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Well, this is how I look at it.
Having an averaging system (rather averaging ideology) is the way I have built my confidence in trading. When you look at a chart (daily preference) of any pair, outside of one or two instances, there will always be a retrace of a major move.
The reason I lost money in my first 6 months of technical trading is because I would kill a trade because I feared I would lose everything, or that my system was not correct in its signal. It is important to note I closed my order before getting a signal to go the other way or to get out of my current position with a loss. It is also important to realize I traded heavily enough that I would have infact, LOST EVERYTHING. Though since, I have looked at things in a different light. It humors me to see that the GBP/USD is at the exact same price now as it was 30 years ago. But that is not relevant.
On the GBP/USD there was a 1.8950 - 1.9850 uptrend followed by a 1.9850 - 1.9500 retrace. If your numbers are a little different it is anywhere from 30-40% retrace. I am referencing moves that occur uninterupted. One could call the move that started in October up to December the same move, though I dont consider it to be.
Look at April into May of this year. That was a 3000 pip move followed by a 1000 pip retracement. Would you have been stuck in that full 3000 pip move? Heck no! Your system, be it trend lines, channels, MAs, breakouts etc would have had you going with the trend before your short would have been drawn down 3000 pips. However, this is where the averaging ideology comes in so important. If you COULD HAVE not just survived that 3000 pip move but make money after all is said and done.... why are you afraid and lose in your trades? I found a way to survive that move, an now trade without fear.
Averaging in itself I suppose isnt a system. I do have a sub account I trade without stop losses and do average in in interest postive positions only. USD/CHF gave me an entrance at 1.27 (1), 1.2450 (2) 1.2025 (4). So current position is down $300. However, I am earning $5.50/day just holding the position. It obviously does work better with JPYs. I will only average in every 275 pips because of a recent 1600 sustained move. I will also only enter when given a reliable signal. But to answer a question, yes, it is a 1, 2, 4, = 7 mini lots or .7 standard lots.
Averaging can be used as a system by itself, though I dont believe in that. I believe for carry trades and long term trading it can be a savior. Also, if you have a 70% system, double after every loss. If your system loses 1 trade with 1 lot, trade your next at 2 lots. If it loses that use 4.
I hope I didnt mislead anyone, just figure out how you CANT lose... then things just seem to work a whole lot better ;). At least for me they have.
It was a rough example.
I take the largest single move from the past 2 years (1500?) without interuption and divide that by 6. Then I determine how I would be able to survive that move. If there is a move of 900 pips lets say, would I be averaging every 250 pips at a 1-2-4-8 pace? nahh. Instead you use the technical system you trust and go straight to 4 or 8. This way when you get that retrace you need only go 1/4 of the way back to original entry to BE. Now, there are incredible moves that have happened over the past 15 years that would devestate an averaging system... that is for discretion to come in. I only hope to goodness I can recognize it when it happens.
Lets put it this way, my sub account which I use averaging in was against this current trend that occured. It has come out just fine. Obviously the simple trending system did a lot better ;).
1000 pips was an extreme. Yes, only trade interest positive. Probably best to stick to chf or jpy pairs. Also, use correlation to help get a tell on where the market might want to be going at a quick glance.
Freedom Rocks is a pyramid
scheme. 0 active, personally sponsored customers - 5 cycles ($200/week)
1 active, personally sponsored customer - 10 cycles ($400/week)
2 active, personally sponsored customers - 25 cycles ($1,000/week)
3 (or more) active, personally sponsored customers - 625 cycles - Cycle Bonus Cap ($25,000/week)
Their video states "if the market corrects" about half a dozen times. That is because they are averaging. I will tell you a strategy that I have used and have not lost a trade with in over 3 months... average like this 1,2,4,8,16,32. What you do is look at a 5 year chart and divide the total top-to-bottom range. If it = 6000 pips average in every 1000 pips. Only trade interest positive directions. You really cant lose, "if the market corrects". :).
I dont mean to be harsh at all. I will be interested to find out what you think of them. If they are good, obviously I would have to give them a try. I dont trust the fact that you cant use what ever broker you choose.
