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Dollars Decline Creates Investment Opportunities

easyforexgxx — Sun, 30 Nov 2008 23:53:30 +0000

The U.S. dollar is a false safety blanket for those fleeing market carnage??? Take gains while you can, because next year, the bubble bursts.

For the two and a half months ending October 28, the U.S. dollar index climbed 21%. There???s no question why this rise is happening??? Investors are swarming to cash, dumping all their stock and getting out of the markets altogether.

No surprise, really, when the Dow has dropped more than 15% since August 4, with an ultimate low-loss of 31% back in mid-October. The NASDAQ has fared even worse: down 23% since August with its greatest loss at 35%.

So cash is king in these times???

But it???s a false sense of safety. Every fundamental aspect of the dollar???s strength ??” outside this overwhelming demand ??” is a bright red flashing warning sign, and no one???s paying attention.

The U.S. Federal Reserve has slashed rates to a paltry 1%. Private consumption has fallen for the first time since 1991. We???ve seen severe and dramatic losses in equity and housing markets. Public-sector debt will be 6.75% of GDP next year, higher even than the debt peak during Regan???s administration. Unemployment rates are rising rapidly.

None of this bodes well for the U.S. economy, and to top it all off, our Federal Reserve has been printing money to raise credit and capital liquidity for struggling financial institutions.

The only reason the bottom of this charade has not fallen out is because investors still continue to see cash as safer than equities.

Losing Money Thanks to the Greenback

Let me say unequivocally: It???s not.

Investors can still ??oelose money??? by holding cash. Look, over the past two and a half months, the U.S. dollar index has climbed 21%. Nice, right?

Not if you consider that from July 9, 2007 through mid-August, the U.S. dollar index fell 6.6%, with an ultimate low-loss of 12.9%.

That means that if you had $1,000 stashed away back in July, that grand would have been worth only $934 in mid-August.

So you can lose money by doing nothing???

FOREX.com notes, ??oe[October] USD-buying demand was most likely behind the late week rebound in the USD and we will be watching closely to see how the USD fares once such buying is no longer present.???

Scotiabank Group???s Foreign Exchange Outlook says, ??oeWe maintain our view that the structural systemic deficiencies inherent in the United States credit and equity securities markets, together with a worsening fiscal outlook on the back of massive debt issuance activity, will translate into a weaker USD through the end of 2009.???

The U.S. Dollar vs. Oil

The first thing you should notice about those dollar index loss numbers I quoted is that they are not nearly as large as the recent rise we???ve seen in the dollar index. That should be your first clue as to this bubble forming.

For example, look at what oil prices did??? In January, oil prices averaged $84.70 a barrel. They hit an ultimate high of over $147 in mid-July this year. That???s an average monthly gain of about 12% a month.

Absolutely massive??? and quite similar to the gains the U.S. dollar index has made.

But oil prices have since imploded. On November 3, a barrel of oil sold for $63.93. That???s a drop of 56.5% in three and a half months. That???s how quickly things can change.

One has to wonder how long this bubble will last before people wake up to find that their cash is worth about as much as Monopoly money??? An exaggeration, of course, but do you really expect me to believe that the U.S. dollar has climbed 17.5% against the euro in the past year? In these economic conditions? With the Fed slashing rates to 1% and printing money like mad?

Perhaps it???s not so much of an exaggeration at all.

How You Can Profit From the U.S. Dollar Bubble

So now that I???ve thoroughly depressed you, let me tell you what this means in real terms.

If the dollar drops in value, three things go up: commodity prices, other currencies and exports. Two of these are easily playable for investors.

First, commodity prices rise. Remember that example about oil price I gave you? Well, that historic rise and fall was mainly due to the dollar???s value. And we???ve seen this across the board with commodities???

Look at the price of gold. In January 2008, gold prices averaged $631.17 an ounce. By July, prices had topped out at $986. Gold prices are now trading around the $740 an ounce mark.

Look at the price of corn. In January 2008, futures contracts were trading for $4.84. In late June, they were trading for $7.96, and they???ve recently fallen all the way down to around $4.

Second, the value of other currencies, relative to the dollar, rises. We???re talking about the euro, the yen and a couple others.

We started the year with one euro buying US$1.4603, or 1:1.4603. In July, that ratio was 1:1.58.93. Now that ratio has fallen to 1:1.2626. That???s a massive drop, and it was way over-done.

Same story for the yen??? Almost.

