Forex trading balance harmful

Conditions where trade deficits may be considered harmful

Those who ignore the effects of long run trade deficits may be confusing David Ricardo's principle of comparative advantage with Adam Smith's principle of absolute advantage, specifically ignoring the latter. The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production are internationally mobile.[5][6] Global labor arbitrage, a phenomenon described by economist Stephen S. Roach, where one country exploits the cheap labor of another, would be a case of absolute advantage that is not mutually beneficial.[7][8][9]
Deteriorating U.S. net international investment position (NIIP) has caused concern among economists over the effects of outsourcing and high U.S. trade deficits over the long-run.[3]

Since the stagflation of the 1970s, the U.S. economy has been characterized by slower GDP growth. In 1985, the U.S. began its growing trade deficit with China. Over the long run, nations with trade surpluses tend also to have a savings surplus. The U.S. has been plagued by persistently lower savings rates than its trading partners which tend to have trade surpluses. Germany, France, Japan, and Canada have maintained higher savings rates than the U.S. over the long run.[10] Some economists believe that GDP and employment can be dragged down by an over-large deficit over the long run.[11][12] The opportunity cost of a forgone tax base may outweigh perceived gains, especially where artificial currency pegs and manipulations are present to distort trade.[13] Wealth-producing primary sector jobs in the U.S. such as those in manufacturing and computer software have often been replaced by much lower paying wealth-consuming jobs such those in retail and government in the service sector when the economy recovered from recessions.[6][14][15] Some economists contend that the U.S. is borrowing to fund consumption of imports while accumulating unsustainable amounts of debt.[3][16]

In 2006, the primary economic concerns centered around: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP),[3] high trade deficits, and a rise in illegal immigration.[16][17]

These issues have raised concerns among economists and unfunded liabilities were mentioned as a serious problem facing the United States in the President's 2006 State of the Union address.[17][18] On June 26 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.

Forex trading balance

The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.[1] A favourable balance of trade is known as a trade surplus and consists of exporting more than is imported; an unfavourable balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance.

Early understanding of the functioning of balance of trade informed the economic policies of Early Modern Europe that are grouped under the heading mercantilism. An early statement appeared in Discourse of the Common Weal of this Realm of England, 1549: "We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.

Forex trading news

News or data are always read by the market along the prevailing market bias. Data can provide a good reading for the state of the market. If the data is bad but the price is still rising or not affected, it must be a bull market which means buy on dip strategy is a better one. Conversely, if the data is good but the price is not rising or even falling, it must be a bear market which means sell on bounce strategy is a better one. The inflexion point must be when bad news or good news. no longer affect the prices as they have done before. Medium/long-term bias changes are usually accompanied by such reactions to the news. Fwiw.

It is not the numbers that counts but how the market reacts to the numbers that counts. That gives some comfort to those who are not privy to the numbers already

Forex trading USD/JPY HINTS

One of the silly rules of thumb in USD/JPY trading is it rarely moves 700-800 pips in a row without 200 pips or more correction in the middle and it almost always retraces back to 350 pips advance point from the start of its 700-800 pips move. All because of liquidity problem in Yen market.

The real battle of bulls and bears for medium-term trend is always around 20 day MA line in Yen market. Daily option activities here and there are of no relevance as far as medium-term trend is concerned.

Yen position traders sit on their positions gunning for several hundred pips at one go. For day trades, much more nimble approach is required. As Yen position trader, please never buy anything below falling daily 20 MA and never sell anything above rising daily 20 MA, no matter how attractive they look. So start buying only when daily 20 MA starts rising, from whatever level, is not only safe but also proven way of making money although it sounds so simple. Imho. Good trades.

You can read how Yen traders make intraday moves by watching 30 min USD/JPY candlestick chart or line chart if you are not familiar with candle nuance. 4, 8 hourlies are for positional moves. Good trades.

The Tokyo Fix is where the FX rate is established for the day by the banks for their customers. So even though the FX rate may change during the day the customer gets the rate at the time of the fix. There is a fix in Tokyo, London and Toronto (more I am sure). Importers generally settle their accounts on the 5th, 10th, 15th, etc, of the month before and up until the fix ():50 GMT). Sometimes, if there is an "excess" dollar demand $/JPY will continue to climb slightly after the fix. $Bulls will also use this as a staging for extending a rally. $Bears (Yen Bulls) will use this to establish better shorts.

