DURABLE GOODS ORDERS
(ALSO KNOWN AS THE ADVANCE REPORT ON DURABLE GOODS
MANUFACTURERS’ SHIPMENTS, INVENTORIES, AND ORDERS)
Market Sensitivity: High.
What Is It: A key indicator of future manufacturing activity.
News Release on Internet: www.census.gov/indicator/www/m3/adv/
Home Web Address: www.census.gov
Release Time: 8:30 A.M. (ET); released 3–4 weeks after the end of the reporting
month.
Frequency: Monthly.
Source: Census Bureau, Department of Commerce.
Revisions: Revisions can be major and cover the two preceding months.
INSTITUTE FOR SUPPLY MANAGEMENT (ISM)
MANUFACTURING SURVEY
Market Sensitivity: Very high.
What Is It: First monthly report on the economy with a focus on manufacturing.
News Release on Internet: www.ism.ws/ISMReport/index.cfm
Home Web Address: www.ism.ws
Release Time: 10 A.M. (ET); released the first business day after the reporting
month.
Frequency: Monthly.
Source: Institute for Supply Management.
Revisions: No monthly revisions are done, but every January there are
reassessments of seasonal adjustment factors that can lead to changes in all
the data.
CHICAGO PURCHASING MANAGERS INDEX
(BUSINESS BAROMETER)
Market Sensitivity: Medium to high.
What Is It: Measures business activity in the Midwest region.
News Release on Internet: www.napm-chicago.org
Release Time: 10:00 A.M. (ET); released on the final business day of the month
being covered.
Frequency: Monthly.
Source: National Association of Purchasing Management, Chicago affiliate.
Revisions: The only revision comes from changes in seasonal adjustment factors,
and it is made every January.
Monday, December 22, 2008
GROSS DOMESTIC PRODUCT (GDP)
Market Sensitivity: Medium to high.
What Is It: The foremost report on the health of the economy, GDP measures
how fast or slow the economy is growing.
News Release on Internet: www.bea.doc.gov/bea/dn/home/gdp.htm
Home Web Address: www.bea.doc.gov
Release Time: 8:30 A.M. (ET); advance estimates are released the final week of
January, April, July, and October. Two rounds of revisions follow, each a
month apart. (The Bureau of Economic Analysis expects to speed up the
release of the GDP by two weeks in 2006.)
Frequency: Quarterly.
Source: Bureau of Economic Analysis, Commerce Department.
Revisions: Monthly revisions tend to be moderate, though they can on occasion
be more substantial. There are also annual revisions that are normally done at
the end of July and reflect more complete information. Benchmark or historic
revisions take place every five years or so with changes that can go back to
1929 when the GDP series began.
Market Sensitivity: Medium to high.
What Is It: The foremost report on the health of the economy, GDP measures
how fast or slow the economy is growing.
News Release on Internet: www.bea.doc.gov/bea/dn/home/gdp.htm
Home Web Address: www.bea.doc.gov
Release Time: 8:30 A.M. (ET); advance estimates are released the final week of
January, April, July, and October. Two rounds of revisions follow, each a
month apart. (The Bureau of Economic Analysis expects to speed up the
release of the GDP by two weeks in 2006.)
Frequency: Quarterly.
Source: Bureau of Economic Analysis, Commerce Department.
Revisions: Monthly revisions tend to be moderate, though they can on occasion
be more substantial. There are also annual revisions that are normally done at
the end of July and reflect more complete information. Benchmark or historic
revisions take place every five years or so with changes that can go back to
1929 when the GDP series began.
RETAIL SALES
Market Sensitivity: High.
What Is It: First report of the month on consumer spending; capable of big
surprises.
News Release on Internet: www.census.gov/svsd/www/advtable.html
Home Web Address: www.census.gov
Release Time: 8:30 A.M. (ET); available about two weeks after the month ends.
Frequency: Monthly.
Source: Bureau of the Census, Department of Commerce.
Revisions: Can be huge from month to month. Each release also contains broad
revisions of the two previous months to reflect more complete information.
Annual benchmark changes are released in March and can go back three
years or more.
Market Sensitivity: High.
What Is It: First report of the month on consumer spending; capable of big
surprises.
News Release on Internet: www.census.gov/svsd/www/advtable.html
Home Web Address: www.census.gov
Release Time: 8:30 A.M. (ET); available about two weeks after the month ends.
Frequency: Monthly.
Source: Bureau of the Census, Department of Commerce.
Revisions: Can be huge from month to month. Each release also contains broad
revisions of the two previous months to reflect more complete information.
Annual benchmark changes are released in March and can go back three
years or more.
PERSONAL INCOME AND SPENDING
Market Sensitivity: Medium.
What Is It: Records the income Americans receive, how much they spend, and
what they save.
News Release on Internet: www.bea.doc.gov/bea/newsrel/pinewsrelease.htm
Home Web Address: www.bea.doc.gov
Release Time: 8:30 A.M. (ET); data is made public four or five weeks after the
end of the reported month. (The Bureau of Economic Analysis expects to
have this report out two weeks earlier by 2006.)
Frequency: Monthly.
Source: Bureau of Economic Analysis, Department of Commerce.
Revisions: After the initial release, data on income, spending, and savings
undergoes revisions for the next several months as more complete
information comes in. The magnitude of the changes is usually modest.
Annual revisions are normally done every summer (in July or August), and
benchmark changes occur every four or five years to incorporate new data as
well as changes in methodology.
Market Sensitivity: Medium.
What Is It: Records the income Americans receive, how much they spend, and
what they save.
News Release on Internet: www.bea.doc.gov/bea/newsrel/pinewsrelease.htm
Home Web Address: www.bea.doc.gov
Release Time: 8:30 A.M. (ET); data is made public four or five weeks after the
end of the reported month. (The Bureau of Economic Analysis expects to
have this report out two weeks earlier by 2006.)
Frequency: Monthly.
Source: Bureau of Economic Analysis, Department of Commerce.
