Thursday, September 23, 2010
RECOMMENDED BOOKS
 by R. Mark Rogers This handbook is geared to analysts and traders who need quick access to data relating to key U.S. economic indicators. It considers what indicators mean and how they are calculated, compiled, and reported to enhance informed financial decision making. Employment. . .Inflation. . .Consumer Spending. Each month, financial markets react to these and other important figures. The data, tables, charts, and graphs in this authoritative book explain how each indicator is determined, and how readers can effectively use this information. New sections include employment and labor figures, new GDP measures, and much more. |
 by W. Stansbury Carnes Useful for professional and individual investors, executives or business students--a unique atlas of what makes the markets move. Developed from a popular in-house pamphlet used at Shearson Lehman, this accessible and thoroughly illustrated resource makes understanding economic indicators much simpler. Charts and graphs. |
 The Trader's Guide to Interpreting Economic Indicators and Monetary Policy by Micahel P. Niemira, Gerald F. Zukowski Economic indicators and economic policy have an incredible impact on the volatile financial markets, yet it is often up to traders and investors to interpret the effects and take decisive action. Trading the Fundamentals explains the significance and market impact of all widely followed economic numbers, including the Consumer Price Index, Employment Report and other well-known indicators. Completely updated and revised to reflect today's highly computerized environment, Trading the Fundamentals provides readers with all the tools they need to analyze economic news and make appropriate investment decisions. New topics include: A new emphasis on data availability through the Internet; More detail on indicators such as layoffs and productivity; A completely overhauled discussion of Federal Reserve policy; A discussion of the phases of the business expansion part of the cycle. |
ECONOMIC INDICATORS ANALAYSIS
Economic Indicators analysis is the examination of the underlying forces that affect the interests of the economy, industrial sectors and companies. As with most analysis, the goal is to derive a forecast for the future. Learning the monthly sequence of economic releases and market reaction to each release is one of the first steps in learning to track the economy. Forex traders should be taught to compare market expectations with actual economic indicators and then evaluate market reactions. It's the difference between market expectations for an economic release and the actual release number that primarily affect market movement.
Currency prices reflect the balance of supply and demand for currencies. Two primary factors affecting supply and demand are interest rates and the overall strength of the economy. Economic indicators such as GDP, foreign investment and the trade balance reflect the general health of an economy and are therefore responsible for the underlying shifts in supply and demand for that currency. There is a tremendous amount of data released at regular intervals, some of which is more important than others. Data related to interest rates and international trade is looked at the closest.
Click to see upcoming economic events: Forex Economic Calendar
Currency prices reflect the balance of supply and demand for currencies. Two primary factors affecting supply and demand are interest rates and the overall strength of the economy. Economic indicators such as GDP, foreign investment and the trade balance reflect the general health of an economy and are therefore responsible for the underlying shifts in supply and demand for that currency. There is a tremendous amount of data released at regular intervals, some of which is more important than others. Data related to interest rates and international trade is looked at the closest.
Click to see upcoming economic events: Forex Economic Calendar
3. How to read quotes.
The rates are usually expressed as five-digit numbers. For example, USDJPY = 121.44 means that 1 US dollar is valued at 121.44 Japanese yens (i.e. they are willing to pay you that many yens for one US dollar while you are buying or selling). At the same time, GBPUSD = 1.6262 means that 1 British pound is valued at 1.6262 US dollars. Generally, if the rate XXXYYY = Z, it means that one unit of XXX is worth Z units of YYY.
When the rate has changed, for example USDJPY = 121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263, they say that the rate has moved 1 point. As it follows from the information above, yen in this example has DEPRECIATED by 1 point, but the pound has APPRECIATED, also by 1 point.
While watching the charts, you should keep in mind that only euro (EURUSD), British pound (GBPUSD) and Australian dollar (AUDUSD) charts reflect real movements of the rates of these currencies (that is, chart going up, means increasing price), as growth (that is, charts moving up) mean decreasing rates (prices) for the other currencies.
Sometimes quotes are given as a pair, for example 121.44/49. It is a BID/ASK pair: the first number is BID, then the two last figures of ASK. Knowing that ASK is always higher than BID and that the spread is under 100 points, the full ASK real prices can always be defined. In this example ASK = 121.49.
When the rate has changed, for example USDJPY = 121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263, they say that the rate has moved 1 point. As it follows from the information above, yen in this example has DEPRECIATED by 1 point, but the pound has APPRECIATED, also by 1 point.
While watching the charts, you should keep in mind that only euro (EURUSD), British pound (GBPUSD) and Australian dollar (AUDUSD) charts reflect real movements of the rates of these currencies (that is, chart going up, means increasing price), as growth (that is, charts moving up) mean decreasing rates (prices) for the other currencies.
Sometimes quotes are given as a pair, for example 121.44/49. It is a BID/ASK pair: the first number is BID, then the two last figures of ASK. Knowing that ASK is always higher than BID and that the spread is under 100 points, the full ASK real prices can always be defined. In this example ASK = 121.49.
2. Some codes, numbers and definitions.
2. Some codes, numbers and definitions.
Each currency is assigned a three-letter code. For example, US dollar is coded - USD (United States Dollar), euro is coded EUR (EURo), Swiss frank is coded CHF (Confederation Helvetica Franc), Japanese yen is coded JPY (JaPanese Yen), British pound is coded GBP (Great British Pound). The currency codes are defined by ISO-4217 standard. Usually they are formed as a two-letter ISO-3166 country code and the first letter of currency name. There are a few exceptions most notable being the euro (EUR).Currency rates are equal to ratios of currency units of different countries relative to each other. The rates are represented by 6-letter words composed of two three-letter currency codes. The first position is occupied, as a rule, by the code of a more expensive currency. The rates are expressed in units of the second currency per unit of the first one. For example, rates USDCHF (USD-CHF) show the number of Swiss franks in one US dollar, but rates GBPUSD (GBP-USD) show the number of US dollars having to be paid for one British pound. More detailed information on the codes of financial instruments may be found in this table.
CURRENCY TRADING
1. Purpose of trading
The purpose of trading on any market is to buy low and sell high. The foreign currency market FOREX is no exception. The goods traded on this market are rates of currencies of different countries. As any other goods the currencies have their prices.To settle transactions between businesses located in different countries, governments, speculative transactions and so forth, banks around the world execute currency trades on Forex Market. Depending on various trade, economical and other parameters, interest rates, central bank policies, time of the day, preferences and anticipations of the market players, and many other causes, the rates, that is prices, of currencies stay in ceaseless motion.
Your task as a trader is to determine the trend of the rate and buy an appreciating currency or sell a depreciating one, and then take your profits through execution of a reverse transaction.
And, at last, you will have a special trading account allowing you to buy and sell desired currencies. Despite of having US dollars in your account, you may start your trading from selling euro or japanese yens not concerning yourself with not having bought them in advance.
CFOS/FX division of Commodity, Futures, and Options Service, Inc. (CFOS)
CFOS/FX is the over-the-counter foreign currency ("forex") trading and forex brokerage division of Commodity, Futures, and Options Service, Inc. (CFOS), an Independent Introducing Broker in the cash and futures commodity markets with offices in Houston, TX, Sacramento, CA, Salt Lake City, UT, New York City, NY and Madeira Beach, FL. | ||||
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| Free demo account: | Yes | |||
| Trading Software: | ACC'T | |||
| Regulated: | NFA (USA) | |||
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| Headquarters: | CFOS/FX 2425 West Loop South, Suite 601 Houston, TX 77027 | |||
| Telephone: | 1-877-423-6739 (Toll Free U.S.) 713-622-7774 (Local) | |||
| Company URL: | www.cfosfx.com | |||
Sunday, September 19, 2010
CAD/JPY Once Again
Tim Black hosts the live trading room for the Asia trading session. His background is in computers and technology. He is addicted to charts and technical analysis and enjoys teaching and sharing his viewpoints in these areas. If you would like to trade with Tim click here.
CAD/JPY did what I expected this past week, even coming within pips of our second target with the help of the Bank of Japan. But it did it without me. If you guys followed me on Twitter this week, you’ll know I didn’t get in this trade because it sorta spooked me the way it pushed back down through the trend line. Hopefully, some of you didn’t follow my tweets and made some pips on this trade.
Well, I’m still bullish on this pair but with the move it made this week, it’s going to have to do a little retracing before I get in it. Here’s what I propose:
Just like last week, there are three nice piercing bars into the support zone. It’s also still making higher lows and now there is a nice confirmed weekly buy signal.
I’m going to look for this to retrace to the 61.8% Fibonacci level (around 81.92.) Then I’m going to WAIT until I get a confirmed 4 hour buy signal (a 4 hour candle that CLOSES higher than the prior candle) to get in long. I will place my stop below the 78.6% Fibonacci level (near 81.30) and target just below the recent high (near 84.00), the measured move (harmonic AB=CD, near 85.40) and the recent swing high near 86.20. This will give us a better than 3:1 Reward:Risk ratio.
ENTRY: Long on 4 hour buy signal near 61.8% retracement around 81.92.
STOP: Below the 78.6% retracement near 81.30.
TARGETS: 84.00, 85.40 and 86.20.
RR: Better than 3:1.
Remember to use your risk management rules in sizing your trade. And I know you’re very tired of hearing me say this WAIT, WAIT, WAIT for the proper entry. Just because I’m calling for an entry below the current level, doesn’t mean that a short to that level is a high-probability setup. What I’m saying is IF price action gets to the 81.92 level THEN a buy MIGHT be appropriate with the indicated signals.
Follow me on Twitter as I will tweet trade management for this trade.
CAD/JPY did what I expected this past week, even coming within pips of our second target with the help of the Bank of Japan. But it did it without me. If you guys followed me on Twitter this week, you’ll know I didn’t get in this trade because it sorta spooked me the way it pushed back down through the trend line. Hopefully, some of you didn’t follow my tweets and made some pips on this trade.
Well, I’m still bullish on this pair but with the move it made this week, it’s going to have to do a little retracing before I get in it. Here’s what I propose:
CAD/JPY Weekly
CAD/JPY Daily
ENTRY: Long on 4 hour buy signal near 61.8% retracement around 81.92.
STOP: Below the 78.6% retracement near 81.30.
TARGETS: 84.00, 85.40 and 86.20.
RR: Better than 3:1.
Remember to use your risk management rules in sizing your trade. And I know you’re very tired of hearing me say this WAIT, WAIT, WAIT for the proper entry. Just because I’m calling for an entry below the current level, doesn’t mean that a short to that level is a high-probability setup. What I’m saying is IF price action gets to the 81.92 level THEN a buy MIGHT be appropriate with the indicated signals.
Follow me on Twitter as I will tweet trade management for this trade.
Japan Can't Curb Yen's Gains by Acting Alone, Bank of Korea Governor Says
apan can’t resolve the difficulty of the strong yen unilaterally as currency-market intervention by a single country has limited effect, Bank of Korea Governor Kim Choong Soo said.
“Japan, alone, cannot resolve the problem of the strong yen,” Kim said at a media seminar in Incheon, southeast of Seoul, two days ago. “Japan will need policy coordination with others, including the U.S. and China. The effect is limited when one country tries to handle the issue by market intervention.”
