Effect of Monetary Policy to Financial Market 2012

Unanticipated changes in monetary policy will produce both price (substitution) and income effects. For example, suppose monetary authorities begin a program of expansionary (easy) monetary policy.
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We would then expect the following sequence of events to occur with regard to the price effect:
·Real interest rates will be reduced.·As real interest rates are reduced, domestic financial and capital assets become less attractive as a result of their lower real rates of return. Foreigners will reduce their positions in domestic bonds, real estate, stocks and other assets. The financial account (or balance on capital account) will deteriorate as a result of foreigners holding fewer domestic assets. Domestic investors will be more likely to invest overseas in the pursuit of higher rates of return.·The reduction in domestic investment by foreigners and the country's citizens will decrease the demand for the nation's currency and increase the demand for the currency of foreign countries. The exchange rate of the nation's currency will tend to decline.·With no government intervention, the financial account and the current account must sum to zero. As the financial account declines, the current account will be expected to improve by an equal amount. In other words, the balance of trade should improve. The country's export will have become relatively cheaper and imports will be relatively more expensive.
The effect of an expansionary monetary policy is to lower the exchange rate, weaken the financial account and strengthen the current account. A restrictive monetary policy would be expected to result in the opposite: a higher exchange rate, a stronger financial account and a weaker current account (a more negative, or a less positive balance of trade).
With a program of expansionary (easy) monetary policy, the following sequence of events would be expected to occur with regard to the income effect:
·The domestic GDP will rise.·The rise in domestic GDP will tend to increase the demand for imports. The increase in imports will cause the current account to deteriorate.·The increase in imports purchased will increase the need to convert domestic to foreign currency. As a result, the exchange rate of the domestic currency will decrease.·With no government intervention, the financial account must now move toward a surplus as the financial and current account must sum to zero. Due to the increase in imports, foreigners will now have a surplus of the nation's currency. If foreigners do not use that currency to purchase the country's exports (which would improve the current account balance), they will ultimately need to invest that currency in the assets of the domestic country. This explains why countries such as China and Japan invest large sums in assets such as U.S. Treasuries. The holders of the U.S. currency must put it to work somewhere! Note that foreign investors are often getting better rates of return than what might be readily apparent because the value of the domestic currency is falling relative to their own currency.
In summary, the income effect of expansionary monetary policy tends to lower the domestic currency exchange rate, weaken the current account and work to improve the financial account. A restrictive monetary policy tends to cause the opposite due to the income effect. The domestic currency exchange rate increases, the current account improves and the financial account weakens.
As both price and the income effects of monetary policy move in the same direction regarding their impact on the exchange rate, it is clear that expansionary (restrictive) monetary policy will lower (raise) the country's exchange rate. The effect of monetary policy on the current and financial accounts is not so clear because the price and income effects move in opposite directions. For example, the price effect of easy money on the current account tends to strengthen it, while the income effect tends to weaken the current account. Since the effects move in opposite directions, it is not immediately clear what the ultimate impact will be.
We should note that investors can buy and sell financial assets such as stocks and bonds more quickly than producers and consumers can sell and buy physical goods. So initially, interest rate (substitution) effects would be expected to dominate. An unanticipated increase in the money supply will cause the exchange rate to go down, the financial account to weaken and current account to gain strength. Over time, the income effect will come into play. A rising GDP will cause both the trade balance and financial account to weaken.
Some argue that for an economy with a foreign sector, monetary policy can create cyclical movements that tend to destabilize an economy. Unanticipated expansionary monetary policy initially causes the trade balance to improve, but as time progresses, it causes the trade balance to become more negative. It initially causes the capital account to weaken due to lower interest rates, but then later tends to improve it. In the long run, the main effect of the expansionary monetary policy is a lowering of the nation's currency exchange rate, which is the international equivalent to the long-run effect of expansionary monetary policy, inflation. Empirical evidence indicates that countries with high rates of monetary supply growth experience both inflation and declining currency exchange rates. An important point to consider is the exchange rates of two countries - their relative rates of money supply growth will help determine how the exchange rate changes.
Fiscal policy changes will produce both price (substitution) and income effects for exchange rates and balance of payments. Suppose government policymakers enact a program of unanticipated fiscal stimulus. This would be expected to cause the following sequence of events to occur with regard to the price effect:

·Greater government budget deficits caused by tax cuts and/or increased spending will increase the demand for investable funds, which will cause interest rates to rise.·The increase in interest rates will cause capital inflows (foreigners will purchase more domestic financial assets). As a result, the capital account will strengthen (become more positive or less negative).·Foreign investors will need to exchange their currency for the domestic currency. The increased demand for the domestic currency will cause its exchange rate to increase.·If there is no government intervention with the balance-of-payments, the current account will need to become more negative (or less positive). The trade balance will weaken as imports increase and/or exports decrease. This makes sense because the strengthening of the nation's currency will make its exports relatively less attractive to foreigners and imports will be less expensive relative to the country's consumers and domestic businesses.
To summarize, the price effect of a stimulative fiscal policy is to raise the value of the domestic currency, strengthen the capital account and weaken the current account. A restrictive fiscal policy would have the opposite effects: a weaker domestic currency, a weaker capital account (there would be net capital outflows) and a stronger current account.
With a program of fiscal stimulus, the following sequence of events would be expected to occur with regard to the income effect:
·The tax cuts and/or increase in government spending associated with the fiscal policy, and the associated multiplier effect, will increase GDP.·The rise in GDP will cause the demand for imports to increase and the current account will be weakened (become more negative or less positive).·More domestic currency will need to be converted into foreign currencies to purchase the increased quantity of imports. The increased supply of domestic currency on the international markets will cause the exchange rate to decline.·With no government intervention, the financial account will need to become more positive (or less negative) in order to compensate for the weakening of the current account. Foreigners will be holding more of the domestic currency and are therefore in a position to purchase more of the nation's financial assets. Also, as the domestic economy is improving, they may find it more attractive as a place to invest.
To summarize, the income effect associated with fiscal stimulus will tend to lower the exchange rate of the country's currency, weaken the current account (trade balance) and strengthen the financial account.
Fiscal policy price and income effects move in the same direction with regard to their impact on the financial and current accounts. Stimulating fiscal policy will clearly weaken the current account (balance of trade) and strengthen the capital account. Restrictive fiscal policy will strengthen the current account (balance of trade) and weaken the capital account.
The impact of fiscal policy on exchange rates is not so clear because the price and income effects work in opposite directions. The income effect tends to weaken the currency exchange rate, while the price effect will tend to strengthen the currency exchange rate. Because foreign investors can trade financial assets (such as stocks and bonds) more quickly and easily than consumers and producers can alter the purchase and sale of physical assets, the price effect would be expected to have the larger initial effect. Over time, the income effect will increasingly come into play.
So initially, the fiscal stimulus should cause the domestic currency to appreciate. Over time, as the demand for imports is stimulated, the domestic currency will weaken. If the fiscal stimulus is associated with inflation, there will be a further weakening of the domestic currency. Note that the fiscal stimulus will also have the effect of worsening the balance of trade and increasing the financial account in both the short and long run.
A stimulative fiscal policy is good for the economy when it is operating below full employment levels. There are a couple of factors that will mitigate the positive effects. One factor is that government deficits will work to increase interest rates, which can crowd out private investment. Another factor is that after foreign capital comes in (due to higher interest rates), the domestic currency exchange rate rises. This leads to a rise in imports, which reduces GDP. These two factors lessen the positive effects of fiscal policy stimulus.

