Use the COT Report to Trade the Forex Market With These COT Report Forex Strategies

While the COT Report is not an exact timing indicator, it can aid in forex trading and provide a context for the current, and future, market environment. There are potentially many ways to use the COT Report for analyzing a forex pair; here are three COT Report forex strategies.

Speculators are Trend Followers

Speculators drive trends. Contrary to popular the convention "Don't follow the crowd," we actually want to follow the crowd...at least for a time. If others are buying, we want to be buying too. This is how trends occur, and how traders make money. The trick is to get out before everyone starts heading for the exit.

Therefore, use the interest of speculators as a confirmation tool for trends. If the Euro is moving higher and speculators are increasing their long position this means big traders are pushing the market in your favor if you are long the EURUSD. Trade with the big boys, and follow the trend. Don't get too greedy though, because if all the speculators are long, then there is no one left to keep pushing the trend. This brings us to the next way to use the COT data.

Extreme Levels Can Indicate a Reversal

When speculators are accumulating a position it can be a confirmation that there is interest in the trend - if shorts are being accumulated as the price drops or if long positions are being accumulated as the price rises this can be a good sign the trend will continue. But speculators have a limit--they can't purchase or sell indefinitely. They may run out of money, or simply wish to take profit (or losses). When speculators are tapped out, want out or don't want to invest anymore there is nowhere left for the price to go, but to reverse.

Therefore, the COT data can be used as a type of "overbought/oversold" indicator. Not in terms of price and arbitrary levels like most overbought and oversold indicators, but in terms of the health of traders within the market. Each futures market will be a bit different but critical levels will often repeat and indicate when speculators are overextended.

This method is not recommended for a top or bottom picking strategy; it can be used to provide a context for other analysis and be used to confirm reversals in price though. Extreme levels can look easy to isolate in hindsight, but are not ideal timing indicators. That said, it is very useful for alerting traders when a reversal could be nearby. The COT data should not be acted on alone though; wait for price to confirm a potential reversal signal in the COT data.

Watch For Speculators to Flip Their Position

With the third approach we are looking to capture "the meat" of the trend. If speculators are net short and that short position continually decreases until eventually it crosses above zero, a new trend is quite possibly underway.

The movement from net short to net long or vice versa signals a change in sentiment and that a new trend is emerging or has already begun. Using the logic of our first method of following the speculator trend (when it aligns with price) this shift represents a potential trading opportunity. Exiting positions can be done when the price breaks the trends, when speculation reaches extreme levels or when speculative demand begins to wane. Again, the COT data should always be combined with price analysis, and not acted on in isolation.

COT Report Forex Strategies- Conclusion

The COT report is useful in at least three ways for forex trading. None are precise entry and exit signals but rather provide a context for other analysis and can be used as a confirmation tool for reversals or trends. The first uses COT data as a confirmation tool for forex trends. The second method alerts us when speculators are over-extended, which could in turn lead to a reversal. The third method can be used to see shifts in sentiment and potentially catch a chunk of the trend (but remember to watch for over-extension). When using any indicator, wait for price to confirm the indicator signal.

If you would like to know more, are interested in learning to trade or need help with your trading methods, visit me at http://vantagepointtrading.com/.

Get free access to my trading article archives, trading eBooks, trading courses and my daily market blog. You can also access the Member's Area which provides up to date forex analysis and trade ideas, exclusive educational content and the ability to interact with myself and other traders.

View the original article here

How to Trade in the Best Market on Earth to Scrape Millions?

The foreign exchange or "Forex" (also called the spot market) is the leading market on the planet with an average of $3 trillion traded every single day. That's about 100 times of the $25 billion of the NYSE and more than every single asset class pooled (i.e. more than the bond, stock, equity markets together!).

The Forex billionaire players

George Soros gained international notoriety when, in September of 1992, he toke a chance of losing $10 billion on a single currency speculation when he shorted the British pound. He turned out to be accurate, and in a single day the trade produced a profit of $1 billion - at last, it was articled that his profit on the transaction nearly Stretched to $2 billion. As a result, he is well-known as the "the man who broke the Bank of England.

Warren Buffett is active in Forex market trading and has been for numerous years, in the 3rd quarter Of 2004, Buffett posted profits of $412 million from Forex.

Bill Gates may have been following his friend Warren Buffett's recommendations on how to trade his Forex investments..Bill Gates was 2006's.world's richest man.
How to trade in the Forex market

The basic notion to understand in knowing how to trade Forex is that there are always two currencies in every pair, a BASE and a TERMS. The BASE is forever the first currency in the pair and is always equal to 1. The succeeding currency in the pair is the TERMS and this declares to you how much currency you could get for 1 unit of the BASE currency. For instance, if EUR/USD is trading at 1.4840, it means 1 Euro is worth 1.4840 US Dollars. When the exchange rate climbs, the 'terms currency' is weakening against the base, and the base is obviously increasing against the terms. Currency trading is the simultaneous buying of one currency and selling of the other.

In Forex you can literally create millions for yourself, if you use right practiced trading strategies. This marketplace has both the leverage and the accuracy to transform your trading career. Forex markets are absolutely liquid because there is a participation of banks and corporations, hence the enormous size of the market. For thisSense alone, Forex is the self-selected marketplace of choice of the Millionaire trader, due to its speed, efficiency, precision and clarity of signal.

Here are the 3 key motivations why you should do it too:

1. You only Require a laptop, internet connection, some reasonably inexpensive software and professional training to get going.
2. You can trade from almost anywhere in the world at any time that suits you.
3. You can regulate the risk on any trade of your account balance and leverage the upside for fantastic profit potential.
4. You can simply start trading with a small amount of $150.
5. And ultimately to stress the importance that you need to be trained how to trade first before you get down to it.

View the original article here

Trade the Forex With the Correct Time Frame

Prior to electronic trading, before there was free real-time online access to charting, selecting a time frame to trade with was a non-issue. Standard operating procedure was to simply look at a daily chart and end of day activity. Today this is no longer the case. With easy access to real-time charting, selecting the correct time frame is an important element to a trader's success.

Old school market theory was to always use a large time frame. This mindset was common because the stand alone trader could not access real time charting. In fact, when electronic trading started to gain attention in the late 90's, it was common for traders to spend in excess of $500 a month just to subscribe to a stand-alone charting application. There were no alternatives like there is today.

In those days a common scenario was to simply take standard investing practices and scale those concepts down to trading. We now know the concepts that make a solid trader are not the same concepts that we would apply to investing.

