Last Friday, Non-Farm Payrolls is out. This is like fuel for Usd and it effect all pair especially eur/usd and gbp/usd. Last friday the report came out a mixed bag. People are confused and the price swing up and down. I was on the losing side of the trade but because of the swing at certain point I was 30 pips up but because Marketiva usually lock out during news hour, I finally end up at a lost. Well its forex anyway. If you dont lose in forex you dont feel the thrill.
Anyway Im going to review few pairs. Maybe some of you can find a trade from my review. As for me I am currently out of the market waiting for it to come to sense. Currently all pairs are at extreme oversold or overbought.
Eur/Usd
Currently at 1.2532 after a drop of almost 200 pips. Currently its on a thin downtrend with a possible target of 1.2450. For those of you who are already on a short position, you may hold the position with trailing stop loss of your choice. For me I will only consider an entry at 1.2450, that will depend on the strength of the momentum.
Gbp/Usd
Currently at 1.8540 and just like eur/usd it drop like a rock during NFP report out. Possible target is 1.8200. Looks like a retrace coming soon. Just watch the trend and momentum for possible entry. I will be looking at this one.
Usd/Cad
Currently at 1.1330. My last signal manage to get me 30 pips. Too small for the effort. Currently going up with possible target of 1.1450. Overshot all indicators. Possible retrace at 1.1360. I will be watching this one.
This is my review. Its not a trade recommendation. Be very carefull on your trade coz forex is a risky market. If you are not sure better stay out until the market make some sense. Happy trading.
Thursday, September 17, 2009
DAILY TRADING - THERE IS NO SPOON
Some people are asking me about the secret of daily trading. The answer is there is no secret. It is there for everyone to see but the question is, can you accept what you see.
Trading the daily chart requires patience, lots of it. That is what most of us lack. Patience. If you look at the longer timeframe charts, you will see that price will stop or hover around certain areas. That is your key point. Always start or stop trading around these key point.
The next indicator I use is CCI. CCI alone is a bit of a headache. So I smooth it out with MA. With the MA, I can see the direction of trade clearly. People say MA is a lagging indicator but I dont want to be early going to a party. I like to enter when the party already started.
The last advice is, there is no such thing as holly grail. You just cannot win all the time. The best that we can do is try to win as much as possible and lose a little as possible. In the long run, it would be profitable enough to stay trading. Otherwise you need to find another business to run.
Trading the daily chart requires patience, lots of it. That is what most of us lack. Patience. If you look at the longer timeframe charts, you will see that price will stop or hover around certain areas. That is your key point. Always start or stop trading around these key point.
The next indicator I use is CCI. CCI alone is a bit of a headache. So I smooth it out with MA. With the MA, I can see the direction of trade clearly. People say MA is a lagging indicator but I dont want to be early going to a party. I like to enter when the party already started.
The last advice is, there is no such thing as holly grail. You just cannot win all the time. The best that we can do is try to win as much as possible and lose a little as possible. In the long run, it would be profitable enough to stay trading. Otherwise you need to find another business to run.
Wednesday, September 16, 2009
Do you have what it takes to become a successful Forex Trader?
Forex trading, or any trading for that matter, is an occupation that requires experience and the accumulation of proficiency not unlike any other highly skilled profession. Whether you are a leading executive at a major publically traded company, a professional golfer or trading from your kitchen table, there are 5 key ingredients that one must possess in order to become successful.
1. You must be Passionate about what you do.
As Forex traders we all face one unique set of circumstances that does not exist in any other profession. We get rewarded for when we succeed and equally punished when we don’t! Could you image a corporate worker one quarter receiving a significant accomplishment bonus and the next quarter actually getting money taken from their paycheck for missing performance targets? Not on your life!
2. You have to Apply Yourself and work hard at it.
I talk to so many people that enter into Forex trading with the aspiration of getting rich quick. Without putting the time and energy into really getting good at trading I see them jump from strategy to strategy looking for the goose that will lay the golden egg and eventually quitting while blaming everything else, except the true cause
2. You have to Apply Yourself and work hard at it.
I talk to so many people that enter into Forex trading with the aspiration of getting rich quick. Without putting the time and energy into really getting good at trading I see them jump from strategy to strategy looking for the goose that will lay the golden egg and eventually quitting while blaming everything else, except the true cause
4. You must Push Yourself beyond the point everyone else might have quite.
In Forex Trading this is simple. Assume there is someone on the other side of your trade that is pushing themselves and sharpening their edge. To be successful you must you must do the same thing. Now is the time to examine your mental edge. Do you know the single most critical factor in any currency trade? It is you, the trader! Sharpening you mental edge is the most difficult aspect of trading, but also the most rewarding.5. You must, without wavering, be Determined and Persist to your objective.
You will fail. I can state that emphatically. However, you will not be defeated unless you allow your failures to control your trading. It is the old adage; failure is not falling of your horse, failure is refusing to get back on. Your success depends on your ability to dismiss the criticism, rejection, self-doubt and pressures associated with Forex trading.
Happy Trading!!
1. You must be Passionate about what you do.
As Forex traders we all face one unique set of circumstances that does not exist in any other profession. We get rewarded for when we succeed and equally punished when we don’t! Could you image a corporate worker one quarter receiving a significant accomplishment bonus and the next quarter actually getting money taken from their paycheck for missing performance targets? Not on your life!
2. You have to Apply Yourself and work hard at it.
I talk to so many people that enter into Forex trading with the aspiration of getting rich quick. Without putting the time and energy into really getting good at trading I see them jump from strategy to strategy looking for the goose that will lay the golden egg and eventually quitting while blaming everything else, except the true cause
2. You have to Apply Yourself and work hard at it.
I talk to so many people that enter into Forex trading with the aspiration of getting rich quick. Without putting the time and energy into really getting good at trading I see them jump from strategy to strategy looking for the goose that will lay the golden egg and eventually quitting while blaming everything else, except the true cause
4. You must Push Yourself beyond the point everyone else might have quite.
In Forex Trading this is simple. Assume there is someone on the other side of your trade that is pushing themselves and sharpening their edge. To be successful you must you must do the same thing. Now is the time to examine your mental edge. Do you know the single most critical factor in any currency trade? It is you, the trader! Sharpening you mental edge is the most difficult aspect of trading, but also the most rewarding.5. You must, without wavering, be Determined and Persist to your objective.
You will fail. I can state that emphatically. However, you will not be defeated unless you allow your failures to control your trading. It is the old adage; failure is not falling of your horse, failure is refusing to get back on. Your success depends on your ability to dismiss the criticism, rejection, self-doubt and pressures associated with Forex trading.
Happy Trading!!
Forex strategy
It is quiet obvious that the traders trading in currencies and interested in exchange markets, will be equally keen and interested in knowing about the overall economic development of the countries whose currencies they hold, or are interested in buying. Every trader wants to be convinced that they economy they are about to invest in is developing with a solid and steady growth, which can be known by studying various factors such as unemployment, import and export, and the GDP statistics of a particular countryterima kasih atas sarannya. sebenarnya saya sedang membuat salah satu strategi dan dilengkapi dengan screen shhotnya, dan sekarang dalam proses pengerjaan, mhn bersabar.
Thursday, August 27, 2009
Dollar Debate Misses at G8, but Criticism is still there
So the Dollar was spared yesterday, spared by a seemingly minor situation in an obscure city in an insignificant province of a very relevant state. The Uighur uprising in China took the debate about the value of the dollar as a global reserve unit off the table at the G8 (due to the fact the Chinese president, Hu Jintao, was forced to leave the summit), however it did not stop the show of concern that America’s counterparts in the G8 had.Germany, one of the US’s staunchest supporters during the Bush years, have chilled that relationship and have become more openly critical of the Obama administration. In the past, when the German government had a problem with the US’s policies, you read about it weeks after it had been sorted out, George W. Bush had a great relationship with the German Chancellor Merkel, and it showed. It is ironic. Obama’s social philosophy is more aligned with the German’s and much of Western Europe for that matter, Bush was far to the right of where Europe was. However, we are seeing a spate of discontent from the Western European leaders at the Obama policies – and this is most evident in the words and silence of Germany. Long-time Forex traders know this to be true as in the past, we did not see the spikes we do today in the Dollar, after a European leader gives a speech, today it is routine.In the absence of the BRIC debate on a global reserve currency, Angela Merkel, the German Chancellor, filled in nicely and spoke of how the focus of many nations vital to the economic stability of the world has been on reliving mistakes of years past. By assuming the policies of stimulating the economy through a broad array of spending programs, a tactic that was employed and failed in 1933, the rising debt has been ignored and has grown in such a manner, that the entire world is now under threat of jeopardy in more profound manner.Merkel’s concerns are valid and traders need to keep this in mind when dealing in the Dollar. As we have seen, the Japanese Yen has been profiting nicely from the return of safe-haven flows where it usually took a secondary role to the Dollar in this capacity. The Dollar is volatile, more than ever before, because traders as well as the long-term investors are unsure of which way to go. Sentiment keeps us in the Dollar, but reality forces us to look away. I believe the next three months are vital to determining which way the pendulum will swing for the Dollar – and it starts with the criticism of a European leader that an American policy is too liberal. Go figure.
Stock markets are rising? Look at the Big Picture!
