Month: March 2012

Learn Jeffrey Kennedy’s tips for becoming a consistently successful trader

By Elliott Wave International

You’ve probably heard talk about “market uncertainty” in the financial news recently. But when are the market trends ever certain? The constant uncertainties contribute to your frustrations as a trader, and you need to have a method for dealing with the ups and downs. Every successful trader has one.

Since 1999, Elliott Wave International’s senior analyst and trading instructor Jeffrey Kennedy has produced hundreds of trading lessons exclusively for his subscribers. One of these lessons, “The Three Phases of a Trader’s Education,” gives you Jeffrey’s tips on becoming a consistently successful trader.

Here it is; we hope you’ll find it helpful.

The Three Phases of a Trader’s Education:
Psychology, Money Management, Method

Aspiring traders typically go through three phases in this order:

1. Methodology — The first phase is that all-too-familiar quest for the Holy Grail — a trading system that never fails. After spending thousands of dollars on books, seminars and trading systems, the aspiring trader eventually realizes that no such system exists.
2. Money Management — So, after getting frustrated with wasting time and money, the up-and-coming trader begins to understand the need for money management, risking only a small percentage of a portfolio on a given trade versus too large a bet.
3. Psychology — The third phase is realizing how important psychology is — not only personal psychology but also the psychology of crowds.

But it would be better to go through these phases in the opposite direction. I actually read of this idea in a magazine a few months ago but, for the life of me, can’t find the article. Even so, with a measly 15 years of experience under my belt and an expensive Ph.D. from S.H.K. University (i.e., School of Hard Knocks), I wholeheartedly agree. Aspiring traders should begin their journey at phase three and work backward.

I believe the first step in becoming a consistently successful trader is to understand how psychology plays out in your own make-up and in the way the crowd reacts to changes in the markets. The reason for this is that a trader must realize that once he or she makes a trade, logic no longer applies. This is because the emotions of fear and greed take precedence — fear of losing money and greed for more money.

Once the aspiring trader understands this psychology, it’s easier to understand why it’s important to have a defined investment methodology and, more importantly, the discipline to follow it. New traders must realize that once they join a crowd, they lose their individuality. Worse yet, crowd psychology impairs their judgment, because crowds are wrong more often than not, typically selling at market bottoms and buying at market tops.

Moving onto phase two, after the aspiring trader understands a bit of psychology, he or she can focus on money management. Money management is an important subject and deserves much more than just a few sentences. Even so, there are two issues that I believe are critical to grasp: (1) risk in terms of individual trades and (2) risk as a percentage of account size.

When sizing up a trading opportunity, the rule-of-thumb I go by is 3:1. That is, if my risk on a given trading opportunity is $500, then the profit objective for that trade should equal $1,500, or more. With regard to risk as a percentage of account size, I’m more than comfortable utilizing the same guidelines that many professional money managers use — 1%-3% of the account per position. If your trading account is $100,000, then you should risk no more than $3,000 on a single position. Following this guideline not only helps to contain losses if one’s trade decision is incorrect, but it also insures longevity. It’s one thing to have a winning quarter; the real trick is to have a winning quarter next year and the year after.

When aspiring traders grasp the importance of psychology and money management, they should then move to phase three — determining their methodology, a defined and unwavering way of examining price action. I principally use the Wave Principle as my methodology. However, wave analysis certainly isn’t the only way to view price action. One can choose candlestick charts, Dow Theory, cycles, etc. My best advice in this realm is that whatever you choose to use, it should be simple. In fact, it should be simple enough to put on the back of a business card, because, like an appliance, the fewer parts it has, the less likely it is to break down.

14 Critical Lessons Every Trader Should Know Read more of Jeffrey Kennedy’s lessons in his 45-page eBook, The Best of Trader’s Classroom. Find out why traders fail and how to make yourself a better trader with lessons on the Wave Principle, bar patterns, Fibonacci sequences, and more when you download your FREE eBook today! Don’t miss your chance to improve your trading. Download your free eBook here.

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 15 March, 08:45 EST

The WHOLESALE-MARKET gold price twice rose within a few cents of $1650 per ounce in London Thursday morning, adding 0.9% from yesterday’s fresh 8-week low as industrial commodities ticked lower again.

The price of silver bullion rallied 2.3% to $32.40 per ounce, but remained over 5% down for the week so far, being “very much influenced” by the gold price according to one Swiss precious-metals dealer.

