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Everything You Need To Know About SWAP Curves (Swap Rate Curve)

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Swap curves are charts that describe the bond between swap rates and constant maturities. It indicates the return on swap on several maturity dates. The curve can help examine the trade equal to the yield curve of the bond. The curve depicts similar values. Swap curves are two-dimensional curves drawn against the X and Y-axis. The swap values plotted on the y axis, whereas the maturity rates plotted on the X axis. The slope to this curve is upward movement. When the long-term maturity rates are usually higher than short-term maturity rates. Swap markets are considered strange to individual investors and friendly to market followers. Besides, swap curves play a significant role in the wide-ranging economy. 

The swap rate curves are often drawn together with the yield curve of saving bonds. There are times when two curves coincide, but they diverge from each other. If swap curves are above the yield curve, it represents a positive swap spread. Swaps curves are widely used in financial markets. 

When a person borrows money from an institution, for example, a bank, they pay interest for the amount. The interest rates applied can be either fixed or floating. There are times when companies prefer floating rates over fixed rates or vice versa. Both the parties here enter into a contract known as interest swap rate. Swap curves used the same as yield curves. It helps in identifying the various features of time and the swap rates. Swap rates plotted on the y-axis, where maturities plotted on the x-axis. The swap rates are different for a different time duration, such as a 1-month or 6-month interest rate and so on. Swap curves help the investor identify the possible return on different maturity rates. The maturity date and interest swap are proportional. The longer the maturity rate greater is the rate of interest. Swap rate curves for the long term are upward sloping compared to short-term swap rates. Swap curves in the financial market use fixed standards for determining fund rates. They include government saving bonds, mortgage securities, etc.

These curves also help in determining the average market perception of fixed income. 

 

How To Trade With Interest Rate Swaps And Other Derivatives

 

An interest rate swap is a copied contract in which two parties agree to exchange outflow of future interest. The payments here are dependent on a specific principal amount. Often, swap rate swap includes fixed or floating interest rates. Point to note that interest rate swaps are not traded in public exchange.  Interest rate swaps usually include a future set of payments based on floating rates. Understanding the concepts behind fixed and floating rate loans is essential to understand the interest rate swaps. A fixed-rate interest, the interest on the loan, or any other security, remains unchanged throughout the entire term of the contract. At the same time, the floating interest fluctuates during the term as the whole of the agreement or till the maturity of the contract. Floating interest rates are preferred for interest swaps, on the fundamental guideline with interest rate depending upon LIBOR. LIBOR used leading banks to take part in interbank market charges for short-term loans. 

LIBOR acts as fundamental for determining the various types of finances charged by the lenders. 

The only thing that gets swapped here is interest payments. The interest rate swaps were earlier determined as derivative contracts. Here the party doesn’t take ownership of the debt from other parties. They only agree to pay the difference in the loan amount as per the contract. The parties don’t pay the entire interest on the due date, nor do they exchange the debt asset. This is the only notable difference in the due swap contract. A swap interest rate contract determines the terms and conditions of the agreement. This includes the interest rate to be paid to both the parties and the payment schedule. The contract also states the start and the maturity date of the swap contract. And the terms both parties need to follow till the agreement matures. When parties enter into a swap rate contract, one party gets risk protection from fixed interest. While the others enjoy the floating rate of swaps. We can say that one party reaps financial profit while the other goes through financial loss. 

 

If the interest rate rises in the swap agreement, the party receiving floating interest incurs loss. In contrast, the party receiving the fixed interest will incur profit. If the interest rate falls, the fixed rate will return profit. Whereas the party receiving the floating rate will observe a downfall in the interest. Interest rate swaps are the type of derivative that will benefit both parties in many ways. Yet, there are also risks involved in the swap rates. But, we can say that the risks involved are low for large financial parties or companies. If any of the members involved in the contract fails to meet the obligations, then it will get difficult for the other party to collect the interest rate swap. The contract will be enforceable in the above condition, but the legal process will have many hurdles in its path. 

Swap rate interest deals with the unpredictable nature of the floating interest rates and defines the risk involved for both parties in the contract. 

 

Who Are The Market Makers In Swaps Curves?

Market makers in swaps have been a business with significant change. The increasing cost and complexities have helped the market makers simplify their business. They have provided automated high volume and low prices in the industry. While making prices, market makers consider the basis for paying/receiving a fixed amount. 

The prejudices have given the core interest rate positions about customer care. They also get a colored way of their view on the yield curve. 

The market maker here will need to offer prices in response to RFQ to earn or offer spread. The marketers will find the hedge by using treasuries in the large market until they find the swap hedge. 

The market makers here are worth attracting by changing the bid offers. 

 

What Are The Pros And Cons Of Swap Rate Curves

The swap market offers various advantages, and it doesn’t have government regulations. Hence, it is more comparable across different markets. They provide various tax benefits to both domestic and international investors. They also offer increasing market liquidity with narrow bids of the market. 

 

The supply here depends on various parties that wish to get into the contract in a particular period. 

The exchangeability of swaps between the parties prevents the flow of similar cash from higher rate trading. Thus they help in increasing the efficiency of the market. Swap rates correlate with the yields through other fixed incomes. It includes debt from agencies, securities-backed mortgages, debt by corporate agencies, etc. 

The swap exchange serves as a rough indicator of market risk in the banking sector. A fixed swap rate here equates the present value of the swap to zero, making the government curve unreliable compared to the swap curve. In this respect, several mismatches are here; hence, the swap rates need to be quoted in the swap market. 

To sum it up, we can say that the swap market offers various advantages compared to government market curves. They serve as a better tool for pricing and hedging fixed interest rates on products. Hence making them a more efficient mechanism for hedging and pricing. 

The disadvantages of swap rate curves are a kind of market risk, as they use a grasp amount that requires small payments. This is why there is a risk of contacting other derivatives. This puts them at more risk, as they do not worry about money paid to the derivative when the market goes against them. 

 

What Are The Various Types Of Interest Rate Swap Hedge?

 

Swaps and derivatives are the tools used to represent money exchange between two parties over a certain period. This offers enormous flexibility in designing the contract with mutual understanding. This flexibility involves many variations serving various purposes. 

 

  • Currency swaps: This helps in the capital change in the currency market. They also surpass all other needs. They offer beneficial ways to hedge risk in the forex market.
  • Commodity swap: These trades are usually made between two companies exchanging natural products. That is further used to provide finished products. Here the profit from the finished product might get differentiated if they are not synchronized with the price of the raw materials used. This kind of swap allows a receipt of the commodity price in comparison to the fixed cost of the product.
  • Credit default swaps: they offer insurance to third-party borrowers. They work as insurance to protect the lenders and borrowers from the risk of default.
  • Zero-coupon swap: these are much like interest swaps. They offer flexibility to any one party in the transaction. They do not allow the flowing of a fixed rate of cash. Instead, they enable paying the money once at the end of the swap contract.
  • Total return contract: This benefits the investor with owing without the actual ownership. This contract is between the payer and the receiver with the agreed interest rate to be paid on exchange.

 

What does the forward LIBOR curve represent?

 

The LIBOR curve represents the expectation of the market for future fixing derived from observable trade data. This comprises Eurodollar deposits and futures and the swap rates of LIBOR. They help in providing secured overnight financing rates. These represent the interest rates based on future contracts. Both the curves in the graph represent expectations of the national markets but with a term rate. These curves are often helpful in forecasting and underwriting floating rates. 

 

What’s Next

Swap contracts can be customized as per the need of the parties involved in the agreement. They also help in identifying interest rates with different maturity rates. These are fundamentals used to determine the fund rates. 

 

Also, Read Some Fascinating Information About Best Forex Brokers For Beginners

 

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Learn to Trade

What You Need to Know About Renko Chart Forex (Renko Trading Strategy)

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What You Need to Know About Renko Chart Forex

Renko charts show the fluctuations of asset prices in the Forex market. They comprise blocks of red and green, of the same size, and each block is either higher or lower than the one before it. A red or black bar represents a drop in price, a white or green bar an increase. Renko charts are a relatively easy way to assess the market and make spotting trends easier, allowing for a Renko trading strategy to be developed. They are often chosen for the clear, uncluttered view they provide of the market, and they can be used alongside many other strategies and methods, as well as being customized to suit different trading styles.

When setting up a Renko chart, the trader will choose the size of the brick, by setting the preferred price point movement from the closing price of the first brick. For example, if a user chooses a 25-brick size, then the closing price needs to be 25 price points more or less than the closing price of the last brick in order for a new one to form on the chart.

 

 

A trader can set the time frame for a Renko chart for either a few seconds or a month. As well as identifying trends, Renko charts can also act as a useful trailing stop-loss tool. In general, Renko chart Forex strategies offer the trader more opportunities to take up positions and to try different approaches by altering brick sizes.

 

 

Which Online Forex Trading Strategies Offer Renko Charting

If you’re considering the best Renko strategy to deploy, the options below could be a good place to start.

 

  1. Swing Failure System
    Renko charts can be used to spot swing failure trends in the forex. A swing failure is an incident where a price does not make a new high or a new low, and spotting this early can give a trader advance warning of an upcoming shift in market direction. This Renko strategy is relatively simple to implement, and its main requirement to execute well is patience, and the risk-reward setup is favorable. There is also the potential to male significant levels of profit.Configuring your Renko chart for smaller brick sizes is most suitable for this system, in order for a trader to not be faced with a delay for an entry to be triggered once trading conditions have been established.
  2. Equidistant Price Channel Strategy
    There are a number of different variations in terms of how this strategy is used, but its key component is using a Renko chart to analyze price interactions in connection with equidistant price channels, in conjunction with buy and sell signals. This is a short-term strategy concerned with counter trends; it is similar to price action trading strategies and offers good opportunities for traders who have the patience to wait for the optimum moment to trade. Due to this, traders will need to be able to keep a close eye on the market in order to take up a position at the point that the conditions become favorable. 
  3. Moving Average Crossover System:
    This is one of the easiest strategies to learn, and so is ideal for Renko chart beginners. The basic idea is to use one moving average point to track a shorter-term period while another tracks a longer-term period. It’s a simple yet effective way to spot market trends, and one of its biggest advantages is that, due to its set-up, any losses incurred are likely to be small.
  4. Engulfing Bars Trading Strategy:  By enabling the ‘wicks’ on a Renko chart, traders can view the high/low price and any price rejection clearly. When buying, traders need to identify a significant downtrend or decline in a market, and then watch for the formation of a bullish engulfing bar in the opposite direction. Once this bar is closed, a trader can either place a pending order at the closing price or use the opening price of the new bar to create a pending order. After setting the take profit, the remainder of the position may be trailed, or the trader may prefer to exit completely.

 

 

When traders are selling, they need to watch for a new uptrend or rally in the market. Once this has been identified, it is the formation of a bearish bar going in the opposite direction that needs to be sought.  Once found, a trader will need to enter at the bearish engulfing bar’s close, with profits set to one Renko brick of the size being used. An alternative option is to enter a pending order at the previous Renko bar’s opening position.

This strategy can be used to good effect with Renko price action trading methods.

 

Which Timeframe is Best for Renko Charts?

Choosing a timeframe will largely depend on your trading strategy, and there may need to be an element of trial and error at first to find the method that suits your trading style best. The choice will also be affected by your lifestyle and the amount of time you have available to monitor the market. 

Smaller boxes relate to smaller timeframes: therefore the user can expect to see increased trend changes and, as a result, an increased number of trades. Similarly, larger box sizes mean longer timeframes, and thus fewer trend changes and fewer trades.

