Sell Your Gold And Silver To Weather The Recession

By Eric Hoover

Times are tough. Those who haven't already lost their jobs are concerned they might in the near future. Meanwhile, the cost of living is rising for millions of families. You may be a college student who needs funds for tuition and books. Or, you might be a stay-at-home mom trying desperately to make ends meet. Whatever your circumstances, there may be a solution hidden in your dresser drawers: gold and silver.

Many people have old jewelry, tooth fillings, and coins that contain a healthy store of value due to their gold or silver content. These items sit at the bottom of drawers and are all but forgotten. If you need cash to weather the recession, selling these assets may be the quickest solution. Below, we'll explain why more people than ever are selling their gold and silver. We'll also give you a few tips for selling your precious metal.

Stability In A Volatile Economy

Regardless of the economic climate and the fluctuations of currencies (for example, the U.S. dollar), precious metals experience little variance in value. Of course, prices have risen and fallen over the years, but most economists agree that gold and silver tend not to deviate much from their normal price band.

If you own precious metals, there's a good chance they are worth as much or more than their worth at the time you acquired them. They are a store of value, especially during a recession. Close observers of the market will have noticed that the prices of gold and silver have climbed over the past few years. Now may be the time to sell both for extra money.

Where To Sell Your Assets

There are several ways to sell your precious metals. Many people do so through online auctions and gold parties. Auctions are a hit-or-miss event; your assets may fail to generate interest. Gold parties are usually organized by a host who gathers a group of people along with a local buyer. The buyer will weigh each piece brought by attendees and make an offer.

Selling to online buyers has become far more popular. The process is simple and low-maintenance, and sellers usually enjoy better prices.

Getting The Best Deal For Your Assets

In a way, the online market is similar to a swap meet. There are many buyers who are willing to make an offer for your precious metals. Some will offer a better price than others. Some will be more trustworthy than others. One of the advantages to selling online is that reputable buyers list the prices they're willing to pay. It's easy to compare them.

One note of caution: don't choose an online buyer solely on the merit of the price they're willing to pay. Remember, some are unreliable. Sending your assets to them can be risky if you don't conduct a bit of due diligence. Call them on them phone to personally speak with them. Read the agreement on their website. By taking a few precautions, you'll receive a competitive price while enjoying a problem-free experience. - 31869

About the Author:

The best online resource to sell coins or sell palladium can be found at www.refinity.com

Details Of The Gold Rush Of Australia

By Jack Wagon

A Gold Rush can make an ordinary person a millionaire in just one moment. It can be defined as a time of passionate colonisation of labour into a region where there has been a detection of enormous amounts of gold. Gold rushes happened in'th century in Brazil, Australia, South Africa, Canada, and the United States.

Gold rushes are generally marked with the upbeat, and optimistic feeling of something that is free-for-all. This makes it possible for anyone to become absolutely prosperous instantaneously. The definition given previously is what a gold rush was. A lot of people link gold rushes to the Californian gold rush, although it is a fact that the Australian gold rush remains to date as the richest gold rush of the world.

In'51, the Australian gold rushes began, when Edward Hammond Hargraves went to Lewis Pond Creek with his guide John Lister. When they filled and washed a few pans, and then they got to know that the pots had gold. This information was spread over the world, and then during the next few weeks, large number of people from every where were seen digging, as if their living depended on this.

Hargraves did not get an immense luck from gold. However, Hargraves named the Bathurst goldfield Ophir. Afterwards, James Tom, who was a planter, stated that it was not Hargraves, but actually he, himself who discovered the gold. Even then, the decision of the government went in opposition to him. Hargraves was known as the Crown Land Commissioner of New South Wales. William Tom, and John Lister detained one more enquiry, just earlier than he died in'99, and then it came in support of the maintenance alleges that were made. (According to brother of James Tom)

The first discovery was in New South Wales, followed by Clunes, Ballarat, Buninyong, and then Bendigo Creek. Soon gold was found in all of the other Australian states. The first gold license was issued in Victoria on'51. Varying amounts of licenses were issued through out the country.

The Victorian gold rush, after the Californian gold rush was the most immense amongst gold rushes of Australia. The gold rush had a massive significance, since it proved to be a turning point in monetary and political growth of Melbourne, and Victoria. During'51, more or less 250,000 ounces of gold was found.

The gold rushes of Australia gave a lot of support in the development of the main areas of the city. It was a time when most of the telephone lines, and railway lines were constructed. The huge population of people gave rise to multi-culture, and racism

In'52, more or less 370,000 people entered into the state, and resulted in the boost of economy. In'50s, approximately one-third quantity of the gold was discovered from Victoria. In two years, the population of the area increased from 77,000 to roughly 540,000. An interesting truth that should be mentioned here is that the number of immigrants that came into the area was far more than the entire number of criminals that entered in past 70 years. Hence, the number of people in the area rose three times between'51 and'71. - 31869

About the Author:

Jack Wagon is a gold investment expert. You can buy pure gold bars and get complete information about buying gold bars at his recommended site at http://www.goldmadesimple.com/.

Using LEAP Options

By Ahmad Hassam

One person who made history with options was George Soros who is famously known as the man who broke the Bank of England. Great Britain was finding it difficult to stay within the tight exchange rate band set by the European Monetary Union (EMU).

George Soros had this intuition that the Bank of England would be forced to devalue British Pound. So he bought call options on German Marks and put options on British Pound. He made a bet of $10 Billion by leveraging all the assets in his hedge fund.

Bank of England had made a number of public statements regarding its intention of staying within the EMU. When George Soros made his bet on the intrinsic weakness of British Pound, other currency speculators followed suit and placed their bets too. This build up an immense selling pressure on the British Pound! Bank of England was brought to its knees as it was unable to sustain the immense selling pressure on the British Pound within a few days of the speculative attack on the British Pound. Bank of England was forced to devalue British Pound in a few short days.

George Soros made a cool $1 Billion profit on his bet in a matter of a few days. When you a strong intuition, you should go for the big kill. Can you make such a bet? Maybe not but this one example show the immense power options have if used correctly. Options are risky; there should be no doubt about it.

Most people who trade options lose money, plain and simple. Options give you the right to buy or sell an underlying security like stocks, futures, commodities or currencies at a price before a certain date. This price is known as the Strike Price. This date is known as the Expiry Date. However, in European Style options you can only buy or sell on the expiry date not before that.

Trading options without training is risky. You need to learn the Options Greeks. One of the important things that you need to learn while trading options is the importance of time factor. Time factor is very important when valuing an option. Further out the options contract is from expiration, you will have to pay a higher premium. As the options contract approaches the expiration date and if it is out of money, it loses its value very fast.

LEAP options are basically long term options. Leap options can help you profit over the long haul. You can use LEAP options in options strategies like the covered calls, straddles, spreads and so on. LEAP stands for long term equity anticipation. It basically means that the option is much like the regular option except that the timeframe to expire is greater than 1 year.

LEAP options can be incredibly profitable if used correctly. However, LEAP options are risky because the option writer usually demands a hefty premium for taking on the long term risk. The buyer of the LEAP options has the right to exercise the option prior to expiration should the price of the underlying stock move in the money. Long timeframe means that the possibility of the LEAP options moving in the money is always high hence a high LEAP options premium.

See, closer the out of money option is to expiration, faster its value drops. What this means is that the buyer of the options loses the premium that was paid for getting the right to buy or sell the underlying security. LEAP options can be a great trading vehicle for swing traders as they mitigate some of the time decay that is inherent in short term options. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Learn Candlestick Charting! Know Fibonacci Retracement!

Commodities Benchmark Gives Investors More Profits

By Selwyn Petrov

A commodities benchmark is some type of standard which you can compare an investment by. A standard is very helpful for people trying to figure out how much profit they are making compared to other investments. People looking for high rates of returns may want to use other standards than those looking for long-term and safer purchases.

The type of commodity you choose is also important. If you choose to trade crude oil, then you will want to compare your trades or investment to indexes that are made of energy commodities. This will give you a more accurate picture of the value your investment holds compared to the rest of the market.

