Tuesday, September 1, 2009
Selective Forex Trading by Don Snellgrove
Selective Forex Trading promises to teach the trading technique that allows long winning streaks in Forex without losing a position. This technique was developed by the author of this book and is called S90/Crossover, which name refers to the author’s last name and 90% winning probability. Not that I am huge believer in the trading systems with the high accuracy expectations, but this Forex book has something interesting to offer. It provides a whole trading strategy based on the candlestick chart, River Oscillator Indicator (ROI), Fibonacci retracement levels and the basic line drawing. The author states that this system should be used alone without mixing with some other trading methods or previous strategies of the trader that wants to succeed with this new «selective trading». It’s quite an easy trading system and if you are newbie at Forex I really recommend it as your first one to start with.
Exclusive Market Timing Forex Signal Helps to Ensure Efficient Forex Trading Profits
Forex Traders may consider this ForeFx Signal for Price Action
July 8th 7:15-7:50 p.m. EDT for 1.75 hours duration moderate-to-strong price action
July 9thth 2:20-2:50 a m. for 2.5 hours duration with strong price action
July 9th 8:15-9:00 a.m. for 3 hours duration with strong price action
Currently primary pairs, eur/usd, gbp/usd, usd/jpy are out of harmony but this will change soon based on a primary directional move within the U.S. Dollar Index. I will be on call pretty much for the next 48 hours in effort to capitalize on what I believe will be a rather handsome profit potential and I look forward to making a solid Trade Alert.
If you followed my signal today we lost 35 pips trading the GBP/USD as I always run tight stops – usually less which offers me a average profit to loss ratio better than 2.5:1; this loss today compares to more than 170 pips profit booked in the last trading week.
This month I anticipate at least 3 Tsunami’s, one of my specialized Trade Alerts – which I anticipate profits exceeding 400 pips. Time will tell but we will look for the best opportunities the next few weeks.
I may author a Forecast later but right now the chaos is mixed. If you desire more information about my exclusive Market Timing Trade Alert Program - please feel free to access the links below.
July 8th 7:15-7:50 p.m. EDT for 1.75 hours duration moderate-to-strong price action
July 9thth 2:20-2:50 a m. for 2.5 hours duration with strong price action
July 9th 8:15-9:00 a.m. for 3 hours duration with strong price action
Currently primary pairs, eur/usd, gbp/usd, usd/jpy are out of harmony but this will change soon based on a primary directional move within the U.S. Dollar Index. I will be on call pretty much for the next 48 hours in effort to capitalize on what I believe will be a rather handsome profit potential and I look forward to making a solid Trade Alert.
If you followed my signal today we lost 35 pips trading the GBP/USD as I always run tight stops – usually less which offers me a average profit to loss ratio better than 2.5:1; this loss today compares to more than 170 pips profit booked in the last trading week.
This month I anticipate at least 3 Tsunami’s, one of my specialized Trade Alerts – which I anticipate profits exceeding 400 pips. Time will tell but we will look for the best opportunities the next few weeks.
I may author a Forecast later but right now the chaos is mixed. If you desire more information about my exclusive Market Timing Trade Alert Program - please feel free to access the links below.
Forex Traders Drill EUR/USD for 75 Pips Net Profit
Exclusive Market Timing Forex Signal Helps to Ensure Efficient Forex Trading Profits
Timing the Market Trade Room completed a solid June for an average 21% return on equity. Today we started the month off with a nice bear trade on the eur/usd and booked 75 pips net. Currently we are in stand down mode with open bear targets at 3877 and below and key resistances standing above at 3955-3970 levels to 4000.
We hope to get a new signal setup soon. For more information on my Timing The Market Trade Room please feel free to access the links below.
Britt Maras – Senior Currency Strategist
Timing the Market Trade Room completed a solid June for an average 21% return on equity. Today we started the month off with a nice bear trade on the eur/usd and booked 75 pips net. Currently we are in stand down mode with open bear targets at 3877 and below and key resistances standing above at 3955-3970 levels to 4000.
We hope to get a new signal setup soon. For more information on my Timing The Market Trade Room please feel free to access the links below.
Britt Maras – Senior Currency Strategist
Forex Trade Timing — how to decide entry/exit points
If money management is one half-of trading, determination of entry/exit points constitutes the other half. No amount of successful analysis will be useful if we can't determine good trigger points for our trades. Even if we know that the value of a currency pair will appreciate in the future, unless we have a clear conception of when that appreciation will occur, and where it will end, our knowledge is unlikely to bring us great profits. Similarly, even in the unfortunate situation where the analysis that justified the opening of a position is false, mastery of trade timing might allow us to register positive returns due to the high volatility in the forex market. Clearly, we need powerful strategies to help us calculate the best trigger values for a trade justified by careful and patient analysis.
We have discussed the various ways of creating stop-loss orders on this website, and in this article we'll continue on that theme by handling this subject in a more general way by identifying some principles for the management of our positions. The opening and closing of a position are the most frequent activities of any trader; it is obvious that this should also be the subject to which we devote the greatest attention. However, as in the case of a doctor or an engineer, the final task that is performed routinely and most frequently depends on certain skills, education and study which for the most part lack any obvious relationship to it. Thus, it is important to note that the study of trade timing is one of the final lessons for which the trader must prepare himself. The other courses that would lead us to this subject, such as technical and fundamental analysis, may not always have clearly definable benefits at first sight, but they pave the way to our ultimate goal of timing our trades successfully and profiting from them.
Before going into the technical aspects that complicate our trading decisions, we must say a few words on the necessity of emotional control in ensuring a successful and meaningful trading process. Let's repeat again, as we've done many times on this site, that without proper control over our feelings not a single word in this text would help us to trade profitably. The psychological endurance necessary for achieving a successful trading career is an important precursor to both money management and trade timing. Consequently, even before beginning the study of trade timing, we must concentrate our energies toward the goal of understanding and restraining our emotions, and gaining control over the psychological aspects of decision-making in a trading career. The Main Principle of Trade Timing
The first principle of trade timing is that it’s impossible to be certain about both the price and the technical pattern at the same time. The trader can base his timing on the actualization of a technical formation, or he can base it on a price level, and he can ensure that his trade is only executed when either of these events occur, but he cannot formulate a strategy where his trade will be executed when both of these occur at the same time. Of course it is possible that by chance a predefined price level is reached precisely at the time that the desired technical pattern occurs, but this is rare, and unpredictable.
Supposing that the trader is desiring to buy one lot of the EURUSD pair, he has the option of basing his entry point on the realization of a technical pattern, or the reaching of a price. For example, he may decide that he’ll buy the pair when the RSI indicator is at an oversold level. Or he may decide, for money management purposes, that he’ll buy it at 1.35, to reduce his risk. Similarly, he may choose to place his stop-loss order at the price point where the RSI reaches 50, or he may choose to enter an absolute stop-loss order at 1.345, to cut losses short. But due to the unpredictability of the price action it is not possible to define an RSI level, and a price level at the same time for the same trade.
We have discussed the various ways of creating stop-loss orders on this website, and in this article we'll continue on that theme by handling this subject in a more general way by identifying some principles for the management of our positions. The opening and closing of a position are the most frequent activities of any trader; it is obvious that this should also be the subject to which we devote the greatest attention. However, as in the case of a doctor or an engineer, the final task that is performed routinely and most frequently depends on certain skills, education and study which for the most part lack any obvious relationship to it. Thus, it is important to note that the study of trade timing is one of the final lessons for which the trader must prepare himself. The other courses that would lead us to this subject, such as technical and fundamental analysis, may not always have clearly definable benefits at first sight, but they pave the way to our ultimate goal of timing our trades successfully and profiting from them.
Before going into the technical aspects that complicate our trading decisions, we must say a few words on the necessity of emotional control in ensuring a successful and meaningful trading process. Let's repeat again, as we've done many times on this site, that without proper control over our feelings not a single word in this text would help us to trade profitably. The psychological endurance necessary for achieving a successful trading career is an important precursor to both money management and trade timing. Consequently, even before beginning the study of trade timing, we must concentrate our energies toward the goal of understanding and restraining our emotions, and gaining control over the psychological aspects of decision-making in a trading career. The Main Principle of Trade Timing
The first principle of trade timing is that it’s impossible to be certain about both the price and the technical pattern at the same time. The trader can base his timing on the actualization of a technical formation, or he can base it on a price level, and he can ensure that his trade is only executed when either of these events occur, but he cannot formulate a strategy where his trade will be executed when both of these occur at the same time. Of course it is possible that by chance a predefined price level is reached precisely at the time that the desired technical pattern occurs, but this is rare, and unpredictable.
Supposing that the trader is desiring to buy one lot of the EURUSD pair, he has the option of basing his entry point on the realization of a technical pattern, or the reaching of a price. For example, he may decide that he’ll buy the pair when the RSI indicator is at an oversold level. Or he may decide, for money management purposes, that he’ll buy it at 1.35, to reduce his risk. Similarly, he may choose to place his stop-loss order at the price point where the RSI reaches 50, or he may choose to enter an absolute stop-loss order at 1.345, to cut losses short. But due to the unpredictability of the price action it is not possible to define an RSI level, and a price level at the same time for the same trade.
Forex Trading Update: U.S. Dollar Index is Setting the Tone
EUR/USD Faces One More Round of Seven Week Old Consolidation
Currently the U.S. Dollar Index has been contained in a very harmonic price action pattern. Its structural formation is much cleaner than any currency pair amongst the top five. If the 80.70 level does not reject on a 1 hour candle (currently 80.24) then indeed the US Dollar is in for a multi-week bullish pattern which is likely to show very aggressively in the EUR/USD and GBP/USDS. The Index is perched on support immediately at 84.20 with key but critical support at 79.50 in view.
I would prefer to see the EUR/USD and GBP/USD make one more blush at higher resistance before developing a potentially aggressive bear pattern. The EUR/USD game is a 3980/3900 yardstick and then we should have a verdict.
Resistances: immediate at 1.3957-77, 1.3997, 1.4008, 4037-55, 1.4079, 1.4103-4149, 1.4200 and then 1.4300
Supports: immediate at 1.3928-14/07, 1.3883-64, 3853, 1.3780, 1.3743, 1.3670 and then 1.3349
Currently the U.S. Dollar Index has been contained in a very harmonic price action pattern. Its structural formation is much cleaner than any currency pair amongst the top five. If the 80.70 level does not reject on a 1 hour candle (currently 80.24) then indeed the US Dollar is in for a multi-week bullish pattern which is likely to show very aggressively in the EUR/USD and GBP/USDS. The Index is perched on support immediately at 84.20 with key but critical support at 79.50 in view.
I would prefer to see the EUR/USD and GBP/USD make one more blush at higher resistance before developing a potentially aggressive bear pattern. The EUR/USD game is a 3980/3900 yardstick and then we should have a verdict.
Resistances: immediate at 1.3957-77, 1.3997, 1.4008, 4037-55, 1.4079, 1.4103-4149, 1.4200 and then 1.4300
Supports: immediate at 1.3928-14/07, 1.3883-64, 3853, 1.3780, 1.3743, 1.3670 and then 1.3349
Weekly Forex Market Outlook
Forex Markets This WeekThe S&P has and is breaking supports and continues to churn lower as we have warned in past issues. While we could see another run towards 900, if we do it is nothing less than another opportunity to short near that level. I have and will continue to say that stocks are NOT up trending, but in fact, stuck in a sideways range between 750 and 950 and will remain in that range for at least the rest of the year. This all matters to forex markets because the S&P holds enormous influence over the flow of funds around the world. If stocks falter as we expect, then we will see money run to Dollars. Which I agree makes no sense at all, but it IS what is happening. As I said over a month ago here, sell stocks & commodities on rallies and buy Dollars on dips, or wish you had later. The same still stands as it has worked very well, we are now up over 700 pips for the month so off to another good start.
EUR/USD:Sells taken in the 1.40’s to 1.41’s should be solid entry points as discussed last week. Look for breaks towards the 1.38 level to take profits or at least lock in gains. We could see a much deeper correction but for now we will just look very near term. Same comments as last week as it still applies. We are recycling these comments for a third week as it continues to work, “if it aint broke don’t fix it” I have heard it said.
GBP/USD:The cable remains resilient but offering great opportunities on both sides. We are predominately looking for rallies near 1.63 to sell into this week. We are still looking for this pair to fall back below 1.60 before month end. These are also the same comments from last week and they too apply this week again. We have seen 1.60 tested a few times last week and used that both to exit shorts and enter longs. We are more biased to the short side at this time.
USD/CHF:This pair remains a buy close to the 1.08 level. This pair could see a move back into the low teens before this rally stalls. Same comments as the last few weeks and they still stand. They have paid off nicely the last few weeks and we see similar movements in the weeks ahead. I am not trying to be lazy this week but again these comments worked and we expect that to continue.
USD/JPY:So we did see the downward action I talked about in past weeks. Near term we want to be cautious but still looking for major rallies to sell into.
AUD/USD:We are seeing the .8000 level retested and will again look to sell above it. This is a larger play on a commodities slow down as the global recovery continues to be muted to slow at best. So while I got emails last week saying I was crazy when I made this comment, now it looks not so crazy ehh? I would like to see .80 retested and am selling into rallies in the ladder half of the week.
USD/CAD:Now that Oil has more or less hit my downside target I am looking to begin to sell rallies in the USD/CAD as this pair has moved quite a ways away from it’s “normal” range due to oil. If as I suspect, oil stabilizes and trades between 50-75 for the rest of the year, the Canadian should be able to trade on its own merits again and if we see that then this pair should move lower overall.
EUR/USD:Sells taken in the 1.40’s to 1.41’s should be solid entry points as discussed last week. Look for breaks towards the 1.38 level to take profits or at least lock in gains. We could see a much deeper correction but for now we will just look very near term. Same comments as last week as it still applies. We are recycling these comments for a third week as it continues to work, “if it aint broke don’t fix it” I have heard it said.
GBP/USD:The cable remains resilient but offering great opportunities on both sides. We are predominately looking for rallies near 1.63 to sell into this week. We are still looking for this pair to fall back below 1.60 before month end. These are also the same comments from last week and they too apply this week again. We have seen 1.60 tested a few times last week and used that both to exit shorts and enter longs. We are more biased to the short side at this time.
USD/CHF:This pair remains a buy close to the 1.08 level. This pair could see a move back into the low teens before this rally stalls. Same comments as the last few weeks and they still stand. They have paid off nicely the last few weeks and we see similar movements in the weeks ahead. I am not trying to be lazy this week but again these comments worked and we expect that to continue.
USD/JPY:So we did see the downward action I talked about in past weeks. Near term we want to be cautious but still looking for major rallies to sell into.
AUD/USD:We are seeing the .8000 level retested and will again look to sell above it. This is a larger play on a commodities slow down as the global recovery continues to be muted to slow at best. So while I got emails last week saying I was crazy when I made this comment, now it looks not so crazy ehh? I would like to see .80 retested and am selling into rallies in the ladder half of the week.
USD/CAD:Now that Oil has more or less hit my downside target I am looking to begin to sell rallies in the USD/CAD as this pair has moved quite a ways away from it’s “normal” range due to oil. If as I suspect, oil stabilizes and trades between 50-75 for the rest of the year, the Canadian should be able to trade on its own merits again and if we see that then this pair should move lower overall.
