Forex Education Perspective: June 2016

Wednesday 29 June 2016

Forex Traders Must Face Continuous Health And Stress Issues

Forex Market Commentary

Twenty thousand years man was a hunter that roamed the plains surviving on a staple of lean protein, nuts and berries. Today man has become a complex social creature facing different issues of survival which are largely man-made. The story of evolution does not always guarantee the survival of a species. In spite of a comet impact which wiped out a large percentage of the dinosaurs, eventually, it was the changing cooling climates which wiped out most of the reptilian cold-blooded dinosaurs which were not able to adapt with the changing environment.

The Forex trader faces a complicated world that changes more rapidly than that the clouds above the alluvial plains where our fore-fathers hunted. Nature's perennial code of 'Survival of the Fittest' has become more than an instinctive reaction to fading daylight and wind carrying moisture in the air. The basic instinct of the modern man is largely a response action to man-made smells, sights and sounds where the brain has to process and sort-out and differentiate between natural and man-made phenomena. Within this new world is the life of the Forex Trader whose basic instinct for survival largely revolves around binary and digital information. A big world has recently become bigger over the last two thousand years and the biological longevity plan of the Forex Trader must face these new challenges of dealing with a more complicated world flooded with much more information.

Within this complicated binary and digital world the Forex trader faces several continuous health issues that rises form the very nature of leading a sedentary lifestyle based upon a diet what is almost entirely processed and carbohydrate. In comparison to the early hunter-gatherers the modern Forex trader has a lifestyle which is not honed to surviving in the natural world but in a world that is thousands of times more complicated and therefore more potent with stress-related issues that affect the human body. Twenty thousand years ago a hunter-gatherer would face a mountain lion or perhaps a wild boar and learn to survive out in the wild with minimum shelter and warmth as some of the factors that may induce stress. Yet, twenty thousand years ago our fore-fathers would not accumulate health issues of hyper-tension, diabetes, insomnia, irritability, indigestion and a whole range of debilitating illnesses that could affect the quality of life.

Trading the markets and maintaining mental alertness over several hours per day cannot be measured to the stress of stalking a small mammal like a rabbit with patience in the field. The biology of man has changed over time and the chemical composition of the human body under duress today cannot be compared to the biology of our early hunter ancestor. In an unfriendly and competitive world it therefore becomes imperative for the Forex Trader to seek a balance in order to re-create some of the driving energy that characterized the prowess of the early human hunter with his skills in survival.

Proper diet, exercise and meditation help the modern Forex Trader to get back in touch with his genetic ancestral instinct to make up the complete trader working at optimum performance.

For myself I use Protandim NRf1 and NRf2 for physical and mental boost to keep my mind at body at peak performance over long periods of time.

Check it out:

Http://mylifevantage.com/goldenyearscharities

Give yourself an edge and reduce your stress levels to trade at the best level of proficiency. Stress weakens you, debilitates the mind, and blunts your focus. Take the necessary steps to reduce stress before illness strikes. To some extent you can remove several of the disadvantages of trading with correct nutrition and balance in mind and body to give you a more acute level of concentration and an overall solid performance. You owe it to yourself to build out your health parallel to your trading plans.

Pieter Bergli - Trader X16

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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.

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The Rise Of The Asian Forex Bot Trader And The Brexit

Forex Market Commentary

The Forex trading that I once knew came to a close on Brexit day with the rise of the Asian gamer cum machine trader.

For centuries civilizations clashed in the race for resources, politically and militarily as geopolitical supremacy rose and waned across the world. Two world wars and the friction of two political ideologies are responsible for the story of the 20th century. But today, after the electronic revolution became replaced by the new information technology revolution, with the advent of globalization, the pursuit of assets has taken a whole new meaning today where opposing players inter-act in the race for resources, economic and political advantages.

As a young dealer I can remember the hunting culture as we preyed Forex markets looking for spreads to carve out 3--4 pip bid-offer spreads and pile on our recorded efforts to make profits in the largest Inter-bank Forex market in London. Then come every Friday night, whether as a pin stripe Etonian or blue-shirted and high-spirited Essex lad, we all ventured into the same ritual mind-bender beginning with the traditional pup-crawl from Leadenhall St. towards the West End bars, ending up totally smashed until Saturday sunrise. Fortunately, the London culture of Forex traders was a once a week affair for the Brits really knew how to curb excesses when called for even through the absolutely rowdy indiscipline. In contrast to London, the Asian Forex culture is like a tradition on steroids. I used to think that Asia was symbolic of conservative pragmatism until I hit the neon streets and found a culture several levels raised in excesses. In Asia, from Shanghai to Seoul, from Tokyo to Hong Kong, the culture of the Forex trader was a complete surprise to me ith the sheer level of excess. The ritual of haunting the kærəˈoʊki and the sōpurando among the Forex traders was almost a daily affair! Astonishingly, no matter how copious the alcohol consumed nightly, the Asian trader would be at his desk to attention come 7 am the following morning.

