Article - Markets And Battlefields 4a

The Shooting Star

The Shooting Star is a bullish or a bearish candlestick pattern that usually appears after a series of preceding price declinations or price increases. It is easily identified as having a thick lower body with the days closing higher than the opening and the high of the day above the thick body like so - 

A shooting star may occur either as a bullish signal or as a bearish signal depending upon the preceding candles.

A shooting star at the top of a series of rising candles maybe indicate that the rally has come to an end.

A shooting star at the bottom of a series of declining candles may indicate a reluctance of the market to sink any further and set a tone for an impending rise in prices.

As a real life application, in the EUR/ USD chart, we all know that the EUR has been sinking since 4 months ago where the EUr stood at 1.35 to the Dollar in August 2014. Recently the SNB caught the market by surprise and the EUR sank  precipitously the last 2 weeks in particular on Thursday Jan 15th. Now here below is an example of a bearish shooting star that failed to stop the declination of the price action.
 

Given the SNB action and the further woe of ECB Q.E weighing in heavily on the beleaguered EUR, the market crashed on Thursday 15th Jan.

But in spite of the carnage of the day, the EUR depreciation had already been inaction effectively for the last 6 months since the giddy heights of 1.40. Thus on the 20th Jan after the market reopen from the weekend the EUR found a moment to pause since most of the negative sentiment had already been factored into the price action. The result was a pause over 3 days Jan 20-22 which saw 2 shooting stars form with a failed upward piercing penetration. The market fell from 1.1786 on Thursday 15th January to 1.1598 on Monday 20th January with 2 succeeding shotting stars trying to rise thru the 1.16.
  
After the SNB action the shortening EUR market had quite literally run out of steam with the predilection for EUR bashing. Markets do not rise and fall in a line but they take a zig and a zag as traders pause from bashing each other on price action. This can be attributed to short covering, or traders booking profits for the moment. Nevertheless, further ECB Q.E statements began to weigh in heavily once again and so the EUR started to slide again from the position of the 2 shooting stars at 1.16 right down to 1.1347 ion January 23rd. This is an example of shooting stars failing to lift the market in the face of overwhelming directional trade pressure. if anything the 2 shooting starts portrayed can only reflect a brief moment of profit taking for the shorts.

This example of is a shooting star signalling a respite in the short term only. But not a key reversal pattern. Therefore further slides in prices are expected. swing traders take advantage of these short respites to book quick profits over a 1-3 day trading range. And as the EUr sinks lower to Dollar parity the resistance becomes stronger and the volatility greater. Thus traders in the near future would expect more sessions of quick short pressure and fast profit taking.


Pieter Bergli - DeLoren Trust Holdings

A non-profit educational course for the currency markets



Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Currency trading simulation program

Forex paper trading simulation

Dear Readers,

We learn all the time unceasingly so that we may strive to better ourselves. There is nobody who is perfect. Constant practice is the key to success. Moreover, as history has shown us in many cases of trading, the so-called genius does not win all the time.

Trading is a grind and can be taught to anybody who is willing enough to pack in the long hours to commit to a lifelong educational process.

Fundamental traders learn their economics of currency value, ply thru former data releases, and seek for a better understanding, to catch the momentum of a forex trade as and when a key economic release is made.

Technical traders base their entire philosophy of trading upon the credence that history does repeat itself. Pattern recognition forms an important foundation for determining the probability of a trading direction.

Losses come to us all; it is part and parcel of the profession we choose. But in time we learn to cut slack when the wind is against us and live to fight another day. A good trader will never stop a losing trade from occurring. But as the years and lessons go by a good trader will learn to repeat his mistakes less and thereby increase his chances of success.


Market wisdom is earned through a lifetime in overcoming personal failures. The successful property of forex trading is built upon a life's experience and cannot be made over night.

