Review Category : Trading Tools

The Workings Of Forex Rates

Forex Rates Market

This article covers the details on how forex rates work and what fixed and floating exchange rates are.

A basic method of determining how forex rates work is to consider what you would do if you need to pay for an item to be sent to you from another country.  You need to convert your domestic currency to the foreign currency in order to pay for the item.  The same applies if you wish to sell an item to someone in another currency.  The amount you receive from that person has to be converted to your domestic currency.

Money Cost

Countries depend on their national currency to determine an item’s value regardless of the country it is located in.  FX rates are important for trade and the functioning of global countries as not all the countries have the same currency.  Forex rates can be determined as the cost one currency to that of another currency.

Floating Rates

Floating forex rates are set by the market.  A country’s currency is worth what the buyers perceive it to be, based on demand and supply.  Supply and demand is motivated by inflation, foreign investment, the ratio of exports and imports and many other economic factors.

Countries with mature, stable economic climates generally use the floating rate system.  It is considered to be the more efficient method because the market adjusts the rates automatically by taking account of inflation and other economic determinants.  This system is not perfect as a country could lose huge amounts of investment funds if its currency suffers a decline.  This decline in forex rates could cause other economic problems for countries.

Pegged or Fixed Forex Rates

Countries that adopt this system fix their rates at a certain level.  The government has to make use of artificial methods to maintain the pegged rate.  The rate is often fixed to that of another country’s currency and will generally not experience much movement from one day to another.

Governments do not have an easy task on their hands when they opt for this system.  The central bank has to maintain a high level of reserves of foreign currencies to absorb the supply and demand of their currency.  If there is a sudden demand for their currency, the central bank has to ensure that they have sufficient funds to meet the demand.  If the demand for the currency takes a sudden dive, the central bank of that country would have to buy back their currency.

This system is favoured by countries with immature economies and unstable countries.  Developing countries favour this system as it allows them to maintain a level of inflation that they can control.  This is an extremely risky system as the country could reach a point when their pegged rate is no longer in line with what their currency is really worth.  If they were to adjust their fixed rate to the actual rate, it could send the country into an economic downtrend.  This may push up the inflation rate and cause the currency to decline even further.  The government of the country would have to adjust the value of its currency over a period of time to avoid an economic meltdown.

 

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How To Use Forex Trading Systems

Using Forex Trading Systems

This article is about automation of forex trading systems and the considerations you have to make before you purchase.

To make a success of your career in the forex trading market, you need to have a good trading strategy, and a solid trading plan.  Prior to commencing your trading career, you need to be secure in your knowledge of the complexities of this market.  To ensure that you are ready to enter the live trading market, you should commence with a couple of demo accounts.  This will allow you to become familiar with your trading platform and to test your trading method and strategy.  It will provide you with the confidence to enter the live trading arena.

Automation of Forex Trading Systems

Forex trading systems that are available to you have been developed by professional forex traders in partnership with computer programmers.  The programmes use real-time data which has been converted by the use of algorithms.  The resultant reports from these coding methods will help you to place profitable trades.

Your success level when you use forex trading systems is dependent upon your strategy and the method that was used by the professionals and programmers to achieve the final result.  It is important for the professionals to provide the programmers with suitable data to allow them to design a system suitable for decoding and the provision of information that makes sense.  The reports should be useful enough for you to make profitable trades.

System Setup and Use

If you wish to obtain an automated system, there are several factors to consider.

Setup and Installation

You should not select a system that is unnecessarily complicated.  You should opt for a system that is easy to use and does not need you to spend hours inputting data.  The most useful system is one that allows you to determine your own criteria, set it and forget about it.  You must however check that the system is doing what it is supposed to, on a regular basis.  This type of trading system offers you the freedom and timesaving method which allows you to set your strategy without the need to do time-consuming, complex manual calculations.

Adjustments

The system you select should allow you to amend it in the event that the market conditions change drastically.  If the market has become volatile and your trades are at risk, you should have the facility to move your trade to an early exit.