There is a huge option in the 109.xx range on USD/JPY. I mean HUGE. I was looking for the link that was given to me.. I cant find it or it may have expired already (the link). Either way, there could be a fight a brewin'.
You sure about that?
I do not believe hedge fund owners would make more than $1billion a year if they hired pimple faced kids. These guys are conditioned and well constructed. They wouldnt be part of 16 billion dollar bonuses if that werent the case. As for education, some have it ... some dont. I will be taking my trading record to a futures broker in Chicago in October of 2007, see if I can impress a few guys ;).
Well, brokers that use
Currenex platform are stated as whitelabel partners, such as EFX with MBTrading. If you go to http://www.currenex.com/about_us_partners.html you will see the liquidity providers for Currenex which are the banks, Deutsche Bank etc. The white label partners, most of which are listed there, you can trade through. You can trade direct with Currenex if you have $1mil.. but who has that :).
I have heard solid things about both AaronTrade, ADM http://www.admd.com/ www.aarontrade.com.
If you dont have at least 100k, I would surely suggest just going with MBTrading. These brokers that supply Currenex liquidity require a very large amount of liquidity to be traded.
Basically, if you trade anything less than 5 standard lots, I wouldnt even bother trying Currenex.
Merry Christmas
Currenex minimum $/pip
I believe is $50 or 5 lots. I dont know your financial situation, but that is a bit much for me on scalp trades :). I think it is 25k minimum for Currenex accounts, most are 50k for whitelabels.
The lead trader from a group
I am part of anticipates a big run against the US$ in January. If you check the past, US$ has done quite poorly. I have my doubts, though if I get a buy signal on my daily trending system within the next two weeks, I will take it and risk those 200+ pips SLs.
Yup, weeks.
With the Holidays, I wouldnt be suprised if it doesnt take them until mid - late January to open your account. It took about 14 - 17 days from start to finish to get my account open. I suppose they are covering all legal bases. I trust MBT as a safer broker by comparison because of their stock and future holdings. I would suggest the wait :). Check out Oanda as well, low spreads there and I have been happy with them for my 7+ months of trading now.
Yes, very slow.
MBT is very slow at opening accounts. It takes weeks to open, having opened 4 broker accounts, MBT was by far the longest of them all.
Level II
I know two guys with the capability to see bids and offers and neither of them use it successfully. Donkey over at kingforex also uses it.
Pushing some nice coin there.
I am short eur/usd and long usd/chf at these levels.
Private Traders Group,
Hey guys, I know I may be off base.. but what the heck. I am part of a private trading group with a Yahoo board and HotConference chatroom. I am not an elder member of the group, however, I can make a few invitations. If anyone is interested send me an email, which is in my profile, and I will let the guys know. There are some smart guys in the group, adding some thinkers is what we want in the group. There are about 15 in the group now.
Let me know if you are interested. If not, disregard the post :).
If that happens, great!
I welcome a big move such as that. I trade usually shorter term holds, 1-4 weeks and make somewhere around 100 pips per trade. I would love to see a semi consistant trend. Though I think 1.40 is a bit high... though I suppose we wont know until it occurs. I think we see 1.22 before 1.32 haha : ).
Mister Lava, analysis on GBP/USD?
I see you are very bullish eur/usd. How do you compare the gbp/usd into your fundamental analysis? The Pound has actually moved in the past few months higher % wise than the Euro, is then news just as good ...? Just curious how you factor the GBP/USD.
Livin
Ohh man dudes, what is up?
Hey guys, has it been a while or what? I left sometime back in summer just like that... poof. Yeah, I am still trading. The brokers brushed me over the coals with the news spike trading so I had to jump into technicals. Man.. that was a transition. That is when I left here. I was just so mad when Oanda stopped filling my orders I had to just get away you know? Not their fault I guess, they have to make their money as well.
Anyway, I see from a quick look that all the guys are still here. How you all trading? Well, that is all for now.. I am tired. I dont know if I will be back here or not. Just wanted to stop in and say hi.
LITL! HOLY CHEESE PUFFS!
Nice call : ).
