To become a successful trader, you have to stay rational and emotionally detached. Many novice traders ride an emotional rollercoaster, feeling on top of the world after a win, but down in the dumps after a loss.
The US dollar fell to yet another record low against the Euro on Friday as traders remain overwhelmingly bearish on the greenback. However, the markets have remained bullish on nearly everything else, including commodities. In fact, oil continued to trade near record highs above $90/bbl on Friday amidst escalating tensions between the US and Iran as well as Turkish warnings of a broader assault on Kurdish militants in Iraq. The US dollar will find little support given the sharp rally in oil, and economic data isn’t helping the case either. The University of Michigan Consumer Confidence survey exacerbated fears of a consumer-led recession in the US, as the October reading was unexpectedly revised down to 80.9 – the lowest since June 2006. Stock market tumbles undoubtedly played a hand in the deterioration in sentiment, and further market routs will only leave consumers more pessimistic. Will the dollar’s woes ever end? Within the next few days: probably not. Indeed, the currency faces major event risk this coming week from the FOMC rate decision, the release of Q3 GDP, and non-farm payrolls. The central bank decision and GDP reading hit the wires on the same day, and the former will garner much of the attention. Fed fund futures now price in a 92 percent chance of a 25bp cut on October 31st to 4.50 percent, but there is speculation that Bernanke & Co. could surprise the markets. Will they slash the benchmark rate by 50bp like they did in September as economic conditions worsen, or will they show the DJIA and the S&P tough love by leaving policy unchanged? And what about oil? Given current geopolitical tensions and undeniably strong demand for the commodity, there is much talk about oil jumping to the psychologically important $100/bbl level. Volatility is soaring, and while the greenback is likely to remain weak and oil strong in coming days, all of this wild price action creates the potential for steep corrections market wide.
1. Forex is the world’s largest market. With a $2 Trillion a day volume, forex market participants includes banks, corporations and individuals like yourself, trading from around the world.
This section is one of the most important sections you will ever read about trading.
Why is it important? Well, we are in the business of making money, and in order to make money we have to learn how to manage it. Ironically, this is one of the most overlooked areas in trading. Many traders are just anxious to get right into trading with no regards to their total account size. They simply determine how much they can stomach to lose in a single trade and hit the “trade� button. There’s a term for this type of investing….it’s called GAMBLING!
It has been a record breaking past few months in the currency markets. While the EURUSD, the most actively traded pair in the world, made headlines when it surpassed its all time high late September; the story was quickly overshadowed by the Canadian dollar which reached parity with the US dollar. Six months ago, parity still seemed to be a far fetched idea for loonie traders and now, the Canadian dollar is actually stronger than the US dollar. Could the same thing happen to the Australian dollar? Why not? The currency pair is closer to parity now than the Canadian dollar was five months ago. Although it is possible for the Australian dollar to be even with the US dollar, the better question to ask is whether it is probable.Â
Trading is not your everyday business. It is in actual fact,  a rather demanding affair. This is a game that only the most skilled traders can play to make a living as an active trader. Do you have what it takes?
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