GVI Forex Analysis: Far East Open for December 15, 2008

Pre-Far East Open

•End of year trade continues to see the USD tumble against European currencies. USD weakness is often expected as a seasonal pattern by traders. Gold and oil are mixed. Dealers are looking ahead to a Fed policy easing Tuesday.

•Another focus remains on the auto bailout plan. The world did not end after an accord was not reached over the weekend, but yearend apparently is the dropdead date. The last thing the U.S. needs is another financial shock.

•The extent of the exposure to the Madoff fraud continues to be investigated. Institutions around the globe have been impacted by the mess.

•Far Eastern bourses closed sharply higher despite a poor quarterly Tankan survey from Japan. European bourses ended modestly lower. The current call for the U.S. close is for weaker. U.S. Bond prices are stronger.

•Key data U.S. Tuesday include: November CPI, Housing Starts and the FOMC policy decision. A cut in the Fed Funds rate of either -50bps or -75bps is expected.

Risk Warning:

Foreign exchange trading and investment in derivatives can be very speculative and may result in losses as well as profits. Foreign exchange and derivatives trading is not suitable for many members of the public and only risk capital should be applied. The website does not take into account special investment goals, the financial situation or specific requirements of individual users. You should carefully consider your financial situation and consult your financial advisors as to the suitability to your situation prior to making any investment or entering into any transactions.

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FOREX-US dollar tumbles after Fed cuts rates to record low

* US dollar tumbles versus euro, yen after Fed rate cut

* Fed cuts rates more than expected to record low

* Fed says may keep rates at "exceptionally low levels"

* Yen nears 13-year high; boosting intervention talks

(Adds comments, details, updates prices)

By Vivianne Rodrigues

NEW YORK, Dec 16 (Reuters) - The U.S. dollar tumbled versus the euro and the yen on Tuesday after the Federal Reserve cut its benchmark interest rates more than expected to a record low, further diminishing the appeal of the greenback.

The Fed cut its federal funds rate target to a range of zero to 0.25 percent from the previous target of 1.0 percent, and said it would use "all available tools" to dispel a year-long recession. For details, see [ID:nTRT000354].

Financial markets had expected the Fed to lower rates by no more than three-quarters of a point.

"The dollar is falling against all major currencies... because it was a larger-than-expected cut," said Matt Esteve, a foreign exchange trader at Tempus Consulting in Washington.

"On one side, we effectively have a zero interest rate in the U.S., and on the other side, the Fed has sent a sign that they are ready to use all tools to help the U.S. economy out of recession," he added.

In late afternoon trading in New York, the euro was up about 3.0 percent at $1.4099 , a 2 1/2-month high. It traded as high as $1.4144, more than five cents above its session trough of $1.3631.

The U.S. dollar had its biggest daily decline against the Swiss franc since 1995. It last traded 3.2 percent lower against the European currency at 1.1205 to the dollar .

Versus the yen, the dollar was down 1.6 percent to 89.06 , within a striking distance to a 13-year low against the Japanese currency.

The Fed's rate cut pushed the fed funds target to its lowest level on record, and the central bank said it would keep it at "exceptionally low levels for some time."

The surprise move put the Fed in unprecedented policy territory, but analysts mostly approved of the move.

"It's a highly unorthodox and creative step," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon in New York. "We think it's the best possible move for the U.S. consumer and for the financial market."

U.S. stocks rallied after the announcement, while the InterContinental Exchange's U.S. dollar index .DXY, which tracks the value of the greenback against a basket of six currencies, fell 1.8 percent to 80.628.

The Fed's rate cut move is "an incredibly strong public declaration that the Fed will throw everything it has in attempting to stabilize the financial and economic situation," Mohamed El-Erian, the chief executive of bond giant Pacific Investment Management Co, told Reuters.

"After this 'wow' statement, there should be no question about policy willingness," he added.

The U.S. dollar also tumbled against the Australian and New Zealand dollars in a sign the Fed's move may be positive for risk appetite and riskier assets.

GOLDMAN SACHS, BANK OF JAPAN

Demand for the greenback started to dwindle earlier in the session as investors cut their exposure to risk after Goldman Sachs (GS.N) posted its first loss as a public company.

The dollar's sharp drop in recent days in particular against the yen has raised speculation that Japan may intervene to stem the currency's strength as it nears a 13-year high.

U.S. data released earlier on Tuesday showed new housing starts and permits plunged to record lows in November, while consumer prices dropped at a record rate for a second straight month. See [ID:nN16549579]. [ID:nN15516550].

Analysts and fund managers said the very soft readings on inflation and continued deterioration in the housing sector support views of a very expansionary policy stance.

