Currency Trading Systems - 4 Tips for Choosing the Best
Using a currency trading system to make profits from the online Forex markets is now more popular than ever. Powerful personal computers and the Internet have made online currency trading systems an attractive option for all traders.
The money making concept is appealing - buy a system, plug it in and start making profits.
There are some good systems that you can buy, that can generate enough profit to pay for themselves many times over. However, the vast majority of systems are simply not worth paying for - and they’ll actually ensure that you lose money.
There are two main reasons why most currency trading systems lose:
1. Black-Box Systems
These are systems where the logic is not revealed to the buyer.
Even if the system is based on sound logic, the trader must have confidence in it - and for that he needs to understand exactly how and why it works.
If you don’t know the logic of the system, you won’t have the confidence and discipline to continue to follow it when it suffers a period of losses. If you don’t have the discipline to follow it, then you don’t have a system at all!
2. Curve Fitting and Optimization
Another factor to look for in a currency trading system is curve fitting - or optimization.
Whenever you see a hypothetical track record, you need to look and see if it has been curve fitted or optimized - and chances are it has been. These systems always give extraordinary performance in back testing - because the rules have been made to fit the data, and produce profits.
This is similar to shooting at a barn door, and then drawing circles around every hole after the event, to make sure that each shot scored a bull’s-eye.
We can all make a track record look good if we know the past data, but the problem is we don’t have the luxury of trading in the past. This is why most hypothetical track records NEVER show the same results in real time trading, as they did in their hypothetical simulations.
Avoid any system that offers different rules and parameters for trading different markets or different contracts. If the system is based on sound logic, then it should work in any trading market, without optimization or curve fitting.
3. Simple Systems Beat Complicated Systems
There is no correlation between how complicated a system is, and its profit potential. In fact, simple systems tend to work best - as they tend to be more robust in the real world of trading, with fewer elements to break.
Simple systems tend be easy to understand, easy to apply, and more profitable than complicated systems.
4. The Vendor Guarantee
You should research how much support the vendor offers - and a bit about their background. See if the person behind the system is real - and a trader.
Many systems are simply sold by marketing people, who use hypothetical track records – which as we’ve already seen, doesn’t guarantee profits.
Also look for a money back guarantee – this will give you confidence, as you know that the vendor himself has total confidence in his system.
Finally
Choosing a currency trading system requires common sense - and the time to do the research. If you do your homework, it’ll be time well spent - and it could help you build long term capital gains with your ideal currency trading system.
Saturday, July 4, 2009
Recession Effects on Forex Trading
Our objective as currency traders on the forex market focuses on which nations are struggling with recession, and which nations will prosper from that struggle. If a nation's economy enters a recession - sales recede, profits decline, jobs decline and price of goods decline. This also adversely affects national trade balances, research investment levels and venture capital, all of which are vital to economic expansion. When this happens, governments and financial institutions must free up credit and monetary supply by reducing interest rates; making the currency less attractive to investors. This switching from low interest currencies to higher interest currencies on the Forex market is also known as the carry trade. In carry trades, investors borrow currencies whose countries have lower interest rates, such as Japan and Switzerland, to buy higher-yielding assets.
On the opposite side of the situation will be countries benefiting from the situation. Their lower priced products see a surge in sales and exports which increase profits. Eventually prices will begin to climb to keep the high profit margins intact. In these countries interest rates will come under pressure and begin to climb in order to check inflation. The currencies higher rates are attractive to investors and become heavy with buy orders.
This is when the Forex market does it job in the global economy. If a countries currency becomes so attractive that it actually causes it to spike too high, that countries own population will spend their valuable currency in other countries due to the favorable exchange rate. We saw this in the US during this last holiday season. Many Europeans spent their currencies in the US because the exchange rate was so favorable for the Euro, Pound and Swiss Franc. This market reaction will eventually begin to balance everything out by causing opposite economic reactions.
