It’s like attending a bingo session. All eyes will be down waiting for the highly anticipated employment print this morning. Will this week’s ADP report translate into a much weaker jobs number? Will the stubbornly elevated weekly claims push the unemployment rate up two ticks? Will analyst’s consensus of a headline loss of -100k jobs and no growth in the private sector provide us with a non-event as we head into the ‘labor’ weekend? Expect liquidity to be thin as many New Yorkers skip out of town averting the storm ahead of the holiday. It’s another crap-shoot. Spin the wheel, black or red?
The US$ is stronger in the O/N trading session. Currently it is higher against 11 of the 16 most actively traded currencies in a ‘subdued’ trading range in the O/N session.
We had a plethora of data to digest yesterday ahead of this mornings highly anticipated employment report. It will either be a snooze, non-event heading into this long North American weekend or the results will force traders to react like ‘elephants in a china shop’. In his communiqué yesterday, Trichet met market expectations, again announcing that emergency lending facilities would be extended into next year. Somewhat of a surprise was the EU’s policy maker’s small upward revision to next year’s views. They now expect to come inside a range of +0.5% to +2.3% (up from +0.2% to 2.2%). Could they not have made it any wider! The inflation outlook was also revised up a tad to a range of +1.2-2.2%. It’s worth noting and not surprising that they again identified risks to the downside and flagged renewed tensions in financial markets. Policy makers have no intention ‘to signal any change in rates and remains apart from experiments elsewhere with respect to providing rate guidance’.
The dreaded weekly claims reports potentially points to a downside risk to this morning employment print. Analysts note that initial claims (+472k vs. +475k) remains ‘stubbornly elevated and at a level inconsistent with any expectation for meaningful job growth’ and supportive of renewed private job losses. Digging deeper, continuing claims fell by -23k to +4.456m (2nd consecutive week of declines). Up to date, the average has been hovering around the +4.5m mark as claims push further into extended (+894k) and emergency (+4.1m) categories. Since bottoming at the end of the 1st Q, extended benefits have surged higher by +531.6%. Not to be out done, emergency benefits have seen a similar fate and rallied +50%. With unemployment assistance being extended until the end of Nov. has caused the massive surge in both categories.
And finally, US pending home sales unexpectedly jumped yesterday (+5.2% vs. -1%). Any other day and the market would have paid more heed, but, a day before NFP where market participants try to batten down the hatches, there was no excitement. Technically this is the first ‘bullish’ news we have had to digest in the US housing market for some time. Analysts have been quick to explain the huge monthly jump away, the growth is coming off the lowest base ever (June was all-time record low). On level terms, the July data is only ‘ever so slightly better’ and remains insufficient to counter mounting stockpiles of unsold and shadow inventories. So, it’s back to our doomsday housing scenario.
The USD$ is lower against the EUR +0.05% and higher against GBP -0.01%, CHF -0.17% and JPY -0.10%. The commodity currencies are weaker this morning, CAD -0.18% and AUD -0.15%. The loonie pared some of its euphoric rise, a day after its largest gain in three-months, on concern that US job losses will stall the global economic recovery. Next week’s BOC call is a spilt vote amongst analysts. Fact, futures are pricing in a +40% chance of the BOC tightening. It’s probably one of the toughest calls over the last decade. A string of disappointing Canadian data and a darkening global outlook have weighed heavily on the market’s conviction for a Sept. hike. Last month, the CAD happened to post one of its worst performing months in over a year, falling -3.5% vs. the dollar. The dollar has now capped a triple top at 1.0675 and will prove a formidable support level for the currency again. Canada is not immune to weaker data reported south of its borders. It is only natural that growth and interest rate sensitive currencies would experience some volatile moves on changing risk attitudes. A shortened holiday week will continue to keep the market on its toes.
The AUD fell in the O/N session vs. all its major trading partners ahead of this mornings NFP report. The market anticipates further job cuts this month which is dampening the demand for higher-yielding growth currencies. Investors continue to speculate that the RBA will keep interest rates unchanged next week. The currency has underperformed against all of its major trading partners and is expected to do so until there is a new Government formed. The commodity rich currency is not isolated, as other growth sensitive currencies are suffering the same fate. Government data has also happened to put a lid on the recent rally. Net result traders are adding to their bets that the RBA will leave interest rates unchanged for the next 12-months. Interest rate differentials play a big part of the currency’s attractiveness (0.9100).
Crude is lower in the O/N session ($74.67 -35c). Crude prices yesterday advanced, paring earlier losses, after a rig in the Gulf of Mexico was struck by an explosion, reinforcing concern that US regulations will reduce output in the region. Stronger economic growth data happened to provide a leg up for the ‘black-stuff’ earlier this week. Aiding the commodity was the weekly EIA report revealing an unexpected decline in supplies of distillate fuels. Distillates (heating oil and diesel), fell -739k barrels to +175.2m. The market had been expecting the inventory to increase by +1.15m barrels. Inventories of crude itself advanced +3.42m barrels to +361.7m Supplies were forecast to climb by +1.2m. On the face of it, the weekly report should have been market bearish, but investors happily ignored the data as they found solace in Chinese and US manufacturing data showing new signs of growth. How long is this sustainable? Perhaps NFP will bring even more surprises? In reality, oil hovers just above this month’s low, on concerns that weaker economic data will push the US into a double-dip recession. The market should be wary that the underlying situation has not changed, the fundamentals remain very weak, demand does not look good and stockpiles of crude and products remain at a record high. Speculators remain better sellers on up-ticks in the short term.
Gold prices continue to advance on its record high print recorded earlier this year as investors seek to protect their wealth. The uncertainty of recent data has had investors contemplating boosting their demand for the commodity as a safe heaven. Last month, bullion appreciated +5.2% alone. The market would not be that surprised to see some sort of technical pull back supported by profit taking selling if investors embraced more risk. Consumers are trying to put there cash somewhere more solid on mounting evidence of a US economic slowdown. Speculators again are supporting the various safe heaven assets on pullbacks, avoiding risky assets due to uncertainties in the markets. With a genuine fear for global growth, by default, should boost the demand for the metal as a protector of wealth in the grand scheme of things. With treasury yields expected to remain close to their lows, could promote a quickening inflation rate, which would promote pushing commodity prices even higher. The opportunity costs of holding gold are low due to falling interest rates ($1,254 +60c).
The Nikkei closed at 9,114 up +51. The DAX index in Europe was at 6,093 up +10; the FTSE (UK) currently is 5,376 up +5. The early call for the open of key US indices is lower. The US 10-year backed up 4bp yesterday (2.61%) and is little changed in the O/N session. Treasuries fell a second consecutive day as a surprise pending home re-sales print coupled with a drop in the initial jobless claims data reduced, temporarily at least, the relative safety of government debt. The curve had become too rich and the overbought asset class was due for some sort of correction. Again the curve 2’s/10’s spread has widened 2bp to +211bp after flattening sub +200bp a matter of days ago. Treasuries also after the government announced the sizes of the $67b three debt sales next week (3’s, 10’s and long bonds). Despite product becoming expensive on the curve, NFP uncertainty has debt better bid on pullbacks.
Friday, September 03, 2010
Forex trade after the NFP release - copied Daily Forex Forecast
The Japanese yen is sharply lower in early US session after release of better than expected non-farm payroll report from US. Commodity currencies also soar broadly on risk appetite. European majors are relatively steady and Swiss Franc is indeed dropping sharply following yen. The headline non-farm payroll number showed -54k contraction only comparing to expectation of -105k. Prior month's number was also revised up to -54k. importantly, private sector job market showed 67k expansion versus expectation of around 40k while prior month's data was also revised up to an impressive 107k. Unemployment rate climbed from 9.5% to 9.6% as expected and is ignored by the markets. Markets will now face another test of ISM services later in US morning.
Release earlier today, UK PMI services dropped more than expected to 51.3 in August and sent sterling lower against Euro. Eurozone services PMI was revised mildly up to 55.9 in AUgust. retail sales grew 0.1% mom , 1.1% yoy in July. Swiss CPI was flat mom, rose 0.3% yoy in August.
CAD/JPY follows risk appetite in US session and jumps sharply. Consolidation above 78.52 is still in progress and more upside should be seen to 82 and above. But after all, we'd still expect upside to be limited by 83.48 resistance and bring resumption of the whole fall from 94.46.
Release earlier today, UK PMI services dropped more than expected to 51.3 in August and sent sterling lower against Euro. Eurozone services PMI was revised mildly up to 55.9 in AUgust. retail sales grew 0.1% mom , 1.1% yoy in July. Swiss CPI was flat mom, rose 0.3% yoy in August.
CAD/JPY follows risk appetite in US session and jumps sharply. Consolidation above 78.52 is still in progress and more upside should be seen to 82 and above. But after all, we'd still expect upside to be limited by 83.48 resistance and bring resumption of the whole fall from 94.46.
US NFP (Nonfarm Payroll) Employment Analysis & Trade Plan 09/13/10 - by Henry Liu
We’ll be trading the US NFP (Nonfarm Payroll) Employment Changes, it is the most volatile news release for the week as traders and their cousins all sit around in front of their PCs preparing to jump in…
Here’s the forecast:
8:30am (NY Time) US NFP Forecast -100K Previous -131K
8:30am (NY Time) US Unemployment Rate Forecast 9.6% Previous 9.5%
ACTION: USD/JPY BUY -30K SELL -170K
The Trade Plan
With today’s release, as per a special report by Bloomberg, the expectation ranges from +70K to -190K, counting on an increase in the private sector payrolls estimated at +47K versus the 71K release in July, and Census job cuts in the public sector of -119K. Market has shifted down its sentiment towards private sector jobs slightly after Wednesday’s ADP report of -10K versus +20K of expectation.
The Unemployment Rate will be another important figure today as it is expected to rise to 9.6% from 9.5% in July. I believe that in the event we get a conflict of releases, such as a better NFP figure but worse Unemployment Rate, market will react more to the Unemployment rate if it’s above the psychological 10.0% level.
Considering the lackluster market movement during Thursday’s trading session after ECB Trichet’s interest rate speech, market is likely to remain neutral at the time of NFP release… We could see potential movement in either direction pending on the outcome of the release.
Here’s the plan: If we get a significantly lower release on the NFP (-170K or worse) and Unemployment Rate (9.6% or worse), I’d be looking to BUY JPY (SELL USDJPY, SELL AUDJPY) on a retracement. There might be a chance to go LONG on GBP/USD or EUR/USD as “delayed trades” because the immediate reaction to another disappointing NFP release would prompt traders to SELL USD against JPY. But after the initial spike focused on strong JPY is over, traders will turn towards LONG on EUR and GBP while selling USD.
On the other hand, if we get a positive NFP release (-30K or better) and the Unemployment Rate remains at 9.6% or better, JPY should weaken immediately as USD/JPY may recover and move above 87 throughout the trading session, and the long-term trend would eventually head back on to 90 in the next few weeks…
If we get a conflict release, we will wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, there will be plenty of opportunities for entry. If you just wait for 5 minutes before making an entry, you’ll get a much clearer view.
The Market
If you remember what took place during last NFP release, market didn’t react with much directional bias as the release came out in line with expectation.
We’ll probably see similar reaction in the market if we were to get an in-line with expectation release, or -100K on NFP and 9.6% on the Unemployment Rate. However, I believe the general market will be focused more on the Private Sector jobs, which are expected at a +47K; simple math shows that the entire -100K drop in the NFP forecast is attributed to the -119K of Census Temporary hiring, and that makes the private jobs growth the real reflection of U.S. employment sector…
Therefore, I’d advice everyone to focus on both headline NFP and Private Sector job growth. If we get around 70K+ in the private sector growth, I think market would really take that as a positive sign for the U.S. economy.
NFP Trading Strategy
Below is a general guideline on how to trade NFP release. This is what I do with EVERY NFP release.
