US Dollar Forecast Holds Key to Strategy Bias

Forex options market volatility expectations have once again dropped considerably to start the week’s trade, giving mixed outlook for trading strategy biases in the week ahead. Our 1-week volatility index trades at its lowest levels in nearly 14 months. Yet volatility expectations on key US Dollar pairs remain quite elevated—making forecasts very much unclear. Given such indecision, we will essentially keep a wait-and-see approach to broader trading strategies. The first several days of the week should give indication on whether we can expect big price moves and strong trends in the following days.

US Dollar’s Future in the Hands of Speculators

The dollar was able to manage its most aggressive rally against its chief counterpart (the euro) in months this past week; but the move would not last. Without a scheduled or unscheduled event to dramatically alter the dollar’s status in the well-worn carry trade, risk appetite would ensure the currency would remain shackled to its eight-month old bearish trend channel. Looking out over the week to come, the most pressing question for any trader is determining if and when the greenback will finally catalyze its next trend. Some may argue that direction is the primary concern; but without momentum and follow through, the result is fundamental chop that leaves the market open to volatility while slowly building up the pressure behind the eventual breakout. So, is there potential for a clear, dollar trend in the week ahead?

Euro Remains Below 1.5050 - Is It a Double Top?

The euro ended the past week marginally higher against the US dollar, but down significantly versus the commodity dollars as Credit Suisse Overnight Index Swap (OIS) rates shifted to price in fewer rate increases. Following the European Central Bank’s last policy decisions, OIS rates had been pricing in 98.5 basis points worth of hikes over the next 12 months, but eased back to pricing in 83.1 basis points worth of increases as of Friday’s close. From a technical perspective, EURUSD remains within an uptrend, but 1.5050 is a very clear barrier and a failure to break above in the near-term may signal a double top for the pair.

Japanese Yen Likely to Range Trade Against the US Dollar

Continued S&P 500 rallies made the safe-haven Japanese Yen the second-worst performing G10 currency to finish the week’s trade, finishing higher only against the similarly-downtrodden US Dollar. All major world equity indices finished anywhere from 2-3 percent above their weekly open except for the Japanese Nikkei 225—raising serious doubts on investor demand for Japanese financial asset classes and reflecting poorly on the domestic currency. Indeed, the fundamental arguments for Japanese Yen strengths are becoming increasingly scarce—especially through times of healthy financial market risk appetite.

British Pound Forecast Bullish Versus Euro but watch for BoE Surprises

The British Pound survived a week of fairly lackluster fundamental developments to trade marginally higher against the US Dollar, but a busy week of economic event risk may pose further challenges for the UK currency in the week ahead. Early-week news that Fitch Ratings took a “cautious” view on its outlook for the UK Government Bond’s AAA sovereign rating rattled markets and sent the Sterling instantly lower. The following Bank of England Quarterly Inflation report expressed a similarly cautious outlook for economic growth, and it seemed like the GBP was headed for a break of key support against the US dollar. Yet traders clearly had other things in mind, and the GBPUSD held key technical levels through the week’s close. Whether or not the pair can sustain its defense will likely depend on key event risk in the days ahead, setting the stage for another eventful week of British Pound price action.

How far can the dollar go down?

Theoretically, the US Dollar can go to zero. While unlikely, it should be remembered that nearly every currency that has ever existed throughout history, eventually has a crash that destroys 90% of absolute value, or more.

Won't foreign Central Banks support the dollar?

Why should they? If you are hungry, and your 600 lb. neighbor (who is now so fat he can't even walk anymore he needs to use one of those little carts) missed a few meals, which happen to be 5x expensive as yours, would you finance his dessert? Of course not. You are thinking many things, but supporting his habit of overeating isn't one of them. The US consumes over 25% of the world's resources but produces less than 10%. Economists may not care for such a crude analogy, but the situation with the US Dollar is very, very simple, and should not be overcomplicated. The USD has been a reserve currency for the post WW2 world, but since Nixon abandon gold standard, the USD is backed by only the belief and faith in US Government. We are seeing a commodity boom, not because of a bubble in commodity asset prices, but because of a decline in the USD, the world's reserve currency in which many commodities (especially Oil and Gold) are priced. In any event, it's not likely that foreign central banks will bail out the dollar, because that would in effect make them eat a realized loss in their current account. Moderately wealthy nations cannot afford to take the loss of the US, the largest and wealthiest economy in the world. The US has been a financial big brother who have bailed out other failing economies  but the US has no big brother to lean on, except maybe Russia, although that wouldn't go over too well in Washington. So if the US Defaults, who can come to the rescue?

Gold is cheap

Adjusted for inflation, Gold should be above 1500  without considering any boom. Many are wondering if commodities can continue to increase, without considering how depressed commodity prices were in the late 90's. An economy can live without services, or money, but people cannot decide not to eat or use Oil. Gold is money, the high price in Gold is reflective of investors concern about the value of money  any money. The US Dollar is a reserve currency so when USD goes down, so do many other currencies. The majority of USD holders are foreigners, but that is changing (in the past 10 years foreign USD holders have decreased from 77% to 62%).

What to do?

An argument of this nature should end in a that's next or that you should do. Unfortunately, this is a complex situation with no magic bullet solution. On a basic personal finances level, one should sell your mortgage at any price and become debt free with low cost of living. Don't bet on any economic upturn that will save your finances, things will only get worse. Second, do what you do well  no matter what the value of the dollar or the state of the economy, there will always be demand for goods and services (unless you happen to be in real-estate business, in which case you could start looking into farms.) The good news is that in any time of chaos, uncertainty, and reorganization, there are always massive opportunities. Taking advantage of them may not require huge amounts of capital. Knowledge of the situation can cause one to be in the right place at the right time or at least not in the wrong place at the wrong time for example it would not be smart to be in south Florida amidst economic suffering which could lead to crime, rioting, overall fraud, and a depressed local economy.

Property surrounding small country towns has been doubling in 1 year! Farmland has increased by as much as 500% in some areas over the last few years. There are plentiful opportunities in this market, but they may not be the traditional opportunities that investors are accustomed to.

It's 2008

There is a new market thinking, accept it or not. We don't live in the 1970's, it's not 1970 it's 2008. In 1970 Russia was communist, now there are more billionaires in Moscow than in New York. In 1970 Oil had not yet peaked, there was no Internet, financial markets were not deregulated to the extent that they are now, there were no derivatives, no climate change, and no Oil hungry China. In 1970 Europe was scarcely organized, only 25 years of reconstruction post ww2, and there was no Euro.

Thinking Different

Therefore, the only way to survive in the New Investment Paradigm is to be nimble and stay ahead of the information curve. In any field, applied intelligence can earn a solid position and even great profits. Safe havens are no longer safe as they were, the bond market is getting destroyed by inflation, TIPS (inflation protected bonds) are trading negative for the first time ever, meaning you are betting inflation will be worse than the small loss you will take on the bonds.

A trader named Paulson made a record Wall Street profit on single trade, shorting SubPrime loans. Gold investors are happily sitting on 300%+ returns since 2002. Those holding US Dollar short positions have doubled their money in several years. CTA programs have achieved 70% - 150% in 2007, trading currencies, commodities, and futures. Anyone long Oil or Gasoline futures in the past months would have been very profitable.

Clearly, there are hundreds of opportunities but no clear magic bullet solution that could be recommended, compared to 5 years ago when a US Dollar short or Long Gold portfolio could have been safely recommended. It is for this reason Elite E Services is launching a Global Opportunities Hedge Fund, which should be ready by late spring. If you are trading for yourself, take quick profits and don't hold any positions for the long term, and seek new opportunities. Keep in mind the opportunities may be biased toward the Short side than the long side, as DOW and NASDAQ components will be hit by a sinking dollar, sinking US Economy, and credit problems.

