Hi,

I am new in the forex trading, could anybody answer me the following questions:

1- what is the Opening and the closing time for trading?
2- how many hours between EST & GMT?
3- server time appears on the forex platform, is it EST time or what?

Thanks

I noticed that the dollar fell when the swap lines were annouced and I wondered if the two were correlated. I doubt that speculative trading caused this. Any fundamental insight anyone?

Hi Bukhare,
Welcome to the DailyFX Forums!
1. The US session opens at 8:00 a.m. EST and closes at 4:00p.m. EST
2. There is a 5 hour time difference between EST & GMT, but due to daylight savings, the difference as of now is 4 hours, but after Nov 2nd, it will switch back to 5 hrs again.
3. The server time on the FXCM platform is in EST.

Hope this helps.

I assume the swap lines you mention refer to the Fed's multi-pronged injections on Friday. There is a correlation between exchange rates and this policy effort. Pumping dollars into the market obviously lowers the value of the greenback, which is basic economic theory.

There is also, the impact this effort has on interest rate expectations. After the Fed moved in, it was confirmation that they were concerned about the markets and there was in turn little chance they would actually hike rates with such concerns. Indeed we can see through Friday that rate expectations turned to multiple cuts over the coming three to six months from multiple hikes expected just a month ago.

In my own opinion, I also think that this additional step to stability helped to expose long-term fundamental expectations as well. With the financial stability of the global credit markets secured (the problem favored liquidity and therefore treasury debt), investors then looked at the economic outlook. We already know about the European, UK and Japanese economic slow down, but there seems to have been a blind eye cast towards the US growth. After the 2Q GDP figure accelerated to 3.3 percent, ppl thought the worst was over. Now, market participants are starting to understand, that is simply now true.

__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

24.9.2008

Dear Sir,

I work on the daily charts and I have a problem which I believe would be of interest to many traders:

1. How do I find a good entry point? My problem is that I tend to go in too quick, the market ultimately moves in my favor but it is the interim period that can cause a few heart attacks!! Especially when I realise that I could have waited and made a few more pips...Is there a system or a book that can help or does some good soul out there have a solution?

2. The second problem is how to calculate an adequate stop loss point? I have been stopped out many times and it is getting quite frustrating...too close stops will see me get stopped out often and too loose stops put me at risk of possible loss. Again, any method or book available or does someone have any suggestions/

Much obliged for a reply

Ragingbull60

Hello,

There are few books dedicated to actual strategy generation (and I haven't really read any of them because I question the success of the gurus that write them), but I can help you along your way with things that I have learned.

I take it from you saying you look at daily charts that your trades last anywhere from a couple days to a couple weeks and that your targets are around 100 points or more. If this isn't so, then you are probably trading on too high a time frame chart and not really getting the good picture for technical levels.

Now, onto the meat of your question. To start off with, I'm a cautious trader. I like to get the best entry possible, set my stops relatively wide and make sure I have a plan to book at least partial profits at certainly levels to better ensure I end up with a profitable trade (I have seen far too many ppl suffer from letting winning trades turn into losers).

For entry - this should be a component of your stop and target. When looking at a potential trade, you should determine what would be a reasonable stop (far enough beyond a technical resistance/support level so that you don't get whipped out) and a reasonable first target (I usually put my first target equal to the risk taken as that usually is well within the total range of what I'm looking at and it pretty much 'pays' for the trade). When you know where your stops and targets are placed, you should then decide what is a good entry point.

Say you are trading a range and you know the boundaries of the zone. An optimal entry point would be at one of the extremes, but that is unreasonable because the market may reverse before getting there. So, taking into account the usual volatility, you place a target near the level. If you have a hard time waiting for a good entry level, use limits instead of market orders as this will steady your hand (there will always be trades, so its best to miss a good one than to take a bad one).

A stop on the other hand is a case by case basis. If you see a big technical level, you can use that as a guide. Just place your stop with a good buffer beyond this level (but keeping risk reasonable).

For me, everything will revolve around risk/reward in a trade. You have to consider your entire trade before you ever enter and then start to place the levels that would make it work within your parameters for risk/reward - because you have to remember that if you are doing this for a living you have to find consistency in many trades, so you need to have this risk management in place to win over the long-term.

__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

If an agreement is released today.. what happens to the euro/dollar?

I have one question which maybe should be posted on some other room.
I have red nice book from Kathy Lien callled "Day trading the currency market" In this book she explain how is important to have currency pair checklist. In this checklist there are two column RSI(14) under "range" conditions.
Does someone know what she means about that that "two" same column.???
Does someone have this cheklist and a quick explanation of how to fill it right???
Thank a lot, any answer is wellcome.

