theforex

Forex : Japan opposition cautiously forex intervention

2009-07-16T04:27:00.000-07:00

Forex money - Japan should not intervene in the forex currency markets unless exchange rates fluctuate abnormally, a senior opposition lawmaker said Thursday when asked about the recent strength of the yen against the dollar.

The main opposition Democratic Party has its best chance to win Prime Minister Taro Aso's ruling Liberal Democratic Party (LDP) and its smaller coalition partner in an imminent national election, ending half a century of almost uninterrupted by the conservative LDP .

"forex Currency rates should not be moved artificially, as they reflect the strength of the economy. If Japan's economy is strong, so is the yen and weaker than if the U.S. economy, the dollar will strengthen . It is very natural, "Hirohisa Fujii, a senior adviser to the Democrats, told Reuters in an interview.

"Unless the forex currency moves are abnormal, I do not think we should intervene in forex currency markets."

Fujii, 77-year-old former finance ministry official, is seen by political analysts and party members from running for a key position in economic policy if the Democrats win the elections to be held in October.

He served as finance minister in an anti-LDP coalition, from 1993 to 1994.

It is not clear that a government of the Democratic Party to be appointed as finance minister. Masaharu Nakagawa, the finance spokesman for the party, Fujii and touted as potential candidates, but analysts say that the post could go to other veterans.

Japan has a long history of trying to stop the intervention by the yen to buy dollars, but has remained outside the market from 35 trillion yen ($ 373 billion) a year over 15 months ending March 2004 .

The yen touched a maximum of five months of 91.80 yen per dollar last week, raising concern about the impact on Japan, which depend on the export economy as it emerges from its deepest recession since the Second World War.

Fujii also said that Democrats see no need to change in Japan's $ 1 trillion dollars of foreign exchange reserves, second largest in the world after China.

"It is a fact that confidence in the dollar remains high and is very natural for Japan to manage its reserves which it is hoped the majority of (the markets)," he said.

"The same applies to the currencies and stocks, and we must acknowledge as a fact in a free market economy."

Fujii shrugged the comments made by Nakagawa said that Japan should avoid the purchase of forex dollar-denominated U.S. bonds because of forex currency risk.

"About 60-70 percent of the way it is implemented should not be changed, this is a condition for a change of government. If it has changed 100 percent, which would be a revolution," said Fujii.

"The weight of the dollar in reserves is one of those topics that should not be changed only by a change of government happens."

He also said that the Democrats what they consider to cut wasteful spending in Tokyo from $ 160 billion stimulus measures, which he said includes expenditures such as construction projects, to reduce new bond issues totaling a record 44.1 trillion yen in the fiscal year that began April 1.

"The supplementary budget (for the current fiscal year to next March) is a fake," said Fujii. "It is important to reduce more than 10 percent of new government bond issues. This is important both for the fiscal health of Japan and JGB markets." ($ 1 = 93.74 Yen) - Reuters - Forex money

U.S. dollar, yen slide as risk appetite rises

2009-05-01T23:29:00.000-07:00

NEW YORK, May 1 (Reuters) - The U.S. dollar and yen fell on Friday as increasing risk appetite sparked by better-than-expected U.S. economic data pared demand for both currencies as a refuge against the global slowdown. The dollar fell for a fourth straight session versus the euro, while the yen dropped to a two-week low against both the euro and dollar, with volumes thin given the May Day holiday in Europe. Higher-yielding currencies such as the Australian and New Zealand dollars were some of the biggest movers on the day, moving in tandem with higher U.S. stocks.

New data on Friday reinforced the view that the worst of the recession may have passed, making investors more comfortable with risk-taking. Reports showed U.S. consumers felt more upbeat about the economy in April while a key gauge of manufacturing suggested the sector was gradually emerging out of a prolonged recession. The numbers were consistent with the Federal Reserve's less bleak outlook on the U.S. economy issued on Wednesday.

"Risk appetite is definitely coming back and the data this morning was phenomenal," said Melvin Harris, a market analyst at Advanced Currency Markets in New York.

"The reports are supportive factors to truly build the case that while things are not completely better yet, we are moving in a positive direction. Economic fundamentals will become more important in the next couple of months."

In late afternoon trading, the euro rose 0.3 percent against the dollar to $1.3262 and touched a two-week high against the yen at 132.33 yen . The euro last traded at 131.64, up 1.0 percent from late on Thursday.

On the week, the euro was up 2.8 percent versus the yen.

The ICE Futures' dollar index, a measure of the greenback's value versus six major currencies, fell 0.3 percent to 84.569 .DXY.

YEN FALLS; AUSSIE, KIWI RISE

The dollar, however, gained 0.7 percent against the yen to 99.28 , having hit a two-week high around 99.58 yen, according to Reuters data.

The Australian dollar rose 0.7 percent against the U.S. dollar to US$0.7299 . The New Zealand dollar also climbed, up 0.8 percent against the greenback to US$0.5697 , while the Canadian dollar was also firmer, with the U.S. dollar down 0.7 percent at C$1.1849 .

Investors were also encouraged by data overnight showing Chinese manufacturing gained further momentum in April, as well as by Friday's better-than-expected UK manufacturing survey.

Optimism was further stoked in the United States after St. Louis Fed President James Bullard said on Friday the U.S. unemployment rate will likely crest above 9 percent but not reach levels set in the early 1980s.

Still investors remained cautious as the financial markets remain in an uncertain environment. Next week's announcement of the outcome of U.S. stress tests on top banks is an unknown.

Results from tests of the health of the 19 largest U.S. banks are expected Thursday, May 7, and will include information on estimates of losses for certain categories of loans and resources to absorb those losses. [ID:nWAT011386]

Sentiment also remains vulnerable to any hint on whether a spreading flu outbreak may turn into a pandemic that would be severe enough to dent global economic recovery.

Investors will also be looking to next week's U.S. nonfarm payrolls report for April, another potential risk for the markets. Analysts are expecting job losses of 630,000 last month, according to a Reuters poll.

"Although the pace of U.S. economic decline should be considerably less severe in the second quarter, the best contemporary tracking measures still point to a decline," said Avery Shenfeld, senior economist at CIBC in Toronto.

"How hard can we cheer about a more cushioned fall when another 600,000 drop in non-farm payrolls shows up in Friday's report?"

Dollar extends gains as investors debate forex data

2009-04-30T22:38:00.000-07:00

The dollar rose on Thursday as investors began to react positively to U.S. data, seeing signs of a recovery which would bolster demand for U.S. assets. The dollar was also helped by month-end flows as investors who had been betting against the dollar and dollar-denominated assets were forced to buy to reduce losses.

U.S. weekly jobless claims decreased in the latest period even as continued claims notched a fresh record high, a sign some investors took as stabilization of the labor market. A separate report showed business activity in the U.S. Midwest contracted at a less severe rate than expected in April. "If the U.S. economy starts to show signs of sustained stabilization, the dollar may begin to perform better, though it's probably a bit premature to say this now," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

The euro was last down 0.2 percent at $1.3235 while the dollar was 0.9 percent higher against the yen at 98.33 yen .

A rise in euro zone unemployment to 8.9 percent in March from an upwardly revised 8.7 percent in February underlined the view that the euro zone economy remains weak. Other data showed that euro zone inflation remained at a record low of 0.6 percent year-on-year in April

Moves in the dollar were also being dictated by month-end fixing related flows tied in part to equity-related adjustments.

"The dollar is up because of overall demand for the greenback," Kathy Lien, director of currency research at GFT Forex in New York. "A lot of month-end dollar negative flows are ending as it is the last day of trading" for the month.

Other data showed the weak U.S. job market continued to pressure incomes and spending in March, government data showed on Thursday. A report from the Commerce Department showed consumer spending fell 0.2 percent in March after a 0.4 percent increase in February, initially reported as a 0.2 percent rise. Spending, which accounts for over two-thirds of U.S. economic activity, had also risen in January.

Personal income slipped 0.3 percent after declining 0.2 percent in February, the Commerce Department said. Personal income has declined in five of the last six months.

Savings increased to an annual rate of $455.3 billion. The savings rate climbed to 4.2 percent in March from 4 percent in February.

Inflation was moderate in March, with the personal consumption expenditures price index, excluding food and energy, up 1.8 percent on a year-over-year basis, the same as in February. [ID:nN30506091]

Moves were also exaggerated by thin market conditions ahead of the May Day holiday tomorrow and the start of the Golden Week Holiday in Japan. (Additional reporting by Steven C. Johnson in New York)

Yen rises as Japanese buy

2009-02-08T21:55:00.000-08:00

TOKYO, Feb 9 (Reuters) - The yen rose against the dollar on Monday with demand from Japanese exporters lending support after it earlier hit a one-month low as gains in stock markets pointed to an easing of risk aversion.

The dollar hit a one-month high against the yen earlier as the Japanese currency carried over its weakness from Friday, when U.S. shares rallied even as data showed that U.S. job losses in January were the deepest in 34 years.

"The rise in equities caused risk aversion to wane and triggered selling of the yen," said a trader for a Japanese bank.

But the dollar later shed its gains against the yen due to selling by Japanese exporters, traders said.

The dollar fell 0.3 percent against the yen to 91.73 yen. The dollar earlier rose to 92.42 yen on trading platform EBS, its highest since early January.

In the near term, currencies are seen likely to take their cues from how the stock market reacts to President Barack Obama's financial stability plan, to be outlined by Treasury Secretary Timothy Geithner in a speech at 1600 GMT on Tuesday. The stabilisation steps were initially due to be unveiled on Monday, but the the Obama administration pushed back the announcement as it pressed lawmakers to settle their differences over a huge economic stimulus package.

Market players said the dollar broke above a triangle pattern against the yen on technical charts late last week, suggesting it may have more room to rise.

One possible scenario is for the dollar to rise towards 94.00 yen within a week, but whether that will be the case remains to be seen, said Minoru Shioiri, chief manager of foreign exchange trading for Mitsubishi UFJ Securities. "That is what technical factors suggest, but if you ask whether there are other factors out there that lend credence to that view, or whether this is a situation where people can head openly toward risk-taking, that's difficult," Shioiri said.

Besides the market's reaction to the U.S. financial stabilisation measures, another focal point will be whether there is fund repatriation by Japanese investors, Shioiri said.

Since February is a month when there is a relatively large amount of coupon payments on U.S. Treasuries, there is focus on the potential for dollar selling by Japanese players, he said.

Some $25 billion in coupon payments in U.S. Treasuries are due on Feb. 15, according to U.S. Treasury Department data. In addition, there is $36 billion in maturing coupon securities due that day.

Market players are focusing on whether Japanese institutional investors will try to repatriate overseas assets ahead of their financial year-end book closings at the end of March.

There was little currency reaction to data showing that Japan's current account surplus fell 92.1 percent in December from a year earlier, and that Japan's core private-sector machinery orders fell by a smaller-than-expected 1.7 percent in December.

Forex Trading Strategies

2009-01-11T01:55:00.000-08:00

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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.

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

2009-01-11T01:36:00.000-08:00

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)

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

2009-01-01T04:41:00.000-08:00

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.''

Asia's bull run ends in 2008 with record falls

2009-01-01T04:38:00.000-08:00

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.''

FOREX-China regulator vows to help exporters

2008-12-11T05:37:00.000-08:00

BEIJING, Dec 11 (Reuters) - China's foreign exchange regulator pledged on Thursday to improve its services to the country's exporters, who have been hit hard by weakening demand overseas, while promoting balance in international payments overall. The State Administration of Foreign Exchange (SAFE), in a statement on how it would implement the conclusions of the Central Economic Work Conference that wrapped up on Wednesday, said that it would also keep an eye on the international financial crisis and cross-border capital flows.

'We will greatly improve forex services, facilitate trade and investment, support foreign trade and exports and make it more convenient for firms, especially small and medium-sized ones, to obtain trade finance,' SAFE said on its website (www.safe.gov.cn).

The agency did not provide detailed policy prescriptions. China's exports fell 2.2 percent in the year to November, the first monthly drop in seven years. Actual foreign direct investment into China fell 36.5 percent in November compared with a year earlier.

(Reporting by Zhou Xin; Editing by Victoria Main)

EUR (Euro) Forex Technical Analysis

2008-12-11T05:33:00.000-08:00

Click to see a forex chart

The pre-planned breakout variant for buyers was realized with attainment of basic assumed targets. OsMA trend indicator, having marked strengthening tendency of pair overbought gives risk of further buying positions supports but considering the lack of sustained bearish resistance and considering the chosen strategy there are reasons for supporting bullish planning priority direction for today as well. Hence aiming at decreasing trading risks we assume the possibility of rate return to close 1.3000/20 supports, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 1.3060/80, 1.3120/40 and/or further breakout variant up to 1.3180/1.3200, 1.3260/80, 1.3320/40. An alternative for sells will be below 1.2920 with targets 1.2840/60, 1.2780/1.2800, and 1.2420/40.

FOREX-Dollar dips as auto bailout hopes boost risk tolerance

2008-12-11T05:30:00.000-08:00

NEW YORK, Dec 10 (Reuters) - The dollar fell to a two-week low against the euro on Wednesday and the yen weakened as U.S. lawmakers reached tentative agreement to extend emergency loans to the ailing auto industry, helping to calm investor anxiety.

Stocks rose and investors' rush into safe-haven assets such as U.S. Treasury debt slowed, temporarily undermining the dollar's appeal and lifting other currencies such as the euro.

The low-yielding yen also fell as the pendulum swung back in favor of currencies and assets that offer a higher return.

The impetus for Wednesday's moves was news the White House and Congressional Democrats had reached a deal in principle on a $15 billion plan to help automakers restructure and avoid bankruptcy For details, see [ID:nN10505833].

"It's safe to say risk appetite has improved somewhat, and that has a lot to do with talk of an imminent bailout for the U.S. auto industry," said Omer Esiner, chief market analyst at Ruesch International in Washington.

With the year winding down, Esiner also said investors are taking profits on the dollar's recent rise. That has added to pressure on the U.S. currency and may persist into January.

Late afternoon, the euro was up 0.8 percent at $1.3022 after earlier hitting a two-week high of $1.3070. It rose 1.4 percent to 120.70 yen while the dollar added 0.6 percent to 92.64 yen .

The yen also fell sharply against the Canadian dollar , the Swiss franc and the pound , according to Reuters data.

Analysts said fears of Bank of Japan intervention to prevent too much yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching forex moves carefully. [ID:nTKF003197]

Sterling rose 0.4 percent to $1.4789 while the dollar fell 0.6 percent to 1.1985 Swiss francs .

Analysts were quick to point out, however, that the uncertainties facing the global economy meant a relapse into risk aversion was still likely.

One sign of just how parlous the economic outlook is came when China said its exports and imports shrank unexpectedly in November, sparking fears that global demand has vanished. [ID:nPEK31604]

In the United States, while an auto deal looked set to pass the House of Representatives, some Republicans sowed doubts about possible snags in the Senate [ID:nWEN162].

That weakened stock markets and helped the dollar and yen pare some of the losses seen earlier in the session, though both remained down on the day.

In the longer run, though, analysts expect the dollar's rise to fade next year as markets stabilize and investors stop seeking relative safety in the U.S. currency.

"If you analyze why the dollar has strengthened, it has more to do with the rest of the world than with the U.S.," said Mohamed El-Erian, co-chief of Pacific Investment Management Co, at a Reuters Investment Summit in New York on Wednesday.

The euro and sterling, for instance, fell sharply as the euro zone and British economies slowed and their central banks cut interest rates.

