Top Performers!
By Mike Conlon | March 3, 2010
Forex System Selector (FSS) Top Performers!
When considering any automated forex system providers, not only is it important to have good strategies, but also it is equally important to have a good platform. FSS has you covered on both fronts!
When investors select individual EAs to use, market conditions will determine how effective any one EA will be. If market conditions aren’t ideal, even the greatest strategies can have less-than-desired results.
And that’s the problem with the “one size fits all” approach. You wouldn’t take a sports car four-wheeling, would you? Nor would you want a golf cart on the Autobahn!
Not to worry, the FSS has you covered, as there are over 40 different systems that can excel in a variety of different market conditions. Now you have the power!
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Here’s a look at our top 5 performing systems from last month:
Are you skeptical like I am? Don’t take my word for it. Come see for yourself.
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Tags: account, blog, demo, demo account, forex, forex trading, forextrading, free, fx, idea, Il, invest, investor, market, pip, pips, rate, ssi
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More Problems for the Euro!
By Mike Conlon | January 19, 2010
The Euro (EUR) is down again today against the US dollar (USD) and looks ready to test support at 1.42. The problems in Greece may have a carry-over effect which will diminish the Euro as a viable alternative to the US dollar.
The problem in the Euro Zone is two-fold: either the other Euro nations come to Greece’s aid and bail them out which will in turn send the wrong message to the other PIIGS countries, or they allow Greece to exit and risk possible defaults as credit spreads widen because of the increased risk. Either way, the solution for the Euro is not easily rectified and how this plays out will be interesting to say the least.
In either event, I expect continued Euro weakness and if the Euro breaks psychological support at 1.42, then the next stop could be 1.382, back to its 50% retracement levels against the US dollar.
Because of the lack of viable alternatives to the Euro, the British pound (GBP) is seeing some strength today, up across the board against all other currencies.
Until clarity emerges from the Euro situation, the pound appears to be ready to strengthen against the Euro.
Let’s look at 2 quick charts: (click charts to enlarge)
The first chart is of EUR/USD and illustrates the different Fibonacci levels which can act as support or resistance within larger trends. When trends reverse, these levels an act as “magnets”– pushing the prices toward those levels. So if the problems with the Euro persist, then keep an eye on these levels.
The second chart is of EUR/GBP and it shows the current action of the Pound vs. the Euro. The pound provides a viable alternative to the Euro, so even though the UK has their own set of problems, the market may deem the Euro’s to be worse so I’m expecting continued pound strength against the Euro. I’m looking for a move down to .85 for this pair.
To learn more about how you can use Fibonacci numbers or other technical analysis to enhance your trading, be sure to check out our currency trading courses!
If you want to follow these trades live to see how this may play out, get a free, live demo account here!
Tags: account, blog, charts, course, currenc, currencies, currency, currency trading, demo, dollar, dow, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, interest, market, Mike Conlon, pair, rate, ssi, technical, trade, trades, trend, USD
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Yen Strength!
By Mike Conlon | November 25, 2009
As I’m getting ready to take off for Thanksgiving, was just taking a look through some different charts and noticed this one on dollar/yen (USD/JPY): (click chart to enlarge)
This 10-year chart of USD/JPY shows that the dollar is at its weakest against the yen in over 10 years! Remember that when this chart makes new “lows”, it actually means strength for Japanese yen. And you thought I was kidding about dollar weakness in my article below!
To learn more about how to use charts in your analysis, be sure to check out our currency trading courses!
To get started with a demo account, click here.
Happy Thanksgiving to All!
Tags: account, analysis, article, blog, charts, course, currenc, currency, currency trading, demo, demo account, dollar, forex, forextrading, fx, fxedu, Il, Japan, jpy, USD, Yen
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Risk On, Risk Off!
By Mike Conlon | November 17, 2009
Much like Mr. Miyagi’s advice to Daniel-san, today’s forex market is a case of wax-on, wax off. The lesson to be learned here is that the more things change, the more they stay the same. What do I mean by this? Well, it is rare that any investment just moves in one direction without experiencing some sort of pullback, sideways action, or just a brief pause.
The thing that makes the currency market so nice to trade is that the market tends to “trend” more than other markets such as the stock or futures markets. The reason for this is because the currency markets are driven by fundamental policies of major countries around the world, and it is a rare situation that these policies shift as frequently as other markets.
So one of the easiest ways to participate is to just find currencies with identifiable trends– and then trade with them! I’m sure you’ve hear the phrase ,”the trend is your friend”– and this couldn’t be more true than in the forex market.
