Foreign Exchange News, Analysis, Education for Currency Traders
March 2014
The Craft of Mastering Forex Trading
RIDING THE DRAGON’S WAVE TRADER’S CORNER Recommended Investment position for March the “Jap”
WORLD CURRENCY NEWS JANET YELLEN: Chair of the Board of Governors of the Federal Reserve System FX TIPS & TRICKS
FOREX SCIENCE
THE TOP 8
COUNTDOWN TO BEING A SUCCESSFUL TRADER
RISK
Forex Trading Rules: Never Risk More Than 2% Per Trade
GETTING TO KNOW YOUR PLATFORM Meta Trader 4 / MT4
Pennysheets
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TRADER’S CORNER
CONTENTS RECOMENDED INVESTMENT POSITION FOR MARCH
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We see the Jap’s tendency is still pointing an upward movement and most of the indicators that we utilize to make a technical analysis are coming together in unison to support this entry.
GETTING TO KNOW YOUR PLATFORM
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Meta Trader 4, The basics
EDITORIAL
A Glimpse to What’s Ahead.
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FX TIPS & TRICKS
THE TOP 8 COUNTDOWN TO BEING A SUCCESFUL TRADER
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Our method of trading allow us to confidently trade openly five days a week and some night sessions as well.
FOREX SCIENCE Risk: Forex Trading Rules
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MONTHLY INVITE
Pennysheets
WOLRD CURRENCY NEWS
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JANET YELLEN: Chair of the Board of Governors of the Federal Reserve System
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Your Company. Your News.Your Business.
A Glimpse to What’s Ahead We started with a simple idea in mind, share our forex knowledge with a community of people that are looking for good quality information, coach them so they can see the different aspects of the market, and Trade along with them so that together we can see the value of an Art. Art of Forex was born afther this principal, because we want to influence in a good way people that come to us to learn Forex. We understand that Forex is an Art, and like any artistic form, we are bound to learn the trade, understand the trade, learn the different tools for the trade and most of all became artistic in the trade. What we envision in a very short time is Art of Forex growing and reaching out to the workd with the simple fact, that we have to mold forex artistic traders. We do welcome all who want to join us, share with us and travel with us through this journey. Together we can create a magnificent masterpeice that can stand the test of time.
Francis Reyes Forex Trader / Analyst
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Looks like the Dollar Yen or “Jap” is getting ready to give good openings for investment again. As mention on our last edition with the Cable, major currency pairs have been ranging, meaning that they don’t have a clear directions of where they want to go. Based on the information coming out from the markets, and the approach of the details of the first quarter of the year, we are coming to a good potential long term investment.
As you can see on the chart the Jap has found a support on the daily timeline, meaning that has enough information to start rising again. We get a confirmation as well looking at the weekly, it looks like the Jap having an uptrend has all the ingredients to return to the rise path that it has had since 2012.
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TRADER’S CORNER
RIDING THE DRAGON’S WAVE
Suggested Investment position for March the “Jap”
The Jap comes out from period where it gain to much strength and now with all the politics and economic incentives, it looks like the Jap has everything it needs to get back to its pre-recession level. The level of the Jap before recession is around 110 to 112; though it will take more news and strength in the market to move the Jap to those levels. On the first week of March we will have a clearer picture of where both economies are, and what is going to be the move from the Jap coming out with
enough data to push the pair in that direction. We see the Jap’s tendency is still pointing an upward movement and most of the indicators that we utilize to make a technical analysis are coming together in unison to support this entry. To continue our technical analysis, we need to get closer to see a more precise entry point and corroborate our observation from the daily timeline.
As we can see on the 4 hour timeline, the Jap is trying to find that support where it can get enough strength to start the rise again. The analysis does reveal that the position on the Jap is initial stages to go up, again many factors are still in play and it needs confirmation. The Japanese prime minister recently has stated that the results that they were looking for are far from where they were expecting it. This indicates that we could expect a greater intervention from the Japanese government sometime soon; we also need to see the reports from the US and its first
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quarter. We these information at hand we will be able to have the necessary information, and from that point the confirmation of the position will be in place. Remember to keep your risk assessment in check, manage all the part of your trading and be patient.