 

If your strategy incorporates watching for trading signals, then a longer timeframe won’t be suitable; traders will, in this case, mostly opt for very short timeframes, even as little as a minute. However, if you are concerned with analyzing patterns and market movements on a wider scale, then a longer timescale, such as a daily chart, maybe the best option.

 

 

What Are the Pros and Cons of Using Renko Scalping?

A Renko scalping strategy is a good fit for traders wanting to make multiple small profits over a short time period. Traders will need speed and the ability to read the market and their Renko charts accurately and have a sound knowledge of the principle of divergence in trades. To begin scalping, traders need to first choose their currency pairs and then set their timeframe. Positions can change very quickly, and for a trader to be successful with a scalping strategy they must be able to hold their nerve and react at speed. It can be intense, and traders need to consider their individual personality as well as preferred trading style when it comes to deciding whether this is the right strategy for them to deploy.

The pros of a Renko scalping strategy include:

  • The system is versatile and simple to use
  • Following the system correctly usually results in a 1:2 risk/reward setup
  • It’s a great way to profit from volatile or slow markets
  • Incorporating money management strategies to run alongside scalping can reduce the risk of losses still further
  • It can be tailored to fit multiple trading styles
  • Small price movements are not included, so the chart is clearer to read
  • Support and resistance levels can be spotted
  • Renko calculators for brick sizing are available to identify the best option for this strategy

The cons of Renko scalping are:

  • You need to have a strong knowledge of the markets and the fundamentals of trading. This is not necessarily a good strategy for beginners
  • Not as suitable for those traders preferring longer timeframes
  • In some systems, if pending orders aren’t triggered, they are deleted
  • Scalping is not an appropriate strategy for traders who may only be able to check the market intermittently throughout the day – positions and movements tend to happen and need to be responded to, quickly
  • Renko scalping can be viewed as foolproof: it’s not, and losses can accumulate, especially for the novice trader.
  • Less market information is viewable to analyze on a Renko chart

 

How Can Renko Charts Be Used for Trading and Investing

Using Renko charts in day trading strategies tends to work most favorably; as well as providing a way to spot emerging market trends, they are also helpful in identifying breakouts, reversals, and areas of support and resistance. 

Traders first of all need to set the size of their bricks by establishing price point change and timeframe parameters. The ATR (Average True Range Indicator) can also be used in conjunction with a Renko chart, and this is discussed further below.

Identifying the level of support and resistance (a measure of how far a price has dropped or increased) in the market using a Renko chart can help a trader to decide the best point at which to buy or sell. Short trades can be capitalized on near resistance, while near support is the optimum time to invest.

 

 

The charts are also a tool to spot breakouts occurring in a particular market so that a trader is alerted when to, for example, take a long position in the expectation of an identified trend continuing its upward trajectory. Graphic pattern systems can also be successfully used to trade with a Renko chart by alerting the trader to reversal patterns, double stops, and double bottoms.

 

What is the Best Combination of a Technical Indicator with a Renko Chart?

An ATR technical indicator is widely viewed as the best type to use in conjunction with a Renko chart system, and it is typically set to a fourteen pip value/timeframe. Rather than staying static, the system will automatically change the brick size as the ATR value shifts with the market. Although this means that traders will need to frequently redraw their charts, the advantage of using ATR as a Renko indicator is that it gives a clear and concise view of the price ranges of an instrument.

This approach differs from the fixed box system, in which the size of each box remains constant for the duration of the Renko chart. Some traders prefer this method, although, for many, using a static small box size to analyze trends can be problematic as the chart then becomes sensitive to tiny price point fluctuations, making it more tricky to read and significantly more difficult to identify wider trends.

 

Another technical indicator that can be deployed to good effect with Renko charts are Bollinger Bands, which act as an effective trend signaling tool. Bands can be customized to identify fluctuations in market volatility, and trend changes concerning support and resistance levels. 

What’s Next?

If you’re interested in using a Renko trading strategy, then your first port of call needs to be finding a good quality Renko charting platform that suits you and your trading style best. Charting the bricks is a key element in all strategies incorporating Renko, and there are various platforms online to choose from.

Next, choose the instrument you want to trade – in this case, forex, but Renko charts can also be used to trade in stocks, futures, or commodities.

The next stage is configuring your chart to your preferred specifications, as discussed above. This will largely depend on the type of trading strategy you want to execute, and your preferred level of risk. You’re now ready to consider how your chosen trading strategy will sit alongside your freshly configured Renko chart. A key element to think about is ensuring your system is focused, in order to get the best results, so bear in mind your indicators, and perhaps experiment by analyzing price movements based solely on the Renko boxe fluctuations on your chart.

Lastly, and most importantly, know when to continue trading, and when to bow out of the game. It can be easy to get swept up in the momentum of a few successful positions and end up investing – and possibly losing – more than you meant to. It’s a great idea to have a target profit amount that, should you reach, signals to you to cease trading for the day, as well as a maximum loss figure that, once reached, again, means that you leave the table. This can help protect your gains and mitigate any potential losses.

 

Also, Read Some Interesting Information About Best Forex Brokers For Beginners.

 

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What Do You Perceive By Price Action And Price Movement Forex Trading? (How To Read Price Action)

by admin
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All Financial Markets make the data on the movement of market prices over various time duration – and this data is stated on price charts. Knowing what price action is in Forex(F.X.) is essential if you are a currency trader. Price action trading is the discipline of making all your decisions in trading from a clear price chart. This implies that there are no lagging FOREX indicators present. There are some oddities to move the averages which may help to determine the support areas and dynamic resistance. These are also helpful with the trend direction. We will take a closer look at price action and what it represents in Forex. We will also explain the basic rules and approaches of price action trading. Put, price action is the footprint of money. Financial markets come where the money is commerce between market participants – and this exchange of money leaves a trail. Take into account that price charts reflect the beliefs and actions of all market participants, either human or computer, trading a market during a particular period. Those beliefs are emblazoned on a market’s price chart in the form of Forex price action.

Need to to define and trade from the clues left behind from price actions. It makes its trail across price charts.

Need to learn price action Forex trading. This will help to amplify your trading arsenal in general.

 

How To Trade Price Action With Mastering

 

So, moving on to mastering price action, there are many things we need to understand. The first one is to understand the principles behind Japanese candlesticks. We then need to recognize price patterns, a collection of candlesticks—these technical structures that exist in the markets. The price moves from those structures also help in the breakdown of those structures.

It is vital to master price action, and you need to develop a price action method. This is the way by which you can look to enter and exit these markets. You need to be in the market to gain the necessary confidence and cut hesitation, as these hesitations can prevent you from getting into those trades. They also try to achieve that all-important experience by learning from each technical setup. By acknowledging how prices behave in those situations on many occasions. This is what will give you the ability to master price action okay. This is important to consider, as it focuses on the confirmation that you actually need to make a trading decision. What will be all-important for your ability to trade these levels, and of course, okay. So, looking to master the price action trading strategy itself.

 

 

Who Are The Market Makers In Price Action Channel

 

Market makers help financial markets by maintaining the efficiency of their operations. This makes market-making important for financial markets. If we take out market makers, there would not be many transactions taking place in the market.

 

This is why the market makers have been an integral part of market infrastructure. We can expect that their influence will continue as long as we trade financial assets. With Market Making Strategy, the makers perform from both sides, i.e., buying and selling in the markets. This way, they create the market and earn profit by selling at a higher price than the market price.

Coming back to the topic, Market makers also help in reducing price volatility. This further leads to fair pricing of the assets.

For example, any given asset has the difference between the best bid and best ask, known as the bid-ask spread. Here it is important to note that low liquidity in the markets leads to the vast bid-ask space. To drop the wideness in the bid-ask distance, market makers jump in and provide liquidity to the needs.

 

 

Does Price Action Works On Trading Futures

 

The step for futures trading uses the price action when it comes to make a contract with you and the trader.

A futures contract fit for day trading must fully fill two criteria. It should be volatile as market movements are the source of our trading profits. A dead market does not offer much room for day traders to profit. It should also be liquid. In the market, the slippage and the bid-ask spread will increase our trading costs. A zero-day trader looking to capture small profits must cut these costs.

 

Beyond volatility and liquidity, you should also consider your available time. While many futures markets trade round the clock, they are active during a particular time of the day. Look for operational needs during the period you are free to sit in front of your trading terminal.

Each futures contract has its peculiarities. For instance, each market has a typical volatility pattern throughout a session. Also, the news events that affect each futures market vary. You will need time to research and understand your choice of the futures contract. Do not be too quick to switch from one to another.

 

 

How To Trade Price Action From Confluent Points In The Market

 

The next major step in trading P.A. is to draw in the key chart levels and look for confluent levels to trade from. The chart below shows a self-explanatory and confluent pin bar setup formed in the USDJPY. This has also kicked off a considerable uptrend higher.

Note that the pin bar trade setup rejected a fundamental horizontal support level until 50% retrace significant move. Thus the pins bar had “confluence” with the surrounding market structure.

Confluence: A point in the market where two or more levels intersect each other, thus forming a ‘hot point’ or confluent point in the market. Confluence means ‘coming together of people or things;’ (the picture to the right shows two rivers coming together). So, when we look for confluent areas in the market, we look for places where two or more levels or analysis tools intersect.

All economic variables create price movement, which is observed on a market’s price chart. Whether an economic variable filtered down through a human trader or a computer trader. The training that it creates in the market will be visible on a price chart. Instead of analysing a million economic variables every day (this is impossible, although many traders try), you can practice trade price action. This trading style allows you to analyse and make use of all market variables by reading and trading from the P.A. trail they leave behind in a market.

 

 

What Does The Action Chart Represent

 

Price action can be seen and interpreted using charts that plot prices over time. Traders use different chart compositions to improve their ability to spot and analyse trends, breakouts, and reversals. Many traders use candlestick charts since they help better visualize price movements. This helps display the open, high, low, and close values in the context of up or down sessions.

  • Price action generally refers to the up and down movement of a security’s price when plotted over time.
  • Different looks can apply to a chart to make trends in price action more obvious for traders.
  • Technical analysis formations and chart patterns derived from price action and specialized analysis tools like moving averages calculated from price action. Thus projects into the future to inform trades.

 

Candlestick patterns such as the Haram cross, three white soldiers, and engulfing patterns are all examples of interpreted price action. There are many more candlestick formations that generate off-price movement. This helps to set up an expectation of what will come next. These same formations are also applicable to other types of charts, including point and figure charts, box charts, box plots, and so on.

 

Final Thoughts

Price channel trading is one of the simplest and most effective ways to determine ideal buy and sell points on the chart. The best part is you don’t even have to draw it. Most trading platforms allow you to select it from among their list of trading indicators.

That means it is not a one-all, be-all tool, so be sure to use other technical indicators to predict market direction. This also confirms underlying trends before placing your buy or sell orders.

It doesn’t matter which Trading Strategy or system you end up using. Reading and trading from price action will recover your progress and success rate even if you don’t focus on trade price action strategies. If you are trading forex successfully, knowing how to manage with price action and use price action Forex trading indicators is imperative. You need to understand all the price dynamics within the markets, and there is no way around it.

 

Also, Read The Same Information About What Is Forex Trading And How Does It Work Forex Trading For Beginners.

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Everything You Need To know About Moving Average (Moving Average Method)

by admin
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Moving averages are high-tech indicators that are mainly used to describe the handling trend by forex traders. It uses access to the prior performance of currencies. The moving average calculation is to smooth up the price by keeping a constant update on the average price. The tool helps create total financial security data points over a certain period of time. It also helps in splitting that with current data points to get a moving average. The tool is so named because it recalculates the average point continuously based on current data. The forex trader can use the moving average without any extra technical device to get valuable results. 