So today the market is risk-off day, as the last few days were risk-on! As to be expected, there is US dollar (USD) and Japanese yen (JPY) strength, and Australian (AUD) and Canadian (CAD) dollar weakness. So if you’re a short-term trader, you can make a few bucks playing the counter-trend move on the smaller time-frames.
However, overall, the thing you should be looking at is the trend. Let’s take a look at the AUD/USD pair: (click chart to enlarge)
So even though, this pair is down (1.01%) today, the overall trend is up. So this is what we would call a buying opportunity. Now, does that mean that this pair is going to continue higher forever? No, of course not. But until there is a fundamental change in the economy, policy, etc. this represents a low-risk opportunity to get into the trade. Not to mention the daily interest you will make from this pair!
And as a trader, this is exactly what you should be looking to do: get into trades that are low risk with potentially high rewards.
To learn more about how to identify trends, be sure to check out our currency trading courses!
Think you know about technical analysis and want to test the market? Sign up for a free, real-time demo account here!
Tags: account, AUD, blog, cad, course, currenc, currencies, currency, currency trading, demo, dollar, dow, economy, forex, forextrading, fundamental, fx, fxedu, interest, invest, jpy, market, Mike Conlon, pair, time, trade, trader, trades, trend, USD, Yen
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Whoops! Shoulda Zigged When I Zagged!
By Mike Conlon | November 13, 2009
Let me start by saying thank you to MT4 for having issues that have prevented me from trading. While my logic was correct in that “something had to give”, my choice was wrong predicting yen strength and Aussie/Kiwi weakness.
The exact opposite occurred!
Here’s a quick chart of Kiwi/Yen (NZD/JPY):
(click to enlarge)
My logic this AM was that barring some sort of news for Aussie/Kiwi strength, I figured that someone “knew something” about Japanese yen and why it was moving. Looks like that guess was wrong and this trade almost certainly would have ended in losses.
Just goes to re-enforce what I preach (but don’t always practice LOL) all the time– trade what you see and not what you think you know!
Wanna get started in this market today? Click here for a real-time, demo or live account today!
Tags: account, Aussie, blog, demo, forex, forextrading, fx, fxedu, Japan, jpy, Kiwi, live, market, Mike Conlon, news, nzd, practice, ssi, time, trade, Yen
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FOMC Rate Decision at 2:15 EST!
By Mike Conlon | November 4, 2009
Well here comes Bernanke again, who seemingly has become more of an English professor than an economist. Why do I say that? Well, all ears today will be on whether or not Bernanke is committed to keeping interest rates low for an “extended period”.
So basically, the market is waiting to hear those 2 magic words: EXTENDED PERIOD.
What happens if we heart those words again? Consensus is that the stock market and commodities will rally at least in the short-term, as will the commodity currencies (AUD, NZD, CAD) and the US dollar will fall against all but the Japanese yen (JPY). In other words, the risk-taking trade that I talk about so much.
Should the language change, then expect the risk-aversion trade to be on.
Either way, there are some encouraging signs that the economy is stabilizing if not improving, so rate hikes like the ones seen in Australia and Israel may be coming in the not-so-distant future.
So far in this mornings action, it looks like traders aren’t expecting any change in the language and haven’t waited, as JPY and USD are the biggest losers so far this AM.
So if your day-trading, remember to be careful around this announcement as the action can get VERY volatile in the minutes preceding and following the announcement.
Good trading to all.
If you’d like to follow the action live in a free, real-time demo account, click here.
Tags: account, AUD, cad, commodities, commodity, currenc, currencies, demo, dollar, economy, free, fx, fxedu, Il, interest, interest rate, interest rates, Japan, jpy, live, market, Mike Conlon, nzd, stock, time, trade, trader, trading, USD, Yen
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GBP/AUD Trade Follow-Up!
By Mike Conlon | October 20, 2009
I just wanted to give readers a heads up on this trade that I called out last week. To give you a little background, I don’t typically like to say that I am doing this or that, but rather like to point out “possible trades” with “theoretical results.” Whether I am actually in the trade or not is immaterial for discussion purposes on this blog, as I don’t want to be seen as recommending specific trades, but rather as just trying to point out some tidbits that may be unconventional to some.
The reason I say this (and have disclaimers LOL) is because right after I posted this initial trade idea, I got a call from a good friend of mine who asked me in no uncertain terms, “Are you Nuts?” When I asked what he meant he gave me the usual response of don’t fight the trend, the fundamentals don’t add up, the Aussie is benefiting from the carry trade, BOE trying to keep GBP low through further threats of more QE, etc. And while I was aware of all of these factors before I picked this trade, something told me I should investigate this a little further.
Perhaps it was yesterdays sell-off of this pair that had me second guessing myself, but I realized that when dealing with trend-reversals rarely do they happen and then go strait up. So I decided to do some multi-time frame analysis.
