How to earn from forex

Three Parts:Learning Basic Forex PrinciplesFinding the Right Forex BrokerTrading in Forex
"Forex" is a shorthand way of referring to the foreign currency exchange. It's the market where currencies from different countries are traded.[1] Investors trade in forex for the same reason that they trade in any other market: because they believe that the value of certain currencies will go up or down over time. Remember, currencies are commodities just like anything else. On some days, they'll go up in value. On other days, they'll go down in value. You can use forex to take advantage of the fluctuation in foreign currency prices to make money.

Learning Basic Forex Principles
Know how currencies are traded in the forex market. The forex market is a global exchange of currencies and currency-backed financial instruments (contracts to buy or sell currencies at a later date). Participants include everyone from the largest banks and financial institutions to individual investors. Currencies are traded directly for other currencies in the market. As a result, currencies are priced in terms of other currencies, like Euros per US Dollar or Japanese Yen per British Pound Sterling. By effectively seeking price differences and expected increases or decreases in value, participants can earn (sometimes large) returns on investment by trading currencies.[2]
Understand currency price quotes.
 In the forex market, prices are quoted in terms of other currencies. This is because there is no measure of value that is not another currency. However, the US Dollar is used as a base currency for determining the values of other currencies.
For example, the price of the Euro (EUR) is quoted as (price quote number) USD/EUR.
Currency quotes are listed to four decimal places.
Currency quotes are simple to understand once you know how. For example, the Yen to US would be quoted as 0.0087 JPY/USD. You should understand this as "you need to spend 0.0087 US Dollars to buy one Japanese Yen."
Learn about arbitrage.
Arbitrage, put simply, is the exploitation of price differences between markets. Traders can purchase a financial instrument in one market with the hope of selling it for more in another.[3] Within the forex market, arbitrage is used to profit from differences in the quoted prices of currencies. However, these differences do not occur between two currencies alone, so the trader must use "triangular arbitrage," which incorporates three different trades, to profit from differences in prices.
For example, imagine that you notice the following quoted prices: 20.00 USD/MXN, 0.2000 MXN/BRL, and 0.1500 BRL/USD (between the US Dollar, Mexican Peso, and Brazilian Real). You wonder if there is an arbitrage opportunity here so you start with a theoretical value of $10,000. With your $10,000, you could buy 200,00 Pesos (10,000*20.00 USD/MXN). Then, with your 200,000 pesos, you could buy 80,000 Reals (200,000*0.2000 MXN/BRL). Finally, with your 80,000 Reals, you could buy $12,000 Dollars (80,000*0.1500 BRL/USD). By making these trades, you've gained a $2,000 profit ($12,000 -$10,000).
In reality, arbitrage trades offer very little, if any, profit and price differences are corrected almost immediately. Lightning-fast trading systems and large investments are used to overcome these obstacles.
Trades in the forex are made in terms of lots. A standard lot is 100,000 units of a currency, a mini-lot in 10,000 units, and a micro-lot is 1,000 units.[4]
Understand leveraged trades.
 Traders, even very good ones, are often only left with a few points of arbitrage differences or trading gains. To counter these lows return percentages, the traders must make trades with large amounts of money. To increase the money available to them, traders often use leverage, which is essentially trading with borrowed money. Compared to other securities types, trades made in the forex markets can be made with incredibly large amounts of leverage, with typical trading systems allowing for 100:1 margin requirements.[5]
The 100:1 requirement means that you only need to actually deposit 1/100th of what you are investing in the currency. The deposit is known as the margin and protects you against future currency-trading losses.[6]
Trades using leverage magnify both potential gains and potential losses, so be careful when making these types of trades.
Part
2
Finding the Right Forex Broker
Ensure the broker is compliant with prevailing regulations. The broker should be a member of the National Futures Association (NFA) and be registered with the U. S. Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant and Retail Foreign Exchange Dealer.[7] Usually, you can determine if the broker is in compliance by visiting the "About Us" section of its website. That's where the company will disclose if it's a member of the NFA and registered with the CFTC.
The NFA establishes rules that preserve the integrity of the currency exchange market.
The mission of the CFTC is to "protect market users and the public from fraud, manipulation and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive and financially-sound futures and option markets."
Ensure that the forex pairs you want to trade are offered. It may be the case that you're looking to trade a specific pair of currencies (for example, U.S. dollars for Swiss francs). Be absolutely certain that the brokerage you're considering offers that pair.
Check the reviews.
