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.
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
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.
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.
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.
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 ConditionThe 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
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.
Time of release: 02/21/2014 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
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
Potential 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.
Time of release: 02/21/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
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
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