Japan intervened on Sept. 15 for the first time since 2004 to protect its exporters, after the yen rose to a 15-year high against the dollar. The action stoked speculation that South Korea will move to counter a recent rise in the won, in an economy where overseas shipments are equivalent to about half of gross domestic product.
International trade has “significant impact on our relationship with other nations as we’re heavily dependent” on it, Kim said. His comments at the seminar were released today.
The won has risen 4.5 percent over the past three months and closed up 0.3 percent at 1,160.7 per dollar on Sept. 17. Further increases may hurt export competitiveness at firms such as Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, and Hyundai Motor Co., the country’s largest automaker.
Asked about international policy coordination on currencies, Kim said South Korea “is not in a situation to say something on the issue now and we need to see more how it affects our economy.” The yen has lost more than 3 percent of its value since Japan’s Finance Ministry sold the currency.
Interest Rate Policy
The Bank of Korea unexpectedly left its benchmark interest rate unchanged on Sept. 9, joining counterparts in Australia, Malaysia and New Zealand in pausing rate increases to assess the strength of the global recovery. A possible U.S. slowdown and persistent European fiscal problems are risks to growth, the central bank said after its decision.
Ten of 14 economists in a Bloomberg News survey projected a quarter-point increase to 2.5 percent, after Kim signaled on Aug. 25 that South Korea was alert to the risk of intensifying inflation expectations. The governor raised the benchmark by 0.25 percentage point in July from a record-low 2 percent.
The current rate of 2.25 percent “is not the most desirable,” though it will take some time to normalize as the bank must be certain of the world economic recovery, Kim said after leaving borrowing costs unchanged this month.
Asked about the central bank’s interest rate policy signals at the media seminar, Kim said “when we say we will take a right turn, then we will turn to the right -- the only matter is whether we will do it this time or next time. You should not believe that we’re not changing the direction.”
Exports fuelled a 7.6 percent expansion in South Korea in the first half, the fastest pace in a decade, and the economy will grow 5.9 percent this year, according to the central bank’s figures. The trade surplus will reach $32 billion in 2010, up from a previous forecast of $20 billion, the economy ministry said on Sept. 1.
-- Editors: Sunil Jagtiani, Paul Tighe
To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net;
“Japan, alone, cannot resolve the problem of the strong yen,” Kim said at a media seminar in Incheon, southeast of Seoul, two days ago. “Japan will need policy coordination with others, including the U.S. and China. The effect is limited when one country tries to handle the issue by market intervention.”
Japan intervened on Sept. 15 for the first time since 2004 to protect its exporters, after the yen rose to a 15-year high against the dollar. The action stoked speculation that South Korea will move to counter a recent rise in the won, in an economy where overseas shipments are equivalent to about half of gross domestic product.
International trade has “significant impact on our relationship with other nations as we’re heavily dependent” on it, Kim said. His comments at the seminar were released today.
The won has risen 4.5 percent over the past three months and closed up 0.3 percent at 1,160.7 per dollar on Sept. 17. Further increases may hurt export competitiveness at firms such as Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, and Hyundai Motor Co., the country’s largest automaker.
Asked about international policy coordination on currencies, Kim said South Korea “is not in a situation to say something on the issue now and we need to see more how it affects our economy.” The yen has lost more than 3 percent of its value since Japan’s Finance Ministry sold the currency.
Interest Rate Policy
The Bank of Korea unexpectedly left its benchmark interest rate unchanged on Sept. 9, joining counterparts in Australia, Malaysia and New Zealand in pausing rate increases to assess the strength of the global recovery. A possible U.S. slowdown and persistent European fiscal problems are risks to growth, the central bank said after its decision.
Ten of 14 economists in a Bloomberg News survey projected a quarter-point increase to 2.5 percent, after Kim signaled on Aug. 25 that South Korea was alert to the risk of intensifying inflation expectations. The governor raised the benchmark by 0.25 percentage point in July from a record-low 2 percent.
The current rate of 2.25 percent “is not the most desirable,” though it will take some time to normalize as the bank must be certain of the world economic recovery, Kim said after leaving borrowing costs unchanged this month.
Asked about the central bank’s interest rate policy signals at the media seminar, Kim said “when we say we will take a right turn, then we will turn to the right -- the only matter is whether we will do it this time or next time. You should not believe that we’re not changing the direction.”
Exports fuelled a 7.6 percent expansion in South Korea in the first half, the fastest pace in a decade, and the economy will grow 5.9 percent this year, according to the central bank’s figures. The trade surplus will reach $32 billion in 2010, up from a previous forecast of $20 billion, the economy ministry said on Sept. 1.
-- Editors: Sunil Jagtiani, Paul Tighe
To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net;
Queensland Opens A$7 Billion QR National Stock Sale, Largest After Telstra
Lance Hockridge, chief executive officer of QR National Ltd., speaks during a news conference announcing the company's initial public offering in Brisbane Photographer: Eric Taylor/Bloomberg
“QR National is a growth story - it is Australia’s largest rail freight company and the world’s largest rail transporter of coal from mine to port for export markets,” State Treasurer Andrew Fraser said at a pre-registration meeting for retail investors held in Brisbane today.
Queensland, the third-most-populous Australian state, is selling assets to prop up finances after the recession crimped government revenue. State Premier Anna Bligh said in December she’ll put other assets up for sale in the next two years, including a road network, a coal terminal and a port.
The government formed QR National in July when state-run rail provider QR Ltd., with assets worth A$12 billion, split its passenger train and freight operations. The sale of the non- passenger assets may fetch A$7 billion, Premier Bligh said in June last year. The Australian government sold A$15.5 billion of stock in Telstra, the nation’s largest telephone company.
QR National’s freight network is a “high-quality business” that will meet growing demand for resources in Asia, Fraser said. Public offer documents for the IPO will be available from Oct. 10, he said. QR National will “deliver value for taxpayers,” Fraser said, declining to indicate how much the government was hoping to raise.
Queensland, which is spending A$15 million on the IPO marketing campaign, will initially retain 25 percent to 40 percent of the floated entity, the state government said previously.
State Valuation
If the state keeps 25 percent of QR National and maintains Bligh’s A$7 billion valuation, the sale would be the largest stock offering in Australia since the Telstra sale.
QR National transported more than 198 million metric tons of coal during the 2009-2010 financial year and employs about 9,000 people, with a heavy-haul coal network of more than 2,300 kilometers, according to a presentation on its website.
The government in March appointed Credit Suisse Group AG, Goldman Sachs & Partners Goldman Sachs Australia Pty, Bank of America Corp.’s Merrill Lynch unit, Royal Bank of Scotland Plc and UBS AG to manage the sale.
Commonwealth Bank of Australia Ltd. and Wilson HTM Investment Group were named in July as co-lead managers and Ord Minnett Group Ltd. and Patersons Securities Ltd. were appointed co-managers.
Markets Tumble
Aston Resources Ltd., an Australian coal developer, had to cut the price of its IPO last month as markets tumbled. The reduction in Aston’s offer price follows a 5.9 percent drop this year in Australia’s benchmark S&P/ASX 200 index of stocks. Bilfinger Berger AG, Germany’s second-largest building company, pulled the IPO of Australian unit Valemus Ltd. after investors balked at the price.
Prices for coking coal, a steelmaking raw material, will peak in eight years, after which a market deficit will be plugged, Metal Bulletin Ltd. said in June. China and India, the world’s most populous nations, will account for 70 percent of coking coal demand by 2020, Metal Bulletin said in a report.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
Asian Currencies Rise for a Third Week, Led by India's Rupee, on Inflows
Asian currencies strengthened for a third week, led by India’s rupee, as global investors pumped more funds into the world’s fastest-growing economies.
The Bloomberg-JPMorgan Asia Dollar Index climbed to its highest in more than two years month and the MSCI Asia Pacific Index of shares advanced as stock markets in India, South Korea and Taiwan each attracted more than $1 billion from abroad. China’s yuan had its best week since May 2008 as the U.S. called for faster appreciation and government reports showed pickups in industrial output, retail sales and inflation.
“The trend remains for Asian currencies to strengthen,” said Tohru Nishihama, economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Funds will continue to flow into the region as the economic growth outlook in Asia is solid and stocks in the region have been rising.”
The rupee appreciated 1.3 percent this week to 45.845 per dollar in Mumbai, according to data compiled by Bloomberg. The yuan was 0.7 percent stronger at 6.7235, the Korean won climbed 0.4 percent to 1,160.70 and Taiwan’s dollar advanced 0.5 percent to NT$31.739. Thailand’s baht rose 0.4 percent to 30.72, a seventh straight weekly gain.
The Asia Dollar Index, which tracks the region’s 10 most used currencies excluding the yen, added 0.3 percent and the MSCI Asia Pacific Index climbed 2.2 percent. Developing economies in Asia will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund forecast in July.
Stock Inflows
Equity funds investing in Asia excluding Japan recorded the highest inflows in seven weeks during the period through Sept. 15, according to EPFR Global. The trend was “underpinned by renewed faith in the growth stories of the region’s heavyweights, China and India,” the research firm said.
India’s central bank this week increased interest rates for the fifth time in 2010 and Chinese Premier Wen Jiabao said his nation’s economy, the world’s second-largest, was in “good shape.” U.S. Treasury Secretary Timothy F. Geithner called for “significant” gains in the yuan, which yesterday touched the strongest level since official and market exchange rates were unified at the end of 1993.
The Philippine peso dropped 0.2 percent this week to 44.188 per dollar after central bank Governor Amando Tetangco said on Sept. 14 that policy makers were monitoring gains and signaled action may be taken to curb volatility. Japan unilaterally sold the yen on Sept. 15 in an attempt to halt appreciation after the currency climbed to a 15-year high versus the dollar.
“There’s a possibility that the rest of Asia will try to do the same to keep their exports competitive,” said Mohd Zaki Talib, a currency trader at RHB Bank Bhd. in Kuala Lumpur.
Malaysia’s ringgit rose 0.2 percent this week to 3.1020 per dollar, having reached a 13-year high of 3.0969 on Sept. 13. The Singapore dollar appreciated 0.5 percent to S$1.3340, a fifth straight weekly gain.
The Bloomberg-JPMorgan Asia Dollar Index climbed to its highest in more than two years month and the MSCI Asia Pacific Index of shares advanced as stock markets in India, South Korea and Taiwan each attracted more than $1 billion from abroad. China’s yuan had its best week since May 2008 as the U.S. called for faster appreciation and government reports showed pickups in industrial output, retail sales and inflation.
“The trend remains for Asian currencies to strengthen,” said Tohru Nishihama, economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Funds will continue to flow into the region as the economic growth outlook in Asia is solid and stocks in the region have been rising.”
The rupee appreciated 1.3 percent this week to 45.845 per dollar in Mumbai, according to data compiled by Bloomberg. The yuan was 0.7 percent stronger at 6.7235, the Korean won climbed 0.4 percent to 1,160.70 and Taiwan’s dollar advanced 0.5 percent to NT$31.739. Thailand’s baht rose 0.4 percent to 30.72, a seventh straight weekly gain.