Forex: USD/JPY: Dollar struggling with 95.00 resistance
FXstreet.com (Barcelona) - Dollar decline from Friday's high at 95.85 has found support at 94.60 area and, after a period of consolidation, the Dollar has picked up momentum to attack resistance area at 95.00/10.
In case of breaking above the mentioned 95.00/10, next resistance levels lie at 95.30/40 (Jul 27/29 high) and 95.90 (Jul 30 high). Support levels lie at 94.50 (Jun 31 low), and below there, 94.30 and 94.00 (Jul 29 low).
According to Peter Rosentreich, technical analyst at ACM - Advanced Currency Markets, the Dollar should break above 95.45 in order to attract bulls: "Since then (Friday's sell-off) it has been catching a small bid and hugging the trend higher so despite the heavy handed action on Friday the trend is still up with resistance at 95.29 and 95.849. A revisit to 94.45 should see strong interest from the bulls. 4 hourly RSI is giving good confirmation of the uptrend, having never dropped below 40 (bearish) throughout the whole of this 3 week move.
In case of breaking above the mentioned 95.00/10, next resistance levels lie at 95.30/40 (Jul 27/29 high) and 95.90 (Jul 30 high). Support levels lie at 94.50 (Jun 31 low), and below there, 94.30 and 94.00 (Jul 29 low).
According to Peter Rosentreich, technical analyst at ACM - Advanced Currency Markets, the Dollar should break above 95.45 in order to attract bulls: "Since then (Friday's sell-off) it has been catching a small bid and hugging the trend higher so despite the heavy handed action on Friday the trend is still up with resistance at 95.29 and 95.849. A revisit to 94.45 should see strong interest from the bulls. 4 hourly RSI is giving good confirmation of the uptrend, having never dropped below 40 (bearish) throughout the whole of this 3 week move.
Weekly FOREX outlook
The Dollar seems unable to make a move in either direction these last few weeks. The ranges have given us many great trading opportunities but lacking of actual direction. We continue to want to own Dollars at these levels but caution is still the word for the week as we could still see a few head fakes to the downside in Dollars before turning. We are still up over 800 pips for the month and are looking to finish out this month strong. Most of the comments below are the same from last week but since we have had almost no movement last week these same levels still apply.
EUR/USD:We remain short this pair and are still targeting a move back into the mid 1.30’s by end of summer. Selling rallies above 1.42 should be good entry points.
GBP/USD:This pair remains volatile and lots of fun to trade. We are looking to sell rallies near 1.65 this week and expecting the lower 1.60’s to be tested by end of week.
USD/CHF:This pair saw a nice breakdown and we are now long from just below 1.07 and loosing for a move back towards the 1.10 level.
USD/JPY:We are still looking for this pair to track stocks lower in the weeks ahead so our bias remains to sell rallies above 95 and focus on managing risk on every trade every day without fail.
AUD/USD:We are still selling rallies here as well and I know this sounds nuts and I may be wrong but the odds of a further advance are very low in the near term so I am happy to remain short.
USD/CAD:Canadian continues the charge back towards parity I have mentioned in prior issues. I am now looking to buy dips near the 1.08 level this week. This is really a dead cat bounce trade but risk reward is good.
EUR/USD:We remain short this pair and are still targeting a move back into the mid 1.30’s by end of summer. Selling rallies above 1.42 should be good entry points.
GBP/USD:This pair remains volatile and lots of fun to trade. We are looking to sell rallies near 1.65 this week and expecting the lower 1.60’s to be tested by end of week.
USD/CHF:This pair saw a nice breakdown and we are now long from just below 1.07 and loosing for a move back towards the 1.10 level.
USD/JPY:We are still looking for this pair to track stocks lower in the weeks ahead so our bias remains to sell rallies above 95 and focus on managing risk on every trade every day without fail.
AUD/USD:We are still selling rallies here as well and I know this sounds nuts and I may be wrong but the odds of a further advance are very low in the near term so I am happy to remain short.
USD/CAD:Canadian continues the charge back towards parity I have mentioned in prior issues. I am now looking to buy dips near the 1.08 level this week. This is really a dead cat bounce trade but risk reward is good.
Forex: USD/CAD falls below 1.0700 to post 9-mont lows
Fxstreet.com (Barcelona) – The Dollar's decline against the Canadian from 1.0935, July 29 high, has continued today with the pair falling 0.75% so far today from 1.00760 opening price to trade below 1.0700 level and post the lowest levels since October 2 close to 1.0680.
Currently the pair is trading around 1.0680/90.
According to Kasper Kirkegaard, analyst at Danske Bank A/S, the CAD is back in favour: “Speculative investors have increased their bets that the Canadian dollar will continue its rally. Net long positions were expanded by USD1.2bn, implying that speculative net long positions now stand at 32% of total open interest – the highest since June last year. This indicates to us, however, that positioning has become a liability in relation to a further CAD outperformance against both the dollar and the $-block in general.”
Currently the pair is trading around 1.0680/90.
According to Kasper Kirkegaard, analyst at Danske Bank A/S, the CAD is back in favour: “Speculative investors have increased their bets that the Canadian dollar will continue its rally. Net long positions were expanded by USD1.2bn, implying that speculative net long positions now stand at 32% of total open interest – the highest since June last year. This indicates to us, however, that positioning has become a liability in relation to a further CAD outperformance against both the dollar and the $-block in general.”
Forex: USD/CHF eases initial gains and tests 1.0655
Fxstreet.com (Barcelona) – After rising during the Asian session from 1.0670 to the intra-day high at 1.0733, USD/CHF has fallen around 80 pips to trade below 1.0700 level and test the 1.0650/60 tough zone. Currently the pair is trading around 1.0665/75, easing initial losses and posting 0.15% daily losses from opening price action.
Rajoo C, analyst at Precise Trader, comments: “The Hourly Oscillators are Oversold and the price is Below the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Sideways while 10815 holds and Daily Trend is also Sideways while 10585 holds, so expect the price to be Choppy until the breakout happens. The patterns on the Hourly is giving a price projection of 10610 level, on the 5 min is choppy but the bears ensure that the price doesn't go above 10735-10815. Conservative traders should be Sidelined or strictly trade only at Precise Traders Report levels. Aggressive traders should do the same until the breakout happens.”
Rajoo C, analyst at Precise Trader, comments: “The Hourly Oscillators are Oversold and the price is Below the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Sideways while 10815 holds and Daily Trend is also Sideways while 10585 holds, so expect the price to be Choppy until the breakout happens. The patterns on the Hourly is giving a price projection of 10610 level, on the 5 min is choppy but the bears ensure that the price doesn't go above 10735-10815. Conservative traders should be Sidelined or strictly trade only at Precise Traders Report levels. Aggressive traders should do the same until the breakout happens.”
Forex Traders see EUR/USD Face Key Resistance Levels
My classic July Tsunami is trying to form in the U.S. Dollar Index. I do not trade the Index but I prefer to focus on the next best place to trade the Dollar, in my opinion, as seen in the EUR/USD or GBP/USD. On a daily basis now the European Central Bank (ECB) is striving to talk-down the pair by honestly acknowledging the economic struggles in Europe and of course the rest of the world. In tandem with this, European banks are facing a high debt load with the normally high savings deposit rates by their customers; equilibrium usually prevails.
On a serious note – an increase in Dollar strength is much preferred fundamentally for the world economic outlook as a strong Dollar is in the world’s best interest. That’s my professional opinion anyway.
Currently the eur/usd is still mired in a bunch of nasty noise. Today we tried three different trades for stop loss of -2, -5 and minus 7. Our first trade was a bear call from 3955 that cleanly ran down to the mother load of support at 3913 as noted in my article yesterday afternoon. We desired a breakdown so instead of booking in excess of 35 pips, we stayed in the trade for minus two in effort to not get jigged out. Needless to say, this was one bird-in-the-hand we chose not to take this time.
Now onto the price map:
Resistances: 1.3993, 1.4031-65, 4111, 4147, 4255, 4313
Supports: 1.3955, 3927, 3901, 3860, 3811, 3777, 3723, 3604, 3539, 3339
I am camped out for the big move that I believe is pending. I feel the boomerang is coming and it’s going to be ugly. Chip-Chop! If no boomerang, we’ll follow the leader!
We should have some Market Timing Forex Signals:
On a serious note – an increase in Dollar strength is much preferred fundamentally for the world economic outlook as a strong Dollar is in the world’s best interest. That’s my professional opinion anyway.
Currently the eur/usd is still mired in a bunch of nasty noise. Today we tried three different trades for stop loss of -2, -5 and minus 7. Our first trade was a bear call from 3955 that cleanly ran down to the mother load of support at 3913 as noted in my article yesterday afternoon. We desired a breakdown so instead of booking in excess of 35 pips, we stayed in the trade for minus two in effort to not get jigged out. Needless to say, this was one bird-in-the-hand we chose not to take this time.
Now onto the price map:
Resistances: 1.3993, 1.4031-65, 4111, 4147, 4255, 4313
Supports: 1.3955, 3927, 3901, 3860, 3811, 3777, 3723, 3604, 3539, 3339
I am camped out for the big move that I believe is pending. I feel the boomerang is coming and it’s going to be ugly. Chip-Chop! If no boomerang, we’ll follow the leader!
We should have some Market Timing Forex Signals:
Forex Trading Market Timing Forex Signal Yields 50 pips Profit on GBP/USD
Timing the Markets Trade Room offers Small Profit on GBP/USD Sell Signal
Currently we are in stand-down mode as the eur/usd appears oversold and the Cable (GBP/USD) is either in stall mode on the bear front with deeper targets at 1.6113 or it is setting up for a classic Friday stall or, it is forming a basic bull pattern to test 1.6260 -93, 1.6321-59 or up towards 1.6450.
I think we will move our focus to the EUR/USD for now or we may attempt a ‘half-margin’ bear breakout trade if it reloads. This being Friday, could be best to walk away soon as our Trading Room can settle on about net 7% profit on equity for in the week for what was sort of a slow week. We missed an overnight trade on Wednesday for about 70 additional pips – but that’s okay!
Currently we are in stand-down mode as the eur/usd appears oversold and the Cable (GBP/USD) is either in stall mode on the bear front with deeper targets at 1.6113 or it is setting up for a classic Friday stall or, it is forming a basic bull pattern to test 1.6260 -93, 1.6321-59 or up towards 1.6450.
I think we will move our focus to the EUR/USD for now or we may attempt a ‘half-margin’ bear breakout trade if it reloads. This being Friday, could be best to walk away soon as our Trading Room can settle on about net 7% profit on equity for in the week for what was sort of a slow week. We missed an overnight trade on Wednesday for about 70 additional pips – but that’s okay!
Forex Trading: Market Timing Alert for Price Action
Forex Traders may consider this Forex Signal for Price Action
July 8th 7:15-7:50 p.m. EDT for 1.75 hours duration moderate-to-strong price action
July 9thth 2:20-2:50 a m. for 2.5 hours duration with strong price action
July 9th 8:15-9:00 a.m. for 3 hours duration with strong price action
Currently primary pairs, eur/usd, gbp/usd, usd/jpy are out of harmony but this will change soon based on a primary directional move within the U.S. Dollar Index. I will be on call pretty much for the next 48 hours in effort to capitalize on what I believe will be a rather handsome profit potential and I look forward to making a solid Trade Alert.
If you followed my signal today we lost 35 pips trading the GBP/USD as I always run tight stops – usually less which offers me a average profit to loss ratio better than 2.5:1; this loss today compares to more than 170 pips profit booked in the last trading week.
This month I anticipate at least 3 Tsunami’s, one of my specialized Trade Alerts – which I anticipate profits exceeding 400 pips. Time will tell but we will look for the best opportunities the next few weeks.
I may author a Forecast later but right now the chaos is mixed. If you desire more information about my exclusive Market Timing Trade Alert Program - please feel free to access the links below.
July 8th 7:15-7:50 p.m. EDT for 1.75 hours duration moderate-to-strong price action
July 9thth 2:20-2:50 a m. for 2.5 hours duration with strong price action
July 9th 8:15-9:00 a.m. for 3 hours duration with strong price action
Currently primary pairs, eur/usd, gbp/usd, usd/jpy are out of harmony but this will change soon based on a primary directional move within the U.S. Dollar Index. I will be on call pretty much for the next 48 hours in effort to capitalize on what I believe will be a rather handsome profit potential and I look forward to making a solid Trade Alert.
If you followed my signal today we lost 35 pips trading the GBP/USD as I always run tight stops – usually less which offers me a average profit to loss ratio better than 2.5:1; this loss today compares to more than 170 pips profit booked in the last trading week.
This month I anticipate at least 3 Tsunami’s, one of my specialized Trade Alerts – which I anticipate profits exceeding 400 pips. Time will tell but we will look for the best opportunities the next few weeks.
I may author a Forecast later but right now the chaos is mixed. If you desire more information about my exclusive Market Timing Trade Alert Program - please feel free to access the links below.
Profiting in Forex by Steve Nison
Profiting in Forex is actually a set of presentational slides by Steve Nison that explain how to use the candlesticks to catch the next move on the Forex market. It’s done in a very descriptive manner — all slides are very easy to read and understand, while each of them consists of a complete thought or advice about trading. The e-book covers all sorts of topics connected with candlestick trading. It’s a real practical manual without any theoretical lectures. You will find out the best-working patterns specifically for Forex market and you will also find out what patterns rarely work in Forex. I consider this e-book a real treasure for all those Forex traders that like me don’t like to use multiple indicators and prefer bare charts. The end chapter of the book is a bonus — «Steve Nison’s Forex Trading Lab», where the series of chart pattern examples are given in a question and answer type of study.
Monday, August 31, 2009
Forex Wave Theory by James Bickford
Forex Wave Theory (A Technical Analysis for Spot and Futures Currency Traders) is a Forex technical analysis book about the wave cycles written by James L. Bickford. The purpose of this book is to answer the most important questions of the technical analysis — where and when. Where one wave starts and another finishes? Where are the critical points for setting of the stop-loss and take-profit levels? When is the right time to enter a position and when is the best time close it? Wave theory isn’t something fundamental and monolithic — there are many theories, many authors and many followers of different wave analysis practices. This book tries to research the most prominent of the theories and offer the practical methods of trading based on these theories. The wave cycles of various periods, length, and depth are described in details throughout the main part of the book. The final chapters are dedicated to the advanced parts of trading with the waves and dives into the theory of fractals.
Beat the Odds in Forex Trading by Igor Toshchakov
Beat the Odds in Forex Trading is written by the prominent Forex trader Igor Toshchakov, who is better known under his nickname L.A Igrok and the similarly named trading method by his authorship. The presented book is dedicated to detecting and benefiting from the high-percentage currency market patterns. The proposed method employs the short-term technical analysis and the special money management techniques. Upon introducing the basics of the method developed by him, Igor proceeds to the actual systems and strategies that can use this method as the basement for their rules. The offered short-term and intraday strategies are thoroughly described with all the applicable rules and conditions — both for entries and exits. In the final chapter of the book, the author gives out some templates that can help with the proposed technical trading systems.
Learn Forex Trading With Our Comprehensive Forex Course
Welcome to our forex trading course. If you feel like you’re a penguin in the desert when reading about forex trading, don’t worry, our forex course is here to guide you and help you through your journey in the kingdom of money.
