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2013-02-20 13:30 GMT (or 14:30 MQ MT5 time) | [USD - CPI]
if actual > forecast = good for currency (for USD in our case)
==========
CPI Rise 0.1% In January
Retail inflation remained in check in January, as new government statistics showed that consumer price growth slowed down from the previous month and matched economists' expectations.
The U.S. Labor Department revealed that consumer prices advanced 0.1 percent in January. This followed an increase of 0.2 percent in the previous month.
Economists had expected the figure to rise 0.1 percent.
The Discretionary Trader vs The System Trader (based on dailyfx article)
The Discretionary Trader
First, a discretionary trader uses a method of entry or exit that relies on subjective criteria. For example, a trader who is basing trading decisions off of fundamentals will be a discretionary trader. A technical trader will also likely be discretionary.
The benefit of being a discretionary trader is that you can sense the mood of the market in real time. Though price may be moving in one direction, you can see symptoms of a reversal coming (either through divergence or candlestick pattern). Therefore, the discretionary trader has the ability to react quicker to changes in the market condition.
The System Trader
System trading might also be referred to as mechanical, black box, or algo trading. The system trader uses a fixed set of rules to determine when or where to enter and exit the trade. The rules and interpretation of the rules are black and white so a computer can make the trades.
With FX being a 24 hour traded market, system trading has become quite popular. The computer doesn’t need a nap or to sleep at night which makes it a great candidate for following the rules and looking for trading opportunities that fit those rules.
A huge benefit of system trading is that you can get started with little or no trading experience. So system trading offers easy access to the FX market with a low barrier of entry to get started.
How Social Media Affects The Forex Market (based on dailyforex article)
The Forex market, as you probably know by now, is the biggest market in the world. Yet, somehow, the average citizen, who is quite familiar with the Stock Market, has never heard of the Forex market. When you tell them Forex means the same as foreign exchange, you generally get a response similar to “Ohhh” followed by a “And what is that”?
With the size of the Forex market, and its potential for profit, you would expect it to be a much more popular and familiar market to the masses. A possible explanation of this phenomenon can be the fact that it was originally inaccessible to the average person, and only in the last decade has the Forex retail market taken off.
Having said that, the Forex market has managed to gain more exposure over the last year or two, especially on the global Web. This can be attributed mainly to social media and the presence of Forex brokers and traders on the various social networks.
It is true that the amount of Forex content on the Web continues to grow, but the way in which the primary Forex players make use of social media leaves much room for improvement. The three main social networks used in the Web community are of course Facebook, Twitter, and LinkedIn.
While LinkedIn and Twitter have an infrastructure in place enabling people to connect with others in their field, Facebook is intended more for people to connect with friends and relatives.
Facebook
Before we discuss how Forex and Facebook merge, let’s take a quick look at the statistics of the largest social network on the Web. Facebook now has over 250 million users worldwide. As for content, over 1 billion new content pieces are uploaded weekly. Wouldn’t you say such numbers would yell to Forex traders all over the world to use this platform and connect with other traders?
On the other hand, Facebook was always intended not as a corporate platform but rather a place to connect on a more personal basis, so it is not as ideal as some of the other sites out there. Some of the Forex tools you might come across on Facebook include Forex groups, Forex pages, Forex traders, and Forex signals. I for one have not been exposed to any Facebook spam on the Forex topic, something I wish I could say about the Forex presence on Twitter.
As of today, Facebook is mainly used by Forex players to spread content, accumulate fans of pages, and share signals. With the advanced API and the ability to develop Facebook applications, the Facebook potential for the Forex world is much greater than what is being utilized today.
Twitter
If you have been paying attention, or even if you have not, you have most probably heard the word Twitter in one context or another. It is the buzz word of the tech industry and the global Web. Everyone is talking about how Twitter is the ultimate tool when it comes to exposure, networking, and communication, yet somehow, the Forex players cannot get it right.
It is true that there are endless Twitter accounts that offer Forex content. However, generally speaking, Forex has become a word with very negative associations on Twitter, due to the tremendous number of Forex spammers on Twitter.
The content being shared by most Twitter accounts is promotional. They are trying to sell Forex software or robots, and from the short research I have done, are not seeing results. Twitter is about communicating, two way dialog, not selling something and not spamming other users.
The potential in Twitter and its use in the Forex world is literally endless. Brokers can use it to offer special bonuses to their followers, while listening and communicating with their customers as part of their customer service efforts. Online Forex portals can share their insights in the form of news, analysis, articles, or reviews of Forex products with their followers, and pay attention to their users and how they suggest improving the service.
