Tag: Forex Trading

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Forex Basic Strategies

Heard Of The ‘Good Morning Asia’ Forex Trading Strategy?

Introduction

Introduction

Introduction

In the previous article, we discussed a strategy that was in the European session. However, there are a fair number of traders who prefer the U.S. session as they feel the market tends to be more exciting and thrilling. These traders consider the Asian session to be boring and quiet most of the time.

Many part-time retail traders based in the United States and Europe miss out on opportunities in European and U.S. sessions because of work and other business commitments. The only time they are left with happens to fall in the apparent boring and quiet Asian session. Therefore, it becomes necessary to come out with a strategy that is exclusively meant for the Asia session.

The strategy we will be going to discuss today is suitable for trading during the early-morning Asian hours. This time period has numerous opportunities for traders in different time zones across the world, whether they are part-time or full-time traders. We hope that the strategy will greet everyone like the bright morning sun.

Time Frame

The good-morning Asia strategy works well on the 4-hour time frame. This means each candle represents one day of price movement.

Indicators

This strategy is based on pure price action, and hence no indicators will be used during the process.

Currency Pairs

This strategy applies only to the AUD/JPY currency pair.

Strategy Concept

Opening hours of the Asian market begin a couple of hours after the U.S. market closes. The Asian market direction tends to take its cue from the previous day’s movement during the U.S. session because the U.S. market is the largest economy of the world, and most of the institutional banks are located in the U.S.

It is observed that when the U.S. market closes with the bullish sentiment, the Asian market usually starts the day bullish. If the U.S. market closes with the bearish sentiment, the Asian market remains bearish throughout the day.

During the early morning Asian hours, the best currency pair to take advantage of this phenomenon is none other than the AUD/JPY, as the Japanese Yen and the Australian dollar are the most active currency during the Asian session.

Looking at the price action, we take an entry right after the U.S. market closes at 05:00 PM. The first requirement of the strategy is that we need a ‘range’ or a ‘channel’ before the U.S. market closes. Depending on the position of the price and where the candle closes before the U.S., we take an entry. There are many rules that we need to follow before we can use the strategy profitably.

Stop-loss is placed above or below the technical levels, which is the easiest part of the strategy. The risk-to-reward ratio for this strategy is anywhere between 1.5 to 2, which is quite good.

Trade Setup

For this strategy, the closing of the 4-hour candle corresponding to 5:00 PM New York time is crucial for the strategy. Here are the steps to execute the strategy.

Step 1

Firstly, we need to identify a ‘range’ or ‘channel’ on the chart of AUD/JPY. This becomes our trading region, where we will be carrying out all the trades. A ‘range’ or ‘channel’ is confirmed only if the price has reacted and reached the other end at least twice after touching the extremes.

We have considered an example of a trade where we will be applying the rules the strategy step by step. The below image shows the 4-hour time frame chart of the AUD/JPY pair, where we identified a ‘channel’ with multiple touches on either side.

Step 2

In this step, we need to pay close attention to the position of the price and the closing of the U.S. market. The most important part of the strategy is looking out for the price action taking place at the end of the range, which should be occurring at the close of the U.S. market. Depending on the signal we get from the market, we will take an appropriate currency pair position.

At the close (U.S.) if the price closes as a bullish candle from the support, we will enter for a ‘buy’ at the opening of the subsequent candle. If the price closes as a bearish candle from the resistance, we will enter for a ‘sell’ at the opening of the subsequent candle.

Step 3

In this step, we take an ‘entry’ with a suitable size and determine the stop-loss and take-profit for the trade. As mentioned earlier, we will enter for a ‘buy’ or ‘sell’ right after the U.S. market closes, and the next candle opens. This ensures that the risk to reward will be higher.

The stop-loss for the trade is placed a few pips below or above the key technical level of support or resistance. To increase the risk to reward ratio, we can also place it just above or below the previous candle. This would require some experience of using the strategy over a long time. The ‘take-profit’ is set at the other end of support or resistance. We can have a larger ‘take-profit’ if we are trading with the trend of the market. The ‘take-profit 1’ ensures that we lock in some profits if the trade goes against us.

Strategy Roundup

This strategy is suitable for traders with little time to trade. Furthermore, it does not require complex market analysis. It does have some strict rules which might reduce the creation of the trade setups. The ‘entry’ time of the trade is fixed at every morning. Since Japan and Australia are the first countries in Asia where markets open, there will be ample liquidity in the market that will allow traders to execute ‘long’ and ‘short’ positions very easily. All the best!

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Forex Course

141. Understanding The Concept Of Breakout

Introduction

Introduction

Introduction

A price movement can be considered a breakout when the price clears any critical level on the price chart. These levels can be support/resistance, trend lines, Fibonacci levels, etc. Many professional traders wait for the price to hold above the breakout to take long positions. Conversely, they wait for the price to hold below the breakdown level to take short positions.

When the price confirms that the breakout is valid, volatility tends to increase as the price started to move in the direction of the breakout. The reason why breakout trading is popular among the traders is that it sets the future trend direction. This makes it easier for traders to make consistent profits from the market.

Breakout trading strategy is universal, and we can apply it to the hourly, daily, weekly, or even monthly timeframes. Investors, swing traders, and intraday traders prefer breakout trading the most compared to any other form of trading. The longer price action holds inside the breakout, the stronger breakout we must expect, and also, the longer time the price action moves in that direction.

During the consolidation phase, when the price is preparing to break out in any direction, we will notice a couple of price pattern formations such as channels, triangles, flags, etc. These patterns will give us the clues on which side the breakout may occur—using these signals to enter a trade before the breakout is crucial. But if you are a conventional trader, wait for the price to break above or below the price to take the trade.

Trading Various Breakouts 

Trend Line Breakout
Ascending Trend line Breakout

The below price chart represents an ascending trendline breakout on the NZD/CHF daily Forex chart.

As you can see in the below image, when price action broke below the ascending trend line, it is an indication of sellers stepping into the game. The hold below the trend line confirms the selling entry. We have placed our stop-loss at the previous high and rode the huge downtrend.

Descending Trend line Breakout

The image below represents the breakout of a descending trend line in the GBP/CHF Forex pair.

As you can see below, we took a buy entry when price action went above the trend line and started to hold above. The hold confirms that the buyers are in control, and they are ready to make a brand new higher high. After our entry, price action blasted to the north and printed a brand new higher high. We chose to close our trade at the most recent higher high. The stop-loss order placed just below the trend line is safe enough.

Range Breakout

The price chart below represents a Ranging market in the NZD/JPY Forex pair.

Most of the time, you would have observed traders taking buy/sell trades when the market moves in a range. But in this strategy, let’s trade the market only when the price breaks the range. Just like any other breakout, Range breakout also indicates the winning of one-party over the other.

The hold above the breakout confirms that the range is broken, and it is a good idea to go long. We choose smaller stops because the hold above the range gave additional confirmation.

That’s about breakouts and how to basically trade different breakouts in the market. In the upcoming lessons, we will be going through many of the concepts related to breakouts.

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Forex Indicators

Forex Indicator Testing Tips & Shortcuts

By now you all know that Forex trading with indicators is by far the superior way of trading. Forex is not the stock market and most of the strategies, indicators, and tools are not going to be useful in Forex trading. When you step out in trading waters you will realize there are thousands of […]

By now you all know that Forex trading with indicators is by far the superior way of trading. Forex is not the stock market and most of the strategies, indicators, and tools are not going to be useful in Forex trading. When you step out in trading waters you will realize there are thousands of […]

By now you all know that Forex trading with indicators is by far the superior way of trading. Forex is not the stock market and most of the strategies, indicators, and tools are not going to be useful in Forex trading. When you step out in trading waters you will realize there are thousands of indicators out there that can be used.  Unlike the price action trading, indicators, if everything is done correctly, and have been tested and trusted already, will give you a crystal-clear signal every time.

There is no guesswork with indicators and you can customize settings. Adjust it in the way you like it and make it better than it already is. This cannot be done with Support and Resistance line, right? The best option is that you can combine indicators, and by this, make better results. Everything is going around choosing the right indicators and combining them together to make the system more accurate. One stand-alone indicator will not get anyone anywhere, what is recommendable to do, is to create algorithms – the system of rules to point out to the same signal at the time, which can be used and traded upon.

We will focus now on the ways of testing Forex indicators and choosing adequate ones.
As we already mentioned, there are thousands of indicators out there that can be used. Also, now and then new indicators are made by programmers. In order to choose the right ones, one would need an awful lot of time to test each and every and to make the right choice. This is actually not a bad way to do it, don’t get this in a wrong way. It would even improve your skills, however, to help you shorten the process we chose five criteria points.

An indicator that does nothing other than following the price.

There are a lot of indicators out there that do just this – follow the price. As if you took a pencil and just tracing the price – honestly, this cannot help at all. These kinds of indicators are just mirroring where the price is going and it is not very useful. What you really need from the indicator is to show you what you cannot really see – foreseeing what is not yet visible with a bare eye.

Indicators that do not even work in the example.

Most of the programmers that are making indicators are not traders. Many indicators that are for sale cannot be tested before you buy it and then you need to assume how they work. What would be very useful is they could give a snapshot to a user of a real successful example – where a certain indicator worked and provided the correct signal. If it happens that even in the example the indicator does not meet what is expected and in the way it is expected, it should be cast away without even trying.

Too many signals.

It is not easy to choose between an indicator that gives quality signals and ones that give more signals. If this poses a dilemma to you, a suggestion is to go for quality over quantity each time. In truth, it doesn’t really matter which one you choose as long as it brings you money at the end of the day.

Indicators that give you a buy signal and a sell signal way to quickly, one after another, it would be best to avoid it. If you happen to use this kind of indicator, even in combination with other indicators you may take too many trades and exiting them too soon.

Indicators offering Support/Resistance levels of any type.

The way some traders believe is that Support/Resistance levels are completely non-useful based indicators. Even if it is dynamic support and resistance – meaning it moves, it doesn’t stay fixed, it is still not very useful according to them. What these indicators do is trying to predict the place where the price is going to break out or reverse and it is not really something that can be predicted. It is also good to know, if you are following this kind of strategy, that all indicators which contain words like ‘pivot’, ‘gann’, ‘channel’ are most likely also part of this category.

Indicators you cannot adjust.

If you happen to use these indicators, you know that every once in a while, it works perfectly on default settings. For example, Heikin Ashi – nothing can be changed or adjusted in this indicator. Some serious professional traders think that every indicator that gives you a possibility to improve it – personalize in a way, is going to be better than the one that doesn’t.

These five points should offer you some guidelines on how to choose and test indicators in the future. You can always come up with your own selection, which can take you a lot of time to do it, but it would probably be very useful for improving your trading skills.

Benefits of following the price action.

There are also traders out there that strongly believe that indicators are just a waste of time. These kinds of traders are mainly Price Action traders, trading with clean charts – which are very successful in what they do and wouldn’t change it for any of the indicators. To them, indicators are just a clumsy way of interpreting what they can already see on the chart using Price Action methods.

A lot of new traders are coquetting with both ways in order to find their comfort zone and a method that will work for the long term. According to these guys, a clean chart with minimal indicators represents a clear mind and way of trading on fundamental price movements in opposition to the trading with indicators. Accessing a clean chart may seem simpler and non-demanding and can also be a lot less stressful than having to scan multiple lines, levels, and bars that indicators may show.

While a clean chart would present price information upfront, a chart with indicators will often show other information on top, or even worse, can show compress or stretch actual price information on candlesticks or bars, leading you to the wrong appearance of volatility levels and moment relative to the existing trends.

We must admit that a cleaner chart also gives fewer filters that you are potentially looking out for, allowing you quicker decision-making without getting distracted by information on another window or overlaid on price information. This can improve your efficiency. Just for this method to be applied correctly, your mindset needs to be sharp, equipped with enough years of experience reading the charts and mastering Misk Management.

So, to summarize, the major benefit of trading price action is the simplicity factor. Top trading professionals are often found trading with totally clean charts that allow stress-free and comfortable trading environments that ultimately contribute majorly to their trading success.

Bottom line is, as you may have realized by now, trading with or without indicators is a completely personal decision and depends entirely on the trader. On what kind of trader you are, your own circumstances, risk appetite, experience, and comfort level.
It is impossible to categorize either approach as categorically good or bad, but depending on your situation, choosing one over the other may contribute majorly in determining your success as a trader.

Categories
Forex Fundamental Analysis

What Is ‘Employment Change’ & How Can This Data Be Used For Our Analysis?

Introduction

Introduction

Introduction

Employment statistics are closely watched by the market because of their direct effect on consumer spending. Consumer spending makes up over two-thirds of the country’s GDP for many countries. Hence, understanding Employment Change, its place in the reports, and its impact on market volatility are crucial for building reliable fundamental analysis.

What is Employment Change?

Employment

It is the state of having a paid job. A person is considered employed if it does any work for pay or profit. People who are eligible for employment are between the age of 15 and 64 and are called the working-age population.

Employment Change

Unlike most reports which are reported in percentage or ratios to understand the statistics better, the Employment Change reports the nominal change. Employment Change is the change in the number of jobs added or lost over the previous month.

For example, if there were 20,000 jobs in January, and, in February, the figure was 25,000 jobs, then the Employment change would be +5,000. If the total jobs in February were 10,000 only then the Employment Change would report -10,000. Hence, positive numbers indicate job growth or new jobs added to the economy. Conversely, negative numbers indicate jobs were removed from the economy.

It measures the estimated change in the number of employed people during the previous month, excluding the farming and government industry. Hence, it accounts for the non-farm payroll employees, that are widely used statistics to monitor employment levels.

How can the Employment Change numbers be used for analysis?

Employment is a politically and economically vital statistic in any country. High levels of unemployment threaten social structure, and the ruling party’s governance. There have been incidents in many examples, where high unemployment periods have led to an increased number of crime and suicide death rates. Hence, Central Authorities are politically committed to ensuring low levels of unemployment at all times.

High unemployment is terrible for the economy. As Consumer Spending makes more than 70% of the total Gross Domestic Product for many countries, it is no wonder employment statistics are one of the primary indicators in the currency markets. Employment has a direct effect on Consumer Spending. As more people are employed, more people have disposable cash to meet their needs and discretionary spending. Hence, high employment boosts Consumer Spending, which in turn propels the GDP higher.

High unemployment levels tend to have a ripple effect on the economy, as jobs removed from one sector also tends to induce the same effect on dependent industries, and on a smaller scale on indirectly dependent industries and the overall economy.

For instance, if a car manufacturing company has a slow down in business, and decides to lay off half of its staff, then the company supplying tires to this company will also see reduced demand, leading to the same lay off and reduction in business. Also, indirectly dependent industries like car paint and servicing shops, car perfume selling shops would similarly take a hit. Hence, we see how lay-offs in one sector tend to creep into other sectors as well.

Also, during this cascading effect, there is a definite impact on consumer sentiment as well. A drop in consumer confidence also discourages the spending habits of people, which further impacts consumer spending. Hence, people who are still employed are also affected by unemployment in one or the other way. People generally start saving for a rainy day when employment levels drop, thinking their turn is also around the corner. Generally, industries dealing with luxury and recreation tend to take the worst hit during economic slowdowns and recessions.

Employment Change is a nominal figure that is a little misleading and confusing to correctly analyze the severity of positive or negative numbers as it is a function of the population. A country showing -10,000 jobs lost over the previous month could be ignorable for a country like India or China where the population is vast, and critical for small countries where the population is just in a few million. Hence, people generally prefer the unemployment rate and other percentage metrics to analyze the severity of the country’s employment situation correctly.

Impact on Currency

Even though it is a nominal figure, this report’s earliness gives it an edge over other reports, as traders are always looking to be ahead of the game and beat the market trend before it sets in. Hence, seasoned traders look at the Employment Change reports and analyze them historically to make investment decisions before market trends are set in motion. Hence, there tends to be a lot of market volatility around Employment Change reports.

Employment Change is a coincident and high impact indicator that can generate enough market volatility during significant changes in the reports. It is always best to combine reports with initial jobless claims reports, non-farm payroll statistics to build a broader understanding in the long-term to correctly trade these short and long-term volatilities around the time of report’s releases.

Economic Reports

In the United States, the Bureau of Labor Statistics (BLS) publishes monthly, quarterly, semi-annually, and yearly reports of the Employment change seasonally adjusted figures on its website. The report classifies change in employment as per the major industry sectors.

ADP publishes Employment Change reports on its official website about two days after a month ends. Hence, it is a day or two earlier than other employment situation reports published by BLS. ADP Non-farm employment change is the closely watched statistic before BLS releases its Employment Situation Report later.

Image Credit: U.S. Bureau of Labor Statistics

Sources of Employment Change

We can find the earliest Employment Change report from the ADP employment report.

The United States Bureau of Labor Statistics publishes monthly Employment Change, employment, and unemployment reports on its official website.

We can also find the same indexes and many others with a comprehensive summary and statistics of various categories on the St. Louis FRED.

Consolidated reports of Employment Change of most countries can also be found in Trading Economics.

That’s about ‘Employment Change’ fundamental Forex driver. As mentioned above, the impact of this indicator’s new release on the Forex price charts is minimal. However, if we combine them with other credible employment data like initial jobless claims and non-farm payroll statistics, we can get a broader understanding, which is crucial. Cheers!

Categories
Forex Basic Strategies Forex Economic Indicators

Trading Forex News: Why Risk Assessment Calls for a Different Approach

We know how certain markets, such as the crypto market, foster the culture of sharing news and exchanging information. The spot forex market, however, appears to be calling for a different approach for traders to truly master the skill of trading currencies, building the very needed psychological resilience along with one’s trading account. Some of the market’s most prominent traders even fervently support the idea that trading news is one of the least effective strategies forex traders could ever implement. While a number of traders keep striving to find a way to trade news, a portion of successful traders insists on employing another method. Today, we are trying to understand whether traders should necessarily avoid every type of news, and how reliance on such information affects trading, analyzing claims against incorporating news events in trading currencies.

We know how certain markets, such as the crypto market, foster the culture of sharing news and exchanging information. The spot forex market, however, appears to be calling for a different approach for traders to truly master the skill of trading currencies, building the very needed psychological resilience along with one’s trading account. Some of the market’s most prominent traders even fervently support the idea that trading news is one of the least effective strategies forex traders could ever implement. While a number of traders keep striving to find a way to trade news, a portion of successful traders insists on employing another method. Today, we are trying to understand whether traders should necessarily avoid every type of news, and how reliance on such information affects trading, analyzing claims against incorporating news events in trading currencies.

We know how certain markets, such as the crypto market, foster the culture of sharing news and exchanging information. The spot forex market, however, appears to be calling for a different approach for traders to truly master the skill of trading currencies, building the very needed psychological resilience along with one’s trading account. Some of the market’s most prominent traders even fervently support the idea that trading news is one of the least effective strategies forex traders could ever implement. While a number of traders keep striving to find a way to trade news, a portion of successful traders insists on employing another method. Today, we are trying to understand whether traders should necessarily avoid every type of news, and how reliance on such information affects trading, analyzing claims against incorporating news events in trading currencies.

When we think of news, we should first differentiate between the types of information which can have an impact on forex traders and the second type that has no influence on their trading. The forex community consists of traders, which is distinctly different from investors, which why a number of news announcements on websites such as Bloomberg or CNBC simply do not apply to the currency market. Various sources entirely disregard the forex-related news, whereas other media provides information that is simply not very useful and thus should not constitute a part of traders’ daily routine. In comparison to the previous group, news that forex traders should concern themselves with is economic indicators, which are scheduled news events. These pieces of information always come in advance several times a year (e.g. every two or three months, each quarter, etc.). Of course, traders may suddenly receive some unexpected news at times, but such cases are exceptionally rare and seldom. The benefit of having such transparent information ahead of time is to know factors that can actually affect the market in some way and along with the time of these events’ occurrences.

For traders to be able to make use of such pieces of information, they should first access news calendars, which are available online (e.g. https://www.forexfactory.com/calendar?week=jan13.2019 and https://www.dailyfx.com/economic-calendar). These calendars are an excellent source of information because they offer traders the possibility to protect themselves against any potential pip falls in advance. Nonetheless, even if some of the existing economic indicators or news events lack to provide any information a trader may find relevant, they still have a great impact on trading overall. What often happens is that certain pieces of news alarms people and, as you may already know, the more traders react, the faster will the banks get involved. When the big banks overreact, it usually entails some important market activity ending with the price changing direction. Therefore, consulting news calendars before entering a trade is a crucial part of trading in the spot forex market because traders need to have any available information at their disposal as early as possible.

Some traders assume that managing news events is possible, believing that by possessing these information items gives them control over the market, to the extent that they deem generating a great number of pips in little time possible. Their viewpoint on news events boils down to the idea that the moment such news comes out, they will take specific action accordingly. Should the news be strong, they will go long on their chosen currency and vice versa. They believe that any timely reaction will easily bring them many pips, and we cannot but confirm that such a belief is based on solid grounds. Nonetheless, the fact that some traders managed to achieve this does not prove its quality. Not only does it happen occasionally, which immediately introduces a higher than necessary risk, but it also leads to false conclusions. Wanting to stay on top of news events is equal to trying to beat the traders’ main opponent, the big banks, and attempting to fight the one who decides how the prices will move is a very bad idea in the long run. Failure is inevitable when your adversary is unbeatable, so any attempt to control the news already implies more risk than anyone should have to take on.

Since traders already have no power over the price, they may need to consider the role of the big banks on a deeper level. These banks can choose to redirect the market in any desired way and, even if they ever get fined for manipulating prices, which does happen from time to time, they have enough financial support to withstand and last. You may have already noticed how certain decisions they have made in the past have always been justified in the media, regardless of how incomprehensible or unreasonable those may be. Often when traders receive some positive news regarding a particular currency, a pair involving the currency will suddenly go short and keep the same direction for a long period of time. The forex news media (for example Twitter and Bloomberg, among others) always appears to be prepared under any circumstances, providing some vague explanations such as claiming how the news has already been priced in. Traders, unfortunately, do not possess this information beforehand and each time a price moves in an unusual fashion, traders are made to believe it was them who failed to read through the news or take the right steps. Therefore, going against this powerful opponent is sheer luxury traders need not indulge in for the sake of keeping their accounts.

While the price may at times take a strange direction, there are times when they move in an expected manner. Traders may have witnessed how, when some positive news came out on a particular currency, it become more expensive as a result. News events have the power to dictate whether a price will become higher or lower, but you should know that it is the big banks pulling the strings from the shadow. The news may say where the price will go, but these banks alone will ultimately decide when such action will take place and what will happen with the price before it gets there, moving it up and down to their liking. Apart from special permissions, the big banks also have access to exclusive tools that allow them to see orders, stop losses, and whether traders are going long or short. As they have the ultimate power, they can trigger traders’ stop losses and manage the market as they like. What the big banks especially look forward to is seeing where the majority of traders are going because it is the moment that is the most rewarding for them. The ability to see retail money only helps them earn more by moving the prices against the majority. Therefore, when any big news comes out, they immediately know where the price will have to end up for them to reap the benefits, leaving most traders on the other end of the spectrum.

Some traders may still want to make money trading while the big banks are busy, but this approach will only bring random wins. Unfortunately, this game was designed so that there is always only one winner and traders are not meant to be the ones taking the prize home. You should not, therefore, feel confused or surprised if you realize that the price did not act the way you imagined it would, as this market will never let you build your account this way. While you may have previous success with handling news, you should know that the likelihood of maintaining the same approach long term is rather low. Because many successful traders have already failed to try to play these games in the past, they understand that the best solution is to not get involved. Traders need to seek actions that will grant them control and they definitely cannot control the big banks’ decisions, the news events, or the manner in which the masses are going to reach them. By willfully taking part in the attempt to manipulate news events, you are in fact giving u control over your own money.

The reason why so many traders get involved in such activities is the rush of instant gratification, which practically boils down to the urge to satisfy the greed for becoming rich fast. The best strategy for any trader dealing with such compulsive need is to learn how to properly address the news, and to be able to do that will then require them to have a set plan in place. You do not have to go to great lengths to be able to secure financial stability. Trading five-minute charts, managing numerous screens, and making rash decisions upon entry and exit will not necessarily lead to any lucrative outcomes. By trading the daily chart, for example, you can successfully evade the impact of news events. Just by looking at the news calendars, you can develop insight into the substantial quantity of news happening on a daily basis. You can also, therefore, grasp how many pieces of information the traders using the five-minute chart, which is a stressful endeavor alone, need to manage at the same time. Trading smaller timeframes, hence, does not necessarily imply having more benefits, but quite the contrary.

Traders have probably seen cases of important news going against the majority of people trading smaller time frames that inevitably produce disastrous outcomes for the group in question. Forex traders using the daily chart, however, may occasionally experience some drawdown, but with the right approach and direction as well as technical skills and tools, it is more often than not only going to be a temporary setback until the price eventually returns to its previous course. Even in the case of some unfavorable news, daily chart traders only need to patiently wait out the interim periods and have a ready plan they will see through until the transition is complete. This further entails that traders are required to be prepared in advance in order to protect their trades from any major events by knowing how they will address any type of news they come across. Luckily, traders have such information at their disposal well in advance in most cases and, what is more, these events often concern only one or two currencies, further reducing their impact.

Although these events rarely affect daily chart traders, as described above, they still need to be wary of going in blindly or unprepared. By being cautious and attentive, traders will establish a firm foothold and withstand any alternating circumstances. Furthermore, they may escape a series of unnecessary yet painful losses and build on the momentum of accumulating wins rather than the opposite. To grow an account, you need to think of potential failure ahead of time because in the world of trading currencies you essentially win by not losing. If you drag your account down by taking unwise steps, allowing yourself to be compelled by any upcoming news event, you willfully and consciously engage in activities that will ultimately cost you your account and financial stability. The main benefit of adopting an observant and focused mindset, you prime yourself for success and give your account the opportunity to be much bigger at the end of the year.

An excellent example of the events requiring such a regimented approach is the times of elections when the market behaves in an unusual and uncontrollable manner. Whenever traders attempt to stay on top of those events, they eventually help banks gloat over the results. The U.S. presidential elections and Brexit are the very proof of how external circumstances and unexpected turns of events affect trading because not only did traders witness exceptional turmoil in the market but they also often had their stop losses passed. The market is not intended to act according to traders’ needs and desires, especially under such circumstances, so if you aspire to trade during the times of utter commotion, you are entering a game you cannot control. Some traders may have had some success while trading during elections, but such wins can hardly be more than exceptionally random and rare instances of gaining the upper hand. If you are ready to commit to a disciplined approach, you may need to reconsider trading elections and thus substantially reduce the risk levels.

Certain news events affect the market long term, leading to more lasting changes. When Greece was undergoing major challenges with the overdue debt burden, the European Union was weighing a decision whether to provide further assistance or refrain from lending any more money to such a greatly weakened economy. Through the course of this long period, a plethora of varying news events would suddenly come out, rendering traders confused and lost. They could not know what the news would indicate, how the market would react, or the direction EUR would take. The same scenario repeats itself every time we face any major transformation, directly affecting the market and the related currency. Therefore, the best strategy any trader could adopt in these long and unpredictable periods is to avoid trading the currencies in question. Eliminating additional risk and ignoring all pop-up news for as long as it takes for the dust to settle provides traders with real control in tumultuous times. Fortunately, with having the option of trading eight major currencies, you still have enough room to keep your account active and earn a profit in a safe and sustainable manner.

With regard to short-term events, it is always best to consult a news calendar prior to entering a trade, making it an essential part of one’s daily routine. There is a great number of events traders can ignore; however, a portion of news events has proved to trigger trading by knocking individual stop losses. NewsImpact.com, for example, is an excellent resource offering a historical overview of how prices moved when news came out in previous years. It provides into how an event that occurred two years ago may not have the same effect at present and vice versa. The impact of events can change substantially, where something traders found to be entirely unimportant before can gain importance in time. Nonetheless, what we can control and use as a relevant piece of information is the knowledge of events that historically elevated risk levels for traders, which is why understanding how each currency is particularly susceptible in a specific situation is crucial for both avoiding volatile market activity and maintaining control over one’s trades.

USD

The correlation between nonfarm payroll (NFP) data and the strength of USD proves how trading during this biggest news event of each month is an unwise decision, especially due to its tendency to bring about quick and erratic market activity. The circumstances involving interest rates and The Federal Open Market Committee (FOMC) also require special attention because each time interest rates rise or fall, so does the people’s interest in those currencies. Whenever there is an increase in interest rates, traders look forward to investing their money in the currencies in question owing to the potential of getting a bigger return. Likewise, in the scenario where interest rates decline, traders will inevitably search for better places to direct their money.

Furthermore, each time certain prominent figures decide to speak publicly, their words appear to have a bigger impact on the market. Jerome Hayden “Jay” Powell, the current Fed Chair, is an epitome of a public persona whose apparent disagreements with President Trump may be the source of additional concern because of the number of different interpretations people can derive. When we are assessing words, we are not dealing with any quantitative data, so the result of the manner in which the majority of people conceptualize what was said may lead to some unexpected changes the markets will undergo. From the side of quantitative factors, traders should pay attention to the Consumer Price Index (CPI), which measures price level changes, and these numbers have only recently started to have an impact on USD. As said before, the news impacting this currency may vary and change in relevance over time, but their current impact should not be disregarded.

EUR

Due to the fact that this currency spans across several countries, the impact of the news is of a lesser degree than it would be in case of a currency dominating a single country. Apart from interest rates, which prove to be a common factor among all currencies, people trading EUR should pay additional attention to the news coming from the European Central Bank (ECB) because the previous President Mario Draghi’s seldom statements often caused quite a commotion with regard to EUR.

GBP

One would expect economic indicators to have a stronger impact on a country that is as small as the United Kingdom but appears to be irrelevant in this case. Interest rates in this country depend on the Monetary Policy Committee or MPC whose nine members’ vote determines the timing and the direction of interest rates. News calendars will typically disclose information of a uniform nature, where all nine members agree on the same decision. Nonetheless, should this ever change, it may cause GBP to act strangely causing traders to feel alarmed. Another important news concerning the currency is GDP owing to the fact that a country smaller in size is naturally more affected by its gross domestic product than in the case of larger countries.

CAD

Aside from interest rates, the Canadian market has proved to be vulnerable when it comes to the employment rate, with these numbers often oscillating at the same time as nonfarm payroll which allows traders to tackle two factors simultaneously. Retail sales should be included in the traders’ assessment of the market’s stability and their next move. The last factor in terms of news events relevant for this currency revolves around CPI, whose significance has grown as of recently.

AUD

Interest rates and employment numbers also affect this currency as they do some of the previous ones. Yet, what is different about AUD as opposed to other currencies is the impact of the news coming from China. As Australia’s favored trade partner, events occurring in China would naturally impact AUD. Nowadays, however, due to the fact that the Chinese economy has subsided in the recent years, they are not going to buy as many minerals and materials from Australia as before when the country was in the building stage, which lessens the overall impact of news events originating from China on AUD.

NZD

New Zealand’s currency is affected by a number of factors discussed above, such as the employment rate and GDP. However, we also need to introduce GDT, global dairy trade, as dairy does constitute an important part of the country’s economy. Therefore, whenever the news of GDT comes out, it naturally makes a difference in the market of the Kiwi dollar. It is important to remember that some news calendars may not detect or disclose this, or any other piece of information for that matter, which further entails that you may need to consult several news calendars (consider the previously-mentioned options) in order to put together the complete picture. Interestingly enough, interest rate appears to not have had a major impact on the currency in question in years, which certainly does not indicate that it will not become an important factor once again in the future.

JPY

One of the last two currencies which seem to undergo little impact of news events is JPY. As with NYD, the Japanese currency has also not seen any activity worth mentioning in terms of interest rates since they seldom change, but they may pose a threat in the future when they do. Luckily, it a single piece of news that comes out only once each month, which does make it easy for traders to monitor and detect any news-worthy changes.

CHF

The Swiss currency, similar to the ones before, may one day start depending on the fluctuations of interest rates, named the London Interbank Offered Rate or LIBOR in Switzerland when traders are advised to sit out and patiently wait for the currency to stabilize.

While we have analyzed the main news which may have an impact on the major eight currencies at present time, you may come across other news events as the nature of the market is to always grow and change is naturally an inherent part of such growth. We also need to mention that both banks and people trading in the currency market can choose how they will react regardless of individual expectations and/or needs. The example of the 2019 flash crash should serve to teach traders a lesson that even if we know some information in advance like we knew how Apple sent out a warning concerning the Chinese economy, big banks still allowed the market to go into a craze. News, be it small such as this one or a more sizeable piece of news, can at times stop traders. However, we need to accept it as an integral part of the forex market and decide to move on. While there is a vast number of aspects to trading currencies traders cannot control, what they can in fact do is devise a plan that will serve to protect and support them on their path of growing accounts and finances.

For every news event coming out, each trader should be mindful of the available steps he/she can take so as the secure the best possible position at the time. If, for example, traders are not trading a specific currency pair while receiving some important news, they are advised to refrain from entering any trade involving the currency in question should the news event be occurring within the following 24 hours. If there is a possibility of securing any candles prior to the time frame we have just mentioned, you may freely do so. As long as the trade falls under the period of one day, you are entering the market at the risk of endangering your finances and your account at the same time. This rule will surely introduce more control over news events and limit the urge to trade recklessly, thus providing the necessary stability all people trading in the spot forex market should strive to ensure.

If the news event, however, involves the currency you are trading at the time, you will be able to apply a few different strategies depending on the stage of the trade you are in. In case you are in a trade where you are slightly losing (e.g. 50 pips), but your stop loss has still not been hit, and a big news event is about to take place within the 24-hour period, you will need to exit the trade so as to protect yourself. Taking such loss may be difficult, but considering the fact that by staying you would in fact be open to facing an even bigger loss, this option is the safest it can possibly be. While it may not happen very often, you do not have to get yourself to the stage where the price passes your stop loss without having been triggered. Hoping that the price will go back your way immediately involves too much risk and the cons are simply incomparably higher than the pros. The only way to eliminate a risk this big is to close these trade because the likelihood of your account recovering afterward could be highly questionable otherwise.

If you have entered a trade that is now winning, there are several important facts you should take into consideration. Firstly, regardless of the fact whether you have already taken any profit, using the ATR indicator as your take-profit point is always advised. We can typically see two scenarios unfolding in this case: either a trader has entered a trade but no profit has been collected yet or they have already taken some profit off the table but the price is now falling. In either case, there is only one solution that will mitigate the risk that comes from trading under the impact of an upcoming (or very happening) news event. The only solution here is to take whatever profit you have made so far and exit the trade at peace. There will surely be people who earned a big profit during the time of an important news event, but what this approach is about is limiting the losses. If a trader was lucky enough to go unharmed once, the same circumstance may not play out again which is why this risky approach is then not your best long-term strategy. Even if a trader chooses to move their stop-loss to the break-even point, the odds of a stop-loss being taken out under such circumstances are higher than they may realize. Whatever preventative measure you think you have included in your trade does not truly mitigate the risk, which is why exiting such trades is the only logical and safe solution.

The very last context we will be analyzing today concerns trades that have already scaled out and are still winning. If you have taken your profit at the ATR value, for example, and you are satisfied with how the trade is progressing, you should carry on as if it were any other normal circumstance despite the big news event approaching. You have probably moved your stop-loss point to the break-even or you are relying on a trailing stop, so there is no need to include any other measure at this point. This scenario has several benefits starting with dealing more pips due to trading the daily chart. Moreover, there is a chance that the price does not hit your trailing stop, but keeps moving in the desired direction even further instead. Be it this best-case scenario or a somewhat different one, your trailing stop will always provide the protection you need under these circumstances. Regardless of which scenario you get to experience among the ones discussed in this article, you should always assess the risk levels and take any preventative measure you can so as not to end up where the majority of traders do.

Finally, the notion of going against the big banks is a losing game and the game which will inevitably, sooner or later bring about massive failure. Your job is not to play the game where everyone is meant to lose, but to navigate around the challenging circumstances the best you can. Recognize the repetitive cycles and acknowledge the news events in a rational, non-compulsive fashion. Learn how to read through the news and understand how some events will take months to fully play out, along with taking a number of traders off the trading scene. Whenever you notice the tension building up in the market, the best strategy is to simply be patient and wait for the turmoil to pass. You cannot predict how any participant in the market is going to react, which is why getting involved in any of the events you cannot control is a risky decision. Use wisely the knowledge on the events you should consistently avoid and keep researching the market and the currencies in the context of the states they govern.

Include news calendars in your daily routine and adopt a healthy, sustainable action plan which you can call upon at every trade stage or in any circumstance. Whatever action you are planning to take, you should always rely on the system you developed because it will provide you with technical support this line of business heavily requires. Lastly, while the effect of having such a comprehensive approach to trading may not help you see any immediate results, by the end of the year your account will provide transparent and tangible proof of how having a structured plan supported by technical tools and factual knowledge always leads to success.

Categories
Forex Education Forex Fundamental Analysis

Beating the Masters of Forex – The Big Banks

Some traders trade alone, out of hobby, fun, trying to make some money. Some traders trade professionally for funds, proprietary companies, or investors. This is what one of those professionals has to say about the rulers of the forex market. At the end of the line, dedicating your career to be profitable in the long term in this market eventually produces scientific methods that work. Also, to have the edge in this game, one needs to know it inside out. This leads us to know what the major players are doing and how they affect the market, how we can adapt and not be the 99% of the accounts doomed to be the victims of the big banks.

Some traders trade alone, out of hobby, fun, trying to make some money. Some traders trade professionally for funds, proprietary companies, or investors. This is what one of those professionals has to say about the rulers of the forex market. At the end of the line, dedicating your career to be profitable in the long term in this market eventually produces scientific methods that work. Also, to have the edge in this game, one needs to know it inside out. This leads us to know what the major players are doing and how they affect the market, how we can adapt and not be the 99% of the accounts doomed to be the victims of the big banks.

Some traders trade alone, out of hobby, fun, trying to make some money. Some traders trade professionally for funds, proprietary companies, or investors. This is what one of those professionals has to say about the rulers of the forex market. At the end of the line, dedicating your career to be profitable in the long term in this market eventually produces scientific methods that work. Also, to have the edge in this game, one needs to know it inside out. This leads us to know what the major players are doing and how they affect the market, how we can adapt and not be the 99% of the accounts doomed to be the victims of the big banks.

When we sum everything up, this is a trading strategy that you must know to at least have a chance against players with extreme capital stirring in the forex arena. Prop traders and other professionals know this, and it is not an indicator, practical tip or something you can use right away, unfortunately. And to be honest, no single tool or tip can help you reap the profits out of the 5 trillion flow on forex. It may sound to you we are going to talk about a conspiracy theory about the invisible hand manipulating the market so you always loose. Well, since professional traders do not trade unless math and other facts are on their side, then they are certainly not guided by conspiracies.

The truth is this fact is obscured by overwhelming false information so the big banks can keep reaping your accounts. It is not a secret the big banks are setting the rules on forex, not the economic forces. It is not a free, perfectly competitive market at its core. There is measurable proof to this fact and it is public. Probably the more famous trader spreading the word about this is ICT (Inner Circle Trader) by the name of Michael Huddleston.