We can say that moving averages are an utterly flexible tool, i.e., it allows the user to choose the time frame accordingly while calculating the moving averages. The prevalent timespan used while calculating moving averages is 15, 20, 50, 100, 200, 500 days. A shorter time duration helps create more sensitive data as compared to a long time duration to the price change.  Investors can use several time intervals for calculating the average based on trading objectives. The moving average can help you figure both long term and short term depending upon your investment strategy.  

It would be false to say that there is a particular timespan to set up a moving average. You can determine the moving average by experimenting with different time strategies and then opt for the one which fits your requirements. We must remember, predictions in the stock market are not easy or simple tasks. It can be said that future movement prediction is equal to impossible for a particular stock. But using technical analysis and research about the stock can help you predict movement in the stock. 

A rising moving average determines an uptrend, while a turn down in the average values indicates the downtrend. Moving average convergence divergence(MACD) is used by the trader to determine the relationship between both the moving averages. It is usually calculated by reducing 26day moving average to 12day moving average. A positive MACD indicates that the short-term average is above the long-term average, which “is an indicator of upward movement. While the condition of the average term is vice versa, it indicates a downfall in the momentum. Traders also look for zero movements. A move above zero is a condition to buy, whereas below zero is a condition to sell. 

 

How To Trade With EMA Trading Strategy?

 

The exponential moving average is one of the oldest techniques for the analysis used by thousands of traders. Here you will get the step-by- step guide for calculating EMA trading strategy. EMA is used primarily to identify the leading trend in the market. It is also helpful in providing assistance and an unyielding level for the execution of the trade. 

The EMA is a moving line on a price chart that uses mathematical formulas to sort out price action. It helps in determining the average price over a definite period. EMA stresses more over the current price. This is why it reacts fast to changes in the price data. EMA helps in reducing the crash and uncertainty in the price action. It also helps in settling the price and disclosing the trends of the market. It sometimes also reveals the factors that go ignored from our eyes. This is why EMA is considered a reliable and accurate measure to forecast future changes in the market. 

There are three easy steps for the exponential moving average formula and calculation of EMA. The procedure to calculate EMA uses a simple moving average(SMA) as the base to calculate the value for EMA. To calculate SMA, take the total average time and divide that by 20. We would require a multiplier that focuses on the current price 

The moving average formula brings together all these values to determine the average moving. 

The EMA formula for 20days is:

Initial SMA = 20-period sum/20

Multiplier = 2/(time period+1) 

EMA= {close – EMA(past day} * multiplier + EMA(past day)

The general rule for price trade when rises above indicate an upward trend which means a higher price. Likewise, when we are trading below, it represents a downward trend. 

We would suggest you write down the rules on a piece of paper to become a better trader and exercise the learning curve. 

 

What Are The Examples Of Moving Averages?

 

Moving average is calculated in two different ways: simple moving average and exponential moving average. Listed below are ways by which a simple moving average can be calculated by assuming a specific price for over 15 days: 

Week 1: 20 24 21 25 26

Week 2: 25 27 24 28 29 

Week 3: 28 30 27 29 28 

An average of 10 days’ moving price will be calculated at the first point, while the rest will be added on the 11th day to calculate the average.

Method Of Moving Average Is Used For Measurement Of Trend When

 

A moving average is used to identify the market trend by calculating the price over recent times. By considering the average price over the years, the moving average helps identify and smooth out the market price crash on an everyday basis and ignore the fluctuations in the market. 

 

There are two factors considered while calculating the average moving:

  • The type of average moving 
  • The number of periods to be included while determining the moving average. 

What Do You Understand By The Best Moving Average For A 1 Minute Chart?

 

Forex trade strategies usually determine 1-15 minutes of time strategy. However, some traders prefer the 60seconds approach instead of waiting for 15minutes. There are marketing strategies that help determine the early strategy in the trading process. Here it is essential for you to look after brokers with zero commission and competitive spread as per the trade as we are considering short-term duration. We must cut down expenses on them as much as possible. 

There are traders who prefer an open and close strategy manually as a valuable asset in determining the market positions. We don’t guarantee that you will achieve a high ratio, but you can reach a 2-3 times higher value of the risk amount. The strategy can effectively be used in determining fair pay-outs. 

Technical indicators use a 50days EMA in coexistence, with 100days EMA as a famous trick to use a one-minute chart strategy. Some traders prefer variational oscillators to determine good entry points. 

 

What Are The Pros And Cons Of Moving Average Forex?

 

As discussed earlier, moving averages are of two types: simple moving average(SMA) and exponential moving average(EMA). We were discussing the advantages and disadvantages one by one. 

Advantages and disadvantages of simple moving average(SMA)

 

  • It is the least civilized way to determine the moving average used even for beginners.
  • The method is not prone to fluctuations, which means the ups and downs in the currency price do not affect the tool.
  • It is one of the most authentic tools for determining market variations and assistance.
  • It is the best tool for beginners.
  • It helps remove disturbances in the price chart.
  • It gives significance to past price movements.
  • It is a non-practical trading tool for beginners.

 

Advantages and disadvantages of exponential moving average(EMA)

 

  • EMA’s provide less barricades and a better view of the market trend.
  • It is a better tool for determining the recent price changes.
  • Because it considers the recent highs and lows, the tool is helpful for short as well as day-term investors.
  • The tool helps determine the moving average even if the market is in a reversing trend.
  • It is an easy-to-use tool as compared to others.
  • It doesn’t determine values for every trend.
  • You need to be aware of the wrong signals from EMA due to the recent false price fluctuation created in the tool.
  • EMA requires you to observe previous price points to make a better decision.

 

What Is The Simplest Way To Compute The Average Moving Method?

 

Simple average moving is used by traders and investors widely. It is used to determine and calculate prices such as open, high, low, shutdown, etc. It’s a tool that uses past prices for a particular time. It is used as an indicator to buy or sell for traders and investors. They also help you determine the support and unyielding prices of the stock it is supposed to trade. 

 

SMA’s set parameters to determine the average stock price. Traders also use SMA to get the optimistic and despairing price action. 

You will have to create the indicator using the prior price data plotted on a chart. 

 

What’s next?

 

To sum it up, if you are looking for a better tool to analyse market strategy and price charts, you should switch to moving average. It makes everything easy for the traders; even if you’re a beginner, you will find the tool easy to use. 

Although you can use the trading tool on certain assets combined with these tools that help you determine the trading framework, you might need to complete homework before investing if you do not have a professional broker to help you out. 

 

Also Read About Fascinating Knowledge About What Are Investment Formula Macroeconomics Investment Formula Macroeconomics

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Learn to Trade

Everything You Need to Know About Forex And Pin Bar Trading( Pin Bar Trading )

by admin
written by admin

As the largest smooth market in the world, Foreign or forex exchange entices many of the hawk traders. Every person enters the market for only one thing, which is profit and to make money. This trading is an easy yet impressive trading strategy that offers excellent risk-reward ratios.

Technical contrast somewhat from the old days. The early 1900s saw most of the trading theories trying to understand crowds’ behaviour. This pin Bar Compromise is a price action motif. They always show a certain level of the market price, which may never get rejected. Once the pin bar’s custom formation is set, it is plain from the peer with any chart. How beneficial this masquerade can look over how you can take the edge of the pin Bar strategy. This is what the evolution of pin Bar with the lexicon of changing market conditions always has to ask for. 

The Pin Bar itself has two types which include: the long Bar and the other is Small Bar. On the kind of large Bar, it has “wick,” “tail,” or “shadow,” while on the other hand, in small bars, it has a tiny “body” or “real body.” This Pin Bar can be found in any stripped-down, candlestick chart or “naked” bar chart. By using candlestick charts, you can determine the suitable and easy charts of the trader. Most of the traders guide the standard version over the candlestick bar charts and pay the auction price for a better impression.

 

How To Trade A Pin Bar As A Continuation Pattern

 

Needless, the price breaks higher. Trading the pin bars as continuation patterns follows the same steps as before:

  • Measure the distance between the highest and the lowest point in the pin bar.
  • Go long at the top of it.
  • Place the stop loss at the lowest point in the pin bar.
  • Target smallest 1:2 risk-reward ratio.

In strong trends, the market deviates from the main trend line. As such, traders repeat the process, even though the angle becomes more aggressive.

 

Following the same steps, another trading setup appears. This time, long after the new trendline, the price tests the dynamic support for the first time.

In doing that, it forms two bullish pin bars. The three days to follow show only bullish price action, with the 1:2 risk-reward ratio reached.

 

What Are The Examples Of Forex Moving Average Crossover Strategy

 

Moving averages by themselves can give you an excellent roadmap for trading the markets.

But what about moving average crossovers as a trigger for a set foot in and closing trades?

When anticipating this, then you have to understand that it will lag itself by moving an indicator. Suppose your coat is the ideal lagging indicator to wait for the cross lagging. Then the needle will be a setback to the moving average.

For example, The tremendous and easy moving average with the use of a crossover strategy is the 50 and 200 smash. When Overcoming the simple average of 50 trading’s above. The 200 easy-moving standard generates the golden cross.

When a 50-simple moving average crosses below 200 easy average, it creates cross death.

These two strategies are particularly applicable for long-term investing. Yet, they can be revised and modified for trading. We’ll run through some basic trading crossover strategies.

What Are The Pros And Cons Of Pindar Forex

 

Advantages Of Trading Pin Bars

  • Pin bars are a simple identifiable reversal candlestick pattern.
  • They create a timespan probability and are active in both the forex gap of swing trader and scalper.
  • Reasonable risk: reward ratios for trades that work out as anticipated.

 

Disadvantages of Trading Pin Bars

  • Every pin bar doesn’t need to be created or designed like any other equal bar. So it will be easy to avoid the pin bars, which can fit anywhere in the chart. But, this does not make any sense to the level of supporting the resistance.
  • I agree with other traders, which are trading pin bars. In a shorter time, they might be framing outcomes which is also called “noise” in forex.

 

Using A Pin-Bar Pattern In A Profitable And Stochastic Strategy In Forex

 

There are different issues to practice and overcome. The main one of which is only to take the highest probability setups. After All, this is a discretionary trading system and takes time for traders to get familiar with. Some illustration is that if the trend goes on, the uncertainty of having the issues related to the Pin Bar. If there is some decisive refusal before the profit goal ratio of 2:1, then it will be great to evade the setup.

The length of the wick and the size of the body of the candle can cause some confusion. The thumb rule is that the candle’s body can be small but not for its color. In comparison, the wick should be at least 3x longer than the bossy.

The example above uses a daily chart, but the pin-bar pattern can trade on any timeframe. For instance, in a 4-hour forex trading strategy, the higher timeframe is more reliable. 

As you can imagine, something like the above image of a pin bar occurs quite often in forex markets. Most of the time, the pattern does not offer a tradeable opportunity that gives the trader an edge over time.

A trading strategy consists of more than one candlestick pattern- that is the starting point.

Risk management and technical analysis are two essential fundamental combinations of Pin Bar and the limited number of opportunities. Forex for the great one, and the risk should be worth rewiring always.

 

What is the simple way to trade with the forex strategy?

 

New to forex trading and looking for some simple but effective trading techniques? You’re in the right place.

In this quick guide, we’ll give you a rundown of seven simple forex trading systems for beginners. Each one is easy to understand and ideal for anyone who’s building up their skills.

By taking the time to master these fundamentals, you’ll be able to make simple trades with confidence. Better yet, you set yourself up to try more advanced trading techniques down the line.

 

  1. Breakout trading

 

Breakout trading is one of the most straightforward forex trading styles, making it a good choice for beginners. Before we look at how it works, let’s define the term “breakout.”

