Federal Deficit Projected Higher by $2 Trillion

AP sources: $2 trillion higher deficit projected WASHINGTON (AP)

The Obama administration expects the federal deficit over the next decade to be $2 trillion bigger than previously estimated, White House officials said Friday, a setback for a president already facing a Congress and public wary over spending. The new projection, to be announced on Tuesday, is for a cumulative 2010-2019 deficit of $9 trillion instead of the $7 trillion previously estimated. The new figure reflects slumping revenues from a worse economic picture than was expected earlier this year. The officials spoke only on the condition of anonymity ahead of next week’s announcement.

Ten-year forecasts are volatile figures subject to change over time. But the higher number will likely create political difficulties for President Obama in Congress and could create anxiety with foreign buyers of U.S. debt.

Earlier this week, the White House revealed that it expects a budget deficit for the fiscal year ending Sept. 30 to be nearly $1.6 trillion. That figure was lower than initially projected because the White House scratched out $250 billion that it had initially added to the budget as a bank rescue contingency. The administration ultimately did not ask Congress for that money.

Still that number, together with the 10-year projection, represents a huge obstacle for an administration trying to undertake massive policy overhauls in health care and the environment. Economists predict a slow recovery from the recession, further testing Obama’s goal of cutting the deficit to $512 billion in 2013. Even as he seeks higher revenues to pay for new climate change and health care measures, the president could face pressure to increase revenues or make deep spending cuts to tame the deficit.

Earlier long-term estimates released in February and May relied on now-outdated projections of economic growth. Then, the White House predicted the economy would shrink by 1.2% this year, but the economy shrank 6.4% in the first quarter, the worst in nearly three decades. Both the White House and the Congressional Budget Office scheduled announcements for Tuesday on their new budget estimates.

Relying on more pessimistic economic projections than the White House, the CBO earlier this year predicted deficits totaling $9.1 trillion over 2010-19. Those predictions were based on expectations that the economy would shrink by 2.2% this year. In its earlier projections, the White House said the deficit would be manageable if it slides to 3% of gross domestic product. Earlier projections barely met that standard — even after relying on optimistic assumptions like the wars in Iraq and Afghanistan costing $50 billion a year instead of the $130 billion budgeted for 2010. Now, the deficits could easily exceed 4% of GDP, even after cost-cutting efforts or new revenues claimed in Obama’s budget.

Such deficits have always prompted Congress and the White House to take politically painful steps to curb them, such as former President Bill Clinton’s tax-heavy 1993 deficit reduction plan. A companion effort by Obama could force him to break his promise to not raise taxes on individuals making less than $200,000 a year.

Make Money With International Currency Exchange

International currency exchange or forex (foreign exchange) trading has become one of the most popular ways for investors to get involved in speculative trading from home. Instead of trading stocks, you simply trade the different currencies of the world.

When a currency that you bought increases in value, you make money. However, unlike stocks, you can also make money when a currency that you sold goes down in price. So you could say that you have twice the opportunities for a trade.

The forex market is huge and because of its global nature, you can trade at any time of day, 24 hours a day from Monday through Friday. The US dollar is the most frequently traded currency but of course, two currencies are involved in any exchange. The other major players are the euro, the Japanese yen, the British pound, the Australian dollar, the Swiss franc and the Canadian dollar.

You can start forex trading from home provided that you have a computer with a high speed internet connection and some funds to invest. There are many different types of brokers and some will let you open an account with just a few dollars now.

You can trade on margin so that with an opening balance of say $100 you could be controlling trades of $10,000. This is what makes forex trading attractive to many investors, because it means that you can make a lot of money from just a small starting fund. However, it also means that the risks are high and you should be prepared to lose this money if things go wrong.

Of course it helps if you have some practical experience in a risk free trading situation so that you can be confident about your ability to trade successfully before you start. This is easily done through a forex demo account or practice account which most brokers will offer you for free. Their aim is to have you try out their service without obligation. You can be testing a system at the same time, to make sure that it works for you before you switch to real money.

There are many forex systems available for the international currency exchange market. You will easily find free systems online, but you may be suspicious of these, since often in this world we get what we pay for. The quality may not be high and there is no point starting out with a system that will lose you money. It is better to pay a few dollars for something that is profitable. A good way to evaluate the different systems is to look at reviews online, especially in forex trading forums.

