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
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
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
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
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.
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The Secret of Reduced
One of the best kept secrets in trading is that of reduced
margin spreads. You cannot name a trading method that
provides more safety or a greater return on margin than
does a reduced margin spread, while also being one of the
least time- consuming ways to trade.
The Yin and the Yang of
I am reading a fantastic book on trading, first published
in 1924, by Richard D. Wyckoff, titled "How I Trade and
Invest in Stocks & Bonds".
FOREX - Where Fortunes
Are Made Everyday
The Foreign Exchange Market - better known as FOREX - is a
world wide market for buying and selling currencies. It
handles a huge volume of transactions 24 hours a day, 5
days a week.
How Currencies are
Traded in the FOREX Market
Currencies are traded in dollar amounts called "lots". At
100:1 leverage, one lot is equal to $1000 which controls
$100,000 of a given currency.
The Forex Market-What, When and Why?Forex, FX and the Forex
market are some common abbreviations for the Foreign
Exchange market. Actually it is the largest financial
market in the world, where money is sold and bought freely.
Online Stock Trading:
Freedom of Trade
I remember the first time I started to trade online. It was
just before the tech bubble of the late 1990's and the
internet was still something new for most people.
Stocks Trading -
Advantages and Disadvantages
What is Stocks Trading? Companies throughout the world issue
new stock shares every day. They do so to raise capital in
order to invest in the business.
Financial Crises, Global
Capital Flows and the International Financial
The recent upheavals in the world financial markets were
quelled by the immediate intervention of both international
financial institutions such as the IMF and of domestic ones
in the developed countries, such as the Federal Reserve in
the USA. The danger seems to have passed, though recent
tremors in South Korea, Brazil and Taiwan do not augur
Sending Signals for
Trading in Forex
Forex signals are sent by a forex firm to their subscribers
in order to buy and sell currencies. These signals are
called entry and exit signals for the forex dealers.
Day Trading Course or
Day Trading Technique Seminar: Learn Day Trading
Profitable day traders recognize that momentum trading is
among the fastest & most effective ways to harvest BIG
piles of cash in the stock market.The problem is that if
you don't know what stocks to look for and how to approach
them while limiting your risk, you won't even get close to
making some profits.
Internet and Computer
Systems in the FOREX Business
With every passing year the interest in electronic trading
is bigger, more especially trading shares and currency
through Internet. A new profession came forward - this of
the currency dealer.
A Short Introduction To
FOREX is the world's largest and most liquid trading
market. Many consider FOREX as the best home business you
can ever venture in.
Foreign exchange currency trading is also known as Forex
trading, or FX, and has no single physical marketplace like
the New York Stock Exchange does on Wall Street in New York
or the Tokyo Stock Exchange does in Japan. The New York
Stock Exchange and the Tokyo Stock Exchange online traders
are limited to making purchases during the actual trading
hours governed by New York Stock Exchange hours or the
Japanese Stock Exchange's Tokyo hours.
Welcome to the World of
Indeed large multinational and individual banks and other
major financial institutions have dominated FX trading
(also known as Forex trading), but there is a paradigm
change in the nature and type of investing. According to
one estimate, in the new millennium, there are over 6
million online investment accounts, up from 1.
Q1: When you consider that the foreign exchange market has
become the world's largest financial market, with over $1.5
trillion USD traded daily, where does it go from
here?A1:The FX market is unique, in the UK there is no
central exchange, we trade via the inter bank market.
How To Handle A String Of
Everybody hates to lose and unfortunately no one is blessed
with the ability of foresight, therefore losses are an
unavoidable part of trading. When we enter a trade we will
either be right, or wrong, and even if we broke-even we'd
still be classed as being wrong - as nobody enters into a
trade just to break-even! When unsuccessful traders
encounter a string of losses they begin to engage in
self-destructive patterns that help them escape the pain
they are experiencing.
"FX" is an abbreviation of "forex" or "foreign exchange."
Foreign exchange is the largest and most liquid market in
the world trading approximately $2 trillion every day
(that's over 30 times the daily volume of NASDAQ and NYSE
How to Trade
We all know when you go on a trip to another country; you
need to take some travelers checks and some cash in the
currency of that country. This can be advantageous because
one country's currency is usually worth more or less than
FOREX 101: Make Money
with Currency Trading
For those unfamiliar with the term, FOREX (FOReign EXchange
market), refers to an international exchange market where
currencies are bought and sold. The Foreign Exchange Market
that we see today began in the 1970's, when free exchange
rates and floating currencies were introduced.
Why Forex Traders Plan To
Fail Before They Even Place Their First Trade & How You
Can Know It & ...
Have you heard the wise saying that a trader who fails to
plan, plans to fail? I have, and I was once that trader!
However, did you know that even though traders who have
constructed a plan, which incorporates their trading
strategy (their "edge"), they have a plan that is likely to
fail? If we look at all traders who participate in the
market: we have one group that fails to plan and therefore
plans to fail; another group whose plan is failed; and a
third group who properly plans and therefore does not
fail. Is it any wonder that the success rate for forex
traders is so slim? Well it doesn't have to be.
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