EURUSD | GBPUSD | Spread Trading | Forex Market Update | May 17, 2013
Breaking down the last session of the week and identifying spread trading opportunities between EURUSD and GBPUSD.
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Breaking down the last session of the week and identifying spread trading opportunities between EURUSD and GBPUSD.
A look at today's weakness in the US Dollar caused by the latest economic releases as we identify spread trading opportunities and break down movements in EURUSD and GBPUSD.
Latest Market Analysis ahead of London Trading Session. Analyzing EURO & POUND Cross
Insight and analysis into today's USDJPY movements and a breakdown of possible trading opportunities using our proprietary indicator, the Franklin Strength Gauge
ECB President Draghi spoke today and reaffirmed his stance on negative rates and hinted an yet another possible ECB rate cut. EURUSD made its move of the day after these comments.
A look at how the Yen fared against the dollar in wake of today's US employment data and our look into the next possible movements for USDJPY
A look at today's US employment data and market reaction and analysis in today's market update
Is the Euro headed to parity with the US Dollar? ECB President Draghi hinted today at possible negative deposit rates which will lead banks to flood the market with cash and lead to an eventual decline in the currency.
The FOMC stated today it will leave the Fed Funds Rate unchanged at 0.25% and will continue to keep rates low until appropriate economic goals in regards to recovery are met and unemployment is above 6.5%.
A look at today's market movements and analysis on USDJPY price action as we look ahead to future movements.
Euro moving higher against the US Dollar ahead of today's Fed Funds rate decision. A look at today's economic release data and trading opportunities identified by one of our proprietary trading indicators, the Franklin Strength Gauge.
The Eurozone is speculating an impending rate cut by the ECB and US economic numbers today were bearish than expected.
Finding trading opportunities in today's GBPUSD market movements using the Franklin Strength Gauge and classical technical analysis.
USDJPY retraces from last week's run at 100.00 and continues its downward slide from Friday's sell off.
Euro breaking last week's high against the dollar as it reaches 1.3112. A look at its current movement and where we think it is headed in the short term
A look at today's USDJPY movements ahead of BOJ's overnight rate decision announcement
Today's insight into market movements after US unemployment data release and how the Franklin Strength Gauge effectively called these market movements
Insight into today's USDJPY price movements and market reaction to economic data and how the Franklin Strength Gauge can identify areas of opportunity to profit.
A look at today's worldwide economic releases and market reactions. Is U.S. manufacturing showing further signs of weakness?
A breakdown of today's volatile Euro movements in reaction to today's related economic release information.
A recap of today's market movements across the Asian, London, and US sessions.
A look at today's rating by Fitch on Great Britain and market reactions and the effect on the British Pound
Today's look at the Forex market and the effects of today's G20 Summit and IMF meetings.
A look at today's USDJPY movements and market reactions to today's G20 summit meeting.
An in depth look at today's G20 Summit meeting and EURUSD's market reaction
A look at today's Bank of England's rate announcements and market reactions to the latest economic data
An in depth analysis on the Canadian Dollar and its highly negatively correlated counterpart Crude Oil on news events and market movements
An inside look at today's Australian Dollar and its movement against the US Dollar with market analysis and reactions
Today's market reaction to the Greenback's movements against the Japanese Yen.
Today's recap of market news and events as FOMC members hint at further QE efforts and a change in Fed Monetary Policy
Today's news events and market reaction to Canadian Dollar and Oil related events
A recap of today's #British #Pound related news and market reactions.
Today's recap of Aussie and U.S. related news events and market reactions
A recap of today's Forex related news and events as it relates to USDJPY.
Today's recap of market news and reactions highlighting Treasury Secretary Lew's comments in regards to the U.S. Debt ceiling and other Eurozone and US related updates.
Fundamental Update:
The Dollar is facing downside risk against the EURO & POUND as the market awaits economic outlooks from the major Central Banks to finish out the rest of this trading week. As reported during the early part of the London/US overlap trading session, the ADP Employment change and ISM Non-Manufacturing economic reports missed their forecast by very noticeable margins. EURUSD is trading higher near ~1.2850 after slipping below 1.2800 during the earlier part of London trading while GBPUSD is trading higher as well near ~1.5147.
Spread Trade Technical Update:
Analyzing the chart from the London trading session today, there were periods of correlation breakdown and recovery between the EURO & POUND currency pairs. The Franklin Magnitude Gauge (FMG) was in a sell EURUSD buy GBPUSD trade bias as London trading began. As the trade bias progressed, correlation between these historically positively correlated Forex pairs declined to ~0.40 as the FMG entered oversold territory suggesting a buy reversal. This is exactly what occurred as the spread visibly widened between EURUSD & GBPUSD. The FMGclimbed out of oversold region supporting a buy EURUSD sell GBPUSD trade bias. There was another sell EURUSD buy GBPUSD opportunity but for the most part correlation started to recovery as these currencies statistically corrected themselves. Looking ahead we are expecting Forex volatility to increase as well a potential spread trade opportunities between these major currency pairs.
