ASIA PACIFIC’S FIRST FOREX MA MAGAZINE GAZINE
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Volume 2, Issue 1
Currency Outlook 2009 Dollar-Yen A New
Why Choosing A Forex For ex Broker Is So Confusing
Historic Low Lo w In 2009
So You
Gamma Trading Options On Forex Part II
Think You Can Trade
ISSN 1793-8457
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How To Tra Trade de A News Breakout
A Declaration Of Independence
CONTENTS
8
FROM THE EDITOR
10 LE LETTE TTERS RST TO OFO FORE REX XJO JOUR URNA NALL TECHNICAL ANALYSIS 10
HOW TO TRADE A NEWS BREAKOUT Chris Capre discusses a breakout strategy to employ when trying to trade Forex news events.
PSYCHOLOGY 14
SO, YOU THINK YOU CAN TRADE Abdul Khan discusses things that successul traders do to be successul in their trading. He also looks at things things that unsuccessul traders do that can cause them to be unsuccessul.
CURRENC Y TRADING 18
WHY CHOOSING A FOREX BROKER IS SO CONFUSING David Waring Waring leads a discussion answering most o the many questions that are asked when selecting a Forex broker broker and trading platorm. plator m. This is a ‘must read’ or anyone trying tryi ng to separate act rom ction and nd the right place to trade oreign exchange markets.
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A DECLARATION OF INDEPENDEN INDEPENDENCE CE Traders Traders are constantly bombarded with tips and suggestions in a very sterilized ormat with the best looking chart used to convey the strategies. Paul Day opens a discussion discussion on how to ormulate ideas and trading strategies that suit your desired trading requency and to employ a stringent risk management regime.
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JANUARY 2009
CONTENTS
OPTIONS TRADING 28
GAMMA TRADING OPTIONS ON FOREX – PART II: THE ART, SCIENCE, AND NUANCES OF DYNAMICALLY ADJUSTING EXPOSURE TO THE MARKET. John Netto continues his series o articles on option trading using a gamma strategy. In this article, he discusses real world trades in the Japanese yen and gold utures using gamma strategies to compartmentalize risk and yield smoother returns.
MARKET OBSERVATIONS 36
2009 CURRENCY OUTLOOK Ed Ponsi provides an outlook or the major currencies as we move into 2009.
42
THE AUSSIE & POUND IN 2008 Peter Pontikis looks back at sharp rally in the value o the U.S. dollar in the second hal o 2008 and its impact on the values o other major currencies and their cross relationships.
48
DOLLAR/YEN … A NEW HISTORIC LOW IN 2009 Ian Copsey takes a long-term look rom a Fibonacci Fibonacci perspective at the USD/JYP currency pair.
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THE OUTLOOK FOR MAJOR CURRENCIES IN 2009 Our regular contributor, Dar Wong, Wong, provides his monthly commentary and outlook or the major currency markets as we trade into 2009.
60 UPCOMING EVENTS 61 EC ECON ONOM OMIC ICE EVE VENT NTS SCAL CALEN END DAR 62 BR BROK OKER ERA AGE GEF FIR IRMS MSL LIS ISTI TING NG
JANUARY 2009
FROM THE EDITOR To Research and Educate “The quality o a person’s person’s lie is in direct proportion to their commitment to excellence e xcellence,, regardless o their chosen feld o endeavor.” Vince Lombardi
H
appy New Year and welcome to the January 2009 issue o The Forex Journal !
Publisher & Managing Editor Dickson Yap dickson@orexjournal. dickson@ orexjournal.com com Associate Editor Roger Reimer roger@orexjournal.com roger@orexjournal.com Contributors Abdul Khan Dar Wong Ed Ponsi John Netto Peter Pontikis
Chris Capre David Waring Ian Copsey Paul Day
Graphic Designer Ng Boon Hang Advertising sales Dennis Yap dennis@orexjournal. dennis@ orexjournal.com com
This is the time o year that we make holiday resolutions to change our lives, our utures, or our ways o doing doing things. I you have a list o New Year Resolutions, please reread them and then reread our quote or this month and take the actions necessary to make your resolutions a reality. I you want to become more successul in your trading, consider the methods that you use and how you apply those methods to the markets. Does your trading approach approach t your personality? personality? Does it t the amount amount o capital you have available to work work with? Does your trading t the market or markets that you are most interested in ollowing? These are oten dicult questions to honestly answer. Another thing to consider is that this short list is by no means complete. Time-tested trading rules that are simple oten provide the most consistent prots. prots. To enjoy a successul long-term trading career, it is vitally important to have a t rading business plan and a systematic trading methodology that incorporates trade entry, trade exit, risk control and money management into a cohesive strategy. At The Forex Journal , it is our goal to deliver a balance o educational material to traders o all types and experience levels. levels. I am sure that you will nd each article inormative and educational. In this issue: Our regular contributor, Dar Wong shares his views and commentary on the major currency pairs as we trade into a New Year. Year. Abdul Khan discusses things that successul traders do to be successul successul in their trading. He also looks at things that unsuccessul traders do that can cause them to be u nsuccessul.
SINGAPORE Address
: One Rafes Place OUB Centre #18-01 Singapore 048616
Chris Capre discusses a breakout strategy to employ when trying to trade Forex news events.
Tel
: (65) 6312 8091
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: (65) 6312 8091
David Waring leads a discussion answering most o the many questions that are asked when selecting a Forex broker and trading platorm.
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Circulation
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Ed Ponsi looks at currency pair prospects in 2009.
Peter Pontikis looks back at sharp rally in the value o the U.S. dollar in the second hal o 2008 and its impact on the values o other major currencies and their cross relationships. Ian Copsey takes a long-term look rom a Fibonacci perspective at the USD/JYP currency pair. John Netto continues his series o articles on option trading using a gamma strategy. In this article, he discusses real world trades in the Japanese yen and gold utures using gamma strategies.
Copyright@2008 Copyright@2008 DPR International International Pte Ltd. All rights reserved. No part o this publication may be reproduced, reproduced, stored in a retrieval system or transmitted, in any orm or by any means, electronic, mechanical, photocopying, copying, recording, or otherwise, without the prior written permission o the copyright holder. This publication is designed to provide accurate and authoritative inormation in regard to the subject matter covered. It is sold with the understanding that the authors and the publisher are not engaged in rendering legal, accounting, or other proessional service. I legal advice or other expert assistance is required, the services o a competent proessional person should be sought. In commodity trading, as in stock, and mutual und trading, there can be no assurance o proft. Losses can and do occur. As with any investment, you should careully consider your suitability to trade and your ability to bear the fnancial risk o losing your entire investment. It should not be assured that the methods, techniques, or indicators presented in this magazine will be proftable or that they will not result in losses. Past results are not necessarily indicative o uture results. Examples in this magazine are or educational purposes only. This is not a solicitation or any order to buy and sell. The inormation contained herein has been obtained rom sources believed to be reliable, but cannot be guaranteed as to accuracy o completeness, and is subject to change without notice. The risk o using any trading method rests with the user.
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JANUARY 2009
Traders are constantly bombarded with tips and suggestions in a very sterilized ormat with the best looking chart used to convey the strategies. Paul Day opens a discussion on on how to ormulate ideas and trading strategies that suit you. Our highly qualied contributors provide valuable assistance by enabling us to provide you a broad range range o material. We are always very grateul or their contributions. contributions. Each new article presents an opportunity to learn new lessons about the markets and the tools that are used to trade them. I hope The Forex Journal becomes a vital part o your t rading education and your personal development. I wish you well in your personal lie and in your trading journey. Here’s to Prosperous Trading!
Roger Reimer Associate Editor
LETTERS TO THE EDITOR The editors o The Forex Journal™ magazine would like to hear rom you, our readers. Tell us what you think about the articles we publish. Tell us which people or companies you’d like to see us write about more—or less. Praise us, criticize us, and ask us questions. We regularly publish letters rom our readers in the print version o our magazine, reserving the right to edit them or length and clarity. Please include your ull name, address and telephone number. Thank you.
Dickson Yap (Managing Editor, The Forex Journal)
TECHNICAL ANALYSIS
CHRIS CAPRE
How to Tra Trad de a News Breakout
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JANUARY 2009
Chris Capre discusses a breakout strategy to employ when trying to trade Forex news events.
C
onsidering the eect o news announcements on the markets, traders oten gravitate toward news events hoping to capture a portion o the market response. In Forex Forex trading, this phenomenon has drawn speculators interest to trading news events like vultures to an about-to-be-corpse about-to-be-corpse lying in a eld. eld. It is important to to have specic methods when trading such events because o volatility and the unique order order ow surrounding surrounding them. I a trader is going to trade a news event in the Forex markets, we recommend that they pick the most signicant o all economic events. events. Tis list would would include 1) Announcements rom Central Banks such as the Federal Open Market Committee, European Central Bank, Bank o England, Bank o China etc. 2) NFP 3) Fed Minutes Meeting Other economic events move the market, but they have signicantly less impact and probability to move the markets in such a stark stark ashion. So, we limit ourselves ourselves to the kings o the economic jungle. Te methods best employed during such events are a ‘ade’ ‘ade’ strategy or ‘breakout’ ‘breakout’ strategy. strategy. For the purposes o this article, we will ocus on the breakout method, which is designed to give us an opportunity to take advantage o the announcement pushing the pair heavily in one direction due to the market response rom the economic release. Figure 1.1 shows the 5-minute EUR/USD chart. We al ways want to have the 5-minute chart up or this stratJANUARY 2009
11
TECHNICAL ANALYSIS
Figure 1.1 – EUR/USD
egy. egy. We will also want two sets o Bollinger Bands Bands on the chart. 1) 2)
a 2.5 standard deviation Bollinger band 2) a 1 standard deviation Bollinger band
As you can see, price activity contracts leading up to the news announcement and surges when the news announce-
Figure 1.2 – AUD/USD
12
ment is made. Te candle immediately moves moves sharply in one direction and makes lower lows or the next three candles.
JANUARY 2009
Ater 15-minutes, i the move has made lower lows with each 5-minute candle with the second candle closing outside o the wick o the rst candle, we will trade in the direction o the move or breakout. breakout. Te rst horizontal horizontal line shows our our market entry entry at 1.5522. Our rst target
Figure 1.3 : USD/JPY
is always 30 pips and our initial stop is set at 30 pips. We will enter the position with two lots. lots. Ater hitting the rst rst target, the stop is moved to breakeven. From here, the BolBollinger bands come into eect. We We will use the space between the 1 and 2.5 standard deviation Bollinger bands to act as a pocket or level o exclusion or order ow ow. I the Bollinger bands are are still pushing in the direction o the breakout and price is contained within them, we will stay short. Te position exit will be directed by the price action relating to the Bollinger band pocket and either o these two conditions: 1) any candle has 60% o the body between the pair o 1 standard deviation Bollinger bands (Purple lines) or 2) the entire candle exists inside or in between both 1 standard deviation Bollinger bands Ten, the trade is exited. In this case, 90 pips were were locked in on the second lot with 30 pips on the rst lot or a total o 120 pips prot within one hour. Figure 1.2 shows this method with the AUD/USD on the 5-minute chart. Price is well contained leading up to the announcement. Ten, the candle breaks breaks down with the second candle closing outside the rst candle’s wick, and the third candle candle makes a lower lower low. low. Te entry is on the open o the next candle at .9547. .9547. Our initial 30-pip tartar-
get is achieved quickly at .9517. Te second target comes when the price action spills out into the space between the 1 standard deviation Bollinger bands locking in another 26 pips. Te prot total or or this trade was 56 pips in less than an hour. Chart 1.3 shows our last example using USD/JPY. USD/JPY. As you can see, the pair climbs very quickly with the second candle closing outside the rst candle’s candle’s wick with the third candle making a higher high. Te entry is at 105.02. Te prot prot o 30 pips is taken on the rst lot in 10-minutes and then the move ades about 45minutes later causing us to lock in another 32 pips or a 62-pip gain in one hour. hour. In conclusion, wait or three 5-minute candles to close and make sure the second candle closes outside the low/high o the rst candle depending in the direction o the breakout. Make sure to move the the stop to breakeven ater the rst target is hit and watch or the move outside o the main pocket and into the space between the 1 standard deviation Bollinger bands.
Chris Capre is the current Fund Manager or White Knight Investments. He specializes in the technical aspects o trading, trading, particularly using Ichimoku, momentum, Bollinger bands, pivot and price action models to trade trade the markets. He is considered to be at the cutting edge o Technical Analysis and is well regarded or his Ichimoku analysis, along with building trading systems and risk reduction in trading applications. JANUARY 2009
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PSYCHOLOGY
So, You Th So, Thiink You Ca Can n Tra Trad de
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JANUARY 2009
Abdul Khan discusses things that successul traders do to be be successul in their trading. trading. He also looks at things that unsuccessul traders do that can cause them to be unsuccessul. Introduction When you are at a dinner party or having drinks with riends, how do you answer when they ask what you do?
ing career. career. Tese days, brokerage has has become so competicompetitive that the gap between ull-service and nil-advice brokering has become very blurry. blurry. For this reason, reason, the advantages o using an experienced broker ar outweigh the negatives.