The huge capital big banks use completely dominates forex, and it is used for price control. Traders are the ones who are against these giants and could be interpreted as our nemesis. On the other hand, it is they who make all these nice trends, volatility and create opportunities. Knowing what they are doing is giving you the edge, and consequently puts your trading out of the 99% who lose in the long run. Unfortunately, traders that even know this fact still do not know how to avoid their attacks. Our greatest threat to the account balance is the Interbank or the big banks by the name of HSBS, Citi Bank, JP Morgan, ICBC who control the main part of Interbank.

Like every bank, it will use the client capital in various investments to gain more capital. Some of these investments have a very low, controlled risks by client contract and law. Forex is also their playground where they create liquidity by moving the price. This movement is done with extreme capital flows, constantly replenished by the everlasting supply of losing trades. Your lost trades is their win, they know where traders money is, they see your trades and your Stop Loss, on every currency pair.

How to cope with this? Using one of the best measures in trading – avoidance. You need to be under the radar, do not be popular, stay away from the flock. The minority of traders and their money is not the target to the big banks, it is the lump of the“dumb money”. It is easy for them. See where (what currency pair) major dumb money is, are they trading short or long, and move the price the other way. If there is a concentration of Stop Loss orders at a specific price, let’s do the whipsaw. Repeat. Traders that are doing the opposite of the majority still have to apply good money management to capture that scarce profit, and most of them do not. You probably know what currency pair is the most traded, the EUR/USD. Well, this currency pair also happens to be where big banks like to play with traders’ money. If you do not know by now, the information about traders’ positions is not a secret to us, although it is not widely known. The Sentiment indication is what we also have access to. It also happens to be direct proof of big bank manipulation.

The direct correlation between traders’ positions and price movements is evident. Whenever a collective starts to open short trades, the banks will move the price up, and vice versa into infinity. Interestingly, there will be times when the banks will not demoralize you completely. They will give you that hope you need to stay in the game by allowing the masses to have their short profit time, evident in the right part of the picture. In the long run, if your trades belong to the big group, it will be game over. Casinos are also the masters of this method, known as the Blackjack theory. They will give you a little bit so you feel lucky, keeping you in the game until you lose everything. At first, it will be winning excitement that is keeping you in, then the hope of recovery, and finally they will wish better luck next time so you try again. The example above shows the big bank action on the EUR/USD, but it is also present in other currency pairs. Some cross currency pairs like the AUD/NZD do not experience this manipulation that often, simply because this is not a popular pair, not where the flock is.

There is another proof the market is manipulated, and it is very noticeable on the charts. It is the flash crashes. They happen once in a while but when they do, it is often not only catastrophic to your balance but brokers as well. A typical example of a flash crash is the EUR/CHF pair in 2015. Namely, the Swiss National Bank decided to introduce a “peg” on the EUR/CHF, precisely on the 1.2 ratio. In other words, the price will never drop below this level as proclaimed by the SNB. This led the majority of traders, precisely at the ratio of 70 to 1, to open long positions as the price continued to bounce off the 1.2 level. They would think it can only go up since they said it cannot go down.

On January 14th, 2015 the EUR/CHF drop was fast and brutal crashing 2200 pips in a very short time. Stop Loss orders were not executed because of the server overloads (guaranteed Stop Loss service is rare even nowadays) crushing the accounts and even going below zero, into negative. FXCM is one of the victims of this crash, a large broker with strong capital and reports. FXCM got bailed out by IG and the brand exists although it is a shadow of what it once was. Not to discuss the consequences on the people who got CHF credits from banks. The IG Sentiment report is a must if you want to have a peek into what the big banks look at when they are ready for the harvest. There are also other portals with similar sentiment indicators.

The US dollar is the dominant currency on the most traded pairs in the forex. Be especially careful around these currency pairs. The dollar is also one of the most influenced currencies by the news events. Unsurprisingly, the big banks enjoy this. Traders like to trade around big news events, and all the big banks see are a mass of single direction positions opened by them ready for the reaping. How many times have you seen the price go up when the news report was negative for the EUR on the EUR/USD? Or more likely see it also come back down as the logic assumes, only after your trade hit the Stop Loss. You may think your logical thinking was right, you have entered that trade just too soon. Try again. Eventually, you will understand there is no logic or economic laws. The banks, the Bloomberg and other portals can always give the excuse for this, they can choose what sounds reasonable enough and move on after the event is over. Before the event, it is also popular to give you useless tips from the pros that come down to: the price could move up and it can also move down.
To sum it up here is what you can do about all this.

-Avoid. Avoidance is one of the best measures in your strategy. Avoid the news.

-Do not be popular. Avoid the flock, use the sentiment reports. It is not a secret but traders still lose.

-Do not use the same tools the masses use. Using the same tools puts you in the same flock thinking where the price is going to go. You will be the big bank target. Popular tools are the ones you can easily find, probably the ones you have used first too, and the ones promoted on many videos, portals, and brokers pages. They are not only ineffective but also a favorite big bank “collectors” for the flock.

-Consider the USD pairs avoidance. See how it affects your balance. Seeking out currency pairs that are not exotics but are not popular is the goldilocks zone for you.

-Trading plan. It needs to have good money management in place even when you know what the big banks are doing. You still need to rely on the system to capture the profits.

-Experiment, test, build and look out for new ways to trade. This does not only include finding new tools or indicators, but it also means improving your trading plan and finding new markets.

There are many ways to trade, you may even build a system on unorthodox charting or timeframes, create an automated script which reads the sentiment, find that ultimate combination of indicators, and so on. There are infinite possibilities but one is certain, you have to put in the work. Trading is not easy and not for everyone.

This is a collection of what some of the professional prop traders agree on what is a base for those that want to succeed in the long run. You can trade your way and even be the one who is successful using the popular tool or trading the news, although the odds are against you. Every bullet above may be too vague for you to have something ready to be put to use. Focusing on each will require a separate article and, again, some traders invest a lot of time testing, reading, building, over and over until they find their complete system. What comes after is the easy part, you know your systems works, you are not getting in its way and just repeat. Traders focus on other investments once they have their profit-making machine on forex.

Categories
Beginners Forex Education Forex Basics

Top 7 Reasons Why Forex Traders Quit Trading for Good

The sad truth about trading and forex is that the majority of traders give up, there are many reasons why they may be giving up, some from lack of funds, other from lack of time, but there is a wide range of these reasons which we will be looking at today. Some reasons will be […]

The sad truth about trading and forex is that the majority of traders give up, there are many reasons why they may be giving up, some from lack of funds, other from lack of time, but there is a wide range of these reasons which we will be looking at today. Some reasons will be […]

The sad truth about trading and forex is that the majority of traders give up, there are many reasons why they may be giving up, some from lack of funds, other from lack of time, but there is a wide range of these reasons which we will be looking at today. Some reasons will be unavoidable, others completely out of choice, so let’s jump straight in and take a look at some of the reasons why some people stop trading.

Lack of Funds

Let’s be completely honest, trading forex can be an expensive business, the problem is, that it has been made so accessible with accounts being able to be opened from as low as $10. The problem with this is that $10 is just not enough money to trade with. It’s fantastic that it is so accessible, allowing those to trade who never would have been able to 10 years ago, but what they do not tell you about these low deposits is that it just is not enough to trade safely with. Even with leverage of 1:500 which is what a lot of people go for these days, you will be able to put on just one or two trades before being margin called, it just is not worth it and it is a sure-fire way to lose that account. The other problem is that those coming in with $10 deposits are those that do not have a lot of money, so as soon as that money blows, that is everything that they had available to trade gone.

In order to have a safer account, you need to have a deposit of at least a few hundred dollars, otherwise, you cannot use proper risk management, so while trading is looking more and more accessible, in order to do it successfully and for a longer period of time, you will certainly need more than the minimums that a lot of brokers are suggesting. Without money, you cannot trade, so one of the main reasons why people stop trading is a simple lack of money and funds.

Boredom

Trading is a long process, a very long process, in fact, there aren’t many things out there that take longer to either learn or perform. So it takes a long time to learn and to trade which will already put a lot of people off who jumped into trading in order to get rich quickly. You have probably seen a lot of adverts and people posting about how they have gotten rich overnight or within a week, people come into trading expecting this, but it just is not going to happen, and so they get bored of the fact that they are actually required to learn things and to put in both time and effort in order to make any money. They often decide to simply quit once they realise just how long it is going to take to actually make some money.

The other reason people can quit due to boredom is the fact that on occasion it can take hours or even days for a proper trade setup to show up. Trading was promised to us as being exciting, so why are we just sitting in front of the computer for days at a time with no trades being placed? Sometimes people even try to force some trades in order to build up a little bit of excitement, not something that you should be doing as this will only lead to losses which will put you off trading even more. People do not come into trading realising that it is a marathon and not a sprint. If you are bored, then do something else for a few hours, there is no need to sit in front of the computer for all this time, but people just want to trade, so they do and they then become bored and often this is enough for someone to give up entirely.

Overconfidence or a Lack of Confidence

To many being overconfident or having a lack of confidence may sound like completely different things, while they are on the opposite side of the spectrum to each other, they also have a lot in common and are both reasons for why someone may actually quit trading. Let’s start with the obvious one, having a lack of confidence is common when it comes to trading. This is especially prevalent when we look at people who have just started out. You have the excitement to begin, but do you really know what you are doing? When you have not done something before you often lack the confidence to do it, you can also lose any confidence that you did have when you experience a few losses in a row. If that confidence drops enough then you may even find it hard to put on any trades at all, second-guessing your analysis and trade ideas to the extent where you go days or even weeks without a trade being put on. When you are in this situation it is hard to build up your confidence as you are not trading and this can lead to someone quitting completely.

So the opposite of that is overconfidence, not something that you would normally consider something that would make someone quit doing something. You will normally gain the trait of being overconfident once you have had a few successful and profitable trades in a row. Confidence is a good thing, but when you get overconfidence it can start to cause issues. When you have this much confidence you start to think that you are invincible or that anything that you do will work. This can cause you to become sloppy, to start taking trades that you think will work rather than the ones that your strategy states that you should be taking. These out of strategy trades will eventually lead to losses that will then go against you. Either dragging down your confidence levels or making you think about running with whatever profits you currently have, for more serious cases, overconfidence can make you trade so much that you completely blow your account.

Too Many Distractions

It takes a lot of effort and concentration in order to trade successfully. If you are not able to concentrate on what you are doing then mistakes are going to be made and you will inevitably end up losing some money. So if you are the sort of person that is easily distracted, then you may need to reevaluate what it is that you are doing and the environment that you are trading in. If your computer is full of notifications from Facebook or Reddit then you may need to remove them, if you can hear the TV in the background then you may want to turn it off or remove it entirely from the room. If you are distracted, you will make losses, not something that you want to happen. These distractions lead to a loss of focus which can completely take away your excitement and motivation to trade, if whatever is on the TV is of more interest to you than the markets are, then maybe trading just isn’t for you.

Tiredness and Fatigue

If you have been trading for a long time, multiple hours in a row then you can begin to feel a little tired, this can make you quit for the day but it certainly won’t make you quit trading entirely. Fatigue, on the other hand, can, is where you are constantly tired of trading, you will wake up and not really fancy trading due to being tired of it. When people begin to feel this over a longer period of time, it can be one of the catalysts for them to quit. Think back to the last time you had a hobby, are you still doing it now? Probably not, either from boredom, lack of interest or you got tired from doing it too much. When you do something over and over again, it can become tiresome and can cause you to fatigue. So it is often suggested that you should take regular breaks, to help prevent you from burning out.

Blown Brokerage Account

One of the more obvious reasons to quit trading, a blown account is as low as you can get, it is the thing that all traders dread. Unfortunately, it is far more common than you may think. In fact, the majority of traders manage to blow their account and one time or another, if you haven’t so far, then congratulations, you are doing far better than a lot of other people have. When we do manage to blow an account, it can cause a complete loss of confidence, motivation and willingness to trade. This is the point where people often give up, especially if they put all their available money into that account. Those that stick with it can use this loss of an account has a huge learning opportunity, as long as you do not use all your money at once, understand that you can learn from it and have the motivation to continue to learn, you can get passed a blown account as a better trader, just make sure you don’t try to win that money back too quickly, that will only lead to another blown account.

Lack of Time

Trading can take a lot of time, a lot of it, to learn, to trade, to do pretty much anything. When you start a journey as big as trading, from the outside it may look pretty simple. As soon as you get into it though, you soon begin to realise just how much there is to learn and how long it may take for you to do it. This can instantly put a lot of people off, especially as it is simple stuff. People these days do not want to sit down and take time to learn, they want things to work quickly and straight away, when it doesn’t they give up and move on to something else that they think will be a quick process instead. Trading takes a lot of time, people often want to do it after work, coming home tired and then getting into something so complicated can often make people give up from not having the time to learn it all after work. It is more than possible to learn part-time, many do, but it will take up most of your free time.

So those are just some of the things that can cause people to quit trading. There are of course many more, each trader is different in their goals, their abilities and their willingness to put in the effort. If you want to be successful, you need to be able to guard yourself against some of the reasons why people quit and you also indeed to be able to push yourself through them, as at some time in your trading career you will experience them, the important bit is getting through time and then pushing on to be a successful trader.

Categories
Crypto Education

Forex to Crypto Trading: Making the Transition

Have you noticed how each and every post, podcast, and video out there focus only on one form of trading? If you happened to be wondering why someone who stresses on their success only highlights a single market’s potential, you are on the right track. Also, isn’t it interesting how many traders look up what’s […]

Have you noticed how each and every post, podcast, and video out there focus only on one form of trading? If you happened to be wondering why someone who stresses on their success only highlights a single market’s potential, you are on the right track. Also, isn’t it interesting how many traders look up what’s […]

Have you noticed how each and every post, podcast, and video out there focus only on one form of trading? If you happened to be wondering why someone who stresses on their success only highlights a single market’s potential, you are on the right track. Also, isn’t it interesting how many traders look up what’s new and they take on a new market, completely dropping what they did before as if their shiny new toy was going to render more success despite not having learned anything before? If you have already done some forex trading, and if you browsed through whatever available material there was, you then may have also wondered how understanding other markets could help you prosper. If that is the case, or if you are here for some fresh insight, in today’s discussion we are going to take on a road less traveled and provide you with the reasons why anyone should expand their range of trading experience from the forex to the crypto market.

The topic of expansion is often conditioned by various factors. You are allowed to expand, but when your projections and beliefs go against your primary community, you are either considered to be unrealistic or you may start questioning your judgment. What so many fail to see is that true knowledge comes not only from spreading out across one market’s ecosystem but from expanding across several markets as well. The truth is that no market should ever enjoy the exclusive privilege of being the one way to go about trading.

This topic of superiority has only limited traders from using real-life opportunities to learn how to make more money. What is more, those who recognized the importance of going wide also understand the changing nature of the markets we trade. We need to look for ways to always be a part of the game because we may wake up one day to find out that the currencies we know no longer have the same meaning and importance as they did before. Therefore, by making a conscious decision to learn about other forms of trading you protect your investment and your future as a trader.

Quite interestingly, although both the fiat and the crypto markets revolve around the topic of currency, any cryptocurrency trader who ever tried to boldly copy and paste strategies onto the forex market without attempting to learn before making any decisions probably failed initially. Unlike this situation, all forex traders who shifted to the crypto market faced considerably fewer challenges in comparison to the previous scenario. Although no market is exempt from failure, which can indeed be painful and quite costly too at times, we need to understand what it is that forex traders seem to know about trading that makes such a vast difference in overall trading experience and, naturally, the related financial reward. If you are interested in the topic of cryptocurrency and you strive to become a more affluent trader, then there should not be any reasons for you not to absorb whatever you may have learned about forex and extend this knowledge and previously acquired skills to another market.

The remaining questions, quite understandably, reveal the concern where to start looking. What are the steps that forex traders use to buffer some inevitable challenges looming in the cryptocurrency market? Which factors make it easier for the individuals engrossed in the fiat market to engage in trading cryptocurrencies rather than vice versa? Even though the questions are many, to be able to answer them, we may need to address the overall climate of the two markets first. The answers are often not quantitative, but qualitative, so to provide direct and useful advice that can be transferred to a certain degree from forex to crypto trading, we need to assess the entire setting surrounding both markets. In addition, we need to comprehensively assess how these environments and differences can allow the experience with one market to serve any future involvement with the other.

What each forex trader can testify is that most fiat-driven individuals are deeply immersed in the topic of trading and devoted to the exploration of new and useful information. The blogs and videos on this topic are growing in numbers on a daily basis and the search for the best indicators is as vigorous as it has always been. The same can be said about the world of cryptocurrency, yet there is one essential difference that directly and profoundly impacts a trader’s mindset. While we can see that the two communities experience an almost identical degree of devotion to the development and the desire to grow financially, it is the nature of the traders’ involvement in these communities that make a clear distinction between them.

Unlike the fiat realm, there is an air of neediness to communicate and share one’s expectations between crypto traders. An average crypto trader would commonly turn to the community, waiting for the announcements of upcoming events. Unfortunately, this exchange of information often projects an unrealistically optimistic perspective disguised as mutual support, and the charged-up atmosphere, aside from elevated emotions, often fails to produce any lucrative outcome. As contacts and groups, we engage with professionally help shape our careers, such specific collaboration typical of the crypto market produces a distinctive trader profile, which should be the focal point of research for any forex turn crypto trader.

To further describe why the overall trading climate is so relevant for the growth of every trader, we need to think about the topic of independence. As a forex trader, you may be on the lookout for some useful tips and success stories, but you will eventually need to test these out ether in the demo or in the real world, which needless to say does not apply to the crypto market. The crypto community still consists of individuals who seem to be lacking individuality in decision-making, always watching out for the approval or reassurance from their peers. These may seem to be insignificant differences on the surface yet, from the psychological point of view, such tendencies and practices are slowly but surely building insecure traders, dependent on external ideas before daring to take any deliberate action.

Naturally, this approach can hardly help develop any strategy or pave the way for drawing necessary conclusions. Therefore, short of deduction and planning, trading cryptocurrencies often prevent those involved from developing key analytical skills. Consequently, these traders’ constant reliance on outside support and input, accompanied by a severe lack of objectivity, makes generating revenue highly implausible. Since trading essentially revolves around profit, as a forex trader, it is your task to use your tested-out methods and plan how you can benefit from the pre-existing knowledge prior to new market penetration.

If you are still thinking whether you should embark on this journey, you should bear in mind that you have the necessary means to expand yet to another market and thus ensure an even greater source of income. Due to the fact that your trading experiences allowed you to grow an independent mindset, you can make use of the analytical and planning skills you took time to develop. With this advantage, you will not only progress faster, but you will be able to secure your financial stability should any unexpected events take place in either of the markets. Finally, to answer the question of why anyone should move from forex to crypto, consider how much better and profitable your trading career could be in the future with the ease of not having to put excessive amounts of effort as a pre-condition.

Categories
Beginners Forex Education Forex Economic Indicators

Does a Recession Have an Impact on Forex?

Times change, politics change, economics change, and how do deal with those changes means everything. This phenomenon is not related directly to forex trading but it might be crucial for our long-term success and overall development as forex traders. We need to set us up to succeed and be far more prepared for the problems […]

Times change, politics change, economics change, and how do deal with those changes means everything. This phenomenon is not related directly to forex trading but it might be crucial for our long-term success and overall development as forex traders. We need to set us up to succeed and be far more prepared for the problems […]

Times change, politics change, economics change, and how do deal with those changes means everything. This phenomenon is not related directly to forex trading but it might be crucial for our long-term success and overall development as forex traders. We need to set us up to succeed and be far more prepared for the problems than anybody else. We want to be equipped if and when the next economic collapse comes. The longer we wait the worse is going to get, and we simply need to have some kind of a plan, we need to know what very next step we are going to take. Good thing is that there is always a way to overcome obstacles but surely there’s a lot more to this.

Trading experts agreed on one, forex is recession-proof far more than any other investment we know. No one can truly forecast of how the economic landscape is going to look like but if everything goes south we need to play defense based on our trading knowledge. Especially nowadays when almost everybody is playing offense because we are in the biggest economic rally in recorded history. Our goal is to change our mindset and start to be proactive now instead of being reactive when the problem is already on our doorstep. So how are we going to play defense? The first thing we can do is not to overpay our taxes, we want to keep them legally as low as possible, secondly, keep your precious metals close to you, make sure your money is disposed to a different place.

These are some of the ways of how we can stay solvent, this is how we might stay alive where everything goes south because the next economic collapse will come, don’t doubt it, it would be a miracle not to happen. From this perspective, we can put ourselves in a position where we can play offense and investing when everything out here is super cheap, like real estate, stocks, etc. These are all good things to do in general but they might be great if the next crisis comes. It could be a perfect way to stay protected and take advantage of the economic downturns when the time comes. The last thing we want to be is a helpless person who complains because they lost their job due to the recession, and how the costs of living are high.

The better option is to try to be in control of our destiny. Educate yourself on economics, be dedicated, and focus on details. One of the better economic minds from which we can learn a lot is Ray Dalio, he was explaining how recessions are cyclical, how we actually need them, and how they are supposed to happen every so often. Because we borrow money through credits, we have cycles.

This isn’t any due to law or regulation, it’s simply in human nature and the way the credit works. If we want to buy something we can’t afford, we need to spend more than we make, we do that through credit. Basically any time we borrow we create a cycle. We can explain cycles through debt. ‘Debt allows us to consume more than we produce when we acquire it, and it forces us to consume less than we produce when we pay it back’. All of you people out there, try to remember the sentence above. Debt swings occur in two big cycles. Statistically, we need about five to eight years for the first cycle and about seventy-five to one hundred years for the second cycle. While most people feel the swings, they typically don’t see them as cycles. Day by day, week by week life goes on, and big wheels of the economy are shifting gears.

The reality is that most of what people call money is, guess what, credit. For example, the total amount of credit in the United States is about seventy trillion dollars, and the total amount of money is about five trillion dollars. As a result, an economy with significant potential in credit makes us spending more, which can cause over-consumption that can’t be paid back. So if the cycle goes up, it eventually needs to come down. It is important for us not to forget these fundamentals because they can help us in making the right decisions. So don’t have your debts rise any faster than income because your debt burdens will eventually crush you, don’t let income rise faster than productivity because you will become uncompetitive, and most importantly do all that you can to raise your productivity because that is what matters the most.

Trading one currency against others we need to be careful, because The United States dollar may not be the safest place to be during the next economic breakdown like it was back in 2008. Peter Schiff said as well that The United States dollar is not the safest currency like before and that it might collapse, so we all need to take a serious precaution to protect ourselves and our accounts. No matter how bright the situation is or no matter how bad it gets, we need to gain the comfort of not having to worry about losing our jobs and incomes just because the economy is falling apart. We don’t want to be dependant on what markets say about the values of some goods. Forex trading is different, that is why we are in advantage. We are trading one currency against others, it is unique and different. So is it forex trading recession-prof? Probably yes. Are we recession-prof? Certainly not.

Here’s what we can do, if we have all our physical money in Canadian dollars or Australian dollars we should consider turning some of those dollars in other currencies, like Euro, Swiss francs, Chinese yuan, or The United States dollar. Apart from bank accounts, most financial experts and traders are keeping their wealth in precious metals as we mentioned. Hopefully, if things were to ever go pretty bad, we would have a chance to stay protected, and we will be ok.

Note that this also means if your forex trading account is in the USD, for example, consider diversifying into other currencies, or even better mix asset categories. Your portfolio should consist of several layers of diversification, by type and category. Pay attention when is the best time to invest in Gold, Oil, various currencies that escalate, or that have stable economies behind. You should also pay attention to the risks each asset carries, for example, crypto and new company stocks might be the least present in your portfolio and Gold the most. This structure is common with the most successful investors such as Warren Buffet, they have risky assets in case they skyrocket, but also have assets that do not have high probabilities of dropping too much in value.

Categories
Forex Basic Strategies

Learning To Trade The GBP/JPY Pair Using The ‘Guppy Burst’ Strategy

Introduction

Introduction

Introduction

After discussing some of the intraday and long-term trading techniques, we will now focus on very mechanical trading strategies. The strategies discussed previously were time-driven, which means each strategy involved several parameters.

This style of trading is suited to newbies because it is purely based on a fixed set of rules and steps. Due to its non-dependence on rules specific time frames, the strategies we will be discussing span over three different categories: scalping, day trading, and position trading.

The first strategy is the guppy burst strategy, which is based on the 5-minute chart. The second strategy is English Breakfast Tea, which is based on the 15 minutes chart, and the third strategy we will talk about is the good morning Asia strategy, which is based on the daily chart.

The guppy burst strategy seeks to exploit trading profits when the market is quiet. One would have observed that the market is least volatile after the U.S. market’s close until the Asian market opens. The forex market is quiet during this time and tends to move gently. However, the market movement during this time is fairly predictable. The market again momentum after the Asian market opens.

Time Frame

The guppy burst strategy works well on the 5-minute time frame. This means each candle represents 5 minutes of price movement.

Indicators

This strategy is based on pure price action; hence, no indicators are required for this strategy.

Currency Pairs

This strategy applies only to the GBP/JPY currency pair.

Strategy Concept

Firstly, we identify a ‘range’ during the window of three hours between the close of the U.S. market and the opening of the Asian market. We are also taking advantage of the volatility that is witnessed when the opening of the Asian market is nearing. We will place a pending buy order at the range’s resistance with a stop loss at the support.

Similarly, we will place a pending sell order at the support of the range with a stop loss at the resistance. This might appear opposite for some traders who are well versed with the support and resistance strategy. The reason behind buying at resistance and selling at support is that, as soon as the Asian market opens, the market starts to trend in the same direction of the current move. This means we are anticipating a breakout or a breakdown of the range.

We will have two take-profit points in this strategy. The first profit target is set at risk to reward ratio of 1:1.5, while the second one is at 1:2 risk to reward. By this, we ensure that we lock in some profits and don’t lose when the trade goes against our favor.

Trade Setup

Since the time zone of the trade very important here, we need to mark the reference candle for the strategy. It is the one that corresponds to 5 PM New York time, which is nothing but the closing time of the U.S. market. As mentioned earlier, the strategy is applicable only to the GBP/JPY currency pair. Here are the steps of the guppy burst strategy.

Step 1

The first step is to open the chart of the GBP/JPY currency pair and then wait for the U.S. market to close. Mark this as the reference candle, and from here, the analysis of the chart begins. We need to analyze the pair on the 5 minutes candlestick chart. The below image shows an example of such a trade setup on the GBP/JPY pair. Here we see that the market is an uptrend and recently has formed a range.

Step 2

Next, we need to identify a ‘range’ where we have at least two points of support and resistance. We have to assure that the market does not start moving in a single direction after the U.S. market closes. If it does, then the strategy is no longer valid. However, the market mostly remains sideways after the U.S. session. Depending on the market’s major trend, we place a limit order at support and resistance. If the major trend of the market is up, we place the ‘buy’ limit at the resistance, and if the major trend is down, we place the ‘sell’ limit at the support.

Step 3

In this step, we do not have to do anything, but just wait for the market to hit our limit orders. At the same time, if our limit order is not triggered, we should leave the market as it is and not chase it. This is an important part of risk management.

In the below image, we see that our ‘buy’ order gets triggered a few minutes after the opening of the Asian market.

Step 4

As mentioned earlier, we have two ‘take-profit’ points for the strategy. The stop-loss placed at support if going ‘long’ in the market and at resistance if going ‘short.’ The first ‘take-profit’ is set at a point where the resultant risk to reward of the trade is 1:1.5. The second ‘take-profit’ is set at 1:2 risk to reward. We lock in some profits at the first profit target, which ensures that we don’t lose money even if the market turns around.

The below image shows how the market continues to move upwards and starts trending after the breakout from the range.

Strategy Roundup

As we are not sure when the breakout will happen, the best way to enter the market is by creating a pending order on the extreme ends of the range. The important part is the identification of the range during the three-hour window between the U.S. market close and Asia market open. Along with that, make sure to place a limit order in the direction of the market.

Categories
Beginners Forex Education Forex Basics

The Importance of Remaining Flexible While Trading Forex

Don’t you hate it when you are trying to get something done but need a bit of help, so you ask your colleague for a hand but they won’t help because they are doing something else, they don’t know how to do it and they are not willing to try. This lack of flexibility can […]

Don’t you hate it when you are trying to get something done but need a bit of help, so you ask your colleague for a hand but they won’t help because they are doing something else, they don’t know how to do it and they are not willing to try. This lack of flexibility can […]

Don’t you hate it when you are trying to get something done but need a bit of help, so you ask your colleague for a hand but they won’t help because they are doing something else, they don’t know how to do it and they are not willing to try. This lack of flexibility can cause issues in life, and it can also cause issues within the trading world.

This can most clearly be seen in people’s strategies, often a newer trader will create a new or adapt someone else strategy in order to successfully trade, they manage to get it to a stage where it is being profitable, whether it is slightly or majorly profitable it doesn’t matter. The problem is that the markets change, they are constantly changing, so a strategy that worked yesterday may not work today? The new trader does not want to change anything because it has worked in the past. While the professional trader that the new trader based their strategy off has adapted it to the new market conditions. The experienced trader is being flexible changing things as needed, trying out new techniques, while the newer trader is not being flexible and the trades are starting to move against them.

Being able to change your own bias, such as the direction that you think the markets will move is paramount to being able to trade successfully. Constantly analyzing the markets and changing your stance and approach is what can make you profitable. If you choose one direction and just stick with it, there is no saving your account once things start to move against you.

Flexibility is what allows certain animals and plants to survive while others die out, it is also what allows certain traders to be successful while others blow their accounts. Having a short term memory can often be a bad thing in life, but when it comes to trading it is actually perfect, the short term memory will mean that you are looking at the current trade from a fresh perspective, each trade is it’s own and so your bias towards previous trades is reduced and it is far easier to adapt and be flexible towards any new market conditions that may have come up between now and the last trade you made.

If things have started going against you, or the outlook of the markets has changed, there is no harm in changing part of your strategy, or if your strategy will no longer work, there is no harm or shame starting from scratch, create an entirely new strategy that is adapted to the current market conditions. Don’t forget that old strategy though, you will need to continue being flexible as the markets continue to change, so having that previous strategy that worked, it could either be used again or adapted to yet another new market conditions.

So have a think, do you consider yourself to be a flexible trader, or do you get stuck in your ways and find it hard to adapt to changes?

Categories
Forex Brokers

ProCFD Review

PROCFD is operated by the Investment Service Company UR TRADE FIX Ltd (registration number 336677) and this company is licensed and regulated under the Cyprus Securities and Exchange Commission (CySEC). They offer quite a wide variety of assets to choose from and also a Demo account for those who want to test out their trading […]

PROCFD is operated by the Investment Service Company UR TRADE FIX Ltd (registration number 336677) and this company is licensed and regulated under the Cyprus Securities and Exchange Commission (CySEC). They offer quite a wide variety of assets to choose from and also a Demo account for those who want to test out their trading […]

PROCFD is operated by the Investment Service Company UR TRADE FIX Ltd (registration number 336677) and this company is licensed and regulated under the Cyprus Securities and Exchange Commission (CySEC). They offer quite a wide variety of assets to choose from and also a Demo account for those who want to test out their trading conditions without investing real funds into the account. Keep reading to find out more about this broker and what they have to offer.

Account Types

PROCFD offers four different account types to choose from namely, the Standard, the Gold, the VIP, and the Islamic account.

The Standard account has fixed spreads, daily market analysis, fast executions & quick withdrawals and payments, and quite a high leverage of 1:500.

The Gold account is suitable for advanced traders who have a good hold on the do’s and don’ts of trading. This account comes with a personal account manager, special offers, ALGO trading, live coverage of the market match, and also high leverage of 1:500.

The VIP account is the most ‘luxurious’ account on offer, according to the broker. Customers who hold a VIP account receive a personal dealer who provides them with – market updates, trading ideas, and VIP promotional offers. This account also comes with super low fixed spreads and a leverage of 1:500.

The broker also offers an Islamic account that has similar characteristics to the other accounts however this one is interest-free. The broker states that the guaranteed spreads of this account are equivalent to those in their regular accounts.

You can find more details about each account on the PROCFD’s Accounts page on their website.

Platforms

PROCFD offers its customers a choice of 3 platforms options to use when trading on their PORCFD accounts, these are the Mobile Trader, Desktop Trader, and Web trader. These platforms are linked and can be accessed by the customers using one username and password.

The Mobile trader enables customers to stay up to date with the most recent market rates. Some key features of this platform are, the ability to trade over 200 stocks, indices, currency pairs and commodities, the ability to constantly monitor positions, complete access to balance sheets, equity and margin details, and customizable layout for easy usage.

The desktop trader is ideal for professional traders that use Microsoft.NET technology. The platform comes equipped with advanced integrated charts and it also allows customers to execute one click trades and it is also customizable to fit the customer’s particular preferences.

The Web trader was created to suit the needs of those customers that have issues because of security systems installed on their computers, such as Firewalls, which tend to make trading using the download version more difficult. With this platform, customers are allowed to access a large number of features directly from their own computer, opening, and closing positions, depositing and withdrawing funds, and also viewing the account history.nUnfortunately, PROCFD does not offer the MT4 platform which is by far the most popular platform around.

Leverage

This broker offers a very high leverage of 1:500 for all of their available accounts. Customers must be extremely cautious when dealing with such high ratios as this can bring about major losses as well as major wins.

Trade Sizes

The website of PROCFD seems to be missing some key information, especially when it comes to trading conditions, so unfortunately we cannot comment any further regarding what trade sizes are allowed to be traded when using a PROCFD account.

Trading Costs

The broker does not specify if there are any added trading costs customers might encounter apart from the spread so we cannot comment any further regarding this.

Assets

PROCFD has quite a vast array of currencies available including popular pairs such as EUR/USD and EUR/JPY along with some minor and exotic pairs available as well. As for commodities, this broker offers Coffee, Corn, and Natural gas to mention a few and Apple, Amazon, Cisco, Facebook, Google, IBM, and some others as Shares. PROCFD also has some indices available for trading including Poland 20, US 500, and Netherlands 25 amongst others. You can find the full list of available trading assets on the broker’s website.

Spreads

Apart from mentioning that their accounts have super low, fixed spreads, PROCFD does not provide factual information about how low the spreads actually are, so we cannot comment on this for the time being.

Minimum Deposit

On online customer reviews, we found that this broker asks for a minimum deposit requirement of $100, which is quite standard in the industry. We cannot confirm if this is 100% accurate as the broker does not include this information on their site.

Deposit Methods & Costs

No information is provided regarding how customers can deposit funds into their accounts or what costs they might encounter when doing so.

Withdrawal Methods & Costs

Same as with deposits, there is no mention of withdrawal methods and costs on the website.

Withdrawal Processing & Wait Time

Since there is no information regarding withdrawals on the site, we cannot comment on this for the time being.

Bonuses & Promotions

Customers of PROCFD can apply for one PROCFD promotional offer during the promotion period stated by the broker. The total refund given by the broker will not exceed the initial deposit amount deposited by the customer when opening his/her account. In order for customers to withdraw their bonus funds, they must first generate 10000 times the volume of their net deposits, but first, in order for customers to actually claim the bonus, they must send an email to PROCFD’s promotions department.

Educational & Trading Tools

The Useful Information segment found on this broker’s website has a Forex History article, which mentions briefly the changes the industry has gone through throughout its history, which although makes for an interesting read, it is not very useful for those looking for information to actually help them when it comes to trading. They do have another article which covers a number of points when it comes to influences on currency prices as well as general information about Forex. This segment of their website also has a list of different strategies and analyses customers can choose to adopt during their trading.

Customer Service

Customers wanting to get in touch with PROCFD can do so via email or telephone. We did try contacting them to clarify some of the information that is not clear or completely missing from their website, but we did not receive any reply to our email. Here is their contact information:

Address – Kanika International Business
Centre 4, Profiti Ilia Street,
Germasogeia, CY-4046 Limassol, Cyprus

Telephone – + 44 77522 899 621
Email – [email protected]

Demo Account

PROCFD has a Demo account available for those wanting to get an idea and familiarize themselves with the brokers trading conditions. The broker also states that the Demo account and the trading platform itself has an educational area where customers will have access to tutorials on a variety of aspects of technical analysis and chart patterns.

Countries Accepted

PROCFD does not mention any specific countries that are restricted from using their services.

Conclusion

PROCFD is a Cyprus based broker that offers a variety of accounts available and a number of different assets available for trading. We did find that their website is missing a lot of key information potential customers would be looking to find before creating an account with them which is obviously a disadvantage. Our experience with their customer service left much to be desired as our emails were not answered and as a result, we could not provide all the necessary information. If you’re interested and would like to know more, head on to PROCFD’s website and try contacting them yourself and determine whether PROCFD would be a good choice for you.

Categories
Beginners Forex Education Forex Basics

What Kind of Investor Are You?

Our personalities are one of the main factors that affect the way we do things, especially when it comes to trading. Are you shy and timid, or aggressive, determined, anxious, confident – most likely, fall into one of four main personality types with some possible overlapping. Author and CEO Michael Pompian has contributed some helpful […]

Our personalities are one of the main factors that affect the way we do things, especially when it comes to trading. Are you shy and timid, or aggressive, determined, anxious, confident – most likely, fall into one of four main personality types with some possible overlapping. Author and CEO Michael Pompian has contributed some helpful […]

Our personalities are one of the main factors that affect the way we do things, especially when it comes to trading. Are you shy and timid, or aggressive, determined, anxious, confident – most likely, fall into one of four main personality types with some possible overlapping. Author and CEO Michael Pompian has contributed some helpful information in his book Behavioral Finance and Investor Types: Managing Behavior to Make Better Investment Decisions in order to provide us with an idea of which of his four outlined personality types we fit into. Keep in mind that knowing this can give you an idea of your strong suits and where you need to improve when it comes to trading habits.

In the book’s questionnaire, traders are asked which statement is the most agreeable:

“Losing money is the worst possible outcome.”

“I should act quickly on opportunities to make money.”

“I need to be satisfied that I have taken the time to understand an investment I plan to make, even if I miss opportunities by doing so.”

“I should not be in charge of overseeing my money.”

According to Pompei, those that answered A likely fit into his Preserver type, while those that answered B are called Accumulators. These are both considered to be extreme personality types. Here’s a summary of how these traders are described in the book.

Accumulators are often determined and confident traders, but their mistakes come from believing that they have more control over their investments that they really do. This personality type is prone to overtrading, which can lead to losses.

Preservers find themselves worrying about their losses too much and can fall victim to making trading choices out of fear or anxiety. These traders need to understand that you won’t win every time, and that’s perfectly fine.

Those that answered C to the above question are labeled as Independents, while Followers most likely answered D.

Independent investors have their own original ideas but fall victim to confirmation bias by giving more credit to certain factors that support their own way of thinking. These traders are more likely to contribute wins to themselves, rather than thanking the bull market.

Our last personality type has been labeled as Followers in the book. These traders aren’t as motivated and often follow their friends or chase the fad. Many of these traders make decisions based on past history and might overestimate their tolerance for risk if they have received good results in the past.

As you can see, each of the four personality types are apt to fall victim to specific problems related to the way that they think while trading. The more aggressive Accumulators and Preserves might be too worried about losing money, or they could be overly confident, which leads to trading too often. The more relaxed personality types labeled Independent and Followers either come up with their own ideas or follow others, but either personality can make mistakes when analyzing data, making them overly confident and less likely to worry about their risk tolerance.

