Forex European Preview 08.27.2009

The preliminary estimate of Germany’s EU-harmonized Consumer Price Index is expected to show that inflation fell at an annual pace of -0.4% in August, a slight improvement over the -0.7% result registered in the previous month. Still, the bottom line is that prices are set to decline for the second consecutive month; if this continues to be the case, it will contribute to building expectations of lower prices in the future, threatening to unleash a deflationary spiral wherein consumers and businesses perpetually hold off on spending and investment as they wait for the best possible bargain, bringing economic growth to a virtual standstill. At the moment, a survey of economists polled by Bloomberg suggests the market sees CPI shrinking through the third quarter and returning to a path of positive growth by the end of the year. If this proves to be too rosy, traders may punish the Euro as it becomes clear that the Euro Zone’s largest economy and by extension the currency bloc as a whole are heading for a long-term period of low interest rates and sub-par economic growth. A disappointing outcome seems likely considering the European Central Bank’s apparent inability to offer effective monetary easing as well as well-founded reservations about the sustainability of the second-quarter uptick in German GDP. Indeed, the expected improvements in GfK Consumer Confidence and Bloomberg Retail PMI are all but certainly a product of fiscal stimulus both domestically and abroad, with the big question for Germany as well as most anywhere at this stage being whether growth will continue after the flow of government cash dries up.

In the UK, the Nationwide House Prices report is set to show that property values fell -3.9% in the year to August, the smallest decline in 16 months and a significant improvement over the -6.2% result noted in the previous month. The improvement follows yesterday’s surprisingly strong rise in approved loans for house purchases. Still, it must be kept in mind that any boost to consumer confidence that can be expected from rising real estate values (via a positive wealth effect) is likely to be had from changes in the actual monetary value of Britons’ homes rather than an improvement in the growth rate. Indeed, it is not difficult to produce better results in the percent-change reading considering the very low base form which prices must recovery. If expectations are to be validated, home prices will stand near October 2005 levels, putting everyone that bought real estate between then and the peak in October 2007 firmly under water. Home prices grew five-fold during this period, hinting that the number of homes sold was more than formidable and suggesting that a good portion of UK homeowners are far from seeing any income boost from their real-estate portfolio.

Asia Session Highlights

New Zealand’s Trade Balance deficit narrowed to –NZ$2.5 billion in July from –NZ$3.1 billion in the preceding month as imports fell by a whopping -20.9% from a year before, easily overwhelming a -7.3% decline in exports. The reading is likely a reflection of the impact of rising unemployment on domestic demand: the jobless rate has risen to a nine-year high of 6%, trimming incomes and discouraging consumption. The outcome is all the more ominous considering the local currency has gained 20.1% since the beginning of the year, which would be expected to have helped imports higher by boosting New Zealanders’ purchasing power of foreign goods. More of the same is likely ahead, with economists calling for the unemployment rate to continue higher to hit 7.45% next year.

In Australia, Private Capital Expenditure (a measure of business investment) surprised sharply to the upside, adding 3.3% in the second quarter to trump expectations of a -5.0% decline. The improvement likely came as the government spent 4% of GDP in stimulus to boost the sagging economy amid the global downturn. Similar developments have been readily identified across the world as governments stepped in to replace shrinking private demand, with the real question now being whether the recovery has any staying power once fiscal stimulus reaches its inherent limits.

The Euro drifted slightly lower ahead of the opening bell in Europe, shedding 0.1%. The British Pound also trended lower, giving up 0.2% to the greenback. Technical positioning suggests the US Dollar is carving out a bottom against most major currencies.

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urban area, there should be a Scottrade office nearby with a broker you can personally contact if you have any questions or needs.

Stock markets are rising? Look at the Big Picture

With many of the primary stock markets reaching yearly highs, it would appear that optimism about the prospects for a global recovery is high. The increase in overall risk appetite in the Forex and the jump in stocks have been incredibly impressive.

