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426
« on: January 25, 2010, 04:17:29 am »
| Date | Time | Currency | Event | Forecast | Previous | | 25/01/2010 | 2:30am | AUD | PPI q/q | 0.1% | 0.1% | | 25/01/2010 | 9:30am | EUR | GfK German Consumer Climate | 3.2 | 3.4 | | 25/01/2010 | 5:00pm | USD | Existing Home Sales | 5.95M | 6.54M | | 25/01/2010 | All Day | AUD | Bank Holiday | - | - |
427
« on: January 25, 2010, 04:03:23 am »
Pair sterling against the U.S. dollar has also dropped sharply during trading last week, achieving the lowest levels at 1.60770, we expect this decline will continuo this day toward the goal at 1.59250, and this expectation requires constant trading below 1.62400. Support and Resistance| Pair R1 R2 R3 P S1 S2 S3 | GBP/USD 1.61730 1.62400 1.63100 1.61580 1.61320 1.60590 1.59070
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428
« on: January 25, 2010, 04:01:21 am »
The dollar against the yen is still trading in a bearish channel, and we expect the downward will continue this day for a couple to the target levels of 88,350 initially and then 87,000, these expectations require stability of the daily closing below 92,000. Support and Resistance| Pair R1 R2 R3 P S1 S2 S3 | USD/JPY 90.050 90.280 90.640 90.060 89.620 89.400 89.040
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429
« on: January 25, 2010, 03:56:48 am »
Pair the euro against the U.S. dollar has fallen sharply over the last week, touching the levels of 1.40200; Stochastic appears saturated in sales, which may lead the pair to make a corrective movement to the level of 1.43000 before returning to continue its decline to the new goals at 1.38650. Support and Resistance| Pair R1 R2 R3 P S1 S2 S3 | | EUR/USD 1.41660 1.41980 1.42520 1.41270 1.41020 1.40700 1.40160 |
430
« on: January 25, 2010, 03:40:38 am »
The past week saw the Euro weaken and broke below its weekly 55 EMA and 38.2% Fib Retracement level of the 1.2886 – 1.5141 advance. However, the pair found support near the 1.4000 psychological level which also sees the 50% Fib Retracement level of the 1.2886 – 1.5141 advance. As mentioned in the latest video post of the pair we are on the working assumption that a wave 4 correction is unfolding and 1.4000 is the last acceptable level to warrant the bullish bias. A break below 1.4000 with a daily close voids this outlook and should see the Euro trade towards 1.3750. Intraday, the pair is confined within an uptrending channel and is currently challenging the bottom of this channel, so play the channel until a breakout occurs. Intraday resistance is observed between 1.4220 – 1.4260. A break above 1.4260 will see the Euro potentially retake above the 1.4300 psychological level.
Support & Resistance
1.4100 STRONG
1.4260 STRONG
1.4000 STRONG
1.4300 STRONG
1.3900 STRONG
1.4380 STRONG
434
« on: January 22, 2010, 08:02:13 am »
Hello alen, You chart must be EUR/USD 1-minute. Please check your eurusd chart & set it on 1-minute time frame. regards pranjali Hello,
I have setted EA on my real account. Everything was going on good. But a few minutes ago it started an Alert Bell saying "Works only on EURUSD 1 Minute Chart". Please help me.
Alen
436
« on: January 22, 2010, 04:58:56 am »
EUR/USD : The support level 1.40600 for the Euro against U.S dollar seamed a very strong stand, which lead the pair to increase in corrective movement, the positive signals which was shown through Stochastic helped the pair to raise, we expect today that this corrective will continuo to the level 1.42000, but we must note that if the pair penetration the mentioned support level our expectation will be deleted.
resource: FXCBS
442
« on: December 09, 2009, 10:08:33 am »
Higher Forex Leverage may or may not help the Forex trader but it certainly does help Forex broker. Let me explain why.
