ZEW Economic Sentiment - forex trading.

A monthly economic survey. The ZEW Economic Sentiment is an almalgamation of the sentiments of approximately 350 economists and analysts regarding the economic future of Germany for the next six months. The survey shows the balance between those analysts who are optimistic about Germany's economic future and those who are not.

'ZEW Economic Sentiment in details'

The ZEW - Zentrum fur Europaische Wirtschaftsforschung (Center for European Economic Research) - Issues monthly economic reports for Germany, Switzerland, and the Eurozone.
These Economic Sentiment covers the economic futures of several other countries as well. This survey includes analyst opinions for Europe, the UK, Japan and the U.S. An index value greater than zero indicates optimism while a value below zero indicates pessimism

This indicator comes out once per month.  It has two components. The first component is called ZEW Economic Sentiment, and the second component is called ZEW Current Situation.

There is a German firm that surveys business authorities in all business industries, and it asks them questions about their current assessment and future outlook on German economy.
The questions about the future are compiled into ZEW Economic Sentiment, and the questions about current situation is compiled into ZEW Current Situation.

Germany is the country that has heaviest impact on Euro Zone, so naturally depending on how German economy is doing, traders speculate by trading Euro.  Since trading is based on predicting the future, ZEW Economic Sentiment is what matters the most to traders. When it comes out better than expected, it signifies healthier economy, so traders tend to buy EUR/USD, and it subsequently goes up. When ZEW Sentiment comes out worse than expected, it signifies a weaker economy, so traders tend to sell EUR/USD, and it subsequently goes down.



Enjoy your pips.

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5 Most Predictable Currency Pairs

Every currency pair has a particular story, characteristics, behavior or misbehavior on the technical charts. Certain pairs will make a big breakout across clear lines of support and resistance and will not look back.  Or, when they aren’t able to break through, they will slow down and back off. Those are the more predictable currency pairs. Other currency pairs are more messy.
The reactions of pairs tends to shift over time: some become more predictable and some lose their style.  Here is an updated list of the most predictable forex  pairs, ranked and characterized.
Update: Here are the 5 most predictable currency pairs.

1. AUD/USD: The return of higher volatility and action in the markets makes the pair much more predictable. The pair respects uptrend and downtrend channels in a remarkable way, and also respects critical support and resistance lines. The pair’s predictability will likely be weaker in August when liquidity is lower, if no European news rocks the markets, but it is expected to shine during July and especially September, when there are is no liquidity shortage. In case of action in Europe during August, the Aussie will have the same behavior.
2. EUR/USD: One of the side effects of the euro-crisis are a more predictable euro/dollar.After breaking in a certain direction, the pair reaches a peak (or a bottom), marks it, and following moves in the same directions tend to challenge the same line. As we’ve seen in previous summers, this pair doesn’t take a break. The incessant news flow promises action all the time, and as it is the world’s most popular pair, liquidity is abundant. The pair doesn’t get the first place, as a major European event could rock the boat too strongly (see how to trade the Greek euro-exit) Yet also in such a case, it will be interesting to see if the pair will mark the bottom and re-challenge it, as it tends to do.
3. USD/JPY: This was traditionally a choppy and frustrating pair, but since the beginning of 2012, it is looking much better and even topped the list last time. The pair continues trading in clear ranges, often with double and triple tops. It is indifferent to the level of volatility. The pair behaves in a better manner when it is moving up.
4. AUD/CAD: This may not be the most exciting currency pair, but it might be a good choice for range traders, especially in slower days. This cross of commodity currencies can settle in a range for quite some time.
5. NZD/USD: The kiwi lost some of its mojo, but it still respects most old lines. Upon a breakout, resistance lines usually turn into support and vice versa. It came out first, and it could still rank higher, but not at the moment.

A few more notes:
GBP/USD had some good times, but it deteriorated later on, and dropped off the list.
Given the effective peg of the Swiss franc to the euro, USD/CHF moves in tandem with EUR/USD. Any franc crosses also move in tandem with their respective euro-pairs. So, unless the levee breaks, franc pairs are irrelevant.
EUR/GBP is very recently showing some positive signs, especially on the hourly chart, but the pair isn’t stable enough and could disappoint during the summer.

