Forex Market Commentary
Secondly, we have understood that the world of currency markets belongs to the commercial banks which buy and sell currencies for their customers who engage in international trade through imports and exports across international boundaries. Within this setting we have seen how large currency speculators have applied pressure to prices at key moments during the course of 2015. And of course during the cycle of zig and zag we have noted how the pendulum swings and equilibrium is restored in markets by tracking the 50 day medium term moving average and the 200 day long term average in price.
Thirdly, within such a setting we have learnt the need to place an understanding of fundamentals together with a basic grasp of technical trading.
A conclusion from the study of the currency markets may lead us to the basis that small speculators can become successful in trading currencies given that they apply a disciplining set of rules which can govern their own emotions and expand upon their strengths by way of choice of day trading vs position swing trading to suit the personality.
Small traders are limited in choices; but the lack of choice does not inhibt growth and success. it just means that the small trader has to become very smart in recognizing how to play to his/ her strengths.
Next year, 2016, I shall be focusing more upon the fundamentals of dealer noise and how to filter out the grapevine and develop your own instinct on how to sort out the rumor from the fact. It takes time to develop reflex actions but we shall try. Also we shall take a closer look at technical aspects of trading and how we can just cut out the huge amount of information overload to stick to a few grounding principles like candlestick charts, moving averages and RSI and work with these little studies to achieve a higher probability of success.
For portfolios under $100,000 forget trading currency options on the futures market. Currency futures are more suitable for portfolios over $300,000. Should a small trader devise an elementary risk diversification plan by dividing his/ her basket into 10 separate sections, when currency options can cost as much as $10,000, we can quickly see why their use is better served for larger funds. smaller traders are best served by understanding binary options and i shall be taking you through that world of binary options and how to deal with the rapid factor of time decay in hedging your position for a swing trade.
Overall, traders do not like to trade in December and are more likely inclined to square off their books and so i shall wind down the reporting now since we only really have the November and December FOMC to watch out for.
Given an official 25 basis hike I cannot see a big push on the EUR/USD to the 1,05 unless something dramatic happens in Europe with an expansion of QE to 80 billion or more. Germany is not happy and there is a growing dissension on the current European QE if it would lead to negative bond yields. So we should be range bound 1.06 - 1.08 for the rest of the yearon the EUR/ USD. USDX 98-99, Crude WTI 40 -45 and Gold may pick up with Xmas sales round the corner so we should see strong support at 1050.
Always remember that proper planning prevents poor performance.
Yesterday, when the US retail figures came out in US session and the EUR/ USD spiked in seconds some 40 pips I was just wondering to myself how many small short traders may have panicked and cancelled their shorts. When prices move against you I find that the more interesting part of trading, for the maturity of the mind to allow the trader to take a moment and step out and watch. and lo and behold the pendulum swung again in a matter of minutes as panic gave way to reason and retraced the price. It takes time to develop instincts to filer out the noise, but we shall get these soon enough. of course in the futures makets with a limit down you could always go the options pits and work out the call-put parity. This what I hope i can make small traders understand is: there's actually no need to panic at all; forget the maddening crowd and listen to your instincts building upon years of simple analysis. Cut out the noise and the zillion technical indicators. Keep it simple and march on cut and thrust but keep on marching on.
Yours sincerely,
Pieter Bergli - DeLoren Trust Holdings
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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.
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