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Sunday, January 11, 2009

Forex Trading Strategies

Leverage strategy: Forex trading strategies help achieve success in forex trading or online currency trading. Forex trading differs from trading stocks and the use of forex trading strategies help the person to gain more profits in a very short period. There are many forex trading strategies adopted by the investors, the most useful among these strategies is called as the leverage. This forex trading strategy allows the online traders to get more funds than the deposited amount; by adopting this strategy the benefits are maximized. This strategy helps in utilizing the amount deposited in the account even up to 100 times against any forex trading by backing high yield transactions very easily and better results are got. This leverage forex trading strategy is used by the traders on a regular basis to take advantage of fluctuations happening in the forex market in short term.

Stop loss order strategy: Stop loss order forex trading strategy is also used commonly among forex traders. This strategy protects the investors and creates a situation called the predetermined point, not allowing press launch investor to trade when it is reached. This forex trading strategy minimizes the losses. Sometimes this strategy might backfire and make the investor to run the risk of stopping their trading leading to a higher loss, hence it is up to the trader to use or not to use this forex trading strategy.

Automatic entry order strategy: An automatic entry order forex trading strategy is also one of the widely used strategies. school homework help strategy allows the investors to participate in the trading activity when the price is suitable for them. Here the price is already determined and when the situation is reached the investor enters into the forex trading automatically.

Apart from the above strategies, there are certain basic rules to be followed as strategies to gain profits in forex trading:

The amount exposed in the foreign currency trading should always be kept in track to ensure to be within the accepted levels. While trading, the trader should not be very greedy or breach when keeping the returns free press releases which is expected out of the transactions. The main objective should be kept in mind; it might be either capital appreciation or constant returns or high profits. Keeping track of ones own experience will reward at a later stage.

Investment should be within the affordability to lose. Also relying on expert’s opinions, history prices, and analytical statements may be effective some time rather than going by their own instincts.

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FOREX-US dollar rebounds as jobs data not bad as feared

The dollar rallied across the board on Friday in volatile trading, with investors relieved by data showing U.S. job losses in December were not as dismal as many had feared. Traders had positioned themselves for a gruesome non-farm payrolls number following a U.S. private sector jobs report earlier this week which showed hefty losses of 693,000.

However, many of those short trades were squeezed when the government reported a headline figure of 524,000, slightly better than the market's revised 550,000 forecast. "The dollar has dodged an economic bullet," said Nick Bennenbroek, head of currency strategy, at Wells Fargo in New York.

"Even though the report was generally discouraging, the headline payrolls decline was broadly as forecast. And perhaps most significantly for the dollar, we don't think today's report will accelerate further monetary easing from the Federal Reserve."

The euro hit session lows versus the dollar at $1.3588. It was last at $1.3615 , down 0.8 percent on the day.

The single euro zone currency had hit session highs immediately after the data's release.

Against the yen, the dollar was flat at 91.04 , off session lows at 90.55.

The ICE Futures' dollar index .DXY, a gauge of the greenback's value versus six major currencies, rose 1 percent to 82.371.

Despite the dollar's rebound, analysts said there is plenty in the jobs report that bodes ill for the U.S. economy and its currency.

The 7.2 percent unemployment rate was the highest in nearly 16 years and the upward revisions in November and October have pushed total job losses in the last four months to 1.9 million.

Total job reductions for 2008 were 2.6 million, the largest decline in 63 years.

"There was nothing good in the report," said Kathy Lien, director of currency research at GFT Forex in New York. "The U.S. is in recession and in previous recessions, job cuts have lasted for at least 15 months."

So far Lien said the U.S. economy has only seen 12 consecutive months of job losses which suggests that non-farm payrolls will not turn positive until the second half of the year.

Earlier, data showed showed a bigger-than-expected drop in French industrial output, adding to the argument that the euro zone economy is further deteriorating, and keeping selling pressure on the euro.

The euro ultimately received little support from an unexpected rise in euro zone retail sales, as the outlook for consumer demand remains weak amid plunging business morale and growing unemployment.

