Tag Archives: Fx

One of the subject that’s come up in market discussion of late is the low level of the VIX, the so-called “fear index”. It has reached its lowest levels since back in the early days of the Financial Crisis in 2007. The chart below shows how the VIX has moved up and down since 1992.

The question which comes to my mind is whether we’re seeing a pattern similar to the one following the 1998-2003 period of elevated VIX value where the index retraces back to a lower level for a while as it did in the middle 1990s. The action in the markets in the early 2000s and the likes of Enron knocked a lot of individual investors out of stocks, just as recent developments have done. That makes a case for a similar kind of shift in volatility.

Just for the sake of comparison, I think it’s worth looking at volatility in other ways as well to see how things are playing out. The chart below shows the S&P 500 over the same time frame as the VIX chart. The two subplots show the relative width of the monthly Bollinger Bands (BWI) and a normalized 14-month reading of Average True Range (N-ATR). These give us a reading on how much movement there is in monthly closing prices and how wide the monthly ranges are respectively.

It is interesting to note that the Bollingers are back to being nearly as narrow as they were in the middle 2000s after working back from getting very wide back in 2009. As with the VIX, there is still some room to work lower to match prior lows, but we’re back into roughly the same range.

The N-ADR reading is a different story, though. In this case we’re nowhere near back to the lows of the middle 2000s and middle 1990s. In fact, N-ADR has been rising the last year! This tells us that while price changes from month to month may be getting smaller, the inter-month volatility remains elevated. Could this be a tip-off?

As a technical analyst I have a major concern with the way the S&P 500 made a lower low on the monthly chart back in 2009. That’s a big negative. Add to that the fact that momentum in the rally since then has backed off, as indicated by the lessening beats of prior highs for recent new highs, and you get reason for concern. If the market cannot overcome the 2007 highs on this rally, we could be in for quite a bit of a tumble. And when stocks tumble, volatility tends to rise quite dramatically. Generally speaking, before the top is put in the N-ATR reading is already on the rise. We’re seeing that now, so it’s definitely worth keeping that in mind, though given that we’re looking at monthly charts here, it may be a while yet before any sort of roll-over takes place.

I recently came across something of a pleasant surprise in the form of an article written by Dr. Brett Steenbarger. This was a surprise because the good doctor largely withdrew from the public domain a couple years ago when he accepted an exclusive consulting arrangement with a trading house. My own relationship with him started a number of years ago, prior to my publishing The Essentials of Trading, for which he both provided feedback and a contact at Wiley. You may know Steenbarger from the blog he authored or the books he wrote (The Psychology of Trading, Enhancing Trader Performance, The Daily Trading Coach). If you are unfamiliar with his work, I encourage you to take a look. It's very worthwhile.

The article in question was Why Do You Trade? In it, Steenbarger discusses money as a motivation for trading, suggesting that it cannot be the main reason why someone is in the markets. Why? Because if it's just all about money then drawdowns threaten "the trader's sense of self" in that losing creates a feeling of being a loser, rattling one's confidence.

Sound familiar?

A chance to learn
Steenbarger suggests traders look to view drawdowns as indications of lapses in either our market mastery or our master of ourselves. Restated, drawdowns indicate that either our trading system or methodology isn't working right or our trading psychology is out of kilter. In the former case, maybe there's been a shift in market dynamics. In the latter, maybe we're distracted, or not being as aware of our emotional state as usual. Either way, drawdowns provide opportunities to improve our trading.

Note here the specific use of the term "drawdown". That means a sustained retracement in account equity from a peak. We're not talking here about individual trades. Whether you make or lose money on any given trade should matter little to you so long as you're following your trading plan.

Trading and sex

Here's the line from the article that I think is the one most likely to stick with readers:

"…it is no more sensible to pursue trading to make money than it is to pursue marriage to get sex."

Hey. Reel it back in! We're still talking about trading.

What Steenbarger is saying here is that profits from trading are an affirmation of your efforts in learning how to trade the markets and manage your psychology in much the same way sex in marriage is an affirmation of an intimate relationship. Marriage is about much more than the sex, but a sexless marriage won't generally be a happy one. Similarly, trading is more than being just about the money, but if you're not making any it becomes hard to stick with it given the effort required.

Money as metric

The doc is, in many ways, talking about the money side of trading as being the way you keep score. He's definitely not the first to make that suggestion, and won't be the last. The point is that money acts as an objective metric for gauging the success or failure of your efforts in the market. It's the efforts, though, that need to represent real interest and motivation because money alone won't keep you trading for long. If your interest in the markets is just about the money, then maybe you need to let someone else handle it for you.

