Supermodel Bundchen Dumping Dollars

The state of the dollar is obviously not good as Americans continue to live well above their means.   This is no more evident when supermodels start demanding payment in Euro's instead of US dollars:

Supermodel Bundchen demanding Euros  

There is another article that asks the question if all of this is Bush's fault.  According to them, it's not.  "The dollar is plunging because America has been living beyond her means, borrowing $2 billion a day from foreign nations to maintain her standard of living and to sustain the America Imperium."  The mighty are falling.

Sinking Currency, Sinking Country 

Popularity: 1%

Is The Dollar Dead

The Economist states that the Euro is set to surpass the dollar in total value of notes.  Is this the first nail in the dollar coffin?   Here are 6 reasons why this may be happening:

1. Strength of euro versus the dollar.
2. Eurozone citizens carry more cash.
3. A lot of euros are floating around non-Euro countries.  Many people travel to European countries and exchange their currency for euros.
4. euro has replaced the dollar as the retail reserve currency.
5. The €500 note is more convenient to carry than the $100 bill.  The €500 note is worth more than $650.
6. The population of the Eurozone is larger than that of the United States.

Is the Dollar Dead?

Popularity: 1%

Ultra-Conservative Approach to Trading

I don't know if it is possible but the last couple of weeks I've been taking the ultra-conservative approach with tight stops and non-greedy limits.  It seems to be working for me so far but I have to be careful not to suddenly change my method and set a wider stop because doing so can easily wipe out all of my tiny gains. 

I'm actually very proud of a trade I had this morning because even though the USD was strongly pushing upwards against the CAD, I took my 25 pips that I set out to take when I opened the trade.  The proud feeling was when I saw the price immediately turn back down.  This brings me to my main point, should I be patient and let my profits run or take a small profit.  Over the last couple of weeks, I've seen some huge days especially with the Sterling where if I was patient, the gains could have been 100+ and even 200+ pip profits.  But if this market is trending only 20% of the time or less, am I doing the right thing by taking a profit one-fifth or one-tenth of the potential profit.  I really don't know the answer to this.  I'd also like to know if any of you think that a 60 pip profit target for a week is "weak."

I have to say that the more I think about my 60 p. profit target for the week, the more I like it.  Why? Because it fits my personality.  I have a hard time sitting around for days, even hours, while the price moves ever closer to stopping me out or eating into my profits.  I've also found that even when I think I'm trading the daily charts, I'm really not because I'm entering on the daily chart and exiting on either a 15 minute chart or strictly on discretion.  So what I'm getting at is for now, I'm sticking to the small time frames and depending on my progress may keep it that way at least for a while.

Popularity: 2%

Mellon Bank Morning Briefing

I like reading this everyday when I have time because it is coming from 1 of the top 20 or so foreign exchange dealing desks.  It is a great resource to get the mind going in the morning especially before major economic releases like the CPI this morning.  This release could be the final dagger in the dollar that pushes it over the edge and allows currencies like the Sterling to push past those all important triple zeros (1.9000)

https://fx.mellon.com/currencyresearch/globalfxdaily.html  

Popularity: 1%

Channel Trading Failed Today

I put in 3 trades today during the US session after the Housing Report release that were Anti-dollar but all of them failed to push towards my target.  I managed to recoup some of the losses with another trade placed when the price fell back into the channel so I'm not too disappointed.  It could have been much worst but I wound up losing about 45 pips today.  I'm even for the week.  

On another note, I was reading about fibonacci and stumbled upon a site that includes some fibonacci tricks.  Some of these tricks really only apply to stocks because they relate to gap trading but I found the parabola hunt interesting.

http://www.tradingday.com/c/tatuto/fivefibonaccitricks.html  

Popularity: 1%

TIC Report and my CAD position

TIC data was released at 9 this morning and it was less than
forecasted.  Net foreign purchases of long-term securities were
$69.8 billion.  The forecast was for 80.2B.  I thought that
this would have been bearish for the dollar but the dollar took off
after the release.  I scratch my head sometimes and wonder why
what I thought would happen didn't.  Either way, I don't care
which direction the price goes because I was waiting for a channel
break either up or down.

The dollar did well overnight and my
long USD/CAD position was up about 70 pips during European session
trading.   Ahead of the NY session and the TIC report release,
some of the dollar gains were given back this morning.  I had
moved up my stop this morning to 1.1143.  I entered at
1.098.  The USD/CAD actually hit the .250 fibonacci at 1.1175 and
then bounced off.  This is where having multiple lots would have
helped.  I was watching  3 fibonacci levels:

.250 = 1.1175           .382=1.1280             .500=1.1374

If
I had entered with 3 lots, I would have placed a stop order at the .250
for the 1st lot and held on to the other 2.  This is all in
hindsight but something I thought about when entering this
position.  Either way, when the prices started consolidating a bit
this morning, I was stopped out at 1.1143 for a profit of 45
pips.  Should I have held on to the position longer? I don't
know.  I didn't want to give back all the gains if the dollar
started to get pounded again.  I figure I can go long again on a
break above the
.250 fib.

Popularity: 3%

Top Market Moving Indicators

Like many Mondays, tomorrow probably won't be moved by the very latest economic release because there really aren't with 1 exception. At 9 a.m. tomorrow, the TIC report is released.  This report measures demand for US assets and could be yet another nail in the dollar but I'll be watching just to see if this is a report that would move the market in the future.  See Kathy Lien's study that puts TIC report at market mover #9 for first 20 minutes after release and #3 for the entire day.