According to the news reports, these shifts in sentiment have been driven higher by better than expected corporate earnings out of the US along with good economic data. But something is just not adding up for me, and I am not quite sure where to place my disbelief.

It is odd that just as the markets are flying, bond yields for the major economic countries, the US, Japan, England etc, are going higher. Now obviously this is due in part to trader speculation that once the recovery takes hold, these countries will have no choice but to start raising their low rates.

But what concerns me is the effect of quantitative easing that many of these countries employed. Funnelling money into the system at such a large rate as many of these countries had, will no doubt cause mild to moderate inflation – which would require lower rates. So what is going on?

Last week gave us a clue that all is not so rosy though. England reported a weaker-than-expected GDP figures for the second quarter – much weaker than expected to be specific.

Perhaps the Brits are not fudging their numbers like the Americans are – not that I know anything for a fact, but it wont surprise me to find that out in a few months.

This week's vast amount of economic data coming out of Europe and the US should help paint a better picture. I fully expect sugar-coating, but I know that the Forex traders will be keen to pick up on that.

Among the core numbers to look for this week are the US GDP and the Chicago Purchasing Managers Index. Consumer Confidence and Housing Prices along with New Home Sales numbers are important, but this is where my scepticism is most pronounced as we have seen anomalies in these numbers in recent months and they are easier to manipulate – so keep a sharp eye out there.

I expect the general tone of this week's data to support the recent signs of improvement. It remains to be seen, however, whether the outturns will be sufficient to maintain the bullish momentum as we head into August. Short of very strong numbers, I doubt it will happen.

Look for a weaker week in the Dollar and look for the Aussie and Kiwi to be the beneficiaries of that.

FOREX NEWS

Global Recession - Is it really Over?

The Central Bankers of the world met this past weekend in Jackson Hole, Wyoming. Known for hoards of Deer, Elk, hunters and hamburgers, this relatively small frontier town became the center of the financial world for a few days – and will be widely remembered from this day forth as the place in which the global recession was officially declared over.

Just don’t tell those 14% of industrialized workers who are without work, don’t tell those farmers who are selling items at 2/3rds less than what they were last year because of trade restrictions, and don’t tell the Central Bankers themselves, because in the end – the meeting and declaration was more politically motivated than factually motivated.

Jean-Claude Trichet, the EU Central Bank President, gave a speech that can be defined as optimistic, or if you are one of those protagonists, you could have derived a negative message from him.

Ben Bernanke who heads up the US federal reserve was chipper and growth focused in his remarks – notwithstanding the actual numbers, he used words like “I feel” and “in my opinion” to describe the economic recovery – terms usually reserved for politicians and not numbers oriented Central Bankers. Good for him though as President Obama rewarded him with another term as Fed chairman for his efforts.

The Forex marketplace this week has been slow and light, most everyone is off in some vacation spot, perhaps hunting Deer and Elk or eating burgers. Forex traders have not been moving the markets these past few days – and neither has any news for the most part.

The summer is winding down, quarter 4 is around the corner and the world is anxiously awaiting something to happen. In Europe, Germany’s growth and true recession exit is marred by the other EU countries that are still suffering double digit unemployment and negative growth.

In the US everyone, including the politicians and policy makers are on vacation, trying to regroup and figure out how to spend another Trillion Dollars that they don’t have on a healthcare package. And in China, they are selling their Dollars (shhhhhh).

In a world in which the lines between fact and political fiction, it is difficult to pin just where this economy is going. Yes there is some signs that things are getting better, but there also so many signs that there is bad news on the horizon.

In the past 3 months alone, 650 banks have closed in the EU and US – the pains are still there from last year. Unemployment numbers are still rising – and the politicians warn us this is going to happen for a while longer.

But something is happening, we are reaching a critical point in which something will happen. My belief is that it will not be good, but it can turn out to be positive – the haze of summer is upon us and Forex traders and online Forex bloggers like me are looking for a break in the air – a little clarity – and we are not getting it from those who are charged with honesty and truthfulness.