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Trade Forex Like a Pro- Revealed the secret of the floor traders, How you will be successful trading forex using price. This is proven method tested that is making over $1,250 Monthly. No sorry, no complicated calculation. This is as simple as "ABC"D

Forex Trading Strategies - Investing Versus Trading

By Henry Liu

One of the most important yet often ignored questions that all Forex traders should ask themselves, especially retail traders, is “what’s my goal?” or “what’s my endgame?”

Yes, it may seem absurd to bring this up at this stage of my 7-part series, but how many traders actually examine what do they really want from Forex?  Now, we are not talking about fantasy land here, but something realistic and achievable… and after you really thought through it, I think it comes down to either income replacement, or income supplement…  Of course, there are always those who want to strike it rich overnight, but I think you probably have a better chance at playing the lottery, because it takes just one combination of winning numbers to win millions of dollars, versus having series of winning trades, excellent mental discipline, and perfect timing to achieve your goal.  The odds are just astronomical; so yes, you’d have better odds at playing the lottery than trading Forex starting with a $500 investment and the explicit goal of turning it into $1 million.

Now that we get the myth out of the way, let’s understand the difference between Trading and Investing.

Trading – according to Investorword: is the buying and selling securities or commodities on a short-term basis,  hoping to make quick profits.
I think the key focus is “short-term”, as traders often enter and exit trades within minutes, hours, but very seldom, days.  News trading, straddling, scalping, all describing different types of trading with a short-term focus; as a matter of fact, most traders, especially the novice ones, tend to focus on this type of Trading, or in and out of the market on short-term basis.

Investing – on the other hand, is defined by Google as:

1. Expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture.
2. Devote (one’s time, effort, or energy) to a particular undertaking with the expectation of a worthwhile result.

Obviously investing is not short-term, but rather longer term ventures with goals of achieving profits that are worthwhile.
If your goal in Forex is income replacement or supplement, I’ll show you a way through investing to build up your portfolio.  If your goal is to gamble your account with expectations of huge returns, then the following may not interest you, however, you are welcome to follow along, because what you are about to read could change your Forex Trading forever.

Unless you are already a successful Forex trader, you may still make the same mistake: Closing profitable trades early while let losing trades run…  This is of course, human nature, and it is as true as gravity, because your brain is programmed to go to the path of least resistance.  A normal trader usually feels that taking a small profit is easier than taking a small loss… In a study into positive/negative framing, traders are usually biased against taking losses, even when logic states otherwise.  I’ll get into details in the final chapter of Forex Trading Strategies, but for now, just know that if you give a choice to 100 traders to take a loss of $3000 now, or $5000 later, but with a 10% of probability that market could come back to break even, 85% of traders would choose the $5000 or no loss scenario, when in fact the $3000 loss is the right choice mathematically.

The same applies to winning trades, and if we were to change the context, let’s say to either take profit on $3000 now, or $5000 later, but with 10% chance of making nothing, 85% of traders would take the $3000 scenario, leaving money on the table because of the fear in losing what you already have.  And in order to transform your thinking from trading to investing, we need to learn to do what’s hard, because if you are doing what 85% of traders are doing, you’ll end up with the same results of what 85% of traders are getting, and that’s losing…

And that brings us to the concept of Long Term Trades, or what I call: Currency Investment, or leaving your winning trades run. The idea behind the long-term trade is simple, trade based on major market developments, and once you are in the trade, stay in it until you have reasons to get out.  Start with a very small percentage of your account, preferably taking positions in the pair that will give you positive daily swaps, and then add more positions as the market goes in your direction.  Here are the specifics:

1. Study the market and wait for major breaking news that could change the entire market.  News like the Lehman Brothers, ECB Press Conference, Japan’s PM Abe’s snap election…  all of these news releases change the overall sentiments of the market and affect one or several currencies.
2. Choose a currency pair in the direction of the news that would yield positive daily swaps, or cost you less daily swaps.  If the swaps are mostly the same, choose the pair with the most liquidity (less spread), as it’ll end up costing you less.
3. Follow the market and start with a very small position, no more than 2x to 3x leverage.  Something that you can afford to leave running without losing sleep. If 2x leverage is still too much, take half of that.  (2x leverage is basically twice of your available balance.  If your available balance to trade is $10,000 USD, then 2x leverage would be $20,000 USD, or 2 mini lots.)
4. Once you are up 100 pips or so, move your stop loss to break even, and wait for the inevitable market retracement and add another 2x leverage position.  Note: As a rule of thumb, wait for market to retrace at least 100 pips from the high, then plan your entry.  Use previous Forex Trading Strategies such as Support/Resistance and Market Timing as your guides to enter.
5. Repeat step 2, 3, 4 and continue to add more small positions until you have reasons to get out of the trade.  Usually when a move like this happens, it is possible to see the trend last 3 months to 18 months.

