Photobucket

Keep Visiting Forexlearner for Latest Forex Daily Levels, Forex Live Rates, Forex Recommendations, Forex News*** "Headline News" October 05, 2007--- JAPAN ECON: Leading Index m/m 30.0% As Expected----

Currency
Long/Buy
Short/Sell
Target
Stop
Date
Remarks
Google

FOREX SYGNALS SYSTEM

EURO

Latest trading recommendations 08.00 BST, 03.00 EST)  23-05-08 

Currency Date Time Strategy First Target Second target
EUR/US$ (buy) 22-05-08 13.00 Short term buy at 1.5635 1.5655 1.5675
EUR/US$ (sell) 23-05-08 08.00 Short-term, sell at 1.5810 1.5780 1.5750
US$/CHF (buy) 23-05-08 08.00 Short term, buy at 1.0255 1.0275 1.0295
US$/CHF (sell) 22-05-08 13.00 Short term, sell at 1.0395 1.0375 1.0355
AUD/US$ 21-05-08 13.00 Short term, sell at 0.9650 0.9620 0.9590
US$/CAD 21-05-08 13.00 Short term, buy at 0.9830 0.9850 0.9870
EUR/CHF 19-05-08 13.00 Short term, sell at 1.6350 1.6330 1.6310

(We suggest investors make their own stop-loss decisions. We will, however, assume that all trades have stop losses at 30 pips from entry unless we advise otherwise)

Pound

Latest short-term trading recommendations 08.00 BST, (03.00 EST)  23-05-08

Currency Date Time Strategy First target Second target
GBP/US$ (buy) 23-05-08 08.00 Short term buy at 1.9550 1.9580 1.9610
GBP/US$ (sell) 23-05-08 08.00 Short term sell at 1.9840 1.9815 1.9790
EUR/GBP (buy) 06-05-08 13.00 Short term, buy at 0.7810 0.7830 0.7850
EUR/GBP (sell) 23-05-08 08.00 Short term, sell at 0.8000 0.7980 0.7960
           

(We suggest investors make their own decisions on stop-loss positions. We will, however assume that all trades have stop losses at 30 points unless we advise otherwise)

Wednesday, February 28, 2007

“Dollar Turns – Look For Continuation”

Technical Overview

• Euro Topped?
• Japanese Yen 119 is Key
• British Pound Falters Before 1.9700
• Swiss Franc Reversal at 61.8%
• Canadian Dollar Nearing Important Support
• Australian Dollar Indecisive
• New Zealand Dollar In Small 5th Down



EURUSD – Our analysis from yesterday that “a likely level for a reversal is 1.3257/64. 1.3257 is the 78.6% fibo of 1.3364-1.2865 and 1.3264 is the monthly R1 pivot. Additionally, the 61.8% extension of waves 1 through 3 is at 1.3253 (1.3081 + (.618 x (1.3190 – 1.2911))” has proved correct so far. A break below yesterday’s low at 1.3160 would bolster the bearish case. Near term resistance is at former intraday support of 1.3211. Yesterday’s high at 1.3262 needs to hold in order for the bearish structure to remain intact. Short term bearish support on a break below 1.3160 is at 1.3080. Also keep in mind that this decline is expected to take prices below 1.2865 (eventually and barring a break above 1.3262).

USDJPY – The vicious decline from 121.66 looks like a C wave that completed the correction of strength from 122.21. Price has held near the previous 4th wave low at 117.98 (dipping below to 117.49 intraday yesterday). Additional support is at the 200 day SMA (117.36), the 61.8% of 114.42-122.21 at 117.41, and a potential trendline drawn off of the May 2006 and December 2006 lows. That line is at 116.69 today and increases about 2 pips per day. With the shelf of support just below current price, risk is now to the upside. A break above 119.00 warrants a bullish bias.

GBPUSD – The longer term wave structure suggests that a major top is in place at 1.9915. In fact, the rally from 1.8090 traced out an ending diagonal. Ending diagonals are often fully retraced. A decline below 1.9260 strongly suggests that a top is in place at 1.9915. The rally to 1.9675 may have completed a correction of the 1.9915-1.9401 decline. Only a decline below 1.9401 gives scope to more additional potential.

USDCHF – From yesterday “the pair is currently in the C wave position of the A-B-C correction. Although the pair has bounced this morning at the 50% fibo of 1.1878-1.2575 at 1.2227, the intraday charts suggest that the decline has more to go. Watch the 61.8% fibo of 1.1878-1.2575 at 1.2145 for a bottom.” Price has rallied over 60 pips off of yesterday’s low at 1.2144 but price needs to rally above the 2/20 low at 1.2312 to more confidently say that at least a near term low is in place. Still, downside risk is limited.

USDCAD – The USDCAD is most likely in a wave 3 that has the potential to reach the 161.8% extension of wave 1 at 1.1297 in the next few weeks (1.1719 – (1.618 x (1.1879 – 1.1620)). 1.1719 needs to hold in order for the near term bearish outlook to remain intact. Potential support prior to 1.1297 is the point where the decline from 1.1719 would equal the 1.1879-1.1620 decline. This is at 1.1458, which intersects with both the 50% of 1.1028-1.1879 at 1.1455 and the 7/24/2006 high at 1.1461. Resistance shifts to the 61.8% of 1.1879-1.1564 at 1.1758 on a rally above 1.1719.

AUDUSD – As long as price remains above .7827, the potential exists for a wave 5 rally to above .7950 before a larger pullback. On the other hand, .7827 is the bearish pivot. Daily CCI has rolled over from above 100, which is often a reliable turn signal. In the very short term, it looks like a 5th wave down from .7887 will take price below .7853.

NZDUSD – Analysis is unchanged from yesterday – “Given the long term head and shoulders pattern along with the 78.6% fibo of .7470-.5927 at .7138, it is possible that Kiwi is near a major top. The best interpretation on the daily accounts for an extended wave 1 from .5927. As mentioned with the USDJPY, a correction following a 5 wave sequence where the 1st wave is extended tends to bottom near the bottom of the 2nd wave. Thus, expectations are for a decline to .6528 from near current price. The 78.6% fibo at .7138 is risk.” Similar to the AUDUSD, it looks like a small 5th wave is working down (from .7028).

Intraday Signals

GBP/USD

Pivot : 1.9576

Our preference : Short @ 1.9566 with targets @ 1.951 & 1.95 in extension.

Alternative scenario : Above 1.9576 look for further upside with 1.9602 & 1.964 as targets.

Comment : intraday technical indicators are calling for further weakness. A down move is expected with the 1.95 key support in sight (a bounce should then, shape off this area).

Trend: ST Ltd upside; MT Bullish

Key levels Comment

1.97** Fib projection
1.9679** Fib projection
1.9655*** Intraday pivot point
1.9621 Last
1.9601* Fib retracement (50%)
1.9585** Fib retracement (61.8%)
1.9562** Fib retracement (50%)

EUR/USD
Pivot : 1.321

Our preference : Short @ 1.32 with targets @ 1.317 & 1.3149 in extension.

Alternative scenario : Above 1.321 look for further upside with 1.3227 & 1.326 as targets.

Comments : the 30-min RSIU has broken below a rising trend line.

Trend: ST Ltd upside; MT Bullish

Key levels Comment

1.3272** Fib projection
1.326** Intraday resistance
1.323*** Intraday pivot point
1.3219 Last
1.3192** Fib retracement (38.2%)
1.3171** Fib retracement (50%)
1.3149*** Fib retracement (61.8%)

USD/JPY
Pivot : 118

Our preference : Long @ 118.1 with targets @ 118.75 & 119.09 in extension.

Alternative scenario : Below 118 look for further downside with 117.5 & 117.4 as targets.

Comment : the 30-min RSI validated a bullish divergence calling for an upturn.

Trend: ST Ltd downside; MT Bearish

Key levels Comment

120.86** Fib retracement (50%)
120.79** Intraday resistance
120.67* Fib retracement (38.2%)
120.19 Last
120*** Intraday pivot point
119.7** Intraday support
119.5** Intraday support

USD/CHF
Pivot : 1.22

Our preference : Long @ 1.221 with targets @ 1.2246 & 1.2279 in extension.

