Tag: Forex Trading

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Forex Basic Strategies

Catch the Breakout with 34 EMA Trading Strategy!

Introduction

Introduction

Introduction

The exponential moving average (EMA) is a specialized chart indicator that tracks the value of an asset over time. It is a sort of weighted moving average (WMA) that provides more weighting or significance to ongoing valuable information. As like the simple moving average, the exponential moving average is utilized to see value patterns over time, and observing a few EMAs at one time is simple to do with moving normal rebinds.

What Is an Exponential Moving Average (EMA)?

An exponential moving normal (EMA) is a kind of moving average (MA) that puts a more noteworthy weight and sharpness on the latest information points. The exponential moving average is likewise alluded to as the exponentially weighted moving average. An exponentially weighted moving average responds more essentially to ongoing value changes than a straightforward moving average (SMA), which applies an equivalent weight to all observations in the period.

In the below image, you can see a naked chart of EURUSD

Now let’s plot the exponential moving average in the chart to see how it looks like

The Formula of Exponential Moving Average (EMA)

EMAToday = 
(ValuetToday ∗ (Smoothing / 1+Days)) + EMAyesterday * (1 - (Smoothing / 1+Days))
Where: EMA = Exponential Moving Average 

While there are numerous potential choices for the smoothing factor, the most widely recognised choice is 2

That gives the latest observation exceeding weight. In the event that the smoothing factor is expanded, later observations have more effect on the EMA.

Calculating the EMA

Calculating the EMA needs one more inspection than the SMA. Assume that you need to utilise 34 days as the number of inspections for the EMA. At that point, you should hold up until the 34th day to gain the SMA. On the 35th day, you would then be able to utilise the SMA from the earlier day as the first EMA for yesterday.

The calculation for the SMA is clear. It is essentially the entirety of the stock’s closing prices during a time span, divided by the number of inspections for that period. For instance, a 34-day SMA is only the entirety of the closing value for the previous 34 trading days, parted by 34.

34 EMA with Trendline Breakout Strategy

By combining the exponential moving average indicator with the price action context, the 34 EMA with trend line breakout forex trading strategy has established. In a decent trending market, this forex trading system is an entirely dependable trading strategy that can pull in plenty of pips effectively into your forex trading account.

To demonstrate it, simply proceed to do a little backtest on previous price history, and you will perceive what I’m discussing after you’ve learnt the trading methods and layouts which are additionally clarified underneath.

Timeframes

The 34 exponential moving average trading technique functions admirably in all timeframes from 5 minutes to weekly charts. The higher time frames can give better trading outcomes. However, it is best to stay on the 1 hour to daily chart as it can give high accuracy trades.

Currency Pair

There are no rules to utilise a currency pair. Still, it is good to utilize a forex pair that often remains in the range, for instance, EURUSD. However, all major and minor forex pairs are free to go with this trading technique.

Buy Entry 

  • First, draw a downward trend line and look for an upward breakout.
  • If the breakout has happened, then the price must be residing above the 34 EMA.
  • After the downward trend breakout has happened, look at the highs of the bullish candlestick that form.
  • The signal candle is the candle with a high that is lower than the last candle’s high. So, if the signal candle’s high is broken, at that point, enter a buy trade immediately. On the other hand, you can put in a buy stop order only a couple of pips over the high of that signal candle so if the price breaks signal candle’s high, your order will be placed.
  • If your buy stop order isn’t executed and the candles keep on making lower highs, move your buy stop order to every lower high candle that structures until the price goes up and executes your trade.
  • It’s always better to place a stop loss below the downward trend line breakout candle.

Sell Entry

  • First, draw an upward trend line and look for a downward breakout.
  • If the breakout has happened, then the price must be residing below the 34 EMA.
  • After the upward trend breakout has happened, look at the lows of the bearish candlestick that form.
  • The signal candle is the candle with a low that is higher than the last candle’s low. So, if the signal candle’s low is broken, at that point, enter a sell trade immediately. On the other hand, you can put in a sell stop order only a couple of pips over the low of that signal candle so if the price breaks signal candle’s low, your order will be placed.
  • If your sell stop order isn’t executed and the candles keep on making higher lows, move your sell stop order to every higher low candle that structures until the price goes down and executes your trade.
  • It’s always better to place a stop loss above the upward trend line breakout candle.

Limitations of the EMA

It is hazy whether or more emphasis ought to be put on the latest days in the timeframe. Numerous traders accept that new information better mirrors the current pattern of the asset. Simultaneously, others feel that overweighting current dates makes a preference that prompts to more bogus alarms.

Correspondingly, the EMA depends completely on authentic information. Numerous economists suspect that business sectors are proficient, which implies that current market value meanwhile mirrors all accessible data. If the markets are actually proficient, utilising authentic information should disclose to us nothing about the upcoming movement of security prices.

Summary

Let’s summarise the 34 exponential moving average with trendline breakout trading strategy:

  • You should look for an impulsive trendline breakout.
  • After the trendline breakout has happened, the price must be above or below the 34 EMA (depending on buy and sell entry).
  • It’s always better to put the stop loss below or above the trendline breakout candle.
  • Better money management can give you a better risk/reward ratio.

Moreover, you need to practice this trading strategy until your win ratio reaches above 60 per cent, and you must have to control your emotion and psychology for better outcomes.

Categories
Forex Psychology

Psychology That Will Blow Your Trading Account

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account.

So out the first pitfall is for those people who want to trade forex for the simple reason, to get rich as quickly as possible. Sadly, this is the view of Forex that a lot of people have, mainly because of all those people of social media such as Instagram that are posting their fast cars and million-dollar houses, in case you didn’t know, none of it is real. They do not have this money, they do not own those cars, they have either taken pictures from other people or have rented them for the purpose of the videos, all they want to do it suck people into their affiliate programs. So the mentality that people see and gain fro these is that you can use Forex to get mega-rich, mega quick.

Forex is a long learning process, it can make you rich, but that will be years and years down the line, not within a week. Get that idea out of the mind, you need to treat it like a business, risk management, small profits, and slowly growing.

Are you afraid of losing? Much newer, especially younger traders have the idea in their mind that losing is negative, anything that makes your money go down is bad, but is it really Losses are often seen as the best way to learn, but that mentality is hard to put into someone that has been brought up being told to save their money and to avoid risks. You are going to lose, it is a part of trading, being able to understand that will help put the thoughts of a loss being bad out of your mind and will allow you to adapt rather than sitting in fear.

Do not fight the markets, you won’t always be right and the markets will try to hurt you at times, that is just the sort of asshole it is, knowing when you have been wrong is vital and so is getting out. When your strategy dictates a stop loss at a certain point leave it there, if the markets start moving against you, many newer traders will still believe that their trade was correct so they move the stop loss further down, and then further, and further again because they know the markets will turn in their favor. In the end, it continues down and the stop loss is 5 times large than it was meant to be, it triggers and most of the account has gone. Stick to your original plans, don’t alter them mid-way through as this will only lead to more losses.

A lack of discipline can cause accounts to blow and it is most likely the one that has blown the most. Having discipline means being able to stick to your trading strategy no matter what is happening within the markets or how past results have gone. Many traders when they make a loss will want to get that money back, they do this by increasing the size of the next trade, bad idea, this is known as a Martingale strategy that has blown thousands of accounts in the past. Another thing that undisciplined people do it to leave their perfectly good strategy because it has a few losses, those losses will come no matter what your strategy is, so you need to stick with it and accept some of the losses.

Are you guilty of any of these pitfalls? Take a look at tour past and see if you are or have been, getting them out of your mind is a fantastic step to becoming a successful trader.

Categories
Beginners Forex Education Forex Stop-loss & argets

How to Set a Maximum Loss Size

When you have made a loss or a couple of losses in a day, it is easy to want to trade more in order to try and get some back, but what would happen if they also ended up losing? Would you be willing to risk the entire bank account balance just to make back […]

When you have made a loss or a couple of losses in a day, it is easy to want to trade more in order to try and get some back, but what would happen if they also ended up losing? Would you be willing to risk the entire bank account balance just to make back […]

When you have made a loss or a couple of losses in a day, it is easy to want to trade more in order to try and get some back, but what would happen if they also ended up losing? Would you be willing to risk the entire bank account balance just to make back a few of your losses?

Whether you are new to trading or have been trading for years, I am sure that you have been told how important risk management is, normally people refer to it in regards to a single trade, but it is also relevant when looking at your account as a whole, this can be broken down into months, weekends, days, trades and any other increment.

There will be times that your trades go the wrong way, maybe your fault, maybe there was an unannounced news event, this is inevitable. What is important is that you take steps in order to help protect your account from these events and moves, this is why it can be important to set something that we call a daily maximum loss.

So what is the daily maximum loss, well it is a figure, either monetary or percentage that is the hard stop level for our trading, if you hit this level then you need to step away from your trading platform, take a break and then come back tomorrow with a fresh head. When you are incurring losses, you start to get into a psychological battle with yourself, so stopping and stepping away is a method of resetting that battle in your head.

Having a bad day isn’t something to worry about, it is something that everyone, even the very best suffer from. What is important is how you deal with those bad days.

So how would you set these goals? There is no set way to do it, each of us will have a different approach and each of us will have a different ability to deal with risk, so it is up to you, but here are a few suggestions to give you ideas.

Use a percentage to gauge your losses for the day, gives yourself a set amount, maybe 2% of the account or 5% depending on you and your strategy, as soon as your account hits that percentage, stop and walk away.

A monetary amount, this will depend on your account and can also make the losses seems more real, if you have a $10,000 account, set your maximum daily loss to $500 or $300 whichever you feel is best for you, once that amount is hit, take a break and come back tomorrow.

One way to work out percentages is to base it on your average gain. Would you be willing to lose one day worth of winnings or would you want to lose less, if your average gain is 1%, then set your maximum daily loss at 1% or 0.5% depending on your own thoughts.

You could also set this amount via a longer period of time, give yourself a max loss of 10% per month, this can then be divided down into days, so if every day you lost to your limit, you would only be 10% down.

Set a maximum number of losses, instead of looking at percentages or monetary values, you could set yourself limits based on trades, this is a little risky as it can still result in high losses (although you should have stop losses in place), but if you set yourself to two or three losing trades in a day, then stop and move away until tomorrow.

It is important that you come up with something of your own that you know you will be able to adhere to,m there are a lot of dangers to not following a maximum loss plan, mainly that it can put your account in danger as you go back into winning back mode or through desperation to either make your money back or to simply have a winning trade to end the day.

It is important to stop and walk away fro the day, this could give you the opportunity to properly analyze the trades that you have made to find out why they have lost, or to simply sit down and relax for the rest of the day, taking your mind away from the stresses of trading.

Just remember, protecting your account is the number one key to successful trading, not only will it protect your equity, but it will also help to protect your mind from the stresses of loss.

Categories
Forex Psychology

Take Responsibility For Your Trades!

Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you […]

Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you […]

Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you can do about it, but the reaction and what you do after the news events you certainly can influence. Following a trade loss, do you blame the markets? Your broker? Or the charts? Well you shouldn’t, the news is out fo your control, but everything after that was your doing.

It is easy to blame others or outside influences, but how is that going to help us improve? If we simply blame others, we won’t be looking at it as a learning opportunity, you should already be using a trading journal where you jot down everything you do, using this will help you understand where the trade went wrong and what you can do differently, a far better alternative to just blaming something else.

It is also human nature to look to others when something goes wrong when you make a mistake, you will naturally look for something to blame as this helps prevent you from the psychological strain of a failure, but again, blaming someone else won’t help you improve, you need to take responsibility for your own reading.

If we take a look at traders who copy trading signals or use a copy trading service, they are simply ignoring any form of responsibility for their trading. If a signal goes well, that trader will claim that they chose a good signal to follow if it goes wrong, they will shrug off the loss and put it down to a bad signal provider, after all, it was their trade, I just copied it. They will then go on and look for another signal provider to follow. The trader has no idea what the trades are made and no idea why they won or lost. It is all about having none of the stress and responsibility of losing.

There are others that will simply blame the markets outright, put in a trade but it then gets stopped out, it is the economic news falt, it is the whales stop loss hunting, it is everything but their fault, not a great way to trade and certainly not a great way to learn.

There are then those people that use Expert Advisors (EAs) to do their trading fro them, any losses from the EA are obviously the fault of the EA and its bad programming, nothing to do with the choice to use it or to give all responsibility to he robot instead of yourself. What are you earning fro musing the EA, how has your knowledge of trading improved?

You should never try to avoid the responsibility of a loss, by taking it onto yourself, you are giving yourself the perfect opportunity to learn and develop yourself to be a better trader. While it doesn’t always feel great to take responsibility for a loss, it is paramount that you do it, much like anything in life, a loss is a learning opportunity and the only way to improve is to fail.

Categories
Forex Market

The The Primary Global Trading Sessions

The forex markets are a 24-hour business (Sunday to Friday), but people need to sleep, so how does it stay open 24 hours a day? Well, there are four different trading sessions based on different continents that relate to their timezone. So while London sleeps, Tokyo will be running. The four trading sessions as the […]

The forex markets are a 24-hour business (Sunday to Friday), but people need to sleep, so how does it stay open 24 hours a day? Well, there are four different trading sessions based on different continents that relate to their timezone. So while London sleeps, Tokyo will be running. The four trading sessions as the […]

The forex markets are a 24-hour business (Sunday to Friday), but people need to sleep, so how does it stay open 24 hours a day? Well, there are four different trading sessions based on different continents that relate to their timezone. So while London sleeps, Tokyo will be running.

The four trading sessions as the Asian session (which is both Sydney and Tokyo), the London session, and the New York session. Let’s get a little more information about each one.

The Asian Session

The Asian session runs from 22:00 GMT to 08:00 GMT, it is made up of both the Sydney markets and the Tokyo markets.

  • The most traded currency during this session is unsurprisingly the Yen which makes up around 16.5% of the transactions during this session.
  • Approximately 21% of all forex transactions occur during this trading session.
  • The liquidity during this session is often lower than in the other three sessions.
  • It is far more likely for a currency pair to range during this market rather than to go on a trending movement.
  • Most of the activity will occur at the start of the session as this is when most of the economic news is announced.
  • The most movement will be with the JPY, AUD and NZD pairs as the economic news events for these currencies occur during this session.

The London Session

The London session runs from between 08:00 GMT and 16:00 GMT, this has a slight cross over with the New York Session between 13:00 GMT and 16:00 GMT. the Londo session is considered to be the major market session and often attracts the most interest as the key financial center for Europe.

  • The session has a huge trading volume with over 32% of all trading transactions occurring during the London session.
  • There is a large amount of liquidity.
  • This is the session with the most uptrends and downtrends.
  • Spreads are often very low during this session.
  • The volatility can sometimes slow down in the middle of the London session due to London traders being off for lunch, this remains until the New York Session starts up at 13:00.
  • Market trends can sometimes reverse at the end of the session due to European traders locking in their profits.

The New York Session

The New York session runs from 13:00 GMT to 21:00 GMT, this has a slight cross over with the London session between 13:00 GMT and 16:00 GMT.

  • There is a rough estimation that about 19% of all forex transactions occur during this session.
  • There is a lot of market-moving potential during this session as 85% of all trades involve the US dollar.
  • There are high liquidity levels at the start as it overlaps the London session.
  • Most of the economic news events are released towards the beginning of this session.
  • Liquidity and volatility often decrease as the session goes on.
  • There is often little movement on Friday afternoon and a high chance for trend reversals in the second half of the day.

So that is a little overview of the three (four if you could Asia as two) trading sessions that keep the forex trading world running 24/7. The session that you should trade in depends on the pairs that you wish to trade, but we would suggest sticking to ones that don’t keep you up in the middle of the night.

Categories
Beginners Forex Education Forex Basics

The Old But Gold Rules Of Forex Trading

There are a lot of rules out there that people say that you need to stick by, some of them are simply an opinion, others have been around for years, we are going to be looking at some of the original rules set out by early traders which still ring true today, they are all […]

There are a lot of rules out there that people say that you need to stick by, some of them are simply an opinion, others have been around for years, we are going to be looking at some of the original rules set out by early traders which still ring true today, they are all […]

There are a lot of rules out there that people say that you need to stick by, some of them are simply an opinion, others have been around for years, we are going to be looking at some of the original rules set out by early traders which still ring true today, they are all things that are regularly told to people, yet people still manage to not take them seriously.

Create a Plan and Stick With It

You must have been told about this one when starting up, but you need a plan, a plan that you can stick to. So what does this actually mean? The plan that you create needs to contain a few different things, the strategy that you will be using, a risk management plan and a money management plan. If you have these three things then you have a recipe for success, however, it will only be a success if you stick to it, as soon as you deviate from the plan, you will begin to experience far more losses than when trading with it.

Use Stop Losses

Any trading strategy with its weight will have stop losses built into it, these enable you to limit the number of losses that you will be able to take on a single trade, they are also part of what works out the risk and reward ratio of a strategy. Stop losses are vital, they have saved thousands of accounts and will continue to save thousands more, as a trade goes against you, it will help to protect your account by closing before you get too far into the negatives. Never trade without them, when they get hit it can be a little disheartening but you should understand that they may have just saved your account.

Learn How to be Patient

The markets can be boring at times, really boring. When they are not doing what you need to do for your strategy to work, you can’t really do anything. The last thing that you want to do is to get bored and start to place trades that are outside of your strategy, instead you need to learn to wait. Having the knowledge that your strategy will work when you need to deploy it should be enough, otherwise, take a break and walk away from the markets. Being patient will enable you to get into the markets only at the optimal times instead of increasing risks and forcing trades.

Only use Techniques and Analysis that Suit Your Strategy

Part of learning and developing a strategy is that you know it inside out, you know everything that there is to know about it and the analysis that is required for it. So why would you use something else that doesn’t actually fit in with your strategy? The easy answer here is that you shouldn’t. You should only be working with things that actually fit in with your strategy, it is what you know and it is actually relevant to the trades that you will be making, using things that arent is just wasted energy and time.

So those are a few of the older rules with trading, there are of course plenty of other rules that are just as relevant to trading and for newer traders. It is important that you find a set of rules that work for you, but sticking to your plan, using stop losses, learning patience, and using techniques that are relevant to your trading plan should be top of that list.

Categories
Beginners Forex Education Forex Basics

Tips for Taking Your Trading Game to the Next Level

There are times when we just feel like we have gone as far as we can for the level that we are at, so now it is time to take out trading to the next level in order to start achieving more. Of course, the first thing that you are going to need to do […]

There are times when we just feel like we have gone as far as we can for the level that we are at, so now it is time to take out trading to the next level in order to start achieving more. Of course, the first thing that you are going to need to do […]

There are times when we just feel like we have gone as far as we can for the level that we are at, so now it is time to take out trading to the next level in order to start achieving more. Of course, the first thing that you are going to need to do is to work out exactly what level you are currently at. Think about it, are you a new trader? Are you playing with millions or simple hundreds of dollars? You need to know what level you are on in order to work out what it is that you are going to be doing next.

The best way to do this would be to analyze our current trading performance. This can be done by using your trading journal which we really hope you have been keeping. Take a look at your past trades and results, review the performance that you have had over the past few months. Are they consistent? These results will tell you a lot about the level that you are at as well as your style of trading.

This journal and analysis of it will enable you to look at what your most profitable assets are, the times of these trades, the sizes, the risks involved, and more. It will also tell you how well you do in actually sticking with your strategy, something that is paramount if you wish to move up another level. You need to be able to gather and understand your strengths and weaknesses before you try and move up to the next level, as not having an understanding of them could put you in a potentially dangerous situation for your account.

We have now come up with a number of different ideas that you could use to try and raise your trading game, you may well already be doing some of these things which is fantastic and this will put you in a good position for moving up, some you may not want to d, but at least trying some will help put you in a great position for stepping up our trading game.

Use a trading journal: We aren’t going to say too much on this as you are probably tired of hearing it, but ensure that you have a trading journal setup and that you are using it. It will tell you all sorts of things about your trading and will give you fantastic insights into your strengths and weaknesses. This is something that you will require if you want to improve. So set one up and ensure that you are constantly and actively filling it in. Getting this knowledge is the main step to improvement and you will find it hard to properly scale up your trading operations if you do not have a good understanding of your own strategies and your own trading habits. It is also a great way to help you stamp out any bad trading habits that you may have.

Improve your ratios: When many people think of scaling up their operations they often just think about placing bigger trad sizes. While this is a valid strategy and certainly can help youtube make more money, this does increase the risk that you are putting on your account. So instead, let’s look at improving some of the ratios that we have. The first is your win/loss ratio and the second is the risk to reward ratio. The problem comes from the fact that while they are separate, they can also have a direct effect on each other.

It may seem like a good idea to improve your reward to risk ratio, by narrowing down the stop loss to make it a little tighter, this would mean that you won’t need to win as many trades to be profitable, but it will potentially make your win and loss ratio look horrible, so it may not be worth making a change. You will need to work out a balance between the ratios so that any changes that you make do not damage the other too much. It is the same if you wanted to increase your win rate, you should not sacrifice the risk to reward ratio as this will decrease your overall profits. It is a difficult thing to do, but if you are able to improve these ratios, either one without affecting the other or even both of them, then it will help you jump to the next level of trading.

Keep doing the good things you do: This may seem obvious but there are a lot of people out there that aren’t doing this, as soon as they make changes they seem to forget about all the things that they were doing right before. Do not forget them, they are the reason why you are here so you should continue to do them for as long as you possibly can. Even if you are changing up other aspects of your trading, try and remember the good parts and keep them going along with what you are changing, this way you will only be bringing the good parts and changing the potential bad parts.

Expand your skillset: One of the best things that you can do as a trader is to continue learning, you can never know everything and so there will always be something new for you to learn. By doing this you are better equipping yourself for when the markets decide to change and your current strategy just doesn’t cut it anymore. This can be in the form of different strategies or simply learning to trade a new currency pair. Whatever it is, you should always be on the lookout for new skills and new knowledge to learn. It is simply adding a new weapon to your arsenal, allowing you to trade in situations that you may not have been able to do so before, thus increasing the potential of your success and profitability.

Trading and forex is a huge thing, you will never learn it all and you will never actually master it, there will always be things to trip you up, no matter what level of trading you are currently at, you will always be able to take it higher, whether through your trading or your learning. So neve target complacent, keep an eye on the level that you are at and always work on getting to the next level where possible.

Categories
Forex Signals

Gold Signal Hits Stop Loss – What’s Next to Expect? 

On Thursday, the precious metal gold firmed above $1,900 as the dollar declined, with bargain hunters posting on a resumption of bullion’s broader upwards trend brought by its recent steep slide from a record peak. On the positive side, U.S. President Donald Trump showed too much optimism about the U.S. economy during the White House press conference on early Thursday morning in Asia. As per Trump’s keywords, “U.S. economic performance significantly better than Europe.” 

On Thursday, the precious metal gold firmed above $1,900 as the dollar declined, with bargain hunters posting on a resumption of bullion’s broader upwards trend brought by its recent steep slide from a record peak. On the positive side, U.S. President Donald Trump showed too much optimism about the U.S. economy during the White House press conference on early Thursday morning in Asia. As per Trump’s keywords, “U.S. economic performance significantly better than Europe.” 

On Thursday, the precious metal gold firmed above $1,900 as the dollar declined, with bargain hunters posting on a resumption of bullion’s broader upwards trend brought by its recent steep slide from a record peak. On the positive side, U.S. President Donald Trump showed too much optimism about the U.S. economy during the White House press conference on early Thursday morning in Asia. As per Trump’s keywords, “U.S. economic performance significantly better than Europe.” 

He also said, ” We’re doing amazingly well with the coronavirus (COVID-19) and therapeutics.” However, these positive statements helped the equity market limit its deeper losses and capped the further upside for the yellow metal prices. On the positive side is the Republican leader’s willingness to cut payroll taxes after the November month elections. 

Meanwhile, the upbeat market performance could also be associated with the reports that President and CEO of the Federal Reserve Bank of Dallas Robert Steven Kaplan keep pushing the government for further unemployment benefits while refraining from imposing any lockdowns retractions. At the coronavirus front, the COVID-19 cases remain on the card and continue to affect the U.S. economic recovery. As per the latest report, the figures have crossed almost 5.2 million cases in the U.S. alone as of August 13, as per the Johns Hopkins University and millions unemployed.

Considering the failure of agreeing on the coronavirus (COVID-19) relief package, the broad-based U.S. dollar was down on Thursday morning in Asia. Although market investors have stuck between optimism and uncertainty over the delayed package, some claimed that U.S. economic recovery depended on both sides reaching an agreement. Moreover, the weaker U.S. dollar could also be associated with the on-going doubt about the U.S. economic recovery amid intensifying coronavirus cases. Whereas, the losses in the U.S. dollar become the key factor that kept the gold prices supportive as the price of gold is inversely related to the U.S. dollar price. 


Speaking about the signal, it was doing pretty well as we tried to trade the choppy session within 1,953 – 1,910 level. Unfortunately, the market reversed right before hitting our take profit. Our stop loss was too tight, considering the current level of volatility in the market. For now, the precious metal is trading at 1,930, and the upper and lower boundary of 1,953 to 1,910 level is providing resistance and support, respectively. You can either take a sell trade below 1,953 level or buy trade over 1,910 support. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, August 13 – Top Trade Setups In Forex – Eyes on U.S. Jobless Claims!  

On the news front, the eyes will remain on the U.S. Unemployment Claims figures, which are expected to perform slightly better. With this, the U.S. dollar can exhibit more buying, driving gold lower and the dollar higher.

On the news front, the eyes will remain on the U.S. Unemployment Claims figures, which are expected to perform slightly better. With this, the U.S. dollar can exhibit more buying, driving gold lower and the dollar higher.

On the news front, the eyes will remain on the U.S. Unemployment Claims figures, which are expected to perform slightly better. With this, the U.S. dollar can exhibit more buying, driving gold lower and the dollar higher.

Economic Events to Watch Today   

 

EUR/USD – Daily Analysis

The EUR/USD was closed at 1.17393 after placing a high of 1.18078 and a low of 1.17217. Overall the movement of the EUR/USD pair remained flat throughout the day. The EUR/USD pair took bids and surged above 1.18050 level, but after the release of U.S. economic data, the EUR/USD pair started to decline and posted losses. The pair ended its day on the same level it started its day with and hence, gave a smooth movement throughout the day.

The fresh risk appetite droved the rise in the EUR/USD pair amid the registration of the first coronavirus vaccine from Russia. Russia became the first country to register its vaccine for coronavirus, and this news gave a push to heavy risk appetite in the market.

The stock markets rushed to their higher level on this news, and the riskier currency Euro also gained from it in the early trading session. The gains continued after the release of macroeconomic data from the European side.

At 14:00 GMT, the ZEW Economic Sentiment for Eurozone in August surged to 64.0 against the expected 55.3 and supported the single currency. The ZEW Economic Sentiment for Germany surged to 71.5 from the anticipated 57.0 and supported Euro. The better than expected economic sentiment for the month gave strength to a single currency and pushed EUR/USD pair above 1.18050 level.

However, the gains could not last for long as the U.S. President Donald Trump announced that he was very seriously considering a capital gains tax cut to help job creation. If Trump gave another executive order on capital taxation, it would likely face legal challenges as it would push the boundaries of the President’s executive orders.

Daily Technical Levels

Support Pivot Resistance
1.1722 1.1769 1.1828
1.1664 1.1874
1.1617 1.1933

EUR/USD– Trading Tip

The EUR/USD has traded with bullish sentiment at 1.1805 level, holding right below an immediate resistance level of 1.1815. Below this, the pair is likely to trade bearish until 1.1783 and 1.1745 level. Conversely, the bullish breakout of the 1.1815 level can lead the pair further higher until the 1.1890 level. Let’s keep an eye on 1.1815.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.30470 after placing a high of 1.31318 and a low of 1.30413. Overall the movement of GBP/USD pair remained bearish throughout the day. The GBP/USD pair dropped on Wednesday and posted losses as the unemployment benefits claims surged in the local country and also because of the strength of the U.S. dollar onboard.

At 04: 01 GMT, the BRC Retail Sales Monitor from Great Britain surged to 4.3% from the expected 2.5% and supported British Pound. At 11:00 GMT, the Claimant Count Change for July rose to 94.4K from the expected 9.7K and weighed heavily on British Pound. The Unemployment Rate from the U.K. came in as 3.9% in June and fell short of expectations of 4.2% and supported GBP.

The clamant count change from the U.K. that showed that more people claimed for unemployment benefits in July. According to the Office of National Statistics, around 730,000 people have become unemployed since March this year, and since June, further 114,000 people have lost their jobs.

However, the jobless rate remained flat at 3.9% in June; this reflected that the number of people who had given up looking for work increased.

The ONS Deputy national statistician, Jonathan Athow, said that the labor market had continued its recent fall in employment and significantly reduced work hours because many people were furloughed.

The people without a job and those who were not even looking for a job but wanted to work increased as the demand for workers was depressed.

It is also believed that the full extent of Britain’s’s job problems has been hidden under the Government’s furlough scheme, which promised to cover 80% of the salaries of workers who could not work due to lockdown.

Daily Technical Levels

Support Pivot Resistance
1.3002 1.3035 1.3066
1.2971 1.3099
1.2938 1.3130

GBP/USD– Trading Tip

The GBP/USD consolidates at 1.3070 level, holding right above the 50 periods EMA support area of 1.3040 level while the bearish breakout of 1.3040 level can extend selling unto 1.2918 level. Recently as we can see in the chart above that the GBPUSD pair has violated its upward trendline that supported the pair around 1.3130 level, and now below this, we can expect GBP/USD to continue trading bearish. The GBP/USD should show a bearish crossover to confirm a strong selling bias in the Cable. On the higher side, Sterling may find resistance at 1.3105 and 1.3175. Let’s consider selling below 1.3045 level today. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 106.491 after placing a high of 106.682 and a low of 105.870. Overall the movement of the USD/JPY pair remained bullish throughout the day. The USD/JPY pair extended its previous day gains and rose for the 3rd consecutive day amid increased risk appetite in the market. The Russian vaccine, U.S. Stimulus package, Trump’s executive orders, and the rise of the equity market drove Wednesday’s move of USD/JPY pair.