While "global recession" does not appear to be looming around the corner in any sense; the US, as well as other nations could experience what is called a growth recession. Not true recession where the economies actually decline, but one where only the "growth rate" or "rate of expansion" of their economy declines or completely stagnates. Careful evaluation will be necessary to determine which currencies will benefit by monitoring not only interest rate moves, but also trade, manufacturing, commodity and unemployment figures as well.
While no one wants to see a recession on any level, it is an economic must for global balance. As retail Forex traders we learn to keep our emotions in check to survive the volatility of the market swings. We should also keep our loyalties in check as to our currency preferences. Remembering always that any economic recession is merely a trading opportunity in two directions - up for one currency, and down for the other. Our trading activity will actually benefit the struggling nation's recovery from the forces causing their economic contraction.
Good Luck and Good Trading.
On the opposite side of the situation will be countries benefiting from the situation. Their lower priced products see a surge in sales and exports which increase profits. Eventually prices will begin to climb to keep the high profit margins intact. In these countries interest rates will come under pressure and begin to climb in order to check inflation. The currencies higher rates are attractive to investors and become heavy with buy orders.
This is when the Forex market does it job in the global economy. If a countries currency becomes so attractive that it actually causes it to spike too high, that countries own population will spend their valuable currency in other countries due to the favorable exchange rate. We saw this in the US during this last holiday season. Many Europeans spent their currencies in the US because the exchange rate was so favorable for the Euro, Pound and Swiss Franc. This market reaction will eventually begin to balance everything out by causing opposite economic reactions.
While "global recession" does not appear to be looming around the corner in any sense; the US, as well as other nations could experience what is called a growth recession. Not true recession where the economies actually decline, but one where only the "growth rate" or "rate of expansion" of their economy declines or completely stagnates. Careful evaluation will be necessary to determine which currencies will benefit by monitoring not only interest rate moves, but also trade, manufacturing, commodity and unemployment figures as well.
While no one wants to see a recession on any level, it is an economic must for global balance. As retail Forex traders we learn to keep our emotions in check to survive the volatility of the market swings. We should also keep our loyalties in check as to our currency preferences. Remembering always that any economic recession is merely a trading opportunity in two directions - up for one currency, and down for the other. Our trading activity will actually benefit the struggling nation's recovery from the forces causing their economic contraction.
Good Luck and Good Trading.
The recession will be over sooner than you think
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Good news: Great Depression II avoided and growth resumes mid-2009
Much like today, the Great Depression began with a stock-market crash and a melt-down of the financial system. Banks withdrew credit lines and the inter bank lending market froze-up. What turned this from a financial crisis into an economic disaster, however, was the compounding effect of terrible policy. The infamous Smoot-Hawley Tariff Act of 1930 was introduced by desperate US policymakers as a way of blocking imports to protect domestic jobs. Instead of helping workers, this worsened the situation by freezing world trade. At the same time policymakers were encouraging firms to collude to keep prices up and encouraging workers to unionize to protect wages, exacerbating the situation by strangling free markets.
In fact economic uncertainty is now dropping so rapidly that we believe growth will resume by mid-2009.
Uncertainty is now fallingIt now appears that the global policy response to the credit crunch has avoided repeating those mistakes. Instead, it has focused on delivering a massive dose of tax and interest rate cuts, and spending increases. Policies restricting free-markets have largely been avoided. This has calmed stock markets as the fears of an economic Armageddon have subsided. At the same time political uncertainty has dropped as world leaders have clarified their stimulus plans.
Much like today, the Great Depression began with a stock-market crash and a melt-down of the financial system. Banks withdrew credit lines and the inter bank lending market froze-up. What turned this from a financial crisis into an economic disaster, however, was the compounding effect of terrible policy. The infamous Smoot-Hawley Tariff Act of 1930 was introduced by desperate US policymakers as a way of blocking imports to protect domestic jobs. Instead of helping workers, this worsened the situation by freezing world trade. At the same time policymakers were encouraging firms to collude to keep prices up and encouraging workers to unionize to protect wages, exacerbating the situation by strangling free markets.
