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Learn to Trade Foreign Currency - One Crumb at a Time

It requires diligence and discipline to learn to trade foreign currency. It doesn't matter whether you're a seasoned pro or after a beginner's forex trading training course. Currency trading is about having your finger on the pulse of the market, specializing in select relationships, and attacking the market ruthlessly and fearlessly when opportunity strikes. Sound like fun to you? Then read on.
Contents at a Glance

1. Why There is Always Opportunity to Make Money Trading Foreign Currency
2. In a Purely Logical World Currency Cross Rates Always Make Sense
3. Learning to Trade Foreign Currency

4. The Key to Learning to Trade Foreign Currency with Leverage
5. Automated Trading Programs Trade Currency Faster Than Us
6. Did You Learn about Trading Foreign Currency?

more...
Contents at a Glance

1. Why There is Always Opportunity to Make Money Trading Foreign Currency
2. In a Purely Logical World Currency Cross Rates Always Make Sense
3. Learning to Trade Foreign Currency
4. The Key to Learning to Trade Foreign Currency with Leverage
5. Automated Trading Programs Trade Currency Faster Than Us

6. Did You Learn about Trading Foreign Currency?
7. Open a Trading Account Today
8. Books on Foreign Currency Trading
9. Forex Trading Blog
10. Other Day Trading Investment Tutorials

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Why There is Always Opportunity to Make Money Trading Foreign Currency
Trading Currency Cross Rates Creates Momentary Arbitrage

Trading foreign currency may be a little confusing for the novice investor but hear me out and I'll try to make it more plain for you. Below is a chart detailing the relationships between three currencies (Yen, US Dollar, and Euro) from July of 2008 to July of 2009.
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In a Purely Logical World Currency Cross Rates Always Make Sense
Foreign Currencies Trade in Pairs Called Cross Rates

You'll note in the chart above that there appears to be some sort of synchonization between the movements of the values of the currencies. For example, when the Euro/Dollar cross rate is rising (dollar is strengthening), and the Yen/Dollar is flat, one would expect to see the Yen/Euro falling. That is precisely what we see going on in this chart. It's logical. One should not be able to sell a euro, buy a dollar, then sell the dollar and buy a Yen, only to sell the Yen immediately to buy 2 euros. That simply wouldn't make sense would it? How can anyone expect to sell one euro and then an instant later get 2 back (pardon the exaggeration here) without adding any value to the initial euro sold? It doesn't make sense does it? Well I can tell you it happens every - single - day.
Learning to Trade Foreign Currency
Chart 2: Implied Cross Rate vs. Actual Market Cross Rate

Take a look at a second, slightly different chart. We're still analyzing the cross rates between Yen, US Dollar, and Euro, only now we're only interested in the Actual Yen/Dollar rate, and the cross rate for the Yen/Dollar implied by the Yen/Euro and Euro/Dollar cross rates.
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What I've done here is plotted the implied Yen/Dollar cross rate (made by trading euros, dollars, and Yen) against just trading the dollar for Yen directly. There is virtually no different between the two, yet what are the large green spikes?