Risk Warning

Forex Trading on margin carries a high level of risk, and may not be suitable for all traders. The high degree of leverage can work against you as well as for you. Before deciding to trade forex you should carefully consider your trading objectives, level of experience, and risk appetite. It is possible that you could lose some or all of your initial capital and therefore you should not trade money that you cannot afford to lose. You should be aware of all the risks associated with forex trading, and seek advice from an independent financial advisor if you have any doubts. Having said that, anyone with a sound mind can trade Forex but he must be aware of the risks involved as highlighted above.

Tuesday, July 28, 2009

NextView of Forex Trading

The other weekend I was at NextView to attend their Forex Trading preview. Unlike the normal preview, this was a whole day affair as in addition to Forex, there was also a preview on Options trading, an unusual combination since one would normally just trade one or the other. Another unusual thing was that there was a free buffet lunch thrown in as well so this was certainly good value since it was free! No wonder the turn out was a full house, probably 200+ participants.

The talk in the morning was given by Les Szancer who spoke on Options Trading and promoting his course in August. Since this was not my option, I just waited for the lunch and then the afternoon session on Forex, which was my main course. Just some details on the Options course in case some of you are interested. It is a two-day affair and the cost is RM2,500 with a same day joining fee of only RM1,990 so this is definitely the cheapest Options course as far as I know. I wonder if the Mirriam Options course is still charging RM12,000 , wow!

Lunch was rather chaotic with the big crowd and it could have been better organised. Anyway, the Forex talk was on after lunch with Don Schellenberg. He claimed to have introduced Forex Trading into Malaysia and to be one of the pioneer Forex trainers. His handout was certainly the best so far, with a whooping 142 slides. Of course he did not have enough time to go through all of it and his emphasis was on Fibonacci and Elliot Wave. No prize for guessing the name of his course that he was promoting - Trading Forex with Elliot Wave & Fibonacci.

Apparently this is not really geared for brand new beginners, I suppose his target are those current traders who needed something more than the usual technical indicators to improve their trades. Even in his preview, he never explained what Forex is or the advantages of Forex Trading so beginners were probably at a loss. His course is also for 2 days and the cost is RM3,888 with a free Asus PDA GPS phone thrown in.

In his talk, as a bonus, he mentioned 3 trade setups but he just rushed through them and this is what I could remember.
1. The Holy Grail (???) - Use the combination of ADX and bars above the 20Moving Average to spot a trend.
2. The Squeeze - watch the narrowing bandwidth of the Bollinger Band before a big move.
3. Daily Pivot - Pick high and low for the day.

This probably covers all the major Forex courses that are currently available locally. Our potential traders here are spoilt for choice in terms of the number of courses available. So attend some free previews, take your pick and become a Forex trader. Happy trading.

Ronald Kwok

Friday, July 17, 2009

Forex trading by Kishore (PowerUp Capital)

The last time I attended this Forex preview, it was Kishore himself who gave the talk but this time it was one of his students, one Rajesh. Of course, Kishore was a pro in public speaking but nevertheless Rajesh also gave a good account of himself. Not sure if this was part of the strategy as he told a sob story just like what Kishore did the last time. Also a clip of Nick (Vujicic, the one without limbs) was shown to give a motivational push, nothing wrong with that. Playing on your psychology?

Anyway back to the forex course. This is a 2 days and 1 night course and it costs RM498 x 12 months or a total of RM5,976 where you'll be taught 10 trading techniques. Apparently this is software driven with buy and sell signals probably based on technical indicators as well.

As usual, there were plenty of students testimonials. The advantage they have here is that they have Bellum Tan, the Robert Kiyosaki Asian Ambassador as an ex-student and he is making plenty of money so it is definitely a strong draw card.

There are the usual support with a trading classroom locally for three nights of the week. This is the most expensive course fees so far but they claim to have the largest number of students locally. May well be true since they have been promoting their courses very aggressively and they have been running courses in many other countries as well.

It is really quite difficult for somebody to decide which course to take since there are so many different classes available at varying costs. My next preview will be the one by NextView.

Ronald Kwok

Thursday, July 9, 2009

Forex Trading by Lily Thniah

Last weekend I dropped wife at a cooking class and since I had time to kill before picking her up, I attended another Forex preview. This time it was the one conducted by Madam Lily Thniah. I actually have attended her preview before, about one and a half years ago so it is good to see what she had to offer this time around and to give my readers the latest pricing for her course.

In the last preview, the intro was done by one of her students but this time, Lily did the whole preview herself. Her presentation was much better than the last time (if I remember correctly) and she gave a fairly comprehensive introduction to Forex Trading. There were a lot of video testimonials by her students and samples of some of their trade statements.

Her strategy seems to be based on Technical Analysis, probably candlestick and trends combined with other indicators. She mentioned 27 trades in one day so it may also be some form of scalping. She also emphasised on discipline and using different time frames.

Hers is a 2-day course followed by weekly support classes. The fees? A list price of RM5,500 with discount down to a round figure of RM5,000 with other support such as daily reports, e-mail, hands-on trading, etc.

The syllabus covers all the basics of Forex Trading so the secret will be her trading strategies. I wonder if any of her students are willing to share that here.

I think I will attend one of the Forex previews by Kishore since the advertisement is appearing in the newspaper almost everyday. This will complete my survey on Forex courses that is currently available.

Ronald Kwok

Wednesday, July 1, 2009

Forex Trading by T3B

Last week I attended another of the many Forex previews that are cropping up recently. This one is by T3B located near Centrepoint, Bandar Utama, PJ. The speaker was Chin, himself a product of the same course which he attended earlier. Nothing flashy, just a straight forward presentation. The course was developed by Clarence Chee, a Singaporean Forex trader.

