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How Can You Use a Spinning Top Candlestick Pattern in Trading?How Can You Use a Spinning Top Candlestick Pattern in Trading? The spinning top candle is a key tool in technical analysis, highlighting moments of market indecision. This article explores what spinning tops represent, how they differ from similar patterns, and how traders can interpret them to refine their strategies across various market conditions. What Does a Spinning Top Candlestick Mean? A spinning top is a candlestick pattern frequently used in technical analysis. It consists of one candle with a small body and long upper and lower shadows of approximately equal length. The candle’s body symbolises the discrepancy between the opening and closing prices during a specified time period, while the shadows indicate that volatility was high and neither bulls nor bears could take control of the market. This pattern signifies market indecision, where neither buyers nor sellers have gained dominance. It suggests a state of equilibrium between supply and demand, with the price oscillating within a narrow range. The spinning top may indicate continued sideways movement, particularly if it appears within an established range. However, if it forms after a bullish or bearish trend, it could signal a potential price reversal. Traders always look for additional signals from confirming patterns or indicators to determine the possible market direction. It’s important to note that the spinning top candle is neutral and can be either bullish or bearish depending on its context within the price chart. The colour of the candle is not important. Spinning Top vs Doji Doji and spinning top candlesticks can be confused as they have similar characteristics. However, the latter has a small body and upper and lower shadows of approximately equal lengths. It indicates market indecision, suggesting a balance between buyers and sellers without a clear dominant force. Traders interpret it as a potential reversal signal, reflecting a possible change in the prevailing trend. The doji candlestick, on the other hand, has a small body, where the opening and closing prices are very close or equal, resulting in a cross-like shape. If it’s a long-legged doji, it may also have long upper and lower shadows. A doji candle also represents market indecision but with a focus on the relationship between the opening and closing prices. Doji patterns indicate that buyers and sellers are in equilibrium, and a potential trend reversal or continuation may occur. How Do Traders Use the Spinning Top Pattern? Traders often incorporate the spinning top candle pattern into their analysis as a way to interpret moments of market indecision. Whether the pattern appears during a trend or at key turning points, its context plays a significant role in shaping trading decisions. In the Middle of a Trend When a spinning top forms in the middle of an ongoing trend, traders often view it as a signal of potential market hesitation. This indecision can indicate a pause in momentum, suggesting either a continuation of the trend or the possibility of a reversal. Entry In such cases, traders typically wait for confirmation of the next price move. A break above the high of the spinning top may signal the trend will continue upward, while a break below the low could suggest the trend may move down. Observing how subsequent candles interact with the spinning top can help a trader gauge the market’s intentions. Take Profit Profit targets might be aligned with key price levels visible on the chart, such as recent highs or lows. For traders expecting trend continuation, these targets might extend further, while those anticipating a reversal might aim for closer levels. Stop Loss Stop-loss orders might be set in accordance with the risk-reward ratio. This placement helps account for the pattern's characteristic volatility while potentially protecting against unexpected movements. At the Top or Bottom of a Trend When a spinning top forms at a significant peak or trough, it often draws attention as a potential reversal signal. This appearance may reflect market uncertainty after a prolonged uptrend or downtrend. Entry Confirmation from subsequent price action is critical. Traders typically observe if the price breaks above the candle (bullish spinning top) or below the candle (bearish spinning top) to determine the likelihood of a reversal. Take Profit Targets could be set at major support or resistance zones. A trader expecting a reversal may look for levels reached during the previous trend. Stop Loss Stops could be placed in accordance with the risk-reward ratio, allowing for the volatility often present at trend-turning points while potentially mitigating losses. Remember, trading decisions should not solely rely on this formation. It's crucial to consider additional technical indicators, market trends, and risk management principles when executing trades. Live Example In the EURUSD chart above, the red spinning top candle appears at the bottom of a downtrend. A trader went long on the closing of the bullish candle that followed the spinning top. A take-profit target was placed at the closest resistance level, and a stop-loss was placed below the low of the spinning top candlestick. There is another bearish spinning top candlestick pattern on the right. It formed in a solid downtrend; therefore, a trader could use it as a signal of a trend continuation and open a sell position after the next candle closed below the lower shadow of the spinning top candle. A Spinning Top Candle: Benefits and Drawbacks The spinning top candlestick pattern offers valuable insights into market indecision, but like any tool in technical analysis, it has its strengths and limitations. Understanding these might help traders use it more effectively. Benefits - Identifies Market Indecision: Highlights moments where neither buyers nor sellers dominate, providing a clue about potential price reversals or continuations. - Versatile Across Trends and Markets: Can signal price consolidation, continuation, or reversal depending on its context. It’s also possible to use the spinning top across stocks, currencies, and commodities. - Quick Visual Insight: The distinctive shape makes it easy to spot on charts without extensive analysis. Drawbacks - Requires Confirmation: On its own, the pattern lacks particular signals, needing additional indicators or price action for confirmation. - Context-Dependent: Its reliability depends heavily on where it forms in the trend, making it less useful in isolation. - Prone to False Signals: Market noise can produce spinning tops that do not lead to meaningful movements, increasing the risk of misinterpretation. Takeaway The spinning top candlestick reflects market indecision and suggests a potential reversal or consolidation. Traders use this pattern as a tool to identify areas of uncertainty in the market. Therefore, it's important to consider the spinning top pattern within the broader context and get confirmation from other analysis tools. If you want to test your spinning top candlestick trading strategy or apply it to a live chart, open an FXOpen account and start trading with tight spreads from 0.0 pips and low commissions from $1.50. Good luck! FAQ What Is a Black Spinning Top? A black (red) spinning top is a variation of the spinning top candlestick pattern with a small body and equal-length shadows. This is different from the white (green) spinning top, as its body indicates a lower closing price. Traders analyse its context, technical factors, and confirmation from other indicators to interpret its significance. What Is a Spinning Top Candlestick? A spinning top candle meaning refers to a pattern characterised by a small body and long upper and lower shadows of roughly equal length. It reflects market indecision, where neither buyers nor sellers hold a clear advantage, and is often used in technical analysis to assess potential trend reversals or consolidations. Is the Spinning Top Bullish or Bearish? The spinning top candlestick pattern is neutral by nature. Its significance depends on the context within the price chart. When it appears at the end of an uptrend, it may signal a bearish sentiment, while at the end of a downtrend, it can indicate a potential bullish reversal. What Does a Spinning Top Candle Indicate? This pattern indicates a period of indecision and balance between buying and selling pressure. Depending on its position within a trend, it can signal consolidation, continuation, or a reversal in price direction. What Is the Spinning Top Rule? There is no fixed "rule" for spinning top trading. Traders typically look for confirmation from subsequent price movements or other technical indicators to decide on a course of action. Is Spinning Top a Doji? Although similar, spinning tops and doji candles differ. A spinning top has a small body with visible discrepancies between opening and closing prices, whereas a doji’s body is almost non-existent. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Master Your Emotions: The 3 Trading Psychology Hacks Most traders don’t struggle because they lack a strategy—they struggle because emotions get in the way. After coaching hundreds of traders, I’ve seen the same patterns over and over: hesitation, FOMO, revenge trading, and self-doubt. I get it. I’ve been there too. You see the perfect setup but hesitate. Or worse, you jump in too late and watch the market turn against you. It’s frustrating, but there’s a fix. In this video, I’m breaking down the biggest trading psychology mistake I see and the simple 3-step process that has helped my students trade with confidence, even in the most volatile markets. If you’ve ever felt like your emotions are sabotaging your trades, this is for you. Let’s fix it. Kris/Mindbloome Exchange Trade Smarter Live Better
KRAKEN:BTCUSDEducation
by Mindbloome-Trading
4
