Just like with any other type of trading, there are risks that are involved with online futures trading as well. No matter what you are trading, if it is equities or options, commodities or futures as well as forex there will always be some sort of risk that is involved. When it comes to the risk that is involved with online futures trading, the higher the risk the better your chances are to actually be able to gain profit from the actual trade. One thing that you should keep in mind is that when you are trading commodities along with futures contracts that you will be entitled to a rather large amount of earnings and you will also have the chance that you may suffer from some big losses as well. However, if you take the time to study the markets as well as trading you should have nothing to worry about. One thing that you are going to make sure that you keep in mind is that there is not one single individual trader that is currently successful at trading on the markets that has not suffered from a loss at one point and time during their trading career. The number one reason that a trader is able to become successful is because of the fact that they are able to minimize the occurrence as well as the amount of loss by being able to follow the strict online futures trading principles.
With online futures trading just like any other type of trading, you are going to learn that you have to have money in order to be able to trade because money is one of the main essentials and it is what makes the markets go round. However, you are also going to need an online futures trading plan as well. When you have found an online future trading plan, you are going to make sure that this plan actually is built on your individual trading personality as well as the style that you portray when you are trading. Another thing that you are going to want to make sure that your online futures trading plan relates to is your current economic status not to mention the futures of interest. You should also base your online futures trading plan on the capital that you are able to invest in trading as well as the experience that you have as a trader as well. In relationship to online futures trading, you want to make sure that you know if you invest small amounts you are going to be putting a limit on the options that you have and you should also keep in mind that if you invest larger amounts of money you are going to be inviting higher losses. One thing that you should always keep in mind when it comes to online futures trading is that you should never invest money that is going to affect the way that you are living.
When you are participating in trading, it is very important that you follow the four basic principles of trading. The first of the four basic principles is that you know how to manage your risks, the second of the four basic principles is that you are able to minimize your losses, the third of the four basic principles is that you are able to trade with the trend and the fourth of the four basic principles is that you let the profits that you make run. The ability to manage the risks that are involved ten to get better as you gains knowledge about trading. In fact the ability to manage the risks that are involved is known to withhold a lot which includes the mini contracts and the ability to avoid the markets that are considered to be extremely volatile. You should also make sure that you pay very close attention to the surprise reports and the global trend as well as the ability to preserve money for the actual profits. As a trader you are going to learn if you haven’t already that reducing the amounts of loss is the hardest rule that you can actually take the time to practice. If you are really interested in managing the risk you are going to have to be able to walk away from a trade even at times when the market has turned against your very own predictions.
As many traders and analysts took the advantage of this growing correlation between asset classes to forecast movements in one market by analyzing the changes. However, while using the changes in equities to forecast price action in risk-sensitive currency pairs has grown in popularity, the reverse (using FX moves to anticipate changes in the equities market) has not. And, considering the currency market’s deep liquidity and 24-hour session, overlooking such an advantage would be missing out on one of the best strategies in current market conditions.
Oil prices are rising and the US dollar is falling, but is this the natural relationship between these two assets? Taking a look back at the two prominent oil shocks of the past four decades (1973 and 1979), we see that this is not necessarily the case.
1973 Oil Crisis: Initially Dollar Bullish, Eventually Dollar Bearish
In 1973, oil prices jumped 134% when the members of the OAPEC, which is OPEC plus Egypt and Syria, announced that they were no longer shipping oil to nations that supported Israel in its conflict with Syria and Egypt. This effectively shut down exports to the US, Western Europe and Japan. As a result, prices rose significantly to account for the sharp reduction in supply. At the same time, Saudi Arabia, Iran, Iraq, Abu Dhabi, Kuwait, and Qatar unilaterally raised prices by 17 percent and announced production cuts after negotiations with major oil companies.
Some questions will be discussed here, is the EUR headed Back to 1.60? and can the GBP remain in the levels of 1.97-1.98 and higher?
The Vulnerabilities of the US Dollars
The US Dollars weakened significantly this past week as rising oil prices revealed the vulnerabilities of the United States economy. Companies are beginning to struggle and have been forced to come up with more creative ways to deal with the energy crisis. With crude oil prices hitting $135 a barrel and gasoline in many states topping $4 a gallon, US companies are making cuts across the board. Ford Motors Co for example plans on reducing production while American Airlines will be lowering capacity by 15 percent and adding bag charges. According to the futures market, some traders even expect gas prices to hit $7 to $8 a gallon. However the US is not alone in having to deal with the oil crisis which is one of the major reasons why the dollar has weakened. Over the past few weeks, the market had been slowly pricing in a pause from the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to cut interest rates. The surge in oil prices and hawkish comments from the European Central Bank, the Bank of England and the Reserve Bank of Australia dramatically altered the outlook for these central banks. With strict inflation targets, traders came to realize that interest rates for these 3 countries will remain unchanged for the foreseeable future and as a result, currency rates adjusted for these expectations. In the coming week, the vulnerabilities of the US economy may become even more apparent. The US markets are closed for Memorial Day on Monday, but we still have a busy week ahead of us with consumer confidence, new home sales, durable goods, first quarter GDP, personal income, personal spending and Chicago PMI due for release. We expect most of these numbers to be dollar bearish as US consumers continue to struggle under the weight of deteriorating personal finances.
