Review Category : Trading Tools

Using a Forex Signals Service for Trading

Forex signals

Forex signals can help traders determine the best time to enter and exit the foreign exchange market. This vital piece of information can help in minimising risks and maximising profits. Although the forex market is open all through the day for trading, you may find that most of the favourable trading opportunities are available only for a few minutes.

You may be able to improve your chances of success when you are able to place a trade during these favourable market conditions. You may be surprised to know that most traders are not even aware of these favourable trading opportunities and this affects their ability to earn consistent profits.

You can choose to subscribe to a signal service by paying a subscription fee for a limited or continuous period depending on your personal preference. You should be able to get the service through email alerts, SMS and other mediums that you prefer.

Finding the best forex signals service

The popularity of the foreign exchange market has ensured that there are hundreds of brokers and other providers offering a forex signals service. It is important that you make a good choice as it can affect your ability to trade successfully. You need to ensure that you choose a signal service offered by reputed brokers so that you are able to get reliable service from them.

It is advisable to check how long the service providers have been in this business. Most fraudulent signal providers operate in the market only for a few months and after cheating the traders they tend to vanish from the market altogether. You may be able to identify the fraudulent signal providers from the unrealistic claims they make to the traders.

It is best to do adequate research about the providers so that you are able to make an informed choice. Read reviews from reputed websites, blogs and forums so that you are able to get a clear picture of the services offered. Most reputed providers provide a trial period and you can make use of it to test the services and ascertain their effectiveness in placing a trade.

Benefits of a forex signals service

It is also not possible for traders to sit and monitor the market all through the day as it can take a lot of time and effort. When you use a forex signals service you may be able to take advantage of the many profit-making opportunities available in the market. You may be able to save a lot of time due to this and this can help you concentrate on your trading.

You may be able to determine the best entry and exit points using the signal service. When you know when to open and close a position you may be able to avoid losses and increase gains. As a trader you need to understand that timing is important for success in this volatile market and when you are able to time your trade in an effective manner you might be able to increases your chances of success.

 

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Guidelines for Trading with Forex Signals

Forex signals

Forex signals are tools used by traders to determine the best entry and exit points. When you learn to time your trade correctly, you may be able to increase your chances of success in the forex market. Human analysts or automated trading software are used to generate signals and they need to be utilised in a timely manner so that you are able to take advantage of the trading conditions in the market and make consistent profits.

Tips to trade with forex signals

If you want to be a successful trader, you need to identify favourable trading opportunities in the foreign exchange market. Although the forex market is open for trading all through the day the number of favourable opportunities is few and they tend to last only for a few minutes. As most traders are unable to keep a watch on the forex market for a full twenty-four hours they miss the opportunities to trade successfully.

When you use forex signals you may be able to locate the trading opportunities easily and this can help you make regular returns on your investments. You can make use of the signals to determine when to buy and sell the currency pairs of your choice.

Signals can help you use stop loss orders in an effective manner. It is advisable to place a stop loss order for all your trades so that you are able to minimise the risks. When you place a stop loss the trades gets closed automatically when the market reaches a certain level. This can enable you to trade in a stress free manner.

How to choose forex signals providers

The popularity of the foreign exchange market has ensured that there are hundreds of forex signals providers providing their services to traders. However, not all of them may be able to provide you the type of service and support you require. Many fraudulent signal providers cheat traders of their hard-earned money by making unrealistic claims and it is important that you learn how to identify them so that you are able to avoid them easily.

It is best to do adequate research so that you are able to make an informed choice. You can choose to read reviews about the signal providers on reputed websites, blogs and forums so that you are able to get a clear picture of the type of services offered. Reputed signal providers also provide a demo account and you can make use of it to test the signals provided and determine whether they are useful in placing a trade.

It is advisable to check how long the signal providers have been in this business and their track record. If they have hundreds of satisfied customers in Australia it means that they have been offering the best service and you can expect the best service and support from them. You should be able to get the signals in the medium of your choice like email, mobile alerts and positing on the website so that you are able to utilise them and trade successfully.