Martingale and Anti-Martingale Position Size Trading StrategiesMartingale and Anti-Martingale Position Size Trading Strategies Martingale and Anti-Martingale trading strategies are contrasting approaches to risk management. While one doubles down on potential losses to recover with a single effective trade, the other scales up on potentially effective trades and reduces positions when suffering losses. Both have their strengths and challenges, making them intriguing options for traders. In this article, we’ll break down how each strategy works, so you can decide which or none suits your trading style. What Is Martingale Trading? The Martingale trading strategy originated in the casino industry in the 18th century. In the 20th century, French mathematician Paul Pierre Levy introduced it into probability theory. Later, it was adapted for trading. At its core, the strategy involves doubling the size of a trade after every loss. The idea is simple: one eventual effective trade will offset previous losses and generate a net return. While it can seem appealing in theory, the Martingale method requires significant capital to sustain, as losses can quickly escalate. This makes it particularly risky in volatile markets or without strict loss limits. It’s most commonly used in lower-volatility settings where price movements might be easier to gauge, but even then, the financial risks should not be underestimated. How Martingale Works A Martingale algorithm works by increasing the size of a trade after every loss, aiming to recover all previous losses with one trade. Once an effective trade occurs, a trader returns to the original position size and repeats the process. Here’s an example: - You start by risking $10 on a trade. - If it’s a loss, you double the next trade size to $20. - If that trade also loses, you increase to $40 for the next trade. - Suppose this $40 trade is effective. It covers all previous losses ($10 + $20 = $30) and leaves a $10 return. - After this trade, you reset your trade size back to $10. This approach relies on the assumption that consecutive losses won’t continue indefinitely and that one effective trade will balance the account. However, if multiple losses occur, the required position size increases rapidly. For instance, after just six consecutive losses, the next trade would need to be $1260, with the total exposure already exceeding $1,000. Key Considerations When using the Martingale strategy, it’s crucial to weigh the risks and choose the right conditions for its application. Choosing the Right Market The Martingale strategy is popular in low-volatility markets, where prices are potentially less prone to extreme swings. Instruments like currency pairs with narrow trading ranges could be more suitable. Highly volatile assets can cause significant losses before a recovery. Assessing Capital Requirements The strategy demands a large capital reserve to sustain consecutive losses if they occur. Each losing trade doubles the position size, and costs can escalate quickly. Before using Martingale, traders check if their accounts have enough balance to absorb potential losses without hitting margin limits. Setting a Maximum Loss Limit To prevent devastating drawdowns, traders often establish a hard stop on the total amount they’re willing to lose. For instance, if your account is $10,000, you might set a cap at $1,000. Once reached, the strategy halts. This keeps losses manageable and avoids the risk of depleting the account entirely. What Is Anti-Martingale Trading? Anti-Martingale strategy, also known as the reverse Martingale strategy, uses the opposite approach. It involves halving the size of each position after a loss and doubling it after an effective trade. How Anti-Martingale Works The Anti-Martingale strategy takes the opposite approach to Martingale, adjusting position sizes based on the effectiveness of a trade rather than failure. After each trade where a trader gets returns, the position size is increased to capitalise on potentially favourable conditions. Following a losing trade, the position size is reduced to potentially minimise further losses. This method balances potential risks and rewards. Here’s an example to break it down: - You start by risking $10 on a trade. - If you get a return, you double the next position size to $20. - If you get a return again, you double the position to $40. - If the $40 trade loses, you halve your position size to $20 for the next trade. - After another loss, you halve the size again, returning to $10. This dynamic scaling should ensure that you could maximise returns during strong market trends while potentially limiting losses during weaker periods. For instance, if you got returns in three consecutive trades followed by two losses, you would end up with a net gain, as larger position sizes during effective trades offset smaller losses. However, the risks of the Anti-Martingale strategy include overexposure after effective trades, where larger positions can lead to significant losses if the market reverses, and undercapitalisation after losing trades, which makes recovery challenging. Key Considerations When using the Anti-Martingale strategy, careful planning and risk management are essential. Here are the key considerations to keep in mind: Choosing the Right Market The Anti-Martingale strategy is popular in trending markets. Traders could choose instruments like major currency pairs, indices, or commodities with clear directional movement. Choppy or range-bound markets are less popular for this strategy. Evaluating Capital Needs While this strategy typically requires less capital than Martingale due to its risk-reduction approach in the period of losing trades, you still need sufficient funds to navigate potential fluctuations. Having a comfortable buffer allows you to continue trading even after a series of losses. Setting a Loss Cap Establishing a maximum loss limit is critical to potentially protect a trader’s account. For example, if a trader risks a small percentage of their account on each trade, they might ensure that even scaled-down trades don’t exceed their overall risk tolerance. This might help them keep losses manageable and prevent overexposure. Comparing the Martingale and Anti-Martingale The Martingale strategy involves increasing position sizes after a loss, aiming to recover past losses and secure a net return with one trade. While this approach could deliver quick recoveries in low-volatility markets, it’s inherently risky. Consecutive losses can lead to exponentially larger trade sizes, depleting capital rapidly. Traders using Martingale need substantial account balances and strict loss limits to avoid catastrophic drawdowns. In contrast, the Anti-Martingale strategy focuses on increasing position sizes after a trader gets returns and reducing them after they experience losses. This method leverages favourable trends, allowing traders to maximise potential returns while limiting losses. However, this strategy leads to increasing exposure after effective trades, which can magnify losses, and potentially slow recovery due to reduced position sizes after losses. Is it worth combining Martingale and Anti-Martingale techniques? As these are opposite approaches, the theory states a trader should choose the one that meets their requirements. Start by defining your risk tolerance and trading objectives, and then adapt your strategy to changing market conditions. By doing this, you will understand whether it’s more important for you to increase potential returns or reduce potential risks. Pros and Cons of Each Strategy Both Martingale and Anti-Martingale strategies have unique advantages and challenges, making them suitable for different trading styles and risk profiles. Martingale Pros - Potential recovery with a single trade: One effective trade could recover all prior losses. - Simplifies decision-making: The fixed doubling method removes complexity in adjusting position sizes. - Popular in low-volatility markets: This strategy is popular in markets with generally lower volatility where extreme price swings are less likely. Martingale Cons - High capital requirements: Losses can snowball quickly, requiring significant funds to maintain positions. - Risk of large drawdowns: A long period of losing trades can wipe out an account without strict limits. - Unpopular for volatile markets: Extreme market movements make it even riskier. Anti-Martingale Pros - Risk management focus: Reducing position sizes after losses could limit potential drawdowns. - Popular in trend trading: Larger trades in solid trends could potentially maximise returns. Less demanding on capital: Scaling down after losses conserves funds. Anti-Martingale Cons - Less popular in sideways markets: Struggles in sideways or inconsistent market conditions. - Lower recovery potential: Halving position sizes after losses makes it harder to recover quickly. - Discipline-dependent: Requires precise execution to avoid over-adjusting positions. Final Thoughts Although both strategies have their own benefits and drawbacks, it’s vital to determine the most important aspects for yourself as there is no one-size-fits-all approach. Remember, trading is not just about strategy; it’s also about discipline, patience, and continuous learning. To develop your own trading approach, open an FXOpen account to trade with low commissions and tight spreads. FAQ What Is a Martingale Strategy? The Martingale strategy involves doubling the size of a trade after each loss, aiming to recover losses and secure potential returns with one trade. It’s high-risk and requires substantial capital to withstand potential losing trades. Does Martingale Strategy Work in Forex? Using the Martingale strategy in forex can work, especially in low-volatility currency pairs, but it bears high risks. Forex markets are volatile, and a series of losses can quickly escalate, requiring significant funds to continue trading. Is Martingale a Good Strategy? Martingale is not inherently good or bad—it depends on the trader’s risk tolerance and capital. While it offers recovery potential, the risks of large drawdowns or account depletion make it unsuitable for most. What Is the Alternative Martingale System? The Anti-Martingale strategy, or reverse Martingale, is a common alternative. It takes the opposite approach by increasing trade size after effective trades and reducing it after losses, focusing on capitalising on trends while minimising risks during downturns. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
Portfolio Selection for the Week – 10th February 2025This portfolio selection is for educational purposes only! The key to successful trading lies in consistency. Consistent decision-making, combined with a positive edge, is what leads to long-term success in the markets. This is why we regularly conduct portfolio selection. At present, the Japanese Yen (JPY) is the strongest currency, followed by the US Dollar (USD), Australian Dollar (AUD), and Canadian Dollar (CAD). On the weaker side, we see Swiss Franc (CHF), Euro (EUR), New Zealand Dollar (NZD), and British Pound (GBP). Most currency pairs have been experiencing secondary trends. Once this phase concludes, we can look to align trades with the dominant market trend. If you find this content valuable, hit the boost and share your thoughts in the comments! Wishing you a profitable trading week! 🚀📈
Education
by Charts247TradingAcademy
