FX Archive

Written by Chris Svorcik on December 16, 2014

http://www.winnersedgetrading.com/your-forex-trading-plan-during-the-holidays-and-1st-half-of-2015/

All eyes are focused on the last FOMC statement of the 2014 trading year which will be released on Wednesday afternoon ET time. Will the statement steer the US Dollar back in its uptrend or has the retracement time finally arrived?

The statement will probably give Forex traders a sneak preview of the upcoming trading year of 2015 but generally speaking the following developments seem most likely in my forecast for next year:

1. Typically the market movement slows down during the holiday season and the majority of the trading days will hardly be worth trading. If this is new for you, don’t underestimate the historical seasonal affect of the holidays on the markets and do not beat yourself for focusing on testing or resting;

2. Typically January has a slow start as well, because a brand new trading year has just started. Although last year’s levels are available, there is a brand new playing field (like new trading day) and the market slowly tests support and resistance.

3. Bigger long-term (weekly/monthly) trends often start or accelerate in February or March. Grab a weekly or monthly chart and look at each February or March and tell me what you see by writing down a comment down below. I choose the EURUSD as an example and most times work out well with exception of the big 2012 and 2013 consolidation: trends can start if there is no trend present.

The second half of 2014 has seen the US Dollar in a large uptrend BUT last week’s bullish weekly candles on the EURUSD, GBPUSD, and bearish candle on the USDJPY could hint at a temporary halt of that trend.

The typical slow consolidation during the holiday season fits in well within this picture. After the USD heads sideways with a tad of a bearish correction for the next 2-3 months, the USD uptrend can make its next march forward in February, March or April.

In the below screenshot you can see what I am thinking about in more detail: notice how price bounces at the monthly support trend line. Price action is indicated by small greenish bars, which represent small bullish candles. They are then followed by bigger and impulsive bearish (red) candles pushing through the monthly support trend line.

What if the USD uptrend continues quicker and/or the USD uptrend does not receive follow through in March next year?

As always traders should always remain focused on the price action and follow price wherever it wants to go. Be ready to capitalize on opportunities regardless of the direction and your bias. Every Forex trader will have some kind of bias (impossible to remove it entirely), which allows us to stay sharp and improve our forecasts. Just do not rely on it blindly.

Do not forget to add your opinion in this debate by posting a chat below. What is your forecast for the US Dollar? Do you the same as me or something totally different?

Thank you for sharing this post and wish you all Happy Hunting!

Bio

Chris Svorcik
Chris is the head of the mentoring program and trading room at Winner’s Edge Trading. He has a passion for technical analysis and helping Forex traders achieve their goals in trading. Chris has been trading for almost 10 years and is most fond of the Double Trend Trap (as a strategy), moving averages (as an indicator) and Fibonacci (as a tool).

Forex in Focus – Raghee Horner

Posted December 12, 2014 By APTA.org.au

Forex in Focus – Raghee Horner 8th Dec 2014

The Lure of Forex: Conflict, Debt and Loss in a $400 Billion Market

Photographer: Reed Young/Bloomberg Markets
Jared Martinez, CEO of Market Traders Institute, combs his hair as he prepares to teach an all-day forex-trading seminar at MTI’s school in Lake Mary, Florida.

It’s a Saturday afternoon in March, and more than 500 people have tuned in for a two-hour webinar that tells them they can become rich trading foreign currencies.

“Success in trading is not a fantasy; it’s a formula,” Jared Martinez, founder of Market Traders Institute Inc., the oldest and largest such school in the U.S., tells his audience. “We have that formula.”

The Lake Mary, Florida, company that Martinez founded in 1994 says it has educated 30,000 amateur foreign-exchange investors.

“How many people would like to learn a skill where, within two days, they could make a thousand dollars?” Martinez asks that afternoon. “I’m here to tell you I can teach you how to trade consistently.”

He introduces Jose Tormos, his son-in-law, who echoes Martinez’s advice, Bloomberg Markets will report in its December issue.

More from the December issue of Bloomberg Markets:

“It is the easiest, most predictable and safest way to invest,” Tormos says. “Many of you are missing out on opportunities to build a retirement nest egg.”

