Tag: Forex Trading

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Forex Basic Strategies

15 Minute Forex Scalping Strategy Using The Donchian Channel Indicator

Introduction

Introduction

Introduction

Scalping is a trading strategy designed to profit from small market changes. The Scalpers took a couple of trades in any trading session, and the goal of every scalper is to seize gains when they appear on a price chart because the aim is to have a few small wins rather than one large one. Scalping is one of the most challenging style of trading to master because it requires unbelievable discipline and focus.

A scalper must follow the rules of their trading strategy like a religion because one large loss can easily wipe out dozens of successful trades. One of the most critical aspects of scalping is liquidity because we would not scalp any instrument that is not liquid enough and ensuring liquidity also ensures that we are getting the best price while entering and exiting in a trade. In this article, we will show you how to scalp the 15-minute trading timeframe by using the Donchian Channels Indicator.

Working Of A Donchian Channel

Donchian channel consists of three lines, which are generated by the moving average calculations that comprise an indicator formed by the upper and the lower band, also the median band. The celebrity trader Richard Donchian developed the indicator in the mid-twentieth century so that he can identify the trend of the market. The area between the upper and lower band represents the Donchian channel. The indicator identifies the bullish and bearish extremes areas, which are followed by the reversals or breakouts in price action.

15-Min Trading Strategy

The scalping strategies are only created to trade the lower timeframes, such as 1, 3, 5, 15-minute timeframes; do not apply any of these strategies on any higher timeframes; otherwise, you will face some trouble in your trading.

As you can see in the below image of the USDJPY forex pair, overall, the instrument is in a strong uptrend, and when the price action hits the lower band of Donchian channel it indicates the buy trade, and when it hits the upper Donchian channel, it means to go for a short trade.

In the below image the price action gives us three buying and three selling trade, most of the time the buying trades perform bit longer than the selling trades, it is because the flow of the market was up, but for the scalpers, the flow doesn’t matter, all the scalpers want is to in and out from the market. Close your position when the price action hits the opposite channel, and when you take the entry, if the price action goes a bit against you { for, e.g., 4 to 5 }, then close your position immediately and wait for the new signal.

The below image represents a couple of buying and selling trades in a downtrend. The goal of every scalper is to, first of all, check the trend of the market, and expect more trades by following the trend and simply expect less counter-trend trades. You can see that the below image of the GBPNZD forex pair shows us the nine selling and six buying trades. Most of the selling and buying trades worked very well, and each trade generates a significant amount of money for us. The whole goal is to activate the position when the price action hits the Donchian channel and close your position when the price action goes a bit against us.

Range Trading

If you trade the trending market, then expect the more trend-following trades, and if you scalp the ranges and channels, then you can expect both the buying and selling trades because in ranges and channels both of the parties hold the equal powers this is the reason ranges and channels are favorite for the scalpers. The image below shows the 15-minute chart of the NZDJPY, forex pair, which shows the ranging market, and in range price action gives the five selling and four buying trades. In the ranging market, we suggest you go for the 1:1 RR trades because the price action more often spikes in ranges.

Scalping Trading By Following The Market Trend

Buy Trade

The scalping is all about having a strong and aggressive mind to face the rollercoaster ride in the market, and some of the conservative and confirmation traders want to scalp the market, but they little hesitate to react on every signal, so if you are a conservative or confirmation scalper then here is good news. We specially created a strategy that suits your trading personality. In this strategy, you will find fewer trades, but the trades will be accurate. Apply this strategy only on the fifteen-minute timeframe and avoid trading the ranges and channel markets because both situations have higher chances of fake outs. First of all, on a lower timeframe, find out the clear uptrend in any instrument, and when the price action hits the lower Donchian channel go long and hold your position till the price action hits the opposite channel. Do not go for selling trades in the buying market simply wait for the next buying trade. In the below image, by following the trend of the market, we only got the five buying trades in the EURAUD forex pair. Each of our trade travels a significant amount of time; then the price action generates the next trade. By following this strategy, you will face less mess and good trades in the market.

Sell Trade

The image below represents the six selling trades in the GBPUSD forex pair, you can see that the downtrend was quite smooth, and after activating our every trade, the price action immediately goes into our favor. In the strong trending market, you can go for the smaller stop loss and book profit when the price action gives the buying signal.

Conclusion

Scalping is not easy, but it is a quick way to make some money from the market. As a scalper does not expect a continuous win, most of the scalpers face the ups and downs in their trading journey. Every trading day awaits a couple of buy and sell trades, do not judge yourself or your strategy according to every single trade, instead of at the end of the day find out how many wins and losses you have. If the end of you have more wins than the losses, then it means you have a successful trading day. Scalping works very well on the lower timeframe and the strategies we show in this article created, especially for the 15-minute trading timeframe.

Categories
Forex Basic Strategies

Trading the Forex Market Without Using the Stop-Loss Order

A stop loss is an order placed by a trader on any underlying asset, the order remains until the price action reaches that specific point, then it automatically executes a buy or sell order in the market. Trading the markets without a stop loss is dangerous. However, by placing the stop loss, traders can easily […]

A stop loss is an order placed by a trader on any underlying asset, the order remains until the price action reaches that specific point, then it automatically executes a buy or sell order in the market. Trading the markets without a stop loss is dangerous. However, by placing the stop loss, traders can easily […]

A stop loss is an order placed by a trader on any underlying asset, the order remains until the price action reaches that specific point, then it automatically executes a buy or sell order in the market. Trading the markets without a stop loss is dangerous. However, by placing the stop loss, traders can easily eliminate the emotions from their trading decisions. In your trading carrier, you will often hear about the traders who never use the stop-loss orders, and they continually make money in the market. They rely on the no-stop loss forex trading strategy, and some of the traders succeed, and some don’t. The traders who win consistently in the markets are emotionally intelligent; also, they spent an endless amount of hours on demo trading to master the strategy well. Another most critical skill they learn is Accurate Thinking, and they don’t see things the way they are, they see things the way things are.

Not Using The Stop Loss Have Some Advantages In The Market

In dead markets hours when none of the trading sessions is active, at that time, most of the forex brokers wider their spreads so that they can avoid the scalpers to move the market. In that time, if your strategy gives you the trading opportunity, a widening spread can easily trigger your stop loss. During the opening hours or the high political news events, markets are quite volatile, which sometimes prints unexpected spikes in the market that ends up closing your positions and markets happily moving in the directions you predicted.

No Stop-Loss Trading Strategy

Keep in mind that trading without the stop loss is only applicable for intraday trading only, and it is advisable that use this strategy only on the lower timeframes because markets are random and it’s risky to let your positions to run overnight in the market. Like a gambler, you need to keep watching your trades until your trades hit the take profit. If you are beginner traders, then we don’t recommend you to use this strategy to trade in the live market, first of all, spend two to three months on the demo account to master this strategy and then give it a try on live markets.

Trading The Markets With The Moving Average

From beginners to advanced to chartists to market movers, everyone uses the moving average once in their lifetime. Even chartists and professional traders use this indicator in their everyday market analysis. Moving average defines the current market trend, spot trend reversals; also, it indicates the buy and sell signals. When the indicator is above the price action, it means that the trend is down, and then the indicator goes below the price action, which shows that the trend is up. Many traders and chartists use some other form of technical analysis in conjunction with the moving average to identify the trading signals. You can pair it with other indicators; also, you can use the higher period average with the lower period average to find the best entries. This strategy only works in the trending market, and we suggest you avoid using it in the dead, volatile, and consolidation phases.

Buying Rules

  1. In an uptrend, go long when the 7 MA crosses the 14 MA to the upside.
  2. Exit your position when the red candle closes below the 14period MA.
  3. No need to place the stop loss.

As you can see in the below image of the USDCAD 15 minute forex chart, the markets were overall in an uptrend. Our strategy gives the first trading opportunity around the 27th of February, and exits were also the same day. Our early trade gives us 30+ pips profit. After our position exiting the market provides us with a trading opportunity in the US session, we took this example from the recent market conditions, so our second trade in still running. By now, our second trade is up by 100+ pips. By following the flow of the market, you can easily make money, without placing the stop loss. You can see in the below image that the market is not even dead and volatile; the markets were moving in a relaxed and calm manner, find these kinds of markets to spotlighting the outstanding trading opportunities.

Selling Rules

  1. In a downtrend, go short when the 7 MA crosses the 14 MA to the downside.
  2. Exit your position when the green candle closes above the 14period MA.
  3. No need to place the stop loss.

The below NZDCHF forex pair indicates the selling opportunities by using the Doube moving average. The markets were in a strong downtrend, and it gives us the first trading opportunity on the 25th of February around the London session. After our entry price action dropped immediately and printed the brand new lower low. The very next day market gives the second selling opportunity in the London session. On the same day, the opening of the New York session indicates us to close both buying positions when a green candle closes above the 24 periods MA. Both trades help us to milk 80+ pips in just two working trading days.

The below image represents the 3rd and 4th trading opportunities in the NZDCHF forex pair. We activate the 3rd trade in the New York session on the 27th of February, and the last trade was taken in the Asian session on the 28th of February. Both of these trades are running successfully, and we are in profits of nearly 200 pips. Now, all we need is to wait for the green candle to close above the 14 periods MA so that we can book profits. You can use this way to exit your position, or you can use the significant support resistance areas to book the profits. The MA lines also act as a dynamic support resistance to the price action, and the more, the higher the period we choose, the stronger the S/R will be. So when the price action crosses the 14 periods MA, it indicates our trading party loses its power, { buyers in buying side, sellers in selling side } so it’s the best time to close our position.

Conclusion

We believe that by now, you can understand that it is possible to trade the market without using the stop loss. All you need to do is to put in the extra work required to find one of the best trading opportunities to make some consistent money. In short, Activate your trades only in active trading hours, no trade in dead or volatile market conditions also avoid choppy or ranging market conditions. Find out the super smooth trend in any instrument and wait for the price action to meet the rules of strategy to take trades.

Keep Milking The Markets, Peace.

Categories
Forex Forex Education

How to Master Forex In One Month Or Less

“How long does it take to learn how to trade on Forex?”… There are many different variables to answer this question, which really boils down to the circumstances of each individual. But, there are different ways of understanding the subject that can help you pass the learning curve much faster. Unfortunately, some people never really […]

“How long does it take to learn how to trade on Forex?”… There are many different variables to answer this question, which really boils down to the circumstances of each individual. But, there are different ways of understanding the subject that can help you pass the learning curve much faster. Unfortunately, some people never really […]

“How long does it take to learn how to trade on Forex?”… There are many different variables to answer this question, which really boils down to the circumstances of each individual. But, there are different ways of understanding the subject that can help you pass the learning curve much faster. Unfortunately, some people never really learn to trade, but others do it very well and more when you understand that you never stop learning. What we want is that you can learn to trade Forex as quickly as possible but with minimal mistakes.

The importance of mentality…

Every day there are hundreds of traders entering and leaving the markets. Without a doubt, one of the advantages for successful traders has been their mindset. Unfortunately, they often take us to the market with the misunderstanding that it is easy to make a profit. We are also told that getting rich is not only easy but is to be expected. Actually, that’s not the real reality for the people involved. Usually, when traders look for quick and easy money, they end up ruining their accounts.

Most new traders find it disturbing if they “only win” a couple of percentages over the course of the month. Most traders see it as insignificant. However, professional traders are perfectly satisfied with that because they have much more information and strategy as well as tools at their disposal.

Trading is something that requires an extreme amount of patience, strategy, and of course education. You have to understand what you’re getting into. You’re negotiating against professionals who have studied for years and have many more tools than you. However, there are some benefits of being a retail trader as you are able to get in and out of a position pretty quickly. Fortunately, the retail trader doesn’t have those problems as someone who is trying to move US$20 million.

If your mentality is to know that you have a lot of work to do, but you can also get great rewards, it will serve you well in the future. Also, you have to understand that you must “love trading”. Perseverance is much easier for those who are doing something they really love. If you don’t really love trading, it will be very difficult to deal with the ups and downs of a trading career.

Is it very difficult to learn how to trade on Forex?

One of the best things about Forex trading is that you have a lot of free information on the Internet. You have the facility to search and find an immense amount of information and you may have the possibility to try several systems. Additionally, you also have the possibility to open a demo account, which means you don’t have to lose money in the process. These are the main advantages of trading on Forex, well above any other asset.

Most experienced traders will say that the best trading systems and methodologies are relatively simple. What we need to be clear about is that the simpler the methodology or the system, the more likely you are that it can be executed when the time comes. After all, the biggest problem that many traders have to overcome at first is “analysis paralysis,” which means they have too many things or indicators that come to them simultaneously to make a decent trading decision. Simplification is very often the way to make money in the long run because it clears up many things in the way of confusion.

Let’s not kid ourselves, success takes time…

Unfortunately, many retail traders will try to force time, and therefore lack of patience will almost certainly lead to very bad results. After all, there are many psychological obstacles when it comes to trading on Forex or any other kind of assets. Markets will move unpredictably, the most important thing is not how well your trading is planned. That is why re-testing a system in understanding its merits and weaknesses will become one of its greatest works.

To test a system, you’ll need to place theoretical trades in market conditions that simulate the returns you can expect. You can do this through various platforms and the like, or you can just look at a historical action chart and simulate what your operations would have been over several months, if not years. By testing the system, you will understand what the expected returns might be in the future. However, most people don’t make their way through this.

If you don’t have faith in your system, this is where you’re going to look for the next best thing. This is a cycle in which many new traders will fall, which means they may have come across a system that works in the long run, but they just haven’t given it a fair chance. This is where psychological means and knowledge of your system come into play. Everything will run through a demo account in the first place because it is too expensive to risk the trading capital in a real account for a hunch or some new methodology that you are dabbling in.

How to accelerate the learning curve…

Twitter is full of experienced traders who can offer an insight into how markets move. Certainly, we should not have excuses not to learn the necessary about the markets, because the amount of information that is freely available out there is really staggering.

Also, although most people want to hurry up and start earning money, there are no real shortcuts to learn from those who have already been there. That’s the strange thing about currency traders: they expect to be able to enter markets and clean up immediately. This is like hoping to be a great doctor by just showing up at the hospital. It takes some training and experience to become a profitable and successful trader. 

Going where people have already succeeded, that’s the advice that anyone who succeeds will tell you, and Forex trading will be no different. Although there are no shortcuts, taking a mentor or learning from a professional can help you avoid some of the easily avoidable problems that exist. You can learn many disciplines such as trading systems, fundamental analysis, money management, risk indices to reward, things like Sharpe indices to measure a system, and so on. In short, someone who “has already been there” can help you avoid many of the most common mistakes.

Final thoughts…

There are no two traders who will work the same way, and it is important to understand that those who work harder will get better results. But, one thing that helped me a lot when I started out was checking the charts every night. After all, if you’re learning to operate with technical analysis, the graph and time don’t really matter. If you look at the graphics and notice a flag to bullish, it shouldn’t matter what market you’re trading in. This is where finding a graphics package or a website that gives you many opportunities to read the graphics over the weekend will speed up your progress. Think like this: if an average trader looks at 10 charts each day, you should look at a minimum of 30 charts. This will make you gain experience 3 times faster.

Another thing to think about is that some traders have a much more analytical mind than others. Those who understand the statistics of their trading system will understand that over time they will make money. They will not be shaken by the series of losses that will almost certainly come sooner or later. That being so, they understand that if they just stand firm, they will ultimately make a profit. Also, don’t get bogged down in the idea of jumping from one system to another, which is a long-term losing attitude.

Categories
Forex Education Forex Psychology

Beliefs That Can Limit Our Forex Profits

In this article, I will try to expound on “Limiting Beliefs”: what they are, why they appear, and how they affect us in Trading.

In this article, I will try to expound on “Limiting Beliefs”: what they are, why they appear, and how they affect us in Trading.

In this article, I will try to expound on “Limiting Beliefs”: what they are, why they appear, and how they affect us in Trading.

What are limiting beliefs?

Limiting beliefs are norms that we absorb in our childhood, for example through the education of our parents, the media, school, etc. We simply believe what we are told and our subconscious assumes it as something real, And even more so, those beliefs are deep inside of us that we don’t even question. These beliefs are to blame for our failure to achieve our goals and live our values.

For example, some typical limiting beliefs:

  • I have to work hard to make money
  • The safest thing is to be a civil servant
  • Success takes time
  • It costs a lot to make money
  • It is better to buy flat than to rent
  • If someone offers me something sure that they want to cheat me

And if you focus on trading, a lot of those limiting beliefs come to mind:

  • Only 5% of investors are successful
  • It takes a lot of capital to make money
  • It is not possible to live off the markets
  • Strong hands control the markets
  • I have to ruin myself several times before being profitable

I’m sure you know a lot more.

Everyone’s beliefs form their own reality, and until you disassociate yourself from your limiting beliefs associated with trading, you can never succeed in trading.

A clear example of the negative power of these beliefs is found in athletics. In 1954, athlete Roger Bannister ran the mile below four minutes. Until then, it was assumed that it was physically impossible to do so. The breaking of that record, and of that limiting belief, made a year later 37 runners fall out of the four minutes, and two years later more than 300 runners got it.

When I read in blogs or forums, I notice that there is a very negative feeling regarding the Market. I do not stop reading post always asking the same or even reaffirming negatively the impossibility of being profitable:

  • Can you beat the market?
  • Who really wins in the markets?
  • How to invest and not die trying

Unconsciously, many people are taking these beliefs that they read as reality, they are creating their own limiting beliefs. Unfortunately, there are few comments positively reinforcing this issue, and if someone appears saying that it is profitable, usually instead of learning from it what is done is to criticize it (very common in the Spanish-speaking world).

But how do we eliminate those beliefs?

There is a work process called PCM, which are the initials of:

  • Possibility: achieving any goal is possible
  • Capacity: we are able to achieve this goal
  • Merit: we deserve to achieve that goal

Therefore, let’s assume that our goal is to achieve 50% profitability every year (some right now will be saying: only!! if I already win 100%; and others will be thinking: that’s impossible. well, guess who has the limiting problem).

The next step is to take a walk through the three pillars (Possibility, Ability, and Merit) and ask questions, so we have to find the limiting beliefs that prevent us from developing that goal. For example, one may think that it is not possible, or that it does not deserve it, but why? Perhaps because he believes he does not have the necessary resources (capital, training) or does not have the necessary skills, or because speculating is frowned upon by his family, etc. We have to ask ourselves until we find the root of the problem and discover what are the beliefs that limit us to continue growing.

And the next step is to change those beliefs. We have to turn them around and put them in our subconscious until they are part of us and our reality. This process of change may be more or less long depending on the person, their faith, but it is key to establishing new beliefs that will help us achieve our goals. To really see it first we have to think about it and believe it.

There’s a saying from Henry Ford that says, “Whether you think you can, or you think you can’t, you’re right.” So it’s up to you.

Categories
Beginners Forex Education Forex Basics

Why Forex Traders Must Value Their Time

All traders at the end of the year always take stock of their own trading activity. There still exists an element that is never taken into account and therefore we tend to forget… How much value do we give to our time? Although it seems obvious, time cannot be “preserved”. It just passes. It is […]

All traders at the end of the year always take stock of their own trading activity. There still exists an element that is never taken into account and therefore we tend to forget… How much value do we give to our time? Although it seems obvious, time cannot be “preserved”. It just passes. It is […]

All traders at the end of the year always take stock of their own trading activity. There still exists an element that is never taken into account and therefore we tend to forget… How much value do we give to our time? Although it seems obvious, time cannot be “preserved”. It just passes. It is said that when we are born we are full of time, because we have a life ahead of us, but no one can quantify this wealth and no one can know how long a person’s life will last.

Even so, this wealth is a certainty, since time can be devoted to all things that free will allows. Bearing in mind that our choices will show us the way because at each decision we take new paths and leave others. This leads to a consequence: we spend more time on what motivates us the most. This motivation can be effective, economic, labor, sense of duty, etc. It is very interesting to know that on many occasions we use time as a currency of exchange.

Traders Exchange Time Continuously

This concept applies particularly well to a trader. He exchanges part of his time to have more availability of it, later. What does that mean? Invest money in the financial markets to get more of it and so have more time to live your life according to your desires and goals. Let me explain in detail what this phrase means.

Time and money are surely the two most important resources we have available to invest and make a profit. However, it is money that is really valued as an investment because it allows us, as a system of payment, exchange, and reference, to receive something in return.

Otherwise, when we invest our time, it is not so easy to quantify the return we will get, only in some cases will it give us a profit in the form of money. For example, in the event that we exchange our time with work to be rewarded with a salary. In others, the exchange is not tangible, for example, when we want to increase our knowledge through study.

Paradoxically, these resources have great similarities: both can be managed, lost, wasted, saved, they are not infinite, but the substantial difference is that only money can be earned. If money is lost, it can be recovered over time, but if time is lost, it can never be recovered, even by buying it.

Unconsciously, money is valued more than time, except by increasing age: older people value time more because they realize their lack. Time is available at no cost and is available at will. Moreover, it is the most equitable resource that exists: a priori, we all have it. The problem is your administration.

Different Uses of Time and Money

The same amount of money and time in the hands of different people will not match their uses, even if the source from which they come is the same. If it is easy to answer that time is the main resource we must fight for, we must be aware that money is decisive for our future. Buying new experiences or particular desires requires a significant monetary expense and an investment of time to enjoy them.

The needs of life and the time in which we live mark the future of events:

well-spent money costs little, while well-spent time is scarce and unwittingly spent

It is a good dilemma.

Time measurement precedes the creation of money and is often related to productivity. Benjamin Franklin said that “time is money” and explained that the time spent working to earn money was time well spent; otherwise, if time has been spent on other matters, the money has been lost. This reflection is correct only in its own context, outside it makes no sense because well-spent time not only generates money but also generates many benefits that go beyond money.

Both time and money are consumed even if nothing is done with them. If time passes, it is spent. If we do nothing with the money, like leaving it in a non-productive place, then inflation, over time, will despise its initial value. And this is one of the main theories of finance: while the price of money remains constant, its value fluctuates over time.

Time Must Be Devoted to Investment

In the world of investment, the results are obtained after having devoted much of our time to them. The paradox that to make money I have to invest my time and that if I have money I will have more control over my time, does not go beyond the fact that the reward of both is not proportional. Having a lot of money is not synonymous with having a lot of time.

Time is indifferent to the amount of money. Those who have obtained a significant amount of money have invested a lot of time in it and will also need a lot of time to manage it.

It is clear that everyone is happy in their own way, but those who have less money and more time to devote to themselves and their families may be happier. A study by the journal Social Psychological and Personality Science reveals that 64% of respondents prefer to have money for free time, even if the results changed when asked about happiness. In fact, it has been concluded that the amount of money accumulated is not proportional to happiness.

When a certain money limit is reached, by earning more, that additional amount is not proportional to the increase in happiness. In this sense, it is said, and rightly so, that the rich do not enjoy the same happiness as money. According to experts, this limit is at 60,000 euros per year. 60,000 euros a year? Someone will think: and how to reach them? But here an important reflection must enter.

Investing Time to Buy Time

The trader invests his time because more money improves the ability to use his time. Very true, but how do you use this time invested for this purpose? The trader must be really good at managing the time he dedicates to this profession. If the study of trading requires much of our time and dedication, it is also true that we should not launch it in a 10-hour session that brings nothing good.

Some will say it depends on how much you earn. That’s true, but only in part. If I have to destroy my psycho-physical balance to make money, there’s no point in working like this. Trading is said to be freedom, but this statement is the subtle line between good and evil.

If for the freedom we intend to spend money on totally useless luxury items or sit in front of the computer for many hours to end up repenting and burning our human contact with the outside world, happiness will never be there and this is clear to all. If instead, we refer to the possibility of having quality time, for example, staying with our loved ones or having experiences that enrich us as human beings, then everything changes.

Trading As a Process of Growth

Trading can be seen as a grand ladder: a path where we grow step by step first as people and then as operators. A continuous exchange of time and money that must have a higher quality of time available, but above all awareness of ourselves and how we want to live our lives.

Life… we know well that it is unique and we will never know the exact moment when we will leave. We must therefore be very responsible to ourselves throughout this journey. Negative emotions, the lack of objectives, and the inability to react in the difficult moments of this work must be prohibited.

Time is the most precious thing we have. Unfortunately, we rarely evaluate it consciously: it continues to diminish, inevitably tending to run towards a zero balance. Only in the future will we lose the past and this can never be recovered. Therefore, it is necessary to manage time: if you want to achieve something, the first thing is to realize it. It would be sad and illogical not to do so, it would be an act of self-denial.

Categories
Forex Basic Strategies Forex Education

Detailed Instructions for How to Structure Your Forex Trades

In this guide, I only intend to show you how I structure my trading by trading in the currency market. If you can give ideas or help in your process, the goal of this post will be more than fulfilled. What I want is to be as direct and clear as possible. I’ll go point […]

In this guide, I only intend to show you how I structure my trading by trading in the currency market. If you can give ideas or help in your process, the goal of this post will be more than fulfilled. What I want is to be as direct and clear as possible. I’ll go point […]

In this guide, I only intend to show you how I structure my trading by trading in the currency market. If you can give ideas or help in your process, the goal of this post will be more than fulfilled. What I want is to be as direct and clear as possible. I’ll go point by point.

How to Trade: The Basics

Focusing on the basics and making it simple. I mean, you don’t have to rely on hypercomplex strategies, use the software that packs it and put it on the server next to your broker. You also don’t have to be the best programmer, let alone dirty your platform’s graphics to make money on Forex.

You need systems. Systems work. Companies and results-oriented work methods are system-based. You should start applying and creating systems because they will allow you:

  • Know what you can expect (return and risk) in results.
  • Measure what you do.
  • Knowing when what you are applying is no longer working.

Yes, that of sitting in front of the computer, looking and saying “I think EUR/USD will go up” is the most common, but is that the normal thing here is to lose money. You need winning strategies to start the fight.

Intraday or Swing Trading on Forex?

This question is an interesting question and I make a small point if you’re starting. Swing trading involves trades that usually last several days and when we talk about intraday or day trading we mean trades that close on the same day.

Well, then which one? Like everything in life, it depends (we are). You have to learn that there is no “best for everyone”. In my case, I combine both operations because I dedicate full time to this, but if you are starting or are of the people who stress with trading, I recommend that you focus on doing swing trading.

As you consolidate here you can start to scale and seek to diversify doing intraday. But again, this is just something I recommend based on my own experience and people I’ve met over the years.

Automatic or Manual Forex Trading

Not all automated Forex trading systems are a panacea, and not all discretionary or manual trading systems are bad. Stop looking at it that way, we’re just talking about execution. That’s precisely why I’m going for automated execution. We are willing to talk a lot about this and other topics and if you find it interesting I can dedicate an article just to it. But think of automation as just how strategy is carried out. Whether it’s winning or losing is the basis of everything.

Automating a losing strategy does not make it a winner, it is only about applying strategies that are profitable and ensuring that they are executed in the best way (in manual we always cheat alone).

Is Analysis the Key to Trading?

Many people think that technical analysis is the key to beating the market and defend them from the last consequences. The same thing happens to those who always think that the only way to make money in the currency market is through fundamental analysis.

So what really works? It works that really gives results and you can check. What’s the point of telling me that this or that method is the best if you haven’t even sat down to figure out numbers. Many times it’s not with what, but how. I mean, they can be different methods if they’re done right. But to do that, you need statistics of what you’re doing.

Learn to Create Robust Trading Strategies

First, let’s see what a robust trading strategy is all about. As traders, we know what has happened in the past, but we don’t know what will happen in the market tomorrow. That is why we need systems that are well adapted to the changing circumstances of the market.

How can we know systems are well adapted to spread alterations, prices.? Simulating those alterations, sort of simulating those conditions and seeing how they behave. There are different tests for this as they are: Walk Forward test, Monte Carlo and Multimercado.

These tests give us information on how robust our trading system is and give us a reference. Beware, I have said reference, not absolute truth. Then we will test them, our goal is to leave as little space as possible to chance.

Best Forex Trading Strategies

You may have doubts about how you’re going to manage to create profitable strategies and start with all this. Calm down, there are tools for this, but the important thing here is to know that the strategies that are usually more stable over time and give better results are:

Trading strategies with very simple entry and exit criteria: The opposite of what they might have told you. The simpler our Forex trading systems are, the more likely they are to continue to function over time. I have seen this and I know it firsthand.

Also, what is more likely to stop working, a system based on six indicators or a system based on one or two? That six indicators continue to produce results over years and years is not easy. However, only one or two are more so. Still, trading systems must always be monitored.

Systems with a low number of trades or trades: Sometimes, when we’re obsessed with being in the market constantly doing a zillion trades, we’re giving our broker money and taking it out of our pocket. More is not better in trading, better is better. This is about getting the most money with the least risk, not giving it to your broker.

Strategies with a controlled return/risk: You see a strategy, you look at its benefit in the last few months and years, and you’re already thinking about connecting it. Error, always look at the return associated with drawdown. The drawdown of your system is, in short, the maximum consecutive drop you have had. Why is it important? Because if that fall has occurred in the past it can happen again (and bigger, believe me). Now you’re thinking, what if this happens to me?

Establish Connection and Disconnection Rules

All methods of trading sound great. The problem is when they start to lose. Some tell you that you have to follow, that the system is the system. But what if the system is not working anymore? After all, we live in a changing world and our money is not infinite.

The truth is that most traders do not know when the system is failing or when this happens because they are applying it wrong. If you execute the strategies in an automated way you are already saving this, then what you need is a rule to disable your strategies at a certain point. To do this, simply monitor them with platforms such as bluefx or myfxbook to know what the performance of each one is.

Credit: theforexguy.com

Diversify Into Forex

If we deactivate a Ruben strategy, we stop trading. Not if you activate another one that is doing well. It’s not that you run a Forex trading system or two, it’s that you have different systems: the best ones in real and a demo base created that you can include in your real account when you disable some because their performance has dropped.

You can diversify by time frame (time frame), by assets (different currencies), or types of systems (trend, mean reversion). The goal of diversifying is to look for a more stable return, many people do this to introduce many systems without more, but if you do this you will get the opposite result, as you will be increasing the risk.

Which Currencies to Trade

I recommend that you focus on majors or major currency pairs, especially if your broker has a high spread, as these tend to be smaller. One of the advantages of automating is that you can scale your trade and do it in different currencies diversifying as I said before. Start by being profitable with a few (one or three assets) and as you evolve you can grow your portfolio.

Why Invest (Only) In Forex?

I won’t be the one telling you to invest in Forex and not in another market. Each is his father’s and mother’s and has his good and not-so-good things. Mind you, one thing is clear, wherever you do remember the power of specialization. There are traders who concentrate on one or two assets and are profitable. In the end that’s what it’s all about, isn’t it?

This operation is extrapolated to different assets such as raw materials, indices, and cryptocurrencies. Yes, cryptocurrencies as well. In fact, my operation is mainly based on currencies and cryptocurrencies (at 85% the first group and 15% the second). But I have to say that cryptocurrency trading has given me a welcome surprise this year. Again, if you’re starting, don’t do it with a lot of assets or you’ll get saturated. Start step by step and you will diversify as you evolve. The one that covers a lot, little squeezes.

Steps to Trading

If you get here not be entirely clear to you how the fuck I do trading, then I’ll summarize it for you in steps:

  1. I create statistically profitable trading strategies and test that they are robust.
  2. I put them in a demo account to make sure they work perfectly.
  3. Once they meet the requirements I demand, I’ll move them to real.

In a real account, I manage my systems by connecting and disconnecting them according to their performance (always under objective criteria).

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Beginners Forex Education Forex Basics

Forex Trading: Expectations vs. Reality – Part Two

Let’s be honest, we all came into trading thinking that we were going to be rich, that is simply the expectation that a lot of new traders come into trading thinking, they have seen all the advertising spells with the present but often hidden warnings about the number of people who lost money. Due to these adverts and people on social media, people feel that trading is easy and that they will make a lot of money very easily and very quickly Or there are those that know very little about it that see it as gambling or a risk to do. Both of these expectations come from what they see from the outside, yet when we get into the actual facts, things are very different in reality than they are in their expectations. We are going to be looking at some of the differences between the realities and expectations of trading.

Let’s be honest, we all came into trading thinking that we were going to be rich, that is simply the expectation that a lot of new traders come into trading thinking, they have seen all the advertising spells with the present but often hidden warnings about the number of people who lost money. Due to these adverts and people on social media, people feel that trading is easy and that they will make a lot of money very easily and very quickly Or there are those that know very little about it that see it as gambling or a risk to do. Both of these expectations come from what they see from the outside, yet when we get into the actual facts, things are very different in reality than they are in their expectations. We are going to be looking at some of the differences between the realities and expectations of trading.