When you are trading crude oil, you will want to compare your investments to an energy index. If you are trading in a soft commodity, then you will want to compare your trades with an index weighted to soft commodities. You will also want to compare your investments to investments that are similar in size to your investment. So an ETF in gold should be compared with a precious metals commodity index while an ETF which follows agriculturals like wheat should shadow an index weighted to agriculture.

A very common index used to compare various commodities is the Rogers International or RICI, while others include the CRB, the Goldman Sachs and DJ AIG commodity index. Using these indexes allows you to measure how your investments are doing compared to the whole market. By knowing how your investments are doing compared to the whole market, you will know if you are in the right area of the commodity market. This will be able to help guide you to the right place for your money. By using this strategy, you will be able to put your money in the most profitable parts of the marketplace.

When using a commodity benchmark, you should always keep in mind that you want a relevant investment index for comparison. This is important, because the risk and growth factors are very different in various investments. If you are placing your capital in sugar, then you would not want to compare your investment to LME aluminium prices. If you did this, your sugar trade would appear to have a low return, even if it performed better than the industrial metals.

You want to make sure that your index has similar goals and strategies for the investors who purchase them. If you are looking for high growth, then you should compare your investment to high growth indexes.

For commodities investments, you will want to compare your investment to commodity indexes. This will show you if your investment is as profitable as other investments that are of the same risk level.

If you want a broad view of how an investment is doing compared to commodities, then you will want to use a commodities index. This will give you guidance as to how your investment is performing compared to other investments of a very similar nature. When you use properly chosen benchmarks to judge your investment's performance, you are able to guide your capital to the most profitable investments available for your money. - 31869

About the Author:

The author, Selwyn Petrov, pens articles exclusively on commodity trading and associated matters. Learn more about the interesting features of commodities benchmarks here.

Using ETFs & Mutual Funds

By Ahmad Hassam

You will have to do a lot of research while selecting yours stocks for swing trading. Why not piggyback on the research done by wealthy fund managers and large financial firms. Name of the game is to find stocks that are not popular but have a great swing trading potential. Easier said than done! How do you find such stocks? Here is a very simple strategy that you can use to choose the hottest stocks best for swing trading. When a large financial firm builds an ETF, the first step is always to choose an index of stocks that is expected to outperform the market. The premise of the piggyback strategy is to use the large dollar research of the major financial firms to come up with new and fresh swing trading ideas.

Large financial firms spend millions to choose the index on which they will base their ETF. The ETF is then based on this index of stocks. The price of the ETF then changes as the basket of stocks within the index moves. Why not piggyback on that research and save yourself a few millions? Cool, huh!

So what is this ETF piggyback strategy all about? How do you implement this ETF piggyback strategy? Have you been investing in ETFs before? No! Then you need to do some research to find the best performing ETFs. Your first step should be to analyze ETFs. You need to make a list of ETFs that have outperformed in the last 3 to 6 months. This will give you an idea where the big money is flowing and which ETFs have buying momentum behind them.

Mutual funds are supposed to be a safe investment. You can also piggyback mutual funds while picking stocks for your swing trading ideas. Now ETF piggyback strategy is still the best keeping in view the fact that only 20% of the mutual funds beat the passive benchmark over the long term. You can ride on the coat tails of fund managers who fall into this 20% category. However, ETFs are better than mutual funds as investment vehicles and in recent years have become highly popular with the investing public so stick with ETFs. After making your list of top 20, narrow it down to the five top performers and choose a few areas worth trading. Choose the best performing ETF in your opinion to begin with. Now you need to analyze the top ten holdings of that ETF.

How do you research an ETF? You can do it yourself or you can subscribe to the newsletter of Big A, a former fund manager who recommends the hottest ETFs. If you want to do it yourself, just go to the website of the ETF. You can also use ETF connect.com. Etfconnect.com is a great resource for information on ETFs and closed end funds. With thousands of potential stocks to choose from, the piggyback trading strategy allows you as a swing trader to choose stocks that have a buying momentum behind them. What makes this trading strategy great is that it often generates fresh ideas for swing traders.

Now another advantage of this piggyback strategy is that it can identify stocks that may not be household names to the average trader. With this strategy you will come across many stocks that may not be household names but have a great swing trading potential. ETFs can be utilized to find stocks for swing trading ideas that are based outside the US.

There are thousands of ETFs in the market now. Some are country specific, some are industry specific and some are market specific. So you will have a lot of option in choosing the right ETF for your investment. The way to do that is to use the ETF piggyback strategy with either single country ETFs or regional ETFs. The single country ETFs invests 100% of their assets in one country. A good example can be the iShares MSCI Mexico ETF (EWW), an ETF that invests only in companies headquartered in Mexico.

You can choose industry specific as well as market specific ETFs as well. Country specific ETFs and region specific ETFs have been just used as an example to illustrate how to hedge your risk. Hedging your risk is what a good investment strategy is all about. Instead of putting all your eggs in one basket, you should try to diversify your investment. A regional ETF covers several countries concentrated in a region. The iShares S&P Latin America 40 ETF (ILF) invests in Brazil, Mexico and Chile. So if you want to find international stocks for your swing trading strategy than you should begin by picking the region or the specific country.

Are international stocks safe? You must be thinking why you need to think outside of US Stocks. International stocks also give you the ability to create some hedging strategies in combining US and non US Stocks into a pair trade in addition to volatility that you need as a swing trader. The traders who refuse to consider international stocks only hurt themselves because with the US in the mature business cycle, the real growth and volatility that you need as a swing trader can only come from international stocks. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Autotrading Exposed

By Ahmad Hassam

Can autotrading make you rich? Well, it depends on your autotrading system. Many hedge funds and other entities that manage money through forex trading use some form of autotrading in their daily activities. Autotrading is common in the currency trading.

Previously these autotrading programs also known as Expert Advisors or Forex Robots were expensive costing like thousands of dollars and only wealthy individuals or big institutions like hedge funds could afford them.

However, the recent advancement in computer programming has made it possible for professional forex traders to team up with a software expert to develop their own autotrading systems. Many private individual traders have also begun to adopt autotrading to execute their thoroughly backtested and highly optimized forex trading strategies.

The price of these Expert Advisors has also come down to around a few hundreds that can be easily purchased by ordinary investors like you and me. Metatrader platform makes it real easy to program such type of Expert Advisors.

Recent advancements in computer programming has led to the development of trading platforms that allow an API ( Application Programming Interface) which connects the trader's system to the dealer's trade execution structure through the trading platform. So what is autotrading? You must have heard or read a lot about the benefits or advantages of autotrading.

The trading system needs to be ruled based and mechanical in nature with clear cut entry and exit rules. Once all of the trading rules and criteria are determined by the trader, programming an API can be relatively straight forward for anyone with programming experience. APIs requires programming skills on the part of either the trader or a programmer hired by the trader. After the specific trading rules and criteria are determined, the trading strategy is backtested with positive results.

Autotrading is almost as simple as flipping a switch to begin the trading process. When this occurs not only trades entered when predetermined technical criteria is met but trade exits in the form of stop loss and take profit rules can also be programmed into the API.

However, before an autotrading system is put on live trading, it is thoroughly backtested and forward tested to make sure the likely success of the autotrading system. This creates an entirely self contained autotrading system. So autotrading can actually execute real trades on current real time market prices. When a predetermined signal emerges, the software actually places a trade automatically.

In fact, autotrading is perhaps the best way to achieve it if the trader has optimized and perfected this type of black and white trading strategy that runs devoid of human judgment. Any nondiscretionary technical trading strategy that has clear cut, unambiguous rules is a good candidate for autotrading. Autotrading effectively eliminates all human biases, errors and emotions in the trading process.

The best two forex autotrading systems are FAPT and Ivy Bot. There are a number of successful autotrading systems now available in the market for the ordinary retail investors. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

What is Backtesting? (Part I)

By Ahmad Hassam

What is Backtesting? You must have read a lot about the backtested performance of trading systems on websites. With Backtesting, traders can actually test their trading strategies and how well they would have done if executed in the past. Backtesting any trading strategy allows a trader to simulate its expected performance using historical price data.

What type of a trading strategy can be backtested? Any trading strategy that does not have any ambiguity in its rules can be backtested effectively. Example of a simple trading strategy that can be backtested can be as follows.

