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Building Wealth

There is no better way to build wealth than learning currency exchange the right way and if you do, the potential you have is huge to build long term wealth.

Forex trading is the world’s biggest business and the most exciting. For those traders prepared to work smart, who have desire and a cool head, it can be a route to financial freedom.

Sure it’s a challenge, but the question is are you up for the challenge?

If so welcome to the world of forex trading

Your Mindset the Key to Profits

Learning currency exchange is easy and every trader is capable of becoming a successful trader but they either fail to learn the correct forex education, or find they cannot apply what they learned with discipline.

If you have a method you need to apply it with rigid discipline or you don’t have a forex trading system at all!

Discipline comes from understanding and confidence in what you are doing.

Only if you have these traits, can you apply a method with discipline – if you don’t fully understand this point you will lose.

Currency trading success rests on your shoulders and you can’t blame anyone else if you fail, so you need to take responsibility and do your homework.

If you learn foreign currency exchange, you don’t just need to learn a method to succeed you need to learn the correct mindset to apply it.

Using Technical Analysis Correctly

The simplest and most time effective way to learn currency trading exchange and predict market movement is to use technical analysis
.
This will allow you to take into account the forex fundamentals and investor psychology and see and act on the price as it is – no predicting, hoping or guessing, you act on the reality of price changes.

There are many ways of using technical analysis and forex charts.

Using them is very much an art and not a science. You can’t be right all the time and you cant predict prices in advance but you can trade the odds and if you do this correctly, you can make a lot of money.

You need to keep in mind that currency trading is an odds game – NOT A game of certainties.

You should use a long term trend following or a shorter term swing trading system as the basis of your forex trading strategy and avoid day trading at all costs.

Forex day trading, is simply a way to lose you cannot get the odds in your favor and therefore cannot win. It’s a good story - but stories don’t make money – steer clear of it.

The final point to keep in mind when using technical analysis is:

Always keep your currency trading system simple.

Simple systems are easier to understand, easier to apply and more robust than complicated ones, in the face of ever changing brutal market conditions.

Learning Currency Exchange for Profit Basics

Here are some basic points to keep in mind.

We have explored each point in greater detail in other section of the site – but here we will review the most important points.

Let’s get started and look at the basics of learning currency exchange for profit.

Work Smart NOT Hard
The first point to keep in mind is you don’t need to have a college education and you don’t need to be smart or clever to learn currency exchange and win.

You don’t get paid for being clever in forex trading you get paid for being right, so you need to work smart rather than hard.

There is a famous example when legendary trader Richard Dennis, taught a group of traders who had never traded before to trade in just 14 days.

The result?

They went onto make $100 million for him!

All he did was teach them the right forex education and that’s what you need to do too.

Basics for Making Profits

If you want to learn currency exchange the aim is simple:
As one currency rises another must be falling and your aim is to work out which are strong currencies and buy them, against weaker currencies. If you can learn to do this, you can make huge profits.

Learning currency exchange methods that can make you profits is relatively simple.
You need to learn the right knowledge, avoid common myths and trade with discipline.

While on the surface of it currency exchange looks relatively simple, few people master it and make money. The facts are that 95% of traders who try to learn currency exchange and make a profit – fail.

The first thing you need to familiarize yourself with is how prices move and this is something most traders don’t ever learn. If you do, you already have a head start on your way to making profits.

Top 5 Currency Trading Companies

Pro Finance Group
We obtained and invested funds in the best professionals of trading industry. I pledge my word that every client will get efficient and reliable service from our experienced team of technical specialists, brokers, experts and managers. We want your flight to the prosperity to become flight with Pro Finance Group Inc.! Our trading platform is one of the best of that kind. It affords an opportunity of making online trades and direct communication ensures that you will instantly get the execution price and order confirmation. I usually use our program for trading currencies and CFDs at short and long terms. It is efficient, surely and easy. All you have to know to trade is market direction; everything else is available in the trading platform PFG FX Trader: your current account state, margin rates, quotations, opened and closed positions etc. Your account will be opened online in 10 minutes!