Keep your eyes open – next week will be a good one for numbers. For this week, enjoy the quiet, it is usually like this before the storm.

Read more...

Banks score big on the Economy

I have been so perplexed over the past week, hearing US Federal Reserve Chief Ben Bernanke give a rally cry to the bulls, watching the positive data (or so it was interpreted as) come out and give hope, and seeing the Dollar hold steady.

I really believed that the Dollar would begin a more dramatic cave. But as it seems this was not to be, not just yet. You have bad data still, you have China unloading their Dollars, you have 10% unemployment and the number is growing and yet it was the reports from the banks scoring record profits that kept the Dollar on its feet.

But I have a different outlook, as I have read over the balance sheets over and again of the banks and their multi-Billion Dollar profits.

When an economy is bad, more people live check-to-check, and even tend to extend themselves more than at any time. When an economy is healthy, Banks derive profits from investments and to a lesser degree, fees and customer charges.

Now, in a time where home, car and personal loans have been dry, the fact that the economic growth is negative, and that the questionable securities have not recovered as an investment tool, leaves it hard to believe that banks are able to grow so much last quarter.

Looking at their reports, I can tell you that it is obvious where they are making their money from, and it is not a good sign for the economy.

In the US, when a bank customer goes beyond their account balance, they enter an overdraft territory in which they are charged obscene fees for having the bank cover their charges.

Now, in the past it had been a standard that the customer needed to apply and request this overdraft, and this is not to be mistaken for a typical loan or credit line which are different animals.

The customer would agree that if they charged using their bank car, or wrote a check, and there was no money in the account, they would pay a per-transaction fee and an interest fee calculated and prorated on a month to month basis. The interest is anywhere between 8-18% and the fees can be as high as $10 per transaction.

Now, according to Citigroup, Goldman and Bank of America, it seems as if 60% of their revenue was derived from “customer fees” and increase of 36% from the average between 2002 and 2008. So I dug a little further and here is the fact.

The average bank customer is paying, with fees and interest on overdraft, about 35% per month. Keep in mind that with the high fees, if a customer goes to a pharmacy and charges 1n $8 box of band-aids, he can be charged $18 plus interest on the full $18 as it is calculated at the end of the month.

Think about it, you have no money in your account and you make three charges for $100 in total, with $30 in fees plus interest on the $130 in total, you owe the bank $138. You took $100 and owe more than 1/3rd of that on top of your principle.

What the key is here is banks no longer ask customers if they want overdraft, they automatically approve every customer for it up to a set limit – like $5000. So even if you have no credit, if you have a bank account you do – and this is how the banks are making their money – 60% of it for that matter.

How does this affect the Forex online trader? It is just evidence that some Online Forex blogger has presented to you that the picture is not black and white showing recovery, there are problems and it is growing – growing enough that people en masses are borrowing and the banks are raping them on it, it is making a bad situation worse and the repercussions will come back to haunt everyone involved. Just watch retail sales and consumer prices – these will be telling numbers in the next few weeks.

Forex Club Live Charts

Register for the dbFX webinar, “Focus on the Trade and Not the Money”, on 18 August.

“Focus on the Trade and Not the Money”
Tuesday, August 18th 2009
7:30am New York, 12:30pm London, 7.30pm Hong Kong

During this webinar, Dr. Doug will introduce the idea of how traders should think in terms of probabilities and measure their success by the quality of their trades, rather than by their profits and losses.

* Master the “one trade at a time” mentality.
* Explore how to figure out if you have “edge” in a trade.
* Learn how to measure your success based on your trading process.

August 12, 2009

Interbank FX Brings Private Label Forex Platform to Korea Technology Gives Investment Firms Forex Services; Increased Revenue Stream

Ia provider of online off exchange foreign currency (Forex/FX) trading technology and services, today launched a private label version of its proprietary MT4 online Forex trading platform in Korea.
There are no startup costs, provides all needed trading tools, and no management/licensing fees. For support and education, partners have access to Interbank FX’s IBFXU.
All investment vehicles, Forex included, carry risk. An Interbank FX private label partnership brings incremental revenue, and a complete branded solution on an award-winning Forex platform.