He said when "that stock adjustment is over, which we believe will be in 2009, the dollar (will fall)" but added that it's still premature to bet against the greenback.

"You don't want to be 'shorting' the dollar until you have evidence the de-leveraging has run its course. Our sense is that ... three-fourths of the de-leveraging has taken place." (Additional reporting by Nick Olivari; Editing by Chizu Nomiyama)

Forex - Dollar hits record low vs euro

2008-07-15T22:11:00.000-07:00

The dollar briefly plunged to a record low against the euro as concerns mounted over the U.S. mortgage market and its impact on the wider economy. The euro jumped to an all-time high of $1.6038 as confidence on financial markets continued to plummet after the U.S. government on Sunday announced plans to bail out mortgage lenders Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ).

Investors are nervous that a Federal Reserve bail-out could add billions of dollars to the U.S. national debt, and lower the country's credit rating. 'Traders continue to fall out of favour with the dollar, looking for safer currencies instead,' said CMC Markets analyst James Hughes.

'Sunday's announcement by the Fed regarding its mortgage bail-out plan for Fannie Mae and Freddie Mac remains somewhat derided in the market -- it's apparently done little more than underline the perilous state of the U.S. economy,' he added.

The market jitters drove the euro higher despite a drop in the German ZEW institute's economic expectations index for July to a record low, while the pound breached the $2.00 mark. In addition, the yen rose to highs not seen in more than a month, even though the Bank of Japan has stressed the need of maintaining a neutral stance on interest rates amid increased uncertainties.

The BoJ, as expected, maintained its overnight call rate target unchanged at 0.5 percent for the 20th meeting running. Attention will now turn to the release of U.S. retail sales and the producer price index, and Federal Reserve chairman Ben Bernanke's semi-annual testimony to the Senate Banking Committee.

'Bernanke might provide some conciliatory words to provide support to the market, but given the current softness of the dollar, the data releases will also be crucial,' said an analyst at BNP Paribas (other-otc: BNPQY.PK - news - people ). Elsewhere, the pound remained well bid against the dollar, briefly hitting a three-and-a-half month high following stronger-than-expected CPI inflation data.

Official figures showed the key annual CPI rate jumping to 3.8 percent in June from 3.3 percent in May, beating forecasts for a more moderate rise to 3.6. 'The punchy headline number is likely to ensure that the pound remains well bid for now,' said Daragh Maher, senior forex strategist at Calyon.

The data has kept in place expectations that the Bank of England is unlikely to cut interest rates before the end of the year while inflation remains well above its 2.0 percent target.

'Inertia appears the most likely monetary policy stance for now,' said Maher.

Forex: Dollar Rises Versus Yen, Euro

2008-06-10T08:10:00.000-07:00

The dollar rose to a three-month high against the yen and climbed versus the euro after Federal Reserve Chairman Ben S. Bernanke said economic risks have faded, spurring traders to boost wagers interest rates will rise. Bernanke said late yesterday that the central bank will ``strongly resist'' any waning of public confidence in stable prices. ``Strong'' economic fundamentals will translate to dollar strength, Treasury Secretary Henry Paulson said today in a Bloomberg Television interview in Washington.

"The Fed and the Treasury have signaled what they want: a stronger dollar,'' said Jeff Gladstein, global head of foreign- exchange trading at AIG Financial Products in Wilton, Connecticut. "There's potential for dollar appreciation.'' The dollar rose to 107.14 yen, the highest since Feb. 27, at 10:29 a.m. in New York, from 106.31 yesterday. Against the euro, the dollar climbed to $1.5509, from $1.5646. Japan's currency traded at 165.88 per euro from 166.33 yesterday.

Futures on the Chicago Board of Trade show a 55 percent chance the Fed will raise its 2 percent target rate for overnight lending between banks by at least a quarter point at its Aug. 5 meeting, compared with 9 percent the previous day. The contracts show a 95 percent chance the Fed will increase the rate by December, up from 67 percent odds a week ago.

The dollar has fallen 11 percent against the euro and 7.2 percent versus the yen since September, when the Fed began to lower borrowing costs from 5.25 percent.

China Talks

"The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so,'' Bernanke said in a speech at a Boston Fed conference. "The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations.''

The Fed is "aware'' that the weak dollar boosts inflation, Dallas Fed President Richard Fisher said in response to questions after a speech at the Council on Foreign Relations in New York today.

Paulson repeated comments made yesterday that currency intervention is a tool for policy makers. He also urged China to loosen government controls on energy prices and the value of the country's currency.

The yuan traded near the highest level since a dollar peg was scrapped in 2005. The currency was little changed at 6.9255 per dollar in Shanghai, compared with 6.9230 on June 6, according to the China Foreign Exchange Trade System.
Central Bank Focus

Canada's dollar gained as the Bank of Canada unexpectedly kept interest rates unchanged at 3 percent because energy prices may push inflation past the top of its target band later this year. The loonie strengthened to C$1.0204 per U.S. dollar from C$1.0233 yesterday after touching 1.0323 before the rate announcement, the lowest in more than two months.

"The focus of the Fed and now the Bank of Canada has gone from preventing a second depression to all of a sudden inflation is an issue,'' said Win Thin, a currency strategist with Brown Brothers Harriman & Co. in New York. ``That's good for the dollar.''

The U.S. dollar climbed to 94.59 cents per Australian dollar, the highest since May 16, before trading at 94.75 cents. Against the New Zealand dollar, the U.S. currency gained to 75.49 cents, near the strongest in a month. The British pound slid to $1.9563 from $1.9751 after data showed U.K. house prices dropped in May.

Trade Deficit

A report today showed that the U.S. trade deficit widened in April as the surging cost of oil boosted imports to a record, overshadowing the biggest gain in exports in four years. The gap grew 7.8 percent to $60.9 billion the Commerce Department said.

The Standard & Poor's 500 Index fell 0.7 percent and the two-year U.S. Treasury yields rose 16 basis points to 2.87 percent. The yield advantage of a German two-year bund over a comparable Treasury has narrowed to 1.81 percent from 2.26 percent on June 6.

Finance ministers of the Group of Eight industrialized countries may consider joint action to deflate the price of oil and prop up the dollar at their meeting June 13-14 in Japan, said DBS Group Holdings Ltd. in a report to clients.

The last time the major industrialized countries intervened was on Sept. 22, 2000, when they bought the euro after it tumbled 27 percent from its 1999 debut. They last propped up the dollar in 1995, when it sank almost 20 percent in four months against the Japanese yen to a post-World War II low of 79.95 yen.

The greenback dropped 1.4 percent against the euro last week, the most since March, after Trichet said on June 5 that policy makers may raise borrowing costs in July to contain inflation and the U.S. Labor Department reported the next day that the jobless rate increased the most in May in more than two decades. Crude oil today climbed to $137.98 a barrel in New York. The price more than doubled in the past year.

FOREX-Yen rises broadly amid waning risk demand

2008-05-16T02:12:00.000-07:00

The yen rose across the board on Thursday as investors reduced demand for riskier assets such as stocks after a series of weak U.S. economic data added to anxiety over the country's growth picture.

Analysts said that while market indicators pointed to the Federal Reserve being close to the end of its interest rate cutting cycle, there were nagging doubts on whether the economy would be able to cope without further policy easing.

"It's a yen story. Industrial production was weak and capacity was down. Although the Philly Fed improved, it's still negative and jobless claims were not good," said Ashraf Laidi, chief forex strategist at CMC Markets in New York.

"We cannot just dismiss these numbers by saying manufacturing is a small component of the economy. It is irresponsible for the market to reduce or eliminate the possibility of a rate cut by the Fed."

The dollar slumped to a session low of 104.44 yen and was last trading at 104.64 yen, down 0.4 percent on the day. The euro fell 0.5 percent to 161.72 yen , while sterling dropped 0.4 percent to 203.68 yen .

The low-yielding yen tends to attract flows during periods of uncertainty as the low interest rates reflect Japan's capital surplus.
Factory activity in the U.S. mid-Atlantic region shrank for a sixth straight month in May, while manufacturing in New York State also declined, according to reports by regional Federal Reserve banks.

U.S. interest rate futures continued to signal the expectation the Fed would raise the benchmark federal funds rate by a quarter percentage point by the end of the year to 2.25 percent. They were pricing in a 92 percent perceived chance that the central bank would leave rates steady in June.

Analysts also attributed the yen's advance to a reversal of the previous session's decline and the dollar's failure to break through the 105.20 mark against the Japanese currency.

"There still seems to be pretty good interest to sell U.S. dollars and buy yen at the 105 area," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

"People continue to view the market as being prone to financial risk and volatility. I still think they are trying to pick up the yen on the dips."
In afternoon trading, the dollar rebounded versus the euro as U.S. stocks .DJI extended gains. A further drop in oil prices CLc1 boosted equities and eased some pressure on the dollar. Crude oil for June delivery fell more than 2 percent.

The euro was last down 0.1 percent at $1.5462 after hitting a session high earlier of $1.5547.

Earlier in the session, the euro zone currency rose as data showed strong first-quarter growth in France and Germany. But the market's enthusiasm was dampened by European Central Bank chief Jean-Claude Trichet's warning that the pace might not be as flattering in the months ahead.

The ECB's refinancing rate is at 4 percent and the interest rate differential between the euro zone and the United States has been the main driver behind the dollar's decline.

The market largely shrugged off data showing that the United States suffered net capital outflows of $48.2 billion in March after attracting inflows of $48.9 billion in February.
"There is a predisposition right now in the market to buy dollars. We need a proper catalyst to do that," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York.

Who is participating in forex market trades?

2008-04-13T17:10:00.000-07:00

The forex market is all about trading between countries, the currencies of those countries and the timing of investing in certain currencies. The FX market is trading between counties, usually completed with a broker or a financial company. Many people are involved in forex trading, which is similar to stock market trading, but FX trading is completed on a much larger overall scale. Much of the trading does take place between banks, governments, brokers and a small amount of trades will take place in retail settings where the average person involved in trading is known as a spectator. Financial market and financial conditions are making the forex market trading go up and down daily. Millions are traded on a daily basis between many of the largest countries and this is going to include some amount of trading in smaller countries as well.

From the studies over the years, most trades in the forex market are done between banks and this is called interbank. Banks make up about 50 percent of the trading in the forex market. So, if banks are widely using this method to make money for stockholders and for their own bettering of business, you know the money must be there for the smaller investor, the fund mangers to use to increase the amount of interest paid to accounts. Banks trade money daily to increase the amount of money they hold. Overnight a bank will invest millions in forex markets, and then the next day make that money available to the public in their savings, checking accounts and etc.

Commercial companies are also trading more often in the forex markets. The commercial companies such as Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs, ABN Amro, Morgan Stanley, and so on are actively trading in the forex markets to increase wealth of stock holders. Many smaller companies may not be involved in the forex markets as extensively as some large companies are but the options are stil there.

Central banks are the banks that hold international roles in the foreign markets. The supply of money, the availability of money, and the interest rates are controlled by central banks. Central banks play a large role in the forex trading, and are located in Tokyo, New York and in London. These are not the only central locations for forex trading but these are among the very largest involved in this market strategy. Sometimes banks, commercial investors and the central banks will have large losses, and this in turn is passed on to investors. Other times, the investors and banks will have huge gains.

Next Week Ringgit To Be Rangebound Against U.S. Dollar

2008-04-05T02:25:00.000-07:00

FOREX: Ringgit vs U.S. Dollar

The ringgit is likely to be rangebound against the U.S. dollar next week, with market participants staying on the sidelines due to ongoing fears over the U.S. subprime meltdown, a dealer said.

He expects the local unit to move within a tight range of between 3.1880 and 3.1950 against the greenback next week.

"Market players are staying away from lower yield currencies as the U.S. economy moves closer to a recession due to the deepening subprime mortgage woes," he said.

On a positive note, he expressed optimism over the near-term outlook of the ringgit given rising expectations that the U.S. Federal Reserve will cut its key interest rate by as much as 50 basis points at the next policy meeting scheduled for the end of this month.

"This would further weaken the U.S. dollar, prompting players to invest in countries where interest rates are higher so as to reap better returns on their investments," he said.

He also said that Bank Negara Malaysia will likely allow the ringgit to strengthen further to RM3.10 per U.S. dollar by year end after the 6.7 percent and 7.1 percent gains in 2007 and 2006 in order to contain inflationary pressures.

Noting that Malaysia’s benchmark interest rate is currently at a premium to that of U.S., the dealer said Malaysia's overnight policy rate could be kept steady so that the interest rate differential factor will remain in the ringgit’s favour.

"This will provide a good injection for the further strengthening of the ringgit along with other Asian currencies in the near term," he added.

He added that the strengthening of the local currency will also be in tandem with the expected continued rise of the local stock market.

On a week-to-week basis, the ringgit appreciated against U.S. dollar at 3.1920/1940 compared with the previous Friday's 3.1950/2000.

It was higher against the Singapore dollar at 2.3045/3090 from 2.3142/3197 and was also stronger against the Japanese yen at 3.1155/1187 from 3.1928/1984.

Against the British pound, the ringgit however, weakened at 6.3827/3896 from 6.3772/3882 but it appreciated against the euro at 5.0137/0178 from 5.0344/0432 previously.

Dollar eases vs majors, spotlight on payrolls

2008-04-05T02:12:00.000-07:00

The dollar ticked lower versus other major currencies on Friday in technically-led trade ahead of a key U.S. jobs report.

Signals for non-farm payrolls have been mixed, with a surprise gain in private sector jobs in March offset by news that first-time applications for U.S. jobless benefits rose last week to a 2-1/2 year high.

But overall, investor sentiment has improved in recent sessions, and markets are now only expecting a 25 basis point rate cut from the Federal Reserve this month.

Economists forecast the U.S. economy likely cut 60,000 jobs in March for its third straight month of losses, with the unemployment rate seen rising to 5.0 percent, from 4.8 percent in February. The data is due at 1230 GMT.

"It's pre non-farm payrolls trading. Even if the figure comes in around zero, from a fundamental point of view that's still negative for the dollar because that will not stop the uptrend in the unemployment rate," said Antje Praefcke, currency strategist at Commerzbank Corporates & Markets in Frankfurt.

By 0749 GMT, the euro was up 0.2 pct on the day at $1.5718, but well off March's record peak above $1.59.

Hourly technical charts showed the euro breaking through a 200-hour moving average located at $1.57. The dollar was steady at 102.32 yen. It was down at 1.0073 Swiss francs.

SHRUGGING OFF WEAK ECONOMY?

The Fed has chopped rates since September by a total of 3 percentage points to 2.25 percent, to deal with the credit crisis and shield the economy from an ailing housing sector.

Late on Thursday, San Francisco Fed President Janet Yellen echoed comments on the economy made by Fed Chairman Ben Bernanke earlier this week, saying the U.S. economy has "all but stalled and could contract" in the first half of 2008.

But the dollar took the comments in its stride.

"We think it's possible for the U.S. dollar to strengthen despite a weak economy, providing that euro zone data continues to deteriorate and that the Federal Reserve does not take action that would suggest a monetising of mortgage-backed securities woes," UBS (nyse: UBS - news - people ) said in a research note.

"We continue to target euro/dollar at $1.55 over one month and $1.47 over three months."

Elsewhere, the Australian dollar fell 0.2 percent to US$0.9140 after February retail sales unexpectedly dipped 0.1 percent from the previous month.

Reserve Bank of Australia Governor Glenn Stevens said on Friday that growth in domestic demand was moderating despite uncomfortably high inflation, suggesting that interest rates had risen enough for now.

