US Dollar

yesterday came up the question of whether Forex consumers can really be happy with low non-farm payrolls, rising gasoline prices and escalating tensions in the Middle East. Today we face the answer: YES. Even in the midst of increasing risks, consumers are happy. The jump in confidence is even more surprising after retail sales dropped in June. However the mere fact that companies are not firing, which we see evidence of through the low jobless claims reports, and the fact that the homes are still being sold is enough to keep consumers happy.

After an upward revision to existing home sales in the month of May, sales in the month of June fell by a less than expected 1.3%. It seems that every time analysts issue their warnings about how the next series of economic reports will show the clear deterioration in the US economy, data surprises to the upside. For the time being, this morning’s Forex reports should have a positive impact on the US dollar. The stability of the economy and the housing market in the official data supports the case for a possible interest rate hike by the Federal Reserve next month.

The unofficial data however continues to warn of the dangers that lie ahead especially since existing home sales is a lagging indicator that tends to reflect sales that have been agreed upon in April and May. Regional indexes are far less optimistic on the outlook for the housing market and we may glean more insight from tomorrow’s Beige Book report. Yesterday we had info about the $1.5 trillion of adjustable rate mortgages that are scheduled to reset to market rates over the next 17 months. Of course, these alarm bells have been ringing for some time and to date there have been limited evidence that a sharp housing driven contraction is underway.

Yet it is difficult to find arguments to support a further dollar rally aside from high yield. Just this morning, China’s National Bureau of Statistics said that they should speed up the pace of diversification of (their) country’s Forex reserves to help resolve the risk of possible losses to the dollar assets in the reserves. As the world’s second largest holder of US dollar reserves, China is estimated to own $650 to $750 billion US dollars. Their message of dumping US dollars is clear and poses a big risk to further dollar strength. However we are used to being surprised by the greenback’s resilience, especially under the leadership of mixed message Ben (Bernanke). Therefore it would not be shocking to see a prolonged tightening campaign keep the dollar propped for a few more weeks.

When trading Forex, we all should try and be better each and every day, but even more important - we should try to be more stable in our trading (which is a volatile field itself). Here are 10 things to help achieve that ambition:

1. Do not feel compelled to always have a trade on or to trade everyday. Capital preservation is the key to successful trading and sometimes that just means waiting when the odds are not in your favor.

"Throughout all my years of investing I've found that the big money was never made in the buying or the selling. The big money was made in the waiting." Jesse Livermore

2. Develop your own proven trading system - accept that losing trades will be part of that system.

3. Do not let emotions influence your trading decisions.

4. Forex Trading is a business, be strategic and logical.

5. Learn something new everyday that will help to maintain or increase your edge.

6. Keep a trading journal and review why your actual trades vary from your trading plan.

7. Do not fight the market; it's easier to run with the wind than against it.

8. Always trade with a stop loss and never move that stop further away or remove it completely. Do not allow a day trade to become a long term investment.

9. Become an expert, know your market inside out. Be it options, futures or an individual stock - you should strive to become the World authority in it!

10. The market will rarely do what it 'should' be doing. Instead focus on what it is doing.

Nobody will ever be a perfect Forex trader, but you can most certainly try to be the best you can - most of the time it would be enough.

Forex charting is nothing but a software program specially designed to help you trade efficiently and effectively. Charting makes the rises and falls of rates clear and simple, and much easier to notice and understand. As a tool for your investments, charting comes in handy all the time. You need to see where the market is going and, as a result, understand what leads to these fluctuations. Studying and controlling the ability of info-collecting from charting helps you anticipate the occurrences that will spurn the next change.

Forex charting is not just a tool but also an insight. The secret of successful trading is to take a step back from the market. Trade with the big picture in mind at all times and don't follow the day-to-day market movements that are temporary in nature. Daily market talk can misguide you and sometimes can hypnotize you if you follow it too deeply. You have to see the forest for the trees. That's why you need charting Software that shows you historical trend data as well as current intraday trend data.

Generally, Forex charting software focuses on the big picture with a wider vision. It prompts you to follow the market and not individual stocks. The market in its entirety has more influence on individual stock prices than any other factor. Even the best stocks decline in a bear market. So you can have a glance at the market chart and know (no fundamental info needed) which direction the wind is blowing and where it is wise to invest, plus you can learn when it is wise to stay out and keep your money in your wallet.

Along with the U.S. dollar, United Kingdom pound, Japanese yen, Canadian dollars, European euros, Australian dollars and Swiss francs as some of the top currencies to watch in the forex trading game; some new currencies have been emerging. Be sure to keep an eye out on these emerging currencies: CNY (China Yuan), CZK (Czech koruna), HKD (Hong Kong dollar), HUF (Hungarian Forint), INR (Indian Rupee), KRW (Korean Won), MXN (Mexican Peso), PLN (Polish Zloty), SGD (Singapore dollar), ZAR (South African Rand), and THB (Thai Baht). These currencies may not be one of the top currencies now, but they might end up as the best way to gain a profit. Here are two examples out of all of the emerging currencies in the forex market:

The Czech koruna is a convertible, yet free floating currency that has been floating around since May 1997. All foreign investors have unrestricted access to these local markets. London banks continue to be very active in currency trading and accounts for nearly 60% of the daily turnover. This market is liquid for about five years. The Interest Rate Swaps, or the IRS, is mainly driven by offshore banks.

The China Yuan is only limited to financial institutions and onshore companies and is not liquid. Currently the USD/CNY rate is about 8.2770 and is being closely managed by the central bank (PBOC). The Chinese government has resisted all calls for them to revalue their currency; but as the Chinese government continues to strengthen their banking systems and make reforms in their economic policies, there is likely to be a possible call for opening spot trading. The interbank money market does not go beyond four months.

Remember that knowledge is power, and knowing the top currencies to watch in Forex trading can get you ahead in the game.

This guy I talked to, about forex trading, told he doesn’t understand how it is possible to like the market. The first thing I asked him was: “what platform do you use?” the answer was that he’s not really sure - it was the first thing he found, so he took it.

That’s a huge mistake - taking a platform without checking out the market. A platform can make or break you, when it comes to forex trading. Plus, online security is another important consideration. Web based software is generally more secure than desktop based software packages. If you choose the desktop software, all of your information and data are stored in your hard drive making your valuable information vulnerable to a number of security infractions. All of your personal data and the integrity of your trading system can be jeopardized if a virus invades your computer and if your hard drive crashes, all of your important data will be lost forever. Another threat would be from hackers who have the ability to hack their way into your computer and gain access to all of your personal information and trading systems.

The provider of the package handles the majority of maintenance and security issues with the web based forex trading software. The Internet based foreign exchange systems are readily hosted on secure servers, like the servers that credit cards are processed on. This will give you more protection as your data is encrypted. Along with this protection, your software provider will protect you from losing data by providing mirrors and backups of your account data.