Is your answer? a)
I’m a day trader
b)
I trade the markets
c)
I’m sel-employed sel-e mployed
I your answer to this question was option a) or b), take a good hard look at yoursel. yoursel. I your answer was c), well done, you are on your way to becoming a trader. Good traders do not broadcast what they do in terms o occupation, and also in terms o trading approach. Good traders seek advice, look to learn rom other good traders, avoid placing large improbable bets and always respect the market. Good traders see trading as a business – they are looking to get advice rom those that have been in the business longer than they have been. Tey are making sure sure they have adequate reserve working capital, they can admit when they have made mistakes, and they know that the market has a big enough paddle to spank anyone. Over the years, I have come across hundreds o individuals who have called themselves traders. Most I have seen seen ail, but the ones that were successul had some common characteristics. I I could bottle those characteristics, I would have mysel a very special perume! In the ollowing ollowing pages, I have mentioned some o those characteristics or our readers to consider.
‘You don’t get somethin’ or nothin’!’ I you have been trading or less than 5 years, make a New Year’s resolution to nd an advisor in 2009. Otherwise, Otherwi se, I doubt that you will make it to the 5-year mark o your trad-
For so long, the biggest argument against using an advisory broker was “Why should I pay them?” or “Look at how much I can save by executing my own own trades?” And the corollary should also be highlighted here – do not orget to take into account the hidden charges you are paying with a nil-commission broker. broker. Tere is no such thing as a ree lunch and the last time I looked, the likes o CMC were not registered as non-prot organizations. O course, the hard part is to nd a good advisor. You need to nd someone who will not orce you into trades, or who will not try to get you to trade or the sake o hitting his commission target or the month. You need someone who cares about your money almost as much as you do, someone who believes in money management rather than averaging down into into a losing position. A good advisor will listen to your trading ideas and work as a sounding board or you. He should ask you you about your risk/reward risk/reward ratio, prot targets, the reasoning behind your ideas and trading methodology. He should not be an advisor who is keen to get the account open, but leaves you to sink or swim once you have been setup with a log in. As a client, you should should be able to ollow his recommendations easily, and should eel comortable in asking him questions about a trade with the vie w to learning rom the advisor, as opposed to second-guessing. When you nd an advisor, talk to him about your objectives, and discuss what I call your “pain threshold” – the point at which you have lost so much money that you both need to re-evaluate re-evaluate the approach being taken. taken. Tis threshold should be a percentage, such as 25%, 40%, or even 50%. An old argument used against ull-service advice is that online trading allows trades to be executed instantly, as opposed to waiting on the phone or the order to be placed. JANUARY 2009
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PSYCHOLOGY Tis argument no longer holds water. water. oday, most ullservice brokers oer online trading by developing their own trading platorms or through a White Label Partnership with an established online trading rm, such as Saxo Bank or ACM. Tis gives the client the best o both worlds – instant online trading, coupled with ull advice i needed. Te cost maybe slightly higher than that o a no-advice rm, but as I have detailed, the advantages ar outweigh the drawbacks. Additionally, Additiona lly, with a dedicated dedicate d advisor, you are not just a number, but considered a client/customer/ human being, and treated as such.
‘Don’t pay or education’ Okay, I know what you are probably saying – “this guy just told me that you don’t get something or nothing, and now he is saying don’t pay to learn.” Let me explain. oday, there are probably more trading educators out there than brokers, and most o them are teaching the same thing – echnical echnical Analysis. Te dierence is that each put a dierent slant on it to make it look like they have come up with a new and improved mousetrap. mousetrap. I always tell my clients two things about educators – rst, unless they are trading their methodology live in ront o you, they are no good. I you nd someone like Larry Larr y Williams who will trade live (not simulated) in ront o an audience or several days, then by all means means go or it. Tese guys will show you you how they detect their trading signals, how they implement their trading methodologies methodologies and how they manage risk. All o this is done as the markets are trading, as opposed to using historical data that shows only big winners and small losers. I their methodology is so good, why are they not using it to trade? I know that i I had a new whiz-bang whiz-bang trading system that could return 50% every month by just checking a ew signals or 30-minutes each day, I would be trading with it and using the results to raise trading capital or my own hedge und. und. I would not not waste my evenings doing 2-hour introductory sessions, ollowed by 2-day weekend workshops. Lie is too short or things like that unless I was able to harness the power o good marketing and charge each seminar attendee US$5,000 to $10,000. $10,000. I I could do that, I would would not need to trade and could continue to make money o the attendees by charging them a monthly subscription or on-going trading signals. Since each person has has paid thousands o dollars, they would need to continue paying the monthly ee or at least 12 months to justiy that they had not been taken by a charlatan.
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Instead o paying or education, I recommend traders use the unds or their trading trading account. Tere is no better way to learn about trading than actually pulling the trigger with live ammunition. Tis backs up my thinking about about only going to seminars seminars where the presenter trades trades live. Paper trading has limited use. Ater a couple o o paper losses, you start to lie to yoursel about being stopped out or taking an early prot. By trading live with real unds, you could look look to just “dip a toe into the water” to get a eel or opening and holding positions or seeing how it eels to have the market go against you. Look to try a ew dierent signals to come up with your trading style. A style that is distinctly distinctly yours, tting your personality, your need or money, your trading time horizon, your outside commitments such as amily, work, social etc. Another use or the unds set aside or education is to use them to buy books on trading. Particularly Particularly,, books written by successul traders describing their style, or books where traders are interviewed. You want to be able to get into the mind o a successul trader to see how they work under pressure, how they nd trades, what markets they lik e/dislike, and what traits traits you can can adopt or your trading. Be sure to read these books, rather than using them to raise the height o your computer monitor! oday, there are so many online resources oering ree education I am surprised that educators remain in business. Use these resources rst, read plenty o books and have a go at ring a ew shots yoursel. Ater all o this, i you still think that you need to pay someone to teach you to trade, then please ask them i they trade live beore you hand over any money.
Be big or get out I love my meat, and I particularly enjoy my roast dinners every week. But the number o times times I have heard rom new clients that they are looking to start with just $5,000 or $10,000 ar out numbers the roast dinners I have had over the years. What about where clients clients have said i they only trade 2 lots each day day,, and take 15 or 20 pips a day out o the market? At the end o the year, year, they will have about $50,000. Because they only want to to take 15 or 20 pips a day, day, the market will wi ll just hand them prots on a platter, and there will be no losers because the market will know they are in a position and will move their way. Why don’t don’t they leave their money under the pillow and each night so the trading airy can come along and add to it? C’mon C’mon olks, i you are serious about making it in trading, you need at least US$50,000 to start with. I am not saying that you need to invest the whole $50k, or leverage it up ully 200 times. By having a sizeable sizeable account, it helps
to back you when you are wearing some pain in a position. It also helps you you to work wider stops at at decent levels, as opposed to having to work money-stops, based on how much you can can aord to lose. I always tell my my clients to avoid over-extending. over-extending. Tat is, do not get into too large a position where when and i the market moves against you, you are orced into closing part o the position because o margin issues. A wise old broker once told me “the market will remain irrational longer than you can remain solvent.” solvent.” Invariably, Invariably, the market will turn around, but you will be back on the sidelines licking your wounds wounds when this happens. Over the years, the guys I have seen make money out o trading are the ones who trade longer-term, trade a moderate size and who wear the pain when the market is against them. I could count on one hand, the number o traders who started with a small account (less than US$20,000) who have succeeded in trading. Stop-loss orders are an essential part o trading, but I tend to be airly exible in their use. With small accounts, accounts, you need to use them to prolong your trading lie and to avoid turning a short-term trade trade into a long-term investment. investment. In these cases, I suggest nothing less than a 40-pip stop-loss in the Forex market, but it needs to be based on a sound entry level around support or resistance resistance levels. I will go urther into stop-losses in uture articles. For larger traders, I suggest stop-losses on breakouts or intra-day trades where I am looking or an explosive or small move that will run out o steam over the coming 18 to 24 hours. For longer-term longer-term trades, particularly particularly those based on undamental analysis, I rarely use a stop-loss, believing that i the market moves against the position, it will eventually come back, particularly particularly in Forex. Forex. In these cases, I trade smaller, looking to add to the position when trend conrmation occurs. In some cases, I will work what I call call a “Stop o Last Resort” that is ar away rom the market but at a point where i triggered the market is likely to continue or a prolonged time, and it is best or my clients to be out o the market. As you can see, larger accounts accounts have more exibility. exibility. Tey have more time on their side and they can see things more clearly. clearly. Small accounts accounts are constantly constantly worried about the next trade blowing them up. No matter matter how many times you read or hear the saying “cut your losses, and let your prots run,” human psychology works the opposite way. We all like to win, and we all hate to lose. We are reluctant to admit when we are wrong, and as a result, do not cut losses. We think that i the 15 to 20 pip winners can be maintained, a winning streak can be developed and the account will magically grow exponentially. Te problem is that it only takes one big loss to wipe out this approach.
Believe me, big losses happen on a regular basis.
No one is bigger than the market I you have had a good day, congratulations but tomorrow is another day! day! I you had a ew losses, commiserations but tomorrow tomorrow is another day! Do not let trading trading get you on a real high, but do not let it get you so down that you are ready to to slit your wrists. Keep it real, and stay stay humble. Humility is the big thing I have seen in good traders over the years. Tey are careul not to over celebrate the winners, and rarely lose their cool i they get a bad ll, or are stopped out on the high or the low o the day. day. Good traders do not want pats on the back, they are happy to stay under the radar and just keep doing their thing. Tis is why so many o the good money managers around the world are are hard to locate. Tey trade or a ew select clients, charge them heaps, and continue to perorm well above the average year year in, year out. Te good ones do not want to be ound. Tey get clients by by word o o mouth as opposed to glossy ads in business magazines. Everyday is a new market. It is one o the things I love love about trading – you never know what to expect when you turn on the computer computer screen rst thing in the morning. morning. I you had a bad day yesterday, keep in mind that today is a new market and it could all reverse today. today. Similarly Similarl y, i you won big yesterday, keep in mind that it could all be taken away today and then some. In today’s today’s age o the Internet, online trading and leverage o 500 times, there are more day traders than any other type o trader/investor. trader/investor. It makes sense that i you are a day trader, er, it is highly probable that another day trader will be taking the other side o your trade. trade. For this reason, reason, you need to be ully prepared with all the tools that make a good trader. You need the good backup o an advisor, you need to have some o the traits o great traders, and you need to have ample trading capital to do battle. rading can be compared to war. war. I you do not do the the tactical homework on your charts, i you do not show patience in pulling the trigger, i you do not try to squeeze every last dollar out o a winning trade, and i you cannot admit when you are wrong then be assured your opposition will.
Abdul Khan is a Senior Client Advisor with Tricom Securities, Australia. He has been involved involved in the Forex Forex and utures markets markets or over 15 years, advising beginner and hedge und c lients rom all parts o the world. Abdul can be reached at
[email protected]. JANUARY 2009
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CURRENCY TRADING
DAVID WARING
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JANUARY 2009
Why Why Choosing A Forex Broker Is So Confusing
David Waring leads a discussion answering most o the many questions that are asked when selecting a Forex broker and trading platorm. This is a ‘must read’ or anyone trying to separate act rom fction and fnd the right place to trade oreign exchange markets.
I
you have looked around the Internet and/or talked to other Forex traders, you probably know that there is a wide variety o opinions as to which broker is the best to trade with. Message boards boards are ull o horror stories about trading with pretty much every Forex broker out there. In this article, we will exa examine mine the reasons and try to identiy the source source o the conusion. Tis article will help traders develop a checklist, so they can determine which broker is right or them through a process that separates act rom ction. In my opinion, the main reason there are so many horror stories about the Forex market, stems rom the lack o regulation that existed (and to some extent still exists today) in the retail Forex market, when compared to equities and utures markets. Beore the Internet, Internet, the over-the-counter over-the-counter Forex market was pretty much cut o limits to individual traders. Te Internet opened opened up the Forex Forex market to the JANUARY 2009
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CURRENCY TRADING
Screen shot – na.utures.org
individual trader, but the regulations designed to protect traders rom scams and shady dealing practices were slow to ollow in many countries, and still have not caught up today in many cases. Early on, the Forex market got its reputation as the ‘Wild West’ West’ o nancial markets because many rms took advantage o individuals who came into the ‘new’ market, and used their lack o knowledge to rob them blind through shoddy execution and exorbitant ees. Tere is no question that some o the things that gave the Forex market its bad name still exist today, but luckily, there are several rms who oer a quality product and service to Forex traders, without the scams that have existed in the past. So, i several rms oer a quality product and service, why is it not obvious when reviewing all the message boards and review sites where people express their opinions on Forex brokers? In my opinion, there are are three reasons or this: 1. Te Forex market market is over-the-counter over-the-counter and there is a lack o standardization across many o the aspects o trading that are standardized in centralized markets like utures and stocks. 2. Retail Forex Forex trading is a relatively new market. Tere is not a lot o experience behind the comments made in orums and on review review sites. Combine this with point #1 and you have people who angrily post site ater getting slipped on a trade around a news event or example, instead o understanding that this is the way that the market works.
