Angelo Reynolds Scalps In Euro-Dollar Pit

As a trader in the Eurodollar futures pit at the Chicago Mercantile Exchange, Angelo Reynolds cites mental toughness and
courage as two of the necessary factors to successful pit trading. "I knew I always wanted to be involved in the markets,"
Reynolds said. After graduating from the University of Pennsylvania in 1984, Reynolds. took a job as a runner at the Philadelphia
Stock Exchange.
After paying his dues on the trading floor, Reynolds worked his way up into a brokering position and began filling foreign
currency options. In 1987, a Chicago trading firm approached Reynolds regarding the possibility of a move to the Chicago Board
of Trade bond pit. However, at that time, Reynolds said, "the market was good in Philadelphia and I wasn't really ready to move."
However, a few years later, the currency options market began to slow in Philadelphia. "As the market got slow, I began to
think about a move to Chicago," Reynolds explained. In June 1991, Reynolds made the move to the Midwest and began filling
paper in the Eurodollar futures pit for Quantum.
After successfully filling orders in the Eurodollar pit for three years, Reynolds began to consider shifting to the trading side. "I
had been a broker for about eight years and there is more of a challenge and more financial opportunity in trading." In June 1994,
Reynolds took the leap and joined Deerpark Derivatives as a trader in the Eurodollar pit.
"It was kind of scary the first couple of months," Reynolds admitted. However, he sticks to a couple of "basic rules that
everyone knows" that has allowed him to achieve success.
"In my type of trading-scalping-you have to cut your losers and let your winners ride.” Every day Reynolds squeezes into the
Eurodollar pit, with roughly 1,000 other people, and looks to take advantage of short-term inefficiencies in the market.
Another basic rule Reynolds trades by is trading within your means. "You can't trade outside your capital, you can only trade
5% of your capital." As a "scalper," Reynolds' average time frame for trades is minutes. "Right after a number, it could be a split
second (that I hold a trade) or it could be two to three hours ... the average is five to 10 minutes.”
On the transition from broker to trader, Reynolds said "you have to be more sophisticated to be a trader than a broker because
you have to understand the underlying reason the market is moving.”
When he began trading, Reynolds studied a book on fundamentals in order to gauge the importance of various economic
releases throughout the month. "I study (the figures) a lot. You have to if you are going to be an effective scalper. When the 7:30
a.m. government economic reports flash on the board, Reynolds said, "I look at the numbers to see if they are inflationary.”
For example, if the monthly release of the Producer Price Index came in 0.2% above expectations, "you start looking (to hit)
bids-because that means it's inflationary and the bonds are going to go down."
As Eurodollar futures often trade in tandem with T-bond futures at the Chicago Board of Trade, Reynolds notes that he
watches cash Treasury bond prices closely throughout the day as well. "If we see cash bonds turn around (to the upside) the
locals will come in and just start buying Euros," Reynolds said.
In recent weeks, Eurodollar futures have been trading within extremely narrow ranges-a four- to five-tick range is not
uncommon for the March Eurodollar contract lately. The major factor confining Eurodollar prices is that most analysts believe
Federal Reserve will keep monetary policy steady between now and year-end.
Nonetheless, Reynolds said, "even in a one- or two-tick range you can still make money .. there will be 1,500 (contracts) on
the bid and 2,000 on the offer."
Eurodollar futures are known for having great liquidity. "There's always 2,000 (contracts) at every price," Reynolds said. Total
open interest for Eurodollar futures currently stands near 2,398,012.
So even if the Eurodollars fluctuate within narrow ranges, "when the Euros move, there could be a 1,000 lot you can hit, so it
makes it worth the wait," Reynolds said. "I'll do 700, 800 or 900 contracts because I know there will be 500 at the next price. I
know I'll be able to get out.”
While some traders leave early in the morning if they've had a good trade, Reynolds said, "I'm the type of guy to stay all day. I
love to trade.” However, he added, "I'll cut my losses and go home" if he's having a bad day. "It's usually 1,000 ticks either way,"
Reynolds said for his cut-off point for leaving. One tick in the Eurodollar contract is worth $25.
When asked what are some of the qualities that make a successful pit trader, Reynolds answered, "Number one is confidence.
Number two is mental toughness. Number three is interpersonal skills. Number four is a basic understanding of the markets and
number five-have enough capital-not necessarily in that order.”
"You have to have mental toughness because if you are wrong you have to be able to take defeat and not lose your courage.”
For beginning traders, Reynolds recommends the path he took-beginning as a runner. It is important "to take your time to
build your foundation of understanding of the industry otherwise you won't last long. I just take it one day at a time and try to
build on what I've done and hope I can continue to be successful in the future,” Reynolds concluded.

