Latin America Enters Currency War
A few years ago, I wouldn’t deign to discuss such obscure currencies as the Chilean Peso and the Peru New Sol. But this is a new era! These currencies – and their Central Banks – are being thrust into the spotlight as they join more established Latin American countries in the fight to contain currency appreciation.
Major Latin American currencies have collectively appreciated more than 29% since March 2009. (When researching this post, I discovered the fantastically apropos JP Morgan Latin American Currency Index, which is based on the currencies of Mexico, Columbia, Brazil, Argentina, Peru, and Chile, and is displayed in the chart above). That includes a nearly 45% gain in the Brazilian Real and a 30% rise in the Mexican Peso, with more modest gains by the Peru New Sol, Chilean Peso, and Colombian Peso. The Argentinean Peso seems to be dragging the entire index down, having never recovered from the sovereign debt default in 2008.
Over this period, capital has poured into Latin America: “Net private inflows surged to $203.4 billion last year from $57.5 billion in 2003, according to the World Bank. Stock market indices in the region are closing in on all-time highs, and bond prices have risen (i.e. 32% gain in Colombian bonds in 2010) to such an extent that spreads to Treasury Securities – the most common comparison – have narrowed to record lows. Perhaps this not for naught, as the region recorded economic growth of 5.7% in 2010 on the basis of rising commodities prices, aggressive/fiscal policies, and an overall global economic recovery.
Faced now with rising inflation (6% in Brazil, 4.5% in Chile, 11%+ in Argentina, etc.) and declining export competitiveness, Latin American countries have moved to stem the appreciation of their respective currencies. Brazil, whose finance minister coined the term ‘currency war’ and has been one of the most aggressive interveners in the forex markets, has been the most active. Its Central Bank continues to buy massive quantities of Dollars, it has raised taxes on capital controls, and most recently it moved to limit the ability of banks to short Dollars as a means of betting on the Real’s appreciation.
Meanwhile, “Chile, which hadn’t bought dollars in the foreign-exchange market since 2008, announced Jan. 3 it would purchase a record $12 billion, equal to 43 percent of the country’s currency reserves. In Colombia…the central bank is buying at least $20 million a day in the spot market. Peru purchased $9 billion last year, the second-biggest amount ever. While Mexico has so far refrained from intervention, it recently negotiated an IMF credit line which it could potentially tap for the purpose of holding down the Peso. All together, the Central Bank reserves of the six currencies mentioned above rose 16.5% in 2010 and now exceed $500 Billion.
It’s difficult to discern whether this intervention is having any impact. On the one hand, the raising of reserve requirements will certainly make it difficult for domestic banks to short their own currencies. In addition, some foreign speculators are getting spooked about all of the uncertainty and have moved to limit their exposure to Latin America. “There might be every macro reason in the world to love the Brazilian currency, but the randomness of policy to try and stop appreciation makes us want to have a smaller position,” explained one fund manager.
On the other hand, there is the possibility that legitimate institutional investors will also be scared away, which is problematic because Latin America remains reliant on foreign capital to fund its lavish fiscal spending and growing trade deficits. “There’s always a danger that by having capital controls, you can force some good capital to stay out of the country,” summarized one analyst. There are also concerns that Central Banks are losing sight of the bigger picture: “Central banks view the level of exchange rates as the priority rather than using them to help slow inflation.”
The problem, ultimately, is that Latin American countries want to have their cake and eat it too. The President of Colombia spoke recently of 5% GDP growth and the country’s desire to “put itself in the coming years among the most dynamic economies in the world,” but has whined about the upward pressure on the Peso. Brazil’s newly elected president has also spoken of becoming a global economic leader while its Finance Minister continues to sound off on the currency war. Meanwhile, Chile’s economy remains heavily tilted towards copper exports (it is apparently the world’s largest producer), and then wonders why rising prices have lifted the Chilean Peso. All blame the Fed’s Quantitative Easing Program for their currency woes and use China’s currency peg as basis for intervention.
In short, the appreciation of Latin American currencies has largely mirrored fundamentals. Individually and as a group, their exchange rates are still well below the bubble levels of 2008. Most of the rise over the last two years has merely offset the precipitous declines that took place during the height of the credit crisis. In addition, given the divergence in performance between individual currencies, it’s clear that investors (whether speculative or passive) are discerning. They have flooded the commodities producers with cash, while continuing to punish Mexico and Argentina over fiscal issues.
For that reason, there is reason to believe that most of the region’s currencies will continue to appreciate. Central Banks might manage to stall that appreciation in the short-term, but once they accept the inevitability of interest rate hikes (as Brazil already has) as the cure for inflation, the long-term upward path will be restored. Summarized one economist, “In these games of cat and mouse, I think policy makers will probably lose. There is too much unregulated capital in the world, particularly in developed countries. These guys will find ways around various restrictions.
Dow Jones Ramps up Forex Coverage
In a nod to the growing importance of forex ($4 Trillion per day and growing!), Dow Jones recently announced the development of a new forex news service. While many of the features may only be available at some expense to professional subscribers, retail traders should still enjoy some benefit.
According to the Financial Times, “Financial institutions spend over $1.7bn for foreign exchange news and information… However, Dow Jones’ estimated $22m forex market data sales last year trailed far behind Thomson Reuters, at $1.28bn, and Bloomberg, at $518m.” The “news and commentary” segment (which includes The Forex Blog…) accounted for about $100 million of such spending, “with two-thirds of the market controlled by Informa, Dow Jones and IFR Markets.”
DJ FX Trader will apparently aim to solidify Dow Jones position in forex news, while enhancing its stature in the forex information space. Towards that end, its news coverage will be backed by a staff of more than 100 – which have already been instructed to “seek out interviews that could move foreign exchange markets,” while its information offerings will be supported by its investments in algorithmic trading technology, the hiring of former currency traders, and use of a comprehensive outside data feed.
Of course, most of the advanced features will be made available only to those that pay a hefty subscription fee, estimated at more than $100,000 per year. (Bloomberg Terminal, by comparison, costs about $20,000 per year.) It’s not clear exactly what that will include, although for that price, you would expect nothing less than real-time quotes for all currencies on all major exchanges at all times. Its software package would presumably be the the best available, with the ability to run multi-variable trading strategies that execute instantaneously and automatically.
You might wonder why I bother to report on a service that will be prohibitively expensive for almost all retail forex traders. As I reported last week, a recent Federal Reserve Bank study showed that the effectiveness of technical analysis has gradually declined over the last few decades. As a result, the only way to consistently profit is through the use of increasingly sophisticated trading strategies and instantaneous and comprehensive access to information and rates. Similarly, the majority of currency traders (sadly in my opinion) rely on leverage and rapid-fire trading to eke out small gains on each trader. Being even one second late and losing to other traders (or scammed by your broker, as the CFTC has alleged) could mean the difference between winning and losing over the long run.
I’m not seriously encouraging anyone to consider plunking down $100K for DJ Forex Trader. Instead, I merely want to illustrate the gap in information that is forming between the “have” traders and the “have-nots.” As trading is increasingly electronic and algorithmic, and all technical analysis is performed by computers, I remain more convinced than ever that quality, fundamental analysis is the key to making money trading currencies over the long run.
FOREX-Dollar grinds towards 1995 record low as yen gains The
The euro fell 0.7 percent and the Australian dollar 0.6 percent against the yen, and the European currency triggered sell orders as it headed down to 112.00 yen, with more sell stops expected below that threshold.
Talk of month-end yen demand from Japanese exporters as well as dollar selling by overseas hedge funds who had bought the pair the day before helped push the Japanese currency nearer to Monday's 15-year peak of 80.41 yen per dollar and within a yen of its record trough of 79.75 set in 1995.
But the major currencies were broadly in the ranges that have confined them in the past few weeks as investors wait to see if the Fed says next week that it will resume quantitative easing as many expect, and if so, in what size and over what time horizon.
"Overall the moves seem to be of the position unwinding variety," said a trader for a Japanese brokerage house.
Japanese shares also fell, with the benchmark Nikkei average .N225 down 1.8 percent, making some speculate this could temper the dollar's fall as the market might become cautious of Japanese yen-selling intervention.
A falling share market is seen as one of the conditions which could prod Japanese authorities to intervene, after they did so in September to counter a push higher in the yen.
U.S. bond yields have risen this week partly as euphoria over the Fed's likely asset purchase programme is being replaced by doubts over the size of such a move. [US/]
"A model player's buying is pushing up the euro in thin trade. But given that U.S. bond yields have risen, the dollar will go in the same direction in the near term," said a trader at a Japanese brokerage.
The dollar's fate has had a close correlation to U.S. yields and their gap with rates on other currencies, as increases in U.S. yields -- other things being equal -- tend to help the greenback by making dollar investments more attractive.
With the gap between Japan and U.S. two-year yields near a three-week high and that for 10-year yields near a 2-½ month high, dollar/yen could have further room to rebound, some traders said.
Dollar/yen JPY= dipped 0.2 percent on the day to 81.60 yen, but it was still more than a full yen above Monday's 15-year low of 80.41 yen.
