tag:blogger.com,1999:blog-3298028226009868632024-03-13T09:52:46.460+07:00Forex Education, Online Business, Newslayinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-329802822600986863.post-51118537854732833772009-01-21T11:28:00.004+07:002009-01-21T11:50:16.484+07:00Free Unlimited Ads<div align="justify"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6RMeN9KBFD3ugsyHS9WPI7M0NRn4MdzSJgpSiOGDZuiVrJBHJatYKkAGob_qpucxE9RiStzclR14TNKIklkmxZYiWrdkfl5P2m36-U0cfwfaFgZpx290ZuFzjjDfiatPVUpITdci1A0I/s1600-h/Free+Online+Classified+Ads.GIF"><img id="BLOGGER_PHOTO_ID_5293604368348687234" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 200px; CURSOR: hand; HEIGHT: 150px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6RMeN9KBFD3ugsyHS9WPI7M0NRn4MdzSJgpSiOGDZuiVrJBHJatYKkAGob_qpucxE9RiStzclR14TNKIklkmxZYiWrdkfl5P2m36-U0cfwfaFgZpx290ZuFzjjDfiatPVUpITdci1A0I/s200/Free+Online+Classified+Ads.GIF" border="0" /></a> Wanna put your ads for free??? this is the right place just visit <a href="http://advert.webkios.info/">Free Online Classified Ads</a> you can put your ads about your product, blog, web or anything for free.... by adding your ads at <a href="http://advert.webkios.info/">Free Online Classified Ads</a> your ads will be viewed by many people and the fun part is that you dont have to register or pay just post it any many as you can for FREE..<br /></div><div align="justify"></div><div align="justify"> </div><div align="justify">I have tested to post an ads about my blog and its really easy all i have to do is klik <a href="http://advert.webkios.info/classifieds-form/">post an ads</a>, write it and post...and done!!</div><div align="justify"> </div><div align="justify">its very simple and easy way to put your ads, anyone can do it and why dont you try to post your own ads just visit <a href="http://advert.webkios.info/">Free Online Classified Ads</a><span class="fullpost"> </span></div><p></p><div align="justify"><br /><span class="fullpost"><br /><a href="http://www.buyblogreviews.com" ><img src="http://www.buyblogreviews.com/sponsoredImages/sponsoredpost.gif" alt="Blog Advertising" border="0" /></a><br /></div></span>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-75768086178190153412008-09-11T19:00:00.004+07:002009-01-29T02:23:06.891+07:00Bigger FX Profits Using Techncial Analysis The RIGHT Way<div style="text-align: justify;" align="justify">If you look at any Forex chart, you’ll see repetetive price trends.<br /><br />If you use technical analysis to act on these trends in your Forex trading strategy, turn them into big profits, if you do it the right way.<br /><br />There are many misconceptions about using Forex charts and technical indicators - here we’ll provide some tips on using technical analysis for bigger profits from your forex trading.<br /><br />Technical Analysis Defined<br /><br />Technical analysis is simply the study of price action to identify trends, in various time frames.<span class="fullpost"> FOREX chart patterns repeat themselves becuase human nature repeats itself and remains constant in currency trading and ALL markets. Many traders think that simply studying Forex charts won't work - because it doesn’t take into account the supply and demand situation or the fundamentals. However it does work becuase: it does actually work.<br /><br />Market Perception (human perception) + Fundamentals (supply & demand) = Price<br /><br />Price action reflects all the fundamentals that are known - and more importantly, how the participants who determine price see them. In today’s world of instant communications, the fundamentals show up in price action in seconds - so technical analysis simply assumes that all known fundamentals are discounted in the price. Some of the largest price moves in history have occurred with little or no change in the fundamentals. These price moves were caused by human psychology with emotions to the Currency technical analysis is able to study this. This gives you a huge advantage i your forex trading – when you accept that ultimately, it’s participants determine value. The right price is of course the market price - so you see the reality, rather than listening to the opinions of others or letting your emtions get in the way.<br /><br /><strong><span style="font-size:130%;">Techncial anlysis of forex markets or any market assumes the following:</span><br /></strong><br />1. Markets Discount<br /><br />All fundamentals show up quickly in the price. You are therefore seeing the impact of the fundamentals in the price action.<br /><br />2. Trends Persist<br /><br />In currency trading, you get great trends. Simply look at any currency chart and you’ll see long-term trends – lasting weeks, months or years.<br /><br />History Repeats Itself<br /><br />The basis of currency technical analysis is that what has happened in the past will happen again - as human psychology never changes ie our nature is constant. As chart patterns reflect shifts in human psychology, certain patterns and trends will repeat. Keep in mind that charting is an art. While human behavior does repeat itself, humans can be unpredictable as well - so you’re trading the odds NOT a scinetific theory. The good news is that by using technical analysis of currencies, you can get the odds in your favor and win longer term.<br /><br /><span style="font-size:130%;"><strong>Now, lets look at some tips on using technical analysis:</strong></span><br /><br />1. Longer term trends<br /><br />Currencies tend to reflect the underlying health of the economy.<br /><br />This creates longer-term trends that last for months or even years, by focusing on the these trends, you have the best odds and the best profit potential.<br /><br />2. Use a simple system<br /><br />If you want to develop an effective Forex trading system, keep it simple - support and resistance, and a few confirming indicators can make big gains.<br /><br />In online currency trading, it’s a fact that simple systems work best.<br /><br />Why?<br /><br />There are fewer elements to break, in the real and brutal world of FX trading.<br /><br />3. Isolate Yourself<br /><br />This is a key factor that needs to be learned in ANY Forex trading education.<br /><br />Don’t be influenced by the opinions of others, or the news!<br /><br />You’ll hear convincing stories, but that’s NOT going to make you money, journalists are not traders!<br /><br />If you follow the news, or let your emotions get involved then you will join the 90% of losing traders.<br /><br />4. Be disciplined<br /><br />Don’t trade all the time or for the sake of trading.<br /><br />Only trade when your currency trading system generates trading signals, then follow the trade with discipline.<br /><br />A Simple way to make Big Online Profits<br /><br />Using Forex charts, the right way can make you a lot of money - as they represent the most time efficient and powerful way for any trader to get the odds on their side and win big in online forex trading. </span></div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-47194338202078478382008-09-09T18:43:00.001+07:002009-01-20T14:29:10.874+07:003 Facts You Need To Know To Prevent LossesIf you are a forex day trader or considering it, then you need to know the above facts, if you do they will save you a lot of money. Forex day trading is more popular than ever but how do you make profits? Let’s find out.<br /><br />If you look online you will find more forex day trading courses than any other type of trading methodology and they will all lose you money here’s why:<br /><br />Let’s start first of all with the vendors who sell courses<br /><br /><span style="font-weight: bold;">1. Why are they selling them? </span><br /><br />To make money for themselves! They don’t normally trade their day trading systems because they know they don’t work. <br /><br />If these systems could produce regular profits they would be to busy making money for themselves and not have the time to bother you for a few hundred dollars they would be to busy making money.<br /><span class="fullpost"><br /><span style="font-weight: bold;">2. The Evidence That day trading doesn’t work </span><br /><br />If you ask for a track record of profits from any of these vendors you won’t get one – What you will normally get is a hypothetical track record of huge gains but this is done in hindsight - KNOWING the closing prices.<br /><br />If I knew tomorrow’s price today, I would be a multi millionaire but of course forex trading is a bit more difficult - you have to work out where prices are going without knowing them in advance!<br /><br />These vendors use great advertising copy to dupe people but the logic of day trading simply doesn’t work. Why? Because:<br /><br /><span style="font-weight: bold;">3. All short term volatility is random! </span><br /><br />Day traders will claim that it’s not - but of course it is! <br /><br />Volatility can and does, take prices anywhere in a day and daily support and resistance levels are meaningless. When day traders lose, they blame the system or the indicators they use, however if volatility is random, then it is of course the logic of day trading that is at fault - NOT the indicators.<br /><br />If you think that you can make money day trading go ahead and try but you will learn a very expensive lesson and lose. <br /><br />I would love a day trader to prove me wrong and produce a real time track record of gains over the longer term (3 years or more), but have the feeling I will be waiting for a long time.<br /><br />The belief that you can make money day trading, is one of the biggest myths of forex trading and despite the evidence it doesn’t work, traders still think they can win at it – they can’t.<br /><br /><span style="color:#ff0000;"><a rel="nofollow" href="http://www.upublish.info/profile/kelly-price/10421">kelly price</a></span></span>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com1tag:blogger.com,1999:blog-329802822600986863.post-31814654319573195452008-09-07T18:38:00.001+07:002009-01-20T14:29:39.850+07:00Trading Forex to Advance Your Financial Position<div style="text-align: justify;">Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.<br /><br />Today traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.<br /><span class="fullpost"><br />An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader investment decisions, and they will purchase or sell currency accordingly.<br /><br />This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.<br /><br /><span style="color:#ff0000;"><a rel="nofollow" href="http://www.upublish.info/profile/Jay-Moncliff/355">Jay Moncliff</a></span></span><br /></div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-54136274875382644742008-09-05T03:07:00.001+07:002009-01-20T14:30:09.998+07:00Floating And Fixed Exchange Rates<div align="justify">Did you know that the foreign exchange market (also known as FX or forex) is the largest market in the world? In fact, over $1 trillion is traded in the currency markets on a daily basis. This article is certainly not a primer for currency trading, but it will help you understand exchange rates and why some fluctuate while others do not.What Is an Exchange Rate?An exchange rate is the rate at which one currency can be exchanged for another. In other words, it is the value of another country's currency compared to that of your own. If you are traveling to another country, you need to "buy" the local currency. Just like the price of any asset, the exchange rate is the price at which you can buy that currency. If you are traveling to Egypt, for example, and the exchange rate for USD 1.00 is EGP 5.50, this means that for every U.S. dollar, you can buy five and a half Egyptian pounds. Theoretically, identical assets should sell at the same price in different countries, because the exchange rate must maintain the inherent value of one currency against the other.<span class="fullpost"><br />FixedThere are two ways the price of a currency can be determined against another. A fixed, or pegged, rate is a rate the government (central bank) sets and maintains as the official exchange rate. A set price will be determined against a major world currency (usually the U.S. dollar, but also other major currencies such as the euro, the yen, or a basket of currencies). In order to maintain the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market in return for the currency to which it is pegged.<br />If, for example, it is determined that the value of a single unit of local currency is equal to USD 3.00, the central bank will have to ensure that it can supply the market with those dollars. In order to maintain the rate, the central bank must keep a high level of foreign reserves. This is a reserved amount of foreign currency held by the central bank which it can use to release (or absorb) extra funds into (or out of) the market. This ensures an appropriate money supply, appropriate fluctuations in the market (inflation/deflation), and ultimately, the exchange rate. The central bank can also adjust the official exchange rate when necessary.<br />FloatingUnlike the fixed rate, a floating exchange rate is determined by the private market through supply and demand. A floating rate is often termed "self-correcting", as any differences in supply and demand will automatically be corrected in the market. Take a look at this simplified model: if demand for a currency is low, its value will decrease, thus making imported goods more expensive and thus stimulating demand for local goods and services. This in turn will generate more jobs, and hence an auto-correction would occur in the market. A floating exchange rate is constantly changing.<br />In reality, no currency is wholly fixed or floating. In a fixed regime, market pressures can also influence changes in the exchange rate. Sometimes, when a local currency does reflect its true value against its pegged currency, a "black market" which is more reflective of actual supply and demand may develop. A central bank will often then be forced to revalue or devalue the official rate so that the rate is in line with the unofficial one, thereby halting the activity of the black market.<br />In a floating regime, the central bank may also intervene when it is necessary to ensure stability and to avoid inflation; however, it is less often that the central bank of a floating regime will interfere.<br />The World Once PeggedBetween 1870 and 1914, there was a global fixed exchange rate. Currencies were linked to gold, meaning that the value of a local currency was fixed at a set exchange rate to gold ounces. This was known as the gold standard. This allowed for unrestricted capital mobility as well as global stability in currencies and trade; however, with the start of World War I, the gold standard was abandoned.<br />At the end of World War II, the conference at Bretton Woods, in an effort to generate global economic stability and increased volumes of global trade, established the basic rules and regulations governing international exchange. As such, an international monetary system, embodied in the International Monetary Fund (IMF), was established to promote foreign trade and to maintain the monetary stability of countries and therefore that of the global economy<br />It was agreed that currencies would once again be fixed, or pegged, but this time to the U.S. dollar, which in turn was pegged to gold at USD 35/ounce. What this meant was that the value of a currency was directly linked with the value of the U.S. dollar. So if you needed to buy Japanese yen, the value of the yen would be expressed in U.S. dollars, whose value in turn was determined in the value of gold. If a country needed to readjust the value of its currency, it could approach the IMF to adjust the pegged value of its currency. The peg was maintained until 1971, when the U.S. dollar could no longer hold the value of the pegged rate of USD 35/ounce of gold.<br />From then on, major governments adopted a floating system, and all attempts to move back to a global peg were eventually abandoned in 1985. Since then, no major economies have gone back to a peg, and the use of gold as a peg has been completely abandoned.<br />Why Peg?The reasons to peg a currency are linked to stability. Especially in today's developing nations, a country may decide to peg its currency to create a stable atmosphere for foreign investment. With a peg the investor will always know what his/her investment value is, and therefore will not have to worry about daily fluctuations. A pegged currency can also help to lower inflation rates and generate demand, which results from greater confidence in the stability of the currency.<br />Fixed regimes, however, can often lead to severe financial crises since a peg is difficult to maintain in the long run. This was seen in the Mexican (1995), Asian and Russian (1997) financial crises: an attempt to maintain a high value of the local currency to the peg resulted in the currencies eventually becoming overvalued. This meant that the governments could no longer meet the demands to convert the local currency into the foreign currency at the pegged rate. With speculation and panic, investors scrambled to get out their money and convert it into foreign currency before the local currency was devalued against the peg; foreign reserve supplies eventually became depleted. In Mexico's case, the government was forced to devalue the peso by 30%. In Thailand, the government eventually had to allow the currency to float, and by the end of 1997, the bhat had lost its value by 50% as the market's demand and supply readjusted the value of the local currency.<br />Countries with pegs are often associated with having unsophisticated capital markets and weak regulating institutions. The peg is therefore there to help create stability in such an environment. It takes a stronger system as well as a mature market to maintain a float. When a country is forced to devalue its currency, it is also required to proceed with some form of economic reform, like implementing greater transparency, in an effort to strengthen its financial institutions.<br />Some governments may choose to have a "floating," or "crawling" peg, whereby the government reassesses the value of the peg periodically and then changes the peg rate accordingly. Usually the change is devaluation, but one that is controlled so that market panic is avoided. This method is often used in the transition from a peg to a floating regime, and it allows the government to "save face" by not being forced to devalue in an uncontrollable crisis.<br />Although the peg has worked in creating global trade and monetary stability, it was used only at a time when all the major economies were a part of it. And while a floating regime is not without its flaws, it has proven to be a more efficient means of determining the long term value of a currency and creating equilibrium in the international market.</div><div align="justify"><br />by Reem Heakal</span></div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-22015605164399993942008-09-03T03:05:00.000+07:002008-09-03T03:05:00.710+07:00The Fundamentals Of Forex Fundamentals<div align="justify">Those trading in the foreign-exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies, countries have no balance sheets, so how can fundamental analysis be conducted on a currency? Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation's currency. Here we look at some of the major fundamental factors that play a role in the movement of a currency.<br />Economic IndicatorsEconomic indicators are reports released by the government or a private organization that detail a country's economic performance. Economic reports are the means by which a country's economic health is directly measured, but do remember that a great deal of factors and policies will affect a nation's economic performance.