Chuẩn bị chốt lời được rồi các bác!
Các bác nên giữ kỷ luật kiếm lãi 10-13$/ounce/1 ngày, không tham lam sẽ có nguy cơ lỗ trở lại. Tuy nhiên chúng tôi cho rằng giá có khả năng tăng tiếp lên vùng 1183-1184 nếu như tiếp tục giao dịch ổn định ở vùng 1180, sau đó sẽ điều chỉnh trở lại. Nếu nhà đầu tư mạo hiểm có thể đặt lệnh chốt lời thêm vùng này. Còn muốn giữ đúng nguyên tắc giao dịch và thoải mái trong đời sống, hãy chốt lời và nghỉ ngơi sớm.
Chúc các bác thành công.
Thứ Sáu, 30 tháng 4, 2010
Chiến lược kinh doanh vàng ngày 30.04.2010
Xu hướng dài hạn: Tăng
Xu hướng trung hạn: Tăng
Xu hướng ngắn hạn: Tăng
Giá vàng đã có 5 ngày tăng liên tiếp và đã bứt phá qua ngưỡng kháng cự 1169 khá dễ dàng cho thấy xu hướng đi lên có thể tiếp tục.
Sau khi giá vàng mở cửa tăng vọt lên 1175 và đang điều chỉnh giảm trở lại. Tuy nhiên chúng tôi cho rằng xu hướng tăng vẫn tiếp tục diễn ra trong ngày. Nhà đầu tư tuyệt đối không nên đi ngược xu hướng.
Nếu trong quá trình điều chỉnh, giá bật tăng trở lại nhà đầu tư có thể mua vào.
Chiến lược giao dịch phiên Châu Âu:
Canh mua quanh vùng giá 1169 - Mức MA 20 (Biểu đồ H1)
Cắt lỗ: 1163-1164
Chốt lời: 1180-1182
Greece, Europe and ETFs - Ron Rowland
 |
But if truth be told, Greece hasn't done anything different from many other countries, including the U.S.! The government simply spent too much money, the citizens enjoyed too many overly-generous social programs, and eventually the bill came due. Now someone has to pay up — and the Greeks don't have the cash.
The complication is that Greece is part of the euro currency union. This means other member countries can't just let Greece default on its debts. Therefore a grand negotiation is now underway to figure out how they'll share the pain.
 |
| Greece's economy is crumbling before our eyes. |
So today I want to draw your attention to some exchange traded funds (ETFs) that focus on Europe. You can think about it as a list of ETFs to avoid for now — or a shopping list to consider buying whenever Greece and the rest of Europe finally touch bottom.
Buying Europe in an ETF ...
Numerous ETFs will give you a broad-based allocation to European stock markets. The two most popular are:
- Vanguard European ETF (VGK)
- iShares S&P Europe 350 (IEV)
 |
| ETFs have erased many of Europe's borders for investors. |
iShares MSCI EMU (EZU) is interesting because it includes only those nations that use the euro as official currency. That means EZU is heavy on France and Germany and omits the U.K. and Switzerland. Greece weighs in at just 1.2 percent of this ETF.
Since the worst of the economic problems are in Southern Europe, you might have better luck traveling north on the map to look at the Scandinavian countries. Global X FTSE Nordic 30 (GXF) does this for you, with exposure to Sweden, Denmark, Norway, and Finland.
iShares MSCI Emerging Markets Eastern Europe (ESR) and SPDR S&P Emerging Europe (GUR) specialize in the smaller, less developed European markets. In most cases these are the former communist countries that remain closely tied to Russia, such as Hungary and Poland — and, of course, Russia itself.
Buying Europe —
One Country at a Time
Another way to invest in Europe is with single-country funds. This can be useful because it lets you customize a portfolio with just the allocation you think will work. Here are some ETFs you might want to consider:
- iShares MSCI Austria (EWO)
- iShares MSCI France (EWQ)
- iShares MSCI Germany (EWG)
- iShares MSCI Italy (EWI)
- iShares MSCI Netherlands (EWN)
- iShares MSCI Spain (EWP)
- iShares MSCI Sweden (EWD)
- iShares MSCI Switzerland (EWL)
- iShares MSCI United Kingdom (EWU)
- Market Vectors Poland (PLND)
- Market Vectors Russia (RSX)
- SPDR S&P Russia (RBL)
- iShares MSCI Europe Financials Sector (EUFN)
- iShares FTSE EPRA/NAREIT Europe (IFEU)
Inverse Europe ...
Finally, ProShares UltraShort MSCI Europe (EPV) is a 2X daily leverage inverse fund. That means it's designed to move twice (200 percent) the inverse (opposite) of the daily performance of the MSCI Europe Index before fees and expenses.
In other words, if for example the index drops 10 percent, the ETF's shares could rise 20 percent.
 |
| Try to trade when the U.S. and European markets are open. |
BONUS: Trading Tip
If you buy or sell any kind of Europe-focused ETF, it's usually a good idea to enter your order in the morning hours, U.S. time. That's because most European markets are still open and there is typically more liquidity. You'll see the savings in the form of a tighter bid/ask spread and quicker fills.
Best wishes,
Ron
Thứ Ba, 20 tháng 4, 2010
7 Keys To Choosing A Good Forex Trading System - WHTenn
Forex Trading Systems:
So you want to choose a good forex system, one that will be worth your time and effort learning how to trade?
Well, there are a couple of key points to keep clearly in mind, even before you go out hunting for a system to learn.
Firstly, realize that some systems perform better or are more consistent than others. Yes, it's true that this in itself is in the eye of the beholder, as everyone is different. But say you're comparing two daily systems, and they're very similar in time required to trade it, but the first has better profitability and better consistency, with a smaller draw down, then for most people, the first is a system that may be more attractive.
The second point to consider is that systems differ vastly in the amount of time that's required to trade it. Some systems are take less time to trade, while some require you to be at the screen several times a day, or more. This is a question therefore about what suits your lifestyle.
What we're looking for is a currency trading system that's profitable enough - and this is different for everybody, that has an acceptable draw down, and that actually fits into our daily routine!
This is important, as when any of these factors are not there, we'll find ourselves unable, or unwilling trade the system.
By the time you've read this article, you'll know how to choose a forex system that's worth the time and effort to learn as prosper from!
So here are the 7 power points when checking out a forex system or training course that you've found:
1. The profitability of the system.
This is shown as either pips per month, or when assuming a certain float amount, the dollar amounts per month.
These profit figures are often quoted in pips per month, as it's one way of comparing trading systems, despite the fact that people are trading different trade sizes.
However, when looking at pip profit figures, just be aware that if you assume a fixed risk model, that the average face value that people will trade with any given float, will depend on the average risk per trade. This in turn, depends on the average stop loss distance for that system. But the stop loss distance is not often quoted.
As an example, say you want to trade with a 2% fixed risk model. If the average risk per trade in the first system is say 30 pips, and in the second system is 60 pips, then the average face value would be twice the size in the first system for any given float. If both systems produce the same average pip profit per trade, say 100 pips, the first system will, in terms of dollar amounts, produce the higher profit.
If on the other hand, we're assuming a fixed dollar risk model, then the amounts you put in will depend on the size of the float.
2. The maximum draw down either historical or based on real trading.
The maximum historical draw down of a system is the largest decrease in equity that has happened in the past during back testing or real time trading of the system.
When comparing draw down between systems, you can either look at pips, or if using a assumed float, look at the dollar value. Then with this dollar value, express it as a percentage of the cash float used. For example, if the maximum historical draw down was $6000 based on a $10 000 cash float, then the draw down is 60%, expressed as a percentage of the cash float.
As well as using this draw down figure to compare systems, you can also use it to figure out the amount of funds you'd need to start trading the system.
In the example we just mentioned, you'd need at least $16 000 in the beginning ideally, to trade the system. That is $10 000 float plus backup of $6000. This is in case a drawdown occurs when you first start trading, not months or years after you start. It's wise to be prudent and to have backup.
3. What's the win loss ratio of the system?
The “win-loss” ratio of the system, is the percentage of winning trades compared to losing trades. A high win-loss ratio is a bonus, in that the system may be psychologically easier to trade.
But more ultimately, you need to look at both the win loss and profit loss ratio, which we come to now…
4. The “profit-loss” ratio of the system.
The “profit-loss” ratio is the average size of winning trades compared to losing trades.
A high ratio means that the system is pretty robust. And this is a strength.
So if the “profit-loss” ratio multiplied by the “win-loss” ratio is greater than one, then you're on the right track, that is, the system is profitable. You'd want this ratio to be 2 or 3 or more, not just bordering on one, which means that the system is profitable with a good edge.
5. The consistency of the Forex system, by month and by year.
If you can find a profitable system, with a reasonable draw down, and is very consistent, then that's great. Look at the monthly, quarterly and yearly results to best tell this.
Some people won't mind a slightly higher draw down and less consistency, if the profitability was much higher. However, others depending on their circumstances and personality may want consistency more than profitability, to an extent. There's a different sweet spot for everybody! What's your sweet spot?
6. How much time do you need to trade the system each day?
Some forex systems require about 15 minutes a day to trade, and these are usually daily systems. And others need a few hours per day to achieve similar returns.
On a slightly different note, some forex systems trade the major economic announcements. In these systems of course, you know exactly when you need to be at the computer. Do you want to be a day trader, or do you prefer to trade a short time a day and then focus your day on other businesses?
7. Is the system quite systematic, quite discretionary, or a combination of the two?
A mostly mechanical system is an advantage in that they're teachable and learnable. There's less need to learn discretionary skills that come from real-time paper and live trading, although it's rarer to find systems that are 100% mechanical.
For example, when putting in your support and resistance lines, does the course give you clear rules so that your lines, and therefore your trading decisions will be close to that of the person that's teaching you, or the mentor that developed the system.
Even better, do they have weekly examples of how they draw their lines to fine tune your drawing of these lines?
So when checking out a forex course, keep these points in mind.
And have some practice looking at various forex strategies for yourself so you get familiar with what's around.
You want a system that was worth learning and trading, not one that causes frustration!
Now you have some tools under your belt to help you properly look at forex systems.
So you want to choose a good forex system, one that will be worth your time and effort learning how to trade?
Well, there are a couple of key points to keep clearly in mind, even before you go out hunting for a system to learn.
Firstly, realize that some systems perform better or are more consistent than others. Yes, it's true that this in itself is in the eye of the beholder, as everyone is different. But say you're comparing two daily systems, and they're very similar in time required to trade it, but the first has better profitability and better consistency, with a smaller draw down, then for most people, the first is a system that may be more attractive.
The second point to consider is that systems differ vastly in the amount of time that's required to trade it. Some systems are take less time to trade, while some require you to be at the screen several times a day, or more. This is a question therefore about what suits your lifestyle.
What we're looking for is a currency trading system that's profitable enough - and this is different for everybody, that has an acceptable draw down, and that actually fits into our daily routine!
This is important, as when any of these factors are not there, we'll find ourselves unable, or unwilling trade the system.
By the time you've read this article, you'll know how to choose a forex system that's worth the time and effort to learn as prosper from!
So here are the 7 power points when checking out a forex system or training course that you've found:
1. The profitability of the system.
This is shown as either pips per month, or when assuming a certain float amount, the dollar amounts per month.
These profit figures are often quoted in pips per month, as it's one way of comparing trading systems, despite the fact that people are trading different trade sizes.
However, when looking at pip profit figures, just be aware that if you assume a fixed risk model, that the average face value that people will trade with any given float, will depend on the average risk per trade. This in turn, depends on the average stop loss distance for that system. But the stop loss distance is not often quoted.
As an example, say you want to trade with a 2% fixed risk model. If the average risk per trade in the first system is say 30 pips, and in the second system is 60 pips, then the average face value would be twice the size in the first system for any given float. If both systems produce the same average pip profit per trade, say 100 pips, the first system will, in terms of dollar amounts, produce the higher profit.
If on the other hand, we're assuming a fixed dollar risk model, then the amounts you put in will depend on the size of the float.
2. The maximum draw down either historical or based on real trading.
The maximum historical draw down of a system is the largest decrease in equity that has happened in the past during back testing or real time trading of the system.