A recap of today's London #Forex Trading session highlighting the Franklin Strength Gauge and classical technical analysis.
A recap of today's Asian and London #Forex Trading sessions highlighting the Franklin Strength Gauge and classical technical analysis.
Straight Pair Trading offers opportunities for traders to profit from ratio imbalances between two highly correlated instruments. This is done by taking a theoretical market neutral position by going long on one instrument and short on another. Due to the cost of trade sometimes trying capture an arbitrage opportunity could be missed with extremely positively correlated pairs or the profits will be slim. For potentially larger arbitrage opportunities, pair trade with pairs not as positively correlated maybe using parameters such as .70 to .80. Please keep in mind that using this technique may increase your overall market risk and exposure in the extremely volatile forex market for there is “No Such Thing as a Free Lunch”. Pair Trading is a fascinating trading method but traders can and do lose money.
Forex trading is one of the most potentially profitable and stimulating forms of investment opportunities available in today's market. Perhaps the largest influence on the growth of the market and on its popularity can be found in automation. Automated trading platforms make Forex trading simpler than ever before providing more advantages than disadvantages.
Automated trading primarilyhelps to eliminate emotionally driven losses often seen in manually traded systems which are trying to operate in such a volatile and fast moving environment.Manual systems sometimes leave traders nervous about whether or not their trading strategies are solid,usually causes erratic trading habits to develop. Erratic trading is essentially overtrading which causes traders to abandon trading plans that can have catastrophic effects on their bottom-line.
For manyForex traders another problem is the management of risk and this is also reduced with the use of automated trading platforms. Those who have experienced trading using manual systems know how annoying it can be when losses are caused by nothing more than a time delay also known as price slippage. While not fully protection proof, automated systems can help improve trade execution but ultimately the speed of the broker’s trading platform plays a bigger role.
Automated Forex trading allows trades to take place anywhere in the world and also permits you to operate in a wide range of different currency markets simultaneously without any regard for the time zones of the markets. If you are in the US at one o'clock in the morning then automated trading allows you to conduct business with traders on the other side of the world in several different countries at the same time without delay.
Automated trading has also extended its reach to online trading platforms. Over the past few years, there has been a dramatic increase in online trading programs as computers, high speed internet and the availability of online trading programs make it easier for Forex traders to automate their trend analysis. Automated programs can look at past trends, then crunch that information into working, usable databases which can then be applied to current, real time market data to identify similarities to further investigate.The tips generated by algorithmically based forex programs work around the clock looking for profitable high probability trading opportunities in the market so that trades can be made accordingly.
Technology has advanced considerably in recent years and will continue to do so for many years to come. Most importantly, access to that technology has been made more accessible and affordable from our own homes, and even when we are away from home, allowing for more flexible in managing investments. For those operating in the Forex trading world automated trading is undoubtedly a welcome addition to an already great investment opportunity.
Currently analyzing the spread and price action between #EURUSD & #GBPUSD on a 15 minute NinjaTrader Chart using the Franklin Magnitude Gauge. While it appears that the correlation between these two Forex pairs remains fairly positive (0.951) for the analyzed time frame, the spread is visibly wide suggesting that a correction maybe on the horizon. The Dollar is trying to stage a comeback following the fiscal cliff saga but might run into pressure ahead of key economic release remaining for the rest of this trading week. This economic release includes #FOMC Meeting Minutes, Employment data and ISM Non-Manufacturing reading.
Technical Analysis:
The current price action is showing the #Dollar gaining at a faster pace against the #EURO and slowing down verse the #Pound. The Franklin Magnitude Gauge is supporting a buy EURUSD sell GBPUSD outlook, indicating that the spread could close as the EURO attempts to recover against the Dollar at a faster pace than the Pound. However the Dollar could surge verse the Pound and the GBPUSD currency pair sells off at a pace faster than the EURUSD still supporting the current trading indicator bias.
Looking at the current effects the U.S. Government's "fiscal cliff" discussions are having on the commodities market and related forex pairs, we can observe in the last week that there has a been a breakdown in the latest trend of negative correlation between CADJPY and the price of oil (CL). This has generally been followed by a historic pattern of a movement into high positive correlation. As we can see on the chart below, both instruments have been consecutively breaching new resistance levels, and should ideally continue to move upward together. As the nation's government continues its fiscal cliff budgetary discussions, the inherent worry of increased taxes on consumers may have a short term effect on oil demand, and reverse its current bullish move.