How Does a Carry Trade Work? How Does a Carry Trade Work? A carry trade is a popular forex trading strategy that takes advantage of interest rate differentials between two currencies, aiming to earn returns from the interest gap. This article explores what a carry trade is, its formula, and how the strategy works, helping traders understand its potential advantages and risks. Carry Trade: Definition A carry trade is a popular forex strategy where traders take advantage of the difference in interest rates between two currencies. It involves borrowing money in a currency with a low borrowing cost—this is known as the "funding currency"—and then converting that borrowed amount into another offering higher interest, called the "investment currency." This is done to earn the interest rate differential between the two. The Mechanics of a Forex Carry Trade A carry position involves a few key components that work together to create potential opportunities in the forex market. 1. The Funding Currency The first component is the currency that the trader borrows, the funding currency. Traders typically choose one with low interest costs because the amount to repay will be minimal. Common funding currencies include the Japanese yen (JPY) or the Swiss franc (CHF), as these often have low or even negative borrowing costs. 2. The Investment Currency The second component is the investment currency, which is the one into which the borrowed funds are converted. This is chosen because it offers a higher interest yield, providing an opportunity to earn returns from the interest rate differential. Popular investment currencies often include the Australian dollar (AUD) or the New Zealand dollar (NZD), as they tend to have higher borrowing costs. However, in recent years, emerging market currencies, like the Mexican peso (MXN), Brazilian real (BRL), and South African rand (ZAR), have also been favoured due to their high interest yields. 3. Interest Rate Differential The core concept here is to capitalise on the interest rate differential between the funding and investment currency. If someone borrows in a currency with a 0.5% premium and invests in another offering a 4% yield, the differential (known as the "carry") is 3.5%. This differential represents the potential return, assuming there are no significant changes in the exchange rate. 4. Swaps and Rollovers Swaps and rollovers are key factors. When you hold a position overnight (roll it over), the difference in interest rates between the two currencies is either credited or debited to your account. This is because when you trade a forex pair, you're effectively borrowing one currency to buy another. The swap rate compensates for the interest rate difference. Positive Swap Rate: If the interest rate of the currency you are buying is higher than that you are selling, you might receive a positive swap rate, meaning you earn interest. Negative Swap Rate: Conversely, if the interest rate of the currency you're selling is higher than the one you're buying, you'll pay interest, leading to a negative swap rate. 5. Leverage Many traders use leverage to amplify their positions. Leverage allows them to borrow additional funds to expand the size of their investment. While this can potentially increase returns, it also magnifies risks. If the position moves against the trader, losses can quickly accumulate due to the leverage. 6. Market Fluctuations The price of the pair is a crucial factor in the yield of the differential. While the differential offers the potential for returns, any adverse price movement can negate these gains. For instance, if the investment currency depreciates relative to the funding currency, the trader could face losses when converting back to the funding currency. Conversely, if the investment currency appreciates relative to the funding currency, then they can potentially make an additional gain on top of their interest yield. 7. Transaction Fees and Spreads Traders must consider transaction fees and spreads, which are the differences between the buying and selling prices of a forex pair. These costs can reduce the overall gains of the operation. Wider spreads, particularly in less liquid forex pairs, can increase the cost of entering and exiting positions. In a carry position, these components interact continuously. A trader borrows in a low-interest-rate currency, converts the funds to a higher-yielding one, and aims to earn from the differential while carefully monitoring market movements, transaction costs, and swap rates. The overall approach is based on balancing the interest earned, fees, and potential pair’s price movements. Carry Trade: Formula and Example To calculate the potential return of a carry trade, traders use a basic formula: - Potential Return = (Investment Amount * Interest Rate Differential) * Leverage Let’s examine a carry trade example. Imagine someone borrows 10,000,000 Japanese yen (JPY) at a low interest rate of 0.5% and uses these funds to invest in Australian dollars (AUD), which has a higher borrowing cost of 4.5%. The differential is 4% (4.5% - 0.5%). If the current exchange rate is 1 AUD = 80 JPY, converting 10,000,000 JPY results in 125,000 AUD (10,000,000 JPY / 80). They then use the 125,000 AUD to earn 4.5% interest annually: - 125,000 * 4.5% = 5,625 AUD The cost of borrowing 10,000,000 JPY at 0.5% interest is: - 10,000,000 * 0.5% = 50,000 JPY Converted back to AUD at the original exchange price (1 AUD = 80 JPY), the interest cost is: - 50,000 JPY / 80= 625 AUD The net return is the interest earned minus the borrowing cost (for simplicity, we’ll exclude other transaction fees): - 5,625 AUD − 625 AUD = 5,000 AUD If the price changes, it can significantly impact the position’s outcome. For example, if the AUD appreciates against the JPY, moving from 80 to 85 JPY per AUD, the 125,000 AUD would now be worth 10,625,000 JPY (125,000 * 85). After repaying the 10,000,000 JPY loan, the trader receives additional returns. Conversely, if the AUD depreciates to 75 JPY per AUD, the value of 125,000 AUD drops to 9,375,000 JPY (125,000 * 75). After repaying the 10,000,000 JPY loan, the trader faces a loss. Types of Carry Trades: Positive and Negative Trades with yield differential can be classified into two types: positive and negative, each defined by the differential between the funding and investment currencies. Positive Carry Trade A positive carry trade occurs when the borrowing rate on the investment currency is higher than that of the funding one. For example, if a trader borrows in Japanese yen (JPY) at 0.5% and invests in Australian dollars (AUD) at 4.5%, the differential is 4%. This differential means they earn more interest on the invested currency than they pay on the borrowed one, potentially resulting in a net gain, especially if market movements are favourable. Negative Carry Trade A negative carry trade happens when the yield on the funding currency is higher than that on the investment. In this case, the trader would lose money on the rate differential. For example, borrowing in US dollars at 2% to invest in euros at 1% would result in a negative carry of -1%. Traders might still pursue negative yield differential trades to hedge other positions or take advantage of expected market movements, but the strategy involves more risk. How Can You Analyse Carry Trade Opportunities? To analyse opportunities, traders focus on several key factors to determine whether a carry position could be effective. 1. Differentials The primary factor here is the interest rate differential between the two currencies. Traders look for forex pairs where the investment currency offers a significantly higher interest return than the funding currency. This differential provides the potential returns from holding the position over time. 2. Economic Indicators Traders monitor economic indicators such as inflation rates, GDP growth, and employment figures, as these can influence central banks' decisions on interest rates. A strong economy may lead to higher borrowing costs, making a pair more attractive for a yield differential position. Conversely, weak economic data could result in rate cuts, reducing the appeal of a currency. 3. Central Bank Policies Understanding central bank policies is crucial. Traders analyse statements from central banks, like the Federal Reserve or the Bank of Japan, to gauge future rate changes. If a central bank hints at raising borrowing costs, it could present an opportunity for a positive carry transaction. 4. Market Sentiment and Risk Appetite This type of transaction often performs well in low-volatility environments. Traders assess market sentiment and risk appetite by analysing geopolitical events, market trends, and investor behaviour. Risks of a Carry Trade While carry trading can offer potential returns from borrowing cost differentials, they also come with significant risks that traders must consider. - Exchange Risk: If the investment currency depreciates against the funding one, it can wipe out the returns from the differential and result in losses. - Interest Rate Risk: Changes in the cost of borrowing by central banks can alter the differential, reducing potential returns or even creating a negative carry situation. - Leverage Risk: Many traders use leverage to amplify returns, but this also magnifies potential losses. A small adverse movement in pairs can push the trader out of the market. - Liquidity Risk: During periods of low market liquidity, exiting a position may become difficult or more costly, increasing the risk of loss. A Key Risk: Carry Trade Unwinding Unwinding happens when traders begin to exit their positions en masse, often due to changes in market conditions, such as increased volatility or a shift in risk sentiment. This essentially means exiting the investment and repurchasing the original currency. Unwinding can trigger rapid and significant price movements, particularly if many traders are involved, and lead to a much lower return if the exit is timed incorrectly. For example, if global markets face uncertainty or economic data points to a weakening economy, investors may seek so-called safer assets, leading to a swift exit from carry positions and a steep decline in the investment currency. The Bottom Line This type of strategy offers a way to take advantage of interest rate differentials between currencies, but it comes with its own set of risks. Understanding the mechanics and analysing opportunities is critical. Ready to explore yield differential trades in the forex market? Open an FXOpen account today to access advanced tools, low-cost trading, and more than 600 markets. Good luck! FAQ What Is a Carry Trade? A carry trade in forex meaning refers to a strategy where traders borrow in a low-interest currency (the "funding currency") and invest in a higher-interest one (the "investment currency") to earn returns from the differential. What Is the Carry Trade Strategy? The carry trade strategy consists of borrowing funds in a currency with a low interest rate and using those funds to invest in a currency that offers a higher interest rate. Traders then invest the borrowed funds in the higher-yielding one to earn returns from the borrowing cost differential. The strategy typically relies on both relatively stable forex prices and the interest differential remaining favourable. How Does the Japanese Carry Trade Work? The Japanese currency carry trade typically involves borrowing the Japanese yen (JPY) at a low interest rate and converting it into another with a higher yield, like the Australian dollar (AUD). The aim is to take advantage of the gap in borrowing costs. What Is an Example of a Yen Carry Trade? An example of a yen carry position is borrowing 10,000,000 JPY at 0.10% interest and converting it to AUD, which earns 4.35%. The trader takes advantage of the 4.25% differential, assuming favourable market conditions. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
4
