GBP Still Strong!
By Mike Conlon | October 16, 2009
The British pound is still strong today, showing a little bit of follow through from yesterdays gains. Yesterday I called out a trade in GBP/AUD as a low risk opportunity based on some technical factors, despite the fact that the trade was “counter-trend”. Let’s see how its doing:
(click charts to enlarge)
As you can see, this trade is up about 169 pips from yesterdays entry price (1.7828-1.7659=169 pips). While you’re not going to be able to retire just yet LOL, this high probabilty set-up is showing some initial gains and looks promising going forward. To give you an idea of what this means, with just one lot, you would have made $169 if you were in this trade.
And the cost to get into this trade? Just $50 in margin. So in theory, you put up $50 to make $169. That’s pretty good coin! Now imagine what happens when you use the multiplier effect of leverage!
While its never a good idea to over-leverage your account, taking high probability trade set-ups can be extremely profitable if you know what you’re doing!
To learn about how to spot trade set-ups such as these, check out our currency trading courses here.
Want to test my calls in real time with a practice account of your own? Get started here.
Tags: account, AUD, blog, British, charts, course, currenc, currency, currency trading, forex, forextrading, fx, fxedu, gbp, idea, Il, lot, Mike Conlon, pip, pips, pound, practice, practice account, real time, spot, technical, tip, trade, trend
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Watch out for the U.K. rate decision this morning @ 7am EST!
By Sean Hyman | July 9, 2009
Rates are expected to be at .50%. Keep an eye out for any commentary about the BOE’s rate decision and how the market reacts to it. It comes out at 7am EST. Also look to see how the CAD Housing Starts come out this morning. Those are the two events to watch this morning. CAD Housing Starts come out at 8:15am EST today.
The yen was very strong yesterday as stocks fell. The yen is the number one defensive currency right now and the dollar is the “2nd best” defensive currency right now. This can be seen when you directly compare the USD and JPY against each other in the USD/JPY pair. You’ll notice that it has still gone down even though the dollar and yen have both risen against most every pair. Yet against each other, the yen has remained the stronger of the two when the market gets defensive. So shorting “yen pairs” is typically better right now when the stock market tanks and currencies go on the defensive.
Tags: blog, cad, currencies, currency, decision, dollar, dow, fxedu, Hyman, jpy, market, mywealth, pair, pairs, rate, rate decision, Sean, Sean Hyman, short, stock, stocks, tip, USD, Yen
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Why Currencies are in “Pairs”!
By Sean Hyman | July 7, 2009
You know, when I was in the stock market, you would just see one thing being traded and quoted (ex. IBM, Google, GE, etc.).
However, when I came over to the currency market, I noticed that currencies were in “pairs” rather than just individually quoted and I always wondered why they were that way.
I came to learn that really, everything is a paired trade when you think about it. For instance, when you buy Google’s stock, it’s really like GOOG/USD. Why? Because you’re betting that Google will go up much more than just holding dollars or depositing your dollars in a savings account and earning the meager interest that it earns.
So if you felt that Google’s stock would perform better than your dollars in a savings account, then you’re exchanging your dollars for Google’s stock since you think it would go up more over time than your dollars and the outright interest that they earn.
In the same way, you value a currency by comparing it to what you think another currency is worth. After all, the dollar could perform one way vs. the euro (EUR/USD) and a totally other way vs. the Japanese yen (USD/JPY).
It’s Simple: Put your Money into the “Best Currency vs. the Worst Currency”!
It’s entirely possible that the dollar could lose value when compared to the euro but gain value when compared to the yen, for instance.
So the dollar’s strength is measured by its strength against another currency….OR…I could say it this way. A currency’s strength is determined by how much of another currency that it could buy at the time. If it can buy more today than it could yesterday, then it’s stronger. If not, it’s weaker.
Therefore, in the “pairing game”, what you want to do is buy the absolutely strongest currency and pair it against the poorest performing currency. As I often say, “If I could rig a fight, I’d want to put the strongest fighter vs. the weakest fighter and place my money on the stronger fighter”. Well, that’s exactly what we’re doing in currencies.
Some traders determine the “strongest fighter” by looking to the charts to see how well a currency is performing (trending) vs. other major currencies. Yet other traders will look to see which country has the best fundamentals overall and which has the poorest.
Either way you determine this, it’s important that you do so. You need to have an opinion. Not only that, you need to have a “strong opinion” on the pair you choose. That way, it will help to keep you in the trade when the pair goes bobbing all around and your account equity temporarily jumps around all over the place.
Find out which “Currency Camp” describes you!
Right now, there are “two camps” out there battling it out. One is the camp that thinks that the deflation out there still will carry on and that the central banks and governments of the world can’t possibly pull us out of it anytime soon. Those traders are the ones that feel their “strongest currencies” are the dollar and yen vs. most other foreign currencies (especially higher yielding currencies that they feel have the most to move down in interest rates like
In other words, they’d be short the AUD/USD, AUD/JPY, NZD/USD and NZD/JPY pairs since they feel that the deflation will draw people to the dollar and yen and away from the “high yielders”.