(Additional reporting by Steven C. Johnson, Wanfeng Zhou and Jennifer Ablan in New York;)

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FOREX-Dollar takes breather after big Fed rate cut

MARKETS-FOREX (UPDATE 1):FOREX-Dollar takes breather after big Fed rate cut

* Dollar little changed vs yen, not far from 13-year low

* Dollar pulls up from 2-A½ month trough vs euro

* Fed's historic rate cut seen keeping dollar pressured

By Masayuki Kitano

TOKYO, Dec 17 (Reuters) - The dollar hovered near 13-year lows against the yen and 2-A½ month lows versus the euro on Wednesday after tumbling the previous day as the U.S. Federal Reserve slashed interest rates to as low as zero.

In a historic move, the Fed on Tuesday cut its target for the federal funds rate to a range of zero to 0.25 percent, a record low, from 1.0 percent and said it was willing to keep rates low for an extended period.

The Fed said it would use "all available tools" to support the economy, and added that it was mulling possible purchases of longer-term U.S. Treasury debt and would consider other ways to tap its burgeoning balance sheet to support the economy.

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FOREX-US dollar hits 2-month lows; eyes on US bailout

* Dollar slides across board, hits 2-mth low vs euro

* Dollar hits 2-mth low vs basket of currencies .DXY

* Focus on fate of U.S. automakers, Fed rate decision (Adds comment, updates prices, changes byline, changes dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Dec 15 (Reuters) - The U.S. dollar fell to two-month lows against the euro and a basket of currencies on Monday, pressured by uncertainty over the fate of U.S. automakers and reduced safe-haven flows.

The dollar was starting to respond negatively to concerns about further weakness in the U.S. economy, analysts said, after a run of weak data caused an exodus from risky positions and increased flight-to-quality buying in the currency.

Investors shunned the greenback amid fears a failure of one or more of the automakers could exacerbate a year-long recession and drag down other companies.

"The uncertain outlook for the U.S. automakers continues to keep investors wary of over exposure to the dollar at this point," said Omer Esiner, senior market analyst at Ruesch International in Washington.

"We're starting to see a shift in the market where negative data is starting to actually impact the dollar negatively, which is contrary to what we've seen for the better part of the last couple of months," he added. "We're seeing a naturally weaker dollar as we get into the year end, so bad news is only exacerbating the need for investors to just exit their long dollar positions."

In early New York trading, the euro was up 1.5 percent at $1.3570 , after climbing as high as $1.3584, the highest level since Oct. 15, according to Reuters data.

The ICE Futures U.S. dollar index, which tracks the value of the greenback against a basket of six currencies, hit a low of 82.517 .DXY., the weakest level since Oct. 20. It last traded down 1.3 percent at 82.606.

A more upbeat tone in the global equities market also helped ease extreme risk aversion, reducing the greenback's safe-haven appeal and boosting demand for higher-yielding currencies.

The Australian dollar rose 1.1 percent and the New Zealand dollar was up 1.5 percent .

Against the yen, the dollar fell 0.9 percent to 90.31 , after hitting a more than 13-year high of 88.10 yen on Friday. But yen gains were capped on speculation that Japanese authorities could intervene to stem further currency strength.

BAILOUT IN FOCUS

The White House said on Friday it was considering tapping a $700 billion financial industry bailout fund to prevent a collapse of ailing U.S. automakers. That came after the U.S. Senate on Thursday rejected a bailout plan to avert a possible bankruptcy by one or more of the nation's three automakers.

But U.S. President George W. Bush said on Monday an announcement on a car industry rescue was not imminent, leaving the industry's fate clouded [ID:nN14461208].

Investors also awaited the outcome of a policy meeting by the Federal Reserve on Tuesday to see how close to zero the U.S. central bank will cut interest rates and what alternative measures it will take to boost the economy. The Fed is widely expected to cut rates by at least 50 basis points from the current 1 percent.

"What the Fed says will likely overshadow its rate move," currency strategists at Brown Brothers Harriman, wrote in a research note. "Many investors are looking for insight into where the Fed anticipates ending the rate cuts and what other non-traditional steps will the Fed adopt." (Additional reporting by Naomi Tajitsu in London; Editing by Chizu Nomiyama)

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US Dollar Loses Correlation With Dow Jones, Forex Market Continues to Track Oil

Forex correlations have taken an interesting turn through recent trading, as the safe-haven US dollar has seemingly lost its link to the US Dow Jones Industrials Average—potentially removing a key pillar of support for the US currency. Dismal risk sentiment previously led to a sharp unwind of USD-short positions, and the Greenback benefited from sharp declines in global risky asset classes. Yet more recent price action left the US Dollar significantly lower despite losses in the DJIA and other risk barometers. All else remaining equal, such a shift in correlations bodes poorly for the USD against similarly risk-sensitive currencies. That being said, the Japanese Yen continues to trade almost tick-for-tick with the Dow Jones and other major equity indices.

