Heads I win….and tails I win too.
By Tom Long | March 5, 2008
Because I get to work with new traders in our FX Power Courses, I get a pretty good idea of why new traders lose money. One of the reasons is that these traders do not have an idea of what they want to achieve. Sure, everybody wants to make money, but we need to have realistic expectations to get to that level. I like to compare trading to flipping a coin. If I paid you $1 every time the coin landed on tails and you paid me $1 every time the coin landed on heads. We could flip all day and night and most likely break even after every 100 flips. So how is this information useful to a trader? I like to recommend to new traders that they think in terms of winning half of their trades. If you trade with the trend and only take solid setups, this can be done. But that is only half of the battle. If we win $1 when we are right and lose $1 when we are wrong, how can we make money? The answer is that we either have to win more often or win more when we are right. The idea then is to not win $1 when we are right, but to win $2 and still only lose $1 when we are wrong. That is our 1:2 risk:reward ratio we talk about in trading. If you are risking 50 pips on the trade, you should look for twice that in profit, which is 100 pips. Now we can look at that coin toss differently. If I paid you $1 every time the coin landed on tails, but you had to pay me $2 every time the coin landed on heads, I would want to flip that coin 24 hours a day for the rest of my life. Even if I lost five flips in a row, I would still want to bet on that next flip because I know that after a series of 100 flips, I would still win about half and lose about half of the time. So no matter what happens on the next flip, I would consider myself a winner because after a series of flips, I would most likely be profitable. Heads I win…and tails I win too.
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DailyFX Forex Radio - Bernanke, Fisher Try To Provide The Dollar Support, The Global Calendar Tallies To Rate Changes
By DailyFX Radio | March 4, 2008
Listen to our Evening DailyFX Forex Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioPM030408.mp3
Key Points
· Mixed Fed commentary leaves the dollar lacking direction.
· RBA Hikes 25 bps, BoC Cuts 50 bps, what is the RBNZ expected to do?
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DailyFX Forex Radio - Dollar Tumbles As Market Forecasting 75bp Fed Cut, RBA And BoC Decisions Up Next
By DailyFX Radio | March 3, 2008
Listen to our Evening DailyFX Forex Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioPM030308.mp3
Key Points
· US factory activity and construction spending plunge, Fed Funds pricing in a 75 bp rate cut this month.
· Reserve Bank of Australia and Bank of Canada set to change their benchmark rates over the coming 12 hours.
Tell us what you think of our podcast and send us an e-mail at research@dailyfx.com
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DailyFX Forex Radio - Euro Surges to Record Highs on Divergent Fed and ECB Rhetoric , What Happens Next?
By DailyFX Radio | February 27, 2008
Listen to our Evening DailyFX Forex Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioPM022708.mp3
Key Points
· Federal Reserve rhetoric sends the euro to record-highs against the US dollar
· Fed Chairman Ben Bernanke signals further US rate cuts in the pipeline
Tell us what you think of our podcast and send us an e-mail at research@dailyfx.com
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DailyFX Forex Radio - Euro Hits Fresh Record High; Will Bernanke Revive the Dollar or Drive It Lower?
By DailyFX Radio | February 27, 2008
Click Link to Listen to our Morning DailyFX Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioAM022708.mp3
Fundamental Headlines
• GBPUSD – U.K. GDP rose 0.6% in the fourth quarter of 2007, which was the slowest pace in more than a year. Growth was weighed down by slower consumer spending which printed at 0.2% percent, a third of the 0.6% forecasted. Tight credit markets and a housing downturn are pulling down the economy and recent BoE rate cuts may not be enough to soften the fall. However, the BoE is reluctant to cut further as record energy prices are stoking inflation concerns. Discuss the topic and your trade ideas in the GBP/USD Forum.
• EURUSD – German import prices increased more than expected in January printing 0.8% versus an expected 0.3%, pushing the year-over year rate to 5.2%-the highest since August 2006. The increase is not entirely surprising as rising oil prices have inflated costs worldwide. In a separate report the GfK consumer confidence survey unexpectedly held steady as income expectations improved., but economic outlook and willingness to buy declined. The overall news will not comfort the ECB as inflationary pressures are increasing and preventing them from cutting rates in the near term. Discuss the topic and your trade ideas in the EUR/USD Forum.
Podcast by Terri Belkas, Currency Analyst, DailyFX.com, tbelkas@dailyfx.com
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Get in while the getting is good.
By Tom Long | February 26, 2008
In our FX Power Courses, we always ask new traders to tell us about any potential trades they see setting up in the market. An example would be when a currency pair, being in a strong uptrend, pulls back down to a good support level, offering a solid buying opportunity. But too often when this happens, new traders will say that they want “to see what happens next” instead of jumping into the trade. Naturally, we ask new traders to place these trades in a demo account, so this hesitation is not about risk. This is about new traders who have little confidence in their trading approach. But practicing is about identifying a good trading opportunity and aggressively getting into that trade when the setup is complete. Don’t worry about how the trade will play out, as we are practicing how to trade, not how to be a spectator. As the market pulls back to a support level, it is offering us a good place to buy and to keep our risk reasonable. Since we would be placing our initial protective stop below that support level, the closer we buy to support, the closer our stop is to our entry price which means less risk. So we want to buy as the market is testing that level instead of hesitating. If the market rallies off of that support as you suspected and then you decide to get into the trade, your risk will be larger. So practice identifying a trading opportunity and then get into that trade as it sets up. Waiting to see what happens next is much more educational when you have a trade open, even a practice trade. So don’t hesitate getting in when the getting is good.
