Forex Blog

Many Forex brokers have started to offer 6 digit Forex quotes to via the MetaTrader 4 terminal recently. It has a lot of benefits for the scalping traders and opens up many new trading possibilities for others. But there seems to be a problem with almost all expert advisors that are applied to the MetaTrader 4 platform, which uses 6 digit Forex quotes instead of the more conventional 5 digit format. As the most expert advisors use the "Point" variable for pips to denominate stop-loss and take-profit, there are two major problems with the 6 digit quotes. First, both stop-loss and take-profit values have very strong chances to come to close to the current pair’s price and MT4 will generate an Error 130, if they are to close. Second, the whole strategy embedded into the given EA will stop working properly because all the profits and losses will probably be divided by 10.

Let’s look at the following example. With a 5 digit quote EUR/USD rate is 1.5703 and one Point in MetaTrader 4 is 0.0001 — a conventional pip for EUR/USD pair. Our expert advisor buys EUR/USD, setting stop-loss at 20 pips — 1.5683, and take profit at 40 pips — 1.5743. Everything goes fine and we win 40 pips when the rate reaches 1.5743. But for a 6 digit quote things are completely different. E.g. the rate above might have been 1.57032 and one Point in your MT4 would have been 0.00001 — ten times less than the conventional pip for EUR/USD. The same expert advisor would have set the stop-loss at 1.57012 and take-profit at 1.57072. Not only 99% of the brokers wouldn’t allow such a close stop-loss and take-profit setting, but if allowed this position wouldn’t be very rational and of course it wouldn’t be according to the initial strategy rules.

So how to correct this problem without completely rewriting the expert advisor and, of course, without changing a broker (to one with the 5 digit quotes)? First, I’d like to tell you that all MetaTrader expert advisors that are featured on my site have been already modified to work with both 5 and 6 digit quotes. Second, here is the way to make any EA to work properly with 6 digit quotes:

1. Open the .mq4 of the expert advisor that you want to change in MQL Editor.
2. Add a new global variable declaration (it should be in the beginning of the code, along with other variable declarations):
   double Poin;
3. Add the following code to the init() function of the EA. This function is usually present in all EAs (it contains various initialization routines), but if it’s not there, create it and include this code:
   //Checking for unconventional Point digits number
if (Point == 0.00001) Poin = 0.0001; //6 digits
else if (Point == 0.001) Poin = 0.01; //3 digits (for Yen based pairs)
else Poin = Point; //Normal
4. Replace all further occurrences of "Point„ in the code with “Poin„ (except those in the init() function). This will change the system MT4 variable “Point„ to our declared variable “Poin", which now contains the standard 5 digit pip value.
5. That’s all. Compile it and you are ready to run it on the 6 digit quotes in MetaTrader. Of course, it will still work with standard 5 digit quotes too.

EUR/USD remained mainly unchanged after today’s releases of the macroeconomic statistics in U.S. The overall trading day was bullish for the currency pair — it rose from 1.5715 to 1.5783, but it failed to set a new record high level today. The yesterday’s high value at 1.5902 remains the highest rate that EUR/USD ever reached on Forex.

Building permits in February fell down from 1,061k to 978k, while only a mild drawdown to 1,020k was expected. Housing starts during the same period dropped from 1,071k to 1,065k, which is significantly above the expectations — 995k. It’s noteworthy to say also that the housing starts fell only from a revised January’s value, before revision it was at 1,012k. This can be a first real sign of the U.S. housing market improvement.

Producer Price Index in February rose as expected — 0.3%, while the core PPI rose 0.5% — faster than expected 0.2%. In January they grew by 1.0% and 0.4% respectively.

Markets are waiting for the interest rate decision, which will be carried out later today. There may be a lot of movement on Forex after this release.

The EUR/USD currency pair reached its new absolute maximum earlier today at 1.5902, but it has significantly corrected already and is trading around 1.5750 level.

The first falling indicator that went out today to negatively affect the financial situation on the global market and weaken the U.S. dollar further was the NY Empire State Index for March, it decreased from -11.7 to -22.2, its new all-time record low level. The economic analysts forecasted that it will go up to -5.

Industrial production and capacity utilization report was very disappointing too. Industrial production in February fell 0.5% after the January’s 0.1% growth and the 0.1% forecasted fall for February. Capacity utilization decreased from 81.5% to 80.9% (it was expected to fall to 81.3%).

Net foreign purchases of the long-term securities in January were very optimistic — they went up from $56.5 billion to $62.0 billion, showing that the foreign investors are still interested in the U.S. securities.

As you can see there are huge potentials to make profits on the Forex. But like any financial market, there are risks associated with Forex trading, and even the most experienced of traders makes a wrong decision every once in a while that ends with them losing a large sum of money. Because the Forex market is such a volatile and unreliable market, it is absolutely necessary that you have a thorough knowledge of trading techniques and plans, market indicators, as well a clear understanding of the Forex market itself.

Before you even think about buying or selling any currency on the Forex market, you will need to have a good understanding of what exactly the Foreign Exchange Market is, and how it works. You wouldn’t make an investment without thoroughly researching it, and knowing exactly what you are getting into. The Forex market is no different, and you wouldn’t want to do something with your hard earned money without knowing every single detail. Therefore, you should do some reading about the Forex market, its origins, general history and facts, as well as some of the more detailed information about how the market mechanism works to determine currency prices and exchange rate values. To get started, the best place to find information about the mechanics behind how the Forex functions (except this site, of course) is Wikipedia. You can gather a great deal of information about the position of Forex in global economies, how the Forex market functions and how this function is performed, as well some of the basic terms that are used when dealing on the Forex market. You wouldn’t want to begin trading on the Forex market without knowing what terms such as derivatives, options, and futures mean.