<br />These reports are released at scheduled times, providing the market with an indication of whether a nation's economy has improved or declined. The effects of these reports are comparable to how earnings reports, SEC filings and other releases may affect securities. In forex, as in the stock market, any deviation from the norm can cause large price and volume movements.<br />You may recognize some of these economic reports, such as the unemployment numbers, which are well publicized. Others, like housing stats, receive little coverage. However, each indicator serves a particular purpose, and can be useful. Here we outline four major reports, some of which are comparable to particular fundamental indicators used by equity investors:<br />The Gross Domestic Product (GDP)The GDP is considered the broadest measure of a country's economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility. The GDP is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth.<br />Retail SalesThe retail-sales report measures the total receipts of all retail stores in a given country. This measurement is derived from a diverse sample of retail stores throughout a nation. The report is particularly useful because it is a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy. Revisions to advanced reports of retail sales can cause significant volatility. The retail sales report can be compared to the sales activity of a publicly traded company.<br />Industrial ProductionThis report shows the change in the production of factories, mines and utilities within a nation. It also reports their 'capacity utilizations', the degree to which the capacity of each of these factories is being used. It is ideal for a nation to see an increase of production while being at its maximum or near maximum capacity utilization.<br />Traders using this indicator are usually concerned with utility production, which can be extremely volatile since the utilities industry, and in turn the trading of and demand for energy, is heavily affected by changes in weather. Significant revisions between reports can be caused by weather changes, which in turn, can cause volatility in the nation's currency.<br />Consumer Price Index (CPI)The CPI is a measure of the change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation's exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports - it is a focus that is popular with many traders because the prices of exports often change relative to a currency's strength or weakness. Some of the other major indicators include the purchasing managers index (PMI), producer price index (PPI), durable goods report, employment cost index (ECI), and housing starts. And don't forget the many privately issued reports, the most famous of which is the Michigan Consumer Confidence Survey. All of these provide a valuable resource to traders, if used properly.<br /><br />So, How Are These Used?Since economic indicators gauge a country's economic state, changes in the conditions reported will therefore directly affect the price and volume of a country's currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation. Here are a few useful tips that may help you when conducting fundamental analysis in the foreign exchange market:<br />Keep an economic calendar on hand that lists the indicators and when they are due to be released. Also, keep an eye on the future; often markets will move in anticipation of a certain indicator or report due to be released at a later time. Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators. Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference. Don't react too quickly to the news. Oftentimes, numbers are released and then revised, and things can change quickly. Pay attention to these revisions, as they may be a useful tool for seeing the trends and reacting more accurately to future reports. ConclusionThere are many economic indicators, and even more private reports that can be used to evaluate the fundamentals of forex. It's important to take the time to not only look at the numbers, but also understand what they mean and how they affect a nation's economy. When properly used, these indicators can be an invaluable resource for any currency trader. </div><div align="justify"> </div><div align="justify">by Justin Kuepper</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-68763093622005834352008-09-01T03:03:00.000+07:002008-09-01T03:03:00.919+07:00Trading Trend Or Range?<div align="justify">Whether trading stocks, futures, options or FX, traders confront the single most important question: to trade trend or range? And they answer this question by assessing the price environment; doing so accurately greatly enhances a trader's chance of success. Trend or range are two distinct price properties requiring almost diametrically opposed mindsets and money-management techniques. Fortunately, the FX market is uniquely suited to accommodate both styles, providing trend and range traders with opportunities for profit. Since trend trading is far more popular, let's first examine how trend traders can benefit from FX. TrendWhat is trend? The simplest identifiers of trend direction are higher lows in an uptrend and lower highs in a downtrend. Some define trend as a deviation from a range as indicated by Bollinger Band "bands" (see Using Bollinger Band "Bands" to Trade Trend in FX). For others, a trend occurs when prices are contained by an upward or downward sloping 20-period simple moving average (SMA).<br />Regardless of how one defines it, the goal of trend trading is the same - join the move early and hold the position until the trend reverses. The basic mindset of trend trader is "I am right or I am out?" The implied bet all trend traders make is that price will continue in its present direction. If it doesn't there is little reason to hold onto the trade. Therefore, trend traders typically trade with tight stops and often make many probative forays into the market in order to make the right entry.<br />By nature, trend trading generates far more losing trades than winning trades and requires rigorous risk control. The usual rule of thumb is that trend traders should never risk more than 1.5-2.5% of their capital on any given trade. On a 10,000-unit (10K) account trading 100K standard lots, that means stops as small as 15-25 pips behind the entry price. Clearly, in order to practice such a method, a trader must have confidence that the market traded will be highly liquid.<br />Of course the FX market is the most liquid market in the world. With US$1.6 trillion of average daily turnover, the currency market dwarfs the stock and bond markets in size. Furthermore, the FX market trades 24 hours a day five days a week, eliminating much of the gap risk found in exchange-based markets. Certainly gaps sometimes happen in FX, but not nearly as frequently as they occur in stock or bond markets, so slippage is far less of a problem.<br />High Leverage - Large ProfitsWhen trend traders are correct about the trade, the profits can be enormous. This dynamic is especially true in FX where high leverage greatly magnifies the gains. Typical leverage in FX is 100:1, meaning that a trader needs to put down only $1 of margin to control $100 of the currency. Compare that with the stock market where leverage is usually set at 2:1, or even the futures market where even the most liberal leverage does not exceed 20:1.<br />It's not unusual to see FX trend traders double their money in a short period if they catch a strong move. Suppose a trader starts out with $10,000 in his or her account, and uses a strict stop-loss rule of 20 pips. The trader may get stopped out five or six times, but if he or she is properly positioned for a large move - like the one in EUR/USD between Sept and Dec 2004 when the pair rose more than 12 cents, or 1,200 pips - that one-lot purchase could generate something like a $12,000 profit, doubling the trader's account in a matter of months.<br />Of course few traders have the discipline to take stop losses continuously. Most traders, dejected by a series of bad trades tend to become stubborn and fight the market, often placing no stops at all. This is when FX leverage can be most dangerous. The same process that quickly produces profits can also generate massive losses. The end result is that many undisciplined traders suffer a margin call and lose most of their speculative capital.<br />Trading trend with discipline can be extremely difficult. If the trader uses high leverage he or she leaves very little room to be wrong. Trading with very tight stops can often result in 10 or even 20 consecutive stop outs before the trader can find a trade with strong momentum and directionality.<br />For this reason many traders prefer to trade range-bound strategies. Please note that when I speak of ‘range-bound trading' I am not referring to the classic definition of the word 'range'. Trading in such a price environment involves isolating currencies that are trading in channels, and then selling at the top of the channel and buying at the bottom of the channel. This can be a very worthwhile strategy, but, in essence, it is still a trend-based idea - albeit one that anticipates an imminent countertrend. (What is a countertrend after all, except a trend going the other way?)<br />RangeTrue range traders don't care about direction. The underlying assumption of range trading is that no matter which way the currency travels, it will most likely return back to its point of origin. In fact, range traders bet on the possibility that prices will trade through the same levels many times, and the traders' goal is to harvest those oscillations for profit over and over again.<br />Clearly range trading requires a completely different money-management technique. Instead of looking for just the right entry, range traders prefer to be wrong at the outset so that they can build a trading position.<br /><br /><br />For example, imagine that EUR/USD is trading at 1.3000. A range trader may decide to short the pair at that price and every 50 pips higher, and then buy it back as it moves every 25 pips down. His or her assumption is that eventually the pair will return to that 1.3000 level again. If EUR/USD rises to 1.3500 and then turns back down hitting 1.3000, the range trader would harvest a handsome profit, especially if the currency moves back and forth in its climb to 1.3500 and its fall to 1.3000.<br />However, as we can see from this example a range-bound trader will need to have very deep pockets in order to implement this strategy. In this case employing large leverage can be devastating since positions can often go against the trader for many points in a row and, if he or she is not careful, trigger a margin call before the currency eventually turns around.<br />Solutions for Range TradersFortunately, the FX market provides a flexible solution for range trading. Most retail FX dealers offer mini lots of 10,000 units rather than 100K lots. In a 10K lot each individual pip is worth only $1 instead of $10, so the same hypothetical trader with a $10,000 account can have a stop-loss budget of 200 pips instead of only 20 pips. Even better, many dealers allow customers to trade in units of 1K or even 100-unit increments. Under that scenario, our range trader trading 1K units could withstand a 2,000-pip drawdown (with each pip now worth only 10 cents) before triggering a stop loss. This flexibility allows range traders plenty of room to run their strategies.<br />In FX, almost no dealer charges commission. Customers simply pay the bid-ask spread. Furthermore, regardless of whether a customer wants to deal for 100 units or 100,000 units, most dealers will quote the same price. Therefore, unlike the stock or futures markets where retail customers often have to pay prohibitive commissions on very small size trades, retail speculators in FX suffer no such disadvantage. In fact a range-trading strategy can be implanted on even a small account of $1,000, as long as the trader properly sizes his or her trades.<br />ConclusionWhether a trader wants to swing for homeruns by trying to catch strong trends with very large leverage or simply hit singles and bunts by trading a range strategy with very small lot sizes, the FX market is extraordinarily well suited for both approaches. As long as the trader remains disciplined about the inevitable losses and understands the different money-management schemes involved in each strategy, he or she will have a good chance of success in this market. Next month, we'll examine the various currency pairs to determine which ones are best suited for trend strategy and which are best suited for range. </div><div align="justify"><br />by Boris Schlossberg,</div><div align="justify"> </div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-92030110173038733122008-08-31T02:58:00.000+07:002008-08-31T02:58:00.270+07:00Taking Advantage Of A Weak U.S. Dollar<div align="justify">Between 2003 and 2008, the value of the U.S. dollar fell compared to most major currencies. The depreciation accelerated during 2007-2008, impacting both domestic and international investments.<br />The impact of the rise or fall of the U.S. dollar on investments is multifaceted. Most notably, investors need to understand the effect that exchange rates can have on financial statements, how this relates to where goods are sold and produced, and the impact of raw material inflation.<br />The confluence of these factors can help investors determine where and how to allocate investment funds. Read on to learn how to invest when the U.S. dollar is weak.<br />The Home CountryIn the U.S., the Financial Accounting Standards Board (FASB) is the governing body that mandates how companies account for business operations on financial statements. FASB has determined that the primary currency in which each entity conducts its business is referred to as "functional currency". However, the functional currency may differ from the reporting currency. In these cases, translation adjustments may result in gains or losses, which are generally included when calculating net income for that period.<br />What does all this technical-speak mean when investing in the U.S. in a falling dollar environment? If you invest in a company that does the majority of its business in the U.S. and is domiciled in the U.S., the functional and reporting currency will be the U.S. dollar. If the company has a subsidiary in Europe, its functional currency will be the euro. So, when the company translates the subsidiary's results to the reporting currency (the U.S. dollar), the dollar/euro exchange rate must be used. For example, in a falling dollar environment, one euro buys $1.54 compared to a prior rate of $1.35. Therefore, as you translate the subsidiary's results into the falling U.S. dollar environment, the company benefits from this translation gain with higher net income.<br />Why Geography MattersUnderstanding the accounting treatment for foreign subsidiaries is the first step to determining how to take advantage of currency movements. The next step is capturing the arbitrage between where goods are sold and where goods are made. As the U.S. has moved toward becoming a service economy and away from a manufacturing economy, low-cost provider countries have captured those manufacturing dollars. U.S. companies took this to heart and started outsourcing much of their manufacturing and even some service jobs to low-cost provider countries to exploit those cheaper costs and improve margins. During times of U.S. dollar strength, low-cost provider countries produce goods cheaply; companies sell these goods at higher prices to consumers abroad to make a sufficient margin.<br />This works well when the U.S. dollar is strong; however, as the U.S. dollar falls, keeping costs in U.S. dollars and receiving revenues in stronger currencies - in other words, becoming an exporter - is more beneficial to a U.S. company. Between 2005 and 2008, U.S. companies took advantage of the depreciating U.S. dollar as U.S. exports showed strong growth that occurred as a result of the shrinking of the U.S. current account deficit to an 8-year low of 2.4% of gross domestic product (GDP) (excluding oil) during 2008. (For background reading, see Current Account Deficits.)However, just to complicate matters slightly, many of the low-cost provider countries produce goods that are unaffected by U.S. dollar movements because these countries "peg" their currencies to the dollar. In other words, they let their currencies fluctuate in tandem with the fluctuations of the U.S. dollar, preserving the relationship between the two. Regardless of whether goods are produced in the U.S. or by a country that links its currency to the U.S., in a falling U.S. dollar environment, costs decline. (For more insight, read Floating And Fixed Exchange Rates.)<br />Up, Up and Away …The price of commodities related to the value of the dollar and interest rates tends to follow the following cycle:<br />Interest Rates are Cut Þ U.S. Dollar is Pulled LowerÞ Gold and Commodity Index BottomÞ Interest Rates Turn Up Þ Bonds PeakÞ Stocks Peak Þ Dollar Rises Þ Gold and Commodity Index Peak Þ Interest Rates Peak Þ Bonds Bottom Þ Stocks Bottom Þ Interest Rates are Cut Þ Cycle Begins Again<br />At times, however, this cycle does not persist and commodity prices do not bottom as interest rates fall and the U.S. dollar depreciates. Such a divergence from this cycle occurred during 2007-2008 as the direct relationship between economic weakness and weak commodity prices reversed. During the first five months of 2008, the price of crude oil was up 20%, the commodity index was up 18%, the metals index was up 24% and the food price index was up 18%, while the dollar depreciated 6%. According to Wall Street research by Jens Nordvig and Jeffrey Currie of Goldman Sachs, the correlation between the euro/dollar exchange rate, which was 1% from 1999-2004, rose to a striking 52% during the first half of 2008. While people disagree about the reasons for this divergence, there is little doubt that taking advantage of the relationship provides investment opportunities. (For related reading, see Forex: Venturing Into Non-Dollar Currencies.)<br />Profiting From the Falling DollarTaking advantage of currency moves in the short-term can be as simple as investing in the currency you believe will show the greatest strength against the U.S. dollar during your investment timeframe. You can invest directly in the currency, currency baskets or in exchange-traded funds (ETFs).<br />For a longer-term strategy, investing in the stock market indexes of countries you believe will have appreciating currencies or investing in sovereign wealth funds, which are vehicles through which governments trade currencies, can provide exposure to strengthening currencies.<br />You can also profit from a falling dollar by investing in foreign companies or U.S. companies that derive the majority of their revenues from outside the U.S. (and of even greater benefit, those with costs in U.S. dollars or that are U.S.-dollar linked).<br />As a non-U.S. investor, buying assets in the U.S., especially tangible assets, such as real estate, is extremely inexpensive during periods of falling dollar values. Because foreign currencies can buy more assets than the comparable U.S. dollar can buy in the U.S., foreigners have a purchasing power advantage.<br />Finally, investors can profit from a falling U.S. dollar through the purchase of commodities or companies that support or participate in commodity exploration, production or transportation. (For more on this strategy, read Commodity Prices And Currency Movements.)