Trade Forex Online: Factors to consider

Factors That Influence Forex Trading

The value of a country's currency is influenced by a number of factors: The economics of the country, its trade deficit, political and social environment.

If the current government's deficit increases, its currency's value will fall. As the government decreases its deficit, the currency can begin to recover value and the exchange rate will become more favorable. The same relationship holds true with a country's trade deficit. If the country imports more goods and services than it exports it will have a negative influence on the currency.

Inflation lessens the ability of a unit of currency to buy less and less, so the currency loses value. If the inflation becomes rampant the currency is valued less because it's also viewed as unstable. As the rate of inflation begins to decline the currency begins to increase in value.

Politics and social changes can play havoc with the currency exchange rates. Changes in the regime that are viewed negatively can lower the value of the country's currency in the short term and continue into the long term. If the present government makes decisions that are looked at negatively it can decrease the currency value as well. The opposite can happen. Current government officials can make policy changes that are viewed positively by the rest of the world and that can increase the value of the currency.

For the United States, interest rates and the price of oil can have a major impact on the value of the US dollar.

Interest rates effect how much it's going to cost to borrow money and how much can be earned on investments. Historically if the US raises its interest rates it attracts foreign investors. Those investors have to sell their own currency in order to buy U.S. dollars to purchase treasury bonds. If the interest begins to drop, or the perception is that the rates won't rise any more, investors may purchase Euros as an alternative investment which lowers the value of the US dollar.

The United States is dependent on foreign oil production. Many US industries are dependent on oil and an increase in the price of oil means an increase in their expenses and a drop in profits. In a similar way, a country's dependency on oil influences how the country's currency is valued and will be impacted by changes in oil prices. The US's dependency on oil makes the dollar more sensitive to oil prices than countries who aren't so dependent. As the price of oil increases the value of the dollar drops.

Dealing With Online Forex Brokers

Online forex brokers can turn out to be your competitive advantage in the line of foreign currency trading. They are deemed as a valuable asset especially if you wanted to enter into a high stakes game of currency trading. Because of these, forex brokers are highly esteemed in the market and there are some misconceptions that have also been formed around them. With the industry booming, it's about time that some of those misconceptions be straightened out once and for all.

The Truth behind Trading with Brokers

Most of the time, we feel way too assured for our own good when we get the services of online forex brokers. We tend to feel that we are in the hands of experts so all we have to do is sit back and relax as they do all the needed work for us. So when things don't turn out quite the way we expect them to, we tend to put all the blame on the brokers. Sometimes we even feel cheated that we are paying for nothing. But the truth is that we are also to blame for the losses we incur.

All forex brokers know that in the trading arena, losses amounting to 95% are but a common thing. This is why most of them choose to abide by the rules of day trading. Exchanging currencies are very dynamic and at the end of the day, all your broker ever really does is to provide you with leads. The hand that still makes all the vital decisions is yours and not your broker.

Brokers and Offered Leverage

One of the selling points used by most forex brokers is the leverage they offer. Leverage is the profits that you can be promised by relying on just one forex broker alone. Some even go as far as giving 300:1 and unfortunately some people take the bait. In truth, 20:1 is the maximum that brokers can handle and assure you with. It's easy to believe that they can do it with a spectrum of trading methods but at the end of the day, keep in mind that these brokers are human too. They can only do so much to cover that much and also consider the fact that you may not be their only client.

Listening to Your Forex Broker

One of the great offers that a forex broker can perhaps give you as an extra benefit is their word of advice. You would especially appreciate this if you are new in the game. But the thing is, you should not swallow every piece of advice that your forex broker will give you. Online forex brokers are hired to help you find opportunities but they should never be the ones made to handle the course of your business. At the end of the day, you should still listen to your own gut feel and instincts.

Also, you should never buy most of the things that your forex broker tells you out of the context of work. As much as possible, keep your relationship at a professional level.

Euro Pullback May Turn into Reversal Should Dollar Recover

There is a reason that EURUSD is the world’s most liquid currency pair. While the European regional and US economies are large trade partners; the real basis for this active is that the US dollar and euro account for the highest and second highest level of reserves in the world’s central banks. The dollar has held the title of top reserve currency (and in turn being used to value commodities, acting as a benchmark or pegged currencies, etc) for decades; but it has been the talk of academic, political and speculative circles for months that the greenback is slowly losing its clout. Who will step in to replace the dollar?

British Pound Assured Volatility as BoE is Forced into a Policy Decision

Though they are inextricably linked, economic health and interest rate policy post two very unique concerns for sterling traders. The extension of the nation’s record-breaking recession a few weeks ago has devalued the currency’s standing amongst peers that have already emerged from the gloom. In turn, this throws interest rate timing and monetary policy in general into question. The Bank of England (BoE) will convene this coming Thursday and the outcome - whether it result in looser, tighter or no change to policy - will almost certainly alter trends and stoke volatility. What traders need to ask themselves is whether any drives will last long enough to break prominent ranges (GBPUSD) and perhaps reestablish the pound’s standing in the constant ebb and flow of risk trends.

US Dollar Forecast Remains Bullish Ahead of Critical Economic Data

The US Dollar finally showed signs of life through the past week of trading, setting a substantial low against the Euro and other key forex counterparts. An early-week tumble in the US S&P 500 and other financial risk sentiment barometers provided the spark for the dollar turnaround. Given extremely one-sided Dollar-bearish sentiment, it was little surprise to see the previously downtrodden currency continue mostly higher through Friday’s close. We have long argued that the Greenback was likely to establish a substantial low on overstretched market positioning. Of course, it is never profitable to be early on calls for major counter-trend moves. Yet the substantive week-long turnaround gives us reason to believe that the US Dollar has set a major low and will likely continue higher through end-of-year trading.

Currency Trading Strategy

The day trader's currency trading strategy is usually made up of a multitude of signals, which trigger buy or sell decisions. A currency trading strategy can use technical analysis, fundamental analysis, or a combination of the two. This depends on the way the market behaves on a given day and on the currency trading strategy that the trader uses. Resist the temptation to make your currency trading strategy too complicated. Cram in too many indicators into your forex trading system, and you will have too many elements to break and it will fail. A far more effective currency trading strategy is to set a reasonable profit target each time (not expecting the home run) and be satisfied with smaller profits--which on a consistent basis will build the equity in the account quickly once the compounding action kicks in. A Currency trading strategy with a high profit percentage rewards you mentally also as it will boost you up for further trade and will make it enjoyable.

When choosing a currency trading strategy , it is important to select one that best suits your needs. A solid currency trading strategy consists of entering a trade at the right place, having a stop that is properly calculated, and setting a reasonable profit target level that works time after time after time. Remember a solid currency trading strategy develops over time.

Using leverage as a currency trading strategy has always been a way to let traders make as much as they can by acting on short-term fluctuations in the forex market. Even though day traders are more interested in a currency trading strategy that focuses on intra-day movements, consulting the daily time frame chart is still very important.

Forex Market Trading

The Forex currency market is open for everyone who wants to learn how to increase their wealth, but it requires not only knowledge that you can obtain with the help of currency Forex market trading guidelines, but also a lot of practice as the practice is the only way to gain the precious experience. The goal of forex market trading is to exchange one currency for another in the expectation that the currency you bought will increase in value compared to the one you sold.

Lots of beginner traders often make the following mistakes: starting their trading without having a strategy and trading lead by emotions. Traders must decide which style and/or combination of analysis works best for them. They often read news, analyst reports, and Web site bulletin boards to get a sense of the general market sentiment and then trade either with or against that sentiment. The forex traders need to be disciplined speaking about a market renowned for its volatility, besides being aware of analysis. Currency traders make decisions by analyzing technical factors and economic fundamentals. Technical traders make their decisions using two primary tools: Charting tools (trend lines, support and resistance levels, etc,) Quantitive Trading Models (mathematical analysis to identify trading opportunities). Fundamental traders analyze key economic data, including news and government reports, to evaluate trading opportunities. The Forex trading world is tough and most newbie traders bail out in the first year. Timing is very important for traders as most securities are volatile and a small change in price can result in big gains or losses.

