Browse >
Home / Archive: June 2009
Jun 7 2009
Learn
Forex Scalping.As a currency trader, you need to understand the various terms that are frequently used in Technical Analysis. By definition, Technical Analysis is the study of historical and ongoing price data through charts, price patterns and chart indicators. Charts display price action in time intervals using bars and candlesticks. Discover
L.M.T Forex Formula.
Technical Analysis is based on the following assumptions. 1) All available information is already impounded in the market prices of the securities. 2) Prices always move in trends or patterns. 3) History repeats itself meaning you can predict the future market by studying the past market prices.
Studies have shown that once a trend is in motion, it is most likely to continue rather than reverse it. The more one studies chart patterns in technical analysis, the clearer it becomes that reading and interpreting chart patterns and technical analysis are more an art form than a skill.
Charts come in two types. Bar charts and Candlesticks charts. Bar charts display price data in vertical lines. These vertical lines represents price action during a given time period. The tip at the top is the high for the period. The tip at the bottom is the low for the period. The open and close are represented by small horizontal dashes called tics. The tic to the left of the line is the open. The tic to the right of the line is the close.
Candlestick charts are similar to bar charts in that the top of the vertical line represent the high and the bottom of the vertical line represents the low. However, the market activity between the open and the close is represented differently by the use of candlestick bodies. A hollow body represents a higher closing above a lower opening. A shaded body represents a lower closing below a higher opening.
The price action above and below the body is referred to as tails or wicks. A forex day trader may use any one of the 3, 5, 10, 15, 30, 60 and 180 minutes charts. A swing and position trader may use a daily, weekly or a monthly chart while doing technical analysis. These charts all use the Greenwich Mean Time (GMT) or the Eastern Standard Time (EST) depending on the software that your broker platform uses. But you can always adjust these times according to your local time.
While doing technical analysis, you need to understand what are markets patterns? What are Uptrends? What are downtrends and what are sideway trends? Markets expand and retrace constantly. Market prices may continue to expand for sometimes either upward or downward. It is the nature of the markets to surge then pause and retrace.
Trends make a series of peaks and troughs as they move. An uptrend consists of a series of ascending peaks and troughs. A downtrend consists of a series of descending peaks and troughs. A sidways trend consists of a series of horizontal peaks and troughs.
Find free points of view to
car finance calculator - welcome to your personal tips store.
Jun 7 2009
The Foreign Exchange market, or Forex for short, can be an exhilarating, dynamic and very rewarding place to invest. As with all types of investments, there is a risk of loss in the world of currency trading, but there is also the possibility of outstanding earnings for both traders and long term investors.
In addition, Forex accounts can often be opened with only one or two thousand dollars, making it easy for traders to speculate in world currencies while keeping the rest of their investment portfolios in more stable investments. To make things even more appealing, many firms offer new traders a chance to open practice accounts, giving them a chance to learn about the currency arena and rules of the game without risking any actual cash.
If you are new to the world of Foreign Exchange trading you probably have many questions. This article attempts to answer some of the most frequently asked questions posed by new traders and also advise you to
learn forex trading before you start.
What Does it Mean to Have a short or long Forex Position?
Forex traders cangain from currency moves in two ways. Taking a long position means that the trader will enjoy a profit if the price of the chosen currency goes up, and a loss if its value goes down. A short position is just the opposite, allowing the trader to profit if the value of the currency decreases.
How determines currency prices on the Forex Market?
Any number of factors can affect the value of a given currency. Some of the most common market factors include political instability, moves by the country’s central bank, interest rate changes and changes in outlook for the future of the nation. These external events can have a profound impact on the relative values of world currencies, and these changes in value can provide excellent opportunities for confidence Forex traders.
How Can I Deal with Risk in the Forex Market?
There are a number of ways to manage the inherent risk of trading in aimpulsive currency market, but one of the most useful is the stop loss order. By entering a stop loss order Forex investors can automatically be taken out of their position when the price moves a specified amount. Given the highly liquid nature of the currency market these stop loss orders are easy to set up and just as easy to execute.