Gain Capital Group
With over 100 years of capital markets experience, the executive management of GAIN Capital Group offers expertise in both forex trading and internet technologies and proven track records managing large, global trading operations. This depth of experience, along with a demonstrated ability to successfully manage a 24x6 business with solid risk management and operating procedures, instills in our clients a high level of trust and confidence.

Global Forex Trading
Over the last three decades the foreign exchange market has become the world's largest financial market, with over US$2 trillion traded daily. Forex is part of the bank-to-bank currency market known as the 24-hour Interbank market. The Interbank market literally follows the sun around the world, moving from major banking centers of the United States to Australia, New Zealand to the Far East, to Europe then back to the United States.

Western Capital Forex
The Company was established in Geneva (Switzerland) in February 1990 as an investment advisor and financial markets analyst. Over the years the Company gained experience in market analysis as well as in managing funds for its own account and for various international clients. In order to better service its clients Western Capital Forex S.A. is using the latest techniques and works with one of the best trading system on the market today. A multilingual support service is operating 24 hours a day and is trained to assist the clients in every question relating to the use of the system.

Saxo Bank
Thousands of online traders look to Saxo Bank for online trading of Foreign Exchange (FX), Stocks, Stocks on Margin (CFDs), Futures and fixed income products. As a fully licensed and regulated European bank, Saxo Bank is a world leader in multi-product online trading and we support a truly global client base of retail clients, corporations and financial institutions.

Being Wise With Money

When you’re traveling, it’s always good to make sure you have enough for whatever you need to do. It’s not a good idea to carry large amounts of cash, especially in locales where crime is more of a problem, such as large cities like New York or London. If you look different – like a tourist – you’ll be even more of a target, so make sure you know how to protect yourself from those wishing to get a hold of your hard-earned foreign currencies.

One thing you can do is simply look confident. Pickpockets and other petty criminals are far less likely, statistically speaking, to target a person who looks alert and able to handle him or herself, and will instead look for “soft” targets. If you can use body language to repel attackers, your money will be all that much safer. Also, don’t follow the hype – money belts aren’t all they’re cracked up to be. It’s a classic sign of a naïve tourist to put a lot of cash in a money belt in the belief that this will keep it safer. Unfortunately, criminals know that, and many pickpockets train specifically to target belts for quick cash.

Ordering Currency Exchanges Online

If you want to get some foreign currency in cash before you leave on a vacation or something similar, one easy way to do it is to get online. Services abound that allow you to simply fill out a simple payment form and have cash shipped by Federal Express to your front door. These services work exactly in the way other online retailers do – you specify what you want (which currencies and how much), fill out your billing information, and click next – and bingo, instant access. The cash is packaged and mailed to your location, where you can then store it to bring on your next vacation. It always pays to be prepared.

Shipping cash isn’t as dangerous as it sounds. For one thing, it’s foreign cash, which means it’ll be less of a target than if you were just mailing hundreds or something similar. Second, it’s in an unmarked box. Third, tampering with the mail is a felony, and it would take a lot more than a few Euros to make it worth it. Fourth, if you’re worried about mail theft, you can simply ensure your purchase to hedge your bets and give you peace of mind.

Learning About Foreign Exchange Rates

If you’re planning to invest in foreign currencies or even just want to travel to another country and get some funds shifted to the local currency, you’re going to want to make sure you know what the rates are. By knowing the rates before you start looking, you can know for sure just how much you’re spending, and whether a currency exchange service is as reputable as they say they are. Currencies around the world are very different, and it’s impossible to keep track of all of them, so make sure you know how to find out what you need before you visit another country or invest in other currencies besides the currencies you use now.