Strongest Reversal Candlestick Patterns For Gold & Forex In this educational article, we will discuss powerful reversal candlestick patterns that every trader must know. Bullish Engulfing Candle Bullish engulfing candle is one of my favourite ones. It usually indicates the initiation of a bullish movement after a strong bearish wave. The main element of this pattern is a relatively big body. Being bigger than the entire range of the previous (bearish) candle, it should completely "engulf" that. Such a formation indicates the strength of the buyers and their willingness to push the price higher. Bullish engulfing candle that I spotted on Gold chart gave a perfect bullish trend-following signal. Bearish Engulfing Candle The main element of this pattern is a relatively big body that is bigger than the entire range of the previous (bullish) candle. Such a formation indicates the strength of the sellers and their willingness to push the price lower. ________________________ Bullish Inside Bar Inside bar formation is a classic indecision pattern. It usually forms after a strong bullish/bearish impulse and signifies a consolidation . The pattern consists of 2 main elements: mother's bar - a relatively strong bullish or bearish candle, inside bars - the following candles that a trading within the range of the mother's bar. The breakout of the range of the mother's bar may quite accurately confirm the reversal. A bullish breakout of its range and a candle close above that usually initiates a strong bullish movement. Bearish Inside Bar A bearish breakout of the range of the mother's bar and a candle close below that usually initiates a strong bearish movement. Bearish breakout of the range of the mother's bar candlestick provided a strong bearish signal on EURUSD. ________________________ Doji Candle (Morning Star) By a Doji we mean a candle that has the same opening and closing price. Being formed after a strong bearish move, such a Doji will be called a Morning Star. It signifies the oversold condition of the market and the local weakness of sellers. Such a formation may quite accurately indicate a coming bullish movement. Doji Candle (Evening Star) Being formed after a strong bullish move, such a Doji will be called an Evening Star. It signifies the overbought condition of the market and the local weakness of buyers. Such a formation may quite accurately indicate a coming bearish movement. Above is a perfect example of a doji candle and a consequent bearish movement on Silver. I apply these formations for making predictions on financial markets every day. They perfectly work on Forex, Futures, Crypto markets and show their efficiency on various time frames. ❤️Please, support my work with like, thank you!❤️
FXOPEN:XAUUSDEducation
by VasilyTrader
5
How Can You Trade with an Inverted Hammer Pattern?How Can You Trade with an Inverted Hammer Pattern? In trading, patterns are powerful tools, allowing traders to anticipate changes in trend direction. One such pattern is the inverted hammer, a formation often seen as a bullish signal following a downtrend. Recognising this pattern and understanding its implications can be crucial for traders looking to spot reversal opportunities. In this article, we will explore the meaning of inverted hammer candlestick, how to identify it on a price chart, and how traders can incorporate it into their trading strategies. What Is an Inverted Hammer? An inverted hammer is a candlestick pattern that appears at the end of a downtrend, typically signalling a potential bullish reversal. It has a distinct shape, with a small body at the lower end of the candle and a long upper wick that is at least twice the size of the body. This structure suggests that although sellers initially dominated, buyers stepped in, pushing prices higher before closing near the opening level. While the inverted hammer alone does not confirm a reversal, it’s often considered a sign of a possible trend change when followed by a bullish move on subsequent candles. The pattern can have any colour so that you can find a red inverted hammer candlestick or upside down green hammer. Although both will signal a bullish reversal, an inverted green hammer candle is believed to provide a stronger signal, reflecting the strength of bulls. One of the unique features of this pattern is that traders can apply it to various financial instruments, such as stocks, cryptocurrencies*, ETFs, indices, and forex, across different timeframes. To test strategies with an inverted hammer formation, head over to FXOpen and enjoy CFD trading in over 700 markets. Hammer vs Inverted Hammer The hammer and inverted hammer are both single-candle patterns that appear in downtrends and signal potential bullish reversals, but they have distinct formations and implications: - Hammer: The reversal hammer candle has a small body at the top with a long lower wick, indicating that buyers pushed prices back up after a period of selling pressure. This pattern shows that sellers were initially strong, but buyers regained control, potentially signalling a reversal. - Inverted Hammer: The inverted hammer, by contrast, has a small body at the bottom with a long upper wick. This structure indicates initial buying pressure, but sellers prevented a complete takeover. This pattern suggests that buyers may soon regain strength, hinting at a possible trend reversal. Both patterns signal possible bullish sentiment, but while the green or red hammer candlestick focuses on buyer strength after selling, the inverted hammer suggests buyer interest in an overall bearish context, needing further confirmation for a trend shift. How Traders Identify the Inverted Hammer Candlestick in Charts Although the inverted hammer is easy to recognise, there are some rules traders follow to increase the reliability of the reversal signal it provides. Step 1: Identify the Pattern in a Downtrend - Traders ensure the market is in a downtrend, as the inverted hammer is only significant when it appears after a period of sustained selling pressure. - Then, they look for a candlestick with a small body at the lower end and a long upper wick that’s at least twice the size of the body. This upper shadow shows initial buying pressure followed by selling, suggesting a potential reversal in sentiment. Step 2: Choose Appropriate Timeframes - The pattern can be seen across various timeframes, but daily and hourly charts are particularly popular for identifying it due to their balance of signals and reliability. - Higher timeframes charts generally provide more reliable patterns, while shorter timeframes, like 5 or 15-minute charts, might lead to more false signals. Step 3: Use Indicators to Strengthen Identification - Volume: A rise in bullish trading volume after the inverted hammer can indicate stronger interest from buyers, increasing the likelihood of a trend reversal. - Oscillators: Oscillators like Stochastic, Awesome Oscillator, or RSI showing an oversold reading alongside the candle can further suggest that the asset might be due for a reversal. Step 4: Look for Confirmation Signals - Gap-Up Opening: A gap-up opening in the next trading session indicates buyers stepping in, giving further weight to the bullish reversal. - Bullish Candle: Following the inverted hammer with a strong bullish candle confirms that buying pressure has continued. This is a key signal that a trend reversal may be underway. By following these steps and waiting for confirmation signals, traders can increase the reliability of the inverted hammer’s signals. Trading the Inverted Hammer Candlestick Pattern Trading the inverted hammer involves implementing a systematic approach to capitalise on potential bullish reversals. Here are some steps traders may consider when trading: - Identify the Inverted Hammer: Spot the setup on a price chart by following the rules discussed earlier. - Assess the Context: Analyse the broader market context and consider the pattern's location within the prevailing trend. Look for support levels, trendlines, or other significant price areas that could strengthen the reversal signal. - Set an Entry: Candlestick patterns don’t provide accurate entry and exit points as chart patterns or some indicators do. However, traders can consider some general rules. Usually, traders wait for at least several candles to be formed upwards after the pattern is formed. - Set Stop Loss and Take Profit Levels: The theory states that traders use a stop-loss order to limit potential losses if the trade doesn't go as anticipated. It may be placed below the low of the candlestick or based on a risk-reward ratio. The take-profit target might be placed at the next resistance level. Inverted Hammer Candlestick: Live Market Example The trader looks for a bullish inverted hammer on the USDJPY chart. After a subsequent downtrend, the inverted hammer provides a buying opportunity that aligns with the support level. They enter the market at the close of the inverted hammer candle and place a stop loss below the support level. Their take-profit target is at the next resistance level. A trader could implement a more conservative approach and wait for at least a few candles to form in the uptrend direction. However, as the pattern was formed at the 5-minute chart, a trader could lose a trading opportunity or enter the market with a poor risk-reward ratio. Advantages and Limitations of Using the Inverted Hammer The inverted hammer has its strengths and limitations. Here’s a closer look: Advantages - Simple to Identify: The pattern is easy to recognise on charts due to its unique shape, making it accessible for traders at all experience levels. - Can Be Spot in Different Markets: The candle can be found on charts of different assets across all timeframes. - Straightforward Trading Approach: It offers a straightforward signal that can be incorporated into broader trading strategies, especially with confirmation signals. Limitations - Reliability Depends on Confirmation: The candle alone does not guarantee a market reversal; it requires confirmation from the next candlestick or other indicators. Without this, the reversal signal may be weak. - Works Only in Strong Downtrends: The pattern might be more effective in strong downtrends; in ranging or weak trends, it generates less reliable signals. - False Signals Can Occur: False signals are possible, especially in volatile markets. Over-reliance on this pattern without additional analysis may lead to poor trade outcomes. Final Thoughts While the inverted hammer can provide valuable insights into potential trend reversals, it should not be the sole basis for trading decisions. It is important to supplement analysis with other technical indicators and tools to strengthen the overall trading strategy. Furthermore, effective risk management strategies are crucial while trading the setup. Setting appropriate stop-loss orders to limit potential losses and implementing proper position sizing techniques can help potentially mitigate risks and protect trading capital. If you are ready to develop your trading strategy, open an FXOpen account today to trade in over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50. Good luck! FAQ Is an Inverted Hammer Bullish? Yes, it is considered a bullish reversal pattern. It indicates a potential shift from a downtrend to an uptrend in the market. While it may seem counterintuitive due to its name, the setup suggests that buying pressure has overcome selling pressure and that bulls are gaining strength. How Do You Trade an Inverted Hammer? To trade an inverted hammer, traders wait for confirmation in the next session, such as a gap-up or strong bullish candle. They usually enter a buy position with a stop-loss below the low of the pattern to potentially manage risk and a take-profit level at the closest resistance level. Is the Inverted Hammer a Trend Reversal Signal? It is generally considered a potential trend reversal signal. An inverted hammer in a downtrend suggests a shift in market sentiment from bearish to bullish. An inverted hammer in an uptrend does not signify anything. What Happens After a Reverse Hammer Candlestick? After a reverse (or inverted) hammer candle, there may be a potential bullish reversal if confirmed by a strong bullish candle in the next session. However, without confirmation, the pattern alone does not guarantee a trend change. How Do You Trade an Inverted Hammer Candlestick in an Uptrend? In an uptrend, an inverted hammer isn’t generally considered significant because it’s primarily a reversal signal in a downtrend. Are Inverted Hammer and Shooting Star the Same? No, the inverted hammer and shooting star look similar but occur in opposite trends; the former appears in a downtrend as a bullish reversal signal, while the latter appears in an uptrend as a bearish reversal signal. What Is the Difference Between a Hanging Man and an Inverted Hammer? The hanging man and inverted hammer differ in both appearance and context. The former appears at the end of an uptrend as a bearish signal and has a small body and a long lower shadow, while the latter appears at the end of a downtrend as a bullish signal and has a small body and a long upper shadow. What Is the Difference Between a Red and Green Inverted Hammer? A green (bullish) inverted hammer candlestick closes higher than its opening price, indicating a stronger bullish sentiment. A red (bearish) inverted hammer candlestick closes lower than its opening, which might indicate less buying strength, but both colours can signal a reversal if followed by confirmation. *At FXOpen UK, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
