EurAnalysis Kindergarten

This thread is an extension of the EurAnalysis thread in the Interactive Trading Forum. I have created it specifically as a repository for educational information and trading methods so that the EurAnalysis thread can focus more on technical/fundamental analysis rather than having the contributing posters there answer the same questions over and over again.

So, for any trader who has something educational to contribute, just place it here so that you can refer to it via a link rather than having to re-type it in the main thread.

Once you have posted something of interest or importance, make note of the link for the specific post and bookmark it in your browser so that you can refer to it in the future should anyone ask you to explain it again.

Similar rules apply here as they do in the EurAnalysis thread, and I have posted them below. Please read them before posting anything.

Peace,
PT

RULES

1. Vulgarity, personal attacks, mocking, condescending remarks, lecturing, name calling or bullying of any kind for any reason will not be tolerated here. Generally the only acceptable posts are the ones that offer value to other posters and I will determine whether any such posts meet that criteria at my sole discretion. Obviously healthy, respectful and clean debate is always welcome and encouraged.

2. This thread is not a signal service or a trading school. Information and opinions are given freely by the participants for many varying reasons. If you notice that other posters are trading in a way that does not match your own trading style, or you do not agree with the information they post, it is not your place to criticize or try to "re-educate" them unless they have specifically asked you to do so. Everybody has a different style. It is fine to make suggestions to the general audience, but it is not appropriate to single out any one trading method or poster in a condescending manner. There are almost just as many personalities and language barriers in this thread as there are trading methods. As such you never know how your communication may be interpreted. Therefore, when posting anything about trading methods, only state how you do it and not how you believe others should.

3. This thread is not private. Anything you post here is visible by all internet users whether or not they are Forex Factory members. Furthermore, anything you post here will be indexed by search engines such as Google, Yahoo and Bing etc. If you know the personal identity of another poster in this thread, you must not reveal it in a public post. Doing so is against the rules of this thread as well as very disrespectful towards the poster. It may also put the poster at risk of identity theft. If you have a problem with any poster which results in a conflict, you will bring it to my attention immediately without exception. Failure to abide by this rule is cause for immediate temporary suspension from Forex Factory pending a review by the site administrator. A repeat offence will get you permanently banned.

4. According to the Forex Factory rules, any solicitation to/from posters, whether done via a post on the thread or via private message is prohibited. As such, all posts must not have any links to any commercial websites in which you may have some interests. This includes sites that pay you any commission for referrals. You also agree to abide by all the other rules and regulations of Forex Factory. It you are aware of any poster who is conducting any commercial activity, please contact me via private message and I will personally look into the matter.

Any poster who violates any of the above rules, or ignores any instructions given by the thread starter & moderator (that's me), may be immediately blocked without notice. If I have found reason to issue a fair warning to you, it means you have already gone too far, so it is time for you to listen up and take notice. In extreme cases, I may even recommend to the FF administrators that your account be suspended or permanently banned... Yes, I have that power and I will use it at my discretion

========================================================================================

FF EMAIL SETTINGS:

Here are some instructions regarding emails you receive from this thread.

Once you post to this thread, depending on your current profile settings regarding email notification, you may start receiving an email for every post that is made on here after yours.
In order to change those option, you have to perform the following steps.

1. Go to your profile and click on the subscriptions link in the left hand column. That will give you a list of all the threads and news items you have posted in.

2. Put a check mark in the far right column of the ones you want to change.

3. At the bottom of the list you will find a pull-down menu. There you will find the subscription action options. Just select the option you want.

4. Click GO

You're done.


========================================================================================

RESOURCES:

This section lists a variety of resources for new and seasoned traders alike. I will organize it and build on it as I see fit but welcome suggestions any time.

