A forex demo account is a very crucial tool for assessing a broker’s platform, testing your fundamental and technical analysis skills and lots more. Using a demo account is highly recommended.
Yet it doesn’t fully prepare you for the real thing. Here are 4 downsides for demo accounts, and solutions for part of them.
Demo trading doesn’t include execution problems: Even the best brokers with a strong reputation and many liquidity providers cannot avoid a failed execution of your orders. This is reality, especially in extremely volatile market conditions. Execution in demo accounts doesn’t fully mimic real accounts. Unfortunately there’s no solution for this issue, and this doesn’t mean you should skip demo trading. Just be aware of this.
Amount: The amount of money that you’ll see in your demo account will usually be much larger than you’ll deposit. This will make every loss you encounter in the demo account as less meaningful and may enhance the feeling of “monopoly money”. So, you’ll be less prepared for the real thing. In addition, you”ll get used to big position sizes, and wehn you’ll reach the real thing, a few losing trades could burn your real money. Solution: Ask the broker to adjust the amount of demo money to the number you really think of depositing.
Broker may add demo money: This practice isn’t too common, but you should still be aware of it and refuse to accept it. Refilling the account when it’s close to depletion may help you continue practicing and will also prepare you for more real deposits in the future, something the broker always wants you to do. But on the other hand, it may also give you the false feeling that it’s just another computer game when you can always click “New Game” and also hinder your performance with a real trade. Solution: Ask the broker to “withdraw” the demo money from your account.
Once you’re in, you’re in: If you test only one broker’s account, you’ll most likely proceed with depositing real money. Why? Because you’re already familiar with the platform and the salesperson encourages you to dip into the real waters. The goal of demo trading for you and for the broker is that you’ll get familiar and open a real account. So that’s good. But wait: being familiar with one broker doesn’t mean it is the best one for you. For the sake of comparison, at least test one more broker. The second test will likely be faster.
I would like to repeat that demo accounts are still of high importance and that also seasoned forex traders should test a new broker with a demo account before making a deposit. It’s just that like anything else in life, a simulation cannot fully prepare you for the real thing.
What do you think? Are there any other pitfalls that you can think of?
Thursday, November 3, 2011
Tuesday, November 1, 2011
EUR/USD Nov. 1 – Falls on Greek Referendum
EURUSD is free falling. The hangover from the EU Summit has intensified as the Greek Prime Minister announced a referendum to approve the recent EU deal. This gamble, alongside more signs of global slowdown, weigh heavily on the common currency, which already returned to the levels last seen before the previous summit.
Here’s a short update on fundamentals and what’s going on in the markets.
EUR/USD Fundamentals
14:00 US ISM Manufacturing PMI. Exp. 52.1 points. First hint towards the Non-Farm Payrolls. See how to trade this event with USD/JPY.
14:00 US Construction Spending. Exp. +0.4%.
14:00 US ISM Manufacturing Prices. Exp. 55.1 points.
* All times are GMT.
EUR/USD Sentiment
Greek Referendum: In a move that came as a shocker (although hinted in the past) Greece’s Prime Minister Papandeou announced that the recent EU Summit deal will be brought to the Greek public. This can delay implementation in the better scenario, and receive a NO in the more realistic scenario.
Partial Holiday: It’s “All Saints” Day in many European countries, hence no economic indicators and a slightly lower volume.
Global Slowdown: Chinese PMIs weren’t so convincing, and the sharp drop in British PMI. These join weak euro-zone figures published recently. The Australian rate cut, by itself a downwards sign, was accompanied with a weak sentiment.
EU Summit Doubts: After a very cheerful reception for the EU Summit results, the doubts begin to rise. This begins with no demand for a specific participation in the Greek haircut, continues with doubts about the willingness of China to really help, and the open question of CDS triggering.
Yen intervention fading: The Japanese authorities had enough after USD/JPY fell to 75.31 and made a sharp move in the pair, sending it as much as 400 pips higher before dropping a bit. This wild action sent EUR/USD down, and started the downfall. In the meantime, USD/JPY calmed down and EUR/USD continues on its own.
Italian bonds yields soaring: One of the stronger signs of disbelief comes from Italy. Berlusconi was forced to accept concessions, but they aren’t really huge. Until the leveraged EFSF comes into action, Italy suffers in its bond auctions and was forced to pay a dear price. The ECB, headed by Italian from Tuesday, still finds itself acting and buying bonds to lower their yields. This is a worrying sign. 10 year yields are currently 6.20% – as if the ECB never intervened…
US Situation Improving: The first read of GDP for the third quarter of 2011 came out at 2.5%. This was within expectations but much better than the previous quarters. While it triggered a strong risk rally, there’s still uncertainty about how the Federal Reserve will digest this. They might raise forecasts, but some expect them to act in the meeting this Wednesday.
Here’s a short update on fundamentals and what’s going on in the markets.
EUR/USD Fundamentals
14:00 US ISM Manufacturing PMI. Exp. 52.1 points. First hint towards the Non-Farm Payrolls. See how to trade this event with USD/JPY.
14:00 US Construction Spending. Exp. +0.4%.
14:00 US ISM Manufacturing Prices. Exp. 55.1 points.
* All times are GMT.
EUR/USD Sentiment
Greek Referendum: In a move that came as a shocker (although hinted in the past) Greece’s Prime Minister Papandeou announced that the recent EU Summit deal will be brought to the Greek public. This can delay implementation in the better scenario, and receive a NO in the more realistic scenario.
Partial Holiday: It’s “All Saints” Day in many European countries, hence no economic indicators and a slightly lower volume.
Global Slowdown: Chinese PMIs weren’t so convincing, and the sharp drop in British PMI. These join weak euro-zone figures published recently. The Australian rate cut, by itself a downwards sign, was accompanied with a weak sentiment.
EU Summit Doubts: After a very cheerful reception for the EU Summit results, the doubts begin to rise. This begins with no demand for a specific participation in the Greek haircut, continues with doubts about the willingness of China to really help, and the open question of CDS triggering.
Yen intervention fading: The Japanese authorities had enough after USD/JPY fell to 75.31 and made a sharp move in the pair, sending it as much as 400 pips higher before dropping a bit. This wild action sent EUR/USD down, and started the downfall. In the meantime, USD/JPY calmed down and EUR/USD continues on its own.
Italian bonds yields soaring: One of the stronger signs of disbelief comes from Italy. Berlusconi was forced to accept concessions, but they aren’t really huge. Until the leveraged EFSF comes into action, Italy suffers in its bond auctions and was forced to pay a dear price. The ECB, headed by Italian from Tuesday, still finds itself acting and buying bonds to lower their yields. This is a worrying sign. 10 year yields are currently 6.20% – as if the ECB never intervened…
US Situation Improving: The first read of GDP for the third quarter of 2011 came out at 2.5%. This was within expectations but much better than the previous quarters. While it triggered a strong risk rally, there’s still uncertainty about how the Federal Reserve will digest this. They might raise forecasts, but some expect them to act in the meeting this Wednesday.
