It's been a few days since I had the chance to sit down at the blogspot and open up on a few comments. Last weeks' trading was very good to us as we capitalized on the weakening dollar comments by the Fed, and by the anti-dollar reaction to the Durable Goods Orders of Friday.
As I listen to what other traders are saying today, most are inclined to think that the run in the risk currencies is about over for now and due for a strong pullback. And from an overbought point of view, this is certainly true. But always remember, there are two sides to every market. And while some are looking for a retracement, others are looking for a continued advance. How do we tell who is right? The real answer? WE DON'T.
Trying to pick the "right" in the forex is risky business and is what makes most traders real losers. While it behooves us to always be on guard against reversals, and while some traders seem to make a living at trading off of them, I find it much easier to to trade the trend. So I ask you again, "How do we tell who is right?" BOTH ARE.
Markets will always correct...at some point. But you can lose an awful lot of money trying to find that correction point. From my perspective, stay with the trend. Yes, it's true. We will always be losers at the end of the trend. But that is simply the nature of trading. Let's be winners as long as the tend will last. Doing so will mean that,
1.) sometimes we will give back profit when the trend reverses, but we'll still walk away with a good trade;
2.) sometimes, our profit targets will get hit and we are out before the market reverses. In that case we still have our profits, and no harm inflicted;
3.) sometimes, we may enter a trade right at the reversal point and it is a loser from the get go.
However, if we have exercised proper restraint and money mangement, employed suitable stops top protect our capital, and if this is only one of three scenarios, we should easily come out ahead in the end following the trend and not being extreme reversal pickers.
Happy Trading!
Bill
Monday, September 27, 2010
Thursday, September 9, 2010
Forex Changes in the USA
Just a brief entry tonight, as some traders have checked in, having received notices from their brokers about new margin requirements and leverage limits.
There is a simple way around all this. It may seem a bit foreign, but it is perfectly fine.
Many brokers, mine included (FX Solutions), have branches that are outside the US. It is generally just a matter of paperwork to move your account inside the same company to another location.
My accounts are actually in the UK, even though I am in the US. The transfer was simple. I filled out the paperwork, and the broker took care of the rest. My US account was closed and they took my balance and used it to fund the new UK account.
It is still denominated in USD (not Sterling) so there is no change in my balance, or having to recalculate exchange rates.
If your broker does not have a UK office, and you feel constricted by the US requirements into forex financial affairs, give FX Solutions a call. I am not reimbursed by them, I just really like the way they treat me, and the way they handled this transaction for me.
Happy trading,
Bill
There is a simple way around all this. It may seem a bit foreign, but it is perfectly fine.
Many brokers, mine included (FX Solutions), have branches that are outside the US. It is generally just a matter of paperwork to move your account inside the same company to another location.
My accounts are actually in the UK, even though I am in the US. The transfer was simple. I filled out the paperwork, and the broker took care of the rest. My US account was closed and they took my balance and used it to fund the new UK account.
It is still denominated in USD (not Sterling) so there is no change in my balance, or having to recalculate exchange rates.
If your broker does not have a UK office, and you feel constricted by the US requirements into forex financial affairs, give FX Solutions a call. I am not reimbursed by them, I just really like the way they treat me, and the way they handled this transaction for me.
Happy trading,
Bill
Wednesday, August 25, 2010
Forex and the GDP's
Earlier this week in forex news, Germany reported huge numbers in terms of its' GDP. And inasmuch as Germany is the economic engine that powers the EZ, one would be inclined to think that we should look for big numbers out of Europe when its' time to report. At the same time, Germanys' export numbers were huge, but the admin stoutly declared that the economy is more than just exports. HMMM...something sounds a bit fishy there. But until they can show us otherwise, exports is where their action is.
On this side of the pond, we have rapidly deteriorating numbers. Housing down, durable goods down, unemployment up (with new weekly numbers out tomorrow). Think they will be encouraging? I have had my doubts about this latest USD strength being a real flight to safety. After all, gold is off it's high, and not putting in new ones daily. This should indicate that a flight to safety may not be what is happening.