Brokers will also offer you a wide range of tools to help you implement your chosen system. These include charts and indicators that will help you to assess whether the price of a currency pair is likely to rise or fall in the short, medium or long term. Often they will also provide financial news alerts which can assist you. It is very useful to know if a national government is about to make a financial or economic announcement which will have an impact on the international currency exchange markets.

Forex Predictions: Determining Currency Price Movements Means More Profit from Forex Trading

Can anyone make accurate forex predictions? Also called reading forex signals or forecasting, it is possible and it is done on a daily basis. To trade forex successfully, you need to learn how it is done. By predictions we mean price movement, or the direction in which the currencies you are trading are likely to move.

Successful currency trading requires some way to make forex predictions. This means you need to have an understanding idea of which direction the prices are likely to move.

To be certain, currency trading seems very complicated when you first start out. The beginning trader is confounded by terms like pips, lots, spread and how to calculate profit and loss. Charts and indicators are a complete mystery. Everyone begins here, head dizzy from in this swirl of new terms that we think we’ll never understand. It’s just like learning anything new, you tackle the different aspects of forex trading one by one.

First, sign up for a demo account so that you can try out the skills that you are learning. Your understanding will grow quickly as you are practice trading, and it’s much easier to learn new terms and skills while doing than simply reading.

Your first look at price movements will usually result in one of two reactions. Either it all appears entirely random and impossible to predict, or they think they can just look at a chart and automatically know which direction the price will go in next. The reality lies in the middle somewhere.

There are two aspects to forex predictions. First the economic situations of the world as a whole and the particular countries currencies you are trading. It’s common sense that when a country is doing well as a whole, there will be people who will want to invest in it. So the price of it’s currency will rise in the same way a corporations share prices rise when they are doing well. Whatever impacts the economic outlook of the country impacts the price you will pay or get when buying or selling their currency.

The second aspect is technical analysis, meaning studying charts and indicators provided in your demo account. There are many ways to use these to analyze the market. It will become clear to you when long term trends are forming, and how they many impact the value of a currency pair over the coming days and weeks. Spotting these forming trends and getting in early can mean a lot of profit for the trader who is patient enough to learn how to recognize them and wait for the best time to enter.

And then there is day trading. Forex day traders look for the small fluctuations seen each day or even every hour, as prices bounce within certain boundaries. They attempt to identify patterns in these fluctuations and place orders accordingly to profit from these tiny changes in price.

Understanding how to make forex predictions isn’t a guarantee of profits, of course. So learning as much as you can about how price movements are impacted, using a system that is accurate and sticking to your trading plan and your predetermined risk level are all components of successful forex trading.

Online Foreign Exchange Trading: Avoid These 3 Big Mistakes

Just about everybody who starts online foreign exchange trading is hoping to make big money. There are perhaps a few people who do it just for fun, but if they are at all successful they will soon start to think about turning that success into a money maker that could eventually change their lives.

However, a lot of forex traders see their big dreams come to nothing.

Mistake #1: Increasing The Risk

When you start out you will receive a lot of good advice about keeping your risk down around 2% to 5% depending on the size of your funds. Most people feel it’s OK to take a bigger percentage risk with smaller funds because they don’t care so much about losing the money. So you might be happy to risk 5% of a $1,000 starting balance (that’s $50) but you probably wouldn’t start out risking 5% of a $100,000 balance if you have it (that’s $5,000).

But after a while, the situation somehow becomes reversed and people who started out with a good small risk often find themselves increasing it. This can be either because their system has been consistently profitable and they think they cannot lose, or because they have had a few losses and they think they must be due for a winning run. Neither of these assumptions are true. Disaster can strike, often at the times that we are least prepared … i.e. when we just increased the risk.

Your percentage risk should decrease as your funds increase, not the other way around.

Mistake #2: Trying To Do Everything

Some inexperienced forex traders hop from system to system, abandoning every system whenever a new one comes along. Others try to cover all the bases, running three or four systems at the same time and trading on every currency pair that their broker offers. Both of these tactics are big mistakes.