Forex Correlations Summary

Forex correlations against Oil, Gold, and the Dow Jones Industrials Average for the past 20 trading days:

Strongest Forex Correlations

US Dollar/Japanese Yen and the US Dow Jones Industrials Average The US Dollar has recently lost its correlation with the Dow Jones, but the Japanese Yen’s link to risk sentiment remains rock-solid. The extremely low-yielding currency has almost invariably rallied in the face of stock market losses, and a persistently sky-high rolling correlation between the JPY and DJIA suggests that this is unlikely to change through the foreseeable future. In fact, some traders report using the Japanese Yen as a proxy for trading movements in the Dow—especially against similarly high-yielding carry trade currencies.
British Pound and the G10 Forex Carry Trade Index The British Pound has shown an increasingly strong link to the G10 Forex Carry trade, and it seems that speculative capital flows have punished the GBP about as much as high-volatility carry trade currencies. According to the Deutsche Bank Carry Trade Basket index, the G10 carry trade has lost about 5 years of previous gains in a matter of months. The ongoing theme of global deleveraging played a very large part in the carry trade unwind, and correlations suggest that the British Pound fell victim to the same dynamic. A continuation leaves the British Pound susceptible to speculative capital flows.
Australian Dollar and Reuters/Jefferies CRB Commodity Index The Australian Dollar has recently renewed its link with global commodity prices—trading virtually lockstep with the popular Reuters/Jefferies CRB Commodity Index. Major export commodities such as iron ore and gold remain a key component of Australian Dollar demand, and sharp drops in raw materials prices tends to lead to similar depreciation in the Australian currency. We envision that such a link will remain strong through the foreseeable future—especially as commodity prices remain extremely volatile.

Weakest Forex Correlations

US Dollar and the US Dow Jones Industrials Average The US Dollar has very recently stopped tracking moves in global risky asset classes—making its correlation with the Dow Jones Industrials Average virtually insignificant. The chart shown shows that the medium-term correlation remains historically high, but this measure ignores the past week of price action. If recent trends are any indication, the US Dollar could lose its safe-haven status in the face of continued global financial deleveraging. Such a shift would prove quite bearish for the previously high-flying US currency.

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Forex News and Rumors

US Industrial Output Fell Less Than Expected

US Industrial Output was expected to fall by 0.8 percent for the month of November; however, actual output declined slightly less than projections at 0.6 percent. More

Dollar Rally May be Coming to an End

With billions of dollars flooding into the market in the guise of economic stimulus plans and other assorted bail-outs, analysts suggest that the US dollar will fall against most of the major currencies.

“The dollar will go to new lows as the U.S. attacks its currency,” said John Taylor, chairman of New York-based FX Concepts Inc., which manages about $14.5 billion of currencies. More

Oil Cuts Expected Ahead of OPEC Announcement

The Organization of the Petroleum Exporting Countries (OPEC) is expected to announce “significant” production cuts in an attempt to reverse falling crude prices which are hovering near a four-year low. More

Canadian Dollar Gains on Oil Price Increase

The Canadian dollar gained against the US dollar as stock markets rebounded and the price of crude rose on expectations of an OPEC production cut. More

Outlook for UK Pound Worsens

The British pound continued to struggle against the euro and everyday seems to fall to yet another record low. Currently, the euro is at 89.98p and threatens to break through the 90p level and many analysts suggest that the euro could soon be at parity. More

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Florida forex scam nets guilty plea

A Florida man has pleaded guilty after being found to be the head of fraudulent foreign currency exchange companies.

Mitchell Goldberg has pleaded guilty to two counts each of wire fraud and mail fraud, in a scam that prosecutors say netted $11 million.

Five others were charged with participating in the scheme that was based on the buying and selling of foreign currencies.

In the scam, clients were promised rates of return as high as 300 percent, but, even on poor performance trades, were charged unreasonable commissions

Prosecutors sayd about 475 clients lost about $11.5 million from Goldberg’s operation.

Goldberg could be sentenced to 12 years in prison. He is scheduled for sentencing on February 20th.

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Forex Trading Tip: Don't Get Greedy

Take your profits -- even if they are smallA forex trading tip that I find especially applicable in the current climate is this one: Don't get greedy.

Sometimes, it can seem like a good idea to run your profits. Your position is doing well, and you want to take it just a bit further. Right now, though, with volatility high, this could be a way to turn a winner into a loser.

You never know when a currency that is gaining is going to suddenly reverse and start losing. (This is happening with the end of the dollar rally right now.) So, if you have a profitable position on the currency market, it might be a good idea to exit while you are ahead.

There will be other trades.

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Forex and Dow Jones recommended levels

EUR/USD

Todays support: - 1.2926, 1.2877 and 1.2858 (main), where correction is possible. Break would give 1.2837, where correction also may be. Then follows 1.2808. Break of the latter would result in 1.2784. If a strong impulse, we would see 1.2737. Continuation will give 1.2692.

Todays resistance: - 1.3016(main). Break would give 1.3038, where a correction is possible. Then goes 1.3061. Break of the latter would result in 1.3096. If a strong impulse, wed see 1.3112. Continuation will give 1.3143 and 1.3182.