Please view - barchart which can be found at -

http://www.barchart.com/

This website is very informative and provides excellent market data and news reports. Try the simulated program that provides a unique but simple overview of forex trading with real time data and delayed data feed.
 
http://www.barchart.com/trader/help/trading/paper_trade.php 

and  forex pages can be found at -

http://www.barchart.com/forex/marketoverview



Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free 


Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Article - Markets And Battlefields 3a

Having reviewed the basic shape of the Japanese candlestick concept of the Hanging Man now turn to the Hammer and a recent demonstration for the visualization of the concept of market reversal in a daily Forex chart.

For reference please look at the EUR/ GBP daily chart below where market reversal can be portrayed in the shape of a Hammer. 

Now, if ever a chart could illustrate the power of market struggles between longs and shorts then this chart above amply demonstrates the incessant battlefield between opposing traders from Sept 2014 to Dec 2014 with neither the longs or the shorts able to grapple the price and push it in either direction. 

On the 29th Sept 2014 the EUR/ GBP forms a hammer shape - highlighted within the red circle - to hammer out the bottom of the market so to speak. The market then rose steeply over the next 7 sessions as momentum carried the EUR/GBP from 0.7813 to 0.8018. The hammer shape is an indicator of a positive market reversal to appear after preceding sessions of price decline. However the market struggled to identify a true directional sense in the approach to Xmas and instead traded a sideways channel between the 0.7813 to 0.8018 with no fewer than 3 tops and bottoms over the 3 month period with no confirmation of a price break out either way for the remainder of 2014. 

Where Hanging Man shapes are the precursors for a potential market reversal at the top of the price action, the Hammer is the opposite, being the precursor shape for the bottom of the price action and succeeding higher prices to come. Use of other indicators overlaid like RSI, MACD, moving averages an even Fibonacci numbers will greatly enhance a trader's perspective in understanding the direction of the currency.

Further recommended readings -

http://forexeducationperspective.blogspot.com/2014/12/article-markets-and-battlefields-2.html

and

http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-2b.html

and

http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-2c.html

Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free

 
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

30th January 2015

US DX 

94.857     +0.174 +0.22% 

Support 94.476   Resistance      95.396


EUR

1.12775     -0.00535 -0.47%
 
Support 1.12280   Resistance     1.14020


Crude Oil
   
47.76     +3.23 +7.24%

Support 42.93  Resistance       51.01


Gold

1283.660      +24.205 +1.92%
 
Support 1,246.1    Resistance     1,301.9



Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free

 
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

29th January 2015

Market Commentary




US DX

94.642     -0.041 -0.05%

Support   94.190       Resistance  95.670

 
EUR

1.133500     +0.004880 +0.43%

Support   1.12123       Resistance  1.14243


Crude Oil

44.60     +0.07 +0.16%

Support   42.98       Resistance  45.74


Gold

1260.96     -19.22 -1.50%

Support   1,230.4       Resistance  1,299.4



Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free

 
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Properties Of Japanese Candlesticks For Forex Market Traders

Properties of Japanese candlestick trading - 

references -  

blog - http://forexeducationperspective.blogspot.com

• The Shooting Star - http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-4a.html
• The Hammer - http://forexeducationperspective.blogspot.com/2015/02/article-markets-and-battlefields-3b.html
• The Hammer - http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-3a.html
• The Hanging Man -  http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-2c.html
•  The Hanging Man - http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-2b.html
•  The Hanging Man - http://forexeducationperspective.blogspot.com/2014/12/article-markets-and-battlefields-2.html

internet - 

•   Steve Nison -  http://www.candlecharts.com/candlestick-charting-glossary.html

Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free

 
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

28th January 2015

Market Commentary

US DX

94.624     -0.006 -0.01%

Interesting article here today on USA Today

http://www.usatoday.com/story/money/2015/01/28/january-fed-meeting/22448071/

In a statement after a two-day meeting, the Fed's policy making committee upgraded its economic outlook. It cited recent "strong job gains" and said the economy "has been expanding at a solid pace." Falling gasoline prices, it added, " have boosted household purchasing power."

That translates into strong support for the US DX. There is a strong property element for fundamental support of the currency under pinning the longs in the market.

