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2010 May

May 31st, 2010 @ 4:48 pm by Matt "NewstraderFX" Carniol

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Once you understand why in the long term the casino is a guaranteed winner, you’ll see it has nothing to do with gamblers having “bad luck” and everything to do with simple arithmetic. The idea then becomes to apply this arithmetic to your everyday trading so that you can become the casino and guarantee yourself longer term success.

The casino’s advantage over the gambler comes from always paying less than the true odds for a given occurrence. For example, in the game of dice there are 36 different number combinations and 6 ways to roll a 7, which means that the odds of hitting a 7 on any one roll of the dice are 6 to 1. However, when you make this bet and win, the casino will only pay you 4 to 1 odds. Let’s see what this means.

If the casino collects $10 per roll of the dice on this bet it will collect $60 for every 6 rolls. But it will only pay out $40 for the 1 time in 6 that the gambler wins, which means that for every 6 rolls of the dice (at $10 per roll), the casino is guaranteed to win $20 because it collects $60 and only pays out $40. Casinos love these kinds of “sucker bets” because over the long term, there’s a guaranteed profit built into them (which in this case is 33.3%).

Of course, a gambler could get lucky and hit several 7’s in a row. But over the long term, the casino is the guaranteed winner because it has this built in edge. Every game (and bets within a game) in the casino has a certain amount of built in “edge.”

If you think of forex trading, excluding breaking out even, there are only 2 outcomes; a currency goes up or it goes down. The random odds of winning a trade, in the long term, are 50% which means that over the longer term, you as a trader are going to average somewhere between 45% and 55% winners.

The bottom line here is that you have to find a way to make money at this level of winning percentage. You have to turn the odds in your favor so that you can be the casino and have a built in “edge” that’s guaranteed to make you a winner over the longer term.

What you have to do as a trader is to find a way to get paid MORE than the true odds of a “heads or tails”, 50/50 forex bet. In other words, using our dice game as an example, you have to find a way to get paid 8 to 1 odds (or more) for an occurrence whose odds are 6 to 1. You have to find a way to get paid $80 for every $60 you bet, not $40 for every $60.

The good news is that there way to do this is and it’s something I stress in my room constantly. And because you have to see this work in the longer term, I want to give you a free month in my trade room.

The regular cost of joining is my room is $99 per month but if you join now, you will receive the second month for free. This 60 day period is essential for seeing how I apply these concepts in the longer term.

So, I hope that you will join my room and learn how to turn your forex broker into your own personal “sucker.”

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May 31st, 2010 @ 3:32 pm by The Geek

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Simultaneous Release at
TheGeekKnows.com – Learn Forex Trading and view EUR/USD Reviews.

Good day forex traders.

This is the start of a brand new trading week and let us all target to finish it green :)

Last Friday, we saw a former adviser to the China Central Bank said that the current Euro Crisis probably would not affect China’s foreign reserves diversification plans much. The Euro-Zone would probably emerge from the crisis and regain stability. While this created some bullish relief, the rating cut of Spain by Fitch brought risk aversion again and sent the EUR/USD to a dropping close.

Looking at the EUR/USD, we can see slow activity. This is probably due to the bank holiday in US.

With the US markets closed, we do not have S&P 500 data.

Oil in the meanwhile hovers around $74.

Gold creeps upwards, probably nudged along by demand due to risk aversion.

***

Do remember that we do not have the market in full force today and hence we may have yet to see the full impact of the rating cut by Fitch on Spain.

A reported stated that the economic confidence in Europe worsened in May and we probably could see it coming with all the budget deficit crisis fire fighting. With Spain and Italy conducting budget cut measures, investors may see this as a subtle sign of budget problems.

Tomorrow gives us German Retail Sales, Unemployment Change and Euro Unemployment Rate. Investors will be watching for clues to the Euro Zone’s economic health. US’s ISM Manufacturing PMI which deals with the manufacturing industry conditions will be a data to look out for too. You can find the list of the various economic releases in the Economic Calender below.