Trading in the Forex market is not for everyone, but those with the knowledge and resilience it takes can profit considerably from movements in the world currency market. Trading currencies can provide an excellent counterpoint to the traditional stock and bond markets, with some great opportunities for profit along the way.
Many
forex software are now available at the market and may very likely help to learning forex trading
Find out handy tips about
Solar Panels for Homes - give a look to hyperlinked web page.
Jun 7 2009
Develop your own
Forex Trading System.Part of becoming a good investor in forex is learning to understand that the markets evolve and changes with time. As it does, your trading strategies should also evolve and adjust. You will need to make a little tweak here and a little tweak there sometimes in your trading strategies.Discover
Forex Magic Machine.
There will be periods of low returns or losses. But once you have made the changes and adjusted your trading strategies, you will start making profits again. Don’t get stuck with only one currency pair and one trading strategy. Start looking at macroeconomic events and how different currency pairs react to them.
Now, let’s discuss a trading strategy that depends on following oil prices in the markets. There are many sources of oil. Some currency pairs react more strongly than other when oil prices change. Fortunately for you, oil prices trend for extended periods. When oil prices rise, they continue to rise for several months.
Likewise when oil prices decline, they tend to continue declining for several months. Last year in 2008, we saw a major upsurge in oil prices for several months then a sudden collapse, oil prices than stabilized around $55 for quite sometimes. Some of the currencies that react strongly to oil price changes are GBP and CAD. Let’s focus on USD/CAD currency pair in our oil following strategy.
United States imports more oil from Canada that any other country. The value of CAD should increase with increase in oil prices in relationship to USD. With the increase in oil prices, this means that the pair USD/CAD should start trending downward. This is an example of a trend trading strategy.
Watch for times when the oil prices are rising and the exchange rate USD/CAD is decreasing. Similarly, watch for times when oil prices are declining and the exchange rate USD/CAD is increasing.
Use CCI, “Commodity Channel Index”, to trigger your trade. Watch for the 14 period CCI (Commodity Channel Index) to cross above 100 and then cross back below 100. This will tell you that the buyers have made a temporary upward push on the currency pair USD/CAD but were unable to turn the trend around. The trend is still downward.
Set a limit order of 300 pips and a stop loss order of 75 pips. This gives you a risk reward ratio of 1:4. This risk reward to reward ratio is very good. It allows you to be wrong a few times without ruining your chances of being profitable. 300 pips mean $3000. Usually such a trade will continue for 4-5 weeks.
You can also trade the USD/CAD currency pair in the opposite direction if the oil prices start to decline. However, prolonged downtrends in the oil prices are unlikely under rising global oil demand. This trading strategy depends on just knowing which way the oil prices are moving right now. You can take advantage of this oil price movement. Oil prices have again started to climb. It has reached above $68. Take advantage of the rising oil prices by trading USD/CAD pair as described above.
Access important experiences for
forex managed accounts - this is your own knowledge pack.
Jun 6 2009
Currency Characteristics - US Dollar, Euro, Pound, and Yen
Executive Summary about USD to by Eric Stout
Each of the major currencies has its own personality. Some currencies are heavily influenced by changes interest rates, other currencies not so much. Some currencies are really sensitive to changes in commodity prices or even the winds of political change.
USD - U.S. dollar
The USD is the world's reserve currency. This makes the USD incredibly sensitive to changes in interest rates. Increase in oil prices typically result in a weaker USD. The U.S. is a politically susceptible country. This exposes the USD to political risks such as changes in government and taxes.
EUR - Euro
The EUR is awfully sensitive to changes in interest rates. The EUR is equally sensitive to economic development. The EUR is supported by a immense group of countries that oftentimes have differing monetary and political views. These differences often manifest in weak spot in the EUR.
GBP - UK Pound
The GBP is one of the most highly valued currencies in the world because of the U.K.'s stable and reliable financial policy. The GBP typically carries a relatively high interest rate. The U.K. economy relies heavily on consumer spending, which means the labor situation, retail sales, and housing data are all important statistics to consider when trading the GBP.