When the MACD histogram has crossed above the zero line and the DMI+ is above DMI-, go long when the 5 period moving average has crossed above the 20 period moving averages.

Sell short when the 5 period moving averages has crossed below the 20 period moving average and the MACD histogram has crossed below the zero line and DMI- is above DMI+.

Are backtested trading systems reliable? Why so much backtested performance is quoted on the websites to prove that the trading system is good? You must know that using the past price data to simulate future results often misleads traders into thinking that their backtested results will also give into similar results in actual real time trading. This one example is just meant to illustrate that any trading strategy having clear cut rules can be backtested with the historical data.

Many potential factors can and will make hypothetical performance and actual performance differ significantly. So you should not fall into the trap of thinking that Backtesting may be a perfect method for identifying the most profitable trading strategies.

One of the most important facts that you should always keep in your mind is that market change considerably overtime. A trading strategy that may have worked very well over the past three years may work in an entirely different manner for the next three years as the market changes and evolves.

Often technical indicators that have been giving profitable signals in the past are subsequently unable to replicate their performance in the future. This may frustrate you. But this is exactly what makes trading a challenging endeavor.

Secondly, real time trading and trading with the past historical price data are two different things. A trading strategy in real time may be much different from the way the trading strategy behaves on Backtesting in term of trade execution. These differences can potentially skew the results.

However, Backtesting is still the best available method for evaluating a trading strategy without actually trading it in real time environment. Backtesting can provide a trader with a reasonable expectation of the trading strategy's potential worth and usefulness.

Now let's discuss how to do Backtesting. Backtesting can be done by using two methods. The first one is the automated Backtesting. This is the most popular method. Automated Backtesting entails using a specialized program. The trader inputs the specific rules and criteria for the trading strategy into the Backtesting program.

An entire picture of the past performance is created with the help of that software program. The software automatically applies those rules to the past price data and tallies the past hypothetical profits, losses and other information. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

What is Backtesting? (Part II)

By Ahmad Hassam

The first was doing automated Backtesting. Automated Backtesting is easy. The second method of Backtesting is performed manually and visually by the trader. The trader would take the historical data and scroll back in time on a chart and manually apply the trading strategy as if it was in a real time environment.

The trader would advance the chart bar by bar in order to refrain from seeing price action subsequent to the trade at hand. This eliminates trading in hindsight that is detrimental to an objective backtest.

The major disadvantage of Backtesting as compared to automated testing is the significant potential for human error in executing simulated trades and recording performance results.

Additionally the normal range of human emotions and biases that often interfere with actual trading can be a detrimental factor in achieving objective backtest results. Furthermore, it takes a great deal of work and discipline to simulate trades manually over a large data set without straying from the strict rules of the trading strategy.

However, this provides valuable trading experience although simulated but still a valuable trading experience that no automated backtest could possibly provide. Backtesting manually can provide the trader with the real feel for actually trading the strategy.

Backtesting whether done manually or automatically can be one of the most important elements of building a solid trading strategy. Backtesting can save traders a great deal of time and money that might otherwise had been wasted on trading unprofitable strategies.

Autotrading is the latest fad especially in forex where the number of major currency pairs is only six and this makes programming autotrading easy. Any mechanical trading system can be backtested. This leads us to the important question of autotrading. These autotrading systems are popularly known as Expert Advisors or Forex Robots.

As compared to the forex market, only the US Stock Market has got more than 50,000 stocks listed with them. This makes programming a stock trading robot a bit complicated. However, during the past decade major breakthrough in computer programming has been made.

Big institutions like banks, corporations and hedge funds have always been taking benefit of these autotrading systems. Backtesting is one of the most important components of testing an autotrading system.

Backtesting and autotrading are two important components of implementing trading strategies that generally do not rely upon the trader's judgments or discretion. These types of strategies are primarily technical in nature, and they must necessarily have rules and criteria that are unambiguous.

Backtesting allows the trader to determine if a given strategy would have been profitable using past price data, which is an indication of how it might potentially perform in the future. In contrast, autotrading actually executes real trades automatically according to a pre - programmed set of instructions that sets trade entries, stop losses, and profit limits. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Point and Figure Trading (Part II)

By Ahmad Hassam

The most common amount of reversal threshold is three boxes or three points. A new column is only added when a reversal in an existing column exceeds the reversal threshold.

The reversal amount in pips is 30 pips if the box size is set at 10 pips and the reversal amount is set at three boxes. So in case of a rising X column, price would need to turn back by at least 30 pips before a new O column would be added.

By only focusing on the pure price action, a point and figure chart reduces the unrelated noise in the price action. These two variables the box size and the reversal threshold make the point and figure chart so effective at representing only the most major market moves disregarding all minor fluctuations known as noise. The significance of these two variables, the box size and the reversal threshold should be clearly understood.

Since point and figure charts outline support and resistance so well, one of the best trading strategies in most common use with the point and figure charts is breakout trading. The point and figure charts are excellent indicators of both trend and support/resistance.

In bar and candlestick charts, a double top is a potential bearish reversal signal. Now there is a notable distinction between the bar and candlestick charts and the point and figure charts in the interpretation of double and triple tops and bottoms.

Are you familiar with the chart patterns like the double and triple tops and bottoms? They are taken as important reversal signals in the trend. However, a double top is a resistance point where traders should be looking for a bullish break to the upside on the point and figure charts. The same difference holds for the double bottoms as well as triple tops and bottoms.

Charts patterns like triangles are prevalent as well. Like the horizontal support and resistances levels on these charts, the main method of trading trendlines and pattern on the point and figure charts is through breakouts. Point and figure charts also have their own versions of diagonal trend lines which are drawn at 45 degrees.

The point and figure charts focus exclusively on the price action. Price action is the most important aspect of technical trading. Point and figure charts give a very clear view of the market movements.

Point and figure charts had originated in the'th century. Point and figure charts are still popular with traders today as an increasingly relevant analytical tool for forex traders. It is because of this clarity in viewing and interpreting the price movements that the point and figure charts have withstood the test of time.

Point and figure trading depends on the trendlines, support/resistance and breakouts. Point and figure charts excel at representing clear evidence of such important technical characteristics as trend, support/resistance and breakout without the extraneous elements to clutter the picture.

Other data that is readily available on the bar and candlestick charts like time, period opens/closes are generally excluded on the point and figure charts. This leaves only the uncluttered purity of price action. Some may characterize point and figure trading as based upon pure price action. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Trading Multiple Timeframes

By Ahmad Hassam

Have you ever traded multiple timeframes? No, then let me explain what multiple timeframe trading is. In multiple timeframe trading, a trader first looks at a longer timeframe like a monthly or weekly chart to determine the overall direction of the trend. Multiple time frame trading is a trading method used extensively by forex traders. It involves the use of multiple timeframes.

If the trader finds a decisive long term trend on this timeframe, he/she then decides to drill down to a shorter timeframe like the daily or 4 hourly chart to look for dips or pullbacks in the trend.

First identify the main trend on the long term chart. A minor downward retracement would represent a potentially high probability entry to get in the trend at a reasonably good price in a strong long term uptrend. Finally the trader may drill down to an even shorter timeframe like the 30 minutes or 15 minutes charts to pinpoint and time the exact entry.

Learn to use multiple timeframes in your trading. How do you trade multiple timeframes? Suppose, you are interested in trading multiple timeframes! You identify the retracement in an uptrend on a 4 hourly chart. What you need to do is to wait for a resistance breakout on a 15 minute chart in the direction of the trend before entering into a long position.

What make multiple timeframe trading so powerful is that it puts the traders on the right side of the market while also identifying the highest probability entries available.

Have you heard of the triple screen trading method? One of the multiple timeframe trading strategies is known as Triple Screen. A triple screen resolves the contradiction between the technical indicators and timeframes. The first screen is the long term charts and strategic decisions on long term charts are made using the trend following indicators.

The second screen is used to make technical decisions about entries and exits using oscillators. The second screen is the intermediate charts. Suppose your favorite timeframe is the 4 hour chart. Call it your intermediate time frame. The third screen can be an intermediate chart or a short term chart. The third screen is used to place buy and sell orders.

