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In this post I’d like to address the question, ‘What is foreign exchange market sentiment?’ This might be useful if you’re thinking about changing currencies, but have heard that sentiment toward the UK pound or euro or whichever currency you’re trading is negative, and want to know what this means.

Foreign exchange sentiment is the general feeling toward a currency at a particular time, among investors on the foreign exchange market. It’s a summation of how the countless millions of investors in foreign exchange feel about one currency at present. Sentiment can become more upbeat or downbeat, depending on what’s influencing that currency on a certain day or month. It can also be used to describe the mood on the foreign exchange market as a whole.

For instance then, when looking at sentiment on the foreign exchange market as a whole, one very common way is to describe the market as either having risk appetite or being risk averse. This tells us whether foreign exchange investors are feeling brave (i.e. there is risk appetite) meaning they’re more likely to invest in small or riskier currencies, or whether they’re being cautious, and hence putting their funds in strong and stable economies believed to be safe (i.e. they’re risk averse.)

Depending on whether there is risk appetite or not, the entire outlook for the foreign exchange market can change. The US dollar for instance tends to strengthen when there is risk aversion (i.e. there’s a big political or economic threat in the world) because the US economy is the backbone of the global system. It’s hence a safe place to put money. The UK pound too tends to benefit in times of risk aversion, because it’s thought stable. On the other hand, currencies in smaller and less stable economies such as New Zealand and Canada (whose prospects are tied to the price of commodities) tend not to benefit when there is risk aversion.

In addition to looking at sentiment on the foreign exchange market as a whole, you can also look at sentiment concerning a specific currency. This tends to reflect not the global outlook, but the factors affecting that particular currency at a certain time. These factors tend to be political or economic. For instance then, if you’re looking at the euro right now, you might say that sentiment is cautious but optimistic, because Greece has just received its second EU bailout. This has cheered investors. On the other hand, cautious remains because Europe is in recession right now. This is reflected in euro weakness.

You should now have a better idea what foreign exchange market sentiment is. If you have any other questions about foreign currency exchange then visit foreign exchange specialists Pure FX. 

Forex trading success is through knowing the insides of the financial and foreign exchange market, and through some amazing insight and strategy, successful currency trades can amass you a small fortune. Stanley Druckenmiller is one of the great currency traders and many brokers aspire to reach the levels of success that he has achieved throughout his 30 year career. His most famous, and most lucrative, currency trades both occurred through the successful trade of the German Mark, The first at the fall of the Berlin Wall, and the second in combination with one of his partners, George Soros, that ended up with both men making billions and creating huge gains for the company. All of these currency trades were used with futures stocks and the careful insight of the brokers to use the current political and international climate and predicting change, insight that forever changed the lives of these men and the climate of the forex market.

The Great Currency Trades

Both the trades focused on a currency crisis, and a smart broker can always take advantage of political turmoil. The initial crisis occurred when the Druckenmiller believed that the reunification of Germany after the fall of the Berlin wall would be a very rough transition and made a futures trade, increasing it to 2 billion worth of marks in the long haul and managed to reap benefits of 60% growth for the Quantum Fund. This currency trade cemented Druckenmiller’s position as one of the top traders in the industry and set up his firm as a leader in the industry, changing the thoughts on futures trading. The second multi million deal was done in collaboration with George Soros, and became known as the largest forex trading move in history. While Soros was working on breaking apart the British currency with his trades, Druckenmiller leveraged his working capital and bought up marks in the long haul and leveraging the assumption that investors would shift to the German currency after the English decline. Once again he reaped amazing success, with himself and Soros pulling off one of the largest coups in forex currency trades.

Life After the Mark

Druckenmiller retired in August 2010 stating that his days of great returns were over and that he could not provide returns to clients that he was satisfied with. He has been ranked by Forbes as of this year as the 149th Richest man in America and has holdings of assets of over 2.5 billion dollars. However, beyond all his wealth, he will be known as the forex broker who made the Mark earn him millions in currency trades.

Chart patterns are specific price-action patterns in stock prices that have repeated themselves for decades, giving prudent traders many profitable trading opportunities. However, there are many chart patterns that are unreliable and not profitable. In this article we will cover the 3 highest win rate patterns that almost guarantee long-term profitability and gains.

Pattern #1: Head & Shoulders
The Head & Shoulders is one of the most reliable chart patterns, having accuracy of almost 90% and generating profits for decades. The head & shoulders is a reversal pattern, that indicates a shift in trend and beginning of a reversal.

We will usually trade this pattern when the neckline is broken, and will join the trade right at the breakout. However, for even more accurate entry it is recommended to wait for price to pull back to the neckline, and begin the new trend. The pullback entry is even more accurate than the breakout one, reaching around 95% accuracy. This is a chart pattern you must trade and master.

Pattern #2: Double Top
The Double Top is another pattern which you must trade, as it provides very good win rate (around 76% winning trades) and very consistent profits in many stocks and Forex pairs.

The Double Top is created when price tries to break a resistance level twice and is unable to, creating a shape resembling the letter ‘M’. Eventually price breaks the neckline downwards, which is the sell signal for chart traders. We will also enter a short trade if price pulls back to the broken neckline from below.