USD/JPY

Todays support: - 92.26, 92.14 and 91.80(main). Break would bring 91.60, where correction is possible. Then 91.36. If a strong impulse, we would see 91.07. Continuation would give 90.90.

Todays resistance: - 93.18, 93.48, 93.88 and 94.17(main), where a correction may happen. Break would bring 4.33, where also a correction may be. Then 94.52. If a strong impulse, we would see 94.84. Continuation will give 95.43 and 95.84.

DOW JONES INDEX

Todays support: - 8640.18 (main), where a delay and correction may happen. Break of the latter will give 8627.36, where correction also can be. Then follows 8592.10. Be there a strong impulse, we would see 8561.20. Continuation will bring 8506.00 and 8642.76.

Todays resistance: - 8827.20, 8867.14 and 8930.30 (main), where a delay and correction may happen. Break would bring 8973.22, where a correction may happen. Then follows 9020.00, where a delay and correction could also be. Be there a strong impulse, wed see 9047.90. Continuation would bring 9091.40.

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Forex: Getting email signals for trading

You do not know me but I read a column you wrote in The Punch, which I find very interesting because I also trade in forex though I am a beginner. I would like to know how somebody could get an e-mail signal before entering a trade.

You can get forex signals by email if you have an arrangement with the signal generator. Very often, they will charge for their services. If you know a good trader that uses Metatrader 4 and he or she is willing to give you signals, it can be easily configured on their computer with a small script, such that every time they make a trade, their Metatrader 4 terminal will send an email with the parameters of the trade to your email.

It can also be configured such that the terminal sends the email signal to an email group for distribution to the group members.

In addition, the terminal can send the email to an Email- To-Sms gateway, which then sends you the signal by sms, or distributes it to a group of mobile numbers.

This way such a trader makes extra income from selling trade signals at no extra cost or labour. Usually these signals arrive at least a minute late, so if the traders strategy is a very short term one (scalping) that targets anything less than 20 to 40 pips gain or uses a stop loss just as tight, the signal may be dangerously late.

For longer term daily or weekly trades however, it should be alright, provided the signal generator was right. You can run a search online for forex email signal providers.

Just remember that the signal is only as good as its generator, so you would need to do some due diligence on the signal generator‘s strategy and previous performance.

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FOREX-Dollar down as risk tolerance rises on auto bailout

* Yen slides, dollar dips vs euro on US auto bailout hopes

* US could vote on rescue plan as early as Wednesday

* BoJ's Shirakawa comments on FX mkt weigh on yen

* For up-to-the-minute market news, click on FXNEWS

(Recasts, updates prices, adds quotes, changes byline, changes dateline, previous LONDON)

By Nick Olivari

NEW YORK, Dec 10 (Reuters) - The dollar slipped to a two-week low against the euro while the yen fell broadly on Wednesday as a tentative agreement by U.S. lawmakers to rescue American automakers helped calm investor sentiment.

The White House and congressional Democrats reached a deal in principle on a $15 billion plan to bail out and restructure auto firms, with officials saying the House of Representatives could vote on it as early as Wednesday [ID:nN09294627].

"The market is still feeding off hopes for mass fiscal stimulus in the U.S. once (President-elect Barack) Obama takes office," said Stephen Malyon, chief currency strategist at Scotia Capital in Toronto.

Specific to the auto bailout, "in so far as how it is boosting equities, that is important for the foreign exchange market."

U.S. stock futures rose on Wednesday, a sign of rising risk tolerance, due to bailout hopes. That led to an easing of the move to unwind carry trades, which use the yen -- whose interest rate is near zero -- to fund purchases of higher-yielding assets.

In early New York trade, the euro edged up 0.3 percent to $1.2948, having earlier hit a two-week high of $1.3004, according to Reuters data.

The dollar rose 0.7 percent to 92.78 yen , while the euro EURJPY gained 1.1 percent to 120.28 yen. The yen was down 1.2 percent against the Canadian dollar , 0.7 percent against the Swiss franc and 1.1 percent against the pound , according to Reuters data.

Analysts said fears of Bank of Japan intervention to prevent too much yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching forex moves carefully [ID:nTKF003197].

But few expected action any time soon.

"A comment from BoJ Governor Shirakawa that the Ministry of Finance has the option of intervening was a statement of fact to lawmakers rather than a hint that intervention is imminent," said Brown Brothers Harriman in a note to clients.

Analysts said trading in recent days is less active than usual with little economic data to drive market moves and investors beginning to wind down for the year-end holidays.

"We're seeing subdued days in foreign exchange markets," said Scotia's Malyon. "We are also in a week where there is not a lot of direction."

US BAILOUT IN FOCUS

Analysts believe the falls in the yen are likely to be short-lived as global recession fears keep risk aversion high.

The prospect of interest rates in other developed countries falling towards the low rates in Japan will also keep the Japanese currency supported, they said.

