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Using Commodity Prices as Leading Indicators

July 23rd, 2009
by Ahmad Hassam

Commodities, namely gold and oil, have a strong and substantial correlation with forex markets. By understanding this relationship between gold, oil and currency pairs, you as a forex trader can gauge risk, forecast price changes as well as understand exposure.

Gold and oil prices essentially tend to move based on almost similar fundamental forces that affect a few currency pairs. Four major currencies, the New Zealand Dollar, the Australian Dollar, the Canadian Dollar and the Swiss Franc are considered to be commodity currencies.

The NZD, CAD, AUD, and CHF all have strong connection with gold prices. Natural gold reserves and currency laws in these countries result in almost mirror like movements. The CAD also tends to move with the oil prices.

However, the correlation between CAD and oil prices is not that strong. Each one of these currencies has a correlation with gold and oil and the fundamental factors behind doing so.

Knowledge of the fundamental factors behind these movements, their direction and strength could be a good method to discover trends in both the markets. There is a strong correlation between gold prices and US Dollar as well.

During unstable geopolitical times as well as when global recessionary fears become strong like that presently, investors tend to run away from US Dollar and instead turn to gold as a safe haven for their investments and hoard their wealth.

Therefore, as Dollar loses value, gold prices tend to rise as wary investors become afraid of losing their wealth. As US is going to print more and more dollars to finance its budget deficits, USD will depreciate and gold will appreciate. Many countries are trying to hoard gold keeping in view this anticipated depreciation of dollar. AUD/USD, NZD/USD and USD/CHF are currency pairs that tend to mirror gold movements.

Global energy needs are wholly dependent on oil supplies. Oil prices usually tend to have a huge impact on the global economy. Dont forget, the early part of 2008 when oil and commodity prices jumped skyward taking the global economy to the brink of recession. Oil prices did come down due to the stock market crash but it is being forecasted that it will rise again when the global economy comes out of recession and the demand for oil rises again. USD/CAD currency pair tends to show an oil relationship. The major reason for this relationship is the heavy dependence of US and Canadian economies on foreign oil.

Generally speaking, commodity prices are usually considered to be a leading indicator of currency prices. As such, commodity block traders monitor gold and oil prices to forecast movements in currency pairs. The knowledge of this relationship between gold, oil and currencies can help forex traders to diversity their risk exposure using different products. The combination of gold and forex trading can be very profitable.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Know These Forex Broker Tricks. Learn Currency Trading!

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How Seasonal Patterns Effect Forex Markets?

July 22nd, 2009
by Ahmad Hassam

Most forex traders analyze and predict the future direction of currencies using fundamental or technical analysis. The craftier among them use the combination of both to predict direction of forex markets.

Fundamental analysis studies the long term effect of economic forces on currency markets whether financial or socio political using various economic indicators. Technical analysis is based on the premise that all available information is already compounded into the prices and the future prices can be predicted based on past prices.

If you have been trading stocks, you must be familiar with the term: The January Effect. It has been observed over a long period of time that stocks tend to perform very well between the last week of December and the first week of January.

The explanation of the January Effect is simple. During the last few days of the year, many investors are concerned about their tax returns. They try to realize capital gains or losses to file their tax returns. Many corporations also use the end of the year to face lift their balance sheets favorably at the end of the year.

Seasonality is not peculiar to the stock markets. In fact forex markets also tend to exhibit strong seasonal effects. Seasonality can be defined as a pattern that occurs at a particular period of the year.

The January Effect also takes place in forex markets because most of the investors who are liquidating their stock positions try to convert their local currencies into dollars at that time.

However, dollar may show stronger January Effect with some currencies as compared to others. It has also been studied that dollar shows a summer seasonality when it tends to rise in USD/JPY and USD/CAD in the month of July and give back its gains in the month of August.

There are other seasonal patterns that have been studied in other parts of the year. Now, it does not mean that these seasonal effects take place exactly the same way every year.

Seasonality in currency pairs only means that there is a strong probability that during a particular time of the year, the chances of a particular currency pair going up or down are high.

Forex traders should keep these seasonal patterns at the back of their minds while trading during that period.

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading; stocks and forex. Know These Forex Broker Tricks. Learn Currency Trading!

