Ed Ponssi from Online Trading Academy had the following to say:
7 a.m. GMT to 4 p.m. GMT (Greenwich Mean Time, which is the standard measurement of time in the Forex market) is an excellent time for high volume trading, because these are the hours during which traders from London and Europe are most active. Make no mistake about it, London is the world's capital of Forex trading, and is responsible for about 30% of all Forex volume. To be even more specific, the open of the U.K. session (between 3-5 GMT a.m.) and the beginning of the US session (11-13 GMT) have really high volume, as these are the most liquid times of the Forex trading day. I would give respect to breakouts that occur between 7 a.m. GMT to 4 p.m. GMT, and also (to a lesser extent) to breakouts that occur in the early part of the Asian session, around midnight GMT. On the other hand, breakouts that occur during a time of day that is notorious for low volume (late in the U.S. session or late in the Asian session, for example) can be ignored or even faded, because these breakouts tend to occur on relatively light volume.
How about Fibonacci on Forex?
Fibonacci works in Forex trading because it is a part of the Forex trading culture. [Only fib lines no other esoteric fib stuff.]
Basically, I want to use what the institutions use and see what they see, and I want to avoid analyzing anything that institutions do not use. Since institutional traders are the ones that move the market, we want to align our analysis with theirs.
For me, the bare minimum time frame for a Fibonacci retracement would be one day, but when I draw a retracement usually I am covering a period of weeks or months. Again, try to pick the one that seems most obvious...which one really sticks out? That's the one that most people will use, including the institutions and hedge funds, and therefore it is the one that is most likely to work.
NOTE: I Have the e-mail of this guy.
Showing posts with label Forex. Show all posts
Showing posts with label Forex. Show all posts
High Volume
Ed Ponssi from Online Trading Academy had the following to say:
7 a.m. GMT to 4 p.m. GMT (Greenwich Mean Time, which is the standard measurement of time in the Forex market) is an excellent time for high volume trading, because these are the hours during which traders from London and Europe are most active. Make no mistake about it, London is the world's capital of Forex trading, and is responsible for about 30% of all Forex volume. To be even more specific, the open of the U.K. session (between 3-5 GMT a.m.) and the beginning of the US session (11-13 GMT) have really high volume, as these are the most liquid times of the Forex trading day. I would give respect to breakouts that occur between 7 a.m. GMT to 4 p.m. GMT, and also (to a lesser extent) to breakouts that occur in the early part of the Asian session, around midnight GMT. On the other hand, breakouts that occur during a time of day that is notorious for low volume (late in the U.S. session or late in the Asian session, for example) can be ignored or even faded, because these breakouts tend to occur on relatively light volume.
How about Fibonacci on Forex?
Fibonacci works in Forex trading because it is a part of the Forex trading culture. [Only fib lines no other esoteric fib stuff.]
Basically, I want to use what the institutions use and see what they see, and I want to avoid analyzing anything that institutions do not use. Since institutional traders are the ones that move the market, we want to align our analysis with theirs.
For me, the bare minimum time frame for a Fibonacci retracement would be one day, but when I draw a retracement usually I am covering a period of weeks or months. Again, try to pick the one that seems most obvious...which one really sticks out? That's the one that most people will use, including the institutions and hedge funds, and therefore it is the one that is most likely to work.
NOTE: I Have the e-mail of this guy.
7 a.m. GMT to 4 p.m. GMT (Greenwich Mean Time, which is the standard measurement of time in the Forex market) is an excellent time for high volume trading, because these are the hours during which traders from London and Europe are most active. Make no mistake about it, London is the world's capital of Forex trading, and is responsible for about 30% of all Forex volume. To be even more specific, the open of the U.K. session (between 3-5 GMT a.m.) and the beginning of the US session (11-13 GMT) have really high volume, as these are the most liquid times of the Forex trading day. I would give respect to breakouts that occur between 7 a.m. GMT to 4 p.m. GMT, and also (to a lesser extent) to breakouts that occur in the early part of the Asian session, around midnight GMT. On the other hand, breakouts that occur during a time of day that is notorious for low volume (late in the U.S. session or late in the Asian session, for example) can be ignored or even faded, because these breakouts tend to occur on relatively light volume.
How about Fibonacci on Forex?
Fibonacci works in Forex trading because it is a part of the Forex trading culture. [Only fib lines no other esoteric fib stuff.]
