"It's the possibility of having a dream come true that makes life interesting"   - Paulo Coelho, The Alchemist
Mark Whistler is a trader, author and analyst.  Whistler is a contributing Senior Market Strategist at  TradingMarkets.com...
 
<ul><li>I.  The True Paradigm of Forex    i.    Fundamentals.     ii.   Technicals    iii.  Probability </li></ul><ul><li>...
<ul><li>Why? </li></ul><ul><li>Never stop learning… </li></ul><ul><li>Create community of traders… </li></ul><ul><li>Find ...
 
<ul><li>Many people are 'expert Forex traders' when working with a demo account.  </li></ul><ul><li>However, as soon as th...
I.  The True Paradigm of Forex    i.    Fundamentals.     ii.   Technicals    iii.  Probability
<ul><li>1.  NEVER EVER, EVER, EVER OVER-LEVERAGE </li></ul><ul><li>2.  Know the Economics.   </li></ul><ul><li>Do not plac...
<ul><li>6.  Missed Money is Better than Lost Money .  </li></ul><ul><ul><ul><li>If you have a negative gut feeling about a...
<ul><li>  9.  Little Loss… Little Loss…       HUGE WIN .   </li></ul><ul><ul><li>We must understand that there will be los...
<ul><li>  10.  Lazy is Crazy .   </li></ul><ul><ul><li>At every turn, we will work hard to improve our trading knowledge b...
<ul><li>I.  The True Paradigm of Forex </li></ul><ul><li>   i.    Fundamentals </li></ul><ul><li>    ii.   Technicals </li...
<ul><li>This is real economic “trading” analysis for the real world, not a bubble. </li></ul><ul><li>Analysts live in a bu...
<ul><li>Forex markets move on economic news.  </li></ul><ul><li>Traders who understand what economic reports  actually mat...
<ul><li>Sent:  Thursday, 9 October, 2008 21:31:25 </li></ul><ul><li>Subject:  RE: The Matrix </li></ul><ul><li>Hey Mark, <...
<ul><li>Sent:  Friday, 10 October, 2008 18:03:19 </li></ul><ul><li>Subject:  RE: The Matrix </li></ul><ul><li>Hi Mark, </l...
<ul><li>Sent:  Friday, 10 October, 2008 21:41:06 </li></ul><ul><li>Subject:  RE: The Matrix </li></ul><ul><li>Mark,  </li>...
<ul><li>Mark, </li></ul><ul><li>I lost £700, it seems worse even writing it down. embarrassing even. </li></ul><ul><li>I'v...
Date:  Tue, 14 Oct 2008 23:15:08 +0000  Subject:  Re: Buy EUR/USD To:  [email_address] Hey Mark,   Just been stopped out. ...
<ul><li>Subject:  jigsaw‏ From: XX </li></ul><ul><li>Sent:  Wed 10/15/08 9:48 A </li></ul><ul><li>To:  [email_address] </l...
<ul><li>• Common Sense </li></ul><ul><li>•  The True Fundamental Paradigm </li></ul><ul><li>• GDP </li></ul><ul><li>• Nonf...
Forex Fundamental Paradigm  Rising Currency Interest Rates GDP Non-Farm Payrolls Personal Spending ISM Inflation CPI Micro...
Forex Fundamental Paradigm  Falling Currency Interest Rates GDP Non-Farm Payrolls Personal Spending ISM Inflation CPI Micr...
! National Debt Trade Balance LIBOR Rates Falling Currency Interest Rates GDP Non-Farm Payrolls Personal Spending ISM Infl...
<ul><li>Without a doubt economic and fiscal policy - on a global level - move currencies.  </li></ul><ul><li>Generally, in...
<ul><li>Over the past few years, the Bank of Japan has held and low interest rate of 0.5%.  </li></ul><ul><li>Investors th...
Know the Schedule
<ul><li>Interest rates loosen and/or tighten money supply, while also helping to stimulate the economy and/or, curb inflat...
 
 
<ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to ...
<ul><li>RATE CUT DECISION </li></ul><ul><li>The Federal Open Market Committee decided today to lower its target for the fe...
<ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to ...
<ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to ...
<ul><li>On Wednesday, April 8, the  International Monetary Fund  (IMF) released the 2008 Economic Outlook April update.  <...
<ul><li>Central banking members trickle comments into the media to alter the course of their currencies  </li></ul><ul><li...
<ul><li>We made the trade because of economics. </li></ul><ul><li>We stayed in the trade because of European Central Bank ...
<ul><li>FOREX FORCE UPDATE </li></ul><ul><li>The scare factor of capitulation is the reason why it probably WON'T happen. ...
The News: On Tuesday morning, the euro tested 1.6000, posting a new all time high.   The Breakdown: Comments from ECB and ...
The Bottom Line: Increases and cuts in interest rates are a band-aid to a larger problem. It's clear that both the U.S. an...
<ul><li>Christian Noyer, France's central banker, told French radio network RTL, &quot;Our big problem is to ensure that i...
<ul><li>  12:22 PM EST 04-22-2008 </li></ul><ul><li>Right now, you may be saying to yourself, Mark are you crazy - we're s...
<ul><li>Mr. Noyer actually sought out the WSJ, telling the paper markets had over interpreted his remarks as a hint about ...
 
<ul><li>GDP is the total of all goods and services people produce in the United States. </li></ul><ul><li>Imports and Expo...
<ul><li>Shows whether an  is healthy. </li></ul><ul><li>Measures inflation. </li></ul><ul><li>Rate increases if retail exp...
<ul><li>Advance Report Comes out one month after the quarter ends. This can often be wildly different from the final repor...
<ul><li>For every 1% the U.S. Dollar moves, oil should add/subtract $4 in premium. </li></ul><ul><li>For every 1% global d...
<ul><li>For every 1% the U.S. Dollar moves, oil should add/subtract $4 in premium. </li></ul><ul><li>For every 1% global d...
 
