Howdy Traders,

Looks like I was being a little too cheap with CHF/JPY at $81.70. Today the Franc rocketed 200+ pips off $81.86, and hasn’t looked back yet. My planned profit target was $83.70 but since the market has blown through that price level, there is nothing left to do here except move onto the next trade. Hopefully some of you caught the round number bounce around $81.90.

GBP/USD Testing $1.52

It’s decision time for GBP/USD as a triple top has formed along resistance at $1.52. The currency has failed to close above the $1.52 handle since the last bargain day setup on the 5th of July. The currency has formed a triple top formation along the minor daily chart trend line, and it’s do or die time in my opinion. Our HMA trend indicator is starting to rollover, and appears prepared to turn bearish if a significant break above $1.52 doesn’t materialize tomorrow. Here is today’s chart:

Best of luck,

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

I changed the blog layout again, I thought the old style was a little too busy. I think the new layout is a little cleaner, but I’m still not 100% happy with it. Let me know what you think, did you like the old blog better?

Swiss retail sales posted a 3.8% increase versus an expected 2.7% increase on Monday. The reaction in CHF/JPY was counter intuitive as CHF sold off Monday. This places CHF/JPY in what I refer to as bargain territory, and I’m looking for a buy. In today’s chart you can clearly see a rising trend line with Monday’s candle closing below a bullish HMA. I’m interested in $81.70 which is slightly below S1, and slightly above the trend line. Here is today’s chart:

GBP/USD Thoughts

I’ve posted my thoughts on GBP/USD over on FXStreet.com. If you are interested in reading that post, you can visit this link:

http://blogs.fxstreet.com/dayjobtrader/2010/07/06/gbpusd-in-bargain-territory-will-it-move-higher/

GBP/USD is in bargain territory, but I think the currency pair has some room to move lower. The major price level $1.50 is only a few hundred pips away, and I think this will be tested at some point this week.

Best of luck,
Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Euro hasn’t achieved much over the last fourty-eight hours, but it has managed to print an inside day formation on the daily chart. Inside day formations are usually associated with a pending breakout since one, or more consecutive day’s trading is contained within the previous day. In other words, the trading range is getting narrower, and a breakout may be coming. It is no coincidence the inside day has formed ahead of Non-Farm Payroll numbers due out on Friday. The market often consolidates awaiting what many traders consider the super bowl of all fundamental reports. The question on my mind, will $1.22 hold support or will Euro break lower?

EUR/USD probed lower on Tuesday, breaking down to $1.2150 before a decent rally back to $1.23.  Tonight the currency pair is hovering just below $1.23, but didn’t close in bargain territory. As of right now, I still think a false breakout to $1.24 could happen. I’m not interested in the $1.23 handle, but $1.2420 is interesting to me. Overall, not very clean in my opinion.

Best of luck,

Ryan

I apologize for the lack of posts! I’ve been incredibly busy since April, so I appreciate your patience! I’ve been traveling a lot, and will soon move across the country (again), so I’ve been distracted to say the least! Fortunately my schedule is settling down, so I’m looking forward to blogging more, and sharing my weekly videos with you again. There have been several fantastic bargain day opportunities recently, and hopefully we can blog more of them as they arrive.

Traders Love My New Book Making Money in Forex!

I have to admit, I’m relieved to read the positive comments made about my new book Making Money in Forex! Since it’s release last month I have received several emails, and comments from traders who have put it’s techniques to use. Thank you to everyone who has bought the book! You have made the book #11 in sales among foreign exchange titles, and #20 in international finance titles on Amazon.com as of this evening! The book as been out only a month, and I hope we can break into the top ten soon! If your not sure about Making Money in Forex, I encourage you to read the comments left on this blog by other traders. Additionally, the endorsements on the back of my book are from real traders, working real day jobs who have gained real value from my book. I’m confident it can help you, and if you have any questions email me. Thank you again!

Thoughts on the Vancouver Forex Meet-Up

Last week I was in Vancouver, British Columbia to speak with a group of currency traders about supply and demand based trading. I had a great time, and I wanted to thank everyone who came out to see my presentation. We had standing room only in the back, and I can be long winded when excited about trading! I’d also like to acknowledge my friend and CEO of Trading Metro Samuel Araki for hosting the event.Finally, Vancouver is a great city and I’d encourage you to visit when you get a chance. It’s neighborhoods are distinct, it has a lot of outdoor activities and Canada has the coolest money ever printed because they have hockey players on it. If you have a currency trading group, and you’d like me to speak at it; send me an email and we’ll work out the details.

