Month: May 2011

By David Adams

I’ve been spending some time in recent articles describing different e-mini charting techniques. Specifically, we have been looking at different methodologies to display raw price data. We have discussed candlestick charting, range bar charting, and tick charts. This article will deal with one of my favorite topics and most used charting technique. We will be discussing Renko bars.

My e-mini trading style is devoted exclusively to scalping, or carving out small chunks of price movement in a broader trend. As a scalper, I try to limit the parameters and variables that traders with longer investment horizons must take into consideration. In short, I am interested in momentum and, more specifically, price action. Renko charts are unique in that they deal only with price; there is no consideration is given to volume or time.

Renko charts have their basis in Japanese futures trading and are considered to date back several centuries. The term “Renko” comes from the Japanese word “Renga” which means brick, and have been popular among Forex traders in recent years. The Renko system resembles stacked bricks when they are forming in a trend. I have been using them for several years to trade e-mini contracts with great success. Let’s take a close look at some of the unique characteristics of Renko system.

• The size of each Renko brick is determined by the e-mini trader.
• If prices are very inactive, or static, there may be very little movement in the Renko bricks.
• The Renko trading system are use to track trends and filter out extraneous market noise.
• Unlike range bars, Renko bricks to generate a brick only when the price has moved the predetermined number of ticks in a single direction.
• Renko bricks can be calculated at the start of a new brick or at the close of a new brick.

Now let’s get down to some of the basics in using the Renko systems in an e-mini scalping system. One of the most difficult jobs I have as a trading educator is discouraging students from taking trades during periods of market noise. (Market noise is a period of time when the market is going through normal backing and filling operations and not trending.) By using the Renko system, market noise (which is sometimes referred to as a period of consolidation) is filtered out because consolidating markets exhibit very little directionality in price. When using Renko bars, consolidation periods appear as several Renko bricks; this is in sharp contrast to a traditional candlestick chart where consolidation periods appear as an extended grouping of a very tightly spaced candlestick bars. (candlestick charts are generally based upon a time variable) During periods of narrow range bound price action, Renko bricks will only will add new bricks when the price action has moved the trader specified period of time in one direction. In short, most of the noise prevalent in time-based candlestick charts or multidirectional range charts is eliminated.

In my trading, I typically use either 4 or 5 tick Renko charts. It is not uncommon for me to experiment with these tick settings to determine which setting gives me the clearest view of the actual price action occurring on the chart I am observing. Further, I will generally allow at least two bricks to form in one direction before I consider taking a trade in the direction in which the bricks are moving. There are several generally accepted ways to identify directionality when using Renko bars. Some systems draw hollow bricks when the market action is moving to the upside and solid bricks when the market action is moving to the downside. In my trading, I use the traditional red and green coloration unique to candlesticks to indicate the market directionality. Red Renko bricks indicate the market is moving to the downside, and green bricks indicate the market is moving to the upside. Further, I have found it is most effective to calculate Renko bricks at the close of the bar, as opposed to the beginning of the bar. This is, of course, a matter of personal preference; but I find that using the closing price fits well with my trading system which requires me to initiate trades only at the close of a bar.

In summary, we have only touched a few of the advantages that the Renko system offer. We have noted that this system is ideal for identifying trends and minimizing market noise. Further, we have identified some specific settings where an e-mini trader can begin and emphasized that adjusting the Renko tick settings from time to time may make the trends clearer and easier to understand. Of course, specific tick settings with Renko bars should be set at an e-mini trader’s discretion. Finally, I have emphasized that in my trading using the scalping style, the Rinko system is ideal because I am very trend oriented and Renko bars are priced based and were designed to identify trends based on price, not time or volume.

As a quick note, information about Renko bars can be difficult to find and time should be spent practicing with this system before implementing it with your live trading. In the end though, I suspect most e-mini traders will find the Renko system is a superior methodology to implement into their scalping strategy.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

Greece remains the key question going forward though towards the end of last week the debt crisis was beginning to weaken its impact on the FX markets and the euro.

Talks between the EU and the IMF were continuing as scheduled and should end within the next few days. The German newspaper Der Spiegel reported the EU may withhold a 50B euro package for Greece should the indebted nation fail to reach its proposed austerity measures.

