Roll Coaster Ride of Global Equity Market from 21st to 25th Jan 2008

Posted on January 26, 2008
Filed Under Equity Market | 5 Comments

What a teeth-biting volatile week in the global equity market. At the start of the week, global stock market went into a free fall like there was no tomorrow. To prevent the US equity market following the footpath of its other counterpart, Federal Reserve slashed its key interest rate by three-quarters of a percentage point to 3.5% on Tuesday before market opened. It was the biggest rate cut by the Fed since October 1984.

That unscheduled moved saved the world and limit the damage caused in global equity market. By the end of the week, the DOW gained 0.9 per cent and the S&P 500 advanced 0.4 per cent, while the NASDAQ slipped 0.6 per cent. This similarity was also shared by other stock market.

Nevertheless, early of the week free fall was enough to create havoc for many traders, both home-based and professional.

The below video that I stumbled upon shown a poor young home-based trader lost US$40,000 in just 2 days on holding a equity future market position over the weekend. On Monday market opened, the market crashed and all of a sudden his account was axed by 80% within minutes. This original video was filmed as he was watching his account drop in real time like the world was ending. I must warned you in advance that this video is not for the weak heart, the noise level is of poor quality, and most importantly, its vulgarity with lots of “Fxxx” words.

Stock Futures Trader Having Rough Day - Watch more free videos

You must be thinking that was bad, right? That young trader lost was nothing if you placed him alongside the now very famous Societe Generale SA trader, Mr Jerome Kerviel. His bets on stock index futures caused a Euro 4.9 billion (US$7.2 billion) trading loss, the largest in banking history. It was also the world’s largest loss by a single man ever! A feat in history that others may take years to surpass, or maybe not….?

With all the market volatility over for the weekend, it may be time to relax a little with this video. You may have seemed this video before, I watched it years ago but I still like it. The “robot” dancers with their absolutely amazing moves is so freaking cool.

Cheers, Kampai, Proscht^^!!

Fundamental Analysis in Forex Trading

Posted on January 25, 2008
Filed Under Forex Education | Leave a Comment

In Forex Trading, fundamental analysis focuses on the theoretical models of exchange rate determination such as purchasing power parity (PPP) and the theory of elasticity.

Fundamental analysis also concentrates on other major economic factors such as Gross National Product (GNP) that measures the economic performance of a nation economy. Other economic indicators include Gross Domestic Product (GDP), which refer to the sum of all goods and services produced in a country. Consumption spending, Investment and government spending are all very influential due to their sheer size and have great impact on a nation economic performance.

Inflation Indicators such as Producer price index (PPI), Consumer price index (CPI) are closely watched by traders to measure inflationary activity. For the Federal Reserve, the method of choice to flight inflation is to raise interest rates. And higher interest rates tend to support the local currency, in this case, the US dollar.

For the fundamentalists, this approach to examine all the factors will determine the real value of a currency. This is normally referred to as the intrinsic value. A fundamentalist believes that if the intrinsic value is below the current market price, there is a good opportunity to long or buy the currency. And if a currency current market price is higher than its intrinsic value, there is higher probability that the currency will falls, hence, opportunity to short or sell.

Cheers, Kampai, Proscht^^!!

A video from Aaron Wilburn “If My Nose Was Running Money”

Posted on January 21, 2008
Filed Under Inspirational | 3 Comments

Beware!! – Don’t watch this video before the start or your Forex Trading session. You’ll not be able to concentrate reading your technical charts. Only watch it at the end of you trading day.

This is one of the hilarious video that I’ve watched in recent time. If you want something that makes you laugh out loud, watch it. If your wife or girlfriend gives hint and want you to buy her an expensive gift, play it to her. If you want to hint your husband or boyfriend to buy you an expensive gift, email my Blog’s URL to him, ask him to watch it.

Now I’ve a WISH – It’ll be great “if my nose was running money”. Ha..ha…..

This is the Lyrics of the song in the video:

“You ask me if I love you
And if my love is true
Well if I were a rich man
Here is what I’d do
I’d buy you a diamond ring
And a new fur coat or two
If my nose was running money
I’d blow it all on you

If my nose was running money
I’d blow it all on you
I’d buy you a Cadillac a new Mercedes too
I’d build you a mansion upon that mountaintop
If my nose was running money
But honey, it’s snot!

