On the weekly chart of WTI Crude Oil, there may be a possible breakout of the inverse Head and Shoulder's pattern neckline. In the previous week, there was a feeble attempt to break up above this neckline with price closing the week near to the neckline. This week, there is a possibility we might see a closing above the neckline, given Wednesday's early morning rally and if price is able to maintain the momentum. Keep an eye on the closing this Friday.

How does the FX market actually work?

I get this question all the time. " How does the FX market actually work?"  It is the biggest traded market in the world, bigger than the combined equity turnover of New York and China stock markets and yet little is known about the FX market. The volume is so huge but how is it that we don’t even see a fraction of the  volume being traded?

In the FX market, there is no regulated exchange where trading takes place like the stock market.  It is more like a network of banks operating among themselves. There is less transparency and that is why the FX market place remains so secretive and elusive.

At the heart of the FX market place is the electronic broking system. This is a electronic system, where buyers and sellers try to find each other through price discovery. Buyers will place bid for amount they want to buy in the respective currency pair. They can also buy  the offers put up by the sellers.

There are a few electronic broking systems in use today like FXall,  Reuters dealing system and Bloomberg just to name a few. Banks may also call another bank over a dealing system to ask the other for a direct quote on a specific currency pair and a specified amount. This is how dealing and trading takes place between banks.

Have you ever wondered why FX has no daily volume reported? Trading takes place across different platforms as well as direct bank to bank dealing. Competitors are not going to report the volume they are handling and  there are no regulation for the banks  to report their trading volume. As a result,  there is no daily volume available to FX market participant. The volume we know is reported by the Bank of International Settlement (BIS). This is a survey done every three years based on the currencies handled for clearing by the BIS.  All the trading done by banks are cleared and settled at the BIS.

  Some banks are market makers and they provide prices and quotes to a variety of customers. These customers include central banks, private banks, hedge funds, corporate as well as online brokers. A well known bank platform is the UBS Neo.  UBS clients from corporate to financial institutions, from central banks to hedge banks to private banks can use this platform for their FX needs.

Don’t central banks go directly to the electronic brokering system? No, they do not use the electronic broking systems. They usually transact with banks in their domicile. They will go directly to a bank or a couple of banks and ask for a direct quote.  Corporate like Keppel Corporation and Tiger Airway also tend to use a bank's treasury services. They have currency needs that may be for delivery in 5 months time but they want to convert at the present moment to hedge their revenue or payment. Or they may be interested to swap  one currency for another currency. These are services provided by a bank's treasury and contributed to the FX daily volume.

You have heard of online brokers whose liquidity and spread are good because they use a multi banks liquidity quotes. These brokers get quotes and prices from multiple banks to give  a narrower spread for their retail clients. Almost all the online brokers clear their requirement with banks. I am sure you have come across many brokers who have no dealing desks.

Some FX brokers  are clients of another bigger online broker. In this industry, there are many " white label". A white label means you set up a company and use the service, platform and product of another big broker. 

It is important for retail players to choose their broker wisely . Retail players are not going to get USB Neo unless they have more than US$5m to spare.  It is important to choose a broker with not just strong financial but also strong financial backing from its parent holding.  However retail players tend to choose leverage and spread as their main criteria. And these are how smaller brokers tend to draw clients. The difference in spread is small compared to the daily range. High leverage is a symptom of over trading.

Fibonacci Application of Time and Price on WTI

•Since the breakout and confirmation of the February low at $25.93, WTI has reached a high of $51.65. Along the way, there was a 38% retracement to $35.22, before the rally to $51.65. The rally to $51.65 was 1.6x the distance of the rally from the low of $25.93 to the high at $41.87. This is Fibonacci application on price.

•What about Fibonacci application on time? It took 29 days to complete the first leg of the rally from $25.93 to $41.87. The correction of this rally took 10 days. That is 35% of the time taken for the rally. Price retracement of 38% and time retracement of 35%. The next rally took 47 days from $35.22 to $51.65. 29 days x 1.618 = 46.92 days. Price extended to 1.6x at 51.65, while time taken was 1.618x.

•It looks like we may have seen a temporary high at $51.65 and WTI will likely be doing a correction for some time. The previous correction was simple and fast. It looks like the next correction is likely to be complex and longer in time

.

Fibonacci Application in Price and Time Course

Date 5th Mar 2016
Time 2pm to 6pm
Venue  To Be Advised


Course Outline
Fibonacci Knowledge Base

Price Application
1. Retracement
2. Extension
3 Projection

Time Application
1.Time Numbers
2. Time Ratio

Course Delivery
1. 4 hours of classroom teaching environment
2. 4 weeks of tutorial via Whatsapp
3. Markets covered include FX, Equity Index and Stocks (SG & US)

Fee $480

To sign up http://mytradeforex.com/courses/12578-2/

Thoughts on Wall Street

Friday (15th Jan 2016) was a bad day for Wall Street. Dow Jones Index was down 390 points (2.4%). S&P 500 was down 41 points (2.2%). Looking futher into the details, it could be worse. Friday's volume was higher than usual; market down on higher volume!  Twenty percent of S&P component stocks registered a new 52 weeks' low.

