Trading Strategy Based on Market Sentiment (Part V)

By Ahmad Hassam

Rather than looking at the commercial participants, you should focus on the non-commercial participants when you look at the COT report. You would want to know the reason for ignoring the commercial category in the COT report. Commercial participants are mostly trading currency futures for hedging their future business transactions against exchange rate fluctuations. Commercial participants are mostly large transnational companies. These companies keep on rolling their positions from month to month for hedging even though they maybe taking losses.

However, large speculators like the hedge funds, the banks, big institutional investors and so on, trade currency futures contracts for speculation and pure capital gains only. Hedge funds are a major player in this category. Most of the large speculators will immediately close their losing position instead of rolling it over to the next month. Non-commercial participants do not have any intention of taking delivery of the currency in cash like the commercial participants.

By gauging market sentiment in the forex futures market, you can also gauge the market sentiment in the spot forex market. There is a close correlation between the currency futures market and the spot forex market.

Near the maturity of the forex futures contract, the spot forex and the currency future prices converge. Prices become equal on maturity. Currency futures are basically spot prices adjusted for the forwards based on the interest rate differentials to arrive at the future delivery price.

The main difference between the spot forex market and the forex futures market is that the spot forex market is Over the Counter (OTC) market. It is not centralized. However, Forex futures are traded on a Centralized Exchange Chicago Mercantile Exchange (CME).

There are some differences in price quotation system used in both the markets that you should become familiar with. However, the spot and futures prices of a currency tend to move in tandem. When either the spot or the future price of the currency rises, the other also tends to rise and when either falls, the other also tend to falls. For example, if GBP futures price goes up spot GBP/USD goes up too.

By subtracting the total long positions from the total short positions, calculate the net position of the non-commercial contracts in the COT report. The non-commercials tend to register a net long position when a particular currency is trending up against the US Dollar. This is due to the fact that the large speculators mostly hedge funds like to continue riding the trend as long as it lasts.

The opposite is also true when a particular currency is trending down against the US Dollar. When the market is trending down against USD, the non-commercials will have a net short position. By comparing the latest net positioning with that of the past few weeks or months, you can tell if the latest net positioning is skewing towards an extreme reading.

You can detect turning points in the spot forex market with the COT reports by keeping an eye on the net directional positioning and net contract volume in the non-commercial category. When the majority of the market is positioned incorrectly, dramatic price moves like the major turning points tend to occur.

You can use your COT report analysis to optimize your trading strategies. Entry and exit cannot be timed solely based on COT report but it can generate warning signals of a possible turn ahead in the spot forex market. What deters many traders from using the COT report is its raw organization of data. COT report is a treasure trove. - 23204

About the Author:

Mr.Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Trade The Forex News! Learn Forex Trading.

Finding A Builder In Costa Rica Who Is Cost Effective

By Randy Berg

Right now, the properties in Costa Rica are hot. Many investors are making a beeline to this mainland and buying large areas as the going rate is a steal. You can reach this beautiful mainland in less than three hours by air. When you buy property, consider finding a builder in Cost Rica who is both knowledgeable about the climatic conditions of the place as well as someone who can hand over your finished project on time.

Since Costa Rica is situated in a volcanic region, it is subject to very heavy rainstorms. The location is such that earthquakes are sporadic and frequent. Therefore, when finding a builder in Costa Rica, one should make sure he takes these factors into consideration and uses the right building materials for construction.

If you are on a tight budget, chalk out your requirements and make out a plan before finding a builder in Costa Rica. You can download and research all the information on line or get professional help from a lawyer friend. This way, you learn to work around the loopholes and gain contacts, which you can incorporate into your budgeting.

You can either buy the materials locally or import the same from America. Check with the real estate agents who helped you with the acquisition of the property about finding a builder in Costa Rica who is both punctual and reliable. You must set out the period for completion with the builder and make sure there is no delay in any way with supplies. This way there is no delay and work can progress smoothly.

Your real estate agent may be the best bet in finding a builder in Costa Rica who can work as per your interests. If you have a yen to build your house overlooking the ocean, you can design it in such a way that the colors and sounds of the ocean are incorporated and you can get a glimpse of the sea from every vantage point in the house. Alternatively, you can concentrate on beautifying the approach to your house, creating a beautiful garden with seasonal flowers that give the house an exotic appeal.