U.S. dollar mixed in Sydney morning forex trade

2008-03-30T20:14:00.000-07:00

The U.S. dollar was trading mixed against major currencies on Monday although traders said it is likely to remain under pressure until investors see a credible end to the financial and economic problems in the U.S.

While the U.S. economy is seeing continued weakness the euro zone's economic fundamentals remain sound and Japan is showing some strength with inflation on the rise although investors are waiting for the release of the Bank of Japan's Tankan report on Tuesday, traders said.
Key focus for the Tankan report will be investment intentions though overall the report is likely to

provide mixed signals, providing headaches for foreign exchange markets, they said.

'Monday is month-end and financial yearend in Japan, so most players will look to remain on the sidelines,' said John Noonan of Thomson IFR.

'Overall the U.S. dollar should remain under pressure, until the market sees a credible end to the current financial and economic problems in the U.S.'

At 10.20 am (2320 GMT) the dollar was trading at 99.19 yen from 99.22 in late trade in New York on Friday while the euro was at 1.5789 dollars from 1.5795.

ANZ senior currency strategist Tony Morriss said the yen is being supported by risk aversion following a weak performance by U.S. stocks on Friday.

'It is also the end of the Japanese financial year which has supported a bit of an inflow in recent weeks but today I think the yen will be in demand just on risk aversion,' Morriss said.

He said the euro continues to be supported by a better outlook in the euro zone and a still hawkish view on inflation by European Central Bank officials.

Morriss said the Australian dollar is likely to be under pressure because of less appetite for risk as well as softer commodity prices. The market has already factored in the Reserve Bank of Australia leaving interest rates steady after tomorrow's policy meeting.

Activity will pick up during the week due to a number of key US data releases, including the

Institute for Supply Management's manufacturing data on Tuesday, service sector ISM data on Thursday, factory orders on Wednesday and non-farm payroll numbers on Friday.

As well, Federal Reserve chairman Ben Bernanke will testify before a joint house economic committee on Wednesday.

Peak Possibilities.

2008-02-18T07:04:00.000-08:00

IN JULY 2006, THE WORLD'S OIL RIGS pumped out crude at a rate of nearly85.5 million bbl. a day. They haven't come close since, even as prices have risen from $75 to $98 per bbl. Which raises a ques¬tion of potentially epochal significance: Is it all downhill from here?

It's not as if nobody predicted this. The true believers in what's called peak oil—a motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geolo¬gists—have long cited the middle to end of this decade as a likely turning point.

In the oil industry and the govern¬ment agencies that work with it, such talk is usually dismissed as premature. There have been temporary drops in oil pro¬duction before, after all—albeit usually during global economic slowdowns, not boom times. In most official scenarios, production will soon begin rising again, peaking at more than r ro million bbl. a day around 2030.

That's alarming enough in itself. Even the optimists think we have less than three decades to go? But at industry confer¬ences this fall, the word from producers was far gloomier. The chief executives of ConocoPhillips and French oil giant Total both declared that they can't see oil production ever topping roo million bbl. a day. The head of the oil importers' club that is the International Energy Agency warned that "new capacity additions will not keep up with declines at current fields and the projected increase in demand."

This isn't quite the same as saying that oil production has peaked and is about to start declining sharply—the view of the true peakists. In "peak lite," as some call it, the big issues are not so much geologi¬cal as political, technical, financial and even human-resource-related (the world apparently suffers from a dearth of quali¬fied petroleum engineers). These factors all delay the arrival of oil on the market, meaning that production would not so much peak as plateau. But with demand rising sharply, especially from China and India, even a plateau could be precarious.

It's not that the world is running out of oil. There are massive reserves avail¬able in Canadian tar sands, Colorado shale, Venezuelan heavy oil and other unconventional deposits. The problem is that most of this oil is hard to extract and even harder to refine, and it isn't likely to account for a significant share of global production anytime soon. Almost everybody agrees that the pump¬ing of conventionally sourced oil outside the Organization of Petroleum Export¬ing Countries (oPEc) has already peaked or will peak soon, a reality that even discoveries like the recent 8 billion–bbl. find off the coast of Brazil can't alterbecause production from so many exist¬ing fields is declining.

The big question mark is OPEC, which represents the oil powers of the Middle East and a few other big exporters and currently accounts for 410/0 of world oil production. Every optimistic scenario assumes that this share will rise dramati¬cally in the coming decades. That is, if things turn out well, the U.S. will become substantially more dependent on Saudi Arabia and its neighbors. Great!

Then there's the gloomy view. In his 2005 book 71vilight in the Desert, energy-industry investment banker Matt Sim¬mons opened up a still raging debate over whether Saudi Arabia, OPEC's top produc¬er, really can pump much more oil than it does now. Since the book appeared, Saudi output has dropped from 9.6 million bbl. a day to 8.6 million, despite rising prices.

Saudi officials used the occasion of an OPEC summit in Riyadh in mid-November to say they could up produc¬tion at any time. But that raises the pesky question of why they don't. So far, the answer from OPEC leaders has been that high prices are the fault of speculators and the falling dollar, not low produc¬tion. They're not just blowing smoke. Lynn Westfall, chief economist of refiner Tesoro Corp., says there's more than enough oil for sale right now. The price pressure, he explains, "is coming from fi¬nancial participants in futures markets."

If oPECS members are not able to boost production in coming years, though, it will be impossible to keep blaming the traders as prices rise. What happens then? "If we had better data, we could hold a global summit and say, 'Gentlemen, it's nobody's fault, but we've peaked,"' says Simmons. "We've got to embrace some conservation practices that are draconian, or we will be at war with each other."
Among the peakists, war and econom¬ic breakdown are favorite themes. They figure that cheap oil is the essential fuel of modern capitalism, which will found¬er without it. A more hopeful take is that innovation is the essential fuel of modern capitalism and that high oil prices will drive rapid advances in conservation and alternative energy. Either way, the begin¬ning of the end of the oil era may be upon us, well ahead of schedule

A Market Mood Swing

2008-02-08T06:53:00.000-08:00

TANG WEISHA NG IS EMBARRASSED to admit that he might have made a mistake. Just over a year ago, the 27-year-old sales executive thought he could make a better living trading stocks listed on the Shanghai bourse full-time. He started investing in 2002 with $33,700, and he says he has done pretty well. So, after convincing his wife that he could make enough money to support them, he quit his job and stayed home every day, trading stocks via the computer in the bedroom of the couple's Shanghai apartment.

Now, says Tang glumly, his wife is "telling me almost every day that maybe it's time to go back to a regular job." These days who could blame her? After a furious 18-month run that saw shares of listed Chinese companies more than triple in value, the country's bull market is stumbling. Indexes in Shanghai and Shenzhen are both down about 15% from their October peaks, and recent moves by the government to cool China's runaway economic growth appear to have deflated the mania for stock investing that has gripped urban Chinese, from maids who quit their jobs to devote their time to trading stocks, to pensioners who plunked their life savings into the markets. Almost daily, myths that were pervasive among neophyte Chinese investors—that what happens to the U.S. economy doesn't matter to China, that the government in Beijing will always prop up the market—get exploded. The giddiness of the bubble is starting to be replaced by pervasive gloom. Fear is getting the better of greed. "This is reality," says Tian Junxiao, a 52-year-old investor who has been day trading for a living for six years. "Younger people are learning that the market can go up as well as down. It's a hard lesson, but it's a necessary one."

Tian had an inkling the tide might be turning on Nov. 5. That's the day he sat in the private trading room that Shanghai Securities, his broker, makes available to their sophisticated clients and awaited the highly anticipated Shanghai-market debut of PetroChina, China's biggest oil-and-gas conglomerate. PetroChina was raising $8.9 billion, the largest initial public stock offering in China ever, and the buzz surrounding the listing was deafening. Tian thought the shares would quickly become overpriced, so he decided not to even try to buy. Indeed, PetroChina shares nearly tripled that first day, pegging the company's market capitalization at more that $ 1 trillion.

But the excitement didn't last. Since then, PetroChina shares have fallen by about 33%, resulting in significant losses for investors like Zhang Renfeng. A 63-year-old retiree, Zhang thought it was a no-brainer to buy into the big oil company. "All my friends were saying 'buy it,' so I thought, 'How could I lose?'" says the former schoolteacher, who sunk part of her life savings into stocks two years ago and often hangs out at a brokerage office near her home, watching the markets and playing cards with her friends. But her PetroChina play lost more than 12%, and her other investments have also fallen. In mid-November, Zhang gave up, selling all her shares. She says she lost 20% of the $13,500 she had invested. "That's enough," she says. "I won't invest in stocks anymore. I can't afford to lose my savings."

Whether the market malaise will frighten others into the same decision is uncertain. Chinese have few investment options—real estate markets are frothy in major cities and interest rates paid on bank deposits don't even keep up with the country's rising inflation rate. People were still pouring into the market a few months ago. In August, about 4 million new trading accounts were opened, but the numbers have been falling since, according to stock exchange officials in Shanghai.

A rush for the exits could pose problems for China's economy. According to a recent study by Merrill Lynch, China's investor class—an estimated 15o million people—has sunk 22% of its capital into the stock market, compared with 8% two years ago. Shanghai-based economist Andy Xie calculates that if the stock market drops by half, urban households will lose about 200/o of their overall net worth, putting a dent in consumer spending. Overall, economists figure that a 50% decline in equity values might lop 1-1.5% off China's double-digit GDP-growth rate.

Of course, it's impossible to predict where China stocks are headed. The Shanghai index quickly rebounded from a scary one-day plunge of nearly 9% on Feb. 27. But recently, the warnings that shares are overvalued have become difficult even for inexperienced investors, accustomed to quick scores and relentlessly rising share prices, to ignore. Last month, a top official at the China Securities Regulatory Commission, Tu Guang shao, said investors needed to "educate themselves" about market risks. "Some sort of correction was inevitable, and it's probably here," says economist Xie. Although many investors believed the government would do nothing to damage confidence in stocks before Beijing hosts the 2008 Olympics next summer, that belief has proven to be unfounded. In recent weeks, regulators ordered commercial banks to freeze lending activities through the end of the year—a major step calculated to curb the country's overheated economy that could have a knock-on effect on share prices.

Such actions are blows to even the most optimistic. So is the growing realization in Shanghai trading rooms that China is part of a global economy that could be in for a rough patch, due to the sub prime-credit crisis and the possibility of a recession in the U.S. A month ago, a relatively sophisticated investor such as Tian brushed aside any suggestion that U.S. markets, in turmoil since August, could effect equity values in China. "We're a separate market, a separate economy," Tian said on Nov. 5. Today, he concedes that the connection might be tighter than he imagined. "People are saying that if the U.S economy slumps it will hurt China—that is on the market's mind," he says. As if to reinforce the point, the government on Nov. 15 issued a report warning that a U.S. recession could be "devastating" to China's manufacturing sector.

Tang, the 27-year-old bedroom trader, is getting an education. He won't say how much he has lost in the market recently, but after three straight down days ending Nov. 19, he conceded that "it's possible" China might be experiencing the beginning of a bear market. "The market will come back—at some point," he says. But, prodded by his wife, he is now surfing online job sites for employment leads. He'll soon be working for a salary again. "Maybe [day trading] wasn't such a good idea," he says. "It was nice not to have to worry about having a boss. But it's over."

2008 Great falls on the Asian purses

2008-01-23T18:48:00.000-08:00

The sale of panic accelerated through the Asian purses yesterday while the investors emptied their wallets of actions in mass on fears which a recession in the USA would hammer the economies with fast growth of the area.

The shares in Hong Kong were the worst blow, with principal closing 8.6% of index of Seng of blow downwards as a larger loser of yesterday among the Asian purses. The index fell a total from the surplus the 14.1% two days of trade last this week in its two days more pointed decline in one decade. But in a movement of surprised before the bell of opening on Wall Street Tuesday, the federal reservation of the USA reduced interest rates of interest by 75 basic points to 3.5% in which analysts known as was an apparent offer to avoid a recession in the greatest economy of the world.

Taking the selection of the cut of rate, the European shares reversed their first losses, with stocks in Great Britain 2% of rise while the news burst. Earlier, the commercial feeling in Asia was continued by indications that stocks of the USA started for a great fall Tuesday, with the contracts in the long term on index of security prices moving to a dive 500-point for the industrial average of dow-Jones after one prolonged weekend.

In Japan, the index of Nikkei 225 broke down 5.6%, whereas Australian stocks descended 7% yesterday. None the open Asian stock exchange markets for the trade yesterday was saved, with the principal indices to the bottom at least of 1% of Seoul towards Sri Lanka. On before room, the index made up of kilolitre (KLCI) dégringolé with a bottom of intra-day of 1.340 points, but recovered slightly towards the end although it finished deeply in the negative territory.

The reference mark at the end of 54.12 points inferior, or swallows 3.8%, to 1.354.38, whereas the broader index of FBM Emas dropped 4% at the end at 9.179 points. "(the state of the market) necessarily does not translate into reduction in the economy. The KLCI has 6.3% fallen since the beginning the year, which was a relatively soft fall compared with the losses with two digits on other Asian markets, other than those Shenzhen, in Pakistan and Sri Lanka.

The index of Seng of the blow of Hong Kong was the worst interpreter, having the year-with-date fallen from 22%. "if the recession in the United States is serious, one binds to be negative effects on Asia, but Asia seems to be an area so robust that there are currently no danger or principal change of the economic growth.

The sad feeling on stocks also deviated at the market from the products, with gross prices of the oil of palm tree (CPO) prolonging losses at a third day in a line on derivatives of Bush. The contract in the long term for the delivery of April took blows, loser RM128 per ton, or almost 4%, with RM3,115 per ton. The contract reached high absolute RM3,420 per ton janv. 14. The majority of the analysts provided that CPO would make the average around RM2,800 per ton or moreover in 2008 after the prices increased last year 56%. The oil price crude also reprocessed yesterday, USS3 falls about it by barrel with USS87.60 in electronic hours of trade before the open market for the trade of New York.

Funds -like you to know

2008-01-13T17:49:00.000-08:00

ARE funds (forex/mutual/unit trust/actively managed funds) the way to go to invest for the long term?

There are numerous glossy and enticing advertisements by funds trumpeting excellent returns, but at the same time warning that past performance is no guarantee for future performance.

In the US, more than US$10 trillion is held by nearly 10,000 mutual funds. If you take out money market funds and bond funds, about US$5 trillion is in stocks.

Is funds investing safe and does it provide superior returns (relative to the relevant benchmark indices)?

Majority does not beat benchmark indices

Did your fund portfolio beat the benchmark? Congratulations, for you are in the minority.

In the book, Wall Street Versus America by Gary Weiss (formerly with Business Week), he said “if you had shares in an equity mutual fund on January 1, 1984, just as the bull market was taking off, and held on to it until December 31, 2003, the chances are better than 90% that your fund failed even to match the performance of S&P 500 stock index”.

Can you imagine – 90%? Even the betting tables at Genting Highlands offer better odds.

If you are going to put your money to work by investment pros, you should expect superior performance.

Isn't it difficult to believe that only 20% of funds have managed to beat the benchmark?

The fees charged put most funds on the back foot. Actively managed funds usually incur trading costs – front- and back-end loads, advisory fees, advertising campaigns, and commissions payable to sales and distribution channels. We are not even talking taxes yet.

The fees accruing to unit trust sales forces in Malaysia is a good example, hence it is very difficult to locate funds that actually provide superior returns from the personal EPF investing scheme.

Another issue affecting returns is churn rate, i.e. the number of times the total portfolio value was bought/sold in a year.

