Something Interesting in Financial Video July 2016 - page 2
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Forum on trading, automated trading systems and testing trading strategies
Forecast for Q3'16 - levels for US Dollar Index
Sergey Golubev, 2016.07.06 11:06
Economic Releases that Move the US Dollar
As you can probably imagine, we could spend many lessons and multiple hours going over each of the economic indicators that affect the price of the US Dollar. It is for this reason, that before getting into any of the actual indicators, I wanted to give everyone an overview of the broad things that move the market. As we have discussed in previous lessons the two broad categories that pretty much everything that moves the forex market fits into, are trade flows and capital flows, as covered in module 3 of this course.
Once you have an understanding of this, all that is necessary to understand how economic numbers move the dollar, is to understand which numbers are important to the market at the time, whether those numbers fit into the trade flows or capital flows category, and how they should affect the dollar as a result.
How the market reacts to economic releases is generally determined by two factors:
1. How important the market considers a particular release to be.
2. How close to market estimates the number comes in at. Remember that markets anticipate news, so generally if an economic release comes out as expected, there is very little if any market reaction to that release.
How important the market considers a particular economic release to be, is something that changes over time depending on what is happening from a US Dollar fundamentals standpoint. If there are worries that the economy is going into recession, then the market is going to be extra sensitive to any numbers, such as non farm payrolls and consumer spending, which may provide early warning signs that this is the case. Conversely, if the economy is heating up and the markets are worried that inflation may become a problem, then the most market moving numbers may be price data releases, such as the CPI and the PPI. For your reference, according to Dailyfx.com the most market moving indicators for 2007, in order of importance were:
1. Non Farm Payrolls
2. FOMC Releases
3. Retail Sales
4. ISM Manufacturing
5. Inflation
6. Producer Price Index
7. The Trade Balance
8. Existing Home Sales
9. Foreign Purchases of US Treasuries (TIC Data)
We have discussed most of these indicators already, and for those which we have not, a quick google search, and review of the indicator in the context of whether it fits into trade flows or capital flows, should answer the question of why they move the market.
Although I am probably a little biased since I used to work with the people who run the site, I am a very big fan of Dailyfx.com as the place where I go to find out what economic data is due for release, and for commentary on the number after the release. They have a great global calendar which you can find at the top of the site as well as tons of both technical and fundamental commentary on everything that affects the US Dollar and forex market in general.
For this lesson specifically, if you click the calendar button at the top of the site you will see they have all of the economic data releases from the major countries of the world with the time of the release, the previous number, the forecasted number and the actual number which is updated after the release. You will also notice here they have links for the more important numbers giving a definition of the release, the relative importance of the release, and the latest news release relating to that release.
If you click back to the homepage of the site you will see lots of fx related reports which the Dailyfx staff puts out throughout the day. Two of my favorite reports are the Daily Fundamental report by Kathy lien, and the US Open Market Points by Boris Schlossberg which you can find in the middle of the page.
As we discussed in module 8 of our basics of trading course, the best way to get a feel for how economic numbers affect the market, and which numbers are in focus, is to start following the market on a daily basis and seeing how it reacts to various news events. As this is the case, I highly recommend following the commentary on Dailyfx.com as well as the forex commentary on InformedTrades.com, and start putting your analysis to practice on your real time demo accounts. If you have not registered for a free realtime demo account I have included a link above this video where you can do so.
Article with music about China and Brexit:
Professor David Beckworth: China Yuan Could Be Catalyst For Financial Panic After BREXIT
"China for now is doing these minor tweaks because a major devaluation (or expectations of it) would spark a massive capital outflow and financial panic...I think a major devaluation is in order and I worry that Brexit uncertainty could be the catalyst that pushes the dollar high enough to cause the major devaluation."
George Mason University Professor David Beckworth
There are two dominant themes that it is important to understand when analyzing the Canadian Dollar from a fundamental standpoint. The first, as its designation as a commodity currency implies, is the fact that exports of natural resources (especially gold and oil) make up a significant part of the Canadian economy. This is important to understand because as Canada is the world's 14th largest producer of oil and 5th largest producer of gold, the price of these and other commodities normally has a direct affect on the Canadian Dollar's Exchange rate.
The second thing that it is important to understand here, is the fact that as the Canadian population is relatively small in comparison to its land mass, the economy is heavily reliant on exports, which ties the country more closely together with the international economy as a whole. This is particularly true in regards to economy of the United States, as the US is Canada's largest trading partner, and 81% of Canadian Exports flow to the US.
