Forex Daily Review: Mind the Bearish Gap in EUR/USD

28 Sep 2012• Matti Williamson, FX and commodities analyst      Spain Budget For 2013 Summary

The market is in love with Spain's budget for 2013. New fiscal group will now monitor Spain's budget, ministerial spending will be lowered by 8.9% (approx) and spending will be reduced by EUR 40 billion. Tax revenues are expected to rise by 3.8% to EUR 175.2 billion as Spain is convinced it will meet its 6.3%/GDP debt target by 2012. Spain is expected to be in recession in 2013 but hopes the new spending cuts will ensure it may be the last recession the Spanish region will see.

Egan Jones Downgrade Spain

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Forex Daily Review: EUR/USD Trend in the Fundamental Chaos

My target for AUD/USD was missed by the market but nevertheless a decent decline was noted. Unconfirmed speculations that the Chinese Securities Regulatory Commission (CSRC) will hold a press conference at 08:00am GMT with 'positive news.' This prevents the risk-aversion mode to completely engulf AUD pairs and crosses so weakness could resume after 08:00am GMT. If China doe surprise gains may reach the resistance at 1.0443. The price is expected to cap further gains, I would look for the downtrend to continue towards my predetermined target at 1.0295. To recap, there is a fair possibility the Reserve Bank of Australia (RBA) may cut its cash rate by 25bps in next week's monetary policy meeting.

EUR/USD

EUR/USD recovery will be put to the test around 12:00pm GMT when Spain will announce its preliminary budget report for 2013. So far Spain retail sales for August continue to plummet, posting -2.1% y/y. This is the 26th consecutive month of falls in the Spanish retail sales. EUR/USD did not appreciate the decline and reacted by dropping to 1.2884 at the time of this writing. The big fish however is due Friday when Spain finally releases its stress test results for the banking sector.

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Forex Daily Review: Europe is in Trouble, Copper Continues to Weaken

24 Sep 2012• Matti Williamson, FX and commodities analyst      Greece's Financial Mess

EUR/USD is heavily sold into Europe as the market digests weekend reports on Greece and Spain. Greece stated it is short of

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Forex Daily Review: AUD/USD Bears are Ready to Chew the Bulls’ Stops

25 Sep 2012• Matti Williamson, FX and commodities analyst      S&P Downgrades Growth Forecasts

The slowdown in China was finally noticed by Standard & Poor's (S&P) credit rating agency:

"We have lowered our base case forecasts of 2012 real GDP growth by about half a percentage point for China to 7.5%; Japan to 2.0%; Korea to 2.5%; Singapore to 2.1%; and Taiwan to 1.9%,"

Australia were also penalized, suffering from a 0.2% downgrade from 3.2% expected growth to 3.0%. There will be great pressure on the Reserve Bank of Australia (RBA) monetary policy meeting on 2 October. Although there are no expectations for a rate cut please be aware there is a great risk for the RBA to act and cut its cash rate by 25bps (0.25%) or suggest it may act in the next monetary policy meeting if economic data deteriorates. Fall in commodity prices are beginning to chip the firm Australian economy and I am certain this will not go unnoticed by key market figures. AUD/USD is currently trading at 1.0422 and will be the key focus for the upcoming week.

EUR/USD is Threatened by the ECJ and Finland

Despite recent gains in EUR/USD negative fundamentals are reluctant to let go. According to recent reports the European Central Bank (ECB) and the Bundesbank are reaffirming the legality of the ECB new bond-buying program. There is a great concern lawsuits may be filed to the European Court of Justice (ECJ) to block the program, all legal teams are on the case to ensure the ECJ will dismiss any 'bearish' lawsuits. Forex traders must also be aware of the upcoming 2012 elections in Finland, due in October. The 'True Finns' party, led by Timo Soiniis, are likely to star in the major headlines for their strong objection for financial bailouts to debt-ridden countries such as Spain, Greece and perhaps even Italy. Expect gains in EUR/USD to be short-lived until Finland shows us the light.

USD/JPY and the Cabinet Reshuffling

For USD/JPY fans there is a faint chance Prime Minister Noda will reshuffle its cabinet on 1 October, including a possible reassignment of Finance Minister Azumi. Japanese exporters may feel more comfortable selling Dollar-yen as the 'big brother' may be busy clearing his desk. Nevertheless I am certain the MOF will be monitoring the FX rates in USD/JPY and the new Finance Minister (if Azumi is reassigned) is likely to adopt a more aggressive approach as the strong Japanese Yen (JPY) is continuing to massacre Japanese firms in the stock market.

AUD/USD Technical Trading Strategy

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Forex Daily Review: China Initiated the Bearish Outlook for Gold, Crude Oil and AUD

My focus on AUD/USD is paying off. As expected, HSBC China Manufacturing PMI remained below 50.0, which indicates the economy is still contracting. A slowdown in China means it may purchase less goods from Australia, denting the AAA Australian sovereign rating. The Australian dollar (AUD) is expected to weaken against a basket of currencies on the fears that the Reserve Bank of Australia (RBA) will act and cut rates to counter the slowdown in China at the next monetary policy. The main trigger for Aussie-selling was a decline in China cola imports.