EUR: Going Back to 1.60 and slightly more?
The EUR staged a dramatic recovery against the US dollar this past week as hawkish comments from the European Central Bank fueled speculation that a rate hike may be around the corner. Although we think that a rate hike would be a dramatic move, the stability of recent Eurozone economic data is certainly encouraging as the market's focus shifts from fears for growth to inflation. Earlier this week, German business confidence for the month of May showed a surprising improvement. Today, the PMI numbers explain why German businesses are not worried. Service and manufacturing PMI numbers both deteriorated from the prior month, but remain in expansionary territory. Next week, it may be US rather than Eurozone economic data that help the Euro / USD Pair inch towards 1.60. The only significant reports from the Eurozone are German employment, Retail PMI and German retail sales. We expect the labor market in Germany to continue to improve because the employment component of the manufacturing PMI report actually accelerated this month. Meanwhile it will also be a busy week for Switzerland who will be releasing their trade balance, UBS Consumption and KoF leading indicator reports. The currency has performed very well against the Japanese Yen this past week and it remains to be seen whether this strength can continue.
Can the British Pound Hold Onto its Gains?
It has been a great week for the British pound, which rallied more than 300 pips against the US dollar. Upside surprises in economic data as well as hawkish minutes from their latest monetary policy meeting confirmed that it will be months before we see another rate cut from the Bank of England. In fact, for all intents and purposes, the next move from the BoE may have to be a rate hike. Unlike the United States, the Bank of England has a strict inflation target and if inflation is more than 3 percent, the central bank governor is forced to write a special letter to the Chancellor to explain why inflation has increased and to outline the time frame for bringing inflation back to target. Earlier this month, consumer prices hit 3 percent on a yearly basis, and now, the BoE must do all that they can to rein in inflation. The recent stability in economic data has helped their cause as long as the economy does not fall back into a downward spiral. With no major economic data due for release next week, the British pound stands a chance at holding onto its gains as long as there isn’t surprisingly strong United States data.
Great Week for the Australian, New Zealand and Canadian Dollars
Rising commodity has been the story of the week, helping to take the Australian, New Zealand and Canadian dollars higher. The Aussie rose to a 24 year high, putting itself within an arm’s reach of hitting parity against the USD. Rising inflation pressures and stronger economic data leaves the RBA far closer to a rate hike than any of the other major central banks. We do not believe that they are ready to raise rates, but tighter monetary policy could be a final option. The lack of meaningful economic data next week leaves the action for the CAD and NZD. Canada will be releasing its Current Account balance and GDP while New Zealand will be reporting its trade balance.
Daily Review 28/4/2010
USD Dollar (USD) – The Dollar gained versus all majors except the Yen after S&P cut the rating for Portugal and lowered Greece's credit rating 3 steps to junk. The rating cuts by S&P strengthened risk Aversion and investors turned to the safety of the Dollar and the Yen. NASDAQ and Dow Jones plunged by -2.04% and -1.9% respectively. Crude Oil weakened by -2.09% closing at 82.44$ a barrel. Gold (XAU) gained by 0.71% closing at 1,161.7$ an ounce. Today, FOMC Interest Rate statement is expected unchanged at 0.25% and will attract investor's attention. Crude Inventories are expected with 0.9M versus 1.9M and are likely to cause volatility in Crude prices.
EURO (EUR) –The Euro plunged versus the Dollar and most other majors after S&P cut the credit rating for Portugal and Greece and is trading below 1.32 for the first time since April 2009. Europe debt crisis spreads to Portugal and might spread to Ireland and Spain soon. Overall, EUR/USD traded with a low of 1.3144 and a high of 1.3395. EUR/USD broke below the support at 1.32 and the bearish trend is likely to continue. Today, German Prelim CPI is expected with 0.1% versus 0.5% prior.
EUR/USD - Last: 1.3180
Resistance 1.3205 1.3265 1.3330
Support 1.3145 1.309
British Pound (GBP) –
Daily Review 27/4/2010
USD Dollar (USD) – The Dollar weakened versus most majors as investors became more optimistic regarding the future of the Euro zone as a result of more developments on the Greek bailout plan. NASDAQ declined by -0.28% and Dow Jones finished unchanged on a choppy trading day. Crude Oil weakened by -1.4% closing at 83.97$ a barrel. Gold (XAU) remained almost unchanged closing at 1,153.4$ an ounce. Today, CB Consumer Confidence is expected stronger with 53.6 versus 52.5 prior. Fed Chairman Bernanke is due to testify in Washington.
EURO (EUR) –The Euro gained versus the Dollar and was little changed versus the other majors as traders await more announcements regarding Greece's bailout. Overall, EUR/USD traded with a low of 1.3291 and a high of 1.3416. EUR/USD is still trading beneath its 50 day MA and is likely to struggle with the 1.35 resistance. Today, ECB President Trichet will speak in Chicago.