Traders waited to see whether the House of Representatives would approve the automaker bailout, which includes conditions to provide low-interest loans to avert a threatened industry collapse if one of the three U.S. auto firms were to fail.

Some market participants are sceptical on whether such a plan, if passed, would actually save the struggling auto sector, while others argue that it would ultimately do little to cure the global recession.

"The market may yet reach a stage where interest in risk assets cannot be justified by the underlying conditions in the global economy," analysts at UBS said in a research note. (Additional reporting by Jessica Mortimer in London, Editing by Chizu Nomiyama)

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ICICI Bank’s forex trading platform for corporates

NEW DELHI: In a bid to mitigate forex risk for large corporates, ICICI Bank has developed a customised online trading platform that would enable companies to cover their market risk in different currencies and assist in taking financial decision.

“ICICI Bank E-Dealz through the full-fledged customised system, can now book the forex deals in less than 5 minutes, something that took a day earlier,” ICICI Bank Head Global Markets Group, Ms Shilpa Kumar said.

The system has the capability of booking the trades from centralised or decentralised client location, she said, adding it provides the real time deal log with complete deal history and captures the efficiencies of straight through processing.

To begin with, the customised solution is subscribed by the ABB Ltd, a global leader in power and automation technologies, she said.

With this particular forex solution, Kumar said, the bank is targeting customers who do significant number of forex transactions on daily basis.

Commenting on the solution, ABB Ltd said it is efficient, transparent and has focus on treasury management rather than treasury administrative work.

The consolidated portfolio view makes the trade execution very efficient and now the company can track its cash flows from export and import remittances from different location on a real time basis, ABB Ltd country Treasurer Mr Sundaram Nagasamy said.

These remittances were earlier exposed to market risk due to high volatility in currency market, he said. - PTI

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FOREX-Dollar dips as auto bailout hopes boost risk tolerance

* Dollar dips vs euro, yen slides on US auto bailout hopes

* BoJ's Shirakawa comments on FX market weigh on yen

* Pimco's El-Erian says USD gains to fade sometime in 2009

* For up-to-the-minute market news, click on FXNEWS (Updates prices, adds quotes, changes byline)

By Steven C. Johnson

NEW YORK, Dec 10 (Reuters) - The dollar fell to a two-week low against the euro on Wednesday and the yen weakened as U.S. lawmakers reached tentative agreement to extend emergency loans to the ailing auto industry, helping to calm investor anxiety.

Stocks rose and investors' rush into safe-haven assets such as U.S. Treasury debt slowed, temporarily undermining the dollar's appeal and lifting other currencies such as the euro.

The low-yielding yen also fell as the pendulum swung back in favor of currencies and assets that offer a higher return.

The impetus for Wednesday's moves was news the White House and Congressional Democrats had reached a deal in principle on a $15 billion plan to help automakers restructure and avoid bankruptcy For details, see [ID:nN10505833].

"It's safe to say risk appetite has improved somewhat, and that has a lot to do with talk of an imminent bailout for the U.S. auto industry," said Omer Esiner, chief market analyst at Ruesch International in Washington.

With the year winding down, Esiner also said investors are taking profits on the dollar's recent rise. That has added to pressure on the U.S. currency and may persist into January.

Late afternoon, the euro was up 0.8 percent at $1.3022 after earlier hitting a two-week high of $1.3070. It rose 1.4 percent to 120.70 yen while the dollar added 0.6 percent to 92.64 yen .

The yen also fell sharply against the Canadian dollar , the Swiss franc and the pound , according to Reuters data.

Analysts said fears of Bank of Japan intervention to prevent too much yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching forex moves carefully. [ID:nTKF003197]

Sterling rose 0.4 percent to $1.4789 while the dollar fell 0.6 percent to 1.1985 Swiss francs .

MORE RISK AVERSION TO COME

Analysts were quick to point out, however, that the uncertainties facing the global economy meant a relapse into risk aversion was still likely.

One sign of just how parlous the economic outlook is came when China said its exports and imports shrank unexpectedly in November, sparking fears that global demand has vanished. [ID:nPEK31604]

In the United States, while an auto deal looked set to pass the House of Representatives, some Republicans sowed doubts about possible snags in the Senate [ID:nWEN162].

That weakened stock markets and helped the dollar and yen pare some of the losses seen earlier in the session, though both remained down on the day.

In the longer run, though, analysts expect the dollar's rise to fade next year as markets stabilize and investors stop seeking relative safety in the U.S. currency.

"If you analyze why the dollar has strengthened, it has more to do with the rest of the world than with the U.S.," said Mohamed El-Erian, co-chief of Pacific Investment Management Co, at a Reuters Investment Summit in New York on Wednesday.

The euro and sterling, for instance, fell sharply as the euro zone and British economies slowed and their central banks cut interest rates.

He said when "that stock adjustment is over, which we believe will be in 2009, the dollar (will fall)" but added that it's still premature to bet against the greenback.

