FXCM/DailyFX Signals and Strategies

can i check.. it is said that SSI is contra. indicator and hence

more folks short = the price will long..

i have a hard time digesting this..

if more folks short, isnt this the sentiments changing?

so no one will be left to buy and the price will drop..

pls advise ~ ~

Hi 801,

The trading mentality of the retail trader is an important factor for SSI and why it works as a contrarian indicator. What we have found is that many retail traders try to fade the market. Meaning they like to pick tops and bottoms. This works well in ranging markets.

But in a trending market, trying to pick a top or bottom often results in a losing trade. To make matters worse, retail traders will add to a losing position in an attempt to average the entry price to a lower break even level. This is why the SSI indicator grows to more extreme levels as the trend continues. Traders continue to add to losing positions. At some point, the positions will either capitulate to stop losses being hit or margin calls. This often times marks the top of the trend or a consolidation period.

SSI will not work during a ranging market when retail traders are most often correct. GBP/USD has been in a large range since May, so this is not the best pair to use with SSI (see chart below). Whereas NZD/USD, AUD/USD and EUR/USD have been better to watch in terms of SSI since they have been trending.

Here is where we have additional SSI information on the website http://www.dailyfx.com/docs_pdfs/res...SSI_Primer.pdf and feel free to post more questions

Below is a comparison of GBP/USD (on the left) and NZD/USD (on the right).

http://img9.imageshack.us/img9/37/poundversuskiwi.jpg

thank you Jason.

You're welcome, and here's the latest reading from SSI this morning to demonstrate how retail traders acted during last nights up move in NZD/USD.

http://img17.imageshack.us/img17/4216/nzdssi.jpg

NZD/USD has been in an uptrend since March. The SSI reading for NZD/USD yesterday afternoon before the NZD Current Account announcement was -1.34. This morning positioning has increased to -4.34. So instead of seeing yesterday's positive news as further reason to buy NZD, retail traders have actually sold into the move.

Here's an article that Ilya Spivak released yesterday in case you're wondering what caused such a powerful move in NZD http://www.dailyfx.com/story/market_...575733699.html

Tonight we have the New Zealand GDP report being released. Here's the latest analysis from DailyFX:

The New Zealand dollar may face increased selling pressures over the next 24 hours of trading as economists forecast the growth rate to contract 0.2% in the second-quarter, and fears of a slower recovery may lead businesses to scale back on production and employment in throughout the second-half of the year as global trade conditions remain weak.

Trading the News: New Zealand Gross Domestic Product

What’s Expected
Time of release: 09/22/2009 22:45 GMT, 18:45 EST
Primary Pair Impact : NZDUSD
Expected: - 0.2%
Previous: -1.0%

http://www.dailyfx.com/export/sites/...alyst/raf2.gif

Read the Full Report Here

Trade the News LIVE Coverage with DailyFX Analysts

DailyFX will be hosting a live trading discussion during the FOMC rate announcement. The trading room opens at 2:00pm EDT if you would like to join, and you can join by clicking on the picture below:

http://img223.imageshack.us/img223/3357/cilfomc.jpg

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When are these correlation charts released and how often? I am referring to post #30.

Every week...but it hasn't been updated since August . I asked David Rodriguez about getting a new one posted, and he said he's going to get it updated. ETA is later today or early tomorrow. I will also post it here on the thread when it is released.

The link is found on the main page of www.dailyfx.com under Cross Markets Data Reaction. I took a screenshot (see attachment) and circled the link in red. You will need to scroll down on the webpage, or CTRL+F and search cross market data reaction.

hi Bichiz,

Thanks for the post, and I appreciate your feedback.

The level of analysis and signals range from very simple to complex. If you prefer something simpler, then I would suggest the Trading Signals in DailyFX+.

I attached a screenshot of the trading signals to give an overview. There are 6 strategies based on 3 market conditions: Range, Breakout, and Momentum. The strategies are proprietary based on FXCM's indicators and research, some of which use SSI. So if you like the SSI discussions, then here's a way to get it in an easy to use format.

In the middle of the page, you will see 6 currency boxes. Those are interchangeable with other currency pairs. It gives current information such as volatility, the amount of volume currently being transacted in relation to a weekly average, the overall trend (up, down, or sideways) and whether the relevant strategy is giving a signal to go long or short.

