TOP 5 CURRENCIESHello!
Today we will discuss the five most popular currencies.
Currently, there are 180 currencies in active circulation in the world. Most of the transactions made in the foreign exchange market are made using only about half a dozen of these currencies. If you are familiar with the Pareto principle, then it applies very well in the real world. This article will provide you with an overview of the currencies currently dominating the foreign exchange market.
The five most traded currencies in Forex are listed below, with reasons for their popularity:
* US dollar: The dominance of the US dollar as a currency is undeniable. In truth, this currency has no serious competition. Such popularity is due to the long-term stability of the government and the economic dynamism of the United States. It has a very stable value due to the fact that it is not greatly affected by inflation over a long period of time. Many foreign governments literally hold on to dollars as a reserve currency, mainly because that currency is used for international transactions. Needless to say, the US dollar is on a pedestal and its status as a currency is unparalleled – or rather, not yet.
* Euro: The US dollar as the main currency definitely needs a second currency. Surprisingly, this currency is one of the youngest, and it is considered the official currency from Finland to Portugal and from Slovakia to Slovenia. The Euro is the next most traded currency among all currencies in the world. Currently, there are about 500 million people in Africa and Europe who use this currency for trade. The value of the euro is likely to increase over time.
*Japanese yen: The Japanese yen has become so important nowadays because its value has tripled. Because of this, Japanese firms have taken advantage to acquire several procurement-related positions from many institutions in the United States. Through these developments, the yen has gradually become one of the most important currencies used in the foreign exchange market.
* British pound: The pound sterling has lost some of its glory. Decades ago, it was the second most widely used currency, but with the decline of the British Empire and the rise of the euro, the pound fell by the wayside. Today, the pound is used in only 6% of all foreign exchange transactions. If you're wondering why the pound suddenly dropped to number four, the best answer is that it's in a relative vacuum. The United Kingdom government has fixed its price against the dollar, and this is not good, because it no longer reflects the real value of the currency.
* Australian dollar: This currency was created in 1966 as a replacement for the now obsolete Australian pound. Since then, it has become one of the most popular reserve currencies circulating throughout Oceania and the Asia-Pacific region. Gradually, it has become one of the most preferred currencies for trading.
conclusions
In the 21st century, foreign exchange is moving towards diversity. Investors pay attention to the stability and volatility of the currency. In addition, the reputation of the economy and the security of the state matter in the selection process. Finally, another factor that is taken into account is the extent to which the currency is used.
Due to the high volatility, trading these pairs is faster, which can help you quickly win big or lose everything quickly.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Trading-signals
Forex Trader Career: Pros and consForex trading, which is often perceived as an easy career for making money, is actually quite difficult, although very exciting.
Due to high liquidity, round-the-clock schedule and easy accessibility, Forex trading has become a popular profession, especially for people with financial education. Being your own boss and comfortably earning money using a laptop/mobile phone when it's convenient for you is sufficient motivation for both young graduates and experienced professionals to consider Forex trading as a career.
Advantages of a Forex trader's career
There are several advantages that a career as a forex trader, also known as a currency trader, gives. They include:
Low costs
Forex trading can have very low costs (brokerage services and commissions). In reality, there are no commissions – most forex brokers profit from trading stocks or other securities, where the brokerage structure varies greatly, and the trader must take into account such commissions.
Suitable for different trading styles
In the foreign exchange market, work all day, which allows transactions in its convenience, which is very beneficial for short-term traders who, as a rule, take positions for a shorter period of time (say, a few minutes to several hours). Few traders make trades outside of business hours.
For example, daylight time in Australia is night time for the east coast of the USA. A trader from the United States can trade Australian dollars during business hours in the United States, since no significant developments are expected and prices for the Australian dollar are in a stable range during such non-business hours. Such traders use trading strategies with large volumes and low profits. They are trying to make a profit on a relatively stable duration of low volatility and compensate for this with large volumes of transactions. Traders can also open long-term positions, which can last from several days to several weeks. Thus, Forex trading is very convenient.
High liquidity
Compared to any other financial markets, the forex market has the greatest amount of price manipulation and price anomalies, thereby providing narrower spreads, which leads to more efficient pricing. There is no need to worry about high volatility during the opening and closing hours or about stagnant price ranges in the afternoon, which are typical for stock markets. If no major events are expected, similar price patterns (high, medium or low volatility) can be observed throughout continuous trading.
There is no central exchange or regulator
Since it is an over-the-counter market operating worldwide, there is no central exchange or regulator for the forex market. Central banks of various countries from time to time intervene as necessary, but these are rare events that occur in extreme conditions. Most of these developments are already perceived and evaluated by the market. Such a decentralized and deregulated market helps to avoid sudden surprises. Compare this to stock markets, where a company can suddenly declare dividends or report huge losses, which will lead to huge price changes.
Such deregulation also helps to reduce costs. Orders are placed directly with the broker, who executes them independently. Another advantage of deregulated markets is the ability to open short positions, which is prohibited for some security classes in other markets.
Volatility is a trader's friend
Major currencies often exhibit strong price fluctuations. If trades are placed wisely, high volatility opens up huge opportunities for profit.
Variety of pairs for trading
There are 28 major currency pairs involving eight major currencies. The criteria for choosing a pair can be a convenient time, the structure of volatility or economic development. A forex trader who loves volatility can easily switch from one currency pair to another.
Low capital requirements
Due to the narrow spreads in points, it is easy to start trading on the foreign exchange market with a small initial capital. Without additional capital, it may be impossible to trade in other markets (for example, in the stock, futures or options markets). The availability of margin trading with a high leverage ratio (up to 50 to 1) is the cherry on the cake for Forex transactions. Although trading with such a high margin comes with its own risks, it also makes it easier to get more potential profits with limited capital.
Ease of entry
There are hundreds of fundamental analysis for long-term forex trading, which gives traders with different levels of experience a huge choice for quick entry into forex trading.
Disadvantages of a Forex trader's career
Lack of transparency
Due to the deregulated nature of the forex market, which is dominated by brokers, they actually trade against professionals. Working with brokers means that the forex market may not be completely transparent. A trader may not have any control over how his trading order is executed, may not get the best price, or may have limited views of trading quotes provided only by his chosen broker. A simple solution is to deal only with regulated brokers that fall under the competence of broker regulators. The market may not be under the control of regulators, but the activity of brokers is under control.
Comprehensive pricing process
Forex rates depend on many factors, primarily global politics or economics, which can be difficult to analyze information and obtain reliable conclusions for trading. Most of the trading in the foreign exchange market takes place using technical indicators, which is the main reason for the high volatility in the foreign exchange markets. Incorrect technical assessment will lead to a loss.
High risk, high leverage
Forex trading is available with a high leverage, which means that it is possible to make a profit/loss many times exceeding the trading capital. Forex markets allow a leverage of 50:1, so you need to have only $ 1 to open a currency position worth $ 50. While a trader can benefit from leverage, the loss increases. Forex trading can easily turn into a nightmare with losses if a person does not have a clear knowledge of leverage, an effective capital allocation scheme and strong control over emotions (for example, willingness to reduce losses).
Independent learning
In the stock market, a trader can seek professional help from portfolio managers, trading consultants and account managers. Forex traders are completely on their own, with almost no help. Disciplined and continuous self-study is a prerequisite throughout your trading career. Most beginners leave at the initial stage, primarily due to losses incurred due to limited knowledge about Forex trading and improper trading.
High volatility
Having no control over macroeconomic and geopolitical events, it is easy to incur huge losses in an extremely volatile foreign exchange market. If something goes wrong with a certain stock, shareholders can put pressure on management to initiate the necessary changes, or they can turn to regulatory authorities. Forex traders have nowhere to go. For example, when Iceland went bankrupt, traders owning the Icelandic crown could only watch.
Round-the-clock markets make it difficult to regularly monitor prices and volatility. The best approach is to set strict stop losses for all Forex trades and trade systematically using a well-planned approach.
conclusion
Forex trading has many pros and cons.
You can easily earn large sums and just as easily lose them.
The market has a great history, and you can learn how to make a profit on forex.
