InvestMacro Forex News

Source: ForexYard

The euro shot up to a fresh four-month high against the US dollar yesterday, following a German constitutional court ruling that supported the ECB’s plans to combat the euro-zone debt crisis. The court ruling also resulted in other higher-yielding assets extending their bullish trends throughout the day. Today, the main piece of news is likely to be FOMC Statement, scheduled for 16:30 GMT. Speculations that the Fed will initiate a new round of quantitative easing have kept the dollar bearish recently. If the Fed does announce a new round of quantitative easing today, the greenback could see additional losses in afternoon trading.

Economic News

USD – FOMC Statement Could Lead to More Dollar Losses

The US dollar saw minor upward movement against several of its main currency rivals yesterday, but remained bearish overall amid speculations that the Fed will announce new steps to boost the US economic recovery today. The USD/CHF gained close to 40 pips during mid-day trading to reach as high as 0.9378, just above a four-month low hit earlier in the week. Against the Japanese yen, the dollar advanced more than 20 pips to trade as high as 77.95, just above a recent three-month low.

Today, traders will want to pay careful attention to the FOMC Statement, set to be release at 16:30 GMT. US economic indicators have largely come in below their forecasted levels in recent weeks, leading to an increase in speculations that the Fed will need to take steps to boost the US economy. With a number of analysts predicting that the Fed will announce those steps today, traders can anticipate heavy market volatility during the afternoon session. Should the Fed announce a new round of quantitative easing, the dollar could extend its recent losses.

EUR – Euro Turns Bullish amid Risk Taking

A German constitutional court ruling in favor of the ECB’s plans to lower borrowing costs in the euro-zone led to risk taking among investors yesterday, and resulted in significant gains for the euro. The EUR/USD advanced more than 70 pips during the first half of the day to reach 1.2934, a fresh four-month high. The EUR/AUD also shot up more than 70 pips to trade as high as 1.2336 during the afternoon session.

Today, euro traders will want to pay attention to a batch of US news, specifically the FOMC Statement and Economic Projections. If the Fed announces new steps to stimulate growth in the US economy, investors may continue shifting their funds to riskier assets, which could lead to additional euro gains. That being said, if the Fed decides not to take any new steps today, the common-currency could reverse some of its recent bullish movement.

Gold – Gold Comes Off 6-Month High

After risk taking in the marketplace drove the price of gold to a fresh six-month high in early morning trading, the precious metal proceeded to correct itself during the mid-day session yesterday. Gold fell from a high of $1746.86 an ounce to the $1725 level by the afternoon. That being said, analysts were quick to say that the downward correction may just be temporary, and that the overall trend is still bullish.

Today, gold may be able to recoup some of yesterday’s losses if the US dollar extends its recent bearish trend after the FOMC Statement at 16:30 GMT. A weakened dollar makes gold cheaper for international buyers, which typically results in the precious metal gaining in value.

Crude Oil – US Inventories Figure Turns Crude Bearish

A significantly higher than expected US Crude Oil Inventories figure yesterday signaled to investors that demand in the world’s leading oil consuming country may go down, and resulted in the price of crude turning bearish during afternoon trading. Overall, the price of oil fell by more than $1 a barrel throughout European trading to eventually reach the $96.31 level. A slight upward correction brought the commodity to the $97 level by the afternoon session.

Today, oil may be able to reverse yesterday’s bearish trend after the FOMC Statement at 16:30 GMT. Any announcements regarding a new round of quantitative easing may lead investors to speculate that demand in the US could go up, which could lead to crude turning bullish during afternoon trading.

Technical News

EUR/USD

The Bollinger Bands on the weekly chart are narrowing, signaling that this pair could see a price shift in the near future. Furthermore, the Williams Percent Range on the same chart has crossed over into overbought territory, while the Slow Stochastic on the daily chart has formed a bearish cross. Going short may be the wise choice for this pair.

GBP/USD

The daily chart’s Relative Strength Index has drifted into overbought territory, signaling that a downward correction could occur in the near future. This theory is supported by the Williams Percent Range on the weekly chart, which is currently at the -10 level. Opening short positions may be the smart move for this pair.