Don’t be embarrassed by your puzzlement at some of the new concepts and ideas that you will encounter in this market; just remember that nobody was born an expert. If you fear that the lucrative field of currency trading is only for the likes of old men like George Soros, or big beasts like JPMorgan, we ask that you reconsider your opinion. In this modern age of the Internet, freedom knows no limits! Well, at least the forex market is open to all who open a brokerage account and risk as little as 100 bucks to test their skills.
Our forex education aims to introduce the trader to the basics of how to trade forex. Nobody wants to have a brutal freshman experience as he takes his baby steps to a new activity. By enlightening the new trader as to what he shouldn’t do in the markets, we aim to minimize the birth pains of his budding career. The new trader can expect to find a no-nonsense discussion of the various pitfalls and dangers associated with currency trading in these pages, but he will also find a good deal of advice on what he should do: study, be patient, be humble, and don’t gamble.
Forex can be exciting, and rewarding intellectually. But it can do something else too: it can enrich you materially in a way that you hadn’t expected was possible.
Don’t be embarrassed by your puzzlement at some of the new concepts and ideas that you will encounter in this market; just remember that nobody was born an expert. If you fear that the lucrative field of currency trading is only for the likes of old men like George Soros, or big beasts like JPMorgan, we ask that you reconsider your opinion. In this modern age of the Internet, freedom knows no limits! Well, at least the forex market is open to all who open a brokerage account and risk as little as 100 bucks to test their skills.
Our forex education aims to introduce the trader to the basics of how to trade forex. Nobody wants to have a brutal freshman experience as he takes his baby steps to a new activity. By enlightening the new trader as to what he shouldn’t do in the markets, we aim to minimize the birth pains of his budding career. The new trader can expect to find a no-nonsense discussion of the various pitfalls and dangers associated with currency trading in these pages, but he will also find a good deal of advice on what he should do: study, be patient, be humble, and don’t gamble.
Forex can be exciting, and rewarding intellectually. But it can do something else too: it can enrich you materially in a way that you hadn’t expected was possible.
Introduction to the forex market
Many of us have been fascinated by the shiny, colorful world of currencies as children, and even those of us who have little interest in the forex market have engaged in some form of currency trading while traveling outside their homeland. And these days, one will easily find people discussing the advantages and weaknesses of the US dollar even in a casual gathering.
The forex market is the currency market: it’s where the value of each currency is determined versus every other currency in the world. If you exchange one US dollar for its equivalent value in Euros, you’re already a part of the forex market, and are creating the quotes you see reported on TV screens every day. There’s no difference between the actions of a tourist at an exchange bureau, and the transactions of banks in the international market, apart from size and maturity terms.
In today’s integrated and specialized economies it’s rare to find all the components of any product produced inside one country’s borders, and so, international trade is a major creator of global forex volume. Deepening financial interactions across the globe through partnerships, buyouts of firms and international loans, along with ever complex tools of investment have been increasing the size of the forex market in recent years. If global trade and finance were the body of world economy, the forex market would be the circulatory system; in other words, there doesn’t exist a deeper, more liquid market than that of currency trading. Almost every political or economical event of long-term significance is reflected in its workings, and understanding it results in a very good comprehension of finance and economics in general.
Participating in such a vast and significant mechanism can be a rewarding and exciting experience for the individual investor. But while this is true, success during your interactions with the giants will require more than a bit of diligence and patient study. The rewards can be immense: famous investors such as George Soros, Jim Rogers, large Wall Street firms such as Goldman Sachs, or banks like Citibank all make millions of dollars each year from trading in the forex market. In fact George Soros is notorious as being the man who broke the Bank of England: Through successful speculations, he was able to make 1 billion dollars in just about a week.
The forex market is the currency market: it’s where the value of each currency is determined versus every other currency in the world. If you exchange one US dollar for its equivalent value in Euros, you’re already a part of the forex market, and are creating the quotes you see reported on TV screens every day. There’s no difference between the actions of a tourist at an exchange bureau, and the transactions of banks in the international market, apart from size and maturity terms.
In today’s integrated and specialized economies it’s rare to find all the components of any product produced inside one country’s borders, and so, international trade is a major creator of global forex volume. Deepening financial interactions across the globe through partnerships, buyouts of firms and international loans, along with ever complex tools of investment have been increasing the size of the forex market in recent years. If global trade and finance were the body of world economy, the forex market would be the circulatory system; in other words, there doesn’t exist a deeper, more liquid market than that of currency trading. Almost every political or economical event of long-term significance is reflected in its workings, and understanding it results in a very good comprehension of finance and economics in general.
Participating in such a vast and significant mechanism can be a rewarding and exciting experience for the individual investor. But while this is true, success during your interactions with the giants will require more than a bit of diligence and patient study. The rewards can be immense: famous investors such as George Soros, Jim Rogers, large Wall Street firms such as Goldman Sachs, or banks like Citibank all make millions of dollars each year from trading in the forex market. In fact George Soros is notorious as being the man who broke the Bank of England: Through successful speculations, he was able to make 1 billion dollars in just about a week.
ECB Foreign Exchange Reference Rates - Aug 3
ECB Foreign Exchange Reference Rates - Aug 3 LONDON (Dow Jones)--Following are European Central Bank foreign exchange reference rates. All currencies are quoted against the euro. US Dollar USD 1.4303 Japanese yen JPY 135.86 Bulgarian lev BGN 1.9558 Czech koruna CZK 25.695 Danish krone DKK 7.4449 Estonian kroon EEK 15.6466 British pound GBP 0.8492 Hungarian forint HUF 265.7 Lithuanian litas LTL 3.4528 Latvian lats LVL 0.7023 Polish zloty PLN 4.1088 Romanian leu RON 4.203 Swedish krona SEK 10.2983 Swiss franc CHF 1.5246 Norwegian krone NOK 8.68 Croatian kuna HRK 7.356 Russian ruble RUB 44.4465 New Turkish lira TRY 2.0956 Australian dollar AUD 1.702 Brasilian Real BRL 2.6482 Canadian dollar CAD 1.5274 Chinese yuan CNY 9.7701 Hong Kong dollar HKD 11.0849 Indonesian rupiah IDR 14163.96 Indonesian rupiah INR 68.068 South Korean won KRW 1745.63 Mexican Peso MXN 18.7627 Malaysian ringgit MYR 5.0168 New Zealand dollar NZD 2.1445 Phillipines peso PHP 68.742 Singapore dollar SGD 2.0513 Thai baht THB 48.652 South African rand ZAR 11.0823 The reference rates are based on the regular daily procedure between central banks within and outside the European System of Central Banks, which normally takes place at 1415 CET (1215 GMT)
Forex: GBP/USD: Pound, at 1.6850 after hitting year high at 1.6879
FXstreet.com (Barcelona) - The Pound is trading at levels around 1.6850 after rally from 1.6475 low on Friday extended to 2009 low at 1.6875 on early European session.
According to the Kshitij Consultancy Service Team, the Pound could rise further, as the pair broke important resistance at 1.6820: "Cable has risen sharply during the day breaking past an important Resistance at 1.6820 and looks now headed for a rise towards 1.6940 which is a channel Resistance (the channel being formed by the joining the highs of 11-Jun '09 at 1.6621 and 30-Jun '09 at 1.6746 for the top and the Lows of 8-Jun '09 at 1.5801 and 8-Jul '09 at 1.5984 for the bottom)."
Resistance levels, according to the Kshitij Consultancy Service Team, lie at 1.6917-40, 1.7025-50 and 1.7180. On the downside, support levels lie at 1.6800, 1.6682-56 and. 1.6609
According to the Kshitij Consultancy Service Team, the Pound could rise further, as the pair broke important resistance at 1.6820: "Cable has risen sharply during the day breaking past an important Resistance at 1.6820 and looks now headed for a rise towards 1.6940 which is a channel Resistance (the channel being formed by the joining the highs of 11-Jun '09 at 1.6621 and 30-Jun '09 at 1.6746 for the top and the Lows of 8-Jun '09 at 1.5801 and 8-Jul '09 at 1.5984 for the bottom)."
Resistance levels, according to the Kshitij Consultancy Service Team, lie at 1.6917-40, 1.7025-50 and 1.7180. On the downside, support levels lie at 1.6800, 1.6682-56 and. 1.6609
CORRECT: Romania Jul Forex Reserves Reach EUR27.33B -MediaFax
("Romanian July Forex Reserves Up EUR860M To EUR27.37B -MediaFax," published at 1134 GMT, misstated the total foreign exchange reserve level in the headline. The correct version follows:)
BUCHAREST (Dow Jones)--Romanian foreign exchange reserves rose EUR860 million in July to total EUR27.326 billion, news agency Mediafax reports the central bank as saying Monday.
At the end of June, foreign exchange reserves stood at EUR26.466 billion.
The central bank said foreign exchange inflows were EUR4.243 billion in July, while outflows came to EUR3.383 billion.
In addition to its foreign exchange reserves, the central bank reported holdings of 103.7 metric tons of gold with a total market value of EUR2.214 billion.
As a result, total Romanian international reserves amounted to EUR29.54 billion at the end of July.
BUCHAREST (Dow Jones)--Romanian foreign exchange reserves rose EUR860 million in July to total EUR27.326 billion, news agency Mediafax reports the central bank as saying Monday.
At the end of June, foreign exchange reserves stood at EUR26.466 billion.
The central bank said foreign exchange inflows were EUR4.243 billion in July, while outflows came to EUR3.383 billion.
In addition to its foreign exchange reserves, the central bank reported holdings of 103.7 metric tons of gold with a total market value of EUR2.214 billion.
As a result, total Romanian international reserves amounted to EUR29.54 billion at the end of July.
Forex: EUR/USD: Euro hits 1.4326; right below Jun high at 1.4339
FXstreet.com (Barcelona) - Euro rally from 1.4100 on Friday has extended to levels above 1.4300 as the Euro reached 1.4326, right below 2009 high at 1.4339. At the moment, the Euro trades at 1.4315,0.30% above its day-opening price.
Resistance levels lie at 1.4339 (Jun high) and above here, 1.4370 and 1.4400. Support levels lie at 1.4260, and below there, 1.4195/05 area, and 1.4160.
According to the ecPulse.com analysis team, 1.4310 is a pivotal level for the pair: "The EUR/USD pair continues its upside pressure on the pivotal resistance 1.4310, in an attempt to breach and continue its upside short term direction; where chances favor achieving that after forming a bullish technical pattern, shown in the upper diagram. If the pair succeeded in achieving the breach for this level, and closed the four-hours above it, the intraday direction will rebound to the upside."
Resistance levels lie at 1.4339 (Jun high) and above here, 1.4370 and 1.4400. Support levels lie at 1.4260, and below there, 1.4195/05 area, and 1.4160.
According to the ecPulse.com analysis team, 1.4310 is a pivotal level for the pair: "The EUR/USD pair continues its upside pressure on the pivotal resistance 1.4310, in an attempt to breach and continue its upside short term direction; where chances favor achieving that after forming a bullish technical pattern, shown in the upper diagram. If the pair succeeded in achieving the breach for this level, and closed the four-hours above it, the intraday direction will rebound to the upside."
UPDATE:Romania Forex Reserves Hit Record Of EUR27.33B In July
BUCHAREST (Dow Jones)--Romanian foreign-exchange reserves rose EUR860 million on the month in July to a record high of EUR27.326 billion, after loans taken out by the Finance Ministry, news agency Mediafax reports the central bank as saying Monday.
At the end of June, foreign exchange reserves stood at EUR26.466 billion.
The previous record high, of EUR27.318 billion, was set in October last year.
The central bank said foreign exchange inflows stood at EUR4.243 billion in July, including loans taken out by the Finance Ministry.
In late July, Romania received the first tranche of EUR1.5 billion of a total EUR5 billion balance-of-payments loan from the European Commission. In addition, the Finance Ministry borrowed around EUR1.2 billion in a loan from a series of Romanian banks, adding to the reserve figure.
The central bank said outflows came to EUR3.383 billion in July.
In addition to its foreign exchange reserves, the central bank reported holdings of 103.7 metric tons of gold, with a total market value of EUR2.214 billion.
As a result, total Romanian international reserves amounted to EUR29.54 billion at the end of July.
At the end of June, foreign exchange reserves stood at EUR26.466 billion.
The previous record high, of EUR27.318 billion, was set in October last year.
The central bank said foreign exchange inflows stood at EUR4.243 billion in July, including loans taken out by the Finance Ministry.
In late July, Romania received the first tranche of EUR1.5 billion of a total EUR5 billion balance-of-payments loan from the European Commission. In addition, the Finance Ministry borrowed around EUR1.2 billion in a loan from a series of Romanian banks, adding to the reserve figure.
The central bank said outflows came to EUR3.383 billion in July.
In addition to its foreign exchange reserves, the central bank reported holdings of 103.7 metric tons of gold, with a total market value of EUR2.214 billion.
As a result, total Romanian international reserves amounted to EUR29.54 billion at the end of July.
Forex: USD/CHF eases initial gains and tests 1.0655
Fxstreet.com (Barcelona) – After rising during the Asian session from 1.0670 to the intra-day high at 1.0733, USD/CHF has fallen around 80 pips to trade below 1.0700 level and test the 1.0650/60 tough zone. Currently the pair is trading around 1.0665/75, easing initial losses and posting 0.15% daily losses from opening price action.
Rajoo C, analyst at Precise Trader, comments: “The Hourly Oscillators are Oversold and the price is Below the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Sideways while 10815 holds and Daily Trend is also Sideways while 10585 holds, so expect the price to be Choppy until the breakout happens. The patterns on the Hourly is giving a price projection of 10610 level, on the 5 min is choppy but the bears ensure that the price doesn't go above 10735-10815. Conservative traders should be Sidelined or strictly trade only at Precise Traders Report levels. Aggressive traders should do the same until the breakout happens.”
Rajoo C, analyst at Precise Trader, comments: “The Hourly Oscillators are Oversold and the price is Below the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Sideways while 10815 holds and Daily Trend is also Sideways while 10585 holds, so expect the price to be Choppy until the breakout happens. The patterns on the Hourly is giving a price projection of 10610 level, on the 5 min is choppy but the bears ensure that the price doesn't go above 10735-10815. Conservative traders should be Sidelined or strictly trade only at Precise Traders Report levels. Aggressive traders should do the same until the breakout happens.”
CURRENCIES: Dollar Down With Eyes On Manufacturing Data
The dollar fell to multi-month lows on Monday on Monday after a handful or reports showed manufacturing overseas was recovering, and a similar report in the U.S. is expected to show the sector is the best it has been since August.
The news, as well as some better earnings reports from banks, has supported equity markets, which has lately spelled trouble for the U.S. currency because investors no longer desire its safe-haven status.
The dollar index (DXY), which tracks the U.S. unit against a trade-weighted basket of six major currencies, was at 77.986, down from 78.329 in late North American trading on Friday.
Earlier, it fell to the lowest in 2009.
The British pound (CUR_GBPUSD) rose more than 2% to buy $1.6828, after touching a nine-month high.
The euro (CUR_EURUSD) changed hands at $1.4314, up from $1.4257 late Friday.