Of course, we’ve only based your results on one question from the book, so it might be a good idea to read Behavioral Finance and Investor Types: Managing Behavior to Make Better Investment Decision and to answer the entire questionnaire to see if you get different results. Still, the information provided here should hopefully help you to have a better idea of the type of trader you are and where you need to make changes.

Categories
Forex Basic Strategies

Trading The ‘Trend Bouncer Strategy’ Using Appropriate Risk Management Techniques

Introduction The activation of a trend can be from a political decision or an improvement in the GDP of the economy. Some other reasons include the central bank policy announcement and the discovery of new resources. Trends move like waves causing long to short term price movement in both the directions of the market. In […]

Introduction The activation of a trend can be from a political decision or an improvement in the GDP of the economy. Some other reasons include the central bank policy announcement and the discovery of new resources. Trends move like waves causing long to short term price movement in both the directions of the market. In […]

Introduction

The activation of a trend can be from a political decision or an improvement in the GDP of the economy. Some other reasons include the central bank policy announcement and the discovery of new resources. Trends move like waves causing long to short term price movement in both the directions of the market.

In an uptrend, we observe that, at a certain point in time, price pullback, or retrace before continuing with the upward movement. Similarly, in a downtrend, prices retrace upward against the downward movement before continuing their way down again. This ebb-and-flow movement can be frustrating for many new traders because they are not familiar with such market moves and often get stopped out before the market starts to move in their direction later.

Experienced trend traders usually wait for a retracement before taking a trade in the direction of the major trend. This is how the trend bouncer strategy was introduced. The Bollinger band indicator provides an effective way of identifying the up and down movement of a trend.

Since this is a trend trading strategy, we will have more than one profit target. We have two specific profit levels for this strategy.

Time Frame

The trend bouncer strategy works well with the 1-hour and 4-hour time frame chart. This means each candle on the chart represents 1 hour and 4 hours of price movement, respectively.

Indicators

We will use two Bollinger bands with the following settings.

  1. Moving average 12, deviation 2
  2. Moving average 12, deviation 4

One should have a clear understanding of the Bollinger band indicator before using it for this strategy. Refer to our articles on Bollinger bands for an explanation of the indicator.

Currency Pairs

The strategy is suitable for trading in all currency pairs listed on the broker’s platform, including major, minor, and few exotic pairs. However, it is better to trade in highly liquid currency pairs.

Strategy Concept

With the Bollinger band indicator’s help, we can objectively identify the ebb-and-flow movement of a trend. When the price hits the upper band of the first Bollinger band (MA 12, Dev 2), it indicates an upward movement. In this scenario, we prepare to go long in the currency pair. As prices retrace back to the centerline of the Bollinger band (MA 12), a significant retracement has occurred, and it is time to enter for a ‘long.’

Similarly, when prices hit the lower band of the Bollinger Band (MA 12, Dev 2), it indicates a momentum to the downside, and we prepare to go ‘short’ in the currency pair. As prices retrace back to the centerline of the Bollinger band (MA 12), and it is time to enter for a ‘short.’ We will exit our ‘trade’ in two places, which we explain in the coming section of the article.

Trade Setup

In order to illustrate the strategy, we have taken the example of the USD/JPY currency pair on the 4-hour time frame, where we will find a ‘long’ opportunity in the market using the strategy. Here are the steps of the trend bouncer strategy in forex.

Step 1

Firstly, open the chart of a currency pair and plot two Bollinger bands. The moving average of the first Bollinger band is 12, with a standard deviation of 2. Moving average of the second Bollinger band is also 12 but should have a standard deviation of 4. Since it is a trend trading strategy, it is best to use the strategy on the pullback of a new trend. However, it can also be used on a reversal, but the reversal should be confirmed before applying the strategy.

In this example, we see that the market has shown signs of reversal, which could extend on the upside.

Step 2

The next step is to wait for the price to hit the upper band of the first Bollinger band, in case of an uptrend. Similarly, the price should hit the lower band when trading the pullback of a downtrend. This gives us the confirmation that a trend has been established. Now, we need to wait for a retracement of this move before we can enter the trend.

In the below image, we can see that the price exactly touches the upper band of the first Bollinger band (MA 12, Dev 2), and now we will wait for a pullback to join the trend.

Step 3

The next step is to wait for the retracement to touch the Bollinger band’s centerline. The intersection of the price and the centerline is the entry signal for the strategy. An important point to make a note here is that the pullback shouldn’t come in a single candle. This means the pullback should come in multiple candles. The longer it takes, the weaker the pullback. In such cases, the is a higher chance that the trend will continue.

In our example, we are entering for a ‘long’ as soon as the price touches the Bollinger band’s centerline. We also see that the pullback has come in 6 candles, which is desired.  

Step 4

As mentioned earlier, the strategy has two ‘take-profit‘ points. The ‘take-profit’ points are set based on the risk to reward ratio. The first one is at 1:1 RR, and the second one is at 1:2. The reason for the two ‘take-profit’ points is that since we are trading with the trend, the market has the potential to make new ‘highs’ and ‘lows.’

Strategy Roundup

Understanding the trending nature of the market helps us to identify the direction and timing of our entries. The best part of this strategy is that we bank profits in various stages. With a momentum indicator like the Bollinger band, we greatly increase the odds of being profitable in the long run.

Categories
Forex Brokers

Alpha Beta FX (ABFX) Review

AlphaBeta FX (or, in short, ABFX) was founded in 2009. Their first office was based out of India, but this broker quickly expanded and operated as the first market-making firm to service the greater Asian region. ABFX has a physical presence in 7 different countries, mainly thanks to its technologically enhanced experience, precise execution methods, […]

AlphaBeta FX (or, in short, ABFX) was founded in 2009. Their first office was based out of India, but this broker quickly expanded and operated as the first market-making firm to service the greater Asian region. ABFX has a physical presence in 7 different countries, mainly thanks to its technologically enhanced experience, precise execution methods, […]

AlphaBeta FX (or, in short, ABFX) was founded in 2009. Their first office was based out of India, but this broker quickly expanded and operated as the first market-making firm to service the greater Asian region. ABFX has a physical presence in 7 different countries, mainly thanks to its technologically enhanced experience, precise execution methods, and advantageous trading conditions.

In this review, we will cover the parts that matter most to traders, including ABFX’s spreads, leverage levels, resources, bonuses, and much more. What does this broker have to offer? What are the pros and cons of opening an account? Read this article and find out.

Account Types

Traders can choose between 6 account types that ABFX offers. One of the main positive aspects of this is that you can choose the portfolio that best suits your strategy, especially since most of them have a relatively small minimum deposit requirement. Generally speaking, ABFX’s accounts offer a tradeoff between spreads and commissions.

Micro Account:
Minimum Deposit: $5
Spreads: From 1.9 pips
Commission: $0

Standard Account:
Minimum Deposit: $100
Spreads: From 1.4 pips
Commission: $0

Zero Spread Account:
Minimum Deposit: $1,000
Spreads: From 0 pips
Commission: $10 per lot

Alpha ECN Account:
Minimum Deposit: $1,000
Spreads: From 0.5 pips
Commission: $5 per lot

Alpha Pro Account:
Minimum Deposit: $15,000
Spreads: From 0.1 pips
Commission: $5 per lot

Alpha Custom Account:
Minimum Deposit: $1,000
Spreads: From 0 pips
Commission: NA

As we can see above, the accounts that have no spread charge or commissions. Alpha Zero Spread, from its name, has a 0-pip difference between the bid and ask prices. However, traders do incur a $10 commission on each lot that they trade. Alpha ECN and Alpha Pro have very tight spreads at 0.5 pips and 0.1 pips, respectively. The $5 per lot commission for both of them is lower than the Zero Spread Account. Micro and Standard account holders do have a relatively wider spread (although it is still much lower than what other brokers offer), but you pay no commission fees.

In essence, if you are a new trader or have a small amount of capital, the Micro and Standard might be the most suitable options. Although they have a wider spread than the rest, the associated costs are minimized when you open smaller positions. In addition, not paying commissions gives you time to test your strategy and enter/exit trades without incurring too many fees.

If you are a more experienced trader or want to invest a large amount of capital, the Zero Spread, ECN, or Pro Account might suit you best. First, your profits will not be diminished due to tight or nonexistent spreads. This is especially useful for those who rely on scalping strategies. Second, you have the option of choosing between a 0 spread and a higher commission or a minimal spread and discounted trading fees per lot. In other words, you enjoy flexibility in terms of the account’s features and how it fits in with your trading style.

Platforms

All 6 account types enable you to trade through either MetaTrader 5 (MT5) or cTrader. The platforms are available on both desktop and smartphone devices (Android and iOS alike). You can download them directly from ABFX’s website. MT5 is one of the most sophisticated and advanced platforms on the market. You can easily manage your account, access a large number of technical indicators, and create your own trading algorithm so that positions are opened/closed automatically when an instrument meets your desired conditions.

Other key features of MT5 include viewing up to 100 different charts on 1 screen, getting support in different languages, and customizing trade alerts or notifications. CTrader, on the other hand, is especially suitable for those who rely on scalping strategies and intra-day activity. Mainly, this is thanks to the platform’s speedy order execution process, which usually happens within milliseconds. Just as importantly, cTrader’s custom support services are available in 16 different languages. The platform can be downloaded on desktop and smartphone devices.

Leverage

As is the case with many other brokers, ABFX’s maximum leverage goes down as you deposit more funds into the account. Micro and Standard have up to 1:1000 and 1:500 in leverage, respectively. This number is incredibly large and it is rare to find brokers that provide you with a leverage of 1:500, let alone 1:1000. For the other account types, Zero Spread has 1:300 in leverage, ECN gets up to 1:200, while Alpha Pro traders have a maximum of 1:100. Alpha Custom, which has the same $1,000 required minimum deposit as Zero Spread, also provides you with up to 1:300 in leverage.

On face value, some traders might not appreciate seeing their permissible leverage go down as they deposit more funds. However, ABFX structured their buying power levels this way in order to minimize risk. To clarify, this allows traders to realize meaningful profits (even if they have a small account) without having to worry about losing all of their deposited funds in case things go against them. Otherwise, account holders could rapidly lose a lot of money when they use a lot of leverage and the markets swing downwards (or upwards if they are short-selling).

Trade Sizes

The minimum trade size, across the board, is 0.01 lots (1,000 in the base currency). The only exception is the Alpha Zero Spread Account, which has a minimum trade size of 0.1 lots (10,000 in the base currency).

-Margin Call: 20% (Alpha Pro) and 40% (all other accounts).
-Stop-Out: NA

While ABFX doesn’t have a specific stop-out point, their margin call policy encompasses that aspect. Firstly, when your balance goes below the margin call level (which depends on your account type), this broker will not allow you to open any new positions. They will also ask you to deposit additional funds and/or close losing trades in order to bring your balance above the required margin percentage. If a trader fails to do so or their position quickly loses more funds, ABFX will automatically liquidate all their current trades.

Trading Costs

ABFX offers very competitive and notably low trading costs. First, none of the accounts incur a swap fee on overnight positions. Almost all other brokers will charge you for doing this. Meanwhile, ABFX’s commissions are only paid by ECN ($5 per lot), Pro ($5 per lot), and Zero Spread ($10 per lot). The rest enjoy $0 commissions. Having said that, Micro and Standard are charged spread fees. Zero Spread doesn’t incur this cost. Similarly, the bid/ask price variations are minimal for Pro and ECN.

Assets

This broker’s account holders have access to almost 55 different forex pairs. Furthermore, ABFX allows you to trade cryptocurrencies, namely Bitcoin, Bitcoin Cash, Dash, Ethereum, and Litecoin. Digital currencies have up to 5:1 in leverage. Other than that, this broker offers commodities, indexes, and metals, which are exchanged as CFD contracts.

Spreads

Zero Spread account holders have a $0 difference between the bid and ask prices. The Pro Account’s spread is only 0.1 pips, while ECN’s is 0.5 pips. Micro and Standard have them at 1.9 and 1.4 pips, respectively. These numbers are low when compared to the general brokerage market. However, since AFBX offers floating spreads, they are subject to change from one situation to another. More specifically, the gap between the bid an ask prices could become undesirably large when markets are volatile in a certain country or on a global level.

Minimum Deposit

The minimum funding requirement is only $5 and $100 for the Micro and Standard Account, respectively. It is $1,000 for each of the Zero Spread, Alpha ECN, and Alpha Custom types. To open an Alpha Pro Account, however, traders need a minimum of $15,000.

Deposit Methods & Costs

Another incredibly advantageous feature that ABFX has is that they don’t charge any transfer fees on any of their various deposit and withdrawal methods, alike. Across the board, the minimum amount that you can transfer per transaction is only $5. This broker accepts several credit/debit cards, including Visa, MasterCard, and China Union Pay. The maximum amount that you can transfer in a single transaction is $50,000 (MasterCard and China Union Pay) or $10,000 (Visa). Account-holders may also apply for a broker-issued Alpha MasterCard and use it to make withdrawals/deposits.

Another option is to fund your account via a bank wire transfer. Both the Alpha MasterCard and bank wires have a maximum deposit amount of $50,000 per transaction. When it comes to electronic payment methods, ABFX works with Neteller, Skrill, and WebMoney. The broker’s website doesn’t specify how long it takes for deposits to go through, apart from bank wire transfers (which are processed within 2 to 4 business days). Nevertheless, deposits via Fasa Pay, Money Polo, OK Pay, Perfect Money, and Solid Trust Pay are instant. All deposits/withdrawals can be made in the US Dollar, Australian Dollar, British Pound, Euro, Japanese Yen, and Swiss Franc.

Withdrawal Methods & Costs

All of the methods above can be used to withdraw money from your ABFX account. Outbound transfers are also free.

Withdrawal Processing & Wait Time

The same processing times apply to withdrawals, as well. That is to say: Bank wires take 2 to 4 business days and electronic wallet transfers (apart from Neteller, Skrill, and WebMoney) are instantly processed. ABFX’s website doesn’t mention how long it takes for MasterCard, Visa, China Union Pay, Neteller, Skrill, and Web Money withdrawals to go through.

Bonuses & Promotions

ABFX is running several promotional offers. First is their cash-back promotion, which is available for 6 months after you open an account. For every trade you make, ABFX will reward you with cash. In a way, they are paying you the commissions, which is great. How much you get will depend on your deposit and where it falls under 1 of 5 levels.

Level 1:
Account Balance: $1 to $15,000
Rebate Cash-Cack: $2 per closed lot

Level 2:
Account Balance: $15,001 to $30,000
Rebate Cash Back: $3 per closed lot

Level 3:
Account Balance: $30,001 to $60,000
Rebate Cash Back: $4 per closed lot

Level 4:
Account Balance: $60,001 to $120,000
Rebate Cash Back: $5 per closed lot

Level 5:
Account Balance: $120,001+
Rebate Cash Back: $5 per closed lot

The broker will deposit these rebate amounts each Monday into your account. However, the maximum payouts per transaction are $500, $1,500, $3,000, $5,000, and $10,000 for Level 1, 2, 3, 4, and 5, respectively. Equally as important, there is another cash back bonus offered by ABFX. If you refer another trader and they open an account, you would receive a 10% bonus of whatever your referral’s initial deposit is. For example, if they deposit $2,000, you get $200. However, the minimum deposit that your friend or family member has to make is $1,000. Otherwise, you aren’t eligible for this bonus.

ABFX also offers a rewards program, where you earn a certain number of points every time you make a trade, deposit money, have a referral open an account, and engage in other activities. The more points that you get, the more rewards and features that you can access, such as gift cards, participation in weekly contests, and support from a personal account manager. Lastly, ABFX sends its clients free branded merchandise, including shirts, coffee mugs, calendars, and more.

Educational & Trading Tools

This broker’s educational and practical services fall under 3 categories: Education, events, and automated trading. First, the educational videos walk you through every detail related to the forex market. In fact, they are expansive enough to even benefit experienced traders who want to enhance their strategy and incorporate new methods. The initial videos cover the process of creating a trading plan, managing risk, controlling psychological impulses, and other basics. After that, each video is specifically dedicated to a certain technical indicator or chart pattern. ABFX’s other educational content includes brief written lessons (broken up into 4 chapters) and a glossary that defines common forex concepts.

The automated trading service is mostly for account holders who prefer to code their own robot, which would buy/sell currency pairs if the price and volume levels meet certain algorithmic conditions. The offerings include an MQL programming system (to create the said algorithms) and enhanced software that supports it. When it comes to events, ABFX hosts webinars and seminars. Lastly, this broker provides account holders with a blog about the forex markets, an economic calendar, three calculators (Fibo, Pivot Point, and Risk Percentage Calculator).

Customer Service

Remarkably enough, this broker serves account holders out of 7 different office locations. Each of them has its own phone number, email, and physical address. ABFX is present in Bangalore (India), Beachmont (St. Vincent and Grenadines), Dubai, London, Hong Kong, Kuala Lumpur (Malaysia), and Vake (Georgia).

Phone: +44-2036958896 (London), +971-43306363 (Dubai), +852-58085566 (Hong Kong)

Email: [email protected] (London), [email protected] (Dubai), [email protected] (Hong Kong)

This broker’s customer support staff speak multiple languages and local offices can communicate with traders in the home country or region’s language. You may also get in touch with them via Skype, although this feature is only available through firms in certain cities. For the full list of ABFX’s contact information, traders can look at the broker’s website to find their local office’s email, phone number, Skype, and physical address.

Demo Account

A demo portfolio is perfect for traders who want to practice trading with paper funds before putting their real money on the line. The same applies to account holders who are transitioning from one trading platform to another since each one has its own order types and methods of calculating the returns on investment. Demo accounts that you open through the platforms that ABFX works with (MT5, for instance) are exposed to live market prices and real-time trading conditions, which enhances their practical value.

Countries Accepted

ABFX’s is a formally registered ‘International Broker Company’ in St. Vincent & the Grenadines. While their organizational structure allows them to serve traders from all around the world, those who are located in the United States and Japan cannot open an account with ABFX. This is mainly due to local restrictions and regulations that are related to CFDs and other financial assets.

Conclusion

To summarize this broker’s offerings and services, here are the key advantages that ABFX’s account holders enjoy: Flexible deposit requirements, tight spreads, little to no commissions (with a few exceptions), various transfer methods, local support, and an expanded array of trading tools. On the downside, nonetheless, ABFX doesn’t serve traders in the United States or Japan. The broker also lowers your leverage when you deposit additional funds and some of their withdrawal/deposit methods don’t have a defined processing time. Having said all that, every brokerage firm has its own pros and cons. What makes ABFX unique is that its flexible offerings allow traders to pick the option that aligns with their preferences the most.

For example, two people had $1,000 each and one of them is a frequent intraday trader while the other relies on leverage and scalping strategies. The frequent trader would want to minimize their commissions. They can do so by opening a Micro or Standard Account (if they are okay with a spread that starts at 1.4 pips) or an ECN type (if they can afford a low commission in exchange for a much tighter spread of 0.5 pips). The scalper, on the other hand, would open a Zero Spread Account, especially because the bid/ask price difference would impact their returns, even more so than the $10 commission. Above all else, both of these traders may get started with ABFX and open the account type that they prefer for the same $1,000 deposit or less. The only exception is the Alpha Pro portfolio and its $15,000 minimum funding requirement.

Which account type suits your strategy and trading methods best? Do you prefer the nonexistent commissions or a low spread? How much money can you deposit? The best part about ABFX is that they will most likely provide you with what you need, regardless of how you answered any of these 3 questions. In short, this broker is truly inclusive and trader-oriented.

Categories
Forex Basic Strategies

Forex Trading Using ‘Commodity Correlation Strategy – 2’

Introduction

Introduction

Introduction

A correlation coefficient is a number that describes the extent to which two instruments are correlated to each other. The number ranges between -1 and +1. This number moves from periods of positive correlation to periods of negative correlation. Located on one end of the scale, +1 is considered a state of the positive correlation between two instruments.

If the number is anywhere between 0 and +1, the two assets are said to move in the same direction, with a certain degree of positive correlation. On the other end of the scale, -1 is considered a state of negative correlation between two instruments. If the number is anywhere between 0 and -1, the two instruments are said to move in the opposite direction, with a certain degree of negative correlation.

The strategy we will be discussing today seeks to exploit the inverse correlation between the dollar index and Gold’s price. According to the World Gold Council, Gold tends to rise when the U.S. dollar falls. It is observed in the past that the correlation coefficient for Gold and the dollar index was between -0.6 and -0.8. This means if the dollar index is up, there is a 60% to 80% chance that gold prices would come down. In contrast, if the dollar index is down, there is a 60% to 80% chance that gold prices would come down. Let us see how the strategy works.

Time Frame

The commodity correlation strategy works well in the Daily (D) time frame. This implies that each candlestick on the chart represents the price movement of one day.

Indicators

We will be using the ATR indicator in the strategy. No other indicators are required for the strategy.

Currency Pairs

There are two charts we need to focus on in this strategy. The first one is the spot Gold or XAU/USD, and the second one is the chart of the dollar index.

Strategy Concept

The dollar index’s price action is used as a reference to initiate a trade on the XAU/USD. Technical levels of support and resistance on the dollar index chart are used to spot long and short trades on XAU/USD. If the price closes below the support on the dollar index chart, a long trade is initiated on the XAU/USD the following day. Similarly, if price closes above resistance on the dollar index chart, a short trade is initiated on the XAU/USD the following day. The risk-to-reward of this trade is 1:2. A bigger target can be achieved by allowing the trade to run its course.

The strategy is very simple for those who have a basic understanding of support and resistance. Another reason behind its popularity is that it does not involve the usage of complex indicators. The trade setups are not formed too often as we are using the daily time frame charts. Hence, a lot of patience is required for the application of the strategy.

Trade Setup

Here are the steps to implement the commodity correlation strategy. In both the instruments, we will be using the daily time frame chart only.

Step 1

The first step of the strategy is to open the dollar index’s daily time frame and mark key areas of support and resistance on the chart. If one is looking for ‘long’ trades, the identification of the support area is crucial. And if one is looking for ‘short’ trades, identification of ‘resistance’ trade is crucial. After marking out of the lines, wait for the price to breakout or breakdown. In case of a breakout, we will look for ‘short’ trades in ‘gold,’ and in case of a breakdown, we will look for ‘long’ trades in ‘gold.’

We have taken an example of a ‘long’ trade where we will be executing the steps of the strategy. In the below image, one can see that the price has broken below the long term support.

Step 2

Next, we open the chart of XAU/USD, where we look for ‘long’ or ‘short’ entry. We enter for a ‘long’ in ‘gold’ on the following day of the dollar index’s break of support. Similarly, we enter for a ‘short’ in ‘gold’ on the following day of the break of resistance in the dollar index. The entry is taken right at the opening candle on the next day.

In our case, we are entering for a ‘long’ in ‘gold’ on the following day since the price had broken the dollar index’s support on the previous day.

Step 3

In this step, we determine the take-profit and stop-loss for the strategy. The stop loss is mathematically calculated where it is placed at the amount obtained after multiplying 2 to the value of the ATR indicator on the previous day. This means if the ATR value is 30, then stop loss will be set 60 points away from the current market price (CMP). The take-profit is extended up to a point where the trade results in a risk to reward ratio of 1:2. As mentioned earlier, since this is a long-term chart, the trade has the potential to give higher returns.

We can see in the below image that trade has almost reached our ‘take-profit’ where this is the current state of the market.

Strategy Roundup

Part II of the commodity correlation strategy seeks to take advantage of the negative correlation between the dollar index and gold prices. Using the dollar index as a reference, we are activating trades on the XAU/USD pair, which is nothing but the price of spot gold.

However, the interest rates announcement by the Federal Reserve will try to keep the inverse relationship between the U.S. dollar and Gold. This strategy is ideal for traders around the world who do not have time to watch the markets on a daily basis. The strategy can also be used to look for investment opportunities in Gold.

Categories
Forex Basics

Trader’s Guide to Proprietary Forex Firms

What’s the hottest trend in Forex today? Did you know that somebody else is willing to risk their own money instead of yours, and be paid for it? Forex prop trading – no risk of losing your own money, firms battling to give you large figures to trade, you get a nice piece of that […]

What’s the hottest trend in Forex today? Did you know that somebody else is willing to risk their own money instead of yours, and be paid for it? Forex prop trading – no risk of losing your own money, firms battling to give you large figures to trade, you get a nice piece of that […]

What’s the hottest trend in Forex today? Did you know that somebody else is willing to risk their own money instead of yours, and be paid for it? Forex prop trading – no risk of losing your own money, firms battling to give you large figures to trade, you get a nice piece of that trade, and the cherry on the top, they will always want more if you do well, a never-ending circle. Going forward know this is just an opinion and advice from certain prop traders. So, everybody is already doing it, and that means there are a lot of shady companies out there. Companies that you don’t want to do any business with. Let’s see what you need to know about prop firms, what to look for, sort of general rules for everyone.

What are proprietary trading firms? What they do is, they give you their own money to trade, and, at first, you give them payments, every month or some other kind of fees. It’s always some kind of exchange, helps them insure themselves because they are not familiar with you and they are taking the risks. Of course, you have to assess, what kind of a deal they are offering to you, does that fill your criteria. You can also bring your money to trade and earn more. There are no restrictions, this way you can snowball it up.

Which firms are worth your attention? The ones that don’t take people from the streets to do their business. They will take anybody and that’s a recipe for failure. These companies are first to filter out. Most firms will provide trade training, that correlates with their business style, but good firms will give you options on how you trade, enabling you to trade in a successful, proven way with good exit strategies. Depending on the firm, money fees are going to scale, and it is going to be upfront because firms have training fees, they take all the risk. So be prepared to invest some money first. Successes come gradually, so expect that you will not be making sustainable money for some time.

Explosive income is not real. Training is thorough, nobody’s going to give much money to novice and it’s going to take time to earn credit. And that’s the moment of showing character, going through the grinder. This is the display of trading in the long term, it will show you if you are up to it. Building a system and going again through it, repeatedly, is what trading is – it’s a long game. Today’s novice doesn’t have to have a good resume, it used to be required to show good results for at least a year of trading, to be at least remotely interesting to a firm.

Although it doesn’t hurt to have good trading results, today’s firms will not even ask for it, since many people can produce fake good resumes, you just have to be a good trader. But, if you do have the experience, all that learning and testing won’t go to waste, as firms today tend to release you into the wild, they will test you through their platform and trading. If you produce good results under pressure they will hire you for a long time. Everyone’s experience is different. These lines are just recommendations, showing you options, providing you with more chances for success.

A Few Things to consider…

Prop firms are not a new thing, they ‘we been around since circa 1970, and most of them got modernized in their way of doing business. Those that didn’t should be avoided. Most of them will have desk fees, and you should watch for your expenses on these, as they can get wild. Follow your criteria and financial capability. Be careful with your expectations, set realistic criteria, don’t let scammers take advantage of you with promises of quick and high turnarounds. Firms insisting on using their trading systems are to be avoided, as there is no perfect system and your developed systems go to waste. Also, avoid multi-level marketing structure firms. More on MLMs later.

Structure of the old prop firms formed in the ’90s is still in use today, but they were infamous for a poor working environment. Firms that still work in those conditions are easily spotted and should be avoided, although, some people may thrive in that. Besides that disadvantage, you were required to be present in the office, sacrifice comfort of life, time, even when it wasn’t needed. Simply put, nobody stays with those firms for long as conditions are horrible and it’s hard to make any money because of high desk fees. These fees as horrible as they sound they have a purpose, other than to annoy you. Desk fees allow the firm to operate normally, without affecting the prop trader’s success. Not to trade with your money – something that early prop firms did practice.

Early prop firms would account for traders’ high desk fees as profit, instead of investing in support. These fees are usually higher the more expenses the firm has, for example, a rented office. The Desk fees are usually paid monthly, enabling firms to support employees and pay bills. Most importantly, after all, negative things on desk fees, by paying them you are granted the ability to trade with that firm. Desk fees are a common business practice, and there are many variations to them, but it is best to avoid the “old” firms and those that are not disclosing the fees.

If something sounds too good to be true, it’s probably a scam. Promises of fast unrealistic gains are signs of a scam firm. Scam firms charge upfront and set you up for a test you can’t pass. Why would they do that? It’s not to see into your character, to see how you handle pressure, it’s because they are not there to make a selection, they just want your upfront money. They will promise large trading capital, just to bait you in and once they get your money you are of no interest to them, and they disappear. Those kinds of firms are all over the internet. Do your research first. Avoid firms that impose time limits for targets, another unrealistic expectation, because the market can go up and down and sometimes be completely dead, giving you no chance to make reasonable trades and therefore reach their targets. Giving you monthly targets means that such a firm simply doesn’t understand how Forex market works or they want you to miss trades.

Why? They are just after your money, luring you in with promises of large funding and insisting on high desk fees. They are Incompetent or simply scammers. In both cases, not a healthy environment. Some firms might understand that more time is needed for reaching the targets, for example, 3 or 6 months. So when you see firm with unrealistic expectations, stay away. Ask yourself, do you have a chance to prosper when you are in such a firm. The worst thing that you can do, is set yourself in a position you lose time and don’t get paid.

Firms that won’t let you trade outside their way, is an uncommon practice. Almost all these firms use the popular and ineffective indicators like the RSI (some variations of the RSI are much better and applicable for current Forex conditions), and different risk structures that you should avoid. A lot of prop firms may think they have a method that works and will force this. They teach people their way, fund themselves with your desk fees, and this way the prop firm gets a big tax write off. But in the end, that doesn’t benefit you, the trader.

MLM’s, multi-level marketing, widely known as pyramid schemes. It can be a legitimate business but mostly it’s a form of scam. It is a structure without good traders, sometimes they even don’t care about trading at all, just to grab your money. It never ends well for people at the bottom of the pyramid, while those on the top make large sums of money. There can be some exceptions when people at the bottom actually make money, and they will get praised for it, but it’s just so that scammers can show some legitimacy. MLM structure created their bad reputation, there are so many options other than MLM-s, you can choose whoever you like for trade.

All prop firms take a skim of the trade, it varies in percentage, that is how they make their money. Takes vary from firm to firm, you may expect 30-60% on initial stages, and as you get to higher tier takes will drop. There are a lot of firms with different options. Some give attractive prices, up from a few hundred dollars, with a one-time fee. Others give full experience, with direct support but will take you back for several thousand dollars US upfront. Cheaper doesn’t mean bad, they just may be more reserved to allow you to potentially earn more. They might have several divisions, for stocks, options, and Forex.

All firms that take trading seriously, will make some kind of candidate elimination process. You will be interviewed and tested several times and that will result in high-quality traders. Of all tested, maybe 5% will be funded, and they will be trained on technical analysis, strategies, etc. It will take up to 6 months before you get any funding. After about 6 months your gains should be in a range of 6-9%, anything less and you are done. Other prop firms do not have a “failure” possibility but they keep your initial deposit until you prove yourself. These numbers will make you advance to the next step.

Make preparations before you make any decisions. Calculate fees, see how it works for you. There is a bunch of prop firms out there, probably one for everybody’s taste. Make sure to avoid things like MLM-s or “old” firms. You can call yourself a professional trader when you get funded, and then understand that trading is a long game, full of emotional challenges.

Categories
Forex Psychology

Desperation: The Destroyer of FX Trader’s Dreams

We have seen people burning up on jobs, screaming “I can’t work on this job anymore I have to get out!” We’ve also seen people losing large sums of money trading on Forex. You could see the desperation and you could read on their faces. “How do I get this money back?” or “My expenses […]

We have seen people burning up on jobs, screaming “I can’t work on this job anymore I have to get out!” We’ve also seen people losing large sums of money trading on Forex. You could see the desperation and you could read on their faces. “How do I get this money back?” or “My expenses […]

We have seen people burning up on jobs, screaming “I can’t work on this job anymore I have to get out!” We’ve also seen people losing large sums of money trading on Forex. You could see the desperation and you could read on their faces. “How do I get this money back?” or “My expenses are $2,000 dollars a month, how long do I have to trade to make that sum?” Most people don’t understand that answer to these questions comes with – patience. Which is critical in the trading game.

The lack of patience, it’s something that we all are affected with, more or less. There is one feature of impatience, that is the killer – desperation. That is what is blocking us from achieving success. Something that we need to discard. It is, more than anything, negative that is impeding progress in trading. Desperation causes us to make irrational decisions. Extreme decisions. What would you do if someone would offer you a job that would satisfy you professionally and economically, but only after 5 years building on it with lots of crashes and self-doubts? Would you still be interested?

This article is conceived in such a way to help you get there faster, relieved from impatience. Understand that when you start trading professionally, even after all tests from trading firms, it is just the beginning and there is limited money for the trading accounts. It takes a strong work ethic. That is not to torture you for fun, it is there with a purpose, to see how you handle real money, as training with demos is worlds apart from real trading. You cannot rely on luck and trading firms are there to make money, thus, they are good at managing risks, so you have to get the right to be able to earn more, to show them you are a good investment, consistently. And being consistent is really hard, as the market itself, is always fluctuating. That’s a big step, reliability.

Acknowledge that 90% of traders cannot escape that constant, dull tick of desperation in their heads, that interferes with their trades. Being able to place calculated, disciplined trades with low risk, at the right moment with constant desperation chaining you is impossible, and it gets worse with years. You have lost accounts again and again, but you know Forex is a place where millions can be made, and you are getting anxious and frustrated with your Forex trading endeavors. That gets people in a panic mode, pushes them into making irrational decisions and, not just, financial mistakes.

Impatience, creating unrealistic expectations for yourself, the desperation to get good results, it all leads to disasters. Don’t invest more money that you can’t handle, hunger is good when it is calculated. For those that endure and survive, those disasters can be a catalyst to expand their knowledge on trading. And don’t believe in the myth of quick recovery. Sure, some people are very lucky, odds are that somebody has to win lottery eventually, but that’s not a smart move. Desperation for funds recovery leads to even more losses, like gravity pull into the losers pit.

To some degree, traders who in the beginning use the emotions to resist the acceptance of failure are the ones who win at the end. After a while, they become more like scientists, objectivity, research, experiments, tests, and trying out new things are infused in their minds. But, it cannot be done instantly. Train yourself, stop being desperate. Try to think in this manner “So, you lost an account, man up, don’t cry about it and don’t chase it, learn from it.” Most other problems in trading can be fixed by placing a good system to work and learning how to uphold it. It is great to have the drive, to look forward to something when you wake up in the morning, but that has to be backed up by having realistic expectations. Motivation is great until it turns into desperation, when that happens, it is just a push in the wrong direction. Always think about what went wrong, analyze your trades, trade based on rules that keep you emotionally solid.

This all applies to all stages in life. If you are young, and you heard that trading on Forex is easy money, and you are desperate for independence, that is great motivation, but it can mislead you. Go to college instead if you can, you can practice Forex and learn something in college. At the end of school, you can be ready for a Forex job. If you are contemplating leaving your day job and desperate on living a luxurious lifestyle, you are digging into every chance to make trades on Forex. Stop and think, am I having realistic expectations, am I being hazardous? If you are a pro Forex trader, in a streak of bad trades you will become desperate to compensate losses.

This is the game where you cannot cheat to be successful, it is long. It needs time invested and it is rough. If you see yourself living off Forex trading, you must learn to deal with desperation and maintain healthy motivation. That is the way to be responsible with your money and money entrusted in you. You have no options here.

Categories
Forex Psychology

Why Does Forex Create a Self-Maximization Mindset?

How can you diversify your income streams and improve yourself at the same time? It’s decision time. It’s time to decide whether you are going to just stick to what you’re doing right now or whether you are going to put time and effort into making yourself a success. You could carry on holding down […]

How can you diversify your income streams and improve yourself at the same time? It’s decision time. It’s time to decide whether you are going to just stick to what you’re doing right now or whether you are going to put time and effort into making yourself a success. You could carry on holding down […]

How can you diversify your income streams and improve yourself at the same time?

It’s decision time. It’s time to decide whether you are going to just stick to what you’re doing right now or whether you are going to put time and effort into making yourself a success. You could carry on holding down your job and carry on trading, or you could decide that it is in your best interest to add new streams of income to your life.

Why would you choose to do that? There are two main reasons. The first is that by diversifying your sources of income, you can insulate yourself from any future shocks. The more streams of income you have, the better protected you are from things like the economy tanking or your company going under and leaving you unemployed. The second, perhaps more convincing reason is that you are almost sure to end up making more money this way. The greater the number of income streams you introduce into your life, the greater the odds are that one of them will become a runaway success.

Of course, that’s not an easy thing to achieve. Particularly if you’re stuck in a rut or have allowed your brain to talk you down to the point where you don’t have the confidence to start something new. But, if you’re reading this, that means you have in all likelihood already overcome that first hurdle. You have probably already started forex trading or are on the road to teaching yourself how to trade. Take a moment to give yourself a hearty pat on the back because that is no small feat. It is, in fact, a paradigm shift away from being a bystander in your own life and towards being able to know what you want and how to go out and get it.

Diversifying Income Streams

The huge advantage you have, living in this time, is that there are now more ways than ever to explore new avenues of earning an income than there ever have been before. Better still, a great many of them do not require you to quit your job or abandon your forex trading routine. They can be bolted on without causing the kind of life-changing disruption that would have been inevitable in the past.

Of course, as is the case with everything you do as a trader and – speaking more broadly – every big decision you take in life, you will have to run a careful risk assessment to figure out the potential pros and cons. Not just in terms of your financial portfolio but also in terms of the amount of time invested, whether that time could have been used more productively on another endeavor and, ultimately, on your own personal wellbeing.

Your risk assessment cannot, however, involve no risk. Otherwise, you are just back to square one. Why take any risks when you can sit on your couch and eat chips? That’s not the name of the game. Imagine you’re in a casino and the odds of winning a hand at blackjack or roulette are 12-1. That means that out of 13 possible outcomes, 12 are going the way of the house but if the game does happen to go your way, you stand to make 12 times your stake. Now, of course, betting on a future outcome like that makes little sense. The game is stacked in the house’s favor. That’s why casinos exist in the first place because they can make money by making sure the odds are always in their favor.

Take a look at Las Vegas or Macau in China. There’s a reason why all those casinos look so opulent and it isn’t because the poor schmucks betting on a 12-1 hand are winning all of the money. Okay, but now imagine that the odds of winning the game stay the same but that the winnings go up by a factor of 100. Your chances of winning haven’t changed at all but the potential gains if you do win, gains are now astronomical. No casino would deliberately set up a game like that because they would be out of business in no time. One of the reasons they would go out of business is that suddenly it makes much more sense to make that bet from the punter’s point of view. The reason is that a risk with such a large potential upside starts looking more like a calculated risk that promises to pay out a reward that is out of proportion to both the odds and the initial stake. In other words, it becomes an opportunity.

The point is that when looking for ways to diversify your income, your goal is not simply to search for the low-risk option but to identify real opportunities.

