Fed Members Continued To See Tapering This Year, Despite The September Disappointment

Although the Fed failed to announce tapering in September, the FOMC minutes unveiled that most policymakers expect it to begin this year. The minutes showed that the Fed decision to not taper last month was driven by the tightening in financial conditions, uncertainty over the fiscal outlook and the ambiguous economic data released since the June meeting. Meanwhile, policymakers were divided into 2 camps when considering whether to taper with the first camp mainly concerning about whether economic conditions warranted tapering while the second focused on how the tapering decision would affect the credibility of the Fed monetary stance.

The minutes indicated that some members saw financial conditions as tighter and a risk from "sizable increases in interest rates' although the intermeeting data suggested that the economy was 'expanding at a moderate pace'. Meanwhile, 'household spending and business fixed investment advanced, and the housing sector was strengthening, but mortgage rates had risen further and fiscal policy was restraining growth'. Yet, others viewed that 'cumulative progress' in labor markets since the beginning of the QE warranted reduction of stimulus. They believed that monetary policy credibility would be 'best served by announcing a downward adjustment in asset purchases' at the meeting while any postponement 'of such an announcement to later in the year or beyond could have significant implications for the effectiveness of Committee communications'.

Concerning the forward guidance, some members expressed the concerned that a 'delay could potentially undermine the credibility or predictability of monetary policy by, for example, increasing uncertainty about the Committee's reaction function and about its commitment to the forward guidance for the federal funds rate, with the result of an increase in volatility in financial markets'. The Fed members also 'discussed the potential for clarifying or strengthening the Committee's forward guidance' and the steps suggested include 'stating that the Committee would not raise its target for the federal funds rate if inflation was expected to run below a given level or providing additional information on the Committee's intentions regarding the federal funds rate after the 6.5% unemployment threshold was reached'.

Policymakers had a vigorous debate about whether to taper in September and how the process should work. It's stated in the minutes that 'a few participants expressed a preference for not cutting MBS purchases but reducing purchases only of Treasury securities initially, with the intent of continuing to support the recovery in the housing sector'. With respect to the economic projections, the minutes indicated that 'most participants viewed their economic projections as broadly consistent with a slowing in the pace of the Committee's purchases of longer term securities this year and the completion of the program in mid-2014'.

In short, the minutes were a dovish one. Yet, most member continued to expect tapering to begin later this year but economic data, especially those reflecting the labor market situation, are the deciding factors.

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EXPLOITING CURRENCY OPTIONS EXPIRIES FOR FOREX TRADING

Options are contracts that give the buyer the right to buy or sell an asset at a pre-specified time and price. In return, the seller receives a fee for writing the contract which is termed a premium. A put option is one in which the terms of the contract grant the right to sell the underlying, and a call option is one where the right to buy is granted. Since we will only explore the exploitation of options market data for the benefit of the spot trader, there’s no need to examine the details of this trade. Here we invite the trader to regard the currency options market as a closed box, and to concern himself merely with the aspects that we will utilize to predict the movements of spot.

The strategies we will discuss are simple and easy to use, and depend on the exploitation of implied volatility for long term trades and expiration data for short term use. To utilize these methods we only need to understand a few simple concepts.

* Strike price: This is the price at which the option will grant a payout, in other words, it will register a profit for the option buyer, depending on the kind of option contract.
* Expiry date: This is the date at which the contract is settled, and payments are made. This is perhaps the most important data for trading spot forex.
* Option size: The payout that the option contract stipulates.

Data on open currency options contracts that are close to expiry is regularly provided by IFR and the information can be acquired by registering with brokers that offer the service. Most major forex brokers will offer at least one financial news provider on their platform or website, and the news flow provided by open interest on CBOE options is also available from COT reports which the trader can use to form an opinion on trader positioning, and therefore the potential impact of the option on the market. How to use currency option expiration data to trade the spot market?

One of the easiest and most successful ways of trading the spot currency market is through the use of option expiry data. Options contracts are typically for sums of anywhere between 100 million to 500 million USD, and values beyond the range are not uncommon. Since these are relatively large sums to be concentrated in a few minutes before the expiration, the traders of these options will do all that they can, within reasonable limits, to move the quote to the strike price of the option, provided that the quote is within about 20-30 pips of the strike price at the time of expiry.

One important point that the forex trader can keep in mind is the distinction between the European style, and American style options. Since European style options can only be exercised at their expiration date, they are likely to be defended more vigorously if the quotes happen to be close to the strike price. In addition, at the beginning the trader is advised to utilize non-exotic expiries (so called, vanilla put or call options) for the strategy, as he betters his skills by examining contract types and similar details provided by the news providers. As usual, there is no need to trade every option expiry that is reported. One can simply begin with smaller sums to test his knowledge, and then increase the size and scope of his trades as he gains experience.