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WORLD CURRENCY NEWS
WELCOME
JANET YELLEN New Federal Reserve Chairperson
WHAT SHE MAY BRING TO THE MARKET The question that has been going along, even before she took over the Federal Bank of the United States of America, was what kind of policies or approach will Janet Yellen bring. There has been a lot of people writing and thinking about her approach, and also going back to see her past comments and policies that have been in practice already. Although, Janet Yellen has just gave her first congressional speech, and her first FED Minutes, most of the market have greeted her in a good way, but what reaction will she bring to the market is yet to be seen.
A continuation of the Bernanke era? All of these questions will have their own answers.
But who is Janet Yellen, why did the president chose her over many other good candidates? Diversity? A female’s approach?
economist and her way of seeing the markets is very peculiar, she has a good insight about what it is needed to be done, and
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Let’s see a bit of history of who is Janet Yellen, but before we get into more detail. I would like to express in my personal opinion, that I salute Janet Yellen. She has been a very impressive
She has a good insight about what it is needed to be done, and she will make it happen.
she will make it happen. I am very pleased that she is the new chairman at the FED and I’m really looking forward for her tenure.
A Little History about Janet Yellen. The next information has been provided by wikipedia.org In 1967 Janet Yellen graduate as an economist from Brown University with a recognition of Summa Cum Laude, and in 1971 received her PhD in economics from Yale University, posting a thesis title Employment, output and capital accumulation in an open economy: a disequilibrium approach under the supervision of James Tobin and Joseph Stieglitz. 7
From 1971 to 1976 she was an assistant professor at Harvard University and then in 1977 to 1978 an economist at the Federal Reserve Board of Governors. in 1980 she was teaching at Haas School macroeconomics to MBA and grad students and also at the same time conducting research in the same field. Yellen served as Chair of President Bill Clinton’s Council of Economic Advisers from February 13, 1997 to 1999, and was appointed as
member of the Federal Reserve System’s Board of Governors from 1994 to 1997. From June 14, 2004 until 2010, Yellen was the President and Chief Executive Office of the Federal Reserve Bank of San Francisco. She was a voting member of the FMOC in 2009. on April 28,2010, President Obama nominated Yellen to succeed Donal Kohn as vice-chair of the Federal Reserve System. In July, the Senate Banking Committee artofforex.org
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voted 17 to 6 to confirm her. She was part of voting members to mention that the U.S. economy was “at risk of becoming enmeshed in a Japanese-style deflationary outcome within the next several years”. On October 9, 2013, Yellen was officially nominated to replace Bernanke as head of the Federal Reserve. On December 20, 2013, the U.S. Senate voted 5934 for cloture on Yellen’s nomination. On January 6,
2014, she was confirmed as Chair of the Federal Reserve by a vote of 56-26, the narrowest margin ever for the position. In addition to being the first woman to hold the position, Yellen is also the first Democratic nominee to run the Fed since Paul Volcker became chairman in 1979. After being elected by the Federal Open Market Committee as its chair on 30th of January, 2014, she took office on February 3, 2014. Yellen is consider by many
on Wall Street to be a “dove” (more concern with unemployment than with inflation) and as such to be less likely to advocate Federal Reserve interest rate hikes, as compared, for example, to William Poole (former St. Louis Fed president) a “hawk”. However, some predict Yellen could act more as a hawk if economic circumstances dictate. Yellen is a Keynesian economist and believes in the modern version of the Phillips curve, in its original, pre-1970s from, stated a simple inverse relationship between unemployment and inflation. In her 2010 nomination hearing for Vice Chair of the Federal Reserve Board of Governors, Yellen said “The modern version of the Phillips curve model-relating movements in inflation to the degree of slack in the economy-has a solid theoretical and empirical support.” In a 1995 meeting of the Federal Open Market Committee while serving on the Board of Governors of the Federal Reserve System, Yellen stated that occasionally letting inflation rise could be a “wise and humane policy” if it increases output. At the same meeting she also claimed that each percentage point reduction in inflation results in a 4.4 percent loss of GDP. As you can see, in a nutshell, she is a more than capable person to lead the FED, and get the work done.