Gold

XAU/USD (gold) posted heavy losses as a result of the HSBC Manufacturing PMI. This was also expected as I outlined in my analysis. Despite the Fed's QE3, the weakness in gold and AUD are expected to continue throughout the upcoming months.

Brent Crude Oil

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Forex Daily Review: ESM Cheers won’t Help Copper

21 Sep 2012• Matti Williamson, FX and commodities analyst      ESM Announcement

The European Stability Mechanism (ESM) may finally be signed next Wednesday in Brussels, boosting the market bulls as the DAX 35 Index opened higher at 7420. The hawkish news may drive markets higher in today's session, reflecting in temporary gains in EUR/USD. The gains are unlikely to sustain themselves for the intermediate term, intraday resistance at 1.3040 to cap strong gains in Euro-dollar. The credit rating agencies remain the biggest threat as concerns on the US fiscal cliff mounts as we near the 2013. Immediate focus for today's session will be on GBP pairs and crosses as forex traders anticipate the Public Sector Net Borrowing at 08:30am GMT and CPI data from Canada at 12:30pm GMT.

Copper Technical Trading Strategy

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Forex Daily Review: The Fed QE3 will Initiate the Currency Wars

14 Sep 2012• Matti Williamson, FX and commodities analyst      The QE3 Details

Ben Bernanke unleashed the bullish devil and announced a third round of Quantitative Easing, known as QE3. The Fed will continue to purchase Treasuries under the maturity extension program (Operation Twist) and will begin buying $40 billion of agency mortgage-backed securities (MBS). The total value of the these two programs is valued at $85 billion until the end of the year. The pledge for low rates was also extended until mid-2015, a move that assisted in the weakness of the US dollar against a basket of currencies. Part of the program is to reinvest the prepayments it receives from its $800 billion agency MBS on a monthly basis. The labour market will be the key data to monitor as additional stimulus may be provided if the employment data remains sluggish. The open-ended commitment of the Fed aside the new stimulus is what caused the great bullish momentum in EUR/USD.

The Currency Wars, AUD/USD

For those who believe the Fed's actions will sustain a weak US dollar until the end of the year may wish to reconsider their views. Take AUD/USD as an example. A strong Australian dollar may harm the Australian economy as their exports are now becoming overly expensive. Also China manufacturing sector is contracting, favoring the odds less goods will be imported from Australia.

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Forex Daily Review: The Netherlands 2012 Elections Effects on EUR/USD 1.2900

13 Sep 2012• Matti Williamson, FX and commodities analyst     

Following the 2012 Dutch elections, exit polls suggest that Mark Rutte's party (Party for Freedom and Democracy) is in the lead with 41 seats out of the 140-seats in Parliament. The victory however is limited as the left Labour Party, led by Diederik Samsom is expected to receive 40 seats. If that is the case it will be very difficult to build a coalition between the center-right and the center-left. This could actually weigh on the financial markets but the US Federal Open Market Committee (FOMC) announcement of a possible QE3 at 16:30 GMT with a press conference at 18:15 GMT could prevent deep losses across the board. EUR/USD is currently maintaining its gains above 1.2900. Traders should ask themselves for how long this may be in light of the Netherlands elections.

Fed QE3 or Empty Words?

As the market prepares for Ben Bernanke's press conference, the Wall Street Journal (WSJ) survey shows that 34 out of 47 analysts believe there will be QE3 today but the majority are skeptical whether it will actually have any benefits on the economy. The Fed in my opinion is likely to extend its low-rates pledge into 2015. If any QE3 is introduced, I will not rule out the possibility of any sterilization to the fresh funds, which may actually strengthen the US dollar rather than weaken the world's reserve currency.

SNB and Italy Bond Auction

At 07:30am GMT the Swiss National Bank (SNB) will announce its monetary policy with faint speculations that the central bank wishes to raise EUR/CHF 1.2000 floor. Following the SNB interest rate announcement, Italy's Dipartimento del Tesoro is due to tap its 3-year benchmark, 4.50% July 2015 for between

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Forex Daily Review: EUR/USD Broke 1.2800, What's Next?

Academy > Trading Basics > Seasoned Trader > Currency Insights > Special Insights for Traders > Trading Tips > Currency Pairs > Recommended Resources > 5 Insights

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Forex Daily Review: The Baltic Dry Index Signals the Slowdown

11 Sep 2012• Matti Williamson, FX and commodities analyst      Dutch 2012 Elections and ESM

In a relatively muted session, the major currencies failed to provide a clear trend ahead of the heavy fundamentals, starting on Wednesday with the Dutch 2012 elections and the German Constitutional Court ruling on the European Stability Mechanism (ESM) and the fiscal compact. Moody's credit rating agency poured cold water on the European Central Bank's (ECB) efforts to stabilize the Euro zone with the unlimited bond-purchasing program by highlighting the plan is merely buying time for struggling countries and is not viewed as the final solution for the crisis.