Opportunities for Self-Improvement

Getting to the gist, there are many ways to invest your money that will look on the surface like they provide an additional income stream where you can just sit there while your money works for you. They include anything from peer-to-peer lending, across ETFs and dividend-heavy equities, to investing in the real estate market. These are all likely to be potential components of your financial portfolio in one way or another. They are not, however, very imaginative ways to diversify your streams of income in a meaningful way. For one thing, while the risk may appear to be low, they are not entirely devoid of risk. Moreover, while these options are relatively low-risk, they also do not offer spectacular rewards. In other words, they are not real opportunities.

Another, perhaps better, way to go is to look for business opportunities.

In that sense, we are blessed with the true plethora of business opportunities that the internet and other modern technologies provide. It can be said we are also still very much in the pioneering stage of online business. While it may seem like everyone is online selling something or marketing themselves in some way, this couldn’t be further from the truth. Wherever you are in the world, you will find that most people around you have still not cottoned on. Most people are still bumbling around, unaware of the potential these high-tech tools offer. All of this means there is still time to get in, if not on the ground floor, then at one of the early floors and let the elevator take you up.

What’s Stopping You?

Here’s what’s stopping you and why it shouldn’t. What’s stopping you right now from starting some form of online business in addition to your job and in addition to your trading, is the very same thing that for a long time stopped you from getting into forex trading in the first place. Fear. Now, the fear we’re talking about here is fear of failure. There’s nothing to be ashamed of, we all have it in one form or another.

Here’s what’s lucky about this situation: The reasons for overcoming that fear are precisely the same as they were for overcoming your fear of getting into forex trading. In fact, not only are they the same but there is one bonus reason that makes this kind of endeavor even more worthwhile. So, when you start a new business venture and that business doesn’t work out, if you’re smart, you still get to walk away with quite a lot.

There will be losses, that’s for certain. But the gains are almost certain to outweigh the losses and they should be factored into your risk assessment. The first gain is that you will have taught yourself a lesson about your own resilience. Your business may have failed but you can pick yourself up and get right into the next thing. That resilience will kill your fear of failure right away. The second gain is that you will have learned from any mistakes you made along the way and will be able to do things better at the next go around. This is a gain from the experience that people actually undervalue time and time again.

It’s a little known secret that no number of online courses and video tutorials will teach you. In short, sometimes you need to mess things up yourself so you know how not to do it the next time. The third gain, the bonus gain, is all of the many big and little things you will have learned along the way. Even if your venture fails, you will have invested time and effort into yourself. You will have bought yourself a whole new skill set that you could not have acquired in any other way. Most if not all of those skills will be applied either to your next business venture or to those things you are already doing – your day job, your daily life, and, yes, even to your trading.

The Idea Factory

Ok, so by now you’re probably interested but maybe you don’t have any ideas. First of all, that is hugely unlikely. Give your brain just a few minutes to explore the enormous scope for new businesses out there and it is bound to come up with at least ten viable ideas. If not, however, even that is made easier for us by the wonderful world of the internet. Get online and do some research, let your searches be your guide. Get on social media, get on YouTube, find out what other people are doing and adapt it to something that’s your own. Your brain is just by its very nature a magical source of ideas and plans and schemes but plug that into an online world with millions of other brains doing the same thing and you have yourself a veritable factory of ideas.

The online world is a great place to explore, investigate, and actually put into practice any range of business ventures you care to name. Lots of people have made a go of selling actual physical products online but that’s just a starting point. Using all the tools the internet provides makes it possible not only to sell products but services, brands, entertainment, and even the very skills you learn along the way as you build and develop your business. You could, just as an example, offer up the skills you learn in growing a business as services to other businesses. This is because, as your experience expands, you will come to know all sorts of things about marketing, logistics, accounting, project management, and a whole host of other fields you never knew you would be able to master.

What’s Hot?

One of the things that are particularly hot as an online commodity these days is knowledge. People are hungry for new knowledge and new skills like never before and there is a rapidly growing sector of online businesses ready to respond to that demand. You may be thinking, “well, I’m no expert on anything” but that’s the wrong approach. That’s the fear talking. First of all, your experience is unique, the way you understand the knowledge you have is a complete one-off, your approach to explaining and transferring that knowledge to others might be just what people are looking for.

Often the greatest experts in a field are so deep into the area they work in that they miss the little things that they too had to learn along the way. But those little tips and tricks, they’re like gold dust right now. The other point to make here is that there has never been a better time to learn new skills and perfect the skills you already have. Use all of the tools at your disposal, follow people on social media, watch tutorials and read articles, take an online course if you feel you have to.

If you can combine the knowledge you can pull down from the airwaves with some experience of putting it into practice – even if you failed along the way, or perhaps especially if you failed along the way – you are almost certainly someone people will be able to learn from. It couldn’t be simpler, learn from others, make that knowledge your own through practice and experience, and put it back out into the world. Others are doing it and making it work, why wouldn’t you?

Just Do It?

As we said in the beginning, the only force holding you back is a fear of failure. And since it is now clear that failing, but failing upwards, is part of the journey, now is the time to convert that fear of failure into a fear of quitting. The only real way to fail is if you fail downwards. That is if you try something but quit along the way before you’ve had a chance to learn anything. That puts you in with the 95 percent of ordinary Joes who are just muddling along through life without a plan. Here’s the good news, all you need to step out of that undesirable state of affairs is to stick at it.

So leap forward, diversify your income, and yourself. Try starting a new business and do it with a smile on your face because even if you fail, you will come through to the other side better, more resilient, smarter, and with some new marketable skills. Diversification works in forex and it works in life too.

Categories
Forex Videos

Forex World Faces Another Economic Disaster Part 2!

https://youtu.be/OH9Ct1uoL2I

https://youtu.be/OH9Ct1uoL2I

 

Has the West got it right regarding the China & Hong Kong National Security Law? Part 2 of 2


Societies are complex and ever-evolving organisms,  and if China is to successfully govern Hong Kong then surely it has a right to implement changes to laws if when it feels the need to do so, after all, other countries do this all the time, and mostly without criticism and especially from China, who is fairly agnostic with regards to the governance of other countries.
While 27 countries in the West have openly criticized China’s new Hong Kong law, 53 other countries have come out in support of the new legislation. This is largely gone unreported.

What’s more, 2.9 million people in Hong Kong signed a petition supporting the new law, some 38% of the population in which case you can comfortably assume some people did not bother, in which case it could be as even as a 50/50 split of the population agreed.
Certainly, investors were happy as the Hong Kong stock market surged 1.7% as the bill was introduced.

One question which came out was that several accusations from media outlets – including Ming Pao, RTHK, ATV, TVB, Now TV, Oriental Daily News, and Apple Daily – that organizers had hired protestors, and that many had been paid between HK$200 ($26, £15) to HK$800 for turning up and protesting.

And while in the United States black lives matter’s protesters were called terrorists by Donald Trump, the protesters who were causing disruption, mayhem, wanton criminal damage and almost financial ruin for some businesses in Hong Kong, were called heroes by the West.

And so the question is, has the West got this wrong, and do they have the right to tell China how to handle its affairs and make threats of sanctions and tariffs without any real foundation that the new security law in Hong Kong is such a bad thing, especially as a high proportion of residents actually support it. Wouldn’t it be more advisable to sit back and watch how the new law is implemented and look at it from the point of view that action should only be taken should there be proven breaches of human rights and miscarriages of justice amounting from the new law? After all, how could anybody, with any common sense, expect that China will change the law, now that it’s actually been implemented?  Is it worth risking an economic fallout with China, especially as we are still in the midst of a global pandemic that is crippling economies around the world?

Perhaps we need to further analyze some more lessons from history and further statistics before we start trying to push China around: –

China’s percentage of the world’s gross domestic product in 1980 was 1%, which is quite staggering when we realize that it had grown to 15% in 2015, and currently in 2020, pre-pandemic, the figure was 18.5%.

If growth rates return as expected, by the end of 2021, the post-pandemic picture for China’s growth path could see it with 30% of world’s GDP between 2030 to 2035 according to economic modeling by Tsinghua University, Beijing. That is twice as much as the United States and almost identical to the United States and Europe combined. And, incidentally, that is the same as the percentage of global GDP China enjoyed in 1820.

Some Might argue that China expanded so incredibly because of reverse engineering and copying other countries’ products and stealing intellectual property rights.  However, China has moved on, and the West has certainly enjoyed buying cheaper products as manufactured in China.  But, China has now become a powerhouse of innovation and is clearly able to hold it so on that front, from cars, white goods, phones, computer systems, software, medicine, communications technology, as produced by Huawei and other Chinese tech firms. They are also leading designers of infrastructure projects, with the best rail system in the world. They own huge banking corporations and leading companies such as Alibaba, JD.com, NetEase; the danger is that China is about to leave the West in its shadow. And all this happened since the Chinese communist party abandoned a large part of its ideology in order to embrace capitalism.

China’s growth is simply disproportionate and while it’s most important relationship is with the USA, it is also highly focused on its relationships with the developing world, where it sees itself as having an affinity and especially with African nations which have enjoyed growth and wealth having sold natural resources to China and been able to benefit from infrastructure projects as designed and provided by China.  Some 65% of Africans have a favorable attitude to China and where some African countries are growing solely on the basis of their relationship with China.

Perhaps another lesson for the West is that in 1970 two thirds of global GDP was with the western world, where 15% of the world’s population lives, and only one third in the developing world where 85% of the population lived.

In 2015, 59% of the world’s GDP was accounted for by the developing world, and only 39% by the developed world. And of course, China has its tentacles in all the far-reaching corners of the developing world.

The West cannot stop China, and if it forces China into a situation where tensions become so bad and trust so failing between both sides, the result could be an economic fallout of unprecedented magnitude.

And while China is leaning towards becoming the biggest economic powerhouse on the planet, we should be working with them and not against them if we want to continue to reap the rewards of economic prosperity.

Further alienation by the West to China by forcing them into a corner over the issue of the Hong Kong security law could cause extremely harmful repercussions, which could see pandemonium in the financial markets should sanctions and tariffs be implemented and all while the world is still reeling from the Covid pandemic.  The timing of all this could not be worse. Long-term prosperity can only be met by stopping the rhetoric and working together under an umbrella of economic and political harmony.

Finally, what will the future hold for Hong Kong as a trading hub? Certainly, there is no imminent risk that the West will abandon the trading opportunities with regard to its important finance center, tourism, and import and exports should there be a full-scale trading crisis with China. The people of Hong Kong are largely seen as victims in the dispute over the new law.

Categories
Forex Trade Types

What Makes Contracts for Difference (CFD) Trading So Amazing?

Have you considered trading with other markets? There has never been a time quite like this one before where moving on to other markets, such as metals and oil, was more possible and with so much potential to bring you profit. Trading has always been a universal concept. Pre-historic people bartered a variety of goods […]

Have you considered trading with other markets? There has never been a time quite like this one before where moving on to other markets, such as metals and oil, was more possible and with so much potential to bring you profit. Trading has always been a universal concept. Pre-historic people bartered a variety of goods […]

Have you considered trading with other markets? There has never been a time quite like this one before where moving on to other markets, such as metals and oil, was more possible and with so much potential to bring you profit.

Trading has always been a universal concept. Pre-historic people bartered a variety of goods and services, which was a natural modern-day currency predecessor. As the times change, and they change fast, even as close as three decades ago people did not have the same information and tools at their disposal as we do now.

A relatively recent history of trade tells us how substantial quantities of money were required for anyone who desired to trade anything. People used to face quite limiting market rules and, as a result, the talent itself could not be an asset strong enough to even get you to start off in this line of business. Probably due to these past struggles, present-day men or women may be struggling with fears concerning this topic. People probably have an opinion that tens of thousands of dollars are necessary for anyone to start trading on the stock market.

Individuals who happen to have quantities of money necessary to trade more than one stock are, from the perspective of a forex trader, very likely to face severe limitations pursuant to this type of business – from orders which did not get filled to capital gains taxes. Nowadays, most of the issues related to stock trade are not applicable any longer. We are, in fact, witnessing a great momentum where we can do trade without a lot of money. This is not a suggestion to pursue trading without sufficient financial security, but it is an indication that we have the opportunity to experience an unforeseen variety of possibilities in trade.

Owing to CFDs, contracts for difference, we can now trade anything, from sock to indices. Although created a few decades ago, Australians were the first to use it in exchange, first offering it in 2007. CFDs help traders trade prices, not the actual stocks or commodities for example. A person who does not own stock in a company, but is trading its price, is actually earning a profit if the price goes their way and vice versa. Owning alone can be dangerous because if the prices go down, it is questionable whether anyone would be interested in buying a falling stock.

Forex traders, unlike stock traders, always get their orders filled whenever they want due to two reasons. The number one reason is liquidity – there will always be someone to hold the fort. An ECN broker or a dealing desk broker for example will take the other side of the trade. CFDs behave in the same way, taking the other side of the trade.

Now unlike ECN brokers, dealing desk brokers are required to take the other side of all orders, regardless of how successful a trader is. This an amazing opportunity because it implies that your order will be filled each time and that your stop-loss and take-profit points will be honored, wherever you put them. Today, luckily, people need only click one button and insert their numbers to be in a short trade that easily.

While the previously mentioned facts hold, some rare market phenomena (flash crash, large gaps, etc.) might not apply. However, in everyday circumstances, you should not be worrying over the question of whether your order will be accepted or not. The fact that you can short everything easily opens many possibilities. If you are a longer-term trader, for example, and the market goes into recession, which naturally occurs from time to time, you may choose not to do many long trades, which was completely impossible before. In such situations, people really could not short an entire index before or, even if it was possible, it used to be a strenuous process.

Approximately 11 years ago, when the U.S. market went into recession, people had little knowledge of this possibility and very few brokers had any CFDs to offer. Nowadays, this kind of knowledge can be extremely useful in times of recession. Holding precious metals is a perfect example – making a profit during a recession without having to hold great quantities of precious metal is now possible. The only thing you have to do here is to write a stock down or write an entire index down.

There are, however, a few things a trader should be cautious about. There is always a greater power making large financial decisions that impact entire markets. In 2008, only a handful of individuals knew that the market would crash, which was even documents in a movie called Big Short. Even from the perspective of history, recessions have always helped the wealthiest individuals acquire even more. The information concerning the onset of such big changes, and even their direction, is always in the hands of the lucky few decision-makers. Therefore, when everyone is vocal about the necessity to go long on the stock market, that may be the time to do exactly the opposite. In 2008, after everyone was insistent on going long, the market crashed, which should now serve as an invaluable lesson.

Nowadays, luckily, there is a massive quantity of materials online which can help you educate yourself on various topics, especially finance. Social media has made information and knowledge accessible to the extent that we have the opportunity to hear financial statistics and forecasts unlike ever before. With a great number of individuals making podcasts on the probability of the market crashing, listing the numerous reasons supporting their viewpoints, people now understand red flags and truly comprehend the circumstances revolving around the previous recessions. Although financial networks are trying to hide the facts and stop the information from spreading, people have now learned how to recognize warning signs and explain such trends at present.

As opposed to the times of previous recessions, traders are now equipped with important tools such as CFDs. When a recession does happen, this is what will help many people emerge as winners. Until today, there have been quite a few false alarms, pushing people to take actions too soon. Nevertheless, we know now that each one of us has the ability to do something despite the direction the market is heading to. What is more, we can trade on every trading day, an all of this is possible owing to CFDs.

While contacts for difference may not be accessible from all places on this planet, there is a way to go around present limitations. We may not know when the next recession is going to strike, but CFDs are going to be our greatest ally when it does, allowing everyone to have an advantage regardless of the financial status.

If you have a computer or a laptop, you still have the chance to succeed at this. Grow your skills and knowledge and you may come across someone who will find your expertise in trading oil, or anything else, invaluable. There is such an abundance of options nowadays. We can enjoy ways and possibilities in trading which generations before couldn’t, and despite any circumstances become professionals trading large sums of money.

Categories
Forex Basic Strategies

The Most Simple Yet Effective Scalping Strategies You Must Know In 2020

Introduction

Introduction

Introduction

The Forex market consists of are several types of traders. They are broadly classified based on the time frame traded. For example, swing traders use time frames like 1H or 4H, while positional traders analyze the 1D or 1W time frame. Similarly, there are “scalpers” who trade the 1-minute and the 5-minute time frames. Note that scalpers are different from day traders, as they do not consider the 15-minute or 1H time frame for their analysis.

What is Scalping in Forex?

Scalping is a type of real-time technical analysis, where traders make several trades in a small period. Scalping involves entering and exiting from the market within a few minutes and moving on with the subsequent trade. This type of traders aims for tiny profits rather than home runs.

Scalping is usually most popular among forex traders than those trading stocks and commodities. This is because the FX market is the most liquid and volatile market. Thus, traders make use of this benefit by extracting 10-20 from the market in a short time. Since scalping involves making of few pips on a trade, they are traded with big volumes.

Getting Started with Scalping in Forex

Now that we know the basics of Forex scalping, let’s discuss the analytical side of it and then understand some powerful scalping strategies as well.

Timeframe

The ideal time frame to the scalp is either 1-min or 5-mins. However, some traders get an outlook from the 15-min time frame too.

Take Profit and Stop Loss

The most critical part of scalping is to have a take profit and stop loss on every trade. Since you will be using the 1-min time frame, the profit or loss level should be within 5-10 pips. It is risky to keep the TP and SL greater than ten pips when the analysis is based on the 1-min time frame.

Volatility and Liquid

Volatility and liquidity are other vital points of consideration before scalping any market. Forex is indeed the best market to the scalp as it offers the needed volatility and liquidity. However, you must select the right pair to trade because not all currency pairs offer enough market volatility. There are pairs that barely move on the 1-min time frame, and thus traders must end up waiting several minutes on a trade. Hence, it is recommended to trade only major pairs and a few minor pairs.

Spread

Spread plays a major role in scalping as it greatly affects the P/L of the trade. For instance, let’s say the spread on EUR/USD is two pips. The pip value of the pair is $10. If one lot is traded, the expense of the trade would be $20. Now, if a trade yields you four pips, then the net profit would be $40 – $20 = $20. We infer that 50% of the profit gets deducted as a fee. Thus, scalpers always have an eye on the spread.

Forex Scalping Strategies

Scalping strategies are unlike strategies used by swing and positional traders. Scalpers do not wait for several confirmations before entering a trade. Instead, they aggressively enter after a couple of confirmations. Here are some scalping strategies made for non-conservative traders.

Scalping using Moving Average

This scalping strategy, two moving averages – the 5-period MA and the 20-period MA is used applied onto the 3-min charts. Let us understand the strategy with a couple of examples.

Firstly, we must have a look at the overall direction of the market. Note that this strategy is only for trending markets, not ranging markets. In the below chart of AUD/USD on the 3-minute time frame, we see that the market is in a clear downtrend.

Secondly, the five period MA must be below the 20-period MA. When the price action tries to break above five-period MA (yet below the 20-period MA) and falls back into MA, we can open short positions.

The stop-loss must be placed above the high of the candle that broke below five-period MA. One must exit the trade when the price reaches up to 1:1 risk-reward or at a profit of 5 pips.

Scalping using price-volume charts

Indicators are not a must to scalp in forex. Scalping is possible solely using price action concepts. And here is a strategy for the same. This strategy works on a small time frame used on any currency pair. However, we’ll be sticking to the 3-min time frame for all the strategies.

Below is the chart of AUD/USD on the 3-minute time frame. According to the strategy, we can take entry when the market breakthrough a range strongly with high volume. In the below example, we see that the price fiercely broke above the range with high volume too. This is a confirmation that the big buyer is back into the market. Thus, we can take a long position right after the candle closes above the range.

The stop-loss can be placed below the low of the candle that broke through the range and places the take profit at a 1RR ratio. Note that, the stop-loss and take profit must exceed above 10-12 pips.

Scalping using Support and Resistance

Scalping at support and resistance levels is the most popular technique in the forex industry. Yet most traders apply it illogically. Even though the textbook says to buy at the support and sell at resistance, it cannot be applied practically incorporated in the market as there is a pinch of psychology in it. According to this strategy, one must buy at support and sell at resistance only if there is a false breakout prior to it.

Consider the below chart of NZD/CAD on the 3-minute time frame. The gray ray represents the support level. It is seen that the price broke below the support thrice and came right back above it. Thus, one can enter when the price is holding above the resistance post the fake-out. The stop-loss and take-profit for all such trades much be a maximum of 5 pips.

We hope you found these strategies interesting and helpful. If you are an aggressive trader, do try them out and let us know the results in the comment section below.

Categories
Forex Psychology

Trader Personality Test: Find your Pros and Cons

This concept that we will discuss here is not new. Personality Tests are used when hiring new employees. It is not all about the skills they may have, the employer may want his staff to have certain personality traits for the task in mind or company culture. Companies know that they may perform better for the role, sometimes even the skills and knowledge are secondary. Traders are independent, they do not have anyone superior, their performance is easily measured. The forex market will be their judge and a reflection of the effort, personality, and experience.

This concept that we will discuss here is not new. Personality Tests are used when hiring new employees. It is not all about the skills they may have, the employer may want his staff to have certain personality traits for the task in mind or company culture. Companies know that they may perform better for the role, sometimes even the skills and knowledge are secondary. Traders are independent, they do not have anyone superior, their performance is easily measured. The forex market will be their judge and a reflection of the effort, personality, and experience.

This concept that we will discuss here is not new. Personality Tests are used when hiring new employees. It is not all about the skills they may have, the employer may want his staff to have certain personality traits for the task in mind or company culture. Companies know that they may perform better for the role, sometimes even the skills and knowledge are secondary. Traders are independent, they do not have anyone superior, their performance is easily measured. The forex market will be their judge and a reflection of the effort, personality, and experience.

Still, it is rarely known prop companies test their traders’ personalities as there are so many videos, books, and mentors that are mostly focused on trading technicals, methods, management, and so on. If you have not heard already what are the two most important elements of trading, they are Risk Management and Psychology. Risk Management can be developed with testing and devotion but the Psychological part is a bit harder to master.

Everybody has unique personalities, habits, goals, and so on. Your Trading Plan and your Trading System will reflect this, and it should. Meyer Briggs Personality test is used by a group of prop companies so they can assess their new trader recruits and find out their strengths and weaknesses. If the company has the experience and has researched the personality-psychology relation in trading, they will know what traders’ mistakes are most likely to be. You will rarely find a video or a book about this if you are not searching, unfortunately, and it is such an important topic.

Prop company coaches even dare to say your Trading System is not important, it will increase your odds but it does not matter if you do not master your personality bad habits. Meyer Briggs test has 16 personality categories that cover enough psychological areas of a person so a trader can know on what weak spot he can focus on improving right away. How this is done depends on the weakness. What is important is to know that this test can be done for free, it is easy, and it is widely available. Once you complete it, we move on to explain how you can improve those bad aspects that bring your account down.

 

Know that this personality test does not have the right or wrong answers. In the end, you will have bad and good perks for trading as every trader has. There is no scoring, just the classification based on your answers. Let’s say you are stubborn. If you think this is all bad trait for trading you are wrong. It will mean you are not a quitter, you will likely keep trading despite the challenges. On the other hand, you could be doing things persistently wrong. What is even more interesting is that Forex will state this in your face as you trade. Are you persistent in chasing to recover that losing trade? Well, your account balance will suffer. Still doing this will bust the account. There is no way you can beat the market, if you want to become a professional trader, you will have to adapt.

Many traders that have been through the path of Forex trading have recognized they have changed for the better generally as a person. One of the great quotes that match the idea here is by Joseph Plazo saying that “ When it comes to trading in the market, winning is the matter of the mind, rather than the mind over matter…Playing a winning hand depends on knowing your own mind – and understanding the way psychology moves the market.” Finally, traders start to understand that mastering your mind for trading will take a lot longer than learning to make a good Risk Management plan. And it is perfected using special methods. Trading is 90% mental and 10% technical according to prop firm statements.

When you look at the market and have some basic knowledge to understand it, you will have an opinion. In a more scientific angle, this is subjectivity. This is your internal interpretation of the phenomena and how you deal with it. Your opinion could be aligned with the truth or not, in other words, you could be wrong. Objectivity is facts, our ability to get free from bias, prejudice. When two traders face and discuss what is going to happen next on the market, using the same data, they will form opinions. More often than not these will be the opposite. They will believe their opinions are facts even though in reality they are not. One of them will be wrong, the price will move in one way.

Money is tied to emotions. It will be our Subjectivity versus Objectivity. The separation of emotions from this is impossible according to the professional prop traders. It is very common to see a trader have great results on a demo account and collapse when trading with real money. They cannot trade the same way. If we can get to the point where we trade more on objectivity than on subjectivity, we are steps closer to consistent successful trading. This is one of the reasons trading systems are very helpful to see the objectivity.

The Personality Test has 4 classes that describe your Energy, Decision making, Attention, and Lifestyle. For each class, you have two opposite traits. In the end, there are 16 personality types possible. As you gain experience with trading, your personality results will reflect this. The traits describing your Energy can be Extrovert or Introvert, you make Decisions on Intuition or Sensation, Attention will be based on Feelings or Thinking, and your Lifestyle can be Judging or Perceiving.

Traders will have common opinions that the market is against them, that they are the victims. Of course, it is the trader who is in control. Forex cannot be controlled, except maybe by the big banks, but traders are responsible for their actions. The Personality Test will set you into an Introvert or Extrovert but you are a bland, more or less. Below are the peculiarities of each trader type.

Decision making is based on two traits:

Intuitive traders love patterns, correlations. They seek them out, they feel something is about to happen, they take the big picture and wrap their minds around. These patterns will be their facts. Hunches or feelings are the base of their research. Looking at the chart’s history is their main activity.

Sensing traders use all the sensory input to make a decision. This is the way they create facts, with everlasting desire to find more. Details that make the big picture is their way. Having all gathered, they make structures, linear processing, and an organized plan. Everything has to make sense, they rely on tools and precision.

Attention core is defined by:

Thinkers are more analytical. Analysis, logic, and principle. They want to detach subjectivity and focus on facts. Only objective criteria can make them make a decision. They can see imperfections in their system, engaging in self-criticism and everlasting need to improve it. Precision is required, the goals are defined clearly and the results cannot be in the gray zone. It is black and white, to enter a trade or not is clear to them. Math is their friend. Emotions are a sign to the system is not good enough for them and they will try to take emotions away with precise numbers, not fuzzy thinking.

Feelers like the abstract, intangible forces to guide them. They feel the market, focusing on what the emotions are trying to tell them. Facts are not a priority. Human values and needs create a way for them for judgment and decision making. Market psychology is their friend are more likely to act on it, Therefore, they are less objective, tend to force out bad trades led by strong emotions. If not in control, emotional traders are always in danger of default.

The energy of a trader will align on how they approach to problem-solving:

Introverts focus on their inner voice of ideas, concepts, theories, possibilities, abstractions. They need a reason for a consequence, the source, reasonable argument, proof. They will think reflectively. They will use the market data and action to measure, extract, and define facts. These facts are then aligned into a system used as a machine for decisions. The world is in their head.

Extroverts are outside of their heads. They find meaning in people and what is happening around them. Therefore, interaction is what motivates them, they will also move people into action, create events. They like to make decisions in a team, learn with others, take collective action. The expression is more important than to absorb.

Lifestyle will reflect on how they trade:

Judging traders do not have doubts when they want to trade, they act. Motivation is pumped internally, they will create rules. Unfinished business is not done by the judging trader, the task will be completed, fast. They will act once the basics are known. Plans are created and based on them the trades are executed.

Perceptive traders do not like plans, rules, and strict algorithms. It is not gray or white to them, it is fuzzy. Stop Loss placement is not exact, but close enough where they think it should be. Procrastination is common, easygoing, late at the meetings. They do not lack curiosity, they can adapt and be spontaneous. Before trading, they want to know everything about and tend to make bad trading decisions using too much information.

Now let’s see how all these traits mean for trading and traders. According to the research, all of them have bad and good habits in trading. Recognizing what type you are, you have a good starting point on what area to work on.

Starting with Extroverts’ strengths, they are energetic, passionate, they feel great, optimistic, and ready to trade. Group trading is a great way to trade, they thrive with teams. Chat is their favorite tool, talk about their ideas, and share with the team. Action is their middle name, when it is time to act they will have no fear. When the see the opportunity for trading, it will be done, fast. The weakness in trading is emotions. Extroverts get excited easily and get carried away. Passion for trading is great, but too much of it will cause overtrading, one of the most common bad habits. They may also underperform when alone or when too much information is given to them.

Introvert strengths are very good for trading plan construction. They are introspective meaning they will come up with ideas alone using their analysis. Information is how they base their decisions. That is why they want to know more. They will go deep and be thorough with every info they find. The weak points come with this desire to have more information and then overanalyze. Overanalyzing leads to hesitation. Introverts need just a bit more for that trade execution, until it is too late, missing the opportunity. They really care trade is a good one it blocks their execution. They like their ideas so much they do not want to share easily with others.

Decision-making strengths for the Intuitive type traders are based on patterns they easily see. They get the big picture, understand it, and act on it. Relationships for the movements are also noticeable for them. They zoom out and process all the “invisible” information and act on that. Sometimes they have reasons they cannot explain, but they just feel what is going on, on multiple levels. Their weakness shows up when they hang on to bias, hunch, and how they feel at that moment. If they are asked about a decision, they will have no factual or reasonable argument and probably disregard objectivity.

Sensing traders love details, systems, rules, easy to follow procedures. Organization and plans are precise. Research is top-notch and scientific. All this can be overdone and expose their weaknesses. These are overanalyzing, causing hesitation when trading. They are also stubborn. Once their system is complete it will probably work extremely well. But once the market conditions change at some time, it can stop generating profit. This is a nightmare for the sensing trader, the engineer, who is stubborn to stop trading with these conditions. Failure comes hard on them, they will not accept it and learn from mistakes.

Thinkers have a sea of ideas in their heads. Their strength comes from their mind, creating a reason, logic, clarity, goals, and finally, objectivity. After all, is set and done, they question if everything is based on facts and if it is objective. This is also a filter for emotions. The weakness comes from using the mind too much. Losing trades in a row will start the chain of thoughts about their system, create skepticism. Even when the trade is profitable, thinkers still think about that trade. Stress is something they experience more than other types.

Feelers’ main strength is understanding the market and the psychology behind it. They create a bond with the movements so they understand the relations although they find it hard to explain why. The big picture, the mood, and the energy of the market are easy to assess. Sometimes they can see the sentiment without indicators. The weakness comes from an emotional attachment to the trades. They will often disregard facts and arguments against their decisions. Trading on feelings alone will kick out of the game. Even when loosing extensively, their optimism will fuel their will to continue. This punishing weakness is boxed in with a rigid ruleset.

Judging a traders’ strengths can be very beneficial for trading. As masters of decision making, they will not hesitate. They will take action, complete, push to the goal. The plan will be followed to the letter, and the plan itself will be clear. There is only right and wrong, black and white, nothing in between. Their mindset does not allow doubts, any contrarian opinion will bounce off it. This manifests in the weakness of not taking advice. Additionally, low flexibility is another consequence of this mindset. Thus, traders of this type may have a steep learning curve.

Perceptive traders’ strengths come from their ability to be shaped into great traders. They are adaptive, change their mind, open for new ideas. Having a perceptive trader as an apprentice will be easy for the coach. Whatsmore, their curiosity will further improve their trading to an astonishing level of detail. Weaknesses out of all these positives manifest as being unsure of their decisions. Trades that they have entered could be closed before the Stop Loss rule. They change their minds, soak up information, and forex can easily play tricks on them. These decisions will be spontaneous.

Now once you have defined your weaknesses, you will need ways of eliminating them in trading. Discipline will not be enough. You may try to stay disciplined but your personality weakness will come out. Trying to change what you are is unnecessary. Admitting your weak points, faults, bad habits is a giant leap in trading. Naturally, you will tend to root them out. However, overtrading, risking, impatience, cannot be eliminated just by convincing yourself not do that mistake again. The mistakes will repeat. Because of this, prop traders even advise you to skip this step where you try to eliminate bad trading habits with discipline. Instead, create lifestyle barriers that separate you from the environment where the bad habits manifest.

This can be done in various ways. For example, if you are overtrading, you can appoint some sports activities that will pull you away from the trading platform. You will always feel the next opportunity is around a corner which you can take. This way, you will have an obligation, a barrier, pushing you away from the environment where your habits can manifest. These barriers may diminish at one point, but you will need to create new ways of avoiding exercising bad habits. This can usually be done in agreement with another person. Ultimately, your will to avoid things that bring your account down will decide if you are going to become a professional trader. After some time, the barriers will not be needed, your bad habits will be buried.

Key takeaways for your Personality Test results are:

  • Know that trading is 10% technical and 90% mental
  • Understand who you are and gain acceptance
  • Use your strong points
  • Do not try to fight your weakness, find ways to put it out of reach
  • Compensate your weak points with systems.
Categories
Beginners Forex Education Forex Basics

How Much Money Do You Need To Trade Forex Professionally?

How much should we invest in Forex trading? Too much, we will end up broke, too little, we won’t make anything. What is the amount of money, right enough, to start trading professionally on Forex? There are a lot of answers out there on the interwebs, and most of them are bad advice. Lines you […]

How much should we invest in Forex trading? Too much, we will end up broke, too little, we won’t make anything. What is the amount of money, right enough, to start trading professionally on Forex? There are a lot of answers out there on the interwebs, and most of them are bad advice. Lines you […]

How much should we invest in Forex trading? Too much, we will end up broke, too little, we won’t make anything. What is the amount of money, right enough, to start trading professionally on Forex? There are a lot of answers out there on the interwebs, and most of them are bad advice. Lines you are about to read, are not here to make you happy, they are here to represent the truth, without sugar-coating it. Plain straight. 95% of podcasts, YouTube videos, forums, tweets are just white hum static in the air. How do you know this isn’t? Don’t get depressive, read it to the end. There might be light at the end of this tunnel, even it is not something you were expecting.

So, how much money do we need to trade professionally? And what does it mean, professionally? That means you are trading actual money, the amounts are not important, big or small. When you hear someone presents themselves like trading professionals, take it with a grain of salt. Professionals are not kids playing with their demo accounts. Having a real trading account doesn’t make you a professional. You have to live on the money you earn by trading. Someone has to see you are good enough to hire you to trade their money.

Back to the money. Depending on a broker, the least amount of money needed would probably be $500 in the US. Globally, some might go lower than $500, even up to $1 micro account. Does 1 dollar account sound reasonable to you? Here is the part you don’t want to read. You are young, you want easy money. You heard over this thing on the internet, you dig a little, you learn how to read a chart, tinker with tools to predict prices with the RSI or Fibonacci indicators and it seems to work. And so you awe and think to yourself – I’ll use this for my trading, and get 50 to 1 dollar invested. Just imagine, it’s even better if outside of the US, a $100 for 1 invested. Millions are waiting, just repeat. And with that belief, you set yourself for failure, because the system you have set up is unreliable, works sometimes, 50% at the best. It leads you to believe you can leave your job, gives you unrealistic expectations.

Your system doesn’t work because you have never developed money management skills. A combination of confidence and undeveloped skill is deadly. For example, you trade short, and the price is long, and instead of abandoning with loss, you follow indicator with the belief it is going to straighten itself, but, it didn’t and you burn the account. This is what we are trying to avoid. Some people will follow the same patterns even if they don’t work perpetually, some will drop after only one bump. Sometimes one mistake is there to teach us and give us a better position. To succeed, confidence and motivation are both needed, and you cannot burn somebody else’s money to do it. To build those attributes think beyond those 500 dollars, see it just like a drop in an ocean. They are just a guide to help you ease trade with real money, to let yourself of emotions. You will not turn that initial deposit into anything remarkable, regardless of what internet tells you. We see a lot of scammers today, with promises of 100 pips a day. Experienced traders can confirm that the market conditions will not allow for this amount of pips to be made each day.

So what do we have to toy with now? We have tested and proven our system. How much money do we need to trade professionally? How much is enough to have good revenue and let you live by trading on Forex? Let’s play with a sum of $100000, that’s burning a hole in your pocket. You are in the top 2% of all earners in the US, globally in the 1%. That’s a really narrow percent of people. With that amount of money, what would be a good rate of return per year, on Forex? 11% per year is average. And that is already unreal for a new trader, as it takes a lot of time to get to that percentage. Compound interest over time will grow your fortune over a longer time, but as a young trader, you don’t have that luxury. So, what have experienced traders get per year? 13-14% per year return is top for very best financial advisors. A very rare and small group. Unique occurrence in the form of Warren Buffet will profit with a 20% return per year.

So at best, on $100000 you profit 20%, and that’s 20000 dollars per year before taxes. Or to bring it more into the perspective of monthly living, which is less than 1700 dollars per month. Can we go with 1700 dollars per month? Does that sound like a comfortable life, or can you even say you can make ends meet on that amount? As a professional trader, that would be all you get and if you spend it on daily living, you would be limited in investing further. So, after many years, what you have to work with is less than average yearly income, and that is if by some miracle you get a 20% return. So, that’s the direct answer to the question. Don’t despair, read the rest.

Luckily, there are companies out there, that are willing to invest in you and give you money to trade in their name. Of course, they are willing only if you prove yourself worthy, with properly setup systems and consistent results over time. But first, understand, that to master Forex trading it is necessary to suppress emotions, to be able to easily overcome losses and deal even with wins. That will start providing consistent results. Consistent results will give you an in-depth view of your system, and you will be able to fine-tune it to out give even better results.

Now, starting with demo accounts or small accounts is beneficial to smooth out the trading process, see where you are thin, and to show that you can do good trading in the long run with steady results. This is how we want to present ourselves to trading companies. When they engage you, trading companies will arrange their own tests. They will set a test period and see how you do under pressure, which is usually about 6 months. Don’t be upset by this time period, there is no other way for them to expose lesser traders that can’t maintain steady results. Constant results are hard to achieve, and that will separate a “trader” from a professional trader.

So, back to the question, how much money do you need to trade Forex professionally? Here is a more extensive answer. Not that much. There are a lot of trading firms out there, with lots of different options, and joining them can cost no more than a couple of hundreds of dollars. You just have to have the good sense to trade and be patient enough to build a good system that will attract trading firms. Then you have to be able to prove that system and stay consistent. If you want, you can also start a small account and trade in parallel with your trading firm.

Hopefully, you will see these lines as a guide, to help you save a fortune on burnt accounts, time, and unrealistic expectations. We hope, with this article, to shorten the amount of time to create good traders. Long term traders, that are not all about “easy money”, and in that way enable a dream of sustainable, comfortable living.

Categories
Beginners Forex Education Forex Basics

Questions in Forex Trading: The Good and the Bad

People often wonder how successful traders get such good results doing forex and what they discover is often not quite satisfactory. Browsing through available sources on this topic, a great number of individuals expect straightforward answers which would guarantee immediate success. However, this may not always be possible. Many amazing forex traders out there earned […]

People often wonder how successful traders get such good results doing forex and what they discover is often not quite satisfactory. Browsing through available sources on this topic, a great number of individuals expect straightforward answers which would guarantee immediate success. However, this may not always be possible. Many amazing forex traders out there earned […]

People often wonder how successful traders get such good results doing forex and what they discover is often not quite satisfactory. Browsing through available sources on this topic, a great number of individuals expect straightforward answers which would guarantee immediate success. However, this may not always be possible. Many amazing forex traders out there earned their success through trial and error, attempting and failing over and over again. Do not let yourself underestimate the power of learning from making mistakes in the search for a better approach to do this type of business. Theory and practice ought to go hand in hand, completing each other to provide you with the best possible set of skills you could use in practice.

