AU Retail Sales

February 5, 2013

AU Retail Sales

We´ll be getting the Retail Sales figure from Australia today once again, and if you´ve been following news out of Australia, you´d know that Retail Sales has been a sticky point for Aussie economy and a strong improvement may change the short term trend for the currency. Here´s the forecast:

7:30 pm NY Time AU Retail Sales Forecast 0,3%

Previous - 0,1%

DEVIATION : 0,5% ( BUY AUD 0,8% / SELL AUD - 0,2% )

DEFINITION “Measures the value of sales at the retail level. A rising trend has a positive effect on the nation´s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders payclose attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.”

The Trade Plan

The deviation that we are looking for the Australian Retail Sales m/m release is for a minimum of 0.5%. If we get a 0.8% (or better) we´ll look to buy and if we get -0.2% (or worse), we´d look to SELL. There is a high probability of market movement of over 50 pips in the next 2 hours if we get our deviation. With RBA releasing its interest rate shortly, and the fact that China may cut RRR rate soon, we should only trade if we get our deviation…

Recommended Pairs :  AUDUSD, AUDCAD

AUD/USD - Australian dollar / US Dollar

Resistances : Weekly 1.0475 ; Daily 1.045 ; Hourly 1.042

Supports : Weekly 1.0345 ; Daily 1.036 ; Hourly 1.038

BOOKS

Currency Trading in the FOREX and Futures Markets - Carley Garner - EUR 28,67


Carley Garner has created the perfect book for anyone interested in getting started in currency trading. Whether you are an experienced trader of stocks or options looking to diversify markets you can trade or you are completely new to trading in general this book will get you on the right path very quickly.

The book warns novices of both the dangers and possible rewards of trading currencies. "The goal is to give you a realistic idea of what to expect in order to avoid becoming a statistic".

The author takes you through currency trading step by step from understanding the difference between FOREX and currency futures to how to trade them. The reader will get an understanding of each currency pair and a table with each three letter abbreviation for currencies and the order in which they are paired. You are advised to stick with the currency 'majors' for liquidity and avoid the 'minors' so you are not hurt with the wide bid/ask spreads in low volume markets.
Currency pair values per contract are $100,000 per standard contract, $10,000 per mini contract, and $1,000 per micro. The book also has a table for currency futures contracts.

While FOREX traders are able to leverage their trades with 50 to 1 margin the author warns traders about the dangers of leverage and how it can wipe out your account. There is always an equal downside risk for every possible upside profit with leverage and currency traders would be wise to trade appropriate position sizes that does not put their entire account at risk in one trade.

Carley warns readers that many FOREX brokers that claim to be commission free are really just taking the other side of your trades as off exchange trades instead of executing your trades on the open market like currency futures brokers do through a centralized and regulated exchange. Many FOREX brokers make their money through the bid/ask spreads that you buy and sell at when getting in and out of trades. Also FOREX trading has counter party risks while currency futures trading is guaranteed by the exchange to make all parties whole.

"FX and futures traders are not buying or selling an asset; instead they are trading a liability that is dependent, or derived, from the value of the underlying asset; thus, they are known as derivatives."

She also covers different technical indicators to use in your trading and how they measure price to give buy and sell signals. You will also get the basic styles of trading and what usually works in the currency markets.

I strongly advise any trader interested in trading currency markets to first read this book by Carley Garner before you venture into those waters.
Currency Trading in the FOREX and Futures Markets - Carley Garner - EUR 28,67 

US ISM Non-Manufacturing PMI

February 5, 2013

US ISM Non-Manufacturing PMI

ISM or Institute for Supply Management is releasing its PMI (Purchasing Manager Index) and its similar to the UK Services PMI as this release is targeting the services sectors. As a leading indicator, traders generally pay attention to this report for hints of economic trend.

10:00am NY Time US ISM NonManufact. PMI Forecast 55.2 Previous 56.1

Deviation: 2.5 (BUY USD 57.5 / SELL USD 52.5)

DEFINITION: The Institute of Supply Management (ISM) Non-Manufacturing Index measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation´s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company´s performance, which can be a leading indicator of overall economic performance.

Trade Plan U.S. ISM Non-Manufacturing PMI is better known as the U.S. Services PMI; the current expectation is above the 50 level at 55.2. This figure indicates an expansion in the services sector where 50 is the medium point for the PMI. We´ll be using a deviation of around 2.5 points in order to trade this release. In the event that 57.5 is reached, we could see some USD strength and we should focus on trading against weaker currencies. If the opposite is true and a figure of 52.5 is released, expect to see weaker USD and we should trade with stronger currencies as a below 50 entry shows contraction in the Service sector…

If our tradable releases are reached, there is a good expectation that the market will move 50 pips within the next 120 minutes.

