Items Tagged With November 2005
forexblog.org: Housing Data buoys USDWritten By: forexblog.org2005-11-30 16:05:17
In the last few weeks, many currency traders had begun to shift their attention in favor of the Euro, based on the expectation that the US-EU interest rate differential would soon narrow. That all changed yesterday, as economic data underscored support for monetary tightening. Specifically, the data showed a record month for new home sales, suggesting the housing market and even the US economy are still buoyant. As a result, currency traders and economists are predicting that the Fed will now hike rates three more times, which represents a change from the previous consensus of two times. If the Fed fulfills these expectations, you can expect the USD to continue outpacing the Euro in the near-term. The Financial Times reports:
“The US will be tightening more than the market thinks, and while the ECB will hike this week, we don’t think there will be a follow-up hike until June.â€
B.M.: Refco BankruptcyWritten By: B. Martin2005-11-17 00:24:24
According to the main US market financial reporter, there is a 40 percent jump in trades last month. Refco company, despite this occasion, Refco became a bankrupt – on Oct. 21. seat on the New York Mercantile Exchange, the world’s largest energy marketplace, where Refco brokers were responsible for one in every 10 trades, sold for a record $3.1 million.
‘Thomas Kloet, chief operating officer for Fimat USA, Societe Generale SA’s futures brokerage, in an interview in Chicago and one of the Refco competotors said, that even after the day before it’s bankruptcy there were no sign of it. Moreover, there were no hint of any fall or decrease. Even it’s stock went up.
This event perfectly demonstrates that the reputation can be lost in one minute and never be restorted again.
forexblog.org: China inches towards further revaluationWritten By: forexblog.org2005-11-25 18:55:14
Perhaps in response to recent pressure from American politicians and the IMF, the Central Bank of China made another push towards floating the Yuan by introducing foreign exchange swaps. Swaps function like futures, by enabling partied to buy and sell currencies at a fixed exchange rate on a fixed date in the future. In this case, the Central Bank has agreed to buy USD one year from now at a rate of 7.85 Yuan/USD. Investors and analysts are speculating that the swaps lend explicit insight into where the Central Bank believes the Yuan will be in one year. Non-deliverable forward contracts, which indicate collective investor expectations for the future value of the Yuan, are currently priced at 7.78 Yuan/USD. The China Daily reports:
Late Thursday, China's State Administration for Foreign Exchange announced it would also introduce a new currency trading system allowing interbank market members to trade directly with each other.
right triangle formation EUR/USD hourlyWritten By: admin2005-11-29 05:54:05
I've spotted a right triangle formation forming in the EUR/USD hourly charts as evidenced by this: 
The purple lines are the high/low/close 34 EMA. The trend is mildly up but not enough to look for a swing trade. I'll be looking for a momentum trade and for the USD to push the EURO down below 1.1750.
CFTC Committment of Traders ReportWritten By: admin2005-11-18 23:33:22
The CFTC COT report was released today and data processed. See Forex Volume There isn't anything new to report. Positions still remain in favor of the USD.
EUR/USD profit last weekWritten By: admin2005-11-05 18:16:00
I mentioned earlier last week that if anything, I was going short on the EUR/USD. I did and made a healthy profit last week in doing so. The Forex market was crazy on Friday after the U.S. payroll report showed job growth lower than expected. Immediately after the announcement, the euro raced up to 1.1992 before traders went back in favor of the dollar. The pair wound up closing at 1.1822. Overall for the week, the dollar was up 237 pips versus the euro. The euro hasn't been this down versus the dollar since May of 2004 so you have to wonder what next week will bring. I'm thinking that the possibility that the Fed may raise rates 2 more times early next year is already priced into the market. I may also be favored towards the euro considering there was a flip from net short to net longs in the CFTC report this week. Either way, the trend is still in favor of the dollar and therefore I won't bet against that at this point. |
Backtesting Script and Data ProgressWritten By: admin2005-11-13 16:47:54
I've finished multiple subroutines for calculating Simple Moving Average, Slow Stochastic, and Fast Stochastic. I'm running the Fast Stochastic test with 2005 data from EUR/USD. A virtual sell order will be initiated when %k crosses below %d and a virtual buy order initiated when %k crosses above %d. My first test was using Slow Stochastic (5,5,5) and from 2005-01-01 to 2005-11-01, if crossover buy/sell signals were used strictly , your total loss would be 234 PIPS. I'm going to move the stochastic parameters around and will post more results later.
Forex Blog : Stochastic Price Reverse BacktestingWritten By: admin2005-11-19 00:12:30
I backtested the Stochastic Price Reverse trading system from 2003-2005 for EUR/USD. If you want to read more about it, go to http://www.wealth-lab.com. I have graphed the results and you can view them here.
You can view the actual buy/sell signal results here. To quickly summarize, if you were to use this trading system, over the last 3 years, your would have been most successful if you used 6,7, or 8 as %K values.
forexblog.org: Foreigners buying US assets boost USDWritten By: forexblog.org2005-11-17 00:37:11
In September, foreigners collectively purchased $110 Billion in US assets, which represents a monthly record. Economists had expected net foreign purchases to total only $70 Billion, based on the logic that an appreciating USD would deter foreign investment. Fortunately, it seems members of OPEC and Asian exporters continue to reinvest their trade surpluses into US denominated assets. Dollar bulls have drawn support from the news, using it as evidence that foreigners are nowhere near tired of owning US assets. Bloomberg News reports:
“This number is going to add to the dollar's upward momentum,†said the head of global currency strategy at RBC Capital Markets Ltd. in London. “The dollar is benefiting from increased risk appetite among foreign investors, particularly for equities.â€
Placing too much emphasis on indicatorsWritten By: admin2005-11-20 16:59:07
I purchased a book this weekend titled "Forex Trading for Maximum Profit" by Raghee Horner. This is the best book I have read to date for a couple of reasons. The author gives practical and tactical methods that can be applied to everyday trading. This book actually shares a way to begin trading or at the least analyzing the market. I bought the book at Barnes and Noble for about 80 bucks but I'll do what I usually do and order it from Amazon used, wait for it to be delivered and then return the one I bought at Barnes and Noble. It can be found used on Amazon.com for 29 bucks. The most important things I've realized by reading this book is that I've been placing way too much emphasis on technical indicators (MACD, Stochastic, Momentum, RSI, etc.) This book places a lot of emphasis on using trend lines, fibonacci, and 3 34 day EMA lines (high, low, and close) which the author calls "The Wave." I've read posts and comments by a visitor named Blackday and I can gather that he places similar emphasis on them as well.
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