Some have a churn rate of less than 50% but some can register churn rates of more than 200%.

The higher the churn rate, the higher the fund's brokerage and related fees. On the other hand, a lower churn rate is no guarantee for better performance.

Scandals

In the US you have the late trading and market timing scandals in mutual funds. There have been many cases involving sales incentives for brokers to push in-house funds.

Some fund managers have been known to receive kickbacks in the form of a percentage of transaction orders given to certain brokers.

Front running by fund managers themselves ahead of placing big orders is also a problem (of course by using nominee accounts).

Soft-dollaring

Some funds have a high churn rate because it keeps the brokers/dealers happy, and some would get “soft-dollaring” arrangements if their transaction volume reaches certain predetermined levels (e.g. free terminals, research, online subscription services, computers, monitors, cables, network support, printers, maintenance agreements, etc.)

Depending on the country they are operating in, some of these soft-dollaring are not shown as savings to the actual fund but rather to the fund company's operational revenue and expense columns.

(Soft-dollaring is a new fangled way of referring to kickbacks. While “hard-dollars” refer to expenses coming out of the fund company's pockets, “soft-dollaring” involves using client's cash to pay for things.).

Certain funds even allow their broker to charge “higher commissions” (especially through OTC trades or off-market trades where prices can be negotiated) to get better soft-dollaring deals from the brokers.

Attrition of funds

A large fund management company will launch many funds, sometimes in the same sector or country exposure.

If they launch three country funds in Year 1, and another three similar funds in Year 2, and so on, the savvier funds companies will put different stocks into each of these funds.

Hence, you may notice that some funds provide superior performance while others do not. As a result, the company may close out the underperforming funds and let the “superior funds” run.

After a few years, these big funds management companies will always be able to tout “superior funds” for advertising purposes. Nobody will bring up funds that have been closed down.

The Journal of Finance (March 1997) reports a comprehensive study by Mark Carhart on mutual funds over the period from 1962 to 1993. He states that “by 1993 fully one-third of all mutual funds had disappeared.”

If you were to take into account the attrition, then the 90% under-performance figure by funds cited earlier might have even been worse.

Corporate governance

A fund's board of directors is supposed to look after investors' best interests. Still, some of these fund boards operate too much like an old-boys network.

We need stricter oversight. We need the chairman and at least 3 out of 4 members of the board not to be affiliated in any way to the fund management company.

This needs to be strictly enforced. A strong board is possibly the best hope for those who invest in these funds to ensure that these fund management companies “go the right way”.

In many cases, a fund's quick growth can hinder performance.

The bigger the fund, the harder it is for a portfolio to move assets effectively.

For example, a small-cap fund, which started with RM300mil may register superior performance in the first couple of years.

The company will advertise this fact to lure more investors into the fund. If the fund size expands to RM1bil, it will become increasingly difficult to match the returns of the past as locating decent sized exposure will be more difficult and the fund manager would have to hit more “home runs” now than previously.

Random walk

Many investors have wised up to most of the factors that I've mentioned above, hence the proliferation of indexed-funds over the last 5 years.

Most of them would rather just trail the index performance as they do not want to be slugged with exorbitant fees. Indexed funds have a much lower fee structure, hence their popularity.

But the fact that 90% fail to outperform their benchmarks lends a lot of weight to the random walk theory which imputes that you cannot consistently outperform the market over the long run.

That being the case, instead of active management (which is deemed eventually to be futile under random walk theory) the best way is to track the index.

With that, perhaps one should not rule out too hastily the pros of self-investing as long as they read up adequately and understand the market dynamics and investing fundamentals.

It's either that, or choosing wisely which fund management company to go with.

Individuals or committee?

At the risk of sounding like a broken record, investors need to ask insightful questions before deciding which funds to plough their hard-earned money into.

Needless to say, the merry go-round performance of fund managers affects their long-term performance.

Many funds say that investment decisions are deliberated and made by a committee, thus reducing the dependence on any individual.

Truth is, there are individual fund managers who outperform but it wouldn't serve the fund management company's interest to emphasise that fact, for what if he/she leaves the company?

Your query as an investor is – who are the fund managers at the company? How long have they been with the company?

You should even ask for their bio-data and resume. A fund management company with fund managers on short tenures may indicate a general failure to lure and keep good staff.

It's a realistic business. To chalk up superior and consistent performance, the company needs a dedicated team led by proven fund managers for a prolonged period.

Otherwise, investors may find that they have forked out their savings for some 20 year-olds to play and experiment with!

Worlds News

2008-01-10T02:45:00.000-08:00

JBIC in talks on environmental funds

TOKYO: The Japan Bank for International Cooperation (JBIC) is in talks with Mizuho Financial Group Inc and other financial institutions to set up environmental funds aimed at investing in projects to cut greenhouse gas emissions in Asia.

The total size of the funds could top US$2bil in five years, a JBIC spokesman said yesterday.

The government-owned bank has earmarked 15 billion yen (US$137.3mil) for investment in such funds in the initial year, starting in April, as it plans to contribute about 10 to 20% of the total, he said.

Gold an copper futures surge

SINGAPORE: Gold stormed to a fresh record high and copper futures hit a two-month peak yesterday as investors sought to hedge against inflation or to find alternatives to depressed equity markets.

Spot gold hit a record US$891.40 an ounce, surpassing the previous high of US$881.10 reached on Tuesday.

Oil prices were also firm, moving back towards US$100 a barrel as concern about equity markets persisted following a 1.9% drop on Wall Street on Tuesday.

"The speed of gold's rise is very fast but the market is focusing on taking gold towards US$900 in the near term," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.

Bear Stearns chief exec to step down

NEW YORK: Bear Stearns Cos Inc leader James Cayne, under fire for the collapse of two hedge funds, will step down as chief executive and hand that role to the company's star investment banker, Alan Schwartz, the company said on Tuesday.

Cayne will remain as chairman of the fifth largest US investment bank, which suffered its first loss ever in the fourth quarter because of subprime mortgages.

SIA not giving up on China Eastern bid

HONG KONG/SINGAPORE: Singapore Airlines (SIA) said yesterday it would not walk away from a bid to buy a stake in China's third biggest airline, but called for a cooling off period as China Eastern considers its future.

Loss-making China Eastern's minority shareholders on Tuesday rejected the agreed sale of a 24% stake to SIA, the world's most profitable carrier, and its parent, state investment agency Temasek for US$920mil.

"China Eastern has some issues to work through with the supposed Air China offer. So we have to let them deal with it in time. There will be a little cooling off period," SIA spokesman Stephen Forshaw told reporters. But he insisted SIA would not get into a bidding war.

JBIC in talks on environmental funds

The total size of the funds could top US$2bil in five years, a JBIC spokesman said yesterday.

Oil prices extend decline on worries about US economy

2008-01-07T15:09:00.000-08:00

Oil prices fell Monday as a report of growing unemployment in the United States raised concerns of an economic downturn there that could curb demand for oil.

The U.S. Labor Department said the unemployment rate jumped to 5 percent in December _ its highest level in more than two years _ from 4.7 percent in November. Analysts had expected December unemployment at 4.8 percent.

"Many economists in the U.S. have talked about the potential of the U.S. getting into a recession,'' said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "This latest government report ... has added to the concerns about the economy.''

Light, sweet crude for February delivery dropped 65 cents to US$97.26 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell US$1.27 to settle at US$97.91 a barrel on Friday.

The government also said in the report that employers created just 18,000 jobs last month, less than the 70,000 analysts had expected and the smallest increase since August 2003.

Traders are becoming more concerned that record high energy prices are helping to push the economy into recession.

"If the U.S. goes into a significant downturn, that will impact oil demand there. If it goes into recession, that may also affect other economies, for example, demand in high-growth China could also slow down,'' Shum said.

Any slowdown in the U.S. economy would hurt exporters in Asia that rely heavily on American consumer demand for sales and growth. Energy traders could have interpreted the jobs data positively _ in recent months, oil prices have often moved higher after the government reported dismal economic data because traders believe signs of economic weakness raise the chances that the Fed will cut interest rates. Lower interest rates weaken the dollar, whose decline has contributed to more expensive oil.

But analysts say a recession is seen as much more important to long-term energy prices than the easy money that is a byproduct of lower interest rates.

In London, Brent crude futures fell 50 cents to US$96.29 a barrel on the ICE Futures exchange.

Heating oil futures fell 1.16 cents to US$2.6719 a gallon (3.8 liters) while gasoline prices dropped 1.1 cents to US$2.5 a gallon. Natural gas futures added 0.4 cents to US$7.845 per 1,000 cubic feet.

Japanese stocks start new year down amid US jitters, high oil prices

2008-01-04T15:42:00.000-08:00

TOKYO (AP): Japanese stock prices plunged Friday, losing ground in early transactions after jittery trade on Wall Street amid concerns about the U.S. economy and rising oil prices.

Japan's benchmark Nikkei stock index lost 430.13 points, or 2.81 percent, to 14,877.65 points on the Tokyo Stock Exchange shortly after opening Friday for a half-day session.

The TSE had been closed since Monday for the New Year's holidays. The exchange resumes full-day trading Monday.

Wall Street closed narrowly mixed Thursday after share prices plunged the previous day on weaker-than-expected data for the U.S. manufacturing sector and record oil prices. The Dow Jones industrial average rose 12.76, or 0.10 percent, to 13,056.72 Thursday, as oil set a fresh trading record of US$100.09 a barrel.

Tokyo's broader Topix index, which includes all shares on the exchange's first section, lost 38.90 points, or 2.64 percent, to 1,436.78.

In currencies, the U.S. dollar was trading at 109.54 yen at 8:50 a.m. Friday (2350 GMT Thursday), up from 109.33 yen late Thursday in New York. The euro fell to US$1.4738 from US$1.4744.

How To Register Marketiva and get $5 - Step by step

2007-12-10T16:55:00.000-08:00

Register with Marketiva and get &5 to trade............. Marketiva is a financial services corporation specialized in providing traders with high quality online trading services. With a team of dedicated financial specialists and technical support personnel, Marketiva operates globally as a market maker and principal counterparty to retail traders. Marketiva has established itself as an industry leader by relying on its cutting-edge internet trading platform and its superior customer service. With more than 390,000 serviced users, 220,000 unique and live trading accounts, and more than 3.4 million live orders executed each month, Marketiva is one of the most popular over-the-counter market makers in the world.

1. Open An Account

To open an Account in Marketiva is free and easy, It's easy, takes only 5 to 10 minutes, and you even earn $5 cash reward!

Steps to register:

Go to Marketiva website. Click “Open An Account”.

It will appear registration request form , Fill it with your Information (username, password, address, etc), then enter “continue” button.

Enter The Marketiva coupon code, can provide you a discount, access to restricted chat channels and other special feature. You can enter coupon code on step 2 of register.Choose one of the coupon code below to grab your facilities, then enter the “next” button. :


NQYK54OC0L,
EKJLBQTPRA,
F17Q0PJD7L,
SB27A2AZUA,
9WO9ZPP6YL,
HG33B0I8YU,
5I9W7IIQ0W,
IWE7HISPYJ,
7BWLVM1PSO,
8P2X1IDIC9,
SJ25VE0VGL,
4IOH8EXIYY,
NT2QQ187F6,
FEJ6Z0J3OU,
PTNIS9ZE3H,
GGMR0U2YIU,
W8DWYRTJU4,
Q1YSDB192K,
2KCF94CU3S,
ORJTCKC0G3

Read’s the the “service agreement “ and “risk disclosure” and tick at agreed box, then enter the “finish button”.

Wait……………….

After you finish register. You will receive an Email name as "Account Successfully Created"

2. Account Identification

Account identification requires to avoid your account to be suspended by the system, especially when you use this software with your friend/family at the same computer or at public internet (on Streamster/Marketiva, One person can open one account only !). And it is use for you when you want to withdrawal your profit/fund from your account.

Marketiva requires its customers to properly identify themselves, with the following two forms of identification:

Picture identification, (i.e. a passport or driver's license).
One form of identification confirming the customer's address, (i.e. phone bill or a utility bill).

Both forms of identification can be scanned and directly uploaded in JPEG (Joint Photographic Experts Group) format. Each image must be in color or grayscale mode (monochrome images are not accepted) and a single image cannot exceed 100 KB.

Notes: For Malaysian citizen, just copy “mycard” and upload its to marketiva. ( Because mycard have a pictures and address included)

Steps to Identification:

Login with your “username” and “password”, Click “Account Center” at your Account site - Click “Services” - Click “Identify Yourself”

It will show the option like below and upload your Picture

If you have a problem on what you have to do, you can ask to get help from Marketiva support professionals in multiple languages available 24h on support channels (Live Help)

3. Download & Install Streamster™ Software

Streamster is a Marketiva platform software for trading.It’s easy and fast to download Streamster on your computer

Steps to Download and Install

Go to Marketiva website Click this Marketiva Corporation, Go to "service" option, then click "download" option.

Click "Get Streamster™ The page will change and show the information about how to download Streamster. Click “Streamster™ Installation Package”

Save the file to your hardisk. Click “OK” to start download

If download process has finished, Click “setup-streamster file” on your computer to start installFollow the instruction . After the installation process has finished, so automatically Streamster Software has added on your program file.

4. Start Trading

If you want to make transactions in forex trading. Firstly you have to log in to your Streamster Software on your computer. Click “Marketiva” from program files on you computer (start - program files/all programs - marketiva)

Fill it with your “username” and “password”. Click “Sign in”

Wait a minutes.....

Retreving data from Streamster server

Then You will see the Marketiva platform for trading

To registered with Marketiva please visit marketiva site. After this I will show your how to used marketiva platform to trading forex.

Why Traders Lose Money

2007-12-04T00:17:00.000-08:00

forex futures trading

It is a well known statistic that over 90% of traders do or eventually will lose some or all of their money. It is also interesting to note that many highly qualified and intelligent people come to the market and very surprised when they find out how difficult it is to make money.

In order to simplify matters I have created a list of a reason which hamper peoples progress and is the reason why I believe most people lose money. What makes them good traders is, in part, how they lose.

Many traders trade without a plan. They do not define specific risk and profit objectives before trading. Even if they establish a plan, they "second guess" it and don't stick to it, particularly if the trade is a loss. Consequently, they overtrade and use their equity to the limit (are undercapitalized), which puts them in a squeeze and forces them to liquidate positions.

Usually they liquidate the good trades and keep the bad ones. Many traders don't realize the news they hear and read has, in many cases, already been discounted by the market.

After several profitable trades, many speculators become wild and unconservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that "can't fail."

Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.

Some traders try to "beat the market" by day-trading, nervous scalping, and getting greedy.

They fail to pre-define risk, add to a losing position, and fail to use stops.

They frequently have a directional bias; for example, always wanting to be long.

Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.

They overtrade.

Many traders can't (or don't) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach...a trader needs to develop and stick with a system.

Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.

Many traders break a cardinal rule: "Cut losses short. Let profits run."

Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That's why they should have a plan first, and stick to it.

Often traders have bad timing, and not enough capital to survive the shake out.

Too many traders perceive Spot/Cash markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses.
Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.

Emotion makes many traders hold a loser too long. Many traders don't discipline themselves to take small losses and big gains.

Too many traders are underfinanced, and get washed out at the extremes.

Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.

Trying to trade inactive markets is dangerous.

Taking too big a risk with too little profit potential is a sure way to losses.

Many traders lose by not taking losses in proportion to the size of their accounts.

Often, traders do not recognize the difference between trading markets and trending markets.
Lack of discipline includes several lesser items; i.e., impatience, need for action, etc. Also, many traders are unable to take a loss and do it quickly.

