Most traders keep an eye on the fundamentals, no matter how much of a technical trader they are.

It only makes sense.

You need to know what is going on in the world and when to avoid periods of excessive volatility. But it can be a pain in the ass to visit multiple websites to get the news you need for Forex trading.

There is a ton of crap that you have to wade through to get to the good stuff. Here is an example of a search for “gold news.”

See what I mean?

There is a better way.

In this video, I'll show you how to customize your news intake so you get exactly what you want…all in one place.

If you prefer the text version, it is provided below the video…

There are two parts to consolidating your news feeds. Let's take a look at them one-by-one.

Google Alerts

The first step is to setup Google Alerts for the news items that you want to follow. These are simply Google searches that you can save and access at any time.

A good one to start with is “crude oil news.” If you trade the oil related currency pairs…

Here are a few examples that you can start with. They will need to be refined to get what you want.

You can actually do a lot with Google searches. To see all of the cool things you can do, read this guide on search operators.

For each search, you will need to set them up as RSS feeds. This will allow you to use them in the next step.

To get exactly what you want (or pretty close), you my have to experiment with the different options. For example, I use News and Finance sources for this feed.

Once you have some searches setup, you can't actually use them just yet. That is where Feedly comes in…

Feedly

Now that you have some custom RSS feeds setup, it is time to put them all in one place. Feedly is a free RSS reader that makes it super easy to make your searches easier to read.

Setup an account and login to your dashboard. Then click on the Add Content button.

Then copy and paste the RSS link from each of your Google Alerts into the search field.

To get the RSS link, right-click the link and save the link.

An added bonus is that you can also add RSS feeds directly from different trading related websites. 

You can add blogs, trading forums or any news website. In this example, I have a category for trader blogs that I follow.

Conclusion

That's all there is to it. You can always change your currency news sources and Google searches according to what you need and what you are trading.

This is the most efficient and customizable way that I have found to get all of my news in the same place. It can save you a lot of time and mental energy.

…and the best part is that this is totally free. 

The post The Fastest Way to Only Get the Currency News You Need appeared first on Trading Heroes.

Wasssup, hope your trading is going well. As you probably know, all major financial markets are related, to varying degrees. Therefore, in order to understand how FX markets will move, you must also understand what is going on in bonds, indices and other markets.

Today, I'm happy to present some research from Troy Bombardia. He will show you why he thinks the U.S. Stock Market is due for a big correction, based on stock market corrections history. Troy is not the only one who believes this. Also keep an eye on pairs like EURJPY, which can be highly influenced by the S&P500.

So without further delay, here's Troy…

– Hugh

Note: In this post, the words “U.S. stock market” and “S&P 500” are interchangeable. I believe that the S&P 500 best reflects the state of the U.S. stock market. It is much broader than the Dow and is not as tech-focused as the NASDAQ.

The long term, multi-year movements of the U.S. stock market are not random. The S&P moves in clear cycles, which is why many large corrections are actually predictable.

People say that the crash of October 1987 came out of nowhere.

I disagree.

Here are my 2 favorite signals that can foretell many large corrections.

If the S&P Rises 80% Within 2 Years, Watch Out

Every time the S&P rises more than 80% in less than 2 years (504 trading days), a large correction ensues. Sometimes this signal comes out a little early, but by the end of the correction the S&P will be far lower than where it was when the signal came out.

This is a classic mean reversion signal. Whenever the stock market rises too quickly in too short an amount of time, it is “overbought” and must revert to its mean.

An 80% rise in less than 2 years is very difficult to achieve, which is why this signal has only come out 3 times in the past 50 years.

1. April 14, 2010 – This was only 8 days before a 17% correction began. This correction lasted 2 months.
2. March 20, 1998 – This was 4 months before a massive 22% correction began. This correction lasted 2.5 months.
3. August 7, 1987 – This was just a few days before a 33% correction began that culminated in the crash of October 19, 1987. This correction lasted 2.5 months.

The S&P Must Make a 10%+ Correction or a 4 Month Long Correction Within 3 Years, at Most

Like the previous mean reversion signal, the S&P has a time limit on how long it can rally without a “significant” correction. Some people define “significant correction” is a correction in which the S&P 500 falls more than 10%.

Defining “significant” this ways is nonsensical.