USING CROSSES AND GOLD in forex trading

EUR/GBP and GBP/JPY have a value as the leading indicators of EUR/USD and USD/JPY moves. EUR/CHF is similar to EUR/GBP in forecasting value but stopped trading and looking at it a long ago after experiencing difficulties in running good sized positions there.

In short, EUR/GBP and GBP/CHF are leading indicators for EUR/USD and USD/CHF, and GBP/JPY, EUR/JPY and CHF/JPY are leading indicators for USD/JPY. EUR/JPY plays a very important role in EUR/JPY direction too, while GBP/JPY plays the same role for GBP/USD. For example, yesterday�s EUR/USD weakness largely started from EUR/JPY sales keeping EUR/USD and USD/JPY downwards. As a rule of thumb, if EUR/USD does not move but EUR/GBP moves first, it is a good indicator that someone is maneuvering in EUR/USD front in the same direction later, and when EUR/USD moves but EUR/GBP does not move first or in tandem, then it is highly likely EUR/USD move is countered by its opponent and the opposite move is highly likely soon. Same applies in USD/JPY and EUR/JPY, GBP/JPY front in the same fashion. Imho. Good trades.

Good morning. EUR/USD, EUR/GBP, EUR/JPY and GBP/CHF all have correlation to a certain degree affecting each other. It simply shows how the money moves around in these pairs. For daily candle studies, it is more accurate to read them all to see where the flow is going, and same for 4 hourly or hourly or even 10 minute charts. In fact, GBP/CHF and EUR/GBP in many cases move a day or two before EUR/USD. Even by watching GBP/CHF and EUR/GBP charts, short term or long-term as above, you can manage to move in front of EUR/USD moves in many cases. Same goes for GBP/JPY and EUR/JPY charts for USD/JPY moves. More study on these pairs moves will reveal some more interesting things too. Good trades.

I have been using USD index and Eur/Gbp (or Gbp/Chf) as my guide dogs since late 70�s with reasonable accuracy for medium-term trend. Never lost money on medium-term bet relying on those guide dogs in fact. But that cross does not work when Pound is deliberately devalued.

AUD/JPY is one of the important pairs influencing AUD after Dollar, Euro and Pound. Usually falling AUD/JPY is good for Yen Bulls as well.

Good evening. Gold is the mirror of Dollar for hedging purposes and the co-relation is excellent. Sometimes, when I am tired of double checking too many "inside infos" rushing in every hour, I just watch Gold to confirm and go ahead with the moves. Gold chart is one of the top charts you must always watch in forex trading. Eur/Gbp chart, along with the Eur/Jpy chart, is an excellent mirror for Eur/Usd directions most of the time too. Gold, Eur/Gbp and Eur/Jpy charts will tell most of the market story most of the time with Gold and Eur/Gbp leading Forex world most of the time. Good luck.

TECHNICALS and CHARTING in forex trading

Why day trade once you get a good seat and the market is going your way. It is always more profitable to ride even the short wave for 2-10 days by adding up. In general, you must day trade only when you are losing. To find a buy entry seat for short-term trades, you can study the "accumulation and distribution patterns and 20 MA" in 8, 4 hourlies or 30 min "Line Charts" (or Candle Charts), together with MACD "overbought and oversold indicators" with its Patterns. If you study them for awhile you will understand when it the best entry point. The remainder is for money management and discipline and of course, experience. Good trades�

On technical side of the trading, the first thing to do is to find out the trend in one�s trading time frame and the proper trading strategy for that trend. Some ride positions for months, while some ride positions for less than an hour or a day and their views of the trend obviously differ. For a trader who is running a position for months, a daily fluctuation may be just a meaningless noise while for a daytrader or an hour trader, a daily fluctuation could be a monstrous tsunami. Having a precise definition and a technique of identifying a trend and the turn of a trend in a trader�s time frame, and adopting the right strategies for that trend is the first elementary step in a hard school of trading. Imho.

I keep my technical side on any pair as simple as possible largely relying on other�s moves to see how I can take advantage of the situation. So for me the strategy is to "range trade". Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts. Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend. Good trades.

Each cycle is different from the last one and that is the beauty of the market. It is extremely important to look at the big picture from the distance rather than studying the minute and hourly charts with a microscope. And repeat the whole show again and again �til it shows the sign of turning in daily or weekly chart. And flip. Good trades to you.

I use very primitive charting methods. Please read 8 hour charts of EUR/GBP with 20 and 40 MA, and read round figures and breakout (from consolidations, then you will realize the method cannot be more primitive than that, but still deadly effective). Buy on dips towards the support and add up on breakout of that consolidation treating the two as one trade with same stop loss and "keep them" as long as the market moves in your way. Good trades.

