Archive for September, 2010
World events affecting the market of international trade. Or rather, world events affect market supply and demand, which in turn affect international trade. World events (political, social, government, etc..) And other economic factors continuously moving the forces of supply and demand, which have the effect of changing exchange rates between currencies. (more...)
Several readers have emailed recently asking how I employ the datasets published here. Having worked with them over many years I have developed an approach that combines the use of daily projection levels with one or two conventional technical indicators for intraday trade entry and exit timing. My preferred indicators are MBI and DIF as they have proven over time that they offer superior indications of market imbalance than RSI or similar "conventional" technical indicators.
Additionally they they offer precise trade entry/exit levels in the form of the Projected Reversal Price or PRP. These can be used as a "signal to signal" trading systems if you wish or in combination with the 6 Support/Resistance price levels and 5 and 20 day EMA's
Two excellent sources for news “bullets” are IFR and MMS which can both be found in the menu under News Sources . For both “bullets” and more detailed reports the best source I know is PFX Traders Club. It requires free registration and has detailed news items ind addition to the “bullets” or headlines.
Knowing the date an time of key economic reports or events is also vital and luckily there are several sources for that information as well. Briefing.com is accessible from the menu item Links and covers US data in detail. ACM has a fine scrolling calendar of global data and events while Saxo Bank has another excellent calendar using selective dates as well as scrolling news headlines from AFX (absolutely top notch in my opinion). Access requires registration but is free.
Forex Forums and “Chat Rooms”
Regular visitors to this and the Forex Dynamics predecessor websites know my general opinion of forums and chat rooms is not particularly favorable. While some of them are quite helpful to new traders, most are simply a vehicle for individual traders either to “talk their book” or to look for validation of their own postions/opinions. In other situatiions you will find many simplu looking for “hot tips” on what to trade. In general the value of any “advice” give or recieved has to be taken with extreme caution. That said however, there is one forum which despite some of the issues I note above has some merits if you inclined to go the forum route: that is GVI
Many experienced traders frequent the site and the primary benefit most will get is that these people are willing to share data release results on a very timely fashion and many of their opinions are very well articulated. This website does require registration for a username and password but is the most interesting for traders the is freely accessible.
I cover some trading platforms that I have used either in demo or real time on a separate page but I will be adding links to other platforms as time goes by on this page as well.
Saxo Bank as noted above and elsewhere on this site offers a variety on features, not the least of which is a fine trading platform that in addition to spot forex offers futures and CFD trading capability. This is a top notch site and is well worth investigating.
To end the week I decide to return to the SP futures. I already did two days ago, but now wanted to check in schedule of brokerage. Moreover, my system has worked well (between us, in fact even I am surprised). I have not driven accounts, but the month of September, if continues, will end bien. Pero as I am very cautious, not made or a bell flight. The secret is not trusted and watch every day.
I also want to mention that lately I’m using another indicator, in another screen (hence does not come along to the chart) which is a MACVOL (macd volume) in Quick Setup (4, 10, 4)
Sometimes it helps a bit to complement the Konkord, but I have it on the first level of advisers. Of course, when agreed, are deadly … to the piranhas and sharks that swarm through the markets.
Journal of Operations: 1. 15, 36h over 25, 25 close 26, 25 +1, 25 starting points in each operation I am satisfied with get 1 point or 1, 25. The set automatically stop at 1.50. However, that Konkord signal, which was not very powerful, I have decided on the pattern drawn by the three previous candles, red-green-doji for my bullish.
2. 15 short 40h 25, 50 end 24, 25 +1, 25 points. Repetition of the previous move. The pattern of candles is the same but reverses and also gives the signal Konkord I hope so. For added security, the volume is falling and negative. I will get my one, 25 and I get quiet.
3. 15, 48 hours over 24, 00 stop: one, 50 points I have messed up here by marios reasons – overconfidence. – I have not strictly followed my system. I entered a candle delayed, but not at the beginning and requires my “road map”, but already very high. There was no acceleration of volume, and the entry of “strong hands” in the previous candlestick, that perhaps I confused, not interprets it well.
3. 15 short-51H 22, 75 end 21, 25 +1, 25 points The last entry, positive, and with the same Scores (+1, 25) than the previous. In this note was on autopilot. Objectives: 1, 25, and nothing else in the head. The same sail even dropped another one, 25. Do not know if this setting is good or bad. Since then one, 25 in the mini SP is good (equivalent to three points in the NASDAQ).