As in Europe and the USA, in Asia too the Internet has led to the proliferation of Forex trading platforms which has seen a steady growth of day traders over the last few years. But whilst growing trader interest in Europe and USA has steadily consolidated itself incrementally, in Asia the rate of new account openings has become an exponential growth pattern. With over a billion heads and horse power to back it, the Asian Forex market now contains a massive 25% of such global day traders. With some serious capital at their disposal, and being positioned at the beginning of the global clock for the first time ever, this Brexit day, we witnessed the serious clout of the Asian day trader that was a culture totally non-existent during 2008. How sudden the Forex world has changed and the signs of the new changes are ominous as the Brexit event has illustrated. Nobody understands this new generation of computer-obsessed gamer, based in Asia, who have now become the most fervent Forex traders with the potential to do some serious damage in the global currency markets. But they are now here and now we really know that they are here.

The millennials of the UK bemoan the Brexit result but ahead of the clock on that day as the voting began it was the new culture of Manga Kissa or Internet cafe game-players turned Forex traders who began the very first flapping of the wings of a butterfly that caused the earthquake last Friday taking GBP/USD down from 1.50 to 1.33 as the main body of the price action by the time Dubai and then Frankfurt and London opened. Whispering in private chatrooms and initiating the very first short trades, auto bots soon followed compounding more short trades until by 8 am Tokyo the shorts were becoming a cascade on the Asian day trader platforms.

Whilst bankers and analysts will scratch their heads and ponder this day Brexit, we witnessed the rise of a new breed of Forex trader who grew up in a virtual world of computer games and who now have the stamina to beat the very best of traders from Frankfurt to London and New York. We witnessed the rise of the bot trader from Shanghai to Seoul, Tokyo and Hong Kong; young twenty-something Millennials dwelling in secretive chat-rooms, auto trading and hand-on trading working against a false long position that most of the Euro banks took during the voting day. Auto trading compounds fears. Short positions mounting that Friday morning on Tokyo opening fed into the mainstream Asian banking world as Forex brokers got wind of massive short orders piling up on the GBP/USD. Transferring that weight of opinion into the mainstream bank dealing world, one domino led to the other as the Nikkei fell and other equities markets crashed until the flapping of wings became a voluminous shout sprouting panic in London dealing rooms as dealers trekked into their offices to watch the horror of a Japanese tsunami come head on. The whispers in shady chatrooms had caused an earth-shattering combustion event that is still to be fathomed as the credit agencies shave off the UK AAA rating. Forever now smart Forex traders will watch the Asian markets astutely for any tell-tale signs of ripples in the Forex markets.

With growing interest and growing financial power and a young population obsessed with trading on a level similar to the computer game industry, witness the arrival of the new Asian day trader and ignore them at your peril. The weight of a ripple in Asia has become a game-changer as we witnessed on this Brexit day. What is really frightening is the sheer determination of such young Asian traders to play a numbers game with equal adeptness with their counter-part mainstream dealers from Europe and USA.

Monday 27 June 2016

When Candlesticks Go Wrong In The Forex markets

Forex Market Commentary

Very briefly I will explain why I consider Day Trading upon 5 min charts is a dangerous activity in comparison to Position Trading from several angles and in my argument I hope that readers will take a good look at the trading arena which has become so accessible over the last decade.

Financial markets are mediums for individuals to invest their money and make a return. But equally they can become arenas where money can be lost very very quickly.

1. Forex traders today seem to be bombarded with a whole lot of mis-information and misrepresentation about the ability to make money very fast on internet based forex trading platforms. Such marketing material appeals to our very human nature to want to get somewhere in life as fast as possible. Such experts give you a set of tools which primarily revolve around following data release events using the popular tools of measurement such as candlestick charts and they go on to say that with a large degree of probability you will make gains. But I will now demonstrate to you the flaw in this logic.

2. When you flip a coin 10 times perhaps you may end up with 7 heads and 3 tails or 2 heads and 8 tails. But for the sake of empirical evidence and reasoning conclusions you need to have a higher account of events like 1000 flips where eventually the numbers would settle with even probability for head and tail counts. Candlestick charts are a great set of tools when applied to longer term charts like the day and weekly charts because they can reasonably sum up the market psychology and pressures on price action. With day charts we can stretch out analysis back over several years. However with the 5 min charts which day traders use we are more or less restricted to 12 candles per hour x 8 for a session. In total that's 96 candles for a day trading session. In comparison looking at the daily charts you have a reference of some 300 candles reflecting 300 trading days in the year. Empirically you can now see the picture how day trading on 5 min charts has less data reference than a position trader who can refer to an entire year range of date.