The main question is whether everything that the market is ready to give is suitable for you?
TRAILING STOPWhat is trailing stop?
A trailing stop is a modification of a typical stop order that can be set to a specific percentage or dollar amount of the current market price.
A trailing stop is designed to protect profits by allowing the trade to remain open and continue to make a profit as long as the price moves in the investor's favor. The order closes the trade if the price changes direction by the specified percentage or dollar amount.
Understanding the trailing stop
Trailing stops only move in one direction because they are designed to lock in profits or limit losses. If a trailing stop loss of 10% is added to a long position, a sell trade will be placed if the price drops 10% from its post-buy peak price. The trailing stop moves up only after a new high has been established. Once a trailing stop has moved up, it cannot go back down.
A trailing stop is more flexible than a fixed stop loss because it automatically tracks the direction of a stock's price and does not require manual reset like a fixed stop loss.
Trailing Stop Trading
The key to successfully using a trailing stop is to set it at a level that is neither too narrow nor too wide. Setting a trailing stop loss that is too tight can mean that the trailing stop is triggered by normal daily market movement, and thus there is no room for the trade to move in the trader's direction. A stop loss that is too short will usually result in a losing trade, albeit a small one. A trailing stop that is too large does not work in normal market movements, but it means that the trader is taking on the risk of unnecessarily large losses or forgoing more profit than he needs.
Although trailing stops lock in profits and limit losses, setting the ideal trailing stop distance is difficult. There is no perfect distance because markets and the way stocks move are constantly changing. Despite this, trailing stops are effective tools and, like every other method, there are pros and cons here.
Real world example
Let's say you bought Alphabet Inc. (historically pulls back 5-8% before moving up again). These previous moves can help set the percentage level that will be used for the trailing stop.
Choosing 3% or even 5% can be too difficult. Even minor retracements tend to move more, meaning the trade is likely to be stopped out by a trailing stop before the price can move higher.
Choosing a trailing stop of 20% is overkill. Based on recent trends, the average pullback is around 6%, with larger ones around 8%.
A trailing stop loss of 10% to 12% is better. This gives the trading space room to move, but also quickly takes the trader out if the price drops more than 12%. A 10% to 12% drop is larger than a typical retracement, which means something more significant could be happening – basically, it could be a trend reversal, not just a pullback.
Using a trailing stop of 10%, your broker will execute a sell order if the price drops 10% below your buy price. It's 900 dollars. If the price never rises above $1,000 after buying, your stop loss will remain at $900. If the price hits $1,010, your stop loss will move to $909, 10% below $1,010. If the share price rises to $1,250, your broker will execute a sell order if the price drops to $1,125. If the price starts to fall from $1250 and doesn't come back up, your trailing stop order remains at $1125 and if the price drops to that price the broker will place a sell order on your behalf.
The ideal trailing stop loss will change over time. In more volatile periods, it is better to use a wider trailing stop. During quieter times or when the stock is very stable, a tighter trailing stop loss may be effective. However, once a trailing stop loss is set for an individual trade, it should be left as is. A common trading mistake is to increase the risk of a trade one time to avoid losses. This is called loss aversion and can quickly take a trading account down.
Results
Trailing stop is a very useful tool if you know how to use it.
The tool can help you keep your profits on days when you can't follow the price and move the normal stop yourself.
Adding such a useful tool will help improve your strategy and increase your profits.
But do not forget about the correct setting of the trailing stop, the values of which will be different for each instrument.
To more accurately determine the values for the trailing stop, it is worth knowing the average daily movement of the instrument, as in the example above.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
FOREX TIMEFRAMESMost technical traders have come across the concept of multiple time frame analysis in their market education. However, it is a well established chart reader.
Many market participants miss the larger trend, miss clear support and resistance levels, and miss entry and stop levels because they don't analyze the higher timeframes.
Multiple Time Frame Analysis
Multiple time frame analysis involves monitoring the same currency pair on different time frames.
As a general rule, using three different periods gives a fairly broad view of the market, while using fewer can result in significant loss of data, and using more often provides overanalysis.
When choosing three time frames, a simple strategy might be to follow the "rule of four". This means that you should first determine the medium-term period in which the trader is going to trade. From here, a shorter time frame should be chosen, which should be at least one-fourth of the interim period. Using the same calculation, the long-term timeframe must be at least four times larger than the intermediate one.
In the long term, the current trend will be determined, in the short term, the ideal entry point, and the medium term will indicate how long you can hold the position and where the targets are.
When choosing a range of three periods, be sure to select the correct timeframe.
A long-term trader does not need to follow a minute chart, and a short-term trader does not need to follow a monthly one.
Long term time frames
With this method of studying charts, it is generally best to start with long-term time frames and move on to more detailed frequencies. Looking at the long term time frame, a dominant trend is established.
Long-term price movement is influenced by fundamental data that a long-term trader should take into account in the analysis.
It is important to consider interest rates, which are a major component in the pricing of exchange rates.
Medium term time frames
This is the most versatile of the three because at this level one can gain insight into both short and long term time frames. In fact, this level should be the most commonly used chart when planning a trade when a trade is active and when a position is approaching either its target profit or stop loss.
Short term time frame
As the smaller price action swings become clearer, the trader can better choose an attractive entry for a position whose direction is already determined by the higher frequency charts.
Another consideration for this period is that the fundamentals again have a strong influence on the price movement on these charts, although in a very different way than for the higher time frames. Fundamental trends are no longer visible when the charts are below the four hour frequency. Instead, short-term time frames will react with increased volatility to the news. Often these jerky movements last for a very short time and as such are sometimes described as noise.
Putting it all together
When all three timeframes are combined to evaluate a currency pair, a trader will easily increase the chances of success for a trade, regardless of other rules applied to the strategy. Performing a downward analysis helps to trade with the trend. This alone reduces risk as there is a higher chance that the price action will eventually continue in the direction of the longer trend. Applying this theory, the level of confidence in a trade should be measured by how the time frames match up.
For example, if the larger trend is up and the medium and short-term trends are moving down, cautious shorts should be entered with reasonable profit targets and stops. Alternatively, a trader can wait until the bearish wave ends on the smaller charts and try to go long at a good level when the three timeframes realign.
Another obvious benefit of including multiple timeframes in trade analysis is the ability to identify support and resistance values, as well as strong entry and exit levels. The chances of a trade being successful are increased when it is tracked on a short-term chart due to the trader's ability to avoid bad entry prices, misplaced stops, and/or unreasonable targets.
essence
Using multiple timeframe analysis can greatly increase the chances of a successful trade. Unfortunately, many traders ignore the usefulness of this method when they start trading. As we have shown in this article, it may be time for many novice traders to return to this method, because it is the easiest way to know the direction of the trend and not go against it.
Forex scalpingHi all!
Today I want to talk about scalping.
What is scalping?
Scalping is the style of buying or selling currency pairs over a short period of time in an attempt to make a series of quick profits. A forex scalper aims to make a large number of trades using the small price movements that are common throughout the day.
Understanding Forex scalping
Forex scalpers usually use leverage, which allows them to open larger positions, so that a small price change equals a solid profit.
Forex scalping risks
Like all trading styles, Forex scalping comes with risks. Even if you risk a small amount on a trade, taking many trades can mean a significant drawdown if many of those trades end up losing money.
This is a viable system, but sometimes a trader cannot exit due to a five pip loss. The market can drop through the stop loss point and they end up with a loss of 20 pips. Thus, they lose four times more than they expected. Some of these slippage scenarios can quickly deplete an account.
Special Considerations
Forex scalpers require a trading account with tight spreads, low commissions and the ability to place orders at any price.
If the spread or commissions are too high, or the price at which a trader can trade is too limited, the chances of a forex scalper being successful are greatly reduced.
Who is scalping for?
Scalping may not be suitable for all traders. The profitability of each position opened by the scalper is usually small, and the profit is achieved by adding up the profit from each closed small position. The scalper must be able to wait until his labor brings profit. To become a successful Forex scalper, you need endurance, attentiveness and discipline.
