Month: November 2009

By Russell Glaser – Oil prices have been falling during today’s trading as a significantly stronger dollar has weighed on the market. During the Asian and European trading sessions, the commodity fell 1.3%, dropping to a low of $77.

The dollar is up against the euro by nearly 1%, trading at 1.4650 from 1.4783. The price of crude oil typically falls as the dollar gains in strength. European stocks were down more than 2% as a reorganization plan of the British banking system was announced. Assets that have been divested from some of Britain’s largest banks will be grouped together to form a separate banking entity. Traders were less than pleased with the government’s plan and bid down European equities.

Much of crude oil’s price movement may be attributed to the negative correlation to the dollar. There is also speculation that the price of crude is fundamentally overvalued. Oil refineries are continuing to cut production. Despite the excess slack created, oil and gas inventories have steadily risen.

Contrary to the negative fundamental data, strong manufacturing numbers were reported from the U.S. yesterday, along with positive economic news from Europe and China. Crude oil prices jumped with this news.

Tomorrow traders will be looking for two key market events; the release of the weekly crude oil inventory numbers and the FOMC rate statement. Keep an eye to the result of the change in gasoline stocks. The markets have been focusing on this data piece when evaluating the worthiness of this economic report. The accompanying Fed rate statement will proved significant volatility as the expected statement may include future U.S. interest rate policy, a key factor when valuing the dollar.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

The USD is likely to move on the U.S. Factory Orders publication today at 15:00 GMT. The reason why this release is so important is due to Monday’s releases that showed the U.S. economy is on a rapid road to recovery. Therefore, a similar result today could lead to very high volatility in the forex market, and a possible mass sell-off of the Dollar. In order to make some decent profits today, you should open large positions in the EUR/USD, GBP/USD and USD/JPY pairs now.

Economic News

USD – Dollar Slides on Global Economic Recovery

The U.S. Dollar slid against the EUR and CHF on Monday, as positive manufacturing data and surprising earnings from Ford pushed confidence back into the forex market. The ISM Manufacturing PMI rose to 55.7 vs. the 53.1 forecast. Moreover, both U.S. Pending Homes Sales and Construction Spending rose far higher than many analysts expected. On top of this, Ford announced a surprising, but optimistic $997 million 3rd quarter profit. All of these factors helped U.S. equities rise, which in turn resulted in the rise in value of the EUR/USD pair.

The EUR/USD cross rose by 40 pips to the 1.4800 level. This was despite being as high as the 1.4840 mark in Monday’s trading. The USD/CHF fell to as low as the 1.0165 mark yesterday, as traders continued to ditch the USD for the Swiss currency. This is despite the USD making inroads into the CHF last week. However, with regards to the GBP/USD pair, the greenback made significant gains. This was largely owed to the stock market rally in Britain on Monday, which was initiated by both the U.S. economic news and the optimistic British manufacturing data.

Looking ahead to the day ahead is the U.S. Factory Orders at 15:00 GMT, which is set to be the most important indicator of American economic health. Therefore, it is highly advised that you follow top economic news releases from the leading industrialized nations. In addition, it is a wise choice to follow any surprise speeches from President Obama, as he is set to continue to have important speeches relating to the economy. Therefore, any such speech is likely to lead to very high volatility in the forex market. Consequently, it is recommended that you open your positions in the USD crosses as soon as possible.

EUR – Pound Plummets on Optimistic Manufacturing Data

The Pound plummeted against its major currency pairs yesterday, as the British economy published the best manufacturing data in 2 years. The British Manufacturing PMI rose to 53.7 in October from 49.9 in September. This is far better than the forecast of 53.1. This was great news compared to the 0.4% GDP decline in the 3rd quarter. Top economists say that this result of this indicates that the British economy may rise out of recession in the 4th quarter of 2009. The GBP’s losses were exasperated, as British equities rallied due to both data from both Britain and the U.S.

The GBP/USD pair fell by about 60 pips to the 1.6390 level. The EUR/GBP pair rose by over 50 pips to the 0.9024 level. This came about as the Euro-Zone data wasn’t as good as Britain’s. Additionally, equities markets across the Euro-Zone failed to rally like their British and American counterparts. Thus the result was traders dropping both the USD and GBP, and buying up of higher-yielding assets, such as the EUR, Crude Oil and Gold. With regards to the EUR/USD pair, it finished trading at about the 1.4800 level, the second consecutive day gain for the pair.