USD/JPY

A bullish cross appears to be forming on the daily chart’s Slow Stochastic, indicating that an upward correction could occur in the near future. Additionally, the weekly chart’s Williams Percent Range has crossed into the oversold region. Traders may want to open long positions for this pair.

USD/CHF

The Relative Strength Index on the daily chart is currently in oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bullish cross. Opening long positions may be the smart choice for this pair.

The Wild Card

EUR/AUD

The MACD/OsMA on the daily chart has formed a bearish cross, signaling that this pair could see a downward correction in the near future. Additionally, the Williams Percent Range on the same chart has crossed into overbought territory. This may be a good time for forex traders to open short positions, as a bearish correction could take place.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Article by Investment U

Apple (Nasdaq: AAPL) seems to be a safe haven for investors because it has little competition and new product announcements coming up, providing new sources of income.

Making money in the markets is a combination of being smart enough to recognize value, confident enough to execute on good ideas, and humble enough to take profits.

It’s extremely easy to get greedy and overstay your welcome in a stock and give profits back…

And Apple investors could be heading into such a trap as more aggressive competition and a non-event product release provide the excuse for professional fund managers to take money off the table.

Apple’s stock has had a huge run, but may be running out of gas. Apple is up 67% from the beginning of the year and 17% in seven weeks since missing Wall Street expectations in July. Since gapping down after earnings, the stock has rallied $105 and sits just off of its all-time high of $680. This dramatic move is incredible, fantastic, amazing… and just maybe too good to last.

Lock in Profits Ahead of a Risky Situation

Apple (Nasdaq: AAPL) seems to be a safe haven for investors because it has little competition and new product announcements coming up, providing new sources of income. So people have been holding their breath and buying on the dips, thinking the good news will continue. But what if the good news is already in the price? Or worse, what if Apple’s announcements can’t live up to high expectations? A pullback could be dramatic because every money manager under the sun owns more of it than he should.

I like Apple, the company, for too many reasons to discuss here – but Apple, the stock, seems risky. With the stock at its 52-week high, it makes sense to use the recent strength to sell calls against your position and protect yourself from the event risk of the September 12 product release. In short, lock in profits ahead of a risky situation.

What’s happening? On September 12, Apple is hosting a product announcement where the iPhone 5 will be demonstrated and availability will be announced. Since the iPhone 4S was evolutionary rather than revolutionary, expectations are high for new features in the next handset. There are so many potential pitfalls that the company can fall into, that people should either protect themselves from a shallow decline by selling calls at the least. More active investors should think about selling the stock outright today and buying it back after the announcement.

Expectations are high for a stock that’s topping out. The press and analysts have been wildly speculating about what could happen on the 12th:

• New hardware announcements, such as a larger screen or a whole new design.
• Software improvements, including iOS6 with greater Siri integration with applications.
• New products such as the iPad mini or Apple TV with a set top box.
• A ship date for the iPhone 5 that’s before the end of the quarter in September, which would make September quarter earnings look great.

Of these ideas, only the last two would actually make the company more money. So, let’ take a closer look at the meaningful ones:

New Product Announcements – Everybody knows that Apple is announcing a new handset and a new operating system. Adding another product into the mix would dilute the marketing impact of these two announcements. Since Siri is a big feature, and a key point of differentiation from Samsung and Motorola’s new handsets, Apple will need to educate the market. Making multiple announcements would conflict and confuse people. I’ve been using iOS6 for three weeks and believe that voice controls could revolutionize mobile computing the way that Nintendo’s Wii controller revolutionized video gameplay, so the company probably won’t want to risk it. More announcements mean less press for Siri.

September Ship Date – There will be plenty of time to ship boatloads of handsets before the end of September if the company does make the new handset publicly available before quarter end – but much of this is already in expectations. Investors have already been paid for this, but what happens if it doesn’t ship by quarter end? Apple will have to wait another three months to see the income. What does this mean for you? For being a loyal shareholder, you can expect the stock price to get slammed back as low $620.

Clearly, the downside risk is scary, so how do you prepare for the event?

Buying puts is always an option, but an expensive one with September 14 $675 puts selling for $12.

