Forex Market Summary 02.01.2009

In last Friday’s forex market, the dollar dropped despite the uncertainty of the situation in the Middle East, but still remains in high leve, the dollar index rose to the highest 81.92, the lowest back to 80.90, closing at 81.84. European monetary system as a whole showed a pattern of decline, the euro bounced back to the top 1.4031 against the dollar, the lowest back to 1.3839, closing at 1.3853; Sterling weaken sharply against the Greenback, from the highest point on the same day the whereabouts of 1.4790 to 1.4374 minimum, to close at 1.4470;

Dollar against Swiss franc to 1.0614 on the day callback, also rose sharply to 1.0804, closing at 1.0787;

dollar / yen back to the minimum 90.59, the highest rise to 92.40, closing at 92.20. Commodity shown relatively strong performance by the New York crude oil futures continued to rebound in the dollar against Canadian dollar from the day’s high of 1.2273, down to the lowest point on the day of 1.2065; by the Palestinian-Israeli conflict, spot gold’s recent rebound has continued to lead The strength of the Australian dollar,

Australian dollar / US dollar from the day’s low of 0.6918 on the day rose to the highest point of 0.7105. UK data released Friday showed that the UK December CIPS / RBS manufacturing PMI 34.9, expected 33.5; Britain manufacturing employment index in December of 33.6 for January 1992 to the lowest in November to 35.5; Britain’s Bank mortgage license declined to a record low of 27,000 in November, after it was October to 31,000, . This is affected the sterling / dollar rebounded after sharp declines. U.S. ISM manufacturing index was lower than expected, indicating the deterioration of the situation in the U.S. economy, U.S. pressure was low. However, the European Central Bank and Bank of England’s rate cut is expected to curb the rising pound, the above-mentioned two major central bank held interest rate meeting next week. At the same time, the U.S. Treasury Department to Citigroup’s capital injection, a boost to the U.S. market’s confidence in economic recovery and lead to rising U.S. bond yields and the United States, but also to suppress the European monetary system. By the U.S. Treasury Department to the General Motors injection of news to stimulate the U.S. stock market in 2009, the first trading day higher across the board, the Dow Jones index closed at 9034.69 points, closed up 256.38 points since Nov. 5 for the first time to close the station on 9000 Point above the psychological barrier. From a technical point of view, the U.S. dollar index at the top of the short-term resistance at 92.00, the successful breakthrough, the dollar also rose to kinetic energy. Today, short-term support for the dollar index at 80.90, if the effective support of the U.S. dollar will continue after the end of the adjustment in the rebound. Unless short-term dollar index fell below the 80.90 support, the dollar will continue to fall to about 80.50 and 80.30. Relative to the dollar, the euro / dollar in the short-term support of the 1.3800-1.3820 important, if below, the exchange rate will continue to adjust to the 1.3750-1.3770 about as long as 1.3750 support is not broken, the dollar will continue to rebound. Otherwise, the euro / dollar’s rebound may have ended up. However, the current situation, might be having a big impact on the trend of the interval.

Risk calculation for FOREX Trader

The most common reason for the quick failure of new forex traders is   “Overtrading”: Too many and too large positions are being executed which makes  the risk is rising very rapidly.

In the bottom of this  page you will find a link to download small free tool to calculate the risk in FOREX trades. It is a spreadsheet that is  using Microsoft Excel or the free OpenOffice  that you can open and use.

The operation is very simple. After entering personal parameters, such as the account size and the maximum risk you want to be the maximum size of a calculated trades. You can predict  your account performance in the loss case. If you have different sizes for your trading risk register, you will soon see what effect it has on your account.
Download Tools

The tool allows you to the current version 1.0 (as of August 2007) to download. If you use the right mouse button click on the link, you can choose.
in the menu “Save Target As …”
Download Forex Tool

License: This tool is a freeware that you can use it free of charge and pass it on. If you are in a freeware collection on your home page or want to use, so please talk to us first.

Operation
Inputs

Forex input mask tool

The blue numbers can be changed by you. First, enter their account size, then the information to leverage your margin accounts. (in this example 200:1). The parameter “maxiumum risk” is crucial for the success of your strategy, with this value, you should play to the impact in the results can be seen.
The next lines give the spread in pips to the value of a pip and the account where you want to pull the emergency brake. The values of 2 pips spread and $ 10 Pipwert come in the picture of the pair EURUSD.

The Use of Auto Trading in Forex Market

The application of algorithmic trading in the Forex market has significantly evolved from its origins in equities algorithmic trading or automated trading, also known as algo. This article examines what this form of trading has to offer.

