Mar 27 2010
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Forex Scalping Cheatsheets FREE! Economic Reports are important for all markets but they are a way of life for the currency traders as well as the futures and options traders. Each individual market has its own set of reports which the traders pay special attention. But there are some economic reports that are prime catalysts for almost all markets especially the currency, bonds and the stock markets that stand at the center of the financial universe.
Gross Domestic Product, the Consumer and the Producer Price Index, the monthly Employment Reports, the FED's Beige Book and the Institute for Supply Management (ISM) are some of the important economic reports that you should be aware of as a trader. You simply cannot ignore these reports. These economic reports are considered to be important trend setters in different markets.
As a trader, your world is highly dependent on the economic calendar. Economic calendar is the listing of dates when these important reports are released each month. Each month, these reports are released by different government agencies and the private sector. These reports are a major influence on how the financial markets move in general plus a source of cyclicality or the repetitiveness in the markets.
Not all reports are created equal. Some economic reports have more influence on the market than others. The most important reports that tend to move the markets a lot are the employment report, the Producer Price Index (PPI), the Consumer Price Index (CPI) and the FOMC Meeting Minutes.
The US Department of Labor's NFP Employment Report is considered to be a major market moving report. It is released on the first Friday of each month at 8:30 AM EST. You should try to avoid trading at this time. However, there are many currency traders who now specialize in trading the NFP Report.
The release of employment figures is usually followed by frenzied trading that can last from a few minutes to the entire day depending on what the data shows and what the market was expecting.
The NFP Report becomes very important when the economy is shifting gears like the present when the US economy is coming out of recession. Market tends to develop an expectation about the employment figures and if the NFP report does not confirm with that expectation, it can make the market jittery for sometime before the importance of the release is digested by the market. Trader use the NFP report as one of the several important clues to predict the future of the interest rates.
Mar 23 2010
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Swing Trading End of Day Trading FOREX-4 PACK Training Kit FREE. This is what Henry Liu says: I get asked a lot about my Currency Strength Meter and what are some of the best ways of using it. So I sat down last Saturday and made a 26 minutes video covering the 7 ways that I use my meter, and I hope this video helps you to understand it better...
7 Tips for Currency Meter
If you haven't downloaded my Strength Meter yet, all I have to say is that this nifty little tool is free and it'll compare 19+ currency pairs instantly and show you what's REALLY going on in the market...I honestly can't trade without it! If you just use it after any high impact news release, it'll help you pick out the best currency pair to trade and add at least 30 pips (on average) to your trade. I get rave reviews on this tool and as my way of saying thank you for downloading (or going to download) my Strength Meter, I made this video specially for you:
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My Mastermind Mentoring Program Is Once Again Open For Registration:
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The other reason for this video is to celebrate the one and probably only opening of my Mastermind Mentoring program for the year 2010. I would really appreciate if you help me to get the word out...There's only 50 seats available, so if you are interested, please let me know asap and I'll reserve you a spot! You'll get more details about the Mentoring course at the bottom of my Currency Meter video!
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Feb 9 2010
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NEWS TRADING (By Henry Liu)
1. Friday February 5, 2010 (7:00am NY Time) CA
Employment Changes Forecast 15.2K Previous -2.6K
Unemployment Rate Forecast 8.5% Previous 8.5%
If the employment number is higher, we would SELL USD/CAD, and if the employment number is lower, we would BUY USD/CAD. This news indicator measures the numbers of new jobs created during the previous month, however in this case, we will see how many jobs were actually lost, and less negative numbers mean better economy. Our surprise factor will be at least 30K. Historically, it has moved the market by at least 50 pips if the surprise factor is hit by at least 80% of the time.
2. Friday February 5, 2010 (8:30am NY Time) US
NonFarm Payroll Forecast 10K Previous -85K
Unemployment Rate Forecast 10% Previous 10%
We'll be trading the NFP release today, which is expected at +10K with a previous release of -85K; if you remember what happened last NFP, you'd know that the last release disappointed the market and kept USD under pressure for the better part of the months as after a revision of November NFP to a positive number, the December release brought back concerns over the rate of economic recovery. At the time of writing this analysis, market is in full risk aversion mode.
With the forecast on NFP turning positive for the first time, we could see a bullish sentiment on the USD as a result of market psychology. However, there are several things that we need to consider for tomorrow's NFP release. First of all, there is a possible increase in the total jobs count as the Obama administration hired over 550K temporary workers for the national census. Should this number make in the January 2010
count, expect to see a blow out positive number in the NFP release and a possible 1.0% decrease in the unemployment rate. Secondly, the BLS or Bureau of Labor Statistics will release its annual benchmark revision for the payrolls. Expect to see a significant downward revision on the first quarter of 2009, which may offset the NFP release numbers all together if the revision is significant.
Therefore, let's talk about how to trade this release: We'll wait for the numbers to come out, but will not take any trade YET, even if we get our tradable figures (-60K or 80K). We'll wait for a possible revision to the previous release number, which is -85K, as the market usually overreacts with the Revision and chances favor for this trade to work out if we do not get conflicting releases between the revision and the actual release; then we will wait for the Benchmark Revision... at this point, still stay out of the market.