One person familiar with the webinar pitch is Dan Gratton, a 71-year-old retiree who lives on Social Security in Kingman, Arizona. He says he’s been a student of the institute for two years and had hoped that taking its home-study classes and watching webinars would help him succeed with forex trading. That hasn’t happened.

Photographer: Reed Young/Bloomberg Markets

Gain Capital CEO Glenn Stevens, during an office relocation says, forex traders often…Read More

“Probably the most consistent thing is losing,” Gratton says.

He’s right.

Net Loss

Most retail currency investors lose money most of the time, according to the industry’s own data. Reports to clients by the two biggest publicly traded over-the-counter forex companies — FXCM Inc. (FXCM) and Gain Capital Holdings Inc. — show that, on average, 68 percent of investors had a net loss from trading in each of the past four quarters. These kinds of losses make for investor churn.

The average OTC forex investor drops out of the market after just four months, according to the National Futures Association, an industry self-regulatory group.

Retail forex investors, many of whom are well educated in fields other than finance, enter into a market that is lightly regulated, opaque and rife with conflicts of interest. They are enticed by pitches from coaches like Martinez, saying people can finance their retirements trading forex.

And they are allowed to supercharge their bets with the kind of leverage — as much as 50:1 — that investors in other asset classes can only dream of. That kind of juice can lead to wins, but more often than not, it leads to big losses. Investors can have their entire investment wiped out in a matter of days.

‘Roulette Table’

Forex trading is like gambling at a casino because the odds are always stacked against you, says Michael Greenberger, who was director of the Division of Trading and Markets at the Commodity Futures Trading Commission from 1997 to 1999.

“People are lured into forex trading the same way they’re attracted to a roulette table,” Greenberger says. “It’s a no-win proposition.”

Most people who trade currencies don’t do it on an exchange; they trade over the counter, usually online, using a broker. But currency brokers aren’t neutral parties; they’re also buyers and sellers, sometimes taking the opposite sides of their customers’ trades.

That’s how brokers can be in conflict with their own clients — a disclosure brokers are required to make to clients in writing by the CFTC, which regulates forex trading. Brokers may offer any currency prices they wish and can give different rates to various customers at any time, the CFTC-required disclosure says.

Currency trading is the world’s largest financial market; $5.3 trillion changes hands every day, according to the Bank for International Settlements. That’s 100 times more than the daily dollar volume of the New York Stock Exchange. The forex market is dominated by professionals who make trades of as much as $10 million or more for pension funds and multinational corporations.

$400 Billion

For the past two years, regulators in Europe and the U.S. have been investigating whether the world’s biggest banks traded ahead of their clients and colluded to rig the benchmarks used to determine currency prices. Those probes aren’t looking into retail trading.

Twenty million individual investors, some making bets of just a few hundred dollars, globally trade $400 billion a day, estimates Javier Paz, an industry analyst at Aite Group LLC, a Boston-based financial research firm.

The great lure of forex trading has less to do with the movement of the currencies themselves and more to do with leverage. Using leverage of 50:1, an investor can amp up a $100 wager so it can pack the punch of a $5,000 bet. That means traders can double their investment on a 2 percent currency move in their favor.

‘Magically Turn’

“Would everyone want to take a $20 bill out of your wallet and magically turn it into $1,000?” Tormos asks in the March webinar. “Imagine if you took $2,000 from your bank account and traded it in the forex market. It would be worth $100,000 of buying power.”

The elixir of leverage makes it possible to score big gains even in a market that often rises and falls in tiny increments, calibrated in fractions of cents.

“Currencies don’t move that much,” says Drew Niv, chief executive officer of FXCM, the largest OTC forex firm in the U.S. “So if you have no leverage, nobody would trade.”

While leverage can boost gains, it can also magnify losses.

“Leverage is a double-edged sword, of course, as it can significantly increase your losses as well as your gains,” FXCM’s website says. With 50:1 leverage on a currency trade, a 2 percent move against the investor would mean a 100 percent loss.

That’s what could have happened to a trader using 50:1 leverage to bet on a rise in the Japanese yen on Oct. 31, when the currency fell 2.8 percent against the U.S. dollar in one day. In September, the euro lost 2.07 percent compared with the dollar in three days.

Close Out

In theory, investors can lose more than 100 percent if a currency continues to move against them. In practice, brokers close out trades to prevent further losses.