The President of Russia, Vladimir V. Putin, announced that the Russian government had approved the world’s first coronavirus vaccine. Putin said that his daughter had taken the vaccine in a cabinet meeting, and it has worked adequately enough to declare it safe.

However, global health authorities have said that the vaccine has to complete the last stage of clinical trials to be approved. Despite this, Mr. Putin thanked the scientists in a congratulatory note to the nation who developed the vaccine. He also said that it was “the first” very important step for Russia and generally for the whole world.

Scientists in Russia and other countries said that rushing to offer the vaccine before final-stage testing could backfire. Tens of thousands of people are included in the final stage of trials, and it could take months to prove its effectiveness.

However, investors cheered the news of the vaccine as it was long-awaited, and as in result, the risk appetite of the market rose. The equity markets surged that weighed on the safe-haven Japanese Yen, which ultimately pushed the USD/JPY pair higher, which keeps challenges the upbeat market tone. In the meantime, the White House National Security Adviser Robert O’Brien blamed China while saying that the “Chinese hackers have been targeting U.S. election infrastructure ahead of the 2020 presidential election.” These gloomy updates capped further upside in the currency pair by giving support to the safe-haven Japanese yen.

Later today, the eyes will remain on the U.S. Jobless claims data to determine further trends in the USD/JPY pair. 

Daily Technical Levels

Support Pivot Resistance
106.5500 106.7900 107.1400
106.2100 107.3700
105.9700 107.7200

USD/JPY – Trading Tips

The USD/JPY trades sideways over resistance become support level of 106.628 level. Above this, the USD/JPY pair is opening further room for buying until 107.450 level. The RSI and MACD are also supporting bullish bias in the pair. A recent bullish breakout of 106.450 level can extend the buying trend until 107.390. The current market price of USDJPY is staying over 50 EMA, which extends support at 105.950 and may push the pair higher. Let’s consider buying above 106.480 level today. Good luck! 

Categories
Beginners Forex Education Forex Basics

Start Trading Forex with These 4 Easy Steps

Step #1: Educate Yourself

Step #1: Educate Yourself

Step #1: Educate Yourself

The first thing you need to do on your journey as an aspiring forex trader is to get educated. The internet is filled with free resources for traders, or you could choose to pay for a training course if you’d prefer. Keep in mind that many failed traders only gave up because they didn’t invest enough time into their education before they got started. Here are a few quick tips that can also help with this step:

  • Start with forex terminology (leverage, spreads, bid/ask price, etc.)
  • Try searching “forex basics
  • Learn about the mechanics of trading
  • Research different strategies
  • Take in information from a variety of sources
  • Learn about the factors that affect prices in the market
Step #2: Develop Your Trading Plan

A trading plan takes several factors into consideration:

  • The time you have to trade
  • Your goals
  • How much you’re willing to risk
  • How you will find and execute trades
  • The size of positions you will take
  • Other rules for when and how you will trade
Step #3: Open a Trading Account

First, you’ll need to choose a good forex broker to trade with. Know that there are many trustworthy brokers out there but remember that scammers are out there as well. This is why it’s important to do research about a broker and to read through their terms & decisions before making a decision. You’ll also want to compare brokers to make sure you find the most attractive conditions available for the deposit you’re willing to make.

Step #4: Start Trading!

Once you’ve made it to this last step, you’re ready to begin trading. Be sure to analyze the markets before entering trades, while keeping your trading plan in mind. Some might prefer technical analysis over fundamental analysis and vice versa. Everyone trades differently, but your trading plan should help guide you when it comes to making trading decisions. If you have any trouble getting started, try looking online for tutorials. Video tutorials can be especially helpful.

Categories
Beginners Forex Education Forex Basics

How to Start Trading Forex with Only $100

If you’re going to become a forex trader, one thing’s for sure: you’re going to have to make an investment. You can’t trade without any funds in your trading account, obviously, and many brokerages don’t even offer accounts for less than $500. While many beginners dream of opening a trading account, the thought of investing […]

If you’re going to become a forex trader, one thing’s for sure: you’re going to have to make an investment. You can’t trade without any funds in your trading account, obviously, and many brokerages don’t even offer accounts for less than $500. While many beginners dream of opening a trading account, the thought of investing […]

If you’re going to become a forex trader, one thing’s for sure: you’re going to have to make an investment. You can’t trade without any funds in your trading account, obviously, and many brokerages don’t even offer accounts for less than $500. While many beginners dream of opening a trading account, the thought of investing such a large amount of money into something that may not be profitable is scary. After all, you can do a lot more with that money. Others simply don’t have that much in disposable funds, so trading seems impossible. The good news is that it is possible to open a trading account and to be successful with a small starting deposit of about $100. Some brokers will even let you get started with around $5 or even $1, but it is best to make a slightly larger investment if you can.

Before you make the decision to start, you’ll want to have realistic expectations. It is highly unlikely that your $100 investment will turn into thousands of dollars quickly. You aren’t going to make the same profits as someone that has invested $20,000 into their account. Beginners need to ease into the market. If you lose your entire investment, it doesn’t mean you should quit. Instead, you need to look more into education and base your trades on more evidence.

Indicators, economic calendars, charts, graphs, and so on can give you more information from a technical and fundamental standpoint. The good thing is that if you lose your $100 investment, it won’t break you, and you can start again. Losing a larger amount of money could scare someone away from trading for good. If you find that you’re well-prepared and you start making money, you could always invest more later.

Here are a few quick tips for opening a trading account and getting started with around $100:

-Try to find a broker that offers some type of bonus. Some even offer $30 welcome bonuses or simple deposit bonuses that would add to what you’re investing. Just make sure that your deposit is large enough to qualify.

-Make sure you sign up with a broker that offers good conditions. You should have access to average spreads and fees with a $100 deposit. Don’t open an account with insane fees just because it is the only option with a certain broker. Look for better options and compare what you can get for what you have.

-Don’t use too high of a leverage! This is important because overleveraging your trades can cause you to lose a lot. Many beginners use too high of a leverage to increase their investment power, but this usually backfires. Start smaller and work your way up over time.

-Never risk much on any one trade. Many professionals recommend risking 1% or less of your total account balance on a single trade. This might lead to slower profits, but it is safer. If you go risking 10% on one trade, 20% on another, and so on, you could quickly blow your account.

Once you get started, you should focus more on trading and less on how much you’re making. Opening a trading account with a small amount of money isn’t going to make you rich overnight. It’s going to take a lot of hard work and dedication before you get there. You can plant the flower by opening a trading account, but you need to water it by doing research, getting an education, taking risk-management precautions, and keeping a trading journal to log your progress. You’ll also need to treat your small account the same way you would a large one. You might not feel as worried about losing $1 compared to how you’d feel if $100 was on the line, but it still matters. Understand that it is normal to lose some money, but every dollar lost adds up.

In conclusion, you should be aware that opening a trading account with as little as $100 (or less) is possible and it can be profitable. If you have realistic expectations, you can be successful with an account that has a low initial investment. Remember some of our tips about finding a good broker that offers bonuses and using risk-management precautions so that you can make the most out of your account. Don’t get discouraged if you’re only making a small amount at first. Every trader must start somewhere, and seeing profits is much better than seeing losses! If you manage to increase your account balance by even a few dollars, then you’re doing better than many others that have tried. As you work your way up, you’ll likely gain access to better accounts and have more money to invest, which will help to grow your account more quickly in the future.

Categories
Beginners Forex Education Forex Basics

The Best YouTube Channels for Forex Traders to Follow

Traders can get information about forex trading from a variety of sources, including articles, eBooks, audiobooks, and paper novels, training courses, webinars, seminars, videos, and more. In today’s day and age, one of the most popular sources for learning trading information comes from YouTube. There are a lot of different channels that can offer interesting […]

Traders can get information about forex trading from a variety of sources, including articles, eBooks, audiobooks, and paper novels, training courses, webinars, seminars, videos, and more. In today’s day and age, one of the most popular sources for learning trading information comes from YouTube. There are a lot of different channels that can offer interesting […]

Traders can get information about forex trading from a variety of sources, including articles, eBooks, audiobooks, and paper novels, training courses, webinars, seminars, videos, and more. In today’s day and age, one of the most popular sources for learning trading information comes from YouTube. There are a lot of different channels that can offer interesting trading advice; however, some videos just aren’t worth watching. This is why we’ve taken the time to put together a list of the best YouTube stars you can follow right now so that you won’t have to wade through the bad channels.

Warrior Trading is the YouTube trading channel with the most subscribers, which is currently up to 582K. The channel was created by well-known trader Ross Cameron back in 2013. Since then, his videos have racked up more than 58 million views. The channel focuses on educating traders and teaching one how to make a living trading stocks. Ross provides live day trading watchlists along with his courses and uploads an impressive number of videos each month. If you’re only going to check out one YouTube star, this is the one to watch.

Trading 212 comes in 2nd on our list, with 524K subscribers and more than 48 million views. This channel is powered by the London fintech company that demonstrates the financial markets with free, easy to use smart apps, including the UK’s #1 trading app. If you’re interested in using any of the company’s products or in learning to trade in general, you can really learn something from the channel’s in-depth videos that cover a variety of topics.

Adam Khoo is another notable YouTube contributor for trading information. He isn’t far behind our first two channels with 513,000 subscribers and 203 videos, and he’s been doing this since 2014. The channel focuses on providing insights into investing in stocks and forex with profitable outcomes. Adam Khoo is also the author of multiple books and has helped to further the education of thousands of students.

Rayner Teo covers trading information for beginners with 429,000 subscribers. Although his number of subscribers places him in the fourth position on our list, this creator has contributed more than 500 videos to the cause. Instead of focusing on the luxurious aspects of trading, like fast cars and mansions, this trader explains that he’d rather stay realistic by providing helpful educational videos that can really help you to become a better trader.

Although UKspreadbetting is the last option on our list, the channel has 230K subscribers and the largest selection of videos, with more than 3,000 options. This channel focuses on spread betting with the goal to inform, educate, and entertain aspiring traders. If you like the videos found on this channel, you can also follow the creator on Facebook and Twitter.

There are a lot more YouTube channels out there that cover important trading information, but we found the above options to be some of the top channels with the most subscribers and impressive amount of videos. While you can always learn to trade from a variety of sources, videos are one of the best ways because they allow authors to really explain concepts with audio and visual information.

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Beginners Forex Education Forex Trade Types

Swing Trading: Pros and Cons

Swing trading is a type of trading style that involves opening a position and leaving it open for days or weeks so that profits can accumulate. This style is essentially the opposite of day trading, where traders open multiple positions per day and close them before the end of the trading day. Swing trading is […]

Swing trading is a type of trading style that involves opening a position and leaving it open for days or weeks so that profits can accumulate. This style is essentially the opposite of day trading, where traders open multiple positions per day and close them before the end of the trading day. Swing trading is […]

Swing trading is a type of trading style that involves opening a position and leaving it open for days or weeks so that profits can accumulate. This style is essentially the opposite of day trading, where traders open multiple positions per day and close them before the end of the trading day. Swing trading is seen as one of the most popular trading styles and has unique benefits and a few disadvantages that traders should consider. We’ll start with the positives:

PROS

Swing trading does not require your constant attention and allows traders to have a lot more free time than day trading. Once you’ve opened your position, you won’t have to constantly monitor the market. It’s even possible to work a full-time job if you choose this strategy and you aren’t as likely to suffer from burnout as you are with a more time-consuming trading style.

The holding period for trades is longer, meaning that less time is spent searching for trades to enter.

Returns for this type of trading style are usually around 5% – 10%, as long as you are using a good strategy and are fairly knowledgeable about trading.

CONS

Swing trading is risky and can lead to large losses if the market goes against you. If your trade is made in the opposite direction and the market opens with gaps up or gaps down, it can lead you to lose a lot, and even stop losses don’t protect against this problem.

Most brokers charge fees for holding positions overnight and this can really get expensive if you have multiple positions open for days or weeks. Triple swaps are another problem, as they are often charged on Wednesdays to account for the upcoming weekend.

You need to invest a lot of time into learning about the market, especially surrounding technical analysis. You’ll need to be able to read charts, use technical indicators, and so on. Of course, you need a good knowledge of the market in general, but this is still worth pointing out.

The Bottom Line

The pros and cons of swing trading seem to even out, although there’s a lot to consider before you take up this trading style. You need to spend a lot of time learning about the market for starters, and you’ll need a good understanding of technical analysis and need to know how to read charts and use indicators. The bright side is that this style can provide good returns and it doesn’t require you to be glued to your computer screen all hours of the day, so burnout from boredom is less likely. On the downside, losses will occur and can be large if the market goes against you. You’ll also need to pay attention to how much your broker charges for holding positions overnight and when/if triple swaps are charged.

Categories
Forex Basic Strategies

Let’s Learn Some Momentum Trading Techniques Using The Awesome Oscillator

Introduction

Introduction

Introduction

Bill Williams was the one to first developed the Awesome Oscillator, and it essentially indicates the market momentum. On the other hand, RSI (Relative Strength Index) is a trading indicator that provides an idea of the overbought and oversold zone. In the Awesome Oscillator based trading strategy, we will use the Awesome Oscillator to determine the market direction and use the RSI to increase the probability by eliminating unwanted market movements.

The Awesome Oscillator

Bill Williams has created the Awesome Oscillators to identify the market momentum of a currency pair. Besides the forex market, this trading strategy works well in all financial markets, including the stock, indices, cryptocurrencies, and commodities. The elements of this trading indicator are pointed out in the image below.

  • The first element of Awesome Oscillator is the 34 period’s simple moving average indicating the median of the last 34 candlesticks.
  • 5-period simple moving averages indicate the median of the last five candlesticks.
  • Histogram and Zero Line.

Let’s have a look at how these elements represent in a market:

  • When the Awesome Oscillator is below the zero lines, we should focus on the short term moving average. If the 5 SMA moves below the 34 SMA, it will indicate a downtrend.
  • If the position of Awesome Oscillator is above the zero lines, we can consider the trend as an uptrend.
  • If the Awesome Oscillator histogram moves to the green zone, we can consider the candlestick that moved higher than the previous candle.
  • We will consider the histogram at the red zone that is smaller than the previous candlestick.
  • The rules mentioned above are not exact buying and selling signals. Instead, it provides a trading opportunity where traders should consider other confirmations.

We can also identify the divergence between the price and the Awesome Oscillator to find a trading opportunity.

If you see the price of a currency pair to make a lower low from the left side to the right side, but the Awesome Oscillator makes the opposite, you can find a potential divergence. In divergence, the Awesome Oscillator should create two peaks above the zero lines considering the market condition.

Awesome Oscillator with RSI Trading Strategy

In this trading strategy, we will combine the Awesome Oscillator to identify the market momentum and the Relative Strength Index to get the overbought or oversold zone. If we can combine these accurately, we can make a trading strategy that can provide a good profit.

This strategy works very well in most of the currency pairs and time frames. Therefore, we can take swing trade, day trade, and even position trade. Besides the technical formation using these two indicators, we will use price action to enter the trade. Moreover, we will use stop loss and take profit as a risk management tool before taking the trading decisions.

Now let’s move to the trading strategy. In the image below, we can see the visual representation of how to trade using the Awesome Oscillator RSI trading strategy. The rules for buying and selling of a currency pair are mentioned below:

Buy Trade Setup

  • At first, the RSI should be below the 30 levels and point to an upward reversal.
  • When the RSI moves above the 30 levels, we will consider buying signals only if the Awesome Oscillator shows a green bar.
  • When the green bar appears, we can place a buy stop about 2- 5 pips above the current candlestick and allow the price to take our trade automatically.
  • Sometimes RSI might signal 1-2 candlestick later than the Awesome Oscillator. In that case, we can consider trading entry by taking a smaller lot.

Sell Trade Setup

  • At first, the RSI should be above the 70 levels and point to a downward reversal.
  • When the RSI moves below the 70 levels, we will consider selling signals only if the Awesome Oscillator shows a red bar.
  • When the red bar appears, we can place a sell stop about 2- 5 pips below the current candlestick and allow the price to take our trade automatically.
  • Sometimes RSI might signal 1-2 candlestick later than the Awesome Oscillator. In that case, we can consider trading entry by taking a smaller lot.

In this strategy, we did not consider the histogram crossing zero lines. However, suppose you want to increase the probability of your trading. You can look at the zero line cross as a further trading condition that will indicate the overbought and oversold zone.

Stop Loss And Take Profit Idea

The stop loss and take profit idea is a vital element of any trading strategy. There are many ways to set take profit and stop-loss depending on the market swing low and Sewing high. In a buy trade setup, the stop loss should be below the recent swing low with 10 to 15 pips buffer. Similarly, in a sell trade, the stop loss should be above the recent swing high with 10 to 15 pips buffer.

Another idea of a stop-loss plan is to set it at 1.5X ATR. It will indicate the actual volatility of the currency pair that you are trading. Besides the stop-loss setting, take profits can be set with a multiple-level approach. You can hold your position until the Awesome Oscillator crossed above or below the zero lines. Later on, you can monitor the momentum of the price to identify the next take profit level.

Summary

Let’s summarise the awesome oscillator and RSI trading strategy:

  • If the RSI is above the 70 levels and points downward movement, we will consider selling setups only, and if the RSI starts to move from the 30 levels, we will consider buying only.
  • To enter the trade, we can take a pending order above or below the previous candle if other conditions meet.
  • The stop loss should be below the swing low or swing high with some buffer or at 1.5 X ATR.
  • For setting take profit, you can hold the trade until the Awesome Oscillator crosses above or below the zero lines. Moreover, if the market conditions allow you to extend the take profit.

In every trading strategy, trade management is an essential tool that a trader should not ignore. In the forex market, we anticipate the price based on our technical and fundamental analysis. As we trade on probabilities, there will be conditions where the market will hit our stop loss. Therefore, strong trade management is the only way to keep your balance steady growth.

Categories
Forex Fundamental Analysis

GDP from Construction – Exploring The Fundamental Forex Driver

Introduction

Introduction

Introduction

Construction is the very first phase of an expected economic growth, which is more evident in the developing economies compared to the developed economies. New buildings, infrastructures, renovations are an indication of an expanding economy. GDP from construction is an important economic indicator to assess financial health and future economic expansion trends.

Construction

It is a part of the Secondary (Industry) Sector of an economy.  Construction refers to building and infrastructure works in all areas. The Construction Sector includes all physical making of infrastructures like bridges, transportation systems (roads, railways), dams, irrigation systems, naval ports, airports, pipelines, apartments, buildings, houses, commercial buildings, corporate structures, etc.

How can the GDP from Construction numbers be used for analysis?

The Construction Industry’s Economic Output is a significant economic indicator that is closely watched by both the private and public sectors. It is especially crucial for developing economies like China, as it is their main contributor to GDP. The GDP from Construction figures assist Central Authorities in policy reforms & economic-decisions.

Growth is essentially a process of invention of new things and discarding the old inefficient ones. Construction, in this sense, is nothing but that. It involves the erection of new buildings, renovations, expansions of the infrastructures that are currently existing. Increased GDP from Construction involves more people getting employed, better wages in the sector, and the extra demand for raw materials, etc. Hence we can say that the act of construction itself has a ripple effect on the economy.

Secondly, the GDP from the construction of corporate infrastructures or commercial structures implies that the constructed structures will be used for further economic activities. For example, a company doubling its company size is planning to double its staff and correspondingly the business that it generates. Hence, GDP from Construction figures improvement is indicative of an improvement in many other sectors.

All these improvements correlated with GDP overall also stimulate consumer confidence and encourages consumer spending, which further stimulates the economy and boosts growth. The Secondary Sector is composed of Industrial Output and Construction Output. For most countries, Industrial Output will be the dominant contributor to the GDP from the Secondary Sector.

We analyze GDP from Construction to understand the associated implications that more economic growth will be followed. For example, the construction of new power plants, or manufacturing industries, would show higher GDP from Construction this year. But the subsequent years, we will see higher GDP due to the newly added Industrial Outputs.

Hence, GDP from Construction figures can be used to assess future economic growth. Everything that is constructed is most likely to bring revenue through its usage in the future. Hence, GDP from Construction improvements can be a leading indicator for further improvements in GDP down the line.

The global Construction Industry makes up 13% of the World GDP, which is more than the Agriculture sector, which is about 7% of the World GDP. It means, overall, the global economy is improving at a rapid pace, with the Industrialization of many economies. It is forecasted to grow to 15% in 2020. China, India, and Japan are flourishing in this era with rapid Industrialization and achieving high GDP Growth Rates ranging from 5-20% in recent years.

GDP from construction can be used by investors to know which countries are transitioning from Developing Economies to Developed Economies. As GDP from Construction increases, it would be followed by GDP growth through increased Industrialization. Further down the line, the economies would transition to the services Sector as their main contributor to GDP.

Impact on Currency

The GDP from Construction is not a high impact indicator when compared to measures like GDP and GDP Growth Rates. GDP from construction does not portray the entire picture of the economy. However, it can be an essential tool for the Central Authorities to keep track of Construction Sector performance and its relative implications over the economy.

What construction is occurring can also serve as an indication of the economy type going to be built over the coming years. But, for the international currency markets, it does not serve as a useful indicator. It is a proportional and lagging indicator. Higher GDP from Construction is great for the economy and its corresponding currency, and vice-versa.

Sources of GDP from Construction

For the US, the corresponding reports are available here – GDP -BEA, GDP by Industry – BEA, and Construction – GDP. World Bank also maintains the Construction and Industrial Sector as a percentage of GDP on its official website, which can be found here – Industrial Sector (including construction) – World % of GDP. GDP from construction can also be found here – GDP Construction – World – Trading Economics.

GDP from Construction Announcement – Impact due to news release

The construction sector is one of the fastest-growing sectors today that has a great impact on the economy of any nation. Construction is one crucial sector that contributes to the economic growth of a country. The government and other regulatory authorities have always shown interest in this segment by investing significantly in various parts of the sector. Naturally, it will contribute to the GDP of a country and influence the reading released quarterly and monthly. When talking about the fundamental analysis of a currency or stock, investors make investment decisions based on the GDP and not on contributions made by individual sectors.

Now let’s analyze the impact of GDP on different pairs and witness the change in volatility due to the news release. For this purpose, we have gathered the latest GDP data of Japan, where the below image shows the fourth quarter’s GDP data released in March.

AUD/JPY | Before the announcement

We will first look at the AUD/JPY currency pair to observe the impact of GDP announcement on the Japanese Yen. In the above picture, we see the market has crashed lower due to some other news release, and currently, the price is at its lowest point. This means there is a great amount of selling pressure in the market, or sellers are dominant. In such a market situation, it is advised not to carry any position in the market before the news release.

AUD/JPY | After the announcement

After the news announcement, the price sharply moves higher and closes as a long bullish candle. This means traders sold Japanese Yen soon after the news release as it was below expectations and lower than the previous quarter. The volatility did increase to the upside for a while, but it did not sustain as the Japanese Yen was showing a lot of strength. One should trade after the market shows signs of trend continuation or reversal and not just based on the GDP data.

GBP/JPY | Before the announcement

GBP/JPY | After the announcement

The above images represent the GBP/JPY currency pair, where we see that the market has strongly moved lower as indicated by two big bearish candles before the news announcement. This means the Japanese Yen has gotten strong recently due to some other fundamental reason, and we cannot ascertain if this will continue or not. As volatility is very high, one should not take a position in the currency before the news release.

After the news announcement, volatility spikes to the upside, and the ‘news candle’ closes with a great amount of bullishness. Even though the price moves higher by a lot, it did not go above the moving average. The market has reacted adversely to the news announcement as the GDP was lower than last time and also below what was forecasted. If the price does cross moving average, this means the downtrend is still intact.

NZD/JPY | Before the announcement

NZD/JPY | After the announcement

The above pictures are that of the NZD/JPY currency pair, where we see a major crash in the market before the news announcement, which is visible in the first image. This pair also shows similar characteristics as in the above currency pairs, where the Japanese Yen has strengthened greatly. Ideally, we should be looking to sell the currency pair after a suitable price retracement.

After the news announcement, the market goes higher so much that it almost retraces the previous bearish candle, resulting in some weakness in the Japanese Yen. As the GDP data was weak, it brought disappointment in the market where traders sold the Japanese Yen and bought the base currency. Cheers!

Categories
Beginners Forex Education Forex Assets

Trader’s Asset Investment Guide: Apple

Apple is an American technology company that is headquartered in California. The company was founded by Steve Jobs and his partner Ronald Wayne back in April of 1976. This recognizable brand is insanely popular thanks to the easily recognizable iPhone smartphone, iPad tablets, Mac computers, iPad music devices, the Apple Watch, AppleTV, HomePod speaker, and […]

Apple is an American technology company that is headquartered in California. The company was founded by Steve Jobs and his partner Ronald Wayne back in April of 1976. This recognizable brand is insanely popular thanks to the easily recognizable iPhone smartphone, iPad tablets, Mac computers, iPad music devices, the Apple Watch, AppleTV, HomePod speaker, and […]

Apple is an American technology company that is headquartered in California. The company was founded by Steve Jobs and his partner Ronald Wayne back in April of 1976. This recognizable brand is insanely popular thanks to the easily recognizable iPhone smartphone, iPad tablets, Mac computers, iPad music devices, the Apple Watch, AppleTV, HomePod speaker, and AirPods, along with other products and online features. In addition to producing popular products, Apple is also responsible for creating online software like iTunes, the Safari web browser, and so much more. You’ve likely heard of Steve Jobs before, as he was a famous American businessman. The company’s co-creator Ronald Wayne sold his portion of the company shortly after its original launch in a move that he likely regrets to this day.

One thing is for sure about Apple: people will probably buy their products as long as they’re making them. With the popularity of the iPhone, many people trade in their older phones for the newest version every time one is released, even with costs soaring above $1,000 for a new phone. We’ve never doubted that Apple has built a dedicated fan base that will choose their products over anything else, but this company has experienced some ups and downs with their stocks in the past.

Early in 2019, Apple suffered a crisis where stocks plummeted 10%, sinking to an all-time low for the first time in 52 weeks. Financial media commented on the company’s downfall, and things didn’t seem to be going to well for Apple, even though the company had expected the value of their stock to rise right after Christmastime when many people would have been expected to buy their products for gifts.

Fortunately for Apple, their stocks have risen 43% in the previous 12 months, with record revenues being announced for their previous quarter. This rise in value happens to be occurring during the coronavirus pandemic, despite the uncertainty of these pressing times. Considering that many people are relying on unemployment or suffering delayed work hours, it is reassuring for Apple to see a rise in their stock’s value. This is more reassurance that people truly believe in the company.

Considering Apple’s ups and downs, many investors might wonder whether it is a good company to invest in. Here are some reasons why you should buy Apple stock:
The company is hoarding an almost legendary amount of cash. Apple was holding nearly $193 billion in cash at the end of March 2020 and this money is regularly returned to investors through stock buybacks and dividends.

Apple is expected to continue to grow. Their history proves this – the company’s quarterly revenue is up 16% from one year ago. Apple will continue to produce new devices, like updated iPhones and the company will continue to bring in monthly revenue from its TV services, iTunes, and other online services they have created. We can also expect to see new products released as we move more towards the future. Apple makes money through various sources. If the popularity of one product falls, there are several other products that will help the company to continue making a profit.

Although these factors are positive outlooks on Apple’s stock, there are also some downsides to investing in the company. Some feel that their iPhones may be losing popularity as sales are on the decline. While the iPhone used to be the company’s number #1 product, it only accounts for 50% of their revenue today. This could be contributed to the fact that the company continues to churn out new products and services, providing many more options for clients to spend their money on. Still, the number one earning product might end up taking a backseat to some of these other features. You’ll also want to consider that Apple iPhone has some tough competition with Android, which continues to produce new upgraded phones alongside them.

Another downside is that the popularity of Apple TV could decline. This is because the company offered free service for one year to anyone that purchased one of their TVs. This paid off by attracting a large customer base, but it isn’t yet clear how many of these customers are only watching because it’s free. Many of these users are already paying for other monthly subscription streaming services like Netflix, Hulu, Disney Plus, etc. Apple TV only costs $4.99 a month, but some people might feel that they’re already spending too much on streaming services and/or cable. The service will need to compete with other streaming devices to take their place with some customers.

Apple is easily one of the most recognizable companies in the world. It has attracted investors from all corners of the globe and many people have fallen in love with their products, with no plans to turn to any other companies for their technological needs. This company isn’t going anywhere anytime soon, which gives the value of their shares alone.

A few of the main reasons why you might want to invest in Apple would be their continuously advancing products, news updates, and the fact that they gain revenue from various sources like sales and subscription services. Revenue is constantly flooding in for the company and this pays off for investors. As time goes on, the company is expected to grow and bring in even more money. We don’t see Apple going out of business or slowing down anytime in the near future.

On the downside, Apple’s previous reliance on its famous iPhone is declining. Product sales are down, and the iPhone is only responsible for 50% of the company’s revenue. AppleTV also might not perform as well one many of the free yearly subscriptions run out if users decide not to pay for the service. It isn’t clear whether these users will choose to start paying for the streaming service, considering that there are so many competitors out there, like Netflix, Amazon Prime, Hulu, Disney Plus, and so on.

Final Thoughts

As of right now, investing in Apple might not be the best idea. If you had invested back in 2019 when the stock’s value dropped, then you would have made a good investment. Now, the best thing to do may be to wait to see if the value drops and then to invest. While we expect to see growth through new products and accessories from the company, some of Apple’s recent updates aren’t entirely original. For example, it almost seems as though the company is copying others by releasing a streaming service of their own. The only real difference is that the price is a few dollars less than the others. Of course, if you buy right now, the stock’s value may rise – as nobody can predict the market 100%. Be sure to stay up to date on Apple’s earnings reports, product launches, streaming service reviews, and other important information before making your own decision about whether to invest.

