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Aug 31 2009
If the trade goes wrong, you know exactly how much you are going to lose. The beauty of this trade is that your risk is limited and determined. Remember that money management should always be at the forefront of your trading decisions. Pulling of this trade requires identifying the setup, knowing the forex broker game plan and staying one step ahead of them. First practice on your
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How do you identify the setup? Look for one way trending market. Overbought readings and obvious targets of round numbers! Know your forex broker’s game plan. You know that the forex broker wants to trip stop losses above say 1.5000 GBP/USD price level and collect some quick pips. As soon as the stops are tripped the price will quickly drop back to the previous levels. Learn
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How are you going to set your orders? Sell order lot#1 at 1.5000. Sell order lot#2 at 1.5005. Sell order lot#3 at 1.5010. Set the stops for all these three lots at 20 pips above the figure or 1.520. Set take profit for 2/3 of these lots at 5 pips below the figure or 1.4995.
You will want to ask at this point what happened to the money management rules that are so important for traders. It is better to take quick profit rather than risk losing it all waiting for a deeper correction because of the high probability of the trade working out in your favor.
Remember you are trying to take advantage of the forex broker’s actions and not predicting the future. The expected price action is a spike meant to trip stops than a quick decline and that is what you are going to exploit.
Now let’s use an example to make clear how the big figure trade works. Suppose the forex broker makes a quick move beyond 1.5000. The stops go off. The price trades briefly over 1.5000, only a couple of pips to print a high of 1.5006. Only two of your orders get filled. The price quickly drops under the big figure.
When the price reaches 1.4995, your profit take order for the two lots is quickly executed. You make a quick sure shot profit of 15 pips. Not bad for ten seconds of work.
Be prepared ahead of time in order to trade the big figure. Get out if the trade does not work out immediately say something like 15 minutes. The price action is telling you that it is being supported by some real money demand rather than a broker in such a case.
Although the moves are similar near most round numbers, this trade works best at the end of an overbought intra day trending move coupled with psychological numbers like 1.2, 1.5, 2.00 etc.
Remember that you are not trying to predict the future like a reversal or continuation. You are only trying to ride the coat tails of your forex broker. The spike might continue higher for another 50 pips. It might top out and collapse.
You are only in the trade for a low risk profit of 10-15 pips that the forex broker is generous enough to cough up for you. Generally try to trade only close to the big figure since that is the one hiding stops.
Aug 30 2009
The economic situation in the US might be giving off signals indicating a recovery from the financial crisis, but the US Dollar is not destined to fair very well.
While there are countless analysts who are forecasting a rise in the Dollar in the months to come, there is a an evolving group of traders who are expressing genuine concern over the Dollar’s long term prospects.
The bottom line of this concern is based on the reality that the large amount of money the US has used in order to dig from out of the financial avalanche will come back to haunt them in the form of Dollar weakness.
The Wall Street Journal reported only a few days ago this exact sentiment, and the notion that it presented has taken off and was widely discussed on business shows where onetime Dollar hawks have been pouncing on the notion that it can survive and thrive moving forward.
The truth is the US debt load is too heavy, it is unbearably large and it will affect the future of American business as it relates to other countries.
Import and export prices might skyrocket as a result of inflation, new taxes might be levied to help pay off the debt, basically we might see an economic recovery that will be highlighted by a weak and struggling Dollar – which will in turn bring on another crisis.
I am in no way suggesting that the Dollar will fall – for now the US is too strong for that, but I am saying that they are on the right path to having that happen. Obama’s policies are beginning to cause issues for his popularity.
His Democratic congress is not secure in their jobs as more and more people express dissatisfaction with the spending. His honeymoon is over.
Forex Trading bloggers have been more and more critical of his policies as the world emerges from the darkness of the recession and seeks “something else” to invest in.
Forex traders have also been keen to this – as the news becomes better the Dollar becomes weaker. And this is a trend that I believe will continue.
Analyzing the USD. More contradictory data came out on Wednesday, this time a disappointing Durable Goods Orders report.
The bad news helped propel the Dollar to shake off all of this weeks losses as investors retreated from their riskier investments into the relative safety of the Greenback.
The past few weeks has been difficult for
Forex investors, hearing things are getting better but not seeing the supporting data for those claims.
Home sales rose 9.6% as well it was announced on Wednesday, however most of the rise was due to foreclosure sales and government auctions of foreclosed properties owned by defunct banks.
At 11:00 PM GMT, the Dollar was up .32% to the Euro to 1.4249, up .005% to the Yen to 94.2, up .7% versus the Yen to 1.6244, up 1% to the Canadian Dollar to 1.0971, up .9% to the Australian Dollar to .828, up .4% to the Kiwi and up .65% to the Swiss Franc to 1.0679.
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Aug 30 2009
Retail forex market is different from the forex interbank market. Retail forex market is full of small traders. The trade size is usually so small that the retail forex broker is at a disadvantage. The retail forex broker is forced to act as the retail trader’s sole counterpart. Learn
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When the liquidity is good, making artificial market for their clients is not an issue for forex brokers since they simply offset their risk in the interbank market. However, in illiquid times this represents a great problem for the retail forex broker and an opportunity for the small traders.
The Big Figure Trade is an example of how you can take advantage of your retail forex broker limitations. As a trader, we all know every now and then the market will test a critical level.
It can be a Fibonacci level, a trendline or maybe even a big figure. The actual level is not important. The forex market will often reach a critical level where most of the traders believe that it cannot go higher during sharp, one sided intra day price moves.
Traders initiate short positions near that level. Don’t forget price moves in the forex market tend to be self fulfilling. Usually there is a big round number that short sellers set their stops above.
This is the time when the forex dealers mount their attack on the stops. The short sellers are confident that the market is overbought enough and it will not have the energy to push past the psychologically important number.
