Forex is the acronym for: The Foreign Exchange Market. Its’ a market where buying and selling of currencies of almost every country on earth take place. The size of this market is so big that there is no single definition to aptly describe it. The daily trading volume of this forex market is about $2 trillion dollars a day. The New York stock Exchange has a daily volume of $25 billion dollars. That means the FOREX market is 200 times larger than the New York Stock Exchange.
The daily volume of the FOREX is triple the size of all other investment market and stock exchanges all over the world combined. In spite of the huge size, the FOREX does not have a central exchange or a physical location. It operates through the network of electronic communication between individuals, banks and companies that specialize in trading one currency for another.
FOREX trades are executed on the internet by someone sitting at a computer with a high-speed connection. This is where basic knowledge of the computer is important. In view of the fact that FOREX does not have a physical location or a central exchange, it is able to operate on a 24 hours basis leap forging from one time zone to another across the major financial centers of the world. The FOREX market actually follows the sun around the globe – because as one country is closing for the day, another is just opening up. This market is open 24 hours a day, six days a week from 5:00 pm Sunday (East Coast Time) to 4:00 pm Friday (East Coast Time) .Due to the Vast size of the global FOREX market, its non-centralized nature, there is no chance whatsoever for disruptions caused by insider trading. There is less chance for fraud in the FOREX than in any other investment markets, except fraud that is being perpetuated by some forex brokers which you must get to know off.
There are no exchange commissions, no brokerage fees, and no government fees. This makes it a very low retail transaction cost. If you select your broker properly, your round-trip transaction cost could be as low as 0.07%.
And kindly know this; a very desirable by product of extremely high liquidity is almost instantaneous transactions executed with blinding speed. You can leverage your trades by a factor of 20:1; 50:1, 100:1; and even 200:1. This will be discussed extensively in our subsequent topics.
Not only that, you can trade with a very low margin with relative safety compared with the disastrous potential of margin trading found in other financial markets.
As you get really great at currency trading, your potential financial reward is so big that it can make your head swim. Just how big is the financial reward for the absolute top currency traders in the world? Warren Buffet has invested more than $10billion US dollars in currency trading. Do you wonder why? Is there any downside to FOREX TRADING? You bet there is. If you are not careful, the FOREX market will make you go bankrupt. But you can put the odds in your favour. Treating FOREX trading as a business is the best way to sum up our approach to trading. Every strategy and idea from my teachings ultimately refers back to the notion that FOREX trading is a business and should be approached as such. In the final analysis, business is simply the effective management of cash flow. A successful business generates more cash than it consumes. This is the goal of trading as well.
If you think of trading as a business and realize that you have to make an investment into the business both in terms of education and equipment (computer and software), it puts everything in perspective and will help you enormously as a trader.
The amount of information out there is overwhelming. The problem with the vast majority of the information being peddled on the net and various seminars is that they come from people who have never earned or couldn’t earn their living as traders. They look for short-cut to wealth by selling “rubbish” to the unsuspecting new entrants (newbie) into the FOREX market.
My learning was quite traumatic as those I turned to for “FOREX KNOWLEDGE” milked me dry. After spending over several thousands of US dollars trying to learn the basic details of trading the FOREX, my eyes were now opened to know that over 99% of those who offer FOREX techniques and trading manuals are fraudsters. Some disappointed traders also resort to organizing seminars and workshops at a fee to recoup their “investments”. Most of such seminars and workshops are baseless and worthless like tissue papers. After my disappointing moments of trading with several “useless” technical and mechanical indicators and analysis, I decided to do my own research work on the fundamental and technical approach to FOREX trading. After several months of sleepless nights, I made a discovery. This is the strategy I (PT) talk about but do not boast of. The taste of the pudding is in the eating. Since all inspiration comes from God, I made a vow to impact this FOREX education, on others free of charge. If we quantify the value of this course, we can put it conservatively at $50,000, because it will expose you to the reality of this vast market. No gimmick. No magic. No hidden details.
You can make more than $500 USD daily trading forex market and can start trading with as low as $100 USD. After learning I expect you to develop your own strategy or call to purchase a strategy at cost of $200US Dollar.
CALL PRIVATE TUTOR (PT)
+447035915033, +2348035620321, +2348075145719, +2348136268145 iwekannamdi@yahoo.com, selton88clee88@yahoo.com
WHY TRADE FOREX?