January saw one yen buying US$0.009, or 1:0.009. That ratio peaked at 1:0.0102 on March 17, and fell back down to 1:0.009 on August 15. But something interesting has been happening with the yen.

According to Scotiabank Group, ??oeJapan benefited from the recent waves of heightened currency market volatility the Japanese yen (JPY) appreciated markedly over the past two months as the unwining of carry-trade investment portfolios materialized and global market participants sought refuge in key world economies with floating currencies (China excluded) and massive external savings.???

The Group thinks that if global financial volatility eases, this currency could tumble.

Here???s the thing, though??? Japan has little room left to cut rates, which would (in theory) devalue the yen a bit. But Japan needs to have a cheap currency in order to keep exports flowing. That???s the country???s bread and butter. If it can???t export, it dies.

A cheap currency also allows carry trading: borrowing cheaply and buying a higher-yielding asset.

Commerzbank noted in its November/December 2008 issue of ??oeEconomics, Interest Rates, and Exchange Rates??? that, ??oe[The yen] should continue to benefit for the time being from rate cuts around the globe. Another factor in its favour is the fact that investors??? willingness to take risks will probably only return very gradually. We do not therefore envisage any counter-movement to the latest strong appreciation before next spring.???

After that, things could get a little dicey for the Japanese currency.

A Good Hedge Against the Falling Dollar

So, a drop in the U.S. dollar value means a boost in commodity prices and currencies. One way of combating the coming dollar bubble is to grab some shares any number of ETFs.

In materials, like gold, silver, oil, grains, there are a wealth of exchange-traded funds (ETFs) that you can acquire, like the PowerShares DB Agriculture ETF (DBA :AMEX), or the United States Oil Fund (USO: AMEX). There are many, many others.

You may also play currency ETFs, like the CurrencyShares Euro Trust (FXE :NYSE) and the CurrencyShares Japanese Yen Trust (FXY: NYSE) in the near term at least, or numerous others with an inverse relationship to the U.S. dollar.

Interestingly, there???s also the PowerShares DB U.S. Dollar Index Bearish ETF (UDN:AMEX).

Any of these options might be a good hedge against falling dollar value.

The key thing to remember is that none of the underlying economic factors have changes that should be behind any rise in currency value. Things still look bleak for the U.S. economy for at least another six months, and that???s being optimistic.

So the question will be, when will people stop buying the dollar and start looking at the real issues?

You should be ready for when they do???

If you???d like to profit off the dollar???s decline, look into Everbank???s Debt-Free Index CD. This FDIC-insured CD is comprised of equal parts Singapore dollar, Japanese yen, Swiss franc, Australian dollar and Brazilian real.

Why these currencies? All five economies have a strong balance of payments-a factor that could aid performance against the U.S. dollar. And of the five economies, only Australia has a trade deficit ??” and the gap appears to be narrowing.

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http://www.taipanpublishinggroup.com/How-Much-is-the-Dollar-Really-Worth.html

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Automated Forex Robot The Software To Ease Forex Trade

easyforexgxx — Sun, 30 Nov 2008 23:52:09 +0000

Augment Your Forex Profit With Automated Forex Bot

To increase the profit in Forex trading, technology has come to help in a big way. One of these methods that are widely used is the automated Forex bot. This technological marvel is actually a virtual robot used to handle the Forex accounts.

One does not have to enroll in some financial class to learn the skill in Forex trading. The bot takes charge of all the trading round the clock for you. Hence you actually do not miss any trading that brings you money. The Forex bot does this when you are busy with some other works as the bot monitors all the trading status.

The automated Forex bot is available could be bought for a price of around hundred bucks, though the returns that accrue are higher compared to the investment made. You can also try out the free demo account to know about the product in detail. If one is not satisfied with the product, for more details visit to www.viral-toolbar-builder.com there is a 60 day guarantee period, within which the product can be returned and get the money back.

There is an increase usage of auto foreign trading in the exchange market. This is so as the method used is more accurate and the reliability is equally good. All these could be availed as you do other important work. It is wise to get one for you and be in sync with the technological advances.

There are three things that must be considered while looking for automated forex trading software. These are Accuracy, Ease of Use and Customer Service. With an accurate signal generator, for more details visit to www.software-designers-pro.com one can make lots of money if the machine is used correctly. The generator can be used to predict the result of certain forex pairs in future after an analysis of the trends as well as shifts taking place in the market. Hence, one must try to get the best signal generator available in the market. Most of the publishers of software also provide free updates on a regular basis after the purchase of the software. This helps in getting precise tips on the market trend. It is advisable to read some comparison reviews before buying one for you.