<br />ConclusionPredicting the length of U.S. dollar depreciation is difficult because many factors collaborate to influence the value of the currency. Despite this, having insight into the influence that changes in currency values have on investments provides opportunities to benefit both in the short and long-term. Investing in U.S. exporters, tangible assets (foreigners who buy U.S. real estate or commodities) and appreciating currencies or stock markets provide the basis for profiting from the falling U.S. dollar. </div><div align="justify"><br />by Tina Carleton,</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-28970982725991598292008-08-29T02:50:00.000+07:002008-08-29T02:50:01.306+07:00How to Read a Chart & Act Effectively<span xmlns=""><p><span style=";font-family:Verdana;font-size:10;" >by Jimmy Young of <a target="_blank" href="http://www.eurusdtrader.com/"><span style="text-decoration: underline;color:blue;" >EURUSDTrader</span></a><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" ><strong>Introduction</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >This is a guide that tells you, in simple understandable language, how to choose the right charts, read them correctly, and act effectively in the market from what you see on them. Probably most of you have taken a course or studied the use of charts in the past. This should add to that knowledge.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" ><strong>Recommendation</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >There are several good charting packages available free. Netdania is what I use.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" ><strong>Using charts effectively</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >The default number of periods on these charts is 300. This is a good starting point;<br /></span></p><ul><li><span style=";font-family:Verdana;font-size:10;" >Hourly chart that's about 12 days of data.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >15 minute chart its 3 days of data.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >5-minute chart it's slightly more than 24 hours of data.<br /></span></li></ul><p><span style=";font-family:Verdana;font-size:10;" >You can create multiple "tabs" or "layouts" so that it's easy to quickly switch between charts or sets of charts.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" ><strong>What to look at first</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >1. Glance at hourly chart to see the big picture. Note significant support and resistance levels within 2% of today's opening rate.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >2. Study the 15 minute chart in great detail noting the following:<br /></span></p><ul><li><span style=";font-family:Verdana;font-size:10;" >Prevailing trend<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Current price in relation to the 60 period simple moving average.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >High and low since GMT 00:00<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Tops and bottoms during full 3 day time period.<br /></span></li></ul><p><span style=";font-family:Verdana;font-size:10;" ><strong>How to use the information gathered so far</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >1. Determine the big picture (for intraday trading).<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Glancing at the hourly chart will give you the big picture – up or down. If it's not clear immediately then you're in a trading range. Lets assume the trend is down.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >2. Determine if the 15 minute chart confirms the downtrend indicated by big picture:<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Current price on 15-minute chart should be below 60 period moving average and the moving average line should be sloping down. If this is so then you have established the direction of the prevailing trend to be down.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >There are always two trends – a prevailing (major) trend and a minor trend. The minor trend is a reversal of the main trend, which lasts for a short period of time. Minor trends are clearly spotted on 5-minute charts.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >3. Determine the current trend (major or minor) from the 5 minute chart:<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Current price on 5-minute chart is below 60 period moving average and the moving average line is sloping downward – major trend.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Current price on 5-minute chart is above 60 period moving average and the moving average line is sloping upward – minor trend.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" ><strong>How to trade the information gathered so far</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >At this point you know the following:<br /></span></p><ul><li><span style=";font-family:Verdana;font-size:10;" >Direction of the prevailing trend.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Whether we are currently trading in the direction of the prevailing (major) trend or experiencing a minor trend (reaction to major trend).<br /></span></li></ul><p><span style=";font-family:Verdana;font-size:10;" ><strong>Possible trade scenarios:</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >1) Lets assume prevailing (major) trend is down and we are in a minor up-trend. Strategy would be to sell when the current price on 5-minute chart falls below the 60 period moving average and the 60 period moving average line is sloping downward. Why? Because the prevailing trend is reasserting itself and the next move is likely to be down. Is there more we can do? Yes. Look for further confirmation. For example, if the minor trend had stalled for a while and the lows of the past half hour or hour are very close to the 5 minute moving average then selling just below the lows of the past half hour is a better place to enter the market then just below the moving average line.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >2) Lets assume prevailing (major) trend is down and 5-minute chart confirms downtrend. Strategy would be to wait for a minor (up trend) trend to appear and reverse before entering the market. The reason for this is that the move is too "mature" at this point and a correction is likely. Since you trade with tight stops you will be stopped out on a reaction. Exception: If market trades through today's low and/ or low of past three days (these levels will be apparent on the 15 minute chart) further quick downward price action is likely and a short position would be correct.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >3) A better strategy assuming prevailing trend down, 5-minute chart down, and just above days lows is to BUY with a tight stop below the day's low. Your risk is limited and defined and the technical condition (overdone?) is in your favor. Confirmation would be if today's low was a bit higher than yesterday's low and the price action indicated a very short-term trading range (1 minute chart) just above today's low. The thinking here is that buyers are not waiting for a break of today's or yesterday's low to buy cheaper; they are concerned they may not see the level.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >4) Generally speaking, the safest place to buy is after a sustained significant decline when the bottoms are getting higher. Preferably these bottoms will be hours apart. By the third or forth higher bottom it is clear a bottom is in place and an up-move is coming. As in the example above your risk is limited and defined – a low lower than the last low.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >5) The reverse is true in major up-trends.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" ><strong>Other chart ideas</strong><br /> </span></p><ul><li><span style=";font-family:Verdana;font-size:10;" >There are always two trends to consider – a major trend and a minor trend. The minor trend is a reversal of the major trend, which generally lasts for a short period of time.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Buying above old tops and selling below old bottoms can be excellent entry levels; assuming the move is not overly mature and a nearby reaction unlikely.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >When a strong up move is occurring the market should make both higher tops and higher bottoms. The reverse is true for down moves- lower bottoms and lower tops.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Reactions (minor reversals) are smaller when a strong move is occurring. As the reactions begin to increase that is a clear warning signal that the move is losing momentum. When the last reaction exceeds the prior reaction you can assume the trend has changed, at least temporarily.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Higher bottoms always indicate strength, and an up move usually starts from the third or fourth higher bottom. Reverse this rule in a rising market; lower tops…<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >You will always make the most money by following the major trend although to say you will never trade against the trend means that you will miss a lot of opportunities to make big profits. The rule is: When you are trading against the trend wait until you have a definite indication of a selling or buying point near the top or bottom, where you can place a close stop loss order (risk small amount of capital). The profit target can be a short-term gain to nearby resistance or more.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Consider the normal or average daily range, average price change from open to high and average price change from open to low, in determining your intra-day price targets.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Do not overlook the fact that it requires time for a market to get ready at the bottom before it advances and for selling pressure to work it's way through at top before a decline. Smaller loses and sideways trading are a sign the trend may be waning in a downtrend. Smaller gains and sideways trading in an up trend.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Fourth time at bottom or top is crucial; next phase of move will soon become clear… be ready.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Oftentimes, when an important support or resistance level is broken a quick move occurs followed by a reaction back to or slightly above support or below resistance. This is a great opportunity to play the break on the "rebound". Your stop can be super tight. For example, EURUSD important resistance 1.0840 is broken and a quick move to 1.0860, followed by a decline to 1.0835. Buy with a 1.0820 stop. The move back down is natural and takes nothing away from the importance of the breakout. However, EURUSD should not decline significantly below the breakout (breakout 1.0840; EURUSD should not go below 1.0825.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >After a prolonged up move when a top has been made there is usually a trading range, followed by a sharp decline. After that, a secondary reaction back near the old highs often occurs. This is because the market gets ahead of itself and a short squeeze occurs. Selling near the old top with a stop above the old top is the safest place to sell.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >The third lower top is also a great place to sell.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >The same is true in reverse for down moves.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Be careful not to buy near top or sell near bottom within trading ranges. Wait for breakaway (huge profit potential) or play the range.<br /></span></li><li><span style=";font-family:Verdana;font-size:10;" >Whether the market is very active or in a trading range, all indications are more accurate and trustworthier when the market is actively trading.<br /></span></li></ul><p><span style=";font-family:Verdana;font-size:10;" ><strong>Limitations of charts</strong><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >Scheduled economic announcements that are complete surprises render nearby short-term support and resistance levels meaningless because the basis (all available information) has changed significantly, requiring a price adjustment to reflect the new information. Other support and resistance levels within the normal daily trading range remain valid. For example, on Friday the unemployment number missed the mark by roughly 120,000 jobs. That's a huge disparity and rendered all nearby resistance levels in the EURUSD meaningless. However, resistance level 200 points or more from the day's opening were still meaningful because they represented resistance to a big up move on a given day.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Unscheduled or unexpected statements by government officials may render all charts points on a short-term chart meaningless, depending upon the severity of what was said or implied. For example, when Treasury Secretary John Snow hinted that the U.S. had abandoned its strong U.S. dollar policy.<br /></span></p></span>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-59972462613692921042008-08-27T02:44:00.000+07:002008-08-27T02:44:02.674+07:00TRADING: A MIND GAME<span xmlns=""><p>You must change your mental attitude first from a normal person to that of a speculator. Almost all traders I have met, except a few successful ones who really made millions and billions trading in the market, simply waste all their time trying to learn the easiest part in perfection, like about how to read data and charts, and trying to perfect entry and exit skills, etc. Trading is a mind game and without having a right frame of mind, it is a losing game even before it starts. Training a traders mind is the first step for any successful trader but almost all new traders neglect that part and that explains why more than 95% of traders are a failure in the long run.<br /></p><p>Acquiring the knowledge of the market is not difficult for anyone with average intelligence after a few years of hard study in the market. But it is neither the level of intelligence nor the knowledge that decides the outcome of the market operations of a trader. It is the decision making process that is so hard for most traders to overcome and that is the main reason for a success or a failure for all the traders. Some find it easy to make decisions and stick to it and most find it so hard to make decisions and stick to it. Unfortunately, any decision making process in trading is a pain-taking process and humans tend to avoid pains and go for pleasures even if for temporary ones. Assuming one has acquired enough market knowledge and acquired ones proven trading system (this is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one)<br /></p><p>Through studies and research, a trader faces the task of making decisions to put this knowledge and system into practice. Then, how many traders can honestly say they can commit their ranch when the trade is suggested by their own system (given that trading is just a chance game) and let the profit run for weeks and months when their system tells them, and how many can manage to cut the loss as a routine process when the situation arise. It all sounds so easy when saying it but so difficult when doing it affecting real money in the market. I still do not sleep well when I am running position because even if the profits are running into a few hundred dollars and the system is telling you to carry on, there is no guarantee that the profit will turn into a yard or two in a month time, and it may even turn into a loss in a day or two when something unexpected happens. A painstaking process in real sense. The pain is not knowing what will happen in the future and in fear of losing. So at the end of the day, assuming one has decent trading system and market knowledge and decent info, it is ultimately how disciplined and how well that trader can take the pain of making right decisions at the right time that decides the outcome of the trades. Hence I call trading a mind game. When I interview prospective young traders, I always look for disciplined and strong-willed person as my first priority as long as one has decent education, but strangely in many cases, it is some kind of genius or half-genius with lots of brains with no disciplines who turn up for an interview thinking only bright people can make good traders.<br /></p><p>In fact, I always try to pyramid while position trading medium-term once I am convinced of a new medium-term trend emerging. Like in USD/JPY position trading 135-132 as an initial position, adding in 132 and 129 areas. Same for AUD/USD and EUR/USD with similar strategies. But sitting on positions and watching the counter-rallies costing truck load of money is not easy job to do and causes lots of pain all the time. Most traders even among experienced ones cannot bear that pain and give up too early. <strong>But there is no other way to make a big money and we have to bite the bullet and "sit and accumulate" as long as the medium-term trend is intact. </strong>That is why I always believe psychological aspects of trading is far more important than anything else in successful trading. A mind game like those bluffing game of poker.<br /></p><p>Entries and exits can never be "irrelevant" for any trader for any purpose. It is just that psychological aspects of trading are much more important than entries and exits, and decisive for the success or failure of a trader in the long run. Perhaps exits are more important than entries because any perfect or near-perfect entries are possible only in hindsight.<br /></p><p> <br /> </p><p><span style="text-decoration: underline;"><strong><a name="BCs_WORDS_OF_WISDOM">BCs WORDS OF WISDOM<br /></a></strong></span><a name="BCs_WORDS_OF_WISDOM">Any market, be it real estate market or forex market, is all about transferring money from the masses to a few lucky ones in the long run. In most real property speculation cases, the masses make money ,a lot of money, but the money stays as paper profit and evaporate before they realize their paper profit into real hard cash. In most forex speculation cases, the masses barely survive a few years thanks to lack of knowledge of the market and the deadly leverage. But both types of speculators all serve their useful purposes in investment food chain contributing their hard earned money to the market in exchange for a dream.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">For any prospective traders, hope this is not in anyway a discouragement. Trading is a hard mind game and not everyone is suitable to be engaged in such a hard game. Most have neither frame of mind nor mental fortitude to survive in this hard game. Mastering TAs or numbers or options business are at best a first tentative step into the right direction with no guarantee to any success. Training a right frame of mind is the most difficult but absolutely necessary part for success and most are simply not ready to go through that hard stage of the learning process because it is a very painful process. Trading is essentially about pain-taking-process in the end although most do not realize it. The process of overcoming fear, greed and mastering tranquility of mind in this hard school of speculation. Fwiw.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">Every trader should find his/her method/system which suits his/her own situation and personality. And that system/method must be the one that has proven to be able to make some money through trials. So, if Tom, the medium-term trader, revealed his money making method of last three decades, it may not have the same effect for Dick and Harry, the day traders, and vice versa. Agree that most fail for lack of system/method and/or lack of discipline to follow through.