Begin by looking at your favorite chart, the one that you use the most. Call it intermediate chart. Multiply its length by five to find the long term chart. Now use trend following indicators on the long term charts.

Staying out of the trade is a legitimate position. Use these trend following indicators in the long term charts to make your strategic decision to go long, short or stay out of the trade.

Return to the intermediate chart if the long term chart is bearish or bullish. Use oscillators like the Stochastics or RSI to look for entry or exit points in the direction of the long term trend. Set stops and profit targets before you switch to short term charts to fine tune entries and exits. To get at the short term divide the intermediate timeframe with 4-6. In our case, the intermediate timeframe is 4 hours, so the short term would be 1 hour charts.

Use it on your demo account to get familiar with it before you trade live with the triple screen method. Triple screen is a simple but ingenious multiple timeframe approach to forex trading. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Trading With Point And Figure Charts (Part I)

By Ahmad Hassam

There are a number of charts that are used in trading. The most popular are the bar charts and candlestick charts. Do you know how to read Point and figure charts? Point and figure trading in many ways is similar to the support and resistance breakout trading on bar or candlestick charts. The main difference is the look and functionality of the price charts themselves!

Bar charts and candlestick charts show the high low open and close price for a given period. Point and figure charts represent price in a radically different manner from the more familiar bar and candlestick charts. Many forex charting platforms provide the option of point and figure charts.

Point and figure trading is based exclusively on price action. Point and figure charts are a pure price action play because these charts generally exclude all other elements like time, volume and open/close other than price.

Technical analysis is the study of price action. Technical analysis is used to predict or confirm an uptrend or downtrend or a consolidation in the market. Point and figure charts represent clear evidence of such important technical characteristics like trend, support/resistance and breakouts. Thus a point and figure chart focuses on the behavior of price action which is the most important factor from the technical analysis point of view.

If you look at the point and figure chart you will see many columns with Xs and Os marked in them. How do you figure out what does this means? A point and figure chart has got Xs and Os. A point and figure chart is constructed with a column of boxes alternately labeled with Xs and Os. An X column means that the price has risen in that column. Conversely, an O column means that the price has declined in that column.

So there is no concept of time in a point and figure chart. Only when price moves a significant amount regardless of time will an existing column grow or a new column is created. A new column is created going in the opposite direction when a reversal occurs on any column. So there is no time, volume, opens and close on point and figure charts.

How is a point and figure chart constructed? It depends on two variables. The first variable is the box size. This is the minimum amount that the price is supposed to move before a new box in the existing column is created. These two variables can alter the way the point and figure charts look and act.

X is equal to fixed price increase. Each X denotes a rising trend. For example, if a column of Xs has 10 boxes, price would need to move an additional amount equal to the preset box size before another X would be added to the top of the column.

You can use the charting software to do the actual drawing. However, you should understand the concept behind the point and figure chart. Suppose, you are using the point and figure chart. You set the box size on the point and figure chart to be equal to 10 pips on the point and figure charting software.

So 10 pips is box size or the minimum price increase! Now the price would have to move another 10 pips above each X box before another X could be added on top of that X. On the other hand, price would have to move 10 pips lower than the each box in O column to add another O box on the bottom of the column.

The second important variable is the reversal amount. How do you decide to add another column to the point and figure chart? It depends on the reversal amount. This is the amount of pips the price needs to reverse before a new column is created. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Fibonacci and Pivot Point Trading (Part II)

By Ahmad Hassam

Beginning with the main Pivot Point that is calculated from the previous day's key price points, the resulting support and resistance are subsequently derived from the following calculations. How is the pivot levels calculated? Beginning with the main Pivot Point that is calculated from the previous day's key price points, the resulting support and resistance are subsequently derived from the following calculations:

R1 (Resistance 1) = 2PP-Yesterday's Low. R2 (Resistance 2) = PP + (R1-S1). R3 (Resistance 3) = Yesterday's High + 2(PP-Yesterday's Low).

Main Pivot Point PP = (Previous Low + Previous High + Previous Close)/3.

S3 (Support 3) = Yesterday's Low-2(Yesterday's High -PP). S2= PP- (R1-S1). S1 (Support 1) = 2PP - Yesterday's High.

After calculating these points they are plotted on the currency price chart. Trader's can calculate the current days pivot points using the above formulas based on the previous day's price data.

Breakouts or bounces may be traded with pivot points. Once these pivot levels are calculated and plotted, they are used in much the same way as Fibonacci Retracement. These pivot points are often also used as profit targets. Pivot points also indicate whether the market sentiment is bullish or bearish. Traders also use pivot points as reference levels to provide information as to whether the current price is relatively low or relatively high within its expected price range for the day.

R1, R2 and R3 similarly S1, S2 and S3 are used as references in pivot point trading. If the price is near the day's S2, for example, traders may look for long trading opportunities with the view that the price will reasonably move towards equilibrium around the main PP level.

You can also calculate the pivot levels for a week and for a month too. Instead of calculating the pivot points for the current day you can also calculate the above levels for 4 hour charts as well as 8 hour charts.

Both Fibonacci and Pivot Points are excellent technical tools that often encompass entire trading discipline in themselves. Just replace the day's highs, lows and the closing prices with the appropriate time frame highs, lows and closing prices when calculating the pivot points for the other time frames.

The pivot point can become the target low for the trading session in an extremely bullish market condition. This number represents the true value of a prior session. It is important to understand that especially in strong bull or bear market conditions, it can be used as an actual trading number in determining the high or the low of a given time period.

Traders will step in and buy the pullback until that pivot point is broken by prices trading below that level. A retracement back to the pivot will attract buyers if the market gaps higher above the pivot point in an uptrending market. The opposite is true for the pivot point will act as the target high for the session in an extremely bearish market condition.

Generally prices come back up to test the pivot point if a news-driven event causes the market to gap lower after traders take time interpreting the information and the news. Sellers will take action and start pressing the market lower again if the market fails to break that level and trade higher. Technically speaking, in a bearish market, the highs should be lower and the lows should be lower than in the preceding time frame. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. Try These Cash Printing Forex Signals From Heaven! Learn Fibonacci Retracement

Trading Divergences

By Ahmad Hassam

Price oscillator divergences have long been acknowledged by technical traders as a solid indicator of potential price reversals. But it doesn't mean that divergences will always predict a reversal correctly. However, well defined divergences particularly on the long term charts can be surprisingly accurate in many instances.

Price divergence oscillators can be spotted with just two elements on the price charts. Catching a major price reversal at the correct time can be so profitable that only a few accurate divergence signals are needed to offset the inevitable false signals.

How do you determine a divergence? The first element is the price and the second element is an oscillator that runs either above or below a price level. This second element can be Stochastics, RSI, MACD or any similar oscillator.

Many traders use Moving Average Convergence Divergence (MACD- pronounced McDee) as their sole confirming indicator. The MACD is among the most popular technical indicator or an oscillator invented.

MACD is a multifaceted indicator that acts as a sign of trend momentum by representing the relationship between two moving averages. Some traders also take trading signals exclusively from MACD.

You must have used MACD in your trading. MACD is basically the difference between two moving averages. MACD can be traded by taking signals from the crossovers of two lines, crosses above and below the zero line. Relative Strength Indicator (RSI) is another popular oscillator that provides a measure of price momentum.

RSI is an indicator that gives overbought and oversold signals in ranging markets. However, its usefulness like most other indicators tends to diminish during a trending market. RSI may also be used for divergence purposes. Stochastic indicator may also be used for divergence trading.

What is a divergence technically speaking? A divergence occurs when there is an imbalance between the price element and the oscillator element. Both begin to go separate ways and start telling opposite tales. This is the point when the oscillator is providing a strong hint that price may be losing its momentum and a change in price direction may therefore be impending.

A bearish divergence occurs when the price hits a higher high while the oscillator hits a lower high. A bearish divergence is a hint for an impending reversal back down.

A bearish divergence is an indication that price may soon turn and go back down as the higher high in the price may lose its momentum and begin falling.