If my nose was running money
You’d have anything you please
Anytime you wanted cash
All i’d have to do is sneeze
Honey you’d win the lottery
When I have a cold or flu
If my nose was running money
I’d blow it all on you

It’s a booger of a problem I’ve got
I wish my nose was running money
But it’s snot!
I’d buy you a diamond ring
A new fur coat or two
If my nose was running money
I’d blow it all on you!!”

Cheers, Kampai, Proscht^^!!

Types of Forex Trading Orders

Posted on January 20, 2008
Filed Under Forex Education | 1 Comment

To trade the Forex market, traders must understand the different type trading orders. The following are some of major types of orders that can be found on most Broker trading platforms if one would to trade Forex.

Market Order - A market order is an instant order to buy or sell a currency pair at the current market price and is used to enter or exit the market quickly. Under normal market conditions without any major news release, market orders are executed instantly. When a market order is placed, what the trader means is simply to buy or sell the currency pair at whatever price it is traded now. Under extreme volatile market conditions, especially during major news release, it is possible for a trader to get re-quoted. This means that when prices are moving very rapidly, the price requested may have already changed by the time the order is received by the broker. If this occurs, the broker will immediately provide the trader with a new quote price. The trader can then choose whether to execute the re-quoted price. However, it is important to note that under no circumstances will a market order be filled unless the trader agreed to it.

Limit (Entry) Order - A limit order is a pending order placed to buy or sell a currency pair at a specific price to enter the market. The order essentially contains two variables: price and time. The trader specifies a price at which he is willing to buy or sell a certain currency pair and also specifies the time that the order should remain active. A limit order can be entered either as GTC (Good till cancelled) or GFD (Good for the day). A GTC (Good till cancelled) order will remain active in the market until the trader decides to cancel it. The broker will not cancel the order at any time. It is the responsibility of the trader to remember that he or she possesses the order. A GFD (Good for the day) order will remains active in the market until the end of the trading day. As the currency Spot market is an ongoing market, the end of day will normally be 00.00 GMT on the broker trading platform.

Stop (Exit) Order - A stop exit order is a pending limit order placed to buy or sell a currency pair at a certain price in order to exit the market. The order contains the same two variables, price and time. The difference between a limit order and a stop exit order is that stop order is used to exit the market whilst limit order sole purpose is for entering the market. In Forex trading, Stop exist orders are used for various reasons. To exit the market once a trade loss has occurred. Use to exit the market when the trader profit target is reach.

Trailing Stop Order - A trailing stop for a sell order sets the stop price at a specified number of pips below the market price.

OCO (One Cancels the Other) Order - An OCO order is a mixture of two limit and/or stop orders. Two orders with price and time variables are placed above and below the current price. When one of the orders is executed the other is automatically cancelled.

Understanding the above will prepare a trader to place the correct order for their Forex trading trades.

Cheers, Kampai, Proscht^^!!

Inspirational Video – “The Don’t Quit Poem”

Posted on January 18, 2008
Filed Under Inspirational | 5 Comments

For the last three days, few of readers were kind enough to write to advice that my Blog’s third column was not aligned properly when viewed with their Internet Explorer. They tried to use Mozilla Firefox and the Blog display perfectly. Hence, the problem was only isolated to IE. I did the tests myself and realized that there must be something wrong with my Blog’s HTML code.

For the benefit of all the IE users, I told myself that I must resolve the technical errors. Being a newbie Blogger, I requested the assistance from a friend who happened to be an expert in this field. After spending numerous hours mingling with all the source codes, we were still in doubts as to what exactly when wrong.

We tried to change themes, reduced the width of the second and third columns, and reloaded all the plug-in. But the problem persisted…. With nothing else to do, I landed in YouTube and started checking out some of the uploaded videos. I found this video and started playing it……..With its smoothing background music, appropriate pictures and wonderful choice of words…….

I immediately felt much better after listening. After a long and tiring day, the problem was finally resolved – something related to the “fieldset” code.

I would like to share this inspiring video to all of you. If you ever encounter a teething problem, tell yourself – “Rest, if you must….but don’t you quit.”

Cheers, Kampai, Proscht^^!!

Is Fed cutting interest rate by 50 or 75 basis point cut on 29th-30th Jan? Or will the cut be now?