The Asia Dollar Index, which tracks the region’s 10 most used currencies excluding the yen, added 0.3 percent and the MSCI Asia Pacific Index climbed 2.2 percent. Developing economies in Asia will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund forecast in July.
Stock Inflows
Equity funds investing in Asia excluding Japan recorded the highest inflows in seven weeks during the period through Sept. 15, according to EPFR Global. The trend was “underpinned by renewed faith in the growth stories of the region’s heavyweights, China and India,” the research firm said.
India’s central bank this week increased interest rates for the fifth time in 2010 and Chinese Premier Wen Jiabao said his nation’s economy, the world’s second-largest, was in “good shape.” U.S. Treasury Secretary Timothy F. Geithner called for “significant” gains in the yuan, which yesterday touched the strongest level since official and market exchange rates were unified at the end of 1993.
The Philippine peso dropped 0.2 percent this week to 44.188 per dollar after central bank Governor Amando Tetangco said on Sept. 14 that policy makers were monitoring gains and signaled action may be taken to curb volatility. Japan unilaterally sold the yen on Sept. 15 in an attempt to halt appreciation after the currency climbed to a 15-year high versus the dollar.
“There’s a possibility that the rest of Asia will try to do the same to keep their exports competitive,” said Mohd Zaki Talib, a currency trader at RHB Bank Bhd. in Kuala Lumpur.
Malaysia’s ringgit rose 0.2 percent this week to 3.1020 per dollar, having reached a 13-year high of 3.0969 on Sept. 13. The Singapore dollar appreciated 0.5 percent to S$1.3340, a fifth straight weekly gain.
Thursday, July 29, 2010
WHAT DRIVES SHORT TERM CURRENCY MOVEMENTS IN FOREX?
Short-term currency movements in forex are immediately impacted by:
There is an instant impact of short term currency movements in forex trading
World events.
Comments, statements by government officials.
Unexpected changes in economic numbers.
Technical - charts.
Stock markets.
Bond markets.
Commodity markets.
Newspaper articles.
Interviews with influential individuals.
Rumors.
World events:
Depending on the severity of the news, a world event can have an immediate substantial impact upon a currency and forex market. The British Pound for example took an immediate beating when the press reported they might have exaggerated Iraq chemical weapons plans. These types of news have high impact on forex market. A general opinion is a small trader can lost their money during this news if he works with TK (take profit) and ST (Stop Loss) they will save. So keep eyes on world news and events happen. These take major contribution in C urrency Movements.
World Events:
Significant international events can have a substantial impact on the currency and forex market, such as the outcome of news. When the news broke out about the Iraq�s chemical weapons plan. immediately the British Pounds took the beating. Such news have quick effect on forex market. If small traders works with TK (take profit) and ST (Stop Loss) the general view is that the effect of such news results in great lost for them. So keep a vigilant eye on international news and events as they happen. These events and news are foremost contributors in Currency Movements.
Comments, statements by government officials:
Direct statements or hints of changes in government policy by government officials will be immediately reflected in currency rates. For example, when former ECB president Dusenberg reiterates that Euro rates are at the correct level, the Euro jumps a quick 30 points. This is also a big factor in forex market but in real some time its work on same day some time on next day. But it takes impact. Government official news has high impact on currency market. Keep strong eyes on Government officials meetings and press briefing. These take major contribution in Currency Movements.
Comments, statements by government officials:
When some government officials give some statements regarding government policy, such statements immediately reflects currency rates. For example, when Dusenberg a former ECB president go over to announce that the current Euro rates are in correct level, it immediately follow a quick 30 points jump in Euro.
Unexpected changes in economic numbers:
When scheduled economic numbers are not close to what was expected the movements in the currency can be dramatic. We use these opportunities to initiate trades on a regular basis. Example. U.S. employment fell 100,000 versus an expected rise of 30,000; USD fell 1.5% in a few hours. Each day we have some economic data who impact on forex market. These data have quick impact on forex market but these data are not predictable that whether they go to upward or downward direction. These take major contribution in Currency Movements. There are some special strategies to deal in this situation. You will see these strategies in our FxCraz courses.
Unforeseen changes in economic numbers:
When well planned economic numbers are not near to what was foreseen, the currency movements can be intense. We make good use of these chances to begin trades on day to day basis. For example when US employment cut down to 100,000 against foreseeable set up of 30,000 USD cut down to 1.5% in a few hours. Every day we find some economic data that influence the forex market. Forex market have fast effect of these data, but whether these data go upward or downward direction is not predictable. Currency Movements depends on these data significantly. There are few distinct tactics to handle this state.
Technical - charts:
Breakouts on charts sometimes cause a good move to develop � and sometimes not. Failure to follow through on breakouts often causes a severe reaction in the opposite direction. For example, EURUSD could not hold a break above 113.30 and promptly fell 70 points. These take major contribution in Currency Movements.
Technical - charts :
Data analysis on visuals is sometimes work out excellent and sometimes not. Failure to understand data analysis repeatedly causes opposite reaction. For example, if EURUSD is not able to hold a break above 113:30 and sharply cut down 70 points. These are currency movements major contributors.
Stock markets:
Foreigners have been net sellers of U.S. stocks for quite awhile now. However, the amounts lately have not been great. Do not look for the USD to follow the stock market closely as it did during the boom. You will be disappointed if you do. Forex trading is different from other markets but these take major contribution in Currency Movements.
Stock markets:
Non nationals are net sellers of US stocks for some time now. On the other hand the net amounts lately have not be good. Never look for the USD to pursue the stock market watchfully as was during the boom period. You will not be happy because Forex trading is quite different from other markets, since these take foremost involvement in Currency Movements.
Bond markets:
Foreigners, especially foreign Central Banks have huge bond holdings. They are very much concerned with capital loss due to rising interest rates. In fact on those days when the 5 and 10 years auction results are announced at 1pm EDT, the currency markets or forex trading are very quiet, especially in Europe. These take major contribution in Currency Movements.
Bond Markets:
Non nationals, notably foreign Central Banks are holding huge bond. They are greatly alarmed with capital loss because of increasing borrowing rates. The currency market or forex trading are quiet, notably in Europe on those days when the 5 and 10 years auction results are announced at 1 pm EDT. These take foremost involvement in Currency Movements.
Commodity markets:
Some currencies react to significant changes in agricultural product price and gold, Australia for example. Forex market is link with other market as well. Commodity is one of them who make impact on forex market. These take major contribution in Currency Movements.
Commodity markets:
Few currencies respond to substantial fluctuations in farming product price and gold, Australia for instance. Forex Market is related besides other market too. Articles of trade is one of them who make significant effect on forex market. These take foremost involvement in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can cause a short-term move in a currency. Because traders have strong eyes on world event�s and news. They make trade and on the rumor they show some quickness and make a wrong trade. Some time its fruitful sometime not. So try to move where mob is going. You may have minimum chances to lose. These take major contribution in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can effect a short term shift in a currency. As traders possess strong eyes on world events, news and information. Sometimes they make bad trade due to some unconfirmed reports. Some time its useful and sometime not. Keep moving where the flock is going. That�s how your chances of loss remain small. These take foremost involvement in Currency Movements.
There is an instant impact of short term currency movements in forex trading
World events.
Comments, statements by government officials.
Unexpected changes in economic numbers.
Technical - charts.
Stock markets.
Bond markets.
Commodity markets.
Newspaper articles.
Interviews with influential individuals.
Rumors.
World events:
Depending on the severity of the news, a world event can have an immediate substantial impact upon a currency and forex market. The British Pound for example took an immediate beating when the press reported they might have exaggerated Iraq chemical weapons plans. These types of news have high impact on forex market. A general opinion is a small trader can lost their money during this news if he works with TK (take profit) and ST (Stop Loss) they will save. So keep eyes on world news and events happen. These take major contribution in C urrency Movements.
World Events:
Significant international events can have a substantial impact on the currency and forex market, such as the outcome of news. When the news broke out about the Iraq�s chemical weapons plan. immediately the British Pounds took the beating. Such news have quick effect on forex market. If small traders works with TK (take profit) and ST (Stop Loss) the general view is that the effect of such news results in great lost for them. So keep a vigilant eye on international news and events as they happen. These events and news are foremost contributors in Currency Movements.
Comments, statements by government officials:
Direct statements or hints of changes in government policy by government officials will be immediately reflected in currency rates. For example, when former ECB president Dusenberg reiterates that Euro rates are at the correct level, the Euro jumps a quick 30 points. This is also a big factor in forex market but in real some time its work on same day some time on next day. But it takes impact. Government official news has high impact on currency market. Keep strong eyes on Government officials meetings and press briefing. These take major contribution in Currency Movements.
Comments, statements by government officials:
When some government officials give some statements regarding government policy, such statements immediately reflects currency rates. For example, when Dusenberg a former ECB president go over to announce that the current Euro rates are in correct level, it immediately follow a quick 30 points jump in Euro.
Unexpected changes in economic numbers:
When scheduled economic numbers are not close to what was expected the movements in the currency can be dramatic. We use these opportunities to initiate trades on a regular basis. Example. U.S. employment fell 100,000 versus an expected rise of 30,000; USD fell 1.5% in a few hours. Each day we have some economic data who impact on forex market. These data have quick impact on forex market but these data are not predictable that whether they go to upward or downward direction. These take major contribution in Currency Movements. There are some special strategies to deal in this situation. You will see these strategies in our FxCraz courses.
Unforeseen changes in economic numbers:
When well planned economic numbers are not near to what was foreseen, the currency movements can be intense. We make good use of these chances to begin trades on day to day basis. For example when US employment cut down to 100,000 against foreseeable set up of 30,000 USD cut down to 1.5% in a few hours. Every day we find some economic data that influence the forex market. Forex market have fast effect of these data, but whether these data go upward or downward direction is not predictable. Currency Movements depends on these data significantly. There are few distinct tactics to handle this state.
Technical - charts:
Breakouts on charts sometimes cause a good move to develop � and sometimes not. Failure to follow through on breakouts often causes a severe reaction in the opposite direction. For example, EURUSD could not hold a break above 113.30 and promptly fell 70 points. These take major contribution in Currency Movements.
Technical - charts :
Data analysis on visuals is sometimes work out excellent and sometimes not. Failure to understand data analysis repeatedly causes opposite reaction. For example, if EURUSD is not able to hold a break above 113:30 and sharply cut down 70 points. These are currency movements major contributors.
Stock markets:
Foreigners have been net sellers of U.S. stocks for quite awhile now. However, the amounts lately have not been great. Do not look for the USD to follow the stock market closely as it did during the boom. You will be disappointed if you do. Forex trading is different from other markets but these take major contribution in Currency Movements.
Stock markets:
Non nationals are net sellers of US stocks for some time now. On the other hand the net amounts lately have not be good. Never look for the USD to pursue the stock market watchfully as was during the boom period. You will not be happy because Forex trading is quite different from other markets, since these take foremost involvement in Currency Movements.
Bond markets:
Foreigners, especially foreign Central Banks have huge bond holdings. They are very much concerned with capital loss due to rising interest rates. In fact on those days when the 5 and 10 years auction results are announced at 1pm EDT, the currency markets or forex trading are very quiet, especially in Europe. These take major contribution in Currency Movements.