“Leverage is wonderful if you win, but it kills you if you lose,” says Greenberger, the former CFTC regulator, who’s now a professor at the University of Maryland’s Francis King Carey School of Law. “It’s a selling tool to convince the customer how great retail forex is.”

The leverage forex investors can use dwarfs that allowed for trading stocks. The U.S. Federal Reserve, which sets stock margin requirements, limits individual stock investors’ leverage to 2:1. The investor borrows the amount leveraged from his broker. Forex investors using leverage, by contrast, don’t have to borrow any money.

In a typical OTC forex trade, an investor looks online at his broker’s listing of bid and offer prices for a currency pair such as the yen and the dollar. An investor with $1,000 in his account — which he can fund using a credit card — might, by using 10:1 leverage, bet $10,000 that the yen will rise against the dollar. The trade is open-ended, meaning the investor can close it and collect gains or take losses at any time.

Conflicting Interests

Because OTC trading isn’t done on an exchange, the forex broker becomes the client’s counterparty, taking the other side of the transaction. If an investor wagers the yen will rise, the broker bets it will fall.

Sometimes the broker keeps the trade on its own books, sometimes it matches the trade with that of another customer who’s speculating in the opposite direction, and sometimes the broker lays off risk by hedging with a bank.

The CFTC, which refers to brokers as dealers, requires them to tell clients in disclosures, all in capital letters: “YOUR DEALER IS YOUR TRADING PARTNER, WHICH IS A DIRECT CONFLICT OF INTEREST. WHEN YOU SELL, THE DEALER IS THE BUYER. WHEN YOU BUY, THE DEALER IS THE SELLER.”

The CEOs of the three largest OTC forex firms licensed to operate in the U.S. — FXCM, Oanda Corp. and Gain Capital (GCAP), which collectively have a 73 percent share of retail forex investor money held in the U.S. market — say they minimize how often they take the opposite side of clients’ trades.

‘Small Amount’

“We will hold a small amount of trades,” says Ed Eger, CEO of privately held, Toronto-based Oanda. “We’ll build up a position, and then we’ll hedge it out.”

Forex brokers, unlike stock brokers, don’t have to keep client money segregated; they can commingle the funds with the firm’s money. If a forex broker goes bankrupt, investors have no priority in claims and aren’t covered by the Securities Investor Protection Corp.

But the biggest risk amateur forex investors face is their overzealous embrace of leverage.

“Leverage is the enemy; don’t overleverage,” FXCM’S Niv says. He recommends using no more than 10:1 leverage. Most clients, he says, use 15:1, and some use much more.

The CFTC has tried — with mixed results — to clamp down on leverage. Until 2010, the NFA set the limit at 100:1. Then, as part of the widespread financial rule-making overhaul that followed the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFTC proposed slashing allowable leverage to 10:1.

Overwhelming Pressure

The industry and its customers fought back, flooding the agency with letters of protest. In response, the CFTC set the limit at 50:1.

“Don’t underestimate the power of the industry to influence what the CFTC does,” says Greenberger, the former CFTC official. “The pressure is overwhelming.”

The CFTC declined to make any of its four commissioners (it normally has five, but one seat is vacant) or anyone else at the agency available to comment for this story.

Until 40 years ago, there wasn’t an OTC currency market in the U.S. Before that, exchange rates among major currencies were set in reference to the U.S. dollar — which was backed by gold — under the rules of the Bretton Woods agreement signed by 44 nations in 1944.

When President Richard Nixon ended the gold standard for the dollar in 1971 because the U.S. gold supply was running low, the Bretton Woods system fell apart and currencies were traded freely. In 1974, Congress passed the Treasury Amendment to the Commodity Exchange Act, exempting all forex trading from regulation.

Bucket Shops

That was intended to smooth currency transactions between banks, which had their own regulators. But it created the opening for OTC forex trading. With no agencies minding the store, bucket shops and con artists pitched forex trading to naive investors, FXCM’s Niv says.

“In the late ’90s, the FX business was 100 percent made up of boiler rooms,” he says.

Most firms didn’t even trade foreign exchange; they just took in investor money and held it for themselves, Niv says.

In 2000, the CFTC won the authority to regulate forex trading when Congress passed the Commodity Futures Modernization Act. The agency filed almost 100 civil enforcement cases against forex fraudsters by 2008, winning more than $1 billion in penalties and orders for investor restitution.