The euro EURCHF= rose to 1.3691 francs, its strongest since Aug. 11, with traders citing reports of a large option barrier at 1.3700 francs due to expire later on Wednesday.
The Swiss franc earlier hit a one-month low versus the dollar CHF= of 0.9915.
Data has indicated economic momentum will likely slow in Switzerland in coming months, albeit from a high level.
The U.S. currency steadied against other currencies, with the euro stuck below $1.40 as market participants pondered how much monetary easing the Federal Reserve would opt for and how much may be priced in to an already weak U.S. currency.
Helping steady the dollar were comments by New York Fed President William Dudley overnight, who said the economic context would determine whether an incremental or big bang approach to asset purchases was better.
The market was also wary about pushing the dollar lower versus the yen due to worries about possible intervention after Japanese Finance Minister Yoshihiko Noda said Japan would take decisive steps on forex when needed.
At 0746 GMT, the dollar was up 0.5 percent at 81.15 yen JPY=, with traders citing talk of Japanese investors buying to take it above reported stop losses at 80.90 and 81.05 yen.
The dollar's record low of 79.75 yen has become a focal point. It hit a 15-year trough at 80.41 yen on Monday, with players wary Japan may intervene if it nears 80.00
The dollar dropped to as low as 80.65 yen JPY= on trading platform EBS, its weakest level since 1995 and down about 0.9 percent on the day.
The market is wary that Japanese authorities might intervene to defend the 80.00 yen level to prevent the dollar from reaching the record low, after they stepped in to sell yen on Sept.15 for the first time in more than six years.
Since then, however, the dollar has continued to fall across the board as the market has anticipated a second round of quantitative easing expected from the Federal Reserve later this year, possibly at its next meeting on Nov.2-3.
The euro EURCHF= rose to as high as 1.3544 against the Swiss Franc, and was up 0.55 percent for the day. Semi-official names were cited as buyers of the dollar/swiss pair CHF=.
The dollar rose as far as 81.84 yen JPY= from about 81.00 yen before the comments came out and the euro fell 0.6 percent in a matter of minutes as the market, taking the comments to imply that the dollar did not need to fall further against major currencies, covered dollar short positions.
"It's become a bit difficult to test the dollar's downside for now," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust Bank.
"It seems as if the G7 has formed a united front ahead of the G20 meeting, as he's saying he's mainly focusing on emerging economies when it comes to currencies."
In an interview in the Wall Street Journal, Geithner divided currencies into three categories, with the first, including China's yuan, undervalued by any measure, while the second were of emerging economies with flexible exchange rates that intervene or impose taxes.
The third was the major currencies, "which are roughly in alignment now", he was quoted as saying.
The dollar later retreated to 81.25 yen, up just 0.2 percent on the day, as the market examined the comments more closely.
The dollar index dipped 0.2 percent to 78.041.DXY =USD after climbing more than 1.6 percent the previous day.
But its breach of resistance near 77.93, its Oct. 12 high, and through 77.894, a 23.6 percent retracement of its August-October slide, could pave the way for a move to the 78.96-98 area, which would be a 38.2 percent retracement of that August-October drop.
Investors had increased their bets against the dollar in recent weeks on heightened market expectations for the Federal Reserve to unveil a second round of quantitative easing as early as November.
That positioning had pointed to the risk of a short-covering bounce in the dollar.
"I get the sense that the dollar could rise further in the near term," said Hideki Amikura, deputy general manager for Nomura Trust and Banking's foreign exchange section.
"Market moves fuelled by excessive liquidity stemming from the United States may be drawing to a close," Amikura said.
With quantitative easing from the Federal Reserve now well-priced in ahead of its Nov. 2-3 meeting, currencies have broken higher ground against the dollar, with the euro topping $1.4160 last week and the Australian dollar testing parity.
But squeezing out more gains is likely to be tough until the market sees how sizeable QE will be, with one trader saying, for Tuesday at least, short-term players were simply flipping positions within tight ranges.
The euro has failed to clear $1.4000 again after Friday's surge above $1.4100 and this was seen as a caution by some that more long euro/short dollar positions could unwind, with the euro's Oct. 12 low of $1.3775 EUR= seen as a possible target.
"I think we will see a pull-back in the euro in the near-term," said a Japanese brokerage house trader, noting the recent build-up of short dollar positions.
"The market probably has gone as far as it can go based on the factors in the United States."
The euro was flat at $1.3933, well below Friday's eight-month high. Initial support is expected at $1.3825, with resistance up at $1.40 and a move above $1.4050 needed to restart its rally.
The dollar is on the verge of sliding to a 27-year low against the Australian dollar, which shot up after surprising strength in the job markets revived talk of a rate hike by the Reserve Bank of Australia.
The dollar's latest decline has made many traders nervous about Japanese intervention, as the U.S. currency was flirting with the levels where Tokyo started its first intervention in six years on Sept. 15.
Still, some market players speculate that Japan may refrain from intervention ahead of a Group of Seven (G7) policymakers meeting this weekend where the threat of "currency war" is likely to dominate discussion.
Fuelling that view were comments from U.S. Treasury Secretary Timothy Geithner on Wednesday that global institutions must persuade emerging nations such as China to let their currencies rise or risk a round of competitive depreciations that would endanger the world economy.
Comments by Chicago Fed President Charles Evans, who was quoted as saying the central bank should do much more to spur the economy , boosted speculation that the Fed will resume quantitative easing, possibly as early as its November policy meeting.
The dollar index =USD .DXY fell as far as 77.616, its lowest since January 20, and just above support at 77.60-61.
The dollar was less than half a yen above September's 15-year low of 82.87 yen JPY=, supported by jitters that Japanese authorities could intervene again if it retested that level, after last month's yen-selling intervention.
Analysts said the dollar's weakness was likely to continue with the market apparently dividing currencies into two groups of QE and non-QE, with the yen, the dollar and sterling in the first group and the euro the most prominent in the second.
"Given all the talk of more QE by the Fed, the trend for the dollar index is lower and it can fall another 3-4 percent from these levels," said Neil Mellor, currency strategist at Bank of New York Mellon.
"So with the dollar heading lower we will see the rhetoric about global currency wars and intervention escalating. The flows data that we are seeing suggest massive amounts of funds are moving to emerging countries in search of higher yields."
The dollar index fell to 82.242 .DXY, its weakest since early May as the euro EUR= rose as high as $1.2980.
"The market seems to want to sell dollars whatever," a London-based trader said.
The Australian dollar slid in early Asian trade after the China Securities Journal reported the economy may lose momentum more than expected later this year.
It temporarily pared losses following the release of Chinese official data but soon started to ease again on the selling by model-based funds, traders said.
"The data has attracted much attention but at the end of the day it wasn't far from market expectations. It showed the Chinese economy is slowing down, but that's what markets have been looking for," said Hideaki Inoue, manager of foreign exchange at Mitsubishi Trust and Banking Corp.
The Australian dollar stood at $0.8772 AUD=D4, down 0.7 percent on the day. It hit a two-month high of $0.8871 on Wednesday.
It also dropped 1 percent to 77.28 yen AUDJPY=R.
The dollar could come under more pressure, especially against higher-yielding currencies, in reaction to robust U.S. corporate earnings. Intel Corp (INTC.O) reported results above expectations and gave an upbeat sales outlook, pushing S&P futures higher .SPX. [ID:nN12197658]
Traders said funds were increasingly moving out of cash and low-yielding U.S. Treasuries to buy euro and growth-related currencies. Helping drive sentiment was a strong start to the U.S. corporate earnings season and easing concerns about euro zone's sovereign debt and the financial sector.
The euro EUR= held steady from late U.S. trading on Tuesday at $1.2725. It hit a two-month peak of $1.2739 EUR=EBS on Tuesday, brushing aside a Moody's downgrade of Portugal's sovereign rating by two notches.
Instead, investors chose to pay more heed to the strong response to a six-month treasury bill tender by Greece. The debt-laden country sold 1.625 billion euros ($2.03 billion) of T-bills at a better rate than it pays to borrow under a European Union/International Monetary rescue fund.
"What we are seeing is that cash is being put back to work with all the negative news surrounding the euro zone receding," said Greg Gibbs, currency strategist at RBS, Sydney.
The euro held steady at $1.2595 EUR=, with resistance seen roughly around $1.2690, the trendline from the December high. Near-term support is seen near $1.2550, the previous session's low.
Investors were also cautious about the single currency ahead of Greece's return to capital markets for the first time since late April.
The debt-laden country is seeking to raise 1.25 billion euros through a sale of six-month Treasury bills. That could prove to be a litmus test for the euro in the short term ahead of the results of the euro zone banks' stress tests next week, traders said.
A robust response to a Spanish debt auction earlier this month saw the euro rally to two-month highs. That coincided with worries the U.S. was heading towards a double-dip recession, sending the greenback to its lowest in nearly two-months against a basket of currencies.
Those concerns have taken a back seat for now, but traders said real money investors and margin traders were still being cautious, given lingering worries about a global slowdown.
"The way they are positioned, there is still a feeling that a a double-dip recession could happen," said Jonathan Cavenagh, a currency strategist at Westpac, Sydney.
