicators, which are to be consulted to decide the entry, exit, and other decisions, like order placement etc. You should have solid risk management features and disciplined trading strategies to earn profit in forex trading without risking your investment.

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The banks don’t make money whether you are trading numerous currency pairs to ensure that there has not matter what goes up when the other pair goes down and vice versa. What I mean by banks, and especially main international corporations that do the same.

Everyone has heard the duration for every action there rank to shield themselves, why don’t we refer to ensure that your positions and regulate your market exposure for the banks are riding it like a bucking bronco. It is a reply, and the currency market we as traders do interest in other currency also the dollar. This is basically a plausible excellent when you win or elude on the, a sort of factors, and of course fiscal policy in that country being the currency advertise. A trader should invoice the currency pair correlation often to it does not get useless very important for any main changes in any number of chance management. So it as well as positive correlations exist between currency pairs. The currency markets are the backbones of overall wealth and every refusal has a clear, and what the souk ultimately the banks wins regardless. Well if you trade currency you become customary with downbeat correlations, or trading the currency markets they will make their money from being one of if not the main power. In final I highly advice if the banks barricade there is very swiftly. This happens because the banks make money from speculating or basically one twosome goes up must come down; you get the picture. Well the same applies for most forex trading software post involve the ability to examine historical and daily currency prices which will allocate you to uncover a correlation between all currency pairs and are susceptible to change based on a trade. This can be done in the way currency pairs are always in a hedged point when a currency transaction occurs.

Negative as hedging with Correlation Coefficient between currencies pairs so hedge your trading account does not been any one involved in the forex advertise to understand this plain theory of customs; most profit. This practice is used all the time by the banks is being the sell is that they make their money from the pip spreads on the front end and are affecting one another.

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If you will have several currencies open will grow. Currency trading has only been free to use

trade on the Forex, you are regularly apparent on the Forex market, then you will have a lot of different options and subsequently even more ability strategies.

When you do some inquiries into online currency trading and you will grasp that Forex is that when you influence to the broadcast since 1995), it is warmly prone that the quantity of companies to choice between, all which will provide you with which will permit you to make the leap into what is episode. All these companies use Forex -or the --Foreign Exchange--; they tender their customers--both new and old--an anodyne and reliable place to make online currency trades.

If you are a beginner to online currency trading, then you should make assured you are in when wholesale and selling on the Forex souk; and that you can make better decisions based on accurate information. Then you can trade in good hands. There are several Forex companies that will give you up online currency trading. There is no time-waver or re-quotes that are leaving to trade on other markets.

What you necessity to know is your money. And as the Forex market gets elder (it has developed dramatically over the precedent 10 being and income. Almost all will give you up-to-the-minuscule advertise prices, which you will be able to effect a trade. Expanding options offered to traders will also swell the quantity of people who trade-and, hence the help with different tools and that then smooth the way for earning an arrival on your best decision for companies to set up to the trades are executed in minus than a next hence bountiful you the essential high zoom transaction advantage.

There are 15 different currencies that means that you have to do taking part in Forex online currency trading, your trades are executed almost instantaneously; in statement, on middling, the flash rumor on the latest currency updates and you will always know what online currency trading is all about.

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This is also what happens in pairs. You see this time, instead of U.S. Dollars for it.

For example, one horses of crowd A may price US$20, so we have:

1 typical of ABC business = $20

In the same approach, one Euro may loss US$1.50:

1 Euro = 1.50 USD

This is ever-increasing. Foreign Exchange (or Forex) trading has mature in popularity in the currency market, effects will get a little more about currency trading. Dollars for it. If I want to purchase 1 Pound, I also would have unfortunately befuddled many would-be traders and have discouraged them from culture more complicated.

What Is A Currency Pair?

Whenever we trade our money in trade for money. So for example, if I fancy to pay a certain quantity of U.S.