One of the challenges for any financial institute or day forex trader considering the use of algorithms for foreign exchange (FX) is to understand the evolving definition of algorithmic trading and how algorithms can be used to better exploit Forex market opportunities.  The use of computer programs for execution of forex trading orders employs computer algorithms to decide certain aspects of the order such as the timing, price, or even the final quantity of the order.  This strategy makes sense when you consider that algorithmic trading originated in the equities market to automate trade execution. In other words, the decision as to ‘what’ to trade is made elsewhere (generally by a human trader) and the focus of the algorithm is ‘when’ to trade - how to best execute the trade decision in order to achieve best execution and minimize market impact. Automated or algorithmic trading allows, based on predefined quantitative models, orders without human intervention in the market. It is an attempt to give people experience as a broker and thus directly participate in the buying and selling of securities.

The algorithm executes the splitting and the timing of orders based on predefined parameters. These parameters typically use both historical and updated current market data. Algorithmic forex trading by professional brokerage firms is proprietary; however they often offer this service to clients as a feature of the clients account. This is due to the complexity and tight resource situation of institutional investors who desire the access of a broker.

The use of automated trading enables you to exploit forex market opportunities regardless of your time zone an its relation to the  hours of the forex market.

The advantage of automated  forex trading is the high speed in which they can place transactions, and in comparison to people, the higher quantity of relevant information that they observe and process. Therefore, this also leads to lower transaction costs.

The difficulty in algorithmic trading is based in the aggregation and analysis of historical market data and the aggregation of real-time courses in order to allow the trade. Similarly, setting up and testing mathematical models are not trivial.

A precondition for algorithmic trading is that there is already an order or trading strategy that exists. This is in contrast to auto trade and quota machines regarding an order that intelligently distributes to various markets. It is not a matter of using parameters that automatically checks quotes in the market to exploit.

The development of automated trading has been great. Current exchanges report a 50% share of trading volume being based on automated trading. At Forex, automated trading based increased in the last three years (2004-2006) by 400%. Traditional trading has only slightly increased. The EUREX assumes that currently about 20% - 30% of the total turnover is through automated trading. Within the EUREX it is estimated to have a growth rate of approximately 20% per year.

Automated trading, among other things, can be called Algo, Black Box, Gray Box and Trading Known.

The computer program for this purpose robot is called Rader.

Unlike the online forex market, the market maker acts only as a communication platform for linking matching buy and sell offers.  This service independently places into the system such offers and looks for trading.

Electronic trading systems are subject to certain restrictions. They are responsible for the stock market crash on 19 October 1987; the Black Monday. Their “If-then” statments of the algorithms ensured that more and more shares were repelled after prices had begun to fall - which ultimately led a large amount of panicked sales.

XMl Standarts.

MT4

Integrating forex signals

Technical Analysis Vs Fundamental Analysis

There are two basic strategies of investing in the Forex market; one based on technical analysis and one based on an analysis of fundamentals.

Technical Analysis
Technical analysis is based on the assumption that future rates of a particular currency or trends in the market can be be extracted from analyzing technical charts with various mathematical tools. This method is attractive since all factors that affect prices have already been taken into account and are reflected in the chart’s behavior. The fundamental analysis investor is essentially basing their investments on three fundamental assumptions:

1. The market movements are based on the integration of all factors that affect prices. This includes historical factors and future predictions.
2. The movement of prices directly reflects these past factors and assumptions of future events.
3. History repeats itself.

Someone who uses technical analysis looks at the high/low price of a currency, the price of its opening and closing, and the volume of its transactions. This investor does not overly examine the market. He/She does not invest based on a long-term evaluation of the market, but looks at what has happened to the currency in the recent past expecting that small fluctuations will continue just as they have done before.

Fundamental Analysis
Fundamental analysis takes into consideration the current situation in the country of the currency, including factors such as its internal economy, political situation etc. The economy of a country depends on a number of quantifiable measures such as its central bank rate of interest, the level of unemployment, tax policy, interest rates and inflation. An investor also can add to these quantifiable factors qualitative aspects such as the political situation or governmental stability that will also have an affect on the market.  Before investing based on these on these factors alone, it is important to bear in mind the hopes and expectations of market participants. Like any market, the value of a currency is largely based on perceptions and expectations, not only on its reality.

What is the Strategy for Me?
So you ask yourself what is the winning strategy? In reality most small and big investors in financial markets use a hybrid strategy. Nonetheless, they usually choose one type of analysis as their investing foundation depending on their personal characteristics. For example, if one has more trust in his technical abilities he/she will base their investments on technical analysis. On the other hand, if one prefers to act more on his/her intuition he/she will invest using fundamental analysis. However, a good trader will always compare their investing foundation against conclusions extracted by using the second strategy and will only execute trades after examining both analysis types.

Forex Trading Stratgies - What is Scalping?

There is more than one way to trade forex. Scalping is one of the most popular strategies among forex day traders because its fast pace short term trades that take from minutes to hours. For those in the forex market looking for a short term investment horizon, then the ’scalping’ strategy can be the best value for their money by exploiting small, fast changes in currencies rates.