Best Times To Trade Currencies

Forex is a 24 hour market and there will be good setups for profitable trades in the Asian, European and US sessions. It pays to look at historical price data on forex charts to see what time of the day you could be watching the market and what time you could be doing something else. The aim is to trade when the average trading range is worthwhile and stay out of the market when price is in a narrow sideways range.

How Understanding FOREX Strategy and Analysis can Make You Richer

All successful traders have a carefully thought out FOREX strategy that they follow to make profitable trades. This FOREX strategy is generally based on a system that allows them to find good trades. And the FOREX strategy is based on some form of market analysis. Successful traders need some way to interpret and even predict some of the movements of the market.

There are two basic approaches to analysing market movements, in both equity markets and the FOREX market. These are technical analysis and fundamental analysis. However, technical analysis is much more likely to be used by traders. Still, it’s good to have an understanding of both types of analysis, so that you can decide which type would work best for your FOREX strategy

Want To Trade A Market That’s Open 24/7, Has High Leverage And Low Transaction Costs?

Dear Trader,

It never used to be possible… Historically, small time speculators and investors weren't able to trade the Forex market.

The minimum transaction sizes and strict financial requirements were so steep, that Forex trading was left to banks and major currency dealers. As such, they were the only ones who took advantage of the incredible liquidity and strong trending nature of this market.

Fortunately, new technology has allowed foreign exchange market brokers to break down the barriers and let smaller traders have a piece of the action.

This is good news when you consider that Forex market (by its very nature) is always in a ‘bull market’

You see, currencies always trade against one another. If one currency isn't doing as well, that means the opposite currency is doing that much better. For the smart trader, this means there is always a ‘bull market’ opportunity.

While it's not the same as trading in stocks or futures, with some guidance, you too can jump into this never-ending bull market.

So, if you're ready to take on currency exchange trading, you're going to need a crash course in how things work in this neck of the woods. And that’s where this website will help…

I’ve managed to secure the rights to republish a guide called “Successful Forex Trading”. It’s by no means a definitive guide - instead it covers all the basics to ensure you start off in the right direction.

US Dollar Relinquishes its Tepid Gains as the Dow Rallies

Through much of Thursday’s Asian and European session, the dollar was working on a modest but steady advance against most of its major counterparts. However, seeing as how this appreciation wasn’t supplied by any fundamental strength on the dollar’s own account; a timely reversal in equities would yield the same for the world’s most liquid but maligned currency. Investor optimism started to recover in the middle of the European session and the advance was amplified when the US market brought another round of earnings releases with it. While the third quarter earnings season doesn’t carry the authority of characterizing the definitive turning point for the markets (the previous quarter bore that responsibility) nor are market participants as hungry for any and all positive signs; the accounting to this point has offered evidence that a steady recovery is in place. Among the more notable companies to have issued income, returns or profit better than the market expected were American Express, McDonalds and AT&T. And yet, despite the consistent rally for the session, the benchmark Dow Industrial Average has not cleared the range that has developed over the past week. This is the same predicament that the dollar is, just in reverse. Investor sentiment has not veered from its bullish path; but another period of exhaustion suggests the steady buildup in speculative interests is growing extended.

Euro, British Pound Fail to Hold Ground as U.S. Dollar Rallies on Risk Aversion

The Euro pulled back from the yearly high and slipped back below 1.5000 following the rise in risk aversion, and the single-currency may test the 10-Day SMA (1.4903) for short-term support going into the North American trading session as equity futures foreshadow a lower open for the U.S. market.

Euro and Dow Challenge Psychological Barriers, Will The Rally End?

The EUR/USD has been held in check by the psychological resistance level of 1.500, which the pair recently broke above for the first time in over a year. We have seen a similar scenario with the Dow and 10,000 which could be expected as the blue chip index is currently explaining 61% of price action for the pair.

DPJ May Lead to a Weaker Yen

Non-Japanese speakers do not have to worry about change in Japan so much. Basic policies of DPJ are basically same as ones of LDP, former ruling party. However, yen will be weaker while we gradually notice DPJ's identity and policy.

I suppose non-Japanese speakers are embarrassed by change of power in Japan. As a good example, Washington Post and New York Times expressed concern about political view of Mr. Hatoyama, representative of DPJ and next Japanese PM. Their concerns do not come as a surprise. DPJ is not well known among them although Mr. Hatoyama's view is not so strange for Japanese.

But non-Japanese speakers do not have to worry about change in Japan so much. Basic policies of DPJ are basically same as ones of LDP, former ruling party. Do not forget DPJ is mainly composed of persons from LDP, former Socialist Party and central bureaucracy. (Mr. Hatoyama himself had belonged to LDP).

Some non-Japanese might point out new policies by DPJ, such as no plan to raise consumption tax rate, cash stipend to family with child (KODOMO TEATE) and so on. No problem. Based on Macro economics, DPJ's new policies do not change money flow in Japanese economy. The combination of no raising tax and expanding government expenditure had been adopted by LDP and will be kept by even DPJ.

Over 15 years, government expenditure has increased to cover stagnant household consumption in the Japanese economy. DPJ admits the necessity to increase in government expenditure, especially under the current economic recession. Cash stipend to family with child (KODOMO TEATE) is a good example for that. But DPJ strongly says no need to raise consumption tax rate. DPJ claims extra government expenditure is covered by cutting naff cost such as unbelievable high salary for retired bureaucrats.

Unfortunately, it is too logical to realize DPJ's claim. Japanese bureaucrats must not go in with DPJ, because bureaucrats try to show their power to spend money more and to keep their privileges.

As no raising tax and expanding government expenditure are written in DPJ's manifesto, DPJ would make attempts to realise it, heartily. As the results, new government would keep higher amount of JGB at least. In some instances, they might increase issuing JGB, which is basically same as LDP.

In a textbook of Economics, increase in government bond leads to higher interest rates. But no worry in Japan! Japanese household savings goes to JGB through deposit in bank, instead of expanding their consumption. It means JGB yield would be kept low or depressed lower.

FX traders of even non-Japanese speakers likely notice the next step. What would happen in lower JGB yield? Yes. Yen will be weaker while we gradually notice DPJ's identity and policy.

Risk Appetite Pulls Back Once Again but When Will the Bull Trend behind Currencies and Equities Finally Break?

Risk appetite has turned into another tentative reversal. These brief periods of tempered sentiment set within a more consistent and heady rise in optimism has been the normal pace the since the middle of July. So, the question we have to ask ourselves is whether the pull back over the past week is just another instance where the market is catching its breath before forging ahead or the makings of a meaningful and certain turn in risk appetite.

EUR/GBP Failure at Resistance Provides Scalping Opportunity

On a day that we saw significant volatility with the RBA unexpectedly raising rates and its implications for the Asian Region it was difficult to settle on a pair to execute scalping strategies. However, the EUR/GBP’s failure at a major resistance levels has given way to ideal scalping price action as traders debate whether to take the pair higher.

EURCHF's Range Looks for Fundamental Stability Amid Turbulent Volatility

The demand for yield has once again soared and the currency market has responded in kind. Rallies from high-yielding currencies and plunges from those sporting a low benchmark have sent most of the market to short-term breakouts and back into short-term trends. However, this shift is far from confirmation of a new direction for FX and the other asset classes. We have seen many swings in the recent past that have promised action but ultimately faltered with time. This makes for frustrating trading as setups for both ranges and trends ultimately fall to the directionless volatility and immediate reversals. These are not the conditions to develop normal range-based strategies. To improve our chances, or very solid technical developments. There are few opportunities that meet any of these three scenarios; but EURCHF at least fulfills the fundamental requirement. While all currencies fit somewhere on the market’s tacit risk spectrum, some pairs are buffered to the rising and falling of sentiment by deep economic ties. The close dependence of the Swiss economy on the broader Euro Zone (as well as the more or less coordinated policy efforts) establishes a semi-permanent state of congestion for the pair. There are certainly biases that develop within this chop and sharp responses to unforeseen SNB intervention; but there are is a general pattern to follow. Our setup looks to take advantage of the range low that has developed over the past two weeks with an aggressive entry and a tight stop that this pair can easily support. The long bias is purposefully aligned to potential intervention; but even if the central bank doesn’t act, the first target is still within reach. We will cancel open orders in a week.