Scalping requires a lot more time and attention from the trader compared to other trading styles such as swing trading or trend following. A typical scalper opens and closes dozens of positions during a typical trading day. For some, this may be an overwhelming task, creating too much psychological stress.
Advantages and disadvantages of scalping
The main advantages of scalping
The potential profitability of the strategy, both within one trading day and in the long term.
There is no need to wait for the next trend to form in the market. You can scalp in any situation: with the trend, against the trend, in the sideways (Flat).
More simplified market analysis. With the help of technical analysis and indicators, a short-term trend is assessed, fundamental factors are taken into account selectively.
Suitable for trading on small deposits. Thanks to leverage, even on a small account, you can open significant positions and make a profit.
The disadvantages of scalping are
Difficulty in choosing the right broker. Scalping requires favorable trading conditions – minimum spreads and commissions, no critical slippage. Not every broker will be able to provide such conditions.
Increased risk associated with the use of high leverage. When using leverage, even a small movement of the market against a trader can bring serious losses, so in order not to drain the deposit, it is necessary to apply risk control rules.
Large expenditures of time and constant psycho-emotional stress during the trading day. The scalper makes a large number of transactions and this requires constant monitoring of the market. Such active trading consumes a lot of energy and is fraught with possible "burnout" of the trader.
Limitation on the number of used trading instruments. Not all trading tools are suitable for scalping. To reduce costs with a large number of transactions, assets with minimal spreads are selected.
conclusions
Scalping is perhaps the most difficult type of trading that requires maximum concentration and self-control.
This is because it is difficult to predict the future movement of the market, especially the Forex market.
It is worth spending a lot of time to gain enough experience and trade steadily in the plus.
Learn, try and you will succeed!
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
NFP REPORTSHello traders!
Today I want to share with you interesting information that can bring you profit.
Let's talk about NFP
What is Nonfarm Payrolls?
Nonfarm Payrolls (NFP) is the number of new jobs in the non-farm sectors of the economy over the past month.
The released figures show the dynamics of changes (increase, decrease) relative to the previous period.
These statistics cover about 500 sectors of the economy: construction, trade, business services, transport, logistics, financial sector, medicine, tourism, and so on. The calculations do not take into account workers in the agricultural sector, non-profit organizations and self-employed citizens.
A change in the NFP value of 100-200 thousand jobs will lead to strong volatility in the quotes of world currencies in pairs with the US dollar, gold and stock markets.
Long-term reaction to the growth of non-farms is the weakening of the US dollar against a basket of major Forex currencies;
The short-term reaction is unpredictable due to a sharp jump in the rate, leading to the triggering of many pending orders and an unpredictable exit and infusion of huge amounts of money into the markets in a short period of time.
Position search
An example of looking for a trade setup would be to use 30 pips. It is not unusual for the EUR/USD pair to advance 30 pips within the first few minutes of the release of the report. The larger the initial movement, the better for determining the direction of the pair's movement.
After the initial big move, there is usually a price pullback that signals an entry point. Using one-minute price bars, traders draw a trendline from the high of the initial move to the high of the one-minute price retracement (if the initial move was up). They buy when the price breaks above the trend line.
If the initial movement was downward, then a trend line is drawn from the low of the initial movement to the low of the price retracement using the same criteria. Traders enter into a short trade when the price breaks below the trend line.
Some traders like to wait 5 price bars before plotting a trendline, while others may have experience telling them less or more is better. It also helps to place a stop loss in case the price bar chosen was not the actual price pullback low.
If a trader is using the 5 price bar method, then a stop loss should be placed one pip below the low of that move if a long trade is taken. If a short trade was entered, then the stop loss should be placed one pip (plus the size of the spread) above the high formed on the movement of 5 price bars.
Profit target
To determine an exit position, or profit target, traders use the difference between the opening price and the initial move. The difference is divided in half. The target price is this number. For example, if the initial move was 115 pips, then the profit target would be 57.5 pips.
Risk
Only enter a trade if your profit potential is at least 1.5 times your trading risk. Ideally it should be 2x or more. In the examples above, the profit potential is about 3 times the trading risk.
Don't forget about risk control. Do not risk more than 1% of your capital.
Practice Before Using the Method
It is impossible to describe how to trade all possible variations of the strategy that may arise. That is why it is recommended to use the strategy on a demo version before real trading. Understand the principles and the reasons why they exist, so that if conditions are slightly different on a given day, you can adapt and not be bombarded with questions.
If a profit target seems too bold, use a 3:1 reward/risk ratio target. The goal is to place the target in a logical and reasonable place based on the trend and volatility. The profit target method helps with this, but it is only a guide and may need to be adjusted slightly depending on the conditions of the day.
EUR/USD will not behave exactly the same after every NFP report, so it will take some practice to see how these trade setups play out and be fast enough to jump in and trade them. Practice the strategy on a demo account until you show total profit after trading at least five NFP reports. Only then can you consider trading this strategy with real money.
conclusions
News trading is not easy.
During such a period, the price moves quickly.
It is worth gaining enough experience to confidently trade on the news, so it is recommended to practice on a demo account.
Control the risks, follow the strategy and the profit will come to you.
Good luck!
GOLD PRICEHello!
In difficult times, investors become interested in gold, as has been done for a long time.
But what factors affect the price of gold?
Let's try to find out today.
Reserves of the Central Bank
Central banks hold fiat currency, but gold is also held in reserve.
Ever since the US went off the gold standard, central banks have been building up their gold holdings.
Overall, governments bought a total of 650 tons of gold in 2019, down from the 656 tons bought in 2018, and still at 50-year highs.
US dollar value
The strength of the dollar affects the price of gold.
If the dollar is strong, then the price of gold is usually low.
If the dollar is weak, the price of gold rises.
As a result, gold is often seen as a hedge against inflation.
As inflation rises, so does the price of gold.
Global demand for jewelry and industry
In 2019, jewelry accounted for more than half of the demand for gold, which was equal to 440 tons.
In addition, 7.5% of demand is related to technology and industry, where gold is used to make equipment.
These directions, their growth or decline, strongly influence the price of gold.
Welfare Protection
In times of crisis, gold has always been considered a "safe haven" for investors' funds.
Time passes and gold is still being used, and even the arrival of bitcoin has not changed the situation much.
When the expected or actual yields of bonds, stocks and real estate fall, interest in investing in gold may increase, causing its price to rise.
In addition, it is believed that gold provides protection during periods of political instability.
Investment demand
In addition to the central bank, gold is owned by exchange-traded funds that issue shares available for purchase and sale to investors.
SPDR Gold Trust (GLD) is the largest holding over 1,078 tons of gold in March 2021. In general, gold purchases from various investment vehicles in 2019 amounted to 1271.7 tons, which is more than 29%. of the total demand for gold.
Gold production
Major players in global gold mining include China, South Africa, the US, Australia, Russia and Peru.
The production of gold in the world affects the price of gold, which is another example of supply and demand being met.
The mine's gold production was approximately 3,260 tons in 2018, up from 2,500 in 2010.
Every year it is more and more difficult to mine gold, and this also affects the price.
conclusions
Gold, after several centuries, is still used not only as jewelry, but also for investment.
Every year, the price of production is growing, banks are accumulating gold in their reserves, crises and other factors are raising the price of gold.
Using the data, you can predict the rise or fall of prices.
In any case, nothing more expensive than information has yet been invented.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
8 MYTHS ABOUT TECHNICAL ANALYSISThere are many people and many opinions in the market.
There are those who criticize technical analysis, calling it superficial and even useless.
There are those who consider technical analysis (TA) the holy grail that can bring huge profits.
Today we will try to debunk 8 myths about technical analysis.
myths
1. TA is for short-term trading or day trading only.
Many people think that TA is only suitable for short-term and computer-driven trading, such as day trading and high frequency trades.
The history of TA actually goes back long before computers were invented, and many famous and profitable traders use it for long-term trading.
Technical analysis is used by traders on all timeframes, from minutes to weeks and months.
2. Only individual traders use technical analysis.
In fact, investment banks have dedicated trading teams that use technical analysis.