The ideal conditions for this method are:

1. Option expiry is at 10 am EST.
2. Option size is greater than 500 million USD.
3. The quote is at the strike price before the news release at 8:30 am EST
4. The news release is not a major event, such as a Fed decision.

But even without the realization of these conditions sizable profits can be made with this method in a calm and unexcited market. But these overall conditions, along with the significance of the news release, are the main determinants of the market’s mood which will in turn influence our stop-loss and the profit potential.

What happens during an option expiry?

If the price quote is close to the strike price of the option, option traders and other market participants will attempt to steer the quote in direction they desire.

A strong sign that the option traders will defend their position is the early gravitation of the price quote to the strike price. In an example scenario, if there’s a European EUR/USD vanilla put or call option with a strike at 1.2540, and the quote is at 1.2570 at 7:30 am, the quote will be steered to sit on the option strike value at about the news release at 8:30 am. After that, as the price reacts to the news, the quote may move away from the strike price in an unwanted. To successfully profit from this pattern the trader would need to join the option traders as they try to move the quote back to the strike value, and since a lot of people play this game the odds of success are quiet high.

As long as option expiries are proclaimed by news providers, and as long as large expiries tempt option traders to risk relatively small sums to ensure that they receive their payouts, this method will keep paying dividends. An important point that we should keep in mind is the momentum created by option expiries. As option traders buy or sell, their actions will be joined by all sorts of other traders and snowballing effect creates its own power as a mini-bubble is generated. Needless to day, right after the option expiry occurs, the strike price will be just another number on the charts, and will lose all its significance.

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Dovish Yellen Defended Easing As Economic And Employment Growth Remain Far Short Of Potential?

Vice chairman Janet Yellen's testimony before the Senate contained few surprises. Yet, it did not prevent equities to rise, and US dollar and yields to fall, as the upcoming Fed chairman reiterated her dovish stance and defended the central bank's accommodative monetary easing measures. Yellen indicated that the best way to normalize monetary policy is to normalize the economy, noting that 'a strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases' and 'Supporting the recovery today is the surest path to returning to a more normal approach to monetary policy'. In short, economic developments remain the key determinant of the tapering schedule on which Yellen refrained from giving any hints.

Senators criticized the negative impacts of low rates on deposits and risks to financial stability. While admitting that low interests rates hurt savers, Yellen noted that slack demand would have resulted in low yields even if the Fed had not implemented monetary policies and/or QE. Instead, the Fed's easing has supported the job and housing markets. Concerning risks on financial stability, Yellen defended that she has not see signs of systemic bubbles despite the large size of the balance sheet. Yet, she affirmed that the Fed has been monitoring the risks. In contrast with the case of Bernanke, senators did not questioned about the inflationary risks. After all, Yellen stayed consistent with the Fed's mandate to keeping the Fed's long-run inflation target at 2%. She also stated that she and her colleagues have been striving to maintain price stability.

Another mandate of the Fed is on employment. Yellen appeared to be skeptical of the representativeness of the employment figure (e.g. the unemployment rate) on the actual job market conditions. Indeed, in previous occasions, Bernanke noted that the drop in labor force participation has partly led to the apparent decline in the unemployment rate, and this likely has overstated actual improvement in labor markets. The Fed might find it difficult to rely on the reported statistics in assessing the real employment conditions. Yellen also cited similar reasons to warn that the job market is probably not as healthy as suggested by the job market data. These comments might trigger to speculations of the recent hot topic that the Fed might lower the unemployment threshold. Unfortunately, we failed to get any hint from Yellen. While her comments appeared to support a lowering of unemployment rate threshold as part of the FOMC's communication on interest rate policy, Yellen at the same time noted that there may be resistance should the Fed move the threshold to 6% or below.

As an existing core Fed member, it's expected the Yellen's comments were mainly supportive of the Fed's monetary policies. She explicit stated that she believed the benefits of asset purchases and lower rate for longer guidance exceeded the costs both in terms of financial stability and inflation risks.

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Will the ECB Pull the Trigger?

The European Central Bank will announce its latest decision on interest rates. This is one of the most anticipated meetings in recent months as the market is pricing in a rate cut from the ECB this month, which would be the first cut since April. Also worth watching is ECB President Draghi, who is scheduled to give his regular press conference at 1330 GMT/ 0830 ET.

Rate cut expectations have surged in the last week after a sharp drop in Eurozone inflation for September. The annual rate of headline CPI dropped to 0.7% from 1.1% in August, the lowest level since 2009. This has sparked fears of deflation, particularly in the weaker peripheral states. Since the ECB's mandate is to maintain stable prices, the question is whether inflation is a big enough cause of concern to trigger more stimulative action from the ECB, or if the Bank will take a more pragmatic approach to falling prices, as it has in the past.