Finding a builder in Costa Rica is not difficult. A local builder who is not too expensive, capable of handling building permits and is up to date regarding the regulations is what is important. He should be able to procure the documents and have the right contact so that there is no time delay. Be prepared for a little delay, when the unexpected happens, as this is something beyond anyone's control.

It is vital to envision your project and decide your priorities. Finding a builder in Costa Rica could be that ultimate step that makes your investment a dream come true. - 23204

About the Author:

At Costa Rica Real Estate, you can find yourself an affordable and attractive location in which to retire! Interact with us through our forum.

Easy Way Of Looking At Offshore Investments

By Mr Christopher Latter

Many people in the world are getting restless thinking about reducing their taxes. They are in a constant search for the best possible option. If you are one of those then you should consider Offshore Investment. The investments made in the countries other than your native are termed as Offshore Investments. You might think why it is good to invest in other countries rather than in the home land. There are quite a number of good reasons. The primary reason is to reduce the taxes levied by the home country. The second important reason is the ease of execution processes in certain countries which would help the brokers, consultants and the individual investors a great deal.

A lot of investors both small and big have begun to make offshore investments. You do not have to worry about the illegality because these types of investments are absolutely legal. Offshore investments, if made intelligently offer high returns. These types of investments are quite simple. A beginner with little knowledge also can make effective investments with out much effort.

In-Favor locations: This term is quite common in all the offshore investment markets. Investors prefer these foreign locations as they provide good returns with great tax discounts. There are several criterions one has to successfully match in order to make an offshore investment. The country where you are investing would be responsible for setting this criterion i.e. the government of that company would be the in charge.

Offshore investments are quite simple and very easy to make. Before jumping in to offshore investments, you should do some research and acquire some basic understanding. You have to be sure why you prefer offshore investments over others. Taking legal advice from right persons is not such a bad idea. These things are very crucial in order to earn good profits with out any legal hassles.

You have to be aware of the tax liabilities in your country. This is quite important because in certain nations, if you are a citizen you are required to pay taxes no matter in which part of the world you are living. You have to be very careful otherwise, you would end up paying more taxes than you usually do. You might also consider making an offshore investment in the tax haven countries where the taxes are very low. This factor of tax friendly environment is quite essential for earning good benefits.

You might need to pay some money as commission before making offshore investments in any country. This fee is usually called as commission fee or member fee. After this you could freely trade in any investment market related to that company. Choosing a good financial advisor would be very beneficial. This is a must. It would be better for you to choose the right person who has enough experience in the field of offshore investing so that his advice could bring you good fortune.

You should be updating yourself with what is happening in the country you have invested. You have to stay in touch with current scenarios in the market you have invested in. you have to remember the fact that you future would depend on the growth of these investments. You have to set up certain security standards on your own with out totally relying on the financial advisors. This is the key in offshore investing.

There are a lot of banks which help in making offshore investments. Choosing offshore banks over domestic banks would be wise as offshore banks seem to provide higher returns when compared. More over offshore banks means fewer taxes and more savings which is all you need. - 23204

About the Author:

Discover more on the subject of Offshore Investments by visiting an archive of articles on this topic and other sources closely related to Offshore Investments.

Articles on Forex Trading

By Paul Bryan

Forex can be best defined as a global currency exchange market where buying and selling of the currencies from all over the world takes place. It has emerged as the worlds largest market in terms of money flow and volume of trading. It has been identified as the most liquid market where trillions of dollars are being exchanged every single day.

Many currencies from around the world are available for trading including, but not limited to; the US Dollar, the British Pound, the Euro, the Australian Dollar, the Yen, the Swiss Franc, and the Canadian Dollar.

Now a lot of Forex trading articles are being published in the websites of various online magazines and other Forex websites discussing the Forex trading Strategies. These articles come up with a lot of Forex trading strategies.

But Frankly I am not sure whether all of them are able to do justice to their readers. But yes you do come across some good literature and packages which might be of great help to you. It is also not easy to formulate your own strategy because good trading systems come to light only after years of devoted research and active trading.

It is very difficult for a new trader to tell which articles are good and which are not to be trusted. Be wary of any that seem biased or have been written by someone selling a Forex tool or program.