High-frequency trading, which covers a significant portion of the trading volume of stock exchanges, relies heavily on technical concepts.
3. TA has a low success rate.
To debunk this myth, all you have to do is read Masters of the Market: Interviews with Top Traders by Jack D. Schwager, which quotes many traders who profit solely from technical analysis.
Traders with many years of experience have been making profits using technical analysis for more than a century.
4. Technical analysis is fast and easy.
Novice traders open trades based on a simple TA, but this is not enough to be profitable at a distance.
Success depends on continued study, practice, good money management and discipline.
Technical analysis is just a tool, just one piece of the puzzle.
5. Ready-made technical analysis software can help traders make money easily.
There are a lot of advertisements on the Internet that promise to give you a program for a small amount that will do everything for you and bring you profit - in fact, this is a scam.
There are programs and indicators that can help you trade, but no program will give you guaranteed profits.
6. Technical indicators can be applied to all markets.
Most often, yes, TA can be applied in all markets, but there are exceptions.
Different asset classes move in their own way, with their own characteristics, and a trader must be able to adjust his TA for a particular asset.
Don't make the mistake of applying technical indicators designed for one asset class to another.
7. Technical analysis can give very accurate price predictions.
Beginning traders expect to see 100% accurate signals and accurate profit prices, reversals and so on from TA.
This is simply impossible.
Most often, TA helps to find the zone where the price can go, where it can reverse from and this is not a specific point, this is a zone and experienced traders understand this.
8. The winning percentage in technical analysis should be higher.
If the first trader out of 5 made 4 profitable trades, and the second trader out of 5 made 1, who is more successful?
You need to get more information to give an answer, it may be that the first trader earned $ 10 in 4 trades, but at the same time he lost $ 80 in one and then he will be in the red, and the second trader lost $ 40 in 4 trades , while in one transaction he earned $ 100.
The right trading structure ensures profitability even with a small number of winners.
It is not necessary to have many profitable trades, it is enough that the profit covers losses and something else remains, and sometimes one trade is enough for this.
essence
Technical analysis is not the holy grail, it will not give you 100% profit.
It does not suit everyone and you need to study it before you understand whether it suits you or not.
You need to gain enough experience to learn how to use technical analysis correctly.
When used correctly, TA can give you a real opportunity for trading success.
Good luck!
Forex Fundamental AnalysisHello!
Today I want to talk about a topic that is rarely discussed, but important at the same time - fundamental analysis of the forex market.
News, GDP, interest rates - all this affects the market and everyone needs to be able to understand this.
What is fundamental analysis
Forex fundamental analysis is a way of analyzing a currency, making predictions based on data that is not directly related to price charts.
There are two types of influence of fundamental indicators on the price :
Short term. Fundamental information has an impact on the market within minutes or hours.
Long term. Fundamental factors, the impact of which on currencies lasts from 3-6 months. Used for strategic positions.
Several basic levels are used for conducting FA.
The level of the national economy. Comprehensive analytics of economic and political indicators of the country.
Industry. The volumes of supply and demand, prices, technologies, as well as production parameters are studied.
Individual currency level. Financial statements, management technologies, business strategies, competitive environment are assessed.
The classical scheme of fundamental analysis looks like this :
An analysis of global financial markets, the presence of signs of a crisis and force majeure events, an examination of the situation in the economy and politics of the leading world powers is carried out.
Economic indicators and the general level of stability of the region (industry), the analyzed currency or other instrument are assessed.
The degree of influence of regional and world economic indicators on the dynamics of the selected financial instrument in the short and medium term is determined.
Main fundamental factors
When using FA directly to open trading positions, the following points will be decisive (in descending order of importance) :
Interest rates of central banks (CB).
Macroeconomic indicators.
Force majeure situations, market rumors, news.
Central bank rates
According to the theory of macroeconomics, increasing interest rates cause currencies to rise in price, while falling interest rates make them cheaper. However, there are situations in the Forex market in which a decrease in the rate becomes the reason for the strengthening of the currency.
Foreign exchange market interventions
Currency interventions are an important tool in the analysis. Central Banks resort to such a measure very rarely, but you should not ignore this phenomenon.
Macroeconomic indicators
For any country without exception, there are data of constant importance:
the level of GDP;
inflation rate;
trade balance.
These reports are expected by the market. The approach of their publication dates gives rise to a lot of rumors that fuel the trading frenzy. Such an environment often creates situations in which the release of specific numbers does not cause almost any reaction, since the market has already beaten them in advance. However, as FA practice shows, this happens only when the existing trend is not subject to change. In the case when the published data differ significantly from the forecast, the market response can be very violent. This is especially true of the moment of the general reversal of the current trend.
Important macroeconomic indicators
In simple words, a macroeconomic indicator is expected news, showing up-to-date data on the main indices of the financial and economic state of the state.
The advantage is that each trader can know in advance the moment of release of any data from the economic calendar.
These indicators affect the rate in the short term and are suitable for trading on medium and short term timeframes.
Types of macroeconomic indicators
Trade balance. This indicator reflects the volume of exported goods to imported ones. A positive balance is called when exports are higher than imports. Assumes a strengthening of the exchange rate, due to the fact that rising exports increase the demand for the national currency of the exporting region.
Discount rate of the National Bank. On its basis, interest rates on deposits and loans are formed. When the national bank rate rises, the currency strengthens; when it falls, it weakens.
Gross domestic product. The volume of GDP is obtained by summing up the entire range of services and goods that were produced in the country per capita. However, an increase in GDP always leads to the strengthening of the national currency against other currencies.
Inflation. The growth of this indicator leads to the depreciation of the national currency.
Unemployment Rate. As a rule, an increase in the indicator is followed by a decrease in output, an increase in inflation and a negative change in the trade balance. For this reason, the data on unemployment has a strong pressure on currencies, and an increase in the figure causes a depreciation.
Macroeconomic indicators
One of the most common mistakes in trading is trying to trade on weak news. Therefore, you need to understand which data pertains to you.
Macroeconomic indicators
One of the most common mistakes in trading is trying to trade on weak news. Therefore, you need to understand which of the data are important.
Important market data includes :
money supply;
balance of payments deficit (Balance of Payment Deficit);
trade balance deficit (Balance of Trade Deficit);
unemployment rate (Unemployment Rate);
a significant fall or rise in the rate of inflation (Rate of Inflation);
fluctuations in the volume of GDP;
change in key rates;
emergencies (natural disasters, unexpected events in politics or
Second stage of analysis
An assessment of the numbers predicted in the calendar for future data.
Analysis of the market reaction to this event. This is done in order to understand the price behavior at the news release. For example, when the exchange rate of a currency dependent on news is growing steadily even before the release of figures and at the same time positive data is predicted, one should not expect sharp fluctuations in the exchange rate at the time of the release of the information. And if the forecast turns out to be wrong, then the market can react with a powerful reversal of the current trend.
Decision-making. There are two options for entering a trade. The first is to use the situation to open an order on the current trend before the release of the news with constant trailing stops to protect the position. The second is to wait for the release of the data and make trading decisions according to the situation.
Results
Fundamental indicators certainly affect the price, but each in its own way.
It is worth remembering this and not running to open a position just by seeing some news.
Analyze, try to understand the possible reaction of the market to the news.
Use all the information, be objective and then you will be better than most.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
ACCELERATION OF A SMALL DEPOSITToday I want to talk about a topic that every novice trader has to face.
Most beginner traders save up money to make the first deposit and very often this amount is too small for trading, but the broker gives you the opportunity to trade anyway, why is that?
The fact is that the smaller the deposit, the easier it is to lose them, and the broker knows this.
Therefore, for calm trading, you need an amount greater than $100 or $500.
The optimal amount to start trading is $1000
What is the danger of a small deposit?
Beginners can be anyone from a student to a businessman.
And very often the initial funds will be small, because the reason people come to the market is to make money!
A person invests $10, not because he is greedy, but because there are simply no more free funds.
At the same time, the trader is already dreaming of millions, and his head begins to spin from such thoughts.
As a result, deals are opened for $1, then for $2, and in the end all the money is lost.
The market does not bring quick profits.