Alternative scenario : Below 1.22 look for further downside with 1.2163 & 1.2145 as targets.

Comment : the 30-min RSI has broken above a resistance area. This calls for a further rise.

Friday, February 23, 2007

Forex Trading Tips - Part 5

Part 5: These forex trading tips may be of help to the budding or hardened professional trader. Knowledge is certainly power.

Welcome to part FIVE. If you haven’t read part one, two, three or four please take some time to read and understand them at forextradinghq.com. If you have - congratulations, you probably understand more then most traders gambling their savings away on the forex markets. Take notes of what I say, but it is your choice whether to follow them or not. I am simply sharing my personal experiences, so some of my ideas and opinions may not cover your overall goals in trading forex. So we shall start off to rehash the forex trading tips we covered in part 3.

In part four of our forex trading tip series we discussed three major points. We told you to have a trading goal of at least 20 pips a trade. Why? Simply because of your risk and reward ratio – it is worthwhile holding out for a larger profit if you are going to lose out every so often.. Just as long as you have a system with a stop loss, this goal should work for you. Impose a trading goal of 20 pips a trade. Risk reward; KISS, exits in profit and loss

It would be perfect if you can pick tops and bottoms perfectly. But you would be extremely lucky if you did. Lucky because it is purely by chance that you happened to enter into or exit a position at the absolute high or low of the trend. Everyone would love to pick out tops and bottoms. This is where amateur forex traders falter and professionals exceed. Professional forex traders do not pick bottoms or tops. It is more wise to ride trends, with the aim of getting a small piece of the action at a time. It is just human nature to want to buy at the absolute rock bottom bargain price and it is also human nature to want to sell at the highest price. But in the markets, aiming to always squeeze out the money in the ‘tops’ and ‘bottoms’ are just an equation for failure. Think about it – it is simply greed in play there. Greed, just a human emotion of greed to want more, when you can already have a slice of the action.

Don’t forget your technicals. A large part of forex trading is understanding and analysing your technicals. Understand what the market is doing – whether it is in a long term uptrend or downtrend or if it is bouncing around a tight support/resistance zone. Also remember that there can be spikes in the day to day movement of forex, and that these spikes can lure you away from the bigger picture. Of course, this tip all depends on your trading goals, namely your time horizon for the trade. For example, if your goal was to make a profit off an intra day trade, and the technicals were showing you a long term downtrend, but in that particular day there is a short term breakout or spike in the other way around. So you take your chances. But suddenly the trade goes sour. What should you do? Think now, and not when the heat is on and prepare your trading plan.

Emotional trading. All traders are at the whim of their emotions. Fear and greed are the main culprits of failure at trading the markets for a profit. Even professional traders who have been in the business for years have succumbed to the evils of fear and greed. It is simply human to be tempted by fear and greed and the only weapon traders have against them are having a trading system in place. Without the trading system that will tell you when to get into the forex market and when to exit most of your trades will be decided from the gut – that is from your emotions. The success of your trading without having a system lies on how good your gut feeling is. And let me tell you, trading the forex markets in that way is highly stressful and inconsistent. Systems are all the rage – with people selling them as black box trading systems and people educating traders about their successful system… but that is a totally different story.

We’ll see you soon for part six of the forex trading tip series.

Friday, February 16, 2007

Forex Trading Tips - Part 4

Part 4: These forex trading tips may be of help to the budding or hardened professional trader. Knowledge is certainly power.

Welcome to part 4 of the forex trading tips series. If you haven’t read part one, two or three, please take some time to read and understand them at www.forextradinghq.com/forex-information/forex-resources. If you have - congratulations, you probably understand more then most traders gambling their savings away on the forex markets. Take notes of what I say, but it is your choice whether to follow them or not. I am simply sharing my personal experiences, so some of my ideas and opinions may not cover your overall goals in trading forex. So we shall start off to rehash the forex trading tips we covered in part 3.

In part three we discussed three major points. These three points are important, and most successful forex traders trade the markets on the basis of these trading principles. The first forex trading tip we had a look at was to trade during a peak time since that was when the most volume of forex was traded on the markets. Another point we discussed was to trade foreign exchange in the peak times only as that was when the most volume was traded – it is safer to walk with the crowd than in a quiet and lonely alleyway. Finally, we also discussed the possibility of you making profits from the volatile moves the forex market experiences when news and data releases are made public. Most of the key dates that you need to know are published on key financial websites or the company or government organisation responsible for keeping tabs of economic data figures.

Exit with style. If a trade is going sour, get out. That’s it. Get out. Don’t let your emotions or greed toy with the idea of any future possibility of the currency price recovering. Assuming you have an exit plan specifying your stop loss level, you should comfortably let yourself out of the markets at that level, no matter what second thoughts you have. Show the markets any hesitancy and the markets will slaughter you. Now, if you were on the other side of the coin – that is, if you are sitting on unrealized trading profit, don’t let boredom or stress make the exit for you. Let your plan instruct you on what you should do. Most traders would simply be stopped out, if they were following a trailing-stop strategy.

Impose a trading goal of 20 pips a trade. Question yourself – is the trade worth your while? Is it worth your time? Is it worth the risk? The answer depends on your trading plan, your dealers’ spread and your financial goals. Some traders would say, a trading goal of 10 pips profit a trade is too small – and you are risking far too much for such a little profit. In the end, it is your call, so make your calculations and see if your risk:reward ratio is well worth your while.

Keep It Simple Stupid! Some traders may succumb to implementing a great trading plan with many technical indicators showing them, when to take a trade. But sometimes, the best trades, well in truth, all of your best trades would be made from very simple principles such as support and resistance and trendlines. The lesson here is not to overanalyse a trade. Keep your trading light, keep it simple.

Want to know more? Well, there’s going to be a part 5 in this forex tips series.

George Polizogopoulos is a staff writer for ForexTradingHQ.com, the information hub for forex (foreign exchange) traders. More information about learning forex is available on our forex trading website.

This article "Forex Trading Tips - Part 4" can be found in our Foreign Exchange (FX) Markets Resources category.

Tuesday, February 13, 2007

Today Recommendation / Signals

Tuesday 02.13.2007 Print E-mail


EUR/USD

The Euro traded in a narrow range of 20 pips after it declined on yesterday and it found support at 1.2955. Support backs 1.2955 at 1.2940 at 1.2915. Resistance is seen at 1.2970 followed by 1.2980, 1.3 and 1.3035. While the lower zone remains intact, below 1.2950, a potential recovery aiming towards the 1.3 mark is possible. Daily sentiment is neutral and the hourly is slightly bullish. Current quote is 1.2970 @ 06:51 GMT

Recommended trades:

Long in the 1.2960 area, stop below 1.2930, objectives at and above 1.3010.

Forex Trading Tips - Part 3

Part 3: These forex trading tips may be of help to the budding or hardened professional trader. Knowledge is certainly power
Welcome to part 3. If you have bothered to keep reading until now, you must be enjoying my articles, right? We continue on, our journey, exploring some new forex trading tips to help you either get started or improve your trading skills. Make sure you have read part two before you keep reading. I hope you are taking notes about these secrets to trading the forex markets successfully.

In the last article (part two) of forex trading tips, we went through the concepts of keeping your greed in check with respect to the amount of leverage you take with your trades. Also, I recommended you go out and sort yourself out with a trading strategy. You must be independent when you trade as well as confident in your trading. We also discussed you, "the trader" are a LOSER.

Trade with the volume. Don’t trade in the off-peak hours. (unless you are really confident) The reason is that there is no volume, and the larger institutional traders may be using this time to hedge their positions. So as you watch the markets when you first start off, notice when your currency pais are especially active. Note when the markets for the countries whose currency pairs you are trading open and close. Knowing this information is vital, as sometimes these are the times when forex prices gap by large amounts.

