Currency Trading Information Channel
Adaptation to the Realities of the Market
Do you think adaptation to the realities of the market is the most important thing?
Many times in the past I've written about the need to adapt, the need to be able to change your behavior relative to the market because the markets are ever changing. I've stated that mechanical systems may be workable, but for only a short time relative to the life of markets. You must learn to trade what you see and to understand what you see on a chart.
When I first began trading there was no such things as futures contracts for foreign currencies. Why didn't they exist? Because there was no need for them! In the 1970's all that changed when the US dollar went off the gold standard and began to float against other currencies. Following that, the Chicago Mercantile Exchange began to create currency futures to provide a place where currency traders could hedge the risks associated with dealing in foreign currencies. Some of these risks are direct and some are indirect. Direct risk is involved for those who deal directly in foreign exchange. Indirect risk involves companies who export or import and receive payments or make payments in the currency of another country. Ever since currency futures were created, they have been in a state of flux. More recently, for purposes of futures trading, currency gyrations have centered on a massive move away from currency futures to more direct trading in the forex markets. Currency futures, while maintaining their volume and open interest figures, are actually less liquid than they had been previously. Volume and open interest do not reveal the picture of what is happening in the currency futures pits. Volume and open interest levels are being maintained by fewer and fewer futures traders.
In the period from 1992 to the present, we've witnessed currency futures moving from "red-hot" to "cool" and now hot again insofar as speculators are concerned. Foreign exchange, which in 1992 was one of the hottest plays, first turned dull and then back again to exciting. That this has happened can be seen in areas of which most futures traders are ignorant. Five years ago foreign currency traders were being paid huge salaries and anyone with a track record could virtually name his price. Following that, currency traders were no longer in great demand. Now, again, there is a huge demand for successful currency traders. Currency futures are but a small representation of the $1.5 trillion dollar foreign exchange market. Professional currency traders use forex, forwarding contracts, derivatives of all kinds, and the futures pits, to deploy their various trading and hedging strategies. Looking at only the futures is like the blind man trying to tell what an elephant is like by feeling only the tusks.
In past years, foreign exchange desks at banks, insurance companies, brokers, and other institutions were seen closing down and firing hundreds of employees. Today, they are again looking for currency traders. In the 1990s, Midland Bank closed its foreign New York office laying off dozens of people. Frankfurt Bank had pulled out of New York and Tokyo closed down its foreign exchange desk. At that time, the world's largest foreign exchange trader was Citicorp. In the D-Mark alone, they shrank from 39 traders working at 17 different locations around the world to 4 D-Mark traders all working in one room. Keep in mind that these were traders who had been to a greater or lesser extent using the currency futures. The result at that time was that there were fewer big fluctuations in the currency futures than there once were and therefore much less profit.
However, today, just the opposite is happening. Central banks are presently making much greater interventions in the currency markets. They have stopped publishing targeted exchange rates. Such action by the central banks leaves currency speculators at a loss for what to do, and the result has been a huge surge in forex trading. Because today forex brokers abound and are actively marketing the idea of currency speculation, it is having a profound effect on the foreign exchange planning of individuals, companies, and nations.
If some day the major currencies would be the US dollar, the J-Yen and the euro, who would need thousands of traders to trade them? There would be far fewer currency misalignments to provide a basis for trading. But that is not the way the world is moving. The picture I just presented ignores the rise of China as a major economic force on the world scene. Almost certainly, the Chinese currency will become a major trading vehicle. The same is true for other emerging countries. Some of them will no doubt have important currencies from the point of view of world trade. But will these currencies be traded in the futures markets or in forex?
The changes in just this one area - currency trading - are an example of how things rapidly change and point out the need for traders to adapt. There have of course, been many other changes in recent years. The advent of all-electronic markets has produced markets of a completely different kind. Computers have brought about the ability to trade in various time frames. New exchanges have created new markets and new contracts - so many, in fact, that it is difficult to know exactly where to direct ones trading efforts. It is now possible to trade virtually around the clock. It seems that somewhere, some market is trading.
All the best in your trading,
Joe Ross has been trading for more than 47 years, and is a well known Master Trader. He has survived all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits.
Joe is the creator of the Ross hook, and has set new standards for low-risk trading with his concept of "The Law of Charts?." Joe was a private trader for most of his life. In the mid 80's he shift his focus and decided to share his knowledge. After his recovery, he founded Trading Educators in 1988 to teach aspiring traders how to make profits using his trading approach. He has written 12 major books on trading. All of them have become classics and have been translated into many different languages.
