Introduction to The Foreign Exchange (F/X) Market Cash Interbank Foreign Exchange is the largest business in the world, period. The New York Institute of Finance estimates that somewhere around $1.5 Trillion will change hands every 24 hours. That is
Why Trade Currencies with Integrated Research Services, Inc.? Integrated Research Services deals only in the cash currency markets; specifically known as the Interbank Market. Until now, cash currency trading has been the domain exclusively for Banks, Large Corporations, Governments, and
Global Implications of Lower Oil Prices DISSECTING THE FALL IN OIL PRICES AND OIL PRICE OUTLOOK A. Explaining the Oil Price Drop Oil prices fell by about 50 percent between June 2014 and January 2015. The drop consisted of
DAILY FX UPDATE USD STRONG; RISK OFF HEADING INTO WEEKEND USD strengthening broadly as tone deteriorates into NA open. CAD is flat, trading in tandem with oil; risk lies in tone & U.S. data. EUR fades rally
Why does the Forex Market move? This is not a trick question. For instance, has it ever occurred to you after watching the price action on EUR/USD for days, seeing it go from 1.5300 to 1.5550, and ask yourself that question? Well, I have and the simple answer is that there are more orders BUYING EUR/USD than SELLING, so the price went up from 1.5300 to 1.5550 based on more demand and less supply. Then, it dawned on me that for every price action, a tick, or a pip, there are orders being filled. The market is traveling to the direction where it gets more orders. Now think of this like taxi cabs instead of subway or a train. The orders are dictating where the market goes, not the market making stops at every pip .forextrading and see if there are orders. If there aren’t any orders, market will not even travel there in the first place. The real question is why the orders are piling up one way? The answer, of this supply & demand symptom that we are seeing of more demands on the EUR/USD is the key to understanding Forex Market. forextrading Take a moment and think about it. The reason why EUR/USD is moving up is because the market thinks (perceives) that EUR is more valuable than USD. That is why it is getting bid up. The real underlying question is: Why does the market think EUR is more valuable than USD? Here is the real answer: Forex Market moves because of fundamental news. If there are no news releases, there would be practically no movements in the Forex market because the value of every currency pair would be fixed, with no expectation of better or worse, the market will stay at a standstill. So, we’ve come to a full circle now illustrating WHY the market moves. To put it in a different perspective, Forex Market moves because it is constantly trying to reach equilibrium with news events, pricing in surprises in fundamental news and sentiments. In other words “The Price EUR/USD (or any currency pair) is trading at is NOT its real value, but a perceived future value, an estimated value that the market has placed on it, as results of past, present, and future (estimated) events. forextrading That’s why it’s so important to understand Fundamental news. Every high impact news release changes the perceived value of the currency, understanding these fundamentals will give you a bird’s eye view of the market and allow you to place trades and stay on the right side of the market… forextrading
How, Why, and When? When I first started trading Forex, it had never occurred to me to ask these questions. I mean, why would I? The whole Forex educational world (as I understood at the time) was focused primarily on Technical Analysis; some were based on Fibonacci, some on MACD and/or Slow Stochastic, or a combination of technical indicators with different proprietary settings. Seems like the answer to the holy grail of trading lies in the right combination of indicators (at least that was what I thought.) I still remember the few beginning months of trading; I must have spent over 16 hours a day, 5 days a week, doing an average of 24 trades per day. It was more exciting than profitable, as I quickly went through my live accounts one by one, margining them out and re‐funding them, falling in this vicious cycle that many beginner traders seem to find themselves eventually in, unable to get away… Then, it must’ve been the fourth or fifth time that I re‐funded my account, I began to lose faith in my trading methods; I started to question whether or not these strategies were even supposed to work? I went to my mentor, and despite of spending even more time and energy in learning and re‐learning the same methods, I realized that everything I have learned up to this point is completely, for lack of a better word, ambiguous. What I have learned was practically based on discretion, (which was designed like that on purpose,) so that anyone who teaches it could interpret either or both ways. In other words, there is no wrong answer… News Profiteer’s Definitive Guide to Fundamental News Trading Page 11 Then almost by luck, I stumbled onto someone who trades fundamentals, which at the time seemed sort of “taboo” for technical analysts. You might have heard this: “You show me an economic news release, and I will show you a chart pattern”, which was the mentality of many technical traders at the time, and it was generally believed whether or not one pays attention to the news releases, the results were going to be the same. That was the same half‐truth I was fed with learning Forex… When I say half‐truth, I don’t mean it as a lie. Forex trading is such a difficult art (not science) to master, one can never say definitively without a doubt that this is it or that is that. Forex Market is actually made up of many parts and the sums of all of its parts are greater than the whole, as illustrated in the diagram below: You see in this diagram, Technical trading has its place in Forex Trading. But it is just preposterous to assume that was all there is to trading. In order to trade Forex successfully, you need to learn Technical, Fundamentals, Order Flow and Supply & Demand, and of course, Market Sentiment.