When comparing draw down between systems, you can either look at pips, or if using a assumed float, look at the dollar value. Then with this dollar value, express it as a percentage of the cash float used. For example, if the maximum historical draw down was $6000 based on a $10 000 cash float, then the draw down is 60%, expressed as a percentage of the cash float.
As well as using this draw down figure to compare systems, you can also use it to figure out the amount of funds you'd need to start trading the system.
In the example we just mentioned, you'd need at least $16 000 in the beginning ideally, to trade the system. That is $10 000 float plus backup of $6000. This is in case a drawdown occurs when you first start trading, not months or years after you start. It's wise to be prudent and to have backup.
3. What's the win loss ratio of the system?
The “win-loss” ratio of the system, is the percentage of winning trades compared to losing trades. A high win-loss ratio is a bonus, in that the system may be psychologically easier to trade.
But more ultimately, you need to look at both the win loss and profit loss ratio, which we come to now…
4. The “profit-loss” ratio of the system.
The “profit-loss” ratio is the average size of winning trades compared to losing trades.
A high ratio means that the system is pretty robust. And this is a strength.
So if the “profit-loss” ratio multiplied by the “win-loss” ratio is greater than one, then you're on the right track, that is, the system is profitable. You'd want this ratio to be 2 or 3 or more, not just bordering on one, which means that the system is profitable with a good edge.
5. The consistency of the Forex system, by month and by year.
If you can find a profitable system, with a reasonable draw down, and is very consistent, then that's great. Look at the monthly, quarterly and yearly results to best tell this.
Some people won't mind a slightly higher draw down and less consistency, if the profitability was much higher. However, others depending on their circumstances and personality may want consistency more than profitability, to an extent. There's a different sweet spot for everybody! What's your sweet spot?
6. How much time do you need to trade the system each day?
Some forex systems require about 15 minutes a day to trade, and these are usually daily systems. And others need a few hours per day to achieve similar returns.
On a slightly different note, some forex systems trade the major economic announcements. In these systems of course, you know exactly when you need to be at the computer. Do you want to be a day trader, or do you prefer to trade a short time a day and then focus your day on other businesses?
7. Is the system quite systematic, quite discretionary, or a combination of the two?
A mostly mechanical system is an advantage in that they're teachable and learnable. There's less need to learn discretionary skills that come from real-time paper and live trading, although it's rarer to find systems that are 100% mechanical.
For example, when putting in your support and resistance lines, does the course give you clear rules so that your lines, and therefore your trading decisions will be close to that of the person that's teaching you, or the mentor that developed the system.
Even better, do they have weekly examples of how they draw their lines to fine tune your drawing of these lines?
So when checking out a forex course, keep these points in mind.
And have some practice looking at various forex strategies for yourself so you get familiar with what's around.
You want a system that was worth learning and trading, not one that causes frustration!
Now you have some tools under your belt to help you properly look at forex systems.
Top 10 Forex Blogs - by Yohay
- FXPath: Good technical analysis by forex expert James Chen. He’s also the author of the book: Essentials of Foreign Exchange Trading.
- Forex Blog: Adam Kritzer writes technical and fundamental analysis about the forex market. He has a special interest on China’s growing role in currency markets.
- Forex Magnates: Michael Greenberg brings up to date news about the forex industry with a very clever analysis.
- Kathy Lien - Head of currency research at Global Forex Trading (GFT). She provides interesting technical and fundamental analysis, forex signals and strategies.
- Market Skeptics: Eric deCarbonnel writes his interesting insights about macro-economics. They’re somewhat gloomy…
- The Forex Articles: James W. speaks his mind regarding forex strategies, forex trading ideas and more.
- Currency Thoughts: Larry Greenberg, a veteran currency economist brings forex news from many places all over the world, and in-depth analysis of current events.
- Trading U – Chicago Blog: Jay Norris writes about psychological effects of forex trading, trading patterns, technical analysis and much more.
- Macro Man: Though not always related to forex, Macro man sees the big picutre in his unique style, has interesting insights and makes me laugh.
- Winners Edge Trading: Last but not least, Casey Stubbs at Winners Edge Trading, with a special focus on one of the most popular currency pairs: EUR/USD.
- Only blogs are in this list. While there are lots of definitions for blogs, and there’s a fine line between a blog or a site, I stick with two definitions: chronologically ordered in reverse (last post first), and the option to comment. There are lots of good forex sites out there. I listed here only blogs.
- I listed here only blogs that are to my liking.
- No one paid me for this including him in this list
- The order in the list doesn’t represent an internal ranking.
I occasionally feature these blogs on my Forex Links for the Weekend posts. This list was composed after Casey Stubbs made a similar list, which I am honored to be part of.
I hope you like them as well. Through Casey’s list, I’m getting to know new blogs. Enjoy! Is there any other forex blog that you recommend?
I hope you like my blog as well
You’re welcome to subscribe via email or by RSS.Want to see what other people actually do? What real trades they make? Check out Currensee, where you can trade together with other people, and see their actual actions.
Thứ Bảy, 10 tháng 4, 2010
Five Key Factors that Move the Forex Markets -- and How to Profit from Them
Hi! We're Boris Schlossberg and Kathy Lien, and we've been making people money in Forex for over a decade. As Directors of Currency Research at GFT and long-time Investopedia.com contributors, we've seen our share of wins and losses... Thankfully, over the years, we've also been able to learn from our less glamorous predictions and come up with a currency trading system that has earned us a very respectable success rate on Forex trades.
Today, we're sharing our Forex trading system with you. We're going to show you how to analyze the movements of any currency pair using a simple checklist of five key currency-moving factors. These are the same factors that we use to analyze our own Forex picks.
Why Forex?
Although trading currencies originated as a way to purchase foreign goods and services, investors soon learned that there are huge speculative returns to be made by predicting the value of international currencies. Today, those who use the Forex market as an investment vehicle outnumber those who trade currencies to expedite world trade. In fact, as of December 2006, 80% of all trades in the currency market are made by investors or investment entities out to make a quick return on their extra cash.
The Forex market is the most prolific market in the world, attracting trillions of dollars per day from central banks, corporations, hedge funds, and individual speculators. This fast-paced market operates 24/7, 5 days a week, beginning with trade in Wellington, New Zealand, and continuing on to Sydney, Australia; Tokyo, Japan; London, England; and New York, New York before the whole cycle begins again.
Forex is exciting, and with the right guidance and a bit of luck you can earn 500%, 600%, even 2000% returns. But Forex is not for everyone. If you prefer the penny slots to the high roller tables, then the high-stakes world of Forex trading is probably not for you. Forex is best traded with money you have allocated as risk capital -- money you don't need for day to day expenses.
So, if you'd like to spice up your more secure investments with a pinch of adrenalin and a dash of risk, try a few Forex trades. But first, let us show you how you can gain an edge in the market with the...
Five Keys to Predicting Forex Market Movements
To profit from the fascinating world of international trade, you must have a firm grip on the key factors that affect a currency's value. When making our trades, we analyze five key factors. In order of importance, they are:
Key Factor 1. Interest Rates.
We use two methods to profit from the difference in countries' interest rates:
Every currency in the world comes attached with an interest rate that is set by its country’s central bank. All things being equal, you should always buy currencies from countries with high-interest rates and finance these purchases with currency from countries with low-interest rates.
For example, as of the fall of 2006, interest rates in the United States stood at 5.25%, while rates in Japan were set at .25%. You could have taken advantage of this rate difference by borrowing a large sum of Japanese yen, exchanging it for US dollars, and using the US dollars to purchase bonds or CDs at the US 5.25% rate. In other words, you could have borrowed money at .25%, lent it out at 5.25%, and made a 5% return. Or you could save yourself all the hassle of becoming a money lender by simply trading the currency pair to affect the same transaction.
Generating income from capital appreciation.
As a country's interest rate rises, the value of the country's currency also tends to rise -- this phenomenon gives you a chance to profit from your currency's increased value, or capital appreciation.
In the case of the USD/JPY spread in 2005 and 2006, as the US interest rates stayed higher than Japan's, the dollar continued to increase in value. Investors who traded yen for dollars gained from interest income (as explained in the section above) as well as the US dollar's capital appreciation.
Interest Rates Spark a 700 Point Rally
Another great example of the power of interest rates in the currency market occurred in August of 2006. At that time, the Bank of England surprised the market by raising its short-term rates from 4.5% to 4.75%. Interest rates for Japan were still at a low .25%.
The rise in England's interest rates widened the interest rate differential on the popular GBP/JPY cross from 425 basis points to 450 basis points. Investment money flowed into Great Britain as traders bought up pounds to take advantage of the new spread. As the demand for the GBP increased, the value of the GBP increased, and the spread between the currencies increased. This domino effect lead to a 700-point rally in the GBP/JPY over the next three weeks.
80 Points in Less than 24 Hours
More recently, we have used interest rate differentials to successfully predict several profitable trades for Forex Advisor members.
The concept of interest rates can be used to trade currencies using both long- and short-term perspectives. On a long-term basis, we look for major themes. On a short-term basis, we look for surprises in the news that shift the market’s interest rate expectations. We were able to make two winning trades based on short-term interest rate flows in the Australian dollar/Japanese yen (AUD/JPY) currency pair on January 24, 2007.
The trigger for our trade was the surprise drop in Australian consumer prices during the fourth quarter. The market was looking for hot inflation numbers but instead they received cold ones. Low inflation numbers meant the central bank of Australia was not likely to raise interest rates as expected. This news sent the Australian dollar tumbling hard against the Japanese yen, as traders speculated that the interest rate differential between the two currencies would no longer grow.
The first trade we made on January 24 banked us 45 points. We took profit before the currency pair retraced and then sold it again when it showed further signs of weakness. The second January 24 trade produced an additional 35 points for a total of 80 points.
Australian dollar vs. Japanese yen, January 24, 2007. By predicting the affect of unexpectedly low inflation on the Australian dollar, we made two winning trades on January 24. Combined, these trades netted us 80 points in one day.
Key Factor 2. Economic Growth.
The next factor you need to consider when predicting a country's currency movements is its economic growth. The stronger the economy, the greater the possibility that the central bank will raise its interest rates to tame the growth of inflation. And the higher a country's interest rates, the bigger the likelihood that foreign investors will invest in a country's financial markets. More foreign investors means a greater demand for the country's currency. A greater demand results in an increase in a currency's value.
Hence, a ripple effect: economic growth inspires higher interest rates inspires more foreign investment inspires greater currency demand which inspires an increase in the currency's value.
How Anemic Economic Growth Crashed EUR/USD 2,000 Points
For a good example of the impact of economic growth on the direction of currency rates, let’s look at the EUR/USD from 2005 to 2006. Economic growth is best measured by a country's Gross Domestic Product, or GDP. The United States and Eurozone represent two of the most prosperous regions in the world with GDPs running at $13 trillion and $11 trillion respectively.
In 2005 and 2006, the difference in growth rates between the two major economic powers was clearly reflected in currency movements. In 2005, the Eurozone lagged significantly behind the United States in economic growth, averaging an anemic 1.5% rate throughout the year while the US expanded at a healthy 3% rate. Consequently, investment capital flowed from Europe to the US and the EUR/USD dropped by nearly 2,000 basis points by the end of 2005. In 2006, however, Eurozone growth perked up while US growth began to slow. At the end of 2006, Eurozone GDP actually overtook US growth rates, causing the EUR/USD to rally.
We've used GDP's to forecast trends on several more Forex trades in the past. One great example is our November 14, 2006, United States dollar/ Japanese yen trade (USD/JPY).
67 Points in Four Hours
In the middle of November 2006, hurt by the contraction in its housing sector, the US economic data began to deteriorate. Rumor had it that the US might lower interest rates in the first quarter of 2007, which would encourage foreign investors to look elsewhere.
Meanwhile, the Japanese economy was buoyed by the weak yen that made Japanese products affordable internationally and helped spur double digit growth in exports. On November 14, 2006, the Japanese GDP printed at much better than expected -- 2% versus the 1% forecast. We decided to take advantage of the strength of the Japanese economic growth vs. the relatively weak economic outlook in the US, so we went short USD/JPY at 117.82. As we hoped, that morning, in sharp contrast to Japan, US retail sales produced very weak numbers and the USD/JPY pair collapsed. We were able to collect 67 points on the trade in less than four hours.