Support   93.902       Resistance  95.312

 
EUR

1.12820   -0.00510 -0.45%

Japanese Shooting Star on Yahoo Daily Chart 

Please turn to the daily free yahoo finance chart and notice how on monday Jan 26th a classic shooting star emerges  after several preceding sessions of a gradual descent. usually the shooting star is the precursor signal in Japanese candlestick trading to signal the formation of technical indicators for a key pattern reversal. The succeeding 2 days of trading the EUR demonstrates the cessation of short positioning and at the very least a narrow sideways channel opening up to indicate either a pause, or loss of momentum, or market indecision. More likely this is a short covering bounce as traders take some profit and give the EUR some respite since its collapse over  the last few months. A market cannot slide forever and it is likely we will see more volatility and increasing intermittent patterns of short and bounce over the weeks ahead as traders tentatively nudge the EUR downwards a little more. The properties for a short trade over the longer term however remain technically in tact.

A good reference point for Japanese candlestick shapes can be found at these web pages by Steve Nison -  http://www.candlecharts.com/candlestick-charting-glossary.html

Support   1.12207       Resistance  1.14347


Crude Oil

44.56     +0.11 +0.24%

Support   43.04       Resistance  46.54


Gold

1283.970     -6.605 -0.51%

Support   1,272.9       Resistance  1,301.7



Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free

 
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Forex Seminars

Coming soon - 

Free resource tools    

and an 

educational live webinar 

on the properties of the forex markets





Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex property academia for free

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Article - 11 Year Low for the EURO Currency

This week the Euro dropped a massive 3.1 percent to close at $1.1204 on Friday at the New York cut. In fact this is the biggest biggest weekly loss on the Euro since September 2011. Altogether The Euro is right on course for a seventh month of decline against the US Dollar.

What is notable this week is the amount of new shorts coming into the market with hedge funds taking the lead and with large speculative short positions for a push for a further decline in the Euro against the US Dollar.These positions are far larger than anything ever seen since June 2012 and suggest that the trades are not short time swing trading initiatives but rather longer term strategic positioning for a push towards the US Dollar 1.00 parity.

Smaller time traders learning their trade may observe these large positions and determine entry points for short positions on any signs of a bounce. However positions must never be left open and call option hedges are necessary to protect smaller traders from larger unexpected volatility that could over-run a stop loss.

At then moment there is no fundamental cause for longs to hold their play and weaker longs are being taken out on 10 and 20 day support points day by day. But watch daily volume,COT and upside pricing in a days range for any indication that the relentless push south needs to take a little rest.

On Reuters today you may catch an interesting comment on the article

Political foundation of euro project has been weakened - ECB's Coeure 

Which discusses the unraveling of the Euro,and another important article at Reuters today below which amply illustrates that Germany is at loggerheads with the ECB on the QE program.

ECB's Mersch: German reservations reflected in QE's "small print"

Given the fractious relationship between Germany and the ECB it is no wonder that traders sense a divisiveness that does not encourage any immediate postulations for Euro Zone economic strength. Hence hedge funds hovering in the skies like vultures sensing a further precipitous fall from grace.

The Guardian UK newspaper today comments "better late than never"

However, this commentary starkly admits indecisiveness at the ECB in the very first place and seems to stand right in the face of an old trading adage that "Good Money doesn't chase bad" and ignores the trading concept universally come to be acknowledged as - Gresham's Law - that bad money eventually chases out the good.

1.00 parity is in play.


Pieter Bergli - DeLoren Trust Holdings

Forex education - the currency markets education

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Forex paper trading simulation to test drive your currency trading concepts

Dear Readers,

Life is a constant process of education.

I have often been asked the question which website is all round informative, accurate and easy to browse through and my answer has been consistently - barchart which can be found at -

http://www.barchart.com/

For those of you who would like to paper trade for free and test drive your lessons and ideas then please apply online for a paper trading account. The site provides a unique but simple overview of forex trading with real time data so test drive the barchart trader and see how your ideas stand the test against real time and delayed data feed.
 
http://www.barchart.com/trader/help/trading/paper_trade.php 

and their forex pages can be found at -

http://www.barchart.com/forex/marketoverview 

Every day is a learning day.


