The shocks of 2008-09 global recession are continuing to haunt some members of European Economic and Monetary Union and more so for Greece. The growing Economic woes continue to add fuel to the fire. This has made the situation very uncertain for Greece.

Greece has been member of the European Union since 1981 and member of the European monetary union since the year 2001. However it seems that in time off adversity, it has to find its own economic and social solutions.

Greece, an ancient old, well developed country, is known for the birth of modern Olympics and Democracy. However for some time, it is passing through a very difficult political and economical challenge. The country is faced with rising debt, job losses, strikes and limited buying power with people. Though monetary union had given birth to common currency, the political union has yet to take shape in the real sense. In time of Greece’s difficult money market situation, it is not getting adequate support from leading and financial sound co-members like Germany or others. Thus the positive effect of political or currency union is not visible in the country.

The questions are many. What is the solution to the current problems of Greece? How can EU help? Shall other European economies like Germany enter the scene?

Today Greece has high fiscal deficit, its aging manpower is not as performing, its products are no more competitive and is under increasing foreign debts. The increasing interest cost and public pension system has made situation more difficult. Another issue is that Greece had not initiated economic reforms as happened in the other parts of the World. Had the government be watchful, it could have avoided the present economic mess it is facing.  It is certainly its own creation.

The problem is not of Greece alone and another few European countries are passing through similar situation. In view of the massive support required, the well of Europeans countries like Germany, France and UK are scared to enter the scene.

If we go twenty years back, we will see that the concept of European economic and monetary union was to work as a single entity and provide support to each other in difficult times.  Have those objectives been achieved? Today it looks questionable.

Another consideration is that, can global financial institutions like IMF or World Bank help?  In such situations, this Global financial Institutions recommend currency devaluation but Greece having a common currency Euro cannot choose this path.

Greece is left with limited options. It has to go for reforms, wage war on wastage and do massive cost cutting. Any system loopholes need to be considered and corrected. Improved revenue Monitoring and collection are essential. However its implications are long drawn and lead to initial resistance, high rate of unemployment and political instability. Thus Greece has to find acceptable solutions and also use its good office and seek support of other European members and other international institutions, which are in a position to help.

It is a testing time for Greece and few other European Union member countries. It is equally a testing time for European Union, as any further delay in providing support to ailing economies of Europe, will badly weaken the Euro; adversely affect the European stock markets and the European Union itself. And also this change can be seen at live forex chart Let us hope, wish and pray that combined wisdom and strategy of all stakeholders is quickly finalised and implemented so that Greece like its glorious history comes out of this big financial mess and regains sound health quickly.

A commitment to trading means a commitment to continued effort and education. The road to success can be long and there are often tough times along the way.  It is often the case that many people who set out to trade are blown out of the market within a few years, months, or even within a few days.

From my experience, and also many of the traders that I have met, there seems to be a consistent learning path that we all take. As a technical analyst I found a basic picture was the best way to describe the journey.

During a trading career there are often three distinguishing periods:

1.    Our early trading experiences

2.    Early development: education and risk management

3.    Consistent profitability

Many novice traders are fueled by the adrenalin and the rush that trading provides.  The excitement of trading is what attracts us, however at this point we often do not understand the risks attached and the discipline required. It is during this initial induction, inexperienced traders begin to focus on how much money they stand to make rather than how much they can afford to lose.

Overconfident traders who were hitting home runs in the early sessions begin to feel the affect of strike outs and at this stage do not have the psychological capacity to deal with losing trades.  Traders who were making a loss begin to struggle with how to overcome these losses, often resulting in unnecessary risk.  This stage is critical as many will walk away or blow out their accounts.

Traders who are motivated to succeed eventually begin to understand the possibilities that trading brings.  Getting through this stage is not easy and there are often setbacks as strategies are tried and tested and we begin to discover what type of trader we are and better understand the markets we trade.  Not everyone makes it past this stage and the time to get there can vary from person to person however those that are willing to put in the effort to learn the rules of the game begin to stack the odds of success in their favor.
The end goal is to become consistently profitable, however no matter how good you are, there are sure to be some setbacks throughout your career.  Consistently profitable does not mean you don’t make losing trades and remaining in this final wave will become dependent on you staying motivated and consistently applying the rules you have learned along the way.  Most trading rules are simple to understand but easily overlooked, let us now examine 3 simple rules that you should never forget.

3 “One Size Fits All” Rules

1.     Make a Plan
You need to ask yourself what is your trading strategy; what are your tactics and what conditions need to be fulfilled for you trading to succeed.  In simple terms, if you are going to cross a freeway to get to the other side, do you just walk across blindly without looking out for the moving trucks or do you find a crossing or a bridge?

Your choice of technical indicators will depend on your trading strategy and your personal preference.  Some indicators are more suitable for trend following rather than breakouts or reversals and some indicators work better together than others.  Entry, exit, and risk/reward parameters should also be defined in your plan.
Once you have your trading plan be sure to stick to it.  When your plan is working well it is easy to become overconfident and increase the risks that you take, don’t make this mistake.  Spend some time in developing something that works for you. A bad plan is better than no plan at all!