EUR/USD - Last: 1.3375
Resistance 1.3420 1.3515
Support 1.3290 1.3270 1.3205
British Pound (GBP) –
Daily Review 22/04/2010
USD Dollar (USD) – The Dollar traded with a mixed trend versus the majors. No clear direction seems across the board. NASDAQ and Dow Jones rose by 0.17% and 0.07% respectively. Crude oil plunged after the Inventories data showed an increase of 1.9M barrels, closing at 83.4$ a barrel. Gold (XAU) increased for another day closing at 1146$ an ounce. Today, PPI is expected at 0.4% vs. -0.6% previously. The Initial Jobless Claims is expected at 450K vs. 484K previously and the Existing Home Sales is expected at 5.3M vs. 5.02M previously.
EURO (EUR) – The Euro traded near a 2 week low against the Dollar on concern that the aid package for Greece will fail to stabilize the nation’s debt crisis. The main resistance of the pair is located at 1.3500, as long it trades below this level the momentum is bearish. Overall, EUR/USD traded with a low of 1.3357 and a high of 1.3446. Today, the French PMI is expected at 56.8 vs.56.5 previously. The German Manufacturing PMI is expected unchanged at 60.2. The Manufacturing PMI is expected at 56.8 vs. 56.6 previously.
EUR/USD – Last: 1.3380
Resistance 1.3440 1.3470 1.3510
Support 1.3370 1.3340 1.3280
British Pound (GBP) –
Daily Review 19/04/2010
USD Dollar (USD) – The Dollar strengthened against most majors after news on Friday that Goldman Sachs has been charged with fraud by Securities and Exchange Commission caused an immediate fall in stocks and commodities, thus spearing investors to buy the Dollar as a refuge. NASDAQ and Dow Jones weakened by 1.37% and 1.13% respectively. Crude oil fell by 2.4% closing at 84.6$ a barrel and Gold (XAU) also dropped by 2.0% closing at 1136.9$ an ounce. Today, Fed Chairman Bernanke Speaks.
EURO (EUR) – The Euro weakened against the Dollar on speculation that Goldman Sachs will be charged with fraud. European CPI that came worse than expected at 1.4% vs. 1.5% also helped the momentum and lead investors to sell the Euro versus the Dollar. The main resistance is located at 1.3500. As long as it trades below this level the momentum is bearish. Overall, EUR/USD traded with a low of 1.3472 and with a high of 1.3566.
EUR/USD – Last: 1.3451
Resistance 1.3510 1.3565 1.3695
Support 1.3440 1.3360 1.3340
British Pound (GBP) –
Daily Review 16/04/2010
USD Dollar (USD) – The Dollar traded on a mixed trend against the majors after Philadelphia Fed Factory Index Increased to 20.2 in April from 18.9 the previous month but Jobless Claims in U.S. Increased by 24,000 Last Week to 484,000, putting a warning sign on American recovery. NASDAQ and Dow Jones strengthened by 0.43% and 0.19% respectively. Crude oil decrease by 0.4% closing at 85.51$ a barrel and Gold (XAU) increased by 0.06%, closing at 1160$ an ounce. Today, Building Permits are expected at 0.63M vs. 0.64M prior and Prelim Consumer Sentiment is expected to rise from 73.6 to 74.7.
EURO (EUR) – The Euro weakened against the Dollar and yen on concern the European Union 45 billion Euro rescue plan for Greece won’t be enough to restore the currency’s credibility. The EUR/USD has no clear trend in the last four days, the main support is located at 1.3500 if this level breaks down a short positions is preferred. Overall, EUR/USD traded with a low of 1.3521 and with a high of 1.3666. Today, CPI is expected to remain at 1.5%.
EUR/USD – Last: 1.3548
Resistance 1.3585 1.3627 1.3680
British Pound (GBP) –
Daily Review 15/04/2010
USD Dollar (USD) – The Dollar fell against most majors as a bigger-than-expected increase in U.S. retail sales last month spurred demand for riskier assets, came out at 1.6% vs. 1.1% forecast. In addition, Federal Reserve Ben Bernanke said the U.S. expansion will remain moderate as the economy contends with weak construction spending and high unemployment. NASDAQ and Dow Jones strengthened by 1.58% and 0.94% respectively, crude oil jumped by 2.3% closing at 86$ a barrel, Gold(XAU) increased by 0.5% closing at 1159.6$ an ounce the strongest levels since Decembers. Today, Unemployment Claims are expected to weak from 460K to 439K, TIC Long-Term Purchases are expected to rise from 19.1B to 39.2B, Philly Fed Manufacturing Index is expected at 19.8 vs. 18.9 prior.
EURO (EUR) – The Euro rose against the Dollar after good data which released during the day in the euro zone and in the US succeed to increase the stocks market and higher risky currencies. The main resistance on the one hour chart is located at 1.3700 if this level breaks up a long positions is preferred. Overall, EUR/USD traded with a low of 1.3594 and with a high of 1.3679.Today, ECB Monthly Bulletin.
EUR/USD – Last: 1.3645
Support 1.3545 1.3500 1.3380
British Pound (GBP) –