Let’s talk about how to trade this release: We’ll wait for the numbers to come out, but will not take any trade YET, even if we get our tradable figures (-170K or -30K). We’ll wait for a possible revision to the previous release number, which is -131K, as the market usually overreacts with the Revision and chances favor for this trade to work out if we do not get conflicting releases between the revision and the actual release; at this point, still stay out of the market.
Then the next step is to wait for the Unemployment Rate, which is expected to be at 9.6% from 9.5% prior. If the Unemployment Rate were to surprise higher, we’ll have to really make an executive decision at the time of the release and see what is the primary focus of the market. As long as we don’t go over the 10.0% psychological level, I think traders may not focus exclusively on this release. However, if we do get over the 10.0% level, I’d probably be looking for a SELL on USD/JPY or other JPY crosses and Yen should strengthen.
After all of the numbers have been released. Wait for the market to push… then be patient and wait for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components are extremely volatile, and those who are patient will always get a chance to enter with much better entry.
Additional Thoughts
With USD/JPY sitting at the psychological level of 84, with throwing distance of the 15 year high level at 83.50 against USD, it is going to take a very strong momentum to break this level. I have noticed the numerous attempts to break below this level but the general market seems to find support and unable to stay below 84.00. Therefore, I’d consider this level when SELLING USDJPY on a worse than expected NFP release, and possibly skip the trade altogether to avoid whipsaw.
Looking at the NFP, there are a few indicators pointing for a better than expected release despite the surprise -10K release on ADP report this Wednesday. We’ve got better ISM Manufacturing PMI which indicated strong employment component, a slightly better initial Jobless Claims, higher consumer spending, and general rise in Consumer Confidences…
Although one could argue that the negative ADP report and the uncertainty of government Census job cuts could skew the NFP result to a worse figure, most traders should be focusing more on the Private Sector jobs rather than the headline NFP.
Pre-News Consideration
I strongly suggest that any pre-news trade be closed at this moment. As with NFP releases, liquidity will die down from now until the actual release time because most traders are likely to sit on the sideline.
DEFINITION of NFP
“Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.”
Here’s the forecast:
8:30am (NY Time) US NFP Forecast -100K Previous -131K
8:30am (NY Time) US Unemployment Rate Forecast 9.6% Previous 9.5%
ACTION: USD/JPY BUY -30K SELL -170K
The Trade Plan
With today’s release, as per a special report by Bloomberg, the expectation ranges from +70K to -190K, counting on an increase in the private sector payrolls estimated at +47K versus the 71K release in July, and Census job cuts in the public sector of -119K. Market has shifted down its sentiment towards private sector jobs slightly after Wednesday’s ADP report of -10K versus +20K of expectation.
The Unemployment Rate will be another important figure today as it is expected to rise to 9.6% from 9.5% in July. I believe that in the event we get a conflict of releases, such as a better NFP figure but worse Unemployment Rate, market will react more to the Unemployment rate if it’s above the psychological 10.0% level.
Considering the lackluster market movement during Thursday’s trading session after ECB Trichet’s interest rate speech, market is likely to remain neutral at the time of NFP release… We could see potential movement in either direction pending on the outcome of the release.
Here’s the plan: If we get a significantly lower release on the NFP (-170K or worse) and Unemployment Rate (9.6% or worse), I’d be looking to BUY JPY (SELL USDJPY, SELL AUDJPY) on a retracement. There might be a chance to go LONG on GBP/USD or EUR/USD as “delayed trades” because the immediate reaction to another disappointing NFP release would prompt traders to SELL USD against JPY. But after the initial spike focused on strong JPY is over, traders will turn towards LONG on EUR and GBP while selling USD.
On the other hand, if we get a positive NFP release (-30K or better) and the Unemployment Rate remains at 9.6% or better, JPY should weaken immediately as USD/JPY may recover and move above 87 throughout the trading session, and the long-term trend would eventually head back on to 90 in the next few weeks…
If we get a conflict release, we will wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, there will be plenty of opportunities for entry. If you just wait for 5 minutes before making an entry, you’ll get a much clearer view.
The Market
If you remember what took place during last NFP release, market didn’t react with much directional bias as the release came out in line with expectation.
We’ll probably see similar reaction in the market if we were to get an in-line with expectation release, or -100K on NFP and 9.6% on the Unemployment Rate. However, I believe the general market will be focused more on the Private Sector jobs, which are expected at a +47K; simple math shows that the entire -100K drop in the NFP forecast is attributed to the -119K of Census Temporary hiring, and that makes the private jobs growth the real reflection of U.S. employment sector…
Therefore, I’d advice everyone to focus on both headline NFP and Private Sector job growth. If we get around 70K+ in the private sector growth, I think market would really take that as a positive sign for the U.S. economy.
NFP Trading Strategy
Below is a general guideline on how to trade NFP release. This is what I do with EVERY NFP release.
Let’s talk about how to trade this release: We’ll wait for the numbers to come out, but will not take any trade YET, even if we get our tradable figures (-170K or -30K). We’ll wait for a possible revision to the previous release number, which is -131K, as the market usually overreacts with the Revision and chances favor for this trade to work out if we do not get conflicting releases between the revision and the actual release; at this point, still stay out of the market.
Then the next step is to wait for the Unemployment Rate, which is expected to be at 9.6% from 9.5% prior. If the Unemployment Rate were to surprise higher, we’ll have to really make an executive decision at the time of the release and see what is the primary focus of the market. As long as we don’t go over the 10.0% psychological level, I think traders may not focus exclusively on this release. However, if we do get over the 10.0% level, I’d probably be looking for a SELL on USD/JPY or other JPY crosses and Yen should strengthen.
After all of the numbers have been released. Wait for the market to push… then be patient and wait for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components are extremely volatile, and those who are patient will always get a chance to enter with much better entry.
Additional Thoughts
With USD/JPY sitting at the psychological level of 84, with throwing distance of the 15 year high level at 83.50 against USD, it is going to take a very strong momentum to break this level. I have noticed the numerous attempts to break below this level but the general market seems to find support and unable to stay below 84.00. Therefore, I’d consider this level when SELLING USDJPY on a worse than expected NFP release, and possibly skip the trade altogether to avoid whipsaw.
Looking at the NFP, there are a few indicators pointing for a better than expected release despite the surprise -10K release on ADP report this Wednesday. We’ve got better ISM Manufacturing PMI which indicated strong employment component, a slightly better initial Jobless Claims, higher consumer spending, and general rise in Consumer Confidences…
Although one could argue that the negative ADP report and the uncertainty of government Census job cuts could skew the NFP result to a worse figure, most traders should be focusing more on the Private Sector jobs rather than the headline NFP.
Pre-News Consideration
I strongly suggest that any pre-news trade be closed at this moment. As with NFP releases, liquidity will die down from now until the actual release time because most traders are likely to sit on the sideline.
DEFINITION of NFP
“Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.”
Thursday, September 02, 2010
Forex Plan For US ADP NFP Employment 09/01/10 - by Henry Liu
ADP or Automatic Data Processing (NASDAQ:ADP) is releasing it’s own estimate for the private sectors of NFP (Nonfarm Payroll). This is high impact release and it’s followed by currency traders as they look for hints on Friday’s NFP official release. Here’s the forecast:
8:15am NY Time US ADP NFP Change Forecast 20K Previous 42K
ACTION: USD/JPY BUY 70K SELL -30K
The Trade Plan
As stated in my last analysis on ADP NFP news, I usually don’t trade it but I use this release for future market trend references. However, I assume that most traders are likely to do the same, but if the deviation of 50K is actually hit, true speculators will probably have not problem jumping into the market, and this will undoubtedly change market perception for Friday’s NFP release; therefore it is best to be around your computer during the release time rather than finding out what happened hours later and perhaps missed the entire movement.
With the above being said, if we get 70K or better release, I’d be looking to BUY USD/JPY; if we get a -30K or worse, then I’d be looking to SELL USD/JPY… I’ll look at how close we are to the 84.00 level as it has been considered a strong support for the pair and in order for us to take a SELL trade, we need to see market break beyond 83.50 level.
The Market
With NFP private jobs forecasted at +47K, or a decrease from last month’s figure of 71K, this ADP release’s range is between +17K to +30K, which averages out at around 20K.
With the current market focus on risk aversion, which is exacerbated by the ever increasing unemployment rate and job losses in the U.S., a better than expected release should change the overall perception of the NFP release on Friday and we should see some unwinding of JPY long trades.
Additional Thoughts
The ADP NFP Employment Release is aways considered as a high impact release because ADP is the largest private payroll processing provider in the U.S., traders in general pay more attention to this release, especially during NFP week. ADP usually releases its version of Non-Farm Payroll numbers before the actual NFP based on it’s proprietary private payroll data.
I’ll use caution when trading this release even if we get our deviation. When it comes to NFP, market always exaggerates.
Pre-news Consideration
ADP is expected to show a modest gain of 20K, but with Census hiring skewing the overall picture (still 200K workers need to be fired), private data such as the ADP may not move the market much… However, if we do get a strong release, we could expect some change in the pre-news expectation for NFP on Friday.
There should not be much pre-news trading opportunities for this release. General market trend is still for leaning towards risk aversion, although I am seeing some sign of rebound.
8:15am NY Time US ADP NFP Change Forecast 20K Previous 42K
ACTION: USD/JPY BUY 70K SELL -30K
The Trade Plan
As stated in my last analysis on ADP NFP news, I usually don’t trade it but I use this release for future market trend references. However, I assume that most traders are likely to do the same, but if the deviation of 50K is actually hit, true speculators will probably have not problem jumping into the market, and this will undoubtedly change market perception for Friday’s NFP release; therefore it is best to be around your computer during the release time rather than finding out what happened hours later and perhaps missed the entire movement.
With the above being said, if we get 70K or better release, I’d be looking to BUY USD/JPY; if we get a -30K or worse, then I’d be looking to SELL USD/JPY… I’ll look at how close we are to the 84.00 level as it has been considered a strong support for the pair and in order for us to take a SELL trade, we need to see market break beyond 83.50 level.
The Market
With NFP private jobs forecasted at +47K, or a decrease from last month’s figure of 71K, this ADP release’s range is between +17K to +30K, which averages out at around 20K.
With the current market focus on risk aversion, which is exacerbated by the ever increasing unemployment rate and job losses in the U.S., a better than expected release should change the overall perception of the NFP release on Friday and we should see some unwinding of JPY long trades.
Additional Thoughts
The ADP NFP Employment Release is aways considered as a high impact release because ADP is the largest private payroll processing provider in the U.S., traders in general pay more attention to this release, especially during NFP week. ADP usually releases its version of Non-Farm Payroll numbers before the actual NFP based on it’s proprietary private payroll data.
I’ll use caution when trading this release even if we get our deviation. When it comes to NFP, market always exaggerates.
Pre-news Consideration
ADP is expected to show a modest gain of 20K, but with Census hiring skewing the overall picture (still 200K workers need to be fired), private data such as the ADP may not move the market much… However, if we do get a strong release, we could expect some change in the pre-news expectation for NFP on Friday.
There should not be much pre-news trading opportunities for this release. General market trend is still for leaning towards risk aversion, although I am seeing some sign of rebound.
Using Econonomic News to Supercharge Your Forex Trading Profits
Most forex traders I know use charts and technical analysis to make their forex trades, and are taught by so called “gurus” to completely avoid the market when news comes out, and in many cases, to even take off trades before news. My question is, why avoid trading during a period where price action actually behaves sensibly? In other words, price action actually moves due to traders’ reactions to new information about the economic state of a country, rather than some pattern or price level that may or may not have any predictive ability.
Should you trust the news in your forex trading?
