FXCM/DailyFX Signals and Strategies

[Jason Rogers]

Hi Everybody,

I work for FXCM as an Ambassador to the Forex Moments & Forex Magnates forum. I will post daily information on new information, announcements, and products concerning FXCM as well as highlights from DailyFX analysis.

Please feel free to ask any questions, join the general conversation or provide feedback for FXCM. It's always welcome.

Kind Regards,

Jason Rogers
jrogers@fxcm.com
FXCM

[Jason Rogers]

This is for all of the Australia residents out there!!!

FXCM Australia Ltd (www.fxcm.com.au) joins with CNBC (www.cnbc.com.au) to bring Australia the CNBC.com Currency Challenge. Beginning officially on October 6th, 2009, contestants can register throughout the duration of the contest to play.

Today begins the practice session that will last until the weekend leading up to October 6th. Contestants can become familiar with the contest platform, practice trading, and create a winning strategy.

In this virtual trading competition of currency trading, competitors will be allocated with 1,000,000 virtual dollars known as “CNBC Bucks” to trade on a platform powered by FXCM, one of the foremost currency trading firms. For ten weeks, traders will compete for the grand prize, an Alfa Romeo. In addition, a weekly prize will be awarded to the trader with the highest percentage of weekly growth in the form of a $1000 AUD live forex trading account with FXCM Australia.

FXCM, the exclusive sponsor of the event and one of the world’s largest forex brokers will provide free forex trading education resources to all contestants, including the option for every registered player to receive a free FX Power Course, FXCM’s premier 8 day online trading course. Learn more here: http://www.forextrading.com.au/cnbc-freecourse.jsp

SPECIAL CONTEST PROMO

Anyone who opens a live FXCM AU forex trading account with a minimum of $300 AUD within the duration of the contest will have the opportunity to get a $100 AUD bonus deposited into their account

For complete contest rules, and to register for CNBC.com’s Currency Challenge, please visit: http://www.currencychallenge.net/

[Jason Rogers]

FXCM has released a new designed DailyFX website at www.dailyfx.com. Our goal was to make it more user friendly and easier to find what you're looking for. Please feel free to add any feedback on the new layout to let us know what you think.

Jason

[Jason Rogers]

FXCM has created a new webpage that analyzes the major pairs (and some lesser known ones) to give you insight their characteristics. Opinions will differ from trader to trader. For example, I may look at GBP/USD and see a range to trade on a daily chart, whereas you may watch short time frames for breakouts and momentum. This is intended more as a general guide. Some of the information also touches on differences in liquidity and spreads between NDD and dealing desk firms.

1) EUR/USD: The most liquid pair in the world with the tightest prices. Most bank market makers are excellent at providing this pair, which makes it a no brainer to trade at a No Dealing Desk broker like FXCM. It's good and deep 24 hours a day. It's the best currency pair to do large orders, as well as the best currency to scalp during Asian hours given the low spreads. Most high frequency institutional systems that go for few pips to even one pip profit per trade generally use EUR/USD.

2) EUR/JPY: An excellent highly liquid pair with the same characteristics as USD/JPY but just a notch under. This one happens to have better defined trends and is more volatile due to the concentration of speculators and carry traders. EUR/JPY is a great currency pair for breakout, momentum, and other typical technical strategies.

3) USD/JPY: Another great liquid currency pair that's almost as good as the EUR/USD but slightly less consistent spread wise. This is another great pair to move as well as scalp on low spreads. This is a safer currency pair to scalp or range trade since it's less volatile on intraday basis than the EUR/USD. Same as above, this is another currency pair that is widely used by high frequency systems.

4) GBP/USD: After the euro, this is the most popular currency pair to trade. It's volatile intraday and long term. Spreads and liquidity are far below EUR/USD and USD/JPY, even in the best of times. The London session is best for trading GBP/USD. During the Asia time zone, GBP/USD is hard to trade in large sizes because liquidity is less and its spreads are inconsistent. GBP/USD is the single biggest reason people who lose money trading currencies lose. Range trading strategies are not recommended, neither is scalping. GBP, just like GBP/JPY, is a great breakout and momentum currency. Market makers usually do a better job in GBP/USD during the Asia time zone as they understand that GBP/USD trading is where the majority of people lose money so they are willing to offer fixed spreads or tighter spreads during the Asia time zone. However, when this currency pair does move, usually during London session, it is heavily re-quoted by market makers thus offsetting their initial advantage of fixed or tight spread during the Asia session.

5) GBP/JPY: This is one of the most volatile and most favorite currency pair of the retail forex trading community. Just like GBP/USD, it's a pair that has left massive customer losses in its wake and requires iron discipline to trade. Liquidity and spreads vary widely as it is a synthetic pair created from GBP/USD and USD/JPY. Range trading should not even be remotely attempted and only momentum and/or breakout trading should be tried as strategies. Traditional retail forex market makers love this pair since many clients blow up here, so usually they provide good spreads. However, as mentioned it is a volatile pair so when news does break this is also a pair market makers heavily re-quote.

