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Australia to Hike Rates

Australia’s benchmark interest rate, at 6.50%, is already the highest in the industrialized world, after New Zealand. Ignoring the pleas of the Treasurer, the Central Bank of has all but decided to hike rates even further into the stratosphere at its next meeting. The country is in a bit of a pickle, since a booming economy and the consequent inflation seems to demand a rate hike. At the same time, this rate hike will ensure that Australia continues to be on the receiving end of Japanese carry trades, and this is precisely what irks Peter Costello, Australia’s Treasurer. In other words, the world’s massive economic imbalances will only be exacerbated by an Australian rate hike, but this may be a moot point as far as the Central Bank is concerned.

USD Slumps on Consumer Confidence

The beleaguered dollar found no reprieve on Tuesday, remaining mired near all-time lows versus the euro at 1.4436, and 26-year lows against the sterling just shy of the 2.07-level. Dragging the greenback lower today was a report from the Conference Board revealing a dip in consumer confidence to a new 2-year low at 95.6 for October, compared with a downwardly revised 99.5 from September. The expectations index for October fell to 80.1, versus a revised 85.0 from a month earlier.

The currency market will likely consolidate in the coming session as traders take to the sidelines ahead of Wednesday's FOMC monetary policy decision and accompanying statement. Although the Fed funds futures are fully discounting a 25-basis point rate cut to 4.50% tomorrow, the focus will be on the language used in the subsequent policy statement. Further, the dollar may regain its footing against the majors if the Fed instead opts to leave rates unchanged at 4.75% while signaling a cut at its December meeting.

source: forex news

EUR/CHF 10.30 Analysis

To those who are trading with the TRUE NORTH inverse hedge. Hold the euro against swissy 'til eur/chf reaches 1.6800.

1,6762. EUR CHF broke 1.6740 resistance. EUR/CHF is in a consolidation after the last bullish movement. The volatility is high. Bollinger bands are parallel and form the trend. My customized trend indicator on 1H and daily is in a bullish configuration. 1H and 4H Stochastic indicate a bullish pressure on EUR CHF. The uptrend should continue on 1.6800 round number resistance.

To know more about the True North Concept's hedge strategy, check this site www.freewebs.com/truenorthfx

Dollar Near Fresh Low

Tight range started on the asian session. Most of the big players are waiting for the month much anticipated announcement from the Fed tommorow. Next to focus is the non-farm payroll coming out on the first friday of November which is are expected to slip to 80.0k, versus 110.0k from last September.

The greenback remains under pressure as traders position ahead of this week's closely anticipated FOMC monetary policy setting meeting. Fed funds futures are fully pricing in a 25-basis point rate cut to 4.50%, thereby dragging the dollar to fresh record lows against the euro at 1.4437 and a new multi-decade lows versus the Loonie at 0.9576 and Aussie at 0.9270.

Although the Fed is largely expected to ease by 25-bp, the dollar's direction will likely be dictated by the accompanying FOMC policy statement and whether further easing can be anticipated. We look for the Fed to maintain a largely neutral stance in its policy statement, with an emphasis on the preemptive nature of the cut "to forestall some of the adverse effects on the broader economy", as stated last month.

A Balancing Act

Seasoned traders, trading coaches, and behavioral economists warn traders to reign in their overconfidence. As a young trader who managed his own account put it, "I realize that if I have a big winning period that I shouldn't get overly excited because, most likely, I'll have a flat or losing period just around the corner. That's the way the market works. No style of trading makes money all the time. The odds are that after you have a big winning period, you'll go through a period of losing money shortly thereafter. I try to make enough money to give myself a cushion to handle the losses when they come." A seasoned trader said, "If you're overconfident, you fall into traps. When I have a string of ten days where I made money every day, I have to watch myself. I have to get more defensive after a string of good trading days because I am tempted to think that I'm invincible. In that mindset, I take bigger risks." A successful hedge fund manager said, "During winning periods, it is easy to become overconfident, and that can lead to trouble. While overconfident, I feel a false sense of security. I'm tempted to take unnecessary risks, and I start to think that I don't have to do any more research to find and figure out new ways to extract money from markets. It is easy to fall into a sense of complacency." What's the solution? One trader I interviewed suggested humility: "Every time I have issues with confidence, I become overconfident. I try to be very humble when I trade. You're only as good as your last trade. It doesn't matter what you did last month,last year, or the last ten years, it's what are you doing today."

A winning trader is confident. It's essential to have the proper amount of confidence, however. If you are under-confident, you'll have trouble making money as market conditions change, but if you are overconfident, you may over-extend your trading knowledge and assume that you have skills that you don't actually have. Building genuine, rock solid confidence in one's trading abilities takes time. It's necessary to experience a variety of market conditions and learn which trading
strategies work best under which specific conditions. It's not something that happens in just a few months, and some trading experts say it takes several years of trading before one moves from the status of a newbie to that of a seasoned trader. In the meantime, novice traders walk a tightrope between under- and overconfidence: sometimes they feel they don't have enough confidence while at other times they may have too much. It's often hard to find the right balance when first starting out, but it's an issue to cope with until consistent profitability is achieved.