Then the next step is to wait for the Unemployment Rate, which is at 10.0%. If the Unemployment Rate were to surprise higher, we'll have to really make an executive decision at the time of the release and see what is the primary focus of traders. As long as we don't surprise the 10.5%, I think the market will probably pay more attention to the NFP release. Of course if the census workers were to be included in this release, then expect to have a much lower than expected unemployment rate...
After all of the numbers have been released. Wait for the market to push... then be patient and wait for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components will usually be extremely volatile, and those who are patient will always get a chance to enter at much better entry.
DEFINITION
"Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation's currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises."
Nov 12 2009
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Forex News Trading is a highly profitable way of making pips if you know how to trade the news correctly. You make money from the volatility in the forex market. When some news of fundamental importance is released to the market, the market reacts in a nervous and jittery manner. Many traders look for this type of volatility in the market to make a killing.
But many traders get themselves killed by the market instead. So only trade news if you are experienced and know how to do it. The markets are highly volatile at the time of news release. Most traders prefer to stay out of the market at those times. You never know how the market is going to react to a surprise news so many professional traders will advise you to keep yourself away from the market at those times. By closing all your open trades before the release of the news you make yourself safe.
Then why do some traders try to jump into the market at such times. The reason is if you know how to trade the news correctly, you can sometimes make hundreds of pips in minutes. This type of windfall gains lure this mavericks into trading the news when everyone wants to hold the breadth.
An important question that comes to your mind is what type of news makes the market nervous. Anything that is unexpected is going to make the markets nervous. Suppose the market is expecting a certain housing sales figures but when the housing sales figures are released, they are unexpected! This will make the market nervous. The prices will suddenly start shooting up and down without any reason. It takes sometime for the market to understand the importance of the news and settle down. This time may be a few minutes to a few hours.
What you need to do is take a look at the monthly economic news release calender and mark the times when news of fundamental nature like the Non Farmpayroll (NFP) figures, GDP figures, Consumer Confidence figures, sudden interest rate changes by the Central Banks, CPI figures and so on are released. Just Google Economic News Release and you will find this information for US, Canada, EU etc.
Just observe how much volatile the market becomes at these times by trading on your demo account. The liquidity in the market thins out, the spreads widen and it becomes really difficult not to get your stops tripped. If you are risk averse then you need to stay away from the market at such times.
For those risk takers who want to make tons of pips in such times, news trading is a great opportunity. Within a matter of few minutes you can make up to a hundred pips easily if you are trading at the right time! The most market moving report is the NFP report!
Jul 21 2009
You should understand the discounting effect in the forex market. Often new traders get confused and ask why a particular currency has rallied despite the negative economic figures about that country. Sometimes, the currency can decline on the release of positive news.Learn
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forex signals free.These types of effects confuse and bewilder new forex traders. When there is good economic news about United States, commonsense says that US Dollar should appreciate. Similarly when there is bad economic news and there are signs of economic weakness, like unemployment and huge budget deficits, commonsense tell that US Dollar should depreciate.You should develop a mechanical and rule based
forex trading system.
What is the reason that a particular currency goes up despite bad economic performance of that country or the currency goes down despite good economic performance of that country? This can be attributed to the discounting mechanism of the forex market.
Traders try to take into consideration the future expectations about the currency in their present trading decisions. The market’s inbuilt discounting mechanism is formed by the anticipatory reaction of the traders.
If the traders think that Japan will suffer from the rising oil prices in the near or medium term, they will be bearish on JPY and go short now, thus pushing down the currency. But if the traders have a positive view of the Japanese economy, they will be bullish on JPY and go long now, thus pushing up the currency.
Currency prices integrate the market’s expectations about the future in this way. You must have heard the famous saying: “Buy on the rumor and sell on the news.” This is somewhat similar to this saying. Market has already made up its estimates of those figures based on the work of analyst and economists in the major trading institutions like banks or funds even before the economic data is released for public consumption.
Suppose, the majority opinion in the market is that the US Consumer Confidence Index to show a worse figure than the previous month. Way before the US Consumer Confidence Survey results are released to the public, market has already compounded that information in the exchange rate of say EUR/USD.
When the US Consumer Confidence Survey figures are released, what will move the market is the amount of deviation between the expectation and the actual figures. The currency pair EUR/USD was rallying due to poor market sentiment for USD.
This is old news for the market if the released figures are almost the same as expected. No surprise was caused in the market. This information has already been compounded into the currency prices.
The release of the anticipated news or data can often cause the currency price to move in the opposite direction initially to where the market had positioned itself before the release of the news. After sometime the market adjust itself and the status quo prevails.
Suppose the US Consumer Confidence Index figures turn out to be almost the same as expected. EUR/USD pair may even end up declining with the USD strengthening even in the face of a negative consumer confidence number.
This contrarian market reaction is the result of traders who had gone long on EUR/USD closing their positions and taking profit on the news release. Thus the lack of any deviation between the expected and the actual figures may cause the currency pair to move sideways or even move in the opposite direction as the status quo remains.
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