Traders can use Twitter to communicate with other traders, and make use of others’ experience and expertise in one aspect of Forex trading or another. The platform to connect to others like you is available; people just need to learn how to use it.
LinkedIn
If Facebook is for personal use, LinkedIn targets the corporate world. LinkedIn, with its 17 million visits per day, is the perfect place to expand your Forex reach, and so far, out of the three social networks, it is the only one that comes close, and is on the right path.
All the major experts in the Forex world run and maintain active profiles on LinkedIn, in which they share their insights and tips for other traders to see. Many big names in the Forex brokers’ arena have a serious presence on LinkedIn. Most of them have a group, in which they share all the details of their offering, content, as well as the latest developments in the market in general, and their company specifically.
However, the most important contribution of LinkedIn to the Forex world are the tens of Forex groups, which offer a perfect and spam-free (almost) environment for traders, brokers, and Forex companies to connect and communicate with one another.
In conclusion, social media has become one of, if not the biggest trend on the Web since its invention, and with the potential for profit in the Forex market, there is no reason these two superpowers should not join forces. The Forex world as a whole seems to have taken notice to the world of social media; you can find a Forex presence on any one of the social networks. However, as of now, the potential presented by social media, the one everyone is talking about, is not being utilized by the Forex world, not even close!
Three Ways to Make Your Strategy Most Effective (based on dailyfx article)
Focus Your Strategy in the Optimal Condition
We look at the three primary conditions of trends, ranges, and the breakout:
But just knowing the three primary market conditions is not enough: Traders need to be able to adjust their strategy so that it’s designed to work within the condition for which it was built.
Employ Trade Management Befitting of the Market Condition
The entry into a trade is but a small part of the overall approach. Once the trade is opened and the position is live, that is when the trader is left to their devices.
Many traders go into a trade without any trade management strategy at all. Perhaps they place a stop and limit and just watch prices move expecting to get some magical ‘gut-instinct’ type of feel that will allow them to know exactly what to do at the right time.
Traders should design their trade management in the same way they design the entry into the trade. So, when the trade is entered, a protective stop is placed in case the position doesn’t work out; and profit targets are set in the event that it does work.
The first point of emphasis for trade management is often the break-even stop. This is when the trader can move their stop-loss to their initial entry price so that, worst case scenario; the trader can avoid a loss on the position.
But the optimal time to move the stop to break-even differs amongst market conditions. Trend strategies are, by nature, looking for a bias in the marketplace to continue. So the fear of reversal is high, and traders can look to move their stop to break-even relatively quickly in an attempt to avoid losing precious capital if the profit target isn’t obtained.
Ranges, on the other hand, are generally more congested and can be slower-moving type of markets. This can lead the trader to be slightly more conservative on the break-even stop movement; since a quick break-even stop move might entail more instances of getting ‘wicked’ out of the trade as the range continues with an element of congestion.
Breakouts are marked by their sharp and fast price movements. The upside of this is that if the trader finds themselves on the right side of the move, the benefit can be fantastic. But, if on the wrong side of the move this can be a very costly endeavor. This is where traders will usually look to be most aggressive with their break-even stop move, as a breakout market can reverse very quickly; and that gain in the trade can quickly be wiped away as a loss.
Trading the News: U.K. Retail Sales (adapted from dailyfx article)
The British Pound may face a larger correction over the remainder of the week as U.K. Retail Sales are expected to contract 1.2% in January.
What’s Expected:
Time of release: 02/21/2014 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: -1.2%
Previous: 2.8%
Forecast: -1.0% to 1.0%
Why Is This Event Important:
A slowdown in household spending may drag on the British Pound as it dampens the prospects of seeing a Bank of England (BoE) rate hike later this year or even in early 2015, but the data print may pave the way for fresh highs in the GBPUSD should it highlight an improved outlook for growth and inflation.
How To Trade This Event Risk
Bullish GBP Trade: Retail Sales Climbs 0.3% or Greater
- Need green, five-minute candle following the statement to favor a long GBP trade
- If reaction favors buying British Pound, long GBPUSD with two separate position
- Set stop at the near-by swing low/reasonable distance from entry; need at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bearish GBP Trade: Household Spending DisappointsPotential Price Targets For The Release
December 2013 U.K. Retail Sales (GBPUSD M5 : 116 pips price movement by GBP Retail Sales news event) :
Trading the News: Canada Consumer Price Index (based on dailyfx article)
A pick up in Canada Consumer Prices may spur a more meaningful correction in the USDCAD as it limits the threat of seeing the Bank of Canada (BoC) implement a rate cut in 2014.