From a technical point of view, the EUR/USD remains capped by the resistance of 1.2330. A break will see 1.2400 next. Any bearish momentum may see 1.2200. The H4 trendline remains intact.

***

Time flies when you are doing something you like! Everyday i come home from my crazy day job and switch on my PC. Looking at the charts, reading articles, writing for you folks and interacting with you folks. The next moment, Ms Sleep is screaming at me. LIKE NOW. Haha.

Cheers :)

( Oh yes. i am not having Monday blues because day job was not very crazy today. Hope yours was/will be great ! )

Trade Safely!

Related Forex Articles from the Koala Forex Training College.

Read more Forex Articles and Views by The Koala at
TheGeekKnows.com – Learn Forex Trading and view EUR/USD Reviews.

Click here to read the full article.

May 31st, 2010 @ 2:59 am by Setyo Wibowo

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EURUSD Forecast:
The EURUSD attempted to push higher on Friday, topped at 1.2452 but whipsawed to the downside, bottomed at 1.2268 and closed at 1.2306. This fact keep the major bearish scenario testing 1.2000 intact but as you can see on mt h1 chart below price still move inside the minor bullish channel indicating the bullish correction is still alive and kicking. Immediate support at 1.2260 area. Consistent move below that area could trigger further bearish pressure testing 1.2140/50 area which is a key support area that must be broken before testing 1.2000. On the upside, initial resistance is seen around 1.2450/70 area. Break above that area could trigger further upside pressure testing 1.2671 region. It is still a difficult and volatile market out there so don’t rush jump into the market and stay discipline with your own trading criteria. Plan your trade and trade your plan.

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May 31st, 2010 @ 2:52 am by Setyo Wibowo

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EURJPY Forecast
The EURJPY bullish momentum was paused on Friday, but as you can see on my h4 chart below price found a good support around the bearish channel upper line indicating the upside scenario testing 114.50 remains intact. Only a consistent movement back below 110.66 area could be seen as bullish failure and resume the major bearish scenario re-testing 109 – 108 region.

GBPJPY Forecast
The GBPJPY bullish momentum was paused on Friday. However, as you can see on my h1 chart below price still convincingly move inside the bullish channel indicating the bullish correction scenario remains intact in nearest term especially if price able to break above 133.20, testing 134.80 area. On the downside, immediate support at 130.80. Break below that area could trigger further bearish pressure testing 129.00 and could be a serious threat to the bullish correction scenario.

AUDUSD Forecast
The AUDUSD was corrected lower on Friday. However, the strong bullish movement last Thursday still lead us to a bullish view in nearest term testing 0.8716 area and only another pullback below 0.8360 could be seen as potential bullish failure re-testing 0.8070 region one more time.

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May 31st, 2010 @ 2:44 am by Setyo Wibowo

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GBPUSD Forecast:
The GBPUSD failed to maintain its bullish bias on Friday, topped at 1.4608 but whipsawed to the downside and closed lower at 1.4459. The bias is neutral in nearest term but this fact could potentially produce a false breakout scenario towards 1.4350 before testing 1.4240 region. On the upside, another move above 1.4527 could trigger further upside momentum towards 1.4608 before testing 1.4715 area. It is still a difficult and volatile market out there so don’t rush jump into the market and stay discipline with your own trading criteria. Plan your trade and trade your plan.

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May 31st, 2010 @ 2:40 am by Setyo Wibowo

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USDJPY Forecast:
The USDJPY didn’t make significant movement on Friday. However, on h1 chart below you can see that price is moving above both the major trendline support (white) and the trendline resistance (red) indicating potential upside pressure testing 91.80 – 92.20 region. Immediate support at 90.50. Break below that area could be seen as bullish failure and may trigger further bearish scenario re-testing 89.00 region.

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May 31st, 2010 @ 2:34 am by Setyo Wibowo

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USDCHF Forecast
The USDCHF still move in a boring range area so far, as you can see on my h1 chart below. Unless we have a clear break on either side, the outlook remains neutral. Aggressive intra-day trader can short around 1.1695 or long around 1.1445 with tight stop loss. I personally in wait and see mode for this pair but still maintain the major bullish view.