EDUCATIONAL:
1. Baby Pips School
2. Raghee Horner's 'Best of the daily trading edge" e-book
3. Chart School from stockcharts.com
4. Explains by cnbc.com
5. John Murphy's Ten Laws of Technical Trading
6. Forex trading systems collection revealed!
7. Martin J. Pring’s 19 Trading Rules to Beat the Markets
8. Trading the Forex with Bonds - Part 1 - Part 2 - Part 3 - Part 4

MARKET CHARTS:
1. Futures from Finviz.com
2. Major Currency Pairs from finviz.com

MARKET NEWS:
1. Yahoo Finance Currency News
2. RTT News Earnings Calendar
3. Forex Factory Events Calendar

FF THREADS OF INTEREST:
1. Twelve widely believed forex myths
2. Trading with Deadly Accuracy

OTHER LINKS:
1. World Clocks
2. The Federal Reserve Bank of New York foreign exchange swap agreement web page
3. The latest 10 Year Government bond yields
4. The Swede's primer on options.

RISK ON / RISK OFF:
1. Overview of Risk On/Off
2. Following Example
3. Risk On, Risk Off and the Gold Trade
4. Risk On/Off and Global Currency Flows
5. Overview of Carry Trade
6. Baby Pip's Carry Trade Criteria and Risk
7. The Carry Trade: Get With It Or Get Run Over By It
8. Extra; Bonds and Quantitative Easing For Dummies

PRECIOUS METALS:
1. USA Gold

========================================================================================

SEARCH FOR KEYWORDS:

If you would like to search this thread for a particular post you previously saw that is of interest to you, you don't need to go through all the pages looking for it. The folks at Forex Factory have provided us with a good keyword search tool which you will find just above the first post on every page as a small box called "Search This Thread". Just type in your keyword and search. Try it, it's easy.

Good idea

Why are FX Options magnetic to price

Options in the FX markets are like put or call orders which grant the trader the "option" to sell or buy a specific currency pair at a set price.

One could place a call option on the EUR/USD currency pair at 1.2400.

That option price is known as the strike price.

This give the option holder the right, but not the obligation, to buy the EUR/USD at 1.2400, which becomes attractive should the value of the currency move higher than 1.2400.

The majority of FX Options expire at 1400 GMT (10 am NY time).

Over time, it became apparent that price is magnetically attracted to these FX Option strike prices as the expiry date and time draws near.

Whilst major economic and political news tends to have more of an effect on price than anything else, the effect of FX Option expiries cannot and must not be discounted

The main reason why options have this magnetic attraction is hedging. Whether it is a put or a call option, each trader is looking to benefit on either side of the strike price.

If we use the 1.2400 EUR/USD call option mentioned in the example, as long as the market price stays at 1.2401 or higher, institutions and/or traders backing the call option gain exposure to risk, whereas traders supporting the USD do not.

This results in a battle for position as an FX Option reaches its expiry date and time, which has a magnetic pull on the currency pair value towards the option’s strike price of 1.2400

Excellent Master ...As always I am with you

Introducing the Split-Entry-Calculator.

This post is a continuation of CurremcyMan's post in the EurAnalysis thread;

http://www.forexfactory.com/showthre...00#post5963600

Please read this post carefully first.

I made the Split-Entry-Calculator long time ago when I started to practice entry zones as an alternative to a single fixed entry.

The idea is to widen the entry zone with multiple low leverage entries. If you know where PA turns then this is not for you. Just continue with your single entry trading.

If on the other hand can't say exactly where the perfect entry is then you could apply a scale-in method.

I'm not going into details on how to trade multiple entries with profitability on a sustainable basis but will hint you in the right direction by pointing toward deviation as used by Bollinger and others.

If price deviate from it's mean with a certain number you are getting a higher and higher probability that PA is not going any further but will reverse toward it's mean. It's no guarantee only probability.

Depending on the time frame you trade you could place an entry zone from let's say 3x deviation to 4x deviation. First you have to wait for PA to get into this area and then next use the calculator to place the number of entries you want to use.

Well take a look and please ask if any questions. I will try to answer the best I can.

This is an Excel spreadsheet made for Excel 2007 and requires DDE Server link to MT4. Google if you don't know how to do the setup.

Why this place is so quiet nobody is sharing

Ken, This thread is only a repository. Discussion only happens in main thread.