Although overconfidence can lead to risky trades that may produce losses occasionally, a lack of confidence can be even more detrimental. It's probably not a good idea to be optimistic to the point of putting on trades without carefully managing risk, such as limiting the size of a position or using protective stops, but a moderate amount of optimism and confidence is useful. A study by Dr. James Felton and colleagues in the "Journal of Behavioral Finance," sheds light on this initial finding between overconfidence and trading performance. University students taking a finance class participated in a 13-week simulation. Each participant was given an imaginary $500,000 to invest. There were some real incentives for doing well in the simulation, however. Students could win $500 if ranked in the upper quartile of the simulation, and a portion of their grade was based on their performance. Optimism was measured with a reliable and valid psychological measure. "Risky" investments were defined as investing in futures and options and as the number of transactions made across the 13 weeks. Men and women did not differ in their levels of optimism, but optimistic men made more risky trades (futures, options, number of transactions) than pessimistic men, pessimistic women, or optimistic women. Optimism can be a good thing. Pessimists often panic, become fearful, and tenaciously deny they are in a losing trade. A moderate amount of optimism keeps a trader calm and inquisitive. Even in the midst of a losing trade, an optimist may be more likely to seek out information and make an informed decision.

Finding the proper level of confidence is key. It is a little like walking a tightrope between extreme unrealistic optimism and extreme debilitating pessimism. Finding the right balance will allow you to pick yourself up when you are beaten down, but stay grounded in reality even after a huge win.

Just as a young child must venture out into the unknown, a novice trader eventually must explore new trading strategies and trade under more chaotic market conditions. It's at these times where a typical novice trader becomes overconfident. He or she may cope with feelings of vulnerability by building up a false sense of confidence. Perhaps it is out of inexperience or a need to bolster one's wavering confidence, but the novice trader may feel an unjustified sense of omnipotence when facing uncertain and potentially threatening market conditions. Telling yourself that you are powerful and infallible can help you feel that you can conquer the most difficult challenge, in the short run, that is. In the long run, it can spell disaster. One may trade low probability setups without a clearly defined plan or adequate riskcontrols. Building a strong sense of trading skills is a key for
achieving consistent profitability. It's how you go about it that ismost critical, however; one can do it in a reckless, haphazard approach or build up skills with a well-planned controlled approach. Keep in mind that when trading under new market conditions and with new trading strategies, you are taking greater chances, and it's at these times when you need to carefully manage your risk and steadfastly follow your trading plan. By taking such precautions, you will minimize potential harm and be able to master new domains. The piece of mind you gain through a well-defined trading plan and adequate risk controls will allow you to tackle new challenges with enthusiasm and vigor. Over time you'll master new strategies and gain a strong, intuitive sense of new market conditions. With increased practice, you'll achieve long-term profitability. So don't fall off the tightrope without a safety net. Trade with the proper amount of confidence, and if you do need to take risks, acknowledge the tendency for overconfidence and take precautions to prevent it from interfering with your goals of achieving lasting profitability.

The winning trader is both confident and realistic. If you want to trade like a winner, it's vital that you develop a true sense of self-confidence. By gaining a wealth of experience, your confidence will be based on your actual trading skills. When you know what you can do and what you can't, you'll feel calm and self-assured. You'll know what you can handle, and you will be able to trade with solid,realistic confidence.

source: forex roundtable

Fed may Cut Rates Again

The Dollar is still reeling from the 50 basis point rate cut imposed by the Fed last month. Nonetheless, some analysts are predicting that the Fed will cut rates again on October 31, this time by a quarter of a percentage point, to 4.5%. The looming fall in real estate prices (termed the sub-prime crisis) has officially spread to the rest of the economy, and the Fed is trying to preempt a complete collapse in investor and consumer confidence. Experts remain divided as to whether the Fed will cut rates now or next month. Either way, you can expect the Dollar to drop to fresh lows against the Euro.

source: forexblog

Dollar Hit Record Low

The dollar extended its loss versus the euro and sterling on expectations that the Fed may cut interest rates again next week. The dollar index slumped to a fresh all-time low at 77.035. The euro approached 1.44 versus the dollar, while the sterling rose to as high as 2.0571.

This week's economic data, including housing sales, durable goods orders, weekly jobless claims and today's consumer sentiment index, all showed signs of economic growth slow down. University of Michigan consumer sentiment index fell from 83.4 to 80.9 in October, below the estimate of 82.

It is widely expected that the Fed will lower rates by a quarter-percentage point to 4.00%. Under the pressure of housing slump and rising credit costs, the nation's economic growth may slow down in the future. The overall sentiment on the dollar is bearish.

source: forexnews.com

Oil Price Boosted CAD & AUD

Rising oil prices boosted the commodity currencies, such as the Canadian dollar and the Australian dollar. Crude Oil hit record high at 92.22 per barrel yesterday. The Canadian dollar strengthened to 0.9592 versus the dollar, while the Australian dollar rallied to 0.9176 against the dollar. With increasing demand of gas in the coming winter, oil prices are likely to surge higher.