Why Most Traders Fail (And How I Turned It Around)I still remember my first trade like it was yesterday. I had no idea what I was doing, but I convinced myself I was going to crush it. Spoiler alert: I didn’t. In fact, I wiped out 20% of my account in less than an hour. I sat there staring at my screen, wondering what the hell just happened. If you’ve been there, I get it. Trading isn’t easy—it’s brutal at times. The truth is, most traders fail not because they’re bad at it, but because they’re unprepared for what trading really demands. I’ve made every mistake you can think of, but here’s the good news: I’ve also learned how to turn it around. This isn’t theory—it’s my story. Lesson 1: Winging It Will Destroy You When I started, I thought trading was just about picking the right stock or currency and riding the wave. I’d watch a few YouTube videos, scan some charts, and think, “Yeah, this looks good!” It wasn’t. I was basically gambling with my money. What finally clicked: -I needed a plan, plain and simple. One day, I sat down and wrote out what I’d do: what I’d trade, how I’d manage risk, and when I’d call it a day. -The first time I actually stuck to my plan, I didn’t even win big. But for the first time, I felt in control, and that was everything. Lesson 2: Risking It All = Losing It All There was this one trade—I'll never forget it. I bet way more than I should’ve because I was sure I’d win. When it went south, I froze. I couldn’t bring myself to close it, and the losses just piled up. By the time I got out, half my account was gone. What saved me: -I learned to only risk a small percentage of my account—1-2% per trade. Yeah, it felt slow, but it kept me in the game. -I started using stop losses religiously. No more crossing my fingers and hoping for the best. Lesson 3: Emotions Are Your Worst Enemy I used to get so caught up in the highs and lows. A big win would make me feel invincible. A big loss? Devastated. I’d jump into revenge trades, trying to get my money back, and just dig myself deeper. What changed: -I started journaling every trade—not just the numbers, but how I felt. I noticed patterns, like how I’d overtrade when I was frustrated. -Now, if I feel off, I walk away. No charts, no trades, just a reset. Lesson 4: Overtrading Was My Addiction I thought trading more meant making more. So I’d take setups that were “meh” at best, just to feel like I was doing something. What helped: -I stopped looking for trades—I started waiting for them. -Now, I focus on one or two great setups a day. The rest? I let them go. Lesson 5: You Don’t Have to Know Everything At one point, I was drowning in information. I had 15 indicators on my chart, followed 20 gurus on Twitter, and read every trading blog I could find. It was overwhelming, and it didn’t help. My aha moment: -Simplicity wins. I stripped my charts down to the basics: price action, support/resistance, and a couple of indicators I actually understood. -I stopped chasing the “perfect” strategy and focused on mastering one approach. You Can Do This I’ll be honest—there were moments when I wanted to quit. Blowing up accounts, feeling like a failure, wondering if I was cut out for this... it was hard. But looking back, I’m glad I didn’t give up. If you’re struggling, I get it. I’ve been in your shoes, and I know how overwhelming it can feel. Send me a DM or check out my profile —I’m here, happy to share what worked for me and help however I can. Trading isn’t about being perfect. It’s about progress. So take a breath, refocus, and keep going. You’ve got this. Kris/Mindbloome Exchange Trade What You See
TVC:SILVEREducation
by Mindbloome-Trading
Master Short-term Trading in Stock, Forex, and Crypto MarketsMaster Short-term Trading in Stock, Forex, and Crypto Markets Short-term trading is a fast-paced approach that demands skill, strategy, and quick decision-making to capitalise on small price moves in financial markets like stocks, forex, and crypto. This article dives into advanced techniques, adaptive strategies, and psychological discipline needed to improve your trading edge. Choosing the Right Market and Asset for Short-Term Trading Short-term trading isn’t just about finding an opportunity; it’s about picking the right market and asset that aligns with your strategy, risk tolerance, and trading style. Different assets and markets move in unique ways, and understanding their traits can sharpen your trading decisions and improve your ability to identify favourable setups. Stocks When short-term trading stocks, movements often hinge on company-specific events like earnings reports, product launches, or even management changes. Ideal stocks for short-term trading typically include those in technology or high-growth sectors, which tend to show greater volatility and liquidity. However, specific stock trading hours limit opportunities (with after-hours trading often seeing lower volume), which can reduce flexibility compared to 24-hour markets like forex or crypto. Forex Known for its high liquidity and 24-hour trading cycle 5 days a week, the forex market offers ample short-term trading opportunities, particularly with major currency pairs like EUR/USD or GBP/USD. These pairs are heavily traded, leading to tighter spreads, which is essential for traders looking to make multiple trades in a single day. The forex market is also influenced by economic data releases and geopolitical events, making it a good match for traders who stay updated on global news and market sentiment. Commodities Trading commodities like gold, oil, and silver can add diversity to short-term trading. Commodities often see increased activity during times of economic uncertainty or when inflationary pressures are high. Precious metals like gold, for instance, are seen as so-called “safe havens,” attracting short-term traders during volatile market periods. Energy commodities, such as oil, also offer strong moves tied to supply and demand shifts, including geopolitical developments and inventory reports. Cryptocurrencies The crypto market stands out for its high volatility and 24/7 trading schedule. For those looking to trade for the short term in the crypto market, major coins like Bitcoin and Ethereum are common choices due to their frequent price swings, while smaller coins can offer higher-risk, high-reward short-term investment potential. However, crypto’s high risk and rapid price swings mean that traders must carefully manage the size of their short-term investments and stay alert to sudden shifts in market sentiment, often driven by regulatory updates or large-scale adoption news. Advanced Technical Analysis Techniques For traders aiming to refine their short-term investing, advanced technical analysis techniques can provide the depth needed to make quick, informed decisions. These methods go beyond basic indicators, giving traders a closer look at price dynamics, market psychology, and trade volume to spot potential setups. Price Action Analysis Price action analysis focuses on interpreting price movements without relying heavily on indicators. Traders using this method look for specific patterns like “doji” and “engulfing” candlesticks to gauge market sentiment. Recognising these patterns, along with key levels such as support and resistance, can help trader time entries and exits by indicating when momentum may shift. Price action is especially useful in volatile markets, where traditional indicators may lag. Volume Profile Volume profile charts and indicators show the volume traded at each price level over a given period, helping traders identify where the most buying and selling is happening. This technique highlights “high-volume nodes,” or price points where large amounts of trading occur, indicating levels where the price might stall or reverse. By using volume profiles, traders can spot areas of consolidation or breakout zones, refining their trade entries or exits based on market interest. Discover volume profile tools on FXOpen’s advanced TickTrader platform. Dow Theory Dow Theory is a market analysis framework that asserts markets move in trends, with each trend consisting of primary, secondary, and minor waves. Short-term traders often focus on secondary trends (lasting days to weeks) to align their trades with market direction. By recognising the phases of accumulation, public participation, and distribution, traders can better understand the market’s larger direction and time their entries. Wyckoff Theory Wyckoff Theory can be used by short-term traders for recognising and capitalising on repeatable market patterns driven by supply and demand. Through Wyckoff’s approach to price and volume analysis, traders can identify phases, which signal potential reversals or continuation trends. This allows short-term traders to time entries and exits more accurately based on market structure. Additionally, Wyckoff’s emphasis on liquidity and the role of large institutional players helps traders anticipate price movements, enabling them to make informed decisions in volatile, fast-moving markets. Elliott Wave Theory Elliott Wave Theory proposes that markets move in repetitive waves influenced by crowd psychology. For short-term traders, identifying the five-wave impulse or corrective patterns can provide context on where the market may be within a larger cycle. This analysis can assist in timing trades by aligning with the anticipated movement within a wave sequence. Developing a Flexible, Adaptive Strategy In fast-paced markets, adaptable short-term trading strategies are key for traders who want to thrive in varying conditions. A flexible approach enables traders to pivot based on