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Archive for January, 2009

Thursday. Not such a good day for Stocks

The dollar and the yen were at it again today. After the Fed’s announcement, there was some hope that we might see some return of Risk Appetite to the Markets. This just hasn’t been sustained. Things are looking down again. The Dollar rally might continue.

I want this to end. I know that trading currencies puts you in a good position…you can make money on the way up or down. It’s all relative. However, we need the Economy to turn around. We can’t keep going this way. The number of people getting laid off…it’s just ridiculous.

I hope Obama’s stimulus works.

In the meantime, we have to trade with the cards we have in the Forex Market. Watch for the Dollar Rally to continue.

Automated Forex Trading…to do or not to do?

Automated Forex Trading is a big deal. It’s an even bigger deal now that Currency Trading is so accessible to individual retail traders. All you need is a 300 dollar mini-account, and you’re in. Now there are different ways of getting into trading. We all have different backgrounds and come to the market in different ways. I got in because I wanted to create my own system that would automatically trade for me and make me rich. Those were good times. I’m not so innocent anymore.

That said, what does trading with an automated Forex system entail? A lot of the big boys (Banks, Commercial Companies etc) invest heavily in investigating Forex automated systems. They have their place in the industry. Some of the algorithms are amazing. One can make a lot of money with Automated systems. These days, retail traders now have access to some advanced systems because of the new software packages that come free with trading accounts. They fit particularly well into the the individual Forex Trader’s line because you are essentially trying to make money off fluctuations in the market.

Everyday, new systems are available. infact, most brokers will give you some sort of Forex Trading System when you open your account with them. They do tend to offer better packages if you are willing to pay for it. Forex Trading systems tend to run on particular software packages. The catch is that the software in question has to be running all the time if the Automated system is to do it’s job efficiently. If you are running this on your computer, it would mean not shutting down the program, and also keeping your computer and internet connection running constantly. This means no downtime; no accidental crashes. It could be a catastrophe if that were to happen. This might be alright for some people, but there is a new option that has been getting more takers lately. It involves running your software on a web-based server…like a website. That way, you don’t have to depend on your PC.

In any case, it’s fairly easy to get a Forex Trading System and try it. Most offer a trial period so you can see how they work. You can also run them on a demo account. There’s nothing to lose in trying one.

Happy Trading

Tuesday’s Trading…

…Or lack thereof.

Too much in the way of news this week. Everyone seems to be waiting for something to push them in one direction or the other. There’s going to be a breakout, and I’m afraid it might still favor the dollar.

Barclays came out to see they didn’t need any money from the British Government to keep things going. This might give the markets a slight boost, but I am not sure it is enough. There were some pretty dismal Consumer Confidence numbers from the US. There’s also more data expected for the rest of this week. All of this might mean that the dollar’s rally against everyone else (except the Yen) continues for some time yet.

I’m sitting this one out…just for today anyway. I’ll be keeping an eye out to see what happens. I’d like to catch the break when it happens…

Happy Trading

The Forex Market…who plays?

The Forex Market is huge. Everyone says that, but it is difficult to understand the sheer scope of it. Over 3 trillion dollars traded everyday. That is an obscene amount of money. it belongs more in the realm of fantasy than in real life. The Forex market is also the largest when we talk about average daily turnover per trader. All this is even more impressive when you factor in the fact that there are more players in the Forex Market than any other in world. So, who are these fellas? Well, we will go over some of the majors.

Let’s start with the Banks. You didn’t think they only did saving and lending, did you? It’s a wonder we still call them banks. They are involved in all kinds of things these days. Banks are one of the major leaguers in Forex. Some banks trade several billions of cold hard cash…well electronically mostly…everyday. They sometimes enter trades for clients, but the bulk of it is self-motivated. Commercial Companies are not quite as affluent as the banks. Nevertheless, they do their fair share. Sometimes, they generate enough volume to impact the direction of exchange rates. Central Banks are quite powerful as members of the Foreign Exchange Market. They have significant abilities to influence currency supply, interest rates etc. Central banks for countries have “ideas” about how much theur currency should be worth. If things go too far against them, they can take some action to try and influence the markets e.g. by using currency reserves to trade in huge volumes to raise the value of a currency. There’s a lot of this “intervention” going on now that we have a global recession. They are a sinister group.

We then have the Investment Management Firms. They basically pool a bunch of client finances together and play the market in some way. They tend to use the Forex Market to gain access to foreign Exchange, perhaps to purchase assets in another country. Since this sort of investment happens a lot, they do contribute significant volume to the trades. Think Bernie Madoff…or maybe not, since it turned out he wasn’t really doing much investing after all. Then you have Retail Forex Brokers. These are the good folks you open your Forex trading Account with, and who take the opposite position to you when you enter a trade. Lovely guys. They vary greatly in size and volume of trade, but together contribute something like 2% to market volume.

Then you have me, the little individual Forex Retail Trader. A mere drop in an ocean. We barely make a dent on volumes. Apparently, 95% of us trade at a loss. However, we are a relentless bunch. Most of us realize that the opportunity to get involved can be leveraged to make good profits. We may not have the volume, but we don’t care. We are the new kid at school, finally given the opportunity to make something of ourselves.

There’s room for everyone here. Just know your place.

Friday fun…

This is the funniest ever…

It provided some much needed relief after the long week I’ve had with this new trading strategy I’ve been trying. Since I settled into “proper” trading, I have used a combination of Ichimoku, Bollinger Bands, Support and Resistance (with a little help from my good friend Fibonacci). The trial involved applying this to a 15 min chart and seeing how much I could make in a couple of hours each evening. It hasn’t worked out for me. I just don’t have the temperament for that sort of thing. I kept exiting and re-entering. Suddenly, I remembered what it felt like to be a newbie at this.

I am going back to the Daily Charts…

The Japanese Yen blew everything away this week, but it might have found a bottom. Dollar strength is still the name of the Game, though some of the others tried to stage a comeback. The Canadian Dollar in particular really put up a fight. The Oil prices helped with that. A lot of volatility. Here’s hoping that next week is a little more…how should we say…relaxed.

Happy trading, my friends

Thursday Intra-day Trade

Okay…so I did something silly today. I logged into my account online while I was at my desk. I saw some fast movement on the GBPJPY currency pair…then I plunged in. I figured I could steal some pips without any prior planning. Very bad idea.

Needless to say, it turned on me as soon as I jumped in. I didn’t lose much, but that’s not the point. Impulse buying (or selling for that matter) is alright when you can return the item and get your money back. It has no place in Forex Trading…particularly on a 5-Min Chart!

Patience is necessary, as is a cool head. If, like me, you have trouble controlling yourself, then don’t log into your Charting Software until you have done the News and other Fundamental Analysis. Save the Technical stuff for last.

If your right hand causes you to sin…

Trading for this week of 18th January

There’s not much in the way of Economic news affecting the dollar this week… at least not until Thursday. There’s ┬ástill a lot of fear out there…that could still affect equities negatively. We’ve got to take care. I prefer to wait to see what direction things will take in Monday’s trading before I jump in…

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