Spain's Prime Minister, Mariano Rajoy stated in a TV interview that the government will not accept any bailout terms that include cuts in pensions or government spending. This increases the odds that Spain will not request financial aid to deal with its debt and I am uncertain the market will appreciate this 'heroic' act of Prime Minister Rajoy.

Mario Draghi lowered Spain's bond yields as he introduced his 'master plan' for the Euro zone, thus reducing the odds even further for Prime Minister Rajoy to request financial aid from the European Commission (EU).

 

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Forex Daily Review: German Court Ruling at 08:00am GMT, Watch EUR/USD

12 Sep 2012• Matti Williamson, FX and commodities analyst      To QE3 the Market? Ask Moody's

In a relatively peaceful European session EUR/USD was refuelled through the US session. Although many traders believe the US dollar is weak due to the upcoming decision on the ESM by the German Constitutional Court or a possible QE3 by the Fed however, Moody's credit rating agency appears to be the main cause for the EUR/USD mayhem. In a statement Moody's warned that the US budget negotiations at the end of the year will determine the US credit rating. The pressure on the Fed members to launch QE3 is now higher, the market is reacting in accordance.

"If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable...If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1." (Moody's).

The 'fiscal cliff' is currently assisting the selling of the US dollar but I wonder when that reverse risk-aversion will dominate the financial markets. Forex traders anticipate the Fed to initiate QE3 in a dovish statement. The market is pricing in the probability for QE3 but do not be surprised if strong profit-taking materialize shortly after the Fed's announcement. Please do not be surprised if QE3 will not be on the tables. A clear signal there is still a great concern for QE3 is gold (XAU/USD) failing to post strong gains with the leading indices and USD pairs and crosses in the Forex market.

German Court Verdict Due at 08:00am GMT

The German Constitutional Court will give its verdict in the morning (CEST) on the ESM and Fiscal Compact Treaty and may surprise the market by limiting Germany's liabilities. The court is expected to publish their verdict at 08:00am GMT.

EUR/USD Technical Trading Strategy



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Weekly Technical Analysis: Say Goodbye to $1,700 an Ounce

Gold has finally delivered the perfect price for a great reversal. To recap, gold broke out its supportive trendline that remained intact since 2008. In may 2012 the price broke below the trendline, signaling further weakness is in store. The market failed to retest the trendline, which now acts as a strong resistance. My patience paid off as gold is now testing the required level that may initiate a powerful bearish reversal in the precious commodity. The technical analysis for gold is relatively simple. As long as price remains below 1,782.00 (latter resistance) weakness is expected to reach as low as 1,450. I would then examine the possibility of further losses in the commodity.

I am aware of the Fed's rate announcement and economic projections on Thursday, 13 September where fresh round of Quantitative Easing (known as QE3) may be announced. Nevertheless I stick to the technical view of the market as the enriched fundamentals for this week are likely to weigh on the precious metal.

AUD/USD Weekly Technical Analysis


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Forex Trader Forum - Where Forex Traders Talk About Forex

Savvy forex traders often pinpoint the opportunities in forex trading and persist to time the industry so they know precisely when the right time is to trade, or buy. The problem is many traders buy at the wrong time, although they have monitored, explored, and checked the quotes daily. In addition, these people tend to bank on the notion that buying in forex is best when the market is low and the traders are pulling back.

At the entry level in forex, many traders erroneously time forex marketing without realizing how to fittingly, utilize pullback and the level of support.

Forex marketing has a strategy that many traders overlook. The prime strategy, which many forex traders believe is the key to profiting in the forex industry is the buying low and selling high strategy. Unfortunately, these traders are wrong, since it is a key to losing instead.

Support in forex industry is when chronological value or pricing comes in from traders who "Buy."

The mission behind buying is to provide support for the forex market exchange, as well as to analyze, examine, experiment, investigate, etc, the markets in forex currencies and exchange. Each time the traders test forex, it authenticates support.

Resistance becomes sizeable in the forex industry only when the levels of "resistance" is charted, i.e. at what time the levels of forex value, or pricing refuses to give in to jumping to a higher listing.

For this reason, at what time forex traders venture on buying low and selling high, they are making a big mistake. Traders who delay in forex trading markets will often recoil, or retract at the time some of the biggest deals transpire in the forex industry.

In short, the trends are what traders want to stay aware to, yet most traders will resist. Why, because the traders often feel uneasy at the times when other traders resisting buying and selling in forex.

Now, if you want to get ahead in forex trading and use strategies to win, I recommend you read the book on emotions, or the keys to success. No, these are not actual titles, yet visit your library to find relating material because what you are going to have to do to win in forex trading, is become friends to your discomfort.

Most people feel discomfort will experience distress, anxiety, and often it is because they fear embarrassment. The disadvantage of this way of thinking is that, most times the fears are exaggerated and the one fearing is the one who looses at the end.

Another big failure in life is that most people feel that if they are not on the normal level of thinking, they are not accepted and are set apart from the world. Read your history because you will find that the vast majority of those who succeeding in life, where different. That is they did not think on the terms of normal society. These people often win also in forex trading, since they set strategies apart from the rest.

