Month: February 2011

After hitting a low of 81.08 last February 4, the USDJPY pair has rallied back to mark a high of 83.97 2 days after Valentine’s day. It appears, however, that US dollar’s push against the Japanese yen is starting to lose some momentum. As you can see from its 4-hour chart above, the pair has formed what looks to be a head and shoulders pattern with a neckline at around 83.10. In the process of doing so, it likewise broke its short term uptrend line. After breaking the uptrend line, the pair immediately fell towards the neckline of the head and shoulders. Notice that this neckline corresponds to the previous highs that I highlighted in pink. Anyway, should USDJPY clears below the said neckline support, it could further fall down to around 82.50.

While the price is suggesting a likely fall in USDJPY’s price, a presence of a hidden bullish divergence, where the price registers higher lows and the stochastics make lower lows, is saying otherwise. For those who do not know, a hidden bullish divergence as in this case signals a probable pick up in prices. Hence, if USDJPY is able to rebound off the head and shoulders’ neckline, it could once again reach the peak of the right shoulder at around 83.50.

But what’s the safer play, if you ask me, given this set-up? If it’s me, I would follow first what the price action is saying before I look at the other indicators. The recent price price suggests a likely fall given the formation of a head and shoulders. So what I would do here is that I will wait first for the breakdown to happen. At that time the hidden bullish divergence will be still in effect. Sooner or later the pair will rebound and when it does, I will short it (buy the yen and sell the dollar) probably at the neckline area or any Fibonacci retracement levels from the peak of the right shoulder and the first significant swing low that it will make following a breakdown.

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By James McKee

The decline of the United States and its currency (the USD) have resulted in many hardships experienced around the world, and as the United States capital reserves and borrowing power erode local governments are feeling the pain. California has recently lowered most state workers’ pay to minimum wage, causing outright uproar. In a state where the average rent for a 1-bedroom apartment is over $1500.00, many find it difficult to survive on $10.00 an hour (before taxes, of course). These difficulties have resulted in a populace that is discontent and outright irate, many other states thought that California was an isolated incident but they are waking up to the truth.

The truth is that the USD’s value has dropped by over 20 percent in the last 15 years; this means that things are far more expensive than we realize. The prices of many goods have become cheaper due to outsourcing and the purchase of goods from abroad as well as government subsidies…however these subsidies are coming to an end. The Obama administration has stated they will be cutting the Federal Pell Grant program’s funding in half, in an already expensive education system this is quite the blow to those who want to improve their lives.

Most municipalities across the US are being weighted down to the point of implosion through various pensions that have accumulated nearly 50 billion dollars of debt. The reaction to this financial quagmire has been to cut the pay of those state workers still on the payroll, and to slash their benefits as well. A country without the proper infrastructure at a local level cannot hope to survive and there will be a price to pay for underpaying and not providing support to police, fire departments and so on. Those on the forex currency exchange should carefully monitor how the United states copes with these issues in the near future.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

EURUSD is testing 1.3743 key resistance, a break above this level will indicate that the fall from 1.3861 has completed at 1.3428 already, then further rise towards 1.3861 previous high could be seen. However, as long as 1.3743 resistance holds, the bounce from 1.3428 could possibly be correction of downtrend from 1.3861, and another fall to 1.3300 area is still possible. Support is at the rising trend line on 4-hour chart, now at 1.3568, a clear break below the trend line support could signal resumption of downtrend.

Daily Forex Forecast

By John Eather

I’m sure by now that you have heard about Demo or Micro accounts if you’ve been doing any kind of research concerning online Forex trading.

Use a Demonstration Or Micro account to test your system. Resist the urge to leap right into the trading system with fists full of money. Take the time to perfect your skills through practice by utilizing your Forex demonstration account. This placeholder account can be your proving grounds. If you re unable to grow this demonstration account, you probably won’t be able to make any significant money using your trading methods.

It’s suggested that you test out your new Forex trading strategies with demo accounts before you launch them into your larger accounts. Don’t forget that perfection only comes from practice when you’re trading Forex.

Understand Forex Trading: It’s not wise to purchase an automated Forex program and allow it to do all of the work for you. Ultimately, if you learn the ins and outs of Forex trading yourself, you will find a greater degree of success. Teach yourself about Forex by picking up a Forex book, or attend a Forex class, and test what you find out on your demonstration account.

Only Use Risk Capital To Trade: ‘Risk capital’ can also be called ‘capital which you can afford losing’. This amount is everything you’ve put aside to test out Forex market speculations. With this money categorized differently, you could still afford to continue living if it all suddenly were lost in a bad trade.

If you trade using money that you absolutely need to function in your everyday life, you’re trading with ‘scared money’. ‘Scared money’ is cash which you’re terrified of losing, to the point where you’ll lose sleep and have trouble functioning.

You’re entering very dangerous territory if you are trading with money that you really need in your Forex account. Don’t forget that even the most solid strategy for trading Forex cannot predict your exact profits, or when they’ll be delivered to you when you need them most.