With many of the primary stock markets reaching yearly highs, it would appear that optimism about the prospects for a global recovery is high. The increase in overall risk appetite in the and the jump in stocks have been incredibly impressive.According to the news reports, these shifts in sentiment have been driven higher by better than expected corporate earnings out of the US along with good economic data. But something is just not adding up for me, and I am not quite sure where to place my disbelief. It is odd that just as the markets are flying, bond yields for the major economic countries, the US, Japan, England etc, are going higher. Now obviously this is due in part to trader speculation that once the recovery takes hold, these countries will have no choice but to start raising their low rates. But what concerns me is the effect of quantitative easing that many of these countries employed. Funnelling money into the system at such a large rate as many of these countries had, will no doubt cause mild to moderate inflation – which would require lower rates. So what is going on?Last week gave us a clue that all is not so rosy though. England reported a weaker-than-expected GDP figures for the second quarter – much weaker than expected to be specific. Perhaps the Brits are not fudging their numbers like the Americans are – not that I know anything for a fact, but it wont surprise me to find that out in a few months. This week's vast amount of economic data coming out of Europe and the US should help paint a better picture. I fully expect sugar-coating, but I know that the Forex traders will be keen to pick up on that. Among the core numbers to look for this week are the US GDP and the Chicago Purchasing Managers Index. Consumer Confidence and Housing Prices along with New Home Sales numbers are important, but this is where my scepticism is most pronounced as we have seen anomalies in these numbers in recent months and they are easier to manipulate – so keep a sharp eye out there.I expect the general tone of this week's data to support the recent signs of improvement. It remains to be seen, however, whether the outturns will be sufficient to maintain the bullish momentum as we head into August. Short of very strong numbers, I doubt it will happen. Look for a weaker week in the Dollar and look for the Aussie and Kiwi to be the beneficiaries of that.
Dollar and Yen lose safe haven appeal, but not for the same reasons
As the Dollar and Yen lose their luster for now, partly due to positive news and partly due to political uncertainty (in Japan primarily, but to some extent the US), I want to take this opportunity to rant. I have been involved in the markets for the better part of 15 years. I started my career as a stock broker and find myself now a staunch advocate of the Forex. I have weathered turbulence in the markets, former Fed Chairman Alan Greenspan’s “irrational exuberance” speech (which ironically sent the markets on the biggest rally in 50 years), the internet bubble burst and now the “biggest recession since the great depression.” I lived through 8 US presidents, saw two of the greatest leaders – economically speaking – in Reagan and Clinton and saw miserable failures like Carter and the senior Bush. But, in my life I have never witnessed such irresponsibility and lack of basic understanding of free market thought, as I have with the current president, Barack Obama.Carter was a failure, not because he held such liberal policies as many would have you believe, he failed because he was weak, in domestic and international relations he was viewed as timid and non-confrontational. Perhaps, had he been more assertive he would have succeeded in reforming the system to his liking – and I would be blaming him for killing capitalism. And, as much as people compare the two – Obama is not a Jimmy Carter. We need to look at the core of the man - Carter was weak, Obama is strong. Carter had the support of the US Congress, but was not able to achieve, because he sought bi-partisanship which he did not get. Obama does not care about what the other side thinks, as long as his side is on board it is fine. But Obama has another tool at his disposal that enables him to push his agenda through, without the help of the Congress, the Czar. In the US, cabinet members need to go through a vigorous vetting and approval process by both branches of Congress. A Czar is not a cabinet member. First introduced by Ronald Reagan to head up the war on drugs, a Czar has broad powers to do – and answers only to the president. Reagan created this role because he did not believe the drug war would go on for so long and therefore adding a cabinet post, a move that takes a constitutional amendment, would not be necessary.Obama however has gone beyond this level, appointing 33 Czars, each with an average salary of $250,000 and annual budget for office and staff of over 10 million. This is the single largest expansion of governmental agencies ever – and the fun part is this is not part of the government as the Czars answer only to the president. It is shocking – and it is why Obama is not like Carter – he has the power to achieve what he wants, whether congress says yes or no to the idea, he has a back door to his goals if he needs it.I am not sure if the American public should be more upset at the wasteful 340 million plus that this group is costing them, or the fact that Obama has given powers to a group of people that subvert the system of checks and balances that has made America unique and safe from tyranny. Congress gave Reagan the approval for this post for logical reasons - quick and decisive action was needed, and waiting for congress to approve each mission was pointless. Obama has exploited this rule and it will be to the detriment of the US populace. Take for example the idea that his health czar is proposing – taxing the rich 5% to pay for health coverage for everyone else, or his employment czar, extending benefits to the unemployed by and relaxing the rules so that they do not need to be seeking employment while getting the benefits (their rationale for this: “it is a hard job market you know – it might demoralize the unemployed to have to keep searching for a job in this tight market”). And just how do they pay for this unlimited benefit? You guessed it, taxing the rich. This makes no sense. Why penalize those who work and reward those that don’t? all you do is make the productive less ambitious to be productive and you make the non-productive dependant on a system that is willing to care for them indefinitely – so in turn there is less productivity by default. In my opinion, you don’t need a stimulus that will give people money to do nothing; you need a stimulus that will spark production – as that is what will save the economy over the long haul. For Forex traders and enthusiasts what does this mean? It means the US is moving in the direction of China and Russia and Venezuela, in which there is a central government that controls all things. So what does this mean for the Dollar? Only time can tell, but it does not look too good.
China's Dilemma - Status Quo or Shine
The Australian and New Zealand Dollars have been fairing pretty well these past few weeks. Optimism about the state of the economy and the transparency of government efforts to save what they can of their thriving commodity export business has done them well. Forex traders are aware of the highs being made by these currencies, and specifically at the US Dollars expense.The recent sale of US Dollars by China had done much to help these countries. With China being the primary buyer of their minerals and metals, the sale of US Treasuries signals China’s unwillingness to stop their rampant buying. I personally feel this is a mistake but I am glad they are doing it as it is helping the currencies I like to trade the most. The problem I see arising in the near term though is the rise in prices of core materials. The Chinese cannot continue funding their purchases by selling off their US reserves, it will only serve to hurt the value of the Dollar in the long run – and as holders of 3 Trillion Dollars worth, it is a significant amount that they have at stake. China needs to come to terms with the state of the economy and slow down on their spending right now. This can help them in two ways:1.The amount of buying they are doing is causing increased demand which is driving up prices, if they slow down, prices fall and they can save money.2. The amount of money they are spending stockpiling raw goods could be better spent taking up larger stakes in the US Dollar, by doing so they increase their political influence and are in a better position to get what they want out of the US. As well, it will help their cause with World Bank members in their efforts to establish a global reserve currency.Online Forex readers know all too well that things are not what they seem. The recent stock selloff in Asia has traders nervous. IT would go a long way to calming markets if China were to step up and seize the moment here – it could also change the way people think en masse about the US Dollar and Renminbi as a valuable trading tool.
Good or bad for the Forex? I have no Idea
Continuing my thoughts from yesterday, on Wednesday the US reported a third straight month of Factory Order increase, a sign that things are picking up in the manufacturing sector. The report was met with mixed results as the Dollar fell and stocks ended slightly off, an unusual occurrence as normally when stocks are down the Dollar is up as Forex Traders usually seek a safe haven respite. I was watching Fox Business Network and they had an economist on who was analyzing the data and came up with similar conclusions to what I had said yesterday, simply, the reports that are coming out are not reflective of “the whole picture”. So this is the story behind the factory orders data:About three weeks ago, the US announced a program called “cash for clunkers” which gives people $4,500 for their junk cars towards the purchase of a new car with more than a minimum of 17 Miles Per Gallon. This program is supposed to encourage “green” purchases to help lower overall carbon monoxide gases, as well as a boost to the ailing auto industry enabling them to see out their old 2008 models to allow for increased production of 2009 models. The program was launched in “test” areas about two months ago, and was met with wild success and went national two weeks ago. It has been so popular in the two weeks since, that Congress is approving another 2 Billion Dollars towards extending it. Old model cars are flying off the shelves and as a result, the auto factories that have been closed for the better part of the year are cranking out 2009 models to refill the auto lots. In anticipation of this success, the government asked auto part makers, those that support car manufacturing by producing the “nuts and bolts” of the cars, literally and figuratively, to begin working again – and gave them about 10 Billion Dollars in incentives to do so – taxpayer money. Aside from this, the government is not only giving those that trade in a car $4,500 on the clunkers, they also give the dealers about 15 Billion Dollars in loan guarantees, more taxpayer money, to help those that cannot afford a new car even with the $4,500 credit, finance the cars. The average car sells for $30,000 in the US. So the result of this is you have people who cannot afford a new car, people who never would have thought of buying a new car, now buying new cars to the rate of about 450,000 new cars in the past two weeks. And they are doing it for the most part, with their own present and future tax dollars. To me this is not stimulus but rather stupid. The program is good, don’t get me wrong, it helps real people, dealers, manufacturers, factory workers, but it misleads the investor as if it were not for the mass injection of cash on every level of this venture, factory orders would be negative again. What is a Forex trader to believe? This is a difficult call as the factories are working and they are cranking out new product, but it is the government that is financing all this using money that does not exist. The US government will be in a 13 Trillion Dollar hole next year – 1 Trillion less than the 2007 GDP of the country. They owe China 3 Trillion, Russia 1 Trillion and are poised to pass legislation on healthcare that will send them even further in the red. So, the factory orders are good for now, but at what cost to the value of the Dollar overall is this happening. I am not ashamed to admit that I am stumped here – I don’t know how this will play out as this is a new concept. This is not like the housing starts numbers which are skewed – real people are benefitting – but as Forex Traders how do you trade on this info? My Forex Online friends, if you have an ideas, please leave me a comment – I am curious to know how the rest of the world views this dilemma. For now, I am sticking to the Aussie as always.
