Where Have I Been?

It's been a while; a little over two weeks in fact since my last blog post. My last trade was 18 days ago and today was the first time I opened up a chart since then. Am I quitting? Has the forex market taken its' toll on me? No and no. I started a new job about two months ago and it has been so draining mentally and physically that I just haven't had anything left for forex. Trading forex has since fallen to the bottom of my priority list next to watering my cactus. The unfortunate thing is that I took this new job because I thought it would give me more time to concentrate on forex. I feel like my added responsibilities are started to loosen a bit though as I become more acclimated to my new full-time job. The fact that I'm finally posting something on my blog for the first time in two weeks may be evidence. The question will be whether I jump head first back into trading forex or ease my way back in. Either way, I'll probably wait until May 1st for psychological reasons. I'm up 2% for the month and I'd rather not threaten this by trading hastily before month end. Stay tuned. I'll be back soon. Hope everyone else is still chugging along making progress and money.

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Last Updated ( Monday, April 28, 2008 )

What Do You Think Is Holding You Back?

Investing and Trading

Sunday, April 13, 2008

"You have been at this forex thing for a while now and still are not achieving the results you had originally hoped you would achieve. What do you think is holding you back?" Simple question but nevertheless a good one that made me think. I have been forex trading for almost three years, not a sophomore and not a senior. Three years ago I had high hopes of trading full time within one years time. These hopes faded as the reality quickly sunk in. The results I was hoping to achieve back then were just totally unrealistic. I'm a firm believer that trading takes experience so there really is no way of rushing the learning process. The more you rush, the more chance you have of getting so discouraged that you want to run as fast as you can away from the market. After rethinking my initial goals, I limped around for quite a long time. I couldn't even put together a profitable month. During this time, I got extremely discouraged and couldn't even hope for achieving anything. I was probably two months away from quitting. Then about six months ago, I got my motivation back and wanted to give it one more shot. A lot of things seemed to come together quickly for me and I felt good about my trading. This was the point where I felt like I could start setting realistic goals and I did. Since then, I think I've made great progress toward reaching these goals. In fact, I think I've surpassed the expectations I had six months ago. So in response to the comment, I think I've achieved the results that I had hoped six months ago not three years ago. In response to the question, the only thing holding me back now is my renewed motivation to excel in my non-trading occupation. This was a bit unexpected but one must have a backup plan. I worked hard to get where I am and I don't want to throw it all away. Ultimately, I want to work for me and I think trading gives me the best shot at doing that.

Fed Lowers Rates

The Federal Reserve Bank recently lowered interest rates for the seventh, and perhaps final, time, bringing its benchmark federal funds rate to 2.0%. Since inflation is still hovering around the 4% mark, the Fed will probably be reluctant to lower rates further. Thus, the markets have been given all of the boost that they are likely to receive, and it is "fate" that will determine whether the economy will find its footing. (GDP growth clocked in at an anemic .6% for the last two quarters). The most recent data (including the just-released jobs data) indicate that the economy may be stabilizing, although consumption and the employment situation are still deteriorating. As a result, the National Bureau of Research has yet to officially declare the current economic downturn a "recession," since the picture remains nuanced. The New York Times reports

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Fed Pumps More Money Into Economy

The markets are feeling happy today: First of all the US payrolls numbers were better than expected, and now the Fed has also increased the money it will be pumping into the credit markets. The Fed increased its cash-loan auctions to banks by around 50% to $75 billion and also increased its currency-swap arrangement with the ECB to $50 billion. According to the Fed, these actions were taken “in view of the persistent liquidity pressures in some term funding markets.” So there is still a liquidity problem, but it seems to be easing somewhat; after all Mars was able to obtain a significant amount of funding to purchase Wrigley (WWY: 75.93 -0.24 -0.32%), and that might signal others to look at funding similar deals.

Factory orders were also up 1.4%, thanks to stronger exports due to a weaker dollar. This beat analysts’ expectations after a 0.9% decline last month and shows that the weaker dollar is continuing to benefit US companies.

Chevron’s (CVX: 95.77 +0.83 +0.87%) profit is up 10% to $5.17 billion, or $2.48 per share in Q1, from $4.72 billion, or $2.18 per share last year’s Q1 on higher oil prices, beating analysts’ expectations of $2.41 per share. On the downside though, they said that margins were continuing to tighten for their gasoline refining business as gas prices at the pump haven’t increased as fast as crude oil prices. If Clinton and McCain have their way, oil companies could soon have even fatter profits as they enjoy the benefits of the “gas-tax holiday” which would make them pay less taxes and would make it easier for them to widen their spreads on the oil/gasoline price differential. In the long run, this probably won’t benefit the consumer much, but shareholders of these companies should be happy.

Will Euro Recover This Week?

Last week we saw the largest weekly fall in Euro against the US dollar since June 2006 - EUR/USD fell more than 400 pips on speculation a Eurozone slowdown will force the ECB to follow the Fed’s footsteps in reducing interest rates. ECB’s Trichet warned that economic uncertainties in the Eurozone are “unusually high”.

This week will bring about a heavy slate of economic data like the US retail sales, trade balance and so on, so expect a very volatile environment in the forex markets.

We could see a Euro rebound especially if US data come in weak. Also, the OPEC Secretary-General suggested the price of oil may be shifted into Euros from USD sometime in the future.

The G7 left its statement on exchange rates essentially unchanged, saying currency rates should reflect economic fundamentals and that excessive volatility is undesirable for economic growth.

Watch my forex video from New York below:

Turkish Lira Set for Decline

ppreciated 21% against the US Dollar. However, in the year-to-date, the currency has returned nearly 10% of this gain, making it the third worst performing currency in the world. Turkey generally, and the Lira specifically, are considered by investors as proxies for emerging markets. The global trend towards risk aversion, as well as skyrocketing inflation, are hurting many such currencies. In Turkey, inflation is so problematic (9.4% at last count) that the Central Bank has raised its benchmark interest rate to 15.25%. Ironically, the more the Lira depreciates, the harder it becomes for the Central Bank to control inflation, causing the Lira to slide further as part of a self-perpetuating free-fall. In addition, the country is beset by political uncertainty, as the courts determine whether the nation's current government can stay in office. Bloomberg News reports:

"The recent political developments are likely to complicate policy-making and the investment climate. The deteriorating political backdrop will in turn undermine the prospects for restoring fiscal discipline and reviving the reform agenda."

Fed Lowers Rates

The Federal Reserve Bank recently lowered interest rates for the seventh, and perhaps final, time, bringing its benchmark federal funds rate to 2.0%. Since inflation is still hovering around the 4% mark, the Fed will probably be reluctant to lower rates further. Thus, the markets have been given all of the boost that they are likely to receive, and it is "fate" that will determine whether the economy will find its footing. (GDP growth clocked in at an anemic .6% for the last two quarters). The most recent data (including the just-released jobs data) indicate that the economy may be stabilizing, although consumption and the employment situation are still deteriorating. As a result, the National Bureau of Research has yet to officially declare the current economic downturn a "recession," since the picture remains nuanced. The New York Times reports:

The recession-or-not question is now almost entirely academic, Mr. Bernstein contended, given the steady erosion of American spending power and soaring costs for food and gasoline.