volatility, volume, and market sentiment without rigidly sticking to one strategy. Scalping vs Day Trading Scalping and day trading both offer short-term opportunities, but each thrives in distinct conditions. Scalping—executing numerous quick trades for small gains—is potentially effective in high-volatility environments with tight spreads, like forex or certain tech stocks. Day trading, on the other hand, takes advantage of slightly longer holding times within a single day, allowing traders to capitalise on more substantial moves. Knowing when to switch between these approaches keeps traders prepared. Timeframe Adjustments Adapting timeframes based on volatility can improve timing. For example, traders might use 1-minute charts during high volatility and 5- or 15-minute charts when the market is steadier, allowing them to focus on potentially more reliable setups without overreacting to noise. Continuous Backtesting and Refinement An adaptive strategy relies on ongoing backtesting to identify what works in current conditions. Live adaptation is also essential—strategies might need adjustments in real time based on changing market sentiment or unexpected events. Keeping strategies flexible and adjusting as data changes help traders stay aligned with the market’s rhythm. Advanced Risk Management Techniques Effective risk management goes beyond setting a simple stop loss. For advanced traders, techniques like dynamic position sizing, trailing stops, and a nuanced grasp of win rate and risk-reward ratios are essential to navigating volatile markets. Dynamic Position Sizing Adjusting position sizes based on current market conditions allows traders to respond to volatility without overexposing their capital. For instance, in highly volatile sessions, traders may reduce position sizes to limit exposure, while in low volatility periods, they might increase them to capture larger potential gains. Trailing Stops Trailing stops protect potential gains while letting trades run. As the market moves favourably, a trailing stop gradually locks in gains, automatically adjusting to reduce risk if the trend reverses. This is especially useful for fast-paced assets where trends can shift quickly, helping traders maximise trade effectiveness without manually adjusting their exits. Win Rate and Risk-Reward Balance A high win rate isn’t always the goal; balancing it with a good risk-reward ratio is often more sustainable. For example, a trader with a 40% win rate might still see strong potential returns if their average risk-reward is 1:3. Psychological Discipline and Strategy Execution Mastering short-term trading requires more than technical skill—it’s about controlling emotions and staying disciplined under pressure. Even with a solid strategy, emotional biases like fear and greed can cloud judgement and lead to impulsive decisions. Avoiding Overtrading Overtrading often stems from frustration or the “fear of missing out.” Identifying decent shares to buy for the short term can be exciting, but it’s essential to set clear limits on daily trades. By focusing on quality setups over quantity, traders can prevent hasty, low-probability trades that erode potential gains. Sticking to the Plan A pre-set strategy is only as good as its execution. Traders can strengthen discipline by following structured routines—such as starting each session with a plan, reviewing recent trades, and assessing market conditions. Journaling each trade, including the reasoning and emotions behind it, helps reinforce the commitment to the strategy. Routine and Mindfulness Building a consistent daily routine, from meditation to pre-market preparation, can help reduce emotional swings and keep a trader’s focus sharp. Practising mindfulness helps traders stay centred, making it easier to manage emotions, avoid unplanned trades, and stay aligned with their strategic goals. The Bottom Line Skills like advanced analysis, adaptable strategies, and emotional discipline are essential to navigate stocks, forex, and cryptocurrency markets effectively. With the right tools and techniques, traders can make agile decisions in fast-moving markets. For those ready to take their trading further, opening an FXOpen account offers access to four robust trading platforms, competitive spreads, and fast execution speeds—ideal for short-term trading. FAQ What Is Short-Term Trading? Short-term trading involves buying and selling financial assets over low timeframes, typically ranging from minutes to hours. Traders aim to capitalise on rapid price movements rather than holding positions long-term. How Do Short-Term Traders Make Money? Short-term traders aim to take advantage of small price changes by timing their trades based on market trends, technical analysis, or key events. They base their strategies on quick decision-making, effective risk management, and sometimes high-frequency trading. How to Pick Good Stocks for the Short-Term? To find short-term stocks, traders look for stocks with high liquidity and volatility, as these are more likely to see meaningful price swings. Many traders focus on stocks to buy for the short term that offer recent/upcoming news or earnings reports, which tend to drive price momentum. Which Crypto to Buy for the Short-Term? High-liquidity cryptocurrencies like Bitcoin and Ethereum are popular for short-term trades due to frequent price fluctuations. However, smaller coins can also offer opportunities, but these often carry higher risks due to their volatility. Can You Make a Living From Short-Term Trading? Yes, but it’s challenging. Short-term trading requires a strong strategy, deep market knowledge, and emotional discipline. Many traders supplement their income with other sources, as consistent gains can be difficult to achieve. At FXOpen UK, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Market Volatility: The Trade That Taught Me PatienceEarly on, I thought I could outsmart market volatility. I’d jump into trades during big moves, hoping to catch the wave. But one day, it caught me instead. The Day Volatility Got Me I remember trading during a news event. The market spiked in my direction, and I got excited. I moved my stop-loss higher to give the trade “room to run.” Then, out of nowhere, the market reversed. My gains disappeared, and I ended up with a bigger loss than I could afford. That trade taught me that volatility is unpredictable—and dangerous if you’re not prepared. What Volatility Did to Me -Tempted me to chase moves: I couldn’t resist jumping in, even when it wasn’t smart. -Shook my confidence: The wild swings made me doubt my plan. -Made me emotional: I panicked when things didn’t go as expected. How I Fixed It I stopped trading during news events unless it fit my strategy. I started using stop-losses and stuck to them, no matter what. And I reminded myself that no single trade is worth blowing my account. What I Learned -Volatility is part of trading—embrace it, but don’t let it control you. -A solid strategy and risk management are your best defenses. -Patience pays off when the market gets wild. Struggling with market volatility? DM me—I’ve been there and can help. I also have a webinar this Sunday to help you tackle this challenge and stay grounded. Kris/Mindbloome Exchange Trade What You See
KRAKEN:GALAUSDEducation
by Mindbloome-Trading
5
Trading Forex vs Stock CFDs: Differences and AdvantagesTrading Forex vs Stock CFDs: Differences and Advantages Forex and stock markets are two of the most popular options for traders, each offering unique opportunities and challenges. While forex focuses on trading global currency pairs, stocks involve buying and selling shares of companies. Understanding their differences—from market size and liquidity to trading costs and risk—can help traders choose the market that best suits their strategy. Let’s break down the key differences between forex and stocks. What Is Forex Trading vs Stock Trading? Let us start with some general information that you may already know. The forex market revolves around trading currency pairs, such as EUR/USD, and operates globally, making it the largest financial market with a daily turnover exceeding $7.5 trillion (April 2022). It’s decentralised, meaning transactions occur directly between participants across time zones, with no single central exchange. In contrast, the stock market involves buying and selling shares of publicly listed companies, like Tesla or Nvidia, through centralised exchanges such as the NYSE or LSE. Trading hours are fixed and tied to each exchange’s location, creating more defined trading windows. Forex markets are driven by macroeconomic events and international factors, while stocks are mostly influenced by company-specific developments like earnings reports and industry trends. In this article, we will talk about Contracts for Difference (CFD) trading. To explore live forex and stock CFD trading opportunities, head over to FXOpen’s free TickTrader platform. Forex vs Stock Trading: Market Accessibility and Trading Hours One of the most important differences between forex and stock markets is their structure and timings. Forex: Open 24/5 The forex market operates 24 hours a day, five days a week, cycling through major trading sessions in Sydney, Tokyo, London, and New York. This continuous nature allows traders to react to global events in real-time, whether it’s midday in the UK or midnight in Asia. For example, a trader monitoring the London session can seamlessly transition into the New York session without waiting for markets to reopen. Stocks: Fixed Timeframes Stock trading is tied to the operating hours of centralised exchanges. For example, the NYSE runs from 9:30 am to 4:00 pm EST, while the LSE operates from 8:00 am to 4:30 pm GMT. This also applies to stock CFDs. Outside of these hours, activity is limited to pre- and post-market trading, which typically sees lower liquidity and higher spreads. Conclusion Forex provides flexibility for traders who value around-the-clock access, while stock traders need to plan their activity within set hours. This makes forex especially appealing to those with unconventional schedules or a need for an immediate market response. Trading Stocks vs Forex: Market Size and Liquidity The size and liquidity of a market dictate how efficiently trades are executed and at what cost. Forex and stock trading differs significantly in these areas. Forex: The $7.5 Trillion Giant The forex market stands as the largest in the financial world, with daily trading volumes exceeding $7.5 trillion (April, 2022). This immense size ensures high liquidity in many pairs, meaning they can be traded almost instantly with minimal price slippage. Tight spreads—often as low as fractions of a pip—make forex particularly attractive to traders seeking frequent, precise entries and exits. Stocks: Liquidity Highly Varies The stock market is smaller and is subject to more complicated factors, therefore, traders may suffer when opening and closing trades. First, stock liquidity highly depends on the company and its trading volume. Blue-chip stocks like Apple or BP typically offer high liquidity, which contributes to smooth transactions with competitive spreads. However, smaller, less-traded stocks may suffer from wider spreads and slower execution, particularly during market volatility. Second, trading