Monday is a New York holiday. Keen to see what will happen on Tuesday, 19th of Jan.

Profit From The US Market Talk

In collaboration with CMC, I have been invited to give a free talk on “ Profit from the US market” at CMC premise on the 19^th of March 2015. The location is Singapore Land Tower, #14-06. Time is 7pm to 10pm. There will be 2 parts to the talk. The first part will be on  the US stock market.  The topics include the direction of the US market in 2015, its opportunities and how you can take advantage of these opportunities. Included in this 60 minute talk will be a trading example using pair trading strategy. The theme of this strategy will be  based on oil theme.

The next part of the  talk(60 mins) will focus on Fibonacci trading technique for the US stock market. Besides learning the Fibonacci trading knowledge like trading with retracement, extension and projection I will show, through numerous trading examples, how you can apply the Fibonacci trading technique. This Fibonacci trading technique is suitable for everyone. There will be numerous intra day and inter day trading examples using the Fibonacci trading technique. Though these examples, you will realize the application of this useful technique. Even if you dont trade the equity market, you will also find it useful and applicable to  FX trading

Vacancies are limited, so please register before the date. Do take this opportunity to gather your trading friends and come down together for the talk. It has been a long while since we held our last gathering where fellow students can meet and share their trading experience. This would be a good opportunity. 

Do note that you do not have to be a CMC client to attend this talk. So please hurry and book your seat early to avoid any disappointment. Thank you and hope to see you on that day.

FED Economical Assessment 150128

WASHINGTON (Jan 29): The Federal Reserve boosted its assessment of the economy and down played low inflation readings while repeating a pledge to remain “patient” on raising interest rates. The Federal Open Market Committee described the expansion as “solid”, an improvement over the “moderate” performance it saw in December. It substituted “strong” for “solid” in its evaluation of job gains after a meeting today in Washington. While inflation “is anticipated to decline further in the near term,” the FOMC said in a statement, it is likely to rise gradually toward its 2 percent goal “over the medium term” as the impact of low oil prices diminishes.

Policy makers saw a bonus in cheap energy, saying it’s boosting consumer buying power.
Stocks fell as the statement reinforced expectations that the Fed will raise interest rates this year for the first time since 2006. One caveat: officials will take “international developments” into account when considering an increase, language that sent bond yields lower. “The Fed’s decision about the timing of liftoff is not as sensitive to low inflation as before,” said Laura Rosner, a US economist at BNP Paribas in New York and a former researcher at the New York Fed. “Inflation is one of many factors that will be considered in deciding when to raise rates. The inflation undershoot is no longer receiving special emphasis.”

Clause dropped
The Fed also dropped a clause from its December statement that the assurance of patience was consistent with a previous pledge to hold rates low for a “considerable time”, especially if “projected inflation continues to run below” the 2 percent target. The Fed has kept its main interest rate near zero since December 2008. All 10 voting FOMC members backed the policy statement, marking the first unanimous decision since June.

Robust economic growth is giving Fed officials reason for optimism, even as weaker global demand and a stronger dollar cut into overseas earnings of companies such as Procter & Gamble.
Since their last meeting, Fed officials learned that the world’s largest economy grew at a 5 percent annual pace in the third quarter, the most since 2003.
A report on Friday may show growth of 3.1 percent, still well above the post-recession average of 2.2 percent, according to a Bloomberg survey of economists.

Six-year low
Unemployment is at a six-year low of 5.6 percent, and the economy added 252,000 workers last month to cap the biggest annual gain since 1999 with growth of almost 3 million jobs. Even as the Fed approaches its goal of full employment, its second mandate, for stable prices, remains well out of reach. The Fed’s preferred inflation gauge, personal consumption expenditures, rose 1.2 percent in November from a year earlier and has lingered below the central bank’s 2 percent target for 31 months.

Market-based expectations for inflation in the five years starting five years from now tumbled earlier this month to 1.76 percent, the lowest since 1999. Oil prices near the lowest in almost six years signal inflation is likely to remain muted. West Texas Intermediate crude futures fell to US$45 a barrel this week from US$107 in June. Economic reports yesterday indicated that cheap oil is a boon for households and a mixed blessing for companies.

Consumer confidence
Consumer confidence soared in January to the highest level in more than seven years as gasoline prices fell, while orders for durable goods unexpectedly dropped for a fourth month, signalling the global slowdown is weighing on manufacturers. Another source of concern for some policy makers: stagnant wages, which point to continued labour-market slack. Average hourly earnings increased 1.7 percent over the 12 months ended in December, the smallest gain since October 2012. Fed officials, including San Francisco Fed President John Williams and Atlanta’s Dennis Lockhart, have signalled that a midyear increase would be the appropriate.