Japanese and Hong Kong equities rose, but European stock markets were flat while US equity futures pointed higher.

The price of US Treasury fell for the seventh consecutive session, pushing the 10-year bond’s yield up to 2.29% – just shy of Wednesday’s 5-month high – and extending the longest period of price falls since 2006 on Bloomberg’s data.

“The [bond] market is on the back foot,” reckons head strategist Charles Diebel at Lloyds Banking Group in London.

“The catalyst seemed to be the Fed acknowledging the better growth.”

Analyst forecasts for today’s US jobless data pointed to a further drop in the number of people claiming unemployment benefits.

US manufacturing and consumer price data – due Thursday and tomorrow respectively – were forecast to show a slight rise.

“Overall, the [gold price] looks rather vulnerable with a likelihood of testing lower levels before it resumes it upward run,” says refinery and finance group MKS in its latest note.

“What seems to be surprising at these levels is lack of firm physical demand.”

Over in India, however – the world’s No.1 gold buying nation – “Demand has improved significantly in the past two days,” Reuters quotes a Mumbai dealer.

“Prices have fallen and there is also concern about import duty hike in tomorrow’s budget.”

New Delhi doubled gold import duties – and handed India’s domestic gold-recycling operators a strong price advantage – in January.

Despite yesterday’s fresh drop in the gold price, the quantity of physical bullion held to back the SPDR Gold Trust – the world’s single largest exchange-traded gold trust (ETF), now capitalized at $68 billion on the New York Stock Exchange – remained unchanged after slipping half-a-tonne Tuesday to 1293.3 tonnes.

Gold ETF holdings worldwide were unchanged Wednesday at a record high of 2409.7 tonnes, according to Bloomberg data.

Open interest in US gold futures crept 0.6% higher on Wednesday to 445,163 contracts – greater by 1.2% from a week before.

“Gold dropped bearishly [on Wednesday] through our Fibo support level,” says Russell Browne at bullion bank Scotia Mocatta, pointing to another Fibonacci level – based on a number series used by some technical analysts to spot important prices – for the “the next key support level at 1625.

“A definitive close below this support level opens up a full retracement to the December low of 1522.”

On the currency market Thursday morning, the US Dollar eased back from last night’s rise close to a 7-week high against the Euro, which slipped near $1.30.

That held the gold price in Euros below €40,600 per kilo (€1263 per ounce).

Spain today sold €3 billion in new debt, paying 3.37% annually on 4-year debt – just less than it paid at a sale in January, despite prime minister Mariano Rajoy saying last week that Madrid will breach the newly-agreed budget deficit limit for Eurozone members.

Europe’s benchmark Brent crude slipped but held near record-highs in Euro and Sterling terms.

The Reuters newswire claims that US president Obama and British prime minister Cameron yesterday discussed using emergency oil reserves to bring prices lower.

“The window for solving [Iran’s nuclear program] diplomatically is shrinking,” Obama told a press conference.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

The Federal Reserve released the stress test result at the end of Tuesday and concluded that 15 of the 19 biggest financial institutions in America would be able to handle an extreme financial circumstance. The circumstance is defined as 13% unemployment rate, 50% drop in the stock market and 21% further decline in the housing market. From the report card this time, regional banks have the weakest real estate portfolio while two of the national banks fell short on the business loan segment. Others passed with flying colors. The Fed usually considers any bank with a tier 1 common equity ratio above 5% to be healthy. Tier 1 capital consists of the most liquid assets and when comparing this number against the total risk-weighted assets, it gives us a key measure of a bank’s overall condition. The Fed wants to emphasize the stress test is only an extreme negative scenario and doesn’t portray the outlook of our economy. And yes, it’s about time for another round of examination like this because it has been a few years since the last release of banks’ health diagnosis.

By The Sizemore Letter

Neil Caffrey

Perhaps it is all the research I’ve been doing lately on investing in the art market, but I find myself enjoying the exploits of Neil Caffrey, the gentleman art thief, bond forger, and lead character of USA’s White Collar.  In the recent season finale, Mr. Caffrey was kind enough to return to its original owners a priceless Raphael painting he had “borrowed” to avoid implicating his ex-girlfriend.  Mighty sporting of him.

Caffrey has a taste for the finer things in life, and an eye for fine art.  Alas, I realized a long time ago that I will never have Mr. Caffrey’s fashion sense, let alone his artistic connoisseurship.  And it is precisely the exclusivity of this market that creates its value.

