Forex traders have been looking ahead to today, as today is the day of the much-anticipated FOMC meeting and the expected announcement of the second round of quantitative easing from the US Federal Reserve.

At this point further easing looks a certainty but the question is how much and when as well as the statement that accompanies the announcement. Expectations currently are that the Fed will announce around $500 billion of Treasury purchases over the next 6 months as well as an indication that that amount will be increased if necessary.

Much of the past couple of weeks has seen sideways trading in the forex markets as traders position themselves and wait for the announcement but the past couple of days has seen renewed dollar weakness, especially against the higher yielding commodity based currencies. It remains to be seen as to how much of today’s meeting has already been priced in to the market and whether the Fed do more or less than anticipated.

Movements away from what is expected may move the markets in either direction but without doubt the trend is very much against the US dollar at present and further moves are more likely to be in the direction of the prevailing trend.

The Fed is expected to announce its decision at 2.15pm today, 6.15pm UK time.

Good trading

Phil Seaton

PS. Find out more about our forex spread betting system by clicking here. We are currently offering a 30 day free trial of our forex system.

The LS Forex spread betting system is now live!

We have built this system based on the same trading principles and spread betting strategies that the LS Trader system is based on but have optimized this system solely for forex.

As with LS Trader, this system is a trend following system with money management rules included. The system came about following the numerous requests that we had received for a forex only system and following 2 years of testing and development we are now live.

There are some differences between the LS Forex system and the LS Trader system. LS Forex trades eight of the currency pairs that we trade at LS Trader, minus the US Dollar index. Both systems have been developed for use with financial spread betting. In these three aspects the systems are both similar and there is some overlap. Trades in LS Forex and LS Trader will always be in the same direction, with the trend.

However, there are some differences with forex and the new system has been optimized just for the forex markets and we therefore get slightly different signals and enter and exit trades at different times as well as entering during the middle of the week, which is something we don’t do with LS Trader as that is a weekly system.

One major advantage that we have with forex is that being so liquid, we can enter trades via stops without having to worry about slippage of getting a bad deal with very wide spread in the middle of the night as we would if this was tried on some commodities.

Inside the LS Forex member’s area is a brand new 82 page manual on forex and how to spread bet forex including information on how to open trades by stop, rather than manually. Because we also enter markets by stop, we include entry levels on the trades sheet and these are updated during the week when necessary as well as at the weekend.

What our research has shown is that a system must trade all markets in the same way, otherwise it is curve fitted and will not perform well in the future. Because of this, LS Trader has been built and optimized over all 43 markets that we trade at LS Trader.

But LS Forex is different. Because we are only trading 8 markets, and all from one sector, we can optimize just on that basis and this means that we have slightly different entry and exit criteria. We also, because we are only trading 8 markets can take a slightly larger trade size, meaning that with the exception of the smallest accounts, all markets can be traded and nearly all trades can be taken without worrying about part closing a trade to get around the minimum bet size.

Because the system is similar and trades mostly the same markets it is imperative to trade it completely independently and to do so through a different spread betting platform, such as ETX Capital if you are already using IG Index. It can of course be traded with virtually any spread betting platform as long as they cover the markets that we trade, and most should.

We’re also offering a 30 day free trial so you can check it out and see if it is for you. We think you’ll see that it’s the easiest way to trade forex.

We hope to see you inside the member’s area soon

Good trading

Phil Seaton

PS. Click here to sign up for a 30 day free trial of the LS Forex spread betting system

This week’s LS Trader financial spread trading update is now available and can be read by clicking here.

Last week was a relatively light volume week for the stock markets as expected due to the holiday in the US. This week will likely see a return by traders to their trading desks and should lead to a considerable increase in volume. The week ahead is likely to give us a better idea of short term action for the stock markets than we got from last week in spite of the impressive rally.

In this week’s spread trading update we take another look at the S&P 500, which had a considerable rally from support. We look at the levels to watch out for next for this market and how to pay attention to the all important long term trend.

We also look at the ever popular Gold market and look at how last week’s patterns may influence market direction this week, as well as taking another look at Crude oil and the best way to play the crude oil market.