The best way of find out that information is simply to use the Internet. Live foreign exchange rates are posted twenty four seven on web sites around the world, making it very easy to see what the foreign exchange rates are. If you’re investing in foreign currencies, knowing the information so quickly allows you to keep track of your investment with minimal effort and trouble. If you don’t have access to the Internet at any time, you can also call your local bank or library to have them look up the appropriate information.

Making Money Off of Currency Exchange Rates

There is one positive thing about the recent shift in global currency values. Because the American dollar is falling against the Euro, you can use this opportunity to use American dollars to buy Euros through a banking service that offers exchange rates, and ride the rise of the Euro – global economies, when utilized properly, offer an amazing amount of profit to the shrewd investor. Trends tend to be fairly gradual in the national currency world, so it’s a safe and smart investment if you’re trying to think of where to seed your money to reap a bountiful harvest later.

If you’re considering investing in foreign currencies, ask your local bank about the possibility of expanding your account to include a foreign currency account. If, say, you’re an American businessman looking to buy several thousand Euros for investment, ask your bank if you can open a Euro account, or, if not, try getting an overseas banking account somewhere in Europe. This way, you can simply transfer funds to that account – converting them into Euros in the process – and bring them back after the Euro has gone up another thirty or forty cents. If you have enough invested, even a few cents of profit per dollar can add up to a significant amount of money.

Exchanging Currency On Arrival

Sometimes it’s just easier to change currency when you arrive in the country you’re visiting, rather than changing a lot before you leave and then having to carry large amounts of cash around with you as you tour your destination. If you’d rather just keep cash or a credit card and exchange to a foreign currency as you need the money, most countries offer exchange rates to the local currency from major currencies like the dollar, pound, euro, or yen. If you need money, all you have to do is visit one of these services, pay a transaction fee – often determined by percentage or inflated foreign currency exchange rates – and get your local currency.

The first place you’ll see on arrival at your destination is the foreign exchange currency counter at the airport. This counter makes its money by charging higher currency exchange rates, so you’ll save money if you can wait and visit a major bank in the area. Many banks in other countries offer ATM machines that should work with your debit or credit card, and will give you the best exchange rate possible for your money. You’ll be most likely be able to use that machine if your card is one of those with a basic four digit pin number.

Best Currency Exchange Methods

When you’re traveling somewhere and you need to exchange some currency, the first thing you should do is find out what the currency exchange rates are. These days, that’s easy – you can get live foreign exchange rates simply by going to your Internet browser and searching for “currency exchange rates,” and then following the live foreign exchange rates website links that come up. Just write down the comparison (American dollars to Euros, for instance, if you’re going to France), or comparisons you’ll need on your vacation, and keep it with you to compare currency exchange rates against when you find places to change money.

Once you’ve determined what the rates are, it’s time to get some money. It’s always a good idea to have some local cash before you visit another country, especially if you plan to arrive late at night when most foreign currency exchange services may be closed or shut down for the night. Many large banks offer currency exchange tables for your convenience. You can also order foreign currency online by simply sending a money order and having the money FedExed to your location. Getting money before a trip is always a good idea. If you’re too late, though, many airports also offer foreign exchange tables for your convenience – though you may have to pay a higher fee.

Reasons to Exchange Currencies

All of this is very interesting if you plan to go into international economics, but what if your interests are more personal? What if, say, you want to take a vacation this summer to Thailand or England or France or Japan, and you want to be able to buy a few souvenirs while you’re there? Do you need to take anything more than American dollars?

The answer really depends on where you plan to go. Some countries accept United States dollars as currency – Mexican businesses and merchants, for instance, often allow you to pay them directly in American dollars without having to convert first to the country’s official currency, the peso. In cases like that, you’re saved the trouble of having to look for currency exchange rates and local currencies before you go. Check with a travel agent or read a travel guide to see if the locals will accept American dollars.

Many places, such as England or most of Europe, for example, rarely accept American dollars as legal tender. In those cases, you’ll have to either convert some cash before you go or visit an exchange table when you arrive. Many tourist oriented currency exchange tables artificially inflate exchange rates in order to make a profit, so you’ll probably be better off going with a more official and less “profitable” source. Check into the currency exchange rates before you leave.