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Currently the markets, are still on the lookout, and waiting to see the reaction of the FED coming out with the numbers for December and January though we understand that many policies are going to be kept in place until matters are need to be brought on. Only time will let us see what this new era of the FED will bring to us and to the Forex market, but rest assure that the person in charge are more than capable of getting things done. We welcome Janet Yellen Chairman of the Federal Reserve. We’re looking forward on her guidance for the U.S. during her term, and hopefully get some good results for all of us in the Forex Market.
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FX TIPS & TRICKS
The Top 8 Countdown to Being a Successful Forex Trader So you think you want to give it a shot and start planning for a future of only trading Forex for a living? If you are then I want to share 8 Big Steps with you that will put you ahead of the game. Are you ready, here goes my top 8 ways to climb to the top of making living just trading currencies
Best Step # 8 Don’t get overwhelm reading Forex Books It not all about reading books on the subject. I know there are ton of books on the learning how to trade and some general strategies but no step by step methods or real guidance. It all mostly general stuff. If a book existed it would be entitled “The Last Book You Need to be a Successful Forex trader.” So what book do I recommend then? I don’t really recommend any particular books. Just don’t think a book is going to make you a successful trader.
Best Step # 7 Trade with a Demo account for at least 1 month straight So many people start to open up a demo account and see some success in a short period of time and decide to go suddenly open up a real artofforex.org
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account. Big big big mistake. You have to use a demo account for at least a month. If you want to lose your money faster, then don’t take my advice. Pretty soon, most of their money is in their broker’s account instead of theirs. Not good. If Forex was so easy then my grandmother would be trading. Please trade for at least 1 month.
Best Step # 6 Find a trading platform that is very friendly to navigate The trading platform must be easy to use or else you will get frustrated even before you start to trade. My recommendation is to look at the top forex brokers and open up a demo account and start to trade with the trading platform that it comes with. Do you find it intuitive? How good is the support? Does it comes with a training videos on how to use the platform. Test out the technical support and how well they answer your questions. 10
Best Step # 5 Know Fundamental Analysis Let start out with what is Fundamental analysis. This is simply studying the economic news of other countries. The more information that helps you understand how the dollar, pound, or yen is being affected, the better off you will know which way to trade. Economical and political events have a influence in the currency market. There are economic calendar that contained weekly news releases of various countries and they give out valuable data. In addition, there are certain speeches that will move the market, like those from Chairman of the Federal Reserve Bank. Let me give you some example of fundamental analysis: If a country raises its interest rates, its currency will strengthen because investors will move their assets to that country to gain higher returns; another one is employment situation – a decrease in the payroll employment are considered a signs of a weak economic activity that could eventually lead to lower interest rate, which has a negative impact on the currency. Same with info on trade balance, budget, GNP, consumer confidence, retail sales, farm payroll, etc.
Best Step #4 Analysis
Know Technical
Yes, you must know how to use read technical charts, figuring out trends, and how to use indicators. One of the underlying tenets of technical analysis that historical price action predicts future price action. Since the forex is a 24-hour market, there tends to be a large amount of data that can be used to gauge future price activity, thereby increasing the statistical significance of the forecast. This makes it the perfect market for traders that use technical tools, such as trends, charts and indicators.
Best Step #3 Get to know the right indicators to trust Technical traders use many different indicators in combination with support and resistance to aid them in predicting the future direction of artofforex.org
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exchange rates. Again, learning how to interpret various forex technical indicators is a study unto itself. A few indicators that we feel we should mention, due to their popularity, are: Bollinger Bands®, Fibonacci retracement, moving averages, moving average convergence divergence (MACD) and stochastics. These technical tools are rarely used by themselves to generate signals, but rather in conjunction with other indicators and chart patterns.