Trading against the trend, especially without reasonable stops, and insufficient capital to trade with and/or improper money management are major causes of large losses in the Spot/Cash markets; however, a large capital base alone does not guarantee success.

Overtrading is dangerous, and often stems from lack of planning.

Trading very speculative counters is a frequent mistake.

There is a striking inability to stay with winners. Most traders are too willing to take small profits and, therefore, miss out on big profits. Another problem is undercapitalization; small accounts can't diversify, and can't use valid stops.

Some traders are on an ego trip and won't take advice from another person; any trade must be their idea.

Many traders have the habit of not cutting losses fast, and getting out of winners too soon. It sounds simple, but it takes discipline to trade correctly. This is hard whether you're losing or winning.

Spot/Cash traders tend to have no discipline, no plan, and no patience. They overtrade and can't wait for the right opportunity. Instead, they seem compelled to trade every rumor.

Staying with a losing position, because a trader's information (or worse yet, intuition) indicates the deteriorating market is only a temporary situation, can lead to large losses.

Lack of risk capital in the market means inadequate capital for diversification and staying power in the market.

Some speculators don't have the temperament to accept small losses in a trade, or the patience to let winners ride.

Greed, as evidenced by trying to pick tops or bottoms, is a frequent error.

Not having a trading plan results in a lack of money management. Then, when too much ego gets involved, the result is emotional trading.

Frequently, traders judge markets on the local situation only, rather than taking the worldwide situation into account.

Speculators allow emotions to overcome intelligence when markets are going for them or against them. They do not have a plan and follow it. A good plan must include defense points (stops).

Some traders are not willing to believe price action, and thus trade contrary to the trend.

Many speculators trade only one counter.

Getting out of a rallying counter too quickly, or holding losers too long results in losses.

Trading against the trend is a common mistake. This may result from overtrading, too many day-trades, and undercapitalization, accentuated by failure to use a money management approach to trading Spot/Cash.

Often, traders jump into a market based on a story in the morning paper; the market many times has already discounted the information.

Lack of self-discipline on the part of the trader and/or broker creates losses.

Traders don't clearly identify and then adhere to risk parameters; i.e., stops.

Most traders overtrade without doing enough research. They take too many positions with too little information. They do a lot of day-trading for which they are undermargined; thus, they are unable to accept small losses.

Many speculators use "conventional wisdom" which is either "local," or "old news" to the market. They take small profits, not riding gains as they should, and tend to stay with losing positions. Most traders do not spend enough time and effort analyzing the market, and/or analyzing their own emotional make-up.

Too many traders do not apply money management techniques. They have no discipline, no plan. Many also overstay when the market goes against them, and won't limit their losses.

Many traders are undercapitalized. They trade positions too large, relative to their available capital. They are not flexible enough to change their minds or opinions when the trend is clearly against them. They don't have a good battle plan and the courage to stick to it.

Don't make trading decisions based on inside information. It's illegal, and besides, it's usually wrong.

The cumulative result of the above problems is normally enough to finish most traders off. Breaking them could increase your chances of failure. The traders who are most at risk are those that fight markets, trade larger or more often to recapture lost money, and can't stay out of the water when conditions are unfavorable. All traders lose money; it's how you trade when you're down that makes all the difference.

Forex brokers

2007-12-01T01:56:00.000-08:00

forex futures trading

"Who are the best forex broker?" You might ask. Choosing the best forex broker is important. The best currency trading broker provide you the services you're looking for and you are not charged for unnecessary services that you don't need. Here is the Forex Brokers List where you'll find guides on choosing the best forex brokerage firm for yourself.

Marketiva:

Company:	Marketiva Corporation
On-line since:	2005
Regulation:	Incorporated as an international business corporation in British Virgin Islands with registration number IBC CAP. 291 Reg. # 646819. Marketiva Corporation is under jurisdiction of the Financial Services Commission (FSC) and conforms with its regulations and internationally accepted supervisory and regulatory standards.
Payment options:	WebMoney, e-gold, e-Bullion, E-Dinar and wire transfer
Minimum account size:	$1
Minimum lot size:	0.001 lot
Spreads:	2 pips on EUR/USD

Advantages:

Client program with a user-friendly interface
Great support chat
Fast order execution
No limit on trade size
No overnight interest
e-gold, E-bullion, E-Dinar and WebMoney billing options
Investment funds shares available
World indexes and precious metals trading

Disadvantages:

No MetaTrader 4 software support
U.S. citizens can't open accounts
$7 withdrawal fee (only first withdrawal)
Muslim Forex broker - no overnight interest
No contact phone/fax numbers

Click here to open an account with Marketiva

LiteForex:

Company:	Straighthold Investment Group Inc.
On-line since:	2004
Regulation:	Registered resident of the British Virgin Islands, according to the terms of the International Business Companies Act (Chap. 291).
Payment options:	WebMoney, e-gold
Minimum account size:	$0.01
Minimum lot size:	0.001 lot
Spreads:	3 pips on EUR/USD

Advantages:

Metatrader Forex broker
e-gold and WebMoney deposit/withdraw method
Very low minimum deposit to start trading

Disadvantages:

Click here to open an account with LiteForex

FXOpen:

Company:	Belvedere Inc.
On-line since:	2005
Regulation:	Unregulated
Payment options:	e-gold, WebMoney, CashU, E-Bullion and wire transfer
Minimum account size:	$1
Minimum lot size:	0.001 lot
Spreads:	2 pips on EUR/USD

Advantages:

MetaTrader 4 Forex broker
Traders contests and competitions
Bonus for real trader account opening
Muslim Forex broker - no-overnight interest accounts
e-gold funds deposit/withdraw option
Futures trading is available
Start trading with as little as $1

Disadvantages:

No important disadvantages

Click here to open an account with FXOpen

FXcast:

Company:	FXcast
On-line since:	2005
Regulation:	Unregulated
Payment options:	e-gold, WebMoney, E-bullion, E-Dinar, c-gold, Liberty Reserve, wire transfer and credit cards
Minimum account size:	$1
Minimum lot size:	0.01 lot
Spreads:	1 (one!) pip on EUR/USD on Swing platform, 3 pips on EUR/USD on MT4 platform.

Advantages:

Metatrader 4 Forex broker
1 pip spread for EUR/USD for FXcast Swing platform.
Start trading with as little as 1$
e-gold, E-bullion, WebMoney, E-Dinar, c-gold, Liberty Reserve and wire transfer deposit/withdraw options
Leverage from 1:25 to 1:400
Muslim friendly Forex broker
Allows exchanges from e-gold to WebMoney and Liberty Reserve

Disadvantages:

No important disadvantages

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Orthers Forex Brokers Listing

A full list of retail Forex broker companies which offer on-line Forex trading services:

Forex Broker Name	Min. Account Size	e-gold	MT4	CFD	Browser-based Platform	Registered with any Regulator	Easy On-line Account Opening	Demo account
LiteForex	$1	+	+	+	-	-	+	+
FXOpen	$1	+	+	-	-	-	+	+
FXcast	$1	+	+	-	-	-	+	+
HY Markets	$50	-	-	-	+	+	+	+
eToro	$50	-	-	-	-	-	+	+
Ava FX	$100	+	-	-	-	-	+	+
Marketiva	$0.01	+	-	-	-	-	+	+
ForexYard	$100	-	-	-	+	-	+	+
Easy-Forex	$25	-	-	-	+	-	+	+
Forex WebTrader	$25	+	-	-	+	+	+	+
Pip Forex	$200	-	-	-	-	+	+	+
MoneyFOREX	$250	+	-	-	-	+	+	+
NorhFinance	$100	-	+	+	-	-	+	+
Oanda	$1	-	-	-	+	+	+	+
FXCM	$300	-	-	-	-	+	+	+
Saxo Bank	$2,000	-	-	+	+	+	-	+
GFT Forex	$250	-	-	-	-	+	+	+
Alpari	$200	-	+	+	-	+	+	+
Interbank FX	$250	-	+	-	-	+	-	+
Forex.com	$250	-	-	-	-	+	-	+
Realtime Forex	$2,500	-	-	-	-	+	+	+
ACM	$5,000	-	-	-	+	+	-	+
Direct Forex	$500	-	+	-	-	+	-	+
Deutsche Bank FOREX	$10,000	-	-	-	-	+	-	+
FX Solutions	$250	-	-	-	-	+	-	+
CMS Forex	$200	-	-	-	-	+	+	+
Interactive Brokers	$5,000	-	-	+	+	+	+	-
X-Trade Brokers	$2,000	-	+	+	-	+	-	+
MB Trading	$400	-	-	+	-	+	-	+
Tadawul FX	$1,000	-	+	-	-	+	-	+
Forex.CH	$2,000	-	-	-	-	+	-	+
Finotec	$200	-	-	+	-	-	+	+
Western Capital Forex	$5,000	-	+	+	-	+	-	+
Hotspot FX	$7,500	-	-	-	-	+	-	+
EFX Group	$400	-	-	-	-	-	+	+
ECN broker	$200	-	-	-	-	+	+	+
PFG Forex	$1,000	-	-	-	-	+	+	+
Dukascopy	$50,000	-	-	-	+	+	-	+
Finexo	$100	-	-	+	+	+	+	+
High Street Networking	$100	-	-	-	+	-	-	+
Real Trade	$20	+	+	+	-	-	+	+
Forex Club	$10	-	-	-	-	+	+	+
Crown Forex	$300	-	+	-	-	+	-	+
MIG Investments	$2,000	-	+	-	-	+	-	+
SNC Investments	$500	-	+	-	-	+	-	+
RCG fxtrader	$5,000	-	-	-	-	+	-	+
Questrade FX	$250	-	-	-	+	+	-	+
Royal Forex Trading	$300	-	+	-	-	+	-	+
ODL Securities	$100	-	+	+	-	+	+	+
MGFOREX	$200	-	-	-	-	+	-	+
MF Global	$10,000	-	-	+	-	+	-	+
IG Markets	$200	-	-	+	+	+	+	+
IFX Markets	$500	-	-	-	-	+	+	+
CMC Markets	$2,000	-	-	-	-	+	-	+
IFC Markets	$1	+	-	-	-	-	+	+
Neuimex	$400	+	+	+	-	-	+	+
MFN	$500	+	-	+	-	-	+	+
Swissnetbroker	$200	-	+	-	-	+	-	+
iFOREX	$100	-	-	-	+	-	+	-
FIBOGroup	$300	-	+	+	-	-	+	+
FXDD	$500	-	+	-	-	-	+	+
Synthesis Bank	$10,000	-	-	+	-	+	+	+
iTradeFX	$300	-	+	-	-	+	+	+
ActiveTrades	€250	-	+	+	+	+	+	+
ABN AMRO marketindex	£10,000	-	-	+	+	+	+	+
Boston Trading and Research	$500	-	+	-	-	-	-	+

Which Timeframe Should I Trade?

2007-11-29T01:31:00.000-08:00

forex futures trading

Which one is better?

It depends on your personality!

Let me give you a breakdown of the three to help you choose:

Timeframe	Description	Advantages	Disadvantages
Long-term	Long-term traders will usually refer to daily and weekly charts. The weekly charts will establish the longer term perspective and assist in placing entries in the shorter term daily. Trades usually from a few weeks to many months, sometimes years.	Don’t have to watch markets intraday Fewer transactions means less paying of spreads	Large swings which require large stops Usually 1 or 2 good trades a year so patience is required Bigger account needed to ride longer term swings Frequent losing months
Short-term	Short-term traders use hourly time frames and hold trades for several hours to a week.	More opportunities for trades Less chance of losing months Less reliance on one or two trades a year to make money	Transaction costs will be higher (more spreads to pay) Overnight risk becomes a factor
Intraday	Intraday traders use minute charts such as 1-minute or 5-minute. Trades are held intraday and exited by market close.	Lots of trading opportunities Less chance of losing months No overnight risk	Transaction costs will be much higher (more spreads to pay) Mentally more difficult due to frequency of trading Profits are limited by needing to exit at the end of the day.

You also have to consider the amount of capital you have to trade. Shorter timeframes allows you to make better use of margin and have tighter stop losses. Larger timeframes require a bigger account so you can handle the market swings without facing a margin call.

When you finally decide on your preferred timeframe is when the fun begins. This is when you start looking at multiple timeframes to help you analyze the market.

ABC Correction

2007-10-22T01:41:00.000-07:00

forex futures trading

The 5-wave trends are then corrected and reversed by 3-wave countertrends. Letters are used instead of numbers to track the correction. Check out this example of smokin’ hot 3-wave corrective wave pattern!

The Chrise 5 – 3 wave pattern can look like this:

Waves within a Wave

The other important thing you have to know about the Elliot Wave Theory is that a wave is made of sub-waves?

Do you see how Wave 1 is made up of a smaller 5-wave impulse pattern and Wave 2 is made up of smaller 3-wave corrective pattern? Each wave is always comprised of smaller wave patterns.
Let’s look at a real example.

As you can see, waves aren’t shaped perfectly in real life. You’ll also learn its sometimes difficult to label waves. But the more you stare at charts the better you’ll get. Elliott Wave Theory guru, you can learn more about it at www.elliottwave.com

The 5-3 Wave Patterns

2007-10-20T01:36:00.000-07:00

Ralph Nelson Elliott discovered that stock markets. They traded in repetitive cycles, which he pointed out were the emotions of investors and traders caused by outside influences (ahem, CNBC) or the predominant psychology of the masses at the time.

Elliott explained that the upward and downward swings of the mass psychology always showed up in the Chrise repetitive patterns, which were then divided into patterns he called "waves". He needed to claim this observation and so he came up with a super original name: The Elliott
Wave Theory.

The 5 – 3 Wave Patterns

Mr. Elliott showed that a trending market moves in what he calls a 5-3 wave pattern. The first 5-wave pattern is called impulse waves and the last 3-wave pattern is called corrective waves.

Let’s first take a look at the 5-wave impulse pattern. It’s easier if you see it as a picture:

That still looks kind of confusing. Let’s splash some color on this patern.

Here is a short description of what happens during each wave. I am going to use stocks for my example since stocks is what Mr. Elliott used but it really doesn’t matter what it is. It can easily be currencies, bonds, gold, oil, or Tickle Me Elmo dolls. The important thing is the Elliott Wave Theory can also be applied to the foreign exchange market.

Wave 1

The stock makes its initial move upwards. This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons real or imagined) feel that the price of the stock is cheap so it’s a perfect time to buy. This causes the price to rise.

Wave 2

At this point enough people who were in the original wave consider the stock overvalued and take profits. This causes the stock to go down. However, the stock will not make it to its previous lows before the stock is considered a bargain again.
Wave 3

This is usually the longest and strongest wave. The stock has caught the attention of the mass public. More people find out about the stock and want to buy it. This causes the stock’s price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.

Wave 4

People take profits because the stock is considered expensive again. This wave tends to be weak because there are usually more people that are still bullish on the stock and are waiting to “buy on the dips”.

Wave 5

This is the point that most people get on the stock, and is most driven by hysteria. You usually start seeing the CEO of the company on the front page of major magazines as the Person of the Year. People start coming up with ridiculous reasons to buy the stock and try to choke you when you disagree with them. This is when the stock becomes the most overpriced. Contrarians start shorting the stock which starts the ABC pattern

The Day, avoid to trade

2007-10-15T02:00:00.000-07:00

Fridays: Fridays are very unpredictable. This is a good day to trade if you want to lose all the profit you made during the rest of the week.

Sundays: There is very little movement on these days. Trade this day if you want to start off your week with NEGATIVE pips.