In fact economic uncertainty is now dropping so rapidly that we believe growth will resume by mid-2009.
Uncertainty is now fallingIt now appears that the global policy response to the credit crunch has avoided repeating those mistakes. Instead, it has focused on delivering a massive dose of tax and interest rate cuts, and spending increases. Policies restricting free-markets have largely been avoided. This has calmed stock markets as the fears of an economic Armageddon have subsided. At the same time political uncertainty has dropped as world leaders have clarified their stimulus plans.
how to boost invester confidence
$5b to boost investor confidence
SWISS bank UBS is planning to raise 3.8 billion Swiss francs ($5 billion), by selling 293 million shares to a few institutional investors for 13 Swiss francs per share, the troubled company said on Thursday.Existing shareholder, the Government of Singapore Investment Corp (GIC), "did not participate in the capital-raising exercise as we are already a large investor". GIC injected 11 billion Swiss francs into the bank last year and now holds a stake of about 6 per cent."The capital-raising helps strengthen confidence in UBS and the Swiss financial centre,'' UBS said in a statement.
"UBS is taking this action now in order to take advantage of current market opportunities. This is not related to any particular event.''Still, its extra capital-raising may spark fresh fears about the state of bank balance sheets, months after the shocks in the global banking system seemed to have ended. Last week, the Swiss National Bank said it was still not comfortable with the leverage of the country's big banks.
UBS also said on Thursday that it expected to post a net loss of an undisclosed amount for its second quarter during its results announcement on Aug 4. "The majority of the expected loss is attributable to own credit and the restructuring charges that have already been announced," it said.The bank added that the operating result for the quarter would likely represent an improvement compared with the first quarter of 2009, largely attributable to better market conditions affecting its investment bank and a reduction in losses and writedowns on legacy risk positions.
SWISS bank UBS is planning to raise 3.8 billion Swiss francs ($5 billion), by selling 293 million shares to a few institutional investors for 13 Swiss francs per share, the troubled company said on Thursday.Existing shareholder, the Government of Singapore Investment Corp (GIC), "did not participate in the capital-raising exercise as we are already a large investor". GIC injected 11 billion Swiss francs into the bank last year and now holds a stake of about 6 per cent."The capital-raising helps strengthen confidence in UBS and the Swiss financial centre,'' UBS said in a statement.
"UBS is taking this action now in order to take advantage of current market opportunities. This is not related to any particular event.''Still, its extra capital-raising may spark fresh fears about the state of bank balance sheets, months after the shocks in the global banking system seemed to have ended. Last week, the Swiss National Bank said it was still not comfortable with the leverage of the country's big banks.
UBS also said on Thursday that it expected to post a net loss of an undisclosed amount for its second quarter during its results announcement on Aug 4. "The majority of the expected loss is attributable to own credit and the restructuring charges that have already been announced," it said.The bank added that the operating result for the quarter would likely represent an improvement compared with the first quarter of 2009, largely attributable to better market conditions affecting its investment bank and a reduction in losses and writedowns on legacy risk positions.
American Eagle Gold Proof Coins
Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins “in quantities sufficient to meet public demand . . . .”
Danger: Stock Market Crash - Recession - Depression Ahead
In the summer of 2007 concerns were rising regarding mortgages and other toxic paper. The concerns were causing drops in the Dow and NASDAQ. Ironically, George Bush called the American economy “the envy of the world,” noting that its fundamentals were “strong… Job creation is strong. Real after-tax wages are on the rise. Inflation is low.”
Now compare this to Herbert Hoover in 1928 on the eve of the Depresson, who stated “We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.