Apart from the usual basics on Forex, Chin gave 2 sample strategies from the course, one each for the Dynamite TNT System and the Profit in Pivot System. (There are supposed to be 5 + 3 strategies in total.) Both are trading on trends, the first is on the hourly chart based on Moving Averages crossing and confirmation by Stochastic and MACD, so quite a basic one. The second is on a daily chart based on position of the weekly Pivot Line, a proprietary (?) indicator.

Since this is relying on Technical Analysis, it gives more confidence (at least in my opinion) than the previous preview I attended by Wealth Mentors where the emphasis is NOT on technical analysis. One can argue that as long as the method makes money, it does not matter what it is based on but I feel there must still be some basis, it surely cannot be on guesswork! So please, can some past students of Wealth Mentor give their comments or are they sworn to secrecy?

Trading results of monthly top students were shown and they were very realistic winning figures ranging from about 300 to 1,500 pips nett (for the month) so no exaggerated claims here.

What about the fees, the most important part of any course? Well, this is a 2 and a half days affair (Saturday and Sunday full day plus Monday night) for a list price of RM4,688. After the mandatory discount, it comes down to RM3,988.

Is this for you? Maybe, but there is nothing like attending some of these free previews to judge for yourself and find one that is suitable for you.

Ronald Kwok

Monday, June 22, 2009

Maid Miriam does Forex!

Hi folks I'm now back and I have not met Robin Hood and Miriam during my holidays!

OK it is actually Mirriam, Mirriam MacWilliams to be exact. You know she is the lady who is a guru in Options trading and conducts classes with Wealth Mentors locally. I was at one of those free Forex previews the other night and I was surprised that she is now into Forex as well. If you need any proof that Forex Trading is the instrument of choice for trading, this must be it. In fact, this was not even mentioned in the advertisement that the Forex course will be conducted by Mirriam herself, maybe not to detract from her Options Trading courses.

Anyway, some details on the Forex course on offer by Wealth Mentors. The preview was conducted by Albert Seah who gave (IMHO) an over-simplified view of Forex trading. This is in line with the course where the emphasis is on simple rules; no complicating indicators or technical analysis, no news analysis, no software, etc. From the preview, it did show examples of winners using candlestick charting so my only guess is that it would be using trend as the main guide to enter a trade but I could be wrong.

It is a two day course (Sunday and Monday) and the list price is RM6997 and after all the usual discounts and special promotion, it comes down to RM4997. It comes with 3 months mentoring but still seems too much for just two days. It may be good for the very non-technical but how effective it is is left to be seen but there are plenty of winning trades by Mirriam on show and some positive testimonials in the ads.

It would be good for those who have attended this course to give their comments so that others can learn if this is worth the effort and the money.

Ronald Kwok

Thursday, May 21, 2009

Holiday break in Turkey

I will be away for two weeks in Turkey so there will be no new posts and I will not be able to respond to comments until I am back. Cheers.

Ronald Kwok

Friday, April 24, 2009

My date with Kathy Lien

Wow, last night I had a date with Kathy Lien, yes the real Forex analyst Kathy Lien and not some look alike with the same name! OK, I was not alone but with another 300 or so men (and ladies) at her Forex Masterclass in Kuala Lumpur. You see, she was in Singapore over the weekend for the Asia Trader and Investor Conference and stopped over here to meet her clients. She was formerly with FXCM but is now with GFT, a Forex broker with an office in Singapore.

As this talk was sponsored by GFT, I was expecting a lot of sales talk but no, there was only one slide she showed that had the GFT account offer. She did had several slides on Foresight-AI, a forecasting tool marketed by GFT but it was nothing pushy at all. She also had some slides promoting a GFT website, FX360, for Forex news and commentary and again it was done without any sales pitch. Most of the evening was devoted to Forex trading itself and it was definitely not for beginners as she went straight into some trading strategies. (Didn't she called it Forex Masterclass?) Here's a summary of what she covered for those interested and were not able to see her in person.

1. The Five-Minute Momo Trade. Trading on the 5 minute chart using MACD to confirm momentum. You can get details of this in
Investopedia here.

2. Using Bollinger Bands to pick Tops and Bottoms. Has the 1 deviation Bollinger Bands together with the normal 2 deviations BB to define Buy and Sell Zones.

3. Trading the First Break using the Bollinger Bands above.

4. Trading the Retrace using the same Bollinger Bands above.

5. The Perfect Order. No, this is not the long or short order that made you a lot of profit but all the SMA's lining up in the right order according to their durations.

The most interesting part of the evening was on Trading the news. While most Forex gurus will advise traders not to trade the news, Kathy gives TWO strategies to trade the news. One is Proactive Trading (i.e. enter before the news is released) and the other, Reactive Trading (i.e. after the news is released). The first requires a lot of work but big pips reward while the second is easier but with comparatively smaller pips reward.

Finally she gave some words of wisdom on Trading Lessons. Not bad overall, considering that it is totally free except for the parking fee.

Kathy has just published her new Forex book, Day Trading & Swing Trading the Currency Market and I was surprised that she was not even promoting this book at the gathering. Maybe I got there a bit late and her book has already sold out or she is making more than enough in the Forex market. I picked up my copy last weekend at Kinokuniya but you can get almost 40% discount from Amazon but check the shipping charges.

I have not gone through the book yet but from my browsing, I believe it is worth a read. It has great background information on the Forex market, the major currency pairs and on Fundamental Analysis but there is not much on Technical Analysis so you'll need something else for that. There's a chapter on Technical Trading strategies but this assumes knowledge of the technical indicators employed. Many of the trading strategies given in her talk are also included here. I'll give a more detail review of her book after I have read it but at 290 pages, it'll take some time!

If you need a book on Technical Analysis to complement Kathy's book, I would recommend Technical Analysis for Dummies. Though it is not specifically written for the Forex market, it covers all the basic technical indicators and most of them are applicable to the Forex market.