Summer may be drawing to a close, but the latest news in the world currency markets continues to bring the heat. Check out the top stories we’ve been reading this week:

Steve Jobs stepped down as CEO of Apple Wednesday, signaling a momentous change for the technology industry. While many were anticipating an enormous drop in Apple’s stock, it closed Thursday down only 0.65 percent. By comparison, recent numbers show that the Standard & Poor’s index has dropped 6.7 percent ($1.03 trillion) since its Aug. 5 downgrade of U.S. debt. Federal Reserve Chairman Ben Bernanke’s speech last week in Jackson Hole, Wyo., didn’t reveal much about QE3, but he did announce that the Fed will extend its meeting in September from one to two days in order to discuss future ways to relieve the economy. Market volatility as a result of these economic issues continues to affect the currency markets, as all major currencies have moved higher against gold, despite gold reaching record nominal highs of $1,913.50 per ounce. Japan once again took steps to control the yen, this time by creating a fund backed by the government that supports exporters who feel the weight of the rising currency. Also this week, German Chancellor Angela Merkel and French President Nicholas Sarkozy met to discuss plans for a financial transaction tax, the effects of which could potentially increase market volatility and “threaten London’s status as the world’s biggest foreign exchange center.”

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

A question came in from an attendee of last week's PIIGS panel discussion which wasn't directly related to the topic at hand, but which is clearly something that's on forex traders' minds these days. The question was "Is there a chance Dodd-Frank bill could end retail FX in the U.S." This is something I wrote about on my own blog last week, but I'll address it here again because it's something, which clearly needs further comment.

To answer the question very directly and succinctly, there is absolutely zero chance Dodd-Frank kills US retail forex.

That direct enough? :)

This question perhaps could have legitimately been asked a year ago when the bill was passed, but to bring it up now is useless. Basically, what Dodd-Frank said in regards to retail forex in the US is that the overseeing regulatory agencies must put regulations in place within a state period of time (a year I believe) or a prohibition would be put in place. The reason this has come up recently is that an SEC ruling came out which basically said (in order to meet the Dodd-Frank deadline) that existing rules regarding retail forex trading would stay as they are for a year while the agency considered new rules.

The fact that this SEC news has caused consternation in the retail forex trading community reflects the lack of understanding of how the market is regulated in the U.S. The SEC is only responsible for "securities" firms, which basically means stock brokers and stock exchanges. That means there are only a couple of minor forex players (and would-be players) falling under SEC purview.

The CFTC is the major regulator for retail forex trading in the US. The vast majority of forex brokers serving US customers are registered with that agency. The CFTC has already put through new rules. In fact, it was in the process of doing so even before Dodd-Frank. They didn't kill the US retail forex business then, even though there were loads of voices screaming that the FIFO, no-hedging, and 50:1 leverage limitation changes would do just that. The business is alive and well and not going anywhere.

I actually think the SEC could only really have a positive impact on US retail forex trading. The worst the agency could do is ban it for securities firms all together, but that's not something that's going to have any real impact on the industry because of the small footprint of stock brokers. If the SEC went the other way, though, and put the stock brokers in some kind of favorable position relative to the CTFC-regulated firms (or at least didn't put them in a disadvantaged position) it could actually create more positive competition in the industry.

While the Currensee Trade Leaders™ Investment Program may be the right investment choice for you, not every Trade Leader is right for each investor. I’ve put together some tips to help you get the most out of the Trade Leaders program:

  • Assess each Trade Leader. Look closely at each Trade Leaders’ performance and risk to help ensure you’re choosing Leaders who most closely match your investment style and needs.
  • Zoom in on performance. When viewing the Profile Performance graphs for each Trade Leader, you’ll notice that, above the graph, you can view the actual change in equity over the time period being shown. The number is above the graph next to the ticker being tracked.
  • View trade frequency. To see how often a Trade Leader typically trades, view their profile and change the view. The default view is 3 months, but zoom in to view ten days, thirty days or specify a custom time period.
  • Diversify, diversify, diversify! Take steps to build a well-balanced, diverse portfolio of Trade Leaders including a variety of strategies, risk and trading styles.
  • Think longer-term. Try not to think in terms of buying high and selling low. Plan to follow a Trade Leader for some time before making changes. Remember, on average even the most successful Trade Leaders lose some of the time.
  • Allocation is key. Lastly, make sure you’re making the most of your money – as your account grows be sure to re-allocate your funds. Funds that are not allocated are a missed opportunity as when your funds are not invested in a Trade Leader, you miss the chance to see returns.

Remember, the team and I are here to help you, so if you have questions, feel free to reach out to us at team@currensee.com and we’ll do our best to answer any specific questions you have about the Currensee Trade Leaders™ Investment Program.

