Euro Currency

Euro has emerged as the main challenger to the dominance of US Dollar over the last decade. EU has emerged as a major global political and economic power block in recent decades. The European Union consists of fifteen member countries that include the Netherlands, Portugal, Spain, Sweden, France, Germany, Greece, Ireland, Italy, Luxembourg, Austria, Belgium, Denmark, Finland and the United Kingdom.

Only 12 common currency countries out of these above 15 countries constitute the European Monetary Union (EMU). These 12 countries share a single monetary policy dictated by the European Central Bank (ECB). All these above countries share the common currency Euro except Denmark, Sweden and United Kingdom.

After the United States, EMU is the world’s second largest economic powerhouse. EMU has a highly developed and efficient fixed income, equity and the futures market. This makes EMU the second most attractive investment market for domestic and international investors. Many hedge funds are based in EU countries.

US assets have had solid returns historically. United States absorbs something like 70% of the total foreign savings as a result. In the past, the EMU had difficulty in attracting foreign direct investment or large capital inflows. The primary reason was the United States. The present global financial crisis has hurt the US and EU economies deeply. It is expected that a major restructuring of the global financial system will take place eventually that makes EMU far more attractive.

However, with the EMU beginning to incorporate even more members in Eastern Europe, Euro’s importance is expected to increase. Induction of new members will further increase the size of EMU. The capital flows to Europe is expected to increase as well.

EMU is in fact a trade driven and a capital flow driven economy. Trade is very important to the national economies within EMU. Demand for Euro is expected to continue rising with foreign central banks expected to diversify their Euro reserve holdings even further away from US Dollar. In fact Euro provides a hedge against US Dollar reserves. If the EUR/USD pair goes up, it means US Dollar is losing value and if it goes down, it means US Dollar is gaining strength.

EMU has significant power in the international trade arena because of the size of the EMU’s trade with the rest of the world. EU exports comprise almost 20% of the world trade. While EU accounts for only 17% of the world imports! Unlike United States, EMU does not have large trade deficit or surplus.

Both EU and the United States are two very important members of the World Trade organization (WTO). United States is the largest trading partner of EU. The formation of EU allows individual member countries to group as one entity and negotiates on an equal playing field with the United States. International clout is one of the primary reasons in the formation of EU.

Leading import sources for EU are China, Switzerland, United States, Japan and Russia. Leading export markets for EU are the United States, Japan, Poland, Switzerland and China.

Manufacturing, mining and utilities account for around 20% of the EU economy while services account for more than 70% of the EU economy. EU is primarily a service oriented economy. While outsourcing most of their manufacturing to Asia, large numbers of EU based companies concentrate their research, design, innovation and marketing part of the activity in EU.

Before Euro, most of the countries had to deal with individual national currencies with each having a different risk profile. Most international trade transactions involve the British Pound, the Japanese Yen and the US Dollar. It is important for most of the countries to hold large amounts of reserve currencies to reduce exchange rate risk and transaction costs.

In the past before the adoption of Euro as a single currency by EMU, it was necessary for many countries to hold large amounts of every individual European currency. As a result the currency reserves tended towards US Dollar. In 1990s, 65% of the global reserves were in US Dollar.

As EU becomes one of the major trading partners for most countries around the world, Euro will become more and more popular and this trend is expected to continue. With the introduction of Euro, foreign reserve assets are shifting in favor of Euro. Euro is in direct competition with the US Dollar as regards the market share is concerned.

The European Central Bank: Forex traders keenly watch the policy announcements of European Central Bank. The European Central Bank (ECB) comprises the Executive Board and a Governing Council. The Executive Board implements the policies made by the Governing Council. The Executive Board of ECB comprises the president, the vice president and four other members. These individuals along with the governors of the member national banks comprise the Governing Council. ECB is the governing body that determines the monetary policy for the EMU countries.

The policy meetings are biweekly. Although ECB meets biweekly and has the power to change the monetary policy in any of these meeting, it is only expected to do so where an official press conference is scheduled afterwards. New monetary policy decisions are usually taken by a majority vote. The president has the deciding vote in the event of a tie. These policy meeting are very important to watch for professional currency traders as most of the decisions announced in these meetings impact the Euro.

ECB heavily depends on the individual central banks in the implementation of its policies. ECB has a strict mandate based on inflation and deficit. ECB tries to keep the Harmonized Index of Consumer Prices (HICP) below 2% and M3 (money supply) annual growth below 4.5%. So, the EMU’s primary objective is price stability and growth.

ECB is supposed to coordinate its policy decisions with the respective central banks. You should understand that the ECB and the European System of Central Banks (ESCB) are independent institutions from both national governments and other EU institutions. This operational independence is granted to them as per Article 108 of the Maastricht Treaty. Without this independence, meaningful monetary policy is out of question.

There are many factors that have to be taken into consideration while setting the targets for inflation and growth. There was EMU criteria that were used as a precondition for any EU member state joining the EMU. How ECB achieves its policy targets of price stability and growth? The primary tools the ECB uses to control monetary policy are the Open Market Operations. ECB has at is disposal four categories of open market operations that it can use to manage interest rates, control liquidity and signal monetary policy stance.

Bulk of refinancing for the financial sector is done through these main refinancing operations. These refinancing operations are conducted weekly with a maturity of two weeks. These operations are regular liquidity providing reverse transactions.

In order to smooth the effects on interest rates caused by unexpected liquidity fluctuations, fine tuning operations are executed on an ad hoc basis with the aim of both managing the liquidity situation in the market and steering interest rates. Longer term refinancing operations are liquidity providing reverse transactions with a monthly frequency and a maturity of three months. These operations provide counterparties with additional long term liquidity.

Structural operations involve the issuance of debt certificates, reverse transactions and outright transactions. ECB uses these operations to adjust the structural position of the Eurosystem vis-à-vis the financial sector. The ECB minimum bid rate is the key policy target for the ECB. It is the level of borrowing that ECB offers to the central banks of its member states.

If it believes that inflation is of concern, ECB is not constrained from intervening in the forex markets. Therefore, ECB does not usually have the exchange rate target but can factor in exchange rates in its policy deliberations as exchange rate impacts price stability.

As a forex trader you should always watch the news especially if you are trading Euro cross then any news or announcement relating to ECB. ECB publishes monthly bulletin detailing analysis of economic conditions. This bulletin can give important signals to changes in the monetary policy. Forex market participants widely watch the comments by the members of the Governing Council of ECB. These comments frequently tend to move the Euro.

Euro has become the second major global currency. All major euro crosses are highly liquid and heavily traded. Now EUR/USD cross is the most liquid currency. The movements of EUR/USD currency pair are used as the primary gauge to judge the health of both European and the United States health. Since it is the US Dollar fundamentals that have dictated the movements in the EUR/USD pair from 2003-2008, Euro is also known as the anti-dollar.

As they have tight spreads, make orderly moves and rarely gap, EUR/USD and EUR/GBP are great trading currencies. EUR/JPY and EUR/CHF are very liquid pairs too and are used to judge the health of the Japanese and Swiss economies. Always remember to understand and study each currency pair in detail. Each currency pair has a unique behavior that you need to understand before you plan to trade that pair.

Euro is still a new currency. It was launched in 1999. Euro has unique risks. There are number of risks unique to the Euro. The most important is the exposure to the economic, political and social development of 15 member countries in the EU.

It could affect the stability of the entire region although more countries are expected to join EMU if a member country drops Euro and reverts back to its original national currency because it believes that ECB actions are not in its best interests.

ECB has the power to determine monetary policy for its 15 member countries. With that comes the political pressure of 15 governments. Making monetary policy is a challenging task to do for one country what to talk of a group of 15 countries. This political pressure frequently tests the actions of ECB. We can say Euro is a currency without a country.

The present global financial crisis is unlike any in the past. It is deep and may continue for some more years. It started from the sub-prime markets in the US and then spread to the rest of the world. Many big banks became the victims of this financial crisis. However, the rapid response of ECB to the present global financial crisis in the shape of deep liquidity injections has transformed its reputation. The spread between 10 year US Treasuries and 10 year bunds can indicate Euro sentiment.

As a forex trader you should know one important interest rate. It is the Euro Interbank Offer Rate (Euribor). This is the rate offered from one large bank to another on interbank term deposits. Traders and investors tend to compare the Euribor futures rate with the Eurodollars futures rate.

Lower spreads between these two interest rates make the European assets less attractive. Higher spreads between the two rates makes the European fixed income assets more attractive. Merger and Acquisition activities between US and European multinationals have important implications for EUR/USD pair. Large deals have often significant short term impact on EUR/USD if in cash.

