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Global Equity Markets slumped on Tuesday as a wave of poor economic news and lowered rating caught the market off guard.  In Japan, GDP printed less than forecasted, coming in at 1.3%.  Fitch lowered its rating on Greece. In Dubai, the main developer reported a $3.65 billion loss contributing to the market’s woes.  The DJIA finished the session down 104.14 points to close at 10,287.97

The Dollar continued its rally feeding off the poor equity performance as risk aversion remained in firm control.  The DXY closed at 76.31, a level not seen since early November.  Gold continued its selloff as it closed the day down $30 to 1,128.40.  Oil was not far behind finishing the day down $1.31 to 72.62 a barrel.

The BOC left rates unchanged at .25.  In Switzerland, Unemployment printed as expected for November at 4.2%. Later today the RBZ will announce its Interest Rate decision.  They are widely expected to keep rates on hold, currently at 2.5%.  With no relief insight we expect the dollar rally to continue in to today.

Upcoming Forex Events for December 9, 2009

CHF     Unemployment Rate  Actual  4.10% Forecast  4.20%  Previous  4.10%

EUR    German CPI (MoM)   Actual  -0.10% Forecast  -0.20%  Previous  -0.20%

NZD     Interest Rate Decision Forecast  2.50%  Previous  2.50%

AUD   Employment Change Forecast  6.00K  Previous  24.50K

Research by http://www.ufx.com

NZD/USD:

We are not suggesting the Dollar bulls are running wild, however, every rally in hindsight has a defining moment.  Every trader on the street is aware that when the Dollar bulls get set free they are going to come charging.  Even if you are a skeptic to the end just the mere massive unwinding of the carry trade would rocket the Greenback.

Our pick would be the NZD and here 3 reasons why:

Performance – Going back to March 9^th, 2009 through December 7^th, 2009 the top performing G-10 currency (on a percentage basis) against the Greenback has been the Kiwi.  It is up 47.24% which is quite shocking given the New Zealand economy is not among the largest of the G-10. To put some perspective on it the EUR is only up 19.59% and the GBP 20.57%

Technical – There are 2 obvious technical reasons that stand out to us.  A) A pattern we look for are lower lows and lower highs and vice versa.  In the chart below we have depicted the initial emergence of this pattern. B) The Kiwi is already trading below its 50 day MA and on the verge of taking out its 100 day MA, a more significant breakout level than the 50 day MA, which many other G-10 currencies have yet to crack.

Commodities – The Kiwi benefits from rising commodity prices as it is a commodity currency.  Commodity prices are quoted in USD so as the Dollar strengthens commodity prices cheapen.  If commodity prices cheapen so will the NZD.

Combine these three factors and you may see significant price action on this pair.  Of course if the Dollar rallies all currencies will be on their heels but as a trader you are looking for the best trade, and this may be it.  We define the best trade as the one with the best risk to return ratio.

Analysis by http://www.ufx.com

Global Equity Markets were off slightly Monday.  A combination of light volume and a lack of any real economic data releases left markets essentially flat as traders continue to be risk averse heading into year end.  The Dollar had looked to continue its rally until Fed Reserve Chairman Ben Bernanke’s comments regarding U.S rates remaining low for an “extended period of time” and his seemingly unimpressed manner regarding unemployment put the rally on hold.

The Dollar held its gains from Friday as the DXY closed down only a couple points to 75.757.  Gold finished modestly lower to 1,158.10 while Oil gave up a little over a 1.50 a barrel to finish the day at 73.93.

The CAD moved into positive territory as Building Permits jumped 18%.  This once again reaffirmed that Canada is in the midst of substantive recovery.  This news comes on the heels of the BOC Rate decision today.  Mark Carney, Governor of the BOC, has already expressed his commitment to keep rates on hold at least through mid 2010.  In Japan, GDP figures are set to print and in the U.K. Industrial Production number are due out.  We expect a good amount of volatility in the market today given recent events and today’s prints.

Upcoming Forex Events for December 8, 2009

CAD   Interest Rate Decision            Forecast  0.25%  Previous  0.25%

GBP    NIESR GDP Estimate            Previous  -0.40%

JPY     GDP (QoQ)     Forecast    0.90%  Previous  1.20%

AUD   Home Loans (MoM)   Forecast  -1.80%  Previous  5.10%

Research by http://www.ufx.com

The Greenback has been offered across the board since March 2009. As long as risk did not rear its ugly head investors were
selling the dollar in favor of better yielding assets. When risk showed up at the Market’s doorstep the Dollar was right
there with it ready to regain market control. We saw this a week and half ago when Dubai spooked the market with a needed
debt restructuring.

