The Japan Finance Minister Azumi said that the Group of Seven countries have come to a decision during a conference call held last Tuesday to strengthen cooperation to  suppress the Eurozone debt crisis. Central banks and the G7 Finance Ministers promise to work as one to get a solution to the worsening problem of Greece and Spain.

The rise of yen and the latest turn down in the prices of the Japanese stock market are damaging the economy of their country and that the G7 have come to an agreement to join forces to prevent drastic movement of Forex.

Director of Currency Research for Global Forex Trading (GFT) Kathy Lien says that there is no joint statement that will be issued, and the G7 meeting is a complete disappointment. She also added that “Their lips are sealed which tells us that they are either working on something big or failed to reach an agreement.”

Director Lien is also hoping that at the next G20 meeting the officials will announce much support either from the IMF or from Europe internally.

Tuesday, Cristobal Montoro, the Spain treasury minister announced in an interview in a radio that the Spanish bond’s high risk premium is keeping them away from bond markets that stops Spain to refinance its debt. Last Friday, June 1^st, the 10-year bond spread between Spain and Germany hits an all time European Union record of 548 basis points.

The treasury minister guaranteed that the recapitalization of Spain’s banks does not need too much funds and he advise European Union institutions to aid Spain get them. Montoro also adhere by the government of Spain’s belief that their nation will not call for a bailout, he also said that it is essential to form a Eurozone banking union.

in the meantime, Germans continue to show their disagreement to direct financing for EU banks that are in debt problems and keeping on pressuring the Spanish to allow aid from the Euro rescue fund.

We’ve already briefly looked at moving averages on this blog and the basic uses for them. They essentially give us a great indication of the overall direction of the market and smooth out the extreme peaks and troughs to give us a more balanced view of what’s going on. They’re an extremely popular type of indicator and a large percentage of trading strategies use them in some shape or form.

You may be thinking that trend definition is all they’re useful for but there’s actually another major use for moving averages that many beginners don’t realise and it can actually be the most powerful way to use them.

Before I describe it we need to back up a second and have a look at how the markets actually move. About 70% of the time the markets are fairly flat and range-bound and the rest of the time they’re trending up or down and those trending periods are generally when we can make the most money as traders. One of the key factors that we need to understand about a trend though is that they don’t simply move solidly in one direction but rather they move up or down in waves. As an example if we have a long up-trend, the market will generally make a series of peaks and troughs getting slightly higher each time.

Unfortunately this means trading isn’t quite as simple as buying whenever there’s an uptrend and selling whenever there’s a downtrend because if you do that there’s quite a big chance that you will buy at the peak of one of the waves and the market will turn against your position. That’s one of the dangers of the common phrase “the trend is your friend” that beginners often live by. The trend is only your friend if you understand how it works and find a way to take advantage of it.

So how can we use moving averages to take advantage of these waves in the trend?

If you apply certain specific types of moving averages to your charts they can actually act as floating support and resistance levels and can therefore give you an indication of when a pullback in a wave is likely to turn and continue in the direction of the trend.

Some examples of the strongest MA’s out there are the 200sma, the 62ema and the 21ema. For trend trading the 21ema is potentially the best one and can give you great trading set-ups over and over again. Next time you’re looking at a chart try applying a 21ema and look what happens during a strong trend. Chances are the market will repeatedly pullback to the moving average and then bounce away and continue in the direction of the main trend. If you combine this knowledge with a good reversal indicator like candlestick patterns you can build an extremely strong trading strategy that works in just about any market.

We will begin to look at trend trading using technical indicators in more detail in the future but for now moving averages give you a great starting point.

Yesterday, Financial Ministry and central bank presidents of G7 discuss through an emergency conference call  the Eurozone’s worsening debt problems. The private conference includes officials from the US, Germany, Japan, France, United Kingdom, Canada and Italy. The G7 discussion focus on the European Central Bank (ECB) meeting or even action Quantitative easing (QE) from the Fed, show that markets are at a very serious stage in the debt crisis. United states officials stated that they expect more action to make Euro banking system stronger in the next 2 weeks  prior to the meeting of the G20 leaders which would be held later this month at Cabos, Mexico.

Decisions on what to do from policy makers will most probably be time-consuming, it will take longer time than the market require, which means that there is a possibility of a large correction in risk that is waiting to happen.

When you first decide to give Forex trading a go there’s two big decisions you need to take early on to determine which path you’re going to go down. Firstly you need to decide whether you’re going to be a technical or a fundamental trader. That decision generally makes itself nowadays with almost everyone (particularly home/retail traders) focussing on technical trading and giving very little time to the fundamentals.

The next decision you need to make and the topic I’m going to look at here are whether to focus on day trading or swing trading. I would say that the majority of new traders try to get into day trading because it seems the most logical way to pursue trading as a full-time career since it can be treated like a 9-5 job in many ways.