FOREX is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs for example:-
GBPUSD which means Great Britain Pounds/United States Dollars. EURO/US Dollar is EURUSD, Australian Dollar/Japanese YEN is AUDJPY. There are two main reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must have the need to convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation. For FOREX traders, the best trading opportunities are with the most commonly traded currencies of high volatility and therefore most liquid currencies, they are called the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
BENEFITS OF FOREX – PROFITABILITY
The FOREX market is highly liquid and it occurs by means of the mechanism of margin trade which consists that there is no necessity to have all the sum of the contract to make a transaction, it is enough to bring only a pledge which makes a certain percentage of the contract. That means you are financed with the missing sum of money for the transaction execution on a currency purchase or sale. For example, it is necessary to bring in $1000 of a pledge for realization of a deal on $100,000 at a pledge of 1% or leverage of 100:1.
So the trader may operate with the market sum of $100,000 having small means in stock.
For instance, if you are a trader and you have $1000 in your account, which allows you to strike a bargain on market lot in $100,000. Let’s say you have taken a decision to sell $100,000 US dollars against the Japanese Yen, at the price of 124.80. In a few hours or even minutes when the rate of USDJPY has fallen down to 100pips or points and become 123.80, you have decided to close the position and have bought dollars much cheaper than you have sold them, so you have received profits.
Profit = (Open Price – Close Price) (volume of lot)/ (close price)Price Profit = (124.80 – 123.80) x 100,000 ÷123.80 = $807dollars.
The FOREX is capable of making you a millionaire as well as making you go bankrupt within a very short time. The leverage in the FOREX business provides this opportunity which if well managed could guarantee you financial freedom for life. This is the more reason you need this education in order to avoid the pitfalls most of us encountered in our bid to be successful traders and forex mentors.
FOREX TRADE STRUCTURE
Broker: - An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a 'dealer' commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Trading Platform: - Its’ a market software where the trade execution takes place. This is been provided by your Broker, it contains all most every technical indicator and a space to import expert assistance like ROBOT or special technical indicators.
CURRENCY EXCHANGE – BASE AGAINST COUNTER: -
It is important to clarify the need to read currency exchange programmes and pairs correctly. One currency in a currency pair is always dominant; this is called the base currency. The base currency is identified as the first currency in a currency pair. It is also the currency that remains constant when determining the price of a currency pair. The other currency exchange in the currency pair is referred to as the counter currency. The base in the currency exchange is always equal to one of the currency’s monetary unit of exchange for example- 1 US Dollar or 1 Pound. If an investor buys 10,000 GBPUSD, the British Pound as the base currency is being bought or received and the US Dollar as the counter currency is being sold. The amount of the base currency being bought is equal to 10,000 GBP. This always applies regardless of the universal currency conversion. The base currency amount remains constant; it determines the values of currencies exchange with FOREX strategy in the market.
Although the pairs may appear complex, once investors have become familiar with reading quotes and formulate a suitable FOREX strategy it becomes comprehensible, reading foreign currency symbols becomes a second nature. The counter currency amount that the investor is selling will fluctuate with the exchange rate for the currency pair. Since it is this part of the currency exchange that fluctuates higher or lower, it determines the strength or weakness of both currencies in the pair.
As with everything, when one currency goes up, the other must go down.
When a currency exchange pair goes from a low price to a higher price, the base currency is said to have strengthened or appreciated. Conversely, the counter currency is said to have weakened or depreciated as the base currency has strengthened or appreciated.
WHAT IS A PIP?
In the FOREX market, prices are quoted in pips, pips stands for “percentage in point” and is the fourth to fifth decimal point which is 1/100th of 1%.
In EURUSD, a 3pip spread is quoted as 1.2500/1.2503. Among the major currencies, the only exception to that rule is the Japanese Yen. In USDJPY the quotation is only taken out of two to three decimal points (i.e. to 1/100th of Yen, as opposed to 1/1000th with other major currencies).
In USDJPY, a 3pip spread is quoted as 114.05/114.08.
When the US dollar is the base currency unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency i.e. the counter currency has weakened. If the USDJPY quote we previously mentioned increases to 115.10, the dollar is stronger because it will now buy more Yen than before.
The three exceptions to this rule are the British Pound (GBP), the Australian dollar (AUD) and the EURO (EUR). In these cases, you might see a quote such as GBPUSD 1.7366, meaning that one British Pound equals 1.7366 US dollars. In these three currency pairs, where the US dollar is not the base currency, a rising quote means a weakening dollar, as it now takes more US dollars to equal one Pound, EURO or Australian Dollar.