Put, a “breakout” is any price movement outside a defined support or resistance area. Breakouts can occur when prices increase above resistance areas, known as “bullish” breakout patterns. They can also happen when prices decrease below support areas, known as “bearish” breakout patterns.

The reason breakout trading is an essential strategy is that breakouts often represent the start of increased market volatility. By waiting for a break in a price level, we can use volatility to our advantage by joining a new trend as it begins.

 

2 Moving average crossover

 

Moving average (MA) is a simple technical analysis tool that smooths out price data by creating an updated average price. That average can take over different periods of time – anything from 20 minutes, to three days, to 30 weeks, or any other period a trader chooses.

Moving average strategies are prevalent and can be tailored to any time frame, suiting long-term investors and short-term traders.

 

3. Carry trade

 

Carry trade is a type of forex trading whereby traders look to profit by taking advantage of interest rate differentials between countries. It is important to note that while popular, it can, yet, be risky.

 

This strategy works because currencies bought and held overnight will pay a trader the interbank interest rate (of the country of which the currency is). A trader executing carry trade “borrows from” a low-interest-rate currency to fund the sale of a currency that provides a higher rate.

A trader using this strategy wants to profit from the difference between the rates, which can be much depending on the amount of leverage used.

 

4. Fundamental analysis

 

In fundamental analysis, traders look at a country’s economic fundamentals to try to understand whether a currency is undervalued or overvalued. They also use the information to try to get a view of how its value is likely to move relative to another currency in the future.

Fundamental analysis can be complex, involving the many elements of a country’s economic data that can indicate future trade and investment trends. It can simply concentrate on a few major indicators.

 

5. Trend trading

 

Trend trading is another popular and common forex trading strategy. It’s also easy for beginners to understand and follow. The technique involves identifying trends in a currency price movement. This further chooses trade entry and exit points. These points are based on the positioning of the currency’s price within the trend. Trend traders use many different tools to check trends, such as moving averages, relative strength indicators, volume measurements, directional indices, and stochastics.

 

Select the best and leave the rest

To create or generate money, Pin Bar trading is always an actually tricky task to perform at. It takes place due to their flaws and assumptions built upon the information given to traders in action price websites. The main aim of this blog is to provide an appropriate knowledge of Pin Bar Trading. That is why the other hunch is not reasonable. Although at the same time give you a few tips on what you can do to trade pin bars more in the future.

 

Also, Read Some Interesting Information About Best Forex Brokers For Beginners.

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Learn to Trade

What Are Investment Formula Macroeconomics? ( Investment Formula Macroeconomics)

by admin
written by admin

Investment formula macroeconomics is concerned with how the pattern of individual spending affects the balance of the wider economy.

So, firstly, let’s answer the question: ‘what is investment spending?’ The definition of this term is the spending of money on assets that are then used to produce other goods, capital, or services. Examples of investment spending include a company buying land that will be used for farming to generate further profits, or a private individual investing in equity bonds. The formula used to show this type of economic transaction is S = I.

Macroeconomics relates to overarching economic trends, such as national interest rates.

Therefore macroeconomics is how general buying trends and behaviors, such as, in the example above, businesses purchasing land to generate profit through farming activities, has a ripple effect on the whole economy, and the nature of these ripples.

 

 

What is the Investment Spending Formula?

 

The investment spending formula is Y = C + I + G + NX.

In this formula, Y is GDP (gross domestic product). C represents consumption, I is an investment, G represents government spending and NX is net exports. The purchase of new capital is what makes up the investment element of this equation.

 

 

Countries that are ‘closed’ have no international trade, and so the GDP formula in these cases is:

Y = C + I + G

Therefore, the investment spending formula (also known, for closed economies, as the national savings formula) is:

I = Y – C – G

The two main types of investment spending are replacement purchases and new purchases. Replacement is linked to depreciation, whereas new purchases tend to be connected with growth and expansion.

These formulas require a very large quantity of data but are extremely useful to get an overall picture of a country’s economic situation.

 

What are the Advantages of an Investment Formula?

 

The benefit to the trader of having an investment formula is that it allows for clear parameters in terms of risk and capital invested. It’s also important as investment formulas are based on large quantities of data over significant time periods, and so they can be used to indicate trends and anticipate shifts in the market. 

Having an investment formula is a really good idea for new traders to have in place when they enter the market. Most plans will usually necessitate long-term positions, however shorter positions, like day trading moves, are possible to incorporate into an investment formula. An investment formula also allows traders to consistently calculate their return on investment, to analyze the profitability of the market and their trades.

Buying and selling currency pairs on Forex can be defined as investment spending, as capital is being expended on an instrument to bring in further overall gain.

 

 

 

An effective investment formula on Forex is trading on a number of different accounts. One account could be for swing trade positions, for example, while the other is used for day trading. As part of this plan, a set, small amount of money will be deposited into each of these accounts to start with, and, depending on the success of subsequent trading, more funds can be added to one or all of the accounts.

Following trends carefully is another good investment plan. By tracking shifts in the market, traders will be able to get a much better grasp on factors that affect their chosen commodity or currency and react accordingly. Traders will also be able to notice how even low-value trades can sometimes have a major knock-on effect in the Forex market.

Carry trading can also be incorporated into your investment formula. Carry trading involves trading high-interest rate and low-interest-rate currencies, with the differential in your favor carried over at the close of play to the next day’s trading. For this type of trading, the markets don’t need to be checked regularly throughout the day; there’s the potential for major profits too…and also to sustain big losses.

In terms of the wider economy, a set investment spending formula is a way of standardizing value, enabling traders to analyze data and make projections and forecasts of the market. Comparing different nations’ investment spending totals can be vital in making decisions on currency and commodity trading. 

 

 

How is Total Invested Capital Calculated?

 

The total invested capital of a company is calculated by totaling the amount of money invested by shareholders, debt holders, and other lenders. The equation looks like this:

Invested capital = short term debt +long term debt + total lease obligations + total equity + non operating cash and investments

 

 

Invested capital is integral to a company: it allows the company to expand by taking on more fixed assets, such as land or buildings, or it can be used to cover the business’ operating costs if necessary. A company that is expanding will show a positive net investment, while a declining company will show a negative net investment. In terms of market analysis, traders will do best to compare the invested capital of businesses in the same sector, rather than in different fields, when looking for investment opportunities. 

The depreciation needs to be factored into calculating total invested capital. Depreciation is concerned with the loss of value of capital assets over time due to simple wear and tear and obsolescence. The aim of depreciation is to provide a more accurate figure of the value of a company’s assets, and it should be applied to all property and equipment owned by the company.

If a company needs to raise capital, it can go about this by issuing bonds or selling stock and shares.

Net investment also applies to a country’s economies and makes up an element of its GDP. It is a reliable marker of an economy’s capacity for production. As a component of GDP, it’s an indicator of the economic productivity potential of a country.

In terms of invested capital, also included could be holdings in cryptocurrency, commodities, stocks, and indices.

In order to analyze and evaluate total invested capital, investors will usually look at the return on invested capital (ROIC) – this metric is a way of determining the overall value of a company. A company is considered a ‘value creator’ if it has a relatively high ROIC, as this indicates it has the resources for growth and expansion. Broadly, this suggests that the company has good potential to generate further profit through the efficient use of its invested capital. In calculating ROIC, operating income, tax rates, book value, and time are the four factors applied which, together, can indicate how well a company is using its financial reserves.

A company’s ROIC can also be used as a standard to assess the value of other businesses in the same sector, and so is extremely useful to traders.

 

 

How is Business Fixed Investment Spending Good for Traders

 

The definition of business fixed investment spending is funds that a business diverts to purchase assets to grow the company, such as land, machines, and equipment. An example of business fixed investment spending is the purchase of a printing press by a publishing house – the publishing company is anticipating growth, and so has procured extra equipment to facilitate this. 

Where there are signs that the overall rate of a country’s business fixed investment is falling, then this could indicate a downshift in the economy and could be a warning sign that conditions are not conducive to growth. Sometimes, businesses with decreased fixed investment spending can point to a general lack of confidence in the current economic landscape.

Therefore, it is significantly beneficial for Forex traders when there are healthy business fixed investment rates – they are any indication, either nationally or on a micro, single company level, that the situation is positive and that the company (or companies) are anticipating making a further profit. Fixed investment spending provides a wealth of opportunities for traders to profit, too, from the economic situation, and suggests that the market is less likely to be volatile.

 

 

 

In terms of currency trading, an exotic currency could get a boost if its originating country suddenly sees a spike in local business fixed investment spending, providing good returns for any traders holding the relevant stock. Similarly, if, for example, the price of crude oil rises, then businesses in this sector are more likely to increase their fixed investment spending which, in turn, would result in a rise in crude oil share prices on the stock markets. And this, subsequently, will affect the Forex. So, a trader who is aware of the effects of business fixed investment spending, and what it means to the markets, will be well-positioned to anticipate these shifts and act upon them quickly with good trading decisions.

 

 

Macroeconomic Factors that Affect Forex

 

The wider economy can hugely affect the Forex. A country’s inflation is one of the key issues that can cause volatility; going hand in hand with this are things like political unrest, conflict, or any other scenario or event that can cause destabilization of the economy and, therefore, the currency markets.

This wider picture will fundamentally affect the value of a country’s currency, and traders will need to be acutely attuned to these macroeconomic factors in order to make good buying and selling decisions. For example, a country’s trade deficit or surplus will have a huge impact on the Forex market, and traders will use this information to inform their positions.

Capital markets have a huge impact on the Forex and are also, trend-wise, the easiest to discern, as there tends to be plenty of media coverage around relevant events. As an example, if oil prices spiked, the Canadian dollar would gain value compared to other currencies, given its close affiliation with commodities such as crude oil. The currency and commodities markets are tightly interwoven and shifts in one will be felt in the other. The stock, bond, and commodities markets play a key role in terms of exchange rates.

The state of trade between different countries is another important macroeconomic factor that can have an effect on the Forex. For example, countries whose goods are in high demand can expect to see an effect on the appreciation of their currency – more buyers mean more buyers needing their currency.

 

 

 

Political news plays into the Forex, too: increases or decreases in government spending will be an influence on the value of a country’s currency, as can deregulation, or increased regulation, in a certain industry. Overall fiscal policy, and elections with uncertain outcomes, will also cause variation or increased volatility in the Forex, as will new rules regarding the availability of margin and leverage. Brexit is a great example of how an unanticipated event can generate shock waves in the Forex: the ‘leave’ vote that resulted had a huge effect on the value of the British pound. Similarly, if a country elects a new government with a fiscally responsible policy, championing growth, then exchange rates usually react positively to this change.

Finally, economic reports need to be factored in, and many traders will rely on these to help them make market decisions, often using an economic report calendar to track changes when things are moving quickly. Included in these reports are a country’s employment levels, retail sales, manufacturing output, and capacity utilization.

 

What’s Next

 

If you’re considering beginning to trade on the Forex, then having a strong grasp of investment spending, how to calculate it, and how to apply it to your analysis of the market, will be crucial to making your positions successful.

 

 

Macroeconomics is tightly bound to the money markets, and the importance of these factors can’t be overlooked by traders wishing to generate profit. Using this knowledge can help traders react quickly to unfolding events, or to see warning signs in good time, thereby being better able to protect their investments.

Prospective traders are strongly advised to undertake training before investing capital in the Forex or to consult one of the many complete online guides. Having a sound knowledge of the fundamentals of the market will put you in the best position to make potentially profitable trades in the short and long term.

 

Also, Read Some Interesting Information About Forex Trading Basics Everything You Need To Know.