Comparing these two statements makes one think or maybe better said… Worry…
Where are we really in this cycle. Are we in a Recession? Have we entered a Depression? Everyone seems to have an opinion. However only in retrospect will we really know. We have not had any waterfall declines such as 1987 or even 1929. It seems things are just dragging down or grinding us down. The anxiety is not just in the stock market but seems to be encompassing our entire lives. It seems to many the world has changed.
Who would have really believed interest rates would be virtually zero. Who would have believed that Citi (C) would be $2.51. Surely not the Abu Dhabi investment authority or Bin Alaweed. It seems more money was lost trying to catch the bottom. Seems everyone wants to call a bottom. Not to be negative but all one has to do is look at Japan. Their economy, stock market and real estate market has been in the dumpster close to 20 years. Why can that not happen in the Western economies?
I have never met anyone who has been long time successful predicting anything... not alone the stock market. One needs not to have an opinion and simply follow the market where it wants to go in order to be successful.
There is more to this though. I am not just thinking from a trading perspective but rather a main street USA perspective. The sale of antidepressants and anti-anxiety drugs are rising. People are losing their homes. Businesses are firing employees. Some companies that have existed for years, actually longer than memory are shutting their doors. Gun sales are increasing. I even read an article that there were shortages of bullets in some locals. People are taking cash out of the bank in preparation for a long-haul bad time. They have no confidence in the banks… or for that fact, much of anything. More worrisome is the fact if someone wants Gold Eagle Coins they cannot obtain them from the US mint.
Now compare this to Herbert Hoover in 1928 on the eve of the Depresson, who stated “We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.
Comparing these two statements makes one think or maybe better said… Worry…
Where are we really in this cycle. Are we in a Recession? Have we entered a Depression? Everyone seems to have an opinion. However only in retrospect will we really know. We have not had any waterfall declines such as 1987 or even 1929. It seems things are just dragging down or grinding us down. The anxiety is not just in the stock market but seems to be encompassing our entire lives. It seems to many the world has changed.
Who would have really believed interest rates would be virtually zero. Who would have believed that Citi (C) would be $2.51. Surely not the Abu Dhabi investment authority or Bin Alaweed. It seems more money was lost trying to catch the bottom. Seems everyone wants to call a bottom. Not to be negative but all one has to do is look at Japan. Their economy, stock market and real estate market has been in the dumpster close to 20 years. Why can that not happen in the Western economies?
I have never met anyone who has been long time successful predicting anything... not alone the stock market. One needs not to have an opinion and simply follow the market where it wants to go in order to be successful.
There is more to this though. I am not just thinking from a trading perspective but rather a main street USA perspective. The sale of antidepressants and anti-anxiety drugs are rising. People are losing their homes. Businesses are firing employees. Some companies that have existed for years, actually longer than memory are shutting their doors. Gun sales are increasing. I even read an article that there were shortages of bullets in some locals. People are taking cash out of the bank in preparation for a long-haul bad time. They have no confidence in the banks… or for that fact, much of anything. More worrisome is the fact if someone wants Gold Eagle Coins they cannot obtain them from the US mint.
Is the recession over?
The recession began in December 2007. Did it end sometime this spring?
It's a provocative question that's tough to answer. It's tempting to say the recession is over when that seems to be what the stock market is telling us.
But Wall Street hardly has a perfect track record: There were numerous bear market rallies during the Great Depression, for example.
Stocks also enjoyed a nice run last spring after Bear Stearns almost imploded, even though the collapses of Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500), Lehman Brothers and AIG (AIG, Fortune 500) were still yet to come.
It's a provocative question that's tough to answer. It's tempting to say the recession is over when that seems to be what the stock market is telling us.
But Wall Street hardly has a perfect track record: There were numerous bear market rallies during the Great Depression, for example.
Stocks also enjoyed a nice run last spring after Bear Stearns almost imploded, even though the collapses of Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500), Lehman Brothers and AIG (AIG, Fortune 500) were still yet to come.
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