GOLD AND EURO MARKET 2012

Adam Hewison shot 2 little videos .... they
are both under 2 minutes in length, giving you his
technical outlook... one on GOLD... the other on
EURO.

http://broadcast.ino.com/education/gold630aff/?campaignid=3
http://broadcast.ino.com/education/euro630aff/?campaignid

Good Luck

Target Index of Stock Market and Gold

Adam Hewison of Market Club has released two new videos that are a
MUST SEE if you are trading the Stock Market and Gold.

S&P 500
http://broadcast.ino.com/education/sp500630aff/?campaignid=3
Gold
http://broadcast.ino.com/education/gold630aff/?campaignid=3

http://clicks.aweber.com/y/ct/?l=GpLGB&m=1bEDPwFlQS8NEX&b=_2uZ21vSEH6h.969ftopQQ

The 24 Hour Forex Market for 2012

The 24 Hour Day

Forex traders have ability to trade 24 hours a day. Let's take a look: here is a 24 hour day.

Starting Your Day In New York: The U.S. market opens at 8:00 am Eastern Standard Time and remains open until 5:00 pm. That's 9 hours when the USD is most active.

London: The London market had been open since 3:00 am because of the difference between time-zones. So the London market has been trading for five hours before the market in New York was even opened.

Sydney: It's 5:00 pm in New York and the exchange is closed. Don't worry, the forex market in Sydney opens at 5:00 pm EST and closes at 2:00 am EST the next morning.

Tokyo: We look to the far east to complete our 24 hour day. The Tokyo forex market opens only a couple of hours after the Sydney market, 7:00 pm EST to be exact and closes at 4:00 am EST the next morning, giving forex traders the chance to trade a wide variety of Asian currencies, most notably the Japanese Yen. Also, since the Tokyo market overlaps with both Sydney and London markets

How To Win The Game Of Forex Trading (Like You Play Chess)

Forex trading is like a game of chess – it has a beginning, middle and end game. To win the game of forex is similar to winning a game of chess – you need the strategy and tactics and good dose of psychology. Here are some top trading tips with regards to the 3 games in forex trading you must master to win:

1. Opening Game

Like chess, there are certain trading rules you must adhere to, just like the basic rules in playing chess. One important rule is called the opening gambits. Regardless of how smart you are and how well you understand the game, you will lose if you don’t follow these opening rules. What are these opening rules? They are low gearing, never trade against the fundamental and forex trading is all about probabilities, not certainties.

2. Middle Game

If you have successfully passed the opening game by knowing the basic rules, you have to rely on strategies and tactics for the middle game. This is where you make you move and enter the your positions. Like chess, you need to ensure your defence is secured, then you attack your opponent’s weak spots. In other words, you must do everything you can to give you the edge. Here’s how you play the middle game in forex trading:

a. Use multiple entries, each with low gearing.

b. Trade currency in one direction, based on the current trend.

c. Use leading indicators and price action for real time analysis

d. Use multiple time frames for relational analysis e.g. if the trend is up on 4 Hourly, switch to Hourly chart to enter based on retracement to a support level or fibonacci level.

These will give you an advantage as you move to enter your end game for your forex positions. You need to use a forex strategy that can consistently work for you.

3. End Game

If you’ve come this far, you’re now ready to close the deal with a profit. Just like chess, the end game is to finish off your opponent. If you don’t know yet, forex trading is a zero sum game. This means that your loss and your opponent’s gain and vice versa. The end game can be trickly because if you’re not careful, you can turn your winning position to a losing one. The key to ending the game well is to set a profit target and moving your stop loss to protect your profits.

Great chess players always think a few steps ahead. They have a good game plan, prepare well, respect their opponent (in forex trading, the opponent is the Market) and takes nothing for granted. They rely on their own skill and knowledge they’ve built over many years of experience. Similar, good forex traders rely on their forex trading systems and knowledge about the currency market to make profits. This requires constant practice.

Eventually, once you have reduced forex trading to like playing a game of chess like great chess players, you may not win them all, but at least you can win enough to make good money.

(From http://www.toptradingsutra.com/top-trading-tips/how-to-win-the-game-of-forex-trading-like-you-play-chess)

Forex Trader's Weekly Update

EUR/USD

EUR/USD's rebound from 1.1875 resumed late week and surged to as high as 1.2610, breaking 38.2% retracement of 1.3691 to 1.1875 at 1.2569. Initial bias remains mildly on the upside this week and further rise could still be seen. Nevertheless, note that such rise from 1.1875 is treated as a correction in medium term down trend from 1.5143 only. Hence, we'd expect strong resistance between 1.2671 resistance and medium term falling trendline (now at 1.2826) to limit upside and bring fall resumption. Below 1.2434 minor resistance will flip intraday bias back to the downside for 1.2149 support first.

In the bigger picture, fall from 1.5143 is part of the whole down trend from 2008 high of 1.6039. Nevertheless, sustained trading above the trend line will be the first alert that EUR/USD has bottomed earlier than we thought and will turn focus to 1.3266/3691 resistance zone.

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key fibonacci level will dampen this view and open up the case of a take on parity.

Pips Mover's Weekly Pivot Point for this week: 1.2464

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600

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GBP/USD

GBP/USD rose further to as high as 1.5228 last week, just inch below 38.2% retracement of 1.6875 to 1.4230 at 1.5240. Initial bias remains on the upside this week and further rise could still be seen. However, whole recovery from 1.4230 resistance is treated as a correction in the larger decline from 1.6875 only. Hence, we'd expect strong resistance between 1.5240 fibo level and channel resistance at 1.5306 and bring reversal. Break of 1.4873 will argue that rebound from 1.4230 is completed and will flip bias back to the downside for retesting this low.