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Trading Strategies

Everything You Need to Know About Forex And Formulating a Profitable Strategy (Profitable Forex Strategy)

by admin
written by admin

The Forex (foreign exchange) market is a global, decentralized market and comprises banks, commercial companies, central banks, hedge funds, investment management firms, and retail investors and brokers. It is the largest financial market in the world. The basic facility of Forex is to trade currencies in order to, hopefully, make a profit; these transactions are made by traders, who speculate on the strength of a particular set of currencies. Thinking about a profitable Forex strategy is the first step to start trading.

 

How to Get Started with a Successful Trading Strategy

 

If you’re new to Forex trading, then making a trading strategy before you begin is a great idea. To start, consider the investment you have available, your timeframe, the current state of the market, and, crucially, how your personality may affect the type of strategy likely to work best for you.  Many trading beginners use a demo trading platform to allow them to experience and hone their skills before investing in the ‘live’ market.

 

 

It’s important to also consider position sizing, risk management, and how to exit a trade. The four trading styles below have remained consistently popular choices so maybe worth thinking about in terms of identifying the best forex strategy for consistent profits that best suits you.

 

 

Scalping

 

Scalping moves are very short-term trades – sometimes held for mere minutes. This is a fairly advanced style that can be used to quickly generate small profits; it can be stressful and requires significant self-discipline. Scalpers will often need to spend many hours at their screens while being ready to act quickly. This type of strategy requires market volatility to work effectively, and traders will seek out things like overlapping markets or sudden breaking news events and then move swiftly to make multiple small but profitable trades. A profitable Forex scalping strategy involves reacting at the moment the market shows any sign of shifting.

 

Day Trading

 

Day trading is the style that most beginners use. It’s a way of ensuring that live trades aren’t affected by any major market fluctuations overnight. Day traders exit their trades before the day’s end, with these trades often only lasting for a few hours.

Traders will need to be able to analyze the market effectively in order to be in the best position to make profitable moves; day trading strategies tend to be concerned with regularly occurring, small price movements. When choosing a broker for day trading, ensure they can achieve excellent trade execution speed and are able to trade directly from graphs.

 

Swing Trading

 

Swing trading is all about short-term price patterns and their potential profitability. Trading positions are normally held for a few days, with a trader checking bars about every half hour to an hour. Many traders use technical analysis to interrogate trends, and moving averages to determine the best positions to enter and exit trades.

Swing traders are advised to use a daily chart for at least 3-6 months to help analyze the market and check the direction of any present trends.

 

Positional Trading

 

This style of trading is concerned with generating profit from significant shifts in price and is usually a long-term position. Traders using this style need to have a broad and in-depth knowledge of the markets and how they operate and require a lot of patience. Positional trading usually necessitates checking end-of-day charts, and traders will usually focus on specific sectors in order to benefit from longer-term trends.

For the best chance of success using a positional trading style, it is key to consider long-term market trends, have a specialism in one or more financial markets, and to set up a trailing stop loss to protect any profit generated.

Once you’ve decided on the style of trading, the level of risk you wish to take, and the time you want to allocate to trading, it’s time to consider trading strategies. Some of the most popular are listed below:

 

Daily Chart Strategy

 

This strategy is made up of three key elements: trend location (identifying long drawn out moves in the market); staying disciplined, in order to keep your capital back for the larger opportunities; and using larger stops and less leverage.

 

1 Hour Trading Strategy

 

The currency pairs likely to provide the best potential for profit in this strategy are EUR/USD, USD/JPYGBP/USD and AUD/USD. In terms of buying, traders can enter a long position when the MACD histogram goes beyond the zero line. For selling, short-term positions can be entered when the histogram drops below the zero lines. Traders using this strategy only need to check the market every hour, making this an ideal choice for those unable to watch the Forex for significant periods of daily.

 

 

Weekly Trading Strategy

 

Traders often favor this strategy as it provides somewhat more stability and flexibility. When employing this strategy, it’s common for traders to use price action trading patterns, such as haramis and hammers. This is a great strategy to deploy for traders who have only limited time to dedicate to monitoring the markets: checking positions once daily is usually sufficient.

 

Trend Following Strategies

 

There are various trend-following strategies that you may wish to use, such as the Donchian Trade System. The basics of this system are to consider buying if the market value goes above its prior 20 days high, and selling if the price drops below the prior 20 day low.

 

5 Reasons That Traders Lose Money

 

Sadly, the majority of traders lose money on the Forex and end up throwing in the towel – around 80-90% of traders aren’t successful. However, by bearing in mind the following 5 things, you can drastically boost your chances of bucking this trend.

 

Overly Aggressive Trading

Beginners often make the mistake of trading too aggressively or trading against trends in an attempt to ‘beat the market,’ and this is often catastrophic, especially if the trader is starting out with only a small amount of capital. In order to resist this temptation, traders just starting out should make it their priority to keep the value of their initial investment rather than gaining on it – this latter goal should come second. Aggressive trading always means exposure to larger, more frequent risks, and this should be avoided until traders have built up a solid market knowledge.

 

 

Too Little Start-Up Capital

It’s tempting to start trading with very little initial capital – especially if you are trading to try to make a fast profit or to resolve debt issues. However, to mitigate risk and have the best chance of making a profit on your investment, $1000 is considered to be the smallest viable start-up capital to have at your disposal. This also guards against the emotional reactions (and subsequent mistakes) that having a very low initial investment can precipitate.

 

 

Not Accounting for Risk

Risk management is absolutely vital to successfully trade on the Forex. Protecting your investment should always be your first priority, and keeping this in mind will help you to manage risk and make better risk management decisions.

Types of risks that are frequently encountered on the Forex include:

 

 

Currency risk -associated with the propensity of currencies to fluctuate

Interest rate risk – this risk is linked to market volatility and concerns sudden jumps or dips in currency interest rates

Liquidity risk – This is the possibility of incurring a loss due to the inability to buy or sell an asset quickly enough

Leverage risk – associated with margins and sustaining greater capital losses than anticipated

Stop-loss orders are a good way to help manage risk, as well as using sensible lot sizes. Remembering to exit a trade if something feels off will help, too.

 

 

Resisting Greed

By aiming for a reasonable profit, rather than trying to aggressively get every last pip from a trade, you are more likely to make better buying and selling decisions, such as holding out for too long on a trade. Try to remember that new opportunities will regularly present themselves.

 

 

Indecisiveness

It can be very tempting, especially for new traders, to switch positions back and forth as the market swings – or to switch as a result of anticipating a change. Frequent switching can lead to an increased risk to your start-up investment – it’s best, in this case, to choose a course and stick with it.

 

Does the Timeframe of Trades Matter When Looking for Consistently Profitable Strategies in Forex?

 

The most successful Forex traders know the right time to buy and sell, and, crucially, when it’s the right time to take a risk.

The principle Forex timeframes are long term, medium term, and short term. Some traders will use all three in their overall strategy, while others might use one long-term and one shorter-term time frame to weigh up potential trades.

Long-term moves tend to fall under the positional trading style and have a trend time frame of weekly, and a trigger time frame of daily. Medium-term positions are geared towards a swing trader strategy, with daily and 4 hourly as their trend and trigger time frames respectively. Short-term positions include day trading and scalping, with buying and selling often taking place within 5 minutes to 4 hourly time frames.

Shorter positions (from about 5 minutes to an hour) will prevent any exposure to overnight shifts and risks, with the opportunity to make quick profits. This might be perfectly suited to your trading style. However, longer charts with some increased risk and the odd incident of staying up all night to watch the market could work better for you. A consistently profitable strategy, therefore, will be the one that suits your circumstances, your personality, and the way you feel comfortable trading.

Scalping, with its short timeframes, could be the best option if you’re looking to make a quick profit. However, scalping must be undertaken with care to avoid the build-up of lots of small losses, and the racking up of commission fees.

Look again at your trading style and the strategy you’ve decided to pursue. Matching your trading strategy to the time frames you plan to trade within is likely to serve you well. For example, a swing trader could make unwise decisions based on trends viewed on a shorter time frame chart (maybe covering the period of a few hours), whereas, for this trading strategy, a longer time frame, such as daily, is more appropriate to judge trends and analyze risk.

Where multiple timeframes are used, traders will analyze a currency pair through the lens of different timeframes to identify both long-term trends and to pinpoint the perfect place to enter a market. 

 

Can a Trader Build a Consistently Profitable Strategy in Forex by Trading With Only Major Currencies?

 

With more than 180 currencies in circulation, plus 1500 different types of cryptocurrencies, there is certainly no shortage of choice when it comes to choosing which pairs of currencies to trade-in as part of your overall strategy.

The most popular currencies usually combine the Euro, the US Dollar, the Japanese Yen, the British Pound, the Australian Dollar, the Canadian Dollar, and the Swiss Franc. While it is very possible for experienced traders to make a profit by analyzing the markets in order to trade in minor and exotic pairs, along with the major currencies, for the beginner, to remain consistently profitable will usually mean sticking to the major currency pairs.

 

 

 

The Euro and US Dollar pair is considered to be extremely liquid and is traded globally. This pair has a tendency to be very volatile and major multiple shifts can happen throughout the course of a day.

The US Dollar and Japanese Yen pair are very difficult to predict: a swing trading style is usually best to use when trading with these currencies.

The British Pound paired with the US Dollar can be difficult to predict due to its sensitivity to the news and to the prevailing political situation. Long-term trading is the best strategy to use with this pair.

The US Dollar and Swiss Franc currency pair is considered to have a good flow, and is not as volatile as some of the other pairs; its comparative predictability makes this the best pair to trade for beginners. Day trading and short-term trading are often the best styles to use with this currency combination.

A minor currency pair is any pair that does not include the US Dollar. These minor pairs are often characterized by high liquidity and short-term volatility; short-term trading is likely to be the safest course of action with these currencies.

Exotic pairs are any currency combination that includes a developing country’s currency. They are significantly more challenging to trade profitably. The flip side of this riskiness is that these pairs can yield significant gains for traders with sufficient Forex knowledge and understanding of the developing country’s political, social, and economic landscape. For that reason, traders resident in one of these countries is usually best placed to use these pairs.

So, to conclude, it is certainly possible to build a consistently profitable strategy using just the major currencies; just as it’s feasible to be profitable in trading minor or exotic pairs – the key is in choosing the trading style and strategy that works for you and consistently applying it. It’s also vital to have a sound grasp on the fundamentals of the market, and on the possible volatilities of the currency pairs, you are considering trading in. Finally, knowing and being confident in managing the risks will play a significant role in a trader’s ability to maintain profitability. All of these factors combined can help determine the success or otherwise of a trader’s strategy, rather than the choice, in and of itself, to trade only in the major currencies.

 

 

Can Carry Trading Be Part of a Consistently Profitable Forex Strategy?

 

In the Forex market, a carry trade is defined as a scenario in which a trader borrows or sells a currency that has a low-interest rate to buy a different currency that has a higher interest rate. The difference in these interest rates is known as the interest rate differential. Effectively, carry trading means borrowing money at a cheap rate from a country that has a low-interest rate, and then investing it in a country’s currency that has a higher interest rate.

In Forex, at the end of a business day, a trader’s position will be closed, and subsequently re-opened the following day, with the overnight interest differential then added to the trader’s account. This is known as ‘rolling over.’

Leverage carry trading can also be a useful Forex strategy – this is attractive as traders don’t require a large investment sum as leverage carry trading allows for trading on a margin: a comparatively much smaller amount.

