EES - The Forex Conundrum

It's difficult to know what one can say publicly about Forex. If performance is mentioned, it should first be approved by the NFA (as should any marketing material). Comments from insiders and partners are told in trust that it will not be repeated. Talking about market direction could be construed as a solicitation to invest or place a trade, opening potential liability issues. It seems there isn't anything one can mention without someone having a problem. Take a position, someone will be on the other side. And then readers complain about trader's making idiotically benign statements such as 'the market goes up and it also goes down.'
Even as this text goes to print, someone somewhere is thinking "what do they mean by this," and "are they talking about me?"
In an industry that revels in anonymity and secrecy, had its credibility ruined by fraud and misrepresentations, that is misunderstood and widely misinterpreted, is it any wonder that 95% (some sources say 99% others say 90%) lose money? As soon as it seems one trend is forming, forces come from out of nowhere and knock the market to another direction. Examples lately have been the SNB revaluing the franc, and announcements by the Fed purchasing US Treasuries.
Speaking of which, that is one investment that can be recommended without having various persons, agencies, and other organizations irritated by comments – TIPS. TIPS are the only haven investors have left to put their savings. Although not tax free, TIPS provide an excellent hedge against inflation and ultra high credit ratings. In fact, based on the perceptions about Managed Futures, Forex, and day trading, it may be simpler for CTAs to simply stop managing accounts and just invest their client funds in TIPS.
Advice for traders
With all the complexities in Forex, it should be an easy case to make that any trader should only use quantitative automated strategies to trade Forex. In order not to upset your counterparties, any strategy should be market-neutral and not take any 'position' in the market. This is easily done with options and much less easily done in spot Forex. However, with the use of automated trading tools, it is very possible. A trader must extract alpha from spot Forex at the same time, no one should know about it, or else those who are peddling other strategies may become jealous and feel threatened. One should use a broker that charges high commissions, so the broker doesn't see the strategy as some sort of intellectual competition to the broker. A tough market to trade, just ask McDonalds.

The oDesk Manifesto for Online Work

The best approach to online work is the one that creates success for both buyers and providers. As the first and only service to guarantee that an hour billed is an hour worked and that an hour worked is an hour paid, oDesk has long held these Manifesto principles dear.
Please consider the Manifesto a declaration: Don't settle for less than you deserve.
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Get guaranteed payment for the time you work
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As a buyer, you have the right to:
Audit the people and hours worked
Access talent from around the world
Know the identity, skills and experience of every team member
Pay your global online team without the hassle of payroll and taxes
Pay competitive rates worldwide
Offer work online without paying a membership fee or a posting fee
Build your own online workteam

Morgan Stanley hires Citi’s Sopp for FX trading

Singapore: Morgan Stanley has hired Stuart Sopp from Citigroup as its Asia head of G-10 spot currency and forward trading, sources close to the matter said.
Sopp, who was previously Citigroup's Singapore-based head of G-10 spot FX trading, would move to Hong Kong to start his new job at Morgan Stanley, sources said.
The hiring is a sign of Morgan Stanley's focus on forex and flow business, one of the sources said, as investor appetite grows for plain vanilla products after a market meltdown last year saw demand wane for riskier derivatives and hedge funds.
Bank of America, Credit Suisse and Morgan Stanley said last month they would join a group of banks supporting a joint venture between foreign exchange settlement provider CLS Group and interdealer broker ICAP plc to reduce risks in processing.
Morgan Stanley is looking to hire sales and trading professionals in all major trading centres across the world, the source said.
Morgan Stanley, which became a bank holding company last year, repaid $10 billion from the government's troubled asset relief program in the last quarter when it posted a third straight quarterly loss.
For Citi, Sopp's departure comes less than a year after he joined the US bank from Deutsche Bank.
A Citigroup spokesman confirmed Sopp's departure. Morgan Stanley declined to comment on the move.
Citi, which vowed to remain focused on Asia, has struggled to retain high-profile executives in the past few months. The bank, one of the worst hit by the financial crisis, has taken $45 billion in bailouts from the US government.
Royal Bank of Scotland (RBS), which was bailed out by the British government, lost Ivan Ferraroni, its head of forex sales and trading in Tokyo, to Barclays, according to Barclays on Tuesday.
It comes a few months after RBS lost David Dredge, deputy global head of local markets at RBS and a key risk trader, to Artradis Fund Management, Singapore's largest hedge fund manager.

Classification and Identification for FX Systems and Indicators

EES is developing a system of Classification and Identification for trading systems, indicators, and related files. The system will be based on existing international standards, modified for appropriate trading applications.

During recent market analysis, some words and descriptive terms are lacking to describe certain market events. EES will use existing scientific standards as a template to name our own systems and develop a trading nomenclature.

For example, we are developing an indicator that will determine market "velocity" which is the 'speed' of the pair divided by the time.

Another example, how does a trader measure the amount a pair may fluctuate in a range? It would calculate the amount of times the price crosses a line, or multiple lines, inside a trading range.

EES Releases V Speed indicator for Spot FX Volatility

V (Volatility) Speed is an indicator that displays the current high-low (range) of each bar on the chart, and displays it in the data window below with a smoothed average of the past x(3) bars. 3 is the default, the longer the period the more long term the value, in other words if you want a short term volatility indication to signal an increase in volatility, a lower number should be used.

EES recommends using this indicator as a measure of volatility, and to signal an increase or decrease in volatility by watching the SMA. A cross up (when the SMA is below the V Speed line and crosses above it) of the SMA indicates a decrease in volatility and conversely, a cross down indicates an increase. The SMA values can be adjusted according to the specific pair and time frame used. V Speed can be referenced by strategies as an indication of volatility.

The name speed is derived from the method to determine how 'fast' volatility is moving, specific to your pair. Monitoring the VIX is not necessarily appropriate. V speed also is a handy tool to display each bars high-low which is the range.

Is China deliberately understating the size of its trade surplus?

CHINA'S current-account surplus is seen by some as the root cause of the financial crisis. The good news is that after widening year after year it is now shrinking much faster than expected. In the first half of this year the surplus narrowed to $130 billion, one-third lower than a year earlier, and barely half its level in the second half of 2008. Not only has China's merchandise trade surplus narrowed, but investment income from China's stash of foreign reserves has also dropped. Arthur Kroeber at Dragonomics, an economic-research firm, predicts that the current-account surplus is likely to drop to 5% of China's GDP this year, down from 11% at its peak in 2007. Belatedly, China seems to be doing its bit to rebalance the world economy.

Dollar Intervention Loses Support

Some analysts are surprised by the evident unwillingness of Central Bankers to intervene on behalf of the Dollar, especially considering how common such "rescue plans" are becoming in other corners of the financial markets. Over the last couple months, all of the momentum that was previously behind intervention has gradually evaporated, such that at the recent G8 Summit, currencies were hardly even discussed. This is somewhat ironic considering the Dollar has resumed its downward trend, and even touched an all-time low against the Euro. Treasury Secretary Henry Paulson and Fed Chief Ben Bernanke aren't willing to completely write off intervention, however. Both have commented explicitly that it is still being mooted as an option. Nonetheless, the current consensus among analysts is that unless the Dollar completely collapses, it's not likely.