These small positions could amount to huge profits in the long run.  I have accumulated 30+ positions on a trade with the first position giving me in excess of 1500+ pips of gain, and I have seen people with 10,000 pips of gain on one trade of shorting GBPJPY from 250.00 down to 150.00.  Even if you enter half of that, you will end up at least doubling your account with very little risk…  Remember, Rome is not built in one day, nor is your Forex portfolio.

Last but not least, let me share with you what kind of news you should paying close attention to… The kind that moves the market!  At the time of writing this strategy, market is particularly sensitive to whatever has to do with QE or Quantitative Easing.  Market is expecting the ultra easy policy to continue, so the next sharp move would take place when central banks stop QE, and that would signal potential concerns for inflation, which will lead to rate hikes.  So the first major central bank, ECB, Federal Reserve, Bank of Japan, or PBoC to talk about ending QE and hiking rates

What Should You Do When Your Online Forex Trading System Fails?

Forex trading systems cannot stay unchanged for too long. Market conditions change constantly and a winning system will eventually start losing. Sticking to the old system while hoping for the winds to change will likely end with a test of the depth of your pockets.
So what can you do?

Assuming that you are generally happy with your system, there are a few things you can do. It’s better to try some back testing, and then demo trading before making these changes on your real account.

• Switch to a higher time frame: Trading could become so choppy and “noisy”, in a way that your kills your system. On higher time frames, your system could work in a better manner.
• Switch to another currency pair: If you always stick to the same pair, perhaps the behavior of one of the currencies in the pair has changed, while the other hasn’t. Switching to crosses can be an alternative to the noise created by US events.
• Modify Stop Loss / Take Profit parameters: This is a small tweak that can make a big difference. It’s important to stress that you keep a normal risk/reward ratio and that you don’t extend the stops while you are trading.
• Remove one of the indicators: Too many systems use too many indicators. This complicates matters and makes it hard to understand why you won a trade and why you lost one. You might have the instinct to add another technical indicator to add extra validation. As aforementioned, this could only make things worse. Try refreshing your graph with one indicator less.
• Begin testing a totally different system: After already trying to make the necessary tweaks to your system, perhaps it’s time to acknowledge it doesn’t work and to seek a new one.

Basics of Forex Economic Indicators

This tutorial highlights some of the Forex economic indicators that will be able to guide the trader’s path in understanding financial and economic data.
Some indicators are very important for certain markets, e.g. Non-farm payroll releases in the US, and others may not be as important.
Guest post by Alexander Collins

Financial Data that Affects Currencies
Economic indicators are signals that provide guidance to the underlying data. This information is critical for traders to make buy and sell decisions. Financial economic indicators also describe the condition of the country’s economy and its impact on currencies.
Various governments and private financial organizations release economic data from time to time. This is part of public policy to keep everyone informed of changes to the country’s economy. These releases adhere to set schedules and traders keep watch for these pieces of data to make decisions.
The release of important indicators often results in increased trading volume and activity that in turn affects currency markets. Analysts will provide reams of information related to these indicators but traders do not need to have great theoretic knowledge to judge their importance.

Schedules of Indicators
Since the release dates and times of economic indicators are known in advance, traders generally track them closely. There are many online and offline media that will have this data instantly updated. Many trading software can automatically alert traders to the new data coming out. Also, many online brokers and dealers highlight them on their websites instantly.
Forex economic indicators represent several underlying economic data such as a country’s Gross Domestic Product (GDP), employment statistics such as non-farm payrolls, and other vital information such as Consumer Price Index that is an indicator of inflation in the country. Every indicator is useful in gauging the country’s economic pulse and how it will impact its currency in relation to others.
Traders can be overwhelmed by the barrage of economic data that is continuously being released by all the countries in the world. It is important to learn which of the economic indicators are critical important and which can be ignored. Some of the closely followed indicators that have a known effect on markets are the Non Farm Payroll data from the US, GDP figures and Central Banks’ Interest Rate changes.