Basically, I want to use what the institutions use and see what they see, and I want to avoid analyzing anything that institutions do not use. Since institutional traders are the ones that move the market, we want to align our analysis with theirs.
For me, the bare minimum time frame for a Fibonacci retracement would be one day, but when I draw a retracement usually I am covering a period of weeks or months. Again, try to pick the one that seems most obvious...which one really sticks out? That's the one that most people will use, including the institutions and hedge funds, and therefore it is the one that is most likely to work.
NOTE: I Have the e-mail of this guy.
Are they against you?
Yes, they are. That peak never happened in the currency market. Most people, including me, had a stop just under 120. That peak took those stops out on this platform.It is a minute graph. The peak only lasted for a couple of seconds.
Nothing to do..., in this market, it is perfectly legal for the dealers to do something like this. There are only two possible recourse for such events: 1.) change dealer, 2.) play against them - using such peaks as an indication of the comming trend.
Pair Trading
Pair-trading is opening opposite position in different currencies that have some correlation like CHF with EUR against USD.
Exiting the trade when we get profit. Risk is limited by the fact the currences are correlated.
Exiting the trade when we get profit. Risk is limited by the fact the currences are correlated.
Fundamentals on Hungary and Europe
Hungary being my origin and EUR the currency I trade. Here are website with statistcs on these:
Eurostat for Europe: http://epp.eurostat.ec.europa.eu
Hungarian: www.ksh.hu, www.gki.hu, www.nmb.hu
Eurostat for Europe: http://epp.eurostat.ec.europa.eu
Hungarian: www.ksh.hu, www.gki.hu, www.nmb.hu
How much to trade?
Keep trading account small enough to stay under the radar of your dealer. Dealers might push the price in one direction if that is in their benefit. If you trading account is small, it is dwarfed by other trading accounts so getting some profits here and there will stay under the radar - meaning: it is being dwarfed how much others loose while you win a little.
Trading System
All of the systems on the below list perform 75-145% annually:
Open trading systems are I-Master from Keith Fitschen/Murray Rugglero (S&P, Russel 2K, Nasdaq, Mini-Value) and Balance Point from Daytrading Education (S&P).
Blackbox trading system for currencies: EuroTrader from eForex (Euro), Mesa T-Notes from John Ehlrers/Mike Barna (US Bonds), Market Rider from Parviz Harnedanian (Currencies), Dollar Trader (Currencies) from Dave Fox.
However, the current top ten performs way better: www.futurestruth.com
Open trading systems are I-Master from Keith Fitschen/Murray Rugglero (S&P, Russel 2K, Nasdaq, Mini-Value) and Balance Point from Daytrading Education (S&P).
Blackbox trading system for currencies: EuroTrader from eForex (Euro), Mesa T-Notes from John Ehlrers/Mike Barna (US Bonds), Market Rider from Parviz Harnedanian (Currencies), Dollar Trader (Currencies) from Dave Fox.
However, the current top ten performs way better: www.futurestruth.com
Forex Market
In most of my studies, I focus on Forex spot market. Especially EUR, USD and JPY.
However it has relation to:
However it has relation to:
- Bonds and their futures
- Currency futures
- Currency options (for now, I consider it seperatly from futures)
- Index and Interest futures: Euribor (On Euronext.liffe, the most liquid contract of the world), short-Sterlink, Eurodollars (On CME, the most acvitely traded contract in the world)
- S&P and Dow indeces
- DAX index
- Gold, Silver
Volume on Forex
I was worried that since I have no volume information available on Forex, I am at considerable risk following only chart signals.
However, it seems that Dr. Alexander Schwarz, one of my favorite system trader, is not using volume after all in his strategies. Simply, because he did not find the statistically relevant.
There is a light after all at the end of the tunnel.
However, it seems that Dr. Alexander Schwarz, one of my favorite system trader, is not using volume after all in his strategies. Simply, because he did not find the statistically relevant.
There is a light after all at the end of the tunnel.
eSignal Experiment
Using eSignal. I have put on my screen the following JPY real-time quotes. What I wanted to see if knowing the various prices on the market, can you predict the future price move at my broker?
About the picture: the upper-left corner is two of my favorite dealers/brokers. Under those the eSignal quotes and a composite pip-level chart on the right. One positive outcome of the experiment that I fall in love with the news ticker (shown on the bottom). It is pretty cool to read about news so much before the newspapers arrive. Also I kind of hate when newspapers don't publish their sources. Here you can even see the e-mail or phone number of the article writers.