Forex ( Foreign Exchange Market )

The foreign exchange market is also known as FX or it is also found to be referred to as the FOREX. All three of these have the same meaning, which is the trade of trading between different companies, banks, businesses, and governments that are located in different countries. The financial market is one that is always changing leaving transactions required to be completed through brokers, and banks. Many scams have been emerging in the FOREX business, as foreign companies and people are setting up online to take advantage of people who don't realize that foreign trade must take place through a broker or a company with direct participation involved in foreign exchanges.

Cash, stocks, and currency is traded through the foreign exchange markets. The FOREX market will be present and exist when one currency is traded for another. Think about a trip you may take to a foreign country. Where are you going to be able to 'trade your money' for the value of the money that is in that other country? This is FOREX trading basis, and it is not available in all banks, and it is not available in all financial centers. FOREX is a specialized trading circumstance.

Small business and individuals often times looking to make big money, are the victims of scams when it comes to learning about FOREX and the foreign trade markets. As FOREX is seen as how to make a quick buck or two, people don't question their participation in such an event, but if you are not investing money through a broker in the FOREX market, you could easily end up losing everything that you have invested in the transaction.

Scams to be wary of
A FOREX scam is one that involves trading but will turn out to be a fraud; you have no chance of getting your money back once you have invested it. If you were to invest money with a company stating they are involved in FOREX trading you want read closely to learn if they are permitted to do business in your country. Many companies are not permitted in the FOREX market, as they have defrauded investors before.

In the last five years, with the help of the Internet, FOREX trading and the awareness of FOREX trading has become all the rage. Banks are the number one source for FOREX trading to take place, where a trained and licensed broker is going to complete transactions and requirements you set forth. Commissions are paid on the transaction and this is the usual.

Another type of scam that is prevalent in the FOREX markets is software that will aid you in making trades, in learning about the foreign markets and in practicing so you can prepare yourself for following and making trades. You want to be able to rely on a program or software that is really going to make a difference. Consult with your financial broker or your bank to learn more about FOREX trading, the FX markets and how you can avoid being the victim while investing in these markets.

Forex trading, where do customers go ?

Forex trading uses currency and stock markets from a variety of countries to create a trading market where millions and millions are traded and exchanged daily. This market is similar to the stock market, as people buy and sell, but the market and the over all results are much much larger. Those involved in the forex trading markets include the Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs, ABN Amro, Morgan Stanley, and so on.

To get involved in the forex trading markets, contacting any of these large broker assistance firms is going to be in your best interest. Sure, anyone can get involved in the forex market, but it does take time to learn about what is hot, what is not, and just where you should place your money at this time.

International banks are the markets biggest users on the forex markets, as they have millions of dollars to invest daily, to earn interest and this is just one method of how banks make money on the money you save in their bank. Think about the bank that you deal with all the time. Do you know if you can go there, and obtain money from 'another' country if you are heading out on vacation? If not, that bank is most likely not involved in forex trading. If you have to know if your bank is involved in forex trading, you can ask any manager or you can look at the financial information sheets that banks are to report to the public on a quarterly baiss.

If you are new to the forex market, it is important to realize there is no one person or one bank that controls all the trades that occur in the forex markets. Various currencies are traded, and will originate from anywhere in the world. The currencies that are most often traded in the forex markets include those of the US dollar, the Eurozone euro, the Japanese yen, the British pound sterling and the Swiss franc as well as the Australian dollar. These are just a few of the currencies that are traded on the forex markets, with many other counties currencies to be included as well. The main trading centers for the forex trading markets are located in Tokyo, New York and in London but with other smaller trading centers located thought out the world as well.

Forex, trading foreign currency

FOREX trading is all about trading foreign currency, stocks, and similar type of products. The currency of one country is weighed against the currency of another country to determine value. The value of that foreign currency is taken into consideration when trading stocks on the FOREX markets. Most countries have control over the value of that countries value, involving the currency, or money. Those who are often involved in the FOREX markets include banks, large businesses, governments, and financial institutions.

What makes the FOREX market different from the stock market?
A forex market trade is one that involves at least two countries, and it can take place worldwide. The two countries are one, with the investor, and two, the country the money is being invested in. Most all transactions taking place in the FOREX market are going to take place through a broker, such as a bank.

What really makes up the FOREX markets?
The foreign exchange market is made up of a variety of transactions and counties. Those involved in the FOREX market are trading in large volumes, large amounts of money. Those who are involved in the FOREX market are generally involved in cash businesses, or in the trade of very liquid assets that you can sell and buy fast. The market is large, very large. You could consider the FOREX market to be much larger than the stock market in any one country overall. Those involved in the FOREX market are trading daily twenty-four hours a day and sometimes trading is completed on the weekend, but not all weekends.