The purpose of a correction within a bull market is to washout some of the overbought momentum. A bull market cannot go up forever and ever without falling from time to time, so corrections are actually healthy for bull markets.

A correction that's “significant” enough to washout momentum does not have to be big percentage-wise. It can be big time-wise. That's why I define a “significant correction” as one that either falls more than 10% or falls for more than 4 months.

The last 10%+ correction ended in June 2012. From a historical standpoint, the S&P cannot go up for more than 3 years (750 trading days) without falling 10% or falling for more than 4 months.

Here's the Data

The S&P rallied for 3 years without a significant correction in only 2 other historical cases:

• From 1962 to 1965 – After this rally the S&P fell 11%
• From 2004 to 2007 – After this rally the S&P fell 12%

The current rally has lasted 3 years (as of mid-2015).

Thus, it's reasonable to expect a large or a long correction to begin any time now.

Conclusion

I am developing some other long term technical indicators that can help predict large corrections. All of these are based on some form of mean reversion.

For example, we all know that the stock market can get insanely overvalued, so valuation isn't really that useful. However, what I'm finding is that a lot of times the S&P will make a large correction when it reaches a minimum valuation target.

About the author: Troy Bombardia is an independent medium term trader who blogs over at Trading Slugger.

He uses long term technical indicators and medium term mean reversion indicators to trade stocks and commodities. He specifically focuses on the U.S. stock market and the precious metals markets.

The post How to Avoid Major U.S. Stock Market Corrections appeared first on Trading Heroes.

Certain currency pairs are highly influenced by commodities like gold and crude oil. The CADJPY is one of those pairs.

In this post, I will go over the CADJPY Oil correlation and why these currencies are so tightly linked to the price of oil.

Just like with any other trading strategy, this does not work all the time. Oil is not the only thing that affects these currencies.

However, as you will see, understanding this relationship can help you spot profitable trading opportunities.

Why There Is A High CADJPY Oil Correlation

The reason that this pair is so heavily influenced by oil is because Canada is a big exporter of oil and Japan is a large importer of oil.

Canada is the fifth largest producer of crude oil in the world and has verified reserves that is third only to Saudi Arabia and Venezuela. A majority of Canada's oil is in oil sands.

The oil industry in Canada employs over half a million people and accounts for $18 billion in government payments.

So as you can see, crude oil accounts for very large percentage of the Canadian economy.

Since Canada is a net exporter of oil, when prices rise it also helps increase the value of the Canadian dollar.

On the other hand, Japan only meets 10% of its energy need through domestic resources. Approximately 47% of its total energy requirements are fulfilled with crude oil.

Therefore, when the price of oil goes down, it is better for the Japanese economy and usually strengthens the Japanese Yen.

So this currency pair is the most likely to have a positive correlation to the price of oil. This is all great in theory, but does it really play out in actual trading?

Let's take a look at a couple of examples…

Monthly Charts

First, let's take a step back and look at the big picture. Here is a monthly chart of US Oil prices from September 2010 to the present.

Now let's look at a CADJPY monthly chart over the same time period. At first glance, the charts do not look the same at all. But look closer…the relative magnitude of the moves is very different, but the highs and lows tend to happen around the same times. There are times when oil does move first, then the CADJPY follows.

Four Hour Charts

Now let's drill down to the four hour charts and see if the oil chart would have helped us predict where the CADJPY was going. This is a current oil chart, as of tonight. The arrow on the chart is pointing to a huge rejection of a resistance level, which would have been a clue that price could move down.

When we look at the CADJPY chart, we see continued weakness during the time that oil spiked up and rejected the resistance level. This was another clue that the CADJPY could head lower.

Of course, hindsight is 20/20. But by looking to the oil chart for confirmation, we could have certainly formulated a profitable trading plan.

Conclusion

Keep in mind that the CADJPY price does not always follow the price of oil. There are no guarantees in trading. But if you are aware of the relationship between crude oil and the CADJPY, you will have a much better chance of profiting.

I'm still formulating a solid trading plan around this relationship, but some early testing has been promising. I'll write more when I have some concrete numbers. To track oil prices, I like to use Trade Interceptor on mobile and desktop.

Do you have any tips on trading CADJPY? Let us know in the comments below…

The post CAD JPY Oil Correlation Explained appeared first on Trading Heroes.