However, selling calls against your position would protect you against a minor decline, give you time to sell while the option prices plunge, and benefit from the time decay. The price of these calls will also drop substantially, even if the stock remains flat, since the volatility component of the option price will be reduced. September 14 $670 calls are selling for $16, which would lock you in at a sale price of $686 if the stock goes up and if the price declines as we expect.

Selling the stock immediately before the announcement will ensure isolation from event risk, but we’re probably not the only people thinking about taking profits after such a dramatic run. So if you are considering selling, it might be worthwhile to sell a few days ahead of the announcement and beat the professionals to the punch.

Either of these techniques will provide you with downside protection and choosing which one depends on your risk tolerance and ability to act on news intraday. We’ve made profits in Apple throughout the year and will again in the fourth quarter, why not reduce risk ahead of a widely anticipated event?

Good Investing,

David

Article by Investment U

Article by Investment U

The truth is a casualty in almost any election. But perhaps especially this year due to the tightness of the presidential race.

However, it’s not just the candidates getting tarred and feathered by political bombast, heavy-handed rhetoric and over-the-top political ads. It’s the free-enterprise system itself.

If you’ve paid any attention at all this year, you’ve heard four things:

1. Wall Street caused the financial crisis
2. Capitalism hurts the poor and middle class
3. Markets are driven by selfishness and greed, and
4. The free-enterprise system is inherently unfair

This is a troubling development, one that has serious implications for our economic future and your investment portfolio. So let’s take a closer look at these claims.

Are Wall Street firms responsible for the financial crisis? In part, yes. CEOs Jimmy Cayne of Bear Stearns, Dick Fuld of Lehman Brothers and Hank Greenberg of AIG all failed to understand the huge risks their firms were taking. Shareholders and employees suffered mightily as a result. There was plenty of collateral damage, too.

But these business leaders – and others like them – aren’t solely to blame. Politicians on both sides of the aisle spent years weakening lending laws to allow almost anyone to buy a home whether they could afford one or not. The Federal Reserve took interest rates too low for too long, making mortgages dirt-cheap and priming the real estate bubble. And plenty of Americans got caught up in the hoopla, figured they could get rich in a hurry by flipping a house using borrowed money they couldn’t reasonably repay. There is plenty of blame to go around.

Capitalism hurts the poor and middle class? Nothing could be further from the truth. Hundreds of millions around the world have been pulled out of poverty by the free-enterprise system. The evidence of history is clear. There is nothing that creates prosperity like capitalism. Have “the 1%” benefited more than most? Yes, but not because they somehow cheated the rest of us. Over the past 100 years, the U.S. has evolved from an agricultural economy to a manufacturing economy to a knowledge economy. Those with higher education and more technical skills are in greater demand.

This is a particularly nasty downturn but when the economy recovers – as it will – demand for all sorts of jobs will increase. In the meantime, how do you raise up the wage earner by pulling down the wage payer? As a young man, I worked maintenance on a truck terminal, the night shift in an auto-parts warehouse and a lot of other unglamorous, low-paying jobs for high-net-worth individuals. Yet never in my wildest dreams did I believe that sticking it to them would somehow benefit me.

The idea that markets are driven by greed is another misnomer. When does self-interest become greed? And who – in a free society – should tell you when you have enough?

Of course, it’s never you or me who is greedy. It’s always the other guy. The truth is all markets are driven by rational self-interest. This is “the invisible hand” organizing society that Adam Smith praised more than two centuries ago. In The Wealth of Nations he said, “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.”

There is nothing the least bit immoral about this. Free markets are about voluntary exchange for mutual benefit. Capitalism promises that you can have anything you want if you just provide enough other people with what they want.

But is the free-enterprise system unfair? It is undeniable that the rewards of capitalism are unevenly distributed. And some income redistribution is necessary to pay for the state and to finance a social safety net for the needy. But let’s also talk about the fairness of keeping the fruits of your labor. If the top federal income tax rate returns to 39.6% and you add in the average state income tax of 6%, plus Medicare and Social Security taxes, the government will take over 50% of many entrepreneurs’ income.