In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening. All currency pairs that do not involve the US dollar are called cross currencies, but the premise is the same. For example, a quote of EURJPY 127.95 signifies that one Euro is equal to 127.95 Japanese Yen.
“BID AND ASK”
When trading Forex, you will often see a two sided quote consisting of a “bid” and “ask”.
The “bid” is the price at which you can sell the base currency (at the same time buying the counter currency). The “ask” is the price at which you can buy the base currency (at the same time selling the counter currency).
LEVERAGE AND MARGIN
The leverage available in Forex trading is one of main attractions of this market for many traders and investors. Leveraged trading or trading on margin simply means that you are not required to put up the full value of the position.
FOREX provides more leverage than stocks or futures. In Forex trading, the amount of leverage available can be up to 200 times even 500 times the value of your account. But be mindful of the fact that the higher the leverage, the higher the risk of losing your investment, if the market moves against your position. ECN Brokers can not offer more 1% or 100:1 leverage due to the transparent nature of ECN platforms.
There are several reasons for the higher leverage that is offered in the Forex market. On a daily basis, the volatility of the major currencies is less than 1%. This is much lower than an active stock, which can easily have a 5%-10% move in a single day. With leverage you can capture higher returns on a smaller market movement. More importantly, leverage allowed traders to increase their buying power and utilize less capital to trade. Of course, increasing leverage increases risk.
In FOREX, margin is the minimum required balance to place a trade. When you open a Forex trading account, the money you deposit acts as collateral for your trades. This deposit is called margin, is typically 1% of the value of the position. But some brokers offer less like 2% or 5%, less in the sense that 1% is 100:1 leverage, 2% is 50:1 leverage while 5% is 20:1.
For example, if you want to purchase $100,000 of USDJPY at 100:1 leverage, the money required is 1% or $1000. The other $99,000 is collateral with your remaining account balance. You pay no interest.
It is very important to remember always that increasing leverage increases risk. Always monitor your account balance on a regular basis and utilize stop-loss orders on every open position in an attempt to limit downside risk. This is where ECN Brokers come in handy because your automated loss will never be pulled unlike the other market makers who pull your stops and increase your risk. Here is an example that demonstrates the upside of leverage. With a balance of 5,000 US dollars in your account, you decide that the US dollars (USD) is undervalued against the Swiss Franc (CHF). To execute this strategy, you must buy Dollars (while simultaneously selling Francs) and then wait for the exchange rate to rise. The current bid/ask price for USDCHF is 1.2322/1.2327 (meaning you can buy $1 US dollar for 1.2327 Swiss Francs or sell $1 US Dollar for 1.2322 Francs).
Your available leverage is 100:1 or 1%, you execute the trade, buying one lot, that is 100,000 US dollars and selling 123,270 Swiss Francs. At 100:1 leverage, your initial margin deposit for this trade is $1000 US dollars.
As you expected, USDCHF raises 50pips to 1.237277. Since you are “Long” (buy) dollars (and you are “short” sell Francs) you must now sell dollars and buy back Francs to realize any profit. You close out the position, selling one lot/selling 100,000 US dollars and receiving 123,720CHF). Since you originally sold (paid) 123,270 CHF, your profit is 450CHF. To calculate your profit & loss in terms of US dollars, simply divide 450 by the current USDCHF rate of 12372. Your profit on this trade is $364.31US dollars.
Summary from the example:
Initial investment: $1000Profit: $364.31Return on Investment: 36%.
If you had executed this trade without leverage, your return on investment (profit) would have been less than 1%, in fact, it would have been 0.36% or $ 3.64. You do not need to bother yourself about calculating profit and loss. For ease of use, most online trading platforms automatically calculate P&L of a traders open positions.
THE SPREAD
By now you should have known that the difference between the “bid” and the “ask” quote is the spread. This supposes to represent the interest or profit for the FOREX BROKERS (market makers). Since this does not seem to be enough for them, you find them re-quote arbitrarily without any level of pedigree because the market is not regulated. A regulated market would have maintained a fixed spread of say USDJPY 114.05 / 114.08 which is 3pips. The bucket shop Forex Brokers will hike the spread to between 10 and 30pips and in some cases up to 100pips during volatile market conditions.
