Thursday, August 27, 2009

HVMM (High Velocity Market Master)

I'm sure you know by now that you don't have to trade all day to see your account grow. Even if you consider yourself a day trader, it doesn't always equals 8 hours of full-time trading. After many years of trading, I've figured out that the key is having the right trading rules and a system that you can trust so you're not strapped to your computer all day taking the wrong trades. No tricks just the right ‘evil plan.' See how using the HVMM strategy brought in $750 per contract in just over 30 minutes:

HVMM (High Velocity Market Master)

In the video the guys over at the HVMM headquarters revealed that trading Crude Oil Futures, can be ideal in particular for those with some trading experience. But, even if you're not an experienced trader, the nice thing about the HVMM is it doesn't discriminate. You can trade any market you desire and any time frame.

HVMM (High Velocity Market Master)

Find out how. Make sure you're registered for the HVMM Premier Tuesday September 1st at 9:00am EST/12:00pm PST/ 5:00pm GMT.

HVMM (High Velocity Market Master)

I'll be there waiting to hear your name called as the winner of their blog
contest. Oh did you catch the trade tip in this latest video? Don't forget
to post the answer in the blog comments! You have to participate in the blog contest and ATTEND the webinar to be in the drawing for the first copy of the HVMM before it's even on the market. You'd better reserve your seat now:

HVMM (High Velocity Market Master)

Money Management in Forex Trading

Think about it, many forex traders spend most of their time trying to figure out when to trade. Proper money management is by far the most important factor in achieving success if for whatever reason you are set on becoming a forex trader. Many traders ignore the importance of proper money management. This is surprising given that money management is the only thing a forex trader can control. Instead of thinking when to trade, forex traders should be thinking how much to trade. There is no guaranteed way to make money.

Forex market is highly unpredictable and ruthless. Forex market is bigger than you, bigger than me and smarter than definitely all of us. Even the best and the brightest are wrong more often than they are right. We are bound to be wrong many times and make mistakes. Many people think that trading requires lot of risk taking. The biggest misconception many people have about traders is that they tend to take a lot of risk to make huge profits. You always control risk with proper money management techniques. This enables us to weather sustained drawdowns and live to trade another day.

All traders must know before hand how much they are willing to risk when trading a mechanical system or trading in a discretionary fashion. In reality great traders aim to minimize their risk relative to their returns at any given moment! Most of us exit the trade depending on our pain threshold level. All too often traders choose an arbitrary numbers that have little to do with proper money management. Ask yourself these questions before any trade: How do I determine my position size? How do I set my stops?

Loss is painful. It increases the level of stress for you. We all are afraid of losing. Our innate fear of failure makes us place too much importance on not to lose. Instead we should be giving more importance to learning how to manage our losses comfortably. Are there any good money management rules? Yes, good money management rules exist and the best way to see if your money management rules need tweaking is to look at your results. The good thing about money management is that it is easy to learn and implement. It just requires some discipline on your part.

For example, you should consider taking smaller positions to mitigate the risk of ruin if you consistently post large winners and losers. However, you consider taking slightly larger positions if your losers are substantially smaller than your winners! The longer you will stay in the market the higher the chances of hitting the home run trade. Longer term success in trading is achieved by accumulating steady profits and occasionally hitting the home run trade. With proper money management you can maintain the all important risk-reward ratio and hit home run trades more often.

Flexible Forex Trading

Flexible forex trading is what you need to survive the forex market in the long run. Learn to be flexible when trading. Flexibility is critical for you if you want to survive in the forex market long term. Flexibility in trading means giving you options. Options to enter into a trade! Stay in it and get out of it.

Trade only one big lot and you essentially remove options from your table until you are faced with an all or nothing trade by becoming overexposed to any one position. Your survival is measured in days not years in the forex world.

Never ever trade without a stop loss in place! This is the most important risk management lesson. However, most of the time you will get stopped out of the market too soon! Most traders have had the frustrating experience of getting stopped out. Only to see the market return back to your entry point some times later on in the day. The only way to stay out of such situations is to stay flexible and trade multiple lots.

How do you test the markets? By making multiple entries! You should consider your initial entry as your toes testing the temperature of the market. If you find it too cold, then you should sit it out. By trading only one lot you are betting that the market will move 50/50 in your favor.

Just jump right in if you find the temperature right. Multiple entries gives you the flexibility to properly position yourself for the move or pull out with a small loss if your analysis proves correct by trading small until you think you have all the information and confirmation you need.

Learn to trade in multiple lots with multiple entries and multiple exits. Trading this way also means missing out on far fewer since pulling the initial trigger becomes less painful making the decision process much less stressful trades when compared to the all in one approach.

Dollar Benefits on U.S. Economic Data; Today Traders Focus on the U.S Unemployment Claims

The U.S dollar gained ground Wednesday against the EUR and the British pound, after strong data on orders for new U.S.-made durable goods and new home sales comforted expectations of an improvement in the economy. The greenback traded higher after the durable-goods orders report said orders for July rose by 4.9%, the largest increase in 2 years. Investors will be watching for the new U.S. jobs report today before making significant moves.



USD - Dollar Rises on Signs of Economic Recovery

The Dollar rallied yesterday against most of its major counterparts after data suggesting the slowdown in the U.S. housing market has bottomed out. A better-then-expected result gave further support to the U.S. currency. The Dollar has been sold off recently partly due to growing optimism regarding the state of the U.S. economy. The USD finished yesterday's trading session about 50 pips higher against the EUR at the1.4249 level.

Yesterday's main U.S economic event was the New Home Sales data. New U.S. home sales hit its highest level in 10 months in July. Orders for Long-Lasting Manufactured Goods also surged yesterday and are interpreted by traders as fresh evidence of a modest economic recovery. Sales of "New Single-family Homes" rose by 9.6% from June, the highest rate since September. It is in fact the biggest percentage gain since a matching increase in February 2005, another indication that housing activity had stabilized after a three-year slump.

Looking ahead to today, there are few important news releases coming out of the U.S. These include the Prelim GDP and Unemployment Claims at 12.30 GMT. Traders will be paying close attention to today's announcement as a stronger than expected result may continue to boost the USD in the short-term. On the other hand, if the results turn out to be lower than forecast, then the Dollar may record a fairly bearish session in today's trading.

EUR - EUR Records Mixed Results against the Majors

The EUR finished yesterday's trading session with mixed results versus the major currencies. The 16-nation currency extended gains versus the Sterling on Wednesday, to trade above $0.8775 amid a broad sell-off in the GBP. The EUR experienced similar behavior against the CHF as the pair rose from 1.5185 to 1.5220 by days end. The EUR did see bearishness as well against the USD as it lost over 50 pips and closed at 1.4249.

A leading indicator released yesterday from Europe was the German Ifo Business Climate report. Germany holds the largest and strongest economy in the Euro-Zone, and thus the relevant publications from this economy usually have a hefty impact over the EUR. This indicator jumped to 90.5 in August from 87.4 in July, above economists' expectations. Analysts said that this is a plus for the European economy, and it's a sign confirming that the real economy is starting to get out of the period of freefall.

Sentiment in the Euro-Zone economy has brightened in the past month following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-Euro crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., Japanese, and other key economies will affect their positions.

JPY - The Japanese Yen Extends its Bullish Run

The Japanese yen rose for a second day against the EUR amid concerns financial losses will delay a recovery in the global economy, boosting demand for Japan's currency as a safe haven. The Yen also rose to a 5-week high against the British pound as a smaller-than-expected July trade balance data from Japan prompted investors flee from riskier-assets.

The outlook for economy in Japan is still doubtful as Japan's export slump deepened in July, indicating the boost in demand that helped pull the country out of its recession last quarter may be short-lived. Shipments abroad fell 36.5 % from a year earlier, steeper than June's 35.7% drop.

Crude Oil - Crude Oil Falls 1.4% on U.S Inventory Data

The price of Crude Oil fell 1.4% or $1.00 to $71.20 yesterday, as the latest inventory numbers from the U.S. Energy Information Administration (EIA) showed an increase in crude oil stockpiles. The EIA reports that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 200,000 barrels in the week ending August 21, from the previous week.

Crude Oil also declined on concern China may cut back on industrial investment, slowing demand for fuels in the world's second-largest energy user. Crude traded low after China said it was studying curbs on overcapacity in industries including steel and cement. Some analysts said the failure to break through the key level of $75 may signal that prices have topped out, with demand for oil still depressed by the global economic slowdown and murky signs of a broad recovery.

