Europe Before the War

Before 1870 different parts of the small continent of Europe
had specialised in their own products; but, taken as a whole, it
was substantially self-subsistent. And its population was
adjusted to this state of affairs.
After 1870 there was developed on a large scale an
unprecedented situation, and the economic condition of Europe
became during the next fifty years unstable and peculiar. The
pressure of population on food, which had already been balanced
by the accessibility of supplies from America, became for the
first time in recorded history definitely reversed. As numbers
increased, food was actually easier to secure. Larger
proportional returns from an increasing scale of production
became true of agriculture as well as industry. With the growth
of the European population there were more emigrants on the one
hand to till the soil of the new countries and, on the other,
more workmen were available in Europe to prepare the industrial
products and capital goods which were to maintain the emigrant
populations in their new homes, and to build the railways and
ships which were to make accessible to Europe food and raw
products from distant sources. Up to about 1900 a unit of labour
applied to industry yielded year by year a purchasing power over
an increasing quantity of food. It is possible that about the
year 1900 this process began to be reversed, and a diminishing
yield of nature to man's effort was beginning to reassert itself.
But the tendency of cereals to rise in real cost was balanced by
other improvements; and -- one of many novelties -- the resources
of tropical Africa then for the first time came into large
employ, and a great traffic in oilseeds began to bring to the
table of Europe in a new and cheaper form one of the essential
foodstuffs of mankind. In this economic Eldorado, in this
economic Utopia, as the earlier economists would have deemed it,

most of us were brought up.
That happy age lost sight of a view of the world which filled
with deep-seated melancholy the founders of our political
economy. Before the eighteenth century mankind entertained no
false hopes. To lay the illusions which grew popular at that
age's latter end, Malthus disclosed a devil. For half a century
all serious economical writings held that devil in clear
prospect. For the next half century he was chained up and out of
sight. Now perhaps we have loosed him again.
What an extraordinary episode in the economic progress of man
that age was which came to an end in August 1914! The greater
part of the population, it is true, worked hard and lived at a
low standard of comfort, yet were, to all appearances, reasonably
contented with this lot. But escape was possible, for any man of
capacity or character at all exceeding the average, into the
middle and upper classes, for whom life offered, at a low cost
and with the least trouble, conveniences, comforts, and amenities
beyond the compass of the richest and most powerful monarchs of
other ages. The inhabitant of London could order by telephone,
sipping his morning tea in bed, the various products of the whole
earth, in such quantity as he might see fit, and reasonably
expect their early delivery upon his doorstep; he could at the
same moment and by the same means adventure his wealth in the
natural resources and new enterprises of any quarter of the
world, and share, without exertion or even trouble, in their
prospective fruits and advantages; or he could decide to couple
the security of his fortunes with the good faith of the
townspeople of any substantial municipality in any continent that
fancy or information might recommend. He could secure forthwith,
if he wished it, cheap and comfortable means of transit to any
country or climate without passport or other formality, could
despatch his servant to the neighbouring office of a bank for
such supply of the precious metals as might seem convenient, and
could then proceed abroad to foreign quarters, without knowledge
of their religion, language, or customs, bearing coined wealth
upon his person, and would consider himself greatly aggrieved and
much surprised at the least interference. But, most important of
all, he regarded this state of affairs as normal, certain, and
permanent, except in the direction of further improvement, and
any deviation from it as aberrant, scandalous, and avoidable. The
projects and politics of militarism and imperialism, of racial
and cultural rivalries, of monopolies, restrictions, and
exclusion, which were to play the serpent to this paradise, were
little more than the amusements of his daily newspaper, and
appeared to exercise almost no influence at all on the ordinary
course of social and economic life, the internationalisation of
which was nearly complete in practice.

It will assist us to appreciate the character and
consequences of the peace which we have imposed on our enemies,
if I elucidate a little further some of the chief unstable
elements, already present when war broke out, in the economic
life of Europe.