Categories
Forex Signals

EUR/USD Manual Close at 20 Pips Loss – Reason Explained! 

The EUR/USD pair traded in a bearish mode earlier today when we opened a sell trade at 1.17132. However, every soon, the market sentiment started to change, and the EUR/USD pair started forming a bullish setup. We decided to cut the minor loss in the EUR/USD pair, instead of keeping it until it hit loss. 

The EUR/USD pair traded in a bearish mode earlier today when we opened a sell trade at 1.17132. However, every soon, the market sentiment started to change, and the EUR/USD pair started forming a bullish setup. We decided to cut the minor loss in the EUR/USD pair, instead of keeping it until it hit loss. 

The EUR/USD pair traded in a bearish mode earlier today when we opened a sell trade at 1.17132. However, every soon, the market sentiment started to change, and the EUR/USD pair started forming a bullish setup. We decided to cut the minor loss in the EUR/USD pair, instead of keeping it until it hit loss. 

As we see now, the EUR/USD has formed three white soldiers’ candlestick patterns suggesting strong bullish bias in the EUR/USD pair. On the higher side, the EUR/USD may head further higher until the 1.1799 level. The hope provided by Trump raised US dollar bars in the market, and that pulled EUR/USD pair from its daily high to below 1.1800 level.

Meanwhile, the risk sentiment was also disturbed by the fears of escalating China-US tensions, as China announced that it would also impose sanctions on 11 Americans in retaliation to the US same sanctions on Hong Kong & Chinese officials. The list of Americans to be sanctioned by China included Senator Macro Rubio and Ted Cruz also.

The faded risk sentiment weighed on EUR/USD pair and pair started to lose its daily gains.

At 17:30 GMT, the Core PPI from the US for July rose to 0.5%from the 0.1% of expectations and supported the dollar. The PPI for July also rose to 0.6% from the expected 0.3% and came in favor of the dollar.

The better than expected PPI data from the US added strength to the US dollar and added pressure to EUR/USD pair, causing it to lose all daily gains and close at the same level the market was opened.


The EUR/USD is trading at 1.1790 level, heading to test the triple top resistance level of 1.1800 level. The closing of candles below 1.1800 level can drive more selling in the pair until the 1.1760 level is met. On the higher side, the EUR/USD pair may find resistance at 1.1835 level after 1.1800 level. In contrast, support continues to stay at 1.1759. Let’s wait for the next entry from our side. Good luck! 

Categories
Forex Videos

The End Of The Retail Forex Trader?

https://youtu.be/bSVKJP0HBvs

https://youtu.be/bSVKJP0HBvs

 

Is the Forex market creaking at the seams?

 

Retail forex traders take for granted, or do not know, or simply forget, that the retail sector of this market is derived from and only operates on the back of the institutional foreign exchange market place, where currencies are physically sold and bought, and need to be electronically delivered, on behalf of their institutional accounts and where these trades are growing again after a short period of decline to over $6.6 trillion in value per day in spot FX and the forward FX market.

If not for the continual success of the institutional forex market, there would be no retail market, where retail traders trade on the difference in price, contracts for difference or spread betting, and do not take physical delivery of the currencies they trade in.

In 2002, under the direction of the Federal Reserve, a company called CLS group which stands for continuous linked settlement was formed to act as the middleman in a large and ever-growing portion of institutional forex trades and where it was their role to authenticate and match trades to ensure that correct currencies or payments are placed into correct accounts.

CLS has prepared a report which was recently published by the global FX committee, or GFXC,  which was set up in 2017 as a forum for bringing together central Banks and private sector participants with the aim to promote a bus fare liquid open and appropriately transparent foreign exchange.

CLS is set up to deal in 18 currencies, most of which are from major economies. In the report, the chief executive, Marc Bayle de Jesse, mentioned a worrying statement, and I quote, ‘’ given the way in which FX trading has evolved, we have to think of additional ways to solve the problems of systemic risk’’.

He added that the market had previously seen payment failure in 1974 when Herstatt Bank in Germany, which was a privately owned bank in the city of Cologne, failed in the delivery of German Deutsche marks and US Dollars in a forex transaction because of time zone differences between Germany and the USA. This, coupled with the fact that they had made losses in betting against the dollar, caused the bank to be put into administration. The knock-on effect was significant, where the counterparty banks did not receive their US dollar payments.

Other entities, such as the bank for international settlements and GFXC themselves, have also expressed potentially very significant risks due to the amounts involved.

And while the payment cost of some clearinghouses is deemed to be expensive, some banks and institutions prefer to settle FX trades directly with their trading counterparts based on trust.

With the forex market growing and where emerging economies will be relying more and more on foreign exchange transactions, it is worrying to see that major clearinghouses are worried that there could be a breakdown in settlements  If this were to happen on large transactions it could cause utter panic in the foreign exchange markets, with a possibility of a halt in market makers offering liquidity to the market, this could cause a spill over into the retail market with disruption to pricing, liquidity and even temporary suspension in trading. As if retail traders didn’t have enough to worry about! Let’s hope those clever people in clearing can develop extra fail-safe mechanisms to protect international settlements.

Categories
Forex Psychology

The Dangers of Envious Trading

Have you ever seen a video, social media post, or anything else posted by someone who claims to be a successful forex trader? Often times, these posts show that those traders are living a luxurious lifestyle. You’re likely to see big beautiful homes, fast sports cars, photos from multiple vacations, expensive clothes, and other luxuries that these people are able to purchase. It’s easy to look at this and think that you want that for yourself; after all, there’s nothing wrong with being ambitious.

Have you ever seen a video, social media post, or anything else posted by someone who claims to be a successful forex trader? Often times, these posts show that those traders are living a luxurious lifestyle. You’re likely to see big beautiful homes, fast sports cars, photos from multiple vacations, expensive clothes, and other luxuries that these people are able to purchase. It’s easy to look at this and think that you want that for yourself; after all, there’s nothing wrong with being ambitious.

Have you ever seen a video, social media post, or anything else posted by someone who claims to be a successful forex trader? Often times, these posts show that those traders are living a luxurious lifestyle. You’re likely to see big beautiful homes, fast sports cars, photos from multiple vacations, expensive clothes, and other luxuries that these people are able to purchase. It’s easy to look at this and think that you want that for yourself; after all, there’s nothing wrong with being ambitious.

So, maybe you’ve already started trading, or you’re considering it. Perhaps you even know someone or have a family member that trades. Forex trading can be a profitable income source, but you aren’t going to become rich overnight from doing it. You may already be disappointed with your results, or maybe you’re setting yourself up for failure by entering with unrealistic expectations. Here are a few things to think about when it comes to being envious over the success of other traders:

Many of the people you see promoting how rich trading has made them, probably have income coming in from other sources. They might own a business or even work as a CEO at a company.

A lot of these people have been trading for quite some time. It may have taken them years or even decades to become millionaires. If you have a big deposit, you might get there quicker, but don’t buy into get rich quick promises. It takes time to make it to the top.

It takes a large deposit to make a lot of profits. It’s true that we all start from the beginning. However, some of us start with $5, while others might have $25,000 to invest.

Some of these people might get paid for attracting new traders. Or maybe they have a book to promote. This makes them more likely to exaggerate their results.
This doesn’t mean that you can’t get there someday, only that you need to have realistic expectations before you begin. Giving into envious feelings can be dangerous. It might lead you to make trading decisions that aren’t well-thought-out, to invest money that should have been used on necessities out of eagerness to turn a profit, or you might even fall for a scheme that claims it will get you rich quick.

Some traders might hear someone they know talking about their strategy and try to hastily copy it, only to lose money because they don’t know exactly what to do. Being envious of a more successful trader also might lead you to downplay your results. If you’re making a profit, then you’re off to a great start. Don’t put yourself down because you only made $5 – celebrate those small wins that will one day become much larger gains. Besides, making a small profit is better than losing money.

If you allow your emotions to affect the way you trade, you’re destined to make mistakes. Remember that it is ok to want to model another trader’s success; you just need to understand that it is going to take time and invested money to get there. Instead of feeling the urge to trade more to reach their level, spend more time learning about different strategies and concepts related to trading, and consider keeping a trading journal to monitor your progress. It’s true that trading can make you rich – eventually. If you begin with realistic expectations and keep negative emotions like envy at bay, then you’ll have the best chance of success.

Categories
Forex Brokers

The Importance of Good Customer Service with Forex Brokers

When choosing a broker, there’s a lot to consider – what type of accounts do they offer? Which trading platforms are supported? How much will you be paying in fees? How can you fund your account? There’s so much to contemplate that we might overlook some of the small details. Customer service is one thing […]

When choosing a broker, there’s a lot to consider – what type of accounts do they offer? Which trading platforms are supported? How much will you be paying in fees? How can you fund your account? There’s so much to contemplate that we might overlook some of the small details. Customer service is one thing […]

When choosing a broker, there’s a lot to consider – what type of accounts do they offer? Which trading platforms are supported? How much will you be paying in fees? How can you fund your account?

There’s so much to contemplate that we might overlook some of the small details. Customer service is one thing that you might not think too much about until after you’ve opened a trading account unless you need help with the account opening process. If support is easy to reach, fast, and polite, you won’t have to worry about having your problems solved quickly later down the road. However, you might find yourself with a big problem and realize that you’ve chosen a broker with horrible customer service when you need help the most. Consider these scenarios:

You have lost the login information to your trading account and can’t get a password reset through email for some reason. You need to get into your account quickly to make or close a trade – but support isn’t online. You wind up waiting days for your account to be unlocked and your broker doesn’t care that you’ve missed out on some important trades.

It’s well past your broker’s outlined timeframe for withdrawals, but yours never hit your bank account, so you reach out to customer support. The agent you speak with is rude and doesn’t seem to care about your problem. They might request certain documents that you can’t get in your country and aren’t willing to work with you at all. You realize that you may never receive your money.

A more technical issue with a trade is causing you to panic because you feel that things aren’t right. Support informs you that they will forward the issue to the trading department – but the specialist won’t be in the office for days because of a limited work schedule.

As you can see, bad customer service can really affect your experience trading with certain brokers. This is why it’s crucial to look at the following factors before opening a trading account through a broker:

#1: How can you get in touch with an agent? In our opinion, LiveChat or any other online instant messaging option is the quickest, most convenient way to contact support. However, some brokers advertise these contact options but rarely have agents online, even during business hours. Be sure to test instant messaging options first to make sure that they are actually used. You also might want to speak to someone on the phone, but every broker does not list a direct phone number. If email is the only contact option, chances are you’ll have to wait at least 24 hours for a response. Imagine having an urgent problem with no option but to wait for days for a response. What if you need to speak to support through multiple messages? Talk about a drawn-out headache.

#2: What hours is support in the office? Some brokers are in the office 24/7 and many others operate 24/5. Having access to support on the weekends is great because this is when most traders decide to open accounts and have questions. Other brokers might have shortened hours that cause them to close earlier in the day. We’ve also seen cases where the trading department or financial departments only work on certain days of the week, which causes a big delay for traders that need to speak to a specialist.

#3: What type of attitude does support have? Think of the scenario we provided earlier where the support agent was unhelpful when dealing with the client who needed to provide a document he couldn’t get because of the country he lived in. Support agents can’t break policy – but we’ve seen cases where agents went above and beyond to find a solution for their clients, even if it meant consulting with the big boss or asking others for advice about how to solve the problem. You should try talking with a few members of your considered broker’s customer service team to find out if the agents are polite and helpful or rude and pushy. It isn’t a good idea to work with a broker that allows their agents to be standoffish towards clients.

#4: What languages are supported? Your browser might translate a broker’s website for you if you speak another language, but it often fails to translate inside of a LiveChat window. If you speak English but are using a broker from another country, or if you speak another language, consider looking for a broker that offers support in multiple languages. There is a way around this, as you can use Google Translate, although this can be a bit inconvenient.

Finding a broker with a professional customer service team is important, as you’re probably going to need to speak with someone at some point in your trading career, whether you have a quick question, are having an issue with a withdrawal, need to speak to the trading department about a trade, get locked out of your account, or for some other reason. Traders often need help quickly when these problems arise so that they don’t miss out on important trading opportunities. If your broker has convenient contact methods, is available most of the time, and is polite and willing to help, then you’ll be provided with quick and easy resolutions. On the other hand, choosing a broker with rude staff and limited contact options will surely create a headache for you later on. Be sure to test out any considered broker’s customer support options before opening an account to find out what to expect.

Categories
Forex Forex Psychology

The Problem with Overconfidence in Trading

Confidence is usually thought of as a good emotion – if we are confident in ourselves, we feel reassured that we can do anything. This is a great outlook on life, but when it comes to trading, confidence can be a negative emotion. Let us explain why. Once traders become confident, they tend to become […]

Confidence is usually thought of as a good emotion – if we are confident in ourselves, we feel reassured that we can do anything. This is a great outlook on life, but when it comes to trading, confidence can be a negative emotion. Let us explain why. Once traders become confident, they tend to become […]

Confidence is usually thought of as a good emotion – if we are confident in ourselves, we feel reassured that we can do anything. This is a great outlook on life, but when it comes to trading, confidence can be a negative emotion. Let us explain why.

Once traders become confident, they tend to become less receptive to criticism and less likely to spend time educating themselves. Some traders might feel that they are on a lucky streak, not unlike gambling. And just like with gambling, this often leads traders to take more risks and to lose huge amounts of money. There’s nothing worse than feeling on top of the world – and then losing it all due to your own stupid choices.

Overconfidence in trading results in something that has been labeled ‘King Kong Syndrome’. A trader suffering from this would experience a series of winning trades, which would result in them choosing to trade more. As they win more and more, those traders pay less attention to the market and convince themselves that they are riding on luck. The winning streak then comes to an end with a difficult reality check where those traders lose everything. The traders that are most likely to fall victim to this demise are beginners that don’t have a lot of trading knowledge. Using too high of a leverage or a huge lot size can contribute to the losses that these traders will experience. Many beginners have emptied their trading accounts because of this and give up on trading for good.

King Kong Syndrome is tied in with trading psychology, which involves the way that our emotions change our trading decisions. Fear and greed are major contributors to how we trade, but excitement and obvious confidence in oneself seems to be the major emotions connected to King Kong Syndrome. Remember that anyone can make this mistake, it isn’t only something that affects beginners. In fact, research shows that men – especially single men, are more likely to fall victim to overconfidence than women are. Beginners may be more prone to this phenomenon, but it can affect any trader out there.

So, how does one avoid making these mistakes and falling victim to King Kong Syndrome? First, you need to understand that confidence in your trades is important, but you shouldn’t feel overly confident. Conducting research and paying attention to fundamental and technical analysis is important, and they can help us feel confident about the trades we’re about to make. But we shouldn’t be too confident – no matter how much research you’ve done, you aren’t guaranteed to get the results you’re expecting. Always set a stop loss and watch how much you’re risking, no matter how much information you’ve gathered about the market.

Simply being aware of this problem is another way to avoid it. Having a good trading strategy also plays an important role. Without a good strategy, you’re basically just gambling with the outcome of your trades. Your plan needs to account for different market conditions and long-term outcomes. Don’t fall victim to overtrading, as most traders amass profits from making smaller, safer trades.

Never make the mistake of thinking that you’re too good to learn something new. No matter how long you’ve been trading, you can always get better and there is more information to learn. Those that give up on trading aren’t always beginners. Many of those traders once considered themselves to be experts or unstoppable, but a few big gambles and the King Kong Syndrome can change that.

Since King Kong Syndrome is tied to one’s emotions, you need to think about the emotions that you’re feeling when trading. If you feel overly anxious, excited, greedy, or anything else, take a break. It’s best to trade with a level head so that you can see the big picture without making hasty decisions. And this goes for overconfidence too – if you’re on a winning streak and you see yourself getting a big head, it may be time to clear your head and take a break. Remember that confidence is important, but too much confidence can cause one to risk too much and make bad decisions.

Being a successful trader involves doing a lot of research and having a well-thought-out trading plan with minimized risks. Good traders can control their emotions and never let them cause bad trading decisions, or they know when to walk away when their emotions are changing the way that they think. Don’t make the mistake of assuming that you’re the best trader out there and never rely on luck. Being a profitable trader comes down to strategy – luck is only an illusion and every winning streak will come to an end if those decisions aren’t made based on facts and data. Be sure to do your research and don’t allow yourself to wipe out your trading account because of King Kong Syndrome.

Categories
Forex Forex Psychology

The Psychology Behind Fear in Forex Trading

Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades: A trader experiencing crippling anxiety, also known as analysis […]

Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades: A trader experiencing crippling anxiety, also known as analysis […]

Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades:

A trader experiencing crippling anxiety, also known as analysis paralysis, enters trades too late or fails to enter a winning trade altogether, even though they knew it was a good move.

A trader that is excited might fail to exit a trade when they should because they are feeling lucky. This could cause the trader to stay in the trade for too long.

A trader that is feeling greedy might want to make every cent possible and could stay in the trade past their take profit goal. Otherwise, the trader might close out the trade after incurring a very small loss because they don’t want to lose anything more.

While all of these problems can cause serious problems, fear is probably one of the worst emotions that traders can experience. Fear causes us to doubt ourselves and our capabilities. Have you ever allowed fear to interfere with one of your trades? If not, then think of the following ways that fear may have played a role in a bad decision you’ve made:

Have you ever failed to enter a trade even though you knew it was a good move?

Have you ever experienced a series of losses that almost made you feel paralyzed to make another trade? Did you feel as though trading was riskier than normal or your luck was bad?

Has the thought of losing money ever stopped you from making a move that you knew you should make?

Have you ever exited a trade too early because you feared the market would move in the other direction, only to watch that trade go on to be a winner?

If you answered yes to any of the above, then chances are that fear has in fact affected you while trading. There are several reasons that could cause a trader to feel fearful. Losing money is perhaps the most prevalent. After all, it takes hard work to make that money and the thought of losing even some of it is scary. Some fear failure altogether and cannot stand the idea of wiping out their account and failing as a trader. Making a mistake, failure, and other personal issues can tie in with trading because of the uncertainty of it all. Then, anxious traders might also doubt their abilities and overthink their strategy even when it’s a solid one. There are many different factors that can cause fear in a trader, and all of them have to do with the way that person thinks in general and while under pressure.

The first step to solving this problem is realizing that it is affecting you. If you’re reading our article, you’re likely already aware that fear is interfering with your trades. Fear is a powerful emotion that clouds our judgment, but there are ways to stop it from hurting your trades.

If you’re experiencing both fear and anxiety, then you likely have a common problem known as analysis paralysis. Traders experiencing this are like deer caught in headlights. They can’t decide in time, so they either enter trades way too late, or they fail to enter them at all because they cannot make up their mind.

There are ways to overcome this, however. Many suffering from this problem of overanalyzed data. They might use too many indicators, for example. Simplifying the number of indicators you’re using or even trading without them are good ideas if you have a ton of indicators running at once. Having a good trading strategy is another measure you can take to overcome the fear and anxiety behind analysis paralysis. Or you can take other measures, like meditation or yoga, music, or another relaxation technique to help calm yourself. There are lots of resources online related to this problem and how to manage it.

Once you’re aware of the ways that fear is affecting you, you can figure out how to use it to your advantage. Understand that highly driven people are usually driven by fear. If you don’t want to fail, then why not put forth every effort to be the best trader you can be? Instead of being paralyzed by fear, you should let it inspire you to do better. Learn more, perfect your trading strategy, figure out the best ways to analyze data, and so on. Embracing your fear can help you to use it to your advantage.

Every trader should know that fear is an understandable emotion that can stem from several different places when one is trading. Whether you’re fearing failure, worried about losing money, or something else, the first step is identifying where this emotion is coming from. Once you’ve done that, you can work on getting better. You might not be able to get rid of your fear entirely, but there are ways that one can use it to their advantage and continue on to trading success. If you’re suffering from analysis paralysis, then there are actually several different methods that might help you overcome that. At the end of the day, every trader needs to know that fear doesn’t have to interfere with their trades or bring an end to their trading career as long as they learn how to manage it.

Categories
Forex Market Analysis

Daily F.X. Analysis, August 11 – Top Trade Setups In Forex – Stronger Dollar In Play! 

On the news front, the economic calendar is a bit light and may not be offering any major economic release. Therefore, we need to trade based upon stronger dollar sentiment, as traders are likely to price better than expected NFP data from last week.

On the news front, the economic calendar is a bit light and may not be offering any major economic release. Therefore, we need to trade based upon stronger dollar sentiment, as traders are likely to price better than expected NFP data from last week.

On the news front, the economic calendar is a bit light and may not be offering any major economic release. Therefore, we need to trade based upon stronger dollar sentiment, as traders are likely to price better than expected NFP data from last week.

Economic Events to Watch Today  

 

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.17363after placing a high of 1.18005 and a low of 1.17358. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair extended its previous day’s losses on Monday amid the strong U.S. dollar and increasing US-China tensions. The main driver of the EUR/USD pair on Monday was the U.S. dollar.

The U.S. Dollar was strong across the board with the U.S. Dollar Index at 93.5 level, with investors taking comfort from President Donald Trump’s move to boost the economy in the wake of coronavirus pandemic.

Over the weekend, U.S. President Trump signed a series of executive orders aimed at enhancing the economic condition. The orders included an extension of expanded jobless benefits at a lower rate of $400 a week. It was down from the previous $600 a week. The State government will pay 1/4th of the bill, which was also included in Trump’s order.

However, it is not clear that the executive orders can withstand court scrutiny as the power relies on Congress. Nevertheless, the President’s orders were an attempt to play his part in breaking the impasse. Though the talks between Republicans & Democrats on August 7 broke some of the differences, they still did not show any consensus. The new round of talk is expected to resume at some point, but the date is not yet confirmed.

The chances for a $3 trillion stimulus package have been compromised to $2 trillion by Democrats, but that is still a trillion more than the framework that the ruling party aimed for. Additionally, the JOLTS Job Openings data from the U.S. on Monday came in as 5.89 M in June in comparison to 5.30M of forecasts and supported the U.S. dollar that weighed on EUR/USD pair.

From the Europe side, the Sentix Investor Confidence for August dropped to -13.4 from the anticipated -16.0 and the previous -18.2 and supported Euro that kept the losses of EUR/USD pair limited on Monday.

Meanwhile, early on Monday, the Defence Ministry of Taiwan said that a Chinese jet fighter crossed the median of the Taiwan Strait line, possibly in response to the U.S. Health Secretary Alex Azar’s visit to Taipei.

Any form of American recognition of the island nation Taiwan that China claimed its own make Beijing angry, and hence, it responded. The tensions in Taiwan have grown since the Hong Kong clash between the U.S. & China.

Besides this, the world’s biggest nations are also clashing over the technological front; recently, the U.S. banned American firms from dealing with TikTok and WeChat app. However, the most important matter between both countries lies with the fulfillment of the phase-one trade deal. Negotiators from both sides are scheduled to meet this week to analyze the achievements of the deal. The risk-off market sentiment was picking its pace after the escalation of US-China tensions, and it has weighed on the riskier pair EUR/USD.

Daily Technical Levels

Support Pivot Resistance
1.1713 1.1758 1.1780
1.1691 1.1825
1.1646 1.1848

EUR/USD– Trading Tip

The single currency Euro slipped against the U.S. dollar amid increased USD demand as traders started to price in stronger than expected NFP data released on Friday. The EUR/USD is now bouncing off the support level of the 1.1728 level. It may head higher towards 23.6% Fibonacci retracement level of 1.1768, and above this, the next resistance can stay at 1.1765 level, which marks 38.2% Fibonacci retracement level.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.30730 after placing a high of 1.31032 and a low of 1.30188. Overall the movement of GBP/USD pair remained bullish throughout the day. The GBP/USD pair rose on Monday ahead of key data due later this week, despite the U.S. dollar’s strength. The risk sentiment favored some of the factors, and investors believe that further upside could be on the horizon.

The latest higher move in the Pound was because of the key economic data, including the update of the labor market and second-quarter GDP scheduled to be released later this week. Moreover, the GBP/USD pair was also supported by the improving risk sentiment in the market after the hopes about the US-China phase-one trade deal became optimistic.

The U.S. trade representative and U.S. Treasury Secretary will meet the Chinese Vice Premier later this week to evaluate the implementation of the phase-one trade deal by China. China has assured that it will fulfill its promises made under the agreement that include the increased U.S. farm purchases and the better protection of Intellectual property rights.

This faded some of the risk-off market sentiment and caused GBP/USD to surge.

The risk sentiment was backed by the comments of WHO Chief Scientist Dr. Soumya Swaminathan, who praised the global efforts in the development of the COVID-19 vaccine. She reported that almost 200 vaccines were being developed globally and were in the stage of clinical or pre-clinical trials. According to her, 24 vaccines had entered the clinical trials in human beings.

The unprecedented global efforts to develop the coronavirus vaccine triggered the risk-on market sentiment as various potential paths to the end of coronavirus gave hope to the investors. The improved risk appetite gave a push to GBP/USD pair on Monday.

On Brexit front, the U.K. media has suggested that David Frost remain the U.K.’s chief Brexit negotiator and will stay on committed to securing an agreement with the European Union even if a deal is not secured by the end of September.

The U.K. formally left the E.U. in January after voting to leave in 2016, and negotiations to reach post-Brexit trade deal are currently deadlocked because both sides have failed to reach a consensus on various matters.

As the end of the transition periods is getting closer day by day, Prime Minister Boris Johnson has vowed to end the year with or without a deal, outside Europe. David Frost is set to take up a new position as National Security Advisor (NSA) in September. However, his position as Chief Brexit Negotiator will remain in place.

Meanwhile, the U.K. government pledged a further 20 Million Pounds in aid to Lebanon following Tuesday’s deadly explosion in Beirut. The U.K.’s support will directly go to the injured and people displaced by the explosion. It will also provide food, medicine, and urgent supplies to the needy in Lebanon affected by the explosion.

The U.K. government has already given 5 Million Pound to the emergency relief effort and said that it would stand by the Lebanese people in the hour of need. This also helped GBP in recovering its position and pushed GBP/USD pair higher on Monday.

Daily Technical Levels

Support Pivot Resistance
1.3024 1.3064 1.3110
1.2978 1.3150
1.2938 1.3196

GBP/USD– Trading Tip

On Tuesday, the GBP/USD consolidates at 1.3067 level, holding right above the 50 periods EMA support area of 1.3040 level while the bearish breakout of 1.3040 level can extend selling unto 1.2918 level. Recently as we can see in the chart above that the GBPUSD pair has violated its upward trendline that supported the pair around 1.3130 level, and now below this, we can expect GBP/USD to continue trading bearish. The GBP/USD should show a bearish crossover to confirm a strong selling bias in the Cable. On the higher side, Sterling may find resistance at 1.3105 and 1.3175. Let’s consider selling below 1.3045 level today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair succeeded to break its previous session thin trading range and rose above 106.00 marks mainly due to the broad-based U.S. dollar fresh strength, buoyed by the Friday’s better-than-expected employment report, which eventually helped the U.S. dollar to put the bids. 

On the other hand, the upbeat market sentiment, backed by the optimism that the U.S. policymakers are showing signs to resume talks about the stimulus package, undermined the safe-haven Japanese yen and contributed to the pair’s gains. In the meantime, the risk-on market sentiment was further bolstered by the upbeat key U.S. and China data, which tends to urge buyers to invest in riskier assets instead of safe-have assets. Currently, the USD/JPY currency pair is currently trading at 106.00 and consolidating in the range between 105.72 – 106.06.

Despite concerns about the ever-increasing coronavirus cases across the world and worsening US-China relations, the investors continued to cheer the hopes of the U.S. fiscal stimulus package triggered by the signs that White House officials and congressional Democrats showed a willingness to compromise on another stimulus package to bolster the stalled economy. 

On the other hand, U.S. President Donald Trump fulfilled his promise to take executive action as the U.S. Congress failed to offer any outcome over the country’s latest stimulus measures. As a result, U.S. President Trump’s signed four executive orders to release unemployment claim benefits, help with student loans, and aid those living in a rented house, which also exerted a positive impact on the market trading sentiment and contributed to the currency pair losses.

Moreover, the upbeat market sentiment was being supported by Friday’s better-than-expected employment report. Details suggested Non-farm payrolls increased by 1.763 million in July month, vs. the estimated 1.6 million increase. The unemployment rate also declined to 10.2% in July, compared to June’s reading of 10.5%.

Despite the positive data, the doubts remain about the U.S. economic recovery amid the on-going surge in the coronavirus cases. As per the latest report, the U.S. crossed the five million COVID-19 cases as of August 10, according to Johns Hopkins University. Whereas Australia’s 2nd-most populous state, the epicenter of the pandemic, Victoria, reported the biggest single-day rise in deaths. As per the latest figures, Australia’s coronavirus death losses crossed 314 as Victoria announces a daily record of 19 deaths and 322 new cases in the past 24 hours. 

Apart from the virus woes, the long-lasting struggle between the world’s two largest economies remained on the cards as U.S. President Donald Trump turned off the business tap for China’s TikTok and WeChat. As well as, the U.S. imposed sanctions on the Hong Kong Leader Carry Liam, which keeps challenges the upbeat market tone. In the meantime, the White House National Security Adviser Robert O’Brien blamed China while saying that the “Chinese hackers have been targeting U.S. election infrastructure ahead of the 2020 presidential election.” These gloomy updates capped further upside in the currency pair by giving support to the safe-haven Japanese yen.

As a result of the upbeat U.S. data, the broad-based U.S. dollar succeeded in gaining some positive traction on the day. Still, the bullish bias in the U.S. dollar is expected to be short-lived as doubts remain about the U.S. economic recovery amid on-going coronavirus cases. However, the gains in the U.S. dollar became the key factor that kept the currency pair higher.