A report at 10 a.m. Eastern time is expected to show the manufacturing sector of the U.S. economy is as good as it has been since August. The Institute for Supply Management's diffusion index is expected to rise to 46.2% in July from 44.8% in June, according to a survey of economists by MarketWatch. Readings under 50 still indicate contraction.
The U.K. manufacturing-purchasing-managers' index unexpectedly grew above the 50 line in July indicating economic expansion for the first time in 15 months, data released on Monday showed.
Euro-zone manufacturing PMI data also showed an improvement, though it still remained below the 50 mark.
Separately, the China CLSA PMI rose to a 12-month high.
The news, as well as some better earnings reports from banks, has supported equity markets, which has lately spelled trouble for the U.S. currency because investors no longer desire its safe-haven status.
The dollar index (DXY), which tracks the U.S. unit against a trade-weighted basket of six major currencies, was at 77.986, down from 78.329 in late North American trading on Friday.
Earlier, it fell to the lowest in 2009.
The British pound (CUR_GBPUSD) rose more than 2% to buy $1.6828, after touching a nine-month high.
The euro (CUR_EURUSD) changed hands at $1.4314, up from $1.4257 late Friday.
A report at 10 a.m. Eastern time is expected to show the manufacturing sector of the U.S. economy is as good as it has been since August. The Institute for Supply Management's diffusion index is expected to rise to 46.2% in July from 44.8% in June, according to a survey of economists by MarketWatch. Readings under 50 still indicate contraction.
The U.K. manufacturing-purchasing-managers' index unexpectedly grew above the 50 line in July indicating economic expansion for the first time in 15 months, data released on Monday showed.
Euro-zone manufacturing PMI data also showed an improvement, though it still remained below the 50 mark.
Separately, the China CLSA PMI rose to a 12-month high.
Sunday, August 30, 2009
Forex pips and lots
A pip is the smallest amount of movement a price quote can make. In other words, each tick of the price quote is a pip. When EUR/USD moves from 1.2786 to 1.2787, for example, it has moved by one pip. You could also call it a point or a tick, but in forex traders’ jargon, pip is the word.
It’s a good idea to measure your profit or loss in pips rather than in the amount you actually lose or earn, since the trader’s performance can only be valued through his success in gathering pips. For instance, supposing trader A has a beginning capital of 100 USD, and trader B has only 10, it would take trader B ten times as much in terms of pips to achieve the same gain that was acquired by trader A in absolute dollar terms. In terms of their prowess in the market, however, if trader B were to make just 1/10 of what trader A makes, they’d still be equal, due to the the difference between their starting capital. This same logic can be utilized when assessing one’s own prowess, and if a diary is kept, it’s always better to note the loss or profit in pips, rather than cash, so as to keep a better track of performance.
It must also be remembered that one pip in the currency pair that is traded may not be the same amount in the trader’s base currency, that is, the currency with which he funds his account. For instance, if your currency is the British Pound, and you’re trading the EUR/USD, one pip movement in the currency pair would be a different amount in your base currency, depending on the quotes.
Another important term in trading forex is the lot, which is the smallest amount of currency you can trade at a particular level of leverage, and the standard lot size is 100,000 USD. Among today’s forex brokers, there are those who allow traders to enter bids without the use of lots (sometimes called mini lots), and the inexperienced trader may seek them before gaining enough confidence to start trading with a higher volume.
It’s a good idea to measure your profit or loss in pips rather than in the amount you actually lose or earn, since the trader’s performance can only be valued through his success in gathering pips. For instance, supposing trader A has a beginning capital of 100 USD, and trader B has only 10, it would take trader B ten times as much in terms of pips to achieve the same gain that was acquired by trader A in absolute dollar terms. In terms of their prowess in the market, however, if trader B were to make just 1/10 of what trader A makes, they’d still be equal, due to the the difference between their starting capital. This same logic can be utilized when assessing one’s own prowess, and if a diary is kept, it’s always better to note the loss or profit in pips, rather than cash, so as to keep a better track of performance.
It must also be remembered that one pip in the currency pair that is traded may not be the same amount in the trader’s base currency, that is, the currency with which he funds his account. For instance, if your currency is the British Pound, and you’re trading the EUR/USD, one pip movement in the currency pair would be a different amount in your base currency, depending on the quotes.
Another important term in trading forex is the lot, which is the smallest amount of currency you can trade at a particular level of leverage, and the standard lot size is 100,000 USD. Among today’s forex brokers, there are those who allow traders to enter bids without the use of lots (sometimes called mini lots), and the inexperienced trader may seek them before gaining enough confidence to start trading with a higher volume.
Getting started — choose a forex broker and the right kind of account
In the past, currencies were traded on the phone, and banks prefer audio contact between counter parties as a means of building trust even today, but the individual trader will have all of his needs satisfied simply by opening an account with an online forex broker. Once one decides to trade currencies, the first requirement will be the opening of an account.
There are many brokers to choose from, and consequently there's a lot of competition for customers among the various firms. What this means is that there's a wide array of different offers suitable to everyone's expectations, and it's a good idea to carefully screen the brokers' terms and conditions before coming to a final decision and committing capital. Calls to the customer service, questions about the financial status of the firm, its registration status are all valid and the prospective trader will find that in most cases the reliable brokers have no problem about supplying this kind of information.
The forex market for individual clients, termed the retail forex market, is a relatively recent development. In the early days of retail forex some brokers would misquote prices, and engage in unethical practices by exploiting their knowledge of clients' trades (such as the infamous stop hunting). There were even scandals, and bankruptcies due to fraud, the largest and most memorable of which is the collapse of commodities and futures broker Refco in 2005.
Fortunately, the retail forex market has come a long way since those days, and there are many regulated brokers with open and clean business practices. There are a number of firms today with records going back to about ten years or more, and the prospective trader will not have much difficulty in finding one that matches his needs among them.
Account typesBut before a brokerage firm is chosen , the first decision to be made will be about the type of account and the amount of leverage that we like..The previous chapters have discussed leverage and undercapitalization, and the new trader should make sure that he understands these subjects before deciding on the type of his new account. Some firms offer maximum leverage of up to 400 times the deposited margin, and there are differing minimum deposit requirements at different forex brokers. In general mini-sized accounts (those typically offered to beginners) offer leverage at a maximum of 100, and the minimum deposit size is around 100 USD. There are also firms that don't have a minimum deposit requirement, and the trader is free to decide how much (or how little) he wishes to risk on his early encounters with the forex market.
If you're new to forex, it's a good idea to embark on your trading journey by opening a mini account. As we discussed before, success of the trader is measured in pips, not the actual dollar amount gained or lost, and it's absolutely possible to have a very good idea on how successful you may be with a standard account by first trading small sums in the mini.
The forex market is diverse, and both the cautious trader, and the rodeo rider are likely to find account packages that suit their tastes. Remember that the market isn't going anywhere, you can take your time and examine as many brokers and account offers as you like before you decide to participate in this rewarding, educating and engaging market.
Final WordTrading the forex market is no riskier than trading stocks or commodity futures. Apart from the usual risks that are present in every market (the broker going bankrupt, natural disasters disrupting electronic trading, and so on) the risks related to leverage, and capitalization that give the forex market a bad name are controlled entirely by the trader, and there's no reason to be wary of trading forex once you're making sure that you don't risk more than what is sensible, and are employing proper money management methods.
In choosing a forex broker, as with a stock broker, or commodities broker, the trader is strongly advised to stick to those regulated by the authorities: In the US, CFTC (Commodity Futures Trading Commission) and NFA (National Futures Association) enforce the rules and regulations that forex brokers must abide by, and the trader should always make sure that his broker is regulated and controlled by these institutions. Of course, even the most stringent regulations will not work very well in a nation of which the financial infrastructure is not well-developed; a broker based in a place like Cyprus, or Ukraine is obviously not the best choice if we want to ensure that its conduct is carefully scrutinized.
The broker trading against clients is always a worry in minds of the beginning and experienced traders alike. To minimize the risk of this happening, it's possible to only choose those brokers that offer the no-dealing desk, and straight through processing options. The NDD (no dealing desk) ensures that trades are fully automated, minimizing the risk that the broker will misquote prices and widen spreads unfairly through deals mediated by phone operators. STA (straight through processing) ensures that there are no manual interventions in the electronic process as customer trades are routed from the client's software to the banks and liquidity providers.
There are many brokers to choose from, and consequently there's a lot of competition for customers among the various firms. What this means is that there's a wide array of different offers suitable to everyone's expectations, and it's a good idea to carefully screen the brokers' terms and conditions before coming to a final decision and committing capital. Calls to the customer service, questions about the financial status of the firm, its registration status are all valid and the prospective trader will find that in most cases the reliable brokers have no problem about supplying this kind of information.
The forex market for individual clients, termed the retail forex market, is a relatively recent development. In the early days of retail forex some brokers would misquote prices, and engage in unethical practices by exploiting their knowledge of clients' trades (such as the infamous stop hunting). There were even scandals, and bankruptcies due to fraud, the largest and most memorable of which is the collapse of commodities and futures broker Refco in 2005.
Fortunately, the retail forex market has come a long way since those days, and there are many regulated brokers with open and clean business practices. There are a number of firms today with records going back to about ten years or more, and the prospective trader will not have much difficulty in finding one that matches his needs among them.
Account typesBut before a brokerage firm is chosen , the first decision to be made will be about the type of account and the amount of leverage that we like..The previous chapters have discussed leverage and undercapitalization, and the new trader should make sure that he understands these subjects before deciding on the type of his new account. Some firms offer maximum leverage of up to 400 times the deposited margin, and there are differing minimum deposit requirements at different forex brokers. In general mini-sized accounts (those typically offered to beginners) offer leverage at a maximum of 100, and the minimum deposit size is around 100 USD. There are also firms that don't have a minimum deposit requirement, and the trader is free to decide how much (or how little) he wishes to risk on his early encounters with the forex market.
If you're new to forex, it's a good idea to embark on your trading journey by opening a mini account. As we discussed before, success of the trader is measured in pips, not the actual dollar amount gained or lost, and it's absolutely possible to have a very good idea on how successful you may be with a standard account by first trading small sums in the mini.
The forex market is diverse, and both the cautious trader, and the rodeo rider are likely to find account packages that suit their tastes. Remember that the market isn't going anywhere, you can take your time and examine as many brokers and account offers as you like before you decide to participate in this rewarding, educating and engaging market.
Final WordTrading the forex market is no riskier than trading stocks or commodity futures. Apart from the usual risks that are present in every market (the broker going bankrupt, natural disasters disrupting electronic trading, and so on) the risks related to leverage, and capitalization that give the forex market a bad name are controlled entirely by the trader, and there's no reason to be wary of trading forex once you're making sure that you don't risk more than what is sensible, and are employing proper money management methods.
In choosing a forex broker, as with a stock broker, or commodities broker, the trader is strongly advised to stick to those regulated by the authorities: In the US, CFTC (Commodity Futures Trading Commission) and NFA (National Futures Association) enforce the rules and regulations that forex brokers must abide by, and the trader should always make sure that his broker is regulated and controlled by these institutions. Of course, even the most stringent regulations will not work very well in a nation of which the financial infrastructure is not well-developed; a broker based in a place like Cyprus, or Ukraine is obviously not the best choice if we want to ensure that its conduct is carefully scrutinized.
The broker trading against clients is always a worry in minds of the beginning and experienced traders alike. To minimize the risk of this happening, it's possible to only choose those brokers that offer the no-dealing desk, and straight through processing options. The NDD (no dealing desk) ensures that trades are fully automated, minimizing the risk that the broker will misquote prices and widen spreads unfairly through deals mediated by phone operators. STA (straight through processing) ensures that there are no manual interventions in the electronic process as customer trades are routed from the client's software to the banks and liquidity providers.
Forex Technical Analysis:
Technical Analysis is probably the most common and successful means of making trading decisions and analyzing forex and commodities markets.
Technical analysis differs from fundamental analysis in that technical analysis is applied only to the price action of the market, ignoring fundamental factors. As fundamental data can often provide only a long-term or "delayed" forecast of exchange rate movements, technical analysis has become the primary tool with which to successfully trade shorter-term price movements, and to set stop loss and profit targets.
Technical analysis consists primarily of a variety of technical studies, each of which can be interpreted to generate buy and sell signals or to predict market direction.
Technical analysis differs from fundamental analysis in that technical analysis is applied only to the price action of the market, ignoring fundamental factors. As fundamental data can often provide only a long-term or "delayed" forecast of exchange rate movements, technical analysis has become the primary tool with which to successfully trade shorter-term price movements, and to set stop loss and profit targets.
Technical analysis consists primarily of a variety of technical studies, each of which can be interpreted to generate buy and sell signals or to predict market direction.
Forex Broker
1: Choosing the Best Professional Forex Brokers The US currency is one of the most widely used trading money in the market today. The US bank and its related financial agencies have a say on the players in the forex market.
2: Dealing With Online Forex Brokers Forex brokers are highly esteemed in the market. Most of the time, we feel way too assured for our own good when we get the services of online forex brokers.
3: Reading Forex Broker Reviews Reputation is an important thing when it comes to hiring forex brokers. Reviews about forex brokers would definitely dissect the credentials of the person in discussion.
4: Choosing Forex Brokers in USA Forex brokers serve as the middle man between you and your buyers or sellers. You can choose to either get in touch with forex brokers in USA as a consultant or employ them as your trading partner.
5: Forex Broker- Selecting the Correct Forex Broker-00-402 Today we are seeing many people starting to trade the Forex Market, as it is recession proof. It is also the most liquid market in the world, turning over in excess of $3 trillion every day. So if you are looking to get into Forex trading then the most important step you can take is to find a great Forex Broker.
6: CFD Broker - Make the Choice - Not A Mistake Today, this article will discuss about the CFD market, and how you can find a great online CFD broker when you do decide to jump on the wagon and become a CFD Trader. Most of the CFD Brokers today offer the ability to be able to trade online, CFD trade over the phone, or CFD trade from you mobile phone.
7: Best CFD Broker - Australia The Contracts For Difference (CFD) Market is the largest financial market and everyday new investors plan to jump in when they learn of the benefits, that is, high returns on investment which is as high as 20% per month a month.
8: Finding A Forex Broker For Dummies Online brokers give an important role to play when you open an online trading account. Every Last broker can offer different services and features. You must research all the online brokers to find the foremost broker to meet your needs.
9: CFD Brokers Singapore - Who is the Best? Online brokers give an important role to play when you open an online trading account. Every Last broker can offer different services and features. You must research all the online brokers to find the foremost broker to meet your needs
10: Finding a Forex Broker Most traders and investors out there know, the foreign exchange market is the largest market in the world. This is why we are seeing so many people making the transition from shares, options, futures to the Forex Markets. With the brilliant liquidity, much longer trading hours, we are seeing traders realize returns as much as 40% a month and in some cases even more.
2: Dealing With Online Forex Brokers Forex brokers are highly esteemed in the market. Most of the time, we feel way too assured for our own good when we get the services of online forex brokers.
3: Reading Forex Broker Reviews Reputation is an important thing when it comes to hiring forex brokers. Reviews about forex brokers would definitely dissect the credentials of the person in discussion.
4: Choosing Forex Brokers in USA Forex brokers serve as the middle man between you and your buyers or sellers. You can choose to either get in touch with forex brokers in USA as a consultant or employ them as your trading partner.