[Partnership With ForexGen]

ForexGen offers three types of business partnerships:
Introducing Broker
White label
Money Manager

The RSI calculation

Forexgen Broker as Wilder introduced the RSI; he recommended using a 14-day RSI. Since then, the 9-day and 25-day RSIs have also gained popularity. Because you can vary the number of time periods in the RSI calculation, I suggest that you experiment to find the period that works best for you. (The fewer days used to calculate the RSI, the more volatile the indicator.)

As Forexgen Broker presents The RSI is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the RSI is to look for a divergence in which the security is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a "failure swing." The failure swing is considered a confirmation of the impending reversal.

resistance penetrations

Forexgen platform Failure Swings (also known as support or resistance penetrations or breakouts). This is where the RSI surpasses a previous high (peak) or falls below a recent low (trough). Support and Resistance. The RSI shows, sometimes more clearly than price themselves, levels of support and resistance.

Divergences. As discussed above, divergences occur when the price makes a new high (or low) that is not confirmed by a new high (or low) in the RSI. Prices usually correct and move in the direction of the RSI.

How Many Kinds of Main Strategies are there in Forex Trading?

There may be dozens of strategies in Forex trading. Let's just talk about the roots.

Nature Of Market:

Every thing in the universe has its NATURE. So is Forex market. So is every currencies pair in this market. For example, GBP/JPY always moves faster, and its wave range is longer than other pairs, such as a hundred pips during a day or even a hour. EUR/GBP generally waves narrowly several pips only within a day. For American, EUR/USD and GBP/USD like to sleep in day and dance at night. AUD/USD and NZD/USD look like twin, they commonly act in the same style, if one of they goes north, another one does not like to go south. But EUR/USD and USD/CHF are doomed to be enemy, while one of them flies up like a hydrogen balloon, the counterpart mostly will drop like a lead ball. And so on, so on.

Once we find this kind of "Nature of Market", we can develop and figure out some strategies for particular currencies pairs, just follow their nature, predict their moving direction and range. Then we will get our own trading strategy and system.

Fundamental Trading:

In Forex market, many professional analysts like to use a kind of method to predict the future. It is so-called "Fundamental Analysis". Based on this method, they develop many kinds of strategies to trade Forex. These are strategies of forecasting the future price movements of currencies based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the foreign currencies.

If you like to try Fundamental Trading, you need learn and understand a lot of finance knowledge. Actually, not only finance knowledge, you need to be interested at many things of this world, including politics, economy, geography, culture, diplomacy, even military affairs. And you need to study the core underlying elements that influence the economy of a particular entity. For example, when the USA's GDP or employment report is strong, you begin to get a fairly clear picture: the general health of America's economy is good. So the US dollar should be stronger than other currencies. But how far can the US dollar go? Fundamental Trading may not answer this question very accurately. You may need to come up with other precise tools as to how best to translate this information into entry and exit points for a particular trading strategy.

Hedge:

In finance, a hedge is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity.

In FOREX, there are two kinds of similar "hedging" strategies:

1, Buy and Sell the same currencies pair, same lots, same timing. Then let it go. While one of those orders goes north, the counterpart will go south. After the winner takes profit, we can wait for the loser turning around. In a yo-yo market, this method works well.

For example, buy 2 lots GBP/USD at 2.0003, at the same time sell 2 lots GBP/USD at 1.9997. While the rate rises up to 2.0053, we close the buy order and take profit 50 pips. Now, the sell order will draw down around 50 pips. Let's wait for the rate falling down, it will fall down usually, especially in yo-yo market environment. If the rate drops down to 2.0037, close the sell order, the sell order will lose 40 pips. Does it hurt? No. Don't forget the 50 pips we have taken at the buy order. Totally, we can get 50-40=10 pips. Furthermore, if the rate keeps falling, let's say down to 2.0027, we can take 50-30=20 pips, etc.

Some people would doubt it... doesn't this "strategy" sound like hedging flat for nothing, just paying double spread? Why bother? Well, they are right, because we forgot mentioning the key point: timing of closing orders. When to close the winning order to set a foundation and when to close the losing order to lock the profit, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital timing. Believe it or not, those experienced traders say that this method helps them screening false signals out.