What of the ECN FOREX BROKERS? They will even reduce the spread as low as 1pip and in some cases 0 spread during volatile market conditions.
PRICE CHARTS
There are so many chart patterns, ranging from “bar” to “candlestick” to “point & figure” patterns.
I, the forex Private Tutor use candlestick only for the purpose of providing visual details of price action. In this regard, I recommend “candlestick” on a 1 hour chart, where the uptrend will carry GREEN EMPTY BODY and the downtrend GREEN FULL BODY.
HOW TO TRADE / ORDERS
The way to trade the foreign exchange market – forex, is a straight forward one. All traders have the same objective when trading, either to buy or to sell. The first thing you must do in order go guide against making lasting mistakes is to identify the position you want to take – the buy or sell position. Analyze the intended position very well before placing an order. This will guide against the tendency of placing a wrong orders – the commonest mistakes new traders make while trading.
For example: - When the US Dollar is likely to appreciate due to some factors or economic indicators just released, or based on market forces that are currently affecting the US Dollar, the first thing to consider is which currency pair are you banking on to give you the desired move. Let us assume you now settle for GBPUSD, what is the position of US Dollar in this currency pair? You must get the answer down which is counter currency. Since the GBP is the base currency and the USD is the counter currency, in order to buy the USD, you must sell GBP, that is a sell order on GBPUSD means that as you are selling GBP, you are buying USD which you have forecasted or predicted to appreciate in value.
Conversely, if you know the US dollar was going to depreciate in value, you would have to place a buy order on GBPUSD to achieve that purpose. In another scenario, if you wanted to buy the US dollar based on your initial assumption that the US dollar would appreciate, but the currency pair this time is the USDCAD, you must define the position of the currency you are either buying or selling. In this case, it is the US dollar which is the base currency in this USDCAD pair. Since you had already predicted the USD to rise, it is a buy order you must place in this regard unlike the previous example where you sold GBPUSD. Conversely, you must sell USDCAD if your forecast was a down trend of the US dollar. This is the basic rule you must adhere to strictly to avoid costly errors in order placement.
* Placing a buy order on GBPUSD or a sell order on USDCAD based on the first steps of the two examples above would have made you to lose heavily on your trading account because you had predicted the rising of the US dollar.
The buy order on GBPUSD and the sell on USDCAD in this analysis would have met your expectations if your original forecast was for the US dollar to depreciate or fall in value. Let me give you another example: Let us say that your forecast is targeted at the Canadian dollar – CAD. Your forecast is that the CAD will appreciate in value and therefore you want to buy the Canadian dollar – CAD. You must first analyze the most suitable currency pair involving the Canadian dollar you need to trade on. Having chosen the USDCAD, you must realize that in this currency pair, the Canadian dollar – CAD is the counter currency and in order to buy the Canadian dollar – CAD, you must have to sell the US dollar. So, the most appropriate order to place is the sell order on USDCAD. By selling USD, you are buying CAD which you had predicted to appreciate in value. This order therefore must meet your expectations.
Conversely, if your original forecast was a depreciation in the value of the CAD, it means you would need to buy USD in order to sell CAD a buy order on USDCAD would have been more appropriate.
In another situation, if the currency pair you are intending to trade on is the CADJPY pair, the type of order would have changed. Since the CAD is the base currency in this currency pair, and your forecast is the rising of the Canadian dollar, a buy order on the CADJPY is the appropriate thing to do here. Buying Canadian dollar while selling Japanese Yen, will meet your expectations of a rising CAD. Conversely, if your initial forecast was a downtrend of the Canadian dollar – CAD, a sell order on CADJPY would have been much more appropriate in this regard because selling the CAD while buying the JPY would have met your expectation of a sliding or falling Canadian dollar – CAD. You must apply this simple principle to all the currency pairs before playing your orders.
The foregoing is the most important aspect of forex trading. The others are just the ingredients which involves – risk management and order tools to maximize profit.
ORDER TYPES
(1) Market Order: - A market order is an order to open a position at the available market price. If the order is accepted, it becomes an open position immediately. In this kind of order, you are in your own world. Up trend or down trend is left at your mercy. This means, if the market moves in your favour fine and good but, if it moves against you too bad, the profit level or loss level in this kind of order depends on when you close the position.