Sometimes, you will not have the opportunity to find resources you may need, which only implies that you will need to come up with a solution yourself. It often happens that we are forced to become creative in our careers, which can eventually set you apart from the competition. What is more, if you are truly seeking to become an expert earning profit from forex trading, you cannot expect to always look for second opinions. Building your integrity and independence is simply essential if you are after professional and financial stability. Nonetheless, if you are new to this and you still feel shy to experiment, do not feel anxious – just keep exploring your options, take in as much information as you can, and most importantly stay focused.

If you feel that you have consumed a great portion of available material concerning forex and you still have a few unresolved questions lingering on your mind, then this is the place where we discuss what constitutes a good question and which ones belong the opposite group. However, let us first define what good and bad means in this respect, as these could be pretty vague categories in general. Since we are talking about business mindset and trading, a question considered to be good is naturally the one that could help you prosper in this market. Also, such questions are positive because they result from constructive thinking based on either the materials read or the real need to gain a different perspective on a specific issue.

Bad questions, on the other hand, are those which can hardly get you anywhere. In most cases, these typically consist of uninventive and unimaginative questions, which have probably already been discussed extensively in various media. Of course, the good-bad ratio is not black and white as we can all sometimes overlook some piece of information or simply happen to lack relevant experience, but the general advice is to always strive to immerse yourself in all types of learning as opposed to leaving an impression of a superficial, uninterested, or unprofessional individual. So, before you let yourself ponder any longer, make sure you set your ideas, impressions, and inquiries straight and align them with your ultimate objective – the goal of being a great trader and earning a profit as a result.

If you still, however, find it difficult to distinguish the good from the bad, consider the sample of commonly-asked questions and related explanations provided below. Note the questions asked are by amateur traders and are answered by a group of professional prop traders.

Bad Questions

Is hedging as a good strategy in forex?

In the world of investment, hedging is a term that denotes the practices money managers and investors apply to lessen and control potential risks. From the practical point of view, hedging could signify going long on a particular currency while also taking up the short position on the very same currency. Although this may sound like a contradictory approach, it actually grants some secure activity to forex investors doing very long trades during sluggish periods. However, despite its practical use, hedging naturally does not apply to all individuals involved with forex due to the fact that they are traders. Furthermore, these practices are not permitted in all places of the planet, and if you do not do your research properly, you may face significant problems in the United States, for example, where hedging is officially banned. What this further implies is that not only is this approach illegal in certain areas, but there are professional traders whose achievement never depended on hedging.

The rationale behind this example is that seeking answers should be backed up by very specific research. Besides, if you ever face a term which you have to do research on, start asking questions why that is so, rather than how to utilize it. Quite naturally, people across the world can have varying experiences as they rely on different methods at times; yet, why would you want to pursue an approach which thousands of forex traders do not really need? As portrayed by this sample question, putting effort into understanding some phenomenon, deriving genuine conclusions, and recognizing the fact that some questions may simply answer themselves can be crucial – both in some situations involving risk and as skills you may wish to develop and utilize in the future.

How do you approach the topics of supply and demand in forex trading?

While supply and demand are important terms in business in general, they hold little relevance in trading currencies, which is what forex is essentially about. The prices around which trading revolves are mostly determined by the direction of the majority and the reaction of the big banks. Therefore, trading has inherently very little to do with the notion of supply and demand in terms of meaning and importance they may have in other fields, which is truly a focal point for study, especially for all traders beginning their forex careers. Why this is deemed bad lies in the fact that there is a faulty belief constituting the question. To be able to grow in the world of forex is to delve into this topic, considering its true essence and all key factors regardless of some common business terms which occasionally have little to do with the notion of trading currencies.

Is TradingView as a charting platform useful for forex trading?

Traders can get very creative while exploring viable options for improving their trading careers, yet they sometimes rush to extend their selection of useful techniques and resources without having previously studied the available advice and stories on what has already rendered success in practice. In terms of charting platforms used in forex trading, MetaTrader 4 (MT4) and MetaTrader (MT5) are often praised for having the greatest number of indicators. Of course, searching for additional tools that could help you with trading is not bad itself, but why would you limit your options to a platform offering fewer indicators? As TradingView is frequently mentioned in the comments’ section in blogs and under videos discussing forex, a few other important ideas naturally arise.

While listening on what works best for growing your finances with forex is crucial, so is your ability to analytically assess whatever you browse through. Even when something is repeatedly mentioned or suggested in various ways, you need to take an objective standpoint to analyze whether something could be useful or not. In the case of TradingView, consider how many people try forex every year and, even if only a small percentage of them inquired about this particular platform, imagine how many comments there would be after a few years. Therefore, the quality of a charting platform is not determined by popularity, or design for that matter, but by its ability to give the highest number of indicators, which would naturally give you an immediate advantage.

How can I calculate the pip value on the ATR?

The question above concerns some of the most extensively discussed topics in the world of forex trading. You only need type pip value on the ATR in your browser to get an immediate response, in addition to numerous blogs, videos, and posts elaborating on this at length. While the search for the answer to this question does pinpoint to a degree of carelessness on the behalf of the inquirer, there may be some other reasons behind failing to understand something so widely discussed across various media channels. For example, a portion of traders may find the difference between yen and non-yen pairs quite challenging to figure out, but thankfully, there is always a way to get around this issue. As with trading with real money, demo trading can also give you some invaluable insights, especially when you fear that your lack of knowledge could hinder your growth.

After doing some very simple math, which you could first look up online, you can actually understand what an ATR value is indicating and use this knowledge to make a real profit. Consequently, traders have different ways to gather information at their disposal nowadays, and owing to practical tools, both those with and those without experience can now see whether the previously acquired information applies in reality. What we should never do, however, is expect to make a profit without at least putting some effort into research, which this question clearly signals.

How can I find a volume indicator?

Even though we may come across various questions which can vary in many ways, some questions are not really aimed at looking for answers the way we think. Some traders can get extremely anxious hoping to become successful in trading that they fail to acknowledge the importance of a learning process. Some other traders may, however, have ulterior motives, where they are not, in all honesty, asking for assistance to learn, but trying to win specific information which would save them time and effort. Although this is not illegal or forbidden, it does raise a few questions regarding integrity. Not only are there already numerous information pointing to obvious conclusions, asking someone to do your part of the job is not a way for anyone to start their own success story. This entire paragraph can boil down to this one key advice – learning is a process that undoubtedly takes time and energy, but it also pays off in time. The materials on forex trading which you may come across are not meant to prolong this period, but save you from having to learn the hard way. If you are truly intent on pursuing a forex trading career, be ready to patiently devote a section of your life without looking for shortcuts.

Good Questions

Can you recommend a broker?

Asking for a recommendation is always a good option because you can get some honest and clear response to your inquiry. Different video makers and blog/post writers sometimes comment on other people’s work, but what traders need to bear in mind when looking these up is that such recommendations can be affected by several factors. Depending on the degree of professionalism and knowledge, the recommendation you are receiving can be heavily reliant on personal opinions and potential deals between the involved parties, among others. Moreover, the recommendation may not involve actual money, which only proves how testing someone’s knowledge or skills did not take place before giving them a recommendation.

The traders’ task, as always, is to test whatever they see, comparing and contrasting the information they are presented with, so as to limit the damage as much as possible. As your knowledge and experience build-up, you will learn to spot the weak points and identify what is valuable in whatever source you turn to. That is why expansion to other markets outside the local one could be extremely beneficial – the more information and practical knowledge you possess, the faster you can profit from trading, especially if you start dealing with other assets, such as metals for example.

Would you recommend the use of divergence in trading?

If your prices are heading the other direction from the indicator, which is called divergence, you could gain some very useful information on the current trends. Divergence can be either positive or negative depending on the way a price is oscillating and, although it does signal some unusual activity, not all professional traders rely on this tool to determine how the prices will move. While thinking about trends and the interest foci is relevant, you can simply run a test trade with your demo trading account and see whether divergence could be of help to you in assessing a price’s momentum.
Would you consider automation or expert advisor (EA) based on a specific trading style?

With automation and EA available in the world of forex trading, the thought of having such a product custom made according to a successful system would definitely have its advantages – from simplifying trading to alleviating the difficulty of the challenges which traders face daily, to list a few. Nonetheless, automated trading can have its drawbacks unless properly designed; for example, news avoidance is said to be crucial because of its potential impact on the outcome of a specific trade. Although the existence of an automated product designed specifically for forex trading is not a matter of question or speculation, every trader at the beginning of their career should learn as much as possible before placing all their faith in a program without having learned how to be independent first.

If a received a signal to go short on GBP/CAD currency pair and another signal to long on the AUD/CAD one, should I opt for the first one?

If we compare the two currency pairs, we could see how the Canadian dollar is the one neutral currency among the three. The person who proposed this question probably assumed that the British pound is going to be weak because they received a signal to go short on the GBP/CAD. In addition, they could conclude that the Australian dollar is going to be strong since they received the long signal on the AUD/CAD. Based on these pieces of information offered by the system, they may be wondering if the best option would be to trade the strongest currency against the weakest one, going short on the GBP/CAD. While this may be inviting, the best advice here would be to do the two trades signaled by the system, without any alterations or deviations. What is more, going long on the AUD/CAD and going short on the GBP/CAD is in fact similar to going short on the GBP/CAD, which resembles a hedge to your advantage. Therefore, following the system’s indicators without overexposing to one currency is a secure way to enjoy trading currencies.

With such a great number of RSIs, should I test them all?

Despite the number of RSIs (the relative strength index), any professional trader would advise you to test all existing variations. Testing allows traders to learn how a tool or an approach works in real life, and many of the indicators discussed and used nowadays are in fact derivatives of the previous versions. Do not get uncomfortable testing an older RSI variation which has not been used for a while because any experience with a particular indicator could provide you with information you could use some time soon. Such versions may not serve the market of today, but with some adaptations, they can serve even present-day needs despite the fact that they were designed a few decades ago.

In the choice of good and bad questions, the focus was always placed upon a few important areas of concern. Browsing through materials discussing forex trading from the perspective of useful tools and strategies used in practice before is the one step every trader should do. This approach is supposed to prevent you from walking in the dark and needing to learn from your own failures. However, do not judge the age or the popularity of the materials, methods, or tools you come across, but run a demo trade and test how these work in reality. Furthermore, if you compare the good and the bad questions provided above, you will see that one of the main differences in the level of knowledge the inquirer possesses. If you are determined to make forex your career, then you cannot allow yourself to lack basic information.

Nevertheless, cramming theory is counterproductive, causing equal damage to the person who did not take time to assess various pieces of information they have gathered on this topic. Any development includes the necessary analysis stage, so by offering you the examples above, the text aimed to point out the differences between the questions which result from deep thinking about the acquired knowledge and the ones stemming from the lack of facts or original thoughts and insights. If you are a diligent and hard-working person, you will surely push against all limitations coming your way and, truth be told, this systematic approach is the only one that will help you succeed.

Sometimes you may feel that a particular question is blocking your progress, while it may not be the case in reality. Surely, the more self-reliant and independent you become, the faster you can prosper, and the best gift you can give yourself is honoring this process. Looking for information, searching for answers, reading, and watching everything and anything you can find on this topic, as well as applying analytical skills will allow you to get there faster than traders were able to a few years back. If you do want to become more involved in community discussions, as an avid reader and a conscious thinker, you are at a much better position of getting the questions right, thus gaining the opportunity to make a real difference while trading.

While blogs and video makers are eager to answer each of their follower’s questions, show respect by avoiding asking boldly for clues which should be your responsibility only. Such attempts at finding shortcuts reveal a mindset very different from the one prerequisite to forex trading, which naturally requires patience and focus. If you continually get proof that forex is not the best choice for earning money for you, there are plenty of other options you could choose, such as stock market trade. Whatever you do, hence, should involve clear thinking and asking the right questions. There’s no such thing as a stupid question, but consider what your choice of question is saying about you as a forex trader.

Categories
Forex Basics

Avoiding the Price Action Prediction Trap

Price action is a vital part of trading forex. It can be an extremely powerful ally or a devastating enemy depending on how you have approached it. Unfortunately, a trap that a lot of traders fall into is the thought that they are able to predict the price action within the markets, you may have […]

Price action is a vital part of trading forex. It can be an extremely powerful ally or a devastating enemy depending on how you have approached it. Unfortunately, a trap that a lot of traders fall into is the thought that they are able to predict the price action within the markets, you may have […]

Price action is a vital part of trading forex. It can be an extremely powerful ally or a devastating enemy depending on how you have approached it. Unfortunately, a trap that a lot of traders fall into is the thought that they are able to predict the price action within the markets, you may have been trading for the past few months to a year, on occasion you have stated that it will move one way and it has, this can give you confirmation biases towards your own abilities to predict the movement.

If you have ever watched a football (soccer) match on TV and predicted a goal, or a penalty, or anything like that and you are right. The next game you watch you predict it again and it is right again. The third game comes along and once again, your prediction is right. So you decide on the 4th match to put down some money, you are confident because every other prediction you had was right, well not this time, it goes against you and you lose.

This is exactly the same mentality that a lot of traders get when it comes to predicting price action within the markets. It is possible to gauge and see small price movements, we won’t deny that, but the overall trend and changes in that trend require far more analysis and knowledge than just looking at previous and current charts can give you.

Predicting without analysis is gambling, that is the simplest way to put it. When you analyze something you are looking at the various probabilities that are available, stacking them on one side, eventually you have enough probabilities to work out exactly which way the markets will move. Making that choice gives you an advantage over the other side, however, this does not mean that it will always go your way.

Many newer traders actually need this experience, a boost in their confidence and then a loss based on their precision, it is a humbling experience that can help to cement the idea that further analysis is actually needed and that predicting price action is not easy, ultimately bringing them back down to earth and allowing them to start learning how to analyze rather than predict.

There is the catchphrase saying of, “Say what you see”, so in Forex, it is important to trade what you see, and not what you think. Getting that I know better mentality out of the way is vital if you wish to become a successful trader. Remember that it is the markets that are in charge and not you, so it doesn’t matter where you think it will go. That may seem harsh, but it is a lesson that a lot of newer traders need to learn.

Categories
Forex Basics

Five Unfortunate Truths About Forex Trading

Trading and forex from the outside can seem like a fantastic way to make money. In fact, those without a lot of money often see it as a way that they will be able to make a little bit extra on the side, or for some, the dream to become rich. Unfortunately, things aren’t quite […]

Trading and forex from the outside can seem like a fantastic way to make money. In fact, those without a lot of money often see it as a way that they will be able to make a little bit extra on the side, or for some, the dream to become rich. Unfortunately, things aren’t quite […]

Trading and forex from the outside can seem like a fantastic way to make money. In fact, those without a lot of money often see it as a way that they will be able to make a little bit extra on the side, or for some, the dream to become rich. Unfortunately, things aren’t quite as rosy once you get in and there are some hidden truths that you only really discover once you have a better understanding of what Forex trading actually is.

So let’s take a little look at some of the unfortunate truths about trading and what they actually mean.

There is No Single Best Strategy

When you look at the markets from the outside, they either go up or down, easy to predict right? Well no, there are thousands of factors that affect them, some far more obvious than others. This is why there are so many strategies out there. With there being so many, it makes it clear that there isn’t a single strategy that works for everyone or for every market condition, due to this there is so much that is needed to be learned. If you try to stick with a single strategy, it may work for a while, but eventually, the markets will go against you and you will suffer some losses.

You should note though, that just because there is not a single strategy that always works, it does not mean that you cannot be profitable, instead, you need to manage your risk and to learn elements of various other strategies, this way you can adapt and also protect your account from market changes.

You Need Money to Make Money

Many come into trading with a small amount, while it is possible to be profitable with a small amount, it will be a very slow process and there is a far greater risk that you could blow your account and lose your initial deposit. Like many things in life, you need money in order to make more money. The more that you have the more likely and also the easier it will be for you to make money. With a larger amount, you can use far better risk management techniques, and also each trade will ultimately bring in more profits.

You should also note that by having smaller amounts, it can cause other issues such as greed or may cause you to make additional mistakes in the pursuit of growing the small account as far as possible, this is more likely when focusing on the profit and loss on the account. You certainly can be successful off a small amount, but if you are depositing $10 and expecting to become rich, you may be disappointed.

You Will be Wrong at Times

We mentioned that there won’t be a single strategy that will work all the time, even the most successful ones. Due to this, it should be clear that you won’t actually be right all the time. In fact, there is a good chance, especially when starting out that you may be wrong far more than you are right. The good news is that you do not need to be if you are using proper risk management, then depending on your strategy, you can still be profitable with a win rate under 50% and even under 40% with many strategies. Due to this, it is important that you do not focus on winning, you need to focus on learning the markets and also making sure that you stick to your trading plan, this is the only way to be profitable in the long run.

You also need to be able to identify changes in the markets, when something changes, you also need to adjust your own strategy and plan in order to adapt to the changes, this is the only way that you will be profitable, but remember, you do not need to chase wins, stick to the plan and even with more losses than wins, you can still be profitable.

You Will Miss Out on Opportunities

The markets are a 24-hour opportunity, unfortunately, you are not. There will be a lot of times when there are some big movements in the markets that are perfect for your strategy, the only problem is that you are at work or asleep. It is important to understand that you won’t be able to get on every opportunity, it is important that you do not look at the things that you missed, they have already gone, you need to continue to focus on what is coming up. If you have just missed something, do not jump in anyway, the opportunity has gone so let it go, there will be plenty more for you to trade. If you are up and trading during the busier London or New York sessions then you will be able to sharpen your skills a lot quicker as the markets are often moving at a much faster pace.

It May Not be Suitable for You

Trading just is not for everyone, in fact, the majority of people will end up hating it, you need to be able to take in a lot of information, you also need a lot of time and dedication which can make it a lonely job to do. If you are not able to put in the time, effort, or have the patience to learn, then you will be on route to a loss. Many people just do not have the mindset for trading, which is absolutely fine, there are other things that would much better suit your style.

So those are a few of the things that people on the outside don’t necessarily see about the Forex and trading market, if Forex is for you then you will do great, but remember, it takes a lot of time, effort and patience, as well as money to become successful in the markets.

Categories
Forex Risk Management

Preparing Yourself For Trading Losses

Preparing for losses, it sounds a little counter-intuitive doesn’t it? Yet it is a vital part of trading, losses will happen, being prepared for them can mean that they have a far smaller effect on both your account as well as your psychological state. When you take a big loss or multiple losses in a […]

Preparing for losses, it sounds a little counter-intuitive doesn’t it? Yet it is a vital part of trading, losses will happen, being prepared for them can mean that they have a far smaller effect on both your account as well as your psychological state. When you take a big loss or multiple losses in a […]

Preparing for losses, it sounds a little counter-intuitive doesn’t it? Yet it is a vital part of trading, losses will happen, being prepared for them can mean that they have a far smaller effect on both your account as well as your psychological state.

When you take a big loss or multiple losses in a row it can put a real strain on your emotional and psychological wellbeing when it comes to trading, you will often feel down, annoyed and lose a lot of your motivation to trade, it could depending on your mentality cause you to make some slightly more reckless trading choices. Sometimes it is even the trades that you had the most confidence in that go against you which can hit you even harder than was “the” trade but it still went wrong.

There is something called emotional trama, this can sometimes happen when there has been a threat to our perceived safety and security, taking a large loss can have this effect on someone as the safety of their account and their own abilities are being called into question. So we know what it is, how do we go about protecting ourselves from it? It sounds a lot simpler than it is, but we need to be able to prepare ourselves for a loss.

The first and primary way to do this is something that you should be doing anyway, having a risk management plan in place, this won’t prevent you from making losses, but it will help to prevent you from making large losses that could have an effect on your confidence. With a risk management plan, with each trade, you know exactly how much you could potentially lose. So when those losses do come, and they will come, it won’t have too much of an effect on you because they have been reduced by the risk management plan that you have put in place.

Take a little look at any successful trading strategy, can you find one that doesn’t have any losses? No, you cannot, because they do not exist, losses are a part of trading, you need to be able to understand that if you are going to have a chance at success if every loss makes you feel bad then you are probably in the wrong business.

So preparing for losses is very negative sounding, do not get it mixed up with aiming for losses, of course, you shoulds till be aiming to win every single trade, but that is just not realistic, that is why the risk management is so important, a loss is when a trade goes wrong, so reducing the effect when it does go wrong is paramount.

Losses are a part of trading, being able to recognize that will help you to prepare for the losses, of course, we should be aiming for wins, no one likes a loss, even the most veteran traders would prefer not to have them, but they are a form to teaching and the way that you bounce back from one is testament to your own psychological well being and the strategy that you have put in place.

Categories
Forex Basic Strategies

What Is ‘Gawk the Talk Strategy’ & How To Trade It Effectively?

Introduction

Introduction

Introduction

Trading the news is one of the best ways to make a profit within a short span of time. This is because volatility is highest during these announcements, and traders look to capitalize on these news releases by analyzing the data and the price movement.

The strategy we will be discussing is amazingly suitable for traders who love the volatility associated with news announcements. One of the biggest advantages of trading the news is accessibility. Today, we can access the news outcome as soon as they are released without any delay.

Many free websites report economic events every day. The one which is widely used by investors and traders is a site called forexfactory.com. This site is user-friendly, and the economic calendar allows us to view the upcoming news at a glance.

The news that has red-coded flags linked to them have the greatest impact on the currency pairs. We will prefer to trade the news events with the highest impact as opposed to the orange or yellow ones because the possibility of large movement is high. Today’s strategy is also based on such news releases.

As the actual and forecasted figures are extremely important for this strategy, we will be watching these numbers very carefully. That is the reason why this strategy is named as ‘Gawk The Talk.’

The top news announcements that cause the greatest moves in the forex market are Interest Rates, Gross Domestic Product (GDP), Employment Change, Trade Balance, Consumer Price Index, Purchasing Manufacturing Index (PMI), and Retail Sales.

Time Frame

Gawk the Talk strategy works well with the 15 minutes and 1-hour candlestick charts. This means each candle on the chart represents 15 minutes or 60 minutes of price movement.

Indicators

No indicators need to be used in this strategy.

Currency Pairs         

The strategy is suitable for trading all currency pairs; however, it is healthier to trade in currency pairs such as the EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD.

Strategy Concept

The idea of the strategy is simple, where we long on the affected currency when the actual figures are greater than forecasted figures by a minimum factor of 15%. To lower the risk, we focus on news events that are related to the U.S. economy. Which means we will be primarily trading the U.S. dollar either as the base currency or counter currency.

We will use the 15 minutes time frame chart to determine our entries since the news is usually released in 15-minutes intervals. Some common times of news releases include 8 A.M., 9:15 A.M., 10:30 P.M., and 11:45 P.M.

For example, if the Reserve Bank of Australia raises the interest rates, we will go long in AUD/USD. And if the interest rates are lowered, we take a short trade in the pair. For news announcements that affect the United States, it is best to trade in the two most liquid pairs: EUR/USD and USD/JPY. Remember, we go long in the pair if the news outcome is positive for the base currency and ‘short’ in pairs wherever the currency is a counter currency.

Trade Setup

To illustrate the strategy, we will use the Unemployment rate news announcement, which was released on the 2nd of July 2020. As mentioned earlier, we will be dealing with currency pairs involving the U.S. dollar only. Hence, depending on the news data, we will take a suitable position in the EUR/USD pair.

Step 1:

The first t step is to go to the forex factory website and look for news releases that have the highest impact on the currency. The easiest way to find such events is to look for the red-colored flags on the left-hand side of the event. We will not consider any other news results other than red ones.

In this example, we will be analyzing the Unemployment rate data of the United States.

Step 2:

An important point most traders miss out while trading using this strategy is that they trade just based on the numbers. They forget to look at the charts from a technical angle. In this step, we mark the key technical levels on the chart based on the current state of the price.

As we can see in the below image, just before the news announcement, the price is at the resistance area. This means a ‘short’ trade is considered to be less risky than a ‘long’ trade at this point.

Step 3:

This step is the crux of the strategy. In this step, we take an appropriate position in the currency based on the news’s outcome. If the actual numbers are higher than the forecasted numbers, we will go long in that currency. Likewise, if the actual numbers are lesser than the forecasted numbers, we will go ‘short’ in that currency. The difference between actual and forecasted figures should be a minimum of 15% before we can take enter the market.

In our example, we see that the Unemployment rate was better than what was predicted by economists. This means the data is positive for the U.S. dollar, and thus we can expect bullishness in the currency. Therefore, we take a ‘short’ position in EUR/USD soon after the market falls from the resistance.

Step 4:

Stop loss for the strategy is placed just above the news candle, which is technically the right spot for placing the stop loss. The take-profit is also placed at a key technical level, which could be a hurdle for the trade. The risk to reward ratio of trades placed using this strategy is a minimum of 1.5. However, one should book partial profits at the halfway mark in order to lock in some profits.

In this case, the price moved about 60% of our take-profit, where would take some profits off. However, more often than not, the price does hit the take-profit levels.

Strategy Roundup

The strategy we discussed today is mostly for the aggressive traders and people with large risk appetite. In this strategy, we are essentially taking advantage of the volatility and the fundamental factors that affect the currencies. The trade management rules of the strategy ensure that we don’t make huge losses even if the trade does not work completely in our favor. Cheers.

Categories
Forex Assets

Trading the EUR/USD Pair the Prop Traders Way

Prop traders are the elite in the trading game on Forex. They do this for a living and their gains are consistently way better than with any treasury note, saving account interest, and even mutual funds investment. If you are not new to Forex you have probably heard about the 99% of traders that breakeven […]

Prop traders are the elite in the trading game on Forex. They do this for a living and their gains are consistently way better than with any treasury note, saving account interest, and even mutual funds investment. If you are not new to Forex you have probably heard about the 99% of traders that breakeven […]

Prop traders are the elite in the trading game on Forex. They do this for a living and their gains are consistently way better than with any treasury note, saving account interest, and even mutual funds investment. If you are not new to Forex you have probably heard about the 99% of traders that breakeven or lose their accounts on Forex. The 1% that consistently win know what they are doing and proprietary traders are the top 10% of that group. When you are starting, it is almost certain you are trading on the EUR/USD currency pair. You are not aware of what is underneath the EUR/USD nice clothes. Here is what a prop trader by the name of VP from the Maverick FX prop company team has to say about this.

This is the most traded currency pair on Forex. Prop companies at its core are a team of elite traders that collaborate and excel at capturing the profits out of this market. They discuss what is going on, what is the best course of action and they release the report or a signal. The signal serves to other traders as to what is estimated to happen with a specific forex asset in a specified timeframe. More often than not, these signals are correct. As per their words, the EUR/USD pair is mostly avoided in their signals.

The 99% group we have mentioned above is trading the EUR/USD, the one that loses or breakeven at best in the long term. EUR/USD is also the most popular pair to start with. According to prop traders, trading with this pair is like having an affair with a celebrity. You will get burnt at the end. Before we move on with reasons, let’s understand what made prop traders to this position. It starts with a concept, a trading theory, strategy, indicator, tool, or method. All this is tested in different ways, mostly through practical backtesting and forward testing on various assets and timeframes.

Based on this data a consensus among top traders is made and can be adopted as a viable option trader can use to make consistent results. This has been done for thousands of indicators and theories, they know what works best to date. It turns out they are doing the opposite of what the 99% are doing, and it makes sense. What is even more interesting is the internet is full of popular “tips” majority of traders listen and become the 99% group. As you may presume, prop traders do not follow these tips.

Top 5 most traded pairs are the EUR/USD, USD/JPY, GBP/USD, AUD/USD, and USD/CAD. The EUR/USD cap is almost one quarter on the Forex. By looking at these pairs, you can notice they all have one in common, the US Dollar. Is this an issue? Prop traders say yes. But why the EUR/USD is the pair of choice for new traders?

This currency pair is often “offered” to them first, so they start trading exclusively on it. Also, all the rest of the popular tools are promoted to them as something that works. At a few busted accounts they either give up or, if they are open-minded and willing, continue to search out new ways of trading.

Beginner traders think they can get good at one before trying another. It is a common misconception that currency pairs all have a special way of price action. Apart from measured volatility specifics, price movements on every pair do not have any character! GBP/USD can have very calm periods, choppy and calm, volatile and uniform, sideways movement, spikes and it happens in cycles. The EUR/USD is no exception to this. Just when you think you have adapted your tools to it, it will start to behave differently, then again. It is the cyclic way economy manifests and it is also the way on forex. The order moves into chaos, chaos into order. Some strategies work better in one environment. For example, scalping strategies would benefit less volatile periods, while higher timeframe trend following strategies needs momentum and volume which causes volatility.

You will certainly notice the trading session spikes around the same time of course, but if we go back 50 days back or 50 days into the future, your trading results will be completely different. The EUR/USD in 2020 is different than the EUR/USD in 2019. Sticking to just one asset is not only unnecessary and a self-limitation, but it will also affect your account(s). The way to go is finding the pair that is adequate for your system at that time, ignore the others. The bigger the pool of pairs to choose from, the more opportunities where your system works best. This does not mean you should trade every currency pair there is, like extremely volatile/illiquid exotics.

The EUR/USD is the most liquid so that is why new traders focus on it. The EUR/USD is the most traded pair but that also makes it the most popular. Being popular puts you in that 99% group. Here is why this is a problem from different angles. Liquidity does not mean your trades will be more profitable nor it means the asset will have more “reasonable” price action. Retail traders do not have enough capital to move the markets, the liquidity pool is simply too big, at least within the major 8 currencies. Also, prop traders say the price spikes are less often on less popular currency pairs! So the notion of liquidity is better applies only if a pair is very exotic, like TRY/PLN.

Another problem with the EUR/USD having that 99% group is this is a world where big banks and institutions like to mess with them. If you do not know already what the big banks are doing, their manipulation is mostly done where the majority of traders are trading (popular) where they can extract the most money out of. This money goes back into the pool again and the cycle continues. In our Big Banks article, we mentioned that they know where traders’ positions are and move the price against their trades. News events are especially good for this since a lot of trades are focused on certain price levels in short periods.

Talking about the USD, it is a dominant currency and it is also packed with news events and the most manipulated. This brings us to the point where every currency pair with the USD is likely to be affected by this. Luckily, many pairs are not targets for big bank manipulation since they do not have a lot of traders, the 1% group which escape their hands from time to time. So to sum it up, here are some practical tips from prop traders you can apply and compare the results on your accounts:

Trade the EUR/USD only if you know what you are doing, expose less on this market, and do not limit your trading only on one asset. There is no specialization, no currency pair has a special way of price action, only volatility is different, If you are trading on lower timeframes than daily, you will notice volume spikes on certain trading sessions, but then again, every currency has its trading session.

Taking a wrong when you are just starting forex trading can be a danger to your effort. You may become accustomed to a certain asset, strategy, or tools that are not effective, or there are better alternatives you do not know about. This path is unfortunately easy to start walking since there are so many sources available the right paths are not easy to find. Keeping your mind open for other things to try will evolve your trading and your system for the better, it makes sense. Being adaptive will reflect on your system, it will too be adaptive as much as you are. This path is not the easy one, you will need to climb to that 1% group. Forex will filter out the ones who are not persistent, open-minded, emotionally in control, and the ones that gamble.

Source: No-Nonsense Forex channel

Categories
Forex Basics

Exploring the Differences Between Sports Betting and Forex Trading

With the rising number of testimonials discussing forex and the reasons behind individual success stories, correlations between sports betting and this form of trading found their place in many sources. Looking at the two terms, we can certainly think of quite a few similarities and differences, but can we answer the question of whether the […]

With the rising number of testimonials discussing forex and the reasons behind individual success stories, correlations between sports betting and this form of trading found their place in many sources. Looking at the two terms, we can certainly think of quite a few similarities and differences, but can we answer the question of whether the […]

With the rising number of testimonials discussing forex and the reasons behind individual success stories, correlations between sports betting and this form of trading found their place in many sources. Looking at the two terms, we can certainly think of quite a few similarities and differences, but can we answer the question of whether the background in sports betting can positively impact one’s experiences with Forex. Also, are there any logical connections or resemblance between a sports bettor and a forex trader? How likely will the success with one lead to success with the other? Should we expect equal success? And, are there any universalities or markers proven in practice that can determine how likely it is for an individual to profit from either of the two forms of making money?

While this article alone cannot grant you financial satisfaction and stability itself, it can offer you specific instructions as to what steps you may need to and want to take to have maximum opportunity to reach monetary gains either through Forex trading or sports betting. Learning about the most important and the most deciding factors which naturally divide the successful from the less successful forex traders and sports bettors – from character traits to key habits and routines – may be exactly what you long needed to apply in your approach.

What Type of Person Makes for a Good Trader? 

We first need to ask ourselves what kind of person is said to be good at these two types of ventures. Are they good analytical thinkers and natural masterminds behind difficult operations or are they gifted individuals, who were simply born this way, blessed by the stars? Now before we resort to checking our zodiac charts, we can rely on psychological facts stating that curiosity is one of the key determinants of success. Voracious minds have a hunger for learning, so if you are interested in sports or trading, you will find it easy to accumulate knowledge necessary to start any project of choice. A deep understanding of a particular topic gives you a real head start over others because your curious mind will always look for more information, searching for ways to define and describe everything you come across.

Another vitally important question which naturally arises after the previously mentioned point concerns the list of sources you are entrusting your time and money with. With a growing interest in ways to earn profit outside the traditional workplace and unrestricted access to various media, we cannot possibly discern how skillful or knowledgeable a writer or a video content creator is unless we have previously had some hands-on experience ourselves. Also, are you relying on numbers of follows and likes, or are you really allowing yourself to grow by expanding your horizons with some relevant and educational material?

The third key determinant is your environment. Are your surroundings conducive to developing relevant knowledge and skills? If you wish to have prosperity with either sports betting or forex trading, you may need to realistically and objectively assess whether the life you are living and the work you do support each other. Consider this real-life example – if you are doing a ten-hour quick-paced, no-time-to-rest type of job, it is highly unlikely that you will have any energy or desire to think about a strategy on how to put your betting or trading ideas and knowledge into practice.

Key Rules Governing Forex and Spread Betting

Next, how aware are you of the key rules governing both sports betting and forex trading. If you have had experience with sports betting, then you probably know some basic dos and don’ts which you may or may not have applied in the past. Just as with sports betting, understanding key principles of trading with forex is something that will essentially give you a value system based on which you will choose how to act. For example, understanding how a foreign exchange market works and what you as a trader can or must never do is the knowledge that will eventually decide for you, with or without your conscious involvement.

Of course, learning per se will not get you far on its own. Reading and watching can also be quite limiting without allowing yourself to practically apply the theoretical knowledge you have acquired. Playing safe, without allowing yourself to learn more about betting and trading, is also going to be insufficient if you desire to multiply your gains. Let’s say that you have done some sports betting in the past, so now may be the time to diversify. Learn about different sports and see how the system you have relied upon stands in comparison. The same applies to forex – consider different currencies and markets you can explore to widen your list of experience and achievement. Diversification will not prevent you from making mistakes, but it will allow you to grow your skillset and widen your perspective.

Now, we have reached the turning point which differentiates the intelligent type of person destined to experience success and the other one which could probably face more challenges than achievements attempting to earn a profit. If you think of school and formal education, you will find that what we are discussing here has little to do with that form of IQ. So, if we reflect on the prototypical conceptions about the word betting, we would most probably immediately think of a casino, which will serve a perfect example. We archetypally find two types of players with one always keeping playing until they lose everything, unlike the other. In the world of betting, we have quite a few examples of people who do not know when to stop. However, this quality of acknowledging your limits it essential if you wish to make a career out of either sports betting or forex trading.

Which Makes for a Better Career Option?

Although few individuals can claim that they are earning their living from sports betting, forex is an ideal opportunity to make a career and be successful in doing it. And, those who belong to that group of individuals understand one of the vital principles which shield them from failure – money (i.e. success) comes first. If you are looking for thrilling experiences, always running after an adrenaline boost, you are most likely doomed in this competitive market. Even when we think of the words trade and market, our minds would somehow be directed at an image of a successful business individual, which probably differs significantly for the image we get when we think of the word betting. You can blame it on ideology, bias, or poor judgment, but you should be honest and ask yourself the question of whether you have a betting mentality or an investment mentality? Learning to set your priorities ahead and follow your plan through will keep you on track, safeguarding you from falling for the thrill trap.

If you have a plan, but it keeps failing at bringing you sustainable profit, you may need to remove all obstacles. How can you do that? Well, you should primarily see what brings money into your pockets. Sometimes making decisions to stop certain activities is not that easy, but sacrificing fun for long-term financial stability seems like a decision worth making. You might consider options other than relying on trend lines and stochastics, grasping the insignificance of instant gratification. If the initial need to gather information involved expansion, long-term success now calls for singling out your golden eggs, focusing your vision like a hawk. However, be mindful of the difference between tunnel vision, which is characteristic of individuals who typically read one article and still naturally can’t see the forest from the trees, and this all-round, comprehensive vision with a specific focus, which distinguishes successful business people from the rest.

Being rational and objective with these endeavors should also be a necessary part of your approach. We have all heard about a John who bet on 15 teams in one go and won as well as Jane who turned $500 into a sum with a few more zeroes; however, this is not an allegory for nurturing hope, but a lesson for you not to chase a dream. You should always strive to set realistic goals and luck naturally falls under the big no-no sign on the road to success, and you do not want to run after a statistic which is as close to zero as it can get, hoping that your next lucky streak is around the corner.

The Role of Money Management

Despite their numerous wins and undeniable success, we have all witnessed very public bankruptcies of a great number of famous sports players after their careers ended. Aside from some unfortunate life circumstances, what this essentially implies is that there is a lack of an important skill which was responsible for their downfall – money management. What this term further means is that all people are required to foster and develop a profound understanding of how to handle and invest finances. We should all be asking ourselves what we ought to be doing to be receiving a constant flow of money as well as what would happen if I couldn’t keep doing what I do any longer. You can be extremely good at sports betting, for example, scoring wins as often as 50% of the times or more, but due to lacking proper management skills, your winnings may eventually go to waste without adopting a sustainable mindset.

In their essence, both sports betting and forex trading rely on a portion of external factors, sharing the common challenge for all people involved – superior bodies holding key information such as bookmakers for the former and banks for the letter. While banks are doing whatever they can to protect themselves, relying on your long-term strategy and applying steps suggested in this article will undoubtedly help you prioritize and focus. Sports betting, on the other hand, is very similar to any other form of betting, which is naturally even more dependent on other factors. This is the reason why our grandma could be shouting it’s the devil’s work down our ears, but it is also an alert for those who are still on the lookout for safer options.

Last but not least, in whichever situation you are now, whether you are considering moving from sports betting to forex trading or if you are thinking of immersing yourself into either of the two, bear in mind that your greatest ally is your ability to eliminate everything and anything which does not serve your purpose and that the most important skill is being disciplined with money. As the saying goes – you are the master of your own destiny, so consider your reward-to-risk ratio, carefully analyze all factors, and explore sustainable strategies for reaching financial satisfaction and success.