Meanwhile, happy trading.

Ronald Kwok

Thursday, April 16, 2009

The Golden Rule of Forex Trading

Last week I was at a Bible study class and the priest there mentioned that Hillel, a famous rabbi was asked to sum up the Torah in one sentence and he said "Do not do to others what you would not want done to yourself." This sounds very much like the Golden Rule said by Confucius rather than by a rabbi. So in the same vein I would like to give you the Golden Rule of Forex Trading in just one sentence.

"Enter the market near the beginning of a trend after it has started and exit before it reverses or soon after." How does it sound? Very simple, right? And that's just what every trader will want to do but it is easier said than done. It is even simpler and more obvious on hindsight when you look at charts that have happened but try doing that during a live market.

So all the study of the charts and technical analysis is to enable one to make an early entry once a trend has started, wait for the trend to continue, the longer the better; and exit before the trend reverses or soon after the trend has reversed. Note that we are not trying to catch the trend when it first starts and exit at the highest (or lowest) point to harvest the maximum number of pips. This is call trying to catch the tops and bottoms and it is too difficult since we do not have a crystal ball to see when the trend will start and when it will end. It would be great if we can get just maybe 70% or 60% of the trend since we are depending mainly on lagging indicators which can only show the trend after it has started or reversed.

The Forex market will set traps along the way and the common ones are known as retracement and false breakout. A retracement is a price movement in the opposite direction after the trend has started, after which the price will continue in the direction of the trend. Depending on which point you enter the market and the stop loss set, you may be stopped out during a retracement. It is most frustrating to see the price continuing in the original direction again after you have been stopped out during a retracement and counting what could have been your profit.

A false breakout is a false trend so to speak. It looks as if a new trend is forming but after a while, the "trend' reverses and move back to where it was or even in the opposite direction. If you get stopped out in this case, it does not feel as bad as in the retracement since the stop loss prevented you from suffering a higher loss while in the other case, the stop loss prevented you from making a profit. It is because of this that there are some gurus who propose not setting a stop loss at all or set at some ridiculously high values. But for beginners, it is always a must to set a stop loss since you will be knowing before hand exactly how much your loss will be if the price moves against you and you can calculate you risk reward ratio from this. Most importantly, this will protect your capital in case you lose your internet connection for whatever reasons. And there can be many reasons.

So for newbies, the advice is always to trade with the trend or as they say, "the trend is your friend" and "trend till it bends". That's Forex trading in a nutshell. Looking at old charts and in hindsight, even a blind man can show you the trend; the challenge is how to identify a trend in the midst of the ongoing price action.

(By the way, what Hillel actually said was "What is hateful to you, don't do to others. This is the whole Torah; the rest is commentary." So this post is the whole Forex Trading and the rest will be commentary!)

Ronald Kwok

Saturday, March 28, 2009

Metatrader 4 for Forex Trading

As I have mentioned in my earlier post, I have just launch my new Blog on Metatrader 4 simply called Metatrader 4 for Forex Trading. Hope it will help in getting more out of this trading platform. Happy trading.

Ronald Kwok

Monday, March 23, 2009

Timeframes and trading styles

Beginners may be overwhelmed by having so many charts of different timeframes to look at. For Metatrader 4, there are charts for 1 minute (M1), 5 minutes (M5), 15 minutes (M15), 30 minutes (M30), 1 hour (H1), 4 hours (H4), 1 day (D1), 1 week (W1) and 1 month (MN). Which are the ones that the trader should be looking at? It all depends on what type of trader you are.

Roughly, traders can be divided into three main categories. First the short-term, high frequency scalpers who would not hold a position for more than a few minutes. Next is the medium term, directional day trader who may hold a position from a few minutes to a few hours but never overnight, hence the term day trader. They are also called swing traders since they trade on the swing from one direction to another direction. Then there are the long term traders who may hold a position for days or even weeks and they are also called position traders since they hold on to their position until there is a major change in direction.

Each type of trader will usually refer to charts of three different timeframe to make their trade. There is no hard and fast rule but it may be something like these.

Scalpers: 1 minute, 5 minutes, 15 minutes
Day trader: 5 minutes, 1 hour, 4 hours
Position traders: 1 hour, daily, weekly

The middle range charts are for monitoring the market during the trading session. The lower range is used for timing entry and exit and the higher range is used for knowing the longer term trend. After awhile, you may find certain timeframes may suit you better than those mentioned above. Anyway, it is always good to look at the hourly and daily chart to see where the market is heading.

Sometimes it can be confusing when you look at the charts at different timeframe since the market seems to be moving up at one time frame while it appears to be moving down in another timeframe. This is the case because the market does not move in a straight line but in waves and any single movement can be broken down into smaller and smaller movements with its ups and downs. During periods when all the time frames are in one direction, the market is trending but this this can change quickly depending how how strong the trend is. Most of the time the market moves within a range in a sideway manner but also with its own ups and downs.

Which trading style is best for a beginner? It all depends on the individual preference and also his tolerance of risk and loses, the capital that is available and the time that he has. As a general rule, the smaller the time frame, the smaller the potential loss (in terms of pips) when setting stop loss and also smaller potential profit (again in terms of pips) when setting the target profit. The converse is also true i.e. the larger the time frame, the higher the potential loss and the potential gain. This is because of the volatility or fluctuation that increases with the timeframe. For scalping, this may be just a few pips to 10, 20 pips; for day trader, 20 pips to 100 or 200 pips while for position trader this will be in the range of hundreds of pips.

Which style is easier to make the pips? To make say 200 pips, you may need to make just 1 trade as a position trader, 4 trades as a day trader or 20 trades as a scalper. One can argue that there are many more opportunities to trade as a scalper within a day but one must remember that every time you enter a market, there is risk involved and for every trade you make, you are giving away pips in terms of the spread. So there is no one best style and whichever style you choose you still have to follow the rules and be disciplined at all times.

