EUR/USD And The Ongoing Crisis Of Debt

Events in Europe continue to push beyond the control of European policy-makers.


The Greek PM, Papandreou, has won the crucial confidence vote.  He will now aim to seek the coalition govt. If this goes ahead the head could be be Evangelos Venizelos, he is the present Finance Minister. 


A much bigger issue than the Greek one is Italy.  The EUR/USD currency pair is holding its ground but many forecasters are predicting a drop going forward.  This is counter to the latest COT report from the CFTC though which shows large specs cutting down their bearish EUR bets..

What is Quantitative easing anyway?

Quantitative easing (QE) is the unconventional financial policy utilized by CBs (central banks) to stimulate the nation's economic system any time standard financial policy is becoming unproductive. A central bank tends to buy financial assets to input a pre-determined volume of money in to the financial system. This is often distinguished in the more usual policy of purchasing or selling financial assets to maintain market rates of interest in a chosen target value.

A central bank implements QE by buying financial assets coming from finance institutions and other private area companies with newly produced money. This course of action boosts the excess supplies from the banks, as well as boosts the expenses from the financial assets bought, which reduces their very own yield.

Expansionary financial policy usually necessitates the central bank acquiring short-term government bonds to be able to decrease short-term market rates of interest (making use of a mix of lending facilities together with open market place methods). Nevertheless, anytime short-term rates of interest are generally located at, or near to, zero, regular economic policy can no more lower rates of interest. Quantitative easing will then be implemented by the economic government bodies to help activate the economy, by buying assets of lengthier maturation as compared with other government bonds and for that reason cutting down longer-term rates of interest additionally on the yield curve.

Sounds pretty complicated doesn't it?

Forex books to learn from

Wishful traders frequently enquire whether or not it is actually achievable to attain a bread and butter trading the Forex markets. The simple reply is yes. The more interminable reply is, sure you can make a living trading the Forex market but you've to systematically do numerous matters in good order. Virtually all traders merely do not yet have the essential trading accomplishment, discipline, forbearance, or honest attitude to come through long-term in the FX markets.  

All the same, this doesn't mean that it is out of the question. You plainly have to acquire what you need to do to convert to a systematically gainful trader, and so do it.

A good education is required to take trading to the highest level.  High quality forex books are rare but some forex ebook have the content required to learn on a demo account and take it from there.

Forex Trade Management

Forex Trade management is potentially the most significant element of achieving in the Forex markets.  

Forex Trade management could possibly make the difference between winning and losing in the long term.

At one time after you ascertain a good Forex trading method - you have to know how to manage your trades after placing them. To the highest degree traders often simply brush aside this all-important nibble of the Forex trading cake - to their detriment.  Through brushing aside trade management or through merely not following it it's entirely a subject of time prior to the trader hitting losses

A complete trade trigger entry could very easy be turning a loss if you don't manage it the right way. 

Incorrect emotional conclusions.  These can cause losses.  Do you discover and enter a fresh perspective simply since your latest trade is making a profit? Do you move your stop losses after entering?

Once you embark on a trade, if you're going against the trading plan the long term result may not be ideal. 

Forex Trade Management is worthy of investigation.

Trade Management

Stochastic Oscillator

Formulated by George Lane in the later end of the 50s, the Stochastic Oscillator is a technical momentum indicator that demonstrates the emplacement of the close in relation to the high-low array across a fixed amount of periods. 

Analysts say that the stochastics follows the acceleration (or opposite) and the momentum of price. The momentum sometimes changes direction ahead of the price. Therefore , the bullish and bearish deviations of the Stochastic Oscillator could be applied to forecast reversals. 

This comprised the foremost signal that Lane distinguished. Lane likewise employed this oscillator to describe bull and bear set-ups to look for a later reversal. Since the Stochastic Oscillator is range bound, is likewise of value for distinguishing overbought and oversold areas.

The forex Market Hours

The forex market is open for trading 24 hours a day and five and a half days per week.

This does not mean that you should be trading the market all the time of the day! Liquidity is low at some times of the day and many day traders understand that there is potential to trade better if sticking with times of deep liquidity.

Here are the summer trading hours:

Time Zone	EDT	GMT
Australia Open Australia Close	6:00 PM 3:00 AM	10:00 PM 7:00 AM
Asia Open Asia Close	7:00 PM 4:00 AM	11:00 PM 8:00 AM
UK Open UK Close	3:00 AM 12:00 PM	7:00 AM 4:00 PM
US Open US Close	8:00 AM 5:00 PM	12:00 PM 9:00 PM

RSI and MACD - Two Popular Indicators

MACD 

The MACD is among the most popular indicators. It constitutes and is used as a trend following indicator usually.  Some traders like using it use it to spot divergence,  it is hard to use in choppy markets. 