Stop Loss Order

Stop loss orders have a variety of important benefits and a few negatives. On the plus side some of the benefits of the stop loss order are as follows:

1. A decision regarding initial exit (in the event the trader is wrong on direction) can be made before the trade is ever entered and the stop placed at that level thus significantly lessening the likelihood of making an undisciplined emotional exit;

2. A stop can get the trader out of a trade that is going the wrong way even if the trader is not watching the market;

3. The placement of a stop can provide a disciplined way to cut losses;

4. The placement and subsequent movement of a stop can help prevent taking profits prematurely;

5. Trailing stops can be set so that as profit is gained, the stop automatically moves with the gain thus capturing more and more profit as a position moves favorable;

6. Stops are an indication of disciplined trading;

7. Stops cost nothing to place or change; there is only a commission when an order is filled.

On the minus side, there are at least a couple of problems, the most significant of which I think are the two that follow:

1. It can be difficult to determine the optimum price at which to place a stop and sometimes the trader can get whipsawed out of a position;

2. Stops do not afford perfect protection.

Keeping those things in mind, it is my opinion that most traders are far better off setting stops than not.

Yen Eased As Risk Appetite Returned

The yen eased against high yielding currencies as carry trades returned slightly today. Investors regained some risk appetite as US equities market was up for two days. Carry trades will still be the center of the market.

Dollar fell today

The dollar pared its gains against the euro and sterling as the bearish sentiment over the dollar does not change after Monday's unexpected dollar strength. The euro rebounded back to around 1.4250 versus the dollar, while the sterling passed through 2.05 against the dollar.

The market will focus on US housing data this week and the FOMC next week. US existing home sales due tomorrow is seen to fall from an annual rate of 5.5 million units to 5.25 million in September. Also new home sales will be released on Thursday. The housing slump will continue to weigh on the nation's economy and therefore put pressure on the Fed to cut rates.

Interest rate futures indicate that traders are pricing in a nearly 90 percent chance that the Fed will cut rates by a quarter percentage point to 4.50 percent at its Oct 31 policy meeting.

Dollar fell today

The dollar pared its gains against the euro and sterling as the bearish sentiment over the dollar does not change after Monday's unexpected dollar strength. The euro rebounded back to around 1.4250 versus the dollar, while the sterling passed through 2.05 against the dollar.

The market will focus on US housing data this week and the FOMC next week. US existing home sales due tomorrow is seen to fall from an annual rate of 5.5 million units to 5.25 million in September. Also new home sales will be released on Thursday. The housing slump will continue to weigh on the nation's economy and therefore put pressure on the Fed to cut rates.

Interest rate futures indicate that traders are pricing in a nearly 90 percent chance that the Fed will cut rates by a quarter percentage point to 4.50 percent at its Oct 31 policy meeting.

Will the US Intervene on Behalf of the Dollar?

At last week’s G8 meeting in Washington, it was expected that currencies would be a hot topic of discussion. With the Dollar retreating to record lows on a daily basis, the failure of China to allow the Yuan to appreciate, the Japanese Yen’s continued weakness despite its strong economy, and the recent parity of the Canadian Dollar and USD, there are certainly plenty of forex phenomena that deserve attention. However, it is the Euro/USD relationship that probably received the most scrutiny, as the biggest contingent of the G8 uses the Euro.

European politicians and bureaucrats have spent the last few months arguing with America-as well as amongst themselves-over the declining Dollar. The consensus is certainly that the Dollar is harming the European economies; as one German Minister phrased it, the “pain threshold” has been crossed. At the same time, it is clear that a relatively weak Dollar is probably in the best interest of global economic stability, since the US current account and financial account imbalances can only be solved by changes in exchange rates. Thus, there is a growing divide between European politicians, who tend to think in provincial terms, and the European Central Bank, which is more focused on the Big Picture. The new President of France, for example, has been quite vocal in lamenting the appreciation of the Euro, even going so far as to demand the ECB step in. Jean Claude Trichet, president of the ECB, responded by calling on European politicians to be circumspect in their comments on the Euro.

However, since Central Banks do not participate in G8 conferences, you can bet that politicians hounded Hank Paulson, US Secretary of the Treasury, on the declining Dollar. Some analysts have even speculated that ‘intervention’ would enter into the discussions. In fact, the US has not intervened in forex markets since 1994, when Europe and American worked in tandem to prop up a then-ailing Dollar. After a couple months, however, the plan was abandoned due to mixed results. Is it possible that the US, confronted with the same situation, will once again attempt intervention?

The answer is “not likely.” First, the Europeans are not even united in their position on the USD/Euro exchange rate. Secretly, they would probably all prefer a stronger Dollar, but in public, only a handful have called for intervention. Second, short of fixing the exchange rate (which would require the US to borrow money), it is very difficult for a government/central bank to control its currency. Recent intervention by South Korea and Japan, as well as America’s efforts in 1994, ended in failure. Finally, there is the issue of China, which does control its currency. The US would surely appear hypocritical if it intervened on behalf of the Dollar while simultaneously encouraging China to float the Yuan. Thus, while certain US economic concessions may result of the G8 conference, a controlled appreciation of the Dollar will not likely be one of them.

