Correlation Forex Pairs
Forex Secrets. Delusion No1. Forex Exchange rate and the impact of economic factors in the Exchange Rate
The illusion that raises conceptual and intraday intraweek FOREX currency quotes movement is governed by improvement or deterioration of the economic situation in the state. But in reality, even if the real news Forex are higher than the estimated one, Forex Quotes up / down movement probability is 50/50.
This statement is very important. Once that the job of forex trader is the set of differential Exchange Rates Forex (Forex Pairs up / down movement), the following is to be held for fault-free benefits:
FOREX pairs pricing mechanism (eg at point X where he is completing the market analysis)
Growth factors teaching / decrease Forex Rates (up / down from the point X).
Therefore, having understood the FOREX ratesfactors effective in extra-change (book-maker) foreign exchange market and the motivating factors because of the currency, an operator must have a distinct knowledge of whether to buy or sell the given currency pair.
So what are these factors?
FOREX student suggest possible interpretation of the factors responsible for the formation of prices and fluctuations in there:
Forex rate is a balance between supply and demand for a commodity (money).
Any violation of this balance (for example, If the news is estimated at odds with the official issued a), results in reciprocity FOREX rates on the hunt for a new balance between supply and demand. Poor demand leads to lower exchange rate determined with a high demand for leading the growth of the latter. The situation continues as long as the purchase currency and demand to consider selling to another level or elsewhere.
Referring to the B. Williams ("Trading Chaos 2" Chapter 1 "The market is what you are thinking about it "):
Every global market is dedicated to distribute some or limited amount of something … between those who wish to obtain most of all. Market affects you in the form of discovering and identifying the exact price? Behind the buyer / seller "balance point of absolute power.
The previous point is easy test for stocks, futures, bonds, currencies and options markets, as well as through an open auction or by a computer installation. Spot markets this point before any imbalance be detectable by you or me or even by traders on the floor.
With this scenario holding true – and you really do – We are able to go to certain simple but important conclusions as to the information is distributed through the market and enjoy, no doubt, acceptance. "
Thomas DeMark was more laconic in "Technical analysis – an emerging science":
"Price movement is regulated by supply and demand. If demand exceeds supply, there is a price rally and if vice versa, there is a drop in prices. All economists share these basic principles. "
Therefore, the role of fundamental analysis for Forex Market is evident.
In a fiction scholar will discover about the following explanation, persistently wandering from one book to another, from one place to another, suggesting the achievement of success in the FOREX market trading through the country counting data economic fundamentals, viz. by monitoring the reflection factor of the condition of the country's economy as follows:
State dynamic economic status indicators (GDP, trade and balance of payments, current account, industrial production, etc. Everyone knows that the more High above indicators – the fastest economic growth and currency prices);
Stock indexes through index arithmetic mean of the country's conditions and dynamics of the stock market. For example: 0.3% daily growth in the U.S. DJI means that some days shares of 30 major U.S. companies, is represented by DJU, was 0.3% more expensive. For similarity, DAX30 most important is the index of Germany, incorporates the price of the shares of the country's top 30 companies.
country's interest rate because the higher the speed, the greater number of investors is willing to invest in the country's economy and therefore a strong point in national currency.
Inflation rate (faster, faster National Bank will hike interest rates). With this assumption, the CPI is a key factor.
Money supply growth in the domestic market, made causing inflation, leading to the rise in interest rates.
The country's gold and currency reserve assets.
Change dynamics the correlation: the balance of payments, trade balance, the budget, gross domestic product (GDP), etc.
Trade and industry dynamics (Industrial production, industrial orders, DGO, capacity utilization, retail sales, etc)
Construction Statistics (spending under construction, new home sales, housing starts, building permits, etc)
Labour statistics (unemployment rate new jobs, etc)
Research Society (Consumer confidence, consumer confidence, purchasing managers and managers feeling services, etc.)
To be considered, moreover, are the country's political stability and peace (clearly, any policy, cataclysms natural and others are sure to unnerve investors to withdraw investments making them the country, thus weakening national currency). And with the currency the national economy resulting from the changes in economic data, inevitably, result in the rate of movement of the former currency.
Conclusions:
Progress on economic performance in the Rally of exchange rate changes.
Decline in economic indicators leading to currency crises national rate.
To summarize, critical to economic and political (the calendar is published in advance and is familiar to any trader) standing is a factor leading to imbalance and cause the fluctuation of currencies.
In anticipation of two important trace economic news and policies FOREX rates as inspired by the estimates ("trade rumors), while with real news there is a movement of the pulse pairs FOREX, in accordance with the following;
Forex rate increases if the current news is better than the approximately one;
Forex rate decreases if news Real are worse than the estimated one.