How to read the symbol: JPY is JPY/USD. @XXXX means the dealer code giving the price quite. A0 means spot market, and FX means Forex.
How to read the symbol: JPY is JPY/USD. @XXXX means the dealer code giving the price quite. A0 means spot market, and FX means Forex.
JPY@ABAA A0-FX
JPY@AD A0-FX
JPY@ALIB A0-FX
JPY@AM A0-FX
JPY@BKCH A0-FX
JPY@CC A0-FX
JPY@CCMI A0-FX
JPY@CM A0-FX
JPY@COES A0-FX
JPY@DO A0-FX
JPY@DS A0-FX
JPY@FXCM A0-FX
JPY@FXDD A0-FX
JPY@GAIN A0-FX
JPY@GFT A0-FX
JPY@HASE A0-FX
JPY@HOTS A0-FX
JPY@HSFX A0-FX
JPY@ID A0-FX
JPY@KZ A0-FX
JPY@LH A0-FX
JPY@NEDS A0-FX
JPY@NICP A0-FX
JPY@ODSE A0-FX
JPY@OH A0-FX
JPY@RF A0-FX
JPY@RTG A0-FX
JPY@SBD A0-FX
JPY@SBZA A0-FX
JPY@SEBS A0-FX
JPY@SF A0-FX
JPY@TDFX A0-FX
JPY@TL A0-FX
JPY A0-FX
One observation: COES, TDFX, AD traded on 1 pip, and ID on 2 pip. Maybe, good to remember these names. However, AD and ID were not trading at the time of the experiment. Another interesting one was OH, it was trading with around 0 pip at times.
Second observation: FXCM listed prices with 4 pip when they actually provide 3 pip service on their website. Interesting. What does this deviation mean? Are they quoting different prices to different customers? Easily possible. It is a bit troubling from a market leader in Forex.
Only 19 of the 34 listed were trading actively. So I had deleted the rest.
Unfortunately, the experiment is negative. Looking at the market is not enough help to figure out future price moves of the individual dealers.
It is possible that the composite index could be used as a kind of "poor man" volume data. It contains more information than just watching the amount of pips from my broker. In Forex, we call the number of pips during a period a volume data since there is no real volume information available for usual retail users. The composite contains the pip moves from 19 brokers giving a better Forex volume indicator.
Pip-level back testing
I want to do pip-level back testing on my strategies.
Why? Because, with a 10.000 Euro account with 1:100 leverage one pip cost me 100 USD in EUR/USD market. A move in one minute may very well be too large for my strategy to test my stops. I might want to have tighter stops. And on 1-minute data, it is not necessary possible to test.
Second reason is indicators. Let's take "Forex volume". Forex volume is counted as the amount of moves within the bar. Unless my broker has pip level historical data, I don't see how he calculates this value correctly. Maybe, he has a databas on it, or maybe, he just counts the length on the move or something else from the open, close, high, low data. I want to know that my indicators really show me what I think they show me.
Why? Because, with a 10.000 Euro account with 1:100 leverage one pip cost me 100 USD in EUR/USD market. A move in one minute may very well be too large for my strategy to test my stops. I might want to have tighter stops. And on 1-minute data, it is not necessary possible to test.
Second reason is indicators. Let's take "Forex volume". Forex volume is counted as the amount of moves within the bar. Unless my broker has pip level historical data, I don't see how he calculates this value correctly. Maybe, he has a databas on it, or maybe, he just counts the length on the move or something else from the open, close, high, low data. I want to know that my indicators really show me what I think they show me.
Backtesting vs brokers
Forex is an OTC (Over-the-counter) market. It means: different dealers, different sell/buy prices .
Back test your strategy on the dealer you are using.
If the broker does not offer back testing or historical data, find another dealer.
In addition to back testing, monitor using a third-party system such as E-signal Forex data (50 dollar per month subscription) or some other real-time data provider weather your dealer gives you significantly different prices from the other dealers . If yes, change the dealer, he might be even cheating with the quotes you get.
Back test your strategy on the dealer you are using.
If the broker does not offer back testing or historical data, find another dealer.
In addition to back testing, monitor using a third-party system such as E-signal Forex data (50 dollar per month subscription) or some other real-time data provider weather your dealer gives you significantly different prices from the other dealers . If yes, change the dealer, he might be even cheating with the quotes you get.