Another common misconception was that you could trade any process in any market on any time frame. The biggest flaw with this idea is that not all markets or trading entities move in the same fashion. Attempting to apply a trading process developed for highly volatile entity like the forex to a low volatile entity or vice versa is just not going to work. Unfortunately we still see today this "one size fits all" trading mentality heavily marketed on the internet. This one misconception is the single biggest contributor to the high failure rate of most traders.

After all it is an easy sell: Buy XYZ trading program and trade it long term or short term on virtually any market. Once the trader gets a modicum of experience he quickly realizes that this thought process literally defies common sense.

The trader in the know understands that we now have the ability to not only select a process that has been developed to trade specific markets, but an integral part of what makes a successful trading process is making sure it is used on the correct time frame.

The key to selecting a time frame is to start small. After all today's online trader has the luxury of looking at price action in small increments as opposed to pre-online trading days. Keep in mind the single biggest difference between a trader's mindset and investor's mindset is that the trader understands his goal is to spend the absolute least amount of time possible in the market while yielding the absolute most amount of profit.

The investor needs time on his side to overcome the day-to-day market fluctuations and hopes that over time he ends up with more money than he started. Remember, the trader is taking advantage of those daily market fluctuations. The trader asks, why stay in a position overnight and be exposed to those fluctuations without the ability to manage the process. It simply is just too much risk.

With today's global economy and easy online access to the markets, folks are quickly realizing that it is just way too risky to be in the markets overnight or for extended periods of time. The numbers are growing exponentially of those who favor the mindset of get in, get a profit and get out, a short term trading mentality. This is a good thing for traders. This new market sentiment is creating ever more short term trading opportunities.

If you want to maximize your potential for profit in the shortest period of time, you need to select a market that is huge and has lots of volatility. Think of volatility as extreme price fluctuations that occur frequently. That condition makes investors lose sleep, but it's the absolute best conditions for a trader.

In order to be a solid trader you have to think like a trader, not an investor.

Hands down, the world's largest and most volatile market is the forex, the absolute perfect market to trade online.

If you select a time frame that is too small, say for instance a 1 minute chart, there is just too much back and forth activity to discern a solid trading setup. This is a form of what traders call whipsaw. So you need to select a time frame that smooths out some of this whipsaw or back and forth movement. However we do not want to pick a time frame that is too large because then we will miss trading opportunities. The sweet spot to be able to realize maximum potential profits in the shortest period of time is the 10 minute chart.

In the forex we can often take advantage of a 100 pip move in one 10 minute increment. Then a common occurrence is that price goes flat for 30-60 minutes and then changes direction, which means another potential trading opportunity.

Another key benefit of trading on a 10 minute chart is it allows the trader to use a very small or tight stop to minimize risk. In fact, another difference between a trader and an investor is that a trader uses stops to protect his capital and minimize his risk. An investor just hopes price will come back in his favor over time should price go against them.

A key element to realize at this point is that if we were to use a larger time frame our stop would also have to be increased. In forex the price action changes so quickly that increasing the stop size exposes the solo trader to too much risk.

The bottom line is using a 10 minute time increment creates a winning formula of maximum profit in the shortest time period while also reducing risk to its tightest possible tolerance.

If you're thinking like a trader you quickly realize that even a 10 or 20 pip move with a very tight stop is the smartest and safest way to go. If you want to increase your profits you simply trade multiple lots.

This way you never violate the cardinal rule of trading: Realize your profit objective in the shortest possible time with the least amount of risk. Another way to look at it is, get in, get positive and get out.

Because the forex is the world's most volatile market, price is constantly changing direction unlike slower, less volatile markets. That is why the trader must select a trading process that work consistently in that type of condition. The first element in that process is selecting the correct time frame.

To learn more visit www.theforextradinginstitute.com

Steve is a seasoned professional trader and trainer with over twenty-five years of experience in the equities, futures and FOREX markets.

View the original article here

Terminology You Must Know To Trade Or Invest In Forex

So you've seen some advertisements on TV or online and maybe you've read a little bit in investment books about Forex and it seems like something you might be interested in but you also keep coming across all these strange new vocabulary words and aren't quite sure what they mean. Fortunately, Forex terminology is simple and makes sense and once you learn it, you'll not only be able to understand more of the articles you read, but you'll also be able to use it in conversation yourself and feel like a pro. So let's get started on some of the Forex terms that you are most likely to encounter:

Ask - The Ask refers to the price at which you can buy a currency pair.

Bid - The bid refers to the price at which you can sell a currency pair.

Spread - The spread refers to the difference between the bid and the ask price. You will often see a currency price listed so that it looks like this:

EUR/USD: 1.3428/30

or sometimes like this:

EUR/USD 1.3428 / 1.3430

What this means is the bid is 1.3428 and the ask is 1.3430.

It is important to note that the bid will always be lower than the ask. If this wasn't true, then you could buy anything and immediately sell it for more money. Plus, the spread (remember, spread means difference between the bid and ask, which in the previous example was 0.0002) is how the market makers or brokers make their money.

It is said that you must "pay the spread" to trade currencies (or anything else, since in every market the bid is always lower than the ask). It is considered part of the cost of investing.

Pip - Pip is one of the most common terms you will hear. A pip refers to the smallest amount of movement a currency pair can make. So for example, if the EUR/USD goes from 1.3428 to 1.3429, that one pip. You could say "the EUR/USD moved one pip." If it goes from 1.3428 down to 1.3400, you could say "the EUR/USD went down 28 pips."

Leverage - Leverage refers to using borrowed money. Assume you have $10,000 to invest. If you buy $10,000 of something and it doubles, you now have $20,000.

But sometimes your broker will loan you money (which you must pay interest on). If you have $10,000 and your broker loans you another $10,000, you can now buy $20,000 worth of something. If it doubles your account is now worth $40,000. Remember that you must pay back the borrowed money ($10,000) so you get to keep $30,000 of the $40,000 after you pay back the $10,000 loan.

From this example it is clear how using leverage can help you make more money from the same movement. However, it is considered dangerous to use too much leverage (since you can lose money faster if price moves against you), and using leverage should always be avoided by beginners until you are sure what you are doing and why.

These are some of the most common Forex terms and understanding them will help you make sense of what you read when you are reading websites and books to learn about Forex.

To learn more, please visit this forex broker!

View the original article here

How to Trade Forex: A Quick Guide to Learning to Trade Successfully

When learning to trade Forex, you might become confused as to exactly what you should look for in a trading strategy or trading system, because there are many options available on the internet today. So, what are some of the core components of a worthwhile and effective Forex trading strategy or trading system?