Save some time and watch for only the high probability trading opportunities
News isn’t something you should avoid. News is the only thing that you know for sure moves the market. News has a much longer effect than just the knee jerk reaction immediately after the release and the next 5 minutes. The reason why news time has such a bad rap among traders is that many news events create random, whipsawing price action that can easily take out stops. So what does one do? Avoid trading during and after useless news events and only stick with ones that have strong cause-effect relationships (i.e. a surprise in the economic data has a high probability of producing a strong, one-directional move in a currency pair). These are:
Interest rate announcements, statements, press conferences (including US FOMC minutes)
Retail sales
Manufacturing PMI, Chicago PMI, Ivey PMI
Inflation/CPI
German ZEW, IFO surveys
US Employment (Non-farm payrolls),
Canadian employment
3 ways to use news in your trading
Analyzing sentiment (and thus direction) using news releases can be a very powerful element of your forex trading strategy. I’m not talking about chasing the market after a news release- I’m talking about professional, calculated, profitable forex trading. Here are some ways to combine forex news trading with technical analysis so that you have a better chance of getting both the direction and timing right during your trades.
1.Look for breakout due to important news surprise.
Out of all the forex technical analysis methods out there, I don’t think any are as powerful as watching how price reacts to weekly (or even daily) highs and lows. All other things equal, if price breaks a high, it’s likely to continue going up, and vice versa for lows. The reason why such a simple strategy as this can result in depleted accounts is because it doesn’t take into account the momentum and behavior of the market. If you consider that the GBP/USD traders are reacting strongly to a surprise in the amount of retail sales in the UK, however, then a sustained upward move beyond the break of the high looks more likely, doesn’t it?
2.Trade retracement of a news spike.
The easy days of waiting for a surprise in scheduled economic data and buying up a currency are long gone, as the competition is too fierce and brokers have implemented measures to make this practically impossible. However, that’s not to say that we can’t get into the move after the original price spike following the release. If you keep your eye on a 4-hour chart and see a clear break of a recent channel or weekly high after a surprise in economic data, wait for a retracement back down to the high and buy there.
3.Fade an “irrational” news move.
I can’t tell you how many times I’ve seen price rocket upward 50-100 pips after a release only to come back down to right where it started a few hours later. Usually what happens is one of two things. First, the deviation between the market’s prediction and the actual economic number might be small (e.g. US retail sales is +0.3% vs. 0.1% expected), but nevertheless enough of a surprise to throw the market off and spur buying, or second, the news release turns out to be better than expected while in the recent past nearly all releases have been negative. In these situations I would look for a nearby technical resistance level, such as a weekly high, and short price when it gets to that level. Of course vice versa for the opposite scenario.
Copied from TFF
Should you trust the news in your forex trading?
Save some time and watch for only the high probability trading opportunities
News isn’t something you should avoid. News is the only thing that you know for sure moves the market. News has a much longer effect than just the knee jerk reaction immediately after the release and the next 5 minutes. The reason why news time has such a bad rap among traders is that many news events create random, whipsawing price action that can easily take out stops. So what does one do? Avoid trading during and after useless news events and only stick with ones that have strong cause-effect relationships (i.e. a surprise in the economic data has a high probability of producing a strong, one-directional move in a currency pair). These are:
Interest rate announcements, statements, press conferences (including US FOMC minutes)
Retail sales
Manufacturing PMI, Chicago PMI, Ivey PMI
Inflation/CPI
German ZEW, IFO surveys
US Employment (Non-farm payrolls),
Canadian employment
3 ways to use news in your trading
Analyzing sentiment (and thus direction) using news releases can be a very powerful element of your forex trading strategy. I’m not talking about chasing the market after a news release- I’m talking about professional, calculated, profitable forex trading. Here are some ways to combine forex news trading with technical analysis so that you have a better chance of getting both the direction and timing right during your trades.
1.Look for breakout due to important news surprise.
Out of all the forex technical analysis methods out there, I don’t think any are as powerful as watching how price reacts to weekly (or even daily) highs and lows. All other things equal, if price breaks a high, it’s likely to continue going up, and vice versa for lows. The reason why such a simple strategy as this can result in depleted accounts is because it doesn’t take into account the momentum and behavior of the market. If you consider that the GBP/USD traders are reacting strongly to a surprise in the amount of retail sales in the UK, however, then a sustained upward move beyond the break of the high looks more likely, doesn’t it?
2.Trade retracement of a news spike.
The easy days of waiting for a surprise in scheduled economic data and buying up a currency are long gone, as the competition is too fierce and brokers have implemented measures to make this practically impossible. However, that’s not to say that we can’t get into the move after the original price spike following the release. If you keep your eye on a 4-hour chart and see a clear break of a recent channel or weekly high after a surprise in economic data, wait for a retracement back down to the high and buy there.
3.Fade an “irrational” news move.
I can’t tell you how many times I’ve seen price rocket upward 50-100 pips after a release only to come back down to right where it started a few hours later. Usually what happens is one of two things. First, the deviation between the market’s prediction and the actual economic number might be small (e.g. US retail sales is +0.3% vs. 0.1% expected), but nevertheless enough of a surprise to throw the market off and spur buying, or second, the news release turns out to be better than expected while in the recent past nearly all releases have been negative. In these situations I would look for a nearby technical resistance level, such as a weekly high, and short price when it gets to that level. Of course vice versa for the opposite scenario.
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Overview of News Trading - copied from Forex Boost
If you’ve read through our site and others, you know there are two sides to forex trading; Fundamentals and Technicals. Technical trading is all about reading forex charts, using moving averages, tools and indicators to such as fibonacci studies and trendline analysis to find high probability trades. There are some very good ways to make money in forex technical trading. This section describes the other side of forex trading called Forex News Trading. This is where your odds of making good, profitable trades increase enormously.
Trading the news, is one of the best ways I know of making larges sums of money in very little time with very little risk. Financial news announcements get released every week. Some of these news announcement can and do move the market if there is a surprise in the announcement. For example, if a country is expected to raise it’s interest rate by a quarter of a point (0.25), the market prices this “expectation” into the price of it’s currency. When the announcement comes and the country decides to hold rates steady or raise them even more, e.g by half of a percent (0.50), this will absolutely move the currency. These are the kind of opportunities forex news traders look for and profit from.
Most news traders break even unless they have an edge. The edge we need is called "spike trading" and it's the only way to be consistantly profitable trading the news. Spike trading is a term used for playing the initial spike in price when a news event is released. This is where the money is made and the way to do this is with tools that get us into a spike trade immediately upon a news release. The only tool I know of, and have used used for amost 2 years, is called the Secret News Weapon (SNW) and it gets me into 80% of my spike trades. Sometimes prices moves too far, too fast so no matter what tool you use, you will not get into a spike trade. But the news spike trades we do get in to, hold your hat, because you can make a lot of money within 10-15 seconds after a news release. Nothing beats news trading with the SNW for super quick and profitable trades.
News trading can also be challenging. In our previous example we said if a country raises it’s rates more than expected, we would expect it’s currency rate to increase. That could be so, but timing is also very important. If the interest rate announcement is accompanied by a statement from that countries Fed of Board that indicates something like this could be the last interest rate hike for a while, this could have a negative effect on the currency. So instead of skyrocketing up, price stalls, flounders a bit and start crashing in the opposite direction. You would initially be on the right side of the trade, with a very nice profit and before you know it, price goes the other direction, stops you out and you lose money of the trade. This can and does happen.
How to Trade The News
You need to know tho (2) things about news trading. First you need to know when important news gets released. The second thing to know, is what kind of numbers will make your news trades work.
The first one is easy. Just look at any forex news calendar to see what news releases are due out and at what time of day. The one I use every day is the Forexfactory Forex News Calendar. This calendar shows you at a quick glance, all the news scheduled for release for the current week. The ones with Red folders are the ones to consider trading.
The second one is what can make you a lot money. To make money trading the news, the news release itself has to be a "shock". In other words, every news event has a Consensus number. This is the number the market is expecting. If that number is hit, or very close to consensus, then 99% of the time, that is considered a "No Trade". In other words, the numbers came out "As Expected". There were no surprises and chances are very good price will not be affected. However, when there is a surprise deviation, this is when price takes off. If the number is a "Good Surprise", then that's good for a currency and that currency would increase in value. If the number is a "Bad Surprise", the opposite happens and the currency you're trading dwould ecrease in value. As news traders, we look for these deviations from consensus and that's what makes us money.
So, the Million Dollar question is, "How do you know what a good deviation number should be?" The only way to know is to look at past performance of news releases and see what numbers caused the currencies to move. The one and only service I know of that has all this historical information in one easy to read place is called News Trader Pro. We also worked out a deal with them too so for our ForexBoost members, if you order their service through our site, you will save 10% off their service one-time service plan. And if you want to make serious money trading the news, you need to get the Secret News Weapon and watch your profits go thru the roof.
Trading Example
One of the best News Trades that everyone looks forward to is called the Non-Farm Payroll Report or what it's commonly referred to as NFP. This report comes out on the first Friday of each month. Everyone looks forward to this trade because if the released numbers deviate considerably from the consensus, then this can be a huge money maker. Some traders only trade this report. That's how important the NFP release is to forex news traders.
The first thing you would do is got to the Forexfactory Forex News Calendar to see what time the report is getting released and what the Consensus is. The NFP is always released at 8:30am EST but you should always double check every report just to make sure. The second thing you would do would be to go to News Trader Pro and find the previous releases for all the past Non-Farm Payroll reports. You would quickly see what deviations caused a huge move in the currency pair when this report was released in the past. I personally trade the USD/JPY (US Dollar vs. Japanese Yen) pair for this report. In my opinion, this pair is the most dependable pair to trade for this report. So, if you see that a deviation of 100,000 for example, caused a huge move, then you would Buy the USD/JPY pair if the number came out at 100,000 or better. And the opposite is true. If you saw a number worse than 120,000 historically caused a huge move in the other direction, you would Sell the USD/JPY pair. If you were fortunate enough to get the Secret News Weapon, you would put these deviation numbers into the Weapon and set your autoclicks. Then wait for the news to come out and if your deviation gets hit, watch your trade fly into profit. I suggest closing 1/2 of your position immediately after the initial spike. Then watch the price action and either go for more profit if price continues, or close out the final 1/2 if price retraces past 50% of the initial spike.
There are many reports released each week and sometimes you'll get a few each day! In my opinion, there's nothing more profitable than news trading in forex. At least with news trading, you know exaclty when to be ready for a trade and you can get in immediately. With technical trading, you really need to watch all your charts and indicators all the time, to make good trading decisions. I'd rather sit through a news release trade for 15-20 minutes than look at my charts for a few hours waiting for a setup. Dont' get me wrong though. I enjoy technical trading, but for faster profits and much less risk, nothing beats trading the news.
Forex News Trading Summary
For trading forex, you need to have money to start with. If you can’t start a forex trading account with at least $2500, my recommendation is to stay out of news trading with us. Needless to say, the more money you start with, the more money you can use to trade and the higher profits you will make.
This is a great business and I’m so glad I decided to get into forex trading when I did. I’ve been at this for years and expect to do it for many more years. I also expect to have enough money to have a nice, early retirement for myself and my family. News trading is one of the main reasons why I'm so much closer to my financial goals than every before.
Trading the news, is one of the best ways I know of making larges sums of money in very little time with very little risk. Financial news announcements get released every week. Some of these news announcement can and do move the market if there is a surprise in the announcement. For example, if a country is expected to raise it’s interest rate by a quarter of a point (0.25), the market prices this “expectation” into the price of it’s currency. When the announcement comes and the country decides to hold rates steady or raise them even more, e.g by half of a percent (0.50), this will absolutely move the currency. These are the kind of opportunities forex news traders look for and profit from.