While many people believe that the US relies most heavily on the middle east for its oil imports, it is actually Canada that is the largest supplier of oil to the United States. As the US is the world's largest oil consumer and Canada is one of the largest producers, fluctuations in the price of oil have double the impact. As we learned in our lesson on trade flows, as the US is a net oil importer and Canada is a net oil exporter, then all else being equal, a rise in the price of oil should strengthen the CAD and weaken the USD.
While exports of commodities are still a very important component of the Canadian economy, the country's service sector has experienced massive growth in recent decades, to the point where the service industry now accounts for 2/3rds of the country's economic output. This is important to understand because, as the United States is its largest trading partner, a slowdown in the US Economy can hurt the Canadian economy and its currency, even if commodity prices remain high.
Forum on trading, automated trading systems and testing trading strategies
Something Interesting in Financial Video October 2013
Sergey Golubev, 2013.10.10 14:44
147. An Introduction to ECNsThis video provides an introduction to electronic communications networks (ECNs), systems that allow buyers and sellers of stocks to trade directly without an intermediary.
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Most forex traders participate in the forex market with forex brokers. There are mainly two types of forex brokers: market makers and electronic communications networks (ECNs). In this article we want to introduce the latter type of brokers, the ecn forex broker.
What is an ECN forex broker?
ECN forex broker is a financial expert that provides the clients with direct access to other forex participants in the currency market by using electronic communications networks (ECNs). Unlike market makers, which always trade against their clients to make profit, an ECN forex broker only creates opportunities of trading between forex traders.
How does an ECN forex broker work?
The ECN forex brokers provide a medium by passing on the prices for different market participants such as banks, market makers and other traders in the market. Then the best bid/ask quotes will be displayed on the trading platforms based on these prices. ECN forex brokers also serve as counterparties to forex transactions, but it is a settlement that they operate on instead of pricing basis. While fixed spreads are offered by some market makers, spreads of currency pairs can be very different, determined by the trading activities of the currency pair. In active trading periods, sometimes you cannot get ECN spread at all, especially in those very liquid currency pairs such as the majors (EUR/USD, GBP/USD, USD/JPY, USD/CHF) and some currency crosses.
Pros and cons of the ECN forex broker
The ECN forex broker has both advantages and disadvantages. The pros and cons of the ECN forex broker are as follows.
The pros of the ECN forex broker can be presented in following aspects.
Traders can usually get better bid/ask prices for they are derived from multiple sources.
At certain time traders may trade on prices with no spread or with only very little spread.
Genuine ECN forex broker will pass on the orders to a bank or other trading participants on the opposite side of the transaction instead of trading against the traders.
It is very likely that the prices on the ECN forex broker are more volatile.
Traders can take on the role of market traders to other traders on the ECNs since they can offer a price between bid and ask.
The cons of the ECN forex broker can be presented in following aspects.
Many ECN forex brokers do not provide integrated charting or new feeds.
Some trading platforms are not so easy for traders to use or operate.
Since there are variable spreads between the bid and the ask prices, it may be difficult to calculate stop-loss and breakeven points in pips in advance.
Forex traders are obligated to pay commissions for each transaction.
It is obvious that there are both pros and cons of an ECN forex broker. Traders have to take many factors into consideration when choosing a forex broker.
VIDEO LESSON - Introduction to the British Pound
Although the United Kingdom is a member of the European Union, it has not yet adopted the Euro as its currency, so it is not part of the European Monetary Union. There are a number of reasons for this, but perhaps most famous is the country's forced withdrawal from the Exchange Rate Mechanism, the precursor to the Euro. As we have touched on in previous lessons, before joining the Euro countries were required to meet certain criteria, one of which was to keep the value of their currency within certain "bands". After initially trying to adhere to the qualifications set forth for participation in the European Monetary Union, the value of the pound dropped below the lower band, forcing the country out of what would become the European Monetary Union.
As Kathy Lien points out in her book Day Trading the Currency Market, while the GBP/USD is a very active currency, the Pound is also very active in the crosses, and as the EU is their largest trading partner, traders pay particular attention to movements in the EUR/GBP for fundamental ques on the currency. As of this lesson the UK also has the highest interest rates in the G7, causing it to be used as the currency many traders will buy when playing the carry trade we learned about in module 3 of this course. This makes GBP/JPY one of the more active crosses in the market and one which traders who are looking for increased volatility often choose as their favorite.