On the other hand, a bullish divergence occurs when price hits a lower low while the oscillator hits a corresponding higher low. A bullish divergence hints at an impending reversal back up.

Divergences are often used as hints of possible turns and reversals. However, divergences are not frequently used as a full fledged self sufficient trading strategy. When used in conjunction with other trading tools, divergences can be a remarkably effective method for helping to time major market events. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try These Cash Printing Forex Signals From Heaven! Learn Fibonacci Retracement

Fibonacci ... Pivot Point Trading (Part I)

By Ahmad Hassam

The use of Fibonacci retracement levels and pivot points are often considered by their adherents as complete, self contained trading strategies. Some traders are diehard fans of the Fibonacci and pivot point trading.

Don't confuse the two methods as one. I want to make it clear the Fibonacci Retracement and the Pivot Points are two different methods and must not be confused as a single trading method. Both produce mathematically derived support and resistance levels that traders may use either as indicators of possible retracement turns or as zones to watch for breakouts. The horizontal price levels that are generated through Fibonacci retracement levels and the pivot points are calculated using different methods and formulas.

One question that might bug your mind is that why these levels work in the market. What is the secret behind them? Why Fibonacci retracement levels and the pivot points work most of the time? What makes these tools work surprisingly well under diverse market conditions is the simple fact that many traders both small and large use Fibonacci retracement levels and pivot points in their trading.

Therefore the levels derived from these two tools become self fulfilling prophecy. This is why significant price action occurs around these levels due to the fact that many traders are watching and reacting to these price levels.

The most common Fibonacci retracement levels are 23.6%, 38.2% and 61.8%. These three Fibonacci retracement levels are most frequently followed by the traders. This phenomenon contributes to the Fibonacci retracement levels and pivot points frequent effectiveness and accuracy in describing the market movement.

As said above, Fibonacci retracement levels are very popular among the traders. There is a full fledge Fibonacci trading method. You will hear very often, the commentary on CNBC or Bloomberg that price is approaching the 38.2% retracement level and something important like a turn could occur at this level. This shows the popularity of Fibonacci retracement levels among the trading community.

Both methods have clear cut locations for the stop loss placement similar to most support/resistance trading methods. Fibonacci retracements can be traded either as a breakout opportunity or as a retracement bounce. Fibonacci levels can also be used as profit targets for existing open trades.

Pivot points are leading indictors of the price action in the market. Pivot points are derived mathematically from the previous day's data that includes the previous day's high. Low and close. The main pivot point (PP) is calculated by taking the average of the high, low and close of the previous days' price action.

From the PP, four other primary pivot points are calculated. Two are above the main PP and two are below the main PP. The levels above are R1 and R2 where R stands for resistance.

You can easily find a pivot point calculator online. Most of the charting software also can calculate the pivot points. The two levels below the main PP are the S1 and S2 where S stands for the Support. Often these pivot points are further extended to R3 and S3.

However, it is always good for the trader to know how these numbers are calculated. This will give the trader an understanding of how these numbers are calculated and what are the variables that are used to calculate them. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. Try These Cash Printing Forex Signals From Heaven! Learn Fibonacci Retracement

Tips on Sugar Commodity Trading, Watch Sugar Commodity Prices

By Marianna Gomes

Traders looking at sugar commodity trading as a way to gain exposure to commodities as an asset class have some great opportunities, particularly with global agricultural prices looking set for long term increases. In the early 1970's sugar prices surged over 60 cents a pound and by over 40 cents a pound in the early 1980's at the tail end of the 1970's commodity bull market. Following the adverse impact of the global economic crisis in 2008, commodities in general and sugar commodity prices in particular are advancing strongly again, with sugar prices are at their highest for 28 years.

There are numerous cases of serious sugar shortages as desperate consumers across Asia queue for small quantities of this key commodity. To think that while in 2007 India was a major exporter of sugar, with a surplus of five million tons, but from 2009 the country is a net importer. So what has caused this serious imbalance between world sugar demand and supply? After the shock of the global economic crisis, the US dollar is falling against other currencies and hopes of a strong rebound are causing real asset prices to be driven higher. Add in the weak monsoon season in India and very unhelpful weather for sugar plantations in Brazil, impacting adversely on sugar yields, and the result is raw sugar prices heading for a high of 25 cents a pound.

Preparing for your sugar commodity trading analysis, find out where sugar comes from, in what forms and consider the recent phenomenon that threatens to change the dynamics of global sugar commodity markets in future. Between 75-80% of sugar comes from sugarcane, produced in over 100 countries globally, largely from the tropical and sub-tropical areas of the southern hemisphere. Rainfall is important for successful crop yields, with ideally around 600 mm needed annually. In addition to bad weather, crop infestation due to pests is another variable causing a rise in sugar prices on world commodity exchanges.

The top producing nations are Brazil, which is also the largest exporter in the world, India, China, the EU, USA and Australia. One key factor which distorts world sugar markets is the subsidy regime in the US and Europe, which supports producers by giving them prices higher than the world price. Sugar is used in a range of fruit and vegetable formulations, in bread fermentation, and increasingly as source material for ethanol fuel.

In 2007 there was a very tight balance between supply and demand, a situation almost certain to worsen as demand is expected to surge in developing Asia, particularly in BRIC nations like China and India. The largest consumer in the world is India, which is allocating far more sugar for ethanol as an alternative fuel. The world's third largest consumer and producer is China, and it is starting from a very low base of only 7kg per annum per capita consumption compared to USA per capita consumption of 45kg per annum.

Brazil is the largest world producer and understanding this market will help your sugar commodity trading strategy. Brazil aims to avoid a sugar glut by using the potential excess sugarcane crop to produce ethanol for biodiesel, an alternative to petroleum-derived gasoline. Growing use of sugar to produce ethanol has arisen alongside increases in crude oil prices and a surge in demand for sugar in China. With high crude oil prices likely in the future coupled with growing demand, producers face huge challenges to avoid higher sugar prices.

Armed with your chosen commodity trading system and good advice from your professional financial adviser, you can trade from almost anywhere in the world with good internet access. The #11 Raw sugar futures on the ICE US Futures platform is the most heavily traded sugar futures contract globally, followed by the #16 Sugar futures contract. It is also possible to use LIFFE CONNECT, part of the NYSE Euronext Group, to trade raw sugar futures. For those hesitant about leveraging in futures, an alternative could be to look at a soft commodity index using an ETF. Broadly speaking, higher sugar prices suggests sugar commodity trading looks very exciting going forward, given growing sugar consumption in the BRIC economies and rising demand for bio ethanol. - 31869

About the Author:

Covering soft commodities, the author, Marianna Gomes, writes articles for the Commodity Trading Today website, a helpful informational resource. Discover more about how you could benefit from sugar commodity trading suggestions here.

Candlestick Guide

By Ahmad Hassam

Candlesticks have become popular in the Western trading community especially the United States in the past decade. However, candlestick charting methods had been developed by Japanese rice traders hundreds of years back.

In the last two decades there have been seismic changes in the way people used to trade. The advent of internet has leveled the playing field for traders whether they trade stocks, futures, options, commodities, precious metals or currencies. Access to the market is now only one mouse click away.

Internet has made commission rates dramatically lower. Market information is now in most cases freely available online. The result is that a whole generation of new traders and investors want to try their luck beating the market.

Did you attend the last Steve Nison Candlestick Charting Technique webinar? Now, you should. Steve is the master of candlesticks and you can learn a lot from attending his candlestick. I am a great fan of candlesticks charting and I have seen many traders both new and professionals becoming die hard fans of candlestick charting. Why? Because candlestick charting is the best tool available. Can you beat the market? It depends if you are using the right tools.

Why candlestick charting is superior to other forms of charting like the line charts, bar charts or point and figure charts? One of the best features of candlestick charting is its visual appeal and readability. You can glance at a candlestick chart and quickly gain an understanding of whats going on with the price action in the market.

Opening and closing price levels can be a very important area of support and resistance from day to day. You can easily spot and opening and closing price of a security or currency on a candlestick chart.

This information can be extremely useful for short term traders like day traders and swing traders. There are certain specific candlestick patterns that can help you identify when is the best time to buy, sell or wait on a trade or investment.