The Risk-On / Risk-Off Phenomenon

What it is:

Over the years, the currency market correlations have been dominated by the phenomenon called the Risk-On/Risk-Off paradigm.

Risk-On simply means that the market has an appetite to take risks and therefore invests in or trades high yielding/high risk financial instruments.

Risk-Off is pretty much the opposite of Risk-On whereby the market becomes risk averse and sells the high yielding/high risk financial instruments and parks the money in low risk instruments also known as safe havens.

Traditionally, the safe havens are considered to be the sovereign bond markets of Japan, the United States and Switzerland. In fact over the last 5 years since the US financial crisis of 2007, this has played out very well.

The high yielding investments are know as the risk assets. These include pretty much everything that produces a higher yield than the safe havens; namely equities and commodities in the global markets, especially (but not limited to) those of very high yielding emerging markets such as the BRIC nations (Brazil, Russia, India, China).

Effect on currency markets:

While the market is in a Risk-On state, capital flows out of the safe haven financial instruments into the high yielding assets which are showing the most promise for yield based on the trader's/investor's preference. As a result, the currency in which the risk asset is priced increases in value as the traders/investors have to exchange their funds from the safe haven currency into the currency that the risk asset is priced in.

For example, let us assume that you are holding $100,000 in US Government Bonds and you want to buy some European equities priced in Euros. In order to do that, you first have to sell your US Government Bonds for US Dollar cash. Then you have to convert your US Dollars to Euros in order to buy the shares. The effect on the EUR/USD currency pair for your transaction would be positive. Of course your transaction is not even a drop in the water, but when combined with everyone else's risk appetite leading to them selling their US Government bonds and exchanging their US Dollars into foreign currencies to purchase other or like risk assets, the currency pair moves.

Obviously the opposite applies to a Risk-Off sentiment. Risk assets are sold off and the resulting cash is exchanged for the currency in which your safe haven asset is priced.

The above explains why traditionally we have seen the US Dollar and the Japanese Yen lose value upon the release of better than expected global economic data, and inversely seen the same currencies gain in value during times of uncertainty or fear.

I must note however, that the Risk-On/Risk-Off phenomenon is not the only paradigm that dictates capital flow and its effect on currencies. There are many others which I will eventually cover also, but it seems to have been the dominant paradigm over the last several years.

In essence, this and all other conditions that dictate global capital flow are all rooted in the simple concept of the search for the highest possible yield at the least relative risk.

A way of detecting Risk off even if you don't have immediate access to latest news is by watching the stock indices together with a currency strength meter.
When JPY is highest followed by USD, and at the same time, AUD races to the bottom

Thanks for your contribution Highway.

An additional indicator which can help confirm risk-on or risk-off, is the commodity futures histogram at finviz.com

When the histogram is mostly green and US Bonds, USD & JPY are included in the red, it's risk On

When the histogram is mostly red and US Bonds, USD & JPY are included in the green, it's risk Off

Check it here... http://www.finviz.com/futures_performance.ashx

The latest histogram


The above Finviz histogram indicates to me that the market is pretty much neutral but leaning more towards a risk-off sentiment. When you see a fairly neutral/balanced histogram like this, it is either in a state of change / indecision or indicates a flat market.

The following histogram from 8th August 2012, however, is more indicative of risk-Off.

Good Day PT!

With the thread rules and objectives I thought I could Post my Monthly Strategy, observations and results because I think a repository is best to keep these materials

However, I am not sure so in case of any objection just let me know will do it in proper way

*******************************************************

Disclaimer: This material is only for learning purpose. You are requested not to follow any of the method mentioned here unless being sure about it.

Objective: I am planning to create my own monthly journal by drafting a Trading plan for the month, considering certain methods which are suitable to back up the plan, What-If scenarios to estimate the Maximal Draw downs etc.

However, I am not considering opening up a new thread unless I see my Monthly Trading plan is working for at-least 6 Months and with my day work I don’t think I will be able to manage a thread/ journal separately.

Therefore, my plan is to continue this post with regular updates (Weekly / Monthly).