Now this is what happens when the forex broker mount an attack on the stops. The typical price action is for the price to fail near the figure a couple of times before the forex brokers produce a quick coordinated attack on the number quickly setting off the number lying above.
In an instant the rate is below the big figure. Most traders have this happen to them a number of times. A quick blip and your stops are busted. The price action than promptly crashes in the expected direction immediately!
Nothing is more aggravating to a trader than this setup knowing that your money was quickly taken away. This trade works especially well for the retail forex brokers with their fixed spreads and guarantees force them to make a market where there is none.
When the forex broker pushes the rate higher and trips stops above the big figure, the action is so quick and one sided that in the interbank market virtually no trading is possible at those prices.
Spreads widen, typically only the offer side of the quote runs higher since no forex dealer would want to be long above the figure. Although a true bank dealer may not be able to get the fill at those prices but you can.
As long as the rate traded is there most forex brokers would fill you at those prices just as they would have if they were filling your stops instead. Because of the fixed spreads and the guarantees the forex broker is forced to take the order.
Aug 29 2009
With the potential for profit in the Forex (foreign exchange) market, many people are turning to Forex robots to trade currencies for them. A lot of these robots are fraudulent and will lose you money rather than earn it; however, if you find the right one, Forex robots can be profitable and are very good tools for beginners with no experience in Forex, or for people who don't have time to invest in learning the market themselves.
I have made use of several of the Forex robots and have seen very good returns with several of them. One of those is the Fap Turbo robot which was the first one I wrote a review for (check out my review on Fap Turbo if you haven't yet, it is a great one to start with). In this article, I will be reviewing the Ivybot Forex Robot. The reason the Ivybot is worth giving a try is because it takes a completely different approach than Fap Turbo. Another reason is because it is always better to be running several robots rather than one; I say this because you never know when a robot can become obsolete or make a wrong decision that can jeopardize all your entire investment, not saying that will happen to you, I'm just paranoid. Just so you don't worry about what I've just said, I'll remind you that all of the top Forex robots have stop-losses checks in their systems which pull your money out once it sustains a loss that has potential to be dangerous; this doesn't mean you shouldn't diversify your interests though.
Anyway, I'll get back to the Ivybot Forex Robot. The thing about Ivybot that makes it great is the fact that it is basically four robots put into one. In fact, when you purchase Ivybot, you will be sent four separate robots. The reason for this is that each robot they send you specializes in a certain market sector and is specifically optimized for certain currencies. This gives you the opportunity to make money on different fronts; specialization is always better than generalization.
The Ivybot really works, the four robots were easy to install and I was able to get them up and running in less than twenty minutes. With minimum investments into each robot, you can expect a return, but just remember this, the more you put in...the more you'll get back. If you only have a hundred bucks or so to start, that number will soon grow, and it will grow exponentially, meaning it will grow at a greater rate as the base amount increases, so don't worry about. If you have a few thousand bucks, you'll see what Ivybot is capable of doing for you a lot quicker. I suggest splitting your funds between the robots and eventually allot more into the robot or bots you are having more success with; at least, this is how I have been going about it.
Now, I've talked about what Ivybot is, and how it works, but I also need to talk to you about the other major advantage it offers you. Like I mentioned in the beginning of this article, sometimes you'll find that a robot you are using will become obsolete and will not keep up with changes in the forex market. This won't happen with Ivybot. Once you purchase Ivybot for the more than affordable one-time fee, you have a lifelong membership with them. With this membership comes free upgrades to your robots that will keep them up-to-date with the forex market in order to ensure that they stay profitable for you. You can't beat that kind of customer support in my opinion....
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Aug 29 2009
A typical forex pattern that can be exploited by the forex traders is the Friday to Sunday price extension. The simple assumption is that price will open the new trading week Sunday NY time in the same prevailing direction as they closed on the Friday evening.Know the
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After the weekend, the Sydney traders generally do not have the oomph or desire to reverse any meaningful decline seen in NY. They are therefore happy to see the prices steadily drift in the direction NY left them until Tokyo comes online.
Just keep this in your mind that don’t expect for a miracle reversal in the direction of the price action on Sunday if you have a losing position. Once Tokyo and London enter the market, the direction may be reversed. But often by then traders nursing losing positions will have already been stopped out.
After a Friday with extreme volatility, however, this typical pattern is enhanced and turns into a low risk trade opportunity for traders. The reason is simple. On economic data heavy Fridays, prices usually end up several hundred pips away from where they started the day.
This leaves the Sydney dealers with a mess on their hands by the time they start trading early Monday morning. As they go through their motions of processing the outstanding orders that the moves in NY have created, this activity shows up as a Sunday morning bump.
Suppose a big economic number is released on Friday morning in NY. It causes the currency prices to jump wildly in both directions. Eventually the market settles for a direction and proceeds to follow it for the rest of the day.
Once European traders go home, liquidity quickly dries up and the NY traders begin to plan their weekends. In this 3-5 pm window, the price will slowly trickle in the same direction until the close of the week.
The market is too thin to stage any kind of meaningful reversal. This window of opportunity enables traders to safely enter the market in anticipation of a Sunday extension.
When Sydney opens the new trading week, the move is quickly extended further for 10-50 pips before settling in for a Tokyo open. By entering yourself in the general direction of the market during the 3-5 PM window, you can position yourself ahead of the market.
Trading the Friday to Sunday extension is simple, yet highly effective. This high probability outcome combined with a limited downside gives this trade great risk-return characteristic.
All that you have to do is to close your eyes, enter in the prevailing direction of the market during the 3-5 PM window and return on Sunday evening NY time to collect your 10-30 pips. Talk about making money while you sleep.
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