How to Open Forex Trades - Right at the Top

Here are some recent trades on the EUR/JPY that were done by my trading mentor. He is able to time accurately when to place the trades right at the top, and when to exit. He did this many times, without fail based on a trading principle. This is all very exciting! I will reveal what I can on his forex trading method soon. Meanwhile, check out the trades below to see what I mean.

Yellow triangles are when the trades were opened, and the blue triangles are when the trades were closed.

March 28, 2008
EUR/JPY



March 30, 2008
EUR/JPY



March 30, 2008
EUR/JPY

Federal Reserve Bolsters Market Liquidity

Breaking Stock News: Bear Stearns

The transaction will be a stock-for-stock exchange. JPMorgan Chase will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock. Based on the closing price of March 15, 2008, the transaction would have a value of approximately $2 per share.

Not good news at all for the BSC investors who did not sell on Friday. BSC closed at $30 per share on Friday, now the purchase from JP Morgan is $2 per share. The stock has essentially dropped from $30 to $2, see that at Monday's (tomorrow) open. The bottomfeeders who bought at $30 on Friday are bagholders(~93% drop).

Bear Stearns Top Bagholders


TOP INSTITUTIONAL HOLDERS

Holder Shares % Out Value* Reported
BARROW, HANLEY MEWHINNEY & STRAUSS, INC. 11,485,058 9.73 $1,013,556,368 31-Dec-07
MORGAN STANLEY 6,335,729 5.37 $559,128,084 31-Dec-07
Legg Mason Capital Management, Inc. 5,721,010 4.84 $504,879,132 31-Dec-07
PRIVATE CAPITAL MANAGEMENT, INC. 5,541,259 4.69 $489,016,106 31-Dec-07
Barclays Global Investors UK Holdings Ltd 4,245,451 3.60 $374,661,050 31-Dec-07
STATE STREET CORPORATION 3,550,715 3.01 $313,350,598 31-Dec-07
VANGUARD GROUP, INC. (THE) 3,149,691 2.67 $277,960,230 31-Dec-07
JANUS CAPITAL MANAGEMENT, LLC 2,765,699 2.34 $244,072,936 31-Dec-07
FMR LLC 2,359,011 2.00 $208,182,720 31-Dec-07
PUTNAM INVESTMENT MANAGEMENT, LLC 2,242,980 1.90 $197,942,985 31-Dec-07


TOP MUTUAL FUND HOLDERS

Holder Shares % Out Value* Reported
VANGUARD/WINDSOR II 8,358,352 7.08 $949,508,787 31-Oct-07
PUTNAM FUND FOR GROWTH AND INCOME 2,350,605 1.99 $267,028,728 31-Oct-07
LEGG MASON VALUE TRUST 1,600,000 1.35 $196,496,000 30-Sep-07
JANUS TWENTY FUND 1,496,429 1.27 $132,059,859 31-Dec-07
VANGUARD 500 INDEX FUND 1,100,046 .93 $135,096,649 30-Sep-07
PUTNAM VOYAGER FUND 965,300 .82 $109,658,080 31-Oct-07
American Beacon Large Cap Value Fd 862,450 .73 $97,974,320 31-Oct-07
PUTNAM INVESTORS FUND 742,700 .63 $84,370,720 31-Oct-07
VANGUARD TOTAL STOCK MARKET INDEX FUND 702,594 .59 $86,285,569 30-Sep-07
COLLEGE RETIREMENT EQUITIES FUND-STOCK ACCOUNT 696,560 .59 $85,544,533 30-Sep-07

Stock Market Prediction: March 17

Let me tell you what I think about the market. I think we are in a bear market, everyone who says otherwise is in denial. A bear market takes time to resolve itself (typically 2 years to reach the bottom). Let us assume that the bottom for the market, as a whole, is 50% from the the latest top.

If I take IWM (russell 200 ETF which the one I mainly trade), the all time top was around 85 something. 50% of that is around 43. We have go down about 25% from the top. This took place in around 6 months. This is in accordance with the behaviour of the stock market price, that is half the move happens in a quarter of the time (25% in 6 months which is 1/4 of 2 years).

So the first leg of the bear market is done. There will still be legs 2 and 3 (3 being the final one, and in which there is the absolute surrender of the champions of all backholders). Those legs should take place over the next 18 months.

As I believed from last Monday, I think we are at a short term bottom. The reward of the short is not worth the risk. That is why (see the live trades) I closed all my shorts, and built a small long position, which I closed on the close of Tuesday. I did some shorting on Wednesday (see my live thread of trades on Wednesday March 12?).

The behaviour of the market on Friday is in my view very strong. I took note of the high volatility (not of the OTM puts), but the high volatility of the OTM calls on IWM. Implied volatility is real money, and I cannot ignore it.

Currently, I recovered my shorts of Wednesday on morning Thursday, and I am currently on the sideline waiting to see what happens.

If I have to make a prediction, I would see range bound and possibly an upmove to 70 for IWM in the near future. As for the short case, I will not short now until I see a bounce up that would make the reward to risk ratio appealing.

Good trading!

Contributor: Chabillion

Forex Trading: Euro's Surge

More bad news for those of us here in the US. We all know that the value of the dollar has been weakening against world currencies for the past few months. But this week, the U.S. economy has officially lost the title of "world's biggest" to the euro zone as the value of the Euro surged to record highs.

Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the United States when the European currency surged to a record high of more than $1.56 per euro.

The size of the euro zone's annual output has exceeded that of the US.

Taking official estimates of 2007 GDP -- $13,843,800 billion for the United States and 8,847,889.1 billion euros for the euro zone -- the economy of the latter passed the United States once converted into dollars, shortly after the euro topped $1.56. The dollar sank to $1.5688 per euro late in European trading hours on Friday, at which rate the euro zone's 2007 GDP equates to $13,880,568.4 billion.