Press review - page 492

[Sergey Golubev]

Intra-Day Fundamentals - EUR/USD, NZD/USD and Dollar Index: U.S. Durable Goods Orders

2017-02-27 13:30 GMT | [USD - Durable Goods Orders]

• past data is -0.5%
• forecast data is 1.6%
• actual data is 1.8% according to the latest press release

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - Durable Goods Orders] = Change in the total value of new purchase orders placed with manufacturers for durable goods.

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From rttnews article:

• "The report said durable goods orders jumped by 1.8 percent in January after falling by a revised 0.8 percent in December."
• "Excluding a sharp increase in orders for transportation equipment, durable goods orders edged down by 0.2 percent in January following a revised 0.9 percent advance in December."

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EUR/USD M5: 19 pips range price movement by U.S. Durable Goods Orders news events

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NZD/USD M5: 11 pips range price movement by U.S. Durable Goods Orders news events

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Dollar Index M5: range price movement by U.S. Durable Goods Orders news events

[Sergey Golubev]

AUD/USD Intra-Day Fundamentals: Australian Current Account and 22 pips range price movement 

2017-02-28 00:30 GMT | [AUD - Current Account]

• past data is -10.2B
• forecast data is -3.8B
• actual data is -3.9B according to the latest press release

if actual > forecast (or previous one) = good for currency (for AUD in our case)

[AUD - Current Account] = Difference in value between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter.

==========

From official report:

• "The current account deficit, seasonally adjusted, fell $6,348m (62%) to $3,853m in the December quarter 2016. There was a turnaround of $8,205m on the balance on goods and services, resulting in a surplus of $4,667m in the December quarter 2016. The primary income deficit rose $1,843m (30%) to $8,081m."
• "In seasonally adjusted chain volume terms, the surplus on goods and services rose $700m (49%) from $1,424m in the September quarter 2016 to $2,124m in the December quarter 2016. This is expected to contribute 0.2 percentage points to growth in the December quarter 2016 volume measure of GDP."

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AUD/USD M5: 22 pips range price movement by Australian Australian Current Account news event

 

[Sergey Golubev]

Quick Technical Overview - USD/CAD: trading to be within 100-daySMA/200-SMA ranging area waiting for the direction of the trend to be started (adapted from the article)

D1 price is located within 100 SMA/200 SMA levels for the ranging market condition:

• The price is ranging between 1.3055 support and 1.3334 resistance levels
• Ascending triangle price pattern was formed by the price to be crossed to above for the bullish trend to be resumed.
• "We’ve seen Canadian Dollar strength that is backed by much of the Commodity run and subsequent USD weakness since the Fed hiked in December. However, February has been a sideways affair."
• "I’m awaiting a price breakdown and close below the support levels of 1.3083/76 to validate the view. However, we do see a lot of support at 1.3000 as the price continues to hold up above 1.3000 or find bids. Regarding resistance, the price has had a difficult time breaking above the twin forms of resistance of the 200-DMA at 1.3148 and the Fibonacci Zone that currently rests at 1.32274/31285."

If the price breaks 1.3055 support level on close D1 bar so the price will be reversed back to the primary bearish condition and with 1.3008 nearest target to re-enter.
If price breaks 1.3334 resistance level so the primary bullish trend will be resumed with 1.3460 daily bullish target.
If not so the price will be ranging within levels for direction.

Resistance	Support
1.3334	1.3055
1.3334	1.3008

Trend: ranging

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2013.07.31 18:54

The Basics of Forex Leveraging :

Leverage in trading simply refers to the ability to increase the size of your trade or investment by using credit from a broker. When trading using leverage, you are effectively borrowing from your broker, while the funds in your account act as collateral. This collateral is referred to as margin.

The amount of leverage available is based on the margin requirement of the broker. Margin requirement is usually shown as a percentage, while leverage is expressed as a ratio. For example, a broker might require a minimum margin level of 2%. This means that the customer must have at least 2% of the total value of an intended trade available in cash before opening the position. A 2% margin requirement is equivalent to a 50:1 leverage ratio. In practical terms, using 50:1 leverage, having $1,000 in your account would allow you to trade up to $50,000 worth of a given financial instrument. At a 50:1 leverage, a 2% loss in the instrument traded completely wipes out a fully leveraged account. Conversely, a 2% gain doubles the account.

Leverage by Market and Instrument

Leverage available differs substantially depending on what market you are trading and from which country you are based. For example, the degree of leverage available for trading stocks is relatively low. In the United States, investors typically have access to 2:1 leverage for trading equities, a margin level of 50%.

The futures market offers much higher degrees of leverage, such as 25:1 or 30:1, depending on the contract traded.

The leverage available in the forex market is higher still at 50:1 in the U.S. and as high as 400:1 offered by brokers internationally.