5: Forex Broker- Selecting the Correct Forex Broker-00-402 Today we are seeing many people starting to trade the Forex Market, as it is recession proof. It is also the most liquid market in the world, turning over in excess of $3 trillion every day. So if you are looking to get into Forex trading then the most important step you can take is to find a great Forex Broker.
6: CFD Broker - Make the Choice - Not A Mistake Today, this article will discuss about the CFD market, and how you can find a great online CFD broker when you do decide to jump on the wagon and become a CFD Trader. Most of the CFD Brokers today offer the ability to be able to trade online, CFD trade over the phone, or CFD trade from you mobile phone.
7: Best CFD Broker - Australia The Contracts For Difference (CFD) Market is the largest financial market and everyday new investors plan to jump in when they learn of the benefits, that is, high returns on investment which is as high as 20% per month a month.
8: Finding A Forex Broker For Dummies Online brokers give an important role to play when you open an online trading account. Every Last broker can offer different services and features. You must research all the online brokers to find the foremost broker to meet your needs.
9: CFD Brokers Singapore - Who is the Best? Online brokers give an important role to play when you open an online trading account. Every Last broker can offer different services and features. You must research all the online brokers to find the foremost broker to meet your needs
10: Finding a Forex Broker Most traders and investors out there know, the foreign exchange market is the largest market in the world. This is why we are seeing so many people making the transition from shares, options, futures to the Forex Markets. With the brilliant liquidity, much longer trading hours, we are seeing traders realize returns as much as 40% a month and in some cases even more.
Forex Beginner
1: What is a forex broker? Have you ever felt intrigued by the many advertisements on high leverage and great profit potential involved in currency trading? The golden gate of the kingdom of money, we are told, is reached by the road of forex.
2: Easy Income Source that can be happening in One Day Forex is the best home business to father. Once you are able at it your channel is lined with gold if we embroidered just a petty little.
3: Learn the Simple Forex Market Forex trading is a market which is both complex and simple. How to make money is the simple part, but the implementation of the process to learn forex market can be a little difficult. Forex education can prove to be a boon for all those who are willing to try their luck in forex trading. Therefore it is very important for them to understand the ways and methods of forex trading before actually getting into it. Even if one is well experienced in trading, there is always a room for improvement even for the experts.
4: Automated Forex Trading System The Forex MegaDroid is an automated Forex trading robot This was specifically designed to function in all market environments. Which isexactly why its performance during testing was close to the highest we have everwitnessed. The facts are clear and un-debatable on this issue, the market canmake unexpected moves at the drop of a hat and having a weapon in your arsenalable to react instantly to those corrections and profit from them at the sametime, puts you in a very powerful position. Because of this we were forced togive it our highest rating possible, a 10 out of 10. This item is not to beunderestimated and MUST be in your final decision making process when makingyour purchasing decision
5: Forex Signals Providers - Are They Really Worth Your Money? Making money in forex market became no longer difficult as it was few years ago. with the all new trading techniques and high speed internet connections and the appearance of the so many brokers who give the opportunities to every one to participate in the forex trading market regardless his capital volume.
6: Can You Make Money Online Trading Forex? When you are ready to trade this market, keep these four simple steps in mind and then do not let anything stand in your way of becoming the trader you want to be.
7: Online Forex Resources Are Abundant Forex trading is quickily becoming one of the investing world's hottest, most rewarding opportunities and it's chosen as "ideal business" by lot of traders. Forex are risky, but only when you dont have the necessary knowledge to make a sound decision about the money youre trading.
2: Easy Income Source that can be happening in One Day Forex is the best home business to father. Once you are able at it your channel is lined with gold if we embroidered just a petty little.
3: Learn the Simple Forex Market Forex trading is a market which is both complex and simple. How to make money is the simple part, but the implementation of the process to learn forex market can be a little difficult. Forex education can prove to be a boon for all those who are willing to try their luck in forex trading. Therefore it is very important for them to understand the ways and methods of forex trading before actually getting into it. Even if one is well experienced in trading, there is always a room for improvement even for the experts.
4: Automated Forex Trading System The Forex MegaDroid is an automated Forex trading robot This was specifically designed to function in all market environments. Which isexactly why its performance during testing was close to the highest we have everwitnessed. The facts are clear and un-debatable on this issue, the market canmake unexpected moves at the drop of a hat and having a weapon in your arsenalable to react instantly to those corrections and profit from them at the sametime, puts you in a very powerful position. Because of this we were forced togive it our highest rating possible, a 10 out of 10. This item is not to beunderestimated and MUST be in your final decision making process when makingyour purchasing decision
5: Forex Signals Providers - Are They Really Worth Your Money? Making money in forex market became no longer difficult as it was few years ago. with the all new trading techniques and high speed internet connections and the appearance of the so many brokers who give the opportunities to every one to participate in the forex trading market regardless his capital volume.
6: Can You Make Money Online Trading Forex? When you are ready to trade this market, keep these four simple steps in mind and then do not let anything stand in your way of becoming the trader you want to be.
7: Online Forex Resources Are Abundant Forex trading is quickily becoming one of the investing world's hottest, most rewarding opportunities and it's chosen as "ideal business" by lot of traders. Forex are risky, but only when you dont have the necessary knowledge to make a sound decision about the money youre trading.
What are the advantages of the Forex Market over other types of investments?
When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.
The Forex market is also very liquid. When trading Forex you have full control of your capital.
Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control
Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment.
The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase.
The Forex market is also very liquid. When trading Forex you have full control of your capital.
Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control
Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment.
The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase.
Forex The Future Investment
There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.
The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.
Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.
Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!
So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.
The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.
Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.
Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!
So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.
Forex Avenue: The Road to Riches
In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.
I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.
Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.
There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available — http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson.
While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.
I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.
Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.
There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available — http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson.
While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.
Interested in FOREX Trading?
The Foreign Exchange Market (Forex) has no central exchange location yet it is the largest financial market in the world. It is over 3x's the size of the stock and futures markets combined and operates via an electronic network of a banks, corporations and investors.
Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:
USD — United States Dollar EUR — Euro members Euro JPY — Japan Yen GBP — Great Britian pound CHF — Switzerland franc CAD — Canadian dollar AUD — Australia dollar
There are 2 types of investors involved in the Forex market.The first type of investor is the hedger. The hedger is involved in International trades and utilizes Forex trading to protect their interest in a transaction from adverse currency fluctuations. The 2nd type of investor is the speculator who invests in currency solely for profit.
Currency prices fluctuate due to a variety of economic and political factors. The major factors are:
Interest rates International trade Inflation Political stability
There are many reasons investors take a great interest in FX trading Some of the major reasons are:
No fees No middlemen No fixed trade sizes Low transaction cost High liquidity Instant transactions Low margin / High leverage 24 hour market Online access via online trading platforms Always good opportunities to trade, unlike the stock market the market is never bullish or bearish. No one entity can control the market No insider trading can occur
To begin trading in the Forex market, an investor only needs a computer, a high-speed internet connection and an online trading currency account. A mini account can be opened for as little as $100.
These are some of the reasons why Forex trading has become quite popular in recent years. For more information on getting started in FX Trading visit http://www.fx-trading-guide.com/
Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:
USD — United States Dollar EUR — Euro members Euro JPY — Japan Yen GBP — Great Britian pound CHF — Switzerland franc CAD — Canadian dollar AUD — Australia dollar
There are 2 types of investors involved in the Forex market.The first type of investor is the hedger. The hedger is involved in International trades and utilizes Forex trading to protect their interest in a transaction from adverse currency fluctuations. The 2nd type of investor is the speculator who invests in currency solely for profit.
Currency prices fluctuate due to a variety of economic and political factors. The major factors are:
Interest rates International trade Inflation Political stability
There are many reasons investors take a great interest in FX trading Some of the major reasons are:
No fees No middlemen No fixed trade sizes Low transaction cost High liquidity Instant transactions Low margin / High leverage 24 hour market Online access via online trading platforms Always good opportunities to trade, unlike the stock market the market is never bullish or bearish. No one entity can control the market No insider trading can occur
To begin trading in the Forex market, an investor only needs a computer, a high-speed internet connection and an online trading currency account. A mini account can be opened for as little as $100.
These are some of the reasons why Forex trading has become quite popular in recent years. For more information on getting started in FX Trading visit http://www.fx-trading-guide.com/
Forex Pay No Commissions
In the forex market costs are confined to the bid-ask spread. FXCM charges no commission or additional transaction fees, and its customers trade on spreads provided to FXCM by some of the world's largest banks via the FX Trading Station. In the stock market, “no-fee” programs are frequently offered only with provisos mandating minimum account balances or minimum trades per month.
Spot Forex versus Currency Futures
Many traders have made the switch from currency futures to spot foreign exchange ("forex") trading. Spot foreign exchange offers better liquidity and generally a lower cost of trading than currency futures. Banks and brokers in spot foreign exchange can quote markets 24 hours a day. Furthermore, the spot foreign exchange market is not burdened by exchange and NFA ("National Futures Association") fees, which are generally passed on to the customer in the form of higher commissions. For these reasons, virtually all professional traders and institutions conduct most of their foreign exchange dealing in the spot forex market, not in currency futures.
The mechanics of trading spot forex are similar to those of currency futures. The most important initial difference is the way in which currency pairs are quoted. Currency futures are always quoted as the currency versus the US dollar. In Spot forex, some currencies are quoted this way, while others are quoted as the US dollar versus the currency. For example, in spot forex, EURUSD is quoted the same way as Euro futures. In other words, if the Euro is strengthening, EURUSD will rise just as Euro futures will rise. On the other hand, USDCHF is quoted as US dollars with respect to Swiss Francs, the opposite of Swiss Franc futures. So if the Swiss Franc strengthens with respect to the US dollar, USDCHF will fall, while Swiss Franc futures will rise. The rule in spot forex is that the first currency shown is the currency that is being quoted in terms of direction. For example, "EUR" in EURUSD and "USD" in USDCHF is the currency that is being quoted
The mechanics of trading spot forex are similar to those of currency futures. The most important initial difference is the way in which currency pairs are quoted. Currency futures are always quoted as the currency versus the US dollar. In Spot forex, some currencies are quoted this way, while others are quoted as the US dollar versus the currency. For example, in spot forex, EURUSD is quoted the same way as Euro futures. In other words, if the Euro is strengthening, EURUSD will rise just as Euro futures will rise. On the other hand, USDCHF is quoted as US dollars with respect to Swiss Francs, the opposite of Swiss Franc futures. So if the Swiss Franc strengthens with respect to the US dollar, USDCHF will fall, while Swiss Franc futures will rise. The rule in spot forex is that the first currency shown is the currency that is being quoted in terms of direction. For example, "EUR" in EURUSD and "USD" in USDCHF is the currency that is being quoted
Online Forex Trading
Do you know what Forex trading is? Some people have heard of this type of trading, others have not. If you haven't, it might be something you are interested in trying. Forex trading stands for foreign exchange trading. What it consists of is the buying and selling of different currencies. This is done simultaneously, and there are people who make a lot of money with this kind of trading. This is apparent by the 1.9 million dollar turnover in this market that happens every day. Also a lot of it is done online. Online Forex trading is very popular.
The most common currencies to trade are the Euro and the U.S. dollar, and the U.S. dollar and the Japanese Yen. However, nearly all of the Forex trading done involves the major currencies of the world. These include the Euro, Japanese Yen, U.S. dollar, Canadian dollar, British Pound, Australian dollar, and the Swiss franc. The Forex exchange is different from other exchanges, such as the New York Stock Exchange, in that it does not have a physical location or central exchange. The exchange day begins in Sydney, then moves to Tokyo, on to London, and finally ends in New York. Each country takes the responsibility of regulating the Forex exchange activities in their own country. So there is no overall regulatory agency. However, this does not seem to be a problem and most countries do very well at overseeing Forex exchange activities.
There are a lot of things that influence the Forex rate. For instance, economic things, like interest rates and inflation, and also political things, such as political unrest in other countries and major changes in government cause up and down changes in the Forex rate. However, these things tend to be short-term, and don't affect it for long.
Online Forex trading sites are easy to find by surfing the Internet. Most of them provide a wealth of information for the first time trader. You can find out about the history of Forex trading, how to co it, tips on being successful, etc. You can also start trading with as little as $250 in your account on some sites. For anyone who is interested in currency or trading, it is something you should check out.
As with any type of trading, there are no guarantees that you will make money or that you won't make money. It is a smart choice to learn as much as you can about online Forex trading before investing any money and doing any trading. It is a fact that informed investors do better than those who don't know much about what they are trading. So get the fact before you dive in. You might just make a little money in a very interesting currency exchange.
The most common currencies to trade are the Euro and the U.S. dollar, and the U.S. dollar and the Japanese Yen. However, nearly all of the Forex trading done involves the major currencies of the world. These include the Euro, Japanese Yen, U.S. dollar, Canadian dollar, British Pound, Australian dollar, and the Swiss franc. The Forex exchange is different from other exchanges, such as the New York Stock Exchange, in that it does not have a physical location or central exchange. The exchange day begins in Sydney, then moves to Tokyo, on to London, and finally ends in New York. Each country takes the responsibility of regulating the Forex exchange activities in their own country. So there is no overall regulatory agency. However, this does not seem to be a problem and most countries do very well at overseeing Forex exchange activities.
There are a lot of things that influence the Forex rate. For instance, economic things, like interest rates and inflation, and also political things, such as political unrest in other countries and major changes in government cause up and down changes in the Forex rate. However, these things tend to be short-term, and don't affect it for long.
Online Forex trading sites are easy to find by surfing the Internet. Most of them provide a wealth of information for the first time trader. You can find out about the history of Forex trading, how to co it, tips on being successful, etc. You can also start trading with as little as $250 in your account on some sites. For anyone who is interested in currency or trading, it is something you should check out.
As with any type of trading, there are no guarantees that you will make money or that you won't make money. It is a smart choice to learn as much as you can about online Forex trading before investing any money and doing any trading. It is a fact that informed investors do better than those who don't know much about what they are trading. So get the fact before you dive in. You might just make a little money in a very interesting currency exchange.
Trade Around the Clock
The forex market is a near-seamless 24-hour market. Subject to available liquidity, FXCM offers trading from Sunday, starting after 5:15 PM EST, until Friday, 4PM, EST (FXCM Client Service is available 24/7). With the ability to trade around the clock, currency traders have the advantage of customizing their own trading schedule; they can usually get in or out of the market at any time without waiting for an opening bell or encountering a market gap. While trading stocks after usual market hours is possible, very often that possibility is negated by a lack of order flow or a drastic widening of the bid-ask spread.
Forex Market Information Easily Accessible
Information about stocks is abundant, but so are the stocks. Finding a trade opportunity in the equities markets may mean sifting through data on thousands of stocks, while the forex trader has only six major currencies to research. Additionally, the vital information that moves equity markets, such as revenues and profits, is proprietary and private. In contrast, virtually all of the news that bears on the forex market is in publicly disseminated reports from governments or research institutions, and released to everybody at the same time. We feel that the knowledge you've gained in analyzing stocks can easily be transferred to the forex market. Many of the economic indicators familiar to equity traders, such as payroll data and interest rates, affect the currency markets. And many technical traders have found the forex market to be particularly attractive, since currencies respond well to many of the common technical indicators, such as MACD, RSI, and Candlestick charting. To learn more about transitioning from trading equity markets to trading in the Forex market, contact the FXCM staff today at 888-503-6739.