The CFTC now has on its plate a proposal to tackle another controversial element of the OTC forex market: the use of credit cards. The combination of leverage and credit cards can be a perilous brew. By funding a trading account with a credit card and making a losing bet using leverage, an investor can find himself paying a 3 percent upfront fee, as well as a debt with an interest rate as high as 25 percent.

Credit Cards

The NFA, which is empowered by the CFTC to help regulate forex trading, has asked the CFTC to ban the use of credit cards.

“Retail forex customers overwhelmingly fund their trading accounts using a credit card,” the NFA wrote in a June letter to the CFTC.

FXCM and Gain’s websites tout the use of credit cards.

“The fastest way to fund your account is with a credit or debit card,” FXCM’s website says.

The NFA warns of the hazards of credit cards for forex investors.

“Given the highly volatile nature of the forex and futures markets, the substantial risk of loss and the possibility that a total loss may occur in a very short period of time, the Board has concluded that Members should be prohibited from permitting customers to use credit cards,” the NFA wrote.

In the same letter, the NFA noted that 72 percent of U.S. retail forex traders suffered a net loss in the fourth quarter of 2013.

Martinez, the Market Traders Institute CEO, tells students the odds of losing in forex trades are even worse. But therein, he says, lies an opportunity.

‘Zero-Sum’

“Ninety percent of all novice traders fail,” he says during MTI’s March webinar. “This is a zero-sum game, like playing poker, where the losers pay the winners,” he adds, speaking softly, patiently. “If you can land within this 10 percent, don’t you think you can make a lot of money trading forex?”

Martinez, who refers to himself as 'the FX Chief,' teaches pattern recognition in the forex market. Photographer: Reed Young/Bloomberg Markets

Martinez, who refers to himself as ‘the FX Chief,’ teaches pattern recognition in the forex market. Photographer: Reed Young/Bloomberg Markets

Martinez, 59, refers to himself as the “FX Chief.” He illustrates his presentation with slides of forex price charts interspersed with photos of himself wearing a dark pinstriped suit. He says he became a millionaire trading forex after growing up dirt-poor in Whitefish, Montana, on the Blackfoot American Indian reservation.

He displays a photo of a 5,897-square-foot (548-square-meter) mansion with a pillared portico and a semicircular driveway.

“This is how I live today,” he says.

Postcard Business

Martinez, whose school has 115 employees, says in an interview that before he opened MTI, he imported and sold high-quality postcards from Japan. When the dollar fell more than 40 percent against the yen from 1985 to 1986, he suffered losses in his postcard business. That’s when he realized he could make money in forex trading.

First, he spent thousands of dollars taking trading classes, but he says that didn’t lead to winning trades. So he trained himself through trial and error — and then launched his academy to pass on his knowledge. About 1,000 students have received three college credit hours for MTI trading courses, Martinez says.

The CEO says he’s helping people fund their retirements. He makes no apologies for MTI graduates who lose money trading.

“If a client has a dream, it’s not my position to take it away,” he says. “I think colleges get their tuition whether people make money or not.” Forex trading isn’t for everyone, Martinez tells prospective students. He says MTI doesn’t track the trading performance of its graduates.

One graduate of Martinez’s school who’s pleased with what he’s learned is Ron Abrams, who paid $5,000 for a 16-lesson course in July 2013.

New Challenge

“Before that, I was losing all the time,” says Abrams, a retired inventory management specialist who lives in Bay Shore, New York. Abrams, 58, says he was a stock trader for more than 20 years. He got into forex in 2011 because he was looking for a new challenge, he says.

Ron Abrams says he hopes to beat the odds and make money trading forex. Photographer: Reed Young/Bloomberg Markets

Ron Abrams says he hopes to beat the odds and make money trading forex. Photographer: Reed Young/Bloomberg Markets

Abrams places about a dozen trades a week with FXCM as his broker. He usually uses technical analysis in an attempt to recognize patterns, which he learned from MTI. The school teaches what it calls the ABCD method. The technique trains students to identify zigzagging lines in currency-price charts, the first three of which are dubbed A, B and C.

Those lines move down, up and down like the start of the letter W. Martinez tells investors to speculate when the C line hits bottom and then trade when they think the currency price will rise, which would be the D line.