Zimbabwes Currency,
Interesting article off of Yahoo News. I had heard that some of the "unethical" aspects of Forex was the muscling and manipulation of cheaper currencies. I have yet to figure out how this transpires:
****
HARARE (AFP) - Zimbabweans last week flooded banks to hand in old notes after the central bank slashed three zeroes from the local currency, but analysts said the new money would not provide relief from record inflation.
ADVERTISEMENT
Zimbabwe's Reserve Bank slashed three zeroes from its currency last Monday to help consumers battling with bundles of money on shopping trips which can cost billions and trillions of local dollars.
The change, which ushered in a new currency, is also aimed at compelling individuals and companies to bring in billions of dollars stashed away in safes and combatting a burgeoning black market in currency, central bank chief Gideon Gono said.
Since Monday state television has been screening an advertisement in which an ecstatic housewife hails the currency change saying a loaf of bread which cost 200,000 Zimbabwe dollars "now costs only 200 dollars."
Independent economist John Robertson told AFP: "The currency change is a purely cosmetic exercise which won't overcome the problems facing the country.
"It will only work as far as reducing the volumes of bank notes people will carry but it does not provide solutions to the main problems of inflation, lack of investment and high unemployment."
Best Doroh, an economist with a leading bank, said the currency change "does not entail an immediate reduction in the prices of goods and services.
"Availability of basic commodities will also not necessarily improve. Inflationary pressures will most likely remain alive in the economy."
Zimbabwe is in the throes of an economic crisis characterised by world-record inflation hovering over 1,000 percent, high unemployment and chronic shortages of foreign currency and basic goods like fuel and cooking oil.
At least 80 percent of the population lives below the poverty threshold often skipping meals and walking or cycling long distances to work as they battle to stretch income to the next pay-day.
Economist Eric Bloch lauded fiscal and currency reforms introduced by Gono, however, saying they would reap rewards in the long run.
"The benefits will not come overnight," Bloch said. "But the government must refrain from printing money and financing its projects. The governor also did well to remove subsidies which have contributed greatly to inflation."
Zimbabwe started printing high denomination bearer cheques, a bank note equivalent, following cash shortages which saw banks running out of cash and customers waiting long hours for cash deliveries.
As hyper-inflation struck, millions became "millionaires" overnight carrying wads of notes to buy groceries.
The central bank gave a 21-day ultimatum to hand in the old bearer cheques and imposed thresholds on amounts that can be deposited in banks in an apparent crackdown on hoarders.
Those found with cash exceeding the limit will have to reveal the source or forfeit the money and face prosecution for money laundering.
Shopowners have also been barred from accepting cash payments of more than 100 million Zimbabwe dollars (400 US dollars) for goods and services.
Critics say the currency reforms were a psychological ploy to hoodwink ordinary Zimbabweans into believing prices had gone down.
"The government wants to create the impression that goods are cheaper which is not the case," said a taxi driver in central Harare.
A Harare-based economic thinktank, KM Financial Solutions, said unless President Robert Mugabe's government changed its economic policies, the country would keep on playing with the currency.
"One also hopes that the government will be able to fuel the functioning of the economy since most of the fuel was being financed by black market dealers," another analysts said.
The government blames the country's economic woes on sanctions imposed by western countries four years ago while its critics say the economic downturn is a result of corruption and mismanagement.
Lying broker,
Forget the ODLSecurities thing. Lying SOBs won't take any of my money. Good source just gave me a heads up. These guys requote you on dozens of standard lots. -XXk's worth of money. Will send my ODL money to HotSpot. Will let you guys know how HotSpot, IB and MB take care of me.
* To be fair, Oanda did honor my stoploss, take profit placements on the NFP on Friday. Only good thing to happen all week.
New brokers are,
ODLSecurities, Interactive Brokers and MB Trading. If I find I am not happy with one of these I will take my money and place it with HotSpot. If I were you, seeing as how you trade (short term technical, scalping etc) I would go with MB Trading or Interactive Brokers. ODL Securities not only has a 25k minimum like Interactive Brokers, they also have fixed 3 pip, 4 pip or 5 pip spreads on the major pairs. In this case you are behind a bit before you even have the chance to start. IB and MB have the best interbank bid/ask offers.
