FOREX TRADING

What is FOREX?

The Foreign Exchange market, also referred to as the "FOREX" or "Forex" or "Retail forex" or "FX" or "Spot FX" or just "Spot" is the largest financial market in the world, with a volume of over $4 trillion a day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really is. It actually equates to more than three times the total amount of the stocks and futures markets combined! Forex rocks!

What is traded on the Foreign Exchange market?

The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a or dealer, and are traded in pairs; for example the euro and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to the other countries' economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990's, only the "big guys" could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start with! Forex was originally intended to be used by bankers and large institutions - and not by us "little guys". However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to 'retail' traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.

BabyPips.com was created to introduce novice or beginner traders to all the essential aspects of foreign exchange, in a fun and easy-to-understand manner.

What is a Spot Market?

A spot market is any market that deals in the current price of a financial instrument.

When Can Currencies Be Traded?

The spot FX market is unique within the world markets. It’s like a Super Wal-Mart where the market is open 24-hours a day. At any time, somewhere around the world a financial center is open for business, and banks and other institutions exchange currencies every hour of the day and night with generally only minor gaps on the weekend.

The foreign exchange markets follow the sun around the world, so you can trade late at night (if you’re a vampire) or in the morning (if you’re an early bird). Keep in mind though, the early bird doesn’t necessarily get the worm in this market - you might get the worm but a bigger, nastier bird of prey can sneak up and eat you too…

Time Zone	New York	GMT
Tokyo Open	7:00 pm	0:00
Tokyo Close	4:00 am	9:00
London Open	3:00 am	8:00
London Close	12:00 pm	17:00
New York Open	8:00 am	13:00
New York Close	5:00 pm	22:00

The Forex market (OTC)

The Forex OTC market is by far the biggest and most popular financial market in the world, traded globally by a large number of individuals and organizations. In the OTC market, participants determine who they want to trade with depending on trading conditions, attractiveness of prices and reputation of the trading counterpart.

The chart below shows global foreign exchange activity. The dollar is the most traded currency, being on one side of 86% of all transactions. The euro’s share is second at 37%, while that of the yen is third at 16.5%.

Why Trade Foreign Currencies?

There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market:

• No commissions.
  No clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for their services through something called the bid-ask spread.
• No middlemen. Spot currency trading eliminates the middlemen, and allows you to trade directly with the market responsible for the pricing on a particular currency pair.
• No fixed lot size.
  In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot Forex, you determine your own lot size. This allows traders to participate with accounts as small as $250 (although we explain later why a $250 account is a bad idea).
• Low transaction costs.
  The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. Of course this depends on your leverage and all will be explained later.
• A 24-hour market.
  There is no waiting for the opening bell - from Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.
• No one can corner the market.
  The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.
• Leverage.
  In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
• High Liquidity.
  Because the Forex Market is so enormous, it is also extremely liquid. This means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (a limit order), and/or close a trade if a trade is going against you (a stop loss order).
• Free “Demo” Accounts, News, Charts, and Analysis. Most online Forex brokers offer 'demo' accounts to practice trading, along with breaking Forex news and charting services. All free! These are very valuable resources for “poor” and SMART traders who would like to hone their trading skills with 'play' money before opening a live trading account and risking real money.
• “Mini” and “Micro” Trading:
  You would think that getting started as a currency trader would cost a ton of money. The fact is, compared to trading stocks, options or futures, it doesn't. Online Forex brokers offer "mini" and “micro” trading accounts, some with a minimum account deposit of $300 or less. Now we're not saying you should open an account with the bare minimum but it does makes Forex much more accessible to the average (poorer) individual who doesn't have a lot of start-up trading capital.

What Tools Do I Need to Start Trading Forex?

A computer with a high-speed Internet connection and all the information on this site is all that is needed to begin trading currencies.

What Does It Cost to Trade Forex?

An online currency trading (a “micro account”) may be opened with a couple hundred bucks. Do not laugh – micro accounts and its bigger cousin, the mini account, are both good ways to get your feet wet without drowning. For a micro account, we'd recommend at least $1,000 to start. For a mini account, we’d recommend at least $10,000 to start.