Article Source - Dollar Benefits on U.S. Economic Data; Today Traders Focus on the U.S Unemployment Claims

Euro in Play as German CPI Shrinks for Second Month, Boosting Deflation Fears (Euro Open)

The Euro may see selling pressure in European hours with Germany’s Consumer Price Index expected to show that the annual inflation rate fell for the second consecutive month in August. UK Nationwide House Prices are also on tap, with forecasts calling for home values to fall the least in 16 months.

Key Overnight Developments

• New Zealand Trade Deficit Narrowed in July as Imports Tumbled
• Australian Business Investment Trumps Expectations in Second Quarter

Critical Levels



The Euro drifted slightly lower ahead of the opening bell in Europe, shedding 0.1%. The British Pound also trended lower, giving up 0.2% to the greenback. Technical positioning suggests the US Dollar is carving out a bottom against most major currencies.

Asia Session Highlights



New Zealand’s Trade Balance deficit narrowed to –NZ$2.5 billion in July from –NZ$3.1 billion in the preceding month as imports fell by a whopping -20.9% from a year before, easily overwhelming a -7.3% decline in exports. The reading is likely a reflection of the impact of rising unemployment on domestic demand: the jobless rate has risen to a nine-year high of 6%, trimming incomes and discouraging consumption. The outcome is all the more ominous considering the local currency has gained 20.1% since the beginning of the year, which would be expected to have helped imports higher by boosting New Zealanders’ purchasing power of foreign goods. More of the same is likely ahead, with economists calling for the unemployment rate to continue higher to hit 7.45% next year.

In Australia, Private Capital Expenditure (a measure of business investment) surprised sharply to the upside, adding 3.3% in the second quarter to trump expectations of a -5.0% decline. The improvement likely came as the government spent 4% of GDP in stimulus to boost the sagging economy amid the global downturn. Similar developments have been readily indentified across the world as governments stepped in to replace shrinking private demand, with the real question now being whether the recovery has any staying power once fiscal stimulus reaches its inherent limits.

Euro Session: What to Expect



The preliminary estimate of Germany’s EU-harmonized Consumer Price Index is expected to show that inflation fell at an annual pace of -0.4% in August, a slight improvement over the -0.7% result registered in the previous month. Still, the bottom line is that prices are set to decline for the second consecutive month; if this continues to be the case, it will contribute to building expectations of lower prices in the future, threatening to unleash a deflationary spiral wherein consumers and businesses perpetually hold off on spending and investment as they wait for the best possible bargain, bringing economic growth to a virtual standstill. At the moment, a survey of economists polled by Bloomberg suggests the market sees CPI shrinking through the third quarter and returning to a path of positive growth by the end of the year. If this proves to be too rosy, traders may punish the Euro as it becomes clear that the Euro Zone’s largest economy and by extension the currency bloc as a whole are heading for a long-term period of low interest rates and sub-par economic growth. A disappointing outcome seems likely considering the European Central Bank’s apparent inability to offer effective monetary easing as well as well-founded reservations about the sustainability of the second-quarter uptick in German GDP. Indeed, the expected improvements in GfK Consumer Confidence and Bloomberg Retail PMI are all but certainly a product of fiscal stimulus both domestically and abroad, with the big question for Germany as well as most anywhere at this stage being whether growth will continue after the flow of government cash dries up.

In the UK, the Nationwide House Prices report is set to show that property values fell -3.9% in the year to August, the smallest decline in 16 months and a significant improvement over the -6.2% result noted in the previous month. The improvement follows yesterday’s surprisingly strong rise in approved loans for house purchases. Still, it must be kept in mind that any boost to consumer confidence that can be expected from rising real estate values (via a positive wealth effect) is likely to be had from changes in the actual monetary value of Britons’ homes rather than an improvement in the growth rate. Indeed, it is not difficult to produce better results in the percent-change reading considering the very low base form which prices must recovery. If expectations are to be validated, home prices will stand near October 2005 levels, putting everyone that bought real estate between then and the peak in October 2007 firmly under water. Home prices grew five-fold during this period, hinting that the number of homes sold was more than formidable and suggesting that a good portion of UK homeowners are far from seeing any income boost from their real-estate portfolio.

Written by Ilya Spivak, Currency Analyst
Article Source - Euro in Play as German CPI Shrinks for Second Month, Boosting Deflation Fears (Euro Open)

Overleveraging in Forex Trading

Many of us are not clear what overleverage is in forex trading? You are fooled into thinking that it is a good thing to control $200,000 with $1000. Forex brokers constantly extol the virtue of 200:1 leverage ratio. Don’t fall into this trap. Overleverage is like driving at a speed of 150 mph. Suppose you have $1000 starting balance. You decide on a leverage of 200:1. A mere 10 pips move against you would result into 20% of your account equity getting wiped out if you were to trade $200,000 in EUR/USD.

This is not the only thing. In any trade there is a trading cost. Trading cost is the bid/offer pips spreads you pay when enter the trade or exit the trade. Suppose the spread is only 3 pips. In fact, you are having a trading cost of $60 just by entering the trade and you are down 6% on a trade. $60 trading cost on $1000 equity is not a small thing. This is only the entry cost. If you are forced to exit, you will again have to pay $60 as the trading cost. Your total trading cost will become $120. This is much more than any permissible loss. Any market noise is bound to wipe out your account size. Trading position sizes this big in relation to your account size means that you are essentially trading yourself into a corner.

You may as well hand over your money directly to your forex broker instead of losing it in a trade if you are overleveraging your trades. Forex brokers love this. This is easy money for them. What is the suitable level of leverage for a retail trader? The retail investor should definitely not use more than 10 times leverage. It means the price would have to move 1000 pips against you before your account gets wiped out if you have a starting balance of $1000. Professional money managers don’t use more than 2-5 times leverage level.

Understanding the role of leverage and how to avoid overleverage is crucial for your long term success as a forex trader or for that matter any trader. You get more room to maneuver and it gives you more flexibility with a leverage level of 10. Choosing the right amount of leverage is the first critical step in maintaining your flexibility in the market. Learn to be flexible when trading. Flexibility is critical for you if you want to survive in the forex market long term. Flexibility in trading means giving you options. Options to enter into a trade! Stay in it and get out of it.

Trade only one big lot and you essentially remove options from your table until you are faced with an all or nothing trade by becoming overexposed to any one position. Your survival is measured in days not years in the forex world. Never ever trade without a stop loss in place! This is the most important risk management lesson. However, most of the time you will get stopped out of the market too soon! Most traders have had the frustrating experience of getting stopped out. Only to see the market return back to your entry point some times later on in the day. The only way to stay out of such situations is to stay flexible and trade multiple lots.

Wednesday, August 26, 2009

Crude Oil Plummets on Profit Taking

Later afternoon trading saw the price of Crude Oil take a nose dive as traders took profit. The price of Oil stalled at the $75 resistance level and fell significantly following the failed breach. Today traders will be tracking the release of the U.S. Crude Oil Inventories data along with the New Home Sales numbers for today's market direction.



USD - Dollar Sees Mixed Results against the Majors

Yesterday, the Dollar saw mixed results against its major currency rivals. Against the EUR, the Dollar began the trading session with sharp drops, yet it managed to fully recover later on. The Dollar saw mixed result against the Yen as well.

The Dollar's recovery came as a result of the better than expected Conference Board Consumer Confidence report. The report showed that the U.S. consumers' confidence has increased in August, largely due to the labor market recovery. The report rose to 54.1, making the first gain in three months, from 47.4 in July. The most significant outcome of this result is that it shows that consumers feel their financial outlook is secure and thus allow themselves to spend more. Eventually this has the potential to elevate the economy as analysts expect.

Looking ahead for today, a batch of data is expected from the U.S. economy. Two main publications are expected to create large volatility in the market - the Durable Goods Orders indices and the New Home Sales. The Durable Goods Orders indices are expected at 12:30 GMT. Investors hold great importance to their results as they are leading indicators of production, especially the core report. The New Home Sales is scheduled for 14:00 GMT. This is one of the highest indicators of the housing sector, and thus has an immense impact on the Dollar. Analysts forecast 393K new single-family homes were sold during July, and if the end result will be similar it has the potential to boost the Dollar's recovery.

EUR - German Business Climate on Tap

During yesterday's trading the EUR saw volatile activity against the major currencies. The Euro saw mixed results against the Dollar and the Yen, beginning the day with rising trends yet dropping later on. However against the Pound, the Euro continued the bullish trend from the last few days.

