Many have compared investing to gambling and in many ways they may be correct. Playing poker and investing have many similarities. Some kinds of day trading involve considerable risk and the forex market is extremely risky and volatile much like a game of poker. Poker is probably the most popular game of skill and it comes as no surprise to find that many poker players also trade on forex exchanges. Poker tournaments are routinely broadcast on ESPN and many poker players have become household names in the US.

Discipline and Adaptability

Poker playing and forex trading require very similar skill sets. For example poker players must be very disciplined with nerves of steel. This characteristic is also the hallmark of a successful forex trader. Poker players and forex traders are methodical and not given to emotional responses to adverse situations. Poker players and forex traders are amenable to change and the forex market is constantly changing much like the cards in a game of Texas Hold ‘Em. Both must have the ability to adapt to sudden changes and the sudden rate changes of the Fed can have the same effect as a newly dealt card.

Logic and Reason

Poker players and successful forex traders have the ability to make quick decisions based on logic and reason. Typically emotion does not play a part in the decision making process. Both must be able to withstand losses without emotional reaction. Just as poker players do not win every hand forex traders may experience sudden losses due to rapidly changing market conditions. Forex traders and poker players are resilient and have the ability to bounce back after sudden losses.

Long Term Results

Forex traders and poker players focus on long term results. Just as chips accumulate so do pips. Poker players and forex traders are usually confident people. Forex trading can easily be as volatile and ever changing as a game of poker and both require a high degree of confidence. Given these similar characteristics it would not be surprising to learn that many top poker players also trade forex!

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The US dollar fell to a seven month low against the Japanese yen on Friday. Forex markets were influenced by a statement from the G 20 summit in Pittsburgh which said that the G 20 nations pledged to continue stimulus spending until a sustainable recovery from the current recession is possible. The US indicated that it would continue to keep rates at record lows for the foreseeable future. The yen was also bolstered after a statement by a former Japanese financial official said that the Japanese government was unlikely to intervene unless the dollar vs. yen rate fell below 85 yen. The dollar fell 1% and traded at 90.35 yen after falling as low as 89.97.

Pound vs Dollar at Four Month Low

The dollar performed better against other currencies most notable the pound which fell to a four month low after Bank of England Governor Mervyn King said that a weak pound would help British exports. The pound fell 0.6% against the dollar and traded at $1.5966 after falling as low as $1.5917. At the G 20 conference British Prime Minister Gordon Brown said that currency exchange rate imbalances were just one of many key issues facing the global economy.

G 20 Nations to Keep Stimulus Programs in Place

Most economic data was overshadowed by the G 20 nations promising to maintain emergency economic supports and programs in place to deal with the global recession. Currency strategists believe that the G 20 pledge means that interest rates will remain low for some time. Omer Esiner of Travelex Global Business Payments stated, “In the near term, it favors continued momentum selling of the U.S. dollar.” Eisner also suggested that in the future that attention would shift back to improvements in major economies and that could possible be dollar positive if the US economy outperforms its rivals.

Last week forex markets were dominated by the Fed meeting and the ongoing G 20 summit. Monday’s trading should be very interesting.

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The euro which recently has been a barometer of risk appetite fell after a decline in stocks after the US Federal Reserve said it would keep rates low for the foreseeable future. The euro vs. dollar rate fell 0.3% to $1.4744, after hitting an intraday low of $1.4731. The US dollar remains weaker against a basket of major currencies as risk sentiment rises. Sal Guatieri of BMO Capital Markets stated, “The U.S. dollar is generally weaker against everything. Bond markets are up, equity markets are up. The Fed will keep the monetary pumps at full throttle for another few months. Markets are rejoicing — all markets except the U.S. dollar.”

Fed to Slow Mortgage Backed Securities Program

The Fed said the US economy was in recovery and that it will slow the purchases of mortgage backed securities but will continue the purchase program until the end of March 2010. Many experts expect the dollar selling trend to continue after the Fed meeting. Michael Woolfolk of BNY Mellon stated, “And now that the risk of the Fed meeting has passed, people are comfortable returning to the trend of selling the dollar. That’s the bottom line.”