Daily Technical Levels

Support Pivot Resistance
105.6900 105.9500 106.1900
105.4500 106.4500
105.1900 106.7000

USD/JPY – Trading Tips

The USD/JPY has made a slight bullish recovery from 105.780 to 106.150 area, especially after examining the 38.2% Fibonacci support level of 105.650. A bullish breakout of 106.467 resistance level can drive more buying until the next resistance area f 107.198. On the lower side, the USD/JPY may find support at 105.600 and 105.078, extended by the 38.2% and 61.8% Fibonacci retracement level. The current market price of USDJPY is staying over 50 EMA, which extends support and may push the pair higher. Let’s consider buying above 105.750 level today. Good luck! 

Categories
Beginners Forex Education Forex Basics

Top 6 Forex Questions Answered

Forex trading can be a profitable way to spend one’s free time, while some make their living by working as a full-time day trader. Although trading forex has become more popular over the years, it is still surrounded by some confusion and myths. Some wonder if you can really make money doing it, if trading […]

Forex trading can be a profitable way to spend one’s free time, while some make their living by working as a full-time day trader. Although trading forex has become more popular over the years, it is still surrounded by some confusion and myths. Some wonder if you can really make money doing it, if trading […]

Forex trading can be a profitable way to spend one’s free time, while some make their living by working as a full-time day trader. Although trading forex has become more popular over the years, it is still surrounded by some confusion and myths. Some wonder if you can really make money doing it, if trading is really worth it, or if the whole thing is a scam. Below, we will answer some of the most common questions that beginners ask when considering becoming a forex trader.

What Does it Mean to Trade Forex?

This one is basic but important. Forex trading involves making transactions that involve different currencies on the foreign exchange market. The currency pair EUR/USD is a recognizable example. Investors would try to determine whether the value of the euro would appreciate or depreciate in value versus the US dollar in order to try to make a profit. A person that trades forex is known as a trader. In order to trade, you need to open an account through a broker, who provides you with access to the market.

How Much Do I Need to Get Started?

Perhaps you’ve avoided trading because of the assumption that you’d need thousands of dollars to get started. Fortunately, this isn’t true. Some brokers do require larger deposits, but there are companies out there that will allow you to open an account with as little as $1-$5, or around $100. Do keep in mind that your expectations need to match the amount of your investment. You won’t make as much as a trader that has invested $20,000 if you only put $20 into your account. It’s actually better to start out small in the beginning as you perfect your strategy and improve your skills. Then you can worry about growing your investment and bringing in noteworthy profits.

Is it Really Worth it? Can I Actually Make Money?

You can absolutely make money as a forex trader. However, you need to know that trading isn’t going to make you rich in a short time span. It takes a lot of hard work and effort to become a successful trader and to bring home enough profits to support yourself, quit your job, or meet other financial goals. If you’re looking for an easy or quick way to get rich, then trading probably isn’t for you. On the other hand, if you’re willing to work for it, trading will prove to be worth it if you put in the effort.

What Do I Need to Start Trading Forex?

The good news is that you don’t need much to get started. First, you’ll need an education so that you understand basic terms and concepts related to trading, along with more advanced information like setting a stop loss or trading psychology. You can learn everything you need online for free, so there’s no excuse not to do it. Once you’re ready, the next step is to open a trading account through a broker. You’ll need to do some research to make sure you choose a trustworthy company with attractive costs. Of course, you’ll also need to make a deposit into your trading account. As we mentioned earlier, some brokers accept deposits as low as $1. You should try to make a larger investment if you can, but you can still get started with a low amount. Along with obvious necessities like a computer, phone, or tablet and internet connection, this is all you need to become a trader.

Are There Benefits to Trading Forex?

Forex trading is popular because it offers key benefits over working a real job. The best part is getting to be your own boss. You get the perks of job flexibility and you can work from anywhere with an internet connection on your PC, laptop, smartphone, or tablet. Unfortunately, there is one main disadvantage to forex trading – you aren’t guaranteed to make money. A real job offers you stability and a guaranteed paycheck for the hours you’ve worked, while forex trading may or may not be profitable on any given day. This is why many traders start out doing it part-time before quitting their jobs or making larger investments. It’s a good idea to test the waters and get an idea of your profit goals first.

How Risky is Forex Trading?

The forex market is risky. It is affected by news releases and other factors and can experience volatility at certain times of the day. However, you can make trades based on certain data, so trading offers more of a probability for winning than gambling. Nobody knows what the market is going to do, but having a good trading plan, learning to use indicators, read charts, devise a strategy, and so on will improve your odds for winning. If you’re losing money, you can always change your system and fix the issue, so trading isn’t a complete gamble. Avoiding trading during more volatile times is another helpful way to avoid taking as much risk.

Categories
Beginners Forex Education Forex Money Management

Seven Trading Secrets that Most Successful Traders Won’t Share

1. Keep an Open Mind In the world of forex trading, nothing is ever guaranteed. Successful traders don’t think in terms of absolutes or in “if/then” statements. Instead, you should think of words like “likely” or “probably”. Always remember that there is no accurate way to predict what is going to happen and that no […]

1. Keep an Open Mind In the world of forex trading, nothing is ever guaranteed. Successful traders don’t think in terms of absolutes or in “if/then” statements. Instead, you should think of words like “likely” or “probably”. Always remember that there is no accurate way to predict what is going to happen and that no […]

1. Keep an Open Mind

In the world of forex trading, nothing is ever guaranteed. Successful traders don’t think in terms of absolutes or in “if/then” statements. Instead, you should think of words like “likely” or “probably”. Always remember that there is no accurate way to predict what is going to happen and that no matter how sure you are about the ways things will go, you should never feel too certain. Those that fall into confidence often make mistakes when it comes to overtrading or make hasty decisions because they believe they know exactly what will happen. Imagine losing a great deal of money because of this issue.

2. Stop Focusing on Making Money!

Traders that start out with dollar signs in their eyes are only setting themselves up for failure. Of course, you might be wondering “what’s the point?” if it isn’t making money. Your goals as a forex trader shouldn’t be to make a certain amount of money, but rather to make more than what you’ve lost. If that equates to a $5 profit in a one-month period, you’re doing better than many others that have tried. Creating a solid trading plan and perfecting your strategy is another notable goal that directly affects your success and profits later down the road. Instead, try to mold yourself into the best trader you can be, and you will reap the benefits in the end.

3. It’s Better to Risk Less

It might seem like taking a bigger risk is the better option, as it can result in a larger reward. However, the opposite is true. If you only risk around 1% or slightly more on each trade, then it will be much harder to drain your trading account if the market moves against you. It will take longer for your profits to build up, but you won’t lose everything in one sweep either. Trust us, we’ve heard horror stories of traders losing hundreds of thousands of dollars on one trade.

4. Boring is Normal

You might have a concept in your head about what trading is like from watching movies and tv shows that depict traders on Wall Street running around, jumping, yelling, and so on. In reality, those that choose to trade from home use devices like laptops and phones, often trading in solitude and watching the market for something to happen. Overall, it can be quite boring, as you’ll spend a lot of time watching your computer screen. A quick tip if you can’t handle sitting on your hands for hours – consider investing in an automated forex robot so that you won’t have to.

5. Know that your Win Rate isn’t Important

A trader’s win rate is one of the most talked-about figures when it comes to trading. This seems to make sense, as you want to win more than you lose, therefore, a higher win rate should seemingly indicate success. This isn’t true, however. What really matters is making more money than you lose. If you have a higher win rate with profits then that’s great, but you could still wind up coming out on top with a higher loss rate as well. Instead, simply compare your profits vs losses.

6. Decide How Much Money you Want to Lose on a Trade, Not the Percentage

Traders typically base their risk tolerance on a percentage of their account balance. For example, you might risk 2% of your account balance on any single trade. This is recommended by experts, but you might not want to base every single move on the same percentage. Instead, it is recommended to decide how much you are actually willing to lose on each trade down to the dollar amount. That amount might actually be higher or lower than a predetermined percentage.

7. Remain Neutral

Obviously, nobody wants to lose their hard-earned money when trading. Unfortunately, this is an inevitable part of trading that is bound to happen from time to time. If you find yourself hoping and crossing your fingers that your trade will be a winner, you might be setting yourself up for disappointment. The best traders have learned how to be neutral and don’t allow losses to break their spirits because it is a simple part of trading.

Categories
Crypto Market Analysis

What Influences the Cryptocurrency Market?

If you’re going to invest in cryptocurrency, you need to have a good understanding of the driving forces behind prices in the market. Many different things can affect the prices you’ll see, but many of these influences are different than those that affect stocks and currencies. Therefore, it is important for investors to know what […]

If you’re going to invest in cryptocurrency, you need to have a good understanding of the driving forces behind prices in the market. Many different things can affect the prices you’ll see, but many of these influences are different than those that affect stocks and currencies. Therefore, it is important for investors to know what […]

If you’re going to invest in cryptocurrency, you need to have a good understanding of the driving forces behind prices in the market. Many different things can affect the prices you’ll see, but many of these influences are different than those that affect stocks and currencies. Therefore, it is important for investors to know what to watch for to make the best trading decisions.

Announcements or Changes

Many cryptocurrency providers are constantly working to improve their products. For example, the Bitcoin halving event is set to take place in May of 2020. When cryptocurrency goes through updates or transitions, this affects the price. This can go in one of two ways: successful updates may drive the price up as more traders feel confident in the cryptocurrency, or failed projects and technical problems with updates may lead some to walk away from the product altogether.

Supply & Demand

Supply and demand is a common influence behind the price of stocks, forex, and cryptocurrencies. This concept generally revolves around the fact that an abundance of something causes a decrease in value, while a shortage increases the value. During the COVID-19 pandemic, some grocers raised the price of meat or other items more than 50% because hoarding and reduced production caused a shortage of those products. While that price inflation was technically illegal in our example, this is how supply and demand affect the price of cryptocurrencies. Mining also influences supply and demand.

Bad Publicity

Bitcoin received harsh criticism when it was discovered that many consumers were using it to purchase illegal drugs or to pay for other illegal online services thanks to it being more private than traditional banking. When drama or unbecoming stories break, it can cause a decrease in the currency’s value and cause some investors to walk away. On the other hand, good publicity can have the opposite effect.

Market News

Like with any type of asset, the news is one of the main influences behind prices. In the case of cryptocurrency, news can give us insight into what is going to happen. A bad economy or decrease in the value of a major currency can push many traders to invest in cryptocurrency instead. This is something that you’ll want to keep a close eye on because of how significantly it can affect the prices.

High Profile Investors

Often referred to as ‘whale investors’, this category usually includes corporations or individuals with a lot of capital. These investors have a large influence on the market because they either invest a large sum into the market or sell a large amount. If these investors buy, it means that they believe the market will go up, while selling indicates the opposite. Many of these investors have more resources at their disposal, so it is a good idea to pay attention to their moves so that you can benefit.

Other Influences

There are a few other factors that can affect the price of cryptocurrency:

Hard Forks: This involves a blockchain being split in two, like when Bitcoin was split with Bitcoin Cash or Ethereum and Ethereum Classic. If there is any drama behind the split, then this can be a cause for concern.

Competitors: If a new cryptocurrency hits the market or an existing one improves their services it can draw some investors away from other options.

How it can be used: If a cryptocurrency has multiple uses, investors may be more likely to buy.

Security: Any cyber-attacks or hacking problems with a cryptocurrency will make traders more fearful of investment or it will cause investors to sell, which will cause the price to go down.

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Beginners Forex Education Forex Basics

What You Need to Know to Succeed as a Forex Trader

Forex traders spend a great deal of time educating themselves before they are truly ready to begin trading. However, its easy to miss out on some important tips because there are so many sources floating around on the internet. Below, we will provide some of the most important facts that you need to know to […]

Forex traders spend a great deal of time educating themselves before they are truly ready to begin trading. However, its easy to miss out on some important tips because there are so many sources floating around on the internet. Below, we will provide some of the most important facts that you need to know to […]

Forex traders spend a great deal of time educating themselves before they are truly ready to begin trading. However, its easy to miss out on some important tips because there are so many sources floating around on the internet. Below, we will provide some of the most important facts that you need to know to succeed in your career as a forex trader. Be sure to take a look, just in case you’ve missed anything!

Be careful with leverage: There’s a big range of leverage caps being offered by different forex brokerages. Some limit their maximum leverage to a safer amount around 1:30, while others push their cap to 1:1000 or higher. It’s true that using a higher option can result in a large win, however, it can also cause you to lose a lot of money very quickly. Our best advice is to proceed with caution and think of the highest leverage options as off-limits if you have a small account balance or don’t want to take a lot of risks. Many professionals prefer a leverage of 1:100, so try this or start lower until you become more acquainted with the ways that leverage can affect your balance.

Start with a demo account: Almost every forex broker offers free demo accounts to their potential clients. These accounts allow you to practice trading in a live environment without risking any real money and can even give you insight into what conditions are like trading for that particular broker. Being that these accounts are absolutely free, and a real account is not required to open one, there’s absolutely no reason why beginners shouldn’t take advantage of the opportunity before investing real money.

Be careful how much you risk: This might sound obvious, but you might not realize how small of an amount experts recommend risking per trade. The answer is actually only 1% of your account balance, so for every $100 in your account, you only want to risk a dollar. It’s better to risk less in case you lose than to risk more in case you win because the latter usually leads to a blown account.

Some brokers will work against you: This also might seem obvious, but the ways that you identify scammers aren’t quite as so. Always check terms and conditions and look at reviews online from other users. Know that some of the worst brokers will hold your withdrawals and refuse to give them back thanks to crazy terms in their contracts. Don’t get this confused with regular procedures, however – requiring a photo of your ID, requiring you to verify that you’ve requested a withdrawal, and other means are common guidelines with most brokers.

Only invest what you can afford to lose: Some people go crazy and invest every penny they have into their account. This will only lead to problems. For example, some customers become very upset because they have no other money and want to immediately withdraw funds from their account, even though it can take at least a few days or more. Some brokers will even charge you to withdraw your money with no trading activity.

Don’t believe in “get rich quick” schemes: Some people will tell you that they have the magic answer to becoming rich as a forex trader. This person might be referring to a strategy, indicator, forex robot, etc. Regardless, you can’t put all your faith into these promises. If it were that easy to become a trader, everyone would do it. This doesn’t mean that their strategy isn’t profitable, however, but words like “guaranteed” don’t mean much considering that the market is volatile, and nobody can predict what will happen.

Make sure your expectations are realistic: A billionaire has more money to invest and will make profits more quickly than someone with a $100 investment. Instead of feeling discouraged, you should simply have a realistic expectation instead of basing your expected results on someone that has a lot more money or experience than you do. You can still make a lot of money; it will just take some time. Some traders start out with heightened expectations because of something they’ve heard or read about trading, only to walk away quickly because they feel that they should be making a lot more money.

Categories
Beginners Forex Education Forex Basics

What’s Your Forex Trading Style?

If you don’t already know what your trading style is, it’s important to spend the time learning about the different styles so that you can figure out what type of trader you are. Finding the right trading style is one of the first steps on the journey to becoming a successful forex trader. Once you’ve […]

If you don’t already know what your trading style is, it’s important to spend the time learning about the different styles so that you can figure out what type of trader you are. Finding the right trading style is one of the first steps on the journey to becoming a successful forex trader. Once you’ve […]

If you don’t already know what your trading style is, it’s important to spend the time learning about the different styles so that you can figure out what type of trader you are. Finding the right trading style is one of the first steps on the journey to becoming a successful forex trader. Once you’ve found it, you’ll be ready to start working on your trading strategy. To be clear, there are differences between a ‘trading style’ and a ‘trading strategy’. Your trading style refers to the way you trade, for example, swing or day trading, position trading, and scalping. Your trading strategy revolves around the way that you make your trades and goes into more detail about the reasons why you decide to make a trade when you choose to enter and exit a position, your risk-management precautions, and other factors.

Novice traders should begin by choosing a trading style before moving on and choosing a strategy. If you skipped this step and already started trading, don’t worry, you can still go back and work things around. Below, we will describe the four main trading styles to help you decide which is the best fit:

Day Trading

As the name suggests, day traders trade during the day, often opening several positions per day. In most cases, day traders close out all of their positions before the end of each trading day. This style can be time-consuming – some day traders even complain that they can’t leave their computer to eat or use the bathroom, otherwise, they might miss a good opportunity. Still, this is a popular style, even though it is considered to be risky because of the number of positions one opens per day. We would recommend this style to traders that have enough time on their hands unless you’re considering using a forex robot to trade for you if you don’t have the time.

Swing Trading

Swing trading is essentially the opposite of day trading in that traders usually open one medium or large trade and leaves it open for a period of days or weeks so that it can accumulate. There are some advantages to this style because it is considered part-time and can be taken up alongside regular job hours if you wish. On the downside, most brokers charge fees for leaving positions open overnight, and this can really add up if you’re leaving your position open for several days, especially considering that triple charges often apply on a certain day of the week. The positive side of swing trading is that it doesn’t require much effort and it’s even been said that the best traders trade less often.

Position Trading

Position trading is similar to swing trading; however, traders actually keep their positions open for months or years instead of days or weeks. These traders are looking for more historic price movements and can really capitalize off of those movements. This doesn’t require much time, as you barely have to watch the markets, but you do need to have a strong belief that the market is going to go up in the long run.

Scalping

Scalping is our fourth trading style and is like day trading, with the main difference being that traders can make hundreds of trades per day where day traders make less. Each and every market movement is an opportunity for a scalper, and they attempt to make small profits from those movements. Over time, profits add up to a substantial amount, although one of the downsides to scalping is that one large loss can eliminate the multiple wins that the trader worked so hard to obtain. This style is considered to be intense but rewarding when done correctly.

The Bottom Line

There are several different trading styles out there and it is important to find the one that suits you best. One of the first things to think about is how much time you actually have to trade, considering that day trading and scalping require more time spent at the computer while swing trading and position trading don’t require as much attention. The pros and cons of each style are also important, as some styles are riskier but can be more profitable as well. Once you figure out which trading style is the best option for you personally, you can put much more time into perfecting your trading strategy.

Categories
Forex Basic Strategies

Combining Moving Averages with Parabolic SAR To Generate Accurate Trading Signals

Introduction

Introduction

Introduction

Trend trading is a great way to earn money from the forex market. Any retail trading strategy based on a trend continuation pattern works well when it moves within a trend.  Therefore, in this trading strategy, we will take trades from minor corrections using the parabolic SAR towards the trend.

Furthermore, we will use a 100-period exponential moving average to determine the trend. If the price is trading above the 100 exponential moving average, we will consider the trend as an uptrend. If the price is trading below the 100-period exponential moving average, it will consider it a downtrend. We will follow a simple logic by considering buying trades when the market moves up and considering sell trades when the market is moving to drown.

However, there are no specific rules about the period of your moving average. Some traders are comfortable with 100 EMA, while some traders are compatible with 20 EMA or SMA. Therefore, if you’re trading in a lower timeframe, you can use any moving average from 20 to 100 periods. However, we will focus on 100 EMA as it provides good profitability based on swing trading ideas.

Why Should We Use Parabolic SAR?

Parabolic SAR is a forex trading indicator that stands for “stand and reverses.” This trading indicator was devised by J Welles, represented by some dots below and above the candlestick. In an uptrend, dots remain below the price and indicates a bullish pressure once the price is rejected from these dots. Similarly, in a downtrend, the dots form above the price, and the price starts to move once it gets rejected from the parabolic SAR.

In the image below, we can see a clear chart of the candlestick pattern.

Let’s plot the parabolic SAR in the price chart and see how it looks like.

It is visible that in an uptrend, Parabolic SAR is below the price, and in a downtrend, the parabolic SAR is above the price. This is why the parabolic SAR is considered as a stop and reverse indicator.

Furthermore, the parabolic SAR has a built-in stop-loss function. Once the price moves up or down with a new candle, the parabolic SAR changes with the price. Therefore, you can move your stop loss once the price creates a new higher or lower low. Furthermore, you can edit the primary parameter of Parabolic SAR from the indicator’s setting, but in this trading strategy, we will use the default format.

Moving Average with Parabolic SAR

If we use a 100-period exponential moving average, we can catch the major trend direction from the minor correction. The forex market Moves Like a zigzag. Therefore, there is a minor correction in a major bullish trend and minor bullish correction in a major downtrend. If we know the major trend, we can quickly enter the trade from a correction to get the maximum reward from the minimum risk.

In the forex market, parabolic SAR usually provides trading signals earlier than expected, which might create a negative impact on your trading result. Overall, any trend following indicator does not provide a good result when the price moves within a range. In most of the cases, markets follow the trend of about 35% of the time. Therefore, it is essential to filter out the conditions where the market is moving within a range.

We can eliminate the unexpected market behavior by using the 100 moving average as it will provide a more significant trend that will prevent over-trading. In the image below, we can see how the parabolic SAR provides false trading signals when the market moves within a range.

In the ranging market, it would be difficult to make a profit using this trading strategy. Therefore, it is better to use the 100 moving average to get the overall direction of the trend.

Moving Average With Parabolic SAR Trading Rules

Every trading strategy has its unique rules. In the moving average with the Parabolic SAR trading strategy, our main aim is to follow the trend towards the direction of 100 EMA.

Overall, we will follow simple rules as Complex trading rules make it challenging to implement it on the chart. You can make good profits with a simple trading strategy if you can utilize it well with appropriate trade management and money management rules.

Timeframe

The moving average with the Parabolic SAR trading strategy works well in all timeframes from 5 minutes to weekly charts. The longer timeframe will provide better trading results. However, it is better to stick to the 1 hour to daily chart as it can cover fresh moves driven by banks and financial institutes.

Currency Pair

There is no obligation to use a currency pair. However, it is better to use a currency pair that does not remain within a range for a long time like EURCHF. Therefore, all major and minor pairs are good to go with this trading strategy.

Buy Entry (Inverse for Sell Entry)

  • Identify the price above the 100 periods moving average. If the price is choppy at the 100 EMA, Ignore the price chart, and move to another market.
  • Identify the parabolic SAR to point dots below the candlestick, which will be a buy signal (above the candlestick is a sell signal).
  • Later on, place a buy stop order above the candlestick high.
  • Put your stop loss below the printed dot with some buffer.

Example of Parabolic SAR Strategy

At the image below and see how parabolic SAR provided a buy trade setup.

  • Notice that the price is moving in a range at the 100 EMA area with a violation. The blue horizontal line represents the support and resistance level, where the price is consolidating. In this consolidation, we will not take any trade.
  • If you look at the price structure, you can see the price is moving within a range from their resistance to support. On the price move above the 100 exponential moving average, you should put a pending order above the range, projecting that it will break out from the resistance level and create an impulsive bullish pressure.

Stop Loss and Take Profit Set

When you put the pending order above the resistance level, you should put a stop loss below red dots that have appeared below the candlestick. While setting the stop-loss, make sure to use some buffer of 10 to 15 pips.

Later on, hold the price until it points red dots above the price. The red dot above the price will indicate that sellers are entering the market, and there is a possibility to create a new lower low. Furthermore, while sitting the stop loss and take profit, you should follow the basic rules of price action, including the breakout and pullback.

Summary

Let’s summarize the moving average with the Parabolic SAR trading strategy:

  • You should look for a fresh trending movement above or below 100 exponential moving average.
  • Parabolic dots below the price will provide buy-entry, and parabolic dots above the price will indicate sell-entry.
  • You should avoid ranging markets where the price might violate parabolic dots.

Moreover, trade management and good trading psychology are mandatory for every trading strategy. You cannot make a decent profit until you know how to minimize the risk to get the maximum benefit from trade.

Categories
Forex Market Analysis

Daily F.X. Analysis, August 10 – Top Trade Setups In Forex – Market Prices In NFP Outcome! 

On the news front, eyes will be on the low impact events such as Sentix Investor Confidence from Eurozone and JOLTS Job Openings from the U.S. Besides, the stronger NFP data may keep dollar bullish.

On the news front, eyes will be on the low impact events such as Sentix Investor Confidence from Eurozone and JOLTS Job Openings from the U.S. Besides, the stronger NFP data may keep dollar bullish.

On the news front, eyes will be on the low impact events such as Sentix Investor Confidence from Eurozone and JOLTS Job Openings from the U.S. Besides, the stronger NFP data may keep dollar bullish.

Economic Events to Watch Today  

 

 

EUR/USD – Daily Analysis

The EUR/USD prices were closed at 1.17849 after placing a high of 1.18829 and a low of 1.17550. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair broke under the 1.1800 level and reached 1.175 the lowest in 3 days after the U.S. dollar took its pace and outperformed in the market. The greenback rebounded from its two years low and trimmed its weekly losses on Friday that weighed on EUR/USD pair.

The rising tensions between the U.S. & China have already driven the U.S. dollar higher, and the U.S. jobs data on Friday added further strength to it. The latest development in the US-China conflict was the U.S. imposed sanctions on officials in Hong Kong and China, including Hong Kong leader Carrie Lam, over the suspension of protests in the territory.

On the data front, at 11:00 GMT, the German Industrial Production for June increased to 8.9% from the forecasted 8.3% and supported Euro. The German Trade Balance also came in positive as 14.5 B against the expected 10.3 B. At 11:45 GMT, the French Industrial Production for June increased to 12.7% against the forecasted 8.6% and supported Euro. The French Prelim Private Payrolls for the quarter came in as -0.6% against the anticipated -1.0%.

The French Trade Balance for June came in negative as 8.0B against the projected -7.1B and weighed on Euro. The Italian trade Balance at 13:00 GMT came in line with the expectations of 6.23 B.

Investors failed to cheer the positive data from Europe as the U.S. dollar was stronger on Friday, and the sharp decline in Turkish Lira over the past week exerted downside pressure on Euro.

A sharp selloff triggered the Euro’s correction in Turkish Lira that dropped it to the lowest of 2 years, the historic currency crisis of August 2018. The reserves of Central Banks of Turkey (CBRT) went negative for a couple of weeks, which caused a surge in the Turkish Lira’s selloff. However, last month, CBRT made a massive purchase of gold and overtook Russia as the world’s largest gold purchaser. In the lira currency crisis of 2018, Euro underperformed during that time period, and this has raised fears that if the history repeated, then downside risks for Euro can be seen.

However, on the U.S. front, at 17:30 GMT, the Average Hourly Earnings for June increased to 0.2% from the forecasted -0.5% and supported the U.S. dollar. The Non-Farm Employment Change suggested that 1.8M jobs were created in June against the expectations of 1.6B and supported the U.S. dollar. In the month of June, the Unemployment Rate also fell to 10.2% from the expected 10.5% and weighed on the U.S. dollar. The strong U.S. dollar weighed heavily on EUR/USD pair and dragged its prices to the level below 1.8000 on Friday.


Daily Technical Levels

Support Pivot Resistance
1.1773 1.1783 1.1792
1.1764 1.1802
1.1754 1.1812

EUR/USD– Trading Tip

The EUR/USD pair retraced lower to trade at 1.1793 level. On the upside, the EUR/USD may encounter resistance at 1.1865 and 1.1909 mark. A bullish breakout at this level can extend the buying trend to 1.2050. Today, the EUR/USD is likely to find support at 1.17650 level, and below this, further selling can be seen until the 1.1713 level. Let’s keep a focus on 1.1805 level to stay bearish below this in the EUR/USD pair.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.30521 after placing a high of 1.31492 and a low of 1.30092. Overall the movement of GBP/USD pair remained Bearish throughout the day.

The Pound to U.S. dollar exchange rate fell by -0.3% on Friday to a low of 1.3000. The Sterling fell against the U.S. dollar after the concerning comments from the UK Chancellor Rishi Sunak, who warned that the extended furlough scheme would only give false hopes to the people. Mr. Sunak said that it was wrong to trap the people in a situation and pretended that there was always a job that they can go back to.

However, apart from this downbeat comment, Mr. Sunak also raised hopes for a possible Brexit deal and said that he was confident that there was a possibility to get an agreement with the E.U. by September. As in result, GBP investors became hopeful that there was possible progress in the EU-UK trade talks.

On the data front, the Halifax House Price Index for July rose from 0% to 1.6% and beat the expectations of 0.2%. However, the GBP investors failed to cheer the U.K.’s positive data as the U.S. dollar was strong across the board on Friday.

The U.S. dollar gained traction on the board on Friday after the release of better than expected U.S. jobs data. The latest US Non-Farm Employment Change suggested an increase in the number of jobs created in June by the U.S. Department of Labor & Statistics to 1.8M from the expected 1.5M and helped the U.S. dollar gain traction.

The Average Hourly Earnings from the U.S. also rose to 0.2% from the previous -1.3% and the expected -0.5% and supported the U.S. dollar. The Unemployment Rate for June dropped to 10.2% against the expected 10.5% and May’s 11.1%. The less unemployment rate from the U.S. showed that the U.S. economy was moving on the recovery side even after the widespread coronavirus cases across the country.

The better than expected U.S. jobs data weighed heavily on GBP/USD pair and dragged it to 1.3000 level on Friday. The Sterling traders will be looking ahead to Monday’s release of the latest Retail Sales figures from the U.K. Any improvement in the U.K.’s retail sector would provide strength to Sterling.

The U.S. Dollar Investors will be looking at the publication of the US NFIB business optimism index for July. The demand for safe-have greenback can be lifted after any improvement in the outlook for the American economy. On Tuesday, the release of the U.K.’s ILO unemployment rate report for June. If the figures came in equal to 3.9% or less, we could see the GBP/USD pair go on the upward as fears of high unemployment will be diminished.

Daily Technical Levels


Support Pivot Resistance
1.3037 1.3052 1.3065
1.3024 1.3080
1.3010 1.3093

GBP/USD– Trading Tip

The GBP/USD consolidates at 1.3067 level, holding right above the 50 periods EMA support area of 1.3040 level while the bearish breakout of 1.3040 level can extend selling unto 1.2918 level. Recently as we can see in the chart above that the GBPUSD pair has violated its upward trendline that supported the pair around 1.3130 level, and now below this, we can expect GBP/USD to continue trading bearish. The GBP/USD should show

a bearish crossover in order to confirm a strong selling bias in the Cable. On the higher side, Sterling may find resistance at 1.3105 and 1.3175. Let’s consider selling below 1.3045 level today. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.912 after placing a high of 106.055 and a low of 105.478. Overall the movement of the USD/JPY pair remained bullish throughout the day. After falling for two consecutive days and staying flat for a day, USD/JPY pair rose and posted gains on Friday amid strong U.S. dollar comeback.