Leverage in Forex Trading

High leverage availability, coupled with a relatively low minimum balance to open an account, has added to the allure of the forex market to retail traders. However, excessive use of leverage is often and correctly cited as the primary reason for traders blowing out their accounts.

The danger that extreme leverage poses to investors has been recognized and acted on by the U.S. regulatory bodies, which have created restrictions on the amount of leverage available in forex trading. In August 2010, the Commodity Futures Trading Commission (CFTC) released final rules for retail foreign exchange transactions, limiting leverage available to retail forex traders to 50:1 on major currency pairs and 20:1 for all others.

As of 2013, brokers outside the U.S. continue to offer leverage of 400:1 and higher.

Examples of Leveraged Trades in the Forex Market

In our first example, we'll assume the use of 100:1 leverage

In this case, to trade a standard $100K lot you would need to have margin of $1K in your account. If, for example, you make a trade to buy 1 standard lot of USD/CAD at 1.0310 and price moves up 1% (103 pips) to 1.0413, you would see a 100% increase in your account. Conversely, a 1% drop with a standard 100K lot would cause a 100% loss in your account.

Next, let's assume you are trading with 50:1 leverage and 1 standard $100K lot. This would require you to have margin of $2K (2% of 100K).

In this case, if you buy 1 standard lot of USD/CAD at 1.0310 and price moves up 1% to 1.0413, you would see a 50% increase in your account, while a 1% drop with a standard 100K lot would equal a 50% loss in your account.

Consider here that 1% moves are not uncommon and can even happen in a matter of minutes, especially after major economic releases. It could only take one or two losing trades using the leverage described in the examples above to wipe out an account. While it's exciting to entertain the possibility of a 50% or 100% increase in your account in a single trade, the odds of success over time using this degree of leverage are extremely slim. Successful professional traders often suffer a string of multiple losing trades but are able to continue trading because they are properly capitalized and not overleveraged.

Let's now assume a lower leverage of 5:1. To trade a standard $100K lot at this leverage would require margin of $20K. An adverse 1% move in the market in this case would cause a far more manageable 5% loss.

Fortunately, micro lots enable traders to use lower leverage levels such as 5:1 with smaller accounts. A micro lot is equivalent to a contract for 1,000 units of the base currency. Micro lots allow flexibility and create a good opportunity for beginning traders, or traders starting with smaller account balances, to trade with lower leverage.

Margin Calls

When you enter a trade, your broker will keep track of your account's Net Asset Value (NAV). If the market moves against you and your account value falls below the minimum maintenance margin, you may receive a margin call. In such an event, you could receive a request to add funds to your account, or your positions could simply be flattened automatically by the broker to prevent further losses.

The Use of Leverage and Money Management

The use of extreme leverage is fundamentally antithetical to the conventional wisdom on money management in trading.

Among the widely accepted tenets on money management are to keep leverage levels low, to use stops and to never risk more than 1-2% of your account on any one trade

The Bottom Line

Data disclosed by the largest foreign-exchange brokerages as part of the Dodd-Frank financial reform legislation has shown that a majority of retail customers lose money trading. A substantial if not leading cause is the misuse of leverage.

However, leverage has key benefits, providing the trader with greater flexibility and capital efficiency. The absence of commissions, tight spreads and available leverage are certainly beneficial to active forex traders, creating trading opportunities not available in other markets.

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2016.06.30 08:08

How to Trade - Forex Leverage (based on the article)

Leverage in forex is expressed as ratios - for example as the following: 1:1, 1:50, 1:100, 1:200, 1:400.

Leverage in forex = Purchase Power/Capital Invested = $100,000/$1,000 = 100

This leverage ratio of 1:100 is translated as following:

For every $1 I deposit in my forex broker's account, my broker in return deposits $100 in my margin account. So, if I deposit $1000 then my broker deposits $100,000 in my trading account. So with just $1000 of my own money, I can control $100,000 for my trading purposes. By doing so I created a leverage in forex.

"Leverage has been in use from the early dawn of our civilization primarily to cope up with daily necessities. In the medieval era leverage was employed probably just to lift heavy stones to build houses. But in the modern era leverage has been used extensively in finance and commerce. When I am buying one million dollar house with only 10% down payment, I am essentially using leverage. Leverage adds glamor to forex trading. It is what makes so many traders gravitate to forex trading as compared to equities and other securities market."

"Hence, leverage in forex is the secret behind huge wind fall profits in forex trading. Be that as it may, leverage can magnify losses in losing trades. This is also why leverage is considered double edged sword. If I make winning trades using leverage then my profits are huge. Likewise if I make losing trades my losses are also huge."

[Sergey Golubev]

Intra-Day Fundamentals - EUR/USD and Brent Crude Oil: U.S. GDP Second Release

2017-02-28 13:30 GMT | [USD - GDP]

• past data is 1.9%
• forecast data is 2.1%
• actual data is 1.9% according to the latest press release

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - GDP] = Annualized change in the value of all goods and services produced by the economy.