MB Trading has a minimum deposit of only around $1000 and they have 1-2 pip spreads on the majors very often, if you are lucky you will get 0 or - spreads. You can also bid or ask within the spread. They do charge commission which turns people away, though if you do buy the ask or sell the bid at a 1 pip spread, commission = roughly 1 pip... so it is a 2 pip charge. If you buy the bid or sell the ask you are only paying the commission, in effect just 1 pip. Both IB and MB have horrific platforms, though both are very respectable in both equities and forex markets. IB offers 50/1 leverage and MB offers 100/1 leverage. MB Trading doesnt give you a chart service, though http://www.cbfx.com/charts/chartsdemo.htm is pretty good.
Good luck,
Livin
If your broker allows it,
use a hedge with a SL. Modify the stop losses to around 5-10 off of market price immediatly before the turn of the hour. I usually risk around 12-15 pips of loss (spread and whipsaw possible) for the chance to get a move like this. My limits didn't fill today, Oanda has fallen apart. I am currently depositing my funds with 3 different brokers.
Try Trade the News, they are about $200/month. Reuters is $750/month with a yearly contract.
BoE rate statement,
Keep a close eye on the markets reaction to this statement. The consensus is about 15% chance that they raise their rates. This means that there are some "gamblers" out there that will likely be closing their long positions when the statement comes out unchanged. I personally don't believe it will cause much.. though will be nice to watch. Looking to short this bloated sterling anyway :).
Saxo Bank,
May want to check to make sure. You may be right about the 40000k protection. I have been reading on so many platforms my head is spinning. The funny thing about Saxo Bank is.. it is a market maker... not a bank lol! Saxo Bank is actually a bank I guess, though they use a retail mm platform under their name. From what I have been told, they have dealing desk that actually "personalizes" YOUR quotes as an individual trader. Meaning that on any given trade, they can adjust the pip spread from say.. 4 EUR/USD to 6-7.
http://www.elitetrader.com/vb/forumdisplay.php?s=7300b09ed31243554f4aea5883a2696c&forumid=47&...
copy and paste that.. it may provide some info.
Bloomberg, broker,
Hey JDZ, Bloomberg Anywhere is $1700. As far as news trading is concerned.. figure you have to trade $10/pip extra to pay off the monthly cost. $10/pip on news trading is very conservative as you probably know. A conservative estimate trading news is about 200pips/month. Though I would advise AGAINST Bloomberg unless you trade fixed income: notes or bonds. Reuters FX program is $700/month from what I hear.. I will let you know about that next month or the month after when I get it :).
JDZ, as far as Saxo Bank.. I have heard some rumors of their honesty. Saxo Bank only protects their clients up to 10k EUROs from what I have been told. Dukascopy is a swiss broker who places all of your money in a Swiss Prime Bank (whatever that is lol) to protect from bankruptcy or other problems. Dukascopy does not do well in volatile markets.. which will not be a problem if you dont trade news. Dukascopy offers at times zero pip spreads on the EUR/USD! Most of the time it is 1-2 pips (actual interbank quote). You will need to put a 25k minimum with them.. so if you have it.. I would look into them. If you you want more info there is a guy over at www.hibbiz.com that MAY be able to help. If you want a EURO broker, I would look into Deutsche Bank.. they are the single most powerful forex player around. DBFX.com is their retail platform, AutoBahn FX is their platform for the big guys that they don't want anyone to know about ;).
Livin
As for me.. I don't know who my broker will be. By some time next month I will have 4 of them *sheesh*. Just shopping around I suppose.
Forex trading on Bank Platforms
So far I have found AutoBahn FX (Deutsche Bank), CITIFX, UBS FX, Cantor Fitzgerald (eSpeed), there was another though it escapes me at the moment.
Anyone heard anything useful about trading with larger banks? The liquidity is incredible and supposedly CITI FX works with you to set up an API system. Leverage is only 15:1.. though that is good enough for most progressive traders. Most of the minimum accounts are crazy large UBS = 500k, though others have 25k minimum.
Livin
Spot Gold sizzles!
Spot gold on Oanda platform costs .60c an ounce? Anyone here know any brokers that offer a better price? Been doing a whole bunch of research.. just cant find any.
