forex trading systems

Using fundamental and technical analyses, the individual trader attempts to determine trends in the price movements of currencies, and by buying or selling currency pairs, attempts to gain profits. The most often traded currencies, the major currencies, are those of countries with stable governments and respected central banks that target low inflation. Currencies that often trade along with the U.S. Dollar include the European Euro, the Japanese Yen, and the British Pound as they are the most liquid. A trader can trade these currencies in any combination. CMS Forex also offers the Swiss Franc, and the Canadian, Australia and New Zealand Dollars making for 19 total trading instruments when accounting for all the cross pairs. More "Exotic" currencies are not offered as they are often tightly regulated and simply too illiquid.
Buying and Selling Currencies

Traders can generate profits (or losses) whether a currency is rising or falling by buying one currency, which is anticipated to gain value against another currency or selling one currency, which is anticipated to lose value against another currency. Taking a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. Alternatively, a short position is one in which the trader sells a currency that he anticipates to depreciate and aims to buy the currency back later at a lower price.

Diagram illustrating how a position is opened and closed generating a profit. Position is closed based on speculated downward market movement. Forex trading involves a substantial risk of loss.

Buying or selling currencies in response to economic or political events which occur are reactive, whereas buying or selling currencies on anticipated events is speculative. The bulk of currency activity is generated by market participants anticipating the direction of currency prices. In general, the value of a currency versus other currencies is a reflection of the condition of that country’s economy with respect to the other major economies.

It is the trader’s option to take either a conservative or a more risk-taking approach. Employing a conservative approach, the trader establishes and liquidates positions quickly and efficiently to capitalize on even the slightest of price fluctuations, using limit and stop orders to manage risk. A limit order is placed to ensure a position is established once a price level in the market has been reached.* A stop order is placed to automatically liquidate a position at a chosen price level in order to limit potential loss on a particular trade. By placing orders in relation to technical support and resistance levels, the trader may profit incrementally from the minor price fluctuations that occur each day.

The Time in the Major Financial Centers Impacts Market Players

Financial Centers - London, Tokyo and New York City.
Foreign exchange is a continuous global market, providing participants with 24-hour market access. The only breaks in trading occur during a brief period over the weekend. Although foreign exchange is the most liquid of all markets, the fact that it is an international market and trading 24-hours a day, the time of day can have a direct impact on the liquidity available for trading a particular currency.

The major dealer centers and time zones are that of Sydney, Tokyo, London, and New York. Therefore, traders must consider which players are in the market, since in the modern interconnected financial world, events that occur at any hour, in any part of the globe, can affect some or all parts of the investment community.

The market's 24-hour nature is a substantial attraction to traders that prefer to trade at all times of the day, or night.

* Under volatile market conditions, a broker may not be able to execute a limit or stop order at the exact price specified by the trader. CMS’s own policy, however, is to attempt to honor all stop and limit orders up to 10 lots in size.
Opportunities in a rising or falling market
Dissimilar from trading in the equity market, forex does not have any restrictions on short selling. No matter which way the market is moving or whether a trader is short or long, profit potential (and risk) exists in the forex market. Because currency trading involves the buying and selling of currency pairs, traders have an equal potential to profit (or lose) in a falling or rising market.
Unparalleled liquidity
In the forex market, over $3.2 trillion worth of trades are traded daily, which makes the currency trading market the most liquid market in the world – trading in 1 day what Wall St. trades in 1 month. No matter what time of the day or night it is, the forex market is always moving, and around the world active traders are buying and selling currencies.

200 times more leverage than trading stocks
With stocks, the maximum leverage is 2:1. But when you trade Forex with CMS Forex, you can use up to 400:1 leverage. For example, if you invest $1,000 in stocks, with 2:1 leverage you may buy up to $2,000 worth of shares. However, if you invest $1,000 margin on a foreign currency trade, at 400:1 leverage, you can control up to $400,000 in currencies. Leverage is one of the most appealing factors of the forex market. Traders should note that trading using leverage may increase potential gains as well as losses on any given trade.

Scratch-out the middleman
Spot currency trading bypasses expensive middlemen that are always associated with trading stocks. With forex, clients are able to interact directly with the currency market, and can buy and sell at the simple click of a mouse. No mess. No hassle. No middleman.

Commission-free*
With CMS Forex, you are never charged a commission. No clearing fees. No exchange fees. No Software fees. No brokerage fees.

*CMS charges no commission on your trades; we are compensated through the Bid and Ask prices or spread of a given currency pair. We may charge a fee for fund withdrawals. Please see Withdrawal of Funds for more information. Please be aware that the bank you deal with may be charging fees on your deposits or withdrawals. CMS has no control over any applicable bank fees.

Forex and the technical trader
Because currencies typically develop strong trending patterns, a technical currency trader may potentially identify new trends, breakouts, and opportunities to enter and exit positions.