Posted on January 17, 2008
Filed Under Forex News | 5 Comments

For Forex traders trading on Fundamental Analysis and News, being updated and knowing what is happening may be vital for one’s trading success.

Currently in the US, Dow Jones is down around 6% since the beginning of the year and the Nasdaq has shed almost 10%. Banks keep making public announce about their big write-off from the sub-prime woes and big looses. Federal Reserve’s Beige Book survey said that US economic momentum had moderated during the end of 2007. This moderation is partly due to the contracted retail sales and producer prices. Bloomberg News said that this is the worst year for US retailers since 2002.

Economists are now raising the odds for a recession. Some even argue that the US economy is already in a recession. Based on textbook theory, a recession is defined as two consecutive quarters of negative GDP growth. Technically, US economy is still not in recession, even though the last quarter of 2007 may contracted. Only if this quarter is in negative growth that you declare the US economy is in a recession.

No one really knows for sure how weak the economy will get. How many additional write-off banks will report? Bigger shocks and more scary stuff may yet to come as banks call for big adjustments in their account book. As one government has said, it is better to eat your bitter medicine now to cure your illness at one go rather than to wait for it to develop into a tumor. How high oil prices will soar? Soaring oil prices will have damaging effect on the US economy as a whole, as US is the world’s largest oil consumer. How bad the US economy will be performing this quarter is anyone guesses?

We all know by now that US central bank, Federal Reserve, is one of the chief movers to most of your investment results. The Fed can be your friend or fore depending whether they increase or decrease the value of your investment portfolio. I said that because Fed has the power not just in anticipating market trends, but they actually cause them, by shifting the playing field when they raises or lower interest rates.

Now, the Fed has the power to determine whether the US economy falls into a recession. In the Forex futures arena, the market has already factor in a 50 basis point cut during their 29th-30th Jan meeting. If they cut interest rate by a mere 50 basis point at the end of the month, good chances that the US dollar may regain some composure as the market has already anticipated it. How far the US dollar will strength will also depends on what is the market sentiment towards other currency. As for the stock market, it will likely rally for a day or two and continue its downward momentum.

What if Fed cut interest rate by 75 basis point end of the month? Is this possible? Yes, as there is already speculation that the Federal Reserve could cut US interest rates by as much as 75 basis point. Some even mentioned that an interest rate cut now may be possible ahead of its scheduled end of month meeting. The latter step if taken is to send a message that the Fed is not playing around and will do everything in their power to prevent a recession from happening. Such announcement may be good for the stock market but not so good for the US dollar. How well or bad the US dollar will perform till the end of this month will greatly hinge on the decision of the Feb.

In Forex Trading, knowing the news and trading on the news are two different games.

Cheers, Kampai, Proscht^^!!

Using Law of Attraction to Increase your Wealth Creating Opportunity in Forex Trading

Posted on January 15, 2008
Filed Under Inspirational | 9 Comments

Forex Trading is just one of the many wealth crating mean and process to achieve wealth. As far as wealth goes, you don’t need money to be happy. A lot of people refer to cliché like “Money is not everything”. There is truth to that statement but the opposite also holds true- without money you may have nothing!

I believe wealth will only follow those who ‘think’ and ’see’ themselves as wealthy. Only then will the Universe present you with wealth creation opportunities. If you have the opportunities but don’t act upon them, you will not be able to convert it to real wealth. Forex Trading is one of the many conversions to wealth.

Before we could achieve anything in life, we need first to condition our minds. We need to feed our brains with all positive thoughts. Positive affirmations can help to overcome all negative thoughts and assist in promoting a healthy state of mind.
Most of us don’t realize that if we constantly tell ourselves negative things, we are building a destructive belief system. A negative but powerful barrier, which limit and prevent us from achieving success in life. Many self improvement gurus have mentioned that one of the most effective ways to change this belief system is to replace misguided negative messages with new positive ones.

Many Gurus said that the power of positive affirmations will make itself felt if you repeat them DAILY and when you are thinking negatively. The Law of Attraction is perfect and will follow only your thoughts and actions.