Also, Bloomberg works like a gem. Next trial I have to use is Reuters. Bloomberg will get you the news before the spikes nearly every single time. Though I really got hurt during this trial because Oanda has decided to go loco on me. Forget them! I am moving on to better things... will try and get an API set up as well.
Livin
Thanks Elder,
Yes.. I was looking at Interactive Brokers as well. I have read good things of them. Thanks for the rec.
$200k isnt enough!
You are crazy.. I want to see half million at least.. gee.
Those standard lots?
Geez No.. and to think I had a large account :). I tell people that I can trade with 30 standard and they look at me cross-eyed. Not that I ever do... my MM (Oanda) wont fill me more than 5 during news releases... which is why I am getting out and finding a new one. ODL promises 40 standard lots before they start to hit you with the deal desk, yeah RIGHT! I will see.
ODL Securities, Hotspot, FXAll, Currenex are my 4 finalists. Yes! They are all affiliated with one another :).
I would post trades up here with you guys, though I don't scalp or trade technicals :(. I do have hedges going.. though making profit through deviation isnt very fun :).
Livin
What timeframe?
Awesome Shakerzz! How long it take you to convert that 40k? Your profile says your 21! That means I have about 8 months to make $7,890,000.00 rofl!!!
Livin
Yes. Already out.
I am always happy to stand up and walk a trade like this off. Even if it does run again.. I don't believe it will be worth my risk. Perhaps I will trade with 1/4 of my earlier position.
Take care,
Good thing he didnt keep his mouth shut.
I saw "moderation" and hit buy in a second! That was a fun 5 minutes lol!
"Moderation" creates havoc!
100 pips on the EUR/USD. Congrats on that profit JDZ! I had a short on the YEN at 117.50. and went long on the EUR/USD @ 1.2485 on the spike. 80+ pips for me today :). Thanks Benny!
Take care,
Livin
Interest vs Pips,
Obviously pips will win this match. Still.. as I was averaging my short on the USD/YEN pair... it is amazed me how much interest this short and hold was costing me. Switching over to the CHF/YEN pair :). I hope to be done averaging by this weekend. Hopefully the pair(YEN) start making the move next week.
Currency Correlation,
This is from http://www.investopedia.com/printable.asp?a=/articles/forex/05/051905.asp
*Please go to the link to look at all the tables :).
I thought it was interesting since I am searching high and low for forex strategies to apply. I have been applying hedging to my trading of late. I am looking for a new broker to accomodate my news trading.
-BEGIN
To be an effective trader, understanding your overall portfolio's sensitivity to market volatility is important. But this is particularly so when trading forex. Because currencies are priced in pairs, no single pair trades completely independently of the others. Once you know about these correlations and how they change, you can take advantage of them to control over your portfolio's exposure.
Defining Correlation
The reason for the interdependence of currency pairs is easy to see: if you were trading the British pound against the Japanese yen (GBP/JPY pair), for example, you are actually trading a kind of derivative of the GBP/USD and USD/JPY pairs; therefore, GBP/JPY must be somewhat correlated to one if not both of these other currency pairs. However, the interdependence among currencies stems from more than the simple fact that they are in pairs. While some currency pairs will move in tandem, other currency pairs may move in opposite directions, which is in essence the result of more complex forces.
Correlation, in the financial world, is the statistical measure of the relationship between two securities. The correlation coefficient ranges between -1 and +1. A correlation of +1 implies that the two currency pairs will move in the same direction 100% of the time. A correlation of -1 implies the two currency pairs will move in the opposite direction 100% of the time. A correlation of zero implies that the relationship between the currency pairs is completely random.
Reading The Correlation Table
With this knowledge of correlations in mind, let's look at the following tables, each showing correlations between the major currency pairs for the month of March 2005.
The upper table above shows that over the month of March (one month) EUR/USD and AUD/USD had very strong positive correlation of 0.94. This implies that when the EUR/USD rallies, the AUD/USD will also rally 94% of the time. Over the longer term (three months), though, the correlation is slightly weaker (0.47).
In contrast, the EUR/USD and USD/CHF had a near-perfect negative correlation of -0.99. This implies that 99% of the time, when the EUR/USD rallies, USD/CHF will undergo a selloff. This relationship even holds true over longer periods as the correlation figures remain relatively stable.