Saturday, October 22, 2011
Forex Most Important Events of the Week – October 24-28
The US dollar fell for another week as the panic seen early in the money continues to unwind. Will this weakness come to an end? The EU economic summit, rate decisions in Canada, Japan and New Zealand and US housing and employment figures are the major events this week. Here is an outlook on the main market-movers awaiting us.
Last week The Philly Fed Manufacturing Index scored +8.7 points unlike predictions for a negative reading of-9, a good sign of recovery after the serious 30.7 drop in September. Nevertheless, all eyes are turned to Europe and the EU Summit this Sunday and a follow up later on.
Important decisions are about to take place concerning the huge debt crisis affecting worldwide financial markets. Options are becoming limited.
Let’s Start
EU Economic Summit: Sunday. The leaders of the Euro-zone will try to reach an agreement about the usage of the EFSF bailout fund, recapitalization of the banks and the size of the Greek haircut. Negotiations are stuck and a second summit on Wednesday has a better chance of reaching an agreement on something.
Canadian rate decision: Tuesday, 14:00. The BOC decided to maintain rates at 1.25% for the seventh time however hinted strongly about a possible rate hike in the next rate decision meeting. The bank also announced that monetary stimulus will be stopped in case the growth continues in order to achieve a 2.0% inflation rate. No change is forecasted.
US CB Consumer Confidence: Tuesday, 14:00. The Conference Board Consumer Confidence Index increased in September, less than predicted, to 45.4 from45.2 in August while a rise to 46.2 was predicted. Consumers are worried about current conditions which weakens consumer spending. A rise to 46.3 is predicted.
US Core Durable Goods Orders: Wednesday, 12:30. U.S. companies’ orders of durable goods, excluding transportation products, dropped by 0.1% in August contrary to predictions of 0.1% gain. This important spending indicator reflects the weakness in theUS economy. An increase of 0.6% is predicted now.
US New Home Sales: Wednesday, 14:00.US new home sales dropped by 2.3% in August in line with predictions reaching 295,000 units after302,000 in the previous month. New home prices are still considerably higher than existing home prices taking into account the foreclosure deals tempting the US home buyer. This situation is expected to weigh on future new home sales. A rise to 303,000 units is expected now.
NZ rate decision, Wednesday, 20:00.New Zealand’s central bank decided to keep rates at 2.50% in light of increasing global economic risks despite a positive recovery process in NZ domestic economy fearing tough conditions abroad will jeopardize exports. Rate are expected to be maintained at 2.50%.
Japanese rate decision: Thursday. The Bank of Japan maintained its overnight call rate between 0 to 0.1% by a unanimous vote and continues its monetary easing to achieve price stability. No change in rates is forecasted.
US Advance GDP: Thursday, 12:30. The earliest indicator of US economic growth showed a 1.3% climb in the second quarter of 2011 from 0.4% expansion in the previous quarter. This reading was somewhat below the 1.7% increase predicted. This rise is credited to the increase in exports and foreign investments. A growth of 2.3% is expected now.
US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped last week to 403,000 indicating improvement in the job market conditions following409,000 in the preceding week. Nevertheless economists predicted claims will drop to401,000. A small rise to 405,000 is predicted.
US Pending Home Sales: Thursday, 14:00. Pending sales of existing U.S.homes dropped 1.2% in August due to Hurricane Irene, stopping sales in the Northeast. Before the Hurricane, economists predicted 1.8% rise. An increase of 0.2% is expected now.
*All times are GMT. That’s it for the major events this week. Stay tuned for coverage on specific currencies.
The scenario of an orderly yet non-elegant Greek default in the first week of November is getting closer and becoming more real.
If you are interested in an alternative way of trading currencies, check out the weekly binary options setups, including EUR/USD, GBP/JPY and more.
Last week The Philly Fed Manufacturing Index scored +8.7 points unlike predictions for a negative reading of-9, a good sign of recovery after the serious 30.7 drop in September. Nevertheless, all eyes are turned to Europe and the EU Summit this Sunday and a follow up later on.
Important decisions are about to take place concerning the huge debt crisis affecting worldwide financial markets. Options are becoming limited.
Let’s Start
EU Economic Summit: Sunday. The leaders of the Euro-zone will try to reach an agreement about the usage of the EFSF bailout fund, recapitalization of the banks and the size of the Greek haircut. Negotiations are stuck and a second summit on Wednesday has a better chance of reaching an agreement on something.
Canadian rate decision: Tuesday, 14:00. The BOC decided to maintain rates at 1.25% for the seventh time however hinted strongly about a possible rate hike in the next rate decision meeting. The bank also announced that monetary stimulus will be stopped in case the growth continues in order to achieve a 2.0% inflation rate. No change is forecasted.
US CB Consumer Confidence: Tuesday, 14:00. The Conference Board Consumer Confidence Index increased in September, less than predicted, to 45.4 from45.2 in August while a rise to 46.2 was predicted. Consumers are worried about current conditions which weakens consumer spending. A rise to 46.3 is predicted.
US Core Durable Goods Orders: Wednesday, 12:30. U.S. companies’ orders of durable goods, excluding transportation products, dropped by 0.1% in August contrary to predictions of 0.1% gain. This important spending indicator reflects the weakness in theUS economy. An increase of 0.6% is predicted now.
US New Home Sales: Wednesday, 14:00.US new home sales dropped by 2.3% in August in line with predictions reaching 295,000 units after302,000 in the previous month. New home prices are still considerably higher than existing home prices taking into account the foreclosure deals tempting the US home buyer. This situation is expected to weigh on future new home sales. A rise to 303,000 units is expected now.
NZ rate decision, Wednesday, 20:00.New Zealand’s central bank decided to keep rates at 2.50% in light of increasing global economic risks despite a positive recovery process in NZ domestic economy fearing tough conditions abroad will jeopardize exports. Rate are expected to be maintained at 2.50%.
Japanese rate decision: Thursday. The Bank of Japan maintained its overnight call rate between 0 to 0.1% by a unanimous vote and continues its monetary easing to achieve price stability. No change in rates is forecasted.
US Advance GDP: Thursday, 12:30. The earliest indicator of US economic growth showed a 1.3% climb in the second quarter of 2011 from 0.4% expansion in the previous quarter. This reading was somewhat below the 1.7% increase predicted. This rise is credited to the increase in exports and foreign investments. A growth of 2.3% is expected now.
US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped last week to 403,000 indicating improvement in the job market conditions following409,000 in the preceding week. Nevertheless economists predicted claims will drop to401,000. A small rise to 405,000 is predicted.
US Pending Home Sales: Thursday, 14:00. Pending sales of existing U.S.homes dropped 1.2% in August due to Hurricane Irene, stopping sales in the Northeast. Before the Hurricane, economists predicted 1.8% rise. An increase of 0.2% is expected now.