Now you may be asking yourself, why don’t you use technical indicators? Well, I do, but do after the fact as confirmation to see if it matches up with what I’m seeing from the price action on the chart. What I’d rather do is begin looking at shorter time-frames to see if any discernible patterns are emerging.
Voila! I dropped down 1 time-frame (which for me is the 4-hour chart) and noticed what I thought to be a possible cup & handle formation. This is a very bullish pattern if it completes properly. Let’s look at the chart (click to enlarge):
Now you’ll have to forgive my awful chart-drawing skills, but as you can see, there is a very rudimentary c&h formation in progress. Should this pair breakout above the “brim” of the cup at around 1.785, then we could see some momentum to the upside.
To come up with a target price, I added the height of the cup to the breakout price of the handle and came up with roughly 500 pips. But because I am already in this trade (half position- I took some profits), I don’t need to take any action at this point. But if this should breakout above the handle, then one could play the break-out by buying just above that price level.
So while at this point the fundamentals still don’t add up for this trade, stranger things have happened. Its amazing to watch how the technicals sometimes predict fundamental action. Whether or not it will in this case is anyone’s guess. But that is what trading is about, not trying to guess where the market is going, but rather trying to increase your odds that a particular action may take place and having sufficient risk management in place if it doesn’t occur.
So keep an eye on this pair to see if this formation “activates”, and if so, listen to the news to see if anything material has taken place. Or you can just check back here… as I will be sure to update.
Good trading to all!
To learn about these possible set-ups, be sure to check out our forex trading courses!
Or get a live demo account to follow in real-time!
Tags: account, AUD, Aussie, blog, course, demo, dow, forex, forex trading, forextrading, fundamental, fx, fxedu, gbp, invest, live, market, Mike Conlon, momentum, news, pair, pip, pips, ssi, technical, time, trade, trades, trend
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Vexed by the Vix!
By Mike Conlon | October 14, 2009
Market Shows Little Fear. Time to Be Worried?
The CBOE Volatility Index, otherwise known as “the Vix”, is commonly referred to as the fear index as it measures the market’s expectation of volatility using S&P 500 index options. Generally speaking, the value of the Vix at any given moment is the amount that the market thinks the S&P 500 can rise or fall over the next 30 days.
While the Vix (VXX, VXZ) can measure uncertainty over market gains or losses, it is typically associated with bear markets, as investor psychology tends to worsen when the market is falling as opposed to rising. To see proof of this, look no further back to October of 2008 when the stock markets were collapsing during the height of the credit crisis. It was at that point that the Vix reached its highest levels by far, and justifiably so.
Since that time, the equities markets have rebounded from their March lows, and the Vix has returned “to earth” from its stratospheric levels of last October. But has it come back too far? Is this Vix telling us that we’ve now returned to reasonable levels of uncertainty, and that market conditions have stabilized? (click chart to enlarge)
There are two major reasons why the equity market should be more “fearful” than it is right now.
“Strong Dollar Policy”. In what has become somewhat of a running joke, the Fed’s stance that the U.S. has a strong dollar policy despite having record low interest rates, quantitative easing programs which probably should show negative interest rates were it possible, and ballooning deficits is the greatest threat to market stability.
This joke might actually be funny, were it not so serious. Increased calls from China, Russia, et al. for a new world reserve currency haven’t phased Bernanke in the least. Should you be worried when the equity markets don’t appear to be? Absolutely. Especially when you see headlines like this one.
One of the reasons why the equity markets seem to be shrugging off this news is because a weak dollar has been good for the equity and commodity markets. A quick look at this chart shows the inverse correlation between the US dollar (UUP) and the S&P 500 Index (SPY). (click chart to enlarge)
So as long as Bernanke keeps on printing dollars, the markets should continue to go up, right?
Wrong. Should the major holders of US dollars abroad (China)get Fed Up (pun intended) start dumping dollars and the dollar loses its status as the world’s reserve currency, tangible assets and physical goods and commodities will benefit in what would become a hyper-inflationary environment. Would you want to own shares in a US company, which trades in dollars? Me neither.
While this scenario is highly unlikely, the only way to prevent this from happening is for the Fed to raise interest rates. And while they are loathe to do so in the face of rising unemployment, pretty soon the tactic of jaw-boning of the dollar higher will no longer work and they will not be able to control the massive sell-off. This leads to the second scenario which should cause fear in the equity markets.
A rising interest rate environment. It is become apparent that Bernanke is running out of time and there are too many holes in the dam for him to plug. To think that he is going to be able to control inflation and dollar devaluation when he does decide it matters by raising interest rates 25 bp at a clip is naïve. Once the ball gets rolling, he will have to take drastic action and this could mean major rate hikes. Thus we would see a move out of equities and into bonds, which could also derail the gains in the stock market and could push us towards the dreaded ‘W’ market recovery.
