Reduce Forex Trading Risk | Manage Overtrading | Forex Trading Safety
Reducing trading risk.
One of the most common reasons that people lose money and give up is overtrading. A simple change in mindset can reduce overtrading by challenging your reasons for placing a trade. Here are three questions from Walter Peters of tradingmarkets.com to ask yourself before you enter your next position:
1. Why would I take the opposite trade?
If you can come up with at least two reasons why then you probably should not take the position. “The very best trades are not ambiguous.”
2. When was my last trade?
If you generally take one trade every day and it’s been 24-hours since your last trade than you are probably clear-headed enough to take a new trade. Hunting for a revenge trade is a sure way to cloud your thinking.
3. Does this trade look like free money?
If you are absolutely excited about this trade; if it looks like the set-ups from your most profitable trades in the past, then it’s probably a good trade to take. If you consistently feel this way about every trade you take “your trading will improve dramatically”.
James Bond in the crude market.
Trying to pick a trend in the infamously volatile crude oil market is tough, but some traders are going to great lengths to get an advantage, says Gregory Meyer in The Financial Times. Genscape, an energy industry data provider, has been hiring helicopters to track the movement of oil tanks at Cushing in the US. Crude prices are impacted by the amount of oil stored at Cushing, the US pipeline hub and the delivery point for West Texas Intermediate oil futures. About 30 large traders, from oil majors to hedge funds, subscribe to the service, which releases its information before news from the American Petroleum Institute and the US Department of Energy. The James Bond style exercise involves camera and infrared equipment taking images that are later used to estimate how much oil is parked at Cushing. The most recent official data shows inventories are down 14% on the record highs of January but still above historical averages.
Cycles point the way.
Gold could be far higher than US$2000 an ounce by the end of 2011, says Martin Weiss on Market Oracle. That’s the prediction of the Foundation for the Study of Cycles, a non-profit think tank established 70 years ago following the Great Depression. The Foundation was sponsored by the founders of some of America’s most respected institutions like the Smithsonian Institute, the National Bureau of Economic Research and Fidelity Investments. Since the 1950’s the foundation has studied cycles in history, sometimes going back to BC to discover trends and identify turning points. The foundation claims it has forecast all the major turning points in the financial markets including the gold rush of the 1970s, it’s decline starting in the 1980s, and it’s bottom in 2001, the 1987 stockmarket crash, the bear market of 2000-2002, the stockmarket’s rise until 2007 and the big plunge of 2008. They are now predicting a range of events and turning points in the coming years:
The US stockmarket will zigzag downwards for the next three years because price-earnings ratios are at boom-time levels and not the five or six times earnings that characterise a recession. To make money be prepared to take positions in both directions in that time frame.
Gold is forecast to be significantly above US$2000 by the end of 2011 against a background of a sinking stockmarket and US economy. In fact the worst recession since the Great Depression could see gold quadruple in value. Its rise will be driven by weakness of the US dollar and it is based on gold cycle data going back to 1680.
The US dollar will start to sink against all currencies at the start of the third quarter of 2010 and not bottom until early 2012. But beware most currencies are set to weaken - “currencies are not a beauty contest, they’re an ugly contest”. The best currencies to ride out this storm are the Aussie and the Canadian dollar.
Crude oil and most other commodities (except precious metals) will not make new all-time highs. That’s because a double dip recession in the US will occur in 2011. This second contraction has the potential to be worse than last year’s recession. The cyclical data shows there is likely to be a rise in US GDP growth for the first two quarters of 2010 until the economy starts to revert back to recession.
The year 2012 will see a massive rise in economic pain and general tension in society as well as a shift in old structures to new. The period of late 2011 to late 2012 is the convergence of cycles for stocks, currencies, consumption, and GDP. There is also the convergence of a 500-year geopolitical cycle dating back to 670BC that heralds a move from West to East in terms of power and wealth.
About AxiTrader
AxiTrader is an Australian company established to provide innovative online financial products and services, and are there to assist you with all your trading needs. In short you can trade Margin FX, Precious Metals Commodities, Global Indices and Australian share CFDs, all with competitive rates and spreads. For your peace of mind all funds deposited with AxiTrader are held in a segregated trust account with HSBC in Sydney.
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