Forex Trading

After starting the week under pressure the EUR USD rebounded as trader appetite for risk grew following favorable economic reports from the U.S. and China. The news that U.S. retail sales fell less than expected lifted the spirits of traders who were expecting a sharp decline. Rather than buy the Dollar in expectation of a weaker economy, traders shifted their interest to the short side as the report drove up interest in equities and other risky assets. The news that Chinese inflation and manufacturing were better than expected also sat well with traders who were expecting to see bearish news on the heels of speculation that China was getting ready to burst its economic bubble. Fear that China’s economy was coming to a screeching halt has been one of the reasons traders have been using to prop up the U.S. Dollar. In addition, the shedding of risky assets has also driven traders into the safety of the Greenback. Although the Euro was supported...

I chuckle as I write the title for this commentary for the very simple reason that it is a line heard so often on the sales and trading desks on Wall Street. We can get a sample of “what the smart money is thinking and doing” from a very recent Bloomberg Poll. Be mindful that those polled represent a global random sampling of 1,263 Bloomberg subscribers. Would you like to know what they think of the following? 1. Which national markets will offer investors the BEST and WORST opportunities over the next year? 2. What asset class will offer the BEST and WORST RETURNS over the next year?  3. What do those polled think of their regional economy, the U.S. economy, and the global economy? 4. Where will the U.S. dollar stand relative to the Euro three months from now? 5. How do these global investors intend on shifting their exposures across asset classes over the next six months? (I find this question to be particular...

Spread betting is a risky game of trading in which you can lose more than you have in your account. That's because of leverage. Every time you buy or sell a market, you just need a small fraction of your total trade – a margin, which can be as low as 1-2%. If the market goes against you quickly, then you could be in trouble. That's what most people think – but are they correct? Spread betting has in fact some risks, and losing more than what you have in your account is a real possibility, but depending on your provider and on the type of trades you carry, it can be a really low one. Before going broke, there is a margin call trigger, in which most providers will automatically start closing positions you have in your account until the margin is again satisfied.

The pictures and stories from Japan have shocked us all. The human aspect of this country’s struggle to cope with the earthquake and tsunami tugs at our hearts. The same applies to those in Middle Eastern countries crying out for freedom and democracy only to be responded to with bullets and bombs. While the human factor is not to be taken lightly, the economic consequences are making the most headlines. These headlines helped to bring back some market volatility that reminded me somewhat of 2008. The markets pulled back and rebounded from the news in Japan, Egypt and Libya relatively quickly. However, the indicators that track investor confidence tell us that investors are becoming more nervous about the future. What is the individual investor to do in these volatile times? I would urge you to do nothing IF your portfolio is properly allocated. Why? Investors tend to do poorly when they react to what the market does instead of preparing...