Bond Markets:
Non nationals, notably foreign Central Banks are holding huge bond. They are greatly alarmed with capital loss because of increasing borrowing rates. The currency market or forex trading are quiet, notably in Europe on those days when the 5 and 10 years auction results are announced at 1 pm EDT. These take foremost involvement in Currency Movements.
Commodity markets:
Some currencies react to significant changes in agricultural product price and gold, Australia for example. Forex market is link with other market as well. Commodity is one of them who make impact on forex market. These take major contribution in Currency Movements.
Commodity markets:
Few currencies respond to substantial fluctuations in farming product price and gold, Australia for instance. Forex Market is related besides other market too. Articles of trade is one of them who make significant effect on forex market. These take foremost involvement in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can cause a short-term move in a currency. Because traders have strong eyes on world event�s and news. They make trade and on the rumor they show some quickness and make a wrong trade. Some time its fruitful sometime not. So try to move where mob is going. You may have minimum chances to lose. These take major contribution in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can effect a short term shift in a currency. As traders possess strong eyes on world events, news and information. Sometimes they make bad trade due to some unconfirmed reports. Some time its useful and sometime not. Keep moving where the flock is going. That�s how your chances of loss remain small. These take foremost involvement in Currency Movements.
1.7 UNDERSTANDING LEVERAGE & MARGIN
Usually leverage is quoted as a ratio that is 100.1.
It means that you can trade with 100 units by just investing 1 unit. By just investing 1,000 USD you can trade up to 100,000 USD.
Margin is quite same as leverage, but a view point is little different. Margin is usually quoted as a percentage that is 10%.
Borrowed money trading is leverage. Brokers in the foreign exchange provides greater leverage than the brokers in the equities and future market, that makes forex more tempting and interesting than other kinds of traders. It is important to understand that the leverage is not without any flaw. It has the potential to notably rise trader’s earnings, but it can also substantially increase their losses, if incorrectly applied.
Leverage and Margin:
Leverage will also specify margin conditions that is the amount of currency that the trader should have in their account. For example, some brokers offer a maximum of 20:1 leverage that is for every 20 units of currency the trader purchase, they must have a 1 unit in their account. There are brokers who offer up to 100.1 leverage, there are few who even give a leverage of up to 400:1.
Margin Calls:
Since traders who are trading with leverage, because they use borrowed money there is a possibility that they might lose greater money than they have in their account. In order to stay away from this situation, most of the forex traders design a system known as an automated margin call. Automated margin call make good use of the system when the worth of the trader’s account is lower than the margin requirements, when the condition is as such then the majority of the forex brokers will quickly and automatically close the trader out of their position, that is how they avoid end up in negative account balance.
In order to understand its working, there is a following example:
If a trader buys 100,000 EURUSD. The margin required is $ 1,000 per $ 100,000 units traded. Assume that only $5000 in the account of trader. In such a situation, each pip is worth $10. if against the trader EUR-USD goes 401 pips, the trader will have a floating loss of -4.010 US dollars (401 pips, 10 USD per pip) As the trader has an opening balance of $5000, then their variable value of account will be $990 � the variable loss of $4010 = 990. As its below the required margin, which the broker has agreed upon. As a consequence the broker is free to close the position as he desire � without consulting the trader.
Leverage Facilitate Greater Control of Risk:
Although leverage is considered to be a risky business but it can be a valuable tool to monitor risk and vulnerability they are exposed to. For example leverage is used by many traders as an assets that are comparatively predictable. It makes leverage that can be well organized and controlled, having primary source of risk - as against the asset�s instability that cannot be regulated by the trader. Such thinking is popular amongst forex traders when the trend of currency movement is in a very narrow range, as compared to stocks and futures, a 2% shift in price in a day is amazing for a currency, but is normal in most of the equities markets. Resulting in forex traders to use leverage to trade predictable currencies and enjoy greater power and take their chances freely. They depend on the leverage ratio that they have selected than the basic asset ’s instability.
Traders should be careful in using leverage. It enhances their earnings immensely and is popular amongst dynamic forex traders - but its also responsible for great loss especially those who are new to the market.
A simple example:
1 - If I have 1000 USD I can invest in forex trading, my choice fo broker is the one who gives me a leverage of 1:200. so that I can buy 200 dollars from my 1 dollar or I USD is equal to 200 USD.
2 - I will trade and decide how much I want to invest and how much I will use as a reserve. If I want to trade with 100 USD, it means investing 20,000 USD.
On every pip I will acquire 2 USD gain or loss. If 1,5677 USD/GPB is a trade buy. After 10 min its 1,5699. it means 20 pip profit, my gain is 40 dollars. If the market is 1,5655 then I incur loss of 40 dollars.
In leverage you have an equal chances for success as well as failure. If you want to use leverage be careful before you take your chances. In leverage a trader might begin with as little as zero and soon become a millionaire or begin from a millionaire and soon become zero.
It means that you can trade with 100 units by just investing 1 unit. By just investing 1,000 USD you can trade up to 100,000 USD.
Margin is quite same as leverage, but a view point is little different. Margin is usually quoted as a percentage that is 10%.
Borrowed money trading is leverage. Brokers in the foreign exchange provides greater leverage than the brokers in the equities and future market, that makes forex more tempting and interesting than other kinds of traders. It is important to understand that the leverage is not without any flaw. It has the potential to notably rise trader’s earnings, but it can also substantially increase their losses, if incorrectly applied.
Leverage and Margin:
Leverage will also specify margin conditions that is the amount of currency that the trader should have in their account. For example, some brokers offer a maximum of 20:1 leverage that is for every 20 units of currency the trader purchase, they must have a 1 unit in their account. There are brokers who offer up to 100.1 leverage, there are few who even give a leverage of up to 400:1.
Margin Calls:
Since traders who are trading with leverage, because they use borrowed money there is a possibility that they might lose greater money than they have in their account. In order to stay away from this situation, most of the forex traders design a system known as an automated margin call. Automated margin call make good use of the system when the worth of the trader’s account is lower than the margin requirements, when the condition is as such then the majority of the forex brokers will quickly and automatically close the trader out of their position, that is how they avoid end up in negative account balance.
In order to understand its working, there is a following example:
If a trader buys 100,000 EURUSD. The margin required is $ 1,000 per $ 100,000 units traded. Assume that only $5000 in the account of trader. In such a situation, each pip is worth $10. if against the trader EUR-USD goes 401 pips, the trader will have a floating loss of -4.010 US dollars (401 pips, 10 USD per pip) As the trader has an opening balance of $5000, then their variable value of account will be $990 � the variable loss of $4010 = 990. As its below the required margin, which the broker has agreed upon. As a consequence the broker is free to close the position as he desire � without consulting the trader.
Leverage Facilitate Greater Control of Risk:
Although leverage is considered to be a risky business but it can be a valuable tool to monitor risk and vulnerability they are exposed to. For example leverage is used by many traders as an assets that are comparatively predictable. It makes leverage that can be well organized and controlled, having primary source of risk - as against the asset�s instability that cannot be regulated by the trader. Such thinking is popular amongst forex traders when the trend of currency movement is in a very narrow range, as compared to stocks and futures, a 2% shift in price in a day is amazing for a currency, but is normal in most of the equities markets. Resulting in forex traders to use leverage to trade predictable currencies and enjoy greater power and take their chances freely. They depend on the leverage ratio that they have selected than the basic asset ’s instability.
Traders should be careful in using leverage. It enhances their earnings immensely and is popular amongst dynamic forex traders - but its also responsible for great loss especially those who are new to the market.
A simple example:
1 - If I have 1000 USD I can invest in forex trading, my choice fo broker is the one who gives me a leverage of 1:200. so that I can buy 200 dollars from my 1 dollar or I USD is equal to 200 USD.
2 - I will trade and decide how much I want to invest and how much I will use as a reserve. If I want to trade with 100 USD, it means investing 20,000 USD.
On every pip I will acquire 2 USD gain or loss. If 1,5677 USD/GPB is a trade buy. After 10 min its 1,5699. it means 20 pip profit, my gain is 40 dollars. If the market is 1,5655 then I incur loss of 40 dollars.
In leverage you have an equal chances for success as well as failure. If you want to use leverage be careful before you take your chances. In leverage a trader might begin with as little as zero and soon become a millionaire or begin from a millionaire and soon become zero.
1.5 QUESTIONS NEW FOREX TRADERS ASK FOR FOREX TRADING
1 - What is your approach to trading in periods between news releases?
2 - Do you trade in these times of more gradual market activity, and if so,
what are your rules for entry and exit?
3 - Which charts (1 min through monthly) do you refer to for entry and exit in these periods and the relevance of each?
At the time of government officials talking, closely observe and monitor the market. When any sudden price move than assume that the reason behind is government officials statement. This is an effective technique for new forex trader for forex trading.
Acquire real economic releases and any relevant articles published. This is an effective technique for new forex trader for forex trading.
Find out the up to date misforecast and its impact on economic release�s instant price shock. This is an effective technique for new forex trader for forex trading.
Precisely I look for forex trading routes inside forex trading channel, preferably 5 minute forex trading channel within 30 minute forex trading channel. When both are concurrently close to top or bottom of channel I begin a trade with a tight stop that reinforce my analysis. I frequently study trad EURUSd. This is an effective technique for new forex trader for forex trading.
I study for 30 min visual plus 60 period moving regular and I also study 5 min visual plus 60 period moving regular. I am looking inside for a trend. For instance, when EURUSD price is less than 60ma on 30 minute visual than I search for openings to sell EURUSD if price bore into 60ma on 5 minute visual to the lower side than I ponder that 30 minute is suggestive of today’s trend and 5 minute a timing pointer. This is an effective technique for new forex trader for forex trading.
When within a short period of time prices rise quickly I look for short term adjustments and recovery. I find a limit on 1 minute visual plus 60 period moving regular is remarkable for profit taking or beginning for a brief period of time “bounce” trade. This is an effective technique for new forex trader for forex trading.
My main focus is on high and low end that is within reach of forex trading range that earlier responds to real accomplishment of main points and forex trading plan that I possibly can employ. This is an effective technique for new forex trader for forex trading.
To understand the indicators of patterns of higher high and higher lows and vise versa I look at bar charts. While discovering the patterns of early change I will join at a level that permits me to connect the patterns at a price that consider for tight stop loss and validate that the pattern is broken. For instance if EURUSD seem to place in a short term bottom as pointed by two successive bars with higher highs and higher lows. Than I will enter a trade when the third bar that is rather close to low of second bar (consider tight stop as if price goes under low of second bar pattern is broken and no reason for trade, and pattern continuation exists) and expectations of getting in at the beginning of a new brief period inclination. This is an effective technique for new forex trader for forex trading.
Finally the series of bars with higher highs and lower highs will run in a sequence of trends and proceed downward. I look for patterns when they no longer able to approach important tops, forex trading channels tops, vital and effective regular lines. Many times I change to candle charts for more validation when these patterns arrive at their logical stopping place. There are many ways to trade this 1) sell immediate top of earlier bar with stop higher than earlier bar ( tight stop, potential to catch full turnaround) 2) sell vital top with tight stop 3) sell top of forex trading channel with tight stop 4) sell lower but with regular line and stop higher than regular. This is an effective technique for new forex trader for forex trading.