 If you think you've found a great brokerage, search online for reviews of the brokerage and see if other people have had a good experience. If you find that the vast majority of reviewers are complaining about the brokerage, move on.
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Look at the trading platform. Make sure that the trading platform is designed in such a way that you find it easy to use. Usually, brokerage sites will offer screen shots of their trading platforms online. You might also find some YouTube videos showing people actually using the trading platform. Be sure that it's the kind of platform you can work with.
Pay attention to the commissions. You're going to have to pay money every time you make a trade. Be sure that the commission you're paying is competitive.
Trading in Forex Successfully
Use a practice account. As with everything else in life, you get better at forex trading with practice. Fortunately, almost all of the major trading platforms offer a so-called practice platform that you can use to trade currency without spending any of your hard-earned money. Take advantage of that platform so that you don't burn cash while you're on a learning curve.
When you make mistakes during your practice trading sessions (and you will), it's important that you learn from those mistakes so that you avoid making them again in the future. Practice trading won't do you any good if you're not benefiting from the experience.
Start small. When you've completed your practice trading and have determined that you're ready for the real world, it's a good idea to start small. If you risk a significant amount of money on your first trade, you might find that fear of loss kicks in and your emotions take over. You might forget what you've learned in your practice trading and react impulsively. That's why it's best to invest small amounts at first and then increase the size of your positions over time.
Keep a journal. Record your successful and unsuccessful trades in a journal that you can review later. That way, you'll remember the lessons of the past.
Look for and take advantage of arbitrage opportunities. Arbitrage opportunities pop up and disappear many times every day so it's up to you as a trader to locate them and make your move. Looking for these opportunities manually is almost impossible; by the time you've calculated whether or not arbitrage exists, the moment is over. Luckily, many online trading platforms and other websites offer arbitrage calculators that can help you locate opportunities quickly enough to take advantage of them.
Become an economist. If you want to be a successful forex trader, you're going to need an understanding of basic economics. That's because macroeconomic conditions within a country will affect the value of that country's currency. Pay particular attention to economic indicators like the unemployment rate, inflation rate, gross domestic product, and the money supply.[9] Even more important: pay attention to the trend in those indicators so you get an idea of where they're headed.
If a country is about to enter an inflationary period, for example, then that means that the value of its currency is about to go down.[10] You wouldn't want to buy that currency.
Pay attention to countries with an economy that's sector-driven. For example, Canada's dollar tends to move in tandem with crude oil. If there's a rally in crude oil prices, it's likely that the Canadian dollar will also appreciate in value. So, if you think that oil will increase in value in the short-term, it might be a good idea to buy the Canadian dollar.
Follow a country's trade surplus or deficit. If a country is running a healthy trade surplus, that means that buyers of its products will have to convert their currency into the nation's currency first. That's going to spur demand for the currency and cause it to appreciate in value. If you think a country's trade outlook is going to improve, it might be a good idea to buy that country's currency.
Remember the "all other things being equal" mantra. There are a number of principles of sound forex trading mentioned in the previous step. However, the economic conditions that are described there don't exist in a bubble. You have to look at the complete economic picture before purchasing a country's currency.
For example, a country could run a healthy trade surplus, which might cause its currency to appreciate. At the same time, that country could be a sector-driven nation with a currency that's tied to oil. If oil is dropping at the same time that its trade outlook is improving, its currency might not appreciate in value.
Learn to read charts like a pro. Technical analysis is another way that you can make money in forex. If you examine the historical chart for a specific currency, you might notice certain patterns in that chart. Some of those patterns can offer predictions about where the currency is going.
The head and shoulders pattern is an indication that the currency is about to break out of its price range.[12] That's a technical indicator used by many forex traders.
The triangle pattern is an indication that the high-low range of a currency is tightening.[13] It's also a signal that the currency could break out, depending on the overall direction of the triangle.
An engulfing pattern is noticeable on candlestick charts. That's when the range of one candle completely engulfs the range of the previous candle. In that case, the currency is likely to move in the direction of the engulfing candle. It's an excellent trading signal used by many forex investors.