In the bigger picture, our bearish view remains unchanged. Fall from 1.7043 is tentatively treated as resumption of the whole down trend from 2007 high of 2.1161. Such fall should target 61.8% projection of 2.1161 to 1.3503 from 1.7043 at 1.2310 after taking out 1.3503 low. However, decisive break 1.5521 resistance will argue that whole fall from 1.7043 is finished. This will also suggest that medium term rise from 1.3503 is not finished yet and another high above 1.7043 might be seen before long term down trend from 2.1161 resumes.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Rebound from 1.3503 should have completed and the whole fall from 2.1161 is likely resuming for 61.8% projection of 2.1161 to 1.3503 from 1.7043 at 1.2310 next.

Pips Mover's Weekly Pivot Point for this week: 1.5118

Historical Levels up to date: 1.9445, 1.8490, 1.7520, 1.6570, 1.6255, 1.5675

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USD/CHF

USD/CHF dropped further to as low as 1.0577 last week but drew support from 61.8% retracement of 0.9916 to 1.1729 at 1.0609 and turned sideway. A temporary low should be in place and initial bias is neutral this week. Some recovery might be seen but another fall will remain in favor as long as 1.1009 resistance holds. Sustained trading below 1.0609 fibonacci level will target 1.0434 support next. Though, break of 1.1009 will indicate that fall from 1.1729 is possibly over and will turn bias back to the upside for stronger rebound.

In the bigger picture, the close below medium term trend line support argues that rise from 0.9916 is finished but 61.8% retracement of 0.9916 to 1.1729 at 1.0609 is still intact. We'll turn neutral first. Sustained trading below 1.0609 will indicate that whole rise from 0.9916 is finished. This will also argue that recent price actions are merely part of the sideway pattern that started at 2007 low of 0.9634. In such case, deeper fall would be seen to outer trend line support (0.9634, 0.9916, now at 1.0009). On the upside, break of 1.1009 resistance will revive the case that fall from 1.1729 is merely a correction and rise from 0.9916 is still set to resume for 1.2296 resistance next.

In the longer term picture, a long term bottom is no doubt in place at 0.9634 with bullish convergence condition in monthly MACD. Rise from 0.9916 is set to resume the rise from 0.9634 and 55 months EMA should be taken out firmly. Such development will favor the case that long term down trend from 1.8305 has reversed and would favor stronger rise to 1.3283 resistance and above.

Pips Mover's Weekly Pivot Point for this week: 1.0701

Historical Levels up to date: 0.9880, 1.0685, 1.0830, 1.0875, 1.1000, 1.1175

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USD/JPY

USD/JPY dropped sharply to as low as 86.96 last week. The break of 88.13/25 support zone confirmed that fall from 94.97 has resumed. A temporary low is formed at 86.96 after the fall and hence, some consolidation might be seen initially this week. But recovery should be limited well below 90.27 resistance and bring fall resumption. Below 86.96 will target a retest on 84.81 low.

In the bigger picture, the break of 88.13 support confirms that medium term rebound from 84.81 has completed to 94.97 already. The corrective structure in turn indicates that whole down trend from 2007 high of 124.13 is still in progress. Retest of 84.81 should be seen next and break will confirm down trend resumption for next key level of 79.75. On the upside, break of 94.97 resistance is needed to be the first sign of medium term reversal. Otherwise, we'll stay bearish.

In the long term picture, current development suggests that USD/JPY has not bottomed out yet and the down trend will extend beyond 84.81 to 79.75. However, we'd be cautious on any sign of loss of momentum and reversal on next fall.

Pips Mover's Weekly Pivot Point for this week: 87.98

Historical Levels up to date: 93.50, 95.75, 98.00, 99.70, 101.35, 101.70, 103.00, 104.95, 105.50, 106.30, 107.20, 110.50

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EUR/JPY

EUR/JPY dipped to as low as 107.30 last week but recovered since then. Initial bias remains neutral this week and some more consolidations would be seen above 107.30 first. But after all, upside is expected to be limited below 113.40 resistance and bring down trend resumption. Below 107.30 will target 61.8% projection of 169.96 to 112.10 from 139.21 at 103.45 next. However, note that decisive break of 113.40 resistance will argue that an important bottom might be formed and bring stronger rebound.

In the bigger picture, fall from 139.21 is treated as resumption of long term down trend from 2007 high of 169.96 and should target 61.8% projection of 169.96 to 112.10 from 139.21 at 103.45 which is close to 100 psychological level. Though, we'd expect strong support between 2000 low of 88.96 and 100 psychological level to contain downside and bring reversal. On the upside, break of 119.64 support turned resistance is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bearish.

In the long term picture, up trend from 88.96 has completed at 169.96 and made a long term top there. Based on the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. The third falling leg is now in progress but would be contained above 88.96 key support level. We'll hold on this this view unless fall from 169.96 shows sign of acceleration.

Pips Mover's Weekly Pivot Point for this week: 109.58

Historical Levels up to date: 124.25, 126.50, 130.90, 133.25, 135.65, 138.00, 140.00, 151.95, 156.00, 156.85, 164.00

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USD/CAD

USD/CAD's strong rebound last week indicates that corrective fall from 1.0851 has completed at 1.0138 already. Such rebound stalled ahead of 1.0678 resistance and turned sideway. Initial bias remains neutral this week and some consolidations might be seen first. But in case of another fall , downside should be contained by 1.0319/0468 support zone and bring rally resumption. Break of 1.0678 will target 1.0851 high first.

In the bigger picture, the fall from 1.0851 to 1.0138 suggests that it's corrective in nature and revives the case that whole rebound from 0.9929 is not completed. Break of 1.0678 will affirm this bullish case and target 1.0851 and then 38.2% retracement of 1.3063 to 0.9929 at 1.1126 first, with prospect of extending further to 61.8% retracement at 1.1866 and above. However, note again that break of 1.0138 support will shift favor back to the case that 0.9929 is not the bottom yet. Though, considering bullish convergence conditions in daily and weekly MACD, we believe that medium term decline from 1.3063 is going to reverse soon, probably after a brief break of 0.9929 low. Hence, focus will be on reversal signal even in case of another fall.

In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term sideway pattern.

Pips Mover's Weekly Pivot Point for this week: 1.0568

Historical Levels up to date: 0.9805, 1.0060, 1.0270, 1.0470, 1.1025, 1.1140, 1.1270, 1.0160, 1.1940, 1.2040, 1.2225, 1.2475

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AUD/USD

AUD/USD dropped sharply to as low as 0.8315 last week. The break of 0.8549 support suggests that corrective rise from 0.8066 is finished to 0.8858, just ahead of 61.8% retracement of 0.9380 to 0.8066 at 0.8878. While some recovery might be seen initially this week, we'd expect upside to be limited well below 0.8858 resistance and bring fall resumption. Below 0.8315 will target a test on 0.8066 support next.