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3. In my experience, the best rms tend tend to be much larger. larger. Te act that larger rms have have 10 times as many clients makes it look like they receive a larger percentage o complaints. complaints. As I see it, a rm that is ten times as large but has twice the complaints oers a much better service than the smaller rm receiving hal the complaints.
Regulation and Financial Stability By walking through how I would evaluate a U.S. brokerage rm, I am going to give a ramework that traders can use to evaluate the regulatory environment in any country. country. For those who have knowledge o, or questions on, the regulatory environment in other countries, I encourage you to post in the ‘comments’ section on Inormedrades.com. Te retail Forex market came under the jurisdiction o the Commodities Futures rading rading Commission (CFC) with the passing o the Commodity Modernization Modernization Act in 2000. It is currently going through some changes with the recent passing o the arm bill. Te industry body that currently currently enorces the laws set by the CFC is the National Futures Association (NFA). (NFA). Te National National Futures Futures Association Association is a regulatory service provider or the derivatives markets. On the NFA website (www.na.utures.org), you can read about the requirements that rms oering retail Forex trading in the United States have placed on them. In the upper right hand corner o the site, is a link that says “Broker/Firm “Broker/Firm Inormation.” Inormation.” I you click this link you can
plenty o excess capital to meet current requirements, but also uture requirements.
Screen shot – ctc.gov
enter the name o a rm and see who the owners o the rm are, and any complaints or actions that the NFA and/ or CFC has taken taken against the rm. One thing to keep in mind is that there are many rms with only a ew clients who oer Forex Forex trading. It is important to consider consider the size o a rm when researching complaints, so you can make sure you are comparing apples to apples. Te next web page o interest when researching rms is the CFC’s CFC’s nancial data page reporting how much capital each o the Forex brokers has. Tis is important because i the Forex broker you are trading with goes bankrupt, your account is not protected under current regulations unlike the stock and utures markets. On the CFC web page (www.ctc.gov), you will nd a section called “View Financial Data FCMs” on the right side o the page. Clicking this link gives a report report with all the U.S. Futures and Forex rms listed on the let hand side. Across the top are 2 columns that are important to us. Te rst is the column that says “Net “Net Capital Requirement,” ment,” which is the amount o unds that a rm is required to have in liquid assets that are easily convertible into cash. Tis number is set by the CFC to make sure that a rm has enough cash cash on hand i something goes wrong. I a rm drops below this requirement, the CFC will step in and shut the rm down in order to protect p rotect client unds. Te next logical question that many traders will ask is – “How close is the rm they are trading with, or considering trading with, to alling below their “Net Capital Requirement?”” On this same page you you should nd a column that says “Excess Net “ which gives us the cushion that a rm has, beore they would get into i nto a potentially troubling position. Te last thing that it is important to keep in mind is that the CFC has recently upped the ‘Net Capital Requirement’ to a minimum o $20,000,000 or all Forex rms to be phased into eect. eect. With this in mind, it is important to be sure that the rm you are trading with not only has
I you are considering opening a Forex account with a nonU.S. rm, I strongly encourage you to do your research into what the regulatory environment is in that rm’s country. By doing so, you can make sure that the necessary protections are in place to protect your capital in the event that the rm you are trading with runs into nancial difculty. difculty.
How to Evaluate Transaction Costs When trading any market, transaction costs can have a signicant eect on returns, especially or the active trader. Unlike other markets, where transaction costs outside o commissions are airly standard, the Forex market is overthe-counter and transaction costs can very widely rom broker to broker. Tere are generally our things that a trader should consider when reviewing the transaction costs o a broker that he or she is considering trading with. 1. Commissions, i any, any, that are charged by the broker. 2. Te Spread or the currency pairs that they wish to trade. 3. Te rollover rates or the currency pairs they wish to trade, assuming they will be holding positions past the rollover cut o. 4. Te quality o the execution on live trades. Te large majority o Forex brokers do not charge a commission. When analyzing those that do, most traders will add the spread or the currency pair that they are trading to the commission to calculate the total transaction cost or the trade. Te important thing to keep in mind is that while commissions are normally xed, the pip value or each currency pair varies depending on current market rates, and whether or not the U.S. dollar is the second currency in the the pair or not. As an example, the current pip value when trading on a standard account or USD/JPY is $9.25, and the current spread with the broker I am looking at is 2.5 pips. So, i this broker were were to charge a $10 commission on top o this, then my total transaction costs would be 9.25*2.5 + 10 or $33.13.
JANUARY 2009
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CURRENCY TRADING One last thing to consider on commissions, when you inquire about the commission level, you want to know whether the commission rate a broker is quoting is ‘per side’ or ‘round ‘round trip.’ trip.’ I the commission in the the example I just gave were quoted ‘per side,’ this would mean there is a $10 commission to open the trade, and a $10 commission to close the trade, bringing the total commission or the trade to $20. I it is ‘round trip,’ trip,’ this means the commission to open and close the trade is $10.
being quoted are consistently o-market, then you know there is a problem and can address it accordingly. accordingly.
Trading Technology and Value Added Resources Ater a trader has an understanding o the nancial stability, bility, regulatory environment and transaction costs o the rm they are considering, probably the next most important thing to understand is the trading technology and value added services that the rm oers.
A second actor to consider when evaluating transaction costs is what the spread is or the currency pairs that you will be trading. You can calculate calculate the spread in dollars by by One thing that is universally important to all traders in terms o trading technology is platorm stability stabili ty.. A trader’s trader’s taking the value o a 1-pip move in the currency that you trading platare analyzing, and then multiplying multiplying it by the spread. It platorm is his lieline to the markets. I the trading is important to keep in mind that the spread with many orm crashes, reezes up or experiences other technological difculties, this obviously hinders the ability to perorm. brokers will uctuate throughout the day based on the liquidity o the currency pair that you are trading, and the Where quality o trade execution is open to interpretation, rm’s platorm is stable or not is i s pretty straightvolatility in the market market at the time. With this in mind, it is whether a rm’s that the broker review sections o important to consider the spreads during the timerame(s) orward. I have ound that Elitetrader.com are a pretty good indication that you will be trading. trading. While many traders traders like to in- orums such as Elitetrader.com quire with a trader who is already trading live with the rm o who is strong and weak in this area. they are considering on this point, generally I have ound Outside o platorm stability, there are as many dierent that the demonstration platorms are a airly accurate reppriorities traders have or trading technology as there are resentation o the spreads you will see on a live account. trading styles and personalities. personalities. o help each individual trader go about this decision making process in as structured A third actor to consider when evaluating transaction costs a manner as possible, I have come up with a list o eatures is the rollover rates that a rm deducts rom your account that traders can rank in order rom highest to lowest prior when you are long a currency with the lower interest rate, ity. ity. Remember that many many rms oer multiple multiple platorms, and the rate that they pay into your account when you are long a currency currency bearing the higher interest rate. While this so do not assume that a rm does not have something, simis not very important or active traders who rarely hold po- ply because it is not eatured on their website. sitions overnight, it is especially important or traders ex1. Ease o use ecuting longer-term strategies, where the rollover rate can signicantly aect the return o their strategy. strategy. 2. Clarity o prot and loss report Te last actor that it is important to consider when looking at transaction costs is the execution that you receive on live trades. Unortunately, Unortunately, demonstration accounts are not normally an accurate representation o live execution, so there is no way to know this or sure, without opening an account and executing some trades. From my experience here as well, the message boards (or the reasons I mentioned earlier) are not a good representation o reality in this regard. Once you have a live account, account, in normal market conditions you should be executed without slippage and the prices that you are being quoted should be in line with what other market makers are quoting (which you can see by pulling up their demo accounts). accounts). I you are are being consistently slipped on trades and/or the rates that you are
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3. Advanced order entry 4. rading rom charts 5. Backtesting 6. Web based platorm versus downloaded platorm 7. Platorm customization 8. Mobile trading I you have other things that interest you, simply add them to the list in order o priority, beore checking out the di-
erent options that are available to you. From a value added services standpoint, there are many dierent options available depending on which rm you select. With this in mind, you should have a good ununderstanding o what is important to you as a trader beore beginning your search. search. I have included a list to assist you with this process.
methods that can be used to contact contact them. Remember that the Forex market is a 24-hour market, so a rm’s support sta’s ability to perorm overnight as well as during your daytime is much more important than in the equities and many utures markets. markets. Te our most common common methods to contact a broker’s support sta are: 1. elephone
1. In-house research
2. Email
2. Tird-party research
3. Live chat
3. Real-time news
4. Forums
4. rade signals and recommendations recommendat ions 5. Charting package options 6. Managed accounts 7. rading education educatio n Tis discussion should give you a good understanding o the main things to consider rom a trading technology and value added resources perspective when choosing a Forex broker. Now Now,, we will look at what are in my opinion the last two major actors to consider – customer service and trading desk accessibility. accessibility.
Evaluating Customer Service Te retail Forex Forex market is a relatively new market. Tis means that many traders who have experience trading other markets do not have much experience with Forex. When you add to this the act that much o the market has yet to be standardized, you can see the potential or many questions that need to be answered and the importance that a rm has an intelligent sta that is easily accessible to answer those questions. With this in mind, the rst thing that I recommend when evaluating a broker’s broker’s customer service is calling and talking to one or two two o the people there. Ask them to describe describe their oerings as well as any Forex questions that you may have. Tis should give a pretty good idea o the compecompetency o the support sta and an indication o how they are going to perorm when it really matters.
Te last and perhaps most important thing to consider when selecting a Forex broker is to make sure a rm’s trading desk is reachable by telephone in the event o platorm ailure that may occur either on your your end or theirs. While this is important in any market, it is especially important in the Forex market, as platorm stability issues are more common here because the technology is newer and mostly proprietary.
David Waring is the ounder and community host o www. InormedTrades.com, which is an online community devoted to helping traders o all experience levels nd the quickest path to protability. His site does this by organizing all o the best ree video and text trading education and news rom rom around the Internet, into one easy to navigate resource. Beore starting InormedTrades, David gained valuable experience in the oreign exchange market as a Managing Director at Forex Capital Markets LLC (FXCM), one o the largest retail Forex trading rms in the world. During his 7 years at FXCM, David held multiple positions, helping grow the rm rom 15 employees and 2,000 clients, to the over 600 employees and 120,000 clients that the rm has today. today. David also oversaw FXCM’s managed unds division, and the launch o its Sentiment Managed Funds Product, which had over $20 Million in assets and returned an impressive 32% during the rst 11 months o live trading.