Let’s be honest, we all came into trading thinking that we were going to be rich, that is simply the expectation that a lot of new traders come into trading thinking, they have seen all the advertising spells with the present but often hidden warnings about the number of people who lost money. Due to these adverts and people on social media, people feel that trading is easy and that they will make a lot of money very easily and very quickly Or there are those that know very little about it that see it as gambling or a risk to do. Both of these expectations come from what they see from the outside, yet when we get into the actual facts, things are very different in reality than they are in their expectations. We are going to be looking at some of the differences between the realities and expectations of trading.

The Work Involved

If you go onto social media you would get the impression that there isn’t really that much work to put in in order to make a bit of money, if you have watched a trading film, which is the only reference that a lot of people get, you will either think that there is an incredible amount of work or none at all. Either way, whatever your expectation is, it is probably wrong. Those coming into trading thinking that they won’t need to put on a lot of work will be in for a shock. There is in fact a lot of work involved. In fact, it can take a very long time to put on a single trade, if you want to be profitable then this won’t happen overnight. Instead, it will happen over months or even years for a lot of people. If you want to succeed then you need to ignore the idea that it is quick and easy and instead come to realize that you are going to have to put in a lot of time and effort.

Is It Gambling?

From the outside, forex trading can look like a bit of a gamble, let’s be honest, the markets will either go up or they will go down which makes it a 50/50 chance right? Pretty easy to guess then, well not exactly. The markets are influenced by hundreds of different things, each pulling the market in one direction or another, it is up to you to work out which way it will go. You cannot however simply guess, if you do that, you are pretty much guaranteed to lose overall. Instead, you are going to need to take your time to analyze all the different indications and influences of the markets. This will enable you to see which is the most likely direction that the markets will move in. This can then give you the best chance to trade correctly, so it certainly is not gambling. It is all about weighing up the different probabilities and then trading in the most likely direction.

Required Funds

Many people seem to be coming into trading thinking that they will be able to make a lot of money off a $100 account, this is simply not the case though. Much like with anything in life, you need money to make money, the larger your account is the more profits you will be able to make. Those adverts that are promising you that you will make $100,000 on a $100 account overnight are simply trying to scam you out of your money. If you want to make a lot then you will need to start with a lot. Otherwise, you will need to slowly build up your account over a longer period of time. If you have a $100 account then you can expect to make a few quid per week, not double it up every single week.

Winning Formula

There are hundreds of strategies out there, loads of variations of each one, so why some people come into trading looking for that magic formula that will make them profits all year round is very confusing. If there was one strategy that worked, then we would all be using it and all those other strategies simply would not exist. Not to mention the fact that if there was one strategy, the markets would simply cease to function, as everyone would be using the same strategy and putting on the same trades, meaning that the markets would come to a standstill. For this reason, there cannot be a single strategy that always works, instead, you need to learn a number of different ones in order to remain profitable all year round.

Is It Random?

The simple answer is no. The markets are far from random but they certainly look like it sometimes. From the outside it looks like they simply do what they want, moving up and down whenever they want for no apparent reason. When in reality there are a lot of different things that can cause them to be and to influence the way that it moves. Trader sentiment, news events, natural disasters, and economic data are just a few of the things that can influence it. When they do take effect, the directions and the effects can be predicted, however even though it can be predicted to a certain extent, it can also move out of sync, moving against what would be expected. This is why trading is not a guaranteed thing, while it can be predicted to an extent, it does have a very small essence of randomness to it, but not as much as it may look like from the outside.

Is It A Scam?

Another popular opinion amongst those that do not actually trade is that forex is basically a giant scam, it is full of people wanting to take your money and you can’t actually make any profits. The sad truth is that this is partly true, there are a lot of scammers out there, from traders, account managers, signal providers, and even brokers. There are ones that are there to simply take your money, but this is not what all of them are doing. There Are genuine people out there that are actively trying to help you to make money, there are some great brokers that are only there to help, signal providers offering genuine signals, you get the point. So while there are frauds out there there are also some great opportunities too.

Those are just a few of the expectations that we see people have and what is actually going on. There are some similarities in places, what we see is sometimes what we get, however, there are also a  lot of differences, once you actually get into trading you will come to find that there will be a lot of differences in what you experience compared to what you were thinking you were going to get.

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Beginners Forex Education Forex Basics

Forex Trading: Expectations vs. Reality – Part One

When you tell someone about trading and forex, what do you tell people? Most likely you are telling them all the best things about trading, these good reasons are the reason why you trade in the first place after all. These stories that you are telling other people are what is creating an expectation in them of what trading and forex actually are. If you look anywhere on the internet, there will be people talking about forex and how much you can make, how easy it is, and how life-changing it is, very rarely do you hear horror stories or the opposite feelings. This creates a certain expectation from people outside of the trading circle, expectations that do not really match up to the reality of what trading is and what it involves. We are going to be looking at what some of the realities are when compared to the expectations that a lot of people have and seeing whether the general expectation is right, or if reality is completely different.

When you tell someone about trading and forex, what do you tell people? Most likely you are telling them all the best things about trading, these good reasons are the reason why you trade in the first place after all. These stories that you are telling other people are what is creating an expectation in them of what trading and forex actually are. If you look anywhere on the internet, there will be people talking about forex and how much you can make, how easy it is, and how life-changing it is, very rarely do you hear horror stories or the opposite feelings. This creates a certain expectation from people outside of the trading circle, expectations that do not really match up to the reality of what trading is and what it involves. We are going to be looking at what some of the realities are when compared to the expectations that a lot of people have and seeing whether the general expectation is right, or if reality is completely different.

When you tell someone about trading and forex, what do you tell people? Most likely you are telling them all the best things about trading, these good reasons are the reason why you trade in the first place after all. These stories that you are telling other people are what is creating an expectation in them of what trading and forex actually are. If you look anywhere on the internet, there will be people talking about forex and how much you can make, how easy it is, and how life-changing it is, very rarely do you hear horror stories or the opposite feelings. This creates a certain expectation from people outside of the trading circle, expectations that do not really match up to the reality of what trading is and what it involves. We are going to be looking at what some of the realities are when compared to the expectations that a lot of people have and seeing whether the general expectation is right, or if reality is completely different.

It’s Incredibly Easy or Hard

When all you hear about is the fact that people are making a lot of money or that people are making some great returns then it would make it seem like trading is easy, thousands if not millions of people are making money doing it, this is true, but they are putting in a lot of effort in order to get to that level, they did not simply sign up and then place trades in order to be successful, a lot of work needs to be put in. On the other hand, looking from the outside, it can look like it is incredibly complicated, with numbers all over the place, charts, indicators, and more. It can seem very complicated which would make it seem hard to do. When in reality, it is quite straightforward, it does take time and work, but it is nowhere near as complicated, most indicators are self-explanatory and when you actually start using them, they make a lot of sense.

You Need A Lot of Money

If you have watched any trading films, it would make it seem like you would need a couple hundred thousand to trade properly, and to be honest, this would be true if you went for a 1:1 leverage account. The thing is that a lot of brokers these days are offering far higher leverage. In fact, some go as high as 2000:1 which is a little extreme, but even the popular 500:1 makes it so that trading is far more accessible to the average person. Many brokers allow you to sign up with a minimum deposit of $10, which will allow you to trade, you would need a couple hundred to trade properly, still a far cry from the hundreds of thousand that you otherwise may have thought you would have needed.

Forex Is A Scam

When something seems too good to be true, then most people would consider it a scam, and many people see forex as too good to be true, a way of making money by sitting at home in your underwear. It is Perfectly understandable why people think that trading is a scam, but in reality, it is not. Yes, there are people who try to scam newcomers into trading or to take advantage of what they believe, making quick profits, but trading in itself is not a scam. It really is a way to make money at home, even in your underwear, but it takes time and effort, so don’t believe the huge and instant returns that are promised and work on your own trading. Oh, and you should also keep an eye out for those dodgy brokers, but choose a good one and you should be fine.

It’s All the Same

From the outside, all the different currency pairs look pretty much the same, the charts look pretty similar and they all work the same way. Fortunately, that is not the case, in fact, every single currency pair acts completely differently, they have different levels of liquidity, different levels of volatility and offer a new trading experience when compared to another. For this reason, it is recommended that you learn a single currency at a time, then move on to a new one, if you start with a load you will be confused and make losses. With so many different currency pairs to choose from, it ensures that trading will always be interesting and there will always be new challenges to look for.

The Gambling Aspect

For some trading and forex simply looks like a gamble, there are only two outcomes, after all, the markets will either move up or they will move down. While technically true, there is a lot more behind it than simply that. There are thousands of different things that can influence the markets. News events, natural disasters, Donald Trump tweeting something, or just other traders thinking the markets will move a certain way. You need to take all of this into consideration, once it has been analyzed you can work out the most likely direction of the markets, it is not simply a 50/50 chance of it moving one way or another. Some people do of course come into it and gamble, but they very quickly learn that you cannot be successful by trading that way.

Managing your expectations is vital when it comes to trading, many people come into it with expectations that are far too high, thinking that they can make a lot of money overnight, this just won’t happen. If you have your expectations in the right place then you will be in a much better place to achieve your overall goals. Managing your expectations is vital for a successful trading career.

Those are some of the differences in the expectations that people have compared to the realities of trading. From the outside forex looks like a very different beast than it is from the inside. You don’t really know what is involved until you are in it and when you are, your expectations will be quickly broken as you realize what it is really about.

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Beginners Forex Education Forex Basics

Forex Isn’t As Difficult As You Think: Here’s Why…

With all the warning signs that you got all over the place about trading, the little notices that say things like “Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with IC Markets (EU) Ltd. […]

With all the warning signs that you got all over the place about trading, the little notices that say things like “Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with IC Markets (EU) Ltd. […]

With all the warning signs that you got all over the place about trading, the little notices that say things like “Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with IC Markets (EU) Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.” You would think that trading would be pretty hard wouldn’t you? Well, the truth of the matter is that trading forex is simply not that difficult, at least not as difficult as you may think it is.

That is quite a bold thing to say, considering so many people have lost money. In fact, a lot of people have lost everything that they own due to trading, but is that because it is hard? Or is it due to the fact that there may have been some flaws in their plans, or even in their own personality which has caused them to lose, or maybe it was simply the unfortunate event where they signed up with a scammy broker or apparent account manager. Whatever the reason was, there are things that you can do to prevent these losses and ultimately make forex trading a lot simpler and dare we say it, easier.

The concept behind trading is simple, we are taking one currency, converting it to another, and then converting it back once the price of the currencies has changed. If they change in the right direction then we profit, if they change in the wrong direction then we lose. That is the very basic concept of trading and why it is fundamentally very easy to do. All you need to get started is a broker, of which there are thousands, a little money, some brokers allow you to trade from as little as $10, and an internet connection. You can then use your phone or computer to load up an application and start trading, that is as easy as it is to start trading.

So if it is so easy, why do so many people fail and lose money? The simple fact is that they did something wrong, it was not the markets that did anything wrong, they work how they work. It is up to use to analyse and work out what it is that they will be doing, something that a lot of these losing traders did not do due to either a lack of knowledge or simply not being bothered and wanting some quick profits. Trading and forex are not rich quick schemes, even though it is described like this in various places. It is a methodical, long-term endeavor that takes patience and understanding.

Forex is all about creating a plan and then sticking to it, if you are able to do this then there is a good chance that you could end up being a successful and profitable trader. When we start trading we always need to create a trading plan, this plan then includes a number of different things like our strategy and our risk management plans. These things combined make it so that trading can become a lot simpler, it can be a lot more straightforward and more importantly, it can become a lot easier.

Your trading plan should involve creating your strategy. It is important to understand that you need to develop a good understanding of your strategy. Simply having one is not good enough, you need to understand how it works and also why it works. Doing this will enable you to adapt things should the market conditions change, and they will change, regularly. Being able to adapt will mean that you are able to maintain your profitability and also keep risks low in multiple different trading conditions, something that a lot of new traders fail and so end up losing out.

The other and arguably the most important thing that you need to have in place in order to make trading more successful and easier is our risk management plan. This will set out the different aspects of you trading that is to do with risk Your risk to reward ratio will detail how much you will risk on each trade and how much you are aiming to profit. With this being a positive ratio, 3:1 as an example, you only need to be right 33% of the time in order to be profitable, something that is much more achievable than some people who try and be right 80% of the time. This risk management plan will also detail things such as where you will be putting your stop losses. Trading without a stop-loss, putting extra risk on your account, is not something you want to be doing at all.

Another tip for making trading easier is to keep a trading journal. This journal is somewhere that you will be writing down pretty much everything that you do. It is a little tedious and a little boring, but it is vital and doing it gives you access to a whole lot of information that is beneficial to you. You are able to use what you have written down to analyse your own trading, to find out what you are doing right and what you are doing wrong. You can then use this to try and alter your trading or your trading rules to be a little more profitable. Consistency in doing this will result in much safer and more profitable trading.

The final tip to give you is simply the fact that you need to ensure that you are not taking on any scams. There are a lot of them out there, do not take people’s word for granted and if something looks like it is going to be too good to be true, it most certainly is, so beware. Trade yourself, learn yourself and you will thank yourself for it, as you will be able to trade for years to come and will be able to adapt should you need to, not something you would be able to do if you were relying on someone else.

Trading seems very difficult from the outside, especially with all the warnings about it, but when you dig a little deeper there are things and rules set in place that are there to protect you. These are there to make things easier for you and they are there to help you to be profitable. Do not rush in, plan your trades, plan your education and things will end up being a lot easier than you may think they are.

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Beginners Forex Education Forex Basics

How to Start Investing in Forex

Forex or Forex Trading is a market, also known as OTC (Over-the-counter) and is the largest market in which billions of dollars are executed daily. It’s even bigger than America’s stock markets. But given its OTC nature, no trader can really calculate the correct numbers regarding currency rotation. However, foreign exchange is in fact a […]

Forex or Forex Trading is a market, also known as OTC (Over-the-counter) and is the largest market in which billions of dollars are executed daily. It’s even bigger than America’s stock markets. But given its OTC nature, no trader can really calculate the correct numbers regarding currency rotation. However, foreign exchange is in fact a […]

Forex or Forex Trading is a market, also known as OTC (Over-the-counter) and is the largest market in which billions of dollars are executed daily. It’s even bigger than America’s stock markets. But given its OTC nature, no trader can really calculate the correct numbers regarding currency rotation. However, foreign exchange is in fact a large market and is therefore integrated by many participants. From your bank or from large specialized investment firms, foreign exchange markets always offer a piece of the action to whoever you are and wherever you are (even from home).

The basic concept of currency trading is very simple. You trade or speculate against other traders in the direction that you take a currency. Therefore, if you believe the euro will rise, you WOULD COMPARE the euro, or SELL the euro if you are convinced that the euro would fall. It is as easy as that.

Learn the Fundamentals of Currency

Before you prepare to deposit your funds and start trading there are some important points you must understand, each of which are described below.

Brokers of the Forex: To start trading with Forex, you will need to operate with the help of a foreign exchange broker. There are many currency brokers that allow you to open a forex account with just $5 dollars. The forex broker is the one who allows your purchase and sales orders and also allows you to investigate the markets (also known as technical analysis or fundamental analysis) to help you make the best decisions…and obviously allows you to deposit more funds or withdraw your benefits whenever you want.

Trading Venue: You need to have a trading platform from which you can conduct your transactions, which are then sent to the settlement broker. In addition, a trading platform is essential to enable it to carry out its technical analysis and also to view current market prices. Most retail brokers offer the MT4 trading platform (Metatrader 4), which is free. You can also open a Forex Trading demo account and practice trading with virtual money forex to gain the necessary experience before trading with real money.

Timetables of Forex Trading: While you may have heard that currency markets never sleep, you really do. Firstly, you will not be able to trade on weekends (Sundays and Saturdays). But for the other days of the week, the currency market works 24 hours a day. This is due to the fact that currency trading is global. At any time, you will always find an overlap of a new market session while closing the previous market. What time of day or what trading market session plays an important role if you are an intra-day trader or a scalper? Now that you already have an overview of Forex trading, here are some final tips to remember before you start trading for yourself.

Pips: Pip is a measure of the change in the value of a currency pair and is the fifth decimal place. For example, if EUR/USD changes from 1.31428 to 1.31429, the change is called 1Pip (1.31426 – 1.31427 = 0.00001). When you negotiate, the more pips you make, the more benefit you have. Example: Buying EUR/USD at 1.31428 and selling (or closing your trade) at 1.31528 would give you 100 Pips in earnings.

Quotations for the Reading: Forex quotes are presented at a Bid and Ask price (which vary in pips and from one broker to another). The price of the Offer is the price at which it can be bought and the Selling Price is the price that can be sold. Therefore, a EUR/USD quote would look like this 1.31428 (Bid) /1.31420 (Ask).

What is the Spread? Spread is no more than the difference between the price Bid and Ask. Therefore, in the above example, for 1.31428 / 1.31420, the spread would be 8 Pips.

What is an Asset Leverage? Leverage is the amount of capital by which you can ask your broker to expand (or increase) its trading value. Leverage is often quoted in relationships like 1:50, which means that when you trade with a leverage of 1:50, your $100 is magnified to $50,000. Leverage is very important both in terms of making more profits and risk management and therefore its operations.

What is a Batch? Much is a unit by which you conduct your trade. In financial terms, much is also known as a contract. There are pre-established lots (or contract sizes) that you can negotiate. For example, a standard batch is no more than 100,000 units (known as 1 batch).

Tables of the Reading: The ability to understand and read graphics is very essential for trading. Depending on your approach, you have the ability to choose between a line, bars, or candles and trading accordingly (for example, trading based on candle patterns).

Placing orders (How to buy and sell): In Forex trading, it is possible to buy or sell any currency pair. Most trading platforms give you this option. You buy when you think the price will rise and you sell when you think the price will fall. There is common terminology used in foreign exchange trading, which is Buy Low, Sell High; that is an important point to remember.

Types of Orders: In addition to buying and selling, another point to remember is the types of orders. There are two types of basic orders: market orders and pending orders. At the time of clicking on “Sell” or “Buy”, you are basically buying (or selling) at the current market price. On the other hand, a limited order tells the broker that he wants to buy or sell only at a certain price.

Find a Forex Broker

As mentioned, there are many Forex brokers in the market today and therefore you may feel extremely confused about how to choose the currency broker that is right for you. To summarize briefly, remember the following points when choosing a forex broker. Look for a regulated Forex broker, this is extremely important to stay away from scam situations.

  • See if the broker sets a minimum deposit
  • What is the advantage you have with a broker?
  • What is the minimum size of the contract you can negotiate?
  • Types of deposit and withdrawal, as well as terms and conditions
  • Trading methods allowed by the broker

Start Operating

Finally, now you have chosen a Forex broker to trade with him, it is recommended to first open a demo account or a practice account. Most Forex brokers offer unlimited demo trading accounts (but will be disabled if not used for 30 days). This is an excellent way to be familiar with foreign exchange markets and also help you understand your style of trading (scalper or intraday trading, swing trading, etc.) and approach (fundamental or technical analysis). You can look for various commercial methods and systems or you can develop yourself when you have an excellent knowledge of the technique or fundamental indicators.

Conclusion

Forex trading is one of the most dynamic and active forms of trading in financial markets. The heart of everything is the basic fluctuations in currency values that drive everything else. Learning to trade Forex and understanding foreign exchange markets can provide a good basis for trading other markets such as derivatives or equities.

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Beginners Forex Education Forex Basics

Top 10 Things I Wish I’d Known Earlier About Forex

Hindsight is a fantastic thing for those of us that have been trading for a long time. We made a lot of mistakes or didn’t do things quite the right way when we started out, things that we wish we had known or done differently. For those just starting now, you can take advantage of […]

Hindsight is a fantastic thing for those of us that have been trading for a long time. We made a lot of mistakes or didn’t do things quite the right way when we started out, things that we wish we had known or done differently. For those just starting now, you can take advantage of […]

Hindsight is a fantastic thing for those of us that have been trading for a long time. We made a lot of mistakes or didn’t do things quite the right way when we started out, things that we wish we had known or done differently. For those just starting now, you can take advantage of the fact that we have learned a lot of new things about our trading and the things that we can do, meaning that you can start off where we are now, rather than at the very start of a trading journey. So here are ten things that we wish we had known earlier in our trading career.

1. No single best time to trade: When I started out trading, I was told that there are certain times during the day that you need to trade at, and should pretty much avoid the rest, this is simply not the case Yes there are times where there is a lot more liquidity and movements in the markets, such as during the changeover of the different markets (London and New York for example). This does not, however, mean that this is the only time that you are able to trade, but this is what we thought, of course, we don’t mean that we weren’t able to, just that it would not be as beneficial for our strategy, now, however, we know that we can trade at pretty much anytime and it can be effective, bar some special circumstances or random news events.

2. The majority of traders lose money: If you are just coming into trading now then you probably already knew this, but a number of years ago, forex brokers did not have to have the disclaimer about the majority of traders losing money as they do now. In fact, they purposely hid it, which is why the requirement came into lace. Due to this, we believe that everyone could make a lot of money, but we now have the understanding that it is a hard thing to do, and this makes us more cautious and careful with the trades that we make.

3. Some currencies are linked: A number of the currency pairs and different assets are linked together, think about oil and CAD for instance, when the oil prices change, so does the CAD currency. Knowing which assets work with each other can give you a real advantage when it comes to knowing how the markets will move and how certain things like news events will affect other currencies, ones that say not necessarily be involved in the news.

4. You can profit with more losses than wins: Losses are a part of trading, in fact, it is something that all of us will experience and experience a lot of them. What we did not understand before is that you are actually able to be profitable by winning only a fraction of your overall trades. Our current strategy means that we only need to win 25% of our trades, something that is certainly achievable. Get your risk management and risk to reward ratio right and you can profit with just a small number of wins overall.

5. You can lose with more winners than losers: The other side to the coin mentioned above is the fact that you can actually lose money, even if you win 80% of your trades, if you do not use proper risk management techniques, then even if you have a number of winning trades, when you have a losing one, without the proper things in place, that one losing one could take away all of your profits and leave you out of pocket. This shows us how you need to get your risk management right, no matter the strategy that you are using.

6. Big news can be bad news: News events can be a little scary, yet we were not told this when we first started. Instead, we just traded whenever, with little regard to what news events were going on around us. This is where we went wrong, we wish we knew about the effects that news events can have on the markets, we have been trading through them and seeing ht markets jump massively up or down which has caused us both large wins, but also large losses, far more losses. So now we know not to trade during the news events, which has saved us a lot of money.

7. Don’t quit your job: Not something we actually did, at least not to begin with, but quitting your job was the goal of a lot of people, and we were told that it is certainly possible due to this, a large number of people took the leap a little too early. Unless you are really ready for it, with a lot of time and work behind you, then you will not be ready, no matter how well you are doing, you are not ready to quit your job unless you have been successful for at least a year in a row and are making more than you do with your job, only then should you do it. We weren’t told this before, and many learned it the hard way.

8. It can be good not to trade: A quick one at this, but you don’t actually need to trade. If the conditions aren’t right, then there is no need to actually put on any trades. It can be best to sit back and be patient. Better opportunities will come up and if the markets are not in line with your entry requirements, then putting on a trade would be considered a bad trade, something that we want to avoid doing as much as we possibly can.

9. You don’t need loads of indicators: Indicators can be fantastic, they can show you a whole host of information, but do you really need all of it? If you have too many indicators it can actually slow down your trading, each one that you add is another bit of information that you need to check before putting on a trade, the more you have, the more time that will take. Not to mention the fact that it could simply confuse you seeing so much information on the screen. Instead, choose just a few, this will enable you to get the info you need while still streamlining your trading and making it much quicker. Oh, and make sure they are at least relevant to your strategy and not just simply random indicators because they look cool.

10. Forex is long term: We came into trading like many others did, with the idea that we can make a lot of money and make it very quickly, we now know that this is north e case and instead Forex and trading are long term things where we can build for our future. Trying to make a lot quickly will only cause you to lose your deposited capital, so take your time and slowly build your balance rather than going for the big bucks.

Those are 10 of the things that we wish we had known when starting out our trading carers. You probably know most of them already as the information is much more accessible and people have been through the same experiences as us and shared them online. There will of course be learning opportunities and things that you will develop that you wished you knew before, but ultimately that is life and will happen with everything that we do.

Categories
Forex Daily Topic

How Does Trading Forex Differ From Trading Stocks?

Many people think of trading as a giant single entity that comprises Forex, Indices, Metals, Stocks, and more, when in reality each of the elements within the idea of trading is completely separate. Forex and stocks as an example are often thrown into the same bucket, but there are a lot of differences between them. In fact, the only similarity between them is that you are buying or selling them, pretty much that is it, everything else has differences. Some differences are large, others are quite small, but they are there. We are going to be looking at the differences between trading forex and trading stocks, there are a lot so we may not go over all of them, but you will surely get the idea that they are quite different beasts.

Many people think of trading as a giant single entity that comprises Forex, Indices, Metals, Stocks, and more, when in reality each of the elements within the idea of trading is completely separate. Forex and stocks as an example are often thrown into the same bucket, but there are a lot of differences between them. In fact, the only similarity between them is that you are buying or selling them, pretty much that is it, everything else has differences. Some differences are large, others are quite small, but they are there. We are going to be looking at the differences between trading forex and trading stocks, there are a lot so we may not go over all of them, but you will surely get the idea that they are quite different beasts.

Many people think of trading as a giant single entity that comprises Forex, Indices, Metals, Stocks, and more, when in reality each of the elements within the idea of trading is completely separate. Forex and stocks as an example are often thrown into the same bucket, but there are a lot of differences between them. In fact, the only similarity between them is that you are buying or selling them, pretty much that is it, everything else has differences. Some differences are large, others are quite small, but they are there. We are going to be looking at the differences between trading forex and trading stocks, there are a lot so we may not go over all of them, but you will surely get the idea that they are quite different beasts.

The first difference is the opening times of the markets, the time that the markets are open and you are able to place new trades. The forex markets are open 24 hours a day 6 days a week, only closing over the weekend and on certain holidays. This makes it hugely accessible, able to trade from anywhere in the world and at pretty much any time that you want. Share and stock trading are a little bit different, the trading times for stocks are often linked with the opening times of whichever particular exchange that the stocks listed on. These often close in the evening and open again in the morning, meaning that you are limited to trading during the day, extended hours are coming into play that allows you to trade outside these hours, but otherwise, you are more limited in the time that you can trade when trading stocks over forex.

Another major difference is the liquidity in the markets. Liquidity for those that do not know is about how easy it is to place trades, how much money is going through the markets at any one time. The forex markets are the most liquid in the world with over $5 trillion being traded each day. This makes it incredibly easy to put on trades. No matter the size of your trade, you will be able to put it on almost instantly without any issues. When it comes to stocks, there is a considerably lower number when it comes to the amount of money being traded and there are far fewer trades being made each day. Certain stocks like Facebook or Apple will have a lot more trades occurring each day, but other smaller companies will have far fewer which can make it a little harder to trade with potential delays on each transaction.

Volatility is a major difference, the forex markets are known for their volatility, their ability to move and to move a lot, this is where the profit potential comes from, but also the risks. There can be huge movements up and down, it can also move quickly. When it comes to the stock market, the volatility of the markets and the movement are often far more stable than when it comes to forex. This means that there is far more profit potential when it comes to trading forex, but if you are looking for a more stable and safer trading experience then stocks may well be the better option for you.

When it comes to trading, you have probably heard about leverage, this is the ability to kind of borrow money from the broker that you are using in order to trade with larger trade sizes than your account would otherwise allow. Forex is full of leverage, in fact, some brokers are offering as high as 2000:1 when it comes to leverage, which is incredibly high, a little too high. This does, however, give you the ability to make a lot more money than you otherwise would have been able to, it does of course also increase the risk and potential losses at the same time. When it comes to stocks, there are actually some brokers that are offering leverage on stocks, but it is far lower, normally not any higher than 10:1 if even that high. This means that the profit potential is limited when you compare it to forex trading. Many brokers offer no leverage at all when it comes to stocks, so the money that you have in your account is all that you have to trade with, some would argue that this is the best way of trading and the safest way.

The last difference that we will be looking at is the types of trades that you have., When it comes to forex, you can buy or sell, you are able to profit on the markets moving both up and down, it doesn’t matter, you do not have the physical asset so you are simply speculating on the price movements. When it comes to stocks, traditionally, you could only profit when the price rises, buying low and selling high. This has changed slightly these days, with the ability to treat them more like stocks, but you will need to find the right broker that lets you both profit on the buys and sells.

So those are some of the differences when it comes to trading forex and stocks. There are a lot of similarities between them in regards to the way that they are traded, and the opportunities that they give you, but there are a lot of differences. If you are looking for a faster-moving and more volatile trading experience then you would need to look at trading forex due to the volatility, liquidity, and leverage that is on offer. If you are looking for a more stable, slow-moving, and far safer trading experience then stock trading would be the right way for you to go. Of course, would then be limited to trading at specific times when the markets are open. Whatever you choose, you can also diversify and trade both, giving you the best of both worlds.

Categories
Crypto Forex

Forex vs. Cryptocurrency Trading: Explained In Detail

There are a few different markets available for trading, there is the Forex, Stocks, Commodities, Indices and then there are Cryptocurrencies. The most popular for retail traders is by far Forex trading, but with the rise in popularity of cryptocurrencies, many brokers are now picking them up as additional tradable assets, and they are quickly […]

There are a few different markets available for trading, there is the Forex, Stocks, Commodities, Indices and then there are Cryptocurrencies. The most popular for retail traders is by far Forex trading, but with the rise in popularity of cryptocurrencies, many brokers are now picking them up as additional tradable assets, and they are quickly […]

There are a few different markets available for trading, there is the Forex, Stocks, Commodities, Indices and then there are Cryptocurrencies. The most popular for retail traders is by far Forex trading, but with the rise in popularity of cryptocurrencies, many brokers are now picking them up as additional tradable assets, and they are quickly becoming quite popular to trade, especially as they are tradable over the weekends while the main forex markets are closed.

So the decision now is which of these assets is right for you and which ones should you trade. We are going to be looking at some of the advantages and disadvantages of both of the asset types so that you can work out which one would be better suited for you as a trader. Before we get into that, let’s take a look at what Forex trading is and also what Cryptocurrency trading is.

What are the forex markets?

Forex is simply the exchange of different currencies around the world. It is the world’s largest trading market with a trading volume of over $5 trillion which is a lot of zeros, in fact, it looks like this $5,000,000,000,000, so a pretty large number. The markets contain a lot of different things, it includes financial institutes, banks, business and retail traders trading from home, it is a constant exchange of currencies between different people and organisations at different prices.

In order to trade in the forex markets you need a lot of money, thankfully a lot of brokers have now stepped in to make it accessible and easy to trade for retail traders. Normally, a person would put up a currency for a price and then someone else would come along and take the trade, but now that brokers have stepped in, they act as a kind of middleman, making it easier to place smaller trades. The markets are open 24 hours a day which again makes it very accessible, they crossover the weekends and on some holidays but otherwise they are open all year round.

The forex markets can move a lot and very quickly, different currency pairs have different characteristics and as time goes on, they all change in terms of their liquidity and volatility, it is this volatility that makes it such a promising endeavor when it comes to making profits, profiting on the movements up and down, forex trading is becoming more and more popular as the years go on due to its accessibility.

What are the cryptocurrency markets?

The ability to trade cryptocurrencies is very new, in fact, so are cryptocurrencies as a whole with the first coming out around 15 years ago, the ability to trade them about 10 years ago, so it is a very new market and this is something that a  lot of people are wary about, but at the same time a lot of people are excited about.

The markets are constantly growing and also growing in popularity as more and more coins and tokens come out and also more brokers take up cryptocurrencies as one of their assets. The market is open 24 hours a day 7 days a week and pretty much never closes throughout the entire year, so they can be traded at any time which is a real pull for many traders. The cryptocurrency markets are extremely volatile, they are not regulated at all so they can be manipulated by those that hold a lot of the coins, the markets are far less affected by news events and world events, however, they can be affected by news within the cryptocurrency world.

There are of course a number of different similarities between trading forex and trading cryptocurrencies, the first and most prominent thing is one of the ways that we actually trade. The majority of trading of forex and cryptocurrencies are done through brokers, furthermore, a lot of them are done through the same brokers, brokers offering cryptocurrency trading will often also offer forex trading, they use the same trading platform and so the methods of actually putting on a trader are almost identical. There are of course dedicated cryptocurrency exchanges, but for actual trading, they can be done on the same platforms.

Both forex currencies and cryptocurrencies are offered as pairs, for example, EURUSD is the Euro and US Dollar, BTCUSD is Bitcoin and the US Dollar, in order to trade you are basically trading the exchange rate between the two, which is done in a very similar way. Both the forex markets and the cryptocurrency markets are made up of institutions, businesses, and individuals, so in that regard, they are very similar to each other.

What are the differences? 