EUR/USD Sunday Planning

I always try to spend time on Sunday planning trade ideas ahead of the market open. This exercise gets me prepared for the trading week, and reminds me where major price action boundaries exist so hopefully I won’t miss one during trade planning. Sunday planning is really quite simple for me. I mark the previous week’s high, and low trading zones, along with the major “000″ numbers that may be in play during the trading week. I usually start with a monthly or weekly chart, then move daily and four hour. Since I try to focus on EUR/USD with this blog, that currency pair is the subject of today’s post.

Tonight’s planning will start with the monthly chart. I think long term, Euro is still in trouble technically. May’s price action smashed any hope Euro bulls had about holding trend line support near $1.30, and it looks vulnerable with no major support until the November 2000 lows. Euro may get a bounce back to test the trend line and $1.30 barrier, but it looks bad. Short term price action on the four hour chart sets up a triangle consolidation pattern along support at last week’s low price of $1.22. The pattern traders are no doubt looking for a breakout on this triangle, but if it happens long it may be a fake out. The weekly high supply zone near $1.26 may cut any long breakouts short. If that scenario plays out, we may see the breakout longs get their stops tripped below $1.22 and accelerate the slide. That being said, their may be teeth to a Euro breakout long even if it is just a pull back correction on the weekly or monthly charts. The selling has been vicious, and if risk sentiment eases a bit Euro may find some buyers. The U.S. is observing Memorial day so Monday the U.S. equity markets are closed. I don’t think there will be anything decent to work with until Tuesday evening.

Best of luck this week!

Ryan

Sticking with my trading motto Semper Gumby (Always Flexible); this week I traded with the AUD/USD trend, and against the prevailing GBP/JPY trend. In the weekly currency trading video I’ll give you some insight on how I combined a fundamental event with support and resistance levels to plan a longer term trend trade. I hope you had a great week of trading!

This week was a slow, and frustrating trading week for me. It ended without a single pip being banked! My longer term systems didn’t throw any signals, and my one and only short term trade missed it’s entry by four pips! In this week’s video I discuss the basic setup I use to trade the London session with entry orders. There were two setups this week, one I didn’t take due to Passover, the other missed my entry by a few pips. Don’t let the “London trading session” part of this strategy fool you! The system can be executed whether or not you work full-time, you do not need to be present to trade. I personally like to sleep while London is trading.

I hope you had a great trading week, and have a great weekend!

Ryan

When you trade around other interests (like sleeping), the use of entry orders is a necessary evil. Today was one of those trading days when using entry orders ended up a frustrating experience. I have a very simple trading strategy that uses entry orders, round numbers, and the London open. The system attempts to execute low risk, high probability trades while I sleep. Occasionally the market will deal me a hand like the one I was dealt this morning. I had a five lot entry order waiting to go long EUR/USD placed at $1.3380. The market missed my entry point by four pips. My dealers trading platform pegs EUR/USD’s low price for today at $1.3884! It stinks to miss out on 120 pips for the sake of four pips, but this is the game played when using entry orders to mange trades in our absence.

I think trading support and resistance with entry orders is a lot like fishing your favorite fishing hole. You have a good idea where the fish are biting, you even cast your line in the right spot, but sometimes the fish swim right by your lure without taking the bait. Just because a fishing hole is familiar to you, doesn’t mean you’re going to bring home dinner every day. I bring this trade (or lack of a trade) up as a reminder to those of you who are new to trading price action. Support and resistance trading is an imperfect science, and even when everything is correct you still might miss out on a killer trade. This is the compromise we make for the convenience of sleeping, or working a day job. You have to take trades like this one in stride, or trading will drive you mad. I hope your line was cast at $1.3390 last night instead of my fishing hole at $1.3380.

