Adaptation to the Realities of the Market
Do you think adaptation to the realities of the market is the most important thing?
Many times in the past I've written about the need to adapt, the need to be able to change your behavior relative to the market because the markets are ever changing. I've stated that mechanical systems may be workable, but for only a short time relative to the life of markets. You must learn to trade what you see and to understand what you see on a chart.
When I first began trading there was no such things as futures contracts for foreign currencies. Why didn't they exist? Because there was no need for them! In the 1970's all that changed when the US dollar went off the gold standard and began to float against other currencies. Following that, the Chicago Mercantile Exchange began to create currency futures to provide a place where currency traders could hedge the risks associated with dealing in foreign currencies. Some of these risks are direct and some are indirect. Direct risk is involved for those who deal directly in foreign exchange. Indirect risk involves companies who export or import and receive payments or make payments in the currency of another country.Ever since currency futures were created, they have been in a state of flux. More recently, for purposes of futures trading, currency gyrations have centered on a massive move away from currency futures to more direct trading in the forex markets. Currency futures, while maintaining their volume and open interest figures, are actually less liquid than they had been previously. Volume and open interest do not reveal the picture of what is happening in the currency futures pits. Volume and open interest levels are being maintained by fewer and fewer futures traders.
In the period from 1992 to the present, we've witnessed currency futures moving from "red-hot" to "cool" and now hot again insofar as speculators are concerned. Foreign exchange, which in 1992 was one of the hottest plays, first turned dull and then back again to exciting.That this has happened can be seen in areas of which most futures traders are ignorant. Five years ago foreign currency traders were being paid huge salaries and anyone with a track record could virtually name his price. Following that, currency traders were no longer in great demand. Now, again, there is a huge demand for successful currency traders.Currency futures are but a small representation of the $1.5 trillion dollar foreign exchange market. Professional currency traders use forex, forwarding contracts, derivatives of all kinds, and the futures pits, to deploy their various trading and hedging strategies. Looking at only the futures is like the blind man trying to tell what an elephant is like by feeling only the tusks.
In past years, foreign exchange desks at banks, insurance companies, brokers, and other institutions were seen closing down and firing hundreds of employees. Today, they are again looking for currency traders.In the 1990s, Midland Bank closed its foreign New York office laying off dozens of people. Frankfurt Bank had pulled out of New York and Tokyo closed down its foreign exchange desk. At that time, the world's largest foreign exchange trader was Citicorp. In the D-Mark alone, they shrank from 39 traders working at 17 different locations around the world to 4 D-Mark traders all working in one room. Keep in mind that these were traders who had been to a greater or lesser extent using the currency futures. The result at that time was that there were fewer big fluctuations in the currency futures than there once were and therefore much less profit.
However, today, just the opposite is happening. Central banks are presently making much greater interventions in the currency markets. They have stopped publishing targeted exchange rates. Such action by the central banks leaves currency speculators at a loss for what to do, and the result has been a huge surge in forex trading.Because today forex brokers abound and are actively marketing the idea of currency speculation, it is having a profound effect on the foreign exchange planning of individuals, companies, and nations.
If some day the major currencies would be the US dollar, the J-Yen and the euro, who would need thousands of traders to trade them? There would be far fewer currency misalignments to provide a basis for trading. But that is not the way the world is moving. The picture I just presented ignores the rise of China as a major economic force on the world scene. Almost certainly, the Chinese currency will become a major trading vehicle. The same is true for other emerging countries. Some of them will no doubt have important currencies from the point of view of world trade. But will these currencies be traded in the futures markets or in forex?
The changes in just this one area ? currency trading ? are an example of how things rapidly change and point out the need for traders to adapt. There have of course, been many other changes in recent years. The advent of all-electronic markets has produced markets of a completely different kind. Computers have brought about the ability to trade in various time frames. New exchanges have created new markets and new contracts ? so many, in fact, that it is difficult to know exactly where to direct ones trading efforts. It is now possible to trade virtually around the clock. It seems that somewhere, some market is trading.
All the best in your trading,
Joe Ross has been trading for more than 47 years, and is a well known Master Trader. He has survived all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits.
Joe is the creator of the Ross hook, and has set new standards for low-risk trading with his concept of "The Law of Charts?." Joe was a private trader for most of his life. In the mid 80's he shift his focus and decided to share his knowledge. After his recovery, he founded Trading Educators in 1988 to teach aspiring traders how to make profits using his trading approach.He has written 12 major books on trading. All of them have become classics and have been translated into many different languages.
Joe holds a Bachelor of Science degree in Business Administration from the University of California at Los Angeles. He did his Masters work in Computer Sciences at the George Washington University extension in Norfolk, VA.Joe still tutors, teaches, writes, and trades regularly. Joe is still an active and integral part of Trading Educators.