* Dollar rises vs euro after jobs data

* U.S. job loses at 524,000; unemployment rate at 7.2.pct

* Euro pressured by mixed euro zone economic data (Recasts, adds comments, U.S. data, updates prices, changes byline, dateline; previous LONDON)

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Thursday, January 1, 2009

Wall Street looks to '09 with relief after terrible '08

NEW YORK (AP) - The last trading day of 2008 on Wall Street provided a merciful end to an abysmal year _ the worst since the Great Depression of the 1930s, wiping out $6.9 trillion in stock market wealth. Six years of stock gains disappeared as the economy crumbled and markets crashed around the globe, shaking the confidence of professional and individual investors alike.

But the year's chaos went far beyond the stock market. Credit markets that drive lending became paralyzed, plunging the country further into recession and touching off an unprecedented rush for the safety of Treasury bills, notes and bonds.

Commodities markets, usually ignored by most investors, soared on speculative buying and then collapsed when it became clear that the world economy was in trouble and that record high prices, including oil's peak above $147 a barrel, were unjustified.

"It was a feeling of flailing,'' said Jerry Webman, chief economist at Oppenheimer Funds Inc.

"People couldn't get a grasp because there were not obvious historical precedents.''

By the year's end, many market analysts were predicting that 2009 would be better, but that recovery would be slow as investors, shaken by the devastation to their portfolios, U.S. companies and the overall economy, remain reluctant to buy.

"I think this may be much more of a show-me market than we're used to. The market is going to be looking for some stabilization, increases in earnings, a few more positives before it begins to recover,'' said Webman.

Wall Street's stats for 2008 provide evidence of how stunningly terrible the year was:

_ The average price of a share listed on the New York Stock Exchange plunged 45 percent to $41.14 by the end of the year from $75.01 a year earlier.

_ The Dow Jones industrial average fell 33.8 percent for the year and 38 percent from its record close of 14,165.53 in October 2007, making it the Dow's worst year since 1931, when the country was in the midst of the Great Depression.

_ The Standard & Poor's 500 index, the indicator most watched by market pros, slumped 38.5 percent in 2008 and 42.3 percent from its 2007 high of 1,565.15.

_ Investors lost $6.9 trillion as relentless selling reduced the value of stocks across the market. That amount, measured by the Dow Jones Wilshire 5000 Composite Index, represented 38 percent of the total value of U.S. stocks at the start of 2008.

Yet the last week of the year was almost serene.

On Friday, the Dow rose 108.00, or 1.25 percent, to 8,776.39.

Broader stock indicators also rose.

The Standard & Poor's 500 index gained 12.61, or 1.42 percent, to 903.25. The Nasdaq composite index rose 26.33, or 1.70 percent, to 1,577.03 and ended the year down 40.5 percent.

It's down 44.8 percent from its recent peak in October; the Nasdaq's record high close of 5,048.62 came in March 2000 just before the end of the dot-com boom.

The Russell 2000 index of smaller companies rose 16.68, or 3.46 percent, to 499.45.

The tranquility was a welcome change in a year that was rocky from the start as worries about the financial system were fed by reports that banks had suffered billions of dollars in losses on securities tied to defaulting mortgages.

The forced-sale of Bear Stearns Cos. in March unnerved Wall Street, yet it still managed to right itself through the spring.

The surging price of oil and other commodities dealt another blow to the market.

As a barrel of crude leaped from $112 at the beginning of May to a once-unthinkable $147.27 on July 11. With retail gasoline prices soaring above $4 a gallon, stocks fell amid fears that consumers would have to cut back their spending because of higher energy prices.

But the market again stabilized - until the September bankruptcy of one of the most venerable Wall Street investment firms, Lehman Brothers Holdings Inc., set off a panic on Wall Street and in the credit markets.

Banks, fearing that other financial institutions would be unable to repay, stopped lending to each other.

The market for short-term corporate debt known as commercial paper was frozen. Interest rates soared.