You should ensure that these features are available before you buy your system.  This could save you money in future.  You may not always be able to determine the capabilities of the system prior to purchasing it.  To overcome this stumbling block, you should request a free trial version of the system prior to buying it.  If this is not possible, the provider may be willing to offer a refund guarantee if the system is not what you are looking for.

Automatic Adjustments

The system should be able to adjust automatically if there are extreme movements in the marketplace.  This may happen during times when news releases are made.  The system should be able to recognise the sudden change that your forex broker may make to the spread and automatically amend your lot size for the existing or the next trading period.  Once it detects that the spread has been returned to normal, it should return to its normal trading pattern.

You should have the facility to log in from an alternate device and land at the exact point where you last left off.  You should ensure that you are able to trade at least two major currency pairs.  The ideal system would be one that offers you more than two currency pairs.

 

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  • 14 Video Lessons
  • Free One-on-One Training
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  • In-House Daily Analysis
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The Technology Behind Forex Trading Systems

Forex Trading Systems Technology

This article looks at the hardware that you need to run forex trading systems.

When you look at trading on the forex market you have to consider what the technology is that will power the forex trading systems you are using.  When you look at the technology you should consider the computer you are going to be using and the internet connection that you need.  These are the two primary items of technology that power the forex trading systems that you use.

The Computer You Use for the Forex Trading Systems

The forex trading systems that you employ will need to be based on a computer.  This is the primary tool that you need to have when you trade.  If you do not have the right computer then you are not going to be able to trade as effectively as you should be.  There are a number of points that you have to consider when you look at the computer you are going to use for trading.

The first point that you should consider is whether or not you are only going to be using the computer for trading.  There are many traders who will have a computer that they only use for trading.  When you do this you ensure that the computer is not slowed down by other information that is not related to your trading.

The hardware that you have in the computer should be as fast as you can get.  The faster the processor the easier the computer will handle the trading software that you are going to be using.  You also need to consider the memory that you have with the computer.  The higher the amount of memory with the computer the better it will be for your trading.

You also have to ensure that your computer is able to handle more than one monitor.  When you trade you should consider the use of more than one monitor.  This allows you to see all the information you need to at a glance without having to take the time to change the window you are looking at.

Having a back up battery for the computer is also important.  If there were to be a power failure you do not want this to affect your trading.  An uninterruptible power supply is something that you have to consider when you look at trading.

The Internet that You Have

The internet that you are using also needs to be considered.  All retail trading will be done via the internet making it the second most important tool that you need when you trade.  The internet connection that you are running should be high speed internet because you do not want to wait on the rates that you are getting.

The internet that you use should also be stable otherwise you could lose connection when you do not want to.  The best internet for trading is high speed with very little lag.  If you can get internet that does not have a fair use policy you should consider this.

The amount of data that you are allowed with the internet should also be considered.  You need to have high amounts of data because the forex trading systems you use will constantly be transmitting data.

 

Self-Education-Fortune


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  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
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Taking a Look at Forex Strategies

Hedging Forex Strategies

This article looks at the different forex strategies categories.

When entering the foreign exchange market, new traders will notice that there are various forex trading strategies available for use.  However, these numerous strategies all fall into two broad categories – speculating and hedging.  It is important to be aware of the difference as this can affect your trading.  Both hedging and speculating will be discussed below.

The hedging category

When a company chooses to sell goods or services in a foreign country, they are generally paid in the currency of that particular currency.  However, the currency exchange is in constant flux, causing sales to be valued at a price which may be less than what is desired by the company.  In order to avoid a potential loss from fluctuating currencies, the company can hedge the trading pairs.  This hedging is a means of protecting oneself against the possibility of damaging currency price movements, helping the company focus on generating profits.

It has been seen that traders in international financial markets will hedge foreign currency exposure in order to gain as much from their investments as possible.  For example, a mutual fund manager holding Japanese stocks may hedge against movements in the Japanese yen.  This will protect the management against exposure to any fluctuations in price movements in the currency.