Don’t Add Money To A Failing Trade: This trap is easy to succumb to. No one ever likes to lose money from Forex trading. You need to come to peace with the idea that some trades will result in losses. It’s just a normal part of trading in Forex, which everyone has experienced – even the Forex traders with the greatest successes.

About the Author

Are you ready to become a Forex trader? Sign up for John Eather’s Free eCourse on Forex Trading. Keep up to date with the latest info concerning Automated Trading. Go to http://www.MoneyMakingFxTrader.com to get more details.

By James McKee

The response to America’s fiscal crisis in the private sector has been surprising; across the board manufacturing has actually increased. Large companies such as Ford have expanded their factories to include increased production and an increase in the number of people they employ. The slumping US unemployment rate can only benefit from moves such as these being made by large companies. The non-farm payrolls have a direct impact on the value of currency because when a country has good unemployment numbers and high levels of income they will spend more. This is much more attractive to investors and will increase the value of the USD.

Provided that US jobs continue to emerge from the ashes of an otherwise bleak economy the USD may yet have some legs to run on in 2011. While America is still an out of control debt machine the income necessary to pay it off may just make the difference that is necessary to boost the value of the USD. All of the jobs available will not be appealing to Americans because some of them will not pay well but it is up to the individual working to decide whether or not they should take a manufacturing job.

Much of America’s infrastructure is not set up to accommodate export but more so importing. The shift will be difficult for many Americans to adjust to and could spell out a new phase of American labor law making. Such turbulence could spell out trouble for the USD in the long run and those on the forex currency exchange should stay up to date on this situation. Failing to stay up to date on the employment situation in the United States would be foolish because it is one of the strongest indicators available for the value of the USD.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

By James Woolley

There are some investors who are only interested in capital gains. However there are lots of others who like to invest in shares that will give them a solid regular income in the form of dividends. There are many dividend strategies you can use, but today I want to discuss a very simple, but effective strategy you can use.

Basically it involves using some kind of stock screener to find those companies that have long and established records of dividend growth. The reasoning being that if they have constantly grown their dividends every single year, even in adverse market conditions, then they are likely to continue growing their dividends by a similar amount in future years as well.

You can vary the length of time and the amount of growth that you require, but a good rule of thumb is to look for dividend growth of at least 10% over this period of time. So you could look at companies that have grown their dividends by this amount every year for the last 10 years, for example, or you could drop down to the last 4 or 5 years if you want to find a few more companies.

The thing is that this is a good indication of a strong company, and it shows that they are able to withstand challenging market conditions. For example we all know that 2008 and 2009 were very tough years for many businesses, so those that still managed to grow their earnings and their dividends during these years are clearly very good well-run companies. Furthermore they should do even better during the good years.

It’s not a foolproof strategy by any means because a strong history is not necessarily an indication that a company will do just as well in the future. There may be new businesses starting up in the future who could eat into their market share, their products may fall out of fashion, or they may have some kind of crisis that negatively affects the company. However if you pick the very best companies from this shortlist and look at future analyst forecasts for the next few years, you should get a good idea of which ones are likely to continue growing.

The point is that you if are investing for income purposes, you need to find those that have secure dividend payouts, and ideally those that are likely to increase their payouts every year. A long and established history of this kind of growth is always a good thing, and the longer the better. It is no guarantee of course, but it is as good a guide as any other and a pretty good strategy overall.

About the Author

Click here to read a review of Zecco, the online stock broker that offers free trades, and to read all about Portfolio Prophet, the new course that teaches you how to successfully trade ETFs.

By Vytautas Zilenas

Market boom that preceded the most recent crisis created a lot of opportunities for an average trader to make a lot of money. Lots of people managed to do that in various markets, but they waited for too long or they got into markets too late and when there was a reverse they actually lost everything that they had made and even more. This fact saddened most traders and investors as nobody knows when we are going to have another boom where most money is made. However, I am absolutely sure that this is a flawed understanding and you can make as much money, or even more during crisis than you are able to make during economic boom.

How is that possible? It has been possible for quite a long time, but an average person does not know about this possibility. Everybody knows that if you want to sell a stock, you need to buy it first and only then you will be able to sell it. However, for over a hundred years you have been able to sell without buying first. How do you do that? You simply borrow a stock or any other security from a broker or your dealer and sell it in the market for a profit or a loss. When you close the position you simply return the amount for which you got a stock or a security and take profit or add extra which you lost from an operation.

Some small financial markets do not allow doing that, but you can do it without any problems on all major financial markets now. So, when you see a crash coming, or you know that the market is in a downtrend and is going to be in it for a long time, you should borrow securities for selling. In fact, crisis is much better for trading than a boom is. Why? Because during crisis fear and skepticism rules and securities fall very fast and you can make much bigger money selling during crisis than buying during a market boom.

So, if we talk about period which is better for a trader I would say that crisis is a much better period than a boom, because you can make much bigger money trading when economy is in bad shape than at the time when it is booming. Of course, if we do not talk about traders but people in other professions, then a boom is much better. However, I think that people should familiarize themselves with the financial markets and possibilities how to trade them, because they could profit a lot from the knowledge and who knows, maybe they would change their profession one day.