In short, fear is the mechanism behind all failures. Now to sum up the best times to buy in forex trading. The best times to buy in trading industries, such as forex is when the market is "high" and traders are not resisting, or pulling back. In summary, when you use strategies in forex trading such as buying "high" and selling "higher," you are off to a grand start in winning in the forex industry. As well, you have setup forex trading strategies that set you apart from the rest, which means your chances of winning are higher

Forex Trader - Learning the Secrets Behind Forex Trading

Forex trader is a word you are going to here for a very long time when you enter the forex market. The forex market is by far the largest market in the world and over 2 trillion dollars are traded daily on this market! It is hard to imagine what 2 trillion dollars actually is. This 2 trillion dollars accounts for large financial institutions and multi-national corporations trading on the forex market daily. Small single investors are finally emerging after decades on the forex market.

Predict forex is something that everyone is trying to do these days and going to every great length to become the best forex trader possible. Most people dumb thousands and thousands of dollars a year on expense forex trading software, forex online platform trading, forex loan online trading, and spending way to much money learning someone else's useless forex rate exchange when they should be selling or buying their forex currency.

Now there are many great things you should know about the forex market. For starters, it is a unregulated investing market with no barriors or walls. Your earning potential on this market is unlimited and also the market is NOT government regulated like the stock market. The forex market is open 24 hours a day, 5 days a week so you can forex trade based on your schedule, not restricted to a regulated time. The stock market only allows stock traders to trade between the hours of 9 am - 5 pm Monday - Friday. Those hours are horrible especially if you work a Monday-Friday 9 am - 5 pm job yourself. When are you going to find time to stock trade? Exactly, you can't. But trust me you will never want to trade stock again once you find out how valuable forex trading is and how much income you potentially can earn from such a small investment.

When you get started in the forex market you really need to consider a few things?

How much forex training do you have? If you answer this question as little or none, you need to sign up for a free account on online forex websites. You will be able to create a free account to trade forex currency as if it was real money. You can earn "play money" and make the same decisions as if you were using real money. You can get a feel of your earning potential right away and see if you are on the right track to success. If you are not earning money right away do not get discouraged and give up! It will come to you over time. Just like anything new, you have to work at it and give it time to become a forex trading expert.

Once you become a forex trading expert your earning potential could rise above 6 figures like mine did. I did not need any fancy broker forex for all my trading or rely on forex software or a forex system to risk all my money (over $200,000). Would you like a forex system risking $200,000 and it is not a real human? You have the potential to be the best forex trader out there with a little studying of the market and picking up a real solid forex ebook on forex trading. Stop procrastinating and take action now!

Forex Software - How to Achieve Consistency in the Forex Market

Choosing the best Forex software to purchase can be a daunting task; a vast assortment of different programs are available, many with similar features and track records. This article is meant to provide some guidelines to follow when choosing a Forex program to buy.

The first and most obvious question is whether or not there is such a thing as good Forex software in the first place. Is there really such a disparity between different programs that you can objectively qualify some as being better than others? The short answer to this question is an emphatic "yes". The longer one is "yes, but be careful": there are some programs that are practically guaranteed to turn you a profit, but there are also those that can ruin your account. Trial and costly error is often the only way to determine the consistent winners from the consistent losers, but with the right research to back up your decision, you can avoid this process and turn a consistent profit with minimal risk through careful selection of the best Forex software.

With this in mind, let us have a look at what you'll find in the best Forex programs.

The first thing worth considering is that the field of Forex software is split into two camps. Not only do you need to determine which programs are the most likely to help you make money, but you also need to figure out which kind kind of Forex software suits your needs.

The bare-bones variety is called Forex signal software; these are programs that analyze the Forex market for profitable opportunities and signpost when you should buy in and sell out of particular investments. A wide variety of Forex signal programs are available, some more reliable than others: a few particularly good ones can add consistent growth to your equity. However, there is a dark side to this particular kind of Forex software: they do not actually perform any trades on their own. To actually profit using a Forex signal program, you must constantly monitor the software and act on its information, a task made more difficult by the fact that the Forex market is open 24/7; unlike the stock exchange, there is no closing bell for currency trading. It's possible to make money with these programs, but you absolutely must be able to spend some time to trade, perhaps keeping odd hours to keep up with the market.

The second variety, and the one most people think of, are expert advisors, also known as "Forex robots". These robots have their cousins' ability to analyze the Forex market and identify optimal trading opportunities, but they can also execute trades without any human input whatsoever: not only can these programs take much of the drudge work out of reading the market's movements, but they can trade in your place all day and all night, eliminating the need for long hours spent watching the market.

The logical conclusion that can be reached from this is that most people will find it easier and more convenient to profit using a fully-automated Forex robot; claims of their incredible reliability and uncanny ability to identify profitable trades are frequently backed up by live trading results and success stories, and further still, they can trade even when their user is not physically in front of the computer.