• Simplicity - The strategy or system that you ultimately decide to use to trade the markets should be one that is not overly complicated. The Forex industry is full of hyped up trading systems and strategies that are big on claims and promises but deliver little in the way of results. Instead, what you usually end up getting is a confusing heap of indicators that looks more like a piece of abstract art than a trading system. Stick to simple price-action based trading methods that don't require you to use a lot of indicators.

• Effectiveness - Obviously, you want your trading strategy to be effective. But how do you know if a particular trading strategy is truly effective or not as you learn to trade Forex? Well, the answer is that you don't really know for sure, because any strategy can fail in the hands of an undisciplined trader. But, generally trading strategies that are built on simple concepts of reading and trading the raw price dynamics in the markets are the most effective.

• Fits your schedule - Let's face it, if you are working 50 hours a week you probably are not going to be able to day-trade the markets. So, make sure the trading strategy you pick fits your schedule. It's best to focus on the daily charts when first learning to trade because they provide the most practical and pertinent view of the market.

• Flexible - If your trading strategy or system is not flexible enough to allow you to trade in any market condition, you might as well find a new one. Markets are not always trending. So, you need to find forex strategies that allow you to trade both trending and consolidating markets.

Finally, there is no "magic-bullet" when learning to trade Forex. Trading successfully over a long-period of time takes consistency and discipline. Anyone can get lucky and make some money for a month or two, but if you want to profit every month, year after year, you will have to shift your mindset from thinking about the now to thinking about the bigger picture. The bigger picture means getting quality forex trading training from a genuine and effective source, and applying this training with strict discipline in the markets.

There is no "sure" way to make money in the markets, but if you follow a no-nonsense trading strategy with discipline and patience, you will give yourself the best chance to succeed over the long-term. Don't get trapped in the snares of websites that make big claims about their trading systems or strategies. Instead, look for real forex training that teaches you how to read the raw price action of a market.

Nial Fuller is a Respected Trader and Forex Coach. He Runs Forex Training and Education Website, Visit his site here Currency Trading Training

View the original article here

Trade The News - Profiting From Trading With Low Latency News Feeds

Experienced traders recognize the effects of global changes on Foreign Exchange (Forex/FX) markets, stock markets and futures markets. Factors such as interest rate decisions, inflation, retail sales, unemployment, industrial productions, consumer confidence surveys, business sentiment surveys, trade balance and manufacturing surveys affect currency movement. While traders could monitor this information manually using traditional news sources, profiting from automated or algorithmic trading utilizing low latency news feeds is an often more predictable and effective trading method that can increase profitability while reducing risk.

The faster a trader can receive economic news, analyze the data, make decisions, apply risk management models and execute trades, the more profitable they can become. Automated traders are generally more successful than manual traders because the automation will use a tested rules-based trading strategy that employs money management and risk management techniques. The strategy will process trends, analyze data and execute trades faster than a human with no emotion. In order to take advantage of the low latency news feeds it is essential to have the right low latency news feed provider, have a proper trading strategy and the correct network infrastructure to ensure the fastest possible latency to the news source in order to beat the competition on order entries and fills or execution.

How Do Low Latency News Feeds Work?

Low latency news feeds provide key economic data to sophisticated market participants for whom speed is a top priority. While the rest of the world receives economic news through aggregated news feeds, bureau services or mass media such as news web sites, radio or television low latency news traders count on lightning fast delivery of key economic releases. These include jobs figures, inflation data, and manufacturing indexes, directly from the Bureau of Labor Statistics, Commerce Department, and the Treasury Press Room in a machine-readable feed that is optimized for algorithmic traders.

One method of controlling the release of news is an embargo. After the embargo is lifted for news event, reporters enter the release data into electronic format which is immediately distributed in a proprietary binary format. The data is sent over private networks to several distribution points near various large cities around the world. In order to receive the news data as quickly as possible, it is essential that a trader use a valid low latency news provider that has invested heavily in technology infrastructure. Embargoed data is requested by a source not to be published before a certain date and time or unless certain conditions have been met. The media is given advanced notice in order to prepare for the release.

News agencies also have reporters in sealed Government press rooms during a defined lock-up period. Lock-up data periods simply regulate the release of all news data so that every news outlet releases it simultaneously. This can be done in two ways: "Finger push" and "Switch Release" are used to regulate the release.

News feeds feature economic and corporate news that influence trading activity worldwide. Economic indicators are used to facilitate trading decisions. The news is fed into an algorithm that parses, consolidates, analyzes and makes trading recommendations based upon the news. The algorithms can filter the news, produce indicators and help traders make split-second decisions to avoid substantial losses.

Automated software trading programs enable faster trading decisions. Decisions made in microseconds may equate to a significant edge in the market.

News is a good indicator of the volatility of a market and if you trade the news, opportunities will present themselves. Traders tend to overreact when a news report is released, and under-react when there is very little news. Machine readable news provides historical data through archives that enable traders to back test price movements against specific economic indicators.

Each country releases important economic news during certain times of the day. Advanced traders analyze and execute trades almost instantaneously when the announcement is made. Instantaneous analysis is made possible through automated trading with low latency news feed. Automated trading can play a part of a trader's risk management and loss avoidance strategy. With automated trading, historical back tests and algorithms are utilized to select optimal entry and exit points.

Traders must know when the data will be released to know when to monitor the market. For instance, important economic data in the United States is released between 8:30 AM and 10:00 AM EST. Canada releases information between 7:00 AM and 8:30 AM. Since currencies span the globe, traders may always find a market that is open and ready for trading.

A SAMPLE of Major Economic Indicators
Consumer Price Index
Employment Cost Index
Employment Situation
Producer Price Index
Productivity and Costs
Real Earnings
U.S. Import and Export Prices
Employment & Unemployment

Where Do You Put Your Servers? Important Geographic Locations for algorithmic trading Strategies

The majority of investors that trade the news seek to have their algorithmic trading platforms hosted as close as possible to news source and the execution venue as possible. General distribution locations for low latency news feed providers include globally: New York, Washington DC, Chicago and London.

The ideal locations to place your servers are in well-connected datacenters that allow you to directly connect your network or servers to the actually news feed source and execution venue. There must be a balance of distance and latency between both. You need to be close enough to the news in order to act upon the releases however, close enough to the broker or exchange to get your order in ahead of the masses looking for the best fill.

Low Latency News Feed Providers

Thomson Reuters uses proprietary, state of the art technology to produce a low latency news feed. The news feed is designed specifically for applications and is machine readable. Streaming XML broadcast is used to produce full text and metadata to ensure that investors never miss an event.