On Sept. 9, Abrams made a trade speculating that the British pound would decline against the dollar, guessing the pound would drop if Scotland voted for independence from the U.K.

Abrams says Martinez mentioned that trade opportunity in a group online mentoring session — part of the package he bought. Ten days later, after Scotland voted against secession, Abrams closed out his trade for a $2,000 loss.

‘Getting Confident’

“I was in the black until the Scottish vote,” he says. He remains confident he’ll succeed as a forex trader. “I feel like I’m getting better,” he says. “I’m still encouraged to continue.”

People like forex because currency markets are open 24 hours on weekdays, FXCM’s Niv says.

“It’s a luxury convenience,” he says. “You can do it after dinner. You can do it in the morning before you go to work.”

Glenn Stevens, CEO of Gain Capital, says individual forex traders rarely do the market and risk analysis necessary to win consistently. Most traders don’t have a disciplined approach, he says.

“Unfortunately, most people don’t like to do homework,” he says.

Forex firms such as FXCM and Gain Capital make money from trading volume, with small markups on many transactions. Although forex trading is a big market, it isn’t a big business.

Co-Founder Niv

FXCM’S stock market value was just $781 million as of Nov. 11. In 2013, it reported profit of $34.8 million on revenue of $481.9 million. FXCM, co-founded by Niv in 1999, went public in December 2010. Its shares were trading at $16.56 on Nov. 11, 18 percent above the IPO price.

Since the middle of last year, FXCM’s share price has swung up and down — along with volatility in the currency market — from a high of $19.97 in September 2013 to a low of $12.05 in August.

Because Oanda is privately held, it doesn’t release earnings. As required, it did report that in the last two quarters of 2013, 64.9 percent and 67.5 percent of its forex clients lost money trading. Those numbers dropped to 57.8 percent and 54.5 percent in the first two quarters of 2014 and increased to 62.6 percent in the third quarter.

Forex OTC brokers woo potential clients by offering them what they call practice accounts. These dummy accounts draw people in by allowing them to see bid and offer prices and make trades while not putting up cash. The demonstrations can make forex trading appear like a simple way to get rich.

‘Risk Free’

“Try forex trading RISK FREE with a free practice account” is the headline on Forex.com, the website of Gain Capital.

Michael Scalia, a used-car dealer, got great results trading in the practice account he opened with FXCM.

“When I traded my paper accounts, I did very well,” says Scalia, 60, who lives in Danvers,Massachusetts. It was a different story when he opened an actual account. He lost money. He says he took profits too soon and didn’t cut his losses early enough. “When I traded my real accounts, I was way more quick on the trigger,” he says.

Scalia says he had used 100:1 leverage until 2010. When the CFTC changed the rules, he used 50:1 leverage.

“I wasn’t making any money trading,” he says.

Royce Barron, a retiree in Spanish Fork, Utah, opened a practice account 14 years ago and then moved on to the real thing. He, too, was felled by leverage, and so were many of his trading buddies.

“Most of the people I started trading with — there were 20 of us — they don’t do it anymore, because the leverage blew them out,” Barron, 69, says.

‘Ban It’

Leverage has blown out a lot of OTC forex traders. So have broker conflicts, enticing pitches, practice accounts, credit card debts — and taking risks in a market dominated by professionals that may not be suitable for amateurs.

Former CFTC official Greenberger says the only way to fix the market is to shut it down.

“There’s no good reason to allow it,” he says. “The way to get at it is to ban it.”

The closest the CFTC has come to doing that is requiring forex brokers to give clients dire risk warnings. Even with those, no matter how large the disclosures about leverage and conflicts are written, millions of people take the OTC forex plunge every year.

“A myth is that people think that they’re going to be insanely wealthy, guaranteed,” Niv says. “They understand that they’re unlikely to, but they think they could.”

To contact the reporter on this story: David Evans in Los Angeles davidevans@bloomberg.net

Next APTA Meeting Tues 5th August 2014

Posted July 22, 2014 By APTA.org.au

Next APTA Meeting

Tues 5th August 2014

The next meeting of the Australian Professional Technical Analysts (APTA) Inc will be held at the City Tattersalls Club at 194-204 Pitt Street, Sydney at 6.00pm on 5th August, 2014.