Learning how to spot these candlestick patterns is very important for you. In order to trade and invest effectively using candlestick charts you need to understand these candlestick patterns. These candlestick patterns can be a real boon to your trading and you can combine them with other technical indicators for even more reliable results.

Patterns appear on the candlestick charts as simple, single stick occurrences or complex multi stick formations. Many different types of candlestick patterns can tell you what may lie ahead in the market.

You may use the information provided by candlestick patterns to decide when to get into a trade, when to get out of a trade or even when to hang unto a trade you are already in. This information can be highly valuable in knowing that the prevailing trend might reverse or continue.

This is the best candlestick guide in the market and you dont need to waste your money on buying a guide because this candlestick guide is a complementary gift for you from the Options University. Download your 82 page candlestick guide here complete with strategy flash cards all free. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try These 1500 Pips A Day Forex Signals From Heaven. Download Your Free 82 Page PDF Candlestick Guide!

Spot Forex (Part I)

By Ahmad Hassam

The spot forex market is an over the counter market. The spot forex market is a decentralized network of buyers and sellers. There is no physical central exchange that acts as a central clearing house.

Over the counter means that the buyers and sellers make a binding contract with each other after agreeing on the price and this is not carried through an exchange unlike the forex futures trading that is carried out through the exchange like CBOT, CME etc.

Forex traders in the spot forex market carry out their activities by dialing directly with one another or through brokers on telephone or internet. There are several advantages of a central exchange like the counterparty risk for the trades is reduced. There is trading anonymity something that big players want to hide their trails.

In 2007, Chicago Mercantile Exchange (CME) along with Reuters launched FXMarketSpace; the worlds first centrally cleared global forex market place. In this centrally cleared system, CME will act as the clearing house and guarantee the performance of all the contracts for both buyers and sellers.

Only sophisticated investors with net worth of more than $20 Million can trade on the FXMarketSpace. Unfortunately FXMarketSpace is an institutional trading platform and is not open to retail forex traders.

There are many players involved in the spot forex market. Recently NFA (National Futures Association) had also passed certain new rules that make it more skewed against the small investor like you and me. The spot forex market is still skewed against the retail forex trader. Why is it so?

Previously spot forex trading was the playfield of the big banks, multinationals and the hedge funds. With the advent of the internet, it became possible to introduce trading platforms for the retail investors.

A mushroom growth of online forex brokers took place. Many did not have even enough capital with them to start the brokerage business. But this is the way; the spot forex market has developed over the years.

Why these players trade forex? What type of advantages they have over the retail forex traders? It is essential for you that you understand the nature of the spot forex market and who are the main players. Off balance sheet earnings are the declared aim of most banks and spot dealing in forex which represents a high loss potential but practically no credit risk falls in that category.

Over the counter (OTC) means that the spot forex market is spread all over the globe with no central location! Over the counter nature (OTC) of the spot forex market means that currency transactions do not take place at any single place. No government oversight and no central deal book to compare trades means that the banks can pretty much do whatever they want to their unsuspecting customers.

A players access to the spot forex market depends on the quantity of transactions of large amounts of money. Players in the spot forex market range from those who trade billions of dollars daily to those who only trade just a few thousand dollars daily. Now who are the main players in the forex market against whom you as a retail forex trader will be competing? - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

Dont Trade Without A Stop Loss (Part I)

By Ahmad Hassam

Do you have a trading system that tells you when to enter the market? Lets assume that you already have got a trading system that tells you where to enter the market. Does this system also tell you where to get out before you enter the trade?

On the road to profitability, lets start by agreeing that we need stop loss exits. In other words are you taking the market conditions into account and willing to give your trade a breathing space so that you dont get whipsawed or repeatedly get stopped out.

After this agreement, we need to determine how to effectively select stop loss exits to avoid excessive stop outs. Just dont forget, the more trades you place, more commissions or spreads you will have to pay and the higher your trading cost will be.

So right there you can increase your profitability if you increase the number of winning trades that is your win ratio thereby decreasing your trading cost. The best way to do this is to develop a stop loss strategy that takes into account currency market conditions.

There need to be a connection between you and your trading system. It truly is like having a personal relationship. Finding the right trading system can be a lengthy process. You must believe in your trading system and have a high degree of trust that it can produce consistent level of profits overtime.

But you must also understand that no trading system can be perfect and no trading system can produce 100% winning trades. If you have a trading system that isnt working for you and your win ratio and your payoff ratio dont generate a profit over time then you need to rethink your trading strategy.

Determine if it is your trading system that isnt working or is it your trading psychology that is off. Make adjustments to entry and exits. Maybe the market conditions have changed and you havent adjusted your trading system to the new market conditions.

Just keep this in mind that if you dont give your trading system a chance to work jumping constantly from one trading system to another trading system in search of a holy grail wont help you.

Divorce of any kind can be emotionally and financially expensive so proceed with caution when divorcing your trading system. The decision to divorce your trading system should be a carefully thought out one.

If you feel comfortable and confident with your trading system, you ultimately will also be profitable. The primary purpose of your trading system is to make you feel comfortable and confident.

In the end, you need to develop a relationship with your trading system. You will feel confident when your trading system has proven to you and you have proven to your trading system that both can work together. Its a team work. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. Try These 1500 Pips A Day Forex Signals From Heaven. Download Your Free 82 Page PDF Candlestick Guide!

Forex & Other Markets (Part I)

By Ahmad Hassam

The New York time between 3:00 PM EST to 7:00 PM EST is best suited for scalping with the counter trend strategy. Off hours between 3:00 PM and 7:00 PM EST is when all the world banks are closed. The U.S. banks are closing their doors and the Asian banks have not yet opened. This is a great time to scalp the market using a counter-trend strategy, because no larger banks are moving money (i.e. the markets) at that time. Just as with the London close, there is no set way in which the New York afternoon market plays out. On more active days where prices have moved significantly, the lower liquidity can cause additional outsized price movements. So traders just need to be aware that lower liquidity conditions tend to prevail and adapt accordingly.

The forex market does no exist in a vacuum. Why do investors need to exchange their domestic currencies for foreign currencies? You may have heard of other markets that exist like the gold, stocks, bonds, oil, futures and commodities.

There is a fair amount of noise and misinformation about the supposed relationship among these markets and the individual currency pairs. You can always find some correlation between two markets over time.

However, always keep this in kind that all the various financial markets are markets in their own right. All these individual financial markets function according to their own internal dynamics based on data, news, positioning and sentiment.

You should view each market in its own right perspective and trade accordingly. These markets will occasionally overlap and display varying degrees of correlation due to various underlying economic factors.

Lets discuss some major financial markets and see what conclusions we can draw for currency trading. Its always important to be aware of whats going on in the other financial markets.

Gold: Gold is commonly viewed as a store of value in times of economic and political instability and uncertainty. Gold is also considered to be an alternative to the US Dollar and a hedge against inflation.

A weaker US Dollar is generally accompanied by higher gold prices and a stronger US Dollar is accompanied by lower gold prices. Over the long term, the relationship between Gold and US Dollar is mostly inverse or negative.

In the short term, the relationship between gold prices and US Dollar may not be as solid as it has been historically in the long term. This makes short term relationship between the gold prices and US Dollar generally tenuous. However, in the short term, each market has its own dynamics and liquidity. Overall, the gold market is much smaller than the forex market. There is only a limited and finite quantity of gold. No major gold mine has been discovered in the past many decades. Only the discovery of a major gold mine can bring the prices of gold right now.

Gold traders tend to keep an eye on whats happening to the US Dollar. At the same time, extreme movements in the gold prices tend to attract currency traders attention and usually influence the US Dollar in a mostly inverse fashion.