The speculating category

The majority of trading activities fall into the category of speculation.  This involves the buying or selling of an asset, usually in the face of raised risk, in order to take advantage of a market movement.  All trading on the foreign exchange market is done in currency pairs, and the speculating trader is one who believes that the value of one currency will move higher or lower in relation to the second currency in the pair.  This means that they believe one currency will increase, while the other fails in the near future.

The majority of foreign currency trading is conducted among liquid and active pairs, and to speculate one must have an understanding of both the market and these pairs.  It is recommended that new traders utilise the major currency pairs as there is more information available on these currencies.  Furthermore, they are also traded more often than the obscure pairs allowing for greater speculative opportunities.

Additional forex strategies

The above two forex strategies emphasise the relationship of one currency to another; however, there are those that focus on the trade itself.  Arbitrage trades involve a trade both buying and selling the same currency at slightly different prices with the hope of making a profit.  However, arbitrage trading is rather rare among foreign exchange traders, and is not seen as effective or beneficial.  This strategy requires close monitoring and immediate action if trading opportunities present themselves, thus it is not recommended for the new trader.

Another popular trading strategy is the carry trade.  This strategy is generally seen among larger players and is often used during times of low market volatility.  It involves the selling of a currency with low interest rates and investing the proceeds into a country with high interest rates.  This allows the trader to make a profit as long as the relationship between the currencies is stable.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →

Choose Your Forex Trading Strategies

Trend Forex Trading Strategies

This article looks at a few of the available forex trading strategies you can make use of.

Once you have gone through your forex training, you need to develop a trading plan and decide on your forex trading strategies.  There are a number of strategies for you to choose from.  Some of these are quite easy to use and there are some more complicated ones available.  The most suitable strategy for you will depend on your trading style.  You also have the facility to combine strategies to find the one most suitable for your requirements.

Day Trading

Day trading is classified as a forex trading strategy.  Many people see this more as a method than a trading strategy.  This strategy involves holding on to your trades for a specified and limited time period.  These trades will generally not last longer than a trading day.  Many day traders do not keep their positions for longer than a few hours.  This strategy is more suitable for traders with experience as you have to be alert to market movements at all times during your trading day.

Trends

One of the forex trading strategies you can make use of is trend following.  Many recommend this strategy for forex beginners as it is quite easy to follow and the data required to implement it is readily available.  The strategy requires that you use forex charts to check the market trends.  You can make use of daily charts or weekly charts.  If you are a beginner in the market, you should not use the shorter timeframes as the weekly and daily charts give you the opportunity to follow the trends in a more effective manner.  Once you have the trend charted, it will indicate whether you should trade down or up.

Carry Trading

Carry trading is a simple strategy which is suitable for beginners.  It is also known as interest rate trading.  This strategy involves buying and holding a currency that has a higher interest rate than the other currency in your pair.  For each trading day that you hold onto this pair, you will earn on the difference in rates.  The one main benefit of carry trading is that even if the currency pair does not move at all, you will still be earning.  To obtain the most benefit from this strategy, you should leverage your positions.  You should bear in mind the risks of leverage in that it can turn against you if your trade goes the wrong way.

The main disadvantage linked to this trading strategy is that your currency pair will be affected by the smallest market movement.  This raises the risks involved with this type of trading.  If the market experiences any movement at all, the currencies could decline quite quickly and you may not have sufficient time to exit your trades.

Fundamental Forex Trading Strategies

This also goes by the term ‘news trading’.  The strategy uses fundamental analysis to do market predictions.  Traders who use this strategy observe the current news and events and use that information to forecast the movements in the forex market.  Many traders find this an unsuitable strategy due to the time required for analysis and the scope of the data that is required.  You also have to be quite quick with your trading once the news releases are done.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →

How To Use Forex Trading Systems

Using Forex Trading Systems

This article is about automation of forex trading systems and the considerations you have to make before you purchase.