In the bigger picture, the failure to sustain above 55 days EMA argues that rebound from 0.8066 was merely a correction in the larger decline and has finished. Break of 0.8066 will target next key support level at 0.7702 as medium term correction from 0.9404 extends. On the upside, break of 0.8858 is needed to confirm rebound resumption. Otherwise, we'll favor more downside.

In the longer term picture, long term correction from 0.9849 has likely completed at 0.6008 already, after being supported slightly above 76.4% retracement of 0.4773 to 0.9849. Rise from 0.6008 is possibly developing into a new up trend which extend the long term rise from 0.4773. We'll continue to favor the long term bullish case as long as 0.7702 support holds and expect an eventual break of 0.9849 high. However, a break of 0.7702 support will firstly argue that whole rise from 0.6008 has completed. Secondly this will open up the case that AUD/USD is in phase of a long term consolidation and will gyrate in the large range of 0.6008/0.9849 for some time.

Pips Mover's Weekly Pivot Point for this week: 0.8469

Historical Levels up to date: 0.7695, 0.7870, 0.7930, 0.8000, 0.8200, 0.8350, 0.8670

Letter From Norman Hallett - CEO of Discipline Trader

Hi Violet VN

Norman Hallett here from The Disciplined Trader Intensive Program.

I generally don't discuss my personal trading techniques.

They can easily be misused and/or misconstrued and unless I gave you the complete picture... how I handle
a trade sequence from start to finish... it would be of little or no use to you.

However, because I'll be hosting a Webinar in a couple of days (Wednesday, July 7th) with CandleStick Chart Guru, Steve Nison, I felt this would be a good time to give you some personal trading details.


HERE'S WHAT I DO to trigger a "take" on a trade...

1. I trade from daily charts, but this technique can be used for any time frame.

2. I work with only charts that have an established trend, meaning those that have completed at least one 'round' of higher highs and higher lows (or lower highs and lower lows).

3. When the trend starts a correction phase (I'll use an uptrend in this example), I 'spot' the bottom of the
just-completed upleg and 'spot' the top of the just-completed upleg, and apply the Fibonacci Retracement lines.

4. I'm looking for the current correction in the uptrend to correct to one of 3 Fibonacci Retracement levels (38%, 50% or 62%) Note: 50% is really not a FR level, but it commonly a key point.

5. When the market gets to one of these levels, I am in the "acute focus" stage, looking for the turnaround back to the primary trend... and that turnaround signal is given to me via a high-probability CandleStick Reversal Formation (one of 3 formations).

6. When the CSRF is confirmed, I take the trade in the direction of the primary trend, and place my stop on a close-only basis below the 62% correction level.

7. With the first 'thrust' higher, I quickly bring my stop to break-even.

At this point, this is all I can reveal. Again, I'm not in the business of giving trading advice... I'm in the business
of keeping you mentally and emotionally 'fit' to trade... but the fact that THIS EXACT PROCEDURE is responsible for the initiation of over 75% of my trades this year and last year and I've done very well, I decided to reveal it.

I did not tell you how I scale in and out of trades on the way up, or go through my target selections, etc., so don't go using the above without INTEGRATING it into your total trading plan and risk management scheme.

I give you these steps because... well, they've been working for me.

I've combined the scientific TRUTHS of the Fibonacci Ratio, with the EMOTIONAL TRIGGER of Candlesticks...

and it's EXACTLY these emotional triggers Steve Nison will be discussing in his exclusive talk to my subscribers on Wednesday, July 7th, at 8:30 PM Eastern time...

Tap Here NOW to Register for Steve Nison's PRIVATE CandleStick Webinar


IMPORTANT NOTE: If you cannot be there live at this Webinar, register anyway, and you'll get the replay link for the event, assuming there are no glitches during the recording procedure. But YOU SHOULD try to be there live as Mr. Nison will take your personal questions right after his formal presentation.


SPECIFICS on Mr. Nison's presentation:


No matter what you trade, you can improve your performance with these key topics covered in this
high-energy, informative and entertaining Webinar...

=> See how Nison Candles will give traders (especially options traders) vital timing advantages
in entering BEFORE the potential big moves start.

=> Why you MUST know about the "Trading Triad" in your trading, or face the consequences.

=> Discover what the candlestick line is telling you about the health of the market so you know exactly
when to exit, enter, or stand aside.

=> See how to avoid some of the most common miscues of candles that could cost you big $$$.

=> PARTICIPATE in the LIVE Q&A to have rock solid confidence about what you've learned at the
Webinar.

=> Discover how to use candles with Western indicators for super-confident trading.


You already know I'm a big fan of CandleSticks because they are the best measure, in my opinion, of market emotion... and Steve Nison is the God Father of Candle analysis...

See you at the Webinar!

Good Trading!

My best,

Norman Hallett, CEO
Subconscious Training Corp.

BE THE DISCIPLINED TRADER:

http://www.thedisciplinedtrader.com

9 Tricks Of The Successful Forex Trader for 2012

For all of its numbers, charts and ratios, trading is more art than science. And just as in artistic endeavors, there is talent involved, but talent will only take you so far. The best traders hone their skills through practice and discipline. They perform self analysis to see what drives their trades and learn how to keep fear and greed out of the equation. We'll look at nine tricks a novice trader can use to perfect his or her craft; for the experts out there, you might just find some tips that will help you make smarter, more profitable trades, too.

1. Define Your Goals
Before you set out on any journey, it is imperative that you have some idea of where your destination is and how you will get there. Consequently, it is imperative that you have clear goals in mind as to what you would like to achieve; you then have to be sure that your trading method is capable of achieving these goals. Each type of trading style requires a different approach and each style has a different risk profile, which requires a different attitude and approach to trade successfully. A personality mismatch will lead to stress and certain losses.
2. Choose The Right Broker
It is important to choose a broker who offers a trading platform that will allow you to do the analysis you require. Choosing a reputable broker is of paramount importance and spending time researching the differences between brokers will be very helpful. You must know each broker's policies and how he or she goes about making a market. For example, trading in the over-the-counter market or spot market is different from trading the exchange-driven markets. A good broker with a poor platform, or a good platform with a poor broker, can be a problem. Make sure you get the best of both.
3. Choose A Methodology And Be Consistent
Before you enter any market as a trader, you need to have some idea of how you will make decisions to execute your trades. You must know what information you will need in order to make the appropriate decision about whether to enter or exit a trade. Some people choose to look at the underlying fundamentals of the company or economy, and then use a chart to determine the best time to execute the trade. Others use technical analysis; as a result they will only use charts to time a trade. Whichever methodology you choose, remember to be consistent. And be sure your methodology is adaptive. Your system should keep up with the changing dynamics of a market.
4. Keep Your Timing In Sync
Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could, in fact, show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the daily chart also confirms a buy signal. Keep your timing in sync.