It is also impossible to deposit the last money or money borrowed.
All this will only lead to the drain of the deposit.
1000$?
Why $1000 is considered the best start?
This question can be answered by the rules of money management.
Everyone remembers the rules of risk, let's say you decide not to risk more than 5% on each trade.
When trading intraday, the position size is 20-50 pp., that is, when trading micro-lots of 0.01, the risk per trade will be $2-$5. Such a risk is acceptable for a $100 account, since then it will be 5%.
When trading on daily timeframes, the average risk is even higher: 50-100 pp. (5-10 pp.). In this case, the account must be at least $200. As you can see, money management clearly indicates the minimum deposit size.
This is when trading micro-lots.
As a rule, traders use standard lots because they want to make quick money and it is very risky.
Therefore, you should not start trading with $10 or $200.
It is better to save and collect the required amount, or at least $500, and then it will be easier to trade.
But what if you can't wait?
How to disperse the deposit?
There are a couple of rules:
A trader must have a working trading strategy that has proven itself well on a demo account and on a real account;
Comply with risk management rules;
Provide a deposit amount of $200-$400.
Subject to these conditions, you can “softly” disperse the deposit.
Overclocking
With a quick acceleration of the deposit, the risks increase, you must understand this.
Here are three principles that make it possible:
The risk per trade is set higher than in the classic MM, and can reach 10%;
If the trade is unprofitable, the risks are not doubled;
When the deposit is broken up to the set limit (for example, from $200 to $500), the trader returns to the previous risk of 5% and trades for several months in compliance with Money Management rules. Then you can repeat the "acceleration".
pyramiding
A popular way to accelerate a deposit is Pyramiding, the meaning of which is to add positions.
Here's how it goes:
You determine the main trend on the daily timeframe and open a position following the trend.
Then wait for another signal indicating the continuation of the trend.
If there is a signal, open another position along the trend. The protective stop-loss order of the first order is transferred to the opening level of the second order, that is, to breakeven.
The size of the take profit on the second trade should be small, because the trend can change direction at any time.
It is important to remember that this strategy only works if there is a trend, so a flat or correction should be avoided.
Outcome
Trading this way is very risky.
The best way is to raise an amount equal to or greater than $1,000.
Then trading will become less dangerous for you, since you can use the standard money management rules.
Before dispersing the deposit, you must set yourself a goal, after reaching which, be ready to use the standard risk rules.
Big risks are rewarded, but even they need to be taken with intelligence and control.
Good luck!
DROP IN TRADINGHello!
Today I want to talk about drawdown in trading.
This topic is very important because it is directly related to the possible loss of all capital.
What is a drawdown?
When trading, you can make profits as well as take losses.
When you lose too much and the account decreases significantly, this is called a drawdown.
Losses in trading are normal and should not be feared.
But you should not lose too much, a minus of 15-20% is considered a moderate minus value, and these losses must be controlled.
Drawdown (DrawDown, DD, drawdown) in the foreign exchange market is a temporary decrease in funds in the trading account as a result of opening a losing trade.
In simple words, a drawdown is a trader's floating or real loss.
Drawdown types
In the Forex currency market, it is customary to classify the following types of drawdown:
The current drawdown is a temporary drawdown associated with an open position, which is now in the red.
The size of the initial deposit does not change until the position is closed.
As a result, the position itself can be closed even in a plus, but if the position goes into a minus, you should think about the rules of money-management.
Because a position not closed in time may end up with a margin call.
A fixed drawdown is a position closed with a loss.
This type of drawdown negatively affects the size of the deposit, reducing it.
If money management is not used correctly, such transactions can significantly reduce your deposit, which is not recommended.
Maximum drawdown - the maximum value of deposit losses for the entire trading period.
It is calculated each time from the previous maximum deposit amount, and the largest value is selected.
For example, there were three big minuses on the account: $300 with a $1000 deposit, $450 with a $2000 deposit and $200 with a $2500 deposit. The maximum drawdown here will be $450.
Relative drawdown - the maximum decrease in the account relative to the initial deposit, expressed as a percentage.
It is often used when analyzing a trading strategy in order to understand after what losses a trader should think about changing the strategy.
For example, if the relative drawdown is 20%, then with an initial deposit of $1000, the speculator will understand that it is necessary to close deals and modify tactics when the current drawdown reaches $200.
The absolute drawdown shows how much the balance has decreased relative to the initial value. These data are similar to the relative drawdown, but are expressed in the deposit currency.
Why analyze losses?
Each trader should know how much he is ready to lose and at what value he needs to change the strategy and start trading a little differently.
The percentage of allowed drawdown is different for each trader, conservative traders try to minimize the maximum drawdown, more aggressive traders take risks much more often and in large volumes.
Large companies keep the maximum loss in the region of 15-20%.
Optimal drawdown size
The optimal drawdown size varies depending on many factors: the type of strategy, the amount of the deposit, the psychology of the trader, the timeframe, and so on.
Drawdown can be divided into three types:
A drawdown of 15-20% is working and quite normal. It can be restored, and it does not make strong adjustments to the trading strategy.
A drawdown of 21-35% is a dangerous level of losses that will require a reduction in the volume of the trade and recovery can be difficult. Closer to the 30% mark, it is important to think about modifying the trading strategy and review it for errors in the risk management system.
A drawdown of 36-55% is an actual harbinger of a loss of a deposit. It is better to close orders and think about what led to such a drawdown, which was not closed forcibly earlier.
Drawdown reduction
Setting a stop loss - and its size should not exceed 5% of the total amount on the trader's account.
Optimal leverage - the use of a large amount of leverage can lead not only to drawdowns, but also to draining the trader's deposit to almost zero.
Refraining from trading in an unstable market - very often a trader, observing even the first two conditions, still manages to lose almost half of his own funds during one session. Therefore, if you have made several unsuccessful transactions in a row, then it is better to give up trading for today and do something else.
Correct assessment of probable profit - one should not be greedy when placing a take profit, its size should always correspond to the market dynamics.
conclusions
Every trader who wants to consistently earn money in the market must understand how much he is ready to lose, while the trader must do everything not to lose all his capital.
You can lose 15% per month and it will not be scary for a trader who follows a trading strategy, money management and monitor losses.
As a result, such a trader can return the lost next month.
But those who do not follow these rules, do not think about a drawdown, do not know how much they are ready to lose and how much they cannot lose, as a result, everyone loses.
Losses are inevitable, but don't let the market take everything.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
TRADING MYTHSHello traders!
There is a lot of information about trading on the Internet and it is sometimes difficult to understand what is true and what is fiction.
Today we will try to sort out the most popular myths and understand what is really true and what is not.
Work without rest
You have to work hard, but don't overdo it.
If you watch charts 24/7 or study hundreds of systems, you will simply go crazy.
There will be a mess in your head, and most importantly, you will be tired.
Improve your skills and discipline, keep a trading journal and analyze trades, and don't forget to rest.
It's a matter of discipline
Discipline is a very important skill for a trader.
Through discipline, you can control your emotions and follow the rules.
But do not think that one discipline is enough to be a profitable trader.
If you are losing money over and over again, it may be because of your trading strategy.
Analyze your trading and find your style.
Point of entry
The entry point is very important when making a new trade.
The better the entry point, the less the price will go against you if you have analyzed everything correctly.
However, there are other factors that play an important role in trading: position size, stop loss, trade management, etc.
The entry point is just a part of the whole work.
Did you know that even with random entry points, you can still be profitable if you think about stop losses, position size, and trade management?
Profitability
Trading is not a one day job.
And do not expect that you will take a huge profit in an hour.
The main task is to be profitable at a distance.
Don't run for quick profits.
Remember that the more positions you open, the more likely you are to lose.
Engage in consistent profits that are different for different trading styles.
For scalpers, consistent returns mean making a profit every quarter. For traders who trade daily charts, consistent returns will mean making a year's worth of profits.
Determine the value of constant return for yourself and follow the plan.
Trading is a risk
Every day carries a variety of risks.
You run the risk of being hit by a car or having an accident.
But after a few driving lessons, the risk of getting into an accident decreases.