Pieter Bergli - DeLoren Trust Holdings

Forex education - the currency markets explained 

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

23rd January 2015

Market Commentary

A couple of years back Mario Draghi was quoted as saying that the ECB would do "whatever it takes" to stimulate the European economy. Clearly today that has not happened, the Eur has collapsed further and worse; it is clear public knowledge that Germany is not happy at all with the entire Q.E concept, the ECB bungling of the bail-outs for weaker Euro nations and clearly the Euro land is now more divided than ever for not knowing how to keep it's house in order as Germany wishes it to be. US DX

94.996     +0.801 +1.03%

Support at 93.634   resistance  96.484


EUR/USD

1.12040   +0.00005 0.00%

Support at 1.09897      resistance 1.15097


Crude Oil

45.59  -0.97 -2.09%

Support at 43.64  resistance  48.74


Gold


1295.290   -4.895 -0.38%

Support at 1,274.7   resistance  1,311.9


Pieter Bergli - DeLoren Trust Holdings

Currency market perspectives

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

22nd January 2015

Market Commentary


The President of European Central Bank Mario Draghi announced on Thursday that the European Central Bank will buy 1.1 trillion euros ($1.3 trillion) worth of government and select corporate bonds through to September 2016 but would this be enough to restore an already flagging Euro consumer sentiment with consumers very reluctant to spend? The euro currency quickly declined to the 1.13 lvel on the back of the news that the ECB's quantitative easing program will be much larger than analysts had originally expected.

US Dollar
 
94.382 +0.187 +0.24%

Support at 91.837     with resistance at 96.027


EUR/USD
 
1.133109 -0.003250 -0.29%

Support at 1.11103     and resistance at 1.18043


Crude Oil
 
47.07 +0.76 +1.63%

Support at 43.87  and resistance at 50.31   


Gold
 
1294.690 -5.495 -0.42%

Support at 1,267.2  and resistance at  1,324.6


Pieter Bergli - DeLoren Trust Holdings

Currency market educational perspectives

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/

21st January 2015

Market Commentary


The currency market is all on Q.E watch waiting for Mario Draghi to spell out these exact details of the Euro bond buy back program to provide a stimulus to the Euro banking sector. The quantitative-easing program is expected to exceed 1 trillion euros.  The ECB’s Executive Board proposed a target spending plan of 50 billion Euros a month to buy back Euro member state sovereign debt through to the end of 2016 which is about 1.1 trillion Euros..This follows the successful introduction of Q.E in USA and UK since 2008 but many traders are skeptical that this program will work hence the pressure on the Euro currency.

US Dollar

92.986   +0.274 +0.35%

Support at 91.977 with resistance at 93.907


EUR/USD

1.158865   -0.001240 -0.11%

Support at 1.14730  and resistance at 1.17450


Crude Oil

47.53  -0.25 -0.53%

Support at 45.86  and resistance at 49.16


Gold

1287.465 -5.155 -0.40%

Support at 1,272.7  and resistance at   1,317.5


Pieter Bergli - DeLoren Trust Holdings

Forex market education

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/

19th January 2015

Market Commentary -


US DX   

92.616  -0.047      -0.06%

The US DX is extending its strong winter rally.but for the short term the market looks a little over-bought and signaling that a short-term top has been made. Any close below the 20-day moving average crossing at 91.29 will confirm that but if if US DX continues to rally then the next weekly resistance crossing is at 94.32 as the next upside target. the first resistance is last friday's high crossing at 93.56 and the first support is the 10-day moving average crossing at 92.28.


EUR/ USD

1.160700   +0.004835     +0.42%

A much calmer market now resumes after the SNB shock and much of the Q.E fears hs already been factored into the EUR slide. technically market is oversold and needs a breather for direction. But if the decline resumes
the monthly support crossing at 112.75 would be the next downside target. It would take a close above the 20-day moving average crossing at 119.87 to alter the trader's perspective on EU.