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">Trading success is all about making as much as one can when one is right and losing as little as possible when one is wrong. That is the essence of this business. So, any theory or system which looks after the above is a good one.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">System is a weapon of a soldier in this market. You must have one as soon as possible. Otherwise, it will be like fighting well-armed Forex robbers with a handbag. Best one is a self-made one because you can never feel comfy in borrowed shoes although borrowing good ideas from others is a good idea. Good luck.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">One cannot make a dime unless follow the herd or trend most of the time. It is just that one has to be cautious when overbought/oversold region is approaching and know how to turn at inflection point for the opposite trend. Following herd needs average intelligence and courage but identifying inflection points and taking a necessary action needs not only intelligence but also a lot of courage. <strong>Again, fortune favors the brave.</strong><br /> </a></p><p><a name="BCs_WORDS_OF_WISDOM">Money management is where most traders go wrong in almost all cases leaving only a few as the winner at the end of the day. Money management and discipline of mind is what makes or brakes a trader at the end of the day, not the elementary entry and exit method.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM"><strong>Forex/Currency Trading: It is a sentiment game w/ a crowd mentality where even the best players w/ the best forecasts are tricked out of good positions by the magic of price action.</strong><br /> </a></p><p><a name="BCs_WORDS_OF_WISDOM"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="BCs_WORDS_OF_WISDOM"><strong>TREND TRADING: Accumulation and Distribution</strong></a></span><a name="BCs_WORDS_OF_WISDOM"><br />Forex market like any other market works in a very simple way. It accumulates in a certain area for awhile, and once the accumulation is over, it advances to a certain distance until distribution starts, and accumulation happens again and advances to a certain distance again, and repeat and repeat. Day trading may not yield the best results while the accumulation and distribution work out itself, being double-murdered by zig-zag moves, while the market starts advancing out of accumulation area, day trading is a sure way of cutting profit short. In general, day trading is not the best form of yielding the most profits in my experience contrary to what some writers who never made real money in this game try to say.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">The safe and better way in making some money must be wait for "accumulation" to be over and ride the whole length of advance until "distribution" starts and reverse as the market dictates as a short-term trade for 2-10 days, as the case may be.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM">Please study 8 hour or 4 hour line charts or candle charts, especially the patterns and 20 MA inside the charts for a few months everyday, and you will discover what I mean by accumulation and distribution for short-term trades in Forex market. Forex market always needs this process, so you can decide what tactics you will use at a given stage. Imho. Good luck.<br /></a></p><p><a name="BCs_WORDS_OF_WISDOM"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="BCs_WORDS_OF_WISDOM"><strong></strong></a><strong><a name="TECHNICALS_and_CHARTING">TECHNICALS and CHARTING<br /></a></strong></span><a name="TECHNICALS_and_CHARTING">Why day trade once you get a good seat and the market is going your way. It is always more profitable to ride even the short wave for 2-10 days by adding up. In general, you must day trade only when you are losing. To find a buy entry seat for short-term trades, you can study the "accumulation and distribution patterns and 20 MA" in 8, 4 hourlies or 30 min "Line Charts" (or Candle Charts), together with MACD "overbought and oversold indicators" with its Patterns. If you study them for awhile you will understand when it the best entry point. The remainder is for money management and discipline and of course, experience. Good trades<br /></a></p><p><a name="TECHNICALS_and_CHARTING">On technical side of the trading, the first thing to do is to find out the trend in ones trading time frame and the proper trading strategy for that trend. Some ride positions for months, while some ride positions for less than an hour or a day and their views of the trend obviously differ. For a trader who is running a position for months, a daily fluctuation may be just a meaningless noise while for a daytrader or an hour trader, a daily fluctuation could be a monstrous tsunami. Having a precise definition and a technique of identifying a trend and the turn of a trend in a traders time frame, and adopting the right strategies for that trend is the first elementary step in a hard school of trading. Imho.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">I keep my technical side on any pair as simple as possible largely relying on others moves to see how I can take advantage of the situation. So for me the strategy is to "range trade". Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts. <strong>Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend.</strong> Good trades.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">Each cycle is different from the last one and that is the beauty of the market. It is extremely important to look at the big picture from the distance rather than studying the minute and hourly charts with a microscope. And repeat the whole show again and again til it shows the sign of turning in daily or weekly chart. And flip. Good trades to you.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">I use very primitive charting methods. Please read 8 hour charts of EUR/GBP with 20 and 40 MA, and read round figures and breakout (from consolidations, then you will realize the method cannot be more primitive than that, but still deadly effective). Buy on dips towards the support and add up on breakout of that consolidation treating the two as one trade with same stop loss and "keep them" as long as the market moves in your way. Good trades.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">As a rule of thumb, 20 MAs in 8 hour, day, week and month are useful for its directional tendency and as a resistance and support point. Not sure how much it is useful in daytrading though.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">Please have a look at Eur/Usd and Usd/Jpy weekly 10 RSI and Aud/Usd monthly 10 RSI "patterns", not levels. Then you will find out primitive things work better when coupled with even simpler MAs. And RSI is useful "only in these weekly and monthly time scale" as far as I can see. You can ignore RSI in short-term scales as the inventor of RSI, Wilder, told us long ago.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">Good afternoon. Agree with your observation. Once Soros of Quantum Fund hit the nail on the head with his theory of reflexivity in the market and that is exactly how these players work in the market. That rather romantic tool of <strong>daily candlestick chart</strong> is useful because whenever some players start positioning to start or stop short-term moves in Yen market, say several hundred pips, for whatever reasons, it reveals their intention to the market, more often than not. It sounds so weird to say tens of yards are spent relying on indicators so primitive like hand-drawn candlestick charts, but that is the truth in Yen market. Same as millions of soldiers risking their lives depending on how their generals draw up the battle plan with their cheap red and blue pencils in their operation room desk. Crazy world, I would say, but that is the fact. And as you say, battle is a battle and those ones who make their first move with their candlestick may not always win either. I happen to believe if a child can learn to trade with some simple signals he will do better than most traders, most of the time, making a good living. But then again, movin market is more than just following the signals. Good trades to you.<br /></a></p><p><a name="TECHNICALS_and_CHARTING">I guess if you are a daytrader, 30 minute and 15 minute <strong>candle charts</strong> and line charts in combination with MACD and MA could be more useful than hourly charts or even daily charts. Especially watch out for the down-sign and up-sign with long tails in candle charts and confirmation of the change of short-term trend in line charts breaking accumulation area in these charts. If you are a nimble trader, even a candle-sign is enough to start moving in with stops above or below the long tail end. For dollar/yen trade, read swiss/yen, pound/yen and euro/yen together to confirm the top or bottom. For Eurodollar or dollar/swiss trade, read pound/swiss and euro/pound together to confirm the same. If you are a daytrader, what matters is the flow of that particular day, not the bull or bear bias, so, 30 Min and 15 Min Candle Charts and Line charts are not bad tools to follow these flows. Good trades.<br /></a></p><p><a name="TECHNICALS_and_CHARTING"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="TECHNICALS_and_CHARTING"><strong></strong></a><strong><a name="USING_CROSSES_AND_GOLD">USING CROSSES AND GOLD<br /></a></strong></span><a name="USING_CROSSES_AND_GOLD">EUR/GBP and GBP/JPY have a value as the leading indicators of EUR/USD and USD/JPY moves. EUR/CHF is similar to EUR/GBP in forecasting value but stopped trading and looking at it a long ago after experiencing difficulties in running good sized positions there.<br /></a></p><p><a name="USING_CROSSES_AND_GOLD">In short, EUR/GBP and GBP/CHF are leading indicators for EUR/USD and USD/CHF, and GBP/JPY, EUR/JPY and CHF/JPY are leading indicators for USD/JPY. EUR/JPY plays a very important role in EUR/JPY direction too, while GBP/JPY plays the same role for GBP/USD. For example, yesterdays EUR/USD weakness largely started from EUR/JPY sales keeping EUR/USD and USD/JPY downwards. As a rule of thumb, if EUR/USD does not move but EUR/GBP moves first, it is a good indicator that someone is maneuvering in EUR/USD front in the same direction later, and when EUR/USD moves but EUR/GBP does not move first or in tandem, then it is highly likely EUR/USD move is countered by its opponent and the opposite move is highly likely soon. Same applies in USD/JPY and EUR/JPY, GBP/JPY front in the same fashion. Imho. Good trades.<br /></a></p><p><a name="USING_CROSSES_AND_GOLD">Good morning. EUR/USD, EUR/GBP, EUR/JPY and GBP/CHF all have correlation to a certain degree affecting each other. It simply shows how the money moves around in these pairs. For daily candle studies, it is more accurate to read them all to see where the flow is going, and same for 4 hourly or hourly or even 10 minute charts. In fact, GBP/CHF and EUR/GBP in many cases move a day or two before EUR/USD. Even by watching GBP/CHF and EUR/GBP charts, short term or long-term as above, you can manage to move in front of EUR/USD moves in many cases. Same goes for GBP/JPY and EUR/JPY charts for USD/JPY moves. More study on these pairs moves will reveal some more interesting things too. Good trades.<br /></a></p><p><a name="USING_CROSSES_AND_GOLD">I have been using USD index and Eur/Gbp (or Gbp/Chf) as my guide dogs since late 70s with reasonable accuracy for medium-term trend. Never lost money on medium-term bet relying on those guide dogs in fact. But that cross does not work when Pound is deliberately devalued.<br /></a></p><p><a name="USING_CROSSES_AND_GOLD">AUD/JPY is one of the important pairs influencing AUD after Dollar, Euro and Pound. Usually falling AUD/JPY is good for Yen Bulls as well.<br /></a></p><p><a name="USING_CROSSES_AND_GOLD">Good evening. Gold is the mirror of Dollar for hedging purposes and the co-relation is excellent. Sometimes, when I am tired of double checking too many "inside infos" rushing in every hour, I just watch Gold to confirm and go ahead with the moves. Gold chart is one of the top charts you must always watch in forex trading. Eur/Gbp chart, along with the Eur/Jpy chart, is an excellent mirror for Eur/Usd directions most of the time too. Gold, Eur/Gbp and Eur/Jpy charts will tell most of the market story most of the time with Gold and Eur/Gbp leading Forex world most of the time. Good luck.<br /></a></p><p><a name="USING_CROSSES_AND_GOLD"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="USING_CROSSES_AND_GOLD"><strong></strong></a><strong><a name="USING_STOPS">USING STOPS<br /></a></strong></span><a name="USING_STOPS">Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts. Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend. Good trades.<br /></a></p><p><a name="USING_STOPS">For position traders, the basic bias of the market in his trading time frame, the liquidity situation of the market in that time frame, and the size of trading positions must be all taken into account when exercising stops, be it based on tech levels or a certain sum of money or a percentage of a total equity. It is a must but also it is form of art like trading itself. And every trader must develop his own unique style of using stops. But unfortunately, all this can be learned only by paying a certain amount of tuition fee to the market.<br /></a></p><p><a name="USING_STOPS">Yes, but as a position trader I never use tight stops. Same goes for trailing stops. All very far away from the market not to be taken out by meaningless market noises. Initial stop is always 1% of my total equity, and never commit the whole position at a go but always scale in and scale out.<br /></a></p><p><a name="USING_STOPS">Good morning. You can avoid your problem in most cases by leaving the market always by trailing stops, i.e., do not set the profit target. So, any winning trade must be held as long as market does not tell you to leave by hitting your trailing stops. When you enter the market by market signals and leave by stops or trailing stops, it solves the most difficult part of decision making process rather easier for traders. Good trades.<br /></a></p><p><a name="USING_STOPS"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="USING_STOPS"><strong></strong></a><strong><a name="USD_JPY_HINTS">USD/JPY HINTS<br /></a></strong></span><a name="USD_JPY_HINTS">One of the silly rules of thumb in USD/JPY trading is it rarely moves 700-800 pips in a row without 200 pips or more correction in the middle and it almost always retraces back to 350 pips advance point from the start of its 700-800 pips move. All because of liquidity problem in Yen market.<br /></a></p><p><a name="USD_JPY_HINTS">The real battle of bulls and bears for medium-term trend is always around 20 day MA line in Yen market. Daily option activities here and there are of no relevance as far as medium-term trend is concerned.<br /></a></p><p><a name="USD_JPY_HINTS">Yen position traders sit on their positions gunning for several hundred pips at one go. For day trades, much more nimble approach is required. As Yen position trader, please never buy anything below falling daily 20 MA and never sell anything above rising daily 20 MA, no matter how attractive they look. So start buying only when daily 20 MA starts rising, from whatever level, is not only safe but also proven way of making money although it sounds so simple. Imho. Good trades.<br /></a></p><p><a name="USD_JPY_HINTS">You can read how Yen traders make intraday moves by watching 30 min USD/JPY candlestick chart or line chart if you are not familiar with candle nuance. 4, 8 hourlies are for positional moves. Good trades.<br /></a></p><p><a name="USD_JPY_HINTS">The Tokyo Fix is where the FX rate is established for the day by the banks for their customers. So even though the FX rate may change during the day the customer gets the rate at the time of the fix. There is a fix in Tokyo, London and Toronto (more I am sure). Importers generally settle their accounts on the 5th, 10th, 15th, etc, of the month before and up until the fix ():50 GMT). Sometimes, if there is an "excess" dollar demand $/JPY will continue to climb slightly after the fix. $Bulls will also use this as a staging for extending a rally. $Bears (Yen Bulls) will use this to establish better shorts.<br /></a></p><p><a name="USD_JPY_HINTS"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="USD_JPY_HINTS"><strong></strong></a><strong><a name="REACTING_TO_NEWS">REACTING TO NEWS<br /></a></strong></span><a name="REACTING_TO_NEWS">News or data are always read by the market along the prevailing market bias. Data can provide a good reading for the state of the market. If the data is bad but the price is still rising or not affected, it must be a bull market which means buy on dip strategy is a better one. Conversely, if the data is good but the price is not rising or even falling, it must be a bear market which means sell on bounce strategy is a better one. The inflexion point must be when bad news or good news. no longer affect the prices as they have done before. Medium/long-term bias changes are usually accompanied by such reactions to the news. Fwiw.<br /></a></p><p><a name="REACTING_TO_NEWS">It is not the numbers that counts but how the market reacts to the numbers that counts. That gives some comfort to those who are not privy to the numbers already<br /></a></p><p><a name="REACTING_TO_NEWS"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="REACTING_TO_NEWS"><strong></strong></a><strong><a name="FAIR_VALUE">FAIR VALUE<br /></a></strong></span><a name="FAIR_VALUE">Good evening. The concept of fair value in any currency is largely that of CBers and economists and not much about trading ..Almost always currencies overshoot from the fair value areas some 20-30% in their medium-term trend and what makes all hard currencies range in reasonable areas overtime since we had this floating regime in 1971 must the ability of relevant CBs to control the currency ranges and their real economy's weakness or strength to support those ranges. ECB folks were not joking when they said Eur/usd was some 25% undervalued from the fair value when Eur/Usd was below parity levels two years ago. Same goes for BOJ when they were saying Yen was some 10-20% overvalued when it was trading around 100 some three years ago too. That is how these folks view the markets and try to guide the market. Of course, when US Treasury folks say "Dollar is still strong" when it is falling, they are begging the market to sell more Dollars.<br /></a></p><p><a name="FAIR_VALUE"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="FAIR_VALUE"><strong></strong></a><strong><a name="DIFFERENT_CENTERS">DIFFERENT CENTERS<br /></a></strong></span><a name="DIFFERENT_CENTERS">The first hour after opening in Tokyo tend to provide the best liquidity of the day and that is when most heavyweight players try to position their way without having much difficulty for the day. Sydney open is more often used as an ambush hour by certain players using the time window till Tokyo open. One rule of thumb is when Yen jumps at Tokyo open the chances are it will continue throughout the day and a few more days. On different point, learn to position trade Yen or any other currency if one is really going to make a big money one day. Fwiw.