Recommended Pairs : EURUSD, USDJPY, NZDUSD

AU RBA Interest Rate Decision

February 4, 2013

AU RBA Interest Rate Decision

RBA (Reserve Bank of Australia) is expected to keep its borrowing costs at 3.00% as per general market consensus, this is following last meeting’s decision to also keep the rates unchanged…

Here´s the forecast for this news release:

10:30pm (NY Time) AU RBA Interest Rate Decision

Forecast 3.00% Previous 3.25% 

DEVIATION: 0.25% (SELL AUD 2.75% / BUY AUD 3.25%)

Definition: Australian RBA interest rate is often refers to as the “cash rate target”, also called the official cash rate (OCR) or cash rate. This is the Australian base rate. Banks pay this interest rate when they take out a loan with a maturity of 1 day from another bank. By buying or selling bonds and other securities issued by the government the RBA can influence the money supply and thus the cash rate target. A rise or fall in the cash rate often also leads to a change in the interest rates for mortgages, loans and savings.

The Trade PlanIf RBA decides to cut interest rate, we will stay out… If RBA decides to keep rates unchanged, we’ll BUY of AUD as market expects a cut. Ultimately we are neutral to slightly bullish on the AUD as AUDUSD has shown certain degree of resilience and should continue after today’s rate decision, especially considering the positivity from China.

 Recommended Pairs : AUDUSD, AUDCAD

AUD/USD - Australian dollar / US Dollar

Resistances : Weekly 1.051 ; Daily 1.0475 ; Hourly 1.044

Supports : Weekly 1.036 ; Daily 1.038 ; Hourly 1.041

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US NFP (Nonfarm Payroll) Employment

 February 1, 2013

US NFP (Nonfarm Payroll) Employment

We´ll be trading the US NFP (Nonfarm Payroll) Employment Change, it is the focus news release for the week. Here´s the forecast:

8.30 am ( NY Time ) US NF Employment Forecast 160 k 

Previous 155k

8.30 am ( NY Time ) US Unemployment Rate Forecast 

7.8%

Previous 7.8%

DEVIATION : 70K ( BUY USD 230K / SELL USD 90K )

DEFINITION Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation´s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

The Trade Plan Todays NFP Employment Change release is forecasted at 160K. The Unemployment Rate is expected to remain at 7.8% after the steady drop in the past few releases. If we get a significantly lower release on the NFP (90K or worse) and slightly higher Unemployment Rate (8.0% or more), I´d be looking to SELL the USD against stronger currencies as speculation for Feds to continue with QE should dominate the market. On the other hand, if we get a strong NFP release (230K or better) and the Unemployment Rate remains at or below 7.8%, USD could strengthen and I would BUY USD against other weaker currencies (use CSM or recommended pairs above).

If we get a conflicting release, then well wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, well get plenty of opportunities for an entry if we just wait for 5 minutes after the release; you´ll get a much clearer view.

UPDATE – Jan 31, 2013 10:58am EST

US GDP came in at the lowest level since Q4 of 2009, but a closer look revealed that the culprit was government spending, which was -15% versus +9% prior.  The ADP NPF came in better than expected at 192K versus 164K, although the previous month was revised downward by about the same amount that beat consensus expectations. The FOMC Statement maintained a positive tone, but it did note growth paused due to weather related temporary factors, which reinforces the need for further QE as Feds vowed to continue the same $85B of purchases until thresholds of 6.5% unemployment rate and 2.5% CPI are reached.

With the NFP scheduled on the First of the month, we really don’t have that many data to go by in our prediction for NFP figure; however, I believe here are the 3 potential scenarios:

1. NFP comes in much better than expected by at least 70K.  This would be positive for risk sentiment, I would be looking to go LONG on JPY crosses, such as EURJPY, AUDJPY.
2. NFP comes inline with expectation. This would ultimately be negative for the USD as demand for risk continue to drive safe-haven currencies, such as USD, lower.  I’d be going LONG on EURUSD.
3. NFP comes in much worse than expected by at least -70K. This would be negative for the USD temporarily as traders focus on the fundamentals, and of course, speculators will be looking for QE3/4 to continue, thus feeding into the view for more weakness in the USD… Although we may see some temporary USD strength due to safe-haven flows, it should reverse soon and provide us with a good entry by not having to deal with the spikes in the confusion as risk sentiment and fundamental traders fight it out… I’d be looking to go LONG on EURUSD.

As you can see, I am not in the market for LONG USD, as I don’t see any potential scenario that would produce persistent USD strength.

