Tag Archives: forex economic indicators

What is the hardest part of trading?  For traders new to foreign exchange it may be finding the right currency pair to trade.  For others it may be figuring out which time horizon to trade or learning which economic indicators have the ability to make markets move in rapid fire fashion.  Even for experienced traders that are used to hitting the “mine” and “yours” buttons it may be the technology needed which may require VPS access.  For me it has been the transition from running models in Excel with DDE feeds to learning MT4 and developing code.

Even with all those potential obstacles trading the Forex markets does offer opportunity and reward.  I’m not trying to sound like a commercial there but any market that has seen its top traded security, EUR/USD in this case, trade up more than 20% in 6 months with generally little risk of that security going to zero offers some value.  Yes there have been some emerging market currencies that have caused major pain for investors but the Forex market wasn’t alone in suffering trading and investing losses in those instances.

One of the beautiful offerings on Currensee is the “Strategy” section.  Here traders that opt to offer their strategy, and many do, show the strategy they use.  Not only is the strategy description offered but their performance is broken out by currency pair and other behavioral metrics such as the average duration of a trade is displayed.

Where else will you find such valuable insight?  You can have this work two ways for you as well.  Especially if you are inquiring about a strategy that you may want to use and want to see if someone else is already using it.  For example what if you think that "trading the (economic) numbers” is a useful strategy.  Or how about “chart pattern recognition."  There certainly are no guarantees that the trader using the strategy is making the right decision every time but certainly this is a valuable warehouse of information.

Let’s take an example.  Have you traded “Cable” or the “Loonie” before?  That is GBP/USD and USD/CAD respectively.  In my experience Cable tends to be a very choppy currency.  It doesn’t move from 1.50 to 1.60 in a straight line very often, its more like a major zigzag formation between the 2 figures.  Some counter-intuitive thinking may be needed every once in a while.  The strategy “CB Counter Trend” shows an accumulated 614.14% gain by the trader that posted this strategy.  Its description says that it is a “a counter trend system” using 5 minute charts and their target is 20 pips per trade.  For more details on this particular strategy please visit the Strategy section.

I have not used this exact system myself but it sounds perfect for GBP/USD and some other pairs.  Of course this isn’t the only strategy that shows merit and from my account there are over 160 strategies that post returns and even more strategies that showcase their description.

If you are looking for strategies and more trading ideas then you may want to visit the Strategy section on Currensee.

=====

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

1 Comment

In this guest post, Currensee welcomes Tim Mazanec, CMT, a 14 year veteran of the foreign exchange and global markets.  Tim combines technical, fundamental and flow analysis to develop his forecasts and Forex trading decisions.

=====

Monday marked the 3rd consecutive Monday that US equities opened the week on a strong note with the last two Monday’s seeing a surge in equity prices. Currency traders are well versed though that EUR/USD has only partially kept pace as it continues to trade around the 1.50 level. This begs the question of whether or not we are starting to see a divergence between traders in the stock market and in the currency market?

A quick check on Currensee on Monday afternoon shows that 61% of EUR/USD traders remain Short this pair. Their average entry price is 1.48323 stating that they expect this upward move in risk-taking to dissipate. If you take a look at one of the stock market bell-weathers, GE, you’ll find that there was a 7% decrease in shorts this past week. So at first glance there is a divergence in what Currensee and equity traders are thinking.

Those not willing to be long EUR/USD or those that are more risk averse have more than a few economic indicators that they can point towards to support their case. These can be found easily enough on Currensee’s Economic Calendar on the Research Dashboard. Consider last week’s US Treasury budget. Within the budget it shows the monthly federal withholding taxes that are deducted from everyone’s paycheck. The beauty of this figure is that it is an actual figure. It is not derived from a survey and not subject to revisions and/or changes in benchmarks. The data shows that individual tax receipts were down 22.2% y/y in October. That is the lowest monthly figure since May 2004. Normally the months of Sept. & Oct. are "incoming" season for the Treasury due to tax extensions but when comparing this Sept/Oct to last year it was even worse at -30% y/y.

Of course these figures more closely resemble the current 10.2% unemployment rate rather than the improved NFP figures. That said the US economy remains reliant on the consumer after all and less income (lower taxes points to less income) and fewer jobs may equate to a subdued economy ahead.

As we alluded to though more a few traders, especially equity traders are a little more bullish. If the global economy is getting better then more investors may not only be willing to put risk back on but also go back into the buy-and-hold strategy that we used to be accustomed to. If you go back to the Economic Calendar on Currensee’s Research Dashboard you’ll notice more than a few economic indicators that are due this week. They range from CPI/PPI to Capacity Utilization midweek before finishing off with the latest Leading Indicators and Jobless claims. Improved economic figures may help build confidence for equity traders to remain long ahead of potential profit-taking season.

Of course Bernanke threw his 2 cents in on the dollar on Monday but that was literally it as within his 6 page speech there were literally 2 sentences that touched on the Dollar. Not exactly enough to frighten one out of a position either way. Very much overshadowed by Bernanke was Bank of England’s Sentence, who suggested that ‘the impact of (their) interest rate cuts are only just being seen’. You could have seen this on the Thomson Reuters IFR squawk Box (that can be found in the Currensee Widget Gallery) as his suggestions would have been harder to notice without this widget.

Either way there are enough arguments on both sides of the debate to keep bulls in one corner and bears in the other.

=====

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.