We focus also on the forex markets and in particular the 3 main markets that we trade which are the US dollar index, the British Pound and the Euro. Last week’s action shows some indecision in the Pound and the Euro and possibly some support for the Dollar as well as a tightening of the price ranges in these markets, which points to some bigger moves ahead.

This week’s LS Trader financial spread trading update begins with:

The past week saw the stock markets rally sharply from support during a light volume holiday week in the US. It will be interesting to see.….continue reading by clicking here

Good trading

Phil Seaton

PS. You can sign up for a risk free trial of the LS Trader financial spread trading system by clicking here. The system comes with a 30 day no questions asked money back guarantee.

This week’s financial spread betting update is now available and can be read by clicking here.

This week we look at the S&P 500, which may be set to test a key support level this week and the likely impact on the markets that failure for support to hold would have.

We also take a look at Gold and Crude Oil, which in particular has been struggling with resistance levels of late as well as our usual focus on the forex markets, which have had a busy week with the dollar index reaching new highs and the Euro falling to new 4 ½ year lows against the US dollar.

This week’s update begins with:

At the end of the shortened trading week due to the markets being closed for the holidays in the US & UK, the markets ended lower, especially stocks and commodities, whilst the dollar and bonds moved higher. The week ahead could be quite an important one as major support levels in several markets could be tested….continue reading by clicking here

Good trading

Phil Seaton

PS. You can sign up for a risk free trial of the LS Trader financial spread betting system by clicking here. The system comes with a 30 day no questions asked money back guarantee.

Here is the fifth part of our 7 part series titled “The 7 Deadly Financial Spread Betting Mistakes”. Today we will discuss the fifth of the 7 financial spread betting mistakes that financial traders make:

Mistake #5 Taking too much risk

Most online traders take too much risk when trading. This is especially the case for people trading online with financial spread betting.

In futures trading, traders decide how many contracts to buy of each instrument, but in financial spread betting, traders only have to decide how much to bet per point. This makes it much easier to over trade and to risk too much on each trade.

It is also much easier now to trade too frequently, with the temptation to sit in front of the screen all day. It is no longer necessary to pick up the phone to execute your trades as you can access your financial spread betting account 24 hours a day and can trade with ease at the press of a button. This can very easily lead to over trading and taking too much risk.

To get around this it is necessary to have a specific system to follow with specific rules which will govern each of the following:

1.      The markets (instruments) in your portfolio.

The selection of markets (instruments) in your portfolio is a crucial factor. It is important to select actively traded markets so that you can exit your trade when you want to. If liquidity in a certain market is low this can prove difficult and expensive as you may get a far worse price than you had expected when you go to exit your trade.

2.      How many markets in your portfolio you will trade at any given time

The number of trades that you will have open at any one time determines the total amount of risk that you have. There must be a point at which you do not open any new trades until some prior trades have been exited, or the stop loss in some trades has moved up to the entry level.

3.      How much exposure you will have on open trades at any one time

This follows on from point 2. If you are going to risk 2% per trade then 50 trades open at one time would mean that 100% of your account is exposed. This would be an extremely dangerous game to play and the volatility in your account would be extremely high.

If you are only prepared to risk 50% of your account then you can only have 25 trades open at any one time. Obviously as certain trades progress you can move your stops up to break even and then eventually to lock in profit. At this point you could have more trades open but not so much risk exposure.

4.      Your bet size for each individual instrument.

Most people who use financial spread betting bet far too much per point. The correct approach is to decide where you will set your initial stops, assign an amount of risk per trade which should be the same for all trades and then subtract your exit price from your entry price. You would then divide the number of points that your stop is away from the entry price by your risk per trade which would give you your bet size per point.

5.      The distance your initial stop loss is from your entry price

Most online traders put their initial stops too close to the market and bet too much per point. The correct approach is to use a wider stop and a smaller bet size. Stops which are too close to the market invariably get hit, causing you to get taken out of a trade prematurely. At the same time you don’t want your stops too far away as this will cause you to trade with a reduced size which will limit your potential profit.