Taking any position you need close analysis of crucial moment, so that you can monitor your stop loss level and your ability to risk taking. This is an effective technique for new forex trader for forex trading.
The large number of trades you do than the chances are that you will end up self defeating because of paying spreads (difference between bid and offer late) on each transaction you carry out. Once you start a trade the odds are 50-50, the spread (for example 3 to 5 points in EURUSD ) the success chances are inclined towards brokers favor. For instance, suppose you are forex trading on four point EURUSD spread, by committing two trades a day your additional payment (spread cost) is 8 points, if you do 40 trades than your additional payment (spread cost) is 160 points in commission�s daily and thrive. Do some effort in learning this. This is an effective technique for new forex trader for forex trading.
The main point access plan favor close points were I will wither be stopped out quickly or take part in short term movement turnaround. Correcting my exit level is firm by the subsequent price action. Preferably I get quick price spike turning in my favor. I happily exit. In EURUSD when the trade goes 30 points my favor I move my stop to neither profit nor loss scenario and most of the times not fortunate enough to become my exit strategy. My forex trading strategy is never to let a profit into loss. End result with exit points is to have an exit plan before you enter the trade and stick to it unless you have real cause to change it. What looks sometimes like a 50 point trade might be 150 point trade with endurance and order.
Trades turnaround tendency is an effective exit plan that is 38%. Sometimes price move in opposite direction and many forex traders jump in there when they anticipate the tendency to go on afterwards that may turn out to be only an adjustment, creating 35% initial tendency change turnaround have to be fine, as well as the Fib level does not grip you can always enter again.
If you are sharp and patient your results will improve considerably, no matter where you enter or exit the market.
More than 30 minutes visuals are good for big picture. More than 30 minutes for 300 periods is not good. As they say in Waynes World, “Stay in the now man”.
1 - What is the relationship between fundamentals and technical in these
periods?
If there is no imminent risk of news associated spikes, prices are inclined to slower movement in a well defined direction (technical forex trading). When prices touch a crucial levels instability starts to surge and the possibility of a huge earning trade emerges. Without any news alarm, fault lines can be broken, on the other hand huge position shift cause news shocks. In the absence of fundamental news, technical take over takes place.
2 - What is a minimum acceptable ratio of profitable trades (to develop a
forex trading system)
Right or wrong is not the standard for a successful forex trading, in fact its all about return on equity, if the money in your forex trading account is growing you are successful. The great Chicago commodity traders in 1980�s applied breakout system that lost 90% of their trades but they made profit by positive three digit percent returns for years. All they did was when they got it right they rode it for all that was worth and when they were not right they exit without any further delay.
On the other hand the broker, he invests his money by buying at his buy price (bid) and selling at his sell price (offer) and usually seize the price difference between them. That�s how your broker makes money and you lose money in forex trading.
The importance of profitability forex trades ratio is irrelevant in shaping forex trading success; on the other hand psychological effect can be important. It becomes much more difficult to pull the trigger on the trade, once you have lost money on successive trades. This is an effective technique for new forex trader for forex trading.
Focus on risk/reward.
2 - Do you trade in these times of more gradual market activity, and if so,
what are your rules for entry and exit?
3 - Which charts (1 min through monthly) do you refer to for entry and exit in these periods and the relevance of each?
At the time of government officials talking, closely observe and monitor the market. When any sudden price move than assume that the reason behind is government officials statement. This is an effective technique for new forex trader for forex trading.
Acquire real economic releases and any relevant articles published. This is an effective technique for new forex trader for forex trading.
Find out the up to date misforecast and its impact on economic release�s instant price shock. This is an effective technique for new forex trader for forex trading.
Precisely I look for forex trading routes inside forex trading channel, preferably 5 minute forex trading channel within 30 minute forex trading channel. When both are concurrently close to top or bottom of channel I begin a trade with a tight stop that reinforce my analysis. I frequently study trad EURUSd. This is an effective technique for new forex trader for forex trading.
I study for 30 min visual plus 60 period moving regular and I also study 5 min visual plus 60 period moving regular. I am looking inside for a trend. For instance, when EURUSD price is less than 60ma on 30 minute visual than I search for openings to sell EURUSD if price bore into 60ma on 5 minute visual to the lower side than I ponder that 30 minute is suggestive of today’s trend and 5 minute a timing pointer. This is an effective technique for new forex trader for forex trading.
When within a short period of time prices rise quickly I look for short term adjustments and recovery. I find a limit on 1 minute visual plus 60 period moving regular is remarkable for profit taking or beginning for a brief period of time “bounce” trade. This is an effective technique for new forex trader for forex trading.
My main focus is on high and low end that is within reach of forex trading range that earlier responds to real accomplishment of main points and forex trading plan that I possibly can employ. This is an effective technique for new forex trader for forex trading.
To understand the indicators of patterns of higher high and higher lows and vise versa I look at bar charts. While discovering the patterns of early change I will join at a level that permits me to connect the patterns at a price that consider for tight stop loss and validate that the pattern is broken. For instance if EURUSD seem to place in a short term bottom as pointed by two successive bars with higher highs and higher lows. Than I will enter a trade when the third bar that is rather close to low of second bar (consider tight stop as if price goes under low of second bar pattern is broken and no reason for trade, and pattern continuation exists) and expectations of getting in at the beginning of a new brief period inclination. This is an effective technique for new forex trader for forex trading.
Finally the series of bars with higher highs and lower highs will run in a sequence of trends and proceed downward. I look for patterns when they no longer able to approach important tops, forex trading channels tops, vital and effective regular lines. Many times I change to candle charts for more validation when these patterns arrive at their logical stopping place. There are many ways to trade this 1) sell immediate top of earlier bar with stop higher than earlier bar ( tight stop, potential to catch full turnaround) 2) sell vital top with tight stop 3) sell top of forex trading channel with tight stop 4) sell lower but with regular line and stop higher than regular. This is an effective technique for new forex trader for forex trading.
Taking any position you need close analysis of crucial moment, so that you can monitor your stop loss level and your ability to risk taking. This is an effective technique for new forex trader for forex trading.
The large number of trades you do than the chances are that you will end up self defeating because of paying spreads (difference between bid and offer late) on each transaction you carry out. Once you start a trade the odds are 50-50, the spread (for example 3 to 5 points in EURUSD ) the success chances are inclined towards brokers favor. For instance, suppose you are forex trading on four point EURUSD spread, by committing two trades a day your additional payment (spread cost) is 8 points, if you do 40 trades than your additional payment (spread cost) is 160 points in commission�s daily and thrive. Do some effort in learning this. This is an effective technique for new forex trader for forex trading.
The main point access plan favor close points were I will wither be stopped out quickly or take part in short term movement turnaround. Correcting my exit level is firm by the subsequent price action. Preferably I get quick price spike turning in my favor. I happily exit. In EURUSD when the trade goes 30 points my favor I move my stop to neither profit nor loss scenario and most of the times not fortunate enough to become my exit strategy. My forex trading strategy is never to let a profit into loss. End result with exit points is to have an exit plan before you enter the trade and stick to it unless you have real cause to change it. What looks sometimes like a 50 point trade might be 150 point trade with endurance and order.
Trades turnaround tendency is an effective exit plan that is 38%. Sometimes price move in opposite direction and many forex traders jump in there when they anticipate the tendency to go on afterwards that may turn out to be only an adjustment, creating 35% initial tendency change turnaround have to be fine, as well as the Fib level does not grip you can always enter again.
If you are sharp and patient your results will improve considerably, no matter where you enter or exit the market.
More than 30 minutes visuals are good for big picture. More than 30 minutes for 300 periods is not good. As they say in Waynes World, “Stay in the now man”.
1 - What is the relationship between fundamentals and technical in these
periods?
If there is no imminent risk of news associated spikes, prices are inclined to slower movement in a well defined direction (technical forex trading). When prices touch a crucial levels instability starts to surge and the possibility of a huge earning trade emerges. Without any news alarm, fault lines can be broken, on the other hand huge position shift cause news shocks. In the absence of fundamental news, technical take over takes place.
2 - What is a minimum acceptable ratio of profitable trades (to develop a
forex trading system)
Right or wrong is not the standard for a successful forex trading, in fact its all about return on equity, if the money in your forex trading account is growing you are successful. The great Chicago commodity traders in 1980�s applied breakout system that lost 90% of their trades but they made profit by positive three digit percent returns for years. All they did was when they got it right they rode it for all that was worth and when they were not right they exit without any further delay.
On the other hand the broker, he invests his money by buying at his buy price (bid) and selling at his sell price (offer) and usually seize the price difference between them. That�s how your broker makes money and you lose money in forex trading.
The importance of profitability forex trades ratio is irrelevant in shaping forex trading success; on the other hand psychological effect can be important. It becomes much more difficult to pull the trigger on the trade, once you have lost money on successive trades. This is an effective technique for new forex trader for forex trading.
Focus on risk/reward.
1.4 ESSENTIAL ELEMENTS OF A SUCCESSFUL CURRENCY TRADER Confronting with courage under tense conditions
Armed with all foreign exchange trading information will not help unless you have the courage to take risk in buying and selling currencies and risking your money. When you put your money at risk you have to be confident that you are going to make profit our of it. Its not easy at all to press enter key when your real money is at risk.
Anxiety and fear will always accompany you. You will only make money if you have enough courage and will to act. When a fireman enters a burning building to save life, his own life is endanger but he does it anyway and accomplish his mission. If you can put yourself to the role of that fireman you can be successful forex trader or currency trader On the other hand, when you acquire enough courage, soon it will be convenient for you to take risk and start making money in forex trading or currency trading. Sometime you grow over confidence and start losing your focus on all risk involved.
Begin by knowing yourself first. Ask yourself that are you the person who can control his personality, like overcoming emotions and shortcomings carryout trades in currency market, most of the times under tense conditions? Ask yourself that are you the type of person who is overoptimistic and vulnerable to take more chances then desired? By looking inside yourself you can overcome the defects in advance, otherwise they may result in failure or huge loss. An immense loss can end your career in forex trading or currency trading or delay your attainment until you can raise extra capital.
The incapacity to begin a trade or close a losing trade can establish severe psychological problems for a trader moving forward. Being aware of these obstacles, you can acquire excellent trading habits.
In trading foreign exchange the problem does not end just by �pulling the trigger� In fact what comes next is far more problematic. The next challenge is staying in the trade. Once you enter the trade of trading foreign exchange or forex you can leave the trade early once you find it not working. Many people who find success in non trading projects find this notion hard to carry out.
For example, real estate tycoon make money by selling property during the boom periods and buying during bad times. The strategy is to hold on the capital during bad times and invest that capital during boom period. In foreign exchange trading, the currencies are in long term persistent, directional trends and when you really want to invest and make good use of it, your equity will be worn out before currency comes back.
The other strategy is to stay in a trade that is flourishing. The danger is closing out while gaining, without any appropriate motive. �Fear is your worst enemy�. Fear will work as a hindrance in your subconscious mind. You will not be able to work unhindered. Some fearful thoughts come into your mind, like �what if news comes out and you wind up with a loss�. In reality, if the news comes out in a currency that is showing upward trend, than there are higher chances of news being positive than negative.