United States dollar vs. Japanese yen, November 14, 2006. The strong economic growth in Japan made the USD/JPY trade a success for us in November.
Key Factor 3. Geo-Politics.
Do you hate the business section? Do your eyes glaze over at the mere mention of economic data and mind-numbing accounting numbers? Fear not. The currency market is the only market in the world that can be successfully traded on political news as well as economic releases. Because currencies represent countries rather than companies, they are political as well as economic assets and are therefore very responsive to any disturbance in the political landscape.
The key to understanding speculative behavior with respect to any geopolitical unrest is that speculators run first and ask questions later. In other words, whenever investors fear any threat to their capital, they will quickly retreat to the sidelines until they are certain that the political risk has disappeared. Therefore, the general rule of thumb in the currency market is that politics almost always trumps economics. The history of FX is littered with examples of political trades. Let’s take a look at some examples over the past few years.
No-Confidence Vote Depresses Loonie
The end of May 2005 was not a happy time for the Liberal Party government of Canada’s Prime Minister, Paul Martin. After having guided the country to its best economic performance in 30 years, Martin was facing the fight of his life as his party prepared for a no-confidence vote stemming from accusations of past Liberal Party corruption.
Meanwhile, Canada’s economy was becoming a star performer, spurred by the massive rises in the price of oil. As the number one exporter of crude to the US, Canada was benefiting mightily from this newfound wealth. Yet despite the great economic news, the Canadian dollar remained weak against the greenback as traders worried about the implications of the fall of the Liberals.
On May 26, 2005, Martin’s government survived the no-confidence vote and the Canadian dollar rallied, causing the USD/CAD* to plunge 200 points in less than a week as the market once again focused on Canada’s stellar economic fundamentals.
*The USD/CAD pair trades inversely.
BoJ Governor Fukui Responsible for Floundering Yen
At the beginning of June 2006, Bank of Japan Governor Fukui revealed to the Diet that he had invested 10 million yen in 1999 in a fund founded by financier Yoshiaki Murakami. Murakami was later indicted on charges of insider trading and although Fukui was not involved in any illegal activity, the mere appearance of impropriety in image-conscious Japan greatly damaged his reputation.
As the principal of Japan’s monetary policy during its recovery from a decade-long battle with deflation, Fukui was considered one of the most powerful men in the currency markets. His forced resignation would do great damage to the prospects of further recovery in Japan.
Meanwhile, Japanese economic data continued to show stellar economic performance as exports and business investment continued to grow, unemployment reached decade-long lows, and consumer sentiment improved. Talk spread through the markets that Japan would soon abandon its zero-interest rate policy and would actually have positive interest rates for the first time this century.
Despite all the positive speculation, the yen floundered, continuing to decline against the dollar as traders feared that Fukui would have to step down. Fukui stolidly refused, and as the furor passed and the market realized that he would stay on, the yen’s strength returned, showing once again that when it comes to currencies, politics can often be more important than economics.
United States dollar vs. Canadian dollar, October 19, 2006. Knowing that OPEC's announcement would affect Canadian currency allowed us to gain 70 points on October 19.
Key Factor 4. Trade and Capital Flows
Before you make your final prediction about the trend of a country's currency, you should take a moment to categorize the country as dependent on either trade flow or capital flow. Trade flow refers to how much income a country earns through trade. Capital flow refers to how much investment a country attracts from abroad. Some countries are sensitive to trade flows, while others are far more dependent on capital flows.
Countries whose currency strength depends on their trade flows include:
For countries such as the US and UK, which have large liquid investment markets, capital flows are of far greater importance. In these countries, financial services are paramount. In fact, in the US, financial services represented 40% of the total profits of the S&P 500.
The United States also serves as a perfect example of why it is crucial to understand which flows affect which country in order to effectively analyze the direction of currencies. On the surface, the US currency, with its record multi-billion dollar trade deficit and near $1 trillion current account deficit should depreciate significantly. However, that has not been the case. As the chart below illustrates, the US has been able to attract more than enough surplus capital from the rest of the world to offset the negative effects of its massive trade deficits.
For the time being, trade-flow deficits do not matter to the dollar. However, should the US become unable to attract enough capital flow to offset its deficits, the currency may weaken.
Understanding the influence of trade and capital flows has been important to a number of our trades, including our New Zealand dollar/United States dollar (NZD/USD) trade on January 22, 2007.
Uridashi Bond Prediction Returns 40 Pips
New Zealand has one of the highest interest rates in the developed world (as of January 2007 it was 7.25%), and because of that fact, it is a major destination for capital flow. On January 22, 2007, there was talk of Uridashi bonds being issued to the benefit of the NZD. Uridashi bonds are issued when companies want to denominate their debt in a higher yielding currency and then offer it to Japanese investors. These are popular because the yield offered is far higher than the yield that Japanese investors can earn at home, which is less than 1%.
We anticipated that the week’s Uridashi issuances would inspire capital flow into New Zealand as investors purchased the bonds in New Zealand dollars. Once we made this prediction, we had to decide which New Zealand currency pair we would trade to best take advantage of the movement of the New Zealand dollar. We considered both the NZD/USD pair and the NZD/JPY.
We decided to go long the New Zealand dollar against the US dollar instead of against the Japanese yen. The risk/reward ratio to go long NZD/JPY versus NZD/USD was not as attractive. Our stop in the NZD/USD was more conservative than the risk we would have assumed in NZD/JPY. Therefore, we went long NZD/USD and banked 40 points over the next 24 hours.
New Zealand dollar vs. Japanese yen, January 22, 2007. The New Zealand Dollar / Japanese yen trade would have been a higher risk than the above-charted NZD/USD trade.
Key Factor 5. Mergers and Acquisitions
While merger and acquisition activity is the least important factor in determining the long-term direction of currencies, it can be the most powerful force in staging near-term currency moves. Merger and acquisition activity occurs when a company from one economic region wants to make a transnational transaction and buy a corporation from another country.
If, for example, a European company wants to buy a Canadian asset for $20 billion, it would have to go into the currency market and acquire the currency to affect this transaction. Typically, these deals are not price sensitive, but time sensitive because the acquirer may have a date by which the transaction is to be completed. Because of this underlying dynamic, merger and acquisition flow can exert a very strong temporary force on FX trading, sometimes skewing the natural course of currency flow for days or weeks.
If you keep abreast of international merger and acquisitions, you may be able to predict short-term fluctuations in FX. In late 2006, for example, Canadian economic data showed a great deal of weakness. Yet large demand for Canadian corporate assets from the Asia, Middle East, and Europe overrode the financial reports and kept the USD/CAD at all-time lows*.
*USD/CAD trades inversely
In November of 2006, we made a healthy profit by predicting a backward acquisition effect: After a surprising government announcement, money that had been used to purchase equities in Canada, reversed flow and headed out of the country.
Canada Loses Investors, Inspires Big Forex Gains
Merger and acquisition activity can be a powerful but sometimes stealthy driver of demand in the currency market. When a country’s capital assets such as equities, suddenly find favor from the rest of the world, they indirectly affect pricing in the foreign exchange market as dealmakers first have to buy the country’s currency before they can buy the stock. However, woe unto any currency when this situation reverses. Such was the case with USD/CAD in November 2006.
In the fall of 2006, Stephen Harper's newly elected conservative government made a shocking announcement that the very popular Canadian income trusts which enjoyed certain tax advantages would be taxed just like other Canadian securities. The Harper government exacerbated the situation by not grandfathering any of the long-term investors who already held positions in income trusts.
We thought the impact of this news would be highly negative to the Canadian dollar as foreign capital would quickly flow out of the country. Despite lackluster US economic news at the time, we thought a USD/CAD trade would be profitable because news that affects immediate investment flows typically overwhelms any day to day economic data. Therefore, on November 1, 2006 we went long USD/CAD at 1.1290 and were able to bank 45 points in just a few hours.
At 10 to 1 leverage you could have profited $450 on a $10,000 investment on the November USD/CAD trade -- that's a 4.5% profit in a matter of hours.
CONCLUCTION:
Today, we're sharing our Forex trading system with you. We're going to show you how to analyze the movements of any currency pair using a simple checklist of five key currency-moving factors. These are the same factors that we use to analyze our own Forex picks.
Why Forex?
Although trading currencies originated as a way to purchase foreign goods and services, investors soon learned that there are huge speculative returns to be made by predicting the value of international currencies. Today, those who use the Forex market as an investment vehicle outnumber those who trade currencies to expedite world trade. In fact, as of December 2006, 80% of all trades in the currency market are made by investors or investment entities out to make a quick return on their extra cash.
The Forex market is the most prolific market in the world, attracting trillions of dollars per day from central banks, corporations, hedge funds, and individual speculators. This fast-paced market operates 24/7, 5 days a week, beginning with trade in Wellington, New Zealand, and continuing on to Sydney, Australia; Tokyo, Japan; London, England; and New York, New York before the whole cycle begins again.
Forex is exciting, and with the right guidance and a bit of luck you can earn 500%, 600%, even 2000% returns. But Forex is not for everyone. If you prefer the penny slots to the high roller tables, then the high-stakes world of Forex trading is probably not for you. Forex is best traded with money you have allocated as risk capital -- money you don't need for day to day expenses.
So, if you'd like to spice up your more secure investments with a pinch of adrenalin and a dash of risk, try a few Forex trades. But first, let us show you how you can gain an edge in the market with the...
Five Keys to Predicting Forex Market Movements
To profit from the fascinating world of international trade, you must have a firm grip on the key factors that affect a currency's value. When making our trades, we analyze five key factors. In order of importance, they are:
- Interest Rates
- Economic Growth
- Geo-Politics
- Trade and Capital Flows
- Merger and Acquisition Activity
Key Factor 1. Interest Rates.
We use two methods to profit from the difference in countries' interest rates:
- interest income
- capital appreciation
Every currency in the world comes attached with an interest rate that is set by its country’s central bank. All things being equal, you should always buy currencies from countries with high-interest rates and finance these purchases with currency from countries with low-interest rates.
For example, as of the fall of 2006, interest rates in the United States stood at 5.25%, while rates in Japan were set at .25%. You could have taken advantage of this rate difference by borrowing a large sum of Japanese yen, exchanging it for US dollars, and using the US dollars to purchase bonds or CDs at the US 5.25% rate. In other words, you could have borrowed money at .25%, lent it out at 5.25%, and made a 5% return. Or you could save yourself all the hassle of becoming a money lender by simply trading the currency pair to affect the same transaction.
Generating income from capital appreciation.
As a country's interest rate rises, the value of the country's currency also tends to rise -- this phenomenon gives you a chance to profit from your currency's increased value, or capital appreciation.
In the case of the USD/JPY spread in 2005 and 2006, as the US interest rates stayed higher than Japan's, the dollar continued to increase in value. Investors who traded yen for dollars gained from interest income (as explained in the section above) as well as the US dollar's capital appreciation.
| Figure 1-1. Between January 2005 and November 2006, as the spread between US and Japanese interest rates widened, so did the spread between the currency values. A wide spread in currency values provides investors with a ripe opportunity to earn income through both interest income and capital appreciation. |
Another great example of the power of interest rates in the currency market occurred in August of 2006. At that time, the Bank of England surprised the market by raising its short-term rates from 4.5% to 4.75%. Interest rates for Japan were still at a low .25%.
The rise in England's interest rates widened the interest rate differential on the popular GBP/JPY cross from 425 basis points to 450 basis points. Investment money flowed into Great Britain as traders bought up pounds to take advantage of the new spread. As the demand for the GBP increased, the value of the GBP increased, and the spread between the currencies increased. This domino effect lead to a 700-point rally in the GBP/JPY over the next three weeks.
| Figure 1-2. When the Bank of England raised short-term interest rates in August 2006, it lead to a 700-point rally in the GBP/JPY over the next three weeks. |
More recently, we have used interest rate differentials to successfully predict several profitable trades for Forex Advisor members.