How does forex trading work?
Forex trading is the act of trading currencies from different countries against each other. Forex is acronym for foreign exchange.
For example, in Europe the currency in circulation is called the Euro (EUR) and in the United States, the currency in circulation is called the US Dollar (USD).
An example of a forex trade is to buy the Euro while simultaneously selling the US Dollar. This is called going long on the EUR/USD.
Forex trading is typically done through a broker or market maker. As a forex trader you can choose a currency pair that you feel is going to change in value and place a trade accordingly.
Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position.
When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen in seconds.
The main enticements of currency dealing for private investors and attraction for short-term forex trading are:
* 24-hour trading, 5 days a week with non-stop access to global forex dealers.
* An enormous liquid market making it easy to trade most currencies.
* Volatile markets offering profit opportunities.
* Standard instruments for controlling risk exposure.
* The ability to profit in rising or falling markets.
* Leveraged trading with low margin requirements.
* Many options for zero commission trading.
To know if you made a good investment in forex trading, one needs to compare this investment option to alternative investments.
At the very minimum, the return on investment (ROI) should be compared to the return on a 'risk-free' investment. One example of a risk-free investment is long-term US government bonds since there is practically no chance for a default, i.e. the US government going bankrupt or being unable or unwilling to pay its debt obligation.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling.
If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit.
An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the forex market is speculative.
In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency
For example, in Europe the currency in circulation is called the Euro (EUR) and in the United States, the currency in circulation is called the US Dollar (USD).
An example of a forex trade is to buy the Euro while simultaneously selling the US Dollar. This is called going long on the EUR/USD.
Forex trading is typically done through a broker or market maker. As a forex trader you can choose a currency pair that you feel is going to change in value and place a trade accordingly.
Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position.
When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen in seconds.
The main enticements of currency dealing for private investors and attraction for short-term forex trading are:
* 24-hour trading, 5 days a week with non-stop access to global forex dealers.
* An enormous liquid market making it easy to trade most currencies.
* Volatile markets offering profit opportunities.
* Standard instruments for controlling risk exposure.
* The ability to profit in rising or falling markets.
* Leveraged trading with low margin requirements.
* Many options for zero commission trading.
To know if you made a good investment in forex trading, one needs to compare this investment option to alternative investments.
At the very minimum, the return on investment (ROI) should be compared to the return on a 'risk-free' investment. One example of a risk-free investment is long-term US government bonds since there is practically no chance for a default, i.e. the US government going bankrupt or being unable or unwilling to pay its debt obligation.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling.
If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit.
An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the forex market is speculative.
In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency
Forex Bank
Forex AB is a Swedish financial services company. The company was started in 1927 as a currency exchange service for travellers, at the Central Station in Stockholm. The owner of Gyllenspet's Barber Shop, according to the legend, discovered that most of his customers were tourists in need of currency for their trips. The owner began keeping the major currencies on hand.
The company was subsequently acquired by Statens Järnvägar (SJ), the Swedish State Railways, which expanded the operations until it was sold off to one of the managers, Rolf Friberg, in 1965. The company was the only one apart from the banks that was licensed to conduct currency exchange in Sweden.
The company, which is still wholly owned by the Friberg family, has expanded into Denmark, Finland, Norway and Iceland and has over 60 shops, usually located at train stations or airports. The decrease in the business brought on by introduction of the euro has made the company look for alternative sources of revenue, like applying for a banking licence and attempting to move into more regular transaction services, earlier handled by Svensk Kassaservice, a subsidiary of the state owned Swedish postal company, Posten.
Since 2003 Forex is a licensed bank.
The company was subsequently acquired by Statens Järnvägar (SJ), the Swedish State Railways, which expanded the operations until it was sold off to one of the managers, Rolf Friberg, in 1965. The company was the only one apart from the banks that was licensed to conduct currency exchange in Sweden.
The company, which is still wholly owned by the Friberg family, has expanded into Denmark, Finland, Norway and Iceland and has over 60 shops, usually located at train stations or airports. The decrease in the business brought on by introduction of the euro has made the company look for alternative sources of revenue, like applying for a banking licence and attempting to move into more regular transaction services, earlier handled by Svensk Kassaservice, a subsidiary of the state owned Swedish postal company, Posten.
Since 2003 Forex is a licensed bank.
Pakistan Forex Scam Case
In November 2008 Munaf Kalia (Chief Executive Officer of Khanani and Kalia International (Pvt.) Ltd.), Yusuf Kalia, and associates, were charged for illegally transferring funds from Pakistan to Afghanistan.
* 1 Background
* 2 Exit control list
* 3 Time Line
* 4 Hawala business
Background
Since the depreciation of the rupee from July 2007, the Federal Investigation Agency was investigating the unexpected depreciation by the orders of the Pakistani government. In November 2008, the government sought support from Interpol with whose help the FIA cracked down all over Pakistan searching for persons involved in illegal smuggling of US dollars outside Pakistan.[2]The FIA conducted raids in various parts of Karachi detained more than 12 people including Munaf Kalia, and ten officials of the National Database Registration Authority suspected of providing counterfeit identity cards.[3]Manaf Kalia appeared in the court of Omar Awan, judicial magistrate South Karachi on November 9, 2008. The FIA sought and obtained a remand to Lahore to face another charge.
Exit control list
The Special Civil Court of Lahore, ordered that more than 14 names of different people involved in the forex scam case be included in the ECL (Exit Control List) of Pakistan.
Time Line
On November 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for 30 days and debarred KKI’s head office, branches, franchises payment booths and currency exchange booths from undertaking any kind of business for violating its rules and regulations.
On December 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for an indefinite period of time. The suspension order further stated that the company's headquarter, branch offices and/or franchise cannot carry any business dealings.
Hawala business
The government’s action against Hawala trade, which involves international network of currency dealers for making unrecorded payments in each other’s countries, was one step in the series of the forex scam case. These steps were taken at a time when the rupee depreciated by 30 percent against the dollar since the beginning of 2008.
* 1 Background
* 2 Exit control list
* 3 Time Line
* 4 Hawala business
Background
Since the depreciation of the rupee from July 2007, the Federal Investigation Agency was investigating the unexpected depreciation by the orders of the Pakistani government. In November 2008, the government sought support from Interpol with whose help the FIA cracked down all over Pakistan searching for persons involved in illegal smuggling of US dollars outside Pakistan.[2]The FIA conducted raids in various parts of Karachi detained more than 12 people including Munaf Kalia, and ten officials of the National Database Registration Authority suspected of providing counterfeit identity cards.[3]Manaf Kalia appeared in the court of Omar Awan, judicial magistrate South Karachi on November 9, 2008. The FIA sought and obtained a remand to Lahore to face another charge.
Exit control list
The Special Civil Court of Lahore, ordered that more than 14 names of different people involved in the forex scam case be included in the ECL (Exit Control List) of Pakistan.
Time Line
On November 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for 30 days and debarred KKI’s head office, branches, franchises payment booths and currency exchange booths from undertaking any kind of business for violating its rules and regulations.
On December 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for an indefinite period of time. The suspension order further stated that the company's headquarter, branch offices and/or franchise cannot carry any business dealings.
Hawala business
The government’s action against Hawala trade, which involves international network of currency dealers for making unrecorded payments in each other’s countries, was one step in the series of the forex scam case. These steps were taken at a time when the rupee depreciated by 30 percent against the dollar since the beginning of 2008.
Forex Ascending trend
Ascending trend in forex and currency trading Ascending trend channels are a useful tool due to their ability to predict overall changes in trend. As long as prices remain within the ascending trend channel, the upward trend in price can be expected to continue. As soon as prices exceed either trendline forming the channel, however, a strong signal either to buy or to sell is generated. A break through the upper trendline generates a strong buy signal, while a break through the lower trendline generates a strong sell signal.
Foreign exchange autotrading
Forex autotrading is a trading strategy where forex buy and sell orders are placed automatically based on an underlying system or program. The buy or sell orders are sent out to be executed in the market when a certain set of criteria is met.
Autotrading - and systems, or programs to form buy and sell signals -, are used typically by active traders who enter and exit positions at a much higher rate than the average investor. There are also a wide range of systems that differ on the set of criteria used to generate the buy or sell signals. Typically, the criteria used are more technical in format - in that they focus on price movement and technical indicators
* 1 History
* 2 Types
* 3 Advantages
* 4 Regulation
History
Forex autotrading originates at the emergence of online retail trading, since about 1996 when internet-based companies created retail forex platforms that provide a quick way for individuals to buy and sell on the forex spot market. Nevertheless, larger retail traders could autotrade Forex contracts at the Chicago Mercantile Exchange as early as in the 1970s.
Types
Today, there are two major types of Forex autotrading:
Fully automated or robotic Forex trading: This way of autotrading is very similar to algorithmic or black-box trading, where a computer algorithm, or Expert Advisor (EA), decides on aspects of the order such as the timing, price, or quantity or initiation of the order without human intervention. Users can only interfere by tweaking the technical parameters of the program; all other control is handed over to the program. Examples of such robotic EA’s are, Fapturbo, PipZu etc.
Signal-based Forex autotrading: This autotrading mode is based on the concept of auditing traders all over the world and making their strategies available to anyone interested in the form of signals. Then traders have the ability to automatically convert any of these signals to real trades in their broker accounts. Human interference here is augmented; signals come from live traders while users can actively select to follow a Signal Provider whose strategy fits their risk profile. Examples of such platforms are: ZuluTrade, Rent a Signal etc.
Advantages
An automated trading environment generates fewer trades per market than a human trader can handle, it can of course replicate its actions across multiple markets and timeframes. Furthermore, it is far less restricted in the number of intermarket opportunities it can observe and act upon. An automated system is also unaffected by the psychological swings that human traders are prey to. This is particularly relevant when trading with a mechanical model, which is typically developed on the assumption that all the trade entries flagged will actually be taken in real time trading
Signal Provider based models have the advantage that they offer traders the opportunity to follow previously successful signal providers or strategy with the hope that the advice they offer will continue to be accurate and lead to profitable future trades. An added advantage is the accessibility offered by these programs as traders do not need to have expert knowledge on Forex but only have to select a system, making Forex trading possible to anyone.
Forex autotrading services can be offered for free, on a spread basis (ZuluTrade) or on a one time fee basis (Fapturbo).
Regulation
As an unregulated and highly profitable market, the Forex market is extremely attractive to scammers. Forex autotrading, as it brings Forex trading to the masses makes even more people susceptible to frauds. Bodies such as the NFA and the SEC issue warnings and rules to avoid fraudulent Forex trading behavior on the web.
Autotrading - and systems, or programs to form buy and sell signals -, are used typically by active traders who enter and exit positions at a much higher rate than the average investor. There are also a wide range of systems that differ on the set of criteria used to generate the buy or sell signals. Typically, the criteria used are more technical in format - in that they focus on price movement and technical indicators
* 1 History
* 2 Types
* 3 Advantages
* 4 Regulation
History
Forex autotrading originates at the emergence of online retail trading, since about 1996 when internet-based companies created retail forex platforms that provide a quick way for individuals to buy and sell on the forex spot market. Nevertheless, larger retail traders could autotrade Forex contracts at the Chicago Mercantile Exchange as early as in the 1970s.
Types
Today, there are two major types of Forex autotrading:
Fully automated or robotic Forex trading: This way of autotrading is very similar to algorithmic or black-box trading, where a computer algorithm, or Expert Advisor (EA), decides on aspects of the order such as the timing, price, or quantity or initiation of the order without human intervention. Users can only interfere by tweaking the technical parameters of the program; all other control is handed over to the program. Examples of such robotic EA’s are, Fapturbo, PipZu etc.
Signal-based Forex autotrading: This autotrading mode is based on the concept of auditing traders all over the world and making their strategies available to anyone interested in the form of signals. Then traders have the ability to automatically convert any of these signals to real trades in their broker accounts. Human interference here is augmented; signals come from live traders while users can actively select to follow a Signal Provider whose strategy fits their risk profile. Examples of such platforms are: ZuluTrade, Rent a Signal etc.
Advantages
An automated trading environment generates fewer trades per market than a human trader can handle, it can of course replicate its actions across multiple markets and timeframes. Furthermore, it is far less restricted in the number of intermarket opportunities it can observe and act upon. An automated system is also unaffected by the psychological swings that human traders are prey to. This is particularly relevant when trading with a mechanical model, which is typically developed on the assumption that all the trade entries flagged will actually be taken in real time trading
Signal Provider based models have the advantage that they offer traders the opportunity to follow previously successful signal providers or strategy with the hope that the advice they offer will continue to be accurate and lead to profitable future trades. An added advantage is the accessibility offered by these programs as traders do not need to have expert knowledge on Forex but only have to select a system, making Forex trading possible to anyone.
Forex autotrading services can be offered for free, on a spread basis (ZuluTrade) or on a one time fee basis (Fapturbo).
Regulation
As an unregulated and highly profitable market, the Forex market is extremely attractive to scammers. Forex autotrading, as it brings Forex trading to the masses makes even more people susceptible to frauds. Bodies such as the NFA and the SEC issue warnings and rules to avoid fraudulent Forex trading behavior on the web.
Forex Myths
It’s hard to make money in Forex
Could that be said for any market? Is making money ever easy? Also, how can that be substantiated? Hard for who?
No one’s making money in Forex
Bank of America claims foreign exchange as a major source of income. Money managers such as FX Concepts, John Henry, and Alex Merk are all making millions. FX Concepts has roughly 10 Billion assets under management by some measures. FX Brokers are some of the fastest growing companies in USA according to Inc. 500. Interbank FX is ranked #8, Gain Capital is ranked #32 . George Soros made much of his fortune speculating in currencies .
Conclusion
The conclusion of this article is that for the Forex market, there isn’t enough data to make any solid conclusion. Significant effort should be spent compiling and analyzing data about Forex trading and investing. In a series of articles, we will attempt to first define the problems, collect data and sources of data, and engage FX experts in a series of interviews and discussions.
With existing tools it is possible to trade and invest in Forex, but without full information sufficient to make any conclusion, we are left with only the path taken by Diogenes , searching for an honest answer.
Could that be said for any market? Is making money ever easy? Also, how can that be substantiated? Hard for who?
No one’s making money in Forex
Bank of America claims foreign exchange as a major source of income. Money managers such as FX Concepts, John Henry, and Alex Merk are all making millions. FX Concepts has roughly 10 Billion assets under management by some measures. FX Brokers are some of the fastest growing companies in USA according to Inc. 500. Interbank FX is ranked #8, Gain Capital is ranked #32 . George Soros made much of his fortune speculating in currencies .
Conclusion
The conclusion of this article is that for the Forex market, there isn’t enough data to make any solid conclusion. Significant effort should be spent compiling and analyzing data about Forex trading and investing. In a series of articles, we will attempt to first define the problems, collect data and sources of data, and engage FX experts in a series of interviews and discussions.
With existing tools it is possible to trade and invest in Forex, but without full information sufficient to make any conclusion, we are left with only the path taken by Diogenes , searching for an honest answer.