Win Per Pips
Assuming an USD account, the following is the profit per pip.
Let's assume we invest 10.000 USD in each trade with 1:100 leverage. Note: With 2-pip spread. Each of our trade would start with 2 pip minus, of course, but let focus now on the first pip in profit.
10.000 USD commands 10M USD with 1:100 leverage.
10M USD buys 1186,7M JPY. One pip profit is 0.1M JPY profit which is about 840 in USD.
So here is my basic 1-PIP win table:
Any currency pair where USD is the base currency will trade on 100 USD per pip.
The make the above trade, the account must minimum hold 10.000 EUR plus enough margin to cover for the minus pip moves.
Daily Moves
In the last one month period the daily moves in pip:
Automatic stops by the broker
Good idea to check what happens if zero cover remains on the account? That is 1000 traded, while the remaining cover the original was 1000 gets "eaten up by the pips against us".
Different brokers might execute this trade differently. In theory, we should have exactly 1000 EUR when the broker exited this trade. Some brokers, however, will exit the trade earlier. Some might exit it later leaving only 0 on the balance.
I think I would always use "stop-loss orders" on my trades, but it is good to check the above just in case.
Money Management
Money management is possible not by changning the levarge but by changing the bet size. That is trade only 1000 EUR at a time which is only 84$ change per pip. If I stop out on any trade that is in minus 12 pips, that is about 1000 EUR.
So on any trade, I risk 1000 EUR by trading only 1000 EUR, if my stop limit is 12 pips of entering the trade. That is 10 pips move in the wrong direction plus 2 pips initial spread.
If I have a trading capital of 100.000 EUR. For me the right way of trading is never to keep more than 2000 EUR on my trading account and only trade 1000 EUR at a time (keeping the other 1000 as cover for the minus pip moves.)
More on Money Management
Let's assume I am aiming for a large time period.
I put my stop on -50 pip but hoping for a profit, of course.
So -50 pip is the "risk" I take. Let say, my Forex trading capital is only 10.000 USD. And I don't want to risk more than 1% on any single trade. That is 100 USD risk, I am willing to take.
100 USD for the 50 pips risk. That is 2 USD per pip risk.
Unfortunatly, it also means that when I set up this trade, I can only profit 2 USD per pip on the plus side unless I am willing to take a higher risk.
From the above table: if I trade 10.000 USD, my risk per pip is 840 USD. That is 420 times higher than the risk I am willing to take.
So I must trade only 10.000/420 = 23.8 USD. Which will give me a risk of 2 USD per pip on the risk side, and a profit of 2 USD per pip on the plus side.
More on Money Management
This calculation demonstrates that with 10.000 EUR trading capital, the "1% risk" is not an easy target. Trading with 2 USD profits per pip takes quite some nerve and time to make a living on.
How can this be improved?
First, by not entering trades where the stop loss is 50 pips. Instead, always limiting the loss.
Second, a larger trading capital is needed to be both safe and profitable.
Third, it is good idea to use a statistically provable strategy or a "low risk/high probability" strategy for the trades. What does it mean?
If I could know that my strategy will never under any circumstances have a series of trades where there are more than 5 losses than wins. Example: a situation where trade results are "win, loss, loss, loss, win, loss, loss, loss, loss" can never happen as in this series there are more than 5 losses than wins.
So if we would know that this cannot happen - proven by backtesting or guaranteed buy the strategy we trade, we would only need to cover this 5 loose with our trading capital.
Can I find a trading strategy like that?
Let's assume we invest 10.000 USD in each trade with 1:100 leverage. Note: With 2-pip spread. Each of our trade would start with 2 pip minus, of course, but let focus now on the first pip in profit.
10.000 USD commands 10M USD with 1:100 leverage.
10M USD buys 1186,7M JPY. One pip profit is 0.1M JPY profit which is about 840 in USD.
So here is my basic 1-PIP win table:
JPY: $840
EUR: $100
GBP: $100
CHF: $80
Any currency pair where USD is the base currency will trade on 100 USD per pip.
The make the above trade, the account must minimum hold 10.000 EUR plus enough margin to cover for the minus pip moves.
Daily Moves
In the last one month period the daily moves in pip:
JPY: 10 - 156 pips
EUR: 11 - 178 pip
CHF: 9 - 174 pips
Automatic stops by the broker
Good idea to check what happens if zero cover remains on the account? That is 1000 traded, while the remaining cover the original was 1000 gets "eaten up by the pips against us".