The “other camp” is the one that thinks inflation is returning and that the global economy is on the mend. They feel that we are past the trough of the global recession and we’re working our way out back into expansionary/inflationary mode and away from deflation and an economic contraction.
These traders are buying the countries with the highest inflation rates (again, like
I say…You can count on governments to “print their way” out of a global recession causing inflation!
It will be a while before we see which side wins. Personally, the way I see the fundamental data tilting, it’s all tilting towards the latter crowd rather than the former crowd.
However, either way you feel, if you have an opinion about where the world is headed economically (inflationary or deflationary), then you have an opinion on which currency pairs to look towards.
Never pair “medium strength” players together though. Always, “rig the fight” by putting your strongest candidate against what you feel is your “worst candidate”. By doing this, you will have a pair or two that you feel the most strongly about and you will find that you hold up better when your P&L is bouncing around all over the place.
Tags: account, AUD, blog, currencies, currency, currency market, dollar, dow, EUR, Euro, fundamental, fx, gbp, Hyman, interest, interest rate, interest rates, jpy, money, nzd, pair, pairs, recession, Sean, Sean Hyman, ssi, tip, trade, trader, trend, USD, Yen
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An RSI trick to get you more signals when the traditional settings just won’t do it!
By Sean Hyman | July 3, 2009
Many times, in stronger trends…the traditional RSI setting just won’t cut it (14 periods). It won’t even come close to the overbought/oversold levels of 30/70.
[B]However, if you tweak your RSI settings to where they are set to 9 periods…then you will find that the RSI gets wider swings which will trigger more RSI signals at or very close to the 30/70 levels when the 14 period didn’t even come close.[/B]
See my chart and you’ll see what I mean. Copy/Paste this link into a new browser and you’ll be able to see the chart. http://www.forextradingblog.com/wp-content/uploads/2009/07/rsi-14-9.JPG
[B]Note:[/B] In downtrends, it’s best to ONLY take sell signals for your entries. In an uptrend, it’s best to ONLY take buy signals for your entry signals.
I’ve circled many of the signals below that triggered on the 9 period RSI that didn’t trigger on the 14 period RSI setting. This would allow for a lot more potential trading opportunities on this chart with that one small “tweak”.
Try it out, mainly when your 14 period RSI isn’t generating enough signals often enough. See if you like it.
Sean Hyman
Tags: currency, dow, downtrend, forex, Hyman, lot, RSI, Sean, Sean Hyman, setting, time, tip, trading, trick, uptrend
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Medium Term Fundamental Trade: A Case for the Euro!
By Sean Hyman | April 27, 2009
I want to show you how to crawl into the mind of a fundamental trade. As an example, I’d like to show you a recent example of how I go about formulating a longer term fundamental view of the euro (EUR/USD). So let’s take a look below…
For the first time in a long time, I see the start of a fundamental shift for the Euro Zone. It’s not just one thing but actually there are six pieces to this pie as I see it. Let’s take a look at them for a moment.
The talk among the European central bankers is starting to change. For instance, over this past weekend, the ECB’s Wellink is talking about a “floor for the benchmark interest rate”. Others have stated that it may not be a wise move to take interest rates lower.
So for the first time in a while we’re seeing the European central bank members talking about halting the interest rate decreases. That’s a first step in halting the fall of the euro.
Also over this past weekend, the Group of Seven (G-7) nations got together and have released a statement that said, “Economic activity should begin to recover later this year”. Then they went on to say that, “Recent data suggests that the pace of decline in our economies has slowed and some signs of stabilization are emerging”.
This will give investors a sigh of relief and it will encourage them to “come back out of hiding” from within the dollar and yen and to inch back into beaten down currencies that have a huge chance for appreciation. The first place money usually runs to is the euro (nicknamed the anti-dollar). So if money leaves the dollar (and I think it is), then the first stop is the euro.
Now, the next changes that I’ve begun to notice are the recent changes in the sentiment indicators for the Euro Zone (particularly
For instance, the German ZEW economic sentiment indicator came in at -3.5 two months ago but was expected to come in at +1.8. However, it blew out those expectations by coming in at +13.
Another sentiment indicator complimented the ZEW. It’s called the German Ifo report and it is a survey that has to do with the business climate. Two months ago, it came in at 82.2. This past month, it was expected to inch fractionally higher to 82.4. Yet it blew by those expectations and came in at 83.7.
So with the Euro Zone being in such disarray and the sentiment numbers still coming in more bullish than expected, it becomes a huge vote of confidence going forward for the euro.
Then we come to the final pieces of the puzzle which are the recent improvements in both the manufacturing and services numbers for
What does the stabilization of commodities have to do with the euro? The EUR/USD pair is predominately driven by “dollar flows”. So as the dollar falls, the EUR/USD rises and vice versa. As commodities rise, the dollar tends to become weighed down. As commodities fall, it’s like the ankle weights are being taken off of it and it propels higher. So if commodities have completed their fall and they’ve based sideways, it’s only a matter of time before they turn upward and head higher once again. As that happens, the dollar will plummet and the euro will be one of the biggest beneficiaries of the slide off in the dollar.