<br /></a></p><p><a name="DIFFERENT_CENTERS">One hour from Tokyo open, London open and NY open are the times where most liquidity of the market exist. And that is where market makers are busy setting the trend for the session or even the day. Your observation has a merit because most of the session or daily moves are started either in London open or Tokyo open or NY open. Especially London Open. Other markets are too thin for any good sized traders to make their market views felt. Good luck.<br /></a></p><p><a name="DIFFERENT_CENTERS">London is just a market place where all sorts of Forex folks flock to buy and sell. It does not have to be London folks. It could be anyone from anywhere in the world with deep pockets who start setting the market direction on a given day. Same goes for NY and Tokyo sessions markets. In any case, Tokyo and NY still relatively small markets when compared to London as far as Forex goes.<br /></a></p><p><a name="DIFFERENT_CENTERS"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="DIFFERENT_CENTERS"><strong></strong></a><strong><a name="A_WORD_FOR_NEW_TRADERS">A WORD FOR NEW TRADERS<br /></a></strong></span><a name="A_WORD_FOR_NEW_TRADERS">Traders that try to pick the tops and bottoms of the market throughout the day end up with mostly misery because inexperienced fellows in Forex departments even in first division clubs try to pick the tops and bottoms believing that is where the real big money is. And ego demonstration and bonus consideration comes into play too for smart college graduates. The first thing I do when facing new recruits is, do my best to destroy their ego and fear in the market first. Once their ego and fear are reasonably cured, they become dutiful followers of the market like Pavolvs hounds and they can survive. And once they can survive, they can be taught on how to put temporary tops and bottoms to the market at much higher level of speculation school. Then, that may take at least a decade of training too.<br /></a></p><p><a name="A_WORD_FOR_NEW_TRADERS"> <br /> </a></p><p><span style="text-decoration: underline;"><a name="A_WORD_FOR_NEW_TRADERS"><strong></strong></a><strong><a name="QUIPS_FROM_BC">QUIPS FROM BC</a></strong></span><a name="QUIPS_FROM_BC"><br />Forex is all about how to hit the next ball correctly rather than worrying about something of a distant future. The next ball may be for 2 pips or 20 pips or 200 pips or 500 pips depending on a traders style.<br /></a></p><p><a name="QUIPS_FROM_BC">Anything is possible in Forex.<br /></a></p><p><a name="QUIPS_FROM_BC">I am useless as a daytrader. Corrections may take days or longer to complete.<br /></a></p><p><a name="QUIPS_FROM_BC">Good quality info is everything in this game.<br /></a></p><p><a name="QUIPS_FROM_BC">Bottom picking in the Usd/Jpy is the Mother of all risky trades.<br /></a></p><p><a name="QUIPS_FROM_BC">We learn how to trade till we stop trading and we learn from each other everyday. That is the beauty of trading and life in general.<br /></a></p><p><a name="QUIPS_FROM_BC">Do not worry about what market will do. Just worry about what you will do when market reaches your "pain point" or "happy point". You will have an easier life as a trader that way.<br /></a></p><p><a name="QUIPS_FROM_BC">Forex players can operate quietly, but they cannot hide their moves in those charts.<br /></a></p><p><a name="QUIPS_FROM_BC">Good morning. Yes, no liquidity and no conviction by players make the market look like a vagrant loitering in his usual area. Good forecasts and trades.<br /></a></p><p><a name="QUIPS_FROM_BC">Good sleep is essential for good trading but most of the traders I know of seem to sleep with one eye open.<br /></a></p></span>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-70517469644373648452008-08-25T02:24:00.000+07:002008-08-25T02:24:01.412+07:00Economic glossary<span xmlns=""><p><strong>A</strong><br /> </p><p><span style=";font-family:Times New Roman;font-size:12;" >Auto Sales<br /></span></p><p>Car sales are tremendously important to the US economy but their volatility can make them an unreliable indicator. New models introduced at the end of summer and in early spring tend to have a disproportionate influence on sales figures. That said, strong figures are a good sign that consumer demand is picking up. They can be seen as indicating higher future production if demand is sustained over three or four months. The size of the item in question and the timeliness of the release allow auto sales to be a useful leading indicator of retail sales and personal consumption expenditures data.<br /></p><p>Release Date: Around the 13th of each month<br />Release Time: 13:30 GMT<br /></p><h2><a name="b">B<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="b">Balance of Payments (BOP)<br /></a></span></p><p><a name="b">The Balance of Payments (BOP) is the method countries use to monitor all international monetary transactions at a specific period of time. Usually, the BOP is calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP in order to determine how much money is going in and out of a country. If a country has received money, this is known as a credit, and, if a country has paid or given money, the transaction is counted as a debit. Theoretically, the BOP should be zero, meaning that assets (credits) and liabilities (debits) should balance. But in practice this is rarely the case and, thus, the BOP can tell the observer if a county has a deficit or a surplus and from which part of the economy the discrepancies are stemming.<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="b">Balance of Trade<br /></a></span></p><p><a name="b">The largest component of a country's balance of payments. It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy, and foreign investments in the domestic economy. The US merchandise trade balance has been in a deficit since the mid-1970s. Rising deficits can be reflective of increased consumption, which can be a sign of a strengthening economy.<br /></a></p><p><a name="b">Release Date: Around the 12th of each month<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="b">Beige Book Fed Survey<br /></a></span></p><p><a name="b">Officially known as the Survey on Current Economic Conditions, the Beige Book is published eight times per year by a Federal Reserve Bank, containing anecdotal information on current economic and business conditions in its District through reports from Bank and Branch directors, and interviews with key business contacts, economists, market experts, and other sources. The Beige Book highlights the activity information by District and sector. The survey normally covers a period of about 4-weeks in duration, and is released two weeks prior to each FOMC meeting, which is also held eight times per year. While being deemed by some as a lagging report, the Beige Book has usually served as a helpful indicator to FOMC policy decisions on monetary policy.<br />The Beige Book isn't considered to be a big market mover. It is a gauge on the strength of the economy and not a commentary on the views of Fed members. Occasionally it can move markets if the findings are a big surprise from analyst expectations.<br /></a></p><p><a name="b">Release Date: Two Wednesdays before every FOMC meet. 8 times a yr<br />Release Time: 19:15 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="b">Business Inventories and Sales<br /></a></span></p><p><a name="b">Business inventories and sales figures consist of data from other reports such as durable goods orders, factory orders, retail sales, and wholesale inventories and sales data. Inventories are an important component of the GDP report because they help distinguish which part of total output produced (GDP) remained unsold. As a result, this presents us with important clues on the future direction of the economy. Before computerization allowed companies to trim inventories and use minimal stock on hand, inventory build up was indicative of falling demand and potentially a recession. If inventories decline significantly over a three month period it is an indication that demand has picked up and that production will have to increase to restock.<br /></a></p><p><a name="b">Release Date: Second Friday of each month<br />Release Time: 13:30 GMT<br /></a></p><h2><a name="c">C<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Capacity Utilisation<br /></a></span></p><p><a name="c">Measures how much of the productive potential of the economy is being used. A level of 85% is a good balance of growth and inflation; anything above this level raises inflationary fears.<br /></a></p><p><a name="c">Release Date: Around the 14th of each month<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">CBI Surveys<br /></a></span></p><p><a name="c">Britains largest organisation of business employers, aims at creating and sustaining favourable conditions for their optimal competition and prosperity. The CBI publishes monthly and quarterly surveys, on past, current and future assessments on the manufacturing and services sectors. The indexes reflect respondents views on various items such as, output, sales, prices, inventories, and export/import orders.<br /></a></p><p><a name="c">Release Date: Around the 27th of each month<br />Release Time: 11:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Chicago PMI<br /></a></span></p><p><a name="c">A survey of Chicago-based managers which covers prices, durable goods orders and inventories. It is closely-watched since it is announced before the National Association of Purchasing Managers' index (NAPM). The Chicago figure gives a good idea of what the national figure will be.<br /></a></p><p><a name="c">Release Date: Around the end of each month<br />Release Time: 15:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Construction Spending<br /></a></span></p><p><a name="c">Construction spending data comes out after most of the housing data has already been released; its influence is therefore diminished. The indicator sometimes shocks the market if it shows a sudden pick-up in the amount spent on new home construction.<br /></a></p><p><a name="c">Release Date: Around the beginning of each month<br />Release Time: 15:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Consumer Confidence Index (CCI)<br /></a></span></p><p><a name="c">The Consumer Confidence Index (CCI) is put out by The Conference Board. (There are others such as the Michigan Sentiment Index which is put out monthly by the University of Michigan). The Consumer Confidence Survey is based on a sample of 5,000 U.S. Households and is considered one of the most accurate indicators of confidence. It even goes as far as calculating the number of "help wanted" ads in newspapers to detect how tight the job market is.<br /></a></p><p><a name="c">The idea behind consumer confidence is that when the economy warrants more jobs, increased wages, and lower interest rates, it increases our confidence and spending power. Should the index move above or below the moving average it is a good indication that consumer confidence is significant. Month to month changes are not considered to have as great an impact as the overall trend.<br /></a></p><p><a name="c">Confidence is looked at closely by the Federal Reserve when determining interest rates, which affect stock prices. Lowering interest rates make it easier to borrow which ultimately supports consumer spending and higher confidence - something the stock markets love to hear. Keep in mind that lowering interest rates is not an instantaneous confidence booster, it can take 6-8 months for rate cuts to work their way into the economy. On the other hand, if confidence is rising rapidly it could trigger higher inflation.<br /></a></p><p><a name="c">Release Date: Around the 25th of each month<br />Release Time: 15:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Consumer Credit<br /></a></span></p><p><a name="c">Consumer Credit is an indicator of consumer spending and demand. It reflects the amount of credit Americans are using, month-on-month, through credit card purchases, personal loans, hire purchase orders or payment plans. A high consumer credit figure suggests the US consumer is not concerned to run up bills in order to finance his/her consumer demands. But the figure is often revised and is seasonally volatile it goes up before Christmas. It is therefore is given only cursory attention.<br /></a></p><p><a name="c">Release Date: Around 7th of each month<br />Release Time: 20:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Consumer Price Index (CPI)<br /></a></span></p><p><a name="c">The Consumer Price Index (CPI) is considered the most widely used measure of inflation and is regarded as an indicator of the effectiveness of government policy. The CPI is a basket of consumer goods (and services) tracked from month to month (excluding taxes). Items included reflect prices of food, clothing, shelter, fuels, transportation, health care and all other goods and services that people buy for day-to-day living. CPI figures are collected in 87 areas throughout the U.S. from over 22,000 retail and service establishments. Rent paid by individuals is also collected from 50,000 landlords and tenants.<br /></a></p><p><a name="c">The CPI is one of the most followed economic indicators and considered to be a big market mover. A rising CPI indicates inflation, a large increase is something financial markets don't like to hear. Inflation is the rate at which the general price for goods and services is rising, and subsequently our purchasing power is falling. As inflation rises this means that every dollar you own will buy a less percentage of a good or service. The Federal Reserve typically battles rising inflation by increasing short term interest rates. Rising rates are frowned upon by corporations and investors because the cost of borrowing money increases.<br /></a></p><p><a name="c">Release Date: Second Friday of each month<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="c">Current Account<br /></a></span></p><p><a name="c">The most important part of international trade data. It is the broadest measure of sales and purchases of goods, services, interest payments and unilateral transfers. The entire merchandise trade balance is contained in the current account.<br /></a></p><h2><a name="d">D<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="d">Durable Goods Orders<br /></a></span></p><p><a name="d">These include large ticket items such as capital goods (machinery, plant and equipment), transportation and defence orders. They are extremely important in that they anticipate changes in production and thus, signal turns in the economic cycle.<br /></a></p><p><a name="d">But the large size of these items (aircrafts and civilian orders) means that they present equally large changes, which makes them extremely volatile. This also gives rise to sizeable revisions in the subsequent periods once more complete data becomes available one week later. Durable goods data are better used when omitting defence orders and transportation orders, while calculating a three-month moving average, and a year-to-year percent change.<br /></a></p><p><a name="d">Release Date: Around the 26th of each month<br />Release Time: 13:30 GMT<br /></a></p><h2><a name="e">E<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="e">Employment Cost Index (ECI)<br /></a></span></p><p><a name="e">The Employment Cost Index is a quarterly survey of employer payrolls in the final month of the quarter. The ECI tracks movement in the cost of labour which includes wages, fringe benefits, and bonuses for employees at all levels of involvement in the companies. Wages and salaries make up approximately 75% of the indexes value. The one benefit not included in the ECI is employee stock options, which actually don't cost employers anything to issue.<br /></a></p><p><a name="e">This indicator isn't the most watched, but it is among a select group of indicators that have enough power to move the markets, especially during inflationary times. The idea behind the ECI is that as wage pressures increase so does inflation. This is mainly because compensation tends to increase before companies increase prices for consumers (inflation).<br /></a></p><p><a name="e">The ECI is particularly useful when it's compared to inflation and productivity growth rates. Ideally you would like to see wages increase at a similar rate as inflation and productivity. If employee costs are rising but productivity is not then it could spell trouble for companies.<br /></a></p><p><a name="e">Release Date: The last Thursday of Apr, Jul, Nov and Jan<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="e">European Central Bank (ECB)<br /></a></span></p><p><a name="e">The European Central Bank (ECB) and the national central banks together constitute the Eurosystem, the central banking system of the euro area. The main objective of the Eurosystem is to maintain price stability: safeguarding the value of the euro.<br /></a></p><p><a name="e">Release Date: First Thursday of each month<br />Release Time: 12:45 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="e">Existing Home Sales<br /></a></span></p><p><a name="e">The number and value of old homes sold. Can give markets an insight into the strength of consumer confidence and spending power. Existing home sales also offer evidence of inflationary pressure if prices are rising rapidly.<br /></a></p><p><a name="e">Release Date: Around the 25th of each month<br />Release Time: 15:00 GMT<br /></a></p><h2><a name="f">F<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="f">Factory Orders and Manufacturing Inventories<br /></a></span></p><p><a name="f">In many respects this report is a rehash of the durable goods release that became available a week earlier. However, the factory orders report merits review because it also contains data on orders and shipments of nondurable goods, manufacturing inventories, and the inventory/sales ratio. Order data is useful because it tells us something about the likely pace of production in the months ahead. They are extremely volatile and can fluctuate by three or four percent in any given month. They are subject to sizeable revisions and are very difficult to forecast.<br /></a></p><p><a name="f">Release Date: Around the 4th of each month<br />Release Time: 15:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="f">Federal Open Market Committee (FOMC)<br /></a></span></p><p><a name="f">The body that sets the interest rate and credit policies of the Federal Reserve System.<br />The FOMC is the most important monetary policymaking body of the Federal Reserve System. The current chairman is Alan Greenspan.<br /></a></p><p><a name="f">The FOMC is composed of the seven members of the Board of Governors and five Reserve Bank presidents. The president of the Federal Reserve Bank of New York serves on a continuous basis, while the presidents of the other Reserve Banks serve one-year terms on a rotating basis.<br /></a></p><p><a name="f">Release Date: First Wednesday of the month<br />Release Time: 19:15 GMT<br /></a></p><h2><a name="g">G<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="g">Gross Domestic Product (GDP)<br /></a></span></p><p><a name="g">GDP is a gross measure of market activity. It represents the monetary value of all the goods and services produced by an economy over a specified period. This includes consumption, government purchases, investments, and the trade balance (exports minus imports). The GDP is perhaps the greatest indicator of the economic health of a country. It is usually measured on a yearly basis, but quarterly stats are also released. The Commerce Department releases an "advance report" on the last day of each quarter. Within a month it follows up with the "preliminary report" and then the "final report" is released another month later.