Holidays: Banks are closed which means very little volume for whatever country is having the holiday. Holidays are great to trade when you would rather lose your money than take a day off and enjoy the other finer things in life.

News Reports: No one really knows where the price will go when a news report comes out. You could lose a fortune trading during news releases if you don't know what you're doing. Price during these times become unpredictable.

Forex Pivot Point Trading Tips

2007-10-12T01:27:00.000-07:00

Here are some easy to memorize tips that will help you to make smart pivot point trading decisions.

• If price at PP, watch for a move back to R1 or S1.

• If price is at R1, expect a move to R2 or back towards PP.

• If price is at S1, expect a move to S2 or back towards PP.

• If price is at R2, expect a move to R3 or back towards R1.

• If price is at S2, expect a move to S3 or back towards S1.

• If there is no significant news to influence the market, price will usually move from P to S1 or R1.

• If there is significant news to influence the market price may go straight through R1 or S1 and reach R2 or S2 and even R3 or S3.

• R3 and S3 are a good indication for the maximum range for extremely volatile days but can be exceeded occasionally.

• Pivot lines work well in sideways markets as prices will most likely range between the R1 and S1 lines.

• In a strong trend, price will blow through a pivot line and keep going.

How to Trade with Pivot Points

2007-10-09T13:22:00.000-07:00

Breakout Trades

The pivot point should be the first place you look at to enter a trade, since it is the primary support/resistance level. The biggest price movements usually occur at the price of the pivot point.

Only when price reaches the pivot point will you be able to determine whether to go long or short, and set your profit targets and stops. Generally, if prices are above the pivot it’s considered bullish, and if they are below it’s considered bearish.

Let’s say the price is hovering around the pivot point and closes below it so you decide to go short. Your stop loss would be above PP and your initial profit target would be at S1.

However, if you see prices continue to fall below S1, instead of cashing out at S1, you can move your existing stop-loss order just above S1 and watch carefully. Typically, S2 will be the expected lowest point of the trading day and should be your ultimate profit objective.

The converse applies during an uptrend. If price closed above PP, you would enter a long position, set a stop loss below PP and use the R1 and R2 levels as your profit objectives.
Range-bound Trades

The strength of support and resistance at the different pivot levels is determined by the number of times the price bounces off the pivot level.

The more times a currency pair touches a pivot level then reverses, the stronger the level is. Pivoting simply means reaching a support or resistance level and then reversing. Hence, the word “pivot”.

If the pair is nearing an upper resistance level, you could sell the pair and place a tight protective stop just above the resistance level.

If the pair keeps moving higher and breaks out above the resistance level, this would be considered an upside “breakout”. You would also get stopped out of your short order but if you believe that the breakout has good follow-through buying strength, you can reenter with a long position. You would then place your protective stop just below the former resistance level that was just penetrated and is now acting as support.

If the pair is nearing a lower support level, you could buy the pair and place a stop below the support level.

Theoretically Perfect?

In the real world, pivot points don’t work all the time. Price tends to hesitate around pivot lines and at times it’s just ridiculously hard to tell what it will do next.

Sometimes the price will stop just before reaching a pivot line and then reverse meaning your profit target doesn’t get reached. Other times, it looks like a pivot line is a strong support level so you go long only to see the price fall, stop you out, then reverse back into your direction.

You must be very selective and create a pivot point trading strategy that you intend to strictly follow.

Let’s go look at a chart to see just how difficult and easy pivot points might be.

Look at the orange oval. Notice how the PP was a strong support but if you went long on PP, it never was able to rise up to R1.

Look at the first purple circle. The pair broke down through PP but failed to reach S1 before reversing back to PP. On the second break down though (second purple circle), the pair did manage to reach S1 before once again reversing back to PP.

Look at the pink oval. Again, PP acted as strong support but never was able to rise up to R1.
On the yellow circle, the pair broke out to the downside again, sliced right through S1, and managed to fall all the way down to S2.

If you ever attempted to go long on this chart, you would have been stopped out every single time. Personally, we would have not even thought about buying this pair - Why not? Well we have a little secret. What we didn’t show you regarding this chart was that this pair was trending down for quite some time now. Remember the “trend is your friend”.

How to Calculate Pivot Points

2007-10-04T11:19:00.000-07:00

The pivot point and associated support and resistance levels are calculated by using the last trading session’s open, high, low, and close. Since Forex is a 24-hour market, most traders use the New York closing time of 4:00pm EST as the previous day’s close.

The calculation for a pivot point is shown below:

Pivot point (PP) = (High + Low + Close) / 3

Support and resistance levels are then calculated off the pivot point like so:

First level support and resistance:
First support (S1) = (2*PP) – High
First resistance (R1) = (2*PP) – Low
Second level of support and resistance:
Second support (S2) = PP – (High – Low)
Second resistance (R2) = PP + (High - Low)

Don’t worry you don’t have to perform these calculations yourself. Your charting software will automatically do it for you and plot it on the chart.

Also keep in mind that some charting software also provides additional pivot point features such as a third support and resistance level and intermediate levels or mid-point levels (levels in between the main pivot point and support and resistance level).

These “extra levels” aren’t as significant as the main five but it doesn’t hurt to pay attention to them. Here’s an example:

Pivot Points

2007-10-02T01:16:00.000-07:00

Professional traders and market makers use pivot points to identify important support and resistance levels. Simply put, a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change.

Pivot points are especially useful to short-term traders who are looking to take advantage of small price movements.

Pivot points can be used by both range-bound traders and breakout traders. Range-bound traders use pivot points to identify reversal points. Breakout traders use pivot points to recognize key levels that need to be broken for a move to be classified as a real deal breakout.

Here is an example of pivot points plotted on a 1-hour EUR/USD chart:

Reverse Head and Shoulders

2007-10-01T08:06:00.000-07:00

The name speaks for itself. It is basically a head and shoulders formation, except this time it’s in reverse. A valley is formed (shoulder), followed by an even lower valley (head), and then another higher valley (shoulder). These formations occur after extended downward movements.

Here you can see that this is just like a head and shoulders pattern, but it’s flipped upside down. With this formation, we would place a long entry order above the neckline. Our target is calculated just like the head and shoulders pattern. Measure the distance between the head and the neckline, and that is approximately the distance that the price will move after it breaks the neckline.

You can see that the price moved up nicely after it broke the neckline. WE know you’re thinking to yourself, “the price kept moving even after it reached the target.”

If your target is hit, then be happy with your profits. However, there are strategies where you can lock in some of your profits and still keep your trade open in case the price continues to move your way. You will learn about those later on in the course.

Head and Shoulders

2007-09-29T01:03:00.000-07:00

A head and shoulders pattern is also a trend reversal formation. It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder). A “neckline” is drawn by connecting the lowest points of the two troughs. The slope of this line can either be up or down. In my experience, when the slope is down, it produces a more reliable signal.

In this example, we can visibly see the head and shoulders pattern. The head is the 2nd peak and is the highest point in the pattern. The two shoulders also form peaks but do not exceed the height of the head.

With this formation, we look to make an entry order below the neckline. We can also calculate a target by measuring the high point of the head to the neckline. This distance is approximately how far the price will move after it breaks the neckline.

You can see that once the price goes below the neckline it makes a move that is about the size of the distance between the head and the neckline.

Double Bottom

2007-09-20T01:00:00.000-07:00

Double bottoms are also trend reversal formations, but this time we are looking to go long instead of short. These formations occur after extended downtrends when two valleys or “bottoms” have been formed.

You can see from the chart above that after the previous downtrend, the price formed two valleys because it wasn’t able to go below a certain level. Notice how the 2nd bottom wasn’t able to significantly break the 1st bottom.

This is a sign that the selling pressure is about finished, and that a reversal is about to occur. In this situation, we would place an entry order above the neckline.

The price breaks the neckline and makes a nice move up. Remember, just like double tops, double bottoms are also trend reversal formations. You’ll want to look for these after a strong downtrend.

Best Days of the Week to Trade Forex

2007-09-15T02:00:00.001-07:00

We know that the London session is the busiest out of all the other sessions, but there are also certain days in the week where all the markets tend to show more movement. Below is a chart of average pip range for the 4 major pairs for each day of the week:

TRADING SESSIONS
DAYOF WEEK	EUR/USD	GBP/USD	USD/CHF	USD/JPY
Sunday	24	31	36	25
Monday	92	110	141	95
Tuesday	102	128	162	104
Wednesday	101	123	158	106
Thursday	83	98	121	77
Friday	80	96	117	72
Average PIP range of the 4 majors during each day of the week

You can see that during the middle of the week is where the most movement is seen on all 4 major pairs. Fridays are usually busy until 12pm EST and then the market pretty much drops dead until it closes at 5pm EST. This means we only work half-days on Fridays. The weekend always starts early!.

Double Top

2007-09-10T00:53:00.000-07:00

A double top is a reversal pattern that is formed after there is an extended move up. The “tops” are peaks which are formed when the price hits a certain level that can’t be broken. After hitting this level, the price will bounce off it slightly, but then return back to test the level again. If the price bounces off of that level again, then you have a DOUBLE top!

In the chart above you can see that two peaks or “tops” were formed after a strong move up. Notice how the 2nd top was not able to break the high of the 1st top. This is a strong sign that a reversal is going to occur because it is telling us that the buying pressure is just about finished.

With double tops, we would place our entry order below the neckline because we are anticipating a reversal of the uptrend.

Looking at the chart you can see that the price breaks the neckline and makes a nice move down. Remember, double tops are a trend reversal formation. You’ll want to look for these after there is a strong uptrend.

Descending Triangles

2007-09-07T00:50:00.000-07:00

As you probably guessed, descending triangles are the exact opposite of ascending triangles (we knew you were smart!). In descending triangles, there is a string of lower highs which forms the upper line. The lower line is a support level in which the price cannot seem to break.

In the chart above, you can see that the price is gradually making lower highs which tell us that the sellers are starting to gain some ground against the buyers. Now most of the time, and we did say MOST - the price will eventually break the support line and continue to fall.

However, in some cases the support line is too strong, and the price will bounce off of it and make a strong move up.

The good news is that we don’t care where the price goes. We just know that it’s about to go somewhere. In this case we would place entry orders above the upper line (the lower highs) and below the support line.

In this case, the price did end up breaking the support line and proceeded to drop rather quickly. (*note- The market tends to fall faster than it rises which means you usually make money faster when you are short).

Forex versus Futures

2007-08-28T16:23:00.000-07:00

or Cancel

FOREX VERSUS FUTURES ADVANTAGES
ADVANTAGE	FOREX	FUTURES
24-hour Trading	YES	NO
Commission Free Trading*	YES	NO
Up to 400:1 Leverage	YES	NO
Price Certainty	YES	NO
Guaranteed Limited Risk	YES	NO

Liquidity

In the spot Forex market, almost $2 trillion is traded daily, making it the largest and most liquid market in the world. This market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. The futures market traders a puny $30 billion per day. Thirty billion?!! Peanuts! The futures markets can't compete with its limited liquidity. The Forex market is always liquid, meaning positions can be liquidated and stop orders executed without slippage except in extremely volatile market conditions.

24-Hour Market

At 2:15 p.m. EST Sunday, trading begins as markets open in Sydney and Singapore. At 7 p.m. EST the Tokyo market opens, followed by London at 2 a.m. EST. And finally, New York opens at 8 a.m. EST and closes at 5 p.m. EST. So, before New York trading closes the Sydney and Singapore markets are back open - it’s a 24 hour seamless market! As a trader, this allows you to react to favorable or unfavorable news by trading immediately. If important data comes in from England or Japan while the U.S. futures market is closed, the next day's opening could be a wild ride. (Overnight markets in futures currency contracts exist, but they are thinly traded, not very liquid, and are difficult for the average investor to access).

Commission Free Trading

You know what’s great about trading currencies? You pay NO commissions! Because you deal directly with the market maker via a purely electronic online exchange, you eliminate both ticket costs and middleman brokerage fees. There is still a cost to initiating any trade, but that cost is reflected in the bid/ask spread that is also present in futures or equities trading. Brokers are compensated for their services through the bid-ask spread instead of via commissions.

Price Certainty

When trading Forex, you get rapid execution and price certainty under normal market conditions. In contrast, the futures and equities markets do not offer price certainty or instant trade execution. Even with the advent of electronic trading and limited guarantees of execution speed, the prices for fills for futures and equities on market orders are far from certain. The prices quoted by brokers often represent the LAST trade, not necessarily the price for which the contract will be filled.

Guaranteed Limited Risk

Traders must have position limits for the purpose of risk management. This number is set relative to the money in a trader’s account. Risk is minimized in the spot FX market because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the available trading capital in your account. All open positions will be closed immediately, regardless of the size or the nature of positions held within the account. In the futures market, your position may be liquidated at a loss, and you will be liable for any resulting deficit in the account.

Market Hours

2007-08-20T01:48:00.000-07:00

“When” to trade the forex market. That the forex is open 24 hours a day, but that doesn’t mean it’s always active the whole day. You can make money in the forex when the market moves up, and you can even make money when the market moves down. However, you will have a very difficult time trying to make money when the market doesn’t move at all. This lesson will help determine when the best times of the day are to trade.

Market Hours

Before looking at the best times to trade, we must look at what a 24hr. day in the forex world looks like. The forex can be broken up into three major trading sessions: the Tokyo Session, the London Session, and the U.S. Session. Below is a table of the open and close times for each session:

MARKET HOURS
TIME ZONE		EST	GMT
Tokyo	Open	07.00 pm	07.00 am
Tokyo	Close	04.00 am	09.00 am
London	Open	03.00 am	08.00 am
London	Close	12.00 pm	05.00 pm
U.S.A.	Open	08.00 am	01.00 pm
U.S.A.	Close	05.00 pm	10.00 pm

You can see that in between each session there is a period of time where two sessions are open at the Chrise time. From 3-4 a.m. EST, both the Tokyo and London markets are open, and from 8-12 a.m. EST, both the London and U.S. markets are open. Naturally, these are the busiest times during the market because there is more volume when two markets are open at the Chrise time.

TRADING SESSIONS
SESSION	EUR/USD	GBP/USD	USD/CHF	USD/JPY
Tokyo	66	79	100	66
London	80	99	121	74
Us	67	78	101	60
Average PIP range of the 4 majors during each session

The London session usually shows the most movement.

Ascending Triangles

2007-08-19T11:45:00.000-07:00

This type of formation occurs when there is a resistance level and a slope of higher lows. What happens during this time is that there is a certain level that the buyers cannot seem to exceed. However, they are gradually starting to push the price up as evident by the higher lows.

In the chart above, you can see that the buyers are starting to gain strength because they are making higher lows. They keep putting pressure on that resistance level and as a result, a breakout is bound to happen. Now the question is, “Which direction will it go? - Will the buyers be able to break that level or will the resistance be too strong?”

Many charting books will tell you that in most cases, the buyers will win this battle and the price will break out past the resistance. However, it has been my experience that this is not always the case. Sometimes the resistance level is too strong, and there is simply not enough buying power to push it through.

Most of the time the price will in fact go up. The point we are trying to make is that we do not care which direction the price goes, but we want to be ready for a movement in EITHER direction. In this case, we would set an entry order above the resistance line and below the slope of the higher lows.

In this scenario, the buyers won the battle and the price proceeded to skyrocket!

Pattern Schmatterns

2007-08-12T01:37:00.000-07:00

Think of chart patterns as a land mine detector, because once you learn this, you will be able to spot “explosions” on the charts before they even happen, making you a lot of money in the process.