Most news traders break even unless they have an edge. The edge we need is called "spike trading" and it's the only way to be consistantly profitable trading the news. Spike trading is a term used for playing the initial spike in price when a news event is released. This is where the money is made and the way to do this is with tools that get us into a spike trade immediately upon a news release. The only tool I know of, and have used used for amost 2 years, is called the Secret News Weapon (SNW) and it gets me into 80% of my spike trades. Sometimes prices moves too far, too fast so no matter what tool you use, you will not get into a spike trade. But the news spike trades we do get in to, hold your hat, because you can make a lot of money within 10-15 seconds after a news release. Nothing beats news trading with the SNW for super quick and profitable trades.
News trading can also be challenging. In our previous example we said if a country raises it’s rates more than expected, we would expect it’s currency rate to increase. That could be so, but timing is also very important. If the interest rate announcement is accompanied by a statement from that countries Fed of Board that indicates something like this could be the last interest rate hike for a while, this could have a negative effect on the currency. So instead of skyrocketing up, price stalls, flounders a bit and start crashing in the opposite direction. You would initially be on the right side of the trade, with a very nice profit and before you know it, price goes the other direction, stops you out and you lose money of the trade. This can and does happen.
How to Trade The News
You need to know tho (2) things about news trading. First you need to know when important news gets released. The second thing to know, is what kind of numbers will make your news trades work.
The first one is easy. Just look at any forex news calendar to see what news releases are due out and at what time of day. The one I use every day is the Forexfactory Forex News Calendar. This calendar shows you at a quick glance, all the news scheduled for release for the current week. The ones with Red folders are the ones to consider trading.
The second one is what can make you a lot money. To make money trading the news, the news release itself has to be a "shock". In other words, every news event has a Consensus number. This is the number the market is expecting. If that number is hit, or very close to consensus, then 99% of the time, that is considered a "No Trade". In other words, the numbers came out "As Expected". There were no surprises and chances are very good price will not be affected. However, when there is a surprise deviation, this is when price takes off. If the number is a "Good Surprise", then that's good for a currency and that currency would increase in value. If the number is a "Bad Surprise", the opposite happens and the currency you're trading dwould ecrease in value. As news traders, we look for these deviations from consensus and that's what makes us money.
So, the Million Dollar question is, "How do you know what a good deviation number should be?" The only way to know is to look at past performance of news releases and see what numbers caused the currencies to move. The one and only service I know of that has all this historical information in one easy to read place is called News Trader Pro. We also worked out a deal with them too so for our ForexBoost members, if you order their service through our site, you will save 10% off their service one-time service plan. And if you want to make serious money trading the news, you need to get the Secret News Weapon and watch your profits go thru the roof.
Trading Example
One of the best News Trades that everyone looks forward to is called the Non-Farm Payroll Report or what it's commonly referred to as NFP. This report comes out on the first Friday of each month. Everyone looks forward to this trade because if the released numbers deviate considerably from the consensus, then this can be a huge money maker. Some traders only trade this report. That's how important the NFP release is to forex news traders.
The first thing you would do is got to the Forexfactory Forex News Calendar to see what time the report is getting released and what the Consensus is. The NFP is always released at 8:30am EST but you should always double check every report just to make sure. The second thing you would do would be to go to News Trader Pro and find the previous releases for all the past Non-Farm Payroll reports. You would quickly see what deviations caused a huge move in the currency pair when this report was released in the past. I personally trade the USD/JPY (US Dollar vs. Japanese Yen) pair for this report. In my opinion, this pair is the most dependable pair to trade for this report. So, if you see that a deviation of 100,000 for example, caused a huge move, then you would Buy the USD/JPY pair if the number came out at 100,000 or better. And the opposite is true. If you saw a number worse than 120,000 historically caused a huge move in the other direction, you would Sell the USD/JPY pair. If you were fortunate enough to get the Secret News Weapon, you would put these deviation numbers into the Weapon and set your autoclicks. Then wait for the news to come out and if your deviation gets hit, watch your trade fly into profit. I suggest closing 1/2 of your position immediately after the initial spike. Then watch the price action and either go for more profit if price continues, or close out the final 1/2 if price retraces past 50% of the initial spike.
There are many reports released each week and sometimes you'll get a few each day! In my opinion, there's nothing more profitable than news trading in forex. At least with news trading, you know exaclty when to be ready for a trade and you can get in immediately. With technical trading, you really need to watch all your charts and indicators all the time, to make good trading decisions. I'd rather sit through a news release trade for 15-20 minutes than look at my charts for a few hours waiting for a setup. Dont' get me wrong though. I enjoy technical trading, but for faster profits and much less risk, nothing beats trading the news.
Forex News Trading Summary
For trading forex, you need to have money to start with. If you can’t start a forex trading account with at least $2500, my recommendation is to stay out of news trading with us. Needless to say, the more money you start with, the more money you can use to trade and the higher profits you will make.
This is a great business and I’m so glad I decided to get into forex trading when I did. I’ve been at this for years and expect to do it for many more years. I also expect to have enough money to have a nice, early retirement for myself and my family. News trading is one of the main reasons why I'm so much closer to my financial goals than every before.
The Difference Between Currency Futures and the Forex Market
Well, you already know that the word “currency” refers to the monetary unit used in countries to buy goods and services (or pay taxes like in the USA). And we are also aware of the fact that “trading” refers to the purchasing and selling of these currencies. To say that there are nearly as many currencies in the world as there are countries is a fairly safe assumption. But when it comes to discussing currency futures versus the Forex market, the most targeted currencies for investment purposes are:
* United States dollar
* British Pound (sterling)
* The Euro
* Japanese Yen
Since the currency markets have become extremely popular with investors, and since they are predominantly a day-trade oriented market, they exhibit an extremely high volume of trading (contracts) and equally high amount of liquidity. The factors of high volume and liquidity entice the participation of all types of traders such as:
* Banks
* Financial and non-financial companies
* Governments
* Individual day traders
There are a number of ways in which to trade currencies but even non-traders are familiar with the most obvious one, namely trading your currency for that of the country that you are vacationing in. Usually, travelers will use a currency broker, in this case one of the country’s banks, to exchange their currency. When the transaction is done, it is considered to be part of the currency exchange market. Where the serious investor or professional trader is concerned, this form of currency exchange is not acceptable.
Forex (FOReign EXchange)
The Forex Exchange is one of the most popular and highly trafficked venues of trading the actual exchange rates of two currencies in the industry, and the Euro to United States dollar gets a lot of attention in the Forex market. The exchange is usually listed as EUR/USD, which means trading the value of one Euro in US dollars. The five other most popular currency trades are:
* AUD/USD – The Australian Dollar to US Dollar
* CAD/USD – The Canadian Dollar to US Dollar
* EUR/CHF – The Euro to Swiss Franc
* EUR/GBP – The Euro to British Pound
* GBP/USD – The British Pound (Sterling) to US Dollar
In the Forex market, currencies are traded directly rather than in contracts. “Lot” is the terminology that is used to describe the minimum amount that can be traded, which is characteristically $25,000 USD.
Currency Futures
The currency futures market is based on the currency exchange market. Trades use futures contracts that are a reflection of the exchange rates of two different currencies. The Euro futures market is currently the most popular market of the bunch and is based upon the EUR/USD exchange rate. The Chicago Mercantile Exchange, or CME, provides the most popular currency futures.
An exchange provides the currency futures since it is a futures market, meaning that it employs centralized pricing, as well as clearing, and therefore ensures that market prices remain constant regardless of which brokerage is being used. Contract specifications include the value of the contract, the “tick size” (minimum price change), and the “tick value” (price change value).
Copied from Futures Trading System
* United States dollar
* British Pound (sterling)
* The Euro
* Japanese Yen
Since the currency markets have become extremely popular with investors, and since they are predominantly a day-trade oriented market, they exhibit an extremely high volume of trading (contracts) and equally high amount of liquidity. The factors of high volume and liquidity entice the participation of all types of traders such as:
* Banks
* Financial and non-financial companies
* Governments
* Individual day traders
There are a number of ways in which to trade currencies but even non-traders are familiar with the most obvious one, namely trading your currency for that of the country that you are vacationing in. Usually, travelers will use a currency broker, in this case one of the country’s banks, to exchange their currency. When the transaction is done, it is considered to be part of the currency exchange market. Where the serious investor or professional trader is concerned, this form of currency exchange is not acceptable.
Forex (FOReign EXchange)
The Forex Exchange is one of the most popular and highly trafficked venues of trading the actual exchange rates of two currencies in the industry, and the Euro to United States dollar gets a lot of attention in the Forex market. The exchange is usually listed as EUR/USD, which means trading the value of one Euro in US dollars. The five other most popular currency trades are:
* AUD/USD – The Australian Dollar to US Dollar
* CAD/USD – The Canadian Dollar to US Dollar
* EUR/CHF – The Euro to Swiss Franc
* EUR/GBP – The Euro to British Pound
* GBP/USD – The British Pound (Sterling) to US Dollar
In the Forex market, currencies are traded directly rather than in contracts. “Lot” is the terminology that is used to describe the minimum amount that can be traded, which is characteristically $25,000 USD.
Currency Futures
The currency futures market is based on the currency exchange market. Trades use futures contracts that are a reflection of the exchange rates of two different currencies. The Euro futures market is currently the most popular market of the bunch and is based upon the EUR/USD exchange rate. The Chicago Mercantile Exchange, or CME, provides the most popular currency futures.
An exchange provides the currency futures since it is a futures market, meaning that it employs centralized pricing, as well as clearing, and therefore ensures that market prices remain constant regardless of which brokerage is being used. Contract specifications include the value of the contract, the “tick size” (minimum price change), and the “tick value” (price change value).
Copied from Futures Trading System
Forex News – How The Worlds News Effects Currencies
Either you are simply starting in Forex or have a expertise in it, but it’s very important you stay on top with all the Forex news happening in the industry. Staying intact with what happens around the world within your industry can be really addictive at times. Moreover with a globalized world it seems that something happens somewhere every moment of the time.
Financial News
Here we are listing some of latest news that has happened in and around the forex industry and will impact your business as well in some ways. Remember that Foreign exchange currencies are always paired so you will need to receive relevant news about the comparison of two different currencies or commodities. Some examples of relevant news that would have an impact on various currencies around the globe would be;
-A recent story reported that retail traders had just tipped to a net short positioning on the same day that the British pound gained a 200 point plus rally.
-Forex traders watch the U.S. housing slump very carefully, gauging the market for mortgage futures.
-When the U.S. Fed made its recent rate cut, one Forex news service reported that expectations for the U.S. Dollar were “falling like a rock.”
-Recession fears in the United States may drive the dollar even lower than it already is. (In Forex trading, the fact that the dollar drops is not considered negative, as long as the trader leverages the drop when trading for higher priced, more valuable currencies around the glove.
Political News
Most people are under the wrong impression that currency and finance news are the only things that interests any forex trade, yet political news is very important as well as they can give you hint of the political movement of different nations and their where their country is headed. You need to make sure that you follow the trend that goes throughout the world.
Currency and financial news are not the only news stories of interest to Forex investors and traders. Forex traders are also interested in political news that can have an impact on a country’s currency.
-Tragic events like the assassination of a political leader can affect currency futures in the country where the event occurs and can have a ripple effect in surrounding areas; for example, the assassination of Benazir Bhutto in Pakistan.
-Natural disasters like an earthquake, hurricane, or typhoon can consume a great deal of a country’s resources; therefore, Forex traders watch news of such disasters.
-Political events, like the U.S. presidential election cycle, has significant effects on currency valuation; therefore, Forex news contains updates on presidential candidates, primary elections, and general elections.
News Analysis
Forex news services add value to the news stories they provide by analyzing current events and predicting how they will affect the exchange rates of various currencies around the globe.
Some popular sources for Forex research and analysis are: Daily FX, Rabobank Technical FX Daily, Scotia FX, TRL, Mizuho Corporate Bank, CIBC World Markets, BHF Bank, and Mellon Foreign Exchange.