When you start or expand a business, you are taking a risk, one that could generate a loss for which you are solely responsible. But if you work hard or smart (or both) and are successful, is it fair for the government to take most of what you earn? (And that’s before sales taxes, property taxes, sin taxes and so on.) I don’t believe that’s the kind of republic the Founders had in mind when they pledged their lives, their fortunes and their sacred honor in what was largely a tax revolt against the king.

I mention these widespread misconceptions because if you truly believe the economic system is rigged, financial markets are unfair and Wall Street is corrupt, why invest? And if we don’t have a dynamic, growing economy to throw off hundreds of billions in tax revenue, where will we get the money to pay for essential government services?

I understand why candidates in both major parties are under attack, but I don’t get the hostility toward the free-enterprise system itself. What do we do after we strangle the goose that lays the golden eggs?

Good Investing,

Alex

Article by Investment U

By TraderVox.com

Tradervox.com (Dublin) – The USD/CHF has continued to trade in a narrow range as risk returns to the market. The pair shed over a cent last week where it closed at 0.9438, and the increased Fed stimulus speculation is weakening the dollar further against the franc. The franc has edged upwards as Germany has confirmed its participation in the bailout fund. The technical levels that we are looking at as we close the week are inclined to downward trend.

From top, we are looking at a resistance level at 1.0136 which is followed by the line at 1.0066; this line was breached for the last time in 2010. The parity line has been firm throughout the year; this paves way for the line at 0.9915. The resistance line at 0.9719 has held firm; however, the resistance at 0.9584 has been weak as the pair has breached in the previous week. The resistance line at 0.9510 switched to a supportive role last week as the dollar increased.

The pair started the week with support at 0.9420 which is set to be broken as the dollar weakens. There is strong support at 0.9317 which has been firm since May. The Fed decision may push the cross below this line this week. Support lines at 0.9250 and 0.9182 are strong and they may hold firm this week. Other support lines in focus are 0.9093, 0.9016, 0.90, and 0.8918.

The USD/CHF pair continued to trade lower on Wednesday as the support line at 0.9420 was tested. The support line at 0.94 is a 200-day SMA and a break below this line will expose the 0.93 support line. At this level the pair will start to rise in line with trendline at 0.8930. The Fed policy is a key announcement that will determine dollar performance across the board. The franc is set to decline further against the euro as German Court decided to allow the formation of ESM.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
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Source: ForexYard

The euro remained within reach of a four-month high against the US dollar last night, as risk taking among investors remained high following a German court ruling yesterday in support of the euro-zone bailout fund. Meanwhile, the US dollar sunk to a more than three-month low against the Japanese yen amid speculations that the Fed will initiate a new round of quantitative easing to stimulate US economic growth as early as today.

Main News for Today

US PPI- 12:30 GMT
• The PPI is forecasted to come in at 1.1%, significantly higher than last month’s 0.3%
• If true, the dollar could see temporary gains before the FOMC Statement later in the day

US Unemployment Claims- 12:30 GMT
• Unemployment claims are forecasted to come in at 370K, slightly higher than last week
• If the indicator comes in above its forecasted level, the dollar could extend its recent losses

US FOMC Statement- 16:30 GMT
• Speculations that the Fed will announce a new round of quantitative easing today have weighed down on the dollar in recent weeks
• If a new round of monetary stimulus is announced, the dollar could extend its recent losses

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By MoneyMorning.com.au

Everything’s looking great again.

The iron ore price is back up to USD$100, after dipping below USD$90 last week.

The German Constitutional Court has given approval for the 700 billion euro European Stability Mechanism (ESM)…although we prefer to call it the euro bailout fund (EBF).

China has kick-started a USD$157 billion stimulus program.

And according to a survey of economists by Bloomberg News, almost two-thirds of economists believe, ‘The Federal Reserve is likely to announce a third round of bond purchases tomorrow.’

In other words, get ready for the next round of central bank money printing.

Even our old pal, Slipstream Trader, Murray Dawes says he’s struggling to find a single Aussie stock to short sell right now.

So, is all this good news for stocks? It could be. But before you jump into the market, consider this first…

Before you get too excited about Murray drawing a blank with short trades, consider that he hasn’t found any new buy trades either.

