In the past few weeks I have been serving readers of this column authoritative information as related to the newest game in town—Forex trading. Today, I shall be rounding off on this game by giving you the necessary checklist that you must observe while opening your forex account and also the two options that you can deploy to trade in this market profitably.

Registering With A Broker: The Checklist
Is the Forex broker regulated?

When selecting a prospective Forex broker, find out which regulatory agencies it is registered with. The Forex market is labeled as an “unregulated” market and it basically is.

Regulation is typically reactive, meaning only after you’ve been bamboozled out of your entire savings will something be done. In the United States, a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and NFA member. The CFTC and NFA were made to protect the public against fraud, manipulation and abusive trade practices.

Customer Service
Forex is a 24-hour market, so 24-hour support is a must. Can you contact the firm by phone, e-mail, chat, etc.? Do the representatives seem knowledgeable? The quality of support can vary drastically from broker to broker, so be sure to check them out before opening an account.

Here’s a good tip: Choose several online brokers and contact their help desks. Seeing how quickly they respond to your questions can be key in gauging how they will respond to your needs. If you don’t get a speedy reply and a satisfactory answer to your questions, you certainly wouldn’t want to trust them with your business.

Online Trading Platform
Most, if not all, Forex brokers allow you to trade over the internet, which is relatively easy. The back bone of any trading platform is their ordering system. So, trading software is very important. Get a feel for the options that are available by trying out a demo account at a few online brokers.

Closely examine the broker’s screen layout. It should include:
•Ability to view real-time currency exchange rate quotes,
•An account summary showing your current account balance with realised and unrealised profit as well as loss, margin available and any margin locked in open positions.

Most trading platforms are either Web based (in Java), or a client-based programme you can install on your computer and which version you choose is your personal preference:

•Web based software is hosted on your broker’s web site. You won’t have to install any software on your own computer and you’ll be able to log in from any computer that has an internet connection.

•A client-based software programme, or one that you download and install, will only allow you to trade on your own computer (unless you install the programme on every computer you use).

Don’t forget your high speed internet connection
The Forex market is a fast moving one and you will need up-to-date information to make good trading decisions. Make sure you have a high speed internet connection, because if you don’t, you might as well not even bother trading. Dial-up will absolutely is not too good for Forex trading.

Real Time Quote:
Any Forex broker worth his salt should offer you real time quotes and allow you to quickly enter and exit the market. These are minimal requirements of any trading software. Most brokers now offer integrated charting and technical analysis packages with their trading platforms. The level of integration with the trading platforms varies and is worth understanding carefully. In Forex trading, the ‘spread’ is the difference between the buy and sell price of any given currency pair. Lower spreads save you money.

There are two basic types of analysis you can take when approaching the forex: Fundamental and technical analysis.

There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know a little bit of both.

Fundamental Analysis: This is a way of looking at the market through economic, social and political forces that affect supply and demand. In other words, you look at whose economy is doing well and whose economy sucks. The idea behind this type of analysis is that if a country’s economy is doing well, its currency will also be doing well. This is because the better a country’s economy, the more trust other countries have in that currency.

For example, the US dollar has been gaining strength because the country's economy is gaining strength. As the economy gets better, interest rates get higher to control inflation and as a result, the value of the dollar continues to increase. In a nutshell, that is basically what fundamental analysis is.

Technical Analysis: This is the study of price movement. In other words, technical analysis is equal to charts. The idea is that a person can look at historical price movements and, based on the price action, can determine at some level, where the price will go. By looking at charts, you can identify trends and patterns which can help you find good trading opportunities. Most Nigerians are scared of this part of forex and when you see people saying that forex is difficult, this is what they normally refer to. But once you know it, there’s no holding back.
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The dollar has recently been gaining ground. And is there any wonder! The euro tumbled two percent after The French referendum on the European constitution became known, and then even further after the even more resounding "No" from the Dutch population. The dollar, by default, gained ground.

"France and Europe reeled on Monday from a resounding French 'No' vote that could sound the death knell for a proposed constitution for the European Union," a Reuters wire story reported.

