Mistakes in a Trading Environment

When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years trying to find the right system. But having a system is just part of the game. Don’t get us wrong, it is very important to have a system that perfectly suits the trader, but it is as important as having a money management plan, or to understand all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there must be equilibrium between all important aspects of trading.

In the trading environment, when you lose a trade, what is the first idea that pops up in your mind? It would probably be, “There must be something wrong with my system”, or “I knew it, I shouldn’t have taken this trade” (even when your system signaled it). But sometimes we need to dig a little deeper in order to see the nature of our mistake, and then work on it accordingly.

When it comes to trading the Forex market as well as other markets, only 5% of traders achieve the ultimate goal: to be consistent in profits. What is interesting though is that there is just a tiny difference between this 5% of traders and the rest of them. The top 5% grow from mistakes; mistakes are a learning experience, they learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try it harder and do it better the next time, because they know they might not get a chance the next time. And at the end, this tiny difference becomes THE big difference.

Mistakes in the trading environment

Most of us relate a trading mistake to the outcome (in terms of money) of any given trade. The truth is, a mistake has nothing to do with it, mistakes are made when certain guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios:

First scenario: The system signals a trade.

Signal taken and trade turns out to be a profitable trade.
Outcome of the trade: Positive, made money.
Experience gained: Its good to follow the system, if I do this consistently the odds will turn in my favor. Confidence is gained in both the trader and the system.
Mistake made: None.

Signal taken and trade turns out to be a loosing trade.
Outcome of the trade: Negative, lost money.
Experience gained: It is impossible to win every single trade, a loosing trade is just part of the business; our raw material, we know we can’t get them all right. Even with this lost trade, the trader is proud about himself for following the system. Confidence in the trader is gained.
Mistake made: None.

Signal not taken and trade turns out to be a profitable trade.
Outcome of the trade: Neutral.
Experience gained: Frustration, the trader always seems to get in trades that turned out to be loosing trades and let the profitable trades go away. Confidence is lost in the trader self.
Mistake made: Not taking a trade when the system signaled it.

Signal not taken and trade turns out to be a loosing trade.
Outcome of the trade: Neutral.
Experience gained: The trader will start to think “hey, I’m better than my system”. Even if the trader doesn't think on it consciously, the trader will rationalize on every signal given by the system because deep in his or her mind, his or her “feeling” is more intelligent than the system itself. From this point on, the trader will try to outguess the system. This mistake has catastrophic effects on our confidence to the system. The confidence on the trader turns into overconfidence.
Mistake made: Not taking a trade when system signaled it

Second Scenario: System does not signal a trade.
No trade is taken
Outcome of the trade: Neutral
Experience gained: Good discipline, we only need to take trades when the odds are in our favor, just when the system signals it. Confidence gained in both the trader self and the system.
Mistake made: None

A trade is taken, turns out to be a profitable trade.
Outcome of the trade: Positive, made money.
Experience gained: This mistake has the most catastrophic effects in the trader self, the system and most importantly in the trader’s trading career. You will start to think you need no system, you know better from them all. From this point on, you will start to trade based on what you think. Confidence in the system is totally lost. Confidence in the trader self turns into overconfidence.
Mistake made: Take a trade when there was no signal from the system.

A trade is taken, turned out to be a loosing trade.
Outcome of the trade: negative, lost money.
Experience gained: The trader will rethink his strategy. The next time, the trader will think it twice before getting in a trade when the system does not signal it. The trader will go “Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success”. Confidence is gained in the system.
Mistake made: Take a trade when there was no signal from the system

As you can see, there is absolutely no correlation between the outcome of the trade and a mistake. The most catastrophic mistake even has a positive trade outcome, made money, but this could be the beginning of the end of the trader’s career. As we have already stated, mistakes must only be related to the violation of rules a trader trades by.