Make or Break Moment for the Greenback
With all the talk lately about the dethroning of the US currency as the premiere reserve investment for sovereign countries, the debate is about to get a stark reality check. This week, the US is doing its best to auction off a whopping 106 Billion Dollars in new debt, in a bond auction and what Forex online blogs and street traders are looking for is how quickly they sell. There is no doubt that it will sell out, but the questions are, who will be doing the buying? And, how quickly will it be sold?The US auctions typically has a short life, with most of the debt going away even before the official gavel is dropped down. However, it has been a sobering sign for the US Treasury that in recent auctions, it was been more difficult to get rid of the debt, to the point that yields on the bonds and notes have hit record highs as if the buyers are saying that the investment is more risky than others and therefore you need to pay us for assuming that risk. Another telling sign of the recent sales is that when the Federal Reserve, the Central Bank of the US, sees that the Treasury auctions are not selling out in a timely manner, the Fed buys the debt. This is equated with just plain printing money and diluting the value of the dollar, as the money used to buy the debt extends the treasuries credit line with the Fed.The Fed is responsible for setting monetary policy such as interest rate levels and balancing the valuation of the dollar in relationship to other currencies. The US Treasury is responsible for the actual management of money. Yet, recent legislation has broadened the Fed’s scope of jurisdiction and it is easier for the Fed now to “loan” the treasury money.Now, Forex traders are not stupid – we were all brought up learning that paying your MasterCard with your Visa is not a smart policy of money management – yet this is essentially what the US is doing.China, Russia, Brazil and India – fondly known as the BRIC nations met last week and came out vocally for a new reserve currency alternative – and they did so by specifically mentioning the policy of printing money that the US is employing now. The statements they made make sense, how can they ensure the value of their investment if there is seemingly a conscious policy to water it down?To correlate this to other investments, take the Ford Mustang. This year the Ford Motor Company is coming out with a limited edition (only 45 cars) of the Mustang to celebrate the 45th anniversary of the car.Now, each car is unique and a throwback to the old style with modern bells and whistles and is already being bid up to over 200,000 USD per car. If Ford were to make hundreds of these cars, the uniqueness of the product will be devalued and would water down the investment value of the car. This is what the BRIC’s are afraid of.So, this brings us to the auction this week. Considering that the primary buyers of the debt in past years have been the BRIC nations, what is their interest going to be in the record breaking bond issue this week? Are they going to put their money where their mouth is or will they succumb and continue to buy like heroine addicts in need of a fix? I am not speculating on the outcome, I truly don’t have a clue. But, I do know that if they stick to their principles, the Dollar is in for a rough ride – and if they do not, the USD seems like a good investment in the short term.
Daily FX Updates
According to the news, The Dollar rose again against the Euro, which hit a new month low of 1.31 USD, even after the release of a poor US retail sales report which saw sales fall 2.7% in December. Fears over a broadening global recession were realized when Standard and Poor’s downgraded Greece’s credit rating to A- / A-2, something they had warned about doing last week. Forex traders continued their move towards the US Dollar as it is still believed in the investor community that the US currency is a safe bet.
Although the news in the US has not been great as of late, the trading and investing trends has continued to work in favor of the US as Europe continues fielding bad economic news and speculation. Forex brokerages have seen continued selling of the Euro by their customers on news of an imminent rate cut. Adding to the fire in Euro-land was Germany’s declaration that its economy shrank 2.0% in the last quarter of 2008. Coupled with the S&P downgrade of Greece was the now very real prospect that Spain and Portugal were to follow after they too received warnings a short while ago. Look for continued weakness in the Euro as more countries begin reporting their Q4 economic data.
The Euro also fell against the Japanese Yen, albeit slightly to 117.11. The Yen also traded up and down slightly all day against the USD, which was looking at a mild gain towards the end of the day. Japanese officials are monitoring the strength of the Yen in an effort to perhaps keep it from getting much stronger. It is believed that a strong Yen will hurt Japanese exports which, in this environment, are crucial to their economy.
India has said that their inflation will fall to between 3% and 4% by the end of Q1. Normally a drop in inflation is good news however given that many countries are experiencing severe deflation in this economic crisis, this raises flags for India. An economic crisis in India can have a large impact on the overall global economy. This is something to watch in the near future.
Although the news in the US has not been great as of late, the trading and investing trends has continued to work in favor of the US as Europe continues fielding bad economic news and speculation. Forex brokerages have seen continued selling of the Euro by their customers on news of an imminent rate cut. Adding to the fire in Euro-land was Germany’s declaration that its economy shrank 2.0% in the last quarter of 2008. Coupled with the S&P downgrade of Greece was the now very real prospect that Spain and Portugal were to follow after they too received warnings a short while ago. Look for continued weakness in the Euro as more countries begin reporting their Q4 economic data.
The Euro also fell against the Japanese Yen, albeit slightly to 117.11. The Yen also traded up and down slightly all day against the USD, which was looking at a mild gain towards the end of the day. Japanese officials are monitoring the strength of the Yen in an effort to perhaps keep it from getting much stronger. It is believed that a strong Yen will hurt Japanese exports which, in this environment, are crucial to their economy.
India has said that their inflation will fall to between 3% and 4% by the end of Q1. Normally a drop in inflation is good news however given that many countries are experiencing severe deflation in this economic crisis, this raises flags for India. An economic crisis in India can have a large impact on the overall global economy. This is something to watch in the near future.
Dollar Shining After Obama Inaugural
The British Pound Sterling is falling today, down to a 7 ½ year low against the dollar and the Euro has fallen to a new six week low against the currency of Obama as well. Banking woes, economic uncertainty, lack of faith in England’s new bailout plan are all contributing to the downslide while the US is tapering some of its inauguration day losses while Forex Brokers are scrambling to find something that is stable in what has been a highly volatile week. At the moment, the Sterling is trading against the dollar at $1.3718, a 1.2% drop bringing it back to 2001 levels.
But it is not only the US Dollar that is benefitting from the British currency’s woes, the Yen, much to the chagrin of the Japanese government which wants to keep the currency from getting too strong, reached a record high against the Sterling today – up over 1% to 123.53. In what Forex Brokers see as a response that is not in line with the wants of the Bank of Japan, the Yen is gaining strength against the majors – also hitting a 13 year high against the dollar. Today, the BOJ will be coming out with a plan to boost lending to businesses (aka commercial paper) in order to thwart ill effects of this credit crisis. Look for the YEN to pare some its recent gains as the BOJ’s hidden agenda is to stem the growth of the YEN in order to protect exports as well.
But it is not only the US Dollar that is benefitting from the British currency’s woes, the Yen, much to the chagrin of the Japanese government which wants to keep the currency from getting too strong, reached a record high against the Sterling today – up over 1% to 123.53. In what Forex Brokers see as a response that is not in line with the wants of the Bank of Japan, the Yen is gaining strength against the majors – also hitting a 13 year high against the dollar. Today, the BOJ will be coming out with a plan to boost lending to businesses (aka commercial paper) in order to thwart ill effects of this credit crisis. Look for the YEN to pare some its recent gains as the BOJ’s hidden agenda is to stem the growth of the YEN in order to protect exports as well.
Rising oil prices have them Dancing Down Under
The Dollar has fallen to a year low against almost every major currency, given the problems that the US is facing, it is understandable - but the stock market gains are what is puzzling to me.Forex Investors and traders are pumping up the markets because historically, when people have a sense of security they tend to abandon the the USD and the Yen and test their luck with stocks. If the pundit, Nuriel Roubini is right though, the global economic challenge that we are facing is far from over. Only yesterday did the US revise 4th quarter 2008 and 1st quarter 2009 figures to show a decline twice than what was originally disclosed. Worse even, than at the worst time during the Great Depression.The US Economy is still in freefall. The fact that Tim Geithner, the US Treasury Secretary, has now began telling news outlets that the biggest challenges lay ahead with the enormous deficit is a big warning sign of that. Broker trading companies investing and trading in the markets have begun to recognize this as the Dollar has matched the economy. The market seems to have reversed from a psychological one to a fundamental one and this is good.I still believe that the real money to be made lies with Australia and New Zealand. The risk is less because of the low value of their currency in comparison with the big four, Yen, Euro, Pound and US Dollar, and the yields can be higher. The Aussie and Kiwi have been doing very well as of late, and the Australian honesty we saw last week has seemingly driven much confidence in the competence of the leadership there. Oil is rising and with it other commodities that rely on the slippery black stuff to help extract it - the $71 per barrel that oil is now is very good for both down under dollars.Keep an eye out this week for the unemployment numbers from the US and the British GDP figures. They will go a long way to showing us how to move in the coming days.