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Economic Factors That Move the Forex Markets in the Short Term

July 21st, 2009
<div style='font-style:italic;' class='byline'>by Ahmad Hassam

Fundamental traders depend on fundamental analysis in trading forex. Technical traders depend on technical analysis in trading forex. But the importance of economic data cannot be underestimated in shaping trading strategies.

Over 90 percent of currency transactions are done against USD. USD is either the base currency or the counter currency in most of the currency trades.

Since majority of the currency trades involve USD, you as a forex trader will also most probably trade USD most of the time. Release of certain economic data has significant and lasting impact on currencies like USD.

With experience, you will understand that currency markets reaction to the release of different economic data with time also changes. A few years back, US GDP figures used to be important for USD but they dont have much impact now.

EUR/USD is the most liquid pair in the forex market and is heavily traded. The release of Nonfarm Payrolls (NFP) data on the first Friday of each month has become important in recent years. These figures makes EUR/USD and other pairs involving US Dollar highly volatile for some time until the markets digest the importance of these figures.

Similarly, the release of US housing sales number every month has become very significant for USD in the recent years. Previously, forex markets used to give more importance to US Trade Balance.

Range traders like to trade when the currency pair they are trading tends to range. If you are a range trader who wants to scalp for a few pips every time you trade, you should avoid the day NFP data is released for trading. This is a highly volatile day for the markets.

However, if you use breakout trading as your trading strategy, understanding which economic data is expected to be released on a particular day can help you in your trading. You should plan your trading strategy in accordance with the significance of the economic data to be released.

In nutshell, understanding that some economic indicators move the forex markets most is very important for you as a trader. It is also important for you to know which economic data the market deems most important at any point in time.

You should also know which data causes knee jerk reaction in the markets and which pieces of data will have lasting reaction in the forex markets.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading; stocks and forex. Know These Forex Broker Tricks. Learn Currency Trading!

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Fundamental Trading Strategies in Currency Markets (Part I)

July 20th, 2009
by Ahmad Hassam

As a forex trader you should use a combination of trading strategies in developing your forex system. This will hedge your risk and maximize return. There are a few strategies based on fundamental analysis and others are based on technical analysis. You can use a fundamental trading strategy that is based on big macroeconomic events for swing trading that may last from a few weeks to a few months.

Short term forex traders and day traders try to focus only the economic news release of the week and how it will impact their day trading. This works well for many traders. Learn forex nitty gritty, a method based on only 20 minutes trading a day.

Fundamental trading strategy based on macroeconomic events can make few thousand pips for you in a matter of a few weeks or months. You should not lose sight of the big macroeconomic events that may be bubbling in the economy or for that matter in world. Large scale macroeconomic events have the potential and ability of moving the forex markets big time for a long time.

The impact of big macroeconomic events has the ability and potential to change the fundamental perception about a currency not only for a few days but for a long time. Events such as natural disaster, political uncertainty, wars and international meetings have widespread physical and psychological impact on forex markets.

Therefore, by keeping on top of the global developments, understanding the underlying market sentiments before and after these global events and trying to anticipate them could be very profitable for you. At least it can help prevent significant losses in your currency trading.

You may ask what type of big events affects the currency markets in the long term. Important world summits, major central bank meetings, potential changes to the currency regimes, possible default by large countries, G-8 Finance Minister meetings, Presidential and Parliamentary elections in big countries, possible wars, FED Chairman semiannual testimony to the Congress. These are only a few examples of big events that make the currency markets jittery and may have a long term impact.

For example, 2004 and 2008 US Presidential elections were hotly contested. Candidates had different stances on the growing budget deficit and how to deal with the recession engulfing the US economy. This resulted in the overall USD bearishness.

G-8 meetings also tend to leave a long lasting impact on the currency markets. Combined these eight countries account for the two third of the world GDP. So whatever decisions that are taken during these G-8 meetings usually leave a short term as well as a long term impact on the global forex markets.

For example, the US Dollar collapsed after the September 2003, G-8 Finance Minister meeting in which the finance ministers wanted to see more flexibility in the exchange rates of the member countries. This meeting was also important as the US Trade Deficit was ballooning and going out of control at that time.

EUR/USD bore the burnt of the dollar depreciation. China and Japan intervened aggressively to stabilize their currencies. USD had already begun to sell off leading up to the meeting. The trend continued for many months after the meeting.