6.      How you will manage your trade once it is open and when you will exit the trade.

You must have a set point at which you will exit your trade. A good trading system will have specific rules for this and your stop should follow up behind the current price as the trade progresses. Initially moving stops up behind a trade as the trend progresses will enable you to limit your exposure on that particular market and ultimately to lock in profit whilst still allowing the trade to progress.

7.      The correlation between each instrument.

Many markets are correlated. Some are highly correlated such as Crude Oil and No Lead Gasoline; others are slightly less correlated, like Soybeans and Wheat. Others have little or no real correlation at all.

If you trade too many markets that are highly correlated you are trading the equivalent of one trade but with much more risk as you have multiple trades. A dramatic move in these markets is likely to cause a severe drop in equity in your account.

8.      The maximum drawdown in equity that the system will generate

A drawdown in equity is the distance of the highest point of equity to the lowest point. A good trading system will have a high profit return with the smallest possible drawdowns.

The maximum drawdown that the system has should be within the comfort zone of the trader. Some traders are able to withstand high volatility in their account and larger drawdowns and are subsequently able to capitalize on market moves. Other traders are more risk averse and have to reduce either the number of instruments that they trade or the risk per trade (bet size).

9.      The duration of the drawdowns

The duration of the drawdown is how long it takes in trading days to return to new equity highs from the lowest point. A good trading system will recover in a relatively short period of time.

10.  The frequency of the drawdowns

The frequency of drawdowns a system has is also a factor. If you trade a system which has frequent drawdowns in equity of 50%+ you fill find it extremely difficult to follow the system over a long period of time, increasing the likelihood that you will abandon the system. Chopping and changing systems will ensure that consistent profits will elude you.

The LS Trader system takes all of the above factors into account and is a robust trading system, which has been optimized in all of the above factors, culminating in a system which has high returns whilst also keeping drawdowns to a minimum. There are specific rules to cover all of these areas meaning that the trader will always know exactly what to do in any eventuality.

In the next part which will be published in the next few days we will discuss Deadly Financial Spread Betting Mistake #6 which is titled “Day Trading and what all day traders should know”.

Until then, good luck in your trading.

Phil Seaton

PS. If you are not already subscribed to the LS Trader system, please click here to start your 30 day trial. The Ls Trader system has been built around all the points covered in this article and avoids all the mistakes that most users of financial spread betting make.

Financial Spread Betting Newsletter April 2010

This month’s financial spread betting newsletter is now available. To read the newsletter, please enter your email address in the box at the top right hand corner of this page. Please note that our financial spread betting newsletter is a free monthly publication and your email address will never be spammed or sold.

In this month’s issue we look at most of the 43 markets that we spread bet at LS Trader, including stocks, commodities, forex and interest rate futures. The newsletter covers many important aspects of financial spread betting and provides insights for spread betting financial markets, including the key support and resistance levels in many of these markets.

Good trading

Phil Seaton

PS. You can sign up for a risk free trial of the LS Trader financial spread betting system by clicking here. The system comes with a 30 day no questions asked money back guarantee.

LS Trader Financial Spread Betting Weekly Update

This week’s financial spread betting update is now available and can be read by clicking here.

This week we look at what’s been happening during the shortened trading week ahead of the Easter holiday. We look at the new highs that have been formed in the stock indexes, take a look at the forex markets which made some decent moves last week and we also take a look at Gold, which has broken out of the pattern that we have been discussing recently.

This week’s update begins with:

The past week has seen stocks continue higher, especially the stock markets from outside the US such as the Nikkei and the German Dax. Commodity markets were also higher in some sectors with metals and energies gaining strength.….continue reading by clicking here

Good trading

Phil Seaton

PS. You can sign up for a risk free trial of the LS Trader financial spread betting system by clicking here. The system comes with a 30 day no questions asked money back guarantee.

LS Trader Financial Spread Betting Weekly Update

This week’s financial spread betting update is now available and can be read by clicking here.

This week we look at what’s been happening in the major market sectors which include stocks, forex and commodities. We take a look at the stock indexes, which have all made new highs again as well as the Nikkei 225, which closed last Friday just below a key resistance level. The reaction to that resistance level this coming week will be key to the next move for the Nikkei.