If you click on the currency box, the trade details will appear above in the Trade Details section. Here you can see Momentum1 and Breakout2 gave signals to buy NZD/USD. Hold means do not get into the trade if you are not in it yet. If it says Enter Now, then you can get in.

Down at the bottom of the page you will see the Strategy Performance. This measures the performance of the signals over the past 60 days. Our view is that as market conditions change, the success of each strategy will change as well. This lets you know which strategy has been working well in current market conditions.

As always, past performance does not guarantee future results.

This is another free tool available to all FXCM live account holders to add to your own trading analysis. If you want to login with a free trial, then register for a demo login on our website here http://www.fxcm.com/trading-signals.jsp

Jason

Updated due to popular demand (compliments of David Rodriguez of DailyFX)!!! If you trade oil, gold, or stock indices, we now have them available through CFD contracts with FXCM UK. Here is where you can register for a demo http://www.fxcm.co.uk/demo-cfd-usd.jsp . Note, CFD accounts are only available for non-US residents (it disappoints me just as much as you). But feel free to register a demo for the charting nonetheless.

Interesting how the EUR/USD has become an important gauge for risk in comparison to S&P 500. The Yen correlation has dropped quite near to 0. See correlations below:


http://www.dailyfx.com/export/sites/...yst/923dra.gif

Here is where you can find the full article on DailyFX
http://www.dailyfx.com/story/dailyfx...734232940.html

Thanks alot, is there going to be an update schedule such as every week, two weeks month?

Thanks

You're welcome. The schedule is for it to be updated every week. Hopefully this will let them know it's an important report to update!

DailyFX has been very busy recently with new things in the pipeline. Stay tuned for a new DailyFX website within the near future

This has been a common question recently so wanted to take a moment to discuss.

A lot of Expert Advisors (EA's) will ask the trader to check a box if the broker is using ECN execution.

The term ECN is thrown around casually in the forex market. By ECN, the EA is really referring to "Market Execution". Brokers can choose to have their MT4 platform setup with either Instant Execution or Market Execution. With Market Execution, the stop and limit orders have to be entered after the order is executed. FXCM's MT4 platform is setup for Market Execution.

So if you use FXCM's MT4 platform, and the EA asks you to put a check in the box if the broker is using ECN, put a check in the box.


NDD (STP) vs. ECN: A true ECN allows traders to make a market on the platform. This means if you create a pending order, your order will be displayed in the available liquidity and another trader can hit that price rather than having to wait for the bank to quote the pending order price. I'm not familiar of many (if any) retail forex platforms that are true ECN's in this sense. What traders are more commonly trying to distinguish the platform from is dealing desk execution. In this sense, ECN would indicate that the broker is not taking the opposite side of your trade, but instead offsetting it immediately with a bank or financial institution which No Dealing Desk (STP) execution does as well.

FXCM's MT4 uses no dealing desk execution so each order is offset back to back with a global bank. And the price quote coming from the banks need to reach your pending order price for the order to go into execution.

I'm surprised DailyFX isn't giving the GBP more coverage than it has been. The weekly SSI report was released yesterday. It gives a longer term view on SSI positioning with an outlook. Here's the SSI graph for the GBP/USD. The histogram displaying the green line indicates net long positioning with darker green shading indicating more extreme positioning.

http://www.dailyfx.com/export/sites/...yst/924dre.gif
You can find the full report with all the major pairs here http://www.dailyfx.com/story/strateg...802560852.html.

The GBP/JPY has already started to slide, but that's another interesting one to watch. GBP/USD looks precariously susceptible to breaking through support at this point.

http://img36.imageshack.us/img36/95/gbpusdy.jpg

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We have some important economic reports coming out next week including everyone's favorite...NFP.

Here are the highlights, written by Terri Belkas of DailyFX and have a great weekend.