Forex for begginers

With today's sophisticated financial market operating worldwide, world currencies now have their own distinct sets of resources for measuring their worth over time. The general Forex, or foreign exchange market, helps to promote the comparison of different world currencies against each other, and against other assets, to help individual traders and investors take advantage of conditional values for those currencies. One resource is in the form of currency charts that provide a visual demonstration of the worth of a currency against other assets. If you need to read currency charts in order to get a better idea of currency values, here are some of the basic steps involved in utilizing these financial tools.


Method-1
Learning the Basics
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Get access to up-to-date currency chart information. In order to read and benefit from currency charts, you'll need to get them from a legitimate provider.
Most of the smaller traders and investors who profit from currency trading use charts that are offered directly from their brokerage services. New online brokerage services often include tools, like currency charts, in order to help their clients understand current pricing.
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Select a time frame for your currency chart. One of the most important steps in using currency charts, or any other kind of financial chart, is to set a specific time frame. The values that you view are only relevant to the specific time frames that you establish for them. With a paper chart, you can crop the chart for your specified time frame, where online tools often enable the user to change the view to a specific time frame, for example, 1 day, 5 days, 1 month, 3 months, 6 months or 1 year.
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Observe your currency chart for the desired time frame. You will see a line graph that represents changes and fluctuations in currency value over that period of time.
Look at your line graph against your Y axis. The Y axis, or horizontal axis, for a currency chart most often indicates a comparative asset price. When a line fluctuates, it shows how your selected currency performs against the currency or asset that is represented in the Y axis.
Check your X axis. The X axis for your currency chart represents your time frame. You will see that both of these axes have scaled, segmented values, where your line graph fluctuates in a variable way.
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Look for specific chart structures. Advanced traders and others look for specific visuals in a currency chart to try to predict which way future prices will go.
Understand candlestick charting to take advantage of this advanced financial resource. Candlestick charts show a range of traits for a specific trading day, with a top and bottom that illustrate price movement. Many currency charts include candlestick charting, especially online ones, and by observing these charts correctly, you can know much more about the price than just how it has changed over a period of time.
Look for items like Fibonacci retracement. A Fibonacci retracement is a specific kind of price spike or dip where a reversal can signify a general trend. Read up on this sort of predictive tool and apply it to your currency chart observation.
Look for movement against moving averages. Moving averages tell you how the price has changed over a longer time frame. These may be helpful when you are viewing your currency chart.
Method-2
Reading Candlestick Charts
Understand what the chart consists of. There are no calculations required to interpret Candlestick Charts. They are a simple visual aid representing price movements in a given time period. Each candlestick reveals four vital pieces of information:
the opening price, the closing price,
the highest price and the lowest price the fluctuations during the time period of the candle.
In much the same way as the familiar bar chart, a candle illustrates a given measure of time.
The advantage of candlesticks is that they clearly denote the relationship between the opening and closing prices.
Understand that candlesticks display the relationship between the open, high, low and closing prices. This means that they cannot be used to chart securities that have only closing prices. Interpretation of Candlestick Charts is based on the analysis of patterns. Currency traders predominantly use the relationship of the highs and lows of the candlewicks over a given time period. However, Candlestick Charts offer identifiable patterns that can be used to anticipate price movements.
Learn the patterns. There are two types of candles: The Bullish Pattern Candle and the Bearish Pattern Candle:
A white (empty body) represents a Bullish Pattern Candle. It is used/denotes when prices open near the low price and close near the period’s high price.
A black (filled body) represents a Bearish Pattern Candle. It is used/signifies when prices open near the high price and close near the period’s low price.
Understand how to read the Bullish Candlestick Formations:
The Hammer is a Bullish Pattern if it appears after a significant downtrend. If the line occurs after a significant uptrend, it is called a Hanging Man. A small body and a long wick identify the Hammer. The body can be empty of filled in
The Pricing Line is a Bullish Pattern where the first candle is a long, Bear candle, followed by a long Bull candle. The Bull candle opens lower than the Bear's low, but closes more than halfway above the middle of the Bear candle's body.
A Bullish Engulfing Line is a patter strongly Bullish if it occurs after a significant downtrend. It may also serve as a reversal pattern. It occurs when a small Bearish candle is engulfed by a large Bullish candle.
The Morning Star is a Bullish Pattern signifying a potential bottom. The star indicates a possible reversal and the Bullish candle confirms this. The Star can be a Bullish or Bearish candle.
In a Bullish Doji Star, the star indicates a reversal and a Doji indicates indecision. This pattern usually indicates a reversal following an indecisive period. You should wait for a confirmation before trading a Doji Star.
Understand how to read the Bearish Candlestick Formations:
A Long Bearish Candle occurs when prices open near the high and close lower, near the low.
The Hanging Man pattern is Bearish if it occurs after a significant uptrend. If this pattern occurs after a significant downtrend, it is called a Hammer. A Hanging Man is identified by small candle bodies and a long wick below the bodies, and can be either Bearish or Bullish.
Dark Cloud Cover is a Bearish Pattern that is more significant if the second candle's body is below the center of the previous candle's body.
Understand how to read Neutral Candlestick Formations.
Spinning Tops is a neutral pattern that occurs when the distance between the high and low, and the distance between the open and close, are relatively small.
A Doji candle implies indecision. The open and close are the same.
A Double Doji (two adjacent Doji candles) implies that a forceful move will follow a breakout from the current indecision.
The Harami pattern indicates a decrease in momentum. It occurs when a candle with a small body falls within the area of a larger body.
Understand how to read the Reversal Candlestick Formations:
A Long-legged Doji often signifies a turning point. It occurs when the open and close are the same, and the range between the high and the low is relatively large.
The Dragonfly Doji also signifies a turning point. It occurs when the open and close are the same, and the low is significantly lower than the open, high and closing prices.
A Gravestone Doji occurs when the open, close, and low prices are the same, and the high is significantly higher than the open, close and low prices. It also signifies a turning point.
Stars indicate reversals. A Star is a candle with a small, real body that occurs after a candle with a much larger, real body where the real bodies do not overlap. The wicks may overlap.