Earlier this year, I wrote a piece for MarketWatch about investing in the art market (see “Profiting from the Art Boom”).  In the article, I tied the boom in fine art to a broader investment theme—the rise of the global nouveau riche, led by the legions of new high-net-worth individuals in China and other emerging markets—that was causing a boom in everything from high-end cars to expensive booze.

I warned against investing in art directly, arguing that it is a “thinly-traded market dominated by a relatively small number of expert opinion makers and wealthy patrons” and that the high prices for each piece made portfolio diversification all but impossible with less than a nine-figure net worth (I’ll save you the chore of counting on your fingers; that would be a net worth of 100 million dollars).

Interestingly, an entire niche industry has sprung up to assist modestly wealthy investors with overcoming these obstacles.  Artvest Partners, a New York-based investment advisory firm run by two long-time veterans at auction house Christie’s, Jeff Rabin and Michael Plummer, offers “investment advice for the art market.”

Among other services, Artvest offers separately-managed art investment accounts, art investment funds and partnerships, and art financing.  They even offer estate planning for investors with art assets in their estates.

In the firm’s Fall 2011 Market Analysis, Artvest made comments similar to my own, noting that the art market is “opaque, illiquid, unregulated, non-commoditized and emotional” and that entering the market without doing significant study was akin to “letting a child drive the family car.”  Well said, and I would argue that the same would apply to most alternative investments.  Insiders have enormous informational advantages that the average investor simply doesn’t have.

Artvest also picked up on another theme I’ve been covering—that the global boom in art is being driven by China.  Chinese investors accounted for just 5% of art sales as recently as 2006.  By 2010, they had risen to 19%, and the number continues to march higher.  What’s more, in addition to buying Western art, Chinese investors tend to fancy their domestic works as well.  Chinese art has been a bigger seller in recent years than Impressionist & Modern and Post-War & Contemporary—traditionally the two most broadly traded sectors.

Investors have begun to fret about slower GDP growth in China and on what affect this might have on Western firms that export to China (see “Why China’s Slowdown Won’t Hurt Luxury”).

At 7.5% GDP growth, I’m not particularly worried about the prospects for China’s wealthy.  Should the property market continue to weaken or China’s banks come under pressure, I would recommend that investors dump luxury-themed stocks and avoid art investments.  But until then, I would continue to recommend both as “backdoor” ways to get exposure to China’s wealthy.

In my last article on art, I suggested that readers invest in art indirectly, though a company like Sotheby’s (NYSE: $BID) that auctions it.  I continue to view this as the best option for most investors.

But investors with larger bankrolls and a willingness to dig into the research might take a stab at something a little more exotic.  A classical Chinese painting, anyone?

By The Sizemore Letter

Last month, we reported that the struggle for control of Turkcell’s (NYSE: TKC) board of directors was entering the last innings of what had proven to be a very long ballgame (see “Turkish Telecom on Brink of Big Move”).

Alas, we have nothing new to report on this drawn-out pitcher’s duel.  The case is still bouncing around the court system of the old British Empire, and nothing definitive has been decided.  I do expect a resolution—and soon.  But I also learned that it might be best not to hold my breath.

In the meantime, life goes on, and Turkcell continues to expand and thrive as one of the premier emerging market telecom providers.   The company released earnings late last month,  and results were mostly strong.  Revenues grew 4% in what was a very difficult year for Turkey and emerging markets in general, and Turkcell’s subscriber base grew by 1.1 million to 34.5 million users.  The company expects 2012 revenues to grow by more than double the 2011’s rate, driven by the increased popularity of data and mobile internet plans.

Earnings took a hit, however, falling 33% due to a currency crisis in Belarus, where Turkcell has significant assets.   (Yes, this is the downside of investing in emerging markets;  while the potential for growth is enticing, it’s not all sunshine and roses.  Little things like currency devaluations can and do happen.)

Interestingly for shareholders, while no decision has been made on the reinstatement of the dividend—which has not been paid in over a year due to the boardroom dispute—CEO Sureyya Ciliv suggested that a share buyback could be in the works for July of this year.

I’ve made my case for several months now: even if Turkcell’s boardroom power struggle continues indefinitely the company is attractive as a play on rising incomes in Turkey, the Middle East, and Eastern Europe.  It is a fantastic investment in what I consider to be the biggest macro trend of the next decade: the rise of the emerging market consumer.