Forex Genome Project
Pandora has created a ‘Music Genome Project ’ that tracks what songs you like and creates suggestions, a quasi form of Artificial Intelligence . Although Pandora does not disclose what it’s algorithm is, Wikipedia states:
The Music Genome Project, created in January 2000, is an effort founded by Will Glaser, Jon Kraft, and Tim Westergren to "capture the essence of music at the fundamental level" using almost 400 attributes to describe songs and a complex mathematical algorithm to organize them. The company Savage Beast Technologies was formed to run the project.
A given song is represented by a vector (a list of attributes) containing approximately 150 "genes" (analogous to trait-determining genes for organisms in the field of genetics). Each gene corresponds to a characteristic of the music, for example, gender of lead vocalist, level of distortion on the electric guitar, type of background vocals, etc. Rock and pop songs have 150 genes, rap songs have 350, and jazz songs have approximately 400. Other genres of music, such as world and classical music, have 300–500 genes. The system depends on a sufficient number of genes to render useful results. Each gene is assigned a number between 1 and 5, in half-integer increments.
To create a song's genome, it is analyzed by a musician in a process that takes 20 to 30 minutes per song. Ten percent of songs are analyzed by more than one technician to ensure conformity with the standards, i.e., reliability.
The technology is currently used by Pandora to play music for Internet users based on their preferences. Because of licensing restrictions, Pandora is available only to users whose location is reported to be in the USA by Pandora's geolocation software.[2]
While this is compelling, it could be argued that the application in Music is not necessary. For example, if you choose the wrong CD it’s not a life or death situation; there isn’t any monetary or material punishment (aside from angry listeners possibly throwing things at you). Make a poor decision in the markets, and entire counties budgets are wiped out.
For example, in 1994 the County of Orange County declared bankruptcy due to suffering $1.6 Billion in losses on interest rate derivatives .
Would a genome project have a more tangible economic (and thus overall) benefit if used for Forex? Imagine a system that instead of determining for the user what type of music they like to listen to, it could determine what kind of investment to implement on your account?
The Music Genome Project, created in January 2000, is an effort founded by Will Glaser, Jon Kraft, and Tim Westergren to "capture the essence of music at the fundamental level" using almost 400 attributes to describe songs and a complex mathematical algorithm to organize them. The company Savage Beast Technologies was formed to run the project.
A given song is represented by a vector (a list of attributes) containing approximately 150 "genes" (analogous to trait-determining genes for organisms in the field of genetics). Each gene corresponds to a characteristic of the music, for example, gender of lead vocalist, level of distortion on the electric guitar, type of background vocals, etc. Rock and pop songs have 150 genes, rap songs have 350, and jazz songs have approximately 400. Other genres of music, such as world and classical music, have 300–500 genes. The system depends on a sufficient number of genes to render useful results. Each gene is assigned a number between 1 and 5, in half-integer increments.
To create a song's genome, it is analyzed by a musician in a process that takes 20 to 30 minutes per song. Ten percent of songs are analyzed by more than one technician to ensure conformity with the standards, i.e., reliability.
The technology is currently used by Pandora to play music for Internet users based on their preferences. Because of licensing restrictions, Pandora is available only to users whose location is reported to be in the USA by Pandora's geolocation software.[2]
While this is compelling, it could be argued that the application in Music is not necessary. For example, if you choose the wrong CD it’s not a life or death situation; there isn’t any monetary or material punishment (aside from angry listeners possibly throwing things at you). Make a poor decision in the markets, and entire counties budgets are wiped out.
For example, in 1994 the County of Orange County declared bankruptcy due to suffering $1.6 Billion in losses on interest rate derivatives .
Would a genome project have a more tangible economic (and thus overall) benefit if used for Forex? Imagine a system that instead of determining for the user what type of music they like to listen to, it could determine what kind of investment to implement on your account?
Forex companies growing fast
In 2009, GAIN Capital is ranked #32 in the Financial Services category “Fastest Growing Private Companies List” . GAIN Capital is a Forex broker, and their revenue is primarily derived from Forex brokerage. Their growth can be explained by a popularity of Forex as an asset class, and as a new way to trade and invest. Why else?
Forex lacks hard data
Unlike other markets, there is little data available for Forex. For example, the annual BIS numbers that are commonly referenced when you hear “3 Trillion per day” turnover is conducted by survey . The institutions that are surveyed have no reason to lie, but they also have no reason to be 100% transparent. The problem, like the problem with fraud, is not the honest bankers who report, but those who don’t, who have something to hide in off-balance sheet transactions. Other markets have hard facts, verifiable data. Other exchanges publish similar data, because they are required, but more importantly, because they have it.
Only each Forex counterparty has access to his own data, and many of them are reluctant to release it. For example, Forex brokers could publish statistics:
* Number of positive accounts for the day, week, month, year
* Average percent gain or loss for each account
* How many accounts are profitable after 1 year
The question is why don’t they, why is data like this unavailable anywhere, in stark contract to non-forex rivals where it is possible to obtain overwhelming amounts of data on the performance of mutual funds .
Why is there no central database where traders and customers can log onto and verify authenticity, receive economic data in a standardized format, including performance information?
This is a regulatory question, but in the context of Forex, the answer is that there is no reason for the counterparties to divulge such information without any tangible benefit. Why should they open their books, when much of their business is based on perception?
Only each Forex counterparty has access to his own data, and many of them are reluctant to release it. For example, Forex brokers could publish statistics:
* Number of positive accounts for the day, week, month, year
* Average percent gain or loss for each account
* How many accounts are profitable after 1 year
The question is why don’t they, why is data like this unavailable anywhere, in stark contract to non-forex rivals where it is possible to obtain overwhelming amounts of data on the performance of mutual funds .
Why is there no central database where traders and customers can log onto and verify authenticity, receive economic data in a standardized format, including performance information?
This is a regulatory question, but in the context of Forex, the answer is that there is no reason for the counterparties to divulge such information without any tangible benefit. Why should they open their books, when much of their business is based on perception?
95% of people lose money trading Forex
This would imply that it’s ‘difficult to make money in Forex’ as some claim. From another perspective, is it easy for the 5% who are winning? Also consider in Forex a lot of money is lost due to hedgers, commercial requirements, central bank interventions, and other non-investment losses. That means there are profits that can be obtained by traders in Forex that don’t necessarily need a loser on the other side (such as the case with equities).
Comparative statistics: 53% of workers aged 16 and older in Los Angeles county were deemed functionally illiterate .
Los Angeles is the home of many famous authors , writing clubs such as The LA writers Group and WritersBloc .
Considering the high illiteracy rate in Los Angeles, why don’t these authors change their profession to something that doesn’t require reading, or relocate to another area where there is a higher literacy rate?
The reason is clear; anyone in the world can read their books, not only LA residents. Secondly, they are writing for the 47% that can read, which in a city with a population of over 4 Million , is still at least 2 million readers.
Comparative statistics: 53% of workers aged 16 and older in Los Angeles county were deemed functionally illiterate .
Los Angeles is the home of many famous authors , writing clubs such as The LA writers Group and WritersBloc .
Considering the high illiteracy rate in Los Angeles, why don’t these authors change their profession to something that doesn’t require reading, or relocate to another area where there is a higher literacy rate?
The reason is clear; anyone in the world can read their books, not only LA residents. Secondly, they are writing for the 47% that can read, which in a city with a population of over 4 Million , is still at least 2 million readers.
Forex is Shariah compliant
Finding Shariah compliant investments is not easy. Forex trading is 100% Shariah compliant. A Shariah compliant portfolio could be created using Forex Automated Systems. Also, these types of systems offer a diversity in a particular market. The difference between a “Mean Reversion” Forex system and a “Correlation” Forex system can be as different as investing in emerging markets and Treasuries.
The Forex Metaphor
A metaphor is an appropriate tool to explain something from another dimension, not easily explainable in the first dimension. George Lakoff states:
"We are neural beings," Lakoff states, "Our brains take their input from the rest of our bodies. What our bodies are like and how they function in the world thus structures the very concepts we can use to think. We cannot think just anything — only what our embodied brains permit."
In his 1980 book “Metaphors we live by” with Mark Johnson, he explains ‘the great metaphor’ known as a conceptual metaphor:
There are two main roles for the conceptual domains posited in conceptual metaphors:
* Source domain: the conceptual domain from which we draw metaphorical expressions (e.g., love is a journey).
* Target domain: the conceptual domain that we try to understand (e.g., love is a journey).
A mapping is the systematic set of correspondences that exist between constituent elements of the source and the target domain. Many elements of target concepts come from source domains and are not preexisting. To know a conceptual metaphor is to know the set of mappings that applies to a given source-target pairing. The same idea of mapping between source and target is used to describe analogical reasoning and inferences.
A primary tenet of this theory is that metaphors are matter of thought and not merely of language: hence, the term conceptual metaphor. The metaphor may seem to consist of words or other linguistic expressions that come from the terminology of the more concrete conceptual domain, but conceptual metaphors underlie a system of related metaphorical expressions that appear on the linguistic surface. Similarly, the mappings of a conceptual metaphor are themselves motivated by image schemas which are pre-linguistic schemas concerning space, time, moving, controlling, and other core elements of embodied human experience.
Conceptual metaphors typically employ a more abstract concept as target and a more concrete or physical concept as their source. For instance, metaphors such as 'the days [the more abstract or target concept] ahead' or 'giving my time' rely on more concrete concepts, thus expressing time as a path into physical space, or as a substance that can be handled and offered as a gift. Different conceptual metaphors tend to be invoked when the speaker is trying to make a case for a certain point of view or course of action. For instance, one might associate "the days ahead" with leadership, whereas the phrase "giving my time" carries stronger connotations of bargaining. Selection of such metaphors tends to be directed by a subconscious or implicit habit in the mind of the person employing them.
The principle of unidirectionality states that the metaphorical process typically goes from the more concrete to the more abstract, and not the other way around. Accordingly, abstract concepts are understood in terms of prototype concrete processes. The term "concrete," in this theory, has been further specified by Lakoff and Johnson as more closely related to the developmental, physical neural, and interactive body (see embodied philosophy). One manifestation of this view is found in the cognitive science of mathematics, where it is proposed that mathematics itself, the most widely accepted means of abstraction in the human community, is largely metaphorically constructed, and thereby reflects a cognitive bias unique to humans that uses embodied prototypical processes (e.g. counting, moving along a path) that are understood by all human beings through their experiences.
It is difficult to explain philosophy to a dog, because they do not have a means of understanding the language, hence the need for doggie metaphor. Everything to a dog can be equated to throwing the ball (in the case of Labradors, for other dogs a smelly metaphor can be used). Dogs and other animals have an intelligence which can be measured, such as the Monkey who outperformed the human memory champ in a memory test . Modern humans struggle with basic math skills; the understanding of money and finance is 95% numbers and mathematics. Finance is math, not magic, as many would like you to believe. It is possibly the last subject yet to be understood by the scientific method.
Is it ironic that the country with the most money, and the most dynamic capital markets, struggles with basic math skills, and money and finance is understood only by the understanding of math? Why is it that Americans have the highest per capita GDP and some of the lowest scores in mathematics globally? Could this be connected to Consumerism, multiple market bubbles, and a growing problem in financial literacy? Americans nearly flunk financial literacy, says Bankrate:
That's disappointing enough, but the statistically valid survey of 1,000 Americans, conducted for Bankrate by RoperASW, also shows that Americans are in "debt denial." They're unwilling to admit that credit is a problem -- in fact the only thing Americans are more secretive about is their love lives.
Finance is not tree-cutting. Making an investment portfolio is not like chopping a branch of a tree, while the analogy is a powerful tool to educate, it can’t turn a caterpillar into a butterfly.
Making a cup of coffee is an algorithm: plug in machine, put filters, put water in tank, put ground coffee in filter, turn on coffee maker, pour coffee into cup, wait to cool down, drink.
Educators use analogies like this to explain algorithms to those who have never been exposed to them. An algorithm is a process, a procedure, a series of steps – it must have a beginning and an end .
Just because making coffee is also an algorithm, doesn’t mean if you brew a cup of coffee you can design a good Forex algorithm.
"We are neural beings," Lakoff states, "Our brains take their input from the rest of our bodies. What our bodies are like and how they function in the world thus structures the very concepts we can use to think. We cannot think just anything — only what our embodied brains permit."
In his 1980 book “Metaphors we live by” with Mark Johnson, he explains ‘the great metaphor’ known as a conceptual metaphor:
There are two main roles for the conceptual domains posited in conceptual metaphors:
* Source domain: the conceptual domain from which we draw metaphorical expressions (e.g., love is a journey).
* Target domain: the conceptual domain that we try to understand (e.g., love is a journey).
A mapping is the systematic set of correspondences that exist between constituent elements of the source and the target domain. Many elements of target concepts come from source domains and are not preexisting. To know a conceptual metaphor is to know the set of mappings that applies to a given source-target pairing. The same idea of mapping between source and target is used to describe analogical reasoning and inferences.
A primary tenet of this theory is that metaphors are matter of thought and not merely of language: hence, the term conceptual metaphor. The metaphor may seem to consist of words or other linguistic expressions that come from the terminology of the more concrete conceptual domain, but conceptual metaphors underlie a system of related metaphorical expressions that appear on the linguistic surface. Similarly, the mappings of a conceptual metaphor are themselves motivated by image schemas which are pre-linguistic schemas concerning space, time, moving, controlling, and other core elements of embodied human experience.
Conceptual metaphors typically employ a more abstract concept as target and a more concrete or physical concept as their source. For instance, metaphors such as 'the days [the more abstract or target concept] ahead' or 'giving my time' rely on more concrete concepts, thus expressing time as a path into physical space, or as a substance that can be handled and offered as a gift. Different conceptual metaphors tend to be invoked when the speaker is trying to make a case for a certain point of view or course of action. For instance, one might associate "the days ahead" with leadership, whereas the phrase "giving my time" carries stronger connotations of bargaining. Selection of such metaphors tends to be directed by a subconscious or implicit habit in the mind of the person employing them.
The principle of unidirectionality states that the metaphorical process typically goes from the more concrete to the more abstract, and not the other way around. Accordingly, abstract concepts are understood in terms of prototype concrete processes. The term "concrete," in this theory, has been further specified by Lakoff and Johnson as more closely related to the developmental, physical neural, and interactive body (see embodied philosophy). One manifestation of this view is found in the cognitive science of mathematics, where it is proposed that mathematics itself, the most widely accepted means of abstraction in the human community, is largely metaphorically constructed, and thereby reflects a cognitive bias unique to humans that uses embodied prototypical processes (e.g. counting, moving along a path) that are understood by all human beings through their experiences.
It is difficult to explain philosophy to a dog, because they do not have a means of understanding the language, hence the need for doggie metaphor. Everything to a dog can be equated to throwing the ball (in the case of Labradors, for other dogs a smelly metaphor can be used). Dogs and other animals have an intelligence which can be measured, such as the Monkey who outperformed the human memory champ in a memory test . Modern humans struggle with basic math skills; the understanding of money and finance is 95% numbers and mathematics. Finance is math, not magic, as many would like you to believe. It is possibly the last subject yet to be understood by the scientific method.