-The Misconceptions about Education

By: Hillel FuldAs attractive as the Forex market is to many people, the hard statistics show that the vast majority of Forex traders fail in the long run. That is not to say that there are not many traders that make a nice living from the Forex market, there are. However, if we can understand why so many people fail, maybe we ourselves can become a part of the minority that succeeds.
Here are some common mistakes made by Forex traders, which will act as a Forex guide:
-The Search for the Magical SolutionA lot of people are attracted to the Forex market because it generates a lot of hype. The reason it generates so much hype, is because the potential for Forex profitability is endless. However, the nature of hype is that it misses a few details along the way. Yes, you can make a lot of money from Forex trading, but not without working hard at it. There is no one magical indicator that once you figure it out, the dollars start pouring in. It is true that technical indicators can give you a hint of what is to follow in the market, but nothing, absolutely nothing is 100% in the Forex market. Like everything in life, best things come to those who wait. So learn the market, practice, read, and only then should you trade. Expect some loses and do not let them affect your future trading, and just keep at it. You will eventually see your bank account grow assuming you make educated decisions along the way.
-The Desire for Easy MoneyMany people, in fact all people, after working a 9-5 job, are interested in a way to earn easy money. Since the Forex market has become such a buzz word over the last few years, people think this easy money will come via Forex trading. They could not be more wrong. It is true that Forex trading can be from the convenience of your own home, and you have the ability to buy hundreds of thousands of dollars at the click of a button. Yes, that part is easy. But then again, so is throwing your money into the wind. The trading itself might be easy, but making profits consistently is far from easy. It takes a lot of discipline, a broad education on the topic, and a tremendous amount of patience on the part of the trader.
-The Need for a RushThere is no doubt that the ability to trade astronomical amounts of money can cause excitement and a rush for many traders. However, if that is the reason you entered the Forex market, you are in for a very big surprise. This might be the most expensive endeavor you ever tried to achieve a rush. It is true that the available Forex leverage of the Forex market gives you endless options as a trader, but the danger it presents is just as great. In fact, excitement is not the only emotion that should not drive you in the world of Forex. All emotions should be left outside of the "Trading room".
-The Lack of Self AwarenessI have said this before and I will say it again. Forex trading can be an emotional and psychological Forex roller coaster. So many emotions can be a part of your trading day and if you do not have enough control over them, can be detrimental to your Forex career. You need to be completely in tune with yourself and adjust your trading plan according to your personality. Just to explain with an example, do not become a trader that leaves positions open over night if you know about yourself that this will cause anxiety and fear. Trade with a plan that fits you and who you are.
Just like you would not purchase an expensive diamond without a basic knowledge of diamonds, so too, you should not invest your hard earned money in the Forex market without doing extensive research about the complicated world of Forex. Whether you are a believer in the philosophy of fundamental analysis or you believe the trend is your friend, in order to trade efficiently, you need to understand both technical and fundamental analysis. The education of a Forex trader never ends, you learn on every position you open. If someone things they can trade successfully without learning about the origins of the Forex market as well as its inner workings, they are very wrong, and will eventually learn it the hard way.
Just to summarize, Forex is a discipline like any other. I don't think anyone would stand before a judge or operate on a patient (ignoring for a second the legal issues) without having gone to medical or law school. The same applies for Forex. Learn as much as you can before risking your money. That is not the only thing Forex has in common with other fields. Just like a good lawyer or doctor is always improving their skills with time, so too the Forex trader. Train yourself to become the ultimate trader by implementing the above points, and you will be pleasantly surprised by the results you will see from the Forex market.