With that being said, is day trading actually the optimal way to pursue trading success or is swing trading worthy of some consideration? It’s my opinion that swing trading is actually far easier to become proficient at for a couple of major reasons.

Firstly you need to consider the commission structure of Forex trading. The main way the brokers make money out of you is via the spread of each market so the more trades you take the more commission you’ll pay. The other thing to note is that since your profit targets will always be smaller with day trading the spread actually makes up a higher percentage of your trade. If the spread of the market you’re trading is 2 pips and your profit target is something small like 10 pips then the spread obviously represents 20% of your trade so you need a really big edge to be profitable overall. If on the other hand your target is 100 pips because you’re swing trading then the spread only represents 2% of your trade so your required edge is far smaller.

The other major factor to consider is that the more trades you take and the quicker you have to make decisions on them the more likely you are to make a mistake. Swing trading gives you the time to really think things through and be careful and precise as opposed to day trading which sometimes forces you to rush decisions. This can be particularly difficult from a psychological point of view which can be absolutely critical. Day traders certainly suffer from more mental blow ups than swing traders and the fact that you’re generally forced to watch your trade unfolding makes it very hard to avoid being tempted to move your stop further away or close your trade before it’s hit it’s target. With swing trading once you place the trade you can simply walk away and even turn off your computer if you want.

It would certainly be naive to say that swing trading is “better” than day trading. Both can be hugely profitable and some people are clearly just suited to one more than the other so it can be a very personal decision. I just think there’s a lot of people out there struggling along with their day trading and not really getting anywhere who might have far more success if they gave swing trading a go so please make sure you give it some consideration at the start of your trading journey.

It used to be the case that fundamental analysis was the be all and end all of market speculation. All the famous traders, all the up and comers and everyone else in-between considered themselves a fundamental analyst. Technical analysis was a myth, a load of nonsense dreamt up by traders who couldn’t get fundamental analysis to work for them.

That seems a long time ago now doesn’t it? All you ever see now if you’re looking for trading strategies or trading advice is indicators galore and chart patterns left right and centre. We’ve gone full swing to the point that the standard retail trader doesn’t use fundamental analysis at all. In fact the closest they get is checking an economic calendar to make sure they aren’t opening any trades during a major news release. Even if you try to find some information out about fundamental trading it’s hard to come by and it seems to be limited to large funds and institutions only.

So is it safe to say that fundamental trading is a thing of the past? Are traders right to completely ditch fundamental analysis or is there room for it in your trading plan?

As with all things the truth lies somewhere in the middle. It was absolutely right that traders started opening their minds to technical analysis because clearly it works and it also adds a totally different dimension to trading. By stubbornly refusing to even give any consideration to it traders were really shooting themselves in the foot. That being said, to totally ignore fundamental trading now is to potentially make exactly the same mistake. The fact that it worked for all those years for many well known and successful traders tells you that it can work. Indeed, you could make a strong argument that fundamentals are still what essentially drive the market so learning what the big economic releases mean and understanding other major fundamental factors can surely only benefit you in the long run.

So how can we have the best of both worlds? In my experience the way to mix the two major types of analysis into a coherent trading plan is to use fundamental analysis to establish a bias in the market and to use technical analysis to find a safe trigger point in order to take advantage of it. If for example you’re pretty sure the market’s going to go down based on some key fundamental factors, you might think the obvious thing to do is open a sell in the market at the current price. In some cases it could well be but using technical analysis we can now look for a chart pattern, turning point, candlestick pattern or whatever it is that you like using in order to find a low-risk entry into the market, and we can also use some basic technical analysis to set a logical stop loss level and a logical target level. Trading in this way means that we have two factors working for us in our trades rather than just one so if we do it correctly we should be able to develop an even bigger edge.

The point of this article isn’t to say that we should all be learning fundamental analysis but rather to demonstrate that there’s still potentially a place for it and I wouldn’t write it off as a viable trading strategy just yet.

Friday morning, the Spread between the Germany and Spain government bonds widened to an all new record-high of 546 basis points. The markets keep on punishing the already troubled Spain as the yield on the Spanish ten year bond has reached to 6.63%.

The European Union critized Prime Minister Rajoy’s administration’s financial reforms yesterday, EU said that the reform is not ambitious enough and it is also not going to be effective to resolve its current debt crisis.

Spains reforms for public administration, financial regulation and competitiveness was less than expected, according to the European Commision. It also states its dissappointment with the current administration’s labor reform, which brings in higher public debt level and short term contracts.

When you first decide to give Forex trading a go you will no doubt come across a multitude of systems and services that promise you the world for a small one off fee. The core of what these people offer you is essentially a way to predict the markets either through the use of a certain indicator or some special trading software. Almost without exception these “systems” are a complete failure and lead to losses.