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DailyFX Forex Radio - US Dollar Softens Ahead of PPI, Consumer Confidence; New Zealand Dollar Hits 26-Year High
By DailyFX Radio | February 26, 2008
Click Link to Listen to our Morning DailyFX Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioAM022608.mp3
• USDCHF – The gauge for Swiss consumption improved in January spurred by a twenty percent increase in car sales. The index rose to 2.19 from a revised 2.18 in December, remaining above its long-term average of 1.5 for the 23rd month, and the highest reading in the January in seven years. A strong labor market and rising wages are propelling the economy and fueling optimism. The indicator which is based on car sales, retail sales and overnight hotel stays shows that consumer spending should remain strong throughout the remainder of the year. For more news and resources, visit the Swiss Franc Currency Room.
• EURUSD – The German IFO survey of business confidence unexpectedly increased for the second straight month, increasing to 104.1 rising from a reading of 103.4 in January. Europe’s largest economy is showing resiliency despite a U.S. slowdown, record oil prices and a strong Euro. However, the gauge for expectations declined to 98.2 from 98.7, showing that there still remains downside risks to the economy . This data will strengthen the ECB’s current hawkish stance and increase expectations that they will not cut rates until the latter part of the year. Discuss the topic and your trade ideas in the EUR/USD Forum.
Podcast by Terri Belkas, Currency Analyst, DailyFX.com, tbelkas@dailyfx.com
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DailyFX Forex Radio - US Dollar Consolidates Losses; Are US Equities Poised To Rebound?
By DailyFX Radio | February 25, 2008
Click Link to Listen to our Morning DailyFX Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioAM022508.mp3
Fundamental Headlines
• GBPUSD – The U.K. housing market is continuing to show signs of weakness as prices declined for the fourth straight month according to Hometrak Ltd. The British Bankers’ Association reported a 31% decline in mortgage approvals from a year earlier, as banks have made it harder for buyers to get mortgages. However, approvals did slightly rebound in January to 44,288 from December’s record lows of 42,343, signaling that the recent BoE rate cuts may be beginning to impact the market. Housing troubles will start to weigh on consumer spending and the overall economy, as a rebound is still in the distant future. Discuss the topic and your trade ideas in the GBP/USD Forum.
• EURUSD – Despite Italian retail sales increasing 0.1% in the month of December, year-over-year sales declined 0.6 percent. The monthly surprise couldn’t put a positive spin on the data as experts were expecting a 0.2% increase in the yearly number. The Italian economy has consistently lagged Eurozone brethren, as a strong Euro has weigh on it’s exports. As data from the Eurozone continues to point to a regional slowdown-tomorrow’s German IFO is expected to show confidence declining-will ECB President Jean Claude Trichet move on his hawkish stance. We may get some insight into this today as he speaks in Frankfurt. Will the ECB start moving toward a rate cut? Discuss the topic and your trade ideas in the EUR/USD Forum.
Podcast by Terri Belkas, Currency Analyst, DailyFX.com, tbelkas@dailyfx.com
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DailyFX Forex Radio - US Dollar Remains Weak, Carry Trades Heavy As Asian, European Stock Markets Falter
By DailyFX Radio | February 22, 2008
Click Link to Listen to our Morning DailyFX Radio PodCast: http://media.dailyfx.com/podcasts/FXRadioAM022208.mp3
• USDJPY – Japanese supermarket sales declined 1.7% in January, falling for the 25th consecutive month. The figures based on 78 companies saw declines in all the components with household goods and clothing, the second and third largest categories, falling -3.6% and -4.2% respectively. A weakening U.S. economy and slowing domestic demand has made the Japanese economy dependent on China to stimulate growth. Japanese officials will have to watch and see how the affects of the U.S. slowdown is impacting Chinese exports, as it will ultimately impact its demand for Japanese goods. For more news and resources, visit the new Japanese Yen Currency Room.
• EURUSD – Eurozone PMI services printed higher than expected at 52.3 versus 51.0, with gains in employment and new orders. Meanwhile, manufacturing softened in line with expectations to 52.3 from 52.8 in January. The stronger than expected services number will strengthen the ECB’s hawkish stance and allow them to keep rates unchanged for the time being. However, the weakening manufacturing sector will be an area of concern and may force them to consider rate cuts in the latter part of the year. Discuss the topic and your trade ideas in the EUR/USD Forum.
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Tell us what you think about the PodCasts: tbelkas@dailyfx.com
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DailyFX Forex Radio - FOMC Minutes Send Dollar For A Loop, BoE Minutes Surprisingly Dovish
By DailyFX Radio | February 20, 2008
Listen to our Evening DailyFX Forex Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioPM022008.mp3
Key Points
· FOMC lowers its growth and employment outlook, though some officials see the potential for ‘rapid reversal’ in rates
· Surprises from the BoE minutes weigh on the the pound, RBA’s statement boosts expectations for further hikes
Tell us what you think of our podcast and send us an e-mail at research@dailyfx.com
To chat with us and other traders about currency trading, visit our very popular Forex Forum
Want to hear our PodCasts daily? Subscribe to them for free on iTunes
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