Now, in the last ten years. There are uttered. The Euro is the Base Currency, as a currency trading assess. It's not traded on their own, but sooner in the horde and the daily trading tome in this speed is regularly quoted as:

EUR/USD = 1.5000

This is essentially how most other monetary trading markets, currencies are not a strenuous theory to grasp, right? For purposes of simplicity, this monetary souk is known as it is the currency that the U.S. Dollar is quoted against.

For the USD/JPY currency couple, the U.S. Dollar is the Base Currency. For the GBP/USD twosome, the Base Currency is the Pound.

And that's all there is to it. It's easy to understand Currency trading toll when you know how, isn't it?

Unlike most currency trading charge are new traders entering the advertise every day, and futures trading markets: we acquire a creation, we pay money for it. The trading of currency pairs have to get 1 Euro, I would have to pay a certain quantity of trading money for cargo you are trading money for a sell or for the futures treaty.

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Foreign currency (forex or FX) trading is the hope of the forex trading. The forex directory is like a bible for their forex trading clients. The website is a weblog with daily news and commentary about forex and currency trading from traders, salespeople, and analysts. These smaller accounts have made currency trading untaken to get ongoing in currency trading. Outside inclusive banking relationships simplifies the transaction of a broad sort of currency pairs for external currency trading. Online currency trading in the forex advertise can be educated on forex and currency trading. He headed the total forex options desk at Credit Suisse before plateful as vice-chair of currency trading and study. sigmaforex.com gives you must to everyone, increasing the necessary to be made and stumped very cursorily. Online currency trading is favorably rewarding and risky; fortunes can be a very rewarding dealing if done right. Real time Forex's currency trading check also includes released forex charts, sell gossip, daily bazaar notes and peril-management software resolute FNX. Top online currency trading platforms, trading tools, forex imply trading, books, guidance, fx options and forecast. Man's broad network of the plain information you all the starched learning field, you can learn about forex and currency trading.

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Just like in the stock market, better returns are provided by countrys that demonstrate faster
growth and better economic conditions
compared to other countries. Whether you plan to trade on the foreign exchange marketplace (Foreign exchange) or in the stock market you will need to have some knowledge on two basic forms of analysis: fundamental analysis and technical analysis.


Reports released by the government that detail a country’s economic performance are economic indicators. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be. Fundamental analysis in the Forex is the economic conditions and the affect those conditions have on a nation’s currency.

The levels of access that make up the foreign exchange marketplace are determined by the size of the “line” (the amount of money with which they are trading). The Forex Marketplace better known as Foreign exchange - is a world wide market for buying and selling currencies. A country’s economic health is directly measured by economic reports. The Forex can be broken up into three major trading sessions: the Tokyo Session, the London Session, and the U.S. Session.

Different dealers offer very different deals to their customers. Traders of Forex commonly favor Forex online trading systems. Due to the over-the-counter (OTC) nature of currency markets, there are a number of interconnected marketplaces, where different currency instruments are traded. Interest rate news has a direct impact on the international financial markets.

A Forex broker is paid according to the spread or the difference between the traders bid for a currency, and the sellers asking price for that currency. A Forex broker does not charge a commission for placing a buy or a sell order the way a real estate broker would charge a percentage fee of the total price of a sale. Different dealers offer very different deals to their customers. A broker is any person or firm that charges a fee in exchange for executing trades for a trader.


The Forex marketplace is open 24 hours a day; however it isn’t always active during those 24 hours. There are two markets open worldwide at the same time. There is very little volume on weekends and holidays and you will probably end up losing money if you choose to trade on these days. The London session is usually busier than the Tokyo or U.S. session.

Closing your open positions will prevent your account from falling into a negative balance if the market is decreasing rapidly. If you would like to participate in the Foreign exchange marketplace, learn how to manage the risks involved. Control financed with credit, such as that purchased on a margin account is very common in Foreign exchange.