Follow the white rabbit. Or rather, the black rabbit. What I mean is, follow that black line on your screen. Yes, that line. What line? I’m talking about the trendline that you arbitrarily drew on your trading screen. It depends on your system what time scale you are looking at with your trendline, but always remember to trade with the trend. If the market is going up, it’s going up. If it is going down, it’s going down. Simple. Bullish markets. Bearish markets. You can’t predict the future from past trends but acknowledge that sometimes there is a pattern – the trend that the market usually follows for a certain amount of time. Trade with the crowd – not against it. Think about what happens to you if you try to walk against a herd of people exiting a football stadium? You would find you would probably make no progress.

Trade forex on news and data releases. Almost all foreign exchange currency movements occur when news or some critical data is released. As a retail trader, you have to be careful. Sometimes, there may be some delay between the release of the news and when it reaches us. Assume that the banks know everything far in advance of us, the retail traders. Because it is true. They are in the industry, word spreads fast in industry as some of you can attest in your own professions. So give in to the fact that sometimes, or almost all the time, you as a trader would not be fully disclosed to everything the big institutional traders know. Just follow their tails. Follow the white rabbit.

So, we’ve covered three more things: trade with the volume, trade with the trend and be wary about news releases as those are the times that the forex markets are especially active.

Monday, February 12, 2007

Forex Trading Tips - Part 2

Part 2: These forex trading tips may be of help to the budding or hardened professional trader. Knowledge is certainly power

Welcome to part 2. Still reading about the forex markets are we? Looking for more forex trading tips to help you either get started or improve your trading skills? Maybe you are just curious about how the your friend is making a killing at the forex markets, and not getting killed like you are. Whatever your case, make sure you have read part one of this series of forex trading tips before you keep reading. So here, we continue on our journey of discovery about finding the secret of trading the forex markets successfully.

In the last article of forex trading tips, I said something about being ambitious yet humble. Well in other words, the type of trading you want to avoid is being overly cautious. Being over cautious tells me one thing about your trading. And that is, you aren’t confident enough about your trading and it is too risky for you to trade the markets effectively. When you take a position, you must be confident. And when you have confidently opened a position you should give your position a chance to give a result.

Be independent. You have your own personality, be yourself, don’t be someone else. Be true to yourself in your trading and you will succeed. If you pretend to be someone else in the markets, the markets will quickly take profits from you. When you start listening to too many people, people who may have more experience, or people who simply have opinions, be careful with the information and advice you receive. Make your trades by yourself, be accountable to yourself.

You are a loser. And will always be a loser. That is, be humble. Remind yourself, that every day spent in the market increases the chance for you losing. Be confident in your trading, but not too over-confident to consider yourself bulletproof. You will lose for sure – but it is up to you on how much of a realized loss you will take.

Greed with respect to leverage. Be careful with the amount of leverage you place in every forex trade you make. Question your motivation to increase your leverage amount – is it because you are mastering your system, and know that your system delivers or is it because of plain greed? Did you do the calculations in your head? “Hmm, If I put more money into the trade, with more leverage, IF I turn a profit, the profit will be HEAPS larger than simply putting XXX amount.” STOP! Question yourself – is this calculation due to greed? Thinking along these lines is almost certainly a trap due to greed. Watch out.

You must have a trading strategy. Trading without one, is simply gambling. Are you a gambler? Hopefully not, because it is almost a certain fact, if you do all your homework, backtest your system, and assess your system as you trade, you will make money. (Unless you are simply very unlucky) A strategy is a must. The strategy is the route map to your success in the forex markets. Your strategy should detail how you trade: how much leverage you use, what currencies to trade, and how you manage your risk. Have a strategy or be one of the 90% of losers.

Daily Market Commentary

The dollar rallied against the yen and slipped the European currencies early Monday
Mon, 12 Feb 2007 03:29:56 GMT
by Cornelius Luca

The dollar rallied against the yen and slipped the European currencies early Monday. The G7 ministers warned against carry trades, which usually involve selling the low-yielding yen, so the artificially weak Japanese currency to gain against the dollar. But the yen remains weak because the financial ministers left it the Japanese to deal with their currency! Therefore, short yen positions against the dollar, commodity and the European currencies remain favored.

Euro/dollar

Euro/dollar is still struggling for direction, falling on Friday and struggling higher in Asia today. The pair is stuck in an inside range and must exit the consolidation area between1.2825 to 1.3050 to attract new positions. The upside is favored.

Above the four-week high of 1.3074, the pair has strong resistance at 1.3130. Distant resistance is pegged at 1.3200.

Immediate support is at 1.2975. Below 1.2920 there are two pivotal lows at 1.2882 and 1.2868.

Oscillators are mixed.

NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Mixed
LONG-TERM: Bullish

Dollar/yen

Dollar/yen rallied to a near two-week high in Asia following the rubber-legged G7 fin mins 'critique' of the weak yen. The rally should continue, but at a reduced pace.

Above 122.18, resistance is seen at 122.50 from a 50-point pivot, which targets 122.00 and 123.00.

Initial support is at 121.55. The pair then has strong support at 121.05 from a 50-pip pivot, which targets 121.55 and 120.55. Below 119.95, dollar/yen retains good support at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.

Oscillators are rising, validating the bullish momentum.

NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Sterling/dollar

Sterling/dollar fell sharply on Friday as well, but should now recover some of the losses.

Initial resistance is at 1.9535. If the Fibonacci retracement level at 1.9565 breaks, then the pound would recover to the next level 1.9620.

Below the four-week low at 1.9454 there is support at 1.9385. A break below this level would signal a re-test the pivotal low at 1.9261.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Mixed

Dollar/Swiss franc

Dollar/Swiss franc made a further recovery for part of Friday but then stalled. It should now attempt to decline first and then attempt to advance again.

Immediate support remains at 1.2430. Then, there is support at 1.2375.

Above 1.2570, resistance is still seen at 1.2660 from the target of a bull flag. Next level is 1.2720.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish

Forex Trading Basics

The global foreign exchange market is the biggest market in the world. The USD 1.2 trillion daily turnover dwarfs the combined turnover of all the world's stock and bond markets.

There are many reasons for the popularity of foreign exchange trading, but among the most important are the leverage available, the high liquidity 24 hours a day and the very low dealing costs associated with trading.

Of course many commercial organisations participate purely due to the currency exposures created by their import and export activities, but the main part of the turnover is accounted for by financial institutions. Investing in foreign exchange remains predominantly the domain of the big professional players in the market - funds, banks and brokers. Nevertheless, any investor with the necessary knowledge of the market's functions can benefit from the advantages stated above.

Margin Trading

Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, SaxoBank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.

In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed.

Base Currency and Variable Currency

When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell Euro. Or buy Euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.

The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against German marks, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of Euro credited and debited for the two transactions. In other words, your profit or loss will be denominated in Euro, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.

This way of trading is different to the futures markets, for example, where the marks, francs and yen are the fixed trade currency, resulting in a US dollar denominated profit or loss. You can, however, also choose to trade in this reciprocal manner in foreign exchange markets but it is not the norm.

Dealing Spread, but No Commissions

When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.

The dealing spread is typically 3-5 points in normal market conditions, e.g. USD/EUR 1.7780-85. This means that you can sell US dollars against the Euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.

This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USD/EUR presents price swings of 150-200 points.

Spot and forward trading

When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. Due to the fact that the EU investment directive does not presently cover spot foreign exchange trading we will, however, require you to swap your trade forward at least another two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.

Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.

Interest Rate Differentials

Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate.

Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 - disregarding the interest rate differential. From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar, and an initial disadvantage of the same size by being short.

Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.

Stop-loss discipline

As you can see from the description above, there are significant opportunities and risks in foreign exchange markets. Aggressive traders might experience profit/loss swings of 20-30% daily. This calls for strict stop-loss policies in positions that are moving against you.

Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out. Of course, the market can move very fast and a stop-loss order is by no means a guarantee of getting out at the desired level.

