Sample Strategy 1 - Simple Moving Average

Sample Strategy 1 - Simple Moving Average
Successful trading is often described as optimizing your risk with respect to your reward, or upside.  Any trading strategy should have a disciplined method of limiting risk while making the most out of favorable market moves.  We will illustrate one decision making model which uses a Simple Moving Average ("SMA") technical study, based on a 12-period SMA, where each period is 15 minutes.  This type of study is available in the CFX trading charts. This is one example of a trading decision making strategy, and we encourage any trader to research other strategies as thoroughly as possible.
We will use a simple algorithm: when the price of the currency crosses above the 12-period SMA, it will be taken as a signal to buy at the market.  When the currency price crosses below the 12-period SMA, it will be a signal to "Stop and Reverse" ("SAR").  In other words, a long position will be liquidated and a short position will be established, both with market orders.  Thus this system will keep the traders "always in" the market - he will always have either a long or short position after the first signal.  In the chart below, the white line represents the price of USDJPY, the purple line represents the 12-period SMA of USDJPY, and the red line indicates where USDJPY crosses above the SMA, generating a buy signal at approximately 129.90:

This is a simple example of technical analysis applied to trading.  Many strategies used by professional traders make use of moving averages along with other indicators or "filters".  Note that the moving average method has an element of risk control built in: a long position will be stopped out fairly quickly in a falling market because the price will drop below the SMA, generating a stop-and-reverse signal.  The same holds true for a sell signal in a rising market.  Note that the SMA is generated automatically by CFX's integrated charting application.

Sample Strategy 2 - Support and Resistance Levels

Another of technical analysis, apart from technical studies, is in deriving "support" and "resistance" levels.  The concept here is that the market will tend to trade above its support levels and trade below its resistance levels.  If a support or resistance level is broken, the market is then expected to follow through in that direction.  These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past.

For example, in chart below EURUSD has established a resistance level at approximately .9015.  In other words, EURUSD has risen up to .9015 repeatedly, but has been unable to move beyond that point:

The trading strategy would then be to sell EURUSD the next time it gets close to .9015, with a stop placed just above .9015, say at .9025.  This would have indeed been a good trade as EURUSD proceeded to fall sharply, without breaking the .9015 resistance.  Hence a substantial upside can be achieved while only risking 10 or 15 pips (.0010 or .0015 in EURUSD).

News from Spain at the end of the week supported gold

On the last day of the week gold rose after four stable sessions on the weakening dollar and the strengthening of the euro. Euro on Friday strengthened the U.S. dollar and other world currencies following the increase in the prices of government bonds in Spain.
Support the European currency and securities in Spain had the newspaper Financial Times that the European authorities are involved in the development of new economic program the Spanish government, which should be released next week.
According to sources, the newspapers, the parties focused on measures that may be required from Spain's foreign creditors, if Madrid officially turn to them for help. This should provide the opportunity to harmonize these measures in advance.
The government's plan is to focus on structural measures on which long insisted Brussels, not in new spending cuts and tax increases.
Yield on 10-year benchmark government bonds in Spain fell in the course of trading on Friday, up 5.7%.
On Thursday, gold has risen in price to a maximum of 6.5 months after the announcement of the Bank of Japan to expand the program purchase of government bonds.
The sharp rise in prices, which began last week, was caused by the resumption of incentive programs of the European Central Bank and the U.S. Federal Reserve. On Wednesday, they were joined by the Bank of Japan expanded the asset purchase program to 10 trillion yen ($ 127 billion) to 80 trillion yen.
Stocks of gold-ETFs this week rose to a historic high 73.681 million ounces.
Experts link the return to power of gold to last year's absolute record $ 1.920,30 per ounce in the first place with the state of the U.S. economy.

FOREX review 08,10,2012

EURUSD
The risky purchase at 1.2898 reached its target 1.3000 and even it gave a chance to earn more than 100 pips.
The pair rebounded from the four-hourly middle uptrend and it goes down again, it has 2 supports on its way, from which you can try to buy: the 1st is the breached resistance 1.3172 - 1.2968, + level 1.2900 , +76.4% Fib from the growth 1.2041 - 1.3171, 1.2255 + support - 1.2804, and 2n - support uptrend H4 1.2041 - 1.3170, + 61th of the Fib level of the same growth, +76th level from the weekly fall 1.4939 - 1.2041, and if you shift downtrend to the new points 1.3172 - 1.3072 - 1.2803, there is support of this downtrend. So, the 1st buy limit 1.2910 (sl 1.2860 / tp 1.3150), the 2nd is less risky buy limit 1.2750 (sl 1.2690 / tp 1.3030 or 1.3150).
It is the same for sales, I have 2 options: the 1st is riskier - from the resistance 1.3172 - 1.3072, but I will not set the limit, at first the price should go a bit down, for drawing a wave, and then we have a chance to rebound from this line, and use it after the formation confirming signals, the 2nd limit has set previously on sale at the daily resistance, just shift it lower - sell limit 1.3165 (sl 1.3230 / tp 1.2828).
But if the pair does not reach the sales and the level of 1.2800 will not stand, it will be possible to sell it on the roll back a long time.