Another Thomson Reuters news feed features macro-economic events, natural disasters and violence in the country. An analysis of the news is released. When the category reaches a threshold, the investor's trading and risk management system is notified to trigger an entry or exit point from the market. Thomson Reuters has a unique edge on global news compared to other providers being one of the most respected business news agencies in the world if not the most respected outside of the United States. They have the advantage of including global Reuters News to their feed in addition to third-party newswires and Economic data for both the United States and Europe. The University of Michigan Survey of Consumers report is also another major news event and releases data twice monthly. Thomson Reuters has exclusive media rights to The University of Michigan data.

Other low latency news providers include: Need to Know News, Dow Jones News and Rapidata which we will discuss further when they make information regarding their services more available.

Examples of News Affecting the Markets

A news feed may indicate a change in the unemployment rate. For the sake of the scenario, unemployment rates will show a positive change. Historical analysis may show that the change is not due to seasonal effects. News feeds show that buyer confidence is increasing due the decrease in unemployment rates. Reports provide a strong indication that the unemployment rate will remain low.

With this information, analysis may indicate that traders should short the USD. The algorithm may determine that the USD/JPY pair would yield the most profits. An automatic trade would be executed when the target is reached, and the trade will be on auto-pilot until completion.

The dollar could continue to fall despite reports of unemployment improvement provided from the news feed. Investors must keep in mind that multiple factors affect the movement of the United States Dollar. The unemployment rate may drop, but the overall economy may not improve. If larger investors do not change their perception of the dollar, then the dollar may continue to fall.

The big players will typically make their decisions prior to most of the retail or smaller traders. Big player decisions may affect the market in an unexpected way. If the decision is made on only information from the unemployment, the assumption will be incorrect. Non-directional bias assumes that any major news about a country will create a trading opportunity. Directional-bias trading accounts for all possible economic indicators including responses from major market players.

Trading The News - The Bottom Line

News moves the markets and if you trade the news, you can capitalize. There are very few of us that can argue against that fact. There is no doubt that the trader receiving news data ahead of the curve has the edge on getting a solid short-term trade on momentum trade in various markets whether FX, Equities or Futures. The cost of low latency infrastructure has dropped over the past few years making it possible to subscribe to a low latency news feed and receive the data from the source giving a tremendous edge over traders watching television, the Internet, radio or standard news feeds. In a market driven by large banks and hedge funds, low latency news feeds certainly give the big company edge to even individual traders.

Jubin Pejman, Founder of FCM360, is an industry leader for Financial Services Technology Facilitation. FCM360 specializes in establishing high-performance IT infrastructures for Financial companies to gain connectivity to mission-critical exchange markets. Learn more about FCM360's low latency colocation services.

View the original article here

How to Trade the Forex Market Open Successfully

The open provides a great time to trade the forex markets during high volatility. It is an edge you can exploit to give you an opportunity to be in the right place at the right time. Generally, a fast market can provide great opportunities to both make and lose money. Slow markets can provide opportunities but commonly, move so slowly and without direction that making money is almost nonexistent.

The market open can be a great time to see large moves and tend to go through a pattern as long as a news event doesn't push them around. As an example, when markets open there is a flood of buyers and sellers that can push them to an early extreme. The move quickly fades in the opposite direction about 30 minutes after the open as volume starts to subside. At some point, a direction for the day will form and a short or long-term trend will emerge. Try looking at a 5 minute chart sometime and see if you see this happen.

Below are the forex market hours:

- Japanese traders open 7:00 pm to 4:00 am EST
- London traders open 3:00 am EST to 12:00 noon EST
- New York traders open 8:00 am to 5:00 pm EST

That provides 3 times every 24 hour period to watch the opening volatility come in and see if the pattern emerges. Once you see it happen over and over you will quickly develop confidence and will be ready to profit from it. Having your trading plan ready will keep you prepared and your emotions in check.

One strategy to consider is buying after the cycle completes and trying to ride the trend for a profit. Consider this, as the market opens and price moves to an extreme high or low write down the price on paper. Wait until it moves back in the opposite direction at least fifty percent and rebounds to a new high or low. Once it surpasses the original price extreme take your position and ride the trend.

Entering the trade is just one component of being successful. To manage the trade you have to develop a strategy that won't turn a winner into a loser. Paper trade until you have your system down and confidence up.

There are many way to trade in any market. Finding the method that works for you is a key to being successful. Take the time to develop your own trading plan and paper trade it before you use real money. The ideas in this article are presented to help you formulate a plan and are not meant to be trading advice.

For more information and a free forex trading e-book go to http://bit.ly/vHrF45

Joe Tavenner CSP, CFPS has over 15 years of experience, a bachelors and Masters degree in Occupational Safety Management and an MBA in Management. He trades forex as a hobby and has a blog full of free resources, articles and product reviews. If you are looking for more forex information go to http://bit.ly/free4u123

View the original article here

How to Trade Smart in Today's Forex Market

Forex trading has witnessed a lot of tremendous developments in recent years thereby giving traders the platform to make big money. But if you don't know how to trade smart in today's market, your desire to be among top earners would be dashed. The following tips will show you the secrets of trading smart in a present-day market.

1. Use a dynamic trading platform: Using a dynamic trading platform will increase your chances of making money in the forex market. Platforms with many functionalities will give you an added advantage in making the right decision that will guarantee continuous profit in the market. Endeavour to use a platform that is equipped with new features from time to time.

2. Exploit social trading option: Not minding your experience or inexperience in this business, you should take advantage of social trading to enhance your speculation, if you have one. Social trading is all about knowing what others are doing and using it to enhance your trading activities. There are platforms that supports social trading and they are designed to help traders to spot trading signals in order to make more money.

3. Go with the trend: Your major task as a forex trader is to spot the trend and follow it. If you can successfully do this, you are definitely going to succeed in this business. The basic principle for all traders is the correct forecast of the market and subsequently taking advantage of this.

4. Put your ear to the ground: Before you can succeed in this game, you must get the latest information at the right time. What makes the market thick is the array of information that is available for traders and it is the most powerful weapon for successful trading. Before any meaningful success can be made on the market, information gathering is indispensable.

5. Trade on the move: In our present world, forex trading has now been made easy. With your Android phone, you can now stay glued to the market and trade on the go. Whether it is fundamental or technical trading, or even the latest social trading, doing so on your phone is a smart way to make money with ease. Get the right information in order to come up with the right forecast, get the right broker and platform, open an account, fund your account and you are set to hit the most traded market in the world in order to tap your own cash.

View the original article here

The 4 Stadia of a Trade

When you trade Forex in a professional way, every trade you make should go through four stages. Each stage has its purpose in the trading plan and risk management. These four stadia are the setup, the entry, the determination of the stop loss and take profit points and the exit.

