With Forex getting millions of hits on our site over the past few days I asked Bill Poulos from ProfitsRun to give us his opinion on the Forex markets. Bill has recently released a number of highly educational Forex videos and has over 30 years trading. Please enjoy the piece and watch his latest videos.
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By now, everyone has been well-schooled by the media on how dire the economic situation is in the USA, as well as globally. A massive credit contraction is in the process of wreaking havoc on one and all. After almost 70 years of non-stop credit expansion, the party appears to be over. The result is plunging stock markets around the world, a collapse in real estate prices, commodities, and even oil. Unemployment is moving higher, retail sales are off significantly, and the media has now announced what we already knew months ago - the economy is in a recession.
Now, there is no denying that the situation is very serious and, of course, the government is doing everything they are capable of to stave off the contraction and the consequences of deflation.
So the prevailing mood is one of "doom and gloom" – it's in the air, in the print media, radio, TV – you are programmed to believe that you are a hapless victim that can only hope for the government to save you.
As for us investors and traders – the message is there is little you can do in this environment except wait for our stock portfolios to recover, which may take years.
I strongly disagree with this notion and here's why.
There is at least one market that offers significant profit potential right now, hour by hour, day in and day out. Whether you are a day trader or an end of day trader. And it should be no surprise that I am referring to the Forex market.
The Forex markets have always offered great profit opportunities, but these opportunities get even better in times like these. You see, with all of these economic cross currents and pressures that are working against other investment vehicles, they actually drive even better profit opportunity than normal in the Forex market.
For example, since this past July, the dollar has been in an almost unprecedented rally against other key currencies offering the savvy trader terrific profit opportunities. The EURUSD pair has fallen by 3500 pips or $35,000 per standard lot, the GBPUSD pair has fallen by 5000 pips or $50,000 per standard lot, and the AUDUSD pair by 3000 pips or $30,000 per standard lot. So while other more traditional markets are being decimated, the dollar rally has offered great opportunity. But only for those with eyes to see it and a trading method to take advantage of it.
Make no mistake, there is plenty of risk associated with the Forex markets and for that reason you must have a good trading method to guide your trading that puts risk management first and foremost – because without it, you will lose. But to better put this into perspective, I often use the analogy of driving a car. Driving a car without understanding the rules of the road and without experience would be a very dangerous thing to do. But with the proper training and guidance, as you received when you first learned to drive, you were able to enjoy the benefits of driving by first paying attention to and controlling the risk of driving. I think of Forex trading in the same way.
Whether you are able to trade a large account or small account, standard lots or minilots, the mechanics of Forex trading are quite straightforward and easy to do, again with the proper guidance.
I believe anyone who wants to ditch the "gloom and doom" scenario and take control of the situation has the opportunity to do so by mastering a good Forex trading method that puts risk management first and in the process go from reliance upon others to becoming an independent trader.
For an in-depth technical look at how to spot profit potential today in the Forex markets, click here for a free, 3-part video training series.
Good Trading,
Bill Poulos
As a veteran purchaser of books, systems and newsletters I must say I just can't stand it anymore when I run across the phrase "you see" in a promo letter like this. Typically, when I get to the second "you see" my hair trigger slams the delete key and I'm gone. Note to Bill; please quit using the phrase "you see".
In the proffered letter Bill states "all these forces are working against other investment vehicles". This is simply not accurate. All vehicles, including foreign currencies, drift up and down in response to those same forces; they are not being worked against, i.e. they will all react to interest rates and employment numbers....etc..., no matter what.
All in all the entire paragraph could be deleted and then I would pretty much have no issue with it.
Once inflation reasserts itself I see a return of the EUR/USD to roughly 1.6, and then some. The final spasmotic leg down off the current end of year rally needs to happen, the new admin needs to take office, the final shaking out of the banking mess needs to occur, the full details of the new financial plan needs to see the light of day. Key for me to call the turn will be employment numbers turning around, oil on the rise, ....etc...I will be watching the govt's inflation numbers, but taking those with a grain of salt.
I see repeated testing of the 1.3 level, possible pull back to 1.25, in the near term. When all the pieces are in place, deflation has run it's course and inflation is "back to normal" I see the EUR/USD re-establishing at around the 1.6 level and slowly drifting from there towards 1.7 through 2010.
You might try my patented girlie bar indicator. Many times the girls will tell you "I'm doing this to save up for college" or "graduate school", but right now they're actually IN SCHOOL! When the current students are doing well enough to go back to school for good and the current dancers go back to SAVIng for school, that will be a strong indicator of a return to the status quo.
My Friends do we have the same thing we had in the seventies? With Energy being low and then started a run, it led to long lines. But what did it really do? Energy attached it self to "GOLD" and away it went.. Gold will go down a little but then as "OIL" starts this run to 200.00 a barrel Oil it will attach it self to the Gold and away we go,Oil 200.00, Gold 1900.00 an ounce. be sure to get the plan in place.. This is going to start as soon as China wants their money.......
DAVIDS COMMENTS HAVE BEEN ON MY MIND TOO.
WITH THE US DOING SO BADLY, SHOULDNT WE SEE THE DOLLAR REVERSING SOUTHWARDS ANY TIME NOW.
I AM SURPRISED WHY GOLD HAVE NOT GONE UP TOO.
PL. GIVE US YR COMMENTS.
The key question is when will this dollar rally run out of steam and reverse. With non-farm payroll figures today showing a huge increase in unemployment and auto manufacturers in very bad shape, the economy is getting weaker by the day.
And just look at how NYMEX light, sweet crude futures are getting hammered, heading towards the $40 level. I am sure OPEC will be getting nervous ahead of their Algeria meeting later this month. What are the chances of say a cut of 3 million barrels a day in crude oil production?
Will the Chinese decide to liquidate their holdings of US Treasuries to fund their mega- $586 billion economic stimulus package in mainland China?
Will oil-rich Middle Eastern investors repatriate some of these funds and buy up even more physical gold bullion?
The precious metals are building up a real head of steam in the background and when the dollar turns, we can expect gold and silver to head for the skies.
And the flip side of this will be the US dollar heading south against other major currencies like the Yen, euro and Swiss Franc.
Wow what a wonderful value-added activity, arbitraging currencies to squeeze out profits. "Wealth creation" at it's finest!
Thanks for your frequent and informative videos. I am a new member of Market Club and have been very impressed. Just the educational value of the videos alone are worth the membership fee.