GBPUSD
The purchase at 1.6105 brought 100 pips, but it didn’t reach to the profit 20pips, I closed the deal before the weekend. The pair breaks down support at the H4 1.5489 - 1.6066, but it hasn’t consolidated three candlesticks under the line yet, so the continuation of the movement will count in a couple of four-hourly candlesticks. And if you set it on sale so at the level of 1.6100, and higher limit is on sale at the resistance 1,6308 - 1,6271, sell limit 1.6100 (sl 1.6150 / tp 1.5910), and sell limit 1.6185 (sl 1.6235 / tp 1.5910).

USDCHF
There is downtrend on the H4 0.9972 - 0.9798 - 0.9246, there is younger corrective uptrend 0.9244 - 0.9334 - 0.9391, which has already broken down, and which the price roll back to, at the intersection of these lines, and I plan the sale, sell limit 0.9405 (sl 0.9455 / tp 0.9275), and in the area of profit, on the third point of uptrend 0,9244 - 0,9274 buy limit 0.9284 (sl 0.9235 / tp 0.9450).

Oil fell below $ 90

Oil showed a second weekly decline on concern that slowing economic growth will reduce demand.
The protests in Spain against austerity measures have increased fears of a three-year extension of the debt crisis in the euro zone. In addition, a number of U.S. companies reported a reduction of profit despite the global slowdown.
Investors also remain concerned about weak demand in China, which is the second largest oil consumer in the world, as small firms, which are the main driving force of economic growth, the lack of money.
Despite the drop in oil prices supported the growth of tension in Iran and the rumors about the possible reduction of supply from key vendors of oil to Asia. Prices rose after Iran's state news agency reported that Iran had fired four missiles in the Persian Gulf, but said of the military exercises. Iranian President Mahmoud Ahmadinejad said in an interview with U.S. television that his country would defend itself if attacked by Israel. It is learned that the military exercises in the Strait of Hormuz last until the end of the Iranian calendar year, i.e. by March 20.
In response, on Thursday, Israeli Prime Minister Benjamin Netanyahu called on the international community to close the Iranian nuclear program.
Crude oil prices also rose after the price of gasoline has risen to its highest level in nearly five months on concern that stopping oil platform in the Atlantic basin will further reduce inventories on the East Coast of the U.S.
OPEC Secretary General El-Badri said on Friday that "OPEC spare capacity and commercial inventories of common enough. The market is currently well supplied, and we see no deficit. "

Gold prices held near an eight-month high

Gold quarterly gain in more than two years, and has grown more than 10% after the Federal Reserve announced the third round of quantitative easing earlier this month.
At the end of the week gold was down against the strengthening dollar after U.S. data released showed that the purchasing managers index and the index of consumer sentiment fell more than expected, increasing the demand for riskier assets. The U.S. currency strengthened after the purchasing managers' index fell to Chicago for the first time in three years below 50, indicating contraction.
Reserves of gold in exchange-traded funds, which issue securities backed by physical metal, fell from record highs, which were recorded by nearly 340,000 ounces.
Demand in India, which is a major consumer of gold, remains weak, as higher interest rates reduce the metal.
Data from the International Monetary Fund showed that South Korea has increased its gold reserves by almost 16 metric tons (17.63 tons) in July, along with Paraguay, which has increased its reserves in July, from a few ounces to more than 8 tons.
So far this year, central banks have increased their holdings to 262.1 tons, compared to 203.39 tonnes in the first eight months of 2011.
At the same time, Turkey raised its reserves to 100.2 tonnes in the first eight months of the year, and Russia at 53.75 tons.
Private investors also added to their gold reserves through exchange-traded funds, with the support of physical metal to a record 74.06 million ounces.