It's the same with trading.
Over time, you will become more experienced and will become better versed in trading, thereby reducing the risks.
Everything in life comes with some risk, and your job is to keep all possible risks to a minimum.
Leverage
There are a lot of advertisements on the Internet for brokers who offer crazy leverage.
Brokers say that you can make 100% profit from one position, but they don't say that you can lose everything.
Leverage in inexperienced hands will result in the loss of the entire account.
Always remember that leverage is a double-edged sword. It can increase both your gains and your losses.
Grail
Everyone wants to find it!
But he is not.
The Grail does not exist, and professional traders do not have any secret.
To be profitable you must have experience, knowledge and discipline.
This is what distinguishes professionals from beginners.
You can make $100,000 out of $1000
You often see ads that say you can make $100,000 out of $1,000.
It is unlikely that there will be at least one newcomer who is able to do this.
Seeing such an advertisement, beginners think that it is possible to do it in one transaction.
In trading, you need to have a lot of money to earn a lot. If you have a small initial capital, then you will not be able to earn a million dollars in the short term.
In the early stages, think about how not to lose capital, and only when you learn this, you will understand how to make a profit consistently.
Where will the market go?
In the beginning, every trader wants to know exactly where the price will go.
Essentially, it means knowing the future, which is impossible.
No need to try to predict the future, in trading you will earn thanks to probabilities.
You should study this topic and understand that you don't have to be right on every trade.
You can be wrong more than half the time in determining future price action and still be profitable.
It is enough not to lose more than you earn.
Cut your losses and let your profits run.
Conclusion
The world is full of trading myths.
There are gigabytes of information around and it is very difficult to understand what is true and what is fiction, what is really useful and what is not.
Study the market, but don't believe everything you read.
Listen to the best, but don't forget to think with your own head .
HOW TO TRADE PULLBACKSHello everyone!
Today I want to discuss pullback trading with you.
You may have come across such a situation when you were waiting for a pullback to enter the market, but the price did not stop and went further.
In the place where you expected the end of the rollback, there was a breakdown, and you did not receive an entry point.
Something went wrong?
Trend
Trend is our friend!
The most famous and most important rule.
At the beginning of any market analysis there must be a trend definition.
If you want to trade pullbacks correctly, you must determine the direction of the trend.
If you are trading on the hourly chart, you must determine the direction of the trend on the daily chart and wait for the right situation on your chart, while trading, of course, with the trend.
There must be a trend in the market in order to trade on a pullback.
Trend types
Trends are different, of different strengths.
They can be divided into three types:
1. When the price bounces off the 20MA and stays higher, we say the market is in a STRONG TREND.
2. The price bounces and stays above the 50MA - GENERAL TREND.
3. The price reaches and bounces from the 200MA - WEAK TREND.
Knowing these types of trend and being able to understand the movement will help us enter the market at the right point.
Point of entry
The entry points will be the areas around the MA lines.
Here it is worth focusing on the word REGION.
You must understand that the price can go below or above the MA and only then turn around, be prepared for this.
Entry on a strong trend
In a strong trend, the price stays above the 20MA.
At the same time, you need to remember that with a strong trend, rollbacks are not deep.
This means that finding the entry point will not be so easy.
But you can open a position after the breakdown of the last maximum.
Entry on a regular trend
In a normal trend, the price makes deeper pullbacks.
The price is testing the 50MA, while the previous resistance may become support.
These are the moments we are looking for to enter.
In such zones, we will wait for a price reversal candlestick pattern to enter.
Entry on a weak trend
In a weak trend, pullbacks are even deeper than in a normal trend.
The price makes a strong pullback, reaching 200MA.
When the price of the zone is reached, we are waiting for confirmation - a candlestick formation.
Closing positions
Closing a position is just as important as opening it.
The main signals for closing will be the price movement beyond the MA line.
For example, in a market with a strong trend, the price may go a little lower than 20MA, which is not critical yet, but it makes you be more careful.
It is worth paying attention to the support level, which should not be broken by the price, but if the price still breaks through the level, then the position must be closed.
With a weak trend, it is worth remembering that pullbacks can be deeper and the price will go beyond 50MA.
You must be prepared for this.
Watch for a support level that should not be broken.
With a weak trend, holding a position is the most difficult.
The price will make strong pullbacks, which will eventually force you to close the trade.
Sometimes the price, having reached the desired zone, does not bounce right away.
Consolidation begins and if you see such a situation, the best entry option would be to exit the consolidation zone.
You must have a plan for every occasion.
conclusions
Trading with the trend is the most profitable business.
You must be able to identify the trend on the higher timeframe and, importantly, be able to wait for the right situation on your timeframe.
The market cannot be predicted with 100% certainty, so use stops and keep an eye on support and resistance levels.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
CONQUER YOUR EMOTIONSHello everyone
Today I want to talk about a very important topic in trading – emotions.
Emotions accompany us in trading from beginning to end: when we open a position, while we hold and when we close.
Our psychological state is constantly being tested.
All this leads to constant mistakes and loss of money.
But how to avoid all this?
The main reason
Think about what is the main reason for your emotional swings?
It may seem strange, but the main reason for emotional mistakes is the continuous observation of the price chart.
You constantly look at the chart, watch every tick, the price changes its direction every second, you overwork and begin to doubt the correctness of your forecast.
At the same time, it is worth recalling that people like to watch: movies, magazines, books.
We are constantly looking at something and looking for something new.
Forex is interesting because there is money there.
When a position is open, traders are happy to follow every price movement.
And when the position is not open, what do you do?
That's right, you don't look, because looking at the market is just so boring.
If the position is open, it is difficult to resist and not look at the chart.
What is the reason for the shaky psychological state of the trader?
Your drug
Constant monitoring of the price leads to addiction.
You get tired, the exhausting observation of how profit comes and goes, leads to big mistakes.
Continuous emotional roller coasters kill the desire to trade in us and at some point, on a subconscious level, you want to lose everything just to get away from the monitor.
Familiar?
How to overcome emotions?
There are many different ways, today we will look at three that will help you avoid emotional overload.
1. Use a higher timeframe
If you trade on minute charts and experience problems with emotions and fatigue, you should switch to an older timeframe.
If you start trading, for example, on a daily chart, there will be no need to look at the chart every minute, because the price does not move so fast.
The daily or 4-hour schedule does not change so often and it will be enough for you to look at the chart once or twice a day.
Thus, you will remove from the equation the constant monitoring of the schedule, which leads to fatigue.
You will have fewer mistakes, which means more profit.
2. Daily goals
A great way to reduce emotional pressure is to set goals.
The point is that you set yourself a certain profit and loss goal every day, and when you reach one of the indicators, trading for you stops today.
You can set yourself a profit and loss goal, for example, of 50 points.
As soon as you earn or lose 50 points, you go to rest until the next day.
This is a great way, and it will definitely help to avoid over-trading.
But not everyone can force themselves to leave, especially after losing money.
Follow the strategy, otherwise you will be pursued by losses.
3. Lot reduction
For many, this method may seem strange.
After all, everyone thinks only about profit and how to get it quickly.
The market is a dangerous place and there is no need to hurry here.
Reduce the position by 5 times and you will see the difference in your trading.
You will stop making mistakes, you will follow the strategy.
But why?
The problem is that when trading large lots, the trader thinks only about money, forgets about risks and rules. This is how the trader drains the account.
When trading small volumes, your brain will be free from thoughts of quick profit.
YOU will become more reasonable and attentive.
Results
Emotions will not go away and the market will always test you.
Strong emotional swings make you make mistakes and lose money.
Use the methods listed above and control over emotions will come, the results will improve.
May peace come with you!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
SECRETS OF PROFITABLE DAY TRADING. №2.
Continuation of the first part.
SECRET 6 - High Time Frames
Watch the situation on high timeframes.
Watch out for high time frame trends.
Often, this is how beginners open positions against the trend, do not follow higher timeframes.
At the same time, there are situations when a correction has begun on a smaller timeframe, which is not yet visible on a higher timeframe.
Such situations can be traded, but you should be very careful.