Bernanke stated today in his post-FOMC meeting that more easing may be needed to get past "fiscal cliff," as the Fed decided to keep U.S. rates unchanged today at 0.25%. Looking at EURUSD, we can see the Euro continuing to steadily break new resistance points and showing a series of higher-lows (as shown) against the dollar since the beginning of the week as market concerns are being priced in pushing the greenback lower. Currently the Euro is testing a resistance point of 1.3090, and if reached, we will be eyeing the next point of 1.3110.
For further in-depth analysis and news follow us on Twitter @FGCForex and @FGCFXresearch.
The Bank of Canada has decided to keep rates unchanged at 1% this morning. Currently watching the market, USDCAD has broken past initial support level of 0.9927, as it heads to next support level of 0.9918
The Reserve Bank of Australia has expectedly cut rates by 0.25% in easing efforts. Looking at the live chart right now, AUD/USD has surged 2%. We can probably expect a whipsaw back to today's levels as rate cut was accurately forecasted prior.
Beating economist's expectations, the German business index released its November score of 101.4 compared to the expected score of 99.5. The November score even bested October's score of 100, which further strengthens the hopes for gains in the European economy. On light of this news, the German DAX posted a strong gain of .9%. Black Friday retail numbers continue to come in strong, which provides further evidence that world economies could be in for a strong closing to the year. Stay tuned to the Franklin Global Capital Research team for further European analysis.
Currently eyeing #USDCAD (60 min chart) ahead of tomorrow's #CAD #CPI data, currently forecasted at 0.2%. Current major support level of 0.9963, if breached, next support level would be 0.9933. Currently, major resistance level of 1.0038. Be sure to follow @Fgcfxresearch for latest forex news.
The Euro is currently facing resistance at 1.2900 ahead of the EUR German GDP Economic report. Euro gaining strength as China shows further signs of Economic Expansion. China reported a HSBC Flash Manufacturing PMI Economic reading of 50.4 for November verse previous report of 49.5. The FGC Research Group is looking for developing Forex arbitrage opportunities within the EURO Cross pairs.
Positive news out of China regarding their private manufacturing index, helped to push European stocks to a fourth straight day of gains. FTSEurofirst 300 Index closed its Thursday session with a .6% increase on news that China posted a 13 month high in the manufacturing sector. Traders took this news as a sign that demand in the most populated country of the world could be increasing for raw materials such as metals, lumber, and other building materials.
The Bank of Japan maintained its rate at 0.10% as expected citing " will pursue aggressive monetary easing in a continuous manner by conducting its virtually zero interest rate policy as well as steadily increasing the amount outstanding of the Asset Purchase Program". The Japanese Yen is currently trading around 81.26 vs. the Dollar ahead the London Trading session. Follow the FGC Research Team on twitter @FGCFXResearch for further Forex market developments.
The Reserve Bank of Australia released its November minutes reaffirming its stance on a more accommodative monetary as it lowered its GDP forecast for 2013 citing changes in its mining investment profile. The members also noted that the Euro Zone continues to threaten the overall global economy in lieu of the better than expected positive economic data from the US and China.
The RBA members stated " that further easing may be appropriate in the period ahead" but also suggested that inflation was for the most part reasonably contained and it is unclear if recent interest rate reductions have materialized fully within the Australian economy. The Aussie was for the most part unchanged following this release and is currently trading at 1.0406. Follow the FGC Research Team on twitter @FGCFXResearch for further Forex market developments.
ThePound continues to struggle against the Dollar as we head into the final half of the US Trading session. It is currently trading around the 1.5900 area and finding further weakness as the EUROPOUND pair continues to stage a move higher ahead of Euro Finance Meeting. Continue following us @FGCForex for the latest Forex market related news.
The Australian Dollar is currently extending its advancement against the Yen from 82.00 on 11/9/2012 to its present level trading around 84.20. This is a level not seen since May of this year. The New Zealand performance services index for October increased to 57.4 from its previous economic reading of 49.9. Continue following us @FGCForex for the latest Forex market news on Aussie and Kiwi related currencies.
The Japanese Yen has declined to a level not seen in almost seven months while dropping versus most of its major counterparts. As of this morning, USDJPY rose to 81.59, yet there was little affect on EURJPY. The Japanese Yen has declined just over 3 percent since the beginning of this year against the Greenback.
The Greenback gained on the Yen today by 1 percent, as the US Core CPI data release was in actuality 0.2% versus the forecasted 0.1% setting a new resistance level at 81.38. Currently eyeing the next resistance level of 81.60.
