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
Showing posts with label trading. Show all posts
Showing posts with label trading. Show all posts
Wednesday, August 11, 2010
Friday, June 4, 2010
Forex and The Continuing Euro Move
The euro has done it again. Over night we saw another new low hit against the dollar. Each new low gives us more opportunities to profit.
But last night something historic happened. The euro passed it's all time median point at 1.2130. That means that out of all it's entire range for its complete history, it has now returned from its very high highs, to the very middle of its all time range. What were the heights from which it fell? 1.5100!
That means it has fallen 3000 pips, and has 3000 more to go to the bottom of it's range. That would place it at around .9000.
Now while it may not stretch that far on this move, it is certainly well within reason that it would move half that far to 1.0500. An I am inclined to think that as the year unfolds, that may certainly happen.
So hang on to your hats, and let's ride this baby as long as we can!
Happy Trading!
Bill Jenkins
www.thefxtradingmasters.com
But last night something historic happened. The euro passed it's all time median point at 1.2130. That means that out of all it's entire range for its complete history, it has now returned from its very high highs, to the very middle of its all time range. What were the heights from which it fell? 1.5100!
That means it has fallen 3000 pips, and has 3000 more to go to the bottom of it's range. That would place it at around .9000.
Now while it may not stretch that far on this move, it is certainly well within reason that it would move half that far to 1.0500. An I am inclined to think that as the year unfolds, that may certainly happen.
So hang on to your hats, and let's ride this baby as long as we can!
Happy Trading!
Bill Jenkins
www.thefxtradingmasters.com
Tuesday, May 4, 2010
Forex and Trading the News, Part 2
Last time we looked at some of the rationale, both good and bad, for trading the news releases. I wrote on how to trade the trends following up to the news release. I should add here, that if you are trading those shorter term movements, generally I want to be out several hours before the news release itself.
But not only is there decent opportunity to trade leading up to the announcements, but following them as well. Especially if the news is a surprise and causes a reversal, or if it is a surprise and continues in the direction of the trend. A news release that offers no surprises, either good or bad, can just be rather boring, and difficult to trade.
Trading Forex price action after a news release, is done just the same way as in the days leading up to it. Make sure you have established the direction of the trend, then trade off of the 5 minute charts. Keep your stops close, just beyond the previous swing high or low, and let your winners run with a trailing stop. See yesterday's entry for more detailed information.
Another means of trading Forex news announcements, and making a profit from entering a trade, is to look at the immediate price action after the announcement, and then just enter a longer term position. So if the market gets a surprise to the upside from a data announcement, watch the price action for 5-15 minutes, to see if there is a discernable direction. If so, you can enter on a pullback, again using a 5-15 minute stochastic, and just trail the move. It will likely last all day unless there is some other news to off-set it.
Tomorrow we will take up part 3 of Trading the Forex News, using news to augment or exit an existing trade. And we will have a very timely example from our Euro trade this week!
Until next time...Happy Trading!
Bill
But not only is there decent opportunity to trade leading up to the announcements, but following them as well. Especially if the news is a surprise and causes a reversal, or if it is a surprise and continues in the direction of the trend. A news release that offers no surprises, either good or bad, can just be rather boring, and difficult to trade.
Trading Forex price action after a news release, is done just the same way as in the days leading up to it. Make sure you have established the direction of the trend, then trade off of the 5 minute charts. Keep your stops close, just beyond the previous swing high or low, and let your winners run with a trailing stop. See yesterday's entry for more detailed information.
Another means of trading Forex news announcements, and making a profit from entering a trade, is to look at the immediate price action after the announcement, and then just enter a longer term position. So if the market gets a surprise to the upside from a data announcement, watch the price action for 5-15 minutes, to see if there is a discernable direction. If so, you can enter on a pullback, again using a 5-15 minute stochastic, and just trail the move. It will likely last all day unless there is some other news to off-set it.
Tomorrow we will take up part 3 of Trading the Forex News, using news to augment or exit an existing trade. And we will have a very timely example from our Euro trade this week!
Until next time...Happy Trading!
Bill
Monday, April 19, 2010
Forex Trading, 50 and 200 day MA
Our last post centered on the iedea of using Moving Averages to determine the trend of a currency pair. If you'll recall, I said then to use the 200 simple MA on a daily chart. Then simply look at the direction of the line. If the MA is pointing up, the trend is up, and that is the direction you want to trade. If the MA is pointing down, then the trend is down and that is the way you want to trade. If it is moving sideways, STAY AWAY!
