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Bites Of Trading Knowledge For New TOP Traders #5 (short read)Bites Of Trading Knowledge For New TOP Traders #5 --------------------------------------------------------------- What is the bid-ask spread? – Bid-ask spread is the amount by which the ask price exceeds the bid price for a market. The bid-ask spread is the difference between the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept. An individual looking to sell will receive the bid price while the one looking to buy will pay the ask price. A wide spread may indicate low supply or demand for a market at that point of time during the trading period, while a narrow spread would indicate sufficient supply and demand for a market meaning strong buying and selling competition is at play. What is the role of a market maker in the financial markets? – Market makers are market participants who ensure there is enough liquidity and volume of trading in the markets and offer to sell a market at the ask price and will also bid to purchase a market at the bid price to traders and investors. How does the bid-ask spread relate to liquidity of a market? – The size of the bid-ask spread from one market to another differs mainly because of the difference in liquidity of each market. Certain markets are more liquid than others and that commonly is reflected in their lower spreads. Price takers demand liquidity while market makers supply liquidity. For example, foreign currency futures would have very low spreads during the trading day given the use of currencies as a medium of exchange to do business globally compared to live cattle futures, which relates more to businesses in the United States domestic market. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS – Diversification: Futures Spreads with Currency Futures – A futures spread is usually created when one futures contract is sold simultaneously to the buying of a second related futures contract in order to capitalize on a discrepancy in price. Currency futures spreads combine the use of different currencies usually paired to the U.S. Dollar with the same contract month to express a relationship between the two currencies usually taking into account their strength or weakness relative to each other. For example, the Singapore Dollar (USDSGD) may be seen to be strengthening (price movement is downward) while the South Korean Won (USDKRW) may be seen as being very weak (price movement is upward). To take advantage of this observation, we would want to buy Singapore Dollar (sell the USDSGD future) and sell the South Korean Won (buy the USDKRW future) and as a result eliminate the U.S. Dollar. However, it must be noted that not all currencies are quoted in the same way like the Australian Dollar futures is quoted “AUDUSD”. It means then that to take advantage of a strong Australian Dollar and a weak South Korean Won quoted as “USDKRW”, an investor would need to buy both the AUDUSD future and the USDKRW future. Diversification: Portfolio Risk Using FX Futures – Individual investors taking a portfolio approach with managed futures and spot foreign exchange could be entering into emerging market currency positions including for example Hong Kong Dollar, Singapore Dollar or South Korean Won. Depending on the view of each of the currencies in the portfolio, it could be constructed to eliminate exposure to the U.S. Dollar. However, there may be a time during which investors would like to introduce U.S. Dollar exposure and they could do so by using Mini U.S. Dollar Index ® Futures with a contract value of $10,000. For example, the U.S. Dollar Index ® may be observed to be in a medium term uptrend and an investor may want to consider entering into a long position in the Mini U.S. Dollar Index ® Futures based on their strategy of choice and exit the position when either their profit target is achieved or their loss limits are triggered. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
DX / DX1 - Friday's Dollar "Less Transitory"The Taper of Bond Purchases begins @ $15 Billion, it will be the shortest "Taper" in History. Over and done before the announced Timeline of 7/8 Months. They'll either slow it dramatically or reverse course Mid-Point due to - you guessed it... "Policy Error" Not that it amounts to a drop in the Bucket given O/N Repos are approaching $2 Trillion, recently cresting $1.8 Trillion with no signs of abatement. Secretary of the Treasury, Janet Yellen announced Friday - "Inflation will be with us throughout 2022." ____________________ The Global Supply Chain "Crisis" - yes it is now a "Crisis" continues to create issues for People around the Globe. Rolling downhill, the wreckage is Far and Wide. Elevated Inflation Data sent the Dollar in a rather large vertical - +0.8475% - a shove higher, on a Friday no less. The 10Year Note Futures (ZN) are performing the squatty potty routine, attempting to hold on to 130. A feat that has been ongoing for weeks on end. To some, this is "Bullish." Dunno seems to be Selling it has worked here from the 134s, some Traders appear to enjoy arguing with success. Personal Income declined 1% M/M - Spending increased 0.6% - PCE Core @ 30 Year Highs ____________________ The Dollar came off the 50SMA @ the Lower Trend Line of the rising Channel. Backtesting the Breakout... expected. Volatility next week is going to be "Frustrating" as Jerome would echo and has. Pesky Inflation, from the Pests @ the Federal Reserve. The DX is gaining strength and momentum... oops. It was all but ignored Friday. ____________________ The 007s are back, true to form, it's to the Moon again. Insistent