August 11, 2009

M I G EXPOS & CONFERENCES

7th Seoul International Dervatives & Securities Conference
Venue: Westin Chosun Hotel, Seoul, Korea
Date: August 26th - 27th

Alpari (UK) introduces flexible spreads – minimums on average 25% lower than current fixed levels – Tuesday 18th August 2009 (23:00 GMT)

From market opening 18th August 2009 (23:00 GMT), Alpari (UK) will be tightening minimum spreads across all currency pairs and precious metals on Demo and Live accounts. Flexible spread minimums will be reduced, on average, by 25% and up to 60% for some currency pairs compared with current fixed spreads. Refer to the table below. With the introduction of additional price feeds, clients will be able to access significantly tighter spreads as we pass on the benefit of the tighter spreads available to us from the Interbank

FX Solutions Opens FX Solutions UK

FX Solutions (www.fxsolutions.com), a leading online foreign exchange market maker, announced today the opening of FX Solutions UK (www.fxsol.co.uk). Continuing its planned global expansion, FX Solutions is now regulated in three international jurisdictions. FX Solutions UK will complement our existing entities in the US and Australia. It gives us the advantage of expanding our global reach through a presence in the UK and Europe where the potential for growth is extremely promising.” said Michael R. Cairns, CEO of FX Solutions.

FX Solutions UK will offer Foreign Exchange, CFD (Contract for Difference) and spot metal trading for retail customers in Europe and most other countries. For US and Canadian customers, an FX and spot metal only platform is offered, as those countries’ regulatory agencies prohibit CFD trading. FX Solutions UK, a trading name of UK based parent company City Index Limited, is registered in England and Authorized and Regulated by the Financial Services Authority.

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Special department for customer service has been established within Masterforex company

Dear clients of MasterForex! We are glad to inform you on the innovations connected with improvement of quality of services represented by the company. For your convenience was created the united service on work with clients which urged to solve operatively all existing questions of clients, including consultation on the financial, technical, organizational moments.

«For us, such a specialized and well-prepared division in structure of the company, is one of the first steps in basic improvements of represented service quality which we plan to undertake. We understand how the time factor is important in our business, therefore the purpose of new service is first of all the professional and operative decision of all existing questions of the client 24 hours per day» — has commented Igor Volkov, the executive of MasterForex company.

LatitudeFX Limited and GAIN Capital Launch Award-Winning Forex Trading Platform

Local foreign exchange (forex) trading services provider, LatitudeFX Limited, has partnered with global forex giant GAIN Capital to launch GAIN’s award-winning forex trading platform in New Zealand and Australia.

In announcing the partnership and launch of LFX Trader, GAIN Capital CEO, Glenn Stevens, said he was pleased that LatitudeFX had chosen GAIN Capital as its forex provider and believed the arrangement would be a mutually beneficial one.

“The deal struck between the two firms will leverage LatitudeFX’s strong presence in both New Zealand and Australia with GAIN Capital’s proven forex trading technology, execution, clearing and custody services,” said Mr. Stevens.

FXOpen New Design!

Dear Friends, We are glad to inform you that we have almost finished the upgrades on our website. As you can see, we have redesigned our website and we hope that it is more user friendly and useful to you now.

We have opened a poll on our forum to judge your reaction to the changes at our forum. Please visit the thread and vote. Your opinion is very important to us!

Regards,
FXOpen team.

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Alpari Group announces advanced trading platforms: Alpari Direct Pro and Alpari Direct

Straight Through Processing (STP) and Non Dealing Desk (NDD

Higher execution speeds, larger liquidity pool and increased market depth

Alpari, one of the world’s fastest growing providers of online foreign exchange (FOREX) services, will launch two advanced trading platforms by the end of August, offering high-speed and direct access to the international currency market for Alpari clients and other institutional and retail customers. Powered by trading technology provider Currenex®, Alpari Direct Pro will be offered to institutional clients while Alpari Direct will be offered to retail customers.

