Where is the Market Headed?

Excerpts from the Avid’s Live Chat Room…

In all fairness, there is no way of determining the longer term outcome of recent events which occurred over the past month. There are no doubt long term effects that should result from the credit squeeze which has occurred, sum good and sum very bad but on a purely technical basis the probability of seeing further appreciable price erosion of equities has diminished greatly from the chart action which was engineered this week. The boys did what they had to do in conjunction with the FED and on paper this week.  They fixed a lot of apparent leaks and painted a price chart that now looks more bullish than bearish. Whether it is sufficient to stem further erosion later in the year remains to be seen, but for now it appears that further equity value declines have been rendered moot.  We’ll begin to see whether the general public buys it once all the folks who went off to sunbath in the Hampton Beaches begin to trickle back into their work cubicles this week.

From the technical chart perspective, we now have developed and enormous “irresistible tail” on the daily and weekly charts that most likely generates an incentive to buy rather than to sell going forward. My interpretation is that we shall travel back up to the approximate area where the PSAR last gave it’s sell signal which is approximately the 1500 SPX mark where the battle will begin anew. That being the case, some bears who are currently sitting on some sizable profits, if they are short from higher up, should book’em Danno and await the inevitable retracement IMO.

Traders’ Talk

Excerpts from the Avid’s Live Chat Room…

What does the future hold? My bet is ~1300 SPX in the fairly near future. Then most likely new highs after that. But I reserve the right to change that forecast. : ) It is certainly interesting, and confirms suspicions about the nature of the selling, that as soon as the NYSE closes, the futures rebound somewhat. Often it is the futures that push the market around. But not in the past couple of weeks. Institutional selling becomes a fundamental piece of information for the Futures camp, there is nothing you can sell that cant be sold.

The present situation is not exactly ‘business-as-usual’. But my current judgment is that there will not be a huge impact on the aggregate economy from what is happening. I.E. we will not see two consecutive down quarters in real GDP. The Federal Reserve was created for the very reason that an institution like the Fed was required to stabilize things when discontinuities like the present happen. There had been so many of theses kinds of events in the 1800s, which did have fairly serious economic ramifications, that finally in the 1913 (?) they created the Fed precisely for the present type of situation.

So, I expect us to weather this without a problem in aggregate GDP, but clearly there are a lot of entities that currently are short of cash and need to liquidate assets to raise cash. How long the liquidation will last is anyone’s guess. But SPX ~1300 seems like a sensible number to me. Although I have to say that my degree of conviction about GDP in the immediate coming quarters is appreciably less than it would be without the present ‘mess’. But my point is that it depends on who it is that is selling that explains PREM. Or if you like, PREM gives some information about who it is that is selling. This time it is not the futures people who are applying the selling pressure. Let’s put it this way, if the Fed wants a recession it would have no trouble getting one going. But if the Fed doesn’t want a recession then all the gods in the universe combined would have their time cut out trying to create one. IMO

Day Trading

 

Introduction

Day trading is defined as the buying and selling of a security within a single trading day. It is a liberal profession and it gives the day trader the freedom of choice. Day trading is about risk taking not gambling. Day trading is not a get-rich-quick scheme, even though some seminars do their best to sell it as one. It can be extremely stressful and an expensive full-time job. You must treat it like a regular business.

Trading

Day trading is difficult for several reasons. The key to successful day trading is to manage your trades and your emotions. Discipline is a requirement, consistency is key, and commissions eat away at profits. Day Trading requires prior experience and skills to be successful. If you are not up to spending the time learning the techniques of trading, reading about new and improved trading strategies, and working with commitment in a fast-paced trading environment, then day trading is probably not for you. Day trading isn’t just investing, you need your investments to make profit (as any investment should) plus pay your living expenses. It is all about control and how much you have of it. Limiting your losses when day trading is by far more important than making big profits. Although it is commonly viewed that day trading is riskier than investing, the professional day trader will argue with you that the opposite is true. Successful day trading is about one thing -momentum- whether you are shorting the market or going long. Day traders want to ride the momentum of the stock and get out of the stock before it changes course.

Day trading is done in real-time. Real time charting software is essential for day trading, it will save you time and improve the accuracy of your trades. Day traded stocks are rarely kept overnight because of the extreme risk of prices changes to the detriment of the trader. Day traders depend heavily on borrowing money or buying stocks on margin. Overnight margins required to hold a stock position are normally 50% of the stock’s value, while many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. Day traders use direct access brokers, not retail brokers as execution of trades are too slow. Low commission rates allow a day trader to make a large numbers of trades during a single day with out eating away at the traders’ profits. There are a variety of online trading services. CyberTrader is one of the best online brokers in the market today.

Conclusion

Successful day traders have the discipline to follow their method because they know that only trades which are indicated by that method have the highest probability of resulting in a profit. Expect to make at least 500 trades before you really start to get comfortable. You must ask yourself, “Do I trust myself to enter trades and do I trust myself to exit trades when my method indicates to do so? “ Remember, good day traders do not rush into trades. They take their time and pull the trigger when the right time occurs. So are you ready to begin day trading online and making money?