Therefore, for these six reasons mentioned above, I believe that the euro has put in a floor around the 1.25 level to the dollar and that we will see it start to head higher in the months ahead.
For many, this will be a “hard pill to swallow”. After all, I hardly know of anyone out there talking about the euro going higher in the months ahead. Almost everyone is betting on the rise of the dollar in the months ahead because of how well it has done in the past year. However, the dynamics that blessed the dollar with a good year last year are starting to change….and my readers are tipped off to it ahead of the masses.
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Tags: bank, blog, central bank, commodities, currencies, data, dollar, dow, economic, EUR, Euro, Europe, falls, forex, forextrading, fundamental, index, interest, interest rate, interest rates, invest, investor, lower, money, mywealth, pair, Sean Hyman, time, tip, trade, USD, Yen, You Tube
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Swing Trade Idea produces 100+ pips!
By Sean Hyman | March 31, 2009
In times like this, when the swing trade works out so well, so fast….you may want to take part of your trade off of the table by closing 1/2 of your lots and moving your stop to breakeven. If you’re happy with the 115-125 pip gains thus far, then you could pull the trade off entirely. If you were long EUR/USD, you also collected a few pennies on your dresser to boot.
These pairs continue to rally, but are overbought in the very short term.
Sean Hyman
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Tags: CHF, EUR, fxedu, idea, index, lot, money, mywealth, pair, pip, Sean Hyman, time, tip, trade, USD, wealth, You Tube
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For the Rest of Your Investments…
By Sean Hyman | March 27, 2009
Tags: blog, ETF, idea, invest, money, mutual fund, Sean Hyman, stock, strategy, technique, time, tip, trade, trend, video, wealth, You Tube
Topics: What To Look At In The Market | 4 Comments »
Short Term Trading Thoughts
By Sean Hyman | March 26, 2009
The thought behind looking to daily percentage gainers is that you are spotting where the momentum is going. You are jumping on a train that is already in motion and where the intraday money flow is heading presently.
Also, you are trading WITH the intraday trend and not against it. Instead of trying to call a top or a bottom, which is futile…instead, you’re hopping on board, knowing that the likelihood for the trend to continue (more times than not) is of higher odds than you getting in at the tip top of an intraday uptrend or the very bottom of an intraday downtrend.
This increases your odds and if you couple this with a good risk to reward ratio, you stand a much better chance of success.
Remember that “pros” don’t “bet the farm” but rather they put no more than 1-5% of their capital at risk between their entry and their stop level (times the number of lots they have on). For, this is your true risk.
This means that short term, intraday trading requires a bit more capital because you are usually putting on larger positions for shorter moves AND yet, you still should only risk that small percentage of your account.
Sean Hyman
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Tags: account, dow, downtrend, index, momentum, money, mywealth, Sean Hyman, spot, tip, trading, uptrend, You Tube
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Long Term Breakout Trades up 500-1,000 pips within weeks!
By Sean Hyman | March 23, 2009
Update on the long term breakout trades
Back on March 19th, I tipped you off to the USD/ZAR breakout out to the downside. Today it sits about 1,000 pips below the breakout point. This trade still may have much more to go.
You should have done very well on that trade. Here’s the link to the original story below.
The next long term breakouts were on these yen crosses: EUR/JPY, NZD/JPY. Both of these are up about 500-600 pips since the article on March 11th. See the original article here.
Sean Hyman
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Tags: article, blog, breakout, currency, dow, EUR, forex, forextrading, index, jpy, market, mywealth, nzd, pips, Sean Hyman, tip, trade, trades, update, USD, Yen, You Tube
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Don’t Forget: Existing Home Sales Come out at 10am EST Today!
By Sean Hyman | March 23, 2009
Existing Home Sales out at 10am EST!
Last time there were 4.49 million homes sold. The expectations for today’s reading is for 4.45 million homes to be sold. See where the numbers come in at on: http://www.forexfactory.com or http://www.dailyfx.com .
This housing number could greatly affect the U.S. dollar.
Also, Tim Geithner is speaking right now too. So be watching for what he says. A lot of times, you can pick up what he’s saying on marketwatch.com under their headlines section: http://www.marketwatch.com/search/default.aspx?mktwd=0&otherd=0&query=1&s0=&i0=5&tab=0&d=954219924.954211799&sd=633733959600000000&ed=633733924200000000&close=&y=83&__EVENTTARGET=SearchButton&__EVENTARGUMENT=&__LASTFOCUS=&ft=0&__VIEWSTATE=&adv=1&subi=5&_ctl84=Enter+Symbol(s)+or+Keyword(s)&SearchType=search&value=U.S+Treasury&mode=Keyword?=RealTime+Headlines&ex=&rpp=50&cs=on&emm=mm&edd=dd&eyy=yyyy
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Tags: 2009, bad debt, dailyfx, data, dollar, economic, existing, forex, fxedu, Geithner, home, idea, index, invest, market, money, mywealth, sales, Sean Hyman, tip, trade, Treasury, U.S., wealth, You Tube
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