Currency Trade: Long USD, Short Euro

This is not a new trade (short EUR/USD), in fact both this trade and the long yen trade (against almost any currency) have done very well the last few months. However, European economies are actually in worse shape than the US and their financial systems more troubled, though for somewhat different reasons. Europe is now dealing with a deep banking crisis and Asia faces a plunge in exports, the financial contagion will be more deeply felt outside the United States than within.

"In contrast with the United States, Europe's banking systems is fraught with many portions that are not very healthy. Italian, Swedish, and Austrian banks are far too exposed to Central Europe, which is now in a credit crisis. German banks' corporate ties have left them with poor assets far greater in value than anything American subprime practices created. In addition, Spanish and Irish banks face much deeper subprime problems relative to their economic size than American banks. And the list goes on and on. So while the United States has a liquidity crisis that can be addressed "relatively" easily, Europe faces a banking debacle that has been uncovered by the liquidity crisis -- and dealing with that banking debacle is likely to take more than a year. "

With these ongoing problems in Europe, the ECB will be forced to continue to cut rates more dramatically than previously thought and increase liquidity injections. All this points to a stronger USD vs. the Euro. In addition, further market weakness will lead to a continued flight to safety, which means a strong USD. Look for possible EUR/USD parity within 12 months or less.

Making 100 Pips a Day in Forex

A pip is the smallest price increment in forex trading - pip stands for percentage in point.

Prices are quoted to the fourth decimal point in the forex market - for example EUR/USD might be bid at 1.1914 and offered at 1.1917. In this example we can see that the spread is 3 pips wide.

Making 100 Pips a day results in a gain of .1% or about 30% a year. However, Forex trading allows lots of leverage (up to 200X). At even very mild degrees of leverage (relatively speaking) of 10x this system could triple your money with almost no risk. One of the best Forex trading platforms now available for individuals.
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Trading the Forex Markets

A lot of people have heard about trading in the foreign exchange markets. Some may have dabbled in trading the currency markets through certain discount brokers. Most of you probably lost money doing this, going against the professional speculators. But there are ways of capitalizing on the huge currency markets. Many currency market participants are not investors, but rather hedgers, and this creates an enormous opportunity to exploit their moves.

If you really want to have success trading Forex, you should read this.
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