Te second thing I would recommend is getting an idea o the hours when those support people are available, and JANUARY 2009
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CURRENCY TRADING
PAUL DAY DAY
A Declaration O Independence
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JANUARY 2009
Traders are constantly bombarded with tips and suggestions in a very sterilized ormat with the best looking chart used to convey the strategies. Paul Day opens a discussion on how to ormulate ideas and trading strategies that suit your desired trading requency and to employ a stringent risk management regime.
here are many reasons or wanting to trade the Forex markets, especially at a time when bond yields remain historically low and equity market returns are in negative negative territory across across the globe. globe. Te rise o the Internet and the surety o high-speed hi gh-speed communication lines have opened the markets to new participants and the plethora o online Forex brokerage rms has vastly reduced the sum required to get onesel started and not to mention the narrowing o the bid/oer spreads in the major currency pairs. Te independent trader has a huge arsenal o weaponry to use in making trading trading decisions. Tere are 24-hour 24-hour nancial news channels, trading magazines, blogs, independent and institutional research and trading portals that oer JANUARY 2009
25
CURRENCY TRADING both black box construction sotware and highly sophisticated technical analysis programs. So much inormation can present a problem o overload that can lead to either trading paralysis or irrational behaviour behaviour.. One must be able to separate the wheat rom the cha and apply consistent rules and behaviour patterns to stand more than a gambler’s chance o winning. In his highly acclaimed books, Fooled by Randomness and Randomness and Te Black Swan, Swan, Nassim Nicolas aleb explains both the distortion that luck can have on the perception o one’s ability, and the allibility o well-held belies – not just in trading but across across all disciplines. I may walk into a Las Vegas casino, put $10,000 on number 17 at a roulette table and walk away with $360,000 but that does not mean I am a gambling genius, a proessor o gaming theory or someone you would would wish to take any advice rom. Good ortune does not an analyst make. I also may tell you that that debt underwritten by AMBAC and MBIA is AAA rated and sae as houses (pardon the pun) – I would have done this had I worked or most global bank credit risk departments or recognised ratings agencies in early 2007. Te current nancial crisis enveloping the globe is a perect example o how badly analysts, traders, risk managers and central bankers can get it horribly horribly wrong. I nd it unny unny how the talk now is o the ‘inevitability’ o the situation rom analysts who did not see it coming and their suggestion that Mr. Paulson and Mr. Bernanke are best placed to guide the economy out o the current current predicament. predicament. Ater all, they both commented in late summer o 2007 that the sub prime crisis was well contained and would not spill over to the rest o the nancial or wider wi der communities. I guess the reasoning behind my tirade is that, as a trader, one is constantly bombarded with tips and suggestions in a very sterilized ormat where the best looking chart to convey said strategies are are predominantly shown. I have a natural natural distrust o analysts and strategy salespeople that only show the winners – the game just is not like that – as many traders learn at their own own expense. Tough not a natural natural cynic, I have learned to disregard any commentator who suggests the product they are involved involved in is going up. A person bullish on gold who works or buysomebullionome.com or the analyst rom wemakemoneywhenyoubuystocks.com who suggests banking stocks are a screaming buy get short shrit rom me. Tey may be right, but how can I judge their impartiality? It is the same with any analyst – i you
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trade on their advice and they are wrong, it is you who loses money and not them. It is important to stand on your own, to be able to ormulate ideas and trading strategies that suit your desired trading requency and to employ a stringent risk management regime. It is not my my intention to either put you o or to to oer some golden panacea to immense ortune. ortune. What I would like to recommend are simple rules I employ to gain a level o consistency in my trading that can be directly applied to the Forex markets and are equally relevant to both novice and experienced traders.
• Risk/Reward – Many traders run positions with terrible risk/reward proles, oten risking more than they stand to gain rom an individual trade. Indeed, many trades are entered on an emotional basis with no stop loss in mind. Tis is the path to ruin. I recommend that you run at least least a 3 to 1 prot/loss ratio – i.e. unless your target prot level or a trade is at least 3 times the distance rom your entry level as your stop loss Do not do it! By employing employing a 3:1 3:1 strategy – and assuming you run the same risk per trade, a win ratio o just 25% will protect your trading capital over the long-run. long-run. Also, do not move your your stop urther away rom your entry level i the trade moves against against you. Te market will not disappear i you get it wrong, but you might! • Leverage – Many online Forex Forex platorms oer leverage o 200 to 1. Tis means a $1,000 margin account can be used to assume a $200,000 position. aking such risk is not in the least sensible – do not orget at the start o 2008 there were 5 investment banks on Wall Street, rumoured to be running leverage leverage o around 30 to 1. None o these rms exist in their original orms today. GBP/JPY routinely moves 1.5% to 2% a day and a 200:1 leverage on all your capital would see you margin called ater a 0.5% 0.5% move against you. I would suggest a maximum leverage employed o 20 to 1. • Capital deployment deployment – Do not put all your your eggs in one basket. Dene a proportion o your tradtrading capital you are comortable in taking or each
trade and stick with it. I would not not risk more more than 5% o my trading capital on any one trade. As your tradable capital increases, your position size grows accordingly accordingl y. I your tradable capital diminishes, so should your exposure per trade. I rate Risk/Reward, Leverage and Capital Deployment as undamental in my trading strategy and believe they would assist greatly in the longevity o a trader’s participation in the market. Despite maintaining an overall macro view o long-term market direction, my trading mechanism is predominantly technically based. based. In this guise, I oer our broad broad brush strokes that may stimulate one to try something new. new.
• Avoid Multicolliniarity Multicolliniarity – Tis applies to both technical analysis and in positional trading. a. In technical analysis, oscillators oscillators such as stochastics, RSIs, MACD etc. are basically the same thing – a rst derivative o price – and one should not be used to conrm another. another. I using them or negative or positive divergence (the only reason I ever use them) choose one oscillator and stick to it. b. In trading, i you you have the view the yen will decline; deploy 5% or your capital to your overall JPY short. Do not not sell USD/JPY, USD/JPY, EUR/JPY, GBP/JPY, AUD/JPY and NZD/ JPY! Tis combination would equate to 25% o your tradable capital risked on, ostensibly, ostensibly, the same same trade. Choose one one currency currency pair and go with it. • Expand your Depth o o Analysis Analysis – I trading trading rom rom a technical perspective, always look at least one timerame up and one timerame down rom your avoured chart period. I you you predomipredominantly trade o daily charts, also monitor hourly or 240-minute charts and weekly charts. I you trade on a shorter timerame, say hourly charts, also monitor 15-minute and daily charts to see i they tell a dierent story.
obviously interrelated. interrelated. I you trade GBP/USD, GBP/USD, it remains important to track other currency pairs – a sharp move higher in EUR/USD is likely to be cable bullish, while a carry-trade unwind oten adversely aects the higher yielding currencies and may lead to pressure pressure on Sterling. Sterling. Also do not just stop at currencies – yield dierentials, equity markets, individual commodity prices and the CRB index, levels o Baltic reight etc. can all aect currency movements and big moves in other markets are oten a sign o risk aversion or margin calls, which is a warning sign that sharp reversals could occur in trending markets. • rending versus Non-rending Non-rending markets. a. In trending markets, I use short-term (3 or 5 session) moving averages o the session lows to underpin a rally, and short-term moving averages o the session highs to cap a decline. When markets go into prolonged trends, it is amazing how oten this simple strategy eectively captures a huge chunk o the move. b. In ranging markets, your risk reward is in avour o longs near the range bottoms and shorts near the range highs – this sounds like I am teaching teaching you to suck eggs. But during consolidations, markets usually look magnicent at the top and awul at the bottom and your riendly analyst will probably be telling you to do the opposite o what is the best trade rom a risk perspective. ry splitting a consolidation zone into 5 horizontal segments looking or a short-term mean reversion trade at the extremities and paring your risk in the central, neutral zone. rading the currency markets can be an exciting and re warding business. business. Setting consistent, consistent, eective eective rules and methodologies can help you in your trading lie and I see it as a natural step in becoming a successul trader. Paul Day is Deputy Head o Research at MIG Investments SA. He was ormerly Manager o Strategic Trading at HSBC Markets in London.
• Expand your Breadth o Analysis Analysis – Markets are JANUARY 2009
27
OPTIONS TRADING
JOHN NETTO
28
Gamma Trading Opti Gamma Options ons on Forex – Part II: The Art, Ar t, Science, and Nuances of Dynamically Adjusting Exposure to the Market.
JANUARY 2009
John Netto continues his series o articles arti cles on option trading using a gamma strategy strategy.. In this article, he discusses discusses real world trades in the Japanese yen and gold utures using gamma strategies to compartmentalize risk and yield smoother returns.
W
ith a once in a lietime move across all asset classes taking place in the Fall o 2008, there has never been a more important time to understand the importance and consequences o gamma trading options in the market. Te rst article article published in the October 2008 issue highlighted some key points and benets o gamma trading. It discussed discussed how how to implement a strategy to better compartmentalize risk and deliver smoother returns.
As the Chie Investment Strategist or NetBlack Capital, a Commodity rading Advisor, my perormance assessment is not only based on the underlying perormance o the accounts I manage, but also how skillully I manage the risk by measuring the levels o volatility commensurate with the return. Te idea being the the less volatility volatility generated in making a return, the more skillul a manager manager is. Tis acumen has never been more important in light o the recent market price action. In this article, I am going to delve urther into the encyclopedia o potential gamma trading strategies to cover dynamic repair strategies and creative exposure in the market through calendar calendar spreads spreads and calendar calendar butteries. butteries. Tese strategies, when applied with the right amount o trading acumen, really open up the possibilities or a portolio manager and trader. Te USD/JPY market has been a particularly volatile currency cross in the past six months. It ell to 15-year 15-year lows in late October and has maintained a strong correlation with the major global equity indexes. We witnessed record volatility skews between ront and subsequent month contracts. In this type o environment, environment, a way to take on bullish posture is to put on a bullish calendar spread and build back month long portolio gamma. A trade that I put on in the yen utures, (traded on the Chicago Mercantile Exchange), trading at .9400 during September 19, was selling the ront month yen calls (Oct) that expired on October 3 or a credit o 72 ticks (or $900 a contract) and buying the November November calls or 145 ticks (or $1,825). Tis let me take on a bullish bullish posture in the posiposition and still dene my risk. Tis position created created a debit in the account o $925 per contract.
On the downside, my breakeven was about 9350 and my breakeven on the upside was close to 9900. I was comortable with both o these scenarios as I was particularly bearish the equity markets. Even i the stock markets markets rallied, I would eel comortable owning the November 96 yen calls given they did not expire until November 7, or another 35 days o action past the time the October calls were to expire. (see Chart 1) Meanwhile, i the market rallied, I could conceivably hedge o my long yen exposure in the S&P 500 utures market, which is very deep and lled with tons o intraday volatility volatility.. When setting up trades, one thing I ocus on and convey to investors are innovative ways to better structure positions to achieve superior superior risk-adjusted returns. returns. Te yen utures utures are not as liquid as the S&P and do not have the same ow. As a result, I build up my exposure on a longer-term basis on the market I have a viewpoint, such as the yen utures. Ten, I synthetically hedge around it in a market having a high inverse correlation, in this case the S&P 500 utures to gain a structural edge.* As it turned out in this trade, the yen rallied to close at 9553 (see Chart 2) on Friday, Friday, October 3. Te October calls sold or 72 ticks had expired worthless and the calls purchased or 145 ticks had risen in value to about 220 ticks. So, i this position is closed closed out at this point, we can take a 72 tick prot ($900 a contract) rom the expired calls and a 70 tick prot ($875) rom the calls that still have 35 days let until expiration, or a total o $1775 in prot rom the trade. Tis move provided some nice prots and I opted to take them and move orward with the month o October October.. Tis is one way to play this move using dierent month options to build a longer-term view versus a shorter-term view, as well as take an opinion on volatility and dene your risk. Tis was a slightly dierent dynamic than the next trade example where we took on a dierent exposure prole. Te next position involves the black mamba o trading vehicles – gold. My meaning here is that that “one “one trade can kill you.” you.” Gold has been an enigmatic enigmatic market or gold bulls bulls and bears, as it will take on wild wi ld swings and unction in an extremely capricious manner. manner. It will sell hard in one direcJANUARY 2009
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OPTIONS TRADING
Chart 1
tion appearing that it will never rally, ollowed by rocketlike ascensions that eel no resistance can contain the shiny stu. In such an environment as described in i n gold, volatility between the AM (at-the-money) ront month calls (December calls had 4 days until expiration), which expired on Tursday, Tursday, November 20 were sporting an implied volatility reading o 48. Te January calls calls (expiration on December December 26) showed implied volatility o 43 and the February calls showed an implied volatility o 41. My view at the time and the idea or setting up this trade was to get into some January calls, which in reality would give some exposure or the month o December. When I put this position on, the December gold contract was trading at $735 $735 an ounce. As you will see rom the options graph below selling the Dec 740 calls brought in a credit o o 21.80, or $2,180 per contract. contract. Buying twice the Jan 740 calls (which actually trades o o the February underlying contract) cost 47.10 x 2, or a debit o $9,420 or two contracts, and selling 1 o the Feb 740 calls took in a credit o 59.10, 59.10, or $5,910. Te net result o this this “calen“calendar buttery spread” as I aectionately term them is about - $1,330 per unit (see Chart 3).
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My strategy and viewpoint behind this position is three old. First, gold had headed into a consolidation consolidation phase in the short-term and I thought that late November and December could provide some nice trading opportunities and by ading the short-term positive p ositive volatility skew, there was some nice value. Te second is my viewpoint on the volatility skew between the January and February options would expand as things got going during the above-mentioned timerame. Tis would allow me to prot rom both the underlying price action I would gain rom gamma trading around the position and a relative expansion in volatility rom the long volatility exposure (January calls) against my short volatility exposure (February calls). Finally, $740 is a key spot that gold has used over several years and I elt condent that even i gold were to move outside my short-term prot range over the rst our days, I would be able to dynamically manage it rom a three-dimensional perspective. Meaning even i the the rst our days days o the position did not work out and we went above or below, below, I would have another 36 days to go to delta neutral, or whatever market viewpoint I take on at the time the December calls expire.