All these mistakes were directly related to the signals given by a system, but the same is applied when getting out of a trade. There are also mistakes related to following a trading plan. For example, risking more money on a given trade than the amount the trader should have risked and many more.



Most mistakes can be avoided by first having a trading plan. A trading plan includes the system: the criteria we use to get in and out the market, the money management plan: how much we will risk on any given trade, and many other points. Secondly, and most important, we need to have the discipline to follow strictly our plan. We created our plan when no trade was placed on, thus no psychology barriers were up front. So, the only thing we are certain about is that if we follow our plan, the decision taken is on our best interests, and in the long run, these decisions will help us have better results. We don’t have to worry about isolated events, or trades that could had give us better results at first, but then they could have catastrophic results in our trading career.

How to deal with mistakes

There are many possible ways to properly manage mistakes. We will suggest the one that works better for us.



Step one: Belief change.

Every mistake is a learning experience. They all have something valuable to offer. Try to counteract the natural tendency of feeling frustrated and approach mistakes in a positive manner. Instead of yelling to everyone around and feeling disappointed, say to yourself “ok, I did something wrong, what happened? What is it?



Step two: Identify the mistake made.

Define the mistake, find out what caused the mistake, and try as hard as you can to effectively see the nature of that mistake. Finding the mistake nature will prevent you from making the same mistake again. More than often you will find the answer where you less expected. Take for instance a trader that doesn’t follow the system. The reason behind this could be that the trader is afraid of loosing. But then, why is he or she afraid? It could be that the trader is using a system that does not fit him or her, and finds difficult to follow every signal. In this case, as you can see, the nature of the mistake is not in the surface. You need to try as hard as you can to find the real reason of the given mistake.



Step three: Measure the consequences of the mistake.

List the consequences of making that particular mistake, both good and bad. Good consequences are those that make us better traders after dealing with the mistake. Think on all possible reasons you can learn from what happened. For the same example above, what are the consequences of making that mistake? Well, if you don’t follow the system, you will gradually loose confidence in it, and this at the end will put you into trades you don’t really want to be, and out of trades you should be in.


Step four: Take action.

Taking proper action is the last and most important step. In order to learn, you need to change your behavior. Make sure that whatever you do, you become “this-mistake-proof”. By taking action we turn every single mistake into a small part of success in our trading career. Continuing with the same example, redefining the system would be the trader’s final step. The trader would put a system that perfectly fits him or her, so the trader doesn’t find any trouble following it in future signals.

Understanding the fact that the outcome of any trade has nothing to do with a mistake will open your mind to other possibilities, where you will be able to understand the nature of every mistake made. This at the same time will open the doors for your trading career as you work and take proper action on every mistake made.

The process of success is slow, and plenty of times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. How we deal with them will shape our future as a trader, and most importantly as a person.

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The Five-Minute Forex "Momo" Trade by: Kathy Lien and Boris Schlossberg

Some traders are extremely patient and love to wait for the perfect setup while others are extremely impatient and need to see a move happen quickly or they'll abandon their positions. These impatient traders make perfect momentum traders because they wait for the market to have enough strength to push a currency in the desired direction and piggyback on the momentum in the hope of an extension move. However, once the move shows signs of losing strength, an impatient momentum trader will also be the first to jump ship. Therefore, a true momentum strategy needs to have solid exit rules to protect profits while still being able to ride as much of the extension move as possible.

In this article, we'll take a look at strategy that does just that: the Five-Minute Momo Trade.

What's a Momo?

The Five Minute Momo Trade looks for a momentum or "momo" burst on very short-term (five-minute) charts. First, traders lay on two indicators, the first of which is the 20-period exponential moving average (EMA). The EMA is chosen over the simple moving average because it places higher weight on recent movements, which is needed for fast momentum trades. The moving average is used to help determine the trend. The second indicator to use is the moving average convergence divergence (MACD) histogram, which helps us gauge momentum. The settings for the MACD histogram is the default, which is first EMA = 12, second EMA = 26, signal EMA = 9, all using the close price. (For more insight, read A Primer On The MACD.)