You might be surprised at the number of people that are involved in FOREX trading. In the years 2004, almost two trillion dollars was an average daily trading volume. This is a huge number for the number of daily transactions to take place. Think about how much a trillion dollars really is and then times that by two, and this is the money that is changing hands every day!

The FOREX market is not something new, but has been used for over thirty years. With the introduction of computers, and then the internet, the trading on the FOREX market continues to grow as more and more people and businesses alike become aware of the availablily of this trading market. FOREX only accounts for about ten percent of the total trading from country to country, but as the popularity in this market continues to grow so could that number.

Why trading Forex

Forex trading has surged in recent years, as more individuals earn their living trading and the popularity of riskier investment vehicles like hedge funds has increased. The bottom line for these investors is superior returns, and in foreign exchange four major factors create a unique investment environment:

1. Liquidity
2. Leverage
3. Convenience
4. Cost

In no other market can you find a playing field that is so biased to the investor, at least on the surface. But to take advantage of these factors you have to be constantly aware of their downside.
Liquidity
In a liquid market there is a high degree of transparency, even when large transactions change hands. The sophisticated investor understands what this means: forex attracts huge players. As a trader grows in sophistication, they understand that these huge players have significant price impact, and watch for their market entry.
Leverage
The low margin requirements in the forex markets make everyone’s what-if analysis yield forecasts with 1000% growth annually. What those forecasts fail to account for is the multiplying effect of leverage during periods of consecutive losses.

The six forces of forex

THE SIX FORCES OF FOREX

Trading forex is like watching a school of fish move. One minute is total harmony, the next, complete chaos. As the observer of this school of fish, do you believe you can accurately predict the direction the school of fish will move each time? Would you bet on it?
What causes the fish to move the way they do? Why do they work together in one moment, moving with force and precision, and move in what seems to be an infinite number of directions the next? There’s no way to know unless you can sense what the fish sense each time they move. The fish have an instinct about the nature of their environment. They understand the context of all things around them – natively – and can react accordingly. Surely if you shared this understanding you’d be a much more accurate predictor of fish movement!
Trading forex is not much different - we need to develop that keen sense of what is happening around us. Will we ever be able to predict every move in the forex markets? Absolutely not. But we can use our understanding of the context of the market – the six forces of forex – to make better, more profitable trading choices. Once we understand these forces, we can create and operate within a comprehensive trading plan:

• Who trades forex? Understand who participates in the markets, why they are successful, and how you can emulate them.
• Why trade forex? There are superior returns in forex, but not for all investors. Are you one of them?
• Where should you trade? Choose to work with service providers who can efficiently enable your style of trading.
• What should you trade? Select the currency pair, entry, exit and money management methods that will maximize your returns.
• When should you trade? Trade when the environment is most likely to produce the best conditions for executing your system.
• How should you trade? Trade using methods that maximize your ability to emulate the proven winners.

Knowledge of these forces and how they work is a major determinant of your success as a trader. Figure 1 shows these 6 forces, their relative rarity, and their effect on profitability.

Practicing in the Forex Market

So you want to learn about the Forex market, and trading internationally but you are risking your personal wealth if you jump in before knowing all about how trading takes place. Online, you will find many games and simulations while learning the methods involved in forex market trading. The forex markets include countries from around the world, where all countries involved are using different currencies, and when faced against each other are worth more or less than the original valued currencies that are being traded. The forex markets are used to build wealth in, for governments, banks, and brokers, and for many countries.

To get started in learning about forex trading, you will need to locate the forex trading software, education-learning system you want to use. As you find the games, as they are called, you will enter information about yourself, about what you are interested in learning and then you will download software to your computer. In following the 'game', you will learn how to make and lose money in the forex market. This type of game is going to make you more aware of what happens daily, how the markets open and close, and how different the various countries currencies really are.

You will open an online 'account' using the gaming system. You will then be able to read the news, find and compare markets, and you will be able to make 'fake' trades so you can watch your money build or be eaten away in losses. As you learn the system, using it a few times a week, you are going to be more prepared, more educated and you will be ready to use the forex trades to make money. Of course, you may still need the aid of broker or a company to make your transactions happen but you will better understand the process, what will happen, and what calls you may want to make when you read about the news, the markets, and the currencies in other countries.

The forex market is also referred to as the FX market. If you are interested in joining the millions who are making money in the forex markets, you want to ensure you are dealing with a reputable banker or company involved in forex trading. With the spur of interest in the forex markets, there are many types of companies that are popping out on the Internet appearing to be genuine forex trading companies but in reality, they are not. Forex trading can be completed through a broker, a company that deals in the funds, and from within your own country. For example, the US has many regulations and laws regarding forex trading and what companies are permitted to work with the public dealing with international trading and markets.