Revisions: After the initial release, data on income, spending, and savings
undergoes revisions for the next several months as more complete
information comes in. The magnitude of the changes is usually modest.
Annual revisions are normally done every summer (in July or August), and
benchmark changes occur every four or five years to incorporate new data as
well as changes in methodology.
The Most Influential U.S. Economic Indicators
EMPLOYMENT SITUATION
Market Sensitivity: Very high.
What Is It: The most eagerly awaited news on the economy. Are jobs being
created? It has great economic and political significance.
News Release on Internet: http://stats.bls.gov/news.release/empsit.toc.htm
Home Web Address: http://stats.bls.gov/
Release Time: 8:30 A.M. (ET); announced generally on the first Friday of each
month and covers the month just concluded.
Frequency: Monthly.
Source: Bureau of Labor Statistics, Department of Labor.
Revisions: Can be major. Revisions often go back two months with each release.
The government does benchmark changes for the establishment (or payroll)
survey every June. Benchmark changes for the household survey are rare,
about every 10 years or so.
Market Sensitivity: Very high.
What Is It: The most eagerly awaited news on the economy. Are jobs being
created? It has great economic and political significance.
News Release on Internet: http://stats.bls.gov/news.release/empsit.toc.htm
Home Web Address: http://stats.bls.gov/
Release Time: 8:30 A.M. (ET); announced generally on the first Friday of each
month and covers the month just concluded.
Frequency: Monthly.
Source: Bureau of Labor Statistics, Department of Labor.
Revisions: Can be major. Revisions often go back two months with each release.
The government does benchmark changes for the establishment (or payroll)
survey every June. Benchmark changes for the household survey are rare,
about every 10 years or so.
Sunday, December 21, 2008
4 Hour MACD Forex Strategy
Moving Averages:
First of all are the moving Averages that we are going to use.
1. 365 Exponential Moving Average (365EMA)
2. 200 Simple Moving Average (200SMA)
3. 89 Simple Moving Average (89SMA)
4. 21 Exponential Moving Average (21EMA)
5. 8 Exponential Moving Average (8EMA)
MACD:
MACD settings at
1. Fast EMA 5
2. Slow EMA 13
3. MACD EMA 1
First of all are the moving Averages that we are going to use.
1. 365 Exponential Moving Average (365EMA)
2. 200 Simple Moving Average (200SMA)
3. 89 Simple Moving Average (89SMA)
4. 21 Exponential Moving Average (21EMA)
5. 8 Exponential Moving Average (8EMA)
MACD:
MACD settings at
1. Fast EMA 5
2. Slow EMA 13
3. MACD EMA 1
Institutional Forex System
The strategy consists of placing two trades on the same side of the
market.
Trade 1- Short the EUR/USD
Trade 2- Short the USD/CHF
We don’t care which direction the market goes as long as it goes. This
may be the opposite of strategies you have tried in the past where
there is an equal chance of you losing on the position as there is
gaining. If you go long @ 1.2879, there is a 50% chance it will go up
and a 50% chance it will go down. That’s the same odds as playing
black or red on a roulette wheel. While most individual investors are
playing the guessing game and hoping the trade will go in their favor,
the institutions know they will make money. This is why individual
traders are so inconsistent in the long run because one month you
may hit it big if you guess right and the next two months you may
blow out your account. We are not interested in the big hit; we are
looking for a small piece of the pie on a consistent basis.
The Institutional Forex System gives you everything you need to trade
like a pro. A simple strategy that works in live trading that anyone
can do. In addition, it teaches how to set up proper money
management, the key to long term successful trading. This system
completely eliminates the human emotion out of your trading, which is
critical when trading your own funds. This system is a solution for the
3 biggest factors that cause retail traders to lose in the Forex market:
1. Lack of a concrete trading plan
2. Lack of or improper money management
3. Allowing emotions to dictate trading decisions
Stop following the herd of sheep into the slaughter house and start
trading with the Smart Money.
market.
Trade 1- Short the EUR/USD
Trade 2- Short the USD/CHF
We don’t care which direction the market goes as long as it goes. This
may be the opposite of strategies you have tried in the past where
there is an equal chance of you losing on the position as there is
gaining. If you go long @ 1.2879, there is a 50% chance it will go up
and a 50% chance it will go down. That’s the same odds as playing
black or red on a roulette wheel. While most individual investors are
playing the guessing game and hoping the trade will go in their favor,
the institutions know they will make money. This is why individual
traders are so inconsistent in the long run because one month you
may hit it big if you guess right and the next two months you may
blow out your account. We are not interested in the big hit; we are
looking for a small piece of the pie on a consistent basis.
The Institutional Forex System gives you everything you need to trade
like a pro. A simple strategy that works in live trading that anyone
can do. In addition, it teaches how to set up proper money
management, the key to long term successful trading. This system
completely eliminates the human emotion out of your trading, which is
critical when trading your own funds. This system is a solution for the
3 biggest factors that cause retail traders to lose in the Forex market:
1. Lack of a concrete trading plan
2. Lack of or improper money management
3. Allowing emotions to dictate trading decisions
Stop following the herd of sheep into the slaughter house and start
trading with the Smart Money.
Saturday, December 20, 2008
The Conflicted Trader
The lure of winning fuels her greed.
How much she wants and wanting taunts,
But fear of losing blocks her deed.
A hesitation halts her speed.
To trade, to wait, the wanting haunts;
The lure of winning fuels her greed.
A raging market calls to feed.
Enormous wealth and now it flaunts.
But fear of losing blocks her deed.
She cannot act despite her need.
The dream of riches tied with taunts,
The lure of winning fuels her greed.
Act now, act now, her heart will plead.
It’s hers to have, the movement flaunts.
But fear of losing blocks her deed.
She cannot lose! That is her creed.
Despite the hope, oh how it haunts!
The lure of winning fuels her greed.
But fear of losing blocks her deed.
How much she wants and wanting taunts,
But fear of losing blocks her deed.