The concept of interest rates can be used to trade currencies using both long- and short-term perspectives. On a long-term basis, we look for major themes. On a short-term basis, we look for surprises in the news that shift the market’s interest rate expectations. We were able to make two winning trades based on short-term interest rate flows in the Australian dollar/Japanese yen (AUD/JPY) currency pair on January 24, 2007.
The trigger for our trade was the surprise drop in Australian consumer prices during the fourth quarter. The market was looking for hot inflation numbers but instead they received cold ones. Low inflation numbers meant the central bank of Australia was not likely to raise interest rates as expected. This news sent the Australian dollar tumbling hard against the Japanese yen, as traders speculated that the interest rate differential between the two currencies would no longer grow.
The first trade we made on January 24 banked us 45 points. We took profit before the currency pair retraced and then sold it again when it showed further signs of weakness. The second January 24 trade produced an additional 35 points for a total of 80 points.
Australian dollar vs. Japanese yen, January 24, 2007. By predicting the affect of unexpectedly low inflation on the Australian dollar, we made two winning trades on January 24. Combined, these trades netted us 80 points in one day.
Key Factor 2. Economic Growth.
The next factor you need to consider when predicting a country's currency movements is its economic growth. The stronger the economy, the greater the possibility that the central bank will raise its interest rates to tame the growth of inflation. And the higher a country's interest rates, the bigger the likelihood that foreign investors will invest in a country's financial markets. More foreign investors means a greater demand for the country's currency. A greater demand results in an increase in a currency's value.
Hence, a ripple effect: economic growth inspires higher interest rates inspires more foreign investment inspires greater currency demand which inspires an increase in the currency's value.
How Anemic Economic Growth Crashed EUR/USD 2,000 Points
For a good example of the impact of economic growth on the direction of currency rates, let’s look at the EUR/USD from 2005 to 2006. Economic growth is best measured by a country's Gross Domestic Product, or GDP. The United States and Eurozone represent two of the most prosperous regions in the world with GDPs running at $13 trillion and $11 trillion respectively.
In 2005 and 2006, the difference in growth rates between the two major economic powers was clearly reflected in currency movements. In 2005, the Eurozone lagged significantly behind the United States in economic growth, averaging an anemic 1.5% rate throughout the year while the US expanded at a healthy 3% rate. Consequently, investment capital flowed from Europe to the US and the EUR/USD dropped by nearly 2,000 basis points by the end of 2005. In 2006, however, Eurozone growth perked up while US growth began to slow. At the end of 2006, Eurozone GDP actually overtook US growth rates, causing the EUR/USD to rally.
| In 2005, The EUR/USD plummeted as Eurozone showed little economic growth compared to the US GDP. In 2006, as the EZ GDP rallied, so did the EUR/USD. |
67 Points in Four Hours
In the middle of November 2006, hurt by the contraction in its housing sector, the US economic data began to deteriorate. Rumor had it that the US might lower interest rates in the first quarter of 2007, which would encourage foreign investors to look elsewhere.
Meanwhile, the Japanese economy was buoyed by the weak yen that made Japanese products affordable internationally and helped spur double digit growth in exports. On November 14, 2006, the Japanese GDP printed at much better than expected -- 2% versus the 1% forecast. We decided to take advantage of the strength of the Japanese economic growth vs. the relatively weak economic outlook in the US, so we went short USD/JPY at 117.82. As we hoped, that morning, in sharp contrast to Japan, US retail sales produced very weak numbers and the USD/JPY pair collapsed. We were able to collect 67 points on the trade in less than four hours.
United States dollar vs. Japanese yen, November 14, 2006. The strong economic growth in Japan made the USD/JPY trade a success for us in November.Key Factor 3. Geo-Politics.
Do you hate the business section? Do your eyes glaze over at the mere mention of economic data and mind-numbing accounting numbers? Fear not. The currency market is the only market in the world that can be successfully traded on political news as well as economic releases. Because currencies represent countries rather than companies, they are political as well as economic assets and are therefore very responsive to any disturbance in the political landscape.
The key to understanding speculative behavior with respect to any geopolitical unrest is that speculators run first and ask questions later. In other words, whenever investors fear any threat to their capital, they will quickly retreat to the sidelines until they are certain that the political risk has disappeared. Therefore, the general rule of thumb in the currency market is that politics almost always trumps economics. The history of FX is littered with examples of political trades. Let’s take a look at some examples over the past few years.
No-Confidence Vote Depresses Loonie
The end of May 2005 was not a happy time for the Liberal Party government of Canada’s Prime Minister, Paul Martin. After having guided the country to its best economic performance in 30 years, Martin was facing the fight of his life as his party prepared for a no-confidence vote stemming from accusations of past Liberal Party corruption.
Meanwhile, Canada’s economy was becoming a star performer, spurred by the massive rises in the price of oil. As the number one exporter of crude to the US, Canada was benefiting mightily from this newfound wealth. Yet despite the great economic news, the Canadian dollar remained weak against the greenback as traders worried about the implications of the fall of the Liberals.
On May 26, 2005, Martin’s government survived the no-confidence vote and the Canadian dollar rallied, causing the USD/CAD* to plunge 200 points in less than a week as the market once again focused on Canada’s stellar economic fundamentals.
*The USD/CAD pair trades inversely.
| Despite strong economic performance, the Canadian dollar remained weak until Martin survived the no-confidence vote and the Canadian political climate settled. |
At the beginning of June 2006, Bank of Japan Governor Fukui revealed to the Diet that he had invested 10 million yen in 1999 in a fund founded by financier Yoshiaki Murakami. Murakami was later indicted on charges of insider trading and although Fukui was not involved in any illegal activity, the mere appearance of impropriety in image-conscious Japan greatly damaged his reputation.
As the principal of Japan’s monetary policy during its recovery from a decade-long battle with deflation, Fukui was considered one of the most powerful men in the currency markets. His forced resignation would do great damage to the prospects of further recovery in Japan.
Meanwhile, Japanese economic data continued to show stellar economic performance as exports and business investment continued to grow, unemployment reached decade-long lows, and consumer sentiment improved. Talk spread through the markets that Japan would soon abandon its zero-interest rate policy and would actually have positive interest rates for the first time this century.
Despite all the positive speculation, the yen floundered, continuing to decline against the dollar as traders feared that Fukui would have to step down. Fukui stolidly refused, and as the furor passed and the market realized that he would stay on, the yen’s strength returned, showing once again that when it comes to currencies, politics can often be more important than economics.
| Despite positive speculation and strong economic reports, the Japanese yen did not regain strength until investors realized that Fukui would not resign. |
If you enjoy predicting changes to the political landscape, your talents could be well utilized as a Forex trader. Recently, we predicted a strengthening of the Canadian dollar and earned close to 70 points in less than 24 hours. At 10 to 1 leverage you could have profited along with us, making a 7% return or $700 on a $10,000 trade.
How OPEC Made Us 70 Points
Geopolitical risk can mean wars, terrorist attacks, or missile launches, but it can also relate to milder yet still politically powerful events such as G7 meetings and OPEC announcements. In October 2006, Saudi Arabia announced that they would back OPEC’s plans to cut oil production by one million barrels a day after oil prices dropped more than 10% in just seven trading days. The cuts were to take effect on November 1, 2006, with more to come in December.
As Canada is a major exporter and producer of oil, we believed that this policy change would be very positive for the Canadian dollar. Therefore we went short the US dollar and long the Canadian on October 19, 2006. Over the next 24 hours, based upon the geopolitical theme, we earned close to 70 points on the trade.
United States dollar vs. Canadian dollar, October 19, 2006. Knowing that OPEC's announcement would affect Canadian currency allowed us to gain 70 points on October 19.Key Factor 4. Trade and Capital Flows
Before you make your final prediction about the trend of a country's currency, you should take a moment to categorize the country as dependent on either trade flow or capital flow. Trade flow refers to how much income a country earns through trade. Capital flow refers to how much investment a country attracts from abroad. Some countries are sensitive to trade flows, while others are far more dependent on capital flows.
Countries whose currency strength depends on their trade flows include:
- Canada
- Australia
- New Zealand
- Japan
- Germany
For countries such as the US and UK, which have large liquid investment markets, capital flows are of far greater importance. In these countries, financial services are paramount. In fact, in the US, financial services represented 40% of the total profits of the S&P 500.
The United States also serves as a perfect example of why it is crucial to understand which flows affect which country in order to effectively analyze the direction of currencies. On the surface, the US currency, with its record multi-billion dollar trade deficit and near $1 trillion current account deficit should depreciate significantly. However, that has not been the case. As the chart below illustrates, the US has been able to attract more than enough surplus capital from the rest of the world to offset the negative effects of its massive trade deficits.
| The US has massive trade deficits. However, its currency remains strong because it consistently attracts large amounts of investment capital (capital flow). |
Understanding the influence of trade and capital flows has been important to a number of our trades, including our New Zealand dollar/United States dollar (NZD/USD) trade on January 22, 2007.
Uridashi Bond Prediction Returns 40 Pips
New Zealand has one of the highest interest rates in the developed world (as of January 2007 it was 7.25%), and because of that fact, it is a major destination for capital flow. On January 22, 2007, there was talk of Uridashi bonds being issued to the benefit of the NZD. Uridashi bonds are issued when companies want to denominate their debt in a higher yielding currency and then offer it to Japanese investors. These are popular because the yield offered is far higher than the yield that Japanese investors can earn at home, which is less than 1%.
We anticipated that the week’s Uridashi issuances would inspire capital flow into New Zealand as investors purchased the bonds in New Zealand dollars. Once we made this prediction, we had to decide which New Zealand currency pair we would trade to best take advantage of the movement of the New Zealand dollar. We considered both the NZD/USD pair and the NZD/JPY.
We decided to go long the New Zealand dollar against the US dollar instead of against the Japanese yen. The risk/reward ratio to go long NZD/JPY versus NZD/USD was not as attractive. Our stop in the NZD/USD was more conservative than the risk we would have assumed in NZD/JPY. Therefore, we went long NZD/USD and banked 40 points over the next 24 hours.
 New Zealand dollar vs. United States dollar, January 22, 2007. We traded the New Zealand dollar / United States dollar on January 22. The trade returned 40 points in 24 hours. |
New Zealand dollar vs. Japanese yen, January 22, 2007. The New Zealand Dollar / Japanese yen trade would have been a higher risk than the above-charted NZD/USD trade.Key Factor 5. Mergers and Acquisitions
While merger and acquisition activity is the least important factor in determining the long-term direction of currencies, it can be the most powerful force in staging near-term currency moves. Merger and acquisition activity occurs when a company from one economic region wants to make a transnational transaction and buy a corporation from another country.
If, for example, a European company wants to buy a Canadian asset for $20 billion, it would have to go into the currency market and acquire the currency to affect this transaction. Typically, these deals are not price sensitive, but time sensitive because the acquirer may have a date by which the transaction is to be completed. Because of this underlying dynamic, merger and acquisition flow can exert a very strong temporary force on FX trading, sometimes skewing the natural course of currency flow for days or weeks.
If you keep abreast of international merger and acquisitions, you may be able to predict short-term fluctuations in FX. In late 2006, for example, Canadian economic data showed a great deal of weakness. Yet large demand for Canadian corporate assets from the Asia, Middle East, and Europe overrode the financial reports and kept the USD/CAD at all-time lows*.
*USD/CAD trades inversely
| Although economic data indicated USD/CAD should rally, the pair stayed at all-time lows due to a large number of foreign investors acquiring Canadian dollars to purchase Canadian equities. |
Canada Loses Investors, Inspires Big Forex Gains
Merger and acquisition activity can be a powerful but sometimes stealthy driver of demand in the currency market. When a country’s capital assets such as equities, suddenly find favor from the rest of the world, they indirectly affect pricing in the foreign exchange market as dealmakers first have to buy the country’s currency before they can buy the stock. However, woe unto any currency when this situation reverses. Such was the case with USD/CAD in November 2006.
In the fall of 2006, Stephen Harper's newly elected conservative government made a shocking announcement that the very popular Canadian income trusts which enjoyed certain tax advantages would be taxed just like other Canadian securities. The Harper government exacerbated the situation by not grandfathering any of the long-term investors who already held positions in income trusts.