It does not mean that trading the longer time frame has the higher risk (in terms of your capital) even though a bigger number of pips are involved since you can adjust the risk by reducing the number of lots as compared to a shorter time frame. There's nothing like trying it out and you can do it for free absolutely by opening a demo account. Most Forex brokers will allow you to open a demo account and that's the best way to get started before you put in your real money. There are also many trading platforms but the most popular seems to be Metatrader 4 and this is the one that I'll be using in all my posts.

So open a demo account and start trading.

Ronald Kwok

Saturday, March 14, 2009

Pips Conqueror, first impression

I'm back from my Advance Class by Forex Investology and the new software, Pips Conqueror by Sam Se looks to be the best yet so far. It has so much functions built into it that it will take some time to fully digest and put it to good use. You can just simply drag and drop to place your order (if the market conditions meet the criteria) but unless you do a correct trade set-up, you may not end up winning. So it is very easy to use but to use it well, it will take some effort. In any case, the Money Manager portion will do all the calculations for you, prevents the really silly trades and reduces over-trading.

In fact I was reading the Pips Conqueror user manual to understand it better while sitting on my throne this morning when it suddenly occurred to me that there is a need to start a separate Blog on using the trading platform Metatrader 4 since many beginners will find some difficulties in using all its functions. Writing about it will also make me understand it better so watch this space for the launch.

Sometimes great idea flows while other things are flowing. But for now it is practice, practice and more practice on the Pips Conqueror. Sorry for the digression but in my next post, I will be back to Forex Trading basics.

Ronald Kwok

Saturday, March 7, 2009

Daylight Saving Time, again

It's Daylight Saving Time again for this year and it will start this Sunday, 8 March for the US. Though the NFP report is always released at 8.30am EST, the last NFP on 6 March was released at 9.30pm MYT and the next NFP report on 3 April will be released at 8.30pm MYT because of the Daylight Saving Time. (MYT is local Malaysian Time.)

The IBFX trading always closes at 4.00pm EST Fridays and opens at 6.00pm EST Sunday. So with Daylight Saving Time, it will be 4.00am MYT Saturdays and 6.00am MYT Mondays while it was 5.00am MYT Saturdays and 7.00am MYT Mondays previously. Confusing? You bet.

So to get all the release times of the various economic reports in the correct local time, make sure you synchronise the time in the calendar of your favourite Forex web-site to match your local computer time. In this way you will get the local time right and ensure that you are not caught unexpectedly by sudden market changes immediately after the release of such economic reports.

This will be a short post since I am currently attending the 4-day Forex Investology Advance Class where Sam Se will release his latest Forex trading software, Pips Conqueror that will simplify and improve the chances of making money in the Forex market. This looks very promising but the real test will be whether it will bring in the dollars. Isn't this what we are in the market for? So watch out for my review once it is put to the test.

Ronald Kwok

Thursday, February 26, 2009

Technical Analysis

In my last two posts I have touched on Fundamental Analysis so it is now time to talk on Technical Analysis, the other major branch of analysis that most traders carry out.

Technical Analysis (TA) can be defined as the study of historical price movements to predict future price movements or looking at the market past behaviour to see what is most likely to happen in the future. There is this standard disclaimer that "past performance is no guarantee of future results" and also the equally common "history repeats itself" so which one do the Forex market follow? Well, it is a bit of each and a combination of both and that makes the market both predictable and unpredictable the same time. So nothing is 100% certain in the market and we can only talk of high probability and TA provides the tools to help traders make decisions with a high probability of success, hopefully.

Two factors make TA a viable tool for traders - the market is made up of human and thus follow human crowd behaviour and TA is used by the majority of traders and thus it has a self-fulfilling prophesy aspect. This is more so in the Forex market than the other trading markets and it makes TA an important tool for Forex traders.

There are hundreds (if not thousands) of books written on Technical Analysis and you can get loads of information on the Internet so I'll just give a brief summary here and mention only the common items. Broadly, TA can be broken into the following main areas but these are not clear divisions and there are overlaps.

1. Chart Analysis
2. Pattern Analysis
3. Trend Analysis
4. Momentum Analysis
5. Predictive Analysis.

Chart Analysis
Briefly, this is looking at the charts and price to see the movement in the market and this forms the basis of all the other analysis. The two main types of charts are the Bar Chart and Candlesticks and the latter is gaining popularity since it gives a record of the price movement that is slightly easier to interpret visually that the traditional Bar Charts.

Pattern Analysis
Over a period of time, the Bars or the Candlesticks will form certain patterns and from pass experience, certain patterns will behave in a certain way. Past gurus have given names to these patterns such as Double Tops, Head and Shoulder, Flags, etc. In the case of Candlesticks, a particular candle or a certain combination of candles will occur before subsequent behaviour in a certain way and they also have names such as Doji, Morning Star, Harami, etc.

Trend Analysis
The price will sometimes make higher highs or lower lows and by joining some of these points, you will will be able to form a trend line. Sometimes the price will stop repeatedly at certain points and by joining these stops, you will have the support and resistance lines, akin to the ceilings and the floors of a room. To smooth out the choppy price movements, Moving Averages are normally used and they can also come under trend analysis since after being smoothed out, the MA will show some kind of trend, especially over longer periods. There are two main types of MA, the Simple (SMA) and the Exponential (EMA).

Momentum Analysis
Apart from moving sideways, prices will move up or down and the momentum will show how fast or slow it is moving and there are technical indicators that show this momentum and they tend to oscillate between 0 and 100%. Such oscillators include Relative Strength Index (RSI) and Stochastic. You will meet Overbought and Oversold areas in these oscillators and also the somewhat predictive Divergence.