Since two years after U.S. President Donald Trump decided to ban U.S. transactions with two popular Chinese apps, the U.S. dollar rebounded from the lowest level. During the occasions of massive conflicts between the U.S. & China, the U.S. dollar has often preferred as a refuge, and on Friday, the U.S. dollar again used this status.

The U.S. President Donald Trump officially banned American companies from working with TikTok, the video streaming app, and WeChat, the social messaging app. the action to ban these companies was taken in response to the widespread fears of data privacy. However, the chances that the US-China conflict will rise further increased after this move, and hence, the U.S. dollar gained.

Meanwhile, the U.S. Treasury imposed sanctions on 10 top officials from Hong Kong and China, including the Hong Kong Leader Carrie Lam, as the protests arose in the territory against the new security law in Hong Kong.

Furthermore, the U.S.’s macroeconomic data also remained supportive of the U.S. dollar when it came to better than expectations on Friday. 

At 17:30 GMT, the highlighted Average Hourly Earnings rose to 0.2% in June from the negative expectations of -0.5% and supported the U.S. dollar. The Non-Farm Employment Change rose to 1763K from the forecasted 1530K and came in favor of the U.S. dollar. The greenback was also supported after the Unemployment rate for June also dropped to 10.2% from the expected 10.5%. In June, the better-than-expected U.S. jobs data gave a push to the U.S. dollar that added further strength to USD/JPY pair on Friday.

However, the gains remained limited as the data from Japan was also supportive of its local currency. At 04:30 GMT< the Average Cash Earnings for the year from Japan came in as -1.7% against the forecasted -3.0% and supported the Japanese Yen. The Household Spending for the year from Japan also came in as -1.2% against the expectations of -7.8% and supported the Japanese Yen. However, the Leading Indicators from Japan were released at 10:00 GMT, came in line with the expectations of 85.0%.

The positive data from Japan supported Japanese Yen on Friday that kept a check on USD/JPY pair gains. On the vaccine front, the risk sentiment was supported by the news that Russia was all set to register the world’s first COVID-19 vaccine next week. The Russian vaccine third phase trials were currently in progress, and Russia announced to disclose them on August 12. This vaccine was developed by the collaboration of the Russian Defence Ministry and the Gamaleya Research Institute.

The improvement in risk sentiment weighed on safe-haven Japanese Yen and contributed to the USD/JPY pair’s gains.

Daily Technical Levels

Support Pivot Resistance
105.8200 105.8900 105.9300
105.7800 106.0000
105.7200 106.0400

USD/JPY – Trading Tips

The USD/JPY continues to trade at 105.780 area with the bullish sentiment, especially after testing the 38.2% Fibonacci support level of 105.650. On the lower side, the USD/JPY may find support at 105.600 and 105.078 level, which is extended by the 38.2% and 61.8% Fibonacci retracement level. A bullish breakout of 106.467 resistance level can drive more buying until the next resistance area f 107.198. The current market price of USDJPY is staying over 50 EMA, which extends support and may push the pair higher. Let’s consider buying above 105.600 level today. Good luck! 

Categories
Forex Fundamental Analysis

Understanding ‘GDP from Services’ As A Macro Economic Indicator

Introduction

Introduction

Introduction

The different proportion of contribution to GDP from the three sectors (primary, secondary, tertiary) can tell us a lot about the economic development stage a country is at the moment. GDP from Services can help us gauge the transition of countries from developing to developed status efficiently. Hence, it is useful for Central Authorities and business people to understand the growth of the Service Sector.

What is GDP from Services? 

Service Sector

It refers to the production of intangible goods, services to be exact, that are not goods. Services are intangible, non-quantifiable, and formless. The result of service may or may not produce a physical good. For example, a construction service would give the client a building, whereas a lawnmowing service would not. It is the largest sector in the global economy and bears high significance in advanced economies.

How can the GDP from Services numbers be used for analysis?

The three different sectors of an economy are associated with different activities. The primary sector is mainly associated with dealing with agriculture, farming. It answers the basic needs. The secondary sector deals with industrialization, where livelihood, employment are answered through the production of goods.

The tertiary sector comes into picture when the basic needs like food, employment, security are taken care of. The tertiary sector consists mainly of services. Countries that have Service Sector as their main contributor to GDP are generally considered the more advanced economies. Indeed, the underdeveloped nations will primarily struggle for food and water, where Agriculture would be the primary need to feed the population.

The industrialization growth will be associated with low-cost wage labors working in factories for mass production to compete in the global market. Whereas, the service sector will be associated with high-cost services generally to provide “good-to-have” commodities.

For example, a vegetable is cheaper than an industrial product. Likewise, an industry product would be cheaper than a service sector like antivirus software. The cost of a 1kg of potato is about 2.50 US dollars, whereas 1kg of potato chips from a company like lays would cost 10 US dollars, whereas a Netflix subscription (service) would cost around 10-15 dollars a month.

It is a general trend where a software employee (service sector) gets paid more than a factory worker (industrial sector). A factory worker generally gets paid more than a farmer (agricultural sector). It is easily observed the wealth generated from the Service Sector far outpaces that of the Industrial Sector and essentially the Agricultural Sector.

In general, countries start to grow from underdeveloped to developing nations through industrialization. China and Japan would be good examples of industrialization-led growth. Once a country has firmly established its primary and secondary sectors, it can reach the status of a developed economy through the service sector only. India and China would be good examples of developing economies, increasing their service sector to generate higher wealth.

Hence, GDP from Service is essential to assess the status of a country transitioning from an emerging or developing economy status to a developed economy. As the contribution of Service Sector to GDP increases, it implies that more percentage of people are engaged in higher revenue-generating activities, and have crossed the stages of addressing basic survival needs.

It is also essential to understand that GDP from Service can increase only when the country is firmly established and stable in the primary and secondary sectors. Because when primary and secondary needs are not answered, people will first engage in meeting primary needs and not providing services.

The developed economies have substantial contributions to GDP from Service Sector. For example, the United States and the United Kingdom, have about 80% of their GDP contributed from the Service Sector. Developing economies like India and China have over 50% of their GDP from Service Sector. Underdeveloped nations like Uganda have only 24% of the Service Sector.

Impact on Currency

Leading indicators like Services PMI or NMI already forecast the GDP from Service, which would mean the increases from GDP from Services is already priced into the market. It is a proportional and lagging indicator.

Also, GDP from Services does not paint the full picture of the economy. Still, it can be an essential tool for the Central Authorities to keep track of Service Sector performance and its relative implications to the economy. As established, the Service Sector is a significant contributor to the GDP in developing and developed economies.

Hence, Service Sector GDP improvements bring more prosperity to a nation than an equivalent improvement in Agriculture or Industrial GDP. Service Sector GDP increase brings wealth to a nation and improves the standard of living of its people better than any other sector. A country can become a developed nation only when its Service Sector GDP increases to 70-80% of its GDP.

In general, Higher GDP from Services is good for the economy and its currency, and vice-versa.

Sources of GDP from Services

For the United States, the BEA reports are available here – GDP -BEA & GDP by Industry – BEA. World Bank also maintains the Service Sector’s contribution as a percentage of GDP on its official website – Service Sector – World % of GDP & GDP from Services – Trading Economics.

GDP from Services Announcement – Impact due to the news release

In the previous section of the article, we saw the contribution made by the service sector to the GDP, and it’s importance in the growth of the economy. But when it comes to fundamental analysis of a currency, the service sector’s contribution alone is not of great importance to investors as it represents only a small portion of the whole GDP.

Therefore, traders and investors look at a broader figure, which is essentially the GDP itself, and take a currency position based on the GDP of a country. So an increase or decrease in the contribution of ‘Services’ to GDP does not have any impact on the currency.

Now, let’s analyze the impact of GDP on different currency pairs and observe the change in volatility due to the news release. The below image shows the latest quarter on quarter GDP data of New Zealand released in March.

NZD/JPY - Before the announcement

We will start with the NZD/JPY currency pair to examine the impact of GDP on the New Zealand dollar. The above chart shows the state of the market before the news announcement, where we see that the price was in a downtrend with the least number of retracements. Depending on the impact of the news release, we will position ourselves accordingly in the market. However, we should be looking to take a ‘short’ trade since the major trend of the market is down.

NZD/JPY - After the announcement

After the news announcement, the market moves lower by a little where the price closes, forming a bearish ‘news candle.’ The GDP data in the fourth quarter was lower than last time, which drove the price below the moving average. However, it did not cause a major crash in the market where the volatility slightly increased to the downside soon after the news release. One should wait for a price retracement before a ‘short’ trade.

NZD/CAD - Before the announcement

NZD/CAD - After the announcement:

The above images represent the NZD/CAD currency pair where we see in the first image the price violently moved lower, and few minutes before the news release, it has reversed from the ‘lows.’ Until the reversal is confirmed, we should be looking to sell the currency pair since the down move is very strong. Since a major news event is due, one should wait for its release and take a position based on the change in volatility.

After the news announcement, volatility expands on the downside, and the ‘news candle’ closes, forming a trend continuation pattern. The market reacted negatively to the GDP data since there was a decrease in the GDP by 0.3% in the fourth quarter. This can be taken as an opportunity for joining the downtrend where one can take a ‘short’ position with a stop loss above the ‘news candle.’

EUR/NZD - Before the announcement

EUR/NZD - After the announcement

The above images are that of the EUR/NZD currency pair, where the market is in an uptrend, and the price is currently at its highest point. The chart signifies weakness in the New Zealand dollar before the news announcement with no signs of strength. Technically, we will be looking to buy the currency pair after a pullback to a key technical level.

After the news announcement, the price moves higher and volatility expands on the upside, thereby further weakening the New Zealand dollar since it is on the right-hand side of the pair. At this point, one should be cautious by not taking a ‘long’ position as it would imply chasing the market. Cheers!

Categories
Beginners Forex Education Forex Stop-loss & argets

What to Consider When Planning Trade Exits

When it comes to planning trades, the majority of people will instantly think about planning to get into a trade, but there is an entire second part of each trade, the exit. Getting the exit right can be just as important as the entry, if you get it wrong you can miss out on some […]

When it comes to planning trades, the majority of people will instantly think about planning to get into a trade, but there is an entire second part of each trade, the exit. Getting the exit right can be just as important as the entry, if you get it wrong you can miss out on some […]

When it comes to planning trades, the majority of people will instantly think about planning to get into a trade, but there is an entire second part of each trade, the exit. Getting the exit right can be just as important as the entry, if you get it wrong you can miss out on some potential profits, or you can potentially lose out and make some very large losses.

Some strategies even focus on the exit rather than the entry as they know the importance of it, so why exactly do people seem to negate this part of the trade? It has simply come down to the fact that people look for profits, in order to do that they need to put on a good trade, even those that look at the exit of a trade often just look at the basics of it, the stop loss and take profit and pretty much nothing else, but we need to think about a lot more.

So we are going to be looking at a number of different things that you need to be thinking about when you decide to plan your exits and the importance of doing so.

What are you willing to risk?

Your risk management plan should be the first stage of planning your exits. This will detail exactly how much you are willing to risk with each trade or how much of your account you are willing to risk each day, week, or month. Many traders look to risk 1% to 2% of their account per trade. However, each strategy is different and so some risk much less and some more. It will all come down to you and how much risk you are willing to hold and also your strategy. Ensure that you have this planned, it will give you the baseline for when you need to get out of a trade, either through hard stop losses or trailing stops, whatever your method, ensure that you know how much you are willing to risk with each trade. Do not be afraid to alter it, if it is not working the way that it is, there is no harm in altering it in order to more suit yourself and your strategy.

At what point do you cut your losses?

You will have trades that go negative, everyone does and it is a major part of trading that you cannot avoid, especially considering that the majority of trades always start out negative due to spreads. What you need to ask yourself though is where and when you should cut your losses, how far are you going to let it go? This works along with your risk management plan and can indicate to you where you should be putting your stop losses. While you should always be using stop losses, there will inevitably be times where you don’t, others through purpose or just due to completely forgetting it. If this happens, you need to know when and where you will get out of those trades, the last thing that you want to do is to let it run indefinitely, so have an idea that is based on your strategy of when you will want to cut the losses should things go the wrong way.

What if your tradies invalidated?

The markets can be a little unpredictable, this is very much true, but the world can be just as unpredictable, and there can be events happening that will completely invalidate any trades that you may have placed. There needs to be a contingency plan in place just in case this happens. What could result in this? A Tsunami or earthquake or more recently, a pandemic that goes around the world taking out a lot of the world’s economy, when things like this happen you will need to act.

You need to have an understanding of what you would do, if things are suddenly going crazy in the world and with the markets, are you going to exit your trades in order to save them and your account? If the market consensus has suddenly gone south and against you, it may be a good time to close out and reevaluate the markets before entering again. There is also the argument of letting it run as things can be unpredictable and so could go the right way too, but this is down to you and your strategy. Just make sure that you are prepared to make changes and potentially cause trades should things go a little crazy out there.

How long are you going to hold your trades?

Initially, this will come down to your strategy, those that are scalping will be holding their trades for a shorter period of time while those that are using a swing trade strategy will of course be holding the trades for a long time. However, even within these sorts of strategies, different people will have a different idea of how long they should be holding onto their trades, ultimately it will be up to you how long you hold it, but what is important is that you have an idea of how long planned before you make any trades.

Consider your strategy, consider your own risk style, and plan how long you will hold your trades. It is vital that you try not to come out of trades too early or too late if you do it can skew your overall strategy and risk management plan, keep your trades in line with your risk to reward ratio so even when you do need to cut losses, you are doing so in line with this and so it will help to keep your account profitable.

So those are a few of the things that you may need to consider when you look to exit a trade. Try not to only concentrate on the entry, while that is, of course, important, it is just as important that you get out of a trade in the right place. Stick to your plans, your strategy, and your risk to reward ratio and it will help you and your strategy to become a lot more successful and profitable in the long run.

Categories
Forex Money Management

Tips To Help You Trade Consistently & Profitably

Consistency, one of the main roads that you see thrown about as something that you want to be, you need to be consistent if you want to be profitable, if you aren’t consistent with your trading you will only lose. Those are all phrases that you have most likely seen before, most likely multiple times. […]

Consistency, one of the main roads that you see thrown about as something that you want to be, you need to be consistent if you want to be profitable, if you aren’t consistent with your trading you will only lose. Those are all phrases that you have most likely seen before, most likely multiple times. […]

Consistency, one of the main roads that you see thrown about as something that you want to be, you need to be consistent if you want to be profitable, if you aren’t consistent with your trading you will only lose. Those are all phrases that you have most likely seen before, most likely multiple times. So what does consistently actually mean? It is defined as “acting or done in the same way over time, especially so as to be fair or accurate”, so this would mean that we need to trade the same way over a long period of time before we can be sure that our strategy works properly and that our strategy is actually profitable. This needs to be an extended period of time, not just a couple weeks that a lot of people think.

We are going to be looking at some of the different things that you can do which may help you to become more consistent. Some may work for you, some may not, some may seem completely irrelevant but that may be true for you, but not for others. As long as you can use some of these tips to help you stay consistent with your trading, it will be a big benefit to your overall profitability and can ultimately help lead you to trading success.

Know Your Limits

You need to have a good understanding of what your own limits are, this is more in regards to the money that you have available to trade. You often see horror stories of people borrowing money in order to trade, this is never a good idea and is something that you should never do. You need to be able to trade within your own means. In order to work out how much you can trade, think about losing the money that you are wanting to trade with, if it would have a negative effect on your life, such as not being able to do things you would normally do then this is too much, you need to reduce it down to an amount that if you lost, you could still continue to live the way you currently are.

You also need to be able to limit your total loss, at the start of each month, think about the maximum amount that you would be willing to lose that month, this should be less than your total account balance. If you were to hit that amount during the month, you should stop for the month and then use any remaining time to analyze and evaluate the trades that you have made in order to hopefully work out exactly where things went wrong and what you can change for the next month in order to hopefully be more successful. Once the next month comes you can begin again with a new loss limit, when you do become profitable, ensure that you are putting a bit aside each month in order to act as a reserve, helping to keep your account safe in the future should you reach our loss limits again.

Limit Your Losses

This goes hand in hand with the point we made above, successful trading often comes down to being able to limit your losses, this does not mean that you won’t take losses, those are inevitable. What it means is that when you do have a loss, it takes a smaller hit on your account capital rather than a big one. This is required if you want to be profitable in the long run, it’s simple really, limit your losses so that your profits can grow. If you are only losing a small amount with each trade then it will take multiple losses in order to overturn one of the wins, so you can technically have more losses than wins and still be profitable. This is how a lot of strategies work and how a lot of traders become profitable, even with an under 50% win rate, you can be a profitable trader.

You can use things like trailing losses in order to help reduce potential losses and to help you close trades at a minimum of break even, there are a number of other ways to protect yourself against reversals too and these are things that you should certainly be taking advantage of.

Trade with a Suitable Strategy

Understanding your strategy, the advantages of it, and the weaknesses of it is vital, but it is also just as vital that you trade a strategy that suits your own style of trading. If you are a relatively impatient person and like to take smaller and quicker trades (known as scalping) then there is no point in trying to use a swing trade strategy, it just won’t gel with your personality and you will begin to make some mistakes.

There are a lot of other aspects that you need to think about, things like the amount of risk that you are comfortable with, if you do not like risk, then risking a larger amount with each trade will cause you to stress, and a lot of it, s you need to be able to have a strategy that matches your risk preferences too. What would be beneficial would be to develop a number of different strategies that each suit your own trading style, this way you will be able to trade with whatever conditions there are with a strategy that you are comfortable with. It is sometimes good to get out of your comfort zone, but you do not want to do it with every single trade you make.

Be Patient

A virtue that a lot of people seem to lack, patience can be an incredibly powerful tool when it comes to trading, not just for making profits but also for avoiding losses. If things are quite in line with your strategy then you need to be able to wait. If the markets are very quiet and there is nothing to do, you need patience in order to not push yourself to make trades when you know you should not be making them. Sometimes it can go hours, days, or even weeks without a proper setup, are you prepared to wait that long? If you want to be consistent then you may well need to.

Stick with Your Plan

A nice simple one here, if you have a plan stick with it. If you do not, then what was the point in actually creating the plan? You made it for a reason so stick with it, as soon as you deviate from it, you will begin to start making bad trades and this will only lead to losses in the long run. So once you have made a plan, stick to it.

Those are a few of the things that you can do to help yourself become more consistent, some you probably already do so it is important that you stick with them. As long as you do these things, stick to your own plans and strategies, you will be in a good position for being more consistent in the future.

Categories
Beginners Forex Education Forex Basic Strategies

When To Let Go Of Your Trading Strategy

You may have spent the last few days, weeks or months developing your very own trading strategy which is great, having your own strategy that is suited and adapted to your own personality and trading habits is great, however, this does not actually mean that it is the right strategy for you to be using, […]

You may have spent the last few days, weeks or months developing your very own trading strategy which is great, having your own strategy that is suited and adapted to your own personality and trading habits is great, however, this does not actually mean that it is the right strategy for you to be using, […]

You may have spent the last few days, weeks or months developing your very own trading strategy which is great, having your own strategy that is suited and adapted to your own personality and trading habits is great, however, this does not actually mean that it is the right strategy for you to be using, this can be for a number of reasons that we will look at later in this article.

You may well be seeing others boasting about their profits or the amount of pips that they are making each month which could then make you want to switch over to that one and to abandon all the work that you have put into your current strategy. This is of course not the best idea or thing to do, firstly we do not know if those results are actually real and secondly, those strategies are created for those people not for you. So simply wanting to emulate someone else’s success is not a good reason to throw your own strategy to the side, instead you should be sticking to your own.

Before we look at the reasons why you possibly should change your strategy, create your own and what you put into it, because if you missed out one or more of these things then you may just need to alter your own rather than look for an entirely new one. Did you take your time to play it? Including risk management, your risk to reward ratio, and just overall risk of the strategy. Are you using the correct indicators for the strategy, there is no point having 100 indicators if you only use 3 or 4, but make sure that those 3 or 4 indicators are the right ones which give you the right information. How long have you tested the strategy? If it has only been a week or two, then you need to use it for longer, a few months at least to ensure that you are clear as to whether it is working or not. Finally, are you following the rules, and do they suit the current market conditions? Not all strategies work all the time, yours may work when there are different conditions to the ones in the markets right now, so you may not need to abandon it completely.

Since you have done all of that, if things still aren’t working then it may be time to try something new, so we have come up with some reasons why it may be the right time to jump out of your current strategy into a nice new shiny one, this does not mean that the new one will work, it may give the same results, but it is worth trying something that more suits you as a trader.

You struggle to follow your own rules.

When you created your strategy, you would have created some rules that you are meant to be following. The problem is that some people struggle to do this for a number of reasons. Maybe there are just too many of them, maybe they are a little unrealistic, whatever the reason as to why you are not following them, it could be an indication of this strategy not being suitable for you. You breed to be able to be consistent with the rules, this is the only way to work out whether a strategy is successful or not, so if you are struggling to stick to them, no matter what they are, this strategy is probably not the right one for you. Of course, as mentioned before, it is always better to slightly tweak these rules to see if that makes things easier rather than just ditching the entire strategy, although that is of course still an option that is available to you.

Does your strategy require too much effort?

Let’s be honest, you probably don’t have 12 hours a day that you can set aside for trading, if you are working a job at the same time then you probably only have a couple of hours each day to trade. So if your strategy currently takes you hours to find a trade or it requires you to be online at ridiculous hours then do you feel that you will be able to keep it up? If your system is keeping you up or is requiring you to be online at hours and times that are not suitable for you then it may not be the right strategy. You may need to find one that fits in better with your current schedule rather than allowing one to dictate it for you.

Are you spending more than you make?

This is more for those that are buying their strategies or using Expert Advisors. We should point out that some are fantastic and can make you money, while a lot of others will not. However, if you are paying for a signal or an EA, then you need to be able to add the costs of this into your profit and loss numbers. If this results in you spending more on the signal or the Ea than you are making,g then we are sure that you can see the issue here. A good signal or EA will be able to cover its own monthly cost with its results, if it cannot, then there’s clearly something wrong and you should probably consider moving on to a different one.

The market conditions aren’t right.

There may not actually be an issue with your strategy at all, it may just not be the right time to be using that exact strategy. There is no one strategy that works all of the time, they are all suited to certain market conditions. Some like trends while others like a more up and down market If Your strategy works on a trend but the markets are going sideways then of course it will not be effective. This does not however mean that it won’t be effective once the markets begin to trend. So you should still be keeping that strategy at hand once the market conditions change. So try and have multiple strategies that you can switch between based on the current markets and what works best for them.

It’s not profitable.

The big bad obvious one, if your strategy is not profitable, then you should not be using it. We are not talking about not being profitable week to week, we are talking about being profitable over a long period of time. If you have been using it for months and it is still not profitable then it may be time to look for another one to try.

So those are some of the reasons why it may be the right time to try and get a new strategy. It is entirely up to you what you do, or how long you give a strategy before deciding to get a new one, but try and give it enough time to have enough results to see an accurate portrayal of how it will perform. You should also not be shy about simply tweaking things with your current strategy rather than looking for a new one completely.

It can take you time, effort, and possibly a little bit of luck before you find a strategy that works for you, just don’t be afraid to ditch some of the work that you have put in in order to find a more suitable strategy for you. Take your time with it, demo it to ensure that it works and this will hopefully allow you to be more successful over a longer period of time.

Categories
Beginners Forex Education Forex Basics

Why Do Trade Losses Occur?

Trading is full of ups and downs. In fact, that is pretty much all that it is, the markets will continue to move up and down based on the strengths of the currencies or assets that are being traded. The sad thing is, around 90% of all traders will lose, which means that only around […]

Trading is full of ups and downs. In fact, that is pretty much all that it is, the markets will continue to move up and down based on the strengths of the currencies or assets that are being traded. The sad thing is, around 90% of all traders will lose, which means that only around […]

Trading is full of ups and downs. In fact, that is pretty much all that it is, the markets will continue to move up and down based on the strengths of the currencies or assets that are being traded. The sad thing is, around 90% of all traders will lose, which means that only around 10% of people are winning, so why is this? Let’s have a little look at why most people tend to lose when trading.

Lack of Equity

We will get this one out the way to begin with, we are constantly seeing more and more brokers allowing people to trade with increasingly small amounts. Some brokers are now allowing you to sign up and trade with just $1 or $10 which is great for accessibility, but not great for keeping accounts active. You need at least a certain amount in order to take risk management and money management precautions. The markets will always turn, no matter when you put in your trade, however no person willing to trade will put enough in to be able to cope with the longer trends, so this is why risk management is key and why having such small amounts can make it almost impossible to succeed.

Not fully Understanding Indicators, Market Entry, and Other Aspects

There are hundreds of people over the internet recommending different indicators to use, they are designed to help you analyze the markets. However, just sticking a lot of them on to the charts will not give you much indication of anything. In fact, it will most likely confuse you even more. Having indicators can be good but you need to understand what they actually mean, trading blindly on what others have told you or what an indicator tells you is not a good way of doing things. You need to ensure that you fully understand what you are looking at before you take action on any of the information that was given.

Blindly Copying Others

A lot of new traders are now coming into trading with the hope of not actually putting in the work, so they look to signal providers or a so-called mentor in order to get some trading signals. The problem with this is that they do not give you an understanding of why the trades are being made, this means that you are trading them completely blind, with no knowledge of the risks behind them. The majority of these signal providers are doing it to make money from subscribers rather than from their actual trading, these sorts of providers do not last long and eventually go bust, and so will those following them.

Not Sticking to a Tested & Proven Trading Plan

When you first start learning to trade, you are often told that you need to create a trading plan, this will involve your strategy as well as any risk management that you are going to put in place. Once you have one working, you will need to stick with it. As soon as you step away from the plan things can start to go wrong. Taking trades outside the criteria or risking too much on a single trade are both recipes for disaster. Once you have a plan, stick to it and don’t deviate from the pan.

Greed

A simple one, but a lot of people get into trading for a quick and potentially easy way to make a lot of money, this leads them to making trades far riskier than they should be, this will ultimately lead to losses. Risking too much portrayed, and putting on too many trades at once are two of the main mistakes being made and two of the main reasons why people end up blowing their account.

Not Using a Demo Account

Demo, demo, demo. This is one of the most used phrases when it comes to trading, you should always start on a demo account, learning the ropes, and testing your strategy. Those that decide to jump straight into live markets are destined to fail, they do not yet have a solid understanding of the markets or what causes them to move up and down, so not using a demo account is a sure-fire way to blow an account.

Having a Bad Day

Sometimes we just have a bad day, things are all going against you, your analysis was spot on, you checked your risk management but things just go the wrong way. This is simply a part of trading, the good news is that because you did everything right, your losses will be reduced and limited to a certain amount and this can just be put down as a part of trading. Nothing can be done about it but to move on to the next tread, just try not to allow it to cloud your judgment on your next trades.

So those are a few of the things that can cause traders to lose, there are of course other things that can cause you to lose, trading is all about planning, preparation, and risk management, get those right and you will have a fantastic chance to start making some money with trading.

Categories
Forex Fundamental Analysis

Everything About GDP From Transport & Its Impact On The Forex Price Charts

Introduction

Introduction

Introduction

The Transportation Industry’s contribution to GDP is both direct and indirect. The real contribution of Transportation to overall economic growth goes beyond what the GDP can measure. Hence, Understanding the Role of Transportation in economic activity and its underlying importance that is both visible and subtle is essential for our overall fundamental analysis.

What is GDP from Transport?

Transportation

Transportation includes the types of services that are provided through operating vehicles, moving goods, or people over public transport systems like roads, railways, waterways, airways, etc.

The supply side of the Transportation system is called the Transportation Industry. It is also essential to note that the Standard Industrial Classification (SIC) and North American Industrial Classification System (NAIC) both consider Transportation as a separate industry. They do so through a standard set of definitions and criteria. Hence, not all Transportation services come under the Transportation Industry.

The Transportation services’ contribution to GDP can be measured in the following ways:

Final Demand: It is calculated by adding all the expenditures by households, private firms, and the government on Transportation related goods and services.

Value Added: It is calculated as the GDP contribution by the Transportation services overall. Transportation Value Added is a gauge of the transportation sector’s contribution to GDP. It is based on the difference between transportation services sold value and the goods and services used to produce Transportation.

The Bureau of Economic Analysis (BEA) takes industry value added to be a measure of an industry’s contribution to GDP.

From measurement viewpoint, three types of transportation operations can be distinguished:

  • For-hire operations: It includes those services conducted by transportation industries on a fee basis. A trucking company’s trucking operations is an instance of for-hire operations. 
  • In-house operations: also called, own-account operations, is conducted by non-transportation industries for their use. For instance, the Coca-cola company may transport its beverages to its local warehouse for storage through its trucks. 
  • Final user operations: Final users include the general population (end consumers) and the government who purchase transportation services like cars, trucks for their use.

Transportation Satellite Accounts: The Satellite industry segregates data by focusing on types of economic activity. Hence, the TSAs depict the contribution of for-hire, in-house, and household transportation services as they all form part of the Transportation Industry.

How can the GDP from Transport numbers be used for analysis?

The Transportation-related Final Demand metric is useful to compare the expenditures incurred on other industries like healthcare or housing. For sector-wise, growth analysis, investors can use this to gauge, which industries are experiencing increasing demand that can help them to invest accordingly.

On the other hand, it is not an accurate metric to measure the Transportation needed to support and sustain economic activity. For instance, if the investment into Transportation infrastructure is underfunded, then correspondingly, it will underestimate the final demand due to low economic output. The Transportation industry’s contribution in the year 2019 and 2018 has stayed around 3.2% of GDP as per BEA.