Forex News
The Federal Reserve kept interest rates at current levels, but extended the long-term debt purchasing program, to the tune of $300 Billion. The move helped vault the higher yielding currencies in a display of risk appetite and gave caution to traders who were thinking that all was well in the US economy. While the Fed did say that the situation was much improved, and essentially gave no negative economic comments, the fact that they are extending the bond buying program signals that the US economy is still vulnerable and at risk of turning negative very quickly.In the past few treasury sales, the Federal Reserve has been the primary bidder, essentially printing money in order to accomplish the purchases. The US economy, according to many analysts, is at risk if inflation as a result of the aggressive spending and debt issuance. Year to date, the US debt has increased by $1.27 Trillion in the fastest and most expensive spending spree on record.At 3:00AM GMT, the US Dollar was down .25% to the Euro to 1.4221, down .22% to the British Pound to 1.6507, down .15% to the Canadian Dollar to 1.0895, down .4% to the Australian Dollar to .8361, down .35% to the New Zealand Dollar to .6737 and down .16% to the Swiss Franc to 1.0763.Other news…Norway's central bank held rates at a record low, but opened the door for increased borrowing costs sooner than expected as the economy continued to recover. Chinese stocks sank on Wednesday on fresh worries that this year's equity rally was running ahead of an economic recovery and bank lending was showing signs of cooling.
Chinese making an Impact on US Dollar
According to other sources I read after my curiosity was peaked, it seems as if the Chinese government is spread a bit too thin right now – having increased their feverish purchase plan of almost every natural resource in the Eastern hemisphere while investing heavy in mineral and oil excavation Africa as well.In an economy that thrives on exports to be spending as large as they have been under conditions that are being equated with the Great Depression is just plain crazy – and culturally it was probably not easy for them to stop when they realized this.Culturally, the Chinese are all about not making mistakes or miscalculations and while they were saying things were fine, they were really not.The theory here is that the Chinese need to unload some of the 3 Trillion greenbacks they have to raise cash – by no means am I saying that China is in trouble, but they are not as well off at this point as everyone thought.If this is the case, Forex traders can worry if they are long Dollar positions. The fact is, the Chinese have so much impact on the Forex at this moment based solely on their reserve levels, that the hint of a selloff would panic the market.I don’t believe the Chinese want to hurt the Dollar, I will say this a thousand times, it is not in their interest to do so. I just think that their needs might inadvertently lead to this and there is nothing anyone can do about it.For now, I will keep my nose in the online Forex world and ears to the whispers – perhaps I can help make more sense of this as the weeks go by.
Forex News: Euro Update
Data reported on Friday showed that manufacturing activity contracted at a far slower pace than expected, and that the services sector decline seen over the past 11 months was flat in July, lifting the Euro a bit. Forex Online Investors have still not picked up on the good news from the Eurozone despite positive growth reports from France and Germany and this signals the insecurity with the reported growth on behalf of the investors due to conflicting statements from EU officials. The next few weeks can go a long way to shedding more light on the economic situation in Europe.At the close the Euro was up .71% to the Japanese Yen to 135.2, up .5% to the British Pound to .8676, down .03% to the Canadian Dollar to 1.5487, up .1% to the Australian Dollar to 1.7155 and up .1% to the Swiss Franc to 1.5159.
ENGLAND FOREX BANK
Dollar Lending Rates RiseDollar lending rates rose on the interbank forex market despite the announcement of plans for the US government to bailout the failing Citigroup bank. The LIBOR (London Interbank Offered Rate) rate for three month loans in dollars rose slightly from 2.16% Friday to 2.17 on Monday, Nov, 24th, 2008.Increase in LIBOR RateThe increase in the LIBOR rate is important for the interbank forex, the financial sector, and the wider economy. The LIBOR determines rates for loans to households, and businesses. Many mortgages and student loans are tied to the LIBOR rate and can have wide ranging effects on the day to day economy. The rate increase suggests that banks are worried that other financial institutions could collapse in a chaotic global economy.
Section 3 - The Role of the Central Bank
The final area of the Museum is devoted to the role of the Bank and takes an interactive approach in providing visitors to the Museum with information on the mission and core functions of the Bank. In addition to the collection of historical objects relating to Central banking, the multimedia and interactive elements in this section include a Question and Answer Quiz, a money game, an audio visual presentation on the Central Bank, and real-time information on key economic developments in Trinidad and Tobago.
Central Bank Money Museum
The first section of the Museum looks at the origins of money and examines various representations of money on the global continents, including cowrie shells, a Katanga cross, gold bars and paper money. Find out about money, old and new, from Spanish Doubloons to credit cards and e-money.The Museum occupies an area of 350 sq. metres and is situated on the ground-floor of the Central Bank building. It utilises modern design concepts and contains a mix of showcases, graphics, interactive elements and multi-media experiences that aim to give visitors a memorable and rewarding experience.The Museum tells a story about the global history of money, the history of money in Trinidad and Tobago and the role that the Bank has played and continues to play in shaping the economic and financial landscape of Trinidad and Tobago. The three aspects of the story-line of the Museum is represented in a separate physical but well-integrated area.
FOREIGN EXCHANGE MARKET !
Exchange market is the largest financial market in the world. This market has a daily average turnover of US$1.9 trillion dollars a day which is greater than the combined volume of all U.S. equity markets.Foreign Exchange is a cash market in foreign currencies made by large banks. In this market, currencies are bought and sold and exchange rates are determined. Unlike the Stock Market, Forex works on a 24 hour clock allowing for after hours trading. The Forex Market allows you the freedom and flexibility to build your portfolio on your timetable not the Stock Exchanges.Forex market trading does not occur on the Stock Exchange and is considered an Over The Counter market as is the NASDAQ. These transactions can occur electronically or over the phone.
Wednesday, July 15, 2009
Forex Stop Hunting
If there is much market demand to buy above a resistance level or sell below the support, the forex broker acting as the market maker has to absorb all the buy/sell orders. However, you must know that the market maker is not a fool. There must be a seller for each buyer and a buyer for each seller.
Most of the retail traders being new or inexperienced individual investor like to trade the breakouts! The new traders learn technical analysis. They tend to most eagerly follow trade recommendations based on certain chart patterns recommended in the technical analysis courses.
Most of the successful traders are contrarian in their trading approach. The seasoned traders do exactly the opposite of what the crowd is expected to do. They prefer to fade breakouts.
Trading is a zero sum game. For every loser, there is a winner. Most of the breakouts fail. Breakouts fail because the institutional or the seasoned traders take advantage of the crowd psychology of the retail or inexperienced traders and win at their expense.
Understand the tricks that can be played by the forex dealers and seasoned traders. Market makers, mostly the forex dealers and brokers can fade breakouts. Their game plan is simple. They will make money from the majority of the crowd. The crowd thinks that prices will rally happily after an upside breakout. Similarly, the crowd thinks that it will decline dangerously after a downside breakout.
Whether you like it or not, market makers have to take the opposite side of your trade. They are the pricing counterparties to the retail traders like you and me. Suppose most of the retail traders have placed their stop entry orders at a certain price above the resistance level anticipating a breakout.
Market makers spend some of their money to bid up the price to that level where most of the stop entry levels have been placed. Market makers reach into their pockets. Now they can sell to most of the traders who are desperate to buy. They make some decent profits from this trick that they had played on inexperienced traders.
By selling to the retail crowd, market makers get the chance to close their long positions. Now they begin to overwhelm the buying crowd by going short. This pushes the prices down, below the breakout level. Many stop loss orders have been placed by the retail traders who wanted to trade the upside breakout at this price level.
Market makers have the information of their customer’s orders from their order book. Thus a potential conflict of interest exists. By buying from the retail traders who are selling to close their losing breakout trades, market makers happily offload their short positions now. Retail traders must know how to protect themselves.
Retail crowd thinks that the false breakout is due to the sudden turning of the market. Market makers often go on the stop hunting spree. False breakouts maybe the consequence of that! These false breakouts are most likely the direct result of the games market makers play.
Most of the retail traders being new or inexperienced individual investor like to trade the breakouts! The new traders learn technical analysis. They tend to most eagerly follow trade recommendations based on certain chart patterns recommended in the technical analysis courses.
Most of the successful traders are contrarian in their trading approach. The seasoned traders do exactly the opposite of what the crowd is expected to do. They prefer to fade breakouts.
Trading is a zero sum game. For every loser, there is a winner. Most of the breakouts fail. Breakouts fail because the institutional or the seasoned traders take advantage of the crowd psychology of the retail or inexperienced traders and win at their expense.
Understand the tricks that can be played by the forex dealers and seasoned traders. Market makers, mostly the forex dealers and brokers can fade breakouts. Their game plan is simple. They will make money from the majority of the crowd. The crowd thinks that prices will rally happily after an upside breakout. Similarly, the crowd thinks that it will decline dangerously after a downside breakout.
Whether you like it or not, market makers have to take the opposite side of your trade. They are the pricing counterparties to the retail traders like you and me. Suppose most of the retail traders have placed their stop entry orders at a certain price above the resistance level anticipating a breakout.
Market makers spend some of their money to bid up the price to that level where most of the stop entry levels have been placed. Market makers reach into their pockets. Now they can sell to most of the traders who are desperate to buy. They make some decent profits from this trick that they had played on inexperienced traders.