Today, there is some very important news that is set to come out of Britain and the Euro-Zone. From Britain, there will be the Construction PMI publication at 09:30 GMT. A better than forecast result for this release could help the British Pound in today’s trading, as investors look to make some big profits. From the Euro-Zone, there will be the speech by Bundesbank President Axel Weber at 17:00 GMT. This speech is crucial, as Weber is also a member of the ECB (European Central Bank) Governing
Council. Therefore, traders will be looking for some clues about future Interest Rates. For that reason, volatility will be very high surrounding this event.

JPY – JPY Loses Ground on All Fronts

The Japanese currency lost ground on all front on Monday, as Japan’s bank holiday left the JPY on the backburner. The result of this was an extremely bearish trading session. The JPY lost much strength against virtually all of its currency pairs. The USD/JPY cross rose by 25 pips to the 90.31 level. The EUR/JPY cross soared by 70 pips to the 133.65 level. The Yen also lost much ground against the NZD.

Tuesday’s trading offers many important opportunities with regards to the JPY’s key crosses. There is much crucial data later today form the U.S., Britain and the Euro-Zone. Therefore, the Yen will be on the backburner again for much of today. However, at 23:50 GMT the Japanese Monetary Base data will be published, which is vital as it is a key measure of Japanese economic health. As a result, positive results could help the JPY in late trading today.

Crude Oil – Oil climbs on Optimistic U.S. Data

Crude Oil made significant gains on Monday, as much positive data was released from the U.S. economy. The most important of these was both manufacturing and housing data. This resulted in a U.S. stock market rally and a selling-off of the greenback. The effect of this was a rally in Crude Oil, which lasted throughout much of yesterday’s trading. Crude closed higher by around $0.80 at the $78.28 level.

Today offers much important opportunities for Crude Oil traders. There is the opportunity to make big profits, as traders seek o take advantage of the optimism on the back of a global economic recovery, led by the U.S. A fall in the USD today could further help Crude Oil prices yet again today. For now, it is advised that you open your positions in Oil, whilst volatility is still low.

Technical News

EUR/USD

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.4790 level. The weekly chart’s Slow Stochastic is showing a bearish cross suggesting that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The typical range trading on the hourly chart continues. The daily chart RSI is floating in neutral territory. However, the 4-hour Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops might be the right strategy today.

USD/JPY

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the weekly Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card – Gold

Gold prices rose significantly yesterday and peaked at $1063.45 for an ounce. However, the daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

*New Zealand Wages rose 0.4% in the third quarter, more than market estimations

Europe

*German PMI Manufacturing in October at 51.0 as expected

*Euro-zone PMI Manufacturing in October at 50.7 meeting market expectations

*UK PMI Manufacturing in October better than expected at 53.7

Americas

*US Pending Home Sales rose 6.1% in September

*US ISM Manufacturing climbed to 55.7 in October beating all market forecasts

The Overall Sentiment

Equities

US stock markets advanced boosted by better-than-expected manufacturing and housing figures. The ISM Index climbed to its highest level in three years showing encouraging signs of improvement in the manufacturing sector. US equities gave up some gains as financial stocks declined on comments from a Fed official about the banking system being ‘far from robust’ but managed to close on the positive side with the S&P gaining 0.7% and the Dow Jones adding 0.8%. The UK manufacturing sector surprisingly expanded as well adding to the positive sentiment and the FTSE 100 closed up 1.2% driven by gains from mining companies. In Japan a negative reaction caused by worse-than-expected earnings reports sent the Japanese Nikkei 225 down 2.3%, its biggest decline in a month.

Forex

An inconsistent day for the Dollar started with weakness against the Euro as the positive European manufacturing figures triggered appetite for riskier currencies. The rally reversed however when the associate director of the Fed’s bank-regulating division stated that the current situation of the banking system is ‘far from being robust’ spurring investors’ demand for the Dollar’s safe-haven properties. Nevertheless, sentiment inverted once again as strong US manufacturing and housing figures shifted attention to higher-yielding assets sending the EUR/USD to the 1.48 area in late trading hours. The Canadian dollar advanced the most in a gaining session for commodity-linked currencies with a 0.7% appreciation against the greenback. The Aussie dollar traded around 0.9080 ahead of the RBA rate decision. The Pound had a choppy session versus its US counterpart and declined against most majors as the uncertainty grows around this week’s BoE rate decision. The Yen weakened for a second day versus most currencies as risk appetite makes a comeback fuelled by renewed beliefs that global economy is improving.