 

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Still Clinging On Non-Mining Investments?

non mining

Forex Australia press people noted every detail of RBA Deputy Governor Lowe on a speech on investment outlook. Analysts most specially were concerned by the 3 percentage point drag to GDP from falling mining capex and partly offsetting recovery in non-mining investment to high single digits.

Goldman Sachs see the risks as skewed to the downside with the magnitude of extra capacity in Australia’s non-mining economy, gradual development in end-demand and a modest non-mining investment pipeline.

In simpler terms, forex Australia brokers are keeping an eye on downside risks in Australia’s economy are skewed to the broader recovery falling short of economists’ expectations. Hence,  forex Australia brokers believe this will lead to an RBA cut for the last time in 2013.

Analysis of RBA Statements

The following were taken from the key points of the interpretation of Goldman Sachs analysts following RBA Deputy Governor Lowe’s speech in Melbourne about Investment and Australian economy:

(1) Broadly, the speech covered previous ground on the need for a pick-up in non-mining activity to offset an ongoing retrenchment in mining construction. The speech had a particular focus on non-mining investment as part of this broader recovery.

(2) Of note, for the first time, the RBA has put numbers around the expected drag to GDP growth from the mining capex unwind ( approximately -3ppts over the “coming years”) and the Bank’s forecast gradual rise in non-mining investment (“high single digit rates of growth within the next couple of years”).

(3)From Goldman Sachs perspective, firstly – while they sympathise with the magnitude of the mining capex drag – they continue to see the risk skewed towards this occurring earlier than is commonly expected. Secondly – on the outlook for non-mining investment, they see the risks to the RBA’s forecast as skewed to the downside given that i) preconditions for a material pick-up in non-mining investment are closure of the non-mining output gap and a rise in non-mining demand – neither of which appear likely in the near term; and ii) their analysis suggests there are not enough major non-mining (or public) projects in the investment pipeline to drive growth into high single digits.

(4)In his speech Mr. Lowe also identified three key drivers of the forecast non-mining recovery – a falling AUD, rising business confidence, and low interest rates. However, while there have been supportive developments on the first two factors – there was a strong sense in the speech that the AUD and confidence remain hostage to global dynamics and may not remain as supportive for investment moving forward. Clearly, domestic interest will remain sensitive to trends in the AUD and business confidence over the coming months.

(5) In the subsequent Q&A period, Mr. Lowe was asked “what keeps you up at night” and he nominated i) an economic shock out of China and ii) the possibility that an “enduring legacy of the ‘Great Moderation’ is that businesses do not take on risk and invest” – with the implication that the world gets stuck in a “low growth equilibrium”. Mr. Lowe also nominated the high AUD as Australia’s biggest structural headwind and while he doesn’t appear overly perturbed by the recent strength in the Australian dollar, clearly it is unhelpful. The Deputy Governor also indicated comfort with developments in the housing market (given credit growth is sustainable) and the need to retain a focus on productivity (given expectations that the AUD will remain above its long run average for many years).

Monetary Policy

Forex Australia brokers believe that the speech flags an extremely optimistic outlook for the economic recovery in non mining investment, while the Reserve Bank of Australia has already shifted to a more cautious outlook on the timing/magnitude of the mining capex unwind over the past year.

The forex Australia brokers further added that the amount of extra capacity in the non mining industries and the modest non-mining investment pipeline see the risks skewed towards the recovery of falling short expectations. Over time, they expect weaker than expected activity data to contribute to one final rate cut on the existing cycle which is on March 2014.

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USD As Funding Currency: Attractive No More

USD

In BNP Paribas’ opinion, the greenback is not the most attractive funding currency for a re-establishment of carry positions towards the end of 2013. The forex brokers believe that the US money-market remains above JPY and CHF funding rates. It has been at a premium to EUR cash rates since the onset of 2012 and slightly lower than GBP rates .

Push Back

The Fed remains focused on an exit from policy accommodation and the risks to US rates are very much skewed to the upside from existing levels. The slow improvement in the US economic data is expected to manifest in the succeeding months must be enough to maintain this theme, even if actual tapering of asset purchases remains very much a lingering first quarter issue.