A hesitation halts her speed.
To trade, to wait, the wanting haunts;
The lure of winning fuels her greed.
A raging market calls to feed.
Enormous wealth and now it flaunts.
But fear of losing blocks her deed.
She cannot act despite her need.
The dream of riches tied with taunts,
The lure of winning fuels her greed.
Act now, act now, her heart will plead.
It’s hers to have, the movement flaunts.
But fear of losing blocks her deed.
She cannot lose! That is her creed.
Despite the hope, oh how it haunts!
The lure of winning fuels her greed.
But fear of losing blocks her deed.
Some Beliefs that Support Successful Trading
• I’m in control of my own actions trading.
• I’m in control of myself and my future.
• I learn through my mistakes.
• I learn through my successes.
• My past failures have strengthened me.
• Each day I become a more seasoned, more effective trader.
• I get stronger and wiser every day by facing risk and adversity.
• There will be other major opportunities besides this one.
• The market provides me with oceans of opportunity.
• I know why I want to create wealth trading.
• There are no limits to the amount of money I can make.
• I use my money wisely for my own well being and the benefit of others.
• I can handle anything that comes up.
• I can solve any problem.
• Risk is essential to reward.
• I’m willing to give in order to receive.
• I always manage the risk.
• I accept the unknowability of the future.
• I prepare for surprise random events.
• I am committed to being an excellent trader.
• I know my rules, and I follow my rules.
• I value money because it has great power for good.
• Money comes to me easily.
• A part of all I make is mine to keep.
• I want to succeed as a trader.
• I deserve to succeed as a trader.
• I love trading. It is a privilege to trade.
• I am willing to work hard for what I believe in.
• I will do the necessary work and essential play to be a superior trader.
Ruth Barrons Roosevelt "Keeping a Cool Head in The Hot Market"
• I’m in control of myself and my future.
• I learn through my mistakes.
• I learn through my successes.
• My past failures have strengthened me.
• Each day I become a more seasoned, more effective trader.
• I get stronger and wiser every day by facing risk and adversity.
• There will be other major opportunities besides this one.
• The market provides me with oceans of opportunity.
• I know why I want to create wealth trading.
• There are no limits to the amount of money I can make.
• I use my money wisely for my own well being and the benefit of others.
• I can handle anything that comes up.
• I can solve any problem.
• Risk is essential to reward.
• I’m willing to give in order to receive.
• I always manage the risk.
• I accept the unknowability of the future.
• I prepare for surprise random events.
• I am committed to being an excellent trader.
• I know my rules, and I follow my rules.
• I value money because it has great power for good.
• Money comes to me easily.
• A part of all I make is mine to keep.
• I want to succeed as a trader.
• I deserve to succeed as a trader.
• I love trading. It is a privilege to trade.
• I am willing to work hard for what I believe in.
• I will do the necessary work and essential play to be a superior trader.
Ruth Barrons Roosevelt "Keeping a Cool Head in The Hot Market"
The Dilemma
by. Ruth Barrons Roosevelt
At the core of trading—indeed investing as well—lies a crucial
enigma. A trader must protect his capital: he must not lose his
medium of investment. At the same time he must take advantage of
the opportunities that come his way, but in so doing, he puts his capital
at risk.
It’s a balancing act. The trader must continually measure risk
with reward and keep the two in a state of counterpoise. Truly, if
nothing is ventured, nothing is gained. If you clutch the bird in the
hand, you will not catch the two in the bush. Too much hesitation
in the face of movement, too much reluctance to enter a market, and
the tide of fortune passes.
At the same time, rushing into a situation before it’s mature
leads to false signals and false hopes. In rushing the bush, you could
lose the bird in the hand.
The trader’s conundrum is to preserve the money she has
while growing it at a rate commensurate with what the markets are
offering.
Once the entry is commenced, the problem is just beginning.
How long does she stay? How does she know when she’s wrong?
How does she know when the move has ended?
Grabbing small profits in a major move is a recipe for mediocrity
at best and failure at worst. We’ve all heard the saying: “the
money is made in the sitting.” And, indeed, great fortunes have been
made staying with a position through its ups and downs.
The Warren Buffet’s of this world have proven that.
On the other hand, we’ve all heard the stories of wealthy
investors who die broke and broken hearted. Recently, I heard of a
man who made $20,000,000. in the run up of the stock market going
into March of 2000. Today he’s lucky if he has $10,000. of it left.
At the core of trading—indeed investing as well—lies a crucial
enigma. A trader must protect his capital: he must not lose his
medium of investment. At the same time he must take advantage of
the opportunities that come his way, but in so doing, he puts his capital
at risk.
It’s a balancing act. The trader must continually measure risk
with reward and keep the two in a state of counterpoise. Truly, if
nothing is ventured, nothing is gained. If you clutch the bird in the
hand, you will not catch the two in the bush. Too much hesitation
in the face of movement, too much reluctance to enter a market, and
the tide of fortune passes.
At the same time, rushing into a situation before it’s mature
leads to false signals and false hopes. In rushing the bush, you could
lose the bird in the hand.
The trader’s conundrum is to preserve the money she has
while growing it at a rate commensurate with what the markets are
offering.
Once the entry is commenced, the problem is just beginning.
How long does she stay? How does she know when she’s wrong?
How does she know when the move has ended?
Grabbing small profits in a major move is a recipe for mediocrity
at best and failure at worst. We’ve all heard the saying: “the
money is made in the sitting.” And, indeed, great fortunes have been
made staying with a position through its ups and downs.
The Warren Buffet’s of this world have proven that.
On the other hand, we’ve all heard the stories of wealthy
investors who die broke and broken hearted. Recently, I heard of a
man who made $20,000,000. in the run up of the stock market going
into March of 2000. Today he’s lucky if he has $10,000. of it left.
