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MadMarketScientist
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The US Dollar is the world’s reserve currency, and the most liquid currency in the world. Traders with a negative outlook for the performance of the US Dollar versus other currencies will often put this bias into practice by selling the USD and using it to buy another currency, such as the Euro or Yen. When US Dollar sell positions are established, traders can only make money when the value of the US Dollar declines. If the value of the currency increases, the trade will lose money.
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Day traders tend to focus on technical analysis rather than on long term trends based on fundamental forecasting. Intraday price fluctuations in the forex market develop quickly and many Day traders will implement trading software to identify relevant chart patterns and establish trades. Stop loss levels and profit target tend to be smaller than what is seen in longer term trades, because daily price activity can change in unanticipated ways.
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Traders will never just buy or sell an individual currency. Instead, currency are bought and sold in relation to each other. A currency pair is comprised of a base currency and a quote currency, for example, the EUR/JPY. Here, Euro is the base currency and the Yen is the quote currency. The value of the currency pair shows the value of one unit of the base currency relative to the quote currency. If EUR/JPY trades at 110.15, this means one Euro will buy 110.15 Japanese Yen.
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When trading strategies are backtested and are shown to be successful over long periods of time, there is a greater probability that the same strategy will work in future markets. It is impossible to track all of the historical data manually, so traders tend to run software programs which open and close positions when certain conditions and requirements are met within the market. Backtesting is a technical analysis practice and is not generally used by fundamental traders.
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As an example, the US Dollar can be quoted as USD$0.75 per CAD$1. This quote shows you that 0.75 US Dollars are required to purchase one unit of CAD (the Canadian Dollar). By extension, CAD$1000 could be purchased with USD$750.
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TradersLaboratory Newsletter - Apr 14, 2012
This newsletter is brought to you by our sponsor NinjaTrader
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TOP POSTS & THREADS
[1]Short Term TF & ES Trading
I've been trading for over eight years now, and I'm looking to get more
involved with the trading community. I don't know anyone else that trades
really. I'll be posting daily trade recaps ...
Links:
[2]I Want To Be A Money Manager
I read an article in Forex Magnates today that NFA goes after PAMMs and
money managers. Does any one know that is it illegal to be a money manager
to trade for clients in ...
Links:
2. http://www.traderslaboratory.com/forums/forex-trading-laboratory/12721-money-manager.html
[3]Volume and Market Profiling
Years ago, after blowing out a few accounts, my trading was turned around by
a group of prop traders who wanted to give something back to the trading
community. With the help of ...
Links:
3. http://www.traderslaboratory.com/forums/market-profile/12755-volume-market-profiling.html
[4]Price Patterns Are The Secret
After some years, you start to memorize price movements. My favorite pair is
GBP/USD so I watch it more carefully. I noticed that you can see very
similar patterns over and over. I will ...
Links:
4. http://www.traderslaboratory.com/forums/technical-analysis/12745-price-patterns.html
[5]Darn Squawks & Rumours!
Yesterday was a classic of squawks trying to relay news to justify moves.
Rumours were that China GDP was going to come in higher than the expected
8.4% at 9.0%. Obviously that was ...
Links:
[6]Why Are 3rd Party Datafeeds Recommended?
I'm learning to start trading forex. I'm not sure I understand why I need to
invest in a reliable datafeed that is not provided by the forex broker. For
this case, lets say the broker is truly routing ...
Links:
HOT TOPIC
[7]I Can Help with the E-mini!
I trade the E-min and make money every day. I do some swing trading, and I
regularly trade the NASDAQ, Copper Notes and Bonds. I am an auction market
trader and I use a combination of CBOT Market Profile, volume at price
analysis, and pattern recognition techniques. I have been a screen trader
for thiry years and have tried everythig. What I have now works for me. I
made 22 points in the NASDAQ today, shorted the ES a 1370 and am still
holding, shorted copper at 3.6600 and am stil holding. You don't have to
believe me, I will post set ups staring tomorrow, the proof is in the
trades. I generally make one to 3 trades a day. The first set up is usually
between 7:30 and 9:30 CST in the ...
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Can't wait to see them!
MMS
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Hi,I am a beginner futures trader and want to take advantage of the tax benefits. I reside in Ontartio Canada. I looked up on Canada Revenue Website and in form IT346R it indicates speculative trading in futures is taxed on 50% of income. My question is what deductions can I make?. Can I claim computer hardware...internet, ninjatrader license, books, education, travel and car?
If there is anyone trading futures in Ontario and know how best to set this up as a business and has contacts for accounting if needed i would greatly appreciate.