"I think they could be in for a major surprise if a majority of U.S. corporate results beat expectations. That should see the U.S. dollar stage a comeback and hence investors are a bit cautious about going too short."
The yen pared initial losses after Japanese election results that showed political uncertainty ahead.
The dollar rose across the board, recovering from a fall against a currency basket late last week to its lowest since early May, as investors crept into dollar-denominated assets, a common occurrence during times of risk aversion.
Investors awaited more details on stress tests on 91 European banks -- the results of which are due later in the month -- as the European Union seeks to restore confidence in the sector.
Analysts said that despite the euro's rally this month, its failure to break above a key downtrend line had stalled its upward momentum.
"We saw a decent comeback in the euro in the past week, so there's been some profit taking on that move," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
"There's some nervousness in the market, and prices are rising on risky assets."
Analysts said the efficacy of the stress tests would depend on how much detail they include, and the possibility the results may be thin on in-depth information was weighing on the euro.
The ruling Democratic Party of Japan and its coalition must win 56 seats to maintain its Upper House majority. This is a crucial task for Prime Minister Naoto Kan--who is considered an aggressive fiscal reformer--because his first term as head of the DPJ, and thus the premier, will expire on Sept. 30.
For Kan to remain in power, he must be re-elected in an intra-party vote; and to win that race, he can't afford to lose many seats at the weekend, analysts said.
"If they (the DPJ) fail to win 56 seats, there will be the risk of a leadership challenge. That's yen-negative," said David Forrester, a strategist at Barclays Capital.
Latest opinion polls by local media show the DPJ will fall several seats short of a majority.
As of 0450 GMT, the greenback was at Y88.63, up from Y88.38 in New York Thursday. The execution of automated stop-loss dollar-buying orders at around Y88.50 helped the currency's ascent, dealers said.
The euro, meanwhile, was at $1.2684 and Y112.40 from $1.2703 and Y112.27 in New York overnight.
Analysts said the euro is likely to fall ahead though it has rallied of late, hitting $1.1876 on June 7 and Y107.30 on June 29.
"The economic fundamental landscape in the euro-zone remains disconcerting," said Tim Davis, a senior analyst at Morgan Stanley.
Investors are waiting for results of stress tests on European banks, which are due on July 23. Davis said the outcome of the tests could prompt investors to resume a euro-selling campaign.
It is possible there will be "plenty of negative headlines that could propel the euro lower," Davis said. "We'd like to use current levels to sell the common currency" to beef up the long-term investment portfolio.
The euro EUR= eased 0.4 percent to $1.2578, after meeting resistance around the May 21 high of $1.2673 and on selling from a hedge fund. It hit $1.2663 on trading platform EBS on Tuesday, the highest in about seven weeks.
Still, one positive factor for the euro was the fact that it finished Tuesday's U.S. trading above resistance at the bottom of the daily Ichimoku cloud -- a signal that its entrenched downtrend may be over.
The euro in mid-December slid beneath the cloud on the Ichimoku chart, the Japanese chart pattern that is closely followed across markets, and had mostly traded below it since then. But its rise back into the cloud suggests the single-currency may have entered a consolidation phase.
"The euro is in a retracement phase in the wake of its drop to below $1.2 and could rise back towards the top of the cloud," said Tokichi Ito, deputy general manager for Trust & Custody Services Bank's forex team.
While worries about the euro zone's debt woes linger and market players refrain from actively taking long positions in the euro, Ito said the euro may see a short-covering bounce towards $1.2800, near the top of the daily Ichimoku cloud.
The euro was also supported after a strong response to a syndicated Spanish debt sale. The robust demand eased some of the worries about the debt problems in the euro zone, although traders said they would remain cautious until the stress test results of the euro zone's banks are out later this month.
The Reserve Bank of Australia (RBA) left its cash rate steady at 4.5 percent as expected, saying the global economy had continued to expand, albeit unevenly, with growth in Asia very strong and signs of China moderating to a more sustainable rate.The Aussie fell in thin trading ahead of the announcement as some had expected it to sound a more dovish note, and on the charts it formed a short-term double bottom at $0.8317 AUD=D4, a drop which helped set it up technically for a rebound.
"There were concerns among dealers that the RBA would be very bearish about the economy before the rate announcement. But the central bank was not that dovish, prompting players to buy back the Australian dollar, as well as the euro," Daisuke Karakama, market economist at Mizuho Corporate Bank.
"But there were no new factors out. The only thing we can say is that the euro and the Aussie are in a rebound phase."
The Aussie stood 0.4 percent up on the day at $0.8437 AUD=D4 after earlier dropping to test support at $0.8315, a low set last week.
Against the yen it climbed 0.6 percent on the day at 74.08 yen AUDJPY=R after sliding as far as 72.73 yen.
"The RBA is refusing to panic, as many in the market seem to be," said Brian Redican, senior economist at Macquarie.
The euro EURCHF= rose around 50 pips to the day's high of 1.3265 francs, according to Reuters data, as the news prompted broad selling in the safe-haven Swiss currency.
The franc CHFHUF= also hit a session low against the Hungarian forint, trimming some gains from its recent rally against the Hungarian currency.
According to the Financial Times, “Financial institutions spend over $1.7bn for foreign exchange news and information… However, Dow Jones’ estimated $22m forex market data sales last year trailed far behind Thomson Reuters, at $1.28bn, and Bloomberg, at $518m.” The “news and commentary” segment (which includes The Forex Blog…) accounted for about $100 million of such spending, “with two-thirds of the market controlled by Informa, Dow Jones and IFR Markets.”
DJ FX Trader will apparently aim to solidify Dow Jones position in forex news, while enhancing its stature in the forex information space. Towards that end, its news coverage will be backed by a staff of more than 100 – which have already been instructed to “seek out interviews that could move foreign exchange markets,” while its information offerings will be supported by its investments in algorithmic trading technology, the hiring of former currency traders, and use of a comprehensive outside data feed.
Of course, most of the advanced features will be made available only to those that pay a hefty subscription fee, estimated at more than $100,000 per year. (Bloomberg Terminal, by comparison, costs about $20,000 per year.) It’s not clear exactly what that will include, although for that price, you would expect nothing less than real-time quotes for all currencies on all major exchanges at all times. Its software package would presumably be the the best available, with the ability to run multi-variable trading strategies that execute instantaneously and automatically.
You might wonder why I bother to report on a service that will be prohibitively expensive for almost all retail forex traders. As I reported last week, a recent Federal Reserve Bank study showed that the effectiveness of technical analysis has gradually declined over the last few decades. As a result, the only way to consistently profit is through the use of increasingly sophisticated trading strategies and instantaneous and comprehensive access to information and rates. Similarly, the majority of currency traders (sadly in my opinion) rely on leverage and rapid-fire trading to eke out small gains on each trader. Being even one second late and losing to other traders (or scammed by your broker, as the CFTC has alleged) could mean the difference between winning and losing over the long run.
I’m not seriously encouraging anyone to consider plunking down $100K for DJ Forex Trader. Instead, I merely want to illustrate the gap in information that is forming between the “have” traders and the “have-nots.” As trading is increasingly electronic and algorithmic, and all technical analysis is performed by computers, I remain more convinced than ever that quality, fundamental analysis is the key to making money trading currencies over the long run.
FOREX-Dollar grinds towards 1995 record low as yen gains The
 | dollar fell within sight of its 1995 record low on Friday as the yen rose broadly and pushed down the euro and higher-yielders, with trade made choppy by month-end business but still in ranges ahead of a Federal Reserve decision on easing. |
The euro fell 0.7 percent and the Australian dollar 0.6 percent against the yen, and the European currency triggered sell orders as it headed down to 112.00 yen, with more sell stops expected below that threshold.
Talk of month-end yen demand from Japanese exporters as well as dollar selling by overseas hedge funds who had bought the pair the day before helped push the Japanese currency nearer to Monday's 15-year peak of 80.41 yen per dollar and within a yen of its record trough of 79.75 set in 1995.
But the major currencies were broadly in the ranges that have confined them in the past few weeks as investors wait to see if the Fed says next week that it will resume quantitative easing as many expect, and if so, in what size and over what time horizon.
"Overall the moves seem to be of the position unwinding variety," said a trader for a Japanese brokerage house.
Japanese shares also fell, with the benchmark Nikkei average .N225 down 1.8 percent, making some speculate this could temper the dollar's fall as the market might become cautious of Japanese yen-selling intervention.
A falling share market is seen as one of the conditions which could prod Japanese authorities to intervene, after they did so in September to counter a push higher in the yen.
 | FOREX-Dollar slips but underpinned by higher U.S. yields A short-covering bounce in the dollar paused on Thursday but traders said a rise in U.S. Treasury yields could prompt more buybacks in the greenback before the Federal Reserve's policy meeting next week. |
"A model player's buying is pushing up the euro in thin trade. But given that U.S. bond yields have risen, the dollar will go in the same direction in the near term," said a trader at a Japanese brokerage.
The dollar's fate has had a close correlation to U.S. yields and their gap with rates on other currencies, as increases in U.S. yields -- other things being equal -- tend to help the greenback by making dollar investments more attractive.
