Foreign Currency Trading

The U.S. dollar has weakened significantly driving many of the major currencies to the highest level in months. Here’s a table illustrating the significance of today’s moves. I expect at least another 2 percent decline in the U.S. dollar against the key currencies (Short and Long Term Outlook for U.S. Dollar).

The fact that USD/JPY is not participating in today’s rally indicates that investors’ distaste for dollars rather than their risk appetite is driving the dollar lower. The modest gains in Dow futures and the sharp rise in gold prices confirm that investors are bailing out of dollars. In my interview with Fox Business 2 days ago, I talked about how the one takeaway from the concern about the credit worthiness of the U.S. is the need for diversification.

Yesterday, a Brazilian official said that the BRIC nations (Brazil, Russia, India and China) could take unilateral action to reduce their dependency of dollars at their summit next month. Brazil has already begun to replace the dollar bilaterally in their trade with China and unfortunately this trend could continue with other nations following suit in the coming weeks and months. The one thing that the financial crisis has taught investors large and small is need for diversification and no one wants to sit with baskets full of dollars waiting for S&P to make an announcement. Sovereign Wealth Funds are taking this to heart which could create a fresh supply of dollars.

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There are several breakouts happening in the EUR/JPY, EUR/USD, GBP/USD and USD/CHF pairs. This London session preview video tries to get some use of them and show the possible good entry points.

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In currency trading there is a thing called, a Mini Account, and it uses a different leverage calculation than a regular account. Pips in a Mini Account are worth, usually $1 rather than the $8 to $10 price they have in a regular account. As an example, whilst a 20-pip loss on a 100,000 Greenbacks / JPY position would be $200, the same loss on a ten thousand Dollars / JPY position in a Mini account would amount to $20. Here you’ve got an outline of leverage ( Margin, Account Size ) on each one of the 2 accounts debated above : 100K ( Regular Full-sized Account ) - Minimum needed account deposit = $2,000 - Advised needed account deposit = $5,000 to $10,000 - Traded in 100,000-unit currency lots - Default Margin : set at 1% ( $1,000 per lot ) - Leverage = 100:1 or 50:1 ( if margin is set at 2% ) Mini Account - Minimum needed account deposit = $300 - Counseled needed account deposit = $2,000 - Traded in 10,000-unit currency lots - Default Margin : set at 0.5% ( $50 per mini-lot ) - Leverage = 200:1 there’s no disadvantage to trading a mini account, you’ll be still enjoying all of the benefits that full-size FX account holders enjoy, including, same state-of-the art trading software, charts, resources, and tools, and so on.

This mini accounts are ideal for a new Currency exchange trader to develop a controlled, sane currency trading strategy without excessively targeting profits and losses. Also there’s no maximum trade volume when you employ a mini account. Though the standard trade size is ten thousand units, you aren’t restricted to trading one lot. For example, you can trade 10,000 units, fifty thousand units or 200,000 units.

This implies as you become more seasoned and build up confidence you can slowly increase the dimensions of your positions to maximise profits. In reality the trade size of ten thousand units allows for more suppleness re customising the dimensions of your trade.

With less capital at risk in a Mini FX account, it is less complicated for you to develop a controlled trading method, as well as the confidence wanted to be a successful currency trader, without the stress and distractions that come with huge Profit and Lose swings.

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I was on Fox Business talking about the outlook for the dollar. Its a one hour clip and I am on air starting at 39:00

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London Forex trading session preview video that is entirely dedicated to the euro and its crosses. It utilizes multiple timeframes and Fibonacci levels.

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In the current London Forex trading session preview video the support and resistance levels are used to show the trading plans for EUR/USD and EUR/JPY currency pairs.

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The absence of a correct trading plan which includes exact rules for entering and exiting a trade will definitely guarantee failure over the long run. Newbies often be afflicted by the same common infirmities. They desert trading plans solely on the spur of the moment because things are not going precisely as how they’d imagined. Repeatedly they use untrustworthy strategies that fail to supply a profit. Many traders hold on to losing positions telling themselves it is going to turn when each indicator claims otherwise because they can’t bear the idea of a loss. Why do they torture themselves? Why don’t they just identify what is going on inaccurate and make a change? For some folks spotting a trade or a trading method isn’t working and making a change is easy, except for others it is very troublesome. They must look at their restrictions admit that they have screwed up and that is hard as it injures our ego. Psychologically it’s dangerous, it’s regularly better to fool ourselves. Just keep going, living in a state of denial till your account is used. If you recognize any of these characteristics in yourself you may stop trading instantly. If you look close enough you will see a pattern. This is the reason why it’s essential to record every trade and as much info about it as possible. You may never be a successful trader if you continue to live in a state of denial. What can be done to revisit reality? There’s a lot you can do.

