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Weak Japanese Economy

The Japanese Tankan survey for Q1 came out very weak. The key diffusion index for large manufactures declined to 14 from 22 in the previous quarter, the lowest in a year. The market had been looking for a number of +22/23. None of the underlying categories showed any progress as 4 fell and 2 were unchanged. And finally, with regard to profits for fiscal year 2005, the picture also looks very bleak. Clearly a disapointment for those looking for improvements in the Japanese economy.
Read more Forex News

Japan retreats from US dollar

Japanese purchases of US treasuries FELL 1.4% to $702 billion in January, showing the fourth monthly decline over the past 5 months on record and confirming that the biggest holder of US treasuries is indeed reducing its exposure to the depreciating currency. Not only the January holdings are the lowest in 6 months, but it is the first time in 4 years in which Japanese holdings registered such frequency of monthly declines in a concentrated period of time.

The data from Japan suggest that the latest articulations from PM Koizumi regarding diversifying currency holdings was not a verbal misstep but a preliminary alert to what will prove to be a prevailing trend in the future as Japan seeks to reduce its exposure to Treasuries, currently about 0.1% of GDP. Thus, a gradual Japanese retreat from US dollar securities into non-dollar assets is inevitable in order to avoid massive losses on the central bank’s US dollar portfolios.

Source - www.forexnews.com

FOREX Definitions and Basics

"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

Approximately 85% of all dailyforex transactions involve “the majors,” which include the US dollar, yen, euro, British pound, Swiss franc, Canadian dollar, and Australian dollar.

As a matter of convention, the dollar-yen exchange rate is expressed in yen per dollar. Hence, an increase in this rate indicates an increase in the value of the dollar versus the yen. In contrast, the euro-dollar exchange rate is expressed in dollars per euro. Thus an increase in this rate indicates a decline in the value of the dollar versus the euro.

Why Trade FOREX?

WHY TRADE FOREX?

• 24-hour trading: Traders benefit from the ability to respond to breaking news immediately, day and night.
• Superior market liquidity: More than one trillion dollars are traded every day in the FX market. The sheer volume of this market helps ensure price stability, as well as less gapping and price slippage.
• Narrower dealing spreads: Normal bid/ask spreads are five pips or less, much tighter than a typical stock transaction.
• No uptick rule: It’s easy to establish both short and long positions.
• Increased leverage: Firms offer traders a 2% margin, compared to a 50% margin for equity markets.
• No commissions or fees: Overall, FX has much lower transaction costs than equities or futures — an important point for active traders.

New Forex Trading Resource List

Updated and refreshed with additional Forex Trading Listings!

www.futures-trading-primer.com/forex_trading


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Money Management Solutions

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Never Let Your Guard Down

A trader must know and accept what the markets can do on the damage side to your equity, to your mental piece, and to your self esteem. You should expect that every day is a big suprise in trading. You must plan for any suprise before any trade is put on.

You can never let your guard down in trading. You must always know what the next step is for any situation. If you rehearse your cirteria for a trade, it can become second nature - just like driving a car becomes a subconscious effort for you when you are proficient at it.

Because you can never control what the markets will do, or how the order is entered in the pits, when a large fund will take profits, or enter a new position - you must start out with a trading plan that will take every angle that is important into account.

As commodities futures traders, we are not just looking for a few extra bucks to spend on a vacation - no, we are looking for returns in investment that would not be considered fair in any other investment. We are looking for the big return - that involves big risk.

Trading is a loser's game. You must learn how to lose. Expect it. Prepare for it. The biggest loser who loses small will continue in the game!

If you start out expecting the adverse market moves, and plan your actions around that, then you are not giving the market the power to control you position or emotions with adverse market moves.

Next - When to get out of a position...

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Futures Trading Forums

I found a great resource site I thought I'd share;

Check out this great list of Commodity Trading Forums, Chat, Discussion Boards, Bulletin Boards, IRC, Hotcomm and Paltalk Rooms - http://commoditycentral.com/commodity-trading-forums.htm

Today, I clicked through this list and posted to a number of Forums, inviting people to review my blog, and my comments on Phantom of the Pits Gift.

Thank you for visiting, and please let me know if I'm missing some pointers!! :-)

Doug

No Judgement Approach to Trading

Phantom of the Pits - In trading, rules are not meant to be broken for your own sake. The Rules bring you to a no judgement-type approach. you design your trade program and approach to tradking by keeping the major choice of positions within your program while keeping the confirmation to the market. Your only job is to follow your trade program while obeying Rule 1 and 2.

The rules take away the need to deside what to do during the trading day. You have a good idea of what to expect from yourself at all times, rather than guessing what will take place with your positions.

You will be proven correct with your positions, or you will simply get out of them. You don't stick around and increase your risks if the market has not proven your position correct. It is much better to get out and re-evaluate than to stay in and wait for the market to come back.

In addition, using Rule 1 will allow you to have sanity about your next trade. Your mental well-being is worth a lot in trading; you can trade well when you are thinking well. Remember it is not bad to be wrong - infact, you can expect to be wrong with, perhaps, 60% of your trades and still make a profit. Rule 1 hastens you to remove a bad trade, keeping the losses small.

The No-Judgement Approach to Trading simplifies your trading life. Knowing what to expect, and having those expectations up front from the entry of your trades greatly enhances your ability to make good trades.

Next - Never Let your Guard Down!