OPTIONS TRADING
Chart 2
Chart 3
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JANUARY 2009
Chart 4
Clearly, the potential scenarios are too numerous to cover in this article. However, However, what needs to be taken away rom this is an alternative approach to nancing some o these options trades while still actively managing the risk and not getting hung on a bad position. On Tursday, November 20, December gold closed at $749 and I squared out the December leg o the position so that I was long twice the number o January calls as I was the February call. call. Ten, I shorted enough o o the February underlying gold contracts to put mysel in a delta neutral position, meaning I was simply long volatility and looked to play the next move. Friday, November 21, a day that I was doing a live trading event at the Las Vegas raders Expo, saw gold rally nearly $50 per ounce and I began to delta hedge out o some o the long exposure to gold that was developing as a result o the rally higher (remember rom the rst article that when you are long gamma, the more the market goes up the longer you become and the more the market goes down, the shorter you you become). Tis move had the makings makings to test the $815 to $830 level, providing a nice spot or gold to sell down rom based on the weekly chart. (see Chart 4). Te ollowing Monday, November 24, saw gold rally to $830 and I went short my ull position using the Jan 740 calls as a backstop to hedge my shorts, or taking on a synthetic put position. My target back back on the downside downside rom this key inection point rested at the level between $750 $750
and $770. Tis level is a place gold had used or most o October and November as a resistance spot that would now oer good support as $750 was a .618 Fibonacci retracement o the move move higher over the previous previous weeks. Such a retest seemed pretty likely in the wake o an environment o deationary sentiment and technical weakness that has been pervasive across a number o markets. In a nutshell, this encapsulates the mindset behind those who proessionally trade options and embrace the art o gamma trading. Te portolio posturing based on playing playing the ow o the market with predened risk parameters and osetting your delta o your options depending on your viewpoint is the third dimension o trading. On Monday, December 1, gold and the rest o the commodity markets pulled back severely oering an opportunity to begin phasing out o the shorts that had been initiated over the previous week until it hit $748 on Friday December 5 on a worse than expected Non-Farm Payrolls number. number. Again, being aware o what a key level level $750 was, I went rom being net short to delta neutral again and can play the move rom there. Going orward, I am still working this position and by the time this article is published, the January call options will have expired. However by being delta neutral, my game plan going orward is to ade a gold move that rallies back above $800 or much less prot objectives than the $50 to $70 experienced on the last sell down. Should gold hit the $850 level, I would get ully short against my long call JANUARY 2009
33
OPTIONS TRADING
Chart 5
position. On the other hand, i gold cannot cannot muster a rally and heads south, I will look to start selling rallies and use the calls as a cushion to reinitiate synthetic put positions again. Hopeully, Hopeully, doing all o this while outperorming the underlying time decay and implied volatility risk that can hasten one’s one’s losses when long gamma. Te trades are two possibilities that these positions could have been handled with and will hopeully open a discussion orum o conceivable ways to manage one’s trades. Te beauty o options lies in this nuance and subtlety o position management.
John Netto is Chie Investment Strategist o NetBlack Capital, LLC, a Commodity Trading Advisor, as well as a Market Maker on the US Futures Exchange or the Mini Dollar Dax. He is the author o “One Shot - One Kill Trading: Precision Trading through the Use o Technical Analysis” (McGraw-Hill, 2004) and President o One Shot - One Kill Ki ll Trading, LLC. LLC. John is a regular contributor or The Money Show, The Traders Expo, The Forex Traders Expo, CME Group, Fox Business Channel, Interactive Brokers, International Securities Exchange, ICE, MSN
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Money, Stocks and Commodities Magazine, The Forex Journal, ESPN Sports Radio Las Vegas, Fox Sports Radio Las Vegas, and many other media outlets. While he loves teaching, John’s passion lies in the trading arena and educating the public through a one-o-akind Web show “SniperScope Live! Hedge Fund Trading, Unplugged”. Viewers log in to watch, learn and interact with John as he trades the markets in real time with real positions, real working orders, and real money being made and lost in total transparency. Mr. Netto used his nine-year US Marine Corps career and travels to the Far East to learn to speak, read, and write Japanese and Chinese, allowing him to articulate his vision o trading to an international audience. When not engrossed in the markets, Mr. Netto spends his ree time sharpening his intuition, discipline, and ri sk management skills as an avid poker player and sports handicapper. He appears regularly on both Las Vegas and national radio discussing the art o the trading, odds making and poker. John resides in San Francisco, Las Vegas and New York City. He posts ree newsletters and audio blogs at his web site, www.osoktrading. com, on all o the aorementioned topics.
MARKET OBSERVA OBSERVATIONS TIONS
ED PONSI
2009
Currency Outlook
3
JANUARY 2009
Ed Ponsi provides an outlook or the major currencies as we move into 2009.
I
t is that time o year again – the time when traders tally up the gains and losses or the year and plan or the uture. I am not going to bore bore you with the details details that we are living in a historic time, or write about how volatile the markets have been in 2008. I am going to assume that that you have not been living in a cave or have been stranded on a desert island or the past twelve twelve months. Rather than a look through the rear view mirror, let’s look ahead to see what 2009 might hold or the currency markets.
Great Britain Pound Te British pound had a terrible year in 2008, alling to multi-year lows against the Japanese Japanese yen and U.S. dollar. dollar. It reached its lowest point against the euro since the inception o that currency currency in 1999. Despite an oncoming economic economic slowdown, the Bank o England’s Monetary Policy Committee, led by Mervyn King, inexplicably kept the U.K’s benchmark Bank Bank Rate too high or too long. As a result, result, the MPC damaged any possibility o an immediate economic recovery, but King and company realized the error
o their ways and cut rates dramatically late in the year. Since rate cuts take months to work their way through an economy, this proves to be too little, too late; the markets voted on this by taking the pound down down hard. Te British pound ell persistently against the U.S. dollar throughout the second hal o 2008, orming a series o ag ormations as it stair-stepped lower (see Figure 1). Te downward spiral o the British pound will continue into 2009. Look or cable to all to at least 1.4000, a support level rom early this decade, as scared money continues to rush into U.S. reasuries in the early months o 2009. In 2009, the British pound should begin its long recovery, recovery, but it will lag behind the euro, the Australian dollar and other currencies that are better positioned to benet rom the eventual recovery o the world economy. economy. Where will the pound go rom here? here? A look at the monthly chart shows major support in the 1.40 area, last visited in early 2002. It is amazing how a decade’s decade’s worth o gains can be undone in a handul o months, but that is exactly what has happened (see Figure 2).
Figure 1 – GBP/USD orms bear ags in the all/winter o 2008.
Source: Saxo Bank JANUARY 2009
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MARKET OBSERVA OBSERVATIONS TIONS
Figure 2 – GBP/USD approaches old support at 1.40, unwinding years o gains.
Euro Te euro has certainly taken a detour in its quest to become the world’s world’s dominant currency. However, despite the recent resurgence o the U.S. dollar, the euro is still positioned to eventually join, i not displace, the U.S. dollar as the world’s world’s reserve currency. currency. Te euro may have taken a beating versus the U.S. dollar in 2008, but it also managed to reach a lietime high versus the British pound. Te euro has been ar more stable than some o the independent European currencies, such as the Polish zloty and the Czech koruna. Te zloty and koruna lost 21% and 13% respectively versus the euro rom July through December.
Figure 3 – EUR/USD appears to be orming a bottom.
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JANUARY 2009
Source: Saxo Bank
Excessive volatility in 2008 damaged the hopes o those countries to qualiy or euro adoption, which underscores the advantages o switching to the more stable euro. euro. In Denmark and Sweden, support is increasing or euro adoption, and as more countries join over time, the European Union’s power and inuence will increase. Right now, the euro appears to have established a base below 1.30 against the U.S. dollar. dollar. Te downtrend appears to have dissolved into a range bound situation and the euro may be poised or a rebound. rebound. I expect the EUR/USD pair to climb back up to 1.40 in the New Year (see Figure 3).
Source: Saxo Bank
Figure 4 – AUD/USD ranges below resistance at .70.
Australian Dollar Australia is a major supplier o commodities to China, a country that recently hit a speed bump on the road to dynamic growth. According to the World Bank, economic growth in China will decrease to 7.5% in 2009. While that gure represents a level o growth many countries can only dream about, it is a sharp decline rom the nearly 12% growth experienced in China in 2007. Stock and real estate estate prices in China have allen sharply, and construction has slowed drastically drastically as economic growth has slowed. Tis can only spell bad news or Australia, a chie supplier o copper, aluminum and other base materials used in construction. o bolster its economy, Beijing has already announced a plan to spend nearly $600 billion over the next two years to help stimulate growth. growth. It is sad that China has has resorted to the same tactics as the bankrupt West; West; is it possible that the news is even worse worse than what we are hearing? hearing? I China is in deeper trouble than is currently believed, the Australian dollar will be aced with even greater problems. While China looms as a headache, another problem or the aussie is the general pullback in commodity commodity prices. Australian mining behemoth BHP Billiton was recently orced to abandon its takeover attempt o rival Rio into due to the unprecedented slide in demand or steel and related products. Tese mining companies have been hammered by the collapse in Chinese demand or iron ore and other minerals used in steel, as have producers o coal, which steelmakers consume rapidly. rapidly. Te current downturn is the sharpest and deepest or China’s steel industry in at least a decade with its output plunging 17% in October. One positive or the Australian dollar has been the recent
Source: Saxo Bank
series o interventions by the RBA (Reserve Bank o Australia). Te RBA has conrmed conrmed it spent a whopping $3.15 $3.15 billion AUD (about $2 billion U.S. dollars) buying buying the Australian dollar in late October as the currency appeared on the verge o alling below 60 U.S. cents or the rst time since April 2003. Te RBA acted again on November November 13 when the Australian Australian dollar hit 63.50 U.S. cents. Each time, the RBA denied that it was deending a key level, telling the media instead that it was adding liquidity to the currency market. Much like the euro, the Australian dollar is orming a bottom and appears to be ba basing sing sideways. I believe that when the global recession nally ends, demand or commodities will explode and the Australian dollar will be back on the oensive. Wait or AUD/USD to break above above 70 cents, at that point the bulls should be ready to run (see Figure 4).
U.S. Dollar Te U.S. dollar, along with the Japanese yen, was the darling o the second second hal o 2008. 2008. Te incredible collapse collapse o the credit markets drove money out o equities worldwide and into U.S. reasuries, ueling demand or the dollar. As long as turmoil reigns in the markets, the U.S. dollar should perorm well as risk-averse traders pile into reasurreasuries. Te question is this – when the credit crisis ends – I know it seems endless but trust me, it will end someday – will the U.S. dollar hold on to the huge gains it racked up in 2008? In my opinion, the answer is ‘no.’ ‘no.’ It could be said that the current demand or the U.S. dollar is based on panic buyJANUARY 2009
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MARKET OBSERVA OBSERVATIONS TIONS
Figure 5 – U.S. Dollar rally is about to encounter resistance.
ing rather than sound undamentals and that the panic eventually will end. When it does and traders traders slowly begin to embrace risk again, money will move out o U.S. reasreasuries and into various equity markets around the world. Tis exodus out o reasuries reasuries will put the U.S. dollar right back on the path o weakness that has been so dominant this decade. It is important important to remember remember that during during this period o strength, the undamentals o the U.S. economy have not improved. improved. In act, the undamentals in the U.S. economy have deteriorated. With soaring debt due to massive bailouts in what is already the world’s largest debtor nation, look or the U.S. ederal budget decit to exceed 1 trillion U.S. dollars in 2009 alone. Perhaps Perhaps the U.S. will benet in the short run, but the policy o bailing out ailed companies is going to weaken the U.S. economy or years to come. Under a capicapitalist system, weak companies are allowed to ail, and in the vacuum let behind, strong companies gain market share or enter new markets. For example, someone in the United States might be planning to create a new automobile manuacturing company right now, using state o the art manuacturing techniques, orward looking uel efcient designs and a lean management structure. structure. It would be much easier or such a company to achieve prominence in a market that had been vacated by ailed companies such as General Motors, which is currently seeking a bailout rom the U.S. government. I the U.S. government government agrees to to keep GM alive, it
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JANUARY 2009
Source: Saxo Bank
will squelch potential competition in avor o spending tax dollars to support an inefcient, bloated bloated company. company. It will damage the industry as a whole, and postpone the evolution o the American automotive manuacturing sector by putting a band-aid on a painul but important and necessary part o economic economic history. history. Tis will not only only happen in the automotive sector, but potentially in many parts o the U.S. economy. Meanwhile, Bernanke will begin a policy o quantitative easing in 2009 – a ancy way o saying that he will direct the Federal Reserve to purchase 30-year U.S. reasury Bonds to push their price higher, resulting in lower bond yields. Since 30-year mortgages key o o 30-year -Bonds, this will have the eect o creating lower mortgage rates – at least or those in the U.S. who can still qualiy or a loan. How to pay or all o o this? Te answer is simple – print money, borrow more money and raise taxes. When the world economy nally awakens rom its i ts slumber, the U.S. dollar will pay a hety price or this orgy o bailouts. bailouts. Te USD Index is nearing a major Fibonacci resistance level near 90, which is the 38.2% retracement o the downward spiral that began in 2001 (see Figure 5).