About the Author

If you are interested in causes and results of market bubbles I would recommend you reading my article about economic bubble.

By Cedric Welsch

For those who are interested in the idea of investing in the foreign exchange market but do not seem to have enough knowledge yet to pursue it, then this is going to be a good introduction to how the foreign exchange trading market works.

The foreign exchange market is considered to be a huge marketplace where several professionals such as traders, investors, and brokers transact with one another. And every transaction inside the forex market is motivated by the main purpose of making profits out of trading currencies.

The entire forex market is always busy because of all the traders who are either buying currencies or selling them. Different countries around the world and their respective currencies are involved in the trading of currencies inside the currency exchange market. Therefore, it is safe to say that foreign exchange trading is a global operation in its entirety where professionals of various nationalities are able to transact with one another.

Investing in the foreign exchange market used to be an investment medium that is only known and taken advantaged of by the elite and wealthy investors. However, this is no longer the case nowadays. Today, even the common guy who just wants to make a profit out of trading currencies can easily learn the whole trading process and make a really good profit out of it.

While there are traders who indeed make a good lump sum amount of profit out of their investment, the hard truth is that there are individuals who are known to be losing a solid amount of their investment funds. There is no real secret on how to really emerge a winner in the forex trading business, but there are some techniques and strategies that can be implemented to get a better shot at winning. In fact if you are only able to carefully operate under certain forex investing guidelines, then you will have a much bigger advantage to really making some solid amounts of profits as a trader.

One safe and really important guideline to follow is that you should never take the risk of investing all of your money in any single transaction. Always act as a smart investor and try to diversify your investments by however best way possible.

Do not base your investing decisions through just mere assumptions, but rather investigate and analyze the market real carefully. Consider only investing through well managed accounts. Do not hesitate to consult with trading experts as they have more knowledge and experience about the behavior of the forex market.

When necessary, do not be afraid to invest on some tools that can help you better analyze and study the market. Through such tools, you can better read data facts and statistics on a much accurate manner, hence you can make much more accurate decisions as well.

About the Author

Do not attempt to trade currencies without proper forex research. While reading a forex scam review will keep you away from fraudulent transactions.

By Doug West

We have taught nearly 1,000 people how to daytrade the mini-Dow or S&P emini index. Of those traders, nearly all were able to successfully trade our simple index strategy on their demo accounts (we only know of 2 exceptions that reportedly could not even get consistent on the demo. One man claimed that every single trade he made was a loss. In my mind that would be as hard to do as to make profit on every trade).

If your day trading strategy is consistently successful on your demo account, then what is the difference when you go live? Mindset! It all boils down to that in your trading (in my opinion this is true of life in general, but you see the results immediately in trading – especially day trading).

I really hate to call what we do as index traders, day trading. That is only because of the negative connotation the term brings to mind. Stock trading is what most people think of when they hear the term day trading. Regardless of what type of trader you are, you will have to come to terms with the fact that each trade depends on YOU. What frame of mind you are in at the time you place those trades will have a HUGE impact on how many of those trades are successful.

Most traders think that it all boils down to the technical and/or fundamental analysis of the markets. This is where they spend all their time and money, but they never get around to working on the mindset. They feel the real key is in becoming a great market analyst. However, the world is FULL of good market analyst (just watch CNBC or Bloomberg for examples) who are not able to trade. They too didn’t have the right mindset and had to take jobs instead.

So what is the right mindset for a trader (or day trader)? That would take volumes of articles to answer. A good start is to read Mark Douglas’ book “Trading In The Zone”. Don’t end your mindset training there, but it is a good start.

Another good exercise is to keep a traders diary. Write down what you were thinking and how you were feeling as you made your trade. Do this immediately after the trade so that you can be as accurate as possible. Do this on winning trades and on unsuccessful ones too. You should notice that on your winning trades everything felt easy and sure. Once you notice the difference, don’t enter trades unless your mind is in the correct frame!

It’s amazing how the human mind is able to pick up on the overall mood of the market. Douglas calls this being “In The Zone”. We have always referred to it as getting a “Market Feel”. Some traders have felt that it was impossible, while others gain that market feel advantage rather quickly. The difference is always in the mindset of the person. Some people are naturally much more in tune with their emotions, and they don’t let them effect their mind while trading.

Many traders get hung up in all the technical tools that are available today. They reason that if they can just add the right tools, they will become successful traders. After working with hundreds of traders over the years, I can tell you for certain that you will NEVER be successful unless you have the right mindset.

About the Author

Doug West has taught thousands how to grow wealth with simple Index Trading and online marketing of products and services. He has affiliates that have earned $100k in less than a year.

Get more tips on how to build your retirement income with Mini-Dow Index Trading Made Simple

Need Debt Relief? Get Doug’s Debt-Free Report

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Autotrading does have an appeal by way of having the trading systems do all of the work, but that doesn’t mean a trader is out of control with their strategy or strategies.  Forex Collective2 lets a trader stay in the loop, and in control.  One can watch the trades being placed, as they happen, examine open positions, and watch profit-and-loss, in real time.

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