Online Forex Trading
Foreign exchange currency trading is also known as Forex trading, or FX, and has no single physical marketplace like the New York Stock Exchange does on Wall Street in New York or the Tokyo Stock Exchange does in Japan. The New York Stock Exchange and the Tokyo Stock Exchange online traders are limited to making purchases during the actual trading hours governed by New York Stock Exchange hours or the Japanese Stock Exchange's Tokyo hours. In contrast online Forex trading gives traders access to the online Forex trading community through an electronic series of different online trading platforms. Online Forex trading and online accessibility are nicely compatible because the world's foreign currency exchange market is a 24-hour market, and the internet makes online forex trading a 24 hour possibility open to anyone with a computer, a telephone line and money. Anyone, any corporation or any bank can log onto an online account at any time, and trade foreign currency through online forex trading.
Trade Exit - How To Cut Losses And Let Profits Run
Cut your losses short and let your profits run. This is the essence of your trade exit rules.
Sending Signals for Trading in Forex
Forex signals are sent by a forex firm to their subscribers in order to buy and sell currencies. These signals are called entry and exit signals for the forex dealers. The firms, which send this forex signal, do so after tedious and meticulous research and analysis into the currencies that their dealers are trading in. For example a firm may send the entry and exit signals at designated time frames in real time. These will remain valid for a short period only after which they are going to be different.
The Secret of Reduced Margin Spreads
One of the best kept secrets in trading is that of reduced margin spreads. You cannot name a trading method that provides more safety or a greater return on margin than does a reduced margin spread, while also being one of the least time- consuming ways to trade. Have you ever asked yourself why it is that many of the largest, most powerful traders trade spreads? I'm going to show you why!
Forex Brokers - Helping to Maximize Your Success
A Forex broker is a broker dealing in foreign exchange, just like real estate broker who deals in real estate and properties. Simply, a Forex broker is an advisor who advises you about the forex market. However, the Forex market is not the perfect place to play with as a novice and beginner as there are many criticalities involved along with much risk bearing capacities. Novices can very quickly get their fingers badly burnt. But inexperience is not the only reason to consider using a Forex broker to trade in the high-risk international currencies market.
Business and the Forex
The business world is a complex web of supply and demand. Money and goods, physical or otherwise, pass through the global market every single day. To meet this exchange between one country and another, foreign exchange, or forex, was born. The term forex is used to refer to transactions involving the conversion of money of one country into that of another or to the international transfer of money and credit instruments.
Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information
Profitable day traders recognize that momentum trading is among the fastest & most effective ways to harvest BIG piles of cash in the stock market.
Hedging Foreign Exchange Risks
The exchange rate of the Macedonian Denar against the major hard currencies of the world has remained stable in the last few years. Because of the IMF restrictions, the local Narodna (Central) Bank does not print money and there are no physical Denars in the economy and in the local banks.
The Yin and the Yang of Markets
I am reading a fantastic book on trading, first published in 1924, by Richard D. Wyckoff, titled "How I Trade and Invest in Stocks & Bonds". Although most of the examples in the book pertain to stocks, the insights into the nature of trading are relevant no matter what instrument you choose to trade.
Forex Scams: How to Spot Them A Mile Away
In recent years, investors have witnessed increased number of investment opportunities and offerings. While the complexity and success of these investment products vary, technological innovation has made the Forex market one of the fastest growth areas. Many of the leading Forex brokers reported up to 500% rise in the number of new retail customers. However, the growth of the Forex market has been accompanied by a sharp rise in foreign currency trading scams.
Getting a Forex Trading Education
Many Americans are interested in getting involved in forex trading. Before doing this, you should get a forex trading education. You should never get into forex trading without forex trading education. With the proper forex trading education, you can be on your way to making a tidy profit.
5 Questions You Need To Have Answered Before You Back-Test Your Forex System
As 90-95% of new forex traders lose money within the first 3-6 months this article helps to guide new forex traders by asking 5 questions that the forex trader needs to know prior to back-testing their forex system.
Example of a Profitable Transaction in FOREX
To make a profit, in the FOREX, a trader can enter the market as a *buy position* (known as going "long") or a *sell position*(known as going "short").
Be a Smarter FOREX Currency Trader: Three Basic Principles
Below I will describe three basic principles that may come in handy for currency traders. They are very easy to implement and potentially take advantage of as you will see.
Forex Signal Services
What are Forex signals? Forex signals are paid services offered by some brokers and independent Forex annalists. Companies that offer forex signals monitor and analyze the market for you, providing you with their data via desktop alerts, email or even SMS and pager alerts.
How Currencies are Traded in the FOREX Market
Currencies are traded in dollar amounts called "lots". At 100:1 leverage, one lot is equal to $1000 which controls $100,000 of a given currency. This leverage is known as "margin" and some brokers will allow traders even higher leverage than 100:1. This superhigh leverage is one of the reasons that Forex trading has become so popular.
The following situation happens quite often to many traders. Look it over and see if it has been happening to you:
Mechanical or Discretionary Trading - Which is Best?
Trading Profitably on the Foreign Exchange Market
You may be asking yourself "how does one begin to trade profitably as a currency trader?".
|© Athifea Distribution LLC - 2013|