<ul><li>CANADA:   </li></ul><ul><li>Background:  One of the world's richest nations - thanks partly to immigration. The No...
<ul><li>Background:  The world's foremost economic and military power. Despite relative prosperity in recent years, the ga...
<ul><li>AUSTRALIA:   </li></ul><ul><li>Background:  In the past 20 years or so have made their near neighbours a priority ...
<ul><li>CHINA:   </li></ul><ul><li>Background:  After stagnating for more than two decades under the rigid authoritarianis...
<ul><li>JAPAN:   </li></ul><ul><li>Background:  The world's second-biggest economy, achieving an economic miracle in the s...
<ul><li>NEW ZEALAND:   </li></ul><ul><li>Background:  Agriculture is the economic mainstay, but manufacturing and tourism ...
<ul><li>SWITZERLAND:   </li></ul><ul><li>Background:  Its financial sector has helped it become one of the world's wealthi...
<ul><li>GERMANY:   </li></ul><ul><li>Background:  Once celebrated as Europe's economic powerhouse, recent falling export o...
<ul><li>FRANCE:   </li></ul><ul><li>Background:  Nicolas Sarkozy was elected President in 2007 promising sweeping economic...
<ul><li>All 27 EU states broadly support the bank rescue plan proposed for the bloc and the holding of a world finance sum...
<ul><li>ARAB STATES:   </li></ul><ul><li>Latest:  Share prices have dropped precipitously this year, amid fears of weaknes...
<ul><li>You will find that you are suddenly ahead of the curve, trading news before it even happens.  </li></ul><ul><li>Yo...
$1 of $100 is 1%.  Just one year ago, at the beginning of 2007, a $1 move would have been (roughly) 2%.  Sensationalistic ...
Part II II.  Truth Behind Technicals    i.   The true paradigm of technical analysis    ii.  Why many technical indicators...
<ul><li>Why Pitchforks and Trendlines. </li></ul><ul><li>How you can see a trend before it begins. </li></ul><ul><li>Fibon...
 
 
 
Pitchforks require: A rally, or trough, which helps identify the midpoint of the trend. A move, or trend prior to the rall...
Traditional technical analysis requests that we connect two, or more lows (or highs) to draw the median line on a pitchfor...
Correct pitchfork is drawn using the last significant low prior to the trough. Then, parallel lines are drawn above and be...
<ul><li>Head and Shoulders top confirmed pitchfork movement down in EUR/USD. </li></ul>
 
 
 
<ul><li>All of the magical math in the world will never make Fibonacci retracements true 100% of the time.  Period.  </li>...
<ul><li>Before we even consider a Fibonacci retracements, we need to be able to spot when a move has occurred that would w...
Much of the time, the 36.8% Fibonacci Retracement does not hold as a reversal point...  Often a currency can “pop” above (...
 
Real Trading Example from April 16, 2008. Pitchforks gave entries. Retracements helped us hold for a HUGE winner.
<ul><li>How to evaluate how long the trend will continue for - looking at technical analysis and the larger economic story...
Example from April 20, 2008. Pitchforks help line up short-re-entries.  Pitchfork support, or resistance coupled with Fibo...
Part III III.  Truth Behind Technicals    i.   The true paradigm of technical analysis    ii.  Why many technical indicato...
<ul><li>The Law of Reversion  </li></ul><ul><li>The mean trading range can be identified on any timeframe.  </li></ul><ul>...
<ul><li>Bounces almost always appear. </li></ul><ul><li>Reversal is a paradigm shift, while reversion is descriptive stati...
<ul><li>Reversals are difficult to trade, as it requires trading against the larger trend. </li></ul><ul><li>Reversals are...
Locating the mean and median actually help us find the implied volatility range within the present trend.  We can also fin...
 
Trendlines help identify reversals...  While also helping to identify trend re-entry points when trading with momentum...
Using channel trendlines (a modification of pitchforks) and other tools like Fibonacci Retracements, we also increase our ...
We can use trendlines on intraday charts to identify median points, reversals and entry “zones.”
<ul><li>ANYONE can pick an entry, but only the BEST know how to EXIT. </li></ul><ul><li>If you don’t know how to land your...
<ul><li>NEVER open a trade without a stop in place. </li></ul><ul><li>Why Forex volatility is built to take out stops of t...
Traders must know how to use stops!
<ul><li>Offensive versus defensive stops. </li></ul><ul><li>When you need to control the position. </li></ul><ul><li>Must ...
Pitchforks are great hard stop tools.
 
<ul><li>Use when you can’t be at computer, but you’re sure a move will occur. </li></ul><ul><li>Hurt traders who use them ...
<ul><li>Use when you can’t be at computer, but you’re sure a move will occur. </li></ul><ul><li>Hurt traders who use them ...
THANKS!
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October 18 2008 Whistler Speech in Houston - Forex Traders Association 1.08 Whistler

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Mark Whistler discusses Forex markets and current state of affiars within global financial crisis at the Forex Trader's Association in Houston on Saturday, October 18, 2008.

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October 18 2008 Whistler Speech in Houston - Forex Traders Association 1.08 Whistler