However, some traders may prefer a degree of autonomy, preferring to trade based on their own judgment, making Forex signal software the more attractive option: these programs can still provide valuable market analysis without intruding on the trader's ability to make their own decisions regarding when or what to trade. Still, for beginners, a Forex robot is undeniably the ideal choice: a reliable Forex program can turn a consistent profit even for those with little or no Forex trading experience.

Whether you're a novice trader looking to make some money from the Forex market or an established trader looking to increase your profits, a Forex program of any description can be a valuable addition to your repertoire. Regardless of whether you opt for an automated trading program, a good Forex program's ability to pick out the best trades and avoid costly mistakes is well beyond human capacity. Do your research to find the best software and pick the program that best suits how you intend to trade.

Forex Signals - How to Instantly Trade Like You Have Decades of Forex Trading Experience

Seriously consider forex signals if you are not yet trading profitably, have limited experience, or just don't have much time to devote to your forex trading.

From the simple one email a day variety to the forex mentor who sits with you all day holding your hand as you trade, a portfolio of forex trade alerts can be virtually free and can transform you into a profitable trader instantly.

If like us you've ever analysed a chart and placed your own trades, you will almost certainly have also sat in front of your screen wondering if you were doing the right thing.

Questions like "have I entered this trade too late ?" and "am I trading in the right direction (long when I should be short)" will certainly have entered your mind.

How many times have you wished you had an expert trader with decades of experience guiding your trades, keeping you out of dangerous trades, and pointing you towards trades with a higher probability of success ?

We were certainly in that position many times in the early days, but always imagined the cost of having an expert on hand would far outweigh any extra profits we might make. It turns out we were quite wrong.

There are numerous services available, known variously as forex signals, forex alerts, or forex tips.

Trading signals come in a variety of formats, suited to how much of your day you can devote to trading. And yes beware, there are loads of scams out there too, but we'll show you how to avoid them, and we'll direct you towards the better ones.

Forex Trading Signals - many varieties

The main characteristics of forex trading signals to be aware of are as follows;

• Cost: Free OR monthly subscription



• Complexity: Simple "one email a day" OR Full-Service



• Control: You keep full control OR the signal provider trades your a/c for you



• Trading style: e.g. frequent scalper OR low volume swing trader

A free forex signal may at first seem like a fabulous idea, but as we will reveal here, you may very well prefer to pay for a free subscription service (yes, we know that doesn't make sense - but read on)



Most forex trade signals charge a very modest subscription fee, usually in the region of USD $80 - $400 per month (although happily most are at the lower end of this range), while there are also websites which provide forex signals for no charge.

In their simplest form a forex trading signal will send you a forex alert email once a day listing trade set ups for the next 24 hours.

Some of these are purely computer generated, some are computer generated and then audited by a human expert, and some are completely researched and generated exclusively by a human expert trader who may add some market commentary to their forex forecast.

Some forex trading signals are high volume scalpers, calling many trades in a day aiming to profit a handful of pips on each. Others only call a few trades a day, aiming to profit 20 - 80 pips on each single trade.

At the more full-service end of the market is the type of forex signal service which provides you with an almost 24 hour a day live online broadcast calling forex trading tips as they occur, explaining the logic of the proposed trade and backing it up with an email or even a video clip.

Some forex trading signals will even trade their signals in your own account for you, leaving you to just sit back and watch.
This is similar to what a robot does by using forex signal software, but with the added reassurance that it's being done by an experienced intelligent human trader rather than a dumb machine following an algorithm.

Think of full-service forex trading signals like a forex TV station, which you have running in the background on your pc or internet connected laptop throughout your day. The broadcast remains quiet when there is nothing to do, freeing your time for the other priorities in your day, then calls for your attention when there is a trade to place or manage.

You may be surprised, as we were, to discover that the prices charged by full-service providers are usually very similar to those charged by the one email a day providers.

This type of service usually also includes an interactive facility, enabling you to send a message to your forex mentor if you have a question.

Many forex signal services have very loyal memberships, and some even limit the number of members they will accept.

Free forex signals (virtually)

On the basis that time is money, in our opinion the amount of time we can now devote to other activities by not slaving over our charts for hours searching for the perfect trade set up, not to mention the improvement in our trading results, has more than paid for the very modest cost of the forex signal subscriptions.

Indeed if you apply this logic, subscription based services can effectively be free when you take into account the improvement in your trading profits, and the freeing of your time for other profitable activities.

If you think about it, a subscription based forex signal service has a built-in incentive to call profitable forex trading tips, as its subscriber base would soon evaporate if it failed to provide profitable currency trading tips. "Free" non subscription signals do not have this incentive.

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Forex Secrets - Support and Resistance Levels in Forex Market

Support and resistance are the known cornerstones in Forex technical, wherein:

1. a current Forex rate (CFR) is surrounded by levels of:

a). resistance being superior to CFR;

b). support being inferior to CFR.

2. a level breakthrough triggers a leap to a consecutive support/resistance;

3. a false breakthrough is responsible for a rate backstroke (say, from resistance to support).