Euro Falls Victim to Dollar Strength

Despite the fact that officials from the European Central Bank continued to stress their hawkishness, the Euro erased all of its gains and then some. The move did not come until the US session as the upside surprises to Eurozone data kept the Euro hovering around 1.36 until the open of the US session. The data indicated that French wage growth accelerated in the first quarter along with non-farm payrolls. Eurozone CPI remained unchanged at 1.9 percent, which was slightly stronger than market expectations. The ECB is set to release their monthly report tomorrow and we expect the details to contain the same hawkish tone. Growth and inflation data give us no reason to question whether the ECB will follow through with their plans to raise interest rates next month.

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Don't be fooled by the Dollar

DONT be seduced by reports of the dollars great value against the Pound a study out this week discovers the US is STILL one of the most expensive places to head on holiday.

The Post Office Holiday Costs Barometer found that although the exchange rate is great for picking up electronics and jewellery at a discount, everyday necessities are often expensive.

Consumers may save on iPods, laptops and designer clothes but the added cost on essentials like water, beer and suncream may eat away the savings.

The Post Office checked prices of ten basic items in favourite holiday destinations and found the America was the MOST expensive, with costs totalling 69.41.

The cheapest destination was Bulgaria, whose total cost for all ten items was only 16.86 a 52.55 difference.

A 1.5-litre bottle of Evian water is almost three times more in the US than in any other country surveyed, and is 15 times more expensive than in Egypt.

But the States does have the second cheapest prices for rental cars.

Greece has the most expensive cup of coffee at 2.14 a cup, while the least expensive bottle of beer can be found in Egypt.

In Thailand, a bottle of Coke and a daily newspaper are only 48p each.

In the euro zone, Portugals shopping basket total of 33.65 put the country in fifth place overall but made it noticeably cheaper than the other euro countries surveyed.

Spain and France were almost twice as expensive.

Greece was the cheapest holiday resort in the Eastern Med, at 41.06 for the ten items, just pipping Cyprus and Turkey at the post.

Post Office head of travel services Kevin McAdam said the Holiday Costs Barometer was a useful guide to pricing abroad but warned: You have to be careful when comparing costs in different countries.

It all depends on their relative cost of living and it pays to be aware that favourable currency rates like those currently available for the US dollar do not necessarily mean a destination will be cheap.

Its useful to compare the costs across Europe. Our barometer proves that one currency does not mean one cost.

From: www.thesun.co.uk

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

US Dollar and Equities Recover but Bond Yields Continue to Sell Off : What Does this Mean?

It is earnings season and this appears to be cushioning the fall in both the US dollar and the Dow. Stocks clawed their way back into positive territory in the late US trading session after the market digested the more optimistic Federal Reserve Beige Book report. In contrast to the warnings and dour outlook given by Fed Chairman Ben Bernanke last week, the report from the 12 Fed districts provided a breath of fresh air. According to the report, economic growth continued at a modest pace for most districts. Even though consumer spending for 4 out of the 12 districts was mixed or below expectations, business spending was strong. The same could be said about the real estate market, which was weak on the retail level but more active on a commercial level. At the same time however it leaves the market confused about who to believe since Bernankes comments could be a more current assessment of the economic situation and a more valid warning about the troubles ahead. Existing home sales fell 3.8 percent in the month June to the weakest level in over 4 years (this is the lowest since Nov 2002). The markets took the weaker numbers in stride because the previous collapse in the US dollar, bond yields and stocks essentially priced the disappointment in. Also, the average sales price increased for the first time in a year while supply remained unchanged. It is not time to get complacent just because house prices have increased. Although possible, we think that it is highly unlikely that Bernanke will be shifting his tone at the bottom of the housing market. The increasing number of late payments reported by American Express and Countrywide Financial is hardly the behavior of a healthy economy. New home sales are due for release tomorrow along with durable goods. The weak dollar could boost orders for big ticket items but new homes sales on the other hand could suffer the same fate as existing home sales. Even though the stock market licked its wounds and the dollar rallied strongly, bond yields continued to sell-off. Interest rate markets tend to be most accurate indicator of the overall markets assessment of data. The fact that yields are lower suggests that there may be more bad news to come.

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Euro: A Repeat of December 2004?

In yesterdays Daily Fundamentals, we had pointed out that the peak in the EUR/USD in December 2004 was triggered by a series of disappointing economic data. Today we get a sense of dj vu as we are beginning to see the same scenario unfold once again. Earlier this week, German retail sales dropped significantly and this morning, we saw German unemployment and Eurozone manufacturing PMI all fall short of expectations. Originally expected to drop by 40k, unemployment instead only dropped by 9k, leaving the unemployment rate unchanged at 9.2 percent. The Eurozone PMI manufacturing survey was also originally expected to increase, but it remained unchanged. Aside from the German retail number, these disappointments are not significant. Nonetheless, it does indicate that the combination of a strong Euro and the value added tax increase is beginning to have a negative impact on the Eurozone economy. We are already looking for more Euro weakness than strength though in the short term, that would be dependent upon US data. However if the mild disappointments start to become serious ones, then we could see a major trend reversal in the EUR/USD. In the meantime, ECB officials remain committed to raising interest rates. ECB member Liebscher said today that the central bank needs to remain vigilant to ensure price stability. Over in Switzerland, even though the Swiss franc is stronger, manufacturing PMI also fell short of expectations.