SECRET 7 - Daily drawdown
You should limit your losses per day.
Choose for yourself a suitable value for losses and profits, upon reaching which, you will stop trading that day.
If you decide that your daily drawdown is $100, this means that if you get a loss of $100, you will stop trading that day and do not make stupid trades in the hope of winning back.
Hope for wagering - always leads to the drain of deposits from beginners.
Control emotions and losses.
SECRET 8 - Trading Sessions
A day trader wants to make a quick profit and get out of the market, so it's important to keep an eye on the trading sessions and know when the market is most active.
The European session, intersecting with the American one, creates the most volatile time on the market.
At this time, the market moves faster, which will give you the opportunity to earn quickly.
But do not forget about the risks, such volatility can bring losses just as quickly.
It is worth remembering that the end of the Asian session and the beginning of the European one is a great time for reversal setups.
SECRET 9 - Daily Volatility
Each pair has its own daily volatility.
And, if you know this value, it will be easier for you to understand when the movement potential is likely to be exhausted.
These values can be found on the Internet for each pair.
SECRET 10 - Carrying positions through the night
Very often, beginners make this mistake - they transfer positions to the next day.
Do not forget that you opened on an intraday setup, that is, this setup most likely will not work the very next day.
Tomorrow, and maybe even at night, the market will behave differently, go against you and reach your stop.
Don't go against your strategy, follow its rules.
conclusions
Day trading is not easy, but it can be learned.
In addition, it is very profitable.
Good for overclocking a small account.
But don't forget the rules.
Don't go against the market, follow the strategy.
Good luck!
DEFINE YOUR LEVELHello to all!
Let's talk about what levels of becoming a trader are.
LEVEL #1: Unconscious Incompetence
When a beginner enters the forex market for the first time, he thinks that it will be easy to make money.
He has heard many beautiful stories and is now ready for you to go into battle.
The price is going up! So it's time to buy.
These first steps of an incompetent trader lead to disaster: usually a loss of the deposit.
It can only be worse if the trader manages to earn something and starts to think that he understands the market.
Over time, these traders lose everything.
After a series of mistakes and losses, comes the realization of one's incompetence and the desire to become better.
LEVEL #2: Conscious Incompetence
At this level, the trader realizes that he lacks knowledge and the trader begins to study and seek…
A trader looks for the Grail, buys "super profitable" indicators, learns trading methods and changes them every week without understanding.
A trader experiments with indicators, Fibonacci lines, each new figure of technical analysis seems to be the one that will lead to success.
The trader is looking for a bottom, an ideal entry point in the market and loses money again.
This level can last for several months or even years.
The trader will study, search, be disappointed every day.
It is at this stage that most of the players leave, who do not believe that it is possible to make money on the market.
LEVEL #3: “Eureka!”
At the end of the second level, the trader begins to understand that it is not a matter of strategy, but of psychology.
The trader begins to realize his mistakes and realize that he was succumbing to emotions that were blinding.
The trader begins to study books on psychology and find his mistakes on the pages.
At some point comes the realization that the future movement of the market is impossible to predict.
The trader chooses a strategy that suits him and determines the risks for himself, trading becomes easier.
Negative transactions do not upset, because the trader understands that the strategy works and sooner or later the trader will take his toll, you just need to act according to the strategy.
A trader has learned to manage risk and learn the discipline to follow a strategy clearly.
LEVEL #4: Conscious Competence
A trader opens trades when the system gives a signal.
A trader easily closes losing positions when he realizes that the market is moving against him.
The trader allows profitable trades to grow, and cuts unprofitable trades.
Most likely at this stage, the trader will trade at zero, learn not to lose money, understand how the market works.
Losses do not bother, but the trader allows profits to grow, and this can continue for about a year.
LEVEL #5: Unconscious Competence
Trading is easy and unconscious.
The trader, as if on autopilot, opens and closes transactions and does not feel emotional swings.
The trader mastered his emotions.
100 pips of profit don't turn the trader's head like before.
Trading becomes work.
The trader does not stop developing and analyzes each trade in order to improve the system.
And the trader likes all this, because it is still a very exciting journey, which now brings money to life.
Conclusion
Trading is not easy, but it can be learned.
It should be understood that the main enemy in the market is your emotions.
Do not lose control over yourself, study, analyze, follow the strategy and then you will succeed.
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
SECRETS OF PROFITABLE DAY TRADING. №1. Hello everyone!
Today we will discuss a very important topic - intraday trading .
Intraday trading is considered not an easy task, but quite profitable.
There are a few secrets that every trader should know about.
These secrets will greatly improve your trading and relieve you of unnecessary stress.
SECRET 1 - Don't trade below H1
During the day, the trader uses setups that will often give false signals on small timeframes, which will make trading nervous and unprofitable.
On H1 timeframes and above, setups are processed much better and there will not be as many false signals as on small timeframes.
The higher the timeframe, the stronger the setups formed on it.
SECRET 2 - Don't make too many trades
Even if you think that intraday trading involves a large number of transactions, this does not mean that you need to open transactions often.
Each trade should be entered after the setup signal , don't open trades just because you feel like it.
Look for clear signals, like in the books.
Wait, don't rush.
SECRET 3 - Number of tools
Day trading involves many quick decisions from the trader.
If you follow 30 pairs at once, you will not be able to clearly analyze the market and will not be able to make the right decisions.
There are enough deals inside the day, so keep an eye on 3 pairs , no more.
For beginners and it will be a lot, start with one pair and as you get better, add more charts.
Don't make it difficult for yourself, it's not easy.
SECRET 4 - Risks
The old risk rule still works and works well.
Do not risk more than 1% of your capital on each trade.
This rule applies most to beginners.
Experienced traders can deviate from this rule and risk a little more.
But this applies to experienced traders and even they should not risk 50% of the capital.
It's too much.
SECRET 5 - News
News has always influenced and will influence the market.
If the news is not so scary for high timeframes, then for smaller ones it can become a big loss.
Do not trade half an hour before the release of important news.
This is a dangerous time when the market can go either way very quickly, stopping your position.
Don't take risks.
Good luck!
End of the first part.
MARKET MAKER MANIPULATIONHello everyone!
Today I want to discuss with you a very interesting topic - the traps of market makers.
Let's get started.
Traps…
How often did you encounter this - you opened a position, and why did the price go sharply against you, knocking out your stop loss, and as soon as your position was closed with a loss, the price turned around again and went where you expected?
You analyzed your trades and did not understand what you did wrong.
Actually, it's not your fault. You just fell into the trap of a market maker.
These traps are created by large players in order to collect the stops of small market participants, thereby creating liquidity for opening or closing their large positions.
What do traps look like?
As a rule, traps are false level breakouts.
It is in these places that small players place their stop orders and this will be the main goal of a large player.
The first trap pattern is the classic Double Top pattern.
Everyone knows from books that the second peak should be slightly lower than the first. So the market tells us that the price no longer has the strength to make new highs and it's time to fall.
In fact, above the first peak, most traders place their stop losses, and large players push the price to them in order to activate orders and gain liquidity, after which the market reverses.
The second trap situation is the trend.
The trend is our friend! Everyone remembers and knows this.
In addition, everyone remembers that the trend changes when the price, in a bear market, renews the previous high.
After the new high, we believe that the trend has changed, but the price suddenly falls even lower and the downtrend resumes again, what happened?
The big player knows that traders put their stop losses above the last high and that is why the price pushes higher, so liquidity gathers, after which the bear market continues.
How to trade?
We cannot find out the thoughts and desires of major players.
The average trader should analyze the chart and try to act in the direction the market maker is pushing the price.
Pay attention to false breakouts - these are strong signals.
Seeing that the price has updated the maximum, and then turned around sharply, go short, so you will trade in the same direction with a major player.
Also, remember that traps are usually characterized by candles with long tails.
A long shadow will be a false breakout.
Conclusions
Trading traps is very difficult and at the beginning of the path you will fail.
Study the market, try to understand how a big player thinks.
When you learn, this strategy will bring you big profits.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
BEST CROSS CURRENCY PAIR EUR/GBPNow the dollar is going through a turbulent time, and EURGBP will help us avoid problems related to the dollar, because the pair does not contain the main world currency.