Different brokers might execute this trade differently. In theory, we should have exactly 1000 EUR when the broker exited this trade. Some brokers, however, will exit the trade earlier. Some might exit it later leaving only 0 on the balance.
I think I would always use "stop-loss orders" on my trades, but it is good to check the above just in case.
Money Management
Money management is possible not by changning the levarge but by changing the bet size. That is trade only 1000 EUR at a time which is only 84$ change per pip. If I stop out on any trade that is in minus 12 pips, that is about 1000 EUR.
So on any trade, I risk 1000 EUR by trading only 1000 EUR, if my stop limit is 12 pips of entering the trade. That is 10 pips move in the wrong direction plus 2 pips initial spread.
If I have a trading capital of 100.000 EUR. For me the right way of trading is never to keep more than 2000 EUR on my trading account and only trade 1000 EUR at a time (keeping the other 1000 as cover for the minus pip moves.)
More on Money Management
Let's assume I am aiming for a large time period.
I put my stop on -50 pip but hoping for a profit, of course.
So -50 pip is the "risk" I take. Let say, my Forex trading capital is only 10.000 USD. And I don't want to risk more than 1% on any single trade. That is 100 USD risk, I am willing to take.
100 USD for the 50 pips risk. That is 2 USD per pip risk.
Unfortunatly, it also means that when I set up this trade, I can only profit 2 USD per pip on the plus side unless I am willing to take a higher risk.
From the above table: if I trade 10.000 USD, my risk per pip is 840 USD. That is 420 times higher than the risk I am willing to take.
So I must trade only 10.000/420 = 23.8 USD. Which will give me a risk of 2 USD per pip on the risk side, and a profit of 2 USD per pip on the plus side.
More on Money Management
This calculation demonstrates that with 10.000 EUR trading capital, the "1% risk" is not an easy target. Trading with 2 USD profits per pip takes quite some nerve and time to make a living on.
How can this be improved?
First, by not entering trades where the stop loss is 50 pips. Instead, always limiting the loss.
Second, a larger trading capital is needed to be both safe and profitable.
Third, it is good idea to use a statistically provable strategy or a "low risk/high probability" strategy for the trades. What does it mean?
If I could know that my strategy will never under any circumstances have a series of trades where there are more than 5 losses than wins. Example: a situation where trade results are "win, loss, loss, loss, win, loss, loss, loss, loss" can never happen as in this series there are more than 5 losses than wins.
So if we would know that this cannot happen - proven by backtesting or guaranteed buy the strategy we trade, we would only need to cover this 5 loose with our trading capital.
Can I find a trading strategy like that?
Mini vs Standard Account
Mini accounts usually come with higher leverage. I like to trade with high leverage so I use mini accounts.
The drawback of using a mini account is that you trade with lower capital, however, twice as much leverage requires half of the trading capital.
The drawback of using a mini account is that you trade with lower capital, however, twice as much leverage requires half of the trading capital.
Forex Fundamental vs Technical
According to statistics, brokers generaly like technical analyses on the short run (like 1 week period).
Fundamental analyes clearly dominates on long-term investments (undertsandably).
On very short term (intraday trades). Professionals would use trade flows (not available for private investors) and news releases.
It the word of Forex, there are no clear techinicians and fundamnetal analysts. Generally, all available methods are used.
OTC Market
Forex is over-the-counter market. Meaning brokers quotes can different from each other significantly enough (especially during fast market moves) to make short term technical analyses unreliable.
Possible solution is to watch several data feeds.
Using Technical Analyses on Futures
The problem with this is interest rates that is reflected on the price. Usually, technical analyses is applied to spot prices because of this.
Fundamental analyes clearly dominates on long-term investments (undertsandably).
On very short term (intraday trades). Professionals would use trade flows (not available for private investors) and news releases.
It the word of Forex, there are no clear techinicians and fundamnetal analysts. Generally, all available methods are used.
OTC Market
Forex is over-the-counter market. Meaning brokers quotes can different from each other significantly enough (especially during fast market moves) to make short term technical analyses unreliable.
Possible solution is to watch several data feeds.
Using Technical Analyses on Futures
The problem with this is interest rates that is reflected on the price. Usually, technical analyses is applied to spot prices because of this.
Why Forex?
- Tax free income. All you do is you change your currency from one to the other so why would a government want to collect a tax on money?
- Can be done in 24 hours a day. Anytime during the day
- Any place on the world.