The Rise of the Euro and European Currency

In the last few years, the United States Dollar has begun to see a fall against the newer and more valuable Euro. Used across Europe and in consideration in other countries for possible introduction in the next decade or so, the Euro is worth approximately 1.35 US dollars at the moment and has just recently surpassed the dollar in total worldwide value in circulation. As of the last month in 2006, the Euro was at 610 billion in circulation, equivalent to approximately eight hundred billion United States dollars. The Euro has continued to rise against the dollar recently and, if trends continue, may become the leading force in international economics.

The only other serious competitor in the international currency market is the Japanese yen, which gained some use worldwide during the 1980s, but relapsed slightly in the Japanese economic recession a decade later. These days, most countries peg their own currencies against the United States dollar, but more are increasingly switching to the Euro or the yen as the dollar falls in value against its competition.

Currency Exchange

The human race has a long and rather convoluted history; economics is merely part of the tangle. As tangled as it is, it's no wonder we humans can't just decide on a single way to pay each other off and buy stuff online. The sad truth is, we can't. Because of that, we have to worry about trying to work between Euros and dollars, dinars and yen, and any number of other currencies in use all around the world.

Overview of Currency
Ever since the first stages of globalization, currency has been an important issue. In the 17th and 18th centuries, worldwide commerce first began to call for a currency that could be used across the board by merchants everywhere. At that time, the currency of choice was the famous Spanish dollar, or “pieces of eight,” made famous by countless pirate tales and popular movies today. This Spanish currency was legal tender on most markets, and its connection with naval commerce and international trade of that time period is still strong in our minds today.

Today, though, a different currency is foremost. At the moment, that currency is the American dollar. American dollars, or USD in standard international abbreviation, are used around the world for a number of purposes. Internet based companies, for instance, primarily use United States Dollars for their commerce, and online services exist to convert other currencies into United States Dollars. The United States Dollar has been strong in non-digital markets, as well – in 1996, it counted for around two thirds of the world’s foreign exchange reserves. In 2001, Robert Galpin wrote in Global Political Economy: Understanding the International Economic Order that between 40 and 60 percent of all international transactions at that time were conducted in United States Dollars.

Currency Exchange

The human race has a long and rather convoluted history; economics is merely part of the tangle. As tangled as it is, it's no wonder we humans can't just decide on a single way to pay each other off and buy stuff online. The sad truth is, we can't. Because of that, we have to worry about trying to work between Euros and dollars, dinars and yen, and any number of other currencies in use all around the world.

Overview of Currency
Ever since the first stages of globalization, currency has been an important issue. In the 17th and 18th centuries, worldwide commerce first began to call for a currency that could be used across the board by merchants everywhere. At that time, the currency of choice was the famous Spanish dollar, or “pieces of eight,” made famous by countless pirate tales and popular movies today. This Spanish currency was legal tender on most markets, and its connection with naval commerce and international trade of that time period is still strong in our minds today.

Today, though, a different currency is foremost. At the moment, that currency is the American dollar. American dollars, or USD in standard international abbreviation, are used around the world for a number of purposes. Internet based companies, for instance, primarily use United States Dollars for their commerce, and online services exist to convert other currencies into United States Dollars. The United States Dollar has been strong in non-digital markets, as well – in 1996, it counted for around two thirds of the world’s foreign exchange reserves. In 2001, Robert Galpin wrote in Global Political Economy: Understanding the International Economic Order that between 40 and 60 percent of all international transactions at that time were conducted in United States Dollars.

The Floating Exchange Rate

There are two main systems used to determine a currency's exchange rate: floating currency and pegged currency.

The market determines a floating exchange rate. In other words, a currency is worth whatever buyers are willing to pay for it. This is determined by supply and demand, which is in turn driven by foreign investment, import/export ratios, inflation, and a host of other economic factors.