The question then becomes, what are the important markets to watch that can affect the daily fluctuations in currency pairs?  In this post, I will give you three markets to watch and which currency pairs they influence.

Before we get into it, remember that trading is not an exact science.  You need to observe these statements for yourself in real market conditions and draw your own conclusions.  They are generally what influences markets, but there are many different things that factor into the price of a currency pair.  It is up to you to determine when a price move is being driven by one of these other market and when it is not.

Crude Oil

Crude powers the world and it is no wonder that it's price affects the world's currencies.  Pay particular attention to countries that rely on heavily on oil imports and exports.

The currency pair that is most sensitive to fluctuations in oil is the CAD/JPY.  The reason is that Canada's economy relies heavily on oil exports and Japan imports almost all of it's oil.

When oil gets expensive, it is good for the Canadian economy and bad for the Japanese economy and the pair goes up.  When the price of oil falls, it has the opposite effect on the pair.  When these individual currencies are a part of other currency pairs, the price of oil does have an effect on the pair, but not as much as with the CAD/JPY.

Gold

The yellow stuff is considered a safe haven when things start to get crazy in the financial markets.  But it's price also has an effect on countries that export and import a lot of gold.  Of particular note is Australia, which is one of the largest gold exporting countries in the world.

The prevailing trend of gold price should always be taken into account whenever trading a pair that involves the Australian dollar.  Remember that when the AUD is listed first in the currency pair, such as in the AUD/JPY, an upward move in gold, will have add an upward bias on the currency pair.  If the AUD is the second pair, like in the EUR/AUD, an upward trend in gold will give the pair a downward bias.

US Stock Market

Watching US stocks and also give you some clues as to the direction of the market.  The general concept is that when US stocks do well, that attracts interest from foreign investors, who convert their currencies to US Dollars to purchase US stocks, which is good for the US Dollar.  Conversely, when US stocks are not doing well, foreign investors sell their stocks, putting downward pressure on the US Dollar.

So keep this in mind when trading USD pairs.  The correlation may not be high, but watch for long trends in the US stock market.  The stronger the trend, the more likely foreign money will start to move in or out of US Dollars.

There may be similar correlations with other stock markets, such as in the UK, so do some research and put in some screen time watching these markets and how the move, relative to each other.  Chris Lori also mentions is that watching Dow futures before the US market open can give you a clue as to where AUDJPY is going to go for the day.

How To Keep Tabs On These Markets

There are several ways that you can keep track of these markets.  One way is to continually check a site like Bloomberg or Reuters to see what is going on.  It is not hard to do, but I forget many times.

Another way to do it is to add the charts to TradeInterceptor on your phone.   Here is what TI looks like on my phone and the non-forex markets that I am tracking.  Again, I usually check it a couple of times a day, but sometimes I do forget.

So it is nice to have a backup.  My solution is to get free email updates from INO.  It makes it easy to scan what is going on in the markets during the day.  If you want, they have an in-depth analysis of each market in the email, but I usually just read the summary of how the markets did for the day, at the top.  Oil is a little further down in the email.
There may be other ways that work better for you, but this is what I have found most convenient.  Again, it cannot be stressed enough, but these are just clues as to what the currency markets might do next.  You have to determine for yourself if a currency pair is currently being heavily influenced by one of these three factors, or not.  I hope that this post helps you put some of the pieces together when it comes to seeing the bigger picture in currency trading.

Are there any other intermarket correlations that you have found particularly useful?  Let us know in the comments below!

Disclaimer: I do get a commission if your purchase or sign up for services mentioned in this post.  However, I only recommend them because I find them useful and the proceeds go towards supporting my work and a portion goes towards my charity partner.

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Photo Credits: Oil, Gold

The post 3 Non Forex Markets That You Should Watch to Trade Forex appeared first on Trading Heroes.

As retail traders, we don't have a lot of insight into what goes on behind the scenes, in the markets. Things are getting better with advances in technology, but transparency is still low.

But one source of market information has been around for a long time is the Commitment of Traders Report. Also known as the COT Report, for short.

This blog post will show you how to get it, how to read it and how it can help you find profitable trades. 

What is the COT Report?

The Commitment of Traders Report comes directly from the U.S. Commodity Futures Trading Commission (CFTC). The raw data can be found here.

