An inside bar is easy to identify, it is simply a bar where:
- The high is lower than the previous bars high.
- The low is higher than the previous bars low.

An inside bar can indicate the following:
- Consolidation – The market is taking a breather before moving on in the direction indicated by the previous bar.
- Indecision – The market does not make new highs or lows because it is unsure of the direction it wants to go.

Studies have found the following results following inside bars:
- Very little movement in the market for the following two days if the previous bar is not a strong bar.
- If the inside bar follows a strong UP or DOWN bar there can be significant statistical results can often be found for the following 2 – 3 days.

- Follow Market Commentary
Find a good collection of credible experienced bloggers or websites to keep track of what the professionals think about the market.

- Follow Other Markets And Asset Classes
Movements in other asset classes and markets can have a huge impact on the market you are trading, either directly or indirectly. For example if you trade the USD, you should also be aware of how other markets can influence its value, like gold and oil.

- Keep An Eye On Economic Indicators and Expectations
Find a reliable source of scheduled news reports for the day, by doing this you can avoid being caught up in major volatility. Watching how the markets respond to major news announcements can also give you a clue as to their future direction.

Don’t forget the big moves in the market are caused by the big picture.

A wedge formation is similar to an ascending or descending triangle. A wedge is formed when both the angled sides of the triangle are sloping against the dominant trend in a market.

The wedge formation shows consolidation of the market, once the support or resistance provided by the wedge has been broken the market will generally continue in its original direction.

A market order is simple a request is sent to the Forex broker to buy or sell a currency pair immediately at the best available current price. As Forex is a highly liquid market, market orders can be expected to go through immediately.

Placing market orders during a news release is not recommended as the price can move quickly and your brokers response to fill your order can be delayed (sometimes up to 20 minutes!), this can result in getting your order filled at a significantly different price than you expected.

An Entry Order is placed as either a Stop or Limit Order.
BUY = Place a stop order if you want to buy at a price higher than the current price. Place a limit order if you want to buy at a price lower than the current price.
SELL = Place a limit order if you want to sell at a price higher than the current price. Place a stop order if you want to sell at a price lower than the current price.

Your entry order will become a market order when the price hits your stop/limit order price.

Most Forex brokers also give you the choice of when you want your order to be canceled if your stop/limit price is not reached.
- End Of Day (EOD) = Your order will be canceled at the end of the day.
- Good Until canceled = Your order will be active until you cancel it or it is triggered by reaching your stop/limit price.

2. Programming trading software (like WealthLab) to trade a Forex system. You will need some programming skills to do this (or know someone who does), but if you have a good mechanical trading system this is a good option.

Some important things you should think about before you begin to back-test the system include;
- Does the system have a stop and profit target?
- Does the system have any money management rules?
- Are any of the indicators likely to ‘repaint’ causing your back-test results to be invalid?
- Does the system enter trades during a news release?

It is possible to back-test a Forex trading strategy with a currency trading demo account. However, if you are testing a strategy with time periods less than 1 day (e.g. 15 min, 1 hour, 4 hour) you may find that many Forex brokers provide limited historical data which will limit how much back-testing you can do. If you wish to do a large amount of back-testing you may need to find a source you can download historical data from that can be imported into a platform such as MetaTrader 4 or Amibroker.

To test your ability to apply the rules of the strategy it is a good idea to forward test and/or test using a simulator. Using a Forex simulator such as Forex Tester you can replay the past as if it were happening now and enter/exit trades to test your skills.

There are so many brokers offering online foreign currency trading it can be difficult to decide which one is right for you. Fortunately they make this easier by offering free practice accounts where you can put their platform to the test before you commit any real money.

1. You could think about getting a professional trader to trade your money. Collective2 has an extensive list of Forex systems you can choose to trade, the trades are placed automatically by the trader and routed to your account automatically. This kind of setup means you can set and forget about the system.