Fed Chair Janet Yellen suggested at her December press conference she’s in no rush to raise rates.
She said the reference to being patience means the committee “is unlikely to begin the normalization process for at least the next couple of meetings”. Diminishing inflation expectations helped push yields on the 10-year Treasury note to 1.71 percent earlier this month, the lowest since May 2013.
It was 1.82 percent late yesterday.

The Standard & Poor’s 500 Index has declined 1.4 percent this year through yesterday amid disappointing fourth-quarter results from companies including Caterpillar and Microsoft.
A cooling global outlook is also giving policy makers pause. The International Monetary Fund last week made the steepest cut to its global-growth forecast in three years.

The FOMC gathering is less than a week after the European Central Bank announced an expanded asset-purchase program of up to 60 billion euros (US$69 billion) a month to spur growth and counter deflationary pressures, highlighting the diverging prospects for two of the world’s largest economies.

Nicholas Tan Practical Forex Course - 24th Jan 2015

Part I: Forex Foundation
Learn the characteristics of the 4 major currency pairs
Timing to trade for each major pairs
Time frame and your trading
Charting Knowledge
Trade and Money Management

Part II: Technical Analysis
Trend identification (uptrend, downtrend) and confirmation using reliable technical indicators
Use of selected trend following indicators and oscillators
Support and resistance identification

Part III: Powerful Strategies
No. 1 – Modified Duck Trading System
No. 2 – PMA Trading System
No. 3 – Modified Duck Reversal
No. 4 – Fibonacci Trading System
Best time to trade with these strategies
Indicators, templates will be provided for every students.

Course Duration and Support:
1 full day of Classroom Lessons ( 10am to 6pm)
2 nights of practical tutorial training (7 pm to 10pm) where students get to see and apply trading system taught in real time market condition.
Email support: send your questions direct to the trainer and get them answered
Receive useful information via email

Classroom Lesson
Dates : 24th Jan 2015
Time 10:00 am to 6:00 pm
Venue: Realty Center, 15 Enggor Street
(Please bring your laptop on the day of the course)

Practical Tutorial Lessons
Dates : 26th and 28th Jan 2015
Time: 7pm to 10pm



Your Investment:SGD$1,000

My Trade Forex © 2015

Free Forex Workshop 20th 2013

If you have any interest in Forex Trading, or if you want to explore Forex Trading, the opportunity is now here. Nicholas Tan, a highly experienced Forex trader, is conducting a free " Getting Started in Forex Trading" workshop on 20th June 2013. The best thing about this is it is free and you will be equipped with the right tools and knowledge to get started in Forex Trading.

Details of the course Getting Started in Forex Trading.

Why the buzz about Forex?

The attraction of FX Trading

What you think of FX Trading

The real world of FX trading



All the basics terms of Forex to get you ready for FX Trading.

Currency pairs

Quotation

Pips and spread

Bid and offer



Basic charting knowledge you will need to trade successfully.

Candlestick basics

Time period for trading

Support and resistance

Trend



An effective trading strategy to take home for trading FX, suitable for intraday, swing trading(2-3 days)

The Simplified Pullback strategy



Choosing the trading platform and broker



What it takes to be a successful FX trader.

Discipline

Risk Management




Course Dates

20th June 2013 (Thurs) 7pm to 10pm


Location
15 Enggor St, Realty Center, #09-03 Singapore, S(079716)



How to sign up

Send an email to Nicholas@mytradeforex.com.

With your name and your preferred date.

An email confirmation will be sent to your address upon successful registration.

Bring the confirmation email as your ticket to the workshop.

Practical Forex Course Scheduled for 2nd Mar 2013

ForexFoundation
Learn the characteristics of the 4 major currency pairs
Timing to trade for each major pairs
Time frame and your trading
Charting Knowledge
Trade and Money Management
Trend identification (uptrend, downtrend) and confirmation using reliable technical indicators
Use of selected trend following indicators and oscillators
Support and resistance identification

Powerful Strategies
No. 1 – Modified Duck Trading System
No. 2 – PMA Trading System
No. 3 – Modified Duck Reversal
No. 4 – Fibonacci Trading System

Best time to trade with these strategies
Indicators, templates will be provided for every students.


Course Duration and Support
1 full day of Classroom Lesson ( 10am to 6pm)
2 nights of practical online tutorial training (7.00 pm to 10.00 pm) where students get to see and apply trading system taught in real time market condition.

Email support: send your questions direct to the trainer and get them answered
Post your questions and share trading tips in our forex forum
Receive useful information via email

Dates:
Classroom Lessons 2nd Mar 2013
Time 10am to 6pm
Venue: Realty Center (Please bring your laptop on the day of the course)

Online Trading Tutorial Lesson
Time:7.00pm to 10.00pm
Dates:5th and 8th Mar 2013

YourInvestment:$1000