Predictive Analysis
Under this would be the Fibonacci Retracement, Fibonacci Extension, and Elliot Waves since traders use them to predict what the future price will likely to be or where it will likely to change directions.

There are some common indicators that do not fall clearly into any of the above analysis. One is MACD (or Mac-D) that is a combination of moving averages and oscillators that do not oscillate between 0 and 100% but around the zero point. Another one is the Bollinger Band, a combination of moving average and the standard deviation. When the bands contract, a breakout is imminent.

A successful trader will use a combination of all or some of the above analysis before making a trade. Some are used to trigger a trade, some used for confirmation and some used to set stops or profit targets. If you enter with too little analysis, it will be like gambling; if you make too much analysis, you may never enter at all or miss the opportunity. As they say this is "Paralysis by Analysis"

So it has to be a practical compromise between the two extremes and this will come with experience and it depends on the individual as a certain combination of indicators are best suited for a certain trading style. In summary, all these tools are used in combination to time when to enter the market and when to exit for high probability trades with the best results.

Ronald Kwok

Friday, February 13, 2009

NFP - review

So how was your experience with the NFP last Friday? This time around it was not too exciting since the unemployment figures were bad just as expected, so no surprises. Looking at EURUSD, it went up just 58 pips within two minutes of the NFP report. It was definitely more exciting early last year before this financial crisis. The range of movement was in excess of 100 pips and it would move up and down within minutes, unlike the tame affair we are having nowadays.

What are the other market moving economic reports? Here are the top 8 for the US Dollar (and consequently the EURUSD) as given by Kathy Lien of FXCM.

1. NFP (Unemployment report)

2. Interest rates (Federal Open Market Committee or FOMC decision)

3. Trade Balance

4. Inflation (consumer price index, CPI)

5. Retail sales

6. Gross domestic product (GDP)

7. Current account

8. Durable goods.

Most of the US reports are released at 8.30am EST or 10.00am EST

What about the Euro? Similar reports to the above for the main EU countries are also significant and in addition, the European Central Bank (ECB) statements and German economic reports are also important. These are normally released at 0900 GMT.

As for the British Pound, the Bank of England (BOE) statements are critical in addition to those reports above. Most British reports are released at 0930 GMT.

The Tankan Survey (done quarterly) is a important report that greatly affects the movement of the Japanese Yen.

In addition to having an immediate effect on the Forex market, some of these reports will have a long term effect which will affect the general direction of the movement of the currency pairs affected. The study of such effect is known as Fundamental Analysis. Some traders specialise in this and they normally trade in longer terms such as days, weeks or even months. These are for the professionals as they have to withstand fluctuation of pips that move in the hundreds.

Fundamental Analysis is one of the two main branch of analysis carried out by Forex traders; the other one is Technical Analysis. Before we move on, here's a reprint of a poem I wrote earlier on the effect of the NFP sometime last year that has appeared in my other Blog in case you have not read it. Have fun. (There are some slight amendments.)

For Karaoke fans, this can be sung to the tune of Twinkle, Twinkle, Little Star and the title is "Twinkle, Twinkle, Currencies"


Twinkle, twinkle N-F-P
What you get’s not what you see.
Where more is low and less is high,
When I see sell, you say it's buy.
Twinkle, twinkle N-F-P,
Please don’t bring me to my knees.

The reactions

Twinkle, twinkle E-U-R,
Like the plunging Niagara.
I’ve been praying for your rise,
I have paid a heavy price
Twinkle, twinkle E-U-R,
You will need some Viagara.

Twinkle, twinkle G-B-P
What a trick you played on me.
When I clicked sell, you took a bend;
Now I have to say amen.
Twinkle, twinkle G-B-P
Thanks to you, I’m all at sea.

Twinkle, twinkle C-H-F,
When you dive, there’s nothing left.
Lower, lower down you go,
I’ve been battered, blow by blow.
Twinkle, twinkle C-H-F,
You have put me in deep cleft.

Twinkle, twinkle J-P-Y,
On the downward path you fly.
All my profits, they are gone;
I’m better off to trade the won.
Twinkle, twinkle J-P-Y,
My poor pocket, you wring dry.


Twinkle, twinkle U-S-D,
How I wonder where you’ll be.
Up the charts you rise so high,
Oh as if you’ll reach the sky.
Twinkle, twinkle U-S-D,
I just wander, woe is me.

Ronald Kwok

Wednesday, February 4, 2009

Times to watch

In my last post, I covered how the Forex market can be traded round the clock, 24 hours a day. You would have realised that the activities and liquidity of the various currency pairs are not the same throughout the 24 hours. Which are the times that is important? (All times mentioned below are Daylight Saving Time where applicable.)

Well, it all depends on when your normal trading hours are. The hours when you trade is of course the most important to you. There are other times that are important to all traders.

1. Start of a trading day. This will depends on the particular Forex market, if it is the London market it will be 0700 GMT . For purpose of compiling data for daily charts, the start of the day will be 0000 hour GMT (which is 8am MYT, 8pm EST)

2. Start and end of a trading week. Since the Forex market closes on Friday, 4pm EST (that's Friday, 4am MYT, 2100 GMT) and opens again on Sunday 6pm EST (that's Monday 6am MYT, 2300 GMT), there is usually a price gap between the closing price and the opening price. Sometimes this can be more than 100 pips so you may want to close your positions before the market closes for the weekend. These times are based on Interbank FX and other brokers may differ slightly.

3. At release time of scheduled economic reports. You will find that at certain time of the day, the price move rapidly either up or down for no apparent reasons. But if you check with the calendar for the schedule economic reports, you will find that these times of rapid movements are the times when such reports are released.
At such times, it is best not to open any new positions or if you have opened positions, to close them or move you stops to protect your profit since nobody knows for sure which way the market will move once the report is released. Luckily for all of us, most of these economic reports have a fixed date and time for their release and we can prepare in advance before these times come.