<br /></a></p><p><a name="g">The most recent GDP figures have a relatively high importance to the markets. GDP indicates the pace at which a country's economy is growing (or shrinking). If GDP growth fails to meet or beat the market expectations stocks can temporarily pay the price. Traditionally, the U.S. Economy's average growth rate has been between 2.5 - 3%. Economists believe that this range represents the sustainable long-run growth rate of output.<br /></a></p><p><a name="g">Release Date: Last day of the Quarter<br />Release Time: 15:30 GMT<br /></a></p><h2><a name="h">H<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="h">Help Wanted Index<br /></a></span></p><p><a name="h">An index published monthly by the Conference Board that shows the total number of help-wanted advertisements occurring monthly in 51 major newspapers from around the country.<br /></a></p><p><a name="h">This is an indicator of strength in the labour markets. Large numbers of ads imply that the labour market is strong and wages will need to increase in order to attract more workers. In contrast, if the number of ads are few, the labour market is weak and wages will decrease as workers will be willing to accept lower wages for jobs.<br /></a></p><p><a name="h">Release Date: Last Thursday of each month<br />Release Time: 15:00<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="h">Housing Starts / Building Permits<br /></a></span></p><p><a name="h">This economic indicator tracks how many new single-family homes or buildings were constructed throughout the month. For the survey each house and each single apartment are counted as one housing start, (a building with 200 apartments would be counted as 200 housing starts). The figures include all private and publicly owned units, with the only exception being mobile homes which are not counted. Most of the housing start data is collected through applications and permits for building homes. The housing start data is offered in an unadjusted and a seasonally adjusted format.<br /></a></p><p><a name="h">This indicator isn't a huge market mover, but it has been reported by U.S. Census that the housing industry represents over 25% of investment dollars and a 5% value of the overall economy. Housing starts are considered to be a leading indicator, meaning it detects trends in the economy looking forward.<br /></a></p><p><a name="h">Declining housing starts show a slowing economy, while increases in housing activity can pull an economy out of a downturn. However, a considerably stronger report is not good because it can be interpreted that growth is extremely strong and could lead to high inflation. The fact that housing is closely related to mortgage rates means that housing starts data has a strong effect on the bond market and predictions for interest rate movements. As interest rates rise it is expected that housing starts will decline.<br /></a></p><p><a name="h">Release Date: Around the middle of the following month.<br />Release Time: 15:30 GMT<br /></a></p><h2><a name="i">I<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="i">IFO<br /></a></span></p><p><a name="i">Germanys leading survey of business conditions. Published monthly by the Institute for Economic Research, one of the largest economic think tanks in Germany, the IFO Business Climate Index is a widely followed leading indicator of economic activity known for its track record in calling economic turns in German economic growth. The index surveys over 7,000 enterprises on their assessment of the current business situation and their resulting plans for the short-term. In addition to this aforementioned headline index, there is the Current Situation Index and Business Expectations Index.<br /></a></p><p><a name="i">Release Date: Around the end of each month<br />Release Time: 13:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="i">Index of Industrial Production<br /></a></span></p><p><a name="i">This is an important measure of the nation's industrial output. It is expressed as a rate of change from the previous month, and gives markets a good idea of the strength of the US manufacturing sector. The index comprises data from the market and from industrial sectors. The market grouping consists of final products (consumer goods, business equipment, and construction supplies), intermediate products and materials. The industrial grouping covers manufacturing (divided into durable and non-durable goods), mining and utilities.<br /></a></p><p><a name="i">Changes in industrial production are a significant indicator of manufacturing sector trends. However, from month to month the figures can be volatile. With this in mind it is better to follow either the three-month moving average of the monthly change or year-on-year changes.<br /></a></p><p><a name="i">Release Date: The second Friday of each month<br />Release Time: 14:15 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="i">Initial Claims (Jobless Claims)<br /></a></span></p><p><a name="i">The numbers are released each week by the US Department of Labour and measure the weekly change in state applications for unemployment benefits. The financial markets regard the report as a good indicator of changing trends in the labour market and in the economy as a whole.<br /></a></p><p><a name="i">However, the figures do not always represent a true picture of economic trends. They are often distorted by short-term factors such as state and federal holidays. Therefore, a longer-term moving average of initial claims is a more reliable indicator.<br />Initial claims also give hints about the non-farm payroll. If initial claims are down consistently over a month, there is a good chance the non-farm payroll will come in high.<br /></a></p><p><a name="i">Release Date: Every Thursday<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="i">Institute for Supply Management (ISM)<br /></a></span></p><p><a name="i">This is leading survey on US manufacturing activity. The report is released on the first working day of the month, providing the first detailed look at the manufacturing sector before the release of the all-important employment report.<br /></a></p><p><a name="i">Highly valued for its timeliness and breadth of information, the headline figure is a function of six major components: prices paid; new orders; supplier deliveries; production, inventories and employment. Note that the latter three components reflect supply forces, while the former three cover demand forces. Watching the relative trend of these two groups (demand and supply) sheds light on the balance between demand and supply forces, and hence, provides insight on the Federal Reserves policy decisions since they lend much importance to these balances. The Prices Paid component is widely watched because it assesses price pressures ahead in the sector. A figure of 50 or above indicates expansion in the sector, while a number below 50 suggest a contraction.<br /></a></p><p><a name="i">Release Date: First Thursday of the month<br />Release Time: 15:00 GMT<br /></a></p><h2><a name="l">L<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="l">Leading Indicator<br /></a></span></p><p><a name="l">The leading indicator piles together already-announced data for new orders, jobless claims, money supply, average workweek, building permits, stock prices and durable goods. Its predictability gives it a low grade.<br /></a></p><p><a name="l">Release Date: Beginning of the month<br />Release Time: 13:30 GMT<br /></a></p><h2><a name="m">M<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="m">Michigan Consumer Sentiment<br /></a></span></p><p><a name="m">The Michigan consumer sentiment index is a survey of consumer confidence conducted by the University of Michigan at a national level. There are two reports a month: a preliminary released around the 10th of the month for that month, and a final released on the first of the next month for the prior month. The index is nothing more than a snapshot of whether consumers feel like spending their money or not.<br /></a></p><p><a name="m">Release Date: The second Friday of each month<br />Release Time: 14:45 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="m">Monetary Policy Committee (MPC)<br /></a></span></p><p><a name="m">Interest rates are set by the Monetary Policy Committee.<br /></a></p><p><a name="m">The MPC studies all the available economic data and looks at a range of domestic and international economic and monetary factors. There is a briefing meeting prior to the MPC where presentations are made to the MPC by the Bank's economists and its regional agents.<br />The Bank's Monetary Policy Committee (MPC) is made up of the Governor, the 2 Deputy Governors, the Bank's Chief Economist, the Executive Director for Market Operations and 4 external members appointed directly by the Chancellor.<br /></a></p><p><a name="m">Release Date: Wednesday / Thursday at the beginning of the month<br />Release Time: Thursday 12 Noon<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="m">Money Supply<br /></a></span></p><p><a name="m">The entire quantity of a country's bills, coins, loans, credit, and other liquid instruments in the economy.<br /></a></p><p><a name="m">Money supply is divided into three categories, M1, M2, and M3, according to the type and size of account the instrument is kept in. This number is important to economists trying to understand how policies will affect interest rates and growth.<br /></a></p><p><a name="m">Release Date: Around the beginning of each month<br />Release Time: 09:30 GMT<br /></a></p><h2><a name="n">N<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="n">New Home Sales<br /></a></span></p><p><a name="n">Monthly data new home sales data are released for the nation as a whole and for four geographical areas the Northeast, the Midwest, the South, and the West. The report also contains information on home prices, and number of houses for sale. Housing is a crucial segment of the economy because it signals changes in consumer spending patterns that are indicative of economic activity. Volatility and revisions, however, are common in the report. The report is seasonally variable. A four-month moving average or a year-on-year measure is more useful.<br /></a></p><p><a name="n">Release Date: Around the 26th of each month<br />Release Time: 15:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="n">Non-Farm Payroll (NFP)<br /></a></span></p><p><a name="n">Non-farm payroll (NFP) is a monthly survey of the number of new jobs created. It is a very good indicator of the unemployment rate. NFP is the market mover, the most closely-watched by all in the bond and foreign exchange markets.<br /></a></p><p><a name="n">NFP is also seen as having a reasonable correlation with GDP growth. There is a rule of thumb that a rise of 200,000 a month equates to a rise of 3% in GDP.<br /></a></p><p><a name="n">Release Date: First Friday of each month<br />Release Time: 15:30 GMT<br /></a></p><h2><a name="p">P<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="p">Personal Consumption<br /></a></span></p><p><a name="p">Personal consumption is an indication of the amount Americans spend on goods and services in a given month. The number is pre-empted by retail sales which tend to give a more thorough view of similar expenditure.<br /></a></p><p><a name="p">Release Date: Around the end of each month<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="p">Personal Income and Personal Consumption Expenditures (PCE)<br /></a></span></p><p><a name="p">Personal Spending, also known as PCE, represents the change in the market value of all goods and services purchased by individuals. It is the largest component of GDP. Personal income represents the change in compensation that individuals receive from all sources including: wages and salaries; proprietors income; income from rents; dividends and interest; and transfer payments (Social Security, unemployment, and welfare benefits). The release of these two figures gives you the savings rate, which is the difference between disposable income (personal income minus taxes) and consumption, divided by disposable income. The ever-declining savings rate has become a key indicator to watch as it signals consumer spending patterns.<br /></a></p><p><a name="p">Release Date: Around the end of each month<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="p">Philadelphia Fed Index (Business Outlook Survey)<br /></a></span></p><p><a name="p">The Philadelphia Fed Index is a monthly survey of manufacturers located around the states of Pennsylvania, New Jersey and Delaware. Companies surveyed indicate the direction of change in their overall business activity and in the various measures of activity at their plants. They are asked questions regarding employment, working hours, new and unfilled orders, shipments inventories, delivery times, prices paid, and prices received. The survey has been conducted each month since May 1968. The index signals expansion when it is above zero and contraction when below. It takes the difference between the number of positive and negative responses: if 30% of manufacturers think prices will go up and 39% think they will go down, the prices paid indicator would be 9.<br /></a></p><p><a name="p">The Philadelphia Fed Index is considered to be a good indicator of changes in everything from employment, general prices, and conditions within the manufacturing industry. Manufacturing is considered to be a precursor to future economic conditions and it lays the groundwork toward economic recovery. For example, in a poor economy if manufacturing starts to pick up there is an expectation that the economy will soon follow behind.<br /></a></p><p><a name="p">Release Date: Around the 17th of each month<br />Release Time: 15:00 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="p">Producer Price Index (PPI)<br /></a></span></p><p><a name="p">The Producer Price Index is not as widely used as the CPI, but it is still considered to be a good indicator of inflation. Formerly known as the "Wholesale Price Index", the PPI is a basket of various indexes covering a wide range of areas affecting domestic producers. The PPI includes industries such as goods manufacturing, fishing, agriculture, and other commodities. Each month approximately 100,000 prices are collected from 30,000 production and manufacturing firms.<br /></a></p><p><a name="p">There are three primary areas that make up the PPI. These are industry-based, commodity-based, stage-of-processing goods.<br />The PPI is another important indicator which investors pay close attention to. It is not as strong as the CPI in detecting inflation, but because it includes goods being produced it is often a forecast of future CPI releases.<br /></a></p><p><a name="p">The PPI is also used extensively by company officials for determining future supply or sales contracts. For example, a sudden rise in the PPI could mean that future sales contracts will also rise.<br /></a></p><p><a name="p">Release Date: Second Thursday of the month<br />Release Time: 13:30 GMT<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="p">Productivity<br /></a></span></p><p><a name="p">An indication of output per employee. While productivity is helpful in the analysis of an economy, it is often misleading. This is because a reduction in personnel can, at times of recession for example, lead to an increase in productivity. Thus output per employee may seem encouraging while overall economic performance is declining.<br /></a></p><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="p">Purchasing Managers Index (PMI)<br /></a></span></p><p><a name="p">The Index is widely used by industrialised economies to assess business confidence. Germany, Japan and the UK use PMI surveys for both manufacturing and services industries. The numbers are arrived at through a series of questions regarding Business activity, New Business, Employment, Input Prices, Prices Charged and Business Expectations. In addition to the headline figures, the prices paid components is highly scrutinized by the markets for evaluating pricing power and inflationary risks. Also see National Association of Purchasing Managers (NAPM). A PMI index over 50 indicates that manufacturing is expanding while anything below 50 means that the industry is contracting.<br /></a></p><p><a name="p">The PMI report is an extremely important indicator for the financial markets as it is the best indicator of factory production. The index is popular for detecting inflationary pressure as well as manufacturing economic activity, both of which investors pay close attention to. The PMI is not as strong as the CPI in detecting inflation, but because the data is released one day after the month it is very timely.<br /></a></p><p><a name="p">Should the PMI report an unexpected change, it is usually followed by a quick reaction in stocks. One especially key area of the report is growth in new orders, which predicts manufacturing activity in future months.<br /></a></p><p><a name="p">Release Date: The first business day of the month<br />Release Time: 15:00 GMT<br /></a></p><h2><a name="r">R<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="r">Retail Sales<br /></a></span></p><p><a name="r">Measures the percentage monthly change in total receipts of retail stores, and includes both durable and non-durable goods. It is the first real indication of the strength of consumer expenditure. The limits of the retail sales figure, however, lie in the fact that it focuses on goods while ignoring services and other items such as insurance and legal fees. In addition, the report is stated in nominal terms rather than real, thus, not accounting for inflation. The retail sales figure is also subject to sizeable revisions, even when excluding auto sales (core retail sales). Every month the data is released showing the percent change from the previous month data. A negative number indicates that sales decreased from the previous months sales.<br /></a></p><p><a name="r">This indicator is a big market mover, especially for retail stocks. The data is very timely because retail sales data is released within 2 weeks of the previous month.<br /></a></p><p><a name="r">Release Date: Second Thursday of each month<br />Release Time: 13:30am GMT<br /></a></p><h2><a name="u">U<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="u">Unemployment<br /></a></span></p><p><a name="u">Unemployment is a key indicator. It has a lowly rating because there are previews to it that paint most of the picture before the actual figures are released. Most important of the previews are the initial claims figures, which report the numbers looking for unemployment benefit. All the same, unemployment can still contradict expectations and cause upsets.<br /></a></p><p><a name="u">Release Date: Around the 7th of each month<br />Release Time: 15:30 GMT<br /></a></p><h2><a name="w">W<br /></a></h2><p><span style=";font-family:Times New Roman;font-size:12;" ><a name="w">Wholesale Trade<br /></a></span></p><p><a name="w">The trade conducted between wholesalers and the retail sector. Not watched particularly closely by markets, but gives an idea of economic activity that may later filter through to the wider economy.<br /></a></p><p><a name="w">Release Date: Around the 7th of each month<br />Release Time: 15:00 GMT<br /></a></p></span>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-55430173186121441152008-08-23T14:54:00.000+07:002008-08-23T14:54:01.030+07:00Trade in the direction<p>The real meaning and idea of the saying is a simple and clear demand: <b>Trade in the direction of the trend and ignore trading signals directed against the current trend</b>.