Copied from Futures Trading System
Financial News
Here we are listing some of latest news that has happened in and around the forex industry and will impact your business as well in some ways. Remember that Foreign exchange currencies are always paired so you will need to receive relevant news about the comparison of two different currencies or commodities. Some examples of relevant news that would have an impact on various currencies around the globe would be;
-A recent story reported that retail traders had just tipped to a net short positioning on the same day that the British pound gained a 200 point plus rally.
-Forex traders watch the U.S. housing slump very carefully, gauging the market for mortgage futures.
-When the U.S. Fed made its recent rate cut, one Forex news service reported that expectations for the U.S. Dollar were “falling like a rock.”
-Recession fears in the United States may drive the dollar even lower than it already is. (In Forex trading, the fact that the dollar drops is not considered negative, as long as the trader leverages the drop when trading for higher priced, more valuable currencies around the glove.
Political News
Most people are under the wrong impression that currency and finance news are the only things that interests any forex trade, yet political news is very important as well as they can give you hint of the political movement of different nations and their where their country is headed. You need to make sure that you follow the trend that goes throughout the world.
Currency and financial news are not the only news stories of interest to Forex investors and traders. Forex traders are also interested in political news that can have an impact on a country’s currency.
-Tragic events like the assassination of a political leader can affect currency futures in the country where the event occurs and can have a ripple effect in surrounding areas; for example, the assassination of Benazir Bhutto in Pakistan.
-Natural disasters like an earthquake, hurricane, or typhoon can consume a great deal of a country’s resources; therefore, Forex traders watch news of such disasters.
-Political events, like the U.S. presidential election cycle, has significant effects on currency valuation; therefore, Forex news contains updates on presidential candidates, primary elections, and general elections.
News Analysis
Forex news services add value to the news stories they provide by analyzing current events and predicting how they will affect the exchange rates of various currencies around the globe.
Some popular sources for Forex research and analysis are: Daily FX, Rabobank Technical FX Daily, Scotia FX, TRL, Mizuho Corporate Bank, CIBC World Markets, BHF Bank, and Mellon Foreign Exchange.
Copied from Futures Trading System
Forex Trading Success – Three Popular Forex Trading Strategies That Lose Money – Avoid Them!
Here we are going to look at three popular Forex trading strategies which the bulk of all new traders use and they are all doomed to failure so make sure you avoid them or you will lose to, here they are.
Let’s take a look at all strategies which involve making no effort and buying the vast amount of Forex Robots and Expert Advisors.
1. Automated Predictive Software
How many cheap hundred dollar systems do you see online which tell you they can make you an income for life with no effort, because they have software that predicts the future? There are loads of them, they all lose and there predictions, always turn out as accurate as your horoscope.
You cannot predict markets in advance because humans are not predictable!
People are creatures of emotion and not logical, if you could predict the future there would be no market, as we would all know the price in advance. Avoid these cheap get rich quick systems, you don’t win in a market were 95% of traders lose by making no effort and spending the cost of a good night out.
2. Any Forex Scalping or Day Trading Strategy
Any system based on the above will lose long term – think about what you have to to win:
You have to decide what countless millions of traders will do in advance, all with different skills, aims objectives and emotional make up and to make it even harder you have to decide what they will do in a few minutes or hours.
All volatility in short term time frames is random therefore, you cannot get the odds on your side and you can’t win. Avoid these short term trading strategies.
3. Fibonacci Systems
This has to be one of the most amusing and dumb ways to trade Forex, this is no disrespect to Fibonacci but even he would be surprised how his theory has been hijacked by the far out investment crowd.
This theory had nothing to do with Forex and traders who trade it, give you mystical retracements you can buy into where prices are supposed to hold to some universal law – so do they work?
Sometimes but so will any percentage retracement. This theory is supposed to have found the hidden order of the universe but it hasn’t quite figured it out in Forex! Do not be taken in by people selling you systems, based upon this theory.
If you want to Win at Forex
Get a simple Forex trading strategy, based upon trading the odds which doesn’t predict but executes its trades on the reality of price change and you can enjoy long term currency trading success.
Copied from Futures Trading System
Let’s take a look at all strategies which involve making no effort and buying the vast amount of Forex Robots and Expert Advisors.
1. Automated Predictive Software
How many cheap hundred dollar systems do you see online which tell you they can make you an income for life with no effort, because they have software that predicts the future? There are loads of them, they all lose and there predictions, always turn out as accurate as your horoscope.
You cannot predict markets in advance because humans are not predictable!
People are creatures of emotion and not logical, if you could predict the future there would be no market, as we would all know the price in advance. Avoid these cheap get rich quick systems, you don’t win in a market were 95% of traders lose by making no effort and spending the cost of a good night out.
2. Any Forex Scalping or Day Trading Strategy
Any system based on the above will lose long term – think about what you have to to win:
You have to decide what countless millions of traders will do in advance, all with different skills, aims objectives and emotional make up and to make it even harder you have to decide what they will do in a few minutes or hours.
All volatility in short term time frames is random therefore, you cannot get the odds on your side and you can’t win. Avoid these short term trading strategies.
3. Fibonacci Systems
This has to be one of the most amusing and dumb ways to trade Forex, this is no disrespect to Fibonacci but even he would be surprised how his theory has been hijacked by the far out investment crowd.
This theory had nothing to do with Forex and traders who trade it, give you mystical retracements you can buy into where prices are supposed to hold to some universal law – so do they work?
Sometimes but so will any percentage retracement. This theory is supposed to have found the hidden order of the universe but it hasn’t quite figured it out in Forex! Do not be taken in by people selling you systems, based upon this theory.
If you want to Win at Forex
Get a simple Forex trading strategy, based upon trading the odds which doesn’t predict but executes its trades on the reality of price change and you can enjoy long term currency trading success.
Copied from Futures Trading System
Tips for people learning to trade the FOREX market from home
Demo trade before doing any live trading. Everyone says this, its true…. always test a new system or your first system using a demo account first. Demo is a good way to start. Be prepared for a shock when going to a live account using your hard earned money! Everything changes, losses hurt more, wins are way better, and the emotions can run away with you. Its another world compared to demo. The best thing to do is open a micro account with a few hundred bucks and trade pennies first. Get used to losing as well as winning, gain confidence before moving on to a larger account. And don’t move on until you are profitable using small amounts. Don’t get bored with pennies and try to jump ahead to make real money before you can turn a consistant profit first. It takes a lot of patience in the begining, being impatient can be expensive!
Don’t jump in to trades, you see the price action take off and think wow I want to get some of those pips! You jump in just as it reverses and heads the other way …. Arrrg! Happens way too often. Find or create a system and follow it. Don’t open a trade until your system shows a setup. There are lots of systems out there for free! The key is finding one that suits you and following it.
Don’t buy systems on eBay or websites! There are so many good free systems out there! The ones for sale are no better and some are very expensive! The same goes for education, there is so many free ways to learn trading… try them first! I have never heard anyone say “My system cost a lot but it was worth it!” Never! Its always the opposite! ” I spent alot of money and the system was no better or worse than some of the ones available for free!” They advertise stuff like “10,000 pips in 3 weeks!!” or something more incredible, grab your wallet and run the other way!! Training and education is the same also, be very wary of courses that sound great and are expensive. Most of the best training is available for free, and many forums have experienced traders who are happy to answer questions and post charts to study.
Be wary of EA’s or autotrading. Sounds great at first… let the EA (Expert Advisor in Metatrader…) do the trading! I can make money just letting the robot trader run… who needs to learn!! I fell into this trap! I was having a hard time learning manual trading, couldn’t seem to find the right system. Went with EA’s for awhile and lost quite a bit of my account! I still like them, but only on Demo for learning. Some of them can be very profitable if used properly. Also don’t buy them on eBay or anywhere else! There are lots and lots of them for free!
Risk Management is very important in trading. Each trade should be only a small percent of your trading account. This also requires using a Stop Loss… very important!! Nerver open a trade without a stoploss! Calculate how much you will lose if your stop gets hit. This should be a small amount, for example 3% of your account. This is your risk for the trade. So then do the math, if your system calls for a 30 pip Stop Loss, with a $10,000 account, 3% would be $300, so the amount of the trade would be $10 per pip. This should all be worked out before you enter the trade. When the trade goes in your favor a certain amount, move your stop to break even. Then your risk is zero! Always be aware of your risk, don’t let it get above a certain level by opening multiple trades either, say a 10% to 15% maximum for example, don’t open anymore trades until the risk level drops. I can’t stress this enough, risk management will save your account from a Margin Call, which is one of the worst feelings ever…. poof and your account is gone! I have done this and it is very painful. Risk management is key to successful trading.
Money Management is the twin to Risk Management. The key is “Cut your losses short and let your profits run” everyone says this also and its very true. Its hard to watch a trade go the wrong way and hit your stop, but its harder to see a lot of money piling up in a trade and let it continue! People tend to close early and grab the quick profit! Trouble is you will never make much money this way. The best thing to do is close a partial amount and take some profit, move the stop to breakeven and let the rest go. Risk management has a stop loss, money management has a Target! Before entering the trade your system should have a target, where price action should go before turning back. This should be farther than your stop loss, say your target is 50 pips and the stop is 30 pips away, This would be a good Risk / Reward ratio, almost 2 to 1. In this example we could enter this trade and after 25 pips in our direction we move our stop to break even, eliminating our risk. Then let the rest go to target and close it, or close half at target and let the rest continue, and move the stop up to say +25 pips. You could let the trade go and keep moving the stop up behind it. This sounds easy but actually doing it can be hard, price usually zig zags around and can make you want to close early to at least get a small win instead of a loss, so you close with a + 10 pip trade and are relieved… then price zigs back up and hits your target eventually… your +50 trade ended early with +10! Stand by your system and acccept the risk and let the trade go!
Copied from www.MykeFX.com
Don’t jump in to trades, you see the price action take off and think wow I want to get some of those pips! You jump in just as it reverses and heads the other way …. Arrrg! Happens way too often. Find or create a system and follow it. Don’t open a trade until your system shows a setup. There are lots of systems out there for free! The key is finding one that suits you and following it.
Don’t buy systems on eBay or websites! There are so many good free systems out there! The ones for sale are no better and some are very expensive! The same goes for education, there is so many free ways to learn trading… try them first! I have never heard anyone say “My system cost a lot but it was worth it!” Never! Its always the opposite! ” I spent alot of money and the system was no better or worse than some of the ones available for free!” They advertise stuff like “10,000 pips in 3 weeks!!” or something more incredible, grab your wallet and run the other way!! Training and education is the same also, be very wary of courses that sound great and are expensive. Most of the best training is available for free, and many forums have experienced traders who are happy to answer questions and post charts to study.
Be wary of EA’s or autotrading. Sounds great at first… let the EA (Expert Advisor in Metatrader…) do the trading! I can make money just letting the robot trader run… who needs to learn!! I fell into this trap! I was having a hard time learning manual trading, couldn’t seem to find the right system. Went with EA’s for awhile and lost quite a bit of my account! I still like them, but only on Demo for learning. Some of them can be very profitable if used properly. Also don’t buy them on eBay or anywhere else! There are lots and lots of them for free!
Risk Management is very important in trading. Each trade should be only a small percent of your trading account. This also requires using a Stop Loss… very important!! Nerver open a trade without a stoploss! Calculate how much you will lose if your stop gets hit. This should be a small amount, for example 3% of your account. This is your risk for the trade. So then do the math, if your system calls for a 30 pip Stop Loss, with a $10,000 account, 3% would be $300, so the amount of the trade would be $10 per pip. This should all be worked out before you enter the trade. When the trade goes in your favor a certain amount, move your stop to break even. Then your risk is zero! Always be aware of your risk, don’t let it get above a certain level by opening multiple trades either, say a 10% to 15% maximum for example, don’t open anymore trades until the risk level drops. I can’t stress this enough, risk management will save your account from a Margin Call, which is one of the worst feelings ever…. poof and your account is gone! I have done this and it is very painful. Risk management is key to successful trading.