Commodities

Gold made a strong advance of around $20 reaching $1064 an ounce and rapidly approaching its highest level of $1070.80. Silver climbed above $16.60 but still has much territory to cover to return to last month’s highs on the $18 area. Crude Oil had a volatile session following the intraday swings of the equity markets and closed up about a dollar to trade slightly above $78.

The Day Ahead

The day will start with the highly expected RBA rate decision. Australia’s central bank is likely to raise its benchmark interest rate by a quarter percentage point to 3.5% from 3.25% amid strengthening national economy, although some analysts forecast a half-point increase based on concerns about medium term inflation pressures. In the UK positive figures are expected for the PMI Construction report and the US Factory Orders will complete a day with a thin stream of economic data being released ahead of a loaded calendar for the rest of the week.

Technical Analysis

EUR/GBP DAILY

EUR/GBP has been following a downward channel for the last three weeks. After the last bearish wave the cross stalled at the lower boundary of the channel and started to change direction once again presenting the opportunity to enter a Long position to take advantage of a new bullish impulsion.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Fast Brokers – Gold has recovered nicely from Friday’s slight pullback in the face of a stronger dollar and sliding equities.  The precious metal has since plowed past the psychological $1050/oz level and our 1st tier downtrend line after U.S. ISM Manufacturing PMI and Pending Home Sales data points knocked aside analyst expectations.  We recognize strength and stability in the EUR/USD and AUD/USD as well, gold’s stronger positive correlations.  In fact, the EUR/USD and AUD/USD held up relatively well on Friday considering the extent of the selloff in U.S. equities.  As a result of present activity, gold’s momentum has suddenly swung to the positive side.  The final technical barrier separating the precious metal from a retest of previous 2009 highs seems to be our 2nd tier downtrend line hanging nearby.  Therefore, although downward pressure does have a chance of kicking back in, technicals are suddenly working in favor of the topside once again.  As for the downside, gold now has multiple uptrend lines serving as technical cushions and the psychological $1050/oz level is working the precious metal’s favor now.

Meanwhile, investors should keep an eye on the EUR/USD and AUD/USD and monitor their ability to break through their respective Friday highs.  Furthermore, investors should track the S&P’s present interaction with its own psychological 1050 level.  It seems we should be in for another volatile week considering the amount of econ data we have to go along with Fed, BoE, and ECB monetary policy decisions.  Therefore, investors should exercise caution and monitor the markets carefully since surprising news could shift sentiment rather quickly.

Present Price: $1060.65/oz

Resistances: $1062.54/oz, $1065.38/oz, $1067.72/oz, $1069.89/oz, $1075/oz

Supports: $1059.19/oz, $1055.69/oz, $1053.76/oz, $1051.51/oz, $1048.50/oz

Psychological: $1050/oz, $1075/oz.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – Friday’s selloff in the USD/JPY accelerated on large volume as investors headed divested from riskier investment vehicles in reaction to the large selloff in U.S. equities.  Friday’s strength in the Yen also stemmed from the BoJ’s decision to end a couple of its bond purchasing programs in an effort to tighten liquidity.  Friday’s monetary policy falls in line with the BoJ’s more conservative stance since the DPJ took office.  Furthermore, the BoJ was likely encouraged by the USD/JPY’s recent solid performance above its important 90 threshold.  However, yesterday’s larger than expected decline in both the Tokyo Core CPI and Household Spending tell us the BoJ can’t be too conservative with its monetary policy since deflationary pressures are still bearing down on consumer prices.  Additionally, even though last week’s Industrial Production number printed better than analyst expectations, the 1.4% rate of growth is unsubstantial compared to the huge declines we witnessed during late 2008/early 2009.  Hence, Japan’s economy still faces a long path to recovery.