This strategy waits for a reversal trade but only takes advantage of it when momentum supports the reversal move enough to create a larger extension burst. The position is exited in two separate segments; the first half helps us lock in gains and ensures that we never turn a winner into a loser. The second half lets us attempt to catch what could become a very large move with no risk because the stop has already been moved to breakeven.

Rules for a Long Trade

1. Look for currency pair trading below the 20-period EMA and MACD to be negative.
2. Wait for price to cross above the 20-period EMA, then make sure that MACD is either in the process of crossing from negative to positive or has crossed into positive territory no longer than five bars ago.
3. Go long 10 pips above the 20-period EMA.
4. For an aggressive trade, place a stop at the swing low on the five-minute chart. For a conservative trade, place a stop 20 pips below the 20-period EMA.
5. Sell half of the position at entry plus the amount risked; move the stop on the second half to breakeven.
6. Trail the stop by breakeven or the 20-period EMA minus 15 pips, whichever is higher.

Rules for a Short Trade

1. Look for the currency pair to be trading above the 20-period EMA and MACD to be positive.
2. Wait for the price to cross below the 20-period EMA; make sure that MACD is either in the process of crossing from positive to negative or crossed into negative territory no longer than five bars ago.
3. Go short 10 pips below the 20-period EMA.
4. For an aggressive trade, place stop at the swing high on a five-minute chart. For a conservative trade, place the stop 20 pips above 20-period EMA
5. Buy back half of the position at entry minus the amount risked and move the stop on the second half to breakeven.
6. Trail stop by lower of breakeven or 20-period EMA plus 15 pips

Long Trades

Figure 1: Five-Minute Momo Trade, EUR/USD

Source: FXtrek Intellichart

Our first example in Figure 1 is the EUR/USD on March 16, 2006, when we see the price move above the 20-period EMA as the MACD histogram crosses above the zero line. Although there were a few instances of the price attempting to move above the 20-period EMA between 1:30 and 2:00 EST, a trade was not triggered at that time because the MACD histogram was below the zero line.

We waited for the MACD histogram to cross the zero line and when it did, the trade was triggered at 1.2044. We enter at 1.2046 + 10 pips = 1.2056 with a stop at 1.2046 - 20 pips = 1.2026. Our first target was 1.2056 + 30 pips = 1.2084. It was triggered approximately two and a half hours later. We exit half of the position and trail the remaining half by the 20-period EMA minus 15 pips. The second half is eventually closed at 1.2157 at 21:35 EST for a total profit on the trade of 65.5 pips.

Figure 2: Five-Minute Momo Trade, USD/JPY

The next example, shown in Figure 2, is USD/JPY on March 21, 2006, when we see the price move above the 20-period EMA. Like in the previous EUR/USD example, there were also a few instances in which the price crossed above the 20-period EMA right before our entry point, but we did not take the trade because the MACD histogram was below the zero line.

The MACD turned first, so we waited for the price to cross the EMA by 10 pips and when it did, we entered the trade at 116.67 (EMA was at 116.57).

The math is a bit more complicated on this one. The stop is at the 20-EMA minus 20 pips or 116.57 - 20 pips = 116.37. The first target is entry plus the amount risked, or 116.67 + (116.67-116.37) = 116.97. It gets triggered five minutes later. We exit half of the position and trail the remaining half by the 20-period EMA minus 15 pips. The second half is eventually closed at 117.07 at 18:00 EST for a total average profit on the trade of 35 pips. Although the profit was not as attractive as the first trade, the chart shows a clean and smooth move that indicates that price action conformed well to our rules.