New Zealand Dollar at 13 Month High

The Kiwi dollar hit a 13 month high vs. the greenback after better than expected data that showed the New Zealand economy pulling out of the recession during the second quarter. The Kiwi rose over a penny to $0.7315. The Canadian dollar which has been weaker vs. the US dollar rose to 93.78 cents. Japanese trading was light as Japanese financial markets closed for a holiday and will reopen Thursday. The dollar index, or DXY, fell 0.27 percent to 75.913 the lowest since last September. The dollar index has declined 2.5% this month due to rising investor confidence in a global recovery.

G 20 Ahead

The G 20 summit looms ahead and will surely affect currency exchange rates. The G 20 is expected to call for a continuation of stimulus programs boosting demand for higher yielding and riskier assets. Clifford Bennett of Kinetic Securities stated, “The G20 is the fly in the ointment. We need to clear that, which has some risk of strong dollar rhetoric emerging. (The) overall down-trend in the U.S. dollar is likely to persist however.”

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The US dollar rose on Monday against the Japanese yen as investors pulled back from bets against the greenback in advance of the Federal Open Market Committee meeting and the G 20 summit scheduled later this week. The dollar vs. yen rate gained slightly more than 1% although gains were limited due to light Asian trading as Asian financial centers were closed for a holiday. The absence of economic data spurred investors to take profits from currencies which rallied against the US dollar last week.

Fed May Start Removing Stimulus Programs

Some Forex experts are speculating that the Fed may announce an exit strategy for quantitative easing. Chuck Butler of Everbank World Markets stated, “There are some thoughts in the markets that the (FOMC) might announce that they’re going to start removing stimulus. That’s why the dollar is a little bit stronger. I don’t think this is any trend reversal of what we’ve seen from March on. This could just really be a correction. Last week’s run-up (in other currencies) was huge.” Last week the Aussie and Kiwi dollars were big winners but gains have been pared in advance of the FOMC and G 20 meetings.

FOMC Expected to Keep Rates Low

Despite speculation the FOMC is expected to keep rates at their present level but Forex markets will be watching for signs of the Fed’s exit strategy. In New York the ICE futures, which tracks the greenback against a basket of major currencies, rose 0.4% to 76.746 DXY the highest since September 10th 2009. The US dollar benefited from lowered risk sentiment due to a decline in the FTSEurofirst 300 index which fell below 1,000. The FTSEurofirst 300 index tracks the performance of Europe’s largest 300 companies by market capitalization.

Caution Ahead of G 20 Summit

Investors are also cautious in advance of the G 20 summit on Thursday and Friday in Pittsburgh. Boris Schlossberg of GFT Forex said that rhetoric in advance of the G 20 meeting promoted profit taking in risky assets and any future regulation of capital markets could spark a rise in risk aversion.

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The US dollar remains on the defensive as investors get out those forex converters and seek higher yielding currencies. Two of the biggest winners have been the Australian and New Zealand dollars and the Aussie dollar is now at a one year high. Rising stocks in the US and Asia has lifted risk sentiment and investors are seeking riskier assets.

DXY May Fall to 2008 Levels

Rising risk sentiment has caused the DXY to decline to 76.226 which is near the one year low of 76.151 on Wednesday. Many currency experts believe the DXY will fall to 2008 levels of around 70.70. Hideaki Inoue of Mitsubishi UFJ Trust Bank stated, “Firm stocks suggest the dollar is probably set to slide for another week.”

Euro Rally Due For Correction

The euro has gained 2.5% this month on improved investor risk appetite and the perception that US rates are likely to remain at record lows for the near future. The euro rose 0.1% to $1.4729, near the one year high of $1.4738 on Wednesday. Some experts doubt that the Euro’s rally will be sustained. Matthew Strauss of RBC Capital stated, “With eight of the nine last sessions ending in euro rallies, the upward trend is extremely stretched. In fact, euro valuations against the U.S. dollar are the most extreme since May this year. The trend is your friend but beware the technical correction.”

Aussie at One Year High

The Aussie dollar rose to a one year high of $0.8757 and in early afternoon Asian trading rose 0.2% to $0.8743. The Kiwi dollar also rose almost 1.4% on Wednesday and is holding at 0.7134. The euro to yen rate rose 0.3% to 134.20. The US dollar rose 0.2% against the Yen to 91.10. The US dollar slid against the Yen after Japan’s Finance Minister Hirohisa Fujii said a strong yen would benefit the Japanese economy.

New Data Due

Data that will affect currency exchange rates include retail sales for August due in the UK, US jobless claims, US housing starts and the Philadelphia Fed business activity index. All are scheduled to be released Thursday.