Meanwhile, investors will be focused on the flow of important U.S. econ data along with more Q3 earnings reports before Wednesday’s FOMC meeting.  Additionally, investors will receive monetary policy decisions from both the ECB and BoE on Thursday.  Therefore, we could be in for another volatile trading week since there is an air of uncertainty surrounding the upcoming central bank decisions.  For the time being, it seems investors may favor the Yen over the Dollar as a safe haven due to yesterday’s selloff in conjunction with pullbacks in the EUR/USD, GBP/USD and AUD/USD.  As a result, the USD/JPY could be in for further weakness should the S&P futures choose to test their October lows and the psychological 1000 level.  However, we’ll also receive a public address from BOJ Governor Shirakawa on Tuesday along with BoJ meeting minutes on Wednesday.  Any surprising language coming from either of these events could have a moderate impact on the Yen.

Techncially speaking, the USD/JPY dropped through 10/16 lows and was fairly close to testing 10/14 lows.  Furthermore, the currency pair sank past the highly psychological 90 level along with our 1st tier uptrend line on high volume.  As a result, present momentum appears to be in favor of the downside.  As for the topside, the USD/JPY faces multiple downtrend lines along with 10/30 highs.  On a positive note, the currency pair has managed to climb back above 90 this morning to keep its head above water.

Present Price: 90.11

Resistances: 91.16, 91.29, 90.41, 90.60, 90.78, 90.93

Supports:  89.91, 89.77, 89.60, 89.38, 89.26, 89.14

Psychological: 90

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is tacking onto Friday’s selloff backed by a pop in sell-side volume.  Friday’s weakness came on the heels of worse than expected British HPI data along with disappointing U.S. pricing and spending numbers.  The EUR/GBP has been hit heavily recently, making today’s pop in the currency pair and present relative weakness in the Pound warranted.  The Cable is adding onto its losses today after a Bloomberg report signaled that many analysts expect the BoE to increase its QE package by 50 billion at its upcoming monetary policy meeting.  Britain’s recent negative Prelim GDP number sent shockwaves throughout the FX market, and analysts are expecting the BoE to react by loosening liquidity further.  However, investors should keep in mind that we have seen some encouraging data from Britain lately, including today’s impressive Manufacturing PMI number.  Hence, positive results from tomorrow’s Halifax HPI and Wednesday’s Services PMI data points could change the present bearish tone.  The Services PMI number should carry the most weight of the two releases since services comprise roughly 70% of Britain’ GDP.  The last release thoroughly trounced expectations, and analysts are expecting the indicator to remain around a respectable 55.4 level.

Meanwhile, the riskier investment vehicles sure could use a little boost from econ data since we are witnessing a flight to safety across the board.  The S&P futures received large sell-side volume with Friday’s sizable pullback beneath Wednesday lows.  Hence, there remains a downward pressure on U.S. equities, meaning investors could continue to favor the Dollar since the Greenback and equities are normally negatively correlated.  Therefore, investors should keep an eye on the S&P’s reaction to upcoming econ data and Q3 earnings, particularly if we should witness a retest of October lows.  The Cable should ultimately follow its positive correlation with U.S. equities despite its relative strength as of late, that is unless the BoE behaves surprisingly hawkish at this week’s policy meeting.  Overall, with key econ data and an abundance of monetary policy meetings we should be in for another volatile trading week.

Technically speaking, the Cable still has a couple uptrends to fall back on along with 10/28 and 10/26 lows.  However, the currency pair is getting awfully close to our 2nd tier uptrend line, which may separate the GBP/USD from stabilization and a retest of the psychological 1.60 level.  As for the topside, the Cable has multiple downtrend lines bearing overhead along with 10/20 and 10/30 highs.  Additionally, the psychological 1.65 level serves as a technical barrier once again.

Present Price: 1.6346

Resistances: 1.6356, 1.6397, 1.6435, 1.6474, 1.6508, 1.6566

Supports: 1.6315, 1.6285, 1.6251, 1.6234, 1.6204, 1.6167

Psychological: 1.65, 1.60

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD’s trading right around where we left it on Friday.  The currency pair found strength once again just around our 2nd uptrend line, setting a slightly higher low than Thursday.  However, downward forces remain since last week’s global econ data ended on a sour note.  German Retail Sales printed 12 basis points lower than analyst expectations, negating Thursday’s positive Employment Change number.  Furthermore, investors found that U.S. prices and personal spending continue to decline while Unemployment Claims remain at historically high levels.  Therefore, unemployment and consumption are lagging behind the improvement in corporate earnings.  Investors should keep in mind that much of the rebound in earnings has been driven by a combination of deep cost cutting measures and global economic stimulus measures.  Hence, economists are becoming increasingly worried that any premature removal of stimulus and tightening of liquidity may jeapordize the global recovery taking root, resulting in additional cost cutting and even higher unemployment.  As a result, investor uncertainty is rising, as seen by the large pop in the VIX, and are divesting from risk and heading towards the Dollar.