Thursday, December 18, 2008
Using Fibonacci levels to detect range bound and trending markets
Using Fibonacci levels to detect range bound and trending markets
(Why we shouldn’t buy breakouts):
Thomas Long, FX Power Course Instructor
The FX-market oscillates on a regular basis between range bound and trending markets. In range bound market conditions, traders typically adopt a simple buy low, sell high approach, where as trending market climates call for traders to trade with the trend. However detecting whether the market is currently in a range bound or trending environment can be tricky, and costly if applied inaccurately. With that said, the Fibonacci levels can provide a valuable insight to the current market climate and the appropriate trading approach.
The first chart below shows a significant rally to the upside, as the trend reversed direction, the market then passed through all 3-commonly used Fibonacci levels; 38.2%, 50%, & 61.8%. Due to the fact that not one of our Fibonacci levels established our new support, we can extrapolate that a trend is not probable. It is important to keep in mind that trends exist when there is an uneven distribution of buyers and sellers, forcing the market to new high/low prices. However due to the fact that the market fell back below every Fibonacci line, indicates that the buyers were not in fact in control of the marketplace. Finally note how the market then accomplished a ‘slightly’ new low before reversing once again back to the upside. If we were to sell short the market at its slightly new low price, we would have certainly exited the trade at a loss.
(Why we shouldn’t buy breakouts):
Thomas Long, FX Power Course Instructor
The FX-market oscillates on a regular basis between range bound and trending markets. In range bound market conditions, traders typically adopt a simple buy low, sell high approach, where as trending market climates call for traders to trade with the trend. However detecting whether the market is currently in a range bound or trending environment can be tricky, and costly if applied inaccurately. With that said, the Fibonacci levels can provide a valuable insight to the current market climate and the appropriate trading approach.
The first chart below shows a significant rally to the upside, as the trend reversed direction, the market then passed through all 3-commonly used Fibonacci levels; 38.2%, 50%, & 61.8%. Due to the fact that not one of our Fibonacci levels established our new support, we can extrapolate that a trend is not probable. It is important to keep in mind that trends exist when there is an uneven distribution of buyers and sellers, forcing the market to new high/low prices. However due to the fact that the market fell back below every Fibonacci line, indicates that the buyers were not in fact in control of the marketplace. Finally note how the market then accomplished a ‘slightly’ new low before reversing once again back to the upside. If we were to sell short the market at its slightly new low price, we would have certainly exited the trade at a loss.
Sunday, December 14, 2008
Why We Trade
Brett N. Steenbarger, Ph.D.
Why do we trade? To be sure, trading allows us independence, the opportunity to work for ourselves. Trading also offers the prospects of a lifestyle in which evenings and weekends need not be consumed by work. Some of us crave the competitive aspect of trading, doing fresh battle each day. Others approach trading as a puzzle to be solved, deriving a sense of intellectual achievement. Finally, there is income. A successful trader can make seven figures in a year—and many of the traders I work with are living proof of that.
So why do they trade? Once you have the money, all of trading’s lifestyle advantages could easily be yours. Needs for competition and intellectual stimulation could be met in so many other ways. Why do traders remain traders long after they’ve won the game?
Perhaps we can illuminate this question by asking it of practitioners in other fields. Why do artists continue their craft long after they receive recognition for their paintings, novels, or films? Why do elite Special Forces troops stay in units that test their mettle even after they’ve earned their coveted badges? A gifted athlete such as Michael Jordan earned plenty of money and honors and, in fact, did retire on a couple of occasions—only to return to his game. Why?
There is something deep here that speaks to the nature of productive work. People retire from jobs and even careers, but they never abandon their callings. For some, work means something more than earning a living or achieving a lifestyle. Work is their path in life. It is the way they have chosen—or perhaps that has chosen them—for self-expression and self-development.
Suppose the pastor of a large, successful church wrote a book, made significant money, and promptly retired from the clergy and all religious life. What would that say? Surely, we would think, this person’s faith could not have been too heartfelt. But why should our productive work mean less to us than the clergy means to a devout pastor? Presumably, the religious life meets deep, important needs for the pastor. Is it really so different for the artist? The athlete? The trader?
The great professions are those that serve as personal playing fields. They are the arenas we choose to express and develop ourselves. In mastering a discipline, we cultivate self-mastery. In writing a poem or placing a large trade, we capture—in a single act—our vision of how we see the world at that moment. The great occupations are great precisely because they are such meaningful playing fields. Long after we’ve earned fame and fortune, the calling remains to be more than we are, to return to the arena and do battle with our limitations. The profound urge to extend the human grasp is common to all the great callings. To run faster, to capture more beauty, to predict ever better: in no small measure, our work is our pursuit of the godlike, however fleeting.
Maybe it is our different images of the godlike that animate our career choices. If my deepest view of godhood is that of a meek and all-forgiving Christ, perhaps I will be drawn to an occupation of service. If my deepest view is more akin to the ancient Greeks, whose gods sent heroes on quests, then my calling may be on a battlefield or a playing field. Either way, in work we find something divine within ourselves. Whether as scientists, monks, or traders, we strive for those moments when we are just a little closer to perfection, a little nearer to immortality. That is why we trade.
Why do we trade? To be sure, trading allows us independence, the opportunity to work for ourselves. Trading also offers the prospects of a lifestyle in which evenings and weekends need not be consumed by work. Some of us crave the competitive aspect of trading, doing fresh battle each day. Others approach trading as a puzzle to be solved, deriving a sense of intellectual achievement. Finally, there is income. A successful trader can make seven figures in a year—and many of the traders I work with are living proof of that.
So why do they trade? Once you have the money, all of trading’s lifestyle advantages could easily be yours. Needs for competition and intellectual stimulation could be met in so many other ways. Why do traders remain traders long after they’ve won the game?
Perhaps we can illuminate this question by asking it of practitioners in other fields. Why do artists continue their craft long after they receive recognition for their paintings, novels, or films? Why do elite Special Forces troops stay in units that test their mettle even after they’ve earned their coveted badges? A gifted athlete such as Michael Jordan earned plenty of money and honors and, in fact, did retire on a couple of occasions—only to return to his game. Why?