Best Step #2 Get into a Successful Live Trading Session with a live host. The ability to get into a live trading session, gives you invaluable insight. You will learn so much from a professional traders trade in the market. If you have a host who oversees the trading session, then even better. A live trading session gives you the view of seeing the forex market in various states. Get into a live trading session.
Best Step #1 Follow someone successful entries and exit points What I have learned is the number one way to become successful is copying a truly successful forex expert’s signals on a regular basis is by far the best way to learn how to trade forex. Trading is a “hands-on” activity and is best learned by jumping in and doing it. However, if you do on your own, you can lose a lot of money while learning so I HIGHLY recommend this strategy of getting real time forex signals sent to you from an expert trader. It’s like having training wheels on while you learn and you get to make a lot of money while you’re learning instead of continually losing your investment. Any questions, I’d love to hear from you. Keep in mind, we offer live trading session and a GetCopy- Trade signals service. Email is rob25kman@gmail.com
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FOREX SCIENCE
RISK Forex Trading Rules: Never Risk More Than 2% Per Trade Never risk more than 2% per trade. This is the most common - and yet also the most violated - rule in trading and goes a long way toward explaining why most traders lose money. Trading books are littered with stories of traders losing one, two, even five years’ worth of profits in a single trade gone terribly wrong. This is the primary reason why the 2% stop-loss rule can never be violated. No matter how certain the trader may be about a particular outcome, the market,
as the well known economist John Maynard Keynes, “can stay irrational far longer that you can remain solvent.”
Swinging for the Fences
Most traders begin their trading careers, whether consciously or subconsciously, by visualizing “The Big One” - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives. In FX, this fantasy is further reinforced by the folklore of the markets. Who can forget
Amount of Equity Loss *
the time that George Soros broke the Bank of England” by shorting the pound and walked away with a cool $1 billion profit in a single day! But the cold hard truth of the markets is that instead of winning “The Big One”, most traders fall victim to a single catastrophic loss that knocks them out of the game forever. Large losses, as the following table demonstrates, are extremely difficult to overcome.
Amount of Return Necessary to Restore to Original *
25% 50% 75% 90%
33% 100% 400% 1000% Based on real trading sessions
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Just imagine that you started trading with $1,000 and lost 50%, or $500. It now takes a 100% gain, or a profit of $500, to bring you back to breakeven. A loss of 75% of your equity demands a 400% return - an almost impossible feat - just to bring your account back to its initial level. Getting into this kind of trouble as a trader means that, most likely, you have reached the point of no return and are at risk for blowing your account.
Why the 2% Rule?
The best way to avoid such a fate is to never suffer a large loss. That is why the 2% rule is so important in trading. Losing only 2% per trade means that you would have to sustain 10 consecutive losing trades in a row to lose 20% of your account. Even if you sustained 20 consecutive losses - and you would have to trade extraordinarily badly to hit such a long losing streak - the total drawdown would still leave
By controlling your losses, much like a business that contains its costs, you can withstand the tough market environment and will be ready and able to take advantage of profitable opportunities once they appear. That’s why the 2% rule is the one of the most important rules of trading.
The Craft of Mastering Forex Trading
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you with 60% of your capital intact. While that is certainly not a pleasant position to find yourself in, it means that you need to earn 80% to get back to breakeven - a tough goal but far better than the 400% target for the trader who lost 75% of his capital. The art of trading is not about winning as much as it is about not losing.