NFP Trading Strategy Let´s talk about how to trade this release: We´ll wait for the numbers to come out but continue to hold on a trade, Even if we get our tradable figures (230K to 90K). Wait for a possible revision of the previous release number of 155K, and market usually overreacts with the Revision and chances favor that a solid trade will present itself if we don’t get a conflicting releases between the revision and the actual release; at this point, still stay out of the market.

Then the next step is to wait for the Unemployment Rate, which is expected to be at 7.8%. If the Unemployment Rate were to surprise higher, we’ll have to make a decision based on the market sentiment coming into this release… Of course, if Unemployment rate were to fall below 7.6%, then we should see a surge in risk appetite as traders very much like to see lower jobless rates.

After all of the numbers have been released, wait for the market to push and wait patiently for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components are extremely volatile, and those who are patient will always get a chance to enter with a much better entry.

EUR/USD - Euro / US Dollar

Resistances : Weekly 1.373 ; Daily 1.3675 ; Hourly 1.364

Supports : Weekly 1.3535 ; Daily 1.357 ; Hourly 1.36

USD/JPY - US Dollar / Yen

Resistances : Weekly 93 ; Daily 92.5 ; Hourly 92.3

Supports : Weekly 91.05 ; Daily 91.65 ; Hourly 92.1

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Expert Advisor Programming: Creating Automated Trading Systems in MQL for MetaTrader 4 - Andrew R. Young - EUR 22,58


Andrew Young is a trading system programmer and entrepreneur, and the founder of Easy Expert Forex, an online MQL programming service. He currently resides in Nashville, TN.

Finally, the first comprehensive guide to MQL programming is here! Expert Advisor Programming guides you through the process of developing robust automated forex trading systems for the popular MetaTrader 4 platform. In this book, the author draws on several years of experience coding hundreds of expert advisors for retail traders worldwide. You'll learn how to program these common trading tasks, and much more: - Place market, stop and limit orders. - Accurately calculate stop loss and take profit prices. - Calculate lot size based on risk. - Add flexible trailing stops to your orders. - Count, modify and close multiple orders at once. - Verify trading conditions using indicators and price data. - Create flexible and reusable source code functions. - Add advanced features such as timers, email alerts and Martingale lot sizing. - Avoid common trading errors and easily troubleshoot your programs. - Adjustments for fractional pip brokers and FIFO. - Plus, learn how to create your own custom indicators and scripts! Whether you're a beginner or an experienced programmer, Expert Advisor Programming can help you realize your automated trading ideas in the shortest amount of time. This book features dozens of code examples with detailed explanations, fully-functioning example programs, and reusable functions that you can use in your own expert advisors!

UK Manufacturing PMI

February 1, 2013

UK Manufacturing PMI

Manufacturing PMI is a leading indicator that is usually released early in the month. Traders pay attention to this release for surprises as this survey may help to shape the general trend of the currency for the rest of the month. Here is the forecast:

4.28 am ( NY Time ) UK Manufacturing PMI Forecast 51.0

 Previous 51,4

DEVIATION : 2.0 ( BUY GBP 53.0 / SELL GBP 49.0 )

DEFINITION “UK Manufacturing PMI is a survey of purchasing managers in the manufacturing sector on various economic activities, including inventory, employment, orders, etc… A higher than 50 reading means expansion, or a less than 50 reading means contraction.”

The Trade Plan We´re looking for a tradable deviation (or the difference between the forecast figure and the actual release figure) of 2.0. Since this is a leading indicator and its impact may hint the future trend of other economic indicators (such as inventory, employment, retail sales, etc..), the market usually reacts to this release with volatility if we get our deviation.

We´ll be looking to BUY GBP if we get a 53.0 or better, or looking to SELL GBP if we get a 49.0 or worse.

Recommended Pairs : GBPUSD, GBPCAD

GBP/USD - British Pound / US Dollar

Resistances : Weekly 1.596 ; Daily 1.5935 ; Hourly 1.589

Supports : Weekly 1.5775 ; Daily 1.58 ; Hourly 1.5845

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Fundamentals On Trading For Beginners With This Easy 

And Simple Trading Guide To Help You Learn How ... In 

Stocks, Currencies Or Other Types Of Trade - Lionel R. 

Thicke - EUR 12,23

We often hear that 95% of people who try trading for a living fail within the first year. These are not very good odds and it is natural for new traders to wonder if they have what it takes. Trading is great way for serious investors to make money, but inexperienced traders often wind up with big losses. A good set of instructions can minimize the risks and save months of expensive trial-and-error learning. It is wise to view trading as a probability game. The awareness of risks and chances can alert the new trader to tread the trading market with great caution and shrewdness. This trading guide will outline only the most basic parts of trading. From this book, the new trader will learn the following: 1. A general idea of what to know and do to become a profitable trader 2. The main points of common types of trading in the stock market 3. Some Truths about trading 4. A list of characteristics that I believe could be found in most winners Plus lots of really helpful tips and tricks to help you win in stock market trading!