The largest countries in EMU are Germany, France and Italy. Study of the economic data of these three large countries is also important in determining the market bias for Euro. Important indicators for Euro are Harmonized Index of Consumer prices (HICP), M3, German Unemployment, Preliminary GDP that includes France, Germany and Netherlands, German Industrial Production, Individual country budget deficit.

U.S. Dollar to Go Volatile on the Release of Advance GDP Figures

The USD is set to go extremely volatile today on the release of Advance GDP figures for the 2nd quarter from the U.S. economy at 12:30 GMT. The forecasted results are -1.4%, significantly better than the 1st quarter results of -5.5%. The other things that are expected to move the market to day are the publication of the CPI Flash Estimate and the Unemployment Rate from the Euro-Zone. In order to make some big profits today, open you positions in the USD, EUR, GBP, and JPY now, as Friday's trading gets under way.



USD - USD Slides on Further Signs of Recovery

The Dollar slid yesterday, as the U.S. and global economy showed further signs of recovery. This was due to both the predictions for today's U.S. GDP figures, which show the U.S. economy declined at a much slower pace the in the 2nd quarter than the 1st, and global corporate earnings figures led to a jump in optimism. In turn, this helped spark a global stock rally, as investors took advantage of the fresh optimism to snap up higher-yielding currencies, such as the EUR and Australian Dollar.

The USD fell against the EUR by 75 pips to 1.4128. This comes about as Germany and the Euro-Zone released better than expected unemployment and consumer confidence figures. The USD also tumbled against the GBP, as Britain posted optimistic consumer confidence figures. The GBP/USD pair closed higher by 150 pips at the 1.6519 level. Against the Japanese Yen, the Dollar rose 0.5% to 95.35 Yen, extending gains after government data showed a drop in continuing claims, boosting optimism about the U.S. labor market.

Today, there is a reasonably strong possibility that much of the same behavior in the forex market will continue. This is likely to occur as traders continue to trade on Thursday's optimism. This may continue to drive the USD lower against its major currency [pairs. Also, it is advisable for traders to follow the following releases from the U.S. economy: Advance GDP and Employment Cost Index at 12:30 GMT and the Chicago PMI at 13:45 GMT. So if you want to make some bug money as end-of-week trading kicks in open your USD positions now.

EUR - EUR Rallies on Improved Global Economic Sentiment

The EUR was driven higher vs. the U.S Dollar yesterday by data showing an improvement in Euro-Zone economic sentiment in July, as well as an unexpected fall in German unemployment, which was seen as an encouraging sign for the region's recovery prospects. The European currency also gained more ground versus the Yen to hit session highs on Thursday as a sharp rally in stocks boosted risk appetite. The EUR rose as high as 134.86 Yen, and finished trading at 134.67 Yen.

The EUR rose dramatically against the USD to $1.4128, rebounding from a 2 week low near the $1.40 level. The Euro-Zone single currency briefly pared gains after the International Monetary Fund (IMF) said the EUR exchange rate looks somewhat on the strong side relative to its fundamentals. According to analysts, the EUR may pare its monthly gains against the U.S Dollar today prior to reports that will show deflation deepened in the 16-nation area, and job losses increased.

The GBP leaped against the U.S. Dollar on Thursday, after a report showed British house prices climbed in July for a 3rd month. This led the British Pound to extend its gains, hitting a 4 week high against the EUR. The Pound also gained against the EUR and USD due to a report released yesterday showing British consumer confidence at its highest level since April 2008. This was yet another sign that Britain is rising out of the recession. Analysts expect much of the gains for the EUR and GBP may continue throughout today's trading.

JPY - JPY Plummets against the Major Currencies


The Japanese Yen fell against its most traded currencies on Thursday as the leading economies published a string of optimistic figures. This led to global stocks rising for a 3rd straight week, reducing demand for the relative safety of the Japanese currency. Looking at the bigger picture; positive economic data, rising stocks and better-than- expected earnings improved risk appetite, analysts said. Additionally, the improved risk appetite means that the safe-haven currencies will weaken further.

A wave of Japanese mutual funds will be launched today, keeping the Yen soft against the U.S Dollar and higher-yielding currencies, such as the Australian Dollar. But in the near term, the rush in the launching of these funds is expected to have only a limited impact, as a rally in global stocks and commodities in the past few weeks has made fund managers cautious about immediately putting money to work, many traders believe.

Crude Oil - Oil Rebounds On Market Optimism

Crude Oil rose above $67.50 a barrel on Thursday, boosted by higher stock markets in Europe and Asia, better than expected corporate results and data suggesting the economic downturn is bottoming out. The more than 5% rally yesterday, the highest gain in more than 3 months was boosted as continuing U.S. jobless claims figures improved sentiment in the energy sector. All of this is further evidence that the leading economies may rise out of recession in the coming months.

Oil may continue to gain on increased optimism that the global economic decline will ease. The number of people collecting unemployment insurance decreased for a third week, according to the U.S. Labor Department. A U.S. report yesterday showed that Crude supplies unexpectedly climbed as demand lagged behind year-earlier levels. However, this failed to drive prices lower, as the price of Crude also soared on a extremely weak USD.

Article Source - U.S. Dollar to Go Volatile on the Release of Advance GDP Figures

Euro Zone Consumer Prices to Shrink for Second Month, Boosting Deflation Risk (Euro Open)

The Euro may see selling pressure emerge in the coming session as the Euro Zone Consumer Price Index shows that inflation fell for the second consecutive month in July, stoking risks of deflation that could commit the currency bloc to a long-term period of economic stagnation.

Key Overnight Developments

• Japan’s Jobless Rate Higher Than Expected, Hits Highest in 6 Years
• Australian Lending Gains Least Since September 1993, Threatening Recovery
• Japanese Inflation Shrinks Most in Over Three Decades, More Losses Likely
• PMI Shows Japanese Manufacturing Expanded for the First in 17 Months
• US Dollar Retreats as Asian Stocks Rally After Sony Corp Earnings Outperform

Critical Levels



The Euro gained 0.4% in the overnight session while the British Pound added 0.3% against the US Dollar. Both currencies advanced as the greenback came under pressure amid a rebound in risk appetite that drove Asian stock markets higher following a better-than-expected earnings report from Sony Corp., trimming demand for safety-linked assets.

Asia Session Highlights



Japan’s Consumer Price Index printed squarely in line with expectations in June, showing that annual inflation shrank at an annual pace of -1.8%, the most in at least 33 years. The Bank of Japan has reinforced expectations of negative price growth, noting that the pace of consumer price growth is likely to turn negative, reflecting the declines in the prices of petroleum products, stabilization of food prices, and overall economic weakness. Indeed, utilities and fresh food prices led declines, slipping -5.9% and -4.7% from the previous year. The operative question going forward is whether the BOJ’s aggressive monetary easing measures will make CPI’s dip into negative territory a temporary affair, or if deflation once again becomes entrenched in the world’s second-largest economy. This would substantially delay any hopes for a recovery in the near term, keeping a lid on economic activity as consumers and businesses are encouraged to wait for the best possible bargain and perpetually delay spending and investment.

Turning the labor market, Japan’s Jobless Rate jumped to 5.4% in June, the highest in 6 years, while the ratio of available jobs to seeking applications fell to 0.43, a new record low. Looking ahead, a survey of economists conducted by Bloomberg suggests the jobless rate surpassed 5% in the second quarter and will approach the 6% mark by the second half of 2010 while the Bank of Japan has said that consumption to remain weak as “the employment and income situation [is] likely to become increasingly severe”. This points to continued weakness in consumer spending as layoffs weigh on disposable incomes, a clearly on display in June’s Trade Balance and Retail Sales data. Although Nomura/JMMA Manufacturing PMI rose to 50.4 in July to mark the first time since February of last year that the sector has expanded, the improvement is unlikely to boost hiring, with industrial output gains linked to restocking of inventories rather than sustainable growth in underlying demand.

In Australia, Private Sector Credit grew at the slowest pace in nearly 16 years, adding 3.4% in the year to June. Continued contraction in lending seems to bolster the central bank’s recent assertion that the influence of changes in benchmark interest rates on bank lending rates has weakened over the past two years, suggesting monetary policy is losing potency in stimulating economic activity. A breakdown in this dynamic could prove to derail an extension of positive momentum that the Australian economy has built up in recent months of the back of generous fiscal stimulus, with growth levels retreating once again when the flow of government cash dries up.