The Bank of Japan and the Swiss National Bank are on hold and are subject to render sufficient liquidity to secure near zero rates for the future. The ECB continued to show some interest to further offer some comfort and not rule out a more dovish tone from the Bank of England if the UK economic data will fall. Forex brokers are confident that that favourable carry trade environment does not signal that the USD will weaken anytime soon as against the core G10 currencies.

So technically, Barclays believe that a derivatives based FX measure of risk adjusted carry trade suggests EUR is generally more efficient fund provider as compared to the USD , mostly for yield plays. This took advantage to lower rates of the EUR and mostly lower EUR cross vols.

Shorting the USD

The positioning of forex brokers is believed to be mitigating against further USD downside versus most core currencies. BNP Paribas believes that the long position on the EUR and GBP is already nearing its highest levels of the year, while the market went to place short position on the USD in late September for the first time in 2013.

The forex brokers still notice that the economic data disappointment deprived the dollar of a catalyst for position reversal. Hence, this leaves forex brokers like BNP Paribas to be reliant on dovish statements from other G10 central banks to push for a short rally in the USD towards the end of 2013. BNP Paribas is keen to achive its bullish forecast on the USD versus the JPY, CHF, EUR and GBP. They would want to focus their attention on the statements that will be made by the ECB policymakers.

There has been some shy discussion of gains in the EUR with regards to the exchange rate in comments by council member Ewald Nowotny on 11 October. Economists believe that ECB officials will commence to articulate more strongly on this issue in the succeeding weeks. Forex brokers are keeping their radar screen on the policy speeches and the ECB meeting this coming November as the main event risk for EUR/USD long positions.

Upside Surprises

Though still, the USD is still under pressure versus the G10 currencies despite as the high yielders are struggling. The disappointing weekly jobless claims and a weaker PMI added to the drama set by last week’s jobs print.

BNP Paribas further expects that September durable goods print to conclude the week with same dim result with its forecast of plus 0.2% for ex transport orders lower than consensus estimate of a 0.5% rebound after last month’s 0.1% decrease. They also anticipate more weakness in the Michigan sentiment survey. Consensus estimate of economists predict the headline index to slide to 72.5 from the preliminary 75.2 reading. Although they believe that reviving the fed tapering expectations is challenging enough, they would expect the US dollar to be more sensitive to the coming economic data surprises instead of the slight downside misses that their analysts forecast. Hence, they expect the greenback to gain against low yielding G10 currencies in the coming forex calendar weeks.

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Steeper Upward Trajectory For USD/CAD

dollar and PC

Most forex surprises now come from USD/CAD cross. The Bank of Canada surprised the FX market by the forex news of eliminating the policy stimulus. Barclays see this as a dilemma in policies that is trapped between low inflation and rising household debt. Economists now are pushing back the timing of the initial rate hike by the Bank of Canada to first quarter 2015 from third quarter of 2014.

Neutral Policy

Forex strategists have mixed reactions Bank of Canada’s neutral policy stance and its choice to hold a longer position imply that USD/CAD is sensitive to the monetary policy outlook between Canada and the US. Barclays market strategists noted this will respond more to the forex news from the Fed on its policy nomalisation. The economists have revised its opinion on the Fed and expect it to begin tapering in March 2014 instead December 2013. Hence, Barclays analysts now expect USD/CAD to bear a steeper upward trajectory until the next ssix month. According to the broker, the CAD is slighly overvalued versus the US dollar on long term investment valuation.

CAD Underperformance

Barclays does not expect significant underperformance of the Canadian dollar with its current forecast. However, concerns on household indebtedness is anticipated to unwind only gradually. It would restrict further easing over getting rid of some hawkish bias like what they did recently. Medium term factors like prices of oil and the US forex news that support the Canadian dollar would still be intact.

Oil Prices

The forex news on oil prices has a significant role for the CAD performance as a commodity currency. It fell below $100 although the trade weighted index came under pressure. Barclays’ estimate remains optimistic on its outlook going the end of 2013 and through to 2014 with an approximate price forecst of $104 in 2014. Discount for Canadian crude oil have expanded as turnaround season on refineries affected demand. However, the equity markets expect it to improve in the succeeding weeks and then it will slowly slim down, leading to an average discount of $22.25 in 2014 from the current $31.75.