We thought the impact of this news would be highly negative to the Canadian dollar as foreign capital would quickly flow out of the country. Despite lackluster US economic news at the time, we thought a USD/CAD trade would be profitable because news that affects immediate investment flows typically overwhelms any day to day economic data. Therefore, on November 1, 2006 we went long USD/CAD at 1.1290 and were able to bank 45 points in just a few hours.
 United States dollar vs. Canadian dollar, November, 2006. As investment dollars flowed out of Canada, the USD/CAD trade earned us 45 points. |
CONCLUCTION:
The basic building blocks of Forex analysis are relatively simple to understand. Interest rates, economic growth, politics, trade and capital flows, and merger and acquisition activity are the five primary forces that move prices in the currency market. However, while the factors that drive trade are straightforward, actual currency trading can be very tricky.
To forecast the Forex market, you must be able to predict the endless interplay of each of the five forces affecting a currency pair. A currency pair typically driven by economic growth may suddenly be overtaken by influences in trade flows or short-term acquisitions. A pair that seems sure to fluctuate with interest rates may unexpectedly be held back by investors' response to political unrest.
Some investors enjoy solving the puzzle themselves -- spending hours and years analyzing the complex cause and effect relationships between a country's economics, politics, and currency strengths. Others are more interested in reaping the potential rewards, without all the hard work. If you are one of the latter, it makes sense for you to find a qualified Forex analyst and follow their lead.
To forecast the Forex market, you must be able to predict the endless interplay of each of the five forces affecting a currency pair. A currency pair typically driven by economic growth may suddenly be overtaken by influences in trade flows or short-term acquisitions. A pair that seems sure to fluctuate with interest rates may unexpectedly be held back by investors' response to political unrest.
Some investors enjoy solving the puzzle themselves -- spending hours and years analyzing the complex cause and effect relationships between a country's economics, politics, and currency strengths. Others are more interested in reaping the potential rewards, without all the hard work. If you are one of the latter, it makes sense for you to find a qualified Forex analyst and follow their lead.
Thứ Năm, 8 tháng 4, 2010
38-Steps to becoming a Successful Trader
Interesting, good road map to see where you are and whats ahead of you:
- We accumulate information--buying books, going to seminars and researching.
- We begin to trade with our 'new' knowledge.
- We consistently 'donate' and then realize we may need more knowledge or information.
- We accumulate more information.
- We switch the commodities we are currently following.
- We go back into the market and trade with our 'updated' knowledge.
- We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in.
- We start to listen to 'outside news' & other traders.
- We go back into the market and continue to donate.
- We switch commodities again.
- We search for more information.
- We go back into the market and continue to donate.
- We get 'overconfident' & market humbles us.
- We start to understand that trading success fully is going to take more time and more knowledge then we anticipated. Most People Will Give up at this Point as they Realize Work is Involved
- We get serious and start concentrating on learning a 'real' methodology.
- We trade our methodology with some success, but realize that something is missing.
- We begin to understand the need for having rules to apply our methodology.
- We take a sabbatical from trading to develop and research our trading rules.
- We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute.
- We add, subtract and modify rules as we see a need to be more proficient with our rules.
- We go back into the market and continue to donate.
- We start to take responsibility for our trading results, as we understand that our success is in us, not the methodology.
- We continue to trade and become more proficient with our methodology and our rules.
- As we trade we still have a tendency to violate our rips and our results are still erratic.
- We know we are close.
- We go back and research our rules.
- We build the confidence in our rules and go back into the market and trade.
- Our trading results are getting better, but we are still hesitating in executing our rules.
- We now see the importance of following our rules as we see the results of our trades when we don't follow them.
- We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
- We continue to trade and the market teaches us more and more about ourselves.
- We master our methodology and trading rules.
- We begin to consistently make money.
- We get a little overconfident and the market humbles us.
- We continue to learn our lessons.
- We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
- We are making more money then we ever dreamed to be possible.
- We go on with our lives and accomplish many of the goals we had always dreamed of.
Những nguyên tắc quan trọng trong giao dịch trong Forex - Benforex
Phân tích kĩ thuật là khả năng có thể được cải thiện khi bạn có kinh nghiệm và sự nghiên cứu. Hãy luôn là một người học hỏi và kiên trì học tập.
1/ Vạch ra xu hướng:
Phân tích các đồ thị trong dài hạn. Bạn hãy bắt đầu đánh giá với những đồ thị được lập hàng tháng, hàng tuần kéo dài trong thời gian nhiều năm. Một quy mô lớn hơn về “các bản đồ về thị trường” sẽ tạo ra một tầm nhìn rõ ràng hơn và tốt hơn trong dài hạn về thị trường. Một khi thiết lập được tầm nhìn trong dài hạn, sau đó bạn hãy kiểm chứng hằng ngày với các đồ thị trong ngày. Một thị trường trong ngắn hạn được xem xét riêng lẻ có thể thường bị nhầm lẫn. Ngay khi bạn chỉ giao dịch trong một thời gian rất ngắn (scalping) , tốt hơn hết là bạn hãy giao dịch theo cùng một sự hướng dẫn như đối với xu hướng của trung và dài hạn.
2/ Hãy đặt mình vào xu hướng thị trường và song hành với nó:
Hãy quyết định một xu hướng và giao dịch theo nó. Xu hướng thị trường có rất nhiều quy mô khác nhau như trong dài hạn, trong trung hạn và trong ngắn hạn. Đầu tiên, bạn hãy quyết định xu hướng mà bạn định giao dịch và sử dụng những đồ thị thích hợp. Hãy chắc chắn rằng bạn đang giao dịch theo đúng sự hướng dẫn của xu hướng đó. Mua ở điểm đáy khi có xu hướng lên giá và bán ở điểm đỉnh nếu nó xuống giá. Nếu bạn quyết định đầu tư theo hướng trung hạn, nên sử dụng những đồ thị về thị trường hàng ngày, hàng tuần. Nếu bạn chỉ giao dịch ngắn hạn, sử dụng các biểu đồ hàng ngày và trong ngày. Tuy nhiên, trong mỗi trường hợp hãy dùng những đồ thị trong dài hạn hơn để quyết định. Sau đó mới sử dụng những đồ thị có thời hạn ngắn hơn.
3/ Tìm giá cao nhất và giá thấp nhất trong ngày của xu hướng đó:
Tìm các mức giá sàn và giá trần mong đợi . Nơi tốt nhất để mua là điểm gần mức giá sàn của thị trường. Điểm giá sàn này thường là dựa trên mức giá các chu kì trước nhưng ở mức thấp hơn. Nơi tốt nhất để bán là gần điểm giá trần của thị trường. Điểm này thường là đỉnh của đồ thị trước đây. Sau khi một đỉnh giá trần của đồ thị bị phá vỡ, nó thường tạo ra mức giá sàn ở sự giảm xuống tiếp theo. Nói cách khác, giá cao nhất cũ trở thành mức giá thấp nhất mới.Tương tự như vậy, khi mức giá sàn (support) bị phá vỡ, nó sẽ dẫn đến việc bán ra ở đỉnh tiếp theo của đồ thị - Mức giá thấp nhất cũ trở thành mức giá cao nhất mới.
4/ Biết mức tỉ lệ nào nên rút lui:
Đolường tỷ lệ của sự quay trở lại xu hướng cũ (retracement) . Sự điều chỉnh của thị trường lên hay xuống thường trở lại phần quan trọng của xu hướng trước đây. Bạn có thể đo lường sự điều chỉnh của một xu hướng đang tồn tại theo những tỷ lệ đơn giản. Phổ biến nhất là tỉ lệ retracement 50% của một xu hướng trước. Mức retracement của xu hướng cũ ở mức nhỏ nhất thường là 1/3 xu hướng đó và lớn nhất thường là 2/3. Mức retracement mang tính quy luật (Fibonacci) của khoảng 38% và 62% cũng có giá trị xem xét trong suốt một chu kỳ của một xu hướng đi lên. Vì vậy, ban đầu khi mua bạn nên mua ở những điểm nằm trong khoảng từ 33% đến 38% của vùng retracement.
5/ Vẽ ra đường đi xu hướng:
Vẽ các đường biên của một xu hướng. Đường biên của xu hướng là một trong những công cụ vẽ đồ thị đơn giản nhất và hiệu quả nhất. Tất cả những gì bạn cần là một đường biên thẳng và hai điểm trên đồ thị. Những đường của xu hướng đi lên được vẽ từ hai mức giá thấp nhất liên tiếp trong ngày. Đối với đường của xu hướng đi xuống thì được vẽ từ hai điểm đỉnh liên tiếp trong ngày. Giá cả thường giảm theo đường đi của xu hướng trước khi tiếp tục hướng của chúng. Điểm phá vỡ đường đi của xu hướng thường báo hiệu một sự thay đổi xu hướng.
6/Theo chỉ số trung bình:
Hãy theo dõi sự chuyển động của các chỉ số trung bình (moving averages). Sự chuyển động của các chỉ số trung bình cung cấp những dấu hiệu mua và bán một cách khách quan. Chúng cho bạn biết khi một xu hướng đang tồn tại vẫn còn chuyển động và giúp bạn xác nhận sự thay đổi trong xu hướng. Sự chuyển động này không giúp bạn đoán trước giá, tuy nhiên, đó có nghĩa là một sự thay đổi trong xu hướng sắp xảy ra. Một sự liên kết đồ thị hai chuyển động của các chỉ số trung bình ( 2 đường MA cắt nhau) là cách phổ biến nhất để tìm ra những dấu hiệu giao dịch. Một số cách liên kết phổ biến trong tương lai là những chuyển động của các chỉ số trung bình trên 4 ngày ( MA 4) và trên 9 ngày (MA 9), trên 9 ngày(MA 9) và trên 18 ngày(MA 12), trên 5 ngày(MA 5) và trên 20 ngày (MA 20). Những dấu hiệu được đưa ra khi các đường trung bình trong thời gian ngắn hơn vượt qua những đường trung bình trong thời gian dài hơn. Khi giá vượt lên cao hơn hay thấp hơn một sự chuyển động trên 40 ngày của các chỉ số trung bình cũng cho thấy dấu hiệu giao dịch tốt. Và nếu sự chuyển động của các chỉ số trung bình trên đồ thị theo đúng hướng của các đường chỉ số thì có nghĩa là nó đã đạt hiệu quả trong việc định hướng thị trường.
7/ Biết được các dấu hiệu đổi chiều:
Theo dấu vết các chỉ số dao động của thị trường có thể giúp bạn nhận ra khi nào thị trường đã vượt mua hoặc vượt bán. Trong khi các đường MA xác nhận sự thay đổi của xu hướng thị trường thì các chỉ số này cảnh báo trước cho bạn khi giá một thị trường đã tăng lên hay giảm xuống quá xa và sẽ nhanh chóng bị đổ vỡ. Hai chỉ số phổ biến là Relative Strength Index (RSI) và Stochastics. Chúng đều thể hiện trong một khung từ 0 đến 100. Với RSI, đạt trên 70 là báo hiệu vượt mua và dưới 30 là đã vượt bán. Giá trị vượt mua và vượt bán của chỉ số Stochestics là 80 và 20. Hầu hết những người giao dịch thường sử dụng Stochastics đối với dao động trong 14 ngày hoặc nhiều tuần, RSI đối với dao động trong 9 hoặc 14 ngày và cả đối với nhiều tuần. Sự phân kì của các chỉ số dao động thường cảnh báo sự thay đổi của thị trường. Những công cụ này làm việc vẫn hiệu quả trong giao dịch ở các loại thị trường khác nhau. Những dấu hiệu theo tuần có thể được sử dụng như một chỉ dẫn cho các dấu hiệu theo ngày. Những dấu hiệu theo ngày có thể được sử dụng như một chỉ dẫn cho các dấu hiệu trong ngày.