And it’s not because he’s not looking. Each day he looks at hundreds of stock charts.

As he told us this morning:

‘I have pared back the Slipstream Trader portfolio to almost nothing. I want to be able to trade the [US Federal Reserve’s] FOMC announcement and not have to spend my time putting out fires. The market is now so heavily manipulated that you can throw any normal analysis out the window. I’m a bear, but I can’t keep shorting the market if it’s in strong long term uptrend. There’s a point where the central bankers will force my hand to buy the market even though I think it should be going down.

‘For now I’m resisting, because I think there’s a good chance we could see a false break of April’s high in the S+P 500 which could lead to a vicious sell-off over the next month or so. The outcome of the FOMC meeting will be crucial to the direction of the market over the next month so I would prefer to sit on my hands and not trade until that meeting is out of the way and I have observed how the market reacts.

‘The Fed might print, say, $50 billion a month to buy Mortgage Backed Securities and the market could spike on the news. But I fear the market has priced this in, so we may see an initial spike and then a sharp sell-off. On the other hand, if the Fed is too scared to act just before an election we may see them dangle the carrot, but do little else. In that case the market will gap down 2-4% in the blink of an eye. I don’t want this volatile market throwing me around like a ragdoll. I’d prefer to sit with very few positions on and wait until I get a clear signal of which way the market wants to go.’

Of course, when traders look at minute by minute moves, there’s always a chance his view could change between us writing this email and you receiving it.

But for now Murray seems pretty firm on sitting things out until the Fed releases a statement tomorrow.

So, will the Fed do anything? We can’t say for certain. But there is something we’d like to know…

One Big Reason Not to Print

The question we have for the goons who cheer for euro bailouts, China bailouts and Fed bailouts is: what happens when this plan doesn’t work?

Not that they’re thinking about that now. The shills are screaming at the central bankers to do more. The unnamed ‘Editors’ at Bloomberg News write:

‘If Federal Reserve Chairman Ben S. Bernanke fails this week to announce new measures to stimulate the U.S. economy, he’d better have a good reason. We can only think of a bad one, and we urge Bernanke to refute it explicitly.’

The bad reason — apparently — is that Bernanke may not want to announce more money printing before the US election that’s due in early November.

But aside from that, as far as Bloomberg’s ‘Editors’ are concerned, there’s no other valid reason for the Fed not to print oodles of freshly minted cash.

Perhaps we can help them, seeing as they can’t be bothered thinking for themselves. Because we can think of a reason, a big reason.

The Fed’s policy of money printing is destroying an already dying currency. The following chart from the Federal Reserve Bank of St Louis shows how well the Fed has performed in one of its key mandates — ensuring stable prices:

Click to enlarge

The index has shrunk from over 1,000 in 1915, to just 43.6 today. In other words, the value of a US dollar over that time has fallen over 95%.

Even since 1980, its value has fallen 56.4%. So much for the mandate of achieving stable prices.

With a record that bad, you have to wonder why the markets still trust the Federal Reserve and Dr Bernanke.

It’s clear the last thing the Fed and other central banks are concerned with is stable prices. More important to them is maintaining the easy money and credit expansion of the past 40 years.

To do that, they need to keep printing money.

Brainless

Earlier this year, we thought the market would start getting bored with central bank meddling. We figured the big market players on Wall Street, Martin Place and in the City of London were smart enough to see the damage it was causing.

Turns out we gave them too much credit for having brains. Turns out they’re just as dumb as we always thought they were.

Based on market action, the big players still crave more central bank intervention. After four years of this policy repeatedly failing, the madmen in the madhouse keep cheering for more of the same.

And so, like Murray, we’ll wait to see what the Fed says tomorrow. You should be under no illusion that it will do anything to help the US or world economy, but it could give you a clue about how much longer this madness will last.

Look out for our thoughts on the Fed’s announcement tomorrow.

Cheers,
Kris

Related Articles

What You Must Do to Survive the Coming China Crash

Why the Latest Euro ‘Fix’ Could be Bad News for the US

The ECB is Only Fooling the Gullible

Why Does the World Still Trust This Man?