Mostly your fear is untrue. Don�t fight your fear, accept it like a fun and move towards your task at hand that is shaping your way out plan based on real price measure. As Gath says in Wayresworld �Live in the now man�. Don�t worry about what could be, work on what is in hand by studying your chart and shaping your way out point as genuine and realistic.
Some times you close in a winning position, because you find it boring, its not moving according to your expectations. For example in a hockey match, some time a key player is out of the ground temporarily for a breather, when he come back in the game, he is a serious threat to the opponent, because now he can gain more yards.
Your situation is like that hockey player. Once you take a breather after gains, the next move should be more gains.
To be successful in foreign exchange trading or forex trading or currency trading you have to be brave and patient. If you are impatient and hasty you will have to adjust yourself according to the requirements of the trade. You will have to be confident to risk your money. You need to acquire knowledge base to be confident in decision making.
Gain knowledge through patience, study and focus.
Many enter the trade but mostly fail because of the fact that they don�t have the proper money management skills. They believe that all they need is know how of few charts, technical indicators and finance. Most of them come up losers with few weeks or months, in the beginning few of them are successful, but it take not more than a year before they are flatten. Only few with good money making skills, patience, study and very well focused are successful traders.
Chances of success is only insured if you can acquire knowledge that requires hard work, study, dedication, and focus. Also learning all aspects of the trade like funda
Anxiety and fear will always accompany you. You will only make money if you have enough courage and will to act. When a fireman enters a burning building to save life, his own life is endanger but he does it anyway and accomplish his mission. If you can put yourself to the role of that fireman you can be successful forex trader or currency trader On the other hand, when you acquire enough courage, soon it will be convenient for you to take risk and start making money in forex trading or currency trading. Sometime you grow over confidence and start losing your focus on all risk involved.
Begin by knowing yourself first. Ask yourself that are you the person who can control his personality, like overcoming emotions and shortcomings carryout trades in currency market, most of the times under tense conditions? Ask yourself that are you the type of person who is overoptimistic and vulnerable to take more chances then desired? By looking inside yourself you can overcome the defects in advance, otherwise they may result in failure or huge loss. An immense loss can end your career in forex trading or currency trading or delay your attainment until you can raise extra capital.
The incapacity to begin a trade or close a losing trade can establish severe psychological problems for a trader moving forward. Being aware of these obstacles, you can acquire excellent trading habits.
In trading foreign exchange the problem does not end just by �pulling the trigger� In fact what comes next is far more problematic. The next challenge is staying in the trade. Once you enter the trade of trading foreign exchange or forex you can leave the trade early once you find it not working. Many people who find success in non trading projects find this notion hard to carry out.
For example, real estate tycoon make money by selling property during the boom periods and buying during bad times. The strategy is to hold on the capital during bad times and invest that capital during boom period. In foreign exchange trading, the currencies are in long term persistent, directional trends and when you really want to invest and make good use of it, your equity will be worn out before currency comes back.
The other strategy is to stay in a trade that is flourishing. The danger is closing out while gaining, without any appropriate motive. �Fear is your worst enemy�. Fear will work as a hindrance in your subconscious mind. You will not be able to work unhindered. Some fearful thoughts come into your mind, like �what if news comes out and you wind up with a loss�. In reality, if the news comes out in a currency that is showing upward trend, than there are higher chances of news being positive than negative.
Mostly your fear is untrue. Don�t fight your fear, accept it like a fun and move towards your task at hand that is shaping your way out plan based on real price measure. As Gath says in Wayresworld �Live in the now man�. Don�t worry about what could be, work on what is in hand by studying your chart and shaping your way out point as genuine and realistic.
Some times you close in a winning position, because you find it boring, its not moving according to your expectations. For example in a hockey match, some time a key player is out of the ground temporarily for a breather, when he come back in the game, he is a serious threat to the opponent, because now he can gain more yards.
Your situation is like that hockey player. Once you take a breather after gains, the next move should be more gains.
To be successful in foreign exchange trading or forex trading or currency trading you have to be brave and patient. If you are impatient and hasty you will have to adjust yourself according to the requirements of the trade. You will have to be confident to risk your money. You need to acquire knowledge base to be confident in decision making.
Gain knowledge through patience, study and focus.
Many enter the trade but mostly fail because of the fact that they don�t have the proper money management skills. They believe that all they need is know how of few charts, technical indicators and finance. Most of them come up losers with few weeks or months, in the beginning few of them are successful, but it take not more than a year before they are flatten. Only few with good money making skills, patience, study and very well focused are successful traders.
Chances of success is only insured if you can acquire knowledge that requires hard work, study, dedication, and focus. Also learning all aspects of the trade like funda
1.3 FOREX TRADING | EQUITIES | FUTURES TRADING
orex trading turnover is almost 3.2 $ trillion everyday. Offering greater advantages to conventional trading markets. Its outlined as following:
FOREX VS EQUITIES
Around the Clock Trading
Forex trading is around the clock, providing benefits over equities trading. Buyers are always actively involved in trading foreign currencies. Traders quickly respond whenever news breaks. Earning reports and analyst conference calls are not affected by after hours.
Equities trading has several restrictions for after hour US equities trading such as ECN�s ( Electronic Communication Networks), also know as matching systems; if possible brings together buyers and seller. Chances of carrying out every trade is not assured, or at fair market price. Often traders have to wait for next market with a tighter spread.
Quality Liquidity
Forex trading volume is 50x everyday, that is larger than New York Stock Exchange, broker/dealers are always buying and selling currencies. It helps to ensure price stability of major currencies in the liquidity market. Traders have a choice to open or close at a reasonable market price. Stock market stocks are vulnerable to liquidity risk due to lower trade volume resulting wider dealing spread or larger price movements, responding to somewhat large transaction.
100:1 (&200:1) Leverage
Leverage of 100:1 is usually available from online forex dealers that is far more than usual 2:1 margin offered by equity brokers. Traders post $1000 margin for a $100,000 or 1% at 100:1.
Significant leverage available from online currency trading firms is not for everyone but it�s an effective tool to boost finance. In forex market leverage its not just about risk but in fact its necessary because the regular percentage change chief currency is below 1% in contrast to stock with 10% price change on any given day. Margined trading is strictly followed by a disciplined trading method that constantly apply stop and restrict orders. Planning strict controls that emotions might not take over.
Efficient Transaction Costs
In terms of transaction fees and commission Forex is more cost effective to trade. Offering traders access to all the related market knowledge and trading tools for self-direct accounts without any charges. Commission for stock trades range from $795-29.95 per trade including online discount brokers up to $100 or more per trade with complete brokers service.
One more point require consideration is regarding the width of the bid/ask spread irrespective of deal size, normally forex dealing spreads are 5 pips or less ( a pip is 0005 US cents). Generally width of the spread in a forex transaction is less than 1/10 of a stock including a .125(1/8) wide spread.
Profit Potential In Both Rising And Falling Markets
The potential for profit always exists in rising as well in falling market. An investor in an open forex position, shorten one currency and lengthen the other. Trader sells in short position in anticipation of decline while in long position the trader buy a currency in anticipation of rise.
Another distinct advantage over equity trading is the ability to sell currencies without any limitations Equity markets in the US is very difficult to set up a brief position because of Zero Uptick rule that discourages investors from shorting a stock unless it directly equals or lowers the price of short sale that follows.
FOREX VS FUTURES
Forex trading or currency trading markets operates 24 hours with over $2 trillion daily turn over. It is the most dynamic market in the world. It�s a major even.
There are significant benefits of forex over currency futures trading. There are philosophical facts like the history of each, their main spectators, and their importance in the contemporary forex markets, to more visible issues like trade fees, surplus, cash flow, convenience of technical and information proposed by each service.
These differences are as following
Big volume is better for Liquidity. Futures currency volume is 1% CME of the daily volume in the forex markets as compared to liquidity has many advantages that forex markets hold over currency futures. It is an established fact that currency professionals are well aware that cash has been dominating since the dawn of contemporary currency markets in the early 1970�s. From every individual traders risk profile currently have full access to the available opening in the forex markets.
Compared to futures markets forex markets presents much tighter bid for spreads. It can be readily seen that in the USD/CHF in the above example that by inverting futures dealing price of 5894 � 5897 brings about a cash price of 1.6959 � 1.6966,8 pips vs the 5 pip spread on hand in the cash markets.
Compared to currency futures trading, forex market offer higher leverage rate and lower margin rates. Currency trading have same rate for all day and all night traders, but futures traders have different rates for day and night traders, its dependent on transaction size.
Forex markets make use of easy and understandable terms and price quotes where as currency futures quotes are inversions of the cash price. Such as a cash price for USD/CHF is 1.71001.7105, the futures equivalent is 58941/.5897; a policy that is only limited to futures trading.
The forex market have no other difficulty of including a forward forex element, to consider any time factor, interest rates, and the difference of interest from currency to currency, where as currency futures prices have many complications such as adjustments, and mathematical manipulation.
Currency futures can easily swallow trader�s profits due to trading commission, exchange fees and clearing fees.
Currency futures have experienced historical fluctuations since the last ten years. Currency futures are a tiny part of extremely larger market.
Currency futures contracts were established at the Chicago (called IMM contracts or international monetary markets futures ) Mercantile Exchange in 1972.
These contracts were established for the market specialists, at that time they have accounted for 99% of the quantity generated in the currency markets.
Contracts proposals were designed as 99% of the quantity will be generated by markets.
Few courageous individuals speculate in currency futures, extremely skilled veterans take over the pits. These contracts were created.
Currency futures become a minor event, rather than a hub for world wide currency connections for hedgers and arbitragers roaming around for small, brief, and inconsistent between cash and futures currency prices.
They appear permanent but in reality very few arbitrage windows are open. And whenever they do, they are instantly slammed shut by a horde of professional dealers.
These changes have reduced the importance of number of currency futures professionals, shut the window further on forex vs. futures arbitrage openings and increased the openings for systematic markets. While equal opportunity is dangerous to the P&L of a currency futures trader, its been the trail out of the labyrinth for individuals trading in the forex markets.
FOREX VS EQUITIES
Around the Clock Trading
Forex trading is around the clock, providing benefits over equities trading. Buyers are always actively involved in trading foreign currencies. Traders quickly respond whenever news breaks. Earning reports and analyst conference calls are not affected by after hours.
Equities trading has several restrictions for after hour US equities trading such as ECN�s ( Electronic Communication Networks), also know as matching systems; if possible brings together buyers and seller. Chances of carrying out every trade is not assured, or at fair market price. Often traders have to wait for next market with a tighter spread.
Quality Liquidity
Forex trading volume is 50x everyday, that is larger than New York Stock Exchange, broker/dealers are always buying and selling currencies. It helps to ensure price stability of major currencies in the liquidity market. Traders have a choice to open or close at a reasonable market price. Stock market stocks are vulnerable to liquidity risk due to lower trade volume resulting wider dealing spread or larger price movements, responding to somewhat large transaction.
