Forex Trading: Can Technology Improve Success?

Forex trader extraordinaire Renee Loh reviews how new technology can help leverage the US Dollar against other major currencies so that investors walk away as winners rather than risk takers and losers.

Trading on foreign exchange market - better known as "forex", can be a volatile yet exciting form of investment and it certainly has the potential of bringing vast returns. Just imagine, about USD 2 trillion worth of currency is traded daily, so the potential for high earnings from taking part in this market is extremely tempting. Unfortunately, about 95% of beginning traders fail and as any seasoned investor will tell you, there is no potential of high gain without high risk. Many practitioners today guard against such risk by amassing a larger and varied portfolio to spread the risk. For beginners with limited funds to invest, this is not always feasible.

Forex trading is basically trading the world's currencies. It is traded in pairs, such as the Euro against the US Dollar (EURUSD), US Dollar against the Japanese Yen (USDJPY) and so on. The first currency in the pair is the base currency which is the basis for buying and selling, while the second is the counter or quote currency. For instance, if you are quoted EURUSD at 1.2833 means €1 is worth US$1.2833 at that point in time, and similarly, USDJPY at 117.55 means US$1 is worth ¥117.55. The idea is to buy one currency while selling the other. So, if we expect the US economy to be strong and the Euro to weaken against the US Dollar, we will execute a SELL of EURUSD. By doing this, we would have sold the Euros and bought US Dollars, with the anticipation that the US Dollars will appreciate while the Euro will depreciate.