5. Calculate Your Expectancy
Expectancy is the formula you use to determine how reliable your system is. You should go back in time and measure all your trades that were winners, versus all your trades that were losers. Then determine how profitable your winning trades were versus how much your losing trades lost. Take a look at your last 10 trades. If you haven't made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made.
6. Focus On Your Trades
Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money. Once the vacation is over your money is spent. Have the same attitude toward trading. This will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful. Secondly, only leverage your trades to a maximum risk of 2% of your total funds. In other words, if you have $10,000 in your trading account, never let any trade lose more than 2% of the account value, or $200. If your stops are farther away than 2% of your account, trade shorter time frames or decrease the leverage.
7. Build Positive Feedback Loops
A positive feedback loop is created as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence - especially if the trade is profitable. Even if you take a small loss but do so in accordance with a planned trade, then you will be building a positive feedback loop.
8. Perform Weekend Analysis
It is always good to prepare in advance. On the weekend, when the markets are closed, study weekly charts to look for patterns or news that could affect your trade. In the cool light of objectivity, you will make your best plans. Wait for your setups and learn to be patient. If the market does not reach your point of entry, learn to sit on your hands. You might have to wait for the opportunity longer than you anticipated. If you miss a trade, remember that there will always be another. If you have patience and discipline you can become a good trader.
9. Keep A Printed Record
Keeping a printed record is one of the best learning tools a trader can have. Print out a chart and list all the reasons for the trade, including the fundamentals that sway your decisions. Mark the chart with your entry and your exit points. Make any relevant comments on the chart. File this record so you can refer to it over and over again. Note the emotional reasons for taking action. Did you panic? Were you too greedy? Were you full of anxiety? Note all these feelings on your record. It is only when you can objectify your trades that you will develop the mental control and discipline to execute according to your system instead of your habits.

Reasonable Money Management and Trade Discipline - by Dennis Vydrin

Certainly before starting trading every Forex trader has got his own expectation targeting at obtaining high profit out of trading operations. But achieving these goals requires something bigger then just an appropriate Forex education and entrepreneurship abilities, it needs something extra. If you want your trading to be successive bringing you desired results, the following necessary rules may become your Forex trading guidance:

Simple Forex Systems Work Best

Forex was originated as a simply structured system. Even now the best Forex strategies are very simple to imply instead of sophisticated ones. They should be easy to understand, to use and to have confidence in. Keeping your Forex methods clear and simple would provide you with a decent benefit.
Accumulate your forces, don`t waste your efforts. Just watch a tough basketball of football game. Which team looks exhausted after the game? Who left more sweat and blood on the ground? But which team triumphs?

At the finish of the day it appears to be that you need to apply more efforts to win than just to participate and be defeated. The payback of such efforts is extremely tiny comparing to the strategy that is more complicated bringing success. So what is important now to succeed or to get exhausted? That is why proficient traders do not desire to limit their efforts, they use them smartly, not wasting them.

Reasonable money management

Another key issue to succeed is to base your trading strategy around safe and sound money management. You need to make sure that you protect what you have. However, implementing any strategy implies losses and your task is to cut them as quickly as possible. Few people like taking necessary losses. So your risk needs to be controlled to stop them. Trading regardless money management rules indeed is just a blind gambling. Your strategy needs to cover long term outlook, not just trying to chase a high jackpot. Possessing knowledge of how to control losses will place you on a higher step of profitability ranking.

Discipline is the right way

You might have heart the words like ”The discipline is the key factor for good training”. So why is it so important? To some extent trading is considered to be a way to gain money out of probability. For instance, a certain trading strategy proved to be profitable in 85% of all successive transactions. Will this strategy bring the same result later? It may happen that the answer is “No”. Some unpredictable factors such as market situation change may break this strategy, reducing profitability. Inappropriate discipline may only deteriorate the situation.

A well-disciplined trader relies on the chosen strategy giving reasonable chances to get benefit out of a certain probability.
Sticking to discipline rules looks hard to all Forex traders. The whole system is easy to learn but it is hard apply discipline for it. Our feelings and emotions suffer when we lose money, it is natural. But your mind always needs to stay sound not to lose too much. The sense of discipline is brought by appropriate Forex education. You need to deeply know yourself, always trying to be confident of what you do and what circumstances it may bring.

Regards, Dennis Vydrin
Forex Ltd.

Author's Bio
Experienced expert in Forex trading

Money Management And Forex Trading - Copyright © 2007 Joel Teo

Money management is an essential and necessary part of Forex trading. There are a lot of mistakes that Forex traders make, and not following their own money management system is one of them. Listening to other opinions can lead to some costly mistakes, and unless the opinion is a business opinion from a company or government that you trust, then do not factor it into your trading. Set your own guidelines for trading, and stick with them. Trading on opinions, whether they are your own or another person's, can be a very costly mistake. Make your own evaluation based on all the facts that you know, and then do not let opinion sway your trading tactics.

Overtrading is another common money management mistake in the Forex market. This trading does not have clearly defined trading objectives, the sole purpose is to make more money. To avoid this mistake, make sure that every trade is broken into definitive goals, and that these goals are acheived before other positions are added. Very few traders can successfully manage multiple positions in a variety of trading markets.

Overconfidence is a big mistake when it comes to money management and the Forex market. This is caused when a trader has or thinks they have special or inside information. These hot tips are sometimes wrong, and when this happens large amounts of money may be lost because of this. The way to avoid this is to avoid being confident in any rumors or special information you may have. Managing your money means taking measures to preserve it as well.

Preferential bias can exist among Forex market traders. This happens when they only see or hear what they want in relation to the preferred trade. This can cause a trader to ignore the actual activity of the Forex market in preference of what they want to happen. It is important to look at each trade objectively and do not become set in cement with your opinion. Do not ask friends or family for their opinions, just go with what you know.

Money management and Forex trading can be complex and complicated. Once you set your money management guidelines, make sure that you follow them. Avoid listening to rumors and opinions once you start trading. Avoid overtrading, and make sure each trade has clearly defined trading objectives. Make sure that you are not overconfident. The most important thing in money management with Forex trading is to try and avoid preferential bias. By following these tips, you will be able to manage your money and investments better.

