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So you want to make money by becoming a forex trader. Getting into the currency trading market can be quite intimidating at first. However, there’s no real reason to be, since you’re actually not competing against anyone; in fact a lot of traders are quite willing to share with each other since they’re looking to ride the market waves and profit.

News, you must realize, is just isn’t aimed at forex traders. Nothing you’ll ever hear will be directly informative to you as a trader, but you will hear information that eventually tells you where the economy is headed. Economic news is what makes currencies rise and fall. It is necessary to make sure you got that right. Good news, is good for currency and bad news is bad for currency.

Keep your trading strategy very simple. Those who end up losing in forex are the ones that have very long conflicting strategies that are hard to understand. In fact, all the strategy that you need to make profit can be very simple.

You also need be logical. You cannot afford to be emotional when you’re in this kind of business. It’s deadly simply because it makes you make bad trades, making you hold onto unprofitable currency and in the long run leads you into financial ruin. If you try to be logical, you become a cold calculated machine that makes trades for one reason alone — profit!

Another thing: You need to get some sort of an automated software such as Forex Killer. This will save you a lot of time and headaches since it will take in a lot of currency data in search for profitable trends that you can then use to your advantage.

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Former Fed Reserve member Lyle Gramley has been tracking how the rising US currency will affect inflation as well as economic growth. In other words, what it means is that the Fed will, most likely, stay on hold this year.

Now Gramley puts it into perspective this way: The simulation indicates is that real GDP growth between now and the end of 2009 will decline by approximately one-half percentage point. On the other hand, the inflation rate will go down by a slightly more than one-fourth percentage point. At a time when the growth of the economy is expected to be slow, losing half a percentage point due to the US dollar’s increase is not welcome.

While the decrease in the inflation rate is small, it is happening partly because of plunging oil prices, moderation in rents — which are one-third of the consumer price index — and slightly improving labor and product markets.

For Federal Reserve policy, the dollar’s surge has weakened even more the case for raising interest rates to combat the current inflationary trends. The hawks on the Federal Open Market Committee are being increasingly isolated. The chances of that the Federal Reserve will be increasing interest rates before some time next year have have practically been reduced to zero.

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Lately the US currency is on its way back up. Yes, the dollar is trending up! It has increased in value by more than 7 percent versus the euro in a few weeks. With a 20/20 hindsight, a number of forex experts believe that the support for the greenback had been on the rise for several months now.

The first break, experts say, for the Greenback came when the Fed ceased lowering interest rates in March. Then, at a meeting of the G8 nations, a number of high-ranking officials were unhappy about the US currency’s decline. They suggested that in order to avoid a further collapse of confidence, coordinated intervention should be effected. While this intervention was merely a verbal one, without any substantial backing, investors seem to have taken the hint.

The Federal Reserve’s reassurance of its commitment to a strong dollar policy also contributed significantly to the greenbacks resurgence. An easing commodity prices plus the proposed bailout of the two pillars of American’s mortgage industry, has led currency traders to think that the world’s economic policymakers now would simply let the dollar plummet further. However, the US dollar didn’t break through a resistance level at $1.60/euro (close to a record low), and has since rallied sharply.

“It seems that that the big money had committed to a long Dollar, and was waiting for the economic slowdown to spread to the Euro Zone. Once the Euro Zone began to experience a slowdown, it just became a matter of time before the short positions that had been built for several months would pay off,” according to the International Business Time.

We’re back again with candlestick patterns. In this candlestick chart pattern, the market must be in clearly defined uptrend.

Take a look at the picture, can you identify which one the bullish candle is? It’s the first candle. The second one is a bearish candle.

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Here you can clearly see the bearish candle engulfing the other candle’s body.

Here, it doesn’t matter what candle size the other one engulfed. Also, you can safely ignore the wicks.

Keep in mind that whenever you see a bearish candle swallowing the bodies of two or three other candles, then that’s a very strong bearish signal. This means that this could be a start of a new bearish trend.

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The Canadian Dollar or the loonie continues to plummet. The declining prices of the country’s natural resource coupled with the credit crunch have exacted a severe blow on Canada’s economy, which made it to actually contract during the most recent month. Now, the Central Bank has made a forecast saying that the economy will see a growth of only 1% in 2008.

Most economists believe that Canadian Monetary Policy will in the near future be lagging behind US policy. This will most definitely be true if the Fed raises interest rates to fight inflation.