The EUR's rise in early trading came as a result of the positive data published from the Euro-Zone. The German Final Gross Domestic Product showed a 0.3% rise in the inflation-adjusted value of all goods and services purchased by the German economy, marking the first positive results in 5 months. This continued the recent positive figures from both Germany and France, the two largest economies in the Euro-Zone. Also yesterday, the Belgium Business Climate report delivered a better than expected figure after dropping 18.2 points, beating expectations for a 19.7 drop. This also supported the EUR during yesterday's trading.

As for today, two main publications are expected from the German economy, the German Import Prices and the German Business Climate. The German Business Climate, published by the Institute for Economic Research, is expected to create a large impact on the EUR. It is considered to be a leading indicator of economic health because business is known to react quickly to market conditions. A positive result is likely to increase hope for an early economic recover, which has the potential to strengthen the EUR.

JPY - Yen Recovers against the Major Currencies

The Yen saw a mixed trading day during yesterday's session. The Yen began with bearish trends against both the Dollar and the EUR. However, later on it managed to recover back to previous rates. Against the Pound, the JPY continued to strengthen and the GBP/JPY is currently traded around the 153.40 level.

The Yen recovered due to concerns that financial losses will delay a recovery in the global economy, increasing demand for the Yen as a refuge. Currently, many analysts claim that the outlook for economies around the world is still doubtful. This situation is known to create risk aversion, which leads to the purchase of the Yen.

During late trading, the Japanese Trade Balance report was released, delivering a poor result of 0.19T, lower than the 0.35T expected. The Japanese economy largely relies on its exporting, and thus this result has the potential to halt the Yen's recovery.

As for the day ahead, no imported data is expected from the Japanese economy. Traders are advised to follow the leading publications from the U.S and the Euro-Zone as they are likely to set the tone in today's trading.

Crude Oil - Crude Oil Drops to $71 a Barrel

Crude Oil fell close to $3 a barrel during yesterday's trading, to the lowest price in a week, seeing the first decline in six days.

Crude Oil dropped from $75 a barrel to $71.20 on signs that reduced lending in China deceased demand for the world's fastest-growing, energy-consuming county. Another reason for oil's weakness is the recovering Dollar. Because Oil is valued in Dollars, the fluctuations in the Dollar's value tend to affect oil as well. During yesterday's trading, a U.S. Consumer Confidence report was released, providing a better than expected figure, which promptly strengthen the Dollar. This eventually had an impact on Crude Oil's value, and led to the sharp drop.

As for today, the U.S. Crude Oil Inventories is scheduled at 14:30 GMT. This report measures the change in number of barrels of crude oil held in inventory by commercial firms during the past week. Its result tends to have an immense impact on oil's value, and traders are advised to follow this report with extra caution.

Article Source - Crude Oil Plummets on Profit Taking

Euro May Gain as German IFO Rises But Long-Term Outlook Favors Downside (Euro Open)

The Euro may see near-term gains in European hours as Germany’s IFO indicator of business confidence shows that companies’ 6-month economic outlook improved for the eighth consecutive month in August, but the likely path of interest rates favors the downside in the long-term outlook.

Key Overnight Developments

• Japan's Trade Surplus Shrinks in July, Further Losses Likely
• Euro Flat, British Pound Lower Against USD in Overnight Trading

Critical Levels



The Euro tried lower but rebounded late into the session to yield a flat result in Asian trading. The British Pound declined, testing as low as 1.6306. Technical positioning suggests the US Dollar is carving out a bottom against most major currencies.

Asia Session Highlights



Japan’s Merchandise Trade Balance surplus shrank to 380.2 billion yen in July, down from a revised 507.5 billion in June as imports grew 3% while exports shrank -1.3% from the previous month. The metric hit a record low in January 2009 and has since corrected higher, coinciding with acceleration in the growth of unemployment that has weighed on consumer spending, including that of foreign-made products. Indeed, in annual terms, the rate of contraction in inbound shipments (-40.8%) continues to outpace the drop in overseas sales (-36.5%). Still, the trade balance has been trending firmly lower since the surplus peaked in September 2007, the same month that US personal consumption of durable goods topped out and began to trend sharply lower. Although current economic growth forecasts suggest the US will outpace most industrial countries as the global recovery gains traction, chances are it will be some time before the American consumer is ready to meaningfully commit to big-ticket purchases such as Japanese cars and electronics. Indeed, a survey of economists conducted by Bloomberg calls for the external sector to add just 2.3% to overall growth on average this year and in 2010, the least in 9 years.

Euro Session: What to Expect



Germany’s IFO Survey of business confidence is expected to show that firms’ 6-month economic outlook improved for the eighth consecutive month in August. Still, the reading is expected at 92.0, a print below the 100 “boom-bust” threshold, suggesting conditions are still deteriorating but at a perpetually slower pace. Some recovery is to be expected as an array of fiscal stimulus both in Germany and abroad boost domestic demand and exports, but the big question in the Euro Zone’s top economy as well as most anywhere at this stage is whether growth is sustainable after the flow of government cash dries up. As it stands, a survey of economists conducted by Bloomberg suggests that Germany, and by extension the Euro region as a whole, will underperform most industrialized countries at least through the end of next year. The most pronounced differentials are seen against commodity-linked counties (Canada, Australia, and New Zealand) as well as the United States. A comparatively slower pace of economic growth will mean that Europe lags behind the curve as central banks begin to return to higher interest rates, a prospect that surely bodes ill for the single currency.

Written by Ilya Spivak, Currency Analyst
Article Source - Euro May Gain as German IFO Rises But Long-Term Outlook Favors Downside (Euro Open)

Forex Supernatural

You already know how huge a market Forex is. You probably have invested a ton of money and time learning how to make a killing in the Forex markets. I bet you've bought all sorts of products, systems, tools... you name it. Well, I'm going to blast all of those out of the water. Sorry to tell you that what you've spent so far is going to end up being wasted money, but I've had enough. It's time for people to start profiting from Forex instead of helping product sellers pad their pockets.

Forex Supernatural

The only challenge is that I have a tight lid on this for the moment. Why? Because it's almost ready, but not quite. If I let the cat out of the bag too soon...well, I just won't. But I'm not going to leave you twisting in the wind entirely. Let me get right to it. Do you know why you haven't succeeded at Forex? It boils down to one thing. You're not smart enough, and you're not emotionless enough. Neither am I. I'm in the same boat as you.

We're human beings. We can't switch off our emotions and trade like the Terminator hunted down his enemies. But that's exactly how you have to trade if you're going to swipe the profits pros rake in. It took me years to learn this lesson. Oh, don't misunderstand, you can do very well as a Forex trader even if you have to fight emotion every step of the way. And you don't have to be a genius to put on profitable trades. But none of that matters. The key is making profits consistently, and hanging on to the profits you make.

Forex Supernatural

I can tell you from personal experience, most traders, I mean the vast majority (95 percent, plus) will NEVER succeed. They'll trade for a while, make some gains, make even bigger losses, and quit when they run out of cash. It's worse than a gambling addiction. Any true Forex expert out there will confirm this. I'm sick of that reality, for myself and for you. I set out to change it. The lid is still on tight (I won't budge until the appointed time), but I'll tell you this...What I've created is going to turn your world upside down. You simply won't believe it. I've created software that:

* Finds a TON of high-probability trades for you

* Enters each trade at exactly the right time

* Closes the trade at the right time, either with a small loss (yes, those happen) or with a nice gain

* Does all of that complete autopilot

That means you can use what I've created even if you work at a job all day. You don't have to babysit your computer. Heck, you don't even have to check it for weeks if you don't want to. And the results? Maybe this will excite you...

$10,360 profit on ONE trade...

$5,615 on only four trades in a week...

$6,164 on only three trades in a week

As always, you might make more, you might make less. But one thing is true for everyone...this is a stone cold trading weapon. It's like having your own Forex killer on your side. I've poured all of my years of trading experience and trial-and-error learning into this software. It's not the same old thing that doesn't work, despite the promises of autopilot wealth. Like I said, I'm not going to reveal this yet. You only have to wait two days, though. At that point, I'll send you a link to a free video that shows you just how powerful this thing is. I'll also give you the chance to sign up for another free video that shows you proof of results for this thing that will shock you (what I've told you in this email is NOT a fluke, by any stretch of the imagination).