Japanese Yen Ater years o serving as the punching bag o the Forex world, the Japanese yen became the heavyweight champion
o major world currencies in the second second hal o 2008. Te yen crushed everything in its path, even the resurgent U.S. dollar, dollar, and soared to a thirteen-year high versus the British pound and a six-year high versus the euro. Ater years o weakness, why did the yen suddenly become so strong? Te key phrase or 2008 was risk aversion, aversion, an attitude among traders that has also served the U.S. dollar well. In a normal market, traders traders embrace risk by purchasing stocks and entering carry trades, collecting interest on currency trades that involve shorting low-yielding currencies like the yen. When traders are are in a mode o o risk aversion, they sell stocks and close carry trades. trades. Since many carry trades include a short position on the yen, traders must purchase the JPY in order order to close the trade. trade. Tis led to a sudden burst or the yen as traders, now spooked by the subprime asco, closed their carry trades en masse. Momentum players joined in, causing the Japanese currency to surge even higher. Tis helps explain why a country country can have such a dominant currency even in times o recession. Now that we are aced with a global recession, how will the Japanese yen perorm in 2009? Te answer depends on the depth o the global recession and the duration o the
bear market in equities. Yen pairs such as as EUR/JPY and GBP/JPY ell along with global stock markets in 2008, and those pairs should rise when the stock stock market recovers. recovers. In other words, the mighty yen rally should end at the same time the next bull market in stocks is born. born. Savvy currency traders use this correlation, ollowing stock markets to place trades in currency markets. Tat is all or now! I wish you all the best in 2009. 2009.
Ed Ponsi is the President o EdPonsi.com EdPonsi.com and FXEducator.com. FXEducator.com. He is a dynamic public speaker who has appears regularly on CNBC, CNN and Fox Fox Business Network. His book, Forex Forex Patterns and Probabilities, is available at http://www.edponsi.com and rom major book book retailers. An experienced proessional trader trader and money manager, Ed has advised hedge unds, institutional traders and individuals o all levels o skill and experience. Ed’s DVD series, FXEducator: Forex Trading with Ed Ponsi is available at www. xeducator.com xeducator.com and rom select distributors worldwide. For more inormation, email us at ino@xeducator.com
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www.fx-forecaster.com www.fx-forecast er.com JANUARY 2009
41
MARKET OBSERVA OBSERVATIONS TIONS
PETER PONTIKI
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JANUARY 2009
The Aussie & Pound in 2008
Peter Pontikis Pontikis looks back at sharp rally in the value o the U.S. dollar in the second hal o 2008 and its impact on the values o other major currencies and their cross relationships. The Global Background An analysis o the Australian dollar’s sharp decline in the September quarter o 2008 must take into context the sharp appreciation o the U.S. dollar dollar at the same time. Tis was a move that subsequently stalled as we moved into the end o the 2008 calendar year.
It was this sharp rally in the value o the U.S. dollar in the second hal o 2008 that has primarily impacted i mpacted the values o other major currencies and their ancillary cross relationships. Tis rally in the U.S. dollar happened at a time o proound nancial market instability in the U.S. banking system seems counter intuitive and needs some explanation. o nd the explanation, we need to visit longer timerames or the value o the U.S. dollar dollar.. Tis is where it becomes apparent that the U.S. dollar was already ‘super low’ going into banking crisis crisis o September September 2008. (Dened here as being at its 40-year lows on a real trade weighted basis.) o this end, the U.S. U .S. dollar recovery o the past ew months has not recouped 25% o its losses incurred during the 2000 to 2008 serial bear market. Indeed, this is technically technically not enough to conrm that the said bear market has nished.
JANUARY 2009
43
MARKET OBSERVA OBSERVATIONS TIONS At this point, we can say that the recovery in the U.S. dollar at the very least represents partial relie rom previously over-sold or ‘cheap’ ‘cheap’ levels prevailing p revailing into 2008.
high domestic savings ratio and was never immediately exposed to the implications o the global rising cost o credit as a creditor economy. In act, it could be argued that JaJapan was a beneciary o the crisis on its capital account. On the other hand, by virtue o their deeper nancial and economic links to the United States banking system and economy, the United Kingdom and European economies were and are ar more exposed to both the nancial market shocks and the spread o the U.S. economic slow down.
The Result Te erstwhile ‘expensive’ euro (trading at record highs in mid 2008) was sold down as it normalised itsel against an already oversold U.S. dollar, dollar, while at the same time the yen was bought up against the U.S. dollar. dollar. Further, it remains difcult to dene the U.S. dollar rally o late 2008 as being a uniorm run or the U.S. dollar. As the ollowing chart shows, the U.S. dollar enjoyed divergent ates against its major counter party pairs – rising strongly against the euro, while alling sharply at the same time against the Japanese yen, as most currencies did during this period.
Te ollowing euro/yen crossrate chart shows the ull impact o this in the extraordinary extraordinary collapse o the cross. cross. EUR/JPY moved rom record highs to decade lows in the space o a month as the euro abruptly returned to earth.
What did this mean or the Australian dollar?
Te history is still being written about these substantial market moves. moves. With the volatile volatile backdrop o the credit credit crunch inspired global nancial market crisis, we can briely explain the dichotomy o a U.S. dollar rally against the euro and other Anglophone currencies and its all against the low yielding Japanese yen. For its part, the Japanese yen, like that o most large Asian economies, enjoys a substantial trade surplus as well as a
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JANUARY 2009
As a second tier traded currency, the Australian dollar is usually beholden to the movement in the major currency crosses as well the movements in the earul commodities markets that ell in lock step with the darkening outlook into 2008’s 2008’s end. Tat was the case in this move move as well. As the next chart shows – the AUD/USD rate all o late 2008 was basically a mirror o the all in the EUR/USD rate. And so, the AUD suered in late 2008, what most non-Yen
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To advertise to the readers of
Call Dennis Yap at (65) 9040 4151 or email at dennis@forex
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MARKET OBSERVA OBSERVATIONS TIONS O course, the decline in the Australian dollar did not occur in a vacuum and is consistent with pre-crisis correlations as mentioned in past articles o the relationship between the bench mark U.S. dollar cross, the Euro/USD, on the values o the AUD (among others).
As we go to press, the Australian dollar nds itsel going into the end o 2008 in a holding range pattern bounded by the extremes o September and October between 60 and 72 U.S. cents.
currencies endured in the ace o a substantial short squeeze in the U.S. dollar’s dollar’s value. Falling Falling rom 25 year highs, the AUD quickly plumbed the decade’s lows in a move reminiscent o the euro, British pound and a host o rst and second tier currency crosses. Falling rom above 98 U.S. cent highs, the AUD dropped to 60 U.S. cent lows to date in a basic waterall collapse as investors exited the previous carry trade commodity based avourite. Te all was indeed sharper and worse in proportion to those experienced by the other top currencies as the Australian dollar ell to multi-decade lows against the euro and Japanese yen as well hitting decade lows against the Sterling. It was at this low point that the central bank become concerned and entered the market with high prole deensive buying undertaken in an eort to stabilize what had become an unstable market.
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JANUARY 2009
In the context o its recent sharp all, the holding pattern represents a welcome respite and necessary consolidation that alas may be a little too early to conrm an end to the all o 2008. Even the momentum momentum o the September quarter all is unlikely to be repeated. Needless to say, i the Reserve Bank o Australia’s buying o recent weeks suggests, it is an area that it at least nds value in buying.
What about Sterling? Te sterling or its part suered a ate little dierent rom that o the Australian Australian dollar in recent months. months. Falling as it did rom ostensibly expensive multi-decade highs in the over 2 U.S. dollar range to something like 20-year lows near the 1.40 area as noted below. Once again, this precipitous decline should be read both as undamental and technical realignment o both perceived value and ranges o the sterling. (Mirroring as it does in part the overall short squeeze in the U.S. dollar). As the 25-year look chart implies, there is i s still some leeway or more marginal declines in the value o the sterling to
which it has already bounced and taken back something like a 1/3 o its September quarter’s quarter’s losses. Te suggestion being that some consolidation will now be required o the cross, beore any new trend can be discerned in this volatile cross. In summary, summary, the sharp declines in the Australian dollar and the British pound in the September quarter o 2008 should be taken in the context o both a very sharp squeeze in the value o the then ‘cheap’ U.S. dollar as well the Australian dollar and Sterling’s Sterling’s multi-decade range high/expensive readings o the time. Going orward, the prognosis or both the U.S. dollar and other Anglophone currencies becomes more problematic.
U.S. dollar rate. Tere is better support lying near the 1.30 to 1.35 band.
As both sides o the respective currency equations have alternatively come due or a consolidation in the case o the U.S. dollar (its recent gains) and some like stability in
echnically, it cannot be said that the decline in the Brit-
the conversely severely and temporarily oversold common-
ish pound has actually troughed. [Te market would need
wealth currencies. currencies. Currencies that are at/near ostensible ostensible
+1.65 levels to hint hint o that.] Te main rationale or such a
cheap levels now at 1 to 2 decade lows.
short hand summary relates to the nexus o declining rally peaks, that continues to step lower and the lack o an observed range that might suggest a base has even begun to orm.
Peter Pontikis is an investment management specialist or ANZ Private Bank and has authored a book on Foreign exchange. exchange. He
What does this imply about the prospects or the AUD/
is treasurer o the international ederation o technical analysts
GBP rate? Having allen to 5 year year lows, the Australian Australian
(www.IFTA.org). (www.IFTA.org). The above opinions opinions are strictly his own. own.
dollar itsel appears to be at the bottom o its range rom JANUARY 2009
47
MARKET OBSERVA OBSERVATIONS TIONS
IAN COPSEY
Dollar/Yen…
A New
Historic Low in2009 48
JANUARY 2009
Ian Copsey takes a longterm look rom a Fibonacci perspective at the USD/JYP currencyy pair. currenc pair.
I
t has been over 14 years since the 79.70 low in Dollar/Yen. lar/Yen. Over the past 10 years, it has oscillated within the range rom 101 to 135. Tis past year has seen the low o this range penetrated and reach within 11 yen o its historic low. So, what o the the coming year? Have we seen the the ull extent o the weakness or will there be be more losses to come? come? In my JANUARY 2009
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MARKET OBSERVA OBSERVATIONS TIONS
Figure Figure 1 – Monthly USD/JPY chart
view, it is the latter and indeed, a new historic hi storic low appears to be highly likely. Tis monthly chart extends back to around 1970. 1970. For the most part, the direction o the chart has been basically lower during the the past 38 years. Since the peak at at 277.50 in November 1982, the largest correction has been the one that moved rom the 79.70 low nally stalling at 147.66. (see Figure 1) Since the 277.50 high, which is shown within the rst quartile o the larger red cycle, we have seen lower lows develop. Tis coming year will see the rst bottoming bottoming o the same red cycle expected around the end o the 3rd quarter. quarter. Te implication o this analysis is or quite strong losses over the coming 8 to 10 months. For some time, I have been uncertain just how the rally rom 79.70 to 147.66 147.66 developed. However, However, I suspect that it came in 3 waves and was probably either the start o a at correction or possibly an expanded at. Te latter scenario scenario implies new historic lows.
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JANUARY 2009
Te decline rom the 147.66 high down to the 101.25 low is labeled Wave Wave (a). Since then, I eel we have seen a triangular Wave Wave (b) develop, ending ending at 110.65. Te wonderul nature o Fibonacci has shown through within this triangle. Te rally in Wave ^c was exactly 66.7% o Wave ^a, the decline to Wave ^d was exactly 85.6% o Wave ^b and the recovery in Wave ^e was exactly 66.7% o Wave ^c, ending at 110.65. Tereore, the peak at 110.65 is the end o Wave –b- and we can derive a wave equality target in Wave –c- at 64.24 and a 138.2% projection at 46.51. o judge which o these projections is correct; I take the common relationships o an expanded at Wave eb at 23.6% and 38.2%, which imply targets at 63.66 and 53.74. Clearly, Clearly, the two that match are the 63.66 and 64.24 levels. (see Figure 2) Now, we need to determine whether the decline is going to move directly lower rom current levels (92.50 at the
Figure 2 – Cycle projections
time o writing) or whether we will a correction to a higher
the 3rd quarter (possibly into the 4th quarter) somewhere
level.
around 63.66 to 64.24.