Google Adsense Strategies and Tips

Adsense is beginning to make a huge impact on the affiliate marketing industry today. Because of this, weak affiliate merchants have the tendency to die faster than ever and ad networks will be losing their customers quickly.

If you are in a losing rather than winning in the affiliate program you are currently promoting, maybe it is about time to consider going into the Adsense marketing and start earning some real cash.

Google is readily providing well written and highly relevant ads that are closely chosen to match the content on your pages. You do not have to look for them yourselves as the search engine will be the doing the searching for you from other people’s source.

You also don't have to spend time in choosing different kind of ads for different pages. Google makes it very easy for you, with no codes to mess around for different affiliate programs.

You will be able to concentrate on providing good and quality content, as the search engines will be the ones finding the best ads in which to put your pages on.

You are still allowed to add Adsense ads even if you already have affiliate links on your site. It is prohibited, however, to imitate the look and feel of the Google ads for your affiliate links. One of the things you can do, however, is to utilize Google's custom palette to customize your Google ads, making them to appear a part of the web page itself. The idea here is to match background and links to match the theme of your site. People on the internet today are trained to click on a link that is blue, and if your Google ads have the same theme as your web page, it makes the Google ads appear to be a portion of your "content."

You can also filter up to 200 URLs. This gives you a chance to block ads for the sites that do not meet your guidelines, and also block competitors. Remember that it is unavoidable that Adsense may be competing for some space on web sites that all other revenues are sharing.

Owners of small sites are allowed to plug a bit of a code into their sites and instantly have relevant text ads that appeal to your visitors appear instantly on your pages. If you own many sites, you only need to apply once. Then ,you are issued a unique "publisher ID", which can be used on any site you currently own. A small snippet of Javascript is placed on your site in the location you wish the ads to appear in, and generally speaking, the ads from Goggle will appear in minutes. This ends the hassle of having to apply to many affiliate programs, and keeping track of many different URL's and user ID's and passwords.

As Google ads are very easy to customize, and can be placed anywhere on your site you wish, you can experiment with placement, colors, and themes. Many tricks are available to the resourceful webmaster, including adding images in conjunction with your Google ads to make them more noticeable.

The payment rates can vary extremely. The payment you will be receiving per click depends on how much advertisers are paying per click to advertise with the use of the AdWords. Advertisers can pay as little as 5 cents and as high as $10-12, sometimes even more than that too. Some savvy lawyers are currently paying as high as $75 for advertising the keyword mesothelioma! And you, as the ad publisher, are earning a share of that money generated.

If your results remain stagnant, it can help if you try and build simple and uncluttered pages so that the ads can catch the visitor’s eyes more. It sometimes pay to differ from the usual things that people are doing already. Google has many tutorials, including a "heat chart" which shows you where the best placement for ads are. You will need an account to access these tutorials. Sign up for an Adsense account at https://www.google.com/adsense It is also a refreshing sight for your visitor once they see something different for a change.

It is still wise to look at other people’s information and format your Adsense in a like manner. A wise old business axiom is to "find a good business model, then copy it." Let others do the hard work for you, and learn from a successful site. Just think about it as doing yourself a favor by not having to work too hard to know what content to have. Look to sites that have high page rank, and carefully observe their layouts, their content, and placement of their ads. A little time spent doing research can put dollars in your pocket down the road.

Publishers have the option of choosing to have their ads displayed only on a certain site or sites. You can also have them displayed on a large network of sites if you so desire. Google now has the option to allow other people to advertise on your site. This only makes good sense. If you are marketing to a tightly defined niche, you can place your own ads, written by you, on site that allow this option. The choice is yours, depending on what you think will work best to your advantage.

It is important to note that you cannot choose certain topics only. If you do this, search engines will not place Adsense ads on your site and you will be missing out a great opportunity in making hundreds and even thousands of dollars cash.

Topics to be avoided includes gambling, firearms, ammunition, tobacco or drugs. If you are being offered more cash in exchange of doing Adsense with these kinds, it is just like signing your own termination paper.