The best way to be prepared for this is to have a calendar of forthcoming reports. Most of the Forex websites have a calendar option where the economic reports are listed on a daily, weekly or monthly basis. I print out a weekly list of the reports and highlight those that are of importance that may have a major effect on the price in the market. The website that I use is Forex Factory and here are some details on what I used.

I choose the weekly calendar and there is an option to print out the current view. There is a filter option to select the currencies that you are interested in and also the expected impact of the economic reports. There are 4 categories of impact and I choose just the top two so as not to have too many release times to follow. Finally, I select the time of the report to show the local time so that I do not have to do all the time conversion which can be confusing at times. You can find similar options in other major Forex websites.

Not all the reports have the same effect on the Forex market. One of the most important and one that has the most dramatic effect (on the USD and related currencies) is the NFP or Non-Farm Payroll which is the US unemployment report. This is released monthly at 8.30 am EST on the first Friday of the month and you can witness the effect this coming Friday at 1330 GMT (9.30pm MYT). Lately, the effect of this report is less dramatic mainly because it is more of the same, more unemployment every month so it is nothing new and nothing unexpected. Just watch the EURUSD this Friday to see what the effect will be this time around. Will there be fireworks or just a whimper? Nobody can be sure so don't bet on it.

Ronald Kwok

Saturday, January 24, 2009

Which Forex market to trade?

As my last post was on which Forex currencies to trade, this post will be on which Forex Market to trade. Though you can trade Forex 24 hours a day round the clock, effectively the time you trade will determine which Forex market you are trading since basically the Forex market is active when the banks and financial institutions in that particular market are active.Which are the top Forex markets in terms of turnover? Well based on the latest (2007) report from the Bank for International Settlement (BIS), the international supervisory body for banks around the world, the Top 10 Forex markets are the following with their percentage market share. Their positions in the previous report in 2003 are shown in brackets. You can download the report from this site if you are interested.

1. (1) UK 34.1%
2. (2) USA 16.6%
3. (8) Switzerland 6.1%
4. (3) Japan 6.0%
5. (4) Singapore 5.8%
6. (6) Hong Kong 4.4%
7. (7) Australia 4.3%
8. (9) France 3.0%
9. (5) Germany 2.5%
10. (11) Denmark 2.2%

An interesting development is that Japan used to be the traditional no.3 but is now overtaken by Switzerland while Germany has fallen from no.5 to no.9 since the last report. The top 2 markets, UK (London) and USA (New York), account for more than half the world's market share. (Malaysia is way down with only 0.1% market share.) We can thus break up the Forex world broadly into 3 markets, viz the Asian (centred on Japan), European (London) and US (New York) markets. By adding the individual country's market share, we get these figures. (Australia is counted as Asian for this purpose.)

Asian - 20.4%
European - 47.9%
US - 16.6%

You would expect the market volatility to reflect this market share but generally you’ll find that the Asian market is the least volatile, the US market is the most volatile and the European market is somewhere in between. Maybe this is a reflection of the number of active individual Forex traders as opposed to just the banks and institutional traders.

Since it will be very confusing if every market is shown in their own local time so for easy reference, most trading platforms use the GMT, Greenwich Mean Time, as a common reference. How does the 24 hours Forex trading day move along? Well, the day starts with the Australian (Sydney) market that opens at 9pm GMT (5am MYT, Malaysian time, or 5pm EST – NY time). This is followed by the Tokyo market at 11pm GMT (7am MYT or 7pm EST). Next to come on will be the Singapore and Hong Kong markets at 1am GMT (9am MYT or 9pm EST). The Asian market will then be in full swing. After about 5 hours, the continental European market will start at 6am GMT (2pm MYT or 2am EST). An hour later, the biggest market, the London market will start at 7am GMT (3pm MYT or 3am EST). Finally the New York market starts at 12 noon GMT (8pm MYT or 8am EST) and ends at 9pm GMT. That’s when the Sydney market opens to another day and the cycle repeats all over again.

It will be easier if you plot the above in a chart and you can also see how the markets overlap. I have done one chart using Excel, and if you want a copy, just e-mail me.

Please note that the starting and ending times above are approximate and they refer to the period of Daylight Saving Time, usually from March to October for Europe and USA. Outside this period or during Standard Time, just add one hour to the MYT. An easy way to remember the EST, Eastern Standard Time (or New York time) is that it is exactly 12 hours behind Malaysian time so if it is 8pm in MYT, it is 8am in EST; just change PM to AM and vice versa. (This is during the Daylight Saving Time period.) For more details on this and on time conversion, you can visit this Time and Date site. Malaysian Time is always GMT + 8 hours.

For us in Malaysia, the trading day can be divided roughly into three sessions. They are Morning, the early Asian market, Afternoon, the later part of the Asian and the early part of the European markets and lastly Night, the late European and the early US markets. After midnight it will be the last half of the US market for the night owls. So we can choose when we want to trade depending on our daily routine and we can always fit the Forex trading hours into our lives and not the other way round.

As mentioned earlier, each market has a different character and volatility and after trading for some time, you will notice it. This is generally the case but since there is never certainty in the Forex market, there will be some uncharacteristic movements from time to time especially around the times of major reports or economic announcements.

Since the Lunar New Year is just round the corner and Monday will be the start of the year of the bull so here’s wishing it will be a bullish and prosperous year for all viewers, especially for the Forex traders. Good luck in your trades.

Ronald Kwok

Thursday, January 15, 2009

Which Forex Currency Pairs to Trade

Since there are so many countries in the world, there will be many currencies pairs available but luckily the bulk of the Forex market involves only a handful of currency pairs and you only need to trade in these pairs and not bothered about the rest. This is surely much simpler than picking what stocks to trade.