3. In a shorter time frame the candles become blurred. If a day candle can sum up price action, trader psychology, fears, expectations, fundamental factors and illustrate the overall feeling for the market for that day, then what exactly does a 5 min candle represent at a microscopic level? Essential, in the short term what we have is noise.

Here is the day chart GBP/USD and today 5 min chart.

On the day chart with a high degree of probability a gap up usually is followed by reluctance and steams out into a shooting star that leads to a collapse in prices. This is the Brexit day. If you entered a short trade on the shooting star towards end of day session you would have made gains.

On the 5 min chart GBP/USD the noise becomes blurred. Many traders take a 5 candle momentum up as a need for a pause and pull back and enter a short trade but here in the 5 min chart the price climb did not stop. and the candles have become unreliable. Usually in day charts a hanging man candle leads to a collapse on the basis of a 50% retracement if you are using Fibonacci guidelines. But the hanging man candle in the 5 min chart became unreliable and failed as did the shooting star red which was followed by a green successful shooting star. Thus you can see in a shorter time frame it becomes harder to evaluate the market psychology in candlestick charts. There is just too much noise in the short term 5 min charts for the candles to truly represent price action.

3. When candlesticks go wrong for the day trader when a trader is using a forex platform there is no ability to hedge. In comparison, when you trade futures you can hedge yourself with options and in rapid moving markets you can figure out the put-call parity to work out actual pricing. But many forex platforms do not provide a hedging ability. i am more in favor of trading currencies with the more regulated Futures Commission Merchants because there is more security on your money.

In conclusion I believe that we read to much into our expectations by what we hear from experts on the internet and consequently many traders see their capital wiped out. trading forex should be for the longer term where more judgemental analysis can be reached with more accuracy in candlestick charts reflecting a longer time horizon. However, as ever, too many of us want to get to our goals too quickly. Forex trading should be a part of a comprehensive and balanced plan for managing your money together with stocks and bonds and commodities. We should put out of our minds ideas of making 100% returns and keep our expectations to a more modest level with the aim of conserving and preserving capital first and thereafter to carefully grow investment direction with forex trading as part of a larger plan to grow wealth.

For these reasons forex day traders usually struggle because the experts themselves give flawed presentations on candlestick charts. What the experts do not do is point out that candles are better suited for longer term analysis.

Saturday 25 June 2016

Advantages And Disadvantages Of Day Trading Forex Markets

Forex Market Commentary

The human mind and body can be likened to a motor vehicle; being mechanical in nature, eventually wear and tear takes a toil until the point of mental and physical breakdown.

Go to the Forbes list of wealthy people and just try to count how many people in that list of billionaires actually came from a trading background. Of course the most famous of all is George Soros who infamously broke the GBP in the 1990's. But not too many traders actually accumulate such vast fortunes quite simply because it is impossible in the long run to consistently make money year in year out over a period of ten years.

Trading can be a capricious and and harmful profession in the long run if were a vocation to be pursued per se, solely, without consideration of other business activities. In essence, the seasoned trader knows that he or she is against time and learns to temper down his or her initial enthusiasm to embrace a more pragmatic approach to trading over the long haul.

The advantages are opportunities for making money once or twice a day; the disadvantages are more likely that your day trades can go awry with sudden change in market sentiment.

Day traders in the forex markets typically use candlestick charts on a 5-mins basis as the prime method of interpretation of price action. Some of the trade criteria they adopt are as follows:

1. Central bank - taking positions on FOMC and ECB minutes release etc.
2. News releases - trading a Reuters breaking news
3. Time-zone cut - entering a trade at the start of Euro or NY session.
4. Momentum trades - counting bars, typically 5-7 successive green/red..

Without doubt all this activity requires the most astonishing level of concentration and peak mental alertness.

Forex trading as a vocation demands mental and physical health for optimum performance. That means a decent level of physical athleticism and mental stability. Certainly we are a baggage of emotions and they can at times inhibit our judgements. That is why activities like physical exercise and yoga and relaxing periods of time are essential as well as proper nutrition to make up the complete trader performing at optimum performance.

For myself I use Protandim NRf1 and NRf2 for physical and mental boost to keep my mind at body at peak performance over long periods of time.

Check it out:

Http://mylifevantage.com/goldenyearscharities

Give yourself an edge and trade at the best level of proficiency. To some extent you can remove several of the disadvantages of trading with correct nutrition and balance in mind and body to give you a more acute level of concentration and an overall solid performance. you owe it to yourself to build out your health parallel to your trading plans.