Forex Supernatural

Take the worldwide stock market, the commodities markets, and every other market you can think of. Bundle them up. The Forex market is bigger than all of them combined. People are trading U.S. Dollars, Japanese Yen, Euros and all sorts of other currencies literally every minute of every day from Sunday night to Friday night. Fortunes get made and lost in minutes. That's how fast this market moves. And prior to now, only pros have been able to make a killing. But we are going to change all of that. We're going to let YOU get in on the action... without getting slaughtered.

The reason Forex trading is so risky for novices who give it a shot is that speed of the market. Putting on trades isn't rocket science, once you get the idea that you can buy when things are going up and sell when they're going down to make money both ways (that's a mind-bender for some people). But the speed of the market exposes the raw power of emotions to screw up your trading results. Think about how fast the market moves.

Forex Supernatural

If you put on a trade for $1,000, you could double your money in literally minutes on a strong move that goes your way. But you can also get run over by a freight train when a move doesn't go your way. That means most people get whipsawed by two emotions that just about doom them to failure. They're scared to death of losing money, probably because they've had some big losses or can imagine the losses being huge. Or they're greedy, and they hang on to positions too long as their profits melt away.

After doing that a couple of times, it's easy to see why people get skittish. How hard to do you have to work to earn $1,000 right now? Watching it vanish in a few minutes because China talks yucky about the U.S. Dollar is no fun.Most people simply have no defense against their own emotions, and it costs them their entire savings. That's why what these guys are talking about is going to thrill you. I won't even reveal who they are... that's part of the fun. Watch this extremely short video to see why this is so exciting:

Forex Supernatural

We're going to explain everything, and it won't cost you a penny to learn about how we're going to change your life. I won't reveal too much here. But I will divulge one thing...If you thought Forex was hard, or took lots of sweat effort, or was the riskiest game in town, prepare to be shocked out of your shoes. We are going to reduce your risk to manageable levels (it can never be zero), and take 99.99 percent of the work away. No, that's not a joke. It's absolutely for real. You don't have to believe me. Just watch the video and let us prove it to you:

Forex Supernatural

I don’t mean the mechanics of trading, which are easy. I mean making consistent profits that let you live a life you can’t imagine right now. If you’ve ever tried Forex and gotten eaten alive, you know what I mean. But there’s a reason for that. It has nothing to do with professional traders crushing you in the market. Frankly, it’s too big for them to control that way. It also has nothing to do with some crazy conspiracy theory about shadowy forces out to steal your success. NOBODY controls the Forex market, and there is NO conspiracy. So why is Forex so hard? Two reasons...

The first reason is that the market moves like greased lightning. Most people think the stock market moves fast. You can have stocks like Google dance around and be up or down $10 in a day...or in an afternoon. But let me tell you, Google is in a coma compared to Forex moves. It’s shocking. That means it’s pretty easy to lose your shirt. It’s no exaggeration to say that you can watch your money vanish like you threw it in the fireplace.

Forex Supernatural

The second reason Forex is hard is that human beings are emotional. We all deal with fear, for example. When you put on a trade with real money, you remember what kind of effort it took you to make that money. You had to sweat for it, probably at a job you detest. So the risk of losing it looms large. And if you’re up on a trade, meaning you have a paper profit, you get a little blinded by the potential for more gain. That probably means you stay in the trade too long and you end up with a loss instead of any profit at all. We all do that. It’s natural.

Well, the guys who create the free video I’m going to point you to have produced a way to trade Forex without a care in the world. It’s actually automatic. I don’t mean it’s a system you follow. I mean it’s software that trades for you. They call it Forex Supernatural. Don’t believe me? Then watch:

Forex Supernatural

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Forex Executor

Tuesday, August 25, 2009

U.S Consumer Confidence will determine Today's Trend

Today's U.S. Consumer Confidence data release is set to dominate the trading between the Dollar and its major currency pairs. A number of other factors are also likely to impact the forex market today, such as the British BBA Mortgage Approvals at 8:30 GMT. The results of today's data are likely to determine the USD's trend going into rest of the week's trading.



USD - The U.S Dollar Strengthens Against Most Rivals

The greenback rebounded versus major currencies Monday, from a string of recent declines after signals at the weekend that most key central banks backed a policy of keeping their Interest Rates low for the foreseeable future.

Analysts continue to anticipate that at some point signs of strength in the U.S. economy will be read as positive for the nation's currency, ending an inverse relationship since the credit crisis began, where negative news triggered safe-haven buying of the U.S Dollar. That relationship still held back the Dollar's gains on Monday.

The USD also advanced yesterday vs. the EUR and Japanese yen as Wall Street surrendered earlier gains and traders repositioned themselves ahead of U.S. consumer and Housing data due this week. Solid U.S. data and an upbeat assessment on the economy from Federal Reserve Chairman Ben Bernanke over the weekend earlier pushed investors to take on riskier investments at the expense of the low-yielding Yen and Dollar.

EUR - Sterling Pressured; Hits 11 Week Low vs. the EUR

The EUR erased its gains versus the Dollar yesterday as Treasury yields fell and the European Central Bank (ECB) policy makers warned against succumbing to optimism with regard to the economic situation in Europe. The EUR also reversed again versus the Japanese yen after the Euro-Zone industrial orders came in much higher than expected.

But investors are keen to see how the Euro-Zone economy fares, especially after higher-than-forecast purchasing managers' index readings last week. Traders expect Germany's Ifo survey of business sentiment to be the key event for the European currency this week.

The British pound dropped yesterday against 14 of the 16 most-traded counterparts on speculation the Bank of England will depress yields on gilts, making the U.K.'s assets less attractive to foreign investors. The Sterling declined yesterday to an 11-week low versus the EUR as much as 0.6%, the weakest level since June 8th. Analysts have said that the EUR was pushed past a key options barrier at 87 pence, setting up further gains in the pair, while traders said expectations for persistently low UK Interest Rates were weighing on the British currency.

JPY - The Yen Advances as Stocks Extend Losses

The Japanese yen was broadly firmer on Tuesday as investors took a pause from a recent rush to stocks and higher-yielding currencies, with focus shifting to U.S. data later in the day for clues on an uncertain economic recovery. The low yielding Yen tends to gain when stocks and higher-yielding currencies fall or when weak economic data highlights a long and uncertain road for global recovery.


The JPY rose against all of the 16 most-active currencies after Atlanta-based SunTrust Banks Inc., Georgia's biggest lender, said U.S. financial institutions may report more credit losses as commercial real estate falters. Worries are re-emerging that regional and local banks in the U.S. may be facing more loan losses, hence causing risk aversion and buying of the Yen.

Crude Oil - Oil Trades Near 10-Month High on Economic Optimism

Crude Oil prices rose Monday, briefly touching their highest level in 10 months, as optimism about a rebound in the global economy boosted energy prices. The gains came alongside strength on Wall Street, where the stock market also briefly touched 10-month highs before pulling back slightly after a 4 day rally.

Commodities markets have tracked stocks indexes closely in recent months as dealers view equities as a leading indicator of economic performance. Oil dealers said many investors were also using commodities as a hedge against the U.S Dollar, particularly oil, as OPEC producers work to restrain supply.

However, Crude reduced its earlier gains in afternoon trade as U.S. stocks turned lower. With demand remaining weak and supplies standing abundant, the crude market could be ready for a quick and sharp downward movement.

Article Source - U.S Consumer Confidence will determine Today's Trend

Currency Markets Quiet as Obama Says Bernanke to Be Nominated for 2nd Term (Euro Open)

Currency markets took little notice as US President Barack Obama announced that he will nominate current Federal Reserve Chairman Ben Bernanke to another term when the central bank chief’s term in office. The final revision of Germany’s second-quarter GDP figures and Switzerland’s Employment figures top the calendar in European hours.

Key Overnight Developments

• New Zealand’s Inflation Outlook Bolsters Case for Interest Rate Cuts
• Euro, British Pound Yield Flat Result as Bears Fail to Keep Momentum
• US President Obama to Nominate Fed Chief Ben Bernanke To 2nd Term

Critical Levels



The Euro tried lower in overnight trading, testing as low as 1.4274, but rebounded just above the 1.43 mark late into the session to yield an effectively flat result ahead of the opening bell in Europe. The British Pound followed a nearly identical dynamic, tipping a low of 1.6383 before running back up to 1.6420, the same place where it started after the close in New York.