Analyzing
Economic indicators dealing with inflation data such as CPI are important when related to certain countries but not to others. As the US dollar is a key driver in the Forex markets, any indicator that relates to the US or its Federal Reserve is watched alertly by traders. And known as the market movers in a big way, so it is good to anticipate them.
Forex economic indicators are universally available to traders but each trader may judge them in their own special way. There is always more than one opinion to analyze any of them. If traders feel positively about it, they will buy the underlying currency, or else sell it. This leads to major volatility in the market since traders want to make most of the opportunity generated by the release of an economic indicator.

Anticipating
Many of indicators are anticipated by market analysts and financial gurus. They try to predict these numbers based on their study of the economy. Many traders follow these predictions. When a released is quite different from the anticipated figure then it can cause quite a bit of volatility. Traders try to come to grips with the changed situation and assess their own exposure to the Forex market.

Example
For example, let’s say the prediction was that Non-Farm Payrolls would register a net gain of 10,000 jobs. Traders tend to position themselves in the market for this outcome. However, if the actual data came out as net loss of 25,000 jobs, there would be a wave of shock in the trading community. Such unexpected releases are common. Traders who were exposed to the market would immediately wish to liquidate their positions. This causes a run on the short side for the US dollar, with the exchange rate literally falling to the floor rapidly.
Some of the surprises in Forex economic indicators are related to revisions in data posted earlier. Governments and other organizations frequently revise older data based on any new information they receive. This impacts the current economic indicators, so traders are advised to look at these older revisions to understand the causes for the unexpected changes.
Economic indicators are a very big help for traders to develop their trading strategies. Traders must be aware of the schedule of the releases of financial data as these will have an effect on their already open positions. Traders have to follow Forex economic indicators especially for the countries whose currencies they regularly trade to gauge the outlooks of their respective economies.
This guest post is submitted by Alexander Collins, a forex software developer and trader. To compliment your reading, he offers to download free tools for MT4 at http://pipburner.com/free-forex-trading-tools/. For example, you will find there FX Pulse – trend detecting and news reading indicator.

Four Important Trading Skills You Need In Online Forex Trading.

Even if there are many important things you will learn from a forex school, there are still many essential skills that you may not get from your forex education. This is not to denigrate the value of formal education in currency trading, but rather to stress the limits of this training.
When you are actually trading with real money, there are many practical skills that you will need in order to avoid losing all your trading capital. Of course, there may be opportunities for you to learn some of these skills if the school offers mentorship programs or supervised trading opportunities. Here is a short overview of some of these skills.

1. Risk management. Every time you open a trade, there is always a chance that it will go against you and you will lose your money. Because of this, you will have to develop risk management skills that will help you to deal with the risk so that you’ll be able to navigate it successfully. One example of managing risk is to limit the amount of money you will risk per trade to a certain percentage of your trading capital. This will limit the amount of your losses in case you make unsuccessful trades. Of course this does not prevent you from increasing the amount ventured on your trades in case you feel the market is in your favor.
2. Developing a trading mindset rather than a gambling mindset. One of the worst things that you can do as a trader is to let your trade run rather than closing it out when it begins to go against you. A trader would accept that a trade is unsuccessful and accept their loss while a gambler would let the trade continue to run in the hope that it will eventually reverse itself in the trader’s favor.
3. Learning patience. It takes time to learn how to trade successfully and the trader should accept this rather than believe that after only a few courses, they will be successful at once. Apart from the lessons they will learn from the Forex school, they will also have to spend hours of practice making paper trades before they go and make actual money trades. It is said that it takes 10,000 hours to become proficient at something, and you will have to put in the time required to develop into a successful trader since it will not happen overnight.
4. Taking the long term view. Most beginning traders mistakenly believe the hype that the currency market is a place where you can make a fortune virtually overnight. Any good forex school will inculcate in their students the basic lesson that it takes time to make money. Attempting to make a big amount of money at once in the markets can only end in disaster unless you’re really lucky. Keep in mind that the only way to earn substantial profits from the forex markets is to trade using leverage, but this also greatly increases the amount of money you can lose.

The Process of Online Forex Trading Successfully

The primary reason most Forex traders fail is that they ignore the process.
In today’s world of quick-fix solutions, drive-thru menus, and expedient transportation, we want everything NOW. In our “convenient culture” we have come to expect results right away, putting aside the basic principles of online forex trading. “I’ll have a Big Mac, biggy-sized, with 10 milkshakes, and a vanilla latte!” Instantaneously, our ears hear the delightful words “Coming right up!”