When you open a position, Forex broker requires you to put aside certain amount from your account balance called Margin Requirement. This margin requirement is based on the leverage the Forex Broker has provided you with.
Say you have a $10,000 account and your forex broker has provided you with 100:1 leverage. When you open a $100,000 position you would be required to put aside $1000. If the position goes against you then you will have until -$9000 to hold the position. Any further loss and you will get a Margin Call and your forex broker will automatically close the position leaving you with $1000 that you initially put aside.
Now here is the good part. The higher leverage you have the less money you put aside per trade. Forex brokers know that most people starting off will eventually lose all of their money and they want to you to end with the least amount of money in the account. So if you are trading with 400:1 then you would end up with $250 in your account in above scenario.
Now say you are an experienced trader and you know all about Money Management. You have decided not to risk more than 3% per trade and hence maximum loss you would take is $300. It doesn’t matter what leverage you have because you will always have sufficient funds left in your account even after taking loss. Even if you want to open multiple positions at the same time you won’t need leverage higher than 100:1 You may also want to look at “Forex Money Management : A new Approach“
Higher leverage is not all bad news. It does help in one scenario. When starting off a lot of people don’t like to invest a lot of money. Say you want to start only with $500, in such case a Micro account 400:1 leverage can help to get you started. You can then perhaps open a $1000 position with only $2.5 margin requirement.
443
« on: December 09, 2009, 10:01:48 am »
What is Forex Leverage?
Leverage simply means the % amount of money you are allowed to borrow from the broker when you open a position. Typically in Stock market when you buy 100 shares of a company trading at $10 per share, you are required $1000 to open the trade. Some stock brokers would let you borrow money from them, most cases it is 50-80% of the total stock value. So instead of $1000 you are now only required to have $500. This helps traders to buy more shares with same amount of money. However stock broker would charge you interest on the money borrowed. Forex Leverage is similar expect on steroids.
A typical Forex Broker would let you borrow 99% of the total value required to open a trade and you only need to come up with the remaining 1%. So if you are about to trade $1000 then you only need to have $10. Big difference from normal stock trading. Also Forex broker won’t charge you interest on the borrowed amount.
In my personal opinion one should not go beyond 100:1 leverage. However your opinion may differ so feel to add comment with your preferred leverage and why.
444
« on: December 09, 2009, 09:56:10 am »
Understanding Forex Margin
What is FX Margin?
In the Forex market the term margin is most often referring to the amount of money required to open a leveraged position, or a contract in the market. It may also be used to describe the type of account, i.e. Forex margin account; meaning that an account is being traded on borrowed funds. It is generally safe to assume that all off-exchange retail foreign currency (or Forex) traders are trading within margined accounts.
Without leverage, or the ability to trade on borrowed funds, a trader placing a standard lot trade in the market would need to post the full contract value of $100,000 in order to have his or her trade executed. Forex trading with a margined account allows traders to utilize leverage, meaning that the same $100,000 contract can be placed for an amount of margin determined by the set level of leverage. An account at 100:1 leverage would require $1,000 of margin to place a $100,000 trade.
Simply stated, trading Forex on margin increases your buying power. As an example: a trader with $10,000 in an FX margin account that allows 100:1 leverage, would be able to purchase a maximum of $1,000,000 in currency contracts (10 standard lots). At 100:1 leverage 1% of the contract value is required as collateral.
By trading Forex on margin, traders can potentially increase their total return on investment with less cash outlay. Trading Forex on margin should be used wisely as it magnifies both your potential profits AND potential losses. A good rule of thumb to follow is the higher the margin, the greater the risk.