The pattern we have seen for the last 9 months has been equities advancing as the dollar slides. Equities would advance on
positive (or at least less negative) economic data. The correlation between increasingly better news and the Greenback was
therefore negative. When normal markets are in control positive news typically strengthens a currency. What we witnessed
Friday may be an early indicator that the Dollar bear is finally ready to hibernate.

Friday brought us 2 very important prints from the U.S. The first was the Change in Nonfarm Payrolls and the Unemployment
Rate. The Change in Nonfarm Payrolls fell by just 11k and the Unemployment Rate fell from 10.2% to 10%. This is obviously
positive news for the U.S economy and the Global economy as well. Stock’s advanced, but this time the Greenback would not
yield any ground instead it posted gains on all its G-10 rivals. The Dollar move was positively correlated with the
economic news, something not seen in 9 months. There was a tangible shift in market sentiment regarding the timing of a
potential rate increase. Originally, forecasts were calling for an increase in Q4, however, analysts now think it may come
sooner.

It is not by coincidence that a number of pairs slid almost exactly to Support levels before firming against the Dollar. A
breakthrough of support would most likely trigger a massive Dollar rally, something the market is not whole heartily a
believer in at this point in time. Rather, the move on Friday was one of caution as it may be the first signal the Bull is
getting ready to run.

Let’s analyze current key technical levels and what the trading implications are:
EUR – Friday’s close put the EUR right at the 50 SMA. The 50 SMA has been holding as support for nearly 9 months. An
entire candle below the 50 SMA would trigger a Short EUR entry while a quick bounce off of support levels would trigger a
a resumption of our EUR Long

AUD Similar to the EUR, the 50 SMA has been holding firm support. Therefore, a Short AUD entry would be triggered
with the appearance of an entire candle below support. We would resume a Long AUD position with a bounce off of support.

GBP The Cable has been trading the range but has not dipped below the 50 SMA since mid September at which point it
gave up over 4.5% to the Dollar. As with the EUR and AUD, an appearance of entire candle below the 50 SMA would trigger a
Short GBP entry

Obviously one occurrence hardly represents an entire shift in trend, however, a shift in trend starts with one occurrence.
Continue to monitor the correlation between economic news and the Dollar. In addition pay special attention to support and
resistance levels on the majors, as a breach of S&R may signal future changes and should be capitalized on.

Analysis by http://www.ufx.com

Gold tumbled on Friday as better than expected Unemployment and Nonfarm Payroll figures helped prop up the Greenback. Gold
fell 5.1% during intra-day trading to a session low of 1,150. Crude Oil was mixed on Friday as it originally bounced higher
on the positive news, however, it gave up its gains and then some as the Dollar firmed throughout the day. Both Gold and Oil
are quoted in Dollars ,so as the Dollar strengthens it sends commodity prices lower.

Global Equity Markets advanced Friday finishing the week in positive territory. The DJIA added 22.75 points to close at
10,388.90. At the moment Equity Futures are pointing lower ahead of the open. Economic data releases will be on the lighter
side for Monday although the remainder of the week will yield some interesting price action as Canada, New Zealand,
Switzerland, and the U.K are on deck for rate decisions.

The DXY soared to highs not seen since early November as the DXY touched 75.911 during the Friday session. Traders were
unwinding some bets and covering shorts as the positive employment data gave rise to concerns that the U.S Federal Reserve
may raise rates sooner then later. With little economic data due out today do not expect much price action.

Important Forex Events for December 7, 2009

EUR ECB President Trichet Speaks
CAD Building Permits (MoM) Forecast 1.00% Previous 1.60%
USD Fed Chairman Bernanke Speaks
AUD Current Account Forecast -17.00B Previous -13.30B

Research by http://www.ufx.com

Negative character traits lead to failure in binary options trades. Binary options traders need to identify these negative character traits and work on ridding of them if there are to stand any chance of success while trading.

A common negative character trait exhibited by many binary options traders is being overly emotional. You should never be guided by emotions in your investments since emotions blind you. A common emotion with many binary options traders is hope. When the value of the underlying asset is not doing well, a hopeful investor will fail to exit the trade with the hope that it will recover. This is dangerous because time decay means the more the time passes, the higher the rate of depreciation. Other binary options traders are greedy. Greed drives you towards binary options that promise high rewards and you ignore the fact that the greater the promised reward, the greater the risk. Binary options trade should be based on research and analysis. Over-confidence is also a negative character trait when it comes to binary options trading. Over-confident investors believe that they cannot go wrong and they ignore basic facts. Just because you are having a winning streak does not mean you will have one tomorrow.

Impatience is another negative character trait when it comes to binary options trade. Some binary options traders want quick cash – this means such traders are not able to conduct comprehensive research of the underlying asset and they are not able to do comprehensive analysis of the market and the underlying asset. This will lead to losses because the binary options that promise high returns are usually the risky ones.