Generally, almost everybody will be sucked in by the sales pitch at least once and some people are still stuck in that loop of system jumping, waiting to find that holy grail system that does what it says on the tin. The fundamental reason why we keep falling for it over and over again is because we have this unquestioned belief that the markets can be predicted. Perhaps it’s time to ask yourself if that’s really the case. Can markets actually be accurately predicted or are they much more random than you currently believe?

The key to understanding the nature of market randomness is to understand what markets actually are. Are they some mystical force beyond human control? Are they a self-controlling entity? Of course not, the truth is that financial markets are simply a visible representation of their participants. If the majority of the participants (or at least the most significant participants) buy into the market then the market will go up as demand exceeds supply. If the majority of those same participants sell into the market then it will go down as supply exceeds demand. We also know that trading is a hugely psychological activity and our buying and selling decisions are affected hugely by our mindsets.

That being the case, the logical conclusion is that to truly predict the markets 100% we would need to factor in not just the strategies and economic factors that are forming peoples decisions but also the psychological principles that are underpinning them. It doesn’t take a rocket scientist to realise that type of prediction is impossible.

So you might think that if we can’t predict the market, how do we ever make money? To answer this you need to understand what a market prediction really is. Nobody in the world can tell you with any certainty that the market is going to move up or down at any specific time no matter how skilled or experienced they are. All a good trader can do (and indeed all they ever need to do) is find a way to pick entries into the market where the odds are stacked in their favour. This is achieved through a mixture of analysis, sound money management, patience and most of all discipline.

Anytime you feel tempted to buy a trading system or package that promises to tell you when and where the markets are going to move or guarantees to make you money without hard work on your part, please try to remember this lesson. If professional traders don’t need to predict the market then why do you?

In the forex market scalping is usually done in high leverage. You target a very small changes in every time you trade. Just 1 to 5 pips (outside the spread) would be Ok. Forex traders who like to profit each day and who aren’t patient enough to study the long term charts do well in Forex trading scalping. To them, this type of short term forex trading technique minimizes their risks since they are able to get out of bad trades quickly. They can also quickly identify small profits in good trades. The small movement in pips in big volumes of currency can results to a significant amount of profits (or loss) at the end of each day.

Short movement in the currency prices during trading day are what scalpers are taking advantage of, however this fluctuation in currency can also cause a lot of losses or even wipe out all your invested money or all your gained profits when doing this in high leverage. Not all broker suggest this kind of trading technique. and not all Forex traders have a system for scalping that have been proven effective. It is essential that traders doing currency scalping is physically and mentally fit to be able to manage the seconds-long trades fast. Those forex scalpers who are not sure if they can buy, sell or close their trade in time mostly rely on forex trading bot they program it to automatically execute trades for them.

Making use of an effective Forex scalping system and discipline makes scalping in the forex market much easier, though discipline is the hardest part to attain this is another reason to rely on Forex trading bot, you can just program your forex bot all the rules of whatever your trading system is, and just let your programmed forex trading system do the scalping for you.

If ever you would like to try a forex trading bot, I suggest you choose an automated forex system that you can relied on to execute your technique on a per tick basis. A good scalping strategy can make you more profits more than a day trader can.

How do FOREX traders develop a strategy? Analysis, no matter if it is Technical of Fundamental Analysis needs information of quality. Let’s take a look at Fundamental Analysis for FOREX trading. In this case, we will be analyzing the economic or political conditions that affect our assets. In this case, our currency account. Many factors can have a positive or negative effect on currency prices. However, the facts that can affect a FOREX position are not infinite. The most important are economic policies, GDP, inflation, growth rate. All this factors go into reports and good traders use these reports properly to give their trading an edge above other traders.

How do FOREX traders apply the Fundamental Analysis? The fundamental analysis is like a road map for their entry and exit points into the FOREX market. If they have a broad overview of the market conditions they will entry the market in an appropriate moment. The laws of supply and demand have an effect on all prices, including currency. And they are influenced by the economic situation around them. The most important elements is how stable the economy is or what is its interest rate. Normally the interest rate, is the most important single indicator about what direction the FOREX will take. Higher interest means more people buying a currency.

A simple picture or the situation in a market is possible, analyzing carefully the indicators released in a country. Two very important are the international trade and, as said above, the interest rates. In international trade, a deficit balance is an unfavorable indicator. This simply means that there are less exports than imports. It means that there is a higher flow of currency going out the country than coming into the country. This has a negative effect on the price of the currency. Of course, there are exceptions. This is only a pressure to the price of currency, not a natural law. Many countries operate on deficit balances with a stable currency. Some countries have more resources than other to keep its currency stable.

How does the interest rate affect currencies’ price? The interest rate itself operates in a rather simple way. The only problem to analyze the instability on the currency price, is that many other factors are involved. High rates bring in foreign investment to a country but they also means a selling-off of stock market assets. A potential strengthening of the currency can be offset by the stock market going down. How can one arrive at any conclusion about when and where to invest, then? Good traders are able, since they use not only the concrete information, but also their nose, news and past experience to predict trends.