- It is possible to paper trade Not like in the stock market, the paper trade results are practically identical to real trades.
- You can only loose the amount of money that is on your account - if you do something really stupid. No further risk but unlimited potential.
- No office required, no special dressing code.
- Very high leverages, even up to 1:400.
- Immediate fills.
- No broker commissions.
- Very tight difference between buy and sell price.
- It is the largest market of the world exceeding 3 trillion per day!
- The most liquid market of the world. It is cash after all that you trade, isn't it?
- For a technical analyst it is an ideal market. For fundamental analyst it is also a perfect arena to try their strategiest.
- Low investment. Low starting capital. And very-well manageable risk.
- Unlike in stocks you only have to choose from a limited number of currencies. So no time wasted in "stock selection".
- There are no margin calls from your broker asking to pay more money because your broker can automatically close out your loosing trades within a blink of an eye. You can also use practically guaranteed stops to get out of losing positions.
Correlations
If you download historical data into Excel. It is possible to calculate "correlation". A mathemtacal figure that tells how much one item "zig or zag" in the graph is reflected in the other graphs "zig or zag". 1 means they are equals. -1 means they are opposites. 0 would be "no correlation".
Correlation value change over time so the values provide here are only valid in the mid of 2006. A good example of this is Canadian dollar that sometimes correlates with gold, sometimes with oil, etc.
Use any correlation value that is above .5 or below -.5 as it gives a trading edge.
(Each correlation is only listed ones. I don't mention non-correlating items)
Australian Dollar: Understandable correlates to Gold (0.84) since Australia is an important gold exporter.
Corn: Eurodollar (CME traded index) (0.81). Five-year notes (Chicago Board of Trade) (0.77). Thirty Year Treasy Bonds (Chicago Board of Trade): 0.77. Weat (0.93).
Euro Dollar: Five-year Notes (0.96). Japanese Yen (Chickage Merchantile Exchange) (0.68), Thrity Year Treasy Bonds 0.91. Weat (0.71)
Five-Year Notes: Japanese Yen (0.74), Thiry-Year Treasy Bonds (0.97), Weat (0.75).
Gold: Japanes Yen (0.74), S&P 500 (0.62), Wheat (0.62)
Yapanese Yen: Thirty Year T-Bonds (0.71).
Weat: 30 year T-bonds (0.8).
Stock Prices
Here are some examples how S&P correlates with DEL (0.82), and DOW Industrial (0.978).
EUR, USD anD YEN:
In my Forex trading I often use EUR, USD and YEN due to the excellent leverage I can get with my money on Yen.
For trading Euro, it is good to watch: Five-year Notes (0.96), Yen (0.68), Thirty-year t-bonds (0.91).
For trading Yen, it is good to watch: the Euro (0.68), Five-year Notes (0.74), Gold (0.74), Thirty-year T-bond (0.71).
Correlation Between Currencies
EUR: CHF (0.96), GBP (0,80), JPY (0.63), Aud (0.67)
JPY: EUR (0.63), CHF (0.65), Aud (0.75), Nzd (0.5)
Unfortunatly, the hour corrleation between even highly correlated currecnies like EUR, CHF can vary greatyl. However, EUR & CHF correlations are very high on the long term.
Here again with currencies, it is good to calculate correlations using Excel from time to time.
Correlation value change over time so the values provide here are only valid in the mid of 2006. A good example of this is Canadian dollar that sometimes correlates with gold, sometimes with oil, etc.
Use any correlation value that is above .5 or below -.5 as it gives a trading edge.
(Each correlation is only listed ones. I don't mention non-correlating items)
Australian Dollar: Understandable correlates to Gold (0.84) since Australia is an important gold exporter.
Corn: Eurodollar (CME traded index) (0.81). Five-year notes (Chicago Board of Trade) (0.77). Thirty Year Treasy Bonds (Chicago Board of Trade): 0.77. Weat (0.93).
Euro Dollar: Five-year Notes (0.96). Japanese Yen (Chickage Merchantile Exchange) (0.68), Thrity Year Treasy Bonds 0.91. Weat (0.71)
Five-Year Notes: Japanese Yen (0.74), Thiry-Year Treasy Bonds (0.97), Weat (0.75).
Gold: Japanes Yen (0.74), S&P 500 (0.62), Wheat (0.62)
Yapanese Yen: Thirty Year T-Bonds (0.71).