Risk management needs to be carefully attended to for any trader undertaking carry trading positions, as depreciation or appreciation in the market can drastically affect the profitability of trades. Similarly, carry trading in the currencies of countries with developing or small economies carries the more obvious risk of market fluctuations and volatility. Stop-loss orders can be a helpful instrument to apply to help mitigate some of these risks.

In terms of profitability, the carry trade strategy is the only one that has the potential to give traders a profit on their very first day of trading on the Forex. However, to yield significant profits, carry trading should be considered as part of long-term strategies – for example, if, after a year holding a position, a trader had only achieved break-even, they would still potentially make profit from the interest earned over this time period.

To conclude, as with trading exclusively in only the major currencies, carry trading can absolutely form part of a consistently profitable strategy: but the key is a trader’s ability to read the market to determine the optimum conditions to initiate carry trading positions, their personal trading style, and the capital they have to invest.

 

What’s Next?

 

To get started trading on the Forex market, it’s vital to learn how to trade properly and to understand the terminology and fundamental concepts. You may wish to undertake some training; alternatively, there are a number of in-depth guides available to help steer you through the process.

Next, as discussed above, decide upon your trading strategy. As well as considering which would suit your personality and startup capital, also consider your lifestyle: if you’re only able to keep a close eye on the markets at certain points during the day, then this needs to be factored into your decision, too. Stop loss and price action trading are going to probably be your best bets if this is the case.

 

 

The next stage is deciding upon a broker. A regulated broker may be more expensive but is a much safer choice in terms of keeping your funds safe. Your broker will probably give you access to some form of a demo account, which you should familiarize yourself with – this is perfect training for the real thing. 

Once the broker is in place and you’ve spent some time on the demo account, you are all set to begin trading on the Forex for the first time. It’s important to bear in mind that even the most successful traders will make losses on trades: as you learn the ropes, it is best to limit your exposure to risk in the early days and keep set reserves in place. It’s also a great idea to regularly review your strategy to see how well it’s working for you and to make adjustments as necessary.

Some traders decide to try trading on the Forex for a living. This is certainly achievable, but traders considering taking this step need to be clear that, in the vast majority of cases, making a profit needs to be played as a long game, and many traders sustain regular losses along the way. 

In conclusion, whether you are considering day trading on the Forex now and again, or are thinking about investing significant capital and attempting to earn a living from the market, then the importance of patience, self-discipline, and the facility to learn from mistakes should not be underestimated.

 

Also, Read Some Interesting Information About Best Forex Brokers For Beginners.

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forex trading basics
Learn to Trade

Forex Trading Basics: Everything You Need to Know

by admin
written by admin

Forex trading is an international financial market where currencies are traded. Forex trading can seem like a daunting task, but once you know more about how it works, you’ll see that forex profits aren’t so difficult to earn! In this post, we will cover all of the basics of forex trading including introductory information such as what it is and why people trade forex.

What is Forex Trading

Forex is a type of market in which one currency is traded against another. It is the largest and most liquid global market, with an average turnover of over $200 trillion per day.

The forex market can be thought about as being similar to other financial markets such as stocks or commodities where traders buy and sell assets in hopes that they will make money on their investment when it increases in value. In this context, “currency” refers to different types of money like Euros (EUR), British Pounds Sterling (GBP), Canadian Dollars (CAD) etcetera but you may also hear people refer to forex trading specifically as exchanging currencies rather than just basic trade between two countries.

The Pros and Cons of Forex Trading

One of the benefits of  Forex trading is that it is open 24 hours a day, five days per week. This means you can trade currencies when markets are available in your region and time zone. Another benefit of forex trading is the ability to leverage higher position sizes than other asset classes with relatively low margin requirements because traders do not have any capital at risk for “long” currency positions: they only need enough money to cover short positions or their initial deposit amount if they start off as “flat”.

The disadvantages of Forex Trading include increased risks, such as fluctuations in interest rates, political conditions, trends, and unforeseen events. There is also market volatility which can lead to an increase in transaction costs and slippage due to bid-ask spreads widening during times of high volatility.

How to Start Forex Trading

Or how does Forex trading work? Forex traders have a variety of tools at their disposal including charts, prices, indicators, and key levels. Forex trading is not limited to any particular time or space; it is open 24 hours a day all around the world. There are three major markets that trade in forex – the US Dollar (USD), Euro (EUR), and Japanese Yen (JPY). The most common pairs traded are EUR/USD, USD/JPY, USD/CAD.

All you need to start Forex Trading is an internet connection with some spare cash on hand for deposits into your broker’s account! It may take some getting used to but once you’re comfortable with how everything works then there is no limit as to how much you can earn.

There are a number of popular online Forex brokerages in the US – FXCM, Interactive Brokers, Plus500, and OANDA.

Tips for Successful Forex Trading

In order to be successful at Forex trading,  you need to be disciplined and understand the risks you are taking. A number of traders make a living trading Forex but this is not easy, it takes a lot of work! Some of the most successful Forex traders have spent over a decade perfecting their craft.

Before you get started, here are some tips to help you along the way:

  • Know your risk tolerance and goals before you start trading.
  • Don’t take your losses too hard and don’t worry when you make a profit.
  • Always have a plan and know how much to risk before each trade, that way if the market goes against you it won’t be too devastating.
  • Add some variety by trading in different markets – this will help to reduce any one particular risk factor coming into
  • Set stop-losses to limit potential losses 
  • Have a set amount of time each week where you are only allowed to trade so as not to let it take over your life

Is Forex trading profitable?

Some people believe that forex traders need to be clairvoyant in order to predict which way markets are going to move instantaneously when there may not even be immediate news on an event affecting currency values. There have been many analyses performed by experts who claim this is actually possible with disciplines like Elliott Wave Theory, Fibonacci Retracement Levels, and Classical Chart Patterns among others – they take into consideration everything coming before a price movement happened (such as volume, economic data, historical charts) and use it for future predictions about what might happen next.

How much money you make with Forex trading depends on a number of factors including your broker, your trading platform, and the time you spend analyzing markets. Forex traders are in constant competition with each other to buy or sell currencies for profit. They all have different goals – some trade stocks while others hedge against risk, and still, others speculate on whether they think a particular currency will go up or down in value. The differences between these types of traders are how much money they use to make their trades and what kind of risks they take when making them- not if it’s “easy” or “hard”.

Forex Day Trading Risk Management

With any investment, risk management is important.  There are a number of tactics you can employ to reduce the risk on trades and keep your losses at bay. The most common strategies for Forex traders are to utilize Stop Loss Orders and Limit Orders. Stop-Loss Orders automatically close out positions when they reach a certain value, preventing any further loss in case things go wrong for whatever reason. Limit Orders are essentially the same thing but instead specifies a price below which it won’t execute; if prices do drop then this kind of order will ensure your position isn’t closed too soon because you might just get lucky with another rise.

Forex Day Trading Strategy

Forex Day Trading Strategy is about having patience and understanding that trends take time to develop. If an opportunity arises during trading hours (e.g., stocks or currencies) then make sure you have enough capital to act on your decision rather than waiting until the next day as some opportunities may not last! When you’re asking “Is Forex Trading Profitable?” It’s important to distinguish between day trading and long-term trading. It’s also important to understand how many pips can be made or lost on trade and to know the risks.

Hypothetical Scenario

The major risk is that once an order has been submitted, there is no guarantee it will be filled at all. In this case, brokers often offer traders stop-losses (as discussed above) which can limit their losses if they are unable to execute their trades as planned. A stop-loss is simply where you specify how much you are willing to lose before exiting your position – for example $500 per pip of one currency traded (e.g., USD/CAD). 

This means that if CAD rises by 50 pips against USD then the worst trader could lose up to $250 in this instance ($500 x 50 = 25000) but any trading system is going to have losses at some point.

The forex trader is only risking the difference between the entry and exit points, meaning that if a trade goes against you then your actual loss is limited by how many pips are left before exiting – for example $500 per pip of one currency traded (e.g., USD/CAD). 

In this instance, we’d be talking about a maximum possible loss of up to $250 in our above example ($500 x 50 = 25000) as opposed to losing say an entire lot of 100,000 units (100,000 x 500=USD$50, 000)!

Trading Leverage

Finally, it’s also important not to forget those margin requirements vary from broker to broker but can be a very useful tool for forex traders.

In this instance, the broker is lending you money to trade with in exchange for collateral – which is usually held as margin requirements (e.g., $500 per pip of one currency traded). 

The benefit of trading on leverage is that it allows us to open trades at much bigger sizes and thus take advantage of movements on a larger scale than if we were limited by our own funds alone. It’s worth noting, however, that there are also risks involved when trading leveraged positions: namely increased volatility due to large price swings and potential losses caused by uncontrolled risk exposure.

Trading Currency Pairs

The base currency is the first one quoted in a pairing, and it is usually considered as an investment. It is “stronger” than its corresponding quote because each unit of that currency will buy more units of the second or quote currency rather than less.

In Forex trading, most people refer to the major pairs: EUR/USD, USD/JPY, GBP/USD, and AUD/USD.

These pairs represent the most liquid markets with strong liquidity both ways – meaning traders can easily purchase either side for their trades to be executed quickly at good prices. This also means they’ll have plenty of opportunities when using these currencies for different trades.

Slippage Larger Than Expected Loss

Slippage occurs when a trader does not get the price they expected from entering or exiting a trade.  This is most common when entering trades, which often happens via market orders.

When a trader wants to enter or exit the trade at their desired price but doesn’t get it, they could have experienced slippage and may be worse off than expected. This can happen because of many factors such as time sensitivity in their trading strategy or even due to other traders with more liquidity taking out large positions before them.

Once the order is put into the market, there’s no telling what will happen – this creates uncertainty for both buyers and sellers. The bid-ask spread also has an effect on pricing by not always being unified either way (i.e., if you’re buying money goes up).

Most Forex brokers offer quotes in pips, meaning a price is quoted in terms of the number of pips between the bid and ask. It’s important to note that brokers often have tiered pricing structures such as tight-spread trades which charge less per pip than standard trades.

Transaction costs are also an aspect worth mentioning; if you’re using one broker for all your trading needs, this may not affect you but it may be wise to shop around.

Forex Millionaires

All around the world, young people are becoming millionaires by getting their hands on Forex profits. Luke Blackburn (https://www.thesun.co.uk/news/10103772/college-drop-out-forex-millionaire/) has made so much money that he now teaches people how to do it themselves.

Sandile Shezi (https://g.co/kgs/AGYnCi) is 24 years old. He has a net worth of more than 2 million dollars. He learned the business by reading articles and attending seminars. Sandile Shezi created a training program to help people become professional traders and make millions.

Louis Tshakoane is a wealthy businessman who became successful by trading on the Forex market and with cryptocurrencies. He was born into a rich family, but he kept working hard to keep up his way of life.

Louis started a business called Botho Gym. He worked with Richard Branson, who helped him start the business. One of the motivations for starting Botho Gym was to keep young people from doing street crimes and drug abuse. These are common in his neighborhood.  He wrote the book Forex Millionaire in 365 Days and it has already earned him 2 million in sales. He does not tell anyone how much money he is worth.

The World’s Richest Forex Traders

The World’s Richest Forex Traders. It’s not a coincidence that the world’s richest forex traders are also the world’s richest people. George Soros, Paul Tudor Jones, and Michael Marcus have all made fortunes trading forex. Their success has helped them create even more wealth for themselves than they could ever possibly make on any other venture or industry in life. It is because of this vast amount of money that they have amassed over time due to their innovative way of thinking about finances and risk. 

In one of the most famous trades of all time, George Soros shorted the British pound in 1992, earning him $2 billion when he was competing against a currency speculator who had earlier talked about how one should never bet against an Englishman.

