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Determining Market Condition

This is a discussion on Determining Market Condition within the Trading Systems forums, part of the Trading Forum category; Behind central banks in terms of size and ability to move the foreign exchange market are the banks . It ...

          
   
  1. #31
    Senior Member ArticleMan's Avatar
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    How Banks, Hedge Funds and Corporations Move Currencies



    Behind central banks in terms of size and ability to move the foreign exchange market are the banks. It is important to understand here that in addition to executing trades on behalf of their clients, the bank's traders often times try to earn additional profits by taking speculative positions in the market as well.

    While most of the other players we are going to discuss in this lesson do not have the size and clout to move the market in their favor, many of these bank traders are an exception to this rule and can leverage their huge buying power and inside knowledge of client order flow to move the market in their favor. This is why you hear about quick market jumps in the foreign exchange market being attributed to the clearing out the stops in the market or protecting an option level, things which we will learn more about in later lessons.

    The next level of participants is the large hedge funds who trade in the foreign exchange market for speculative purposes to try and generate alpha, or a return for their investors that is over and above the average market return. Most forex hedge funds are trend following, meaning they tend to build into longer term positions over time to try and profit from a longer term uptrend or downtrend in the market. These funds are one of the reasons that currencies often times develop nice longer term trends, something that can be of benefit to the individual position trader.

    Although not the typical way that Hedge funds profit from the market, probably the most famous example of a hedge fund trading foreign exchange is the example of George Soros' Quantum fund who made a very large amount of money betting against the Bank of England.

    Next in line are multinational corporations who are forced to be participants in the forex market because of their overseas earnings which are often converted back into US Dollars or other currencies depending on where the company is headquartered. As the value of the currency in which the overseas revenue was earned can rise or fall before that conversion, the company is exposed to potential losses and/or gains in revenue which have nothing to do with their business. To remove this exchange rate uncertainty many multinational corporations will hedge this risk by taking positions in the forex market which negate any exchange rate fluctuation on their overseas revenues.

    Secondly these corporations also buy other corporations overseas, something which is known as cross boarder mergers and acquisitions. As the transaction for the company being bought or sold is done in that company's home country and currency, this can drive the value of a currency up as demand is created for the currency to buy the company or down as supply is created when the company is sold.

    Lastly are individuals such as you and I who participate in the forex market in three main areas:

    1. As Investors Seeking Yield: Although not very popular in the United States, overseas and particularly in Japan where interest rates have been close to zero for many years, individuals will buy the currencies or other assets of a country with a higher interest rate in order to earn a higher rate of return on their money. This is also referred to as a carry trade, something that we will learn more about in later lessons.

    2. As Travelers: Obviously when traveling to a country which has a different currency individual travelers must exchange their home currency for the currency of the country where they are traveling.

    3. Individual speculators who actively trade currencies trying to profit from the fluctuation of one currency against another. This is as we discussed in our last lesson a relatively new phenomenon but most likely the reason why you are watching this video and therefore a growing one.
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  2. #32
    Senior Member HuntedRelated's Avatar
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    Introduction to the Australian Dollar

    A look at what forex traders need to know about the currency of Australia, the Australian Dollar.

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  3. #33
    Senior Member TechnoMeter's Avatar
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    S&P 500 Technical Outlook: Dip-buyers Left Waiting

    Yesterday’s move higher showed not only good buying interest, but was also enough to push the S&P beyond the first line of resistance we had marked in by way of the March top-side trend-line. No issues at all pushing on through. We’ll look to see how the market responds to it on any dip which may unfold from here. The move higher now brings the underside of the November slope into play. As stated the other day, both of these overhead lines given they are running with the direction of the prevailing trend, are not viewed as the most steadfast forms of resistance. But potential resistance, nevertheless. With that said, if the market is ready to launch higher in a similar fashion as it did during February we may see the S&P tear through the November slope with relative ease.

    Determining Market Condition-us-500-w1-g-e-b.png


    But again, to reiterate, not a big fan on this end of paying up into momentum; choosing, rather, to buy on dips. This means those traders looking to get long may have to be nimble and establish positions on intra-day dips and single-day declines (Keep in mind the March top-side trend-line as first potential support.) Overall, risk reward at this moment is not the most compelling.

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  4. #34
    Senior Member TechnoMeter's Avatar
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    DAX Bouncing, but Has Work to Do to Turn Outright Bullish

    Since Tuesday morning when global markets initially reacted lower on North Korea’s launching of a missile over Japan, we’ve seen the market view weakness as a buying opportunity. The DAX broke down to its worst levels since March, but has rebounded a bit. The breakdown came from a triangle pattern we were discussing as likely to lead to lower prices, but selling from the formation has proven to be a one-off event thus far.