Yes you can incorporate and deduct everything you listed ... but note the following:
- office space is a proportion based on office vs. house size
- car will be iffy, depends if you can make a case you use it to trade futures at home!
- annual incorporation taxes need to be filed and this will cost at least $1000 or so (if you pay someone)
But bottom line is the business tax rate is 15% (at least in Alberta) so this is well worth it if you are making a a decent profit and this in incremental to other income.
MMS
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From the Back Cover
A Market Maker Reveals How He:
- Times Entry and Exit Points for Minimum Risk, Maximum Profit
- Combines Fundamental and Technical Analysis
- Controls His Environment Every Day, with Every Trade!
Hundreds of books, written from the buy-side viewpoint of the successful trader, promise day trading success. The Market Maker's Edge is the first book to turn the tables, working from the sell side to explain how the market maker routinely maintains the upper hand, seizing profits while controlling risk in today's volatile marketplace. Written by a Josh Lukeman--a Morgan Stanley Dean Witter market maker who has honed his skills for years--The Market Maker's Edge reveals:
- 4 signals for spotting--and profiting from--a developing trend
- Important risk control concepts every trader must know to protect against losses
- Advanced trading strategies based on recurring technical patterns
Today's top market makers operate in intensely competitive atmosphere, with millions of dollars at stake. The Market Maker's Edge is today's only trading book written from inside the market maker's domain. Use it to open the door, and shed light on the trading tactics used by Wall Street's most powerful market making institutions.
- Times Entry and Exit Points for Minimum Risk, Maximum Profit
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While new technology and complicated theories promise to take your trading to "the next level," the truth is that long-term success in this field is rooted in simplicity. That's why Al Brooks has created Reading Price Charts Bar by Bar.
With this book, Brooks—a technical analyst for Futures magazine and an independent trader—demonstrates how applying price action analysis to chart patterns can help enhance returns and minimize downside risk. Along the way, you'll discover the importance of understanding every bar on a price chart, why particular patterns are reliable setups for trades, and how to locate entry and exit points as markets are trading in real time.
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From the Inside Flap
Investment Valuation
Tools and Techniques for Determining the Value of Any Asset
Regarded as one of the top experts on investment valuation, NYU Stern Business School professor Aswath Damodaran returns with a completely revised Second Edition of his classic, Investment Valuation. This practical, comprehensive guide covers a wide range of tools and techniques, both new and old, for determining the value of any asset, including the valuation of stocks, bonds, options, futures, real assets, and much more.
Using updated real-world examples and the most current valuation tools, this Second Edition addresses new sectors such as dot-coms, private companies, and financial service firms that pose complex valuation problems. Damodaran guides you through the theory and application of different valuation models and clarifies the entire process from cash flow valuation and relative valuation to acquisition valuation.
An invaluable resource for authoritative information, analysis, and insight, Investment Valuation, Second Edition, covers all the key topics in asset valuation, including:
Choosing the right valuation model for any given asset valuation scenario
Applying valuation techniques to start-up firms, unconventional assets, private equity, and real estate
Risk and return–domestically and abroad
Value enhancement measures such as economic value-added (EVA) and cash flow return on investment (CFROI)
Using real option theory and option pricing models in valuing individual assets such as patents as well as entire businesses
Investment Valuation, Second Edition, thoroughly explains the valuation process from the ground up and offers you some of the most flexible approaches to valuing assets.In fact, the valuations will be constantly updated online, so you can have a closer link to real-time valuations.
Filled with case studies and proven valuation models, this indispensable guide is a must for anyone wishing to gain a better understanding of investment valuation and its methods. Take the insight and advice of a recognized authority on the valuation process and put them to work for you today.
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Best of luck!!
MMS
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Forex Direct Markets - Ultra Low Spreads
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Thanks ... fixed
MMS
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The term underlying asset is sometimes used interchangeably with financial asset, financial instrument, etc. The underlying assets are the items being traded and everything about trading is based on them. Without the underlying asset, there is no basis for trade on the financial markets. For a trade to be valid, there must be a financial asset.
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The trade balance report shows a state of the nation’s economy by measuring the difference in the amounts spent on importing products into the country, and the amounts realized from exporting its products to other countries. A positive trade balance (exports > imports) is known as a trade surplus while a negative trade balance (imports> exports) is known as a trade deficit. A positive trade balance is seen as bullish for the currency of the country in focus and a negative trade balance is seen as bearish. Countries like China operate a trade surplus while the US has a trade deficit. This report gives clues to the state of sectors like the manufacturing sector and is used as an index of economic growth.