It is released every Tuesday and shows the open futures and options trading positions of traders that fall into certain classifications.

Here's an example of the Wheat report:

In the previous version of the report, traders were only classified into three categories:

• Commercial: These companies use the futures markets to offset, or hedge, their business dealings. For example, a wheat farmer might short some wheat futures close to harvest, in case prices fall.
• Non-commercial: These are the hedge funds, large institutional investors and other entities that enter the futures market for speculation and investment. They are usually not involved with physical goods or manufacturing.
• Non-reporting traders: This category is a catch-all for smaller traders that do not fit into the other classifications.

This is a graph from a third party service that makes it easier to see this data. The primary value of this data is being able to see when the non-commercial or “spec index” is at an extreme.

The overall net position of the non-commercial traders can be a big clue as to where the markets are going.

The current version of the report classifies traders into five categories:

• Producer/Merchant: This is an entity that engages in production of a physical commodity and uses the futures market to hedge risks associated with their business.
• Swap Dealers: An entity that primarily deals with swap transactions. They use the futures markets to hedge their swap dealings.
• Managed Money: This includes Commodity Trading Advisors (CTA), Commodity Pool Advisors (CPO) and other similar money managers.
• Other Reportables: These are the entities and people who do not fall into the previous three categories, but still report positions.
• Non-Reportable: The remaining positions fall under this category. This includes small traders.

Now let's break down the report, starting with the top. The first part of the report shows the market (wheat) and the exchange that it is traded on (Chicago Board of Trade).

Dissaggregated shows that the positions are broken out by type of trader and not added together. Then it shows the instrument (futures) and the date of the report.

The left side of the first column shows the total open interest, which are the number of open contracts in that futures market. 

• All: The number of total contracts out there.
• Old: This is for commodities that have a crop “year.” For example, if the wheat futures were from a previous harvest, this would be the old harvest.
• Other: If there were any other harvests, then that would fall into this category.
• Changes in Commitment: The total change in contracts out there.

Next, let's take a look at the Producer/Merchant/Processor/User section. This shows the contract size, in this case 5,000 bushels of wheat. From there, the positions are broken down by long and short.

Each of the other sections is the same for each type of trader.

After that, then next row of data shows the percentage of open interest for each type of trader. In this screenshot, the largest positions are held by the long swap dealers.

It is just a simpler way of seeing who is holding the biggest positions.

The next row after that shows the number of traders in each category. It doesn't really mean much to us traders, but the CFTC may have reasons to put it in.

Number of traders doesn't matter so much because one trader holding 20,000 contracts is the same as 10,000 traders holding two contracts each. It may give you an idea of how many people are involved, but what is important is how many total contracts are out there for that position.

This stat is not shown for “non-reportable” positions because they are not officially reported. They are simply calculated by subtracting the total from the reported positions.

Finally, the last section shows how much of the open interest is controlled by large traders. This is more useful than the statistic above because it shows you if the total open interest is owned by a few traders or a larger population.

Yeah, that's all pretty confusing, right? Luckily, there are better ways to see this information.

Where Else Can I Get COT Data?

There are quite a few places where you can get COT data, that are a little more user friendly. Here are just a few.

• COTBase 
• Current Commitment of Traders
• Tradingster
• ICE COT Reports

If those aren't for you, then these options might help. They are from Forex focused sites, so they can be a little more useful to us because they are more focused on FX.

COT Indicator for MT4 (Free Download)

Wouldn't it be great to get COT data for free, inside MT4? This can be another easy way to see the COT data next to a chart.

A MT4 plugin by Boeing737 can be an easy way to get this convenience.

COT Forex – Data for Each Major Currency

If a MT4 indicator is too confusing, then there are easier ways to do it. For example, you can use a site like Oanda's COT page.

Unfortunately, this page is no longer available. 

Here's an example chart of the Euro.

This chart only shows positions of the non-commercial (speculative) traders. It also shows a price chart.

A chart like this is probably quite a bit different from what you are used to seeing when it comes to COT reports.

Conclusion

That is how to read the Commitment of Traders Report and get a few alternatives. It's not for everyone, but if you find it useful, learn more and practice it.

The post How to Read the Commitment of Traders Report appeared first on Trading Heroes.