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Stocks extended recent gains and US Treasury prices declined affecting currency exchange rates. The Fed issued a positive but cautious statement saying that economic activity is ‘leveling out’ but that the economy is likely to remain weak ‘for a time.’ Kathy Lien of GFT Forex said, “The outcome of this decision is still much more dollar bullish.” Many analysts believe that last week’s trend will continue. Last Friday the US dollar rose on better than expected US employment data. Throughout the recession good economic news has pressured the dollar downward.

Fed to Extend Asset Purchase Progam

Some traders believe that the decision by the Fed to extend the asset purchase deadline indicates economic weakness and will cap dollar gains. Michael Woolfolk of Bank of New York-Mellon stated, “The Fed is not yet convinced that the economy is on solid ground,” and that Fed Chairman Bernanke “knows very well the risks associated with removing stimulus too quickly.” The Fed said it would extend by one month the program to purchase long-term government securities and will not increase the amount of the purchases.

Surprise Data From France and Germany

The euro to dollar exchange rate hit a one week high after Germany and France posted surprise data that indicated a return to growth. The greenback also felt pressure from the demand for higher yielding assets. After a weak performance in 2009 the Eurozone is expected to return to growth in 2010. The euro to dollar exchange rate was up 0.5% to $1.4270 and against the Japanese yen the euro gained 0.8% trading at $1.4270. The decision by the Fed to keep interest rates at their present levels stopped market speculation that the Fed will raise rates in the near future putting pressure on the dollar’s exchange rate. Kazuyuki Kato of Mizuho Trust & Banking stated, “The Fed move basically did not have enough impact to alter the market trend of funds flowing into riskier assets. The prospect that the Fed will keep rates low will likely be one factor causing dollar weakness in the long term.”

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The US dollar held onto last week’s gains in early trading Monday. Improving US employment figures and positive manufacturing and housing data helped last week’s dollar rally. Although the dollar slipped slightly against the yen it rose against the euro and a basket of other major currencies. Martin McMahon of Credit Suisse stated, “We had a big move on Friday, so we’ll be seeing some consolidation today.”

Correlation Between Dollar and Risk Sentiment Breaking Down

Mr. Mahon also suggested that investors are waiting to see if last week’s dollar rally is a sign that the correlation between the dollar and risk sentiment is breaking down. Since the current recession began bad news has helped the dollar and good news has put downward pressure on the greenback.

Treasury Yields Help the Dollar

After hitting a high of $1.4448 last week the euro was trading at $1.4185 against the US dollar. The dollar fell 0.3% against the yen and traded at 97.30. The dollar index was little changed at 78.869. Some experts said that a rise in US Treasury yields helped the dollar and will attract investors making it easier for the US to finance its debt.

Fed to be Upbeat About Economy

This week’s meeting of the Federal Reserve is bound to affect currency exchange rates. Many analysts believe that the Fed will end its plan to purchase $300 billion of longer-dated Treasuries in September. Many believe the Fed will extend a separate program to boost the credit flow to consumers and businesses. Barclays Capital analysts believe that the closeness of the payrolls report and the anticipated Fed meeting explain the dollar’s rally. In a note Barclay’s Capital analysts said regarding the Fed meeting, “Our US economists expect no increase in asset purchases and a more upbeat tone on the economy. In our view this would likely be a USD positive and may herald a period where positive news for U.S. yields continues to be a USD positive.”

The Fed meeting begins on Tuesday and Forex traders and investors will be watching closely.

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Twitter is a wildly popular micro blogging and social networking service. Members send short messages called ‘tweets’ which are short posts limited to 140 characters. According to web traffic analysis done by Alexa Twitter is one of the 50 most popular websites. Twitter was creates in 2006 and has steadily grown in popularity. Twitter was used by both candidates in the 2008 presidential election. On Election Day Twitter use increased by 43%. Twitter users blog about most anything and that includes currency trading.

Twitter Offers Forex Converter

Currency traders are now using Twitter to share information and tips. Twitter has an online currency converter that covers most major currencies. Many Forex brokers have integrated Twitter into their day to day operations. Twitter can also be accessed by many mobile devices making it convenient for currency traders who can follow the forex market from their phones. Since most new mobile devices have internet access currency traders can conduct business from anywhere there is a signal.