With the gap between Japan and U.S. two-year yields near a three-week high and that for 10-year yields near a 2-½ month high, dollar/yen could have further room to rebound, some traders said.
Dollar/yen JPY= dipped 0.2 percent on the day to 81.60 yen, but it was still more than a full yen above Monday's 15-year low of 80.41 yen.
 | Forex - Euro hits 2-1/2 month high vs Swiss franc The euro hit a two-and-a-half month high against the Swiss franc on Wednesday, with traders saying the market was targetting a key expiry level. |
The Swiss franc earlier hit a one-month low versus the dollar CHF= of 0.9915.
Data has indicated economic momentum will likely slow in Switzerland in coming months, albeit from a high level.
 | FOREX-Dollar gains vs yen after Japan reminders The dollar gained against the yen, holding above its 1995 record low on Tuesday following reminders from Japanese officials about the possibility of more steps to curb yen strength. |
Helping steady the dollar were comments by New York Fed President William Dudley overnight, who said the economic context would determine whether an incremental or big bang approach to asset purchases was better.
The market was also wary about pushing the dollar lower versus the yen due to worries about possible intervention after Japanese Finance Minister Yoshihiko Noda said Japan would take decisive steps on forex when needed.
At 0746 GMT, the dollar was up 0.5 percent at 81.15 yen JPY=, with traders citing talk of Japanese investors buying to take it above reported stop losses at 80.90 and 81.05 yen.
The dollar's record low of 79.75 yen has become a focal point. It hit a 15-year trough at 80.41 yen on Monday, with players wary Japan may intervene if it nears 80.00
 | Dollar extends drop, falls to 15-yr low on yen The dollar fell to a 15-year low against the yen on Monday, drawing ever closer to its postwar record low of 79.75 yen set in 1995 as traders took a weekend G20 statement as a green light for continued dollar weakness |
The market is wary that Japanese authorities might intervene to defend the 80.00 yen level to prevent the dollar from reaching the record low, after they stepped in to sell yen on Sept.15 for the first time in more than six years.
Since then, however, the dollar has continued to fall across the board as the market has anticipated a second round of quantitative easing expected from the Federal Reserve later this year, possibly at its next meeting on Nov.2-3.
 | Forex - Euro extends gains vs Swiss franc, hits 2-mth high The euro EUR= rose to a fresh two-month high against the Swiss franc on Friday as investors added to long positions in the single currency after the pair broke above its 100-day moving average earlier this week. |
| FOREX-Dollar rises vs yen, euro after Geithner comments The dollar leapt half a yen and climbed rapidly against the euro on Thursday after U.S. Treasury Secretary Tim Geithner said major currencies were roughly in alignment now, although it later gave back some of its gains. |
"It's become a bit difficult to test the dollar's downside for now," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust Bank.
"It seems as if the G7 has formed a united front ahead of the G20 meeting, as he's saying he's mainly focusing on emerging economies when it comes to currencies."
In an interview in the Wall Street Journal, Geithner divided currencies into three categories, with the first, including China's yuan, undervalued by any measure, while the second were of emerging economies with flexible exchange rates that intervene or impose taxes.
The third was the major currencies, "which are roughly in alignment now", he was quoted as saying.
The dollar later retreated to 81.25 yen, up just 0.2 percent on the day, as the market examined the comments more closely.
 | FOREX-Dollar slips off highs hit on China rate rise The dollar dipped against a basket of currencies on Wednesday, trimming gains it made after a surprise rate hike by China spurred the market to lower risk exposure, but was seen likely to stay supported due to the potential for further short-covering. |
But its breach of resistance near 77.93, its Oct. 12 high, and through 77.894, a 23.6 percent retracement of its August-October slide, could pave the way for a move to the 78.96-98 area, which would be a 38.2 percent retracement of that August-October drop.
Investors had increased their bets against the dollar in recent weeks on heightened market expectations for the Federal Reserve to unveil a second round of quantitative easing as early as November.
That positioning had pointed to the risk of a short-covering bounce in the dollar.
"I get the sense that the dollar could rise further in the near term," said Hideki Amikura, deputy general manager for Nomura Trust and Banking's foreign exchange section.
"Market moves fuelled by excessive liquidity stemming from the United States may be drawing to a close," Amikura said.
 | FOREX-Dollar tries out firmer ground, choppy times ahead The dollar gingerly tested firmer ground on Tuesday after a bout of choppiness, and players didn't rule out an eventual 1.5 cent retreat by the euro if some long positions grew stale and unwound ahead of expected U.S. easing. |
But squeezing out more gains is likely to be tough until the market sees how sizeable QE will be, with one trader saying, for Tuesday at least, short-term players were simply flipping positions within tight ranges.
The euro has failed to clear $1.4000 again after Friday's surge above $1.4100 and this was seen as a caution by some that more long euro/short dollar positions could unwind, with the euro's Oct. 12 low of $1.3775 EUR= seen as a possible target.
"I think we will see a pull-back in the euro in the near-term," said a Japanese brokerage house trader, noting the recent build-up of short dollar positions.
"The market probably has gone as far as it can go based on the factors in the United States."
The euro was flat at $1.3933, well below Friday's eight-month high. Initial support is expected at $1.3825, with resistance up at $1.40 and a move above $1.4050 needed to restart its rally.
 | FOREX-Dollar mired near lows, Aussie near 27-year peak The dollar was mired near a 15-year low versus the Japanese yen and an eight-month low against the euro on Thursday on the spectre of more money-printing by the U.S. Federal Reserve as early as next month |
The dollar's latest decline has made many traders nervous about Japanese intervention, as the U.S. currency was flirting with the levels where Tokyo started its first intervention in six years on Sept. 15.
Still, some market players speculate that Japan may refrain from intervention ahead of a Group of Seven (G7) policymakers meeting this weekend where the threat of "currency war" is likely to dominate discussion.
Fuelling that view were comments from U.S. Treasury Secretary Timothy Geithner on Wednesday that global institutions must persuade emerging nations such as China to let their currencies rise or risk a round of competitive depreciations that would endanger the world economy.
| FOREX-Dlr plumbs 8-1/2 mth lows as QE prospects weigh The dollar extended its losses on Wednesday, falling to an 8-1/2 month low against a basket of currencies and edging towards a 15-year trough on the yen, hurt by expectations of more easing by the Federal Reserve. |
The dollar index =USD .DXY fell as far as 77.616, its lowest since January 20, and just above support at 77.60-61.
The dollar was less than half a yen above September's 15-year low of 82.87 yen JPY=, supported by jitters that Japanese authorities could intervene again if it retested that level, after last month's yen-selling intervention.
Analysts said the dollar's weakness was likely to continue with the market apparently dividing currencies into two groups of QE and non-QE, with the yen, the dollar and sterling in the first group and the euro the most prominent in the second.
"Given all the talk of more QE by the Fed, the trend for the dollar index is lower and it can fall another 3-4 percent from these levels," said Neil Mellor, currency strategist at Bank of New York Mellon.
"So with the dollar heading lower we will see the rhetoric about global currency wars and intervention escalating. The flows data that we are seeing suggest massive amounts of funds are moving to emerging countries in search of higher yields."
| Forex- Dollar index falls to 2-1/2 month low The dollar index fell to a 2-1/2 month low on Friday, hit as the euro touched a two-month high versus the U.S. currency while recent weak U.S. data and dovish Federal Reserve minutes continued to take their toll. |
"The market seems to want to sell dollars whatever," a London-based trader said.
| FOREX-Aussie drops despite benign Chinese data The Australian dollar fell on Thursday, as selling by model-based funds weighed on the currency against the yen, while it took in stride data that pointed to a mild slowdown in China, rather than a deeper one as some had feared. |
It temporarily pared losses following the release of Chinese official data but soon started to ease again on the selling by model-based funds, traders said.
"The data has attracted much attention but at the end of the day it wasn't far from market expectations. It showed the Chinese economy is slowing down, but that's what markets have been looking for," said Hideaki Inoue, manager of foreign exchange at Mitsubishi Trust and Banking Corp.
The Australian dollar stood at $0.8772 AUD=D4, down 0.7 percent on the day. It hit a two-month high of $0.8871 on Wednesday.
It also dropped 1 percent to 77.28 yen AUDJPY=R.
| FOREX-Euro hovers near 2-mth high The euro held steady near a two-month high against the dollar on Wednesday, with high-yielding currencies such as the Australian dollar supported by a seemingly significant improvement in risk appetite |
Traders said funds were increasingly moving out of cash and low-yielding U.S. Treasuries to buy euro and growth-related currencies. Helping drive sentiment was a strong start to the U.S. corporate earnings season and easing concerns about euro zone's sovereign debt and the financial sector.
The euro EUR= held steady from late U.S. trading on Tuesday at $1.2725. It hit a two-month peak of $1.2739 EUR=EBS on Tuesday, brushing aside a Moody's downgrade of Portugal's sovereign rating by two notches.
Instead, investors chose to pay more heed to the strong response to a six-month treasury bill tender by Greece. The debt-laden country sold 1.625 billion euros ($2.03 billion) of T-bills at a better rate than it pays to borrow under a European Union/International Monetary rescue fund.