In addition, after Brexit, new interesting opportunities have opened up, which I will discuss below.
Dollar
Most traders choose to trade pairs in which there is a dollar due to the large liquidity.
Liquidity is a trap for a trader, especially intraday traders, but beginners do not understand this.
This liquidity is created by large players whose goal is to collect your stops and manipulate the market.
Such a market is very difficult to predict and very often your positions will be closed by the stop.
The only way out of this unfavorable situation is to trade cross-pairs.
Cross-currency pairs
There are 8 recognized major currencies of developed countries with stable economies.
The fact that these currency pairs can interact with each other without the mediation of the dollar makes them so attractive and resistant to external news and stuffing from the United States.
Cross-pairs, unlike dollar currency instruments, have the following advantages:
A more unambiguous reaction to economic indicators;
Limited (half-day) volatile trading period;
The opportunity to calmly move positions through the night, as pairs react poorly to news from the United States;
EURGBP Cross-pair
The EURGBP cross-pair ranks first among the crosses in terms of transaction volumes. The EU and the UK are connected to each other geographically and politically, until 2020 it was a single union. In 2016, British citizens voted for the option of Britain exit, giving the world a new word "Brexit".
After Brexit, the pair began to grow, giving a good opportunity for earnings. In addition, the EURGBP pair always reacts to problems in the global economy in the same way - with the growth of the euro, for the simple reason that the economy of the Union is larger than the economy of the island UK.
The economic crises of the XXI century have raised the exchange rate of the pair to the same levels, which allows you to build countertrend strategies, as well as to fix profits in the interim.
Best trading time
The most active time of EURGBP trading is from 7 to 16 in London.
A unique feature of EURGBP is a decrease in trading activity during the American session, which is explained by the absence of USD in the instrument.
The day trader can afford not to sit waiting for the release of the Fed minutes and not to increase the stop loss before the publication of the NFP.
How exactly to trade and what strategies to apply?
The pair is characterized by a lower percentage of knocked-out stops, since the price does not make unexpected jumps, unlike the dollar.
Thanks to this, you can trade using classic trend strategies.
As a rule, the movement is most often unidirectional. That is, having opened positions in the right direction, you can safely keep it until the evening or put a take profit.
The tactics of late entry, at about 10 o'clock in London, will help to weed out false breakouts.
Daily trends after Brexit
After Brexit, the pair gives very clear and understandable trends. You can even use a simple moving average to open good deals.
The graph is literally "like in textbooks". It is unknown how long such a picture will last.
Conclusion
Cross-pairs are special currencies that can give a trader a number of advantages over other instruments. This situation arises because crosses are not interesting to large players, market makers work out technical trading on them without mega-fluctuations in liquidity and "hunting for stops".
In general, EURGBP is a calm pair, suitable for beginners and still providing opportunities for trend trading on D1.
STOP LOSS > TAKE PROFITHello everybody!
Today I want to discuss with you a question concerning risk management – Is it possible to set a stop loss more than a take profit?
History says…
Historically, traders have a rule according to which a stop loss should not be more than a take profit. There is a logic in this, if you receive more losses than profits, sooner or later your account will disappear.
But time goes by and the market is changing and already today it correctly seems not so ideal.
Every trader should understand that after a large number of trades, the expectation should be positive.
The expectation formula is as follows:
(Average profit value * ratio of profitable positions) – (average loss value * ratio of unprofitable positions) - transaction costs.
In order not to bother with calculations, traders have created a table that simply and clearly shows what a positive expectation is.
According to the table, if only 20% of the total number of your trades are profitable, then the RISK ratio is/The PROFIT should be 5:1 and higher.
If there are 50% profitable trades, then the ratio may be 2:1, and if there are 60% profitable trades, then the stop loss may be even greater than the take profit.
Therefore, the main rule that a trader should follow is that the smaller the take profit, the higher the win rate should be.
The difference in the markets
It is worth remembering that 80% of the books where these tips on the ratio of risk to profit come from are written about the stock market, which is more inclined to rise than to fall.
On the other hand, currency pairs tend to average.
This is the main difference: in the forex market, if the stop is large, you can sit out the fluctuations, if the take is large– you can not wait for it to work out.
You need to understand when and where to use large take profit and stop loss based on the strategy and the market.
And not because you multiplied the stop loss by 10.
Conclusions
The conclusion may be unexpected for you, but the profit/risk ratio is not an unbreakable rule.
Always adhere to the rule of positive expectation.
Set a stop loss and take profit based on the strategy and the market in which you are trading.
TRIPLE TOPHello everyone
Today I want to share with you a figure of technical analysis called the TRIPLE TOP.
This figure occurs quite often and brings excellent profit.
What does it look like?
The figure looks like three maxima, approximately at the same level.
These peaks are formed because the buyers' forces are drying up and with each new peak, the bears are getting stronger.
Very often, the third peak will be higher than the previous two - this is the last gasp of buyers, before capitulation.
How to trade?
The main criterion is the formation of three peaks, after a strong uptrend.
After that, the price makes the last spurt (the third peak) and breaks through the support.
This breakout is the first possible entry point .
Often you will observe how the price makes a retest of the level, after which it turns down.
The second possible entry point will be this retest of the level.
To calculate the potential profit point , you need to measure the height from the minimum to the maximum of the vertices.
This value, plotted below the breakout, will be a potential profit point.
The stop loss is set above the maximum of the vertices.
Conclusion
The figure is very profitable and often found.
In addition, you can find a triple bottom on the chart, which trades in the same way as a triple top, only in the opposite direction.
Very often, after a triple top, a strong downtrend begins and holding a part of the position can bring big profits.
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
Bullish trend phases1) Use higher timeframes to determine the trend. Look for the entry point on smaller timeframes.
3) "Zone shift" is a price movement designed to accumulate and preserve volumes.
In this phase, it is worth looking for entry points.
4) "Stop hunting" usually consists of three movements that occur in a short time.
The minimum of the day serves as a signal point about where the reversal will occur.
2) The second zone shift serves as a profit-taking point.
5) The penetration of each accumulation zone is a potential entry point.
6) "Market maker spread" - the maximum and minimum of the initial channel. Usually this value is 25-50 points.
-------------------------
Additionally:
The time of termination of consolidation depends on the volume of HOD/LOD captured during the hunt.
It's hard to determine. We don't know how long it will take a major player to take a position, and we don't know how much volume he needs.
A) From time to time, the movement will be without consolidation, since the accumulated volume is too large, so a V-shaped bottom may form.
B) The accumulation of volume always takes different time, so sometimes it will take more time to accumulate than usual.
C) Accumulation may take longer, which is why a wide zone is formed, after which movement to the second stop (accumulation zone) will begin
FLAG and PENNANTHello everyone!
I want to tell you a little about such figures as Flag and Pennant.
These patterns are quite common on the chart, so every trader should know how to trade them.
What does the flag look like?
After a strong movement (flagpole), the price begins to correct in the form of a rectangle, which corrects against the previous trend (flag).
What does a pennant look like?
Just like a flag, a pennant appears after a strong trend.
After that, the correction begins in the form of a narrowing triangle.
How to trade the flag?
A bullish flag is a flag that has formed after a strong upward movement.
The entry point for a bullish flag will be a breakout and anchoring the resistance of the rectangle (flag).
The stop is placed at the low of the flag.
To calculate a possible profit target, it is worth measuring the flagpole of the flag - this value superimposed above the breakout will be the target for your profit.
How to trade a pennant?
A bullish pennant forms after a strong bullish move.
To find an entry point, you need to wait until the resistance of the triangle is broken and the price fixes above the level.
Stop loss is usually placed below the nearest minimum.
To get an approximate profit target, you need to measure the length of the bullish move in front of the triangle - this value will be your target above the break.
Conclusion
These patterns are very common and give an excellent risk / reward ratio, usually greater than 1: 3.
With correct trading, the profit value will be even higher.
Do not forget that these shapes are continuation shapes.
And don't forget to set your stop loss.
Good luck to you!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