Euro Session: What to Expect



The Euro Zone Consumer Price Index is set to show inflation fell for the second consecutive month in July, shrinking at an annual pace of -0.4%. Acute economic weakness is likely to keep prices under firm downward pressure in the months ahead. Indeed, the Euro Zone Unemployment Rate is set to rise to the highest level in over a decade at 9.7% in June, weighing on incomes and discouraging consumption, the largest contributor to GDP growth. The IMF recently forecast that the Euro Zone will stand apart from other industrialized economies in seeing GDP continue to shrink in 2010. If this dynamic sees expectations of falling prices become entrenched, the currency bloc may be facing a long-term period of stagnation as consumers and businesses are encouraged to wait for the best possible bargain and perpetually delay spending and investment.

The European Central Bank has seemingly struggled to formulate an effective policy response to the deflationary threat thus far. Jean-Claude Trichet and company have focused on banks as the vehicle through which to make money cheaper and put a floor under falling prices, promising unlimited lending to the region’s financial institutions including an unprecedented 442 billion euro in 12-month bank loans. The ECB will also implement a 60 billion bond-buying scheme. To the central bank’s credit, borrowing costs have indeed moved lower: although the ECB publicly maintains target interest rates at 1%, it has allowed the average cost of overnight lending (referred to as EONIA) to drift far below that. Indeed, borrowing in Euros has been consistently cheaper than doing so in British Pounds since late June, even though the Bank of England’s stated interest rates are substantially lower at 0.5%. However, the lower cost of credit between banks has not translated into lending, and so has offered little stimulus to the overall economy. Indeed, loans to Euro Zone businesses and households grew just 1.5% in June, the lowest since records began in 1991. Banks may be choosing to hang on to cash as a buffer against $1.1 trillion in as yet unrealized losses linked to the subprime mess, according to the IMF, as well as the fallout from looming defaults and/or devaluations among the EU’s newly-minted central European members. In any case, the door is open for traders to punish the Euro as the ECB’s inability to ensure that looser monetary conditions translate beyond the interbank market make deflation all but certain.

In Switzerland, the KOF Leading Indicator that aims to forecast GDP growth in the coming 6-9 months is expected to print at -1.45 in July, extending a rebound from the record low in April. As with most industrialized countries, the mountain nation is showing tentative signs of stabilization after the GDP shrank the most in 15 years in the first quarter. Although the metric is still in deeply in negative territory and virtually assures that the economy will suffer profound losses through 2009, the cautious moderation seen over recent months suggests that a bottom may be forming. Still, deflation remains a threat to sustainable long-term growth with consumer prices falling for four months straight since March.

Written by Ilya Spivak, Currency Analyst
Article Source - Euro Zone Consumer Prices to Shrink for Second Month, Boosting Deflation Risk (Euro Open)

EUR/USD Strategies on July 31, 2009

09:00 PM (GMT+7)


It's still on the track even EUR/USD in early day moving up but still in my range views. It's make a top at 1.4155, and as I said yesterday on my previous day post that I might will make averaging on EUR/USD if price move to 1.4130 area. I already add new entry, sell at 1.4147. I put SL at 1.4170 on both my short position ( my original position and my latest entry) while my target I leave it open. I will tell you why I leave it with open target latter, now I'm to bussy take care my other pair, becaouse my main pair not EUR/USD actualy, as long as I can't find EUR/USD rythm I'm still play in GBP/JPY as my main pair


UPDATE:

Wow! I finished post and after I look back at my chart, my EUR/USD already hit Stop Loss. That's realy make me upset. OK, I'm done now for EUR/USD, this month I've got nothing but red pips from EUR/USD. But I won't give up, monday it will be a new day and begining new month. I decided keep using TF 4H as my basic....

New NFA Rules And Forex Trading

NEW NFA Rules will kill your forex trading.Game over for anyone trading with an NFA regulated broker... no more, no less... it is as simple as that. No doubt you have already heard about the various new NFA rules that threaten to end profitability for many forex traders...The latest batch are kicking off after the market closes this Friday and it is one of those blows that will kill any forex trader who hasn't yet been terminated by their previous directive.

What a way to end the career of so many forex traders that use NFA regulated Forex brokers.Unless you have been living on Mars, you must know about the little "favors" the NFA has done for Forex traders! It has already been a few weeks since the NFA forced their first new directive on brokers and hurt so many traders... the latest batch will become "law" after the market closes this Friday and if your trading was not killed by the last rule they implemented, it will be this time! 3 new "rules" will take you from being a potentially profitable forex trader to a certain losing forex trader:

New NFA Rule #1: No way to have long (buy) and short (sell) orders open at the same time
New NFA Rule #2: No way to open orders with StopLoss and TakeProfit levels set
New NFA Rule #3: No way to close the order(s)that YOU want to close

Ok... I would like to review each of these elements in detail. Please over this carefully since it is your money at stake here:

New NFA Rule #1: No way to have long (buy) and short (sell) orders open at the same time. This is often referred to as "hedging" and, if you listen to the NFA, is a very bad thing to do. If, however, you step back and consider things sensibly and rationally, you can see immediately that hedging is not a bad thing at all - it is actually a very useful way to operate your trading account. What this rule actually means for you is that you are no longer able to trade your account with multiple strategies on the same currency pair.

Perhaps you trade several EAs (Expert Advisors), perhaps several manual strategies, perhaps a combination of manual and automated systems. If so, it would be very common to find some strategies / EAs trading long positions and some trading short positions - until the "experts" at the NFA decided that the whole idea of trading in two directions was bad for you and banned the concept!

New NFA Rule #2: No way to open orders with StopLoss and TakeProfit levels set. One of the most fundamental aspects of trading is money management and the best way to achieve that is with correctly placed StopLoss orders to accompany each trade opened. Another important aspect of money management is being able to take a profit on an open trade. Once again, the NFA disagree with long-held principles of trading because one of their new rules (takes effect this weekend) will not allow StopLoss and TakeProfit orders to be specified... you must choose one or the other! I am sure that this little revelation will send you searching for your crystal ball so that you can accurately predict which type of order you will require before actually placing each new trade.

New NFA Rule #3: No way to close the order(s)that you want to close. The final gem of an idea thought up for you by your caring, sharing NFA is something referred to FIFO (First In, First Out)...What that means is this: assume that you were trading EURUSD and opened a long position... the market moves up and looks like it will continue so you open another long position. Now price starts to decline so you want to close the 2nd order before it turns into a loser and let the initial order run in the hope that the upward move will resume, after all, you can always close the initial order later if the need arises...

Sorry - that is not allowed! The new NFA rules means you would be forced to close the initial order before you could close the second order. So, once the markets re-open on Sunday, the face of trading for vast numbers of people will have changed very much for the worse! If your current broker is registered (and therefore regulated) by the NFA then there is a very, very high probability that any EAs that you might be using will cease to function. Depending upon the order types used, there is still a slight possibility that an EA might continue to function if it was the sole trading system used on a particular currency pair, but, under the new rules there is no safe way of simultaneously running multiple EAs on the same currency pair - even if they were all trading in the same direction as the FIFO rule prevents an EA from monitoring and managing its own positions.

Remember: This does not just affect traders using EAs - anyone trading more than one manual strategy is also going to find things incredibly difficult from next week. To quote from the US national anthem "...the home of the brave and the land of the free (unless you trade Forex!)"

To HELL With This... THE Solution!
You have really only got 2 options - you either stop trading forex or you adjust. The bottom line is this... life is all about adjusting. Nothing is static in life... you have got to overcome those issues that eventually hit you head on! When judging any broker's performance, you need to take into account 8 criteria: Service, reliability, spread, slippage, ease of opening an account, reputation, suitability for the small trader AND MT4 compatibility.

Remember - it is not just about the spread... or the slippage... or the service - it is about a whole range of characteristics that are KEY to your forex trading success.

I know... many people might think "Damn, do I have to open a new forex account now "... YES, my friend - you do, unless you want to stay behind and suffer the bitter consequences. Do something about it now - do not just sit and wait for the new NFA rules to hit your forex trading account. From Sunday the 2nd of August 2009 You Can Kiss Your Forex Trading Profits GOODBYE! The clock is ticking and, to be honest, if I were you I would NOT want to have my forex trading account with an NFA regulated Forex broker come Sunday the 2nd of August 2009.

If you have not opened a Forex trading account yet and wish to do so now OR, if you have an account with an NFA regulated broker, then it is time to act...There are over 80 forex brokers in the market... most are CRAP. Most will scam you out of your hard earned cash. A few will be good... even fewer will be great, reliable and consistent.

US Dollar Currency Profile

Know the US Dollar intimately as a currency trader. It is important for you as currency trader to have a good grasp of the general economic characteristics of the most commonly traded currencies. US Dollar is the most heavily traded currency in the global economy.

You should know as a trader what moves the currencies particularly the pairs that you are interested in trading. Traders need to also know the difference between the expected and the actual data. Some currencies tend to track commodity prices while others may move in complete contrast.