  1. 1. &quot;It's the possibility of having a dream come true that makes life interesting&quot; - Paulo Coelho, The Alchemist
  2. 2. Mark Whistler is a trader, author and analyst.  Whistler is a contributing Senior Market Strategist at TradingMarkets.com and heads the currency trading Service: Forex Force.   From time to time Mark can be seen on CNBC and is a regular contributor to FXStreet , discussing currency trading and global markets. Whistler is one of three founders of Tekonomix Partners, a a privately-held partnership, helping corporations connect to capital, while also laying out strategic infrastructure and planning to achieve the highest possible shareholder value. His books include: Trade With Passion and Purpose (John Wiley & Sons, Inc. 2007), Trading Pairs (Wiley, 2004), Profit from China (Investment U/Wiley, 2006) and Profit from Uranium (Investment U/Wiley, 2006.) Mark’s newest book, The Swing Trader’s Bible (John Wiley & Sons, Inc.) - co-authored with CNBC/Fox News regular guest Matt McCall - will be on shelves in December, 2008. Mark Whistler is also the founder of WallStreetRockStar.com , and is a regular columnist for TraderDaily.com and Investopedia.com . In his spare time, Mr. Whistler operates the MarkWhistlerGallery.com and Eats For The Streets , a growing organization - dedicated to helping homeless across America.
  3. 4. <ul><li>I.  The True Paradigm of Forex    i.   Fundamentals.    ii.  Technicals    iii. Probability </li></ul><ul><li>II.  Truth Behind Technicals    i.  The true paradigm of technical analysis    ii. Why many technical indicators don't work anymore.    iii.  The art of the pitchfork to utilize mean/median line trading. </li></ul><ul><li>III.  Understanding Probability and Volatility    i.   Why volatility is misunderstood by so many.    ii.  How descriptive statistics predict volatility, trending and lateral markets.    iii.  How traders can utilize simple charting techniques to perceive volatility, trending and lateral markets. </li></ul><ul><li>IV. Live Market analysis - Summary </li></ul><ul><ul><li>i.  A few tips and tricks by Whistler </li></ul></ul><ul><ul><li>  ii. Discussion of a few winners and losers    iii.  Open market discussion / Q&A </li></ul></ul>
  4. 5. <ul><li>Why? </li></ul><ul><li>Never stop learning… </li></ul><ul><li>Create community of traders… </li></ul><ul><li>Find new ideas… </li></ul><ul><li>Feeling of accomplishment… </li></ul><ul><li>Sometimes, you just have something you have to say… </li></ul><ul><li>Trading Goal </li></ul><ul><li>$40 Billion </li></ul>
  5. 7. <ul><li>Many people are 'expert Forex traders' when working with a demo account. </li></ul><ul><li>However, as soon as they go live - statistically, 95% of new traders lose 80%, or more of their account - in 60 to 90 days. </li></ul><ul><li>No trader will ever survive without common sense. </li></ul><ul><li>It is vitally important for traders to remember that common sense is king in Forex markets. </li></ul>
  6. 8. I.  The True Paradigm of Forex    i.   Fundamentals.    ii.  Technicals    iii. Probability
  7. 9. <ul><li>1. NEVER EVER, EVER, EVER OVER-LEVERAGE </li></ul><ul><li>2. Know the Economics. </li></ul><ul><li>Do not place a trade if you don't understand why the trade is being made. </li></ul><ul><li>3. NEVER EVER, EVER leave a position unattended without some sort of stop in place. </li></ul><ul><li>4. NEVER, EVER, EVER, EVER OVER-LEVERAGE </li></ul><ul><li>You will compromise your account by taking on a position that is too large to think clearly. </li></ul><ul><li>5. When in Doubt Get Out . </li></ul><ul><ul><li>If you can't sleep at night, get out of the trade. </li></ul></ul><ul><ul><li>Trust your instincts. </li></ul></ul>
  8. 10. <ul><li>6. Missed Money is Better than Lost Money . </li></ul><ul><ul><ul><li>If you have a negative gut feeling about a trade setup, stay out. </li></ul></ul></ul><ul><ul><ul><li>There will always be opportunity to make money, but not if you don't have any. </li></ul></ul></ul><ul><li>7. Send the Trade Away, Live to Trade Another Day. </li></ul><ul><li>If it doesn't look, or feel right, get out. </li></ul><ul><li>8. The First Loss is Always the Smallest Loss. </li></ul><ul><li>It's hard to take a loss, I know, I've taken plenty of them. I can tell you firsthand, you will save a ton of money by taking the </li></ul><ul><li>first loss - at your predetermined stop - rather than letting your emotions keep you in a position. </li></ul><ul><li>Stop losses are a critical rule of money management. </li></ul>
  9. 11. <ul><li> 9. Little Loss… Little Loss… HUGE WIN . </li></ul><ul><ul><li>We must understand that there will be losses in trading. We will accept small losses, even if there are a string of them, knowing that a big win is on the way. </li></ul></ul><ul><ul><li>We will never take a large loss by violating out stops, because doing so, would void the trading plan we are working so hard to execute. </li></ul></ul><ul><ul><li>If you think small, you will get small. </li></ul></ul><ul><ul><li>Traders who constantly take little winners off the table eventually blow up. </li></ul></ul>What So Many Miss
  10. 12. <ul><li> 10. Lazy is Crazy . </li></ul><ul><ul><li>At every turn, we will work hard to improve our trading knowledge by reading </li></ul></ul><ul><ul><li>and studying everything we can. </li></ul></ul><ul><ul><li>My commitment to subscribers: I will provide you with every single tidbit of trading knowledge I have, all of my insights and my strategies. </li></ul></ul><ul><ul><li>I will provide educational resources and articles. </li></ul></ul><ul><ul><li>The commitment I expect from you: You will take the time to read them. </li></ul></ul><ul><ul><li>If you are a subscriber, we are trading together. </li></ul></ul><ul><ul><li>I consider you my trading partner and at every turn, I am doing everything possible to help you learn and make money. </li></ul></ul><ul><ul><li>NEVER BLAME ANYONE ELSE – YOU PULLED THE TRIGGER! </li></ul></ul>Put In The Time
  11. 13. <ul><li>I.  The True Paradigm of Forex </li></ul><ul><li>   i.   Fundamentals </li></ul><ul><li>   ii.  Technicals </li></ul><ul><li>   iii. Probability </li></ul>
  12. 14. <ul><li>This is real economic “trading” analysis for the real world, not a bubble. </li></ul><ul><li>Analysts live in a bubble, we don’t. </li></ul><ul><li>These strategies work... If they don’t, I lose money! </li></ul><ul><li>Forex Force subscribers recently used this exact style locking down a EUR/USD reversal, bringing Forex Force subscribers a 298 PIP winner. </li></ul><ul><li>What you’re going to learn here – today – is how to trade FOREX. I have a proven track record of success. </li></ul><ul><li>I trade EVERY SINGLE DAY!!! </li></ul><ul><li>I’m not an analyst who doesn’t put his money where his mouth is. </li></ul>
  13. 15. <ul><li>Forex markets move on economic news. </li></ul><ul><li>Traders who understand what economic reports actually matter stand a much greater chance of finding winning trades, while minimizing unforeseen volatility risk. </li></ul><ul><li>Common sense goes a LONG way! </li></ul><ul><li>Must THINK INDEPENDENTLY </li></ul>