Currency Trading

 

Introduction

Currency trading is the largest market on the planet. It is a major business, and it is estimated that over US$2 trillion in currency is traded globally everyday. The New York Stock Exchange has daily transactions of approximately US$50 billion each day. Based off that statistic you can see that the magnitude of the currency trading market exceeds all other equity markets in the world combined. An important distinction to make is that currency trading is not centered on an exchange like the NYSE or NASDAQ. Currency trading is open for trading 24 hours a day unlike the domestic stock markets. Currency trading uses the purchase and sale of large quantities of currency to leverage the shifts in relative value into profit.

Currency

The currency market is one of the most popular markets for speculation due to the enormous size of currency trading and liquidity. Any currency has a value relative to all other currencies in the world. Currency trading has many real benefits over equity trading like the stock market. There are two reasons the relative value of a currency fluctuates. The first is as outside investors or visitors buy things within a country, they are driven to convert their domestic currency into the currency of the country they are buying within. The second force for currency fluctuation is speculation. This speculation can have extreme consequences on a nation’s currency and consequently on a country’s economy.

Trading

If you do not have experience in the field of currency trading, you need to at least have knowledge. The attraction to the currency trading market has led many people to look for currency trading courses. These types of course can help prepare you for the exciting world of currency trading. For a deposit of just $2,000 an investor can leverage $100,000 worth of foreign currency or $50 leverage for every $1 invested. The heavy buying and selling in the currency market can drastically impact the value of the currency itself. Trading currency allows traders to earn profits during rising and falling markets. Unlike stocks, there are no restrictions on short selling in foreign currency trading. The “ask” is the price at which a market maker will sell the base currency in exchange for the counter currency in which you can buy. The “bid” is the price at which a market maker is willing to buy the base currency in exchange for the counter currency in which you can sell. The spread is how the market maker and the introducing broker are compensated for their work. The spreads for currency trading are extremely low, making the cost to a trader very low as well. One of the most important differentials in currency trading is timing. As traders feel a given currency will perform strongly or weakly, they will buy or sell accordingly. However, most traders agree that the currency market is no place for beginners. An individual has to take into consideration technical and fundamental data and make an informed decision based on his perception of trading market sentiments and market expectations to become a profitable trader. Every trader has to be aware of the events going on in the market, and also has to understand the subtleties of the market to safely trade.

Conclusion

If you are seeking new opportunities why not investigate what currency trading has to offer? Once you have decided that currency trading is right for you, it’s just like learning to ride a bike. This type of trading is a challenging and profitable opportunity for developed and experienced traders. However, before choosing to engage in currency trading you should carefully consider your investment or trading objectives, level of experience and appetite for risk. But most significantly, do not trade money you cannot afford to lose.

What is FOREX?

 

FOREX is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. FOREX is the worldwide market, so when you are sleeping in the North America some dealers in Europe are trading currencies with their Japanese counter parties. FOREX is a perfect market to invest in, as it is free from any external control and free competition.

 

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. FOREX was launched in the 1970s, to become the biggest liquid financial market today, dealing in more than hundred times the daily trading on the New York Stock Exchange. FOREX trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. It literally follows the sun around the world. FOREX currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of, that country currency. FOREX, however, is a spot (cash) market in which trades executed within same business day. FOREX trading involves high risk and you can lose a substantial amount of money. It is a very unique market because it is not based in any particular place, and it also has very few qualifications for investing. But it is a more objective market, because if some of its participants would like to change prices, for some manipulative purpose, they would have to operate with tens of billions dollars.

 

That’s why it is a perfect market to invest in, as it is free from any external control and free competition. FOREX Trading requires the employing of technical as well as fundamental analyses. The main thing in the FOREX is that dollar competes with four main currencies: British pound sterling, Japanese yen, Swiss franc and Euro. It is a type of trading that goes on around the world and for that reason the trading of different currency pairs goes on constantly. It largely determines how much a currency is worth based on demand. FOREX transactions can help stabilize cash flows and profits, improve forecasts, and decrease uncertainty. FOREX is not centered at an exchange like the NYSE. It also allows highly leveraged trading with low margin requirements relative to its equity counterparts. FOREX investments can be made without actually having the money in an account too. FOREX trading can gain investors a large amount of money either over an extended duration, or in a short period of time.

 

Conclusion

 

Trading FOREX is like picking money up off the floor and not trading FOREX is giving another a chance to pick up. And the only time Forex is not being traded is when the whole world is in a weekend. Investing in FOREX is fairly simple and is practiced by anyone who wants to reap profits from solid investments. It is a business like any other business and planning is required. Learning Forex is the first step before getting involved in this type of trading. It can be very rewarding to a variety of people. The question is: Is FOREX for you?