Monday, 07 December 2009 17:27
administrator
by: patjackson11
If you do an Internet search for companies that trade in currency, you may be surprised to find that there are dozens, if not hundreds, of web sites dedicated to promoting the purchase of the Iraqi currency. Many of them tout it as a get rich quick scheme. Others say that it is a patriotic way to support the new democracy of the Iraqi people and their government. Still others base their marketing on the notion that buying the Iraqi currency (the dinar) is like buying a penny stock – it is so cheap that you can afford to buy huge quantities, so that even a slight increase in value will guarantee huge yields on your original investment. But buyers beware, because there is no proof that the dinar will make a comeback anytime soon.
Here are a few things for would-be investors to consider before venturing into ownership of the dinar. First of all, there is still no official and organized market for trading the Iraqi currency. This means that even if you want to buy and sell the dinar as a currency trader, there is no way to ensure that you will be able to find a market for it. Without buyers and sellers coming together in an organized fashion, the currency lacks liquidity – if you need to sell your dinars to convert them to dollars, you may have to wait days, weeks, or months to find a buyer to take them off your hands. And without such liquidity, those who broker the notes will be taking big commissions, to make it worth their while. All of these things will factor into your ability to make a profit from trading the currency.
Many who advertise sales of the dinar will not buy the same currency. That should make you somewhat skeptical, because if it is such a good deal, traders would not only sell dinars, but also be interested in purchasing them. And they claim that even a fraction of an upward movement in the currency can make you a millionaire. That may be true, but it is no insurance that the currency will go up. And meanwhile, currencies of other, more economically stable countries in the world – like Turkey, for instance – are cheaper to buy that the dinar, so why not invest in those currencies instead? The fact is that Iraq’s economic outlook is bleak, and the possibility of making huge profits by buying and selling the dinar remain slim – at least for now.
Of course if you want to show your support for the country – and buy a souvenir for your grandchildren in the process – there is nothing at all wrong with buying dinar notes, as many of them as you want. They are very inexpensive – you can buy them for pennies – and they have some historical value as keepsakes from an interesting time in the long story of Iraq’s civilization. But to buy them strictly upon their upside price potential is another thing altogether, and the inherent risk of such a purchase makes it more of a gamble than an investment.
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Monday, 07 December 2009 17:20
administrator
By: Chris Strudwick
Bollinger bands will help you to predict big trending moves, act on big trend reversals and finally, time trading positions with greater accuracy for bigger profits.
Here we have related Bollinger bands to the currency markets (as it is here that they are most useful) - but they are useful in all financial markets.
What are Bollinger Bands?
Developed by John Bollinger, Bollinger bands are volatility bands drawn around a simple moving average.
You calculate Bollinger bands using the standard deviation of price over the same period as moving averages and plotted as lines above and below the moving average.
As moving averages have been traditionally used to identify the underlying trend, Bollinger bands combine this with the volatility of the individual market (or the standard deviation) – to plot a trading envelope.
The distance between upper and lower Bollinger bands reflects the volatility of the market traded.
As prices force themselves away from the longer-term average, the standard deviation rises - and thus the bands will fluctuate in varying amounts, away from the average.
Why Bollinger Bands Work
In any market, the value of currency traded tends to rise slowly over the longer term.
Prices may spike short term, but will normally dip back to the longer term moving average (the centre band) - which represents realistic value.
The volatility of the outer bands therefore gives us an indication of how volatile prices are - and how far away price is from longer-term value.
Most price spikes are caused as much by trader psychology, as the supply and demand backdrop - and this scenario is reflected in the concept of Bollinger bands.
Why are Bollinger Bands so useful?
Bollinger bands perform three major functions for traders:
1. Spotting a Breakout and New Trend
Markets move between low volatility trading ranges, to high volatility trending moves.
When a market makes trades in a narrow range, the Bollinger bands will narrow together and this shows a market with extremely low volatility - however this is a warning that a high volatility trending move is likely to follow.
When prices break above or below the upper or lower band, it is an indication that a breakout and trend is about to develop - traders will then take a position in the direction of the breakout, and try to ride the trend.
2. Timing Entry Levels in a Trend
We all know long term currency trends last for months or years - but we need to get in at the best risk / reward level.
Bollinger bands will help get you in to the trend and time your entry.
All you do is watch for dips toward the centre band - and enter in the direction of the trend - it really is that simple!
To time your entries with greater accuracy, and filter out “false” breaks we recommend using a momentum indicator - such as stochastics, to confirm the move.
3. Spotting Market Reversals
When the price touches the top of the band, a sell is generated, and prices should revert back to mean, or the middle moving average band.
If the price touches the bottom of the band, traders can buy a currency, assuming that it is oversold, and will rally back towards the top of the band.
The spacing, or width of the band, is dependent on the volatility of the market, but gives traders a clear indication of where prices will go, and when to enter.
A Word of Caution!
Bollinger bands are a useful tool - but need combining with other indicators, as with any single indicator, they should not be used in isolation.
We personally feel Bollinger bands should be used with basic charting, to get the big picture - and the best timing indicator is the stochastic as stated, to filter out “false” signals
Monday, 07 December 2009 17:12
administrator
If you want to make big profits from currency trading, you need to lock into and follow the longer-term trends.
“The art of contrary” thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.
What is the Art of Contrary Thinking?
Humphrey Neill’s book, "the art of contrary thinking,” the best known work on the subject, is based on a simple powerful idea that:
"When everybody thinks alike, everybody is likely to be wrong"
“The art of contrary” thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior”.
Why Contrary Trading Works
By spotting situations when the consensus of a currency is either extremely bullish or bearish, means that a trend change is imminent, as it is likely the emotions of greed and fear have pushed prices too far away from true value.
If you can step aside from the crowd and take a contrary view at these turning points, you can make big currency trading profits. Contrary thinking can be used in any market and is highly effective in currencies.
Contrary thinking can be used to make really big currency trading profits and if used selectively, when markets are extremely over bought or oversold, you can be in right at the start of the trend for maximum profitability.
In any currency you look at - The Yen, Euro, British Pound Swiss Franc Canadian or Australian dollar and many others, there are always occasions where a currency trend in the news is forecast to continue, due to overwhelming evidence in its favor and it then promptly collapses!
Big profits from currency trading can therefore be made by using the art of contrary thinking when the market is extremely bullish or bearish.
Why? Because everyone who has bought has taken positions and there are no buyers left. Prices have moved away from fair value. When there is no more buying to enter the market, a trend change is imminent.
It is clear that to succeed and make big profits in currency trading you need to think independently of the majority at important market turning points.
You can make big profits in currency trading from trend following, but you can with a little practice spot potential turning points in currencies as well which will help you bank profits, tighten stops or open new trades right on the turn, for maximum profitability.
Contrary trading will not only make you big profits in currency trading but in ANY market and has worked for centuries, as human nature never changes.
This article is free for republishing
Source: http://freenice.org
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