The Myth Of Profit/Loss Ratios

When trading the forex market or other markets, we are often told of a common money management strategy that requires that the average profit be more than the average loss per trade. It's easy to assume that something that has been so widely advised must be a good thing. However, if we take a deeper look at the relationship between profit and loss, it is clear that the "old," commonly-held ideas may need to be adjusted.

Profit/Loss RatioA profit/loss ratio refers to the size of the average profit compared to the size of the average loss per trade. For example, if your expected profit is $900 and your expected loss is $300 for a particular trade, your profit/loss ratio is 3:1 - which is $900 divided by $300.

Many trading books and "gurus" advocate a profit/loss ratio of at least 2:1 or 3:1, which means that for every $200 or $300 you make per trade, your potential loss should be capped at $100. (For related reading, see Limiting Losses.)

At first glance, most people would agree with this recommendation. After all, shouldn't any potential loss be kept as small as possible and any potential profit be as much as possible? The answer is: not always. In fact, this common piece of advice can be misleading, and can cause harm to your trading account.

The blanket advice of having a profit/loss ratio of at least 2:1 or 3:1 per trade is over-simplistic because it does not take into account the practical realities of the forex market (or any other markets), the individual's trading style and the individual's average profitability per trade (APPT) factor, which is also referred to as statistical expectancy.

APPT is Key to ProfitabilityAverage profitability per trade basically refers to the average amount you can expect to win or lose per trade. Most people are so focused on either balancing their profit/loss ratios or on the accuracy of their trading approach that they are unaware that a bigger picture exists: Your trading performance depends largely on your APPT.

This is the formula for average profitability per trade:


Average Profitability Per Trade = (Probability of Win x Average Win) - (Probability of Loss x Average Loss)

Let's explore the APPT of the following hypothetical scenarios:

Scenario A:Let's say that out of 10 trades you place, you profit on three of them and you realize a loss on seven. Your probability of a win is thus 30% or 0.3, while your probability of loss is 70% or 0.7. Your average winning trade makes $600 and your average loss is $300.

In this scenario, the APPT is:
(0.3 x $600) – (0.7 x $300) = - $30
As you can see, the APPT is a negative number, meaning that for every trade you place, you are likely to lose $30. That's a losing proposition!

Even though the profit/loss ratio is 2:1, this trading approach produces winning trades only 30% of the time, which negates the supposed benefit of having a 2:1 profit/loss ratio. (For related reading, see The Importance Of A Profit/Loss Plan.)

Scenario B:Now let's explore the APPT of a trading approach that has a profit/loss ratio of 1:3, but has more winning trades than losing ones. Let's say out of the 10 trades you place, you make profit on eight of them, and you realize a loss on two trades.

Here is the APPT:
(0.8 x $100) – (0.2 x $300) = $20
In this case, even though this trading approach has a profit/loss ratio of 1:3, the APPT is positive, which means you can be profitable over time.

Many Ways of Becoming ProfitableWhen trading the forex market, there is no one-size-fits-all money management or trading approach. Traditional advice, such as making sure your profit is more than your loss per absolute trade, does not have much substantial value in the real trading world unless you have a high probability of realizing a winning trade. What matters is that your APPT comes up positive and that your overall profits are more than your overall losses.

For more forex money management tips, see Money Management Matters.
by Grace Cheng,See Grace's Forex blog at www.gracecheng.com (Contact Author | Biography)

Grace Cheng is a forex trader, creator of the PowerFX Course and author of "7 Winning Strategies for Trading Forex" (2007, Harriman House). This revealing book explains how traders can use various market conditions to their advantage by tailoring a strategy to suit each one. The book is a perfect complement to the PowerFX Course. The PowerFX Course, designed for both new and current traders, teaches tools and trading approaches that combine technicals, fundamentals and the psychology of trading forex. It also includes Grace's proprietary tips and tricks. Grace's works have been published in The Trader's Journal, Technical Analysis of Stocks & Commodities, Smart Investor and other leading trading/investment publications.

5 emas Forex System Review - By Thomas Eliot

"Finally, a time-tested Forex trading system, with DOCUMENTED PROOF, that has the potential to turn $1,000 into $1,000,000 in just 24 months." This is the claim that Adam Burgoyne boldly makes for his 5EMAs Forex System on the front page of his website. Maybe this might be an achievable claim to make if it were aimed only at trading veterans, but is it realistic to think that a beginner could actually accomplish this too? This 5EMAs review will attempt to answer that question.

If as a beginner you're serious about forex trading, then you need to take the time necessary in order to learn the ins and outs about trading the forex market in the real world. It may take a few months of paper trading or actual online trading for the beginner to gain enough experience in trading the forex market before he feels comfortable making trades. So, don't expect to hit the ground running right out of the box. Expect that you'll need to give yourself some time to gain the requisite knowledge and experience of in-the-trenches trading.

One thing about this program that will help speed up this process is the availability of an Expert Advisor, which will alert you whenever it identifies the criteria for an entry. By setting the timer you can get alerts before a potential trade is eminent. You will need to have the MetaTrader4 charting platform, which is available in a free download, in order to properly use the Expert Advisor. By confirming that all the rules for a successful trade have been met according to the 5EMAs system, you will have complete control over your trading.

The EA feature can save the inexperienced trader much time and independent analysis. It can also be set for longer term trading possibilities for those who are not able to sit and monitor a trading period throughout the day. This feature allows those who would like to transition from their day jobs to full-time forex trading a real possibility. Combining the use of the Expert Advisor with a proper review and comprehension of the trading rules it applies to the trades it identifies will assist the beginning trader in speeding up his learning curve.

The 5EMAs refers to the exponential moving averages of recent price changes in the market. One important consideration that a beginner needs to be aware of when using exponential moving averages is that while EMAs are generally more sensitive than a simple moving average (SMA) and therefore generate more signals, there will also be an increase in the number of false signals and whipsaws. Being able to tell when these are likely to occur is something that comes only with experience in trading the market. No matter how good a system may be, no system is perfect all the time.

That said, this system has the potential to earn a great deal of money in forex trading. With the proper approach, using care and consideration, even a beginner can make steady money in trading the forex currency market. To learn more about this trading system, you can read another opinion at Review of the 5EMAs Forex System.

http://www.streetdirectory.com/travel_guide/185393/foreign_exchange/5emas_forex_system_review.html

Forex Trading As A Home Business - By: Gerald Greene

Trading forex is like many financial trading businesses in this world. What makes it different are the items that are being traded and the complex factors that influence price fluctuations. Forex trading is a speculative activity and one mistake can bring you down. The best thing to do is invest carefully until you have a full understanding of how the market moves.