6) AUD/USD: A great currency pair to trade 24 hours per day. Australia, being in the Asia time zone, ensures there is activity in the pair during these times, so spreads don't deteriorate.

7) USD/CAD: Liquidity is greatest in the U.S. time zone due to cross border investment and trade (U.S. and Canada are each other's largest in both respects). Outside of the U.S. time zone, spreads are wider and liquidity is lower. USD/CAD is used for macro bets on oil and, although it is not volatile intraday, USD/CAD tends to have great trends on long term basis.

8) NZD/USD: A much smaller economy and currency means that, although similar to Australia, spreads are wider and there is less liquidity. In most years, interest rates are higher than in Australia and people usually trade NZD crosses for the carry.

9) EUR/CHF: This pair is noted for its low intraday ranges and in most years it tends to range period. It's a perfect pair for range trading strategies and scalping. Liquidity and spreads in the European and U.S. time zones are excellent. During Asian hours the pair deteriorates significantly from liquidity and spreads perspective.

10) EUR/GBP: This pair is very similar to EUR/CHF with low intraday ranges. Great liquidity and spreads during European and U.S. markets. During the Asian session the spreads widen and liquidity is much less.

11) Other yen crosses: The yen is the world's most consistently borrowed currency for carry trade purposes. Most yen crosses are therefore used for their carry potential with exception of USD/JPY, EUR/JPY, and AUD/JPY other crosses do have fairly wide fluctuations in spread and are usually good for macro bets, breakout and momentum trading. Many people range trade them at times but overall these are rending currencies.

12) Emerging market currencies: These should be traded only in their respective time zone and be thought of as longer term macro bets on the particular country and/or commodity. Spreads won't allow for scalping and it's very hard to trade large sizes in short periods of time. It's better to scale into it. Overnight markets for these are thin to non-existent and so strategies must retrain use of leverage to avoid needing to exit overnight margin call.

13) Scandinavian currencies: These should be thought of in the same way as emerging market currencies. The only exception is that they are much more stable economies and therefore the risks are smaller than emerging market countries.

[Jason Rogers]

A sharp reactionary rebound in risk appetite through much of the past year has produced aggressive rallies in oil, gold and most major currencies against the US Dollar. As 2009 winds down, we examine the major macroeconomic trends that are set to play out across the currency and commodity markets in the months ahead.

If 2008 seemed like the last gasp of life across financial markets, then 2009 was a collective sigh of relief. As central banks dropped interest rates to record lows and governments frantically doled out some $2 trillion dollars in stimulus, the sheer panic that seized investors after the collapse of investment banking giant Lehman Brothers began to recede: the sharp declines in leading economic indicators began to slow, credit markets showed cautious signs of life, and a glimmer of hope began take root across the world’s exchanges. The first quarter proved dismal, but by March a sense that Armageddon had been averted had started to become the consensus view.

What happened next can only be appreciated in light of the carnage of the previous year. Having stared down a near-collapse of the global financial system, overjoyed investors began piling into so-called “risky assets”, setting off sharp rallies in equities, commodities, and high-yielding currencies. Sure, the world economy was far from healthy, but anything that was better than the dark days of late 2008 was good enough. This also brought a sharp decline in the US Dollar, which had previously banked on the sophistication of US financial markets and its unparalleled liquidity and flourished amid the mayhem as a natural safe haven asset. The result was a bipolar marketplace torn between “risk” and “safety” where gains in the Dollar meant declines across nearly every major asset class, and vice versa.

Eight months hence, capital markets have advanced to lofty levels: the MSCI World Stock Index equity benchmark has returned to pre-Lehman levels and are trading at the highest levels relative to earnings since 2002; crude oil is pushing $80/barrel having bottomed near $41 in January; gold is setting record highs above $1100; and high-yielding currencies like the Australian and New Zealand Dollar have retraced close to 80% of the drop that began last year. With the worst now increasingly behind them, however, investors seem to be gaining a sense of sobriety after the intoxicating exhilaration of surviving the credit crunch. The sustainability of the recovery after stimulus is withdrawn and concerns about runaway inflation as a result of ultra-loose monetary policy crop up more and more often, with calls for a retracement of the risk rally starting to mount in earnest. Indeed, October may yet prove to have been a watershed month as the MSCI World Stock Index dropped the most in since February while the VIX index of US stock options volatility that is often seen as a proxy for investors’ risk aversion gained the most in a year. As 2009 comes to a close, we examine the macroeconomic trends that are likely to play out in the year ahead.