The Aussie is trying to stabilize its decline vs. the US Dollar as the Buck has surged over 100 pips from the AUDUSD high of about 1.0450 yesterday. Continue following us @FGCForex for the latest Forex market news on Aussie related currencies.
After dropping to its lowest level since June yesterday, the Dow Jones Industrial Average could not gain any traction as it dropped another .2%. Wal-Mart was the main culprit with earnings 3.6% below analyst estimates. S&P 500 also posted a .2% loss behind phone and utility stock losses, while the NASDAQ dropped .35%. These losses can also be attributed to, yet again, the political showdown concerning the fiscal cliff the US is currently tracking toward. Democrat and Republican congressional leaders will meet with President Obama tomorrow in hopes of reaching a compromise on tax increases and spending cuts.
The FTSEurofirst 300 index closed at its lowest level since early September, with a drop of .9%. Swiss and German stocks took the worst hits as investors shied away from major trading on the fear of the continuing euro zone recession crisis. Banking stocks did help limit the losses, but could not prevent the markets from tumbling. Furthermore, an impending bailout request from Spain could ease any further losses. Stay tuned to Franklin Global Capital for further market evaluation.
The Australian and New Zealand Dollar both trading lower. AUD Consumer inflation expectation for November was 2.2%, lower than 2.6% previous reading. The NZD Business Performance of Manufacturing Index for October was 50.5 slightly higher than previous reading of 48.5. Continue following us @FGCForex for the latest Forex market news on Aussie and Kiwi related currencies.
Japan's Yen fell against the Greenback 1% today on bearish news coming from Japan's manufacturing sector showing placed orders fell 4.3% versus an estimated drop of 1.9%. This was assisted by news that an increase in the amount of credit US lenders have been willing to issue shows an overall confidence in consumers ability to repay that debt.
After posting two days of gains, the FTSEurofirst dropped .4% on news of strikes in Spain and Portugal and unstable debt crisis in Greece. Investors focused on these continuing uncertainties despite a postive quarterly corporate earnings report that was released by Thomson Reuters. Thus far, European companies have beaten earnings estimates by an average of 2.1%.
The Australian Dollar surges vs. the Kiwi following an unexpected decline in the New Zealand retail sales down -0.4% after the market was forecasting an increase of 0.4%. Continue following us @FGCForex for the latest Forex market news on Aussie and Kiwi related currencies.
The Aussie is trading higher and AUD Westpac Consumer Confidence came in at 5.2%, higher than the previous reading of 1.0%. The U.S. fiscal cliff and the Euro-zone debt crisis could affect the Markets appetite for risk as they continue to lurk.
With the impending Fiscal Cliff still worrying investors, all three US Markets post losses while heading to a 3 and a half month low. The Dow Jones Industrial Average dropped .46%, while the S&P 500 dropped .4%. The major market loser was the NASDAQ, which posted a .7% loss. The markets continue to take a beating as investors still show concern whether or not the US government can reach a compromise prior to the automatic spending and tax increases due at the end of the year.
European trading ended on a positive note for the second consecutive day with a gain of .2%. Speculation of a potential rescue bailout for Spain and Greece helped to stimulate traders with this welcome rebound.
GBPUSD Testing Support Level (1.5860) ahead of the London Trading Session and GBP CPI Economic Data. Resistance is seen at 1.5925.
EURUSD is currently failing the 1.2700 Support Level and eyeing 1.2600 ahead of the London Trading Session and EUR German ZEW Survey for November.
China's international trade data today provided a boost to the Australian and New Zealand dollar as the amount of their national exports exceeded their number of exports to two of their largest trading partners in excess of $32 billion for the month of October. This was higher than the expected $27.3 billion surplus.
China export growth pushed to a 5 month high of just over 11%, which led many worldwide investors to believe that China's slowing economy could be rebounding. Scattered trading in Europe was boosted by this news, causing the market to pull out a slight gain of .1% after being down 1.6% the previous week.
The Aussie stops a three day slide in the Forex market after data shows AUD approved home loans increased for a second month. The market was looking for 1.0% and the reported number was basically inline with a reading of 0.9%.
After a week filled with mixed US economic news, the University of Michigan/Thomson Reuters consumer sentiment index was released this morning with a favorable rating of 84.9 in November. This reading is up from October's 82.6. Furthermore, this reading is the nation's highest since July 2007. In all likelihood, consumer spending should be pushing in an upward trend as the nation heads into its holiday season.
Looking at a 60-minute chart, Aussie currently in a strong downward trend channel as it finds lower lows. Major support level of 1.0333 last touched on 11/3.