Expectations are what move the markets in the short term. Short term traders need to closely monitor the expectation of the currency markets. News or data that is in line with the expectations has less of an impact on currency movements than unexpected news or data. The correlation between the currency markets and news is very important.

US GDP is approximately five times the size of Germany, three times the size of Japan and seven times the size of UK. United States is the world’s leading economy. The US economy is now a service oriented economy with almost 80% of GDP coming from real estate, finance, health care, transportation and business services.

United States capital markets are the most efficient markets in the world. United States has the world’s most liquid and deep equity and fixed income markets in the world. The manufacturing sector is still formidable and US Dollar is particularly sensitive to the development within the sector. Cheap capital formation is what drives any company or any economy and United States capital markets help in cheap capital formation.

The import and export volume of US also dwarfs the countries. This maybe due to the sheer size of US as true import and export represent only 12% of the GDP. Foreign Direct Investments (FDI) into the US is equal to almost 40% of the total net inflows for United States. Investors from all over the world purchase US assets due to their liquidity and safety.

Current Account Deficit & US Dollar
However, United States is running a large CA deficit for more than a decade now. US economy is facing the paradox of the twin deficits. One is the Budget Deficit and the other is the Current Account (CA) deficit. During the present financial crisis, the budget deficit has ballooned. Almost a trillion dollars have been added to the budget deficit. This is going to fuel inflation when the economy recovers. There are dangers of high inflation returning. Inflation can make the US Dollar weak in the long run.

Due to the high CA deficit; United States need to attract a few billion dollars of capital inflows daily in order to prevent the decline in the value of US Dollar. In other words, the Current Account (CA) deficit is being financed by the Capital Account (KA) surplus. The large CA deficit makes the US Dollar highly sensitive to changes in the capital flows.

United States is a member of the World Trade Organization (WTO). This means that United States is heavily committed to the free trade idea. A weaker US Dollar will help boost US exports whereas a stronger US Dollar makes the US exports expensive and US imports cheap. US trade is equal to roughly 20% of the world trade. United States is the trading partner of many countries across the globe.

Leading import sources for United States are: China, Mexico, Japan, Canada and European Union (EU). Leading export markets for United States are: Japan, European Union (EU), United Kingdom, Canada and Mexico. The growth and political stability in countries that are leading export markets for US are important. For example, Canada’s demand for US exports will fall that will have a ripple effect on US growth should Canada growth slow.

FED & US Dollar
You should understand the role of monetary and fiscal policy in strengthening or weakening the US Dollar or that matter any other currency is important. Who makes the monetary policy in any country? It is the Central Bank of that country. The Federal Reserve Board (FED) is responsible for making the monetary policy of United States. Through its Federal Open Market Committee (FOMC), FED sets and implements the monetary policy. The voting members of FOMC are the seven governors of FED plus five presidents of the district reserve banks. The meetings of FOMC are widely watched by the analyst for interest rate announcements and changes in growth expectations. Eight meeting of FOMC are held every year.

FED uses the monetary policy to control inflation, unemployment and balanced growth. FED has a high degree of independence in setting the monetary policy. FED has the mandate for long run price stability and sustainable economic growth. In other words, fighting inflation and unemployment are the two most important jobs of FED Chairman. The most important tool used by FED is its Open Market Operations.

Monetary policy uses control of interest rate to increase or decrease the money supply in the economy to achieve its growth objective. FED controls the short term interest rate through its open market operations. It involves FED’s sale or purchase of government securities that includes treasury bills, notes and bonds. Increase in FED’s purchases lowers the interest rates while selling of these securities raises the interest rate.

Federal Fund Rate is the key policy target of the FED. It is the interest rate at which the banks lend overnight to one another in the overnight interbank market. The primary interest rate that is affected by these operations is the Federal Fund Rate. The market then adjusts the other short term and long term interest rates accordingly. FED does not directly sets the Federal Fund Rate. It establishes a target rate through the open market operations.

US Treasury & US Dollar
The other main pillar of economic policy is the fiscal policy. Who controls the fiscal policy? The governments in almost all the countries! Fiscal policy means the amount of taxes and government spending for a given year. The US fiscal policy is in the control of US Treasury. In fact it is the US Treasury that actually determines the US Dollar policy.

You should always try to watch the US Treasury views as changes to that view is very important for the currency markets. For example, US Treasury can give instructions to the New York Federal Reserve Board to intervene in the forex markets by actually buying or selling US Dollars if the US Treasury feels that the US Dollar is under or overvalued.

EUR/USD, USD/JPY, GBP/USD and USD/CHF are the most heavily traded currency pairs in the global currency markets. These currency pairs represent the most frequently traded currency pairs in the global markets. Over 90% of all currency deals involve the US Dollar. As you can see, all these currency pairs involve US Dollar on either side of the pair. So the most important economic data for the global currency markets is the US Dollar fundamentals.

Gold & US Dollar
The relationship between Gold and US Dollar is very important for you to understand. There is an almost perfect negative correlation between the US Dollar and the gold prices. The US Dollar moves in opposite direction to the gold. This inverse relationship stems from the fact that gold is measured in US Dollars.

When US Dollar depreciates due to global economic uncertainty like the present, gold appreciates. Similarly when the US Dollar will appreciate on the news of US economic recovery, gold prices will go down. Gold is commonly viewed as the ultimate safe haven commodity by the investors all over the globe. You must know that the gold prices are going up right now and have reached very high levels. Gold trading and currency trading can be a very powerful combination.

United States was known to have one of the safest and the most developed capital markets in the world. As the risk of severe United States instability was considered to be very low, US Dollar was considered one of the premier safe haven currencies in the world prior to September 11.

US Dollar reserves were very popular among the foreign countries and foreign investors. US Dollar was considered to be very safe. Almost 76% of the global currency reserves were in US Dollar. This allowed United States to attract investments from all over the world at a discounted rate of return. However, due to the present United States financial crisis, foreign investors and the Central Banks are not so sure about the US Dollar due to the increased US uncertainty. The decreasing interest rates and continuing recession is forcing foreign investors to think of other alternatives.

China & US Dollar
China pegs its currency to US Dollar. China has been accused by the United States many times of using this practice to keep its national currency artificially weak in order to boost its exports. There are many other developing and emerging countries that peg their local currencies to US Dollar. China is a very active participant of the global currency markets because its maximum float per day is controlled within a narrow band based on the previous day’s closing US Dollar rates. Any fluctuations beyond this band will invite intervention by the Chinese Central Bank that may include buying and selling US Dollars. Important countries that peg their currencies to US Dollar are China and Hong Kong.

EU represents a market as large as US with its own single currency Euro. The emergence of Euro is also threatening the US Dollar as the world’s premier reserve currency. Euro has provided an alternative to the US Dollar. With the passage of time, it is feared that Euro will emerge as a strong challenger to the dominance of US Dollar. Recently a group of countries like China, France and others have called for the introduction of a new global reserve currency by the IMF that should replace the US Dollar. If this happens in the next few years, it may have far reaching implications of the US Dollar and the US economy.

Many analysts fear a major devaluation of US Dollars in the near future due to the present financial crisis in the United States. Many central banks have already begun to diversify their foreign exchange reserves by reducing their US Dollar holdings and increasing their holdings in Euro and the gold. The US markets are the largest markets in the world and the investors all over the world are very sensitive to the yields offered by the US assets. Money flows where the returns are high. Interest rate differentials can be a very strong indicator of potential currency movements. The interest rate differentials between the US Treasuries and foreign bonds are followed by the professional forex traders with keen interest.

US Dollar Index
It is important that you follow the US Dollar index because when the market analysts are talking of general US Dollar weakness, they are referring to this index. The USDX is a futures contract traded on the New York Board of Trade (NYBOT). Market participants closely watch the US Dollar Index as an indicator of overall US Dollar strength or weakness.

The US Stock and Bond markets also impact US Dollar. Cross border merger and acquisitions involve big forex transactions and are also very important for forex traders to watch. The following economic indicators are important for the US Dollar: Employment, Nonfarm payrolls, Consumer Confidence, Retail Sales, Consumer Price Index, Produced Price Index, GDP, International Trade, Employment Cost Index, Industrial Production, TIC Data etc.

How to Prosper in a Downturn?

How to prosper in a downturn? If you've followed my videos and courses, you know one of the key lessons I teach is about being able to take advantage of 'trends'. Usually we're talking about stocks or Forex - but did you know there are trends emerging right now that could affect your ability to create wealth over the next 30 years?