* Please note that APTA and MTA members receive 3 Continuing Education (CE) Credits for the CMT and AMT qualifications for attending the meeting.

Cost:

APTA and MTA Members FREE

Non members $30
Non members must register and pay prior to the event

Speakers:

Curtis Miller, Foreign Exchange and Fixed Interest Specialist

Thomson Reuters

Curtis Miller

Topic:

Harmonic Patterns and the Implementation of a ‘Normalised RSI’

Curtis Miller will review the basics of Harmonics in Technical Analysis, whilst focusing on the ‘Gartley’ Pattern specifically.

The perspective of his presentation will be from that of a trader, rather than purely academic.

The focus will be on identifying precise turning points and examining market behaviour related to taking geometric price patterns one step further – through the effective implementation of the Fibonacci techniques.

He will also examine an indicator currently utilised by a significant number of financial institutions – the Relative Strength Index (RSI).

Curtis will show how to build a ‘better’ RSI. The ‘better’ RSI (Bollinger’s RSI) utilises volatility to measure overbought and oversold levels, rather than simply rely on fixed level lines.

Biography:

Curtis Miller is a Foreign Exchange and Fixed Interest Specialist at Thomson Reuters.

He has been involved in trading financial markets across a range of instruments and market segments for 10 years.

Curtis’ current role at Thomson Reuters has him involved in guiding financial market participants across major accounts throughout APAC, on Technical Analysis and the relevant trading strategies associated.

Curtis is CTFe qualified and a member of the ATAA.

thomson-reuters-logo

ABS and NAB Employees Charged With Insider Trading

Posted May 9, 2014 By APTA.org.au

http://www.smh.com.au/business/markets/abs-and-nab-employees-charged-with-insider-trading-20140509-3809o.html

An Australian Bureau of Statistics staffer and a NAB employee have been arrested on insider trading and corruption charges over allegations they made $7 million by trading on market sensitive information on the Australian dollar.

The Australian Federal Police said a 24-year-old ABS man allegedly gave his 26-year-old friend at NAB market sensitive information before it was released publicly by the ABS.

They allege his friend then took the information to trade on the foreign exchange derivatives market.

New ABS figures show internet penetration rates are still closely aligned with income.

The sensitive information relates to labour force, retail and trade figures.

The charges against the NAB employee are insider trading, corruption of a public official and money laundering.

The charges against the ABS employee are insider trading and receiving a corrupt benefit.

The sensitive information relates to labour force, retail and trade figures.

The federal police said the pair knew each other from university. The ABS man was based in Canberra and the NAB employee was in Melbourne.

They are expected to appear in court in those cities on Friday or Saturday after authorities executed a number of search warrants.

The federal police allege proceeds of crime were found in residential property, funds in bank accounts and a motor vehicle.

They said the employee at NAB did not use any funds or systems from NAB.

ASIC would not say how it became aware of the suspicious trades, as part of a general policy not to reveal such details.

A statement from NAB chief executive Cameron Clyne is expected this afternoon.

“The person is no longer an employee,” a NAB spokeswoman said.

The two men are expected to appear in court in Melbourne and Canberra today. The AFP will allege that the ABS employee utilised sensitive information to ‘‘predict fluctuations in the Australian dollar’’.

The information was market sensitive because it had not yet been released by the ABS.

ABS data is strictly monitored and issued to the market at exactly 11.30am on any given day.

The data is market sensitive as it gives the latest snapshot of the economy and is used to inform market participants who are making daily trades.

ASIC said movements in the Australian dollar “directly or indirectly” affected the whole economy and reflected the serious nature of the allegations.

“The integrity of this market is a fundamental importance to all Australians,’’ ASIC’s head of market enforcement, Chris Savundra said.

NAB said the charges did not relate to the former employee’s work at NAB.

‘‘No NAB money or no NAB customer money is involved. No NAB systems have been involved in any trading and no other NAB employee is involved,’’ it said in a statement.

Chief executive Cameron Clyne added: “While I can’t talk about the details of the charges, I can say that the activity alleged by authorities is unlawful and completely unacceptable to NAB and our core values of doing the right thing by our customers, our shareholders and our staff.”

“NAB has a strict Code of Conduct that all employees must adhere to as part of their employment and if NAB is aware that any employee has acted contrary to its Code of Conduct, we will take appropriate action.”