to lose their Capital to the scrouges of Inflation. Have it again Baggies, we'll take your Capital and thank you again. Our scorecard, there on the back nine... 8 under Par while the 007s gorged on Hot Dogs off the 10th Tee. Eventually, too many Manhattans & Dogs had the careening into the Pond on Hole 12. At 18, they were 22 over, but insisted the bet was 36 Holes... it wasn't - revisionism is the new truth. Keys were handed over to the pride of Aston Martin's... with all of "M's" goodies in tow. One drunken Bondie needed a ride to his Estate, didn't feel a thing when ejecting his seat in the parking lot, prey/predator/splat. BONDs will PRICE INFLATION again. It is dead ahead, TLT Filled its Gaps as we indicated on the FR of 139, time to begin hunting the 139s to 134s. ____________________ We see the DX Price Objective just shy of 98. Oh my... that is up there... what, pray tell would become of Yields? Higher, Higher, Higher with INTENSIFYING VOLATILITY. This is not an environment the Equity COmplex will escape unharmed. We suspect the actual harm will be greater than before. The Dollar has been monkeyed with for several weeks, FX - JPY / 6e, the uptrend for Uncle Buck appears ready to surge. Indicators for FX, Equity Market Volatility Event - Equities will be smoked again, and WHY the RUSH to A higher Fill. The Silly Phase is well underway. Retail Bulls remain in the UTL Camp, a bonfire of the Vanities. ____________________ We are patiently waiting, sticks are being stripped of bark, Marshmallows being plated, nearing time to begin the Roast.
ICEUS:DX1!
by HK_L61
4
Uncertainty Grips Markets as Optimism WanesMarket sentiment has deteriorated since earlier this year amid still elevated financial vulnerabilities and mounting concerns about risks to inflation. Amid the prolonged and painful pandemic, risks to global financial stability have remained contained—so far. But with economic optimism fading, and with financial vulnerabilities intensifying, this is a time for careful policy calibration. To an unprecedented degree, the world’s central banks, finance ministries, and international financial institutions have asserted—for a year and a half—policy support for economic growth. Now they must craft strategies that safely approach the next stage of monetary and fiscal policy action. The sense of optimism that had propelled markets in the first half of the year is at risk of fading. The world’s systemically important central banks know that any unintended consequences of their actions could put growth at risk—and could, conceivably, lead to abrupt adjustments in the world’s financial markets. Uncertainty is especially intense because of the persistent pandemic-stricken atmosphere where society confronts the challenges inherent in “the three Cs”: COVID-19, crypto, and climate change, as discussed in our latest Global Financial Stability Report. Fading optimism Massive monetary and fiscal policy support for the economy in 2020 and 2021 helped limit the economic contraction that began at the start of the pandemic and that—for much of this year—supported a strong economic rebound. In many advanced economies, financial conditions have eased since the initial months of the pandemic. Nonetheless, the sense of optimism that had propelled markets in the first half of the year is at risk of fading. Investors have become increasingly worried about the economic outlook, amid ever-greater uncertainty about the strength of the recovery. Uneven vaccine access, along with the mutations of the COVID-19 virus, have led to a resurgence of infections—fueling concerns about more divergent economic prospects across countries. Inflation readings have been above expectations in many countries. And new uncertainties in some major economies have put markets on alert. Those uncertainties are triggered by financial vulnerabilities that could increase downside risks, surging commodity prices, and policy uncertainty. The deterioration in market sentiment since the April 2021 Global Financial Stability Report resulted in a significant decline in global long-term nominal yields in the summer, driven by falling real rates, reflecting concerns about long-term-growth prospects. In late September, however, investor anxiety about inflationary pressures pushed yields higher as price pressures then started to be seen as potentially more persistent than initially anticipated in some countries—entirely reversing the earlier declines. If investors, at some point, reassess abruptly the economic and policy outlook, financial markets could endure a sudden repricing of risk—and that repricing, if sustained, could interact with underlying vulnerabilities, leading to a tightening of financial conditions. This could put economic growth at risk. Risks also bear close monitoring in other key areas. Crypto asset markets are growing rapidly and crypto asset prices remain highly volatile. Financial stability risks are not yet systemic in the crypto ecosystem, but risks should be closely monitored, given the global monetary implications and the inadequate operational and regulatory frameworks in most jurisdictions—especially in emerging market and developing economies. Likewise, as the world continues to seek ways to speed up the transition to a low-greenhouse-gas economy in order to avoid the negative economic and financial stability outcomes associated with climate change, a promising opportunity is emerging in the financial sector. While assets under management in climate-themed investment funds remain relatively small, inflows have surged, and there is a promise of cheaper funding costs for climate-friendly