Asia Session Highlights



The Reserve Bank of New Zealand released the Inflation Expectation report, revealing that consumer prices are expected to remain below the 2% target level in a year from the third quarter but rebound to 2.3% into the second half of 2011. Although 1-year GDP growth projections turned positive for the first time in six months, wages are set to grow at a record-low 1.7% in the same period and 2.3% in 24 months, the lowest estimate in over a decade. Forecasts of rising unemployment are surely the culprit here: unemployment expectations were revised higher yet again, now calling for the jobless rate to hit 7.2% by September 2010 and 6.7% by the same time in the following year.

As we have previously argued, the likelihood of a low-inflation environment in the near to medium term gives the Reserve Bank of New Zealand scope to lower interest rates. Such a move would help to decouple the local currency from overall trends in risky assets, helping to trim the formidable current account shortfall as well as offer some additional stimulus at a time when the government has cancelled additional fiscal measures amid concerns about the nation’s public debt, both of which recently forced downgrades of new Zealand’s sovereign credit rating by both Fitch and Moody’s.

Currency markets took little notice as US President Barack Obama announced that he will nominate current Federal Reserve Chairman Ben Bernanke to another term when the central bank chief’s term expires in January. Obama had taken atypically long to make the announcement, causing some market-watchers to suspect he will look to install someone closer to the administration into the key position. On balance, the move points to continuity in US monetary policy for the time being, though little can be reasonably assumed given the extraordinary measures taken by Bernanke and company in recent months to check the fallout from the credit crisis that erupted last year and the global recession that followed.

Euro Session: What to Expect



The final revision of Germany’s second-quarter Gross Domestic Product is expected to confirm that output grew 0.3% in the three months through June, the first positive result after four consecutive quarters of losses. The annual rate of contraction is also expected to be confirmed at -5.9%, the first improvement in the year-on-year metric since the end of 2007. Despite the seemingly positive tone of the headline figure, the comparative picture of German growth is far from favorable. A survey of economists conducted by Bloomberg suggests that the Euro Zone’s largest economy, and by extension the region as a whole, will underperform most industrialized countries at least through the end of next year. The most pronounced differentials are seen against commodity-linked counties (Canada, Australia, and New Zealand) as well as the United States. A slower pace of economic growth will mean that Europe lags behind the curve as central banks begin to raise interest rates at the onset of the global recovery, a prospect that bodes ill for the single currency.

In Switzerland, Employment is expected to have contracted at an annual pace of -0.1% in the three months to June, the first negative reading since the third quarter of 2003. The unemployment rate hit 3.7% in July, the highest in over three years, and official government forecasts suggest that it will top 5% by the end of 2010. Job losses will trim on incomes and discourage consumption, weighing on overall economic growth. Against this background, UBS will release the July edition of its monthly Consumption Indicator, a measure intended to foreshadow spending trends and thereby overall economic growth by approximately 3-4 months. The metric rose for the first time in three months in June, but UBS cautioned that the future environment “remains difficult” with unemployment “likely to increase significantly in the coming months”.

Written by Ilya Spivak, Currency Analyst
Article Source - Currency Markets Quiet as Obama Says Bernanke to Be Nominated for 2nd Term (Euro Open)

Forex Analysts

The retail forex market is booming. People are turning towards forex in droves. A critical lack of market information has led to the rise of a new forex superstar, “The Forex Analyst.” Retail forex brokers are doing a booming business as more and more people enter the retail forex market.

Every forex broker wants you to open an account and start trading forex immediately even if you don’t know how to trade. Don’t know how to trade? Don’t worry; we have the people that can teach you. Can’t tell which way the Euro will go. Don’t worry, we have the experts. Retail forex brokers are hiring and promoting the skills of forex analysts in droves in order to offset their client’s fear of the forex market. Who is a Forex Analyst by the way?

Don’t try to forget the dotcom bubble. Many people had got their fingers burnt in that era. Sadly the investing public seems to not have learned any lessons following the internet boom era IPOs. Forex analysts are master peddlers of excuses and explanation as to what did happen. But a forex analyst will never really tell you what will happen.

The job of a company hired stock analyst is to sell its stocks to the public by painting rosy pictures of the future price appreciation. Just think for a moment. Do you think a company hired analysts will give anything but a strong buy to the company’s stock if a company is going public? A similar conflict of interest arises in the retail forex world now full of forex analysts more than willing to share their views on TV, print or chat rooms.

Forex analysts are almost similar to stock analyst. Their job is to make the clients trade as much as possible. Who are these forex analysts? Are they forex traders? Do they trade their own money? Most of them are not traders. A look at their profile will show you an Ivy League degree full of theoretical knowledge. Is any of this knowledge applicable to day to day forex trading? Of course not!

Forex analysts are supposed to know a lot of meaningless forex jargon and economic figures in support of their views. Trust me they would have started their own fund long time ago if they were smart enough. What is the job requirement of a forex analyst? Look good on the TV and write well.

Forex analyst will always be full of great trading ideas to help you trade more since forex brokers only make money the more you trade as a retail forex trader and the more you lose. What is the exact job of a forex analyst? Like any job in the world, the job of a forex analyst is simple to make money for the forex broker company.

Many traders don’t know this stupid little secret. You will never trade from the advice of your forex broker if you are wise. Some moves just happen in the forex market without any fundamentals or technicals supporting them.

Corporate flows make a mess of the intra day forex market. Most of these corporate flows happen in the intra day market. Most of the moves started by these corporate flows have no fundamental or technical reason behind them. Yet no self respecting forex analyst will be caught without a neat explanation at hand.

Financial experts are not even ready to accept technical analysis as a subject. Yet many traders believe in technical analysis and it does work, I can testify to that. Do you know the theory of random walk? Markets move in a random manner. I would love to host a trading competition between the retail forex analysts and some of the dart throwing monkeys. Monkeys have a higher chance of winning. On whom would you bet?

Monday, August 24, 2009

Will the Dollar's Bearish Trend Continue this Week?

Last week marked a sharp drop in the Dollar's value, especially against the EUR and the CHF. The biggest question for this week is whether the Dollar will continue to see bearish trends against the major currencies, or reverse. It seems that the upcoming data from the U.S. economy will play a main role in this week's trading, and traders are advised to follow these main publications closely.



USD - Dollar to Go Bearish on Strong Equity Market

The positive homes sales and manufacturing figures from the U.S. last week helped increase risk appetite resulted in the Dollar dropping significantly against the EUR. The bullish equity markets also continued to drive the greenback lower last Friday. The EUR/USD pair was trading as high as the 1.4374 level on Friday, and now trades at 1.4330. The GBP/USD cross began Friday's trading at 1.6442, and now stands at the 1.6535 level. This in itself indicates the very high volatility that the forex market has been going through in recent weeks.

The key meeting in the latter part of last week in Jackson Hole, Wyoming, is likely to play a key role in USD trading for today and this week. Traders should follow news still flowing from the developments from this meeting that was attended by central bankers and key financial experts. Additionally, forex traders need to pay close attention to economic news that will come out of Britain and the Euro-Zone, as news from these 2 regions will help establish the greenback's dominance against its main currency pairs today.

Looking ahead to this week, there are many economic data releases which will affect the Dollar. This includes CB Consumer Confidence, New Homes Sales, Prelim GDP, and Unemployment Claims. Also, the USD may indeed continue to go bearish if the equity market continues to rise rapidly. This could happen if traders continue to increase their risk appetite. In addition, the Personal Spending and Revised UoM Consumer Sentiment figures at 12:30 and 13:55 GMT on Friday are set to dominate the mind of traders at the conclusion of this trading week.

EUR - EUR Rises on Increased Optimism

The EUR/USD rate reached as high as 1.4374 last week, and it now stands at 1.4330. This has come about as the U.S. economy and other leading global economies, such as Germany and France continue to rise out of the recession. On the other hand, the British economy hasn't been fairing well as of late, as the EUR/GBP rate opened at 0.8608 last Thursday. However, it now stands at 0.8680, which signals a loss in confidence in the GBP since the beginning of Thursday's trading.

Due to the more optimistic patterns that we have seen from Germany, France, Japan and even the U.S., the EUR continues to strengthen as a response. However, Britain is lagging far behind, as she has a fragile banking system, debt is 60% of GDP and the printing of money is out of control. Things are so bleak that even the Governor of the Bank of England (BoE), Mervyn King, has run out of ways to stimulate the British economy. This may explain the GBP's weakness against the EUR and CHF last week.