(2). Market Order With Stop Loss: - When you place a market order as explained above, you have the added advantage to add another order to this position. With a stop loss order, it enables you to set the maximum number of pips you are ready to lose incase the market moves against you. The number of pips to set your stop loss order on supposed to be at your discretion. But this is not so with market-maker forex brokers. Some will insist it must not be less than 20 pips away from the market price. But with ECN Brokers, it is at your discretion.
* As a warning, you must always use Stop loss in your orders to protect you from monumental losses.
(3) Market Order with OCO: - in this type of order, you have the singular honour of being protected on both sides of the trade. OCO – simply means one order cancels the other. What this means is that if you have an open position, with OCO, you will have a combination of two extra orders of: 1. Stop loss and 2. Take profit.
For example:- if you place this type of order to buy GBPUSD at 2.0020, you must set your stop loss below the market price of 2.0020 to protect a you from heavy loses, while at the same time setting a take profit above the market price of 2.0020. Let us assume that the target for you to take profit is 50 pips away from the market price and stop loss of 10 pips away from the market price. Your order must look like this: - market price on GBPUSD = 2.0020, OCO = Stop loss = 2.0010; Take profit = 2.0070. The beauty of this kind of order is that if your take profit level is met first, the position will be closed automatically, while canceling the stop loss order simultaneously.
Conversely, if the market moves against your position, and the stop losslevel is triggered, the take profit order is automatically cancelled.
* But some brokers have different names for this kind of order – OCO. For example, in EFX group, OCO is the same with their version of TTO which means Threshold Triggered Order. There are different order types depending on your broker, but we are discussing the most commonly available.
(4) Trailing Stop Order: - Some brokers have this real trailing stop order which automatically closes your open position if the market that has been moving in your favour moves against your position by the number of trailing pips you have pre-set against your trade. For example, if your broker has a real trailing stop facility in the platform, it works like this: If you are long on GBPUSD, that is you have a buy order on GBPUSD with a trailing stop of 10 pips, and the market price on GBPUSD is 2.0020, your trailing stop will come alive if the market moves in your favour by at least 10 pips to GBPUSD of 2.0030, in this case, if the market now suddenly moves against you, the trailing stop which now acts like an imaginary chain will stop the position automatically when the price on GBPUSD falls to 2.0020. This means, you have broken even, no loss and no profit. But if the market reaches the price of 2.0070 before moving against you, the trailing stop facility will close out the position after a drop down of 10 pips, that is at (GBPUSD) = 2.0060. In this case, the platform has been able to save you a profit of 40 pips.
* Beware: - In so many bucket-shop brokers, who are market-makers, this trailing stop facility is just a decoration, it does not work. When you ask them, some will tell you that it is used as a signal because you will be alerted. ALERTED FOR WHAT?
(5) STOP ORDER: - This is the type of order where you can buy at a price above the current market or sell below the current market price.
(6) LIMIT ORDER: - This order enables you to buy below the market price and sell above the market price. This order I can say, is one of the most important orders in my trading strategy, if not the most important.
These are the most commonly used orders. Any order not discussed here must be given in details by your broker if such order is available on their platforms. In my mentoring service, I shall teach you how to use these orders in one unique way and maximize your profit.
The only thing I cannot do for now is to release the trading strategy to the public. After learning I expect you to develop your own strategy or call to purchase a strategy at cost of $200US Dollar.
CALL PRIVATE TUTOR (PT)
+447035915033, +2348035620321, +2348075145719, +2348136268145 iwekannamdi@yahoo.com, selton88clee88@yahoo.com
Fundamental Analysis Index
What is Fundamental Analysis?Fundamental Analysis is the study of the core underlying elements that influence the health of the economy of a particular country. It is a method of study, that predicts price actions and market directions by analyzing economic indicators, government policies, societal and political factors, natural disasters, outbreak of wars, epidemics, earthquakes etc, within a business environment.
If you think of the financial market as a big clock, the fundamentals are the gears and springs that move the hands around the face. These are the engines that move automobiles.
You can look at this clock and tell what time it is now, but the fundamentalist can tell you how it came to be this time and more importantly, what time or more precisely, what price it will be in the future.
There are two basic classes of Forex Traders.
The Fundamental Traders
The Technical Traders.