Perhaps it is only a retracement from a technical perspective. We shall see. For now the USD is getting dumped in anticipation that the GDP numbers they will present on Friday will be less than stellar, and may not even reach the forecasts from the Advanced reading. Remember, when it comes to GDP, there is the advanced or 1st reading, the second reading and the final reading. If you are looking at a forex news calendar, they will often be denoted by an A, S or F. And as a rule, they move the markets less with each reading...unless there is a notable departure from the previous reading.
I have a hard time believing that Friday's second reading won't be a disappointment. The real question will be, "How will the market respond?"
Will it see a deteriorating US economy as a sign to succumb to rising fear of an all out depression? Or will the Euro currencies, led by robust Germany, simply take the lead? Will all these austeriy measures be deemed a positive while the US is seen as extending more stimulus insead of tightening it's belt?
These are uncertain times in the forex. The most treacherous trading I've seen in some time. I am thankful for the nice return we've seen this month, more than most interest bearing accounts pay out in a year! And I am encouraged to have so many of you write to me and let me know that you have fared much better than our official numbers. That's great!
Let's continue to be cautious. Nobody ever suffered from being careful. Lastly, for those who wrote in today, and asked what I meant by "making money by standing aside", that is drawn from an old Jesse Livermore quote in his classic trading book, "Reminiscences of a Stock Operator". It's well worth the read. But he says there that he made more money by staying on the sidelines than by jumping in on every trade or price movement. As he finished very, very wealthy, his advice is worth paying attention to!
Happy Trading,
Bill
On this side of the pond, we have rapidly deteriorating numbers. Housing down, durable goods down, unemployment up (with new weekly numbers out tomorrow). Think they will be encouraging? I have had my doubts about this latest USD strength being a real flight to safety. After all, gold is off it's high, and not putting in new ones daily. This should indicate that a flight to safety may not be what is happening.
Perhaps it is only a retracement from a technical perspective. We shall see. For now the USD is getting dumped in anticipation that the GDP numbers they will present on Friday will be less than stellar, and may not even reach the forecasts from the Advanced reading. Remember, when it comes to GDP, there is the advanced or 1st reading, the second reading and the final reading. If you are looking at a forex news calendar, they will often be denoted by an A, S or F. And as a rule, they move the markets less with each reading...unless there is a notable departure from the previous reading.
I have a hard time believing that Friday's second reading won't be a disappointment. The real question will be, "How will the market respond?"
Will it see a deteriorating US economy as a sign to succumb to rising fear of an all out depression? Or will the Euro currencies, led by robust Germany, simply take the lead? Will all these austeriy measures be deemed a positive while the US is seen as extending more stimulus insead of tightening it's belt?
These are uncertain times in the forex. The most treacherous trading I've seen in some time. I am thankful for the nice return we've seen this month, more than most interest bearing accounts pay out in a year! And I am encouraged to have so many of you write to me and let me know that you have fared much better than our official numbers. That's great!
Let's continue to be cautious. Nobody ever suffered from being careful. Lastly, for those who wrote in today, and asked what I meant by "making money by standing aside", that is drawn from an old Jesse Livermore quote in his classic trading book, "Reminiscences of a Stock Operator". It's well worth the read. But he says there that he made more money by staying on the sidelines than by jumping in on every trade or price movement. As he finished very, very wealthy, his advice is worth paying attention to!
Happy Trading,
Bill
Monday, August 23, 2010
Forex and the Steinitz Fractal Breakout Indicator
Some of you followed my suggestion last week, and purchased the Forex indicator from Don Steinitz. I wanted to take a few paragraphs and let you know more fully why I think this particular indicator is well worth your time and money.
