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More Thoughts On Forexforeign exchange risk
Yes, but as a position trader I never use tight stops. Same goes for trailing stops. All very far away from the market not to be taken out by meaningless market noises. Initial stop is always 1% of my total equity, and never commit the whole position at a go but always scale in and scale out.
You can avoid your problem in most cases by leaving the market always by trailing stops, i.e., do not set the profit target. So, any winning trade must be held as long as market does not tell you to leave by hitting your trailing stops. When you enter the market by market signals and leave by stops or trailing stops, it solves the most difficult part of decision making process rather easier for traders.
USD/JPY HINTS
One of the silly rules of thumb in USD/JPY trading is it rarely moves 700-800 pips in a row without 200 pips or more correction in the middle and it almost always retraces back to 350 pips advance point from the start of its 700-800 pips move. All because of liquidity problem in Yen market.
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The transaction costs are calculated in terms of pips. Profiting from FOREX fx is the greatest to the trader when the spread between the bid/ask is the lowest number of pips required per trade by the broker. By comparing pip spreads of a half dozen brokers or so will reveal different transaction costs.
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forex cargo
The Forex market is a nonstop cash market where currencies of nations are traded, typically via brokers called forex brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets while traders increase or decrease value of an investment upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events so it is also considered to be a highly volatile and fragile market too. Conditions of the Forex market never remain the same they changes every second.
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Asian Morning Update 11th March 2008Mon, 10 Mar 2008 18:25:26 -0500
Dollar bearishness has lost its edge
European releases overnight:
January Forecast Actual
Italian Industrial Production (MoM) +0.6% +1.3%
Italian Industrial Production (YoY) - 2.7% +0.5%
U.K. Industrial Production (MoM) +0.1% - 0.1%
U.K. Industrial Production (YoY) +0.5% +0.4%
U.K. Manufacturing Production (MoM) +0.1% +0.4%
U.K. Manufacturing Production (YoY) +0.1% +0.6%
February
U.K. PPI: Input (MoM) +1.6% +1.7%
U.K. PPI: Input (YoY) 18.3% 19.4%
U.K. PPI: Output (MoM) +0.6% +0.3%
U.K. PPI: Output (YoY) +6.0% +5.7%
March
Euro-zone Sentix Investor Confidence 2.70 0.40
States releases overnight:
January
U.S. Wholesale Inventories (MoM) +0.5% +0.8%
There were quite a few releases overnight but none really that would grab the market by the neck and push rates in any direction. The European industrial numbers, with the exception of the U.K. were really quite good given the depression running into this year.
It still hasn’t provided any comfort for investors as Sentix reported a collapse in European investor confidence by 2.3 points to 0.40. With the uncertainty over the reach of the credit crisis and the potential unreported writedowns from banks and the squeeze on hedge funds there is every reason for investors to be concerned.
There were even rumors that HSBC are pondering a bid for Societe Generale and later on the bidder was changed to Barclays which highlights how the unpredictable becomes possible.
Tricher renewed the pressure on the States to do something about the weak Dollar. “We're concerned about excessive exchange-rate moves in the present circumstances,” he said.
However, all in all there was nothing really to push the Dollar strongly in either direction and this is helping the pullback scenario. The Dollar has seen sharp losses over the past month with very little correction and running through to after Easter the chances are that the market will take a breather.
Given the excessively bearish sentiment the first few steps higher will be the slowest. There may be even a small risk of minor new lows but the spark has been taken away from the market for the moment and gradually over this week and probably next there is likely to be a gradual recovery.
This should eventually lead into new lows in April.
More later once the daily analysis has been done…
The following are economic releases from Asia due today:
Japan February Machine Tool Orders (F) (YoY)
Australia
January Home Loans (MoM) +1.0%
January Investment Lending
February ANZ Job Advertisements
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