First step: the setup

Initially, you will need to find out if the market is favorable for your trading strategy. You will analyze the market to see, if all parameters are suitable to make possible beneficial trades, by following your trading plan. At this stadium, you take a look at the charts of the currency pairs you are used to trade with. The trading system usually indicates which currency pairs you should use to be successful with the strategy of your choice. When you have become more experienced with your trading strategy, you will see rather quickly if the market is appropriate or not. If not, you concentrate on another currency pair. If so, you get a more detailed view on the chart of your interest. In many cases, you will use the larger timeframes to get an idea of the trend and major support and resistance lines. The smaller timeframes can be used to get a closer view of the setup conditions. A proper setup condition does not necessarily means that you have to trade. At this phase, you only consider placing an order.

Second step: enter the trade

When the market conditions are met, you will need to wait until the right moment, to enter the trade. Any significant trading strategy provides you with a set of rules that will help you to find the right time to start a trade. Psychologically, most beginners will tend to enter the trade too early. At this stadium, you have to be extremely patient and not too greedy. Most of the times, it is better, that you wait a couple of minutes in order to be rewarded with a higher profit. Each gained pip is a profitable one and will count for a satisfactory result at the end. Mostly, smaller timeframes are more appropriate to determine the exact entry point.

Third step: set a stop loss and determine the profit target

Just after you placed the order, or while you are doing it, you place a stop loss. This step is primordial for trading success. Respect your money management rules at all times and stick to your trading plan. Beginners tend to change their stop loss in the hope that the market will turn into their favor. The ability to accept loss comes into play and should be trained. Of course, you can trail the stop loss so to break even or to a first profit level, but never expose your account to more risk than necessary. Conventional money management states that you should never risk more than 2% of your trading capital. The ATR is an indicator that can help you to set your stop loss and take profit target. It calculates the average true range of a number of previous bars.

Fourth step: exit the trade.

The exit point is determined in your trading strategy. Most reputable trading strategies have been tested for several months. In my opinion, it is better, that you stick to the trading plan and follow the rules to determine the exit point.

There are two main ways to exit the trade. On one hand, the trade can reach the predefined profit target or stop loss. On the other hand, you can get out of the trade manually. In that case, you will need to make sure, that you found your decision on market analysis, and not on fear. Getting out of a trade too soon, is also one of the common mistakes of a beginner.

In a summary, we have seen the four stadia of a trade. In every strategy you evaluate, you should find these four elements. Hopefully, this information will help you to have a better understanding of your trading system.

To your trading success.

Trading is like driving a car. When you know how to do is, it's childs play. It is a natural set of actions. But, when you have not learned how to drive properly, it can become dangerous. The same applies to forex trading. This is why I started a forex currency trading blog with tools and tips that will help you to build a good trading toolbox.

Visit my blog at http://www.myforextoolsonline.com/

View the original article here

Is There a Big Difference Which Market to Trade?

A lot of newbie traders have lots of wrong preconceptions about financial markets. Most of them think that some markets are safe and some are not. They say the same things about individual stocks. Therefore, a lot of investors are searching for safe type of investments. All booms and financial crises prove that it is the other way round. Nothing is safe and nothing is dangerous out of itself. None market can be called dangerous and none of it can be called safe. Forex is no more dangerous than government bonds of United States or any other country. All markets are very similar in their nature (with minor differences) and if you are able to trade one market you will definitely be able to trade any other one too.

Now, the most interesting thing here is that all markets undergo very similar stages and tendencies too. All markets have ranges; all experience trends from time to time, all of them go sideways, all experience booms and collapses. Whether you take Forex, metals, stocks, bonds or any other market you will see all those stages and tendencies everywhere. So, if you create successful trading strategy or strategies you will be able to apply them in any market.

So, if technical analysis works in futures market, it will also work in Forex and stocks. What we have to do is to use our heads to find out the best methods and apply them in the market of our choice with specific securities that we understand best and feel comfortable with most. Do not be too much fascinated by some free signal providers. You can, but if you want to become a professional independent trader you will have to find out what works for you and stick to that.

If you are a newbie in this business I would recommend becoming analyst before you become a trader. Learn to see the big picture first, analyze bigger time frame charts: daily, weekly, monthly and then move on to smaller time frame charts to see how these add to the big picture. Learn to notice big moves and how to trade in the direction of those moves. Don't be lured to trade counter trend moves before you learn to trade tendencies. Then see if you really want to trade corrections or not. Practice makes perfect. Get accustomed to a trading platform of a provider you are using, spend some time trading demo and only then start trading (having decided how much money you can afford to lose). Hope that was useful.

For more information regarding financial markets I recommend visiting blog Trend and reading an article how to use Relative Strength Indicator in your trades. Hope you will enjoy the blog.

View the original article here

How To Trade Forex Using News

Foreign Exchange (Forex) trading is the simultaneous buying and trading of different currencies around the world. Nowadays, an average person can stay home and trade in the Forex 24 hours a day, seven days a week. A Forex trader must understand the important details of the Forex market. Why prices fluctuate and how to profit from this volatility and price changes impulses? A good investor needs a good level of experience, acceptance of risk, working knowledge of the market, history, strategies and trends. Related news is the one of the most important source for achieving above mentioned goals.

The news is unimportant in itself. The headline itself may not be that important in any financial or Forex market but how the Forex market participants (as a group ) react to them is important. While all traders have the same facts in view, they all make different conclusions and findings. These all things add up and make the trends in the Forex market.

We have better and faster news sources than ever, but most traders do not use the news correctly and end up losing. Here's the correct way to use and how to get great benefits? Here we will not examine the trade news itself but how they can be used to detect changes in sentiment and great reward trades?

Many market traders watch the commerce news and their Analysis. Similarly, Forex market also discount instant news and the market is looking toward the future and also the news reflects the greed and fear of the majority of the losers. We know from history that markets collapse when they are more pessimistic people in the market and fear is the result. When there are more optimistic then greed takes over the market. You can use this Greed and fear to your benefits. If you follow News Forex Charts, you can see the reality of prices and you can also see price spikes, where participants push prices away from fair value, due to greed and fear. You can see these peaks on a graph of the currency, news not last long and change can be very helpful in making a counter-trade and time your trading signal.

Let's say, you have news that the market will never stop rising or falling possibilities, has the height of greed and fear. The herd simply pushes prices to measure fair value. If you used forex charts you would have seen the culmination peak, then collapsed and had several thousand pips profit. Operators often take what the papers say as gospel and lose. If it was that easy to follow the news and trade in the direction of the big traders then everyone will get profits but it's not the case. So my advice, Play safe and keep yourself away from greed and fear. In other words, don't follow the herd. Always take an honorable exit before herd change the direction.