True to Alpari’s commitment to providing clients with institutional-level services, both platforms will feature Straight Through Processing (STP), Non Dealing Desk execution (NDD), 1 click Executable Streaming Prices (ESP), accurate pricing with fractional pips and integrated algorithmic models that enable enhanced levels of execution. These features will ensure high speed and low latency execution and will empower traders to optimize market impact and reduce execution costs. An integrated Dow Jones feed will keep users up-to-date with current news.

Further to this, Alpari Direct Pro, the execution interface for institutional clients, will provide traders with access to a deep liquidity pool, which aggregates feeds from over 60 global banks and multiple Electronic Communications Networks (ECNs). Alpari Direct Pro shows traders the full market depth and also features 24 order types (including advanced orders such as pegged orders), which empower traders to take control of order timing and execution. In addition, this institutional platform offers intuitive and fast keypad trading capabilities, pre- and post-trade allocation solutions, trade averaging capabilities and sophisticated order management, allocation and advanced reporting tools.

Alpari’s platforms are created using Currenex technology. Currenex is a recognized and award-winning leader in providing trading solutions to the active-trading segment of the FX market.

Commenting on the new platforms, Andrey Vedikhin, Co-Founder of the Alpari Group, said: “Alpari Direct Pro and Alpari Direct represent another step towards Alpari’s goal of providing an institutional level trading experience for all. Alpari now provides its clients with one of the most comprehensive selections of advanced trading tools, expert educational resources and responsive customer services available from any online FX trading provider.”

FX Strategy Secrets

Taking Profit

Posted by Jed & kirk Norwood on May 18, 2009 · Leave a Comment

There are several approaches to taking profit in forex trading. For example some traders will put on several lots
on a trade then when the market reaches a predetermined level they will close a small portion of
the trade. They leave on the remainder lots so they can continue to be in the market and gain
profits. Then there are the traders that put on a small number of lots, add to the trade when they
get additional entry signals and when the market tells them that the current trend is coming to an
end then they close all of the positions.

If a trader is making money we can’t say the way they take the profit is bad. As long as we are
trying to make money on a trade why not maximize the profits on that trade. We have been thinking,
when the market reaches the point that a trader wants to take some profit and the market is still
moving why not put a stop loss at the predetermined exit point and let all of the lots continue to
run. There are a couple of ways the trade could be ended with a maximum amount of profit and a
minimum amount of loss.

The stop loss could be moved up as the market moves up to protect even larger amounts of profit.
When the market gives a strong exit signal then close all of the lots on the trade. If the market
retraces then continues in the original direction of the trade, at that point the trade can be
reentered and make profits all over again. We know there is no wrong or right way to make money.
Pick the way that fits your emotional ability, and trading style. In any event continue to make
money and have fun trading.

The Number One Reason For Washing Out As A Trader

The time a trader usually blows up his account comes when he has had a series of good forex trades
over the course of a day, week, or month. He starts to be confident and does not put his stop
on. It is late in the week he is a little tired makes one more trade leaves off the stop and
then the whole market turns and goes against him. He loses all he made and more. He did not
take time to use good risk management.

He is feeling low emotionally and his account is a wreck.

He should not dwell on the big mistake but go back to the basics of his trading plan. Review
the risk management and get back to the discipline that made him money the first part of the week.

When you over look risk management you have a greater risk of washing out of trading than any
other single thing. When you pay close attention to risk management you have the greatest
potential to make it as a trader.

A few small losses will not hurt the big wins that come along on a regular basis. This will
cause your account to grow on a steady basis.

TAKING THE NEWS TO SERIOUSLY

Reading the financial news papers, listening to all the financial television stations,
studying the economic reports, and visiting all of the chat rooms can be a big challenge.
You can lose prospective of why you are trading in the first place if you get caught up in
to much news. It is a good forex strategy to know some of the major things that are going on but to be a
good trader you do not need an over dose of news.

