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“Haircuts” And “Rescue Packages” Coming To A City Near You – July 7th 2015

Lessons We As Investors Can Learn From Greece

I’m going to go on a mini rant today. Do you ever notice how the powers that be and the media outlets they own and control always like to spin things in a positive light. Take for example the current situation in Greece. The current idea for the ‘rescue package’ calls for a potential 30% haircut on private deposits. Are you really ‘rescuing’ a country if you take 30% of the private citizens wealth to pay back money on debt the Greek people don’t owe? For those of us living in a country that feels rather stable you have to ask yourself have you gotten complacent? For those of us in the US, do you think you might ever see a ‘social security rescue act’. People always think it can “never happen here”, but is that really true. On April 5th, 1933 everyone was required by law to turn in their gold. For every ounce that you turned in your received $20.67. Roughly a year later gold was revalued at $35 per ounce. Because the currency was backed by gold at that time they instantly devalued every dollar in existence by roughly 40%.  If they called it a ‘haircut’ do you think people would feel better about it? Remember also that for every loser their is a winner. Because the government owned all the gold, when they increased the price of gold from $20.67 an ounce to $35 an ounce they essentially increased the value of the gold they were holding by 69%. Just to reiterate, the people had their dollars devalued by 40% and the government had the value of its gold increased by 69% overnight. The here is you have to learn from history so you don’t repeat history’s mistakes. And if your ignorant to think it cannot happen where you live then you deserve what happens.

How can people protect themselves today. First and foremost the global economy has been changed for the foreseeable future. We are in something much larger than just a simple cycle. You will see more and more people pushed into low paying jobs and the wealth of the middle class will continue to shrink. To combat this you have to do something that cannot be taken away from you. In my opinion trading offers one of the greatest opportunities to thrive in any economic situation. Another great option is rental real estate that cash flows. I’m not talking about flipping, I’m talking about longer term rentals that pay the cost of the mortgage as well as provide monthly cash flow. When it comes to capital preservation, as most have already guessed I’m a big fan of gold and silver. The bottom line is you cannot repeat the same thing and expect different results. The bottom line is start taking action now because no one is going to do it for you!

Expected Continuation Down In The Euro

The Euro created a nice trade for us today off of the gap close. For those of you who are members make sure to check out the daily market review from tonight as I cover that setup in depth. For today I think the Euro has a much higher probability of a continuation to the downside. With that being said there is still one lower area that I would consider a long setup from if a valid confirmation entry trade setup is satisfied. There are Eurozone meetings today and with that being said the potential for a tape bomb does exist. As always if your trading the EUR/USD right now it would be wise to have access to live squawk audio news. Talking-Forex.com provides the cheapest access to that type of news that I’m aware of. I personally use them and they are good.

 

EUR/USD Chart - July 7th 2015

Potential First Push Up On The GBP/USD

The Pound made a very lack luster push to the upside yesterday which is why I’m still open in regards to direction. Today will not change much from the levels I was looking to trade from yesterday. The one thing to be aware of today is the news coming out at 4:30AM Eastern. I will cover this in more detail below.

 

GBP/USD Chart - July 7th 2015

 

Forex News For July 7th 2015

Manufacturing Production M/M – This month release is expected to be .1% growth. This is definitely a market mover if the right deviation is hit. Generally the market needs to see a .5% +/- deviation from the expected number to get a large reaction. With a deviation of that size it is capable of not only creating quite the large spike but also shifting the direction of the short term trend.

The only news coming out of the US and Canada today is trade balance. While websites like Forex Factory mark this as a high impact news event, they are really a non event in my opinion. You may see your spread widen slightly around this news but don’t expect more than a few pips of price action on the actual release. If you didn’t know it was coming out you would probably think it was normal market movement.

-Sterling

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