"You don't want to be 'shorting' the dollar until you have evidence the de-leveraging has run its course. Our sense is that ... three-fourths of the de-leveraging has taken place." (Additional reporting by Nick Olivari; Editing by Chizu Nomiyama)

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Forex Trading: The Most Common Flaws

Many traders are very much attracted to the sophistication offered by the multi indicators and use them in their forex trading systems. Many of the confluence system indicators show the price movement and in no way adds any value to the trade. Due to this, the traders either end up over bought or over sold technical indicators like the stochastic, momentum indicators, candle stick chart pattern recognition, Bollinger band breaks out even neural networks which are supposed to be artificial intelligent systems. The technical indicators just show signals which are similar to buy or sell or hold, making the signal generated to be correct. Theoretically it sounds good but in reality to arrive at a conclusion might be difficult. As a result the traders are confused in making a right decision. They either enter too late or too early or remain still without being able to make a decision to enter the market. The major flaw is due to the use of useless trading system which does not serve the purpose to make profits, but confuses the traders and complicates the forex trading until the trader loses.

Another dangerous flaw found in forex trading is of an emotional nature interwoven into the process. It is fear and greed of the trader. A profitable forex trade can lead to exuberance and over joy, but this is the time when greed comes in and crosses the aspects of risk management. When a trader is hooked to winning, out of greed he over-rides all aspects to see more and more profits, only to see them crash to earth. They wait for the prices to regain, but in dismay may some time and with press release distribution possible losses. This is the time when fear crops up and paralyses the trader not making him to open up any position. Hence while trading, the trader should not override the emotional side of trading, stick to discipline of the trade which can prevent them from committing the flaw of forex trading.

Another kind of flaw can happen when the trader is an unconcerned person or the one who is lazy, or with no drive to gain profits or feels the need to be profitable. These people would have entered into forex trading due to hearing it as an easy game. For them pr newswire release not a trade which involves skill, trade management, preparation and re-investment. It is a fun game for them, where loses do not make any difference to them. Such persons make a wrong footing, with a wrong objective.

Flaws in forex trading due to the inadequate knowledge of the trader:

Some of the losers start with good purpose in the trade. Even though they had gained some knowledge from here and there they might find it difficult to apply them practically in the trade. Inadequate knowledge might be the major flaw which stops them from achieving success.

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FOREX-Dollar gains vs most majors; euro zone data weak

* Euro flops vs dollar , yen

* German ZEW sentiment beats forecast; conditions weak

* Risk demand still low, Japan growth contracts

* For up-to-the-minute market news, click on FXNEWS

(Recasts, updates prices, adds quotes, changes byline, changes dateline, previous LONDON)

By Nick Olivari

NEW YORK, Dec 9 (Reuters) - The dollar gained against most currencies, including the euro, on Tuesday though with no major U.S. data scheduled for release, investors took their cue from investor sentiment in the euro zone's largest economy.

The Mannheim-based ZEW economic think tank's poll of economic sentiment unexpectedly rose to -45.2 in December from -53.5 in November, but the current conditions component worsened. [nSAB020603].

Uniformly grim UK economic data also put the British pound under pressure, as economists pointed to further cuts in Bank of England interest rates. [nL9702067].

"The ZEW is not going to do the euro any favors," said Ron Simpson, director of FX research at Action Economics in Tampa, Florida. "And incoming UK data is poor at best, putting the pound under pressure."

The euro fell 0.9 percent to $1.2821 in early New York trade, down from a session peak of $1.2968, according to Reuters data, its strongest level since November 25.

Sterling fell 1.4 percent on the day to $1.4695, while the euro hovered near record highs reached the previous day against the UK unit .

Demand for risk was generally low after figures earlier on Tuesday showed the Japanese economy contracted 0.5 percent in July-September, far more than an initial reading of a 0.1 percent decrease [ID:nT356356].

The dollar was 0.3 percent weaker against the yen at 92.54 yen .

Yen strength pushed the euro down 1.2 percent to 118.70 yen . The higher-yielding Australian and New Zealand dollars were down more than 2 percent against the low-yielding Japanese currency.

Sterling also dropped 1.7 percent against the yen as investors continued to unwind carry trades, where the yen was used to fund investments in higher-yielding currencies.

Investors were also wary of taking on risk as they awaited a U.S. emergency loan package for its top three automakers, while figures late last week showed that the U.S. lost more than half a million jobs in November alone [ID:nN08534770].

"The harsh reality of global weakness is still coming through in markets," said Stephen Koukoulas, strategist at TD Securities in London.

Rapidly deteriorating economies have prompted central banks to slash rates aggressively.