Firstly ensure you are not trading under stress.

One of the simplest solutions is to trade smaller. The smaller the trade the less the strain, particularly for the newbie. If you are experienced and in a loosing streak scale back your contracts till you get your confidence returns. Some folks need to take five altogether.

Escape from it all. Take your mind off the trading. The second thing you can do is to make certain you’ve got a life. Trading can be addictive particularly when you’re winning. Don’t put all your emotional eggs in the trading basket. You want to have other roles that give your life meaning and purpose. By outlining your identity in a selection of ways, you won’t place un-natural significance on trading events., you’ll be in a position to take losses in walk and take a look at your trading more objectively. Ultimately, radical acceptance is a key psychological technique for dealing with market doubt. Many traders make the error of thinking they can control the markets. No-one can control the markets. Adopt the attitude that trading is an excursion and that all we’re able to do is go where the markets take us. To achieve success on this journey you can’t afford to lose too much. Manage risk and just accept what you get and experience the ride. This way you can trade more openly and creatively. Don’t live your life in denial.

Accept your limitations, work around them, and become a winning trader . Write out your trading plan with precise entry and exit points. Test your system on paper and when assured test in realtime with the minimum contract size.

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This video offers a simple intraday Forex trading system for the 5-minute timeframe EUR/USD chart. Like all intraday systems this one requires a dedication and a strong disciple, but if you have them - go ahead and learn this simple trading system.

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A laptop and access to internet is all you need to get started with Forex trading. The Foreign Exchange Market also known as Forex, FX, is where currencies around the world are traded everyday.

The world moves with money and you can be part of it if you have the willingness to study and learn about the biggest financial market in the world.

This exclusive club was only reserved to major banks, or individuals with a lot of money and I mean millions of dollars. No more now anyone can start trading with currencies due to the surge of the World Wide Web and online brokers that will give you the resources necessary to start trading.

One to be cautious is that this market requires training and lots of it but not a college degree or brains like Einstein. All the resources to start trading are at your disposal, all you need to do is look up forex brokers and read as much as you can about Forex trading.

You have to read the advantages as well as the disadvantages to make sure you have the knowledge of the bad and the good of forex.

Get started, the Forex market has plenty of room for you

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The biggest story in the currency market this morning is news that Standard and Poor’s has put the U.K.’s Sovereign Debt rating on negative credit watch. This means that the U.K. now has a 1 in 3 chance of losing its prized AAA rating. I have written an extensive article on what this could mean for the British Pound and if the threat is is serious on FX360.com.

Instead, I think it is more interesting to talk about whether the U.S. could be the next country to receive a credit warning. According to the comments by the S&P, their fear is that debt in the U.K. could hit 100 percent of GDP in the near term. Yet the U.K. is not the only country to be up to their ears in debt. The IMF released a report in April that projects U.K. debt load to be at 66.9 percent of GDP compared to 70.4 percent for the U.S. and 69 percent for the Eurozone. The following chart shows the IMF’s estimated government debt as a percentage of GDP and it is clear that the U.K. is not running the highest debt load (click on image to enlarge).

Source: WSJ

S&P is starting to examine more G10 nations and there is a decent chance that the U.S., Germany, France, Italy, and Japan could come under review as well. There are major consequences to downgrading U.S. debt or even just putting on credit watch. I think that a physical downgrade of U.S. or U.K. is unlikely. The U.S. dollar is the global reserve currency and S&P may not have the guts to say that the “Emperor has no clothes.” This is one area where being reactive rather than proactive can actually benefit S&P.

Last week, in my article “Could America Really Lose Its Triple A Rating?,” I said “I think that ratings agencies talk a good game but they will problems following through. The consequences of downgrading U.S. sovereign debt is huge both politically and economically. Therefore Moody’s or any rating agency for that matter may be reluctant to the first to pull the trigger. Downgrading the U.S. is very different from downgrading Ireland. Based upon how the rating agencies have handled the credit derivatives bubble, chances are they will be behind the curve once again.

With that in mind, U.S. finances are deteriorating significantly, raising the concern of Asian nations. However if President Obama is successful at turning around the U.S. economy, America will be well equipped to meet its debt obligations. ”

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