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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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

As you’ve undoubtedly noticed we at Currensee World Headquarters have been working diligently over the past few months to bring you the Currensee Trade Leader Program, at the same time we have been making some great changes to the Currensee Social Network.

We’re excited to review with you some of the major changes and improvements we’ve made to your Trader Profile.

  • First, we’ve integrated information from the Risk tab into the main Profile page. This means you have a single view of the key data on your account and that of other Currensee Traders rather than several.
  • Next, we’ve moved the Ticker information to the top right-hand corner of the Profile and we’ve added a Ticker drop-down list so that you can choose the ticker you want to look at and be able to simply look at that information.
  • Most excitingly, we’ve added monthly performance to the Profile. Did you start a new approach to trading in June? Meet with your Mentor in August? Drop a few pairs in September? Well, the monthly historical performance information will give you a clear view of your performance, month over month, for as long as we’re able to report. Check out one of our Trade Leaders, Ajay Awtaney's monthly performance below.

So enjoy the changes, and stay tuned … we’ve got much more to share with you in the coming weeks and months!

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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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Watch last week's Forex Trading Psychology webinar with Navin Prithyani below. We hope you enjoyed this unique perspective on Forex trading as much as we did.

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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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Today marks a big day in Currensee history. Currensee Limited, the UK subsidiary of Currensee, Inc. has opened. What does it mean for Currensee? Well, now Currensee is able to better serve the London and Europe community. This is quite the milestone for us as we continue to build our business outside the United States.

The opening of the Currensee UK office follows the our recent approval by the Financial Services Authority (FSA), the UK financial services regulator. Currensee UK will be led by Managing Director, Steve Winters, who joined Currensee as director of business development in 2009. Of the opening Winters says, "I’ve worked with some of the top Forex brokers over the past ten years and came to Currensee because of their cutting-edge offerings for traders, investors and brokers. The Forex opportunity in the UK and Europe is explosive and Currensee brings just the products and services this growing market needs.”

To read our full press release click here. For more information about Currensee head over to our website, Twitter, or Facebook.

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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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Why do people - and traders - do what they do? Why do traders sometimes do what they know is the wrong thing? How can we learn the right behaviors and stop doing the wrong ones? Join us for this practical webinar, 8AM EST tomorrow, and learn about important concepts in the Forex Trading mindset, and review actual trades taken at the London market open. Urban Forex analyst Navin Prithyani will share his experience and introduce you to these trading psychology concepts and tools:

* Knowing in advance what you want from a trade
* Sticking to your plan
* Practicing and applying techniques to daily trading

Sign up here:

The webinar is free and suitable for traders from beginner to professional. At the end of the session there will be time for audience Q&A with Navin and all attendees will get a special offer from the Currensee Marketplace and Urban Forex.

About Navin Prithyani:
Navin Prithyan started his Forex journey in his teens. Trading and testing several systems and trading strategies in the beginning, Navin has been a great contributor in the Forex industry. With over 6 years of experience, he today runs forexwatchers.com and teaches individuals how to trade the empty charts using little to no indicators. All his methods are shared widely within the Forex community and are free of charge.

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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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

We've been busy here at Currensee. It's Fall here in New England and we thought - what better time to redesign the website? Some people took the summer off but we were working away on a complete site overhaul. And, voila, it's ready for prime-time.

Designing and building websites in the start-up world is a fun but challenging task. You release something to the world and then two days later, the message changes or there's a product update or we change our mind about a graphic or image. I think about our website as the living representation of our brand - who we are, what we stand for and what we do. The site needs constant care and feeding. The idea of whipping a website together, putting it up and leaving it for months and months is archaic and trust me, you'll see the results in your web traffic. Instead, here at Currensee, we are constantly improving what we do for our visitors to currensee.com.

Our redesign is centered around three main goals:

  1. Making content more accessible
  2. Improving the overall design
  3. Delivering a better user experience and more functional UI

Upgrades include:

  • New layout, navigation and design
  • Affiliate signup form and affiliate program information
  • New About page and "Memory Lane" timeline
  • Social links on all pages
  • Updated messaging and positioning
  • New content sections
  • Direct links to upcoming events on our homepage
  • The ability to easily scale with new product and platform offerings

Our super-talented Product Designer, Elliot Nash, had a huge hand in making this redesign happen. Of the redesign he says, "The Currensee.com redesign makes our marketing site more usable and gives visitors a better overall experience." Way to go, E!

Here's to continuous improvement. It's a beautiful thing. Check out the redesign by going to Currensee.com.

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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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.