Forex Margin Trading Example
A trader with a $10,000 account balance decides that the US Dollar (USD) is undervalued against the Euro (EUR). The current bid/ask price for EUR/USD is 1.2348/1.2350 – meaning a trader can buy 1 EUR for $1.2350 USD or sell 1 EUR for $1.2348 USD. The trader decides to sell EUR (buy dollars) by selling 1 standard lot. With leverage at 100:1 or 1%, initial margin deposit for this trade is $1,000, leaving the account balance at $9,000. As anticipated, the EUR/USD drops 48 pips to 1.2298/1.2300. To exit the position the trader would close 1 lot at 1.2300 In this scenario the trader has realized a profit of 48 pips or $480 US Dollars.
Trading with a heavily margined Forex account is a double-edged sword. Trading utilizing high leveraged accounts can potentially increase profits, but it increases your risk of potential losses. Remember, the higher the leverage, the higher the risk. Traders in the Forex market are subject to the margin rules set by their chosen brokers. In order to protect themselves and their traders, brokers in the Forex market set margin requirements and levels at which traders are subject to margin calls. A margin call would occur when a trader is utilizing too much of their available margin (cash deposit towards an open position). Spread across too many loosing trades, an over margined account can give a broker the right to close a trader’s open positions.
Calculating Your Margin Capability
Generally maximum available Forex margin is 1% (100:1 leverage) for standard and mini Forex accounts. Traders always have the option of setting a lower level of leverage. Doing such may help some traders manage their risk, but bear in mind that a lower level of leverage will of course mean that larger margin deposits will need to be made in order to control the same size contracts.
Margin = (Contract size / Leverage)
Margin Example
To calculate the margin required to execute 4 mini lots of USD/JPY (40,000 USD) at 100:1 leverage in a $500 mini account, simply divide the deal size by the leverage amount e.g. (40,000 / 100 = 400). $400 margin will be required to place this trade, leaving an additional $100 marginable balance in the trading account.
The Forex trading software platform automatically calculates FX margin requirements and checks available funds before allowing a trader to successfully enter a new position. If there are not adequate funds available to enter a new position, traders will receive a "Not Enough Money" message when attempting to place the trade.
445
« on: December 09, 2009, 09:45:51 am »
Understanding Currency Pairs
The Majors
Most currency transactions involve the "Majors" consisting of the British Pound (GBP), Euro (EUR), Japanese Yen (JPY), Swiss Franc (CHF) and the US Dollar (USD). Many traders are beginning to add the Canadian Dollar (CAD) and the Australian Dollar (AUD) to this category as well.
Currencies in Pairs?
Often new traders struggle to grasp the concept of trading currencies in pairs, why not just buy the Euro they might ask? Why does it have to be paired with the US Dollar? Simple, the currency on the right side of the pair is there to establish a comparative value, without it how could the base currency (currency on the left side of the pair) have any certain value? In other words, if currencies were not paired what would a single currency gain or lose value against? By pairing two currencies against each other a fluctuating value can be established for the one versus the other. So, how is the Euro doing against the Dollar, or how many Dollars does it take to buy one Euro? Thus the need for currencies in pairs.
Cross Currency Pairs
Currency pairs that do not include the US dollar are referred to as Cross Currency Pairs. Cross Currency trading can open a completely new aspect of the Forex market to speculators. Some cross currencies move very slowly and trend very well, ideal for beginning traders. Other cross currency pairs move very quickly and are extremely volatile; with daily average movements exceeding 100 pips.
Speculators might utilize cross pairs as a means of portfolio diversification. An example would be an investor whose portfolio is primarily comprised of US based stocks and bonds who wants to diversify into foreign markets. Holding carry trades in cross currencies might be a good option for this type of investor. Many of these cross currencies also offer greater return potential with enhanced interest (also referred to as swap, rollover interest or carry forward interest) that can be paid on open positions. Swap is a credit or debit as a result of daily interest rates. When traders hold positions over night, they are either credited or debited interest based on the rates at the time. Often, cross currencies yield higher interest rates than do major currencies and are traded for the purpose of collecting said interest.