Categories
Forex Psychology

The Lifestyle of Forex Traders

What is like to be a professional forex trader? Not long ago, we had an interview with a high-profile forex trader named Arnold, he was speaking about the motives and transitions he was going through, why he became a trader and how that decision affected his life. When we asked him how he discovered forex, he said that in his mid-twenties he worked as an assistant manager at Abercrombie & Fitch store in London, drinking around with his lads, and always struggling to support his living. One day on his way back home, he was in the metro sitting next to the nifty guy and noticed him playing some strange video game on his mobile phone. He was curious so he politely asked a guy about the game.

What is like to be a professional forex trader? Not long ago, we had an interview with a high-profile forex trader named Arnold, he was speaking about the motives and transitions he was going through, why he became a trader and how that decision affected his life. When we asked him how he discovered forex, he said that in his mid-twenties he worked as an assistant manager at Abercrombie & Fitch store in London, drinking around with his lads, and always struggling to support his living. One day on his way back home, he was in the metro sitting next to the nifty guy and noticed him playing some strange video game on his mobile phone. He was curious so he politely asked a guy about the game.

What is like to be a professional forex trader? Not long ago, we had an interview with a high-profile forex trader named Arnold, he was speaking about the motives and transitions he was going through, why he became a trader and how that decision affected his life. When we asked him how he discovered forex, he said that in his mid-twenties he worked as an assistant manager at Abercrombie & Fitch store in London, drinking around with his lads, and always struggling to support his living. One day on his way back home, he was in the metro sitting next to the nifty guy and noticed him playing some strange video game on his mobile phone. He was curious so he politely asked a guy about the game.

The thing is that wasn’t a game, it was the Metatrader, which is a trading platform used by a large majority of forex traders. Later on, a guy said to him that he had been made fifteen thousand pounds the day before. Later that day, our guy spent hours on internet researching about forex trading, and that’s how his journey went on. Today Arnold is a professional forex trader and mentor to over one thousand beginners worldwide.

Here we are going to try to pull back the curtain a little bit on a lifestyle of someone who trades daily, and who is close to understanding and anticipating the landscape of forex trading. We’ve been listening to all the time about different daily routines. About waking up early, trading, drinking coffee, going to the gym, taking our vitamins, reading news, trading again, and that’s it. That doesn’t tell us a lot, to be frank. What we can expect from this lifestyle and what it is? For all of you flashy people who think that lives of traders are super glamorous, if you think that every day is going to be a P. Diddy video, hot girls wearing bikinis, drinking cocktails, riding around the pool on roller skates, you better think twice. There are a bunch of traders around wearing Rolex watches, driving Bugatti cars, having the latest gadgets, and owning multi-million dollar houses, but we need to be reasonable and put those commodities on aside for a bit.

Don’t get us wrong, being a forex trader is great, it could be super beneficial, but it takes a lot of effort and practical knowledge if you want to be in the game. In this world, we have as well, a significant number of low intelligence people and very desperate people that can be easily amazed by a flashy lifestyle of forex traders. They happen to think that forex trading is their way to the penthouse. Those people are bound to fail, no matter what you tell them. Arnold says it’s the first law of marketing: ‘Don’t advertise to intelligent!’ because at the very end someone is making money out of your ignorance. So be careful about what you take for granted. If you are a type of person who genuinely wants to know what it’s like to be a professional forex trader, we shall try to give some answers here because you can make pretty good life trading forex. Speaking further with our guest, he told us it could be helpful to live below our means.

We should avoid buying stuff we can’t afford. If we want to be successful, we should stop wasting our time, drinking a lot, feeling sorry for ourselves, or anything like that. As forex traders, we need to do everything we could to make our trading consistently profitable. For beginners especially, you guys are not going to be able to put yourself in a comfortable position where you can easily trade your money. It’s most likely you are going to lose all. So if we manage to present consistent results maybe somebody out there would give us money to trade for on their behalf. Eventually, some steady company might be a solution for us. Private coaching could be a potential source of income as well, for people who have a capacity for something like that, and if you find yourself confident about the knowledge that you are about to present.

Whoever wants to make a living out of this type of business, that person must be ready for the extreme inconsistency because there will be a lot of time not knowing how much money we are going to make the next day, the next week, or the following month. From this stand of point, it is going to be almost impossible to project the future or to make any plans. So the first moment when we actually taste the money and think we could sit back and pop the champagne cork or treat ourselves with a golden watch, we should stop right there and act accordingly because we simply don’t know just how long that is going to last. Hopefully, it’s going to last for a very long time, but if we don’t adopt a long game approach it might ruin everything we achieved. We should be better thankful for what we got and try to maintain a certain level of decent modesty. Instead of spending money on things we don’t need, we should consider to allocate our income into other businesses, other markets, or put our money in more passive income. Arnold emphasizes that he was constantly trying to build and build and add those layers of protection so this lifestyle he worked so hard to create never goes away.

So what is being a professional forex trader, what that lifestyle is? It is anything you choose it to be. If it’s private jets, exotic pets, and shiny jewelry, ok. But it might not last very long because it isn’t right kind of money management, investing in things like depreciating assets was always pretty questionable. You guys are free to do whatever you want to do with the money that you made, it is your money, but we are going to live a very long life hopefully, we might as well build that empire while we can. Most hi-expert digital nomads are mainly focused on flashy ideas rather than flashy possessions because that is the financial energy that we want to be involved with. Preservation should be our number one goal as Arnold likes to point out. So traders, understand that if we don’t take necessary steps to preserve our wealth it could all be gone in a blink of an eye, and it may never come back. So the real life of a professional forex trader is relentless work and dedication. We need to learn from our mistakes, write them down, find out what went wrong, what was behind that and we must be patient. Remember guys, the game is far from over, and whatever that dream of yours is, go and get it. The time is now.

Categories
Forex Psychology

Four Ways to Boost your Confidence while Trading

Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go […]

Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go […]

Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go through four simple, yet essentials ways how you can boost your confidence whilst trading.

Learn your trade.

The best way to boost your confidence in anything you set your mind too is to challenge yourself to learn all that you can about the subject. Subjects such as trading might be overwhelming at first, with so many trading styles, techniques, approaches, and terminology to learn, however, daily trading will set you on the right track to becoming knowledgeable and clearer in your daily trading decisions. Even when you feel like you cannot learn more about the subject, you will realize that although you have prepared yourself well, markets will remain highly unpredictable. Because of this, traders often find themselves feeling like they never know whether their trades will be successful or a waste of time. This is why shifting your focus onto your trading plan rather than your losses and profits, will help you become consistent, disciplined, and eventually profitable in your trading.

In today’s world, finding authentic and unbiased information online about trading techniques and plans might be a bit of a challenge, however sourcing out other traders like yourself through online forums or groups, is a great way to share and learn through other traders’ experiences.

Be confident enough to walk away.

Working with such an ever-changing environment, which is what trading is all about, can make it easy for you to fall into the trap of constantly sitting at your computer/device monitoring your trades. This can be detrimental both to your trades as well as your general wellbeing. Confidence comes with time and experience, however in the beginning, even though you might not feel confident enough to do so, you need to make yourself believe enough in your trading plan and be able to walk away from your trades, even if this comes at the risk of losing your trades. Even if you do lose out on your trades, remember every loss is a great opportunity to learn and develop your trading strategies.

Use your winnings and losses to become better.

Being successful at trading, especially for a long period, might make it easy for traders to become overly confident. A great way to keep your confidence within the ‘safe zone’ is to analytically reflect on your losses, to learn from those mistakes, but also to analyze your wins. Trading with small amounts that you can afford will help to make your losses feel more like learning curves rather than personal disasters. Some traders go on to say that your losses might be your most fruitful mentors. It is best to keep in mind that in trading, there are no winners without losers, so prepare yourself for many losing trades and learn how to extract the important information from each loss you will inevitably encounter.

Set your rules and follow them.

If you’ve attended trading training or if you’ve done your research online, you’ve heard of strategies, how to identify them, when to apply them and how to manage them once they’ve been applied. Strategies are nothing but a list of rules that help you to recognize and apply your methods for making a trade profitable.

Making your list of rules that accompany the trading strategy you’ve opted for, is a great way to keep yourself focused and motivated for your current and more importantly, your future trading. Many beginner traders, unfortunately, give up after the first few losing trades, however that moment when you feel like this might not be the best for you, is the moment when you learn the most.

Making yourself a clear list of rules, writing them down, and sticking them up where you trade, will make it easier for you to be disciplined. Set up rules such as – When will I trade, how much risk am I going to carry daily/weekly/monthly, what markets am I going to focus on, etc.

Your list of rules will change and develop as you learn more about who you are and where you stand as a trader. Consistency and discipline are the two main ingredients you need to have to help yourself develop the necessary confidence traders need to become successful. Do not expect to make massive profits on your first few trades, because the probability is, you won’t. Learn the basics, make your rules, stick to them, and believe in your choices. Happy trading!

Categories
Forex Basics

Which Assets to Trade During a Recession

When speaking about a recession, investing might not be the first activity that comes to mind, however, during these testing times, investors and traders can still source out industries that with or without a recession have to keep the wheel rolling. Being able to sift through the thousands of options available, the key essential service […]

When speaking about a recession, investing might not be the first activity that comes to mind, however, during these testing times, investors and traders can still source out industries that with or without a recession have to keep the wheel rolling. Being able to sift through the thousands of options available, the key essential service […]

When speaking about a recession, investing might not be the first activity that comes to mind, however, during these testing times, investors and traders can still source out industries that with or without a recession have to keep the wheel rolling. Being able to sift through the thousands of options available, the key essential service providers are what you should be looking at during these dire times we are experiencing now.

Another great way to seek out those investment opportunities during a recession is to look back at the most recent recession and find out which industries managed to stay afloat, or even strive during that period. Below are the top five industries that managed to plow on during the tough times.

Healthcare

Although the financial situation of civilians may be negatively impacted by a recession, there are certain products and services that we really cannot do without, the first on that list is healthcare. During this COVID-19 pandemic, populations all around the world are investing in healthcare products as well as medical equipment to help prepare the people and their respective healthcare systems to combat this new virus.

This is not to say that all health care companies will make it out successfully as there are companies with large debts and less cash flow that will, unfortunately, suffer too during this time. It would also be best to stay away from new and upcoming biotech startups which are still in their early phases which makes them riskier. Therefore, it would be best to source out companies that have a low debt-to-equity ratio as these are the ones more likely to perform better.

Food

Like healthcare, food is a basic necessity that cannot be spared. Looking at the recession that took the world by storm back in 2008, it seems like although populations tend to take a step back from dining out and purchasing expensive food to cut down on their monthly cost, they shift their purchasing to cheaper, pre-packaged food options. Again, looking back to 2008, we can see that popular brands such as Walmart, McDonald’s and other large food chains did relatively well during that tough period.

Freight and Logistics

The COVID-19 pandemic brought a halt to most air and sea transportation for people, however, goods are still being shipped and flown across the globe. Freight companies or companies that help to move freight from one country to the other are quite safe options when looking for trading opportunities during recessions such as the one we are currently experiencing.

Do it Yourself

By looking back at 2008, one can notice that although people are unlikely to go out looking to purchase new cars, furniture or properties, during tough times people tend to focus their time and effort on fixing/DIY projects around their household. Taking into consideration that this pandemic has put millions of people on lockdown inside their homes, home projects are definitely on the rise. Any large home and garden improvement centers, as well as auto retailers that focus on parts, might do better during these times

Discount Shops

The high unemployment rates currently plaguing countries all over the world, similar to 2008, people are shifting to more affordable and cheap essential items. When a person’s income is drastically decreased, they have 2 options, either to stop purchasing or to purchase cheaper options. When it comes to essential items, stopping purchasing is not an option, so discount stores such as Dollar General or Walmart are a safe option to invest in. Back in 2008, Dollar general rose by a whopping 60% in that year alone.

Needless to say, it is not only the above-mentioned industries that will most probably come out of this recession without too many scratches, however, but this list can also put you in the right frame of mind of what to look out for. Keep in mind, even from your own experience during recessions, what goods and services do you still require, what services are deemed as non-essential during these times and what would you prioritize if your income suddenly decreased?

Categories
Forex Service Review

FFx MACD Divergences Indicator Review

The MetaTrader 4 and 5 platforms come with one of the most popular indicators known to traders – MACD. FFx MACD Divergences build upon the already integrated indicator in the MT4 platform, extending the functionality especially useful for divergence strategy traders. This paid indicator is published on 4th July 2014 on the MQL5 repository and […]

The MetaTrader 4 and 5 platforms come with one of the most popular indicators known to traders – MACD. FFx MACD Divergences build upon the already integrated indicator in the MT4 platform, extending the functionality especially useful for divergence strategy traders. This paid indicator is published on 4th July 2014 on the MQL5 repository and […]

The MetaTrader 4 and 5 platforms come with one of the most popular indicators known to traders – MACD. FFx MACD Divergences build upon the already integrated indicator in the MT4 platform, extending the functionality especially useful for divergence strategy traders. This paid indicator is published on 4th July 2014 on the MQL5 repository and since then has no received much attention. The latest version has not changed since the initial placement and remains at 1.0. The author of this extension tool is Eric Venturi-Bloxs from Thailand. This author has no less than 52 products on the mql5.com, a good portion of that is free.

Overview

This extension indicator is simple. It adds hidden and classic divergences on the MACD averages and displays it in a single window for multiple timeframes. This way, traders that rely on trade filters based on higher timeframe divergences can have a glance if there is one. The display will show as many timeframes you set in the settings in multiple small subwindows. The addon on the tool is very simple but original and useful for the followers of the divergence strategies.

The settings available allows traders to set timeframes from M1 to Monthly, set the number of bars for each timeframe window, set alerts on various conditions, change colors, and so on.

Service Cost

The price of this simple and useful indicator is $10 for 5 activations and there is also a demo. The price is not high given the rarity of such tools.

Conclusion

User ratings are 5 starts but based on only 3 reviews since 2014. Still, it should be understood that this tool targets specific traders. One of the reviews perfectly describes how FFx MACD Divergences can be used:

“Woooooow!! love it! I trade low TF signals based on H4+Daily Divergence. Now when my indicator gives me a buy signal on e.g. M15 then I immediately see if there is higher TF divergence or not on the same chart. Trade Yes or No? Decision takes one second now. Thank you for this great tool and the cheap price Eric!”

The author developed similar small useful gadgets for other trading styles.

This Forex service can be found at the following web address: https://www.mql5.com/en/market/product/4900

Categories
Forex Fundamental Analysis

What Does The ‘GDP Growth Rate’ Forex Driver Say About A Nation’s Economy?

Introduction

Introduction

Introduction

GDP Growth Rate is the most critical fundamental macroeconomic indicator for measuring economic prosperity. It is the number one macroeconomic indicator, and all other leading, coincident, and lagging indicators are all trying to predict what GDP Growth Rate would be. Our fundamental analysis revolves around predicting the growth rate before the GDP Growth Rate reveals it. It is the de facto measure of economic growth for all countries worldwide.

The importance of this economic indicator cannot be understated. GDP Growth Rate figures move the markets like no other, be it the currency or the stock markets. Hence, understanding the significance of this macroeconomic indicator is paramount for traders and investors.

What is the GDP Growth Rate?

Gross Domestic Product

It is a measure of the total economic output of a country. It is the total monetary value of all the goods and services produced within the country regardless of citizenship (resident or foreign national). The commonly used term “size of the economy” refers to this economic indicator. The US is the world’s largest economy, and it means it has the highest nominal GDP or highest economic output.

GDP Growth Rate

GDP Growth Rate is the measure of the rate of economic growth. In other words, it tells the pace at which an economy is growing. Generally, developing or emerging economies like China, India, or Japan will have a higher GDP growth rate than the mature or developed economies like the United States, United Kingdom, etc.

Mathematically, it is the percentage change of Gross Domestic Product with regards to the previous quarter. Although the GDP Growth Rate is reported quarterly, it is annualized for better analysis and comparison. It means that the quarterly GDP is scaled to a year to compare the Growth Rate with the previous year and understand whether the economy is growing faster or slower compared to the previous year. 

The other reason is that the GDP Growth Rate changes according to the business cycle and is usually very high during the last quarter, accounting for holiday shopping from consumers driving up the GDP. Hence, annualizing with seasonal adjustment makes it more accurate for analysis. The Real GDP Growth Rate accounts for inflation and is the most-watched GDP statistic.

The GDP Growth Rate is affected by the four components of the GDP:

A | Consumer Spending: It is also called Personal Consumption. It represents spending associated with the end-consumers or the general population. The Personal Consumption Expenditure reports, Retail Sales, are all different economic indicators representing Consumer Spending. It makes up about 69% of the total GDP in the United States.

B | Business Investment: Economic Output of the Business Sector makes up 18% of the total GDP in the United States. Business Surveys like Purchasing Manager’s Index, Industrial Production, etc. help assess the Business Sector’s contribution to economic output.

C | Government Spending: It involves all the expenditures incurred by the Government to maintain and stimulate economic growth and run its operations. In the United States, significant proportions of Government Spending go to Social Security, Medicare benefits, and Defense Spending. It accounts for 17% of the total economic output for the United States.

D | Net Exports: It is the difference between the total exports and imports. Revenue is generated from exports and depleted from imports. Developing economies will mostly have positive Net Exports as it is an integral part of their revenue generation. The United States has -5% Net Exports of the total GDP, meaning it is a net importer.

How can the GDP Growth Rate numbers be used for analysis?

When the economy is growing or expanding, the GDP Growth Rate is favorable. When the GDP Growth Rate is increasingly positive, businesses, jobs, and personal income all grow followingly. Developing economies grow faster than mature economies (as the developed economies are already more saturated compared to developing ones). It is generally standard for matured economies to peak out at 3-4% GDP Growth Rate and developing economies can have anywhere between 5-20%.

When the economy is slowing or contracting, businesses will halt new investments and plans to avoid deflation. New hiring is also postponed; people will save more than spend to prepare for the oncoming deflationary conditions. The economy comes to a slowdown. The Government intervenes through fiscal and monetary levers to stimulate economic growth and bring it back to normal conditions and maintain the growth rate. Overall, the GDP growth rate tells us the economy’s health.

Impact on Currency

The GDP is a lagging macroeconomic indicator that has high-impact on the market volatility. Investors’ decisions are based on the GDP growth rate. It is a proportional indicator. High GDP Growth Rates are suitable for the economy overall and vice-versa.

Though it is a lagging indicator, it has many implications for the economy. It is the most extensive measure of economic activity and the primary gauge of the economy’s health. GDP Growth Rate comparisons amongst different economies are vital for currency markets, and hence, it has a very high impact on the currency market.

Economic Reports

For the United States, the Bureau of Economic Analysis releases quarterly GDP Growth Rate figures on its official website every quarter. The release schedule is already mentioned on the website and is generally released one month after the quarter ends. 

Major international organizations like the World Bank, International Monetary Fund, OECD, etc. actively maintain track of most countries on their official website: 

Sources of GDP Growth Rate

For the United States, the BEA reports are available here.

The St. Louis FRED keeps track of all the GDP and its related components in one place on its official website. You can find that information in the sources mentioned below.  

GDP & GNP – FRED 

GDP Growth Rate – World Bank

GDP Growth Rate – IMF

Impact of the “GDP Growth Rate” news release on the Forex market

In the previous section of the article, we explained the GDP Growth Rate fundamental indicator and saw how it could be used for gauging the strength of an economy. The GDP Growth Rate indicates how quickly or slowly the economy is growing or shrinking.

It is driven by four components of GDP, the largest being personal consumption expenditures. But economists prefer using real GDP when measuring growth because it is inflation-adjusted. When the economy is improving, the GDP Growth Rate is favorable. If it is contracting, businesses hold off investing in new technologies. If GDP Growth Rate turns, then the country’s economy is in a recession.

In the following section, we will analyze India’s GDP Growth data and observe the change in volatility due to the news announcement. The below image shows the fourth quarter GDP Growth data of India, where there has been a fall in the value compared to the previous quarter. The most critical and highest contributor to the growth of the Indian economy is services. Let us find out the reaction of the market to this data.  

USD/INR | Before the announcement:

We shall start with the USD/INR currency pair to study the impact of GDP Growth Rate on the Indian Rupee. The above image shows the ‘Daily’ time-frame chart of the currency before the news announcement, where we see that the market is moving within a ‘range’ and currently the price seems to have broken out of the ‘range.’ The volatility is high on the upside, indicating that the Indian Rupee is weakening. Depending on the GDP Growth Rate data, we will take a suitable position.  

USD/INR | After the announcement:

After the news announcement, we see a sudden rise in the volatility to the upside. The price moves higher initially, but selling pressure from the top makes the ‘news candle’ to close with a wick on the top. This was a result of the harmful GDP Growth data where there was a reduction in the Growth Rate from last quarter.   

INR/JPY | Before the announcement:

INR/JPY | After the announcement:

The above images represent the INR/JPY currency pair, where it is clear from the first image that the price was moving in a ‘range’ before the announcement, and presently it has broken the ‘support’ with a lot of strength. This is the first sign of weakness in the Indian Rupee that could probably extend. If the price remains below the moving average, a ‘sell’ trade can be initiated.

After the news announcement, the price crashes lower but immediately gets reversed, and the ‘news candle’ closes with a wick on the bottom. The initial reaction was a result of the weak GDP Growth Rate, which lead to the further weakening of the currency. Volatility increased to the downside due to the news announcement, which was on expected lines.

AUD/INR | Before the announcement:

AUD/INR | After the announcement:

The above images are that of AUD/INR currency, where we see before the news announcement, the market is in a downtrend, and currently, the price is at its lowest point. Technically, we should be looking to sell the currency pair after a price retracement to the nearest’ resistance’ level or an appropriate Fibonacci ratio. Therefore, depending on the volatility change due to the news release, we will take a pair.

After the news announcement, the volatility emerges to the upside, and we see a sudden rise in the price that also goes above the moving average. This was a result of the weak GDP Growth Rate that made traders to ‘long’ in the currency pair by selling Indian Rupees. The news release hurts the currency where the weakness persists for a while, but later, the downtrend continues.

We hope you understood the concept of “GDP Growth Rate” and its impact on the Forex price charts after its news release. All the best. Cheers!

Categories
Crypto Education

Forex Planning: Skills in Crypto Trading

Crypto traders love to engage in community discussions, sharing opinions of events, and jointly weighing their options. While group support has its psychological benefits, in the world of trading groupthink often implies a lack of independence and strategy. Therefore, to achieve sustainable growth and profit, traders sometimes need to go outside their immediate communities and […]

Crypto traders love to engage in community discussions, sharing opinions of events, and jointly weighing their options. While group support has its psychological benefits, in the world of trading groupthink often implies a lack of independence and strategy. Therefore, to achieve sustainable growth and profit, traders sometimes need to go outside their immediate communities and […]

Crypto traders love to engage in community discussions, sharing opinions of events, and jointly weighing their options. While group support has its psychological benefits, in the world of trading groupthink often implies a lack of independence and strategy. Therefore, to achieve sustainable growth and profit, traders sometimes need to go outside their immediate communities and adopt skills and knowledge externally. Based on the analysis of the crypto trading scene, one of the key areas requiring more effort and learning is planning, one of the essential pre-requisites for dealing with the markets we trade such as forex.

To generate long-term success, forex traders put the effort into understanding the market’s needs and analyze tools and information they gather through research. The most successful ones recognize the importance of constructively assessing the data they acquire because it will essentially serve to develop a plan and the strategies which will allow them to reach the goals they have previously defined. Of course, acquiring a good amount of money is plausible even without initially devising a plan but, in reality, these instances are merely coincidental, and to render lasting success, one needs to adopt an equally long-term approach.

A number of different testimonials and experiences point to the ratio between planning and outcome. If you are intent on trading cryptocurrencies and develop your trading carrier, you may need to let go of the lottery mentality and start viewing your participation in the market holistically, not as individual, unrelated steps. A macro perspective will help you see how your choices correlate with global events and where you can make improvements so as to mitigate losses and increase financial returns.

Remain Loyal to Your Plan (Within Reason, Of Course)

Making money overnight can often hinder one’s attempts to remain loyal to their plan, which can be detrimental to their entire trading careers. If we make a conscious choice to stick to the original idea of how we want to act in our market of choice, we often assume that such an approach would immediately generate constant money flow. However, devising a plan and committing to it also implies accepting that there would be periods of lower returns and no activity as well. Even when prevailing conditions seem to be unfavorable, every trader has a responsibility to assess the circumstances as objectively as possible, endure the hardship against all odds, and collect the profit at the best possible time.

With regard to investing, if you have already collected some crypto and you desire to obtain some more, you should be cautious about overleveraging. A trader who holds a cryptocurrency may not thus want to exceed 5% of portfolio value. Even if overall conditions worsen, with such an approach traders can still earn money from their investments. Moreover, the upside-downside ratio can be indeed helpful in gaining a new perspective on this matter, in that if everything collapses and a trader loses all money, the upside on such investment is incomparably more satisfactory. Therefore, if you use this strategy, you know that you can either lose only what you initially invested or truly amass a fortune.

Another important notion every crypto trader should incorporate in their planning is diversifying, as we cannot exactly predict which direction the crypto market is going to take in the future. Even if we turn to some experienced crypto traders for advice, we will learn that they may not necessarily be on the same page with regard to their outlook on different cryptocurrencies. Hence, the more we know about different coins, the more security we can guarantee in trading in the crypto market.

Hatching Your Escape Plan

Apart from practicing discipline, outlining a plan for your trading also entails defining an exit strategy. Protect your investment by thinking of how you can improve your buy and hold strategy for different coins and tokens and invest in developing money management skills. Despite the current favorable conditions in the market, every trader must absolutely think of various scenarios and have ready solutions both for the challenges which have already occurred in the past and the hypothetical ones.

Traders are often afraid of going after a huge return because they fear potential losses. As long as you weigh out the upside-downside ratio and construct a system where your foundation is always protected, you should follow trends and use all the chances to increase your finances. Every trader should create a hierarchy where the basis should denote the majority of their investment. Nonetheless, such a strategy does not imply that all other layers will not render any success, but one should bear in mind that the higher the layer, the higher the leverage is.

If we use cash or stablecoin as the base of our investment strategy, we know that all other investments we make will not endanger our stability. The very next step could involve bitcoin or XRP as the second most stable layer. Then, we can invest a smaller amount of money in altcoins of choice and possibly use several different coins because we may not always be sure which one is going to take off at that point. We can, as the ultimate layer, consider longshots because, even though we are not going to allocate large amounts of money for these investments, we are aware of the possibility of upside, which is essentially why we are devising this strategy incorporating these high-leverage investments.

We have yet to discover what the best time to buy is, but if you believe that there is a likelihood of any cryptocurrency moving in a favorable direction, you do not need to wait for it to plunge to any lower value before you feel certain that you should take this step. What is more, if you have analyzed the market, and especially if you have already seen some upside or witnessed a similar activity before, there is no reason for you to be shy and thus fail to earn a much greater amount of money. The ability to make such decisions for yourself is an extremely important part of being an independent trader who is not dependent on the news announcing upcoming events in the crypto market.

What Comes Next for the Crypto Market?

Looking into the future, traders feel optimistic claiming that the crypto market is not only going to persist but that some coins are going to gain in importance in the coming years. Some even state that bitcoin is going to become the main vehicle for all major global transactions. While the crypto as we know it may last the test of time, we cannot know for sure how the individual interest in the crypto market is going to change and thus affect the coins’ value. Even if the market keeps generating interest worldwide, we cannot tell which actions governments may take so as to alter the amount of money individuals get to earn.

History has shown how fiat currencies often have an expiration date and we cannot know for sure whether cryptocurrencies would take over at some point in the future. However, whatever the short-term and long-term circumstances you face as a trader, your greatest ally against external conditioning is planning. Incorporate objective thinking, money management skills, discipline, and strategizing into your trading and most importantly invest in nurturing independence, which will ultimately help you stay on track with your plan.

Categories
Beginners Forex Education Forex Basics

What Equipment Do I Need to Trade Forex?

So, you want to start trading on Forex, but don’t know what equipment you need? Scared that you might start something and then realize you are missing a part? What do we need before we start trading on Forex? Firstly, we need to know what or how “long” are we going to trade on Forex, […]

So, you want to start trading on Forex, but don’t know what equipment you need? Scared that you might start something and then realize you are missing a part? What do we need before we start trading on Forex? Firstly, we need to know what or how “long” are we going to trade on Forex, […]

So, you want to start trading on Forex, but don’t know what equipment you need? Scared that you might start something and then realize you are missing a part? What do we need before we start trading on Forex? Firstly, we need to know what or how “long” are we going to trade on Forex, meaning, we might be trading 15 minutes a day, or are we going to be a day trader.

Perception of stock trading, as you see in the movies, rows of monitors attached to a supercooled computer, is really not necessary – unless you are a day trader, who are forced to have that hardware because they need to monitor a lot of market and a lot of trades. And that’s a harsh way to make a living, as they are always stressed with large amounts of data. That stress transfers to their lifestyle, family, and it is mentally unbearable. But for a novice, that perception has that wow factor, makes you imagine yourself like a captain of a starship.

Imagine rows of monitors with currency pairs and news on CNBC and Bloomberg to stay informed…everything beeping and humming, but not all that shines is gold. For the amount of money needed to buy such hardware, you would probably have to be in some other kind of business first. Once you get on trading you will see it’s not necessary, and all that money spent on all that equipment you could not get back for at least 3 years of initial trading. What we would even recommend is buying used computers, because on the hardware side, luckily, we don’t need much. It’s a workhorse, it doesn’t need to be flashy. One laptop, or even a tablet, and a good internet connection is all that we need to trade on Forex.

The minimum requirements for the MetaTrader 4 or 5 platform are what most average grade old computers can easily handle. Note that once you become open for many other markets and indicators, the load on opened charts could become quite evident, so you might need to wait 30 seconds to a minute for all 28 currency pair charts. Of course, this is not necessary and depends on how you use the platform.

The network connection stability is a priority here. If you have an unstable connection you will experience a lag in order executions, feedback, and some EAs will not be able to work optimally. If you try scalping strategy EAs know they will not give you positive results in this environment even if they might be performing well otherwise.

Smartphones are a potential solution too, but given that their screens are small(ish) and are power reduced devices, using them may be awkward and uncomfortable. For example, you can have MT4 on your phone but can’t use custom indicators. Phones have yet to be developed to support this, or MetaQuotes might find some solution for their platform. The advantage of having MT4 or MT5 on your phone is of course mobility so you can manage positions on the go, but know that advanced technical analysis with indicators not included in the platform is not possible. So the best way to use it for alerts, emergency adjustments, and monitoring. Some traders even say that having forex in your pocket is not always a good idea especially if you become too attached to trading.

So, what we need to know is that you are not trying to impress anyone with your setup, you don’t need high power, flashy desktops with a bunch of charts on the wall made of monitors. People of less developed countries can have a go on Forex trading too, they just have to have a laptop. The beauty of Forex is that it is not bound to one place, you just need a laptop, you can be anywhere in the world and it will work. How many professions can be attributed to that? Freedom from desk, monitors, and keyboards, office cubical… To summarize, most of you are already equipped enough.

Categories
Forex Basics

Should You Participate in Forex Trading Contests?

Forex trading contests are the type of competitions where we use our demo accounts. Usually, there is no entry fee, it is just required to follow basic regulations of the competition. This is not something new for most traders and this type of trade is mainly created for people who are new in forex trading. For some traders, it might be a good way to get a name out there, opportunity to improve your skills, get a prestigious title, or win a significant amount of money.

Forex trading contests are the type of competitions where we use our demo accounts. Usually, there is no entry fee, it is just required to follow basic regulations of the competition. This is not something new for most traders and this type of trade is mainly created for people who are new in forex trading. For some traders, it might be a good way to get a name out there, opportunity to improve your skills, get a prestigious title, or win a significant amount of money.

Forex trading contests are the type of competitions where we use our demo accounts. Usually, there is no entry fee, it is just required to follow basic regulations of the competition. This is not something new for most traders and this type of trade is mainly created for people who are new in forex trading. For some traders, it might be a good way to get a name out there, opportunity to improve your skills, get a prestigious title, or win a significant amount of money.

Previously, it was not super easy to find these contests but today we can find numerous trading contests on the internet if we look hard enough. Sometimes it takes signing up for a broker that we don’t want to sign up for, so that’s not always very appealing to people but a lot of contests do payout, they might pay cash, they payout credits towards that broker. There are a lot of things that we can potentially get by competing or winning at these contests.

Are those competitions represent a true test of skills when it comes to the real thing? What might be unfortunate about them is that almost all of the time people who actually win them or even place in the top ten for that matter are not really good forex traders. What might be certain is that this concept of competing is not rewarding traders who play the long game, the long term trading with consistent returns, and optimal risk management.

In a span of one, maybe two months, the person who finishes first can often achieve an ROI of anywhere from up to like 2500%. For some people, this might not sound crazy but for those traders who are fully entrenched in the right way of trading, this might be completely ridiculous. Successful traders tend to say that proper money management in these trading contests is not only not rewarded, but it is completely frowned upon. Taking the wild chances and hitting them might be the name of the game, therefore it does not mimic real-life forex trading at all.

Most of these competitions tend to look alike a huge poker tournament with people who are not playing a real-life poker. Instead, let’s say that this tournament is going to be only thirty minutes long and whoever has the most chips on the table at the end of thirty minutes wins the entire tournament. Can you imagine what that would look like? Probably every person at the table would be going all-in every single hand because they would have no choice. Everybody would have to play haphazardly and whoever got the luckiest at the end of the tournament would win and be rewarded for that. That is why most high-profile traders avoid this format of competition or any similar way of competing.

People win these tournaments by achieving exorbitant crazy figures, but there is actually a very tiny bit of skills involved in there. It might seem that there is nothing there that we can observe like a rational forex trading. So for someone who wants a little bit of fun participating in some of these contests, you guys go right ahead, you are absolutely allowed to do that. But even if we do tremendous, we mustn’t allow the things we did to place well in some tournaments affect our actual trading. Reckless style of trading every once in a while is not what we are going to recommend here.

Although this might be the quickest way to distinguish ourselves from everybody else and make temporary results, we believe it is much better to consider long-term trading and make people good money. We don’t want to build up our reputation by being a mediocre long-term trader that just happens to know how to win a contest. We want to become extremely good at this, that’s the key.

Forex trading contests are not for long game players. We need to put the time in because it’s very part of the definition of playing the long game. If we put ourselves too early on the marketplace with an unfinished product and not really designed for proper forex trading, we might be doomed. Traders should stop to look for a fast lane because it is not a way to go, they need to be patient and allow the system to develop. Eventually, they would have come out with much better product years down the road. So stay on the course traders, it’s worth in the end, do it right.

Categories
Forex Market

The Phenomenon of President Trump’s Tweets

“If they actually did this the markets would crash. Do you think it was luck that got us to the best Stock Market and Economy in our history? It wasn’t!” Do you guys use Twitter? “We are doing very well in our negotiations with China. While I am sure they would love to be dealing […]

“If they actually did this the markets would crash. Do you think it was luck that got us to the best Stock Market and Economy in our history? It wasn’t!” Do you guys use Twitter? “We are doing very well in our negotiations with China. While I am sure they would love to be dealing […]

“If they actually did this the markets would crash. Do you think it was luck that got us to the best Stock Market and Economy in our history? It wasn’t!” Do you guys use Twitter? “We are doing very well in our negotiations with China. While I am sure they would love to be dealing with a new administration so they could continue their practice of ‘rip-off USA'($600 B/year), 16 months PLUS is a long time to be hemorrhaging jobs and companies on a long-shot….” Does this ring a bell?

Maybe this? “As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work ‘brilliantly’ with both, and the U.S. will do great…” It is extremely unique how and in what ways we have seen tweets from President Donald Trump affect the market almost immediately after he posts them and what that does to our trades. This is the type of phenomenon that we have never had to deal with before, it is something completely new for traders.

There’s been a lot of complaining all over social media about something that we cannot see coming and we substantially have absolutely no control over. Something that has the ability to pop up and ruin our wonderfully perfect technical trade almost instantly. We will try to focus on this from the politically agnostic stand of point because our number one goal should be finding ways to make money from the forex market. But this whole thing with President Trump’s tweets is pretty eccentric to anything we had to deal with before because it is constant and it is highly unpredictable. We never know when it is going to happen but we can surely anticipate that markets are going to freak out. So why this is happening? How could smart investors with all that big money be so foolish and react to something like this? Especially when most of the words from tweets end up never really materializing. It is perfectly normal to wonder about that. There are a couple of factors in play here.

Firstly, if we give the opportunity to big banks to manipulate prices a lot in a hurry, they are going to take advantage of that opportunity every single time. They don’t need to explain to anybody why they did what they did. This whole interesting moment with the huge central banks we can see only happening some of the time when we see big moves after a Trump tweet. Secondly, we have institutions. For example, hedge funds play a significant part in this because they have a lot of money and when they move, they move all at the same time. Proprietary trading firms are an example of institutional trading but to a much lesser degree. Typically they don’t have the amount of money at these hedge funds have, and their traders don’t all move in lockstep.

There has been a rumor among traders that some of these hedge funds have algorithms that are able to comb through Twitter mainly when Trump tweets something and they are targeting for certain words or a certain combination of words that will automatically trigger their algorithms to go long or to go short on whatever instrument they’re trading. It is the ultimate front-running tactic. The financial game is more about survival than anything else and these funds and firms are finding ways the keep their heads above the water. We can’t be mad at them, it is pretty innovative and it’s working. So the two main types of entities that can have a big impact on the forex market all on their own are the big banks and larger institutions, they play instant reaction games and they are both involved in this little amusement with Donald Trump’s tweets.

The question remains, what we the small retail traders can do about it? Is there any recourse for us? To be honest, there is nothing we can do to counter this phenomenon. We are just going to have to deal with this new normal. We are not going to be able to change the way we trade at all to adjust to something like this. It might be better not to worry about it. On one hand, this could make the price of a currency pair go up or down, so it is going to make a mess sometimes because we are going to be emotionally invested in those times where this external factor out of nowhere came and messed up our trade. On the other hand, there is a 50% chance that it could propel our trade even further. We have been seen some people who are complaining and the ones that benefited from these tweets.

There will always be the factors that we can’t control and they might negatively affect us but we mustn’t allow things like this to get us down. You guys don’t worry about the things that you can’t control. In forex trading, It’s always going to be something, either the markets are too crazy, it’s too dead, we have now this Trump tweets, it is always going to be something that prevents us from getting the results we think we deserve. We simply need to find a way to be immune to all the financial earthquakes. In the end, our best approach should be just to trade our system and let it organically do what it does regardless of the circumstances. These external factors are not actual factors, they should have nothing to do with our constant improvement. We don’ have any impact on them and we can’t do much about that. So traders focus on the things that actually matter without complaining. The best thing we can do is to leave politics as it is and try to make our trade better every single day.

Categories
Forex Assets

Analyzing The ‘CHF/AED’ Forex Exotic Pair

Introduction

Introduction

Introduction

CHF/AED is the short form for the Swiss Franc against the United Arab Emirates Dirham. It is considered an exotic currency pair. Currencies are always traded in pairs in the Forex market. The main currency in the pair is considered the base currency, while the sequential one is the quote currency.

Understanding CHF/AED

The market value of CHF/AED determines the value of AED required to buy one Swiss Franc. It is priced as 1 CHF per X AED. Hence, if the market price of this pair is 3.8835, these many United Arab Emirates Dirham units are necessary to buy one CHF.