You need a combination of fundamental and technical. I lean more to the technicals.
Some of the things that I see happen to the traders that over dose on news are: Trying
to pick which way the market will go. Getting hooked on an opinion of what is going
to happen and lose all objectiveness as to what might happen. The market moves in
trends and the news will cause little bumps in the direction of the trend. When the
news dust settles the market returns to the major trend it was on. You can get spike
fever, chase the market movement and get caught from both directions in the market.
Even with all the news research one will not be the first to know what the market will
do based on the news alone. So by the time the trade comes along you are trading
discounted news that has already been factored into the price of the market. So By
using news to trade forex you are taking a gamble on which way the market will go.

The Market can make a positive move with bad news and a negative move with good news.
It is all tied to the sentiment of the market the way people react to the news not what
the news is.

Set Yourself Low Forex Goals

One of the common misconceptions that I have run across is that people think that if
you’re not hitting big home runs in your trading that you can’t make much money.
Nothing could be further from the truth. If you continually re-invest your money,
and you risk only a small percentage of the total on every trade, huge returns can
be realized. The following examples are only for illustration, and obviously they
are just hypothetical. I simply want you to understand that the returns can be
exponential without exposing yourself to a dangerous level of risk.

Example 1

Starting equity: $10,000
Monthly return: 6%
Compounded return after 1 year: 100%

At this rate of 6% per month, you would have about $1.2 Million after 7 years.

To break it down further, suppose you needed a 25 pip stop loss and you were only
risking 2% of your total equity. That’s $200 on a starting account of size of
$10,000, which means you could trade 8 minis. If you only made 20 pips net all
week that would be $160 per week, or $640/month, which is more than 6%! You see,
you don’t need to trade a lot, just be patient.

Example 2

Starting equity: $10,000
Monthly return: 10%
Compounded return after 1 year: 300%

At this rate of 10% per month, you would have about $1 Million after 4 years

Remember, have a realistic plan and think longer term. This isn’t a race, and as
you can see, the power of compounding can be very effective, so be patient and set
reasonable goals. All you really need to do is be consistent in the execution of
your trades, realize that there will be losses, but stick to the game plan. As
always, controlling risk is of paramount importance! Above all, do not trade with
money that is not truly risk capital. This means that if you lost it, it would not
change your life!

Places To Get a Great Forex Trading System

’s very important that if you’re exploring forex trading or already trading that you have a trading system. One aspect of that trading system are the actual setup rules which usually contain entry and exit techniques. Traders put a lot of time and effort in developing these setup rules too often neglecting other aspects such as position sizing or relative size of your profits compared to losses. Therefore it’s important to find a comprehensive forex trading system.

Where can you find a comprehensive forex trading system? Throughout the last three years, I’ve been through many trading systems obtained mostly from books, forums, or other websites. I’ve found that almost every time, I’ll mold that system into something totally different than the original incarnation, something that fits my personality and style of trading. Many times, the original system will also need to be expanded to include things that were neglected or forgotten. Those of you searching for the perfect system may find this method of modifying existing forex trading systems desirable. There are places where you can find the whole package without any need for modification.

This brings me to the question, "where did you get your forex trading system?" I think there are four main ways of getting a trading system.

1. Buy it. There are tons for sale out there on the net but heed caution. Many were just copied from forums, books, or other websites. Sometimes when you buy forex education, part of the package will include a trading system. For instance, Rob Booker provides his Arizona rules as part of his mentoring program.
2. Get a free one. There are many free systems that can be found in books, forums, or other websites. I guess one can question whether a system found is a book is free since you paid for the book.
3. Create an original system yourself. My main trading system is an original creation. There may be other systems out there that are similar to it since it’s a culmination of years of exposure to other systems and experiences.
4. Modify someone else’s system and make it your own. As I stated above, I have done this many times.