US Dollar Rises Despite Stock Gains, Australian Data Points to Housing Bubble (Euro Open)

The US Dollar advanced despite of a sharp rally across Asian stock exchanges which would normally have been expected to weigh on the safety-linked currency. Australian lending and construction data pointed to a housing market collapse in the making in August. Swiss unemployment and the final revision of Euro Zone GDP are on tap ahead.

What makes a good Trading Strategy?

sk most NEW traders, and they will tell you about some moving average or combination of indicators or a chart pattern that they use. This is, as the more experienced trader knows, an entry point and not a strategy.

Any trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.

BUT there is one other vital ingredient that many traders forget - and that is to fully understand the "personality" of what you trade. Some traders specialise in say, gold or Brent crude or currencies or they might specialise in a particular index such as the FTSE 100 or the Dow but many traders choose to trade shares. Indeed some traders dabble in a bit of everything. I think this is the area that causes many traders to fail or at least not reach their full potential.

In my view: You absolutely MUST specialise.

I am sure that on the surface most people would say that sounds sensible but here is why it is a MUST!

Superficially, many charts look the same. I bet if you had not seen the charts for some time and someone where to show you a chart of Brent Crude over 6 months and then a chart of Barclays PLC over the same 6 months you would be hard pushed to say which was which purely on the look of the chart.

However, I bet that if you found a trader who trades ONLY Barclays day in and day out and also found someone who trades ONLY Brent Crude day in and day out, both of them would easily identify which was which. WHY?

Because every share, index or commodity has it’s own "personality".

Some will be volatile intra-day, some will follow their sector or the main index (market followers), some will do their own thing, some will spike up and down regularly, some will stop at key moving averages and some will just plough through. Some will move by 5% on average before they retrace and some by 2%. Some will gap up or down regularly, some will not. You get the idea!

Therefore, no matter how good you are at analysing indicators, moving averages, trends and patterns, the same strategy WILL NOT work for everything. I would go so far as to say that a strategy that works well for Bovis Homes, for example, is likely NOT to work for BT Group - they have very different "personalities".

So let’s return to our question: What makes a good trading strategy? Let me answer with a series of ten questions that you need to find answers to, in order to build a REALLY GOOD strategy.

1. What do you want to trade (share, index, commodity, currency, etc)? If your answer is shares (plural) I would urge you to pick one typical share at this stage to really specialise. You can add more later.
2. What "personality" does that share, index etc have?
3. What entry system is the most reliable for that share?
4. What stop loss system is the most effective for that share?
5. What average risk will a typical trade carry?
6. What exit system works well for that share?
7. What is your trading personality (attitude to risk, losses, discipline, how much do you worry etc) and can you trade that strategy without overriding it?
8. What timescale do you want to trade? (Using intra-day or end of day data)
9. How much data do you keep on past trades to help identify strategy weaknesses?
10. How does all this fit with your trading objectives?

Once you have an answer to each question you need to do one final thing. Make sure all those things fit together and complement each other. For example, if the ideal stop loss position represents a big average risk and conflicts with your own attitude to risk, you need to start again. If you will override your exit point because greed makes you hang in for more, you need to think again. Perhaps you shouldn’t trade that stock in the first place - look for one with a different "personality" which will lead to a strategy you can trade comfortably.

It is a long and sometimes painful iterative journey. You might need to go round and round in ever decreasing circles over a long time. Testing and refining, testing and refining before you can truly have a reliable and repeatable strategy that REALLY WORKS for you.

THEN, you can look for other things to trade that have the same "personality" as your specialist stock, index, commodity or currency.

Pivot Points

Those of you who have been trading for a while will be familiar with Pivot Points. During this lesson I want to go over how to find a Pivot Point and also a slightly different method of using them. First let’s look at how you calculate a Pivot Point.

Using a bar chart you will observe that each bar has an Open, High, Low and Close. This information represents all price activity during that particular period.

In the case of the following example, we shall use a daily bar. To calculate the pivot point all you need to do is add the High, Low and Close. Once this has been done you next divide the total by three, e.g. the cash FTSE on the 2nd May 02 had a High of 5192.70, a low of 5125.50, and a close of 5174.10. If you add the three together, you get 15492.3. You then divide that total by three to get a Pivot Point of 5164.10.

OK, so far so good, but what do you do with this information? Well, one technique I like to use intra day is to use the pivot point as a trend indicator. We already know that the Pivot Point for the 2nd May was 5164.10 and we will use this the next day as an intra day trend indicator.

If the price is above 5164.10, then I would only be long and if it were below 5164.10, I would only be short.

As price can fluctuate around any given point I also add a further proviso. If I have support close to 5164.10, I will first wait for the price to pass through 5164.10 and support before entering short. If I have resistance close to 5164.10, I will first wait for the price to move through the Pivot Point and resistance before entering long.

This method becomes even more powerful when the Pivot Point is close to the opening price. If, for example, the opening price is 5174.10, the Pivot Point is 5164.10, and I eventually go short at 5155, I can stay short the whole day as long as it does not go above the Pivot Point.

Once in a position I normally have a very tight stop to begin with and then will follow the market with a trailing stop to lock in profits.

Another way I like to add Pivot Points to my analysis is for more long-term projections. I will use the Pivot Point of a Yearly, Monthly and Weekly chart. In this case it would be the High, Low and Close of the previous Year, Month and Week.

How to Win the Forex Battle

Every trading activity is in fact participating in a battle. Winning the battle is a matter of knowledge, skill and experience. If you miss any of those you are going to join the long line of losers. Some says that 95 to 99 percent of the traders are lining up on the loser’s side.

How to win the battle in the currency market? It is easy to answer that question, based on the above approach – prepare yourself for the battle. If you treat currency market activity as a hobby you’ll ultimately lose all investments there. If you treat it as a business you still may loose everything.

The correct approach is: consider each pressing of the Buy/Sell button as entering a battlefield. If you enter it without having a knowledge, skill and experience on how to win, you are destined to fail. You may have some lucky trades in the beginning, though. That, by the way, is the worst case scenario for the rookie in trading.

The earlier you get your “bad” lessons, the better for your overall experience. No mater how good you consider yourself prepared, after demo trading lessons, you have no idea of the forces ruling on the real market.

In fact the worst enemy you are going to face in the very beginning is not hiding behind the walls of the global currency trading centers. Your most dangerous foe is hiding deep inside of you. That enemy is so powerful that you will be amazed how quickly it will wash away all your carefully considered decision.

No one has been able to evade the force of that destructive power. No one can understand or realize that force unless it has been confronted face to face. Start trading with real money and you will face it too. Fear, Greed or Hope are some of the names of that power.

Fear forces you to sell near the bottom and buy near the top. Greed forces you to get out of the market prematurely. Hope will keep in the trade until you loose everything. Fear may save you but hope may wreck you completely. Greed will never make you rich.

It is easy to give advice to trade without emotions and use the logic, only. How you can achieve that if you never have been there. You need to go through that turmoil, pick up your loses due to your emotional decisions and than analyze.

Study all your “bad” trades, because they are the most precious gifts on the way to proficiency in trading. Growing as an experienced trader is possible only after getting your losses in the beginning. Then sit down and carefully study the lessons they brought to you.