To make a success of your career in the forex trading market, you need to have a good trading strategy, and a solid trading plan.  Prior to commencing your trading career, you need to be secure in your knowledge of the complexities of this market.  To ensure that you are ready to enter the live trading market, you should commence with a couple of demo accounts.  This will allow you to become familiar with your trading platform and to test your trading method and strategy.  It will provide you with the confidence to enter the live trading arena.

Automation of Forex Trading Systems

Forex trading systems that are available to you have been developed by professional forex traders in partnership with computer programmers.  The programmes use real-time data which has been converted by the use of algorithms.  The resultant reports from these coding methods will help you to place profitable trades.

Your success level when you use forex trading systems is dependent upon your strategy and the method that was used by the professionals and programmers to achieve the final result.  It is important for the professionals to provide the programmers with suitable data to allow them to design a system suitable for decoding and the provision of information that makes sense.  The reports should be useful enough for you to make profitable trades.

System Setup and Use

If you wish to obtain an automated system, there are several factors to consider.

Setup and Installation

You should not select a system that is unnecessarily complicated.  You should opt for a system that is easy to use and does not need you to spend hours inputting data.  The most useful system is one that allows you to determine your own criteria, set it and forget about it.  You must however check that the system is doing what it is supposed to, on a regular basis.  This type of trading system offers you the freedom and timesaving method which allows you to set your strategy without the need to do time-consuming, complex manual calculations.

Adjustments

The system you select should allow you to amend it in the event that the market conditions change drastically.  If the market has become volatile and your trades are at risk, you should have the facility to move your trade to an early exit.

You should ensure that these features are available before you buy your system.  This could save you money in future.  You may not always be able to determine the capabilities of the system prior to purchasing it.  To overcome this stumbling block, you should request a free trial version of the system prior to buying it.  If this is not possible, the provider may be willing to offer a refund guarantee if the system is not what you are looking for.

Automatic Adjustments

The system should be able to adjust automatically if there are extreme movements in the marketplace.  This may happen during times when news releases are made.  The system should be able to recognise the sudden change that your forex broker may make to the spread and automatically amend your lot size for the existing or the next trading period.  Once it detects that the spread has been returned to normal, it should return to its normal trading pattern.

You should have the facility to log in from an alternate device and land at the exact point where you last left off.  You should ensure that you are able to trade at least two major currency pairs.  The ideal system would be one that offers you more than two currency pairs.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →

Taking a Look at Forex Strategies

Hedging Forex Strategies

This article looks at the different forex strategies categories.

When entering the foreign exchange market, new traders will notice that there are various forex trading strategies available for use.  However, these numerous strategies all fall into two broad categories – speculating and hedging.  It is important to be aware of the difference as this can affect your trading.  Both hedging and speculating will be discussed below.

The hedging category

When a company chooses to sell goods or services in a foreign country, they are generally paid in the currency of that particular currency.  However, the currency exchange is in constant flux, causing sales to be valued at a price which may be less than what is desired by the company.  In order to avoid a potential loss from fluctuating currencies, the company can hedge the trading pairs.  This hedging is a means of protecting oneself against the possibility of damaging currency price movements, helping the company focus on generating profits.

It has been seen that traders in international financial markets will hedge foreign currency exposure in order to gain as much from their investments as possible.  For example, a mutual fund manager holding Japanese stocks may hedge against movements in the Japanese yen.  This will protect the management against exposure to any fluctuations in price movements in the currency.

The speculating category

The majority of trading activities fall into the category of speculation.  This involves the buying or selling of an asset, usually in the face of raised risk, in order to take advantage of a market movement.  All trading on the foreign exchange market is done in currency pairs, and the speculating trader is one who believes that the value of one currency will move higher or lower in relation to the second currency in the pair.  This means that they believe one currency will increase, while the other fails in the near future.