Those of you who have been with me for a long time, know that I do not "market stuff" to my clients unless it is my own, or, as in this case, I think it will benefit everybody in the long run. But as I mentioned on Friday, I don't mind at all making an exeption for Don's indicator. Like I told you, I had spent alot of time and money on numerous other courses and setups only to get burned repeatedly. As a novice trader, I was failing to see the big picture, and that the most successful traders ALWAYS use the trend to their advantage. For those of you who signed up to my free list, you may remember that before I directed you to the blog, the very first email lesson was on the determination of trend. Without it, we are like directionless pilgrims trekking through an unremarkeable desert landscape with no way to mark our bearings.
The genius of Don's indicator is first and foremost the algorithm he uses to determine trend. Now I make no claim to being an expert at mathematics, nor do I know the parameters of Don's algothims, but I do know that they are effective. The second part of his indicator is the means by which he measures retracements in the trends. As you know, it's one thing to identify a trend successfully, it's another entirely to be able to gauge a good entry to catch the rest of the wave. The indicator is not perfect, but it is accurate.
One thing that I did find helpful was to lengthen his stop losses. Doing so increased my number of successful trades when I used the indicator. Of course, it is always important to remember, that if you use this for intraday trading (as I have), be sure to shorten your profit targets. Shooting for 100 pips on a 15 minute chart is not wise management. It is true, every 100 pip move begins on a 15 minute chart somewhere, but you shouldn't look for that each time. Look to the most recent swing high or low (depending on whether you are going long or short) and target that point. Get some off the table at that level, and leave the rest run as a free trade.
If you haven't taken advantage of Don's indicator yet, please give it a try. For those of you who are anxious about trading different currencies than the ones I specialize in, this will really fill the bill. Remember, always size your risk properly, never overcommit and never over trade. Even the world's best indicator won't save you from those two mistakes!
If you haven't taken a look at it yet, just follow this link:
http://drwilliam.trader6969.hop.clickbank.net
Happy trading!
Bill
www.thefxtradingmasters.com
Those of you who have been with me for a long time, know that I do not "market stuff" to my clients unless it is my own, or, as in this case, I think it will benefit everybody in the long run. But as I mentioned on Friday, I don't mind at all making an exeption for Don's indicator. Like I told you, I had spent alot of time and money on numerous other courses and setups only to get burned repeatedly. As a novice trader, I was failing to see the big picture, and that the most successful traders ALWAYS use the trend to their advantage. For those of you who signed up to my free list, you may remember that before I directed you to the blog, the very first email lesson was on the determination of trend. Without it, we are like directionless pilgrims trekking through an unremarkeable desert landscape with no way to mark our bearings.
The genius of Don's indicator is first and foremost the algorithm he uses to determine trend. Now I make no claim to being an expert at mathematics, nor do I know the parameters of Don's algothims, but I do know that they are effective. The second part of his indicator is the means by which he measures retracements in the trends. As you know, it's one thing to identify a trend successfully, it's another entirely to be able to gauge a good entry to catch the rest of the wave. The indicator is not perfect, but it is accurate.
One thing that I did find helpful was to lengthen his stop losses. Doing so increased my number of successful trades when I used the indicator. Of course, it is always important to remember, that if you use this for intraday trading (as I have), be sure to shorten your profit targets. Shooting for 100 pips on a 15 minute chart is not wise management. It is true, every 100 pip move begins on a 15 minute chart somewhere, but you shouldn't look for that each time. Look to the most recent swing high or low (depending on whether you are going long or short) and target that point. Get some off the table at that level, and leave the rest run as a free trade.
If you haven't taken advantage of Don's indicator yet, please give it a try. For those of you who are anxious about trading different currencies than the ones I specialize in, this will really fill the bill. Remember, always size your risk properly, never overcommit and never over trade. Even the world's best indicator won't save you from those two mistakes!
If you haven't taken a look at it yet, just follow this link:
http://drwilliam.trader6969.hop.clickbank.net
Happy trading!