"What we are seeing is that cash is being put back to work with all the negative news surrounding the euro zone receding," said Greg Gibbs, currency strategist at RBS, Sydney.
| FOREX-Euro steady after retreat, Greek auction eyed The euro consolidated well below two-month peaks against the dollar on Tuesday as investors hesitated to go long on the single currency and risk large short dollar positions during the U.S. earnings season. |
Investors were also cautious about the single currency ahead of Greece's return to capital markets for the first time since late April.
The debt-laden country is seeking to raise 1.25 billion euros through a sale of six-month Treasury bills. That could prove to be a litmus test for the euro in the short term ahead of the results of the euro zone banks' stress tests next week, traders said.
A robust response to a Spanish debt auction earlier this month saw the euro rally to two-month highs. That coincided with worries the U.S. was heading towards a double-dip recession, sending the greenback to its lowest in nearly two-months against a basket of currencies.
Those concerns have taken a back seat for now, but traders said real money investors and margin traders were still being cautious, given lingering worries about a global slowdown.
"The way they are positioned, there is still a feeling that a a double-dip recession could happen," said Jonathan Cavenagh, a currency strategist at Westpac, Sydney.
"I think they could be in for a major surprise if a majority of U.S. corporate results beat expectations. That should see the U.S. dollar stage a comeback and hence investors are a bit cautious about going too short."
| FOREX-Euro slides on bank stress test concerns The euro fell against the dollar on Monday, pulling away from a two-month high as concerns about the effectiveness of stress tests on European banks prompted investors to trim long positions in the single currency |
The dollar rose across the board, recovering from a fall against a currency basket late last week to its lowest since early May, as investors crept into dollar-denominated assets, a common occurrence during times of risk aversion.
Investors awaited more details on stress tests on 91 European banks -- the results of which are due later in the month -- as the European Union seeks to restore confidence in the sector.
Analysts said that despite the euro's rally this month, its failure to break above a key downtrend line had stalled its upward momentum.
"We saw a decent comeback in the euro in the past week, so there's been some profit taking on that move," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
"There's some nervousness in the market, and prices are rising on risky assets."
Analysts said the efficacy of the stress tests would depend on how much detail they include, and the possibility the results may be thin on in-depth information was weighing on the euro.
| FOREX: Importers Push Yen Down The dollar rose against the yen in Asia Friday as Japanese importers settled accounts while funds in the region largely stood on the sidelines.These short-term-focused investors refrained from active trading because they were waiting for the outcome of Japan's Upper House elections to be held Sunday. Tokyo dealers said the result will likely set the yen's trading direction. |
For Kan to remain in power, he must be re-elected in an intra-party vote; and to win that race, he can't afford to lose many seats at the weekend, analysts said.
"If they (the DPJ) fail to win 56 seats, there will be the risk of a leadership challenge. That's yen-negative," said David Forrester, a strategist at Barclays Capital.
Latest opinion polls by local media show the DPJ will fall several seats short of a majority.
As of 0450 GMT, the greenback was at Y88.63, up from Y88.38 in New York Thursday. The execution of automated stop-loss dollar-buying orders at around Y88.50 helped the currency's ascent, dealers said.
The euro, meanwhile, was at $1.2684 and Y112.40 from $1.2703 and Y112.27 in New York overnight.
Analysts said the euro is likely to fall ahead though it has rallied of late, hitting $1.1876 on June 7 and Y107.30 on June 29.
"The economic fundamental landscape in the euro-zone remains disconcerting," said Tim Davis, a senior analyst at Morgan Stanley.
Investors are waiting for results of stress tests on European banks, which are due on July 23. Davis said the outcome of the tests could prompt investors to resume a euro-selling campaign.
It is possible there will be "plenty of negative headlines that could propel the euro lower," Davis said. "We'd like to use current levels to sell the common currency" to beef up the long-term investment portfolio.
 | FOREX-Euro slips from 7-wk high, pauses before resistance The euro slipped on Wednesday but was holding not far from a seven-week high, with traders saying it could rise further in the near term due to doubts about a recovery in the U.S. economy and positive technical signals. |
Still, one positive factor for the euro was the fact that it finished Tuesday's U.S. trading above resistance at the bottom of the daily Ichimoku cloud -- a signal that its entrenched downtrend may be over.
The euro in mid-December slid beneath the cloud on the Ichimoku chart, the Japanese chart pattern that is closely followed across markets, and had mostly traded below it since then. But its rise back into the cloud suggests the single-currency may have entered a consolidation phase.
"The euro is in a retracement phase in the wake of its drop to below $1.2 and could rise back towards the top of the cloud," said Tokichi Ito, deputy general manager for Trust & Custody Services Bank's forex team.
While worries about the euro zone's debt woes linger and market players refrain from actively taking long positions in the euro, Ito said the euro may see a short-covering bounce towards $1.2800, near the top of the daily Ichimoku cloud.
The euro was also supported after a strong response to a syndicated Spanish debt sale. The robust demand eased some of the worries about the debt problems in the euro zone, although traders said they would remain cautious until the stress test results of the euro zone's banks are out later this month.
| FOREX-Aussie rebounds after RBA, euro turns higher The euro and Australian dollar rebounded from early losses against the dollar and yen on Tuesday after a statement by Australia's central bank helped dispel some gloom about the economic outlook and led to short-covering. |
"There were concerns among dealers that the RBA would be very bearish about the economy before the rate announcement. But the central bank was not that dovish, prompting players to buy back the Australian dollar, as well as the euro," Daisuke Karakama, market economist at Mizuho Corporate Bank.
"But there were no new factors out. The only thing we can say is that the euro and the Aussie are in a rebound phase."
The Aussie stood 0.4 percent up on the day at $0.8437 AUD=D4 after earlier dropping to test support at $0.8315, a low set last week.
Against the yen it climbed 0.6 percent on the day at 74.08 yen AUDJPY=R after sliding as far as 72.73 yen.
"The RBA is refusing to panic, as many in the market seem to be," said Brian Redican, senior economist at Macquarie.
| Swiss franc falls after Hungary says plans IMF deal The Swiss franc fell broadly on Wednesday after a Hungarian official said the country planned to sign a new standby agreement with the International Monetary Fund for 2011 |
The franc CHFHUF= also hit a session low against the Hungarian forint, trimming some gains from its recent rally against the Hungarian currency.
Foreign exchange market, is it a good place to make money?
How hard is it to make money in the foreign exchange market? How high risk is it? What sort of commissions do brokers charge and what sort of success do they have? Any information you can provide will be much appreciated.
Trading foreign exchange online is no different than trading stocks, or other financial instrument. The learning curve in trading usually takes two years. During those 24 months, it is going to be a roller coaster ride for you. You might even lose all of your trading capital. Some get lucky and make huge returns in less time. But they are the exceptions.
What you can do is this.
Open a demo trading account with an online broker. This way, you will get to know that online broker, how they do business, how reliable they are. At the same time, while demo trading, you will define, develop and fine tune your trading method. You should be able to learn when to trade and when not to trade.
The downside with demo trading is that it is way too easy. Soon as you are showing profits three months in a row with your demo account, open a live trading account with only $10 (you can do so with oanda.com). This way, if you bust your account, you will only lose that $10.
Trade this $10 account using the methods you developed while demo trading. Trade only with small position size as you trade. I'd recommend you trade with one unit only and risk only maximum of 1% of total capital on each trade. If you are consistently methodical with your trading, this $10 will last you at least six months. Agian, when you are able to show profits three months in a row, add more funds to your account.
If you need more information on trading, you can visit trading forums like elitetrader.com, moneytec.com, trade2win.com. You will find more information about this business of trading in those forums than in yahoo answers.
Hope this helps.
Jim http://jsforex.blogspot.com
John F
I´ve been investing for more than 20 years and trading for almost 14, and I can tell you that if you want to make BIG and FAST profits, I recommend you trading rather than investing, trading can help you to go from rags to rich.
If you are investing, you must have already achieved some degree of financial success, long term stock investing and FOREX can help you become much richer than you are today.
My experiences as a Nasdaq Market Maker, Head trader of several brokerage firms, and currently as a professional trader and private hedge fund manager, I can suggest you that:
We trade because we want quick, short term profits on a consistent basis. We want to cash flow the market. Milk it like a cow.
Make consistent, small, short term gains rather than trying to hit a home run on every trade. Don't ever forget that.
Don't marry a stock, marry the idea of making money trading stocks. That's the only way to do it.
For me "All stocks are equally worthless”
I don't hold on to any illusion that the stock market will continue to go up and provide a nice retirement for me.
I could care less which way the market goes. It's irrelevant to me if the market goes higher, crashes or moves sideways for the next 50 years. I really could care less. Stocks are just four letters with two prices next to them that I use to make a living trading.
Trade ONLY when you have a clear, easy and identifiable advantage, because without a CLEAR EDGE your odds of success are NO better than a flip of a coin… That´s why so many new traders (and investors) lose money.
Take a look at any daily chart of any index or stock and you'll probably see the most volatility and the biggest opportunity for profit during the first Hour of the stock market's opening.
The popular thinking and conventional wisdom is that you should wait about an hour before you start trading.