Oil: A lot of confusion is usually spread on the relationship between oil and US Dollar and other currencies like CAD and JPY. Correlation studies show no appreciable relationship to that effect in the short run which is where most of the currency trading is focused. The idea behind these theories is that if the country is an importer of oil, its currency will be hurt by the higher oil prices and helped by lower oil prices. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

Forex & Other Markets (Part II)

By Ahmad Hassam

The lower the prices of oil, the lower the inflationary pressures are going to become but this is not always true. The higher the price of oil, the higher the inflation would be and the slower the economic growth is going to become. Take oil as an inflation input and a limiting factor on the overall economic growth. Rising oil prices tend to retard economic growth that in turn depreciates the domestic currency. When you see oil prices making major moves, watch for the currencies that have a strong relationship with oil to make major moves as well. Some currencies have a positive correlation with oil meaning that when oil prices go up, the value of the currency also goes up. Other currencies have a negative correlation with oil meaning that when oil prices go up, the value of the currency goes down. If you can, utilize those currency pairs that have one currency with a positive correlation and one currency with a negative correlation in the pairing, like the CAD/JPY. This will help you not only make profits in your forex trading but also offset the additional expenses in your budget that will be brought on by rising oil prices.

The global oil reserves are finite. With the rising energy demand in emerging economies like China, India and Brazil, the prices of oil are expected to rise and reach around $200 per barrel in the coming few years. We would like to factor changes in the prices of oil into our inflation and growth expectations and then draw conclusions about the course of US Dollar from them. Above all, oil is just one input among many.

Stocks: You must have invested in stocks sometimes back. Many people invest in stocks. Buy and hold is the best strategy that has been followed over the years by the stock investor. Almost everyone is familiar with stocks and the stock markets. You can take stocks as microeconomic securities rising and falling in response to individual corporate results and prospects. Stocks are units of ownership rights that get traded on the stock exchanges.

You can think of individual countries as companies and their currencies as stocks that get traded in the global financial markets. Currencies are essentially macroeconomic securities fluctuating in response to wider ranging economic and political developments. There is no intuitive reason that stock market should be related to the forex market. Virtually nowhere else does the forex market serve as the perfect hedge for your investments than in the stock market? If you are a longer term investor who enjoys the long range returns of the stock market but who doesnt enjoy watching your account value drop whenever the stock market cycles through a downturn, you can offset your losses in the Forex market.

There was a boom in the Tokyo Stock Exchange a decade back. Many investors wanted to take part in that boom. But in order to invest in Japanese stocks, they needed Japanese Yen (JPY). Heavy buying pressure on JPY made it appreciate. So sometimes a relationship develops between a stock market and a currency for the time being. However, long term correlation studies bear this out that there is no major relationship between stocks and currencies. Major USD currency pairs and the US equity markets over the last five years have almost zero correlation coefficients. However, the two markets occasionally intersect.

The US stock market may drop on an unexpected hike in the US interest rates while USD may rally on the surprise move. For example, when equity market volatility reaches extraordinary levels like when S&P 500 Index loses 2% in a single day, USD may experience more pressure than it otherwise would have. But there is no guarantee of that.

Bonds: When interest rates are on the rise, at some point, doing business becomes difficult, and when interest rates fall, eventually economic growth is energized. The bond market rules the world. Everything that anyone does in the financial markets anymore is built upon interest rate analysis. Globalization is here to stay. At the center of the globalization phenomenon is the entity known as the bond market. As a futures trader, you are likely to deal mostly, but not exclusively, with the U.S. Treasury bond futures. However, over the next 10 or 20 years, or perhaps sooner, the European bond market, and more than likely bond markets in Dubai and China, will play significant roles in the global economy.

That relationship between rising and falling interest rates makes the markets in interest rate futures, Eurodollars, and Treasuries (bills, notes, and bonds) important for all consumers, speculators, economists, bureaucrats, and politicians.

Both the bond market as well as the forex market reacts to interest rate changes. Bond or fixed income markets have a more intuitive relationship with the forex markets as both are heavily influenced by the interest rate expectations. However, the short term supply and demand fluctuations interrupt most attempts to establish a viable link between the two markets on a short term basis.

Just about every country in the world with a convertible currency has some kind of bond or bond futures contract that trades on an exchange somewhere around the world. Sometimes, the bond markets more accurately reflect the changes in interest rate expectations with the forex market doing the catch up. At other times, the forex markets react first and fastest to the shifts in the interest rate expectations.

Changes in the relative interest rates exert a major influence on forex markets. As a forex trader, you definitely need to keep an eye on the yields of the benchmark government bonds of the major currency countries to better monitor the expectations of the interest rate market. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

Understanding Spot Forex Market (Part II)

By Ahmad Hassam

There is a select club that really rules the spot forex market. These big banks make an exclusive club where most trading activities take place. This club is known as the Interbank Market. The worlds big banks are the main players in the spot forex market.

Unlike other markets, the interbank market operates on the principle of highest credit standing in dealing with the counterparty in any forex transaction. For this reason, big banks prefer to deal with big banks only. As a result smaller fish are shut down the line from the interbank market. Down the hierarchy in the spot forex market are the smaller banks, big multinational companies, hedge funds and other institutional investors or speculators and the retail forex brokers. The wealthier you are and the more money you have or are able to get credit for, the more chances you have of accessing this big boys club.

These players conduct currency transactions in the interbank market if they have large capital and have credit standing with the large banks. The independent retail traders lie at the bottom of the market structure.

So there is no central exchange in the spot forex market to set the prices. Then who sets the currency prices? The retail forex trades trade through their forex brokers. They generally trade in much smaller lot sizes. Central banks are also occasionally involved in currency transactions. Unregulated nature of the spot forex market as well as poor governmental oversight lets the forex dealers to behave the way they want. Because of the tight knit nature of the forex market and its lack of regulation, the spot forex market is an unfair market for the nonprofessional to operate in.

Market makers make the bid and ask prices based on the currency movements that they anticipate will take place. Without a central exchange, the currency prices are set by the market makers.

Largest banks are the major market makers and they handle billions of dollars worth of forex transactions on behalf of their clients like the other institutions and companies and also for themselves. Many banks have professional traders solely dedicated to trading forex for speculation.

This big money laden network is knows as the interbank market. Interbank market is where large banks deal with one another. The resulting massive flow of money handled by these big banks is what primarily drives the currency markets. The interbank market is not a perfect market. Since the information is not freely available, market access is restricted, manipulation takes place, governments intervene and a large number of participants in the market routinely buy and sell currencies irrespective of profit which all comes together to turn conventional trading wisdom on its head in this range bound market.

Most of the trading activity takes place in the interbank market. The transactions carried out by these big banks like the Citigroup, Barclays, UBS, Deutsche Bank etc amounts to the greatest bulk of the total daily forex volume.

The banks deal directly with one another through the electronic brokering platforms like the Electronic Brokering Services (EBS) or Reuters Dealing 3000 Matching. These brokering services get the best available rates for the various currency pairs.

The banks establish specific credit lines with one another in order to deal with one another in the forex market as there is no exchange to serve as each banks counterparty. These brokering systems match buying and selling requests from the bank dealers. Between these two competitors they connect at least 1000 banks together.

Smaller banks that also trade forex also get access to these brokering platforms. Next large companies come. As the main market makers, these big banks constantly quote bid and offer prices to one another thereby making the market. Unlike the exchange traded markets like the NYSE where the market maker has the responsibility to quote the same price to two different parties, a forex dealer in the interbank market may quote whatever price he wishes to his clients. Good customers receive decent prices but for irregular or complicated clients it becomes practically impossible to receive fair market prices. - 31869

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

EUR/USD

By AHmad Hassam

EUR/USD is the most heavily traded currency pair in the global currency markets at the moment. Trading currencies can be exciting and lucrative. Its a great market because of the way politics affect the trends. Elections, strikes, and sudden developments, both good and bad, can lead to significant trading profits if you stand ready to trade the euro is a convenient currency because it encompasses the policies and the economic activity and political environment of a volatile but predictable part of the world: Europe.

France, Italy, and Germany, the largest members of the European Union (EU), normally operate under high budget deficits and tend to keep their interest rates more stable than the United States, where the free-market approach and a usually vigilant Federal Reserve make more frequent adjustments on interest rates.

The general tendency of the Fed is to make the dollar trend for very long periods of time in one general direction. Aside from the technical analysis, here are some general tendencies of the euro on which you need to keep tabs:

- The European Central Bank is almost fanatical about inflation, given Germanys history of hyperinflation in the first half of the 20th century and the repercussions of that period, namely the rise of Hitler. That means that the European Central Bank raises interest rates more easily than it lowers them.

