Thousands of people try their hand at FX
trading for the first time each year in the UK, and despite all the heeded
warnings most fall into the same old pitfalls that can so easily be avoided.
Here are some do’s and don’ts that may not make you money, but will most
probably help you save some!
The best way to become a successful trader is to honestly evaluate your own performance without allowing emotions to cloud your judgement - all try, some succeed, most fail.
Too often novice traders start trading with large volume, made possible by excessive leverage - it’s no surprise that the majority quit the market within six months. It’s important to understand leverage and how to utilise it correctly.
Retail traders are the David's of the FX world, taking on the Goliath's that are banks and institutions. This article takes a pragmatic view of what retail traders are up against and where they fit in. There are ways that David can beat Goliath; the secret is having a clear strategy that plays to your strengths.
Market tension continues strongly into 2012 as European debt, US fiscal health, Chinese growth and geo-political tensions in the Middle-East lead the market themes
The EUR directed focus last week but it was the high-beta currencies that were the weakest performers overnight after Sunday’s market open
Over the past six weeks USD is higher against the Euro and down against JPY, but it has fallen against the higher yielding commodity currencies
This week’s macro calendar centres more on Europe and China than the US
FX space largely unchanged last week as all currency pairs posted ±1% change against other G20 counterparts
Gold prices were a shade lower, meeting strong support around $1670 per troy ounce
Short-term, traders remain sceptical as to whether we have seen enough to reverse the crisis of confidence in the Euro-zone. Chances of an IMF program for either/both Italy and Spain has increased with news of an additional €200bn IMF fund
Domestic demand is slowing in China as well as globally – prime data out this week could be the most market moving FX theme in the absence of revelations in Europe
Oil and Gold remain the most volatile contracts as risk tolerance reversed course. Commodity currencies and Scandies were the pack leaders last week in G20 FX – most strength seen against USD and JPY
ECB expected to cut interest rates again (Thu) and provide additional liquidity. Political progress also a key focus – full fiscal union would be hugely EUR/USD positive
Periodic Chinese activity data could be crucial if global economic slowdown is worse than feared
On the political front, near-term focus is on Italy’s reform agenda to be unveiled today and on the new Spanish government’s program once it takes office on December 22nd
Multiple central bank meetings coming up: RBA and BoC on Tuesday, followed by RBNZ, BoE and ECB on Thursday. The RBA could be market moving because a cut is fully priced but the bank may not ease so soon after its previous move
With the largest financial crisis in living memory behind us, a larger, more pervasive crisis is setting in as governments continue to privatise public gains and nationalise private losses.
As financial markets stutter forward amid growing private and national debt, traditional currencies are in danger of suffering a confidence crisis, but, given their dynamics, can also be a leading indicator for all asset classes.
The global economy is returning to pre-crisis norms in terms of volatility and confidence, but with the balance of power shifting towards Emerging Markets and countries that have largely avoided the effects of the credit crisis, can financial markets bear the strain?