Julia Benson
is experienced in personal Forex trading with years of experience in the Forex market

View the original article here

Global Trade and the Yuan

As a general rule the most successful man in life is the man who has the best information
“How soon will the Chinese natural resource demand decrease? The Chinese population is significantly larger than every individual country’s population in the world (except India).” Is China the New North? Assessing the Impact of Chinese Trade with Latin America, Brookings Institution
“In terms of long-term structural trends, demand is now driven by an urbanization process that is far more structural than consensus generally believes. On our analysis, China is only 20 to 25 per cent along the path towards being a mature materials market and it may take at least six to nine years before demand intensity peaks.” Andrew Keen, Thorsten Zimmermann and Lourina Pretorius, analysts at HSBC
BCG Consulting says China is expected to become the world’s second largest consumer market by 2015 and by 2020 China’s consumer consumption nation-wide will amount to 22 percent of total global consumption, behind only the U.S. at 35 percent. The expected transition from an investment led economy to a more consumer focused model will bring about continued growth.
The McKinsey Global Institute projects that India’s middle class will grow to 583 million people in the next two decades. At the same time, the country will advance from the world’s 12th largest consumer market to the fifth largest.
Africans, on a per capita basis, are richer than Indians and a full dozen African states have higher gross national income per capita than China.
Today Africa has 14% of the world’s population and by 2050 one in every four people on the planet will be African – by 2027 Africa will have more people than does China or India.
The New Silk Road
Over the last few years the economic cycles of developed economies have become disconnected from the cycles of the developing world. A crisis in the US or Europe does not hurt development in Africa, India or China as much as many believe. That’s because there’s been a shift in global trade taking place with developing countries increasingly interacting with each other instead of their old trading partners, the developed nations.
“A network of new “South-South” trading routes connecting Asia, the Middle East, Africa and Latin America are set to revolutionize the global economy. Trade and capital flows between emerging areas of the world could increase tenfold in the next forty years. In the same way that trade between the developed nations exploded in the 1950s and 1960s, we expect the 21st Century to see turbocharged trade growth between the emerging nations.” HSBC Global Research
“In all trade corridors in which China participates, strong growth is anticipated. So strong in fact that it is no exaggeration to highlight this as the emergence of a new world trade order; by 2030, China will effectively be fulfilling the central trade role occupied by the US and the EU today. Having said that, the importance of India should not be underestimated – particularly for trading partners in MENA, the Association of Southeast Asian Nations (ASEAN) and Africa.” The Super-Cycle Report, Standard Chartered Research 2010
Today the:
• BRIC countries; Brazil, Russia, India and China
• CHIME group of countries; China, India, Middle East
• MENA group; Middle East and North Africa
• GCC, the Gulf Co-operation Council; Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman
• ASEAN, The Association of Southeast Asian Nations is a geo-political and economic organization of ten countries located in Southeast Asia – Indonesia, Malaysia, the Philippines, Singapore and Thailand, Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.
Are defining world trade.
Indonesia will soon be added to the CHIME group.
India
After reaching $60 billion in 2010, bilateral trade with China is expected to reach $70 billion in 2011 and up to $100 billion by 2015.
“The report also confirms the shift in India’s trade patterns that we have been witnessing. Trade with the West Asia corridor, China and a few Latin American countries is expected to be higher than India’s traditional large trading partners the US and Europe.” Bhriguraj Singh, HSBC India, talking about the HSBC trade forecast survey
A just concluded trade deal between India and Pakistan has been called historic. India has also been trying to engage its other neighbors in the region, Afghanistan, Nepal, Bangladesh, Myanmar and Sri Lanka on a commercial basis.
Currently intra-region trade, at $5 billion, accounts for just five percent of the goods trade total. A World Bank report, published last year, estimated intra-region trade could grow to $20 billion.
A Free Trade Agreement (FTA), signed in August 2009 with 11 ASEAN member countries became operational in 2010 and will lift import tariffs on more than 80 percent of traded products between 2013 and 2016,.
“FTA has opened up more opportunities for Indian industries in terms of greater market access for their products in the ASEAN region.” Federation of Indian Chambers of Commerce and Industry (FICCI) survey
Africa
Africa’s top trading partners, in terms of bilateral trade volume, are China, India, Brazil, South Korea and Turkey.
Africa’s trade with emerging countries has doubled to 40% of its total trade volume. In 2009, China overtook the United States as Africa’s top trading partner.
Manufactured goods represent a growing portion of the products emerging countries import from Africa.
ASEAN
ASEAN is the third-largest trading partner of China and China-ASEAN imports and exports totaled USD 171.09 billion in the first half of 2011, up 25.5% from the end of the first half of 2010.
With a GDP of $1.7 trillion and 591 million people, ASEAN has concluded free trade agreements (FTA) with China, India, Korea, Australia and New Zealand. The ASEAN group has also completed a Trade and Investment Framework Arrangement with the US and is negotiating other trade and investment agreements.
The ASEAN-China FTA represents an estimated 1.9 billion consumers.
Arab League
China’s trade with Arab countries is growing by 30 percent annually – over the past five years trade between China and Arab states has increased from US$65 billion to $145 billion.
“The United Arab Emirates (UAE) will emerge as India’s largest trading partner with trade volumes estimated at $103.6 billion overtaking China, which was largest trading partner in 2010.” HSBC trade forecast survey
Iran
When the current Iranian calendar year ends  annual trade between Iran and China will be worth $45 billion. The Iran-China trade was worth $30 billion in the last Iranian year. China is Iran’s biggest oil buyer.
India and Iran have agreed to set up a payment mechanism to facilitate bilateral trade and resolve the payment crisis for oil imports as well as exports. Iran is India’s second largest oil supplier supplying 12 per cent of India’s needs.
Turkey
HSBC’s Trade Connections report says “Turkey is one of the world’s fastest growing economies and trade is forecast to grow 109 percent by 2025.”
Turkish-Russian trade will increase by 123 percent and Turkish-Chinese trade by 125 percent in the same period, taking the volume of exchanged goods to USD 541.3 billion by 2025, up from its 2010 level of USD 266.1 billion.”
Trade with India will rise 7.09 percent.
Korea
China is South Korea’s biggest trading partner and bilateral trade between the two countries has increased at an average annual rate of 22 percent. In the first half of 2011, China accounted for 22 percent of South Korea’s total foreign trade, compared with a record low nine percent for the US.
South Korea saw a combined trade surplus of $18.8 billion last year with Chile, Singapore, the European Free Trade Association (EFTA), India and the Association of Southeast Asian Nations (ASEAN).
Russia
Trade between Russia and China could reach $70 billion in 2011 and $200 billion by 2020 according Russian Prime Minister Vladimir Putin.
Russia is close to sealing an energy supply agreement with China worth one trillion dollars for up to 68 billion cubic meters of gas every year.
China and Russia recently opened an oil pipeline from Daqing in northeast China to Skovorodino in eastern Russia. The line is 1,000 kilometers (621 miles) long and yearly capacity is 15 million tonnes.
The volume of Russian-Indian trade, in 2010, increased by 14.4% compared with 2009 and amounted to $8.5 billion.
In 2010, India was 18th among foreign trade partners of Russia, while Russia was listed 29th among foreign trade partners of India.
Latin America