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By Terry Cohen The Penny Sheets team understands the importance of transparency, accuracy and availability of company information in the valuation process to satisfy the needs of their investors and increase shareholder value. Our Focus is on Transparency, Accuracy and Availability of Company Information. With the trend towards using independent data suppliers growing, achieving the right level of transparency into an investor’s hands is essential. This regulatory reporting can be both daunting and complex. This is commonly experienced by Pink Sheet/Over-The-Counter companies in transition, or companies facing financial strain that are also challenged with the ambiguity of compliance issues set forth by costly and increasingly monopolistic financial marketplace portals (OTC Markets and Yahoo Finance). IR Websites have been increasing in popularity among investors as an opportunity to provide transparency and business information control; unfortunately most IR Websites are confusing, convoluted and have limited information. As such, public companies today also face the challenge of marketing their company information effectively
pennysheets.com via IR websites due to basic features, ineffective SEO results and news syndication services that lack a direct impact in building shareholder value. More than 72% of shareholders polled say they visit the corporate website of companies in which they are investing. Of that 72%, more than half said it was difficult to find accurate stock information or any fundamentals at all. Large online financial and information portals and search (OTC, Yahoo Finance, Bing, Google) engines are typically focused on distinguishing themselves from their competition by developing a comprehensive set of information that can help attract and retain investors. While these “giants” provide an opportunity to distribute a company’s market and editorial data, they are slow to update in-accurate information, highly competitive, require costly subscription fees, otherwise imposing caution or restrictions to company profiles, drawing warnings to investors. Penny Sheets is providing a solution for every Pink Sheet Company with a cost effective, turnkey IR Websites that provide immediate Top-Level hierarchical search visibly defined simply by a company’s ticker symbol, with real-time Tier-1 data feeds, and full control of business information.
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GETTING TO KNOW YOUR PLATFORM
A. GETTING STARTED Client Terminal is a part of the online trading system. It is installed on the trader’s computer and intended for: • receiving quotes and news in the online mode; • performing of trade operations; • controlling and managing of open positions and pending orders; • conducting of technical analysis; • writing of expert advisors, custom indicators, scripts, and functions in MetaQuotes • Language 4 (MQL 4); • Testing and optimizing of trading strategies. For making a decision to trade, reliable on-line information is necessary. For that, quotes and news are delivered at the terminal in the realtime mode. On basis of on-line delivered quotes, it is possible to analyze markets using technical indicators and line studies. Expert advisors allow to work off routine of observing markets and the own positions. Moreover, to ensure more flexible control over positions, several order types are built into the terminal. artofforex.org
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The Client Terminal can operate under Microsoft Windows 98SE/ME/2000/XP/2003. Hardware requirements are limited with software ones. a) Terminal Installation To install Client Terminal, it is necessary to download its distributive and launch it. Then it will be necessary to choose a directory for installing the program there and follow the Installation Wizard tips. After the terminal has been installed it will run automati- cally. Terminal can also be installed over an installed version of it. At that, all terminal settings remain as they were in the preced- ing version. Exceptions can be: DEFAULT profile and template, as well as standard MQL4 programs included in the delivery set. This is why it is not recommended to change standard templates or profiles, but to create MQL4 programs named uniquely. If there is a need to work with several accounts simultaneously, the corresponding amount of terminals must be installed in dif- ferent directories. At that, each terminal has its individual settings, except for registration details and interface language that are stored in the Registry. 15
Terminal Start After installation has been completed, a group of Client Terminal programs will be created in the “Start” menu, and the program shortcut will additionally appear on the desktop. They will help to start client terminal. Terminal can be started from the command line, certain parameters having been specified. The account number and profile name can be used as a parameter. If the account number was specified as this, an attempt to authorize this account will be made at the program start. If the profile was specified there, it will be downloaded automatically. For example, terminal.exe “123456-’British Pound’”, where “123456” is the account number, and British Pound is the profile name. If there are spaces in the command line (like in the above profile name), the double quotation marks should be used. If no spaces occur, there is no need indouble quota- tion marks. Single quotes
are used for profile names. For example: terminal.exe 123456-’GBPUSD’. Either login only, or profile and login can be used in the command line. The profile cannot be used without login. The terminal can also be started with predefined settings. For more details, please look through the “Configuration at Startup” and “Datacenter.ini” sections. b) Opening of Accounts Terminal allows working with two types of accounts: demo accounts and real accounts. Demo accounts enable working under training conditions, without real money on them, but they allow working out and testing trading strategy very well. They possess all the same functionality as the real ones. The distinction consists in that demo accounts can be opened without any invest- ments, though one cannot count on any profit from them.