The Australian Dollar has strengthened versus most of its 16 major counterparts since Nov. 2 on signs of an improving Chinese economy. The Aussie is poised to have a weekly advance of just over a 0.5%. Australian bonds advanced pushing the yield on 10 year debt to 3.09 percent after earlier touching 3.086 percent, the lowest since Oct. 16.
The New Zealand dollar falls vs the USD and YEN as the nations unemployment rate reaches the highest since 1999. The Kiwi reached a two month low against the Aussie after reports showed that Australia added more jobs than forecast. The New Zealand dollar had fell as much as 0.5% vs the greenback, the weakest since Oct. 24. The Kiwi has fallen 1.2% in the past three months.
For the second straight day, all Wall Street markets dropped based still off the Fiscal Cliff uncertainty. The Dow Jones Industrial Average dropped just under 1% with a loss of 0.94%. S&P reported a loss of 1.22%, while the NASDAQ posted a drop of 1.42%. An interesting bit of information is that S&P has dropped 6% since reaching a 52 week high on September 14th.
During late trading in the Europe markets, early gains turned mostly flat results at closing. Italian shares took the biggest hit of all the markets, as concerns over the continued euro zone debt sitution has kept most if not all investors on feeling uneasy.
Aussie dropping from two month high as it hit resistance of 1.0470. Currently trying to break psychological support level of 1.0400. Making a break past this point will open up next support level of 1.0330. Currently looking at a 240-minute chart.
GBPUSD Testing Support Level (1.5975) again ahead of the London Trading Session and Bank of England Rate Decision.
EURUSD Testing a Key Support Level (1.2750) again ahead of the London Trading Session and European Central Bank Rate decision.
Australian employers added more jobs than economists had forecast in October. The unemployment rate holds as the nation weathers an economic slowdown while the jobless rate was unchanged at 5.4%. The Aussie gained to $1.0421 at 11:47 a.m. in Sydney compared to $1.0393 before employment data was released. The Aussie has gained 1.5 percent since October.
New Zealand unemployment rate rises last quarter to a 13 year high. Evidence that the recovery may be faltering and in turn sends the best performing currency plunging out of the Group of 10. Jobless rate jumped to 7.3 % from 6.8% in the second quarter. The jobless rate is the highest since the first quarter of 1999. New Zealand dollar has dropped to near a two week low as investors bet the Reserve Bank of New Zealand will lower interest rates next month. The New Zealand dollar has gained just over 5% vs the U.S. counterpart.
After an intense day of trading, the US Markets could not post a recovery. Dow Jones Industrial Average and S&P 500 both drop 2.4%, while the NASDAQ drops 2.5%. Mixed election results of the likelihood of whether or not the Republican-led House and the Democrat-led Senate can work together, led investors to worry if a deal can be made regarding the potential $600 billion budget cuts and tax increases. This Fiscal Cliff debate could derail a continued economic recovery, both for the US and worldwide.
European investors, despite their relief of President Obama's re-election, are showing fears of the much mentioned US Fiscal Cliff. With reports of as much as $600 billion in spending cuts and tax hikes, enough concern is being shown in initial, post-election trading to show that Europe is still concerned about slow growth in the euro zone economy.
Aussie surges as the Reserve Bank of Australia has decided to keep rates unchanged in contrast to the expected 0.25% cut. Daily price range today was uncharacteristically tight for the pair as the difference in the low and high was 0.0040 as market participants were awaiting the RBA's news.
#GBPUSD Facing Initial Resistance at 1.6020 Level and Support at 1.5975 Level
#EURUSD Facing Resistance at 1.2800 Level and Support at 1.2750 Level
Aussie rebounding from last Friday's drop off but finding Resistance near the 1.0370 level. The Franklin Volatility Index currently shows downward pressure on the Aussie headed back near initial support levels to start this session. Take note of the already triggered statistical signals given by the FVX, resulting in one profitable trade already tonight and currently in a Sell bias
Ahead of tomorrow's Non-Farm Payroll numbers, Aussie is currently near its two week high and current resistance level of 1.0410. Franklin Volatility Index indicating an upward momentum swing. If Aussie breaks 1.0410, will be looking at 1.0430 as next point.
EURO facing resistance at 1.3010 level after breaking through downward trend on 10/30/2012. We are eyeing a possible support area around 1.2920 in line with the former likely downward trend reversal point. If 1.2920 holds then expect another run to 1.3010, otherwise 1.2890 support line is exposed again.
In a follow up to last night's post, we observed that #USDJPY was developing upward trend momentum, previously stated that would push near resistance level of 80.00, currently at 79.86.