But the main risk is really an event over the weekend, where all markets are closed. This happens from time to time as many important political events, such as G7 meetings, are normally scheduled for weekends.

For speculative trading, we always recommend the placement of protective stop-lossorders. With Saxo Bank Internet Trading you can easily place and change such orders while watching market development graphically on your computer screen.

Saturday, February 10, 2007

Forex Trading Tips - Part 1

Part 1: These forex trading tips may be of help to the budding or hardened professional trader. Knowledge is Power

The retail forex markets are certainly in a boom time. Forex dealers are popping up like rabbits. Hundreds of thousands of people like you and me are trading the markets for a nice profit everyday. Brokers are making a killing from their spreads in these deals. Forex markets are volatile and hence present great profit opportunities as well as great risks to your capital. And if you aren’t careful your capital will quickly be lost by the markets. So what is the key? What is the secret to trading the forex markets successfully? We look at some forex trading tips in the following series of reports.

Some of the facts and measures we go through may be simple to some but may be new concepts altogether for other people. All in all every piece of information is critical to your understanding and succeeding in the forex markets, and hopefully our articles about forex trading tips will help you on your way.

When you trade currencies you are trading currency pairs. You always trade a currency in reference to another. Therefore, when you are looking to trade currencies, make sure you are aware which currency pair you are looking at trading with and understand how both currencies impact on one another.

Understand the bigger picture. Understand how the foreign exchange markets are influenced, and what makes them move. The forex market movements are different to stock markets in their leverage and in their volatility and nature. They are open 24 hours and because they are global, are easily influenced by news and data releases at any time of day. Any news affecting any country’s economic progress or anything about interest rates are bound to have some effect on the forex markets in their relevant currency pairs.

Be ambitious yet humble. Your trading goals need to be reasonable, not too greedy, but not too small. Some traders aim to profit from small moves - placing tight orders to take their small profits. But think about it – is this sustainable? Is your risk/return ratio worth the effort? Remember that you have to wait until the price clears the spread your dealer placed on the currency pair. If your trading system it aiming small, it would mean, more trades and more chance the trade will go sour, since a large portion (the spread) of your trade will be going to to your dealer’s pockets and you aren’t allowing for much movement before you take your profits (or loss). If you are new, this concept may be a little confusing, but for those of you in the know - you should definitely have a think about it if you haven’t already considered it.

That’s enough forex trading tips for now, come back for the next part soon.

Simple Combined Daily Breakout System - Hans 123

This forex trading strategy has been developed by Hans Van Der Helm from the Netherlands.


* Determine the 06.00 CET – 10.00 CET High Low on EUR/USD and GBP/USD
* Determine the 10.00 CET – 14.00 CET High Low on EUR/USD and GBP/USD
* Set BuyStop at High + 5 pips and SellStop at Low - 5 pips for both timeframes and both currencies
* Set Target Price at entry + 80 pips for EUR/USD and entry + 120 pips for GBP/USD
* Set StopLoss at entry - 50 pips for EUR/USD and entry - 70 pips for GBP/USD. If the other side of the breakout is within 50 pips for EUR/USD or within 70 pips for GBP/USD then the StopLoss will be that level (Longtrade: SL = Low range - 5 pips = SellStop; Shorttrade: SL = High range + 5 pips = BuyStop)
* Move the SL to breakeven after a gain of 30 pips for EUR/USD and a gain of 40 pips for GBP/USD
* If a certain position is taken and price turns agains you and it breaks the other side of the breakout channel then turn. If the breakout channel is broader then the stoploss first the stoploss will be hit. If the breakout channel is narrower then the stoploss then hitting the other side means that you have to turn your position. There is only one turn per time frame possible. This rule is a result of all previous rules. You can skip this rule if you want.
* At 24.00 CET all orders expiring and close all trades at market. On Friday we do the same at 23.00 CET.

This link displays the time in every major city in the world: www.qlock.com. I am using CET time (Amsterdam, Frankfurt).

Friday, February 9, 2007

Analysis & Forecast

EUR/USD

The Euro recovered after it declined into the 1.2970 area on yesterday, testing bids around the 1.3040 mark. Support is formed by 1.3025 backed by 1.3005 and 1.2975, lower. Resistance starts at 1.3043 followed by 1.3065 and 1.31. Daily sentiment is bullish and hourly is neutral. While the first two support levels hold, we may see a test of 1.3065 which is a strong barrier and a break may confirm an end of the range that has been valid since a month ago. A potential break of 1.3065 would encourage the bulls to aim towards targets in the 1.31-1.32 area. Current quote is 1.3036 @ 06:47 GMT

Recommended trades:

Long in the 1.3020 area, stop/reverse at 1.2990, objectives at and above 1.3065. Extended objectives may aim towards 1.31.

Trade of the Week

GBPUSD 29 January 2007 - 2 February 2007

Best Times To Trade Currencies

Forex is a 24 hour market and there will be good setups for profitable trades in the Asian, European and US sessions. It pays to look at historical price data on forex charts to see what time of the day you could be watching the market and what time you could be doing something else. The aim is to trade when the average trading range is worthwhile and stay out of the market when price is in a narrow sideways range.

London Trading Session
London opens at 8 am GMT or 3am EST. Closes at 4 pm GMT or 11am EST. The most active pairs during this session are EURUSD with 39% of the trading volume, GBPUSD with 23%, USDJPY with 17%, USDCHF with 6% and USDCAD with 5%. European Session Europe opens at 7am GMT or 2am EST, Closes at 3 pm GMT or 10 am EST. The European session is the most volatile session most of the time. New York Session New York Opens at 1pm GST or 8 am EST. Closes at 8pm GMT or 3pm EST.

New York is the second largest forex market place. The busiest time is 8am to noon EST. News releases can result in a volatile market. Trading activity usually winds down after the U.S. afternoon trading period.

Asian Session
The Tokyo session opens at 1am GMT or 8pm EST and closes at 8am GMT or 3am EST. Sometimes volatility is low and sometimes good moves occur. The USDJPY is the most active pair with 78% of the volume followed by EURUSD with 15% and EURJPY with 5%
Forex Signal
Sory the lately of this Signal, because i just open my email

EUR/USD
Buy now (1.2985) SL 1.2955

USD/CHF
Sell now (1.2400) SL 1.2430

GBP/USD
Buy now (1.9715) SL 1.9660

USD/JPY
No trades

# posted by Paul W : 5:43 PM 0 Comments
Tuesday, February 6, 2007
Today Recommendation
EUR/USD
Sold at 1.2935 SL 1.2970

USD/CHF
Bought at 1.2505 SL 1.2465

GBP/USD
Sell-stop at 1.9560 SL 1.9620

USD/JPY
No trades

EUR/USD daily report, by Liviu Flesar

The Euro resumed the decline after it failed to break 1.2965 and it found support at 1.2915, level which is being tested at the time of this writing. It seems that more and more pressure is put on the 1.28 zone and a test of 1.2860 is highly possible. Support is now seen at 1.2915 backed by 1.29 and 1.2860. Resistance emerges at 1.2935 followed by 1.2965 and 1.3. Daily sentiment is bearish and the hourly is neutral. The downside is favored and a slip below 1.29 would signal potential objectives towards the 1.26 and 1.27 area later, during the upcoming days. On the other side, a close above the 1.2965 resistance may extend the recovery and help the Euro getting past the 1.3 mark again. Current quote is 1.2915 @ 06:30 GMT

Recommended trades:

Short in the 1.2935 area, stop at 1.2960, objectives at and below 1.2885.

# posted by Paul W : 3:02 PM 0 Comments
Monday, February 5, 2007
Today Recommendation
EUR/USD

The NFP release on Friday encouraged the U.S. dollar to get past the barriers in the 1.3 area and the higher half of 1.29. The pair declined and reached lows around 1.2930 during today Asian session. Support is now seen at 1.2925 backed by 1.29 and 1.2860. Resistance starts at 1.2950 and it is followed by 1.2980 and 1.3. Daily sentiment is bearish, hourly is neutral. We are expecting a recovery of the Euro which may rise towards the 1.3 area. Current quote is 1.2947 @ 07:06 GMT

Recommended trades:

Long in the 1.2925 area, stop at 1.2895, objectives at and above 1.2965.
Short in the 1.2985 area, stop at 1.3015, objectives at and below 1.2940.