The only thriving part of the credit markets was government debt. Investors desperate for safety poured money into Treasury issues, particularly short-term bills.

The yield on the three month bill plunged to zero, and briefly to a negative return, as investors decided no return or a slight loss was better than the losses on Wall Street or in commodities.

Wall Street's crash in 2008 didn't come in one day like the famous 22.6 percent plunge of Oct. 26, 1987. In many ways it was more nightmarish than Black Monday because there wasn't a quick end to the selling and record volatility.

From Sept. 15 to Nov. 20, when the Dow fell to a close of 7,552.29, the depths it had reached in the bear market of 2002, the blue chips rose or fell by triple digits 41 trading days out of 49.

Relative stability returned to the market during December.

But Wall Street's horrific performance has cast a new mold for modern bear markets, often defined as a decline of more than 20 percent, and made expectations for 2009 so low that any reduction in the economic bloodletting would be considered a victory.

"Everyone is so down in the dumps about everything that I do think it gives you the opportunity to have a positive surprise if maybe the economy does turn quicker,'' said Bill Stone, chief investment strategist at PNC Wealth Management.

Wall Street is hoping for signs of recovery by the second half of 2009, including evidence the housing market has hit bottom, increased lending by banks and a drop in unemployment accompanied by increased consumer spending.

But for the near future economists and market experts predict more bad news.

"I have yet to see anyone who anticipates that the first half of next year is going to be rosy,'' said Dean Junkans, chief investment officer at Wells Fargo Private Bank.

But even a modest improvement in the economy, which has been in recession since last December, could help stocks extend their recent run.

"If you're standing still, walking is a pickup of speed,'' said Alan Levenson, chief economist at T. Rowe Price Associates Inc.

The government has helped calm markets with a $700 billion rescue of the financial sector and by agreeing to provide financing to the major U.S. automakers.

The Federal Reserve slashed its benchmark interest rate to near zero to reduce borrowing costs.

Cheaper oil prices - it settled at $44.60 a barrel on Wednesday - are expected to help bolster the economy, draining less money away from consumers and businesses.

The declining prices of other commodities, which have come down in response to rapidly waning demand for raw materials around the world, should also help.

In addition, some analysts believe the market will improve because so many investors have pulled out, leaving little room for more selling.

"Given the nasty carnage how much further risk is there?'' said David Darst, chief investment strategist for Morgan Stanley's global wealth management group.

Still, the credit markets remain nearly stagnant as banks continue to be anxious about lending.

Corporate forecasts in January could help shape investor sentiment, even as expectations are modest.

David Kelly, chief market strategist at JPMorgan Funds, said the prospects for the market are "exceptionally uncertain.''

For the market to hold its advance from November he contends the calmer trading of the past month must continue and president-elect Barack Obama's plan to boost the economy with spending on infrastructure must show it is working quickly.

"The great risk is we are in a wait-and-see economy,'' Kelly said. "What Obama needs to do is turn this into a do-it-now economy, give people a reason to buy.''

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Asia's bull run ends in 2008 with record falls

From Tokyo to Mumbai, Asian stocks plunged by record amounts this year as the region's powerhouse economies lost steam and foreign investors pulled billions of dollars from its once-booming markets. Dizzying losses felt around the world were all the more painful in Asia, whose stocks had long been seen as a safe haven from financial turmoil in the West - another myth that burst along with the housing, credit and commodities bubbles in the global crisis of 2008.

In many cases, markets that benefited most during a bull run that gathered momentum from 2006 were hit hardest as it ended. In China, the benchmark Shanghai Composite Index plummeted 65 percent - its largest-ever annual drop - becoming the year's second-worst performing market after Russia, where a key index fell about 72 percent.

The Shanghai index had soared more than 300 percent over 2006 and 2007.

Japanese shares also suffered their biggest yearly decline, with the Nikkei 225 dropping 42 percent as world's second-largest economy slid into recession.

That outpaced a 39 percent decline in 1990 after Japan's so-called "bubble'' economy of the 1980s burst.