Forex Trading is being called "today's exciting new investment opportunity for the savvy investor". The reason is that the forex trading market only began to emerge in 1978, when worldwide currencies were allowed to 'float' according to supply and demand, 7 years after the Gold Standard was abandoned.

Forex trading is attractive because it offers unparalleled freedoms. A forex trader can live anywhere as long as he/she is within reach of the Internet. Forex trading is not two strange words for those who are looking forward to making a quick profit in the financial market. Most investors will have at least heard or read about Forex trading. Forex trading is not bound to any one trading floor, but takes place electronically between a network of banks continuously over a 24 hour period.

Forex trading is something that many people do not understand very well. While they hear of the dollar "fluctuation" they never quite understand the process or what it means. Forex trading is not easy however it does provides significant potential for profit, as more and more people are discovering. In this review, I want to provide information to help you decide whether forex trading is for you. If you do have risk capital and the inclination to learn forex trading can be an ideal home business.

Forex trading is highly speculative in nature which can mean currency prices may become extremely volatile. Forex trading is highly leveraged. Since low margin deposits normally are required, an extremely high degree of leverage is obtainable in foreign exchange trading. Forex trading is not an exact science, but you need to be able to make cost benefit analysis along with looking at fundamental, economic and technical factors. Forex trading is buying and selling the foreign currencies of different countries. The basis idea is simple enough. Buy at one price and sell at a higher price or sell at one price and buy back at a lower price.

Forex trading is always done in currency pairs. The value of your forex investment increases or decreases because of changes in the currency exchange rate or forex rate. Forex Trading is the world's largest financial market with an estimated daily average turnover between $2.5 trillion to $3.0 trillion that we cannot doubt.

If we want to make profit from this investment, there is some related knowledge that we definitely need to know. Forex trading is an alternative to the unpredictable nature and whims of the other markets. In the Internet age you can easily participate in the USD 2.5 trillion FX market.

Forex trading is the potentially most lucrative home based business at the moment. It is a business where you can earn an income without selling anything, without pitching a sale to people and without running around after clients. Forex trading is becoming very popular nowadays because in it there are so many additional methods that can be used to get into the markets which are not available through the New York Stock exchange.

Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

Forex trading is a holistic art. You cannot trade a set of technical indicators crossing (but ignore everything else), and hope to be consistently profitable. In order to be a successful forex trader you need to have discipline and good knowledge of the forex market place.

Of course, good luck is also always welcome. But since good luck is such a fickle thing before getting started you had best prepare yourself for forex trading as a home business venture with a good bit of relevant knowledge

Money Management - Forex Education for 2012

Copyrighted by International Business Times
Money Management Basics
Did you ever think about the difference between a new trader and a professional trader?
In our trading life we can experience that:
- A new trader thinks about how much they can win
- Professional traders think about how much they can lose
No trader is right 100% of the time:
- That means managing your risk is key to long-term success
Be prepared to take on a loss and manage your risk appropriately.
- Use protective stops whenever possible
- Don't let your emotions change your trading approach
- Before entering a trade, determine where you will get out of the trade
Determine your entry - Identify your risk - Project your potential profit
When we toss a coin and choose heads or tails, we have a 50% chance of being correct.
- Win $1 when we are right
- Lose $1 when we are wrong
To be profitable, one of two things needs to be done:
1. We need to win a higher percentage of the coin tosses (trades)
2. We need to profit more when we are right than we lose when we are wrong
- Profitable traders know there is no guarantee that any one trade will be profitable
- They detach themselves from the outcome of any one trade
- They treat trading as a business
Managing Your Trades
- 1. Think about winning half of our trades
- 2. Use the classic 1:2 risk/reward ratio

This means if you trade with a Stop Loss of 20 Pips and a Take Profit of 40 Pips, you still will be very profitable if you win half of your trades.

What if the market reverses just before hitting my target?
Make a protective stop to break-even when/if the market moves halfway to your target. This means, in the same example if your trade made already 20 Pips, move your Stop Loss up to your entry.
Managing Your Account
Don't risk more than 5 % of your account balance at any one time.
For example you have an account balance of 10,000 USD, count like this:
Stop Loss: 5 % * 10,000 USD = 500 USD
Risk means:
1. Determine the stop distance on your trade
2. Determine the pip cost on your trade
Conclusion
1. Identify where you are going to get out before you get into a trade
2. Use a protective stop and have it in the market whenever you are in a trade
3. Use a 1:2 risk to reward ratio so you can be profitable if you win half of your trades
4. Never risk more than 5% of your account balance at any one time
5. Obey all rules all of the time!

Analysis Of The Death Cross Sell Signal - In Market Analysis 2012

Moving averages are used by many traders to identify trends as they smooth out price action and act as key support on the way up, and resistance on the way down. In fact, it is one of the most widely used technical indicators and extremely popular among high frequency traders because it is so clear cut and easy to program. It allows the trader to ride a trend higher and to cut losses short.

The death cross is a popular signal that when used properly can cut massive losses short. The death cross is so popular because many institutional investors use the 50 day moving average as a medium term average and the 200 day as the long term moving average. Basically, the crossover method signals a sell signal when the shorter term moving average crosses the longer term moving average to the downside. A buy signal is identified when the short term moving average crosses the long term average on the upside.

Crossover methods are easy to program into a computer. However, I must warn that one must use additional clues to create a sell signal. There are frequent whipsaws and failures when you use the crossover method in isolation.

Chart reading is an art that requires discipline, experience and study. Crossover methods used exclusively, such as by a computer program, will not produce the same results of an experienced technician who looks for other pieces of evidence to confirm the bearish crossover.

Similarly, back testing the results of the death cross using a computer program will not produce optimal results, since technicians look for additional signs of the breakdown than just the cross. I was recently interviewed by the Toronto Globe and Mail on this topic and explained that one must be aware of this crossover and its implications.

Although some believe this signal is nonsense, and show back-tested data with computer models, it does not show the crossovers used in conjunction with other technical signals.

If the crossover signal is confirmed with a head and shoulders breakdown, a cross into new lows, and poor price volume action, which is occurring now, I will patiently wait on the sidelines and look for prudent short points when I see a price reversal and as the price comes up to certain resistance. If all these signs are coming together the probability of a whipsaw is significantly reduced.

It is also important to note that a death cross is further confirmed if the 200 day begins sloping downwards after the break. This will act as resistance on the way down.

A look at the death cross of the Dow in January of 2008 showed many of the signs of a market top and trend change.



