Global Currencies

Chapter 1

Forex Basics

Chapter 2

Fundamental Factors

Chapter 3

Technical Tools

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Initial Changes, 4 Hours Later

We will now explore one of our trades, the USD/JPY, several hours after we opened it.

Our USD/JPY position gained! Our short term prediction proved to be correct. We see the price of the Dollar bounce back after its steep fall. Our initial thoughts, that the Dollar's strength from the last couple of days will continue, plays out on the chart.

USD/JPY - October 24th, 2006 - 6:00 PM

This graph shows that a succession of blue candles, which indicate positive gains for our position, has been interrupted by a first red candle. At this stage our position is up 11 pips.

A couple of candles later...

USD/JPY - October 24th, 2006 - 8:00 PM

A couple of hours later, the short term uptrend seems to have stalled. There is some back and forth between the pair's bears and bulls. Our position has moved a couple of pips higher to positive 14 pips.

Close the Position?: Since our position is positive and our initial prediction was correct this could be a good place to think about closing the position with a gain. The decision when to close a position depends on your broader strategy. That strategy depends on how conservative or aggressive your trading style is. For a short term objective (intra-day) we may have accomplished our goal ($100 gain on the trade).

During this same time our EUR/USD was falling by about the same amount, but we will show both pairs on the next page after one full day.

Lets now continue onto the next day.

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.