2.    Cut your losses with a stop-loss
There are not many things that can be guaranteed in life but there is one guarantee we can all be sure of; you along with the best traders in the world will make a losing trade at some point.  It’s just part of the game so you better prepare yourself you deal with it.

It is easy to get paranoid about the market trying to stop you out before continuing in the right direction.  Long-term success is impossible if you let your reactions trump planning. The solution is simple; don’t chase the losses by moving your stop-loss!

The best way to deal with it is to control your risk.  If you risk 10% of your account on one trade then you may find that your account size falls rapidly during a draw-down period.  If on the other hand you are risking 3%, you will find yourself in much better shape to continue trading and stay in the game.

3.    Understand Your Market
Different markets can and do trade differently so when you pick your market it is important you do your research before you start trading.   The research and information you gather will form a basis for your trading tactics.

For example, if you’re trading FX determine which technical indicators work best, which pairs are correlated and which economical announcements are likely to cause spikes in the market.  If you are trading stocks, find out exchanges they trade, how liquid are they, are they seasonal and how much can they gap up or down?

The more you understand what you are trading, the more effective you will be able to execute your strategy.  This will move the odds in your favor and you will find it easier to time the market and hopefully enter a market closer to the low and exit nearer the high for a long (and vice versa for a short).

In this post I’ve tried to touch briefly on a few of the issues I faced early on in my trading career along with some of my colleagues.  If you would like more information on any of the points raised or would like to provide any feedback then please contact me and I will be sure to help.

Good Luck & Merry Christmas

Today we will re-examine the USD/JPY after November saw the biggest monthly drop this year.  A lot has happened in the last week with the biggest news being the debt crisis at Dubai World.  The dollar remains weak after Dubai’s banks eased concerns with more liquidity for the market.

USD/JPY fell to 86.03, the lowest level we have seen for some time.

Technically speaking we have broken through the previous low for the year of 87.12.  The 50, 100 and 200 day moving average are all trading below each other respectively: the downside still looks favourable.  One possible positive sign from this graph is the long shadow on the candle for the 27th November: this long lower shadow shows that people are still going long here however it is too early to see signs of a definitive reversal.

This market still remains in a strong down trend.

Today was the start of what will be a busy week for US data releases.  U.S. retail sales rose 1.4% in October surpassing expectations of a 0.9% rise and motor vehicles and parts rose 7.4%.  Excluding gasoline, autos and building materials, retail sales rose 0.5%, which makes this a third consecutive month of gains.

These figures support the opinion that the US economy is going to continue with its recovery during Q4.  In order to support the ongoing economic recovery and support the labour markets, the Fed are likely to maintain rates around 0.00%-0.25% for some time to come.

So what does this mean for the US Dollar?  Well today Bernanke made comments that supported a strong dollar which did give some initial signs of boost during intraday trading sessions however this was short lived and there was some downside pressure on the dollar for the remainder of the session.

Looking here at the USDJPY  from a technical perspective we are trading below the 50 and 200 day Simple Moving Averages, we broke through previous support levels and made new lows for the day; for the moment the downside prevails.  There is some support around the 88.31 level; if we break through that then further downside can be expected.  We will wait to see if we can hold this support level; a failure to close below this support may prompt signs of a reversal….

The rallies in the equity markets seem to be taking a break giving more time for long-term investors to pick up a bargain. For traders however this is a time for caution to see which direction the next major trends are going to take us.

The Australian dollar opened lower tonight after equity and commodity prices fell quite sharply last week.  There’s a bit more caution from traders and since the Australian currency is a “growth currency” it has some positive correlation with commodity prices and equity markets.

AUDUSD moved down to a low of 0.8907 but has since bounced off this primary support level and is now trading at 0.8978.  AUDJPY moved down to a low of 79.48 shortly after the open but has bounced back to 80.45 as of 23.27 GMT.

quantum-fx version 2 continues to look for trading signals in all of the major currency pairs.

Later today GBP (9:30 am) and USD (4:00 pm) have some major data releases with respect to Manufacturing PMI and Pending Home Sales: expect increased volatility around these times especially if there are any surprises with the numbers.

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Goldman Sachs came out today stating that the economic downturn is being overplayed making GBP too cheap.  RBS on the other hand, who are one of the biggest FX traders, said that they expect the pound to weaken further and their outlook is echoed by a number of other large institutions.

We saw positive gains in the first half of last week for GBP on the back of rumours of interest rate rises.  In our view, once we see an actual rise that might be the catalyst for a reversal on the pound or at the least we will see some sort of bounce back.

We cannot be sure when these macro shifts will take place.   The Bank of England expected the UK economy to expand over the second half of the year but we have not seen much evidence of that so far.  But we can always find a story in the technical’s…

GBP has made a 50% retracement from the lows in the first quarter and critically we have crossed over and above the 200 day moving average.  We have some support around the 1.555 region reinforced by a double bottom.  For the moment this market is moving sideways and a breakout from this will give a hint as to the next long term trend.