The problem for the ECB is that prices are falling at a faster rate in the periphery compared with the core; for example, German inflation is at 1.2% compared to Spain, which is already experiencing deflation. The prospect of deflation in the peripheral economies is a double-edged sword: on the one hand it is necessary to make the weaker economies more competitive, yet on the other hand it increases their already hefty debt loads (inflation can erode the value of your debt).

The arguments for a small rate cut to 0.25% from 0.5% include:

A rate cut is a relatively easy monetary response to the recent weakening in the Eurozone economy and the sharp drop in inflation, it could also dampen the EURUSD, which is being blamed for causing inflation and growth to slow.
The ECB does have room for a rate cut and it would bring ECB rates in line with rates in the UK and the US.
The arguments against a rate cut:

One 25 bp cut is unlikely to impact the Eurozone economy in a material way.
EURUSD has fallen sharply in recent sessions from 1.38 to below 1.35, more than 2.5%. Thus, the market may have done the ECB's job for it since a weaker EUR could ease deflation pressures down the line.
The ECB has been remarkably tolerant of low inflation in recent months and there are still signs of growth in the currency bloc, which could make the ECB hesitant to cut rates at this juncture. For example, the composite PMI remained in expansion territory in October.
The ECB may choose to cut rates in Dec rather than Nov when the Bank will have the latest staff inflation and growth projections.
Regardless of whether the ECB cuts rates at this meeting, we still expect President Draghi to reference the drop in inflation. We will be watching to see whether he thinks this has impacted long-term inflation expectations in the currency bloc, if it has then the ECB may be forced to act in order to fulfil its mandate. In the past Draghi has surprised the market with his rhetoric, thus it is worth watching to see if the problems of the periphery, or the predicament of the core, is foremost in the ECB's minds.

We will also be watching out for further clarification on the ECB's forward guidance. Will the Bank try to anchor forward guidance to an economic threshold or a specific period of time in the future? This could limit the upside for European rates even if the US goes ahead and starts to taper in the next couple of months, which could put upward pressure on US Treasury yields.

Market reaction?

Mario Draghi has surprised the markets before with his decisions and rhetoric, so rather than try to second-guess the ECB, below are a few scenarios for potential outcomes and the impact on EURUSD.

ECB cuts rates and sounds dovish, and anchors forward guidance to a threshold: this would be the most dovish outcome in our view, and could trigger a fresh bout of selling in EURUSD. Key support lies at 1.3445 - the top of the daily cloud. Below here is a bearish development that opens the way to 1.3355 - the daily cloud base.
ECB does not cut rates but points to a rate cut in December: this is also bearish for EUR in our view and after a knee-jerk push higher after the no-change announcement at 1245 GMT; we could see any strength get faded by the market once Draghi starts speaking in dovish tones. 1.3355 - daily cloud base - is also a support level to watch.
ECB does not cut rates and does not sound worried about the decline in inflation: this would be the most bullish outcome for EURUSD In our view and could trigger a sharp reversal in the single currency as the market is forced to ditch its dovish ECB bias. We may see back to 1.3560 - Fib resistance, and then 1.3630 - a high from early October. We could also see EURGBP stage a mini recovery and EURJPY come under some upward pressure, as the BOJ would look more dovish than the ECB in this scenario.

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FOREX FUNDAMENT KNOWLEDGE

As we mentioned before, prices do not cause prices. The reasons that lie behind price movements in the forex market are the subject of fundamental analysis, and those familiar with trading stocks should have little trouble in becoming familiar with fundamental analysis of currencies. Just as stock traders measure the health of a publicly-traded company by examining its balance sheet, indebtedness and cash flow statistics, the forex trader decides on the soundness of a nation’s economy by considering such things as central bank interest rate differentials (which is the difference between the borrowing costs as decided by the central banks of different countries), trade surplus or deficits, along with employment trends, productivity, and a number of other factors.


Fundamental analysis states the causes of major price movements in a straightforward and clear manner. For instance, because of the ease of borrowing and the resultant abundance of global liquidity in recent years, the interest rate differential between two nations’ central banks has been the most important indicator in determining price trends in the forex market. While this is unlikely to remain so in today’s difficult environment, interest rates will remain one of the most important drivers of currency market trends for as long as financial actors are free to move capital across national borders.


Fundamental analysis attempts to discover and predict the causes of forex trends, and in doing so it uses a number of indicators to present a comprehensive picture of global finance. But beyond the indicators themselves, what really causes a currency pair to move in a particular direction? Are currency movements really decided by statistics and news flow only?