Crude Oil

47.86     -0.03      -0.06%


The CL February crude oil rally has run out of steam and reason. Last week's  higher closings were more to do with profit taking on short covering on Friday rather than any fundamental and technical reason. It would take a strong close above the 20-day moving average crossing at 51.35 to confirm that a an upside bias. But, if February CL extends the decline off 2014 June's high, then monthly support crossing at 43.77 will be severely tested as the next downside target.


Gold 

1276.85  - 0.13     -0.01%

Gold appears overbought but remain neutral to bullish signaling that a sideways to higher prices are still possible in the ear-term. First resistance is at 1282.40.with first support at the 10-day moving average crossing at 1230.10.


Pieter Bergli - DeLoren Trust Holdings

Forex education for all

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/

Article - A clear demonstration of what can go wrong day trading Forex

The last 2 days of forex market chaos surrounding the CHF and EUR clearly demonstrates the dangers of day trading in the currency markets.

Several big banks like Barclays and Deutsche lost "tens of millions" of dollars and we are only beginning to see the true nature of the currency trading fall out. So if the big banks like Barclays, Deutsche and Citi can get it wrong how could the smaller currency brokers fare considering that they do not have the capital base that large international banks do?

Today, it is estimated that the retail currency market in total makes up about 4 % of the daily global daily spot turnover according to the latest survey from the Bank of International Settlements. That is a very small market share of a global currency market daily estimated at 3 trillion dollars in the spot market alone.  Although companies from the retail currency sector like FXCM pose a very limited risk to the overall financial system because they are not banks that trade in huge volumes of currency for import export clients, still when things goes awry it becomes a time for the regulators to turn the spotlight on and address issues that can protect the small time traders from trading currencies in the future.
In the last 15 years brokerages have sprung up offering the public the ability to trade foreign currencies with high leverage and very low transaction costs. The cash FX products became high popular amongst retail customers with under $100,000 US Dollar accounts. Internet marketing enhanced the appeal of the forex trading platforms and the relative ease of account opening led to great popularity.

But now that the dust is finally settling on the SNB's sudden decision to cap the value of the CHF, a host of questions now arise concerning the actual safety of such retail forex trading accounts.

Question 1 - How Big is Big? What does it take in terms of financial size for a brokerage to demonstrate that it has enough liquidity to sustain massive market turmoil and protect the value of it's customer accounts? if FXCM lost a reported $250m and would not have survived without a rescue, then how much more likely could smaller brokerages fold in the face of a liquidity crisis?

Question 2 - In fast moving markets had the customer been made aware of the dangers of entering trades at prices that maybe visible on screen but in effect and reality are far different from that quoted at the moment a trade is placed? Brokerages should be more transparent on how they price their trades. During fast moving markets the temptation becomes much easier to distort pricing and fairness to the account holder.

Question 3 - Do brokerages really explain with clarity to the customer the concept that stop losses cannot guarantee the pricing at which a losing trade will eventually close out? there really needs to be more demonstration of what can go wrong instead of the tiny print disclaimer.

Question 4 - Do brokerages that set their trading prices fully explain to the customer the mechanism whereby they obtain currency in the wider markets and provide a list of their own counter-parties to demonstrate market depth in order to obtain best prices at best efforts at any given moment in time?  Obviously a brokerage with several counter-party relationship is faced with more trading options than a brokerage tied to just a few currency providers. Transparency over counter-party relationships would greatly assist a potential customer's decision over opening a new account.

Question 5 - Liquidity? They say that the currency markets are most liquid markets in the world but exactly do we know if our platform providers are liquid enough not to go insolvent during a heated moment? In fairness yes that's certainly true with daily volumes in several trillions US Dollar value. However, in opening a private account with a forex provider, the account holder is usually tied to a single counter-party, being the platform provider itself. So, in reality, the customer doesn't really have a wide array of trading angles like a professional dealer. Hence, the reality of the absence of liquidity, unlike the futures markets where a trader can offload position with relative ease into a liquid market.

We still cannot ascertain the overall damage done to the retail trading sector in the forex market. it's still too early. But damage has been done.