By selling to the retail crowd, market makers get the chance to close their long positions. Now they begin to overwhelm the buying crowd by going short. This pushes the prices down, below the breakout level. Many stop loss orders have been placed by the retail traders who wanted to trade the upside breakout at this price level.
Market makers have the information of their customer’s orders from their order book. Thus a potential conflict of interest exists. By buying from the retail traders who are selling to close their losing breakout trades, market makers happily offload their short positions now. Retail traders must know how to protect themselves.
Retail crowd thinks that the false breakout is due to the sudden turning of the market. Market makers often go on the stop hunting spree. False breakouts maybe the consequence of that! These false breakouts are most likely the direct result of the games market makers play.
False Breakout
However, you should not misunderstand every false breakout as the result of the tricks big players play. False breakouts can be as a result of price action losing momentum soon after a breakout. Market running out of steam to reach higher highs and lower lows in a sustained price break may also give you a false breakout.When there are not enough sellers in the market to sustain a downward price move or enough buyers in the market to sustain an upward price move, the breakout will fade out soon and may not be sustainable. Individual traders have higher chances of success if they also fade the breakout just like the big players who love to fade breakouts.Profits potential in price breakout is far higher than in a failed breakout. Everyone wants big easy profits. Fading breakouts is counterintuitive and it is not something instinctive. The question is how to identify a false breakout.Look for fading breakout opportunities on a minimum time frame of hourly charts or more. Fading breakouts can occur anywhere on the price charts at the levels of support and resistance.You need to know how to draw trendlines. Trendlines are drawn by joining at least two extreme points of highs or lows over a long period of time. They can be horizontal or sloping. The price will bounce off the trendline in a false breakout and the probability of a false breakout is higher if the trendline is at an angle or a gradient. The chances of this fading breakout are more if the moving average lies slightly above the descending trendline or slightly below the ascending trendline. Usually the third or sometimes even fourth extreme point of contact on a gently sloping trendline presents a good fading opportunity.The chances of a false breakout or a trendline bounce will be much higher if the prices are approaching the trendline slowly and gently. The speed of price movement before the approach to the trendline should be considered. It is very important in identifying a fading breakout.There will be a sustained follow through in prices if the price action has a high momentum. The fast and high amplitude approach of price action will most likely result in a successful price breakout of the trendline on the other hand. In such a case, don’t trade it as a likely false breakout. You should place a limit or market entry order a few pips above an up trendline or below a down trendline. You will want to know how to trade a fading breakout? You can stagger your entry orders by placing another order a few pips away from the breakout if you are an aggressive trader.Now there are a few chart patterns that are ideal for identifying the false breakouts. About placing staggered entry orders for fading breakouts, you should do it with a proper money management plan. Stops should be placed at least 20-30 pips beyond the support or resistance, away from the price zone. This will make your average cost of entry more favorable for either your long position or your short position.
You need to know technical analysis if you want to trade forex successfully. There are some chart patterns where the false breakouts are more likely to occur. You need to apply a lot of common sense in identifying a false breakout. You should be able to identify likely false breakouts in order to employ the breakout fading strategy.Head and Shoulders Pattern: The pattern resembles the head and shoulder pattern of a human. This chart pattern is the hardest for new traders to identify. Don’t confuse it with a shampoo. The head and shoulder pattern consists of three points of rallies. The middle rally is the highest with the left and right being smaller. A horizontal or sloping neckline can be drawn connecting the lows of the left and right shoulders. It signals a bearish reversal or a consolidation period before the uptrend is continued if the head and shoulder pattern is found at the end of an uptrend. An inverted head and shoulder pattern can also be found in the middle or end of a downtrend. The head and shoulder pattern is usually found in the middle or end of an uptrend.If they are buying up the rallies from the support level, many traders who have identified the head and shoulder pattern as a possible breakout signal place their stop loss orders below the neckline. Head and shoulder patterns are notorious for precipitating a false breakout.Similarly, if traders are shorting the decline from the resistance level, they place their stop loss orders above the neckline of the inverted head and shoulder pattern. Traders can also place numerous entry stop orders below the neckline. Traders can also place entry stop orders above the inverse neckline in anticipation of a breakout besides the stop loss orders.False breakouts are triggered by the market makers to shake out the positions of small traders most of the time. Prices will usually rebound. There maybe explosive price movements off the neckline in the pre breakout zone.You may choose to place a stop loss slightly below the high of the second shoulder or slightly above the low of the second shoulder. You may fade the breakout with a limit of market entry order a few pips above the neckline or a few pips below the inverse neckline. It is always best to assume that the first break of a head and shoulder pattern will tend to be false.
You need to know technical analysis if you want to trade forex successfully. There are some chart patterns where the false breakouts are more likely to occur. You need to apply a lot of common sense in identifying a false breakout. You should be able to identify likely false breakouts in order to employ the breakout fading strategy.Head and Shoulders Pattern: The pattern resembles the head and shoulder pattern of a human. This chart pattern is the hardest for new traders to identify. Don’t confuse it with a shampoo. The head and shoulder pattern consists of three points of rallies. The middle rally is the highest with the left and right being smaller. A horizontal or sloping neckline can be drawn connecting the lows of the left and right shoulders. It signals a bearish reversal or a consolidation period before the uptrend is continued if the head and shoulder pattern is found at the end of an uptrend. An inverted head and shoulder pattern can also be found in the middle or end of a downtrend. The head and shoulder pattern is usually found in the middle or end of an uptrend.If they are buying up the rallies from the support level, many traders who have identified the head and shoulder pattern as a possible breakout signal place their stop loss orders below the neckline. Head and shoulder patterns are notorious for precipitating a false breakout.Similarly, if traders are shorting the decline from the resistance level, they place their stop loss orders above the neckline of the inverted head and shoulder pattern. Traders can also place numerous entry stop orders below the neckline. Traders can also place entry stop orders above the inverse neckline in anticipation of a breakout besides the stop loss orders.False breakouts are triggered by the market makers to shake out the positions of small traders most of the time. Prices will usually rebound. There maybe explosive price movements off the neckline in the pre breakout zone.You may choose to place a stop loss slightly below the high of the second shoulder or slightly above the low of the second shoulder. You may fade the breakout with a limit of market entry order a few pips above the neckline or a few pips below the inverse neckline. It is always best to assume that the first break of a head and shoulder pattern will tend to be false.
Market Orders
Forex markets are open 24 hours a day, five days a week except on weekends. You cannot sit in front of your computer screen all the day watching the markets move. Currency traders use market orders to catch market movements when they are not in front of their screens. A market move is just likely to happen while you are asleep or in the shower as while you are sitting in front of your computer screen.There are many types of market orders. Proper use of market orders is very critical to your trading success. You should think of the different types of market orders as trades waiting to happen. You are in the market so be as careful as possible while playing with the market orders if you enter an order and the subsequent price action triggers its execution. Trading can be very difficult without these market orders.Professional currency traders routinely use market orders to limit risk in volatile or uncertain markets, implement a trade strategy from entry to exit, capture sharp short term price fluctuations and preserve trading capital from unwanted loss. Market orders are essential for maintaining trading discipline and your peace of mind as a trader.
Currency markets can be notoriously volatile and difficult to predict. There can be sudden price swings. Using market orders can help you capitalize on short term price movements while limiting the impact of any adverse price movements. You probably don’t have a well thought out trading plan if you don’t use market orders. It will also give you the peace of mind in trading. There is no guarantee that the use of market orders will limit your losses and protect your profits in all market conditions. However, a disciplined use of market orders will help you quantify the risk that you are taking. A number of different types of market orders are available to currency traders in forex markets. You should add the market orders to the list of questions you need to ask the broker when you open an account with a forex broker because you should know that not all market orders are available at all online forex brokers.Take Profit Orders: Use the take profit order to lock in profits when you have an open position in the market. An old market saying, “You can’t go broke taking profits.” If you are long EUR/USD at 1.2845, your take profit order will be to sell the position somewhere higher close to 1.2875. Suppose you are short GBP/USD at 1.2354. Your take profit order will be to buy back the position and be place somewhere below 1.2334. Making you a profit of 20 pips!Limit Orders: Don’t forget the saying, “Buy low and sell high”. A limit order is any market order that triggers a trade at more favorable levels than the current market price. The limit order must be placed somewhere above the current market price if the limit order is to sell. The limit order must be entered somewhere below the current market price if the order is to sell.
Currency markets can be notoriously volatile and difficult to predict. There can be sudden price swings. Using market orders can help you capitalize on short term price movements while limiting the impact of any adverse price movements. You probably don’t have a well thought out trading plan if you don’t use market orders. It will also give you the peace of mind in trading. There is no guarantee that the use of market orders will limit your losses and protect your profits in all market conditions. However, a disciplined use of market orders will help you quantify the risk that you are taking. A number of different types of market orders are available to currency traders in forex markets. You should add the market orders to the list of questions you need to ask the broker when you open an account with a forex broker because you should know that not all market orders are available at all online forex brokers.Take Profit Orders: Use the take profit order to lock in profits when you have an open position in the market. An old market saying, “You can’t go broke taking profits.” If you are long EUR/USD at 1.2845, your take profit order will be to sell the position somewhere higher close to 1.2875. Suppose you are short GBP/USD at 1.2354. Your take profit order will be to buy back the position and be place somewhere below 1.2334. Making you a profit of 20 pips!Limit Orders: Don’t forget the saying, “Buy low and sell high”. A limit order is any market order that triggers a trade at more favorable levels than the current market price. The limit order must be placed somewhere above the current market price if the limit order is to sell. The limit order must be entered somewhere below the current market price if the order is to sell.