Guided by Risk - Euro, Swiss Franc and the ‘Commodity’ Dollars

As the currency of the world’s second-most liquid and developed financial market, the Euro is the natural antithesis to the US Dollar and so will tend to rise and fall on the greenback’s fortunes. It is no wonder then that the EURUSD exchange rate is tightly linked to global equity markets considering the US unit’s standby safe-haven asset status. To that effect, the continuity of the stocks rally is the critical question driving EURUSD trading, with any correction lower likely to carry the pair along for the ride. Further, the Euro’s exchange rate to the Dollar is consistently about 99% inversely correlated with that of the greenback’s value against the Swiss Franc, suggesting that whatever happens with EURUSD is likely to be mirrored in USDCHF.

The so-called “commodity dollars” are also an all-but-pure reflection of the risk versus safety dichotomy. This is particularly the case with the antipodeans, who boast the highest interest rates in the G10 and so are the most attractive buys for yield-seeking “carry” trades. Reasonably, FX carry trades flourish when investors value returns over safety, making the Australian and New Zealand Dollars over 90% correlated with global stock performance (as measured by the MSCI World Stock Index).

Read the Rest of the Article Here

[Jason Rogers]

FXCM releases a trader positioning guide called the Speculative Sentiment Index that can be used as a contrarian indicator. Basically it shows you how FXCM traders are positioning, long or short, amongst the major currency pairs. It works well as a contrarian indicator to pick trends in the market because many retail traders like to fade the market. Meaning they sell rallies and buy declines. This works well when the market ranges and pulls back, but does not work in trending markets where the market continues to move against the position.

DailyFX has a weekly SSI positioning guide that analyzes long term trends and updates SSI twice per day through DailyFX Plus. Below is a portion of today's release. David Rodriguez of DailyFX had the following to say about recent positioning: "Weekly SSI now up on DailyFX.com. Big highlight is the fast shift towards USD shorts--sign of a bigger turn. "

Our sentiment-based forex trading strategies have very recently begun going long the US Dollar versus the British Pound and other key counterparts, as a sudden shift in sentiment points to further near-term gains for the US currency. Traders had previously bought aggressively into USD declines—giving us contrarian signal to buy the Euro/US Dollar. Yet the most recent turnaround leaves crowds pointing in exactly the opposite direction, and the abrupt shift leaves scope for further dollar pullbacks. The notable exception is the US Dollar/Japanese Yen pair, where our contrarian sentiment strategy points to further Japanese Yen rallies (USDJPY losses).

[Jason Rogers]

The previous post containing SSI data is a part of DailyFX Plus. DailyFX Plus is an exclusive section for live accounts. If you would like to login for a preview to test on a demo, you can register for a free trial. Here is where to register through the website http://www.fxcm.com/trading-signals.jsp .

[Jason Rogers]

DailyFX released their forecast for gold, and it's an interesting call (at least in the short term).

Look for a break back below 985 over the coming weeks to officially trigger the topping formation and expose deeper setbacks to retest key support at 845–865, which also loosely coincides with the 50% fib retracement off of the major 2008–2009 low-highs. From here, look for the market to enter a period of choppy consolidation in the 800–900’s before potentially considering a resumption of the longer-term bull trend.

There's been a lot of discussion about the role the Fed is playing with money creation and the impact it will have on inflation. DailyFX discussed this as well:

The amount of money actually created by the liquidity injection engineered by Ben Bernanke and company is a function of the money multiplier, a ratio that measures what an initial deposit can expand into as it works through the system of fractional reserve banking through constant lending and borrowing. A crude estimate of what the multiplier ought to be, given the Fed’s reserve requirements of about 5.7% at present, yields a value of 1.75, suggesting that every dollar that the Fed injects into the banking system should produce $1.75 in actual money circulating in the economy. However, data compiled by the Federal Reserve Bank of St. Louis reveals that the current money multiplier is actually much lower than that. Indeed, it stands at the lowest level in over 25 years.

DailyFX then goes on to explain that the current environment is different because personal savings outstrips borrowing by the widest margin in 5 decades. My question is, where are those savings going? The stock market? Gold? Plain vanilla savings accounts?


You can read the full DailyFX Gold Forecast here: http://www.dailyfx.com/files/DailyFX...t_for_Gold.pdf

[Jason Rogers]

As a part of the re-launch for DailyFX, we've introduced a live news coverage and trading element for major news events such as tomorrow's Non-Farm Payroll event. Here's what it looks like:



Here's where you can find it on the website: http://www.dailyfx.com/calendar/trade_the_news/

DailyFX analysts will be providing real time analysis for the news event and going over trading signals. You're also welcome to share your sentiments about the news event and trade setups through the chat feature on the site.

[Jason Rogers]

FXCM is holding an expo in Las Vegas on May 2-4, 2010. The schedule of events is being finalized now, and there are over 60 free workshops scheduled at the moment.

You can find more information about the expo here as well as registration.

Here's a list of the featured topic:

• MetaTrader 4
  
• Programming Services
  
• Automated Trading
  
• System Trading
  
• Technical Analysis
  
• 2010 Forex Outlook
  
• Signal Services
  
• Trading