Wouldn't you like to know what trends are happening now that you could ride before anybody else even knows they exist or what the impact of those trends will be? We all would! That's why you might want to check out Harry Dent. Why Harry? Here's what he predicted

-- the 1990 collapse of the Japanese market
-- the U.S. economy's boom years of the late 90's
-- the real estate 'bubble' of 2003-05

And Harry is virtually the only one to accurately predict the financial cliff that the banking industry fell off of last year (and the subsequent, tethered world industries after that). Now Harry is talking, both publicly and literally, in his
"How to Prosper in a Downturn". In this sneak peek preview, you can hear exactly what's coming, and how to prepare for it -- Grab your copy of "How to Prosper in a Downturn" here:

How To Prosper in a Downturn?

Following the financial system collapse last fall, people said, "Way to go Harry; you called it right." But what did they REALLY want to know?

- what we can do about it now?
- how we can take advantage of it?
- what could be next?

This led Harry to put forth one of the most comprehensive forecasts -- he's making some very shocking predictions about where things are headed, when, and what you can do about it. I think you'll find his letter makes for VERY interesting and exciting reading.

How To Prosper in a Downturn?

Good Trading,
Bill Poulos

Crude Oil Price Crashes after Unusually High Inventory Data

The price of Crude Oil experienced a sharp decline in prices yesterday after a U.S. inventories report highlighted a sudden surge in energy supplies. While these reports may carry mixed messages about demand, supply, and growth expectations, the message yesterday was quite clear: demand is plummeting. Many analysts were expecting a draw-back in prices after last week's surge, but the inventory report only demonstrated how unwanted this commodity has become, which only put additional weight on the downward pressure this commodity was already expecting.

USD - Dollar Extends Profits against the Majors



The Dollar continues to strengthen against all the major currencies. During yesterday's session the greenback was traded near a two-week high versus the EUR. The Dollar also marked a significant uptrend against the Pound and Yen.

It seems that the main reason for the USD's appreciation yesterday came as a result of the positive Core Durable Goods Orders monthly report, as well as a statement by China that it will maintain a more loose monetary policy. Whilst the Durable Goods figures reported a drop of 2.5% in June, mainly as a result of the weak demand for new civilian aircraft and defense equipment, it seems that investors were more impressed by the 1.1% rise in the Core Orders during June.

The difference between the two reports is that the Core report measures the change in the total value of new purchases orders placed with manufacturers for durable goods, excluding transportation items. Orders for aircraft are known to be very volatile, and thus have the potential to distort the underlying trend. This is why investors tend to attribute more importance to the Core report. The positive figure marked the third consecutive month in which this report delivered signs of positive growth, driving investors to believe that the global recession is reaching its end.

As for today, the main publication from the U.S economy looks to be the weekly Unemployment Claims report at 12:30 GMT. Currently, while all the major indicators of the U.S economy are showing signs of improvement, it is only the job sector which continues to deliver negative figures. Analysts forecast that 578K individuals have filed for unemployment insurance for the first time during the past week. If the actual result will be similar, this could be the harshest unemployment figures in the last month. Such a result may help drive the demand for the safety of the USD and drive its recent bullishness even higher.

EUR - German CPI Marks First Annual Decline in 22 Years

The EUR dropped yesterday against most of the major currencies. The EUR is currently traded near a two weeks low against the Dollar, as the pair fell to the 1.40 level. The EUR also saw a sharp drop against the Pound during yesterday's session.

The EUR's slide came as a result of the unexpected negative German Preliminary Consumer Price Index (CPI) report. This indicator measures the change in the price of goods and services purchased by consumers in Germany. Considering the fact the Germany currently holds the strongest and relatively healthiest economy in the Euro-Zone, the inflation indicators from this nation have a large impact on the EUR. The indicator showed a drop of 0.1% in July.

More severely, this report has marked the first annual decline in consumer prices in Germany in more than 22 years! It appears to be the drop in energy and food costs, which took place as a result of the global recession, which created the poor annual decline in German CPI. It now seems quite certain that for any negative indicators from the German economy such as this one have the potential to weaken the EUR in the near future.

Looking ahead to today, another significant report is scheduled from the German economy. The German Unemployment Change, which measures the change in the number of unemployed people during the previous month, is expected at 07:55 GMT. Analysts have forecasted that unemployment in Germany increased by 44K in June. If the results are indeed close to this figure, the EUR might continue to depreciate against the major currencies.

JPY - Yen Slides on Poor Retail Sales Release

The Yen underwent a bearish session against most of the major currencies yesterday. The JPY dropped over 100 pips versus the Dollar, and over 200 pips against the Pound.

The Yen dropped yesterday on poor Retails Sales data. The report showed that the total value of sales at the retail level dropped by 3.0% in June, failing to reach expectations for a 2.5% drop. Furthermore, Japan's retails sales fell for a 10th month in June, making the longest losing streak since 2003. It seems that even though the Japanese economy is showing signs of recovering, mainly due to the positive export figures, the Japanese citizens are reluctant to resume last year's consumption levels, an indication that optimism may be lacking in Japan.

As for today, a batch of data is expected from the Japanese economy. Traders are advised to follow the Tokyo Core Consumer Price Index report. This report is a leading inflationary indicator for Japan, and thus tends to have a large impact on the JPY's value. If current expectations for a 1.7% drop will be similar to the real result, the Yen might continue to weaken against the major currencies in late-trading today.

Crude Oil - Will Crude Oil Drop Below $60 a Barrel?

Crude Oil prices continued to slide yesterday. Yesterday morning, a barrel of oil was valued near $66, but the current price is trading for less than $63. The main reason for the sharp cut in crude oil prices yesterday was the Crude Oil Inventories report. The report shows an unexpected surge in U.S. energy stockpiles. While analysts expected a drop of 1.1M barrels, the actual result showed that stockpiles surged by 5.1M barrels!

Most analysts had anticipated a pull-back in prices since Oil was seemingly over-bought technically and fundamentally, but the high inventories report simply put added weight to this expected downward pressure. In addition, the USD continued to strengthen yesterday. Crude Oil is valued in Dollars, and as such, tends to fall under the weight of a strong Dollar.

Looking ahead to today, traders are advised to follow the Natural Gas Storage report, scheduled at 14:30 GMT. This is more energy data that has the potential to influence oil prices by showing a continued trend of high stockpiles, indicating low demand. Traders should also consider the Dollar's movements in today's trading, as it has a large effect on commodity values.

Article Source - Crude Oil Price Crashes after Unusually High Inventory Data

Euro May Extend Losses as German Jobless Rate Hits Highest in Nearly 2 Years (Euro Open)

The Euro may extend recent losses in European trading hours as Germany’s unemployment rate rises to 8.4% in July, the highest since November 2007, as the Euro Zone’s largest economy sheds 43,000 jobs. Euro Zone Economic Confidence is also on tap.

Key Overnight Developments

• Japan’s Industrial Production Grows Most Since 1953 in Q3
• Euro, British Pound Flat Ahead of the Opening Bell in Europe

Critical Levels



The Euro is effectively unchanged going into the European trading session having oscillated in a narrow 0.4% range around 1.4050 in overnight trading. Likewise, the British Pound fluctuated in a 0.4% band around 1.6380, yielding a flat result ahead of the opening bell in London.

Asia Session Highlights



Japanese Industrial Production grew at the weakest pace in three months in June, adding 2.4% from the previous month. In annual terms, the pace of decline moderated to -23.4%, the slowest rate of contraction since December of last year. On a quarterly basis, output gained 8.3% in the three months through June, the most since 1953. Much of the resurgence can be chalked up to companies replenishing inventories having sharply cut back on orders and production as the global economic crisis reached a boiling point in 2008. More of the same is likely in the coming months as restocking continues. In fact, minutes from the last meeting of the Bank of Japan revealed policymakers expect manufacturing and exports will continue to recover “mainly due to progress in adjustments in [inventories]”. That said, any sustainable rebound will have to come with growth in underlying demand, which is arguably destined to remain sluggish for some time. Indeed, the International Monetary Fund (IMF) said its latest world economic outlook that global trade volumes are likely to rebound just 1% having shed a whopping -12.2% in 2009.

Euro Session: What to Expect



Germany’s Unemployment Rate is set to rise to 8.4% in July, the highest since November 2007, as the Euro Zone’s largest economy sheds 43,000 jobs. Mounting layoffs will hinder Germany’s ability to mount a robust recovery from the current downturn, weighing on disposable incomes and discouraging consumption, the largest component of overall economic growth. Indeed, the IMF recently forecast that Germany as well as the Euro area as a whole will stand apart from other industrialized economies in seeing GDP continue to shrink in 2010. Further, the ailing labor market is likely to become a more visible drag on risk appetite as the government’s fiscal package is used up and firms run out of room to cut capacity and produce upside earnings surprises, yielding to sluggish revenue growth and driving stock valuations lower. This bodes ill for the Euro, particularly against the US Dollar, with interest rates likely to remain low and risky assets on the defensive.