This question brings us to another definition of fundamental analysis: Fundamental analysis attempts to predict money flows into and out of a particular currency. Statistics are significant only as far as the markets regard them as a basis for directing cross-border money flows. A nation can have very low unemployment, a high current account surplus, excellent productivity rates, and very good statistics in general, and its currency can still do poorly against others — if, despite all those advantages, there’s a greater supply of it with respect to total demand. In other words, no indicator, no statistic or standard is enough to magically appreciate a currency versus another, if the general economic environment (i.e. the financial markets in general), is unwilling to make use of the advantages that a sound and healthy economy provides.


Later we will return and take a deeper look at fundamental analysis.

The strength of fundamental analysis lies in its ties with economic events at the root level. It is relatively straightforward about its descriptions, and its rules and principles are often simple and easy to understand. And, the fact that fundamental causes decide the major trends in forex markets is indisputable. The trader possesses a very reliable tool in this kind of analysis. The problem with fundamental analysis, on the other hand, is twofold: it’s very poor as a timing indicator; and markets do not always react to its dictates in a rational manner. What must be remembered when the market value of a currency is a lot different from its fundamental value, is that the market would not have tolerated an irrational quote if some people somewhere were not making a great profit from that irrationality. It is therefore imperative that the analyst identify the abnormality, examine the causes of it, and formulate a strategy to exploit the discrepancy.


If fundamental analysis is a poor method for deciding on the timing of a trade, what will you, the trader, use to define your entry and exit points? Which method will allow you to decide when to take a profit or accept a loss? This question leads us to introduce the subject of technical analysis.

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BOJ Sees Growth To Slow In Fiscal 2014

The BOJ's minutes for the October meeting contain little surprise. While policymakers voted unanimously to keep the policy rate unchanged at 0.1% and leave the target for the monetary base expansion at an annual pace of 60-70 trillion yen, 3 of the 9 board members were opposed to the central bank's baseline medium-term growth and inflation outlook that upside and downside risks are balanced. In general, members were expecting Japan's economic growth to accelerate in the second half of fiscal year. Yet, they cautioned that the growth rate would slow substantially in fiscal year 2014.

On inflation, the members affirmed that the economy is on track to the 2% inflation target at a moderate pace. As stated in the minutes, 'the growth rate for fiscal 2014 would slow substantially compared with the previous fiscal year, as there would be a decline in demand from the front-loaded increase in demand prior to the consumption tax hike, mainly in the first half.

Nevertheless, the growth in exports was likely to accelerate, and business fixed investment would likely continue to increase firmly”. Moreover, the BOJ acknowledged that 'exports continued to generally pick up. Real exports had turned upward in the January-March quarter of 2013 on a quarter-on-quarter basis for the first time in three quarters and had grown at an accelerated rate in the April-June quarter…They then declined only marginally in the July-September quarter.

Public investment continued to increase in a situation where effects of the government's economic measures, including emergency economic measures, had come to fully take hold”. The central bank projected that Japan's economy would grow +2.7% in fiscal 2013, down from +2.8% projected in July. Growth would ease to +1.5% in fiscal 2014, compared with July's projection of +1.3%. The GDP outlook for fiscal 2015 stayed unchanged +1.5%. Note that Sato and Kiuchi remained uncomfortable with the remarks that the CPI is 'likely to reach around 2% – the price stability target – toward the latter half of the projection period”. Sato proposed changing the current expression to 'Japan's economy is judged as likely to head toward achieving around 2% inflation”.

He also proposed changing the current expression that risks 'can be assessed as being largely balanced' to that they 'are somewhat tilted to the downside'. Kiuchi proposed changing the current expression that inflation expectations 'are likely to continue on a rising trend under quantitative and qualitative monetary easing, partly supported by a rise in the observed inflation rate, gradually converging to around 2% - the price stability target' to that they 'are likely to continue on a moderate rising trend, partly supported by a rise in the observed inflation rate. Also, he proposed to change the current expression that the year-on-year rate of change in the CPI 'is likely to reach around 2% - the price stability target' to that 'the rate of increase in the CPI is expected to rise moderately'. Shirai proposed to revise the language for clarity and stronger recognition of downside risks.

 On monetary policy, 'most members' agreed to keep the accommodative policy so as to achieve its 2% inflation target. However, one member was concerned that 'in a situation where it seemed difficult to achieve the price stability target in about two years, if a rise were to occur in markets' anticipation that quantitative and qualitative monetary easing would continue for a protracted period or extreme additional measures would be implemented, this could lead to economic instability in the medium to long term, such as through a buildup of financial imbalances”. Another member noted that 'the price stability target was meant to be a flexible framework, and the BOJ should avoid giving rise to a possible misunderstanding that its ultimate goal was to achieve the specific inflation rate of 2%”

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Summary of October FOMC Meeting Minutes & Potential Timing of First Rate Hike