The majority of foreign currency trading is conducted among liquid and active pairs, and to speculate one must have an understanding of both the market and these pairs.  It is recommended that new traders utilise the major currency pairs as there is more information available on these currencies.  Furthermore, they are also traded more often than the obscure pairs allowing for greater speculative opportunities.

Additional forex strategies

The above two forex strategies emphasise the relationship of one currency to another; however, there are those that focus on the trade itself.  Arbitrage trades involve a trade both buying and selling the same currency at slightly different prices with the hope of making a profit.  However, arbitrage trading is rather rare among foreign exchange traders, and is not seen as effective or beneficial.  This strategy requires close monitoring and immediate action if trading opportunities present themselves, thus it is not recommended for the new trader.

Another popular trading strategy is the carry trade.  This strategy is generally seen among larger players and is often used during times of low market volatility.  It involves the selling of a currency with low interest rates and investing the proceeds into a country with high interest rates.  This allows the trader to make a profit as long as the relationship between the currencies is stable.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →

Choose Your Forex Trading Strategies

Trend Forex Trading Strategies

This article looks at a few of the available forex trading strategies you can make use of.

Once you have gone through your forex training, you need to develop a trading plan and decide on your forex trading strategies.  There are a number of strategies for you to choose from.  Some of these are quite easy to use and there are some more complicated ones available.  The most suitable strategy for you will depend on your trading style.  You also have the facility to combine strategies to find the one most suitable for your requirements.

Day Trading

Day trading is classified as a forex trading strategy.  Many people see this more as a method than a trading strategy.  This strategy involves holding on to your trades for a specified and limited time period.  These trades will generally not last longer than a trading day.  Many day traders do not keep their positions for longer than a few hours.  This strategy is more suitable for traders with experience as you have to be alert to market movements at all times during your trading day.

Trends

One of the forex trading strategies you can make use of is trend following.  Many recommend this strategy for forex beginners as it is quite easy to follow and the data required to implement it is readily available.  The strategy requires that you use forex charts to check the market trends.  You can make use of daily charts or weekly charts.  If you are a beginner in the market, you should not use the shorter timeframes as the weekly and daily charts give you the opportunity to follow the trends in a more effective manner.  Once you have the trend charted, it will indicate whether you should trade down or up.

Carry Trading

Carry trading is a simple strategy which is suitable for beginners.  It is also known as interest rate trading.  This strategy involves buying and holding a currency that has a higher interest rate than the other currency in your pair.  For each trading day that you hold onto this pair, you will earn on the difference in rates.  The one main benefit of carry trading is that even if the currency pair does not move at all, you will still be earning.  To obtain the most benefit from this strategy, you should leverage your positions.  You should bear in mind the risks of leverage in that it can turn against you if your trade goes the wrong way.

The main disadvantage linked to this trading strategy is that your currency pair will be affected by the smallest market movement.  This raises the risks involved with this type of trading.  If the market experiences any movement at all, the currencies could decline quite quickly and you may not have sufficient time to exit your trades.

Fundamental Forex Trading Strategies

This also goes by the term ‘news trading’.  The strategy uses fundamental analysis to do market predictions.  Traders who use this strategy observe the current news and events and use that information to forecast the movements in the forex market.  Many traders find this an unsuitable strategy due to the time required for analysis and the scope of the data that is required.  You also have to be quite quick with your trading once the news releases are done.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →

The Technology Behind Forex Trading Systems

Forex Trading Systems Technology

This article looks at the hardware that you need to run forex trading systems.

When you look at trading on the forex market you have to consider what the technology is that will power the forex trading systems you are using.  When you look at the technology you should consider the computer you are going to be using and the internet connection that you need.  These are the two primary items of technology that power the forex trading systems that you use.

The Computer You Use for the Forex Trading Systems

The forex trading systems that you employ will need to be based on a computer.  This is the primary tool that you need to have when you trade.  If you do not have the right computer then you are not going to be able to trade as effectively as you should be.  There are a number of points that you have to consider when you look at the computer you are going to use for trading.