In Hong Kong, also in recession, the Hang Seng Index closed the year 48 percent lower, its second-biggest drop to date and its worst since the global oil shock of the early 1970s. India's main index in Mumbai retreated about 52 percent.

"It was ferocious, it was an unprecedented move down,'' said Lucinda Chan, director of the private wealth division at Macquarie Securities in Sydney.

"The domino effect was so quick and so swift.''

Major Western benchmarks were down far less, with the Dow off nearly 35 percent and Britain's FTSE 100 slipping 32 percent.

As a whole, Asia fell harder than most other regions as measured by two key MSCI Asian stock indices, both down more than 52 percent for the year.

Averages for Group of Seven major developed countries and global stocks lost a little over 40 percent of their values; Europe dropped almost 48 percent.

Sputtering growth in Asia's export-driven economies was a big reason for the region's decline, analysts say.

As a meltdown of the U.S. housing market mushroomed into a global slump in consumer spending and industrial production, foreign firms yanked billions from Asia to repay debts back home and funds liquidated their holdings to meet redemptions.

At the country level, the pace of initial public offerings that fueled rises in mainland China and Hong Kong bourses fell off.

A surging yen added to the woes of Japanese mega exporters such as Toyota Motor Corp. - down more than half for the year - and Sony Corp. - down 60 percent.

Political upheaval weighed on Thailand's market.

Some of the damage was self-inflicted - shares in companies that lost big on hedging contracts, such as Hong Kong conglomerate Citic Pacific Ltd., were punished as a result.

But markets across the region may have been bound to fall short of the lofty expectations set by investors who bid valuations ever higher as they rushed to cash in on Asia's emerging market boom.

"No one saw an end to the bull run,'' said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

"What many failed to see was an endgame to the leveraged world we were living in and an endgame to the consumption driven economy that the world had become.''

Along the way, investors, big and small, got burned.

In China, only 6 percent of the 25,000 investors participating in one survey reported this week said they had made a profit from stock trading in 2008.

Nearly two-thirds said they had lost 70 percent of their investments or more, according to the survey by the Shanghai Securities News, a newspaper affiliated with the stock exchange.

Many Asian hedge funds, meanwhile, took a drubbing and closed shop by the dozens, with their traditionally long bets on the markets' moves souring amid the furious sell-off.

Whether 2008's lows, reached mostly in October and November, hold in 2009 is a matter of debate.

But most investment strategists have written off any chance of a major rebound in at least the first six months of the new year, when company earnings could prove especially bleak.

And there could be more violent swings if companies aren't done with the massive clean up of debt-laden balance sheets that began last year.

Trillions of dollars in assets may still need to be shed in the global financial system because there may not be enough capital to shore it up, said Paul Schulte, a chief Asia equity strategist at Nomura International in Hong Kong.

How China's economy shapes up will also be closely watched. Fourth quarter growth in 2008 is already forecast to drop to as low as 2 percent from nearly 12 percent in 2007.

"China's economy is obviously at a turning point. There are too many uncertainties, and past huge losses have made investors increasingly cautious,'' said Cheng Weiqing, an analyst at Citic Securities in Beijing.

Asia's fortunes could depend greatly on the mood of consumers - especially in the U.S. - whose appetite for cars, electronics and other goods have been the lifeblood of regional growth.

Credit markets still haven't returned to normal.

Traders are hopeful economy-boosting measures worth hundreds of billions of dollars by governments around the world will help on that front, bringing about some recovery by the second half.

"The landscape has been completely changed,'' said Chan of Macquarie.

"People's confidence needs to be rebuilt, and that has to come through the stimulus packages around the world that are being put out by various governments.''

Many still are bracing for even more selling.

"For 2009, we will see a lot more pain in Asia,'' said Daley, who doesn't see stock markets rebounding until 2010, at the earliest.

"The desperate hunt for a bottom is futile, because when we get to the bottom, get used to it,'' he said. "We're going to be here for a while.''

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