From: http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Euro__A_Repeat_of_December_1178142558155.html

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Dollar Weakens as Chinese Yuan Revaluation Reduces the Need for Buying

The world turned its focus to the currency market today as China made its second most significant revaluation move in two years. The central bank of China announced this morning that they were widening the trading band for the Yuan, increasing reserve requirements and raising interest rates. The last time China revalued its currency was in July 2005 and just as that move came a week after the US imposed a timetable for Chinese revaluation, this move comes in the midst of the G8 meeting and a week before a Chinese delegation arrives in the US for talks with Treasury Secretary Paulson. This politically well timed move is characteristic of most moves made by China. As a proxy for Asian strength or weakness, the latest announcement has sent the Japanese Yen rallying. It has also sent the US dollar lower since a wider trading band means that China will need to buy less US dollars. The stock markets around the world have yet to react and they may be looking to the Chinese market for clues. The announcement was made after the close of trading in Shanghai, which means that we will need to wait until Sunday night to see how Chinese investors really feel about this triple blow. In the meantime, the US dollar still ends the week stronger against most of the major currencies. The more promising outlook on the labor market has helped to offset the burden of higher gasoline prices and concerns about housing. The US economic calendar next week is light especially in the front end of the week. The only potentially market moving data are durable goods, new home sales and existing home sales on Thursday and Friday.

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Strategy Forex - Super Signal

In this pointer for the image that we have it makes look like to bring good results.

We see that the arrows green and red indicate the directions of the movements.

Case somebody has used wants to leave its commentary on the performance of the same.



Description: #Super signals_v2
Filename: 4.mq4
Filesize: 4.0 KB
Downloaded: 04 Time(s)
Download


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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Forex-STD

this forum is very good!

Several EA's, indicators, tips for forex!

http://www.forex-std.com

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Dollar Rises On Unexpectedly US Strong Home Sales

NEW YORK (Reuters) - The dollar rose on Thursday after a report showed U.S. new home sales in April rose by more than expected and at their fastest pace in 14 years, reinforcing the view the Federal Reserve may not have to cut interest rates this year.

The greenback surged against the euro and wiped out modest losses against the yen after the report.

Analysts said the data was further evidence that the U.S. housing sector is on the mend, and that a solid U.S. economy will likely allow the Fed to leave interest rates on hold at 5.25 percent for some time to come.

"While one month's data doesn't mean the housing market is out of the woods, this number certainly feeds into a further recalculation of the near-term US outlook, with dollar positive implications," said Brian Dolan, director of currency research at Forex.com in Bedminster, New Jersey.

The euro was trading down 0.28 percent at $1.3423, compared to $1.3445 ahead of the release of the data. The dollar was up 0.01 percent at 121.61 yen.

Eurodollar futures now perceive a chance of less than 50 percent that the Fed will lower interest rates from 5.25 percent by the end of 2007, in contrast to earlier this year when more than a quarter-point rate cut was fully priced in.

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Compare the brokers' spreads!

in this site you compare the brokers' spreads!

http://fxtrade.oanda.with / spreads / comparing_broker_spreads.shtml

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[Source: Forex - Its own business! - Posted by FreeAutoBlogger]

Yen Seesaws As Inflation Remains Tame; Swiss Rally Blunted

While the EURUSD remained quiet for most of Asian and European sessions contained to a 20 point range, the yen was the most volatile major of the night traveling nearly 70 points several times during Friday trade. The currency continues to be buffeted by carry trade and risk aversion flows as it first rallied when the Nikkei fell by -1.22% only to give up most of its gains as the Shanghai index managed to record yet another up day closing +0.69%. Trading in yen, which is usually quite subdued, was truly schizophrenic tonight as yen bulls managed to push the pair below the 121.00 figure only to be repelled by the bears who quickly rallied USDJPY back above 121.50.

Some of the action was caused by reports that North Korea managed to fire another missile into the sea of Japan, but with North Korean aggression now largely subdued by the Chinese, the geo-political risks in the Korean peninsula do not appear to be as grave as last year. Indeed this type of volatile price activity had less to do with newsflow is more likely to be emblematic of a top. However, calling a turn in pair has been a sucker bet over the past few weeks as Japanese fundamental data has failed to offer any support to the currency. Tonight was no exception as the best thing that could be said about the Japanese inflation data is that it did not decline on the core basis. Prices did fall at a slower pace signaling that deflation has bottomed out, but so far the indexes have offered scant evidence of rising prices. The report was especially surprising given the fact CGPI index earlier in the month recorded very strong gains of 0.6%.

Ultimately however, Japanese monetary policy is much more likely to be driven by the consumer spending data, rather than the CPI readings. BOJ officials recognize the necessity to raise rates in order to protect the yen from the incessant selling of the carry traders, but are constrained in doing so until Japanese wages and spending picks up. To that end next week labor market data and the Household spending reports may be crucial in providing clues for the timing of the next hike.

Finally, Switzerland's most important economic report - the KOF index of leading economic indicators - printed in-line with expectations at 1.96, higher than the 1.90 reading the month prior, but failed to reach the physiologically key 2.00 mark. As such it failed to deliver the knock out punch for Swissie bulls who hoped that a 2.0 number would assure the market that the SNB will hike rates to by 50bp instead of 25bp at its upcoming meeting in June. In the aftermath of the report EURCHF remained flat as traders took the data in stride, but clearly blunted the franc rally that has been developing over the past few days.