Well I am sitting with two, 25 points, equivalent to 5, 50 on the NASDAQ, so now I created a dilemma, not the problem, where do I keep running, NASDAQ or SP?
Bond traders seemed to have slept in this morning but I can’t say that I can blame them. Volume was light and aside from an early morning GDP release there really wasn’t any reason for traders to take a stance ahead of the Fed’s interest rate decision. In the hours prior to the announcement, the Fed Funds futures market had priced in a 22% chance of a pause this time around, but most were looking for a quarter point cut.
Growth of the U.S. economy was bleak in the first quarter, but it was growth and that is all that we can ask for given the credit and housing catastrophes. The GDP was reported at .6%, while the chain deflator came in at a tamer than expected 2.6%. It was this inflation component that Treasury traders were focused on, as a result the long bond found its way higher post release.
On another bright note, the Chicago PMI was reported slightly higher than last month’s reading and a full point higher than analyst estimates. Bond traders and the infamous flight to quality trade seen in the last several months may have lead to an excessively priced asset class. Thus, a temporary corrective bounce in prices (lower yields) may be all that we will see out of the long and intermediate end of the curve.
I have been targeting the mid-117 for the upward retrenchment in the 30 year. Today’s high of 117’04 isn’t far off but I still believe that there is some room for this market to move on the upside. Thus, it is a little early to begin selling calls, but if you are short puts you should be looking to buy them back.
I will be out of the office (and on a beach in Hawaii) from Wednesday April 30th through Tuesday May 6th. I will be available by email; however, should you have any urgent matters, feel free to contact my partner Paul Britain or Robert Firestone by dialing 1-800-935-6492.
We recently discussed the old crop/new crop Chicago wheat spread and the implications of the narrowing action at that time, 26 – 29 cents May over July from a wide of $2.12 May over. I commented on the weight of the large open interest versus the actual crop size. Again, we knew that the planted acres of winter wheat were larger than the 2007 planted and harvested crop and yet the spread had come in from $2.12 to 26 cents at the time. My point was the slowing demand for old crop was reflected in the May contract, but why the strength in the new? Projecting possible problems to a still dormant crop 4 – 5 months in advance was obviously a tiring exercise. As funds cut their exposure to risk, the wheat market lost $3.00 and the spread an additional 40 cents.
Similar distortions are evident in the other grains as well. The widening basis between cash beans and futures forced many hedgers out of the futures market. Many grain elevators and processors will no longer contract for future shipment. Farmers are no longer able to forward contract their crop … And foreign buyers must pay an additional risk premium if they contract for future delivery.
Currently index funds are classified as hedgers because they buy against an index. Hedgers have no position limits, on the other hand speculative funds and individuals are limited to a specific number of contracts they can buy or sell. The CFTC will hold a public meeting April 22 to discuss the age futures markets. Topics will include the lack of convergence between futures and cash and the role of speculators and commodity index funds. Some potential solutions recommended by those in the grain trade that could effect spread trading and trading in general are placing trading limits on funds and ETF’s in the futures and the physical markets and ( this would definitely effect spreads), force funds to roll positions forward at least sixty to ninety days before delivery to minimize spread distortions.
Let’s look at a few spread ideas. I have mentioned I wanted to look at the KC July/Dec wheat spread once wheat was close to coming out of dormancy. An entry of 25-22 cents July under December risking 13 cents would be desirable. This crop went into dormancy somewhat stressed and the Plaines states are still dry. The USDA will start putting out crop condition reports, I believe, next Monday. Considering the market has suffered two years of short crops, we should be very sensitive to these reports.
The bean market has built in larger acreage for 2008, which was verified in the planting intentions report March 31st. As a matter of fact the report came in well above the highest published estimate. The USDA estimated U.S. 2008 soybean acreage up 18% from last year, but 1% below the record high of 2006. The Argentine farmer strike has also induced traders to be long old crop beans/ short new even in the meal market. We know the strike will not last indefinitely, lack of storage and a dependency on exports will force a meeting of the minds in due order. The July/Dec meal spread appears to have or is in the process of topping out, shorting the spread as close to $45- $48 July over. Risk $800.00 per spread – reward could be $35.00 or more.
Two advantages of a Traditional IRA:
- You may be able to deduct some or all of your contributions to it, depending on your circumstances.
- Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed.