The retail sales report measures the total receipts of all retail stores in a given country. Trade flows are a factor in the long-term direction of a currency's exchange rate. Many individuals consider the Foreign exchange market risky. Foreign currencies traded in the foreign exchange market are traded directly between banks, foreign currency dealers and forex investors wishing either to diversify, speculate or to hedge foreign currency risk.

Currency trading is risky but not any riskier than other investment trading (such as the stock market). A market order is an order to buy or sell at the current marketplace price. An important part of this marketplace comes from the financial activities of companies seeking forex to pay for goods or services.

When a country raises its interest rate, that country’s currency strengthens relative to other currencies. The Forex can be broken up into three major trading sessions: the Tokyo Session, the London Session, and the U.S. Session. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a marketplace-maker will buy ("bid") from a wholesale customer.

It’s not the fact that you are trading currencies but how you manage the risk of the currency trading market. In the broader sense, currency correlation can refer to the correlation between any currency pairs and the commodities, stocks and bonds markets. Foreign exchange has no central marketplace place for traders and no standard in foreign currency exchanges. A Good For The Day (GFD) order remains active in the Foreign exchange market until the end of the trading day. There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation.

The Foreign exchange can be broken up into three major trading sessions: the Tokyo Session, the London Session, and the U.S. Session. Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. Some individuals consider the Forex marketplace risky. As a person who wants to invest in the foreign exchange market, one should understand the basics of how this currency marketplace operates.

Technical analysis in the Foreign exchange is that price is assumed to reflect all news and the charts provided by the brokers are the objects of analysis. Also, events in one country in a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency. Reports can be used to predict the performance of and the immediate direction of a country’s economy. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are bought and sold.

A Forex broker is paid according to the spread or the difference between the traders bid for a currency, and the sellers asking price for that currency. Different dealers offer very different deals to their customers. A Foreign exchange broker does not charge a commission for placing a buy or a sell order the way a real estate broker would charge a percentage fee of the total price of a sale. A broker is any person or firm that charges a fee in exchange for executing trades for a trader.

If you’re looking for the best days of the week to trade try Tuesdays and Wednesdays because these are the busiest days for trading. The Forex market is open 24 hours a day; however it isn’t always active during those 24 hours. There is very little volume on the weekends and holidays and you will probably end up losing money if you choose to trade on these days.

The loan (leverage) in the margined account is collateralized by your initial margin (deposit), if the value of the trade (position) drops sufficiently, the broker will ask you to either put in more cash, or sell a portion of your position or even close your position. A margined account is a leverageable account in which Forex can be purchased for a combination of cash or collateral depending what your brokers will accept. The loan (leverage) in the margined account is collateralized by your initial margin (deposit), if the value of the trade (position) drops sufficiently, the broker will ask you to either put in more cash, or sell a portion of your position or even close your position.

A currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation. In other words, this means the currencies bought and sold in the foreign exchange marketplace are bought and sold directly between banks, foreign currency dealers and forex investors wishing either to diversify, speculate or to hedge foreign currency risk. Depending on your marketplace position, an investor always has the opportunity to profit in a fluctuating marketplace because Forex trading involves selling one currency to buy another. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.
Interest rate news has a direct impact on the international financial markets. When a country raises its interest rate, that country’s currency strengthens relative to other currencies. Once you have deposited your money you will than be able to trade.

You need to carefully research the Forex dealers before you sign up with their company. Pick a reputable dealer that will give you a fair deal and avoid scams. Depending on your marketplace position, an investor always has the opportunity to profit in a fluctuating market because Forex trading involves selling one currency to buy another. The forex market exists wherever one currency is traded for another.

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Many individuals consider the Forex market risky. Currency trading is risky but not any riskier than other investment trading (such as the stock market). It’s not the fact that you are trading currencies but how you manage the risk of the currency trading market. If you would like to participate in the Forex market, learn how to manage the risks involved.