Thus, having data on resistance and support levels and being armed with R/S true/false criteria, a trader grows faultless-entry skilled to ensure smooth level-to-level trading.

To be found below is a graphic drawing of a flat followed by an R/S up/down breakthrough.

The chart 1. (For view picture see notes in end of article)

In actual sample GBPUSD trade dated January, 31, 2006 the support breakthrough has triggered a bullish in-session trend.

Simple, isn't it? Affirmative at a glance, but 95% of traders losing their forex deposits are calling for natural questions:

1. What's the reason, the world traders are getting entangled in so a seemingly simple regularity?

2. What's the way of correct detection of R/S levels for currencies to use to jet off from?

3. What attributes are inherent to true/false breach differentiation?

It is, thus, to be concluded that a trader will never achieve steady FX gains unless the answer is found to the above three simple questions.

CLASSICAL BOOKS ON RESISTANCE AND SUPPORT LEVELS

Forex scholars' books, when analyzed, are giving grounds why 95% of traders turn deposit-killers. The point is that under different technical scholars:

a). fairly different understanding is being attached to support and resistance;

b). no distinct criteria (except Demark's technique) is in service to finding a support and a resistance;

c). there is no clear-cut interfacing between R/S levels on different timeframes.

Below is sort of understanding classification:

1. A. Elder. R/S are understood by SOME SCHOLARS to be horizontal lines drawn along price highs and lows

support and resistance are horizontal (or almost horizontal) lines linking several minimums (maximums).

The chart 2. Support and resistance (For view picture see notes in end of article)

b). J. MURPHY also indicates that "points 2 and 4 represent uptrend support levels. The figure depicts uprising support and resistance under an uptrend with points 2 and 4 being support levels which use to be coincident with earlier lows. Points 1 and 3 indicate resistance levels, which use to be coincident with earlier highs" (see: "Technical analysis of the Futures Markets"

Fig. 3a and 3b. Uptrend and downtrend support-resistance levels (For view picture see notes in end of article)

2. SOME SCHOLARS believe support-resistance to be sloped lines drawn along price highs and lows (trend lines, actually) as below:

Fig. 4. Trend line-fashion support-resistance pattern (For view picture see notes in end of article)

a). T. DEMARK

Fig. 5. Bid pivot points (TD-points) building up a resistance level (For view picture see notes in end of article)

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Forex Secrets - Delusion Number 2 - Who Prompts Forex Quotation to Traders?

The delusion conceptually propounds that traders operate at a spontaneous FOREX market (as stipulated by B. Williams, A. Elder, E. Nayman, etc.). But it is not the case. Traders do their job inside a well-organized and controlled currency exchange market, governed by the Consortium of the world's largest banks.

Hence, who is pushing the currencies up and down, who defines trends, corrective actions and flats?

And, who, ultimately, places a trend at a point, where the majority of traders are happy to think they have saddled the wave and are about to win an enormous profit! Now! Not to be scared! Not to close the position! Not to be satisfied with a minor profit! Later on we will discuss that sort of stupidity. Thus, one persists to continue long in spite of more and more degrading profit. Shortly, the loss starts growing with light velocity! Are you familiar with the situation?

Well, who has reversed the rate?

And who generally tugs currency rates?

Tugging is surely centralized. Compare on-line quotes of several Dealers or banks to find out that they are per second coincident. Do each bank's traders act in such synchronism, that even not seeing each other, they place identical orders so that quotation is in 100% agreement? NOTHING IS A MIRACLE HERE!

But prior to further explanation, we will listen to Bill Williams, the FOREX scholar (Trading Chaos, Ch. 6): "...let us trace a trend formation process. Earlier, the market and the market trading venue did constitute a single physical space. Majority of large grain traders were concentrated on the "floor". Their orders involved amounts, sufficient to move the market; they enjoyed better control over the market than at present. During the latest 20 years markets have grown worldwide. Now, not only "Purina Ralstone", "Kellog" and other prominent commercial associations seek hedging their cash assets transactions. So do millions of the world's minor profiteers and farmers, competing with them in anticipation of perspective grain price fluctuations? This fact also implies strong potential for traders with nowadays, trends not being constructed on the floor. The latter mainly ensures the market liquidity by way of tackling "outer orders".

The fact, that today's trends are formed rather "outside the floor" than "on the floor", as before, enables one to trace further market tendencies with trade volume being the key thereto. Our only on-line information is restricted to tick volume, time and price. Tick volume constitutes a number of price changes per a certain time period. It is not at all a number of traded contracts. Multiple researches revealed no significant difference between actual and tick volume. Using a tick volume, we may suppose, that it represents actual volume. It is a real-time volume, thus being our key to what's going on in "trading pits".

Two basic elements are organic to FOREX trading: brokers on the floor and remote traders. Local brokers constitute staff, executing orders, thus earning their salaries and/or commissions. They don't possess money to be at their disposal. They are order executors. Their prospects are not burdened by prices, they getting for the orders management.

Remote traders use their own money. They have to pay the price out of their own pockets, unless they are getting a good one. Traders have to be much superior in skill to brokers since they independently take their own decisions, while the broker's job is to follow the others' orders.