By definition, the major currency pairs will involve the following major currencies - USD (US Dollar), EUR (Euro), JPY (Japanese Yen), GBP (Great Britain Pound), CHF (Swiss Frank), CAD (Canadian Dollar), AUD (Australian Dollar) and NZD (New Zealand Dollar). Out of the many combinations possible, the major dollar currency pairs are, in order of volume traded, the following. (The figure in brackets is the spread in pips used by Interbank FX, other brokers may vary but this is typical. This is the spread under normal trading conditions but during very volatile periods or just before major financial announcements, the spread will increase quite a bit so keep an eye on this before you execute your trade as it may upset your calculations.)

1. EUR/USD (2)
This is the most actively traded currency pair in the Forex market (27% market share) and thus it is the most liquid pair. This is the best pair for trading by newbies since it is generally well behaved and not very volatile compared with other pairs. It also has the lowest spread and some traders just trade this single pair for a living.

2. USD/JPY (3)
This is the second most actively traded currency pair (13% market share) after the EUR/USD. This pair can move quietly along a narrow range for some time and then move very quickly in either directions. This pair is popular with short-term traders for quick profit because of this trait.

3. GBP/USD (4)
The next most actively traded pair (12% market share). This generally has similar directional movement as the EUR/USD but it is more volatile and moves a bigger range than the EUR/USD.

4. USD/CHF (4)
This has only 4% market share but is the most volatile among the 4 major currency pairs and sometimes it even appears chaotic. Thus it is not recommended for newbies but good for those looking for excitement.

Thus the top 3 major pairs has more than 50% of the market share and just trading these 3 pairs is enough to keep you busy round the clock. If these are not enough you can look at some other pairs below when you are feeling bored.

The minor dollar currency pairs are those where the USD is pitted against the other major currencies, namely,

5. USD/CAD (5)
6. AUD/USD (5)
7. NZD/USD (5)

And finally, the cross currency pairs are those that do not involve the USD and you can have so many combinations but the more popular ones are the following.

8. EUR/JPY (5)
9. EUR/GBP (7)
10. EUR/CHF (7)
11. GBP/JPY (9)
12. GBP/CHF (12)

It is recommended that newbies start with trading the EUR/USD and hone their skills using this pair. You will be able to see similar patterns of price action repeating itself over a period of time and by concentrating on a single pair, you will improve your chances of success. Familiarity breeds profits, not contempt.

Ronald Kwok

Wednesday, January 7, 2009

Forex Trading Courses - Updated

The Forex Trading Courses has waken up to the New Year after the year end slumber. Just yesterday, I saw an advertisement by T3B for Dynamite Forex (trainer Clarence Chee) in The Star. And today I saw no less than 3 ads for Forex Trading previews - Lily Thniah (Ringgit Fleet), Sam Se (Forex Investology) and Kishore (Power Up Capital). So if you are interested to find out more, just attend the previews, after all they are all free. The best is to attend all of them if you have the time and then decide which is most suitable for you.

Here are just a few pointers for you to consider while making your choice.

1. The trainer should be a professional Forex trader since he will be in a better position to explain Forex trading and will be talking from real life experience rather than just from text-book theory.

2. There should be adequate after-sales service or follow-up after the course is over where students can seek assistance and be kept up to date on the changing Forex market and improvements and new information be imparted to the students as necessary.

3. The trading platform taught should be easy to use but should also have sufficient charting tools and technical indicators to assist the trader as he become more experienced.

4. In addition to the mechanics and technicals of trading, the course should cover money management and trading psychology, two other important aspects of successful trading.

5. Any other trading aids would be a bonus.

As you know, the Forex Trading course that I attended was Forex Investology (FI), conducted by Sam Se. Why did I make that choice? I attended a few free previews (three, if I remember correctly) before I made the decision. Based on the previews that I attended, my main reasons for selecting FI were:-

a) Their claims of success is more modest and realistic (and not some fantastic figures that sound too good to be true) which to me is more sincere.
b) Sam Se is a professional Forex trader and from the preview, you can see that he knows his stuff. And the clincher -
c) The fees were the cheapest (among those that I know at that time)!

Since then, I have also attended more previews to see what others have to offer since they are free. Would I make the same choice after attending all the additional previews? Definitely, since Forex Investology is still the cheapest in town and offer the best value for money.

The after sales service has also been good since there were "clinics" for those with technical problems, "Trade with Sam" sessions with market outlook and new information and tools in addition to phone-in and hands-on support. There is a Forum that used to be active but is now quiet probably because it used to give Forex hedging signals but is now temporary suspended because of the current financial turmoil. How does this compare with those provided by the others? Don't know since I have not attended any other courses. From feedback I have from friends, some are non-existent (since they are no longer existing) and some are good. Feedback from actual participants here (in the comments section) would be most welcome.

What about the FI course itself compared to the others? Again, don't know as this is the only Forex course that I attended and I cannot make any comparision. Again, it would be good for actual participants to give their comments here. I suppose all would cover the basics in Forex Trading, the technical indicators, the trading platform, etc.

Another fact that I only knew after attending the FI course is that Sam Se is also a programmer and he has written Expert Advisors (EA) and trading software and tools for Metatrader 4 (the Forex trading platform taught and used by FI) that were given to the students. He is adding more tools and trading aids from time to time and thus students are assured of continuous improvement. I don't think any other trainer can provide his own programmes.

Enough said. Don't take my word for it. Attend all the free previews coming to a hotel near you and find out for yourself. Happy preview hopping!

Ronald Kwok

Monday, January 5, 2009

Forex Trading Courses and Workshops

You must have experienced this before. You tend to see a lot of something of passing interest but when you are actually looking for it, you would have difficulty finding it. So this was the case of getting material for this post. i.e. the overview of the Forex Trading Courses locally. I remember seeing plenty of advertisements in the papers for such courses almost daily but when I was actively looking out for them in the last two weeks, I saw very few. (Actually there is a logical explanation to it, it's the end of the year and all the Forex Courses organisers are probably on holiday, doing their year's review or preparing for the challenges in the year ahead and so are many of the potential clients, so no workshop previews and no advertisements.) Thus I have to dig up my old newspapers and also largely rely on my memory.