The dollar was up 0.9 percent against the Canadian dollar at $1.2661 after the Bank of Canada unexpectedly cut its key interest rate by 75 basis points to a 50-year low of 1.5 percent on Tuesday and declared the Canadian economy to be in recession. [ID:nBAC000266]. (Additional reporting by Veronica Brown in London) (Reporting by Nick Olivari, Editing by Chizu Nomiyama)

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Forex Trading Systems – Avoiding Scams and Finding One For Big Profits

The first thing to look for with any forex trading system is the track record and if you see the disclaimer below be extremely cautious. We will explain what it means in a moment but for now here it is and its required by the CFTC.

“HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR online master degrees IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOW”

If you have read the above and understood it, you will see that vendors can simply make track records up (and they do), as they can use past data and say what they want! So long as they put this disclaimer on the material their covered.

Of course most forex traders simply concentrate on the gains and do realize these track records are actually meaningless.

Anyone can do a track record in hindsight, knowing the closing prices but it’s not so easy in real life – we have to trade forward!

The fact is most of the currency trading systems sold on the net today are never traded at all - there simply done by marketing people and track records are made up to appeal to the greed and naivety of investors.

So the first step is simply to ignore any forex trading system that does not have a real time track record and believe me, you have cut out at least 95% of systems.

You may say well there must be some honest guys out there selling systems?

Yes there are and some simulations do come good (a small minority) but why should you risk you money?

If the vendor hasn’t the confidence to trade neither should you.

Once you have found a real time track record look for the following:

1. It is over a reasonable period of time at least 3 years.

2. Check the drawdown and look for the worst peak to valley drawdown to see if its in line with your risk – reward criteria.

3. Check the logic is revealed so you can have confidence in it

4. Check the support and find out if you are comfortable with the vendor

While a real time track record does not guarantee profits it is a good indication of the potential of the system and if you know how it works and are comfortable with its worst peak to valley drawdown and time to recovery chances re you can follow it with discipline.

Don’t look to make a fortune over night – the best systems will do up to 50% per annum and that will build you fantastic compound gains over time.

If you want bigger growth you will find many simulations offering you more but you know what will happen if you buy it!

Be sensible when buying forex trading systems and remember, all those track records that look to good to be true are! There is no “free lunch” when it comes to make money.

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FOREX-Dollar climbs vs most majors; euro zone data weak

* Dollar rallies vs most majors

* German ZEW sentiment beats forecast; conditions weak

* Risk demand still low, Japan growth contracts

* For up-to-the-minute market news, click on FXNEWS (Recasts, updates prices, adds quotes)

By Nick Olivari

NEW YORK, Dec 9 (Reuters) - The dollar rose against most currencies on Tuesday though with no major U.S. data to provide direction, trading was based on technical levels or economic reports from the UK and elsewhere.

The euro clawed back from the session low with investors testing whether they can push the single zone currency through the upper level of its most recent range, analysts said.

Earlier the the market took its cue from investor sentiment in the euro zone's largest economy. The ZEW economic think tank's poll of German economic sentiment unexpectedly rose to -45.2 in December from -53.5 in November, but the current conditions component worsened. [ID:nSAB020603].

Uniformly grim UK economic data also put the British pound under pressure, as economists pointed to further cuts in Bank of England interest rates. [ID:nL9702067].

The dollar did trim losses against the yen and gains against the euro after a report showed a smaller-than-expected drop in pending existing home sales for October, which raised cautious optimism of some stability in the distressed housing market. [ID:nN0975120].

"There is some medium-term resistance at $1.2965 and that is a target dragging some players to test that level and if we break through, there will be a test of the psychologically important $1.3000 level," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon on the euro/dollar.

The euro was little changed against the dollar at $1.2935 midway through the New York session, down from a session peak of $1.2968 but also far above the session low of 1.2798, according to Reuters data.

Sterling fell 0.9 percent on the day to $1.4774, while the euro hovered near a record high against the UK unit .

"The ZEW is not going to do the euro any favors," said Ron Simpson, director of FX research at Action Economics in Tampa, Florida. "And incoming UK data is poor at best, putting the pound under pressure."

Demand for risk was generally low after figures earlier on Tuesday showed the Japanese economy contracted 0.5 percent in July-September, far more than an initial reading of a 0.1 percent decrease [ID:nT356356].

The dollar was 0.4 percent weaker against the yen at 92.43 yen .

Yen strength pushed the euro down 0.5 percent to 119.54 yen . The higher-yielding Australian and New Zealand dollars were down around 1.7 percent against the low-yielding Japanese currency.

Sterling also dropped 1.4 percent against the yen as investors continued to unwind carry trades, where the yen was used to fund investments in higher-yielding currencies.

Investors were also wary of taking on risk as they awaited a U.S. emergency loan package for its top three automakers, while figures late last week showed that the U.S. lost more than half a million jobs in November alone [ID:nN08534770].

"The harsh reality of global weakness is still coming through in markets," said Stephen Koukoulas, strategist at TD Securities in London.

Rapidly deteriorating economies have prompted central banks to slash rates aggressively.