You can find yesterday's blog post here http://franklinglobalcapital.com/blog/entry/boj-after-effects.html
Trading foreign currency, also known as Forex, is the most lucrative investment market that exists. Making an investment in the Forex market is something thousands of individuals do every day. To begin trading in the Forex market, an investor only needs a computer, a high-speed internet connection and an online trading currency account.
The foreign exchange market (Forex) offers many advantages to investors but you need to know where to begin. Forex is not simple, though, so you'll need some knowledge to make wise investment decisions and although it is relatively easy to start trading on the Forex, there are risks involved. The benefit of today's modern age is information available at your finger tips in the form of ebooks, blogs, trading systems and online brokers. Your first move as a beginner should be to find out as much as possible about the market before risking any money.
When you are ready to proceed, you should first look for a reputable broker. Forex traders usually require a broker to handle transactions. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.
Next, open a Forex account. You will need to fill out a simple form and providing the necessary identification. The form includes a margin agreement which states that the broker may interfere with any trade deemed to be too risky. This is to protect the interests of the broker, since most trades are done using the broker's money.
Once your account has been established, you can fund it and begin trading. Many brokers offer a variety of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in Forex trading if your access to large amounts of capital is limited.. Trades are technically commission-free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. However, its important to keep in mind that Forex involves paying a spread which could make the cost of high volume trading pricey. Brokers make their money on the spread or the difference between bid and ask prices.
Almost every broker operates on the Internet. Once your account is set up, you can access it from any computer just by entering your account name and password. Each broker has its own set of software tools. Real-time quotes, news feeds, technical analyses and charts, and profit-and-loss analyses are some of the features you can expect to see on most online brokers' websites.
Forex investing is one of the most potentially rewarding types of investments available. Even small changes in the market can result in substantial profits because of the large amount of money involved in each transaction, commonly referred to as leverage. Individual investors should understand that leverage acts as a double edge sword meaning it can work both for and against you. There are a number of software tools available to help investors minimize losses that occur in any type of investment rather its Forex or Stocks. While there is no guarantee that you will actually make money trading Forex, its extremely important to learn about these tools as they can act as a vital component to your trading account and overall success.
Forex is the largest market in the world in terms of the total cash value traded. Any person, company or country may participate in the market. Forex investors may engage in currency futures as well as trade in the spot forex market. The difference between these two investment options is minor as explained below.
The introduction of Forex futures occurred at the Chicago Mercantile Exchange in 1972. Forex futures also referred to as currency futures serve two primary purposes as financial instruments. First, they can be used by companies or individuals to remove the exchange rate risk inherent in international transactions. Second, they can be used by investors to speculate and profit from currency exchange rate fluctuations.
With currency futures, the price is determined when the contract is signed and the currency pair is exchanged on the delivery date, which is usually sometime in the distant future (typically no more than 3 months). However, most participants in the futures markets are speculators who opt to close out their positions before the settlement date.
In the spot FX, the price is determined at the point of trade, and the physical exchange of the currency pair takes place right at the point of trade or within a short period of time thereafter (the standard settlement timeframe for foreign exchange spot trades is 2 days from the date of trade execution). Forex trading is not conducted on a regulated exchange. It is referred to as an over-the-counter (OTC) transaction. For example, whenever someone goes to a bank to exchange currencies, that person is participating in over-the-counter (OTC) trade.
Whether you decide to jump right in to spot FX or want to speculate a little, the Forex market offers countless opportunities with unlimited risk.
Is automated trading too much of a risk or are their benefits? In this article we seek to find the answers so many traders have questions about. Forex trading is one of the great ways to earn money, and for many people it has become the mean of living; however, it is not as easy as it is seems. Every trader wants to be successful, for this it is necessary to learn about the market and to know the proper way to analyze the movement of the currency in relation of one another.
Automated Forex systems are great tools for Forex traders. Automated Forex systems are also known as Forex robots and can assist in making swift trades that are both easy and meaningful thereby increasing profitability with less effort. An automated system provides insight into trading strategies, are a good tool for research and mitigate the risk of a participating trader by building a more well-rounded view of all the aspects of a particular market.
An automated Forex trading system utilizes software to calculate falls and rises in the rates of the currency which in turn makes decisions based on profit margin. Although similar to stock market trading systems, Forex trading is based on world currencies and works continuously in a 24/7 marketplace. Automated trading software is a specially designed tool that will automatically make transactions on your own account. It is generally carried out with various program versions, tools and special software’s that smoothly analyze and track movement in the foreign exchange market.
Some of the Advantages of an Automated Trading System Include:
1. Forex is a 24 hour market and automation depends on technology not human intervention, thereby allowing trading activity can continue even when you sleep.
