Have you ever heard of the Dogs-of-the-Dow system. It’s a well known system in the stock and trading business. There are several stock brokers who have earned a lot of money by working with this system. They are using at for several years now. They think it’s a safe way to let your money grow slowly but consistently.

If you know the Dogs-of-the-Dow system you know that the system makes yearly a better percentage then the index.

If you have started using the system several years ago and used it properly for those years you would have earned a nice percentage each year. Double figures are more then ones made. A high yield income of 17.7 % average annual return since 1973 has been made.
The Dow Jones Industrial Average overall return was 11.9 % during that same periode.
So you would have made almost 6 % more each year. Not bad at all.

If you never heard about it let me explain how that system works.
At some point in the year, mostly early January, you take a look at all the companies that gives you the highest dividend payment.

You make a basket (several companies added together) then you decide how much percentage you will spent on each company. Next you buy stocks of each company to a curtain amount of money you have available and wait until the year passes.
When the year has passed you make op the balance and see how much you have earned.
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Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.

What is traded in the Forex market?

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

EUR/USD: Euro
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
USD/CHF: Swiss franc
AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.
Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.
If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

EUR/USD 1.2545/48 or 1.2545/8
The bid price is 1.2545
The ask price is 1.2548

A Pip

A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.
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It is not easy to make money, although you already have big company and huge amount on your bank account, you still need to work hard to earn. You also need to always update and learn something new to be a better businessman. Do you know, even wealthy people always update information or they will left behind by others.

There are so many way to keep update. For example is reading economic and financial blog such as mike’s blog. You will get new data sets; get information about financial reform, and much more information that is very useful to increase your knowledge as well as many great ideas to apply on your business. In case you need help from other, if you keep update, you will easily know where to find your help. For example, if you need new machine to your factory, you know where to find equipment loans with advantages.

Investment is one thing you must consider to make more money from money you already have on your account. Investment world is vast and again, you need to keep update to make your investment work. Try to visit dealbreaker.com to get the latest information about Wall Streets as well as financial news to support your investment.

Forex Trading, meaning Currency Trading, is a world wide, little known market, which will become the most popular source of income for investors in the very near future. It is open for banks, rich investors and small ones alike and, depending on the sum of money they are willing to risk, the earnings demonstrate this is the best way to start getting rich.

Why choose currency trading over stock, real estate or futures trading? The currency trading advantages are speed, liquidity, commission-free transactions, increased safety, short-term trading and great earnings. Let’s study each of these advantages in other trading systems:
-Speed: Currency trading is instant due to a large amount of transactions while future trading implies a longer time to trade certain commodities, agricultural products, financial instruments and goods (contracts need to be written and signed)
-Stock traders must pay brokers a certain fee for each transaction made. The brokerage fee is available for all futures transactions, but not in the case of currency trading. In currency trading brokers earn money by studying and profiting from the difference of price between sold and bought currencies.
-Liquidity: The currency market is opened non-stop, anywhere in the world giving currency traders the chance to trade whenever they find the opportune moment and prices. This is a characteristic attributed only to currency trading.
-Safety: while other trading systems are based on speculation, on the fluctuation of price, on slippage and market gaps, currency trading is controlled with the help of built in safeguards that limit slip-ups.
-Short term trading, like currency trading, is more efficient for profit making than long term trading. Day trading does not increase speculation, risk and does not imply that the broker’s commission will reduce any profit made.
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