Jim Rogers Buying the Yuan

[neverwas]

[ QUOTE ]
I have a small account at Oanda. All these are outright purchase.

For a large position, it might be safer to buy a futures contract from CME.

[/ QUOTE ]

Considering opening an account with Oanda, please share your experience. How long have you had an account there? Have you had any bad experiences with them?

[MrBlue]

No bad experiences with them.

Note that I'm not a winning FX trader so I've never cashed out but I did manage to keep playing with my original stake even after 2 yrs.

But ever since IB introduced spot fx, I don't use Oanda much anymore.

[tippy]

ItalianFX, what was your Merrill friends basis for suggesting we are at a disadvantage in Forex?

I've found that technical analysis just doesn't cut it in trading Forex. The only way to succeed is to supplement that TA with a good base in the fundamental workings of the Forex market. The actual currency pair you are trading is simply the final piece of a sequence of events (if that makes any sense). You can TA the Eur/Usd pair to death, but if you don't know the rest of the picture leading up to the final TA, it is all useless.

Any trader in Forex should have a working knowledge in ALL major market areas and understand the intermarket relationships between those areas. Trading currency without using the associated markets is just impossible in my opinion.

1. commodity markets (gold, base metals, CRB index, GSCI index, JOC-ECRI index, oil)

2. bonds/rates (spreads, yield curve, inflation rates, Fed thinking, Fed Funds, bond prices/yields, foreign bond prices/yields, ECB thinking, other foreign central bank policy, foreign economy economic indicators)

3. equities (sector rotation, rate sensitive sectors, inflation sensitive sectors, gold mining shares, oil shares, banking shares, futures instruments, foreign equity markets)

4. other currencies (carry trades, correlative relationships)

5. domestic economic indicators (too many to list)

6. Geopolitical events (wars, weather, natural disasters, terrorism, etc.)

These are just the major areas. Each of these markets affect other markets. No matter how good your TA of the Eur/usd looks, if these other markets don't lead up to that last piece of the puzzle and confirm it, then the TA is useless.

TA is pretty much just a tool to fine tune your entry point based on a whole host of other fundamental factors.

[ItalianFX]

tippy,

Do you simply read, read, read? What do you look at and how do you interpret everything?

[tippy]

mainly I look at Gold, Oil, Copper, 2yr/10yr/30yr bond prices/yields/spreads, CAC/FTSE/DAX/Nikkei/SP500, XAU, XOI. These are my major intraday indicators. Minor things I look at intraday are the BKX, SOX, CMR, DJB, DJU,GSC. Daily I look at all the domestic economic indicators, foreign rates, foreign economic indicators, some news. I've got it pretty organized, so it doesn't take much time.

Everything has a cause and effect and each sector feeds off the others. Commodities are affected by the dollar. If Gold is up, the dollar is down. If the dollar goes down too much, commodities rise (look at gold and the CRB index). If commodities rise too much (inflation), interest rates go up. If interest rates go up, the dollar strengthens. If interest rates go up, bonds go down and stocks go down. If the Fed raises the rates the dollar goes up, gold goes down, commodities go down. And the cycle never ends. You can develop many relationships to observe whatever you want. Everything is related although sometimes there are lags. If one of these markets isn't behaving the way normal relationships say it should be, then watch out, the market is about to throw you a curve.

Gold and gold mining shares should move together, divergences are signals. Same with oil stocks.

Probably the best book to start with is John Murphy's "Intermarket Technical Analysis". It is an awesome read and points out all the major intermarket relationships. Once you get these down, reading the market (no matter which market you trade) gets alot easier. Even if you trade equities, having a working knowledge of the other areas can make trading alot easier. After that, move on to his next book, "intermarket analysis".

I know it sounds like alot of information, but it isn't really. Once you know what to look for in the intermarket relationships, things become clear. You filter out alot of what isn't important.

[ItalianFX]

[ QUOTE ]

Probably the best book to start with is John Murphy's "Intermarket Technical Analysis". It is an awesome read and points out all the major intermarket relationships. Once you get these down, reading the market (no matter which market you trade) gets alot easier. Even if you trade equities, having a working knowledge of the other areas can make trading alot easier. After that, move on to his next book, "intermarket analysis".


[/ QUOTE ]

I checked out both books. Are they basically the same thing, only the second is a revision?

Either way, they look to be amazing books; however, they are expensive! [img]/images/graemlins/frown.gif[/img]

[tippy]

Yes, the second is a revision of the first. The first was written in 1991, the second in 2004. The second book simply took all the relationships and showed how they held up after 1991. Some of the relationships changed for periods and the author describes why. A really good section on Deflation in the second edition.

If you just want to get one, go for the first one. You can usually pick up a good used copy for about a third of the new price. Nerds reading this stuff aren't usually too destructive, so the books are usually in pretty good shape, lol (if they have even been read at all).

Have a good weekend.

[john kane]

tippy, that books looks great, ive looked on amazon but the only copy is £208 ($420). are there more mainstream books around which would be more available?

i really want a book which explains how currency, bonds, commodities etc inter-relate.

also, i went on to the cme.com website, i may be really stupid but can you actually sign up on this website to trade? i tried going on to the membership section but membership was some huge amount of money.

[petp_the_greek]

regarding people buying the CNY...yes, techincally outsiders are not allowed to own the currency...same thing goes for brazil, argentina, south korea, phillipines (and some others)...but that doesnt mean it cant be traded. FX dealers devised a way around it by creating something called a NDF (non-deliverable forward)...basically its just a regular forward contract that automatically unwinds itself a day or two prior to maturity (so you dont take actual delivery of the foreign ccy) and thus settling any gains/losses in USD.
since NDF's are not as liquid as the majors, an alterative way to gain exposure to china (or most exotic asian currencies) is by buying/selling JPY.

and currencies DO have less longterm volatility than say, equities. but the reason youre at such a disadvatage is because of the volume you must trade in order to make any money and the use of leverage. hedge funds doing billion dollar trades are not that uncommon. in order for a retail investor to make decent money they must use ridiculous amounts of leverage...100 times leverage at retail brokers is the norm (compare that to 1.5 times leverage in the stock market)...so any small swing against you will usually wipe you out.

[ItalianFX]

[ QUOTE ]
tippy, that books looks great, ive looked on amazon but the only copy is £208 ($420). are there more mainstream books around which would be more available?

i really want a book which explains how currency, bonds, commodities etc inter-relate.


[/ QUOTE ]

Intermarket Technical Analysis is $16 as the cheapest for me. Where did you see 420?