Separately, Euro Zone Economic Confidence is expected to rise to 75.0 in July, marking the fourth consecutive month of improvement since the metric hit a record low in March. The reading is a composite of five sub-sector sentiment reports: Industrial Confidence (40%), Service Confidence (30%), Consumer Confidence (20%), Construction Confidence (5%), and the Retail Trade Confidence Indicator (5%). The metric may continue to gain for a bit longer as the combined impact of fiscal stimulus measures across the region and higher stock prices boost confidence, but seems likely to reverse course in the medium term as lackluster domestic and overseas demand creep back into the forefront.

Written by Ilya Spivak, Currency Analyst
Article Source - Euro May Extend Losses as German Jobless Rate Hits Highest in Nearly 2 Years (Euro Open)

Forex Magazine at the presentation of DJ FOREX

PRIME-Tass and Dow Jones Newswires announce the successful launch of Russian-language news feeds on the foreign exchange market DJ FOREXMoscow, May 12. The leading Russian economic information agency PRIME-TASS news agency and the world financial and economic news agency Dow Jones Newswires today officially announced the launch of a Russian-language news feeds on the international currency market - DJ FOREX. This unique for the Russian market news intended for the Russian foreign exchange dealers, analysts, customers of banks and investment companies offering services on access to the world currency market.News was unofficially launched in early February. Since then, subscribers DJ FOREX became more than a dozen of the largest Russian banks and financial companies, including Guta-Bank, MDM Bank, Lefko-Bank, company, Forex Club, Teletreyd, Fibo, Kalita-Finance, and Russian Alpari Dealing Center.The number of individual users DJ FOREX, receiving news through their brokers, there are now hundreds of people. It was expected that by the end of the year DJ FOREX will be available to several thousands of individual users."The first three months of the DJ FOREX show that in Russia there is indeed a serious demand for quality information in real time on the international currency market. It is obvious that the demand for this information will grow, as Russia is approaching the year 2007, when Russian ruble should become a convertible, "- said director of PRIME-TASS Oleg Ananiev."We are very pleased to positive market reaction to our new product. This reaction shows that in Russia there is a demand for quality news on the foreign exchange market by Dow Jones Newswires", - said Michael Bergmayer (Michael Bergmeijer), Vice President of International Sales and Marketing, Dow Jones Newswires. "We are also very pleased that our partnership with the PRIME-TASS news agency developed and now has reached the stage in the production of joint products."News consists of headlines and articles translated from the same tape Dow Jones Newswires, highlighting the situation in the key world currency venues of Tokyo to New York in real time. Especially detailed bid for the U.S. dollar, Japanese yen, euro, British pound and Swiss franc. In the special category "People say the market" published operational comments and forecasts of leading market participants. Every day is a few reviews, market commentary and technical analysts. One section of the tape deals with macroeconomic data from the Big Seven. Subscribers have access to a constantly updated calendar of major events affecting the currency market.The translation into Russian news team from a few professional translators and editors are well versed in the specifics of the foreign exchange market. The quality of translation is controlled by Dow Jones Newswires.DJ FOREX News in Russian in real time is available to subscribers from 7 am to 11 pm Moscow time, when the opening of the main foreign exchange markets. In addition, subscribers also have access to the news headlines in the foreign exchange market in English 24 hours a day 365 days a year.News in Russian now consists of 150-200 titles per day, while the number of English-language titles may exceed 600.Newsline is available for individual customers through the website PRIME-TASS www.prime-tass.ru/news/dowjones/ or by e-mail. Large customers have the opportunity to receive news via the IP-connection. Dow Jones Newswires Customers can subscribe to news virtually anywhere, including through Reuters terminals.DJ FOREX is the fruit of cooperation between the Prime-Tass and Dow Jones Newswires, which was formalized by the treaty last year. Agreement on the Establishment of DJ FOREX was signed in January this year. PRIME-Tass and Dow Jones Newswires are considering creating similar products for financial markets.About Dow Jones NewswiresDow Jones Newswires, the world's largest news agency, deals with the spread of economic, financial, and political information. News agencies often have a strong influence on the situation in global financial markets. Every day, Dow Jones Newswires publishes up to 10 thousand messages. His clients are 318 thousand professionals of the financial market in 66 countries. In addition, millions of people have access to selected Dow Jones Newswires reported on the Internet, through electronic exchanges, corporate web sites and networks. News Dow Jones Newswires published in 11 languages.In the past and present of the Dow Jones Newswires had received an award as "Best Supplier news from the professional edition of Inside Market Data. Dow Jones Newswires was founded in 1882. Currently, it operates 800 journalists and editors. Dow Jones Newswires - is part of a global network of Dow Jones & Company, in which 1,6 thousand journalists. Dow Jones Newswires also uses the resources the agency Associated Press.

Forex Trading As A Business

Always take forex trading as a business. You need to seriously treat trading as a business. If you are currently trading for a living or want to take on trading as a future substitute of your current job, you should always remember to take trading as a business.

You need to give some consideration to the fact that how you are going to deduct your monthly expenses such as your computer equipment, your quote feed, your DSL line, travel to investment conferences and continuing education seminars. How are you going to treat trading as a business? You should think whether you need to form a private limited company or a public limited company.

Take advantage of all the regular and necessary expenses as business deductions. This can help you save thousands of dollars annually. You should seek advice from a tax specialist so that you know the best way to cut your business expenses.

Many people jump into trading without giving any consideration to these issues. For them the target is to start making money as early as possible. They need not waste time on other non trading issues. After you have consistently started making money in the market, it would be heart breaking to know that you cannot make expense deductions that could literally save you thousands of dollars.

Treating trading as a business will help you focus on it just like any other brick and mortar business. Let’s see what can be your expenses as a forex trader: You need to have a room where you have the required peace for trading. Suppose you rent a small one room office that could cost you like $500-1000 per month. Then you have to have equipment that includes desktop computers, printers, laptop for travel and so one. Let’s say these things cost you $5000.

Attending investment conferences can provide you with lot of good trading ideas. You attend an investment conference that might cost you $1000 roundtrip airfare plus $500 per night for the night stay at a hotel. A price quote feed might cost you like $200 per month. You need a good DSL connection for your trading, $50 per month for the DSL expense.

There will be many business entertaining expenses for you. If you have business entertaining expenses and went to two investment conferences per year, you could be taking as little as $5000 to $25,000 per year in actual business expenses that could be deducted if you are running trading as a business.

Do you have a business plan? What business plan you have in place to protect the money you make in the market. If you are a small time investor and decide that trading for a living is something that interests you, you should think do you have the financial resources, time and emotional makeup to trade full time.

If you have finally decided to take up trading as a living then you should be able to earn enough to pay for your living expenses as well as utility bills. You need to cover your cost of living expenses, mortgage payments as well as your business expenses. As a long term trader what will you do when the market conditions change according to your system or methods?

In forex trading, there are no commissions per trade like that in the stock market. But you have to cover the bid-ask spread each time you trade as a trading cost. The forex market offers you a unique opportunity to participate on a pay as you go method because there are no commissions. Forex dealers provide free charts and quotes.

Suppose you are a day trader, you need to keep this in mind that trading is not free. You trade twice a day with a 4 pips bid-ask spread. Suppose you trade 5 lots ($100,000) each trade. So your daily trading cost will be $400 = (4) (2) (5) (10). If there are 200 trading days in a year, it means $80,000. Not to talk of your actual trading losses, first you need to cover $80,000 as your trading cost annually.

Swing Trading Time Frames

Swing trading means that your trade can run for several days as long as your profit targets are not met and the trend does not reverse itself. Swing traders believe in the saying, “Trend is your friend.” Most of the day traders end up being swing traders. A swing trader may have started as a day trader. Either they scaled out of a portion of the position, set a stop loss objective and kept the trade running as the market kept moving in the desired direction.

So, many day traders eventually end up being swing traders when they see the trend continuing and don’t won’t to let go the opportunity of riding the trend. A swing trader is also considered to be a mini position holder. Swing traders need to focus on higher degree time frames and spend less time on 5-15 minutes time frames regardless of how swing trading started.

5-15 minute time frame charts are for the day traders, most of who are scalping. 5-15 minutes charts will generate too many short term signals if you are a swing trader holding a position for a few days. The most reasonable time frames for a swing trader are the 60 minutes (hourly), 240 minutes (4 hourly) and the daily charts.

You should use pivot points in your trading. Using pivot points will give you an edge as a trader. Swing traders should give more attention to the daily, weekly and the monthly pivots as far as the pivot point trading is concerned. It helps them to be aware of the confluence of any support or resistance. This information will help them to identify potential entry or exit targets.