Generally, countries with mature, stable economic markets will use a floating system. Virtually every major nation uses this system, including the U.S., Canada and Great Britain. Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces.

The floating system isn't perfect, though. If a country's economy suffers from instability, a floating system will discourage investment. Investors could fall victim to wild swings in the exchange rates, as well as disastrous inflation.

Find a Floating System
You can see a floating system at work. Changes in the U.S. and Canadian economies have led to the Canadian dollar becoming worth more. For years, a Canadian dollar was worth about 65 cents. In 2003, it rose to 75 cents. By early 2007, it had reached about 92 cents. Look in the business section of your newspaper, or check an exchange rate calculator on the Internet, and track the Canadian dollar's rise in value yourself. Right now, economists aren't sure how high it will go.

The Euro

On January 1, 2002, the euro became the single currency of 12 member states of the European Union -- making it the second largest currency in the world (the U.S. dollar being the largest). This was, to date, the largest currency event in the history of the world; sixteen national currencies have since completely disappeared and were replaced by the euro.

The original seed for a common currency was planted in 1946 when Winston Churchill suggested the creation of the "United States of Europe." His goals were primarily political, in that he hoped a unified government would bring about peace for a continent that had been torn apart by two world wars.

Although the euro is fundamentally a tool to enhance political solidarity, it also has the economic effect of unifying the economies of participating countries. Some of the euro's advantages, in regard to economics, include:

• Elimination of exchange-rate fluctuations - The euro eliminates the fluctuations of currency values across certain borders.
• Transaction costs - Tourists and others who cross several borders during the course of a trip had to exchange their money as they entered each new country. The costs of all of these exchanges added up significantly. With the euro, no exchanges are necessary within the Euroland countries.
• Increased trade across borders - The price transparency, elimination of exchange-rate fluctuations, and the elimination of exchange-transaction costs all contribute to an increase in trade across borders of all the Euroland countries.
• Increased cross-border employment - With a single currency, it is less cumbersome for people to cross into the next country to work, because their salary is paid in the same currency they use in their own country.

Hybrids

In reality, few exchange rate systems are 100 percent floating, or 100 percent pegged. Countries using a pegged rate can avoid market panics and inflationary disasters by using a floating peg. They peg their rate to the U.S. dollar, and that rate doesn't fluctuate from day to day. However, the government periodically reviews their peg, and makes minor adjustments to keep it in line with the true market value.

Floating systems aren't really left to the mercy of market forces, either. Governments using floating exchange rates make changes to their national economic policy that can affect exchange rates, directly or indirectly. Tax cuts, changes to the national interest rate, and import tariffs can all change the value of a nation's currency, even though the value technically floats.

The next time you cross a border, and trade your money for that of another country, remember that economic forces across the world helped determine that exchange rate. In fact, when you exchange currencies, you're one of those economic forces -- you're helping to set the exchange rate, too.

Although this system works pretty well most of the time, it's not always the best solution.

The Pegged Exchange Rate

A pegged, or fixed system, is one in which the exchange rate is set and artificially maintained by the government. The rate will be pegged to some other country's dollar, usually the U.S. dollar. The rate will not fluctuate from day to day.

A government has to work to keep their pegged rate stable. Their national bank must hold large reserves of foreign currency to mitigate changes in supply and demand. If a sudden demand for a currency were to drive up the exchange rate, the national bank would have to release enough of that currency into the market to meet the demand. They can also buy up currency if low demand is lowering exchange rates.

The Foreign Exchange Market, or Forex, is the most prolific financial market in the world. Each day, over $1 trillion worth of currency changes hands.

Countries that have immature, potentially unstable economies usually use a pegged system. Developing nations can use this system to prevent out-of control-inflation. The system can backfire, however, if the real world market value of the currency is not reflected by the pegged rate. In that case, a black market may spring up, where the currency will be traded at its market value, disregarding the government's peg.