What’s Expected:
Time of release: 02/21/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 1.3%
Previous: 1.2%
Forecast: 1.2% to 1.3%
Why Is This Event Important:
Despite the recent slowdown in economic activity, Governor Stephen Poloz may retain a rather balanced tone for monetary policy should we see a diminishing risk for disinflation, and the BoC may keep the benchmark interest rate on hold this year as central bank officials see a more robust recovery in the U.S. – Canada’s largest trading partner.
How To Trade This Event Risk
Bullish CAD Trade: Headline Inflation Advances 1.3% or Greater
- Need red, five-minute candle after the CPI report to consider short USDCAD entry
- If the market reaction favors a long Canadian dollar trade, establish short with two position
- Set stop at the near-by swing high/reasonable distance from cost; use at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bearish CAD Trade: Canada Consumer Price Report DisappointsPotential Price Targets For The Release
December 2013 Canada Consumer Price Index (USDCAD M5 : 15 pips up and 48 pips down by CAD - CPI news event) :
2013-02-21 09:30 GMT (or 10:30 MQ MT5 time) | [GBP - Retail Sales]
if actual > forecast = good for currency (for GBP in our case)
==========
UK retail sales drop 1.5% – more than expected – but GBP/USD recovers
The volume of British retail sales dropped by 1.5%. Expectations were low for this retail sales release. They were expected to drop by 0.9% for the month of January after an outstanding leap of 2.6% in December, which was now upgraded to 2.7%. Year over year, sales rose by 4.3%, less than 5% expected. Core sales also dropped by 1.5%, and y/y it stands at 4.8%, both also slightly below expectations. All major UK figures disappointed this week.
China Seeks Seat On Gold Fix Table. What Does It Mean For The Gold Price? (based on Forbes)
This week reports emerged that South Africa's Standard Bank was in negotiations to take Deutsche Bank's seat at something known as the London fix: the group of banks who chair the price-setting mechanism for the global gold benchmark. On first glance it looked interesting and perhaps practical that South Africa, as a leading gold producer, should seek a seat at this particular table. But that is to miss the point. What is much more interesting is that Standard Bank is 20% owned by China's Industrial and Commercial Bank of China (ICBC) - which is also in the process of buying a majority stake in Standard's UK-based markets business, including commodities.
2013-02-21 13:30 GMT (or 14:30 MQ MT5 time) | [CAD - CPI]
if actual > forecast = good for currency (for CAD in our case)
==========
Advantages of Trading the FX Market (adapted from dailyfx article)
High-Leverage & Low-Cost of FX
The Forex Market allows you to trade with large amounts of leverage. Leverage allows to control a position or trade that is larger than your capital base. Therefore, with a $5,000 account, you could open up a trade of $10,000, $50,000, or $100,000, if you so desire.
Of course, there is always a trade off in any market and Forex is no different. Your profit or loss on any trade is dependent on the trade size open. Therefore, if you open a trade that is too large relative to your account balance and that trade goes against you, the effect can be more than you bargained for.
The other side of the coin to the Forex Market is the low cost to start an account. The brokerage that you decide to trade with will set the required start-up account balance. However, as a trader, less isn’t more as we found it is far better to find an appropriate balance over the lowest possible balance.
The other aspect of low costs is displayed in the transaction costs. The transaction costs in Forex is known as the spread and is found by taking the different of the bid and ask measured in pips. All things being considered, the lower the spread, the quicker you will realize a profit should the market move in the direction of your analysis.
Intermarket Moves Keep FX Relevant
In 2013, the hottest stock market in the world was the Nikkei 225. The Nikkei 225 is Japan’s stock market which was boosted by an aggressive monetary policy via the Prime Minister of Japan and the Bank of Japan. As the world becomes more and more interrelated, it shouldn’t surprise you that the JPY was similarly one of the biggest performers in 2013 which assisted in the Nikkei 225’s 57% return in 2013.
24-Hour/5 Access to an Active Market
Trading stocks isn’t kind to those who work for a living and want to actively trade. The New York Stock Exchange opens after most start their work day and almost certainly end before their day ends. Stock trading hours in the US are open from Monday through Friday 9:30 a.m. to 4:00 p.m. ET. This means that if you want to have an active trading style, you’ll likely need to pay someone else to do the trading for you.
This dilemma doesn’t exist in the Forex Market. Living in the Western Hemisphere, you can easily trade the Japanese Consumer Price Index or Reserve Bank of Australia Rate announcement in the evening. What’s more, there are three distinct zones in any given trading day with distinct trading opportunities so that regardless of your preference on how to trade, there’s likely a few opportunities a day for you to try and capitalize on.