Invest In Gold
The importance of gold in terms of wealth cannot be undermined. Gold is unarguably one of the most precious elements on the earth. However, the sources are limited. Gold is becoming rarer with each passing day and hence, the price of gold is continuing to rise higher and higher.Invest in Gold Therefore, it is a perfect alternative to trade gold. It is thus advisable that you buy gold when the price decreases in the market. Later on, when there is a rise in the price, you may sell gold in the market. Before you start to invest in gold, it is best to have a perfect strategy for investing in gold. You also have to be familiar with the market that deals in bullion to get the maximum benefits.Invest in Gold Next, investing in gold bullion bars of different sizes and weights like ounces, grams and kilograms is also a better option. To buy gold bullion of 10-ounce bar, which consist of a fine purity of 99.5% is the standard unit and may be the best vital alternative not only in gold trading, but also for personal use.There are many advantages of bullion gold. It is similar to stocks and can be traded at the latest market rates. Gold bullion is not only considered a tangible asset, but also an investment that ensures total security and value during the time of financial inflations or crisis.Invest in Gold Due to the multiple benefits, majority of investors think that it is better to invest in gold certificates. You can trade gold freely in the gold market by investing in gold certificates or funds. Gold funds and certificates are completely insuredFor investing in gold, bullion coins surely proves to be one of the best options. By selling gold bullion, you may earn cash in times of emergencies or urgency, while saving the others. By doing this, you will save some extra expenses. As these coins come in small sizes, there is no need of cutting them in more small pieces.
Trading Secrets
Trading is speculating. It is not investing. It is not the buy and hold strategy that was taught to you. Trading can be challenging. Trading is a risky business and requires active participation. Speculation is done in the hope of profiting from market fluctuations by taking a business risk. It also requires putting your money on the side of the trade on which you think the market is going to go up or down. Successful speculation requires predicting outcomes and analyzing different market situations.Trading Secrets If you are a trader, you should appreciate the fact that if you apply the correct techniques for analyzing trades, manage your money and protect your trading account, you can be wrong 70 percent of the time and still be a successful trader. How is that possible? It is only possible by entering a trade where the risk/reward ratio is less than 1/3.Right now forex and gold markets are really hot while the stock market is down. Stock market was a great investment opportunity a few years back. Over time, opportunity keeps on shifting from one market to another. Gold prices are going up. Those investors who entered this trend in the gold market by investing at the right time if they are going to ride the trend till it lasts in the gold market will make a lot of money. At the moment almost everyone is investing in gold as a hedge against likely USD depreciation. Everyone includes countries like China, Russia, India, hedge funds, institutional investors like big corporation and big banks, and retail investors. Trading Secrets Last year in 2008, oil prices had reached almost $140 per barrel in a matter of few months. Many hedge funds had made a lot of money by investing in crude oil futures in the year 2008. Then the bubble burst and oil prices came tumbling down to almost close to $35 per barrel. This situation may continue for some months or some years but suddenly you will find that crude oil futures have become a great investment opportunity again. Right now oil prices are down due to the reduced demand in the global markets.Timing for entering the market and the timing for exiting the market is very important for a successful trade. In trading it is the timing that is of essence. As the global economy recovers and demand for oil increases, oil prices will again go up in a few years time.Trading Secrets Investors and traders make the mistake of focusing only on one market. Many end up spending time on only one market. In reality all the markets are interlinked. Futures, options, forex, stocks, commodities, all markets are effected and in return effect other markets. If something happens in one market, you will find the repercussions in the other markets. Successful trading requires mastering a strategy that enables you to trade multiple markets and multiple time frames.Many traders get stuck up with one market. They want to master that market. They trade only one instrument. They do testing and development. They put on a million indicators. Then they go and trade live that instrument. While they do everything they can while spending all kinds of time trying to figure out one market and one timeframe. But then what almost happens is that the market starts to go sideways. The opportunity shifts to another market.
Rollovers in Forex
Rollovers represent the intersection of interest rate markets and forex markets.When an open position from one value date or settlement date is rolled over to the next value date or settlement date, this is known as a Rollover in forex trading. Rollovers are unique to the forex markets.Keep this in mind what you are trading is in fact the good old cash. Currency is money after all. So when you talk of money, interest rates naturally come into play. Rollover rates depend on the difference between the interest rates of the two currencies in the pair that you are trading.You should expect an interest gain/expense on holding a currency position over time. It is similar to earning interest on a bank deposit and paying interest on a loan. It is like having a deposit in a bank account when you are long on a currency. It’s like take a loan from the bank if you are short.Interest rate differential is the difference between the interest rates between the two currencies. You should think of the open currency position as one currency with the positive balance (the currency you are long) and one with negative balance (the currency you are short).You should look for the base or benchmark lending rates in each country. The interest rates of two different countries apply because your accounts are in two different currencies. You can find the benchmark lending interest rates of different countries from any good financial website like the Wall Street Journal, the Financial Times, CNBC etc.If you hold an open position past the settlement date or value date, rollovers are usually carried out by your forex broker. The smaller the impact of the rollovers, the narrower the interest rate differential! The larger the impact from rollovers, the larger the interest rate differential!Some online forex brokers apply the rollover rates by applying the rollover credit or debit directly to your margin balance. Other forex brokers apply the rollover rates by adjusting the average rate of your open position. Rollovers are applied to your open currency position by two offsetting trades that result in the same open position.Day traders don’t have to worry about rollovers. Rollovers do not apply for day traders who usually close their positions at the end of each trading day. Rollovers are not applied if you don’t carry a position over the change in the value date. Rollovers only apply to your over night open position carried over to the next day. Rollovers are applied to open position after 5.00 PM EST change in value date.If you are short the currency with the higher interest rate and long the currency with the low interest rates, rollovers will cost you money. If you are long the currency with the higher interest rate and short the currency with the lower interest rate, rollover can earn you interest income.
FAPT Evolution
If you saw the Fapt Evolution proofpage yesterday, I am sure a ton of questions kept running through your mind. How can a forex robot has such an extreme performance? What are the differences between all those crappy metatrader 4 robots and this new java based platform one? Why are spreads so much better here? and most important: How the hell does this robot manage to pull in USD 8,400 in REAL CASH in a SINGLE DAY of autotrading?FAPT EvolutionWell the good news is they promised to answer all of those questions plus give out a FREE copy of Fapt Evolution robot to a lucky winner! How? Simple. Just attend one of the two free webinars that are being held tomorrow! 1 winner per webinar will be chosen randomly among the participants, so make sure to be there early before the rooms are full! Time's running out - the long awaited Fapt Evolution webinar's going to take place very soon.People have so many questions... they want to know so much and this is the chance to get those important questions answered by the Fapt development team themselves. I love it when product vendors are accountable for what they sell... that they back up their product and efforts... that they don't hide behind some hyped up sales page...FAPT EvolutionWhen it comes to accountability and transparency, the Fapt team is #1 - HANDS DOWN! Make sure you join their webinar - places are restricted and I expect them all to be full within a few minutes of the start, so go here now:2 Copies Are Being Given Away At N0 Cost The Fapt team is giving away 2 copies of Fapt Evolution during the special webinar they're conducting. This is your chance not just to participate in one of the more important forex events of the year but also to win one of those copies of the most sought-after Forex robot in the world!Remember that only 2,000 copies will ever be released so it wouldn't be a bad idea to try and get one of the complimentary licenses - there's a fairly high probability that the 2,000 copies will be sold before you have a chance to get yours. Participate in the webinar - ask what you need to ask... grill the Fapt team a bit... and, of course, try to get your hands on one of those Fapt Evolution copies here:FAPT EvolutionOhhh - before I forget...We hope you saw the amazing earnings shown on the FAPT Evolution proof page yesterday...The website has received a record number of hits! The buzz revolving around FAPT Evolution is out of control! Some of the biggest names in the forex industry have beta tested this software and are verifying the unbelievable earnings claims FAPT Evolution has been making. Again these are all listed on the proof page:FAPT EvolutionSo you might be asking...how do I get my hands on something this great 100% Free??...Well the creators have decided to give away a couple free copies of Fapt Evolution in tomorrows webinars for those serious about making (more than) a full time income online while chilling on the couch. The winner will be chosen randomly at the end of each webinar so make sure to attend.Forex is a continuous learning process and these guys wants you to gain priceless information while also having a shot at a copy of this limited super robot! Both seminars will be held tomorrow, Monday 13th, seats are limited so make sure to attend early. There are 2 webinars tomorrow. One is at 4 PM EST and the other is at 7 PM EST. You can register for these webinars toward the bottom of the proof page...FAPT EvolutionNot only will you get some great Forex Insider secrets from these masters...you might walk away with FAPT Evolution Free. The response regarding the account proofs on the Evolution website has been phenomenal! People are emailing me raving about how profitably this robot has been performing and simply asking me when and where they can get it. I hope you got the chance to see how well those accounts have been performing and understood why there is so much excitiment right now from 10's of thousands of people! You can always access them here:This is what Steve, Mike and Uli, Marcus B. Leary, Andreas Kirchberger, the whole of Forex Guru Club and the FAPT Team say about FAPT Evolution: "Fapturbo "Evolution" is about to be released. FAPT Evolution is the most powerful and stable Forex Robot we have ever developed. Some of our beta testers literally suggested we not sell FAPT Evolution to the masses, but rather limit sales so as to not dilute FAPT Evolution and its money making capabilities. We decided to appease them as a form of compromise of sorts by limiting copies sold (unlike the original fapturbo).FAPT EvolutionDevelopment of this new super robot has been in the works for over 8 months and we are EXTREMELY proud of it.. This is a first in the industry.The first of its kind, to bring together an automated forex trading solution encompassing both the perfect broker and the perfect artifical moneymaker. A robot which abandoned the metatrader4 programming language in favor of something RADICALLY more powerful for a platform with very stable spreads.Second, because the forex market is so huge, selling LIMITED copies will supply us with real live trading info and data... allowing us to perfect and tweak. If you are one of the lucky few traders to get FAPT Evolution we urge you to post your results in the FAPT Evolution Forum enabling us to analyze your personal results so we may hone our skills and keep rocking.We really feel as though it's PERFECT as it is but hey we digress.