</p> <p>Friendly trend would remain friendly, while trader treats him like a friend , not doing something against the desire and will of the his friend/trend. Do you know friends who would not be disturbed by your doings against their desire, understanding and will ? Nobody likes such things. </p> <p>But nevertheless, many of us starting examining charts absolutely forget this simple and clear rule and start trying to catch the high or low peaks or to trade against the trend. This means, that the trader lacks main thing - dicipline. It is interesting, that the looser, while considering and investigating his own mistakes, often even does not see his main mistake - trading against the trend. </p> <p>How the trend could be defined ? Very simple - with the help of combination of four Simple Moving Averages (MA). For example, let us take combination of 5/20/40/60 МА. </p> <p>Usually current trend is defined by looking at Daily chart and this is right. But the traders with small cash amounts may define trend at 4-hour chart and 1-hour chart. It often happens that in the interests of relatively quick trading the trend may be defined using only 1-hour chart. But we should not forget about the Daily chart, because if the hourly signal coincides with the daily trend, then there appears a brilliant possibility for a mighty movement along the trend.</p> <p>But let us return to the above mentioned combination of MAs. So, if МА 40 is above МА60, then the trend is upward and each time when MA5 crosses MA20 upward (that is in compliance with the trend direction), we enter the market. But when MA5 crosses MA20 downward, we use this signal <b>only for closing</b> of previously opened positions.</p> <p>And vice versa, if МА40 is under МА60, then the trend is downward and now we enter the market only when MA5 crosses MA20 downward, and we use upward crosses of MA5 and MA20 only for closing opened earlier positions.</p>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-73173502260822673382008-08-21T02:16:00.000+07:002008-08-21T02:16:00.681+07:00Rollovers in Forex<span xmlns=""><p><span style=";font-family:Verdana;font-size:10;" >by Mark Mc Rae<br /><a target="_blank" href="http://www.surefire-trading.com/sft.php?offer=goforex"><span style="text-decoration: underline;color:blue;" >Surefire Trading</span></a><br /> </span></p><p><span style=";font-family:Verdana;font-size:10;" >Even though the mighty US dominates many markets, most of Spot Forex is still traded through London in Great Britain. So for our next description we shall use London time. Most deals in Forex are done as Spot deals. Spot deals are nearly always due for settlement two business days later. This is referred to as the value date or delivery date. On that date the counter parties theoretically take delivery of the currency they have sold or bought.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >In Spot FX the majority of the time the end of the business day is 21:59 (London time). Any positions still open at this time are automatically rolled over to the next business day, which again finishes at 21:59.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >This is necessary to avoid the actual delivery of the currency. As Spot FX is predominantly speculative most of the time the traders never wish to actually take delivery of the currency. They will instruct the brokerage to always rollover their position.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Many of the brokers nowadays do this automatically and it will be in their policies and procedures. The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Just to go over this again, your broker will automatically rollover your position unless you instruct him that you actually want delivery of the currency. Another point noting is that most leveraged accounts are unable to actually deliver the currency as there is insufficient capital there to cover the transaction.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Remember that if you are trading on margin, you have in effect got a loan from your broker for the amount you are trading. If you had a 1 lot position you broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you rollover your position. This normally only happens if you have rolled over the position and not if you open and close the position within the same business day.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >To calculate the broker's interest he will normally close your position at the end of the business day and again reopen a new position almost simultaneously. You open a 1 lot ($100,000) EUR/USD position on Monday 15th at 11:00 at an exchange rate of 0.9950.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >During the day the rate fluctuates and at 22:00 the rate is 0.9975. The broker closes your position and reopens a new position with a different value date. The new position was opened at 0.9976 - a 1 pip difference. The 1 pip deference reflects the difference in interest rates between the US Dollar and the Euro.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >In our example your are long Euro and short US Dollar. As the US Dollar in the example has a higher interest rate than the Euro you pay the premium of 1 pip.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >Now the good news. If you had the reverse position and you were short Euros and long US Dollars you would gain the interest differential of 1 pip. If the first named currency has an overnight interest rate lower than the second currency then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >To simplify the above. If you are long (bought) a particular currency and that currency has a higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.<br /></span></p><p><span style=";font-family:Verdana;font-size:10;" >I would like to emphasise here that although we are going a little in-depth to explain how all this works, your broker will calculate all this for you. The purpose of this article is just to give you an overview of how the forex market works.<br /></span></p></span>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-62241149893514627372008-08-19T13:51:00.000+07:002008-08-19T13:51:00.722+07:00Knowing the Ins and Outs of Chandelier Exit<div align="justify">Have you ever heard of a stop placement strategy that trails stop based on previous 'high' points? It is called Chandelier exit as it hangs down from the high point or the ceiling of our trade, just as a chandelier hangs from a room ceiling. The distance, which is usually calculated from the high point to the trailing stop; could also be calculated in dollars or in contract based points. However, the value of this trailing stop moves upward very promptly as higher highs is reached.<br />The Chandelier Exit, which has a trailing stop from either the highest high of the trade or the highest close of the trade, is best measured in units of Average True Range (ATR). One of the many factors leading to use ATR for measuring the distance from the high to our stop is that, it is pertinent across markets and is adaptive to changes in unpredictability.<br />The essence of this calculative measure is that, even on expansion and contraction of trading ranges, our stop will automatically adjust and move to the apt level, thereby, constantly staying in tune with changing market conditions. Chandelier Exit is one of the most tried exit methodology used across a varied portfolio of futures markets to generate profitable test results.<br />It is imperative that the changes in unpredictability can curtail or stretch the distance to the actual stop, since the highs used to hang the Chandelier move only upward. However, in order to witness less fluctuation in the stop distance, you can use a longer moving average to calculate Average True Range. In other ways, shorter moving average is required, in case you want the stop placement to be more adaptive to fluctuating market conditions.<br />When short averages for the ATR is used; brief periods of small ranges can bring the stops too close, abnormally resulting in premature exit. To avoid this, you can have a short and highly adaptive ATR while calculating a short average and a longer average and using the average that produces the widest stop.<br />Although Chandelier Exit differs from Channel Exit (which trails a stop based on previous 'low' points), the combination of both, where the trade is initialized by the trailing Channel Exit and then adding the Chandelier Exit, after the price has moved away from the entrance point, will help in making the open trade lucrative. Here the Channel Exit is fastened at a low point and does not move up as new profits are accomplished. At the same time, it is necessary to have the Chandelier Exit at the right position so that the exits are never too far away from the high point of the trade.<br />The fundamentals behind combining the exit techniques, Channel and Chandelier exit is that, while Channel Exit as a suitable stop that very steadily rises at the commencement of the trade, switching over to Chandelier Exit is necessary to ensure better exit that protects more of our profit. This feature makes Chandelier Exit one of the most sought after rational exits from the profitable trades.</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-5983953447070459592008-08-17T13:39:00.000+07:002008-08-17T13:39:01.489+07:00Determine Market Trends with MACD<div align="justify">MACD Divergence or Moving Average Convergence/Divergence is a useful indicator for spotting major changes in market trend, indicate trend direction and for giving hints of a possible market reversal. It is one of the strongest signals generated by technical indicators such as crossovers and divergence from price on a daily chart.<br />This MACD method, developed by Gerald Appel also referred to as a trending indicator, indicates the up-trend or a downtrend of a particular stock. It is essential that you first assess the track of the long-term trend, before you invest in any market.<br />The MACD method as used by Gerald Appel makes applicable a 26-day and 12-day EMA based on the daily close, and a 9-day EMA for the signal line. If you are a bit confused, let me acquaint you with the simplest version of the MACD indicator. It is composed of two lines: the MACD line and a signal line.<br />While the MACD line is the difference between two exponential moving averages (EMAs), the signal line is the EMA of the MACD line itself. You can find the signal line plotted on top of the MACD, which indicates buy or sell opportunities in the market. The two main sets of signals generated by the MACD are crossovers and divergence.<br />Crossovers: One of the two MACD crossovers is Signal Line Crossovers, which refers to when MACD crosses above or below the signal line. When the MACD rises above the signal line, it is buying time, and when the MACD goes below the signal, it is selling time according to MACD trading rule. It is recommended that the Signal Line Crossovers be used in combination with other technical analysis tools to avoid many false signals. </div><div align="justify"></div><img id="BLOGGER_PHOTO_ID_5231291050756903362" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcbRPQRAG07Th-L5PfrsBtL_c5aDwefQLEs9V6_V18926WL6Vf5D2Y1UQ1Cg-lauvl4gU4xtCU0J-spJyqcoJolPujnwYybJbcmK_UDmufv9BdIEEuypnqna_zq0FB0MKhUIl7DFjAh4c/s320/20080213_gbpusd_1.gif" border="0" /> <p align="justify">On the other hand, when MACD crosses above or below the zero line, it is called Zero Line Crossovers. When you need to buy/sell stocks when the MACD crosses above/below the zero line, this zero line helps in producing a signal.<br /></p><p align="justify"><img id="BLOGGER_PHOTO_ID_5231291314344478098" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPBfWHHxJ6xd_uw_DfHbgMGubGuUPU4UHreAdRr0L1n963pukuERoz1GU5aNY4VBun_9x1txu7vCrvnUA8RJN27AtNnSOxFaUPsllVEr5egbaylsX6ih7jMKLk-j9_fnAFa2nNoFXUQtY/s320/20080213_usdchf_1.gif" border="0" />Divergence: When the MACD makes a higher low but the market makes a lower low, then it is called positive divergence. On the other hand, when the MACD makes a lower high while the market makes a higher high, it is known as negative divergence. While the former situation gives us a hint of a possible reversal to the upside, the latter gives us a hint of a possible reversal to the downside. </p><p align="justify"><img id="BLOGGER_PHOTO_ID_5231291622291741346" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVreV_TEVfNKN8vU35lPHvbryuRnu35wNNjVwnY4QVcNdYbw1WBe7AWtotct1odvewJkJcn_JPhEZUfZNGr_zfWAbr1Q8R7r8JilLv_34NxMEQelY4Aym-ItbczE8SykOjr9iQ3kvIHY4/s320/20080213_audusd_1.gif" border="0" />However, market experts believe that the best way to use MACD would be an amalgamation of signals to verify one another. There are also recommendations of the addition of fast MACD lines to enhance the signals generated and to provide early warning of trend changes. It is also noteworthy that MACD can provide premonition of important market turns through divergence.<br />The MACD also has its own set of weaknesses. Just as being a trend indicator, MACD sometimes fails to capture the move when the trend is short lived, even though it reliable enough to capture the majority of the move, when a substantial trend develops.<br /></p><p align="justify"><br /></p><br /><p><br /></p><br /><br /><div align="justify"></div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-31347731382688771392008-08-15T13:20:00.000+07:002008-08-15T13:20:00.514+07:00Online Forex Trading Strategies<div align="justify">Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.Forex trading is very different from trading in stocks and using forex trading strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of forex trading strategies available to investors and one of the most useful of these forex trading strategies is a strategy known as leverage.This forex trading strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this forex trading strategy you can maximize the forex trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any forex trade which will make backing higher yielding transactions even easier and therefore allowing better results in your forex tradingThe leverage forex trading strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the forex market.Another commonly used forex trading strategy is known as the stop loss order. This forex trading strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this forex trading strategy allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their forex trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into forex trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.All these forex trading strategies are designed to help investors get the most from their forex trading and help to minimize their losses. As mentioned earlier knowledge of these forex trading strategies is vital if you wish to be successful in forex trading. </div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-71179304027986514522008-08-13T13:23:00.000+07:002008-08-13T13:23:01.596+07:00The Secret of Timing<div align="justify">Once you¡¯ve identified a trading opportunity, the next step is to decide EXACTLY when to buy - and this is where many traders go wrong.Here we explain how to incorporate better market timing into your FOREX strategy - so that you can make bigger profits.Most traders time their entry levels incorrectly, so here¡¯s the right way to do it:Using Support and Resistance CorrectlyA basic wisdom of market timing is ¡°buy low, sell high¡± - well, the reality is, if you try this in FOREX trading, you¡¯ll end up losing money. First, let¡¯s define what support and resistance meansA support level is a historical price that traders come in, and buy to ¡°support the market¡± ¨C and the more times it¡¯s tested, the more valid the support will be.Conversely, a resistance level is a level on the charts that ¡°resisted prices from moving higher¡±- again the more times it¡¯s tested, the more significant it becomes.Why Buy Low and Sell High doesn¡¯t Work¡°Buy low, sell high¡± is accepted wisdom by the majority of traders - but this logic is fundamentally flawed - use it in FOREX trading, and you¡¯re asking for trouble. Why? - If you wait for a pullback, you¡¯re going to miss some of the biggest moves.Think about it - what if a currency starts to trend and doesn¡¯t pullback? (How often have you seen this?) If you¡¯re waiting for a pullback that never comes, you¡¯ll never get in on the trade ¨C and you¡¯ll miss a major opportunity.You Need to Feel UncomfortableWhen Trading in the FOREX market, you should usually feel uncomfortable (and that¡¯s why most traders don¡¯t make these trades) - as no one likes to buy or sell after the market has started trending - but doing this will make you money.The fact is, the more comfortable you feel when entering a trade at support, the less likely the trade will be a big winner.During any given year, most of the big moves in currencies, take place from new MARKET HIGHS with NO pullback.If you base your FOREX Trading strategy around waiting for a warm comfy entry, at key support, you¡¯re going to miss the biggest and most profitable trades ¨C so step away from the losing majority of traders.Your FOREX trading strategy should give you a different mindset - most traders ¡°buy low and sell high¡± - so you should ¡°buy high and sell higher¡± ¨C i.e. you should be doing the opposite of what the crowd are doing.Don¡¯t worry - most traders lose money, and their FOREX Trading strategy is based on the flawed logic we have just discussed - so not doing what they do makes total sense. Therefore, look for breakouts through support and resistance - and sell and buy respectively.Its Tough Mentally - But it Makes Money!Sure, it¡¯s hard to do - the majority don¡¯t agree with you - and no one likes to go against the majority. However, it¡¯s the right thing to do, to make your FOREX trading successful. Think about what we¡¯ve just said, and you¡¯ll see it makes logical sense.Has this Happened to You?How many times do traders buy into support, and the market breaks support, stops them out and continues to decline. On the other hand, another common scenario is, price never get to support - it simply goes higher - and the trader misses the chance to get in on the trend.This type of trading is tough mentally - that¡¯s why 90% of traders don¡¯t do it - they want to be comfortable - well being comfortable is great, but you¡¯ll lose money.Breakouts work, and if you use them in your FOREX Trading strategy, you won¡¯t be comfortable on entry - but you¡¯ll make money - and that will more than compensate.The way to succeed in FOREX trading is to do what the losing majority don¡¯t do - then you can join the elite 10% of traders who make the big profits - try it and see! </div><div align="justify"></div><div align="justify"><a href="http://www.tradercurrencies.com/">Author</a></div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com2tag:blogger.com,1999:blog-329802822600986863.post-65456954005692816632008-08-11T13:16:00.001+07:002008-08-11T13:16:00.188+07:00Essential Elements of a Successful Trader<div align="justify">All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.<br />You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.<br />However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.<br />Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.<br />Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.<br />The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.</div><div align="justify">For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.<br />The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).<br />So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.<br />Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?<br />If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.