There is something deep here that speaks to the nature of productive work. People retire from jobs and even careers, but they never abandon their callings. For some, work means something more than earning a living or achieving a lifestyle. Work is their path in life. It is the way they have chosen—or perhaps that has chosen them—for self-expression and self-development.
Suppose the pastor of a large, successful church wrote a book, made significant money, and promptly retired from the clergy and all religious life. What would that say? Surely, we would think, this person’s faith could not have been too heartfelt. But why should our productive work mean less to us than the clergy means to a devout pastor? Presumably, the religious life meets deep, important needs for the pastor. Is it really so different for the artist? The athlete? The trader?
The great professions are those that serve as personal playing fields. They are the arenas we choose to express and develop ourselves. In mastering a discipline, we cultivate self-mastery. In writing a poem or placing a large trade, we capture—in a single act—our vision of how we see the world at that moment. The great occupations are great precisely because they are such meaningful playing fields. Long after we’ve earned fame and fortune, the calling remains to be more than we are, to return to the arena and do battle with our limitations. The profound urge to extend the human grasp is common to all the great callings. To run faster, to capture more beauty, to predict ever better: in no small measure, our work is our pursuit of the godlike, however fleeting.
Maybe it is our different images of the godlike that animate our career choices. If my deepest view of godhood is that of a meek and all-forgiving Christ, perhaps I will be drawn to an occupation of service. If my deepest view is more akin to the ancient Greeks, whose gods sent heroes on quests, then my calling may be on a battlefield or a playing field. Either way, in work we find something divine within ourselves. Whether as scientists, monks, or traders, we strive for those moments when we are just a little closer to perfection, a little nearer to immortality. That is why we trade.
Saturday, December 13, 2008
Forex Trading Tips
Tip 1.
Gamblers go to casino. All unproved, spontaneous actions in Forex trading — are a part of pure gambling.
Any attempt to trade without analysis and studying the market is equal to a game. Game is fun except when you are losing real money...
Tip 2.
Never invest money into a real Forex account until you practice on a Forex Demo account!
Allow at least 2 month for demo trading. Consider this: 90% of beginners fail to succeed in the real money market only because of lack of knowledge, practice and discipline. Those remaining 10% of successful traders had been sharpening and shaping their skills on demo accounts for years before entering the real market.
A good demo account to start practicing with could be, for example, FXGame from Oanda.
Tip 3.
Go with the trend!
Trend is your friend. Trade with the trend to maximize your chances to succeed. Trading against the trend won't "kill" a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.
Tip 4.
Always take a look at the time frame bigger than the one you've chosen to trade in.
It gives the bigger picture of market price movements and so helps to clearly define the trend. For example, when trading in 15 minute time frame, take a look at 1 hour chart; trading hourly would require obtaining a picture of daily, weekly price movements.
If a trend is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying big trends, what's happening in the market here and now (during 5-10 minute time frame) should be of only importance to a Forex scalper.
Tip 5.
Never risk more than 2-3% of the total trading account.
One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavorable conditions on the market, while an unsuccessful trader will blow up his account after 5-10 unprofitable trades in the row.
Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in money management approach. To introduce you to money management, let's get one fact: losing 50% of total account requires making 100% return from the rest of money just to restore the original balance.
Tip 6.
Put emotions down. Trade calm.
Don't try to revenge after losing the trade. Don't be greedy by adding lots of positions when winning.
Overreaction blocks clear thinking and as a result will cost you money. Overtrading can shake your money management and dramatically increase trading risks.
Tip 7.
Choose the time frame that is right for you.
Choosing wise means that you are comfortable and have time enough to analyze the market, place and close orders etc. Some people can't wait for hours for the price to make a move, they like action and therefore prefer smaller time frames. On the contrary, for others 10-15 minutes is a hustle to be able to make the right decision.
Tip 8.
Not trading or standing aside is a position.
When in doubt — stay out. If it is not clear where the market will move — don't trade. In this case saving present capital is and absolutely better choice than risking and losing money.
Tip 9.
Learn to use protective stops. Respect them and don't move.
Hoping that market will turn in your direction is a very delusive hope. By moving a stop loss further a trader increases his chances to end up with much bigger loss.
When holding to a losing trade too long, and even if funds permit, traders as a rule are very reluctant to accept big losses, thus often continue "hoping for best". In the mean time invested money is stuck in the open trade for unknown period of time (weeks and even months) and cannot be used for opening new positions. Not working money — dead money. Also this will result in constant interest payments for holding open positions.
Tip 10.
"Keep it simple, stupid" — applies to indicators, signals and trading strategies.
Too much information will create a controversial picture of where to trade and when not to. To avoid lots of confusion create a simple but working method of trading Forex.
Tip 11.
Think about risk/reward ratio before entering each trade.
How much money can you lose in this trade? How much can you gain? Now, make a decision if the trade is worth entering.
Example: if trader is looking for possible 35 pips gain and possible 25 pips of loss, such conditions are not worth trading. Compare it with the situation when a trader has 100-120 pips of potential gain and only 10-20 pips of possible loss. This is the trade to open!
Tip 12.
Never add positions to a losing trade. Do add positions when the trade has proven to be profitable.
Don't allow a couple of losing trades in a row become a snowball of losing trades. When it is obviously not a good day, turn the monitor off. Often not trading for one day can help to break a chain of consecutive losses. Trying to get revenge can often make things worse.
Tip 13.
Let your profits run.
Let your position be open for as long as the market wishes to reward you. Of course, for this traders need a good exit strategy, otherwise they risk to give all profits back...
Running two or more open trades gives an option to close some positions earlier and keep others running for higher profits.
Tip 14.
Cut your losses short.
It's better to finish unprofitable trade quickly than wait for the situation to get worse. Don't put a stop loss too far — it's your money you risk. Better calculate the best spot to enter when a potential loss would be minimized. Again: respect your stop and don't move it "cherishing hopes".