Leading analysts forecast the possibility of a sell-off of the GBP at the commencement of this week. Nevertheless, this may actually reverse as the week drags on. Today, there is much important economic news coming out of the Euro-Zone, including Industrial New Orders at 9:00 GMT. Furthermore, there is a lot of data coming out of the Euro-Zone during the coming trading week. Thus the EUR is set to be a key currency in the forex market this week.

JPY - Yen to Lead Forex Trading This Week!

Recently, Japan's economy rose out of recession, beating even the best of estimates. Moreover, we saw some bullishness in the previous week for the Yen. For example, the Japanese currency rose heavily vs. the USD. There may be a number of reasons for this. Mixed figures from the U.S. played a role, as pessimistic unemployment figures from the U.S. economy, and increased risk appetite hurt the USD. The USD/JPY cross went was as low as 93.46 last week, and it is currently trading at the 94.60 level.

As there are many important data releases coming out of Japan this week, there is great potential for volatility in the Yen. A number of releases, such as the Trade Balance, Household Spending and Tokyo Core CPI figures are scheduled to be released this week. These releases will help forex traders get a taste of the health that the Japanese economy currently is in. Therefore, it is reasonable to suggest that the Yen will have a crucial role in leading forex trading this week.

Crude Oil - Oil Set to Hit $75 a Barrel?

Oil recorded a good trading week overall, as the commodity now stands at $74.30 a barrel. Crude prices were helped by a number of different factors last week. Improvements in data coming out of the leading global economies did help. A weak Dollar last week also helped push up the price of Crude, as the commodity itself is priced in Dollars. Additionally, the Crude Oil Inventories figures plummeting last week also drove-up the price of Crude.

Last week's behavior contradicted many people's expectations, as they expected Crude Oil to have another bearish trading week. However, last week shows that the black gold still has much support. Trading on Friday saw Crude rise by $1.75, which was probably due to the weak USD. If the U.S. continues to release positive economic news and the USD continues to weaken, we may see Crude prices hit $75 a barrel very soon.

Article Source - Will the Dollar's Bearish Trend Continue this Week?

US Dollar Supported as Stocks Rally, Australian Dollar Options Signal Losses (Euro Open)

The US Dollar held up in overnight trading despite a sharp rally on Asian stock exchanges. Currency options markets showed traders betting on an end to the Australian Dollar’s four-month rally. June’s Euro Zone Industrial New Orders are on tap ahead.

Key Overnight Developments

• Currency Markets Ignore Rally on Asian Stock Exchanges
• Australian Dollar Options Traders Price in Bearish Reversal

Critical Levels



The Euro kept to a narrow 20-pip range above 1.4330 in overnight trading. The British Pound followed suit, trading sideways above the 1.65 level.

Asia Session Highlights



With no significant economic data on the calendar, currency markets took a muted tone in overnight trading. A strong equities rally failed to translate into meaningful FX volatility: Asian shares rose on last Friday’s US Existing Home Sales and optimistic comments from Fed Chairman Ben Bernanke, both of which have already been priced into exchange rates.

Currency options markets showed the Australian Dollar rally that began in early March may be running out of steam. Options to sell the Aussie next month rose to cost 2.32% more than to buy the currency at current rates, showing traders were willing to be the biggest premium to protect against a drop in the Australian unit since mid-February. Technical positioning is supportive of a bearish scenario.

Euro Session: What to Expect



The economic calendar is decidedly bare in European hours, with June’s Euro Zone Industrial New Orders report the only item on the docket. Expectations call for orders to rise 1.6%, the largest monthly increase in 17 months. Manufacturing figures across most key markets have shown signs of improvement in recent months on the back of aggressive government stimulus measures (often focused on infrastructure projects) and widespread inventory restocking efforts. Still, the long-term trend in orders is far from encouraging: the annualized rate of decline is set to print at -28.6%, a reading well within the range of values noted since the beginning of the year. A meaningful, sustained return to growth will require the re-emergence of private demand in the Euro Zone’s key export markets, an outcome that seems unlikely considering nearly all of them (excluding Russia) are expected to see unemployment rise at least through 2010, trimming incomes and discouraging spending.

Written by Ilya Spivak, Currency Analyst
Article Source - US Dollar Supported as Stocks Rally, Australian Dollar Options Signal Losses (Euro Open)

Trading Out A Losing Position

How long have you been trading forex? Maybe some months! Maybe one year! There may come a point in your trading career when you find yourself in a trade that is deep underwater. If you continue with the trade you may get your account wiped out. One of the most important lessons any forex trader needs to learn is how to get out of a losing position. This type of a situation may develop very soon in your trading career.

What we are talking about is a run away position that has the potential of wiping out the equity in your account. Can this type of a situation develop? Let’s suppose that there is a run away trade confronting you. Although in my opinion if you follow proper money management rules, this type of situation should never arise. What can a trader do when he/she is faced with such a run away trade? Most traders have two choices when holding onto a big loser.

1) Cut the position immediately and avoid a huge loss.
2) Try to average down and hope for a turn around in your favor.

You should accept a big monetary hit in first instance. You should place all your chips on the table and hope for the best in the second instance. Neither approach is attractive. Good news for you. There is a third way those great traders always use.

Great traders slowly begin to trade their way out of a losing position once they realize that the market has proven them wrong. Great traders simply refuse to take an outright loss by way of a stop.

Without adding to the position once you realize that you have a losing position that you need to get out, your mission should be to better your average cost. Adding to the position will only create more pain and sorrow for you.

You need to cut part of it to create a more breathing room for yourself. After that you should be able to trade out of the rest. Adding to a losing position can also quickly take away your flexibility as the loss grows and becomes unmanageable.

How can this happen? I mean how can such a situation develop? Let’s suppose that you had gone short in a downtrend. After sometime the trend suddenly reversed and turned into an uptrend. Now you are in a losing position because the trend has reversed. You have three choices with you. Read all the three carefully as this situation may indeed one day confront you.

1) Hold onto the losing position and hope that the trend will again reverse itself before you receive your margin call.
2) Get out of everything and take a substantial loss.
3) Cut part of the position on any reasonable dip.

What is a dip? It is when the market consolidates after an uptrend or a downtrend. What are the benefits of cutting your position on a dip? There are two benefits of cutting your position on a dip. Firstly, you are in fact freeing up liquidity to react to future price moves although you are going to take an initial loss. Any move now is a good move.

This simple step can now help you by reloading at better selling levels to improve your average cost if the currency pair bounces higher. On the other hand, if it immediately collapses then great, it is moving in your direction.

Loss is always painful. Seeing an unrealized loss is stressful. It might compel you to take hasty trading decisions. One of the most stressful aspects of trading is the psychological impact a running loss may have on your trading. The other great aspect of cutting part of your position is that you instantly take some of the stress away. Faced with a big loss, most traders are keen to take a needless hit and stop the pain immediately.

How do you deal with a run away trade? Let’s take a run away trade example. Suppose you trade EUR/USD pair. You are quite conversant with EUR/USD fundamentals and technicals. Suppose you believe that the currency pair EUR/USD is overbought and is near the top. You believe the rate may fail near the resistance level 1.2453. You take an initial short at 1.2433.

You are looking for a swing trade back to the support level 1.1983. This will give you a 450 pip profit when you close your position on reaching this support level. Your plan is to scale into the position. This is your first shot. You want to stay flexible.

You have done the scenario planning. You expect that the maximum the EUR/USD rate would go is up to 1.2583. You place a 150 pips stop loss at 1.2583. This gives you a risk/reward ratio of (150/450=) 1/3. This risk/reward ratio is really good.

You are prepared for a initial EUR/USD pair rally up to 150 pips. However, EUR/USD rallies taking out stops to print a new high of 1.2490 on reaching 1.2453 resistance level. You are not surprised. You knew it could happen so you had placed your initial stop loss at 150 pips.

You have planned two more lots. This is the point you enter the second lot into the market by going short. You take advantage of the higher levels to place your second short at 1.2493. You replace the stop loss of 150 pips with two stop losses of 75 pips each (150/2). Now you are two short at an average cost of 1.2493+1.2433= 1.2463.

All the time you are expecting the trend to reverse itself. When trend reaches the level 1.2383 (70 pips below the initial resistance level of 1.2453), you plan to place a third short since that will be an indication that the momentum is picking up steam to the downside. The EUR/USD pair begins to sink. You are happy.