Whether you are a day trader or a swing trader, you are only interested in making profits from what moves the markets. You are not so much concerned with long term macroeconomic conditions as you are with riding a momentum wave when you are day trading. This is your job. The same is also true for swing trading. As a swing trader you are simply looking to ride from a move and profit from it.

Swing traders try to identify a potential trend and enter it at a time when most of the other traders have not yet identified it. You need to capture opportunities as they arise. In short term trading market conditions change! Forex markets are ideal for momentum trades. The forex market tends to trend well over the course of 3-10 days. This allows swing traders opportunity to capture larger price swings over a given period of time.

You have access to the forex market over the 24 hours period unlike the equity markets. Forex markets are open 25/5 except on weekends. Therefore, you can monitor your positions, place stops and take action to exit a trade at any time, day or night. This is the biggest advantage that forex markets have over stock markets.

The fact that the forex market is a 24 hour market and because of the time frame involving several days in swing trading, swing trading is slightly more advantageous in forex markets. Due this continuous market action there are very few time that gaps occur in the currency pair prices, this makes forex markets more suitable for swing trading as compared to the equity markets.

In swing trading the profit potential is much higher if you enter a trade when the trend has just been formed. Carry a day trade through the overnight session if it moves sharply in your favor and you believe that a trend is in the making that can last several days. However, do not carry your losing position to the next session. Try not to hold a position over the weekend. Your entry was correct if the trade starts making money in your favor from the let go.

Never get fancy and try to get a better fill by placing limit orders when you enter a bona fide trading signal. Go to the market before your competitors. Wait until the close of the period to confirm the signal. Never anticipate that a signal will happen.

EUR/USD Strategies on July 30, 2009

04:32 PM (GMT+7)


After calculating the results that I made in EUR/USD by using the Time frame of 30 minutes, I concluded I was not suitable to use only the time frame of 30 minutes. Now I will use TF4 H as my based with other time frames as support.And it might not everyday I made a trade. My main Idea on my next trading plan is short. I will tell you why. For now I just wait and see. This idea for short it is my plan, it might will change as market change. But the fact is, now I just sit and watch all EUR/USD's movement


This is TF 4H chart which is I'm used as my basic plan to trade, click to see:

From that chart, EMA 5 (Blue) and EMA 20 (green)already crossed down EMA 66 (red)and RSI fall bellow 50 wich mean bearish already comfirm.Neverthles,there are several reversal candlesticks pattern ( watch 5 previous candle) indicated bearish lossing the momentum and need to pull back to collect more power to make another penetration.Price action will try to push and carry out with it ema 5 to ema 20 wich is 1.4230 area where there are several barrier that have been formed by Parabolic SAR. If I am right then price will try to push EMA 250 (purple) in area 1.3988 and next if RSI hold below 50 it will continue to push EMA 365 (pink) in area 1.3871


CORRECTION:
I make mistake when type, it should be like this:
....carry out with it ema 5 to ema 20 wich is 1.4130 area where ...




UPDATE - 07:33 PM (GMT+7)

ALready Sell EUR/USD at 1.4052, detil from my decision will be update soon, after I completed set my TP and my SL



and here are my considerations:

EUR/USD TF 1H,after price climb to 1.4096 it fail to hold and next candle forming dark cloud bearish candle. EMA 5 (blue) already try to cross up EMA 20 but failed to break it, in my basic reference (cornflower method) it is the best time to open re sell.RSI also stay below 50.

EUR/USD TF 15 minutes, EMA 5 (blue) and EMA 20 (green) alredy cross down EMA 66(red) wich mean bearish cofirm continue,RSI and Parabolic SAR also boost it down. It's in line with TF 1 H so I decided to sell it. Possibility it has a chace to 1.4130 but I hope it's not happen so I don't need to make locking or averaging. I already take one short for EUR/USD at 1.4052 with open target, and no SL, I just will watch it if EUR/USD moving up to 1.4130 area I will set new plan.

My Congratulations to the FAP Turbo Team

FAP Turbo is now the All-time #1 Selling Forex Trading Robot! I was around since its debut, and this little robot is still going strong. NICE WORK GUYS!

- Jason H.

Greenback Rebounds from Earlier Lows

The U.S dollar drifted sideways against a basket of currencies on Wednesday, hovering not far from the lowest level of the year, as investors continue to assess the real economy by looking at economic data in the U.S. Nonetheless, the U.S. dollar had found modest support against the EUR and trimmed a loss against the Japanese yen after some positive news about the U.S. economy. With signs that the U.S. housing market may be stabilizing, traders will also be examining U.S. consumption and employment conditions in coming data.



USD - Weak Consumer Confidence Boosts the U.S Dollar

The Dollar rose from the lowest level this year against most of its major currency counterparts on revived demand for the safety of the world's main reserve currency.

The resurgence in risk aversion came after the Conference Board's U.S. Consumer Confidence Index dropped to 46.6 from 49.3 in June; a worse result than the expected 49, reinforcing concerns that higher unemployment will hurt consumer sentiment. Contributing further to the demand for the safety of the American currency were the declines in stock markets.

The market also awaits more U.S. Treasury auctions this week and the effect on yield moves. A record $42 billion two-year Treasury auction on Tuesday had little impact on the currency market, although details of the outcome were not encouraging for the dollar.

Looking ahead to today, traders should follow the release of the Core Durable Goods Orders due at 12:30 GMT. After the disappointing results of the Consumer Confidence Index and the recent weak second quarter earning results, any worse than expected result will further dampen risk appetite and likely push the Dollar further up.

EUR - EUR fails to Breach the $1.43 Level

The EUR rose above $1.43 Tuesday morning, its highest level in about 8 weeks. However, by early afternoon Tuesday it was at $1.4155, down from $1.424 late Monday. The EUR also fell 1.1% against the Yen to 134.04 from 135.48 Monday. The decline came as equities dropped and investors turned to the safety of the Japanese and American currencies.

While mostly appreciating, the EUR is having difficulties pushing past important resistance levels, failing to stay above the significant $1.43 level. This is do to milder gains on the European Stock markets combined with investor's caution ahead of the release of the U.S second quarter GDP this coming Friday and the Non Farm Employment report due next Friday.

Along with movements in equities, the release of the German Prelim CPI throughout the day is also expected to cause market volatility, possibly pushing the EUR back to the $1.43 level.

JPY - Yen Gains on Return of Risk Aversion

The Yen rose yesterday against most of its 16 major counterparts advancing versus the EUR for the first time in 4 days as a bigger than forecasted drop in U.S. Consumer Confidence this month discouraged investors from buying higher-yielding assets.

Furthermore, as the Yen is highly correlated with movements in equities, yesterday's disappointing second quarter earnings and the consequent drop in global stock markets further assisted the Yen's rise. With no major news releases from Japan, risk sentiment will likely continue being the driving force behind the JPY's movements.

Crude Oil - Crude Prices Tumble after an 11 Day Rally

Crude oil for September delivery fell $1.15, or 1.7%, to $67.23 a barrel Tuesday; hitting an intraday low of $66.60. Crude Oil tumbled as U.S Consumer Confidence fell, boosting concerns over recovery in demand. Lower than estimated second quarter earning also put pressure on Oil Prices. With a negative Oil forecast from British Petroleum (BP) and a continuing climb in U.S Oil inventories, the sentiment turned bearish on Oil prices.

Movements in equities as well as Dollar sentiment will likely be the driving force behind Oil trading today, as a strong Dollar tends to put downward pressure on Oil prices. Furthermore, traders should follow the release of the U.S Crude Oil Inventories at 14:30 GMT today as this release tends to create great volatility in Oil Prices.

Article Source - Greenback Rebounds from Earlier Lows

Ivy Bot Review

Ivy Bot was launched yesterday. It seems there was a lot of interest in the new Ivy Bot trading robot. Just be aware that the rumor is they will raise the price in the next 24 hours. When you use the Ivy Bot trading robot it is 100% automated. You don't need to watch the screen once it is setup, it trades for you. This seems to be the new trend in trading and the Ivy Bot seems to be the flavor of the month.This is a very powerful robot and probably the best on the market right now. You can see the test reports and get more information here:

Ivy Bot

It also has a decent history:

Year
2002 - 490.32%
2003 - 790.32%
2004 - 721.97%
2005 - 920.00%
2006 - 475.89%
2007 - 691.87%
2008 - 745.11%
2009 - 523.98% so far.

What a day yesterday was for the Ivy Bot... in its first day of the official launch, it got to a point where their server was about to crash due to the high volume of traffic. I already thought that there was a new heavyweight in the Forex automatic trading industry... now I'm CERTAIN! Ivy Bot robot is here to stay... this robot has definitely taken the standard a few notches up. This one's here to stay simply because it's a GOOD robot! Two things put it in a league of its own:

1. It's the first multi-currency forex trading solution that trades each pair with a separate robot best suited for that pair's market behavior.