  14. 16. <ul><li>Sent: Thursday, 9 October, 2008 21:31:25 </li></ul><ul><li>Subject: RE: The Matrix </li></ul><ul><li>Hey Mark, </li></ul><ul><li>  </li></ul><ul><li>I just wanted to let you know that after reading your descriptive statistics reports my </li></ul><ul><li>trading has improved dramatically. I have had an amazing week up to now, my account </li></ul><ul><li>has grown a whopping 300%. I only had a very small account so I won't be expecting </li></ul><ul><li>this every week :) </li></ul><ul><li>  </li></ul><ul><li>I think your reports were the final piece of the jigsaw puzzle and have been a massive part </li></ul><ul><li>in turning my trading around. I hope I'm not being premature though because of a few good </li></ul><ul><li>days trading. If you like, I will keep you posted on my progress and if you would like any </li></ul><ul><li>feedback or any other help, just give me a shout. </li></ul><ul><li>  </li></ul><ul><li>Thanks so much for sharing. </li></ul><ul><li>John Doe </li></ul>
  15. 17. <ul><li>Sent: Friday, 10 October, 2008 18:03:19 </li></ul><ul><li>Subject: RE: The Matrix </li></ul><ul><li>Hi Mark, </li></ul><ul><li>  </li></ul><ul><li>Please don't use my testimonial, I have lost all my weeks gains :( </li></ul><ul><li>  </li></ul><ul><li>I traded the eur/usd so badly.....bad entry, no stop....how stupid am i </li></ul><ul><li>  </li></ul><ul><li>John Doe </li></ul><ul><li>  </li></ul>
  16. 18. <ul><li>Sent: Friday, 10 October, 2008 21:41:06 </li></ul><ul><li>Subject: RE: The Matrix </li></ul><ul><li>Mark, </li></ul><ul><li>I'd had a great week, every trade was a winner, so guess I got </li></ul><ul><li>to confident. </li></ul><ul><li>  </li></ul><ul><li>I entered on the retrace of the big impulse move at 07:00 ish gmt but </li></ul><ul><li>I over leveraged and had no stop... </li></ul><ul><li>  </li></ul><ul><li>  when the market rallied after lunch I thought this was the big move up </li></ul><ul><li>but it turned around and kicked my ass. wiped out. </li></ul><ul><li>  </li></ul><ul><li>I cant believe I did it again ! I feel so stupid </li></ul><ul><li>John Doe </li></ul>
  17. 19. <ul><li>Mark, </li></ul><ul><li>I lost £700, it seems worse even writing it down. embarrassing even. </li></ul><ul><li>I've got £100 left so not enough to trade eur/usd. </li></ul><ul><li>I use gft, why do you ask? </li></ul><ul><li>John Doe </li></ul>
  18. 20. Date: Tue, 14 Oct 2008 23:15:08 +0000 Subject: Re: Buy EUR/USD To: [email_address] Hey Mark,   Just been stopped out. Is the update going to be out tonight? Regards Joe Date: Tue 10/14/2008 7:29 PM Subject: Re: Buy EUR/USD To: [email_address] all my gains from today gone,  :(
  19. 21. <ul><li>Subject: jigsaw‏ From: XX </li></ul><ul><li>Sent: Wed 10/15/08 9:48 A </li></ul><ul><li>To: [email_address] </li></ul><ul><li>Hi Mark, </li></ul><ul><li>  </li></ul><ul><li>Being stopped out last night was hard to take but again I'm glad it happened. </li></ul><ul><li>As you know, losses are hard to take but you learn so much from them. </li></ul><ul><li>I was up all night studying the charts and something clicked I am finally </li></ul><ul><li>starting to see the bigger picture. </li></ul><ul><li>  </li></ul><ul><li>My apologies for my rather curt emails last night. </li></ul><ul><li>  </li></ul><ul><li>Thanks for your help. </li></ul><ul><li>  </li></ul><ul><li>XX </li></ul>
  20. 22. <ul><li>• Common Sense </li></ul><ul><li>• The True Fundamental Paradigm </li></ul><ul><li>• GDP </li></ul><ul><li>• Nonfarm Payrolls </li></ul><ul><li>• Interest Rate Announcements • ISM Non-Manufacturing • Personal Spending • Inflation (Consumer Price Index) • Existing Home Sales </li></ul>
  21. 23. Forex Fundamental Paradigm Rising Currency Interest Rates GDP Non-Farm Payrolls Personal Spending ISM Inflation CPI Micro Factors Home Sales Consumer Sentiment News Topic ‘de jour’ ( oil, food shortage, etc) Micro Factors OIL TRADE POLICY POLITICS
  22. 24. Forex Fundamental Paradigm Falling Currency Interest Rates GDP Non-Farm Payrolls Personal Spending ISM Inflation CPI Micro Factors Home Sales Consumer Sentiment News Topic ‘de jour’ ( oil, food shortage, etc) Micro Factors OIL TRADE POLICY POLITICS
  23. 25. ! National Debt Trade Balance LIBOR Rates Falling Currency Interest Rates GDP Non-Farm Payrolls Personal Spending ISM Inflation CPI Micro Factors Home Sales Consumer Sentiment News Topic ‘de jour’ ( oil, food shortage, etc) Micro Factors OIL TRADE POLICY POLITICS
  24. 26. <ul><li>Without a doubt economic and fiscal policy - on a global level - move currencies. </li></ul><ul><li>Generally, interest rate cuts will spur a decline in the country's currency. </li></ul><ul><li>Interest rates are low in one country, they can stimulate borrowing. </li></ul><ul><li>The reinvestment of those funds in higher yielding interest-bearing countries. Also known as a &quot;carry trade.&quot; </li></ul>
  25. 27. <ul><li>Over the past few years, the Bank of Japan has held and low interest rate of 0.5%. </li></ul><ul><li>Investors thus, borrowed money from the Bank of Japan and invested the money in other economies that were showing growth, like the United States. </li></ul>
  26. 28. Know the Schedule
  27. 29. <ul><li>Interest rates loosen and/or tighten money supply, while also helping to stimulate the economy and/or, curb inflation. </li></ul><ul><li>When the Report is Released: </li></ul><ul><li>Eight times per year. </li></ul><ul><li>Where the Report can be Found: </li></ul><ul><li>Source: http://www.federalreserve.gov/monetarypolicy/fomc.htm </li></ul><ul><li>What it means to Forex: </li></ul><ul><li>Generally, declining interest rates weigh on the U.S. dollar. However, when the FOMC raises rates to curb inflation, the event can also take a toll on upward momentum on the U.S. dollar as well. Interest rates should also be used in conjunction with national debt and other economic indicators. </li></ul>
  28. 32. <ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent. </li></ul><ul><li>Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets. </li></ul><ul><li>The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully. </li></ul><ul><li>Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks. </li></ul><ul><li>Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting. </li></ul><ul><li>In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco. </li></ul>
  29. 33. <ul><li>RATE CUT DECISION </li></ul><ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent. </li></ul><ul><li>PRESENT STATE OF AFFAIRS </li></ul><ul><li>Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets. </li></ul><ul><li>INFLATION EXPECTATIONS </li></ul><ul><li>The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully. </li></ul><ul><li>OUTLOOK </li></ul><ul><li>Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks. </li></ul><ul><li>WHO VOTED WHERE </li></ul><ul><li>Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting. </li></ul><ul><li>DISCOUNT RATE </li></ul><ul><li>In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco. </li></ul>