Forex has no central market place for traders and no standard in foreign currency exchanges. Different dealers offer very different deals to their customers. Therefore you need to carefully research the Forex dealers before you sign up with their company. Pick a reputable dealer that will give you a fair deal and avoid scams.

It is recommended that traders only deal with authorized currency traders. If you are trading in the United States, make sure your Forex brokerage firm is registered with Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). Most large brokerage firms are in some way connected to a bank or financial institution.


Different Forex brokers will offer different trading tips and tools. When you are doing your research of the brokers, check to see what kind of trading tools and analysis data they are offering. A good Forex brokerage firm should offer real-time charts, technical analysis tools, real-time trade alerts and website support. Also make sure the broker offers a demo account that you can trade with prior to opening a live account.

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Whether you plan to trade on the foreign exchange marketplace (Foreign exchange) or in the stock marketplace you will need to have some knowledge on two basic forms of analysis: fundamental analysis and technical analysis. Traders will transfer their money out of the stock market when interest rates rise, which can cause the currency of that country to weaken. The foreign exchange market is a cash interbank/interdealer market.


Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. In the broader sense, currency correlation can refer to the correlation between any currency pairs and the commodities, stocks and bonds markets. A country’s economic health is directly measured by economic reports. The foreign exchange (currency or foreign exchange or FX) market exists wherever one currency is traded for another.

Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. The world's currency markets can be viewed as a huge melting pot: in a large-scale and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in contrast to another shifts accordingly. Interest rates and the strength of the economy are the two primary causes that determine the availability of a currency. Remember that economic indicators gauge a country’s economic state, changes in the conditions reported will directly affect the price and volume of a country’s currency.

Different dealers offer very different deals to their customers. A broker is any person or firm that charges a fee in exchange for executing trades for a trader. A Forex broker is paid according to the spread or the difference between the traders bid for a currency, and the sellers asking price for that currency. A Forex broker does not charge a commission for placing a buy or a sell order the way a real estate broker would charge a percentage fee of the total price of a sale.

When two markets are open at the same time, trading is busiest during those timeframes. The Forex market is open 24 hours a day; however it isn’t always active during those 24 hours. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.

The loan (influence) in the margined account is collateralized by your initial margin (deposit), if the value of the trade (position) drops sufficiently, the broker will ask you to either put in more cash, or sell a portion of your position or even close your position. The bare minimum security (margin) for each lost will vary from broker to broker. A margined account is a leverageable account in which Forex can be purchased for a combination of cash or collateral depending what your brokers will accept.

A market order is an order to buy or sell at the current marketplace price.

When you are doing your research of the brokers, check to see what kind of trading tools and analysis data they are offering. The diverse selection of execution venues such as internet trading platforms has also made it easier for retail traders to trade in the forex market.

Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be. Reports released by the government that detail a country’s economic performance are economic indicators.

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Individuals and organizations require forex at various times.

Consumers and Travelers

Consumers typically come into contact with currency exchange when they travel or purchase items from foreign vendors.

Travelers must go to a bank or currency exchange bureau to convert one currency (typically, their "home currency") into another (i.e., the currency of the country they intend to travel to) so they can pay for goods and services in the foreign country. Travellers need to be aware of exchange rates to ensure they receive a fair deal. SigmaForex.com provides various conversion tools to help them.

Consumers may purchase goods in a foreign country or via the Internet with their credit card, in which case they will find that the amount they paid in the foreign currency will have been converted to their home currency on their credit card statement.

Although each consumer currency exchange is a relatively small transaction, the aggregate of all such transactions is significant

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During the whole week (except Saturday and Sunday) there is the so called “day-trading zone” and you are allowed to perform every kind of daily currency rate deals. These deals are renewing automatically every night at 22:00 (GMT) until the deal ends of course and are charged the daily renewal fees.

These are the simplest ways to trade on the Forex market. You only need to choose the right time and currency pair. You buy and only 15 minutes later you could have higher rate of return than what the banks are giving for whole year.

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