Weat: 30 year T-bonds (0.8).
Stock Prices
Here are some examples how S&P correlates with DEL (0.82), and DOW Industrial (0.978).
EUR, USD anD YEN:
In my Forex trading I often use EUR, USD and YEN due to the excellent leverage I can get with my money on Yen.
For trading Euro, it is good to watch: Five-year Notes (0.96), Yen (0.68), Thirty-year t-bonds (0.91).
For trading Yen, it is good to watch: the Euro (0.68), Five-year Notes (0.74), Gold (0.74), Thirty-year T-bond (0.71).
Correlation Between Currencies
EUR: CHF (0.96), GBP (0,80), JPY (0.63), Aud (0.67)
JPY: EUR (0.63), CHF (0.65), Aud (0.75), Nzd (0.5)
Unfortunatly, the hour corrleation between even highly correlated currecnies like EUR, CHF can vary greatyl. However, EUR & CHF correlations are very high on the long term.
Here again with currencies, it is good to calculate correlations using Excel from time to time.
Historical Data
The following website gives historical Forex data in simple downloadable files: http://ratedata.gaincapital.com/
In Russian:
Interestingly no timestamp in the file.
http://www.forexite.com/free_forex_quotes/forex_history_database.html
DealBookFX at GFT supposed to have.
Metatrader
www.premiumdata.net
MarketCast-Australia
IDEALPRO
In Russian:
Interestingly no timestamp in the file.
http://www.forexite.com/free_forex_quotes/forex_history_database.html
DealBookFX at GFT supposed to have.
Metatrader
www.premiumdata.net
MarketCast-Australia
IDEALPRO
Boom vs Bust
In any market, booms and busts follows each other in a cycle: boom, bust, boom, bust, boom, bust, boom.Where are we right now? Where are we in the market you trade?
The steps in the above picture might be slightly different but the rules are simple to understand.
When there are good jobs, confidence grows. If people confident, they spend more. If they spend more the inflation increases so the central bank is "forced to" increase interest rates.
Higher interest means that harder to get a loan on an apartment and what is more important: harder for companies to finance projects, new start ups. Even day to day operations of companies depend on short-term loans. So higher interest rate is like a brake on companies (they call it "brake on economy"). Share prices become less valuable as the companies worth less. Many companies need to close down. High unemployment. Low confidence is the result.
Even people who would have money to invest are not confident so they keep their money in gold or they protect it otherwise.
Many people believe that economy controls interest rates. I think it is the opposite. Central banks use interest rates to control economy.
So now it is easy to understand while certain news releases are vital to follow during our investments. When the government comes out with unemployment rates, it is an indicator of consumer confidence. Governments even measure consumer confidence and they release that information regularly.
If such news is greatly different from the expectations: it might have an immediate (meaning within seconds) or long-term impact on your trades.
http://www.oanda.com has a service that maps the impact of news releases on currency price changes. This provides a good insight into the impact of releasing fundamental data to our trading.
Spread Betting
There are some companies such as https://www.worldspreads.com/ that allows you to bet directly on the spread.
If you trade shares, it can be very money-saving to bet on if the the price moves up or down. You don't need money to buy the shares to go short or long. Instead, you bet directly on the price move as little money as you wish. There are no broker commissions, executions are fast, guaranteed stops, etc. are some of the benefits of betting directly on the price move.
You can bet on share prices, index movements, etc.
In the word of Forex, however, there might not be much point using spread betting as technically there is no real difference between spread betting than executing Forex trades on a margin with the brokers.
Maybe, the only main difference that when you just begin to trade Forex, it might be hard to follow the idea that you go "short in USD, long in EUR" at the same time when you buy EUR. The concept of "betting on if the the price moves up or down" is much simpler to understand.
If you trade shares, it can be very money-saving to bet on if the the price moves up or down. You don't need money to buy the shares to go short or long. Instead, you bet directly on the price move as little money as you wish. There are no broker commissions, executions are fast, guaranteed stops, etc. are some of the benefits of betting directly on the price move.
You can bet on share prices, index movements, etc.
In the word of Forex, however, there might not be much point using spread betting as technically there is no real difference between spread betting than executing Forex trades on a margin with the brokers.
Maybe, the only main difference that when you just begin to trade Forex, it might be hard to follow the idea that you go "short in USD, long in EUR" at the same time when you buy EUR. The concept of "betting on if the the price moves up or down" is much simpler to understand.
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