CAD Outlook

A major consideration in the CAD is the medium term economic outlook in the US. This accounts for Canada’s strong economic ties with the US which is around 70% of Canadian exports flow to the US. Meanwhile, the Bank of Canada has revised its forecast downward for 2014 and 2014 as issued in the last Monetary Policy Report (MPR). It will be driven mainly by forex news of a higher level of cautiousness on the growth of net exports. The broker revised its forecast to 1.5% from 1.7% Y/Y in 2013 and to 2.5% from 3.1% in 2014. Barclays believe that it will create a downward revision to the Canadian growth from this territory. Therefore, Canada should constantly benefit from a positive spill over from moderate US economic growth, anchored by smaller drag from sequester spending cuts, as the US economy is expecte to increase its momentum going into 2014.

The FX market has pushed back the Fed’s tapering expectation as higher-yielding currencies are likely to outperform the CAD in the near term. To conclude this discussion, FX analysts have a strong conviction that the CAD is better positioned to withstand eventual policy normalisation by the Fed versus other high-yielding, commodity currencies, most particularly the Australian dollar.

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German Consumer Confidence Improved in October

 ZEW

German forex signals are in merry mood as the German ZEW survey showed further improvement in consumer confidence in October. ZEW is one of Germany’s leading economic research institutes, and enjoys a strong reputation throughout Europe. The ZEW Indicator of Economic Sentiment is ascertained monthly. Up to 350 financial experts take part in the survey. The indicator reflects the difference between the share of analysts that are optimistic and the share of analysts that are pessimistic for the expected economic development in Germany in six months. The survey also asks for the expectations for the Eurozone, Japan, Great Britain and the U.S.A.

This expectations index relased forex signals to an improved 52.8 in October, from 49.6 in September. Consensus expectation is a moderate improvement and a constant reading of the index. Survey participants consist of 237 financial analysts likewise believe that the outlook for euro area is more optimistic. The index improved once more in October. This is more or less at odds with the same group of participants expect for Italy and France. Forex signals for the six months ahead in France and Italy diminished with index for France declining to 25.3 in October down to 25.3 in October which fell below 3.7 points. Italian index declined to 27.3 down by 4.9 points.

Debt Ceiling Debate

The ZEw argued that the US debt ceiling debate does not seem to have an impact on sentiment in the euro area. Though the forex signals are more sceptical, as the weakening in the assessment of current conditions in the US was mildly strong (from minus 14.4 points in September to minus 1.2 in October). This could have created a spillover to the evaluation of current conditions except for United Kingdom.

More Survey Results

The current conditions in Germany deteriorated marginally from minus 0.9 percentage point to 29.7 point. This is equal to a change in opinion of two to three analysts only. The 12.3 point leap in the index in the past month show only a mild deterioration not as risk. The index on euro area conditions diminished by 1.2 points to minus 60.9 in October. Concerns on forex signals were more visible on the French economy with minus 8.7 points to minus 76.3 points and in Italy by minus 1.2 points to minus 85.4 points.

The ZEW confirmed that the economic outlook for the euro area amassed specifically in Germany. Meanwhile, other surveys like the PMIs, the European Commission’s Sentiment Index and the business climate index should tread in sentiment too. BNP Paribas believes that the euro area is satisfied for two to three quarters ahead. They expected the growth to accelerate to 0.4% Q/Q by the first quarter in 2014. But they also expected that this trend will step back again given the structural challenges in the economy. Germany will be the growth outperformer with growth of 0.4% Q/Q in the third quarter accelerating in the next two quarters.

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Foreign Exchange Trading with a Mini Account

foreign exchange trading

As a trader, you have many choices of foreign exchange trading accounts and it is advisable to make the choice depending on your knowledge and experience. You can choose the standard account, mini or micro trading account. If you are a beginner, it is best to start with a mini trading account, as it enables you to trade smaller positions compared to a regular trading account.

The mini trading account is only one tenth of a standard account and you are able to trade 10,000 units with it. You can choose to open a mini account with the forex broker of your choice and start trading in the largest financial market of the world. Beginners who do not have any trading experience prefer to use these mini accounts as it helps them minimise the risks associated with this trade.

