RESOURCES :.

• Why Fundamental analysis is not practical for most traders?
• What is System Trading?
• What is forex?

Why Fundamental analysis is not practical for most traders?

Listed below are the most important fundamentals that compound the macroeconomic scenario and drive the FOREX market:

1. Monetary policy set by the FED through the participation in open market operations.
2. G-7s economies and Asian Economies
3. Trade Balance
4. Domestic Consumer Price index
5. GDP growth
6. Money supply growth
7. 10 year asset bear yields
8. Interest rates
9. Money markets

These aggregate gross inputs and their derived indicators combined with the political considerations in each of these countries comprise the framework in evaluating a nation's currency relative to another. Derived macroeconomic indicators include factors such as GDP growth rates, interest rates, inflation, unemployment, money supply, foreign exchange reserves and productivity. Political considerations impact the level of confidence in a nation's government as the climate of stability and level of certainty.

Order to effectively trade based on the aforementioned market catalysts, it would require that person to be on the cutting edge of all global economic, social, and political activity and news. Additionally, it would require one to have a theoretical framework that has the capacity to successful project the evolution of the aggregated indicators. This fundamental trader would be competing with other fundamental institutional traders who have teams of PhD filled research departments with eyes and ears all around the world 24 hours a day, 7 days a week. The average trader therefore must recognize that trading in this fashion, based on the factors listed above, is an extremely difficult task.

However, a trader can be profitable with the limited recourses by basing their trading decisions on the sole observation of the data itself, assuming that price has already incorporated all the necessary information into the market price.

The basis of system trading (trend following) is a combination of risk and money management rules. What are the guidelines or parameters that drive these rules? There are several and these can range from position sizing algorithms, correlation, and volatility, exit strategies. So any of these various calculations can be applied to create a risk and money strategy, but there is one major rule that is prominent for trend following -measure risk before a trade occurs. This is why Turbo Turtle systems use position sizing, correlation, volatility and exit strategies algorithms to determine risk or loss. Turbo Turtle is a complete mechanical long term trading system that trades the Forex market, Turbo Turtle is based on unique algorithms that monitors risk while capturing major movements in a trend, also during the trend process whether there is a long or short position. Adjustable or systematic stops are implemented to insure that risk is minimized according to volatility. Trying to encapsulate system trading in a short topic can be a complicated process because of back testing of parameters over data, therefore all trending following or system based trading are driven by algorithms not fundamental or technical analysis. One last important note system trading is not based on emotions, trend followers have found that human emotions can evoke indecisions that can hamper one's trading ability.

With a daily volume of $1.5 trillion, the Foreign Exchange (Forex or FX) Market is the largest in the world - 30 times larger than the combined volume of all U.S. equity markets Historically, the Banks dominated the FX cash markets and offered ‘Interbank’ dealing spreads (typically 5 pips or less) only to their largest or most valuable institutional clients. In contrast, the dealing spreads typically available to other market participants were much wider (50-100 pips or more in many cases), which essentially excluded their participation in the currency markets.

For this reason, the IMM began quoting currency futures in an effort to give the retail customer access to this 1.5 trillion dollar a day market.

However, Internet-based FX trading firms now offers retail investors direct access to the cash markets, with 24-hour trading at Interbank spreads.

The following are added benifits when trading the forex market:

• Limited Risk - Traders can NEVER have debit balances trading forex! In the event that funds in your account fall below margin requirements, the Dealing Desk will simply close all open positions. That means that, even if you are dead wrong and there is a catastrophic market move against you, you can never lose more than the amount of money you have in your account. In addition, by using stop loss orders that are guaranteed, your risk can be further limited and defined. That provides you with tremendous peace of mind.
   
• Instantaneous Execution and Firm Prices - The futures market does not offer instant execution or price certainty. Even with electronic trading and limited guarantees of execution speed, the price for fills on market orders is far from certain. In the futures market, the prices represent the LAST trade, not necessarily the price for which the contract will be filled. With FOREX, in contrast, you get instantaneous execution and price certainty. On the FX trading, you trade directly off real-time streaming prices. Your trades are filled instantly. There is no discrepancy between the displayed price and the execution price. This holds true even during volatile times and fast moving markets.
   
• Maximum Liquidity - Due to its enormous size (46 times bigger than all futures markets combined), the currency market is the most liquid market in the world. The spot currency market is a $1.4 trillion daily market, making it the largest and most liquid market in the world. This market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. If you compare this to the $30 billion per day, futures market, it becomes clear that the futures market provide only limited liquidity. The currency market, in contrast, is very liquid, meaning positions can be liquidated and stop orders executed without slippage.
   
• 24 Hour Trading - Unlike most futures exchanges, the currency market is a seamless, 24-hour market. At 5 p.m.Sunday, New York time, trading begins as markets open in Sydney and Singapore. At 7 p.m. the Tokyo market opens, followed by London at 2 a.m., and finally New York at 8 a.m. As a trader, this allows you to react to favorable or unfavorable news by trading immediately. It also gives you the added flexibility of determining your trading day. By comparison, the currency markets in the United States, such as the Chicago Mercantile Exchange and Philadelphia Exchange, have regulated hours. The CME, for instance, opens at 8:20 a.m. New York time and closes promptly at 2 p.m. Therefore, if important data comes in from England or Japan while the U.S. futures market is closed, the next day's opening could be a wild ride. (Overnight markets in futures currency contracts exist, but they can be thinly traded, not very liquid and difficult for the average investor to access.)
   
• Automatic Roll Overs - Open positions are rolled over automatically every two days. At 5 p.m. ET you are automatically rolled over in all your open positions (swaps the trade forward) to the next settlement date two business days in the future. As is true with futures, there is often a carrying cost associated with rolling over a position. Moreover, currency positions sometimes can actually make you money on the rollover. That is because your profit/cost is determined by the difference in interest rates between the two currencies. Thus, if you are long the currency with the higher interest rate in the pair, you will actually gain on the spot rollover through the premium relationship of that currency relative to the short currency. The amount of the gain is determined by the interest rate differential between the two currencies, and fluctuates day-to-day with the movement of prices.
  
  For instance, on any given day, the rollover can be $2 per lot for USD/JPY and $15 for GBP/JPY. Rollover fees are shown in dollars, and are posted in the "interest column" on the AFOREX Trading Station every day at 3 p.m. ET. For day traders who never hold a position overnight, there are no carrying costs.

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