The dollar was up 0.5 percent against the Canadian dollar at C$1.2602 after the Bank of Canada unexpectedly cut its key interest rate by 75 basis points to a 50-year low of 1.5 percent on Tuesday and declared the Canadian economy to be in recession. [ID:nBAC000266].

The greenback also gave up some gains against the loonie as the session wore on however, with the U.S. currency more than a Canadian cent off the session peak of C$1.2743. (Additional reporting by Veronica Brown in London) (Editing by Andrea Ricci)

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Forex Charts - Novice Trading Mistakes

It’s the same with forex charts 95% of users drown – Let’s look at common errors that novice traders make and how to avoid them.

1. Predicting Price

No one can predict price movement and if you do - you are simply hoping levels will hold.

Do this and you will be wiped out quickly the market wont reward you for hoping or guessing.

If you want to win, act on the reality and that means - trading with price momentum AFTER a test of the level you are looking at.

Trade with momentum on your side and you are trading a fact and your odds of success are increased dramatically.

If you don’t use momentum indicators in your forex technical analysis learn what they are quickly.

2. Indicators Chosen and Misuse Of Them

A common error is to use lagging indicators to enter trades such as moving averages – This really leads on from the above: A

Always use momentum indicators to enter trades and only use lagging indicators to determine levels of support and resistance.

Many indicators traders use are useless good examples are:

Fibonacci levels and cycles - they again involve prediction and simply help wipe out equity.

3. Trading Invalid Data

Day traders are the worst offenders here. They are picking a short time frame where volatility is random they can’t calculate the odds - so they lose.

4. Systems that are to complicated

Some people devise very clever systems and lose.

Fact is - in forex trading you get your reward for being right – NOT Being clever.

Simple systems are best - as they are more robust and have fewer elements to break.

5. Not understanding volatility

Do you know what standard deviation of price is? If you don’t learn it backwards as this will help you determine everything from stop levels to targets for your trades and help you stay in winning trades longer and get better money management.

6. Your edge

Ask yourself this question:

What is your trading edge which will see you win when 95% of traders lose?

If you don’t know what it is – then find out or do more work on your forex trading strategy!

If you don’t know what your edge is kiss goodbye to your equity.

7. Following a method

Many traders have perfectly good methods but simply don’t have the discipline to follow them – if you dont have discipline you have no method in the first place.

If you want to enjoy currency trading success don’t make the mistakes above or you will lose.

Finally, there are a lot of vendors on the net promising you untold riches from their currency trading systems, for just a few hundred dollars – its not that easy so don’t buy them.

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FOREX-Yen rises as stock drop saps risk tolerance

MARKETS-FOREX (UPDATE 1):FOREX-Yen rises as stock drop saps risk tolerance

* Yen advances vs dollar, euro as Tokyo shares fall

* Euro underpinned by prospect of Fed rate cut next week

* Focus stays on fate of US automaker bailout

By Kaori Kaneko

TOKYO, Dec 11 (Reuters) - The yen advanced against major currencies on Thursday, recovering some of its losses from the previous day as stocks fell, making investors less risk tolerant.

Asian shares fell despite gains on Wall Street, making investors return to the relative safety of the low-yielding yen.

But market participants said currencies were unlikely to move much as trade winds down towards the year-end, with moves likely to be led by big institutional players.

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Forex Day Trading – Picking the Best Systems for Profit

The first consideration is the track record that is presented with the day trading system or method. If you see a track record you are almost certain to see this disclaimer which is required by the CFTC read it fist and we explain EXACTLY why rack records that have this disclaimer on need to be avoided. So here it is:

“HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR online courses from IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOW”

This disclaimer allows any vendor to make up a track record - there designed with hindsight KNOWING the closing data!

How on earth can you take a track record like this seriously?

Lets face it, anyone who can read and write can make money in hindsight but the problem is we don’t have the benefit of hindsight when we trade – we have to trade not knowing the prices and this is much harder.

If you see any day trading system sold, you will get one of these disclaimers and you should ignore them.

The obvious track record to look for then is a real one but in day trading you wont find one of these ( or if you do let me know) and the reason is day trading simply doesn’t work.

The biggest myth of forex trading is that day traders make money – they don’t.

The reason is really common sense.

You have millions of traders each day trading trillions of dollars in currencies and to say that you can measure what they can do in a few hours is laughable.

All short term volatility is random and prices can and do go anywhere and day traders lose longer term because, they have no chance of getting the odds on their side – PERIOD.

So if day trading makes no money why are there so many systems sold?

The answer is it’s a good story and the vendors who sell these systems (mostly marketing companies or failed brokers) rely on clever copy, to appeal to online courses from and naivety of buyers who don’t think twice before buying, assuming the track records they see, give them a chance of making similar gains – of course they are destined to fail.

The reality of day trading systems is the vendor wins by selling the system, to the mug punter who then loses in the market and wonders why!

Don’t fall for the trap of believing these systems can make you money, or that day trading works – if you do you will lose all your money.

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