hours affect market liquidity, making it challenging to trade before and after market close. Conclusion Forex’s unmatched liquidity mainly ensures consistent trade execution across major pairs. In contrast, stock traders must carefully choose assets to avoid issues with low liquidity, especially when trading small caps or during off-peak hours. Forex vs Stocks: Volatility and Price Drivers High volatility creates opportunities for traders by producing price swings that can be capitalised on. However, the factors driving these movements differ significantly between forex and stocks. Forex: Global Events and Macro Trends Forex volatility is often driven by large-scale economic and geopolitical events. Central bank interest rate decisions, employment data, inflation reports, and geopolitical tensions can cause significant price shifts. For instance, a hawkish Federal Reserve announcement can lead to USD appreciation against other currencies. Currency pairs also experience varying levels of volatility depending on their classification. Major pairs like EUR/USD tend to be less volatile than exotic pairs such as USD/ZAR, where price swings can be much more dramatic due to lower liquidity and heightened economic risks. Stocks: Company-Specific Drivers Stock volatility is more granular, often linked to specific companies. Earnings reports, mergers, leadership changes, or industry news can move a single stock significantly. Broader market trends, such as sector-wide sentiment shifts, can also drive volatility, but these are secondary to company-specific factors. For example, Tesla’s earnings announcement can cause sharp movements in its share price without impacting other automakers. Conclusion Forex volatility is broader and influenced by global macroeconomic trends, while stocks are typically driven by isolated, company-specific events. This distinction makes forex appealing for traders focusing on macro analysis and technical patterns, whereas stock traders often blend fundamental company research with broader market trends to identify trading opportunities. Forex Trading vs Stock Trading: Trading Costs and Leverage Trading costs and leverage significantly impact a trader’s strategy and potential returns. And choosing between trading stocks or forex is no exception. Forex: Potentially Low Costs and High Leverage Forex may provide opportunities for lower-cost trading, with fees paid via commissions and spreads. For instance, forex commissions at FXOpen start at $1.50 per lot, depending on account size. Spreads are usually tight for major pairs like EUR/USD, making costs relatively low. At FXOpen, you can trade with spreads from 0.0 pips. Forex offers significantly higher leverage compared to stocks. While this allows traders to operate with smaller capital, it requires disciplined risk management to avoid significant losses. Stocks: Higher Costs, Lower Leverage Stock trading via CFDs typically incurs higher costs compared to forex, with commissions charged per trade or embedded in spreads. For instance, at FXOpen, US stock CFD traders can see commissions charged from 0.04% to 0.1%, varying by account size, with a minimum commission of $1 per order. Leverage is also lower—usually capped at 1:5 for retail traders, reflecting the relative instability of stock prices compared to currencies. Conclusion Forex CFDs offer lower costs and higher leverage, making it popular among traders with a short-term focus. Stock CFDs, while more expensive, give access to financial instruments for portfolio diversification. Choosing between them depends on the trader’s goals, risk tolerance, and preferred market dynamics. Forex vs Stocks: Regulation and Market Transparency Regulation and transparency are critical for traders when choosing between forex and stocks. Both markets are regulated, but their structures create distinct differences in how pricing and trade execution work. Forex: Decentralised and Broker-Driven The forex market is decentralised, meaning trades are executed through brokers rather than central exchanges. This structure can lead to variations in pricing and execution quality, depending on the broker. Therefore, traders need to find regulated brokers to avoid issues with unreliable pricing or execution. For example, FXOpen is regulated by the FCA and CySEC to ensure fair practices and client fund protection. Stocks: Centralised and Transparent Traditional stock markets operate on centralised exchanges like the NYSE or LSE, where all trades are matched through a regulated order book. This ensures consistent pricing and high transparency, as traders can see bid and ask levels across the market. At the same time, stock CFDs are traded on a broker level. Conclusion Forex and stock CFDs’ decentralised nature provides flexibility but relies heavily on broker reliability. Forex Trading vs Stock Trading: Suitability for Different Trader Types Deciding between forex trading and stock trading comes down to choosing between each market’s unique characteristics. Forex: Favouring Short-Term Strategies Forex is ideal for short-term traders, such as scalpers and day traders. Its high liquidity and round-the-clock trading mean there’s always an opportunity to act on price movements, especially during overlapping sessions like London and New York. The use of leverage, often higher in forex, makes it appealing for those seeking to amplify returns on smaller price shifts (please remember that higher leverage leads to higher risks). Traders in forex often focus on technical analysis, utilising chart patterns and indicators, and study macroeconomic data to analyse short-term trends. This market tends to suit individuals who are comfortable with frequent decision-making and quick trade execution. Stocks: A Blend of Short and Medium-Term Trading Stock trading, particularly via CFDs, is more versatile, attracting both medium-term and swing traders. While day trading is possible, the structured trading hours and broader price swings make stocks particularly appealing for those who prefer holding positions for days or weeks. Stock traders often lean on company-specific fundamentals, such as earnings reports or sector trends, alongside technical analysis. This market suits individuals who prefer analysing individual businesses or sector dynamics over global macro trends. Conclusion Forex trading caters to short-term strategies, attracting traders who thrive on quick decisions and frequent trades, while stock trading offers flexibility, appealing to those who prefer a mix of short- and medium-term strategies with a focus on company fundamentals. Each market has unique characteristics, allowing traders to choose based on their style and objectives. The Bottom Line Both forex and stock markets may offer unique opportunities tailored to different trading strategies and goals. Whether you’re drawn to forex’s 24/5 accessibility or the structured transparency of stocks, understanding their key differences is crucial. Ready to explore forex and stock CFD trading? Open an FXOpen account today and take advantage of competitive spreads, fast execution speeds, and a wide range of instruments. FAQ Is the Stock Market Bigger Than Forex? No, the forex market is significantly larger. Forex sees daily trading volumes exceeding $7.5 trillion (April, 2022). This makes forex the largest and most liquid market, popular among traders seeking tighter spreads and fast execution. What Is the Correlation Between Forex and Stock Markets? The relationship varies. Commodity-linked currencies like AUD or CAD often correlate with related stocks or indices. Broader market sentiment, such as risk-on or risk-off conditions, can also drive both forex and stocks in similar or opposing directions. Should I Invest in Forex or Stocks? It depends on your trading style. Forex could suit short-term traders focusing on global economic trends, while stocks might appeal to those who prefer company analysis or medium-term strategies. Which May Offer Greater Returns, Forex or Stocks? Ultimately, potential returns depend on your strategy and discipline. Forex offers higher leverage for short-term trades, but higher leverage leads to higher risks. Stocks may provide better longer-term growth potential, but they are subject to high volatility. Which Is Riskier, Forex or Stocks? Forex can be riskier due to leverage and rapid price swings. Stocks also carry risks, particularly from company-specific events, but lower leverage makes losses potentially less amplified. The risk depends on your approach and management. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Who Moves the Forex Market | Forex Market Players Forex is the largest market in the world, with the tremendous daily trading volumes and millions of market participants. In this educational article, we will discuss who moves that market and who are its 6 the most significant players. 1. Governments Governments tend to set economic goals and influence the markets with their political decision. They define the course of their nations, issuing policies and imposing regulations. 2. Central banks Central banks implement the decisions of the governments, applying multiple instruments: Central banks control the emission of the money, shifting the supply and demand. They control interest rates and define the credit policies. Above is a top 10 of the biggest central banks by total assets. Central banks control the international trade and sustain the exchange rates of the national currencies by interventions and handling the foreign currencies and gold reserves. 3. Commercial banks Commercial banks handle the international transactions. Over 70% of total Forex Market transactions directly refers to the actives of commercial banks. In a pie chart above, you will find the biggest commercial banks by trading volume. Commercial banks are also involved in speculation activities, benefiting from market fluctuations by relying on various strategies. 4. Corporations Corporation is the business that operates in multiple countries. With the constant capital flow between its branches and counterparts, corporations are permanently involved in a currency exchange. Also, corporations usually hedge currency risks, storing their liquidity in particular currencies. 5. Investment funds By investment funds, we imply the international or domestic professional money management companies. Dealing with hundreds of millions of investments, they quite often are operating on Forex market, buying foreign assets, speculating and hedging. Below, you will find the list of largest world's hedge funds. 6. Retail traders The main goal of retails traders and speculators is to make short terms profits from their transactions on the market. Typically, the activities of traders constitute a relatively small portion of total trading volumes. Knowing which forces move the forex market, you can better understand how it works. The spot prices that you see on the charts reflect the sentiment of all the above-mentioned participants. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
7
