Forex Blog: Currency Trading

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Normally I pride myself on manual trading and using the brain rather than relying on a indicators only “holy grail of the forex” strategy.

But as can be seen below and by the charts of todays price action, had I left it all up to my “One Chart Wonder - Crown & Glory” forex trading strategy - yes its really called that - my take profit would have been hit now for 14 points profit.

Now for the days strategies.

I’ve gone to being quite the fan of Miss Nicole Elliot at Mizuho corporate bank - thanks for your diligent and hard work Nicole if you read this.

 

[UPDATE] Nicole Elliot was utterly wrong today. The EXACT opposite happened to what she said. See earlier posts on this blog about why its dangerous to trust forex tipsters alone, but that they can provide excellent advice.

Todays trading strategy from her suggests upside bias for GBP/USD and that we are in some kind of Elliot Wave cycle by the sounds of things. We are told that buying 2.0350 could see profits on the upside with cable. As I write, the upmove on cable just seemed to collapse. We are still above support, but I’m kind of glad I got out when I did because the take profit I had set was cutting it very fine anyway.

This whole idea seems to wrest on the announcement that will come out a bit later of the UK trade balance.

Let’s just focus on trade balance for a moment.

This is what http://www.yahoo.com/ (finance) says about the US trade balance:

http://biz.yahoo.com/c/terms/trade.html

Trade balance measures the value difference between imports and exports for the month. If the trade balance is in the positive, it means that there were more goods exported than imported during the given time frame. Exports are good for the economy therefore a rising trend in trade balance figures will strengthen the currency of that economy. This is because there is increasing demand for the nations currency - if we think of it in terms of large foreign companies for whom institutions are seeking the best currency deals for their imports - they are in need of the nations currency in order to transfer funds to the recipient company - is created through the simply supply/demand equation of business.

Let’s think about how this high demand for exports will affect the economy in general. It will affect GDP (gross domestic product) because more people will be required to work to meet the demands (ie raised employment). Unemployment may then fall also. Production levels will increase as factories ramp up production levels to meet the demand. These factors have a positive effect on the domestic economy. The demand for the nations currency increases its value.

A negative trend in trade balance does the opposite. Imports are higher than exports. The demand for the currency is lower and therefore the price of the currency becomes weakened in the light of decreased demand.

This idea of supply and demand is what the whole market responds to. It is the law that governs the market in a lot of respects.