Forex Demo Account
Almost every broker offers a free forex demo account to new clients. This is used as a marketing gimmick by most of the brokers in order to entice new people to forex trading. All you need to do is to sign up with any good forex broker. The best way for new traders to get a handle on what currency trading is all about is to open a demo account.Forex demo account gives you the great chance to experience the forex market without losing your real money. You can see how the price changes at different times of the day. Demo accounts are funded with virtual money. So you are able to make trades with no real money at stake and gain experience in how margin trading works. The more you use the practice account, the more familiar you will become with how the forex market works. This will help build your confidence. Confidence is what you need when trading live. Without any fear of losing money, you can trade your demo account with real market conditions. Practice trading will teach you how various currency pairs may differ from each other? It will also teach you how the forex market reacts to new information when major news and economic data is released.You will also learn using different market orders on your demo account. Imagine using your real money trying to figure out how different market orders work. You will learn on your demo account how to manage an open position? This will improve your understanding of how margin trading and leverage works. You can also start analyzing charts and following technical indicators on your practice account. Without any fear of losing your money, you can experiment with different trading strategies and see how they work out in the real market conditions.You can test drive almost all the features and functionality of a broker’s platform on your demo account. However, one thing you will never be able to simulate on your practice account is the emotions involved in trading. Controlling emotions is important in order to become a successful trader. Emotions will only come into play once you put your real money on the line. Demo accounts are a great way to experience real forex markets first hand.You can use market orders like the limit orders or the one cancels the other orders. However, you can also trade the current price of the market using the click and deal feature of your broker’s platform. There are many ways to pull the trigger in the forex market. Pulling the trigger means how to enter or exit a position.Many traders don’t want to leave an order that may or may not get executed. Most like the idea of opening a position by trading at the market. Most prefer the certainty of knowing that they are in the market.You just need to specify the amount that you want to trade. Then click on the buy or sell button to execute the trade. The forex trading platform will respond back within a second or two with a pop-up message either confirming or not confirming that the position was opened. Most forex brokers provide live streaming prices. You can deal with these live price feeds with a simple click of your computer mouse.You should understand and know from the get go that any action you take on a trading platform is basically your own responsibility. You cannot blame anyone except yourself. You may have meant to click Sell but instead you clicked Buy. No one knows for sure except you. Forex demo account is the ideal place to learn forex trading and avoid these costly mistakes.If you don’t want to blow your account repeatedly, double your demo accounts three times in a row only then trade live. First practice on your demo account instead of jumping into live trading!You should know that when the prices are adjusting quickly like break of a key technical level or price point or after a data release, attempts to trade at the market can sometimes fail in very fast moving markets. You must understand that part of this stems from the latency effect or time lags on the internet. You can experience these time lags so that you don’t learn them during real trading by first practicing on your demo account. The time lag between the platform reaching your computer and your trade request reaching the platform server can cause your trade to fail in fast moving markets.You are in the market by pulling the trigger. You opened your position. The forex market isn’t a roulette wheel where you place your bets, watch the wheel spin and simply take the result. Don’t think that you have pulled the trigger and now its time to sit back and let the market do its thing. You will have to constantly monitor your trade position on regular basis.Always trade with a plan! New information and price developments are constantly creating new opportunities and changing previous expectations. Currency market is a dynamic and fluid environment. You should know how to exploit these newly created opportunities by changing your trading plan.Before getting caught up in the emotions and noise of the market, you can improve your chances of trading success by thoroughly planning each trade. You should know in advance where to enter and when to exit a trade. Entry and exit at the proper time is crucial for making a winning trade. If you are following a medium to long term trading strategy based on swing trading the currency markets, you will generally set wider stop loss and take profit targets and adopt the policy of set and forget. How much managing your open position you need, it depends on your trading style and the overall market conditions.No matter what your trading style, it pays to keep up with the market news and price developments while trade is active. Even for a longer term trade, staying on top of the market is still a good idea. A lot can happen between you open a position and the price action hitting your target level. So you may require making changes to your trading plan. Unexpected news may suddenly impact your position.When we talk of making changes to the trading plan, we are referring only to reducing the overall risk of trading by moving the take profit or stop loss order. Your account will be blown up in a matter of hours or days if you don’t know these things. You need to learn and experience these things on your demo account first. Don’t try to learn them on your real account.
The US Dollar Index
The US Dollar Index Futures Contracts are traded on the New York Board of Trade at Finex and at the Chicago Mercantile Exchange (CME). The US Dollar Index is widely quoted in the press and on quote services and is used by traders to get the big picture of the overall trend of the dollar. The Federal Reserve Board had introduced the US Dollar Index in 2003. The index is the result of the Smithsonian Agreement that had replaced the Bretton Woods Agreement. The US Dollar Index is similar to the Fed’s Dollar Index which is a trade weighted index. The Fed gives value to each individual currency in the index based on how much it trades with the US.However, the US Dollar Index and the Fed’s Dollar Index should not be confused with one another. The value of US Dollar Index and the Fed’s Dollar Index is different. The US Dollar Index futures contract expires on March, June, September and December. The minimum tick on the US Dollar Index is 0.1. One tick is equals $10.Delivery is physical and means that you receive dollars based on the value of the index. Delivery is made on the second business day during the month of the expiring contract prior to the third Wednesday. The overall value of the futures contract on the index is 1,000 times the value of the index in dollars. Suppose the value of the index is 80. It’s value in dollars will be $ 8,000.No trading limits are placed on the US Dollar Index. Trading hours are from 8.05 AM to 3:00 PM. There is overnight trading also from 7 PM to 10 PM. Delivery day of the US Dollar Index Futures Contract is the third Wednesday of the contract month. The US Dollar Index was modified at the inception of the Euro. It is weighted in a way that’s similar to the Fed’s trade weighted index as follows: Highest percentage is for Euro 57.6%, second highest is Japanese Yen 13.6%, third highest is Great Britain Pound 11.9%, then comes Canadian Dollar 9.1%, Swedish Krona 4.2% and Swiss Franc 3.6%. The US Dollar Index is best used as an indicator of trends in the forex market.However, you must keep this in your mind that as compared to trading currencies, the US Dollar Index is not a good trading vehicle. The best way to trade the index is by using the currency mutual funds. There are a few good currency mutual funds that you can find. You should know that one of the secrets of knowing trading success is understanding what kind of personality you have. You should know whether you are weak nerved or strong nerved.If you are weak nerved than spot forex market is not for you! Suppose you fear that the market will move against you. You are afraid of taking a bathroom break or even a coffee for that matter. You can’t even blink your eye afraid that you will end up with a margin call. In such a case you need to invest in currency mutual funds based on US Dollar Index and relax. You can avoid a big part of the risk involved in trading spot currency market by trading currency mutual funds. You can have a pretty good idea as to how your fund is going to close at the end of the day if you check the dollar index a few times during the day. This will smooth your nerves and make you relax. If trading makes you tense and nervous, you should think about doing something else. Maybe trading is not for you.
FAPTurbo Evolution
Fapturbo Evolution has gone gold. A few days ago I already mentioned about the Fapturbo Evolution from the same team that developed the world renown The Fapturbo robot...The Fapturbo Evolution just pushes forex trading to the next level and it just went live today:FAPTurbo EvolutionCheck out the proofs about the robot that manages USD 117,369 Real Money Account...the first robot in the world that has 100% successful rate... Depending on what time you read this it may already be too late. The FAPTurbo Evolution Edition trading robot has been unleashed on the Forex world today and as you read this post, I can tell you that there are already thousands of other traders scrambling to the website to get a copy. I know that you do not want to be left behind and the doors are officially opened now so head on over to the following link to get your copy:FAPTurbo EvolutionIf you're still on the fence about whether to get it or not, let me give you the low down on this digital monster. Here's what we know about the FAPTurbo Evolution Edition trading robot so far:* This is the only Forex robot in existence that is able to double real money deposits every month since the year 1999.* The trading robot was beta tested on live accounts and the live statements can be seen on the site. (The latest results of yesterdays trades are there as well)* There is a members zone built to make it as easy as possible for you to get up and running.* There are Phone support lines ready to answer even the most basic questions.* The robot was specifically designed to work with only one broker.* Dukascopy only deals with the larger clients and their dealing desk has been designed for high performance, lightning fast execution. Only banks get this level of service.* Additional tweaking and optimization was performed on the robot to ensure maximum quality.* The robot trades 3 currency pairs.* No more Metatrader lags and execution delays.* True Interbank environment - no dealing desk tricks and spread-price manipulation.* There is an automated installer and easy to follow guide included.* You also get video tutorials and a how to install step by step guide.