The Top Forex Profits Trading Books

–  “Inside the House of Money: Top Hedge Fund Manager Tells All” by Steven Drobny

– “A Complete Guide to Day and Swing Trading With Technical Analysis” by Kathy Lien

– “Forex for Beginners: The Ultimate Guide To Understanding Foreign Exchange For Profitable Results” by Tommy Butler Jr. & Desmond Marshall III

Also read about various trading strategies.

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Is Forex Trading Profitable Today: How to Trade and Double Your Forex Money
BlogLearn to Trade

Is Forex Trading Profitable Today: How to Trade and Double Your Forex Money

by admin
written by admin

Forex Money; One question that often comes up frequently in the forex trading industry is: Is Forex Trading Profitable Today?

Often than not, this question comes from retail forex traders who’re not making it headways due to their flawed trading approach.

Whether you’re using a proven trading strategy, a trading strategy is more important than the strategy

you’re using to trade.

However, some traders take it the other way round.

So, if you’ve been wondering whether forex trading is profitable or wondering if forex trading is safe, the

answer is pretty straightforward: yes, forex trading is profitable today!

However, you might find it difficult to trade and make profits always.

Like in any other currency trade and other markets by extension, even the most season trader hit a

snag and slid into some kind of losses.

Sounds scary? Probably not!

Due to the uncertainty in the forex exchange markets, wins and losses come randomly. As such, your profits and losses are always randomly spread.

However, with a tried and proven trading approach and a profitable trading strategy, wins can turn out more often than losses.

How to Double your Money in Forex Trade

How to Double your Money in Forex Trade

Typically, to trade forex and make profits, you should use some of the proven ways that

can help you double your money more often.

Are you wondering how to trade forex and double your money? Even though it could sound a

bit tricky, you shouldn’t worry.

We’ll walk you through some tricks and hacks to help you trade forex and double your

money with any forex broker.

Ready to get started?

Here are some of the ways to trade forex and double your money.

The Easy Way to Double Your Forex Money

Keen traders know it takes a lot of work and time to see their forex money double.

So, while it’s possible to increase your profit, it doesn’t happen overnight; it rather requires patience.

Fortunately, there are no hard and fast rules to follow – no need to learn about confusing strategies or follow complicated charts.

The best way to go about it is to open forex savings account in a currency with a higher interest rate.

The interest rate will slowly accumulate, increasing your compound interest and subsequently increasing

the money in your trading account.

Rule of 72

How long will it take for your money to double? That’s where the rule of 72 comes in handy.

With the “Rule of 72,” you have to wait for many years to watch your money double.

However, you don’t have to follow complex chats and advanced techniques to get your trading going.

This rule lets you calculate the actual number of years required to see your money double.

Thus, the number of years needed to double your investment equals the value of 72 divided by the expected rate of return.

Therefore, if long-term patience isn’t your type, you can try using other techniques discussed in this article.

Common Pitfalls

This trick comes with its own pitfalls, though. Like the high-return and high-risk investments, currencies

with the highest interest rates usually experience steep inflation rates, which could depreciate their value too.

But if you pick a currency with a fairly stable interest rate, you’ll be good to go.

Suppose you’re based in the US, opening a savings account may not be ideal since the US dollar can

reduce the interest rate by rising in value against your currency down the line.

On the other hand, if you live outside the US, a savings account could work perfectly for you and help double your money in a few years.

Furthermore, the US offers extremely lower interest rates expected to worsen in the coming years.

But the dollar is considered more resilient as it can retain its value during hard times and appreciate with time.

The Classic Way

The classic way is an investment strategy used by many in the old days.

The method involves buying stocks without leverage, charts, real-time news, and trading on margin and holding it down. Many old-school traders employed this strategy and ultimately doubled their accounts.

You can use this method as long as you trade in low-risk markets.

In this case, buy low-quantity currency pairs and hold them for months or as long as you need to realize high returns.

Forex trading offers almost unlimited profits and losses. However, it requires self-discipline,

education, and dedication to succeed.

Using the conventional 1:2 Risk-reward Ratio

If you use a risk-reward ratio of 1:2, you will likely double your investment in just 35 trades, presuming

you analyzed the market properly and don’t have losses.

Below is how it works.

Opening Balance: 1000
Trade 1 1020 Trade 19 1457
Trade 2 1040 Trade 20 1486
Trade 3 1061 Trade 21 1516
Trade 4 1082 Trade 22 1546
Trade 5 1104 Trade 23 1577
Trade 6 1126 Trade 24 1608
Trade 7 1149 Trade 25 1641
Trade 8 1172 Trade 26 1673
Trade 9 1195 Trade 27 1707
Trade 10 1219 Trade 28 1741
Trade 11 1243 Trade 29 1776
Trade 12 1268 Trade 30 1811
Trade 13 1294 Trade 31 1848
Trade 14 1319 Trade 32 1885
Trade 15 1346 Trade 33 1922
Trade 16 1273 Trade 34 1961
Trade 17 1400 Trade 35 2000
Trade 18 1248    
       

 

  • Advantage
  • The position trading and the long-term trends of currency pairs don’t affect their course.
  • With time, you’ll learn how to identify the market cause, sell, or buy only on pullbacks, and the process will become easy as you trade.

 

  • Common Pitfalls

The 1:2 risk-reward ratio isn’t constant and varies depending on your scope of knowledge in the trading market and risk appetite.

Since this method of doubling your income relies on accuracy, this strategy’s effectiveness depends

on your trading methods.

Going the Speculative Way

Contrary to the classic way, the speculative way involves high-risk short-term trading.  In fact, what

sounds like noise to a trader focusing on a long-term goal is what intrigues a speculator.

If you’re a risk-taker/ speculator, you may find yourself attracted more to the speculative trading method.

But, you still have to follow all risk and money management principles to mitigate some avoidable risks that can result in losses.

This trading approach is the riskiest as it relies on short-term price changes that are almost impossible to interpret even for trading experts.

Using the speculative approach, you’ll have to select a risk-reward ratio most suitable for your trading style and risk appetite.

The main difference between speculative and classic trading approaches is the frequency of trade.

Assuming you went with the 1:2 ratio, take high-risk trades in a sequence and close down at 35 trades in a

few days to see if you can hit the spot once you complete the 35 trade cycle.

But still, is forex trading profitable? You might ask.

Here is the most preferred way to trade forex profitably.

The Best Way to Get a Double Profit on Your Money

Whether you’re an expert or a newbie, cracking the 35 trade cycle is a game of chance.

However, you can easily double your profits in a short time if you use a good trading strategy.

You can use an indicator, Pipbreaker, to achieve this purpose.

This indicator has built-in functions for long-term trading, short-term trading, and scalping.

In addition, the Pipbreaker generates signals with matching accuracy, enabling you to realize the

expected returns every time you invest.

The indicator also produces much more precise signals than other indicators, making it highly effective and reliable.

The Pipbreaker is resistant to market upsets and can help reduce your losses, giving you a safe

environment to double your money.

How to Outdo Market Uncertainty for the Best Trading Outcomes

Is forex trading profitable?  Given the uncertain nature of the market, it is normal to worry about your investment.

What will happen once you start trading? Luckily, there are tips to help you navigate the market uncertainties

Master the game of probability – Like a coin, the market is two-sided, and you’re never 100% sure of the outcome.

So you either succeed or fail – the probability value varies from 0.01 – 99.99 percent, depending on your interpretation and analysis.

Embrace the market uncertainty – Another way to outdo market uncertainty is to be well-informed of the

market setup and understand what heightens the uncertainties. Sometimes, the most uncertain

times can lead you to greater opportunities if you diligently take advantage of the situation.

Take a break when you’re not certain – The forex trading market is characterized by several factors: interest

rate, technical trend, inflation, and GDP, which are usually unstable. When these factors align, you can enjoy trading and possibly increase profit.

However, this state can quickly change without you having the slightest idea, and with the spirit of

trading still high, everything would sink. It’s also hard to figure out if the trend will consolidate, continue,

or reverse at the very time, so it is better to stay out and watch.

Final Thought

Is Forex trading profitable today? A precise answer is yes! But, it will depend on your trading approach,

trading strategy, your trading discipline, and to some extent, the trading platform you use for your trade.

While there is no guarantee to rounds of winning in every trade, you close in forex markets,

using tried and tested trading approaches compounded with a good trading plan and discipline pays off.

And with the money doubling strategies, you can always double your money through forex trade and even trade forex trade for a living.

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IS FOREX TRADING EXPENSIVE
BlogLearn to Trade

IS FOREX TRADING EXPENSIVE?

by admin
written by admin

FOREX TRADING EXPENSIVE; Of course, but the real question is: “Is forex trading worth it or not?” It is not about how much money is necessary to start forex trading. The key thing you want to know about is how much money you can earn along the way.

IS FOREX TRADING EXPENSIVE

Sure, “expensive” and “cheap” are subjective terms, but knowing how to trade Forex with $100 is a form of art.

There have been some brokers in the past who have allowed traders to open accounts with $5, but

this is no way to do business. Is forex trading expensive?  Is forex trading worth it? It depends on the trader,

but does it have to be?

What Does It Look Like To Be A Forex Trader?

What Does It Look Like To Be A Forex Trader

So, what does it look like to be a forex trader? If you’re just getting started with the business, this is one of the questions you might be asking yourself frequently.

But look, it shouldn’t be a head-knock on the wall as we’ll make it pretty easy for you to understand exactly what your work would look like.

Sounds great, right?

Let’s begin…(FOREX TRADING EXPENSIVE)

As a forex trader, you must learn how to be a great risk manager. Since huge gains can be made

overnight and lost within the same span,

you must know how to manage your trades is the best possible way to break even. With that in mind,

any miscalculation could result in enormous losses of your gains.

Does it mean forex trading is an incredibly risky venture? Absolutely not! In fact, forex trade is less

risky than other forms of currency trades. Ideally, if you spread your trade properly, you are likely to make good profits.

However, if you invest too much to make up for a string of losses in the trade, your chances of losing

your capital and finally bowing out of trade could be higher than you could imagine.

Apart from risk Apart from risk management, as a Forex trader, you will be entering and managing the orders.

This is one of the critical aspects of your trade. At this point, you should do your homework right and identify a profitable trading strategy with a verifiable edge.

Also, it would be best if you decided on the currency to trade and the style of trade. With your trading style, you can execute your trading plan, complete with where you’ll exit, and cover for your losses.

Essentially, you’ll be entering your orders, managing your trades, and picking up your trades as per your plan. Without a profitable plan, your Forex venture is meant to fail.

Is Forex trading expensive? You might ask. To put it precisely, Forex trading isn’t such an expensive venture. But it would be best if you got started with some reasonable amount to fund your orders.

However, the minimum amount you can play on currencies will always depend on the platform on which you conduct your trades.

In addition to placing your orders and managing your trade, another critical aspect of successful Forex trading is money management.

Since you may not always be 100% sure your next order will win, managing your money can be savvy.

How can you manage your Money on Forex trade?

It’s pretty simple!

If you’re trying to invest huge chunks of money, you can get a smashing win when the trade outcomes favor you.

However, in case of a loss, a high-risk trader will always lose enormously. Since losses and wins come randomly, that’s where Forex money management comes in.

Overtrading and trading too much is a bad forex money management habit. Similarly, high-risk trading is equally a result of bad money management.

Interestingly, learning how to manage yourself is pretty straightforward and requires no special skill set to get started with.

But, it all starts with setting up your plans, practicing them, and sticking to them even when things don’t seem to be going right.

Sounds a bit tricky?

Yeah,…at times, you have to stay on course by following tough decisions.