2. It's the first time a dedicated team has been stood behind a robot to make sure that it's well adapted to changing market conditions AS SOON AS they happen, rather than after they happen. You can get Ivybot now, before the price is raised, by going here:

Ivy Bot

I truly feel that this is one of those rare opportunities which come along once in a very long time...I mean, we've all been in this niche for quite a while... we've all seen the B.S. flying around...but, most important, we can all appreciate and know how to separate something good from the "crap". Ivy Bot is the first robot that treats the forex market just as it should be treated... not "forcing" rigid strategies on every pair it trades.

Ivy Bot has proven that in order to be truly successful trading various
pairs, you have to adapt to each pair individually.Make sure you watch the Ivybot video and also read more about the robot here:

Ivy Bot

I know some people are a bit undecided weather to grab a copy of the Ivy Bot EA or not...To be honest, I can quite understand that. With so much S**T flying around on the net lately, it's perfectly reasonable to be skeptical. However... there's a difference between being skeptical and not being
able to separate bad from good.

The Ivy Bot team is putting in A LOT of effort to separate itself from the crowd... to prove to people that they are very different, both in terms of product and support quality. The Ivy Bot team is not your average robot vendor that only cares about making the sale and later disappears... you know the type I mean... they don't just screw you with a B.S. robot, they also leave you with no-one to talk to when it isn't running like it did on the sales page!

These guys are a "TEAM"! They live forex trading... they make their money from trading forex... they're here to stay and to build a great reputation.... and you'll notice this once you join their team. You can read more about the Ivy Bot (and get your copy before the price goes up) from here:

Ivy Bot

Many people have been asking me about what most separates this robot from the bunch (trading wise)...Well, it's quite simple. It's the first robot that trades several currency pairs BUT uses a unique strategy for each pair... a strategy that fits that specific pair's market conditions.Quite a brilliant and profitable concept... no doubt. Ivy Bot is the first robot on the market which attacks the multi-currency issue with such a unique approach. And the results?... well, take a look here:

Ivy Bot

Being a part of the Ivybot team doesn't just mean getting unconditional support... it also means a lifetime of upgrades and new features.I truly believe this is a great chance for anyone who wants to make an awesome living from an automatic trading solution. The Ivy Bot comes with a full 60 day return option. Now, I know some vendors may have made it hard for you to get your refund if you didn't like their product. Well, it's not the case here and that's my personal promise to you. These guys are totally professional... they don't want your money if you aren't 100% happy.

Ivy Bot

Forex Confidante 2.0

There's a downright dirty lie floating around the Forex market right now like a very nasty turd in a swimming pool...Ok, maybe that was a bit too visual but you get my point. I'm hacked off with unethical 'marketers' pushing their crap pieces of code onto unsuspecting folks like you who just want to make a dime in Forex. If there's one thing I detest it's those damn robots. And Tom Strigano agrees with me...

Forex Confidante 2.0

Whoever thought that a piece of code could predict when to enter and exit a market got it all wrong. You see, in Tom's 25 years of trading he realized a few things that no one else teaches. He calls it the psychology of trading. And it's not something you'll get from a damn robot.Read more about it here...

Forex Confidante 2.0

I'm sure by now you've realized that robots are just sucking you in with your need for fast cash. But it's a case of The Emperor's New Clothes. These things don't work. Period. Once you understand that, you're ready to graduate to the next level of Forex trading. And you'll get there in lightning quick time with Tom's methods and systems at your disposal.

Forex Confidante 2.0

Armor yourself with battle-tested blueprints and use the same weapons Tom deployed in 25 years of going up agains the greatest financial minds in the world. Is that a power you'd like to wield? Go now and find out the coveted money-sucking systems of a renegade Forex master. Somebody wants to tell it like it is. Are you ready to listen?

If you really think a piece of code can judge the man-made fluctuations in a market based on previous results. Go ahead, you deserve all the robot junk you buy. If you want proven systems, tested at the highest level... you need to listen to the confidante...How would you like to download 25 years of elite Forex trading into your brain right now?

Forex Confidante 2.0

Think you might fiercely increase your gains? Maybe skyrocket your pips? Sure you would. Now... the technology to implant the knowledge directly into your brain doesn't exist...yet! But I can do the next best thing and give you ultra-advanced (yet simple enough for a newbie) Forex tactics in the form of Forex Confidante...The astonishing blueprint from Tom Strigano has made serious waves amongst Forex traders new and old. Why?

Because its methods are like nothing else out there. Unique, innovative and frighteningly effective. This isn't the usual 'get rich quick' Forex junk clogging up the internet.These are battle-tested systems, proven at the highest level. And they're good enough to turn you into a pro Forex trader almost overnight. Once you absorb the electrifying battle plan within Forex Confidante you'll have the very same mastery of the market that the world's top banks use to juggle trillions of dollars each day.

Forex Confidante 2.0

Just a warning: You may not be 'ready' for these methods. Tom gets people calling him every day saying they didn't quite 'get it'. Tom then asks them to read the book again... before long the lightbulb switches on and they quickly see a nice surge in profits. Fact is... the systems inside the report run almost opposite to the other junk being peddled. Go in with an open mind and you'll emerge with armfuls of cash.

Tom let me know that he WILL be pulling Forex Confidante from the market real soon. Be under no illusion, getting this info into too many people's hands will affect everyone's profits. If you want to keep these money-sucking systems secret between elite traders... grab the blueprint now...

Forex Confidante 2.0

Forex Day Trading Time Frames

When you are planning for a trade, the first step is to identify the type of trade into which you will enter. Do you want day trading, swing trading or positions trading? It all depends on your trading strategies. What matters most to a trader or an investor is how to create a positive cash flow.

It all depends on the profit targets that you want to achieve. Once we acknowledge what our goals and objective are than we can narrow our expectations. Is it a day trade? Is it a swing trade or is it a long term positions trade? Day trading has a different profit potential than swing trading. Both are different trading styles. Day trading requires a lot of active participation on your part. In swing trading, when you set up your trade, you can monitor it once a day.

Suppose I am a day trader. I need to know what the daily range of the currency pair that I am planning to trade is to start with. I will expect that if I miss 20% of the bottom and 20% of the top then I can expect to capture 60% of the average daily range. I will generally be able to identify what the average range for the day is. My expectations are for X amount of a given range.

For that I will have to structure my computer and charts to a format that is conducive to day trading. Day trading can be stressful for some people. You need to know all these things before you decide on a trading style for a trade. So how do I start? How many pips you want to make in a specific time frame like eight to six bars from entry? Say 30 pips or 40 pips! This is what you should expect in day trading. In swing trading the profit targets can be higher but the time frame is also much longer.

In day trading you should use two time frames; 5 minutes and 15 minutes time frames to look at the market! Use the 5 minute time frame to exit a position in day trading. Use the 5 minute time frame as a shorter time frame trigger to go with the 15 minute signal. Use the 15 minute time frame for the dominant trend if you trade Euro, Yen or Pound, then for day trading.

How do you make your entry and exit decisions in day trading. First look at the 15 minutes chart than take a look at the 5 minutes chart to make your trading decision. The key to remember is when the 15 minute time period is in the buy mode, take the 5 minute buy signals. Similarly when the 15 minute time period is in sell mode, take the 5 minute sell signals.

The most important time frames for a day trader are the 5 minutes and the 15 minutes. If you are in a trade based on the 15 minute and the 5 minute time periods, these are the time frames you need to monitor for that specific trade. However as a day trader you can watch the 60 minute time period.

During day trading keep in mind your profit targets and where you are in range. Keeping an eye on the 60 minute time period will help you identify the current trend if a moving average crossover occurs and a potential change in the trend.

Suppose you are trading EUR/USD currency pair. The odds are that your profit potential is in the range of suppose 30 pips or less if the average true range (ATR) is 80 pips based on the past 14 trading days and if the Euro is already down 50 pips when a sell signal is triggered. How do you calculate these things?

Free forex charts do not go into very fine details that you need to look into when making your trading decisions. You will have to subscribe to a good forex charting service. Using good forex charting software will help you automatically calculate all the daily, weekly, monthly pivot points as well as the daily range, support and resistance, S-1, R-1 and other stuff.

Learn pivot point trading. Pivot points are the best leading indicators that tell you the market sentiment at any point of time. You should learn how to calculate pivot points. Using pivot points in day trading can give you an edge. For day trading use the 60 minute time period for calculating the monthly pivot points, 15 minutes time frame for calculating the weekly pivot points and the 5 minute time frame for calculating the daily pivot points.