The value-added contribution of Transportation Industry to GDP is, however, understated for the following two reasons:

  • It only includes the contribution of for-hire transportation services. Many industries use transportation services for their use. In-house services do not contribute to GDP.
  • The extent to which industries depend on Transportation is not depicted in these figures. Mobility and interconnectivity between industries, states, and countries are critical factors in business growth in today’s interconnected international markets.

Accessibility to resources, end consumers are all enabled through Transportation and are heavily impacted with poor transportation infrastructure. The US Department of Transportation – Bureau of Transportation Statistics accounts for the TSA reports, and they, by far, depict the contribution of the Transportation industry better than other measures published.

Impact on Currency

GDP from transport does not paint the full picture of the economy but tells us the direct contribution of the Transport industry to the overall GDP. Still, for the International Markets, it does not serve as a useful indicator. It is a proportional and lagging indicator. Higher GDP from Transport is good for the economy and its corresponding currency, and vice-versa.

Sources of GDP from Transport

For the United States, the BEA reports are available here – GDP -BEA

We can use the GDP by Industry to get the transport’s contribution to GDP here –

GDP by Industry – BEA & Transportation Statistics –Annual Report – BTS

Transportation’s contribution to GDP for the world can be found here –

GDP from Transportation – Trading Economics

GDP from Transport Announcement – Impact due to news release

The main role of transport is to provide access to different locations to individuals and businesses. Transport facilitates a wider range of social and economic transactions than would otherwise be possible. Transport is an important sector in its own weight. Transport infrastructure and transport operations together account for more than 5% of the country’s GDP. In developed countries, further investment in that infrastructure will not only result in economic growth but also improve the quality of life, lower costs to access resources and markets, and improve safety.

Therefore, the transport sector is an important sector of the economy that many long-term benefits associated with it. Fundamentally speaking, investors would not invest based on a currency based on the contribution made by the transport sector alone, as its direct influence on the GDP is less. The transport industry indirectly helps in boosting the GDP by assisting in all business activities.

In today’s article, we will observe the impact of GDP on various currency pairs and observe the change in volatility because of its news announcement. For illustration, we have collected the latest GDP data of Switzerland, which was released in March. The below image shows that the GDP in the fourth quarter was slightly better than expectations and higher than the previous quarter.

USD/CHF | Before the announcement

Let us start with the USD/JPY currency pair in order to analyze the impact of GDP on the Swiss Franc. In the above Forex price chart, we see that the overall trend of the market is down where recently the price is moving in a ‘range.’ After the occurrence of a trend continuation pattern, a ‘sell’ trade can be taken with less risk. Conservative traders should wait for news releases and trade after the volatility settles down.

USD/CHF | After the announcement

After the news announcement, the price marginally increases that takes the market higher by just a few pips. We can argue that the GDP data had the least impact on the currency pair and did not induce any volatility in the market. As the data was as expected, it did not turn the market downside, and it moves as usual.

EUR/CHF | Before the announcement

EUR/CHF | After the announcement

The above images represent the EUR/CHF currency pair, it is clear that before the news release, the market is in an uptrend, and few minutes before the release, the price has been moving within a ‘range.’ This means the news event could either result in a continuation of the trend or a reversal of the trend.

Hence it is recommended to wait for the news announcement to watch the impact it makes on the price chart. After the news announcement, there is a slight increase in volatility to the downside after the close of news candle resulting in strengthening of the Swiss Franc. However, the ‘news candle’ itself appears to be impact-less, where there is hardly any change in price during the announcement.

NZD/CHF | Before the announcement

NZD/CHF | After the announcement

The above images are related to the NZD/CHF currency pair, where we see that the market is moving sideways before the news announcement. Just before the release, the price is close to the bottom of the ‘range.’ As the impact of these numbers is less, aggressive traders can take ‘long’ positions when technically the location is supporting for a ‘buy.’

After the news announcement, the market moves higher, and there is an increase in volatility to the upside. Since the GDP was not extremely bullish or bearish, the market did not react violently to the news release. Therefore, in such times we need to look at the charts from a technical angle. All the best!

Categories
Forex Market Analysis

Daily F.X. Analysis, August 07 – Top Trade Setups In Forex – Big Day, NFP is Here! 

The Non-farm payrolls will extend clarity over the damage in the labor market last month, and traders will keenly await its release. Overall, economists expect a slight improvement in the U.S. unemployment rate from 11.1% to 10.5%, while the Average Hourly Earnings are expected to improve from -1.2% to -0.5%%. The NFP itself is expected to report 1530K (negative for a dollar) vs. 4800K figures beforehand.

The Non-farm payrolls will extend clarity over the damage in the labor market last month, and traders will keenly await its release. Overall, economists expect a slight improvement in the U.S. unemployment rate from 11.1% to 10.5%, while the Average Hourly Earnings are expected to improve from -1.2% to -0.5%%. The NFP itself is expected to report 1530K (negative for a dollar) vs. 4800K figures beforehand.

The Non-farm payrolls will extend clarity over the damage in the labor market last month, and traders will keenly await its release. Overall, economists expect a slight improvement in the U.S. unemployment rate from 11.1% to 10.5%, while the Average Hourly Earnings are expected to improve from -1.2% to -0.5%%. The NFP itself is expected to report 1530K (negative for a dollar) vs. 4800K figures beforehand.

Economic Events to Watch Today  

 

 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18640 after placing a high of 1.19048 and a low of 1.17927. The EUR/USD once again saw a bullish movement after a brief U.S. dollar recovery attempt earlier this week. Despite worsened coronavirus cases in some Eurozone nations, the bloc’s outlook remained much more optimistic than the U.S. outlook.

While the advances in the Euro have slowed, the EUR/USD pair has continued to trend higher over the past week. EUR/USD pair climbed slightly from 1.1656 to 1.1778 last week. After U.S. Dollar attempted to recover, the pair EUR/USD saw a brief dip at the beginning of this week. However, the EUR/USD pair is eventually rising again as the U.S. dollar’s weakness persists. Whereas, the potential for advances in the currency pair was limited as coronavirus concerns rose on Sunday. The Euro remained broadly appealing overall. Throughout the coronavirus pandemic, the E.U. and the European Central Bank have handled the crisis well compared to other major economies like the U.K. & U.S.

As a result, Euro’s losses in response to a rebounding U.S. dollar have been limited. The Euro and U.S. dollar has a negative correlation, and the Euro often gains from the U.S. dollar weakness. It means that the rally of the EUR/USD pair is set to continue even a rise in worsening coronavirus cases’ concerns.

The Euro appeal was also down after Spain saw a surge in coronavirus cases, and speculations arose that the Eurozone could face fresh lockdowns in Spain to support the Eurozone economy. On the U.S. dollar front, the greenback attempted recovery earlier this week; however, the gloomy outlook persisted and kept investors from mounting much of a recovery rally in the currency.

The number of coronavirus cases in the United States has increased to its highest, and the U.S. government and Federal Reserve have only taken mixed action to limit the virus spread and protect the U.S. economy. Attempts to push further stimulus have been stuck in U.S. Congress, and Federal Reserve may become more dovish.

On the data front, at 12:15 GMT, the Spanish Services PMI fell short of expectations of 52.3 and came in as 51.9. The Italian Services PMI for July came in as 51.6 against the expectations of 51.6 and supported Euro.

At 12:50 GMT, the French Final Services PMI for July dropped to 57.3 against the expected 57.8 and weighed on Euro. At 12: 55 GMT, the German Final Services PMI dropped to 55.6 against the forecasted 56.7. The Final Services PMI for the whole bloc fell to 54.7against the forecasted 55.1and weighed on EURO.

Later today, eyes will remain on the Non-farm payrolls will extend clarity over the damage in the job market last month, and traders will eagerly await its release. Overall, economists expect a slight improvement in the U.S. unemployment rate from 11.1% to 10.5%, while the Average Hourly Earnings are expected to improve from -1.2% to -0.5%%. The NFP itself is expected to report 1530K (negative for a dollar) vs. 4800K figures beforehand.

Daily Technical Levels

Support Pivot Resistance
1.1802 1.1854 1.1915
1.1740 1.1968
1.1688 1.2029

EUR/USD– Trading Tip

The EUR/USD pair retraced lower to complete 38.2% Fibonacci retracement at 1.1817 level. On the higher side, the EUR/USD pair may find resistance at 1.1909 level, and the closing of candles below this level can keep bearish pressure on EUR/USD. A bullish breakout of this level can extend the buying trend until 1.2050. Today, the EUR/USD is likely to find support at 1.1800 level. Let’s keep an eye on NFP as it may drive sharp price action in the EUR/USD pair.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.31133 after placing a high of 1.31614 and a low of 1.30528. The pound rose on Wednesday to remain on course for a third-straight weekly gain against the U.S. dollar and ignored weaker than expected economic data ahead of the Bank of England meeting on Thursday. Previously, the Final Services PMI in July came in as expected 56.5 points and indicated expansion in the services sector in the U.K.

This Thursday, the focus will be on the Bank of England’s monetary policy decision and Andrew bailey’s speech. England’s central bank is anticipated to keep interest rates unchanged but will roll out its forecasts on a range of economic measures, including Inflation, GDP, and unemployment. In recent weeks, debates have been under discussion about the BoE’s cutting of rates below zero, but Thursday’s meeting is unlikely to offer detailed insight.

The NIRP (Negative Interest Rate Policy) has been under active review at the Bank of England, but it seems like a little too early for the central bank to make any decisive move. Some analysts expect that the Bank of England will prefer to use a negative interest rate until the EU-UK relationship for 2021 gets cleared.

On the U.S. front, the ADP Non-Farm Employment Change dropped to 167K from the expected 1200K in July. It means that the U.S. government introduced 167K jobs only while that weighed on the U.S. dollar and added strength to the GBP/USD pair gains.

However, in July, the Final Services PMI rose to 50.0 from expected 49.6, and the ISM Non-Manufacturing PMI rose to 58.1 from expected 55.0. This showed an expansion in America’s services sector in July and supported the U.S. dollar that weighted on additional gains in GBP/USD pair.

Another reason for the rise in GBP/USD pair was the weakness of the U.S. dollar. The ever increasing numbers of coronavirus cases dampened the prospects for a swift economic recovery in the U.S. and forced investors to continue dumping the greenback. This, coupled with the delay in the U.S. fiscal stimulus package’s announcement and further pressurized the U.S. dollar.

The U.S. dollar was so under pressure that even the goodish rebound in the U.S. Treasury bond yields failed to support the U.S. dollar.

Apart from this, the rising number of coronavirus cases in the U.K. and the renewed fears of no-deal Brexit, as both sides were lagging in securing a deal, held investors to place any aggressive bullish position in the GBP/USD pair ahead of BoE monetary policy.

Daily Technical Levels

Support Pivot Resistance
1.3060 1.3111 1.3166
1.3005 1.3217
1.2954 1.3271

GBP/USD– Trading Tip

The GBP/USD consolidates at 1.3127 level, holding right above the double bottom support area of 1.3103 level while the bearish breakout of 1.3105 level can extend selling unto 1.3058 level. Recently as we can see in the chart above, the GBPUSD pair has violated the upward trendline, which supported the pair around 1.3130 level. At the same level, the 50 EMA was extending support, but the GBP/USD showed a bearish crossover, suggesting further odds of selling in the Cable. On the higher side, Sterling may find resistance at 1.3176. Let’s consider selling below 1.3105 level today. 

USD/JPY – Daily Analysis

A day before, the USD/JPY closed at 105.592 after placing a high of 105.871 and a low of 105.318. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair extended the decay on the back of the weaker U.S. dollar across the board and bank of Japan governor Kuroda’s speech telling that Japan’s economy will improve in the second half of the year.

The Bank of Japan Governor Haruhiko Kuroda warned that in order to contain the spread of public health measures were re-introduced, then the economic activity could be significantly constrained. He also affirmed that Japan was not slipping into deflation and that the central bank would continue with its efforts to achieve the inflation target of 2%. Kuroda again assured that the Bank of Japan would be ready to ramp up the monetary stimulus without hesitation if needed to aid the economy through the pandemic crisis.

Kuroda also said that Japan’s financial system was quite safe and stable and countered the fears that the banking sector would fall out from COVID-19. He also warned that there would be risks to Japan’s financial stability if pandemic prolonged longer than expected.

He said that Japanese and overseas economies would gradually improve from the second half of this year despite extremely high uncertainties. However, the pace of growth is expected to be moderate as the preventive measures to control the virus spread has its effects on economic activity.

On the other hand, the greenback was the worst performer in the currency market. It was so under pressure that it could not benefit from the latest round of economic data that showed an improvement in the Service Sector of the U.S. The rebound in the U.S. Treasury yield also could not support the U.S. dollar. The U.S. Dollar Index (DXY) was testing the 92.60 level lowest since last week.

On the data front, the ADP Non-Farm Employment Change showed that the U.S. created 167,000 jobs in July against the estimated 1200K. This weighed on the U.S. dollar and added further in the losses of the USD/JPY pair.

The Trade Balance from the U.S. fell in line with the expectations of -50.7B. The Final Services PMI rose to 50.0 points in July than the expectations of 49.6 and supported the U.S. dollar. At the same time, the ISM Non-Manufacturing PMI also rose to 58.1 points from the forecasted 55.0 and came in favor of the U.S. dollar.

However, USD bulls did not cheer the positive data, and the U.S. dollar remained under stress to post losses on the day. On the US-China front, China’s ambassador to Washington said that China did not want to see a Cold War break out between China and the U.S. He suggested that both countries need to work to repair their relations that were under extraordinary stress.

Daily Technical Levels

Support Pivot Resistance
105.3100 105.6000 105.8800
105.0300 106.1700
104.7400 106.4500

USD/JPY – Trading Tips

Technically, the USD/JPY hasn’t changed much as USD/JPY continues to consolidate at 105.680 with bearish sentiment, especially after violating the 38.2% Fibonacci support level of 105.650. On the lower side, the USD/JPY may find support at 105.078 level, which is extended by the 61.8% Fibonacci retracement level. A bearish breakout of 61.8% level can drive more selling until the next support area f 104.200. The current market price of USDJPY is staying below 50 EMA, which extends resistance at 105.650 level. Let’s consider selling below 105.650 level today. Good luck! 

Categories
Forex Stop-loss & argets

The One Time-Frame That Might Give Us the Best Results

One of the main conflicts that traders have with themselves is how they are going to organize their time. Work-life balance is one of the key figures in our lives. Without the schedule, our trading could be stressful and compromise our productivity. Ultimately, if we are not careful, it can lead to over-trading, dullness, information […]

One of the main conflicts that traders have with themselves is how they are going to organize their time. Work-life balance is one of the key figures in our lives. Without the schedule, our trading could be stressful and compromise our productivity. Ultimately, if we are not careful, it can lead to over-trading, dullness, information […]

One of the main conflicts that traders have with themselves is how they are going to organize their time. Work-life balance is one of the key figures in our lives. Without the schedule, our trading could be stressful and compromise our productivity. Ultimately, if we are not careful, it can lead to over-trading, dullness, information overload, and burnout. So if we want to have any chance of winning in the forex industry we need to go outside of conventional thinking. A constant sea of conventional thinking is always there but if we want to vault ourselves into that fraction of a percent where we can improve our trading, we need to reconsider which is the best time frame to trade forex.

As we all know, by time frame on most charting platforms we can trade the 5 minutes chart, 15 minutes, 30 minutes, 1 hour, 4 hours, daily, weekly, and the monthly chart. These charts are the most common depending on the platform we trade. So where we can search for the best chance of winning? Word winning has a different meaning for everyone. What we might perceive here as the winning in forex is consistent profit. Consistent profit over and over to the point where we go long-term and look 12 months after we started or 12 months after we started keeping track. Are we at a consistent well-organized path to where we can trade real money and make a good living off that? Are we trading with good enough results to where somebody can notice that and hire us? Or to a lesser degree, are we increasing and improving at a good enough pace to where we are going to get there soon? That is the winning according to professional traders. So the best time frame to trade forex if we want to win consistently might be the daily chart. Why do we believe that the daily chart might be the far superior chart to trade forex? There are 4 main reasons for this statement. The first reason, everything on a daily chart, every technical tool works better and more consistently than any other chart out there.

Even if we use some not that good tools like the RSI indicator or trend lines, they work better on the daily chart then they do anywhere else. In other words, trades win more often. If there’s any constant in all of this research among traders is that every single time the daily chart turns out to be more consistent than any other chart. The second reason, why the daily chart might be the far superior time frame to use is that we don’t have to be slaves to the markets. Trading does not suppose to be super long, we could just turn on our charts, look at all currency pairs, our algorithms, and the system that we put together tells us one of three things. Either we make a trade, manage a trade we’re already in or we do nothing and move on. That is how it supposed to be and after we can do whatever we want because we want to achieve a great life-work balance. So some traders who trade on 5 minutes or 15 minutes chart might be trading a lot longer than someone who is trading on the daily chart because they want to get in and get out and make that quick money. How quick is that money really? The market doesn’t always start moving when we think it’s going to so there can be a lot of waiting.

Sometimes there are days where the market just never gets off the ground therefore it could be a lot of waiting for nothing. The forex trader life can be nerve-racking and horrible or it could be blissful, wonderful, and rewarding. The third reason, why the daily chart might be the best option is that news events matter a lot less to us than before. What do we mean by this? Well, on one hand, if we are trading smaller time frames news events on particular currencies that don’t even have a lot of significance can disturb our trade instantly if they don’t go our way. On other hand, the news event might actually be in our favor but for some reason, banks could decide to take opposite way even though the news event was good so we could easily find ourselves in a helpless feeling of sitting behind our system and scratching our head after a losing trade. If we manage to get those feelings out of our trading, life could be much better, it’s going to be a lot less to worry about.

Essentially, we don’t have any control over those news events. The news events are killers and if we have a chance to avoid most of them and if we are able to sidestep most of them that could be a great addition to our daily chart routine. Going on further, we will try to reveal the fourth reason why we might trade the daily chart exclusively. The big banks of the world, the people who are responsible for moving prices up and down employ traders that go to work every day for the purpose of moving the market against the popular side to knock those orders out and put that money back into their pockets so they could redistribute it back in the market and make the price go up and down. Professional traders claim that banks are doing this over and over every day and because of that the daily chart traders might be less exposed to these financial earthquakes than for example the 15 minutes chart traders.

Why? Because there’s a lot more of 15 minutes chart traders and they are trading all the time which means there’s an endless supply of traders out there for the banks to take from. The same reason why Las Vegas casinos are making tons of money on slot machines because there are always people there pulling that lever and hitting buttons over and over again regardless of how much they are actually wagering. It is important to mention that according to our knowledge the weekly chart and the monthly chart time frame do not perform better than the daily chart. Simply, the weekly chart time frame contains too many huge news events where we can no longer avoid them so there might be a big risk for us to ruin our trade. There can be thousands of pips in this time frame so it is highly questionable is it worth it.

For those who are skeptical about the daily time frame, there’s a solution. They can try to do both at the same time and compare which one can give us better and more stable results. If both works, then perfect, we could trade in both time frames. In the end, we will never have control over the market but we concluded that forex trading is such a rare combination of things where we can have a large impact and somewhat control the outcome. If we set things the right way we might have some measure of control and we believe that the journey starts where we can eliminate things that we cannot control. The daily chart might be the right way to get things done as we all want them and be closer to our central mission of becoming the best traders that we could potentially become. Hopefully, in the future, we can attack the market with more confidence.

Categories
Beginners Forex Education Forex Trade Types

Reversal Trading vs. Trend Trading: A Different View

While reversals are deemed to be extremely useful in some other forms of trading, some successful forex traders go as far as to say that they could prevent you from becoming a professional in this market. Whether you have vast experience dealing with fiat or you have yet to get to that level in your […]

While reversals are deemed to be extremely useful in some other forms of trading, some successful forex traders go as far as to say that they could prevent you from becoming a professional in this market. Whether you have vast experience dealing with fiat or you have yet to get to that level in your […]

While reversals are deemed to be extremely useful in some other forms of trading, some successful forex traders go as far as to say that they could prevent you from becoming a professional in this market. Whether you have vast experience dealing with fiat or you have yet to get to that level in your trading, you probably understand how crucial having a stable foundation for your trading career is. On one of the key topics for thinking and development in this respect includes the question of what forex is essentially about – reversals or trends. Even if you feel that you already know the answer, you may find some new perspectives and information in today’s discussion, which can help you become a better trader earning a greater profit more quickly. There are essentially two ways to do trade with one being easy and the other one difficult, and today you can learn why this topic is believed to be so vitally important for everyone wishing to reach the pro level.

A number of individuals trying their luck in this market believe that trading reveals is the right approach to discovering lucrative opportunities. Nevertheless, the answer to the question of whether you should be doing reversal trading or trend trading is considered to be the exact opposite of what the majority of forex traders generally do. Most traders, who are either at the beginning of their trading careers or moving from another market to forex, typically rely on the buy low, sell high method, placing their focus on tops and bottoms. This tactic may have even lead to some profitable investments, making you feel that you are on the right track.

Naturally, the odds of choosing the bottom in this thriving market are stacked against anyone attempting to grow their trading strategy based on this approach, which is why, despite some beginner’s luck, it can be severely detrimental to traders from the long-term standpoint. What this essentially means is that one lucky win can instill flawed thinking which can make you put all your eggs in one very unstable basket, waiting on that second win like a slot-machine player hopes for the next winning combination. This can inevitably make you lose focus of your trading account, which can ultimately lead to three most probable scenarios – you can either reach your break-even point, barely earn some profit, or most likely experience a complete downfall at the end of the year.

The reason why so many traders seem to fail at forex trading often lies in the fact that they misinterpret currencies as stocks, commodities, or equities that, unlike fiat currencies, actually have real values. When you think of stocks, you naturally think of assets, balance sheets, and products, which all play a part in determining a stock’s price. Due to a large amount of downright inaccurate and misleading information, terms such as overbought and oversold are frequently incorporated in trading in the forex market while, in reality, they have little to do with currencies. Currencies are simply not affected by the factors which may be relevant for other markets as they are directly influenced by the big banks, which can alter the price whenever and however they want.

The greatest actors, which are nowadays considered to be Citibank, Deutsche Bank, Chase Bank, and HSBC, have the ability to control and move the prices up and down, which only supports the statements provided above. Even with big news events, it is always the big banks that have a final say on the direction and time of every price change, further highlighting the insignificance of individual impact. Interestingly enough, if we look at the comparison between the stock and the spot markets, we can conclude that a large money influx will always determine where the stock prices will go, while the opposite is true for currencies. The big banks have a vast array of information at their disposal, which helps them assess where the money is concentrated and how it should be directed. More often than not, to act in their best interest, these major players decide to take the price the opposite way. What this implies is that the money they take is redistributed into the market, which is essentially how prices go up and down in this market.

While reversal trading is not what most professional traders would recommend doing, it is what allows big banks to manipulate the prices. In reality, whenever there is a currency pair that has been trending down long, it naturally implies that quite a few reversal traders never ceased trying to call reversals all the way down. Interestingly enough, the reversals will not occur until the moment every reversal trader decides to stop. To put theory into practice, we are going to use an example of the USD/JPY pair which really happened a few years ago.

As you can see from the image above, this currency pair experienced quite a long downtrend only to go right back up, which only happened because the money kept going in the opposite direction. The traders in this case would not stop picking the bottoms, which basically left room for banks to keep bringing the price down. To provide additional proof for this statement, we are going to use the sentiment indication available at dailyfx.com, which can help us see the balance of short and long positions of all the traders for the particular asset.

The blue line in the chart stands for all (reversal) traders, whereas the price exemplifies where the money went in reality. As the task the big banks have is to grasp where the money is headed and whether those positions are long or short on any currency pair, we can see at the very onset of this chart how the traders tried to go long when the banks recognized this tendency and decided to go short. However this did not stop traders from attempting to do reversals and they kept going long, and the discrepancy between these traders’ activity and the money’s actual direction is clearly demonstrated by the divergence of the two lines in the chart above. Going further along the chart, we can see how these price whipsaws all the way, which only proves how banks carefully follow each step traders take and do exactly the opposite.

Reversal traders are always on the loss because their money is constantly exploited due to their lack of knowledge or understanding of how trends function. There will always be a vast number of individuals trying to pick tops and bottoms who will actually help the banks secure themselves better. Of course, they will be allowed to have their single occasional wins so as to keep investing more, but these traders will always be losing more and more money because this approach is simply not sustainable and it does not benefit anyone but the big banks. You may try to rely on some indicators, such as Stochastics, RSI, Bollinger Bands, or CCI, hoping that this will help you win the game.

Unfortunately, you will find that even the best reversal tools available at the moment will only do you a disservice as the house always wins. Therefore, in order to make consistent money, you should invest in understanding trends and learning how to interpret market activity. By relying on trends, not reversals, you can actually secure a much more stable profit and save yourself from being another pawn in the big banks’ game, which should altogether be the best motivation for anyone wishing to trade in the forex market.

Categories
Forex Indicators

Guide to Selecting Custom Forex Trading Indicators

How should you use custom forex trading indicators and should you buy them? One of the greatest gifts modern technology has bestowed upon us as technical traders is the ability it has given us to shape, hone, and personalize our trading experience. The seemingly unstoppable march of technology has given us the ability to craft […]

How should you use custom forex trading indicators and should you buy them? One of the greatest gifts modern technology has bestowed upon us as technical traders is the ability it has given us to shape, hone, and personalize our trading experience. The seemingly unstoppable march of technology has given us the ability to craft […]

How should you use custom forex trading indicators and should you buy them?

One of the greatest gifts modern technology has bestowed upon us as technical traders is the ability it has given us to shape, hone, and personalize our trading experience. The seemingly unstoppable march of technology has given us the ability to craft for ourselves bespoke strategies, charts, and indicators in order to optimize our market experience to fit our needs.

Why Custom Indicators?

If you are a technical forex trader, why should you use indicators when trading? There are really two answers to this and neither of them will come as any big surprise to any of you. The first one is simple, to give you an edge in terms of the timing of your trades and the precision with which you take advantage of that timing. The second reason is that forex trading, even technical trading, is as much an individual process – trying not to say art, here – as it is a scientifically or mathematically founded methodology. Even if you are a very technically driven trader, you will want to adapt your trading strategy to your own personal needs, goals, and ways of doing things. Inevitably, one of the outcomes of this is that you will need to build up, over time, a personalized system that relies on, among other things, a set of trading indicators that you have finely tailored to your requirements.

Who Builds Indicators?

Who designs and makes those custom indicators that you can find out there and download for your own use – whether you pay for them or not – and should we care? The short answer is, of course, we should care a bit. Here’s why: While some custom indicators are made by traders and enthusiasts with some knowledge of how trading and the markets work, there are a great many indicators out there – maybe even most of them – that are made by programmers. Now, being good at coding is important to make a good custom indicator but that does not necessarily mean it will result in one that is actually useful. More to the point, it does not mean that it will result in one that is useful for you.

Evaluating Indicators

Ok, bad news first: There is no shortcut. Of course, if you’ve been forex trading for almost any amount of time at all, you will have been able to figure that answer out for yourself because there are no shortcuts to anything. If you’re not ready to put in the grind, you won’t get very far. That is particularly true if you’re a technical trader.

So, how do you chose the right custom indicators for your strategy? There’s no mystery here, the answer is you have to test them. Testing is important for two reasons. First, you will have to probably go through a large number of custom indicators to see what fits with your approach to trading. Even good indicators, those that work as advertised or as close to the way they are advertised as possible, may not be the ones that mesh with the system you are building. The second and even more important reason is that you need to test the dice out of indicators to make sure they work.

Once you download a custom indicator, take it to the testing range. Backtest it to make sure it worked in the past. This is the first hurdle and if it clears that, its time to upload it to your demo account and forward test it to see how it performs in the market. Moreover, forward testing is the best way to ensure that a given indicator will add value to your strategy.

The testing process you put custom indicators through needs to be rigorous. It has to be robust in two senses: First, it should comprehensively test each indicator you select and, second, it should test a broad range of indicators to provide you with a clear picture of what works and what works in your system.
Your friends here are time and work. The more indicators you put through a testing regimen, the better honed your system will be. Expect to test tens, if not hundreds, or even thousands of indicators throughout your career as a trader. The key is to avoid resting on your laurels but to always be learning and adapting.

Paying for Indicators

Should you go out and buy custom indicators to integrate into your platform? There is now a very broad market for custom indicators out there – some are free and some are paid-for. When you first encounter this it might seem a little daunting. You will ask yourself, are the paid indicators better in some way? As many experienced technical traders will tell you, ultimately there is no guarantee of a difference. Those who have already put the time and effort into exploring and testing the custom indicators that are floating around out there will have discovered the following: the main thing separating paid indicators from those you can download for free is that the person who made them decided to try to charge for them. The vast majority of custom indicators that somebody else made are likely to either a) not work properly at all, or b) not suit your particular system or strategy. This applies equally to those that are free and those that cost actual money.

So, should you just ignore the indicators that will cost you a few bucks? There’s an element of personal preference in the answer here. Because technical trading is an unending cycle of learning and re-learning, there is a good chance you will not regret paying for an indicator even if it turns out that it isn’t very useful. Even just by taking it through a robust testing process, you will learn something – both about the indicator itself and about your approach to trading. There is also the caveat that an indicator you pay for could turn out to be really useful to you and end up helping you to make many times over the 10, 30, or 50 dollars you paid for it.

It is also possible that you will pay for, download, and test an indicator and then decide not to use it. But that down the line at some point, as your trading strategy evolves and as you learn new approaches, you will want to go back to an indicator you previously decided to set aside. Maybe you will realize that you can tweak it to make it a useful addition to the way you trade or maybe the way you trade will change over time to the point that you need a new mix of indicators that will now include one you bought two years ago, say, and never used.

The Bottom Line

Whatever approach and strategy to forex trading you are designing for yourself, you will certainly benefit from the myriad of custom indicators available out there. You don’t have to feel like you have to pay for indicators – there is no guarantee that paid-for indicators will work any better than free ones. The key thing to remember is that any indicator you are thinking of using will have to go through a comprehensive testing phase – whether you chose to pay for it or source it for free.