I'm going to be releasing my Economic Release PDF again this week with comments.  It looks like Wednesday (US CPI) and Thursday (Bernanke Speaks) are possible US session movers and there are a couple of other important non-US releases like the BOJ Interest Rate Statement on Friday (1 am EST.)

In much of my reading, I stumble upon useful bits of information.  There was a study by Kathy Lien, an FXCM strategist, of the top market-moving economic indicators for the Dollar during the first 20 minutes following a release and for the rest of the day.  These are ranked from highest average pip range and are only for the EUR/USD.  Considering other pairs like the GBP/USD react more to these economic releases, the average pip range would be much higher.

First 20 minutes

1. Unemployment (nonfarm payrolls) 124 p
2. Interest rates(FOMC) 74 p
3. Trade balance 64 p
4. CPI 44 p
5. Retail sales 43 p
6. GDP 43 p
7. Current account 43 p
8. Durable Goods 39 p
9. TIC data 33 p

Daily

1. Unemployment 193 p
2. Interest rates (FOMC) 140 p
3. TIC data 132 p
4. Trade balance 129 p
5. Current account 127 p
6. Durable goods 126 p
7. Retail sales 125 p
8. CPI 123 p
9. GDP 110 p

It is interesting to note how the importance of economic reports actually changes over time.  For instance, here is FX Dealer importance of Economic Data as of 1997 and as of 1992.

As of 1997 

1. Unemployment
2. Interest rates
3. Inflation
4. Trade balance
5. GDP          

As of 1992

1. Trade balance
2. Interest rates
3. Unemployment
4. Inflation
5. GDP 

Popularity: 2%

Day traders find new outlet in foreign exchange wagers

{mosimage}
I am posting this article from last year because this is the actual article I read back in July 2005 that first exposed me to the unknown world of Forex and actually drove me to the bookstore within an hour to find out more.  It was originally published in the Wall Street Journal and I'm happy to have found it.  

By Craig Karmin and Michael R. Sesit, The Wall Street Journal

At an hour past midnight, when he gets home after working as a disc
jockey for a New York City classic-rock station, Marc Coppola checks
the market and starts trading.

Having lost $750,000 trading stocks after the technology-stock bubble
burst in 2000, his appetite for shares is greatly diminished. Instead,
he is joining thousands of other individual investors by betting on the
global currency markets.

Mr. Coppola, brother of actor Nicolas Cage and nephew of movie director
Francis Ford Coppola, earlier this year pocketed about $1,400 on a
$60,000 bet that the euro would rise against the dollar. In March, he
reversed course, betting $40,000 that the euro would fall. Once it
slipped to $1.30 from $1.31, he cashed in half of his investment, then
soon after closed out the rest.

"I got scared out of the trade," Mr. Coppola says regretfully. "I
should have said, 'the euro is going lower' and rode it down to the
$1.20 area."

[Click READ MORE to continue]

[Read more]

Popularity: 2%

April Issue of Currency Trader Magazine is Here

I love this online magazine.  There isn't anywhere else you can go to read a full-length magazine exclusively on Forex Trading.  In addition, the content is all exclusive and hasn't been seen anywhere else.  The April issue was just released 4 hours ago and contains the following top stories and more:

1. Battle of the Bucks (US Dollar vs. Canadian Dollar)
2. Top Forex Traders of 2005
3. Hedging Overseas Investments with the Dollar Index
4. Candlestick Reversal Patterns
5. Understanding Forex Supply and Demand

Content Removed: Download from http://www.currencytradermag.com

Popularity: 2%

There’s a New Kid in Town

There's a new guest trader on fxcmtr.com.  His name is John Putnam and he comes from Putnam Financial. 

This is John's Trade Methodology:

FX Analytics (FXAN) is a blend of quantitative modeling, combined with advanced technical overlays. PFI's trade and forecast models are built around a balanced dollar index providing exceptional insight and liquidity into a large group of US based pairs. FXAN utilizes a mathematical model and scientific grade software to process a large dataset across a distributive grid of computers. This forecast is then triggered into actual trades through a series of overlays where algorithm efficiency, market dynamics and specific risks are modeled and factored in.

HIS ANALYSIS?

Trade Idea:

Long EUR/USD on a bullish candle reversal (1 hour or 2 hour bullish Harami) that fails to sustain a break below 1.2240

Stops below 1.2210

Target 1.2330

Dollar forecast for the next 24hrs: Bearish

Stronger EUR/USD, GBP USD & AUD/USD

Weaker USD/JPY, USD/CHF & USD/CAD

Market Dynamics:

Favored - Cyclical & Regression Models 

At Risk - Trend Models

PFI exited its long EUR/USD trade this morning for 221 pips. For all practical purposes I could have stayed with it given the model bias remains bearish on the dollar.  That said, with a major event risk on the horizon (NFP on Friday) I've decided to stand aside for the balance of the week.

Today's price action will probably look a lot like yesterdays and will remain choppy through the day. This makes the target of the trade idea (1.2330) a tough task in the short term and could push traders into Friday trying to achieve it; which I don't encourage.  1.2240 and 1.2210 are Bollinger Band and ma support levels (different time frames) with 1.2330 bringing in substantial Bollinger Band resistance.

Overall the dollar is finding some support at our lower channel; it would be unusual for the dollar to sustain a push deeper into this region after floating across the top for any length of time. If we don't see a substantial pull-back to a more neutral position tomorrow, I'd almost expect to see NFP come out stronger than expected or an overall muted reaction to poor numbers, which will leave the market in good shape for a technical reversal at the beginning of the week.

 

 

 

 

Popularity: 2%

Next Page »