Spread

The spread is the distinction between the ask-bid price. Mostly, these two prices are set by the stockbrokers. The gap between the pip values is through which brokers generate revenue. Below are the ECN & STP Spread values of CHF/AED pair.

ECN: 19 pips | STP: 24 pips

Fees

The fee is the minimum commission you pay to the broker on every single spot you open. There is no fee to be paid on STP accounts, but a few additional pips on ECN accounts.

Slippage

Slippage is the distinction between the price at which the trader implemented the trade and the original price he got from the broker – this changes based on the volatility of the market and the broker’s implementation speed.

Trading Range in CHF/AED

The trading range table will help you determine the amount of money that you will win or lose in every timeframe. This table signifies the minimum, average, and maximum pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/AED Cost as a Percent of the Trading Range

The price of the trade alters based on the volatility of the market. Hence, the total cost comprises slippage and spreads, excluding from the trading fee. Below is the analysis of the cost difference in terms of percentages.

ECN Model Account

Spread = 19 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 19 + 8 = 32 

STP Model Account

Spread = 24 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 24 + 0 = 29

Trading the CHF/AED

The CHF/AED is not a very volatile pair. For example, the average pip movement on the 1H timeframe is only 42 pips. If the volatility is more significant, then the cost of the trade is low. Nevertheless, it involves a higher risk to trade highly volatile markets.

Also, the higher/lesser the proportions, the greater/smaller are the costs on the trade. We can then determine that the costs are higher for low volatile markets and high for highly volatile markets.

To reduce your risk, it is recommended to trade when the volatility is around the minimum values. The volatility here is low, and the costs are slightly high, corresponding to the average and the maximum values. But, if the priority is towards reducing costs, you could trade when the volatility of the market is near the maximum values.

Benefits on Limit orders

For orders that are implemented as market orders, there is slippage applied to the trade. But, with limit orders, there is no slippage valid. Only the spread and the trading fees will be accounted for estimating the total costs. Therefore, this will bring down the cost noticeably.

STP Model Account (Limit Orders)

Spread = 24 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 24 + 0 = 24

Categories
Beginners Forex Education Forex Assets

The Euro, the Pound, and the Swissy

The title of this article is not some forex movie spinoff, although there is one “bad” currency in this article. Not all things work in forex trading. You will have tools and indicators that are just bad, and unfortunately, they are abundant. Additionally, some currency pairs are not good for your strategy. If you do […]

The title of this article is not some forex movie spinoff, although there is one “bad” currency in this article. Not all things work in forex trading. You will have tools and indicators that are just bad, and unfortunately, they are abundant. Additionally, some currency pairs are not good for your strategy. If you do […]

The title of this article is not some forex movie spinoff, although there is one “bad” currency in this article. Not all things work in forex trading. You will have tools and indicators that are just bad, and unfortunately, they are abundant. Additionally, some currency pairs are not good for your strategy. If you do not know by now, the trend following strategies are the most successful according to many research studies and confirmed by experience. A group of experienced prop traders has more success in certain currency pairs than with others. The most common ones are the EUR/GBP and the GBP/CHF, out of the major 8 currencies. We will discuss these three currencies, and why they are good for trend following trading. Also, some warning signs about trading that could even ruin the best trades out of thee pairs.

Note that all this material is just an opinion by a forex prop trade who is relying on a technical analysis most of the time. Therefore, trend trading like thins involves a lot of systematic, mathematical decision making using indicators in specialized roles. Following the trend and avoiding events that could disrupt it is also one of the elements. This implies the USD is not a really good choice for this trading type. Not that it is impossible to trade, just unlikely as good as involving the EUR, GBP, and CHF. Traders that have been doing this for 10 years say the USD is full of surprises that could ruin what looked like a very consistent trend. There are several reasons for this. The first one is that the USD is heavily manipulated by the big institutions.

One proof of this is the sentiment, every time traders go long, big players go short and move the price and vice versa. The USD pairs are also most traded, or most popular. This is the place where it is easy to counter the majority of traders’ positions. The big banks and institutions will go where the traders’ money is, hence why the USD pairs are also very hard to master, especially for amateur traders who use the same tools as everybody else. News events are also more frequent with the USD pairs, the price will move illogically to the report or doing extreme shakeouts before the move happens. Anytime you see the major events like the non-farm payrolls or interest rates, the market will go crazy, disrupting your strategy and planed trades.

The Power of Tweets

Interestingly, the USD is affected by one more phenomenon – Trump tweets. Whenever the president of the US has some comment, regardless if it is related to the US economy, the media start to make stories and predictions to which forex market reacts. Now, we have one more event to pay attention to, making the USD unforgiving, choppy currency. If you like trading the news, this is not something you could use to your advantage, these events are unpredictable, unlike the reports. There is no “logical” move behind them.

Luckily for every forex trader, there are cross pairs. Cross pairs can be defined as the ones that do not have the USD, among other definitions. Again, most of the traders do not come to these markets for several reasons. Of course, it is ok to specialize on one or a few currency pairs, but we all know the basic rule of the Risk Management, diversification is good for your loss protection, never put all of your eggs in one basket. There will be times your favorite pairs will act differently, your system will have a hard time giving you any gains. If you have a specialized system, it means you will not be able to trade once markets change their face, there will be no market you can migrate your system to.

Options for Trend Followers

Back to the currencies that we think are the good ones for trend followers. The advantages of the EUR come from the currency segregation. The Euro is segregated, it is a currency of many EU countries, and it has low relation to the US economy. The EUR/USD is of course affected by the news events from the US but if we look at the EUR alone, it does not care what the USD is doing. The news that the EUR has are scattered, you will see interest rates of Germany, France, and other strong countries, but the impact they will have on the EU and the EUR is not as strong. The EUR is unlike the CAD, for example, where every bad or good event affects the price of CAD drastically. Also, the EUR news schedule is not as tight as with the USD, they are easy to follow and the ones that are not tied to a specific EU country are those that matter. You can easily plan accordingly when you know the ECB is releasing the decision on the interest rates, for example. You do not have to worry about the tweets or hysterical media that make markets go wild.

Moving on to the GBP, this currency is an oldtimer on forex. It has its own “personality” and is not correlated to anything. Depending on how much you are familiar with the market, you may notice that the EUR and the CHF are somewhat correlated. The USD and the JPY are also similarly correlated, they are both regarded as the safe-haven currencies. The USD and the CAD are correlated because they are both North American currencies. Unlike these, the GBP is not correlated to anything. Because of this, the GBP pairs are on the constant move, the constant move means strong quality trends. More trends mean more gains for trend followers. Sideways movement is bad for trend traders and GBP does this rarely. Just pay attention, when the GBP moves sideways, these ranges are whipsawing faster and higher than with other currencies.

Another specialty about the Pound is that the moves are more extreme, this is easily spotted if we compare the ATR (Average True Range) of GBP pairs and other non-exotics. Similarly to the EUR, GBP news events are also easy to follow. It is common to see the same type of news affect the GBP, fewer surprises – fewer losses. What news events affect major 8 currencies the most would require another article, but it Is important to know the outlines about the GBP, EUR, and CHF.

Coping with Neutrality

The Swissy is very neutral, just as the country politics itself. Very few news events affect the CHF, the only one you need to pay attention to is the Swiss National Bank. Whatsmore, the SNB does not have a lot to say. This means you can leave your trades running, the news will not affect trends as much. Another similar currency to the Swissy regarding this is the JPY. Swissy is also regarded as a safe haven currency, it is common to see it negatively correlated with the equities market but also positively correlated with the EUR. This is not always the case of course although when the Swissy correlates with the EUR the movements are not to the same extent. This trait of the Swissy can be used for so-called Pairs Trading method. Whatsmore, this gives you the ability to “switch” the trend if you have a position with the EUR, move it to the CHF where the news event will not affect it much.

There are moments in the forex market where a certain currency will behave like a major news event was ongoing even though you will not see anything that could cause such a drastic move. AUD might be one of these currencies, but not the CHF, at least not always (remember the CFH flash crash off the peg?). So Swissy is also the currency with few “weird” moves that do not have any arguments. It is usually the big banks play when you see something like this. So predictability is great, always take inherent risk into account with a certain currency. You mat even eyeball some chart and see if it is too choppy for your system, do you see some spikes and are those spikes affected by news which you can predict or not.

This trio can make a lot of gains when paired together. Starting with the EUR/GBP, what is so special about it?. It is the slowest out of the major 8 pairs. According to the ATR, this is what is usually seen and measured on the charts historically. Slow movement can be a good thing when you want more control. The pair is also USD news proof. The relation to the USD news is minor at best so you can focus only on GBP and the EU news, which are easy to follow. The movements on the EUR/GBP are rarely in balance, more often than not there are some trends in this pair. So when you combine something that has slow predictable movements, without much news disruptions and having trends…this is the golden choice for trend traders.

Still, this pair is not on the top of the most traded pairs list, not even close. The analogy of this might be like when most people want to have a trendy iPhone smartphone instead of a Samsung, even though it may not be a good fit for their needs or financial capabilities. According to the reports of professional prop traders, this pair has a great winning percentage. If they have a signal to buy on the GBP, they would rather trade the EUR/GBP than the GBP/USD. They are not even splitting the risk profile on two, just go full on the EUR/GBP. The probabilities they have gathered say it is just better to allocate positions on this pair, even if it means more risk by not diversifying.

Other Pairs to Consider

Moving on to the GBP/CHF, the ATR of this currency pair is higher than the EUR/GBP. The Swissy is a single national currency, unlike the EUR and is sensitive to the GBP movement, boosting the momentum. So if the EUR/GBP is too slow to trigger your trade entry or exit, check this pair as there are similar qualities. To some extent, this causes the pair to be even more trendy than the EUR/GBP. Having better “spool” and consistent trends. Stagnation is not common, at least not for the forex majors pairs standards. As with the rest of the pairs, the news events are not frequent, do not cut the trends, and are predictive. The USD events’ effects are not noticeable. GBP/CHF pair is very very unpopular. As such do not expect those weird price action movements without any news to back it up, nor sudden whipsaws.

The EUR/CHF, well, this is the one to avoid. Consider how much the Swissy is correlated to the Euro. Are the baskets similar? Compare the sideways or consolidation ranges to the GBP. You will understand this is a place where trenders either do not trade a lot or just lose. The stagnation or positive correlation to the EUR can change, at this moment this pair is moving nicely like the CHF is now more expressive in less certain times. Trading the EUR/AUD would be the same as trading the EUR/CHF a while ago before 2018, but now it is a bit different. The correlation will probably start again when the markets get out of the (if) COVID-19 crisis. For now, there is not enough historical evidence to say this pair is not correlated anymore. If you are trading this one, try it with less risk.

These observations can be seen on the charts. When we open the mentioned currency pairs charts in the MT4 or any other trading platform, you will notice the sideways movements on the daily timeframe that could last for a month or two. These are areas you should avoid. Some traders can spot these periods by the naked eye, others rely on indicators. These types of indicators are not common, but this is another subject. Take all of this as advice, especially if you have a trend following system.

A few more warnings or tips for you. When you see the GBP/CHF and the EUR/CHF charts and you have a signal on one but the other is very close to giving one, do not wait for it, go with the first pair with a signal. This hesitation could lead you to miss great trades. Professional prop traders are often calm when they lose a trade, although when they miss significant trends because they are late to the party, they are very self-critical. The second tip or a warning is not to trade GBP/CHF and the EUR/GBP at the same time. Your exposure on the GBP will be doubled, so trade one or split the risk if you have two signals.
To conclude, be aware of the USD, if you trade USD related pairs, go with reduced risk or smaller positions. Find more opportunities with cross pairs, they tend to have better trends, especially the ones mentioned. Finally, the elementary part of your Risk Management setup should be not to overexpose on one currency, remember the eggs and the basket.

Categories
Forex Psychology

Why Trading Discipline May Not be Enough

Let’s say you are an experienced trader, trading on the Daily timeframe. You are long on the EUR/USD, as per your system signal, you have also set up your Stop Loss. The trade is open, although it is not going your way. It is going lower, fast. You notice the candle extreme pushes down, as […]

Let’s say you are an experienced trader, trading on the Daily timeframe. You are long on the EUR/USD, as per your system signal, you have also set up your Stop Loss. The trade is open, although it is not going your way. It is going lower, fast. You notice the candle extreme pushes down, as […]

Let’s say you are an experienced trader, trading on the Daily timeframe. You are long on the EUR/USD, as per your system signal, you have also set up your Stop Loss. The trade is open, although it is not going your way. It is going lower, fast. You notice the candle extreme pushes down, as someone deliberately wanted to destroy your trade. What do you do now? It is closing in quickly to your Stop Loss level! The time is up! What have you done? There is only one answer that proves you have the discipline – Do Nothing.

You will and should come back to this article as it is human to recognize your discipline is not effective. Psychological discipline in trading is necessary to do things the right way, and the right way is to separate emotions. That’s not easy even after years of professional trading. Discipline is one of the most important things in trading, and you will slip on it, it’s just human nature, at some point, you will get in your way. To train your discipline, you need to create a system of entries and exits, set of criteria, indicators, and follow it, and when you fail, take a step back, and follow your system.

When building a system, testing is important, but setting criteria in a demo is essential. This is important because it will allow you to do good trades in the long term. Of course, the system has to be tried first. How good can you separate your emotions from trading? When making big decisions you need your intellect and strategy and emotions out of the way. Trading with emotions is trading by feel and it will result in loss, always, so to avoid this, set up a sound strategy, logic entries, and exits, let it unwind on a trade.

Now to get into more details. Your system, you are following the rules, yet you still mess things up. You have worked hard on that system, made a long way but the trading results are not good. It is because you stand in front of your system. If your trading rules do not need you to think, to intervene, put on your brain whether you enter a trade or exit, it is a good thing. You think it is easy not to deviate from your system, just do what it says to do? That is where most traders fail without even noticing. Separating logic and emotions is hard. Emotions are the killer of good trading decisions yet every logical approach has a degree of emotion mixed in. You must be at your best when it comes to forex trading, and emotions will be in your way.

The worst and dumb decisions you made had a big part of emotions. If we take a long and not so happy relationship, they are not a good decision when we look at it rationally, but emotions keep it floating, taking a significant part of your life you cannot relive. When you need to decide, take a step back, are you emotional about that trade? If yes, you know what to do – nothing. You already have something that works, if you have backtested and built your system the right way, so let it do what is meant to do. Your emotions or gut feeling about the trade is going to make it worse. Here is what we can do to make emotions detached:

Choose your strategy wisely, because mistakes are easily done, and these are the checkpoints to follow and avoid crashes. We know exactly when to enter and exit a trade. We have found a trade we like and now it is time to pull the trigger.

Do not make corrections, even if the market trends seem to be unfavorable, let the system work. Interventions make a proven system go bad. As much as you want to change something, let the market go. If it is going to trigger that Stop Loss, watch it do it, even better do something else. If you intervene, and you are right, you have just prolonged your misery. There is a 50% chance you get it right, the price will move up or down. You have a justification, you think you are good at this, your feelings work, but, they do not.

The biggest mistake is to look at your trading terminal and your blinky lights. If you made your trades, turn off the terminal, your screen, move away. If you need to lock it and give the key to someone, do it. Creating a barrier will put you in a very good position not to have any possibilities to intervene. If you are trading on the Daily timeframe, this can be easy for you, all you have to do is check your trades at the end of the trading day. Boredom can be your doom too. Therefore, find your favorite place to work out, swim, socialize, play games, whatever you like. The best part of being a daily timeframe trader is you have a lot of free time. Although this can also be a problem for some.

Chasing losses and overtrading go hand in hand. Let’s say you take a few consecutive losses. You start hating that currency pair, you want your money back. Someone has manipulated the price because every time you enter, the trend reverses the other way. Now you have that justice emotion, revenge against these manipulators. This is how the spiral down to your account bottom begins. Some may even think about position size increase, you cannot lose 5 times in a row. Well, you can, EAs sometimes use that tactic to recover the losses of consecutive bad trades. Essentially, it is just increasing potential loss.

Panic or exiting too early. It is very relative to what you do after a trade is executed. You look at the charts and make an emotional decision when you are losing but also whet you are winning. Drawdowns are always happening, you will rarely see a trade go the way you want without a drawdown. Do not close the trade if you do not have the signal for that from your system. Closing too early because you are afraid the trend will reverse and want to keep that what you have is just a limit to your potential profit. Forex will create that emotional build-up in you after a few losses, making you hesitate and get scared. A good analogy to this is with boxing. When you land a good hit, you do not stand and marvel at it, engage even harder! Sometimes you want to cash in and not be greedy, that trade you made is really good. Well, know that putting a cap on your winners is also your doom.

Not giving your system time to make the signal. You might notice the repeating sentences in this article. Repetition, practice is what will make your mind perfect and remember this. You will make the same mistakes with discipline so you must remember to stay away from your system.

Not understanding the long term trading. Forex is not a casino, this is a long term involvement. Traders need to understand bad trades can happen a few times in a row, but after 1000 trades, the sum should be on your side. If you have a bad day, week, month, and even a year, it does not mean you have to dwell and change things. It happens even the other way around, you can have a great period where you make great gains. After a few trades that gain is negated and you are back to break even.

Long term mistakes come in scenarios when you feel invincible after trading well for some time. When you take a hit and see all of your long period of winning is negated, it is emotionally devastating even to experienced traders. Trading is always fluctuating, so ups and downs are normal, stay with the planned course and discipline will help you. Discipline will take you to the top, you have a tested system, stay with it, and realize what matters is the long game.

Now let’s see what can we do about these problems, starting with the zoomed-out perspective. Generally, if you have low discipline in life, you will have difficulties in trading on Forex. Understanding discipline will make you overcome that hazardous jumping mindset. The best way of action is to change bits of yourself. Books come in handy, one particularly good and practical is “Discipline Equals Freedom” by Jocko Willink.
If we zoom-in now we get to another important part. It is time-consuming. Test systems, adjust them until they start working to your set criteria. Prove it works, on a demo account.

There’s no partial discipline. Follow the system, don’t make unnecessary corrections. You are not smarter than the system you created. If the criteria for entry are only ¾ met, then do not trade it. After you are done, do not look at it! Otherwise, emotions will creep in, and the worst option is when you are right to intervene. Know that trying to be more disciplined just by yourself is not going to work. When you realize the mistake, you will say to yourself that you are never going to do this again. But it will happen again, you will not succeed with self-discipline. The best course of action is to come back to this article and read the steps again.

Categories
Forex Fundamental Analysis

How The New Announcement Of ‘GDP Per Capita’ Indicator Affects The Forex Market?

Introduction

Introduction

Introduction

GDP per capita is the primary economic indicator in macroeconomics to measure the standard of living and economic prosperity. While GDP indicates the economy’s size in terms of economic output, it does not reveal for what populace the output is divided. Hence, GDP per Capita is more suited to assess the wealthiness of the country’s population. 

Every nation strives to improve its standard-of-living by increasing the wealth of the population beyond just meeting daily needs. Hence, GDP per Capita becomes an important economic indicator for countries’ comparison of how well-off their people are.

What is the GDP per Capita?

GDP 

GDP is the measure of a country’s total economic output. It is the total monetary value of all the goods and services produced within the country regardless of citizenship (resident or foreign national). It is the market value of all the finished goods and services within a nation’s geographical borders for a given period. The period is generally a quarter (3 months) or a year. The commonly used term “size of the economy” refers to this economic indicator. The USA is the world’s largest economy, and it means it has the highest nominal GDP or highest economic output.

GDP Per Capita

It is a metric that is obtained by dividing a country’s GDP by its population count. Here, “per Capita” translates to “per average head” or “for one individual.” Hence, GDP per Capita is the measure of economic output per person. 

If we want to compare GDP per Capita amongst countries, we use the Purchasing Power Parity (PPP). Through PPP measure, we can compare countries on equal terms, as many countries have different currencies, comparing economic output becomes difficult. Hence PPP measures everything in the United States dollar terms, thus creating a base standard for comparison.

How can the GDP per Capita numbers be used for analysis?

Since GDP is the total economic output, countries with lower economic output than other countries may not necessarily be poorer. On the contrary, it could be wealthier. For example, Qatar has only 19 billion US dollars GDP in comparison to the USA, which has 20.54 trillion US dollars. But Qatar is the number one ranked the country as per GDP per Capita. It has 126,898 US Dollars compared to the United States that has only 62,794 US Dollars. Hence, the people of Qatar are wealthier than those in the United States. 

Here, we have to understand GDP per Capita is a function of the population. Higher population results in higher GDP prints but also distributes the GDP amongst more people. Qatar is a prosperous country with sizeable natural oil resources, which is not a labor-intensive task to extract and export. Hence, the high GDP through Crude Oil exports is divided amongst a few populace of 2.7 million people compared to the United States 328 million. The USA is the third most populous country after China and India.

Overall, small and prosperous countries and developed industrial nations tend to have high GDP per Capita. The wealthiest and most impoverished countries are also assessed based on the GDP per Capita as a primary metric.

The income per capita and GDP per Capita are the two most common tools for measuring economic wealth and prosperity. GDP per capita is more popular and widely used as it is more regularly tracked and maintained on a global scale by most countries. It, in turn, helps in ease of calculation, usage, and comparison amongst countries.

It tells us how much economic output is attributed to a citizen. Hence, it is a measure of national wealth. On the other hand, it can also tell us the economic productivity of the people. Productive and talented groups of people will contribute more value to the GDP prints.

GDP per capita is used alongside GDP and other GDP related metrics like the GDP Growth Rate, Real GDP, by policymakers to assess the economic health and take necessary actions to drive the economy in the right direction. When the GDP prints are consequently decreasing for two quarters, Central Authorities intervene through monetary and fiscal levers to counter deflation and stimulate economic growth through inflationary pressures. 

GDP metrics are closely watched by investors (domestic and foreign alike) to make investment decisions. Declining GDP holds off investments from investors, due to decreased confidence and vice-versa.

Impact on Currency

GDP metrics are used in a variety of ways by a variety of people. Economists and Central Authorities primarily use GDP per Capita to understand the economic wellbeing of its people. GDP Growth Rate is primarily used by Traders, Business people, and Investors to make business decisions.

GDP per capita would likely be more useful for Policymakers, and Business people. Business people can use this as a wealth metric and consequently decide the products that would suit the budget of people. The higher the wealth of the individual citizen, the costlier products and services they can afford. Hence, business decisions can also be impacted.

It is a proportional high impact indicator. Fluctuations in the GDP metrics bring a lot of volatility in currency markets. Falling GDP metrics are terrible for the economy, its businesses, consumers, and the Government. GDP impacts everyone. Hence, Central Authorities are committed to maintaining GDP Growth and take the necessary actions to avoid deflation. Businesses also hold off investment decisions in the stagnating economy and vice-versa.

Higher GDP per Capita is good for the currency and the economy and vice-versa. Although for trading decisions, GDP Growth Rate serves as a more relevant metric for comparisons amongst different currency countries. 

Economic Reports

For the United States, the Bureau of Economic Analysis releases quarterly GDP figures from which we can obtain our statistics on its official website every quarter. The release schedule is already mentioned on the website and is generally released one month after the quarter ends. 

Major international organizations like the World Bank, International Monetary Fund, OECD, etc. actively maintain track of GDP figures of most countries on their official website:

Sources of GDP per Capita

For the United States, the BEA reports are available here.

The St. Louis FRED keeps track of all the GDP and its related components in one place on its official website. You can find this information in the below-mentioned sources. 

GDP & GNP – FREGDP per Capita

Real GDP per Capita – FRED

GDP per Capita – World Bank

Impact of the “GDP per Capita” news release on the Forex market

In the above section of the article, we saw the definition of GDP Per Capita and understood how it differs from the nominal GDP. Per Capita GDP is calculated by dividing GDP over the entire population of the country. GDP Per Capita is a universal measure used by most economists to gauge the prosperity of nations.

It provides insight into the economic prosperity and economic development across the globe. Countries with high technological progress see a significant increase in GDP Per Capita. It is also a significant indicator of comparing the economic growth between the two countries. GDP Per Capita if often analyzed alongside GDP. GDP Per Capita considers both the GDP and its population.   

In today’s lesson, we will analyze the impact of GDP on the value of the currency and observe the variation in volatility due to the news announcement. In this regard, we have collected the year-on-year GDP of Japan, where the below image shows the GDP measured in the last fiscal year. Let us find out the reaction of the market to this data.

USD/JPY | Before the announcement:

We shall start with the USD/JPY currency pair to observe the impact of GDP data on the Japanese Yen. We can see in the earlier image that the market is in a downtrend with a large bearish candle visible a few minutes before the news release. As the market is very bearish, we will look to the currency pair after a price retracement to a technically significant level. At this point, we cannot take any position in the market. 

USD/JPY | After the announcement:

After the news announcement, we see that the price moves lower, resulting in further strengthening of the Japanese Yen. As the GDP data was very close to market expectations, traders comprehended this data to be positive for the economy and bought Japanese yen by selling the currency pair. In terms of positioning ourselves in the market, once should not go ‘short’ in the market soon after the news release as this would mean chasing the market, which is very risky.     

NZD/JPY | Before the announcement:

NZD/JPY | After the announcement:

The above images represent the NZD/JPY currency pair, where we see that the market has crashed recently, and the price is at the same level since then. This means there is extreme optimism in the market concerning the Japanese Yen. As the price is meager, we need a pullback before we can take a ‘short’ trade in the currency pair. Until then, we will watch the impact of GDP on the currency.

After the news announcement, the volatility expands on the downside, and the price sharply lower. The market reacted positively to the GDP data since it was measured to be nearly the same as before. This proved to be bullish for the Japanese Yen, where traders bought the currency and took the price lower.   

EUR/JPY | Before the announcement:

EUR/JPY | After the announcement:

The above images are that of EUR/JPY currency pair where we see that again, the market is in a downtrend, but in this pair, we notice a strong bullish candle from the lowest point, which has taken the price higher. This means the Japanese Yen is not as bullish as it was in the above two pairs. Since the market is not expecting a fall in the GDP, aggressive traders can take a ‘short’ position with a strict stop loss.

After the news announcement, the price moves lower and closes with a large bearish candle. This increases the volatility to the downside and strengthens the Japanese yen. Therefore, it clear that the GDP data had a hugely positive impact on all the currency pairs.    

We hope you understood the concept of ‘GDP per Capita’ and how the Forex price charts get affected after its news release. All the best. Cheers!

Categories
Forex Fundamental Analysis

What Is ‘GDP From Public Administration’ Forex Fundamental Driver All About?

Introduction

Introduction

Introduction

Public Administration is a critical aspect that drives overall economic growth. GDP from Public Administration can give us insights into the strength of the current central authorities’ efficiency in governance. Public Administration is the levers to the economic engine, and it can put brakes or accelerate the economy to sink into a recession or propel to economic growth. Hence, understanding Public Administration and its contribution to GDP will help us better understand its role in society’s functioning as a whole.

What is GDP from Public Administration?

Gross Domestic Product

GDP is the measure of a country’s total economic output. It is the total monetary value of all the goods and services produced within the country regardless of citizenship (resident or foreign national).

It is the market value of all the finished goods and services within a nation’s geographical borders for a given period. The period is generally a quarter (3 months) or a year.

The commonly used term “size of the economy” refers to this economic indicator. The USA is the world’s largest economy, and it means it has the highest nominal GDP or highest economic output.

Public Administration

It is the implementation of government policies. Public Administration is a part of every economy. Policies can be either monetary policy or fiscal policy.

Public Administration is concerned with the operations of government that run the nation. It is centered around the structuring of the Government policies and programs and government officials’ conduct to implement the same.

Public Administration’s definition and goals are vast subjects. In our analysis, we will only focus on the economic impact of Public Administration. 

How can the GDP from Public Administration numbers be used for analysis?

An analogy to understand the importance of Public Administration would be if an economy or nation is viewed as a car or engine. Public Administration would be the brake, gear, and acceleration levers. Levers determines whether the car moves forward or backward, and also the pace of movement.

Similarly, Public Administration determines what direction the economy’s growth is going towards and at what rate. Monetary policy is associated with the Central Bank of a nation. Fiscal Policies are associated with the Central Government. 

Officials working as per the Public Administration policies are called Civil Servants, together the Governing body and its policy determine how effectively the opportunities are maximized to satisfy the public demands and lead to overall economic wellbeing.

Policy reforms and effective Administration can reduce economic disparity amongst different classes of people, increase employment, wages, and business prosperity. Government Spending, Tax programs, Outlays, allowances, funding programs are all part of the Government policy. Public Administration determines how effectively such policies are implemented.

Public Administration provides the foundation for economic activity through laws and as a catalyst to economic wellbeing through its services. 

Without firm laws and regulations and active civil servants, the nation is in jeopardy. Weak governance and policy can sink the nation where corruption, political instability, riots, public protests, etc. can creep in. 

Services like transportation, maintaining law and order, road construction, police, jails, tax exemptions, medicare, social security, etc. directly may or may not generate revenue for the government but indirectly helps other sectors to boost overall economic prosperity.

When a nation’s government fails to stimulate the economy, there is a probability that it will continue for its elected period. Hence, International Investors can glean such clues from GDP from Public Administration figures. They can understand the behavioral nuances of the government and its probable impact in the upcoming quarters.

The government impacts the people and the business. On an absolute basis, the government has complete control over the nation for the elected period. It can bring about any policy reforms they see fit. It can help businesses or impede businesses. It can control money flow through the economy, and how much people pay taxes.

It is also essential to perceive that the GDP from Public Administration is only part of the government’s revenue. It assists in the functioning of other sectors through its public services that are not accounted for in the GDP. 

Hence, GDP from Public Administration itself does not tell us the real contribution of Public Administration in growth. The functions of a government span across various sectors and vary from region to region based on the economic region’s requirements.

Impact on Currency

The GDP from Public Administration is a low impact indicator, as the broader measures like Real GDP and GDP Growth Rates are more important for the Currency Markets. 

GDP from Public Administration does not paint the full picture of the economy, but it tells us the effectiveness of the current government and its policies. Still, for the International Currency Markets, it does not serve as a useful indicator.

It is a proportional and lagging indicator. Higher GDP from Public Administration is good for the economy and its currency, and vice-versa.

Economic Reports

For the United States, the Bureau of Economic Analysis releases quarterly GDP figures on its official website every quarter. The release schedule is already mentioned on the website and is generally released one month after the quarter ends.

In the full report, we can extract the GDP from Public Administration figures. We can also go through GDP by Industry to get the Public Administration performance in the report. Below is a sample of the same:

World Bank actively maintains track of GDP by Sector figures of most countries on their official website. Public Sector 

Sources of GDP from Public Administration

For the United States, the BEA reports are available here.

We can use the GDP by Industry to see the government’s contribution to GDP here. 

Different metrics like Public Debt, Expenditure, etc. are all categorically available here.

We can also find GDP from Public Administration for different countries here.

Impact of the ‘GDP From Public Administration’ news release on the price charts 

In the previous section of the article, we understood the importance of Public Administration in an economy and how it impacts economic growth. It plays an essential role in overseeing and shaping new impact market strategies. It is the responsibility of public administrators, whether policymakers or non-profit executives, to make use of the opportunity to ensure that the economy flourishes.

Profound policies are needed to facilitate private-sector investment in socially beneficial concerns. All this is in the hands of public administrators and the government. Therefore, the department has a fair amount of contribution to the GDP and the economy. When it comes to investing based on this information, investors do not make investment decisions based on the contribution from different sectors. They look at the final GDP and take a position in the currency.

In today’s lesson, we will analyze the impact of GDP on different currency pairs and see the volatility created after the news release. The below image shows the first-quarter GDP data of Singapore, where we see a significant drop in the GDP value compared to the previous quarter. Let us find out the reaction of the market to this data. 

USD/SGD  | Before the announcement

 

Let us start with the USD/SGD currency pair, where the above image shows the state of the chart before the news announcement. We see that the market is moving in a small ‘range,’ and just before the release, the price is at the top of the ‘range.’ This means we can expect selling pressure from this point that can take the price lower. However, it is better to take a position based on the volatility caused by the news announcement. 

USD/SGD  | After the announcement:

After the news announcement, we see that the price moves lower, and the market falls considerably. The market reacted oppositely to what was expected as it resulted in the strengthening of the Singapore dollar even though the GDP data was negative. The volatility increased to the downside, and eventually, the market turns into a downtrend.    

SGD/JPY | Before the announcement

SGD/JPY | After the announcement:

The above images are that of the SGD/JPY currency pair, where we see that the price is precisely at the ‘support’ before the news announcement. There is a high chance that the buyers might come back in the market and go ‘long’ in the currency pair. Since economists forecast a lower GDP for this quarter, it is advised not to take a ‘short’ position before the news release.

After the news announcement, the price initially moves higher, but this gets immediately sold into, and the candle closes with a large wick on the top. We witness a fair amount of volatility in the currency, and finally, it gets extended to the downside. One can take a ‘short’ position in the currency after noticing trend continuation patterns in the market and after confirmation from technical indicators.     

GBP/SGD | Before the announcement

GBP/SGD | After the announcement:

The above images represent the GBP/SGD currency pair, where we see that before the news announcement, the market has reversed to the upside, and currently, the price has reacted strongly from the ‘demand’ area. This indicates a high amount of bullishness in the currency pair and weakness in the Singapore dollar since it is on the left-hand side of the currency pair.

After the news announcement, the market falls lower, and the volatility slightly increases to the downside. The Singapore dollar gets more influential after the news release, despite reporting weak GDP data. Thus, we can conclude that there is some confusion in the market and hence it moves in both the directions. Traders should technically analyze and take positions accordingly. 

That’s about ‘GDP From Public Administration’ and its impact on the Forex market after its news release. In case of any questions, let us know in the comments below. Good luck!  

Categories
Forex Service Review

Line Sync Mirror Chart Review

LineSyncMirrorChart is a specific way of currency correlation representation tool designed for the MetaTrader 4 charts. The initial version is published in May 2016 by Vitaly Muzichenko from Ukraine, finalizing with the version 16.10 updated in October 2017. Updates added more features such as the ability to disable synchronization of all charts and Heikin Ashi […]

LineSyncMirrorChart is a specific way of currency correlation representation tool designed for the MetaTrader 4 charts. The initial version is published in May 2016 by Vitaly Muzichenko from Ukraine, finalizing with the version 16.10 updated in October 2017. Updates added more features such as the ability to disable synchronization of all charts and Heikin Ashi […]

LineSyncMirrorChart is a specific way of currency correlation representation tool designed for the MetaTrader 4 charts. The initial version is published in May 2016 by Vitaly Muzichenko from Ukraine, finalizing with the version 16.10 updated in October 2017. Updates added more features such as the ability to disable synchronization of all charts and Heikin Ashi chart type implementation. This tool is aimed towards Price Action trading strategies using the Support and Resistance, divergence, and reversals. LineSyncMirrorChart belongs to the paid products category on the MQL5 market and hasn’t received much attention.

Overview

By mirroring it is meant that the tool can plot multiple currency pair price charts into a single one. This correlation provides signals on many levels and interpretations, most of them are subjective. Price Action levels are not always clear, two traders can plot different Support or Resistance levels and see different Price Action patterns on the same chart. Comparing two or more price charts makes these patterns even more subjective thus making this tool very hard to measure or put it to the performance test. The MT4 Strategy Tester module is completely useless here.

According to the author, two strategies are recommended. The first one is the divergence detection after news events and their impact on the market or once a trading session starts. After such movements, the market will calm and the delta will converge. Support and Resistance levels have to be preset to avoid trading near them when the signal is pointing towards the Support/Resistance line. Traders can also detect false breakouts by comparing Price Action and currency correlations. Given all of the above, the tool is only for traders that make decisions on subjective technical analysis, not the one calculated and absolutely defined by indicators.

Some of the features include currency pair inversion. This feature can be used in many ways although it requires some creativity from traders. Many of the features mentioned in the Overview page require visual analysis such as detect history regularities, determine the strength of a currency, and reversal patterns. The developer recommends combining this tool with the “CorrelatePairs” indicator, which also belongs to the paid indicators category. In the video, the EA used is developed for this tool and is attached to the comments page.

There are many settings for Line Sync Mirror Chart although just a few are related to how the indicator behaves. First, you can select what markets are you trading, Forex, CFD, Futures, or Indices. Then, how to calculate lots for trades. The rest of the settings are visual, about the line colors, the number of buttons in the columns (for pair switching and similar), line style or width, line dragging support, font settings, and so on. Based on the screenshots, the tool is also showing the Pivot, Support and Resistance levels, symbols switcher, and more.

Service Price

The price for the Line Sync Mirror Chart is $32 to buy with 25 activations and $16 to rent for one month. The demo is available and free to include once you register on the MQL5 market. There are many other currency correlation tools published by others not giving this one a chance since it is probably badly presented and executed, making the tool a bit complicated, not beginner-friendly, and focused only on a narrow group of strategies.

Conclusion

The video supplemented on the presentation page is not showing all that this tool can do. Most of the pointers and the logic are missing, viewers may be confused about what is the purpose of many buttons and features. This is probably the reason why the tool is not popular with only one perfect review that does not tell much. The Comments page is mostly in Russian therefore not useful for others not speaking this language.

This Forex service can be found at the following web address: https://www.mql5.com/en/market/product/14719

Categories
Forex Brokers

xDirect Markets Review

xDirect Markets is a London based brokerage firm that provides a platform to trade FOREX, commodities & indices to traders and non-traders. Some of their aims are to ensure their customers face no strains while using their service, to be truthful and develop long-lasting relationships with their clients, to have a choice of trading conditions, and to be excellent and professional at all times. We will be using this review to dive deep into the site to find out exactly what is on offer from xDirect Markets.

xDirect Markets is a London based brokerage firm that provides a platform to trade FOREX, commodities & indices to traders and non-traders. Some of their aims are to ensure their customers face no strains while using their service, to be truthful and develop long-lasting relationships with their clients, to have a choice of trading conditions, and to be excellent and professional at all times. We will be using this review to dive deep into the site to find out exactly what is on offer from xDirect Markets.

xDirect Markets is a London based brokerage firm that provides a platform to trade FOREX, commodities & indices to traders and non-traders. Some of their aims are to ensure their customers face no strains while using their service, to be truthful and develop long-lasting relationships with their clients, to have a choice of trading conditions, and to be excellent and professional at all times. We will be using this review to dive deep into the site to find out exactly what is on offer from xDirect Markets.

Account Types

Looking around the internet it seems like there are three different account types, the Basic, Standard, and Pro account, unfortunately, there doesn’t seem to be any information regarding them on the site, so we can’t really comment on their features or requirements. As we go through this review, if we notice any potential differences we will outline them within the corresponding section.

Platforms

There are two different platforms available to trade with, we will outline some of their features for you.

MetaTrader 4 (MT4): xDirect Markets upgraded its MT4 platform to integrate seamlessly with our No Dealing Desk Forex execution. This means no 3rd party bridges and no auto account syncs. So of the features of MetaTrader 4 include the market watch window, navigator window, ability to use multiple order types, 85 pre-installed indicators, analysis tools, multiple chart setups, automated trading, and different order execution capabilities.

xStation: xStation is a powerful web-based trading platform that provides an array of innovative features for both beginners and experienced traders to help you maximize your trading potential. It surpasses relatively slight features when compared with other widespread trading platforms. This platform is embodied with exceptional trading straight from the charts, quicker performance time, and whole straightforwardness of use. The platform brings 91 different financial instruments and more.