8/ Nắm được các dấu hiệu cảnh báo:
Theo tín hiêu của MACD (The Moving Average Convergence Divergence) - sự tập hợp các dao động của các chỉ số thị trường khác nhau. Sự chỉ thị của MACD (phát triển bởi Gerald Appel) nối kết một hệ thống các chuyển động trung bình của thị trường giao nhau và các điểm mua quá nhiều và bán quá nhiều của một chỉ số thể hiện sự dao động. Một dấu hiệu mua xuất hiện khi đường nhanh hơn vượt lên trên đường chậm hơn và cả hai đường đều dưới 0. Một dấu hiệu bán xuất hiện khi đường nhanh hơn nằm dưới đường chậm hơn ở trên vạch 0. Dấu hiệu hàng tuần được ưu tiên hơn dấu hiệu hàng ngày. Một biểu đồ MACD đánh dấu sự khác nhau giữa hai đường và đưa ra cả những cảnh báo khá sớm về sự thay đổi xu hướng. Nó được gọi là “biểu đồ” vì đường kẻ thẳng đứng được dùng để chỉ ra sự khác nhau giữa hai đường trên đồ thị.
9/ Xu hướng, có tiếp diễn hay không?
Bạn hãy sử dụng đường ADX (The Average Directional Movement Index) – Đường chuyển động của các chỉ dẫn trung bình – để giúp bạn quyết định một thị trường đang theo một xu hướng hay đang trong giai đoạn biến đổi. Nó đo lường mức độ của xu hướng hay định hướng của thị trường. Một đường ADX đi lên ám chỉ một xu hướng mạnh. Một đường ADX đi xuống lại thể hiện sự tồn tại của một thị trường giao dịch và sự vắng mặt của một xu hướng. Một đường ADX đi lên chỉ ra sự chuyển động của các chỉ số trung bình, và một đường ADX đi xuống cho thấy thị trường đang dao động. Theo sự hướng dẫn của các đường ADX, người giao dịch có thể quyết định dạng giao dịch và phần nào của các chỉ số là thích hợp nhất đối với thị trường ở hiện tại.
10/ Biết những dấu hiệu xác định:
Bao gồm cả khối lượng (volume) và dòng tiền. Khối lượng và dòng tiền là những yếu tố xác nhận sự chỉ dẫn quan trọng trong thị trường tương lai. Khối lượng giao dịch đi trước giá giaod ịch. Quan trọng là phải đảm bảo rằng một khối lượng mạnh có thể được mua bán theo sự chỉ dẫn của xu hướng chiếm ưu thế. Khi thị trường tăng giá thì một volume mạnh cần được xem xét mức độ tăng lên mỗi ngày. Sự tăng lên của dòng tiền xác định rằng xu hướng mới này ủng hộ cho xu hướng chiếm ưu thế. Sự giảm đi của dòng tiền này là dấu hiệu của sự kết thúc một xu hướng. Mức giá vững chắc của một thị trường tăng giá thường đi kèm với sự gia tăng về khối lượng và dòng tiền.
1/ Vạch ra xu hướng:
Phân tích các đồ thị trong dài hạn. Bạn hãy bắt đầu đánh giá với những đồ thị được lập hàng tháng, hàng tuần kéo dài trong thời gian nhiều năm. Một quy mô lớn hơn về “các bản đồ về thị trường” sẽ tạo ra một tầm nhìn rõ ràng hơn và tốt hơn trong dài hạn về thị trường. Một khi thiết lập được tầm nhìn trong dài hạn, sau đó bạn hãy kiểm chứng hằng ngày với các đồ thị trong ngày. Một thị trường trong ngắn hạn được xem xét riêng lẻ có thể thường bị nhầm lẫn. Ngay khi bạn chỉ giao dịch trong một thời gian rất ngắn (scalping) , tốt hơn hết là bạn hãy giao dịch theo cùng một sự hướng dẫn như đối với xu hướng của trung và dài hạn.
2/ Hãy đặt mình vào xu hướng thị trường và song hành với nó:
Hãy quyết định một xu hướng và giao dịch theo nó. Xu hướng thị trường có rất nhiều quy mô khác nhau như trong dài hạn, trong trung hạn và trong ngắn hạn. Đầu tiên, bạn hãy quyết định xu hướng mà bạn định giao dịch và sử dụng những đồ thị thích hợp. Hãy chắc chắn rằng bạn đang giao dịch theo đúng sự hướng dẫn của xu hướng đó. Mua ở điểm đáy khi có xu hướng lên giá và bán ở điểm đỉnh nếu nó xuống giá. Nếu bạn quyết định đầu tư theo hướng trung hạn, nên sử dụng những đồ thị về thị trường hàng ngày, hàng tuần. Nếu bạn chỉ giao dịch ngắn hạn, sử dụng các biểu đồ hàng ngày và trong ngày. Tuy nhiên, trong mỗi trường hợp hãy dùng những đồ thị trong dài hạn hơn để quyết định. Sau đó mới sử dụng những đồ thị có thời hạn ngắn hơn.
3/ Tìm giá cao nhất và giá thấp nhất trong ngày của xu hướng đó:
Tìm các mức giá sàn và giá trần mong đợi . Nơi tốt nhất để mua là điểm gần mức giá sàn của thị trường. Điểm giá sàn này thường là dựa trên mức giá các chu kì trước nhưng ở mức thấp hơn. Nơi tốt nhất để bán là gần điểm giá trần của thị trường. Điểm này thường là đỉnh của đồ thị trước đây. Sau khi một đỉnh giá trần của đồ thị bị phá vỡ, nó thường tạo ra mức giá sàn ở sự giảm xuống tiếp theo. Nói cách khác, giá cao nhất cũ trở thành mức giá thấp nhất mới.Tương tự như vậy, khi mức giá sàn (support) bị phá vỡ, nó sẽ dẫn đến việc bán ra ở đỉnh tiếp theo của đồ thị - Mức giá thấp nhất cũ trở thành mức giá cao nhất mới.
4/ Biết mức tỉ lệ nào nên rút lui:
Đolường tỷ lệ của sự quay trở lại xu hướng cũ (retracement) . Sự điều chỉnh của thị trường lên hay xuống thường trở lại phần quan trọng của xu hướng trước đây. Bạn có thể đo lường sự điều chỉnh của một xu hướng đang tồn tại theo những tỷ lệ đơn giản. Phổ biến nhất là tỉ lệ retracement 50% của một xu hướng trước. Mức retracement của xu hướng cũ ở mức nhỏ nhất thường là 1/3 xu hướng đó và lớn nhất thường là 2/3. Mức retracement mang tính quy luật (Fibonacci) của khoảng 38% và 62% cũng có giá trị xem xét trong suốt một chu kỳ của một xu hướng đi lên. Vì vậy, ban đầu khi mua bạn nên mua ở những điểm nằm trong khoảng từ 33% đến 38% của vùng retracement.
5/ Vẽ ra đường đi xu hướng:
Vẽ các đường biên của một xu hướng. Đường biên của xu hướng là một trong những công cụ vẽ đồ thị đơn giản nhất và hiệu quả nhất. Tất cả những gì bạn cần là một đường biên thẳng và hai điểm trên đồ thị. Những đường của xu hướng đi lên được vẽ từ hai mức giá thấp nhất liên tiếp trong ngày. Đối với đường của xu hướng đi xuống thì được vẽ từ hai điểm đỉnh liên tiếp trong ngày. Giá cả thường giảm theo đường đi của xu hướng trước khi tiếp tục hướng của chúng. Điểm phá vỡ đường đi của xu hướng thường báo hiệu một sự thay đổi xu hướng.
6/Theo chỉ số trung bình:
Hãy theo dõi sự chuyển động của các chỉ số trung bình (moving averages). Sự chuyển động của các chỉ số trung bình cung cấp những dấu hiệu mua và bán một cách khách quan. Chúng cho bạn biết khi một xu hướng đang tồn tại vẫn còn chuyển động và giúp bạn xác nhận sự thay đổi trong xu hướng. Sự chuyển động này không giúp bạn đoán trước giá, tuy nhiên, đó có nghĩa là một sự thay đổi trong xu hướng sắp xảy ra. Một sự liên kết đồ thị hai chuyển động của các chỉ số trung bình ( 2 đường MA cắt nhau) là cách phổ biến nhất để tìm ra những dấu hiệu giao dịch. Một số cách liên kết phổ biến trong tương lai là những chuyển động của các chỉ số trung bình trên 4 ngày ( MA 4) và trên 9 ngày (MA 9), trên 9 ngày(MA 9) và trên 18 ngày(MA 12), trên 5 ngày(MA 5) và trên 20 ngày (MA 20). Những dấu hiệu được đưa ra khi các đường trung bình trong thời gian ngắn hơn vượt qua những đường trung bình trong thời gian dài hơn. Khi giá vượt lên cao hơn hay thấp hơn một sự chuyển động trên 40 ngày của các chỉ số trung bình cũng cho thấy dấu hiệu giao dịch tốt. Và nếu sự chuyển động của các chỉ số trung bình trên đồ thị theo đúng hướng của các đường chỉ số thì có nghĩa là nó đã đạt hiệu quả trong việc định hướng thị trường.
7/ Biết được các dấu hiệu đổi chiều:
Theo dấu vết các chỉ số dao động của thị trường có thể giúp bạn nhận ra khi nào thị trường đã vượt mua hoặc vượt bán. Trong khi các đường MA xác nhận sự thay đổi của xu hướng thị trường thì các chỉ số này cảnh báo trước cho bạn khi giá một thị trường đã tăng lên hay giảm xuống quá xa và sẽ nhanh chóng bị đổ vỡ. Hai chỉ số phổ biến là Relative Strength Index (RSI) và Stochastics. Chúng đều thể hiện trong một khung từ 0 đến 100. Với RSI, đạt trên 70 là báo hiệu vượt mua và dưới 30 là đã vượt bán. Giá trị vượt mua và vượt bán của chỉ số Stochestics là 80 và 20. Hầu hết những người giao dịch thường sử dụng Stochastics đối với dao động trong 14 ngày hoặc nhiều tuần, RSI đối với dao động trong 9 hoặc 14 ngày và cả đối với nhiều tuần. Sự phân kì của các chỉ số dao động thường cảnh báo sự thay đổi của thị trường. Những công cụ này làm việc vẫn hiệu quả trong giao dịch ở các loại thị trường khác nhau. Những dấu hiệu theo tuần có thể được sử dụng như một chỉ dẫn cho các dấu hiệu theo ngày. Những dấu hiệu theo ngày có thể được sử dụng như một chỉ dẫn cho các dấu hiệu trong ngày.
8/ Nắm được các dấu hiệu cảnh báo:
Theo tín hiêu của MACD (The Moving Average Convergence Divergence) - sự tập hợp các dao động của các chỉ số thị trường khác nhau. Sự chỉ thị của MACD (phát triển bởi Gerald Appel) nối kết một hệ thống các chuyển động trung bình của thị trường giao nhau và các điểm mua quá nhiều và bán quá nhiều của một chỉ số thể hiện sự dao động. Một dấu hiệu mua xuất hiện khi đường nhanh hơn vượt lên trên đường chậm hơn và cả hai đường đều dưới 0. Một dấu hiệu bán xuất hiện khi đường nhanh hơn nằm dưới đường chậm hơn ở trên vạch 0. Dấu hiệu hàng tuần được ưu tiên hơn dấu hiệu hàng ngày. Một biểu đồ MACD đánh dấu sự khác nhau giữa hai đường và đưa ra cả những cảnh báo khá sớm về sự thay đổi xu hướng. Nó được gọi là “biểu đồ” vì đường kẻ thẳng đứng được dùng để chỉ ra sự khác nhau giữa hai đường trên đồ thị.
9/ Xu hướng, có tiếp diễn hay không?
Bạn hãy sử dụng đường ADX (The Average Directional Movement Index) – Đường chuyển động của các chỉ dẫn trung bình – để giúp bạn quyết định một thị trường đang theo một xu hướng hay đang trong giai đoạn biến đổi. Nó đo lường mức độ của xu hướng hay định hướng của thị trường. Một đường ADX đi lên ám chỉ một xu hướng mạnh. Một đường ADX đi xuống lại thể hiện sự tồn tại của một thị trường giao dịch và sự vắng mặt của một xu hướng. Một đường ADX đi lên chỉ ra sự chuyển động của các chỉ số trung bình, và một đường ADX đi xuống cho thấy thị trường đang dao động. Theo sự hướng dẫn của các đường ADX, người giao dịch có thể quyết định dạng giao dịch và phần nào của các chỉ số là thích hợp nhất đối với thị trường ở hiện tại.