Bill
www.thefxtradingmasters.com
Wednesday, August 18, 2010
Forex and Relief Rallies
A relief rally is like the blowing off of a pressure valve. In today's example, we have been watching the pound sterling get sold off with pre monetary policy committee meeting jitters. From its' perch just below 1.5700, it fell 200 pips over several hours to a low just below 1.5500. There seemed to be nobody ready to bid it up, even though there were rumors that there might be a change in the status of the report that would include new language about raising rates. And maybe even a bonus of someone bedsides Andrew Sentance voting for an increase. Had the vote changed from 8-1 to 7-2, we probably would have seen a virtual explosion in the gbp/usd. As it was, we got a massive relief rally of over 150 pips as the longs jumped on and the shorts collected their profits.
But what will happen in the days ahead? Does this big move portend a change for the bulls? Probably not. It is a big move, but when viewed from a distance, we see it currently halting at previous resistance just below 1.5700. Now a couple of 4 hour closes above that level, a pullback to 1.5700, and then a bounce...that would change the outlook dramtically. But without that, we are left into a channel, until we get a move up or down. Currently, we've seen the pair very well bid around 1.5500.
But relief rallies also cause another phenomen, sympathy moves. Particularly in this case we've watched the euro climb higher on the back of the sterling and the swissy has been something of a beneficiary also. As a rule, I don't like to jump onto relief rallies. Mostly because they have several points of resistance that they have to break before they become anything of import. More often than not, I've found myself on the losing end of them. What I would prefer to do is to watch them and look for signs of exhaustion in the rally. Once they appear, the move may be over, plus I can usually get in at a nice price with a smaller stop...that way if the rally isn't over, I've risked very little. The real temptation is to get in too soon. If you try that 3 or 4 times and fail, you've really racked up quite a bit of losing pips, and it's hard to make that back up. So when counter trading relief rallies, be patient on your entry, and jump in small. That'll give you more staying power if it moves against you. Make sure you know where your resistance and support lines are as they often provide the very best entries. Finally, don't be too greedy. Get 20-30 pips and take some off the table. Let a smaller portion ride for that homerun. Also, set your stop to break even, when you take a bit off the table. Then you're home free with a guaranteed profit. Remember, a profit a day keeps the bill collector away!
Happy trading!
Bill
www.thefxtradingmasters.com
But what will happen in the days ahead? Does this big move portend a change for the bulls? Probably not. It is a big move, but when viewed from a distance, we see it currently halting at previous resistance just below 1.5700. Now a couple of 4 hour closes above that level, a pullback to 1.5700, and then a bounce...that would change the outlook dramtically. But without that, we are left into a channel, until we get a move up or down. Currently, we've seen the pair very well bid around 1.5500.
But relief rallies also cause another phenomen, sympathy moves. Particularly in this case we've watched the euro climb higher on the back of the sterling and the swissy has been something of a beneficiary also. As a rule, I don't like to jump onto relief rallies. Mostly because they have several points of resistance that they have to break before they become anything of import. More often than not, I've found myself on the losing end of them. What I would prefer to do is to watch them and look for signs of exhaustion in the rally. Once they appear, the move may be over, plus I can usually get in at a nice price with a smaller stop...that way if the rally isn't over, I've risked very little. The real temptation is to get in too soon. If you try that 3 or 4 times and fail, you've really racked up quite a bit of losing pips, and it's hard to make that back up. So when counter trading relief rallies, be patient on your entry, and jump in small. That'll give you more staying power if it moves against you. Make sure you know where your resistance and support lines are as they often provide the very best entries. Finally, don't be too greedy. Get 20-30 pips and take some off the table. Let a smaller portion ride for that homerun. Also, set your stop to break even, when you take a bit off the table. Then you're home free with a guaranteed profit. Remember, a profit a day keeps the bill collector away!
Happy trading!
Bill
www.thefxtradingmasters.com
Friday, August 13, 2010
Forex and the Stellar Euro GDP
We've all heard the saying that "No news is good news."