*All times are GMT. That’s it for the major events this week. Stay tuned for coverage on specific currencies.
The scenario of an orderly yet non-elegant Greek default in the first week of November is getting closer and becoming more real.
If you are interested in an alternative way of trading currencies, check out the weekly binary options setups, including EUR/USD, GBP/JPY and more.
Friday, October 21, 2011
EUR/USD Oct. 21 – Stays in Channel as Summit Headlines Remain Confusing
Euro dollar continues to trade choppily in a smaller range within the channel. Discussions about the crisis strategy aren’t fruitful yet, and the leaders are still scrambling to get something done, perhaps for a second summit afterwards. The calendar is relatively light, but will some news about a comprehensive solution break before the week ends?
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
Asian Quiet trading under the 1.38 line..
Current range: 1.3725 to 1.38.
Further levels in both directions: Below 1.3725, 1.3650, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
Above: 1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
Note the downtrend channel which accompanies the pair. It’s getting narrower.
1.3650 is an important cushion for the current range and its role strengthened.
1.38 is only a minor line before 1.3838, which is also becoming weaker.
Euro/Dollar trades in channel - click on the graph to enlarge.
EUR/USD Fundamentals
8:00 German Ifo Business Climate. Exp. 106.3. Actual 106.4. No big surprises here, but still a deterioration.
17:00 US FOMC member Narayana Kocherlakota talks.
17:20 US FOMC member Richard Fisher talks.
19:00 US FOMC member Janet Yellen talks.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
EFSF Scrambling: The leaders of Germany and France are trying to come up with something towards the summit on Sunday, October 23rd, before the bigger G-20 summit which begins on November 3rd. According to denied reports, there is a significant gap. One of the ideas on the table is to postpone the summit or have a second one on Wednesday, October 26th. They know that time is running out before the G-20 summit, when The Plan of a Greek default at the beginning of November is set to happen. Currently the long list of confusing reports just adds to the choppiness.
Greek parliament approves austerity again: A two-day general strike, and massive protests of which some turned violent didn’t stop the parliament from approving more austerity. Also in Greece, a report that 200 billion euros had fled the country adds pressure on the banking system, which has a shortage in cash and is exposed to Greek sovereign debt.
France’s rating in danger: After Moody’s slashed Spain’s credit rating to A1, more than expected and Slovakia was downgraded, S&P talks about downgrading France as aid to its leveraged banks looms over Europe’s second largest country.
Trouble in Portugal: Spain’s neighbor has a significant hole in its budget which it is now trying to fix. This sounds too familiar to Greece.
US Situation Improving: The huge leap in the Philly Fed Index was great news, but with the current focus on the debt crisis, it was ignored. This joined the excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. QE3 is away from the table, and we’ll probably hear more about that from the 3 Fed officials that will speak late in the day.
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
Asian Quiet trading under the 1.38 line..
Current range: 1.3725 to 1.38.
Further levels in both directions: Below 1.3725, 1.3650, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
Above: 1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
Note the downtrend channel which accompanies the pair. It’s getting narrower.
1.3650 is an important cushion for the current range and its role strengthened.
1.38 is only a minor line before 1.3838, which is also becoming weaker.
Euro/Dollar trades in channel - click on the graph to enlarge.
EUR/USD Fundamentals
8:00 German Ifo Business Climate. Exp. 106.3. Actual 106.4. No big surprises here, but still a deterioration.
17:00 US FOMC member Narayana Kocherlakota talks.
17:20 US FOMC member Richard Fisher talks.
19:00 US FOMC member Janet Yellen talks.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
EFSF Scrambling: The leaders of Germany and France are trying to come up with something towards the summit on Sunday, October 23rd, before the bigger G-20 summit which begins on November 3rd. According to denied reports, there is a significant gap. One of the ideas on the table is to postpone the summit or have a second one on Wednesday, October 26th. They know that time is running out before the G-20 summit, when The Plan of a Greek default at the beginning of November is set to happen. Currently the long list of confusing reports just adds to the choppiness.
Greek parliament approves austerity again: A two-day general strike, and massive protests of which some turned violent didn’t stop the parliament from approving more austerity. Also in Greece, a report that 200 billion euros had fled the country adds pressure on the banking system, which has a shortage in cash and is exposed to Greek sovereign debt.
France’s rating in danger: After Moody’s slashed Spain’s credit rating to A1, more than expected and Slovakia was downgraded, S&P talks about downgrading France as aid to its leveraged banks looms over Europe’s second largest country.
Trouble in Portugal: Spain’s neighbor has a significant hole in its budget which it is now trying to fix. This sounds too familiar to Greece.
US Situation Improving: The huge leap in the Philly Fed Index was great news, but with the current focus on the debt crisis, it was ignored. This joined the excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. QE3 is away from the table, and we’ll probably hear more about that from the 3 Fed officials that will speak late in the day.
Monday, October 17, 2011
EURUSD on the weekly chart
After a downside sharp move that we have seen in the past few weeks, the pair has found a support and has rebounded significantly since then.
As such, we now suspect that wave D is almost complete and that the EURUSD is now trading in the final stages of wave B) running triangle, which we may see completed later this year.
Keep in mind that this B) wave is only a second leg of the corrective move lower started with the the 2008's recession So, once wave B) is done, a sharp sell-off will most probably follow in C) move, below the black wave B!
As such, we now suspect that wave D is almost complete and that the EURUSD is now trading in the final stages of wave B) running triangle, which we may see completed later this year.
Keep in mind that this B) wave is only a second leg of the corrective move lower started with the the 2008's recession So, once wave B) is done, a sharp sell-off will most probably follow in C) move, below the black wave B!
Saturday, October 15, 2011
Forex Most Important Events of the Week – October 17-21
Ben Bernanke's speech, German ZEW Economic Sentiment and U.S. employment claims market moves are some of the market movers awaiting us this week. Here is an outlook on the main events.
Last week the mood towards the euro worsened as the European Central Bank released its monthly bulletin accounting for its recent policy meeting and stressing the high uncertainty regarding Europe’s economic outlook. Although the rate was unchanged, there were many speculations for at least a 25 basis points cut. This release sent the EUR/USD down amost 70-pips.
Let’s dive right in.
UK inflation data: Tuesday, 8:30. UK inflation climbed to 4.5% in August from 4.4% in the previous month due to higher transport costs, and clothing. In light of this reading BOE £200bn quantitative easing program is likely to increase. A further increase to 4.9% is predicted now.
Euro-Zone German ZEW Economic Sentiment: Tuesday, 9:00. Germany’s economic sentiment continued to decline in September reaching -43.3 from -37.6 in the previous month. Analysts expected the reading to drop to -45. This slide reflects the reoccurring crisis in Europe. Another decrease to -44.7 is expected.
US PPI: Tuesday, 12:30. Producer prices were flat in August despite the rise in food prices and following 0.2% gain in July. Economists predicted PPI to decline by 0.1%. Meanwhile core PPI excluding food and energy gained 0.1% from 0.4% increase in July indicating inflation is slowing down. PPI is expected to increase by 0.2% as well as core PPI.