Summary of October FOMC Meeting Minutes & Potential Timing of First Rate Hike The USD has strengthened since the release of the Fed meeting minutes. Key bullets from Oct. FOMC minutes: FOMC expects QE taper in coming months based on labor market improvement Participants assessment of the costs/benefits of QE may see FOMC alter balance between policy tools, while still maintaining significant accommodation Participants had reservations about adjusting pace of QE based single rule... Unemployment rate or payroll number Some participants preferred to adopt a simple plan, such as a timeline or announce total size of remaining QE Simpler plan could help public distinguish Fed policy on asset purchases from fed funds rate
 


Number of participants want similar adjustments to treasuries & MBS's, while others preferred trimming treasuries more rapidly FOMC says it may be appropriate to simultaneously reduce pace of purchases & modify forward rate guidance Couple of participants favored reducing 6.5% unemployment rate threshold, others expressed concerns Several participants think providing qualitative information is most helpful after unemployment threshold reached In hindsight, key Fed proclamations over the past 24-hours are more meaningful: Yellen: Monetary policy likely to remain highly accommodative long after thresholds reached Evans: Fed probably will purchase $1.5T in assets from Jan.

2013 until QE is wound down Bernanke: Interest rates to remain low until "well after" 6.5% unemployment threshold reached As a result, while the door for Tapering QE in December is still open, we believe it will not occur until early 2014. Furthermore, when they do begin to scale back the pace of monthly asset purchases, it will likely be in conjunction with a strengthening of the Fed's forward rate guidance. As a result, rather than bringing forward the potential timing of the Fed's first rate hike, this practice would probably extend it further into the future. Interestingly, this is already being exhibited by the 30-day Fed Fund futures curve.

 Two months ago, pre-Sept. FOMC announcement, the market was priced to see the first rate hike (to 0.50%) in March 2015, however as of today (post-Oct. meeting minutes) the curve has not only flattened, but has also shifted materially to the right. Accordingly, the market now believes the timing of the first Fed rate hike is Nov/December 2015!

 

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RETAIL FX TRADING CONTINUES TO SURGE

Pretty much every brochure advertising forex trading highlights the fact there is no such a thing as a bear market in forex. Stocks, bonds, and commodities can all lose value simultaneously (as happened when Lehman Brothers declared bankruptcy in October 2008) but it’s impossible for all currencies to decline simultaneously. A bear market in the Euro might be offset by a bull market in the Dollar; or Swiss Franc; or Brazilian Real. Regardless, you don’t have to search far to find currencies that are outperforming, whereas a stock picker would certainly have his work cut out for him during an economic recession. I remind you of this cliche because in the current market environment, it has apparently taken on new significance. Anecdotal reports of investors frustrated with stocks, or having been burned by China, or disappointed by the collapse in oil, are flocking to forex by the thousands. Angry about suspended trading rules on stock markets? This could never happen in forex (at least not under current rules), since currencies are traded on multiple exchanges linked through a decentralized system. Here are the stats: at Forex.com, “New accounts have increased about 30 percent a month in the last six months from pre-September levels, while the number of trades per day has risen almost 50 percent. GFT Forex said trading volume rose 187 percent from late 2007 to late 2008….By the end of 2006 [the last year apparently for which this type of data is available], average daily trade volume reached over $60 billion, a 500 percent increase from 2001…Trading volume generated by ‘retail aggregators’ — electronic trading platforms that cater to individual retail traders — rose almost 43 percent from 2007 to 2008.” This dwarfs both overall growth in forex, as well as retail growth in the bread-and-butter securities markets.
One trend worth drawing attention to is that new investors are focusing on the most popular currency pairs. [See Chart below, courtesy of Wikipedia]. It has been proposed that this is because of widening spreads (i.e. more PIPs) on less liquid pairs, but it is just as likely being caused by investors applying the stock market logic of “buy what you know” to forex. It is understandable that those new to the game would want to get their feet wet by dabbling in the Euro/Dollar/Yen, rather than diving right in to niche currencies such as the Mexican Peso or even Korean Won, whose movements are both more volatile and more difficult for the average trader to understand.

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What Types of Orders Provide: part-3

One-Cancels-the-Other (OCO)

Whenever entering the market, exiting the market at some future time is required. An OCO order is a

procedure that means "one-cancels-the-other." Upon entering the market, place a protective Stop Loss

Order and establish a projected profit target. That projected profit target can be your Limit Order.

If you simultaneously place both Limit and Stop Loss Orders when you enter the market, you can OCO

them and walk away from your computer. What does that mean? At some future point in time, either

your Stop Order or Limit Order will automatically cancel your opposing order. If the trader is sure about

a trade, they can execute an OCO order and walk away from the trade. The trading software will then

manage the trade.