Having said that, there are of course some differences between them, one of those differences is the fact that cryptocurrencies can also be traded on dedicated exchanges, within these exchanges they have their own ecosystem, so you are only trading between the people on that exchange rather than globally as you would with forex. Another difference is the liquidity, forex is massively liquid with trillions going through it each day, when it comes to cryptocurrencies, there is a lot less liquidity, due to this there can be a lot more violent movies or larger tends than you would get with forex, this is why it can be so hugely profitable and yet so dangerous to trade at the same time.

The other main difference is the fact that cryptocurrencies are decentralised while the currencies in forex are all based on the governments and countries that use them. News events from the UK can have a massive effect on the GBP currency, while real-world events can of course affect the cryptocurrency markets, the effects that they have will be much smaller in size.

So those are some of the similarities and differences between forex trading and cryptocurrency trading, which one is right for you will be a decision that you will need to make. Consider The risks that come with them, far higher volatility on cryptocurrencies, more choice on forex trading, and the fact that you can often trade both on the same account depending on your broker, so you can do a bit of both, but just be sure that you are prepared and that you have some risk management in place should you consider doing this.

Categories
Beginners Forex Education Forex Basics

Addicted to Forex? Us Too. Here’s 5 Reasons Why We Just Can’t Get Enough!

Forex can be exciting, it can be exhilarating, it can be amazing but it can also be devastating, no matter what it is doing, there is one thing that will remain true, we are absolutely addicted to it. For whatever reason, once we started trading we just could not stop, and there are a lot […]

Forex can be exciting, it can be exhilarating, it can be amazing but it can also be devastating, no matter what it is doing, there is one thing that will remain true, we are absolutely addicted to it. For whatever reason, once we started trading we just could not stop, and there are a lot […]

Forex can be exciting, it can be exhilarating, it can be amazing but it can also be devastating, no matter what it is doing, there is one thing that will remain true, we are absolutely addicted to it. For whatever reason, once we started trading we just could not stop, and there are a lot of other people out there too that have the exact same feelings. We are going to be looking at some of the reasons why we are completely addicted to trading, as well as some of the reasons that have been given by those of you on various websites around the internet.

The Profits

Let’s be honest, a lot of you probably started trading because of the potential profits that you could make, and then as soon as you started making them you simply did not want to stop. This is a perfectly natural reaction and thankfully, it has a positive outcome to it. When those profits start rolling in you will do what you can to make more, to keep it consistent, and to ensure that you continuously earn those big bucks. When you achieve what it is that you set out to do it can give you a great feeling and so we will want to continue to feel that, hence why these profits keep us coming back for more.

The Highs…And Lows

Forex is full of highs and lows, and it is mainly those highs that give us the adrenaline, it gives us the feeling that we can do anything, that we are invincible, and that we can make a lot of money. However, with forex, there are also those lows, when things aren’t quite going right for us, when we have made mistakes and even losses. However, the next trade, we could be on a high again, this is a rollercoaster, trading and forex is a rollercoaster, and it is a rollercoaster that we do not want to get off. When your feelings and emotions are up and down rapidly, it gives you a real yearning, it makes you want more. Those highs that we experience can be similar to those that you experience when traveling 100 mph on a rollercoaster, those coasters are popular, and so is trading.

It Gives Us a Feeling of Belonging

Forex traders often act as a community due to this it can actually give you a sense of belonging, to be a part of a group. Many traders sit at home by themselves, it can be lonely, loved ones may not understand things and neither do your friends or maybe you don’t have friends, either way, it is a pretty lonely thing to do. However, there are a lot of trading communities out there, communities where traders come together to help each other, to share ideas, and to simply meet one another. These sorts of communities can give us a new home, somewhere where we can talk to like-minded people about things that we enjoy, we can get ideas from them, new trades, test our analysis on people and more, these communities are fantastic and the sense of belonging can be addicting all by itself.

Hitting Milestones

Milestones are little goals that we set ourselves, if you are setting them properly then they will be set up in a way that will make them easy to achieve and also in set increments, increments that work with one another to lead us to the next one. When set up in this way we feel that we are always achieving something, this helps us to motivate ourselves and to push us to continue. Each time we achieve one we feel great, we feel that we want to continue, to push to the next one, and with each milestone being hit we get a little more addicted to trying to hit the next one, not to mention that fact that with each milestone we are being a little more successful and we are making a little bit more money, the main reason why so many of us started trading in the first place.

It Gives Us A Better Life

This kind of takes in a lot of the other things that we mentioned above, when we trade, we make a bit of money, that money can then be used on the sweeter things in life, to allow us to treat ourselves and to give us a little more financial freedom than we otherwise would have had, heck, it even lets us treat our significant other. Of course, it can have the opposite, cause us to lose things, but when it comes to our love of trading, we of course think about the good things it brings us and the improvements that it allows us to make to our everyday life.

Those are some of the things that make us addicted to trading, we love it, it gives us highs, it gives us profits and it gives us a community to be a part of, things that make it worthwhile for us, even though those losses and lows that come with it.

While trading is great, and we speak about how we love doing it, we do have to mention one thing though, those with an actual addiction, not just a real fondness of trading should try and seek help. Being addicted to something can actually ruin lives and when it comes to anything that involves finances, from gambling to forex trading, it can devastate lives. If you think that you or someone that you know is actually addicted to trading, then you should do what you can to try and seek help for them, try to do this as soon as you can, the earlier to catch it, the earlier that you can help that person get out of it.

Trading addiction can cause you to spend all your money, to use the money you cannot afford to use, so do what you can to get out of it, and most importantly, do not be afraid to ask for help, help is out there, and waiting for you.

Categories
Beginners Forex Education Forex Basics

Top 15 Undeniable Reasons to Love Forex Trading

When it comes to trading, there are a lot of things that we love about it, we would not be trading if we didn’t love it after all. We are going to be looking at 15 of the reasons why we really love to trade and how those different loves affect our outlook at our […]

When it comes to trading, there are a lot of things that we love about it, we would not be trading if we didn’t love it after all. We are going to be looking at 15 of the reasons why we really love to trade and how those different loves affect our outlook at our […]

When it comes to trading, there are a lot of things that we love about it, we would not be trading if we didn’t love it after all. We are going to be looking at 15 of the reasons why we really love to trade and how those different loves affect our outlook at our trading.

1- You can make money.

Who doesn’t love this aspect of trading? The fact that you can make a little extra money, or even a lot of money is a real draw-in for a lot of people and it is for us too. For a lot of people, the fact that you can make money is the initial draw in and the reason why a  lot of people trade, if there was not an opportunity to make money then there would be far fewer people actually trading.

2- Anyone can do it.

The great thing about trading is that pretty much anyone can do it, of course, there are a few limitations like needing to be over the age of 18 and to have access to a computer or phone, but otherwise, there is pretty much nothing stopping you from taking part, brokers are accessible, the markets are too. If you want to trade, there is always a way of managing to do it.

3- It’s very accessible.

As with the above, trading is getting more and more accessible and it has never been easier to get involved. You only need as little as $10 or even $1 for some brokers to get started. You can also access it from anywhere that has an internet connection using a desktop computer, a laptop, or even a smartphone, heck even some fridges have the capability of doing it now too. If you want to trade, there are more than enough ways to get involved and it is very easy to get started.

4- You can do it on your phone.

As we mentioned above, your smartphone is not a full-fledged trading terminal, years ago people would never have thought that they would be able to trade on their phone, now you can. On the train, on the couch, on the toilet, no matter where you are, as long as you have your phone with you and an internet connection, then you can very easily start trading.

5- It doesn’t take long.

You don’t need to be sat in front of the computer to make trades, it can be done in a few minutes, of course when you are first starting out it will take quite a bit longer, and you need to do the initial learning, but once you know what you are doing, you can get through your trading pretty quickly. That is something that we love as we do not want to spend 5 hours a day putting on trades.

6- It provides good reading material.

There is a lot of information when it comes to trading which is great for those that have the time to read. You can read up on things pretty much anywhere you are and there will always be something new for you to read and learn about. No matter the sort of writings you like from fact to fiction, there will be some related to trading that will suit your tastes.

7- There is a great community.

The trading community is one of the best, once you get past the plastic traders or those trying to get other people’s money, the community is fantastic. They are always there ready to help, to share ideas, and to discuss different things related to trading and the markets. There are a number of different communities out there so it shouldn’t be too hard to find one that suits you. They are also a great place to let off steam and the frustrations from trading.

8- You can work from home.

One of the main draws for a lot of people is that you can work from home, you can choose your own times to trade, you can trade as much or as little as you want and you can have a nice lie each day. It is fantastic being able to trade from home and to avoid the long daily commute that you used to do when you worked your previous 9 to 5 job.

9- You don’t have a boss.

Most of us hate having a boss, it is something that pretty much any job comes with and it is something that we strive to get away from. Trading is the perfect place to get rid of your boss and to basically be your own boss. Lots of freedom to do what you need without someone peering over your shoulder is a fantastic feeling and one that trading can very much provide you.

10- There are a lot of assets to trade.

There are a lot of options and assets to choose from, you will always be able to find one to trade and one that suits your style of trading. If one is going slow, fund another, there will always be options. That is the fantastic thing about trading, there are currency pairs, oils, metals, stocks, and more to choose from, so you will always have things to do and it will always be exciting.

11- It’s never boring.

Trading is never boring, things are always happening and this makes it so good to trade. Just when you think you will have a quiet period, something will happen, a news event, a disaster somewhere, whatever it is it can really shake up the markets and move things about. Even when you have trades open, you will need to keep an eye on them simply because anything could cause the markets to move. Some currencies can be slow, but there are others that will certainly be doing something.

12- Helps you control risks in life.

A part of trading is risk management, if you’re able to do it during your time trading then you can certainly take that into other aspects of your life too. Take what you learn and start reducing the risks that you are taking in other aspects of your life too.

13- It’s a profitable hobby.

Hobbies often cost you a lot of money, trading is a little different, it can actually help you to make money, not many people can say that their hobby brings them additional income rather than costing it. It takes time and work, but it can certainly help you to make a little extra on the side.

14- You can trade at any time.

There are no limits as to when you can trade. You can trade first thing in the morning, late in the afternoon, or in the middle of the night, the markets are always open. They close over the weekends but otherwise, they are a 24/7 opportunity to make money that you certainly should be taking advantage of.

15- It provides a shot of adrenaline.

Trading can be exciting, it can really boost your adrenaline levels, especially when the trade is doing the right or wrong way, it can really pump us up and that is a great feeling, for many, it is what they trade for. If you find trading boring then you won’t get this, but for the rest of us, the excitement is enough, the money is a bonus.

Those are some of the reasons why we love trading forex and why you should too. There are of course more reasons out there, but these are the main ones that come to mind. Think about why you love trading, and keep that in mind next time you get frustrated or bored. We will always love trading, and so should you.

Categories
Beginners Forex Education Forex Basics

10 Things Steve Jobs Can Teach Us About FX Trading

At the onset of the digital awakening, Steve Jobs emerged as a symbol of innovativeness. His legacy precedes him but is no less of a wonder than his own set of traits. He was a true creative, a visionary, and a master salesman who set the grounds for how business was going to be done […]

At the onset of the digital awakening, Steve Jobs emerged as a symbol of innovativeness. His legacy precedes him but is no less of a wonder than his own set of traits. He was a true creative, a visionary, and a master salesman who set the grounds for how business was going to be done […]

At the onset of the digital awakening, Steve Jobs emerged as a symbol of innovativeness. His legacy precedes him but is no less of a wonder than his own set of traits. He was a true creative, a visionary, and a master salesman who set the grounds for how business was going to be done in years to come. He bestowed the world with not just amazing products but also with lasting lessons that we can and should apply to Forex trading as well.

  • Clear Vision & Focus

“Focusing is about saying no.” When Steve Jobs returned to the company in 1997, he immediately stopped all experiments on products he considered futile. He diverted the company’s attention to the things that really mattered. “Focus on a few products because others would drag down the company.” As traders, we can sometimes get torn between our everyday life, developing our trading systems, and our hopes for the future. Steve Jobs made Apple take fewer projects to direct energy to what deserves improvement. More trades won’t make you a good trader but the right focus and prioritization will give you the impetus to become one. 

  • Results & Reinvention

Steve Jobs didn’t believe that people had to follow a system just because things had always been done that way. He often explained how we have “an opportunity to always question what we do.” This is a necessary approach in trading because we tend to read so much material on how to become successful traders but we may not be as devoted to testing and journaling to make this dream a reality. Each product Apple launched was a more supreme combination of features the market needed, which is a reflection of the effort put into their development. 

  • Passion

Steve Jobs believed that we should all do what we feel passionate about so that we can make changes around us. As an exceptionally passionate individual, he was able to motivate his company and employees to make history. This special love for his job was transmitted to the products and, hence, to the customers as well. As a trader, you are too making history and changing your (and/or your family’s) everyday life. We cannot become great with a half-hearted attitude. Go all the way now to build confidence and render results gradually.

  • Personal & Career Development

The man we know recognize as the face of digital expansion was once a college dropout. He also managed to get fired from his own company. Life wasn’t always easy and Steve Jobs certainly wasn’t an easy person to handle. Besides his genius and the success his attention to detail generated, he was also a human who made mistakes. His products and his mindset revealed how he always believed in innovation and improvement. Still, he didn’t rest his business’s growth solely on intuition; he made changes in the company, in the people he hired, and most importantly in himself. 

  • Perseverance

Steve Jobs himself said that passion fuels a person’s journey and any ordinary person would certainly quit unless there was any passion. If you see trading as a means to run away from your current boss or a way to finally prove to your ex-wife that you are the man, you won’t last the hurdles that come your way. Persistence needs vision; sustainability requires internal motivation. Don’t rely on the rose-colored glasses to cross the bridge for you. Also, accept your failures as lessons. As Steve Jobs said, “I didn’t see it then, but being fired from Apple was the best thing that could have ever happened to me.” Sometimes, the best lessons are the most painful. Just power through.

  • Leadership

Steve Jobs was known for not wanting to delegate. He strived to be interwoven in every business facet. He knew about technology and sales which helped him translate his vision into products that are still sold around the globe. As traders, we need to understand different aspects of trading; while beginners will focus more on the vocabulary and understanding new terms, as they grow they will start to realize that other topics (e.g. news and elections) are of significant importance for trading accomplishments. Traders cannot say that they are only interested in one side of trading because they are owners, the CEO, and the employees all in one. As Steve Jobs put it, “The greatest people are self-managing.” 

  • Confidence

“You have to trust that the dots will somehow connect in your future. You have to trust something – your gut, destiny, life,  karma, whatever – because believing that the dots will connect down the road will give you the confidence to follow your heart even when it leads you off the well-worn path, and that will make all the difference.” If you doubt your every step as a trader, you won’t get far. You need to believe in what you are doing. Learning and improving will additionally help build your stamina because positive self-talk is not what Steve Jobs relied on (at least not solely) to build an empire.

  • Facing Challenges

Steve Jobs was always able to pinpoint a problem and present it to others in looking for a way to resolve it. He never wavered thinking that it would go away. Traders too need to address any issues and not procrastinate because of their severity. Great minds charge forwards solving problems on the way. Steve Jobs took the responsibility for growth and so should you. 

  • Tech-savvy 

Mangers may not be that good at understanding the technical side of the business, but Steve Jobs was different. In the years that he wasn’t part of Apple, the company is said to have struggled immensely. Steve Jobs certainly wasn’t the best engineer but he was a man who knew how to get to what he wants. He always found ways to translate his ideas into reality. Traders may not know all instruments there are, but they do need to know how to use what they have properly or where more learning and training is required to reach perfection. 

  • Talent

As we said above, Steve Jobs wasn’t a top engineer but he knew how to recognize talent. He explained how “it doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” Likewise, traders need to find tools that can assist them in trading as well as tell them what to do at key points in a trade. You don’t want to have to tweak your settings constantly or micromanage your trades all the time because this means your toolbox is flawed. 

Steve Jobs never feared failure. When he was fired from Apple, he went on and created NeXT, a computer platform development company. What turned out to be one of his monumental contributions was that he helped drive the development of Pixar, thus boosting the troubled animation industry. Steve Jobs understood his talents and passions and didn’t stop after his failure. Traders often get discouraged because they take losses.

The key ingredient is learning through one’s mistakes and taking the knowledge from one busies to another. We can derive so many lessons from him and his experience. Traders can learn about extremely important topics such as diversification and investment that we often believe is only possible for the wealthy. Steve Jobs never believed in money alone but experience and the message. What is your storyline? What is that great motivating factor that makes you go back to trading? And, finally, how is your routine able to support your vision?

“The doers are the major thinkers. The people that really create the things that change this industry are both the thinker and doer in one person.” 

Categories
Beginners Forex Education Forex Basics

Let’s Get Real: Is Day Trading Really Profitable?

Day Trading or also known as Intraday Trading can be very profitable. But, many ask: Is Day Trading really profitable? But, it is not such an easy method to perform. And that is, the frustration of losing money can discourage more than one. Although with enthusiasm, a positive mind, a lot of discipline, and a […]

Day Trading or also known as Intraday Trading can be very profitable. But, many ask: Is Day Trading really profitable? But, it is not such an easy method to perform. And that is, the frustration of losing money can discourage more than one. Although with enthusiasm, a positive mind, a lot of discipline, and a […]

Day Trading or also known as Intraday Trading can be very profitable. But, many ask: Is Day Trading really profitable? But, it is not such an easy method to perform. And that is, the frustration of losing money can discourage more than one. Although with enthusiasm, a positive mind, a lot of discipline, and a good methodology, everything is possible and you can get good results at the end of the day.

Day Trading is one of the most complicated and complex strategies that exist, so the vast majority of investors or users lose their money trying. But, for those who are more wrestling, skillful, and consistent, your luck will come and you will have very good wins.

What is Day Trading?

Intraday trading is known as a strategy that is applied in a financial negotiation, especially of purchase and sale, which is carried out on the same day of the business. Day traders or intraday traders use this quick trading strategy to try to make daily profits and not have to wait for long-term investments. These traders must close all their positions before the end of the day in the market.

Financial instruments that are included in the day trading include currencies, stocks, options, and futures contracts. If you would like to be a Day Trader, in the beginning, the fundamental thing is to have a good formation.

What is the Profitability of Day Trading?

On the same day of trading, it makes it possible for high profits to occur or, conversely, large losses. Therefore, the profitability of Day Trading is very variable. It can be around an annual average of between 10% and up to 50%.

Although the most pessimistic say, that every day you lose money and at the end of the year, you get less return than making a long-term investment. But, if we get carried away by the statistics of some big investors in history, such as Peter Lynch (in 13 years) and Warren Buffett (in 32 years or so), the average annual return was 29 and 24% respectively.

If you are a person who only trades and does not invest in stocks in the long run or survive the day-to-day, it is said that you do not possess financial freedom. This means that financial freedom is obtained when the income that is received for the assets, manages to properly maintain the lifestyle and you can live from it every month without problems. Therefore, a well-known phrase for determining financial health is how much passive money is received from assets.

Something very beneficial for day traders is that brokers allow a higher margin for daily trade (about 25% for intraday shopping). In that case, a daily trader who has a minimum set in his account (of about $25,000), will be able to buy shares of up to $100,000 during the same day. But, in that case, half of those shares, must come out before the market closes.

Day Trading Benefits and Risks

The results of all trading operations that are carried out daily, can be very profitable or on the contrary, a total failure. In that case, day traders can get large percentage returns from their investment or huge losses, not pleasant at all.

Daily trading can be risky, especially in the following cases:

  • Poor execution of operations.
  • Not appropriate risk capital.
  • Exchange of game or operations.

A very common strategy in Day Trading is to buy instruments using funds that are not their own. This can increase gains or losses, as the case may be, and in a very short time. If we consider the high risk of daily trading, a day trader will be forced to abandon a losing position almost immediately. In this way, a fatal loss, much higher than the original investment or the total assets, will be avoided.

Categories
Forex Market

What’s Holding Back the Forex Industry?

The short answer is well known but the rabbit hole goes deep. It is the same reason we have global economic downturns, each special in its way but with a common enemy. The behavior of all actors linked to the forex industry is guided by many interests. Interests that do not align with individual forex trading. Let’s try to understand the gist since the short answer just turns people away from trading even though forex trading is one of the best ways to attain financial freedom, despite its quirks. 

The short answer is well known but the rabbit hole goes deep. It is the same reason we have global economic downturns, each special in its way but with a common enemy. The behavior of all actors linked to the forex industry is guided by many interests. Interests that do not align with individual forex trading. Let’s try to understand the gist since the short answer just turns people away from trading even though forex trading is one of the best ways to attain financial freedom, despite its quirks. 

The short answer is well known but the rabbit hole goes deep. It is the same reason we have global economic downturns, each special in its way but with a common enemy. The behavior of all actors linked to the forex industry is guided by many interests. Interests that do not align with individual forex trading. Let’s try to understand the gist since the short answer just turns people away from trading even though forex trading is one of the best ways to attain financial freedom, despite its quirks. 

Forex Views

We could bring the scam debate that plagues individual trading almost since it became available to regular folk. But we could not just stop there and tell it is the only thing on the way of what is really great about forex trading. Interestingly, the first thing that comes to mind to people about forex (also binary options) is betting, scammers in suits, and very unethical ties in the backstage of brokers. 

Some parts of the globe are educated and know a thing or two about the markets, be it equities, crypto, forex, or something else. Others do not, and unfortunately, these people are good targets for scammers. It is enough to be a victim and then the word of mouth forms groupthink. It is really hard to get out of the common conception that not all forex brokers are bad and not all traders are losers. Simply, once you get burned it is likely you will get burned again, which makes it even sadder knowing in most cases it is because these people are truthful or in desperate need of income. 

Forex Broker Agents

In so many cases broker agents are just employees with good on-phone selling skills. Sometimes not even that. Outsourcing the workforce benefits the broker industry but not the actual client. People with just a bit of common sense know if somebody is looking to save by putting a non-native speaker to speak about sensitive, demanding topics of forex trading does not care about the client or their money. Then the client or the forex trader, beginner or not, is perceived as part of the money harvest. 

We can go even deeper to understand the whole picture. These employees are also just a part of the broker scheme to make a high turnover of small deposits from small investors who are oblivious about what is about to happen, let alone about forex trading. The pressure is on sales, so much it borders with manipulation using half-truths, sometimes complete lies. If the sales team does not deliver the “investing now” hype to the client, they will get replaced eventually. All this creates a profoundly exploding “Wall Street” atmosphere seen in the movies. The reality, of course, is not easily discovered. Can you blame the business model? Some would say it is just how business is done, which gets us to the next point.

Broker Business Model

Spend some time reading about the broker model and you will notice a lot of discussions. Interestingly, some topics are not discussed much within the industry. How come there are brokers who can act as market makers with their pool of positioning against a trader that is not in conflict of interest? This conflict of interest is now covered with different technology, connectivity, liquidity providers, all of which actually belong to a bigger motion of deals between banks and brokers. Even the biggest brokers in the forex industry, like the IC Markets, openly state brokers are not following the interest of traders. Apart from a few exceptions, most make money when their clients lose. Do not get lost reading about the ECN, STP, B-book, A-book brokers, it doesn’t matter really. 

At the end of the day, it falls to the traders’ community. In these places, they can share their experience based on which a new trader can decide if some broker is good or not. But what about all the people who do not always find these sources? These portals are not what first comes out of the search or the broker’s websites. Whatsmore, the marketing is carefully designed to bring out all of the good feelings about trading even though it is superficial. Their targets are not the people who dig deep to find the right portals and information, but those that are impulsive and unaware. Since the majority of traders lose in the industry, a lucrative business will continue. 

The Big Banks Game

Forex has never been designed to bring fortunes to traders, on the contrary. A direct proof of that is the sentiment index available at one of the biggest forex houses, IG group. But this forex game has been present from the beginning, it is not the reason that is arguably holding back the industry. It is the fact major players have the final saying, even if it is against the law. Experienced traders have witnessed so many fines paid by funds and banks measured in billions yet no one questions if the same game will continue. It will, it seems, be how forex works and how it is connected with other industries. Major players turn so much volume fines are just one drop in the bucket. Like the concept of fines are made just to appease the law is present and functioning. Now, the big banks control the forex, governments can also generate money out of thin air, and the world elite has their wealth secured and multiplying, but this does not stop forex still being one of the best tools of your personal finance management.

Regulators

Everyone remembers how most governments of the world were somewhat clumsy reacting to the COVID-19. Similar is with regulating the brokerage. As some broker CEOs agree, not much has been done to cope with problems related to the inappropriate approach to forex trading, more specifically risk management. Reducing leverage has not solved the problem, the leverage is still optional to a significant degree and it will still eat up reckless trading. It is not even a compromise solution between clients on the one side and brokers and regulators on the other. Clients still lose despite the reduced leverage for regulated brokers. To make you think, observe how much is invested in marketing and how much into education and responsible trading. Just to make things clear, forex is primarily a money network for the big players, regulators are under pressure but not by the traders. Invent something like bitcoin where the focus is on the network user alone and you have governments, companies, and the big banks looking to seize the control.

Media and Marketing

The media has its own place in the industry, as with many other “markets” not clearly defined on the economy table. What is presented to you on TV, in newspapers, and most of the other popular information sources are sometimes even made up reasons for crashes that unexpectedly happened. Smart presenters tell you a correlated chain of events that lead to a flash crash, for example, but they always seem to be late tellers. This does not help anyone except to keep you calm and quiet. Eat up your loss because it was an “accident” no one is responsible for. Experienced traders know what happened, and most of these events are driven by the major forex players on purpose. Pegged Swissy is a perfect example. 

Another interesting phenomenon is market presenters always sound very smart, but they are not good traders. If it is cool and easy to understand, that is what the masses want, not what traders can benefit from. 

Real Forex Trading Benefit

The real trading education starts far away from the marketing and the media for the masses. It is not always what you want to hear, but forex trading actually can be one of the best “jobs” you can get. However, to get to the top and be in the minority of winners is hard work, at least in the beginning and it is for the persistent researchers. All the unforeseen barriers to entry deny many who try. Those that remain enjoy forex knowledge which translates to many other investing areas and real life.

Categories
Forex Basics

Information You’ll Wish You Had BEFORE You Started Trading Forex

When you start anything new, you are going into it pretty blind, picking things up as you go and of course making mistakes, probably a lot of them. When we have been doing something for a long time, we often look back and think about when we first started out and trading is no different. If you think back to your first days, weeks, month, or even year, you can probably think of some things that you probably wished that you had done differently, or things that you wish you had known, they probably would have saved you a lot of grief, but hindsight is like that, we all know better once something has already been done. We are going to be looking at some of the things that we wish we knew before we started trading all those years ago.

When you start anything new, you are going into it pretty blind, picking things up as you go and of course making mistakes, probably a lot of them. When we have been doing something for a long time, we often look back and think about when we first started out and trading is no different. If you think back to your first days, weeks, month, or even year, you can probably think of some things that you probably wished that you had done differently, or things that you wish you had known, they probably would have saved you a lot of grief, but hindsight is like that, we all know better once something has already been done. We are going to be looking at some of the things that we wish we knew before we started trading all those years ago.

When you start anything new, you are going into it pretty blind, picking things up as you go and of course making mistakes, probably a lot of them. When we have been doing something for a long time, we often look back and think about when we first started out and trading is no different. If you think back to your first days, weeks, month, or even year, you can probably think of some things that you probably wished that you had done differently, or things that you wish you had known, they probably would have saved you a lot of grief, but hindsight is like that, we all know better once something has already been done. We are going to be looking at some of the things that we wish we knew before we started trading all those years ago.

When many people first get into trading they go the easy route, they go after the advertisements about things like automated trading, hands-off trading, or signal copying. They seem like the perfect thing, simply deposit someone, sit back and let them trade for you, the problem with this is that it is the equivalent of simply giving someone your money and letting them do what they want with it. Not the smartest thing to do and also not something that you would do in any other situation. So why we thought it was a good idea back then we have no idea. One thing that we wish we had done differently would to simply not have used these services, it would have saved us thousands of dollars from the losses that were lost by trusting these traders with our money.

It would have been good back then if we understood that there wasn’t a perfect strategy out here, there isn’t a strategy that will allow you to win 100% of the time and so we should not be looking for it. Countless hours spent looking for it, countless hours and hundreds of dollars wasted trying out the so-called perfect strategies. If we knew back then that they wanted one, it would have saved us a lot of time and money. Instead, we should have been learning and developing our own strategies and also multiple different ones to allow us to trade in different trading environments and conditions.

It would have also been a good idea for us to learn a little before jumping into a live account, or at least using a demo account. Pretty much every broker now offers demo accounts, where you can trade on almost the same trading conditions without any risk to your own capital. Back in the day, they were not as regular and people didn’t seem to use them as much. Instead, we just jumped straight into a live trading account with our own money. All tests were done live, all changes were done live and the mistakes made cost us real money. If we were to start over, we would certainly be using a demo account for all of our practice, it can potentially save you a lot of money and also a lot of stress.

Avoid the news, something that is said a lot now. In fact, some brokers no longer let you put on trades during major news events and this is something that we wish we thought about back when we started. Trading the news can be incredibly profitable, the problem is that it can be incredibly risky too, in fact probably more risk than it is worth. The news can cause big movements in the markets, and the markets can even move in ways that are completely non-correlated to the news that was given, making it even riskier. We wish that we had known this before and decided to avoid trading during news events, it would have saved us a lot of money in the long run.

It would have been good to have had a better understanding of what different currency pairs are as well as the differences between them, we are talking about the difference in volatility, the difference in liquidity, and other aspects like that. Each pair reacts differently and moves differently, and this is something that we would have liked to have known a little earlier. We traded USDMXN the same as we did EURUSD, if any of you have traded both, you will know that they work very differently, but we used the same strategy on both which as you can imagine did not have the best effects and this caused us some pretty hefty losses before we worked out what was going wrong.

Learn the different order types, that is a big one, many traders simply use market execution orders by simply placing trades. Yet there are a lot of other styles of orders too, limit orders, stop orders and more, these different order types allow you to enter the markets in different conditions and at a price that it is not currently at the moment. This adds a whole new level to our trading allowing us to predict movements and to take trades on the support and resistance levels. We just wish we knew about them, or at least how to use them properly back when we started trading.

Forex and trading are not guaranteed, something that should be quite obvious, but back when we started you did not have all the warning signs on every site, that was not a requirement, all that we ask was the opportunity and the other traders stating how much they had made. Of course, now we know that those saying all the positives were simply trying to get some affiliates signed up after them, but back then, the dream was real and it seemed more realistic than it is now (of course it is still possible now too). It would have been nice for there to be more waning like there are now, and we would of course start again knowing that nothing is guaranteed and that we need to put in a lot of work to make it profitable.

Those are just some of the things that we wish we knew before we started trading all those years ago, there are of course some other things that we would have done differently, we could probably write for hours about it. Hindsight is an amazing thing, we need to live with our mistakes but also learn from them, we do not make the same mistakes that we made back then, it is all about learning from what we have done to make us a better trader in the future.

Categories
Forex Basics Forex Psychology

Weird Hobbies That’ll Make You Better at Forex

There are things that we do in our everyday lives that can actually make us better at trading. Some of them may be related, while others will have absolutely nothing to do with trading at all. Our hobbies can have the same effects, there are hobbies out there that people do that will give you […]

There are things that we do in our everyday lives that can actually make us better at trading. Some of them may be related, while others will have absolutely nothing to do with trading at all. Our hobbies can have the same effects, there are hobbies out there that people do that will give you […]

There are things that we do in our everyday lives that can actually make us better at trading. Some of them may be related, while others will have absolutely nothing to do with trading at all. Our hobbies can have the same effects, there are hobbies out there that people do that will give you the skills that you need to be a fantastic trader, in fact, they will improve aspects of your trading. We are going to be looking at some of the hobbies that people do that help to build our trading skills or develop certain aspects of us that would be beneficial to our forex trading.

Reading

This one may seem quite obvious and to be fair, it is. If you like reading then you will love Forex and trading, as there is a lot of reading to be done. Any people get bored when reading and learning, this is why there are so many video tutorials out there now, but if you actually enjoy it then you will be in a good position as there is so much information available for you to take in. There are also trading-related books out there that can be filled with relevant information and so reading those in your spare time can give you some fantastic insight into different techniques or give you ideas that you can implement into your trading. If you are not a fan of reading, there are alternatives out there, but you will find far more information in the written format than any other format when it comes to trading.

Jigsaw Puzzles

Trading can be compared to puzzles in a number of ways, the most obvious reason is the fact that when you are putting a puzzle together, you are taking lots of small things in order to make a larger overall picture. We do the exact same thing when we are trading, we are taking small bits of information from various analyses or indicators and putting it all together to give us an overall picture of what the markets may do and what we should trade. Doing puzzles helps you to take your time, to analyze each piece of information, and to have patience, afterall, some puzzles can take a long time to complete.