  30. 34. <ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent. </li></ul><ul><li>Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened.  Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters. </li></ul><ul><li>Inflation has been elevated, and some indicators of inflation expectations have risen.  The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.  Still, uncertainty about the inflation outlook has increased.  It will be necessary to continue to monitor inflation developments carefully. </li></ul><ul><li>Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability. </li></ul><ul><li>Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh.  Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting. </li></ul><ul><li>In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco. </li></ul>
  31. 35. <ul><li>The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent. </li></ul><ul><li>Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters. </li></ul><ul><li>Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully. </li></ul><ul><li>The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability. </li></ul><ul><li>Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting. </li></ul><ul><li>In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco. </li></ul>
  32. 36. <ul><li>On Wednesday, April 8, the International Monetary Fund (IMF) released the 2008 Economic Outlook April update. </li></ul><ul><li>The IMF stated, &quot; Global growth is projected to slow to 3.7 percent in 2008, 1/2 percentage point lower than at the time of the January World Economic Outlook Update and 1 1/4 percentage points lower than the growth recorded in 2007. </li></ul><ul><li>Moreover, growth is projected to remain broadly unchanged in 2009. The divergence in growth performance between the advanced and emerging economies is expected to continue, with growth in the advanced economies generally expected to fall well below potential.” </li></ul><ul><li>Advanced Economies 1.3% </li></ul><ul><li>The United States 0.6% </li></ul><ul><li>Euro Zone 1.4% </li></ul><ul><li>Japan 1.6% </li></ul><ul><li>Emerging Countries and Developing Nations 6.7% </li></ul><ul><li>China 9.3% </li></ul><ul><li>India 7.9% </li></ul>Does the IMF have an Agenda Also?
  33. 37. <ul><li>Central banking members trickle comments into the media to alter the course of their currencies </li></ul><ul><li>In action, you will see that some of the largest comments are from knowing central banks, GDP, inflation and policymakers personalities. </li></ul>
  34. 38. <ul><li>We made the trade because of economics. </li></ul><ul><li>We stayed in the trade because of European Central Bank Member comments to the press. </li></ul><ul><li>We used technical analysis as a back up. </li></ul><ul><li>We booked a windfall profit!!! </li></ul>
  35. 39. <ul><li>FOREX FORCE UPDATE </li></ul><ul><li>The scare factor of capitulation is the reason why it probably WON'T happen. With this in mind, we are going to open a short position RIGHT NOW. </li></ul><ul><li>It's important to remember that we're 'probing' the EUR/USD trying to take on a position that will enable us to ride a large move. Capitulation could still ensue, and if the EUR/USD rallies back above 1.5900 we're going to begin thinking about covering our short and turning the trade long. </li></ul><ul><li>However, given the inflation issues, we need to get short, as inflation curbs - beyond interest rates - could begin showing up in headlines. One such item would be buying in the US dollar to cool the price of oil. What's more, almost everyone is thinking oil will go higher - even me - which is why it might not happen. </li></ul><ul><li>Please note that I have OPEN A SHORT POSITION in the EUR/USD. We need to 'be there' on the short side, just incase. </li></ul>
  36. 40. The News: On Tuesday morning, the euro tested 1.6000, posting a new all time high. The Breakdown: Comments from ECB and FOMC policymakers have been the main catalysts for the dollar's decline and the euro rally lately. Clearly, policymakers have an agenda. Posting new all-time highs last week, there was question over the weekend whether the EUR/USD would be able to make new highs. Then, on Saturday, ECB member Axel Weber told the press, &quot;I am concerned that, with regard to the conduct of wage and fiscal policy, the recent temporary heightened inflation rate could be consolidated for longer than is necessary above the tolerance level of the Eurosystem,&quot; (Bullish euro comment.) Early Tuesday evening, the dollar began to recover slightly, just before ECB member Noyer made additional comments that a rate hike could be looming. (Bullish euro comment.) In Addition, ECB Governing Council member Yves Mersch told the Financial Times the question of a rate hike is 'fully justified.' Mersch could not have made a more euro-bullish comment.
  37. 41. The Bottom Line: Increases and cuts in interest rates are a band-aid to a larger problem. It's clear that both the U.S. and Euro Zone policymakers have their own agenda. Fact is, a stronger U.S. dollar would help ease the price of oil. What's more, protectionist trade policy, like tariffs on Brazilian sugarcane ethanol, only fuel inflation through keeping agricultural prices artificially high. Rate cuts and hikes are band-aids, while trade policy, credit policy and debt are the real problems. Policymakers who constantly make interest rate cut comments to media, but not discuss the real problems - clearly have an agenda, which may not truly be aimed at helping consumers, but rather big business and the Government instead. The ECB clearly wants the euro to move higher, as seen in multiple press-comments about an interest rate hike to ease inflation. Because oil is traded in U.S. dollars, when the dollar falls, Europe enjoys cheaper oil. Again, driving the dollar lower through comments about an ECB hike is a band-aid. Trade and fiscal policy supporting high oil prices and agricultural protectionism - are the real inflationary problems. URL: http://www.tradingmarkets.com/.site/forex/commentary/MarkWhistler/-76566.cfm
  38. 42. <ul><li>Christian Noyer, France's central banker, told French radio network RTL, &quot;Our big problem is to ensure that inflation returns below 2% next year. </li></ul><ul><li>We will do whatever </li></ul><ul><li>is necessary for that. If needed, we will move interest rates.“ </li></ul>
  39. 43. <ul><li> 12:22 PM EST 04-22-2008 </li></ul><ul><li>Right now, you may be saying to yourself, Mark are you crazy - we're short while the EUR/USD is trading near highs. Please let me tell you that I do not like trading against the trend. However, as I analyze the present global economic environment, there's a huge problem... </li></ul><ul><li>First, the more I read about ECB members talking about raising rates, the more I feel they have a specific agenda, trying to push the euro higher. However, a higher euro isn't going to help in the long-run and I believe it is only a matter of time before intervention chops the feet out from the euro. This could come from the U.S. realizing the dollar in a lower range is not healthy and/or pressure for the ECB to reconsider it's actions - from the IMF, WTO, or other governments. </li></ul><ul><li>Raising rates to curb inflation is a band-aid to the inflationary issues in the Euro Zone. Really, the ECB needs to focus on controlling prices through policy reform. Regardless, trading against the trend is painful and frustrating. Looking at a 4-hour chart, we see that the euro has fallen back below the top band of the 21-period 2-standard deviation Bollinger Band. What's more, throughout commentary this morning, I see fear right and left. My instincts are telling me to stay short. </li></ul><ul><li>The concern is this: Yes the euro could spike one more time, possibly hitting the 1.6055 area and then fall through the floor. I don't want to miss a capitulation trade, however, when the euro starts to tumble, it is going to move fast. If the euro starts to trade above 1.6025, check back for an update - If the EUR/USD does start to move up again, I will immediately be in contact with you. </li></ul><ul><li>This is a crucial time for a potentially huge trade and I am not leaving my screens until we are in safe territory. </li></ul><ul><li>Strength above 1.6055 will have us turning the trade long, but for now, we have to stay short. Again, please hang in there! </li></ul>