While the question over Greece remains unanswered, markets may have come to the conclusion that new funds will be provided to the indebted nation and Greece will eventually undertake a restructuring of its sovereign debt. Should the Greek situation be put on the back burner, this may allow for the euro to rally in the near term as the underlying fundamentals between the euro and the dollar have not changed over the month of May when the EUR/USD declined 3.5%. EU interest rates are still expected to rise while the Fed continues its QEII program into June. A close above the 50-day moving average at 1.4350 would put the bulls back in the driver’s seat with a target at the May high of 1.4940.

The dollar is on its back foot again versus the G10 currencies following a week of disappointing data releases. Lower than forecasted durable goods orders, disappointing GDP, and a steep decline in pending home sales on Friday all point to a US economy that is not firing on all cylinders. Given the downturn in US data releases, the dollar could continue to be sold versus the G10 currencies in the near term.

Read more forex trading news on our forex blog.

By Cedric Welsch

The term “currency exchange” refers to the way money is valued between different economic systems. Currency is a reference to the money supply of a nation. It generally refers to the physical aspect, such as dollar bills or coins. This is exchanged for goods and services. The non-physical aspects of currency are those that exist via bank systems, such as purchases with credit or debit cards.

Each country has a currency system. This is the system for buying and selling goods. The worth, or value of money in the system differs from place to place. Economists understand the finer parts this while people with little economic experience may not fully comprehend what makes one dollar worth more than another.

A strong economy in a country will make the money more valuable than that of a weaker economy. This is part of the reason that the U.S. dollar is valued at a greater rate than the currency of a country such as Jamaica. If a country is wealthier, chances are their money will be valued at a greater amount than a country that is not a major world power.

When you look up the currency exchange between two countries, you should see what one is valued to the other. Some websites allow you to calculate the exchange of a total sum. If you are considering moving to another location and want to compare the rate of rent, you can take the new rent amount and enter it into a converter. This will give you the exchange for what you will be looking at. This is a good starting point at figuring out the approximate difference in values.

Even if you are not looking at a big move, traveling can require you to do a currency exchange. You may wonder how far your dollar will go in another country or have to figure out the hotel bill where you will be staying. You can do this online, or figure out a mental system to convert the monies. If you are in the country with money for your home country, you may decide to convert that to the local dollar. You can do this at many banks or money exchange locations.

Having a basic understand of currency exchange is a good idea even if you do not plan on traveling. Just knowing the basic ways in which economies work and differ can help you follow what’s going on in the world.

About the Author

It can be a bit scary for the beginning trader to take as much fx news as possible all at once. Although a highly factual broker forex review is very accessible, traders still ignore some of them.

Overnight the New Zealand dollar reached its highest level versus the US dollar since February 2008 on the strength of significantly better than forecasted trade balance data as the Kiwi builds on gains from last week.

Comments by New Zealand Prime Minister John Key touched on the strength of the Kiwi which knocked the NZD/USD off of a 3-year high. Earlier in the Asian trading session the pair reached as high as 0.8214 before trading back to 0.8170.

Helping to boost the Kiwi was significantly stronger than expected trade balance which showed a surplus of 1,113M NZD for the month of April. The data handedly beat expectations for 603M NZD. The tone of the report was further boosted by the March numbers which were revised higher to 578M NZD from a previously reported 464M.

The trade balance numbers are quite the feat following the Christchurch earthquake in February and show the improvement in New Zealand exports and terms of trade. Today’s trade balance data should further support a bullish case for the Kiwi. Last week the New Zealand dollar rose sharply following reports of Chinese interest in diversifying the nation’s FX reserves and setting aside up to 1.5% to invest in New Zealand assets and government bonds.

While the NZD/USD hit a 3-year high overnight the AUD/NZD also reached a significant technical level, falling to the trend line off of the November and January lows at 1.3010. A breach here and the AUD/NZD would target a range between the January pivot at 1.2775 and 1.2470, the latter being the 61.8% retracement level from the 2010 low to the May 2011 high. The November low at 1.2640 would be a last stand for the Aussie dollar.

Read more forex trading news on our forex blog.

By David Adams

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

With UK and US markets closed today liquidity may be on the light side. However, the economic calendar will not be taking a break as monthly Canadian GDP numbers will be released later today.

CAD – GDP m/m – 12:30 GMT
Expectations: 0.2%. Previous -0.2%.
Canadian GDP for the month of April is forecasted to grow following a disappointing month of February which had economic growth slipping into the red. Expectations are low and any decent growth numbers would be a positive for the Loonie. Initial support for the USD/CAD is found at 0.9740 followed by the low on March 20th at 0.9640. To the upside the recent rally has been capped at 0.9815. A breach here opens the door for gains towards 0.9970, a level where the mid-March high coincides with the 200-day moving average.