Therefore, the long term impact of these events is much more significant that the short term impact and the event itself have the ability to change the overall market sentiments.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Know These Forex Broker Tricks. Learn Currency Trading!

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Understanding How the Forex Brokers Make Profits

July 18th, 2009
by Ahmad Hassam

When you open a forex trading account, you will be told by your forex broker that there are no commissions involved in currency trading. Most of the new traders take their broker words as true. They think that the cost of trading is minimal.

Forex brokers also called FCMs (Futures Commission Merchants) make profits through the bid-ask spread they offer to their clients for each currency pair. This bid-ask spread is the trading cost for you and the profit for your FCM.

Lets take a practical example. Bid/ask spreads are usually overlooked by the individual traders as the price they have to pay for trading. So lets calculate what your cost of trading can be in a year.

Suppose you are a day trader. You trade 5 times a day. Taking away the weekends, when you cant trade, there are 250 trading days.

As a day trader, you open and close your position before the end of the day. That means each position is traded 2 times.

Suppose; your start with an account size of $50,000. You are using a leverage of 4 only, you are cautious. So this $50,000 deposit will control (50,000) (4) = $200,000 for you.

Your Annual Turnover will be; (5) (250)(2)(200,000)= $500 M. Huge! Now lets calculate how much your broker will make and what your spread cost is. Spread Cost= (Annual Turnover) (spread)/2.

Suppose further, the bid/offer spread charged by the broker is 3 pips. 3 Pips Spread Cost= (500M) (0.0003)/2= $75,000.

Suppose, the spread offered by the broker is only 2 pips. 2 Pip Spread Cost= (500M) (0.0002)/2= $50,000.

You can see now, the cost of trading with a 3 pips spread versus a 2 pips is $25,000. Huge for you, this is 50% of your account equity. You see now that a 1 pip difference can result in $25,000 more as trading cost for you.

You will need to make a profit of $75,000 in a year simply to breakeven with a 3 pips spread. Trading costs are one of the most important reasons most active traders fail in the long run.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Know These Forex Broker Games. Learn Forex Trading.

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Sourcing Auckland Accommodation

May 28th, 2009
by Vanessa Mortley

The kind of accommodation that you will find in Auckland all depends on two things: what you’re looking for and how long you intend to stay. If you’re visiting and looking for an Auckland accommodation for a week, for example, you’ll find a variety of options than those who are moving long term and seeking serviced apartments or living arrangements for their situation. There are many Auckland accommodation options that you can find, as long as you know what you need.

If you are looking for a serviced apartment, Auckland can afford you many different options to choose from. There are flats and apartments of all kinds all over the beautiful city of Auckland, so you are sure to find what you need. However, if you are travelling on vacation and seeking an Auckland accommodation like a hotel room or a rental house, there are many different things that you can find.

Hotels and rental homes are fortunately easy to find in Auckland. Literally, there are thousands of places that you can stay whilst on vacation in New Zealand. The options range from budget accommodations to high-end luxury suites and of course, everything in between. Being an all year round tourist destination, New Zealand can prove to be difficult when it comes to finding vacant accommodation. So be sure to book your accommodation well in advance to ensure that you get the Auckland accommodation that you want.

The city of Auckland is beautiful, and affords a different type of vacation than many other destination cities. The city is situated on an isthmus with water on two sides, and makes any vacation stay a beautiful one no matter where you find accommodations. Take the time to check a map when you are considering your Auckland accommodation, because you will want to make sure that the location suits your needs as far as what you intend to do while in town.

If you’re looking to get away for awhile or a long while, Auckland is a great choice of destination. Just plan your trip, pack your bags, and be on your way to the vacation of a lifetime. Rest assured that as long as you know where to look, you should have no trouble in finding the best Auckland accommodation that suits your needs and budget, no matter how big or small they might be. Book your accommodations today and be on your way to a relaxing vacation in no time at all.

About the Author:
Visiting Auckland and searching for Auckland Accommodation? Let Quest Newmarket fulfil your accommodation needs.