But what about this one, "Good news is no news." Something doesn't quite seem to fit. Good news should cause rejoicing, jubilation, cheer and enthusiasm. Today we witnessed great news out of the Eurozone, but nobody clapped. Nobody cheered. Nobody stood up and gave a toast.
The Eurozone was forecasting 2nd quarter avanced growth of+0.7% and a year over year figure of+1.4%. So when the data was released that the 2nd quarter figure was really +1.0% (and the year over year was +1.7%), an astounding 30+% surprise, the euro should have shot through the roof. I've seen similar positive surprises move a currency 200 pips in just hours. But what did we get? Bupkiss. Zero. Zilch. Nada.
What gives? It seems that underneath the surface lies a bubbling uneasiness. A fearful restlessness that perhaps the data isn't what it appears. After all, where is the spending in Europe? Where is the Manufacturing or Industrial production? Where are there any real signs of inflation? And if they really are producing all this stuff, who else in the world is buying it?
I have often bemoaned to you my leariness of government generated reports. Those who have a vested interest in them certainly can influence their release or the way in which they are calculated at the very least. The eurozone is the worlds' second largest economy by some measures, and the largest by others. There is no way that the world's largest economy comes out with a 30% surprise and it doesn't move the markets. Either traders think they are lying (can I see a show of hands?) or the markets are so fearful of other macro debt issues that this tier one data becomes second fiddle.
Either way, we may be in for quite a decline in the currencies. Goldman Sachs has reported that they feel there is a 50/50 chance of a double dip recession here in the US. They are a bit late for the millions who have lost their jobs and remain out of work, but I guess we can welcome them to the party. Nothing like pointing out that there is an 800 pound gorilla in the room. Nevertheless, when GS speaks, the lemmings listen. NOW they are afraid. This could spark another massive US dollar rally like the one that ended '08.
Let's see, 2010 has seen record foreclosures countrywide. We have had more banks fail this year than at the height of the credit crunch. The unemployment rate is still hovering at its highs (and would be higher if the government would actually tally up the people who have quit looking for work altogether...but somehow they aren't worthy of being counted).
Credit debt is down, savings are up, confidence is on the wane...any of this sound like a recovery to you? Hold onto you hats...this could get very interesting!
Have a great weekend!
Bill
www.thefxtradingmasters.com
But what about this one, "Good news is no news." Something doesn't quite seem to fit. Good news should cause rejoicing, jubilation, cheer and enthusiasm. Today we witnessed great news out of the Eurozone, but nobody clapped. Nobody cheered. Nobody stood up and gave a toast.
The Eurozone was forecasting 2nd quarter avanced growth of+0.7% and a year over year figure of+1.4%. So when the data was released that the 2nd quarter figure was really +1.0% (and the year over year was +1.7%), an astounding 30+% surprise, the euro should have shot through the roof. I've seen similar positive surprises move a currency 200 pips in just hours. But what did we get? Bupkiss. Zero. Zilch. Nada.
What gives? It seems that underneath the surface lies a bubbling uneasiness. A fearful restlessness that perhaps the data isn't what it appears. After all, where is the spending in Europe? Where is the Manufacturing or Industrial production? Where are there any real signs of inflation? And if they really are producing all this stuff, who else in the world is buying it?
I have often bemoaned to you my leariness of government generated reports. Those who have a vested interest in them certainly can influence their release or the way in which they are calculated at the very least. The eurozone is the worlds' second largest economy by some measures, and the largest by others. There is no way that the world's largest economy comes out with a 30% surprise and it doesn't move the markets. Either traders think they are lying (can I see a show of hands?) or the markets are so fearful of other macro debt issues that this tier one data becomes second fiddle.
Either way, we may be in for quite a decline in the currencies. Goldman Sachs has reported that they feel there is a 50/50 chance of a double dip recession here in the US. They are a bit late for the millions who have lost their jobs and remain out of work, but I guess we can welcome them to the party. Nothing like pointing out that there is an 800 pound gorilla in the room. Nevertheless, when GS speaks, the lemmings listen. NOW they are afraid. This could spark another massive US dollar rally like the one that ended '08.