Other reasons are, although I am trading Forex since the year 2008 but was not consistent all the time. I am only a part timer, I do not have much fundamental knowledge, I have moderate technical skills, I had bad money management skills, I am emotional (sometimes emotion is not good for trading) and I do not have much Monetary support behind me.

This post is rather implementing a check on my-self to be extra cautious on my Entries and don’t be lousy. For others who are reading it, if you find here anything which is helpful then that is extra gain for me.

August 2012 : Trading E/U

My Fundamental Take at the beginning of the month was, less market driving news and Bearish Sentiment will cause this pair to bound in a lower range and there will not be any sharp move. So I will be concentrating on taking Short positions from Daily highs.

Although, Technically price was in a Strong Demand Zone of 1.21xx and with the Monthly Candle close we can see a clear win of Technical and News Whipsaw in the last trading day of the month.

So, basically in this month when I thought 1.244x – 1.25xx could be enough resistance for E/U, it proved me wrong but I am able to escape the situation with the August 2012 Trading Methods and this post is all about that.

August 2012 Trading Results

Attached Image

Attached Image (click to enlarge)

Attached Image (click to enlarge)

August 2012 Trading Methods

A. Pending Orders with Small Lot Size: (1/1000) size used
B. Instant Execution on Weak PA: (2 to 15 / 1000) size used
C. AVG Maximum Position/Day: 2
D. Single Pair: EUR/USD
E. STOP LOSS: None / Manual
F. TRAILING STOP: 15 pips

August 2012 Trading Statement

Attached Image (click to enlarge)

Helpful Instant Trading Systems on M5, M15

RodMCA System
PipTrapper_CCI System

I am not describing these systems further because you can simply get in touch with the originator of the systems if you are a regular follower of EurAnalysis Thread and second thing is my objective is not describing any trading system here.

Helpful Supply/Demand And Support/Resistance on H4 and above

II_SupDem : This I’ve used in the August month and it is still helpful in low volume market however it does lot of repaint so in the next month onwards I will be watching the SamSeiden_SupportResistance indicator instead.

SamSeiden_SupportResistance: Thank you Swissy (FxSwissTrader) for the help. This draws the Tested Resistances and Supports, Weak or Strong S/R etc.

Go with the Momentum / Short Trend – Long Trend:

Raff Regression Channels with settings of 20, 50 gives you shorter trend settings of 100, 200 gives you longer trend.

Best Regards.

I am posting some general information on Auction market theory with volume profile per request from interested parties on the EurAnalysis thread. Volume profile is what I use as my main trading strategy. Since this is NOT a thread on said subject, nor am I able to provide detail instructions limited to this one post, one would have to devote a specific thread to implementing this strategy in an effective manner.


My goal here is to at least peak your interest enough that you will be open to exploring how market/volume profile can work to compliment your current trading strategy. I will post some very informative video links that perform a great job in explaining what market/volume profile is all about. I will also post valuable links for you to explore at your leisure. With these links, it will at least help you to understand the lingo associated with this strategy. Please follow the videos in their respective order, as I have taken the time to place them in their rightful order to help you in better understanding of the concept. You can find these below. Enjoy:

Lesson 1 http://www.tradethemarkets.com/public/3618.cfm
Lesson 2 http://www.tradethemarkets.com/public/3621.cfm
Lesson 3 http://www.tradethemarkets.com/public/3630.cfm
Lesson 4 http://www.tradethemarkets.com/public/3634.cfm


http://www.cmegroup.com/education/in...marketprofile/


Webinar: Auction Market Theory Concepts with Volume Profile:
http://traderkingdom.com/market-prof...olume-profiles


Building a Trading Strategy with Market Profile:
http://progressive.powerstream.net/0...le/player.html


Helpful Links:
http://www.trading-naked.com/MarketProfile.htm
http://www.trading-naked.com/MarketP...USTRATIONS.htm
http://ensign.editme.com/virginpoc


Recommended Reading:


Steidlmayer on Markets: Trading with Market Profile
Author: J. Peter Steidlmayer



Mind Over Markets
Author: James F. Dalton, Eric T. Jones, Robert Bevan Dalton



Markets in Profile
Author: James F. Dalton, Eric T. Jones, Robert Bevan Dalton


---------------------------------------------------------------------------------------------------------------------


I hope that my contribution will be helpful and brings some value to my fellow traders. Be open minded and remember that in this business, we must continue to evolve as traders, never become complacent and definitely never stop learning.