Developed by Gerald Appel in the late seventies, Moving Average Convergence-Divergence (MACD) is one of the simplest and common indicators used by traders.

RSI

RSI is equally common and well used indicator used by range traders.

It is intended to chart the existing and historic strength and weakness of an instrument by working on on the closing prices of a recent trading period.

Why do traders use indicators?

We will look at Oscillators as an example.

Oscillators comprise a section of indicators that enclose the myriad array of price action into a new reading after calculations have been added.

The initial development was probably attributable to the trouble of distinguishing a peak or bottom in the markets.

Whilst we might have intellectual conceptions of what is a peak or bottom in a normal day's trading, the explosive and helter-skelter nature of trading entails that any peak could well be replaced by another one.  That's the nature of the markets. Fans of indicators believe that prices without confirmation can be a poor indicator in calling tops and bottoms. traders who use oscillators believe they help work around this challenge by distinguishing levels that give a  clue as  to potential highs or lows.a

Fear and greed move the markets

What constitutes price action trading?

Price action trading comprises the process of building all  trading choices from a simple price chart. This entails no indicators with the  inherent latency they bring (they can be used as confluence but not a primary decision factor when trading this way).

Any market we analyse will bring forth information around the changes in price over a given period of time in the anatomy of technical charts is how we trade from this information..  Technical rraders believe that  price action charts display all factors of any market for any given timeframe.

Price charts show the mass market psychology in action and the feelings regarding this instrument of all traders who are trading it.

Any economical information that contributes to price motion on the market is first converted into a thought in the mind of traders and speculators. 

Traders ask these questions and more:

• Could this information affect the market?
• What happens if I miss the move?
• What happens if I lose?

Fear and greed move the markets.  This feeling is then converted into an impulse from the trader to enter trades thru price action analysis and the cycle continues.  There are of course many other factors contributing but it is the way these are interpreted by humans that drives the markets.

Price action setups include some of the following:

• Pin bar/hammer/hanging man
• Outside bar or engulfing bar
• Inside day/inside bar
• Abandoned Baby
• Morning Doji Star
• Three Inside Up
• Three White Soldiers
• Doji Star
• Dragonfly Doji
• Morning Star
• Piercing Line

And the list goes on......

So how is price action used on the forex market?

Price action trading on forex is popular due to the liquidity on offer and leverage available to traders.  People new to the market should study hard and learn how to demo trade a few simple but effective price action patterns like the one's listed above.   Demo trading price action setups in conjunction with support and resistance can help traders develop the skills needed to trade Forex.

Forex testing benefits

Experienced traders have an understanding how their trading method is likely to perform over a prolonged series of trades.

It's important that we understand what this is actually saying to us.

This post runs over the gains that come from examining and optimizing a trading system without taking a chance gambling  with a single cent and refining their skills in the process.

Why use a Forex tester software package?

There is virtually no difference between a normal trading software package and a test system. The trader sources real historical data which is added into the software testing system and they can subsequently probe and examine the system off line from the market. 

The tester can commence by getting OHLC (open,high,low,close) data from their broker. The test trading environement can then be configured on the precise time period according to the trading strategy and any trading tools like moving averages etc added. The cool part now comes... years of detailed testing is now possible with minimal effort expended on the task.

If a tester was strategy testing a system that brought positions activated on weekly candles there's at least a week between expected trading chances.  Quite a difference from our back testing which took no time once setup.

What is Forex?

FOREX — the FX, foreign exchange or sometimes also known as the currency market is a market where currenciesis are traded against each other. It comprises one of the biggest markets on the globe..

A lot of the players in this market are only attempting to exchange a foreign currency for the one they already posses, similar to international companiess who need to pay wages and disbursements in different countries than they are based at. 

All the same, a big component of the market is assembled from currency traders, who trade on on apparent movement in rates, very much alike to how others would trade on drifts of gold or stock fluctuations.

Currencies are dealt against another in pairs.  All currency pairs are therefore making up a tradeable pair.  For example, EUR/USD is the price of the euro conveyed in US dollars, as in 1 euro = 1.3000 dollar.

In this blog we will look at Forex trading and how different techniques are used to trade from.