One thing traders never want to do is to admit of being wrong. The market is a constantly changing and it demands flexibility in taking decision. That implies monitoring and constantly adjusting, changing your decision and action. When your logical analyzes suggest that you are wrong – get out, quickly.

Once you overcome the emotions, concentrate on developing your signature way of trading. You can start with following different advisors and system and picking from them the things you like. Demo trade and test your ideas until you find the trade system which is matching completely your personality.

Now, you have to go back to emotion in a controlled way. Every time your system suggests a trade look inside you and see how you feel about this trade. You feel bad – discard it. If you feel good – keep it.

Here comes the final step: Looking for the final approval sign before submitting the trade. Here is the time, where the mastership shows up. Your weapon is loaded, the target is clearly seen on the visor and the finger is on the trigger. You have to make that final exhale, get the target over the cross point and shoot it.

How much knowledge, skill, experience and patience you need to build within in order to reach that very final stage of trading proficiency? Only you’ll know that and only you can do it. The rest is just numbers in your bank account.

Building a fortune by trading currency is not a mirage in the desert of live. There are hundreds of traders who are making living of that business and you can do it too. Study all you can find on the net and follow the steps of the best if you want to win that battle.

Canadian Dollar Technical Outlook

The USDCAD rally from 1.0631 is in 3 waves. The form suggests that the trend remains down. A break to a new low would expose a Fibonacci extension at 1.0317, the 78.6% retracement at .9914 and the 100% extension of the 1.3068-1.0782 decline at .9444. This level intersects a potential channel line at the end of September. 1.0950 is resistance.

US Dollar Forecast for Recovery Will be Put to the Test

The US Dollar finished the week higher against the Euro and other key counterparts, but a sharply disappointing Nonfarm Payrolls report nearly derailed the nascent Greenback recovery through Friday’s close. The trade-weighted US Dollar Index hit fresh monthly highs near 77.50 just ahead of the release. Immediate declines in the US S&P 500 initially sent the dollar higher, but markets clearly expressed their displeasure with the worse-than-expected payrolls release and sold USD through in subsequent trading. Sudden USD losses complicate our otherwise bullish near-term Dollar forecast, but we continue to forecast further Greenback recovery through near-term trade. Comparatively limited event risk in the days ahead has left volatility expectations lower, but flare-ups in financial market tensions could nonetheless force major moves across USD currency pairs.

Euro: Will Risk Appetite Hold EURUSD Up or Will the ECB Ease a Break?

There are more than a few concerns for fundamental euro traders in the days ahead. Where just a few months ago, the single currency was considered among the best speculatively positioned economies given its optimistic outlook for growth and hawkish bearings; we now see the euro struggling to find its place in a broad spectrum of relative risk and safety. In the normal scale of yield and risk, the euro stands just in the middle of the spectrum which leaves it to be jostled by speculative winds that find greater response from high yield (Aussie dollar) and struggling funding currencies (the US dollar). However, speculation is ever active; and some long-term considerations are starting to come to term. Among the most pressing concerns is the pace Euro Zone’s recover (especially in comparisons to that of the US) and the lingering potential for financial instability.

Risk Appetite Pulls Back Once Again but When Will the Bull Trend behind Currencies and Equities Finally Break?

Risk appetite has turned into another tentative reversal. These brief periods of tempered sentiment set within a more consistent and heady rise in optimism has been the normal pace the since the middle of July. So, the question we have to ask ourselves is whether the pull back over the past week is just another instance where the market is catching its breath before forging ahead or the makings of a meaningful and certain turn in risk appetite. The fundamentals that have developed over the months have increasingly supported an approach of caution as the outlook for growth has been deemed feeble and the prognosis for competitive yields in turn rendered bleak. Nonetheless, speculation doesn’t have to follow the lines of rationality and the natural stream of capital from the financial sidelines can continually feed the draw of capital gains. The appeal of buying into trends that are still young and selling later down the line clearly has its appeal for those that are looking to get back into the market and/or lost a significant percentage of their wealth during the 2007-2009 financial crisis. This is perhaps the most accurate rational for the steady trends the currency, equity and other capital markets that have sported since the definable turn in risk appetite back in February/March. However, this trend will not last forever; and the current pull back is putting the bull phase’s stability to the test once again. In the past week, we have seen both the dollar and yen make sharp but measured gains against high yielders. For confirmation, the Dow is the midst of its of its deepest correction since early July.

British Pound: UK Data, BOE Decision Present Breakdown Potential

The British pound was one of the strongest major currencies last week, losing only against the Canadian dollar and ending essentially unchanged versus the US dollar. That said, the moves may have been more of a relief rally than anything else, as the British pound has depreciated 2 percent against the greenback, 4.3 percent against the euro, and almost 5 percent against the Japanese yen over the past month.

Australian Dollar Rally May Finally Be Losing Steam

The Australian dollar was the weakest of the major currencies last week, and a bearish engulfing candle on the daily AUDUSD charts on October 1 suggests further declines could be in store. Since the Australian dollar still tends to move with other risky assets, traders should look for any fallout from the release of the G7 statement over the weekend. Though the statements don’t usually signal any sort of groundbreaking new biases, there are lingering concerns that there may be a more pronounced focus on currencies, and more specifically, US dollar weakness. Such a move would likely lead the US dollar higher, and thus, AUDUSD lower, on speculation of a coordinated intervention effort. Later in the week, the Australian dollar is going to encounter two of its most market-moving reports: a rate decision from the Reserve Bank of Australia and the net employment change.

New Zealand Dollar At Risk of Turn Lower on Extreme Sentiment

The New Zealand Dollar finished the week almost squarely unchanged against its US namesake, as a noteworthy pullback in global risk sentiment offset several bullish data releases from the antipodean economy. The National Bank of New Zealand reported that domestic Business Confidence surged to its highest levels in 10 years—painting a decidedly rosy picture for the future of business growth. Indeed, 49.1 percent of businesses expected the economy to improve over the next 12 months. Currently poor business conditions provide such a low base for growth that improvement should be relatively easy to come by. Yet we cannot deny that overall survey data points to a return to economic growth—however moderate—through the foreseeable future. Limited economic event risk in the week ahead gives little in the way of foreseeable volatility. New Zealand dollar traders should instead keep a close eye on broader financial market risk appetite as seen through the US S&P 500 and clear analogs.

AUD/USD Support Provides Scalpers With Level To Enter and Exit Positions

The AUD/USD has a firm level of support under it, limiting downside risks and creating an area for traders to target for potential consolidation and reverses. The range bound pair makes it attractive for traders looking to scalp profits as it has provided solid entry and exit levels.

Euro/Dollar Remains Driven by Risk, After Fed Tempers Interest Rate Expectations

The EURUSD continues to see its correlation to risk hold firm as equity markets are currently explaining 47% of price action. The pair continues to see little relationship with interest rate expectations with overnight index swaps holding only a 0.1 correlation with price direction. The ECB and FED have continued to try and temper interest rate expectations with warnings of downside risks and pledges to continue stimulus efforts. However, as signs of stabilization mount and prices start to rise, policy decisions will become more difficult and yield expectations would grow in importance regarding price action for the pair. Conversely, if growth signs falter then waning risk appetite could weigh on the pair as it would remain its primary driver of price action.

AUDNZD Might Have Reached the Extreme of Its Range

Seeing as how both the Australian and New Zealand dollars are considered the high-yield currencies among the majors, there is some level of buffer to violent swings in risk appetite. Nonetheless, the slow trends that this pair takes over time reveals there is a bias for which currency is considered to be positioned for the greatest increase in yield with time – and that prejudice currently falls in the kiwi’s favor. It is important to recognize that risk appetite (and this pair’s correlation to this underlying driver) will not disappear. Therefore, our setup has to take this reality into account. In establishing support, we are fundamentally accounting for a rally in the kiwi’s favor that has been founded on speculation for a time table for rate hikes from the RBNZ; but the reality is that the RBA holds a premium over its counterpart and is still far more hawkish in their disposition. As for the position, we have recently formed what could be a double bottom with the April lows around 1.2050/20 that is further established through a long-term Fibonacci retracement and as the bottom of a prominent trend channel. Our stop is purposefully wide as reversals can be extended before finally correcting. Timing is also a factor. A reversal should occur relatively quickly; so if we are not entered by tomorrow, we will cancel all open positions.