Tis is nely balanced but looking at the daily chart, we
While obviously a much longer timerame call, but i all
can see that the correction rom the Wave (i) low at 90.88
this occurs and we see a bounce rom 63.66-64.24, then
was very swit and given that daily cycles are nding a low
the implication rom the structure and the major monthly
around this time, I suspect a complex correction.
cycle low is or a rally back to 147.66…
Tere are a ew possibilities here, ranging rom a direct rally in Wave Wave c back into the 101.00 to 104.00 range, a at correction which could still see price dip back to 90.43 to 88
Ian Copsey is a veteran technician having begun his career in Foreign
once again beore recovering to the same area and nally a
Exchange over 25 years ago. Over 4,000 readers worldwide have
dip in an expanded exp anded at Wave Wave b at between 87.20 and 89.46
read his book, Integrated Technical Technical Analysis. His experiences range
beore the rally.
rom working in the trading rooms at Barclays Bank in London and
Looking at the daily cycles, I suspect we should reach a peak in Wave (ii) around the end o February and rom there the start o Wave (iii) should begin. Tis should move down closer to the 79.70 low and may dip a little urther to around 74.50 by the middle o June and ater a
Hong Kong, acting as a technical analysis specialist or Dow Jones Telerate in Tokyo where he provided seminars or bank traders and also as the regional manager or technical analysis products in Asia Pacic. He provides his popular daily orecast “The Daily Forecaster” through his website www.x-orecaster.com.
correction in Wave Wave (iv) the nal low should arrive by late in
JANUARY 2009
51
MARKET OBSERVA OBSERVATIONS TIONS
DAR WONG
TheOutlook orMajor Currenciesin
2009
52
JANUARY 2009
Our regular contributor, Dar Wong, provides his monthly commentary commenta ry and outlook or the major currenc currenc y markets as we trade into 2009.
L
ast year, the nancial crisis that originated with the U.S. subprime debacle rolled down the prices o global equity. equity. At the same time, the continual axing o interest rates to stimulate the economies in many developed and emerging countries triggered a massive unwinding o high-yielding currencies against the Japanese yen that literally has been next to nothing among all currency investments. Last year rom the middle o July through August, the all o USD/JPY aected many Japanese investors and corporations who shited their yen prots into oshore swaps. Major European currencies like the euro and the British pound also ell heavily rom large exposure in U.S. institutional unds in addition to the pull caused by the domestic housing housing slumps and dwindling dwindling economic economic growth. growth. Te unexpected 70% slump in crude oil prices rom the record high o USD147 added a double impact to the deation o these slowed economies. JANUARY 2009
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MARKET OBSERVA OBSERVATIONS TIONS
USD/JPY as o December 11, 2008
As we move into 2009, crude oil prices will continue to be a leading indicator o recovery in many many economies. As China has become a large industrialized country, country, it has also become one o the biggest crude oil consumers because o its emerging growth. growth. Owing to the impact o the global crisis, every country including China has been experiencing a contraction in its exports and domestic demand. In other words, i China were aected with shrinking growth this year, oil prices may decline urther to below USD30 per barrel. However, However, i a surge in crude oil demand is realized too soon as the result o the recovery o Asian economies, the situation may trigger a stagation in many developing countries. Since China and India are the two largest industrialized nations in Asia, it will not be a surprise to see them emerge rom this economic rut in 2010 more quickly than other areas. Other countries countries in Asia, especially those that are oil producing and rich in commodity-based products will emerge quickly rom this rut as well. In this rst issue o 2009, I would like to give a orecast or some major currencies that might be suitable or your
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JANUARY 2009
Source: NetDania (2008)
investment portolio. portolio. Tis could also serve as a general general guideline or managing your corporate exposure i you are going to deal with commercial prots in any o these currencies.
Outlook or USD/JPY Te Federal Reserve and United States Congress ace tough challenges trying to reshape the U.S. economy with huge nancial bailouts. Te Fed Funds Funds rate currently currently stands at 1% ater a series o rate cuts designed to boost the U.S. equities markets. Job losses losses continue to mount with the unemployment rate or November November at 6.7 percent, the worst unemployment level level since 1993. Te U.S. Labor Department reports that citizens on unemployment benets rose over 4 million at the end o o November November 2008. Te housing crisis still inects the economy with home prices and sale gures both both declining. Te nancial nancial and manuacturing sectors o the economy are deteriorating with more collapse cases that will need to be salvaged. Last November, November, China surpassed Japan to become the larg-
JANUARY 2009
55
MARKET OBSERVA OBSERVATIONS TIONS
EUR/USD as o December 11, 2008
est holder o U.S. government treasury treasury bonds. China unveiled a stimulus plan o 4 trillion yuan (estimated USD580 billion) to support the U.S. and prevent urther altering in the American economy. From the technical outlook, USD/JPY has been mauled by a selling renzy caused by a loss o investor condence. condence. Te market began its plunge rom a high o 110.66 on August 15, 2008 and has made a remarkable 50% recovery ater reaching a low 90.95 90.95 on October 24, 24, 2008. Teoretically speaking, this bottom is a very important level to hold as it might well mark mark the end o o the all. However, However, i this 90.95 support level is broken, it will cast serious doubts or growth in the U.S. economy or 2009 and deter the export o Japanese products.
5
Source: NetDania (2008)
good i the support at 90.95 is not violated. violated. Otherwise, the market may go lower to attempt the region at 86.00 beore we could see some rebound rom there.
Outlook or EUR/USD Te Eurozone Eurozone aces a slump slump in output. Although central bank policymakers have been ocused on ination in the early part o 2008 and complaints that the rising euro was hurting exports. Te eventual decline o this currency’ currency’ss value by an estimated 20% has not helped in the increase in the value o current accounts due to the global crisis.
Short-term market projection (3 months) – In our opinion, the market is likely to trade in the range between 90.00 and 100.00 or this quarter beore the market successully searches or a clear direction. direction. However, However, on its way up, we expect the market will hover or a while around 96.50 and make a channel ormation beore it eventually climbs higher.
In December, the European Central Bank cut its renance rate again by 75 basis points to 2.5 percent. During the last quarter o 2008, retail sales and consumer markets deepened its decline. Service and manuacturing gures reportreported by the Royal Bank o Scotland Group PLC were charted at below the expansion benchmark o 50. Gross Domestic Domestic Product or the whole European region shrank 0.2 percent in the third quarter o 2008 with much o the market’s market’s pessimism carrying orward into the ourth quarter.
It is important to remember that this projection is only
From the technical outlook, EUR/USD reached its bottom
JANUARY 2009
GBP/USD as o December 11, 2008
Source: NetDania (2008)
at 1.2328 on October 27, 2008 and ormed a powerul pincer bottom or reversal thereater. thereate r. We would consider that this market has made a good consolidating phase over the year-end and will prepare to move higher or a technical recovery.
policies in the Eurozone during the middle o this year or the market to decide or a new ne w potential direction.
Short-term projection (3 months) – Tis market has gathered sufcient bullish sentiment to counter the past rantic selling. From the bottom gradually scaling up, the market has successully built another 3 progressive supports at S1 – 1.2389 (November 13, 2008), S2 – 1.2424 (November 20, 2008) and S3 – 1.2549 (December 4, 2008).
Te economy in the United Kingdom is very vulnerable with additional risk coming rom U.S. subprime losses and declines o domestic housing housing prices. Foreclosures Foreclosures on residential homes rose 12 percent in the third quarter 2008 due to the contraction in the economy and rising unemployment. In November November or the rst time, the Chartered Institute o Purchasing and Supply (CIPS) reported a drop in the service index to 40.1, which was the lowest level on record since 1996. Consumer condence and and spending are still low while rozen credit continues to stall liquidity in markets necessary or purchasing xed xed assets. Te Gross Gross Domestic Product (GDP) in the third quarter o 2008 slipped 0.5 percent, making its rst decline since 1992.
In January, we expect the market to orm another support level in the region o S4 – 1.2950 beore we see the target above 1.4300 probably some time in mid February or March. Tereater, Tereater, the market is expected to make a long downward correction or this current recovery bull trend that started in October October o 2008. In any unlikely event, we would advise traders to abandon all long positions i the market turns south and drives below 1.2320. Unortunately Unortunately, we will be unable to orecast into the second quarter until we meet the calendar calendar time-line. Furthermore, it will depend a lot on the speed o recovery and stimulus
Outlook or GBP/USD
Nearing the end o 2008, Prime Minister Gordon Brown pledged the biggest round o tax cuts and spending increases in the last two decades to counter counter the recession. A declaration o a 25.6 billion-pound (USD38.8 billion) package to be released over coming two years will bring the budget JANUARY 2009
57
MARKET OBSERVA OBSERVATIONS TIONS
USD/CAD as o December 11, 2008
decit to 118 billion pounds or the 12 months through March 2010. In December, another round o rate cuts was introduced. With the current benchmark rate at 2 percent, policymakers hope to unlock the credit gridlock and encourage more banks lending to good customers, improving the market liquidity and cash ows in nancial investments. From the technical outlook, GBP/USD has been very tricky. tricky. Some experienced traders spotted an opportunity in EUR/GBP during the last quarter quarter 2008. o initiate our study o the British pound, we need to determine and conrm that the market has bottomed beore we start our upward projection or the rst quarter 2009. Otherwise, it will be very difcult or us to gauge GBP/USD i it acts like a bottomless pit and keeps trying to make new lows ater every consolidation phase! Short-term projection (3 months) – I the lowest bottom is assumed to be at 1.4477 on December 4, 2008, the market will gradually recover together with the rising euro value. I this up trend is projected correctly, correctly, we expect the market will reach into the region around 1.5500 beore mid January ollowed by a progressive phase o consolidation that will urther build into another round o escalation up above 1.7000 in February.
58
JANUARY 2009
Source: NetDania (2008)
It is important to take note that the above hypothesis will not be valid i the market penetrates below the low at 1.4477. I this happens, the possibility o urther decline in GBP/USD may make an attempt at 1.4000 beore the selling orces halt and are overtaken by a technical rebound.
Outlook or USD/CAD From the technical outlook, USD/CAD has ormed a strong resistance area by making a pincer top ormation around 1.3000. 1.3000. It is interesting interesting to note note rom the weekly chart that USD/CAD began its slide above 1.6100 in January 2002 and has never looked back. Te market reached reached its bottom at 0.9058 during early November November 2008 and has since rebounded. As an oil-producing country, it is logical that the Canadian dollar is strong strong with the backing o crude oil prices. USD/ CAD moves inversely to general crude oil prices and the EUR/USD market. As we near year-end 2008, when oil prices declined by an estimated 70% rom the record high at USD147, USD/CAD surged sharply to make a recovery briey above the 50% retracement. Breaking through this resistance at 1.3000 will be a very difcult. We expect the market to all back back while moving
into a sideways trend in the rst quarter o 2009. Short-term projection (3 months) – I the aorementioned resistance can be protected, we orecast the market will track its way back down to the region around 1.1000 with the possible recovery recovery o oil prices. It is likely the market may even stretch its southward direction to 1.0300 should the U.S. dollar weaken undamentally against the euro. Tis could happen within the rst quarter quarter 2009 or into the second quarter.
strengthening Chinese yuan rom the top limit o 7.8500 since 2006. Despite the European Union and U.S. central bank demands that the Chinese currency be allowed to appreciate, the value o the yuan is still very much controlled by People’ People’ss Bank o China or ear o overheating the Chinese Chi nese economy and risking inationary problems, especially when GDP growth is projected to be lower in 2009 rom the global nancial crisis.
Tis hypothesis will delay i the market goes up urther ater breaking 1.3000. 1.3000. In that case, we could be looking at 1.3700 beore the market reverses down.
In our opinion, the U.S. dollar is only temporarily strengthening against the Asian currencies including Chinese yuan. We believe the U.S. dollar will continue to weaken when the European currencies start to surge against it ater midyear with higher commodity and gold prices.
Outlook or AUD/USD
We oresee a tight cap o resistance at 7.0000 and expect the USD/CNY rate will continue to drop progressively in the long-term outlook with the gradual expansion o the Chinese Chines e economy. economy. However, we are not able to orecast how low the rate will go as it is new uncharted territory in this market.
From technical outlook, AUD/USD started its slide last July when the U.S. dollar began to strengthen against all Asian currencies. currencies. Tis was mainly due to the undamental weakness o major European currencies against the U .S. dollar putting an upward pressure in the greenback to hedge against other major Asian currencies. aking the bottom o October 27, 2997 at 0.6006 to be the ultimate support level, the market has ormed a reasonably strong consolidation in the last quarter as it strengthened and stabilized in a sideways trend. Short-term projection – I the U.S. dollar weakens against the major Asian currencies as the result o a technical recovery in the EUR/USD, we should expect AUD/USD to rise to about 0.8000. Tis is quite likely since the market has dropped drastically or the last 5 months without making a substantial correction. Another valid reason or this scenario is that the market has made a consolidation in November and December without breaking the ultimate support, thus developing sufcient strength to climb back or a window-dressing rally into the beginning o the New Year. Year. Tis hypothesis is valid only i the market does not penetrate the ultimate support at 0.6006 in the rst quarter. Otherwise, holding on to long positions or trying to pick new long entries could be disastrous as the market will be uncharted territory dating back to 2003.