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What to Do When Your Contract Hire Car Breaks Down

May 26th, 2009
by Harvey Williams

Unfortunately it should always go to the main agent to have any damage repaired. To do otherwise is risky and can in the long term work out more expensive. Whilst a vehicle is under warranty one must be conscious not to do anything that risks invalidating the warranty and of course one has to take into account that the leasing company owns the vehicle.

The temptation to have repairs carried out at a smaller garage, that is less expensive is understandable. In particular when for one reason or another the company is not intending to claim of their insurance; this can be because they feel they have already made too many claims in that year, or a large excess makes it unviable for them to claim.

Technically of course the insured is supposed to tell the insurance company of any incident, whether they claim or not but of course they don’t. There was a case not so long ago where a car was broken into, close to the owner’s home and the radio was stolen. The driver not wanting to claim had the broken window and the radio replaced at his own expense.

Not long after the car was stolen from approximately the same location, the insurance company became aware of the previous break in, perhaps through the police report, and refused to pay out. They said that they should have been informed of the break in, because that would have indicated to them an increased risk of theft. Of course just because an insurance company refuses to pay out, it doesn’t mean that they are correct in doing so, or that it can’t be challenged.

One of the risks you take when you have work carried out locally is that the car leasing company becomes aware of it and charges you to have the work re done. So if they are going to put the car through the auctions as they do with most ex contract hire cars will they have the work redone, or just sell the vehicle as it is? It will vary from company to company but in any event if the car has not been repaired properly they are perfectly entitled to charge you, it is then up to them to take a view on how they sell it.

Where repairs are carried out other than by the main agent, which involved damage to the engine is generally more risky for the hirer; manufacturers will invalidate the cars warranty if they find out and with the diagnostics of today there is not much they can’t detect.

One of the exceptions to this is tyres. If you damage tyres, first check if you have maintenance included in your contract hire agreement and the terms of the maintenance agreement, because tyre damage may be included.

If tyres are not covered under a maintenance agreement, it is perfectly acceptable to buy them at another outlet (the difference in cost can be significant), rather than the main agent. Although it is important to purchase the tyres that are specified by the manufacturer. Beware of retailers who try to sell you a tyre “that is exactly the same” Perhaps it will serve just as well, perhaps not and you may only find out when you are skidding out of control.

In summary it is really the safest option to in general to get the repairs to your lease car carried out at the main agent, at least then you can be confident there will be no problems when the car is returned at the end of its term.

About the Author:
For more Contract Hire and Lease Purchase articles, please go to our website www.bowaterprice.com.

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Article Marketing Secrets

May 2nd, 2009
by Hass67

Article marketing is the best way to attract massive publicity to your website. In article marketing you write articles on the topic of your choice. Then submit them to article directories, ezines and announcement groups.

You dont need to be great writer in order to succeed at article marketing. Article marketing is being used by regular every day people for driving traffic to their websites.

This is the free and best way to build massive back links to your site. These backlinks will count with the search engines and will increase ranking of your site on the search engines. You only require giving not more than an hour of your time everyday writing an article.

Suppose you are afraid to write. You consider yourself not a good writer. Believe me, if you can write letters to your friends, you can also write good articles with a little bit of practice and good advice.

Your article should not be too long or too short. It should be between 400-700 words for best results. When you write an article avoid talking about your business or your website in the body. Try to give your reader information that has value in an interesting manner.

In the beginning, write one article per day. Next day, again read the article you wrote the previous day. This way you will be able to take a fresh look at it and make it even better. Then submit it to article directories.

The title should be enticing enough for people to click on it. Start your article in an interesting and lively manner that compels the reader to continue reading till the end.

At the end of the article there is a resource box. You can talk about yourself here. It is the most important part of the article in addition to the title and the body.

In the resource box, you can talk about yourself. Try to tell the reader about yourself in third person. Here you can sell your business and your website.

Your resource box should be compelling enough for the reader to click on the link and visit your website. A good article tends to leave a positive impression in the mind of the reader and builds trust. It also establishes you as an expert in your niche.

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. His hobby is internet marketing. Discover Web Traffic Machines. Read about an Article Marketing Network comprising 12,000 blogs. Make Money Online

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More On Forex Brokers Scams

April 22nd, 2009
by Hass67

You as a retail forex trader need to understand that forex brokers are in the end above all marketing machines. Since more than 90% of the new traders dont survive long and give up trading after losing their hard earned money, forex brokers need a constant flow of new clients.