The EUR/USD pair does not break that level. It rebounds at 1.2463 and is soon testing the highs again. You are unfortunate again. During this rebound you can choose either to cut the trade at cost or stick with it. You could have closed your position at 1.2463 taking a loss of 30 pips on your first short and a profit of 30 pips on the second short to end up with a zero loss.

You could have used the rebound to get out of the trade with zero loss. You did not close your positions instead you had decided to let the rate go up with a belief that the pair will rebound after going beyond 1.2500 level. The rebound does not take place and the rate continues to go up and reaches the 1.2470.

You have one more lot with you to trade. You decide to throw all your cards by going short again at 1.2473 as still you are expecting a rebound around 1.2503. Now you are short 3 lots average 1.2503+1.2493+1.2433= 1.2466.

A strong uptrend has developed. The pair EUR/USD continues to go high. It reaches 1.2480. You again reduce your stops to 50 pips each for the three lots (150/3=50). Now you make a strange decision against all your training as a forex trader. You decide to disregard all the money management rules and remove the stop with the belief that this high rate for the pair EUR/USD is unsustainable. The pair is overbought and it will reverse soon. You are very sure of the fundamentals and the technicals. This will give you the time to cut your position when it does.

Never ever fool yourself by thinking that the market will do exactly what you want it to do. Whenever the market is faced with something it can’t do. It proceeds to do exactly that. Trying to out think the market is never a bright idea. This is because the traders just like you who have been caught on the wrong side of the market are all sitting on the same trade and are vulnerable.

The equity in your account is in danger of getting wiped out. This simple trade is now looking like it may very well take a large chunk out of your account. The EUR/USD rate reaches 1.2550. You are in trouble now with an unrealized loss of 107+57+47=211 pips. 211 pips mean a straight loss of $2,110.

Some trades try to play martingale at this stage. Stubborn traders may be tempted to double up and bet on a decline. The stress level increases. You are tempted to simply stop the pain, get rid of it all and regroup. Now to simply get out will be your second wrong decision.

The pair EUR/USD is in a strong uptrend. It is set on going beyond 1.2550 level. The pair EUR/USD does not want to reverse any longer. Pride has no place in forex trading. The market proved you wrong and you need to move forward.

Do you know this fact that currency rates have a tendency to make a move, consolidate then continue? The one thing that can save you during this bad time is that currency rates do not move straight up or down. This stair case pattern is evident in most financial instruments. It simply indicates the accumulation/distribution stages of a move. The prices rises or falls then tries to consolidate before it rises or falls again.

These consolidation periods can be your savior. You should consider these consolidation periods as your window of opportunity. Longs may take some profits and the shorts may get stopped out and both need time to set new positions.

Wait for a dip to develop. It will definitely develop as the price cannot continue to rise forever. It has to consolidate at some level. That level can never be very far away. You look for a dip and a consolidation period to free up part of your position. You get rid of one lot at 1.2553 taking a realized loss of 107 pips. Taking a loss hurts but we have now given ourselves more flexibility and more margin. Now you have two lots short.

Range is when the market is consolidating. A range develops when both the support and resistance are horizontal. You wait for a range to develop. This soon takes place as a rough 100 pips range develops and trades for several days. You realize that a range has developed. You actively start to trade it with the third lot that you had freed from the trade.

You can cut your losses by trading the range that inevitably develops after each uptrend or a downtrend. This technique proves effective. You are nimble enough with intra day trades to quickly pocket a good amount of pips to offset some of the loss that you have taken by removing all the stop losses.

This way you can reduce your loss. The currency prices can never go up and up. It will at one point pause and try to consolidate. You have taken advantage of this fact. Lesson is to reduce your total exposure and try to manage it instead! Remember these simple steps to get out of a losing trade:

1) Unload part of your position on a dip.
2) Wait for a consolidation to take place and a range to form.
3) Trade the range with multiple quick ins and outs.
4) Minimize your losses and get out. Don’t try to convert your losers into winners.

But sometimes it is always good cut and run. You be the judge of your decisions.

MetaTrader 4 Plugins You Must Have

You need new MetaTrader 4 plugins for your MetaTrader 4 platform if you want to continue forex trading after the new NFA regulations. If you haven't heard the buzz, you aren't aware of what's going in the Forex industry... and you darn well should be. As of August first, the NFA has implemented new regulations, limiting the kinds of trades FX traders can put on. Brokers are no longer allowed to accept OCO orders, (one cancels the other, used when bracketing the market for breakouts) or Limit orders. (These are the ESSENTIAL Target and Stop orders all traders use.)

MetaTrader 4 Plugins

Some brokers have simply removed these orders all together, others have created a temporary patchy work around, and others still have sent ALL of their clients overseas! (not a good idea by any stretch) All this has most traders running scared, and totally unsure how to proceed, and this new ruling effects EVERYONE! As you are likely aware, the NFA has made some major changes to the regulations regarding order types that traders can now place. Brokers are NO LONGER allowed to accept:

-OCO orders, (one cancels the other, used when bracketing the market for breakouts)

-Stop Loss Orders (To Limit Your Losses or Risk in a given Trade) - GONE

-Limit Orders (To Exit You Out Of Your Position When Your Target Is Hit) – GONE

Some brokers have simply removed these orders all together, others have created a temporary patchy work around (which can come crashing down on a MOMENTS notice), and others still have sent ALL of their clients overseas! (not a good idea by any stretch). Learn how to solve this problem and at the same time truly SUPERCHARGE your trades, in a brief video waiting for you here:

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Once you watch it you'll want to register for a very special live webinar being held next Thursday at 1:00pm and 9 PM EST.

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The recent changes have many traders running scared, but the solution is genius...It's called Forex Executor Pro, and not only does it get around the new NFA rulings, it has a TON more functionality that will literally transform your MetaTrader 4 platform in ways you have to see to believe! The executor will give you an unfair advantage over all other traders, and even the brokers themselves.

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Trailing Stops...That are infinitely more sophisticated and powerful that what MetaTrader 4 offers...

Break Even Stop Loss Orders (WAY cool, and need to be seen by any serious trader)...

Cell phone texting, so you can be alerted any time an order triggers, no matter where you are...

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You don't want to miss this... it's one neat plugin that will make you trading far more efficient. This is very exciting stuff, so go watch the brief video now, and make sure to register and attend the webinar on Thursday, it just may make the difference you've been waiting for.

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Sunday, August 23, 2009

Forex Weekly Trading Forecast - 08.24.09

US Dollar Faces Another Plunge, How Will Fundamentals Shape Things?

Fundamental Outlook for US Dollar: Bullish

- Existing home sales see a record increase in July thanks to deflated prices through foreclosures, inventories
- Fed Chairman Bernanke offers a cautiously optimistic outlook among his peers at Jackson Hole
- Will the dollar topple or has resistance set the stage for a true reversal?

The US dollar ended this past week in a precarious position. After four consecutive days of selling pressure (the currency’s worst trend since the end of May), the greenback once again finds itself within arm’s reach of its yearly lows. The market has flirted with renewing the dollar’s bear trend for nearly two months now. It is only a matter of time and speculation before the world’s reserve currency finds direction once again – especially as the global recovery gathers traction and the scales between risk and reward tilt towards higher returns. In determining what may be the ultimate catalyst for a renewed trend, we have to determine what traders are more concerned about: risk appetite or growth potential. Investor sentiment is notoriously difficult to gauge as it is notoriously fickle and often sparked by innocuous factors that quickly snowball through speculation. However, there is a good chance that, in the end, both paths may lead back to growth.

Through the worst of the financial crisis, the US dollar garnered a clear distinction as a safe haven through its reserve status and the liquidity of the government debt that backed it. Whether this title still fits or not, the dollar’s flight-to-safety quality continues to drag it down while equities, commodities and other popular ‘risky’ asset classes rally. In the short-term, this designation may in fact benefit the currency. While we have seen investor sentiment steadily rise over the months, with the S&P 500 just recently hit new highs for the year; there are signs that optimism is flagging. Taking a look at the volume data that accompanies the steady trend in equities, there is a clearly diminishing trend in conviction behind this move. Considering the risks just beneath the surface of this speculatively-fueled recovery, it is no surprise that doubt is developing. Since the worst of the financial crisis depressed investment levels to oversold conditions, we have seen a natural rebound turn into an impromptu bull trend on the foundation that the global economy is returning to growth. However, the early signs of recovery that market participants have attached themselves to are merely evidence that the recession is easing and stability is returning. Policy officials and economists have unanimously warned that expansion through the next year will stagnate; but speculation has built off of its own momentum. Eventually, these divergent assessments have to realign - and it isn’t the nature of growth projections to suddenly change. However, with statistics like rising unemployment, strained credit availability and the US already facing the most bank failures in a year since 1992 (through August nonetheless); there are plenty of catalysts to spark a wave of fear.

