Finding a Fresh Path for the New Year

By James Dicks

Happy Holidays from JDfn

The past year has been very rough on traditional investors; investments have blown up in the faces of people who had been religiously putting funds in 401(k) plans and IRAs and chances are their home values have crumbled around them as well.  Thousands more got caught in a layoff and are now forced to use what is left of their savings to simply survive, while thousands more have lost their homes to foreclosure. It was the kind of year that people will talk about for the rest of their lives; just like Grandpa used to talk about the Great Depression of the 1930s.

Many businesses have collapsed under the stress of this fragile economy; some are still alive but running on the fumes of what they were able to scrape together soon after the recession hit them.  Like I said, it’s been a tough year but it is not impossible to overcome.  It’s now time to rebuild our personal and professional lives.

As we enter the holiday season, I see the effects of this economic downturn hit yet again.  Corporate CEOs and HR managers have had to do what was in the best interest of their companies – normally that means trimming the employee roster – at least for the time being.  We’ve all had to determine where costs can be cut to generate needed cash flow so American companies can stay “open for business” and start to mend our damaged economy.

The same goes for families across the U.S. trying to find their “new” paths to personal financial freedom.  Many of you were doing everything correctly and thought you had it made, only to discover that traditional methods of investing just didn’t work anymore and established family traditions had to be cut or done away with all together.

I’ve heard more and more people say that this year’s holiday season will be different – this year there won’t be as many presents given to as many people as there have in the past.  Charitable organizations are already feeling the pinch because there are fewer donations coming in this year than in previous years.  For many charities, the recession has delivered a double blow. There have been sharp drops in donations tied to increasing demand for their services in these difficult economic times.

Maybe it’s time for us all to start cutting back and simplify our lives.  Perhaps we all should cut back a bit and use the extra time and money to get closer to our family and friends.  Read more to your kids and grandchildren, and get interested in what your spouse is working on in the kitchen or out in the garage.  Invite your friends over to play a board game – these are all things that will allow us to reconnect with people; something that is probably long overdue.

Like “Grandpa’s Great Depression,” we must now find new ways of doing things; changing our lives is not an option anymore.  Prior to 2009, Americans were not savers – today more and more of us are starting to put money away for that proverbial “rainy day.”  American business now understands that their consumer base has changed their spending habits and has had to get creative to keep things moving forward.  This is all positive.  These are all things that we should have been doing all along.  Maybe if we had done so, the economic situation would not have hit us all so hard.

So this year, instead of indulging ourselves in a rich holiday season, maybe we should focus on what we have remaining in our lives.  We need to center on giving thanks for the food and the time we can share with our family and friends, and celebrate the things that we believe in; commemorate the holiday traditions that make our lives meaningful.  And one more thing, don’t forget to spend a little quiet time with yourself this holiday season, reflecting on the past year and looking toward the future with optimism.

Happy holidays,

James Dicks

Basic FOREX Trading Tips

By Michael Thomas

FOREX Trading

There are thousands of people who have started trading the FOREX this year and many are brand new to any kind of trading.  The James Dicks FOREX Network (JDfn) offers daily help to many of the beginning traders that listen to these highly informative programs every day.  But I thought it would be important, as we approach a New Year, to let you know some of what you should be doing and learning as beginning traders to the Foreign Exchange market.

It goes without saying that obtaining an education about successfully trading the FOREX should be your first goal.  There’s always something new to learn and every day you should be reading books, financial magazines, and online blogs to get a better insight into how you could be trading more effectively.  This year you might even consider taking a FOREX trading class to obtain the necessary information you need from a professional trader.  Listen, when you started to learn algebra you had a teacher.  When you began driving a car you probably had a driving instructor, even if it was one of your parents.  The fact remains, if you want to become successful in any task, you must first learn the basics from someone who knows.  Get the education you need this year and you’ll most likely see progress in your trading in a relatively short period of time.

Once you have acquired some education to supplement your trading skills, the application process should take control.  That simply means practice, practice, and practice some more.  One thing that makes trading the FOREX beneficial to new investors is that it allows you to use a practice trading account, a Demo Account, to hypothetically trade without actually using real money.  Setup an account that will closely imitate the actual account you will eventually set up.  This way you will be trading in a manner that will be similar to the “real thing” once your live account is activated.  Apply the lessons you learn and perfect your trading style and trading plan.  Make sure you always “stay the course” and never divert from your trading plan.  Develop a strategy that will allow you to enter and exit trades using proper money management. Once you feel comfortable in your trading skills, leave your demo account and activate your live trading account.  Once thing is for sure, you can learn how to trade using a demo account but you sure can’t make any money and that’s why you’ve decided to trade the FOREX.  When you transfer to a live account is certainly up to you.  You’ll know when your confidence level is at the point where you feel secure trading your own money.

Always remember that you must never invest more money than you are willing to lose.  That’s where proper money management will come into play.  Money management represents the amount of money you are willing to invest in one trade and the amount of risk you are going to accept for the trade.  If you trade your account without using proper money management techniques you may as well be gambling.  Knowing how much risk to take on any particular trade will help you to sustain the proper perspective.  Money management is a method of keeping your emotions at bay while disciplining yourself during the trading session.  If you follow basic money management rules, you will see a dramatic improvement on your returns.  If you ask me, this should be a key area to obtain additional education in the New Year.