<br />Patience to Gain Knowledge through Study and Focus<br />Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.<br />To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.</div><div align="justify"> </div><div align="justify"><strong>Risk Disclosure:</strong> Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.</div><div align="justify"> </div><div align="justify">by: Jimmy Young</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-76467785813170933282008-08-09T13:32:00.001+07:002008-08-09T13:32:00.410+07:00The Trading Secrets of Fibonacci and the Golden Ratio<div align="justify">We all are familiar with the fact that successful traders use Fibonacci and the Golden ratio. Before, we all get ready to try our luck, it is imperative that we know and understand what they are. While Fibonacci numbers and sequence was first known to appear in a book (Liber Abaci ) written by a famous 13th century mathematician Leonardo Fibonacci da Pisa in 1202 as a solution to a problem. The question quoted "How many pairs of rabbits can be generated from a single pair, if each month each mature pair brings forth a new pair, which, from the second month, becomes productive?"<br />The Fibonacci numbers were the first introduced in the European countries, which was still using Roman numerals with the decimal system or the Hindu-Arabic numerals as presently used. The Fibonacci sequence: 1,1,2,3,5,8,13,21,34 and so on to infinity, is made by adding the two previous numbers in the sequence, to come up with the next number.<br />Similarly, Golden ratio is also connected to Fibonacci, as it was recorded that just after the first few numbers in the Fibonacci sequence, the ratio of any number to the next higher number is approximately .618, and the lower number is 1.618. These two numbers are known as the Golden ratio.<br />Fibonacci numbers like much of its use in spheres of art, music, biology and architecture; finds an ardent follower in traders, who uses Fibonacci numbers to set stop loss orders. Two of the most important Fibonacci percentage retracement levels in trading are 38.2% and 62.8%. While other important retracement percentages include 75%, 50% and 33%. For instance, if a price trend initiates at zero and peaks at 100, to later decline to 50, it would be considered as 50% retracement. Similarly, the same levels can be applied to a market that is in a downward move and then suddenly experiences an upward correction.<br />There is a great connection between Fibonacci numbers and trading, as it defines stop loss level. A trader can set a stop loss placement just below or above the zone, in case three Fibonacci price levels come together in a relatively tight zone. Moreover, a Fibonacci number can help define stops in eventualities like if the support zone is violated and the price trades below that zone; or a trader trades against a support zone. In such cases, the cause for the trade is annulled and the position closed.<br />However, using Fibonacci retracements takes away the excitement out of trading and gives a pre-defined exit point. Moreover, Fibonacci numbers gives position sizes depending on the risk you are prepared to take per trade; and also defines profit objectives to bank partial profits or constrict stop loss level, once a pattern is completed against a Fibonacci price zone.<br />One of the immense advantages of Fibonacci numbers and the Golden ratio in trading is the fact that while taking the excitement out of trading, you can define not only stop losses to exit a market, but also set profit objectives as well.</div><div align="justify"></div><div align="justify"><a href="http://www.forexcycle.com/content/view/274/72/"></a></div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-18086778994710694342008-08-07T13:28:00.000+07:002008-08-07T13:28:13.391+07:00Charts for the technical analysis<div align="justify">Kinds of prices and time units. Charts for the technical analysis are being constructed in coordinates price (the vertical axis) time (the horizontal axis). The following kinds of currency prices represented on charts are being distinguished on Forex:* open - a price at the beginning of a trade period (year, month, day, week, hour, minute or a certain amount of one from these units);* close - a price at the end of a trade period;* high - the highest from prices observed during a trade period;* low - the lowest from prices observed during a trade period.Providing the technical analysis one uses charts for different time units from 1 year or more till 1 minute. The bigger is a time unit applied for the chart plotting the bigger is a time span to analyze price movements and to determine the major trend by means of the chart. For the short trading charts for less time units are more suitable.Line chart. The line chart is plotted connecting single prices for a selected time period. The most popular line chart is the daily chart. Although any point in the day can be plotted, most traders focus on the closing price, which they perceive as the most important. But an immediate problem with the daily line chart is the fact that it is impossible to see the price activity for the balance of the period as well as gaps breakups in prices at joints of trade periods. Nevertheless, line charts are easier to visualize. Also, technical analysis goes well beyond chart formation; in order to execute certain models and techniques, line charts are better suited than any of the other charts.Bar chart. The bar chart consists from separate histograms. To plot a histogram in coordinates price time the points responding to high, low, open and close prices for a time period analyzed should be marked on the one vertical bar. The opening price usually is marked with a little horizontal line to the left of the bar; and the closing price is marked with a little horizontal line to the right of the bar. Bar charts have the obvious advantage of displaying the currency range for the period selected. An advantage of this chart is that, unlike line charts, the bar chart is able to plot price gaps. Hence, it is impossible to see on a bar chart absolutely all price movements during the period.Candlestick chart. The candlestick chart is closely related to the bar chart. It also consists of four major prices: high, low, open, and close. In addition to the common readings, the candlestick chart has a set of particular interpretations. The latter is possible thanks to the convenient visual observation of that chart.The opening and closing prices form the body (jittai) of the candlestick. To indicate that the opening was lower than the closing, the body of the bar is left blank. Current standard electronic displays allow you to keep it blank or select a color of your choice. If the currency closes below its opening, the body is filled. In its original form, the body was colored black, but the electronic displays allow you to keep it filled or to select a color of your choice. The intraday (or weekly) direction on a candlestick chart can be traced by means of two "shadows": the upper shadow (uwakage) and the lower shadow (shitakage). Just as with a bar chart, the candlestick chart is unable to trace every price movement during a period's activity. </div><div align="justify"> </div><div align="justify">by: Tomas Anderson</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-71794868658809105692008-08-04T18:31:00.000+07:002008-08-04T18:32:08.328+07:00How To Trade The FOMC<div style="text-align: justify;">The Federal Open Market Committee (FOMC) decision on interest rates is one of the most powerful market movers in the forex market and when the markets move traders trading the news have the opportunity to make money.<br /><br /><br />The FOMC sets the discount rate or federal funds rate and because interest rates are set higher to induce foreign investment and therefore fight inflation during times of prosperity and lower to increase spending during recessions they are one of the main factors influencing the strength of the dollar.<br /><br /><br />Economic indicators play a huge role in the forex trading especially for traders who approach the market through fundamental analysis and trade the news. The Federal Open Market Committee (FOMC) interest rate decision is one of the most influential indicators for the US dollar and you can be sure after the news is released there is going to be volatility in the markets and volatility is what traders thrive on.<br /><br /><br />I have heard many 'traders' say never to trade the news and especially the FOMC. Although the FOMC interest decision is a news event and can fall under the category of through fundamental analysis I am a technician and I believe that charts always price everything in. However I guarantee the market does not know what exactly the Feds comments and decision will be, therefore it is not priced in yet and this will cause the markets to react when they do find out. This is confirmed by the change in price after the decision and the continuation in the days following.<br /><br /><br />I have been trading the Fed for eight years now and yes I have been burnt in the past and that is exactly how I have come to learn how to trade it properly. The most common pattern to trade the Fed is the whip-saw. But do not be fearful of it, embrace it. Here is how it happens, first there is a large spike one direction (traders come in and follow that direction)followed by a large spike in the opposite direction (those same traders now sell their first position at a loss and reverse their position - this is when I take a position in the direction of the original move)followed by an extended move back in the direction of the original spike (all the emotional trades are left sick to their stomachs) and I am left holding a very nice position setting myself up to capture a larger than average market move.<br /><br /><br />If this pattern does not play out exactly as outlined I stand on the sidelines and do not trade at all. Because the markets are moving fast in the period following the FOMC interest rate decision I am watching a very short time frame, mainly the one and five minute charts.</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-20833507855460969592008-08-04T18:30:00.001+07:002008-08-04T18:30:50.421+07:00Making Money by breaking ALL the Forex Trading rules<div style="text-align: justify;">When I started my trading career I attended a 3 day forex trading course which gave me a mere introduction to this great and fascinating money making activity. I was given some good advice during this course but I have since found that there are more many more ways to skin a cat than sticking to hard a fast Forex trading rules. If all traders are sticking these common trading beliefs one has to ask the question why do so many fail?<br /><br />One of the Golden rules of Forex trading I was told is Never, but never, trade without a stoploss. I took this rule very much to heart and started trading with stops. Like most beginners my stops were way too tight and small and I got stopped out time and time again. As I gained experience and started trading the bigger price waves I started trading bigger stops. I soon realised that the bigger your stop the higher your success rate. However I also soon found out that the gains made on nine successful transactions when using big stops can very quickly be wiped out by one or two big losses. So I went through a very frustrating time when my stops were too small for my good transactions (the stops were hit and then my targets soon after) and way too big for my bad transactions (allowing big stops when the direction was totally wrong). You soon start thinking that brokers are there just to hunt your stops. This is always an emotive subject for debate amongst forex traders.<br /><br />One day I started thinking the unthinkable. Why not trade without a stoploss at all? Is it possible to make money trading with no stoploss orders? I set about developing a technique to do just that. It took a few years of experimenting, but I now have a profitable no stop forex trading technique. I can't tell you the relief of not caring which way the price moves (as long as it moves). Yes, it is possible to cash on any move in the market. For more information, which is freely available, on this great technique why not Google stop forex trading or visit informative sites like www.expert-4x.com or www.forextradersupportservices.com<br /><br />Other rules that were worthwhile breaking in the course of developing this technique were: let your profits run and cut your losses or always trade in the direction of the main trend. These will be subjects of future articles which give more information on the development of the No Stop forex trading system.<br /><br />This is the first in a series of seven articles on the No stop forex trading technique which will be published in this article directory on a regular basis. Make sure that you do not miss any of them.</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-84644914733289262222008-08-04T18:28:00.000+07:002008-08-04T18:29:03.731+07:00Forex Profits by buying and selling at the same time?<div style="text-align: justify;">This article is one of a series which looks at the advantages and weaknesses of trading using the hedged, grid trading system to trade volatile markets.<br /><br />We will look at how money can be made by breaking a number of trading truths or principles; * cut your losses and let your profit run and * there is nothing to gained by entering into buy and sell deals at the same time.<br /><br />The hedged grid trading system uses the principle that one should be able to cash in at a gain no matter which way the market moves. No stops are therefore required at all. The only way this is logically possible is that one would have a buy and sell active at the same time. Most traders will say that that is trading suicide but let's take some to look at this more closely.<br /><br />Let's say that a trader enters the market with a buy and sell active when a currency is at a level of say 100. The price then moves to 200. The buy will then be positive by 100 and the sell will be negative by 100. At this point we start breaking trading rules. We cash in our positive buy and the gain of 100 goes to our account. The sell is now carrying a loss of -100.<br /><br />The grid system requires one to make sure that cash in on any movement in the market. To do this one would again enter into a buy and a sell transaction. Now, for convenience, let's assume that the price moves back to level 100.<br /><br />The second sell has now gone positive by 100 and the second buy is carrying a loss of -100. According to the rules one would cash the sell in and another 100 will be added to your account. That brings the total cashed in at this point to 200.<br /><br />Now the first sell that remained active has moved from level 200 where it was -100 to level 100 where it is now breaking even.<br /><br />The 4 transactions added together now magically show a gain:- 1st buy cashed in +100, 2nd sell cashed in +100, 1st sell now breaking even and the 2nd buy is -100. This gives an overall a gain of 100 in total. We can liquidate all the transactions and have some champagne.<br /><br />There are many, many other market movements that turn this strange buy and sell at the same time activity into gains. These will be covered in future articles and are covered in a free grid trading course which is available at the expert-4x.com website for those traders whose curiosity has been aroused.<br /><br />There will be more on the hedged grid trading articles to be issued regularly. Please watch Forex Article Collection for future articles.</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-47141509975313882332008-08-04T18:26:00.001+07:002008-08-04T18:26:46.955+07:00Why Hedge Foreign Currency Risk<div style="text-align: justify;">International commerce has rapidly increased as the internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.<br /><br />Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.<br /><br />Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.<br /><br />Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.<br /><br />Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.<br /><br />Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0tag:blogger.com,1999:blog-329802822600986863.post-57134800132710323562008-08-04T18:25:00.001+07:002008-08-04T18:25:45.643+07:00Online Currency Trading Tutorials<div style="text-align: justify;">Whether are learning to drive a car or trade in the Forex market you benefit from the experience and knowledge of others. None of us ever really believe that we are an expert at something as soon as we try it for the first time. For this reason, unless you are already maintaining a healthy bank balance trading Forex then you can benefit from a tutorial in Forex trading.<br /><br />A tutorial in currency trading will help to teach you the basics, and even if you have been trading currencies for a while then you may still learn something new. You see, the Forex market is pretty complex and therefore it can take years to master it. For this reason taking the time to learn as much as possible will save you money in the long run.<br /><br />Not too long ago it was almost impossible to find anyone offering any kind of training or tutoring in Forex. This was mainly because trading was only open to large corporations and businesses. The situation is completely different nowadays as the Internet boom has opened the doors to individual traders and that has led to a massive increase in the number of courses and tutorials available.<br /><br />Training can be done online or in a classroom depending on your location and preference. There are so many ¡®learn at home¡¯ courses available now that if you think that is the way to go then all you have to do is pick one. Classroom learning is a little different since you may find yourself having to travel fair distances to get to your nearest course.<br /><br />Another advantage of an online tutorial is that not only do you get to learn from the comfort of your own home or office but you can also take things at your own pace. The downside however is that there is no teacher for the one to one discussions and explanation (the DVDs or online videos are your teacher) that you may sometime need.<br /><br />Some online currency trading tutorials come with a money-back guarantee, that is if you do not like their course you can return it for a refund. However, you should look out for those courses which claim to be able to guarantee you a profit. These kind of claims are hard to achieve and should be treated with sketiscm as some courses are no more than scams.<br /><br />Forex trading requires very quick thinking and decision making. Tutorials cannot teach you that. They can tell you the principles of trading and make you a much better trader for it. However, what it takes is for you to use the knowledge they give you and incorporate it in to your daily trading habits.<br /><br />Through the help of a course you decision making and speed can definitely be improved but they cannot tell you exactly when to enter or exit a trade. That said, if you take the time to learn everything you can then it will be much easier to call the next market move correctly. You can also look to the help of Forex signal service providers for further security.<br /><br />Currency trading tutorials can never teach you everything you will ever need to know. No-one can. However, they can help you to make decisions more quickly and with more success, it¡¯s all about how you take the knowledge they give you and what you do with it.</div>layinhttp://www.blogger.com/profile/07328248564556476317noreply@blogger.com0