"The charter, designed to ensure smooth decision-making in the enlarged bloc, requires the backing of all member states to enter into force."

"While the outcome was not seen jeopardizing the monetary union that underpins the euro," Reuters hopefully surmised, "leaders feared the expected political uncertainty could hit investment and reform efforts."

And let’s face it - particularly the French population, collectively, would never agree to even a hint of economic reform which would defile the sanctity of the 35 hour working week. 35 hours is ample, or so they have decided. Inconveniently however, economic policies that promote short working weeks and low productivity do not always yield an abundance of jobs. The French unemployment rate recently touched a 5-year high of 10.2%.

So where does leave the good old faithful US dollar – touching year high levels against the Euro.

But it would be imprudent indeed to proclaim a new dollar bull market. A Euro bear market - yes; but a dollar bull market – I don’t think so – at least in the medium to long term. In fact there is likely to be a growing disatisfaction with all paper currencies – euros as well as dollars. Perhaps the answer lies in the ground – with that fascinating and enduring yellow metal - gold.

Simple Moving Average (SMA) - The average price of a given time period, (5 minutes, 10 minutes, 1 day, etc.) where each of the chosen periods carries the same weight for the average. Example using the closing prices of the USD/JPY currency pair: Day 1 close = 124.00, Day 2 close = 126.00, Day 3 close = 124.00, Day 4 close = 126.00; The 4-day SMA is 125.00 (the average of the prior four closes).

Exponential Moving Average (EMA) - Here, the averages are calculated with the recent forex rates carrying more weight in the overall average; for example: In a 10-day exponential moving average, the last 5 days will have more effect on the average than the first 5 days. The idea is to use the most recent data as a better indication of trend direction

Bollinger Bands - The basic interpretation of Bollinger Bands is that prices tend to stay within the upper and lower bands. The distinctive characteristic of Bollinger Bands is that the spacing between the bands varies based on the volatility of the prices. During periods of extreme currency price changes (i.e., high volatility), the bands widen to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The bands are plotted two standard deviations above and below a simple moving average. They indicate a "sell" when above the moving average (or close to the upper band) and a "buy" when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.

Parabolic SAR - The Parabolic SAR (stop-and-reversal) is a time/price trend following system used to set trailing price stops. The Parabolic SAR provides excellent exit points. Forex traders using this technical indicator should close long positions when the price falls below the SAR and close short positions when the price rises above the SAR. If you are long (i.e., the price is above the SAR), the SAR will move up every day, regardless of the direction the price is moving. The amount the SAR moves up depends on the amount that currency rates move.

Rate of Change - The oldest closing price divided into the most recent one.

RSI (Relative Strength Index) - The RSI is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the RSI is to look for a divergence in which the currency price is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a "failure swing." The failure swing is considered a confirmation of the impending reversal in the price of the currency.

Stochastics - Stochastic studies are based on the premise that as prices rise, closing prices tend to be near the high value. Conversely, as prices fall, closing prices are near the low for the period. Stochastic studies are made of two lines, %D and %K, that move between a scale of 0 and 100. The %D line is the moving average over a specified period of time of the %K line. The %K line measures where the closing price of a currency is compared to the price range for a given number of periods.

Momentum - Designed to measure the rate of price change, not the actual price level. Consists of the net difference between the current closing price and the oldest closing price from a predetermined period. The Momentum indicator can be used as either a trend-following oscillator similar to the MACD or as a leading indicator.

MACD - Moving Average Convergence/Divergence - Consists of two exponential moving averages that are plotted against the zero line. The zero line represents the times the values of the two moving averages are identical. The MACD is calculated by subtracting a 26-day moving average of a currency's price from a 12-day moving average of its price. The result is an indicator that oscillates above and below zero. When the MACD is above zero, it means the 12-day moving average is higher than the 26-day moving average. This is bullish as it shows that current expectations (i.e., the 12-day moving average) are more bullish than previous expectations (i.e., the 26-day average). This implies a bullish, or upward, shift in the forex rate. When the MACD falls below zero, it means that the 12-day moving average is less than the 26-day moving average, implying a bearish shift in the currency.