By MoneyMorning.com.au

Hopefully you weren’t one of the shareholders in Burberry who got a nasty shock.

The fashion brand saw its share price tank by 21% as it warned that a slowdown in sales would hit profits. Sales at stores open for at least a year were flat, and have turned negative in recent weeks.

Burberry may have been the first of its peers to warn on profits, but we suspect it won’t be the last.

China’s slowdown is bad news for luxury goods

What’s Behind Burberry’s Profit Warning?

Luxury goods analysts are desperately trying to work out how to pin the blame on the company itself. After all, if this is the result of a marketing screw-up by Burberry, or simply a shift in the fickle tastes of ‘fashionistas’, then the rest of the sector should be OK.

Burberry itself wasn’t particularly specific about the problems, according to the FT. The company has suffered a broad-based slowdown. That’s probably no surprise. These days, flaunting your expensive lifestyle choices is the equivalent of pinning a ‘tax me’ sign on your own back.

European tax collectors, for example, have come up with the crafty wheeze of using ostentatious displays of wealth to work out who has been fiddling their returns. As a result, if you’re in the market for a cheap Ferrari or other ‘supercar’, your best bet is to head to Italy, we’re told.

However, most investors jumped to one conclusion. It’s a sign that the fabled Chinese consumer is finally running out of steam. And indeed, Burberry’s finance director, Stacey Cartwright, admitted that ‘China is a significant contributor to the decline’.

This has been on the cards for a while. China’s slowdown has already hit the mining sector hard. Now more recent figures suggest that the slump is having a nasty trickle-down effect on other sectors.

For a start, taxes are going up. Local governments have been trying to raise money to plug the gaps left by poor land sales. So, as analysts at Chinese investment bank CICC point out, companies have been told ‘to pay full enterprise tax rate this year, rather than the preferential high- and new-tech enterprise tax rate they had been granted’.

Beyond that, costs are rising and the weak global economy is taking its toll on exports. The FT and S&P Capital IQ analysed corporate cash flow data from the past six quarters. Many industrial companies have seen cash flows turn negative recently. But both the consumer and retail sectors – the sectors that China is pinning its ‘rebalancing’ hopes on – are also suffering.

‘There is something more than a real estate and investment slowdown going on,’ as Louis Kuijs at RBS put it.

Like any other government confronted with the grim reality of a boom ending, China looks increasingly panicky. The original idea was to rebalance the economy away from infrastructure spending and more towards the consumer.

Now the plan seems to be to maintain growth in any way possible. China’s premier, Wen Jiabao, said that China will achieve 7.5% growth this year, and that it has room to stimulate the economy if it needs to. On top of that, last week, Beijing approved plans for $158bn in infrastructure spending.

Don’t Bet on a China Bounce

That cheered the mining sector, and arrested the recent plunge in the price of iron ore. We’d sell the bounce, rather than buy on the dips though. China’s banks already carry a lot of bad debt. The chances of another uncontrolled infrastructure splurge seem slim.

And we certainly wouldn’t touch the luxury goods sector. Bill Bishop, writing in his Sinocism blog, makes an interesting point. He reckons that a significant chunk (10-30%) of China’s 2008 stimulus package ‘disappeared through corruption.’ Much of this likely went into overseas investment (London property maybe?) or into luxury goods.

But that scale of stimulus package is unlikely to be repeated. And, says Bishop, ‘the government is now at crisis point dealing with corruption. I don’t think we should rule out its ability to make things a bit cleaner (it will never be clean). Both points are bad news for luxury firms.’

John Stepek
Contributing Editor, Money Morning

Publisher’s Note: This article originally appeared in MoneyWeek

From the Archives…

Outright Money Transactions – Why ‘Free’ Money Costs You More
07-09-2012 – Kris Sayce

Spanish Banks are in BIG Trouble
06-09-2012 – Bengt Saelensminde

With Iron Ore Prices Falling Will Fortescue ‘Break the Buck’?
05-09-2012 – Kris Sayce

Brace Your Portfolio for a Hard Landing in China
04-09-2012 – John Stepek

Australian Resources Boom Curse…or Industrial Renaissance?
03-09-2012 – Nick Hubble

Luxury Firm Burberry Highlights the Chinese Slowdown

Plus: Discover Where to Place “Protective Stops”

By Elliott Wave International

What advantages does the Wave Principle offer to traders?

