If you are involved in currency trading, you are likely to come across the term interbank forex trading from time to time. You might see it mentioned on websites or forums. The meaning is not necessarily very clear and you have to know a little about the history of forex trading to understand it.

When speculative forex trading began, after the relaxation of the gold standard which fixed relative currency values until the 1970s, it really only involved banks and other large financial institutions such as fund managers. It was rare for private individuals to be involved unless they had financial connections. Most of the institutions – which are often just called banks for simplicity – would have their own dealing desk where their staff would negotiate with other banks, either on a trading floor in one of the financial centers, or by wire or telephone to other locations around the world. The average Joe could only get in on the act through a broker, and even then, only if he had a lot of money to invest.

So at first the currency market was almost entirely interbank, which means between banks. But then the internet began to take over from the telephone as the main trading medium, and at the same time it became more and more common for average citizens to have a home computer and a broadband connection. Suddenly there was the potential for the average Joe to connect up to the forex market.

Brokers responded to this by creating software platforms which would allow people to log in and manage their own account. This cut costs and made it worthwhile for many brokers to take on clients who were not dealing in hundreds of thousands of dollars, but much smaller amounts. So gradually it became easier for people to trade from home.

More and more of these retail traders have been coming online in the last few years, getting involved in the forex market to make money – or often, unfortunately, to lose it. That is what can happen if a beginner is not well enough prepared for the fast moving and risky environment of the currency trading market.

You still may see the term ‘interbank’ used in a way that includes the whole of the forex market and those who trade it in, but strictly it should not be used that way any more. There is a difference between retail forex trading and interbank forex trading.

Global forex trading has exploded in the last few years. All around the world, more and more people are hooking up to the internet and getting access to the opportunity to speculate in the currency trading market. Forex is a risky investment option but it brings the opportunity to make a lot of money. Naturally, this attracts a huge number of people.

The best way to start if you want to make money with global forex trading is to concentrate on not losing. That may sound obvious but it is important. Many people start out with dreams of becoming rich almost overnight or giving up their jobs to become a full time forex trader. That can happen but only if you start out small. It is very important not to risk too much in the beginning.

New traders will find that the market is only predictable to a certain extent. Even the best forex trading system will make losses from time to time. It is vital to allow for this. You may be lucky at first and have a good run of money making trades but do not become over confident.

Fortunately, most brokers offer a demo account so that you can try out their services risk free. This also gives you a chance to become proficient in trading before you go live with real money. You can test systems and find one that works for you.

When using a demo account, try to act exactly as you would if your real money was at risk. This will help you discover a profitable system that you will be able to operate comfortably in the real global forex market. Minimizing stress is important when you start to trade forex for real because high levels of stress often lead to bad decision making or mistakes.

The global forex market is open 24 hours a day Monday through Friday. It operates in so many time zones that the whole 24 hour period is covered. It is truly a worldwide market in that you are not restricted to trading in your own country’s currency. You can trade any currency pair that your broker offers. In most cases you can even open accounts with brokers in other countries if that suits you, although local laws vary on this. Some brokers operate international offices and will want you to sign up with their office in your own country. Nevertheless, it is a market that is very free of boundaries.

The 24 hour market is an advantage for many people in other ways too. For example, it means that you can trade outside of business hours. This gives you much more flexibility than with stock trading, for example. The global forex market allows you to trade in the evenings or early mornings, fitting around the other activities of your day.

It is important to know the forex trading times if you are going to begin trading currency on the forex market as a hobby or a way of making some extra money. When you trade currency, you are not limited to business hours as you would be with the stock market. Forex is a global market so it crosses many different time zones. But is it actually open for trading 24/7?

The answer to that is no. The forex market is open 24 hours a day, but only five days a week. You might also find it closed in most countries (and very quiet in others) on days that are holidays in most of the major economic powers, such as Christmas. But generally it is open 24 hours Monday through Friday.

In fact in many parts of the world, forex trading times begin on Sunday evening or even earlier. This is because the first markets to open are in Australia and New Zealand, which are ahead of most other parts of the world. At 8 am Monday in Sydney it is 10 pm Sunday in London, 5 pm Sunday in New York and 2 pm Sunday in Los Angeles. Those times may vary a little because of seasonal hour adjustments in the different countries but for most people it means that if you want to start trading Sunday night, you can.

However, the market is going to be pretty quite at that time, at least until the clock gets around to 8 am in London and the British and European trading floors open up for business. Before that, it’s what is known as the Asian session which might be a good time to be online if you are trading a cross pair whose markets are both open such as the Aussie dollar and the yen, but otherwise there is less happening. Some systems are based around a quiet market but for most beginners it is better to start trading at busier times when you are more likely to get the prices that you see.

This means that the best forex trading times for beginners are when the London and New York markets are open, and especially during the overlap of those times. These are the two busiest trading floors. The overlap happens when it’s morning in New York and afternoon in the UK, and that is when you will see the highest volume of trading in just about all currency pairs. Remember, we are not limited to trading our own country’s currency, so a trader in New York may be dealing in EUR/GBP or just about any other pair.