We also covered the price action in relation to the MA. If the price action is above the MA and the MA is pointing upward, you'll want to wait until the price action comes to to the MA and then put on a long trade.
If the price action is below the MA and the MA is pointing downward, then wait until the price comes back up to the MA, and initiate a trade to the short side.
If price is above a downsloping MA, or below an upsloping MA, this is an excellent place to begin looking for the trend to continue. But there is also another moving average that if you overlay it on the chart with the 200 day will give you some really trades.
So put a 50 day MA on the chart, and watch how often the price follows it during a bull or bear run. So instead of waiting for a pullback to the 200 day MA, just wait for pull back to the 50 day MA, then enter in the direction of the prevailing trend. Set your stop 20 pips or so away from the most recent swing high or low, and see how you do!
Happy Trading!
We also covered the price action in relation to the MA. If the price action is above the MA and the MA is pointing upward, you'll want to wait until the price action comes to to the MA and then put on a long trade.
If the price action is below the MA and the MA is pointing downward, then wait until the price comes back up to the MA, and initiate a trade to the short side.
If price is above a downsloping MA, or below an upsloping MA, this is an excellent place to begin looking for the trend to continue. But there is also another moving average that if you overlay it on the chart with the 200 day will give you some really trades.
So put a 50 day MA on the chart, and watch how often the price follows it during a bull or bear run. So instead of waiting for a pullback to the 200 day MA, just wait for pull back to the 50 day MA, then enter in the direction of the prevailing trend. Set your stop 20 pips or so away from the most recent swing high or low, and see how you do!
Happy Trading!
Wednesday, April 14, 2010
Following the Forex for Profit
This is a brand new blog site dedicated to the education and training of would be forex traders. There is no other market under the sun where a profit can be made with such a small start up capital, and in such a short amount of time.
Starting with only a couple hundred dollars you can get into the largest trading market in the world. With a smaller account like that, you can put up less than $3 in margin to test your trading skills. In a days' time you would only need to get 30 points (called pips in the forex world), and you would double your money.
How hard is it to get 30 pips?
An average currency pair may move 100 pips or more each day. And you only need 1/3 of that in order to make 100%. Of course, you can settle for less and many professional traders, myself included, actually do. After all, only getting 10 pips, or 33%, is pretty darn good. And a heck of a lot better than you'll ever do at your bank!
So at this blog, I'll be showing you how I make my trades each day and what I base my decisions on. I'll also be recommending companies that can assist you in your trading with other good programs. But beware. While there are many good ways to trade the forex, there are many more bad ways to trade it, too! So it's crucial to only use people you trust, not just one of the multitude of scammers trying to make a quick buck.
Today's trade (which you could find by subscribing to my website) is a continuation of a trade we entered yesterday. We bought the aussie dollar at .9275. It is already up to .9336. That's a gain of 61 pips in 24 hours! And for those of you who are counting, that's 200% on my initial margin investment.
Now I am putting up more in margin than just $3, but you get the picture. Start small. Take your time and grow your account. That's what this blog is all about, making money in forex. And if there was ever a time when folks needed more money...it's now!
So check back in often, we'll be posting trades and lessons regularly!
Happy Trading!
Starting with only a couple hundred dollars you can get into the largest trading market in the world. With a smaller account like that, you can put up less than $3 in margin to test your trading skills. In a days' time you would only need to get 30 points (called pips in the forex world), and you would double your money.
How hard is it to get 30 pips?
An average currency pair may move 100 pips or more each day. And you only need 1/3 of that in order to make 100%. Of course, you can settle for less and many professional traders, myself included, actually do. After all, only getting 10 pips, or 33%, is pretty darn good. And a heck of a lot better than you'll ever do at your bank!
So at this blog, I'll be showing you how I make my trades each day and what I base my decisions on. I'll also be recommending companies that can assist you in your trading with other good programs. But beware. While there are many good ways to trade the forex, there are many more bad ways to trade it, too! So it's crucial to only use people you trust, not just one of the multitude of scammers trying to make a quick buck.
Today's trade (which you could find by subscribing to my website) is a continuation of a trade we entered yesterday. We bought the aussie dollar at .9275. It is already up to .9336. That's a gain of 61 pips in 24 hours! And for those of you who are counting, that's 200% on my initial margin investment.
Now I am putting up more in margin than just $3, but you get the picture. Start small. Take your time and grow your account. That's what this blog is all about, making money in forex. And if there was ever a time when folks needed more money...it's now!
So check back in often, we'll be posting trades and lessons regularly!
Happy Trading!
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