Fundamentalists are said to be purists to a large extent because it is quite easier to remain a fundamentalist, once you are one, than to remain a technician for a long time. Due to the fact that over 95% of technical analysts fail, they readily embrace the principle of Fundamentalism. Fundamentalists are quite successful in Forex trading because, we rely on the factors that actually drive the markets. Incidentally, most forex brokers who run Dealing-Desks do not like fundamentalists. We are feared, because of the pinpoint accuracy at which price action can be predicted. There are numerous cases where such forex brokers closed the live accounts of such traders once it was discovered that they trade forex as fundamentalists.
One thing that readily comes to mind is that once you are able to delve further and further into the complexities and subtleness of the fundamentals of the markets, you will find that your knowledge and understanding of a dynamic global market will increase immeasurably.
Fundamental analysis is a very effective way to forecast economic conditions, but not necessarily exact market prices but price action. For example, when analyzing an economics’ forecast of the upcoming GDP (Gross Domestic Product) or employment report, you begin to get a fairly clear picture of the general health of the economy and the forces at work behind it. However, you will need to come up with a precise method as to how best to translate this information into a particular trading strategy.A trader who studies the markets using fundamental analysis will generally create a "model" to formulate a trading strategy. These models typically utilize a host of empirical data and attempt to forecast market behavior and estimate future values or prices by using past values of core economic indicators. This information is then used to derive specific trades that best exploit this information.
Forecasting models are as numerous and varied as the traders and market buffs that create them. Two people can look at the same data and come up with two different conclusions about how the market will be influenced by it. Therefore, it is quite important that before casting yourself into a particular mold regarding any aspect of market analysis, you study the fundamentals and see how they best fit your trading style and expectations. Don’t succumb to “PARALYSIS BY ANALYSIS”. Given the multitude of factors that fall under the heading of “The Fundamentals”, there is a distinct danger of information overload. Sometimes traders fall into this trap and are unable to pull the trigger on a trade. This is one of the reasons why a few traders turn to technical analysis that provides no guarantee of any sort.
Trading in particular, without knowing a great deal about the exact nature of its underlying elements, is like fishing without bait. You might get lucky and snare a few pips on occasion but it’s not the best approach over the long haul. For forex traders, the fundamentals are everything that makes a country tick. From interest rates and central bank policy to natural disasters, the fundamentals are a dynamic mix of distinct plans, erratic behaviours and unforeseen events. Therefore, it is best to get a handle on the most influential contributors to this diverse mix than it is to formulate a comprehensive list of all “The Fundamentals”.
FUNDAMENTAL INDICATORS
HOW INTEREST RATES AFFECT CURRENCY PRICES
The best way to think about interest rates is how much it is going to cost to borrow money, whether for our mortgages or how much we will earn on our bond and money market investments. Currency traders think bigger. Interest rate policy is actually a key driver of currency prices and typically important for new currency traders.
Fundamentally, if a country raises its interest rates, the currency of that country will strengthen, because the higher the interest rates, the more foreign investors are attracted to that country.
Conversely, if a country reduces interest rates, the currency will weaken and foreign investors will not show keen interest in doing business there. These are natural laws of demand and supply.
HOW RISING / FALLING GOLD PRICES AFFECT CURRENCIES
Historically, gold is a country’s neutral alternative to the US dollar. So, given the inverse relationship between gold and the US dollar, currency traders can take advantage of the volatility in gold prices in innovative ways. For example, if gold breaks an important price level, one would expect gold to move higher in coming periods. With this in mind, forex traders would look to sell dollars and buy Euros, for example, as a proxy for higher gold prices.
RELATING OIL PRICES TO CURRENCY TRADING OPPORTUNITIES
Higher oil prices negatively impact the stock market Prices of companies that are highly dependent on oil such as airlines, since more expensive oil means higher expenses and lower profits for these companies.
In the same way, a country’s dependency on oil determines how its currency will be impacted by a change in oil prices. The US’s massive foreign dependence on oil makes the US dollars more sensitive to oil prices than other countries. Therefore, any sharp increase in oil prices is typically dollar-negative.
If you believe the price of oil will continue to increase for the near term, you could express that view point in the currency markets by once again favouring commodity – based economies like Australia and Canada or selling other energy-dependent countries like Japan.
Most economic indicators can be divided into two categories.
(1) Leading indicators and (2) Lagging indicators.
1. Leading indicators are economic factors that change before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy.
2. Lagging indicators are economic factors that change after the economy has already begun to follow a particular pattern or trend.
