Forex Probability Indicator

I’ve been following the development of FerruFx’s Probability Meter for trading Forex with MetaTrader 4.  To be quite honest, I find this to be a pretty brilliant tool for those of us who like to see in BOLD colors which way to trade.  This tool could easily keep you out of the most disastrous trades by shorting a currency that is clearly strong or buying a currency that is weak.  The Probability Meter will show you not only the direction of the trend but how strongly it is moving in that direction.

Basically, how this indicator works is the user must determine whether or not the individual indicators within the chart align.  The creator says that 75-80% is a  good trigger for an entry, but without a doubt other things should be considered like Fib levels and pivot levels.

Example how you can trade with the Probability Indicator from FerruFx: “attach the Meter on M15 and the 2TFs below (M5 and M1). First, the 2 additional indicators on the 3 TFs must agree. Then watch the numbers of the 3 others indicators (doesn’t matter which TF because the number will be the same). If these numbers are about the ones i suggested in the explanation above, then the Global % would be close to a good entry point. 75% seems to work well but with experience we’ll all find our % which we are confortable with.”

 The Probability Indicator works with the following currency pairs:

EURUSD
GBPUSD
AUDUSD
USDJPY
USDCHF
USDCAD

EURJPY
EURGBP
EURCHF
EURAUD
GBPJPY
GBPCHF
AUDJPY
NZDUSD
NZDJPY
AUDNZD
CHFJPY
EURCAD
AUDCAD

The indicator by itself is only $67.  Check out Forex Forums for a discussion on the Probability Indicator.

Forex Online Signals — Signal Provider Review

Came accross another Forex Signal Provider site called Forex Online Signals.   The question remains however, Forex Online Signals, are they just a good promotional program or are there signals effective enough for regular traders like you and me to be profitable?

Forex Online Signals offers a few things that set them apart from the rest.  Most important of these is the fact that you pay only if they give out a signal.  Some days, a signal will not be sent.  This allows (in my opinion) for them not to feel pressured to always be giving out a signal every day (like ForexProIndicator) because, quite frankly, there isn’t a trade every single day, maybe once a week, and this is what I like most about Forex Online Signals.  Moreover, they have a point system rather than you paying for each signal cash, you buy points and use those as you go along.

A few members of the Forex Forum I belong to has long talked about a Forex Signal Provider that would ask for compensation as a trader goes along rather than a huge chunk of money at the beginning of a month and not really leaving we, the traders, with a confident feeling that we will get what we paid for.

So, after reviewing Forex Online Signals, I will give them a thumbs up or down, depending on how it really goes.  I have belonged to Signal Providers before that send out signals that do not result in profitable trades even though their system says it was profitable for them.  Another thing to look out for when trying out Forex Signal providers.

I’ll keep you all posted!  Happy trading.

China’s Foreign Exchange Reserves Fall in 2008

Looks like the worldwide recession is starting to effect China’s Forex Reserves as well.  It was reported this weekend that China’s foreign exchange reserves have declined for the first time since 2003 after reaching $1.9 trillion at the end of September 2008.  China’s amount of reserves has been rising by hundreds of percent annually and this recent decline may indicate further slipping of the vast amount of reserves the country had amassed.

This chart displays how the Yuan has been gaining on the US Dollar for months and in recent weeks has levelled out.  The recent dollar strength can be seen not only against the Yuan, but many other currencies.

((http://www.chinadaily.com.cn/china/2008-12/24/content_7335345.htm))

One party official attributed the decline in forex reserves to the slowdown in appreciation of the Yuan against many currencies and the short-term depreciation of the Yuan against the USD.  It is also due to the increase of foriegn investment by Chinese companies leaving less money in the hands of investors.

Forex Patterns & Probabilities: Trading Strategies for Trending & Range-Bound Markets

Forex Patterns & Probabilities: Trading Strategies for Trending & Range-Bound Markets Book Description:
Most Forex books deal with general concepts and neglect how to trade specifically.  On the other hand, Forex Patterns and Probabilities provides you with insight on real-world Forex trading strategies and a unique glimpse into the mechanics of currency trading. Leading Forex trading professor Ed Ponsi explains what moves the currency markets up and down and provides strategies to enter, exit, and money management in between trades. Ed provides us with countless examples of charts and explanations that will guide you each step of the way and allow the the beginner forex trader to “look over the shoulder” of a professional forex trader who’s only business is trading.

Not sure if the name “PONSI” is a bad omen, since it resembles the word PONZI scheme so much, and in this time of Bernie Maddoff the Ponzi King, who’se willing to give it a shot?   “Forex Patterns and Probabilities” has a fair amount of useful information that is presented in an easily understandable and enjoyable manner. The number of strategies is are not numerous and some aren’t very new, but they are effective no doubting this.  It is clear that this book is written by an experienced trader.  One giveaway is the tremendous detail and the clear process of thought that Ed Ponsi has applied in describing these theories and strategies.  Ed goes as far as to show us instances where his trades didn’t work and explain why.

FED CUTS INTEREST RATE TO %.25

The US dollar fell to a 2 month low versus the Euro after the Federal Reserve’s cut interest rates by 75base points to 0.25%. This latest cut makes the American Dollar the lowest yielding currency amongst the major currencies and could possibly touch of more selling.

The Fed also announced it’s commitment to continue buying Mortgage backed securities and long term treasuries. The USD came under severe pressure after the announcement while stocks rallied.  Most importantly, at .25 percent, most big traders and others looking to buy the currency may not find the yield high enough to justify the risk. This latest move downward for the dollar may be a correction resuming after the past few months of incredible dollar strength despire the ecomonimc doomsday scenario playing out in the United States and the markets around the world.

The EURO broke above 1.4190 as the FED cuts interest rates more than predicted.

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