2) EUR/USD pair is affected by what is happening politically and economically both in Europe and the US. The European Central Banks actions become important when all other factors are equal, meaning politics are equally stable or unstable in the United States and Europe, and the two economies are growing. For example, if the U.S. economy is slowing down, money slowly starts to drift away from the dollar. In the past that meant money would move toward the Japanese yen; however, because the market knows that Japans central bank will sell yen, the default currency when the dollar weakens is often now the euro.

3) EUR/USD currency pair is heavily influenced by the political developments in the Eurozone. Especially when the European economy is slowing The flip side is that the market becomes jittery and often sells the euro during political problems in the region.

As a word of caution, its okay to form an opinion and have some expectations, but the final and only truth that should make you trade is what the charts are showing you. As usual, you want to closely monitor major currencies and the cross rates. The direction that counts is the one in which the market is heading.

It is always best to choose only two or three currency pairs and become a specialist in them. Fundamental analysis can help you determine the strong/weak currency pair. Use fundamental analysis to determine if USD is expected to lose value and EUR is expected to gain more strength that means that the currency pair EUR/USD is perfectly timed for swing trading. Use technical analysis to make the entry and exit decision. Combining fundamental analysis with the technical analysis can give you the edge as a forex trader. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Top Coffee Commodity Trading Tips, Watch Coffee Market Fundamentals

By Marianna Gomes

There are some great opportunities for coffee commodity trading observers to make some gainful trades, after a UN agency report urged that global food production needs to rise by over 70% by 2050. With crude oil coffee has over the years been a top traded commodity, so clearly any notable change in coffee futures prices are followed closely, particularly when a dramatic change in weather can impact crop yields. Good rainfall levels are key for this popular commodity, and so you will find most coffee beans grown in countries between the Tropic of Cancer and the Tropic of Capricorn.

Climate is crucial for success in achieving good yields as well as having an optimum temperature range of between 17 and 23 centigrade and favourable soil conditions. A recent Cafedirect report showed the gradual damage caused to coffee farmers in developed countries. One clear impact of rising temperatures is coffee growers needing to move to higher altitudes. Another effect is more disease caused by pests due to the temperature rises. The climate change challenge is significant to coffee growers because the beans can only grow properly in a relatively narrow temperature range.

For those who follow coffee commodity trading the two main varieties of economic importance are Arabica and Robusta, both highly traded futures on global commodity exchanges. While the largest global coffee producer is Brazil with around 34 million (29% global output) 60-kg bags of coffee in 2007/8, and mainly Arabica, the US is the biggest world consumer and importer of coffee. In second place with a 15% world share at 17.50 m bags (Robusta) is Vietnam, while Columbia with a 11% share was third producing Arabica, and with production of 7.0 m bags in 2007/8 Indonesia was fourth largest producer.

Arabica, which represents about 70% green coffee bean production, is grown in warm, humid climates at altitudes above 4,000 ft, and this combined with the soil conditions helps it achieve its characteristic aromatic flavour. Arabica is mainly grown in the high altitudes of Latin America, such as Brazil, Peru, Venezuela, Ecuador and Columbia. One of the best grades of Arabica coffee in Brazil is Santos, where the beans are picked within the first 4 years of the coffee tree's life. Normally with Arabica there is a long lead time of 4-5 years, while with the lower quality Robusta, grown in South East Asia, the beans are picked after 2-3 years.

A drought can lead to coffee futures prices rising because a crop yield collapse hits supply. Lower crop yields due to higher than normal rainfall may also lead to higher prices. The crop for both current and the following year can be affected by freezing, which can be a problem particularly in Latin America for Arabica varieties in the higher altitudes. Over recent years serious freezing has occurred once in every six years in winter (June to August) months in the southern hemisphere, according to data. The coffee commodity trading observer needs to weigh up all these factors before they enter trades.

The appearance of white blossom on coffee trees points to the first stages in coffee bean growth, after which over a period of between two weeks to 6-9 months green cherries appear, eventually becoming red and then black cherries. Each cherry holds two coffee beans. Most coffee production uses the "dry" method where cherries are stripped off the tree. Then the green beans are dried and graded, ready for shipping and roasting. On average about 2,000 cherries (4,000 beans) yield a pound of coffee.

With your coffee commodity trading system set up and having approached a broker for an electronic trading platform, you are ready for profitable coffee trades. On ICE Futures US there is a Coffee "C" futures contract which is the Arabica benchmark, while the exchange also offers a Robusta futures contract. Alternatively, with NYSE Euronext route there are two Robusta coffee futures contracts available to trade on the London LIFFE market, along with other soft commodities like white sugar, raw sugar, cocoa and rapeseed. If you only want exposure to soft commodities without trading futures you could invest in an agricultural ETF, tracking a soft commodity index. With these derivative and investment funds you have a good choice for gaining exposure to dynamic coffee commodity trading markets. - 31869

About the Author:

The author, Marianna Gomes, covers soft commodities and writes articles for a helpful website ontrading commodities. Discover more about how you could gain from coffee commodity trading ideas here.

What Is Fibonacci Trading? (Part I)

By Ahmad Hassam

What is Fibonacci trading? Fibonacci trading is based on the famous Fibonacci number series. Whether you trade stocks, futures, commodities or currencies, you will find Fibonacci trading techniques highly useful. The good thing about learning the Fibonacci trading techniques is that once you master it in one market you can use it in other markets as well. Did you see the movie, The DaVinci Code? You will find a scene in the movie where the characters talk about the Fibonacci number as part of a clue or code of some sort.

Fibonacci trading techniques are based on a series that was discovered in the 13th century by an Italian Leonardo de Pisa. Over the years many interesting characteristics have been discovered on a few ratios derived from this series. The Fibonacci series starts with 0 and 1 and goes out to infinity with the next number in the series being derived by adding the prior two. What are Fibonacci numbers? For example, 0+1=1, 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13, 8+13=21, 13+21=34, 21+34=55, 34+55=89, 55+89=144, 89+144=233, 144+233=377.

Fibonacci trading is based on using those ratios in your trading entry and exit decisions. What is so fascinating about this series is that there is a constant found within the series as it progresses to infinity. This constant is known as the Golden Ratio, Golden Mean or Divine Proportion. The Fibonacci series is like this; 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610, 987..to infinity.

Take any two consecutive numbers in the series after the first few and you will find the Golden Mean by dividing the higher number with the lower number. For example, 89/55=1.618, 144/89=1.618, 233/144=1.618, 377/233=1.618, 610/377=1.618, 987/610=1.618 and so on. The inverse of 1.618 is 0.618.

Identifying support and resistance is very important in forex trading or for that matter any other trading. How do you identify support and resistance? Fibonacci ratios are usually used by traders to identify support and resistance. What is most important to forex traders is that applying these ratios can help identify key support and resistance zone in the market and therefore determine key trading opportunities or setups. The Golden Ratio can also be found in many places in nature like flowers, shells, fossils etc.

Thus the application of Fibonacci ratios can give you the edge as a forex trader if you use the Fibonacci trading technique properly. We have already discussed the Golden Ratios 1.618 and its inverse 0.618. The main ratios used in everyday analysis are 0.382, 0.50, 0.618, 0.786, 1.000, 1.272 and 1.618.

It is assumed that you have a computer, a market data source such as quote.com and a technical analysis program to manipulate that data since you are trying to look into a type of technical analysis. You should be proficient with the technical analysis program.

There are three types of Fibonacci price relationship namely, retracements, extensions and price projections (sometimes also called price objectives). We will look into each type of these relationships individually. The Fibonacci price analysis calculations can be done by hand as well but they are time consuming and tedious.

Support is when the buying pressure overcomes the selling pressure and the decline in the price is reversed at the support level. The definition of a support is the price area below the current market where you will look for a possible termination of the decline and where you would consider to becoming a buyer of whatever currency pair you are trading. Each of these Fibonacci price relationships will be setting up potential support or potential resistance in the chart that you are analyzing.

Similarly resistance is price area above the current market where you would look for the possible termination of a rally and consider being a buyer. - 31869

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!