In as much as I don’t want to bore you with too much theory-based analysis, I only want to acquaint you with the factors that formed my research work. I am aware of the fact that by direct “MENTORING” I shall impact the full knowledge in you a soon as possible.
ECONOMIC CALENDER
THESE ARE THE MAJOR INDICATORS
(1) The Gross Domestic Product (GDP) – The total number of all goods and services produced, either by domestic or foreign companies. GDP indicates the pace at which a country’s economy is growing (or shrinking) and is considered the broadest indicator of economic output and growth.
(2) Industrial Production – It is a chain-weighted measure of the change in the production of the nation’s factories, mines and utilities as well as a measure of their industrial capacity and of how many available resources among factories utility and mine is being used (commonly known as capacity utilization). The manufacturing sector accounts for one quarter of the economy. The capacity utilization rate provides an estimate of how much factory capacity is in use.
(3) Purchasing Managers Index (PMI) – The institute for supply management (ISM) releases a monthly composite index of natural manufacturing conditions, constructed from data on new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders and import orders. It is divided into manufacturing and non-manufacturing sub-indices.
(4) Producer Price Index (PPI) – The producer Price Index (PPI) is a measure of price changes in the manufacturing sector. It measures average changes in selling prices received by domestic producers in the manufacturing, mining, agriculture and electric utility industries for their output. The PPIs is most often used for economic analysis and those for finished goods, intermediate goods and crude goods
(5) Consumer Price Index (CPI) – The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumers (80% of population) for a fixed basket of goods and services. It reports price changes in over 200 categories. The CPI also includes various user fees and taxes directly associated with the prices of specific goods and services.
(6) Durable Goods Orders - Durable Goods Orders measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. A durable good is defined as a good that last an extended period of time (over three years) during which its services are extended.
(7) Employment Cost Index (ECI) – Payroll employment is a measure of the number of jobs in more than 500 industries in all states and 255 metropolitan areas in the US. The employment estimates are based on a survey of larger businesses and counts the number of paid employees working part-time or full-time in the nation’s business and government establishments.
(8) Retail sales – The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the timeliest indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays and trading-day differences. Retail sales include durable and non-durable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the consumers.
(9) Housing Starts – The Housing starts report measures the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Housing is very interest rate sensitive and is one of the first sectors to react to changes in interest rates. Significant reaction of housing start and building permits to changing interest rates, signals interest rates are nearing peak. To analyze, focus on the percentage change in levels from the previous month. Report is released around the middle of the following month.
The general rules governing economic indicators are:-
1. Know exactly when each economic indicators is due to be released – because, economic indicators have the potential to generate volume and move prices in the markets.
2 Keeping track of the calendar of economic indicators will also help you make sense out of other wise unanticipated price action in the market.
3. Understand what particular aspect of the economy is being revealed in the data. For example, you should know which indicators measure the growth of the economy - (GDP) versus those that increase inflation (PPI, CPI) or employment rate.
4. Not all economic indicators are created equal. This is so because some have acquired much greater potential to move the markets than others.
5. Know the indicators the markets are keying on. For example, if prices (inflation) are not a crucial issue for a particular country, inflation data will probably not be as keenly anticipated or reacted to by the markets. On the other hand, if economic growth is a vexing problem, changes in employment data or GDP will be eagerly anticipated and could precipitate tremendous volatility following their release.
6. The data itself is not as important as whether or not it falls within the market expectations.
7. Don’t get caught up in the headline news.
8. Speaking of revisions; don’t be too quick to pull the trigger should a market economic indicator fall outside of market expectations. Contained in each new economic indicator released to the public are revisions to previously released data. For example, if durable goods should rise by 0.5% in the current month, while the market is anticipating them to fall, the unexpected rise could be the result of a downward revision to the prior month. Look at the revisions to older data because in this case, the previous month’s durable goods figure might have been originally reported as a rise of 0.5% ,but now, along with the new figure, is being revised lower to say, a rise of only 0.1%. Therefore, the expected rise in the current month is likely the result of a downward revision to the previous month’s data.
9. Don’t forget that there are two sides to a trade in the foreign exchange market.
10. Do not be hasty in your judgment of any price action. By calculating your pointers in advance, relate them to the strategy we shall teach you during mentoring and achieve the independence you truly desire and deserve.
The only thing I cannot do for now is to release the trading strategy to the public. After learning I expect you to develop your own strategy or call to purchase a strategy at cost of $200US Dollar.