The Ease of Use means to know the ease with which the program could be used. This could be learnt from the website of the publisher. One must look for the user friendliness of the software. The software must have an accurate signal generator along with basic stop loss. It must also take the profit features of Forex trading.

The Customer service of the software company could be determined by sending an e-mail to them and look for the response time. Normally, the response time could be between 1 to 3 hours. This is also a reflection of the reputation of the company for being concerned about your business and the way they keep the customer happy. Again, though there will not be any problem with the program, however, if some problem does crop up, you can be sure that your comment and complaint will be swiftly dealt with in an effective manner.

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The Three Different Types of Forex Traders: Which One Are You?

easyforexgxx — Sun, 30 Nov 2008 23:50:47 +0000

Of the many components that go into the decision making process of a successful forex trader, finding a trading strategy that works for you is one of the most important parts. But even if you have a winning forex trading strategy, it is in your best interest to determine what your currency trading style is. Forex traders come in three basic varieties: Scalpers, Day Traders, and Position Traders, with the majority of traders falling into the middle category.

A scalper is somebody who goes for small profits usually in the range of 3-10 pips, will usually base their trades on a chart with 1-minute to 5-minute candlesticks, and will tend to place multiple trades in a single day.

A day trader will hold an open position anywhere from 15 minutes to longer than one day. They will be using a time frame of maybe two different charts with 5-minute and 15-minute candlesticks (possibly 30-minute if they are a longer-term day trader), and will tend to set profit targets of 10-50 pips.

A position trader is one who will go for long term gains and will place their trades based on a 1-hour or 4-hour candlestick chart. This trading style requires a large risk tolerance, and profit targets will tend to be over 50 pips and as high as 4 big figures or more (400 pips or more).

Determining which type of forex trading style you prefer and which one matches your trading strategy the best is a very important step that many traders never take. Choosing and sticking with a certain trading style can allow you to see which trading opportunities to pursue and which ones to avoid, such as whether you should focus on following fundamental-based or technical-based trading indicators.

Choosing a specific trading style is also important because you can see which currency pairs and currency crosses to trade and which ones to avoid. For example, if you decided that you were a scalper and you wanted to go for small profitable trades multiple times per day, you would want to trade a currency pair that had a very small spread. If you were trading a more exotic non-dollar currency cross then this would tend to have a much higher spread and make a profitable scalping strategy nearly impossible.

Conversely, if you decided that being a position trader was the best route for you and you were willing to hold positions open for days at a time or even a week or two, then a 9-pip spread on an exotic currency cross may not seem like such a big deal since you might be aiming for a profit target that is larger than 200 pips. Depending on which forex trading style you choose, there are different considerations to be made for each one and there are also profits to be had with each one.

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Nathan Navachi is a professional marketer and trader who specializes in forex currency trading. He is webmaster over TheCurrencyMarkets.com which is a professional learning portal that covers topics such as reducing international currency exchange rate risk.

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Learning to Trade Forex- Part 1: Books

easyforexgxx — Sun, 30 Nov 2008 23:49:24 +0000

When it comes to learning forex there are quite a few options of how to go about it. It can be overwhelming to look at the options and wonder which would be best for you and your situation. Once you understand the basics of the methods the course that will work best for you will be apparent. There are 3 major ways to learn forex and exploring their pros and cons helps understand which will work best for you. Here is one of the options.

Books and Articles

There are hundreds of books that have been written on forex and author after author will share their story of how they became successful forex traders. The downfall of books is that there are so many it can be difficult to know where to start. It also takes significant time for some to read and no one wants to spend hours studying the wrong book. It can be difficult also to understand a trade they are discussing. They can’t show you visually exactly what happened. They can only use pictures and dictate how it played out.

The positive thing about books is that you really can study anywhere. You can stick in your briefcase or purse and read while you wait in the doctor’s office, or in your carry on while at the airport or in your lunch box and read on your lunch break. Books also are easy to refer back to when you actually get to your trading platform. You can have you book open and next to you while you try to figure out what is happening on the screen.

How do you choose a good book then? Look for two things. First find one that is designed to ‘teach’ forex and not just discuss philosophies. Theories and philosophies are important and interesting but until you know the basics of forex it won’t do much good to study them. Second stay away from radical claims. Forex is NOT a get rich quick program, if you slowly work at it and become proficient you can be very profitable. If a book is telling it will make you money fast I would put it down and run the other way.