At the other end of the week the situation repeats, with the Sydney market closing first, when it is still Thursday in many other time zones. The last of the big markets to close is New York at 4 pm EST on Friday. So forex trading times run 24 hours a day from 5 pm Sunday to 4 pm Friday EST.

Beginners often wonder why it is so hard to find good forex trading systems. Advertisements all over the internet and on TV draw the average Joe into the lucrative but risky forex trading market with dreams of striking it rich, but he quickly finds that making a lot of money in currency trading is not as easy as he hoped.

Before you even start looking for forex trading systems, you need certain qualities. You need to be comfortable with figures. You need to be cool headed and, in a certain way, ruthless; while you don’t have to deal with other people too much, you do have to face your own fears. You need to be able to take risks without being a gambler who will stake all for a win.

Then if you fit the mold or think you can learn to, it is time to look around for instructions on how to trade. There are a huge number of forex trading systems available and all you need is one that works, so it should not be too difficult … right?

In fact, the idea of a forex system that ‘works’ is misleading. Trading systems do not work all by themselves, unless they are automated, and even then you have to set them up in the right way in order to maximize the potential profits without exposing yourself to too much risk. Manual systems depend even more on the individual who is using them.

So one of the reasons that people find it hard to track down good forex trading systems is that they are looking for the ‘one size fits all’ perfect currency trading system, and it does not exist. If you look in forex forums you will not find a single system that has 100% positive reviews. There is always somebody who ‘couldn’t make it work’ for one reason or another.

However, you should be able to find a currency trading method that works for you if you have the right attitude when you are looking. That is, search for something that fits your own trading style. If you do not yet know what that is, just try out a few free systems in demo mode to see if you are better suited to day trading or longer term trading, and how much you can handle in terms of technical analysis.

Many people find day trading more stressful but it has the advantage that at the end of your trading hours you have normally closed all of your trades so you can switch off completely and relax. Long term trading involves leaving trades open, and you might find that there is always a little worry at the back of your mind, especially at first. You might be sneaking off to the computer at all times of day or night to see what is happening to the prices. Give yourself a little time with various forex trading systems in demo, and you should soon find one that is right for you.

While many currency traders prefer to take their forex trade signals from technical analysis tools, the importance of the fundamental factors in the market should always be kept in mind. In the end, the market is driven by economic forces, not by price charts. So we should not forget to check the financial and economic news alerts and announcements that everybody has access to online.

New traders are often discouraged by the number of economic factors that have to be taken into account in fundamental analysis. Not only are there a lot of them, but news is being released all over the world. It is not enough to watch the financial news from the USA. You have to keep on top of all of the currencies involved in any pairs that you trade.

However, the good news is that some factors are more important than others. Even better, a lot of them are related, so you can often form an idea of what is likely to happen from the knock on effect of different announcements. In this article we will look at the most important fundamental indicators that might be used for forex trade signals, and at the relationships between them.

Top of the list is interest rates. An interest rate rise or fall in the USA or one of the other major players in the forex market can have a ripple effect across many currency pairs, even those that do not include the affected currency. Understanding this effect can provide forex trade signals for some traders who work with fundamental analysis all of the time.

The reason that the interest rate affects currency values so strongly and so fast is really quite simple. Unlike other factors that tend to be reported monthly or quarterly, a change in the interest rate can happen at any time. It is therefore the fastest indication that a country’s economy is strengthening or weakening.

An interest rate rise is a positive sign of a strong economy. International investors will immediately be drawn to investing in that country. In order to buy stocks or shares there, they need the country’s currency, so there will be a bigger demand for that currency, pushing up its value.

At the same time, they will be selling investments in countries with weaker economies to free up some capital. This leads to a drop in currency prices in countries that are perceived to be weakening.

So interest rates are probably the most important factor in determining fundamental forex trade signals. However, there are many other factors which can indicate the strength of the economy in a country. All of these will have some impact on interest rates and on currency prices. Here are some of the most significant:

- Consumer Price Index (CPI)
- Producers’ Price Index (PPI)
- Gross Domestic Product (GDP)
- Payroll or Employment figures
- Retail Sales
- Durable Goods Orders

These indices might have different names in different countries, but a rising index will always indicate a strong economy. Some rise in the currency price can be expected in the short or long term, unless of course the announced increase in an index was less than expected. If that happens, the market may already have moved further than it should and there could be a retracement. It is important to keep this in mind when using indicators such as these for forex trade signals.

Forex rates are constantly changing. There are small fluctuations even from one minute to the next, and often a significant change in the price of a currency pair over just a few hours. These changes have the power to make or break a currency trader according to whether he or she has predicted the direction of movement correctly.

In fact, successful and profitable forex trading boils down to being able to predict currency price movements. It is a very simple question: whether the dollar will rise or fall against the euro, or the same question for any other two currencies. The answer, however, is not always so easy to find.

For new forex traders it is important to remember that there are many ways of predicting movements in forex rates. These are the systems that traders use. They do not have to be 100% accurate: in fact, no system is always right. Provided that you allow for losses and do not over commit your position, all you need is a system that will come out making a profit over a period of time.