China’s trade with Latin America is growing twice as fast as U.S. trade with the region.
In 2007, Latin America’s trade with China topped 100 billion U.S. dollars for the first time, just three years later trade was worth 183 billion dollars.
India’s bilateral trade with Latin America was $23 billion in 2010, a ten-fold increase from 2000. Indian-Latin American trade involves not only commodities but manufactured goods as well.
Indonesia
According to the Indonesian Ambassador to India, Ani M Ghalib, bilateral trade between India and Indonesia will reach $25 billion by 2015, trade between the two countries today amounts to $12.7 billion.
By the end of the current fiscal year Indonesia will be the second largest trading partner of India in the ASEAN region.
Indonesia’s Industry Minister Mohamad Hidayat said Indonesia and China aim to double two-way trade to $80 billion by 2015.
Disconnect
There has been a revolution in world trade – a new pattern of trade is flowing, connecting Asia, the Middle East, Africa and Latin America. Trade between China and South Asia is growing, China’s trade with Africa is expected to double by 2015, Africa’s top trading partners, in terms of bilateral trade volume, are China and India, over 50 per cent of India’s trade is now with other Asian countries while only 32 per cent is with the United States and Europe. China’s trade with Arab countries is growing by 30 percent annually and India’s is expected to grow even quicker. China’s trade with Latin America is growing twice as fast as U.S. trade with the region and India’s trade within the region has increased 10 fold in a decade.
The First Industrial Revolution started with technological innovation driving the slow industrialization of the United Kingdom in the 18th century which merged into the Second Industrial Revolution around 1850. The start of the second industrial revolution was marked by a transition of technological leadership from Britain to the United States and Germany.
What is happening today is not being driven by technological innovation or technological leadership, what’s driving emerging economies today are urbanization, population growth and consumerism. The US is still, by far, the leader in technological innovation – emerging economies are simply playing catch-up with the west. They want a better life for their families; schools, running water, electricity, better sanitation, transportation and shelter. They want increased consumerism, the flat screen TV’s and other electronic devices that go along with a modern society and their increasing disposable income – all of this is driving a commodities super-cycle.
Infrastructure spending and increased discretionary spending by consumers are the key factors driving this rising demand – as more and more people in emerging markets move from rural areas to the cities, consumption will increase putting massive upward pressure on commodities – per capita consumption of commodities in developing countries is still only a fraction of the level it is in developed countries.
“By 2030, income per head in China – using market exchange rates, which include our view of a stronger CNY – could have risen from USD 4,166 in 2010 to USD 21,420. China, currently a big but poor economy, would become a middle-income economy – but on a vastly larger scale…Income changes elsewhere are no less impressive. India, for instance, is projected to go from USD 1,164 in 2010 to USD 7,380 by 2030, Latin America from USD 7,114 to USD 14,608, and Sub-Saharan Africa from USD 1,075 to USD 2,780.” Gerald Lyons, chief economist Standard Chartered
In 2000, developing countries were home to 56% of the global middle class, by 2030 that figure is expected to reach 93%.
The current commodities super-cycle will see China, India and the ASEAN group emerge as economic powerhouses – much like Great Britain and the United States did but without emerging economies obtaining technological leadership.
The world economy will grow from $62 trillion in 2010 to a projected $308 trillion by 2030, with emerging economies accounting for 68 percent of that growth, according to Standard Chartered.
Growing trade between emerging markets helps explain why they now account for about 30 percent of global final consumption, about the same as the U.S. and up from 10 percent in 1990.
Ascending Yuan
Emerging markets are increasingly starting to denominate trade contracts in currencies other than dollars.
“Western central banks use quantitative easing and government backup plans to deal with fundamental problems in their economies. But it is not sustainable. Those developed countries used to interfere with the development of developing countries. I believe it is about time for China and ASEAN to unite to protect their own interests. The Chinese yuan is the best choice for an intermediate currency in trade. I hope China could facilitate a trade mechanism by providing yuan convertibility and develop its settlement mechanism which is easy and simple to implement.” Yum Sui Sang, CEO of Union Commercial Bank of Cambodia.
Because of its international aspirations and the fast growth of business conducted in the Yuan, in March of this year, the Industrial and Commercial Bank of China (ICBC) set up its first overseas Yuan processing center in Singapore. In June 28, ICBC set up a China-ASEAN Yuan clearance and settlement center in Nanning while at the same time launching a pilot program for the exchange between the Yuan and Vietnamese dong. The world’s first offshore Yuan denominated spot gold contract recently started trading in Hong Kong.
“Occasionally we read in various columns of mainstream journalists that the Chinese have shot themselves in the foot when they (in violence of Friedmanite precepts) failed to revalue their currency upwards. The world will retaliate by imposing punitive tariffs, creating horrible unemployment in China and causing civil unrest. These journalists should be careful to make wishes, because they may just get what they’ve wished for. One of these days China may open its Mint to gold and silver, setting the example to Asia and the Muslim world and, possibly, to South America. Other countries may follow suit.” Antal E. Fekete
It was “a push by Chinese authorities for a more international role for its currency and as an alternate reserve currency to the embattled dollar and euro.” GoldCore Analysts
The Chinese Yuan or Renminbi (RMB) currently cannot be used as a reserve currency for two reasons:
1. The Chinese government maintains capital controls on the conversion of its currency
2. China’s currency is not attractive to central banks for holding, they need to develop a strong open bond market
While China’s currency will be increasingly used to settle trade between emerging nations China is not YET ready to turn the Yuan/Renminbi into a Global reserve currency on par with the Euro and Dollar…but the first steps are being taken.
Baosteel, the state-owned Chinese steelmaker, is going to issue Rmb6.5bn ($1bn) worth of renminbi denominated bonds. This is a landmark move as Baosteel will be the first Chinese company, other than a bank, to sell renminbi bonds directly to international investors.
“The regulatory approval shows that China is supporting the growth of the offshore bond market in Hong Kong, they want the market to increase and to be more liquid.” Dariusz Kowalczyk, Hong Kong-based strategist at Crédit Agricole
Conclusion
A commodities super-cycle is based on the assumptions that 1. population growth will lead to industrialization, urbanization and infrastructure build-out and 2. higher living standards leads to increased consumerism and higher protein diets. This supports long-term demand and higher prices for industrial and agricultural commodities.
The developing countries of China, India, Russia, the Arab League, ASEAN including Indonesia, Latin America and many countries in Africa represent a huge percentage of the world’s population and its natural resources.
The global shift in trade, the Chinese Yuan becoming the developing world’s,  currency of choice for trade and Chinese baby steps to make their currency at least a regional reserve currency, with future, much higher aspirations, should be on everyone’s radar screen. Is it on yours?
If not, maybe it should be.
Richard (Rick) Mills
rick@aheadoftheherd.com
www.aheadoftheherd.com
Related posts:
Buy the Yuan – The trade of the decade?Stronger yuan, higher labor costs, euro zone threaten China’s advantagePlaying the China Blame Game – The Currencies to Trade if the U.S. Launches Another Trade WarChinese Bond Sale Tests Global DemandShifting Trends Lead to China-Bashing and Rising Global Trade Tensions

