The German Federal Statistical Office published some economic data today. And it wasn’t pretty. According to official figures, Germany’s economy contracted 5% in 2009, which is by far its worst performance since World War II. Until now, the worst postwar performance to date was a 0.9 percent decline in West Germany’s gross domestic product in 1975. The worst since German reunification was a 0.8 percent fall in 1993. Foreign trade is largely blamed for most of contraction, with exports falling as much as 14.7%, bad news for country heavily depending on selling its products abroad.
Technically, recession in Germany came to an end earlier in the year, but one wouldn’t know it looking at this data. Even if forecast for 2010 projects minor growth of economy, this is not reflected in pending industrial orders or employment numbers. Official unemployment rate is still high at 8.2% and rising. Yet another example of “jobless recovery“, term that we are too familiar with. We’ve been hearing about it for months. While weak data in itself was expected, it still pushed Euro down. After all, Germany is the economic engine of European Union with largest single economy.
This aided my EUR-GBP trade. Well, not exactly, because target was met before data release. It does, however, make for a stronger case for downward bias in this cross, something I had been trying to exploit for a while, with a string of small trades. The latest one from yesterday worked out just fine.
This trade was a sell with entry at 0.8958 and a small target of 30 pips. Strong support built at 0.8920 or so. Trade produced desired result and price spiked under the support. I sold it again at 0.8913, objective is set at 0.8865, or almost 50 pips. After that another very strong support is present which could be a formidable obstacle.
Above 4H chart shows couple of bottoms at that level, but even this is not a complete picture. For that daily chart needs to viewed, because there is one more important low before this set of data. I posted one earlier in Larger Picture update. If my current objective is met (not a guarantee), any follow up trade will be dependent on what happens on daily chart. I will return to it when warranted.
I took one more trade in a Pound cross, that can be shown here, because it just started. For some time GBP-NZD has been building possible reversal and today it moved above latest high. I bought it at 2.1960, with a target of 2.2200. For now. This could be a difficult trade, this cross is notorious for deep pull backs and corrective moves. Not for the faint of heart. On the plus side, when moves happen, they can lightning fast. But I’m prepared for a rough ride, something like the EUR-NZD trade, which will be discussed in more details in the next update.
Mike K.
We’ve had good time with eur/gbp recently. I just follow you, that’s why I say “we”. So when 0.8850 is broken, it will be daily charts?
IF 0.8850 is broken, yes daily charts will be used. But it is not a done deal yet.
Mike, what are some of the better books you read on trading? I’d like read them, too, if possible.
Depends on how advanced you want to get. For most relative bigginers I’d suggest John Murphy’s “The Visual Investor” and William O’Neil “How to make money in stocks”. These are broad in scope, but very educational.
Dear Mike or anyone else ,
I have this letter from OANDA today :
It has me confused . I know the true leverage (TL) is different from the broker leverage (BL) .For example if I have $1000 in my accoynt at OANDA’s 50:1 leverage option putting a trade of $40 gives a 1:1 effective leverage .
Here is the letter :
Short Description: low leverage option
Hello Peter,
Thank you for contacting OANDA.
The lowest leverage offered is 10:1 . leverage below this is not offered by the company and exceptions are not made for individual users. Additionally the platform does not offer trading off-margin as there is always a margin requirement on every trade placed on the platform and that is determined by the leverage selected.
Should you have further queries do not hesitate to contact us.
Kind regards,
OANDA FXTrade Team
If I have a 50:1 OANDA setting for Broker Leverage (BK) and I have $2000 in my account what trade amount do I need to have a 3:1 effective leverage (EF)?
Can you(or anyone else) show how to work it out ?
OANDA forum is confusing and so is OANDA’s letter to me today?
Thanks for taking the time .
Best ,
Peter
Sydney,Australia
They are saying you must select one of the options. However, that doesn’t impose that you must trade at this margin. If you have account set t0 50:1 option, with $2000 in it, at the most you can trade $100,000 position size. But you can elect anything smaller. In your example, 3:1 would be $6000 trade size. If you want to you can trade only $11 dollars, $196, or $44,444, any size lower than $100,000 maximum with this setting.
[...] Bad news for Euro. | fxmadness.com fxmadness.com/2010/01/13/general/bad-news-for-euro – view page – cached This blog goes where few traders dare – the exciting world of Forex outside the [...]
[...] central bank meeting. This worked very well for my EUR-GBP trade outlined just yesterday in the Bad news for Euro post. Short entry happened at 0.8913, with an objective of 50 pips. Market rebounded at first, but [...]
Thanks Mike.Forex is different to stocks .Steep learning curve when there’s so little available to teach intermediate -advanced principles of the platform with screenshots of OANDA .I’ll persevere.
Thank’a for clearing up the point. It was just the “rule of three” or simple cross-multiplication .
Hope it helps others when Google indexes forexmadness.com
Best and Greetings from Sydney,Australia on a hot Summer’s day(Gee ,I miss Los Angeles !!!! -:) )
You are welcome. I think site is indexed. Maybe not all the posts, but it comes up it searches. After all, it covers a relatively niche area of interest, so it is unlikely to be extremely popular.
Enjoy your summer, even if it could be too hot!