US TIC Long-Term Purchases: Tuesday, 13:00. U.S. TIC long term purchases increased below expectations in July reaching 9.5 billion from 3.4 billion in the previous month. Economists forecasted an increase of 27.3 billion. A rise to 27.8 billion is forecasted.
Ben Bernanke speaks: Tuesday, 17:15. Ben Bernanke head of the Federal Reserve is scheduled to speak at the Federal Reserve Bank’s 56th Economic Conference, in Boston. His speeches cause high volatility in the market.
US Building Permits: Wednesday, 12:30. The number of building permits increased to 630.000 in August from the 597.000 registered in July, according to data released by the US Census Bureau. The result is higher than market consensus of 600.000. A small decline to 620,000 is predicted now.
US inflation data: Wednesday, 12:30.US inflation rate Continued to climb rising by 0.4% in August after 0.5% jump nut the Core CPI excluding food and energy increased by 0.2% in line with predictions and the same as in the previous month indicating a healthy inflation rate with will make it hard for the FOMC members to plead for another round of QE. Core CPI is expected to increase by 0.2% while CPI is predicted to grow by 0.4%.
US Unemployment Claims: Thursday, 12:30. Initial claims for unemployment in the US dropped by a mere 1000 claims to 404,000 after seasonal adjustment. Economists expected a higher figure of 406,000 pointing to a possible improvement in the employment market. A small increase to 408,000 is predicted.
US Existing Home Sales: Thursday, 14:00. A nice climb in sales of second hand homes despite tight credit and appraisal problems sales reached 5.03 million units in August from 4.67 million in the previous month. Economists predicted a much lower figure of 4.75 million units. existing home sales are at their highest level since March and are up 18.6 percent compared to August of 2010. A decline to 4.95 million is expected now.
US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the mid-Atlantic region dropped further but slower in September reaching -17.5 from-30.7 in the previous month. This reading was lower than the -14.7 predicted. However employment got stronger in September moderating decline. Another more moderate decline of 8.7 is forecasted.
Euro-Zone German Ifo Business Climate: Friday, 9:00. German business confidence dropped less than expected in September reaching 107.5 after108.7 in the previous month offering hope for Europe’s largest economy in resisting the European debt crisis. A drop to 106.3 is predicted.
Canadian inflation data: Friday, 11:00. Core consumer price inflation inCanada excluding volatile components, increased more-than-expected in August gaining 0.4% after 0.2% increase in the previous month. This increase was well above predictions of 0.1% climb. Core CPI is expected to grow by 0.3% while CPI is predicted to increase by 0.1%.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
Last week the mood towards the euro worsened as the European Central Bank released its monthly bulletin accounting for its recent policy meeting and stressing the high uncertainty regarding Europe’s economic outlook. Although the rate was unchanged, there were many speculations for at least a 25 basis points cut. This release sent the EUR/USD down amost 70-pips.
Let’s dive right in.
UK inflation data: Tuesday, 8:30. UK inflation climbed to 4.5% in August from 4.4% in the previous month due to higher transport costs, and clothing. In light of this reading BOE £200bn quantitative easing program is likely to increase. A further increase to 4.9% is predicted now.
Euro-Zone German ZEW Economic Sentiment: Tuesday, 9:00. Germany’s economic sentiment continued to decline in September reaching -43.3 from -37.6 in the previous month. Analysts expected the reading to drop to -45. This slide reflects the reoccurring crisis in Europe. Another decrease to -44.7 is expected.
US PPI: Tuesday, 12:30. Producer prices were flat in August despite the rise in food prices and following 0.2% gain in July. Economists predicted PPI to decline by 0.1%. Meanwhile core PPI excluding food and energy gained 0.1% from 0.4% increase in July indicating inflation is slowing down. PPI is expected to increase by 0.2% as well as core PPI.
US TIC Long-Term Purchases: Tuesday, 13:00. U.S. TIC long term purchases increased below expectations in July reaching 9.5 billion from 3.4 billion in the previous month. Economists forecasted an increase of 27.3 billion. A rise to 27.8 billion is forecasted.
Ben Bernanke speaks: Tuesday, 17:15. Ben Bernanke head of the Federal Reserve is scheduled to speak at the Federal Reserve Bank’s 56th Economic Conference, in Boston. His speeches cause high volatility in the market.
US Building Permits: Wednesday, 12:30. The number of building permits increased to 630.000 in August from the 597.000 registered in July, according to data released by the US Census Bureau. The result is higher than market consensus of 600.000. A small decline to 620,000 is predicted now.
US inflation data: Wednesday, 12:30.US inflation rate Continued to climb rising by 0.4% in August after 0.5% jump nut the Core CPI excluding food and energy increased by 0.2% in line with predictions and the same as in the previous month indicating a healthy inflation rate with will make it hard for the FOMC members to plead for another round of QE. Core CPI is expected to increase by 0.2% while CPI is predicted to grow by 0.4%.
US Unemployment Claims: Thursday, 12:30. Initial claims for unemployment in the US dropped by a mere 1000 claims to 404,000 after seasonal adjustment. Economists expected a higher figure of 406,000 pointing to a possible improvement in the employment market. A small increase to 408,000 is predicted.
US Existing Home Sales: Thursday, 14:00. A nice climb in sales of second hand homes despite tight credit and appraisal problems sales reached 5.03 million units in August from 4.67 million in the previous month. Economists predicted a much lower figure of 4.75 million units. existing home sales are at their highest level since March and are up 18.6 percent compared to August of 2010. A decline to 4.95 million is expected now.
US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the mid-Atlantic region dropped further but slower in September reaching -17.5 from-30.7 in the previous month. This reading was lower than the -14.7 predicted. However employment got stronger in September moderating decline. Another more moderate decline of 8.7 is forecasted.
Euro-Zone German Ifo Business Climate: Friday, 9:00. German business confidence dropped less than expected in September reaching 107.5 after108.7 in the previous month offering hope for Europe’s largest economy in resisting the European debt crisis. A drop to 106.3 is predicted.
Canadian inflation data: Friday, 11:00. Core consumer price inflation inCanada excluding volatile components, increased more-than-expected in August gaining 0.4% after 0.2% increase in the previous month. This increase was well above predictions of 0.1% climb. Core CPI is expected to grow by 0.3% while CPI is predicted to increase by 0.1%.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
Saturday, October 8, 2011
Questions a forex trader should ask himself during the weekend
Did you trade like a drunk monkey this Friday?
As the weekend comes and I often think, "How the hell did I get here" You wake up in a daze and there, lying in bed next to you is a naked USD/JPY trade?. It looked so much better when they were drunk on the morning of Friday, during the NFP. Now you're stuck with it until Sunday afternoon. You can not call her a taxi. It seems that you will be spending another night with a trade. Maybe I did not even use protection (stop loss). Perhaps it's even pregnant...