Looking outside of the simple measure of the appetite for and aversion to risk, we also have to consider the dollar’s relationship to this fundamental qualifier. The currency has been labeled a safe haven partly as a holdover from the panic-stage of the crisis through the end of 2008 and partly due to its loose monetary policy approach in the face of what some market participants consider a clear recovery (a situation which would likely suppress growth and yields). However, if indeed the global recovery will stagnate through the near-term, maintaining its fiscal stimulus, guarantees and bailout loans may actually encourage a faster return to sustainable growth. In the days ahead, the market will find a better sense of the United State’s standing in the race to recovery. Second readings of German, UK and US 2Q GDP numbers will provide important updates on the component data behind the headline readings. Consumer spending, capital investment and exports will be critical in evaluating the pace of recovery beyond the three months ending in June. Among the other notable economic listings on the docket, consumer confidence, personal income and spending figures will measure the health of an economic group that accounts for approximately 70 percent of GDP. Another notable contribution could be made housing. This past week, existing home sales marked their biggest jump on record, but due to a sharp drop in prices due to foreclosures and at the consequence of rising inventories. A genuine recovery in this vital source of wealth and employment depends on credit and consumer health.

Euro Could Hit Fresh 2009 Highs If Data Signals End of EZ Recession

Fundamental Forecast for Euro: Bullish

- German investor sentiment jumped to the highest level in over 3 years
- German producer prices plunged 7.8% in July from a year ago, the sharpest drop since records began in 1949
- German services, French manufacturing PMI breached 50 in August, signaling growth for first time in 12+ months

The euro staged an impressive rebound against the US dollar from 1.4050 last week, closing Friday just below resistance at 1.4350. The appreciation was the result of a variety of factors, including broad US dollar weakness, but also from fundamental forces. Indeed, German services PMI surged to a 16-month high of 54.1 in August while French manufacturing PMI hit a 15-month high of 50.2, signaling an expansion in activity after growth had contracted for more than a year. Together, these helped push the Euro-zone composite PMI, which encompasses both manufacturing and services, up to a 14-month high of 50 from 47.0. Now, 50 is the point of neutrality for these indices, so the data suggests that business activity in the Euro-zone registered no change during August, but put into perspective with the record lows seen in the first quarter, the news is positive. The data was timely when also considering Federal Reserve Chairman Ben Bernanke’s comments from the Jackson Hole Symposium – a meeting of the world’s central bankers and finance ministers – as he said we are "beginning to emerge" from a deep global recession. Given strong PMI reports, it looks like the Euro-zone could be helping lead the way.

That said, upcoming economic reports may exacerbate this optimistic sentiment or derail it. On Wednesday, the German IFO survey of business confidence. Like the latest ZEW survey, the results are anticipated to reflect a surge in confidence, with the index estimated to creep up to a 10-month high of 89.0 in August from 87.3. On Thursday, the German GfK survey of consumer confidence is projected to rise to a more than 1-year high of 3.6 in September from 3.5 and on Friday, Euro-zone economic confidence is anticipated to increase to a 10-month high of 78.0 in August from 76.0. Overall, a steady stream of positive news could be the impetus to drive EURUSD to fresh 2009 highs. That said, such a move would also require a broad increase in risk appetite, as the US dollar is still treated as a safe haven asset.

Japanese Yen Forecast Bullish but Price Action Depends on S&P 500

Fundamental Forecast for Japanese Yen: Neutral

- Japanese Yen forecast to rally further versus US Dollar, British Pound
- Japanese Yen may gain as China tightens banking rules
- Yen nonetheless under pressure as S&P 500 rallies further

The Japanese Yen finished the week near fresh monthly highs against the downtrodden US Dollar, but sharp rallies in the US S&P 500 and other risk sentiment barometers doomed the currency to losses against virtually all other counterparts. An earlier-week tumble in equities gave hope that the JPY would forced a sustained turnaround against the majors—yet markets clearly had other things in mind. We have found ourselves on the wrong side of the ‘risk’ trade for quite some time now. Indeed, our calls for Japanese Yen reversals on clear sentiment extremes have proven premature at best. A continued build in JPY-short positions nonetheless suggests that the Yen could rally sharply on episodes of financial market duress. Yet fresh 2009 highs in the US S&P 500 clearly gives us reason for pause for our JPY-bullish outlook, and it will be critical to watch the trajectory of financial market risk sentiment.

An ostensibly busy week of Japanese economic event risk is relatively unlikely to force major moves in JPY pairs; instead, we will continue to watch the Nikkei 225 and S&P 500 for cues on short-term direction. Markets have proven largely immune to Japanese economic developments, and we have little reason to believe that the coming week will force any noteworthy shifts in this dynamic. Of course, any especially large surprises out of Trade Balance, Jobless Rate, or Household Spending results could cause short-term volatility in domestic stock indices—likely forcing commensurate moves in the JPY. Japan’s economy remains heavily reliant on export industries, and disappointing trade numbers could affect economic confidence. Jobless Rate and Household Spending numbers are perhaps less likely to force major volatility in domestic assets, but we should nonetheless keep an eye out for noteworthy developments.

The Japanese Yen remains at the whims of global market risk sentiment, and short-term moves will continue to depend on the trajectory of the S&P 500 and other risk barometers. The index’s meteoric rise to fresh 2009 peaks suggests that risks remain to the downside for the safe-haven Yen, but as we know quite well, market dynamics can change in an instant. Japanese Yen sentiment remains at bearish extremes, and we favor medium-term strength (USDJPY weakness). Yet the timing of the reversal will clearly depend on the influence of broader financial market flows.

British Pound Outlook Hinges on Trends in Risky Assets

Fundamental Forecast for British Pound: Bearish

- Consumer Prices Unexpectedly Unchanged in July
- British Pound Takes a Hit After Bank of England Minutes
- UK Budget Deficit Soars by 8 Billion Pounds, Much More Than Expected

The British Pound is likely to look past much of the economic calendar to fall in with trends in risk sentiment as the primary driver of directional momentum once again in the week ahead. A trade weighted average of sterling’s value is now 88.1% correlated with the MSCI World Stock Index and 90.3% correlated with the Bloomberg/UBS CMCI Commodity Price Index, suggesting the currency trades largely in tandem with the broad direction of risky assets. Judging the near-term direction of risk sentiment has been a tricky endeavor in recent weeks: an increasing number of voices have started to qualify the rally that began in March as “overdone” given the fragile economic environment, but the bears are clearly still too few to form a dominant enough majority to meaningfully overtake momentum; the resulting tug of war has been superimposed on a backdrop of low summertime liquidity, producing a great deal of volatility with seemly little follow-through. The long-term picture seems to offer more clarity, however: global equities are trading at the highest levels relative to earnings since 2003, which seems more than a little overdone considering the kind of revenue potential that is to be expected in a year when the global economy is set to shrink for the first time in the postwar period; the demand for commodities also looks fragile, with the bulls’ stand-by story of steady Chinese growth challenged (at least for the time being) as the East Asian giant prepares to tighten credit access. On balance, this points to a bearish medium-term bias for risky assets and hints that a reversal of the recent rally will invariably bring the British Pound along for the ride.

Turning the economic calendar, a second revision of the second-quarter Gross Domestic Product figure headlines the docket of scheduled UK event risk. Expectations call for a validation of the originally reported 0.8% decline, bringing the annual growth rate to -5.6%, the worst in at least 53 years. Barring an unexpected, meaningful revision in the headline figure or any of the components, the outcome seems likely to be priced into the exchange rate already and is unlikely to cause much of a stir in currency markets. The releases of Augusts’ US Consumer Confidence, July’s Durable Goods Orders, and second quarter GDP figures will also be notable given their potency to drive overall market sentiment. Indeed, traders look to US economic data as a proxy for that of the world at large, expecting a rebound in the leading consumer market to yield positive spillover elsewhere. To that effect, these releases will likely prove market-moving across equity and commodity markets and thereby pull the sterling along as well.



Written by John Kicklighter, David Rodriguez, Terri Belkas, Ilya Spivak, John Rivera and David Song, Currency Analysts
Article Source - Forex Weekly Trading Forecast - 08.24.09


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