Are you familiar with these basic elements of ABC FOREX STUDY?
Do you accept that you can earn money by way of these basic elements, known to every trader?
So why, after absorbing these axioms economy, the 90% of Forex traders around the world are losers and winners.
Where is the illusion of ABC over the truth, prompting traders to lose? Let run a sort of point by point analysis.
Forex Currency Exchange market is a book that take one. Is the game in the rates of difference without the direct cash transfers exchange market, except for the coverage of funds by brokers to Forex traders, through buy-sell difference especially during strong trends). So www.forexite.com reads: "Trading is done without real money supply, which reduces overhead and actually allows Forexite go long and short on the currency" http://www.forexite.com/forexite_advantages/forex_advantages.html.
Comment: Have you ever known any book of account;
or whose logic was consistent with that of their customers (operators)
or whose shares are being conducted in accordance with analysts' estimates of their ability technical, economic laws and common sense?
And what extent of doubt and skepticism should be attached to its free "recommendations" "advice", "surveys" and "forward" set in their places by analysts SU?
As a result regular, over 90% of traders worldwide are losing their deposits in FOREX each time you follow Thomas DeMark stereotype that "all economists share these principles fundamental. "
Comment 1. To the extent the basic principles above 90% are contradictory to the practice leads to the next question. Could these underlying principles, shared by all economists as Thomas DeMark "may have become dogma, alien life and practice?
Comment 2. What should be based on a merchant practice or dogma, even if supported by big names, provided that the merchant is supposed to win money?
FOREX analysts issuing their daily market reports are not bulky Forex traders in the vast majority (see the analysis details below). And to bring together the pairs 1, 2 and 3 do not seem certain regularity.
Please think of the word A. Elder, that "FOREX rates and Fundamental analysis is tied with a rope of a mile long. Fundamental analysis is ultimately decisive. But anything is likely to happen before that event . See http://forum.alpari-idc.ru/viewtopic.php?p=233365&sid=a15db5e24b0eec0a8cf725e2c5cac859).
Another, however, no less famous operator and analyst, Bill Williams emphasizes the regularity of mind of an experienced operator training (level 3 operator skill rating for "Trading Chaos 2"): "The level of achievement of three that emerge as a self-provided professional trader.'re Always familiar with the market, usually invisible structure. It is no longer necessary to refer to the opinions of others. It is not necessary to read "Wall Street Journal, market-oriented view television programs, and subscribe to newsletters, waste money on information channels. "
Comment: Obviously, there is a counter-implication that if you are willing to become a successful trader, you are to restrict the influence of various surveys and recommendations on yourself even if they originate at the world famous "Wall Street Journal, to say nothing of the gurus of raw skins analyst use to know in advance where will the currencies.
Forex News is a theme provided the basic data, which generally affects FOREX rates a strong pulse of the movement. But then, why exchange rate movement vector is only 50% coincident with the logical truism ABC as to where the rate case hasten to real news that is much better or worse than the estimate. And please, make an attempt to answer the following question, stirring to each operator: why the new being worse than expected (for example, in the U.S. economy), the USD initially reduced by 40 points (run-off news), but within 5-10 minutes would turn back and show a rally of 200 points, without regard either to the press release or common sense.
Here are some examples:
Fig. 1. GBPUSD letter on April 1, 2005 after the news positive for the GBP and negative for the U.S. for the economy.
(Picture can be seen on the website of author)
In March, the CIPS manufacturing index rose to 52.0 (with previous data revised from 51.8 to 51.6). Oil prices in New York has grown U.S. $ 2.40 to USD57.70 per barrel (new record for the past 21 years). Non-farm payrolls in the U.S. was minimal since last July (the previous data revised towards lower values). There has been a decline in the Michigan sentiment index to 92.6 (average estimate was 92.9, with 92.9 above).
All indexes in the U.S. against a fall. DJI New York Stock Exchange has fallen by 99.46 points (-0.95%) to close at 10404.30. Nasdaq declined 14.42 points (-0.72%) to 1984.81. S & P 500 fell 7.67 points (-0.65%) to 1172.92. U.S. Bonds 4729 30-year loan (0.037 lower compared with the previous close.) On the contrary, has grown FTSE100 19.60 points (0.40%) to 4914.00.
Now the question is for economists certificate: what happen with the GBP / USD in one day or even several hours after the publication of these data? You are right, should not be limited to USD fall, is going to collapse. Hard, quickly. Well, well …
And this time, the same question to experienced traders. For Forex news headlines you might have assumed that the events are taking place in the U.S. session on Friday. Correct. At first, however, the graph will go up 100 pips GBPUSD (news wok-off), followed by a withdrawal. Forex success after starting a new rally.
