Profitsee – Future Economic Surivival

Divinations in Forex, Commodities and Economic Patterns

ZuluTrade Demo Account – Divinations through a Signal Providers Account

Using over 10 signal providers I’m trading this Zulu Demo account: (www.zulutrade.com/Follower.aspx?ref=1&id=364583) and I take opposite positions on my oanda.com forex account. Over time, built positions are hedged through my nadex.com. Will post the composite details of all these accounts through another resource to enable the redistrubtion plan. Feel free to sign up. I expect to build a further resource to enable monetization of a real account based from this demo for redistribution to followers.

Filed under: Forex

EUR/USD, Citibank, banking, Eastern Europe

From Scotia Capital Global Reasearch 2/23/09

Gains in European equities are helping to keep the momentum moving against the USD in early trading. GBP is the top performer with the aussie and kiwi not too far behind. Only the franc and yen have fallen behind the USD today, reflecting the increased willingness of markets to make more aggressive bets, though it seems that volatility is a bit more elevated within today’s trading ranges for a number of currencies (EUR, CAD, JPY). The news that Citi is in talks with the government for more capital in return for an increased equity stake is helping to provide a bit of a sentiment boost, though it seems a little bit premature as it is unclear whether any such move would leave the bank a private sector entity or whether the government could eventually move to take a greater than 50% stake. The precondition for a US (and global) economic recovery is a return to certainty in banking sector stability, which would be a definite positive market driver. However today’s sentiment boost is based on the assumption that Citi gets more capital without nationalization. Given that incremental steps have repeatedly proven to be a failure in the markets eyes, we’d view the current rally (and USD selling) with at least a little bit of skepticism, and keep in mind that it was last week that equities were taking a throttling due to the notion that the banking sector would indeed need to be temporarily nationalized. More capital for a large US bank doesn’t erase the possibility of a return of the nationalization threat down the road as policy makers may grow tired of steps that run the risk of continued failure (though nationalization is not the desired route in the US). Nevertheless, it is still the financial sector that is driving the market as we begin the week, and positivity runs a little higher than last week. Another major currency market driver in recent sessions, the worries over banking exposures of Western Europe to Central and Eastern Europe, seem to have gone away for the time being as EMEA currencies have all rallied against the USD and EUR, moving away from recent (and in some cases record) peak levels of weakness (most notably HUF and PLN). The easing in the degree of pressure on these currencies is definitely a welcomed event, though again we wonder how long this will last, as all the market received from the larger European economies last week is reassurance over the stability of the Eurozone and some hint that support would be available through certain facilities for struggling EU member states not in the Eurozone. Talk is cheap however, and the proof is in the pudding. While the market is taking its focus off of this problem for the time being, a resurgence in pressure on EMEA currencies will show just how willing Europe is to act and with what kind of firepower. We’d note that the failure to act to help a struggling EU economy that is a prospective Eurozone member would definitely do little for general euro sentiment. Also, the knock-on impact on the Eurozone (and EU) of such a failure could be something very much like allowing another large US banking institutions fail, filled with unpredictable and unintended negative consequences.CAD is quite resilient today, though has given back some of its earlier gains which saw USDCAD trade down to near the 1.2355 level before retracing to around 100 points higher as North America comes online. There is currently a down trend in play for USDCAD over the past four sessions, as last week’s early USD gains are in danger of being completely unwound. Outside of large one day equity driven strengthening moves in USDCAD, consolidation dominated by a

Filed under: Forex, Research, Scotia, , , ,

ATM Strike Leverage

euro-tic-values.PNG

The implied cash market leverage for an At-The-Money bine (at $50) is 1329% compared to the highest fx cash market leverage of 200%. If you were long an ATM bine at $50, the equivalant 200% cash positon would be $333. In other words, if you feel an ATM 1.3325 2pm bine was going to hold, you would receive an approx 50% discount on Hedgestreet.com for your trade. This is a leverage-calculated price.

Even if you felt the price wasn’t realstic, your stop-cover would have offered some protection. As you see to the left, the post-New Housing figure announcemen’t affect on the Euro on the 12-2pm NY EST session (per-tic time frame). The maximum leverage on Oanda.com is 50% which gives a equiv. cash position of $1330 on 50,000 units. Each 1 pip = $5, 10 pips = $50. Say you sold a 3225 2pm. You see the price went to 3339 approx. Your loss is binary-static; your follow-up action would be to spread long 5 pips.

Theoretically, a potential 5-pip loss over 2 hours would yield a “10-pip” gain on the 3325 2pm bine. As you see in the graph, your cover-loss spread would have been egagined at 1.3330. The breakeven would have been 1.3338. Is this noise? Take your 5 pip profit in cash and wait till prices go back to <$50 on the 3325 bine. Your profit would be your Cash Pips – the noise factor. Or would you want to implement the tight stop? as each tic up represents your net profit.. But, alas, as the case may be, you’ve paid for the privledge to play this small range up , waiting for it to come down to the bine, then up again in cash.

Filed under: Forex,

New York Stringer Magazine’s take on Hedgestreet’s binaries

David Katz of New York Stringer Magazine makes the following observation regarding the regulated trading of binaries at Hedgestreet.com.

The option premium…represents the investor’s view of the odds that the event will occur.  HedgeStreet is careful to avoid the use of the terms “bet”, “odds”and “winnings”;  as a regulated exchange, they are eager to avoid being mistaken for a gambling enterprise. Their mission is, in fact, to bring the advantage of hedging instruments, previously only available in large denominations, to the retail market

The implications of offering these type of derivatives teeters on that edge of gambling when such short-term (2 hour) options are “trading” at-the-money. “Trading” is in quotes because, at this time, the volume in binaries is thin or non-existent. Binaries are virtually indistinguishable from a wager when, say, a 1.3325 10am strike binary is at $50 at 9.55 am when the EUR/USD is at 1.3325. At worst, if the underlying was for a small-traded stock with light volume, this would be manipulation; at best, even in FX, its a gamble.

So how does Hedgestreet’s regulated binaries overcome this perception? Its only a matter of time. In the late 1970’s when the first equity indicies were traded, and also in the 1980’s when the International Swaps and Derivatives Association came out with their contracts, the same gambling-mentality existed. As most people in the ISDA and managed-money know, derivatives are merely risk-management tools fitted to achieve certain objectives in one’s portfolio. Those institutions, too, endured the same challenges that Hedgestreet.com is experiencing.

Anyone in the financial world will depict — in hindsight — the higher rate of return equities provided over bonds and money markets going back 50 years. However, go back 50 years ago, were those money managers making the same observations? Those who cite history merely underscore the need for equities  — the beginning, crude form of derivatives — in ones portfolio. And as the 1980’s and 1990’s showed, mutual funds, hedge funds, equity options and ETFs were developed along the way. Hedgestreet.com seems no more different than the outgrowth of these products and services. The chasm they have yet to bridge is the retail suitability. As Katz points out, this indeed presents itself as a “mission.” And in that respect, naysayers will eventually dismiss the exchange as “gambling”, especially in its present form.

Filed under: Forex,

Akmos sentiment indicator in GMT

Akmos

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