Joe holds a Bachelor of Science degree in Business Administration from the University of California at Los Angeles. He did his Masters work in Computer Sciences at the George Washington University extension in Norfolk, VA. Joe still tutors, teaches, writes, and trades regularly. Joe is still an active and integral part of Trading Educators.
MORE RESOURCES updated Sun. January / 26 / 2020
What is Forex... Coinspeaker
How To Succeed With Forex Trading NuWire Investor
Visual Tools to Understand Forex Trading Strategies NuWire Investor
State Street seeks buyer for Currenex currencies-trading system Financial Times
Beginners' guide to forex trading Standard Digital
Best Forex Trading App of 2020 for iPhone and Android Emirates Business 24/7
Forex Trading in Nigeria DailyForex.com
Traders twiddle thumbs as volatility fades in currency markets Financial Times
Forex Forecast: Pairs in Focus MENAFN.COM
Six currency pairs to trade in January Capital.com
Everything you need to know about forex trading in Africa Ventures Africa
Shantou reverses lockdown order ForexLive
US embassy in Baghdad hit with a rocket ForexLive
U.S. Brief, January 24 - Top Trade Setups in Forex – Canadian Retail Sales Under Spotlight! - FXStreet
U.S. Brief, January 24 - Top Trade Setups in Forex – Canadian Retail Sales Under Spotlight! FXStreet
BNP to set up e-currency trading platform in S'pore The Straits Times
Forex Trading is on the Rise in Africa Africa.com
Binance adds Vietnamese currency trade capabilities, Zhao talks exchange storage - Warrior Trading News
Binance adds Vietnamese currency trade capabilities, Zhao talks exchange storage Warrior Trading News
Instagram Forex trader Gurvin Singh GS3 Trades 'scams more than 1,000 victims of £3million' - Daily Mail
Instagram Forex trader Gurvin Singh GS3 Trades 'scams more than 1,000 victims of £3million' Daily Mail
Stock tumble accelerates ForexLive
Bank of England meet next week - preview ForexLive
‘Act decisively on currency dealings’ The Herald
EUR/USD looking weak despite upbeat data Forex Crunch
Forex Trading for Beginners Yahoo Finance
AUD/USD Plunges to New 6-Week Lows Amid Risk-Off Trading FXDailyReport.com
Forex and Cryptocurrency Forecast Action Forex
Top Four Forex Trading Mistakes to Avoid NuWire Investor
The Complete Beginner's Guide To Forex Trading The Tokenist
First Financial Bancorp (NASDAQ:FFBC) & Akbank T.A.S. (NASDAQ:AKBTY) Financial Analysis - Riverton Roll
First Financial Bancorp (NASDAQ:FFBC) & Akbank T.A.S. (NASDAQ:AKBTY) Financial Analysis Riverton Roll
Top 5 Reasons Why You Should Start Forex Trading Business Review
Stories of have-a-go forex trading heroes belie a quiet market Financial Times
US Open – Coronavirus ruins Lunar New Year, Intel adds fuel to tech rally, EZ PMIs stabilize, BOE cut odds ease, Tech Earnings good so far, Oil and Gold slide - MarketPulse
US Open – Coronavirus ruins Lunar New Year, Intel adds fuel to tech rally, EZ PMIs stabilize, BOE cut odds ease, Tech Earnings good so far, Oil and Gold slide MarketPulse
How does the currency market work? NuWire Investor
Apollo Currency Trading 7.9% Higher Over Last 7 Days (APL) Slater Sentinel
What is forex trading and why it is going strong in 2019? Business MattersBusiness Matters
What Is Forex Trading and How Does it Work? - RushPRnews.com
How To Start Out In Forex Trading Latin Post
How to get started with Forex Business MattersBusiness Matters
Retail forex trading set to go live today Economic Times
How to Invest in Forex | The Smarter Investor | US News U.S. News & World Report
How To Really Make Money in Forex Trading Pulse Headlines
GBP/AUD Extends Uptrend to Conclude Bullish Week Currency Live
Your first 5 minutes as a forex trader ForexLive
The currency-trading scandal continues to dog the banks The Economist
Is forex trading profitable? Capital.com
Never lose hope in currency trading business Rocky Mountain Collegian
Top 8 Mobile Apps for Forex Trading Techzone360
Forex tips for trading the GBP/USD ForexLive