Tip 15.
Trade currency pairs in respect to their active market hours.
Learn about overlapping market hours: when two markets are open and highest volume of trades is conducted.
For example, Australian and Japanese trading sessions are overlapped from 8pm to 1 am EST. At that time trader can successfully trade AUD/JPY currency pair.
Tip 16.
Choose the right day to trade.
This recomendation is often wrongly taken as an optional thing, because everyone knows that Forex market is open 24 hours a day 7 days a week. Yet, choosing the time to trade can make a difference between successful and hopeless trading.
It's proved and highly recommended not to trade on Mondays, when the market has recently awaken and is making first "probation steps" to form a new or confirm a current trend; and on Fridays afternoon, during the huge volume of closing trades. The best days to trade are Tuesdays, Wednesdays and Thursdays.
Tip 17.
Learn about Fibonacci levels and how to use them for trading.
Fibonacci can be very helpful in trading, even partially using the study, for example, to determine the best exit, can bring traders to a new edge of trading.
Tip 18.
Always ensure that a signaling bar/candle on the chart is fully formed and closed before you enter a trade.
A golden rule of trading: "Always trade what you see, not what you would like to see" is the best explanation here.
Tip 19.
If you ask for someone else's advice as about how and when to trade
in other words, choose to rely on live trading signals from other traders, make sure you do it for your benefit, not for disaster. If you use such signals to discover how other traders do analysis and study on the price — you are on the right track and soon you'll be able to do analysis yourself.
But if you're just blindly following recommendations and your only task is to push the correct button... think again.
Tip 20.
Using a highly leveraged account comes at a cost.
It will, of course, give a trader more financial gear to trade, and also trader's broker will be happy as it will mean higher spread income for him. On the other side a trader signs up for additional risks that multiply with higher leverage in a "friendly tight" proportion.
Tip 21.
Learn to measure trading success by the end of the day, week and then month and year.
Do not judge about your trading success on a single trade. To be successful traders don't need to win every trade, they also don't become rich in one trade — they need to be profitable in a long run.
Tip 22.
There is no such thing as a secret approach to understanding the market.
Take the time to develop a solid trading system and find out that the secret to trading success lies in hard work and constant learning.
Gamblers go to casino. All unproved, spontaneous actions in Forex trading — are a part of pure gambling.
Any attempt to trade without analysis and studying the market is equal to a game. Game is fun except when you are losing real money...
Tip 2.
Never invest money into a real Forex account until you practice on a Forex Demo account!
Allow at least 2 month for demo trading. Consider this: 90% of beginners fail to succeed in the real money market only because of lack of knowledge, practice and discipline. Those remaining 10% of successful traders had been sharpening and shaping their skills on demo accounts for years before entering the real market.
A good demo account to start practicing with could be, for example, FXGame from Oanda.
Tip 3.
Go with the trend!
Trend is your friend. Trade with the trend to maximize your chances to succeed. Trading against the trend won't "kill" a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.
Tip 4.
Always take a look at the time frame bigger than the one you've chosen to trade in.
It gives the bigger picture of market price movements and so helps to clearly define the trend. For example, when trading in 15 minute time frame, take a look at 1 hour chart; trading hourly would require obtaining a picture of daily, weekly price movements.
If a trend is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying big trends, what's happening in the market here and now (during 5-10 minute time frame) should be of only importance to a Forex scalper.
Tip 5.
Never risk more than 2-3% of the total trading account.
One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavorable conditions on the market, while an unsuccessful trader will blow up his account after 5-10 unprofitable trades in the row.
Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in money management approach. To introduce you to money management, let's get one fact: losing 50% of total account requires making 100% return from the rest of money just to restore the original balance.
Tip 6.
Put emotions down. Trade calm.
Don't try to revenge after losing the trade. Don't be greedy by adding lots of positions when winning.
Overreaction blocks clear thinking and as a result will cost you money. Overtrading can shake your money management and dramatically increase trading risks.
Tip 7.
Choose the time frame that is right for you.
Choosing wise means that you are comfortable and have time enough to analyze the market, place and close orders etc. Some people can't wait for hours for the price to make a move, they like action and therefore prefer smaller time frames. On the contrary, for others 10-15 minutes is a hustle to be able to make the right decision.
Tip 8.
Not trading or standing aside is a position.
When in doubt — stay out. If it is not clear where the market will move — don't trade. In this case saving present capital is and absolutely better choice than risking and losing money.
Tip 9.
Learn to use protective stops. Respect them and don't move.
Hoping that market will turn in your direction is a very delusive hope. By moving a stop loss further a trader increases his chances to end up with much bigger loss.
When holding to a losing trade too long, and even if funds permit, traders as a rule are very reluctant to accept big losses, thus often continue "hoping for best". In the mean time invested money is stuck in the open trade for unknown period of time (weeks and even months) and cannot be used for opening new positions. Not working money — dead money. Also this will result in constant interest payments for holding open positions.
Tip 10.
"Keep it simple, stupid" — applies to indicators, signals and trading strategies.
Too much information will create a controversial picture of where to trade and when not to. To avoid lots of confusion create a simple but working method of trading Forex.
Tip 11.
Think about risk/reward ratio before entering each trade.
How much money can you lose in this trade? How much can you gain? Now, make a decision if the trade is worth entering.
Example: if trader is looking for possible 35 pips gain and possible 25 pips of loss, such conditions are not worth trading. Compare it with the situation when a trader has 100-120 pips of potential gain and only 10-20 pips of possible loss. This is the trade to open!
Tip 12.
Never add positions to a losing trade. Do add positions when the trade has proven to be profitable.
Don't allow a couple of losing trades in a row become a snowball of losing trades. When it is obviously not a good day, turn the monitor off. Often not trading for one day can help to break a chain of consecutive losses. Trying to get revenge can often make things worse.
Tip 13.
Let your profits run.
Let your position be open for as long as the market wishes to reward you. Of course, for this traders need a good exit strategy, otherwise they risk to give all profits back...