Hi Tek,
If lawmakers are able to pass a bill in the near-future, it will give the Fed more room to hold the benchmark interest rate steady at 2.00% until the economy begins to pick up, which would support a bullish outlook for the greenback going forward. As of now, Fed fund futures are showing that there is a 100% chance that the Fed will cut rates at their next meeting on October 29th, but if a plan is passed before they meet, interest rate expectations could turnover, which would support a rally in the dollar. Hope this helps.

Hi

Just wanted to find out how often the tech levels in dailyfx+ get updated.

USD/JPY
More
SHORT
105.18
103.60
105.40

Should have been stopped out already. And aud nzd as well.

AUD/NZD
More
LONG
1.1934
1.2060
1.1870

Hello sir, just wanted to ask you a specific trading question regarding the EUR/USD. Today is 9/30/2008 and it is 4:45 p.m Eastern and I'm looking at the chart you posted in the Eur chat room. The trend line support seems to come in strong around 1.40-00 as evidence from the bounce we saw today at today's low of 1.40-08. With the euro dropping to new lows everyday and talk of a bailout to boost the U.S dollar...do you really think it's a good idea to buy near this level?

I don't give people direct trading cues because I don't know their trading style, risk/reward management, time frame and many other important factors.

However, in the short-term a bounce looks good. At the same time, I didn't get in because my limit order is close to 1.40 and hasn't triggered yet. I wouldn't hold a long position for long though. My targets would be reasonable percentage (25-40 percent) of the 9/11 to 9/22 range.

What's more, I'm more interested in watching for a major breakout for that trendline. While it's hard to speculate when such a trend change would occur (and you can lose a lot of money trying to get in too early and being consistently wrong), you can easily set up a good trade on the event of a breakout. I'm waiting for a higher time frame (240 or 480 minute) bar close below the trendline to start building a short. I'll add when a daily bar closes below the big 50% fib.

As for the fundamentals, the euro is falling quickly partially because of the financial crisis. It has exposed an oncoming economic recession and bank failures that are expected to quickly change the ECB's tune on interest rates. However, the US isn't in any better a position and it seems to just be getting flows for treasury buying and capitulation (the 'alright, I admit the other economies are in just as bad a position as the US; and I probably bid the other currencies too high everything considered' mentality).

__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Hello, I have been doing some digging to get a better handle on what is fundamentally has been going on lately, and this has given rise to a question upon which I hope that someone may be able to lend some insight.

I have been looking at the Federal Reserve Bank of New York website. In particular I have been looking at the federal funds chart, Federal Funds Chart. And on this chart I have been particularly interested in the effective rate, which in recent days has dropped quite a bit below the target rate. On Thursday of last week, the effective rate was .67%. The chart is a bit difficult to read, but it does appear that the only times in the last 8 years in which there has been such a downward deviation between the effective rate and the target rate have been 12/31/2007 and the week following 9/11. Both of these events preceded the Fed's lowering of the target rate.

My understanding of the effective rate is that it is a weighted average of lending between banks, which appears to be at the heart of the crisis. And it is logical that the recent pumping of US dollars into the markets would push the effective rate lower.

But does this information regarding the effective rate assist traders in understanding and predicting future movements in the forex market?

Hello Andaman,

Just like any other indicator, this is one that has precedence but isn't a direct prediction of the future.

There is an argument that the Fed has to react to what the market expects - as they say this group is the most efficient at processing data and information in forecasting the future. On the other hand, this would seem to contradict their supposed unwavering focus on inflation and employment levels.

Regardless, its the futures on the Fed Funds rate that we get our most objective interest rate expectations; so it stands to reason that this has been exploited in forecasting the Feds moves by others and therefore a pretty good indicator.

On the other hand, even these forecasts are volatile. Over the past few months, the outlook has changed from near certainty of multiple hikes to multiple cuts. Interest rate expectations are what drives a currency; so there will always be a speculative edge to it. What's more, it isn't just the Fed outlook that drives exchange rates in the majors. A pair is made up of two currencies, so the market has to weigh the outlook for not only US interest rates, but its counterpart as well (EUR, GBP, JPY, etc)

__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Hello

If right before the market closes I enter a long and a short trades both with 20 pips stop loss point. Say for example when the market opens on Sunday, it opens with a 100 pips drop. Will my long trade be terminated at -20 pips loss or it will take much greater loss than 20 pips?

Thank you

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