Cancel/Replace Orders

A Cancel/Replace Order is a procedure and not an Entry or Exit Order. By definition, it is when the trader

cancels an existing open order and replaces it with a new order. A Cancel/Replace order is primarily a

strategy of trading and predominately used after one has taken a position in the market and wants to

stay in the market locking in profit. For example, you buy Swiss at 1.410. Your protective Stop Loss Order

is 1.390. The market moves in the direction you projected. Now, you want to reduce your potential loss.

So, cancel your Stop Order at 1.390 and replace it to 1.410 where you got in. You are now in a trade with

no risk! As the market moves further North, in your direction, you want to lock in more profit. You can

cancel your 1.410 Stop Loss Order and replace it with a new 1.440 Stop Loss Order. You have captured

 . You are in an all-win, no-risk trade. Keep canceling and replacing your Stop until you are finally

stopped-out. This is discussed separately under "Protective Stops" in the Ultimate Traders Package on

Demand.

..................Remember................

Sellers are ASKing for a high price

Buyers are BIDding at a lower price

Trading is an auction

Slippage occurs with most Market Orders

The difference between the ASK and the BID price is the SPREAD.

Thanks for being with us.

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Best time to trade forex currency.

Before you place a trade, it’s important to decide on your trading timeframe and also

understand when to place your trade.

The forex market doesn’t sleep.

The 24-hour nature of the forex market means traders have the opportunity to place trades at

any time of day or night. You can’t buy shares in Barclays after 4.30pm but you can buy EUR/

USD at midnight if you want!

Whilst this flexibility is a huge advantage, it does mean that your open trading positions will be

moving whilst you’re tucked up in bed. For this reason we always recommend using a stop-loss

when trading forex (see preserving your capital).

Trading volumes are at their highest during European and US trading hours, whereas Asian

trading is generally much quieter. In fact, forex trading volumes hit their peak during the

crossover period of the UK and US trading sessions – this is from 2.30pm to 4.30pm British

time. So technically, it’s best to place a new forex trade during this ‘crossover’ period.

However, different currency pairs are more likely to move during certain times of the day.

For example, EUR/GBP will experience its greatest movement during the European session.

Whereas AUD/USD can regularly experience large moves overnight during Australian market

hours.

This isn’t to say that you shouldn’t be trading pairs that are likely to move overnight. You just

have to be adequately equipped to trade them.

When trading a currency pair that is likely to be volatile during the Asian session we recommend

placing a limit order along with your stop-loss.

A limit order is essentially an order to close your position when it reaches a certain level of

profit. So placing a limit order will ensure that if the market moves heavily in your favour

overnight, your position will be closed and your profits will be taken. 

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I want to start and monitor Forex trading.

If you wish to trade using the Trading Platform , or any other, you must first

register and then deposit the amount you wish to have in your

margin account to invest. Registering is easy with  and it accepts

payment via most major credit cards, PayPal, 

Western Union.  Once your

deposit has been received, you are ready to

start trading

Online, anywhere, anytime. You have full control to monitor your trading

status, check scenarios, change some terms in your 

Forex deals, close deals, or withdraw profits.

wishes you enjoyable and successful Forex trading!

  

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What Types of Orders Provide: part-2

Slippage

Slippage is a trade executed between a buyer and seller where the resulting buy or sell transaction is

different than the price seen just prior to order execution. On average, one to six pips will be lost with

Market Orders, perhaps more, due to slippage. Market Orders are rarely filled at the exact, anticipated

price. Market Traders Institute recommends caution when entering or exiting with a Market Order.

Limit Orders

Limit Orders are orders given to a broker to buy or sell currency lots at a certain price or better. The

term "Limit" means exactly what it says. Most of the time, you will buy at that exact limit price or better.

Limit Orders are used to enter and exit the market. They are generally used to acquire a specific price,

avoid slippage and unwanted order fills (execution price), which can happen with Market Orders.

When selling above the market, it is a Limit Order.







When buying below the market, it is a Limit Order. A Limit Order will be executed when the market trades through it. Seventy to ninety percent of the time, if the market is trading at your Limit Order, it will be executed. The market must trade through your specified Limit Order number to guarantee a fill. The trading software provides notification within

seconds of the fill. A trader does not have to call his broker to see if their order has been filled.

Stop Orders

Stop Orders are orders placed to enter or exit the market at a desired, specific price. When buying

above the market, it is a Stop Order. When selling below the market, it is a Stop Order. Stop Orders turn

into Market Orders when the market trades at that price. Stop Orders, as well as Market Orders, are

subject to slippage, Limit Orders are not.

The majority of Stop Orders are used as protective, Stop Loss Orders. These orders are placed with an

Entry Order to ensure an exit when the market goes against you. A good trader never trades without a

protective Stop Loss Order. They are orders executed to get you out of the market when your trade has

gone against you. Protective Stops are discussed in depth in the Ultimate Traders Package on Demand.