100:1 (&200:1) Leverage
Leverage of 100:1 is usually available from online forex dealers that is far more than usual 2:1 margin offered by equity brokers. Traders post $1000 margin for a $100,000 or 1% at 100:1.
Significant leverage available from online currency trading firms is not for everyone but it�s an effective tool to boost finance. In forex market leverage its not just about risk but in fact its necessary because the regular percentage change chief currency is below 1% in contrast to stock with 10% price change on any given day. Margined trading is strictly followed by a disciplined trading method that constantly apply stop and restrict orders. Planning strict controls that emotions might not take over.
Efficient Transaction Costs
In terms of transaction fees and commission Forex is more cost effective to trade. Offering traders access to all the related market knowledge and trading tools for self-direct accounts without any charges. Commission for stock trades range from $795-29.95 per trade including online discount brokers up to $100 or more per trade with complete brokers service.
One more point require consideration is regarding the width of the bid/ask spread irrespective of deal size, normally forex dealing spreads are 5 pips or less ( a pip is 0005 US cents). Generally width of the spread in a forex transaction is less than 1/10 of a stock including a .125(1/8) wide spread.
Profit Potential In Both Rising And Falling Markets
The potential for profit always exists in rising as well in falling market. An investor in an open forex position, shorten one currency and lengthen the other. Trader sells in short position in anticipation of decline while in long position the trader buy a currency in anticipation of rise.
Another distinct advantage over equity trading is the ability to sell currencies without any limitations Equity markets in the US is very difficult to set up a brief position because of Zero Uptick rule that discourages investors from shorting a stock unless it directly equals or lowers the price of short sale that follows.
FOREX VS FUTURES
Forex trading or currency trading markets operates 24 hours with over $2 trillion daily turn over. It is the most dynamic market in the world. It�s a major even.
There are significant benefits of forex over currency futures trading. There are philosophical facts like the history of each, their main spectators, and their importance in the contemporary forex markets, to more visible issues like trade fees, surplus, cash flow, convenience of technical and information proposed by each service.
These differences are as following
Big volume is better for Liquidity. Futures currency volume is 1% CME of the daily volume in the forex markets as compared to liquidity has many advantages that forex markets hold over currency futures. It is an established fact that currency professionals are well aware that cash has been dominating since the dawn of contemporary currency markets in the early 1970�s. From every individual traders risk profile currently have full access to the available opening in the forex markets.
Compared to futures markets forex markets presents much tighter bid for spreads. It can be readily seen that in the USD/CHF in the above example that by inverting futures dealing price of 5894 � 5897 brings about a cash price of 1.6959 � 1.6966,8 pips vs the 5 pip spread on hand in the cash markets.
Compared to currency futures trading, forex market offer higher leverage rate and lower margin rates. Currency trading have same rate for all day and all night traders, but futures traders have different rates for day and night traders, its dependent on transaction size.
Forex markets make use of easy and understandable terms and price quotes where as currency futures quotes are inversions of the cash price. Such as a cash price for USD/CHF is 1.71001.7105, the futures equivalent is 58941/.5897; a policy that is only limited to futures trading.
The forex market have no other difficulty of including a forward forex element, to consider any time factor, interest rates, and the difference of interest from currency to currency, where as currency futures prices have many complications such as adjustments, and mathematical manipulation.
Currency futures can easily swallow trader�s profits due to trading commission, exchange fees and clearing fees.
Currency futures have experienced historical fluctuations since the last ten years. Currency futures are a tiny part of extremely larger market.
Currency futures contracts were established at the Chicago (called IMM contracts or international monetary markets futures ) Mercantile Exchange in 1972.
These contracts were established for the market specialists, at that time they have accounted for 99% of the quantity generated in the currency markets.
Contracts proposals were designed as 99% of the quantity will be generated by markets.
Few courageous individuals speculate in currency futures, extremely skilled veterans take over the pits. These contracts were created.
Currency futures become a minor event, rather than a hub for world wide currency connections for hedgers and arbitragers roaming around for small, brief, and inconsistent between cash and futures currency prices.
They appear permanent but in reality very few arbitrage windows are open. And whenever they do, they are instantly slammed shut by a horde of professional dealers.
These changes have reduced the importance of number of currency futures professionals, shut the window further on forex vs. futures arbitrage openings and increased the openings for systematic markets. While equal opportunity is dangerous to the P&L of a currency futures trader, its been the trail out of the labyrinth for individuals trading in the forex markets.
1.8 WHAT DRIVES SHORT TERM CURRENCY MOVEMENTS IN FOREX?
Short-term currency movements in forex are immediately impacted by:
There is an instant impact of short term currency movements in forex trading
World events.
Comments, statements by government officials.
Unexpected changes in economic numbers.
Technical - charts.
Stock markets.
Bond markets.
Commodity markets.
Newspaper articles.
Interviews with influential individuals.
Rumors.
World events:
Depending on the severity of the news, a world event can have an immediate substantial impact upon a currency and forex market. The British Pound for example took an immediate beating when the press reported they might have exaggerated Iraq chemical weapons plans. These types of news have high impact on forex market. A general opinion is a small trader can lost their money during this news if he works with TK (take profit) and ST (Stop Loss) they will save. So keep eyes on world news and events happen. These take major contribution in C urrency Movements.
World Events:
Significant international events can have a substantial impact on the currency and forex market, such as the outcome of news. When the news broke out about the Iraq�s chemical weapons plan. immediately the British Pounds took the beating. Such news have quick effect on forex market. If small traders works with TK (take profit) and ST (Stop Loss) the general view is that the effect of such news results in great lost for them. So keep a vigilant eye on international news and events as they happen. These events and news are foremost contributors in Currency Movements.
Comments, statements by government officials:
Direct statements or hints of changes in government policy by government officials will be immediately reflected in currency rates. For example, when former ECB president Dusenberg reiterates that Euro rates are at the correct level, the Euro jumps a quick 30 points. This is also a big factor in forex market but in real some time its work on same day some time on next day. But it takes impact. Government official news has high impact on currency market. Keep strong eyes on Government officials meetings and press briefing. These take major contribution in Currency Movements.
Comments, statements by government officials:
When some government officials give some statements regarding government policy, such statements immediately reflects currency rates. For example, when Dusenberg a former ECB president go over to announce that the current Euro rates are in correct level, it immediately follow a quick 30 points jump in Euro.
Unexpected changes in economic numbers:
When scheduled economic numbers are not close to what was expected the movements in the currency can be dramatic. We use these opportunities to initiate trades on a regular basis. Example. U.S. employment fell 100,000 versus an expected rise of 30,000; USD fell 1.5% in a few hours. Each day we have some economic data who impact on forex market. These data have quick impact on forex market but these data are not predictable that whether they go to upward or downward direction. These take major contribution in Currency Movements. There are some special strategies to deal in this situation. You will see these strategies in our FxCraz courses.
Unforeseen changes in economic numbers:
When well planned economic numbers are not near to what was foreseen, the currency movements can be intense. We make good use of these chances to begin trades on day to day basis. For example when US employment cut down to 100,000 against foreseeable set up of 30,000 USD cut down to 1.5% in a few hours. Every day we find some economic data that influence the forex market. Forex market have fast effect of these data, but whether these data go upward or downward direction is not predictable. Currency Movements depends on these data significantly. There are few distinct tactics to handle this state.
Technical - charts:
Breakouts on charts sometimes cause a good move to develop � and sometimes not. Failure to follow through on breakouts often causes a severe reaction in the opposite direction. For example, EURUSD could not hold a break above 113.30 and promptly fell 70 points. These take major contribution in Currency Movements.
Technical - charts :
Data analysis on visuals is sometimes work out excellent and sometimes not. Failure to understand data analysis repeatedly causes opposite reaction. For example, if EURUSD is not able to hold a break above 113:30 and sharply cut down 70 points. These are currency movements major contributors.
Stock markets:
Foreigners have been net sellers of U.S. stocks for quite awhile now. However, the amounts lately have not been great. Do not look for the USD to follow the stock market closely as it did during the boom. You will be disappointed if you do. Forex trading is different from other markets but these take major contribution in Currency Movements.
Stock markets:
Non nationals are net sellers of US stocks for some time now. On the other hand the net amounts lately have not be good. Never look for the USD to pursue the stock market watchfully as was during the boom period. You will not be happy because Forex trading is quite different from other markets, since these take foremost involvement in Currency Movements.
Bond markets:
Foreigners, especially foreign Central Banks have huge bond holdings. They are very much concerned with capital loss due to rising interest rates. In fact on those days when the 5 and 10 years auction results are announced at 1pm EDT, the currency markets or forex trading are very quiet, especially in Europe. These take major contribution in Currency Movements.
Bond Markets:
Non nationals, notably foreign Central Banks are holding huge bond. They are greatly alarmed with capital loss because of increasing borrowing rates. The currency market or forex trading are quiet, notably in Europe on those days when the 5 and 10 years auction results are announced at 1 pm EDT. These take foremost involvement in Currency Movements.
Commodity markets:
Some currencies react to significant changes in agricultural product price and gold, Australia for example. Forex market is link with other market as well. Commodity is one of them who make impact on forex market. These take major contribution in Currency Movements.
Commodity markets:
Few currencies respond to substantial fluctuations in farming product price and gold, Australia for instance. Forex Market is related besides other market too. Articles of trade is one of them who make significant effect on forex market. These take foremost involvement in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can cause a short-term move in a currency. Because traders have strong eyes on world event�s and news. They make trade and on the rumor they show some quickness and make a wrong trade. Some time its fruitful sometime not. So try to move where mob is going. You may have minimum chances to lose. These take major contribution in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can effect a short term shift in a currency. As traders possess strong eyes on world events, news and information. Sometimes they make bad trade due to some unconfirmed reports. Some time its useful and sometime not. Keep moving where the flock is going. That�s how your chances of loss remain small. These take foremost involvement in Currency Movements.
There is an instant impact of short term currency movements in forex trading
World events.
Comments, statements by government officials.
Unexpected changes in economic numbers.
Technical - charts.
Stock markets.
Bond markets.
Commodity markets.
Newspaper articles.
Interviews with influential individuals.
Rumors.
World events:
Depending on the severity of the news, a world event can have an immediate substantial impact upon a currency and forex market. The British Pound for example took an immediate beating when the press reported they might have exaggerated Iraq chemical weapons plans. These types of news have high impact on forex market. A general opinion is a small trader can lost their money during this news if he works with TK (take profit) and ST (Stop Loss) they will save. So keep eyes on world news and events happen. These take major contribution in C urrency Movements.
World Events:
Significant international events can have a substantial impact on the currency and forex market, such as the outcome of news. When the news broke out about the Iraq�s chemical weapons plan. immediately the British Pounds took the beating. Such news have quick effect on forex market. If small traders works with TK (take profit) and ST (Stop Loss) the general view is that the effect of such news results in great lost for them. So keep a vigilant eye on international news and events as they happen. These events and news are foremost contributors in Currency Movements.
Comments, statements by government officials:
Direct statements or hints of changes in government policy by government officials will be immediately reflected in currency rates. For example, when former ECB president Dusenberg reiterates that Euro rates are at the correct level, the Euro jumps a quick 30 points. This is also a big factor in forex market but in real some time its work on same day some time on next day. But it takes impact. Government official news has high impact on currency market. Keep strong eyes on Government officials meetings and press briefing. These take major contribution in Currency Movements.