As a rule of thumb, 20 MAs in 8 hour, day, week and month are useful for its directional tendency and as a resistance and support point. Not sure how much it is useful in daytrading though.

Please have a look at Eur/Usd and Usd/Jpy weekly 10 RSI and Aud/Usd monthly 10 RSI "patterns", not levels. Then you will find out primitive things work better when coupled with even simpler MAs. And RSI is useful "only in these weekly and monthly time scale" as far as I can see. You can ignore RSI in short-term scales as the inventor of RSI, Wilder, told us long ago.

Good afternoon. Agree with your observation. Once Soros of Quantum Fund hit the nail on the head with his theory of reflexivity in the market and that is exactly how these players work in the market. That rather romantic tool of daily candlestick chart is useful because whenever some players start positioning to start or stop short-term moves in Yen market, say several hundred pips, for whatever reasons, it reveals their intention to the market, more often than not. It sounds so weird to say tens of yards are spent relying on indicators so primitive like hand-drawn candlestick charts, but that is the truth in Yen market. Same as millions of soldiers risking their lives depending on how their generals draw up the battle plan with their cheap red and blue pencils in their operation room desk. Crazy world, I would say, but that is the fact. And as you say, battle is a battle and those ones who make their first move with their candlestick may not always win either. I happen to believe if a child can learn to trade with some simple signals he will do better than most traders, most of the time, making a good living. But then again, movin market is more than just following the signals. Good trades to you.

I guess if you are a daytrader, 30 minute and 15 minute candle charts and line charts in combination with MACD and MA could be more useful than hourly charts or even daily charts. Especially watch out for the down-sign and up-sign with long tails in candle charts and confirmation of the change of short-term trend in line charts breaking accumulation area in these charts. If you are a nimble trader, even a candle-sign is enough to start moving in with stops above or below the long tail end. For dollar/yen trade, read swiss/yen, pound/yen and euro/yen together to confirm the top or bottom. For Eurodollar or dollar/swiss trade, read pound/swiss and euro/pound together to confirm the same. If you are a daytrader, what matters is the flow of that particular day, not the bull or bear bias, so, 30 Min and 15 Min Candle Charts and Line charts are not bad tools to follow these flows. Good trades.Why day trade once you get a good seat and the market is going your way. It is always more profitable to ride even the short wave for 2-10 days by adding up. In general, you must day trade only when you are losing. To find a buy entry seat for short-term trades, you can study the "accumulation and distribution patterns and 20 MA" in 8, 4 hourlies or 30 min "Line Charts" (or Candle Charts), together with MACD "overbought and oversold indicators" with its Patterns. If you study them for awhile you will understand when it the best entry point. The remainder is for money management and discipline and of course, experience. Good trades�

On technical side of the trading, the first thing to do is to find out the trend in one�s trading time frame and the proper trading strategy for that trend. Some ride positions for months, while some ride positions for less than an hour or a day and their views of the trend obviously differ. For a trader who is running a position for months, a daily fluctuation may be just a meaningless noise while for a daytrader or an hour trader, a daily fluctuation could be a monstrous tsunami. Having a precise definition and a technique of identifying a trend and the turn of a trend in a trader�s time frame, and adopting the right strategies for that trend is the first elementary step in a hard school of trading. Imho.

I keep my technical side on any pair as simple as possible largely relying on other�s moves to see how I can take advantage of the situation. So for me the strategy is to "range trade". Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts. Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend. Good trades.

Each cycle is different from the last one and that is the beauty of the market. It is extremely important to look at the big picture from the distance rather than studying the minute and hourly charts with a microscope. And repeat the whole show again and again �til it shows the sign of turning in daily or weekly chart. And flip. Good trades to you.

I use very primitive charting methods. Please read 8 hour charts of EUR/GBP with 20 and 40 MA, and read round figures and breakout (from consolidations, then you will realize the method cannot be more primitive than that, but still deadly effective). Buy on dips towards the support and add up on breakout of that consolidation treating the two as one trade with same stop loss and "keep them" as long as the market moves in your way. Good trades.

As a rule of thumb, 20 MAs in 8 hour, day, week and month are useful for its directional tendency and as a resistance and support point. Not sure how much it is useful in daytrading though.