Now that you have some general knowledge about the Forex market, it is time to do some real world research of the Forex market to better understand how price and exchange rate values are affected by real world events. To do this, I would suggest you look for some articles relating to exchange rates, the Forex market, or events that have affected the dollar’s value. For example, it should not be hard to find articles that describe how the value of the U.S. dollar has been affected by record high oil prices. CNN and Forbes have excellent, high quality articles relating to these topics available for free.

Right now you are probably feeling that doing research about the Forex market and reading articles about it won’t help you one bit when it comes to real life situations. However, by reading more about the Forex you are subconsciously learning about market indicators, devising plans and strategies, as well as touching on the practice of Forex news trading. From articles that you read or information that you have learned, you are taking in a lot of information that translates into practical knowledge that can be put to use when you start buying and selling on the Forex. For example, if you read an article pertaining to the U.S. Federal Reserve relieving inflationary pressure, you will automatically know that when the Fed makes an announcement about lowering interest rates or lending money to financial institutions, the U.S. dollar will decrease in value.

Every good Forex trader knows that the secret to success comes from a well planned strategy or system that enables them to determine profitable trades. A system usually is used to find good trades, though you do need to analyze the market before you can create a good system. Even though you can find pre-developed strategies in various places on the web (however, they usually cost a great deal of money), it is always better to create your own system. A system developed by you can not only better focus on your goals, but it will also allow you to better understand to what extent economic events will affect the Forex market and what type of events cause market fluctuations. Though many sites on the web require you to pay a fee to use their resources to develop your system, there are still a few sites that are absolutely free. You can use this site or any other similar free Forex resource to get some help in your own system development.

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

During the last nine days, only one day didn’t bring a new absolute record level on EUR/USD; it was last Friday, March 7. Today EUR/USD reached a new maximum value at 1.5687 renewing the yesterday’s record at 1.5644.

In February seasonally adjusted CPI didn’t change at all according the report of the Bureau of Labor Statistics. In January it grew by 0.4% and for this month the majority of the market analysts expected a 0.3% growth.

March preliminary Michigan Sentiment index was released at 70.5, while it was expected to fall from 70.8 to 69.5.

EUR/USD reached a new absolute maximum value today not so long after the opening of the European trading session. It touched 1.5626 and then traded slightly below that level. Bad economic news from the U.S. failed to move the currency pair upwards. EUR/USD even started to correct after those releases.

Retail sales in February dropped 0.6%, while the retail sales excluding the motor vehicles and parts dropped 0.2% in the same period. A growth by 0.2% was expected for both of these indicators.

Initial jobless claims in the last week were at 353k — unchanged from the previous weekly report and just a bit lower than the expected 355k value.

Export prices were up by 0.5% in February, while import prices gained 0.6%, losing some of the January’s pace, when they increased 0.8% and 0.7% respectively.

Business inventories in January increased by 0.8% compared with the previous month (inventories gained 0.6% in December 2007). The market analysts expected a 0.5% growth in January.

FxPro is a relatively new MetaTrader Forex and CFD broker, which I’ve found out recently. I’ve seen the ad for this broker on some cable channel and decided to check it out on-line. Not many Forex brokers advertise on TV nowadays, so I was kind of interested. What I really didn’t like a lot about FxPro was their website — speaking flash marketers isn’t something I expected from the good user-friendly website. Some of the site’s links didn’t work for me (FireFox 2.0.0.12) as well. They also have some funny preproduction artifact in the Trading Terms section:

FxPro has no minimum or maximum restrictions for deposits or withdrawals
NOTE: Query the above information with earlier reference US$ 100 Minimum

The broker itself is rather interesting — it offers 1.8 pips spread on EUR/USD. That’s a record for the fixed/non-ECN spread for real MetaTrader 4 accounts as far as I know. FxPro also accepts PayPal payments, which is quite rare for the MT4 brokers. It’s also registered on Cyprus and is regulated by their SEC. The minimum account for this broker starts with $100.

The February Treasury budget deficit beat the last signs of life out of the fadollar today as the released numbers were far worse than the most pessimistic expectations of the economic strategists. The budget deficit was at $175,6 billion, while the forecasted value was at $170,0 billion. Last year February budget deficit was at $120,0 billion. That’s an astonishing $55 billion (45.8%) increase of the deficit in a year-to-year comparison.

EUR/USD hit its new record value on Forex today after the news on the budget were released. The currency pair started at 1.5341 today and reached the 1.5526 level soon after the release.

Crude oil inventories report for the last week added a little positive to the markets situation today, they increased by 6.2 million barrels compared with the previous week.

Although the U.S. trade balance deficit in January has actually widened compared to December’s revised value, it was significantly below the analysts’ expectations. The negative difference between the exported and imported goods’ value was at -$58.2 billion which is slightly above the December’s -$57.9 billion (revised up from -$58.8 billion). The trade balance deficit was expected to increase from $58.8 billion to $59.0 billion. The reason for the deficit "widening" was that the imports grew faster than the exports in January.

EUR/USD reacted sharply on the trade balance news release and went down from 1.5455 at the time before the release to about 1.5327 as of 14:22 GMT.