Forex Blog

I published a new complex MetaTrader indicator on the site today — it’s called Traders Dynamic Index. It has almost everything the Forex trader needs: trend direction indicator, trend strength indicator and the market volatility measurement tool. But despite these cool features it is very simple to use. This indicator was sent to me by one of the site’s visitors, but it most probably originates from www.compassfx.com.

Here’s a quick guide to using this indicator (I recommend reading the full guide in its code’s commentary):

1. Blue bands show a strength of the trend — the wider they are, the stronger is the trend.
2. Yellow line indicates the trend’s direction change — when it bounces of 32 level, trend goes bullish, when it bounces down from 68 level, trend goes bearish.
3. Green and red lines signal for the long position — if the green one intersects the red one from below, and — for short position, when the red one crosses the green line from below.

Dollar (and, actually, Japanese yen too) showed a major triumph on Forex market today after the Bank of England decided to go down from 5.50% to 5.25% on the main interest rate. And despite, while BoE lowered the rate, ECB held the rate at the same 4.00% value, dollar bulls pushed EUR/USD down as well as the GBP/USD currency pair. And that’s on the disappointing fundamental data coming out in U.S.

U.S. initial jobless claims improved from the previous report at a little worse pace than market strategists expected — it fell from 378,000 (revised up from 375,000) to 356,000. That’s still a very high number for this indicator and it’s a clear sign of the current elevated recession risks.

Consumer credit in the United States in December grew by $2.4 billion — a very low number compared to the November’s $15.4 billion increase. Even pessimistic expectations of $8.0 million growth were above the released value.

I’ve recently ran across an interesting money management book — Money Management: Controlling Risk and Capturing Profits by Dave Landry. It’s a short e-book, written in four parts. First part simply explains why the risk management is important in the financial trading. Second part gives some interesting advices to organize your money management strategy, or to help you create one. Third part is where some of the Forex professionals are sharing their experiences of poor and good money management. And the final one, fourth, is the most interesting one, in my opinion, — different Forex professionals share their lessons of risk-wise trading.

I’ve also changed the structure of the Forex e-books section a little. Now I have a separate list for beginner, general, advanced, psychology, strategy and money management e-books.

Enough with the Blogger, its glitchy publishing system and the limited settings choice. I’ve decided to move my Forex blog to WordPress, as I find it very good CMS for my needs. Of course, in the beginning there will be a lot of things messed up because of it, but now you will probably have a better experience with the whole more clean blog. And the posts will be actually posted without waiting periods of more than 10 hours (because sometimes Blogger just didn’t want my posts to be published).

As to the Forex market, not much news here today. U.S. factory orders for December rose 2.3% instead of the expected 2.4%, but it was still better than 1.5% previous value. This news probably made some difference for euro and EUR/USD rose about 30 pips up today.

Welcome to the February 3, 2008 edition of Carnival of Forex Trading.

Nate presents Scalping: Don’t Lose Your Head posted at Legion Forex, saying, “Become a legionnaire!”

Raymond presents Invest In Gold As A Hedge Against Inflation, Recession, and The Weakening Dollar posted at Money Blue Book.

Jed Norwood presents Having Profitable Losses posted at Forex Strategy Secrets, saying, “Forex trading is a business that carries risk but that doesn’t mean risk has to be a factor that scares you away. simply learn how to manage your risk and learn from mistakes.” Another author from this site — ioventuresinc.com — presents How Much Should You Trade?, saying, “This post is just one of the tips and tricks offered to Forex Traders. Learn the ins and outs of Forex trading”

James D. Brausch presents TMI (Too Much Information) posted at Internet Business Blog, saying, “To succeed with trading (or any financial goal), you have to stop endlessly reading books, create a basic plan, and ACT.”

Sagar presents 10 Reasons to Be Critical of the Federal Reserve posted at Currency Trading.net.

Vahid Chaychi presents How To Use Fibonacci Numbers in Forex and Stock Trading posted at Weboma.com, saying, “Fibonacci levels can act as strong support/resistance. We have to consider them in our trading strategies.” The same author also suggests reading The Language of Japanese CandleSticks — The Only Real Time Indicators, saying — “Candlesticks are the best indicators of the market psychology. We have to learn their language.”

That concludes this Carnival of Forex Trading edition. This month I’ve got more interesting articles than usually. So you can even chose from something. I hope that it would as interesting for you as it was for me.

EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: sell.
EUR/JPY trend: sell.

Nonfarm payrolls is one of the most important indicators of the U.S. economy’s health. Market analysts expected it to grow up in January by 50,000. But in reality it didn’t grow at all, instead it dropped by 17,000. At first, this fueled dollar bears’ activity and drove EUR/USD up close to the historical borders, but then, after release of some other important indicators, it went down to about 1.4800.

The part of the employment report was the U.S. unemployment rate in January — it fell down from 5.0% to 4.9%.

Construction spendings in December fell down by 1.1%, faster than the analysts expected (0.5% drop).

Non-manufacturing ISM report on business activity in January resulted in PMI at 50.7%, showing an increase from the last month’s 48.4% and that it’s significantly better than the forecasted 47.5%.

Index of Consumer Confidence, reported by Reuters and University of Michigan, fell to 78.4 in January from 80.5 in December. Expected value for this indicator was 79.0.