The 200 day which acted as previous support was violated on high volume and was followed by three failed railies at the 50 day moving average before crossing over. If not followed investors would have lost more than 60% of their portfolios.

Now is not the time to look for bargains but to protect your portfolio by selling on any bear rallies.
I believe that this rally will be shortly coming to an end and we will continue to trend lower in equities. Use these rallies to prepare for shorting opportunities.

Disclosure: Not currently shorting or investing in inverse etf’s at the time of writing this article.

Art of Trading - From bigtrends for 2012

Something to share with you from the Art of Trading.

A GOOD Trader WILL:

1. Always wait for the setup: No Setup-NO Trade.

2.Knows that THE BEST trades work almost right away.

3.Never takes a big loss. If it doesn't 'feel' right. Remove it!

4.Always perfecting his craft 5.Is patient with winning trades:Impatient with trades that fight back.

6.Knows that DISCIPLINE is the key to winning at everything!

7.Never gets emotionally attached to trades, trading, losses or profits.

8.Will always trade with the size that makes him unemotional.

What’s the Best Overbought / Oversold Indicator?

Now and then I get asked what are the best technical indicators to use in trading. I know some of you out there are endlessly hunting for the holy grail of technical indicators that’ll get you in and out of trades flawlessly every time. If you find it let me know, and in the meantime here are a few rules of thumb:

1) It’s never a good idea to make trading decisions based on a signal from a single indicator. Technical indicators work best when you use them together, and as one part of a broader trading plan.

2) The best trading plans are simple, using a small number of solid technical indicators along with a few other proven tools and techniques. Too many indicators on a chart confuses things, sometimes even giving contradicting signals.

3) Popular technical indicators are popular because they work (and also because if enough people use them, they can become a self-fulfilling prophecy).

4) And the most critical rule of thumb: It’s at least as important, if not more-so, to know how to use overbought / oversold indicators as it is to know which are the best to use.

That last point is significant, so let it sink in. A better question for this article might be What’s the best way to use overbought / oversold indicators in my trading practice?

As you might know, overbought / oversold oscillators are leading indicators. In other words, they try to predict what price will do in the future. For example, when a security that has been trending up for awhile dips down and an indicator signals that the security is “oversold,” there’s a good chance that price will soon spring back up into the trend. A buying opportunity could be right around the corner.

But we don’t take it for granted that a signal from one single indicator, especially a leading indicator, is enough to get us into the trade. Securities can stay in an overbought or oversold condition for a long time. An overbought or oversold signal simply triggers us to keep an eye on a trending security to see if it actually does start to go back into the trend.

And if that happens, we look at a few other things to validate that this is a good trade. Is there enough volume to show that there’s strength in the movement back into the trend? Is there significant resistance or support in the way that might keep us from making the trade? Is there any upcoming event around the security’s company, like an earnings announcement, that could throw off price unpredictably? Etc.

Getting back to the original question, which overbought / oversold indicator do I like best? In my trading, I mostly use the Williams %R. The Williams %R, a popular indicator created years ago by author and leading trading expert Larry Williams, works by showing the current closing price in relation to the high and low of the past N (typically 10) days. Readings on the indicator range from -100 to 0. Readings in the upper range, from about -10 to 0, indicate the security is extremely overbought while readings from about -90 to -100 suggest it’s extremely oversold.

When the Williams %R shows an extreme overbought or oversold condition in a trending security, it’s time to watch for that security to kick back into the trend, and then use your other trading tools and techniques to confirm whether this is another potential profitable trade.

If you want to know more about the Williams %R or other technical indicators, a good resource is The Equis International site

How to Trade Spot Gold & Forex ? - By belieftran

1. Process?


2. Forecasts?


3. Single - Market or Intermarket?


4. Conect market


5. Tác động -> dự báo?


6. Test --> Error?


7. Rà soát Error?

This Trading Method Is About to Signal Another Buy On Gold and Silver - In Market Analysis

Trading against the market herd, also known as going contrary can be quite profitable, but timing is another challenge entirely . Many contrarians make calls too early as irrational markets tend to stay irrational too long for most investors to stay in them. Nevertheless, when used in conjunction with other technical tools it can provide excellent market entry points that are high reward and low risk when structured correctly.

In these past few weeks since my article on the death cross and why specifically this cross is quite bearish due to other technical signs, I have been bombarded with emails and links to Barron’s and Marketwatch which claim the death cross when back-tested is a contrary indicator with no statistical advantage. Word to the wise, be careful of what you read in the widely published media reports. A technician worth his salt knows if a death cross is real and if you need to be wary of a market downturn, similar to the market decline of 2008.

Remember that Barrons, CNBC and MarketWatch are in the business of advertising, which depends on their circulation. Many of their ads are supported by major corporations who want their readers to be bullish rather than bearish.

What has concerned me lately in gold was the amount of media promoting the possibility of gold skyrocketing during the recent Sovereign Debt Crisis, where many fled the Euro to buy treasuries, the dollar and gold. Today there was speculation that may threaten banks who are not lending. This is becoming a deflationary crisis and investors are now concentrating on treasuries. Mortgage rates are at all time lows, lending is drying up and housing starts are plummeting. There are worries about U.S. Debt, higher taxes and increased government intervention in the private sector. This shakeout in precious metals is giving investors another opportunity to jump into this bull market without being caught up in the hysteria. To enter the trend with additional capital, it would be wise to buy when the conditions are oversold.

I have written about the use of oscillators to show short term buypoints in an uptrend. I am seeing this happening again with gold. Gold is about to hit an 18 month trend line, which has been successfully tested 6 times. This is a valid and significant trend line that needs to be monitored closely. Oversold conditions coupled with long term trend support leads to highly profitable times, as indicated in the chart below.

While learning to trade, I was taught to be a patient lion waiting for the best possible opportunity to pounce. Lions wait intently until they are sure of optimal results: a profitable trade. Now as a trader of gold and silver, I see opportunity approaching. The best way to play this market is by buying gold and silver when it hits the lower support trend line and is oversold, and selling as it approaches the rising resistance line. This rule forces you to enter when the conditions are oversold but still in an up market, giving you very minimal downside risk. Each time gold has rallied into new highs, the first correction to that trend line has been the counter trend bottom in the next major move.

Investors should be concerned if there is a break in that trendline as it has proven to be valid over the past 18 months. There are many similarities with silver.

I believe silver is a great buy here at $17, especially as this is a true deflationary hedge. Eventually the public will want real money, which is gold and silver. Silver has the possibility of making a major run as it is way below all time highs. During this time when it is oversold and coming in play with long term support, I would position myself for a move higher from the $17 area to $21 by the end of 2011.