US Dollar Forecast Bearish on Clear Downward Momentum

The US Dollar dropped like a stone on its way to fresh 2009 highs against nearly all major forex counterparts, breaking its long-standing trading range against the Euro in fairly dramatic fashion. The first full week of post-summer trading finally brought the sustained price moves we have long been waiting for. FX Trading volume increased notably through mid-week trade and fueled US Dollar losses, but fundamental “justification” for renewed US Dollar weakness was far less clear. According to FXCM execution desk data, open interest in the Euro/US Dollar jumped by as much as 20 percent before the week was through. A busy economic calendar in the week ahead suggests that the US Dollar may remain volatile, and it will be critical to see whether its recent downtrend may be sustained.

Euro Fundamentally Weak but Still the Dollar's Counterpart

There are two general assessments of the euro: the strength of the currency of its own accord; and how it is performing against the benchmark dollar. This past week, the euro was actually depreciating against most of its liquid counterparts; yet the market was largely focused on EURUSD – and for good reason. The most liquid currency pair in the market, enjoyed another burst of momentum this past week easily clear 1.45 and set a new high for the year in the process. To discern whether this trend will continue or collapse through the immediate future, we need to discern the fundamental drivers behind the pair and individual currencies. And, it is important to note that these are two separate concerns. There are certainly a range of scheduled economic releases to take account of and the media is keen on attributing each fluctuation on readily available long-term fundamental concerns; but to develop a real sense of the current trend, we need only look to risk appetite.

USD Slides vs GBP, CHF

The greenback was weaker against the British pound, falling to its lowest level in a month to 1.6676 and tumbling to its lowest level since December 2008 versus the Swiss franc at 1.0367. The US economic releases saw weekly jobless claims, which improved to 550k from 570k and the July trade deficit. The deficit figures revealed an increase in July to $31.96 billion versus the June reading at $27.49 billion.

The reports due out on Friday include July wholesale inventory, wholesale sales and the September University of Michigan consumer confidence survey. The preliminary confidence report is seen marginally lower to 65.3 from 65.7 while the current component edging up slightly to 67.0 from 66.6.

EURO: At Key Levels Against the U.S. dollar

The Federal Reserve and the European Central Bank should keep rates steady for the first part of 2010 as well, since the economic recovery remains fragile in some sectors and inflation is low. The Euro is once again at key resistance lines against the U.S. dollar. A breakout would possibly set the currency for a strong move up.

TRADING: A MIND GAME

You must change your mental attitude first from a normal person to that of a speculator. Almost all traders I have met, except a few successful ones who really made millions and billions trading in the market, simply waste all their time trying to learn the easiest part in perfection, like about how to read data and charts, and trying to perfect entry and exit skills, etc. Trading is a mind game and without having a right frame of mind, it is a losing game even before it starts. Training a trader�s mind is the first step for any successful trader but almost all new traders neglect that part and that explains why more than 95% of traders are a failure in the long run.

Acquiring the knowledge of the market is not difficult for anyone with average intelligence after a few years of hard study in the market. But it is neither the level of intelligence nor the knowledge that decides the outcome of the market operations of a trader. It is the decision making process that is so hard for most traders to overcome and that is the main reason for a success or a failure for all the traders. Some find it easy to make decisions and stick to it and most find it so hard to make decisions and stick to it. Unfortunately, any decision making process in trading is a pain-taking process and humans tend to avoid pains and go for pleasures even if for temporary ones. Assuming one has acquired enough market knowledge and acquired one�s proven trading system (this is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one)

Through studies and research, a trader faces the task of making decisions to put this knowledge and system into practice. Then, how many traders can honestly say they can commit their ranch when the trade is suggested by their own system (given that trading is just a chance game) and let the profit run for weeks and months when their system tells them, and how many can manage to cut the loss as a routine process when the situation arise. It all sounds so easy when saying it but so difficult when doing it affecting real money in the market. I still do not sleep well when I am running position because even if the profits are running into a few hundred dollars and the system is telling you to carry on, there is no guarantee that the profit will turn into a yard or two in a month time, and it may even turn into a loss in a day or two when something unexpected happens. A painstaking process in real sense. The pain is not knowing what will happen in the future and in fear of losing. So at the end of the day, assuming one has decent trading system and market knowledge and decent info, it is ultimately how disciplined and how well that trader can take the pain of making right decisions at the right time that decides the outcome of the trades. Hence I call trading a mind game. When I interview prospective young traders, I always look for disciplined and strong-willed person as my first priority as long as one has decent education, but strangely in many cases, it is some kind of genius or half-genius with lots of brains with no disciplines who turn up for an interview thinking only bright people can make good traders.

In fact, I always try to pyramid while position trading medium-term once I am convinced of a new medium-term trend emerging. Like in USD/JPY position trading 135-132 as an initial position, adding in 132 and 129 areas. Same for AUD/USD and EUR/USD with similar strategies. But sitting on positions and watching the counter-rallies costing truck load of money is not easy job to do and causes lots of pain all the time. Most traders even among experienced ones cannot bear that pain and give up too early. But there is no other way to make a big money and we have to bite the bullet and "sit and accumulate" as long as the medium-term trend is intact. That is why I always believe psychological aspects of trading is far more important than anything else in successful trading. A mind game like those bluffing game of poker.

Entries and exits can never be "irrelevant" for any trader for any purpose. It is just that psychological aspects of trading are much more important than entries and exits, and decisive for the success or failure of a trader in the long run. Perhaps exits are more important than entries because any perfect or near-perfect entries are possible only in hindsight.

US Dollar: Will a Recovery in Liquidity Usher in a Breakout?

Liquidity has been the bane of currency traders’ existence this past week; but a gradual return to normalcy may finally allow the dollar and general risk appetite to find its bearings once again. Even a perfunctory glance at a EURUSD chart conveys exaggerated congestion. This pair – and indeed all of the majors – has been relegated to a controlled range or gradual channel for the better part of three months. Now, passing through the extended Labor Day weekend holiday in the US, we are encountering the worst of the unusual market conditions. It wasn’t by chance that the dollar tumbled to test its lows through this past Friday’s close. At critical levels, the speculative ranks could either attempt a break against the dollar while most of the American market is offline or wait for the liquidity pool to deepen and instead work to reconcile the divergent outlook between fundamentals and risk appetite.

Canadian Dollar Volatility Ahead on Rate Decision, Risk Trends

The Canadian Dollar could see heavy volatility in the week ahead as a flux in risk sentiment is compounded by an interest rate decision from the Bank of Canada. An actual change in benchmark borrowing costs is effectively off the table – the BOC has explicitly expressed the intent to keep rates at 0.25% at least through the first half of next year. The markets are in agreement, with overnight index swaps showing that traders are pricing in virtually no change in rates this time around. Whether or not the news proves market-moving will depend on the bank’s rhetoric vis-à-vis the Canadian Dollar in the statement accompanying the monetary policy announcement. BOC Governor Mark Carney has said that the currency’s appreciation over recent months has been a major obstacle for economic growth, adding that he has the “flexibility” to deal with it. Finance Minister Jim Flaherty echoed Carney’s comments, saying “steps could be taken” to check the currency’s ascent. It should not be too difficult for policymakers to make good on such threats because they can simply print more money and let it loose into circulation, so the markets have little reason not to take any language suggesting intervention at face value. To that effect, traders will likely sell the Canadian Dollar should the likelihood of such an outcome be perceived as increasingly likely.