2. You could find or develop an expert adviser (in MetaTrader 4) that will place trades for you automatically. With this kind of setup you need to keep your computer on in order for the expert adviser to run. There are also various software packages that you can program your Forex trading system into and trades will be executed automatically.

3. You could find or develop a Forex trading system with 100% mechanical entry/exit rules. While this kind of system won’t be completely automated, you may be able to setup alerts to let you know when a trade needs to be entered. Most Forex trading eBooks contain a 100% mechanical trading system you could use to practice.

Good luck with your search for an automated Forex trading system.

A. Currency is traded in pairs (for example AUD/USD), the cross rate refers to how much of one currency you can buy by selling the other. If the quote for the AUD/USD is 0.94, this means I can buy 0.94 USD (94 cents) for every $1 AUD I own.

Now, lets say I believe the AUD is going to rise in value in relation to the USD based on some news I read. I could take out an AUD/USD position with a Forex Broker. In the Forex broker platform all I need to do is click BUY on the AUD/USD quote and enter the quantity I want.

Example:

BUY AUD/USD @ 0.9400
(the base currency for the AUD/USD is the AUD, so 1 mini Forex contract would result in buying $10,000 AUD)
COST = 10,000 x 0.9400 = $9,400 USD

I decide to hold the currency for 2 months, here’s what happens every day in my account:
- At the end of the day my profit/loss is calculated and added or subtracted from my account balance.
- I get credited with the difference in interest rates between the AUD/USD, currently the AUD yields 7.73% and the USD yields 3.01%. The difference therefore is 4.72%, this works out to approximately $9,400 x 4.72% / 365 = $1.22 USD per day.

Over the 2 months it turns out I was right and the AUD/USD price is now 0.9815 and I decide to close the position. I do this by clicking on the open position in my Forex broker platform and selecting close trade, or I could also do it by clicking SELL on the AUD/USD quote and entering the same quantity as I bought.

SELL AUD/USD @ 0.9815
PROCEEDS = 10,000 x 0.9815 = $9,815 USD

PROFIT = $9,815 – $9,400 = $415 + interest

Now, wouldn’t it be nice if my Forex broker let me do this for free? Of course, but that isn’t the case. In fact, my Forex broker charged me when I bought the AUD/USD through the spread. In the quote window for the AUD/USD at the time there were two prices, 0.9400 / 0.9396, the difference between the two prices is referred to as the spread and is 0.0004 or 4 pips in this case and is charged when you BUY a currency pair. This 4 pips equals 10,000 x 0.0004 = $4 and is included in the BUY price.

Another advantage of a Forex mini account is if compounding is part of your strategy you will be able to begin compounding earlier than you would if you had a standard account.

Most Forex brokers will give you the same tools and services regardless of what account type you have, so you really can’t lose by choosing a mini account.

If you just want to have a look at what a currency has been doing but you don’t necessarily want to start trading Forex Daily FX offers free Forex charts.

Simply choose a chart and wait for the application to load. You can then choose from a variety of chart types, currencies and periods and add on basic studies if you like.

These charts are great for a quick look at a currency but are not ideal for those serious about Forex trading due to the limited data available and limited tools as compared to a desktop application like MetaTrader 4.

- No need to rollover contracts
- Futures contracts are generally for large dollar amounts, a Forex mini trading account will allow you to trade just $10,000 of currency
- The spot Forex market offers up to 200:1 leverage

- The spot Forex market is more liquid than futures
- Interest is calculated daily, not in the contract price
- Many brokers offer more currency pairs than they do futures

If you’re taxed in the U.S. it is possible to make a tax election so that your spot Forex trades receive the same concessional treatment as futures trades do.

If you’re familiar with trading commodities, it will not take you long to learn how spot Forex works, many Forex brokers offer free practise accounts so you can learn how it all works before putting any money on the line.

To read more articles on learn Forex currency trading online click here.

Currency trading can be performed 24 hours a day 5 days a week, through Forex Brokers.