2. Almost every parameter can be configured depending on the robot (from starting investment to stop loss and more).
3. There is usually a trail period anywhere from 30-60 days depending on the system.
4. Automated trading systems are based on analytical data verses a human emotion or gut instinct therefore eliminating the psychological factors that sometime inhibit smart trades.
Some of the Disadvantages of an Automated Trading System Include:
1. They can be expensive not only in hard cost but if you don’t select a system that incorporates important indicators or the flexibility that is needed in a very volatile market, your trade losses could be significant.
2. As mentioned above as a benefit, removing the “human factor” from trading can also be a disadvantage. Fundamental analysis or indicators based on world events is not captured in analytical data and can play a huge part in influencing the market.
There are several automated systems available on the market so if you are new to Forex trading or simply want a way to supplement your existing efforts, your best bet is to be cautious and evaluate different systems until you find one that fits your particular needs.
Trading has always been a popular method for those interested in making additional income and there are many ways to invest and many ways to make profits by investing. One method that has gained popularity in recent years is Forex trading which has more than doubled since 2001. Forex stands for the foreign exchange market and is defined as the simultaneous exchange of one countries currency for another countries currency.
Forex trading involves trading currencies from all over the world. For example: the US dollar, the Japanese Yen and the Euro. The way the exchange rates change is based on economic indicators such as the export rate is up in Asia so the yen is worth more than the US dollar where the export rate is down. Economic growth changes daily, so the value of these currencies changes daily. Learning to watch for these changes is referred to as “fundamental analysis” and as part of your Forex trading strategy will be one of the keys to your success in the Forex market.
Foreign exchange traders and investors use a number of instruments to take advantage of rising and falling exchange rates. Online trading systems use “technical analysis” such as charting tools that help traders identify long-term projections or trends. Forex technical analysis primarily consists of a variety of Forex technical studies, each of which can be interpreted to help predict market direction or to generate buy and sell signals.
If you’re new to Forex trading, most online providers offer a free demo account. This way you can practice without investing or losing any real money. Then when you get a feel for the Forex system, some even offer a free 30-day trial or free trades to new traders. It is best to utilize some of this free training and the free demo accounts before you start investing your own money.
Trading successfully is no easy task; it is a process and can take years to master. There are a few things though every trader should take in consideration that can accelerate the process: education, effective money management and having a trading system. The best traders know that every trade is a learning experience.
How much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, for others, a few years are enough to get consistent profitable results. The answer to this question may vary, but whatever the case, trading successfully is a process and top traders have a Forex trading system and the discipline to follow their trading plan.
If you are new to the forex market, it is important to realize there is no one person or one bank that controls all the trades that occur in the forex markets. Unlike the stock exchanges around the world, forex is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading. Anyone can get involved in the forex market, but it does take time to learn what it is all about and how to be successful. Professional traders will tell you that trading psychology, discipline and money management are the most important traits you’ll need to succeed in Forex trading.
Although it is relatively easy to start trading in the Forex market, it is not simple. Educating yourself is essential to make wise and profitable investment decisions. Learning as much as possible about the market is a good move for any beginner or you may consider enlisting the help of a qualified Forex broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) or Forex Dealer Member (FDM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.
If you elect to utilize an online broker, most have demo accounts that allow you to make free paper trades for up to 30 days. Every new Forex investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits. Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all Forex brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers’ web sites.
Once your account is set up, you can access it from any computer, just enter your account name and password. If for some reason you are not able to access a computer, find out if your brokerage firm offers mobile access. Many providers are adding this new feature allowing traders to access their accounts via mobile phone. Just one more convenience in today’s high tech world that provides additional options for Forex traders in the very volatile world of Forex trading.
Forex investing is one of the most potentially rewarding types of investments available and although the Forex market is not something new, it continues to grow exponentially with use of computers, the internet and now mobile phones.
In the Forex market, it’s important to understand both the benefits, and risks, of trading with leverage. Leverage is expressed as a ratio and is based on the margin requirements imposed by your broker. For example, if your broker requires you to maintain a minimum 2% margin in your account, this means that you must have at least 2% of the total value of an intended trade available as cash in your account, before you can proceed with the order. This is where margin-based trading can be a powerful tool. With as little as $1,000 of margin available in your account, you can trade up to $50,000 at 50:1 leverage.
Forex margin trading allows you to minimize your financial risk, but the flip side of the coin is that if the value of your trade dropped by the $1000 you put forward it would be automatically closed out by the broker. This is called a ‘margin call’. When trading on leverage, you are in effect “borrowing” money from your forex broker. The funds in your account (the minimum margin) actually serve as your collateral. Therefore, it is only logical that your broker will not allow your account balance to fall below the minimum margin.