Is it ironic that the country with the most money, and the most dynamic capital markets, struggles with basic math skills, and money and finance is understood only by the understanding of math? Why is it that Americans have the highest per capita GDP and some of the lowest scores in mathematics globally? Could this be connected to Consumerism, multiple market bubbles, and a growing problem in financial literacy? Americans nearly flunk financial literacy, says Bankrate:
That's disappointing enough, but the statistically valid survey of 1,000 Americans, conducted for Bankrate by RoperASW, also shows that Americans are in "debt denial." They're unwilling to admit that credit is a problem -- in fact the only thing Americans are more secretive about is their love lives.
Finance is not tree-cutting. Making an investment portfolio is not like chopping a branch of a tree, while the analogy is a powerful tool to educate, it can’t turn a caterpillar into a butterfly.
Making a cup of coffee is an algorithm: plug in machine, put filters, put water in tank, put ground coffee in filter, turn on coffee maker, pour coffee into cup, wait to cool down, drink.
Educators use analogies like this to explain algorithms to those who have never been exposed to them. An algorithm is a process, a procedure, a series of steps – it must have a beginning and an end .
Just because making coffee is also an algorithm, doesn’t mean if you brew a cup of coffee you can design a good Forex algorithm.
Forex Forums a form of Self-Regulation
While Forex trading itself is unregulated, Forex has a means of self-regulation for highly sophisticated investors, for those who are willing to do their homework. Work is required (in the form of time, reading, and understanding), and there is no vertical subordination, and no official authorities in this space. Admins monitor the discussion to make sure it’s focused on topic, but they don’t normally intervene in discussions (such as deleting posts they don’t like).
The forums do not provide any type of identification proofing, so there isn’t stopping anyone from spreading misinformation anonymously. For all the value they provide, and they do provide a unique critique service untouched by commercial interests, they seem to have an equally devastating counterbalance, the ‘rotten apple that spoils the bunch’.
The significance of the forums is they represent a powerful new force defining how information is exchanged among the investing public. Some investors may remember ‘investment clubs’ popular in the 80’s and 90’s. Now, investors can read forum posts without anyone ever knowing – comments, opinions, and some facts, are out there for all to see.
At the most recent TED conference, Gordon Brown quipped that:
"Foreign policy can never be the same again." The power of technology - such as blogs - meant that the world could no longer be run by "elites", Mr Brown said.
Policies must instead be formed by listening to the opinions of people "who are blogging and communicating with people around the world", he said .
This implicates a new user-driven de-centralized internet model will lead new paradigms, not the 20th century, centralized model. The current debate about regulation is all centered on a centralized government authorized regulator.
The problem with the centralized approach, with modern technology including the internet and modern government systems, a company can relocate its offices in a matter of hours in another legal jurisdiction. For example, after the NFA enacted rules affecting the way trades must be accounted for, such as the hedging rule and the FIFO rule , many Forex FCMs shifted their operations to London due to customer request . This was not to thumb the NFA for their rules, but in response to angry customer emails demanding they continue to allow hedging or they would simply move their accounts to London based firms who wouldn’t ban hedging anyway. It’s a conundrum of control, the more they squeeze the more customers will move overseas, or cease to exist (result is the same).
The internet has a downside – unsavory marketing groups can register ‘private’ domains which sell ‘sham’ products, competing with legitimate providers. For those who don’t know what to look for, the marketing sites can be deceptive and misleading. But since criminals usually don’t register with the police, there is little regulators can do.
In some cases, vigilante groups have sprung up with the sole purpose of having the scam sites shut down while providing a review service similar to consumer reports.
The forums do not provide any type of identification proofing, so there isn’t stopping anyone from spreading misinformation anonymously. For all the value they provide, and they do provide a unique critique service untouched by commercial interests, they seem to have an equally devastating counterbalance, the ‘rotten apple that spoils the bunch’.
The significance of the forums is they represent a powerful new force defining how information is exchanged among the investing public. Some investors may remember ‘investment clubs’ popular in the 80’s and 90’s. Now, investors can read forum posts without anyone ever knowing – comments, opinions, and some facts, are out there for all to see.
At the most recent TED conference, Gordon Brown quipped that:
"Foreign policy can never be the same again." The power of technology - such as blogs - meant that the world could no longer be run by "elites", Mr Brown said.
Policies must instead be formed by listening to the opinions of people "who are blogging and communicating with people around the world", he said .
This implicates a new user-driven de-centralized internet model will lead new paradigms, not the 20th century, centralized model. The current debate about regulation is all centered on a centralized government authorized regulator.
The problem with the centralized approach, with modern technology including the internet and modern government systems, a company can relocate its offices in a matter of hours in another legal jurisdiction. For example, after the NFA enacted rules affecting the way trades must be accounted for, such as the hedging rule and the FIFO rule , many Forex FCMs shifted their operations to London due to customer request . This was not to thumb the NFA for their rules, but in response to angry customer emails demanding they continue to allow hedging or they would simply move their accounts to London based firms who wouldn’t ban hedging anyway. It’s a conundrum of control, the more they squeeze the more customers will move overseas, or cease to exist (result is the same).
The internet has a downside – unsavory marketing groups can register ‘private’ domains which sell ‘sham’ products, competing with legitimate providers. For those who don’t know what to look for, the marketing sites can be deceptive and misleading. But since criminals usually don’t register with the police, there is little regulators can do.
In some cases, vigilante groups have sprung up with the sole purpose of having the scam sites shut down while providing a review service similar to consumer reports.
No Forex Model
Since the Nixon Shock, economic theories were not redesigned. Although there are some fresh ideas about what Forex is, there isn’t any unified theory of Forex, a model that describes it for what it is, mathematically. In fact, several papers have been written with the hypothesis that existing ‘models’ are severely flawed, and provide evidence; here’s one:
Roger D. Huang published a paper in 1981 for the American Finance Association with the following abstract:
The variance bounds on exchange rate movements implied by the monetary approach to exchange rate in an efficient foreign exchange market is shown to be violated by sample data. The paper also presents evidence showing that the forecast errors implied by the monetary model can be forecasted using historical data. The results are interpreted to suggest either the incompatibility of the monetary approach with sample data, or an inefficient foreign exchange market or both.
Richard J. Sweeny, in 1986, goes on to claim that there is Alpha in Forex not explainable by risk:
Filter rule profits found in foreign exchange markets in the early days of the current managed float persist in later periods, as shown by statistical tests developed and implemented here. The test is consistent with, but independent of, a wide variety of asset pricing models. The profits found cannot be explained by risk if risk premia are constant over time. Inclusion of the home-foreign interest rate differential in computing profits has little effect on the comparison of filter returns to those of buy-and-hold.
If Forex is truly a reactive solution to a pressured Nixon administration, and still no unified model exists, this indicates that there are large opportunities in trading Forex, like an asset class. These opportunities will exist, and persist, until the floating currency system is replaced by something else (not likely anytime soon), or there is a unified Forex model that becomes widely proliferated as much as “Modern Portfolio Theory ” is.
Roger D. Huang published a paper in 1981 for the American Finance Association with the following abstract:
The variance bounds on exchange rate movements implied by the monetary approach to exchange rate in an efficient foreign exchange market is shown to be violated by sample data. The paper also presents evidence showing that the forecast errors implied by the monetary model can be forecasted using historical data. The results are interpreted to suggest either the incompatibility of the monetary approach with sample data, or an inefficient foreign exchange market or both.
Richard J. Sweeny, in 1986, goes on to claim that there is Alpha in Forex not explainable by risk:
Filter rule profits found in foreign exchange markets in the early days of the current managed float persist in later periods, as shown by statistical tests developed and implemented here. The test is consistent with, but independent of, a wide variety of asset pricing models. The profits found cannot be explained by risk if risk premia are constant over time. Inclusion of the home-foreign interest rate differential in computing profits has little effect on the comparison of filter returns to those of buy-and-hold.
If Forex is truly a reactive solution to a pressured Nixon administration, and still no unified model exists, this indicates that there are large opportunities in trading Forex, like an asset class. These opportunities will exist, and persist, until the floating currency system is replaced by something else (not likely anytime soon), or there is a unified Forex model that becomes widely proliferated as much as “Modern Portfolio Theory ” is.
History of Forex
How many people know why Forex exists at all? They know about the “Nixon Shock” , but why did Nixon float the dollar, who suggested it, and how does that impact modern Forex? The simplest solution being the most likely would indicate the US Administration was politically stretched out and had few options in response to demands by the French for payment in Gold, and the West German removal from Breton Woods. According to the Wikipedia entry:
By the early 1970s, as the costs of the Vietnam War and increased domestic spending accelerated inflation, the U.S. was running a balance of payments deficit and a trade deficit, the first in the 20th century. The year 1970 was the crucial turning point, which, because of foreign arbitrage of the U.S. dollar, caused governmental gold coverage of the paper dollar to decline 33%, from 55% to 22%. That, in the view of Neoclassical Economists and the Austrian School, represented the point where holders of the U.S. dollar lost faith in the U.S. government’s ability to cut its budget and trade deficits.
In 1971, the U.S. government again printed more dollars (a 10% increase) and then sent them overseas, to pay for the nation's military spending and private investments. In the first six months of 1971, $22 billion dollars in assets left the U.S.[citation needed] In May 1971, inflation-wary West Germany was the first member country to leave the Bretton Woods system — unwilling to deflate the deutsche mark to prop up the dollar.[3] In order to prevent the dumping of the deutsche mark on the open market, West Germany did not consult with the international monetary community before making the change. In the next three months, West Germany’s move strengthened their economy; simultaneously, the dollar dropped 7.5% against the deutsche mark.
Because of the excess printed dollars, and the negative U.S. trade balance, other nations began demanding fulfilment of America’s “promise to pay” — in the form of gold from the U.S., in exchange for paper dollars, thus, did Switzerland trade $50 million of paper for gold in July. France, in particular, repeatedly made aggressive demands, and acquired large amounts of gold ($191 million), further depleting the gold reserves of the U.S. On 5 August 1971, Congress released a report recommending devaluation of the dollar, in an effort to protect the dollar against foreign price-gougers. Still, on 9 August 1971, as the dollar dropped in value against European currencies, Switzerland withdrew the Swiss franc from the Bretton Woods system.
Arbitrage can be painful if you are on the wrong side of it. Nixon may have had few options but to float the dollar; the market is a powerful force even with government regulations.
This implies that it was a reaction, not an action. In other words, it wasn’t part of a grand master plan, a scheme designed by international bankers to make the world’s financial markets crumble 35 years later. It seems that it was a random, haphazard solution, as they say “Crisis Management”. But while waiting for Bonanza to finish, to announce the new global Forex regime, Nixon’s team actually spent more time debating how to announce and when to announce to the public than the plan itself:
To stabilize the economy and combat runaway inflation, on August 15, 1971, President Nixon imposed a 90-day wage and price freeze, a 10 per cent import surcharge, and, most important, “closed the gold window”, making the dollar non-convertible to gold — except on the open market. The President and fifteen advisors took that decision, without consulting the members of the international monetary system, thus, the international community informally named it the Nixon shock. Given the importance of the announcement — and its impact upon foreign currencies — presidential advisors recalled that they spent more time, at Camp David, deciding when to publicly announce the controversial plan, than they spent creating the plan.
As a politician, the President did not want to interrupt television viewers watching the tremendously popular TV series Bonanza, not wishing to potentially alienate those voters who fanatically followed the cowboy series. He was advised that the practical decision was to make an announcement before the stock markets opened on Monday (and just when Asian markets also were opening trading for the day). On 15 August 1971, that speech and the price-control plans proved very popular and raised the public’s spirit. The President was credited with finally rescuing the American public from price-gougers, and from a foreign-caused exchange crisis.
This would also hint it was a knee-jerk reaction more than a carefully planned event. Since then, banks have been creating models ‘on the fly’ based on what seems to be working, with little or no understanding of the underlying forces. And being as banks are for profit private institutions, any available data or models they have is not public.
By the early 1970s, as the costs of the Vietnam War and increased domestic spending accelerated inflation, the U.S. was running a balance of payments deficit and a trade deficit, the first in the 20th century. The year 1970 was the crucial turning point, which, because of foreign arbitrage of the U.S. dollar, caused governmental gold coverage of the paper dollar to decline 33%, from 55% to 22%. That, in the view of Neoclassical Economists and the Austrian School, represented the point where holders of the U.S. dollar lost faith in the U.S. government’s ability to cut its budget and trade deficits.
In 1971, the U.S. government again printed more dollars (a 10% increase) and then sent them overseas, to pay for the nation's military spending and private investments. In the first six months of 1971, $22 billion dollars in assets left the U.S.[citation needed] In May 1971, inflation-wary West Germany was the first member country to leave the Bretton Woods system — unwilling to deflate the deutsche mark to prop up the dollar.[3] In order to prevent the dumping of the deutsche mark on the open market, West Germany did not consult with the international monetary community before making the change. In the next three months, West Germany’s move strengthened their economy; simultaneously, the dollar dropped 7.5% against the deutsche mark.
Because of the excess printed dollars, and the negative U.S. trade balance, other nations began demanding fulfilment of America’s “promise to pay” — in the form of gold from the U.S., in exchange for paper dollars, thus, did Switzerland trade $50 million of paper for gold in July. France, in particular, repeatedly made aggressive demands, and acquired large amounts of gold ($191 million), further depleting the gold reserves of the U.S. On 5 August 1971, Congress released a report recommending devaluation of the dollar, in an effort to protect the dollar against foreign price-gougers. Still, on 9 August 1971, as the dollar dropped in value against European currencies, Switzerland withdrew the Swiss franc from the Bretton Woods system.
Arbitrage can be painful if you are on the wrong side of it. Nixon may have had few options but to float the dollar; the market is a powerful force even with government regulations.
This implies that it was a reaction, not an action. In other words, it wasn’t part of a grand master plan, a scheme designed by international bankers to make the world’s financial markets crumble 35 years later. It seems that it was a random, haphazard solution, as they say “Crisis Management”. But while waiting for Bonanza to finish, to announce the new global Forex regime, Nixon’s team actually spent more time debating how to announce and when to announce to the public than the plan itself:
To stabilize the economy and combat runaway inflation, on August 15, 1971, President Nixon imposed a 90-day wage and price freeze, a 10 per cent import surcharge, and, most important, “closed the gold window”, making the dollar non-convertible to gold — except on the open market. The President and fifteen advisors took that decision, without consulting the members of the international monetary system, thus, the international community informally named it the Nixon shock. Given the importance of the announcement — and its impact upon foreign currencies — presidential advisors recalled that they spent more time, at Camp David, deciding when to publicly announce the controversial plan, than they spent creating the plan.
As a politician, the President did not want to interrupt television viewers watching the tremendously popular TV series Bonanza, not wishing to potentially alienate those voters who fanatically followed the cowboy series. He was advised that the practical decision was to make an announcement before the stock markets opened on Monday (and just when Asian markets also were opening trading for the day). On 15 August 1971, that speech and the price-control plans proved very popular and raised the public’s spirit. The President was credited with finally rescuing the American public from price-gougers, and from a foreign-caused exchange crisis.
This would also hint it was a knee-jerk reaction more than a carefully planned event. Since then, banks have been creating models ‘on the fly’ based on what seems to be working, with little or no understanding of the underlying forces. And being as banks are for profit private institutions, any available data or models they have is not public.
Subscribe to:
Posts (Atom)
Flag counter