10/ Biết những dấu hiệu xác định:
Bao gồm cả khối lượng (volume) và dòng tiền. Khối lượng và dòng tiền là những yếu tố xác nhận sự chỉ dẫn quan trọng trong thị trường tương lai. Khối lượng giao dịch đi trước giá giaod ịch. Quan trọng là phải đảm bảo rằng một khối lượng mạnh có thể được mua bán theo sự chỉ dẫn của xu hướng chiếm ưu thế. Khi thị trường tăng giá thì một volume mạnh cần được xem xét mức độ tăng lên mỗi ngày. Sự tăng lên của dòng tiền xác định rằng xu hướng mới này ủng hộ cho xu hướng chiếm ưu thế. Sự giảm đi của dòng tiền này là dấu hiệu của sự kết thúc một xu hướng. Mức giá vững chắc của một thị trường tăng giá thường đi kèm với sự gia tăng về khối lượng và dòng tiền.
50 Golden Rules for Traders
1. Follow the trends. This is probably some of the hardest advice for a trader to follow because the personality of the typical futures trader is not 'one of the crowd.' Futures traders (and futures brokers) are highly individualistic; the markets seem to attract those who are. Very simply, it takes a special kind of person, not 'one of the crowd,' to earn enough risk capital to get involved in the futures markets. So the typical trader and the typical broker must guard against their natural instincts to be highly individualistic, to buck the trend.
2. Know why you are in the markets. To relieve boredom? To hit it big? When you can honestly answer this question, you may be on your way to successful futures trading.
3. Use a system, any system, and stick to it.
4. Apply money management techniques to your trading.
5. Do not overtrade.
6. Take a position only when you know where your profit goal is and where you are going to get out if the market goes against you.
7. Trade with the trends, rather than trying to pick tops and bottoms.
8. Don't trade many markets with little capital.
9. Don't just trade the volatile contracts.
10. Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.
11. Establish your trading plans before the market opening to eliminate emotional reactions. Decide on entry points, exit points, and objectives. Subject your decisions to only minor changes during the session. Profits are for those who act, not react. Don't change during the session unless you have a very good reason.
12. Follow your plan. Once a position is established and stops are selected, do not get out unless the stop is reached or the fundamental reason for taking the position changes.
13. Use technical signals (charts) to maintain discipline - the vast majority of traders are not emotionally equipped to stay disciplined without some technical tools.
14. Have a disciplined, detailed trading plan for each trade; i.e., entry, objective, exit, with no changes unless hard data changes. Disciplined money management means intelligent trading allocation and risk management. The overall objective is end-of-year bottom line, not each individual trade.
15. When you have a successful trade, fight the natural tendency to give some of it back.
16. Use a disciplined trade selection system...an organized, systematic process to eliminate impulse or emotional trading.
17. Trade with a plan-not with hope, greed, or fear. Plan where you will get in the market, how much you will risk on the trade, and where you will take your profits.
18. Most importantly, cut your losses short and let your profits run. It sounds simple, but it isn't. Let's look at some of the reasons many traders have a hard time 'cutting losses short.' First, it's hard for any of us to admit we've made a mistake. Let's say a position starts going against you, and all your 'good' reasons for putting the position on are still there. You say to yourself, 'it's only a temporary set-back. After all (you reason), the more the position goes against me, the better chance it has to come back-the odds will catch up.' Also, the reasons for entering the trade are still there. By now you've lost quite a bit; you sell yourself on giving it 'one more day.' It's easy to convince yourself because, by this time, you probably aren't thinking very clearly about the position. Besides, you've lost so much already, what's a little more? Panic sets in, and then comes the worst, the most devastating, the most fallacious reasoning of all, when you figure: 'That contract doesn't expire for a few more months; things are bound to turn around in the meantime.'
So it goes; so cut those losses short. In fact, many experienced traders say if a position still goes against you the third day in, get out. Cut those losses fast, before the losing position starts to infect you, before you 'fall in love' with it. The easiest way is to inscribe across the front of your brain, 'Cut my losses fast.' Use stop loss orders, aim for a $500 per contract loss limit...or whatever works for you, but do it.
Now to the 'letting profits run' side of the equation. This is even harder because who knows when those profits will stop running? Well, of course, no one does, but there are some things to consider. First of all, be aware that there is an urge in all of us to want to win...even if it's only by a narrow margin. Most of us were raised that way. Win-even if it's only by one touchdown, one point, or one run. Following that philosophy almost assures you of losing in the futures markets because the nature of trading futures usually means that there are more losers than winners. The winners are often big, big, big winners, not 'one run' winners. Here again, you have to fight human nature. Let's say you've had several losses (like most traders), and now one of your positions is developing into a pretty good winner. The temptation to close it out is universally overwhelming. You're sick about all those losses, and here's a chance to cash in on a pretty good winner. You don't want it to get away. Besides, it gives you a nice warm feeling to close out a winning position and tell yourself (and maybe even your friends) how smart you were (particularly if you're beginning to doubt yourself because of all those past losers). That kind of reasoning and emotionalism have no place in futures trading; therefore, the next time you are about to close out a winning position, ask yourself why. If the cold, calculating, sound reasons you used to put on the position are still there, you should strongly consider staying. Of course, you can use trailing stops to protect your profits, but if you are exiting a winning position out of fear...don't; out of greed...don't; out of ego... don't; out of impatience...don't; out of anxiety...don't; out of sound fundamental and/or technical reasoning...do.
19. You can avoid the emotionalism, the second guessing, the wondering, the agonizing, if you have a sound trading plan (including price objectives, entry points, exit points, risk-reward ratios, stops, information about historical price levels, seasonal influences, government reports, prices of related markets, chart analysis, etc.) and follow it. Most traders don't want to bother, they like to 'wing it.' Perhaps they think a plan might take the fun out of it for them. If you're like that and trade futures for the fun of it, fine. If you're trying to make money without a plan-forget it. Trading a sound, smart plan is the answer to cutting your losses short and letting your profits run.
20. Do not overstay a good market. If you do, you are bound to overstay a bad one also.
21. Take your lumps, just be sure they are little lumps. Very successful traders generally have more losing trades than winning trades. They don't have any hang-ups about admitting they're wrong, and have the ability to close out losing positions quickly.
22. Trade all positions in futures on a performance basis. The position must give a profit by the end of the third day after the position is taken, or else get out.
23. Program your mind to accept many small losses. Program your mind to 'sit still' for a few large gains.
24. Most people would rather own something (go long) than owe something (go short). Markets can (and should) also be traded from the short side.
25. Watch for divergences in related markets-is one market making a new high and another not following?
26. Recognize that fear, greed. ignorance, generosity, stupidity, impatience. self-delusion, etc., can cost you a lot more money than the market(s) going against you, and that there is no fundamental method to recognize these factors.
27. Don't blindly follow computer trading. A computer trading plan is only as good as the program. As the old saying goes, 'Garbage in, garbage out.'
28. Learn the basics of futures trading. It's amazing how many people simply don't know what they're doing. They're bound to lose, unless they have a strong broker to guide them and keep them out of trouble.
29. Standing aside is a position.
30. Client and broker must have rapport. Chemistry between account executive and client is very important; the odds of picking the right AE the first time are remote. Pick a broker who will protect you from yourself...greed, ego, fear, subconscious desire to lose (actually true with some traders). Ask someone who trades if they know a good futures broker. If you find one who has room for you, give him your account.
31. Sometimes, when things aren't going well and you're thinking about changing brokerage firms, think about just changing AEs instead. Phone the manager of the local office, let him describe some of the other AEs in the office, and see if any of them seem right enough to have a first meeting with. Don't worry about getting your account executive in trouble; the office certainly would rather have you switch AEs than to lose your business altogether.
32. Broker/client psychology must be in tune, or else the broker and client should part company early in the program. Client and broker should be in touch repeatedly, so when the time comes, both parties are mentally programmed to take the necessary action without delay.
33. Most people do not have the time or the experience to trade futures profitably, so choosing a broker is the most important step to profitable futures trading.
34. When you go stale, get out of the markets for a while. Trading futures is demanding, and can be draining-especially when you're losing. Step back; get away from it all to recharge your batteries.
35. If you're in futures simply for the thrill of gambling, you'll probably lose because, chances are, the money does not mean as much to you as the excitement. Just knowing this about yourself may cause you to be more prudent, which could improve your trading record. Have a business-like approach to the markets. Anyone who is inclined to speculate in futures should look at speculation as a business, and treat it as such. Do not regard it as a pure gamble, as so many people do. If speculation is a business, anyone in that business should learn and understand it to the best of his/her ability.
36. When you open an account with a broker, don't just decide on the amount of money, decide on the length of time you should trade. This approach helps you conserve your equity, and helps avoid the Las Vegas approach of 'Well, I'll trade till my stake runs out.' Experience shows that many who have been at it over a long period of time end up making money.
37. Don't trade on rumors. If you have, ask yourself this: 'Over the long run, have I made money or lost money trading on rumors?' O.K. then, stop it.
38. Beware of all tips and inside information. Wait for the market's action to tell you if the information you've obtained is accurate, then take a position with the developing trend.
39. Don't trade unless you're well financed...so that market action, not financial condition, dictates your entry and exit from the market. If you don't start with enough money, you may not be able to hang in there if the market temporarily turns against you.
40. Be more careful if you're extra smart. Smart people very often put on a position a little too early. They see the potential for a price movement before it becomes actual. They become worn out or 'tapped out,' and aren't around when a big move finally gets underway. They were too busy trading to make money.
41. Stay out of trouble, your first loss is your smallest loss.
42. Analyze your losses. Learn from your losses. They're expensive lessons; you paid for them. Most traders don't learn from their mistakes because they don't like to think about them.
43. Survive! In futures trading, the ones who stay around long enough to be there when those 'big moves' come along are often successful.
44. If you're just getting into the markets, be a small trader for at least a year, then analyze your good trades and your bad ones. You can really learn more from your bad ones.
45. Carry a notebook with you, and jot down interesting market information. Write down the market openings, price ranges, your fills, stop orders, and your own personal observations. Re-read your notes from time to time; use them to help analyze your performance.
46. 'Rome was not built in a day,' and no real movement of importance takes place in one day. A speculator should have enough excess margin in his account to provide staying power so he can participate in big moves.
47. Take windfall profits (profits that have no sound reasons for occurring).
48. Periodically redefine the kind of capital you have in the markets. If your personal financial situation changes and the risk capital becomes necessary capital, don't wait for 'just one more day' or 'one more price tick,' get out right away. If you don't, you'll most likely start trading with your heart instead of your head, and then you'll surely lose.
49. Always use stop orders, always...always...always.
50. Don't use the markets to feed your need for excitement.
Thứ Ba, 6 tháng 4, 2010
Bond Spreads: A Leading Indicator For Forex
The global markets are really just one big interconnected web. We frequently see the prices of commodities and futures impact the movements of currencies, and vice versa. The same is true with the relationship between currencies and bond spread (the difference between countries' interest rates): the price of currencies can impact the monetary policy decisions of central banks around the world, but monetary policy decisions and interest rates can also dictate the price action of currencies. For instance, a stronger currency helps to hold down inflation, while a weaker currency will boost inflation. Central banks take advantage of this relationship as an indirect means to effectively manage their respective countries' monetary policies.
By understanding and observing these relationships and their patterns, investors have a window into the currency market, and thereby a means to predict and capitalize on the movements of currencies.
What Does Interest Have to Do With Currencies?To see how interest rates have played a role in dictating currency, we can look to the recent past. After the burst of the tech bubble in 2000, traders went from seeking the highest possible returns to focusing on capital preservation. But since the U.S. was offering interest rates below 2% (and going even lower), many hedge funds and those who had access to the international markets went abroad in search of higher yields. Australia, with the same risk factor as the U.S., offered interest rates in excess of 5%. As such, it attracted large streams of investment money into the country and, in turn, assets denominated in the Australian dollar.