The most successful systems are simple. Don’t try to employ every forex trading strategy that you can find online and don’t be drawn into thinking that if you combine the advice of all of the experts you will end up with the perfect system.

Trading systems do not mix well. Start with one. If it doesn’t give you enough trading signals so that you don’t have anything to do most days, you might want to add another, but be careful. Remember that if there is a sudden major natural disaster or terrorist attack, all your open trades could go west in a few seconds.

Mistake #3: Too Much Or Too Little Testing

You probably know that you need to test any system in a demo account before going live with it. However well the system is explained, you may be doing something slightly differently that will give you different results from the expected. It’s important to test enough that you have confidence in your system.

But at the same time, don’t test for too long. You need to know that the system works and then not be scared to switch it over to a real money account … without changing anything. Go back to the demo account any time that you think of an improvement. This will give you the best chance of making big profits with your online foreign exchange trading real money account.

Are These 4 Emotional Pitfalls Sabotaging Your Trading? eBook Free Until Aug 17th

To be a consistently successful trader, the most important trait to learn is emotional discipline. I discovered this the hard way trading full-time a few years ago. I remember one day in particular. My analysis told me the NASDAQ was going to start a sizable third wave rally between 10:00-10:30 the next day… and it did. When I reviewed my trade log later, I saw that several of my positions were profitable, yet I exited each of them at a loss. My analysis was perfect. It was like having tomorrow’s newspaper today. Unfortunately, I wanted to hit a home run, so I ignored singles and doubles.

I now call this emotional pitfall the “Lottery Syndrome.” People buy lottery tickets to win a jackpot, not five or ten dollars. It is easy to pass up a small profit in hopes of scoring a larger one. Problem is, home runs are rare. My goal now is to hit a single or double, so I don’t let my profits slip away.

Since then, I’ve identified other emotional pitfalls that I would like to share. See if any of these sound familiar.

Have you ever held on to a losing position because you “felt” that the market was going to come back in your favor? This is the “Inability to Admit Failure.” No one likes being wrong and for traders, being wrong usually costs money. What I find interesting is that many of us would rather lose money than admit failure. I know now that being wrong is much less expensive than being hopeful.

Another emotional pitfall that was especially tough to overcome is what I call the “Fear of Missing the Party.” This one is responsible for more losing trades than any other. Besides overtrading, this pitfall also causes you to get in too early. How many of us have gone short after a five-wave rally just to watch wave five extend? The solution is to use a time filter, which is a fancy way of saying wait a few bars before you start to dance. If a trade is worth taking, waiting for prices to confirm your analysis will not affect your profit that much. Anyway, I would much rather miss an opportunity then suffer a loss, because their will always be another opportunity.

This emotional pitfall has yet another symptom that tons of people fall victim to chasing one seemingly hot market after another. For instance, metals have been moving the past few years so everyone wants to buy Gold and Silver. Of course, when everyone is talking about it is usually the worst time to get into a market. To avoid buying tops and selling bottoms, I have found that it’s best to look for a potential trade where (and when) no one else is paying attention.

My biggest, baddest emotional monster was being the “Systems Junkie.” Early in my career I believed that I could make my millions if I had just the right system. I bought every newsletter, book and tape series that I could find. None of them worked. I even went as far as becoming a professional analyst guaranteed success, or so I thought. Well, it didn’t guarantee anything really. Analysis and trading are two separate skills; one is a skill of observation, while the other, of emotional control. Being an expert auto mechanic does not mean you can drive like an expert, much less win the Daytona 500.

I am not a psychologist or an expert in the psychology of trading. These are just a few lessons I’ve learned along the way… at quite a cost most times. But if you are serious about trading, I strongly recommend that you spend as much time examining your emotions while you are in a trade as you do your charts before you place one. What you discover may surprise you.

For more trading lessons from Jeffrey Kennedy, visit Elliott Wave International to download the Best of Trader’s Classroom eBook. Normally priced at $59, it’s free until August 17.

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Jeffrey Kennedy is the Chief Commodity Analyst at Elliott Wave International (EWI). With more than 15 years of experience as a technical analyst, he writes and edits Futures Junctures, EWI’s premier commodity forecasting service.

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