Comments, statements by government officials:
When some government officials give some statements regarding government policy, such statements immediately reflects currency rates. For example, when Dusenberg a former ECB president go over to announce that the current Euro rates are in correct level, it immediately follow a quick 30 points jump in Euro.
Unexpected changes in economic numbers:
When scheduled economic numbers are not close to what was expected the movements in the currency can be dramatic. We use these opportunities to initiate trades on a regular basis. Example. U.S. employment fell 100,000 versus an expected rise of 30,000; USD fell 1.5% in a few hours. Each day we have some economic data who impact on forex market. These data have quick impact on forex market but these data are not predictable that whether they go to upward or downward direction. These take major contribution in Currency Movements. There are some special strategies to deal in this situation. You will see these strategies in our FxCraz courses.
Unforeseen changes in economic numbers:
When well planned economic numbers are not near to what was foreseen, the currency movements can be intense. We make good use of these chances to begin trades on day to day basis. For example when US employment cut down to 100,000 against foreseeable set up of 30,000 USD cut down to 1.5% in a few hours. Every day we find some economic data that influence the forex market. Forex market have fast effect of these data, but whether these data go upward or downward direction is not predictable. Currency Movements depends on these data significantly. There are few distinct tactics to handle this state.
Technical - charts:
Breakouts on charts sometimes cause a good move to develop � and sometimes not. Failure to follow through on breakouts often causes a severe reaction in the opposite direction. For example, EURUSD could not hold a break above 113.30 and promptly fell 70 points. These take major contribution in Currency Movements.
Technical - charts :
Data analysis on visuals is sometimes work out excellent and sometimes not. Failure to understand data analysis repeatedly causes opposite reaction. For example, if EURUSD is not able to hold a break above 113:30 and sharply cut down 70 points. These are currency movements major contributors.
Stock markets:
Foreigners have been net sellers of U.S. stocks for quite awhile now. However, the amounts lately have not been great. Do not look for the USD to follow the stock market closely as it did during the boom. You will be disappointed if you do. Forex trading is different from other markets but these take major contribution in Currency Movements.
Stock markets:
Non nationals are net sellers of US stocks for some time now. On the other hand the net amounts lately have not be good. Never look for the USD to pursue the stock market watchfully as was during the boom period. You will not be happy because Forex trading is quite different from other markets, since these take foremost involvement in Currency Movements.
Bond markets:
Foreigners, especially foreign Central Banks have huge bond holdings. They are very much concerned with capital loss due to rising interest rates. In fact on those days when the 5 and 10 years auction results are announced at 1pm EDT, the currency markets or forex trading are very quiet, especially in Europe. These take major contribution in Currency Movements.
Bond Markets:
Non nationals, notably foreign Central Banks are holding huge bond. They are greatly alarmed with capital loss because of increasing borrowing rates. The currency market or forex trading are quiet, notably in Europe on those days when the 5 and 10 years auction results are announced at 1 pm EDT. These take foremost involvement in Currency Movements.
Commodity markets:
Some currencies react to significant changes in agricultural product price and gold, Australia for example. Forex market is link with other market as well. Commodity is one of them who make impact on forex market. These take major contribution in Currency Movements.
Commodity markets:
Few currencies respond to substantial fluctuations in farming product price and gold, Australia for instance. Forex Market is related besides other market too. Articles of trade is one of them who make significant effect on forex market. These take foremost involvement in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can cause a short-term move in a currency. Because traders have strong eyes on world event�s and news. They make trade and on the rumor they show some quickness and make a wrong trade. Some time its fruitful sometime not. So try to move where mob is going. You may have minimum chances to lose. These take major contribution in Currency Movements.
Newspaper articles, interviews, and rumors:
In forex trading all can effect a short term shift in a currency. As traders possess strong eyes on world events, news and information. Sometimes they make bad trade due to some unconfirmed reports. Some time its useful and sometime not. Keep moving where the flock is going. That�s how your chances of loss remain small. These take foremost involvement in Currency Movements.
1.7 UNDERSTANDING LEVERAGE & MARGIN
Usually leverage is quoted as a ratio that is 100.1.
It means that you can trade with 100 units by just investing 1 unit. By just investing 1,000 USD you can trade up to 100,000 USD.
Margin is quite same as leverage, but a view point is little different. Margin is usually quoted as a percentage that is 10%.
Borrowed money trading is leverage. Brokers in the foreign exchange provides greater leverage than the brokers in the equities and future market, that makes forex more tempting and interesting than other kinds of traders. It is important to understand that the leverage is not without any flaw. It has the potential to notably rise trader’s earnings, but it can also substantially increase their losses, if incorrectly applied.
Leverage and Margin:
Leverage will also specify margin conditions that is the amount of currency that the trader should have in their account. For example, some brokers offer a maximum of 20:1 leverage that is for every 20 units of currency the trader purchase, they must have a 1 unit in their account. There are brokers who offer up to 100.1 leverage, there are few who even give a leverage of up to 400:1.
Margin Calls:
Since traders who are trading with leverage, because they use borrowed money there is a possibility that they might lose greater money than they have in their account. In order to stay away from this situation, most of the forex traders design a system known as an automated margin call. Automated margin call make good use of the system when the worth of the trader’s account is lower than the margin requirements, when the condition is as such then the majority of the forex brokers will quickly and automatically close the trader out of their position, that is how they avoid end up in negative account balance.
In order to understand its working, there is a following example:
If a trader buys 100,000 EURUSD. The margin required is $ 1,000 per $ 100,000 units traded. Assume that only $5000 in the account of trader. In such a situation, each pip is worth $10. if against the trader EUR-USD goes 401 pips, the trader will have a floating loss of -4.010 US dollars (401 pips, 10 USD per pip) As the trader has an opening balance of $5000, then their variable value of account will be $990 � the variable loss of $4010 = 990. As its below the required margin, which the broker has agreed upon. As a consequence the broker is free to close the position as he desire � without consulting the trader.
Leverage Facilitate Greater Control of Risk:
Although leverage is considered to be a risky business but it can be a valuable tool to monitor risk and vulnerability they are exposed to. For example leverage is used by many traders as an assets that are comparatively predictable. It makes leverage that can be well organized and controlled, having primary source of risk - as against the asset�s instability that cannot be regulated by the trader. Such thinking is popular amongst forex traders when the trend of currency movement is in a very narrow range, as compared to stocks and futures, a 2% shift in price in a day is amazing for a currency, but is normal in most of the equities markets. Resulting in forex traders to use leverage to trade predictable currencies and enjoy greater power and take their chances freely. They depend on the leverage ratio that they have selected than the basic asset ’s instability.
Traders should be careful in using leverage. It enhances their earnings immensely and is popular amongst dynamic forex traders - but its also responsible for great loss especially those who are new to the market.
A simple example:
1 - If I have 1000 USD I can invest in forex trading, my choice fo broker is the one who gives me a leverage of 1:200. so that I can buy 200 dollars from my 1 dollar or I USD is equal to 200 USD.
2 - I will trade and decide how much I want to invest and how much I will use as a reserve. If I want to trade with 100 USD, it means investing 20,000 USD.
On every pip I will acquire 2 USD gain or loss. If 1,5677 USD/GPB is a trade buy. After 10 min its 1,5699. it means 20 pip profit, my gain is 40 dollars. If the market is 1,5655 then I incur loss of 40 dollars.
In leverage you have an equal chances for success as well as failure. If you want to use leverage be careful before you take your chances. In leverage a trader might begin with as little as zero and soon become a millionaire or begin from a millionaire and soon become zero.
It means that you can trade with 100 units by just investing 1 unit. By just investing 1,000 USD you can trade up to 100,000 USD.
Margin is quite same as leverage, but a view point is little different. Margin is usually quoted as a percentage that is 10%.
Borrowed money trading is leverage. Brokers in the foreign exchange provides greater leverage than the brokers in the equities and future market, that makes forex more tempting and interesting than other kinds of traders. It is important to understand that the leverage is not without any flaw. It has the potential to notably rise trader’s earnings, but it can also substantially increase their losses, if incorrectly applied.
Leverage and Margin:
Leverage will also specify margin conditions that is the amount of currency that the trader should have in their account. For example, some brokers offer a maximum of 20:1 leverage that is for every 20 units of currency the trader purchase, they must have a 1 unit in their account. There are brokers who offer up to 100.1 leverage, there are few who even give a leverage of up to 400:1.
Margin Calls:
Since traders who are trading with leverage, because they use borrowed money there is a possibility that they might lose greater money than they have in their account. In order to stay away from this situation, most of the forex traders design a system known as an automated margin call. Automated margin call make good use of the system when the worth of the trader’s account is lower than the margin requirements, when the condition is as such then the majority of the forex brokers will quickly and automatically close the trader out of their position, that is how they avoid end up in negative account balance.
In order to understand its working, there is a following example:
If a trader buys 100,000 EURUSD. The margin required is $ 1,000 per $ 100,000 units traded. Assume that only $5000 in the account of trader. In such a situation, each pip is worth $10. if against the trader EUR-USD goes 401 pips, the trader will have a floating loss of -4.010 US dollars (401 pips, 10 USD per pip) As the trader has an opening balance of $5000, then their variable value of account will be $990 � the variable loss of $4010 = 990. As its below the required margin, which the broker has agreed upon. As a consequence the broker is free to close the position as he desire � without consulting the trader.
Leverage Facilitate Greater Control of Risk:
Although leverage is considered to be a risky business but it can be a valuable tool to monitor risk and vulnerability they are exposed to. For example leverage is used by many traders as an assets that are comparatively predictable. It makes leverage that can be well organized and controlled, having primary source of risk - as against the asset�s instability that cannot be regulated by the trader. Such thinking is popular amongst forex traders when the trend of currency movement is in a very narrow range, as compared to stocks and futures, a 2% shift in price in a day is amazing for a currency, but is normal in most of the equities markets. Resulting in forex traders to use leverage to trade predictable currencies and enjoy greater power and take their chances freely. They depend on the leverage ratio that they have selected than the basic asset ’s instability.
Traders should be careful in using leverage. It enhances their earnings immensely and is popular amongst dynamic forex traders - but its also responsible for great loss especially those who are new to the market.
A simple example:
1 - If I have 1000 USD I can invest in forex trading, my choice fo broker is the one who gives me a leverage of 1:200. so that I can buy 200 dollars from my 1 dollar or I USD is equal to 200 USD.
2 - I will trade and decide how much I want to invest and how much I will use as a reserve. If I want to trade with 100 USD, it means investing 20,000 USD.
On every pip I will acquire 2 USD gain or loss. If 1,5677 USD/GPB is a trade buy. After 10 min its 1,5699. it means 20 pip profit, my gain is 40 dollars. If the market is 1,5655 then I incur loss of 40 dollars.
In leverage you have an equal chances for success as well as failure. If you want to use leverage be careful before you take your chances. In leverage a trader might begin with as little as zero and soon become a millionaire or begin from a millionaire and soon become zero.
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