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DEVIATION : 

CA GDP

January 31, 2013

CA GDP

Canada´s monthly GDP report will be released today. Here´s the trading forecast:

8.30 am NY Time CA GDP Forecast 0,2%  Previous 0,1%

DEVIATION : 0,3%  ( BUY CAD 0,5% /  SELL CAD - 0,1% )

Definition CA GDP is defined (by wikipedia) as: “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.”

The Trade Plan Let´s look to SELL CAD if we get a -0.1% or worse release, or we’ll BUY CAD on a 0.5% or better release. With recent weakness in seen in CAD, a strong fundamental such as the CA GDP figure may be the catalyst we need to see more volatility in CAD.

Recommended Pairs : USDCAD. , GBPCAD

USD/CAD - US Dollar / Canadian Dollar

Resistances : Weekly 1.0095 ; Daily 1.0055 ; Hourly 1.0035

Supports : Weekly 0.99 ; Daily 0.9985 ; Hourly 1.0005

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17 Proven Currency Trading Strategies: How to Profit in the Forex Market (Wiley Trading) - Mario Singh - EUR 41,10 

A comprehensive guide to Forex trading for individual investors Countless money-making opportunities abound in the Foreign Exchange (Forex) market every day, but how does an amateur investor take advantage of these opportunities to earn high returns? This book by CNBC-featured Forex Expert Mario Singh provides a comprehensive solution to this question.
Following the first section that explains in plain English—what is Forex trading, how money is made in the Forex "game," the six major players involved, and the importance of knowing one's Trader Profile—the second section focuses on specific and practical guidance which includes:

• A "Trader Profile Test" to help the reader get a clear picture of his natural trading style and which of five trading profiles he belongs to (Scalper, Day Trader, Swing Trader, Position Trader or Mechanical Trader)
• 17 proven trading strategies (between 2 to 5 strategies for each trader profile) for the reader to immediately start cashing in on the Forex market
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Short on theory and long on practical insights and step-by-step guidance, 17 Proven Currency Trading Strategies—How To Profit in the Forex Market will help anyone—from beginners to professionals, and everyone in between—to master the Forex market and be consistently profitable.

ADX, Average Directional Movement, what is it?

ADX, AVERAGE DIRECTIONAL MOVEMENT

ADX, HOW TO IDENTIFY THE TREND

ADX, Average Directional Movement, with - DI ( Minus 

Directional Indicator ) and  + DI ( Plus Directional Indicator ), are a 

group of leading indicators that form a real trading system developed by Welles Wilder.

Initially, the indicator was created by Wilder specifically for commodities on a daily basis but then you realized that you can just as easily apply to the analysis of the equity instruments and, with the necessary adjustments, including trading and index futures.

The ADX measures the strength of the trend but do not provide guidance on its direction. The + DI and       - DI  complete function of ADX also defining the direction of the trend. Used together, the three indicators we can determine both the direction of the trend that its strength.

The construction is based on of ADX,  + DM (plus directional moviment) and the  -DM (minus directional moviment) determined, according to Wilder, from the difference between two consecutive minima with the difference of the two respective maximum values.

POSITIVE TREND  =     + DI > - DI

NEGATIVE TREND =    - DI > + DI

 The intersection of these last two indicators is then combined with the value of ADX to obtain a complete system for trading. The fact that Wilder has designed the indicator for the trading of commodities and currencies does not mean it can not also be applied to the actions, of course we're going to choose those actions that show a relatively high volatility, because of poorly volatile stocks can often generate generate false signals or not at all. 

The ADX by its nature can also be used to help decide whether to apply a strategy or a trend following strategy is  no trend following.

According to Wilder is a title to be considered in trend when the ADX indicator exceeds the value of 25, while we in the absence of trend, when the indicator is below the value of 20. Remains a zone of neutrality, that between 20 and 25.

ADX is Black

+ DI is Green

- DI is Red

ADX below the value of 20.

Positive trend = + DI > - DI

A simple operating method devised by Wilder provides for the entry long when the + DI crosses upwards the ADX-DI with greater than 20 (25 the value of the value used by Wilder, taking into account that was applied on the U.S. market). The entry short, conversely, is when the + DI crosses downwards-DI with ADX greater than the value 20. If the ADX indicator is not above the threshold of 20 does not open position.

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