The EU will be relatively quiet data wise until Thursday’s monetary policy decision.  The ECB was complaining about the strength of the Dollar recently, and the Euro has since declined about 300 basis points.  As a result, the ECB may be less inclined to take any liquidity measures at this week’s meeting.  Although, we will have to see how the Fed acts on Wednesday first.  Therefore, between now and then activity in the EUR/USD will likely focus on U.S. econ data and Q3 earnings reports.  Hence, investors should keep an eye on the S&P futures and their interaction with present technicals along with October lows should they be tested.

Technically speaking, last week’s sharp movement below the psychological 1.50 level is a discouraging sign for bulls.  However, there remain several uptrend lines we can form, meaning the EUR/USD has a few technical cushions to rely upon before investors can safely cry bear.  The EUR/USD has three uptrend lines to fall back on along with the psychological 1.45 level should the currency pair take a turn for the worst.  Our 2nd tier uptrend line seems to be a key technical since it runs through October lows and likely represents the support separating the EUR/USD from a retracement towards 1.45.  As for the topside, the EUR/USD now has multiple uptrend lines bearing down on price and the psychological 1.50 level becomes a technical barrier once again.  Overall, although the uptrend remains intact, investors should tread carefully since U.S. equities are facing headwinds.

Present Price: 1.4761

Resistances: 1.4806, 1.4828, 1.4853, 1.4878, 1.4907, 1.4933

Supports: 1.4760, 1.4723, 1.4686, 1.4670, 1.4638, 1.4612

Psychological: 1.50, 1.45

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

First of all, before we get more into details let me just restrict myself. It is impossible to have a 100% control on the FSA account. The reason is very simple, when you choose to have strategies trading for you; you forfeit your right to control what’s going on.

Despite all the above, there are still many things you can do in order to adjust the strategy to your needs. Let’s try and figure those out:

1. If I want a short-term strategy, then by definition my greatest concern is how the strategy has been doing recently. So when I need to sort the strategies’ Time Frame, I choose “Last Month to Date”.

2. Then, naturally, I look at the Profit ($) factor. Just like any aspect of life, it is recommended to follow the winner. It can’t promise us that the strategy will continue to see profits, but it’s for sure the best alternative.

3. Now, you have to make the first difficult choice – sort by Max DD. Max DD means Maximum Draw-Down, which means what was the worst losing sequence in losses for the system denoted in pips. In general, the first thought that comes to your mind is that you want the Max DD to be as low as possible. However, bear in mind, that strategies which were built for short-term profits, are also exposed to large quick loses, which means that their Max DD could be relatively high. Take this under consideration upon choosing a strategy.

4. Remember, the major currency pairs don’t tend to fluctuate harshly on a regular basis. This means that if you’re looking to see large profits quickly, you should consider using strategies that trade the more exotic pairs such as GBP/CHF, GBP/JPY, EUR/CAD, etc…

5. One last thing before we say goodbye. Some of you may not be aware of this, but you are perfectly capable of closing a position manually. If you wish to see quick exits, but the strategy doesn’t “obey”, don’t hang on and wait for the system to close it – close it by yourself!

Many people are interested in trading in the forex market because they are attracted to the fact that said market is open and running 24 hours a day and moves more money than the European and American stock markets combined. If one wants to succeed in this market, he has to have a good strategy that will support him as completely as possible.

Most forex traders rely on the economic data that they themselves have gathered, but those who have less time to devote to such a process often choose to use an automated forex trading program to locate successful long-term and short-term strategies for them. This is because they understand that this market is one of the most volatile in the world, and sometimes help is needed.

Therefore, those who want to keep up with the forex game turn to long-term strategies. This is considered one of the best techniques in this very competitive market. You have to keep in your mind a few things when you choose them:

1. Max DD: Maximum Draw Down – The largest drop from net balance peak to net balance valley. The market is unpredictable and a strategy that risks a lot isn’t always a great choice unless it offers very high rewards.