Personally I try to watch these videos just before the start of a new Forex Trading day. It really inspires me to make TODAY successful

The following affirmations are those from the video clip. You can also develop others of your own. Tell yourself:

“I am a money magnet
Everything I touch turns to gold
I have more riches than king soloman’s mines
Money falls like an avalanche over me
There is more money being printed for me right now
I am receiving money making ideas every day
I am receiving unexpected checks in the mail
I have more than enough money for everything that I want
I have my dream home
I have the best of everything
I am grateful and celebrate everyday
I know when to ask for what I want
No matter what it is that I want
No matter how impossible it may seem
I believe and know its mine
The answer must be… (your wish is my command)”

Of all the money making opportunities, Forex Trading is just one method that you can act upon to attain your goals to abundant of wealth.

Cheers, Kampai, Proscht^^!!

What are the Different Sectors in the Forex Market?

Posted on January 15, 2008
Filed Under Forex Education | 1 Comment

Within the Forex market, there are various different sectors, some as follows:

Currency Spot Market - This is where a spot deal takes place between two parties who deliver a certain amount of different currencies to each other, based on an agreed exchange rate, within two business days of the deal date.

Currency Forward Market -This is where a forward transaction takes place between two parties who deliver a certain amount of different currencies to each other, based on an agreed exchange rate, past two business days of the deal date.

Currency Futures Market - This is a special case of the forward market whereby the deals mature past the spot value date. Other than these few sectors, there are also the Swap and Option market.

Of all the above sectors, the Currency Spot market is the biggest with 48% market share followed by Currency Swaps at 39%.

The Spot market with almost half of the entire Forex market share is where many private individuals speculated in the (Long) buying and (Short) selling of currencies with the intention to make profits.

It is estimated that about 70%-90% of Spot Forex transactions is speculative. In simple term - the individual or institution that buys or sells the currency pairs has no intention of actually taking delivery of the currency. In reality, their sole purpose is to speculate on the movement of that particular currency to generate profits.

In recent years, many traders have switched from currency Futures market trading to Spot market trading. The Spot market offers better liquidity and generally has a much lower trading cost than currency futures. Banks and brokers in the Spot market can quote markets 24 hours a day. Furthermore, the Spot Forex market is not burdened by exchange and NFA (“National Futures Association”) fees, which are generally passed on to the client in the form of higher commissions. For these reasons, virtually all professional traders and institutions conduct most of their Forex dealing in the currency Spot market rather than in the currency future market.

Cheers, Kampai, Proscht^^!!

Factors that Cause Currencies to Fluctuate

Posted on January 13, 2008
Filed Under Forex Education | 4 Comments

In Forex Trading, the cumulative buying and selling of a currency causes it to move either up or down. There are numerous factors that cause the fluctuation of exchange rate.

• Government and Central bank monetary policy and balance of payment.
• A country’s political, social and fundamental economic environment such as economic growth rate, inflation and interest rate.
• The inflow and outflow of capital between nations - be it physical or portfolio flow.
• Central bank abilities to back up it own currency during speculative attack will provide faith to calm its currency price.
• Speculative activities by professional currency manger with billions of funds can also sometimes move the market.

Movement of the currencies is ultimately dictated by demand and supply. However, predicting demand and supply in Forex Trading is not as simply and straight forward one would think.

Cheers, Kampai, Proscht^^!!

Inspirational Video – “The Secret to You..A Gift From The Secret Scrolls.”

Posted on January 11, 2008
Filed Under Inspirational | 1 Comment

After watching this Video Clip from a blogger’s collection, I would like to share it to all my like-minded Forex Trading readers. Every time I played it, my mind is tingle with joy and it’s so uplifting to my emotion.

The words from this clip is simple and yet so inspirational and provocating to our minds. Many times, trader’s emotions (greed & fear) will create havoc to our trades let alone to our life.

Some of words really connect to our trading philosophy:

“I am grateful to be alive” – Stop-loss strategy in place so that your trading capital is not completely wipe out in a few losing trades. If you’ve no capital to trade, you are as good as dead.

“All good things are coming to me today” – Just imagine you’re on a losing streak. These words of encouragement will definitely inspire you on.

“I am at peace and one with everything” – It is only with this thought in mind that you could trade calmly when the market is moving fast.

I hope this video clip will inspire us to be “awake, energized and alive”.

I think positive attitude is very crucial for a Forex trader. In the future, I will continue to upload such inspiration videos to brighten up our trading life.