JPY – Preliminary Industrial Production m/m – 23:50 GMT
Expectations: 2.5%. Previous: -15.5%.
A fall in industrial output was expected after the earthquake and tsunami and is reflected in April numbers which declined by 15.5%. A 2.5% gain may be expecting too much from a feeble Japanese economy and could induce further declines in the USD/JPY. Initial support comes in at 80.35 followed by the May low at 79.50. A breach here would expose the pre-intervention low at 76.10.

Read more forex trading news on our forex blog.

By Cedric Welsch

You may have heard about the excitement of Forex trading, and feel you would like to be involved, but have no idea where to start. It would be helpful for you to have a Forex trading guide, to explain the basics of trading on the currency markets. There is the potential for big profits, but it is essential to know what you are doing.

The Forex market is a non stop electronic cash market, where international currencies are bought and sold round the clock. Market conditions and exchange rates are liable to change constantly in response to real time events. Your goal in Forex trading is to profit from the movements of currencies against each other, and trading is always done in currency pairs, for example EUR/USD.

The first currency named in the pair is referred to as the base currency, and the second as the counter or quote currency. The value of the base currency in the exchange is always 1, so an exchange rate for EUR/USD of 1.2803 means that 1.2803 US dollars must be paid to obtain 1 euro. In Forex trading you buy and sell currency pairs, so when you place an order to buy the EUR/USD, you are buying the euro (the base currency) and selling the dollar.

The majority of currencies are traded against the US dollar. After this, the four next most traded currencies are the euro (EUR), the yen (JPY), the UK pound (GBP), and the Swiss franc (CHF). These five currencies are referred to as “The Majors”.

In order to make a profit, it is important to buy or sell a pair only when you expect the currency you are purchasing to increase in value against the one being sold. If it does, you have to sell back the other currency, so as to lock in your profit. An “open trade” or an “open position” is one where the trader has bought or sold a currency pair, but has not yet closed the position by selling or buying back the equivalent amount.

One of the main things you will need to learn from a Forex trading guide is how to judge what the movements of currencies are likely to be, in order to make profitable trades. This involves being able to identify trends, and you have to learn to recognize and predict market trends if you are going to succeed in Forex. There are several techniques that are used, including “moving averages”, and graphs called Bollinger bands. If three or four of these indicators point in the same direction, this helps you to know it is right to make a trade.

As you can see, there is quite a lot to learn from a Forex trading guide, all of it incredibly exciting. You cannot possibly learn it all at once, and you cannot learn it all before you start. You can only really learn by getting involved. The important thing is to find the right Forex trading system, so that you will be able to learn step by step, and make a profit at the same time.

About the Author

Peddling within the boundaries of the forex trade arena is a highly dangerous game to play.
Thousands of hopeful investors in the foreign exchange market are still peddling tirelessly.

By Dillon Davis

India’s monetary standing as eleventh leading in society opens quite a few trading opportunities concerning Forex Rates in India. This second greatest populated territory is now recently industrial. One of the factors that contributed to the population’s brisk increasing financial system is its 1991 market-based reforms on its nation wherein emphasis was put on foreign trade and investment through forex India trading.

Foreign exchange trading is merely the purchasing and selling of goods and products via various currencies. In a nation similar to India, unveiling of forex trading is one direction of providing its people the possibility to participate in the economic marketplace in a multinational viewpoint.

How can one use forex trading in India? What can you do to seize the best Forex Rates India has to offer?

Earlier than investing your Indian rupee to use Forex Rates India, there are crucial things that have got to be considered primarily and these can include the following:

1. The Appropriate Mind-set: You can enjoy forex trading with the Forex Rates India if you have the decisiveness to be a success. You need to have the appropriate bearing when trading in forex India for the reason that if you don’t, you are certain to give up at the slightest blunder.

2. The Appropriate Broker: Having the correct broker who can serve you in trade with the Forex Rates India has is vitally monumental. The suitable broker can present you services such as complete trainings, fund safekeeping, trouble-free funding, and user care to name a few. These benefits can help maximize the benefits of Forex Rates India and can also help diminish any opportunity of committing errors when you begin your forex India trading.