Brokers Use Twitter to Share Information With Clients

Twitter also maintains a forum specifically for Forex traders and the currency allows forex traders and investors to check current currency exchange rates in real time. Since currency exchange rates change several times a day Forex brokers are using Twitter to communicate with clients giving them up to the minute reports about currency exchange rates in real time. The currency converter available on Twitter is updated several times a day.

Many top Forex brokers are now sending clients regular ‘tweets’ with trading recommendations and the latest market quotes. Social networking is one of the most effective marketing tools available and is well suited to Forex trading.

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For the third straight day both the Aussie and Kiwi dollars advanced against the Japanese yen as demand for safe haven assets fades. A US report that showed industrial production contracting at a slower rate and the stellar second quarter performance of Intel and Goldman Sachs lifted investor risk sentiment reducing demand for the US dollar and the yen. Australia’s 10 year bond yields rose as investors bet that Australia’s central bank will raise rates sometime in the next 12 months. Richard Grace of Commonwealth Bank of Australia stated, “The U.S. economy looks more positive. That’s what the bond market reacted to, and it also helped drive the Aussie higher.”

Reserve Bank of Australia to Raise Rates

The Reserve Bank of Australia is expected to raise its benchmark rates by 64 basis points during the next year and the New Zealand will raise its rates by 78 basis points. Federal Reserve figures showed that in June US industrial production fell by 0.4%, the smallest decrease in eight months. Greg Gibbs, a foreign exchange strategist based in Sydney said, “A sense of greater stability in global markets and a higher yield advantage, following stronger data, may lift the Australian dollar back above 80 (US cents) near term, possibly up to 81.”

New Zealand Economy Recovering Says Prime Minister

The New Zealand dollar strengthened after Prime Minister John Key said that the New Zealand economy is starting to recover from the recession. Citing conversations with Reserve Bank Governor Alan Bollard Prime Minister Key stated, “That tallies with what he’s been privately telling us, that we’re starting to come out of this recession, which is good news. The governor is in a good position to assess both the international markets and the domestic market.”

Euro and Pound Up

The rise in risk appetite has affected global currency exchange rates. The euro traded at $1.41 as investors sought out higher yielding currencies. Sterling rose to $1.6385 from $1.6280. Although some analysts caution that the current rise in risk appetite is not sustainable forex investors seem to think otherwise.

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Both the Japanese yen and the US dollar rose against the euro for the second day due to declining Asian stocks and risk aversion among investors. Rising risk aversion has increased demand for both currencies traditionally seen as safe havens. The London Sunday Times reported that Lloyds Banking Group may post losses of 13 billion pounds ($20.9 billion USD) increasing demand for the safe haven of the yen. Also affecting currency exchange rates was a Wall Street Journal report that said that some major US airlines may have to file for bankruptcy. The report said that American Airlines and Delta may be forced to file Chapter 11 bankruptcy unless liquidity improves.

Asian Stocks Decline

A decline in Asian stocks drove risk aversion higher and the yen traded higher against the 16 most traded currencies. Philip Wee of DBS Group Holdings Ltd. Stated, “Currencies will stay sensitive to downside risks in equities worldwide. Markets may seek safety in the yen and the dollar as they adjust their bullish positions accumulated during the March-June rebound from the crisis.”

Banking Giant Lloyd’s to Post Massive Losses

The pound fell against the dollar after a report in the Sunday Times which said that Lloyds may post losses of 13 billion pounds. ($20.9 billion USD). Yousuke Hosokawa of Chuo Mitsui Trust & Banking Co. stated, “The Times report rekindled concerns about the health of the financial system in Europe, which is believed to have a bigger exposure to non-performing loans than U.S. banks. The risk-averse sentiment will favor the yen.” Last month the European Central Bank said that commercial banks in the euro zone may lose $283 billion by the end of next year as the global recession forces the banks to write off bad loans.

ECB Will Leave Interest Rates in Place

Also affecting Forex markets was a report by the ECB which said that its interest rates are appropriate and that the euro zone economy will recover in 2010. On July 2nd the central bank left its 1% interest rate unchanged in an attempt to stimulate euro zone growth.

Quick Forex Tip: Forex trading offers investors a profitable investment option and can be one of the most rewarding opportunities available to the average investor. Major attractions are the 24 hour a day availability of forex markets, low dealing costs, high leverage margin and high liquidity. Currency trading forex can be learned quickly and easily. There are several free reputable courses available online and many online forex dealers provide demo accounts where novice traders can learn the market before risking any real money.