MARKETIVA

Belajar Forex Trading (Valas Trading) di Marketiva
FOREX TRADING (valas trading) merupakan pasar terbesar di dunia diukur berdasarkan nilai total transaksi. Menurut survei BIS (Bank International for Settlement – bank sentralnya bank-bank sentral seluruh dunia), yang dilakukan pada akhir tahun 2004, nilai transaksi forex mencapai USD 1,900miliar per hari. Dengan demikian, prospek investasi di perdagangan forex adalah sangat bagus.

Pasar valas/forex berjalan selama 24 jam, berputar mulai dari pasar New Zaeland & Australia yang berlangsung pukul 05.00–14.00 WIB, terus ke pasar Asia yaitu Jepang & Singapura yang berlangsung pukul 07.00–16.00 WIB, ke pasar Eropa yaitu Jerman & Inggris yang berlangsung pukul 13.00–22.00, sampai ke pasar Amerika yang berlangsung pukul 20.30–10.30. Dalam perkembangan sejarahnya, bank sentral milik negara-negara dengan cadangan mata uang asing yang besar sekalipun dapat dikalahkan oleh kekuatan pasar forex/valas yang bebas.

Forex trading (valas trading) saat ini sudah sangat mudah untuk dilakukan oleh siapapun dan dari manapun. Dengan modal komputer yang tersambung ke internet, kita sudah bisa melakukan forex trading (valas trading) baik dari rumah, kantor, warnet, dan darimana saja yang penting ada fasilitas sambungan internet. Dengan mendaftar di Marketiva, Anda tidak perlu lagi memikirkan modal untuk melakukan forex trading (valas trading), begitu daftar langsung bisa trading karena Anda mendapatkan cash reward $5 real money untuk live trading dan $10,000 virtual money untuk simulasi dengan kondisi pasar yang sesungguhnya. Belajar forex trading (valas trading) dengan metoda belajar sambil praktek akan membuat Anda lebih cepat memahami segala hal tentang forex trading (valas trading).

Transaksi real maupun belajar Forex Trading (valas trading) di Marketiva adalah pilihan terbaik bagi para calon trader dalam mengembangkan ilmu, maupun bagi trader profesional dalam bertransaksi forex trading (valas trading).

Keunggulan
Marketiva provides spot forex on major currency pairs and crosses; $5 cash reward you can start trading right away; tight spreads from 3 pips; trading on 1% margin; virtual and live desks within one account; latest news, alerts on market events, signals, no market commissions; zero-interest on open positions, 24-hour support, chat channels, the most sophisticated and easy-to-use forex charting tool; ability to trade from the charts and the best forex trading software available!

Untuk bisa memulai transaksi sekaligus belajar forex trading (valas trading) di Marketiva, ikutilah langkah-langkah berikut secara berurutan.

Mendaftar
Untuk mendaftar, silakan buka website Marketiva, setelah terbuka, klik Open Account, isilah data diri Anda secara lengkap. Untuk field dengan tanda * (bintang) harus Anda isi, yang lain boleh Anda kosongkan.

* Username: pilihlah username yang indah, karena akan Anda gunakan untuk chatting dengan sesama trader, misalnya: cinta, cantik, handsome, dsb.
* Password: minimal 8 karakter gabungan huruf dan angka.
* First Name: isi nama depan Anda
* Last Name: isi nama belakang Anda, jika nama Anda hanya terdiri dari satu suku kata, masukkan nama Anda tersebut di field First Name dan Last Name. Contoh: jika nama Anda adalah Fitri, maka masukkan First Name: Fitri, Last Name: Fitri.
* Untuk data alamat isikan sesuai dengan KTP Anda.
* E-mail: diisi alamat e-mail Anda yang masih aktif.

PERHATIAN: Seluruh data diri yang Anda isikan harus sama dengan KTP, karena akan dilakukan proses verifikasi untuk bisa melakukan transaksi forex trading (trading valas).

Setelah selesai mengisi, klik tombol Continue>

* User Template: pilih Standar Forex Trader
* Coupon: boleh dikosongkan
* Recovery Question: pilih yang paling cocok dengan Anda, misalnya Anda memiliki kucing dengan nama manis, maka pilih: What is your pet's name?
* Recovery Answer: dalam contoh ini maka jawaban anda adalah: manis

Setelah selesai mengisi, klik tombol next>

* Berilah tanda chek pada pilihan: I have read, understood, and agree with the Service Agreement under which Marketiva Corporation provides it services and products. I have also read and understood the Risk Disclosure statement and I am willing and able to assume such risks.

Setelah itu klik tombol [finish]. Maka proses pendaftaran Anda sudah selesai.

VERIFIKASI IDENTITAS DIRI
Setelah Anda mendaftar, maka Anda perlu mengupload data diri Anda untuk diverifikasi, Anda hanya diizinkan membuka satu account. Anda tidak bisa melakukan penarikan dana sebelum melakukan identifikasi, dan ada kemungkinan account Anda di-suspend (dibekukan) jika Anda menggunakan komputer dengan IP address yang sama dengan trader lain. Untuk itu segeralah melakukan verifikasi identitas diri, berikut data yang diperlukan:

* Image ID: Scan KTP/SIM/KTM atau kartu identitas lain yang ada foto dan nama Anda tertera di kartu identitas tersebut.
* Image Adress: Scan data tagihan yang alamatnya sama dengan KTP/SIM/KTM Anda, misal tagihan listrik, tagihan telepon, rekening bank dll, data di tagihan ini digunakan untuk konfirmasi alamat.
* Scan data harus berwarna dan masing-masing file ukurannya maksimal 100kb, jadi sewaktu scan, resolusi di set ke 72-100 dpi saja.
* Bila Anda tidak mempunya data tagihan yang ada nama dan alamat Anda disitu, maka anda boleh mengupload scan ktp saja, scan bagian depan KTP sebagai ID image, bagian belakang sebagai Address image.
* Upload scan data tersebut di sini

Setelah mengupload data, melaporlah ke live support yang ada di situs Marketiva. Beberapa saat kemudin Anda akan diberitahu bahwa data diri Anda telah selesai diverifikasi.

MENDOWNLOAD DAN MENGINSTAL STREAMSTER
Untuk memulai transaksi forex trading (valas trading) di Marketiva, Anda memerlukan software Streamster, silakan Download dengan cara menekan tombol get streamster di bagian kanan atas website Marketiva dan install di komputer Anda, kemudian jalankan program Marketiva, Login dengan username dan password yang baru saja Anda buat. Setelah selesai Anda download, double klik file hasil download Anda tersebut untuk menginstallnya di komputer Anda, ikuti langkah-langkah yang diminta.

LOGIN DAN MULAI BERTRANSAKSI
Setelah Anda login masuklah ke room chat international dan indonesia, caranya klik tombol groups di bagian atas jendela streamster, tunggu sebentar sampai ditampilkan daftar room yang ada, pilih international dan indonesia, klik OK, maka otomatis Anda masuk room international dan indonesia. Untuk mulai bertransaksi, bertanyalah kepada support personel dari Marketiva menggunakan bahasa indonesia, boleh di room international maupun di room indonesia. Support personel adalah orang dengan nick yang ada huruf ' i ' (information) di depan nicknya, mereka akan dengan senang hati membantu Anda memahami cara-cara bertransaksi di Marketiva.

CAT FX 50

RECAP of CatFX50 (30-09-06):
Main tools:

EMA50 on chart.
EMA120 on chart.

Hist_Step_MA_Stoch_KV1_Ex_03 set at 2000 bars.
Set filters on Step: +0,04 and -0,04.

Plot aNina_v1, set it at 9000 cbars.
Hist_StepMA_Stoch is the main indicator here. When Hist_StepMA_Stoch and aNina give signal simultaneously, the better. Do not trade if they give opposite signals.