3. The Best Training: To use the Forex Rates India you require appropriate guidance and schooling. Because you will be investing cash in order to participate in forex India, you have got to discover how to take care of your capital and make it grow without losing a significant size of money. For apprentice traders, services such as demonstration sign-ups and step-by-step live trading webinars from a qualified investor are provided for easy appreciation of how forex India trading behaves. For the highly developed traders, benefits like advanced trading equipment, select coaching sessions, and even mental enhancements are provided to heighten trading skills relating Forex Rates India. Some seasoned traders also bring into play the forex scalping strategy of trading on especially little time frames by means of leverage for quick profits.

In forex India trading, there is no such contraption as restricted trading potential. With the right point of view, the correct broker, and the desirable training, traders can make best use of the trading potentials of Forex Rates in India and accomplish their goals.

About the Author

Discover the best Forex Rates India has to offer with an experienced broker that will provide you with excellent training, coaching and advanced tools to help you Succeed. Discover the Best-Fx-Broker.com Advantage. Open a Free Demo or Live Account Today and See for Yourself!

By James McKee

After Japan experienced the earthquake and tsunami which ultimately resulted in a nuclear disaster the production fallout is becoming apparent as well. Durable goods in the United States such as electronics are on a steep declined as Japan attempts to rebuild, and unfortunately this has not been an easy process. The sale of goods within the US has declined dramatically and as a result the USD will slump on the online forex exchange once the official numbers are released. Any news of a poor economy will always cause a slump in the value of the hosting economy’s currency, and to date the USD has been suffering greatly.

The only reason the USD has not fallen off the charts completely is that the Euro has been having its own troubles lately. With regard to a continued amount of trouble there is little chance that production will resume any time soon. There is a continued measure of fear where Japanese production (or lack thereof) is concerned, and in all likelihood it will continue to be a problem for some time to come. There needs to alternatives sought out or an international effort to restore the production capacity of Japan.

The United States is not the only country that has become dependent on Japan; other economic powerhouses such as China are importing large amounts of goods from the country as well. Despite Japan’s small size they are the world’s second largest economy, and as such they have a huge impact on the day-to-day functioning of that economy. There has to be regard for this reality, because otherwise the world is facing very real consequences where the production of many different goods is concerned. There must be a comprehensive plan in place to either restore Japanese production or emulate that production in other countries.

The progress of Japan’s ability to produce these goods again is going to impact not only the stock and currency markets, it is also going to effect the commodities market as well. There is sure to be a drop in the value of gold and other precious metals used in the production of electronics and a variety of other goods. Such a drop would cause gold futures to drop as well, and any private parties who have invested in gold will notice a temporary drop in the value of their holdings. The world needs to come together and help Japan through this difficult time as much as possible.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.

By Cedric Welsch

Forex trading education is an essential aspect of forex trading. Without proper education and knowledge on how the trading works, you will be risking a lot of money doing trades. Hence, it is necessary to invest your time in learning the currencies market and how to trade successfully. Luckily, you do not need to spend money to get the education you need. Everything is provided for on the Internet.

Forex trading websites provide not only trading platforms, but quality training and forex guides as well. The best thing about these sites is that they do not require you to pay any amount of money to access their free forex resources, be it videos or text. If you are interested in learning what forex is, find a good FX trading website and access their training videos, eBooks, or written text. They will explain what the currencies market is, what forex is, and what you need to do to make money using their FX trading platform.

First of all, do not go jumping from one website to another all at once. Find a good website first and see if they provide quality FX educational material. Start learning from there and decide whether to find other free references after you finish watching or reading their resources. Keep in mind that forex trading has a lot of aspects to learn about so better check other websites as well to learn more about them in detail.

One of the best ways to practice what you have learned is to create a demo account with the website. The demo account is a great way for beginners to practice their trading skills. The demo account makes you acquainted with how the FX platform works. It also allows you to trade in real time without any risk of losing money because the currency you are trading has no real value. Hence, you do not lose money in case you lose in the trade.

Trading one currency to another does not always end up in a win situation so be sure to get a lot of practice before moving on to trading using an actual account. In addition, always try to review what you learned in case you get lost or confused with the trading process. If you opt to get one-on-one coaching to further enhance your forex trading education, find out if the website offers this option and opt into it.

About the Author

Enormous investment profits are being gained each hour through the forex marketplace.
Wildly enthused currency trading business individuals are glued at their computers for hours.