Scalping the forex market
All the ins and outs on scalping the Forex market. May Chris dives into the world of Scalping where he explains in great detail how this style of trading can be accomplished in the Forex market. This live webinar not only clarifies how a trader can scalp but also provides every Forex trader with a great guidance and extra tips.
The Video - Introduction to the Swiss Franc
Switzerland is one of the richest countries in the world, and while its economic policies and practices largely conform with EU standards, the country's population rejected accession negotiations with the EU in March of 2001. So, at least for the foreseeable future, the Swiss Franc is expected to remain one of the world's most actively traded currencies, with two dominating features that are important to us as forex traders.
Although this status has started to wane somewhat in recent years, the Swiss Franc has historically been considered one of the world's primary safe haven currencies, which means that money flows into the Swiss Franc during times of economic or geopolitical uncertainty. The primary reasons why this is the case are:
In 2005 the Swiss government sold the nations vast gold inventory, and as a result the currency is no longer backed by gold. Some argue that because of this the Swiss Franc has lost much of its safe haven status, something that there will surely be more tests of in the years to come.
The second thing that it is important for traders to understand about the Swiss Franc, is its strong correlation with the Euro. As the Swiss Franc is quoted on the opposing side of the Dollar when compared to the Euro, this means that the USD/CHF currency pair has a strong negative correlation with the EUR/USD currency pair. The two currency pairs shows the strong negative correlation of over 90% between the two currency pairs, resulting from the strong economic ties between Switzerland and the European Union.
The first reason that it is important for traders to understand this strong negative correlation, is so that they can take it into account when considering trades in both currency pairs. As the two currency pairs have such a high negative correlation, there is a very good possibility that a trader's technical analysis will show a buy signal in the EUR/USD, while at the same time showing a sell signal USD/CHF, or vice versa.
If this trader happened to be blind to the negative correlation we have just outlined, he or she may think that they are putting on two completely different trades. As we have just shown however, what this trader would actually be doing is doubling their exposure to the move they were trying to capture. Conversely, if a trader were to trade these pairs in the same direction, then they would effectively be reducing the potency of both trades, as the negative correlation between the two currency pairs will act to offset the gains or losses that result on each trade.
As the Swiss Franc is no where near as liquid as the Euro, on an intraday basis it is important to be aware that this negative correlation can breakdown some what. Lastly, should the Swiss political and/or economic environment (especially monetary policy) start to substantially diverge from that of the Eurozone, you could see a breakdown of this negative correlation on the longer timeframes as well.
Forum on trading, automated trading systems and testing trading strategies
New MetaTrader 5 video guides for beginners
MetaQuotes Software Corp., 2016.07.19 12:53
More and more brokers choose MetaTrader 5 as the primary platform for providing services to their traders. Alpari has noted significant growth on the number of new trading accounts. Representatives of RoboForex have also reported a steep increase in the number of accounts opened through the MetaTrader 5 platform. Furthermore, a growing number of traders on Moscow Exchange tend to choose the new platform and switch to MetaTrader 5 brokers.
At the same time, brokers and platform developers have recorded an increase in the number of requests for technical support from traders who are actively exploring the new platform capabilities. For this reason, MetaQuotes Software has prepared a series of MetaTrader 5 video guides for both brokers and their technical support teams.
These five-minute videos aim to familiarize traders with all analytical and trading features of the platform. The videos provide general information on all basic features, as well as explanation on additional services, including the Market of trading robots, the Trading Signals service, Virtual Hosting and the Freelance resources. For convenience, the videos contain links to detailed video tutorials of other platform components.
"We can handle the increased load from traders and brokers," said Gaies Chreis, COO of MetaQuotes Software Corp. "We expect an intensified influx of clients, and we are preparing new efficient solutions to serve traders. For example, now we are looking to integrate video tutorials straight into the platform. This can provide traders with quick access to assistance and reduce the load on brokers' internal help desk."
The new videos with professional English and Russian voice over are available on the MetaQuotes' official YouTube Channel. The videos are also available with subtitles in 8 languages: Arabic, Chinese, French, German, Japanese, Portuguese, Spanish, and Turkish.
Watch the short video and discover the new features of MetaTrader 5 in five minutes!