  40. 44. <ul><li>Mr. Noyer actually sought out the WSJ, telling the paper markets had over interpreted his remarks as a hint about the direction in which rates might move. </li></ul><ul><li>&quot;Movements can go both ways,&quot; he said. &quot;I would never engage in a discussion about the future path of interest rates, simply because nobody knows. It would be dangerous to make predictions in either direction.&quot; </li></ul>
  41. 46. <ul><li>GDP is the total of all goods and services people produce in the United States. </li></ul><ul><li>Imports and Exports are NOT included, so as to not have volatility, due to exchange rates. </li></ul><ul><li>Inflation is removed. </li></ul><ul><li>Only final products are counted. Raw and intermediate goods are NOT included. </li></ul><ul><li>Measured by year-over-year growth – as a percentage – and is the average of the four quarters within the year. </li></ul><ul><li>U.S. is an advanced economy. Most Forex traded are advanced </li></ul><ul><li>economies. </li></ul><ul><li>Healthy “Advanced Economy GDP growth is 2.0% to 2.5%.” </li></ul>
  42. 47. <ul><li>Shows whether an is healthy. </li></ul><ul><li>Measures inflation. </li></ul><ul><li>Rate increases if retail expenditures, government spending, and exports increase. </li></ul><ul><li>Growth rate will decline with increases in exports, inventory, and declines in consumer, business or government spending. </li></ul><ul><li>Prompts the Federal Reserve to take action, or not. </li></ul><ul><li>The BEA often revises the GDP growth rate within a month after releasing it. </li></ul>
  43. 48. <ul><li>Advance Report Comes out one month after the quarter ends. This can often be wildly different from the final report, simply because all of the trade and business inventory data is not in yet. </li></ul><ul><li>Preliminary Report Comes out two months after the end of the quarter. This is usually pretty realistic. </li></ul><ul><li>Final Report Comes out three months after the end of the quarter. This usually only tweaks the Preliminary Report, but it is important because this is the number that will go down in history as the official number. </li></ul>
  44. 49. <ul><li>For every 1% the U.S. Dollar moves, oil should add/subtract $4 in premium. </li></ul><ul><li>For every 1% global demand increases/decreases, oil theoretically move +/- $20 </li></ul>
  45. 50. <ul><li>For every 1% the U.S. Dollar moves, oil should add/subtract $4 in premium. </li></ul><ul><li>For every 1% global demand increases/decreases, oil theoretically move +/- $20 </li></ul>
  46. 52. <ul><li>CANADA: </li></ul><ul><li>Background: One of the world's richest nations - thanks partly to immigration. The North American Free Trade Agreement, involving Canada, the US and Mexico, has brought a trade boom. Has been asserting sovereignty in the Arctic with growing with the possible bounty from previously-untapped reserves of oil and gas at stake. </li></ul><ul><li>Key data: Gross National Income per capita: US $39,420 (World Bank, 2007) </li></ul><ul><li>Latest: The Bank of Canada cut its key interest rate by half a percentage point to 2.5% on 8 October in a co-ordinated effort with other central banks. </li></ul><ul><li>On 10 October, Finance Minister Jim Flaherty attempted to ease the credit crunch by announcing CAN$25bn ($21bn) of asset-swaps between the country's major banks and the government-owned Canada Mortgage and Housing Corporation (CMHC). The Bank of Canada said three days later it would provide exceptional liquidity to the financial system &quot;as long as conditions warrant&quot;. </li></ul><ul><li>Source: BBC </li></ul>
  47. 53. <ul><li>Background: The world's foremost economic and military power. Despite relative prosperity in recent years, the gap between rich and poor is a major challenge. More than 30 million Americans live below the official poverty line, with a disproportionate percentage of these being African-Americans and Hispanics. </li></ul><ul><li>Key data: Gross National Income per capita: US $46,040 (World Bank, 2007) </li></ul><ul><li>Latest: The Treasury has said it wants to implement its $700bn financial bail-out plan quickly. It also announced plans to inject $250bn into many of the nation's banks, including JP Morgan Chase, Goldman Sachs and the Bank of New York Mellon Corp. President George W Bush and Mr Paulson are expected to unveil more details of the package on Tuesday. </li></ul><ul><li>Source: BBC </li></ul>
  48. 54. <ul><li>AUSTRALIA: </li></ul><ul><li>Background: In the past 20 years or so have made their near neighbours a priority in foreign policy and its economy is geared towards Asia. Migration continues to shape Australia and is a politically-sensitive issue. </li></ul><ul><li>Key data: Gross National Income per capita: US $35,960 (World Bank, 2007) </li></ul><ul><li>Latest: Prime Minister Kevin Rudd announced an injection of $7.4bn into the economy. Most of the money will come from a $15.3bn budget surplus forecast for the current fiscal year. </li></ul><ul><li>Earlier Australia's central bank cut its key interest rate from 7% to 6% - a much larger-than-expected reduction. The government later announced it would guarantee all bank deposits with financial institutions over the next three years. </li></ul><ul><li>Source: BBC </li></ul>
  49. 55. <ul><li>CHINA: </li></ul><ul><li>Background: After stagnating for more than two decades under the rigid authoritarianism of early communist rule China now has the world's fastest-growing economy and is undergoing what has been described as a second industrial revolution. Relations with trading partners have been strained over China's huge trade surplus and the piracy of goods </li></ul><ul><li>Key data: Gross National Income per capita: US $2,360 (World Bank, 2007) </li></ul><ul><li>Latest: China has also joined the interest rate offensive, cutting rates by 0.27 percentage points. </li></ul><ul><li>Source: BBC </li></ul>