Individual brokers may handle margin calls differently. For example, you could receive a request to add more funds to your account, or your broker may simply close your open positions at the current Forex market price to limit further losses. In either case, you could end up losing the entire balance of your account and may even owe additional funds to cover your losses.
Forex trading utilizing margin is risky business, but by getting the balance right between your level of risk and how heavily leveraged your account is you can gain an advantage. This advantage could be the difference between success and failure. Knowledge is key… learn from techniques and tips of other experience traders. Be mindful of economic news that affects the trade and be sure to take well calculated and well planned steps in pursuing your success in the Forex market.
What are Forex trading signals? Forex trading signals are the output of trend analysis. A set of data points that a Forex trader uses to determine whether to buy or sell a currency pair at any given time. Forex signals can be based on technical analysis charting tools or news-based events. The day trader’s currency trading system is usually made up of a multitude of signals that work together to create a buy or sell decision. Forex trading signals are available for free, for a fee or are developed by the traders themselves.
There are a lot of things that influence the Forex market. For instance, economic things, like interest rates and inflation, and also political things, such as political unrest in other countries and major changes in government cause up and down changes in the Forex market. The number of factors that can affect the Forex market is infinite, therefore, it is critical to know and understand what causes the Forex market to fluctuate from day to day. One of the benefits of using a signal service is that it analyzes and crunches the data for you, saving you time. It should be noted, however that using a signal service is no substitute for a proper education in the Forex markets.
There are two basic types of Forex analysis used to produce trends or indicator based strategies; fundamental and technical analysis. Forex analysis that is technical in nature uses methods such as charting tools whereas fundamental analysis uses economic indicators and/or news-based events. Most experts suggest trying a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points. But in the end, it is the individual trader who needs to decide what works best.
Utilizing a broker may help you sort through some of the options available to you. A Forex broker can provide you with access to many different trading platforms. In addition to technical analysis most brokers also provide fundamental commentaries, economic calendars and other research.
The Forex market is the largest market in the world, and individuals are becoming increasingly interested in it. Before you begin trading it, take the time to find a trading strategy that works for you.
If you are interested in participating in the Forex market and joining the many individuals actively trading currency, you’ll first need to decide what type of Forex account is best for you. A managed Forex account is a great place to learn all the basics and benefit from the foreign currency exchange before owning your own personal self-directed Forex trading account. This allows the average trader without much experience to benefit from the aid of professional money managers known as Commodity Trading Advisors (CTA).
A managed Forex account works in much the same way as a traditional mutual fund; an outside trader (CTA) is managing the accounts transactions on behalf of the account owners. The Forex trader (CTA) watches the market and attempts to create profitable trading opportunities for the individuals.
The Forex market include countries from around the world therefore, it is important to understand the regulations and laws regarding Forex trading and what companies are permitted to work with the public dealing with managed Forex accounts. This is another benefit of a managed Forex account verses going it alone as a CTA is responsible for understanding the Forex industry regulations and staying in compliance with them.
Even though using a managed Forex account can be beneficial, it can also be very risky. It is your responsibility to research and select the best investment organization or other experienced individual CTA to manage your account. Past history, rate of average loss and general reputation of the amount of profit yielded are all factors that should be taken into consideration when doing your research.
As with most things, there is a cost associated with a managed account. The cost or payment structure for a managed Forex account will vary based upon the CTA. Most managed Forex accounts are set up to keep a portion of the profits that are made from trading. This type of an arrangement usually works best for new investors. With this payment arrangement, the CTA does not make any money unless he is successful in the market. The percentage of the profit kept can be large. In some cases, the CTA will keep upwards of 30 percent of the profit.
Managed Forex accounts are for those who don’t have the time to devote to the markets rapid pace. It’s also for those who don’t have the expertise to deal in the foreign exchange market. Professional CTAs and investment firms are there to help manage your account. Leverage their experience and potentially lower your overall portfolio risk and enhance your overall portfolio returns.
When trading, it’s important to understand not only the time frame you are trading but other time frames as well. As a general rule of thumb, it’s important to review time frames in increment of threes based on the time frame you are trading. For example if you are trading on a five minute chart, its best to review a fifteen and forty-five minute chart. This can help support your five minute trading decisions by keeping you on the right side of the price action based on your analysis. Basically you typically wouldn’t want to enter into a long position on the five minute chart if the fifteen and forty-five minute charts are suggesting the market is likely to move in a short direction. Again these are just suggestions and traders are encouraged to trade their own taste.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.