In this lesson, we will teach you basic chart patterns and formations. When correctly identified, it usually leads to a huge breakout or “explosion” in this case.

Remember, our whole goal is to spot big movements before they happen so that we can ride them out and rake in the cash! Chart formations will greatly help us spot conditions where the market is ready to break out.

Here's the list of patterns that we're going to cover:

• Symmetrical Triangles
• Ascending Triangles
• Descending Triangles
• Double Top
• Double Bottom
• Head and Shoulders
• Reverse Head and Shoulders

Symmetrical Triangles

2007-08-12T00:40:00.000-07:00

Symmetrical triangles are chart formations where the slope of the price’s highs and the slope of the price’s lows converge together to a point where it looks like a triangle. What is happening during this formation is that the market is making lower highs and higher lows. This means that neither the buyers nor the sellers are pushing the price far enough to make a clear trend. If this was a battle between the buyers and sellers, then this would be a draw.

This type of activity is called consolidation.

In the chart above, we can see that neither the buyers nor the sellers could push the price in their direction. When this happens we get lower highs and higher lows. As these two slopes get closer to each other, it means that a breakout is getting near. We don’t know what direction the breakout will be, but we do know that the market will break out. Eventually, one side of the market will give in.

So how can we take advantage of this? Simple. We can place entry orders above the slope of the lower highs and below the slope of the higher lows. Since we already know that the price is going to break out, we can just hitch a ride in whatever direction the market moves.

In this example, if we placed an entry order above the slope of the lower highs, we would’ve been taken along for a nice ride up. If you had placed another entry order below the slope of the higher lows, then you would cancel it as soon as the first order was hit.

Oscillators and Trend Following Indicators

2007-08-08T12:23:00.000-07:00

For the purpose of this lesson, let’s broadly categorize all of our technical indicators into one of two categories:

1. Oscillators - Oscillators are leading indicators.
2. Trend following or momentum indicators - Momentum indicators are lagging indicators.

While the two can be supportive of each other, they're more likely to conflict with each other. We’re not saying that one or the other should be used exclusively, but you must understand the potential pitfalls of each.

Oscillators / Leading Indicators

An oscillator is any object or data that moves back and forth between two points. In other words, it’s an item that is going to always fall somewhere between point A and point B. Think of when you hit the oscillating switch on your electric fan.

Think of our technical indicators as either being “on” or “off”. More specifically, an oscillator will usually signal “buy” or “sell”, with the only exception being instances when the oscillator is not clearly at either end of the buy/sell range.

Does this sound familiar? It should! Stochastics, Parabolic SAR, and the Relative Strength Index (RSI) are all oscillators. Each of these indicators is designed to signal a possible reversal, where the previous trend has run its course and the price is ready to change direction.

A few examples :

On the 1-hour chart of USD/EUR below, we have added a Parabolic SAR indicator, as well as an RSI and Stochastic oscillator. As you have already learned, when the Stochastic and RSI begin to leave their “oversold” region that is a buy signal.

Here we get buy signals between the hours 3:00 am EST and 7:00 am EST on 08/24/05. All three of these buy signals occurred within one or two hours of each other, and this would have been a good trade.

We also got a sell signal from all three indicators between the hours of 2:00 am EST and 5:00 am EST on 08/25/05. As you can see, the Stochastic indicator remained in the overbought for a pretty long time - about 20 hours. Usually when an oscillator remains in the overbought or oversold levels for a long period of time, that means there is a strong trend occurring. In this example, since Stochastic stayed overbought, you see there was a strong uptrend present.
Now let’s take a look at the Chrise leading oscillators messing up, just so you know these signals aren’t perfect. Looking at the chart below, you can quickly see that there were a lot of false buy signals popping up. You’ll see how one indicator says to buy, while the other one is still saying sell.

Around 1 am EST on 08/16/05, both RSI and Stochastic gave buy signals, while Parabolic SAR still showed a sell signal. Yes, Parabolic SAR gave a buy signal 3 hours later at 4 am EST, but then Parabolic SAR turned into a sell signal one bar later. If you actually look at the bar with the Parabolic SAR below it, notice how it’s a strong looking red bar with very short shadows. Also, notice how the next bar closed below it. This would not have been a good long trade.

On the last two oversold (buy) signals given by Stochastic, notice how there is no indicator at all for RSI, but Parabolic SAR is giving sell signals. What’s going on here? They are each giving you different signals!

The answer lies in the method of calculation for each one. Stochastic is based on the high-to-low range of the time period (in this case, it’s hourly), yet doesn’t account for changes from one hour to the next. The Relative Strength Index (RSI) uses change from one closing price to the next. And Parabolic SAR has its own unique calculations that can further cause conflict.

That’s the nature of oscillators – they assume that a particular chart pattern always results in the Chrise reversal.

While being aware of why a leading indicator may be in error, there’s no way to avoid them. If you’re getting mixed signals, you’re better off doing nothing than taking a ‘best guess’. If a chart doesn’t meet all your criteria, don’t force the trade! Move on to the next one that does meet your criteria.

So how do we spot a trend? The indicators that can do so have already been identified as MACD and moving averages. These indicators will spot trends once they have been established, at the expense of delayed entry. The bright side is that there’s less chance of being wrong.

On this 1-hour chart of EUR/USD, there was a bullish crossover for MACD at 3:00 am EST on 08/03/05 and the 10 period EMA crossed over the 20 period EMA at 5:00 am. These two signals were all accurate, but if you waited for both indicators to give you a bull signal, you would have missed out on the big move. If you calculate from the start of the uptrend at 10:00 pm EST on 08/02/05 to the close of the candle at 5:00 am EST on 08/03/05, you would have watched a gain of 159 pips while sitting on the sidelines.

Let’s take a look at the same chart so you can see how these crossover signals can sometimes give false signals. We like to call them “fake-outs”. Look at how there was a bearish MACD crossover after the uptrend we just discussed.

Ten hours later, the 20 EMA crossed below the 10 EMA giving a “sell” signal. As you can see, the price didn’t drop but stayed pretty much sideways, then continued its uptrend. By the time both indicators were in agreement, you would’ve entered a short trade at the bottom and set yourself up for a loss.

Leading versus Lagging Indicators

2007-08-06T00:16:00.000-07:00

There are two types of indicators:

leading.
lagging.

A leading indicator gives a buy signal before the new trend or reversal occurs.

A lagging indicator gives a signal after the trend has started and basically informs you “to pay attention”, the trend has started.

You would “catch” the entire trend every single time, IF the leading indicator was correct every single time. But it’s not.

When you use leading indicators, you will experience a lot of fake-outs. Leading indicators are notorious for giving bogus signals which will “mislead” you.

The other option is to use lagging indicators, which aren’t as prone to bogus signals. Lagging indicators only give signals after the price change is clearly forming a trend. The downside is that you’d be a little late in entering a position. Often the biggest gains of a trend occur in the first few bars, so by using a lagging indicator you could potentially miss out on much of the profit.

Relative Strength Index (RSI)

2007-08-02T18:30:00.000-07:00

Relative Strength Index, or RSI, is similar to stochastics in that it identifies overbought and oversold conditions in the market. It is also scaled from 0 to 100. Typically, readings below 20 indicate oversold, while readings over 80 indicate overbought.

Using RSI

RSI can be used just like stochastics. From the chart above you can see that when RSI dropped below 20, it correctly identified an oversold market. After the drop, the price quickly shot back up.

RSI is a very popular tool because it can also be used to confirm trend formations. If you think a trend is forming, take a quick look at the RSI and look at whether it is above or below 50. If you are looking at a possible uptrend, then make sure the RSI is above 50. If you are looking at a possible downtrend, then make sure the RSI is below 50.

In the beginning of the chart above, we can see that a possible uptrend was forming. To avoid fakeouts, we can wait for RSI to cross above 50 to confirm our trend. Sure enough, as RSI passes above 50, it is a good confirmation that an uptrend has actually formed.

Stochastics

2007-07-22T06:26:00.000-07:00

Stochastics are another indicator that helps us determine where a trend might be ending. By definition, a stochastic is an oscillator that measures overbought and oversold conditions in the market. The 2 lines are similar to the MACD lines in the sense that one line is faster than the other.

How to Apply Stochastics

Stochastics tells us when the market is overbought or oversold. Stochastics are scaled from 0 to 100. When the stochastic lines are above 70 (the red dotted line in the chart above), then it means the market is overbought. When the stochastic lines are below 30 (the blue dotted line), then it means that the market is oversold. As a rule of thumb, we buy when the market is oversold, and we sell when the market is overbought.

Looking at the chart above, you can see that the stochastics has been showing overbought conditions for quite some time. Based upon this information, can you guess where the price might go?

If you said the price would drop, then you are absolutely correct! Because the market was overbought for such a long period of time, a reversal was bound to happen.

That is the basics of stochastics. Many traders use stochastics in different ways, but the main purpose of the indicator is to show us where the market is overbought and oversold. Over time, you will learn to use stochastics to fit your own personal trading style.

Parabolic SAR

2007-07-12T19:23:00.000-07:00

Up until now, we’ve looked at indicators that mainly focus on catching the beginning of new trends. And although it is important to be able to identify new trends, it is equally important to be able to identify where a trend ends. After all, what good is a well-timed entry without a well-timed exit?

One indicator that can help us determine where a trend might be ending is the Parabolic SAR (Stop And Reversal). A Parabolic SAR places dots, or points, on a chart that indicate potential reversals in price movement. From the chart above, you can see that the dots shift from being below the candles during the uptrend, to above the candles when the trend reverses into a downtrend.

Using Parabolic SAR

The nice thing about the Parabolic SAR is that it is really simple to use. Basically, when the dots are below the candles, it is a buy signal; and when the dots are above the candles, it is a sell signal. This is probably the easiest indicator to interpret because it assumes that the price is either going up or down. With that said, this tool is best used in markets that are trending, and that have long rallies and downturns. You DON’T want to use this tool in a choppy market where the price movement is sideways.

Forex versus Stocks

2007-06-28T16:21:00.000-07:00

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FOREX VERSUS STOCKS ADVANTAGES
ADVANTAGE	FOREX	STOCKS
24-hour Trading	YES	NO
Commission Free Trading	YES	NO
Instant Execution of Market Orders	YES	NO
Short-Selling without an Uptick	YES	NO

24-Hour Market

The Forex market is a seamless 24-hour market. Most brokers are open from Sunday at 2PM EST until Friday at 4 PM EST with customer service available 24/7. With the ability to trade during the U.S., Asian, and European market hours, you can customize your own trading schedule.

Commission Free Trading

Most Forex brokers charge no commission or additional transactions fees to trade currencies online or over the phone. Combined with the tight, consistent, and fully transparent spread, Forex trading costs are lower than those of any other market. The brokers are compensated for theirs services through the bid/ask prices.

Instantaneous Execution of Market Orders

Your trades are instantly executed under normal market conditions. You also have price certainty on every market order under normal market conditions. What you click is the price you get. You’re able to execute directly off real-time streaming prices. There's no discrepancy between the displayed price shown on the platform and the execution price to enter your trade. Keep in mind that most brokers only guarantee stop, limit, and entry orders are only guaranteed under normal market conditions. Fills are instantaneous most of the time, but under extraordinarily volatile market conditions order execution may experience delays.

Short-Selling without an Uptick

Unlike the equity market, there is no restriction on short selling in the currency market. Trading opportunities exist in the currency market regardless of whether a trader is long or short, or which way the market is moving. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. So you always have equal access to trade in a rising or falling market.

More Reasons to Like Forex

No Middlemen

Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located in between the trader and the buyer or seller of the security or instrument traded will cost them money. The cost can be either in time or in fees. Spot currency trading does away with the middlemen and allows clients to interact directly with the market-maker responsible for the pricing on a particular currency pair. Forex traders get quicker access and cheaper costs.

Buy/Sell programs do not control the market

How many times have you heard that "fund A" was selling "X" or buying "Z"? Rumor had it that the funds were taking profits because of the end of the financial year or because today is "triple witching day", all as an explanation of why this stock is up or the market in general is down or positive on the session. The stock market is very susceptible to large fund buying and selling.

In spot trading, the liquidity of the Forex market makes the likelihood of any one fund or bank to control a particular currency very slim. Banks, hedge funds, governments, retail currency conversion houses and large net-worth individuals are just some of the participants in the spot currency markets where the liquidity is unprecedented.

Analysts and brokerage firms are less likely to influence the market

Have you watched TV lately? Heard about a certain Internet stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as "buy" when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it.

IPO's are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses that need the companies as clients. That catch-22 will never disappear.

Foreign exchange, as the prime market, generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in foreign exchange don't drive the deal flow, they just analyze the forex market.

8,000 stocks versus 4 major currency pairs

There are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. Which one will you trade? Got the time to stay on top of so many companies? In spot currency trading, there are dozens of currencies traded, but the majority of the market trades the 4 major pairs. Aren’t four pairs much easier to keep an eye on than thousands of stocks?.

Moving Average Convergence Divergence (MACD)

2007-06-12T18:16:00.000-07:00

MACD is an acronym for Moving Average Convergence Divergence. This tool is used to identify moving averages that are indicating a new trend, whether it’s bullish or bearish. After all, our first priority in trading is being able to find a trend, because that is where the most money is made.

With an MACD chart, you will usually see three numbers that are used for its settings.

• The first is the number of periods that is used to calculate the faster moving average.
• The second is the number of periods that are used in the slower moving average.
• And the third is the number of bars that is used to calculate the moving average of the

difference between the faster and slower moving averages.

For example, if you were to see “12,26,9” as the MACD parameters (which is usually the default setting for most charting packages), this is how you would interpret it:

• The 12 represents the previous 12 bars of the faster moving average.
• The 26 represents the previous 26 bars of the slower moving average.
• The 9 represents the previous 9 bars of the difference between the two moving averages. This

is plotted by vertical lines called a histogram (The blue lines in the chart above).

There is a common misconception when it comes to the lines of the MACD. The two lines that are drawn are NOT moving averages of the price. Instead, they are the moving averages of the
DIFFERENCE between two moving averages.

In our example above, the faster moving average is the moving average of the difference between the 12 and 26 period moving averages. The slower moving average plots the average of the previous MACD line. Once again, from our example above, this would be a 9 period moving average.

This means that we are taking the average of the last 9 periods of the faster MACD line, and plotting it as our “slower” moving average. What this does is it smoothes out the original line even more, which gives us a more accurate line.

The histogram simply plots the difference between the fast and slow moving average. If you look at our original chart, you can see that as the two moving averages separate, the histogram gets bigger. This is called divergence, because the faster moving average is “diverging” or moving away from the slower moving average.

As the moving averages get closer to each other, the histogram gets smaller. This is called convergence because the faster moving average is “converging” or getting closer to the slower moving average. And that, my friend, is how you get the name, Moving Average Convergence Divergence! Whew, we need to crack our knuckles after that one!

MACD Crossover

Because there are two moving averages with different “speeds”, the faster one will obviously be quicker to react to price movement than the slower one. When a new trend occurs, the fast line will react first and eventually cross the slower line. When this “crossover” occurs, and the fast line starts to “diverge” or move away from the slower line, it often indicates that a new trend has formed.

From the chart above, you can see that the fast line crossed under the slow line and correctly identified a new downtrend. Notice that when the lines crossed, the histogram temporarily disappears. This is because the difference between the lines at the time of the cross is 0. As the downtrend begins and the fast line diverges away from the slow line, the histogram gets bigger, which is good indication of a strong trend.