Breakout Trading
When the currency price moves beyond the period of consolidation or range trading, a breakout typically occurs. Massive profits are what breakout trading can provide you. Who doesn’t want to reap massive profits from a big price move in a short time?Even though breakouts are known to be technically unstable, there are times when trading the breakout can be very profitable. When the price moves above or below a support or resistance level whether temporarily or permanently, a breakout occurs.You will have to take into account many market factors including both the technical and the fundamental analysis in order to trade breakouts with a higher probability of success. Both stocks and futures are traded on a centralized exchange. At the end of the day the traders can find out the volume of each security that had been traded during the day. The volume information is easily available for stocks and futures. Information about volume is critical to trading the breakout. This data cannot be collected due to the decentralized nature of the currency markets. Volume data is not available for currency markets due to its Over the Counter nature. Lack of forex volume data is a huge disadvantage to forex traders. Volume reveals where the market is positioned or positioning.Breakout signals a change in the underlying supply and demand conditions possibly triggered by a change in market sentiments. When the price attempts a breakout of a significant support or resistance level, this change is caused by some new markets fundamentals. Successful breakouts are generally accompanied by a rise in volume. Volume is a very important criterion for any breakout trading strategy.Price breakouts can be of two types: 1) Continuation Breakouts and 2) Reversal Breakouts. Successful breakouts must be accompanied with a strong surge of momentum in the direction of the breakout in order to be sustainable. Poor momentum will generally lead to the fizzling out of the breakout and continuation of the existing trend.Continuation Breakout: The price action climbs higher in continuation of an uptrend or falls further lower in a downtrend in a continuation breakout. The breakout occurs after a period of consolidation. The buyers and sellers of the currency pair try to regroup and think about the next price move. Currency prices break out of an established price level to again resume the underlying trend.Reversal Breakout: A breakout my lead to a trend reversal and the beginning of a new trend in the opposite direction! Reversal breakout means a new trend in the opposite direction caused by new market fundamentals. The prices may break the support or resistance but then retreat back into the previous price zone. A false breakout can always occur. There are many times when the price action does not move in a straightforward direction in the markets.If you are a breakout trader and you have placed your stop just above or below the resistance or support levels, a false breakout will stop out most of the breakout traders! The worst kind of a breakout is the whipsaw type.When prices move out of a price range, then back into the price range and then breaks out of the level again, stopping both breakout traders and faders at least once, whipsaw takes place. When there is a lack of momentum or the breakout is small and weak, a whipsaw breakout usually occurs.Reasonably placed stops can help preserve your capital when the price breakout does not go your way. Some times the price action is so choppy that it is better to stay out of the market. Breakouts all carry some risk of failure.Successful trading of a reversal breakout obviously means massive profits in the shortest possible time. The important thing is to identify a breakout with a false breakout. How do you know if a breakout is going to reverse the current trend?There are some chart patterns that can help in identifying a likely breakout. You should look out for these reversal chart patterns that tend to serve as harbingers of a trend change. There is a high chance that a reversal may be in the works if you spot these chart formations in daily or weekly charts. Examples of such patterns include head & shoulder, double top, triple top, double bottom, triple bottom etc.Momentum indicators also known as oscillators are leading indicators. You can also make use of the momentum indicators to tell you if a trend is nearing its end in addition to looking for these chart patterns. They help in identifying a trend reversal before time.MACD comprises of 3 Exponential Moving Averages (EMA). The MACD line is the difference between the 12 period Exponential Moving Average and 26 periods Exponential Moving Average. Usually a signal line consisting of 9 periods Exponential Moving Average is plotted together with the MACD line. Moving Average Convergence Divergence (MACD) is one of the simplest, yet most dependable indicators for a trader
Forex Slippage
You should know the problem of slippage and how to avoid it if you want to successfully trade the news. Slippage occurs when the price you intend to enter or exit the market is different from your actual transacted price. Currency prices tend to move very fast during highly volatile market conditions. The risk of slippage is usually very high when trading the news.Placing stop loss or market entry orders under fast moving market conditions do not guarantee anything. These orders do get filled but mostly at different prices than you had intended. Slippage is the biggest problem when the market moves fast. There is no way you can avoid it. Some of it is genuine. During times when too many orders are placed by the traders, most forex brokers cannot offset these orders in the interbank market due to the small amounts involved. They have to take the opposite positions themselves. This gives them the chance to take the excuse of slippage.Most of the brokers had taken the opposite position themselves as the fast moving market did not allow them to offset these orders in the interbank market. As the broker has the opposite position, if you lose, the broker wins and makes profit. The broker is in fact trading against you now. Many forex brokers will wait till after the big market move is over. Then they will fill your entry order. Sometimes, these entry orders may even get filled past your stop loss or profit target. This means that you would be left with immediate net loss.Slippage is a trick that many forex brokers use in order to make profit by filling your position with a negative spread. Before filling your entry order with wide slippage, many brokers will fill your stop loss or take profit order. The wider the slippage, the fatter the profits the broker is going to make. Imagine the number of orders placed with each forex broker and the amount of profits the broker makes from one such single event. Let’s make it clear with an example. Imagine your profit limit for the EUR/USD is 1.2594. Your long entry stop for EUR/USD at 1.2564! The forex broker may first fill your take profit at 1.2594 and then fill your long entry stop at 1.2604 with a 40 pips slippage. You were confident that you would make a winning trade. If the orders had been filled at the prices you wanted, your trade would have resulted in a profit. But now you have a net realized loss. If the trade goes against you, the forex broker may fill your stop loss order first and then fill your entry order with slippage after that so as to widen their profits. With slippage you cannot predict anything what the broker will do with you.Now imagine you had placed your stop loss at 1.2544 and your long entry stop at 1.2564. Your forex broker could first fill your stop loss at 1.2544 and then fill your long entry stop at 1.2594 with a slippage of 30 pips. You now have a net loss of 50 pips due to slippage instead of planned 20 pips loss. You could never imagine that you would end up with a loss of 50 pips.You should know as an individual trader that your orders will be kept pending till you get stopped out or your profit limit is reached during the release of news when the market moves fast. The more you stand to lose and the more the forex broker stands to make a profit, the larger the slippage you experience. Some forex brokers add slippage to any of your orders to increase their profits during times of fast moving markets when the volatility is high.Many forex traders readily accept the risk of slippage. Most news traders consider slippage as one of the realities of trading the news. However, you as a forex trader should know that slippage can eat up a huge chunk of your profits. In the end slippage can affect your overall profit and loss. In order to avoid slippage, stay out when the market is moving fast. In my next post, I will give you a method that you can use to overcome slippage if you still want to trade the news.
Forex Trading System
Want a good Forex Trading System? Searching for a good forex trading system? If you're anything like me, you've been probably exposed to a number of Forex trading systems haven't you? Most of those trading systems are 100% mechanical in their nature. You know the drill: "if A and B happen, do C... if not, do D instead". They basically tell you exactly what to do and when to do it, which is all good but... the problem is that you do not know what you are actually basing your trading decisions on! Pulling the trigger without know the "why?" factor always gets me a bit nervous. Here's the good news though: You can now learn Forex as a trader instead as a system-follower!Forex Trading System
Luckily for all of us who enjoy old-school trading, there's a fantastic learning program now available where everything related to Forex trader is taught: chart-reading, trend analyzing, stop loss placement, profit takings, news announcements, trading psychology... absolutely everything!!! And you know what's best? it's all taught over live videos! cool ey? If you want to actually learn how to trade Forex, trust me on this one: you don't want to miss this out!Let's see a small snippet of the type of learning you will get in forex trading:Forex Trading System Many folks have asked repeatedly the following particular question regarding Money Management: "If I spot a crystal-clear, mint-perfect, extraordinarily high-probability setup... is it OK to increase my usual lot size for that very trade?" I remember one guy who had even developed a rather unique Money Management system under which he'd rank his trade setups from 1 to 5 points: 1 being a low quality setup with a high degree of risk, and 5 being an A-setup with absolutely all the ducks falling in line.
Luckily for all of us who enjoy old-school trading, there's a fantastic learning program now available where everything related to Forex trader is taught: chart-reading, trend analyzing, stop loss placement, profit takings, news announcements, trading psychology... absolutely everything!!! And you know what's best? it's all taught over live videos! cool ey? If you want to actually learn how to trade Forex, trust me on this one: you don't want to miss this out!Let's see a small snippet of the type of learning you will get in forex trading:Forex Trading System Many folks have asked repeatedly the following particular question regarding Money Management: "If I spot a crystal-clear, mint-perfect, extraordinarily high-probability setup... is it OK to increase my usual lot size for that very trade?" I remember one guy who had even developed a rather unique Money Management system under which he'd rank his trade setups from 1 to 5 points: 1 being a low quality setup with a high degree of risk, and 5 being an A-setup with absolutely all the ducks falling in line.
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