  50. 56. <ul><li>JAPAN: </li></ul><ul><li>Background: The world's second-biggest economy, achieving an economic miracle in the second half of the 20th century that was the envy of the rest of the world </li></ul><ul><li>Key data: Gross National Income per capita: US $37,670 (World Bank, 2006) </li></ul><ul><li>Latest: Prime Minister Taro Aso said he would call an emergency summit of the G8 if finance ministers meeting in Washington did not reach agreement to take action on the credit crisis. </li></ul><ul><li>The authorities also relaxed regulations on companies buying up their own shares, and said they were considering capital injections for medium-sized and small financial institutions. </li></ul><ul><li>Mr Aso said more action would needed to be taken to boost the country's flagging economy, even after the lower house of parliament approved a 1.8 trillion yen ($18bn) stimulus plan and the Bank of Japan put 4.5 trillion yen ($45.5 billion) into the banking system. </li></ul><ul><li>Source: BBC </li></ul>
  51. 57. <ul><li>NEW ZEALAND: </li></ul><ul><li>Background: Agriculture is the economic mainstay, but manufacturing and tourism are important and there is a fledgling film industry. New Zealand has diversified its export markets and has developed strong trade links with Australia, the US, Japan, and China. </li></ul><ul><li>Key data: Gross national income per capita: US $28,780 (World Bank, 2007) </li></ul><ul><li>Latest: The government is planning to guarantee retail deposits, initially for two years. </li></ul><ul><li>Source : BBC </li></ul>
  52. 58. <ul><li>SWITZERLAND: </li></ul><ul><li>Background: Its financial sector has helped it become one of the world's wealthiest countries. It manages a third of the world's offshore funds and has been ranked the second most competitive economy by the World Economic Forum. </li></ul><ul><li>Data: Gross national income per capita: US $59,880 (World Bank, 2007) </li></ul><ul><li>Latest: Switzerland takes steps to strengthen its largest bank, UBS, by giving it 6bn Swiss francs ($5.3bn; £3.1bn) in exchange for a 9.3% stake. The bank will also be able to transfer up to $60bn of toxic assets to a fund supported by the Swiss central bank. Credit Suisse was also offered government assistance but was instead able to raise 10bn Swiss francs from major global investors to shore up its position. </li></ul><ul><li>SWEDEN: </li></ul><ul><li>Background: Sweden survived its own credit crunch in the 1990s when house prices slumped, and unemployment and bankruptcies rose rapidly. The government injected capital into failing banks and guaranteed depositors and creditors of stricken banks. Most of the money was regained as the economy recovered. </li></ul><ul><li>Data: Gross national income per capita: US $46,060 (World Bank, 2007) </li></ul><ul><li>Latest: Finance Minister Anders Borg said on 13 October that the government would soon introduce &quot;quite extensive measures&quot; to safeguard its financial system, but that it did not believe there was a need to inject capital into banks. He said it was also considering raising guarantees on bank deposits for savers despite them being doubled earlier this month to 500,000 kronor ($70,960). Sweden's central bank said separately that it would boost its support for the banks by offering a further 80 billion kronor ($11.3bn) and $10bn in loans. </li></ul><ul><li>Source : BBC </li></ul>
  53. 59. <ul><li>GERMANY: </li></ul><ul><li>Background: Once celebrated as Europe's economic powerhouse, recent falling export orders and rising costs have pushed Germany to the brink of recession. The cost of incorporating the German Democratic Republic is also still being felt. </li></ul><ul><li>Data: Gross national income per capita: US $38,860 (World Bank, 2007) </li></ul><ul><li>Latest: On 17 October the German parliament overwhelmingly approved a 500 billion euro ($675bn) financial rescue package. The plan includes a fund to provide up to 400bn euros in interbank loan guarantees and 80bn euros ($109bn) to acquire stakes in troubled banks. </li></ul><ul><li>German parliament backs bail-out </li></ul><ul><li>The government stepped in on 6 October to avoid the collapse of Germany's second-biggest commercial property lender, Hypo Real Estate. In an attempt to prevent a subsequent run on banks, the government announced it would guarantee all personal bank deposits in the country. </li></ul><ul><li>Source: BBC </li></ul>
  54. 60. <ul><li>FRANCE: </li></ul><ul><li>Background: Nicolas Sarkozy was elected President in 2007 promising sweeping economic and social reforms to tackle sluggish economic growth and high unemployment. He aims to cut taxes, make employment rules more flexible and rein in powerful trades unions. According to French finance minister Christine Lagarde, the country looks to be heading for recession. </li></ul><ul><li>Data: Gross national income per capita: US $38,500 (World Bank, 2007) </li></ul><ul><li>Latest: President Nicolas Sarkozy announced on 13 October the creation of a fund worth 40bn euros ($55bn) to acquire stakes in French financial institutions and a guarantee of up to 320bn euros ($437bn) on interbank loans that would run until the end of 2009. The loan guarantee will be offered to banks at commercial rates, and beneficiaries will have to sign up to certain &quot;ethical&quot; obligations, including on executive pay. </li></ul><ul><li>Source: BBC </li></ul>
  55. 61. <ul><li>All 27 EU states broadly support the bank rescue plan proposed for the bloc and the holding of a world finance summit, France's president has said. </li></ul><ul><li>'New Bretton Woods&quot; </li></ul><ul><li>Eurozone leaders agreed at the weekend on a comprehensive package designed to shore up banks, including making more than a 1,000bn euros ($1,366bn) available for interbank loans. </li></ul><ul><li>&quot;The whole of Europe, without exception, approves the measures adopted on Sunday in Paris,&quot; Mr Sarkozy said. </li></ul><ul><li>But he added that EU states had not yet reached </li></ul><ul><li>a definitive agreement on the text of the banking agreement. </li></ul><ul><li>Source </li></ul><ul><li>http://news.bbc.co.uk/1/hi/world/europe/7671285.stm </li></ul>
  56. 62. <ul><li>ARAB STATES: </li></ul><ul><li>Latest: Share prices have dropped precipitously this year, amid fears of weakness in Dubai's property boom and exposure to global markets. However, economists expect growth to continue at a moderate rate as the region's oil wealth cushions the worst of the financial turmoil. </li></ul><ul><li>In an effort to boost confidence in the financial system, the Saudi Arabian Monetary Agency (SAMA) cut its benchmark interest rate on 12 October for the first time in almost two years. The government of the United Arab Emirates meanwhile promised to protect national banks and guarantee deposits, and Qatar launched a $5.3bn plan to buy bank shares. </li></ul><ul><li>Arab shares see partial recovery </li></ul>
  57. 63. <ul><li>You will find that you are suddenly ahead of the curve, trading news before it even happens. </li></ul><ul><li>You must be able to see where the media is being manipulated, or just doesn’t know. </li></ul><ul><li>Use common sense. </li></ul>
  58. 64. $1 of $100 is 1%. Just one year ago, at the beginning of 2007, a $1 move would have been (roughly) 2%. Sensationalistic headlines regarding &quot;point&quot; or &quot;dollar moves&quot; must be take with a grain of salt. Associated Press: Oil Prices Rebound After Falling $1 Friday April 4, 1:46 am ET - http://biz.yahoo.com/ap/080404/oil_prices.html
  59. 65. Part II II.  Truth Behind Technicals    i.  The true paradigm of technical analysis    ii. Why many technical indicators don't work anymore.    iii.  The art of the pitchfork to utilize mean/median line trading.