2. The PAR: If the strategy offers a much higher return than what it risks, consider using it.

3. Profit Factor: Shows how many times the gross profit exceeds the gross loss. The larger is this value, the better.

4. High Level of Equity: If you wish to open a long term position, I recommend starting with at least $5000 in your balance in order to sustain negative movements.

Another useful tool is the when you log into your FSA account you can see every aspect of the trading strategy before implementing it on your account. You will know in advance what the level of risk and reward the strategy offers even before it has opened a trade.

Long-term strategies might help you ride out the rough times and capitalize on the good ones, but only high equity accounts will be able to ride out negative movements so keep this in mind before trading this type of strategy. Sometimes just taking a step back and accepting a few losses will give you the energy and the knowledge to attack the Forex market with renewed vigor, and make some serious profits!

By Nico Isaac

The following article includes analysis from Robert Prechter’s Elliott Wave Theorist. For more insights from Robert Prechter, download the 75-page eBook Independent Investor eBook. It’s a compilation of some of the New York Times bestselling author’s writings that challenge conventional financial market assumptions. Visit Elliott Wave International to download the eBook, free.

Once upon a time, the term “Black Monday” was to Wall Street what the name “Lord Voldemort” was to Hogwarts. It turned the air freezing cold and sent traders flinching around every corner in fear of a repeat of the October 19, 1987 or October 28, 1929 meltdown.

Case in point: The 2008 “Black Monday” anniversary. At the time, the U.S. stock market was locked in a ferocious downtrend that included regular, triple-digit daily declines of 400 points and more. Needless to say, when the final two Mondays of October arrived, the least superstitious investors surrounded their portfolios with more good-luck talismans than a Bingo player. See October 19, 2008 AP headline below:

“Black Monday: Stocks Sink As Gloom Seizes Wall Street. Prolonged Economic Turmoil” is seen.

That was then. Today, the usual dread surrounding the back-to-back string of “Black Mondays” is nowhere to be found. In its place, media reports abound of a new, global bull market “shrugging off,” “ignoring,” and “making a distant memory” of the event.

For one, “gloom” hasn’t “seized” the U.S. stock market in quite a while; from its March 2009 low, the Dow has risen more than 50% to above the psychologically important 10,000 level. For another, the mainstream experts insist that today’s financial animal is unrecognizable to that of 1987, and especially 1929. In their eyes, it’s a completely different — i.e. safer, smarter, and sounder system.

We beg to differ.

See, while the usual experts want to put as much mental distance between today’s market and those that facilitated the 1987 recession and 1929-1932 Great Depression — the physical similarities are impossible to ignore; more so, in fact, to the latter scenario.

Here, the October 2009 Elliott Wave Financial Forecast presents the following news clip from the October 25, 1929 New York Daily Investment News.

Now, take a look at these headlines from the week of October 12-17, 2009:

“The Great Recession Is Over.” (Reuters) — “80% of Economists Say The Worst Is Behind Us.” (CNN Money) — “The Bull Is Back” (AP) — “The Economic Recovery Is Well Underway” (Wall Street Journal)

They’re interchangeable — Eighty years later.

Along with a similar extreme in bullish sentiment, the performance of stocks between now and the 1929 situation is cut from the same cloth. After an initial plunge from August 1929 through late October 1929, the US stock market enjoyed a powerful rally well into the following year. NOW: After a steep freefall from its October 2007 peak, the US stock market is once again enjoying the fruits of a powerful rally back to new highs for the year.
Also, on closer examination, the October 19 Elliott Wave Theorist (EWT, for short) uncovers an even deeper parallel between the 2009 rally and the 1929-30 one. Here, EWT presents the following snapshot of the Dow during the Depression-era advance:

As Bob Prechter points out — in 1930, stocks rallied to the level of the preceding year’s gap. Bob then reveals that the same level has been reached now.
So, we all know how the 1930 rally ended. The question is whether the 2009 advance will experience the same fate. As Bob explains in the Theorist, the only way to know for certain is to “look at the reality of the situation.”

For more information, download Robert Prechter’s free Independent Investor eBook. The 75-page resource teaches investors to think independently by challenging conventional financial market assumptions.