Global Currencies

Chapter 1

Forex Basics

Chapter 2

Fundamental Factors

Chapter 3

Technical Tools

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Candles Can Paint A Story of Wild Activity - 26 Hours Later

USD/JPY - October 25th, 2006 - 3:00 PM

In the next several hours, the Dollar recovers. Another opportunity to break even or even close the position with a gain presents itself. However, price action becomes quite volatile as can be seen from the large candlesticks and shadows. This point is the last time we will have a chance to break even for a long time, even though we can't know this at the present moment.

The current candle, along with the previous one, tells a story of how the market behaved during that time. At first the pair was heading upwards, moving past 119.25. At that point the pair's bears sold en masse and brought the pair down below 118.95. At this low point the pair's bulls bring the pair back up ending the candle at 119.10. The final half hour follows a similar pattern. The back and forth action here means that a trader will have to be skilled in order to exit correctly.

EUR/USD - October 25, 2006 - 3:00 PM

Let's see the position that was speculating on Dollar weakness and Euro strength.

The last two candles are similar to our USD/JPY position in that both have volatile price action. The second to last candle shows a similar story as explained before. Bulls push up the price, but then bears bring it back down. The pair's bulls are not beaten and in the next candle they bring the price back up to 1.2610. At this moment our position has gained +40 pips.

Risk Warning

Before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose.

There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair.

More over, the leveraged nature of forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. To manage exposure, employ risk-reducing strategies such as 'stop-loss' or 'limit' orders.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Forex.com/UK acts as the clearing agent and counterparty to customers introduced by "Global Currencies" for an IB margined forex transactions. FOREX.com is a trading name of GAIN Capital - FOREX.com UK Limited and is authorised and regulated by the Financial Services Authority. FSA No. 190864.