Remote traders are supposed to support the market by way of taking its opposite side. As a rule, they are not at all crazy about any long-term transactions. Quite a few remote traders have been participants to our private training programs, and it is to be admitted that a 10-minute long transaction may seem quite a long-term one for some of them.

Think back to the fact that trends are built up of orders, delivered to the floor from outside, but not of long-term positions entered by remote traders. Since the traders' job is to take the side opposite to the orders arriving from outside, they have no prospects of trading in between themselves. They follow your money. We are emphasizing again, that tick volume is our key to understanding what's going on in the Forex Market. Remote traders do not contribute any significant volume to trading, which might result from dealing with similar traders on the floor. Trends emerge from incoming orders. That is why we are to be certain about when and in what amount the outer order is supplied to the floor. It is presented via a tick volume change".

So, we, traders, turn out to be price locomotives, don't we? And brokers on the floor just allocate and execute order, incoming from us, don't they? And on April, 1, 2005 they all (meaning: we all) together decided to swivel the trend and to stay short against all the rules, news and common sense... I wonder if the scholar ashamed or not?

As regards the above quotation, I have chanced to hear a single argument in favor of Bill Williams (I guess you understood for what sake I've cited it in detail): it all pertains to the futures markets; we neither read nor use the above at Forex. Strange enough, these are the arguments of Williams's advocates, but not of Williams himself.

This book is actually intended for both: futures markets and Forex Market. That's why pictures taken from both the markets are so mixed up and the author never differentiates between the Technical Analysis methods thereof. Thus, either the author does not trace any difference between the two markets, or he is not eager to reveal it to the reader.

And neither in the foreword, nor in the remarks did Williams and his publishers refer to the fact that something of "Trading Chaos" is inapplicable to FOREX, and thus should not be made use of by a trader at FOREX.

I have repeatedly come through this peculiarity of Williams (correct specific case method definition being extended to a wider coordinates scale) and it actually induced me to write this book. In all and all, the methods and advice, absolutely true and correct for a PART of Forex Market are claimed by Williams to be universal for the WHOLE of Forex Market without being demonstrated where the above is effective and where it isn't.

The same is being done by Williams's opponents and advocates, who visualize the portion of Forex where his methods are operable only. As different from analysts and Williams's bibliographers, TRADERS require much stronger to realize a demarcation with pro-Williams trading to the one side thereof and with counter-Williams trading to the other one.

Logically there comes a question: what might be added to Williams's indicators in order to turn them effective at the point where they are presently ineffective (see details in chapter on the Williams Alligator).

And now we are getting back to the issue of who supplies traders with FOREX rates quotation, bearing in mind that it's us, traders, who exercise rates movement in accordance with Williams's standpoint. Millions of traders have actually been studying FOREX by virtue of the "Trading House" and it is really worth studying. This is one of the most interesting and instructive editions whose repeated reading each time brings about something new and useful.

However, in some passages it smells being custom tailored. Is Williams ignorant of the fact that there is no single FOREX exchange and there's no single trading venue or floor? And that Pacific, Asian, European and American session classification is arbitrary?

Did You see currency rates move, while there's a day off in the USA with the banks closed? So did I. So, who has made up his mind in the USA to trade on the floor on a day off?
Then, who prompts rates, who formulates trends and turns them with no objective reason for the rate to swivel and to rush in a direction, not being requisite at all?

Here is the answer, as provided by No. 11, 2002 "FOREX Profiteer" magazine's article by Nadezhda Larina "Electronic Broker Systems at FOREX market", reading: "... an FOREX dealing "Electronic Broking Service (EBS)" enjoys wide popularity with the extra-exchange inter-bank FOREX market. It has been developed by the Consortium of largest FOREX trading participant banks in association with "Quotron" informatics expert company and launched in 1993. Presently EBS incorporates 13 world's largest market-maker banks, viz,: BN AMRO Bank, Bank of America, Barclays Capital, Citibank, Commerzbank, Credit Suisse First Boston, HSBC Bank PLC, J.P. Morgan Chase and Co.Lehman Brothers, Royal Bank of Scotland, S-E Banken, UBS AG along with Japanese Minex Corp., established by a Consortium of Japanese Banks in a joint manner with KDD Japanese telecommunications company and Dow Jones Telerate.

EBS offers a completely integrated range of dealing services for the professional inter-bank market, being a leading anonymous inter-bank FOREX trading electronic dealer. It is currently used by over 2500 dealers in 850 world banks and yields a trade turnover of about USD80 billion daily.

See there also: "Three greatest FOREX dealers - Citibank, J.P. Morgan Chase and Deutsche Bank, together with Reuters Group PLC) have started Atriax system in June, 2001.The latter terminated the operations in spring, 2002 after having failed to stand the competition.

Can you imagine a monster machine, capable of forcing three world's largest banks - Citibank, J.P. Morgan Chase and Deutsche Bank to abandon their business plans! Or capable of reversing the EURUSD from 1.3660 to 1.1865 and thus instantaneously executing orders of all the world's traders, going and standing short! And thus within, April-June, 2005, buying the EUR from traders at USD1.36, 1.29, 1.20, 1.19, etc.