Money Management is the twin to Risk Management. The key is “Cut your losses short and let your profits run” everyone says this also and its very true. Its hard to watch a trade go the wrong way and hit your stop, but its harder to see a lot of money piling up in a trade and let it continue! People tend to close early and grab the quick profit! Trouble is you will never make much money this way. The best thing to do is close a partial amount and take some profit, move the stop to breakeven and let the rest go. Risk management has a stop loss, money management has a Target! Before entering the trade your system should have a target, where price action should go before turning back. This should be farther than your stop loss, say your target is 50 pips and the stop is 30 pips away, This would be a good Risk / Reward ratio, almost 2 to 1. In this example we could enter this trade and after 25 pips in our direction we move our stop to break even, eliminating our risk. Then let the rest go to target and close it, or close half at target and let the rest continue, and move the stop up to say +25 pips. You could let the trade go and keep moving the stop up behind it. This sounds easy but actually doing it can be hard, price usually zig zags around and can make you want to close early to at least get a small win instead of a loss, so you close with a + 10 pip trade and are relieved… then price zigs back up and hits your target eventually… your +50 trade ended early with +10! Stand by your system and acccept the risk and let the trade go!
Copied from www.MykeFX.com
15 Ways To Avoid Losing Money Trading Forex
When trading Forex, it’s all about the basics – there are so many mistakes you can make that can easily be prevented by some advice from people who have made them and lived to tell the tale. So pay attention to these 20 tips for success and implement them into your trading and you can be a survivor also.
1 – Be careful with demo accounts. Though demo accounts are great for teaching you the ropes of Forex trading, they can be dangerous sometimes. Because they are not strictly realistic, they can give you unrealistic expectations or cause you to form impractical strategies.
2 – Keep a broad perspective. Focusing exclusively on short-term investments and trading plans may work for a while, but in the end you will end up losing money. You need to have a plan and a goal for the future, as well as plans for the present.
3 – Pay attention to technical conditions. You have to know if the market is over-extended short or over-extended long. Sudden changes or spikes usually occur during one of these extremes of conditions.
4 – Don’t be fooled by temporary luck. Forex trading is never about luck. If things are going good and your investments are yielding great profits, do not get cocky or overconfident. You have to acknowledge the fact that sometime you are bound to make mistakes and you must be always on the lookout to avoid them.
5 – Take you losses bravely. It is okay to be disappointed, mad, or sorry about a loss and a mistake, but don’t beat yourself up about it. And don’t sink into depression. Pull through it and continue trading. The best thing in the world to do is to examine your system and see where you went wrong so you can avoid doing it again in the future.
6 – Set aside time for trading. You can’t trade sporadically. You need to have the time to think through decisions, to analyze the market, and to prepare your trading plans.
7- Trade for the right reasons. Never trade just because you’re bored and there doesn’t seem to be anything else to do. If there is nothing else to do, that means that there is no smart trade to be done in the market. So just be patient.
8 – Make sure you have the right broker. Having the wrong broker will mess up everything in your Forex trading career. Make sure the broker you have is sufficient and will perform the task well.
9 – Focus on one currency at a time. It is very dangerous to trade many currencies at a time or right after one another. The more currencies you do, the less time you have to completely master them. It is best to focus on one or two and learn thoroughly and completely their details.
10 – Tough it out. Don’t give up easily just because you made a mistake or got bored with the market. Keep going and stick it out and you will find that it was worth it in the long run.
11 – Don’t act rashly. Jumping the gun will prove to be harmful and will cause you to lose. Stay calm and be patient!
12 – Beware of your pride. Pride and being afraid to admit that your were wrong after you’ve made a small mistake will only lead to more mistakes that will cost you more than your initial small blunder. So swallow your pride and reevaluate your system.
13 – Focus on what you are doing. Though being completely absorbed in the short-term can lead to long-term losses, the same is true of the reverse. Daydreaming about the future will only lead to missing opportunities and making bad decisions in the present. So keep your mind in the moment and trade smartly, with an idea for the future, yet a plan for the present.
14 – Don’t be too smart. This sounds ridiculous, but honestly it’s true! Don’t overanalyze your plans and make them so complicated and full of details. The more details you have the greater the odds are that something will go wrong. So keep it simple, clear, and reasonable.
15 – Be careful of overtrading. It is possible to trade too much at one time or on one day. Don’t procrastinate, but neither try to get it all done at once. Make a plan that follows a specific timeline and spread your trading out wisely, practically, and realistically.
In conclusion, there are a lot of mistakes you can make, but by following the guidelines that are laid out here, you can avoid many of them and move swiftly down the road of success.
Copied from Futures Trading System
1 – Be careful with demo accounts. Though demo accounts are great for teaching you the ropes of Forex trading, they can be dangerous sometimes. Because they are not strictly realistic, they can give you unrealistic expectations or cause you to form impractical strategies.
2 – Keep a broad perspective. Focusing exclusively on short-term investments and trading plans may work for a while, but in the end you will end up losing money. You need to have a plan and a goal for the future, as well as plans for the present.
3 – Pay attention to technical conditions. You have to know if the market is over-extended short or over-extended long. Sudden changes or spikes usually occur during one of these extremes of conditions.
4 – Don’t be fooled by temporary luck. Forex trading is never about luck. If things are going good and your investments are yielding great profits, do not get cocky or overconfident. You have to acknowledge the fact that sometime you are bound to make mistakes and you must be always on the lookout to avoid them.
5 – Take you losses bravely. It is okay to be disappointed, mad, or sorry about a loss and a mistake, but don’t beat yourself up about it. And don’t sink into depression. Pull through it and continue trading. The best thing in the world to do is to examine your system and see where you went wrong so you can avoid doing it again in the future.
6 – Set aside time for trading. You can’t trade sporadically. You need to have the time to think through decisions, to analyze the market, and to prepare your trading plans.
7- Trade for the right reasons. Never trade just because you’re bored and there doesn’t seem to be anything else to do. If there is nothing else to do, that means that there is no smart trade to be done in the market. So just be patient.
8 – Make sure you have the right broker. Having the wrong broker will mess up everything in your Forex trading career. Make sure the broker you have is sufficient and will perform the task well.
9 – Focus on one currency at a time. It is very dangerous to trade many currencies at a time or right after one another. The more currencies you do, the less time you have to completely master them. It is best to focus on one or two and learn thoroughly and completely their details.
10 – Tough it out. Don’t give up easily just because you made a mistake or got bored with the market. Keep going and stick it out and you will find that it was worth it in the long run.
11 – Don’t act rashly. Jumping the gun will prove to be harmful and will cause you to lose. Stay calm and be patient!
12 – Beware of your pride. Pride and being afraid to admit that your were wrong after you’ve made a small mistake will only lead to more mistakes that will cost you more than your initial small blunder. So swallow your pride and reevaluate your system.
13 – Focus on what you are doing. Though being completely absorbed in the short-term can lead to long-term losses, the same is true of the reverse. Daydreaming about the future will only lead to missing opportunities and making bad decisions in the present. So keep your mind in the moment and trade smartly, with an idea for the future, yet a plan for the present.
14 – Don’t be too smart. This sounds ridiculous, but honestly it’s true! Don’t overanalyze your plans and make them so complicated and full of details. The more details you have the greater the odds are that something will go wrong. So keep it simple, clear, and reasonable.
15 – Be careful of overtrading. It is possible to trade too much at one time or on one day. Don’t procrastinate, but neither try to get it all done at once. Make a plan that follows a specific timeline and spread your trading out wisely, practically, and realistically.
In conclusion, there are a lot of mistakes you can make, but by following the guidelines that are laid out here, you can avoid many of them and move swiftly down the road of success.
Copied from Futures Trading System
Forex Trading Traps – How You Can Avoid These 4 Top Frauds in Forex Trading
1. Doing Research: It is most important to thoroughly research Forex trading, and any companies you may be thinking of trading forex with, before making any kind of investments. Be sure to check out any claims made by a company, and make sure they are indeed members of one of these organizations, before even thinking of dealing with them. Some people just park their hard-earned cash with some forex trading organizations without first doing research on that company. It is a risk.
2. Stay Away From Promises That Sound Too Good to Be True: Those Get-rich-quick schemes, including those involving forex trading, tend to be frauds. There is no easy way of learning how to trade forex and earn consistent profits everytime. Always remember that there is no such thing as a “free lunch.”, you will really need to spend some time to learn forex basics. Some big investors invest with a large amount of funds, which are never to be seen again if deposited with those schemes.
3. Avoid Any Forex Company that Assures You Large Profits: Be extremely wary of those forex trading companies that guarantee profits. Nobody can offer sure guarantees where currency trading is concerned. In many cases, those claims are false. Learn to trade forex by yourself with a forex trading guide or ebook will be good enough, then slowly make your way up. The following are examples of statements that are most likely are fraudulent:
“Guaranteed to make a ROI of 40-50% within few days.”
“You will reach a million dollars fast in forex trading.”
“Make $5000 in forex trading every week!”
“You don’t have to learn how to trade forex, it’s all automated.”
“You will never lose again in forex trading.”
4. Avoid promises with little or zero risk trading: The guarantee of risk-free forex trading is another fraudulent claim. The fact that more than 90% of people failed in forex trading means there are risks in losing. the currency market is not the place to put any funds that you cannot afford to lose. No can will know how the markets will be performing in the future. Therefore, it’s either low risk or high risk trading, and NOT NO risk! Anyone who suggests that forex trading is risk-free is likely to be a liar or fraudster.
For those new in forex trading, you will find the contents in my free ebook very useful as there is free forex trading system for you. And for advanced traders, you will also find value added stuffs inside the ebook, so try not to be attracted to those claims which can make you a lot of money, learning and trading by yourself is the best.
Copied from Futures Trading System
2. Stay Away From Promises That Sound Too Good to Be True: Those Get-rich-quick schemes, including those involving forex trading, tend to be frauds. There is no easy way of learning how to trade forex and earn consistent profits everytime. Always remember that there is no such thing as a “free lunch.”, you will really need to spend some time to learn forex basics. Some big investors invest with a large amount of funds, which are never to be seen again if deposited with those schemes.
3. Avoid Any Forex Company that Assures You Large Profits: Be extremely wary of those forex trading companies that guarantee profits. Nobody can offer sure guarantees where currency trading is concerned. In many cases, those claims are false. Learn to trade forex by yourself with a forex trading guide or ebook will be good enough, then slowly make your way up. The following are examples of statements that are most likely are fraudulent:
“Guaranteed to make a ROI of 40-50% within few days.”
“You will reach a million dollars fast in forex trading.”
“Make $5000 in forex trading every week!”
“You don’t have to learn how to trade forex, it’s all automated.”
“You will never lose again in forex trading.”
4. Avoid promises with little or zero risk trading: The guarantee of risk-free forex trading is another fraudulent claim. The fact that more than 90% of people failed in forex trading means there are risks in losing. the currency market is not the place to put any funds that you cannot afford to lose. No can will know how the markets will be performing in the future. Therefore, it’s either low risk or high risk trading, and NOT NO risk! Anyone who suggests that forex trading is risk-free is likely to be a liar or fraudster.
For those new in forex trading, you will find the contents in my free ebook very useful as there is free forex trading system for you. And for advanced traders, you will also find value added stuffs inside the ebook, so try not to be attracted to those claims which can make you a lot of money, learning and trading by yourself is the best.