When you ask for Online Forex Trading success, do not expect a “coming right up!” response. Online Forex Trading is not a get-rich-quick method. If you approach it as one, you will almost inevitably get-poor-quick. Forex Trading involves work, it requires a process. Let us view The Process of Forex Trading together.
Prepare 
Process is defined as: “A series of actions or steps taken to achieve an end.” The first step in the process of becoming successful at Online Forex Trading is to prepare. The preparation I am referring to is financial preparation, having the financial security to invest money that you can afford to lose.

Do not invest money that you can not afford to lose. Do not invest your last $2,000 in hopes of acquiring some much-needed cash for the bills next month. If you trade with funds that you can not afford to lose, the emotional pressure of trading will become so immense and intense that the likelihood of you losing your funds increases exponentially.

Risking you and your family’s financial welfare is never a wise decision. If you are currently not in the financial position to participate in Forex Trading, establish a goal to be financially secure by this time next year. Therefore, you can be confident in your future investing and you will value that investment substantially more than you would if you had not intently and purposefully worked and planned for it.
Without the foundation of financial security, your “wealth house” is exceedingly vulnerable to the storms of the Forex market.

Plan
Winston Churchill said it best; “He who fails to plan is planning to fail”. Having a trading plan is critical to anyone desiring success in Forex trading. Without a plan, any money you do succeed at acquiring, you can expect to succeed at losing very quickly.

Your trading plan consists of your trading vision, goals, and strategy (strategy being your parameters and plans on meeting your goals to accomplish your vision). It is critical to have these three essentials in your Forex trading plan. Your vision will keep you going, even when you fail miserably. Your goals will let you know that you are, or are not, making progress in regards to your vision. The Forex strategy is what you execute to actually see the trading results.
If you exclude any of these three essentials, your plan is ineffectual. A vision without a strategy is a fantasy. A goal without without a vision is insanity (similar to the Fed’s current unlimited Quantitative Easing).

Perfect
Now it is time to trade! Step one in trading: open a demo account. “Demo!? I want live!” Be patient my friend, this is a process!
It is now time to perfect your plan with demo trading. Demo trading can often be viewed as a toy for amateurs, but it is actually a wonderful Forex trading tool for those serious about developing into successful Forex traders.

In this stage of the process you will realize the faults with your plan and tweak them. You can try different plans and compare results. This stage of demo trading may last for many months, if you are not profitable trading with a demo account, chances are low that you will be profitable over the long-term trading a live account.

Perform
Now it is time to trade live. Your long awaited day has arrived. It would be wise to start with a smaller sized account and progress accordingly. You are now consistently trading your “perfected” strategy with discipline. Never feel obligated to enter a trade, but when you do, enter within the boundaries of your Forex trading plan.
One of the most difficult exploits of traders is trading detached from emotions. This is one reason why trading a demo account is so critical. By trading a demo account, you can train yourself to not be ruled by your emotions.
Investors of all kinds are constantly exposed to emotions as they trade, day traders especially. Emotions are good and obviously understandable when it comes to money, but letting them rule your Forex trading is a very dangerous position to be in. You have a choice to make: let your trades be governed by your Forex trading plan or let your trades be governed by fear, greed, and other emotions.
As you perform and execute your trading plan on a live account, you will inevitably find faults. If you notice your plan has stopped succeeding, don’t panic, it’s okay. You can always back up a step to “perfect” your plan further. Consistent, strict adherence to your trading plan ought to always be present in your Forex trading. On the other hand, flexibility is also an essential, understanding that the market is ever-changing.

Prosper
Being the largest market in the world, the Forex market contains endless opportunities for creating wealth. You are now part of the remnant of profitable Forex traders. As Forex trading functions as a stream of income for you and your family, you are now faced with more choices. Should I add funds to my account? Start a new account? Diversify? Save all the profit? The opportunities are endless, the hard work has paid off, and the price of the process was worth it.
Forex trading is not a sophisticated lottery mechanism nor a get-rich-quick scheme. Please do not let greed lead you into skipping steps in the Forex trading process. Good things are worth waiting for. Persevere through the process. If your Forex trading journey has been disappointing so far, you are not alone. Get your head up, start the process from step one and do it the right way. Let’s make 2013 a year where we follow the process, positioning ourselves for long-term wealth creation.