TSR Daily Range Calculator or TSR range2.

This calculator tells us the daily range of the pair. It is very important to know it. It is very important to know too where the pair is in relation to its daily range when we get a signal. It tells us the stop loss we should use according to the daily range and to a Risk/Reward ratio of 3:1. You can change the R/R. The stop loss it shows is a mathematical one, it is not based on any kind of pattern nor Technical Analysis. Do not forget that.

TF: 30 minutes.
Trade time: 08:00cet to 18:00cet
Optional tools:
FX Sniper’s MA. Set it to 50 and you will have EMA 50 with colors.
FiboPiv_v2
MAX Movin Average set at 50, 14, 2000, 2
Camarilladt7 with L3, L4, L5 and H3, H4 and H5.

Standard or Level 1 signals:
Buy when price crosses EMA 50 and new bar opens above. Hist_StepMA_Stoch must be green.

Sell when price crosses EMA 50 and new bar opens below. Hist_StepMA_Stoch must be red.

If price and Hist_StepMA_Stoch crosses are simultaneous, the better.

Level 2 signals (riskier):

For instance, when price is above EMA 50 with Hist_StepMA_Stoch in green. Price then opens one bar at least below EMA 50 and Hist_StepMA_Stoch keeps in green mode. When price opens again above EMA 50 with Hist_StepMA_Stoch validating (green), we can buy. The opposite for a sell.

Level 3 signals (riskier):

For instance, we are in bullish mode: price above EMA 50 and Hist_StepMA_Stoch in green. Suddenly, price goes down crossing or without crossing EMA 50 and obviously without opening below it. Hist_StepMA_Stoch changes to red. We buy when price goes up again always validated by Hist_StepMA_Stoch that should change to green again.
Level 4 signals (Take care):
Level 4 is when price, after a consolidation of a few bars, breaks through the last high or low. The main thing we need is an indication of strength, and if we don't get it, it could be a trap!
Obviously, the breakout down should have Hist_StepMa_Stoch in red and green for the opposite.

The main difference between Level 2 and Level 3:
On Level 3 the price doesn't have to cross the EMA50 line
The other difference is that Hist_StepMA_Stoch briefly changes color

Level 4:
Notice the price breakout in the illustration? It would be hard to ignore, wouldn't it?
You don't have to wait for the price to close to do the trade, get on board and ride that baby!


Something to take into account:

Pairs to trade: EURUSD, USDCHF and GBPUSD.

When bar opens more than 20 pips above/below EMA 50, the signal is riskier.

Do not buy/sell, for instance, EURUSD because GBPUSD has a signal. Wait for the signal to come in each pair you want to trade. Look at EURGBP, USDCHF and US Dollar Index always.

Stop Loss and Money Manegement:
We can not jump in a trade without knowing the amount of pips we expect to make. We can not know that seriously without a stop loss. The stop loss will tell us what we should expect according to the Risk/Reward ratio we use. For instance, we get a validated signal to buy EURUSD at 1.2700. We decide to go with 1 standard lot. OK, where do we place the stop loss? A common and today useless stop loss is 34 pips. So, we are risking 34 pips, that is $340. If we do not want to gamble, we should expect to make $690 at least. That is 69 pips or 2:1 R/R. But the optimum R/R is 3:1. That is $1030 or 103 pips.
EURUSD has usually a daily range between 60 and 80 pips. It is clear that we will not be able to make those 103 pips in the majority of cases. Then, what’s the point of using a fixed stop loss of 34 pips? We should not do that if we want to keep our money. So, we need to place a stop loss according to the risk and reward we assume and expect.
Well, you could say, as I want a 3:1, I place the stop loss 5 pips below entry. That is, I’m risking 5 pips to make 15. Great!!! But this does not work that way, sorry. We use charts because we think they tell us what to do according to what price has done. If we use a s/l of 5 pips without looking at what price has done before we get the signal, we are not trading, but betting. What to do, then?
We need to look at what price has done during the previous bars. They will tell us where to place the stop loss. If the “logic” stop loss we get is too high according to what we expect, we should not take that signal. So, lets say it is 17:30cet and we get a signal to buy EURUSD. The stop loss we need to use is 15 pips and EURUSD has only 10 pips to go up according to its daily range. Do we take it?
But, you could say: “Daily ranges break sometimes”. Yes, they do. You said it: sometimes.
We should not forget that if we scale during the trade, our risk/reward ratio changes, because we acceped a risk at the beginning of the trade according to a assumed reward we will not get; as the reward will not be the same at the end of the trade if we have taken partial profits during its development.

Final:

CatFX50 easy system is a winning one, but it is not a Holy Grail nor a money machine. Use common sense.
Do not forget that CatFX50 has not an exit strategy. Therefore, and it is mandatory, you need to know your risk/reward ratio before placing a trade.
I make daily recaps of the signals CatFX50 gives. These recaps can be deceptive, because you see the huge amount of pips the system generates every single day. But no one can take them all. It is impossible. Do not forget that. Maybe, someday, a very smart trader will find the way to grab them all. Since then, take care and good luck!!!

Winning Forex Trading

Winning Forex
The Whole Point Of Trading
Why do we trade? Money. Let's keep that is the front of our minds. Traders get carried away with all the fun fancy stuff they can do. They get carried away with the thrill. They get carried away with the analysis, but trading is all about making more money.

Your Focus

That's the whole point of this website. It's to show you how to win more. Why did you start trading in the first place (or if you're not trading yet, why did you originally think about it)? It was the financial reward. Okay, so together let's take a journey down the path of becoming better traders.

Overview Of Winning

Really quickly, I just want to give you an overview of the three most important things that are forgotten by many traders (dooming them to become losing traders).
· Keep it simple. The simpler your trading regimen and trading rules are, the more likely you are to follow them. Make it easy. Make it simple.
· Don't care. This is the hardest thing for traders to master. You need to figure out a way to not care about your individual trades. You start caring, and you start stressing. You start stressing, and you'll make a mistake. Make a mistake, and you've lost. I guarantee you this is the reason professional fund managers never consistently make large returns. The managers are thinking way too much about what the investors will think of their every move.
· Be sure you have an edge.


How to trade Heikin-Ashi


There are five primary signals that identify trends and buying opportunities:

- Hollow candles with no lower "shadows" indicate a strong uptrend: let your profits ride!

- Hollow candles signify an uptrend: you might want to add to your long position, and exit short positions.

- One candle with a small body surrounded by upper and lower shadows indicates a trend change: risk-loving traders might buy or sell here, while others will wait for confirmation before going short or long.

- Filled candles indicate a downtrend: you might want to add to your short position, and exit long positions.

- Filled candles with no higher shadows identify a strong downtrend: stay short until there's a change in trend.


These signals show that locating trends or opportunities becomes a lot easier with this system. The trends are not interrupted by false signals as often, and are thus more easily spotted. Furthermore, opportunities to buy during times of consolidation are also apparent



The Basic of Forex Trading
Structure of The Market


The FX market is an over-the-counter market with no centralized exchange. Traders have a choice between firms that offer trade-clearing services.

Unlike many major equities and futures markets, the structure of the FX market is highly decentralized. In other words, there is no central location where trades occur. The New York Stock Exchange, for example, is a totally centralized exchange. All orders pertaining to the purchase or sale of a stock listed on the NYSE are routed to the same dealer and pass through the hands of a single clearing firm. This structure requires buyers and sellers to meet at the NYSE in order to trade a stock that is listed on this exchange. It is for this reason that there is one universally quoted price for a stock at any given time.

In the FX market there are multiple dealers whose business is to unite buyers and sellers. Each dealer has the ability and the authority to execute trades independently of each other. This structure is inherently competitive as traders are faced with a choice between a variety of firms with an equal ability to execute their trades. The firm that offers the best services and execution will capitalize on this market efficiency by attracting the most traders. In the equities markets, the execution of trades is monopolized and there is no incentive for a clearing firm to offer competitive prices, to innovate, or to improve the quality of their service.

