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I would like to ask a simple question: what do you see as fundametal information for currencies trading that can be monitored intraday (hence omitting things like news which are one-off events)?
For the S&P futures one can have the market internals plotted. Im not assuming that having market internals on my hand, I can "predict" the market, on the other hand the internals should be pieces of information somehow relevant (fundamental) to the development of the S&P price (more relevant than e.g. Ugandian rainfall).
What is of similar nature with respect to the currency futures? The only thing I know of would be the US dollar index (DX) but that's all. Any input is much appreciated.
Many thanks,
Daniel
Can you help answer these questions from other members on NexusFi?
It may be a matter of time frame but after trading currencies relatively short time frame (200-1800 tick) from technicals for a few years now, aside from noting when news is scheduled I no longer pay attention to e.g. the dollar index or any other index or instrument other than the one I'm trading (let alone subscribe to any news service or pay attention to media's interpretation of the state of various economies).
The issue(s) for me were first, fundamentals (as they are reported or inferred from e.g. the dollar index) are correlated until they cease to be correlated--trick is determined which is which--and as you may be suggesting, just like news and economic opinion it introduced an unwarranted bias in my interpretation of price action, and moreover my interpretation often enough seemed the oposite of the currency market's interpretation.
Regarding 2nd opinons in general, while I admit there is some satisfaction in watching indices move in and out of correlation, like learning a news service's explanation after the fact of why a trend is (or was) in place, satisfying my curiosity doesn't help my trading; overall rather than suffer the distraction of something else to watch these days I try to focus soley on what price is doing in order to estimate the probability of what it might do next.
Micro and mini lots in forex can help in position sizing techniques, since to jump from 1 contract of 6E to 2 is a big leap. With forex, you could go from 1 lot to 1.1 lots, 1.2 lots, etc.
Overall cost (commission, slippage, spread) may be cheaper, too.
Even the DX doesn't really tell you anything other than give a composite of USD strength. I would find it more interesting to watch the dollar vs. other currencies directly. Is the euro beating the dollar, but the aussie not, for example? Is the dollar strong across the board against euro, gbp, yen, etc? If so, a long dollar position might be more attractive than if otherwise. Also, you might consider looking at stock indexes; a strong euro and a strong DAX or stoxx 50 might give more conviction for a short dollar position, versus if DAX showed risk off and euro showed risk on, for example.