Playing Sports

Sport doesn’t seem like it would give you skills needed for trading, but it does. Well not exactly with your trading, but it is a fantastic way to get rid of some of the stress that can build up when trading. In fact, it gives you the perfect outlet to let off some of that steam. For anyone that sits in front of the computer for the majority of their day, it can damage your posture, can stress you out, and can ultimately make you a little bit fatter. Playing sports is a way of rectifying all three of those things. It helps you keep a good posture, it helps you to relieve stress and it can make you that little bit fitter. So even if this is not one of your current hobbies, try making it one once you start trading, especially if you are doing it full time.

Playing An Instrument

If You have learned to play an instrument in the past then you probably have a number of skills that are very desirable for a forex trader, these include things like consistent learning, patience, and being precise in your learning and implementation. It takes a lot of time and a lot of patience to learn an instrument, much in the same way that it takes time and patience to learn to trade properly. Music can also help to influence your mood or to calm you, something that is vital when it comes to trading. There are no shortcuts when it comes to trading, so being able to bring in the characteristics that were required to learn to play that instrument can be extremely beneficial to you as a forex trader.

Writing

While we don’t do much writing when it comes to trading forex apart from the little notes that we jot down in our trading journal, writing does give us a few skills that we can bring across. Firstly it teaches us to be a little more analytical, looking at what we have written in order to find and rectify any mistakes in the spelling or grammar. It also helps us to research, research is an important part of both writing and trading, so being able to do it when you are writing something means that it will be slightly easier for you to analyze different information sources when it comes to your trading.

Collecting

There are a lot of things out there that you can collect, stamps, pokemon cards, marvel figurines, whatever it is, it will teach you one main skill. That skill is patience, you need to be patient when collecting, finding the right item for the right place, and not jumping in too quickly and ending up out of pocket. This same skill needs to be used when trading, you don’t want to jump into a trade too early and at the wrong place, if you do that too much then you will be making losses, so patience is vital if you are looking to become a successful trader.

Buying and Selling

Some people just love to sell things, and this helps you to understand the value of exchanging one item for money or money for items. This is exactly how trading forex works. We are exchanging one asset for another. Getting an understanding of how this works beforehand and what to look for when it comes to price fluctuations can help you out as a trader. If you do this, you are basically trading already, just in a more physical form rather than online as a retail trader.

The thing with hobbies is that it really doesn’t matter what it is, a hobby is something that you enjoy, this is a great way of destressing yourself. If you have a hobby, do not give it up just because trading is taking up a lot of your time, make time for it, not only will it help your mental health, but it will also help you to develop certain skills that can come in handy when trading, no matter the hobby that you are doing, it will have some form of benefit to your overall trading ability.

Categories
Forex Basics

Struggling With Forex? Read These Quotes Today…

Today we bring you a small collection of famous phrases of traders and personalities that with their words have helped us to improve, we hope that they also help you a lot. Then we’ll leave you with the great truths of the rockers. – If you want to double your money the quickest, then what […]

Today we bring you a small collection of famous phrases of traders and personalities that with their words have helped us to improve, we hope that they also help you a lot. Then we’ll leave you with the great truths of the rockers. – If you want to double your money the quickest, then what […]

Today we bring you a small collection of famous phrases of traders and personalities that with their words have helped us to improve, we hope that they also help you a lot. Then we’ll leave you with the great truths of the rockers.

– If you want to double your money the quickest, then what you should do is double the bills and put them back in your pocket. (Will Rogers)
– I soon realized that men who have succeeded ( Lawyers, Doctors, Scientists… ) have spent years of study and research in their respective fields, before trying to make money from their professions. (William Gann)
– Success is an ATTITUDE, not a matter of luck. (Anonymous)
– Luck does not exist; God does not play dice with the universe. (Albert Einstein)
– What separates the 5% you earn from the other 95% you lose is an enormous amount of effort. It’s perseverance. You have to like it. (Tom Baldwin)

For us these phrases make one thing clear, investing in the markets is a reality, a fact that anyone can do whenever he invests (and never better said) time in doing it, you need constancy, desire, and training correctly, the rest will come.

It is clear that markets are not a magical place where you double the money, the people who earn here are thanks to their personal effort and their dedication.

We also include some of the most famous and famous phrases of the famous Trader Jesse Livermore.

– When I’m not right, only one thing convinces me of it, and that’s losing money. That’s speculating. (Jesse Livermore)
– They say you never get poor by taking profits, that’s right, but you don’t get rich by taking a four-point profit in a bullish market either. (Jesse Livermore)
– We all know that prices go up and down, it happened in the past and it will happen in the future and that’s all we need to know. It is not advisable to be too curious about the causes that cause price movements, as you risk filling your head with irrelevant aspects. All we need to do is try to find the movement and try to follow the flow. Don’t argue with the trend, and especially don’t try to fight it. (Jesse Livermore)
– If you have a little moment I’ll tell you how to make money on the stock market. Buy with low prices and sell with high prices. If you’re 5 or 10, I’ll tell you when prices are low and when prices are high. (Jesse Livermore)

And, without a doubt, the best of so many who said:

– When my driver tells me he’s going to buy some stock, I rush to sell mine. (Jesse Livermore)

These phrases perfectly summarize the trading, the professionals operate with great trends and movements, holding the position until exhausting that trend, never pay attention to the advice of others, only of what they read in the market, In fact, many people believe that they lose in the market because the professionals manipulate it to their liking, this is not so, they simply place themselves on the right side. On the other hand, it refers to the difficulty and time it takes to learn to read the market, this is not a matter of 2 days, you need time and dedication.

Categories
Forex Forex Education

Transitioning From Your Day Job To Full-Time Forex Trading

It is a huge decision, moving away from your secure day job in order to become a trader full time. It’s something that a lot of people aim for or join forex in order to try and achieve, so if you are at that stage in your trading career, you must be doing something right […]

It is a huge decision, moving away from your secure day job in order to become a trader full time. It’s something that a lot of people aim for or join forex in order to try and achieve, so if you are at that stage in your trading career, you must be doing something right […]

It is a huge decision, moving away from your secure day job in order to become a trader full time. It’s something that a lot of people aim for or join forex in order to try and achieve, so if you are at that stage in your trading career, you must be doing something right and well done so far. It is, however, a huge commitment, it should not be taken lightly and the consequences of it should not be underestimated, there is an awful lot that you need to consider.

As a quick overview, there are many things that will change, most notably will be your lifestyle and your finances, the way you work will need to be adapted to the new situation which could potentially throw your entire lifestyle out of synch. If however, you are coming from a position within the financial world, then you will start off with a little bit of an advantage, but it won’t have taught you everything that you need to know. Even coming from a part-time trading situation, that most likely won’t have prepared you fully for what you are about to undertake. Everyone’s approach to being a full-time trader will be different and everyone will have different abilities and requirements. The first thing that we have to consider is whether or not you are actually ready to become a full-time trader.

In order to work out whether you are actually ready to take the leap into full-time trading, there are a few things that you should consider. Think about a few simple questions, what makes you think that you are ready? Do you have enough capital to go full-time? Are you currently making more than your salary? And are your performances good enough? You

 need to look back over an extended period of time in order to answer these questions, if you made one huge trade that made you more than your salary, it does not mean that you are ready, you need to be consistently making more, not just that once. 

It is important that you get some form of experience before even thinking of going full-time. How long have you been trading part-time? We would not suggest getting involved full-time unless you have been trading part-time for at least six months, and the majority of those six months should be profitable and at a level that is similar to your current salary. You will need to have an understanding of different market conditions and how to trade within them. The markets are always changing, if you only know how to trade within a certain condition, then as soon as it changes, your income will dry up and you will begin to struggle. Be honest with yourself, think about what level you are at, there is no harm in staying part-time for a few more months while you hone your skills, just don’t jump into the decision before you are actually ready.

One of the things that we are all told is that we need to use a demo account before going live, this is certainly the case, but it is simply not enough if you are planning to start trading full time. It is great if you are consistently profitable on a demo account, but the only way that you can be sure that you are ready to go full time is to also be profitable when trading on a live account. The environments differ quite a bit between a demo account and a live account, so being able to trade on one does not mean that you will be able to trade on the other. Ensure that you have experience, and consistently profitable experience with trading on a live account, not just demo.

Next, think about whether you have the appropriate space to trade, if you are planning on doing it full time and to make a living out of it, then you can’t be trading from a laptop while sitting on your living room couch. Get yourself a dedicated space that you can use for trading. A room within our house which is there for nothing but trading, if you do not have the opportunity to do this, then hire out a one-man office somewhere and set that up as your trading room. The space needs to be free from distractions, it needs to only have in it the things that you require to help you trade, and nothing else. When you are in that room, you are there to trade, not to mess about, or watch TV. When you have finished trading for the day, leave that space and do not return to it, keep it completely separate from your family or social life. Also, make sure you have a decent internet connection wherever it is that you are trading, the last thing you want is to lose connection mid-trade.

Routine is vital if you want to be consistently successful, one of the issues with working from home is that it can be very tempting to simply trade and work when you want to work, you are now your own boss, but even bosses need to stick to a routine. Without one, there is a good chance that you could end up becoming a little lazy or spending that extra hour in bed each day. Take a look at your strategy, some strategies have certain periods of time where it is best to trade if yours does, then set your routine and schedule around that, for many strategies, this is around the overlaps of the markets. However you also need to consider where it is you live and the time zone that you are in, do not set a routine to get up in the middle of the night in order to trade, you will begin to despise it and let it slip. Be organized, and be consistent.

You also need to set yourself achievable goals, if you are setting yourself goals to make 20% per week, you are simply setting yourself up to fail, the risks that you will be putting yourself and your account under in order to achieve that are not realistic at all. However, if you were to set 20% for the year, that is something that is a lot more achievable. You will be a lot less stressed, but you will need a larger capital to live off. Try not to set your goals too short term, the markets are not always friendly, but over a longer period of time, you should be able to achieve through consistency.

One aspect of your life that will see a lot of changes is your expenses. You are entering a period of your life where you don’t have the job security that you had before. You need to now learn how to manage your money properly and how to cut back and potentially budget. Before you decide to go full time and quit your day job, take note of exactly what you are spending money on, there are bound to be a number of them that you do not actually need, subscriptions that you have set up that you are no longer using, try to remove as many as you can. This will also give you an idea of how much you will be required to earn each month in order to survive. Separate your living expenses from your trading account, you will need a nice capital sum for trading, do not mix up your living balance with your trading balance. When withdrawing, ensure that you are withdrawing what you need to survive, but also ensure that you have enough in your trading account to continue to trade.

Depending on how you have set up your trading space, there may be some additional costs, especially if you have set up an office somewhere away from home, this needs to be covered by the profits from your trading, if you can get it on a 6 months deal, try to pay it all off when you can, this way you can concentrate on the trading without having to withdraw each month or to worry about covering the costs. The same goes for the internet, phone, and anything else that you require within the office. Just remember to try and budget and to cut back on the expenses that you do not actually require.

One thing that people like about working for yourself and working from home is the fact that you are going to have a lot more free time, this does not however mean that you should be spending hat free time going out and having fun, of course, you can do that a bit but you need to be using a lot of your new-found free time to learn. There Is always more to learn, no trader knows everything about what it is that they are doing or what there is to know. Of course, take some extra time away, if you are consistently profitable, then you deserve a little time away, but just don’t take the added free time for granted.

Think about where you are psychologically. How do you feel when you have a loss at the moment? If it bothers you, you need to consider that when you have a loss on an account that you are depending on the money from, it will hit you 100 times harder. The money you are losing will be what you need to live off, this also increases the amount of stress that you are trading under, if you do not deal well with stress then you may struggle here. Also, greed, do you often get the urge to want more or to place larger trades? If you do, then this is not a good place for you, as this is something that you just cannot do when trading full time and trading for a living. Ensure that you are able to deal with these emotions and that you are able to remain calm and focused even when going through hard times. This also goes for accepting losses, when you have one, which you will, accept it and move on, do not let it swap you and do not dwell on it, accept and move on.

You will then begin to find some new friends, your current circle of friends are great, but they probably don’t know much about trading and when you try to talk to them about it, it is most likely a one-way conversation. You will need to find some new friends and a circle of support that understands trading and are traders themselves. This will give you an avenue to communicate, to ask for help, and to see how you are doing with honest feedback from people who know what they are talking about. Join some communities and get involved, the information and knowledge within them can be invaluable to your progress and career.

The last thing that we will talk about is the importance of having a contingency plan, something that you can fall back on should things go wrong. If you were to suddenly lose your capital, what would you do? If you didn’t quite make enough each month, how would you survive? This is something that only you will be able to answer, so you need to be able to consider your own circumstances and come up with a couple of plans on what you would do should things not go right.

Those are some of the things that you will need to consider should you decide to go into the world of full-time trading, it is not an easy thing to do, a lot of people take the plunge and then find that it is not quite right for them. Have plans in place and ensure that you are ready and you will be in a good position to be successful as a full-time trader.

Categories
Forex Basics

Is the Effort of Forex Trading Actually Worth It?

This is quite a big question, yet it is one that you need to ask yourself before you jump into the world of trading. The forex markets are the biggest marketplace in the world and offer the most liquidity and profit potential anywhere in the world, but with all of that opportunity comes a cost, […]

This is quite a big question, yet it is one that you need to ask yourself before you jump into the world of trading. The forex markets are the biggest marketplace in the world and offer the most liquidity and profit potential anywhere in the world, but with all of that opportunity comes a cost, […]

This is quite a big question, yet it is one that you need to ask yourself before you jump into the world of trading. The forex markets are the biggest marketplace in the world and offer the most liquidity and profit potential anywhere in the world, but with all of that opportunity comes a cost, as there cannot be an opportunity with some form of risk. So if you have ever asked yourself questions like, “Is it worth trading?” or “Should I start trading?” this article will give you some insight into what trading is and whether or not it is worth taking it up as a hobby, or even as a potential future career.

To answer the question of whether or not it is worth being a forex trader is simple, the answer is yes, but it is also no. The answer to this question will depend entirely on who you ask and what their own experiences of trading have been. If you were to ask someone who had pulled in all their savings into trading and then lost, the answer will of course be no, they would advise you to run a mile, however,r if you were to ask a very successful trader for one of the multi-million dollar companies, then they will most likely say yes, simply based on their own experiences. So asking others won’t really give you a clear picture or idea as to whether or not you should be trading.

So we know that you will need to find out first hand whether it is right for you, but you first need to get an understanding of why you are thinking of being a trader in the first place. What is it that has made you think about trading? Are you looking to become rich quickly? Are you looking to make a little extra on the side of your job? Are you looking for a completely new career? Knowing this will give you an idea of what your aims are and whether trading will be able to offer what you want. Are you willing to learn? To spend hours and hours reading, analyzing, and practicing? If yes, then it may be something that you can work with. If you already think you know it all, or simply want to get rich overnight, then there may be a rude awakening when you actually begin to trade, overconfidence is one of the most dangerous emotions when it comes to forex trading.

What does it mean to be a forex trader?

Forex trading is all about buying and selling currencies, you try to buy low and sell high, that is all there is to it. Of course, it is a little more complicated than that. There are tonnes of variations to trading, multiple different account types, lot sizes, dozens of pairs to trade, each with its own influences and influences. With that, here are hundreds of different styles and strategies for trading, some of which you may have heard of, others you may never hear of no matter how much you trade. There’s so much variation and so many options that you should be able to find something that fits you well.

Trading can also be used to help diversify your portfolio, any investor will tell you not to put all of your eggs into a single basket, well trading and forex is an additional basket, and a potentially very good one to be involved in. It does provide the opportunity to change your career or to build a second income, but it won’t be easy.

Does forex make money?

Yes, that is the simple answer, but only if you are doing it properly. For every penny that you can make, you must also risk some, so those that come into it simply wanting to make a lot of money, will risk far too much and most likely lose it all, while those coming in with the expectation of a long term investment, over the period of years, will properly maintain their accounts and their risk and will then be on the right track to be profitable.

The problem is that we cannot actually tell you how much you will make, there are a lot of different factors which would influence this, your starting balance, the risk that you take, the market conditions, your strategy, and more. There are a lot of factors that will influence how profitable you are. If you think about it, make 5% to 10% per month for 10 years, you will be looking at a small fortune, but try to push that to 50% per month as an example, you will probably only last a month before you have lost it all, think long term, not instant profits.

One thing that you need to consider when looking at trading is the comparison to a normal career. With a normal job, you have stability, you know how much you will be bringing in or at least what the minimum amount will be, when it comes to trading there is no guarantee. In fact, you could even lose money in a month, the volatility is there, you can make a lot, and we mean a lot, but you can also not make anything, so if your current financial situation is quite tender, trading full time would not be a sensible option, however, doing on the side of a normal career job is certainly an option, and a good one at that.

Should I become a full-time trader?

Another question a lot of people ask, but they normally ask this one after having traded part-time for quite a while, there are however some exceptions who jump straight in and go full time. If You are thinking of going full time then there are a few considerations that you will need to take. Do you have enough capital to sustain things, if you have a bad month, two months, three months, will you still be able to survive? Are you currently making as much if not more than your actual job with your trading? Do you have the discipline to keep yourself on track when doing it full time? These are just some of the things that you need to consider, if your answer is no to any of them, then you should probably hold off going full time for the moment. You will also need to consider whether you actually enjoy trading, if you do then great, but many people find it boring to sit by the computer looking at graphs for hours on end, so if get easily bored, you may begin to struggle after a while.

What are the risks?

When there is the opportunity to make money, there is also a risk involved. When it comes to trading this risk can be pretty high, people have lost entire accounts on a single trade, others have lost an account over a longer more drawn-out time period of months or even years. This is why it is always stated that risk management is key. Risking 1% per trade as opposed to 10% per trade can save your account, the profits won’t be as high, but again, we are going for long-term profits rather than overnight riches. If you are planning on trading, then you will need to stay disciplined, create a risk management plan and then stick to it, as soon as you deviate, you are putting your account in danger. It is of course also possible to lose even when doing everything right, so you need to go into trading knowing that there is risk involved.

So let’s assume that you have decided that this is something that you want to do, how would you go about starting? The first thing that you want to do is to find somewhere to get a basic forex education, there are plenty of places out there in order to do this. You will then need to start reading and read a lot, there is an endless amount of information out there. You will also want to get yourself a demo account, somewhere where you can practice, if you have not got one yet, get one, it will give you an idea of what you need to do to place trades and a little insight into how the markets move, all valuable things to know. Once you have gained a bit of knowledge, put it to practice within the practice account, then eventually you will be ready to go live as a forex trader.

Categories
Forex Forex Basic Strategies

How To Earn $398 Per Day Trading Forex

How does earning $398 a day sound to you? Good right? Many of us can only wish that we will eventually make this much, for some it is a reality, but for most, it is a distant dream. Yet it is achievable, but the real question that you need to be asking yourself is whether […]

How does earning $398 a day sound to you? Good right? Many of us can only wish that we will eventually make this much, for some it is a reality, but for most, it is a distant dream. Yet it is achievable, but the real question that you need to be asking yourself is whether […]

How does earning $398 a day sound to you? Good right? Many of us can only wish that we will eventually make this much, for some it is a reality, but for most, it is a distant dream. Yet it is achievable, but the real question that you need to be asking yourself is whether or not you should be aiming for that amount, and what stage you are currently at. Yes, it is achievable and we will be looking at how you can achieve it, but also why you probably shouldn’t be aiming for something so high straight away.

Should You Aim High? 

Ultimately, yes you should be aiming that high, but you should not be aiming that high straight away. In fact, your first goals should be to simply be consistent or even profitable, those are good targets to aim for. If you think about your current trading and your current strategies, what level are you currently at? How much are you making? You will need quite a large balance and a lot of experience in order to make so much per day. Yes, it is certainly achievable, but it is achievable once you have a number of years of success under your belt. Aim high, but do not aim too high too fast.

Start Low

It is important that you start with more realistic targets, start thinking about simply being profitable, that should be your first goal and the first thing that you aim for. Even something like $10 a month is still a positive result and is still a good step in the right direction. Then once you achieve that, increase it, to $20, then $50, then %100, then start looking at weekly targets, $50 a week, $100 a week, and so forth. While many like to look at daily targets, we would actually advise against this, simply because it can force you to make mistakes or to trade when you shouldn’t, but we will look at that shortly.

Daily Targets

We mentioned earlier about daily targets, sometimes people like to set daily targets but we like to think that these can actually be quite dangerous. If you are trying to make a certain amount each day it can lead to over-trading or larger, more desperate trades. This is why we try to place longer-term trades, it takes away a lot of the pressure that you may be putting yourself under. So instead of placing daily targets, try placing a weekly one, this will mean that you can still have bad days and you won’t feel that you need to make additional trades just in order to meet your targets. Weekly or monthly targets are best, just don’t try and put yourself under too much pressure with large and short goals and targets.

It Takes Money to Earn Money

Let’s be honest, if you want to make a lot of money you are going to need a lot to begin with. Otherwise, you will be using ridiculous amounts of risks which could very easily lead to you blowing your account. If you want to be making $398 each and every day then you will either need to be placing some rather large trades or an awful lot of them, either way, you just can’t do this with a small balance, even with a balance of $10,000 you will most likely struggle to get near to this figure. So the simple fact is that if you want to make a lot of money you will need to have a lot of money in the first place. This does not however make the target unachievable, as it will just mean that you will need to build up your account balance first, start small but aim high.

Take Your Time

You need to remember that you aren’t actually in a rush to make his amount, yes we want to get there as quickly as possible but there is no reason to rush and no reason to put your account under any additional risks by trying to get there as quickly as possible. Instead, take things slowly, the markets aren’t going anywhere and so there is no rush to get to your targets as quickly as possible. Use the time it takes to get there to build up your account balance and to learn, learning is a never-ending endeavor within the trading world and so take your time, do not rush, and try learning a little bit extra along the way.

It can be very tempting to rush your way to achieving such a good target, making that much each day is a dream for many and it would allow them to quit their job and work from home. That amount could solve the majority of a lot of our money issues, but it is not something that you will achieve straight away. You need time and money to get to that stage, a lot of time and a lot of money. Set your goals high, but ensure that you do not rush and that you plan your journey there, do not put your account under risks that you do not need to.

Categories
Forex Money Management

How to Save Money on Broker-Related Fees

When it comes to trading forex, from the outside it looks like it is a fantastic and quite straightforward way to make money. In reality, there are a lot of hidden costs that your broker may be adding to our trades. We are talking about spreads, commissions, swap charges, deposit fees, withdrawal fees, and more. […]

When it comes to trading forex, from the outside it looks like it is a fantastic and quite straightforward way to make money. In reality, there are a lot of hidden costs that your broker may be adding to our trades. We are talking about spreads, commissions, swap charges, deposit fees, withdrawal fees, and more. […]

When it comes to trading forex, from the outside it looks like it is a fantastic and quite straightforward way to make money. In reality, there are a lot of hidden costs that your broker may be adding to our trades. We are talking about spreads, commissions, swap charges, deposit fees, withdrawal fees, and more. All of these fees will add up over time and if you are not careful they can really eat into your profits. We are going to be looking at a few of the things that you can do that could help you to reduce the fees that you are paying and to help you save some of your profits from going into the broker’s profits.

Find the Right Broker

There are a lot of brokers out there, with so many being available, there is also a lot of variety when it comes to the fees that are being charged. Some have high, some have low and some do not have any, but you will need to weigh up the benefits between the fees and the features that you will receive. A broker with very low fees may not be offering the same features as one that charges higher fees. However, if you are paying too much on all fronts, then it may be time to look for another broker. There are industry standards when it comes to the fees, so if you are with one that is far higher than the rest of the market, then you should probably think about changing brokers and going for one with slightly lower overall fees.

Swap Charges

A swap charge is a fee that your broker charges when you hold a trade overnight, these charges are applied directly to the trade that is being held. You won’t find many brokers that do not have swap fees, but there are some out there and some brokers also offer Islamic accounts which do not have swap fees, but the spreads on those accounts are often higher. For many brokers there isn’t much you can do when it comes to the swap fees, they are something that you may need to accept, but you can of course reduce the amount of money that you are paying by trying to close out your trades before the cut-off point in the evening. You will need to weigh up whether it would be worth closing our trade early to avoid the swap or to accept the swap if your trade will make more profit.

Spreads

Spreads are a big one, the spread is the difference between the buy price and the sell price, if a broker has a big spread then the markets will need to move a lot more in order for you to make the same profit than you would with a broker with a lower spread. Brokers often offer different account types, accounts like ECN accounts will have generally lower spreads, so these accounts are good ones to go for If you have a high spread account, there is no harm in getting in touch with your broker to ask if they can lower your spreads, most can do this on an individual account and if you are a good customer of theirs, many will b happy to give a little discount to your spreads.

Commissions

The average commission being charged these days seems to be around $6 per lot traded. Some accounts have commissions and some do not, those without commissions often have large spreads as the commission is often charged as a way of reducing h spreads on the account. If you are being charged anything more than $6 per lot traded then you are most likely being ripped off, either look for a new broker with a lower commission or get in touch with your broker in order to ask that your commission is reduced, if you have a high trade volume with the broker, they will most likely be happy to reduce your commissions a little bit.

Deposit Fees

A bit of a dinosaur this one, but some brokers actually still charge for depositing money into your account, that is right, they charge you to put your money into their accounts. If your broker does this, get out, that is the only advice, there is no place in the forex trading world for brokers that charge you for putting your money into their account.

Withdrawal Fees

Just like the deposit fees, some brokers will charge to withdraw your money. This can be a bit of a pain especially if it is not advertised on the site. There are a few things that you can do, you could look for a broker that does not offer withdrawal fees, there are a lot of them out there but this can be a bit of a hassle, moving all your money into another trading account. You could also check which withdrawal methods are available as some brokers will charge for one method but not for another, so it may be worth changing the method used in order to use one of the ones that do not have a charge. If you are a big player, with a high trade volume, get in touch with your broker, some may be willing to waive any fees that you would otherwise have to pay for your withdrawals.

Rebates

You may have heard of rebates, this is a way of getting back a bit of the money that you are paying through your commission or spreads. There are a number of reputable companies out there that offer you rebates for your trades through a number of different brokers. You will have to sign up for a new account through their introducing broker link, but apart from that, it is a completely automated process. There are also some brokers that will offer rebates directly from them. There will often be a trade volume requirement on these rebates, but if you manage to achieve them, it will save you money getting back a percentage of the commission that you are paying, well worth it if the commissions and spreads are already quite low or at least in line with the industry standards.

Interest

Some brokers will offer you interest for simply having money in your account, a fantastic way to make a little extra money and to help counter the effects of the fees that you are paying. Of course, you are not going to be making thousands a month through interest, but even a few extra dollars per week or month will help to offset some of the fees that you are paying. There aren’t as many brokers offering this sort of thing, but if you are able to find one with other decent features and fees, then it is a great way of making a little more.

Those are some of the things that you can do to help reduce or counteract the fees that your broker may be charging. For many, there may be nothing you can do about them, but for others, it may be worth at least getting in touch with your broker in order to ask whether or not they can reduce any of the fees that you are being charged. There is no harm in asking and many brokers will be happy to offer you something new if you are a good customer of them.

Categories
Forex Basics

Problems Everyone Has With Forex (and How To Solve Them)

When it comes to forex trading, every single trade will have its own individual experiences, however, there will also be a lot of things that are similar, simply due to the nature of the markets. Some of those similarities unfortunately will be problems, problems that the majority of traders will experience. Some may see them […]

When it comes to forex trading, every single trade will have its own individual experiences, however, there will also be a lot of things that are similar, simply due to the nature of the markets. Some of those similarities unfortunately will be problems, problems that the majority of traders will experience. Some may see them […]

When it comes to forex trading, every single trade will have its own individual experiences, however, there will also be a lot of things that are similar, simply due to the nature of the markets. Some of those similarities unfortunately will be problems, problems that the majority of traders will experience. Some may see them as problems, others though may not actually class them as a problem, even though they experience them. We are going to be looking at some of the problems that every trader will experience and the different things that you can do to try and get past them.

Too Much Risk

When you are doing anything with your money, there will be risks involved, risks that could result in you potentially losing any money that you have put in, this is certainly the case when it comes to trading forex and this is a problem for many people. Not necessarily the money that you are putting in, but the emotions and stress that the potential losses can cause. Some People are simply not able to handle risk as well as other people, this is known as their risk tolerance. If you have low levels of risk tolerance then you will find it hard when trading, each and every trade that you put on is increasing the risks to your money and each trade can result in a loss. Some people will struggle with this and so they will end up closing trades early or imply not placing them.

What we need to ensure is that we have a proper risk management plan in place, one that will allow us to reduce the risks for each trade and so that we can see exactly what is being risked with each trade. Things like a risk to reward ratio will allow us to plan the maximum amount that we can lose with each trade through the use of stop losses. These will automatically close the trade when it hits a certain point, this way we can reduce and manage the losses that we are going to take. It keeps our account safe and knowing what the potential loss is before we even place the trade can help give people with lower risk tolerance a lot more confidence in their trade and can help to take some of those worries away. So ensure that you have a proper risk management plan in place to help reduce the issue of trading being a risky endeavor.

It Takes Too Much Time

Another thing that a lot of traders coming into the industry do not fully understand is the amount of time that it takes to learn and to actually begin trading. The initial periods can take a lot of your free time, you need to learn the basics, you need to create a trading strategy, you need a risk management plan for that strategy, and more. This can take a lot of time, more than most people expect as some come into it thinking they will set up an account and then trade, you can of course do that but it will ultimately result in loss.

So yes it does take a long time to get ready, however, it doesn’t always stay like that. Once the initial learning has been completed and you have a strategy ready. Depending on the strategy that you have created, they take up different amounts of time when we look at actually placing trades. If you are the sort of person that does not have a lot of free time, then you can create a strategy that only requires you to place trades once a week, this way you do not need to spend a lot of time placing trades. So yes the initial learning and starting out, but once you have passed that stage, it does not actually take too much time to trade itself. Of course, you will be constantly learning more, but that can be done in bitesize chunks.

It’s Hard to Track

Let’s be honest, when you are placing a lot of trades, not many of us think that we have the time to track everything, to write down everything that we are doing and why. One of the things that are thrown at us when we first start trading is the fact that we are supposed to be keeping a trading journal. A journal where we write down everything that we’re doing, the trades, the results, the reasoning behind it. We just don’t have time to do it all or to even keep a track of the trades we have running.

The good news is that it is a lot quicker than you might think, yes it can be a pretty slow process when you first start out, but it speeds up. It now only takes us a few seconds to write down what we are doing and why, our trading platform also shows us most of the information that we need such as the times of trades, the profit and loss, and so forth. It seems like it will take a long time to build the more that you do it, the quicker it becomes. At the start, it may be a hassle, but it really does not take a lot of time at all once you get used to doing it.

You Need A Lot of Money

When it comes to things like investing, you often hear the phrase “You need money to make money”, while to some extent that is true, if you want to make a lot, then you need a larger balance, but you certainly do not need a lot when you are first getting started. In fact, many brokers allow you to join from as little as $10, making it pretty accessible to most people in the world. Those that were once priced out of the markets can now very easily get involved. It will be hard to make much with such a small balance, for that you will need more, but it just shows that you do not need a lot in order to get started and to actually make anything.

Those are just some of the problems that a lot of people run into when they trade forex. There are others, plus there will be problems that are very individual, that only you may experience. What is important to remember, is that things that look difficult or look like they may stop you in your tracks now, may not actually be as big of an issue as you may think and there will always be ways to get around and to solve the problems that you come across.

Categories
Forex

Will Forex Trading Last Forever?

The best researchers in the world say that the future is predictable. We can understand how things are going to evolve based on the things that occurred in the past. Some state that history repeats itself in cycles, while others believe in linear patterns where the world and societies advance to a higher state of […]

The best researchers in the world say that the future is predictable. We can understand how things are going to evolve based on the things that occurred in the past. Some state that history repeats itself in cycles, while others believe in linear patterns where the world and societies advance to a higher state of […]

The best researchers in the world say that the future is predictable. We can understand how things are going to evolve based on the things that occurred in the past. Some state that history repeats itself in cycles, while others believe in linear patterns where the world and societies advance to a higher state of existence.  So, let’s start with the basics… 

What facts do we know about the history of trading so far? We know that trading alone came to exist in the earliest of times when people exchanged goods without any proxy. The first coins were made of electrum, an alloy of gold and silver, and by 560 BC, the Lydians (a region in present-day Turkey) managed to create a coin made solely of gold. In those times, the value of the coin depended solely on the value of the metal it was made from. Logically, the more gold a country had, the more wealth and power it possessed.

The first expeditions to the New World began in the search for gold and more dominance in the world. European countries started to print money, which caused an imbalance between coins and paper money. This was the onset of what we know now as the gold standard.

Why is this important for forex? Well, the money we trade today is different from what it was back then. Today’s currencies are fiat currencies, which means that they are no longer backed by equal amounts of gold.  Currencies’ strength and dominance would change over time. However, it wasn’t until the 1990s that the currency trading we know today could commence.