Books in general are a powerful source because they turn spare moments into productive ones. You can learn to make money while you wait instead of idly sitting flipping the pages of a magazine of the latest staged star life drama. Forex trading is an independent endeavor that when learned in book form can go anywhere at any time.

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Learn Forex using forexstrategysecret.com’s many posts and articles. forex trading systems seem complicated and confusing at first but with the right forex training you will be surprised at what you can do with the knowledge gained.

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The Forex Software System Trading Which Will Help me Improve my Trading Decisions and Cash Flow

easyforexgxx — Sun, 30 Nov 2008 23:46:48 +0000

There are a multitude of exceptional Forex software system trading on the market today that the new investors in the currency markets when they were first deregulated in 1997 only wished they had access to. These currency trading system can significantly improve your decision making process if you know what your are looking at and doing. Unfortunately, far too many people think the software is a means to an end in itself and that is simply not the case. If you have not taken the time to learn Forex trading from the starting point to the finish line then there is no piece of software in the world that is going to make you money. Sorry to say!

Back to the software and the advancements it has made in the past few years which has been nothing short of outstanding. The market for the products is expanding significantly and the developers of these systems are pumping in millions of dollars attempting to create the number one system on the world. Due to world wide demanding these pieces of software are now selling in the millions of units per month and consequently the suppliers of these systems are able to keep the selling price of there products at a rock bottom minimum. Most of the systems sell in the one hundred to two hundred dollar range. What else can you buy that cost in the millions to develop that you are able to purchase so cheaply? Not top much is the answer.

The Forex software trading systems can be broken into three distinct categories for the most part. They are formula, trend and signal based system. Most professional Forex traders and successful private investors have a trend based system and a signal based system running concurrently. A very high percentage of them also supplement those products with various formula based systems. If you are not familiar with the terms and functionality of the systems mentioned above then I can tell from experience that you are not ready to purchase one. Instead of looking for software at this point you should be concentrating on Forex educational courses.

A Forex software system trading can and will significantly help collect data, sort it and distinguish what is relevant. Which will absolutely improve your decision making process if you are able to interpret it properly. If you feel you are knowledgeable about the markets then it is time to do your research and select the product you feel with best suit your needs. You can be sure that if you purchase a top rated system you will be receiving a good value for your money and be on your way to generating large amounts of cash for yourself.

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How Issac Newton Can Make You a Better Foreign Currency Trader

easyforexgxx — Sun, 30 Nov 2008 23:44:04 +0000

Over 300 years ago there was a cool fellow by the name of Issac Newton who came up with all kinds of great stuff that is still used today, including his contribution to mathematics in the form of calculus and his laws of thermodynamics. But among his most noteworthy accomplishments (and the ones that can be used by the modern currency traders of the 21st century) were his laws of motion.

While Newton's famous equations of motion can be applied to nearly everything in the physical world, understanding this basic concept of motion and momentum can go a long way towards making you a better forex trader. The basic idea behind the concept of momentum is that any object that is in motion will tend to stay that way until it is influenced by an outside force. So what the heck does this have to do with currency trading?

Most every trader in the world has heard the phrase “the trend is your friend," but it is truly amazing how many traders seem to forget this adage when they are working in a live trading environment. This basic principle of motion, the idea of momentum, can be just as easily be applied to a physical object as it can be to the price of a certain currency pair.

If a currency is moving up or down in value, it will tend to stay that until it is influenced by an outside force that can change its value, i.e. buying or selling pressure. So with this basic idea we can see that once a basic trend of the market is identified, it is within your best interest to trade in the same direction as this trend.

Too many forex traders, and especially intra-day forex traders, seem to forget this basic idea of trading with the trend. It is a simple probability that the price of a certain market will continue moving in the path of least resistance and sustain its momentum until there is sufficient buying or selling pressure to change this momentum. As a basic rule of trading, you could say that if there is a trend and you are seeing relatively quiet market conditions (meaning there is no real cause for a change in value), then that trend will likely continue and it will be in your best interest to place trades in the direction of that trend.

It is one thing to just say “the trend is your friend," but it is another thing to make a habit of always identifying the prevailing market trend before you enter into any open positions, and making sure that the direction of your trades always corresponds to the market trend.

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easyforexgxx — Sun, 30 Nov 2008 23:11:06 +0000

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