Yet correlations do not always remain stable. Take USD/CAD and NZD/USD, for example. With a coefficient of -0.94, they had a strong negative correlation over the past year, but the relationship deteriorated over March 2005 for a number of factors, including the Reserve Bank of New Zealand's intentions to resume rate hikes, and political instability in Canada.
Correlations Do Change
It is clear then that correlations do change, which makes following the shift in correlations even more important.Sentiment and global economic factors are very dynamic and can even change on a daily basis.Strong correlations today might not be in line with the longer-term correlation between two currency pairs.That is why taking a look at the six-month trailing correlation is also very important.This provides a clearer perspective on the average six-month relationship between the two currency pairs, which tends to be more accurate.Correlations change for a variety of reasons, the most common of which include diverging monetary policies, a certain currency pair’s sensitivity to commodity prices, as well as unique economic and political factors.
Here is a table showing the six-month trailing correlations that EUR/USD shares with other pairs:
Calculating Correlations Yourself
The best way to keep current on the direction and strength of your correlation pairings is to calculate them yourself. This may sound difficult, but it's actually quite simple.
To calculate a simple correlation, just use a spreadsheet, like Microsoft Excel. Many charting packages (even some free ones) allow you to download historical daily currency prices, which you can then transport into Excel. In Excel, just use the correlation function, which is =CORREL(range 1, range 2). The one-year, six-, three- and one-month trailing readings give the most comprehensive view of the similarities and differences in correlation over time; however, you can decide for yourself which or how many of these readings you want to analyze.
Here is the correlation-calculation process reviewed step by step:
Get the pricing data for your two currency pairs; say they are GBP/USD and USD/JPY
Make two individual columns, each labeled with one of these pairs. Then fill in the columns with the past daily prices that occurred for each pair over the time period you are analyzing
At the bottom of the one of the columns, in an empty slot, type in =CORREL(
Highlight all of the data in one of the pricing columns; you should get a range of cells in the formula box.
Type in comma
Repeat steps 3-5 for the other currency
Close the formula so that it looks like =CORREL(A1:A50,B1:B50)
The number that is produced represents the correlation between the two currency pairs
Even though correlations do change, it is not necessary to update your numbers every day, updating once every few weeks or at the very least once a month is generally a good idea.
How To Use It To Manage Exposure
Now that you know how to calculate correlations, it is time to go over how to use them to your advantage.
First, they can help you avoid entering two positions that cancel each other out, For instance, by knowing that EUR/USD and USD/CHF move in opposite directions nearly 100% of time, you would see that having a portfolio of long EUR/USD and long USD/CHF is the same as having virtually no position - this is true because, as the correlation indicates, when the EUR/USD rallies, USD/CHF will undergo a selloff. On the other hand, holding long EUR/USD and long AUD/USD is similar to doubling up on the same position since the correlation is so strong.
Diversification is another factor to consider. Since the EUR/USD and AUD/USD correlation is traditionally not 100% positive, traders can use these two pairs to diversify their risk somewhat while still maintaining a core directional view. For example, to express a bearish outlook on the USD, the trader, instead of buying two lots of the EUR/USD, may buy one lot of the EUR/USD and one lot of the AUD/USD. The imperfect correlation between the two different currency pairs allows for more diversification and marginally lower risk. Furthermore, the central banks of Australia and Europe have different monetary policy biases, so in the event of a dollar rally, the Australian dollar may be less affected than the Euro, or vice versa.
A trader can use also different pip or point values for his or her advantage. Lets consider the EURUSD and USDCHF once again. They have a near-perfect negative correlation, but the value of a pip move in the EURUSD is $10 for a lot of 100,000 units while the value of a pip move in USDCHF is $8.34 for the same number of units. This implies traders can use USDCHF to hedge EURUSD exposure.