Short Trades
On the short side, our first example is the NZD/USD on March 20, 2006 (Figure 3). We see the price cross below the 20-period EMA, but the MACD histogram is still positive, so we wait for it to cross below the zero line 25 minutes later. Our trade is then triggered at 0.6294. Like the earlier USD/JPY example, the math is a bit messy on this one because the cross of the moving average did not occur at the same time as when MACD moved below the zero line like it did in our first EUR/USD example. As a result, we enter at 0.6294.

Our stop is the 20-EMA plus 20 pips. At the time, the 20-EMA was at 0.6301, so that puts our entry at 0.6291 and our stop at 0.6301 + 20pips = 0.6321. Our first target is the entry price minus the amount risked or 0.6291 - (0.6321-0.6291) = 0.6261. The target is hit two hours later and the stop on the second half is moved to breakeven. We then proceed to trail the second half of the position by the 20-period EMA plus 15 pips. The second half is then closed at 0.6262 at 7:10 EST for a total profit on the trade of 29.5 pips.

Figure 3: Five-Minute Momo Trade, NZD/USD

The example in Figure 4 is based on an opportunity that developed on March 10, 2006, in the GBP/USD. In the chart below, the price crosses below the 20-period EMA and we wait for 10 minutes for the MACD histogram to move into negative territory, thereby triggering our entry order at 1.7375. Based on the rules above, as soon as the trade is triggered, we put our stop at the 20-EMA plus 20 pips or 1.7385 + 20 = 1.7405. Our first target is the entry price minus the amount risked, or 1.7375 - (1.7405 - 1.7375) = 1.7345. It gets triggered shortly thereafter. We then proceed to trail the sec­ond half of the position by the 20-period EMA plus 15 pips. The second half of the position is eventually closed at 1.7268 at 14:35 EST for a total profit on the trade of 68.5 pips. Coincidently enough, the trade was also closed at the exact moment when the MACD histogram flipped into positive territory.

Figure 4: Five-Minute Momo Trade, GBP/USD

Momo Trade Failure
As you can see, the Five Minute Momo Trade is an extremely powerful strategy to capture mo­mentum-based reversal moves. However, it does not always work and it is important to explore an example of where it fails and to understand why this happens.

Figure 5: Five-Minute Momo Trade, EUR/CHF

The final example of the Five Minute Momo Trade is EUR/CHF on March 21, 2006. In Figure 5, the price crosses below the 20-period EMA and we wait for 20 minutes for the MACD histogram to move into negative territory, putting our entry order at 1.5711. We place our stop at the 20-EMA plus 20 pips or 1.5721 + 20 = 1.5741. Our first target is the entry price minus the amount risked or 1.5711 - (1.5741-1.5711) = 1.5681. The price trades down to a low of 1.5696, which is not low enough to reach our trigger. It then proceeds to reverse course, eventually hitting our stop, causing a total trade loss of 30 pips.

When trading the Five Minute Momo strategy the most important thing to be wary of is trading ranges that are too tight or too wide. In quiet trading hours where the price simply fluctuates around the 20-EMA, the MACD histogram may flip back and forth causing many false signals. Alternatively, if this strategy is implemented in a currency paid with a trading range that is too wide, the stop might be hit before the target is triggered.

Conclusion
The Five-Minute Momo Trade allows traders to profit on short bursts of momentum, while also providing the solid exit rules required to protect profits.

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Essential Elements of a Successful Trader

by Jimmy Young
EURUSDTrader

Courage Under Stressful Conditions When the Outcome is Uncertain

All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

Jimmy Young

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Forex Info - New York Money Market Rate Indications

Dow Jones News


Bankers acceptances at 4.25 p.m. New York time.
1M 0.80
2M 1.15
3M 1.35
6M 2.00
9M 2.25
1Y 2.50
Federal funds: days high .2812; low .2188; latest bid .2500; offered .2500; prime lending rate at major banks 3.25; broker call loan rate 2.00

Dealer-placed commercial paper
30 days 0.60
60 days 1.00
90 days 1.25

Treasury bills
30 days 0.20-19 up .004
90 days 0.30-29 dn .004
180 days 0.49-48 up .004

Moody's yield figures
AAA corps 5.19



Click link to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=bsT0%2B90NQ2Wzo%2F4EZ8bLyw%3D%3D. You can use this link on the day this article is published and the following day.