Well, that's enough with the analogy.
Did I make money on Monday and Tuesday, and lose all of it during the rest of the week?
A lot of traders are determined to sabotage their own success. Have you ever hurt a good start of week, trading for the week? One of my friends traded profitably on Monday. He made 166 pips. His goal for the week was 250. You know what he did next? He stopped trading. He did not place any more orders during the week.
It's as if his employer gave him a check early and put him on leave for the rest of the week. Good job pal!
Did you start your week badly, but end up profitable on Friday?
This is rare. If you have done so, please answer the following questions:
Did you change the size of your trades later into the week to get your money back?
Did you focus more on your plan?
What plan did you use to get the money back? Could you do this again?
What is my plan for next week?
Are you burned? You need a few days off? What is your goal for next week? What do you want to accomplish? What have you done well in the last 3 or 4 trading weeks? How can you repeat that?
Was I lucky?
Were you lucky last week? If your trades have been considerably more losers rather than winners, how much you lost? How long would it take to earn that back? What is the trade size? You're risking too much on trade? Remember that huge commercial size feels great when things go wrong, but when things (and things always fall apart at some point), the goal is to lose as little as possible.
What would happen if I ...
Cut in half my size trade next week?
Trading stopped and rested my head for a few days?
Took 10 losses in a row on my next 10 trades? Could I survive?
Found a new interesting strategy? Would I use it to trade, or stay with what I have?
Have a great weekend.
As the weekend comes and I often think, "How the hell did I get here" You wake up in a daze and there, lying in bed next to you is a naked USD/JPY trade?. It looked so much better when they were drunk on the morning of Friday, during the NFP. Now you're stuck with it until Sunday afternoon. You can not call her a taxi. It seems that you will be spending another night with a trade. Maybe I did not even use protection (stop loss). Perhaps it's even pregnant...
Well, that's enough with the analogy.
Did I make money on Monday and Tuesday, and lose all of it during the rest of the week?
A lot of traders are determined to sabotage their own success. Have you ever hurt a good start of week, trading for the week? One of my friends traded profitably on Monday. He made 166 pips. His goal for the week was 250. You know what he did next? He stopped trading. He did not place any more orders during the week.
It's as if his employer gave him a check early and put him on leave for the rest of the week. Good job pal!
Did you start your week badly, but end up profitable on Friday?
This is rare. If you have done so, please answer the following questions:
Did you change the size of your trades later into the week to get your money back?
Did you focus more on your plan?
What plan did you use to get the money back? Could you do this again?
What is my plan for next week?
Are you burned? You need a few days off? What is your goal for next week? What do you want to accomplish? What have you done well in the last 3 or 4 trading weeks? How can you repeat that?
Was I lucky?
Were you lucky last week? If your trades have been considerably more losers rather than winners, how much you lost? How long would it take to earn that back? What is the trade size? You're risking too much on trade? Remember that huge commercial size feels great when things go wrong, but when things (and things always fall apart at some point), the goal is to lose as little as possible.
What would happen if I ...
Cut in half my size trade next week?
Trading stopped and rested my head for a few days?
Took 10 losses in a row on my next 10 trades? Could I survive?
Found a new interesting strategy? Would I use it to trade, or stay with what I have?
Have a great weekend.
Friday, October 7, 2011
Too many strategies, too many systems, too many indicators...
We all did it. We are all guilty.
Oh, I was just trying this new thing in my trading.
I wanted to see what would happen if the price bounced off the trendline.
I decided today I want to change only with the trend.
GBP / JPY has a greater range of everyday, so I wanted to trade today.
One day support and resistance. The next day follow trading signals from some random website. The second day is a new book from Amazon you about Fib retracements. The day after that is Jim Cramer, and then trading Forex news, and then an exotic currency pair that you heard that "works best for trend trading," and then you are extremely confused and end up in front of your computer that looks like this:
At some point we reach too many trading systems. Too many ideas. No confidence. No defined directions. Something different every day. An endless loop of learning new things, but makes no money. A road with no destination. Traders Hell.
It's pure evil.
Oh, I was just trying this new thing in my trading.
I wanted to see what would happen if the price bounced off the trendline.
I decided today I want to change only with the trend.
GBP / JPY has a greater range of everyday, so I wanted to trade today.
One day support and resistance. The next day follow trading signals from some random website. The second day is a new book from Amazon you about Fib retracements. The day after that is Jim Cramer, and then trading Forex news, and then an exotic currency pair that you heard that "works best for trend trading," and then you are extremely confused and end up in front of your computer that looks like this:
At some point we reach too many trading systems. Too many ideas. No confidence. No defined directions. Something different every day. An endless loop of learning new things, but makes no money. A road with no destination. Traders Hell.
It's pure evil.
Friday, September 30, 2011
End of Week, Month, Quarter Means End of Rally for the EURUSD?
Euro dollar repairs its conquests and returns to the lower range, following yet another line of support. Correction is already over? European inflation have cheerleaders strong euro, which received quite a few figures rău. The last hours in this week, month and quarter will likely provide more unstable as trading positions are adjusted.
Here's a quick update on technique, fundamentals, and what happens in the markets.
EUR / USD Technical
Asian Session: More drops were seen as a pair struggledaround 1.3550.
• Current range: 1.3430 - 1.35.
• Additional levels in both directions: Below 1.3430,, 1.3385, 1.3322, 1.3250, 1.3180.
• Above: 1.35, 1.3550, 1.3630, 1.37, 1.3750 1.3838, 1.3950
• Looking up, now becomes important resistance 1.3550.
• On the downside, 1.3430 is a significant cushion.
Euro / dollar growth - click on graphic to enlarge.
EUR / USD Fundamentals
• Retail sales in Germany 6:00. Exp. -0.4%. Real -2.9%. Big disappointment.
• 6:45 French consumer spending for two months. Exp. 0.2% and 0.4%. -0.2% And 0.2% real - lower than expected.
• 9:00 IPC European Flash estimate. Exp. 2.5%. Current 3%. Upside surprise, not cheerleaders euro.
• 9:00 European unemployment. Exp. 10%. Real de 10%.
• 12:30 U.S. personal spending. Exp. 0.2%.
• U.S. Core PCE Price Index 12:30. Exp. 0.2%.
• 12:30 U.S. personal income. Exp. 0.1%.
• 1:45 p.m. U.S. Chicago PMI. Exp. 55.8.
• 1:55 p.m. U.S. consumer sentiment. Exp. 57.9 points.
* All times are GMT.
For more events later in the week, see Euro to U.S. dollars forecast
EUR / USD Sentiment
• End of month / quarter flows: Some funds are re-balancing their portfolios at the end of this period, which was characterized by stock market drops and a strong dollar. This is one reason for the growth seen earlier this week. This is now debugging.
• double downgrade New Zealand: a country sound more in the world, has received a credit rating downgrade by two agencies. This sent a month in June lower kiwi and also had a negative effect on the euro.