Here's how the hedge would work: say a trader had a portfolio of one short EUR/USD lot of 100,000 units and one short USD/CHF lot of 100,000 units. When the EUR/USD increases by ten pips or points, the trader would be down $100 on the position. However, since USDCHF moves opposite to the EURUSD, the short USDCHF position would be profitable, likely moving close to ten pips higher, up $83.40. This would turn the net loss of the portfolio into minus $16.60 instead of minus $100. Of course, this hedge also means smaller profits in the event of a strong EUR/USD sell-off, but in the worst-case scenario, losses become relatively lower.
Regardless of whether you are looking to diversify your positions or find alternate pairs to leverage your view, it is very important to be aware of the correlation between various currency pairs and their shifting trends. This is powerful knowledge for all professional traders holding more than one currency pair in their trading accounts. Such knowledge helps traders, diversify, hedge or double up on profits.
Summary
To be an effective trader, it is important to understand how different currency pairs move in relation to each other so traders can better understand their exposure. Some currency pairs move in tandem with each other, while others may be polar opposites. Learning about currency correlation helps traders manage their portfolios more appropriately. Regardless of your trading strategy and whether you are looking to diversify your positions or find alternate pairs to leverage your view, it is very important to keep in mind the correlation between various currency pairs and their shifting trends.
By Kathy Lien, Chief Strategist, FXCM
Kathy Lien is Chief Strategist at the world's largest retail forex market maker, Forex Capital Markets in New York. Her book "Day Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Swings" (2005, Wiley), written for both the novice and expert, has won much acclaim. Easy to read and easy to apply, this book shows traders how to enter the currency market with confidence - and create long-term success! Kathy has taught currency trading seminars across the U.S. and has also written for CBS MarketWatch, Active Trader, Futures and SFO magazines.
Week not goin' well,
Hey All,
I said I would post my results for the UK Trade Balance. Didn't trade it. Oanda hiked the spreads again on me. Took me right out of the trade. The total movement was around 40 pips in 45 seconds. Great trade I hadn't had to deal with the 20 pips of total spread. Hopefully U.S. Trade Balance will be better.
Also, Canada House Starts didn't move on the news release. Lost my spread ... not really a big deal. Can you believe the move it took on the interest rate news? No forecast to change, didnt change... moved the market 100 pips! Remind me to straddle every interest rate from now on :).
Good luck,
Livin
Hey you People, News :)
This will be one of my last post on iHub concerning actual trading. I like TheForexClub site better. May as well use it right :). So if you are not a member... signup. Glance and Relentless have done a good job. They are probably still thinking of new innovative ways to enhance it.
Okay... these releases are the ones that will have an effect (mostly small) on the currency pairs. It is interesting to note, news released out of E-12 and Japan do not have strong affects on the pairs immediatly. Once I find out the reason for this... everything will probably be done moving!! GRRR!
*7/10*
- UK Producer Price Index Output/Input, House Price Index. These reports come out at 4:30AM Est.
*7/11*
- UK Trade Balance will move the GBP very nicely. It will be released at 4:30 Est. I hope to post my trade results on this trade. Hopefully it will be nice !
- Canada will be releasing Housing Starts, New House Price Index and have their Interest Rate Statement @ 8:15,8:30, 9:00AM Est. Housing Starts should move the Canadian Dollar nicely if off forecast by 10% or more.
- At 9:30AM I will also watch Trichet speak... doubt it will do anything.
*7/12*
- UK Claimant Count Change and Average Earnings Index +Bonus reports will both be released at 4:30AM Est. These two reports if both off forecast in the same direction will move the GBP easily 25-30 pips in the first minute. I am hoping Bloomberg gets the #s quick, I hope to trade this one.
- 8:30AM Est we have USA Trade Balance. Yes! Single report! If the number is $1Billion or more off of forecast I will certainly trade this report. Last month this report moved 45 pips in roughly 1min. I only captured 1/4... I hope to do significantly better this month for serious $$$.
- 8:30AM Est the Canadain Trade Balance will be reported. This will probably be less of a mover because of the USA Balance. I wont be able to trade both... RATS! I need two computers... and two brokers... and another person?? .
- 11:30AM Est Trichet will speak again. Again... I doubt this will move the market. However, I will set up a light straddle on both of his speaches this week. Last week when he spoke the market moved 30 pips in roughly 3-4 minutes. Those banks are always watching... kinda like Batman ; ).