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Based on these developments, everyone seems to agree that the loonie is quite overvalued, and will steadily decline over the next few years, falling to a more sustainable level versus the US Dollar.

The loonie will, by the end of December 2008, slide to C$1.05, and to C$1.09 as the 2010 begins, as predicted by forex experts.

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During the last three years, we see that the Chinese yuan has appreciated. Even into the decade that lead to the sudden revaluation of the currency, a staggering amount of speculative money flooded China. From time to time, the Chinese government and the Central bank have attempted to cull quite a number of these inflows by deliberately making it unprofitable for foreigners to invest in China.

We have seen the artificially low interest rates and the one-way convertibility of the currency. Today, as inflation runs at a 10-year high, the Chinese administration is more intent than ever to tighten measures as regards factors that are driving demand.

In essence, what the result is an altered system for governing forex that will improve its foresight regarding entities and businesses that bring capital into China.

When properly done, a lot of the pressure pushing prices skyward, and the Renminbi itself could be relieved. To sum it up, under the old rule, China had a single exchange rate system, where the central bank would announce the value of the Chinese yuan on a daily basis. Today, under the realigned rules, China has a managed float exchange rate system based on supply and demand.

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If you like playing EUR-JPY, then another opportunity to do so is presented before you. This is so, because price action has pulled the pair right where it previously was — the top of the channel.

Now the question is: Will the channeling behavior of the pair continue?

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In this case a simple approach would be to short the top of the channel.

Here are some fundamental analysis factors you must take into consideration: the Japanese core machinery orders, the trade balance as well as the industrial production data of the Eurozone, and of course, the EU decision on interest rates.

One thing though: Will the ECB hold its ground and remain hawkish on inflation, or will they start addressing the issue regarding the economic slowdown?

This looks like the thing to do is short the market with a wide stop in consideration of future data.

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About a couple of weeks or so ago the AUD-USD pair began to form a pattern on the charts that was readily recognized as a rising wedge.

Experienced and veteran traders would agree that a rising wedge pattern, more often than not, tends to indicate bearish tendencies, since in this case sellers would be quite reluctant to let go of their upper range control.

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By the way things are going at the moment, with the AUD-USD pair breaking beneath the lower trendline, buyers are, for the time being, out of the market.

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Just how far will this momentum take the US currency? If, with respect to the US dollar’s current position, and granting that it will remain so for quite a while, then you should take this pattern into consideration, incorporating it into your technical analysis and take a longer term short position.

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In one sweep, the US dollar under the administration of President George Bush has lost 33.8 percent of its value. This is the dollar’s worst performance ever under one administration.

The escalating twin deficits, lackluster economic performance, including the environment of stagflation at present have all contributed to a drastic and unprecedented loss of confidence in the US currency.

Investors in general are pretty optimistic about the thought of a new President taking over administration, come January. They couldn’t care less whether it is Barack Obama or John McCain that will win in the end. They argue that since the dollar seems has touched bottom anyway, the new President stands to preside over a recovery of the dollar.

“We look at the dollar as a brand and any change from Bush will help benefit the dollar,” according to Reuter.

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If you intend to succeed as a currency trader, then this is a very important lesson, so read on. Aren’t you in business because you want to make money? Well, the first thing you need to learn about money is how to manage it. In trading, this is one aspect that is often overlooked. A lot of traders just couldn’t wait to get right into trading without any regard with respect to the size of their account. The only thing they do is try to assess how much they can afford to lose in a single trade and then go ahead and click the “trade” button. In other words, these people are not traders — they’re gamblers!

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Without money management rules, trading becomes gambling as you leave almost everything to chance. In this case you are not looking at the long term return in your investment. What you are doing in this case is simply looking for a jackpot. By managing your money well, you not only get protected from huge losses, but you will also end up reaping large gains in the long run!

If you believe that gambling is the only way to succeed in trading, then you are very wrong. Take for example a casino, surely there are a lot of people already who have won jackpots, but how come the casino is still alive and well? The answer is quite simple: While there were many people who won jackpots, there were even more who didn’t. It is from these people who didn’t win that casinos reap huge profits. They know that, using the principles of statistics, in the long run, they will always emerge as the winner — not the gamblers.

So the lesson is clear: be a statistician, not a gambler. This way, you will always be assured of winning.