Alpari, the large UK currency broker has folded as a result of massive adverse price movements in forex, and the majority of Alpari account holders had "sustained losses" and will have to go through the painful process of partial recovery of their lost value if at all, through the legal system. New Zealand foreign exchange dealer Global Brokers NZ was also forced as a result of huge losses. Both IG Index and CMC Markets also recorded losses  that will affect their customers. Moreover, the popular currency platform provider Denmark's Saxo Bank, one of the biggest players in the forex market, said that it may have to readjust accounts and set different rates for its clients' transactions over the last few days. That indeed is an alarming statement. Saxo Bank chief financial officer Steen Blaafalk told Reuters that some clients had suffered losses and admitted the possibility of litigation should Saxo set different rates.

Indeed these are not good times for the retail currency market providers given that there will be close scrutiny over their trading practices in the months to come.

Conclusion - When trading cash forex in the retail spot market a small trader really needs to do a lot of homework in selecting a platform provider. Forex brokerages are mostly not banks although some may be part of a banking group as in the case of Denmark's Saxo. Certainly forex brokerages and their solvency can become tested under moments of duress as exhibited in the last few days. However, with currency futures products on global exchanges there is far more transparency on the prices of exchange traded products than when trading cash fx products on a private non-exchange related platform. Tighter regulations on exchange-traded products can at the very least, assure a trader of fairer pricing.




Pieter Bergli - DeLoren Trust Holdings

Forex reporting for a better currency markets understanding

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Article - Spot Day Trading Forex During A Reversal With A Hedge

Although I do not encourage day trading in the forex markets as can be seen from the recent 2 days volatility with the SNB abandoning its CHF cap, there are those amongst us who can really discipline themselves and make a success out of day trading. But it takes a lot of discipline, carefully watching the day volatility and determining quick entry and exit points. Just imagine if you went long for a short hour on the EUR prior to the SNB making its announcement? All the more reason I continuosly and strenuously advocate trading with a hedge. Stop losses are largely ineffective in rapid moving markets and when they get overrun you could be in for a horrific shock as to where your stop actually fell when your provider fills your order. 

So for those who do have the mental toughness and discipline to handle this arena then let us examine how a day trader can handle the whipsaws and reversals that frequently occur when sudden news events sends the volatility shooting for the stars! because everything that goes down goes back up and vice versa; it is the nature of the universe; the Yin and Yang and to and fro of price action.

Usually day traders wait for news events like economic data releases and they perfect their entry points on the sudden releases of data and manage risk through the application of a stop-loss. However, surprises to come, as with last this Thursday's shock SNB announcement that caught many big traders wrong footed. Losses frequently compound with further entries. It would take a revolution in human nature were we to confess that the whole human ego could be contained from the slightest impulse to re-enter a position having had the original stop-loss over-run. Thereafter, swift moving markets can lead traders into false traps as a second trade gets wiped out and the human ego gets hurt and foolhardy enough to enter a third trade with a stop-loss fooling his own  self that the market will turn and that his analysis should stand without correction. Nothing can be further from the truth. It takes utter humility to learn this painful lesson that once over-run; walk away from the screen, temper your flaring ego, and come back a little later on to see how the dust has settled.

But any how, let us try now explore how we could manage risk in the face of adversity. Let us now attempt observe a market reversal in the following 5 minute chart of the to illustrate how a trader can manage to contain reverse and risk effectively and ride the negative pullback even in spite of closing the stop loss marker and minimize losses to potentially earn a modest profit.

Let us assume that on January 13th 2015, 6am GMT, that is 2 whole days prior to the market chaos on the EUR, we entered a long FX cash position in the following EUR/ USD chart coupled together with a put option on the March 2015 Future, together with a Stop Loss. In the chart below see the first blue star to represent our long entry.

Thus our entry would be -

Cash FX - 1 Long - 1.1785
Stop Loss - 1.1775
Put Option Mar 15  - Strike  1180 at 0.01900s = $2375.00

Using an option as a safety valve in the short term can be expensive, however, 1. losses can be mitigated if the long position is stopped out (( as can be amply illustrated with the SNB causing chaos with the CHF and the EUR)), and 2. the use of the option can be retained for further successful longer term forays to trade on the dips for short periods of time. of course the option will only retain a net value so long as time decay does not begin to decrease at a greater rate than the previous day. That is why if you purchase an option then make sure you have decent time value for your purchase, like taking an option on the 2nd contract forward. The premium maybe expensive but the outlay worth its weight in gold in adverse market movements like what happened the last 2 days with the EUR.  So a successful day swing trader may be able to get some good mileage out of an option for as long as perhaps 5 trading sessions, bearing in mind Exchange fees can run high for the entry and close of the option position.