Copied from Futures Trading System
Forex Trading Tips – 5 Traps to Avoid if You Want to Trade the News in Forex
If you have been trading the currency market for a while, you’ll know that there is money to be made trading forex news. However, trading the news in forex does involve some risks and there are 5 major traps you must avoid before you can to trade the forex news successfully. We’ll discuss these 5 traps and provide some forex tips and forex trading strategies to use to counter these traps.
Trap #1: Strong Market Reaction.
Economic news releases and reports are forex indicators for future long-term movements for a currency pair. But for short-term trading, the actual results and the forecasted expectations may create big move opportunities.
Thus, when actual results came out the same as what the market expected, then there is high possibility that the market will not have a strong reaction. It is the big gap difference between the actual release and the market expectations that causes the market to have a breakout or big movement.
Trap #2: Generally Short-Lived.
Most of the time, breakout opportunities from the news release are not a long term trend as the movement may only last for few minutes to few hours. But still, it has to depend on the significance of the economic news release and the difference between the actual results and the forecasted expectations.
Most traders are either using forex scalping or day trading when they trade on news releases. One of the forex tips is to try not to trade during the release as the trade can turn against you in a short moment even after you caught a big initial move.
Trap #3: Quiet Market before a Big Movement.
The market may often poise for a huge movement when it is very quiet before some economic announcements or news releases. This is because the market is waiting for those before deciding on which direction it is going.
Traders are waiting for a right opportunity to jump into the market after the news reports are being released. Thus, you should not react to any forex trading signals 2 to 3 hours before the news are released as the signals may be false and misleading.
Trap #4: High Spread during News Releases.
During news releases, a trading broker may guarantee that your trade will be executed, but none of them will guarantee a normal spread for you. Forex brokers will widen the spread due to the lack of trading volume during the release. EUR/USD is one of the currency pairs with tight spread, but I have seen it turning it into a 10 pips spread from a normally 2 pips during a news release.
Trap #5: High slippage.
You might experience slippage when there is a big move during news releases. It means that your trade order will get filled at a different price instead of the price that you wanted. For example, you might have set a limit order at 1.3000.
But when the news release, the price shoot up 50 pips to 1.3050. So a slippage may occur and you will get your order filled at maybe 1.3020 instead of 1.3000. This is quite risky as the market may go against your trading plan.
The above forex trading guide will be very useful if you are using a forex day trading strategy to trade news. But in any case, I will not recommend news trading as it is very risky with the above considerations.
Copied from Futures Trading System
Trap #1: Strong Market Reaction.
Economic news releases and reports are forex indicators for future long-term movements for a currency pair. But for short-term trading, the actual results and the forecasted expectations may create big move opportunities.
Thus, when actual results came out the same as what the market expected, then there is high possibility that the market will not have a strong reaction. It is the big gap difference between the actual release and the market expectations that causes the market to have a breakout or big movement.
Trap #2: Generally Short-Lived.
Most of the time, breakout opportunities from the news release are not a long term trend as the movement may only last for few minutes to few hours. But still, it has to depend on the significance of the economic news release and the difference between the actual results and the forecasted expectations.
Most traders are either using forex scalping or day trading when they trade on news releases. One of the forex tips is to try not to trade during the release as the trade can turn against you in a short moment even after you caught a big initial move.
Trap #3: Quiet Market before a Big Movement.
The market may often poise for a huge movement when it is very quiet before some economic announcements or news releases. This is because the market is waiting for those before deciding on which direction it is going.
Traders are waiting for a right opportunity to jump into the market after the news reports are being released. Thus, you should not react to any forex trading signals 2 to 3 hours before the news are released as the signals may be false and misleading.
Trap #4: High Spread during News Releases.
During news releases, a trading broker may guarantee that your trade will be executed, but none of them will guarantee a normal spread for you. Forex brokers will widen the spread due to the lack of trading volume during the release. EUR/USD is one of the currency pairs with tight spread, but I have seen it turning it into a 10 pips spread from a normally 2 pips during a news release.
Trap #5: High slippage.
You might experience slippage when there is a big move during news releases. It means that your trade order will get filled at a different price instead of the price that you wanted. For example, you might have set a limit order at 1.3000.
But when the news release, the price shoot up 50 pips to 1.3050. So a slippage may occur and you will get your order filled at maybe 1.3020 instead of 1.3000. This is quite risky as the market may go against your trading plan.
The above forex trading guide will be very useful if you are using a forex day trading strategy to trade news. But in any case, I will not recommend news trading as it is very risky with the above considerations.
Copied from Futures Trading System
Trading Forex During Economic Releases by Alexander Nekritin
In this article I will talk about a popular trend that is taking place among forex traders in terms of taking advantage of inefficiency in the markets during economic news releases. Although this strategy is a bit risky I have seen some of our clients reap great rewards by utilizing it.
How Economic Releases Work
Certain organizations like the Federal Reserve Bank announce economic reports such as the non-farm pay roll, GDP, Consumer price index and more. You will usually be able to find an economic calendar on the internet, in fact our website forexyourself.com has one available. Another very popular one is forexfactory.com. It has been historically tested that various economic releases will impact the price of the currency pairs that are associated with them. For example the Non-Farm Payroll will usually effect the U.S. dollar.
A good economic calendar such as the one on ForexFactory states which currency pair will most likely be affected by a particular economic release. Although the long term price change of a particular currency pair is unpredictable, usually a short-term spike will take place. This spike is based on the divergence between the forecasted numbers (consensus) and the actual numbers released. Thus with this strategy a great deal of traders have created ways (which I will discuss later) to take advantage of the discrepancy between the consensus and the actual economic numbers.
Timing
For the most part there is a lag between when the economic information is released and the change in the price of a particular currency pair. It is because of this lag that many of our clients have been able to take advantage of this inefficiency. Usually only a limited number of agents of major news firms are allowed into the room where the economic numbers are released. After the release the agents must enter the data into news providing services such as Reuters or Bloomberg.
The key to success in terms of timing for the trader is getting into the trade before the spike begins. Prior to the announcement most of the smart money is backing away and not trading but as soon as the information hits they will trade. So what becomes important for the trader is the speed at which he can get his information. Therefore if a retail trader has a fast news feed and has software set up to provide him with the discrepancy between the consensus and the actual report, by being small and nimble he can get in as early as some of the professional banks.
For the most part, the banks are using the similar technology to some of the traders that are taking advantage of these situations. Now a lot of the dumber money are using slower news feeds and end up jumping on the spike later than players with these professional news services and end up driving the price up enough for the smart traders to get out of their positions.
Trading the Spike
In order to get in before the spike some technology is required. First you would need a fast data feed, and you can purchase Bloomberg or Reuters. Another option would be to sign up for a service that broadcasts signals during news. These types of services usually have numerous fast data feeds and broadcast buy and sell signals. These services are usually cheaper and easier to implement than actually paying thousands of dollars for the fast data feeds. The one drawback to these services is a lag due to broadcasting of the signal. The next step is to track the news consensus for the release that's about to come out. Some good places to find the consensus numbers is Briefing.com or FXstreet.com or forexfactory.com.
Now you will need to do some historic research and analyze how the market has reacted to the difference between the consensus and the actual result historically. Basically for each release you need to know how large a discrepancy has to be in order for you to act on the trade one way or the other. This takes a lot of research or you can sign up for a news trade call service which already does the research for you. Now that you have your triggers set, I recommend making a calendar for yourself of the economic releases that you will trade and trading during your releases.
It is very important to get in as quickly as possible if your trigger is met in order to get execution. Once in a trade I recommend moving your stop loss to break even after you have gained 10-15 pips (this varies from trade to trade and trailing your position with a trailing stop after you have generated a profit or 15-20 pips. Having a profit turn into a loss is one of the most demoralizing things that can happen in trading and I recommend avoiding it at all costs if you are trading discretionarily. However you must keep in mind that stop losses are not guaranteed and it is very possible for you not to be triggered to exit at a stop level especially in a fast market such as the one during news trading. So it's imperative that you watch your trade.
Execution
Since forex is an off exchange market usually the desks have to either take risk on a client's position or offset with a bank. Since everybody is trading only in one direction during the spike it becomes hard for the forex FCM's to offset the trades. Therefore they sometimes end up taking a hit during the news times. They do not like it at all, some will not allow news trading and some will re-quote or slip clients. One thing I recommend while trading with this approach is taking trades all the time and just slightly increase position size during the news trades.
I also recommend to let the FCM know what you plan on doing before hand so that they can tell you what size you can get away with. At forexyourself.com we have relationships established with many FCM's and will be able to advise you on what you can do at each place. Also a very important thing to keep in mind is the smaller you trade during these releases the more likely you are to get execution.
Risk Management
Because this strategy can make money quickly a lot of people like to swing for the fences with it, for example leveraging out a large portion of their accounts on it. This is a huge mistake for many reasons. On main reason is the bigger you trade the harder it is to get execution at the trading platforms. Also unexpected events can happen and if you are leveraged out fully you can get yourself into a lot of trouble. I recommend using stops with this strategy and never risking over 5% of your account on any of the news trades. With some of the spikes that can be caught it is possible to make some very decent gains.
Post News Trades
A close friend of mine used to trade on the CBOT. He says that the only way he will trade the release is the pull back. Many times a spike will happen and the price will pull back allowing a second opportunity to get in. This is what's called a post news trade. If the price spikes after the news and makes a slight pullback within 10 to 15 minutes it may be a good idea to get in with a fairly tight stop to catch the second leg of the move. Another way to trade some of the less volatile news announcements is a breakout strategy.
With this strategy you can take announcements regardless of the discrepancy wait until a range is created usually about 10 to 15 minutes and than take a trade in the direction of the range breakout. This is an effective way to capture 8-12 pips after the news trades. I recommend doing historical research or subscribing to a service that calls these trades out to determine your timing with precision.
By establishing a point A and B we are able to play the high probability break out trades. This is a trade we took on 9/29/06 USDCAD after the GDP announcement where we took 9 pips. Although this strategy has its drawbacks it allows the trader to get into some high probability trades. I recommend experimenting with different releases to see which one is a good fit. Please keep in mind that this strategy is risky since you are trading during extremely volatile times. Also it is critical to control your emotions and plan each trade with extreme precision.
How Economic Releases Work
Certain organizations like the Federal Reserve Bank announce economic reports such as the non-farm pay roll, GDP, Consumer price index and more. You will usually be able to find an economic calendar on the internet, in fact our website forexyourself.com has one available. Another very popular one is forexfactory.com. It has been historically tested that various economic releases will impact the price of the currency pairs that are associated with them. For example the Non-Farm Payroll will usually effect the U.S. dollar.
A good economic calendar such as the one on ForexFactory states which currency pair will most likely be affected by a particular economic release. Although the long term price change of a particular currency pair is unpredictable, usually a short-term spike will take place. This spike is based on the divergence between the forecasted numbers (consensus) and the actual numbers released. Thus with this strategy a great deal of traders have created ways (which I will discuss later) to take advantage of the discrepancy between the consensus and the actual economic numbers.
Timing
For the most part there is a lag between when the economic information is released and the change in the price of a particular currency pair. It is because of this lag that many of our clients have been able to take advantage of this inefficiency. Usually only a limited number of agents of major news firms are allowed into the room where the economic numbers are released. After the release the agents must enter the data into news providing services such as Reuters or Bloomberg.
The key to success in terms of timing for the trader is getting into the trade before the spike begins. Prior to the announcement most of the smart money is backing away and not trading but as soon as the information hits they will trade. So what becomes important for the trader is the speed at which he can get his information. Therefore if a retail trader has a fast news feed and has software set up to provide him with the discrepancy between the consensus and the actual report, by being small and nimble he can get in as early as some of the professional banks.
For the most part, the banks are using the similar technology to some of the traders that are taking advantage of these situations. Now a lot of the dumber money are using slower news feeds and end up jumping on the spike later than players with these professional news services and end up driving the price up enough for the smart traders to get out of their positions.