• China is the land: the manufacturing PMI recently published by HSBC showed a third month of contraction, although it was only marginally below the separation of growth and contraction. This indicates a soft landing. Many talk about a hard landing.
• multi-trillion rescue fund: the hope of rescue fund leverage (EFSF) are winding down as refusals to become louder and louder?. While German lawmakers offered a broad new powers EFSF approval, the message is that this is the last approval.
• Troika in Greece, but the default still looms: Troika EU / IMF is in Greece, after the Parliament approved the property tax there. They are expected to give their stamp on the long-delayed installment of aid to Greece, before the country runs out of money, although those talks run into difficulties. But talking about a default will not die. Here, denials do not help. According to reports, Greece will take place on line for 6 weeks, and get involved in early November. Time will be used for preparations from other countries and in banks. These plans are also awaiting approval of the German Parliament.
• Some positive U.S. News: While the focus remains on the European debt crisis, a significant decrease in U.S. jobless claims and the revision in Q2 GDP up by providing some hope that the U.S. will escape recession. These numbers come beautiful background of many of the poor.
Here's a quick update on technique, fundamentals, and what happens in the markets.
EUR / USD Technical
Asian Session: More drops were seen as a pair struggledaround 1.3550.
• Current range: 1.3430 - 1.35.
• Additional levels in both directions: Below 1.3430,, 1.3385, 1.3322, 1.3250, 1.3180.
• Above: 1.35, 1.3550, 1.3630, 1.37, 1.3750 1.3838, 1.3950
• Looking up, now becomes important resistance 1.3550.
• On the downside, 1.3430 is a significant cushion.
Euro / dollar growth - click on graphic to enlarge.
EUR / USD Fundamentals
• Retail sales in Germany 6:00. Exp. -0.4%. Real -2.9%. Big disappointment.
• 6:45 French consumer spending for two months. Exp. 0.2% and 0.4%. -0.2% And 0.2% real - lower than expected.
• 9:00 IPC European Flash estimate. Exp. 2.5%. Current 3%. Upside surprise, not cheerleaders euro.
• 9:00 European unemployment. Exp. 10%. Real de 10%.
• 12:30 U.S. personal spending. Exp. 0.2%.
• U.S. Core PCE Price Index 12:30. Exp. 0.2%.
• 12:30 U.S. personal income. Exp. 0.1%.
• 1:45 p.m. U.S. Chicago PMI. Exp. 55.8.
• 1:55 p.m. U.S. consumer sentiment. Exp. 57.9 points.
* All times are GMT.
For more events later in the week, see Euro to U.S. dollars forecast
EUR / USD Sentiment
• End of month / quarter flows: Some funds are re-balancing their portfolios at the end of this period, which was characterized by stock market drops and a strong dollar. This is one reason for the growth seen earlier this week. This is now debugging.
• double downgrade New Zealand: a country sound more in the world, has received a credit rating downgrade by two agencies. This sent a month in June lower kiwi and also had a negative effect on the euro.
• China is the land: the manufacturing PMI recently published by HSBC showed a third month of contraction, although it was only marginally below the separation of growth and contraction. This indicates a soft landing. Many talk about a hard landing.
• multi-trillion rescue fund: the hope of rescue fund leverage (EFSF) are winding down as refusals to become louder and louder?. While German lawmakers offered a broad new powers EFSF approval, the message is that this is the last approval.
• Troika in Greece, but the default still looms: Troika EU / IMF is in Greece, after the Parliament approved the property tax there. They are expected to give their stamp on the long-delayed installment of aid to Greece, before the country runs out of money, although those talks run into difficulties. But talking about a default will not die. Here, denials do not help. According to reports, Greece will take place on line for 6 weeks, and get involved in early November. Time will be used for preparations from other countries and in banks. These plans are also awaiting approval of the German Parliament.
• Some positive U.S. News: While the focus remains on the European debt crisis, a significant decrease in U.S. jobless claims and the revision in Q2 GDP up by providing some hope that the U.S. will escape recession. These numbers come beautiful background of many of the poor.
Tuesday, September 27, 2011
EURUSD 150 Pips Rally - Why?
Investors are probably scratching their heads right now wondering how risk appetite can be so strong this morning after European officials rejected all of yesterday's rumors about increasing the European Financial Stability Facility (EFSF) and using the European Investment Bank (EIB) to bail the euro out. The reason why the mood continues to improve is because regardless of the denials by European nations that a deal is in the works, the market realizes that if the Europeans are serious about ending their sovereign debt crisis once and for all - and it certainly sounds like they are - they need to announce a major bailout plan in the very near future. It may not take the form of what the U.K. Telegraph or CNBC proposes, but it needs to be equally large and ambitious. In other words, if the market wants a European style TARP, policymakers need to meet or exceed their expectations and based upon recent comments from EU officials, something is in the works whether they admit to it or not.
Optimistic About Greek Vote
At the same time, investors are also optimistic about today's vote in Greece. The Greek Parliament is widely expected to approve an unpopular increase in property tax to show their resolve in slashing their deficit. The Prime Minister even pledged to make a "superhuman effort" to make their debt reduction program a success. Buyers of Italian and Spanish bonds demanded a higher yield at today's auction but the number of bids to the number bonds available for purchase (bid to cover ratio) was strong.
Quarter End Rebalancing Needs
The quarter is also coming to an end and in order to rebalance their portfolios following the sharp sell-off in equities in Q3, money managers will need to buy stocks and high yielding currencies. To clarify further for our new readers, imagine that you are a global money manager with 50 percent of your portfolio in US equities and 50 percent of your portfolio in the German stocks. In the third quarter, US stocks lost approximately 12 percent of their value while German stocks declined by approximately 25 percent. Adjusting for the 6 percent decline in the euro in the third quarter and the drop in the value of German stocks is closer to 30 percent. In order to rebalance the portfolio, you will need to buy both U.S. and German stocks but more euros will need to be bought than dollars.
US Confidence Rebounds but Remains Near 2 Yr Low
Across the Atlantic, U.S. consumer confidence rose slightly in the month of September according to Conference Board. Although this may be a sign that confidence is stabilizing, before getting too excited, it is important to realize that consumer sentiment remains just a hair above its 2 year low. Manufacturing activity in the Richmond region also contracted at a slower pace which is in line with the rebound seen in other parts of the nation. Stronger U.S. numbers should help to sustain risk appetite in the financial markets.
Optimistic About Greek Vote
At the same time, investors are also optimistic about today's vote in Greece. The Greek Parliament is widely expected to approve an unpopular increase in property tax to show their resolve in slashing their deficit. The Prime Minister even pledged to make a "superhuman effort" to make their debt reduction program a success. Buyers of Italian and Spanish bonds demanded a higher yield at today's auction but the number of bids to the number bonds available for purchase (bid to cover ratio) was strong.