Categories
Beginners Forex Education Forex Basics

The Importance of Initiative

The initiative could be defined as an emotional skill, attitude, or act of anticipation and proposing solutions before someone asks for it. Being aware of the initiative is a proactive behavior where we have the ability to put ourselves in a better position. The initiative is a skill we learn in childhood but one we […]

The initiative could be defined as an emotional skill, attitude, or act of anticipation and proposing solutions before someone asks for it. Being aware of the initiative is a proactive behavior where we have the ability to put ourselves in a better position. The initiative is a skill we learn in childhood but one we […]

The initiative could be defined as an emotional skill, attitude, or act of anticipation and proposing solutions before someone asks for it. Being aware of the initiative is a proactive behavior where we have the ability to put ourselves in a better position. The initiative is a skill we learn in childhood but one we can develop in adulthood. It is about making things happen, overcoming difficulties and barriers that appear when we are trying to achieve a goal. It is a dare to thinking differently, it is a flame that lies inside all of us. To have initiative is the difference between optimistic and pessimistic, between active and passive, between direct or be directed.

Why is it important to have initiative? One of the first elements that we need to have in our trading psychology is initiative because there is going to be different times in our life where we could be lost without it. When someone attempts to become a professional forex trader someday, he is separating himself from everybody else. The ability to act or to take charge, understanding the rewards of movements, and try to learn more is what makes a difference. Most people, almost everybody we know doesn’t do this because they are too lazy or too scared to take that jump. As forex traders or potential forex traders, we don’t want to be like everybody else. Most people don’t have the motivation to ever even look at that direction or so many people know exactly what it is but wouldn’t be caught dead trading it because they are scared. You guys decide what is worse. Forex involves risk, we can lose every last cent we put into it, most traders were there a lot of times but only a few were able to shake it off because they were fearless and studious in their game. Everybody wants to come up with excuses. Excuses like: “I wasn’t born here”, “I am a female”, “I’m an immigrant”, “I don’t have enough money to start this”…

The problem is, nobody cares. No matter the situation is we need to educate ourselves, we need to work smart and we need to be relentless. In a world we live in, there are multi-billion dollar industries that are created to keep us unmotivated, lazy, and unproductive and they really work, they are pretty good at what they do. A significant majority of people around us are lazy and they never take initiative. The reason most people don’t even bother jumping into forex trading, even if they’re a little bit interested in it, is just because of the fear of losing everything. This is no different from any other investment out there. The fear of losing everything and having serious responsibility for something are probably the two main feelings that could mess with our motivation. The truth is that most of our fears are often just illusions and they might be completely illogical. The worst-case scenario is never as bad as we think it is going to be. There is a small story in the book called “The 4 Hour Workweek”. Back in the ’80, a guy goes to Ghana to do some volunteer work and there he finds out that Ghana starts to fall apart. Major turmoil hit that country and he got stuck there, he couldn’t come back. He was stuck there eating just cornmeal and spinach every day for breakfast, lunch, and dinner.

That was only available, even there was a problem with clean water. So his worst fears of going to a place like this were pretty much realized. Soon after he was like: “Ok, this is not the end of the world, I have everything that I need to survive. Apart from that, I have a lot of new friends and I am actually having fun”. Years later not only does he look fondly on his time there but he knows that if for some reason he were to fell into abject poverty it wouldn’t be that tragic. When he was there, the things he learned and the friends he made were irreplaceable. From this story, we can learn that our absolute worst-case situation can be temporary especially if we are in some developed country. If we are smart enough and if we have resources we can get out of any bad situation. So at the recession-proof market like forex is, our progression could be unlimited and we should stop worrying about losing everything. We don’t want to let that fear be on our way.

Another reason that we have heard from people is that forex is too complex and overwhelming to learn. Surely that forex is not an overnight thing to learn but there are tons of online material out there that is easily accessible and completely free. Forex is around 4 trillion dollars a day market that traders are trying to go in and extract money from over and over so there could be a lot of benefit for those who are persistent and want to build a career in trading. Honestly, the worst thing is not doing anything. The biggest risk we can ever take is simply not taking any. Why? Because we could end up with no retirement money. Most people have absolutely nothing saved. Relying on someone always and all the time might not be the safest house for us, nobody wants that.

Unfortunately, that is probably the path of many levitating souls around us. We need to believe that we are capable of achieving wonderful things and if we don’t attempt them and follow through them, then we might completely fail. We don’t want that to happen. We don’t want to grow old with regrets in our eyes. The initiative is not one time only action. We need to understand even if we had that initiative to get started and that part wasn’t a problem, it is going to come into play again. We will need initiative more than once, probably more than twice in our trading career. There could be a few different phases on our trading path where we might need a firm initiative. Many of us trading demo account right now which is great but there will come a time where we need a transition into real money and that is going to be a serious challenge for us. We could try to lay back and not even maintain demo trades, but if we try to carry that strategy over into transitioning to real money, we might end up destroyed. Watching our money going up and down in a real money account knowing that is actually our money could largely play tricks on us.

The fact of going from the demo into the real account is a big leap for many people. That might be too much for some people so we need to be ready and not off-guard when that moment comes. But simply some people don’t feel comfortable about investing, they don’t want to do it themselves. They feel more secure to hand it over to somebody else. Eventually, we are going to walk in that fire where we trade with our real money and it is not going to be easy. So we could try to trade our own money and hope we can get good enough return year after year to compound interest and maybe get our retirement savings or our spending money. We could also try to trade other people’s money whether it means setting up our practice and trying to draw clients or join up with the big company, prop firm, or hedge fund. So transitioning through these different phases we will need strong initiative if we want our mindset to evolve. Just a simple walk through these stages is a big psychological leap but if we want to be professionals one day these are the routs we need to take. Knowing that we are going to be tested, judged and that we are going to deal with real money are some factors that are part of the process but the potential rewards could easily outweigh any fears we might have of underperforming.

We need to take the initiative and give ourselves a chance. For some of us who still struggle with initiative, a good thing to do might be to read the book called “Rich Dad Poor Dad”. This might have an impact on some people to try to approach differently to certain things in their life. The mentality, approach, end-game, and mindset are some of the key elements that we should be always trying to upgrade in our trading psychology so we could hopefully be in the right headspace. After those progressions, we just need to make sure not to leave that headspace ever. So for all of you guys, good luck and never give up.

Categories
Forex Indicators

Using Volume and Volume Indicators for Swing Trading

Volume is the lifeblood of forex trading but is often misunderstood and many traders don’t know how to use it to their advantage. If you imagine the market as an organism, then volume is the life force pumping through its veins and, without it, everything would gradually grind to a halt and the market would […]

Volume is the lifeblood of forex trading but is often misunderstood and many traders don’t know how to use it to their advantage. If you imagine the market as an organism, then volume is the life force pumping through its veins and, without it, everything would gradually grind to a halt and the market would […]

Volume is the lifeblood of forex trading but is often misunderstood and many traders don’t know how to use it to their advantage. If you imagine the market as an organism, then volume is the life force pumping through its veins and, without it, everything would gradually grind to a halt and the market would die. And yet, in spite of its importance, it still gets viewed as a somewhat unattractive part of a trader’s toolkit and is often misunderstood, misused or misrepresented. Sometimes all three. But the fact of the matter is that every consistent and successful trader will have a volume indicator that they know and love firmly integrated into their system and will check it religiously before even thinking about entering a trade.

Volume Confusion

Put simply, volume is the measure of how much of something is being traded. So far, so good. But there’s the rub. People still manage to confuse volume with liquidity, volatility, and momentum. This confusion is perfectly understandable actually. These things are all closely interrelated but they are not ultimately the same thing. A good and easy-to-remember way to think about it is that volume creates liquidity and, to a certain extent, volatility. And it certainly influences momentum.

But while you need volume to be able to trade (more on that later), this isn’t the same thing as needing volatility to trade. Just because you need a certain amount of volume coursing through the veins of the market, does not mean to say that you should be looking for the most volatile or liquid pairs and trading those. It’s important to remember this because the close interconnections between these phenomena mean that many people confuse them in their mind.

The thing to take away from all of this is that a higher level of volume shows that there is some gas in the tank and the market is more running better. This is important because the level of volume can show how robust a particular market move is, which can (along with your other indicators) give you a green light on a trade entry. To keep things uber-simple, the more volume during a price movement, the more legs that movement has got. If there is less volume, the movement is likely to lack conviction.

Why Use a Volume Indicator?

Since volume is what makes markets trend, it is crucial for technical traders and trend traders. This is not news to most people but somehow some traders try to trade even when volume is low and then come away scratching their heads when their roster of losses starts overtaking their wins. A volume indicator is just a mathematical tool that visually represents in your platform whether volume is high or low. Be careful because different indicators use different formulas, which changes how useful they are and how they are used.

A good volume indicator can cut down on the losses you will make if you enter trades when the market is running low on gas. Sure, eliminating losses is nowhere near as exciting as finding an indicator that will help you to find wins but a smart trader will be able to see the benefit immediately. The fact is if the market conditions aren’t right and your well-constructed, thoroughly tested system tells you to not trade – you’re already kind of winning because you’re not taking the hit of an unnecessary loss. You win if you don’t lose and you can’t lose if you chose not to play. That’s why you need a good volume indicator. It is key money management and risk management tool and, if you use it right, you will see how it impacts your bottom line.

So, what should a good volume indicator do?

In short, it needs to tell you whether there is enough volume to trade. Think of it as a stoplight. If it’s green (and all your other trade signals align), go ahead and enter the trade. If it’s red, however, that’s your cue to pull out of the trade. A good volume indicator will do both of these things. Another thing to keep an eye on is indicator lag. Some lag is inevitable – all indicators lag to a greater or lesser extent – but you don’t want your volume indicator to lag too much so watch out for that when searching for and testing volume indicators.

It’s just not possible to overemphasize this: if your volume indicator says there isn’t enough volume in the market at the moment, do not trade. Just like when you’re driving, you don’t hit the gas when the light is red, you don’t trade when there isn’t sufficient volume. There are a lot of factors going against you in forex trading – you can’t predict the future, you can’t control the odds of a trade going your way, you can’t influence the big players in the market … the list is endless. But one factor you can control is when you trade. If you feel – or better yet, if you calculate in a rational and systemic fashion – that the odds of a trade are not in your favor, the only smart option is to not enter that trade. It’s not that different from seeing the cards in front of you in a game of poker, figuring out that another player is likely to have a stronger hand, and choosing to fold. We could take the analogy further and figure out what a volume indicator would be in poker but that isn’t necessary – the thing to take away from this is that a good volume indicator will tell you to avoid the trades that you should be avoiding anyway.

Loss Aversion

An indicator that eliminates losses is every bit as important – if not more important – than one that increases wins. A good volume indicator is one such indicator and it is worth as long as it takes to find a good one. Combine it with a good exit indicator and you’re not just eliminating bad trades, you’re also reducing your losses. That is a force multiplier for your wins.

Ultimately, even a bad volume indicator can, in many cases, save you from making losing trades. The trick is to balance that with making the trades you can win. That’s because a bad volume indicator – while it will certainly cut down your losses – will also prevent you from entering potentially lucrative winning trades. Nobody can tell you which indicator is going to work best with your system and you should immediately ignore anyone who tries. The only thing that will tell you which volume indicator to integrate into your process is to test, test, and then test some more. You have to put in the legwork.

You also have to remember that no indicator is perfect. You have to balance the losses it saves you from and the wins it prevents. A volume indicator that tells you to avoid ten trades that would have been losses and stops you from entering three trades that would have been winning is, on balance, going to save you a lot of money. Of course, it is on you to work out how big the losses would have been in comparison to the wins and to factor that in when choosing the right indicator. In the same way, as it is your job to figure out whether you can find a volume indicator that can save you ten losses and only stop you from entering one winning trade.

But, with volume indicators (and with your approach to trading in general), eliminating losses is the path to success. Put the work in to find a good volume indicator, test it to the max and make sure it works how you need it to. Trade with confidence when it gives you a green light and, when it doesn’t, put your cards down on the table like a boss and stay out of the trade.

Which Indicator?

As we said, nobody can tell you which indicator is going to work best with your system. You will have to put the work in and figure that out on your own. However, here are some indicators to take a look at and one to avoid.

Average Volume: This is the most basic, run-of-the-mill indicator that’s already integrated into your platform. It’s a moving day average set to a specific number of days and if you’re tracking a moving price average, it makes sense to set the average volume indicator to the same number of days. Bear in mind that anything less than 50 days is going to throw up a lot of unnecessary noise.

Force Index: This measures how bearish or bullish the market is at a given moment. You can use this in conjunction with a moving price average to measure how significant changes are in the power of bullish or bearish sentiment. It won’t do the job of telling you when to avoid a trade so much as it will tell you how robust a price trend is.

Volume Oscillator: This is a combination of two moving averages, one fast and one slow (with the fast one subtracted from the slow one). It can show you how strong a prevailing price trend is by tracking when a price movement is followed by an increase in volume. When the indicator is above the zero line, this may be a sign that the prevailing trend has some wind in its sails. Conversely, a change in price followed by a slump in volume is a good sign that the trend is lacking strength.

On-Balance Volume: Just like the Volume Oscillator, this indicator is trying to show you whether a price movement is backed by an increase in volume. It does this by combining price and volume. On an up day, the volume is added to the previous day’s score and on a down day, it is subtracted. Again, this will give you an indication of the strength of conviction behind a given price movement.

Accumulation/Distribution: The A/D line seeks to confirm price trends or highlight weak movements. Volume is accumulated when the day’s close is higher than the previous days close and distributed when the day’s close is lower than that of the previous day. The main way you use this indicator is to detect whether there is a divergence between price movement and volume movement.

Average True Range: Volatility is, as you now know, very closely related to volume and, as a result, you might be able to use some volatility indicators in place of a volume indicator. One advantage of doing this is that volatility indicators can be easier to read and some people chose to use the Average True Range (ATR) as a stand-in for a volume indicator. There are several problems with doing this, however, and here are just a couple of them. For one thing, it can be nearly impossible to figure out where to place the cut-off line – the line below which you will listen to your indicator and pull out of a trade.

Firstly, that line will have change and adapt as markets change, which means you will constantly be lowering or raising it. Secondly, you will also need to have a separate cut-off for each currency pair you trade. Thirdly, you will have to raise or lower the line for each currency pair as market conditions change over time. And, as if all of that weren’t enough, you will have a hard time backtesting it because of this inconsistency over time and across currencies. A good volume indicator should be consistent over time and reflect the market in most, if not all, conditions.

Categories
Beginners Forex Education Forex Assets

Trading the AUD/NZD Currency Pair

Most traders nowadays trade pairs involving currencies such as EUR and USD because they have found such currencies to provide them with the best results. However, once paired, some of the other major currencies we trade in the forex market are said to be extremely profitable trades due to their unique traits. The AUD/NZD currency […]

Most traders nowadays trade pairs involving currencies such as EUR and USD because they have found such currencies to provide them with the best results. However, once paired, some of the other major currencies we trade in the forex market are said to be extremely profitable trades due to their unique traits. The AUD/NZD currency […]

Most traders nowadays trade pairs involving currencies such as EUR and USD because they have found such currencies to provide them with the best results. However, once paired, some of the other major currencies we trade in the forex market are said to be extremely profitable trades due to their unique traits. The AUD/NZD currency pair, for example, has been praised by a portion of professional traders who have recognized its great potential. According to these supporters, the nature of this currency pair, or what it is and what it is not in other words, is what makes it so different from all other combinations, making it to some traders’ list of favorites.

If you are a technical trader who keeps looking for ways to evade news and hectic market activity knocking traders’ stop losses, you may find this currency pair particularly interesting despite what you may have heard about it before. Especially during the times of some important events (such as Brexit) or the involvement of some important individuals and organizations (e.g. the European Union), you will find how some of the more popular currency pairs, such as EUR/GBP and GPP/CHF, are heavily encumbered by the surrounding hype and needless news popping up every minute or so. In this case, traders are faced with a few options: give in to the upcoming news events, avoid trading news, and/or avoid trading the affected currencies. What is more, with trading other currency pairs comes the danger of encounter some really choppy periods we can see for ourselves if we take a look at the daily chart. Solidation, on the other hand, is a process traders mostly accept as part of the currency market, but some other downsides of trading popular currency pairs may not always be shared transparently and objectively through all available sources of educational material.

There are quite a few reasons why traders may eventually learn to enjoy trading the AUD/NZD currency pair. Firstly, the pair in question does not involve USD, the currency that is heavily monitored by the big banks whose impact on the market is profound. Secondly, both AUD and NZD are risk-on currencies, which makes trading much easier. Some other currency pairs such as AUD/JPY or EUR/USD entail the risk-on/risk-off challenge, which ties the forex traders close to the activity in the stock market. While trading risk-on/risk-off pairs the market moves exceptionally violently and this may overthrow almost any technical expertise and, thus, affect traders. By entering such trades, you are in fact taking on the risk of not having much control because of dealing with external factors. However, when you are trading two currencies which are both risk-on, you are to an extent trading a pair with no conflicting agendas.

With AUD and NZD being both risk-on currencies, you can feel at ease knowing that you are in fact trading currencies that are both heading in the same direction, further eliminating your list of external factors you ought to be concerned about. Therefore, as you are trading AUD against NZD, you are trading a pair without needing to worry about any derailment on the path to securing your pips. What is more, despite these currencies’ similarities, they still do not exhibit much correlation in the sense that traders sometimes feel annoyed when both currencies go up and down at the same time. In such cases, the correlating movement directly impedes trading as traders cannot trade until this unnerving parallel movement comes to an end. Luckily, while the AUD/NZD pair can at times display similar behavior, it hardly occurs as often as it does with some other currency pairs.

With regard to news, the forex traders who are trading this pair feel relieved because most news comes early in the trading day. Experienced traders using the daily chart who are fond of the AUD/NZD pair claim to trade approximately 20 minutes before the daily candle closes. Such an approach typically leaves them with several hours before any relevant news comes out. In case they find the news to be going against them, they can then still have the remaining 20 hours for the price to take a different turn. According to those who are used to trading the AUD/NZD, many times the price overacts to the news but eventually corrects itself. Should the news, therefore, appear to be negative in any way, traders need not worry since the price often either returns to its initial position or takes the direction the trader favors as the close of the candle approaches.

If we compare this pair with the ones involving USD, we should take into consideration the factor of time, which is in that case reduced to only a few hours. USD-based trades entail a considerably limited amount of time for the price to change and end up going the way traders may need them to. AUD/NZD, however, does not pose a challenge in this regard due to the fact that price generally either trends or consolidates. Even if consolidation worries you, professional traders say how a good choice of a volume indicator can help traders evade most consolidation patterns even though this pair is more likely to trend than cause problems. The chart below reflects how this currency pair is not prone to creating any choppy trends we may witness in some other pairs’ charts. Nevertheless, even if you find yourself trapped in one of such unfavorable trend, experts affirm that the result would not be more than one or two losses. They also add that traders should not fear these areas in the chart because if you keep trading, such losses would eventually be eliminated, unlike with some other currency pairs.

The EUR/USD chart reflecting the same period leaves an entirely different impression. Not only is the price moving too rapidly, but traders can hardly make a profit equal to that of AUD/NZD. By relying on a useful trend indicator, you will be able to know exactly when you should start trading, thus avoiding periods of price consolidation. When a chart is too choppy and the price is moving in a hectic manner, even the best indicators may not be able to detect the activity on the chart. You can, therefore, receive false signals and take unnecessary losses just by trading a currency pair that is prone to these erratic movements. Luckily this is more common for pairs such as EUR/USD than it is for the AUD/NZD currency pair. If your system can handle trading other currency pairs, rest assured that it will take you through AUD/NZD trades with ease. Nonetheless, this does not imply that you should not have a set plan for this currency pair regardless of the benefits that naturally come along.

 

Traders should primarily be prepared to take each trade for which they get a signal even though they may at times get several signals at the same time. Should you need to decide whether to trade AUD/NZD long and AUD/JPY long with a 2% risk, professional traders would advise you to enter the AUD/NZD trade without splitting the risk because of the increased chance of winning. Even though you are taking on the entire risk on one currency pair, understand that the likelihood of winning is much greater. What is more, even when you are testing your system, you can skip this currency pair because it commonly provides favorable trading conditions. Therefore, if you would like how your system operates on some more difficult currencies, you can test USD pairs, but testing AUD/NZD is assumed to be needless because of everything we have discussed earlier. You can also test AUD/NZD first to assess your algorithm because, if it does not work properly with this currency pair, it is much more likely to cause a disaster with some other currency pairs.

It seems that AUD/NZD is not talked about at great lengths in forex traders’ favored media, but the sources that do go into details appear to be extremely satisfied with the results they get from trading this currency pair. Some professional traders even say how the only reason this pair makes the second (and not the first) place is that they cannot enjoy any giant moves with AUD/NZD. Traders’ experiences and trading methods may differ, but this article still reflects an innovative approach to trading and making use of the two currencies. If you have yet to test this currency pair, you will hopefully discover the same benefits professional traders claim to exist, finding reasons to keep trading AUD/NZD. Last but not least, whether you learn to love AUD/NZD for the ability to test your algorithm or the opportunity to avoid choppy trends, trading this currency pair will surely be an interesting experience, especially for those of you who favor calm waters over some news-heavier or more unpredictable currency pairs.

Categories
Forex Psychology

Winning…and Winning Badly

By now, you started trading actively, did some research regarding trading tactics, and watched numerous helpful and educative videos which helped you sharpen your senses and taught you how to profit. All of this led you, step by step, to success. The winning percentage just started rising month after month now. When you hit the […]

By now, you started trading actively, did some research regarding trading tactics, and watched numerous helpful and educative videos which helped you sharpen your senses and taught you how to profit. All of this led you, step by step, to success. The winning percentage just started rising month after month now. When you hit the […]

By now, you started trading actively, did some research regarding trading tactics, and watched numerous helpful and educative videos which helped you sharpen your senses and taught you how to profit. All of this led you, step by step, to success. The winning percentage just started rising month after month now. When you hit the numbers in a row, your adrenalin starts working and you get high on success. After such a winning row one reaches these heights and starts thinking of oneself as of pro which has a power of knowledge and cannot be stopped. This is where you get blind and slightly stupid in your arrogance and inevitably, fall happens – you hit the wall hard – it is just a matter of time.

Every decision and step you take right after this fall could easily determine your trading future from this point on. This will sound crazy, however, there is a right and wrong way of winning. You may take this preaching as rubbish especially if you are in winning swing at the moment of speaking. However, as I can easily foresee it right now, eventually at some point you will, for sure, come back to this article in the future. We will discuss this theme in two different aspects: on the macro level – kind of the zoomed-out point of view, and micro-level – where you need to understand when you are winning.

We propose to have look at these The Big three rules in terms of Forex trading:

Money Management

As we already spoke about it, money management is the most important thing in forex trading. At the end of the day, this is the thing that increases assets on your account or ruins you completely. Put together your plan: how much percentage to risk from your account, how many pips to risk, manage your trade, and pick wisely indicators that you will involve in trade.

Trade Psychology

The most important thing in trading psychology is patience. The long game is far superior to the short game. It is necessary to take initiative and develop the discipline to get to success. And last but not least the Technical Analysis.

Macro-Level

One needs to understand that trading psychology is a very important part of trading. Once you learn everything you are out there getting amazing trade entries, great money management, you are on the run, controlling your emotions, winning trades, and achieving what you dreamed of…

You think the world is yours, now you are untouchable, however, as we already explained, the moments of failure are inevitable at a certain point. To be completely honest, the moments of prolonged failure. The way you deal with failure will determine a lot in the future. One of the things that are quite important is not to give up and leave everything. It is just one fall, get your grip, and start again. All you have to do to get back on track is keep trading your system, do not try to jump in – do not think that you know more or better than the system, and keep repeating this recipe until you get back on winning tracks. If you could do only these three things you would win every time, especially long term. It is not that easy, right?

Trouble is, we are all emotional beings and we cannot change this fact. In trading Forex, we just need to eliminate and subdue our feelings as best as we can and keep doing this all the time. We can be emotional persons, but it is not recommendable to be an emotional trader. Mistakes that we all do when we are winning like you are trading overall and you are unstoppable and your winnings are just landing one on top of the other. While you are in such a run, your emotions are at the highest level, especially if this is your first time, and you never been here before. You cannot stop it. It is just beyond you, especially if this is the first-time experience. The biggest problem with this is that majority of new traders do not understand or see that they are only temporarily winning.

Huge misleading thoughts are ‘this is how it is going to be from now on’, and ‘all I got to do is keep doing what I’m doing and I’m in profit every month till the end of the days’, right? Everyone who reaches these levels is risking to drop off real fast. Professional trader’s opinion is – do not consider this like failure. Consider it as coming back to the true aim you had when you started trading. Let’s say you made 9% per month and now you are making 1,5%. This now is not a bad result – actually it is a great average percentage. The previous average result was the product of too many entries or very high leverage you used. The one incredible mistake that anyone can make is ‘if I’m getting this high win percentage and doing so well, why am I risking only 2% of my assets, when I should be risking way more than that’. It is truly foolish to act like this. Returns that you got are not real and not sustainable on a long term basis and the solution is not to increase your risk.

What you need to do is understand that fall was inevitable, it was supposed to happen. Be completely honest with yourself and analyze, were you following the rules or you were going higher, overtrading and overleveraging, and so on. When you finish the analysis, dust yourself off and get back in the game. Just because you hit this crash doesn’t mean that you are not up to this. It just means that you need to come back taking all experiences into consideration and following the rules this time.

Micro-Level

Here is how it looks on the micro-level: when you are actually in trade and winning, or you just closed winning trade, haven’t you felt regret of doing so? Just a little bit? Do not worry, every trader has been there. Everyone closed at least one winning trade with a speck of doubt ‘why have I did this just now’.
It may happen that you did not exit your winning trade when you thought you should. For example, you were in a winning trade that you saw it can bring 500 pips and suddenly, that price came back the other way, and tripped out to your Stop/Loss or your exit indicator, whatever the case it was, and you ended up closing this trade with only 275 pips. Of course, 500 pips are better than 275 pips, but a win is a win, and you shouldn’t be regretting over it.

The next thing that can be born out of this regret is the idea that you shouldn’t let it happen again, and thought that you should meddle in and stop the trade on 500 pips before it gets lower – this is something that should be avoided completely. The moment you do this, there is a possibility that price is going to come back a little bit, and then give you one really big 1500 pips move, and you are not going to take part in it. You will be watching with regret, what you have missed and professional traders will be getting this move. Why? Because they do not let their emotions to overpower them and get in a way of their trading systems. This is what you should do in the future as well.

There is another possible scenario. By now, you know how to calculate your risk and where to take profit, right? Sometimes, it can happen, that you may get really close to that ‘take profit’ point, and the price is going to come back and it will actually be closed as a loss. It is very true that you were so close. At this point, another form of regret floods you and you think if you just lowered a bit your first ‘take profit’ point you would have closed it with a win. The problem is that this causes you to start deviating from your system. As soon as you do this, slowly you are going to start leaving your pips behind. Again, this is the situation where you are trying to outsmart your system. The system that you made – if you did everything right – has been proven to work, and outsmarting it is not recommendable for profit.

According to many successful traders, regret is a wasted emotion. What these guys do is, keep up the plan, leave emotions out of the trade, and patiently win their trades. The whole point in trading is to get to profit not run from it. Our advice is to keep it smart and simple, follow the system, follow the rules, master your emotions, and stick to the plan. As you may guess by now, everything is up to you and how you control your emotions when they are at the highest level, i.e. when you are winning. We will do the best we can to support you on your way to success but this is something that you need to deal with yourself.

Categories
Forex Basic Strategies

You Must Know This ‘7-Day Period’ Forex Trading Strategy!

Introduction

Introduction

Introduction

Trying to pick the top or bottom is one of the favorite things a trader likes to do. We tried to do that using the ‘Dolphin Strategy.’ We did that with no indicator support. We are again going to unveil a strategy that does pick a top or bottom with no indicator support. This strategy is called the 7-Day period strategy. Let us take a step back and think, indicators are nothing but a mathematical representation of prices, which are calculated in different ways.

Therefore, sometimes it is important to look at prices alone. The 7-day period strategy is based on the idea that after every seven days of consecutive strength, a currency pair’s move is due for a retracement. The question arises, why seven days? This number is derived after constantly watching the market for years. Often, a new trend emerges at the beginning of the week, and if the trend is strong, it can last for several days with no retracement.

Many psychologists believe that human beings have the best retention rates on numbers that are in groups of seven or less. This is one of the reasons why phone numbers in the U.S. only have seven digits, aside from the area code. We have seen that the seven-day reversal pattern is more accurate in a trending market. We gave occasionally seen those periods when the market continues to move in the same direction after seven days of the exhaustive movement, i.e., from the 8th day onwards. Even though the setup is rare, when it does occur, it is significant.

Time Frame

As the name of the strategy suggests, it can be traded only in the daily time frame.

Indicators

In this strategy, no indicators are used. Simple Moving Average (SMA) can put on the chart to get a clear idea of the trend.

Currency Pairs

This strategy can be applied to all the currencies in the forex market. Exotic pairs should be avoided.

Strategy Concept 

The basic idea of the strategy is that when the market is strongly trending on the hourly chart, the retracement does not last more than seven days and changes its direction at the sixth or seventh day. This retracement is considered to over-extended, which leads to a strong reversal in the pair.

If the sixth or seventh candle coincides with a key technical level, the ‘move’ may very well stall at that level and continue its major trend. To implement the strategy effectively, we need to know trends and trend retracement. Since this strategy is based on fixed rules and price action, it is not necessary to know about technical indicators. However, SMA and ATR can be used for trend identification and measuring the momentum of the market.

Trade Setup

In order to understand how the strategy works, we will apply it on the USD/CAD currency pair and execute a ‘short’ trade using the strategy.