There are numerous avenues you can explore to get the information you need to become a successful trader and access to learning has never been easier.  Most of us actively use the Internet and that’s also a great place to start your research. You can actually sign up for online courses that you can accomplish at your own speed – right from your home.  Call your local college or find out what training or educational opportunities your company offers.  The more education you receive the easier it will be for you to adapt to new situations and increase your personal level of self-assurance. During this rough economic period, lots of people are going back to class to earn an advanced degree or to take vocational courses to actually change careers.  Again, the more you learn the more confident you will become.  Develop your FOREX trading skills and become a more profitable trader in 2010.

This month in the FOREX

By Scott Nourse

FOREX

November was a month of sideways trading for many FOREX pairs as the big move lower in the dollar saw consolidation.  This is normal after several months of a strong direction as fewer participants are left to help continue the push.  We have returned to a point where the dollar bears heavily outnumber dollar bulls and exchange rates are reflective of this sentiment.  However, because so many traders are already committed to one side of the market, it may take some new catalysts to propel currencies further against the greenback.  The flatness we have seen in pairs such as EUR/USD suggest that there is some uncertainty about whether buying around 1.5000 makes any sense right now.  On the other hand, the lack of any significant downside moves indicates that few traders are ready to square those dollar shorts that remain.  We are left in technical gridlock.

The strong correlation between high-yielding currencies and equities markets here and abroad has not left us.  Almost daily we see a strong tie between the markets as traders are either buying risk or selling it.  For the most part, buying risk has been the trade since March and only recently has that tapered off.  Data has been mixed in the US as well as in Europe and other developed regions of the world.  We have not seen consistent improvement in all areas of the global economy, but rather scattered reports that are being deemed “less bad” by the investment community.  This tells me that they are looking for reasons to buy rather than sell.  As I’ve often said, data can be spun a number of ways depending on what a majority of traders are really looking to do with it.

Some of the most recent fundamental developments that promote risk-taking include yet another pledge from the Fed to keep rates low for a long time, less job losses each month in the US, and big corporate profits coming with streamlined business.  On the other hand, we have seen unemployment soar past 10% in the US, a number of political leaders around the world attempt to discourage excessive risk, President Obama mention “double-dip recession” and the latest is a potential $80B debt default in Dubai.  As traders in the US were celebrating Thanksgiving, it was learned that Dubai World was struggling to pay its debts that are owed to European and US banks.  Amazingly, this was only a setback for a day or two before more risk-taking returned to the markets.  It really is unbelievable how quickly investors can forget.

Of course, when we look to the bond markets it is clear they have not forgotten so quickly.  Instead, aggressive buying in short-term Treasurys has driven yields into the ground.  This means investors in the bond market see a lot more risk than equities and forex traders.  Who is right?  Only time will tell, but I think the bond guys know a thing or two.

As we enter the final month of 2009, it seems very unlikely that any news will send stocks or high-yielding currencies significantly lower.  Money managers will make sure they don’t give back their handsome profits in the final days of the year.  The highs may not yet be in place, but upside looks rather limited.  I believe range trading is the most likely scenario for the next four weeks.  This does not mean we will see a flat market, but rather one that is confined to nice ranges worth trading in.  Still, this is only a forecast.

Moving into 2010 it still seems to me that as long as corporate profits are solid and government stimulus money is spent, Wall Street will ignore Main Street and spew the “jobless recovery” rhetoric that must infuriate anyone who is unemployed.  This could propel the risk trade even further in the first three to six months.  Beyond there it is really a guess at this point as we will have to watch closely what policy decisions are made in our government and the Federal Reserve.  Tax hikes, whether open or hidden, along with tighter monetary policy will undoubtedly dampen the risk appetite seen today.  We will watch all developments closely and adjust our outlook accordingly as we move forward.

Understanding Currency Cross Pairs

By Adam Horak

Foreign Exchange

Understanding just one currency may give you ample opportunities to trade; unlike the stock market which sees thousands of stocks moving at different times, for different reasons and often in the opposite direction of the overall trend of the market. This can leave traders wondering what is actually taking place. It is not uncommon to see a stock rally in the face of the biggest bear market or sell off during a bull market rally.

This is much less common in the currency market; although such divergences do exist, currencies are often affected greatly by individual new events. This gives the ability for a particular currency to move simultaneously in the same direction against a number of cross currencies. By using FOREX cross pairs, you can make a number of trades that are unaffected by the day-to-day fluctuations of one particular currency.

As most FOREX traders realize, you are either a Bull or Bear on a particular currency; this significantly narrows the number of currency pairs a trader has to manage by allowing you to focus on the underlying move of that particular currency. Now you can place the trade to follow the weaker or stronger cross currency. However, you will notice that not all currency pairs have the same Average True Range (ATR) meaning that some currency pairs may move more or less than the other cross pairs. So as a trader, it is important to be able to recognize what fundamental reason a particular currency has to move. Traders use this data in order to decide what pair to follow which will allow to you maximize your potential profit for that particular trading session.

Trading currency cross pairs is often used as a main part in any trader’s trading plan. This allows you to recognize the overall trend of a particular currency much easier. Whether the move is an upward trend, downward correction, or in a sideways channel, understanding the cross pair of a currency can benefit any traders trading strategy. So understanding currency cross pairs will give you a greater variety of trades while still following the overall trend of a particular currency.