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Banks Fall on Wall Street Losses - Forex Info

Asian share markets fell Friday, with financial stocks hit by further weakness in their U.S. counterparts and investors cautious as the weekend drew near.

Japan's Nikkei 225 ended down 1.9%, while Australia's S&P/ASX 200 fell 1.4% and South Korea's Kospi Composite dropped 3.7%, though in the closing minutes each recovered some ground lost earlier in mid-afternoon selling. New Zealand's NZX-50 fell 1.5%.

Hong Kong's Hang Seng Index was down 2.3% in the afternoon session. China's Shanghai Composite Index rebounded from early losses to rise 0.9%, and Taiwan shares fell 2%. India's Sensitive Index lost 2.1% by early afternoon.

"With all the bad news circling the global economic environment, participants aren't willing to hold positions over the weekend, so we've seem some good old Friday profit taking," said IG Markets research analyst Ben Potter.

Chinese stocks in Shanghai flip-flopped in volatile trading, but electronics and petrochemical companies were gaining after the government Thursday authorized further sector-specific stimulus plans, with TCL up 5.4% and Shenzhen Noposion Agrochemicals adding 4.1% in Shenzhen trading.

Hong Kong shares were weak and Tanrich's Jackson Wong warned "the market will be dragged (down) further in the near-term, as the overall outlook on the U.S. market remains negative."

The declines for Asian indexes came after a sell-off in financial names pushed the Dow Jones Industrial Average to its lowest point of the credit crisis and in roughly six years. U.S. stock futures were recently pointing toward a lower opening again, with Dow Jones Industrial Average futures down 67 points.

"Expectations for the various measures [unveiled by the U.S. government to shore up the economy and financial markets] seem to have turned to distrust," said Hong In-young at HMC Investment Securities in Korea.

Financial stocks across Asia were weak with Westpac down 3.7% and National Australia Bank 2.1% lower in Sydney, and Korea's Shinhan Financial down 4.8%. Japan's Mizuho FG fell 4.1% and Shinsei Bank was down 1.1% while HBSC was off 1.8% in Hong Kong and Taiwan's Cathay Financial Holding dropped 2.3%.

Australia's Macquarie Group was down 5.7% despite an ongoing short selling ban, as Macquarie units, and the overall market, came under pressure as investors analysed corporate results released this week.

Qantas slumped 4.3% after Moody's Investor Service cut the company's long term senior unsecured rating to Baa2 from Baa1, citing a deterioration in Qantas' credit profile.

Bridgestone fell 7.4% in Tokyo after the tire maker released a cautious 2009 outlook on Thursday.

A slumping Korean won hurt shares in Seoul with the market briefly touching its lowest level in nearly 11 weeks. "Foreigners are unloading stocks at a fast pace and they seem to be alarmed by the fast deterioration" in the won, said Park Suk-hyun at Eugene Investment & Securities. The U.S. dollar broke over the KRW1,500 mark early Friday, to touch its highest level since Nov. 26.

New Zealand shares were still being dragged down by concerns about leverage at individual companies and weakness in corporate earnings.

Fisher & Paykel Appliances fell 4.8% with PGG Wrightson plunging 28.1%. Sky Network Television fell 5.7% after saying its first half net profit fell 16.7% from a year earlier, to NZ$42.6 million.

Singapore's Straits Times index was down 1.8% with Malaysia's index down 1%, Philippine shares 1% lower and Indonesian shares slipping 0.7%.

The euro was slightly lower against the U.S. dollar and yen, at $1.2585 from $1.2663 late in New York, and at 118.33 yen, from Y119.51. The dollar was trading around 94.03 yen, down from 94.39 yen.