Pattern #3: The Channel
The Channel is one of the most accurate chart patterns that appears in almost any Stock or index, and are the foundation of trends. The Channel consists of two parallel trend lines in a certain direction – it can be either ascending or descending.

The Channel symbolizes a healthy trend in which price moves forward in a certain rythem. We can trade the channel in several methods: The first one is to take trades on the trend lines themselves (make sure to enter only with the direction of the trend and not against it).

Another trading method that is particularly powerful with channels is to enter after it is broken: entering short when an ascending channel is broken and entering long when a descending channel is broken. For extra accuracy we recommend not to enter the breakout itself but wait for the pullback.

Conclusion
Chart patterns are a very reliable and consistent way of trading, and if you focus just on the 3 patterns mentioned above, you will generate stable profits from any market you trade. Choose one pattern at a time, learn to identify it on historical charts and then proceed to master it in real trading.

If you keep listening to your friends you will keep your day job, keep working for 30 years each and every day and not make serious money and you know why? Because your friends think trading stocks and Forex is nothing but luck and gambling and they can’t be more wrong.

In this article I will share with you a few important tips that will help you make money trading stocks and currencies, so take a pen and a paper and write this down because all the professional traders in the world started using these tips and you should too if you want to make money.

Trade with an amount of money that suits you

At first trading will be difficult and you may lose some money before you get the grasp of it and understand the market and that’s natural. That is why you should trade with an amount of money that suits you as a trader and that means trading with the amount you don’t afraid of losing. I know how it sounds but if you’re afraid of losing you will lose because you will make decisions according to your emotions and not your head and you will lose money, so at first trade with a small amount of money and slowly with time add more money to your trading bankroll.

Always come prepared to any trading day

You should always come prepared prior to any trading day and that means working for 2-3 hours each day searching for stocks and currencies, writing down the entry and exit points of each stock and never leave anything to chance. Only this way you’ll control your bankroll, know exactly how much you’ll profit from a trade and limit your losses to a minimum if the trade was not successful.

Trade with your head and not with your gut

Trading stocks and Forex has nothing to do with luck and we are not gambling here. You read charts, you analyze them, you read news and you know your entry and exit points and with this analytical work plan you make money. If you start trading according to your emotions and gut feelings you may make mistakes and lose money, so always trade smart and don’t let your feelings get involve in your trade but this will come with more trades and experience.

Be patient learn from mistakes and never stop reading charts

If I have one tip to give you in order to succeed in trading is to read as many charts as you can. The more charts you read the more you’ll understand how the market and how the stocks react, you’ll know to anticipate the next move of your stocks and currencies and you’ll have more experience in trading and here it means a lot. Even when you don’t trade keep reading charts, see if you’re right and with time you will master the market and in less than 3-4 years will be able to be a professional trader and believe me this is not a long time as professional traders usually are millionaires because there is a lot of money in the market and with time you will get your piece of it as well.

South Korea has reached a significant financial milestone, with the country’s foreign reserves hitting a record high. This may be encouraging news to exporters in South Korea, who like exporters throughout Asia are currently facing the challenge of a slump in demand – but what exactly are foreign reserves, and how does this development affect South Korea’s global financial position?

About Foreign Reserves

Foreign exchange reserve (or forex reserve) is a term used to describe the total amount of foreign currency deposits and bonds held by a country’s financial authorities and central banks. The purpose of official foreign currency reserves is to ensure that a country’s central bank can purchase the domestic currency (despite the fact that it is considered a liability) and in so doing, stabilise that currency’s value. China is currently home to the world’s largest foreign exchange reserve; other top countries include Japan, Saudi Arabia, Russia and Brazil. The latest rise in South Korea’s foreign reserves saw the country rise to seventh place in the global rankings at the end of January 2012.While the term foreign reserve strictly refers only to matters of foreign currency bonds and deposits, it is also more broadly used to refer to gold, position in the International Monetary Fund (IMF), and supplementary assets known as Special Drawing Rights (SDRs).

About South Korea’s Foreign Reserves

South Korea’s foreign exchange reserves reached an impressive 315.8 billion dollars at the end of February 2012 –according to the Bank of Korea, this marks a 4.46-billion-dollar increase between January and February.

What is the cause of this phenomenal rise in South Korea’s foreign exchange reserves? BOK representatives say it is due to the country’s increasing investment profits, as well as the increased conversion value of South Korea’s non-dollar-denominated assets.How are the foreign reserves of South Korea (also known as the Republic of Korea or ROK) divided? The Bank of Korea reported that the reserves consist chiefly of:

• Securities – 289.5bn dollars

• Deposits – 179.7bn dollars

• Special Drawing Rights – 3.56bn dollars

• International Monetary Fund positions – 2.6bn dollars

• Gold bullion – 2.17bn dollars

Based on the figures above, it seems that the core foreign reserve assets – namely securities and deposits – have been the main contributing factors to the rise in the ROK foreign exchange reserves, followed by those included under the broader category of foreign reserves (SDR, IMF positions and gold).

Will the coming months see South Korea’s foreign reserves reaching even greater heights and rising up through the ranks among the top five, or even the top three? We’ll be paying close attention to foreign reserve developments in the ROK this quarter.