Types of Traditional IRAs. Your Traditional IRA can be an individual retirement account or annuity. It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Below are a different forms of a Traditional IRA:
- Individual Retirement Account
- Individual Retirement Annuity
- Individual Retirement Bonds
To contribute to a Traditional IRA, you must be under age 70 1/2 at the end of the tax year and you, or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self–employment. In addition, taxable alimony and separate maintenance payments received by an individual are treated as compensation for IRA purposes.
Compensation does not include earnings and profits from property, such as rental income, interest and dividend income or any amount received as pension or annuity income, or as deferred compensation.
The most you can contribute to your Traditional IRA for 2003 was the smaller of $3,000 or your taxable compensation for the year. For 2003, the $3,000 was increased to $3,500 if you are 50 or older. Keep in mind that contributions on your behalf to a Traditional IRA reduce your limit for contributions to a ‘Roth IRA’. If neither you nor your spouse is covered by a qualified retirement plan at any time during the year, your allowable contributions to a Traditional IRA will be fully deductible.
If you, your spouse, or both of you are covered by a qualified retirement plan, your IRA deduction may be reduced or eliminated, depending on the amount of your Modified Adjusted Gross Income and your filing status.
Figure your deduction using the worksheets in the Instructions for Form 1040 or Instructions for Form 1040A or in Publication 590. You cannot claim an IRA deduction on Form 1040EZ (PDF); you must use either Form 1040A or 1040. Form 8606 (PDF) should be attached to your return if any of your IRA contributions are not deductible. If both you and your spouse qualify, each of you may contribute to separate IRAs.
If you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts:
- $3,000 for 2003 or $3,500 for 2003 if you are 50 or older, or;
- The total compensation includable in the gross income of both you and your spouse for the year, reduced by the following two amounts: a) Your spouse’s IRA contribution for the year to a Traditional IRA., and b) Any contributions for the year to a Roth IRA on behalf of your spouse. This means that the total combined contributions that can be made for the year to your IRA and your spouse’s IRA can be as much as $6,000 for 2003 or $6,500 for 2003 if only one of you is 50 or older, or $7,000 for 2003 if both of you are 50 or older.
The deadline for making a contribution to a Traditional IRA for the year is the due date of your return, not including any extensions of time to file.
You may choose to take the deduction on a return filed before the contribution is actually made, provided you make the contribution by the due date of that return, not including extensions.
Amounts you withdraw from your IRA are fully or partially taxable in the year you withdraw them. If you made only deductible contributions, withdrawals are fully taxable. If you made any non–deductible contributions, withdrawals are partially taxable. Use Form 8606 to figure the taxable portion of withdrawals.
Amounts you withdraw before you reach age 59 1/2 may be subject to a 10% additional tax. You also may owe an excise tax if you do not begin to withdraw minimum distribution mounts by April 1st of the year after you reach age 70 1/2. These additional taxes are figured and reported on Form 5329 (PDF). Refer to Instructions for Form 5329 for exceptions to the additional taxes. For information on Roth IRA contributions or distributions, refer to Topic 309 and Topic 428. For information on conversions from a Traditional IRA to a Roth IRA, refer to Publication 590.
More information on IRAs, including information on tax–free transfers and rollovers, is available in Publication 590, Individual Retirement Arrangements (IRAs).
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In order to trade in foreign exchange can one needs only the required capital, including computer forex software, a fast Internet connection and a reliable Forex service provider (forex broker) from the Internet.
A professional Forex trader spends about a third of the month with foreign exchange trading. This is due largely to the information which the trader available daily. Only with clear signals is traded when a signal is in doubt, the transaction is postponed to another day and therefore reduces the risk. The next day the trade is carried out again profitable, with rates of exchange in all but the “pip” changes, so the fourth decimal place. Read the rest of this entry »
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In the U.S., said yesterday the majority of pages of economic indicators, “an effort to feed the squirrels.” For the industrial production could grow in August, but just slightly. The same was true for the capacity utilization, which is several months away from their lows, with 74.7% but still well below their pre-crisis is above the 80th The Empire Manufacturing index dropped in September by contrast, which completed the not-too-rosy picture. The development of EUR / USD in contrast, showed relatively unaffected by the disappointing data releases. Investors responded well only to the gains recorded so that EUR / USD continue to commute the 1.30, but without the brand to overcome already sustainable. Previously, deterioration in mood had always led to inflows in the USD, because he is considered a safe haven.
Today could be the Philly Fed index provides other important signals from the manufacturing sector. He also drops; this would not bode well for the national ISM index for the manufacturing sector. The consensus expects, however, with an increase after the index had been rustling in Read the rest of this entry »