Advantages of foreign exchange trading with a mini account

Most new traders are apprehensive about depositing a big amount in their trading account as they lack the experience of placing a trade. Such traders can start foreign exchange trading with a mini account, as they have to deposit only a small amount of money to open a trading account. This is beneficial for small traders as they can start with a small deposit.

When you start trading with a mini account you may be able to limit the risk exposure that you have in each trade. You may be able to manage the inherent risks of forex trading when you use a mini account to trade.

When you start trading with a mini account you are not restricted to placing just one trade but can place several small trades all through the day. As the capital invested in each trade is limited you may be able to control the risk easily. As you do not invest a lot of money in each trade you may be able to test new strategies. Most experienced traders use mini accounts to test new strategies for different pairs of currencies.

Foreign exchange trading with a demo mini account

You may be able to gain knowledge and experience in foreign exchange trading by opting for a demo mini account. The demo or practise account has the same features and functionalities as a live trading account and you may be able to gain experience by placing test trades.

If you are a beginner it is best to opt for a demo account so that you are able to gain adequate knowledge and experience before you start trading with a live account. The practise account can also help you become comfortable with the trading platform that you may be using to place a trade.

After you have gained knowledge about the various aspects of forex trade you can choose to open a live account and start trading. It is best to place small trades so that you are able to limit losses even if the market moves in the opposite direction of your trade. This can help control risks and enable you to make consistent profits.

 

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Foreign Exchange Market Is Like a Coin

foreign exchange market

Your teachers, friends involved in the foreign exchange market, online guides, and marketers will either tell you that trading in forex is the best thing you can do in your life or the worst. In fact, the forex market has this tendency of dividing opinion right down the middle.

Like all things that have these tendencies, the forex market is also like a double edged sword or a two headed coin. This means that it has its strengths and it has its weaknesses. However, the one aspect which puts the forex market ahead of other investment markets is that its downsides can be managed easily.

In fact, the elements that make the b so wonderful can also turn out to be its biggest weaknesses. Here are some examples.

Volatility Ensures Opportunities but Makes Profits Difficult to Pinpoint

One of the things that you will constantly hear about the foreign exchange market is that it is the most volatile investment market in the world. This volatility is the reason why this market is also so profitable because volatility results in the creation of opportunities that you can avail to make your profits.

However, at the same time, volatility means that the market is unpredictable. This unpredictability will affect you as much as it affects other traders in the market, and the winner in the end is the trader who is the most objective and foresighted of the lot.

Round The Clock Accessibility Increases Trading Convenience but Turns out to Be Physically Demanding

The foreign exchange market is the only investment market in the world that is open round the clock for 5.5 days in a week. This means that you can trade in forex in the middle of the night or follow the routines prevalent in most professions.

However, this also means that when you do go to sleep, the market is marching on without you. Thus, the need to have a sense of the broader picture is extremely vital in the foreign exchange.

Provides High Liquidity but Makes Leverage Necessary

The foreign exchange market also boasts of transactions worth 4 trillion American dollars daily. This means that the liquidity of the forex market is the highest in the world. This liquidity makes it very easy for traders to have their orders accepted by the market because there is always somebody at the other end.

However, high liquidity of the market means that a trader will need to buy a lot of currency pairs to make profits. This makes leverage crucial which is again both good and bad.

Highest Leverage Increases Purchasing Power but Also the Intensity of Potential Losses

In the foreign exchange market, a trader can avail leverage of up to 400 to 1. This is very high and allows the trader to increase his purchasing power significantly. The only problem is that while leverage increases the potential size of the trader’s profits from the foreign exchange, it also increases the size of his potential losses.

 

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Foreign Exchange Rates: Four Secrets of Success

foreign exchange rates

The forex market is like a plate of honey and traders the flies that simply cannot resist the lure of all the financial sweetness that the forex market can grant them. The honey, of course, is the money that can be made from fluctuating foreign exchange rates.

However, amongst all the competition, new forex traders almost always drop like flies. This is proven by the fact that only around five to ten percent of traders who are new to the forex market actually make it beyond the nascent stages of their career to have a future in the forex market.