Being deceitful or dishonest is a negative character trait that will definitely lead you to failure in binary options trade. For success in binary options trade, there has to be trust between the buyer and the seller and between the buyer and the broker. When binary options traders are dishonest, there will be no people willing to trade with them. Binary options traders should provide all the information required in the contracts and when opening accounts and they should always pay their taxes. Failure to do this could lead to problems with the law or with the government and industry regulatory bodies.

Laziness is a negative character trait that will definitely lead you to failure in binary options trade. Laziness in binary options trade means a trader will invest in the easiest binary option they can get to avoid doing research and analysis. This means a trader is unlikely to make huge profits since the lower the risk, the lower the rewards.
Ignorance is a very negative character trait when it comes to binary options trade. You should take online courses on the trade and you should always ask for advice from brokers whenever you are not sure of something. Ignorance in binary options trade leads to problems such as getting conned, missing opportunities due to lack of knowledge on the best time to enter and exit a trade, losses due to lack of understanding of industry lingo and rules and regulations, and many other problems.

Valuation in digital options trade is very important for the buyer and the seller alike. For the buyer, failure to carry out valuation before investing means there is a risk of investing in an underlying asset that is overpriced and this means it will probably close out-of-the-money. For the seller, failure to do valuation means there is a risk that you may sell an underlying asset before its real price, meaning you will not get your money’s worth. The differences between the trading price and the real price of most underlying assets can be due to natural reasons such as time decay since underlying assets lose value as they approach expiration. However, some industry players deliberately influence the market so that prices can be lower or higher than what they are supposed to be. An illustration of this is binary options traders creating a buzz that the market is not doing well and selling their underlying assets before expiration at throw away prices to cause panic selling. When people sell, they buy these underlying assets and trade them at their true value. It is therefore important for binary options traders to base all their investment decisions on sound judgment that is based on technical and fundamental analysis.

Binary options traders should know the different valuation models in digital options trade. This way, they will be able to compare them and decide on one that fits their specific circumstances and preference – we are all different and the valuation model that has led to your friend’s success may not lead to your success since our situations are different, as are our strengths, weaknesses and goals. There are different valuation models in digital options trade although they are all meant to show binary options traders the true value of the underlying asset, they make the determination differently and their accuracies and credibility are different. Binary options traders should pick the models that have been tried and tested.

All valuation models in digital options trade are based on quantitative techniques that are based on the concept of risk neutral pricing and stochastic calculus is used for this. The most basic of the many valuation models in digital options trade is the Black-Scholes model. The Black-Scholes valuation model is so effective that it earned its developers, Fischer Black and Myron Scholes, the Nobel Prize for economics. This valuation model is used in most major markets, even the Chicago Board Options Exchange. This valuation model provides a closed-form solution for theoretical prices of European options and binary options and the model is also used in the generation of hedging parameters that are used in risk management and for hedging purposes.

Other valuation models are stochastic volatility models, such as the Heston model, that were developed after the market crash of 1987, the binomial tree pricing model that is used to model the dynamics of the binary option’s theoretical value before the expiration date, the Monte Carlo models which are very easy to follow, and the finite difference models.

All binary options traders, irrespective of the experience or skills, need binary options trading journals. All binary options traders need to understand the importance of keeping a binary options trading journal, they need to know what a binary options trading journal is, and they need to know how to keep a binary options trading journal.

Binary options trading journals are journals that allow the user to keep records of everything that happens in a trading day. Binary options traders record such things as the time the trade started, the direction of the market, the underlying assets they bought, the price of the purchases, the underlying assets they sold, the price of the underlying assets sold, important news events and occurrences during the trading day, market reactions to those news events and occurrences, and the time the market closed, among other relevant information. This information is recorded in a way that can be easily tabulated for ease of calculating and analysis. Binary options trading journals do not have to be a book – one can have an online journal to enjoy the advantages of the World Wide Web use such as convenience, cost benefits, and anonymity.

Most binary options traders will tell you that a binary options trading journal is important, but they will be blank when you ask them why it is important. They know these journals are important because they know it is important to keep records, but they do not know exactly how a binary options trading journal will help in their investments. Binary options trading journals are important because they help traders keep a tab on everything they learn – there is a lot to learn in binary options trading and one cannot remember it all. This advantage is especially significant for novice traders. Binary options trading journals help investors in self-improvement. They help traders become more disciplined and goal oriented. Binary options traders who use binary options trading journals will understand themselves better since they will learn their trading styles and trading behaviors and they will therefore be able to make adjustments in their trading styles and trading behaviors if any adjustments are necessary. Having a binary options trading journal gives you time to reflect on the trade you are about to make since you have to follow the rules you have stipulated for yourself. This is important because traders will avoid making investment decisions based on their emotions. Binary options trading journals give traders reference points in that they will be able to accurately determine what they did wrong and what they did right so that future trades can be better. These journals help traders know how well or how poorly they are doing since the journals help traders do calculations such as winning/losing trade ratios.