Now after the first long trade has been entered we are adopting the outlook assuming that the market will bounce upward after several negative sessions but with an extra option insurance to protect the downside. Then from there we will take a look at how we can react when things hypothetically go wrong.

Now here is the 5 minute chart for the EUR/USD on that day 13th Jan -

Now during the course of the day at 9am our cash position had got stopped out with a loss of 10 pips because the cash price declined through 1.1775 and in fact reached 1.1760 by 10am. Our original swing trading idea of taking a long to take advantage in the easing of selling pressure has backfired.

Our new net position would be - 

Cash FX - 1 Long - - 1.1785 stopped 1.1775 - 10 pips
Put Option Mar 15  - Strike  1180 =     $2400 (+25)

Thus although we got our trade wrong, the put option has indeed protected and minimized our losses to some extent subject to deduction of Exchange fee. Of course the option requires a premium down-payment particularly if your strike price is near the market price and represents a bigger cash outlay than the cash FX. But in the long run, with good time value, the option insurance value can be retained for good purpose so long as time decay doesn't rapidly begin to grow. A mere 30 days can be a lifetime in the forex markets. Indeed if we decided to let the put option run without further cash long entries then the put option could potentially accumulate value where the price of the cash FX to sink further to 1.700 and beyond due to long term weakness in the market. However if we had day traded without the option we would be 10 pips loss. Thus trading with options add to a degree of safety in that losses can be minimized. Furthermore, in view of the last 2 days, should our put option trade still have been in place on thursday morning, then put option would have rapidly increased in value as EUR sank to the 1.16 and further.

But coming back to our angle of Day Trading, let us now assume that on an 13th we decided to enter another long cash FX represented in the chart above as a 2nd blue star entry.

Our new position at 10am would be thus -

Cash FX - 1 Long - 1.1760
Stop Loss - 1.1750
Put Option Mar 15  - Strike  1180 = $2400 (+25)

Now on this day the market bounced from 10am to 12 noon to 1.1795

Thus our new net position would be -

Cash FX - 1 Long - 1.760 - + 35 pips (closed 1.1795)
Put Option Mar 15  - Strike  1180 = $2350 ( -$25)

Options prices do not exactly move with cash FX and may present arbitrage opportunities.However exchange fees can vary.

From here on the market hit a sideways trading channel for the next 10hrs before further decline, which became the lull before the SNB storm 2 days later on Thursday.

In this manner the successful day trader first of all suffered a setback with the first long fx position losing 10 pips, albeit with protection of the put option, and then in a second fx position entry a plus of 35 pips was made taking advantage of short term swings in the market and to net 25 pips overall in total for the 2 trades. 

The professional swing trader would then let the put option hold since there are another 60 days to expiry and significant time value in the option and accumulate in value until the point of deciding to make the next long entry in another swing trading entry to take advantage of respite when pressure eases off the Euro. At the 1600's within a few days of retention the put option may have gained $250-300 dollars before exchange fee as it still has significant time value inherent.

Prices do not go down hill all the way if you could pull up a 6 month chart of the EUR/USD. prices may have fallen but they zig and they zag.

Successful day traders take advantage of this zig and zag like learning to harness the Yin and Yang opposing forces. They would swing trade with long entries and maintain put option position in the direction of the trend being short. Up or down, high volatility or love volatility, taking a short or long cash fx position can sustain any damages should adequate option protection be maintained as in the example of the EUR crash on Thursday this week. Furthermore should the trader decide to switch strategies from the short term swing trade to a longer trade, then the put option could be rolled over, should the trader deem it necessary to trade all the way down the price action should the EUr naturally gravitate to the 1.00 parity as is forecast.