Outlook or USD/CNY From the technical outlook, the USD/CNY has stabilized around 6.8000 rom last July to December. Tis has been mainly due to the strengthening o the U.S. dollar against all major Asian currencies currencies as previously discussed. Prior to that, the U.S. dollar has been devaluing against the
Summary We oresee a new trend o carry trades will be initiated in markets once the nancial crisis gradually settles down late in this year or into 2010. As this current market market crisis may take 1 to 2 years to drain out the losses, some new opportunities will be spotted or borrowing cheap Swiss ranc (0.5%) since it is the next lowest yielding currency to the Japanese yen (0.3%). Eventually, i the U.S. dollar were to slide lower as expected, we predict new ight will move into the cross rates o Chinese yuan, euro and pound as sae havens to saeguard long-term investments or many corporate portolios. O course, in this case, case, we are talking about swapping rom Swiss ranc or Japanese yen again.
Dar Wong has 20 year o trading experiences in global derivatives and Forex Forex markets. His past employment in the nancial industry began in 1989 with Bank o America, ollowed by Bankers Trust, Barclays ZW PLC and as a senior foor trader with S.B. Shearson (Citigroup). Currently, besides writing or The Borneo Post and and nancial magazines, he unctions as a hedge advisor, coach and seminar speaker while trading his personal account. account. Using his PowerWave Trading™ concepts developed since 1998, Dar has groomed many retail and corporate traders to become nancially successul in leveraged trading. You may may read his Forex Forex weekly report by visiting www.pworex.com
JANUARY 2009
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UPCOMING EVENTS Feb 4, 2009 - Feb 7, 2009 Te World Money Show Orlando Stock markets and oil set new highs—just as the Fed fghts a recession. Only by treating yoursel (and your portolio) to the most in-depth “annual checkup” at Te Gaylord Palms Resort in Orlando—can you be confdent that you have ully explored all o today’s today’s best investment opportunities— amidst such market wrenching economic transition. Obtain the best fnancial advice rom top investment gurus—all under one roo. Venue : Te Gaylord Palms Resort, Orlando, United States. Organiser : By Money Show
Feb 21, 2009 - Feb 24, 2009 Te New York raders raders Expo Acquire the knowledge and tools rom expert and ellow traders that will take your skills and profts p rofts to new heights. Also, visit the exhibit hall where you can investigate and testdrive the latest trading tools. Venue : Marriott Marquis Hotel, New York, United States. Organiser : raders Expo
Mar 14, 2009 – Mar 15, 2009 Asia rader & Investor Convention First launched in 2006, Asia rader and Investor Convention (AIC) event has travelled to 7 Asian Cities, i.e., Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Mumbai, Shenzhen and okyo. With participation by over 300 fnancial services companies, including securities exchanges, retail and consumer banks, securities brokerage frms, asset/und management frms, listed companies and other fnancial services providers, AIC events have attracted over 75,000 active traders and serious investors across Asia. Venue Venue : Kuala Lumpur Convention Centre, Malaysia Organiser : Nextview
Apr 18, 2009 – Apr 19, 2009 Asia rader & Investor Convention First launched in 2006, Asia rader and Investor Convention (AIC) event has travelled to 7 Asian Cities, i.e., Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Mumbai, Shenzhen and okyo. With participation by over 300 fnancial services companies, including securities exchanges, retail and consumer banks, securities brokerage frms, asset/und management frms, listed companies and other fnancial services providers, AIC events have attracted over 75,000 active traders and serious investors across Asia. Venue : Suntec City, Singapore Organiser : Nextview
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JANUARY 2009
May 17, 2009 – May 18, 2009 Te Middle East Money Summit With return rom traditional markets expected to remain low institutional investors are diversiying into alternative assets to achieve superior returns and reduce risk. oday, in vestors has already made allocations into alternatives such as hedge unds, private equity, equity, commodities and are in search or emerging trends and new strategies. Venue : Jumeirah Beach Hotel, Dubai, United Arab Emirates. Organiser : Arabcom Group
Jun 3, 2009 – Jun 6, 2009 Te raders raders Expo Los Angeles In this rader Expo you can take a productive step back rom the trading screen and look at the overall markets rom a broader perspective. Venue : Pasadena Convention Center, Los Angeles, United States. Organiser : raders Expo
Jun 6, 2009 – Jun 7, 2009 Asia rader & Investor Convention First launched in 2006, Asia rader and Investor Convention (AIC) event has travelled to 7 Asian Cities, i.e., Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Mumbai, Shenzhen and okyo. With participation by over 300 fnancial services companies, including securities exchanges, retail and consumer banks, securities brokerage frms, asset/und management frms, listed companies and other fnancial services providers, AIC events have attracted over 75,000 active traders and serious investors across Asia. Venue : Hotel Equatorial, Ho Chi Minh City, Vietnam Organiser : Nextview
Jul 31, 2009 – Aug 2, 2009 Te Money Show San Francisco Te Money Show San Francisco is your best opportunity to learn how to manage your portolio during uncertain economic times. Hear rom world-class experts in more than 150 workshops on everything rom market trends to stocks & EFs to buy and sell. Venue : Te San Francisco Marriott, San Francisco, United States. Organiser : Money Show
ECONOMIC EVENTS CALENDAR Legend AU = Australia BoE = Bank o England BoJ = Bank o Japan CPI = Consumer price index CPM = Chicago Purchasing Managers CGPI = Corporate goods price indes
ECB = European Central Bank ISM = Institute or supply ManEU = European Union agement FOMC = Federal Open Market JN = Japan Committee MPC = Monetary Policy ComGDP = Gross Domestic Product mittee PMI = Purchasing managers index
JANUARY 2009 1 2
US – Dec ISM Mg Index data
3
26
US – Dec 2008 existing home sales data Dec 2008 leading indicators data AU – PPI data or Q4,2008
27
US – Jan consumer condence data AU – CPI data or Q1, 2009
28 29
4 5
US – Construction spending data or Nov 2008
6
US – Factory orders data or Nov - ISM Non-Mg Index or Dec - Nov 2008 Pending Home Sales Index data AU – Nov 2008 retail sales data
7
AU – Import & export data or Nov Nov 2008
8
US - Nov consumer credit data UK – BOE MPC ends two-days meeting to set interest rates
9
US – Dec 2008 unemployment data
10 11 13
US – Nov 2008 international trade data - Dec 2008 reasury reasury Budget data
14
US – Dec 2008 retail sales data - Dec 2008 import & export prices data - Business inventories data or Nov 2008 2008 AU – Dec employment & Unemployment data JN - CGPI (PPI) data or Dec 2008
16
EU – ECB Governing Council meets to set interest rates US – Dec 2008 PPI index - Phil survey data or Jan
JN - ertiary Index or Nov 2008
20
JN – BOJ announcement or Jan
21
US - Housing Market Index or Jan JN – Jan Merchandise trade data
22
US – Dec 2008 housing starts data JN - All Industry Index or Nov 2008
US – Retail sales date or Jan - Dec business inventories data
13
EU – GDP Q4, 2008 US- consumer sentiment or Feb
14 15 16
US – Feb Empire State Mg Survey data JN – Dec ertiary ertiary Index
17
UK – CPI data or Jan US - reasury International Capital or Jan EU - Merchandise rade rade or Dec 2008
18
JN - BOJ announcement US – FOMC minutes - Housing start data or Jan - Import & export prices or Jan - Jan industrial production data
19
US – PPI index or Jan - Jan Leading Indicators data - Feb Philadelphia Fed Survey data JN – Dec 2008 All Industry Index
20
US – CPI or Jan
21 US - Personal Income and Outlays or Dec 2008 - Dec 2008 construction spending data - ISM Mg Index data or Jan AU – Import & Export data or Dec 2008 - RBA announcement
22 24
US – consumer condence data or Feb
3
EU – PPI data or Dec 2008 AU – Dec retail sales data
25
US – Existing home sales data or Jan
4
EU – Dec retail sales data US - ISM Non-Mg Index data or Jan
26
5
UK – BOE MPC ends two-days meeting to set interest rates EU – ECB Governing Council meets to set interest rates US - Productivity and Costs or Q4, 08 - Dec 2008 actory orders data
US – Durable good orders data or Jan - Jan new home sales data JN – CPI & CPI Core data or Jan - Unemployment data or Jan - Jan industrial production data
27
EU – Unemployment data or Jan US – Q4, 2008 GDP data - Feb consumer sentiment data - Feb arm prices data
2
6
19
25
US – GDP data or Q4,08 - Q4, 08 Employment Cost Index data - NAPM-Chicago or Jan - Consumer Sentiment data or Jan - Farm prices data or Jan
FEBRUARY 2009
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24
US - Durable Goods Orders or Dec 2008 - Dec 2008 new home sales data JN – CPI data or Dec 2008 - Dec 2008 unemployment rate - Dec industrial production data
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31
US – CPI data or Dec - reasury reasury International Capital data or Nov 2008 - Dec 2008 Industrial Production data - Consumer Sentiment data or Jan
17
23
US - FOMC Meeting Announcement
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12
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NAPM = National Association o Purchasing Managers PPI = Producer price index SK = SK = South Korea
UK – Dec 2008 industrial production data - Manuacturing Output or Dec 2008 US - Jan unemployment data - Consumer credit data or Dec 2008
23
28 29 30
7
31
8 9 10 11
UK – Merchandise trade data or Dec 2008 UK - Claimant Unemployment Rate or Jan - ILO Unemployment Rate or Dec 2008 US – International trade data or Dec 2008 JN – CGPI (PPI) or Jan AU – employment and unemployment rate or Jan
Economic release Release time ( ES) Economic release Release time ( ES) Economic release Release time ( ES) GDP 8.30am Housing starts 8.30am Construction spending 10 am CPI 8.30am Production & capacity CPM report 10 am ECI 8.30am utilization 9.15am Report on business 10 am PPI 8.30am Leading indicators 10 am on-manuacturing on-manuacturing Employment 8.30am Consumer condence 10 am report on business 10 am Personal income 8.30am Uni o Mic consumer New home sales 10 am Business inventories 8.30am sentiment 10 am Chicago Fed national Durable goods 8.30am Wholesale inventories 10 am activity index 10 am Retail sales 8.30am Philadelphia Fed survey 10 am Federal budget 2 pm rade balance 8.30am Existing home sales 10 am Consumer credit 3 pm Te information on this page is subject to change. Te rader’s rader’s Journal is not responsible for the accuracy of calendar dates beyond press time. JANUARY 2009
1
BROKERAGE FIRMS LISTING
MIG Investments SA Website Address:
www.migx.com
Year O Company’s Foundation:
2003
Forex Division Founded:
2003
Regulated By:
ARIF(CH), SFDF(CH)
Pip Spread On Major:
1-3 pips
Mini Account Size:
US$5,000
Regular Account Size:
US$5,000
Services:
MIG ofers 24 hour streamline dealing with aggressive spreads on 32 pairs and no commission. The competitive trading conditions include an institutional ofering with 1 pip on EURUSD & USDJPY and reduced spreads on most pairs. Standard spreads include 2 pip spreads on ve currency pairs! The many advantages include no commission, exceptional margin conditions, ree high quality market research, a powerul trading platorm that allows or programming o automated trading strategies.Free strategies.Free daily technical analysis and market commentary, WAP & mobile phone trading.
Languages:
English, Arabic, Mandarin, Cantonese, Polish, Czech, Slovak, Malay, Danish, Dutch, French, German, Italian, Japanese, Portuguese, Russian, Spanish, Turkish, Ukranian
Years in Business:
5 years
InstrumentsTraded:
Forex
Country:
Switzerland
Phone:
+41-32-722-81-00
Fax:
+41-32-722-81-01
Email:
ino@migx.com
FXDD
2
Website Address:
www.xdd.com
Year O Company’s Foundation:
2002
Forex Division Founded:
2002
Regulated By:
N/A
Pip Spread On Major:
2 EUR/USD; 3 USD/JPY; 3 USD/CHF and 4 GBP/USD
Mini Account Size:
US$500
Regular Account Size:
US$5,000
Services:
FXDD, headquartered in New York City, is a leading online oreign exchange trading rm. FXDD ofers numerous dealing platorms: FXDD Trader and Meta Trader (retail), Power Trader (institutional) and FXDD Auto (automated). FXDD provides tight dealing spreads, instant one -click execution, ree trading tools and top -rated news, no-interest accounts, and much more.
Languages:
English, Arabic, Chinese (Traditional), Japanese, Russian, Spanish, Polish, Bulgarian
Years in Business:
5 years
InstrumentsTraded:
spot oreign exchange
Country:
United States
Phone:
+1 212.791.3950
Fax:
+1 212.937.3845
Email:
sales@xdd.com
JUNE 2008