But if you do, you'll miss the big, fast moves that stocks make as all the amateurs let their emotions out through their
online accounts, usually right after they read some news headline or hear Maria Bartiromo go off about a stock on CNBC.
It's easy to see why trading the open is the market's prime time for profiting from other online traders.
The market's open is very volatile - that is the perfect environment for LARGE, FAST profits.
Learn to trade as a professional Market Maker ,not as an emotionally driven amateur trader or investor with few thousand dollars in an account at Etrade.
There isn't any other time during the day or any stock you can invest in, that can make you 1, 2, 3, 5, 7 or more points
in minutes OTHER than during the first hour the stock market is open. That's why I love trading the open so much.
I trade only when I have an edge and that means "only the first hour the market is open".
If you are a beginning trader, you can give yourself an unfair advantage in the market trading this way.
I can carry on with the advises about how to make money trading, but if you ask me:
"What is the best thing you can do for me?
I will say:
Give yourself a BIG favor and go to this "Top Secret" site and learn how to get the BEST stocks that will make the largest and fastest day trading profits you´ve ever seen, all by yourself...
www.onehourtrading.com
After you review this site you won´t need system, strategy, book, software or mentor to tell you what to do,
you will be able to profit HUGE every day.
Good luck and good trading,
John Fontaine
For someone who is inexperienced in trading. Making money in currency exchange markets is very difficult. Most novices loose money instead of making money.
The amount of risks you take of course depends on how competent you are in trading. For someone who doesn't have a good trading strategy or doesn't follow the strategy he has, the trading risk is equivalent to the risk in a game of chance. Which is very risky.
Most currency exchange companies don't charge any trading comissions. They make money through currency exchange spreads where you buy currency at slightly higher price and sell it at slightly lower price. And the difference is their profit.
George Soros is one of the richest men in the world. And he made his money mostly in currency exchange trading. Which means that currency trading can be very profitable. But for every George Soros, there are countless novices who have lost their shirts in currency trading.
It's possible to learn how to trade well in currencies. And the best way is through practical learning. Open a paper-trading account and trade with virtual money untill you are consistently profitable. And only then start trading with real money. It's a nice way to make money; my entire income now comes from Forex trading. Basically what I originally did was work and save all the money I could, bought a trading system, played using the demo account and then invested my actual cash. I was doing this around 18/19 years old and now I'm in my 20's and never have to work again if I choose not to.
What you do (and what I did) is make sure the trading system has a 60 day money back guarantee first; then make sure you can use a demo account. A demo account let's you play the trading game with "play money" so you can see if you can profit from the trading system without investing your real cash.
Use the demo account for 59 days and if you see you can make profit you keep the system and invest your real cash. If there's no profit to be made you get a refund and try another system; there's literally no risk when buying one.
it is not easy to make money on forex trading, but when you do know how, you can make a lot out of it. due to the volatile market, the risk is higher compared to trading stocks whcih means that this business suits mostly the risk takers. most forex platform do not charge fees except only for the renewal fees.
if you are really interested in this business, you may check your options in this site. this is one of the leaders in forex trading so you can be sure it is legitimate, reliable and trustworthy to deal with. for a minimum deposit of $100 which you can also use to trade later, they will provide you an Account Service manager to be your personal consultant who will serve as your mentor and trading partner as well, will answer all your technical questions and with whom you can talk live over the phone, email, chat or any form of communication available. And you can always interact with other expert forex traders in their chat room. Register and download a Free Ebook.
Focus
Rating
Compared to other trading options, many people feel that it is difficult to make money in forex trading.
However experts agree that most of the technical analysis tools work very well for forex trading. So you can learn technical analysis and benefit out of it
If you're interested I found reviews of the top 3 Forex trading systems: http://forex-funnel.the-perfect-solution.com/
Trading foreign exchange online is no different than trading stocks, or other financial instrument. The learning curve in trading usually takes two years. During those 24 months, it is going to be a roller coaster ride for you. You might even lose all of your trading capital. Some get lucky and make huge returns in less time. But they are the exceptions.
What you can do is this.
Open a demo trading account with an online broker. This way, you will get to know that online broker, how they do business, how reliable they are. At the same time, while demo trading, you will define, develop and fine tune your trading method. You should be able to learn when to trade and when not to trade.
The downside with demo trading is that it is way too easy. Soon as you are showing profits three months in a row with your demo account, open a live trading account with only $10 (you can do so with oanda.com). This way, if you bust your account, you will only lose that $10.
Trade this $10 account using the methods you developed while demo trading. Trade only with small position size as you trade. I'd recommend you trade with one unit only and risk only maximum of 1% of total capital on each trade. If you are consistently methodical with your trading, this $10 will last you at least six months. Agian, when you are able to show profits three months in a row, add more funds to your account.
If you need more information on trading, you can visit trading forums like elitetrader.com, moneytec.com, trade2win.com. You will find more information about this business of trading in those forums than in yahoo answers.
Hope this helps.
Jim http://jsforex.blogspot.com
John F
I´ve been investing for more than 20 years and trading for almost 14, and I can tell you that if you want to make BIG and FAST profits, I recommend you trading rather than investing, trading can help you to go from rags to rich.
If you are investing, you must have already achieved some degree of financial success, long term stock investing and FOREX can help you become much richer than you are today.
My experiences as a Nasdaq Market Maker, Head trader of several brokerage firms, and currently as a professional trader and private hedge fund manager, I can suggest you that:
We trade because we want quick, short term profits on a consistent basis. We want to cash flow the market. Milk it like a cow.
Make consistent, small, short term gains rather than trying to hit a home run on every trade. Don't ever forget that.
Don't marry a stock, marry the idea of making money trading stocks. That's the only way to do it.
For me "All stocks are equally worthless”
I don't hold on to any illusion that the stock market will continue to go up and provide a nice retirement for me.
I could care less which way the market goes. It's irrelevant to me if the market goes higher, crashes or moves sideways for the next 50 years. I really could care less. Stocks are just four letters with two prices next to them that I use to make a living trading.
Trade ONLY when you have a clear, easy and identifiable advantage, because without a CLEAR EDGE your odds of success are NO better than a flip of a coin… That´s why so many new traders (and investors) lose money.
Take a look at any daily chart of any index or stock and you'll probably see the most volatility and the biggest opportunity for profit during the first Hour of the stock market's opening.
The popular thinking and conventional wisdom is that you should wait about an hour before you start trading.
But if you do, you'll miss the big, fast moves that stocks make as all the amateurs let their emotions out through their
online accounts, usually right after they read some news headline or hear Maria Bartiromo go off about a stock on CNBC.
It's easy to see why trading the open is the market's prime time for profiting from other online traders.
The market's open is very volatile - that is the perfect environment for LARGE, FAST profits.
Learn to trade as a professional Market Maker ,not as an emotionally driven amateur trader or investor with few thousand dollars in an account at Etrade.
There isn't any other time during the day or any stock you can invest in, that can make you 1, 2, 3, 5, 7 or more points
in minutes OTHER than during the first hour the stock market is open. That's why I love trading the open so much.
I trade only when I have an edge and that means "only the first hour the market is open".
If you are a beginning trader, you can give yourself an unfair advantage in the market trading this way.
I can carry on with the advises about how to make money trading, but if you ask me:
"What is the best thing you can do for me?
I will say:
Give yourself a BIG favor and go to this "Top Secret" site and learn how to get the BEST stocks that will make the largest and fastest day trading profits you´ve ever seen, all by yourself...
www.onehourtrading.com
After you review this site you won´t need system, strategy, book, software or mentor to tell you what to do,
you will be able to profit HUGE every day.
Good luck and good trading,
John Fontaine
For someone who is inexperienced in trading. Making money in currency exchange markets is very difficult. Most novices loose money instead of making money.
The amount of risks you take of course depends on how competent you are in trading. For someone who doesn't have a good trading strategy or doesn't follow the strategy he has, the trading risk is equivalent to the risk in a game of chance. Which is very risky.
Most currency exchange companies don't charge any trading comissions. They make money through currency exchange spreads where you buy currency at slightly higher price and sell it at slightly lower price. And the difference is their profit.
George Soros is one of the richest men in the world. And he made his money mostly in currency exchange trading. Which means that currency trading can be very profitable. But for every George Soros, there are countless novices who have lost their shirts in currency trading.
It's possible to learn how to trade well in currencies. And the best way is through practical learning. Open a paper-trading account and trade with virtual money untill you are consistently profitable. And only then start trading with real money. It's a nice way to make money; my entire income now comes from Forex trading. Basically what I originally did was work and save all the money I could, bought a trading system, played using the demo account and then invested my actual cash. I was doing this around 18/19 years old and now I'm in my 20's and never have to work again if I choose not to.
What you do (and what I did) is make sure the trading system has a 60 day money back guarantee first; then make sure you can use a demo account. A demo account let's you play the trading game with "play money" so you can see if you can profit from the trading system without investing your real cash.