It is useful to keep an eye on the financial news but unless you make a real study of this, it is risky to base a system on it. Remember that if CNN announces that the US dollar interest rate is likely to rise, the market will be aware of it. Other sources may have put out the same news earlier and the market has already reacted. If you buy the dollar on the strength of that, you may find that you have already missed the rise.

Most beginners find it more useful to base a forex system on technical analysis tools. These are the charts such as candlestick charts which are provided by most brokers. You can also sign up for independent charting services which usually give more options and a bigger choice of indicators.

Most of the forex systems that you can buy online in the form of ebooks or video training are based around technical analysis. Usually this means analyzing a candlestick chart, watching for certain patterns and then checking against a mathematical indicator that might be based on averages for the past certain number of time periods. The aim is to identify whether a recent movement in the forex rates is just a temporary fluctuation or the beginning of a trend that you can profit from.

Do not assume that you need a complex forex system to make money. Most of the experienced traders will tell you that the simple systems are often the best. Applying them consistently is the secret to making money from changes in forex rates.

Forex trading beginners are often looking for forex predictions to make money with currency trading. Others search for tools that will help them identify forex trends. But which will make more money for them?

Making money with forex trading is not necessarily difficult. On the other hand, it is not always as easy as people think. Anybody who tries to second guess the market or take the approach of a gambler, thinking that probability will be on their side, is likely to lose. In the same way, there is no system that can guarantee making money all of the time. But it is necessary to find some kind of a system.

It is also necessary to learn how to trade. This does not just mean understanding how to use your broker’s forex trading platform. It is also a matter of risk management, and recognizing the importance of applying a system consistently. Another surefire way to lose is to hop from one system to another, always thinking that the latest system or robot must be the best. This is not usually true. It is better to go for something that is tried and tested, like a system based on forex trends.

Forex trends and forex predictions are not the same thing. A system that is based on trends involves looking at charts to see what the price movement has been over the last few periods. In this way it is often possible to identify a longer term trend of upward or downward movement in the price of the currency pair. We can benefit from that by backing the trend and watching our profits rise – provided of course that we get out before the inevitable reversal. It is always important to remember that no trend continues forever.

Forex predictions involve making a judgment about which way the market will go in the future. So they are not so dependent on charts and analysis of the recent past price movements. Often, they will be based on fundamental analysis, which is analysis of the economic factors that drive the market, such as an upcoming interest rate change.

The problem with trying to predict the currency market is that most of us do not have any special knowledge on which to base our predictions. Often times it can come down to a gut feeling which is not much more than guesswork or gambling. If we rely on information from financial websites, blogs or newspapers then we are putting our trading into the hands of journalists. Even if the information is correct, we may forget that the rest of the world has access to the same information and so the market may already have responded. We could simply be caught in a retracement.

Trends on the other hand allow us to set up our own systems and avoid trading around times when announcements are due. Most traders find this a much more reliable method. For this reason most forex traders prefer to follow forex trends over seeking out forex predictions.

Forex demo accounts are very popular and certainly they have their advantages. Just about all brokers offer them these days and of course it is great to be able to test out their platform. But should you be using the forex demo account beyond that? Have you ever asked yourself what is in it for the broker?

Forex brokers offer demo services for two main reasons. The first is that everybody else is doing it so they pretty much have to, or a lot of customers will go elsewhere. However, the demo account does also have some benefits for the broker.

We love familiarity. So as soon as we sign up with a broker and start to use their demo account, we become attached to it at some level. When we have gotten to know their trading platform, it feels safer than any alternative. Plus we have invested time in getting to know it, and we do not want that time to have been wasted.

Now, many new forex traders will sign up with pretty much the first broker they come across, thinking there is no need to be concerned with a lot of research to find the best forex broker right now because they are going to start out in demo anyway. No risk, right? But what they fail to take into account is that they are investing their time, and for all of the reasons given above, they will not want to switch brokers later unless there is a very good reason.

This means that a broker can sometimes hook in new clients by providing a very easy to use demo account and a cool looking trading platform, while being uncompetitive in other ways. While this cannot exactly be called a scam, it is important to take account of this factor when choosing a broker.

The second point to watch out for when you are operating a forex demo account is the risk of becoming too comfortable. In demo it is easy to try out a lot of different systems, use maximum leverage, maybe even trade on intuition, and perhaps make money, at least for a while. It is easy to become over confident and think that we are going to make just as money money in the real market, but sadly, it does not work out that way.

The truth is that even if we are scrupulous in following a system in demo mode, it just does not feel the same as trading for real. The stress is not the same. Trading a mini lot for real is far more stressful than trading a standard lot in demo. As soon as stress enters the equation, it is much harder to make the right decisions.

This means that it is usually best to start small when you switch from demo to real trading. Take a position that is one tenth of the position that you have been trading in demo, or even less. This will lessen the risk of having your account balance wiped out in the first few days just because forex demo gave you a false sense of security.