When you add to this powerful macro trend shareholder-friendly moves like the reinstatement of the dividend and the potential for substantial share buybacks, you have the ingredients in place for spectacular returns.  This was my rationale for making Turkcell my pick in the InvestorPlace “10 Stocks for 2012” contest, and it continues to be my rationale today.

When the board drama is resolved, I expect the shares to pop.  But in the meantime, life goes on.

Turkcell recently won the award for “Best New Product” at the 2012 Global Mobile Awards for its Click to Talk application, which enables its users to place phone calls from within Facebook.   The company was also nominated for two other awards, “Best Mobile Money Innovation” and “Best Technology Product or Solution for Serving Customers.”

You could feel Mr. Ciliv’s pride when he said in response, “Turkcell, which is an innovation leader in technology in Turkey, has once again proven with this award that it has the skills to sign global firsts and bests…  We are working hard for Turkey to become a country that produces technology, rather than imports it, and we are pleased to see that our efforts bear fruit.”

Turkcell is a world-class company trading at a very reasonable price.  Take advantage of the buying opportunity presented by the boardroom fiasco to accumulate shares of this leading emerging market innovator.

By TraderVox.com

Tradervox (Dublin) – The downturn in Euro took a breather today with the single currency trading comfortably above 1.3000 levels. It is currently trading near its high around 1.3060, up about quarter of a percent for the day. The support may be seen at 1.3040 and below at 1.3000. The resistance may be seen at 1.3060 and above 1.3100. The employment data from EMU showed a drop of 0.2% in the fourth quarter.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
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Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

A positive economic outlook from the US Federal Reserve earlier this week, helped boost the dollar against its main currency rivals throughout yesterday’s trading session. The news helped boost the USD/JPY to a fresh 11-month high, while the EUR/USD dropped as low as 1.3029 during the morning session. Today, traders will want to pay attention to a batch of US data, which includes this week’s Unemployment Claims figure. Any positive US news could help boost the dollar further.

Economic News

USD – US News Set to Impact Markets Today

The USD was able to extend its bullish trend yesterday, as positive US news continues to boost investor confidence in the American economic recovery. The USD/JPY hit a fresh 11-month high during the afternoon session, and appeared close to breaching the 84.00 level. The EUR/USD dropped to a fresh 1-month low at 1.3029 before staging a mild upward recovery. The main reason behind yesterday’s dollar surge was a positive outlook from the Fed on Tuesday. With a batch of US news set to be released today, the greenback may be able to maintain its bullish momentum.

The main piece of US news set to be released today is likely to be the weekly Unemployment Claims figure, scheduled for 12:30 GMT. Following last week’s positive Non-Farm Payrolls report, investors will be carefully watching today’s figure for clues as to the strength of the US employment sector. In addition, traders will want to note the results of the US PPI figure and TIC Long-Term Purchases, both set to be released at 12:30 GMT. Positive results may continue to help the dollar.

EUR – Weak Euro-Zone Indicators Keep Pressure on EUR

The euro continued its downward run against the US dollar yesterday, after several euro-zone economic indicators came in below forecasted levels. Following the release of the European Core CPI and Industrial Production figures, the EUR/USD dropped some 55 pips and came close to a 1-month low, reached only several hours before. The common-currency had more luck against other safe-haven currencies, in particular the Swiss Franc. The EUR/CHF shot up over 40 pips to reach as high as 1.2115 during the afternoon session.

Turning to today, in addition to any announcements out of the euro-zone that always have the potential to generate market volatility, traders will want to monitor the results of several US economic indicators. In the past, the euro largely benefitted from positive US news, as it tended to generate risk-taking among investors. That has not been the case in recent weeks however, as the euro-zone debt crisis has overshadowed any gains in the US economy. Should today’s news signal additional growth in the US economy, the EUR/USD may slide as a result.

JPY – Poor Japanese Economy Weighs Down on Yen

A record Japanese trade deficit combined with recent monetary easing steps from the Bank of Japan continued to weigh down on the yen throughout yesterday’s trading session. In addition to the USD/JPY, which hit a fresh 11-month high, the GBP/JPY shot up over 130 pips yesterday. The pair reached as high as 131.44 before staging a slight downward correction during the evening session.