Quarter End Rebalancing Needs
The quarter is also coming to an end and in order to rebalance their portfolios following the sharp sell-off in equities in Q3, money managers will need to buy stocks and high yielding currencies. To clarify further for our new readers, imagine that you are a global money manager with 50 percent of your portfolio in US equities and 50 percent of your portfolio in the German stocks. In the third quarter, US stocks lost approximately 12 percent of their value while German stocks declined by approximately 25 percent. Adjusting for the 6 percent decline in the euro in the third quarter and the drop in the value of German stocks is closer to 30 percent. In order to rebalance the portfolio, you will need to buy both U.S. and German stocks but more euros will need to be bought than dollars.
US Confidence Rebounds but Remains Near 2 Yr Low
Across the Atlantic, U.S. consumer confidence rose slightly in the month of September according to Conference Board. Although this may be a sign that confidence is stabilizing, before getting too excited, it is important to realize that consumer sentiment remains just a hair above its 2 year low. Manufacturing activity in the Richmond region also contracted at a slower pace which is in line with the rebound seen in other parts of the nation. Stronger U.S. numbers should help to sustain risk appetite in the financial markets.
Saturday, September 17, 2011
What stands behind the Forex fever
Under the umbrella of sophisticated currency trading operates online sportsbooks a lot of Romanians who promise fabulous gains.
George Soros would die of envy if they are as Romanians can earn foreign exchange transactions. If the famous financier obtained a gain of "only" 10% of several billion dollars placed on the day of the pound fell, a Romanian modest profit may reach 85% within 24 hours even if the investment is millions times smaller. at least that some companies specialized brokers in online transactions, while foreign exchange markets shows that investors, acting rather as mere agents of betting. Through these platforms every Romanian, "regardless of culture and education" can be rich, allegedly by selling and buying currencies alongside the world's major banks.
Lightning initiation in the Forex market
From the experts that I called on the pretext that we are willing to gain easy, I found that Forex trading (foreign exchange market or "forex market") are so easy to understand that you wonder why they bother some people or years to study at university years only famous for the brokers to engage in anonymous bank who knows what. "No matter if you've never traded before. What if you do not have economic knowledge? is very simple. You create register. supplied with at least 100 euros and you can start to sell and buy currencies. You take a pair and ready. If you bet that the euro falls, and even falls, you win, if you lose, "explains gracious lady, employed a specialized Forex trading platform. In our naivety we asked if we have some chance of winning. "Do we exist if people do not win?" Easily irritated asks us "experts", who informs us that perhaps profit to jump 80% in just a few hours of trading.
"If you go by the straight line curve you win"
From one of the "brokers" I learned that even the notions of reading or arithmetic are not required. You only have a minimal graphic sense. Similarity with the famous "păcănele" is striking. "Suppose that chose to lower / higher. Suppose we pair euro / dollar. Press top and see that there is a graph. You have a curve and a straight line. If at the end of the day than the straight line curve you win. The right is passed over, the gain is greater. You can make 85% profit, "explains another nice lady. Just as electronic games: large or small. Nothing about that chart is actually curved in euro / dollar and" straight line ", a level established under even by the intermediary, nothing about the fact that this course is influenced by a multitude of factors and thus should be good for the investor to have some depth notions of economy, nothing about that in our case, to win 85% of amount should be placed on the euro to appreciate against the dollar a few percent better (which happens in reality only exception).
"No matter what the chart shows. Follow the straight line"
Broker but we have other games fun and downright attractive. For example, she says, we can select the "one touch", in which case we can only hope that by the end of the day will reach a curved line just once. Or we can choose to "limit" in which case Our line curve must move between two straight well represented on the screen. In translation, the exchange rate should remain at the end of the day within the limits of which we are not saying a word. We are practically free to play the blind, and that you are the very kind lady: "Yes, the chart shows the exchange rate, but that's not important. Follow the straight line. "
Forex market for all
Even more complicated concepts such as trading on margin seem a breeze after a discussion with one of the "experts" in Forex. "The minimum amount you should place it is 100 euros but with leverage, will trade actually $ 10,000, "says the third lady kind. We ask, of course, "What's that leverage?". The answer explains the situation: "This is it, one in 100 for the pair euro / dollar." Wonder if some kind of loan you take from them. We are told that if the loan was interest demanded. Ask if "we lose the leverage this more." We are responsible not. It remains only to replenish the account and ready especially since we are given a challenging example. "How much was the minimum rate Euro / dollar ? See how was the maximum. If you have bought at least and would be sold within you had doubled the amount of account ".
And yet not so simple
But in reality, say brokers true, no one, no matter how good it is, fails to buy the lowest and sell at the highest level. With regard to margin transactions, they are, despite what the operators told us, a form of interim loan from the investor and also a formula that not just anyone can understand. Represents a method that can bring gains but, as well, you can leave without a penny in your account. Suppose you decided to invest $ 100. Brokerage firm will provide a "leverage" of 1:100, that is real for every dollar invested can give you $ 100. You can thus use $ 10,000 of which own $ 100 and 9900 dollars of the company. The $ 10,000 buy euros at a rate of $ 1.27 for one euro. You buy them 7874 euro. From here on there are two possibilities: either the euro falls, where you lose money, the euro increases in case you win. Suppose the euro appreciated by 1% against the dollar. In this case, the 7874 is now worth 10,100 euros buy dollars. Return the borrowed 9900 dollars and end up with $ 200, you've doubled the amount. On the other hand if euro falls by 1% you will lose everything because the amount purchased will be worth only 9900 dollars, that is just money to be returned to the broker.
What is the truth
The reality is that in Romania, in addition to brokers like the above, there are a lot of serious companies that do not promise nor guarantee that its earnings and customer selected. Brokers these companies use roughly the same methods, but shows clearly how and gain opportunities and risks. "The risks involved in trading on financial markets are not negligible. Forex market volatility is high and in combination with margin trading with high leverage can be dangerous for a customer's account if it has no basic knowledge necessary to initiate a transaction, "said Julian ZF Rizea, manager of brokerage companies. On the other hand, the gains can be significant indeed. "risks arising from margin, and not from market volatility. use increases the risk margin, but also reverse is true, margin and multiply as can win, "said another broker. In Romania there are over 40,000 people who trade currencies online. Most couples choose to bet on the euro / leu euro / dollar and euro / pound sterling.
George Soros would die of envy if they are as Romanians can earn foreign exchange transactions. If the famous financier obtained a gain of "only" 10% of several billion dollars placed on the day of the pound fell, a Romanian modest profit may reach 85% within 24 hours even if the investment is millions times smaller. at least that some companies specialized brokers in online transactions, while foreign exchange markets shows that investors, acting rather as mere agents of betting. Through these platforms every Romanian, "regardless of culture and education" can be rich, allegedly by selling and buying currencies alongside the world's major banks.