BNZ strategist Danica Hampton expected the euro to lose more ground against the dollar soon. "I like the idea of selling the euro into rallies -- I'm still concerned about the euro-zone economy and its relationship with the Eastern European economies."

February gold futures were down $4.50 to $971.60 a troy ounce, after slipping $1.60 overnight in New York, but some analysts were still looking for a push in the near term to $1,000, given hefty flows into exchange-traded funds.

March Nymex crude oil futures were down 79 cents at $38.69 a barrel on Globex before the contract's expiry Friday, pulled down by falling U.S. stocks and data showing a record number of Americans are drawing government unemployment benefits. Negative indicators "put a huge dark cloud over the (oil) market," said Tony Rosado, a broker with GA Global Markets.

Earlier in New York, crude jumped 14% to a 10-day high after the Department of Energy reported the first draw on U.S. oil inventories since December.

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Forex Market Trading

Forex market trading is trading money, currencies worldwide. Most all countries around the world are involved in the forex trading market, where money is bought and sold, based on the value of that currency at the time. As some currencies are not worth much, it is not going to be traded heavily, as the currency is worth more, additional brokers and bankers are going to choose to invest in that market at that time.

Forex trading does take place daily, where almost two trillion dollars are moved every day - that is a huge amount of money. Think about how many millions it does take to bring about a total of a trillion and then consider that this is done on a daily basis - if you want to get involved in where the money is, forex trading is one 'setting' where money is exchanging hands daily.

The currencies that are traded on the forex markets are going to be those from every country around the world. Every currency has it own three-letter symbol that will represent that country and the currency that is being traded. For example, the Japanese yen is the JPY and the United Stated dollar is USD. The British pound is the GBP and the Euro is the EUR. You can trade within many currencies in one day, or you can trade to a different currency every day. Most all trades through a broker, or those any company are going to require some type of fee so you want to be sure about the trade you are making before making too many trades which are going to involve many fees.

Trades between markets and countries are going to happen every day. Some of the most heavily trades occur between the Euro and the US dollar, and then the US dollar and the Japanese yen, and then of the other most often seen trades is between the British pound and the US dollar. The trades happen all day, all night, and thought out various markets. As one country opens trading for the day another is closing. The time zones across the world affect how the trading takes place and when the markets are open.

When you are making a transaction from one market to another, involving one currency to another you will notice the symbols are used to explain the transactions. All transactions are going to look something like this EURzzz/USDzzz the zzz is to represent the percentages of trading for the percentage of the transaction. Other instances could look like this AUSzzz/USD and so on. When reading and reviewing your forex statements and online information you will understand it all much better if you are to remember these symbols of the currencies that are involved.

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Forex Market Update

U.S. Dollar Regains on Risk Aversion as Stocks Weaken

The greenback regained its ground on Friday in Asia on renewed risk aversion after the fall in the DJIA to 2002 lows. The Nikkei closed near a four-month low with the TOPIX near a 25-year low and the New Zealand stock market fell to almost a five year low. The losses in equities were led by financial stocks and triggered renewed safe haven buying of the USD and selling of JPY crosses. EUR/USD which had hit highs in NY around 1.2760, opened in Asia under 1.2700 and proceeded to fall to lows of 1.2576. AUD/USD which had seen highs of 0.6523 in NY, opened around 0.6450 to fall to lows of 0.6375. A similar pattern emerged for sterling, which fell from 1.4447 NY highs to lows of 1.4210. USD/JPY, supported by USD weakness, was however, capped by the JPY cross sales, and maintained a tight range of 93.96-94.22 in Asia due to the two-way flows. Despite the size of the moves, trading was fairly moderate according to dealers and currencies such as AUD and GBP, at least for now, are still in their current range. Oil eased slightly after the strong 14% rally in NY on Thursday while gold eased slightly, extending the losses seen Thursday.

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