446
« on: December 09, 2009, 09:40:41 am »
Unmatched Liquidity
An investment market with lacking liquidity, or a lack of buyers and sellers at certain times, is often the demise of traders who need in or out of the market without delay. The global network of governments, banks, corporations, hedge funds, and individual traders that collectively drive the Forex market, are in essence, also driving the world’s largest network of liquidity. Such high trade volume works to ensure trade execution and the stability of prices, regardless of the time of day.
Equities traders, on the other hand, are more susceptible to liquidity risk and are subject to potentially wider dealing spreads and larger price movements. Liquidity in the equities market really does pale in comparison to that of the Forex market.
High Leverage
Leverage is the key to understanding the risk associated with trading the Forex Market, and of course, the potential for gain. Many Forex brokers offer leverage as high as 200 – 1, meaning that $50 of margin would control a $10,000 position in the market (this is an example of a mini lot). Forex trading is often attractive to investors coming from the equities market because Forex trading offers such high leverage. It is important to understand why Forex brokers offer higher leverage, and of course… the dangers associated with such.
To some extent, higher leverage is a necessary evil in the Forex market. It can offer advantages over equities trading, but only if it is properly understood and utilized. Though currency values on a global stage are constantly in a state of flux, high liquidity and market stability translate to relatively small daily price movements. In fact, average daily movement is around 1% on most major pairs. Compare that to the equities market, where average daily movements are closer to 10% and it is not hard to understand why large contracts are needed in order to yield profits on intraday price movements.
Without high leverage most retail investors would not be able to afford trading in the Forex market. However, with increased buying power comes increased risk. Traders who are new to the market often make the mistake of over-trading their account. Because relatively small margin is required to open large positions beginning traders often make the mistake of opening too many positions at one time. A quick market move can then result in substantial losses. IBFX would advise any trader new to the Forex market to trade only a very small percentage of their account at any one time.
447
« on: December 09, 2009, 09:37:32 am »
Forex Market Hours
Unlike other financial markets, the Forex market operates 24 hours a day, 5.5 days a week (6:00 PM EST on Sunday until 4:00 PM EST on Friday). Through an electronic network of banks, corporations and individual traders exchange currencies, though as Forex is primarily used as a means for speculative investing, actual physical delivery of currencies is almost never intended. Forex trading begins every day in Sydney, moves to Tokyo, followed by Europe and finally the Americas.
448
« on: December 09, 2009, 09:29:31 am »
What is Forex Trading?
Foreign exchange "Forex" is an off-exchange retail foreign currency market where the purchase of a particular currency from an individual or institution and the simultaneous sale of another currency at the equivalent value or current exchange rate occurs. Essentially, the process of exchanging one currency for another is a simple trade based on the current rates of the two currencies involved.
At the core level of the world's need for money exchange is the international traveler. When traveling from the US to England, for example, you will of course need the local currency to pay for transportation, food, and so on. Upon arrival at the airport you will surrender (sell) your US Dollars in order to receive (buy) the equivalent in British Pounds. In this example, you sold the USD and bought the GBP, conversely the forex counter bought the USD and sold the GBP. The prices at which you buy and sell currencies are known as currency exchange rates. This currency exchange rate or price fluctuates based on demand and on political and economic events surrounding each country's currency.
449
« on: December 09, 2009, 09:03:47 am »
Martingale Method I
Assumptions:
* You are using a discretionary or mechanical trading system.
* You know your system well therefore you know how many consecutive losses your system has ever had. For this example, we'll assume your system has had at most 10 consecutive losses.
* You trade 3 lots.
Scenario:
* You have had 10 losses in a row trading 3 lots per trade.
Conservative Martingale Method I Example:
1. On your very next trade after losing 10 in a row, increase the lot size to 4
2. If this 4 lot trade is a winner, go back to normalcy trading 3 lots. Your done using Martingale for now
3. If this 4 lot trade is a loser, increase the lot size to 5
4. If this 5 lot trade is a winner, go back to normalcy trading 3 lots. Your done using Martingale for now
5. If this 5 lot trade is a loser, increase the lot size to 6
6. etc, etc, etc
Keep increasing lot sizes by 1 until you win. I think you get the point.