Read more: http://www.smh.com.au/business/markets/abs-and-nab-employees-charged-with-insider-trading-20140509-3809o.html#ixzz31CY8XmvC

Posted by: Maud 

 http://about.fxstreet.com/laith-marmarchi-nicole-elliot-fx-person-of-the-year-2013-winner-interview/

Forex Person of the Year 201

This year’s person of the year is once again… the “people” of the year, the two minds behind the ForexTradingTV project:

Laith Marmarchi and Nicole Elliot

Last week, we exposed why we believed their work in 2013 would nominate them for the title. Why do they win over Karin Zalcberg? Today, we want to share with you parts of aconversation we’ve had with Laith about their product.

How did you and Nicole met each other and how did the project of ForexTrading start?

Laith Marmarchi: The project was my idea. There are so many signal services based on technical analysis but people want to know why those signals have been produced and the technical explanation behind them… and the best way to explain something is undoubtedly through video content, especially charts. I met Nicole Elliot in my search for an analysts and with her background in Media and extensive history and expertise, she was the perfect candidate.

 Why did you think your idea would offer soemthing different from what was already available out there?

L.M.: With data today being fast and easily accessible and bandwidth restrictions a thing of the past.. people are often happy to click a play button! Also by delivering the video content straight to mobile devices in real-time, people can watch analysis on the go, especially since they are trading on the go! We analyse markets as they are moving and push content in real-time so people can act on it.

 What would you say were the milestones for ForexTradingTV in 2013?

L.M: We only launched one year ago so the main milestone in 2013 was spreading the word and providing white label platforms and white label apps to broker to give the service to their customers. With the help of Thomson Reuters / Metastock we were also able to spread our reach globally. The service changed half way through the year into a video portal and outsourcing the analysis as opposed to doing everything in house. Viewers need different ideas, types of analysis and trading styles after all.

What are your goals for 2014? New projects?

L.M: We have just integrated a dealer insight service into our news feed providing real-time FX flows going through the London session. Our service is very much real-time and many traders are hooked on instant content (not necessarily a good thing as the market is full of noise and trading decisions are susceptible to going wrong as a result of that!). At some point in 2014 we would like to offer a mirror trading service, plus some other ideas which you will find out about…

What do you think of the current situation and available content in terms of Forex analysis nowadays?

L.M: The market is full of different types of services from straight analysis sites to mentorship programs, signal services and EA’s. It’s difficult, especially for a beginner, to navigate through this and portals such as FXStreet are the perfect place to go and find out about the general market offering. As with any industry, first mover advantage is key and the portals will be the winners as opposed to specialized services…. and hopefully ForexTrading.TV will be the new YouTube for Forex Technical Analysis ;)

 

Previous year’s FXStreet Forex Person of the Year:

2012: Andrey Pavlov and Ilya Holeu – cTrader

2011: Michael Greenberg – ForexMagnates

Managed futures funds typically use two different types of trading strategies: technical and macro/fundamental. Technical strategies are price-based and include what is commonly referred to as momentum or trend following.

Macro/fundamental strategies, on the other hand, use inputs other than the price of the market being traded and commonly include macroeconomic factors such as growth, liquidity, inflation, and carry, as well as various fundamental measures of supply and demand. In this paper we evaluate two common foreign exchange trading strategies – momentum and carry – to determine the impact of combining the two strategies.

We find evidence that combining the strategies offers a significant improvement in risk-adjusted returns.
Our analysis, which uses data spanning twenty years, highlights the potential benefits of achieving strategy-level diversification.

http://www.eclipsecap.com/tinymce/filemanager/files/Momentum_and_Macro.pdf

Is the Forex market beyond control?

Posted January 20, 2014 By APTA.org.au

http://behavioural-investing.org/2013/10/22/is-the-forex-market-beyond-control/

Is the Forex market beyond control?