firms, as well as greater climate stewardship by funds. A not-so-easy trade-off Amid still easy financial conditions overall, our analysis finds that financial vulnerabilities continue to be elevated in several sectors—but are masked, in part, by the massive policy stimulus. Policymakers are now confronted with a challenging trade-off: They must continue to provide near-term support to the global economy, even as they must simultaneously try to avoid the buildup of medium-term financial-stability risks. Managing this trade-off is a key challenge confronting policymakers. A prolonged period of extremely easy financial conditions during the pandemic—which certainly has been needed to sustain the economic recovery—has allowed overly stretched asset valuations to persist. If that overstretch continues, it may, in turn, intensify financial vulnerabilities. Some warning signs—for example, increased financial risk-taking, as well as rising fragilities in the nonbank financial institutions sector—point to a deterioration in the underlying foundations of financial stability. If left unchecked, such vulnerabilities may persist into the longer term and become structural issues. Policy action Policymakers will need action plans that guard against unintended consequences. Monetary and fiscal policy support should be more targeted and tailored to country-specific circumstances, given the varying pace of the recovery across countries. Central banks will need to provide clear guidance about their future approach to monetary policy, aiming to avoid an unwarranted or abrupt tightening of financial conditions. Monetary authorities should remain vigilant, and if price pressures turn out to be more persistent than anticipated, act decisively to avoid an unmooring of inflation expectations. Fiscal support can appropriately shift toward more targeted measures and be tailored to country-specific characteristics. Policymakers should take early action and tighten selected macroprudential tools to target pockets of elevated vulnerabilities. This is critical for addressing the potential unintended consequences of their unprecedented measures, given the possible need for prolonged policy support to ensure a sustainable recovery. Policymakers in emerging and frontier markets should, where possible, begin to rebuild fiscal buffers and implement structural reforms. While facing several domestic challenges (higher inflation and fiscal concerns), some of those economies remain exposed to the risk of a sudden tightening in external financial conditions. In a context of higher price pressures, investors are now pricing in a rapid and fairly sharp tightening cycle for many emerging markets, although the increase in inflation is expected to be temporary. Rebuilding buffers and implementing enduring reforms to boost economic growth prospects will be pivotal to protect against the risk of capital-flow reversals and an abrupt increase in financing costs. IMF - blogs.imf.org
ICEUS:DX1!
by HK_L61
4
Dollar index in the near futureThe dollar index is approaching a resistance. At the same time, divergences can be seen in the indicators. In case of reacting to this resistance, this index can initially drop to around 93.5 and if it breaks its white support line, it may fall to 92. But if this resistance is broken by the good news, this analysis will be rejected. Technically, there is a high probability of a fall, but for this we have to wait for the news. A lot of news is on the way this week. If this analysis helped you, please support us with likes and comments. Thank
ICEUS:DX1!
by farshadtn
Bites Of Trading Knowledge For New TOP Traders #4 (short read)Bites Of Trading Knowledge For New TOP Traders #4 --------------------------------------------------------------- What is the role of a financial custodian? – A custodian or custodian bank is a financial institution that holds customers’ securities for safekeeping to prevent them from being stolen or lost. Custodians are responsible for the safety of assets and securities and provide services that include trade settlement, investing cash balances as directed, collecting income, processing corporate actions, providing valuation of securities positions, and providing recordkeeping and reporting services. What is the role of a financial exchange? – An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any financial instrument trading on that exchange. What is the role of financial regulators? – A regulator authorizes, supervises and regulates, financial institutions operating in a country to ensure the soundness of the overall banking and financial system. This supervision enables financial institutions to operate and provide efficient banking and financial services. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS – Portfolio Diversification – Portfolio diversification is the process of investing your money in different asset classes and securities in order to minimize the overall risk of the portfolio. For both corporate and individual investors, having access to markets that enable the building of a diversified portfolio is an important consideration when managing futures focused accounts. Similar to managing risk, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each. For example, the parameters for a price driven strategy may be designed to be applied to any market whether it be index equity futures or forex futures. However, the signals for entry may not always trigger if a trader were just to focus on a single index equity futures such as the Micro MSCI USA Index futures. Having access to other futures markets to apply the strategy to allow for the creation of a diversified portfolio with varying entry and exit points or the ability for more trading oriented investors increased opportunities to execute price driven strategies more often across a range of futures markets. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