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Returns on every investment are subject to taxation. In order to attract a reasonable level of foreign investment, some countries and territories offer very low levels of taxation as an incentive to attract such investment, while at the same time, offering other conditions to keep such investment such as good corporate governance. Tax havens also have secrecy laws which prevent financial institutions from disclosing details of the monies held in their coffers by foreign individuals and corporations. This has led to several points of conflict between tax havens and the countries which depend on tax revenue of its citizens for income (e.g. the US). An example of a tax haven is the Cayman Islands.
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The concept of the strike price is key to a trade in the options market or in the binary options markets. Whenever a trade is contracted, it is based on a delivery of the security purchased at a pre-agreed price on a future date. This pre-arranged price between the dealer and the trader is known as the strike price. Traders use this price to hedge against future price fluctuations, and dealers use this as a means of guarding against price manipulations by traders on the actual exchanges where the exchange of the physical commodities being traded is done.
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The concept of the stop loss is for the protection of a trader’s account from devastating losses if an active trade is in a losing position. There are different ways to apply a stop loss order. On some broker platforms, the stop loss can be applied as a limit order or OCO (order cancels order). On the MT4 platform, this is a lot simpler as all a trader needs to do is to select the stop loss as part of the modify/delete trade order mechanism, which only functions on an active trade.
Whichever style your broker presents to you, the stop loss order carries the same function. It automatically closes a trade at a pre-determined level when the position has moved against the trader. A stop loss does not always work; if there is abnormal volatility in the market such as the one that occurred after the September 11, 2001 attacks on the World Trade Center, the massive contrarian pressure on prices will produce a slippage and the stop loss will be taken out without the trade being closed. This situation also occurs after a weekend gap if the trader is on the wrong end of the trade.
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On some broker platforms, the term stop-limit order is used to signify both a stop order and a limit order, both of which are pending orders. The MetaTrader4 platform simplifies order types for traders, but considering that most ECN brokers do not use MT4 platforms, traders who want to get the most direct access to pricing from the liquidity providers have to get used to this terminology and know how to apply it on the proprietary trading platforms. For example, if a trader wants to sell the USDJPY at a particular price, but still feels that the price of the currency will edge up to a stronger resistance before heading downwards, he will place the order at his preferred level using a stop limit order.
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There are two types of stop entry orders used in the forex markets. These are:
Limit Entry: A limit entry is a trading instruction to the broker to open a trade when prices are more favourable to the trader. The premise here is that if a trader wants to sell for example, he will prefer to do so when the price will be closest to a resistance point than away from it. As such, a limit entry for a sell order will aim the entry price to be above the current market price, so that he can make the maximum number of pips from the trade. The same argument holds for a buy trade, where a trader will want the trade to get as close to a support level as possible before buying. On the MT4 platform, you will see this displayed as Buy Limit and Sell Limit orders.
Stop Entry: A stop entry is a trading instruction to the broker to open a trade when prices are less favourable. The premise here is that the trader has probably missed the early move and is just wishing to catch a continuation of that move. This will leave him with less pips than desired, but still something to take home. As such, for a sell trade, entry price will be below market price, and for a buy trade, entry price will be above market price. On MT4, this is shown as Buy Stop and Sell Stop orders.
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Any trader who wants to make money from trading the financial markets knows that the markets function by timing. In the markets, timing is everything, and what a trader does is to look for indications that the price action of the underlying asset is about to behave in a particular manner. Such indications are given by using technical and fundamental indicators for analysis.
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Resistance levels are not usually a fixed price point. Rather, it is more correct to say that there is a zone of resistance. Usually, the highest point in that zone is assumed to be the maximum point of resistance. You can identify resistance levels when an upward swing of prices have reached a certain point and then stalled, before retreating. For a zone to qualify to be a resistance point, the prices must have tested that level several times. After the resistance has been tested several times, two things may happen. Prices may reverse fully, or eventually break through this point in an upwards direction to continue with the pre-existing trend.
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The RBNZ is the central bank of New Zealand and is the organ of the New Zealand government saddled with the responsibility of determining monetary policy for the country. The structure of the RBNZ differs from the central banks of the other major currencies in that the determination of the monetary policy lies solely with the RBNZ Governor. The RBNZ meets 8 times a year and its core mandate is to maintain price stability as well as stability in interest rates and exchange rates. The RBNZ has an inflation target of 1.5% and pursues this target aggressively.
Dollar Bull Definition
in Trading Dictionary
Posted
The US Dollar is the world’s reserve currency, and the most liquid currency in the world. Traders with a positive outlook for the performance of the US Dollar versus other currencies will often put this bias into practice by buying the USD and using it to sell another currency, such as the Euro or Yen. When US Dollar buy positions are established, traders can only make money when the value of the US Dollar increases. If the value of the currency declines, the trade will lose money.