The key is flexibility. the necessity is to know when to switch from a short term trading strategy to a longer term position. markets are constantly in flux. and as the SNB showed us on Thursday, sudden surprises can stretch known volatiles to the limits. Price movement means price discovery and opportunity. in an adverse scenario should the long fx cash position be stop lost even 200 pips away from it's original entry, the put option increment in value would negate the loss incurred through an over-run of the stop loss. I cannot underscore the value of options hedging and the market action on Thursday demonstrates the reasons why options hedging should be advocated.

Conversely, with an upward trend a swing trader may look to short every respite in buying pressure and maintain a call option position in the direction of the trend being long.

In this manner a trader may not get his results right every single day, but in the long run with options trading he has mitigated his chances of losses on bad days and has increased his chances of gain on good days subject to Exchange fees for trades.



Pieter Bergli - DeLoren Trust Holdings

Forex education technical training for currency traders

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

Article - EUR Drama And The Cost to FX Brokerages

ECB Executive Board member Coeure was said to have gone on record that for the EUR QE program to become efficient then "it would have to be big" and that "we will take into account the American and British experiences to determine the amounts of bonds to buy."  That the SNB moved dramatically in the currency markets on Thursday to abandon the 1.20 mark is a strong indication that the QE program is going to be strong and decisive.

The swift action of the SNB to abandon it's defense caught forex dealers worldwide by such surprise that several notable dealers were inundated in adverse currency movements in the face of tsunami like price volatility.

According to Reuters today - read full article here - 
http://www.reuters.com/article/2015/01/16/us-citigroup-forex-idUSKBN0KP26B20150116?feedType=RSS&feedName=businessNews 

even a behemoth like Citibank got caught up wrong-footed in all the swirl of price volatility. Apparently Citibank, one of the biggest currency dealers in the world, had lost more than $150 million on thursday alone with the massive appreciation of the CHF. 

Even more scary is the story that US based currency broker FXCM ran into severe liquidity trouble yesterday and needed $300 million in emergency funding to prevent it's collapse yesterday. 

Read this article on DealBook http://dealbook.nytimes.com/2015/01/16/currency-traders-rattled-in-wake-of-swiss-central-bank-move/?partner=rss&emc=rss&_r=0

FXCM are supposed to be one of the better forex platform providers for small time traders and are listed on the NYSE - http://www.fxcm.com/
in a truly staggering fashion FXCM on Thursday dramatically imploded in a single day after the SNB led tsunami and its shares on the NYSE fell a much as a staggering 90% and trading nearly halted on news of financing with a senior secured term loan from Leucadia. After re-opening for trade for the Friday after hours session the shares of FXCM were up to around $4, which is about 70% down from its closing price on Thursday. 

 FXCM just released a press release  - http://ir.fxcm.com/releasedetail.cfm?ReleaseID=891597

January 15, 2015

FXCM Comments on Swiss Franc Movement

NEW YORK, Jan. 15, 2015 (GLOBE NEWSWIRE) -- FXCM (NYSE:FXCM) an online provider of forex trading and related services worldwide, announced today due to unprecedented volatility in EUR/CHF pair after the Swiss National Bank announcement this morning, clients experienced significant losses, generated negative equity balances owed to FXCM of approximately $225 million.

As a result of these debit balances, the company may be in breach of some regulatory capital requirements.

We are actively discussing alternatives to return our capital to levels prior to today's events and discussing the matter with our regulators.
----------------------------------------------------------------------------------------------

Considering that the small time trader is largely dependent upon forex trading platforms as such the events of the last 2 days were very frightening. But unlike the events surrounding Refco and Man Financial where traders saw their funds tied up it is a credit to FXCM that they secured bridge financing with such swiftness to stem the tsunami pressure upon its dealing positions. Smaller traders are literally at the mercy of their providers in demonstrating good governance and upholding trade liquidity. To the relief of many currency traders the avalanche did not quite bury FXCM thankfully.


Pieter Bergli - DeLoren Trust Holdings

Forex market education for traders

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer -  http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.