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Seven Helpful Hints to Follow when Choosing your Forex Broker

When getting started in trading on the forex market, one of the most important decisions you will have to make is which broker to use. There are a myriad of institutions out there that facilitate currency trading for the individual investor, and choosing the right one can mean the difference between success and failure as a forex trader. Because the stakes are high, this is a decision that should not be taken lightly, and it is crucial that you research all available information before taking that first step and signing up.

One thing to look for in a forex brokerage is the availability of a demo account, which is a valuable tool for the trader who is just starting out. This type of account does not use real money; the account holder is issued a pretend balance to play around with for a limited period of time, usually thirty days. You can use this time to try different things, and to get a feel for the pace of the forex market and how everything works. These accounts usually come with all of the research tools available to real account holders, so this is also a good way to evaluate the broker's system as a whole.

Most brokerages make a variety of research tools available, but the quantity and quality of these devices vary between different institutions. You should look for a brokerage that at a minimum offers real-time quotes, multiple charting options, live news feeds, and research reports written by professionals. More information means a greater advantage over the competition, so it is important to choose a company that provides enough research tools for you to have the ability to make informed decisions while trading.

You should also check out the software the brokerage makes available to its account holders, particularly if you lack experience using computers. Some programs are easier to use than others, and user-friendliness is a significant quality to look for when evaluating this software. If the program is confusing or difficult to use, you will not have a very good trading experience, and this can translate to lost money. It is important to find a brokerage that provides software you can be comfortable with.

Another vital factor involved in picking a forex broker is the spread. In forex trading, a spread is the difference between the price to buy a currency and the price to sell it at any given moment. The brokerage makes money on this difference, and when one refers to a "tight spread" he is talking about two prices that are close together. This means that less money goes to the brokerage out of your trade, so choosing a brokerage that offers tight spreads is a good idea to maximize your trading success.

The availability of leverage options is something that many forex traders look for in a brokerage. When an investor uses leverage, he borrows money from the broker to trade with, keeping any profits that are made before paying the money back. Most brokerages offer the ability to trade with an amount of money that is much higher than the amount of cash in the account, sometimes reaching up to 400 times this amount. The reason forex brokerages can offer this high level of margin is that the amount that a currency pair will change in price in a day is usually very small, so the risk is much less than with equities.

Beginning forex investors should also check out how long the institution has been in business. By researching the background of the company, you can get an idea as to the legitimacy of the brokerage to see if your money will be safe in their hands. Brokers that have just sprung up overnight are usually not the best places to begin trading, so look for one that has been around for a while. Another good quality to look for is an association with a major bank or other financial institution.

Finally, you should always choose a forex broker that is registered with the Commodity Futures Trading Commission. This independent agency of the U.S. government provides oversight of the various brokerages in the United States, and helps protect investors from fraud that unfortunately is becoming more commonplace in today's society. By making sure the brokerage is registered with this agency, you can take the guesswork out of determining the legitimacy of the institution.

There is a wide range of forex brokerages out there, and it can be difficult to determine which one is the best. But by doing some research into the different options, you can do a lot to not only protect yourself from fraud, but to maximize your success in trading currencies.

One Day Of Trading Left

There's one day of trading left after Wednesday in the May forex trading contest. 9 traders out of about 30 managed to have a profitable month so far; that's about 30%. QLaun is the clear cut winner with a return of 76.81% and a maximum drawdown of -6.54%....

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Is Forex a Trendy Market

I was reading an article in the latest Currency Trader Magazine and they tried to prove or disprove that the Forex market has been trendier than other markets. I've heard for years that the currency market is a preferred market by traders because it trends more so I was...

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

South Beach Vacation

I just got back from vacationing in Miami Beach so I've been out of it for a week.... I'll be back writing and trading tomorrow.

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Forex Diversification

I was reading Simon's blog (http://simonsupertrader.blogspot.com/2007/05/diversification-in-forex.html) where he believes that trading multiple currency pairs is not diversification. Like he states, going long the GBP/USD, long the EUR/USD, short the USD/CHF, and short the USD/JPY is betting against the U.S. dollar. If you trade these 4 major pairs, is...

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

What Currency Is Warren Buffett Buying?

One object of Mr Buffett’s affection could be the yen, which has hit aseries of record lows against a host of currencies in recent months -fitting the Sage’s reputation as a value investor.Read more here (http://ftalphaville.ft.com/blog/2007/05/11/4447/what-is-buffett-buying/)

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

No Cost Trading

I haven't traded individual stocks in over two years. At one point I was concentrating a majority of my efforts in learning to trade the stock market. I may be interested in getting back into the stock market in addition to trading forex but the question is, is...

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Missing Person Report

I have been missing in action since my last post, 15 days ago. I needed a breather from blogging and trading. I don't like the fact that I've been neglecting the site nor the emails I've been receiving considering the time and work I've put in over the...

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Taking a Break

I thought I'd write something since I haven't done so in quite a while. I'm taking a much needed break to recharge my battery. I'm feeling good this week and foresee a return very soon; hopefully next week. I hope everyone is making progress.