  60. 66. <ul><li>Why Pitchforks and Trendlines. </li></ul><ul><li>How you can see a trend before it begins. </li></ul><ul><li>Fibonacci retracements and extensions. </li></ul><ul><li>Fibonacci Pitchforks to time entries and </li></ul><ul><li>exit in real trades. </li></ul><ul><li>CCI / RSI / Stochastics </li></ul><ul><li>Cut out the &quot;noise&quot; of typical technical analysis. </li></ul>
  61. 70. Pitchforks require: A rally, or trough, which helps identify the midpoint of the trend. A move, or trend prior to the rally, or trough, thus allowing us to find some semblance of the trend to be identified.
  62. 71. Traditional technical analysis requests that we connect two, or more lows (or highs) to draw the median line on a pitchfork; however, this is inaccurate and draws a misleading trend. Instead, we want to find the last low (or high in a falling trend) before the trough, or rally.
  63. 72. Correct pitchfork is drawn using the last significant low prior to the trough. Then, parallel lines are drawn above and below the median line, thus giving us the expected “trend” where we can identify buy and sell points, while also keeping an eye out for reversals.
  64. 73. <ul><li>Head and Shoulders top confirmed pitchfork movement down in EUR/USD. </li></ul>
  65. 77. <ul><li>All of the magical math in the world will never make Fibonacci retracements true 100% of the time. Period. </li></ul><ul><li>A little common sense goes a long way when using any type of mathematical, or technical indicator to trade from. </li></ul><ul><li>If the market is showing something different than the indicator, enough people believe in something different that the indicator is wrong. </li></ul><ul><li>Fibonacci retracements are only good so long as enough people are watching and acting on the same information that the collective whole makes the occurrence a self-fulfilling prophecy. </li></ul><ul><li>Even if you’ve opened a trade based on Fibonacci retracement expectations, be prepared to close the position, should common sense warrant such. </li></ul>
  66. 78. <ul><li>Before we even consider a Fibonacci retracements, we need to be able to spot when a move has occurred that would warrant using Fibonacci Retracements. </li></ul><ul><li>This can be as simple as looking at a chart, and visually seeing that a large move has transpired - and capitulated. </li></ul><ul><li>If when looking at a chart you’re expecting to see empirical proof that a move has stalled, you will never be able to do so. </li></ul><ul><li>You will see some signs, like MACD or Stochastics bottoming out, or a candlestick pattern like a hammer bottom, but you will never know for sure. </li></ul><ul><li>One way to have a slight bit of assurance though, is to look for candlestick confirmation. </li></ul><ul><li>What is candlestick confirmation? </li></ul>
  67. 79. Much of the time, the 36.8% Fibonacci Retracement does not hold as a reversal point... Often a currency can “pop” above (or below) a retracement, then fail. Stops should be put above (or below) retracement points.
  68. 81. Real Trading Example from April 16, 2008. Pitchforks gave entries. Retracements helped us hold for a HUGE winner.
  69. 82. <ul><li>How to evaluate how long the trend will continue for - looking at technical analysis and the larger economic story - to perfectly time a trend re-entry after a bounce. </li></ul>
  70. 83. Example from April 20, 2008. Pitchforks help line up short-re-entries. Pitchfork support, or resistance coupled with Fibonacci retracements are double the jet power!
  71. 84. Part III III.  Truth Behind Technicals    i.  The true paradigm of technical analysis    ii. Why many technical indicators don't work anymore.    iii.  The art of the pitchfork to utilize mean/median line trading.
  72. 85. <ul><li>The Law of Reversion </li></ul><ul><li>The mean trading range can be identified on any timeframe. </li></ul><ul><li>Both long and short-term traders will benefit from mean regression. </li></ul><ul><li>Regression and “reversal” are different. </li></ul><ul><li>How to identify exuberance. </li></ul><ul><li>How to profit from exuberance. </li></ul><ul><li>When to sit out. </li></ul>
  73. 86. <ul><li>Bounces almost always appear. </li></ul><ul><li>Reversal is a paradigm shift, while reversion is descriptive statistics. </li></ul><ul><li>Reversion is supported by psychology, Fibonacci and other technicals. </li></ul>
  74. 87. <ul><li>Reversals are difficult to trade, as it requires trading against the larger trend. </li></ul><ul><li>Reversals are found in larger economic events, while also breaking longer-term trendline support. </li></ul><ul><li>Andrew’s Pitchforks work well. </li></ul>
  75. 88. Locating the mean and median actually help us find the implied volatility range within the present trend. We can also find a breakdown (or breakout) point, where the mean changes.
  76. 90. Trendlines help identify reversals... While also helping to identify trend re-entry points when trading with momentum...
  77. 91. Using channel trendlines (a modification of pitchforks) and other tools like Fibonacci Retracements, we also increase our win probability dramatically.
  78. 92. We can use trendlines on intraday charts to identify median points, reversals and entry “zones.”
  79. 93. <ul><li>ANYONE can pick an entry, but only the BEST know how to EXIT. </li></ul><ul><li>If you don’t know how to land your trades, you WILL eventually lose. </li></ul><ul><li>You have to be able to know when to pull the chute. </li></ul><ul><li>You must also be able to tell the difference from needing to jump, or attempting to land the plane, even if both engines are already on fire. </li></ul><ul><li>Stops will help guide your way when your profit altimeter stops working. </li></ul>
  80. 94. <ul><li>NEVER open a trade without a stop in place. </li></ul><ul><li>Why Forex volatility is built to take out stops of traders who do not know how to place them correctly. </li></ul><ul><li>Where and why many banks and large investment firms place their stops. </li></ul><ul><li>Where they hope to take out yours and how you can beat them at their own game </li></ul>
  81. 95. Traders must know how to use stops!
  82. 96. <ul><li>Offensive versus defensive stops. </li></ul><ul><li>When you need to control the position. </li></ul><ul><li>Must be placed on the opposite side of support/resistance. </li></ul><ul><li>Work well then they are staggered with large positions. </li></ul><ul><li>When to use? </li></ul>
  83. 97. Pitchforks are great hard stop tools.
  84. 99. <ul><li>Use when you can’t be at computer, but you’re sure a move will occur. </li></ul><ul><li>Hurt traders who use them too loosely, or too tight. </li></ul><ul><li>Work well then they are staggered with large positions. </li></ul><ul><li>When to use? </li></ul>
  85. 100. <ul><li>Use when you can’t be at computer, but you’re sure a move will occur. </li></ul><ul><li>Hurt traders who use them too loosely, or too tight. </li></ul><ul><li>Work well then they are staggered with large positions. </li></ul><ul><li>When to use? </li></ul>
  86. 101. THANKS!

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