Getting your hands on the sumptuous honey is always going to be a difficult task, especially considering the fact that the forex market is open and welcoming to all types of individuals.

Therefore, in order to beat all the competition for the profits that fluctuating forex rates can give, you not only need to be at par with other traders but also develop an edge. Here are some secrets that should help you do this.

The Two Sides of Fluctuating Foreign Exchange Rates

It is true that the fluctuating nature of foreign exchange rates is what makes the forex market such an attractive proposition for traders. As most traders become enamored by the lucrative quality of fluctuating rates, they forget about the darker side of forex trading i.e. fluctuations in rates also pose risks to their investments.

The true skill of a forex trader lies in his or her ability to negate risks in each trade which result in accrued profits. A trader can only develop this skill if he is always aware of the two sided nature of forex rates.

Importance of Research and Knowledge

Forex trading depends on the trader acquiring an exceptional level of knowledge. This knowledgebase can only be created with research into the market and how it functions.

Not only is a trader required to research the base tendencies of foreign exchange rates but also the specifics of how they are moving at any particular moment. Thus, constantly analysing forex rates and the forex market is crucial.

Smart Trading for Maximum Success

With knowledge acquired through extensive analysis and research, a trader can actually manage to evade most of the risks posed by foreign exchange rates and home in on the profits alone. However, the proper use of this knowledge is also important.

For instance, a trader has to consider all possible contingencies before placing a trade in the market. If the trader can take all possible outcomes into account then he would be able to put in measures to counter the negative outcomes. This is the true secret of risk management and money management.

Simple Strategies as Opposed to Complex Strategies

It is very easy for a trader to get ensconced in the complex movements of foreign exchange rates in such a manner that he tries to use complex strategies to understand them. The best way to project foreign exchange rate movements is to simplify everything including strategies.

 

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Flaws Of Mobile Currency Trading

currency trading

The flexibility of currency trading is celebrated all over the world. It is not surprising. It is because of this flexibility that many individuals are able to continue their forex trading efforts along with maintaining other commitments in their lives. One of the elements of the flexibility of forex trading is the use of mobile trading platforms.

Numerous traders tend to make use of mobile currency trading platforms in various capacities. However, the big question is whether their use of mobile trading actually makes their trading better or worse. In other words, even though the advantages of mobile trading cannot be undermined in any way, there are some flaws that need to be considered as well.

Loss Of Connectivity

Even though mobile phone connectivity has grown leaps and bounds in the last few years in terms of durability and efficiency, there are still locations and situations where it starts reverting to the type of connectivity.

Take for example basements or even elevators. It is far too common for mobile phones to fail in such situations for a forex trader to trust his currency trading profits entirely on mobile trading.

The Waiting Game

A little less troublesome but potentially equally dangerous is the waiting game that traders have to sometimes play with their mobile currency trading efforts. In simple words, if the mobile phone connectivity is not completely gone then it slows down in certain situations and locations.

Not only do such slowdowns require tremendous amounts of patience from the trader but also enough foresight to prevent any lost opportunities or losses incurred.

Additional Costs

There is also the little matter of the extra costs that mobile currency trading brings to the table. Traders can easily find themselves paying over the odds for the mobile connection that they are using for forex trading. This cost must be considered as a part of the total forex trading effort, which means that it negates some of the profits generated from mobile trading, if any.

Lack Of Support

Poor connectivity combined with mediocre handsets can also result in the traders not having enough resources for successful currency trading. For instance, it is impossible with even the best of phones today to use expert advisors. Many traders may depend on such tools to ensure success in the market. Effectively, their performance drops markedly when it comes to mobile trading.

Distractions Galore

There is also the factor of the trader’s surroundings. It is impossible to imagine any trader to have so much focus that he can concentrate on his currency trading efforts while going somewhere in a metro or even in a bus. The sights and sounds around him would lead to him getting distracted repeatedly.

The Best Way To Use Mobile Trading

While the flaws of mobile currency trading are many, there are also many benefits. This means that mobile trading should ideally be used in a balanced manner to keep in touch with the market and possibly manage existing trades. This way, the trader is not risking most of the flaws of mobile trading while leveraging more of its benefits.

 

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