Step 1

The first step is to identify the direction of the market. As this is a trend trading strategy, we should be able to identify the major direction of the market. If the market is making higher highs and higher lows, it is an uptrend, or if the market is making lower lows and lower highs, it is a downtrend. A trend can also be determined using the Simple Moving Average (SMA) indicator. Very simply, if the price is below SMA, we say that the market is in a downtrend, and if the price is above the SMA, the market is said to be in an uptrend.

In the example we have considered, from the below image, it is clear that the market is in a strong downtrend.

Step 2

Next, wait for a retracement from the highest or the lowest point, which we will be evaluated based on our strategy rules. The retracement should be such that there are seven consecutive candles of the same color. One or two candles of the opposite color are okay, but we need to make sure that it does not impact the structure of the retracement. These seven candles represent an extended pullback, which can lead to reversal any moment.

In the below image, we can see seven days of the up movement, which is exactly the kind of retracement which we need for the strategy.

Step 3

In this step, we need to check the position of the price after seven straight days of the movement. The strategy works best if the price coincides with a key technical level of support and resistance. This is because, in these areas, the price action is very strong, and market moves as per expectations. But it is important to make sure that no step of the strategy is used individually. All of them need to be used collectively.

We enter the market once we get confirmation after the 7-day period. The confirmation is nothing but a bullish candle in case of a ‘long’ setup and a bearish candle in case of a ‘short’ setup.

In our example, we see that the price has approached the previous ‘lower high’ of the downtrend. This is an area where we can expect sellers to get active and take the price lower.

Step 4

Finally, we need to determine the ‘stop-loss’ and ‘take-profit‘ for the strategy. We place the stop-loss a little higher than the bullish candle when entering for a ‘long’ and little lower the bearish candle if entering for a ‘short.’ We take profit at two places in this strategy. The first take-profit is set at the previous higher high or lower low, while the second take-profit is set at 1:2 risk to reward.

Strategy Roundup

As there are many conditions associated with the strategy, the setup might be rare, but when it does occur, it is significant. We have seen trends where the retracement occurs for just a few days before it starts moving in the direction of the major trend. But these setups are not reliable. The most important condition of this setup is the continuous appearance of bullish or bearish candles for seven days.

Categories
Forex Market Analysis

Daily F.X. Analysis, August 06 – Top Trade Setups In Forex – A Day Before NFP! 

It’s going to be a busy day from a news perspective, especially for the GBP pairs. The Bank of England is scheduled to publish its Monetary policy with bank rates. Although economists are not expecting BOE to change interest rates, the MPC Asset Purchase Facility Votes is expected to change. Nine out of nine members have voted to increase the asset purchase program to accommodate the economy.

It’s going to be a busy day from a news perspective, especially for the GBP pairs. The Bank of England is scheduled to publish its Monetary policy with bank rates. Although economists are not expecting BOE to change interest rates, the MPC Asset Purchase Facility Votes is expected to change. Nine out of nine members have voted to increase the asset purchase program to accommodate the economy.

It’s going to be a busy day from a news perspective, especially for the GBP pairs. The Bank of England is scheduled to publish its Monetary policy with bank rates. Although economists are not expecting BOE to change interest rates, the MPC Asset Purchase Facility Votes is expected to change. Nine out of nine members have voted to increase the asset purchase program to accommodate the economy.

Economic Events to Watch Today  

     

 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18640 after placing a high of 1.19048 and a low of 1.17927. The EUR/USD once again saw a bullish movement after a brief U.S. dollar recovery attempt earlier this week. Despite worsened coronavirus cases in some Eurozone nations, the bloc’s outlook remained much more optimistic than the U.S. outlook.

While the advances in the Euro have slowed, the EUR/USD pair has continued to trend higher over the past week. EUR/USD pair climbed slightly from 1.1656 to 1.1778 last week. After U.S. Dollar attempted to recover, the pair EUR/USD saw a brief dip at the beginning of this week. However, the EUR/USD pair is eventually rising again as the U.S. dollar’s weakness persists. Whereas, the potential for advances in the currency pair was limited as coronavirus concerns rose on Sunday.

The Euro remained broadly appealing overall. Throughout the coronavirus pandemic, the E.U. and the European Central Bank have handled the crisis well compared to other major economies like the U.K. & U.S.

As a result, Euro’s losses in response to a rebounding U.S. dollar have been limited. The Euro and U.S. dollar has a negative correlation, and the Euro often gains from the U.S. dollar weakness. It means that the rally of the EUR/USD pair is set to continue even a rise in worsening coronavirus cases’ concerns.

The Euro appeal was also down after Spain saw a surge in coronavirus cases, and speculations arose that the Eurozone could face fresh lockdowns in Spain to support the Eurozone economy. On the U.S. dollar front, the greenback attempted recovery earlier this week; however, the gloomy outlook persisted and kept investors from mounting much of a recovery rally in the currency.

The number of coronavirus cases in the United States has increased to its highest, and the U.S. government and Federal Reserve have only taken mixed action to limit the virus spread and protect the U.S. economy. Attempts to push further stimulus have been stuck in U.S. Congress, and Federal Reserve may become more dovish.

On the data front, at 12:15 GMT, the Spanish Services PMI fell short of expectations of 52.3 and came in as 51.9. The Italian Services PMI for July came in as 51.6 against the expectations of 51.6 and supported Euro.

At 12:50 GMT, the French Final Services PMI for July dropped to 57.3 against the expected 57.8 and weighed on Euro. At 12: 55 GMT, the German Final Services PMI dropped to 55.6 against the forecasted 56.7. The Final Services PMI for the whole bloc fell to 54.7against the forecasted 55.1and weighed on EURO.

From US Side, the ISM Non-Manufacturing PMI rose in July to 58.1 from the expected 55.0 and supported the U.S. dollar. Though the data was against the movement of EUR/USD pair, however, pair still moved in the upward direction.

Daily Technical Levels

Support Pivot Resistance
1.1802 1.1854 1.1915
1.1740 1.1968
1.1688 1.2029

EUR/USD– Trading Tip

The technical side of the EUR/USD remains mostly the same as it’s trading with a bullish bias around 1.1880 level. On the higher side, the EUR/USD pair may find resistance at 1.1909 level, and the closing of candles below this level can keep bearish pressure on EUR/USD. A bullish breakout of this level can extend the buying trend until 1.2050. Today, the EUR/USD is likely to find support at 1.1800 level.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.31133 after placing a high of 1.31614 and a low of 1.30528. The pound rose on Wednesday to remain on course for a third-straight weekly gain against the U.S. dollar and ignored weaker than expected economic data ahead of the Bank of England meeting on Thursday. On Wednesday, the Final Services PMI in July came in as expected 56.5 points and indicated expansion in the services sector in the U.K.

This Thursday, the focus will be on the Bank of England’s monetary policy decision and Andrew bailey’s speech. The central bank of England is anticipated to keep interest rates unchanged but will roll out its forecasts on a range of economic measures, including Inflation, GDP, and unemployment. In recent weeks, debates have been under discussion about the BoE’s cutting of rates below zero, but Thursday’s meeting is unlikely to offer detailed insight.

The NIRP (Negative Interest Rate Policy) has been under active review at the Bank of England, but it seems like a little too early for the central bank to make any decisive move. Some analysts expect that the Bank of England will prefer to hold off on using a negative interest rate until the EU-UK relationship for 2021 gets cleared.

On the U.S. front, the ADP Non-Farm Employment Change dropped to 167K from the expected 1200K in July. It means that the U.S. government introduced 167K jobs only while that weighed on the U.S. dollar and added strength to the GBP/USD pair gains.

However, in July, the Final Services PMI rose to 50.0 from expected 49.6, and the ISM Non-Manufacturing PMI rose to 58.1 from expected 55.0. This showed an expansion in America’s services sector in July and gave support to the U.S. dollar that weighted on additional gains in GBP/USD pair.

Another reason for the rise in GBP/USD pair was the weakness of the U.S. dollar. The ever increasing numbers of coronavirus cases dampened the prospects for a swift economic recovery in the U.S. and forced investors to continue dumping the greenback. This, coupled with the delay in the U.S. fiscal stimulus package’s announcement and further pressurized the U.S. dollar.

The U.S. dollar was so under pressure that even the goodish rebound in the U.S. Treasury bond yields failed to support the U.S. dollar.

Apart from this, the rising number of coronavirus cases in the U.K. and the renewed fears of no-deal Brexit as both sides were lagging in the progress of securing a deal, held investors to place any aggressive bullish position in the GBP/USD pair ahead of BoE monetary policy.

Daily Technical Levels

Support Pivot Resistance
1.3060 1.3111 1.3166
1.3005 1.3217
1.2954 1.3271

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3085 level, holding right below the triple top resistance area of 1.3101 level while the bullish breakout of 1.3105 can drive more buying in the GBP/USD pair. On the higher side, the GBP/USD may find resistance at 1.3175, while support can be found around 1.3056 and 1.3022 level. Let’s keep an eye on 1.3125 to extract a bearish bias in the GBP/USD pair today. A bearish breakout of 1.3050 can drive more selling until 1.3005.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.592 after placing a high of 105.871 and a low of 105.318. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair extended the decline on the back of the weaker U.S. dollar across the board and bank of Japan governor Kuroda’s speech telling that Japan’s economy will improve in the second half of the year.

The Bank of Japan Governor Haruhiko Kuroda warned that in order to contain the spread of public health measures were re-introduced, then the economic activity could be significantly constrained. He also affirmed that Japan was not slipping into deflation and that the central bank would continue with its efforts to achieve the inflation target of 2%. Kuroda again assured that the Bank of Japan will be ready to ramp up the monetary stimulus without hesitation if needed to aid the economy through the pandemic crisis.

Kuroda also said that Japan’s financial system was quite safe and stable and countered the fears that the banking sector would fall out from COVID-19. He also warned that if pandemic prolonged longer than expected, there will be risks to Japan’s financial stability.

He said that Japanese and overseas economies would gradually improve from the second half of this year despite extremely high uncertainties. But the pace of improvement is likely to be moderate as the preventive measures to control the virus spread has its effects on economic activity.

On the other hand, the greenback was the worst performer in the currency market on Wednesday. It was so under pressure that it could not benefit from the latest round of economic data that showed an improvement in the Service Sector of the U.S. The rebound in the U.S. Treasury yield also could not support the U.S. dollar. The U.S. Dollar Index (DXY) was testing the 92.60 level lowest since last week.

On the data front, the ADP Non-Farm Employment Change showed that the U.S. created 167,000 jobs in July against the estimated 1200K. This weighed on the U.S. dollar and added further in the losses of the USD/JPY pair.

On Wednesday, U.S. President Donald Trump said that big jobs were coming on Friday. However, private payroll data by ADP reported on Wednesday that just 167,000 jobs were created in July.

 The Trade Balance from the U.S. fell in line with the expectations of -50.7B. The Final Services PMI rose to 50.0 points in July than the expectations of 49.6 and supported the U.S. dollar. At the same time, the ISM Non-Manufacturing PMI also rose to 58.1 points from the forecasted 55.0 and came in favor of the U.S. dollar.

However, USD bulls did not cheer the positive data, and the U.S. dollar remained under stress on Wednesday to post losses on the day.

On the US-China front, China’s ambassador to Washington said that China did not want to see a Cold War break out between China and the U.S. He suggested that both countries need to work to repair their relations that were under extraordinary stress.

Daily Technical Levels

Support Pivot Resistance
105.3100 105.6000 105.8800
105.0300 106.1700
104.7400 106.4500

USD/JPY – Trading Tips

The USD/JPY is trading with the bearish sentiment, especially after violating the 38.2% Fibonacci support level of 105.650. On the lower side, the USD/JPY may find support at 105.078 level, which is extended by the 61.8% Fibonacci retracement level. A bearish breakout of 61.8% level can drive more selling until the next support area f 104.200. The current market price of USDJPY is staying below 50 EMA, which extends resistance at 105.650 level. Let’s consider selling below 105.650 level today. Good luck! 

Categories
Beginners Forex Education Forex Basics

Staying in the Zone While Trading

When you get into the zone it is a fantastic feeling, everything seems to work and you have 100% of your focus on the task at hand, it is what people strive for, not just with trading but with pretty much anything in life, when you need someone done, getting into the zone makes it […]

When you get into the zone it is a fantastic feeling, everything seems to work and you have 100% of your focus on the task at hand, it is what people strive for, not just with trading but with pretty much anything in life, when you need someone done, getting into the zone makes it […]

When you get into the zone it is a fantastic feeling, everything seems to work and you have 100% of your focus on the task at hand, it is what people strive for, not just with trading but with pretty much anything in life, when you need someone done, getting into the zone makes it incredibly easy and quick to complete.

More often than not, we don’t actually know how to get into that zone, it just seems to happen, it’s not always something that you are able to force, people try, but that can often result in you trying too hard and thus missing out on the zone and even potentially making some mistakes from that strong desire to get into it.

Once you manage to get into it, it is important to try and stay in it, it can be quite easy to fall from that zone, you can be knocked out of it by someone else, you can get distracted or you can simply lose steam. So we are going to be looking at ways and things that you can do to help you to stay in the zone for as long as possible and so that you can be as productive as possible.

Confidence

There is something called recency bias, in the back of your head, your past experiences and your past results will be sat there haunting you, especially if the majority of your most recent events are negative and losses. Understandably, if you are constantly thinking of the negatives and your losses, your confidence will take a hit, and this is something that can be quite hard to get over. Unfortunately, this is a major killer for those that have entered into the zone, as soon as you have thought about your previous losses, you will be taken straight out of the zone and will be back at 1st base.

Confidence is something that needs to be built up over time, it can’t be created overnight and can take some people years to have real confidence in their trading abilities. It will come with time and it will come with consistency, the more consistent your results are, not on a day to bay basis but on a monthly basis, if you are consistently profitable at the end of the month and you fully understand your strategy (that there will be losses and wins) then those little losses along the way will have a much smaller effect on your confidence levels.

You can help to build our confidence yourself, things like keeping to a routine is a fantastic way, if you do something a lot of times and make it a requirement, you will become good at it which will, in turn, improve your confidence on that aspect of your trading. Simply being optimistic can help, for some, this is easier than it is for others, but setting targets that are achievable, putting up reminders of your successes can help motivate and give confidence as they are a reminder that you can be successful.

Control Stress Levels

Stress is something that can instantly take you out of the zone, stress can cause you to completely lose track of what you were doing and can cause you to focus on completely the wrong things. Being able to control your stress levels is far easier said than done, it is a powerful emotion that often shows its head if things are either moving too quickly or shortly after a loss or string of losses.

Stress can however also be used to your advantage, stress can actually make things exciting, it can keep you on your toes and can make you want to do more, that rush will keep you focused. The problem is that stress can very easily get the better of you, so you need to be able to keep your stress levels at an appropriate level, you cannot remove it, nor should you try, but have some measures in place just in case it tries to take over completely.

Avoid Distractions

Distractions are one of the main things that can take you out of the zone, think about how many times you have been concentrating on something and then you hear something on the TV that makes you focus on that, or someone comes in and tries to talk to you, or simply something shiny in the corner of the room catches your eye. It is important that you get an idea of what sort of things more easily distract you, each person can be distracted by different things so it is important that you get to know what it is that can more easily distract you.

Once you manage to work out what they are, being able to remove them from your trading zone is important, get rid of them from your zone. This does not mean that your office needs to just be a computer and a desk, you can have things in there, in fact, you need things in there that make you feel calm and make you feel comfortable, but the things that you have identified as your main distractors need to be removed. The worst thing that can happen when you are in the zone is for something simple and something silly to distract you and to take you out of that zone, as we all know that you won’t be getting back into it any time soon after coming out of it.

Preparation

When we talk about preparation, we aren’t just talking about preparing for each trading session, we are more talking about the preparation that you need to put into your overall trading. Your trading plan is one of the major parts of this, if your plan has been properly laid out and is clear, then it will be far easier for you to not only initially follow it, but to learn it by heart, doing this allows you to be able to focus fully on it, to perform your actions and analysis quicker and this can ultimately help you get into the zone as a more regular occurrence.

Being prepared also helps you to remain calm which can help to reduce the stress that we mentioned earlier in this article. Having everything ready, your plan, your workstation, and the room, can really make a difference when it comes to getting into the zone and then staying in it.

Getting into the zone can be difficult, but it can be even more difficult to stay in it for more than a few minutes, but if you have things prepared, you know what you need to do and you can avoid the distractions, you should be able to stay in it for a far longer period of time which can help you to become a fantastic and very successful trader, just remember that being in the one does not happen all the time and that you cannot force it, so just enjoy it when it does eventually happen.

Categories
Beginners Forex Education Forex Trading Platforms

Reasons to Take Demo Trading Very Seriously

It is incredibly important that you use a demo account, you have probably been told this a number of different times, and it is true, a demo account is vital for becoming successful. Spending a lot of time on a demo account is not something that you should be ashamed of and not something that […]

It is incredibly important that you use a demo account, you have probably been told this a number of different times, and it is true, a demo account is vital for becoming successful. Spending a lot of time on a demo account is not something that you should be ashamed of and not something that […]

It is incredibly important that you use a demo account, you have probably been told this a number of different times, and it is true, a demo account is vital for becoming successful. Spending a lot of time on a demo account is not something that you should be ashamed of and not something that you should shy away from, it is a fantastic learning resource and a place for you to test out new ideas without any real risk.

One of the main benefits to a demo account is that there is no risk to you, unfortunately, this also means that there is no direct reward, you do not get anything monetarily out of trading on the demo account, so after an extended period of time, it can become boring and so the motivation to continue using it in a way that you would potentially use a live account will begin to dwindle.

This is the time when a lot of people will decide to jump into a live account, simply because they are a little bit boring to use the demo account. Jumping into a live account at this stage, with this mentality will only lead to a blown live account. It is perfectly normal to start to feel bored or to lose that enthusiasm when there is no direct reward from what you are doing, this is where you need to be able to teach yourself and to push yourself to be able to be successful in the demo account and to get the most out of it before moving over to a live account.

So let’s take a look at some things you can do to help you take the demo account a little more seriously.

Creating a Loss or Forfeit

One of the main problems behind a demo account is that when you lose or make a mistake, there is no actual punishment, you will just shrug it off and move on. This is of course completely the opposite of a live account, where a loss, no matter how small can hit you quite hard. It can be hard to take a loss on a demo account seriously due to that very reason. Over a longer period of time, this will ultimately make demo trading a little boring as there is no risk or reward to it, so there needs to be a way to counter this.

One way of countering this lack of loss is to create a real-world penalty that you need to do each time that you make a mistake or that you make a loss. This can be something simple or you can make it a little more realistic. To make things simple, every time you make a mistake or a loss, force yourself to do some pushups or some jumping jacks, this will make you want to work hard to avoid having to do the exercise. If this isn’t for you, you can make it a little more realistic, every time you make an error or a loss, put some money away into a savings account, you aren’t losing the money, but you no longer have direct access to it. You are learning the same ideas of losing access to money with a loss, but luckily aren’t actually losing any real money.

Give Yourself a Mark

One thing that makes trading a little different to a lot of other professions is that when you learn it yourself, there is no grading system, there are no final exams to make sure understand what it is that you have learned or what you are doing, this can make things a lot more accessible, but it also means that there are no knowledge checks along the way, there is no way for you to know how much of what you have learned you have actually taken in and understood. It is important to have an understanding of what you are doing well and not before moving on to a live account, so you do not make the same mistakes on a live account.

Due to this, it is important that you are able to rate yourself, of course, if you just give yourself a rating out of 10 then you will most likely go a bit higher than you probably should, that is the natural thing to do. So, instead, you need to be able to grade yourself on a number of different things, so here are a few things that you could potentially look at after each week or months to gauge how well you are doing.

  • Do you follow your entry rules?
  • Do you follow your exit rules?
  • Do you stick to your risk management plan?
  • How many trades did you take or miss?
  • What is your profitability?

Grading yourself on these basic yet important aspects of your strategy will help keep you on track and will also help to show you exactly where you may be falling short., Work on anything that isn’t getting a 10, of course, you will never get a 10 in everything, so there will always be things for you to work on and improve. Until you are at a high rating for all sections, you should be remaining on a demo account.

Setting Targets

This can go along with the grading system that you created above, except this time we are not looking at just grading, instead we are looking at setting specific targets, and then potentially rewarding ourselves for the work we have done. So let’s imagine that we want to set a target, we want to have a 50% win rate at the end of the month, or we want a 5% balance increase at the end of the month. They are specific goals that we are able to achieve.

One way to make it a little more interesting is to allow yourself to give yourself a little reward should you decide to reach that target. It doesn’t have to be anything huge, it could just be a simple take away or a new pair of trainers. Setting this goal keeps you motivated to work hard on the demo account, but also rewards you for working hard.

Getting Feedback

Getting feedback on your demo account results and progress can give you a lot of validation around what it is that you are actually doing. Posting your results and account statistics on various trading forums will allow others to let you know how you are doing, this is a way of motivating yourself with the positive comments, or where people have offered some constructive criticisms, it is a way to improve the way that you trade.

Feedback can be powerful and it is a fantastic way to keep improving the way that you trade, but also gives you an insight into what others are doing, the demo account is the perfect place for you to try out any of the possible changes that the feedback has offered.

So those are a few different ways that can help you to keep taking a demo account seriously. Demo accounts are so important, they are a risk-free way to improve and learn, but that risk-free aspect also comes with no rewards, so it is important to find ways to help keep yourself motivated at using a demo account to keep it relevant and to help prevent you from jumping over to a live account too quickly.

Categories
Beginners Forex Education Forex Basic Strategies

What is the Forex 10,000-Hour Rule?

The 10,000-hour rule is a theory that was developed by Malcolm Gladwell in a book called Outliers. In this book he stated that practicing daily, weekly and monthly over the course of 10 years will equate to around 10,000 hours of practice, this is the magic number needed to be able to perform a task […]

The 10,000-hour rule is a theory that was developed by Malcolm Gladwell in a book called Outliers. In this book he stated that practicing daily, weekly and monthly over the course of 10 years will equate to around 10,000 hours of practice, this is the magic number needed to be able to perform a task […]

The 10,000-hour rule is a theory that was developed by Malcolm Gladwell in a book called Outliers. In this book he stated that practicing daily, weekly and monthly over the course of 10 years will equate to around 10,000 hours of practice, this is the magic number needed to be able to perform a task to the standard of a professional, Malcolm was not being specific to a particular skill, instead, he suggested that anything can be taught in this manner, so how does this apply to Forex trading?

We all know that practice is important, you cant get good at anything without it, but when it comes to Forex, is this based on time? If we take the example literally and suggest that you have now been trading daily for the past 10 years, you would have experienced some of the major ups and downs that have occurred from 2010, these include things like the US financial crisis, the European debt crisis as well as the most recent drop of oil prices into the negatives. The experience of going through and experiencing those major moments in financial history can give you a much better understanding of major events and thus can enable you to plan your trades and strategies better.

Those are just the major events, trading in more standard trading conditions can also give you a better-developed understanding of how the markets actually behave and how they like to move in trends and patterns, the timeframes, trading session differences, and which currency pairs you prefer. It will also help you to understand a little about yourself, what your risk tolerance is, and how your personality dictates some of your trading decisions. We would also hope that the 10 years of trading experience would help you to develop some of the better trading habits and to have worked out some of the more damaging ones.

So does the 10,000-hour rule actually work? It is impossible to say and it will also vary for everyone, how much and how quickly you pick up and retain information and habits. A quick learner or more technical-minded person may get to the performance and have the knowledge of a professional in 1,000 hours or less, someone that takes longer to learn may take 20,000 hours to learn what is needed. The 10,000-hour rule should be taken as guidance rather than as a rule, once you hit that 10,000-hour mark it does not magically make you an expert.

Within the world of Forex, there are far more important things to learn than just putting in the hours, just trading for 10,000 hours will not teach you a thing if you just contact output in trades with no reasoning behind them or no learning from your mistakes. Using your time wisely to develop a working strategy, to help remove those bad habits and learn new good habits to replace them is just as important as the time you are putting in.

While we cannot deny that becoming a professional or even profitable trader, in the long run, does take time, a lot of time, we can’t really put a figure on how much, that will come down to you, your dedication and your willingness to learn.

Categories
Beginners Forex Education Forex Basics

Overcoming the Challenges of Trading at Home

Trading from home, or just working from home, in general, can have its issues and it is something that a lot of people seem to struggle with. It is becoming easier and easier to trade at home, there are hundreds if not thousands of online brokers accepting retail clients, giving anyone with a computer, tablet […]

Trading from home, or just working from home, in general, can have its issues and it is something that a lot of people seem to struggle with. It is becoming easier and easier to trade at home, there are hundreds if not thousands of online brokers accepting retail clients, giving anyone with a computer, tablet […]

Trading from home, or just working from home, in general, can have its issues and it is something that a lot of people seem to struggle with. It is becoming easier and easier to trade at home, there are hundreds if not thousands of online brokers accepting retail clients, giving anyone with a computer, tablet or phone the opportunity to trade in the forex markets.

While it is fantastic that it is becoming so accessible, being able to trade from home does come with some downsides, both to you as an individual, your bank accounts and also your ability to focus on the job at hand. So we are going to be looking at some of the issues and challenges that people face with the ability and procedures of trading from home.

Access to Your Money

Trading from home rather than in an office has the downside that you are in your own space and anything that you are going to be trading will feel a lot more personal, due to this, it is often harder to differentiate between your own money and the money that you are using for your trading. It is very easy to get sucked into the idea that adding some of your own money could help you increase your profits. This is a dangerous game to go down, you need to be able to treat trading like a business, even when at home, this way you can protect your own money and will help you stop yourself from adding any of it to your trading funds.

Create an Office Space

When working or trading from home, it is paramount that you create a working space, an office space. It may sound like it defeats the point of working from home, but having that dedicated office space is important for a number of different reasons.

Having that dedicated space will allow you to differentiate between home life and work, it will allow you to remove a lot of the distractions that would otherwise be there if you decided to trade in the front room in front of the TV. Ensure that the office area has all your reading materials and everything that you need to keep you going and to get you started. Do not include things that could distract you, that would not be beneficial to your trading abilities. Remember, you are at home, but you are also working (or trading in this case).

Get Rid of Distractions

Working in an office is perfect for doing work, it has been designed in such a way that the number of potential distractions is kept to a minimum and they are able to completely remove some of them. When trading at home, you, unfortunately, are not in such an environment and so there may well be plenty of distractions still around. You can get rid of some of them by using our above tip of creating a dedicated office space, this will enable you to have an area of your house which is much more like an office environment.

Things like TV, people, and others are all there and available for you when at home, some of it will take a bit of self-discipline to stay away from, in terms of people though, make sure to inform them that you will be working during certain hours and so they should not come in and distract you. Give yourself set working times and set break times, use those break times to get on with whatever distractions that you are interested in, once your break is over, back to work until you allotted breaks or end time.

Take Breaks to Socialize

When you are at home you are probably socializing with those that live with you or over the internet, however, when working and trading at home we have already described how you need to cut that out during your working hours. So when you do have breaks, either before, during or after work, you should certainly use these times to socialize, it will keep your mind healthy and stop you from going mad from loneliness, so use those opportunities to socialize as much as possible.

Set a Schedule

Working and trading at home is fantastic, you can trade at whatever time you want, take a break whenever you want and if you feel like it, not trade at all. Wrong! If you want to trade and home and still be successful, you need to be able to treat it like a job, you need to set yourself some fixed trading and working tikes and then stick with them. Set a time that you will start in the morning, when your brakes will be and when you can finish in the evening and then tick to it. Of course, there may be things here and there that you need to leave the desk for, such as someone at the front door, but apart from that stick to these times.

This will teach you to stay disciplined and dedicated to trading, it will also help you adjust if you ever go back to the office. If you start to do it less and less, your dedication and motivation levels will drop.

Do Not Work or Trade Too Much

One thing that a lot of people struggle with is managing their time. When you are trading from home, it is very easy to get sucked into working longer hours or even loading up the charts in the middle of the night. This is something that you are going to need to train yourself not to do. It is not healthy to spend every waking minute on the charts and it is not healthy to wake up in the middle of the night to check out the charts. You need to be able to separate your social and home life to that of your working life. As soon as you clock out, that should be it for the day, it can be very tempting to want to just jump on for 10 minutes here and there, but that 10 minutes could very easily lead to hours. Once you have finished for the day, you are finished, there is no other way of keeping that healthy home and work balance.

Go Outside

For a lot of people, the majority of the time that they go out are part of their commute to and from work, when you work at home, you are missing out on that commute and that opportunity to go outside. Due to this, it is important that you are able to force yourself to go outside, even if it is just a 10-minute walk or to go shopping, getting out will really benefit your health and it will also help clear your mind of work. It is a way to completely disconnect from the work that you may not be able to do should you just walk from your office space to your living room.

If You are Sick, You are Sick

One thing that a lot of people seem to forget is that you are still working and still trading, even if it’s just for yourself. If you are not feeling well, then you need to take a sick day, the markets won’t be going anywhere, so if you do not well do not force yourself to trade. You are far more prone to making mistakes or taking shortcuts with your trading because you do not feel great or you are feeling too tired. If you are sick, take the day off, take the time to recover, when you come back you can then fully focus instead of trying to trade through the sickness and making mistakes.

Maintain Discipline

Staying disciplined is vital to working at home, this is not in regards to simply avoiding distractions and working. If you work for someone else, you will most likely have some targets that you are required to meet. What happens if you do not meet them? There is probably some sort of performance review if you do really well there may be some kind of reward. You need to keep this mentality when at home too. If you feel that you are not doing well, evaluate what you are doing, and look at how you can improve. If you are doing well, give yourself a reward, a little time off, or a new pair of shoes, something that you would be looking forward to. What is important is that you are constantly evaluating what it is that you are doing so you can keep your productivity and performance levels up.

So those are some of the things that you are able to do that can help you to cope with the change to working from home. It can be a very difficult change for some and a change that can take a long time to adapt to. You need to show a lot of self-discipline in order to be successful with it and strong-willed in order to stick with it. For many, it would be a dream come true, but just take it seriously, plan your days and work times and working from home can give you a lot of freedom that so many people look for.