Running two or more open trades gives an option to close some positions earlier and keep others running for higher profits.
Tip 14.
Cut your losses short.
It's better to finish unprofitable trade quickly than wait for the situation to get worse. Don't put a stop loss too far — it's your money you risk. Better calculate the best spot to enter when a potential loss would be minimized. Again: respect your stop and don't move it "cherishing hopes".
Tip 15.
Trade currency pairs in respect to their active market hours.
Learn about overlapping market hours: when two markets are open and highest volume of trades is conducted.
For example, Australian and Japanese trading sessions are overlapped from 8pm to 1 am EST. At that time trader can successfully trade AUD/JPY currency pair.
Tip 16.
Choose the right day to trade.
This recomendation is often wrongly taken as an optional thing, because everyone knows that Forex market is open 24 hours a day 7 days a week. Yet, choosing the time to trade can make a difference between successful and hopeless trading.
It's proved and highly recommended not to trade on Mondays, when the market has recently awaken and is making first "probation steps" to form a new or confirm a current trend; and on Fridays afternoon, during the huge volume of closing trades. The best days to trade are Tuesdays, Wednesdays and Thursdays.
Tip 17.
Learn about Fibonacci levels and how to use them for trading.
Fibonacci can be very helpful in trading, even partially using the study, for example, to determine the best exit, can bring traders to a new edge of trading.
Tip 18.
Always ensure that a signaling bar/candle on the chart is fully formed and closed before you enter a trade.
A golden rule of trading: "Always trade what you see, not what you would like to see" is the best explanation here.
Tip 19.
If you ask for someone else's advice as about how and when to trade
in other words, choose to rely on live trading signals from other traders, make sure you do it for your benefit, not for disaster. If you use such signals to discover how other traders do analysis and study on the price — you are on the right track and soon you'll be able to do analysis yourself.
But if you're just blindly following recommendations and your only task is to push the correct button... think again.
Tip 20.
Using a highly leveraged account comes at a cost.
It will, of course, give a trader more financial gear to trade, and also trader's broker will be happy as it will mean higher spread income for him. On the other side a trader signs up for additional risks that multiply with higher leverage in a "friendly tight" proportion.
Tip 21.
Learn to measure trading success by the end of the day, week and then month and year.
Do not judge about your trading success on a single trade. To be successful traders don't need to win every trade, they also don't become rich in one trade — they need to be profitable in a long run.
Tip 22.
There is no such thing as a secret approach to understanding the market.
Take the time to develop a solid trading system and find out that the secret to trading success lies in hard work and constant learning.
Forex Fundamental Strategies and Analysis
What is fundamental analysis?
Fundamental analysis in Forex is a type of market analysis which involves studying of the economic situation of countries to trade currencies more effectively.
It gives information on how the big political and economical events influence currency market. Figures and statements given in speeches by important politicians and economists are known among the traders as economical announcements that have great impact on currency market moves. In particular, announcements related to United States economy and politics are the primary to keep an eye on.
What is economic calendar?
Economic calendar is created by economists where they predict different economics figures and values according to previous months. It contains next data:
Date — Time — Currency — Data Released — Actual — Forecast — Previous
For example: If the forecast is better than the previous figure, then US dollar usually is going to strengthen against other currencies.
But when news are due, traders have to check the actual data.
If to look at oil prices, a rising price will result in weakening of currencies for countries which depend on huge oil import, e.g. America, Japan.
A good example of detailed economic calendar can be found here: Forex Economic Calendar
What moves EUR/USD?
US economic indicators by Rank:
1. US Non Farm Payroll — measures new jobs created in States.
2. Interest rates — FOMC rate decisions.
3. US Trade Balance, European Trade Balance — a proportion between exports and imports in US economy.
4. U.S. Current Account
5. US Treasury Inflow Capital (TIC) Data — a measure of how much foreign buying of country's securities takes place.
6. US Gross domestic product (GDP) — a measurement of growth in economy.
7. Federal Open Market Committee (FOMC) Rate Decisions — data about changes in currency rates.
8. US Retail Sales — a measure of strength of consumer expenditure.
9. Consumer price index (CPI) — a measure of inflation in Europe.
Note, that because the US dollar is involved in over 80% of all currency trades, US economic data tends to be the most important in the Forex market.
What moves USD/JPY?
Besides US economic indicators, there are important data of Japan economy with its indicators:
Bank of Japan Monetary Policy Meeting — decides on measures to preserve strength of the currency.
Japanese Trade Balance — Japanese imports versus exports.
Gross domestic product (GDP) — growth in an economy.
Consumer price index (CPI) — a measure of inflation.
Industrial production index — a measure of activity in the Japanese manufacturing sector
Retail sales — a measure of strength of consumer expenditure.
Tankan report — assessment of Japanese business conditions: proportion of "optimistic" businesses to "pessimistic" ones.
Unemployment rate
Fundamentals for GBP/USD
All US economic indicators should be watched plus:
UK Housing Prices — number one indicator for Pound, UK Housing Prices are primary gauge of inflation in the UK.
Bank of England Meeting — provides an outline of monetary policy and changes to currency interest rates.
UK Unemployment rate
UK Retail Sales
Fundamental analysis in Forex is a type of market analysis which involves studying of the economic situation of countries to trade currencies more effectively.
It gives information on how the big political and economical events influence currency market. Figures and statements given in speeches by important politicians and economists are known among the traders as economical announcements that have great impact on currency market moves. In particular, announcements related to United States economy and politics are the primary to keep an eye on.
What is economic calendar?
Economic calendar is created by economists where they predict different economics figures and values according to previous months. It contains next data:
Date — Time — Currency — Data Released — Actual — Forecast — Previous
For example: If the forecast is better than the previous figure, then US dollar usually is going to strengthen against other currencies.
But when news are due, traders have to check the actual data.
If to look at oil prices, a rising price will result in weakening of currencies for countries which depend on huge oil import, e.g. America, Japan.