There is one drawback to MACD. Naturally, moving averages tend to lag behind price. After all, it's just an average of historical prices. Since the MACD represents moving averages of other moving averages and is smoothed out by another moving average, you can imagine that there is quite a bit of lag. However, it is still one of the most favored tools by many traders.

Bollinger Bands

2007-06-02T22:09:00.000-07:00

Bollinger bands are used to measure a market’s volatility. Basically, this little tool tells us whether the market is quiet or whether the market is Loud! When the market is quiet, the bands contract; and when the market is Loud, the bands expand. Notice on the chart below that when the price was quiet, the bands were close together, but when the price moved up, the bands spread apart.

That’s all there is to it. Yes, we could go on and bore you by going into the history of the Bollinger band, how it is calculated, the mathematical formulas behind it, and so on and so forth, but we really didn’t feel like typing it all out.

In all honesty, you don’t need to know any of that junk. We think it’s more important that we show you some ways you can apply the Bollinger bands to your trading.
The Bollinger Bounce

One thing you should know about Bollinger Bands is that price tends to return to the middle of the bands. That is the whole idea behind the Bollinger bounce (smart, huh?). If this is the case, then by looking at the chart below, can you tell us where the price might go next?

If you said down, then you are correct! As you can see, the price settled back down towards the middle area of the bands.

That’s all there is to it. What you just saw was a classic Bollinger bounce. The reason these bounces occur is because Bollinger Bands act like mini support and resistance levels. The longer the time frame you are in, the stronger these bands are. Many traders have developed systems that thrive on these bounces, and this strategy is best used when the market is ranging and there is no clear trend.

Now let’s look at a way to use Bollinger Bands when the market does trend.

Bollinger Squeeze

The Bollinger squeeze is pretty self explanatory. When the bands “squeeze” together, it usually means that a breakout is going to occur. If the candles start to break out above the top band, then the move will usually continue to go up. If the candles start to break out below the lower band, then the move will usually continue to go down.

Looking at the chart above, you can see the bands squeezing together. The price has just started to break out of the top band. Based on this information, where do you think the price will go?

If you said up, you are correct! This is how a typical Bollinger Squeeze works. This strategy is designed for you to catch a move as early as possible. Setups like these don’t occur everyday, but you can probably spot them a few times a week if you are looking at a 15 minute chart.

So now you know what Bollinger Bands are, and you know how to use them. There are many other things you can do with Bollinger Bands, but these are the 2 most common strategies associated with them. So now you can put this in your trader’s toolbox, and we can move on to the next indicator.

Forex Linggo

2007-05-28T16:34:00.000-07:00

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As in any new skill that you learn, you need to learn the lingo...especially if you wish to woo your love's heart. You, the newbie, must know certain terms like the back of your hand before making your first trade. Some of these terms you've already learned, but it never hurts to have a little review.

Major and Minor Currencies

The eight most frequently traded currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD and AUD) are called the major currencies. All other currencies are referred to as minor currencies. Do not worry about the minor currencies, they are for professionals only. Actually, on this site we'll mostly cover what we call the Fab Five (USD, EUR, JPY, GBP, and CHF). These pairs are the most liquid and the most sexy.

Base Currency

The base currency is the first currency in any currency pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6350, then one USD is worth CHF 1.6350. In the Forex markets, the U.S. dollar is normally considered the “base” currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British pound, the Euro, and the Australian and New Zealand dollar.

Quote Currency

The quote currency is the second currency in any currency pair. This is frequently called the pip currency and any unrealized profit or loss is expressed in this currency.

Pip

A pip is the smallest unit of price for any currency. Nearly all currency pairs consist of five significant digits and most pairs have the decimal point immediately after the first digit, that is, EUR/USD equals 1.2538. In this instance, a single pip equals the smallest change in the fourth decimal place - that is, 0.0001. Therefore, if the quote currency in any pair is USD, then one pip always equal 1/100 of a cent.

One notable exception is the USD/JPY pair where a pip equals $0.01.

Bid Price

The bid is the price at which the market is prepared to buy a specific currency pair in the Forex market. At this price, the trader can sell the base currency. It is shown on the left side of the quotation.

For example, in the quote GBP/USD 1.8812/15, the bid price is 1.8812. This means you sell one British pound for 1.8812 U.S. dollars.

Ask Price

The ask is the price at which the market is prepared to sell a specific currency pair in the Forex market. At this price, you can buy the base currency. It is shown on the right side of the quotation.

For example, in the quote EUR/USD 1.2812/15, the ask price is 1.2815. This means you can buy one Euro for 1.2315 U.S. dollars. The ask price is also called the offer price.

Bid/Ask Spread

The spread is the difference between the bid and ask price. The “big figure quote” is the dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in dealer quotes. For example, the USD/JPY rate might be 118.30/118.34, but would be quoted verbally without the first three digits as “30/34”.

Quote Convention

Exchange rates in the Forex market are expressed using the following format:

Base currency / Quote currency Bid / Ask

Transaction Cost

The critical characteristic of the bid/ask spread is that it is also the transaction cost for a round-turn trade. Round-turn means both a buy (or sell) trade and an offsetting sell (or buy) trade of the same size in the same currency pair. For example, in the case of the EUR/USD rate of 1.2812/15, the transaction cost is three pips.

The formula for calculating the transaction cost is:

Transaction cost = Ask Price – Bid Price

Cross Currency

A cross currency is any pair in which neither currency is the U.S. dollar. These pairs exhibit erratic price behavior since the trader has, in effect, initiated two USD trades. For example, initiating a long (buy) EUR/GBP is equivalent to buying a EUR/USD currency pair and selling a GBP/USD. Cross currency pairs frequently carry a higher transaction cost.

Margin

When you open a new margin account with a Forex broker, you must deposit a minimum amount with that broker. This minimum varies from broker to broker and can be as low as $100 to as high as $100,000.

Each time you execute a new trade, a certain percentage of the account balance in the margin account will be set aside as the initial margin requirement for the new trade based upon the underlying currency pair, its current price, and the number of units (or lots) traded. The lot size always refers to the base currency.

For example, let's say you open a mini account which provides a 200:1 leverage or .5% margin. Mini accounts trade mini lots. Let's say one mini lot equals $10,000. If you were to open one mini-lot, instead of having to provide the full $10,000, you would only need $50 ($10,000 x .5 = $50).

Leverage

Leverage is the ratio of the amount capital used in a transaction to the required security deposit (margin). It is the ability to control large dollar amounts of a security with a relatively small amount of capital. Leveraging varies dramatically with different brokers, ranging from 2:1 to 400:1.

Margin + Leverage = Possible Deadly Combination

Trading currencies on margin lets you increase your buying power. Meaning that if you have $5,000 cash in a margin account that allows 100:1 leverage, you could purchase up to $500,000 worth of currency because you only have to post one percent of the purchase price as collateral. Another way of saying this is that you have $500,000 in buying power.

With more buying power, you can increase your total return on investment with less cash outlay. But be careful, trading on margin magnifies your profits AND losses.

Margin Call

All traders fear the dreaded margin call. This occurs when your broker notifies you that your margin deposits have fallen below the required minimum level because an open position has moved against you.

While trading on margin can be a profitable investment strategy, it is important that you take the time to understand the risks. Make sure you fully understand how your margin account works, and be sure to read the margin agreement between you and your broker. Always ask any questions if there is anything unclear to you in the agreement.

Your positions could be partially or totally liquidated should the available margin in your account fall below a predetermined threshold. You may not receive a margin call before your positions are liquidated (the ultimate unexpected birthday gift).

Margin calls can be effectively avoided by monitoring your account balance on a very regular basis and by utilizing stop-loss orders (discussed later) on every open position to limit risk.

SMA vs. EMA

2007-05-18T21:06:00.000-07:00

Which is better: Simple or Exponential?

First, let’s start with an exponential moving average. When you want a moving average that will respond to the price action rather quickly, then a short period EMA is the best way to go. These can help you catch trends very early, which will result in higher profit. In fact, the earlier you catch a trend, the longer you can ride it and rake in those profits!

The downside to the choppy moving average is that you might get faked out. Because the moving average responds so quickly to the price, you might think a trend is forming when in actuality.

With a simple moving average, the opposite is true. When you want a moving average that is smoother and slower to respond to price action, then a longer period SMA is the best way to go.
Although it is slow to respond to the price action, it will save you from many fake outs. The downside is that it might delay you too long, and you might miss out on a good trade.

	SMA	EMA
Pro:	Displays a smooth chart, which eliminates most fakeouts.	Quick moving, and is good at showing recent price swings.
Con:	Slow moving, which may cause a lag in buying and selling signals.	More prone to cause fakeouts and give errant signals.

So which one is better? It’s really up to you to decide. Many traders plot several different moving averages to give them both sides of the story. They might use a longer period simple moving average to find out what the overall trend is, and then use a shorter period exponential moving average to find a good time to enter a trade.

In fact, many trading systems are built around what is called “Moving Average Crossovers”.

Exponential Moving Average (EMA)

2007-05-16T06:03:00.000-07:00

Although the simple moving average is a great tool, there is one major flaw associated with it. Simple moving averages are very susceptible to spikes. Let me show you an example:

Let’s say we plot a 5 period SMA on the daily chart of the EUR/USD and the closing prices for the last 5 days are as follows:

Day 1 : 1.2345
Day 2 : 1.2350
Day 3 : 1.2360
Day 4 : 1.2365
Day 5 : 1.2370

The simple moving average would be calculated as

(1.2345+1.2350+1.2360+1.2365+1.2370)/5= 1.2358

Well what if Day 2’s price was 1.2300? The result of the simple moving average would be a lot lower and it would give you the notion that the price was actually going down, when in reality, Day 2 could have just been a one time event (maybe interest rates decreasing).

The point is, sometimes the simple moving average might be too simple. If only there was a way that you could filter out these spikes so that you wouldn’t get the wrong idea.

Exponential moving averages (EMA) give more weight to the most recent periods. In our example above, the EMA would put more weight on Days 3-5, which means that the spike on Day 2 would be of lesser value and wouldn’t affect the moving average as much. What this does is it puts more emphasis on what traders are doing NOW. When trading, it is far more important to see what traders are doing now rather than what they did last week or last month.

Simple Moving Average (SMA)

2007-05-12T22:58:00.000-07:00

A simple moving average is the simplest type of moving average. Basically, a simple moving average is calculated by adding up the last “X” period’s closing prices and then dividing that number by X.

If you plotted a 5 period simple moving average on a 1 hour chart, you would add up the closing prices for the last 5 hours, and then divide that number by 5. Now…You have your simple moving average.

If you were to plot a 5 period simple moving average on a 10 minute chart, you would add up the closing prices of the last 50 minutes and then divide that number by 5.

If you were to plot a 5 period simple moving average on a 30 minute chart, you would add up the closing prices of the last 150 minutes and then divide that number by 5.

Most charting packages will do all the calculations for you. You must understand how the moving averages are calculated. If you understand how each moving average is calculated, you can make your own decision as to which type is better for you.

Just like any indicator out there, moving averages operate with a delay. Because you are taking the averages of the price, you are really only seeing a “forecast” of the future price and not a concrete view of the future.

Here is an example of how moving averages smooth out the price action.

On the previous chart, you can see 3 different SMAs. As you can see, the longer the SMA period is, the more it lags behind the price. Notice how the 62 SMA is farther away from the current price than the 30 and 5 SMA. This is because with the 62 SMA, you are adding up the closing prices of the last 62 periods and dividing it by 62. The higher the number period you use, the slower it is to react to the price movement. The SMA’s in this chart show you the overall sentiment of the market at this point in time. Instead of just looking at the current price of the market, the moving averages give us a broader view, and we can now make a general prediction of its future price.

Price Smoothies

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A moving average is simply a way to smooth out price action over time. By “moving average”, we mean that you are taking the average closing price of a currency for the last ‘X’ number of periods.

Like every indicator, a moving average indicator is used to help us forecast future prices. By looking at the slope of the moving average, you can make general predictions as to where the price will go.

As we said, moving averages smooth out price action. There are different types of moving averages, and each of them has their own level of “smoothness”. Generally, the smoother the moving average, the slower it is to react to the price movement. The choppier the moving average, the quicker it is to react to the price movement.

Fibonacci Extension

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The next use of Fibonacci you will be applying is that of targets. Let’s start with an example in an uptrend.

In an uptrend, the general idea is to take profits on a long trade at a Fibonacci Price Extension Level. You determine the Fibonacci extension levels by using three mouse clicks. First, click on a significant Swing Low, then drag your cursor and click on the most recent Swing High. Finally, drag your cursor back down and click on the retracement Swing Low. This will display each of the Price Extension Levels showing both the ratio and corresponding price levels.

On this 1-hour USD/CHF chart, we plotted the Fibonacci extension levels by clicking on the Swing Low at 1.2447 on 08/14/05 and dragged the cursor to the Swing High at 1.2593 on 08/15/15 and then down to the retracement Swing Low of 1.2541 on 08/15/05. The following Fibonacci extension levels created are 1.2597 (0.382), 1.2631 (0.618), 1.2687 (1.000), 1.2743 (1.382), 1.2760 (1.500), and 1.2777 (1.618).

Now let’s look at what actually happened after the retracement Swing Low occurred.

• The market rallied to the 0.500 level
• fell back to the retracement Swing Low
• then rallied back up to the 0.500 level
• fell back slightly
• rallied to the 0.618 level
• fell back to the 0.382 level which acted as support
• then rallied all the way to the 1.382 level
• consolidated a bit
• then rallied to the 1.500 level

You can see from these examples that the market often finds at least temporary resistance at the Fibonacci extension levels - not always, but often. As in the examples of the retracement levels, it should be apparent that there are a few problems to deal with here as well. First, there is no way of knowing which level will provide resistance. The 0.500 level was a good level to cover any long trades in the above example since the market retraced back to its original level, but if you didn’t get back in the trade, you would have left a lot of profits on the table.

Another problem is determining which Swing Low to start from in creating the Fibonacci Extension Levels. One way is from the last Swing Low as we did in the examples; another is from the lowest Swing Low of the past 30 bars. Again, the point is that there is no one right way to do it, and consequently it becomes a guessing game.

Alright, let’s see how Fibonacci extension levels can be used during a downtrend. In a downtrend, the general idea is to take profits on a short trade at a Fibonacci price extension level since the market often finds at least temporary support at these levels.
On this 1-hour EUR/USD chart, we plotted the Fibonacci extension levels by clicking on the Swing High at 1.21377 on 07/15/05 and dragged the cursor to the Swing Low at 1.2021 on 08/15/15 and then down to the retracement High of 1.2085. The following Fibonacci extension levels created are 1.2041 (0.382), 1.2027 (0.500), 1.2013 (0.618), 1.1969 (1.000), 1.1925 (1.382), 1.1911 (1.500), and 1.1897 (1.618).

Now let’s look at what actually happened after the retracement Swing Low occurred.

• The market fell down almost to the 0.382 level which for right now is acting as a support level
• The market then traded sideways between the retracement Swing High level and 0.382 level
• Finally, the market broke through the 0.382 and rested on the 0.500 level
• Then it broke the 0.500 level and fell all the way down to the 1.000 level

Alone, Fibonacci levels will not make you rich. However, Fibonacci levels are definitely useful as part of an effective trading method that includes other analysis and techniques. You see, the key to an effective trading system is to integrate a few indicators (not too many) that are applied in a way that is not obvious to most observers.
All successful traders know it’s how you use and integrate the indicators (including Fibonacci) that makes the difference. The lesson learned here is that Fibonacci Levels can be a useful tool, but never enter or exit a trade based on Fibonacci Levels alone.

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