    Determining Market Condition-de-30-d1-g-e-b.png


    While the market broke below an earlier-month swing-low on an intra-day basis, the break was somewhat recovered for a closing print just above the support threshold. So far the bounce is being driven by not only a broad rally in risk but also with the help of a weaker euro. The negative correlation between the DAX & euro(trading in opposite directions of one another) has been significant, with the one-month correlation reaching below -90% during both July & August. It’s also been the longest stretch of inverse correlation since the end of 2015, very beginning of 2016. Correlations are relationships which can fall in and out of love with little warning, and on that, while it is generally true the euro and DAX trade inverse to one another to one degree or another, risk is rising that the two could trade together at some point in the not-too-distant future. Bottom line, don’t get married to the correlation, but simply keep it in mind.

    Turning to the techs-only, the DAX is nearing a trend-line running off the June record high and ‘head’ of a ‘head-and-shoulders’ formation which has acted as a technical guide for much of the past month. The trend-line is first up for the market to conquer, but even with a breach above we will need to see the area around 12300 overtaken to put wind in the sails for longs. That’s still quite a fair amount of distance away. Renewed weakness will bring back into play the weekly low at 11868 near the March low at 11850. Below there, not a move anticipated to take shape at this time, we could finally see the market trade down to the measured move target of the H&S formation near 11600 and an actual level of support around the 11480-mark.

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  5. #35
    Administrator newdigital's Avatar
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    Determining Market Condition-uniabsolutemarket.png


    UniAbsoluteMarket_v2.1 600+ indicator is on this post. This is the updated UniAbsoluteMarket indicator (regular version and for using in EAs) which corresponds the latest version of the UniAbsoluteStrength indicator. The indicator is having ability to find 8 market conditions: Bull Market, Bear Market, Correction, Bear Rally, Choppy Market, Sideways Market, Overbought Market and Oversold Market.
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  6. #36
    Senior Member FXstreet's Avatar
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    Are The Monthly Charts Warning About Apple's Earnings?

    The S&P 500 dropped 0.67% on Monday, in the largest decline since last September. Part of the decline was the 2.1% drop in the stock of Apple, Inc. (AAPL), which was a drag on all of the major averages, as well as the technology sector. The largest holding in the Technology Select Sector (XLK) is Apple, with a portfolio weight of 13.74%.

    Determining Market Condition-aapl.usweekly.png


    The stock market declined even more sharply on Tuesday with the Dow Industrials and S&P 500 dropping more than 1%. Apple was down another 0.52% to close at $167.05.

    Investors are now even more focused on the earnings for Apple, which are scheduled to be released after the close on February 1st. Many other tech giants, including Microsoft Inc. (MSFT) and Facebook (FB), are also reporting this week, but Apple has garnered most of the interest.

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  7. #37
    Administrator newdigital's Avatar
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    Tata Motors stock - ready for bullish reversal: if the price breaks last month high at 484 to above so the daily bullish reversal will be started -

    Determining Market Condition-bomtatamot27-d1-just2trade-online-ltd.png
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  8. #38
    Administrator newdigital's Avatar
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    State Bank of India stock price.
    Bullish breakout: the price is testing the last month high at 294 to above for the key resistance level at 298 as the next target to re-enter.

    Determining Market Condition-bomstatebank24-d1-just2trade-online-ltd.png
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  9. #39
    Senior Member FXstreet's Avatar
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    Possible Resistance Levels For The S&P 500, The Nasdaq & The Russell 2000

    Examining the weekly price charts to estimate possible support levels for the major stock market indices.

    Determining Market Condition-us500index-w1-fx-choice-limited-3.png


    It's that late January/early February spot just below 2550 where buyers took over the last time stocks dipped like this. On this chart, you can see the obvious negative divergence between the increasing prices into September and the decreasing relative strength indicator above the price chart and the moving average convergence/divergence (MACD) below it.

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  10. #40
    Senior Member mql5's Avatar
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    Hammer, the version one

    Hammer_v1 - expert for MetaTrader 5

    Determining Market Condition-hammer_v1.gif

    This advisor is an advisor assistant in manual trading. Powered by rebound from levels. The levels here are the horizontal line objects that the user draws manually on the chart. It is allowed to use one object for opening BUY positions and one for opening SELL positions. The main thing is that the names of the objects Horizontal lines correspond to the specified parameters HLine Buy Level name and HLine Sell Level name .
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