This kind of "Yo-Yo Hedge" can work at any currencies pair.

2, Buy (or sell) unequal lots of special currencies pairs and buy unequal quantities of another kinds of currencies pairs which usually move in the opposite direction. This seems a "Semi-Hedge" trading strategy. It is created based on "Correlation" between some particular currencies pairs. So it is not suitable for every currencies pair.

Actually, this kind of hedge has another feature: earning SWAP! You earn interest daily on the held position which can yield up to 50% per year of your full account balance.

There are several pairs can do it. Such as EUR/USD Vs. USD /CHF, GBP/USD Vs. USD/CHF, AUD/USD Vs. NZD/USD, EUR/JPY Vs. CHF/JPY, GBP/JPY Vs. CHF/JPY.

Let's take the EUR/USD and the CHF/USD pairs.

These pairs are historically negatively correlative 93-98% of the time. That is when one pair goes up the other goes down, and vice versa, up to 98% of the time. In a high leverage account (as high as 400:1 or 500:1), you could earn 50% SWAP interest in a year. How? Let's say you have $5,000 in your account and a 10% risk margin set. If the net interest we receive is 1.25% annually, this 1.25% interest will be enlarged to 50% per annum, by the 400:1 leverage.

And, this return does not include the buy low/sell high profits.

But, if the base of this kind of hedge collapses, it means the "Correlation" does not exist any more, for example the "Correlation" drops under 50% or lower, there will be a disaster.

Arbitrage:

Some people call "Arbitrage" as a risk free strategy. But other people call it as a trick which looks like the cat pawing chestnuts from a fire. But in theory, its risk is minimum in deed. We introduce three types of arbitrage strategies here:

1, Triangle Arbitrage: Searching for two highly fast-moving pairs (like EUR/USD and USD/JPY), the price of a not-so-fast moving pair like EURJPY should always be derived by multiplying (or dividing, etc) the fast-moving pairs. So for example, if EUR/USD is 1.4871 and USD/JPY is 108.24, the logical price of EUR/JPY should be 1.2 x 120 = 160.96. But at the same time, the real EUR/JPY rate is 160.90. The slower moving pair lags behind the logical price, and then profit opportunity comes.

In practice currencies are quoted with a bid ask spread, so a trader should be careful that he is actually buying at the quoted ask price, and selling at the quoted bid price. Other transaction costs, such as commissions, might also invalidate the apparent free lunch.

How to Trade Price Consolidations:

Trading on price consolidation breakouts is a popular choice among Forex traders. In this article, I will present to you one of the most effective and simplest ways to trade consolidations.

What Is A Price Consolidation?

Price consolidation occurs when there is no obvious uptrend or downtrend in short-term time frames. Ranging markets are not considered to be consolidating because prices are still fluctuating up and down. In a true consolidation, market prices don’t fluctuate and typically stay within a 10 to 15 pip range.

What Time Frames Should I Trade?

Consolidating prices don’t usually last very long. That’s why you’ll usually trade using intraday time frames (i.e. hourly charts or minute charts). Occasionally, daily charts may show flat prices as well… but these are more the exception rather than the norm.

How Do I Trade It?

Most people enter into a trade when prices break out of the highest price (or lowest price) of the consolidation. If prices break upwards, they buy. If prices break downwards, they sell. The decision to trade on breakouts is based on the assumption that the momentum of the break will be strong enough to push price further in the same direction.

How Effective Is It To Trade Breakouts?

In my experience, breakout trading can yield rather consistent profits. This is because they usually follow through. The hard part is deciding when to exit your trade once it’s in-the-money, because breakouts sometimes reverse directions quite quickly.

What Should Be My Profit Target?

Usually, a profit target of 30 pips is good enough. Sometimes, you may want to try for 50 pips. I don’t usually hold breakout trade positions after I’m in-the-money for 50 pips because then the price action will usually turn erratic.