Martingale Method II
Assumptions:
* You are using a discretionary or mechanical trading system.
* You know your system well therefore you know the average number of losses your system has before turning a winner. For example, we'll say that on average, your system has 3 losses before turning a winner.
* You trade 3 lots.
Conservative Martingale Method II Example:
1. You are currently not in a trade. You will wait until your system has 3 consecutive losses before doing anything. You WILL NOT trade.
2. Once your system has 3 losses in a row, start trading your system again. Your first trade will be a 3 lot trade.
3. If you win, great. If you lose, increase the number of lots to 4.
4. Increase the number of lots until you win.
Aggressive Martingale Method II Example:
The only change here would be to enter your first trade with a larger lot size than normal after your system has 3 losses in a row. So instead of just trading 3 lots, trade 4.
450
« on: December 09, 2009, 07:55:56 am »
T
Technical Analysis - An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.
Tick - A minimum change in price, up or down.
Tomorrow Next (Tom/Next) - Simultaneous buying and selling of a currency for delivery the following day.
Trade Balance – Measures the difference in value between imported and exported goods and services. Nations with trade surpluses (exports greater than imports), such as Japan, tend to see their currencies appreciate, while countries with trade deficits (imports greater than exports), such as the US, tend to see their currencies weaken.
Transaction Cost - the cost of buying or selling a financial instrument.
Transaction Date - The date on which a trade occurs.
Turnover - The total money value of all executed transactions in a given time period; volume.
Two-Way Price - When both a bid and offer rate is quoted for a FX transaction.
U
UK HBOS House Price Index – Measures the relative level of UK house prices for an indication of trends in UK real estate sector and their implication for overall economic outlook. This index is the longest monthly data series of any UK housing index, put out by the largest UK mortgage lender (Halifax Building Society/Bank of Scotland).
UK Producers Price Index Input – Measures the rate of inflation experienced by manufacturers when purchasing materials and services. This data is closely scrutinized since it can be a leading indicator of consumer inflation.
UK Producers Price Index Output – Measures the rate of inflation experienced by manufacturers when selling goods and services.
UK Claimant Count Rate – Measures the number of people claiming unemployment benefits. The claimant count figures tend to be lower than the unemployment data since not all unemployed are eligible for benefits.
UK Jobless Claims Change – Measures the change in the number of people claiming benefits over the previous month.
UK Average Earnings Including Bonus/ Excluding bonus – Measures the average wage including/excluding bonuses paid to employees. This is measured QoQ from the previous year.
UK Manual Unit Wage Costs – Measures the change in total labor cost expended in the production of one unit of output.
Unemployment Rate – Measures the total workforce that is unemployed and actively seeking employment, measured as the percentage of the labor force.
University of Michigan's Consumer Sentiment Index – Polls 500 US households each month. The report is issued in a preliminary version mid – month and a final version at the end of the month. Questions revolve around individuals attitudes about the US economy. Consumer sentiment is viewed as a proxy for the strength of consumer spending.
Unrealized Gain/Loss - The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.
Uptick - a new price quote at a price higher than the preceding quote.
Uptick Rule - In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.
US Prime Rate - The interest rate at which US banks will lend to their prime corporate customers.
V
Value Date - The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.
Variation Margin - Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.
The VIX or Volatility Index – Shows the market's expectation of 30 – day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge".
Volatility (Vol) - A statistical measure of a market's price movements over time.
W
Wedge Chart Pattern – Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge are incrementally less, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically conclude with a downside breakout, and descending wedges typically terminate with upside breakouts.
Whipsaw - slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
Wholesale Prices – Measures the changes in prices paid by retailers for finished goods. Inflationary pressures typically show up here earlier than the headline retail.
Y
Yard - Slang for a billion.
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