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May 29th, 2010 @ 6:15 pm by The Geek

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Simultaneous Release at
TheGeekKnows.com – Learn Forex Trading and view EUR/USD Reviews.

Good day forex trading koalas.

I hope your weekend is fine so far and that you had a great trading week.

In the last review, we saw the European Union finance minsters meeting to work on ways to improve economic policies and controls. It was generally agreed that tougher sanctions on countries with high budget deficit should be implemented. This was to prevent a similar crisis from happening again. Both financial and non-financial sanctions were under consideration for countries of the Euro Zone which did not adhere to the deficit limit of 3% of GDP. Germany was heading a call to remove certain voting rights of such countries but reservations were seen. Germany also called for a procedure for defaults but the view was not shared by the majority.

The meeting had potential but concerns were the complexity of the plans, the diversity of opinions of the various countries and the long term implementation required.

We also noted that the recovery in the US seemed to be cooling down as economic data started to post disappointing results. This would be a development for close observation.

Looking at the EUR/USD currency pair above, we have came a long way from the heights of above 1.3000.

Early in the week, the seizure of a Spanish bank by regulators and lingering Euro Zone concerns disrupted the bullish momentum from the week before. Investors were speculating that the recent measures might just buy time instead of relieving the region from all it’s problems. Not long later, the North Korea military was put on alert, threatening to start a new war zone. This probably caused risk aversion as investors felt that this would threaten the already fragile global economy. The Libor rate spiked probably due to lending reluctance among banks. This was reminiscence of the 2008 credit crunch crisis and there was fear of a wider financial meltdown. The MSCI World Index fell to a nine-month low due to negative sentiments.

Midweek gave us a break as equities and commodities recovered. This was mainly due to strong economic data flowing out from the US. Furthermore, China mentioned that it would remain a long term investor of the Euro Zone. Coming from an emerging economic superstar, investors felt relieved. A former adviser to the China Central Bank mentioned that the current Euro Crisis probably won’t affect China’s foreign reserves diversification policy much. The Euro-Zone would probably emerge from the crisis and regain stability.

Towards the end of the trading week, the EUR/USD suddenly took a bearish hit, dropping almost 100 pips within an hour diving below 1.2300. Many traders were caught off guard. Koalas, do remember that it is vital to have proper planning for your trades in case of such unexpected movement. Soon it became apparent that the cut by Fitch Ratings of the Spanish rating probably caused a knee jerk reaction due to risk aversion and negative sentiments.

You know my style. I like to see both sides of the coin always and with regards to this Spanish rating cut, we must remember that the rating still remains as a stable outlook after the cut. Hence we must not be quick to jump into and short positions on this currency pair without further confirmation. Having said so, the cut does serve to remind all of us the uncertainty surrounding the extend of the Euro-Zone crisis.

With regards to the US, i will like to remind everyone again that as the federal tax credit for home buying had expired, we may be seeing a dip of home sales. Sentiments are emotional and not logical. Despite knowing that this will be coming, an actual red presented to investors may still cause negative sentiments.

The tension on the Korean peninsular remains and any adverse developments may cause a global effect. With the economy already so fragile, no one wants to see a new war.

From a technical point of view, the EUR/USD fails to break above the H4 trendline as shown above. Many investors are counting on a double bottom reversal. A break above 1.24 may give the possibility of one.

ECB Trichet and FED Bernanke are scheduled for speeches not long after the market reopens. Investors will be paying attention for clues and hence trade safely. Monday is a bank holiday for the US and hence we may see low volume conditions. Many important data is due next week including pending home sales, unemployment claims and the US Non-Farm Payroll. You can find the list of the various economic releases in the Economic Calender below.

If you are on Facebook, i urge you to join TheGeekKnows.com page. Discussions on forex opinions and trades can be found there.

Trade safely.

Related Forex Articles from the Koala Forex Training College.

Read more Forex Articles and Views by The Koala at
TheGeekKnows.com – Learn Forex Trading and view EUR/USD Reviews.

Click here to read the full article.

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