Leverage

The leverage that you get depends on your account balance, the higher the balance the lower the available leverage is. We have outlined them for you below.

  • 0 – 10,999.99 = 1:200
  • 11,000 – 209,999.99 = 1:100
  • 210,000 – 524,999.99 = 1:50
  • 525,000 – 1,099,999.99 = 1:33
  • 1,100,000 – 1,899,999.99 = 1:20
  • 1,900,000 – 3,199,999.99 = 1:10
  • 3,200,000 and above = 1:5

The front page of the site does indicate that the maximum leverage available is 1:400 so we are not sure which one is the correct figure.

Leverage can be selected when opening up an account but must be within the limits above, you can request to change the leverage by contacting the customer service team.

Trade Sizes

Trading sizes start from 0.01 lots and go up in increments of 0.01 lots so the next trade would be 0.02 lots and then 0.03 lots. The maximum trade size is 50 lots which are reasonable, we do not know how many trades you can have open at any one time.

Trading Costs

The front page of the site indicates that spreads are as low as 0.1 pips, so this would indicate to us that there would be an added commission on the accounts, however, there was also mention of zero commissions on trading, we find it hard to believe that the spreads would be that low with no commissions, so something must be wrong. What we do know though is that there are swap charges, these are fees for holding trades overnight and can be both positive or negative, they can be viewed from within the trading platform you are using.

Assets

The assets have been broken down into a number of categories that we will now outline for you.

Forex: AUDCAD, AUDCHF, AUDNZD, AUDUSD, CASCHF, CHFPLN, EURAUD, EURCAD, EURCHF, EURGBP, EURNOK, EURNZD, EURPLN, EURRON, EURSEK, EURTRY, EURUSD, GBPAUD, GBPCAD, GBPCHF, GBPNZD, GBPPLN, GBPUSD, NZDCAD, NZDUSD, USDBRL, USDCAD, USDCHF, USDILS, USDMXN, USDNOK, USDPLN, USDRON, USDSEK, USDTRY, USDZAR. AUDJPY, CADJPY, CHFHUF, CHFJPY, EURCZK, EURHUF, EURJPY, GBPJPY, NZDJPY, USDCLP, USDCZK, USDHUF, USDJPY.

Commodities: Aluminum, Bund 10Y, Coca, Coffee, Copper, Corn, Cotton, EMISS, Gold, Natural Gas, Nickel, Oil, WTI Oil, Platinum, SCHATZ 2Y, Silver, Soybean, Sugar, TNOTE, Wheat, Zinc.

Indices: AUD 200, BRAXOMP, CNHCOMP, CZKCASH, DE 30, EU 50, FRA 40, HKCOMP, HUNCOMP, INDIA 50, ITA 40, JAP 225, KOSP 200, MEXCOMP, NED 25, POR 20, RUS 50, SPA 35, SUI 20, UK 100, US 100, US 30, US 500, US 2000, VOLX, W 20.

Spreads

The front page has a random figure jumping about between 0.1 pips and 0.8 pips, it doesn’t indicate what instrument or if they are live figures so the information is not clear at all. Apart from that, there is no information on spreads apart from the simple statement of low spreads, so real examples are given. The only other information available is that the spreads are variable which means they will move with the markets when there is added volatility they will be seen higher.

Minimum Deposit

The minimum deposit required to open up an account is $1,000. We do not know if this amount is reduced for further top-up deposits.

Deposit Methods & Costs

We looked all over the site for any information surrounding deposit methods but unfortunately, we could not find any. This is a shame as people need to know how they can get their money into a broker and also how much it will potentially cost them to do so.

Withdrawal Methods & Costs

We also could not find any information regarding the withdrawal of your funds, again this information is vital as when a company is holding on to your money, the last thing you want is to try and withdraw to find the methods you want to sue isn’t available or that it will cost you a lot of money to do so.

Withdrawal Processing & Wait Time

We also do not know the exact processing times, we would hope that any withdrawal requests would bet fully processed between 1 to 5 days from the date the request is made, this will depend on the method used.

Bonuses & Promotions

It does not look like there are any active bonuses running when we were writing this review, this does not mean that there won’t be any though so if you are interested in bonuses you could always contact the customer service team to see if there are any coming up that you could take part in.

Educational & Trading Tools

There are a few different aspects to this side of the broker, the first being some webinars, however it looks like they haven’t been active since 2017, there are also trading videos, these go over subjects such as fundamental analysis or risk management. Next up is a forex trading ebook, market news detailing past news but again, this has not been updated since 2017. The final section is based around technical analysis, however, this section has not had an update since July 2019.

Customer Service

The customer service department is open 24 hours a day 5 days a week and closes over the weekend along with the markets. You can use the online submission form to fill in your query and then get a reply via email. You can also use the provided postal address.

Address: 444 Holden House, 57 Rathbone Place, West Central, London, W1T 1JU

Demo Account

Demo accounts are available for both the MetaTrader 4 and xStation clients. The demo accounts will mimic the real accounts and do not have an expiration time. Demo accounts are great as they allow you to test out the trading conditions and new strategies without any real risk.

Countries Accepted

This information isn’t available on the site so if you are thinking of joining but are not sure of your eligibility, we would recommend contacting the customer service team to find out if you are or not.

Conclusion

There is a lot of information missing from the xDirect Markets website, we don’t have a whole lot of information on the accounts or trading conditions as most of the information is scattered around the site instead of on a set page. The trading conditions that we have seen are a little confused, there are mentions of 1:400 as max leverage but also 1:200 as a max, so knowing which one is true is impossible to tell. There is also a lot of missing information, primarily and most worryingly, there is no information on deposits, withdrawals, or any fees that go along with them. This information is vital and not having it available is enough for us to suggest looking elsewhere for another broker to use.

We hope you like this review, please be sure to check out some of the other reviews to help find the broker that works for your trading needs.

Categories
Forex Brokers

Maximus FX Review

Maximus FX is an online foreign exchange broker that focuses on currency pairs and some CFD options. The company is primarily registered in St. Vincent & the Grenadines, with operational and administrative offices located in Ukraine, Cyprus, Nigeria, South Asia, Russia, and Kazakhstan. Maximus FX is currently under regulation by the Financial Services Authority (FCA), making them more trustworthy than some of their unregulated competitors. This broker has been offering several advantages since its launch in 2013, including 0% commission on deposits, spreads as low as 0.2 pips, leverage options that go as high as 1:1000, etc. Stay with us to find out about all of those advantages and everything else you’ll need to know before opening an account.

Maximus FX is an online foreign exchange broker that focuses on currency pairs and some CFD options. The company is primarily registered in St. Vincent & the Grenadines, with operational and administrative offices located in Ukraine, Cyprus, Nigeria, South Asia, Russia, and Kazakhstan. Maximus FX is currently under regulation by the Financial Services Authority (FCA), making them more trustworthy than some of their unregulated competitors. This broker has been offering several advantages since its launch in 2013, including 0% commission on deposits, spreads as low as 0.2 pips, leverage options that go as high as 1:1000, etc. Stay with us to find out about all of those advantages and everything else you’ll need to know before opening an account.

Maximus FX is an online foreign exchange broker that focuses on currency pairs and some CFD options. The company is primarily registered in St. Vincent & the Grenadines, with operational and administrative offices located in Ukraine, Cyprus, Nigeria, South Asia, Russia, and Kazakhstan. Maximus FX is currently under regulation by the Financial Services Authority (FCA), making them more trustworthy than some of their unregulated competitors. This broker has been offering several advantages since its launch in 2013, including 0% commission on deposits, spreads as low as 0.2 pips, leverage options that go as high as 1:1000, etc. Stay with us to find out about all of those advantages and everything else you’ll need to know before opening an account.

Account Types

Maximus FX offers four live account types: Mini, Standard, VIP, and Islamic. It costs $200 to open the broker’s Mini account and requirements then jump to $1,000+ for a Standard account or better. Those of the Islamic faith have an advantage in having access to an account that was created specifically for them, instead of as more of an afterthought; however, those traders will have to afford the steep $50K deposit, otherwise, there is no second option. Accounts share more differences than similarities, including separate leverages, spread types, commission fees, margin call and stop loss levels.

Maximus FX focuses on trading currency pairs, although Standard, VIP, and Islamic account holders can request access to CFDs. Mini account holders won’t have this option. If you’re interested in taking part in ongoing promotional opportunities, you may want to consider that Standard accounts are the only account type that can earn both the Welcome Bonus and Rebate rewards. We’ve provided a quick overview of the various account details below, but we would highly recommend reading further sections to gain a clear picture of each account’s advantages and disadvantages, especially when it comes to the spread types and commission charges.

Mini Account
Minimum Deposit: $200 USD
Leverage: Up to 1:1000
Spread: Ordinary/Variable
Commission: $0 (ordinary spreads) or $20 (variable spreads)
Minimum Trade Size: 0.01 lot
Promotions: Rebate Bonus, Refer-A-Friend

Standard Account
Minimum Deposit: $1,000 USD
Leverage: Up to 1:500
Spread: Ordinary/Fixed/Variable
Commission: $0 (ordinary/fixed) or $16 (variable spreads)
Minimum Trade Size: 0.01 lot
Promotions: Welcome Bonus, Rebate Bonus, Refer-A-Friend

VIP Account
Minimum Deposit: $25,000 USD
Leverage: Up to 1:100
Spread: Variable
Commission: $8 per lot
Minimum Trade Size: 0.1 lot
Promotions: None

Islamic Account
Minimum Deposit: $50,000 USD
Leverage: Up to 1:500
Spread: Variable
Commission: None
Minimum Trade Size: 0.01 lot
Promotions: Welcome Bonus, Refer-A-Friend

Platform

Those that open an account through this broker will be trading from the award-winning MetaTrader 4 platform. Even with the more recent release of MetaTrader 5, MT4 has remained the most preferred trading platform on the market since its release in 2005. If you ask traders why the platform has earned so much credibility, you’ll receive a variety of different answers – some mention the navigable, user-friendly interface, others boast about the built-in features, like charting tools, technical analysis objects, multiple timeframes, etc., and others simply enjoy having the ability to take part in scalping, hedging, trading micro-lots, having access to Expert Advisors, and multiple other supported features.

Another reason that MT4 remains so popular would be the program’s accessibility options. Traders can download MT4 on PC, or on any device that supports Google Play (Android, tablet) or the App Store (iPhone, iPad) for trading on the go. The platform can also be accessed through the WebTrader, which is an ideal option for Mac users or anyone that wants to quickly access MT4 without downloading the program. MultiTerminal is yet another option for those that want to conveniently manage multiple trading accounts at once from one login. Links to all of these options can be found under the “Trading” section of the broker’s website.

Leverage

This broker offers leverage caps that range from a standard 1:100 level up to an impressive 1:1000 ratio. Along with the majority of other forex brokers, Maximus FX offers the higher caps on accounts that don’t typically hold a large balance. This restriction is often implemented due to the high-risk experience associated with trading with a higher than average leverage. The Mini account would be the only account that offers the most generous 1:1000 option, while the Standard and Islamic accounts cut the offer down to 1:500. This amount is especially flexible for Islamic account holders since the account requires a significant $50K deposit.

The VIP account offers the lowest 1:100 cap. This option may seem much lower than the other options; however, many professional traders prefer to use a leverage at this level or below to play it safe. Regardless of which account you’ve chosen; the accessible leverage options are competitive. Traders will simply want to be sure to avoid using some of the broker’s highest caps without prior experience in order to avoid risking their available capital.

Trade Sizes

Micro lots are supported on Mini, Standard, and Islamic accounts. The VIP account is the only exception with a one mini lot trade size minimum. The website doesn’t actually cover the maximum trade sizes supported by each account. We do know that hedging is allowed on all accounts, but there is no mention of scalping or news trading. Maximus FX imposes preset margin call and stop-loss levels that differ for each account in order to stop accounts from going into negative territory. Note that stop out levels may change in situations with irregular market volatility, possibly being raised to 100%. The standard levels associated with ordinary trading conditions have been listed below.

Margin Call/Stop Out Levels

  • Mini Account: 100%/60%
  • Standard Account: 80%/40%
  • VIP Account: 90%/40%
  • Islamic Account: 80%/50%

Trading Costs

Maximus FX charges commission costs differently than other brokers. Rather than charging zero commissions or a flat rate for each account type, the broker decides whether charges would be applicable based on the type of spreads being traded. For example, if you trade with ordinary spreads on the Mini account, there is no commission charge; however, there is a charge of $20 per lot (round turn) if you choose to trade with variable spreads. As you can imagine, lower commission costs equal higher spreads, and vice versa. The Mini and Standard accounts offer multiple spread type choices, while VIP and Islamic account holders will only have the choice to trade with variable spreads. We’ve detailed the available spread types and their commissions for all account types below.

Mini Account
Ordinary Spreads (from 2.1 pips): Zero Commission
Variable Spreads (average 0.2 pips and up): $20 for FX pairs/$30 on metals

Standard Account
Ordinary Spreads (from 1.6 pips): Zero Commission
Fixed Spreads (fixed from 2.2 pips): Zero Commission
Variable Spreads (average 0.2 pips and up): $16 for FX pairs/$28 on metals

VIP Account
Variable Spreads (average from 0.2 pips and up): $8 on FX pairs/$22 on metals

Islamic Account
Variable Spreads (from 1.8 pips): Zero Commission

In addition to the spreads and commission costs, the broker also charges overnight interest fees. Trades that have been opened before 4:59 p.m. New York time/11:59 p.m. MT4 platform time will be subject to those charges, otherwise known as swap rates. These rates are tripled on Wednesdays to account for the upcoming weekend and may be modified for holidays. Islamic account holders will not pay any type of swap fees.

Assets

Maximus FX primarily offers currency pairs for trading. Options include majors, minors, and some exotics, totaling 37 options. Precious metals Gold and Silver are also grouped in with the available FX pairs. Some of those exotic options include the South African Rand, Turkish Lira, Swedish Krone, Russian Ruble, Norwegian Krone, and more. It’s a little disappointing that the broker doesn’t offer a larger number of FX options, considering that this is their primary focus. Commodities, CFD’s, and indices are considered extra trading instruments, which are only available upon request for Standard, VIP, and Islamic account holders.

It’s a bit odd that the broker doesn’t simply offer these instruments to all clients, and the option can’t even be requested on Mini accounts. This makes the broker’s overall investment portfolio seem extremely limited when compared to the stocks, indices, bonds, energies, and other instruments that are often available elsewhere. We’re also curious as to whether the “extra” instruments are available to any trader with an applicable account that asks for them. Most likely, the broker would pick and choose which traders to trust with access to otherwise readily available CFDs.

Spreads

As we mentioned earlier, Maximus FX offers a more customizable experience by allowing traders to choose from different types of spreads on some of their account types. Remember that the chosen spread would affect the commission costs, so it is important to weigh those costs against one another. On the Mini account, spreads can be floating or ordinary. Floating spreads on this account start from as low as 0.2 pips and most of the options average less than 1 pip, aside from a few exotic options that have higher spreads. Compare this to the account’s ordinary spreads, which range from 2.1 pips to 4 pips and higher, and it seems as though the floating spreads are the better choice until the $20 commission charge is factored in. Moving on to the Standard account type, options can be variable, fixed, or ordinary.

The variable spreads average of 0.2 pips and up. Fixed spreads start as low as 2.2 pips, while ordinary spreads start from 1.6 pips. The Standard account is the only account type that gives traders the opportunity to access fixed spreads. Under irregular market volatility, spreads may widen, even if they are fixed. Spreads on the VIP account average 0.2 pips and most of the currency pairs average below 1 pip. The Islamic account is commission-free, with spreads starting from 1.8 pips. Traders will want to note that anything above 1.5 pips would be above the industry average, while anything below this level would be ideal.

Minimum Deposit

If you’re interested in opening an account, you’ll need to deposit at least $200 to access the broker’s most affordable account type, the Mini account. Compared to other options, the deposit requirement for this beginner account does seem somewhat steep. If you’re looking to open a simple Standard account, you’ll need to meet a $1,000 deposit requirement. If you don’t have a lot of funds to start with, or you aren’t looking to make a large deposit right off the bat, then these numbers may seem daunting. If you are prepared to make that large deposit, then the broker’s VIP account may be a worthy option at $25,000.

Earlier, we mentioned an advantage that this broker offers specialized Islamic accounts for those that need to adhere to Shariah laws. On the downside, Maximus FX asks for a $50,000 deposit in order to open an Islamic account. This requirement may actually force some of those traders to choose another broker entirely if they cannot make the deposit. The more expensive account opening costs will serve as a disadvantage to beginners and those of the Islamic faith.

Deposit Methods & Costs

The broker accepts deposits through credit/debit cards (Visa, MasterCard, Maestro, and UnionPay), bank wire transfers, which also includes MoneyNet and Sberbank, and e-wallets Skrill and Neteller. Note that MoneyNet does not accept funds from clients in the USA, France, or Switzerland. Most of the payment methods are fee-free, with the exception of bank wire transfers, which would be charged a fee on the bank’s side. In the event that a transfer is made for an amount that is more than $5,000, the company will reimburse any fees and add them to the client’s trading account.

There are some minimum funding requirements for each payment method. The minimum is $500 USD for bank wire and MoneyNet, $100 for Sberbank, and $50 for UnionPay. All of the remaining methods have a minimum of $10 USD. It takes from 5 minutes to 3 hours for most deposits to be credited. Exceptions would be a 5-business day waiting period for bank wire and a 3-day period for Sberbank deposits.

Withdrawal Methods & Costs

Each accepted funding method is also available for withdrawals and commissions are charged on each method in various rates. A 5% charge is applied to all card withdrawals and there is a 3% charge on Neteller and Skrill withdrawals. All bank methods (bank wire, Sberbank, MoneyNet) will be charged a fee on the bank’s behalf that depends on the total amount of the withdrawal. Traders will also want to be aware of specific withdrawal amount requirements for each payment method, as these restrictions could make it difficult to access your own funds later on. The minimum is $50 for card withdrawals, $100 for bank methods (or 6500 RUB for Sberbank), and $50 USD for Skrill and Neteller withdrawals. These requirements are somewhat steep and will likely cause frustration for some traders later down the road.

Withdrawal Processing & Wait Time

Visa, MasterCard, and UnionPay withdrawals are processed within 1 to 5 business days. Maestro withdrawals are processed much more quickly, within 5 minutes to 3 hours. Bank wire transfers also take 1 to 5 business days to be processed, while MoneyNet transfers take up to 3 days and Sberbank takes 15 minutes to 3 hours. It takes one business day for Skrill and Neteller withdrawal requests to be processed. Note that these timeframes exclude weekdays and public holidays, so traders will want to account for the extra timeframe if planning withdrawals around certain periods of time.

Bonuses & Promotions

An entire section of the broker’s website is dedicated to promotions. The section is divided into bonuses and competitions, but there weren’t any ongoing competitions at the time we checked. Fortunately, the broker is currently offering a 50% Welcome Bonus, a Rebate Bonus, and a Refer-A-Friend program. We’ve provided an overview of each opportunity below.

50% Welcome Bonus (Standard & Islamic accounts): After making an initial deposit of at least $200, traders would need to email [email protected] with their verified account number and promotion name. Deposits from $200 to $10,000 qualify for the 50% bonus and the broker will provide a personal offer to those depositing more than $10K. The bonus is withdrawable and 1 lot is equal to $4 USD worth of the bonus release.

Rebate Bonus (Mini & Standard accounts): This bonus rewards clients with a rebate based on their total number of traded lots. A completed lot size of 1 to 200 lots qualifies for a rebate bonus of $2.50 per lot, 201 to 500 lots qualify for $3.00 per lot, and 501+ lots qualify for $4.00 per lot. The maximum payout for this bonus per client is $4,000, or the equivalent in another base currency.

Refer-A-Friend: Once a friend registers an account and makes a deposit, the referring trader would need to email [email protected] with the friend’s name and email address. The amount of the bonus reward would depend on the size of the referred friend’s deposit. A $200 deposit comes with a $50 reward, $1,000 is rewarded with $100, $2,500 is rewarded with $125, $5K is rewarded with $150, $10K is rewarded with $200, and any amount above $10K will result in a larger reward based on the individual.

Educational & Trading Tools

Maximus FX offers interactive educational resources in the form of individual training sessions, which covers financial markets, investment tactics, online trading, capital management, and trading psychology, in addition to webinars and seminars. Overall, the information covered in these one-on-one sessions is more advanced. Beginners will find a forex glossary and “What is Forex” section on the website, but these sections just don’t provide much information. The website also covers analytics like market news, a weekly overview, technical analysis, and economic events. Even though the available resources are directed more towards those that have some experience, it is nice to see several different options available. Traders will also find a variety of tools built-into the MT4 trading platform, although there aren’t any tools available directly on the website.

Demo Account

Maximus FX provides free demo accounts to any traders that would like to use one, with no associated risks. Demo accounts allow traders to practice in a live environment, under the same conditions offered on the broker’s live accounts. The accounts have become a staple among forex brokers in general because of several key benefits they provide, like the ability to trade form the broker’s chosen platform, to practice with different strategies or leverages, to find out if one is truly prepared to open a real account, etc.

It’s easy to assume that these accounts are better suited for beginners, but even professional traders can gain some advantages trading from the simulation experience offered by demo accounts. In order to open a demo account through this broker, one would only need to select “Open Demo Account” from the top right corner of the website and then fill in a few quick details. Traders will be able to register and trade from their demo account within minutes.

Customer Service

The Maximus FX team is available 24 hours a day on weekdays and can be contacted through LiveChat, Skype, email, or callback request. While we were initially excited to see the instant support option LiveChat available, our experience suggests that the option is actually just a disguise for email requests. When we tried to reach out, the chat window simply asked us to leave a message. There was no indication that an agent wasn’t available or that the broker would try to connect us with someone, even though it was during business hours. Our second attempt at a different time yielded the same results.

We were equally disappointed to see that direct phone numbers are not listed on the website, and traders will instead need to submit a callback request and wait for a response. If you decide to reach out through email, you should know that all of the company’s offices and departments use the same email address, with the exception of the partners department and support for global clients. All of the provided details have been listed below.

Skype: MaximusFX_Support
General Inquiries: [email protected]
Global Support: [email protected]
Partnership Department: [email protected]

Countries Accepted

According to a statement at the bottom of the broker’s website, Maximus FX does not offer service to residents of the United States, Iran, Cuba, Sudan, Syria, and North Korea. We weren’t exactly surprised to see these locations listed since many of the aforementioned countries are often blocked from opening accounts based on regulatory requirements. As usual, we did head over to the registration page to double-check, and we were relieved to find that all of these options are in fact available as selectable countries. Note that some countries, like Iran, are listed in red, but the website will allow one to select those locations and register an account with no issue. In this particular situation, we were happy to find that the website’s prior statement wasn’t upheld.

Conclusion

Maximus FX is an online forex broker that primarily focuses on currency pairs and metals, with CFDs available to some clients upon request. The broker offers a generous leverage cap of up to 1:1000, but opening an account can be expensive. A $200 deposit is required for a Mini account and many traders that are looking to open an Islamic account may not be able to meet that account’s $50,000 deposit requirement. Comparing the commission costs based on spread type can be confusing and it may be difficult for less-experienced traders to keep up with the full cost of their trades. If one chooses a commission-free spread type, then spreads on FX pairs and metals will run much higher. Accounts can be funded through cards, bank wire transfers, and a couple of e-wallets.

The broker imposes $50 and $100 minimum withdrawal amount requirements, which will make it difficult or impossible for some traders to access their funds for withdrawal. The customer support team is in the office on weekdays, but support does not seem to be active on LiveChat, even though it is available on the website. Traders can currently earn extra cash through the broker’s Welcome Bonus, Rebate Bonus, and Refer-A-Friend program. Maximus FX also offers some interactive training sessions, webinars, seminars, demo accounts, and other resources to help educate their clients. Despite their disclaimer, the broker does offer service to clients in all locations. If you do decide to open an account, then one of the most important things to consider would be the spread types and commission charges for this broker in particular.

Categories
Forex Basic Strategies

Learning To Trade The 123 Pattern Reversal Trading Strategy

Introduction

Introduction

Introduction

Strategies that we discussed in the previous set of articles were based on indicators and price action patterns. We are going into the trading strategies, where we will combine popular candlestick patterns and price action. The next two articles will discuss the 123 patterns as a reversal trading strategy and continuation trading strategy. First, we will look at the 123 pattern as an indicator of the end of a trend and also a market reversal. Hence, it is also known as the 123 top and bottom pattern.

The 123 top and bottom is a very powerful pattern that signals a reversal of a trend. It is also used as a trend continuation pattern, which we will be discussing in detail shortly. First, let us discuss the 123 patterns as a reversal trading strategy.

Time Frame

A fascinating feature of this strategy is that it applies to all time frames starting from 15 minutes to ‘daily.’ Before trying this strategy on extremely small time frames such as the 5 minutes or 1 minute, a lot of experience is required.

Indicators

As mentioned earlier, in this strategy, we will not be using any technical indicators. The only prerequisite of the strategy is to have a clear understanding of the 123 patterns before reading about the strategy.

Currency Pairs

The strategy is suitable for trading in all currency pairs. However, it is suggested to look for the trading opportunities in major and few minor currency pairs only as the patterns are more reliable and evident in these pairs.

Strategy Concept

The strategy begins by identifying three main points. For example, in an uptrend, when the market hits a new high, label that point as 1. We then wait for the price to pull back to a short-term support area. This point is labeled as 2. Finally, when the price moves up to an area between points 2 and 3, we label this as point number 3. We then take an entry at a suitable location, which we will address in the later part of the strategy.

The pattern is complete when the price stays below point 2. The strategy is to sell the currency pair on the break of point 2. The take-profit of the strategy is placed at a point that results in a 1:2 risk-to-reward ratio. The stop loss is put just above point 3, whereas a more conservative stop loss is placed just above the move, in order to maximize the risk to reward. The trader will be able to make this choice by trading the pattern again and again. Let us understand the step by step process of the strategy.

Trade Setup

In order to illustrate the strategy, we have considered the GBP/AUD currency pair, where we will look for ‘short’ trades by identifying the 123 top patterns. In this example, we are applying our strategy on the 15 minutes time frame and during one of the major trading sessions.

Step 1

The first step of the strategy is to look for point 1, which is essentially the highest point of a trend. The criteria for selection of point 1 is that the market should reach it’s previous low or high twice before it starts moving lower or higher.

In our example, we can see that the previous lows have been tested multiple times, and thus we have chosen the highest point as our point number 1.

Step 2

The next step is to mark the point number 2. When the market pulls back to the recent support or resistance area after reacting from point 1, we mark this as point 2. Remember that the price should not only reach that area but also react and move higher (for uptrend) or lower (for downtrend). This confirms the key technical level.

Step 3

The formation of the 123 pattern is complete after identifying the third point. When the market moves in the area between points 1 and 2 and later comes goes back to point 1, the point from where the market reversed becomes our point 3. Now the next step of the strategy is discovering the ‘entry.’

Step 4

In this step, we will be discussing the ‘entry.’ There are two ways of entering the market in this strategy. The first one is an aggressive way to take an entry on a break of point 2, and as the market starts moving in that direction. Traders who are confident about the pattern and have belief in the market can opt for such an ‘entry.’ The second one is a conservative approach where one takes an ‘entry’ at the test of the previous support or resistance. This gives additional confirmation that the market is ready to go in a favorable direction.

In this case, we have entered the market right after point 2 is broken, which is a little aggressive.

Step 5

Finally, we need to determine our stop-loss and take-profit levels for the strategy. The stop loss is placed a little higher than point 3, or if one wants to maximize their risk to reward ratio, he/she can place it at a 50% mark between point 2 and point 3. The take-profit is placed at a point where the resultant risk to reward is at least 1:2. However, if there is a hurdle in between, profits can also be taken at such points.

Strategy Roundup

The 123 pattern is a major trend reversal pattern is one of the best strategies for trend reversals. One can trade using this strategy on any time frame. The strategy is based on the idea that the market is losing momentum in the direction of the major trend and could reverse any moment. The probability of this strategy is high and does not require knowledge of technical indicators.

Categories
Forex Brokers

MM Financial Experts Review

MM Financial Experts is an FX and CFD broker that is also a binary options provider. The company is owned by Elit Property Vision LTD, a Bulgaria-based company that also owns other brokerages, including GrahamFE and WellingtonInv. These providers don’t loudly advertise their affiliation with the company, which is never a good sign. Taking a look at this specific brokerage’s offers on its own, we see a diverse range of asset classes that can be traded from 8 different live accounts. With so many options to choose from, opening an account can quickly become a tricky process. We’ve gathered all the information we could to bring our readers a comprehensive review that can help with the decision of which account to open, or answer the question of whether this broker is a suitable candidate.

Account Types

MM Financial offers a diverse range of accounts, including Test and Micro accounts, along with Standard, Silver, Platinum, Sapphire, Trader, and Business accounts. As one reaches higher account tiers, then extra benefits will be unlocked. Some of those advantages include expedited withdrawals, spread discounts, earned interest on profits, and risk-free trades. This is a common tactic used by brokerages that push for traders to make larger deposits. Traders will find that this broker’s website can be vague where it counts, especially when describing trading conditions and prices. We were able to determine that spreads start at 4 pips with discounts given once one reaches the Silver account or higher, but we couldn’t find any mention of commission charges at all. Traders will notice that those spreads are much higher than average, and potential commission charges could quickly raise the trading cost to an alarming rate. A quick overview of each account has been provided below.

Test Account
Minimum Deposit: $1,000 USD
Leverage: Up to 1:200
Spread: From 4 pips
Commission: NA

Micro Account
Minimum Deposit: $5,000 USD
Leverage: Up to 1:200
Spread: From 4 pips
Commission: NA

Standard Account
Minimum Deposit: $10,000 USD
Leverage: Up to 1:200
Spread: From 4 pips
Commission: NA

Silver Account
Minimum Deposit: $25,000 USD
Leverage: Up to 1:200
Spread: From 3.6 pips
Commission: NA

Platinum Account
Minimum Deposit: $50,000 USD
Leverage: Up to 1:300
Spread: From 3.4 pips
Commission: NA

Sapphire Account
Minimum Deposit: $75,000 USD
Leverage: Up to 1:400
Spread: From 3.2 pips
Commission: NA

Trader Account
Minimum Deposit: $100,000 USD
Leverage: Up to 1:500
Spread: From 2 pips
Commission: NA

Business Account
Minimum Deposit: $750,000 USD
Leverage: Up to 1:500
Spread: From 1.2 pips
Commission: NA

Platform

The broker offers a simple web-based platform named “Trading Platform” in place of a more popular option like MetaTrader 4 or 5. Beginners may find the registration process to be simpler through this option since one only has to go to the “Trade” tab on the website to register and access the platform. However, more seasoned traders will likely suffer at the hands of the bland platform that doesn’t quite stand alongside MT4 in terms of accessibility, functions, and overall attractiveness. It’s disappointing that MM Financial isn’t willing to pay the licensing fees for a better platform, considering that they are a more expensive brokerage that is owned by an even larger company.

Leverage

The broker offers a leverage of up to 1:200 on their first four account types, pushes the cap to 1:300 on the Platinum account, and up to 1:400 on the Sapphire account. The maximum leverage ratio tops out at a flexible 1:500 maximum on the Trader and Business accounts, providing another advantage to the top-tier account holders. In a similar fashion, certain leverages are assigned to each account when trading cryptocurrencies. Take a look at those options below:

  • Test Account: 1:10
  • Micro Account: 1:10
  • Standard Account: 1:15
  • Silver Account: 1:20
  • Platinum Account: 1:30
  • Sapphire Account: 1:50
  • Trader Account: 1:70
  • Business Account: 1:100

Traders will notice that some of the crypto leverages are much higher than those offered by the competitors. However, one should always remember the risks associated with using high leverage. We wouldn’t recommend using higher options like those featured here without gaining a great deal of experience. Fortunately, traders can start at a lower level and work their way up.

Trade Sizes

When it comes to trading conditions, the broker’s website is very vague. This isn’t the only category where we felt that the website could have done a better job providing us with information. Common sense tells us that the smallest trade sizes would be one micro lot on the Micro account and this is likely the starting option on the Test account as well. However, we can’t say whether the Standard account adopts the same minimum trade size, or raises the requirement. Often times separate account types do come with different trade sizes, with around one lot being required on more expensive accounts.

Trading Costs

This broker is one of many that don’t advertise their costs in a transparent way. The website spends a lot of time boasting about their account’s special offers and spread discounts, which is actually just a fancy way of advertising spreads that are more than double the average amount on most of their accounts. We would hope that this is a sign that commissions aren’t charged, considering that those charges would put the cost of trading at an insane amount. However, we’re left with more questions than answers when it comes to the overall charges applied by the broker, including withdrawal fees. This is another red flag that MM Financial may not be a straightforward option.

Assets

Although MM Financial doesn’t provide a comprehensive list of their available instruments, they do advertise currency pairs, indices, commodities, and stocks as being among their offers. The broker also offers currency pairs, which aren’t offered nearly as common among their competitors. In total, MM Financial claims to offer more than 800 liquid assets for trading, but traders shouldn’t be surprised if this statement doesn’t hold up entirely.

Spreads

When it comes to spreads, the broker’s website doesn’t throw out any exact numbers and instead lists the discount one will receive based on account type. This makes it sound like a great deal when it isn’t. After checking the platform, we found spreads to be around 4 pips. Following that math, we were able to determine the average spreads one would likely see on each account type once discounts have been applied. Those figures can be viewed below.

  • Test Account: 4 pips
  • Micro Account: 4 pips
  • Standard Account: 4 pips
  • Silver Account: 3.6 pips
  • Platinum Account: 3.4 pips
  • Sapphire Account: 3.2 pips
  • Trader Account: 2 pips
  • Business Account: 1.2 pips

Do keep in mind that spreads may deviate from the above numbers since the website isn’t clear about the figures. Judging by what we found, it seems that MM Financial expects one to make a $750K deposit to access less than average spreads. Otherwise, traders will be subject to spreads that are up to more than twice the industry average amount. At those rates, it would be difficult to turn a profit.

Minimum Deposit

MM Financial starts off with an expensive $1,000 entry-level deposit on their Test account, which is much higher than the $100 (or less) entry-level deposits offered by many other brokers. From there, the asking amounts keep climbing, up to $5,000 on the Micro account, $10,000 on the Standard account, $25,000 on the Silver account, $50,000 on the Platinum account, $70,000 on the Sapphire account, $100,000 on the Trader account, and $750,000 on the Business account. Traders should also note that each account holds a maximum balance that tops out at $1 below the funding amount for the next account. For example, the Test out tops out at $4,999, which is just $1 below the Micro account’s $5,000 deposit requirement. Costs with this broker aren’t exactly beginner-friendly and it may take some time to save up to open a simple Test account.

Deposit Methods & Costs

Accounts can seemingly be funded through Visa, MasterCard, bank wire transfer, WebMoney, and Yandex. The website is rather vague when it comes down to describing specific funding information, so we can’t say for sure whether deposits are fee-free or not. If you’re making a deposit through bank wire, then you should expect to see a charge from the bank’s side.

Withdrawal Methods & Costs

MM Financial follows standard guidelines that state withdrawals must be made back to the originating payment method in order to prevent money laundering. Any profits would be withdrawn through bank wire transfer. Note that there is a $50 withdrawal minimum, which could cause a headache later on, especially if one’s luck goes south and they decide to pull out remaining funds. Traders can request a withdrawal online, by phone, email, or in person. Once again, fees aren’t listed on the website, so the broker leaves their clients blindly hoping that charges won’t climb too high.

Withdrawal Processing & Wait Time

The actual timeframe that it can take for the company to process your withdrawal will depend on your chosen account type. Those that can afford one of the better accounts will benefit from this procedure, with 48-hour withdrawals on the Silver & Platinum accounts and 24-hour withdrawals on the Trader & Business accounts. Everyone else will have to wait 1-5 business days for their withdrawals to even be processed. Many other brokers offer 24 to 48-hour processing, regardless of one’s account status, so the wait time is rather extended here.

Bonuses & Promotions

MM Financial offers a Welcome bonus of up to 100% and other trading bonuses, along with a certain number of risk-free trades on each account, plus earned interest on profits for certain accounts. Note that some of these offers are reserved for accounts of the Silver status and up. Take a look at each account’s special offers below:

  • Silver Account: 3 risk-free trades
  • Platinum Account: Extra 3% interest on profits & 5 risk-free trades
  • Sapphire Account: Extra 4% interest on profits & 7 risk-free trades
  • Trader Account: Extra 5% interest on profits & 12 risk-free trades
  • Business Account: Extra 7% interest on profits & 25 risk-free trades

Some additional offers include a certain number of guided trades or daily guided trades (depending on account type) and special earnings reports.

Educational & Trading Tools

Traders won’t find a wide variety of resources available on the broker’s website, instead, MM Financial focuses on providing some articles about forex basics, analysis, trading plans, and market volatility. While those articles can be helpful, beginners will likely benefit from searching elsewhere on the web for more in-depth information and better learning tools, like video tutorials, e-books, and other sources. MM Financial seems to provide services for more experienced traders that can make larger deposits, which is likely the reason why they haven’t invested much of an effort in this category.

Demo Account

Unfortunately, the broker does not seem to see the benefits associated with offering risk-free demo accounts to their clients. Most brokers offer these accounts at the bare minimum, so it’s always a bit surprising when demo accounts aren’t featured alongside other educational resources. The absence of these accounts might seem minor to some, but beginners might suffer without the chance to trade in a simulated environment before opening a live account.

Customer Service

MM Financial doesn’t exactly make it easy to reach out to support – the website doesn’t offer any instant option like LiveChat and it also fails to list a contacts page. In fact, we couldn’t even find a listed email address on the site, so traders will have to reach out to an agent through a form that is provided at the bottom of the website. 24/5 support is advertised, but we wouldn’t expect to see quick responses with all things considered.

Countries Accepted

If you check out the broker’s registration page, you’ll find that the United States is missing from the sign-up list entirely. This isn’t surprising, considering that the country is governed by strict regulation laws. The good news is that Japan, North Korea, and other commonly blacklisted countries can be selected.

Conclusion

Like many others that follow a similar account system, MM Financial places more of an importance on those that can afford to deposit a significant amount of money. It’s understandable for those clients to receive some benefits, but lower status accounts suffer in some ways, such as being pushed to the back of the line for withdrawal processing, not having access to any promotional offers, and etc. Sure, there are some benefits, like high leverage options and a diverse range of assets to choose from, but is this enough when such options are readily available elsewhere? The broker’s website is vague about funding and doesn’t offer much in the ways of education.

Contacting support could be a nightmare, considering that the broker doesn’t even offer a phone line or instant chat option. In a nutshell, MM Financial is an expensive broker that has the audacity to offer spreads from 4 pips on an account for deposits of up to $24,000, while offering common benefits on a vague and unhelpful website. This brokerage is better suited for experienced traders that can afford a better account type, and even then, those traders could likely do better elsewhere.