==========

From official report:

• "Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent." 
• "The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was also 1.9 percent." 

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EUR/USD M5: 16 pips range price movement by U.S. Gross Domestic Product news events

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Brent Crude Oil M5: 19 range price movement by U.S. Gross Domestic Product news events

[Sergey Golubev]

USD/CNH Intra-Day Fundamentals: Caixin Manufacturing PMI and 40 pips range price movement 

2017-03-01 01:45 GMT | [CNY - Caixin Manufacturing PMI]

• past data is 51.0
• forecast data is 50.9
• actual data is 51.7 according to the latest press release

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CNY - Caixin Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.

==========

From official report:

• "At 51.7, the seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – picked up from 51.0 in January and signalled an improvement in overall business conditions for the sixth month in a row. Though modest overall, the latest improvement was the joint-second strongest for just over four years."
• "Companies continued to report lower staff numbers in February, as has been the case in each month since November 2013. That said, the rate of job shedding was the slowest seen for two years. Higher new orders and lower staffing levels contributed to a modest rise in unfinished business in February."

==========

USD/CNH M5: 40 pips range price movement by Caixin Manufacturing PMI news event

[Sergey Golubev]

USD/CAD Intra-Day Fundamentals: BOC Overnight Rate and 459 pips range price movement 

2017-03-01 15:00 GMT | [CAD - Overnight Rate]

• past data is 0.50%
• forecast data is 0.50%
• actual data is 0.50% according to the latest press release

if actual > forecast (or previous one) = good for currency (for CAD in our case)

[CAD - Overnight Rate] = Interest rate at which major financial institutions borrow and lend overnight funds between themselves.

==========

From official report:

• "The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent."
• "The Bank’s Governing Council remains attentive to the impact of significant uncertainties weighing on the outlook and continues to monitor risks outlined in the January MPR. In this context, Governing Council judges that the current stance of monetary policy is still appropriate and maintains the target for the overnight rate at 1/2 per cent."

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USD/CAD M5: 59 pips range price movement by BOC Overnight Rate news event

[Sergey Golubev]

AUD/USD Intra-Day Fundamentals: International Trade in Goods and Services and 21 pips range price movement 

2017-03-02 00:30 GMT | [AUD - Trade Balance]

• past data is 3.33B
• forecast data is 3.82B
• actual data is 1.30B according to the latest press release

if actual > forecast (or previous one) = good for currency (for AUD in our case)

[AUD - Trade Balance] = Difference in value between imported and exported goods and services during the reported month.

==========

From rttnews article:

• "Australia posted a seasonally adjusted merchandise trade surplus of A$1.302 billion in January, the Australian Bureau of Statistics said on Thursday. That was shy of expectations for a surplus of A$3.80 billion and was down 61 percent from A$3.334 billion in December."
• "Non-monetary gold fell A$671 million (39 percent) and non-rural goods lost A$403 million (2 percent)."

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AUD/USD M5: 21 pips range price movement by Australian Trade Balance news event

‌

[Sergey Golubev]

Gold: bounced from 200-day SMA to 10-day EMA to below for the daily bearish trend to be resumed (adapted from the article)

D1 price is located near and below 200 SMA on the border between the primary bearish and the primary bullish trend on the chart for 10 EMA to be crossing to below with 1,226 support level as the nearest daily target to re-enter:

• "Technically, gold prices have declined substantially after trading to yearly highs earlier in the week at $1,264.06. Now, prices are trading back below their 10 day EMA (exponential moving average), which is found at $1,244.54. A daily close below this average should be considered as a bearish turn in the market, and traders should note that gold prices have not closed below this line since January 30th of this year. If prices decline further, on continued US Dollar strength, gold traders may begin looking for support near the February 21st low of $1,226.23."
  
• "It should also be noted that the US Dollar remain well above their 10 day EMA at 101.20, which should be considered as a value of ongoing support. In the event that the US Dollar turns lower on today’s news, traders should look for the market to trade back toward this average. In a bearish US Dollar scenario, prices should form a long wick reconfirming the previous point of resistance referenced at 101.69. Also in the event that the US Dollar gives back its previous gains, traders should reasonably expect gold prices to rally eliminating its prior daily losses."

If the price breaks 1,264 resistance level so daily bullish reversal will be started.‌
If price breaks 1,226 support so the bearish trend will be resumed.
If not so the price will be ranging within the levels waiting for direction.

Resistance	Support
1,264	1,226
N/A	1,180

• Recommendation to go short: watch the price to break 1,226 support level for possible sell trade
  
• Recommendation to go long: watch the price to break 1,264 resistance level for possible buy trade
• Trading Summary: ranging

SUMMARY: ranging

TREND: waiting for direction