• UK Gross Domestic Product (2Q F) – September 29, 04:30 ET
The UK will face their third and final round of growth results, and this upcoming GDP reading is anticipated to be revised up to -0.6 percent in Q2 from Q1, compared to previous estimates of -0.7 percent. Likewise, the year-over-year rate of growth is projected to be revised up to -5.4 percent from -5.5 percent, which would still mark a record low but would suggest that the UK’s recession isn’t quite as bad as previously though. The last time we saw news similar to this was upon the preliminary (second) release of Q2 GDP on August 28, as the quarterly rate was surprisingly revised up to -0.7 percent from -0.8 percent. At that point, the British pound rallied into the start of the US trading session, but subsequently ran into resistance and ended the day lower. This suggests that if GDP is revised higher than -0.6 percent, the British pound could gain, but ultimately, readings in line with expectations shouldn’t have a large impact on trade.

• US Conference Board Consumer Confidence (SEP) – September 29, 10:00 ET
The September reading of the Conference Board’s measure of US consumer confidence is expected to rise up to a one-year high of 57 from 54.1 in August, but overall, there are some upside risks for this report. Indeed, the final reading of the University of Michigan’s consumer confidence index show that sentiment improved greatly in September, with the index hitting a 21-month high of 73.5 from 65.7. A breakdown showed that as the “economic conditions” component rose to a 1-year high of 73.4, while the “economic outlook” jumped to a 2-year high of 73.5. In light of these positive signs, disappointing numbers could have especially negative repercussions for risk appetite, but if the index rises in line with expectations or proves to be surprisingly strong, FX carry trades could gain and weigh on the US dollar.

• US Gross Domestic Product (2Q F) – September 30, 08:30 ET
The third round of US Q2 GDP estimates is due to hit the wires, but the results will only be market-moving if we see surprising revisions. The final reading is forecasted to be revised down to -1.2 percent from -1.0 percent, though this would still represent a sharp improvement from Q1, when GDP plunged 6.4 percent. Readings in line with expectations may not have a very big impact on price action, but better-than-anticipated results could lead carry trades higher, especially in light of speculation that the recession may have ended in Q2. On the flip side, surprisingly weak numbers could crush these hopes and trigger another bout of risk aversion.

• US ISM Manufacturing (SEP) – October 1, 10:00 ET
On Thursday, the ISM manufacturing index is projected to rise for the ninth straight month in September to 54 from 52.9, which would be the highest reading since April 2006. With 50 being the point of neutrality, this would also be the second month that the index signals an expansion in activity, adding to evidence that the sector is experiencing a recovery in business activity. The last release didn’t have much of an impact on the US dollar, as risk aversion dominated the day, leading the currency higher. However, the report will still be useful because of its employment component as a leading indicator for Friday’s US non-farm payrolls report.

• US Non-Farm Payrolls (SEP) – October 2, 08:30 ET
The US non-farm payrolls (NFPs) index is forecasted to show job losses for the 21st straight month in September, though the rate of decline is anticipated to slow further. At the time of writing, Bloomberg News was calling for NFPs to decline by 187,000, which would be the smallest drop since August 2008. Meanwhile, the unemployment rate is projected to edge up to 9.8 percent from 9.7 percent, but ultimately, the NFP result will be the event to watch as it is extremely volatile and is one of the sole reports that impacts the US dollar from a pure fundamental point of view. A better-than-anticipated result is likely to provide a boost to the US dollar, but it will be interesting to see the impact of disappointing results as weak US data tends to weigh on risky assets and push the greenback higher amidst flight-to-quality.

http://www.dailyfx.com/story/bio1/US...906477033.html

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FXCM's FX Powercourse instructor Gregory McLeod released his Trend of the Day report highlighting AUD/USD. The AUD/USD has been in a tight range for two weeks.

The SSI data for AUD/USD also indicates retail traders are increasing their short positions which as a contrarian indicator calls for a resumption in the uptrend. Keep in mind that picking tops and bottoms during a range trade will often result in retail traders being profitable in which case SSI will be wrong.

Here's the latest SSI release from this morning along with the trading signals being generated for AUD/USD:

Continuing with yesterday's AUD/USD analysis, traders are holding onto their short positions, and SSI is currently at -3.29.

One thing to be mindful of for long positions is the USD acting as a risk barometer. Stocks are dropping this morning, but the AUD/USD has held up fairly well. If we see further drops in equities then USD sentiment could outweigh the positive in AUD. Sometimes that's just how things happen. So if you're trading with the trend, it's something to be mindful of.