View the original article here

Who Else Wouldn’t Trade Forex After the US Markets Open?

Sometimes I think that some traders are quite lucky to live in the UK! And not just because of the Queen and Big Ben (one might think so)… No. Their UK living allows them to trade Forex at the most profitable times of the day. When they get up and have “traditional” morning cup of a tea, their FX trading starts at 8.00 (GMT +1:00) and later around 10.00 or 11.00. When it’s 14.30 on the UK clocks and watches the US markets open. But their job is actually done by then. With the fourth tea cup emptied and all lunch sandwiches eaten they start caring for own stocks. So… is worth trading FX after the US markets open?
My personal opinion – it’s not the best idea for several reasons. I’ll try to make them short:
The high market volume and volatility will “die” as soon as European markets close (a few hours after the US session starts). If you haven’t already closed your positions for the day, you will definitely get your portion of frustration.The start of the American session often brings us, the traders, an armload of major news releases (14.45-15.00 in the UK). We know they can push markets easily as Schwarzenegger pushes trains and planes when being angry.  However, those releases can cause the dramatic market movement, so all of your technical analysis (if you made any by then) would turn useless. Unless you are a trading pro, it is even harder to make your money in such conditions.The US-session market tends to become as calm and “stable” as a cemetery in the end. All big market moves for the day have already occurred. Last few hours of European markets trading within the US session are usually not generous with breakouts, for instance. Even if you get some, there could possibly be no “to be continued…” afterwards.
Summarizing, I want to say that there are still times when trading the US markets is profitable.
Firstly, if you are the News trader. Download and use for free Forex freebie called FX Pulse. FX Pulse is a MT4 custom indicator that shows actual Forex news directly on chart in a second after its release. So you are waiting for the US session to start with your eyes burning fire and hands shaking with excitement (do you really?!). Such reports as NFP or FOMC can make price rocket in seconds as well as can drop it down to earth.
Another way of benefiting with the US markets open is the usage of certain time frames.
Even though most of my trades, which I place with my trading strategy, occur in the morning, I usually place a trade in the afternoon and evening. Not just for the interest sake, but whether a significant EMA crossover occurs in the time. If my profit targets have been reached, I will close the trades opened before.
As a conclusion, I would say that trading the FX market after the US session opens is not really worth it. If you are not the News trader and you are dealing with short term charts. Your trading window is narrow, and those are the market moving announcements that you have to deal with.
Although if you are using one-hour or four-hour charts, for instance, then trading during this time can be worthy as price will often continue moving for the rest of the day and (lower volume expected) into the next one.
Article provided by Alexander Collins, creator of automated Forex trading software that works since 2007 and have positive backtest and forward test results.

View the original article here

Is it Possible to Trade Forex Part-time?

This week, I came across an article in the San Francisco Gate (which, incidentally, has really ramped up its forex coverage over the last year) that addressed this very topic. Given that part-time forex traders probably outnumber those that practice the craft full-time, such an article was long overdue.
In sum, the author advises part-time traders to concentrate their trading during the busiest times of the day, or failing that, to simply trade the most active currency pairs during the period of the day that one happens to have time to trade. For example, if you wish to trade the USD/EUR but only have a limited amount of time to do so, you are advised to trade the opening of the New York and/or London sessions, at 8AM EST and 3AM EST, respectively. Alternatively, if you only have time to trade from midnight to 2am, for example, you are advised to trade currency pairs in which the quote currency is the Yen, because during that time the Tokyo session is “in full swing.”

Alas, this kind of strategy is based on a very dubious assumption, which is that you should aim to trade the currency pairs which are both the most liquid and most volatile (ignore the contradiction here), because this will yield the most profits. In other words, it’s easy to capture profits when trading pairs that tend to bounce around a lot and which are cheap and easy to buy and sell. Right?
If you read the Forex Blog with any regularity and are ware that my bend is towards fundamental analysis, it’s probably already obvious to you that I don’t think this is necessarily the case. Consider that forex is a zero-sum game. In other words, on average, 50% of traders win and 50% lose. [When you account for trading costs (i.e. spreads), its probably closer to 30% win and 70% lose, but let's ignore this for the sake of argument]. Thus, the way I see it, a trader that enters the market during the busiest times has the same chance of winning (~50%) as a different trader that enters the market during the least busy time of day. Either way you cut it, someone has to win and someone has to lose, and no amount of liquidity or volatility can rectify this situation.
Thus, my advice for part-time traders is to forget trading altogether. If you don’t have the time to constantly monitor the market, pore over charts, and develop technical strategy, the odds of winning are pretty low. On the other hand, why not shift your focus from trading to investing? Trading is difficult under the best of circumstances and even more difficult when you don’t have enough time to make a real commitment.

The only way around this is to shift your time horizon from minutes to days – or even weeks. This way, it won’t matter when you have time to trade. Spreads might be marginally higher (as evidenced in the spikes in he chart above, which shows how spreads fluctuate over time) for the USD/EUR at midnight than at 8am, but if you’re planning on holding the pair for more than 10 seconds (and your target profit is greater than 15 pips), this is basically irrelevant.
This way, you also don’t have to worry about carefully planning your entry and exit into positions. Entering a swing trade with a targeted profit of 500pips is probably just as good at 4am as it is at 7am, all else being equal. While this doesn’t necessarily increase the odds of success (above 50%), at least it gives you a great deal more flexibility in being a part-time trader.


View the original article here