Bites Of Trading Knowledge For New TOP Traders #1 (short read)Bites Of Trading Knowledge For New TOP Traders #1 --------------------------------------------------------------- What is Hedging? – Hedging is the action taken through the use of a financial instrument to minimize the loss or risk of the loss of value of an asset due to adverse asset price movements. Who are Hedgers? – Hedgers are market participants such as commodity producers who want to lock in selling prices of commodities they produce, or food manufacturers who want to lock in buying prices of raw materials purchased. Market participants also include financial institutions handling financial assets and use derivative products such as futures to manage the risk of a portfolio of financial assets. What is the difference between Physically Delivered vs Cash Settled Futures Contracts? – Physical delivery is a term in a futures contract which requires the actual underlying asset to be “physically delivered” upon the specified delivery date, rather than being cash-settled. Cash settled futures on the other hand allows for the net cash amount to be paid or received on the settlement date of the futures contract. Futures exchanges may offer both types of contracts to market participants who have different purposes for trading futures contracts. Risks and opportunities for corporates and individual investors: HEDGING – Hedging currency exposure with the Mini U.S. Dollar Index ® futures contract is a way to manage business currency risk by taking a directional position depending on business requirements for conversions to or from the U.S. Dollar. For example, a hedger may have expected the U.S. Dollar to weaken from 93.50 on 31st March (based on an analysis involving the overall downward trend in the market having retraced to the Fibonacci retracement level 76.8%) and may have had plans to convert U.S. Dollars to Singapore Dollars over the coming months to make payments to suppliers in Singapore Dollars. The hedger could have opened a short position using the Mini U.S. Dollar Index ® futures contract at or around 93.50 to lock in the value of the U.S. Dollars that they planned to use in the future at the time of payment to the supplier. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
USD - Rejection The dollar is approaching a multi year line of resistance and also some overbought levels as can be seen on the RSI. The last time the dollar approached this target was 2020 and had a huge rejection. I suspect the same line will again act as level of resistance. “It’s going to be the biggest crash in world history. We have never had this much debt pumped up. Debt is the biggest problem of all…the debt to GDP ratio is out of sync. So when it comes down, and it’s going to bring everything down with it, that’s when I’m going to be buying more gold, silver, and Bitcoin,” Kiyosaki said. He noted that the possible crash will result from decisions made by the Federal Reserve and the Treasury. Kiyosaki opines that decisions made by the institutions do not mirror the current state of the economy (Author of Rich dad Poor Dad).
ICEUS:DX1!
by m44kka
Elliott Wave View: Further Strength in US Dollar Index (DXY)Short Term view in US Dollar Index (DXY) suggests the rally from Sept 3, 2021 low is unfolding as a 5 waves impulse Elliott Wave structure. Up from Sept 3, wave ((i)) ended at 92.8, dips in wave ((ii)) ended at 92.32. Index resumes higher in wave ((iii)) to 93.45, pullback in wave ((iv)) ended at 93. The Dollar Index then completed wave ((v)) at 93.52 which should also end wave 1 in higher degree. Pullback in wave 2 ended at 92.98 with internal subdivision as a zigzag. Down from wave 1, wave ((a)) ended at 93.14, wave ((b)) ended at 93.25, and wave ((c)) ended at 92.98. Index has resumed higher in wave 3. Up from wave 2, wave (1) ended at 93.12 and pullback in wave (2) ended at 93. Index resumes higher in wave (iii) towards 93.42, and pullback in wave (iv) ended at 93.2. Final leg higher wave (v) of ((i)) ended at 93.49. Pullback in wave ((ii)) has also ended at 93.3 and Index has resumed higher again. Up from wave ((ii)), wave (i) ended at 93.8 and pullback in wave (ii) ended at 93.6. Near term, as far as September 23 pivot low at 93 remains intact, expect pullback to find support in 3, 7, or 11 swing for further upside. Potential target higher is 100% – 161.8% fibonacci extension from September 3 low towards 94.56 – 95.55.
ICEUS:DX1!
by Elliottwave-Forecast
1
DX - @ Bottom of RangeA predicted 3% fall in the US Dollar during 2021, was incorrect and met with a Global default denomination of +3.5%. The 7.5% swing and miss in Sum. In the world of currency values and major financial institution predictions - Missing the Mark by the largest Margin in predictive assumptions is no small feat. This never happens and yet it did happen. Fears of the recovery in China, Japan, Australia, and the UK in terms of manufacturing and durable goods corporate performance - failed to meet expectations. China began to restructure Trade. Japan turned inward continuing the largest build in Defense before World War 2. Australia went full mental with Covid restrictions, closing off its Economy. The UK further removed ties to the European Union with Bre-Exit advancing from February to June. Coffin Nails were abundant, their hammering continues.
ICEUS:DX1!
by HK_L61
2