With the introduction of internet trading, banks began creating their trading platforms. In the meantime, online trading platforms were designed for individual traders, and in 1996 the forex market came into existence. The thing is that large banking institutions saw potential from currency fluctuations early on, and this interest persisted to this day.

Different banks, hedge funds, and investment institutions are always on the lookout for what the majority of traders are doing. They always look for ways to exert more control over the market so they could manipulate the prices to their benefit. It’s a nonstop game, a trading Perpetuum mobile. So the real question one should ask is whether the banking sector will ever shut down.

If trading currencies somehow became completely unprofitable and these big institutions decided to back away, this would mean that there is another source of profit that could suffice the demands of these major players. Otherwise, large corporations and banks would take a huge loss, which they would never let happen.

It is they that are moving the market. And, although we as individuals profit from trading in this market, realistically speaking, the market would not exist (and boom) in the first place if it wasn’t for the big banks’ benefit. Therefore, if forex ever disappeared, you could still use all the trading fundamentals and apply your knowledge and skills somewhere else. This is what essentially happened with all new markets. Those who switched from stocks to currencies, for example, just needed to get accustomed to new rules of trading. 

Still, remember the last big economic crash of 2008. What happened with forex? It kept growing nonetheless. Recessions occur cyclically as economies need them to reinvent. Nevertheless, does spot forex depend on what the market is doing? No. Unlike stocks, real estate, and other investments, this market powers through.

In the spot forex world, we have natural uptrends, downtrends, and consolidation periods. When we trade, we trade one currency against the other. And, should we ever see that a specific currency is not doing as we expected it to, we can simply short it. 

Whenever one thing goes down in spot forex, something else goes up.

The USD became really strong in 2008 because everyone took their money from their investments and parked it in this safe-haven currency. This may never occur again in this form, though, because big banks will never let it happen. People will always go back in time thinking that they could use the same pattern to make money in an economic downturn. As forex is recession-proof, the only thing you should worry about is your approach.

The combined daily average exchange in the Forex market is $5.1 trillion every single day as of 2019. It is unlikely that it will suddenly collapse, but your account could. Currencies always change and so do the countries and economies. What you should wonder is if you are safe from global conditions as an individual? If you are solely trading in the currency market, do you think you are protected enough? No matter how many different currencies you trade, you only get paid in one currency. So, if that currency collapses, what are you going to do?

Think of your next move. You could consider expanding to other markets (e.g. metals) to take the edge off. You could also have other currencies on you so you too can be recession-proof. As for forex, individuals will always look for ways to make cash. Like with beauty and slimming products, people always want more money.  And, from the more macro perspective, as long as different nations exist in the world, they keep using their currencies, and international trade is enabled, forex trading is very much essential.

Yes, there have already been some changes. For example, a few years ago, the NFA banned US retail customers from trading leveraged gold and silver. That is how XAU and XAG crosses disappeared overnight for non-institutional US residents.  We know that currently only 6% of all USD is printed, whereas all other money is digital. The disappearance of paper money has been rumored for quite a while, but there would need to be a much bigger jolt to shake up the forex world.

Something would need to replace the regular currencies or there would need to be some extreme measures to hinder individual and institutional profit before it will stop – a new global currency/cryptocurrency, a major limitation on banks’ opportunities to profit, or else. Spot forex is still an incredibly lucrative industry for banks, brokers, and trading companies, so the odds of currency trading vanishing are pretty low.

Instead of thinking about the ways forex could be wiped off the map, we may be better off strategizing how to increase our own financial stability. This year has been incredibly turbulent with the amount of news and global changes, and forex still remained more or less intact. That is why currency trading is highly unlikely to disappear any time soon.

In the past few years, forex has developed from being a largely inaccessible investment tool to a worldwide phenomenon. What is more likely to happen in the future, then, is an increase in prospects for big banks to take the cream off in this market – more lenient regulations, more international trading, and certainly more opportunities to profit for both people and banks.

We are already seeing the proof of this happening with the increased mobile trading and trading software programs and platforms. Remember that a few years ago you needed a substantial amount of money to gain access to the foreign exchange market, making it nearly impossible for small investors to trade currencies without going through banks or financial organizations. In today’s world, we are fortunate enough to start with as little as $100—$200 to trade currencies. 

This bubble is not going away any time soon because this would not benefit anyone, especially not the major players. Like with weight loss pills – practically no one ever lost weight, but everyone keeps buying. You should just be smart enough not to be in the 90% losing group and take the advantage of this booming market. 

Categories
Forex Basics

Is There Such A Thing As Risk-Free Forex Trading?

Risks are the first thing to consider by anyone who wants to undertake a role as a trader/ investor. The risks of losing money due to force majeure, due to manipulations of Forex by market makers, this is due to a mistake of technical analysis or if lose something in the fundamental analysis. It is […]

Risks are the first thing to consider by anyone who wants to undertake a role as a trader/ investor. The risks of losing money due to force majeure, due to manipulations of Forex by market makers, this is due to a mistake of technical analysis or if lose something in the fundamental analysis. It is […]

Risks are the first thing to consider by anyone who wants to undertake a role as a trader/ investor. The risks of losing money due to force majeure, due to manipulations of Forex by market makers, this is due to a mistake of technical analysis or if lose something in the fundamental analysis. It is not possible to avoid 100% risk, but it can be optimized or minimized. Read the article and learn how to minimize/optimize trading risks and how to create a balanced investment portfolio.

On Thursday, 15 January 2015, the Swiss Central Bank shocked the market when it announced that the fixed exchange rate of the Swiss franc could no longer be maintained against the euro, as it had for more than 3 years. After the announcement of the Central Bank, the rate of the franc rose by more than 30% against the US dollar and the euro, the Swiss stock market, on the contrary, plummeted by 10%, which affected the exporters. The consequences for traders were catastrophic. Those who made short on the franc (keeping the pair in short positions), simply in a second lost their deposits due to the stop out. The brokers also had a hard time, because a good number of them announced liquidity problems.

On Saturday, September 14, 2019, Saudi Arabia’s oil facilities were attacked by drones, which reduced approximately 50% of the country’s total oil production, which is more than 5% of the world’s oil supply. At the start of Monday’s day, the futures of Brent oil skyrocketed by 19-20%. The intraday jump was the largest since the Gulf War of 1991. Those who failed to close short transactions before the weekend lost a lot.

Both examples are trading risks. It is impossible to fully foresee them, because, as always, there is the probability of force majeure. But it is possible to minimize the risks. Also, as the risk increases, the probability of profit is higher. Let’s take the same example of oil: if short traders made losses, those who bet on growth earned about 20% in a single day.

From this summary, you will learn:

  • What are trading risks and what types of risks exist.
  • Methods to minimize trading risks,
  • Types of diversification of the investment portfolio.

In the summary, I will try to present two main aspects of risk minimization: errors in employing technical analysis and general risks in foreign exchange trading and the creation of an investment portfolio. My opinion is partly subjective, so I suggest addressing it and discussing it in the comments.

Types of Trading Risks

Trading risk: The risk of losses arising from market factors affecting price direction or errors in the analysis (forecasting) of the market situation.

Technical risks: Risk of loss due to technical problems: platform failures, order failures, broker fraud, etc.

Psychological (behavioural) risks: Risk of error due to a person’s emotional state: stress, emotion, fatigue, euphoria, fear, greed, etc.

Trading risk is uncertainty about future price movements as a result of market and non-market factors. So, if we have an open position, we are facing a unique risk, that risk is that we have erred in identifying the price trend. If the price is directed in the opposite way to the open trade, the trader will lose.

If the transaction has not yet been opened, the risk is in the incorrect prognosis of the trend direction or its reversal. We have to admit there’s no clear definition of the concept of “trend”, so traders understand it in their own way. Traders themselves determine the value of the critical amplitude (price reversal), which is called the risk limit and this risk will always depend on the amount of capital in the deposit. In other words, a trader is willing to endure, for example, a 100 point reduction, another no more than 20 points. They all determine the level (limit) of risk themselves but must understand the nature of the trading risks.

Where Risks Come From

Error in analysis and prognosis. Any publication of statistical information, the publication of the results of the Fed meeting, and meetings of other central banks have their effects. The best question we have to solve first is whether the investor knew how to correctly examine the importance of this or that news item. And the forecasts, made by the majority, were justified? Traders should consider these and other factors in the forecast. And there can often be mistakes. Traders often ignore or lose something important, which can result in an incorrect forecast.

Force majeure: It can be presented in different ways: a humanitarian disaster, an unexpected political decision, or a terrorist attack, discovery of new mineral deposits, release to the market of a new product that has not been previously announced, sudden bankruptcy. Force majeure often leads to immediate and generally long-term consequences. Examples of long-term force majeure include the collapse of “dotcom” and the mortgage crisis in the United States, which has become a global crisis. It must be said that there are people who were able to make a profit from the crisis. (I recommend watching the American film “The Big Short”, which describes this situation quite well).

The human factor: Incorrect interpretation of patterns, signs due to fatigue, lack of attention, stress, etc.

Another classification is the simplified division of the causes of trading risks into forecasting errors in technical, fundamental, and human analysis. We have already said what are the reasons for the most important risks in the section we call “Force Majeure”, and I will dwell on more details on the risks resulting from errors in technical analysis.

High volatility at the time of opening the transaction. The greater the volatility, the greater the breadth of price changes and, therefore, the more and faster you can gain from it. It seems reasonable, but the risk lies in assessing this volatility because if the price goes against you, you must be psyched that you can lose more than you usually win. The data of the indicators are relative, as well as the data of the volatility calculators.

Tip: Identify volatility visually. The price range can be referred to as the distance between opposite fractal ends or candle accumulation. For starters, you can train on the history. At first, it will be difficult for beginner traders (know from experience). Second tip: greater volatility, different from the daily average, is observed at the time of the appearance of fundamental factors. Just don’t open any transactions at this time.

The trading strategy of trading by levels individually: someone opens positions expecting a level rebound, someone tries at breakup. For someone that’s a loss limiter. There is the so-called zone of turbulence around fractal levels in short-term time frames, where the price moves in different directions with a narrow amplitude. Predicting price movements in this area is inefficient.

Tip: Use the levels only as a guide. Open transactions out of levels and try to avoid staging at levels of resistance and stop support, as it can be used by large traders (market makers, which will be discussed below). If the transaction is already open in the direction of levels, then it is better to leave before reaching the level. Otherwise, there could be a rebound with the possible slip, which will worsen performance.

Basically, the analysis is reduced to determine whether the break/rebound of a level is true (the trend) or false (the correction). Does it really make sense to put him at risk?

Opening of transactions in overbought and oversold areas. This is the risk of opening a position at the end of a final trend. A classic mistake is trying to enter when the trend is already underway. At the peak of growth, large traders abandon trading, reaping some less intelligent traders.

It seems reasonable to employ RSI or stochastic, but they are not efficient at minimizing risks. They are often lagging behind, they invest in extreme price zones, and so on. So even if you use the indicators to determine the zones, you can still make a mistake.

Tip: You can identify signs of trend depletion as follows. The amplitudes in the three fractal sections are compared side by side in the time frame M1 (the exhaustion of the trend is clear there before). If the amplitude is shrinking (the amplitude of each subsequent fractal is shrinking), this suggests that the trend is exhausting.

And the simplest and wisest advice is that when starting an operation at the beginning of the trend, don’t do what most. Be careful when interpreting the signals of the indicators, there are no perfect and impeccable indicators.

Opening of transactions where there is no clear trend. There are situations where a trader makes a correction or a local price change for a new trend, which often occurs on flat. It is difficult, especially inexperienced. To identify the flat end, as it often does not have a clear beginning or end.

Tip: I suggest again using the comparison of price amplitude within the flat trend. If in the short term, there is a price movement whose amplitude deviates sharply from the average value, you should be alert. Do not enter an operation immediately, the first price change could be a correction. Analyze multiple time periods at a time: the signal period is М1-М5, confirming longer periods.

Incorrect indicator parameters: This will lead to an incorrect interpretation of the signals.

Council: Before starting to use an indicator with adjusted parameters in trading on a real account, try the system (tester МТ4, FxBlue). More detailed information about testing and optimization strategies in this summary.

Application of pending orders: Outstanding orders are used in trading strategies based on the opening of transactions when the price exceeds the consolidation area. Orders are placed in opposite directions, betting that one of them will work. The risk arises from the fact that outstanding orders are set on the basis of intuition, rather than actual price movements. The distance is calculated, for example, in percentages of the average value of the price movement in the consolidation area. We will always have to take the risk that the price will leave the area, touch the order and then move in the opposite direction.

Tip: To reduce risk, avoid using pending orders.

Abrupt reduction of contributions when a long position is opened. There are several examples when the price changed by 800-1000 points in just a few minutes. Of course, hardly anyone could react, make a decision and make a compromise.

Tip: Always use a stop loss.

Market makers. A particular trader is only a tiny part of a much bigger game. The creators of the market are therefore great players, who can influence price through their huge capitals. They can create a necessary repository of information by manipulating media, forums, and other resources through forecasting, analysis, and information.

But this is not his only means. They could see levels where purchase and sale orders are concentrated, that is, stop losses and pending orders established in advance. As practice shows, most traders set stop loss in the area of the local ends, being tied to strong or rounded levels of support/resistance. Pending commands can be configured the same way. The market makers oppose the majority, push the price to the area where the orders are accumulated, then, even taking into account all the forecasts, most traders are activated to stop.

For example. Market makers want to sell a certain currency at the best possible price. You see multiple stop loss higher than the current rates (green horizontal line at the bottom of the screen), which are basically the orders requested. On the other hand, market makers see many orders pending in the same price area, which does not allow the price to rise (volume equilibrium).

The price is pushed with small orders to the necessary level, after which it satisfies your sales volumes through purchase requests (stop loss). Given the number of short requests, it is unlikely that the price will go further.

Tip: There is no point in fighting with market makers. Therefore, you should learn to identify potential areas of command concentration and try to avoid them. It should also bear in mind that indicators cannot anticipate the possible actions of market makers. Therefore, it makes sense to rely less on indicators and pay more attention to levels, patterns, and exchange of information (trading volumes, order table).

You can suggest any other risk of technical analysis, write in the comments. Let’s look for more ways to minimize and optimize trading risks together. With regard to reducing the risks of erroneous forecasts based on fundamental analysis, there are few recommendations:

  • Do not blindly trust everything that is reported in the media and be especially careful with “expert” forecasts. Check the official data reported by news agencies and official resources.
  • Use complementary analytical tools: economic calendar, action analyzers.
  • Evaluate dynamics statistics, comparing them with analysts’ expectations and previous reports.
  • And prepare to react instantly to a force majeure.

Hedging and Blocking

Coverage and blocking mean the same thing, go into two opposite operations (I won’t dig too deep into the big difference between them). Let’s imagine that a trader opens a buying position, but unfortunately, the price drops. Then, the trader has opened a selling position with the same volume. The loss from the first position is offset by the gain from the second operation.

Advantages of blocking a position:

If you set the locks correctly and unlock the positions on time (cancel the unprofitable or secure position), you can even make profits this way. There is even a trading strategy based on the creation of an order grid.

The lock allows you to manage the floating loss that does not affect the balance or spoil the trading statistics. But, there is always a defect in the locking positions. In the event of incorrect opening and closing of insurance and major positions, the trader is more likely to receive the loss resulting from both the transactions and the spread. Therefore, blocking is a high-risk strategy for a novice trader, such as trading in a similar way to Martingale, but an advanced trader can protect against unprofitable trading employing blocking and hedging.

The strategy and blocking rules should be highlighted in a separate article. If you want to do so, write in the comments.

How to Minimize Trading Risks

Diversification: So far, this is the best recommendation you can take into account when protecting your investment from certain business risks. But it is a kind of art to properly diversify its portfolio of investments and rebalance it regularly.

Types of diversification:

Asset division: It is the most widespread among the community to make a diversification. In addition, you can allocate your funds not only between different currency pairs or shares but also between deposit accounts, precious metals, cryptocurrencies, antiques, real estate, etc.

Diversification by risk level: There are assets that, in case of force majeure, increase in price (for example, gold). There are assets that, even in the midst of strong market fluctuations, hardly change prices. We have assets at our disposal with volatility, for example, of 5% per day. The way we distribute investments among assets with different volatility rates, risk (and, consequently, profitability) is the diversification of risks. I suggest you read the article on protective assets.

Applied diversification: Distribution of investments between strategies with different levels of risk: Martingale and conservative negotiation, scalping and long-term strategies, manual and algorithmic negotiation.

Institutional diversification: Here it is about working with multiple counterparts: Forex, Exchange and different brokers, trust management, etc. If we’re in a force majeure situation (we already discussed the case of the Swiss franc) a counterparty fails, it can withdraw at least the rest of the money from the second.

Statistical diversification: This is a direct and inverse correlation. For example, corn and wheat futures often have the same price direction, USD and gold trends often go the opposite way. A portfolio composed of reverse-correlated assets. will be logically less profitable, but safer because at the time when a low-priced asset, an increase in the price of a different asset offset the loss.

The diversification of investments is limited only by the imagination of the trader and his ability to conduct a market analysis, as well as the appetite for risk. The greater the risk, the greater the potential benefit. That’s why trading risks are often intertwined with psychological risks.

Trade risk insurance:

Stop-loss placement: At this point, we could comment on an example of drivers who ignore the mandatory driving rules of fastening seatbelts. It’s not easy to guess because some people don’t want to use means of protection. On the one hand, market makers can determine the areas where many stops are concentrated and can deliberately push quotes to catch them. Also, a stop loss will be very helpful if a large price difference happens as a result of a force majeure event. We can find another argument, that a trader is not able to react in a volatile market, and a stop loss may save at least part of their deposit.

Close transactions before the weekend: Sometimes, the situation in the Forex market changes drastically for an hour. From Monday to Friday (suppose a trader works 24 hours a day), one could still react to a force majeure. But the weekend, when markets are closed, can bring unpleasant surprises. One example is drone strikes in Saudi Arabia. And it’s even worse if the market opens with a price gap after the weekend.

The moderate use of leverage: That’s logical. If you use high leverage, a negligible force majeure will close your positions due to the stop out.

Calculation of the volume of the lot according to the volume of your deposit, level of risk of the transaction and deposit, and other factors More information in this article.

Conclusion

No risk-free Forex strategies. Is it necessary to minimize Forex trading risks? My opinion is no. Those who want to eliminate or minimize risks cannot participate in trading and invest their capital in a bank deposit. Risks must be optimised by properly assessing their opportunities and the capacity to withstand losses. The risk limitation and balancing policy is a risk management policy, which must be drawn up before trading in a real account begins. Only you can develop a risk management system yourself because in reality there are no recommendations that are good for everyone and that can be perfect for all investors regardless of their condition in all cases.

Categories
Forex Basic Strategies

How to Trade Your Way From 500€ Up to $1 Million

If we refer to Dan Zanger, Rob Booker, among others, we can say that yes, that they have achieved high returns from relatively small accounts. The secret of both the same: a lot of effort and a lot of perseverance. Obviously, virtually no one is considering achieving high returns from such a small base, but […]

If we refer to Dan Zanger, Rob Booker, among others, we can say that yes, that they have achieved high returns from relatively small accounts. The secret of both the same: a lot of effort and a lot of perseverance. Obviously, virtually no one is considering achieving high returns from such a small base, but […]

If we refer to Dan Zanger, Rob Booker, among others, we can say that yes, that they have achieved high returns from relatively small accounts. The secret of both the same: a lot of effort and a lot of perseverance. Obviously, virtually no one is considering achieving high returns from such a small base, but I will prove, at least mathematically, that the fact is possible.

Step One

Have the account in micro-lots. The benefits of the accounts in micro-lots allow us to adjust up to the last euro, our monetary management. Being able to add a micro lot more in each operation will make us enter with the right capital, not much, not little, which if we had a standard account, the least we could adjust, would be with hundreds of euros. 0.1 lots = 100€/$ (depending on the currency of the account itself).

By the time we have a large enough account, it will be time to move to an ECN account. The main advantage that we will have is the drastic reduction of spreads (in many cases, they are below a pip), so it will be easier to get positive trades.

Step Two

Have a system, obviously with positive mathematical hope. During the creation of the system, it would be good, at least in my opinion, to look for systems with high success rates. What are the advantages of a system that makes 90% of hits compared to one that makes 50%? Consistency. The probability that the former will make 5 consecutive losing trades amounts to 0.001% while the one that has 50%, make 5 bad trades, is 3.13%. Much more likely.

If in the first system, we lose 5 consecutive times, we have to worry, since it is very likely that the system has expired at least temporarily, while in the second, we should wait until operation 13.

Step Three

Risk. This point can raise blisters among our readers. Here we must read very carefully, and have very clear consequences that can have. An error in understanding can leave us with nothing. Now you see why he wanted a system with a high percentage of hits.

Let’s start. Let’s deduct: the higher the risk, the higher the profitability, and with this, the faster to get that million euros/dollars. We have a system with a 90% hit, with a Take Profits of 30 pips and a Stop Loss of 120 pips. 1:4 ratio. Matematica Hope 0.13%.

What number of operations should we do to get to 1,000,000?

Logically, at greater risk, fewer operations are needed to achieve our goal. The next step we should consider is knowing how many trades we have before we lose all the capital in our account. If at most we want to keep 50€ of the initial 500€, at most we want to lose: (50-500)/500 = -90% of our account.

 

Therefore, if we have a system that hits 90% of the time, the probability of failing 5 consecutive operations amounts to 1:100,000. Virtually impossible. As we can see, the maximum risk that can be assumed should not exceed 35%, because if we see that the system loses that fifth operation, we will know for sure that the system has abandoned us.

Suppose now that we have found a system like Tim’s, with 95% of hits. The probability of failing 4 operations amounts to 1:160,000, therefore, we could already reach risk of 40%. In order to reach 50% risk, we should find the system with 98% of hits. If instead, we have a system that is 50% correct, we should wait until operation 17, to know with great certainty that the system has stopped working (probability 1:131.072). Therefore, we could not risk more than 10% per operation.

Conclusion

To reach 1.000.000€ we can do it through two routes:

The traditional route, little risk, little by little, waiting for some 6000 and peak operations (doing one operation a day, and that the system does not fail us halfway, are approximately, about 25 years (one operation a day, during the 52 weeks of a year). The venture capital route, that is, if we lose all our capital, “nothing” happens. In this case, we just have to look for probability, mathematical hope on our side.

The number of operations according to risk will vary according to the mathematical hope. The system I have proposed has a very low hope. With higher hopes, fewer operations will be needed. The truth is I highly doubt that anyone in their right mind can do a high-risk strategy (more than 10% per trade) by doing manual trading. It is most likely that such “suicidal” strategies can only be done consistently through automatic trading.

Categories
Forex Psychology

Maybe Emotions are Actually Good for Forex Trading?

In the last 20 years, advances in brain imaging technology and other methods of analysis of neurological activity have produced important advances that allow us to better understand the complex functioning and biology of the human brain. This discipline, neuroscience, is closely related to neuroeconomics, which in the last decade has combined knowledge of the […]

In the last 20 years, advances in brain imaging technology and other methods of analysis of neurological activity have produced important advances that allow us to better understand the complex functioning and biology of the human brain. This discipline, neuroscience, is closely related to neuroeconomics, which in the last decade has combined knowledge of the […]

In the last 20 years, advances in brain imaging technology and other methods of analysis of neurological activity have produced important advances that allow us to better understand the complex functioning and biology of the human brain. This discipline, neuroscience, is closely related to neuroeconomics, which in the last decade has combined knowledge of the brain with biology, physiology, psychology, behavioral finance, and economic theory to improve understanding of decision-making in competitive market environments, where risks and benefits are taken.

For Colin Camerer, Professor of Behavioral Economics and Finance at the California Institute of Technology, neuroeconomics involves opening the “black box” of the brain to inform economic theory and, potentially, for a better understanding to mitigate risky behaviors such as rogue traders. Denise Shull, president and founder of ReThink Group, a New York-based firm that advises professional traders, defines it as the study of “what happens in the brain when we face risk and other decisions that are made under conditions of uncertainty.

When using brain imaging, neuroeconomics also measures heart rate, blood pressure, and facial expressions to evaluate physiological reactions. And it uses games-like tests and experiments to study decision-making, make inferences about how the brain works, and build predictive models about human behavior. These efforts are aimed at advancing and enriching our thinking about economic theory, financial decision-making, or public policy decisions.

Science has advanced in parallel with recent studies of bubbles and crises and how decision-making and risk-taking, at the micro and macro levels, contribute to these events. Andrew Lo, professor of finance and director of the Financial Engineering Laboratory at MIT’s Sloan School of Management, has focused on this area of study. Collaborating with Dmitry Repin of Boston University, Lo has conducted neuroscientific tests on professional traders, looking at how the complex interaction of rational thinking, emotions, and stress can affect risk-taking and the profitability of investments. In his 2011 article, Fear, Greed and Financial Crises: A Cognitive Neurosciences Perspective “by investigating the neuroscientific bases of knowledge and behavior we can identify keys to financial crises and improve our models and methods of dealing with them”.

And watch out because this doesn’t just stay in the financial markets but goes further: President Obama has invested $100 million last year in the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) project, in order to create a map of the brain.

Brain Photos

Functional magnetic resonance imaging (fMRI) is the fundamental tool that has allowed a great boost to neuroscience in the last two decades, making it possible to obtain more information about the experiments performed.

With fMRI, scientists are able to scan brains “in action” in a safe, non-invasive way. They are able to obtain empirical data on which specific parts of the brain are active during a given activity. Though there’s still a long way to go in terms of image quality and accuracy, the technology has produced amazing images and scientific findings.

Coates’ case is striking: he currently works as a researcher at the University of Cambridge but is a former operator of the derivative tables of Goldman Sachs and Deutsche Bank so he knows both worlds well. According to Coates, the way risk is assessed has changed in the last 20 years. Thus, in the nineties “the head of the trading table asked what your position was and how you felt about it, so you could decide if a trader could handle a certain position”. But over time, Coates points out, “this approach was replaced by statistical indicators and risk managers who carried out stress tests and made instantaneous assessments of risk levels.”

However, this change has not allowed us to detect “hidden changes” – those moments that Coates calls “the time between the dog and the wolf” – when people become very risky or very averse to the risk of the normal. Coates says statistical-based methods, which do not take into account biology or neuroscience, are not able to capture the behavioral changes in traders.

In any case, what Coates’ book highlights are that neuroscience and physiology have shown that financial decision-making is not a purely cognitive activity, but that physical components also intervene. Human beings do not manage information without passion, we are not computers; on the contrary, we react to information physically, our bodies and brains move in tune.

Research also shows that much thought is normally carried out automatically and involuntarily, in contrast to controlled thinking that is voluntary, conscious, and open to introspection. Daniel Kahneman himself, a psychologist who won the 2002 Nobel Prize in economics, referred to these modes in 2011 in the title of his book Thinking Fast and Slow, that is, what some authors describe as cold and hot decision-making.

Hot decisions include hunches, instinct, or intuition, which are a way for the body to record critical information that has been received. They hardly affect consciousness, but they are essential to rational choice. Some scientists question the reliability of intuition but experts in neuroscience consider intuition a form of pattern recognition that can help traders identify patterns in complex markets and create algorithms for the exploitation of these patterns. In Coates’ words, “the common sense of a winning trader may be due in part to his ability to produce body signals and listen to them”.

Coates has also deepened the impact of natural hormones on economic agents and markets and in particular the “winning effect” on male traders. The biological evaluation of groups of traders in the City has led him to the conclusion that testosterone and cortisol are chemical messengers that point out risks and economic rewards.

Moderate testosterone levels, says Coates, prepare male traders to take moderate risks, but higher levels occur when traders make winning trades and continue to win. The resulting hormonal imbalance can lead to excessive risk-taking (i.e., the winning effect). What’s more, Coates points out that during bullish markets testosterone is likely to increase, causing risk levels to rise altogether which in turn exaggerates the rally. In contrast, cortisol, a hormone associated with stress and anxiety, can rise during a stock market crack, so traders become irrationally risk-averse. Finally, Coates takes his theory to the extreme: “episodes of irrational exuberance and pessimism that destabilize financial markets can be caused simply by hormones.”

Evidence of the Emotional Component

Another point of view is that of Denise Shull of ReThink Group. This specialist in trader psychology and experienced futures trader claims that much of what we know and have been taught about rational vs. emotional thinking is wrong. Neuroscience has shown that we perceive, judge, and decide in a totally opposite way to that proposed by the prevailing theories in the field of psychology and economics, in which above all the benefits of rational thought stand out.

In particular, Shull cites a 1992 study by Antonio Damasio and Antoine Bechara, professors of neurology and cognitive neuroscience at the College of Medicine at the University of Iowa and creators of the Iowa Gambling Task, a simulator that attempts to represent the decision-making process in real life. In this study, the patients who participated had suffered damage to the orbitofrontal cortex section of the brain, which had been confirmed by fMRI. By studying patients, they found that this area is part of a broader neural system involved in decision-making. Although these patients retained their cognitive abilities despite brain damage, they also showed a dramatic loss of emotional feeling, having begun to make destructive and wrong decisions for their lives.

One patient, for example, had lost all sense of proportion, spending hours obsessed with trivial details and ignoring more important matters. These data led to the conclusion that emotion or feeling is an integral component of the machinery of reason. Another interesting study cited by Shull is the 2007 study by Myeong-Gu Seo of the Robert Smith College of Business at the University of Maryland and Lisa Feldman Barrett of Northeastern University, on the impact of emotions on the decision-making process of buying shares. They selected 101 investors to record their feelings while making investment decisions every day for 20 consecutive business days.

Seo and Barrett found that individuals who experienced more intense feelings during operations made better decisions and made more money, just the opposite of what one would expect! The purpose of the study is that the common prescription of “ignoring your emotions” seems to be wrong for an effective regulation of feelings and their influence on decision-making. Rather, it seems to be the opposite: that people who are in the best position to identify and distinguish their feelings can better control the biases induced by those feelings and, as a result, achieve better trading results.

So, according to Shull, “in risk management what we’re trying to do is extract emotion and come up with a mathematical model, but neuroscience research shows that that takes us the wrong way. ” Moreover, in his paper The Art of Algorithmic War, Shull states that “after most of the non-scientific debate about feelings and emotions there lies the assumption that a feeling or emotion automatically becomes an action. This is simply false… In their purest form, feelings and emotions are designed to give us information. Without realizing it, Wall Street adds emotional information to analysis reports”.

The Biological Factor

Another author who has much to say in this field is Peter Bossaerts of the Caltech Laboratory for Experimental Finance. Bossaerts has applied neuroscience methods to a variety of risk-related topics, including how individuals process risk in a given situation and make risk-related mistakes.

In the tests conducted by Kerstin Preuschoff, a researcher at the Laboratory of Computational Neuroscience at the Swiss Federal Institute of Technology in Lausanne, and Steven Quartz, professor of philosophy and researcher of neuroscience at Caltech, subjects participating in the study were asked to play cards while observing the brain areas activated during risk management using fMRI. The collected data suggest that the anterior insula section of the brain, considered the seat of feelings and emotional awareness, transmits this information in a fairly precise way – essentially in the form of mathematical signals.

For Bossaerts, this means the ability to process risks is encoded in the brain in the form of an algorithm, similar to any mathematical model that quants like so much. Bossaerts has further concluded that while a person may receive new information, the brain’s “processing algorithm” for risk remains constant.

That is, Bossaert claims to have discovered mathematical measurements in an essentially emotional area of the brain so that the processing of emotions in the human being is not something that is done raw, but something that is reported in a reasoned way.”

Conclusion

It is clear that the application of neuroscience to trading opens up a whole new field of research to explore. While the applicability of neuroscience findings to trading is still in its infancy, it is not out of the question that in the future we will be able to reprogram ourselves to trade or act in a certain way to prevent our stress from affecting our performance or even take medications that modify the production of certain hormones to control imbalances in our character that affect trading.

Categories
Forex Basics

Top 10 Fun Facts About Forex Trading

When it comes to forex and trading, there is loads of information out there, it also has a very rich history, so when we think about it, there are thousands of facts that could be spoken about trading. Today we are going to be looking at some of the fun facts about trading that you […]

When it comes to forex and trading, there is loads of information out there, it also has a very rich history, so when we think about it, there are thousands of facts that could be spoken about trading. Today we are going to be looking at some of the fun facts about trading that you […]

When it comes to forex and trading, there is loads of information out there, it also has a very rich history, so when we think about it, there are thousands of facts that could be spoken about trading. Today we are going to be looking at some of the fun facts about trading that you may not really know about. Of course, some are very common knowledge, others will be a little more on the subtle side with fewer people, and some may simply be surprising. So let’s take a look at some of the facts about trading.

It’s Been Around for Centuries

Forex and currency exchange has been around for centuries, of course, it never used to be about trading actual currencies. These days we are trading the GBP with the USD, back then we may have been trading some corn for a sheep. Even in biblical times, the Talmud actually records foreign currency exchanges back in biblical times. They record how moneychangers would set up various stalls where they would then change currencies for another while taking a commission for the change. These sorts of exchanges have also been recorded within ancient Egyptian papyri which date back as far as 260 BC.