Measuring the currency market
Currency prices are reflected in the balance of supply and demand for currencies. When it comes to currencies, there are two primary factors that affect supply and demand and they are interest rates and the strength of the originating country’s economy as a whole. Fundamental indicators, such as foreign investment, PPI, CPI, GDP, and the trade balance, echo the overall health of the economy, and alter the supply and demand for that currency. Expert commentaries and data on interest rates, International trade, and currencies are release on a regular basis.

Trade forex 24-hours a day
When you are looking at your forex platform, you are actually looking at a window display of the world’s economy. Currency trading is available twenty-four hours a day, starting on Sunday at 5P.M. EST with the opening of the market in Sidney and Singapore. A short while after, the Tokyo market opens. Then London, which opens at 2A.M. EST on Monday. And, by daytime in N.Y., the currency market has already been very active for fifteen hours. With currency trading, you are able to decide when to trade. Trading stocks when the U.S. markets are closed is difficult and only offers limited liquidity. With forex, you can trade twenty-four hours a day, from Sunday at 5P.M. EST. until Friday at 5P.M EST.

6 major currency pairs vs. over 8000 stocks
There are approximately 8,000 publicly traded companies, deciding which one to trade can become downright tedious and confusing. How do you determine which needle to pull out of the haystack? With Forex, there are currently 6 major currency pairs to choose from, and about 34 second-tier currencies.

Superior Software
CMS Forex began in 1999. Since then, our team of professional forex specialists has spent many late nights improving our software and services to guarantee a simplified, all-inclusive forex system that enables users to make the most educated decisions possible – providing over 100+ tools and technical indicators, as well as streaming Reuters News to cover necessary fundamental updates that impact the forex market. We offer advanced chart-based trading, streaming price quotes, custom alerts, as well as the ability to create an automated trading system (so you can pre-program your system to buy or sell at specified market occurrences). Through VT Trader, users are able to connect directly with the live currency market on a stable platform that has been made to make your currency trading as intuitive as possible.

Simply download our easy-to-install software and open a free practice account to become better acquainted with the live forex market.


Forex offers more Liquidity than Futures
The benefits of trading forex over futures may be significant. The forex market is the largest, most active financial market in the world, executing over $1.5 trillion a day – or about 46 times greater than all futures markets combined. Compared to the $30 billion futures trades executed daily, the volume of the Forex market is clearly superior. The daily futures volume on the CME is only slightly over 2% of the volume generated in the forex market. This tremendous liquidity is one of the many advantages that having full access to the forex market has over futures.

Rapid execution and set prices
In the futures market, you are not offered instant execution or a set price. Electronic trading has not necessarily advanced futures trading, as the execution speed is not stable and the price for fills on market orders is not certain. When trading forex under normal market conditions, you are given price certainty and near instant execution on your orders. With CMS Forex you are able to interact with live streaming prices directly on the chart, and your trades are filled instantly. There is no difference between the price you see and the execution price – no matter how volatile and active the market is moving.

Forex offers higher leverage and lower margin than futures*
The forex market allows traders to place trades with larger leverage than in most futures contracts. And, as a bonus, you can actually specify the degree of leverage that you want to use while trading. With CMS Forex, you are able to trade with up to 400:1 leverage. In futures, there is one margin rate for day traders and another for overnight positions, and these rates vary depending on the size of the transaction. With Forex, you are able to access the same margin rate daytime or nighttime. However traders should note that leverage can work for or against the trader, and that increasing leverage increases both potential gains and losses on any given trade.

Trading forex through CMS Forex is commission-free!‡
When trading futures you have to worry about exchange fees, clearing fees, and commissions.‡ The fees futures traders encounter can put a serious dent in their profits. At CMS Forex, your trades are completely commission-free‡. At CMS Forex, we offer a free $100,000 forex practice account to those that want to interact with the live currency market to learn the ins-and-outs of trading without making any investment – and we also offer mini-accounts that start as low as $200.

‡ CMS is compensated by the spread between the bid and ask prices.

24-hour access to the forex market
The forex market is open 24-hours a day, starting at 5p.m. Sunday EST until Friday at 5p.m. EST, unlike the futures market. This means that as a trader you can buy or sell at any given moment as market conditions change – you don’t have to wait for the market to open again to place your trades. In the futures market, there are overnight contracts, but they can only be sparsely traded, are difficult to access, and the liquidity is minimal. Forex is a constant stream that moves 24 hours a day. With CMS Forex custom alerts can be designed to signal you when the market makes a move you want to be notified about – and we also offer an automated trading system that will buy or sell based on market-specific occurrences you specify (so, if you want to see at a certain rate, should the market move in that direction, the order will be automatically executed for you). To download CMS Forex’s VT Trader for free, please register for a free forex practice account. We also offer live mini accounts that start as low as $200.