Margin

In standard cash stock accounts, money should be deposited for the full amount of the position you are trading, or if you have a margin account, for at least half of the position. This is in contrast to the FX market, where only a small percentage of the actual position value needs to be deposited prior to taking on the trade. This small deposit, known as the margin, is not a down payment, but rather a performance bond or good faith deposit to ensure against trading losses. The margin requirement allows traders to hold positions much larger than their account value (up to 200x the size).

Margin requirements are as low as .5% meaning for every standard lot size of 100,000 units, you must commit $500. However, if you wanted to control a $100,000 in the stock market, you would have to deposit at the very least, $50,000. Even in the futures market you would have to deposit at least $5,000 to control a $100,000 position.

Currency Abbreviations

Below is a list of the abbreviations for various currencies that are commonly traded in the FX market:

EUR = Euro
GBP = British Pound (Sterling, Cable)
JPY = Japanese Yen
CHF = Swiss Franc (Swissie)
USD = United States Dollar
NZD = New Zealand Dollar (Kiwi)
AUD = Australian Dollar (Aussie)
CAD = Canadian Dollar

WHAT DRIVES THE CURRENCY MARKETS

Currency markets move based on countries’ economic data or different world events, which may affect a particular country’s economy.

Market Sentiment
Market sentiment can defy logic; market psychology often contradicts business reality. But in the real world, perception can become reality, at least for a time. Therefore, you must at times be prepared to make moves that are against your better judgment. The flip side is that at other times, your investor intuition can prove to be more valuable than painstaking analysis.

CURRENCY BROKERAGE FIRMS

Currency Brokers are firms or agents of large banks that take orders from different clients, companies or countries for an amount of currency that needs to be bought or sold and converted from one to another. Brokerage firms also allow clients to speculate on the values that a currency will move to in the future. Brokers in the U.S. are required to be licensed and are regulated by the NFA or National Futures Association. Most brokerage firms clear their currency purchases through large InterBank Clearing Desks run by the world’s largest banks.


Thursday, January 25, 2007
FOREX ADVANCE
Money Management: To Minimize Your Loss
by Boris Schlossberg

Like dieting and working out, money management is something that most traders pay lip service to, but few practice in real life. The reason is simple: just like eating healthy and staying fit, money management can seem like a burdensome, unpleasant activity. It forces traders to constantly monitor their positions and to take necessary losses, and few people like to do that. However, as Figure 1 proves, loss-taking is crucial to long-term trading success

Money Management Styles
Generally speaking, there are two ways to practice successful money management. A trader can take many frequent small stops and try to harvest profits from the few large winning trades, or a trader can choose to go for many small squirrel-like gains and take infrequent but large stops in the hope the many small profits will outweigh the few large losses. The first method generates many minor instances of psychological pain, but it produces a few major moments of ecstasy. On the other hand, the second strategy offers many minor instances of joy, but at the expense of experiencing a few very nasty psychological hits. With this wide-stop approach, it is not unusual to lose a week or even a month's worth of profits in one or two trades. (For further reading, see Introduction To Types Of Trading: Swing Trades.)

To a large extent, the method you choose depends on your personality; it is part of the process of discovery for each trader. One of the great benefits of the FX market is that it can accommodate both styles equally, without any additional cost to the retail trader. Since FX is a spread-based market, the cost of each transaction is the same, regardless of the size of any given trader's position.

For example, in EUR/USD, most traders would encounter a 3 pip spread equal to the cost of 3/100th of 1% of the underlying position. This cost will be uniform, in percentage terms, whether the trader wants to deal in 100-unit lots or one million-unit lots of the currency. For example, if the trader wanted to use 10,000-unit lots, the spread would amount to $3, but for the same trade using only 100-unit lots, the spread would be a mere $0.03. Contrast that with the stock market where, for example, a commission on 100 shares or 1,000 shares of a $20 stock may be fixed at $40, making the effective cost of transaction 2% in the case of 100 shares, but only 0.2% in the case of 1,000 shares. This type of variability makes it very hard for smaller traders in the equity market to scale into positions, as commissions heavily skew costs against them. However, FX traders have the benefit of uniform pricing and can practice any style of money management they choose without concern about variable transaction costs.

Four Types of StopsOnce you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.

1. Equity Stop - This is the simplest of all stops. The trader risks only a predetermined amount of his or her account on a single trade. A common metric is to risk 2% of the account on any given trade. On a hypothetical $10,000 trading account, a trader could risk $200, or about 200 points, on one mini lot (10,000 units) of EUR/USD, or only 20 points on a standard 100,000-unit lot. Aggressive traders may consider using 5% equity stops, but note that this amount is generally considered to be the upper limit of prudent money management because 10 consecutive wrong trades would draw down the account by 50%.

One strong criticism of the equity stop is that it places an arbitrary exit point on a trader's position. The trade is liquidated not as a result of a logical response to the price action of the marketplace, but rather to satisfy the trader's internal risk controls.

2. Chart Stop - Technical analysis can generate thousands of possible stops, driven by the price action of the charts or by various technical indicator signals. Technically oriented traders like to combine these exit points with standard equity stop rules to formulate charts stops. A classic example of a chart stop is the swing high/low point. In Figure 2 a trader with our hypothetical $10,000 account using the chart stop could sell one mini lot risking 150 points, or about 1.5% of the account.

3. Volatility Stop - A more sophisticated version of the chart stop uses volatility instead of price action to set risk parameters. The idea is that in a high volatility environment, when prices traverse wide ranges, the trader needs to adapt to the present conditions and allow the position more room for risk to avoid being stopped out by intra-market noise. The opposite holds true for a low volatility environment, in which risk parameters would need to be compressed.

One easy way to measure volatility is through the use of Bollinger bands, which employ standard deviation to measure variance in price. Figures 3 and 4 show a high volatility and a low volatility stop with Bollinger bands. In Figure 3 the volatility stop also allows the trader to use a scale-in approach to achieve a better "blended" price and a faster breakeven point. Note that the total risk exposure of the position should not exceed 2% of the account; therefore, it is critical that the trader use smaller lots to properly size his or her cumulative risk in the trade.


4. Margin Stop - This is perhaps the most unorthodox of all money management strategies, but it can be an effective method in FX, if used judiciously. Unlike exchange-based markets, FX markets operate 24 hours a day. Therefore, FX dealers can liquidate their customer positions almost as soon as they trigger a margin call. For this reason, FX customers are rarely in danger of generating a negative balance in their account, since computers automatically close out all positions.

This money management strategy requires the trader to subdivide his or her capital into 10 equal parts. In our original $10,000 example, the trader would open the account with an FX dealer but only wire $1,000 instead of $10,000, leaving the other $9,000 in his or her bank account. Most FX dealers offer 100:1 leverage, so a $1,000 deposit would allow the trader to control one standard 100,000-unit lot. However, even a 1 point move against the trader would trigger a margin call (since $1,000 is the minimum that the dealer requires). So, depending on the trader's risk tolerance, he or she may choose to trade a 50,000-unit lot position, which allows him or her room for almost 100 points (on a 50,000 lot the dealer requires $500 margin, so $1,000 – 100-point loss* 50,000 lot = $500). Regardless of how much leverage the trader assumed, this controlled parsing of his or her speculative capital would prevent the trader from blowing up his or her account in just one trade and would allow him or her to take many swings at a potentially profitable set-up without the worry or care of setting manual stops. For those traders who like to practice the "have a bunch, bet a bunch" style, this approach may be quite interesting.

Boris Schlossberg is the Senior Currency Strategist at Forex Capital Markets in New York, one of the largest retail forex market makers in the world. He is a frequent commentator for Bloomberg, Reuters, CNBC and Dow Jones CBS Marketwatch. His book "Technical Analysis of the Currency Market", published by John Wiley and Sons, is available on Amazon, where he also hosts a blog on all things trading.