A good example of detailed economic calendar can be found here: Forex Economic Calendar
What moves EUR/USD?
US economic indicators by Rank:
1. US Non Farm Payroll — measures new jobs created in States.
2. Interest rates — FOMC rate decisions.
3. US Trade Balance, European Trade Balance — a proportion between exports and imports in US economy.
4. U.S. Current Account
5. US Treasury Inflow Capital (TIC) Data — a measure of how much foreign buying of country's securities takes place.
6. US Gross domestic product (GDP) — a measurement of growth in economy.
7. Federal Open Market Committee (FOMC) Rate Decisions — data about changes in currency rates.
8. US Retail Sales — a measure of strength of consumer expenditure.
9. Consumer price index (CPI) — a measure of inflation in Europe.
Note, that because the US dollar is involved in over 80% of all currency trades, US economic data tends to be the most important in the Forex market.
What moves USD/JPY?
Besides US economic indicators, there are important data of Japan economy with its indicators:
Bank of Japan Monetary Policy Meeting — decides on measures to preserve strength of the currency.
Japanese Trade Balance — Japanese imports versus exports.
Gross domestic product (GDP) — growth in an economy.
Consumer price index (CPI) — a measure of inflation.
Industrial production index — a measure of activity in the Japanese manufacturing sector
Retail sales — a measure of strength of consumer expenditure.
Tankan report — assessment of Japanese business conditions: proportion of "optimistic" businesses to "pessimistic" ones.
Unemployment rate
Fundamentals for GBP/USD
All US economic indicators should be watched plus:
UK Housing Prices — number one indicator for Pound, UK Housing Prices are primary gauge of inflation in the UK.
Bank of England Meeting — provides an outline of monetary policy and changes to currency interest rates.
UK Unemployment rate
UK Retail Sales
Free videos: How to 'build a biz' in 4 days!
Have you heard all the buzz about Derek Gehl's FREE
"Build-a-Biz" video training series that's going to be
released next week?
Here's the scoop: Derek was challenged by a frustrated
blog reader to "put his money where his mouth is" and
PROVE it's possible to build a niche website from
scratch in ONE WEEK or less.
... And Derek's agreed to do it!
Not only that -- he's going to videotape the whole
process!
These videos will be released over a 4-day period
(April 21-24th) -- so YOU can use the strategies
Derek's demonstrating to create your OWN money-making
website in just a matter of days!
You can register for these free "hands-on" instructional
videos NOW at:
here
I actually spoke to Derek the other day to get the full
"low-down" on this "Build-a-Biz" challenge -- and he said
the videos will cover the following EXTREMELY POWERFUL
principles...
DAY #1: Find your niche and a product to sell
DAY #2: Write salescopy that gets people to BUY
DAY #3: Build a website that WORKS!
DAY #4: Start driving traffic with PPC and SEO
As Derek uses these strategies to create his "built from
scratch" website, he'll explain how YOU can make them
work for your OWN website.
So if you want to learn the steps you need to take to build
your own money-making website in as little as ONE WEEK (or
less!)...
... Reserve your FREE "front-row seat" NOW at:
here
P.S. People are saying Derek must have some trick up his
sleeve to be able to pull this off -- or that he must have
some sort of crazy new tool to build a money-making website
so FAST.
As an insider, I know he DOES have something in his corner...
Something that's about to take the Internet marketing world
by STORM.
To discover what this "mystery tool" is, sign up for Derek's
FREE videos at:
here
"Build-a-Biz" video training series that's going to be
released next week?
Here's the scoop: Derek was challenged by a frustrated
blog reader to "put his money where his mouth is" and
PROVE it's possible to build a niche website from
scratch in ONE WEEK or less.
... And Derek's agreed to do it!
Not only that -- he's going to videotape the whole
process!
These videos will be released over a 4-day period
(April 21-24th) -- so YOU can use the strategies
Derek's demonstrating to create your OWN money-making
website in just a matter of days!
You can register for these free "hands-on" instructional
videos NOW at:
here
I actually spoke to Derek the other day to get the full
"low-down" on this "Build-a-Biz" challenge -- and he said
the videos will cover the following EXTREMELY POWERFUL
principles...
DAY #1: Find your niche and a product to sell
DAY #2: Write salescopy that gets people to BUY
DAY #3: Build a website that WORKS!
DAY #4: Start driving traffic with PPC and SEO
As Derek uses these strategies to create his "built from
scratch" website, he'll explain how YOU can make them
work for your OWN website.
So if you want to learn the steps you need to take to build
your own money-making website in as little as ONE WEEK (or
less!)...
... Reserve your FREE "front-row seat" NOW at:
here
P.S. People are saying Derek must have some trick up his
sleeve to be able to pull this off -- or that he must have
some sort of crazy new tool to build a money-making website
so FAST.
As an insider, I know he DOES have something in his corner...
Something that's about to take the Internet marketing world
by STORM.
To discover what this "mystery tool" is, sign up for Derek's
FREE videos at:
here
A Lesson in Trading Psychology
Brett N. Steenbarger, Ph.D
Back in 2004, I joined Kingstree Trading, LLC, a proprietary trading firm in
One lesson particularly stands out in my mind. A trader saw buying come into the market, and he quickly jumped on board. He saw that the odds of taking out a recent high were good, given the size of the buying. To his surprise, however, the trade stalled out before the target and reversed. He quickly exited with a tick loss.
He turned to me and said, "I just paid for information."
When the market bounced higher a few ticks several minutes later, the volume was weak. No big players were taking the long side. He aggressively sold and quickly made a couple of points.
He placed a good trade, and it didn't work out. He didn't view that as a threat, as a loss, or as a failure.
He viewed it as information. The market was telling him that we weren't going to take out the recent high.
How he entered the first trade and exited it and how he used the loss to prepare himself for the winning trade: *There* was a clinic in trading psychology.
If your setups are valid, there are only two kinds of trades: Those that make you money and those that give you information.
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