Trading the Spike
In order to get in before the spike some technology is required. First you would need a fast data feed, and you can purchase Bloomberg or Reuters. Another option would be to sign up for a service that broadcasts signals during news. These types of services usually have numerous fast data feeds and broadcast buy and sell signals. These services are usually cheaper and easier to implement than actually paying thousands of dollars for the fast data feeds. The one drawback to these services is a lag due to broadcasting of the signal. The next step is to track the news consensus for the release that's about to come out. Some good places to find the consensus numbers is Briefing.com or FXstreet.com or forexfactory.com.
Now you will need to do some historic research and analyze how the market has reacted to the difference between the consensus and the actual result historically. Basically for each release you need to know how large a discrepancy has to be in order for you to act on the trade one way or the other. This takes a lot of research or you can sign up for a news trade call service which already does the research for you. Now that you have your triggers set, I recommend making a calendar for yourself of the economic releases that you will trade and trading during your releases.
It is very important to get in as quickly as possible if your trigger is met in order to get execution. Once in a trade I recommend moving your stop loss to break even after you have gained 10-15 pips (this varies from trade to trade and trailing your position with a trailing stop after you have generated a profit or 15-20 pips. Having a profit turn into a loss is one of the most demoralizing things that can happen in trading and I recommend avoiding it at all costs if you are trading discretionarily. However you must keep in mind that stop losses are not guaranteed and it is very possible for you not to be triggered to exit at a stop level especially in a fast market such as the one during news trading. So it's imperative that you watch your trade.
Execution
Since forex is an off exchange market usually the desks have to either take risk on a client's position or offset with a bank. Since everybody is trading only in one direction during the spike it becomes hard for the forex FCM's to offset the trades. Therefore they sometimes end up taking a hit during the news times. They do not like it at all, some will not allow news trading and some will re-quote or slip clients. One thing I recommend while trading with this approach is taking trades all the time and just slightly increase position size during the news trades.
I also recommend to let the FCM know what you plan on doing before hand so that they can tell you what size you can get away with. At forexyourself.com we have relationships established with many FCM's and will be able to advise you on what you can do at each place. Also a very important thing to keep in mind is the smaller you trade during these releases the more likely you are to get execution.
Risk Management
Because this strategy can make money quickly a lot of people like to swing for the fences with it, for example leveraging out a large portion of their accounts on it. This is a huge mistake for many reasons. On main reason is the bigger you trade the harder it is to get execution at the trading platforms. Also unexpected events can happen and if you are leveraged out fully you can get yourself into a lot of trouble. I recommend using stops with this strategy and never risking over 5% of your account on any of the news trades. With some of the spikes that can be caught it is possible to make some very decent gains.
Post News Trades
A close friend of mine used to trade on the CBOT. He says that the only way he will trade the release is the pull back. Many times a spike will happen and the price will pull back allowing a second opportunity to get in. This is what's called a post news trade. If the price spikes after the news and makes a slight pullback within 10 to 15 minutes it may be a good idea to get in with a fairly tight stop to catch the second leg of the move. Another way to trade some of the less volatile news announcements is a breakout strategy.
With this strategy you can take announcements regardless of the discrepancy wait until a range is created usually about 10 to 15 minutes and than take a trade in the direction of the range breakout. This is an effective way to capture 8-12 pips after the news trades. I recommend doing historical research or subscribing to a service that calls these trades out to determine your timing with precision.
By establishing a point A and B we are able to play the high probability break out trades. This is a trade we took on 9/29/06 USDCAD after the GDP announcement where we took 9 pips. Although this strategy has its drawbacks it allows the trader to get into some high probability trades. I recommend experimenting with different releases to see which one is a good fit. Please keep in mind that this strategy is risky since you are trading during extremely volatile times. Also it is critical to control your emotions and plan each trade with extreme precision.
Three Strategies To Trade Forex During News by Tom Van Geert
In this article, I will discuss three ways how you can take advantage trading forex during economic news releases.
1) Trading the economic numbers strategy
Currency traders try to take advantage of the discrepancy between the forecasted and the actual economic number, you need a very fast news data feed such as Reuters or Bloomberg because you want to get in the trade before the move begins.
Steps to trade the economic data numbers:
1. Purchase a fast news datafeed at Reuters or Bloomberg
2. Track the news consensus and determine the significance of the economic news report being released, if it is not important, do not trade it.
You will be able to find all important data on a good economic data calendar
3. For each important news release you need to know how large a discrepancy has to be in order for you to act on the trade.
4. Finally, watch the news release using your fast datafeed and trade the numbers.
2) Straddle the News strategy
This strategy is very simple and consists of 2 limit orders, one to buy a few pips above the range high and one to sell a few pips below the range low, then wait for the price to breakout triggering one of your orders. Your stop loss order should be placed a few pips below the range low when buying, conversely, a stop loss order should be placed a few pips above the range high when selling.
3) Hedging the News strategy
What is hedging? Hedging enables a currency trader to simultaneously hold Buy and Sell positions in the same currency pair at the same time in one trading account.
1. To hedge, go both long and short at market price 30 min before the news release.
2. Add a protective stop loss order to both long and short positions 30 seconds before the news release.
3. Add a limit order to both long and short positions 30 seconds before the news release.
For more free tutorials, forex tools, free system downloads, news, forex calendar, forex product reviews and articles about forex trading, please visit us at Aboutcurrency.com | Forex
Article Source: http://EzineArticles.com/?expert=Tom_Van_Geert
1) Trading the economic numbers strategy
Currency traders try to take advantage of the discrepancy between the forecasted and the actual economic number, you need a very fast news data feed such as Reuters or Bloomberg because you want to get in the trade before the move begins.
Steps to trade the economic data numbers:
1. Purchase a fast news datafeed at Reuters or Bloomberg
2. Track the news consensus and determine the significance of the economic news report being released, if it is not important, do not trade it.
You will be able to find all important data on a good economic data calendar
3. For each important news release you need to know how large a discrepancy has to be in order for you to act on the trade.
4. Finally, watch the news release using your fast datafeed and trade the numbers.
2) Straddle the News strategy
This strategy is very simple and consists of 2 limit orders, one to buy a few pips above the range high and one to sell a few pips below the range low, then wait for the price to breakout triggering one of your orders. Your stop loss order should be placed a few pips below the range low when buying, conversely, a stop loss order should be placed a few pips above the range high when selling.
3) Hedging the News strategy
What is hedging? Hedging enables a currency trader to simultaneously hold Buy and Sell positions in the same currency pair at the same time in one trading account.
1. To hedge, go both long and short at market price 30 min before the news release.
2. Add a protective stop loss order to both long and short positions 30 seconds before the news release.
3. Add a limit order to both long and short positions 30 seconds before the news release.
For more free tutorials, forex tools, free system downloads, news, forex calendar, forex product reviews and articles about forex trading, please visit us at Aboutcurrency.com | Forex
Article Source: http://EzineArticles.com/?expert=Tom_Van_Geert
Sunday, August 29, 2010
The 10 Best Questions to Ask at a Job Interview by Karen Burns
You're interviewing for a job. After 20 or 30 minutes, you're asked: "Do you have any questions?"
The worst thing you can do is ask, "What is it your company does?" (Hey, it has happened.) The next worst thing you can do is say, "Um, nope, I don't have any questions."
You need to ask some questions! Asking questions shows your interest in a company and makes you look smarter (smart people tend to be inquisitive). Asking questions gives interviewers a chance to talk about themselves, a thing most people love. And--this is important--asking questions is a way to find out if you really want to work for these people.
Bottom line: Don't make the interviewer do all the heavy lifting. Take an active role in the interview process and improve your chances of landing a job.
So what should you ask? Here are 10 suggestions:
1. "Can you describe a typical day for someone in this position?" If your interviewer appears to be nervous or ill at ease, a non-abstract question like this is a good way to get the ball rolling.
2. "Could you talk about the history of this position?" Specifically, what you're trying to find out is how long the position has existed, how many people have held it, and why it is now available.
3. "What were the major strengths and weaknesses of the last person who held this job?" Or in other words, what kind of act would you have to follow. This is also a chance to find out what happened to your would-be predecessor. How this question is answered will tell you a lot about the dynamics and expectations of this workplace.
4. "What are this position's biggest challenges?" You're naturally curious about the downsides of the job. But find out in a way that makes you look confident and unafraid to tackle problems.
5. "In what area could your team use some improvement?" Do you get an honest-sounding answer? This is important. It's also an opportunity to talk some more about how your skills specifically match this company's needs.
6. "What are the prospects for advancement?" Asking this demonstrates that you have ambition, and makes you look like a big picture person.
7. "How would I be evaluated?" If you want to know an employer's true priorities, and what is really important about the position under discussion, ask this.
8. "Who are the most successful people in this company and why?" A clever way to get a glimpse of a company's values/ethos/culture and how the powers-that-be measure success.
9. "Why do you enjoy working at this company?" Okay, it's a softball question. But the answer, and the tone in which it is given, should tell you a lot. Basically, you are looking to see some sincere enthusiasm here.
10. "Do you have any reservations about me or my ability to perform this job?" It's a gutsy thing to ask. But consider doing so because it's a great way to get real-time feedback on you and your interview skills. Asking for criticism not only earns you points for courage, it could result in some very helpful information.
P.S. Do not ask questions that would be easily answered by consulting the company's website. You will look unprepared, even lazy. You'll also lose the opportunity to gather some valuable insight about this employer and the job on offer.
Thot I copied this here for myself in future just in case that I need this!
The worst thing you can do is ask, "What is it your company does?" (Hey, it has happened.) The next worst thing you can do is say, "Um, nope, I don't have any questions."
You need to ask some questions! Asking questions shows your interest in a company and makes you look smarter (smart people tend to be inquisitive). Asking questions gives interviewers a chance to talk about themselves, a thing most people love. And--this is important--asking questions is a way to find out if you really want to work for these people.
Bottom line: Don't make the interviewer do all the heavy lifting. Take an active role in the interview process and improve your chances of landing a job.
So what should you ask? Here are 10 suggestions:
1. "Can you describe a typical day for someone in this position?" If your interviewer appears to be nervous or ill at ease, a non-abstract question like this is a good way to get the ball rolling.
2. "Could you talk about the history of this position?" Specifically, what you're trying to find out is how long the position has existed, how many people have held it, and why it is now available.
3. "What were the major strengths and weaknesses of the last person who held this job?" Or in other words, what kind of act would you have to follow. This is also a chance to find out what happened to your would-be predecessor. How this question is answered will tell you a lot about the dynamics and expectations of this workplace.
4. "What are this position's biggest challenges?" You're naturally curious about the downsides of the job. But find out in a way that makes you look confident and unafraid to tackle problems.
5. "In what area could your team use some improvement?" Do you get an honest-sounding answer? This is important. It's also an opportunity to talk some more about how your skills specifically match this company's needs.
6. "What are the prospects for advancement?" Asking this demonstrates that you have ambition, and makes you look like a big picture person.
7. "How would I be evaluated?" If you want to know an employer's true priorities, and what is really important about the position under discussion, ask this.
8. "Who are the most successful people in this company and why?" A clever way to get a glimpse of a company's values/ethos/culture and how the powers-that-be measure success.
9. "Why do you enjoy working at this company?" Okay, it's a softball question. But the answer, and the tone in which it is given, should tell you a lot. Basically, you are looking to see some sincere enthusiasm here.
10. "Do you have any reservations about me or my ability to perform this job?" It's a gutsy thing to ask. But consider doing so because it's a great way to get real-time feedback on you and your interview skills. Asking for criticism not only earns you points for courage, it could result in some very helpful information.
P.S. Do not ask questions that would be easily answered by consulting the company's website. You will look unprepared, even lazy. You'll also lose the opportunity to gather some valuable insight about this employer and the job on offer.
Thot I copied this here for myself in future just in case that I need this!
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