ADX - Measures the strength of a prevailing currency trend and whether or not there is direction in the currency market. Plotted from zero on up, usually a reading above 25 can be considered directional.

William's %R - A momentum indicator that measures overbought/oversold levels in the price of a currency. The interpretation of Williams' %R is very similar to that of the Stochastic Oscillator, except that %R is plotted upside-down and the Stochastic Oscillator has internal smoothing. Readings in the range of 80 to 100% indicate oversold, while readings in the 0 to 20% range suggest overbought.

Volatility - Measures the overall volatility of a currency in a given time period.

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SEO Content Writer v/s Content Writer

There is definitely some difference that differentiates a normal writer with an SEO content writer. An SEO content writer understands the importance of keywords in content and will accordingly frame them in an article or web page. Many people fail to realize the importance of hiring a specialized SEO content writer and in the process tend to lose a lot of website traffic related to their specific industry.

Dealing with a professional SEO Content writer

A professional SEO content writer can help you select highly competitive keywords and write the content with the specific keywords in mind. Search Engines tend to catch the keywords while indexing your website. This makes it very much important that you have specific percentage of keywords in your entire 500 words content or web page. The SEO content writer will make sure to use required percentage of keyword throughout the web page. If you're given web page has keyword density over and above a specific limit then search engines might consider your web content as SPAM. This is where SEO content writers can play an important role as they have perfect knowledge about competitive keywords and keywords density to be used in every web page.

Professional SEO content writers are hard to find however a proper search will help you find a writer who is professional enough to handle the job.

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You can see the claims on some FOREX web sites, implying that FOREX is a risk-free pastime.
No investment is risk-free.
In FOREX you are trading substantial sums of money, and there is always a possibility that a trade will go against you. There are several trading tools that can minimize your risk, yes, but eliminate it, no. With caution, and above all education, the FOREX trader can learn how to trade profitably and minimize loss.

The Scams

FOREX scams were fairly common a few years ago. The industry has cleaned up considerably since then. Still, you should exercise caution before signing up with a FOREX broker by checking their background.

Reputable FOREX brokers will be associated with large financial institutions like banks or insurance companies, and they will be registered with the proper government agencies.

In the United States, brokers should be registered with the Commodities Futures Trading Commission or a member of the National Futures Association.

You can also check with your local Consumer Protection Bureau and the Better Business Bureau.

The Risks

Assuming you are dealing with a reputable broker, there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events.

* Exchange Rate Risk: refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly, resulting in substantial losses unless stop loss orders are used (see below).
* Interest Rate Risk: can result from discrepancies between the interest rates in the 2 countries represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction.
* Credit Risk: is the possibility that 1 party in a FOREX transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency. Credit risk can be minimized by dealing on regulated exchanges, which require members to be monitored for credit worthiness.
* Country Risk: is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with "exotic" currencies than with major countries that allow the free trading of their currency.

Limiting Your Risk

FOREX trading can be risky, but there are ways to limit risk and financial exposure. Every trader should have a trading strategy; i.e., knowing when to enter and exit the market, and what kind of movements to expect. Developing strategies requires education, which is the key to limiting risk.

At all times follow the basic rule: Never use money that you cannot afford to lose.

Every FOREX trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted.

There is a vast amount of information on FOREX trading available both on the Internet and in print. If you want to be successful at FOREX, then educate yourself.

Stop-Loss Orders

Even the most knowledgeable traders, however, can't predict with absolute certainty how the market will behave.

For this reason, every FOREX transaction should take advantage of available tools designed to minimize loss.

Stop-loss orders are the most common way to minimizing risk. A stop-loss order contains instructions to exit your position if the price reaches a certain point.

If you take a long position (expecting the price to rise) you would place a stop loss order below the current market price.

If you take a short position (expecting the price to fall) you would place a stop loss order above the current market price.

Stop loss orders can be used in conjunction with limit orders to automate FOREX trading. Limit orders specify that an open position should be closed at a specified profit target.