To entice new traders, vast sums of money are spent on advertising. Just Google, any keyword related to forex and you will find so many ads by forex brokers giving you so many incentives to start trading forex.

Forex brokers want you to trade more. They use many methods as incentives to make you do that. One of the methods is to hold a Forex Trading Contest by announcing cash prizes of $2000, $1000 and $500 for the top three.

In order to win, many small traders get wiped out losing their money. This is just a trick forex brokers use to make you trade more. The more you trade, the more money your broker makes. This trick is similar to a lottery.

There is no check on the forex brokers. They can quote any rate to you. Forex brokers do this by adding 2 3 or even more pips to the interbank market pip spread

Just imagine by acting only as middlemen between the interbank market and retail forex trader, forex brokers make risk free profits of 3 to 4 pips on a round trip trade.

There is a practice used by forex brokers called Price Shading. For example, if the broker is convinced that Euro is on an uptrend and its price is going to rise, the broker will shade his price quote slightly higher to take advantage of the likely increase in Euro price.

If the broker sees that many traders have placed stop orders at a certain price level, he will mount a sudden attack to take out all the stop order by momentarily spiking his price feed.

You cant do anything. It was a momentary spike, so small that it only tripped the stop losses.

Since, there is no central exchange to compare moment by moment prices, your broker can offer any excuse like there was sudden large order in the market or the broker feed is much faster and reflects true interbank rates.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in investing, stock and forex trading. Discover a revolutionary new broker buster Forex Robot. Read about Semi Automatic Forex Engine.

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Learn Forex Trading

April 21st, 2009
by Hass 67

Many people are turning towards forex trading after losing their money in the recent stock market crash. In fact, forex trading is the best work from home opportunity. Forex trading can be done anywhere from the world if you have a computer and an internet connection. Forex trading is the answer to the today’s global recession.

Forex and stock markets work differently in many ways. Forex market is highly liquid as compared to the stock market. Stocks are basically a long term investment method where ordinary people buy stocks either individually or through mutual funds and wait for these stocks to rise in order to build their retirement portfolios.

Forex markets are open 24 hours, five days a week except on weekends. You can trade forex online anytime of the day. On the other hand stock markets are open only from 9 AM to 5PM. After the stock market closes, you have no way to buy or sell a stock.

Forex trading is a highly liquid market. Most of the participants in the forex markets are either hedgers or speculators. Big institutions are looking for hedging their forex exchange risk whereas small traders are looking for speculating opportunities and willing to take on risk. Stocks are considered to be a long term investment.

In the US stock markets there are more than 50,000 stocks listed on the different stock exchanges. As compared to that in forex markets, mostly five major currency pairs are traded: USDEURO, USDGBP, USDCHF, USDJPY, USDASD.

Another major advantage of forex trading over stock trading is the lower trading cost. In forex trading, brokers don’t charge any commission. They make their profit by the difference between the bid ask spread. In stock trading, the brokers charge a fixed percentage as commission per trade.

Stock Market Crash of 2008 was terrible. More than $11 trillion of wealth was wiped out in 2008 alone. Many people lost more than 60% of their retirement savings. Even investments in blue chip stocks considered to be safe lost considerable value.

It is feared that sotck markets will take 2-3 years at least to recover. This bear market has wiped out many investors. But there is always a bull market in forex. Even a small change in dollar or euro exchange rate may be an opportunity for you to make a fortune.

Daily more than $3 trillion get traded on the forex markets. If you combine all the stock markets of the world, even then they cannot the match the size of the forex market. Forex markets are so huge that even governments and central banks are unable to control them.

Many people have lost most of their retirement savings in the stock market of 2008. They still don’t know how they are going to recover their retirement accounts again…

Learn forex trading. Yes, forex trading is the answer to this recession. It is not difficult to learn forex trading. If you are willing to give two hours daily to forex training, I believe in 2 months, you can become a forex trader. Take forex trading as your passion or hobby. You are not going to regret it.

You can read my blog where I give many forex trading methods. Most of these methods are risk free. You can try them on your demo account before actually implementing them on your live account. I want you to try one method that works on autopilot and you can try it risk free for 60 days.

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Know more about Forex Autopilot Turbo. Visit his blog for Auto Forex Trading.

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