CALL PRIVATE TUTOR (PT)
+447035915033, +2348035620321, +2348075145719, +2348136268145 iwekannamdi@yahoo.com selton88clee88@yahoo.com
TECHNICAL INDICATORS
There are hundreds of forex technical indicators, these indicators basically are scrip or program written using program language. Here are some good forex technical indicators:
Simple Moving Average (SMA) Trend:- this is the average price of a given time period, (5 minutes, 10minutes, 1 day, etc) where each of the chosen periods carries the same weight for the average. Example; using the closing price of the USD/JPY currency pair, Day 1 close = 124.00, Day 2 close = 126.00, Day 3 close =124.00, Day 4 close = 126.00; the 4-day SMA is 125.00 (the average of prior 4 closes).
Exponential Moving Average (EMA) Trend: - Here, the averages are calculated with the recent forex rates carrying more weight in the overall average. Example, in a 10 day exponential moving average, the last 5 days will have more effect on the average than the first 5 days. The idea is to use the most recent data as a better indication of trend direction.
Rate of Change: - The oldest closing price divided into the most recent one.
Bollinger Bands: - The basic interpretation of Bollinger Band is that prices tend to stay within the upper and the lower bands. The distinctive characteristic of Bollinger bands is that the spacing between the bands varies based on price volatility. During periods of extreme currency price changes (i.e. high volatility), the bands widens to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The bands are plotted two standard deviations above and below a simple moving average. They indicate a “sell” when above the moving average (or close to the upper band) and a “buy” when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.
Parabolic SAR: - The Parabolic SAR (stop and reversal) is a time/price trend following system used to set trailing price stops. The parabolic SAR provides excellent exit points. Forex traders using this technical indicator should close long positions when the price falls below the SAR and close short positions when the prices rises above the SAR. If you are long (i.e. the price is above the SAR). The SAR will move up every day, regardless of the direction the price is moving. The amount the SAR moves up depends on the amount that currency rate move.
STOCHASTIC OSCILLATOR: - This is an indicator of speed of changing or the impulse price.
%E = 100 * (N – LLV (n)) / (HHV (n) – LLV (n)),
%D = MA (%K, s),
Where N – is the price of closing of the current period,
LLV (n) – the lowest price within the n last periods,
HHV (n) – the highest price within the last n periods,
n – amount of periods (usually from 5 to 21),
s –amount of period of calculation of the moving average
It demonstrates the moments, when the price reaches the border of its trade diapason within predefined time period. It comprises two curve lines – the slow (%D) and the fast (%K).
When trading with Stochastic Oscillator: the signal is to sell when the either line rose above 80 and then falls back below. Vice versa, purchase when both line %K or %D decrease below 20 and then again reaches that level. Another way of action is to watch timing trades and to sell when the %K line shifts below the %D line and purchase when the %K line shifts over the %D line.
Besides you should always follow the discrepancies. For instance, if price start reaching new peaks and the Stochastic Oscillator fails to surpass its previous peaks, the indicator usually demonstrate in which direction price is moving.
RSI (Relative Strength Index):-This measures the strength of all upward movement against the strength of all downward movement in a specified time frame. The most common parameter for RSI is period 14, although users can pick their favorite period of time if they wish. Its’ one of the popular oscillators that works well in range-bound market.
RSI can range from 0-100. The mathematical formula of RSI is as follows:
RSI = 100 – [100/(1+RS)]
RS = average of n days up closes / average of n days down closes
In the formula, if RS = 1, which means the average n days up closes equals to the average of n days down closes. RSI = 50. In that case, the market is having an equal strength of upward and downward force. If RSI > 50, it means that the upward force is stronger than the downward force. If RSI < 50, it means that the downward force is stronger than the upward force.
If RSI > 70, the market is considered to be overbought, a selling signal is issued; if RSI < 30, the market is considered to be oversold, a buy signal is issued.
These technical indicators are but few, proper interpretation of technical indicators will help you to control forex risk and put all odds to your advantage. Endeavour to understand your chosen broker’s platform, functions of all icons and properties.
The only thing I cannot do for now is to release the trading strategy to the public. After learning I expect you to develop your own strategy or call to purchase a strategy at cost of $200US Dollar.
CALL PRIVATE TUTOR (PT)
+447035915033, +2348035620321, +2348075145719, +2348136268145 iwekannamdi@yahoo.com, selton88clee88@yahoo.com
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