The Cable

You may know that the GBP/USD currency is known as “the cable”, but do you know why it is called that? It is known as the cable due to the fact that before we had satellite and fiber optic internet, the information used to be passed between the London and New York exchanges with a giant steel cable that passed under the Atlantic ocean and was used to synchronize the rate between different currencies between the two stock exchanges. While it is no longer needed, it still has some use in modern times, but it is no longer used for the synchronization of data as this can be done quickly through more modern means such as fiber and satellite.

The Worst Currency Inflation

You have probably read about it or seen in the news or even social media sites, that the currency inflation rates in Zimbabwe went through the roof, which is out of sync with the rest of the world which often has very subtle movements in the inflation rates. The country experienced one of the worst inflation in record history where the inflation rate went up 6.56 sextillion percent, to put that into perspective, that is over 6,000,000,000,000,000,000,000%, a number that many probably didn’t even know existed. Due to this, Zimbabwe had to completely wipe out the currency and get rid of it, this happened in 2009 and up until 2014, it had to use foreign currencies as its main currency. During the high levels of inflation, the banks in Zimbabwe actually had to limit back withdrawals to Z$500,000 which equated to just $0.25 USD.

There Has Not Been A Collapse

Contrary to belief, there has not actually been a financial collapse that has affected the forex markets, it has caused a bit of movement but there has never been a collapse. Unlike the stock markets which have had a number of crises where the stock values have plummeted and people have lost thousands or even millions. When those same crises have occurred, the forex market managed to withstand it, this is mainly due to the fact that the markets are made up of traders and the prices rely on them, rather than companies and shareholders, this is why those collapses did not affect the forex markets as much and they can potentially withstand anything that happens.

Printing Money

An interesting fact about American banks, before the US Federal Reserve was established back in 1908, pretty much any bank was able to print their own money. The US Federal Reserve put a stop to this as it had the potential to cause mass inflation within the USD currency should the bank have decided to start printing.

Huge Amounts Are Traded

There is an absolutely huge amount of money traded within the forex markets each day, which is why it is the most liquid market in the world. There is an estimated $6.6 trillion being traded every single day. A number that will most likely never be topped apart from the forex markets themselves. No other market comes close and no other market probably ever will.

Challenged by Cryptocurrencies

The current market prices and trade volume of cryptocurrencies is nowhere near that of forex trading, but if there is going to be any sort of market that can actually challenge that of forex it will ultimately end up being the cryptocurrency markets. Currently, the transaction volume is in the tens of billions, far behind the forex markets, but there has been a substantial increase, and it is continuing to increase each year. It will take a long time, many, many years to get anywhere near the same level, but with the constant increase and exponential growth of the cryptocurrency world, there is certainly a chance that the forex markets will be challenged years down the line.

Forex Will Always Be Here

The markets will always be here in one form or another, even if traditional currencies are no longer available and no longer around, there will be some form of currency exchange. The World will never have a single currency, it just would not work due to the different ecosystems and the different natures of the various countries within it. So even if there are not traditional currencies, there will still be a need for the exchange of currencies whatever they are. Due to this, the foreign exchange market will always be there and so there will always be an opportunity to trade one way or another.

The US Market Is Not the Center

Many people, especially those that have seen some of the Hollywood or bigger films about trading and forex will often think that the USA is the center, it is where the most trading happens. When in reality, only around 19% of trades and trade volume takes place in the US, instead, the center of the trading world is actually London, it is predicted that 43% of all forex trading transactions take place in the United Kingdom, and London, making it the main hub for Forex trading.

Millions Required

Forex trading didn’t use to be as accessible as it is today, many years ago before the rise of retail trading brokers, in order to trade you would need to be an institute with a minimum of at least $40 million in order to trade, not something many individuals would be able to do. These days, you can trade for as low as $10 which makes it highly accessible for people all over the world and from pretty much any location that has an internet connection.

Those are some interesting facts about the forex markets, some you probably knew, others you may not have. The emirate is always changing, different things are always happening within them, but one thing is for sure, the markets will be around for a long time to come.

Categories
Forex Trade Types

Short-Term vs Long-Term Forex Trading: The Comprehensive Guide

There are a lot of different strategies out there including things like scalping, day trading, swing trading, trend trading, and position trading. This can make things quite complicated and hard to work out what strategy and style is best for you. These different styles can be further broken down into two different categories, short-term trading, […]

There are a lot of different strategies out there including things like scalping, day trading, swing trading, trend trading, and position trading. This can make things quite complicated and hard to work out what strategy and style is best for you. These different styles can be further broken down into two different categories, short-term trading, […]

There are a lot of different strategies out there including things like scalping, day trading, swing trading, trend trading, and position trading. This can make things quite complicated and hard to work out what strategy and style is best for you. These different styles can be further broken down into two different categories, short-term trading, and long-term trading. By combining them into these categories it is easier for us to analyse the advantages and disadvantages of both which makes it easier for you to decide which style may be best for you, and that is exactly what we are going to do in this article.

When you started trading you were probably told to think long term, that trading is a long term prospect and that you should not be expecting quick returns, this is true, but it does not mean that each individual trade needs to be long term. So let’s take a look at some of the advantages and disadvantages of trading a short-term strategy. Short-term styles of trading are often seen as scalpers and day traders, both of which do not hold trades for more than a day.

Advantages of short-term trading styles: The first and most obvious advantage is the fact that you will get your money quicker, a short-term style of trading means that you won’t be holding the trades for long, so you will close them quickly and will get your profits quickly. There is also a huge earning potential when it comes to short-term trading, due to trades being closed quickly, you can place many more trades, meaning that you have more potential trades to make a profit on. High volatility currency pairs may make this style very profitable. There is also a limit to the amount of your capital that is at risk when trading, due to not holding trades for a long time, your capital is regularly freed up for more trades, this also means that you won’t be holding your losing trades for a long time either, thus reducing the amount of risk that your account is under at any one time.

Disadvantages of short term trading styles: One issue with opening and closing a lot of trades quickly is that it can become quite costly, in fact, each trade that you make will have a cost, either an omission or a spread cost when you open up a lot, commissions can start to add up and can eat into your profit potential. We mentioned that you can have a lot of profit potential, the other side of the coin are the losses that you can get too. Opening up a lot of trades, if they all start going the wrong way, you can potentially have a lot of trades that have gone rd and which end up as losses. It can also be quite stressful, you will need to maintain concentration when trading, these are not set and forget strategies, you need to sit there concentrating and making decisions pretty much all the time. The other disadvantage is that it takes up a lot of your time, you need to be actively trading, you ain’t place trades and then walk away, you need to be there and you need to be constantly analysing the markets and external factors that may potentially affect the markets.

Examples of short term trading styles include things like support and resistance where you buy and sell on the support and resistance levels, candlestick patterns also fall into this category, things like inside bars, triangles, pennants, and flags can all be used to help work out trades that can be closed within a few minutes to a few hours. So those are the advantages and disadvantages of short-term trading, let’s now take a look at the advantages and disadvantages of longer-term trading styles.

Advantages of long term trading styles: Trading longer-term strategies can actually save you time, what we mean by this is that they are often set and forget strategies, you place a trade on and then can easily walk away and let it do its thing, you do not need to sit there constantly watching the markets. It can also be less stressful, due to the fact that you are not constantly needing to do anything such as watching the charts. You can also take your time with your analysis, there is no rush and no stress in placing it quickly. Each individual trade can be much more profitable than short-term trading style, this means that you can make as much with a single trade as you would with 10 or 20 from a scalping strategy. These sorts of styles are also cheaper, as you are placing fewer trades, you are also spending less on things like commission which can often eat into your profits. It is also far easier to adjust your trades when news events come out or economic data, making it slightly safer and more resilient to market movements.

Disadvantages of long-term trading styles: There are of course disadvantages to this style of trading, firstly you will be waiting for your profits, it can take a long time for trades to close, from a day to months. It also requires a lot of research and analysis, with this style of trading you are often putting on larger size trades, and so you need to make sure that it is right, you need to put in a lot of time and effort into analysing the markets and other various data sources to ensure that you are putting on the right trade. Some strategies that are considered long-term are things like swing trading and position trading, both of these strategies hold onto trades for a long period of time, sometimes even weeks or months.

So those are the advantages and disadvantages of short and long-term staples of trading. Which one is right for you will depend on your own personality and time constraints. There is no harm in trying a number of different styles until you find the one that is right for you. Hopefully, this has given you an insight into the differences between the two, whichever you decide to stick with for a while to ensure whether that style is right for you or not.

Categories
Forex Psychology

Five Reasons You Need to Stop Stressing About Forex

Forex can be stressful, it’s one of the things that are told to us over and over again especially when things are going the wrong way, but does it need to be stressful? There are things that we can do that help us to reduce the amount of stress that we are put under and […]

Forex can be stressful, it’s one of the things that are told to us over and over again especially when things are going the wrong way, but does it need to be stressful? There are things that we can do that help us to reduce the amount of stress that we are put under and […]

Forex can be stressful, it’s one of the things that are told to us over and over again especially when things are going the wrong way, but does it need to be stressful? There are things that we can do that help us to reduce the amount of stress that we are put under and ultimately to show us that forex trading really isn’t anything to be stressed about.

Why can it be stressful?

It is important that we understand why trading can be stressful and in the right situation, it can be very stressful. Each and every person will have different feelings and will have different reactions to how the markets are going and also how their individual trading is going. Stress often comes from losses, when we lose it is not a nice feeling, as soon as we take a loss we have lost a bit of our money, money that we like. If that money is money that we actually could not afford to lose, then the stress levels will continue to rise further. For many stress can also come upon us when a trade is in the red, we can see it going the wrong way and this can cause us to worry that we will lose some additional money. Stress can come at any time and so we need to work out how we can work through it and help to reduce it.

Use proper risk management.

Risk management is the cornerstone of any strategy, it is the foundation that is there to basically protect your account. It is there to ensure that you do not lose more than you want to with each trade and ensures that you do not blow your account. When you have it in place it can help to take out a lot of the stress from your trading. Of course, the opposite is also true, if you do not have proper risk management in place then every single trade that you make will have the chance of blowing your account. If You are in that situation every trade then you will be under constant stress every time that you trade. This is why you need things like trading rules, dictating how and when you trade, stop losses to help protect your accounts, and a proper risk to reward ratio, that dictates the maximum loss and profits that you will make with each trade. Knowing the maximum that you can lose on each trade can really help you to stop stressing about them, as you already know how much you could lose.

Take regular breaks.

At times it will be impossible to prevent any stress from building up, so then we will need to try and deal with it. One of the best ways to do this is to simply take a break, breaks are a fantastic way for us to reduce our stress levels. Getting away from what is causing the stress is the first step, it will prevent any new thoughts or new stresses from being added to the equation. Secondly, being away and doing something else will help to take our minds off of things that are already causing us stress. This way we think about something rose, something else that gives us enjoyment or at least doesn’t add to the stress. Doing this regularly can help you to regulate the stress that you are under. Do this regularly, multiple times a day, it is even a good idea to do it even if you aren’t currently experiencing stress. Just ensure that you are not sitting in front of the computer for hours and hours without any breaks. Coming back with a clear and calm mind can really help you to improve your productivity and trading results.

Ensure we trade with money we can afford to lose.

The golden rule of trading and investing, only to trade with money that you can afford to lose. It remains true in this situation too and is certainly a way to help prevent certain stresses that you would otherwise experience. Think about it, you deposit some money that you actually need for your rent as an example, how would you feel as a trade goes into the red? You will be in a constant state of stress and panic, you are about to lose the money that you need for your rent and you won’t be able to say it this month. Why would you put yourself under that? Reduce or completely remove that level of stress by only trading with what you can afford to lose. If it will affect your life, do not trade with it. Also do not borrow money or take a loan in order to trade, that just puts you in debt and you will end up owing a lot of money should things go the wrong way.

Understand that losses are a part of trading.

Losses are a  part of trading, a big part of them, every single person that has ever traded (apart from those that only do a single trade) will have experienced losses, all of the most successful traders in the world have experienced losses and a lot of them. In fact, they are so much a part of trading that we factor them into our trading through our trading strategies and risk management. Ever heard of the risk to reward ratio? This is where we decide how much we will risk with each trade and how much we want to win. Knowing this means that we know exactly how much we might lose with each trade and that each trade is actually a fantastic way for us to learn from what we have done and for us to improve. Look at why the trade lost and what we can do differently. 

Those are five of the reasons why you should stop stressing about your trading. We understand that trading can be stressful, of course, it can, anything to do with money can be. It is important that we do what we can to reduce those stresses, if things get too stressful it can make us want to quit entirely, so try and include and think about the things that we mentioned above, it will help you to be calmer when trading and in the long run will enable you to be a much more successful trader.

Categories
Forex Basic Strategies

Signs You Need Help With Your Forex Strategy

We all need help with things in life, the problem is that it can often be quite hard for us to realise that we need the help, we need someone on the outside to point it out for us. This is no different when it comes to trading and forex, often we think we are […]

We all need help with things in life, the problem is that it can often be quite hard for us to realise that we need the help, we need someone on the outside to point it out for us. This is no different when it comes to trading and forex, often we think we are […]

We all need help with things in life, the problem is that it can often be quite hard for us to realise that we need the help, we need someone on the outside to point it out for us. This is no different when it comes to trading and forex, often we think we are doing fine, only to have someone else come along and tell us that we are doing things wrong or to point out the fact that we aren’t actually profitable at the moment.

When we are told we are wrong or we aren’t doing well, it can make us feel pretty down but it is also the first step to improving and the first step towards being a better trader. So if someone tells you or points out something that needs improving, take it on board and put it into action. We are going to be looking at some of the signs that may be there that could be telling you that you need to make changes and that you may need a little help with your forex trading.

You Aren’t Profitable

Sometimes when we are in the driving seat, we don’t actually realise whether we are profitable or not, we are concentrating so much on our actual trading that we are no longer looking at or recording the results that we are taking. We could be months in, with hundreds of trades under our belt, but until someone comes along and looks at those results, we won’t realise that we aren’t actually making any money.

There is an easy solution to this, you need to keep a trading journal. This will allow you to write down pretty much anything that you are doing, and by doing this, you are setting yourself up for success. Simply down to the fact that you will be able to look back at your previous trades and see exactly what you did and the results of that trade. This way you will be able to see exactly what your profits and losses are, and allow you to work out whether what you are doing is effective when it comes to being profitable.

It’s Too Stressful

Many people find trading stressful, that is one of the many natural emotions and reactions that you will get to trading, the problem comes when people find it a little too stressful. Some find it so stressful that they simply need to stop or they just cannot think of anything else, or even function properly afterward. If stress is starting to take over whenever you are trading you most likely need help, but first, you need to look at how you are trading.

Firstly, the money that you are using to trade with, do you need it? Will losing it negatively affect your life when it comes to things like food or rent? If the answer is yes, that is why it is so stressful and that is why you should not be trading with that money, never trade with money that you cannot afford to lose, it will always be a stressful situation. The second thing to look at is whether or not you’re using the correct trade sizes. If you are using trades too big then you will be putting too much of your account in danger, and seeing the trades go into the red can be stressful when the trade sizes are too large. So limit your trade sizes and only trade with money that you can afford to lose, those will instantly reduce your stress levels while trading. There are also a  number of different support groups out there, even just talking to someone, friends, or family works well, can help to reduce your stress levels but getting help from professionals about your stress levels could be an option if it is really getting the most of you.

You Don’t Have Time

Trading can take a lot of time, it also can not take a lot at all, it all depends on you and the strategies that you are using. For many, at the start it can take a long time, there is a lot of learning to do even before you place your first trade, and this can be boring for many who simply want to skip it and start trading, but you need to take the tie to learn. The other thing is that certain strategies take a long time to trade with, there can be a lot of analysis, there can be a lot of trade preparation, and then once you place placed your trades, you need to sit there and monitor them, this is especially true for scalping, where you need to be at the computer during the times of your trading.

If you are someone that does not have a lot of time, then there is not really much point in you trading a strategy that requires you to spend a lot of time in front of your trading terminal. Instead, you should be choosing one that only needs you to place the trade and then the rest will be done for you, these longer-term trading styles are perfect for people who do not have a lot of free time each day to trade. So if you are finding that you don’t quite have enough time, think about switching things up and seeing if you are able to trade more effectively.

Not Knowing What To Do

This is something that is far more common than you may think, yet a lot of people simply do not want to admit it. There will however be situations and times where you simply do not know what it is that you are meant to be doing or how to analyse certain information. Try and get involved in some trading groups and communities. They can really help you out, if you are stuck, ask the question and people will always be happy to help, or even just browsing the community can mean that you find out some information that ultimately helps you to improve and get past your blockage. The moral is to simply ask for help if you are in a situation where you are not sure what to do.

There will of course be other signs that you may need help, if you find yourself in a situation where you are stuck, not understanding something, or cannot see any way to improve, it is important that you talk to people, join an online trading community and talk to people, it is the best way to get around things and people are always willing to help. So if you need help, simply ask for it, it’s the best thing that you can do.

Categories
Forex Basic Strategies

Ways to Completely Revamp Your General Forex Strategy

When you have been trading for a while, you will most likely come across some rough patches, or times where you simply do not think that your strategy is still good enough. Due to this, we will often have to try and change a few things to try and stir things back up and to […]

When you have been trading for a while, you will most likely come across some rough patches, or times where you simply do not think that your strategy is still good enough. Due to this, we will often have to try and change a few things to try and stir things back up and to […]

When you have been trading for a while, you will most likely come across some rough patches, or times where you simply do not think that your strategy is still good enough. Due to this, we will often have to try and change a few things to try and stir things back up and to make a few adjustments. Sometimes, however, you will need to completely revamp your strategy, a complete overhaul to make things more successful. So let’s take a look at some of the things that we can do in order to revamp our strategy and to bring back that spark that it once had before.

Start Over

Sometimes things can become very stale, if you feel your strategy has come to the end of its life then there are still things that you are able to do to try and revamp it. One of those things is to start again from the bottom up. Start with the foundations of your strategy, try and rebuild it based on the current market conditions, this way it will once again suit the conditions of the markets. This may seem a little extreme, starting over completely, but that is one of the ways that you can really tailor your strategy to the current market conditions and one of the ways that you can ensure that it will have the best opportunity to be successful in those market conditions.

Test A New Asset

Sometimes you do not need to actually change or revamp your strategy, instead, you can simply change the asset or currency pair that you are going to be trading. This can put some new life into an already established strategy that you may be using. This once again will enable you to feel as if things are a little fresher even without making any changes. You never know, maybe the strategy will be far more successful on the new strategy than it currently is on the asset that you are trading. So consider this as an option as well as making changes to your current strategy.

Make Subtle Changes

Sometimes you do not need to make large changes, a simple change to one of the parameters or the rules that you use with the strategy could be enough, part of using a strategy is that you need to keep making small adjustments as you go. As the market conditions change, so does your strategy, but the changes do not need to be large. These regular small updates are all things that will ultimately add up to larger changes, so after a year or so of very small changes, the strategy could resemble something that has pretty much nothing in common with the initial strategy that was created. That is the beauty of the small changes, it will create large or completely revamped strategies without needing to spend a long time at once totally changing it up at the same time.

Make Changes to Risk Management

A major part of any strategy is risk management. This is what can potentially make or break a strategy and is the last line of defense for your account balance. Sometimes all you need to do in order to completely revamp your strategy is to change up the risk management that you are using. This may be a change to your risk and reward ratio, a change to the positions of your stop losses, or take profits. Or it could be a change to the size of our trades or even the amount of trades that you place at once. Whatever the change is, be sure to test it first and to ensure that your account always remains safe. Also remember, if your changes to risk management mean that you don’t make as much, you can very easily revert back to the previous plans that you were using.

Be Dynamic

The markets are constantly changing, they are dynamic and will have multiple different trading conditions throughout the year, there will be slow times and there will be times of higher volatility. Due to this, your strategy needs to be dynamic in order to keep up with the ever-changing market conditions. As the markets change, you will need to make adaptations, both big and small changes in order to keep the strategy in line with the markets. This could be changed to your stop-loss levels, your trade sizes, the currencies that you trade, the number of trades being made, and pretty much anything else. Remember that you don’t need to make big changes, but keep track of what the markets are doing, and adapt your strategy and your trading to it.

Look Within

One thing that you also need to do in relation to our strategy, instead of thinking about changing your strategy, there may be something within you that you need to change yourself, or something that you currently do like a bad habit that you need to change. The strategy may actually be working fine, but there is something that you are doing that is causing the issues, or at least reducing the profitability of your trading. So look back at your journal, look back at the trades that you have made in order to ensure that you are following your strategy properly and to help find any bad habits that you may be partaking in, nip those in the bud and your trading will improve without having to make any changes to your trading strategy.

There are many ways that you can change or revamp your strategy, sometimes you only need very small and subtle changes, other times, depending on the market conditions you may need to change the entire thing or even try a new strategy completely. What is important is that you take it one step at a time, and ensure that you are comfortable with the changes, if you are changing something that takes you out of your comfort zone or potentially reduces the profitability of your strategy then there may not be a good reason for making the change. Do not be afraid to make changes though, if one is needed, then it is most likely for the best that you make that change, no after how small it may seem.

Categories
Forex Money Management

Beware of the Liquidity Trap!

At present, triggering this wage-price spiral is not within the reach of the Central Banks. The Keynesians, who have not understood a word of what happens in these cases, call this situation a “liquidity trap” and give it an extremely silly explanation, such as an accidental monetary anomaly that leads to insufficient spending.  They remember […]

At present, triggering this wage-price spiral is not within the reach of the Central Banks. The Keynesians, who have not understood a word of what happens in these cases, call this situation a “liquidity trap” and give it an extremely silly explanation, such as an accidental monetary anomaly that leads to insufficient spending.  They remember […]

At present, triggering this wage-price spiral is not within the reach of the Central Banks. The Keynesians, who have not understood a word of what happens in these cases, call this situation a “liquidity trap” and give it an extremely silly explanation, such as an accidental monetary anomaly that leads to insufficient spending. 

They remember that when the economy was going well (in the Happy Twenties) more was spent but they are not able to see what relationship there was between that spending more and that the economy seemed buoyant and they are not able to understand why it is not possible to spend more now. They blame it for a lack of money, credit, and spending, although it is enough to open the window and look to see a world crushed under huge amounts of money, debt, and poverty resulting from decades of spending orgy.

“Liquidity trap” is just a superficial symptom. The central banker cannot cause inflation because he cannot make the money mass grow and this, superficially, is a consequence of the fact that it is not possible to issue huge amounts of new debt that will make the money mass grow. (The failed credit bubble causes the money stock to shrink at high speed (deflation) and the central banker has to create new debt to compensate for that contraction, to replace the money stock that destroys the unpaid credits, and, in addition, create additional debt that makes the money mass grow and dilutes the existing debt). Many analysts think that, fundamentally, it is this severe over-indebtedness of the economy that prevents creating more debt and growing the monetary mass but this is a superficial point of view. Even if all the debt were forgiven, the economy would still be stuck in a deflationary episode.

Let us remember that a spell of spiral price-wages (or currency devaluation) in which the Central Bank causes the money stock to explode evaporates debts because it evaporates savings. It is a confiscation by the State of the savings of savers to subsidize the forgiveness of debtors’ debts (and to get those debtors to consume again and the State to collect again). In this transfer of income, three parts are involved, the saver who has the savings that are confiscated, the State that forcibly imposes that confiscation, and the debtor whose debt is pardoned at the expense of the savings confiscated from the saver.

When in a “liquidity trap”, this transfer of rents stops working, the Keynesians, to explain what is the piece that may be failing and preventing the “stimulus” of the economy, look at only two of the pieces: the debtor or the State and conclude that either there are not enough debtors willing to borrow more or the inflationary policy of the Central Bank is not aggressive enough. Or, in other words, the state is not showing enough commitment to confiscating citizens’ savings or there is not enough interest in receiving the spoils of the confiscation. They always forget the third piece because they do not know that in the economy there are savers who produce and preserve the real collective wealth. They believe that wealth is produced by central banks when they print bills and by squanderers when they borrow those bills and spend them. If the economy does not come out of its agony it is because not enough bills are printed or because they are printed but not spent stupidly enough.

The cog that has stopped, the cog whose arrest is inevitable when you walk the road to poverty called Keynesianism, is of course the third piece in the confiscation and destruction of savings: the saver. No magical Keynesian accountant spell can get us out of this because it lacks the real savings that they can confiscate and destroy to simulate that they create wealth and produce.

Only genuine production (not disguised consumption of production), and savings that allow the preservation and restoration of capital destroyed in the last 50 years, can lift us out of this depression, but none of this would be possible when the economy is crushed by the Great Parasite and his high priests – shamans.

QE’s operations have failed to achieve their goal of inflation because they are a desperate measure in the face of gigantic deflationary forces and simply fail to overcome the power of those deflationary forces. The QE is not a monetary but a fiscal measure, and is, therefore, illegitimate/illegal, since tax measures can only be decided by elected representatives of a Parliament and not by senior officials (who are also deeply retarded).

The QE, as a fiscal measure, consists of a nationalisation of bad private debt. The huge holes in the banks caused by loans that could not be collected are transferred to the taxpayers’ balance sheet, in a Keynesian fantasy operation since the taxpayers will never be able to pay that debt.

The balance sheet of the financial system, which was completely bankrupt, is somewhat healthy and the debt of households and companies is reduced at the cost of an explosive increase in the debt of future taxpayers (the debt of States). In order to understand the process correctly, you have to understand what inflation is and what deflation is. Inflation is the rate of growth of short-term living debt in the system and deflation is the process of contraction of debt stock.

The price increase is only a marginal symptom, which sometimes accompanies and supposes a canary in the inflation mine but is not a fundamental phenomenon and is not always present. For example, hyper-inflationary processes in the Weimar Republic, Venezuela, Zimbabwe, or, today, Argentina occur in severely deflationary scenarios: debt/real value savings in these economies contract severely even if prices rise due to massive counterfeiting of money by governments.

Deflation, contraction of debt/savings present in an economy occur because agents repay their debts and do not go into debt again, because the agents stop saving and there is no savings to finance new credit or because the debtors are unable to meet the financial cost of their debts and those debts become uncollectible and are erased from the banks’ books.

During the onset of the last Great Depression, the current Great Depression, living debt was grossly contracted by debtors’ default. The non-payment of a debt makes that bank asset a failed one: the bank’s right to collect that debt and pushes the bank into bankruptcy, which destroys the savings of the bank’s shareholders first and the bank’s depositors afterward.

For example, a bank with deposits of 10 billion and a capital of 2 billion contributed by shareholders has lent 12 billion. That bank’s assets: its right to collect $12 billion from its debtors, allows it to meet its commitments of $10 billion to depositors and $2 billion to its shareholders.

If that bank’s debtors defaulted on $5 billion, the bank would have to erase, as uncollectible, assets worth $5 billion. Now the bank has assets of only 7 billion with which it would have to face commitments (debts) of 12 billion. The bank is bankrupt and shareholders’ savings worth 2 billion (the bank stock is listed at zero) and depositors’ savings worth 3 billion (depositors suffer a 30% cut, lose 30% of the balance on their deposits) have been destroyed.

 

Categories
Forex Basics

The Rules of Forex: Are They Meant To Be Broken?

Darwin, analyzing the content of his work “the origin of species”, explained that the strongest species are not the ones that survive, not even the ones that have the greatest intelligence, the ones that survive are the species that best adapt to the changes. This has always been an important part of my investment philosophy, […]

Darwin, analyzing the content of his work “the origin of species”, explained that the strongest species are not the ones that survive, not even the ones that have the greatest intelligence, the ones that survive are the species that best adapt to the changes. This has always been an important part of my investment philosophy, […]

Darwin, analyzing the content of his work “the origin of species”, explained that the strongest species are not the ones that survive, not even the ones that have the greatest intelligence, the ones that survive are the species that best adapt to the changes. This has always been an important part of my investment philosophy, a clear example is my aversion to pension schemes, a product whose extreme illiquidity prevents adaptation to change, and the coronavirus crisis has set a good example of how harmful this can be: Many people have gone blind until it is not known when, and many of them are left without income and perhaps with economic problems. 

Having savings allows you to adapt to change, it is good to have savings; but if the bulk of your savings is locked in a pension plan, they will not serve to adapt to change…

Okay, yes, governments have changed the rules to allow some to be saved. And you’ve done well, by the way. But is it wise to let your adaptability depend on the government changing the rules? What if you’re not on the assumption that ransom is allowed? Maybe you can’t get it out because the plan is in your partner’s name, or because you don’t have problems but your son, father or brother does…

But this post is not about pension plans, but about rigidity vs flexibility; rules vs exceptions. And I’ve titled it “Rules are enemies of the best,” because that’s the corollary that comes from two premises that I think are true:

Rules Are Good

I will finish the post defending the deviation of the rules in certain circumstances, so it is good that I start by making it clear that normally you must follow the rules.  When there is a rule for anything (from the circulation code to the ratio of fixed income to the equity that you should have according to age and risk profile), these rules have been put by people who know a lot about the subject, and who have seen that for most people, Following these rules often gives good results most of the time. If you find a rule in a field where you are not an expert, you will do well to follow it. And if you find it in a field where you are an expert, you should have it as a reference and follow it most of the time.

That being said, make it clear that there are a few rules that are an end in themselves, and these must be fulfilled ALWAYS. But most rules are not an end but a means to achieve a goal, and in such cases, you have to stay the course towards the goal, not the rule…

But Rules Aren’t the Best

¡Nor do they claim it! Many rules do not seek to achieve the best, but to avoid the worst. I saw this a lot in my time at Indra, working in public administrations. There are rules to prevent the posts of civil servants from being given to friends, which would be “the worst thing,” but what happened with those rules is that if someone had entered as an interim had done a good job, he could not be allowed to continue in his post. 

But his position was taken to the contest by anyone who knew how to memorize more articles of the constitution… although that had no correlation with his good performance in the post. What was going on? On more than one occasion, they cheated themselves to make a call tailored to the person who was acting, breaking the rules, to achieve “the best thing”: that the one who had been doing that work continue doing it, for the benefit of all. Probably illegal, but certainly not reprehensible… if you’re looking for the best, you’ll have to break the rules. And the same thing happens with promotions, competitions for hiring companies… or outside the administrations, also happens with professional associations or designations of origin of wines. They all have rules to ensure minimum quality, but these rules will make it difficult to achieve the best possible result.

What About the investment Rules?

Investment rules are made with two main objectives:

Limit the risk: Achieve adequate profitability for the level of risk assumed. Both objectives are desirable (although the definition of risk can be discussed a lot), and to achieve them, certain investment rules have been proposed:

The Permanent Portfolio proposes:

  • 25% Shares
  • 25% Long-term bonds
  • 25% Gold
  • 25% Cash

Reducing the risk with age, Bogle proposed that the percentage you have in the stock market should be to subtract your age from 100 (I who have 46 would have to have 54% in the stock market), and the rest to fixed income. If your profile is more conservative, you can change the 100 by 90 or 80, if you are riskier you can use a 120.

These rules have worked pretty well most of the time, so it would be foolish to ignore them. But this post is about adapting to change… and certain circumstances have changed most of the time. The risk-free bond used to give modest but reasonable returns (2%-4%). Now he’s giving negative returns… you pay to lend the money!

For me, fixed income is at a terrible time, and variable income is at an optimal time. Are we going to follow the rules? Do we remember that the purpose of the rules was to limit risk and increase profitability? Because in the long run, buying cheap (stock market) is a great way to limit risk and increase profitability… 

The problem, of course, is that this is difficult because it is very easy to go from “applying the rules with flexibility” to making hot decisions, guided more by emotions than by reason. This is why designing a system of rules where rules evolve with the environment is especially attractive. Frankly, I have not seen anything similar in other disciplines (except in computer science, but is that computer scientists are “special”), and it would be very interesting… can you imagine that when a particular public administration shows above-average performance, it would be allowed a freer system of recruitment, without the obligation to go through competitions and competitions?

And this that I have commented regarding the rules of distribution of assets in portfolios applies also for many other rules that are used in investment…Distribution of assets by sector? Yes, but first let’s see if there are any particularly bad sectors (banking, for example), or expensive (dotcom in 2000, brick in 2007), and that we leave out.

Distribution By Country? Same Thing

The rule of PER 14? Very useful for detecting craziness when you see normal companies trading at PER 40, but beyond these extreme cases, it has many exceptions and nuances that need to be known. The rule not to invest in companies with high debt? It is more difficult to find exceptions to this because we are just talking about the survival of those species that are able to adapt to change, and high debt limits the ability to adapt to change.