British Pound May Find Relief from Dire Growth Outlook Through Risk

How is it that the developed economy with the worst fundamental prospects touts a currency that is among the best performers for the year? Risk appetite. It is true that the currency market - indeed all markets - are highly efficient at pricing in new economic, political, exogenous data and events. However, when speculation is added to the mix, the otherwise clear view is muddled beyond recognition. For the sterling, the disparity seems particularly prominent. Over the past few weeks, data has confirmed a deepening recession, policy groups have projected a significant lag in its recovery relative to its peers and ballooning asset purchases by the central bank means rate hikes are the furthest thing from their mind. Yet, despite all of this, the pound could still break above 1.66 (1.70?) against the dollar, push the EURGBP exchange rate below 0.87 once again and even climb back towards a nine-month highs of 163 against the Japanese yen should risk appetite continue its march higher.

Currency Market and Risk Appetite will Rediscover Volatility and Direction Soon

Risk appetite has diminished for months; yet the positive bias behind the capital markets has not faltered whilst traders sought out the fundamental fuel for the next trend. However, we may see a resolution on both the direction and intensity of sentiment soon as the technical and fundamental pressures build to a breaking point behind the scenes. Whether in the FX, stock, fixed income or any other speculative market; liquidity is acting as a dampener for price action. The height of the summer holiday season has drained the markets and the extended US holiday this coming week will certainly exacerbate the situation. Under such unusual circumstances, volatility can be artificially inflated; but news and meaningful trends are very difficult to establish.What’s more, with both the dollar-based Majors and the Japanese yen crosses in the same position; a break will likely be echoed across the market and further fuel an shift in sentiment itself. EURUSD would be an appropriate gauge for any new trends that develop. The most actively traded currency pair is not highly sensitive to risk appetite; but that works in our favor as it will follow a trend rather than mere volatility. For motivation, three months of congestion has turned into a terminal congestion pattern and the average true range (with a 10-day average) has fallen to its lowest level since February of 2008. A break is inevitable; but the next trend will likely rely on fundamentals.

How Do You Earn Superior Profits in Forex Trading?

Do you want to earn great profits in Forex Trading? Well, in that case, you'll need to chalk out a good, strong plan, one that gives you a clear picture about the present situation. It's also important to remember the unexpected changes that may occur in the future. So, while formulating your Forex Trading plan for the long run, you keep both the present and the future in mind, as this is the primary prerequisite.

Now, the question is, without adequate experience in this field, how can you form a plan that works fine and gives you high profits as well? At this point, you'll need to remember that patience is the keyword for you at the beginning. After all, all good things take time to happen, right? And, this will probably be the best thing happening to you, if you go the right way, armed with the right plan to support your future steps.

One way for you to proceed without taking much trouble is to trust the right Forex Trading software. Such software will take care of all the details for you, and, at the same time, manage your account. So, the advantage is that you won't have to trust a broker with all your account information. Also, you will be in a better position to manage your margin calls. When you're trading currencies in Forex market, the last thing that you'll want is to get margin calls. And, in the presence of the Forex software, you can be sure that you will not have to spent sleepless nights expecting margin calls!

If you wish to create a plan on your own, then you will need to keep a few important points in mind. But, for this, you'll need a certain amount of experience either in trading or as a serious observer to understand the behavior of exchange rates, such as when they fall down or what makes them rise up and things like that. Or, you can also take a quick self-tutorial course by searching the internet for a reliable source.

You may also take the help from experts in this field to create a plan that will protect your margins even in the toughest of situations. Consulting the person with the right knowledge and experience always helps in forming the right plan for Forex Trading and earning profits.

Another effective way to form a Forex Trading strategy is to learn reading the Forex Trading charts. Knowledge about signals along with an ability to read and understand the Forex charts is one of the ways to get the right plan made. If you can understand the signals of rise or fall of currency prices, then you can easily include the same in your plan.

So, if we take a good look at all the above mentioned ways to form a good plan to trade successfully in Forex market, then there's a common link that joins all these points together - a good knowledge about the market, its components, and its nature. You may need to keep in mind that like all trading markets there are specific reasons for the rise and fall of currency prices in this market also.

So, now, with all this information in place, you can proceed with the actual trading process and look forward to earning great profits in no time at all!

Learn Forex Trading - What You Need to Know

Forex trading is the world's largest business in which money of one country is traded with another. To learn forex, it is important to know that the term "Forex" can also be called "The forex exchange" or "Plain FX". In order to learn forex trading, one should know what type of business actually forex trading is? It is the business of "Currencies".

To learn forex trading, one should know the fact that typically trading is a business in which one country imports goods from another country and pay them in their own currency. As every country has its own currency so every currency is assigned by a three coded word i.e. USD for US dollar and EURO for Europe etc

The only problem with the trading is that, there is no central exchange where everyone can trade the currency. Some famous trading centers around the world are: New York, Frankfurt, London, Tokyo, and Sydney. All the exchange of currency is done via telephone and through internet which connects all the commercial agents and currency traders with each other. To learn forex trading it is important to understand it is a risky business.

In order to learn trading, it is important to know about the term "liquidity". It is basically a skill to convert an asset into cash money without a lot of effect on the price. In foreign exchange market, because of its liquidity there are always buyers and sellers to trade with.

Techniques for Advanced Forex Trading

Forex is a potential platform for earning substantial profit. In fact it is one of the largest trading markets of the world. Featuring an average daily trade of US$ 2 trillion and above, this market is best known for its high scale trading volume and intense liquidity. Adding to this, today with the advancement of technology it can be done from anywhere of the world. Backed up by world-wide web, you can easily trade in the forex market at the comfort of your own home. However, it is important to understand that fx trading is based hugely on speculation. You must be smart enough to guess exactly when the rate of a certain currency pair will rise and go down, and then buy or sell based on that. Indeed it is said that if you learn to study the speculation of this market, you will have a better chance of getting profit.

Today, it is more advanced and turned into an active investment arena, where only a factual understanding of the intricacies and complexities can make your capital grow every day. Moreover, like any other business, it also involves some amount of risks. There is no shot fx trading technique for success in the currency trading market, but there are some well-known techniques that can assist you formulate a good advanced foreign exchange trading strategy. Here are few essential techniques that can help you cut your losses and increases profits:

Forex Scalping: It is a latest technique of trading where profits are taken after relatively small moves in the forex market. It is a technique where trading is done over small time frames, and smaller profits are taken more frequently. As the position exposed to the market is shorter, it automatically reduces the risk of adverse market events causing the price to go against the trade. It is a different approach to most other forex strategies, but still requires you to analyze the market to ensure that the set up for a trade is present. This type of trading greatly appeals to day traders and those who look to reduce the risk involved in trading currencies.

Forex Hedging: It is a technique that helps in reducing some of the risk involved in holding an open forex position. It decreases the risk by taking both sides of a trade at once. If your broker allows it, a simple way to hedge is just to initiate a long and a short position on the same pair. Advanced traders sometimes use two different pairs to make one hedge, but that can get very complicated.

It is important to understand that much of the risk involved in holding any forex position is market risk; i.e. if the market falls sharply, your losses may escalate dramatically. So if you have an open Forex position with fine projection but you think the currency pair may reverse against you, it is advised to hedge your position.

Forex Position Trading: Forex position trading approach is yet another trouble-free technique to boost your position size without increasing your risk. This trading tactic is very effective with mini lots. The major highlight with this technique is that - with forex position trading your exposure to the market is less and so therefore is no need to monitor the market continuously. Moreover, you may even earn profit with negligible loss that can further boost your trading confidence. For Example- you might make a short trade on EUR/USD at 1.40. If the pair is ultimately trending lower, but happens to retrace up, and you take another short at say 1.42, your average position would be 1.41. Once the EUR/USD drops back below 1.41, you will be back in overall profit.