Here’s one of the big advantages of using the Wave Principle when trading: you can increase your understanding of how current price action relates to the market’s larger trend.

Other tools fall short in this regard. Several trend-following indicators such as oscillators and sentiment measures have their strong points, yet they generally fail to reveal the maturity of a trend. Moreover, these technical approaches to trading are not as useful in establishing price targets as the Wave Principle.

Here’s another big advantage of using the Wave Principle in your trading, which comes directly from the free eBook “How the Wave Principle Can Improve Your Trading” –

“Technical studies can pick out many trading opportunities, but the Wave Principle helps traders discern which ones have the highest probability of being successful.”

Indeed, this valuable free eBook shows you how to identify and exploit the market’s price pattern, as shown in the Elliott wave structure below:

The Wave Principle also helps you to identify price levels where you may want to place protective stops.

“…although the Wave Principle is highly regarded as an analytical tool, many traders abandon it when they trade in real-time — mainly because they don’t think it provides the defined rules and guidelines of a typical trading system.

But not so fast — although the Wave Principle isn’t a trading “system,” its built-in rules do show you where to place protective stops in real-time trading.”
“How the Wave Principle Can Improve Your Trading”

Before you attempt to identify price levels for protective or trailing stops, you should first become familiar with these three rules of the Wave Principle:

• Wave 2 can never retrace more than 100 percent of wave 1
• Wave 4 may never end in the price territory of wave 1
• Wave 3 may never be the shortest impulse wave of waves 1, 3, and 5

The details and specific instructions for placing protective and trailing stops are in the BONUS section of the free eBook, “How the Wave Principle Can Improve Your Trading.” Here’s what you’ll learn: How the Wave Principle provides you with price targets How it gives you specific “points of ruin”: At what point does a trade fail? What specific trading opportunities the Wave Principle offers you How to use the Wave Principle to set protective stops Keep reading this free lesson now >>

By Central Bank News

The world of Forex is very risky. In every move you take, there are rewards and risks involved. However, with the aid of trading signals, it would be easy for you to have a profitable trade. Usually, there are two main forex trading systems available. These are the discretionary as well as the mechanical forex trading systems. Oftentimes, people are not aware of what these trading systems are, and which the best between the two is. In connection with this, it is important for you to know the information regarding these trading systems in order to determine which the best is. 

The first type of forex trading system is the discretionary system. There are lots of advantages that you can expect from it. First is that the trading decisions will be mainly based from experience. Traders are able to determine which among the trading signals have a chance of becoming a success. Thus, the trade using this system will likely succeed. On the other hand, one of the disadvantages of this form of trading system is that it cannot be automated or backtested. This is because of the fact that there is definitely a tough decision that should be made. In addition to that, this requires some time in order for a person to earn the experience he needs to trade in a successful way.

Completing the forex trading systems is the mechanical type. One of the benefits of using this kind of system is that it can be backtested and automated in an efficient way. In addition to that, this comes with extreme rigid rules whether there is a trade or not. Not only that because those who are looking for Forex trading systems with less susceptibility to emotions will also benefit in using this one. Yet, there are also disadvantages you will experience. There are instances that this kind of system can be backtested in an incorrect way. Apart from that, this system might not work properly these times even if it has worked in the previous years.

Now, the question is “which approach is the best for you?” When it comes to this question, the right system is basically based on your personality. Like for example, in case you are a kind of trader who experiences a hard time in following the signals of trading, it is recommended for you to choose the mechanical type. On the other hand, those disciplined traders will benefit a lot in using the discretionary type. Both of these Forex trading systems will work fine when the right one is properly chosen. 

These are some of the things that you need to keep in mind when it comes to choosing the right Forex trading systems. These systems are proven effective based from one case to another. It is important to measure the applicability as well as the suitability of these Forex trading systems. This is to ensure that you will be able to come up with the right choice in the future.

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