Either way you slice it; these are two “doomsday” scenarios which could have major negative implications for the stock market. Investors and traders alike will have short memories this time and rush for the door at the first sign of panic, which will in turn help move the market lower.
This brings me back to the current level of the Vix, which is sitting somewhere around 22.5 at the time of this writing. If the high of the Vix reading was 89.53 last October, then shouldn’t it be higher considering all of the negative factors facing the market?
Yep I thought so too.
To learn more about the correlations between the US dollar and the equities markets, be sure to check out our currency trading courses.
Already know how the game works but want to practice in a live, consequence-free environment? Click here for a free demo account.
Tags: account, blog, commodities, currency, demo, dollar, dow, fed, forex, forextrading, fx, fxedu, index, interest, interest rate, interest rates, invest, market, Mike Conlon, pair, practice, ssi, time, trade, trader, trades, U.S., Yen
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Loonie Tunes!
By Mike Conlon | October 12, 2009
In a continuation of the move that started last week in the Canadian dollar (CAD), this morning it’s the top performer (USD/CAD -.81%), (CAD/JPY +1.24%). A report out of RBC Capital markets advised clients to sell the US dollar and buy the Loonie as the analyst is forecasting that the Canadian government will raise rates sooner and more aggressively than the US.
Considering the unemployment figures they reported last week, this makes sense. However, I still have a concern about whether or not the Fed is going to be forced to take action with regard to it’s ahem “strong dollar policy”- that is the debasement of USD. Should Central Banks start dumping dollars, this could set off a nasty chain of events.
Obama is the “populist” President (see winning Nobel Peace Prize); I wonder at what point he will have to change tactics to prevent a total US dollar collapse.
While this appears to be “the trade”, when everyone and their brother screams sell dollars my natural contrarian disposition is to do the opposite. However, I don’t want to fight the trend (which is clearly down for USD) but I will be keeping close watch for the first signs of a reversal.
So my short-term outlook is dollar negative, but my longer-term thesis is that I’m looking for buying opportunities and signs that Fed may have to step in to support the dollar. Something’s gotta give here, I just hope its not support that send the dollar into free-fall!
To learn more about how government actions affect the various markets, check out our currency courses.
Or sign up for a free demo account if you want to practice your trading and see how the currency market works real-time.
And if you acted responsibly and want to hold on to your life savings and protect it from devaluation, get started with a live account today!
Tags: account, bank, cad, central bank, course, currenc, currency, currency market, demo, demo account, dollar, dow, fed, free, fx, fxedu, jpy, live, Mike Conlon, practice, rate, short, ssi, time, trade, trading, trend, unemployment, USD
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BOE Holds Steady, Pound Rises!
By Mike Conlon | October 8, 2009
The Bank of England held both interest rates and its bond purchase (quantitative easing) program steady yesterday, prompting the pound (GBP) to its highest level against the US dollar (USD) in the last month, showing signs that their recovery may be underway.
There was some fear that the BOE would have to take further action, as Mervyn King had called for greater measures back in August, which was defeated.
With Australia leading the way and raising rates this week, it may be difficult for Bernanke and the Fed to maintain its “overkill” policy of ridiculously low rates and Q.E. Meanwhile, the US dollar continues to weaken, down across the board most notably weak against the Aussie ( AUD/USD +1.47%) which comes as no surprise to anyone.
It looks like the USD carry trade is in full effect, as a strong overnight move pushed this pair through .90 level.
Here’s a 3 month chart of the AUD/USD– I’m seeing LOTS of green– (click to enlarge)
I’m starting to get the “feeling” that the Fed is going to act soon. While the economy may be improving ever so slightly, we really need to see that the Fed believes we are recovering as well. A token rate-hike would actually be seen as a sign that the economy is on the mend, which could inspire confidence in all markets. While there may be an initial reaction that is negative, in the long run this would be the best course of action. I just hope the Fed is not too short-sighted to see it.
So from here on out, expect the dollar to weaken unless the Fed does something to halt its decline. It may be coming EXTREMELY soon.
To learn more about how you can protect your wealth from the Fed’s devaluing of our currency, check out our currency trading courses here.
To see how this market works first-hand, get a free, real-time demo account here.
Tags: account, AUD, Aussie, blog, course, currency, currency trading, demo, dollar, dow, economy, fed, forex, forextrading, fx, fxedu, gbp, interest, interest rate, interest rates, lot, market, Mike Conlon, pair, ssi, time, trade, USD, wealth
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