Let's see, 2010 has seen record foreclosures countrywide. We have had more banks fail this year than at the height of the credit crunch. The unemployment rate is still hovering at its highs (and would be higher if the government would actually tally up the people who have quit looking for work altogether...but somehow they aren't worthy of being counted).
Credit debt is down, savings are up, confidence is on the wane...any of this sound like a recovery to you? Hold onto you hats...this could get very interesting!
Have a great weekend!
Bill
www.thefxtradingmasters.com
Wednesday, August 11, 2010
Forex after the August FED
Many were looking for some disappointing news from the Fed yesterday, and they delivered. The initial reaction was a dollar sell-off as the Fed offered a dour outlook for the US and global recovery. Not that there isn't a recovery, but it is certainly hard to find. I love governmental euphemisms. In spite of all the stimulus already launched into the world during this depression, inflation rates are not rising. And that was the primary goal. Why? Why would governments want inflation to rise? Isn't that a bad thing? Not in the twisted world of "government-speak". Rising inflation is generally viewed as an indicator that the economy is heating up. Jobs are being created, people are spending and borrowing, asset values are climbing. Of course, when inflation gets too hot, the Fed will attempt to stop it by raising interest rates. This stops borrowing, job creation, and asset price growth. How?
It stops borrowing because people and businesses find it expensive to do so. It stops job creation, because companies cannot borrow at lower rates to expand. No expanding, no hiring. It halts the growth of asset prices, because people can't pay more for an asset plus pay more in interest. It will be one or the other. And since interest rates are out of their control, when they are rising, asset values are falling. This stops, or at least slows, economic growth. So the Fed is looking for some rise in inflation to signal that the economy is lifting. But turning over every rock they can find, the can't find inflation. Nor is all the money given to banks being lent out. This would help inflation rise. But the banks are in worse trouble than most families, and they know it. With falling asset values, they are stuck with under, and non-performing, loans. As more and more homeowners decide they are better off to leave their current mortgages, and "stick it to the man", the banks are truly "stuck". And when businesses go belly up, they don't worry about repaying their loans either. All in all, the recovery is on shaky ground.
Thus, when traders gave further consideration to what is happening, a flight to the dollar became the real answer. Safety. Liquidity. These are what the USD have to offer. Could this become a full fledged double dip? Certainly. Does anybody want to talk about that? Nope. Will the dollar benefit if a double dip occurs? You bet. Stay tuned, and we'll see how all this plays out.
Happy trading,
Bill
www.fxtradingmasters.com
It stops borrowing because people and businesses find it expensive to do so. It stops job creation, because companies cannot borrow at lower rates to expand. No expanding, no hiring. It halts the growth of asset prices, because people can't pay more for an asset plus pay more in interest. It will be one or the other. And since interest rates are out of their control, when they are rising, asset values are falling. This stops, or at least slows, economic growth. So the Fed is looking for some rise in inflation to signal that the economy is lifting. But turning over every rock they can find, the can't find inflation. Nor is all the money given to banks being lent out. This would help inflation rise. But the banks are in worse trouble than most families, and they know it. With falling asset values, they are stuck with under, and non-performing, loans. As more and more homeowners decide they are better off to leave their current mortgages, and "stick it to the man", the banks are truly "stuck". And when businesses go belly up, they don't worry about repaying their loans either. All in all, the recovery is on shaky ground.
Thus, when traders gave further consideration to what is happening, a flight to the dollar became the real answer. Safety. Liquidity. These are what the USD have to offer. Could this become a full fledged double dip? Certainly. Does anybody want to talk about that? Nope. Will the dollar benefit if a double dip occurs? You bet. Stay tuned, and we'll see how all this plays out.
Happy trading,
Bill
www.fxtradingmasters.com
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