Any feedback or comments should be directed in the EurAnalysis thread, as this thread is only for posting educational.



Any specific questions should be sent by PM and not posted on here nor on the EurAnalysis thread.

Good luck trading,
Swissy

From 51325

Just to complete this information. You may found this indicator is not working for your MT4 and you are getting a blank window.

Reason1: In your broker platform the currency pairs string is different.

eg. in the Indicator code the currency pair is "EURUSD" but in your broker market watch it is "EURUSD."

Reason2: Your broker does not support one of currency pair.

eg. USD/SEK is not there in your brokers market watch.

The solution to Reason 1 would be to edit the "IndexPairs" field accordingly

There is no solution to reason 2, but I have never seen a broker that does not have the USDSEK pair. In some instances it is hidden and the way to unhide it is to right-click on the Market Watch window and select "Show All"

There is one other thing. Sometimes, if the indicator comes up blank or incomplete, it may be due to a refresh problem due to not all the data being available. This is an issue with an intrinsic MT4 problem whereby updating data from other pairs may not execute properly. The solution is to go back in to the indicator property after it is loaded, and then click OK again. That will force a data refresh of all the pairs.

I am not using this indicator but more interested how the coefficient is calculated

Disclaimer : Please do not use this tool for Live currency trading unless you are sure about how to use it.

EURO_Strength_v1 Excel Indicator

Objectives:

1. Dynamic Dashboard: In Intraday Trading we can get Real Time picture of 5 EUR pairs (EUR/USD, EUR/JPY, EUR/AUD, EUR/GBP, EUR/CHF). Pair Ranges, High/Low, Bid/Ask, Fib Levels, Support and Resistance Levels, Strength or Weakness in Overall and for each pair.

2. No Need to put Junk on your MT4 Terminal: I know, we use lot of indicators in our MT4 platform to see co-relation of related pairs. But doing so makes our trading terminal slow in order execution and this practice also consumes lot of system resources (CPU, RAM etc.)

Using this Excel indicator is giving you a freedom of not cluttering your charts and having a smart solution running side by side. Yes, using Excel Indicator you will find your system and trading terminal is now lot faster!

3. Further Development: I will be including USD strength shortly in the next version release, mean time you guys can suggest if any further scope you want to add in this indi.


Instructions

Please read first the Settings Word Document File attached here. You need to enable the DDE option in your MT4 Terminal and follow other instructions to set up your Excel to Run this Indi.

Tools:

Excel 2007 or Higher version, MT4 4 digit Broker. I have not tested this in MT4 5 Digit Broker but I think you only get the rounded figure for all the values but I believe that is still ok to use.

ScrrenShot:



Order Execution:

This Indi is not for executing instant orders however you can try for placing Pending orders in Intraday Trading.

In a Low News day you can set your Order executing direction BUY/SELL
then you chose the Price Support Points to place your orders. For Take Profit Level you can Use the Fib Levels or S/R Levels.

Reporting of Bugs and Other Troubles

Please PM me. Only post reply in case you have some value to add in this indi.

Best Regards.

Hi All,

Thanks for testing the indi

Please find the updated version in the first post.

ISSUE

MT4 Brokers Currency Pair Strings are different sometime so it returns error to the Indi functions.

All you need to do is update the Currency Pair Names as it is from the Market watch Window of the MT4 broker.

Please follow the screenshots below to set this up in the new Excel file.

Update Released v.1.01

My main project on Ultimate E/U Strength Dashboard will take some more time.

Till then you guys can enjoy this release for 5 Digit MT4 Brokers. It has USD Strength seperately.

Bug Reporting

Please use PM.

V 1.02 Update:

Fixed Excel related bugs. Hope you can enjoy the updated 4 digit and 5 digit versions.