When people realize that their currency isn't worth as much as the pegged rate indicates, they may rush to exchange their money for other, more stable currencies. This can lead to economic disaster, since the sudden flood of currency in world markets drives the exchange rate very low. So if a country doesn't take good care of their pegged rate, they may find themselves with worthless currency.

Methods of Exchange

The Floating Exchange Rate
There are two main systems used to determine a currency's exchange rate: floating currency and pegged currency.

The market determines a floating exchange rate. In other words, a currency is worth whatever buyers are willing to pay for it. This is determined by supply and demand, which is in turn driven by foreign investment, import/export ratios, inflation, and a host of other economic factors.

Generally, countries with mature, stable economic markets will use a floating system. Virtually every major nation uses this system, including the U.S., Canada and Great Britain. Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces.

The floating system isn't perfect, though. If a country's economy suffers from instability, a floating system will discourage investment. Investors could fall victim to wild swings in the exchange rates, as well as disastrous inflation.

Find a Floating System
You can see a floating system at work. Changes in the U.S. and Canadian economies have led to the Canadian dollar becoming worth more. For years, a Canadian dollar was worth about 65 cents. In 2003, it rose to 75 cents. By early 2007, it had reached about 92 cents. Look in the business section of your newspaper, or check an exchange rate calculator on the Internet, and track the Canadian dollar's rise in value yourself. Right now, economists aren't sure how high it will go.

A Brief History of Exchange Rates

For centuries, the currencies of the world were backed by gold. That is, a piece of paper currency issued by any world government represented a real amount of gold held in a vault by that government. In the 1930s, the U.S. set the value of the dollar at a single, unchanging level: 1 ounce of gold was worth $35. After World War II, other countries based the value of their currencies on the U.S. dollar. Since everyone knew how much gold a U.S. dollar was worth, then the value of any other currency against the dollar could be based on its value in gold. A currency worth twice as much gold as a U.S dollar was, therefore, also worth two U.S. dollars.

Unfortunately, the real world of economics outpaced this system. The U.S. dollar suffered from inflation (its value relative to the goods it could purchase decreased), while other currencies became more valuable and more stable. Eventually, the U.S. could no longer pretend that the dollar was worth as much as it had been, so the value was officially reduced so that 1 ounce of gold was now worth $70. The dollar's value was cut in half.

Photo courtesy URL title -->Caption -->Finally, in 1971, the U.S. took away the gold standard altogether. This meant that the dollar no longer represented an actual amount of a precious substance -- market forces alone determined its value.

Today, the U.S. dollar still dominates many financial markets. In fact, exchange rates are often expressed in terms of U.S. dollars. Currently, the U.S. dollar and the euro account for approximately 50 percent of all currency exchange transactions in the world. Adding British pounds, Canadian dollars, Australian dollars, and Japanese yen to the list accounts for over 80 percent of currency exchanges altogether.

The Cost of Money

National currencies are vitally important to the way modern economies operate. They allow us to consistently express the value of an item across borders of countries, oceans, and cultures. We need exchange rates because one nation's currency is not always accepted in another. You can't walk into a store in Japan and buy a loaf of bread with Swiss francs. First, you'd have to go to a bank and buy some Japanese yen with your Swiss francs. An exchange rate is simply the cost of one form of currency in another form of currency. In other words, if you exchange 1 Swiss franc for 80 Japanese yen, you really just purchased a different form of money.




You can express that exchange rate as:1CHF = 80JPY Meaning that one Swiss franc costs 80 Japanese yen.

Exchange Rates

Maybe you've traveled to Mexico or Canada, and exchanged your American dollars for pesos or Canadian dollars. Or, perhaps you've traveled from England to Japan and exchanged your English pounds for yen. If so, you have experienced exchange rates in action. But, do you understand how they work?

You've probably heard the financial reporter on the nightly news say something like, "The dollar fell against the yen today." But, do you know what that means?

In this article, we'll tell you what exchange rates are and explain some of the factors that can affect the value of currency in countries around the world.