Wednesday, November 19, 2008

Yen Advances vs Dollar and European Euro Stocks Eyed for Direction

* U.S. data shows record consumer price slide in Oct
* Sterling rises, shakes off BoE minutes
* Anxiety abounds about future of US automakers
On 19th Nov, New York:- The dollar fell against the euro and sterling on Wednesday as U.S. stocks stabilized and big buy orders for the European currencies pushed them through key technical levels. A U.S. economic report showing a record slide in consumer prices last month also added to pressure on the dollar as it suggested the Federal Reserve may have to cut benchmark interest rates from an already low 1 percent.
Analysts, however, said investors remained skittish about the health of the world economy and were likely to take future cues from Wall Street's next move higher or lower.
"We saw euro and the sterling break through key trend lines and momentum traders jumped in and followed the moves to push them higher," said Brian Dolan, head of research at Forex.com in Bedminster, New Jersey.
But I think this is a false break because we're likely to see stocks relapse into negative territory, as there's no reason for them to rally in this environment.

Sterling added 1.5 percent to $1.5200 after breaking above the the $1.51 area, which Dolan said was a key trend line in a steady decline that began when it traded around $1.66. Traders shrugged off minutes from this month's Bank of England policy meeting that showed policymakers unanimously agreed to cut interest rates by 150 basis points and even discussed a bigger cut. The yen rises along with risk aversion because investors unwind trades in higher-yielding assets and currencies that had been financed with cheaply borrowed yen. Also of particular concern was the fate of the struggling U.S. auto industry, which some investors fear may fail to win emergency government loans.

Michael Woolfolk, senior currency strategist at The Bank of New York-Mellon, said bankruptcy for General Motors, Ford or Chrysler "could prove to be the next Lehman Brothers because of the systematic risk their failure would create."Markets tumbled in September when U.S. investment bank Lehman Brothers failed. Equities moved dramatically lower in October and the dollar and yen rallied, and most people still fear moves in that direction will reassert themselves," said David Watt, currency strategist at RBC Capital Markets in Toronto. Economic data on Wednesday showed U.S. consumer prices plunged 1 percent in October, while core prices that remove food and energy costs fell 0.1 percent.

Kathy Lien, head of currency research at GFT Forex in New York, said "less price pressure will give the Federal Reserve more room to cut interest rates," adding she expects the federal funds rate to drop to 0.5 percent from its current 1 percent next month.

Wednesday, November 12, 2008

Reserve bank Of India offers banks forex swaps

The exports market worsened even more in October. As per the latest ABN Amro India Manufacturing PMI, the new export orders index slipped below 50, indicating that external demand shrunk as a number of India’s key export destinations are on the verge of recession. While an easing of commodity prices, especially crude oil, will reduce the imports bill, a sharp slowdown in exports could still keep the trade deficit close to $10 billion a month.

This week, the rupee may continue to hold on to its gains, on the back of some support from the equity market and the latest move by the RBI on dollar liquidity. The market will closely watch the Index of Industrial Production (IIP) data release for September on Wednesday. In August, the y-o-y percentage growth in the IIP had slipped to a decade low of 1.3%. However, performance in September could have been better, as suggested by a relatively better growth in output of the six infrastructure sectors during that month.

Saturday, November 8, 2008

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Saturday, November 1, 2008

Simple Way to Dramatically Improve Your Forex Trading Profits

Forex markets for any period of time you will probably by now have developed your own unique trading system.
However the vast majority of systems could be improved upon and made a lot more profitable just by doing one simple thing. All you want to do is to simply weed out the riskier set-ups that are triggered by your system and only trade the ones most likely to make a profit.

This sounds obvious but let me explain this in more detail. Successful forex trading is all about finding high-probability trading set-ups. Most traders determine whether a particular trade is likely to be a winning one by using a variety of different technical indicators.

If they all agree and suggest that a currency pair is highly likely to go either up or down, then this is a high probability trade. Now if you go over every single one of your trades in the last few weeks you will probably be able to identify those positions which you were not very confident about when you placed the trade. Some of these may have turned out to have been winning positions but some will inevitably have turned out to losing ones.

In fact for a lot of people most losing positions will be those that were taken rashly on instinct or were trades that deviated from the strict rules of the system, so it's important to categorise every set-up to try and weed out these potential losers. You can do this quite easily. All you do is you give each potential trade a ranking out of 10 based on how confident you are the resulting trade will be a winning one. This could be based on your technical indicators, for example, or your past success rate trading similar set-ups.

Then it's simply a case of only trading the high probability set-ups, ie those which you've rated highly. You will probably never rate a potential position 10 out of 10 because no-one can be absolutely sure their position will be a winning one, but you should be able to find lots of 8's and 9's out of 10. These are the ones you should be trading. The other set-ups should be ignored. This simple step, which is extremely easy to do, can be enough to turn an unprofitable trading system into a profitable one so it's well worth your while to quickly analyse each set-up before you press the buy or sell button.

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