COLIN MCLEAN ON INVESTING & BEHAVIOURAL FINANCE

How big is too big to rig? Can the scale of a market put it beyond anyone’s ability to manipulate? Forex trading may soon answer these questions, as investigations into possible breaches begin on both sides of the Atlantic. Even a market that trades $5.3 trillion per day may not be beyond the ability of unscrupulous traders. But, is it realistic to expect forex markets ever to be truly fair and transparent? Central banks around the world routinely intervene to support exchange rate targets. Indeed, the recent currency volatility in emerging markets seems to have increased intervention. This is often in complex ways that minimise actual use of foreign exchange reserves for currency support. If forex trading is so distorted, how can regulators separate out any wrongdoing from the legitimate actions of central banks?

This month, the US Justice Department announced it was looking at forex manipulation, following earlier announcements of a UK Financial Conduct Authority probe and from the Swiss Financial Markets Supervisory Authority. This appears to be focusing on a $379 trillion market for interest rate swaps. While currencies are hard to move, if information is shared and some client orders are pooled, there could be potential for gain. The key is that a currency move need not be permanent or significant. Much of the volume is traded within specific time windows, and the huge volumes involved make even small movements meaningful.

Many customers converting currency find it convenient to let banks settle this at specific times of the day and to use those levels in valuation. And, the year end has a significance for many firms, well beyond the low volumes typical on that day. Foreign exchange benchmark rates are typically calculated using actual trades hourly throughout the trading day, with the closing rates “set” or “fixed” at 4pm in London. Although an independent firm compiles the fixing rates, effectively the scenario is another benchmark problem. The impact of any distortions can be magnified, or even emerge in another market, remote from the currency trade. Currencies impact many eco
nomic variables and securities, giving ample opportunity for benefiting from a manipulated rate.

While traders are unlikely to know an exchange rate in advance, any pooling of knowledge of client orders, particularly in less traded currencies, could give an edge. Knowing how much hinges on the key times that determine a rate, and the likely balance of orders, frontrunning or arbitrage would be possible. The market itself is not directly regulated in the way that stockmarkets are, and so the key issue may not be market abuse. What matters is the regulatory framework applying to participants, and also whether customers have lost out. As other benchmark cases have shown, the threat of civil action from customers who feel they have lost out may be the biggest penalty.

Questions have been asked about the forex market for some time. Many commentators have noted the ways in which currencies can jump around at the fixing time. Although the setting process is automated and anonymous, the key could be orders and information, rather than anyone compiling the published rates. For any traders to benefit from this, something must also need to be wrong with incentives. The simplest explanation for any wrongdoing would be that it can create profit for the firms involved, and bonuses reward individuals for that.

Benchmark problems that have already emerged have included lack of independent governance, and failure to identify conflicts of interest. There is often enormous public interest in a benchmark for which there is no payment and no direct accountability. Consider how many organisations and borrowers based their payments on Libor, yet knew little of how it was determined. In some cases, regulators have stepped in, or the bodies involved in benchmark setting have raised their game.

Yet forex is a complex global market that would be difficult to regulate in the same way as commodities or securities. Instead, the focus must be on ethics and operating practices in the banks and other financial institutions conducting the trade. The root of the problem is society’s wish to turn continuous real-time marking to market into discrete hour by hour or daily moves. And, governments also like to smooth out change in exchange rates. There will always be some times and dates that have greater significance, even though trading goes on around the clock. Many companies and individuals like to maintain the fiction that currencies only change their value at set times; real-time modelling of their risks and valuations would be too complex.

Complicating the drive to investigate the possibility of any wrongdoing on forex, is the increasing involvement of central banks in trying to wrest control of rates from traders. The world has seen a gradual movement towards free-floating rates, with even Russia and India heading in that direction. It is difficult to compete for capital globally, whilst maintaining any form of capital controls on foreign investors. Painful as currency volatility and speculation are for many nations, they have an interest in joining the freely trading world.

But, 2013 looks like a step back from that process, as emerging markets try to protect their foreign exchange reserves and monetary policy from the impact of capital movements. It means that governments can be intervening in markets in undeclared ways, and trying to pick the times and instruments where they can make the most impact. Forex has become much more complex this year.

The investigation is a wake-up call for the forex market. Greater transparency and accountability in rate fixing is urgently needed. Any potential conflicts in remuneration structures must also be addressed. And, even if the industry cannot be fully regulated, it would still be helpful to have more clarity over the actions of central banks and others who manipulate the market legally. It is time some light was shed on this important but opaque market.

http://behavioural-investing.org/2013/10/22/is-the-forex-market-beyond-control/

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