We now keep track of whether the infringement was GBP the latest rally high or not. If so, will be undertaken by about 160 pips (Elliott wave 1 was 100 pips, while EW 3 is 60% more). But if discharge is not violated? The price of a currency in any way reach GBP to a standstill, second on Friday afternoon. So – back down to the starting point! And, if breached, similar specific situation, the count is done in a "down" direction (EW1, the same being more than 100 pips 187 pips from 1.8826 to 1.8759 is EW 3).
The tactics FOREX days negotiation will be under scrutiny in a separate chapter. A separate chapter has been selling on Friday in U.S. trading session due to its inherent specificity and apparently a strong circulation is inadequate. The movement is, of course, appropriate. Not to mention on Friday. But it will be addressed later.
Now, back currency to the table. As apparent, the movement GBP / USD on Friday, April 01, 2005 is in no way related to the U.S. economy key data. Every forex trader can provide from tens to hundreds of similar cases, where the news is certain of a vector, whereas, after a peak along the vector fraudulent news, currency applies reverse thrust.
Since then, the next day in the daily foreign exchange survey, economists are certified Be sure to explain everything to us by inventing another silly without disguise, as: "in spite of some data, the operators decided that the currency has already worked-off on this side. "But! How could it happen in April 01, 2005, provided that the currency has been staying flat in a narrow range in the course of the history of progress session?
Otherwise, there may be another explanation, which currency traders awaited further news on the economy than U.S. … But! How much lower, if you agree with DJ, the U.S. non-farm payrolls MA was equivalent to 180K, with troops were 110 K, 225 Estimate is K and 243 K before? And how do these economists count to traders world per capita, by country or by the funds lost by them, which continued to remain long in the belief in saints renowned scholars postulate FOREX rates being tied to countries' statistics economy.
I wonder if ever the opportunity to witness the legal proceedings to be instituted against any of the renowned teachers, so that no one would argue that fundamental data trigger rate peaks.
It refers to economists, writing about the way, traders hundreds of thousands across the world have conspired to the conclusion that it is time to reverse the trends, with absolutely no reason. Is it really feasible?
This reading-matter is, but hammering a single question in mind: it is a lie or is it the stupidity of these reports daily cooking for traders to take a walk, deceiving them and keep them far from the truth, which could be of great use to them in daily operations. Dealers are not a decisive factor, therefore the rates of movement is not in any way depends on your will. Practically in all cases.
Check please? Negotiate with dozens of merchants trading floor and provide a simultaneous entry long in some exotic currency pair. Thus, trying to push either up or NZDCAD NZDHKD, or HKDCAD. It is not necessary? I think so. Probably will suffer failure with the above, not to mention the EUR, GBP, CHF.
Another example:
Fig 2. GBPUSD motion from May 13, 2005.
(Image can be seen on the website of author)
The M15 is a table of the U.S. trading session, where the USD has grown by over 100 pips from 1.8583 to 1.8481 against the news negative for the U.S. economy:
Most indexes have fallen: DJI on NYSE – by 49.36 points (-0.48%) to close at 10140.12, S & P500 – by 5.31 points (-0.46%) to 1154.05. NASDAQ rose by 12.92 points (0.66%) to1976.80. U.S. 30yr Bonds was 4484 (0047 drop previous close)
There is a drop in the Michigan sentiment index. UMich in May was 85.3 to 90.0 and 87.7 est previous med. Therefore, it was worse than the estimate, to reach the low since March 2003. The observed reduction in rate for the fifth month.
The U.S. export in April price index was 0.6% to 0.7% by of.
Here are other examples of the same day.
Fig. 3. EURUSD chart as of May 13, 2005.
(Image can be seen on the website of author)
Hundreds of examples can be given, where the vector is opposite to the Forex news of the currency movement. Virtually real news may become higher or lower than the estimate. Forex Quotes up / down movement is also a 50/50 chance no matter what above.
Why is this and what is the way for an operator to identify the inputs and outputs? This will be discussed in subsequent chapters of this book and trading-V Academy MasterForex procedure.
Full text of this article and photos of examples http://www.masterforex-v.su/
If you want to be trained on the trading system MasterForex-V – one of the new and more effective Forex trading techniques in the world visit http://www.masterforex-v.su/
About the Author
Vyacheslav Vasilevich (Masterforex-V)
Professional Trader from 2000 year.
President of Masterforex-V Trading Academy.
Author of Books:
1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.
2. Technical analyses in Trading System MasterForex-V.
3. Entry and Exit Points at Forex Market
Books web site http://www.masterforex-v.su/
FOREX VIDEO REVIEW: London Session May 15, 2009