The first point that you should consider is whether or not you are only going to be using the computer for trading.  There are many traders who will have a computer that they only use for trading.  When you do this you ensure that the computer is not slowed down by other information that is not related to your trading.

The hardware that you have in the computer should be as fast as you can get.  The faster the processor the easier the computer will handle the trading software that you are going to be using.  You also need to consider the memory that you have with the computer.  The higher the amount of memory with the computer the better it will be for your trading.

You also have to ensure that your computer is able to handle more than one monitor.  When you trade you should consider the use of more than one monitor.  This allows you to see all the information you need to at a glance without having to take the time to change the window you are looking at.

Having a back up battery for the computer is also important.  If there were to be a power failure you do not want this to affect your trading.  An uninterruptible power supply is something that you have to consider when you look at trading.

The Internet that You Have

The internet that you are using also needs to be considered.  All retail trading will be done via the internet making it the second most important tool that you need when you trade.  The internet connection that you are running should be high speed internet because you do not want to wait on the rates that you are getting.

The internet that you use should also be stable otherwise you could lose connection when you do not want to.  The best internet for trading is high speed with very little lag.  If you can get internet that does not have a fair use policy you should consider this.

The amount of data that you are allowed with the internet should also be considered.  You need to have high amounts of data because the forex trading systems you use will constantly be transmitting data.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →

The Workings Of Forex Rates

Forex Rates Market

This article covers the details on how forex rates work and what fixed and floating exchange rates are.

A basic method of determining how forex rates work is to consider what you would do if you need to pay for an item to be sent to you from another country.  You need to convert your domestic currency to the foreign currency in order to pay for the item.  The same applies if you wish to sell an item to someone in another currency.  The amount you receive from that person has to be converted to your domestic currency.

Money Cost

Countries depend on their national currency to determine an item’s value regardless of the country it is located in.  FX rates are important for trade and the functioning of global countries as not all the countries have the same currency.  Forex rates can be determined as the cost one currency to that of another currency.

Floating Rates

Floating forex rates are set by the market.  A country’s currency is worth what the buyers perceive it to be, based on demand and supply.  Supply and demand is motivated by inflation, foreign investment, the ratio of exports and imports and many other economic factors.

Countries with mature, stable economic climates generally use the floating rate system.  It is considered to be the more efficient method because the market adjusts the rates automatically by taking account of inflation and other economic determinants.  This system is not perfect as a country could lose huge amounts of investment funds if its currency suffers a decline.  This decline in forex rates could cause other economic problems for countries.

Pegged or Fixed Forex Rates

Countries that adopt this system fix their rates at a certain level.  The government has to make use of artificial methods to maintain the pegged rate.  The rate is often fixed to that of another country’s currency and will generally not experience much movement from one day to another.

Governments do not have an easy task on their hands when they opt for this system.  The central bank has to maintain a high level of reserves of foreign currencies to absorb the supply and demand of their currency.  If there is a sudden demand for their currency, the central bank has to ensure that they have sufficient funds to meet the demand.  If the demand for the currency takes a sudden dive, the central bank of that country would have to buy back their currency.

This system is favoured by countries with immature economies and unstable countries.  Developing countries favour this system as it allows them to maintain a level of inflation that they can control.  This is an extremely risky system as the country could reach a point when their pegged rate is no longer in line with what their currency is really worth.  If they were to adjust their fixed rate to the actual rate, it could send the country into an economic downtrend.  This may push up the inflation rate and cause the currency to decline even further.  The government of the country would have to adjust the value of its currency over a period of time to avoid an economic meltdown.

 

Self-Education-Fortune


Get a free Forex PDF PLUS:

  • 14 Video Lessons
  • Free One-on-One Training
  • A 5000$ Training Account
  • In-House Daily Analysis
  • Get FULL ACCESS
Become a forex trader!
Read More →
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