Today forex trading is all about watching your options when you make a trade. Aside from using effective risk management and extreme vigilance, advanced trading can be an alternate way to make profits and control losses. Nevertheless, these above mentioned advanced trading techniques are more about using the market behavior to your advantage. Utilizing these advanced techniques can give you the edge from other average trader.

Looking for Cup and Handle Chart Patterns before Buying a Stock

One of the biggest factors an investor should consider before buying a stock is what type of chart pattern the stock is forming. A company may have great fundamentals but if it has an unfavorable chart pattern then it may not be a good company to invest in. One of the basic chart patterns to look for before investing in a stock is called a "Cup and Handle" pattern. Typically a "Cup and Handle" looks similar to a coffee cup if you were holding the cup in your right hand.

Generally I look for stocks that take 3 Months or more to form a Cup and then develop a Handle for at least 2 Weeks. Some examples are shown below.

AMHC formed a Cup for 14 Months and then developed a Handle for 8 Weeks (point A). AMHC broke out of the Handle in December of 2001 and then preceded to rise from $8 to $37 a share over the next 12 months for a gain of over 400%.

EASI developed a 2 year Cup and then formed a 10 week Handle (point B) before breaking out in August of 2000. EASI then preceded to rise from $12 to $38 a share over the next 12 months for a gain of over 200%.

FRNT developed a 12 Month Cup and then formed an 8 Week Handle (point C) before breaking out in November of 2000. FRNT then preceded to rise from $12 to $26 a share for a gain of over 100% over the next 5 Months.

Finally TARO developed a Cup for 10 Months and then formed a 6 Week Handle (point D) before breaking out in October of 2001. TARO then rose from $17 to $50 a share for a gain of 190% over the next 6 Months.

By focusing on companies with good fundamentals that are breaking out of a favorable chart pattern such as a "Cup and Handle" will allow you to find winning stocks even in a Bear Market environment. The purpose of our site is to help focus investors on those stocks that have good fundamentals which are forming favorable chart patterns such as the "Cup and Handle".

Dollar Will have to Turn to Risk Aversion as Rate Forecasts Dim

Over the past week, the dollar has maintained its high-level volatility; but the pace of the market still has not translated into direction. This is partially a consequence of thin liquidity through the end of the summer and into the long, holiday weekend; but the same general affliction for the broader speculative market suggests the unusual calm has deeper fundamental roots. Investor sentiment (and thereby capital markets) has steadily appreciated over the past six months through an evolution of early adoption, an influx of sidelined capital and on prospects for an economic recovery. Yet, just as pessimism overshot reality through the end of the financial crisis; so too can optimism exceed reasonable expectations for returns when the masses are eager to reenter the market and recover wealth lost over the past two years. Sentiment makes for an overwhelming theme and it will very likely decide the ultimate break in the dollar and its subsequent trend. However, these fundamental winds will steadily lose their influence with the markets and the greenback in particular. Ultimately, the degradation of this fundamental link may very well be hastened by the economic prospects for the currency itself. Growth and interest rate forecasts could shift the dollar’s position on the risk spectrum. Though, with speculation of early rate cuts constantly checked and actual expansion elusive, it seems the US will maintain its anti-risk qualities.

Dollar extends its recovery above 92.50 against Yen

The Dollar's recovery against Yen from 7-week low at 91.90 has continued during the American session to post fresh intra-day high at 92.65 after rising around 75 pips.

Currently the pair is trading around 92.50/60, on consolidation mode, posting 0.35% daily gains from opening price action.

U.S. Unemployment Claims to Set the Level for the USD Today

The U.S. Unemployment Claims is the primary publication today that is set to determine the level of the USD when it is released at 12:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the Dollar and EUR is the publication of the Services PMI for Britain at 08:30 GMT, the EUR Minimum Bid Rate at 11:45 from the Euro-Zone, and the ISM Non-Manufacturing PMI from the U.S. at 14:00 GMT.

Euro falls further and tests 1.4250

The Euro's rejection against the Greenback from intra-day high at 1.4348 has continued after the better than expected US Aug ISM non-manufacturing index. The EUR/USD has fallen around 50 pips in the last minutes from 1.4300 level to post intra-day lows close to 1.4245.The Euro has pulled back from intra-day high at 1.4348 to break 1.4285 support on the back of Trichet call to patience and prudence, on his Press release after the Bank announced its decision to keep its benchmark interest rate at 1.0%.

U.S. services PMI grows to 48.4 in Aug from 46.4; Dollar ticks up against Euro

U.S. services sector's activity has contracted in August, but at a slower pace than in July, as Non Manufacturing PMI rose to 48.4 from 46.4 in July, approaching the 50 reading, the level between expansion and contraction.

The Dollar inched up against Euro and Pound; EUR/USD retreat from 1.4350 high has extended after U.S. ISM, and the Euro dipped to test intra-day low at 1.4255.

GBP/USD retreat from 1.6415 is holding above 1.6335 (Aug 31 high) so far, while the USD/JPY remains moving between 92.50 to 92.65 after having bounced at 91.95 intra-day low.

EUR/USD: Trading the European Central Bank Interest Rate Decision

The European Central Bank is widely expected to hold the benchmark interest rate at 1.00% in September as central bank President Jean-Claude Trichet anticipates economic activity to improve going into the following year, and long-term expectations for higher borrowing costs may continue to support the rally in the euro as market participants speculate the Governing Council to tighten policy over the next 12 months.

Three Months of Congestion Doesn't Guarantee a Successful USDCHF Range Trade

Event Risk for the US and Switzerland

US – With sentiment starting to stumble, we have seen the dollar turn into one of the immediate benefactors. This connection to risk appetite means that the long awaited breakout for the world’s most liquid currency may come from out of the blue as optimism often rises and falls without the helm of a specific indicator. There are a few notable pieces of event risk on the economic docket over the coming week (like the ISM services sector survey and trade balance); but the real threat to volatility is the Friday’s NFPs. The market-moving influence of this report has not been absolutely consistent recently; but we should not discount its potential impact. With the trend clearly set in a steady improvement, a smaller than expected net loss (or an actual gain) would likely find the best follow through.

Switzerland – The greatest threat of domestically derived volatility was the recent 2Q GDP report. However, the slower than expected pace of contraction would ultimately fail to make a lasting impression on price action. Now, looking ahead, there are only second tier releases on the docket. Both the August CPI figures (due Friday) and next week’s labor data are economically important but consistently overlooked. Speculators will instead keep their sights trained on the health of the Euro Zone – Switzerland’s largest trade partner – to discern the health of the small, independent nation. It will further be important to keep abreast of risk trends. Low liquidity could help catalyze a meaningful shift in sentiment should US NFPs or the G20 meeting alter the outlook for global growth, financial health or interest rates.

Three Months of Congestion Doesn't Guarantee a Successful USDCHF Range Trade

Trading Tip

The difficulty for range traders now is not in finding congestion patterns but in finding congestion patterns that have consistent and definable levels that can support a reasonable setup. USDCHF has established a very consistent channel for the past three months and has recently built up confirmation for relative support. However, this pair has more than its fair share of risks. From a broader market perspective, range conditions are very fragile. The widespread, technical stability seen in every corner of the market suggests there is something amiss. This can be partially attributed to thin liquidity; but more importantly, investors are awaiting the signal for the next substantial trend. In essence, a breakout is inevitable. This is something to keep in mind in taking this trading approach – regardless of the pair. In the meantime, the particulars for USDCHF do little to further confidence. From a fundamental perspective, the franc is losing its status as a safe haven through intervention, protectionist efforts and the diminishing sense of secrecy for the nation’s renowned banking industry. This will provide a clear direction for this pair should sentiment shift. What’s more, the bearish bias in the market is putting pressure on a substantial level of support. Altogether, we will keep the life of open orders short and cancel them before NFPs.