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Forex Traffic Ranking Update

I'm trying to catch up on emails and everything else so I hope to be back in the swing of things after Memorial Day. I just updated http://www.forexontop.com (http://www.forexontop.com) with the latest traffic data. No major changes on top. This site is losing a bit of traction...

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Latest Update to Most Visited Forex Websites

The latest update to Forex On Top is complete. The number of sites listed are approaching 300. I better get in gear because Forex Project has dropped 3 spots to #28. You can see the latest results at http://www.forexontop.com (http://www.forexontop.com). If your site is not listed,...

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[Source: Forex Project : Experiences of a Forex Day Trader - Posted by FreeAutoBlogger]

Forex Signals & Forex Signal Services

What are Forex signals? Forex signals are paid services offered by some brokers and independent Forex annalists. Companies that offer forex signals monitor and analyze the market for you, providing you with their data via desktop alerts, email or even SMS and pager alerts.

Forex signal services analyze several factors when preparing their data. They do a technical analysis of market conditions and use a combination of indicators to identify trends and isolate profitable entry and exit points. They then send you the results via the venue of your choice and you can choose to use the signal in your own trading, or pass on it.

Most forex signal services offer signals for only a handful of the most popular currency pairs, such as EUR/USD, USD/JPY, GBP/USD, USD/CHF. Occasionally, you can find specialty services that offer signals for other lesser traded pairs. Forex signals can be costly, even upwards of $100 / mth. The benefit of subscribing to such a service is that they analyze and crunch the data for you, saving you time. It should be noted, however that using a signal service is no substitute for a proper education in the Forex markets. Signal services give you data, you still need to know what to do with it.

When shopping for a signal service, make sure that they provide you with historical data so that you can see their track record for yourself. Remember, that like any trader, Forex signal services also have loosing trades. You shouldn't expect a signal service to be a sure ticket to instant Forex wealth, but rather look at them as another tool in your trading toolbox.

Emotional? Get ready to lose your shirt in the forex game!

“Go with your gut.”

Yeah right. That’s advice to doom you at the currency exchange game.

When it comes to forex trading, that’s a trading strategy that is bound to lose you money - unless your gut is highly trained and impervious to emotion. The trick to making money in the currency exchange market is to avoid making emotional decisions and follow a carefully thought out strategy that takes the current market and history into account.

Forex trading is a highly volatile market. Emotions tend to run high - and low - and either of those extremes can influence your trading decisions, unless you have a strategy planned in advance, and stick to it, no matter what you THINK you’re seeing at the moment. The keys to success in Forex are system, analysis and perseverance. Note that emotion is not one of them. Going with your gut is a losing proposition in forex trading.

Letting your emotions rule your decisions can hurt your trading in several different ways. It’s the reason that most experienced traders tell novice traders that they need to develop a system - and stick to it no matter what. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system even when you want to fly in the face of accumulated data, you’ll maximize your profits.

A system based on technical analysis of historical market trends is one of the most potent tools that you can utilize if you’re just getting started in forex trading - and many traders with years of experience continue to use their system to keep the profits rolling in. In fact, many will tell you that when their ‘gut instinct’ and their system collide, the system is almost always right.

The third key is perseverance. Analysis of trends in the market will show you that the market moves in dips and spurts within overall patterns that are predictable. No trend moves smoothly in an up or down line - there are inevitable periods of time when values suddenly spiral up or down based on some outside factor. These are the times when emotion can hurt your portfolio. When a currency that you’re holding takes a sudden dip south, it’s tempting to succumb to panic trading, cut your losses and run even if your system tells you to hold on. On the other hand, it’s easy to catch the rising excitement as a trade starts increasing in value and scramble to buy more of the same. These are exactly the times to rely most heavily on your trading system. It will tell you exactly when to trade for maximum profit.

Using a mechanical system takes the emotion out of your trading, eliminating one of the key factors that people fail. Your system doesn’t get stubborn about proving a theory. It isn’t swayed by bad news, or elated by good news. It doesn’t hold onto a bad trade hoping against hope that if it just holds on long enough, the trend will turn around and become a moneymaker.

To be effective, your system - whether you develop your own or adopt one created by someone else - should identify the entry point of your trade, the exit point of your trade, mitigating factors, and an exit strategy. In laymen’s terms that means:

- Under what conditions should I acquire a currency? For instance, you may have a buy order for when a particular currency drops more than 5 pips because your analysis tells you that that’s likely to be as low as it goes.

- Under what conditions should I trade that currency for another - and which one? There are two reasons to exit - to maximize your profit, or minimize your loss. That means you have a set stop-loss order and a set take-profit order at which point to cash out your trade.

- What factors will I allow to change that decision? If you’re not careful, this is where emotion will sour deals for you. While the money market moves in predictable patterns, there are always individual variations of a trend within those patterns. If you’ve taken those variations into account, it will be far easier to decide when a factor really does make a difference, and when it’s just wishful thinking.

- How will I trade out of a currency? Your exit strategy may be as simple as ‘a stop-loss order when my loss hits 5% or a take-profit order when I’ll make 40% profit’.

By employing a system to tell you when to get in, out or stick, you’ll minimize the impact of your emotions on your trading and maximize your profit.

Don’t try to explain a fundamental event with technical analysis.