Do you see the loss? Watching the EUR slip 1700 pts after having bought it at 1.36... But, possibly, there is no loss at all?

All of Larina's basic provisions have actually found confirmation 2 years later in the UK "Financial Times" article by Jennifer Hughes: "A PC occupying trading floor" (see it on Financial Times 2004).

It underlines that during the precedent 2 years the Consortiums turnover has grown by extra daily USD20 billion thus currently stretching to USD100 billion, whereas the most prominent internet-based trading platforms ensure the average of USD15-20 billion daily turnover.

So, let's jump to some conclusions:

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Forex Secret Tips No 11 - Successful Forex Traders Do These

What separates successful Forex traders from the rest of the pack? Why is it that only a mere 5% really make it in Forex trading? How did these traders do it? While all successful Forex traders have their proven Forex trading strategies and systems to call and manage their trades, they know there is one more important thing to do: focus on improving themselves.

Because the trader is the ultimate resource that can act to produce the desired trading results, he or she must ensure this resource is primed and efficient to perform its best at Forex trading. As such, successful Forex traders pay great attention to the points listed below which elucidate how they go about their Forex pursuit.

Treat Trading Like A Business

Top Forex traders know that trading is a serious business and they accord it such importance by considering key factors that affect all businesses. From the Forex trading perspective, these factors include: writing a Forex trading plan; starting out with an appropriate trading account size; knowing the various costs of trading; sustaining and growing the Forex account; and acquiring the right Forex trading knowledge, skills and equipment.

Keep The Ego In Check

Trading mistakes can arise from emotional responses directly linked to one's ego. A Forex trader that needs to be right will let the ego prevail and inflict ruin to his/her Forex account, always trying to will the market which he/she denies cannot be controlled. Being egoistic also means not acknowledging one's trading mistakes and therefore not learning from them. For example, the ego will egg the Forex trader on to hold a losing trade instead of taking the correct action of cutting loss at the appropriate time.

Be Disciplined In Every Trade

The item that directly affects the Forex trading account bottom line is trading discipline. The serious Forex trader follows his/her trading plan to the letter, and adheres to it as much as humanly possible (Note: even successful traders make mistakes). Trading discipline includes protecting trading capital and sensibly allocating risk per trade; only taking trades that satisfy risk/reward parameters and set up correctly; staying on the sidelines at all other times and not forcing a trade; cutting losses quickly via pre-determined stop loss levels; letting a good trade ride but protecting a winner from turning into a loser. In essence, being disciplined allows the successful Forex trader to show profits consistently and rein in losses should any trading period turn out to be a rough ride.

Protect Trading Capital

The serious Forex trader treats his/her trading money very seriously, as it is what enables trading to be done. Additionally, it is also the objective of Forex trading: make winning trades to grow the money. Thus, the successful Forex trader will guard his/her capital zealously, ensuring that risk per trade is controlled so that losers only erode the Forex account, not chew a hole in it. This assures the Forex trader that his/her Forex business can continue, today, tomorrow and into the future.

Don't Marry Your Trades

The serious Forex trader knows that a single trade alone does not determine his/her trading success. He/she is fully aware that any trade could turn out to be a loser and therefore is conscious in removing any emotional attachment to every trade. While staying disciplined entails waiting for the good trade entries, this wait and eventual trade entry do not compel the successful trader to think that he/she must be right in taking that trade. As such, should the market go against the trader and he/she sees prices approaching the stop loss level, the trader fully accepts that losing is a real possibility and does not rationalize further. Contrast this behavior to a novice trader who will often be tempted to move the stop loss further out so as to let the trade have "more room" -- such a trader feels the need to be right and doesn't know how to walk away from a loser.

Be Realistic, Practical And Persevere

Being realistic is what separates the men from the boys when it comes to Forex trading. The successful Forex trader does not have a get-rich-quick mentality and knows it is hard work; thus he/she treats trading as a business and has the mental fortitude to stay in the game for as long as it takes. Perseverance is a key asset, reinforced by the necessary trading discipline imposed in the trading plan and the personal belief that it is possible to succeed in Forex trading. At the same time, the serious Forex trader knows he/she is psychologically guided by his upbringing, attitudes and experiences regarding money and success, but is practical by admitting these limitations and working to break such self-defeating barriers. Pursuing the right Forex education and learning from other successful traders are good solutions to the problem.

Know Yourself And Let Others Help You

The successful Forex trader knows his/her strengths and weaknesses when it comes to trading, and is not shy to ask for help. While knowing there is no shortcut to success, the trader will often pursue education from the best mentors so as to acquire the right knowledge and learn the right skills essential to their progress towards successful Forex trading. As part of the trading plan, the serious Forex trader keeps a trading journal and reviews this daily to learn from past mistakes and internalize winning trade executions. The trading journal can also be used by the mentor to help the Forex trader make specific and personal improvements.