So you know, learn the rules, apply them in detail, understand them thoroughly… and start thinking about when it’s time to break them. Adapt to circumstances and be flexible. And do not stop questioning your own ideas, and listen carefully to those who question them; sometimes you have to unlearn some things to continue moving forward. And as a general rule, avoid the rigidity that comes with debts and illiquid investments… Although I do not despise an illiquid investment that comes with a substantial discount!

Categories
Forex Market

Will Forex Trading Ever Be Shut Down Completely?

Given some of the changes in recent years over Forex trading laws, it is understandable to understand why traders may be concerned. Many countries have imposed very harsh restrictions on the industry and, of course, some are concerned that this may mark a possible end to Forex. The currency market can be huge, but many industries have become obsolete and extinct as well. For a Forex trader who lives professionally in this industry or wants to have a future trading currency, it is worth considering all these changes and how they may affect you.

Of all the financial markets, the Forex market is the largest in terms of liquidity.

According to the Bank for International Settlements -BIS, forex achieved an average daily turnover of $5.1 trillion in 2016.

Remember that this was the moment when several foreign exchange brokers went bankrupt following the decision of the Swiss National Bank’s (SNB) to remove the Swiss franc from the euro. The impact of this momentous decision was catastrophic and immediate. Within minutes, the franc rose by 30% against the euro and other major currencies, causing huge losses to anyone occupying short positions in the franc. Even brokers with excellent opinions declared bankruptcy.

The consequences of the decision were felt throughout the rest of 2015, reducing daily turnover in the market. Most likely, this drop in trading volume until 2015 contributed to the decrease in the average daily trading volume in the Forex market from the previous record of US$5.5 trillion in 2013. Since then, the Forex industry has continued to suffer and therefore hope of a resurgence is diminishing. After the events of 2015, the Forex market recovered somewhat until ESMA announced its plan to change its regulations in 2016.

MiFID-regulated Forex brokers began to feel the pressure even before the MiFID II regulations came into force in January 2018. As early as 2017, UK and EU brokers were already seeing a decline in revenue. Meanwhile, brokers elsewhere, such as Australia, have reported an increase in European customers throughout 2018. This shows that many customers left Europe-regulated brokers to obtain better conditions elsewhere. As a result, these brokers began to enjoy better profit margins and customer bases compared to their European counterparts.

Today, many currency brokers are losing money after European regulators began to impose stricter laws on the industry. The story is the same with all European brokers, who have been forced to reevaluate their business models or face their demise.

In addition to changes in regulation, volatility has also been very low in foreign exchange markets. The BIS reported that the volume of retail trade in 2018 was US$1.104 trillion, while that of 2017 was US$1.672 trillion, a drop of 34%. Thus, there was much less trade in the Forex market in 2018.

Volatility in 2018 was lower as the ECB announced that it would not raise interest rates throughout the year, which would reduce the volatility of the euro. The ECB has been forced to keep its interest rates low after the IMF lowered its economic growth forecast. Add to this the talks about Brexit, trade wars and elections in different European countries, which probably means this won’t change soon.

Those traders who know these facts are very concerned that the foreign exchange market is in a difficult situation. It is quite likely that the main cause of the problem was the changes in regulation. Volatility is known to diminish, but laws are very difficult to reverse once they are active. For this reason, we must debate these laws in depth that have had a disastrous effect and why the authorities came to think they were such a good idea.

Changes in Forex trading laws

The real wake-up call came in 2008 because of the financial crisis, when regulators knew they could no longer rely on the financial companies’ own mechanisms. Japan was the first country to put limits on leverage. As of August 2010, leverage was limited to 50:1 and then reduced to 25:1 as of August 2011. The US of America followed similarly by reducing leverage to a maximum of 50:1 and 20:1 for major and minor/exotic pairs respectively. In both countries, the foreign exchange market declined significantly due to leverage caps and large capital requirements that were set as necessary for retail traders to participate. Japan is also considering another reduction in leverage to just 10:1, but this law has not yet passed.

The European authorities also knew that they could not allow financial institutions to express themselves either, but their response was slower and more measured, but just as devastating. The new Forex regulations were first proposed in 2014 and came into force in 2018 encapsulated under the MiFID II name. After US regulatory changes, the EU had become the next best option for brokers and traders alike, but no longer. ESMA set a leverage limit of 30:1 for major currency pairs, as the GBP/USD live charts and 20:1 for non-main pairs. That was even less than leverage in the United States…

How the new regulations have affected the industry?

As expected, restrictive regulations have slowed down the industry’s performance and revenue. ESMA hopes that by making the laws tough, new traders will refrain from trading and thus will not lose their capital. However, these traders mostly made the decision to trade with CFD brokers in other foreign countries abroad that had and offered better trading conditions. These brokers are often less secure to deal with as regulation in offshore countries is not as strict as that in Europe. To avoid the loss of customers, it has also been noted that European brokers ask their customers to register with their non-EU entities if they want better conditions.

Does this indicate the end of an era?

If history repeats (as it usually does), current levels of low volatility can be a sign that something dramatic is about to happen. This means that of course Forex is not about to end, but is at the dawn of a new era. In fact, this should be the time when traders take advantage of markets to make huge record-breaking gains.

In addition, there may be other causes that contribute to the low levels of volatility we are seeing at the moment, apart from changes in regulation. The growing tension between the US and China may be aggravating the problems existing in the market, as traders and investors in general are waiting to check what you finally happens. Whatever way the two superpowers decide to go, it will have a huge impact on markets and present wonderful business opportunities. In general, no one likes to risk capital when markets are volatile and unpredictable, which is our current situation. Once things fall, markets are likely to resume their previous volatility levels.

What will be the near future of the Forex market?

At some level, it seems all this even an attack on the industry and regulators want to set limits on markets, as many as possible to retail traders, but this is not the case.

The Forex market will definitely be very different in a few years. It may be almost impossible to create a centralized market for Forex operations, but there may be a dynamic for brokers to report all their transactions on time in the future. MiFID II has already proposed several ways to do this, and it is not unlikely to do so.

In fact, the Forex market today looks a bit like the old stock market, where the market was threatened by “bucket shops”. At the time, stock trading was very risky because there was no simple way to convey orders to the stock exchange, but this problem was solved by technological advances. Therefore, it is not so difficult to imagine a newer technology that unifies the Forex market and makes it centralized.

Categories
Crypto Forex Basics

Forex or Crypto Trading: Which is More Profitable?

Forex and Cryptocurrency markets are very popular. With both traders trade looking to profit from this, but in itself which market is the most profitable? While cryptocurrency is growing, it is quite volatile, even more than the Forex market which makes many wonder which option is the most profitable.

Forex and Cryptocurrency markets are very popular. With both traders trade looking to profit from this, but in itself which market is the most profitable? While cryptocurrency is growing, it is quite volatile, even more than the Forex market which makes many wonder which option is the most profitable.

Forex and Cryptocurrency markets are very popular. With both traders trade looking to profit from this, but in itself which market is the most profitable? While cryptocurrency is growing, it is quite volatile, even more than the Forex market which makes many wonder which option is the most profitable.

Both markets have a high level of volatility, although the cryptocurrency market is much more volatile than any other and in this aspect, you can control more risks in the Forex market having greater chances to maximize profits. Trading in any form means a risk of capital loss but there is always the potential for a trader can earn money. Price changes in cryptos are very wide, and although you can earn money, you can also lose quickly by making risks more controllable on Forex by having less volatility.

The Forex market, as we know, is decentralized just like the cryptocurrency market, but what impact does this have? The currencies and assets of the Forex market are regulated and in the cryptocurrency market, cryptocurrencies are not regulated and are decentralised. Both the market and the assets present within it are totally decentralised.

Because of this, the variation in the price of assets in the cryptocurrency market is allowed to be much higher, which in turn leads to much higher volatility where prices rise and fall widely. While in the Forex market although the changes are present in the same way as the currencies regulated by the countries, their prices remain much more stable despite the volatility.

The purpose of this publication is to say that market is more profitable to operate in terms of the possibility of controlling the risk of loss of capital that as I said always is present. Now, if you ask me if you should trade cryptocurrencies, my answer is that if you do, start by using the most heavily capitalized cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.

Operating in both markets can generate potential profits, but what if you compare the two? You can conclude that Forex is much better, but if you only talked about cryptocurrencies in this article, I would tell you to make use of them because they are very good assets.

Many people wonder what will be the best option to invest, as cryptocurrencies are quite popular and have good returns, but Forex trading is gaining increasing popularity among young investors.

It will always be advisable to make good investigations of the markets of interest. Although for the modern investor Forex and cryptocurrencies head the lists, because they have very good profitability and also offer much desired financial freedom. It should also be noted that many of the investors at the moment have a stake in both markets.

Advantages of Cryptocurrencies:

-They are widely quoted and recognized worldwide.

-They do not depend on any central bank and are not regulated by any country.

-It functions as a scarce asset, so the market gives it value.

-It allows anonymous transactions outside the system’s regulation.

-Cryptocurrencies are immune to inflation.

-It is a payment system that does not depend on banks since it has a blockchain chain system that allows you to transfer money without the need for banking.

-It is a digital ledger that cannot be manipulated. 

Disadvantages of Cryptocurrencies:

-They are highly volatile: it has presented an annualized volatility in the last year of 80%, which makes it enter the classification of high-risk assets

-Changes and Attempts at Regulation: for many, it is a bomb that can explode at any time, and although they have tried to regularize it has only remained in comments and statements. To this end, countries like China prohibit cryptocurrency transactions.

-Robbery: although it is a bit difficult it is not impossible. Hackers have been engaged in developing different methods by which they have succeeded in taking over the assets of others.

-It demands high commissions for its exchange for traditional currencies and they are not yet accepted at all levels.

Advantages of Forex

-You can trade in any currency in the world.

-It offers a greater number of profitable options to invest.

-It is focused on trading (short-term trades) allowing you to see benefits in less time.

-It works with brokers that are regulated by the countries in which they were founded, which increases the reliability of the system.

-It is a highly liquid market and can operate with leverage. 

Disadvantages of Forex

-To see big profits requires the investment of a greater capital or in its absence of a greater number of small and effective operations.

-Forex as such is unregulated and no one or nothing watches over the trades that are made there.

-Leverage can be negative in some cases as it can lead to significant losses.

So… Cryptocurrencies or Forex?

This decision is very subjective, so let’s see what it’s like to invest in each of these markets.

First of all, time plays an important role when you buy these two investments. Forex transactions are short-term, you usually don’t wait more than a few days to close your positions. It’s pretty fast compared to cryptocurrencies, as you want to trade every opportunity you get because of small profit margins.

The more you trade, the more profits you will get, which means you must be an active and experienced Forex trader to know exactly when to place your trades and when to withdraw. With cryptocurrencies, it’s a completely different story.

To begin with, the market is highly volatile, meaning that prices can skyrocket or plummet significantly in just one day, even hours. Applying the same tactics as with Forex trading would be too risky because there is a lot of money at stake, especially if we are talking about Bitcoin.

This is because, in terms of investment, cryptocurrencies should not be regarded as currencies at all, but as precious goods of some kind. Therefore, when you invest in cryptocurrencies, you are actually making long-term investments, because the results are not quick: you will have to wait several months until they start to pay off.

As a result, cryptocurrencies are not for everyone, as they require an infinite amount of patience and self-control to prevent you from performing a panic-stricken transaction when the time is not optimal for you to sell. In addition, with more than 1500 cryptocurrencies today, predicting which one is the goose of the golden eggs and which one is not an almost impossible task.

On the other hand, Forex transactions are much more concrete, as they are almost always the four main pairs and have only a few coins crossed here and there. Forex is a more stable market than cryptocurrency, with the latter being a portfolio diversifier first. Of course, it does not take away the merit of virtual currencies, as they are still a very young market and have much to give, maybe in a few years have enough stability to be seen by traders with greater importance.

For now, Forex will continue to be the favorite for traders on a day-to-day basis, while cryptocurrencies will be seen as long-term investments for those people who can withstand the high volatility of these, and who seek to move away from traditional institutions, as well as banks and states.

Categories
Forex Daily Topic Forex System Design

Trading Algorithms IX – RSI Failures System

Trading the naked RSI system depicted in this series’s previous video as an overbought/oversold signal generator is too risky, and its long-term results questionable. The system is profitable only in sideways movements. Thus, a trending filter or a detrending step will be needed to avoid the numerous fake signals.

Trading the naked RSI system depicted in this series’s previous video as an overbought/oversold signal generator is too risky, and its long-term results questionable. The system is profitable only in sideways movements. Thus, a trending filter or a detrending step will be needed to avoid the numerous fake signals.

Trading the naked RSI system depicted in this series’s previous video as an overbought/oversold signal generator is too risky, and its long-term results questionable. The system is profitable only in sideways movements. Thus, a trending filter or a detrending step will be needed to avoid the numerous fake signals.

Divergences and Failure swings

Welles Wilder remarks on two ways to trade the RSI: Divergences and Top/Bottom failure swings.

Divergences

A divergence forms when the price makes higher highs (or lower lows), and the RSI makes the opposite move: lower highs (or higher lows). RSI divergences from the oversold area show the market action starts to strengthen, an indication of a potential swing up. In contrast, RSI divergences in the overbought area show weakness and a likely retracement from the current upward movement.

Failures

An RSI Top failure occurs with the following sequence of events:

  1. The RSI forms a pivot high in the overbought area.
  2. An RSI pullback occurs, and an RSI pivot low forms.
  3. A new RSI pivot high forms, which is lower than the previous pivot high

Fig 1 – RSI TOP failures in the EURUSD 4H 2H Chart

An RSI Bottom failure occurs with the following sequence of events:

  1. The RSI forms a pivot low below the oversold area.
  2. An RSI pullback occurs, and an RSI pivot high forms.
  3. A new RSI pivot low forms, which is higher than the previous pivot high.

Fig 2 – RSI Bottom failures in the ETHUSD 1H Chart.

According to Welles Wilder, trading the RSI failure swings can be more profitable than trading the RSI overbought-oversold system. Thus, we will test it.

The RSI Failure algorithm

To create the RSI Failure algorithm, we will need to use the Finite State Machine concept, presented in this series’s seventh video.

The Easylanguage code of the RSI system failure is the following:

inputs:  Price( Close ), Length( 14 ), OverSold( 30 ), Overbought( 70 ), 
takeprofit( 3 ), stoploss( 1 ) ;
variables: state(0), state1 (0), state2(0), state5 (0), state6(0), rsiValue(0),
 var0( 0 ), rsi_Pivot_Hi(0), rsiPivotHiFound(False), 
rsiPivotLoFound (False),rsi_Pivot_Lo(0)  ;

rsiValue = RSI(C,Length);

If rsiValue[1] > rsiValue and rsiValue[1] > rsiValue[2] then
      begin
         rsiPivotHiFound = true;
         rsi_Pivot_Hi= rsiValue[1];
     end

else
     rsiPivotHiFound = False;

If rsiValue[1] < rsiValue and rsiValue[1] < rsiValue[2] then
      begin
         rsiPivotLoFound = true;
        rsi_Pivot_Lo = rsiValue[1];
     end

else
     rsiPivotLoFound = False;

If state = 0 then
      begin
        if rsiPivotHiFound = true and rsi_Pivot_Hi> Overbought then
             state = 1    {a bearih setup begins}
     else
           if rsiPivotLoFound = True and rsi_Pivot_Lo < OverSold then
                 state = 5; {a bullish Setup begins}
     end;

{The Bearish setup}    

If state = 1 then
      begin
         state1 = rsi_Pivot_Hi;
         if rsiValue > state1 then state = 0;
         if rsiPivotLoFound = true then
             state = 2;
     end;
    
If state = 2 then
      begin
         state2 = rsi_Pivot_Lo ;
         if rsiValue > state1 then state = 0;
         if rsiPivotHiFound = true then
         if rsi_Pivot_Hi< 70 then state = 3;
     end;

If state = 3 then
     if rsiValue < state2 then state = 4;

If state = 4 then
      begin
        sellShort this bar on close;
        state = 0;
     end;


{The bullish setup}

If state = 5 then
      begin
       state5 = rsi_Pivot_Lo;
       if rsiValue < state5 then state = 0;
       if rsiPivotHiFound = true then
             state = 6;
     end;


If state = 6 then
      begin
         state6 = rsi_Pivot_Hi;
         if rsiValue < state5 then state = 0;
         if rsiPivotLoFound = true then
             if rsi_Pivot_Lo > OverSold then state = 7;

     end;
           

If state = 7 then
     if rsiValue > state6 then state = 8;

 If state = 8 then
      begin
         buy this bar on close;
         state = 0;
     end;
   

If state > 0 and rsiValue < OverSold then state = 0;
If state > 0 and rsiValue > Overbought then state = 0;    

{The Long position management section}

If marketPosition =1 and close < entryprice - stoploss* avgTrueRange(10) then
    sell this bar on close;

If marketPosition =1 and close < entryPrice + takeprofit* avgTrueRange(10) then
    sell this bar on close;


{The Short position management section}


If marketPosition =-1 and close > entryprice + stoploss* avgTrueRange(10) then
     BuyToCover this bar on close;

If marketPosition =-1 and close < entryPrice - takeprofit* avgTrueRange(10) then
     BuyToCover this bar on close;

The results, measured on the EURUSD, are not as brilliant as Mr. Welles Wilder stated.

The trade analysis shows that the RSI Failures system, as is, is a losing system. This fact is quite common. It takes time to uncover good ideas for a profitable trading system. In the meantime, we have developed a practical exercise using the finite state machine concept, handy for the future development of our own trading ideas.

Categories
Forex Basics

Is it Possible to Trade Forex on Sundays?

If you’re new to forex trading, you may be eager to trade as much as possible, or perhaps you’re trying to figure out a schedule for trading that works around your daily life. For many of us, things slow down on the weekends, making it a good time to pursue extra tasks such as trading. […]

If you’re new to forex trading, you may be eager to trade as much as possible, or perhaps you’re trying to figure out a schedule for trading that works around your daily life. For many of us, things slow down on the weekends, making it a good time to pursue extra tasks such as trading. […]

If you’re new to forex trading, you may be eager to trade as much as possible, or perhaps you’re trying to figure out a schedule for trading that works around your daily life. For many of us, things slow down on the weekends, making it a good time to pursue extra tasks such as trading. The good news is that the forex market is in fact open 24/7, however, there are some things you need to know before you decide to devote a large amount of time to trading on weekends.  

To start, the forex market actually opens at 5 p.m. Sunday evening and closes at 4 p.m. Friday evening. Although this leaves out Friday night, Saturday and most of Sunday, overlapping market sessions and different time zones mean that there is always at least one market open. Market sessions are divided into the following:

As you can see, the overlapping market sessions make it possible for traders to enter currency trades at any hour. You’ll always have access to the most traded currency pairs as long as the market is open, but other currencies may not be available 24/7. These are the currencies you can always expect to see available for trading:

  • The U.S. Dollar (USD)
  • The Euro (EUR)
  • The Japanese Yen (JPY)
  • The British Pound (GBP)
  • The New Zealand Dollar (NZD)
  • The Canadian Dollar (CAD)

Did you know that these are the seven most traded currencies in the entire world? You also might be interested to know that spreads for cross pairs involving these currencies are tighter during the busiest market hours. If you trade during these times, you’ll be able to benefit from the tighter spreads while trading highly liquid pairs. 

Should You Trade Forex on the Weekends?

Although you can technically trade forex on the weekend thanks to the market’s time schedule, this doesn’t necessarily mean you should do so. Allow us to explain why.

Typically, the busiest trading times occur during the London and New York sessions and one of the best times to trade is when these two sessions overlap, from 8 a.m. to 12 p.m. CST. During this time, the majority of the daily volume is traded and the market is highly liquid. Things also tend to be much more active towards the middle of the week before slowing down on Friday for the upcoming weekend.

Many traders simply choose not to trade on the weekend. This is due in part to lifestyle reasons, as many of these traders are looking to spend time with their families or to kick back and relax as the weekends. Since there aren’t many traders online, the market slows down, and you’ll find a less liquid market with fewer trading opportunities. This is yet another reason why many traders avoid the market on weekends, as it seems less efficient to trade during this time. 

If you do choose to trade during the slower times, you’ll still be able to make a profit, so this is a personal choice. You should also know that there are some other times that may be better to avoid, such as when major news releases are expected. Political news or elections, financial news, and other events can really shake up the market and make it harder to predict what will happen, but some traders do thrive in this type of market environment. Another time when it’s better to take the day off is whenever there is a major holiday, as most other traders are doing the same and you won’t really be missing out on much. 

The Bottom Line

We covered a few important topics in this article related to trading on the weekend. Here’s a quick summary of the most important things you need to know on the subject:

  • Forex is considered to be a 24/7 market because of different time zones and overlapping market sessions. During this time, the seven most popular currencies are always available for trading, but other emerging currencies may be limited at times.
  • The best times to trade occur through midweek and when the London and New York sessions overlap. Brokers also offer tighter spreads on popular currencies during the most active times.
  • Monday mornings, Friday evenings, and weekends are typically slower and provide fewer trading opportunities, meaning that it is less efficient to trade during these times.
  • There are a few other times when you might want to avoid trading, including major holidays and times when important news releases are expected.  

Flexible market hours provide traders with several different opportunities for trading and everyone should be able to find trading times that work best with their schedule. It’s also important to keep the best and worst trading times in mind when planning what times you will and will not trade. Paying attention to the best trading times will help ensure that you get the most efficient results with less effort invested, plus you might be able to take advantage of benefits like tighter spreads and more trading opportunities.

Categories
Forex Fundamental Analysis

GBP/CAD Global Macro Analysis – Part 3

GBP/CAD Exogenous Analysis

GBP/CAD Exogenous Analysis

GBP/CAD Exogenous Analysis

The UK and Canada Current Account Differential

The current account differential between the UK and Canada can determine if the GBP/CAD pair is bullish or bearish. If the differential is positive, it means that the UK has a higher current account balance than Canada. This would imply that the GBP is in higher demand in the forex market than the CAD; hence, it is a bullish trend for the pair. Conversely, if the current account differential is negative, it means that the UK has a lesser current balance than Canada. It would imply that the GBP has a lower demand than the CAD in the forex market; hence, a bearish trend for the pair.

In Q3 of 2020, the UK had a current account deficit of $20.97 billion while Canada had a $5.83 billion deficit. Thus, the current account differential is -$15.14 billion. We assign a score of -2.

The interest rate differential between the UK and Canada

The interest rate differential is the difference between the Bank of England’s interest rate and that by the Bank of Canada. In the forex market, carry traders use the interest rate differential to decide whether to buy or short a currency pair. When the interest rate differential is positive, traders will earn the differential by going long. If the differential is negative, traders can earn the differential by shorting the currency pair.

Therefore, if the GBP/CAD pair’s interest rate differential is positive, the pair is bound to adopt a bullish trend. Conversely, if negative, the pair is bound to be bearish.

In 2020, the interest rate in the UK dropped from 0.75% to 0.1%. In Canada, the BOC cut interest rates from 1.75% to 0.25%. Therefore, the interest rate differential is -0.15%. The interest rate differential between the UK and Canada has a score of -1.

The differential in GDP growth rate between the UK and Canada

This differential measures the changes in the growth rate between the two economies. It is a preferred method of comparison since economies are of different sizes. Naturally, the economy with a higher GDP growth rate will have its currency appreciate more. Therefore, if the GDP growth rate differential is positive, it means that the GBP/CAD pair is bullish. If negative, then the pair is bearish.

During the first three quarters of 2020, the UK economy has contracted by 5.8%, while the Canadian economy has contracted by 3.3%. This makes the GDP growth rate differential -2.5%. Hence, a score of -1.

Conclusion

Indicator Score Total State Comment
The UK and Canada Current Account Differential -2 10 A differential of – $15.14 The UK has a higher deficit than Canada
The interest rate differential between the UK and Canada -1 10 -0.15% Expected to remain at -0.15% until either economy have recovered
The differential in GDP growth rate between the UK and Canada -1 10 3.30% The Canadian economy contracted at a slower pace than the UK economy
TOTAL SCORE -4

The cumulative score for the exogenous factors is -4. This means that we can expect the GBP/CAD pair to trade in a downtrend in the short term.

However, technical analysis shows the pair adopting a bullish trend with the weekly chart trading above the 200-period MA. More so, the pair is seen bouncing off the lower Bollinger band. Keep an eye on the near-term changes in the exogenous factors.

Categories
Forex Fundamental Analysis

GBP/CAD Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

This analysis will evaluate the endogenous factors that affect the domestic economy in both the UK and Canada. We’ll also cover exogenous factors that influence the price of the GBP/CAD pair.

Ranking Scale

After analysis, we will rank both the exogenous and the endogenous factors on a scale from -10 to +10.

Endogenous factors will be ranked after a correlation analysis with the GDP growth rate. If negative, it means that either the GBP or the CAD have depreciated. If positive, it means that the domestic currency has appreciated.

The exogenous factors are ranked based on their correlation with the GBP/CAD pair’s exchange rate. When negative, it means that the price will drop. The price will be expected to increase if the exogenous analysis is positive.

Summary – GBP Endogenous Analysis

A -15 score on Pound’s Endogenous Analysis indicates that this currency has depreciated since the beginning of 2020.

Summary – CAD Endogenous Analysis

  • Canada Employment Rate

The Canadian employment rate measures the percentage of the labor force that is employed during a particular period. The developments in the labor market are a leading indicator of overall economic growth. When the economy is expanding, there are more job openings, hence a higher employment rate. Conversely, when the economy is going through a recession, businesses close down, leading to a dropping employment rate.

In November 2020, the employment rate in Canada rose to 59.5% from 59.4% in October. Although the employment rate has been steadily increasing from the lows of 52.1% in April, it is still lower than in January. Canada’s employment rate has a score of -6.

  • Canada Core Consumer Prices

This index measures the overall change in Canada’s inflation rate based on a survey of price changes for a basket of consumer goods. The rate of inflation gauges the increase in economic activity. Typically, when demand is depressed in an economy, prices drop, resulting in lower inflation. Conversely, when demand increases, prices tend to increase, resulting in a higher rate of inflation.

In November 2020, Canada’s core consumer prices rose to 136.6 points from 136.3 in October. Between January and November, the index has increased by 2 points. It has a score of 3.

  • Canada Manufacturing Production

This index measures the YoY change in the value of the output from the Canadian manufacturing sector. Canadian manufacturing is a significant contributor to the labor market and economic growth. In the age of the coronavirus disruption, changes in manufacturing production show how faster the economy is bouncing back.

In September 2020, the YoY manufacturing production in Canada dropped by 4.24%. This is an improvement compared to the 5.34% drop recorded in August. Canadian manufacturing production has a score of -2.

  • Canada Business Confidence

The Ivey Purchasing Managers Index (PMI) measures monthly business confidence in Canada. In the survey, private and public companies rate whether the current business activity is higher or lower than the previous month. The index survey aspects including inventories, purchases, deliveries from suppliers, output prices, and employment.

When the index is over 50, it means that purchases have increased from the preceding month. Reading of below 50 shows a decrease in purchases.

In November 2020, Canadian business confidence dropped to 52.7 from 54.5 in October. This was the lowest reading since May, when the economy began rebounding from the shocks of  COVID-19. Consequently, Canada’s business confidence has a score of 1.

  • Canada Consumer Spending

This measures the final market value of all household expenditures on goods and services. It also includes expenditure by non-profit organizations that serve households in Canada but excludes purchases of homes. Consumer spending plays a critical role in economic growth.

In Q3 of 2020, consumer spending in Canada rose to CAD 1.13 trillion from CAD 1 trillion in Q2. However, it is still lower than consumer spending recorded in Q1. Thus, Canada’s consumer spending has a score of -4.

  • Canada New Housing Price Index

The Canadian NHPI measures the changes in the selling price of newly built residential houses. The price measured is that paid by the home buyers to the contractors. Note that the price comparison is strictly between houses of the same specification. The NHPI shows the construction sector’s growth trends; hence, it corresponds to changes in the labor market and GDP growth.

In November 2020, the Canadian NHPI rose to 107.9 from 107.3 in October. Thus, we assign a score of 3.

  • Canada Government Budget Value

This indicator tracks the changes in the difference between the Canadian government revenues and expenditures. It shows whether the government is running a surplus or a deficit. It also breaks down the changes in the receipts by the government. This helps to show how the overall economy is fairing.

In October 2020, the Canadian government budget had a deficit of CAD 18.51 billion compared to CAD 27.59 billion in September. Throughout the year, the budget deficits have been due to the economic shocks brought on by the coronavirus pandemic. The Canadian government had to ramp up expenditure through its Economic Response Plan, while revenues dropped in the same period. We assign it a score of -5.

Conclusion

Indicator Score Total State Comment
Canada Employment Rate -6 10 59.5% in November 2020 The employment rate is steadily increasing. It is, however, still below January levels
Canada Core Consumer Prices 3 10 136.6 points in November 2020 Since January, it has increased by 2 points. That shows demand in the economy has kept prices higher
Canada Manufacturing Production -2 10 YoY dropped by 4.24% in September 2020 A slight increase from -5.34% recorded in August. This shows that the manufacturing production is returning to the pre-pandemic levels
Canada Business Confidence 1 10 52.7 in November November level was the lowest since the economy began to recover in May. It’s expected to improve as mass vaccinations against COVID-19 rolls out
Canada Consumer Spending -4 10 Was CAD 1.13 trillion Q3 2020 Recovered from CAD 1 trillion in Q2 but still lower than Q1. This shows that demand is increasing in the economy
Canada New Housing Price Index 3 10 November NHPI was 107.9 It has been increasing, which shows that output in the construction industry is improving
Canada Government Budget Value -5 10 a budget deficit of CAD 18.51 billion in October The deficit widened in 2020, driven by unprecedented fiscal policies to curb recessionary pressure from the pandemic
TOTAL SCORE -10

A score of -10 indicates that the CAD has depreciated since the beginning of the year 2020.

In the next article, you can find the exogenous analysis of GBP/CAD where we have forecasted this pair’s future price movements. Cheers.

GBP/CAD Exogenous Analysis

  • The UK and Canada Current Account Differential

The current account differential between the UK and Canada can determine if the GBP/CAD pair is bullish or bearish. If the differential is positive, it means that the UK has a higher current account balance than Canada. This would imply that the GBP is in higher demand in the forex market than the CAD; hence, it is a bullish trend for the pair. Conversely, if the current account differential is negative, it means that the UK has a lesser current balance than Canada. It would imply that the GBP has a lower demand than the CAD in the forex market; hence, a bearish trend for the pair.

In Q3 of 2020, the UK had a current account deficit of $20.97 billion while Canada had a $5.83 billion deficit. Thus, the current account differential is -$15.14 billion. We assign a score of -2.

The interest rate differential is the difference between the Bank of England’s interest rate and that by the Bank of Canada. In the forex market, carry traders use the interest rate differential to decide whether to buy or short a currency pair. When the interest rate differential is positive, traders will earn the differential by going long. If the differential is negative, traders can earn the differential by shorting the currency pair.

Therefore, if the GBP/CAD pair’s interest rate differential is positive, the pair is bound to adopt a bullish trend. Conversely, if negative, the pair is bound to be bearish.

In 2020, the interest rate in the UK dropped from 0.75% to 0.1%. In Canada, the BOC cut the interest rate from 1.75% to 0.25%. Therefore, the interest rate differential is -0.15%. The interest rate differential between the UK and Canada has a score of -1.

  • The differential in GDP growth rate between the UK and Canada

This differential measures the changes in the growth rate between the two economies. It is a preferred method of comparison since economies are of different sizes. Naturally, the economy with a higher GDP growth rate will have its currency appreciate more. Therefore, if the GDP growth rate differential is positive, it means that the GBP/CAD pair is bullish. If negative, then the pair is bearish.

During the first three quarters of 2020, the UK economy has contracted by 5.8%, while the Canadian economy has contracted by 3.3%. This makes the GDP growth rate differential -2.5%. Hence, a score of -1.

Conclusion

Indicator Score Total State Comment
The UK and Canada Current Account Differential -2 10 A differential of – $15.14 The UK has a higher deficit than Canada
The interest rate differential between the UK and Canada -1 10 -0.15% Expected to remain at -0.15% until either economy have recovered
The differential in GDP growth rate between the UK and Canada -1 10 3.30% The Canadian economy contracted at a slower pace than the UK economy
TOTAL SCORE -4

 

The cumulative score for the exogenous factors is -4. This means that we can expect the GBP/CAD pair to trade in a downtrend in the short term. However, technical analysis shows the pair adopting a bullish trend with the weekly chart trading above the 200-period MA. More so, the pair is seen bouncing off the lower Bollinger band.

Keep an eye on the near-term changes in the exogenous factors.