JPY - Japanese Yen
The JPY is sensitive to changes in exchange rates because the rate is a huge exporter of manufactured goods. The Bank of Japan is notorious for managing the JPY because the country relies so greatly on exports to drive growth.
Currency Characteristics Summary
There are infinite instances in which understanding a currency's characteristics can help you to spot opportunities in the Forex market.
Dollar Short Strategy
Executive Summary about USD to by Joe Gelet
Massive Dollar Short Opportunity
Recent interventions in commodity markets, which has been a combination of short selling in the Gold market, and large organizations taking revenue in a multi-year bull market in hard commodities such as Oil, has caused a short uptick in the dollar. Fed raises interest rates ECB cuts rates (unlikely because unlike the Fed, the ECB only mandate is to contain inflation) US Economy not only bottoms but shows signs of rapid growth (a bottom would not cause the dollar to climb without an increase in rates)
Euro weakness does not necessarily make a strong dollar, world markets are desynchronized and interest rate parity theory has stopped working years ago.
How to short the dollar?
Long term close your eyes trade; sell now with no stop loss and take profit at USD Index 65. Short term automated trading systems with Sell USD bias. Tweak your systems to find USD short trends and take profits (systematic day trading) Non-USD portfolio (European/Asian bonds / equities) Long Swiss Francs or CHF based bonds.
Other posts you may be interested in reading:
Euro Rate,
Money Converter
Find important information about
managed forex trading - your individual knowledge base.
Jun 6 2009
Discover
Forex Magic Machine. Currency Options are used by companies as risk management tools to hedge their foreign exchange exposure and by speculators to make profits. What are Options? In simple terms, it is a trading contract that gives the buyer the right but with no obligation to buy an underlying asset under specific conditions on payment of a premium. Read about
L.M.T Forex Formula.
The buyer may exercise the right if it makes him/her a profit. He/she may not exercise the right if it is unprofitable. However, if the buyer of an options contract exercises his/her right to buy the underlying asset, the seller is obligated to sell the asset at the specified price.
In all foreign currency transactions, one currency is purchased and another is sold. Consequently, every currency option is both a call and a put option. A call conveys the right to buy the underlying currency at a specified price. A put gives the buyer the right to sell at a predetermined price.
Why options are important as a risk management tool. Suppose a Japanese company is going to make the payment for its import of raw materials in 3 months time in USD.
The Japanese company can stay unhedged and purchase US Dollar in prevailing spot rate in three month’s time. On the other hand, it can hedge by buying USD forwards or it can use an options strategy.
One of the strategies available to the Japanese company is to buy JPY put/USD call option. The effect of buying the JPY put option is to put a ceiling on the cost of imports in case JPY depreciates. The exporter limits the cost to a maximum while not limiting the minimum. Now let’s discuss five exotic options that you can trade to make profits under different market conditions.
Digital options are simple and inexpensive. If you believe the EUR/USD rate is going to be above 1.0900 after two months, buy a digital option if you are not sure when this will happen. If after two months, the EUR.USD rate is indeed above 1.0900, you can earn your predetermined payoff. If not, your digital option will expire with a loss of a small premium.
One Touch Options are perfect for those traders who believe that there will be a retracement and the price of a given currency pair will test a support/resistance level. The one touch options pay a fixed amount if the market touches the predetermined barrier level.
A No Touch Option is a great way that you can use to profit from a trending market. The no touch option pays a profit if the market never touches the barrier level that you choose. All you need to do is to determine the desired payoff, the currency pair that you want to trade, the barrier price and the expiration date of the option.
A Double No Touch Option is perfect for you if you have the successful record of identifying and profiting from breakouts but always lose money when the market is ranging. On the other side, you can use a Double One Touch Option if you know how to pick the tops and bottoms in a ranging market but have always lost in a breakout market.
Access practical tips about
car finance calculator - this is your personal tips store.
RSS FEED