This week we are seeing some small reversals in some of the currency pairs, particularly the USD and JPY pairs. The main reason for this is the upcoming G7 meeting this weekend in Washington DC. This meeting is for the financial representatives of the largest economies in the world, the same countries whose currencies we trade. Typically at these meetings, currency values are discussed. Most of the time it is the Japanese Yen weakness, but this time it may include the US Dollar weakness too. This increases the risk of holding short positions in either currency, which to professional traders means unknown risk and a reason to get out of their trade. So the recent JPY and USD strength is more because of traders exiting positions rather than putting on new positions. If all goes well, they may come back into the market after the meeting and sell the JPY and the USD, but time will tell on that one. However, I am seeing new traders trying to find a technical reason for the reversal. There may be a couple of indicators that showed the possibility of the reversal, but this move has nothing to do with technical analysis. It is a pure fundamental move. Technical analysis does not tell us how traders will react to the fundamentals of the market. They never have and they never will. Tops and bottoms in the financial markets are determined by the fundamentals while technical analysis shows us how we get between those two points. Let my repeat that….tops and bottoms are determined by the fundamentals of the market and not the technicals. Instead of looking at a number of technical indicators to determine the end of a trend, you would be better off checking the economic calendar available at www.dailyfx.com. Big events that result in a change in the interest rate environment or monetary policy are what will change trends, not the fact that the RSI is overbought or oversold. This explains why traders who use both styles of analysis usually have better trading results than those who concentrate on just one aspect. You don’t have to understand why the market is moving the way it is, but knowing that traders are concerned about an upcoming economic release or another event like the G7 meeting can explain current market movement. But we won’t know the extent of the reversal until we know more about the results of G7 meeting and how traders interpret those results.

Get smaller or get out.

Many times I get asked by new traders how to handle a certain situation they find themselves in when trading. These traders may have opened five or six mini lots in a trade and have seen the market move in their direction. But now the market starts to move sideways or even move against them and they ask for help in what to do. My first question to them is what their plan was before entering the trade. You know….before you had money on the line and could think clearly. First of all, if you are asking somebody else what you should do, this usually means that you have lost your way. When you have lost your way, the decisions you make are based on emotions rather than solid analysis. This is what can get you into trouble almost every time. When in this situation, there are two options….get smaller or get out. If you don’t know whether you are still bullish or bearish on your current trade, you should no longer be in that trade so you should get out. If you still want to be in the trade, but feel uncomfortable with the risk, you should get smaller. This means closing part of, but not all of your position. Naturally, if you only opened one lot, this is not an option. But if you have multiple lots open, there is no rule that states that you have to close them all out at the same time. Closing part of the position locks in some of the profit. If you move your protective stop on the remaining position up to the breakeven level, which means moving it up to your entry, you are in the enviable position of having guaranteed a profit on the trade while still being able to further profit on a continuation of the move. That is good trading.

Australian Dollar Approaches Parity

Over the last few months, the Australian Dollar has risen over 15% against the USD, bringing the currency to a 23-year high. With parity (1:1 exchange rate) in sight, some analysts are beginning to draw parallels between the Australian Dollar and the Canadian Dollar, which skyrocketed to parity against the USD just last month. Both economies are rich in natural resources, relying heavily on them to drive exports. In fact, more than half of Australia's exports are comprised of natural resources. It is no surprise that as oil, gold, and a host of other raw materials have surged to record highs, the Australian economy has outperformed even the rosiest of expectations. With China's economic boom promising to keep raw material prices high for the near future, the prospects for Australia's economy, and hence its currency, are brighter than ever.

What’s more, the basic divergence in growth is clearly tipping towards the momentum underlying the Aussie economy with consumer spending, business investment and export income promising strength for the economy and currency in the months to come.

Emerging Currencies at Risk

Most of the world's emerging economies link their currencies to either the Dollar, the Euro or a basket of currencies, through an outright peg or a so-called "dirty float." These countries have attracted waves of foreign money, with the intent of buying cheap exports, foreign direct investment, and capital/forex market speculation. As a result, while the upside of these pegs has been seemingly boundless economic growth, the downside has been inflation, since many of these countries have been forced to print money in exchange for foreign currency. Countries in the Middle East, Asia, and Eastern Europe, especially, have effected tremendous increases in their respective money supplies with double-digit inflation rates to match. Many savvy investors, namely hedge funds, have begun to target countries with fixed exchange rates that are suffering high rates of inflation, with the reasoning that it is inevitable such currencies will soon be forced into appreciation. The Telegraph reports:

Further east, Vietnam is throwing in the towel as inflation hits 9pc. It said it will no longer hold down the dong by massive purchases of US bonds. Singapore, Taiwan, and Korea have begun to change tack, slowing dollar accumulation before inflation gets out of control.

What is Bid and Ask Price?

One of the important aspects of currency trading is learning forex trading terms. One of the basics is the bid-ask spread. This term is important because in forex trading, there are no commissions. Instead, one must overcome the bid-ask spread, which is the difference between the asking price and the bid price.



In forex, the investor can not attempt to buy on a bid or sell at the offer like in exchange-based markets. On the other hand, once the price clears the cost of the spread, there are no additional fees or commissions. Every single penny gain is purely profit to the investor.