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Weekly Trading Lesson: What is Slippage?

Strategy and Analysis Central
You bought the EUR/USD at 1.4000 and the market is now trading at 1.4025.

Since there is an economic release due out in 15 minutes, you move your protective stop up to 1.4000 to protect your winning trade from turning into a losing trade. The number is released and the market trades down through your stop level to as low as 1.3975 in a matter of seconds. But instead of getting filled at your price of 1.4000, you are filled at 1.3990 and now have a losing trade on your hands. Why? The answer is that there was nobody willing to take the other side of the trade at your price. A trade is when two people agree on price but disagree on value. One thinks the value is too high and the market should move down while the other thinks the value is too low and the market should move up. When a major economic number is released, the volume dries up as most big traders stand aside. They will not trade if they cannot identify their risk. So there is not as much volume as you would see in a normal market environment. However, there are still plenty of traders trying to take advantage of the volatility. They will all want to trade in the direction the market should take based on the number released. So if everybody thinks that the market is going down, all these traders try to sell at the same time. The problem is that there are not many traders looking to buy if the market is falling quickly. So the market continues to fall until the buyers step in and start taking the other side of the trades. But they are buying at their price,

US Dollar Hits Record-Lows, Any Hope for Rebound?

Forex
The US dollar continued to set record lows against the Euro and Canadian dollar, defying calls for a worthwhile correction on unflappable anti-greenback sentiment. Limited economic data on the day left currency traders to force movements off of broader speculative interest, and dollar-selling remained the dominant theme in broader currency markets. In fact, the downtrodden buck fell against all major foreign counterparts on a daily basis.

Euro bulls sent the single currency to yet another record, touching heights of $1.4569 before a marginal retracement through the New York afternoon. The British Pound likewise saw strong bids through Tokyo and London trading hours and established fresh 26-year peaks of $2.0905. Anti-US dollar sentiment continued to bolster the Canadian dollar, which shows few signs of slowing its ascent at C$0.9240 per USD. A bounce in global equity markets was not enough to keep the dollar bid against the Japanese Yen, and indeed the greenback remained relatively unchanged at 114.52 yen through time of writing.

The lack of economic data did not stop traders from forcing strong price movements across major currency pairs, and pure market flows away from the greenback served as the only real justification for the move. One prominent bank claimed that the relative underperformance of US equity markets encouraged many clients to pursue risky asset classes in Europe and elsewhere. Others cited further sovereign bank reserve diversification as a prominent driver of daily exchange rates. Whatever the underlying justification for the

Microsoft Chief Information Exec Fired

Market News
REDMOND, Wash. (AP) -- Microsoft Corp. has fired its chief information officer, saying he violated company policies, but a spokesman declined to give the exact reason for the dismissal.

"Stuart Scott's employment with Microsoft was terminated after an investigation for violation of company policies," said Microsoft spokesman Lou Gellos, reading from a company statement Tuesday.

Gellos said Scott was dismissed Friday. He would not elaborate further.

According to Microsoft's Web site, Scott was responsible for the information technology infrastructure at the world's largest software maker. He reported to Kevin Turner, Microsoft's chief operating officer, who in turn reports directly to Chief Executive Officer Steve Ballmer.

Scott joined Microsoft in 2005, after 17 years at General Electric Co., according to Microsoft.

Gellos said Alain Crozier, a corporate vice president who also reports to Turner, and Shahla Aly, a general

Oil Hits $97 on Bombs, Demand Forecast

Futures and Commodities
NEW YORK (AP) -- Oil futures jumped to a new record above $97 a barrel Tuesday after bombings in Afghanistan and an attack on a Yemeni oil pipeline compounded the supply concerns that have driven crude prices higher in recent weeks.

Those concerns were also fed by a government prediction on Tuesday that domestic oil inventories will fall further this year while consumption rises.

At the pump, meanwhile, gas prices continued to rise, following oil's 39 percent price rally since August. The national average price of a gallon of gas jumped 2 cents overnight to $3.024 a gallon, according to AAA and the Oil Price Information Service.

Separately, the federal Energy Information Administration reported that diesel fuel prices reached a national average of $3.303 a gallon, a new record.

Light, sweet crude for December delivery rose $2.72 to settle at a record $96.70 a barrel on the New York Mercantile Exchange Tuesday after earlier rising as high as $97.10, a new trading record.

Oil's seemingly relentless climb raises the question of how high energy prices will go. If crude does keep

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