Gold approached the 11-month high

Last week, gold hit a 10-month high on speculation that the incentive program in the U.S., Europe and Japan will increase the appeal of the precious metal as an alternative to currencies.
Last month, gold price rose by 5.1%, after the Federal Reserve announced the launch of a third round of quantitative easing. In addition, the European Central Bank, which has pledged to buy bonds of troubled countries, and the Bank of Japan to expand the fund asset purchases, also had a positive impact on the growth of gold.
The price of gold rose in the week against the outcome of the Bank of England and the ECB. On Thursday, the Bank of England did not extend the incentive program, fearing inflation, and left the rate unchanged at 0.5%, and the size of the program QE - at 275 billion pounds. In turn, the ECB kept rates unchanged at 0.75%. Central Bank head Mario Draghi during a press conference, explained the motives of the decision. According to him, during the 2012 inflation will be kept above 2% and only in 2013 it is expected to fall below this mark. Consequently, the jump in inflationary pressures will be characterized as temporary. Draghi also said that the rate of economic growth are weak, and the recovery is very slow, because the mood of the players negatively affected by problems of financial markets. Draghi comments strengthened the euro and weakened the dollar, which, in turn, led to a rise in gold prices.
In India - the world's largest consumer of gold - an increased demand in the physical market by strengthening rupee, which caused lower domestic prices to a minimum of five weeks. Stocks of gold-ETFs on Thursday rose by 418,611 ounces, and the stocks of the largest ETF SPDR Gold Trust rose to a record level 1.333,44 tons.

European stocks close

European stocks declined for a third day as investors speculated that economic fundamentals don’t justify current stock valuations and Alcoa Inc. (AA) cut its forecast for global aluminum demand.

Anheuser-Busch InBev NV slipped 1.2 percent after a report that the U.S. may block its $20 billion takeover of Grupo Modelo SAB. BAE Systems Plc (BA/) fell after abandoning plans to merge with European Aeronautic, Defence & Space Co. Imagination Technologies Group Plc (IMG) lost 9.4 percent as analysts recommended selling the shares.

The Stoxx Europe 600 Index (SXXP) dropped 0.6 percent to 268.71 at the close of trading, the lowest level since Sept. 28.

Alcoa, the largest American aluminum producer, kicked off the U.S. earnings season by cutting its forecast for global consumption of the metal by 1 percentage point on slowing Chinese demand. The company reported third-quarter profit and sales that exceeded estimates.

The International Monetary Fund yesterday cut its global growth forecasts and warned of even slower expansion if European officials don’t address threats to their economies.

National benchmark indexes fell in all 18 western European markets.

FTSE 100 5,787.21 -23.04 -0.40% CAC 40 3,369.79 -12.99 -0.38% DAX 7,212.46 -22.07 -0.31%

AB InBev (ABI) dropped 1.2 percent to 67.31 euros after The Capitol Forum reported that the U.S. Department of Justice may want to block the company’s purchase of Mexico’s Modelo, which brews Corona beer. The department may not approve the deal in its current form, the news service that tracks antitrust events said.

BAE fell 1.4 percent to 320.9 pence after the arms company and EADS confirmed they are no longer pursuing a merger. It had become clear that the interests of the “government stakeholders” could not be adequately reconciled, the two companies said. EADS jumped 5.3 percent to 27.48 euros.

Imagination Technologies tumbled 9.4 percent to 455.5 pence for the biggest decline in the Stoxx 600. Credit Suisse Group AG started coverage of the U.K. chip designer with an underperform rating, similar to a sell recommendation.

Elsewhere, Publicis Groupe SA (PUB), the world’s third-largest advertising company, declined 2.6 percent to 43.16 euros after Exane BNP Paribas said third-quarter revenue growth may miss forecasts as the advertisement market worsened since July.

Capita Plc (CPI) fell 1.8 percent to 727 pence. RBC Capital Markets downgraded the supplier of services for the British army to sector perform, a recommendation similar to hold, from outperform, a rating equivalent to buy.

Bankia SA (BKIA) paced advancing shares, climbing 4 percent to 1.02 euros, the first advance in 13 days. Bankia said it sold 126 million euros of written-off car loans to Norway’s Aktiv Kapital. Since July, the bank has sold 926 million euros of soured loans.

Man Group Plc (EMG) rose 3.8 percent to 93.4 pence, the highest price in five months, after the Daily Mail reported BlackRock Inc. may buy the company. The firm may head a group of bidders in a 140 pence-a-share offer, the Daily Mail reported, without saying where it got the information.

Royal Bank of Scotland Group Plc advanced 2.1 percent to 262.7 pence after agreeing to sell two buildings in Frankfurt and Berlin to Axa Investment Managers SA in the biggest German commercial real estate transaction this year, according to two people with knowledge of the matter.

Lloyds Banking Group Plc (LLOY), the U.K.’s second-biggest government-aided bank, gained 4 percent to 38.48 pence.