Attention: Two copies of the Client Terminal are prohibited to be started from the same directory simultaneously. To start several terminals simultaneously, it is necessary to install the corresponding amount of programs in different directories.any profit from them.
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Opening of a Demo Account A demo account can be opened by the “File — Open an Account” menu command or by the same command of the “Navigator — Ac- counts” window context menu. Besides, the terminal will offer to open a demo account at the first program start to begin working immediately. The following data will be requested to open an account: • Name • Country • State • City • Zip code • Address • Phone • Email • Account Type • Currency • Leverage • Deposit
the user’s full name; country of residence; area (region, territory, state, etc.) of residence; city of residence; zip code; exact mailing address (street name, house and apartment numbers); contact telephone number; email address; account type to be selected from the list defined by the brokerage company; the basic currency of the deposit to be set automatically depending on the account type selected; the ratio between the borrowed and owned funds for trading; the amount of the initial deposit in terms of the basic currency.
To activate the “Next” button and continue registration, it is necessary to flag “I agree to subscribe to your newsletters”. Then a server must be chosen to connect to. Addresses of available servers, their names and ping are listed there. The most prefer- able is the server having the lowest ping. After the registration has successfully completed, a window will appear that contains information about the open account: “Login”— the account number,“Password”—the password for access, “Investor”—the inves- tor’s password (connection mode in which it is possible to check
the account status, analyze the price dynamics, etc., but no trad- ing is allowed). After registration has been completed, the new account will appear in the “Navigator—Accounts” window, and it is ready to work with. At that, the server sends a message to the terminal containing login and passwords of this newly opened account. This message can be found in the “Terminal— Mailbox” window. Besides, after the account has been successfully regis- tered, it will be authorized automatically.
Attention: If any problems occur at the account opening, technical support service of the brokerage company should be asked for help
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Currency Broker Representative / Fabian Bordel From IronFX Solid Trading
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Opening of a Real Account Real accounts, unlike demo accounts, cannot be opened from the terminal. They can only be opened by brokerage companies under certain terms and conditions. Real accounts are marked correspondingly in the “Navigator— Accounts” window. To start working with them, one must perform authorization. c) Authorization Authorization is connection of terminal to the server through a login and a password. It allows managing a trading account. Two accesses to the account are possible in the terminal: a normal password and an investor password. Being authorized with the standard password, one gets full rights for working with the terminal. artofforex.org
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Investor authorization allows seeing the account status, analyzing prices, and working with expert advisors, but not to trade. Investor access is a convenient tool used for demonstration of trading at the account. To be authorized, it is necessary to execute the “Login” command of the context menu of the account (context menu is called by clicking with the right mouse button at the account number) in the “Navigator” window or “File” menu. Then, the account number, one of its passwords (standard or investor) should be given in the appearing window, and a server should be chosen. After all data have been specified, the “Login” button should be pressed.
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TESTIMONIALS FROM OUR LIVE TRADING SESSION
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Art of Forex Key Members Robert Osorio Managing partner of Art of Forex Trading Academy. Based in Tampa, Florida. Over 8 years in currency trading, co-moderator in the Live Trading Session. Holds a degree in Mass Communications and has held positions as a technical analysis, technical trainer and International sales engineer.Has run other several based businesses.
Francis Reyes President of Art of Forex Trading Academy in Charlotte NC. He’s the creator of the 4D Trading Strategy and has devoted followers on his Live Trading Sessions. Mr Reyes is recognized as a top currency trader for many years. He has served in the International Monetary Funds (IMF) in Washington DC. Hold a Master in International Marketing with concentration in Finance from Strayer University. He’s the main moderator in the Live Trading Session. Speak multiple languages. freyes@artofforex.org 954.300.1049
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