 

Categories
Forex Basics

How to Explain Why You’re Trading Forex to Your Spouse

If you’re currently married and you’ve just decided to take up forex trading or you’ve recently opened a trading account, you might have a hard time convincing your spouse that it is a lucrative investment. Many people have heard rumors that trading is a scam and doubt that it’s really possible to make money doing […]

If you’re currently married and you’ve just decided to take up forex trading or you’ve recently opened a trading account, you might have a hard time convincing your spouse that it is a lucrative investment. Many people have heard rumors that trading is a scam and doubt that it’s really possible to make money doing […]

If you’re currently married and you’ve just decided to take up forex trading or you’ve recently opened a trading account, you might have a hard time convincing your spouse that it is a lucrative investment. Many people have heard rumors that trading is a scam and doubt that it’s really possible to make money doing it, or they assume that only the rich can benefit from forex trading.

Your spouse has likely heard about these misconceptions before. Some people even believe that forex trading is similar to gambling even though trading is based more on facts and evidence over chance. When it comes to marriage, it’s important to agree on financials, so you’re likely feeling frustrated if you can’t get your spouse on the same page with your decision to become a trader.

We’ll start by mentioning that forex trading can be a very profitable investment that can help with pocket money, pay bills, help you through retirement, or even take the place of your full-time job. If you realize this, you’re probably eager to gain your spouse’s approval so that you can start investing in order to gain a return. The best way to reach an agreement is to listen to your spouse’s opinion and provide hard facts and explanations if they disagree with you. Here are some of the best responses to common objections to forex trading:

Argument #1: Trading is the same as gambling.

When you gamble, you purposefully risk money while relying on things like chance to hopefully make more money. You never know if you’re going to get lucky and win big or walk away with nothing. Forex trading is different because decisions are made based on different kinds of evidence. For example, some traders look at historical price data on charts, while others try to measure the intrinsic value of a stock versus the price it is trading at. There are several other ways that traders make informed decisions about what they are trading and where the price will go. This takes away the whole chance or luck concept that comes with gambling because you’re making evidence-driven decisions. It’s true that the market might move against you, but you are much more likely to see good results if you make informed trading decisions. Think of trading as an investment where you can take steps to improve your likelihood of seeing a large return by performing research.  

Argument #2: You can’t make money by trading.

Some people think that forex is just a big scam that draws people in, gets them to invest money, and then sucks their account dry. Perhaps this comes from the fact that there are some shady brokers out there, or because the ability to trade from home with a small initial investment just seems to good to be true. The good news is that it is very possible to make money trading and it isn’t hard to avoid being scammed. You simply need to find a trustworthy broker that is regulated so that you’ll be protected from malpractice and your money will be refunded if the company goes out of business. After that, you need to find a good trading strategy that is profitable. If your spouse is still hesitant, try trading on a demo account using your trading strategy and then show them that the account was profitable. 

Argument #3: Trading takes up too much time.

It’s true that some forex traders sit in front of their computer screen multiple hours each day, but many others only trade part-time or devote a very small amount of time each week to trading. It’s very easy to find a profitable strategy like swing trading that doesn’t ask you to constantly monitor the market. Also, with all of the convenience offered by the modern world, traders can use signal providers to receive information about trades they should enter directly via alerts on their phone, which eliminates the need to do all the research yourself. An even more convenient option would be to use a forex robot, which trades on your behalf and only needs to be monitored from time to time. 

Argument #4: You Don’t Know What You’re Doing.

Everyone has to start somewhere. Fortunately, there are a ton of free resources available online that can help new traders learn everything they need to know, from beginner concepts like terminology to more advanced subject matter like reading charts and etc. If it makes your spouse feel better, you could prove that you know a lot about forex by taking some online quizzes and showing good results or by providing your demo account results from a period of time. 

Argument #5: It costs too much money to get started.

Most beginners choose to get started with a smaller deposit, oftentimes $100 or less. Most of us can afford to spare this much, so trading might not cost as much as your spouse is thinking. Of course, you can’t expect to make huge profits right off the bat with a smaller deposit, but you can still make some much-needed money while trading off a micro account. Try to compromise over the amount of money you will invest and make a deal that you will never deposit money into your trading account that is needed for household necessities. Once you start bringing in profits, your spouse will likely feel more comfortable with you investing a larger amount of money into trading.

Categories
Forex Basics

Proof That Forex is Exactly the Earnings Opportunity You’ve Been Looking For

Have you been looking to add a little more money to your wallet lately? It’s true that there are several rumors going around about ways to do it, especially when it comes to working from home options. Sadly, it’s difficult to pick out the reliable options from the hundreds of online scams that have been […]

Have you been looking to add a little more money to your wallet lately? It’s true that there are several rumors going around about ways to do it, especially when it comes to working from home options. Sadly, it’s difficult to pick out the reliable options from the hundreds of online scams that have been […]

Have you been looking to add a little more money to your wallet lately? It’s true that there are several rumors going around about ways to do it, especially when it comes to working from home options. Sadly, it’s difficult to pick out the reliable options from the hundreds of online scams that have been surfacing lately.

Many of these money-making schemes just seem too good to be true and there’s usually some sort of catch. For example, you might be able to find freelance work online, but you’ll literally be working for hours just to make a change. Fortunately, we do know of one proven work from home method that isn’t a scam – forex trading. 

If you’ve heard of forex trading before, you might have wondered if it’s just another waste of time. The reality is that trading is actually one of the best ways to make extra cash without taking out a second job or investing in a potential scam. Hear us out and we’ll explain the key reasons why forex trading is exactly what you’re looking for.

You Can Work from Home (Or Anywhere)

Working from home has always been a luxury compared to the hustle and bustle of a daily commute, even more so now that the nation is in the grip of a pandemic that doesn’t seem to be going away anytime soon. There’s nothing better than being in your own home, being able to wear pajamas all day if you want to, and making money. Most trading platforms can also be accessed from your mobile device, so you’ll be able to trade on the go if you have somewhere else to be. Being able to quickly check your trading account at a family function or in the waiting room at your doctor’s office brings working to a whole new level of convenience that you just can’t find with a regular job.

Flexible Hours

You don’t have to choose between forex trading and working a real job because you can set your own hours as a trader. In fact, trading could save you from having to go out and get a second job if you’re badly in need of money. It can also open the door to work for full-time students or stay at home parents that wouldn’t have the option otherwise. As long as you’re disciplined enough to work when you need to, you’ll be able to work around your own schedule and take time off when you have things to do. If you’re not a morning person, you don’t even have to force yourself to wake up early because you can simply trade later in the day. The flexibility offered by trading is definitely one of our favorite perks because it’s difficult to find this anywhere else. 

Safety

If you consider investing money through some other online option, you run the risk of being scammed. Most companies pay their sales representatives to convince you to invest, so you may think you’re talking with a stay at home mom that is telling you about her legitimate results when she’s actually just tempting you with false claims. You also might read online reviews that were written by the company themselves or edited. When it comes to forex trading, you don’t have to worry about this issue as long as you choose a trustworthy broker. Since most forex brokers are regulated by government entities, they are held to higher standards and you can be assured that you won’t lose your money if they go out of business. The profits you make are actually yours and your broker will definitely ensure that your money goes out to your bank account whenever you request a withdrawal. 

You Can Actually Make Money

A lot of these online promotions that claim to make your money don’t work. One common scam asks you to spend money on products that you’re supposed to sell, but you’re left with the bill once you can’t find buyers. With forex, you make an investment into your trading account, make trading decisions based on real evidence that suggests the way the market will perform, and then you make money. It’s true that there is always a chance you could lose money, but you’ll have every resource you need at your fingertips to make informed decisions that are more likely to bring in profits. Compared to gambling, forex trading is much more structured because it is based on solid evidence, rather than chance. 

It’s Easy to Get Started

You shouldn’t assume that opening a trading account is a headache. All you have to do is learn about trading online through sources like YouTube, Investopedia, etc., find a good broker, open an account, and make your first deposit. Learning the basics and mechanics of trading is the most time-consuming step, but you can learn everything you need to know for free at your own pace. People also assume that opening a trading account is difficult, but it truly isn’t. Most brokers will allow you to open an account for less than $100 and ask you a few simple questions before you can get started.

You Get to Be Your Own Boss!

Most of us have dealt with a boss that was…less than pleasant. In a normal workplace, you have to keep your composure and deal with it or else you run the risk of losing your job. With trading, you only have to report to yourself. If you need to take a sick day, want to go on vacation, need to stop early or have any other issue, you don’t have to ask anyone or stress about it. The same thing goes if you make a mistake – you may be disappointed in yourself, but you won’t have an angry boss breathing down your neck or asking for an explanation. You can work without the threat of being fired hanging over your head. 

People Will Admire You

Once you become a successful forex trader, your friends and family are likely to look up to you and see you as someone that is financially smart. You might even be able to help teach your family members or children how to trade, which can ease their financial burdens as well. This is a great conversation starter if you’re dating or your significant other is sure to be impressed once you start making extra money on the side!

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Uncategorised

Daily F.X. Analysis, January 29 – Europe’s GDP’s / Consumer Sentiment + Join Forex Academy’s Telegram Signal Channel! 

Dear traders,

We are moving signals from website to telegram channel. If you enjoyed our signals and want to continue to receive ing them, please subscribe to our telegram channel:

The German Prelim GDP q/q, French Flash GDP q/q, and Spanish Flash GDP q/q report will remain in highlights today on the news front. Later Revised UoM Consumer Sentiment and Pending Home Sales m/m can drive market movements today.

Economic Events to Watch Today  

  


 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21220 after placing a high of 1.21422 and a low of 1.20806. The EUR/USD pair remained higher on Thursday amid the broad-based U.S. dollar weakness and the positive macroeconomic data from the European side. Behind the gradual upward momentum in EUR/USD pair was the U.S. dollar’s weakness driven by the improvement in the market’s appetite for risk. The U.S. Dollar Index that measures the greenback’s value against major currencies dropped by 0.3% and weighed on the U.S. dollar, supporting the upward momentum in EUR/USD pair on Thursday.

On the data front, from the U.S. side, at 18:30 GMT, the Advance GDP for the quarter declined to 4.0% against the forecasted 4.2% and weighed on the U.S. dollar that capped further gains in EUR/USD pair. The Unemployment Claims from last week were declined to 847K against the forecasted 880K and supported the U.S. dollar that also limited the upward momentum in EUR/USD pair. The Goods Trade Balance from December declined to -82.58B from the forecasted -83.4B and supported U.S. dollar. For December, the Prelim Wholesale Inventories also fell to 0.1% against the forecasted 0.5% and supported the U.S. dollar.

At 18:32 GMT, the Advance GDP Price Index for the quarter declined to 2.0% against the forecasted 2.2% and weighed on the U.S. dollar hat added further gains in EUR/USD pair. At 20:00 GMT, the C.B. Leading Index for December came in line with a 0.3% forecast. In December from the U.S., the New Home Sales declined to 842K against the forecasted 860K and weighed on U.S. dollar to and pushed the EUR.USD pair are even higher.

From the European side, the German Prelim CPI in January raised to 0.8% against the expected 0.4% and supported Euro that ultimately pushed EUR/USD pair higher. At 13:00 GMT, the Spanish Unemployment Rate dropped to 16.1% against the expected 16.7% and supported Euro to add further gains in EUR/USD pair on Thursday. 

Moreover, Wall Street suffered its biggest one-day percentage decline in three months overnight, with declines accelerated in the wake of the U.S. Federal Reserve’s policy statement. The Fed signaled a worrying slowdown in the pace of recovery of the world’s top economy and sworn continued support until a full economic rebound was in place. This also weighed on the U.S. dollar and supported an upward momentum in EUR/USD pair.


Daily Technical Levels

Support   Resistance

1.2054      1.2167

1.1999     1.2225

1.1940      1.2280

Pivot point: 1.2112

EUR/USD– Trading Tip

The direct currency pair EUR/USD is trading with a bearish bias at 1.2090, facing immediate resistance at 1.2132 level. The EUR/USD is again forming three black crows on the hourly chart, dispensing the selling trend in the EURUSD pair. On the downside, the pair is expected to go after the 1.2090 and 1.2055 level. The 50 periods EMA are signaling the selling trend in Euro today. Violation of 1.2050 will determine long term trend.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.37267 after placing a high of 1.37458 and a low of 1.36299. The U.S. dollar’s fresh weakness and the rise in British Pound against other major currencies lifted the currency pair GBP/USD on Thursday. Prime Minister Boris Johnson announced no schools until 8-March and laid out a lengthy exit strategy from the lockdown this week. However, a detailed plan will be out on the week of February 22. This showed that Johnson may have learned from past promises and was now going wrong on the side of caution. Because people were expecting an earlier exit from the restrictions and this announcement killed their expectations.

In December, Johnson rejected calls for a lockdown and refused to cancel Christmas, only to back down several days later. However, the U.K. has been vaccinating its population rapidly, which should have led to the lifting restrictions not extending them. Despite all these lockdown developments in the U.K., the British Pound remained amongst the top three best performing G10 currencies on Thursday and supported the upward momentum in GBP/USD pair.

On the data front, from the U.S. side, at 18:30 GMT, the Advance GDP for the quarter fell to 4.0% against the anticipated 4.2% and weighed on the U.S. dollar that added more gains in GBP/USD pair. The Unemployment Claims from last week dipped to 847K against the anticipated 880K, supported the U.S. dollar, and capped further GBP/USD pair gains. The Goods Trade Balance fell to -82.58B from the anticipated -83.4B and supported the U.S. dollar from December. The Prelim Wholesale Inventories for December also fell to 0.1% against the anticipated 0.5% and supported the U.S. dollar. 

At 18:32 GMT, the Advance GDP Price Index for the quarter fell to 2.0% against the anticipated 2.2% and weighed on the U.S. dollar that pushed the currency pair GBP/USD higher. At 20:00 GMT, the C.B. Leading Index for December came in line with the anticipation of 0.3%. The New Home Sales in December from the U.S. fell to 842K against the anticipated 860K and weighed on the U.S. dollar and supported the rising prices of the GBP/USD pair.

The declining GDP numbers from the world’s largest economy in the last quarter of 2020 added weight on the local currency U.S. dollar and supported the GBP/USD pair’s rising prices on Thursday. Furthermore, the market’s risk sentiment was somehow supported by the rally in precious metals markets triggered by speculation that retail traders who had been focusing on pumping stocks like GameStop were now turning their focus to silver. The rising risk sentiment in the market also helped the risk perceived GBP/USD pair rise on Thursday.


Daily Technical Levels

Support   Resistance

1.3643      1.3746

1.3600      1.3804

1.3541      1.3848

Pivot point: 1.3702

GBP/USD– Trading Tip

A day before, the GBP/USD pair traded bullish after violating the narrow trading range of 1.3680 – 1.3670. It placed a high of around 1.3753 level, and it later reversed back to trade between the same trading range of 1.3696 – 1.3646. The GBP/USD may find support around the 1.3647 level, and violation of this level can extend selling bias until 1.3610. Approaching the 2-hour timeframe, the GBP/USD is holding below 10 and 20 periods EMA, and it may extend the selling trend today. Let’s consider taking a sell trade until 1.3645 and 1.361 level.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.259 after placing a high of 104.460 and a low of 104.053. The currency pair USD/JPY extended its gains on Thursday amid the pickup in risk appetite in the market that drove weakness in both the U.S. dollar and Japanese Yen versus most of their major G10 counterparts due to their safe-haven status. 

However, nominal U.S. yields rose on Thursday, with U.S. Treasury yields on the 10-year note up more than 4bps at 1.06%. It drove an increase in U.S./Japanese rate differentials that favor Japanese Yen flows into the U.S. dollar, supporting the currency pair USD/JPY. On the data front, at 04:50 GMT, the Retail Sales from Japan in December dropped to -0.3% against the expected -0.4% and supported Japanese Yen, and capped further upside in the USD/JPY pair.

From the U.S. side, at 18:30 GMT, the Advance GDP for the quarter decreased to 4.0% against the projected 4.2% and weighed on the U.S. dollar and limited further upside momentum in the USD/JPY pair. Last week, the Unemployment Claims decreased to 847K against the projected 880K and supported the U.S. dollar that added further gains in the USD/JPY pair. The Goods Trade Balance from December decreased to -82.58B from the projected -83.4B and supported the U.S. dollar and pushed the currency pair USD/JPY higher.

 For December, the Prelim Wholesale Inventories also decreased to 0.1% against the projected 0.5% and supported the U.S. dollar that extended gains in the USD/JPY pair. At 18:32 GMT, the Advance GDP Price Index for the quarter decreased to 2.0% against the projected 2.2% and weighed on the U.S. dollar and capped further upside in the USD/JPY pair. At 20:00 GMT, the C.B. Leading Index for December came in line with the projection of 0.3%. In December from the U.S., the New Home Sales decreased to 842K against the projected 860K and weighed on the U.S. dollar and capped further gains in the USD/JPY pair.

Risk appetite in the market took a meaningful turn on Thursday, with U.S. equities erasing losses incurred on Wednesday leading up to the FOMC monetary policy decision event. The ultra-dovish tone of the Federal Reserve was actually seen as positive for the risk appetite as Wednesday’s risk-off was a result of overvaluation fears as well as because of the short-selling hedge funds being forced to liquidate profitable large-cap stock long positions as speculative retail trade-driven mania continued in the likes of GameStop. Furthermore, another reason behind the rising USD/JPY pair prices was that the U.S. stimulus package proposed by Joe Biden did not receive approval from Republicans as of yet. This also supported the U.S. dollar that ultimately added gains in the USD/JPY pair.


Daily Technical Levels

Support   Resistance

103.71      104.34

103.33      104.58

103.09      104.96

Pivot point: 103.96

USD/JPY – Trading Tips

On Friday, the USD/JPY pair is trading with a bullish bias at 104.475, and it has violated the resistance level of 104.385. It’s likely to lead the USD/JPY pair until the 104.745 level. On the lower side, the USD/JPY may find support at the 104.300 level. The USD/JPY pair is likely to stay bullish as MACD and EMA suggest bullish bias in the USD/JPY pair on the four hourly timeframes. We can expect USDJPY to bounce off upon 104.300 to continue buying trend today. Good luck! 

Categories
Forex Basics

The Evolution of Forex Trading

So much has happened since the 90s once the internet started to connect the world. The evolution sparked many new things that unfortunately attracted some of the dangers too. Yet, where there is danger there is a secret, an opportunity uncovered. 

So much has happened since the 90s once the internet started to connect the world. The evolution sparked many new things that unfortunately attracted some of the dangers too. Yet, where there is danger there is a secret, an opportunity uncovered. 

So much has happened since the 90s once the internet started to connect the world. The evolution sparked many new things that unfortunately attracted some of the dangers too. Yet, where there is danger there is a secret, an opportunity uncovered. 

Generally, we can do so much more today than when the forex idea began. Actually, currency exchange is as old as the currency itself, but we are not going to go that deep into history, books will satisfy that hunger for knowledge. 

It is the beginning of a new era today, and most experts think It comes with the birth of a new type of currencies – cryptocurrencies. However, since the possibility for individuals to trade on the forex market, many opportunities opened for us and how we can manage our wealth, and yet few remember what made it all possible. Before we go into that, new traders should know how it was back then, when traders had to really warm the chair to get things done. Essential trading things for which we need a couple of minutes now. This article will cover how traders felt forex evolution. 

Traders and Copy Machines

How do you know your strategy or an idea works? You test it on the forex market. More precisely, you backtest and forward test. Only veterans remember how that part was very, very tedious in the 90s. They had to print the chart on their target time frame on a long paper sheet, take the ruler and start drawing. The “future” of the chart was covered so they have to decide to go long or short according to their strategy, without bias. Then write down the results and move the “future” cover by one period. 

Indicators you see today were not born yet. Price Action analysis and moving averages that were manually drawn is what most traders used, no one had the luxury of complex calculus merged into indicator coding we can just snap onto charts with one click. Access to the forex market was very rare, in the USA many traded from their workplaces if their company is connected to the broker. 

Contract For Difference

This little contract evolved forex and not only forex, it opened a new era of individual trading. The 2000s began and in Australia, CFDs were available to individuals finally. The interbank currency market was at traders’ grasp. Opportunities emerged, a new way to trade – CFDs allowed to go long and short on anything. Not only that, one could trade with more asset value than their accounts could handle usually. This was the CFDs and leverage. CFDs were essentially price trading, a trader could buy or sell at one moment and close the position after, without holding the CFD underlying asset. Suddenly you can also go short, not just long as people used to with stock trading. Even today some people do not know this. 

This ability opened new dangers, the risk was exposed and the masses lacked the skills to manage it. Regulations stepped in and closed some of the freedom traders could enjoy with CFDs, especially in the USA. Today, something similar is unraveling with the crypto DeFi idea. Interestingly, regulators did not try to change the broker business model, which leads us to the next part.

Broker Evolution

ECN, DMA, A book, B book broker, and so on, all terms that evolved with IT and communications. Back then with individual trading in its infancy, you could choose 2 or 3 brokers at best. IG Group was one of the pioneers and still exists today, which cannot be said for many others. 

Spreads and liquidity was an issue, you really had to be careful what currency pairs to choose and when. Of course, fast trading strategies that are popular now are out of the picture. With IT on the rise, brokers adapted the technologies, new companies emerged creating competition. Competition curbed the spread, commissions, and generally cost of trading for individuals. 

But new problems emerged, one of the most controversial is the conflict of interest between brokers and traders. The business model of a B-book broker does not externalize the risk, in other words, when a trader wins a broker loses and vice versa. The leverage we mentioned above just explodes the number of losing accounts, since beginner traders do not handle money management well. This profitable business sparked many new brokers to open with great trading conditions we see today. Unethical marketing emerged and evolved attracting many people that went in for the gamble. And as usual, the house always wins. 

However, it seems real brokers that externalize the risk, or true A book brokers are rare. It is considered that only 2% of them exist today. Regulators reduced the leverage more and more as the solution, while the toxic business model is not discussed. Offshore, shady business and fake investing platforms networks spoiled the industry to the point forex today is commonly associated with a scam. 

The latest developments in cryptocurrency technology paved the grounds for crypto-based brokerage. These investing platforms are not regulated and the trust is not backed by any contract. Still, even some of the crypto-based brokerages are not legit, but there are exceptions of brokers with very good reputations. 

Trading Access Evolution

Computers became more powerful, affordable, and interconnected. The Wall Street floor went quiet. No longer agents yelled at the phone line, everything is digitalized now. Computers got portable, so was forex. Platforms on mobiles are giving the traders accessibility to forex trading limited only by battery and internet connection. 

Some may argue this is not a good thing. Traders can get obsessed with following the market, overtrading, and even get health issues. Because of this and extreme marketing, it is never easier to blow your account. But let’s talk about the real benefits.

Platforms became more powerful, analysis went deep, wide, and quickly. MetaTrader platform became dominant on the market with a very good range of indicators with the ability to customize almost everything. Traders recognized they can make many strategies and make custom indicators that facilitated the introduction process to forex. Many professional traders are made in a few years. 

Social Networks and Community

This activity demanded a community, and social networks and forums came into play. Ideas and knowledge are exchanged without limits in a single digital place evolving trading to a whole new level. Information was very accessible, however, as before, this freedom pulled new dangers. 

Scammers could hide easily while picking victims in search of information on how to make money out of forex. Identity problems on social networks and communication platforms allowed forex trading to be plagued in yet another way. Unethical activity is really hard to miss now, making real forex trading harder to realize its true benefits to beginner traders. 

Nowadays, traders that dig deep and want to learn forex trading have to do good research and filter all the false info and noise out of this internet mess. It all became a very big marketing stage with media, government figures, news, and hypes that just are not aligned with the best interest of individual traders. 

Still, all the new tech and community allowed other trading forms to develop, such as automated trading, copy trading, signals providers, various trading proprietary firms, crypto-related exchanges, and staking, ETF types, indexes, and so much more on the horizon. 

The Forex Market Now

Forex, as a market is here to stay, however not much has changed recently. We are witnessing record-high equity levels, and when we see a steady rise of equities forex is waning in volume. The capital is always shifting, in 2019 we have seen record low volatility in forex. In 2020 similar happened except we had a disturbance caused by the COVID-19 pandemic. Whatsmore, the rise of crypto is now taking part in that capital flow. 

There are many fundamental signs of the upcoming crisis that are actually good for forex traders. On the other side, it stirs the need for financial education on how to protect individual wealth, something that is not much talked about. 

Categories
Forex Videos

Beginners – Analysis Feature of MT4 Helps You Fund A Trading Strategy!

https://youtu.be/ngitjajY_io

https://youtu.be/ngitjajY_io


Beginners: analysis feature of MT4 to help find a trading strategy

Thank you for joining this forex academy educational video. 

In this session, we will be looking at an analysis feature of the MT4 platform, which helps traders to find a winning trading strategy.

The Metatrader mt4 platform is one of the widest the most available trading platforms on earth.  It is fully customisable….

And there are a host of technical analysis tools available in the Navigator section, which are freely available from most brokers, and which can be added to, either freely found ones on the internet or paid tools, which can be mostly found on the mql5 website.

On this one-hour chart of the US dollar CAD pair, we have selected three widely used and popular technical analysis tools from the navigator section, which are Bollinger bands, moving average convergence divergence commonly known as the MACD, and the stochastic oscillator indicator.

 Although as a new trader, we must consider many factors when trading, such as fundamental analysis, the time of day while trading, whether or not economic data is due to be released, whether or not political or policymaker decisions, which might affect the particular currency pair we are interested in, are about to make an announcement, which could affect our trade, without doubt, the most critical aspect to trading, and which has the most influence on the movement of a currency exchange rate, is technical analysis.  Technical analysis often overrides fundamental analysis and even economic data releases.

While we cannot be in control, as traders, of fundamental reasons for why a particular currency pair is moving in any particular direction, and nor can we control political events, we can become masters of technical analysis, and where we can study our charts and seek out regular and consistent screen trading patterns which can stack the odds in our favour with regard to consistent winning trades, and with regard to knowing where to place tight stop losses to maintain the health of our account balance.

Now chart patterns have a habit of reoccurring, and technical analysis traders know this.  Therefore, as new traders, we must find regular and consistent winning setups, and this takes a lot of time as a new trader, and this requires a lot of patience and a whole lot of studying.

Only when we have found regular setups, which consistently work, can we then build a successful trading methodology, which should be adhered to.

Because these chart patterns are always changing, we can take advantage of the drawing tools such as the ‘’draw text label’’ as highlighted, and where we can make notes on the chart, and because of the flexibility of the MetaTrader platform…..

 

If we right-click on the chart, we have the option to save the chart as a picture for further analysis at a later time.  

As we see here, to save the chart as a picture, we can set the desired parameters, including the size, and then click ok….

You will then be asked where to save it on your computer, select your destination folder, and save it.

This saves an awful lot of time and alleviates the need to scroll back through hours and hours of charts just to find the setup which you may have been interested in. 

Categories
Forex Videos

Beginners How to save a profile in Metatrader MT4!

https://youtu.be/32IeHYYx53Q

https://youtu.be/32IeHYYx53Q


Beginners: How to save a profile in Metatrader MT4

Thank you for joining this forex academy educational video.

In this session, we will show you how to save a profile in the Metatrader MT4 platform.

The MetaTrader mt4 platform is one of the most widely used technical analysis platforms in the world.  Some traders use it for technical analysis only, and will trade on a different type of platform. And some prefer to use it for both analysis and direct trading.

It is used the world over and is extremely reliable and robust.  The platform comes with the widest range of technical analysis tools than any other platform available, and most brokers will offer the platform free of charge. The reason it is so widely used is because of its ease of customization and the huge range of technical analysis tools available both free of charge and to purchase on the MQL5 market place. 

This is a 1-hour chart of the US dollar to the Canadian dollar, and the technical chart setup is

……called the Williams, and it is a custom setup, which is free with the platform download by most brokers.

Let’s say we have an interest in the Canadian dollar, and we want to see what the general directional bias is for the currency, and where here we can see that the Canadian dollar is currently losing ground against the US dollar…..

And here where we have added a couple of other Canadian dollar cross currencies pairs, including the CAD / Swiss and CAD / JPY on 1-hour charts, and we can tell that the general bias is for a weaker Canadian dollar across all three currency pairs.

The cool thing about the MetaTrader platform is that we can save this as a profile and come back to it later if we want to trade another currency pair.

First, we click on the profiles tab at the top of the platform.

 Then highlight the save profile tab and click on it.

 And then enter a new profile name. Here we have called it the Canadian dollar analysis.

 And finally, click on the ok tab, and the profile will be saved.

 

 

Finally, to find all of your profiles, simply highlight the profiles tab at the top of the MetaTrader platform, and then scroll down to find the one you want. Here at the bottom, as highlighted,  is the Canadian dollar analysis profile, which we have just saved. 

You can see a whole host of similar profiles that we have already saved, including all of the major currency pairs, and where it is very simple and quick to move in and out various saved profiles to maximize opportunities of finding trading opportunities quickly, rather than building profiles each time you have an interest in a particular currency pair.

Categories
Forex Daily Topic Forex System Design

Trading System design -Creating Your Strategy with Tradingview’s Pine Script – Part 2

In part 1 of this article series, we have created the Stochastic RSI indicator as part of our idea for a scalping strategy. Now that we have it functional, we will make the bull/bear phases and visually inspect whether it captures the turning market’s turning points.

In part 1 of this article series, we have created the Stochastic RSI indicator as part of our idea for a scalping strategy. Now that we have it functional, we will make the bull/bear phases and visually inspect whether it captures the turning market’s turning points.

In part 1 of this article series, we have created the Stochastic RSI indicator as part of our idea for a scalping strategy. Now that we have it functional, we will make the bull/bear phases and visually inspect whether it captures the turning market’s turning points.

Possible ways to create bull/bear slices

Our Stochastic RSI consists of two lines, k and d, and two trigger lines, ob and os. Therefore we can use multiple variants that may allow the creation of bull/bear price legs. Let’s consider the following 3

Variant 1 – The transition occurs at the SRSI entrance of the oversold or overbought regions.

Bull: The d-line crosses under the ob-line, which indicates it is into the overbought area
Bear: The d-line crosses over the os-line, indicating d‘s entry into the oversold area.

Code:
if crossunder (d, os)
    SRSI_Long := true
    SRSI_Short := false
else if crossover (d, ob)
    SRSI_Long := false
    SRSI_Short := true 
else
    SRSI_Long := SRSI_Long[1]
    SRSI_Short := SRSI_Short[1]

This code creates a condition SRSI_Long at the cross of d under os, which holds until d crosses over ob and reverses it, creating an SRSI_Short state. This condition is only modified by d crossing under os.
The else statement ensures the condition does not change from the previous bar.

Once we have defined the bull and bear segments, we can color-shade them to visualize them in the chart. To do it, we will use the bgcolor() function.

bgcolor(SRSI_Long ? color.green: na)
bgcolor(SRSI_Short ? color.red: na)

The first statement asks the condition of SRI-Long ( the ? sign). If true, the background color changes to green. Otherwise, no change (an). The second statement behaves similarly for SRSI_Short.

Let’s see how this piece of code behaves in the BTCUSD chart.

Variant 1 triggers the transitions too early. We see that on many occasions when the stochastic RSI enters the overbought or oversold region, it is more a signal of trend strength than a turning point.

Variant 2 – The transition occurs at D and K’s crossovers if in the overbought/oversold regions.

Bull: the k-line crosses over the d-line, if below os ( inside the oversold region. We ignore crosses in the mid-area)
Bear: the k-line crosses under the d-line, if above ob ( in the overbought area. We ignore crosses in the mid-area)

Code:

// creating the long and short conditions for case 2

if crossover(k,d) and d < os
     SRSI_Long := true
     SRSI_Short := false

else if crossunder(k,d) and d > ob
     SRSI_Long := false
     SRSI_Short := true
else
     SRSI_Long := SRSI_Long[1]
     SRSI_Short := SRSI_Short[1]
// bacground color change
bgcolor(SRSI_Long ? color.green: na) 
bgcolor(SRSI_Short ? color.red: na)

The last section for the background change is similar to Variant 1.

Let’s see how it behaves in the chart.

Variant 2 is an improvement. We see that the bull and bear phases match the actual movements of the market, although entries are still a bit early, and in some cases, it missed the right direction. It can be useful as a trigger signal, provided we can filter out the faulty signals.

Variant 3 – the transition occurs when d moved to the overbought or oversold region and, later, crosses to the mid-area.

Bull: the d-line crosses over the os-line
Bear: the d-line crosses under the ob-line.

if crossover (d, os)
    SRSI_Long := true
    SRSI_Short := false
else if crossunder (d, ob)
    SRSI_Long := false
    SRSI_Short := true 
else
    SRSI_Long := SRSI_Long[1]
    SRSI_Short := SRSI_Short[1]
// bacground color change
bgcolor(SRSI_Long ? color.green: na) 
bgcolor(SRSI_Short ? color.red: na)

 

And this is how it behaves in the chart.


Variant 3 lags the turning points slightly, but this quality makes it more robust, as, on most occasions, it’s right about the market direction. This signal, combined with the right take-profit, may create a high-probability trade strategy.

Let’s try this one. But this will be resolved in our next and last article of this series.

Stay tuned!