Use the demo account for 59 days and if you see you can make profit you keep the system and invest your real cash. If there's no profit to be made you get a refund and try another system; there's literally no risk when buying one.
it is not easy to make money on forex trading, but when you do know how, you can make a lot out of it. due to the volatile market, the risk is higher compared to trading stocks whcih means that this business suits mostly the risk takers. most forex platform do not charge fees except only for the renewal fees.
if you are really interested in this business, you may check your options in this site. this is one of the leaders in forex trading so you can be sure it is legitimate, reliable and trustworthy to deal with. for a minimum deposit of $100 which you can also use to trade later, they will provide you an Account Service manager to be your personal consultant who will serve as your mentor and trading partner as well, will answer all your technical questions and with whom you can talk live over the phone, email, chat or any form of communication available. And you can always interact with other expert forex traders in their chat room. Register and download a Free Ebook.
Focus
Rating
Compared to other trading options, many people feel that it is difficult to make money in forex trading.
However experts agree that most of the technical analysis tools work very well for forex trading. So you can learn technical analysis and benefit out of it
If you're interested I found reviews of the top 3 Forex trading systems: http://forex-funnel.the-perfect-solution.com/
The Foreign Exchange Market and CDS Spreads
We are continually amazed at movements in the foreign exchange market that come as a direct consequence of moves in peripheral 5-Year Credit Default Swaps (CDS). The chart below details the relative correlation of a GDP weighted basket of the relevant countries within the Euro. The relationship makes sense. When spreads blow out they do so because investor anxiety over Europe's credit position increases, anxiety over credit worthiness in Europe sees investors selling EUR/USD. However lately moves in the smaller peripheral components have been resulting in out-sized moves in the EUR. Something strange is a-foot.
The 'PIIGS', Portugal, Italy, Ireland, Greece and Spain, make up approximately 18.2% of a GDP basket-weighted Index. PIIG is only 6.34%, Ireland specifically makes up 1.75%, and Portugal 1.91%
However rumors today that Ireland and Portugal would require IMF assistance (something that would affect 3.66% of the overall basket,) resulted in the EUR/USD dropping from 1.3150 down to 1.3050. The rumors were later denied, and the CDS spreads came back in. However the damage was done.
What we are effectively seeing is price movement in the smallest and most illiquid markets (Ireland and Portugal 5 Yr CDS) dramatically moves the largest market in the world (EUR/USD spot). to put this disconnect into a more qualitative argument... While the CDS Spread in Ireland can be moved out by 10BPS by paying the offer in 15 Mio USD, thus resulting in the EUR/USD dropping 100 pips... In the FX market, someone would probably have to sell 3-5 Bio EUR/USD. Keep in mind it took the Japan's BOJ 22 Bio USD to move the USD/JPY price up 300 pips.
Given Ireland 5yr CDS moved out 15 Bps and its weighting in the basket is 1.75%, we would expect the news would contribute a widening of 0.2625 Bps. Given Portugal 5yr CDS moved out 25 Bps and its weighting in the basket is 1.91%, we would expect the news would contribute a widening of 0.4775 Bps.. Together the news should contribute about 0.74 Bps or .0074%. However the EUR/USD dropped from 1.3150 to 1.3050, or 0.8%...
As we stated above. It doesn't take much to move the CDS spreads, for example when a 20-50 Mio USD order in the CDS can realize a move equal to having sold 4 Bio EUR/USD. There is a disconnect.
The 'PIIGS', Portugal, Italy, Ireland, Greece and Spain, make up approximately 18.2% of a GDP basket-weighted Index. PIIG is only 6.34%, Ireland specifically makes up 1.75%, and Portugal 1.91%
However rumors today that Ireland and Portugal would require IMF assistance (something that would affect 3.66% of the overall basket,) resulted in the EUR/USD dropping from 1.3150 down to 1.3050. The rumors were later denied, and the CDS spreads came back in. However the damage was done.
What we are effectively seeing is price movement in the smallest and most illiquid markets (Ireland and Portugal 5 Yr CDS) dramatically moves the largest market in the world (EUR/USD spot). to put this disconnect into a more qualitative argument... While the CDS Spread in Ireland can be moved out by 10BPS by paying the offer in 15 Mio USD, thus resulting in the EUR/USD dropping 100 pips... In the FX market, someone would probably have to sell 3-5 Bio EUR/USD. Keep in mind it took the Japan's BOJ 22 Bio USD to move the USD/JPY price up 300 pips.
Given Ireland 5yr CDS moved out 15 Bps and its weighting in the basket is 1.75%, we would expect the news would contribute a widening of 0.2625 Bps. Given Portugal 5yr CDS moved out 25 Bps and its weighting in the basket is 1.91%, we would expect the news would contribute a widening of 0.4775 Bps.. Together the news should contribute about 0.74 Bps or .0074%. However the EUR/USD dropped from 1.3150 to 1.3050, or 0.8%...
As we stated above. It doesn't take much to move the CDS spreads, for example when a 20-50 Mio USD order in the CDS can realize a move equal to having sold 4 Bio EUR/USD. There is a disconnect.
The foreign exchange market
The foreign exchange market, sometimes called foreign exchange market and globally known as the FOREX (Foreign Exchange Market) is the second largest market in terms of volume traded, behind the market interest rates and far ahead of the award.
Every day, more than 2000 billion dollars that are exchanged. Indirectly, almost everyone plays a role in the Forex market. Simply buy or sell a product abroad. A product purchased in the United States by a Frenchman will be settled in dollars, then charged to his account by his bank in Euros. The bank will it bought dollars and sold euros. This operation has made changes at a rate set on the foreign exchange market, known as the FOREX. The fact that the French bank wants to buy dollars and sell the euro appreciates the value of the dollar. The dollar is requested. So, on the FOREX market, the exchange rate against USD EUR will increase. There is demand on the dollar, and a desire to get rid of the euro ...
In practice, the previous transaction will not wriggle the FOREX. But the principle in the foreign exchange market is exactly the same with huge sums. Above all, unlike the exchange rates displayed in banks, on the FOREX, USD / EUR 18,000 times vary by day.
In this variation the permanent born speculation. For example, we can buy a dollar at a rate t. And later resell them at a different rate. If the dollar has risen, so we made a profit by the mere fact of converting one currency into another, and then converted the other in the first currency.These conversions are happening in the market for foreign currency or foreign exchange market called Forex.
Every day, more than 2000 billion dollars that are exchanged. Indirectly, almost everyone plays a role in the Forex market. Simply buy or sell a product abroad. A product purchased in the United States by a Frenchman will be settled in dollars, then charged to his account by his bank in Euros. The bank will it bought dollars and sold euros. This operation has made changes at a rate set on the foreign exchange market, known as the FOREX. The fact that the French bank wants to buy dollars and sell the euro appreciates the value of the dollar. The dollar is requested. So, on the FOREX market, the exchange rate against USD EUR will increase. There is demand on the dollar, and a desire to get rid of the euro ...
In practice, the previous transaction will not wriggle the FOREX. But the principle in the foreign exchange market is exactly the same with huge sums. Above all, unlike the exchange rates displayed in banks, on the FOREX, USD / EUR 18,000 times vary by day.
In this variation the permanent born speculation. For example, we can buy a dollar at a rate t. And later resell them at a different rate. If the dollar has risen, so we made a profit by the mere fact of converting one currency into another, and then converted the other in the first currency.These conversions are happening in the market for foreign currency or foreign exchange market called Forex.
Forex Basics
1. What is Forex trading?
The foreign exchange market, also known as Forex, or FX, is the world's largest financial market with over three trillion Dollars traded every day. The Forex market is based on the trade of the world's currencies.
2. How does Forex trading work?
Forex trading is conducted in pairs. The trader always trades one currency against another. Some examples of the major pairs include the EUR/USD, USD/JPY, EUR/JPY, GBP/CHF, and CAD/USD among others. When you open a Forex trade, you go “long” on one currency and go “short” on the other. The Forex market does not have a centralized location and is therefore a very flexible trading option for people around the globe.
3. Is Forex trading risky?
In one word, yes. However, there are various tools and techniques one can use to reduce the risk. These include market analysis (technical or fundamental), trading systems, signal providers, and Forex robots. However, the best way to avoid high risks in Forex is to educate yourself about the Forex market before trading real money. Additionally, experts recommended you use a demo account for an extended period of time before risking money.
4. When is the Forex market open?
The Forex market has the most flexible hours with true 24 hour trading. The Forex day starts in Sydney and moves around the globe first to Tokyo, then London, then NY.
5. How does Forex trading compare to stocks or mutual funds?
Forex and stocks have a lot in common but generally speaking, Forex is shorter term trades than other markets. Most Forex traders do not leave positions open overnight, which involves a fee called a “Rollover Fee”. In addition, the stock market is significantly smaller than the Forex market making it a more difficult trade to master.
6. How long are Forex positions maintained?
This very much depends on the preferences of the trader but statistics show that over 80% of Forex trades last for seven days or less and over 40% for two days or less. Generally speaking, Forex traders close their positions when they have achieved their profit goals for that trade, the Stop Loss is triggered as a result of reaching a maximum level of loss, or a new position has become available and the trader wants to reallocate the funds.
7. How often are Forex trades made?
Since most brokers do not charge commission on opening a new position and the Forex market is open almost around the clock, most trades open multiple positions throughout the day. According to recent studies, the average Forex trader opens approximately ten to twenty new positions every day.