Lightning initiation in the Forex market
From the experts that I called on the pretext that we are willing to gain easy, I found that Forex trading (foreign exchange market or "forex market") are so easy to understand that you wonder why they bother some people or years to study at university years only famous for the brokers to engage in anonymous bank who knows what. "No matter if you've never traded before. What if you do not have economic knowledge? is very simple. You create register. supplied with at least 100 euros and you can start to sell and buy currencies. You take a pair and ready. If you bet that the euro falls, and even falls, you win, if you lose, "explains gracious lady, employed a specialized Forex trading platform. In our naivety we asked if we have some chance of winning. "Do we exist if people do not win?" Easily irritated asks us "experts", who informs us that perhaps profit to jump 80% in just a few hours of trading.
"If you go by the straight line curve you win"
From one of the "brokers" I learned that even the notions of reading or arithmetic are not required. You only have a minimal graphic sense. Similarity with the famous "păcănele" is striking. "Suppose that chose to lower / higher. Suppose we pair euro / dollar. Press top and see that there is a graph. You have a curve and a straight line. If at the end of the day than the straight line curve you win. The right is passed over, the gain is greater. You can make 85% profit, "explains another nice lady. Just as electronic games: large or small. Nothing about that chart is actually curved in euro / dollar and" straight line ", a level established under even by the intermediary, nothing about the fact that this course is influenced by a multitude of factors and thus should be good for the investor to have some depth notions of economy, nothing about that in our case, to win 85% of amount should be placed on the euro to appreciate against the dollar a few percent better (which happens in reality only exception).
"No matter what the chart shows. Follow the straight line"
Broker but we have other games fun and downright attractive. For example, she says, we can select the "one touch", in which case we can only hope that by the end of the day will reach a curved line just once. Or we can choose to "limit" in which case Our line curve must move between two straight well represented on the screen. In translation, the exchange rate should remain at the end of the day within the limits of which we are not saying a word. We are practically free to play the blind, and that you are the very kind lady: "Yes, the chart shows the exchange rate, but that's not important. Follow the straight line. "
Forex market for all
Even more complicated concepts such as trading on margin seem a breeze after a discussion with one of the "experts" in Forex. "The minimum amount you should place it is 100 euros but with leverage, will trade actually $ 10,000, "says the third lady kind. We ask, of course, "What's that leverage?". The answer explains the situation: "This is it, one in 100 for the pair euro / dollar." Wonder if some kind of loan you take from them. We are told that if the loan was interest demanded. Ask if "we lose the leverage this more." We are responsible not. It remains only to replenish the account and ready especially since we are given a challenging example. "How much was the minimum rate Euro / dollar ? See how was the maximum. If you have bought at least and would be sold within you had doubled the amount of account ".
And yet not so simple
But in reality, say brokers true, no one, no matter how good it is, fails to buy the lowest and sell at the highest level. With regard to margin transactions, they are, despite what the operators told us, a form of interim loan from the investor and also a formula that not just anyone can understand. Represents a method that can bring gains but, as well, you can leave without a penny in your account. Suppose you decided to invest $ 100. Brokerage firm will provide a "leverage" of 1:100, that is real for every dollar invested can give you $ 100. You can thus use $ 10,000 of which own $ 100 and 9900 dollars of the company. The $ 10,000 buy euros at a rate of $ 1.27 for one euro. You buy them 7874 euro. From here on there are two possibilities: either the euro falls, where you lose money, the euro increases in case you win. Suppose the euro appreciated by 1% against the dollar. In this case, the 7874 is now worth 10,100 euros buy dollars. Return the borrowed 9900 dollars and end up with $ 200, you've doubled the amount. On the other hand if euro falls by 1% you will lose everything because the amount purchased will be worth only 9900 dollars, that is just money to be returned to the broker.
What is the truth
The reality is that in Romania, in addition to brokers like the above, there are a lot of serious companies that do not promise nor guarantee that its earnings and customer selected. Brokers these companies use roughly the same methods, but shows clearly how and gain opportunities and risks. "The risks involved in trading on financial markets are not negligible. Forex market volatility is high and in combination with margin trading with high leverage can be dangerous for a customer's account if it has no basic knowledge necessary to initiate a transaction, "said Julian ZF Rizea, manager of brokerage companies. On the other hand, the gains can be significant indeed. "risks arising from margin, and not from market volatility. use increases the risk margin, but also reverse is true, margin and multiply as can win, "said another broker. In Romania there are over 40,000 people who trade currencies online. Most couples choose to bet on the euro / leu euro / dollar and euro / pound sterling.
Monday, September 5, 2011
Real Time Forex Charts Basics
The first question that comes to mind when a trader wannabe sees the real time Forex charts for the first time is how to read and interpret them. Nevertheless, in order to answer that question you have to know what the chart is and what it represents. That visual projection of data displays the historical price changes of a certain pair of currencies. The charts trace the price changes on the Y axis, while the X axis represents the time. The charts presentation differs due to the varying frequencies based on which the Forex market operates. It can also be due to the huge amounts of data that are generated all over the world.
Even if real time Forex charts look difficult to understand, they are not much different than the stock charts. If you have any background knowledge and understanding of the way the currency market operates, it should not take long for you to learn and master reading and interpreting these charts. The first thing that you have to do is to select a currency pair and a specific time period that represents the length in time of each bar on the chart. You may have also noticed that there are different charts representations, such as line, candle stick or OHLC charts. The candlestick real time Forex charts are the most commonly used by both professional and amateur currency traders.
If for instance you have chosen the EUR/USD pair and the market value fluctuates around the 1.4500 value, this means that 1 unit of the EUR currency is equivalent to approximately 1.45 US dollars. You can also change the time frames, which are usually set at 1 minutes, 5 minute, 15 minutes, 1 hour, 4 hours, daily, and weekly. However, you are going to choose the time frames according to the trading system you will follow. Each system employs one or two specific time frames that are used to confirm the trends and patterns observed on the real time Forex charts. Last but not least, keep in mind that even if the Forex market is only closed during weekends, time zones are important to be kept in mind as well.
Even if real time Forex charts look difficult to understand, they are not much different than the stock charts. If you have any background knowledge and understanding of the way the currency market operates, it should not take long for you to learn and master reading and interpreting these charts. The first thing that you have to do is to select a currency pair and a specific time period that represents the length in time of each bar on the chart. You may have also noticed that there are different charts representations, such as line, candle stick or OHLC charts. The candlestick real time Forex charts are the most commonly used by both professional and amateur currency traders.
If for instance you have chosen the EUR/USD pair and the market value fluctuates around the 1.4500 value, this means that 1 unit of the EUR currency is equivalent to approximately 1.45 US dollars. You can also change the time frames, which are usually set at 1 minutes, 5 minute, 15 minutes, 1 hour, 4 hours, daily, and weekly. However, you are going to choose the time frames according to the trading system you will follow. Each system employs one or two specific time frames that are used to confirm the trends and patterns observed on the real time Forex charts. Last but not least, keep in mind that even if the Forex market is only closed during weekends, time zones are important to be kept in mind as well.
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