We also saw new highs for the Dollar Index and new contract lows for the Euro and we cover these two markets in our forex commentary. We also take a look at Gold, which continues to trade within a tight range and may be building up for a breakout soon.

This week’s update begins with:

The past week has seen stocks move higher again and a continuation of the US dollar rally. Commodity markets on the whole were lower on the back of continuing dollar strength.….continue reading by clicking here

Good trading

Phil Seaton

PS. You can sign up for a risk free trial of the LS Trader financial spread betting system by clicking here. The system comes with a no questions asked 30 day money back guarantee.

Phil Seaton’s 7 Rules of Successful Financial Spread Betting

Here is part 3 of my rules of successful financial spread betting

3. Cut losses

This is where most traders and trading systems fall down. You must cut your losses. You must never move your stop loss back when the price is approaching your stop loss to keep you in a trade in the hope that the price will turn around. Occasionally this may happen but over time you will lose more money. In some instances this style of trading will usually lead to you taking such a large loss that you cannot recover from it.

The key to consistent profit making in the markets is that your winning trades must be larger than your losers. If you keep your losses small and let your winners run this is easily achievable.

For example:

If you make 10 trades risking a £1000 per trade and the following happens

5 trades lose at £1000 per trade = -£5000
1 trade breaks even = £0
1 trade makes a £1000 profit = £1000
1 trade makes a £2000 profit = £2000
1 trade makes a £3000 profit = £3000
1 trade makes a £5000 profit = £5000

You have only been correct on 4 trades out of ten and you lost £5000 on your 5 losing trades, but you won £11000 on your 4 winning trades. You are £6000 in profit for ten trades. This shows you the value of cutting losses short and letting winners run. Most people want to be right all the time and look for a system that gives them 8 or 9 winners out of 10 (I have yet to see such a system!). I am not interested in being right, I am only interested in making money and you should be too.

If I were to offer you the chance to make £11000 out of every ten trades that you made and lose only £5000, meaning that you would be £6000 in profit every ten trades made I hope that you would jump at the chance to play this game all day long. This example is only hypothetical, but it gives you an idea of what this trading system is about. It is possible to be wrong 7 times out of 10 and still make money if you will follow the rules.

The above is just an example but over time, trading does work out usually somewhere along these lines. As an added advantage of trading this way, every so often you get a huge trade that pays out many more times your initial risk. Usually each year we get a handful of outsized winners which we class as home runs.

In the example above I have only included 1 trade winning at 5 times the original trade. In 2008 we had several trades that paid off at 9 or 10 times the original stake and one that we recently exited, the short GBP/JPY trade that paid out around 22 times the original stake.

One concept that must always be kept in mind is the risk of ruin. Many traders overtrade both in frequency of trades and size of trades. They stake far too much on each trade and therefore end up taking big losses. This approach often leads to traders wiping out and losing all their account equity.

The right approach is to risk only a small percentage of your trading capital on each trade and set an initial stop loss and stick to it, never moving your stop loss back to stay in the trade. This way you will ensure that you stay in the game and make sure that you have the chance to catch some big winners and make profits.

If you have a good trading system which has a positive expectancy, then the key point is to stay in the game long enough for this positive edge to work in your favour. If you lose all your chips you can’t play. Therefore you must be conservative, both with your risk per trade and your account equity on the whole.

REMEMBER ALWAYS: CUT YOUR LOSSES SHORT AND LET YOUR WINNERS RUN

My fourth rule of successful financial spread betting will be published on this blog soon.

Good luck in your financial spread betting

Phil Seaton

PS. The LS Trader system incorporates all of my trading rules. You can sign up for the LS Trader system here. The system comes with a 30 day 100% money back guarantee and can be followed in around 15 minutes per week.

LS Trader Financial Spread Betting Weekly Update

This week’s financial spread betting update is now available and can be read by clicking here.

This week we look at what is happening in the stock markets after the indexes broke out to new highs. We also look at the latest in the US dollar rally and what is happening in the forex markets.

This past week has seen new highs for the year for stocks but has also seen more short term weakness for the US dollar….continue reading by clicking here

Good trading

Phil Seaton