Today, US news is forecasted to once again generate volatility for the yen. With the Unemployment Claims, TIC Long-Term Purchases and Philly Fed Manufacturing Index all forecasted to show additional gains in the US economy, investor risk taking may continue as we begin to close out the week. If the forecasts for the news turn out to be correct, the yen may see additional losses today.

Crude Oil – Crude Oil Tumbles Following Strong US Data

The price of crude oil tumbled during yesterday’s trading session, as the combination of a strong US dollar and decreased demand for oil out of China weighed down on the commodity. A strong US dollar typically leads to a drop in oil prices, as the commodity becomes less attractive to international buyers. Oil dropped over $1 a barrel yesterday, reaching as low as $105.61 during the afternoon session.

Today, oil may continue to fall providing US indicators show additional growth in the American economy. That being said, tensions in the Middle East still threaten to cause the price of oil to spike. Traders will want to watch out for any escalation in the conflict between Iran and Western nations. Should anything occur, oil may bounce back to close out the week.

Technical News

EUR/USD

The Slow Stochastic on the 8-hour chart has formed a bullish cross, indicating that upward movement could occur in the near future. This theory is supported by the Relative Strength Index on the daily chart, which has crossed into oversold territory. Going long may be the wise choice for this pair.

GBP/USD

Most long-term technical indicators show the GBP/USD trading in neutral territory at this time. The daily chart’s Williams Percent Range and Relative Strength Index are both range trading. As there is no defined trend, traders may want to take a wait and see approach for this pair ahead of any major movements.

USD/JPY

Technical indicators on the daily chart continue to show that this pair is overbought and could see downward movement in the near future. These include the Slow Stochastic, which has formed a bearish cross, and the Relative Strength Index which is currently at 80. Going short may be the wise choice for this pair.

USD/CHF

The daily chart’s Williams Percent Range is currently well into the overbought zone, indicating that a downward correction could occur in the near future. This theory is supported by the Relative Strength Index on the same chart, which is currently around 75. Going short may be the wise choice for this pair.

The Wild Card

NZD/JPY

A bearish cross on the daily chart indicates that downward movement for this pair may occur in the near future. The Williams Percent Range on the same chart, which is currently at -20, gives further evidence to this theory. This may be a good time for forex traders to go short in their positions, ahead of a possible downward correction.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

The US dollar has continued to plummet against most of its currency rivals this past week, with some now saying that a round of quantitative easing has already been priced in by speculators. The Canadian dollar has also been falling versus many of its currency counterparts, but interestingly it is reaching towards a 6-month high mark against the greenback.

In the chart below we can see that the USD/CAD pair has been falling for the past few months, but trading somewhat flat for the past half-year between 0.9960 and 1.0600. As the price approaches the 23.6% support level on the Fibonacci, traders should be able to determine the direction of the pair by its trading behavior over the next few days.

Other technical indicators seem to suggest an impending upward correction to the pair. The RSI on the chart below has the price just entering the over-sold region, suggesting a build-up in upward pressure. The Stochastic (slow) also appears moments away from a bullish cross, which supports the notion of an upward move.

So long as no major fundamental news causes a shift in value for either currency, the pair may likely see an upward correction after bouncing off the 0.9960 price level. Long-term buy positions appear to be beneficial for USD/CAD traders.

USD/CAD – Weekly Chart

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

Yesterday we saw riskier currencies tumble following the latest news to come out of the Euro-Zone. Should European news continue to be negative, traders can expect safe havens like the US Dollar and Yen to continue to make gains in the marketplace. Here is a roundup of the main economic indicators set to impact the market today.

08:30 GMT: GBP – Revised GDP Report

There are three versions of the UK GDP report. The first, also called the Preliminary, tends to have the most market impact. That being said, the Revised – the second release – also tends to create market volatility among GBP pairs. Analysts are forecasting a slight increase in the UK GDP reading which, if true, could lead to significant gains for the Sterling against its major counterparts.

14:00 GMT: USD – CB Consumer Confidence Report

The Consumer Confidence report is seen as a leading economic indicator, and as such, consistently creates heavy market volatility. The report is the result of a monthly survey of 5,000 American households. Respondents are asked to rate the economic climate in the US today.

Consumer confidence has steadily increased over the last several months, which has tended to create favorable conditions for the greenback. This month, analysts are forecasting another increase. Should the report be released in-line with, or above, the forecasted level of 59.1, traders can expect the Dollar to continue making gains throughout the rest of the day.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.