Legal Notice(s) and Requirement(s): RISK DISCLAIMER: Trading the foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade the foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. Past performances are not indicative of future results, which can vary due to market volatility. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. COPYRIGHT AND OTHER RELEVANT DISCLAIMERS: This E‐Book and its contents are copyrighted property of Henry Liu. Any copying or redistribution of this E‐book, in whole or in part, without express written permission from Henry Liu, is strictly prohibited and violation of this copyright. Any websites, resources, and products mentioned in this e‐book belong to their respective owners. Legal Disclaimer: While all attempts have been made to verify information provided in this Ebook, neither the Author(s) nor the Publisher assume any responsibility for errors, omissions, or contrary interpretation of the subject matter herein. This E‐book is not intended for use as a source of legal or accounting advice. The Author(s) and Publisher want to stress that the information contained herein may be subject to varying state and/or local laws or regulations. All users are advised to retain competent counsel to determine what state and/or local laws or regulations may apply to the user’s particular business. The purchaser or reader of this publication assumes the responsibility for the use of these materials and information and/or its application. Adherence to all applicable laws and regulations, federal, state, and local, governing professional licensing, business practices, advertising, and all other aspects of doing business in the United States or any jurisdiction is the sole responsibility of the purchaser or reader. The Author(s) and Publisher assume no responsibility or liability whatsoever on the behalf of any purchaser or reader of these materials. Any perceived slights of specific people or organizations are unintentional.
Truth in a simpler way of trading One of the biggest mistakes in Forex trading is ironically spending way too much time trading. There is absolutely no one who could predict with certainty where the market is going to do next, and by spending too much time trading, your chances of getting in a losing trade increases, not mentioning the stress associated with trading, which may very well lead to a lapse in your trading decision. My ideal way of Forex trading is knowing ahead when the market is going to move, get in the market during that window of opportunity, enter a trade, and then cash out once in decent profit. Rinse and repeat while spending usually no more than a couple of hours a trade, and no more than 4 to 5 trades a week. The only system that fits this bill is Forex News Trading. Let’s examine some of the benefits in news trading: 1. Scheduled Trading Time: You trade only the high impact news during their scheduled release time, which are available through various news calendars up to few weeks ahead of time, and you are in the market during a time where volatility is almost insured, with ample liquidity, so you don’t waste your time or your money chasing the noises or fake trends during low liquidity hours. 2. Reduce Losses: Trading Forex is about having the odds stacked with you, not against you! By limiting the amount of trades you take in a month, you are cutting down your potential losses while picking the crème of the crop. News Profiteer’s Definitive Guide to Fundamental News Trading Page 7 3. Managed Risk: News trading generally gives you a manageable risk. You can always put your stop order at pre‐release level, because it is a golden rule that once the market travels back to the point before the news release, then the effect of the news is presumably over… 4. High Profit: Since the market is likely to overreact to news releases, volatility becomes our friend. By getting in the right direction after the release, you can cash out on most of the movements. 5. Less Time Trading: There are only about 35 tradable news releases a month, and out of these 35 releases, you’ll probably get 50% giving you a tradable release figure. So the tradable ones could take up to 2 hours per trade, but the untradeable ones should only take 15 minutes of your time.