- 9:30PM Est Australia will release both Employment Change and Unemployment Rate. Generally #s out of Australia do not tend to move the pairs as much as US, Canada, UK. However, they do fairly consistantly get good movement. I will look for vastly different numbers from the 10k forecast on the Change... if say -10k or + 30k.. I will trade this report with a light position. So if it does not move I can just cover for the 2,3,4 pip spread loss.
*7/13*
- 8:30AM Est the Unemployment Claims come out of the United States. I have seen this report move the market 5-25 pips. It is almost a coin flip. So I will basically watch for numbers well off the forecast of 320k. If the number is around 40k off I will trade the report.
- 9:30PM Est the Auzzies release their Trade Balance. This report moved 15 pips last month. If the numbers are moderatly off forecast I will trade it. Hopefully it will move so I do not need to take the 2-4 pip loss on spread.
*7/14*
- 1:00AM Est the Bank of Japan meet to announce their interest rate. Now.. this one will be sweet! If the Japanese do not raise rates... short heavy!! Use everything to go against the Yen. The whole world is expecting them to raise their rates. Though... this is where it gets interesting... how much?? The forecast is .25%... though nobody knows certain. I have heard .50bps rumors. That is why I will go with a straddle and a 15 pip stop loss. *** If your broker is not good at filling limits in a fast market ... hedge this report! *** Place a 15-20 pip stop loss on two JPY pairs. As long as you trust your broker (I hate that they are dishonest!) you will more than likely make solid pips after your bad pair is stopped out. I am actually considering this in accordance with my straddle. There will either be a SPIKE or a very fast move by the JPY. Then the trading kicks in... retraces and resurges... blah blah blah... you guys know how it all works better than I do . I aim at 25 pips in the first minute and 50 overall on this report. Hope you guys do well! Last three changed interest rates 2 out of the USA, 1 Euro have moved over well over 300 pips in the first hour after the report. Nearly 500 pips in the first day!
- 8:30AM Est the United States will release Retail Sales, Retail Sales Excluding Autos and Import Prices (phew). I wont trade this report. I don't like double reports (though they can be traded) let alone triples!! I will watch and trade it in my simulator just to try and build SKILLS (slurred voice).
- 9:45AM - 10:00AM Est the US will release Consumer Sentiment and Business Inventories. I have not seen these reports as of yet. I do not know the move if any they create. So I will just throw a trade in on my simulator to track movement.
A great week coming up... hope stuff is all off forecast. If so... this could be 200 pip plus week. Excellent.
Good tradin' folks!
Livin
I use Oanda.
FXCM is very advertised.. thus the reason for a lot of customers reviewing them. Oanda has near perfect execution, a lot of hidden gems in the trading platform, decent charts. I love the "click and drag" I can do on the chart with the stop loss. I dont need to enter numbers.. with the quick and volatile trades I am in.. comes in handy :).
Tried GFT, still may use them as a secondary account. Too much going on with their platform for the beginner I am :). I love Oanda, though certain trades may benefit from a 100/1 leverage, Oanda only offers 50/1.
Quit work on Friday! So much for that summer job :). Time to register for my fall classes. Can't wait to be a daily poster over at www.theforexclub.us. Please everyone! Use the site.. Glance and Restless have done a great job thus far. Perhaps mostly Glance.. not positive.
Thanks guys,
Livin
I use Trade the News right now,
I will be getting a 21 day trial of Bloomberg Anywhere in July. I am unsure if you work a day job or not?.. if you do.. when you take a vacation, get TTNs free trial. Watch a few reports... it is working very well for me. The most attractive part of news trading is that you only work about an hour a day. I am currently building enough money to excuse myself from going back for my junior year :)!
Good luck all,
Livin
U.S. Interest Rate
Total movement upward thus far has been 105 pips! I got out waaayy too early. The straddle I set up worked PERFECT and I did capture 31 pips of the spike. 120 pips now... I am kicking myself for not getting back in... UGG. If I were a veteran trader I would have pulled my stop loss up to secure profits... then just watched this thing move!
I gained close to 10% on the trade, I used $7,000.00... for a college kid... I am very happy :). 1 more U.S. hike probably... then this will be done for a while.
Livin