* Leverage may increase gains or losses.

† Under normal market conditions.

‡ CMS is compensated by the spread.

Forex is not traded on an exchange, and there are substantial risks in trading.
Fundamental analysis involves examining the intrinsic value of a nation’s currency based on economic news releases that reflect the strength, or weakness, of a country’s economy. Fundamental traders follow these news announcements, known as “fundamental indicators,” because they paint a picture of a currency's strength in relation to other countries.
Fundamental indicators are reports that include statistical data on things such as employment, gross domestic product (GDP), international trade, retail sales, housing, manufacturing, and interest rates. The stability, growth, or decline in any of these sectors may have an effect – direct or indirect – on the value of a country’s currency.

Factors That Move The Forex Market



Central banks play a key role in the Forex market because they have the responsibility of changing the country’s “base” interest rate. A central bank has to find a fine balance when setting interest rates as it wants to maintain growth in the economy, but at the same time it has to be careful to curtail inflation. The bank’s decisions on whether to raise, cut, or hold the interest rate fuels speculation in the Forex market, where the value of a currency, or group of currencies, changes in real time.

In addition to information about a country’s economy, the value of a currency is connected to national and international political events, elections, and changes in government trade policies. The prices of sensitive commodities like oil and gasoline are an important fundamental indicator as high prices can hurt consumer spending and confidence, and curtail the activities of certain businesses and government services.

Natural disasters, terrorist attacks, and militarily actions in a sensitive region cause instability in the world and have a significant impact on the Forex market as they develop. These types of evens can be hard to predict in advance.

The ability to identify trends in macroeconomic indicators and reading central bank’s current and future actions is a valuable tool that comes from following financial news, watching the markets, and trading Forex.

If you are interested in trying, sign up for a free practice account; or to start trading real money on a live account.
The technical trader is concerned with studying patterns of price movement on the chart in order to predict the direction of current and future trends in the Forex market. The decision to buy, sell, or hedge a current position – or to stay out of the market entirely – is made upon this analysis. Identify recurring patterns and make educated assessments to guide your decisions; should you initiate a trade at the current price, or set your system to open a position at a future price? The goal of the technical analyst is simple: to make profitable Forex trades by identifying past patterns that have historically led to a predictable outcome. However, the potential risk should always be considered. A recurring pattern is not precise and does not guarantee a desirable or expected price movement.
Tools of the Technical Trader

Using various chart types and technical indicators, more accurate predictions can be made from better analysis of the Forex market. Technical indicators use price, volume, volatility, and other factors to create measures of how the market crowd is behaving. Technical indicators can be utilized to help decipher underlying currents that are behind price action. Trend lines, support and resistance levels, reversals, and numerous patterns can also be used to track and identify trends. Once a pattern is recognized (not all are apparent), the Forex trader can decide whether to place a trade, or wait and monitor the price to see if the predictions were accurate.

This is the end of our introduction, but it is not the end of the educational resources we have to offer. Our Online Forex Course is a great place to go next if you want to learn more. It has a lesson on technical analysis that presents the basics of trendlines and common chart patterns.

If you are interested in taking an in depth look into specific technical indicators and how to use them, refer to our Technical Analysis Articles. Or, if you would like to experiment with technical analysis and technical indicators right now on our trading platform, VT Trader, you should sign up forThe internet revolution of the 90’s changed many aspects of everyday and corporate life. One such change was to open the Forex market to individuals. What was once the domain of banks, hedge funds, and giant multinational corporations is now accessible to retail consumers. What fueled this change was the onset of trading software that connected anybody to the currency markets through the internet.
CMS Forex was one of the first companies to offer a trading platform built specifically for the currency markets, VT Trader. It was also one of the first to enhance their trading software by letting traders place trades directly from a chart window and to follow the progress of positions visually on the screen.


Two of VT Trader's main windows: Dealing Rates and a USD/JPY, 1 day, chart.


VT Trader has live quotes, charts, and detailed and up to the minute account reports.

VT Trader charts serve as a virtual canvas for trader to:
• effortlessly draw and customize trend lines and moving averages.
• map out support and resistance levels by applying Fibonacci ratios, price channels, and other drawing tools.
• use and combine over 100 different technical indicators in order to strengthen one's analysis.

The platform's interface is graceful in allowing the user to move and customize VT Trader's windows according to individual preferences.


VT Trader is packed with features. From simple ones like entry and bundled market orders, stops and limits, and hedging to more complex ones such as trading system and indicator builders, VT Trader has something for every level of Forex trader.

We welcome you to take VT Trader for a test drive to see for yourself the power of one of the most revolutionary trading platforms on the market. It is completely free to download; all one has to do to get started is sign up for a free practice account.

For more information on how to start using VT Trader, please view our VT Trader User Guide.
a free Practice Account