Balance of trade figures are another important facet of fundamental economic analysis. The trade balance compares exports versus imports for a given economy – sometimes the figures are broken into separate balances covering goods and services

Positive
A positive balance of trade = exports higher than imports. Exports good – money coming into an economy, a trade surplus.

Negative
The opposite of this is a trade deficit, or trade gap – more goods are being imported the exported. Imports bad – money going out an economy to pay for them.

Balance of trade has historically been a critical issue in the Japanese economy, which is heavily based on exports. The financial management of the economy is geared towards stimulating exports wherever possible – keeping the value of the Yen low, low interest rates etc. – so JPY tends to be more sensitive to good/bad balance of trade figures than other currencies – on average…

Japan is a good example of a mature economy and these always tend to run a trade surplus – other examples include Germany and Canada, (sometimes unfairly referred to as stagnant economies), running generally at a lower expectation of growth. But the strong growth economies eg. United States, Australia run regular trade deficits, simply to fuel this growth.

When it comes to pure economic theory – as usual, economists are divided. Some say that trade deficits have to be tackled as they will inevitably bring an economy down, others say it’s a necessary evil to stimulate some growth, and a few even reckon a trade deficit matters not at all…

The markets, however – and it’s always the markets we’re interested in when it comes to forex trading – will tend to go classic picture, trade surplus good, trade deficit bad.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

ETFs, exchange-traded funds, grew out of the older style, mutual funds or unit trusts.

Since ETFs trade on the market, investors can use the same trading tools as they can with a conventional stock, for example, limit orders, stop-loss orders, margin/leverage, selling short, and no restriction on lot size.

ETFs retain the valuation feature of a unit trust, which can be purchased/redeemed at the end of each day for its net value – but you’re not limited to trading at the close price. An ETF is continually priced through market trading hours and so intra-day trading becomes possible. (Not something that ever went on with unit trusts or mutual funds).
Continue reading »

Gold has always been a safe haven, when times get hard – as of now, the price has pushed ahead to US$950 an ounce. (That’s a troy ounce – precious metals still work in pennyweights etc., from when silver and gold were the currency…) The other precious metals have always tended to be coupled with gold – silver is up around 20% in the last 2 months, platinum and palladium around 15%.
Continue reading »

Let’s say you’re forex trading more than 1 lot, and it’s a winning trade – the pair price has hit your target for profit, previously calculated – and you exit 50% of your current position. Opinion can vary, 60, 70%, but the main thing is you are locking in profit – scaling, or scaling out, your profitable trades.

Time has passed – the market has moved to reflect new circumstances, what was true then, is now altered… so you change your position and go into a revised risk/reward situation.
Continue reading »

You don’t actually own the stuff you’re buying.
CFDs are a way of trading without buying or selling the underlying financial instrument, whether currency, stock, equity, directly. So, as such, liquidity doesn’t enter into it – in that sense, a purer speculation on price movement up or down.
Continue reading »

To clarify, further to our quick tutorial on installing mq4 files in MetaTrader – if you’ve downloaded an expert advisor or forex indicator or similar that is in the form of a ex4 file, it’s even easier.
All you have to do here is find the right folder and copy the file to it.

For example, it’s most likely your Metatrader is at C:\Program Files\MetaTrader, so all you need do here is drop it into

C:\Program Files\MetaTrader\experts

if it’s a downloaded expert advisor, or

C:\Program Files\MetaTrader\experts\indicators

if it’s an indicator and it should all show up next time you run MetaTrader.
Continue reading »

It’s easy to include add-ons into MetaTrader – indicators, expert advisors (EAs), and other scripts, customising it to your particular requirements - this makes the software very flexible and is probably the main reason it currently leads the field. But what, why, and how?
Continue reading »

Forex trading the news? – I know this may seem fairly obvious to most, but news events aren’t what they’re talking about on the television financial news networks right now. That’s journalism, reportage, call it what ever you like. As useful information for placing trades in the retail forex market, it’s dead.
Continue reading »

Bollinger bands are a great way of understanding market movements if you’re new to the forex game. Everybody uses them, and overall, the concept is relatively easy to understand. And your charting software will do all the work for you – so at first, no need to go into all the math involved.

And here’s a nice enough example. GPB/USD 30-min chart – the currency pair becoming range-bound, candlesticks shortening and then breakout – here, to the downside.

Continue reading »

Ok, here’s what I do for a strategy, or even a system, a general outline without going into huge detail – but don’t blindly copy any of this, just for the sake of it. It’s what I feel works for me, it’s been formed from my experiences, opinions, prejudices etc. You, on the other hand, may – hopefully will – have a completely different outlook and personality which is going to suit a different style of trading – there’s room for everyone.
Continue reading »