These large differences in interest rates led to the emergence of the carry trade, an interest rate arbitrage strategy that takes advantage of the interest rate differentials between two major economies, while aiming to benefit from the general direction or trend of the currency pair. This trade involves buying one currency and funding it with another, and the most commonly used currencies to fund carry trades are the Japanese yen and the Swiss franc because of their countries' exceptionally low interest rates. The popularity of the carry trade is one of the main reasons for the strength seen in pairs such as the Australian dollar and the Japanese yen (AUD/JPY), the Australian dollar and the U.S. dollar (AUD/USD), the New Zealand dollar and the U.S. dollar (NZD/USD), and the U.S. dollar and the Canadian dollar (USD/CAD). (Learn more about the carry trade in The Credit Crisis And The Carry Trade and Currency Carry Trades Deliver.)
However, it is difficult for individual investors to send money back and forth between bank accounts around the world. The retail spread on exchange rates can offset any additional yield they are seeking. On the other hand, investment banks, hedge funds, institutional investors and large commodity trading advisors (CTAs) generally have the ability to access these global markets and the clout to command low spreads. As a result, they shift money back and forth in search of the highest yields with the lowest sovereign risk (or risk of default). When it comes to the bottom line, exchange rates move based upon changes in money flows.
The Insight for Investors
Individual investors can take advantage of these shifts in flows by monitoring yield spreads and the expectations for changes in interest rates that may be embedded in those yield spreads. The following chart is just one example of the strong relationship between interest rate differentials and the price of a currency.
Notice how the blips on the charts are near-perfect mirror images. The chart shows us that the five-year yield spread between the Australian dollar and the U.S. dollar (represented by the blue line) was declining between 1989 and 1998. This coincided with a broad sell-off of the Australian dollar against the U.S. dollar.
When the yield spread began to rise once again in the summer of 2000, the Australian dollar responded with a similar rise a few months later. The 2.5% spread advantage of the Australian dollar over the U.S. dollar over the next three years equated to a 37% rise in the AUD/USD. Those traders who managed to get into this trade not only enjoyed the sizable capital appreciation, but also earned the annualized interest rate differential. Therefore, based on the relationship demonstrated above, if the interest rate differential between Australia and the U.S. continued to narrow (as expected) from the last date shown on the chart, the AUD/USD would eventually fall as well. (Learn more in A Forex Trader's View Of The Aussie/Gold Relationship.)
This connection between interest rate differentials and currency rates is not unique to the AUD/USD; the same sort of pattern can be seen in USD/CAD, NZD/USD and the GBP/USD. Take a look at the next example of the interest rate differential of New Zealand and U.S. five-year bonds versus the NZD/USD.
The chart provides an even better example of bond spreads as a leading indicator. The differential bottomed out in the spring of 1999, while the NZD/USD did not bottom out until the fall of 2000. By the same token, the yield spread began to rise in the summer of 2000, but the NZD/USD began rising in the early fall of 2001. The yield spread topping out in the summer of 2002 may be significant into the future beyond the chart. History shows that the movement in interest rate difference between New Zealand and the U.S. is eventually mirrored by the currency pair. If the yield spread between New Zealand and the U.S. continued to fall, then one could expect the NZD/USD to hit its top as well.
Other Factors of AssessmentThe spreads of both the five- and 10-year bond yields can be used to gauge currencies. The genereal rule is that when the yield spread widens in favor of a certain currency, that currency will appreciate against other currencies. But, remember, currency movements are impacted not only by actual interest rate changes but also by the shift in economic assessment or plans by a central bank to raise or lower interest rates. The chart below exemplifies this point.
According to what we can observe in the chart, shifts in the economic assessment of the Federal Reserve tend to lead to sharp movements in the U.S. dollar. The chart indicates that in 1998, when the Fed shifted from an outlook of economic tightening (meaning the Fed intended to raise rates) to a neutral outlook, the dollar fell even before the Fed moved on rates (note on Jul 5, 1998, the blue line plummets before the red one). The same kind of movement of the dollar is seen when the Fed moved from a neutral to a tightening bias in late 1999, and again when it moved to an easier monetary policy in 2001. In fact, once the Fed just began considering lowering rates, the dollar reacted with a sharp sell-off. If this relationship continued to hold into the future, investors might expect a bit more room for the dollar to rally.
When Using Interest Rates to Predict Currencies Will Not WorkDespite the tremendous amount of scenarios in which this strategy for forecasting currency movements does work, it is certainly not the Holy Grail to making money in the currency markets. There are a number of scenarios in which this strategy may fail:
By understanding and observing these relationships and their patterns, investors have a window into the currency market, and thereby a means to predict and capitalize on the movements of currencies.
What Does Interest Have to Do With Currencies?To see how interest rates have played a role in dictating currency, we can look to the recent past. After the burst of the tech bubble in 2000, traders went from seeking the highest possible returns to focusing on capital preservation. But since the U.S. was offering interest rates below 2% (and going even lower), many hedge funds and those who had access to the international markets went abroad in search of higher yields. Australia, with the same risk factor as the U.S., offered interest rates in excess of 5%. As such, it attracted large streams of investment money into the country and, in turn, assets denominated in the Australian dollar.
These large differences in interest rates led to the emergence of the carry trade, an interest rate arbitrage strategy that takes advantage of the interest rate differentials between two major economies, while aiming to benefit from the general direction or trend of the currency pair. This trade involves buying one currency and funding it with another, and the most commonly used currencies to fund carry trades are the Japanese yen and the Swiss franc because of their countries' exceptionally low interest rates. The popularity of the carry trade is one of the main reasons for the strength seen in pairs such as the Australian dollar and the Japanese yen (AUD/JPY), the Australian dollar and the U.S. dollar (AUD/USD), the New Zealand dollar and the U.S. dollar (NZD/USD), and the U.S. dollar and the Canadian dollar (USD/CAD). (Learn more about the carry trade in The Credit Crisis And The Carry Trade and Currency Carry Trades Deliver.)
However, it is difficult for individual investors to send money back and forth between bank accounts around the world. The retail spread on exchange rates can offset any additional yield they are seeking. On the other hand, investment banks, hedge funds, institutional investors and large commodity trading advisors (CTAs) generally have the ability to access these global markets and the clout to command low spreads. As a result, they shift money back and forth in search of the highest yields with the lowest sovereign risk (or risk of default). When it comes to the bottom line, exchange rates move based upon changes in money flows.
The Insight for Investors
Individual investors can take advantage of these shifts in flows by monitoring yield spreads and the expectations for changes in interest rates that may be embedded in those yield spreads. The following chart is just one example of the strong relationship between interest rate differentials and the price of a currency.
 Figure 1 |
Notice how the blips on the charts are near-perfect mirror images. The chart shows us that the five-year yield spread between the Australian dollar and the U.S. dollar (represented by the blue line) was declining between 1989 and 1998. This coincided with a broad sell-off of the Australian dollar against the U.S. dollar.
When the yield spread began to rise once again in the summer of 2000, the Australian dollar responded with a similar rise a few months later. The 2.5% spread advantage of the Australian dollar over the U.S. dollar over the next three years equated to a 37% rise in the AUD/USD. Those traders who managed to get into this trade not only enjoyed the sizable capital appreciation, but also earned the annualized interest rate differential. Therefore, based on the relationship demonstrated above, if the interest rate differential between Australia and the U.S. continued to narrow (as expected) from the last date shown on the chart, the AUD/USD would eventually fall as well. (Learn more in A Forex Trader's View Of The Aussie/Gold Relationship.)
This connection between interest rate differentials and currency rates is not unique to the AUD/USD; the same sort of pattern can be seen in USD/CAD, NZD/USD and the GBP/USD. Take a look at the next example of the interest rate differential of New Zealand and U.S. five-year bonds versus the NZD/USD.
 Figure 2 |
The chart provides an even better example of bond spreads as a leading indicator. The differential bottomed out in the spring of 1999, while the NZD/USD did not bottom out until the fall of 2000. By the same token, the yield spread began to rise in the summer of 2000, but the NZD/USD began rising in the early fall of 2001. The yield spread topping out in the summer of 2002 may be significant into the future beyond the chart. History shows that the movement in interest rate difference between New Zealand and the U.S. is eventually mirrored by the currency pair. If the yield spread between New Zealand and the U.S. continued to fall, then one could expect the NZD/USD to hit its top as well.
Other Factors of AssessmentThe spreads of both the five- and 10-year bond yields can be used to gauge currencies. The genereal rule is that when the yield spread widens in favor of a certain currency, that currency will appreciate against other currencies. But, remember, currency movements are impacted not only by actual interest rate changes but also by the shift in economic assessment or plans by a central bank to raise or lower interest rates. The chart below exemplifies this point.
 Figure 3 |
According to what we can observe in the chart, shifts in the economic assessment of the Federal Reserve tend to lead to sharp movements in the U.S. dollar. The chart indicates that in 1998, when the Fed shifted from an outlook of economic tightening (meaning the Fed intended to raise rates) to a neutral outlook, the dollar fell even before the Fed moved on rates (note on Jul 5, 1998, the blue line plummets before the red one). The same kind of movement of the dollar is seen when the Fed moved from a neutral to a tightening bias in late 1999, and again when it moved to an easier monetary policy in 2001. In fact, once the Fed just began considering lowering rates, the dollar reacted with a sharp sell-off. If this relationship continued to hold into the future, investors might expect a bit more room for the dollar to rally.
When Using Interest Rates to Predict Currencies Will Not WorkDespite the tremendous amount of scenarios in which this strategy for forecasting currency movements does work, it is certainly not the Holy Grail to making money in the currency markets. There are a number of scenarios in which this strategy may fail:
- ImpatienceAs indicated in the examples above, these relationships foster a long-term strategy. The bottoming out of currencies may not occur until a year after interest rate differentials may have bottomed out. If a trader cannot commit to a time horizon of a minimum of six to 12 months, the success of this strategy may decrease significantly. The reason? Currency valuations reflect economic fundamentals over time. There are frequently temporary imbalances between a currency pair that can fog up the true underlying fundamentals between those countries.
- Too Much LeverageTraders using too much leverage may also not be suited to the broadness of this strategy. Since interest rate differentials tend to be fairly small, traders accustomed to using leverage may want to use it to increase. For example, if a trader used 10 times leverage on a yield differential of 2%, it would turn 2% into 20%, and many companies offer up to 100 times leverage, tempting traders to take a higher risk and attempt to turn 2% into 200%. However, leverage comes with risk, and the application of too much leverage can prematurely kick an investor out of a long-term trade because he or she will not be able to weather short-term fluctuations in the market.
- Equities Become More AttractiveThe key to the success of yield-seeking trades in the years since the tech bubble burst was the lack of attractive equity market returns. There was a period in early 2004 when the Japanese yen was soaring despite a zero-interest policy. The reason was that the equity market was rallying, and the promise of higher returns attracted many underweighted funds. Most large players cut off exposure to Japan over the previous 10 years because the country faced a long period of stagnation and offered zero interest rates. Yet, when the economy showed signs of rebounding and the equity market began to rally once again, money poured back into Japan regardless of the country's continued zero-interest policy. This demonstrates how the role of equities in the capital flow picture could reduce the success of bond yields forecasting currency movements.
- Risk EnvironmentRisk aversion is an important driver of forex markets. Currency trades based on yields tend to be most successful in a risk-seeking environment and least successful in a risk-averse environment. That is, in risk-seeking environments, investors tend to reshuffle their portfolios and sell low-risk/high-value assets and buy higher-risk/low-value assets. Riskier currencies - those with large current account deficits (which you can learn more about here) - are forced to offer a higher interest rate to compensate investors for the risk of a depreciation that is sharper than the one predicted by uncovered interest rate parity. The higher yield is an investor's payment for taking this risk.
However, in times when investors are more risk averse, the riskier currencies - on which carry trades rely for their returns - tend to depreciate. Typically, riskier currencies have current account deficits and, as the appetite for risk wanes, investors retreat to the safety of their home markets, making these deficits harder to fund. It makes sense to unwind carry trades in times of rising risk aversion, since adverse currency moves tend to at least partly offset the interest rate advantage.
Many investment banks have developed measures of early warning signals for rising risk aversion. This includes monitoring emerging-market bond spreads, swap spreads, high-yield spreads, forex volatilities and equity-market volatilities. Tighter bond, swap and high-yield spreads are risk-seeking indicators while lower forex and equity-market volatilities indicate risk aversion.
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