Other things that binary options traders should record in their binary options trading journals are their thoughts and feelings on all trades, the trading calendar, relevant file attachments, the limitations and strengths, plans and strategies to overcome the limitations, and the short term and long term goals.

For success in binary options trading, binary options traders need to understand what bull and bear markets are so that they can make wise investment decisions. Such decisions include knowing when to enter and when to exit a trade. Emotions of binary options markets refers to the movements or trends of the markets, whether up or down. These trends are indicated by specific terms that are used for almost all markets across the world. A bear market is a market that is characterized by an upward trend that is consistent and a bull market is a market that is characterized by a consistent downward trend.

Binary options traders should note that the bear and bull references in the binary options markets refer to the ‘emotions’ or the general conditions and not short term fluctuations – there is no bull run just because there was a spike in prices across the board. For this reason, binary options traders who rely on secondary information for their investment decisions should note that if the buzz is that there is a bull run, then it is safe to make an investment, and vice versa.

In most binary options markets, bear markets are markets where the price of the underlying assets across the board have gone down by more than 20% over a period of two or more months. Binary options traders should note that a market will still be on a bear run even if there is temporally increase in the value of the underlying assets, but only if this increase cannot be sustained. On the flipside, bull markets are markets where the price of the underlying assets across the board have gone up by more than 20% over a period of two or more months. Note that, again, a market will still be on a bull run even if there is temporally decrease in the value of the underlying assets, but only if this decrease cannot be sustained.

Historically, different markets such as the stock markets and the binary options markets have reflected the health of the nation’s economy, meaning there will a bull run in most markets when the economy is doing well, and vice versa. For this reason, binary options traders who want to benefit from bull runs and/or bear runs should do a fundamental analysis of what is going on in the country and in different markets. Binary options traders should be on the lookout for indicators of an economy’s heath such as unemployment data, inflation figures, investor confidence statistics, and interest rates.

Binary options traders who are making their investment decisions should note that in some cases, bull markets and bear markets do not reflect the health of an economy or the true market value of the underlying assets. Some bull and bear runs are manmade, meaning they are influenced by industry players who want to benefit from any of the two binary options markets. An example of this is binary options traders creating panic in the market so that people can sell and they can buy at reduced prices. Binary options traders should do fundamental and technical analysis of the market first before making decisions that do not seem prudent such as those occasioned by bull and bear runs.

Long-term binary options investments are long-term binary options contracts. The expiry date of these contracts can extent for months or even years. Since there is a lot that can happen in the market before the expiration date, both negative and positive, it is important for binary options traders to be careful when making long-term binary options investments.

An important tip for success with long-term binary options investments, which also applies to short-term binary options investments, is to base all investment decision on facts and not hearsay or emotions. Binary options traders should avoid basing their investment decisions on sensational successes stories – what works for one person may not work for you since our preferences, circumstances, and strengths and weaknesses are different. Binary options traders should avoid basing their investment decisions on emotions such as hope and greed. There should be thorough research before long-term binary options investments are made and there should be technical and fundamental analysis. Fundamental analysis is all about the study of past and present data to bring out any trends that can help in the prediction of future trends while technical analysis uses tools such as charts and volatility data to scrutinize the prices of underlying assets. You should never chase a ‘hot tip’, especially one coming from someone who is not an authority in binary options trading.

For success in long-term binary options investments, binary options traders need to be patient. There will be fluctuations in prices, both negative and negative. You should never stay on a trade just because there is an upsurge and you should never exit a trade just because the prices are heading south. This is because sometimes prices go up and down due to manmade reasons – prices can be influenced by binary options traders who want people to do panic selling at low prices so that they can buy the options.

An important tip when making long-term binary options investments is that although intuition is important for success in the trade, binary options traders should use technology. Technology in long-term investments is important because it helps in analysis before buying and selling investments, it is convenient since traders do not need to move around and because trades can be done any time of day or night, and it is anonymous, meaning you can have a day job and still carry on investing.

When doing long-term binary options trading, traders, especially novice traders, should consider using brokers. Brokers from a respectable brokerage house will bring experience and valuable skills to the table. Traders who plan to do day trading can use brokers as consultants before making major investment decisions.

An important tip when doing long-term binary options trading is that you should have a strategy and you should stick to it. The strategy should borrow from ‘textbook’ strategies that have been used successfully in the past, but it should be customized to fit your specific requirements and needs. Other important tips are that you should never invest more than you can afford to lose, you should not be discouraged by failure in the first few trades, you should diversify your portfolio, you should have a long-term goal, you should read widely on long-term investments and perhaps take a course, and you should always pay your taxes.