Forex Trading has become very popular over the last year or so and there are more than 10 different companies running Forex Trading Courses or Workshops at one time or another. Some have come and gone and some are still advertising regularly in the newspapers. Here are a few prominent ones, not in any particular order. (What I post here is purely my own experience and my personal opinion of the previews that I attended. It would be good if readers can share their own experience by giving their comments on the previews or better still, the actual courses or workshops. As most of the previews I went were many, many months ago, my comments may not reflect the latest status, especially on the fees of the courses.)

1. Rapid FX - this is probably the most active currently since they run preview seminars every week. The preview I attended was primarily done by a lawyer (and student of Rapid FX) so it was very convincing that trading Forex is the way to go. Most memorable part was his argument that Forex Trading is absolutely risk-free since you already know the maximum that you can lose (in terms of the stop-loss level) while risk is something that you do not know. Well, leave it to the lawyers! The fees is about RM6000 for 2 (?) days and the broker used is FXCM.

2. Lily Thniah (Ringgit Fleet) - This is quite active and advertisements appears regularly. From the preview, the course appears OK. Selling point seems to be the weekly coaching for 16 weeks (which is one day each week). The fees is about RM5000 for 3 days.

3. Kishore M (PowerUp Capital) - Kishore is a very good speaker and a good salesman. It seems that he can sell you anything as previously he was teaching options. The preview makes Forex Trading appears as a guaranteed winner and thus loses some credibility (as least to me.) The fees is about RM6000 for 3 days.

4. Forex Investology (Trainer Sam Se) - This is one of the few previews where they talk about losses in addition to wins and it gives a more realistic view of Forex Trading. In addition to directional trading, this teaches hedging as the other main Forex trading strategy. Provides a live Trading Calculator to assist newbies to work out their trade. The fees are about RM2400 for 3 days. This is the course that I signed up for after attending the preview. The broker used is Interbank FX.

5. Infinite FX (Trainer Jasmine Khern) - The preview seems sincere enough and a trading system, Tornado, is mentioned but no much detail is given about it. Can also trade with your provided funds. The fees is about RM3400 for 2 (?) days.

6. Clinicaltrader (Trainer Fuad Ahmad) - Ladies will like his previews, since Fuad is tall, fair and handsome and speaks well too. He talks of watching three signals to confirm before you trade and runs a in-house trading office. Sounds like he is also recruiting traders for his trading room. Do not see his advertisement nowadays. The fees are about RM5000 for 2 (?) days.

7. FX1 Academy - The speaker in the preview doesn't seem to be a professional trader since she attributes the sound of the trading platform disconnection to that of a winning trade. This sounds very exciting to those new to trading (like a cash register ringing) but for these familiar with the trading platform, it loses all credibility. They also have an automated trading system that trades only on USDJPY and they offer a 110% money back guarantee but I was told that you have to really read the fine prints on the terms and conditions. The fees are RM7000 for 3 days.

8. Winning Forex Solutions (Mr.M) - This sounds and appears to be the most unprofessional among all the previews I attended (in my opinion). Mr. M will trade with you at Starbucks and the platform used (involving a Virtual Private Network???) appears gimmicky. This apparently has now disappeared from the scene. The fees are about RM3200 for 2 days.

The above are those that I have attended the free previews and below are those that I've seen being advertised but I have not attended the previews so I have no further comments on them.

9. Wealth Academy Forex (Adam Khoo's Group) - Singaporean trainer. The fees about RM5000 for 2 days course plus 3 days follow-up sessions.

10. Dynamite Forex (Run by T3B, Trainer Clarence Chee) A newcomer to the local scene and another course conducted by a Singaporean trader. Do not have information on the fees and structure, should normally be around RM5000 for 2-3 days.

There are other courses not specifically on Forex but for trading in general which can also apply to Forex Trading. These include-

10. F1 Trader (PI Capital). Training is by Fred Tam. Fred is the Guru of Technical Analysis but now I only see the ads on his course for Financial Technical Analysis in conjunction with Open University Malaysia. No details on the fees for the F1 Trader.

11. Wealth Academy Trader (Adam Khoo's Group). Training by Conrad Lim, another Singaporean trader. The fees are about RM5000 for 5 days of tutorials. Conrad also conduct a course just on Japanese Candlesticks.

Since I am at it, here are some Options Trading Courses for comparison.

1. Wealth Mentors (Trainer Miriam MacWilliams) - The fees are about RM10,000 for 5 days. Just wonder how many would pay this kind of money. The high cost is probably due to the fact that Miriam is from the US.

2. Freely Options (Trainer Dr.Clement Chiang) - A very motivational speaker. From the preview, the strategy seems to emphasize on gapping and it has very high rewards since it also has very high risk. Not for the faint-hearted. The fees is about RM7800 for 2 days and 1 night (to trade the US stock market.)

3. Teraoptions (Trainer David Yuen) - seems like a straight forward trainer and a straight forward course. The fees is about RM4500 for 3 days.

So you see, there are plenty of choices and it can be bewildering to pick any particular course to attend. (Of course, if you have the money, you can choose more then one and then know which one is better.) The best is to attend the free previews that all of them provide and judge for yourself which is right for you, if you have the time.

It would be good if readers who have attended any of the previews or actual courses to give their views in the comments section as this will assist (or maybe confuse!) all potential Forex Course customers in making their choices.

In my next post, I'll give my views of what to look for in selecting a course and explain how I made my choice and my experience with Forex Investology.

Ronald Kwok