THE SMART INVESTOR

THE SMART INVESTOR Although risk is an inseparable part of the currency market, here are some tips to minimize it: • Use strict Money Management techniques. • Invest only as much as you can afford to lose. Don’t get in over your head. • Don’t trade just to trade. • Always use stop losses to ensure that you’re able to trade again the next opportunity. • Trade with the current trend because the probability of a winning trade is much higher. • Monitor your trades often and don’t be afraid to reassess your positions

# posted by Paul W : 7:54 AM 1 Comments
Wednesday, January 24, 2007
TECHNICAL ANALYSIS
Candle stick charts:


Candlestick charts have been around for hundreds of years. They are often referred to as "Japanese candles" because the Japanese would use them to analyze the price of rice contracts.

Similar to a bar chart, candlestick charts also display the open, close, daily high and daily low. The difference is the use of color to show if the stock went up or down over the day.

The chart below is an example of a candlestick chart for AT&T (T). Green bars indicate the stock price rose, red indicates a decline:


Support and resistance:

Support and resistance are the focus of how supply and demand meets. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with bullish, bulls and buying. As demand increases, prices advance and as supply increases, prices decline. When supply and demand are equal, prices move sideways as bulls and bears slug it out for control.


Support is a level at which bulls take control over the prices and prevent them from falling lower. Think of support as a floor, when we fall we hit the floor and most of the time; we bounce back up, just like a stock. But sometimes, we fall through the floor, and keep on falling until we hit another floor, just like a stock.

Resistance, on the other hand, is the point at which sellers take control of prices and prevent them from rising higher. The price at which a trade takes place is the price at which a bull and bear agree to do business. It represents the consensus of their expectations.
Support levels indicate the price where the most of investors believe that prices will move higher. Resistance levels indicate the price at which the most of investors feel prices will move lower.

You can see that it is trading in a flat channel, which is just what you want. However, you can apply support and resistance levels upward or downward.
This is the most basic form of technical analysis. All you must do is determining where the support line is and the resistance line is. However, when a price breaks through one of them, you will see a rally based on whatever line was broken. When this happens it is a good idea to stay out of the trade and wait for the price to determine the next support and resistance line. A breakout above a resistance level is evidence of an upward shift in the demand line as more buyers become willing to buy at higher prices. Similarly, the failure of a support level shows that the supply line has shifted downward.

Moving averages:

In this lesson we will examine, explain and apply the simple moving average to a 4hour time frame chart. Moving averages are one of the most popular and easy to use technical tools available to the average investor. They smooth a data series and make it easier to spot trends, channels, something that is especially helpful in volatile markets. Moving averages are also a great starter for anyone who wants to expand their technical analytical knowledge in any market. I would suggest you log into the DEMO account at FXCM (explained in DEMO section) and pull up the AUD/USD 4hour time chart, preferably a candle stick chart and apply the following.


The simple moving average is formed by computing the average price of a security over a specified number of periods. When ever you input a variable for a simple moving average calculation, it is always the close price of the security that will be included in the calculation. For example: a 5-day simple moving average is calculated by adding the closing prices for the last 5 days and dividing the total by 5. For an example, here are the closing prices of ABC stock.

15+16+17+18+19 = 85
85 / 5 = 17

The averages are then joined which creates a curvilinear line, or the moving average line. Continuing our example, if the next closing price in the average is 20, then this new period would be added. As each days ends, a new day will be added and the oldest day will be eliminated (15). Once a price has broken a moving average line, and depending on what type of time frame, it might signal a shift upwards or downwards. As you see in the picture below, it has broken all three moving average lines in the upward direction, and as you can see, it continued to climb higher.


MACD or Moving Average Convergence Divergence:

MACD is A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

There are three common methods used to interpret the MACD:

1. Crossovers - As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting "faked out" or entering into a position too early, as shown by the first arrow.

2. Divergence - When the security price diverges from the MACD. It signals the end of the current trend.

3. Dramatic rise - When the MACD rises dramatically - that is, the shorter moving average pulls away from the longer-term moving average - it is a signal that the security is overbought and will soon return to normal levels.

Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. The zero line often acts as an area of support and resistance for the indicator.

Pivot Points in Forex: Mapping your Time Frame

By: Raul Lopez

It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.

Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.

As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from 'bull' to 'bear' or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible.

Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.

Pivot Points

In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.

Why PP work'

They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.

Calculating pivot points

There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).

Pivot point (PP) = (High + Low + Close) / 3

Take for instance the following EUR/USD information from the previous session:

Open: 1.2386
High: 1.2474
Low: 1.2376
Close: 1.2458

The PP would be,
PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this number tell us'

It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.

Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT.

Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.

Support 1 (S1) = (PP * 2) — H
Resistance 1 (R1) = (PP * 2) - L
Support 2 (S2) = PP ' (R1 ' S1)
Resistance 2 (R2) = PP + (R1 ' S1)

Where, H is the High of the previous period and L is the low of the previous period

Continuing with the example above, PP = 1.2439

S1 = (1.2439 * 2) - 1.2474 = 1.2404
R1 = (1.2439 * 2) ' 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 ' 1.2537) = 1.2537
S2 = 1.2439 ' (1.2636 ' 1.2537) = 1.2537

These levels are supposed to mark support and resistance levels for the current session.

On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.

S1, S2, R1 AND R2...' An Objective Alternative

As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.

We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.

LOPS1, low of the previous session.
HOPS1, high of the previous session.
LOPS2, low of the session before the previous session.
HOPS2, high of the session before the previous session.
PP, pivot point.

These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.

The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.

What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.

Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.

How we use our mapping method'

We at StraightForex (www.straightforex.com) use the mapping method in three different ways: as a trend identification (measure of the strength of the trend), a trading system using important levels with price behavior as a trading signal and to set the risk reward ratio (RR) of any given trade based on where the is the market relative to the previous session.

FOREX BASIC

What is Forex?

The Foreign Exchange market, also referred to as the "FOREX" is the biggest and largest financial market in the world. It has a daily average turnover of US$1.9 trillion- just imagine that amount of money! Don't you want to join this trillion-dollar industry?

FOREX is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). So basically, FOREX is trading.

There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency.

The other 95% is trading for profit, or what you call speculation. Investors frequently trade on information they believe to be superior and relevant, when in fact it is not and is fully discounted by the market.

On one side of each speculative stock trade is a participant who believes he has superior information and on the other side is another participant who believes his information is superior.

For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid- meaning its in cash or convertible to cash) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors.

A true 24-hour market, FOREX trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - real time- day or night.

The FOREX market is considered an Over The Counter (OTC) or 'interbank' market. This is because the transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange compared to stocks and futures markets.

How Do Forex quotes work?

Reading a FOREX quote may seem a bit confusing at first. However, it's really quite simple if you remember two things: 1) The first currency listed first is the base currency and 2) the value of the base currency is always 1.

The US dollar is the centerpiece of the FOREX market and is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 110.01 means that one U.S. dollar is equal to 110.01 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote we previously mentioned increases to 113.01, the dollar is stronger because it will now buy more yen than before.

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.7366, meaning that one British pound equals 1.7366 U.S. dollars.

In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

When trading FOREX you will often see a two-sided quote, consisting of a 'bid' and 'offer'. The 'bid' is the price at which you can sell the base currency (at the same time buying the counter currency). The 'ask' is the price at which you can buy the base currency (at the same time selling the counter currency).

What is a PIP?

In the Forex market, prices are quoted in pips. Pip stands for "percentage in point" and is the fourth decimal point, which is 1/100th of 1%.

In EUR/USD, a 3 pip spread is quoted as 1.2500/1.2503


Among the major currencies, the only exception to that rule is the Japanese yen. In USD/JPY, the quotation is only taken out to two decimal points (i.e. to 1/100 th of yen, as opposed to 1/1000th with other major currencies).

In USD/JPY, a 3 pip spread is quoted as 114.05/114.08

The smallest price increment in a currency, so instead of a point like in stocks, in the forex market it is called a pip.

Margin Trading:

Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term "lot" refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.

EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)

When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.

Forex Recommendation