Thank you

Wait for What Types of Orders Provide: part-3

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A simple and effective forex strategy

Okay, so you’ve decided on which currency pairs you feel comfortable trading and when you

want to trade them, now what do you do?

The majority of beginners will be so eager to trade that they will simply rush into opening a

position based on last night’s news. In our view, this is the fastest way to lose your money.

Consistently profitable traders have a strategy and we’re going to share a simple yet effective

trading strategy to get you started.

This strategy is based on technical analysis, which is the study of price behaviour as opposed to

fundamental analysis, which looks at the underlying political and economic factors which move

currencies.

The ‘wave rider’ strategy

It’s called ‘wave rider’ because it’s a lot like surfing. Surfing actually has a lot of parallels to

trading.

A surfer lies ready on his board and waits for a wave to come along. When the wave starts to

form, he paddles in the direction of wave. A surfer then rides the wave as long as possible. The

surfer hops off when the wave runs out of momentum.

A trader waits for a trade set-up (visible pattern) to come along. He then takes a position in the

direction of the trend and rides that trend. When the momentum of the trend starts to fizzle

out, the trader closes the position.

A decent surfer knows there’s no point trying to catch a wave too early, because it needs to

build up enough energy to carry you along. Nor can he try and surf every wave, just the ones

that look easy to catch and worth the effort. If he misses a wave, another one will come along

soon.

The ocean is powerful. Don’t fight it. Go with it. The forex markets are just as powerful. So go

with the flow.

The flow of water is like the flow of money.

In order to understand the flow of money we follow the ‘price action’. Thanks to modern day

technology, the price action can be easily observed on a price chart. Charts are the lifeblood of

forex traders. And every chart tells a story.

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How to use this Site for forex

This Site has been developed to help the Forex beginner, though experienced

and professional traders may find it a handy reference.

Beginners and novice traders are likely to benefit from reading the entire

text, starting with Chapter 1, which provides a basic overview of what

currency trading is, and how to get started.

The chapters are set out in a logical flow, but do not need to be read in order

to make sense, as each works as a discrete unit unto itself.  You may prefer to

focus first on those chapters that you feel will complement your particular

knowledge base best.  

Chapter 11 is a glossary of terms (listed alphabetically)

used in the Forex business, that will prove helpful as you read this Site, and

may serve as a valuable reference as you become an experienced currency

trader.

With the help of this guide, you will soon be ready to start trading Forex – in

fact, with the assistance of the online

team, you can start today.

We wish you success in your trading, and hope you find this Site interesting,

helpful and enjoyable.

Before you start, please remember:

Forex trading (OTC Trading) involves substantial risk of loss, and

may not be suitable for everyone.

Before deciding to undertake such

transactions, a user should carefully evaluate whether his/her financial

situation is appropriate for such transactions.

Always ask your Forex dealer (the TRADING PLATFORM you wish to

trade with) the questions we prepared for you in this Site (chapter 9).

Selecting the appropriate Forex TRADING PLATFORM is essential for

success in handling your trading and monitoring your activity, as well as

maximizing profits, while minimizing losses and costs.

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What Types of Orders Provide: part-1

Types of Orders

A Trader must understand what each order is and what part it plays in capturing pips.

A Forex Trader must use three (3) types of orders: a Market Order, a Limit Order, and a Stop Order.

The two, primary orders used for entering and exiting the Forex market are Limit and Stop Orders. Once

an order is placed, there are two critical procedures: One-Cancels-the-Other (OCO) and Cancel-and-

Replace Orders. Properly understanding the procedures of order execution is a vital step to capturing.

Remember: All good carpenters carry a toolbox. The sharper the tools, and the more skilled the

carpenter is at using them, the more effective they are. The sharper you become as a trader, the more

efficient and lucrative you will be.

Market Orders

A Market Order is an order given to a broker to buy or sell a currency at whatever the market is trading

it for at that moment. The Market Order can be an entry order into the market, or an exit order to get

out of the market. Traders use Market Orders when they are ready to make the commitment to enter or

exit the market. Caution should be exercised when using Market Orders in fast moving markets. During

periods of rapid rallies, or down reactions, gains or losses of many points may occur due to slippage

before receiving the fill.

Trading is an auction where there are buyers bidding on what sellers are offering. The bid is the buy and

the offer to sell is the ask.

Thanks for today.....

Wait for What Types of Orders Provide: part-2

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Forex and New Technologies

Not only the number of players is growing, but also the qualitative approach. Having proved to be the most mobile financial market, FOREX instantly traces all most interesting scientific and technical achievements and implements them into business practice.

 The age of internet was one of the most significant stages in the development of FOREX. Proving their dynamism and mobility, the FOREX specialists were able to quickly find applications in the computer network, using it with the highest profitability.