Please have a look at Eur/Usd and Usd/Jpy weekly 10 RSI and Aud/Usd monthly 10 RSI "patterns", not levels. Then you will find out primitive things work better when coupled with even simpler MAs. And RSI is useful "only in these weekly and monthly time scale" as far as I can see. You can ignore RSI in short-term scales as the inventor of RSI, Wilder, told us long ago.

Good afternoon. Agree with your observation. Once Soros of Quantum Fund hit the nail on the head with his theory of reflexivity in the market and that is exactly how these players work in the market. That rather romantic tool of daily candlestick chart is useful because whenever some players start positioning to start or stop short-term moves in Yen market, say several hundred pips, for whatever reasons, it reveals their intention to the market, more often than not. It sounds so weird to say tens of yards are spent relying on indicators so primitive like hand-drawn candlestick charts, but that is the truth in Yen market. Same as millions of soldiers risking their lives depending on how their generals draw up the battle plan with their cheap red and blue pencils in their operation room desk. Crazy world, I would say, but that is the fact. And as you say, battle is a battle and those ones who make their first move with their candlestick may not always win either. I happen to believe if a child can learn to trade with some simple signals he will do better than most traders, most of the time, making a good living. But then again, movin market is more than just following the signals. Good trades to you.

I guess if you are a daytrader, 30 minute and 15 minute candle charts and line charts in combination with MACD and MA could be more useful than hourly charts or even daily charts. Especially watch out for the down-sign and up-sign with long tails in candle charts and confirmation of the change of short-term trend in line charts breaking accumulation area in these charts. If you are a nimble trader, even a candle-sign is enough to start moving in with stops above or below the long tail end. For dollar/yen trade, read swiss/yen, pound/yen and euro/yen together to confirm the top or bottom. For Eurodollar or dollar/swiss trade, read pound/swiss and euro/pound together to confirm the same. If you are a daytrader, what matters is the flow of that particular day, not the bull or bear bias, so, 30 Min and 15 Min Candle Charts and Line charts are not bad tools to follow these flows. Good trades.

Forex Analysis - Stage 6

STAGE VI – HOW

How to trade is the most important factor that needs to be understood by once a perception of the external factors of trading has been made. The real job for a trader is to know his own mind. Working according to the external elements is a comparatively easy job, as they generally are quiet objective, accurate, reliable, and structured.
But same cannot be said about the trader's mind, which is firm at one minute, and soft in the other.

While trading and being a part of the ongoing fluctuations in the market, an investor undergoes an enormous range of thoughts and emotions. While some might turn out to be good like feeling lucky, or victorious, the others might turn out to be bad like fear of failure or anxiety. But going through all this turmoil, it is highly exceptional to come across a trader who constantly sticks by his initial trading plan.

When it comes to trading Forex, or any business for that matter, sentiments or emotions are the biggest hitch. This is because all these emotions tend to make a trader go weak when it comes to maintaining discipline and balance and adhering to the predefined trading plan.
What needs to be understood here is that discipline, control or restraint is far more important while trading Forex than the real currency traders are here to trade. This is because any kind of capital can only be sustained by anyone with correct management techniques and discipline.

A trader in this Forex trading business has a lot of value to the market. When a trader trades equipped with a thoroughly studied trading background and past trends and comprehensible goal study, he has the ability to build on a superb trading system.
This said, no guarantee can be taken of any trading system or approach, as it can rise to success in 1 second and go down into losses in the other.

And what’s more, the basic reason for this downfall is that a trader while going by his predefined trading plan must have at some point tried to mix it with his gut feelings or emotions. One thing should always be made clear that emotions have absolutely no place in trading.
These emotions generally come into play when a trader either encounters a large loss or a huge win. Emotions in such cases then tend to cause a trader to act in a different way, making him act illogically and foolishly at times just to go ahead and mess up his planned strategy and play the large moves by his gut feelings. Emotion causes the trader to apply his trading system in patches, with emotions taking over now and then.

Using simple trading strategies can get you to make big wins in the market, provided you stick to them through out. Professional or experienced traders always trade using conventional, carefully planned money management strategies which would enable them to trade with complete stability.

When it comes to large financial firms and institutions, complete stability is never an issue with them, as they have not one, but many human resources and assets at their side.

But when we talk about an individual investor, we can easily divide them into three different groups.
The ones who trade with inconsistency,

The investors who trade with manual constancy

And the traders who trade with programmed reliability.

While a new trader would always hop from one trading strategy to another, an experienced trader will work smoothly with constant restraint and discipline making it the basis of his trading actions which will help him increase his level of refinement.