Forex First Steps
8. What do I need in order to start trading Forex?
As opposed to other markets, you really do not need much to trade Forex. No license is required, and you can trade Forex with a very small initial capital. However, it is not recommended to jump into Forex trading without massive preparation before. This should include reading, studying, and familiarizing yourself with the ins and outs of the market as well as choosing a top reliable broker with whom you can trade.
9. What is the best way to learn Forex?
The Web is overflowing with articles about Forex, but we have worked long and hard to be the most informative source of Forex information for the beginner trader. You can read our best Forex articles or see a complete list of our Forex articles.
Forex Currencies
10. How are the prices of the currencies determined?
The Forex market is among the most volatile markets on the globe and with its 24 hour schedule, the market never rests. The prices are based on a wide spectrum of factors both economic and political. Anything can affect the movement of the Forex market, but the main factors that drive the currencies are interest rates, inflation, and political stability. Governments often jump into the Forex trading arena in order to affect the prices of currencies. They do this by flooding the market with their currency in order to lower its price or buy out large sums of their currency in order to raise its value. However, as a result of the Forex market's size, there is no one entity that can truly affect the market is a serious manner.
11. What do terms like “Bid”, “Spread”, “Rollover” and others mean?
There are many terms you must understand before your trade Forex. To become aquanited with the basic lingo, see our complete Forex glossary.
Forex Profits
12. How can I manage my risks in the most efficient way?
There are many ways to avoid high Forex risks, but the primary tools used by most traders are stop losses, take profits, and limit orders. Using these tools, you can minimize your risks while maximizing your potential for profits.
13. Is Forex trading lucrative?
The possible rewards of Forex trading are pretty much endless. Most Forex brokers offer high leverage offering the ability to trade tens and hundreds of thousands of Dollars with as little as a few hundred Dollars of equity. Some brokers offer a leverage as high as 500:1. Obviously, the higher the leverage, the larger the potential for profit, but with that potential comes a higher level of risk as well.
14. Is Forex an expensive habit?
Well, that very much depends how you trade. However, unlike many other markets, Forex trading can be a very inexpensive habit. With most brokers offering at least a 100:1 leverage, traders can trade tens of thousands of Dollars with as little $500.
15. What is the best Forex strategy to use?
This is a question that occupies the minds of the world's most well known Forex experts. There is no one right answer to this, but there is one basic principle when it comes to a Forex trading strategy. The important thing is that a trader has some sort of strategy. This is what differentiates Forex trading from gambling. You can use one of hundreds of available Forex trading strategies to maximize the potential of the Forex market. Many traders find it challenging to stick to their strategies when it dictates to pull out of a trade even when it is a winning trade. The important thing is that traders use strategies and stick to them.
Forex Trading Brokers
16. How to choose A Forex broker?
Choosing an online Forex broker might be the most important decision a trader makes. It is therefore very important to make an educated decision. The Web is overflowing with reviews of Forex brokers. It is crucial that traders read them before choosing a broker. DailyForex has put together a comprehensive list of Forex broker reviews for your Forex research.
17. What features should I look for in a Forex broker?
There are a lot of characteristics a trader should look for in an online Forex broker. This can be anything from the website, to their customer support, their trading platform, their platform’s features, and their Forex trading spreads. It is important to read in depth reviews before selecting your broker, and a good start is reading DailyForex’s thorough Forex broker reviews.
18. How do I know if a Forex broker is a scam?
Forex scams are very common, and it is the trader’s responsibility to do the necessary research before selecting a Forex broker. Reading online Forex reviews is the first step, but then a trader should also read forums and experiences from other traders who used the specific broker
The foreign exchange market, also known as Forex, or FX, is the world's largest financial market with over three trillion Dollars traded every day. The Forex market is based on the trade of the world's currencies.
2. How does Forex trading work?
Forex trading is conducted in pairs. The trader always trades one currency against another. Some examples of the major pairs include the EUR/USD, USD/JPY, EUR/JPY, GBP/CHF, and CAD/USD among others. When you open a Forex trade, you go “long” on one currency and go “short” on the other. The Forex market does not have a centralized location and is therefore a very flexible trading option for people around the globe.
3. Is Forex trading risky?
In one word, yes. However, there are various tools and techniques one can use to reduce the risk. These include market analysis (technical or fundamental), trading systems, signal providers, and Forex robots. However, the best way to avoid high risks in Forex is to educate yourself about the Forex market before trading real money. Additionally, experts recommended you use a demo account for an extended period of time before risking money.
4. When is the Forex market open?
The Forex market has the most flexible hours with true 24 hour trading. The Forex day starts in Sydney and moves around the globe first to Tokyo, then London, then NY.
5. How does Forex trading compare to stocks or mutual funds?
Forex and stocks have a lot in common but generally speaking, Forex is shorter term trades than other markets. Most Forex traders do not leave positions open overnight, which involves a fee called a “Rollover Fee”. In addition, the stock market is significantly smaller than the Forex market making it a more difficult trade to master.
6. How long are Forex positions maintained?
This very much depends on the preferences of the trader but statistics show that over 80% of Forex trades last for seven days or less and over 40% for two days or less. Generally speaking, Forex traders close their positions when they have achieved their profit goals for that trade, the Stop Loss is triggered as a result of reaching a maximum level of loss, or a new position has become available and the trader wants to reallocate the funds.
7. How often are Forex trades made?
Since most brokers do not charge commission on opening a new position and the Forex market is open almost around the clock, most trades open multiple positions throughout the day. According to recent studies, the average Forex trader opens approximately ten to twenty new positions every day.
Forex First Steps
8. What do I need in order to start trading Forex?
As opposed to other markets, you really do not need much to trade Forex. No license is required, and you can trade Forex with a very small initial capital. However, it is not recommended to jump into Forex trading without massive preparation before. This should include reading, studying, and familiarizing yourself with the ins and outs of the market as well as choosing a top reliable broker with whom you can trade.
9. What is the best way to learn Forex?
The Web is overflowing with articles about Forex, but we have worked long and hard to be the most informative source of Forex information for the beginner trader. You can read our best Forex articles or see a complete list of our Forex articles.
Forex Currencies
10. How are the prices of the currencies determined?
The Forex market is among the most volatile markets on the globe and with its 24 hour schedule, the market never rests. The prices are based on a wide spectrum of factors both economic and political. Anything can affect the movement of the Forex market, but the main factors that drive the currencies are interest rates, inflation, and political stability. Governments often jump into the Forex trading arena in order to affect the prices of currencies. They do this by flooding the market with their currency in order to lower its price or buy out large sums of their currency in order to raise its value. However, as a result of the Forex market's size, there is no one entity that can truly affect the market is a serious manner.
11. What do terms like “Bid”, “Spread”, “Rollover” and others mean?
There are many terms you must understand before your trade Forex. To become aquanited with the basic lingo, see our complete Forex glossary.
Forex Profits
12. How can I manage my risks in the most efficient way?
There are many ways to avoid high Forex risks, but the primary tools used by most traders are stop losses, take profits, and limit orders. Using these tools, you can minimize your risks while maximizing your potential for profits.
13. Is Forex trading lucrative?
The possible rewards of Forex trading are pretty much endless. Most Forex brokers offer high leverage offering the ability to trade tens and hundreds of thousands of Dollars with as little as a few hundred Dollars of equity. Some brokers offer a leverage as high as 500:1. Obviously, the higher the leverage, the larger the potential for profit, but with that potential comes a higher level of risk as well.
14. Is Forex an expensive habit?
Well, that very much depends how you trade. However, unlike many other markets, Forex trading can be a very inexpensive habit. With most brokers offering at least a 100:1 leverage, traders can trade tens of thousands of Dollars with as little $500.
15. What is the best Forex strategy to use?
This is a question that occupies the minds of the world's most well known Forex experts. There is no one right answer to this, but there is one basic principle when it comes to a Forex trading strategy. The important thing is that a trader has some sort of strategy. This is what differentiates Forex trading from gambling. You can use one of hundreds of available Forex trading strategies to maximize the potential of the Forex market. Many traders find it challenging to stick to their strategies when it dictates to pull out of a trade even when it is a winning trade. The important thing is that traders use strategies and stick to them.
Forex Trading Brokers
16. How to choose A Forex broker?
Choosing an online Forex broker might be the most important decision a trader makes. It is therefore very important to make an educated decision. The Web is overflowing with reviews of Forex brokers. It is crucial that traders read them before choosing a broker. DailyForex has put together a comprehensive list of Forex broker reviews for your Forex research.
17. What features should I look for in a Forex broker?
There are a lot of characteristics a trader should look for in an online Forex broker. This can be anything from the website, to their customer support, their trading platform, their platform’s features, and their Forex trading spreads. It is important to read in depth reviews before selecting your broker, and a good start is reading DailyForex’s thorough Forex broker reviews.
18. How do I know if a Forex broker is a scam?
Forex scams are very common, and it is the trader’s responsibility to do the necessary research before selecting a Forex broker. Reading online Forex reviews is the first step, but then a trader should also read forums and experiences from other traders who used the specific broker
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