An opportunity appeared allowing the specialists to do what previously seemed to be unconceivable. Now Internet allows traders to trade currency in any part of the world and at any time.

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Which Currency market You like most?

The currency market is not just my job. It is a passion and interest of mine and has been so for many years now. I started covering it in 1991 as a journalist in the run up to the Sterling crisis the subsequent year and “Black Wednesday”, September 16, 1992, when the UK currency was forced out of the Exchange Rate Mechanism (ERM) 

and promptly collapsed in value. The abiding memory of mine to this day is of the sheer power of the currency market in its ability to “defeat” the might and resolve of such a respected central bank as the Bank of England, which gave everything it had in its effort to defend sterling’s ERM “floor” against the Deutschmark of 2.7778. It is a memory of currency dealers screaming 

down the phone, of wave after wave of official intervention to support sterling being swatted aside by the sheer weight of selling pressure. The lesson of this neither is nor should be that financial markets will out in all cases. Rather, it is that the currency market has become so huge that it simply cannot be resisted for any length of time. In the case of “Black Wednesday” — or “White Wednesday” 

as many would have it subsequently — the UK economy was experiencing a severe recession and thus simply could not tolerate the raising of UK interest rates needed to support sterling and keep it within its ERM band commitment. The economic pain of this interest rate and exchange rate commitment was completely at odds with the economic reality in the UK at that time. Moreover, 

UK foreign exchange reserves were fast being wiped out in that defensive effort. In 1992, the global currency market’s daily turnover was the equivalent of USD880 billion, according to the Bank of International Settlements (BIS) tri-annual survey. Thus, the Bank of England’s ability to intervene to support sterling, albeit in the billions, 

was dwarfed by the size of the forces opposing it. As of the 1998 BIS survey, daily turnover had increased to some USD1.5 trillion, subsequently falling back to USD1.2 trillion in the 2001 survey in the wake of the creation of the Euro.

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Do you Know what is Margin Trading: Part - 2?

As I have already mentioned margin trades do not require from investor the whole sum of trading contract.

When investors want to make a trading operation, they deposit a certain sum, which depends upon the total size of the trading contract, and crediting conditions set up by brokerage firms.

When the brokerage firm provides the leverage of 1:100, this means that the investor has to pay the pledge of $1,000 for trading $100,000.

The pledge secures brokerage firms from possible trading losses on FOREX.

Margin trading is very popular because it is easily affordable to average investors. Investing ones capital for getting fixed income from securities foreign countries can hardly bring high profits. No one would dare to doubt that US exchequer bonds are stable and reliable, but they are expensive and give low 

revenue (about 6% annually); that is why they are regarded as long-term investments. Shares can give higher income, however the size of dividends strongly depends upon successful (or not) activity of the company and the favors of shareholders.

 Share purchasing for speculating for the rise of the shares is considered to be more interesting and profitable, but it requires large volumes of investments.

Margin trades do not have these restrictions: you can buy and sell whenever you wish and you will need 0.2-10% from the total size of trading contract.

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Why You can get better trading tools at FXCM with offer ?

FXCM's SIZE and FINANCIAL STRENGTH allow FXCM to allocate large amounts of resources to its education and research departments.

Since 2001, FXCM has expanded its staff to over 500 employees worldwide, including TRADING EXPERTS, FX EDUCATION SPECIALISTS, and TOP-NOTCH FX ANALYSTS, in addition to its large customer support, dealing, and technology development staffs. 

This infrastructure has allowed FXCM to aggressively develop new trading tools to meet the needs of all clients, from beginner to professional FX traders. FXCM offers a wide variety of trading tools to help clients learn about forex, 

analyze the market, develop trading strategies, and stay on top of the latest FX

news and headlines. As a result, FXCM has been named to the Inc. 500 list of America's Fastest Growing Private Companies in 2004, 2005,2006 and 2007.

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HOW TO TRADE FOREX-Part-1 ?

Principle of Margin Trading

Just recently, only participants that had millions of dollars traded on the FOREX market. The market was inaccessible for many private investors owing to the necessity to have big initial capital. The situation drastically changed when the principle of margin trading was developed and started to be implemented. Due to that, FOREX became accessible to practically everyone who wants to trade currencies and has only small sums of money.

The principle of margin trading is based on the fact that brokers (dealing centres, banks) that provide end customers with an access to the market extend an automatic credit for the period of transaction. The small amount of money the customer has serves as collateral. Crediting is called leverage. Its value can range widely, from 1:1 to 1:400, which provides an opportunity for the customer to buy/sell some currency for an amount that exceeds the collateral 400 times!

For example, after choosing the 1:200 leverage for the trading account and crediting the collateral amount of USD 1,000.00 to the deposit, the trader has an opportunity to buy currency for the amount of USD200,000.00, which is 200 times (!) higher than the collateral.

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