People look to these articles to get the best information about the Forex business. So, it is very important that while reading these forex trading articles one verifies them properly before believing the message they carry to the core.

A good currency trading article will come up with simple strategies which are easy to use, and are all the more logical and usually used by veteran traders in the business.

Risk management is one of the most important aspects of currency dealing so make sure the article is advising you off this and not making unrealistic claims about how much money you will make. A good article will be written to be useful to you and so the writing style should reflect that.

Forex dealing articles written by expert traders are the best for those people who would like to start a career in Forex trading. These articles focus on strategies used by more experienced traders making use of other indicators along with the moving averages.

Articles written on Forex trading must be aimed at the target market correctly, using simple language and step by step instructions to clarify the points. - 23204

About the Author:

Paul Bryan has years of experience trading the Forex market and has now built a Forex website full of articles, tips and tricks to help you be a better, more profitable trader. To find out more simply visit: Forex Trading Articles

Commodity Trading Challenges, Opportunities in Commodity Markets

By William Davies

Worldwide we now see commodity trading activity taking place on a range of modern, regulated commodity exchanges. A broad range of commodities are traded between end user buyers and producer sellers within a framework of standard contract rules and commodity trading regulations. In effect world commodity exchanges make buying and selling of raw commodities ranging from crude oil, copper and wheat to platinum and orange juice much easier.

To add to the established commodity markets that most are familiar with, such as coffee and crude oil, now we are seeing developments and exciting innovation with the introduction of more specialised forms of futures contracts. A notable area where such product development is advancing is in the carbon emission market. Against a background of growing global awareness of the urgent need to abate emissions of greenhouse gases, the market for trading carbon permits is likely to see strong interest and growth going forward.

For the foreseeable future it is likely we will see continual growth of markets which place a price on the environment, with further development in emissions, plastics and perhaps even water. The basis of commodity trading activity is the buying and selling of futures contracts for a whole range of commodities. While the nickel or cocoa producer will use commodity futures contracts to hedge their future sales, commercial end users will also use these contracts for hedging against sudden spikes in prices.

The commodity markets rely on their liquidity from the speculators who are the major players, while commodity end users and primary producers are relatively minor actors who are hedging their operations. What are the key requirements of a futures contract? That it allows a trader to buy or sell a specified amount of a given commodity in the future, at a price fixed when the contract is exchanged and based on the demand and supply at that time.

In recent years the volume of electronic trading has increased significantly as we see various exchanges merging to achieve efficiency and greater synergy. Across the globe, traders are active either on the floor of exchanges, called open outcry, or as is increasingly more likely now, via an electronically traded platform open 24 hours.

The wider availability of real time trading data and online trading software packages means that the opportunities to engage in commodity trading have reached the small retail speculator, who trades smaller amounts and now has virtually global access to the internet. While some traders look to the fundamentals of demand and supply of basic commodities in specific sectors, a growing number prefer to follow the price action of exciting trades, relying on technical analysis irrespective of the commodity in question.

The emerging economies of Brazil, China, India and Russia (or BRIC) continue to expand over the long term and so expansion in regional commodity markets is to be expected going forward. Just look for example at Dalian commodity Exchange in China which has plans to move beyond its core strength of agricultural commodities towards metals and other areas. And look at Dubai in the Gulf, an area with a fast growing financial centre where a wide range of commodities including steel, plastics, WTI light, sweet crude oil, Indian Rupee, silver and gold can be traded on the Dubai Gold and Commodities Exchange.

While the world economy has suffered some serious shocks following the credit crunch and slowing rate of growth, with a number of companies and even some countries getting into serious financial difficulties, commodities as an asset class would appear relatively unimpaired. Despite the short term difficulties, the global economy will continue to rely on key commodities such as crude oil, steel and copper, as well as basic softs like sugar, cotton and coffee, not to mention grains such as wheat, corn and rice. For this reason we can expect commodity markets to see through these problems and for commodity trading as an activity to continue to be at the centre of world trade and finance. - 23204

About the Author:

The writer,William Davies, travels the globe, follows the markets and contributes to Commodity Trading Today, an informational and educational resource covering commodities markets. You can get free Commodity Trading Alerts and articles from the Commodity Universe Newsletter here.