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Forex Trading for Beginners

By: Hillel Fuld
After working in the Forex industry for some time now, I have been met with one common question countless times. “Isn’t Forex trading just like Forex gambling”? Before I completely negate that question and explain why they are totally different, let me first explain that there is something to that question. 
It is true that there is some percentage of a gamble when opening up a Forex position. No expert, no matter how long they have been trading and analyzing the Forex market, can tell you in full certainty what the US Dollar will do today. There are many tools that can be used in order to help you make a more educated decision, but do not be fooled by so called Forex experts when they tell you they have it figured out. In fact, it is simple math. If they have a 3 trillion dollar a day market figured out, why are they not billionaires? If they really knew the key to eliminating the Forex risk, they would not be wasting their time trying to convert you into a Forex trader. Even in their trading, there is a certain element of Forex gambling.
No one knows “The Forex Secret”. You know why? Because there is no such thing. You can familiarize yourself with all the technical indicators, study fundamental analysis from dusk till dawn, and there still is some sort of a risk when trading Forex. You are still going to be met with a certain factor of Forex gambling.
If you are still reading, you know that while there is great risk in Forex, the possible reward is something you cannot ignore. The potential for making money in Forex trading is as close to endless as any market on the globe. While the Forex gambling/Forex trading comparison is not totally baseless, it is also not accurate and the following is a list of five attributes that differentiate the two industries. 
Numbers
Players
Tools
Emotions
Strategies
 It is true that a very high percentage of traders end up losing, and if you ask me why this is, I will tell you it is because they trade blindly and with no strategy. This is the biggest mistake a trader can make. Before you trade a penny, you need to make some serious decisions about your trading goals and limits. Once you have make those decisions, you must implement them using your trading platform. Use Stop Losses to prevent your emotion and your inner voice from telling you to stay in the trade because it has to go up eventually. Use Take Profits to prevent your natural human greed from telling you not to get out now since your currency will continue to increase in value. Stop your losses and take your profits based on trading strategies and not weak human emotions.   : One of the main issues with gambling, as we all know, is that it causes addiction. If we think about this for a second, we will understand that the reason this is, is because people let their emotions get the best of them. People step into casinos with nothing but their desire to make money. When they do not fulfill this desire, they try again and it is not long before they have lost all their money, which usually leads them to gamble even more, and often more aggressively. This is of course a big problem. In forex trading, on the other hand, the first rule any trader knows is to leave their emotion out of the equation. Trade objectively and scientifically. Set your trading goals, and stick to them. This of course prevents overcompensating with trades, when you have lost money, or letting your greed take over when you are profitable. However, the obvious question is “Is it really possible to leave your emotion out of the picture”? This leads me to my next point, use trading strategies.   : While there is a risk factor involved in Forex trading, you are not totally in the dark when opening a position. There are various schools of thought that dedicate much time and resources trying to eliminate as much of that risk as possible. Whether you are a believer in technical analysis, and the famous saying “The trend is your friend” or you trade with your face glued to the Forex news since you think fundamental analysis is the way to go, Forex is not about luck. You can watch and analyze the Forex market for days before opening a trade, as well as keep a close eye on the currency you are looking to buy, and only then, based on your studies, make your move. I am pretty sure such tools do not exist in the gambling world, which leaves you in the hands of luck or fate. Either way I would not want to depend on chance with my hard earned money. How about you?   : The Forex market is backed by the biggest and most important financial institutions on the globe. It is true that traders do not trade with the banks, but rather on the retail market, even so, the fact that the market is supported by such organization provides a much higher level of legitimacy than the gambling world. While gambling always faces challenges on the legal front, Forex is as legitimate as any other market, such as stocks or commodities. So if you are interested in spending your hard earned money and taking a risk, wouldn’t you be better off putting it where you know the law and morals are on your side?   : Before I get into morals, ethics, legal issues, and legitimacy, let’s just focus on the reason anyone gambles or trades Forex; money. There is absolutely no comparing the amount of money traded daily in the Forex market to that of the gambling arena. In fact, I am not aware of any industry (ok maybe there are a few exceptions) that handles so much money on a daily basis. Depending on who you ask, there are anywhere between 2 and 5 trillion dollars traded daily in the Forex market. I could not find exact statistics about how much money passes through the casinos daily, but I am pretty sure the numbers do not compare. 

It is for this reason that a very high percentage of Forex traders end up losing more than they gain. For this exact reason, it is crucial when first opening up a Forex trading account that you only use money that you can afford to lose. Call it vacation money, designate it for your Forex account, and face the fact that you might lose it.

Many other differences exist between the casino/gambling industry and the Forex market. These are just some examples. If you have more, or disagree with one of the above points, feel free to speak your mind in the comments.