While having a clear set goal and investment patterns might seem uneasy at first, you’ll get used

to it with time. And finally, it will become a new norm in your day-to-day forex trade.

The Best Mindset For A Successful Forex Trader

The Best Mindset For A Successful Forex Trader

When it comes to trading mindset, you can find many books detailing all kinds of mindset to keep you on a successful course.

But, the trading mindset is of little or no value when you’re operating on a flawed strategy.

With a tried-and-tested strategy with a proven edge, the right mindset puts you right in the success

trajectory. Below are four essential mindsets that every Forex trader should have.

  • Focus on long-term goals and avoid getting worried about the daily fluctuation of the market prices.
  • When trading profit or losses, you should understand it’s part of the process to grow your account.
  • Proper risk management can help you grow your business and last long in the tradewhichwhile failing to follow risk mitigation plans offers you the quickest way to par with your hard-earned money.
  • Understand how fear and greed can negatively impact your business and learn how to control your trading habits.

By understanding these four important mindsets in the Forex trade, nothing would be a surprise.

You can jot down the four points on a piece of paper, expound on them and understand how you can implement them into your day-to-day trade.

Can You Trade And Make Profits Consistently?

When making a decision to venture into Forex trading, people find themselves with some common

questions as beginners in the world of currency trade.

Is Forex trading expensive than what I already know?

Can I lose all my investment overnight?

Will I always be sure of profits on every order that I close in?

Well, if this sounds like you, we’ve got all the answers to your troubling questions.

Just like any currency trade, consistency matters in Forex trade. When you become consistent in

your trading plan, you should enjoy the profits that come with the edge of your trading plan.

Now, will you always make profits on your orders?

No.

Due to the uncertainty of the future trade outcomes, you’ll always make profits and sometimes take losses.

You will see your account increase and also decrease at other times. Therefore, the outcomes are not cast in stone.

You may have a losing day, weeks, and perhaps a month.

But, if you focus on the long-term goal based on your trading plan, you can always cover for the losses

in the bad days during your peak profits in the good days.

Therefore, you should have in mind that profits and losses have a random spread.

However, a good trading plan will always guarantee more profits than losses.

If you were wondering, “Is Forex trading safe” or expensive, we got your question answered.

Pros & Cons of Forex

Thanks to the miracle of modern technology, Forex is more accessible to ordinary people than it had ever been in the past. Whereas at one point in time, only major players like banks, corporations, and billionaires had access to forex markets, nowadays, anyone can get in on the action and try their luck.(FOREX TRADING EXPENSIVE)

Pros & Cons of Forex

Compared to the other types of financial markets, Forex is more stable and reliable than most.

Stocks and commodities may fetch a pretty penny, but companies can and do fail after all is said and done, whereas commodities can be quite unpredictable.

On the other hand, Forex deals with currencies, and those are much more difficult to sway or manipulate.

Forex markets also incorporate loads of technology due to their complex nature, and some

traders have even incorporated some of this technology as a part of their trading strategy.

Is forex trading worth all that precious time and nerves? Well, with automated trading, it just might be.

Sure, there are all sorts of ads for automated trading software, saying how they can make you a millionaire in

six months or something like that.

Yeah, right. If that is true, how come they have to make their own money selling their junk online to people like you?

Why are they not somewhere in the Caribbean? No, things do not work that way.

Don’t misunderstand, the idea of making forex trading worth the hassle by teaching a machine to trade on

your behalf is not exactly new – and not half bad, either.

It would eliminate human emotions such as fear or greed out of the equation and make decisions much more efficiently than any human trader.

Nevertheless Nevertheless, using automated trading signals and other programs as a tool to help you out can definitely make forex trading worth your while.(FOREX TRADING EXPENSIVE)

Then again, even Forex is not for everyone. Losses are to be expected, and even the most successful forex traders have lost crippling amounts of money.

Also, many critics have drawn comparisons between Forex and gambling, and for all we know, there just might be something to all these claims.

Finally, some people just aren’t suited to all the pressure and challenges that forex markets have to offer.

These and many other reasons are what stand in the way of so many people out there, preventing them from achieving their dreams. To those people, forex trading is definitely not worth it.

Other people, however, have been known to trade successfully with as little as $100, or so the legend goes. We say legend because a story about a guy who started with $100 and became the next Bill Gates would not even make it as a science fiction novel. For one, the importance of education cannot be overstated.

How to Trade Forex With $100

How to Trade Forex With $100 In order to turn $100 into a success story, a trader would need a lot of skill, luck, and experience. Good trading strategies do not simply come to mind; they must be learned, adopted, and applied with tactical precision.

The truth behind this number is the fact that most brokers require a minimum deposit, and $100 is the most common figure out there. Is forex trading worth it on a $100 budget?

Normally, most trading strategies recommend limiting your trades to 1% of your total capital, or 10% if you are quite optimistic about things. In this case, a person with a $100 capital would be making trades that are in the $1-$10 range, so becoming the next Warren Buffet may be put on hold for quite some time.

Also, keep in mind that there will be losses. The thing that prompted so many people to wonder if forex trading was worth it was the fact that sometimes, even if you win, you lose. Are you still asking yourself is forex trading worth it?

In fact, the only way to even consider making Forex worth your while with $100 capital is to employ an extremely aggressive strategy, trading micro lots and disregarding your traditional forex wisdom.(FOREX TRADING EXPENSIVE)

This does not mean that taking $100 and turning it into $200,000 within a year is impossible, with the right kind of experience and some careful planning. So, is forex trading worth it? The $100 that you are risking, I mean? Well, if so, here is how you do it.

First of all, get some practice on a demo account First of all, get some practice on a demo account, preferably with the same broker you plan to use for actual trading.

In fact, practice a lot because you will be doing real manual trading: no machines, automated software, or exotic currencies.

Focus on EUR/USD, but any other major pair should work as well. The actual strategy is very straightforward.

The first thing you want to do is split your money into two equal shares. One is for trading, and the other is basically your plan B – a way to recover from a bad trade.(FOREX TRADING EXPENSIVE)

For starters, you use $50 for trading, and the rest is your recovery money.

Normally, you are not supposed to do this, but since you are risking a small amount of money, you need an aggressive strategy in order to get ahead.

The next step is to go through the analysis of news, charts, and all sorts of predictions you can find.

Don’t worry, your predictions tend to get better as you accumulate experience.

Basically, you go through the charts and the news to figure out your next move. But you only trade when the odds are in your favor –

if the charts are not looking good, take the rest of the day off. You only trade when the market is volatile. The more up-down-then-up again action you see, the better it gets.

With some practice, the right currency pair, and under favorable circumstances, you should be right 9 times out of 10.

And on that 10th time, make sure you close your orders within a 15% loss.

Don’t worry. These are small quantities of money, and any such losses can be recovered easily.

If you do this right, your capital should double every month or so. Within 6 months, you should be trading with roughly $6,500.(FOREX TRADING EXPENSIVE)

Within a year, anything between $200-400,000 should be attainable. The $200,000 sum would account for any losses, and the $400,000 is the best-case scenario.

What Are My Exact Costs?

The exact expenses depend on a lot of things, including the broker you choose, the kind of trader you are, your trading habits and positions, and a bunch of other stuff.

Most brokers feature an automatic calculator that can help you calculate your exact expenses, so

you should have no problems in finding out is forex trading worth it or not.

As for the exact costs, they vary from broker to broker, so it is impossible to pin them down in actual numbers.

Commissions can range from 4 cents on major currency pairs for 1k lot and go as high as 6 cents on more exotic currencies or even higher.

Spreads can be 0.5 for major currency pairs or 175.00+ if you trade exotic currencies. Here is a chart with some basic expenses that should give you a clue as to what you’re getting into.

Currency EUR/USD EUR/JPY USD/CAD EUR/GBP USD/JPY USD/CHF EUR/CHF
Average spread (pips)  

1.8

  

2.4

  

2.3

  

1.2

  

1.6

  

1.9

  

2.5
 

Commission

  

–

  

–

  

–

  

–

  

–

  

–

  

–
Total cost of a 1k trade  

18 cents

  

24 cents

  

23 cents

  

12 cents

  

16 cents

  

19 cents

  

25 cents
Total cost of a 100k trade  

$18

  

$24

  

$23

  

$12

  

$16

 $19  

$25
Total cost of a 1M trade  

$180

  

$240

  

$230

  

$120

  

$160

  

$190

  

$250
               

Common Forex Trading Pitfalls And How to Avoid them for a Successful Business

Have you ever wondered why some people make it in the Forex trade business while others can hardly end up with some profit?(FOREX TRADING EXPENSIVE)

Well, the difference comes about in the knowledge one has about the trade. Yes,… the knowledge about the“Does” and the “Don’ts” in the field of Forex trading.

And that’s what makes many beginner Forex traders end up with many days of losses rather than profits.

By knowing some of the common pitfalls to avoid in the Forex business, you can avoid them and focus on major points of strength to boost your profit margins.

Below are some of the most common trading blunders that you should watch out for and avoid by all means.

Get-rich-quick mentality

Successful forex trade takes patience, effort, and self-discipline.

However, the novice views Forex trade as the shortest way to get rich quickly, forgetting the time, risk, and effort invested by individuals to achieve such lucrative gains.(FOREX TRADING EXPENSIVE)

Believe it or not, staking large sums of money in an attempt to gain overwhelming profits will likely

land you in tremendous losses as you will at one point incur a loss in the trade.

In the long run, such habits can lead to you losing all your money in the trade due to greed. Therefore, trade wisely and follow a proven trading plan while focusing on a long-term goal.

Overusing Leverage

The opportunity to make trades on margin is one of the most enticing many traders. This can also be referred to as leveraged trading.

Ideally, leveraged trading allows you to invest a small amount of money and to get more profits as if you had made a nominal investment on such trades.

Since Forex involves a high degree of leverage, trading on too much leverage can land you into

serious losses that can eat into the entire investment.

Random decision-making

Successful Forex trading requires a well-defined trading strategy. In fact, you should know when to open and close your position based on a specific system before getting into the trade.(FOREX TRADING EXPENSIVE)

Having an elaborate trading plan eliminates losses by having a stop-loss order and saving you from second-thought guessing.

Also, it’s important the markets may not work as you expected at first but later work in your favor.

Ignoring the use of Stop-loss

Forex trade dynamics can bring you losses at one point and profits in a turn of events.

However, some beginner traders hold onto their losing positions longer than necessary, hoping to recover

the gains when the markets shift in their favor.(FOREX TRADING EXPENSIVE)

Such traders tend to leave their winning positions too quickly towards locking in instant profits.

While you might be tempted to have such a mentality, it’s imperative to be patient and make perfect entries.

If the trade turns against you, you can make a wise decision to cut it quickly or run with it.

Cutting off the trade can, in some circumstances, save you from costly ventures.

Trading on Emotions

Many novice traders make a trading decision based on their emotions rather than the objectivity of the judgment.

And the result is pretty obvious! They are more likely to last in the business for a short time before diving headfirst into losses.

Long-term and profitable Forex trading requires a sound mind and focus on relevant events.

To stay on the safer side, identify your market, monitor your position, master a profitable

trading discipline, employ money management, and avoid the pitfalls we’ve discussed earlier in this article.

Bottom Line

Is forex trading expensive, worth it or not? The answer depends on you and you alone. Between the running costs, possible profits, and all sorts of other ventures out there, there is no way anyone can decide in your stead. It all depends on whether or not you can make enough money to cover all of the expenses and prosper, or not. If so, welcome aboard. If not, good luck with your day job. Don’t quit it just yet.(FOREX TRADING EXPENSIVE)

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