Best of luck,

Ryan

If the Commodity Futures Trading Commission adopts a proposed regulation to limit maximum leverage available off-exchange, many traders will move their accounts overseas where trading regulations are less stringent. In fact, many accounts have already left the United States following the NFA’s rules against hedging, and First-In-First-Out (FIFO) order execution. I have not moved my account overseas, although I probably will if regulation 5.9 is adopted by the CFTC. Trading with a reputable dealer through an overseas subsidiary is a straightforward process, but I was concerned that taxation snares may await U.S. based traders. To clear the air, I contacted Mr. Robert Green CPA/CEO, CEO & Founder of Green & Company CPAs LLC. Mr. Green is a well respected authority on trader taxes, and publishes many excellent articles via his website GreenTraderTax.com. In today’s post I’ll share Mr. Green’s response to my questions.

Note: This post does not constitute direct tax advice. The details of your situation are fact dependent, and I highly recommend you consult the services of a competent tax professional. I don’t think you will go wrong calling Mr. Green or visiting his forums at GreenTraderTax.com if you have questions.

Q: Are there any special forms a trader with an overseas account must submit at tax time?

A: All offshore bank and brokerage accounts need to be reported to the IRS each year on Form TDF 90.22-1. The FXCM UK accounts are foreign bank accounts (FBA). FBA reporting and the rules are clearly stated at www.irs.gov. It’s a simple tax form just listing account information. No income or wealth tax is
associated with the form. Non compliance has very stiff penalties, like $10,000 per occurrence. There was a big stink last year with non compliance on offshore accounts as part of the IRS vs. UBS (Swiss) tax battle and IRS voluntary disclosure program, which I covered on my blog.

Q: Are there any tax “gotchas” waiting for traders who make a profit in an Australian or European currency account?

A:  To date, we have not learned that US residents are taxed in the UK locally on their forex trading accounts. In most countries, including this being the case in the US, the non resident alien tax regime calls for no taxation on capital gains and losses – it’s not effectively connected income (ECI) or
“source income” – but there generally is local tax withholding on dividends and sometimes interest too. In the case of tax withholding, the taxpayer is generally not required to file a tax return, so there are no complexities or burden for tax compliance in a foreign country. Considering that there are
no dividends on forex and rarely interest too, and usually just trading gains and losses, forex traders should generally not have any tax costs in a foreign country. Traders should seek formal answers from local tax authorities and/or local tax professionals and also check US vs. other country tax treaties.

If a trader does pay taxes to another country, they can receive a foreign tax credit in the US, to prevent double taxation. However, if the foreign country tax rate is higher than the US tax rate, they will be paying that higher foreign country tax rate, since the foreign tax credit only allows a credit against the US tax rate amount. In the case of forex, the US tax rate might be 23%, the futures tax rate if the trader elected into Section 1256g. In the UK, tax rates are approximately 40%.

Frankly, it doesn’t sound all that bad in this trader’s opinion. I’d prefer to keep my account in the United States, but I will move if the CFTC adopts regulation 5.9.

I hope you had a great week of trading! I booked a couple of decent trades early in the week, then took the rest of the week off. In this week’s video I cover both trades, the progress of our example option trade on FXC, and some upcoming events I’ll be speaking at if your interested. I’ll be speaking at a Vancouver British Columbia currency trading group in May. The date is tentatively set for May 26th, and if you would like information on attending please email me. This trading group is organized by my buddy, and founder of TradingMetro.com Samual Araki. Also, I have an free seminar planned for an upcoming Sunday. I’ll post information on how to register for this webinar on Monday, look to the blog for more information. Finally, if you haven’t submitted your comments to the CFTC I highly encourage you do so this weekend. The deadline for public comment is Monday the 22nd, and we do have a chance to stop the leverage limits. If you haven’t seen Rob Bookers in depth presentation on the proposed regulations, I’d recommend you take a look. The recorded webinar with all his notes are available a this link: http://www.robbooker.com/special/.

Have a great weekend!

Ryan

Howdy Folks,

Tonight I’m pondering whether or not EUR/USD has truly broken out of consolidation now that we have a bargain day opportunity. This currency has been trending higher since February’s lows, and broke out sharply higher on Friday. Today, the currency pair appears to have completed a pull back on the breakout. I think if the trend holds together EUR/USD is probably on it’s way to test $1.3850ish, which is the support level that broke down in early February. Perhaps the Fed statement tomorrow will give this currency the volatility it needs to break higher. We’ll see how it plays out, best of luck.

Ryan