The Evolution of Forex Trading Platforms and the MarketThe Evolution of Forex Trading Platforms and the Market Forex trading has come a long way since its early days. From manual cash exchange and institutional trading to simple, user-friendly online platforms available for everyone. This FXOpen article explores how technology has transformed forex trading and how AI-based algorithms are used to analyse market data today. Early Days of Forex Trading The history of forex trading in the world is long, dating back to ancient times when people traded goods and services across borders. However, the modern forex market as we know it today began in the 1970s after the collapse of the Bretton Woods system. Since then, currencies have been allowed to float freely against each other. In the early days, forex trading was performed manually, and the role of financial institutions was significant. However, manual methods had their challenges and limitations, such as the lack of real-time data and the need for human intervention. Rise of Electronic Trading Platforms The next step in forex market history was the development of electronic trading platforms. The foreign exchange market has experienced a profound transformation with the advent and proliferation of electronic platforms. These platforms have revolutionised the way currencies are traded, leading to increased accessibility, efficiency, and transparency in the world's largest financial market. The forex market has benefited immensely from advancements in technology. High-speed internet connections, powerful computers, and sophisticated software have enabled traders to execute orders swiftly and efficiently, regardless of their location. The emergence of electronic communication networks (ECNs) in the 1990s-2000s and the introduction of electronic trading platforms transformed the industry. ECN accounts connect leading brokers and individual traders with each other so that they can trade directly, bypassing the exchange mechanisms of intermediaries. ECN globalised the market, as it allowed transactions to be conducted outside the working hours of a particular location. The advantages of such electronic systems are the possibility of daily and round-the-clock trading, the expansion of the number of bidders offering their quotes, and the prompt supply of participants with all necessary information. If you are interested in ECN trading, you can open an FXOpen account. Mobile Apps A positive change in the history of forex trading was the shift from calling brokers to direct trading opportunities via electronic platforms. But this required access to a desktop computer. When mobile phones went mainstream, following the market became much easier. The development of mobile applications has made forex trading more convenient and accessible. It has made it possible for traders to access the markets from anywhere, at any time. Traders can now execute trades and monitor their positions on the go. Mobile apps offer convenience and accessibility, making modern forex trading more efficient and user-friendly. Social and Copy Trading Social trading networks have become increasingly popular in recent years. These networks allow traders to follow and replicate the strategies of other traders. Copy trading, in particular, has gained popularity. This method allows newcomers to take advantage of the expertise of more experienced traders. One advantage this provides is the opportunity to automate strategies and reduce the need for human intervention. However, both social and copy trading come with a set of risks, such as the potential for losses due to the replication of flawed strategies. Algorithmic and High-Frequency Trading (HFT) One promising innovation in the field of trading is the introduction of algorithms. This has the potential to change forex trading because now traders can automate their strategies using computer programs. Robots carry out trades according to predetermined rules and algorithms, and traders only need to observe the course of trading and intervene if necessary. As a subset of algorithmic trading, high-frequency trading (HFT) is also developing. HFT strategies help traders execute trades at lightning speed. Additionally, artificial intelligence and machine learning are playing an increasingly important role in algorithmic trading. AI-based tools collect, sort, analyse and classify market data and make asset selection recommendations. Cryptocurrency* and Forex Integration Recently, the market saw a sharp rise in the popularity of cryptocurrencies* as traded assets and their integration with forex. The evolution of the forex market is that platforms now allow traders to trade cryptocurrencies* alongside traditional forex pairs on the same platform. The impact of blockchain technology on forex markets is yet to be fully realised. But right now, it can be said that it may enable more secure and transparent transactions. The decentralised nature of blockchain enables innovations, such as decentralised exchanges and peer-to-peer trading. Final Thoughts While there are risks associated with forex trading, the integration of technology has made it more accessible to retail traders, and modern algorithms may make it simpler and more transparent. As the evolution of foreign exchange markets continues, traders try to stay informed and adapt to new technologies. You can explore our blog to learn more about highly effective trading strategies and top currency pairs and use the TickTrader platform to access advanced charts and trade various assets on a single account. Join the trading community with FXOpen! *At FXOpen UK, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
Why Trading Sessions Matter in Forex: Key OverlapsThe Forex market is open 24 hours a day during the weekdays, allowing traders flexibility to trade at any time. However, understanding the best times to trade is essential for effective trading. The market is divided into four main sessions: Sydney, Tokyo, London, and New York, each corresponding to peak activity in key financial centers. Using a Forex Market Time Zone Converter can help traders determine which sessions are active in their local time, making it easier to plan around high-liquidity periods. Although the market is technically always open, not all trading times are equally profitable. Higher trading volume, which generally occurs during session overlaps, creates ideal conditions for traders. For example, the overlap of the London and New York sessions sees the highest volume, with more than 50% of daily trades occurring in these two centers. Trading at this time, especially with currency pairs like GBP/USD, can lead to tighter spreads and quicker order execution, reducing slippage and increasing the likelihood of profitable trades. Similarly, trading AUD/JPY during the Asian session, when the Tokyo market is active, is advantageous due to higher trading activity for these currencies. Conversely, trading during times when only one session is active, such as during the Sydney session alone, can result in wider spreads and less market movement, making it harder to achieve profitable trades. Planning trades around high-activity sessions and overlaps is key to effective forex trading.
Education
by Market-Analyzer
9
Learn Best Time Frames For Scalping Any Forex Pair I am trading forex with top-down analysis for many years. In this article, I will teach you powerful combinations of multiple time frames for scalping any currency pair. For scalping financial markets with multiple time frame analysis, I recommend applying 3 time frames: 4H, 15 minutes and 5 minutes time frames. 4H time frame will be applied for trend and structure analysis. On a 4H time frame, you should identify the direction of the market and significant supports and resistance. Key supports in a bullish trend will be applied for buying the market. While key resistances will be applied for counter trend trading. Above is USDJPY chart, 4H time frame. The trend is bullish and I have underlined important historical structures. Key resistances in a bearish trend will be applied for selling the market. While key supports will be applied for counter trend trading. Look at a structure and trend analysis on EURUSD on a 4H time frame. 15 minutes and 5 minutes time frames will be applied for confirmation, entry signal and trade execution. The logic is that once you identified key levels on a 4H time frame, you are patiently waiting for the test of one of these structures. Once one of the key levels is tested, you start analyzing 15 minutes and 5 minutes time frame and look for a signal there. What should be the signal? It can be a specific candlestick pattern, price action pattern, some signal from a technical indicator or some other stuff. Personally, I look for a price action pattern. I am looking for a bearish price action pattern on a 4H resistance and a bullish price action pattern on a 4H support. Look at GBPUSD. The pair is trading in a bearish trend on a 4H time frame, and it tests a key horizontal resistance. On 15 minutes time frame, we see a strong bearish price action signal. Head and shoulders pattern formation and a bearish breakout of its horizontal neckline. That will be our strong scalping short signal. If you sell the market in a bearish trend on a 4H from a key resistance, you can anticipate a bearish movement to the closest 4H support. Look how nicely GBPUSD dropped after a strong bearish confirmation of 15 minutes time frame. In that case, we did not apply 5 minutes time frame in our analysis, keep reading and I will explain when we apply 5 minutes time frame for scalping. Above is USDCAD. On a 4H time frame, I executed trend and structure analysis. We see a test of a key support in a bullish trend. At the same time, no pattern is formed on 15 minutes time frame after a test of structure. In such a situation, analyze 5 minutes time frame. If there is no pattern on 15m, probabilities will be high that the pattern will appear on 5m. On 5 minutes time frame, the pair formed the ascending triangle formation. A bullish breakout of its neckline is a strong bullish signal and confirmation for us to buy. If you buy the market in a bullish trend on a 4H from a key support, you can anticipate a bullish movement to the closest 4H resistance. You can see that after our confirmed bullish signal, the price went up to Resistance 1. Both trading opportunities that we discussed are trend following ones. Remember that the trades that are taken against the trend are riskier and have lower accuracy. For that reason, if you are a newbie trader, strictly trade with the trend! Good luck in scalping with multiple time frame analysis! ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
2
Find Your Trading Style: What Type Of Trader Are You ? Good morning, trading family! Ever feel overwhelmed by all the different trading strategies out there? You're not alone, and today we’re here to help you figure out exactly which trading style suits you. In this video, we’ll explore the four main types of trading—Scalping, Day Trading, Swing Trading, and Position Trading—and give you real-life examples so you can see which one fits your personality and goals best. Whether you’re someone who thrives on fast-paced, high-energy trades or prefers to take a step back and play the long game, this video will give you the clarity you need to trade with confidence. My goal is to help you tailor your strategy so it feels natural and aligns with how you want to trade. If you find this valuable, please comment below and tell me which type of trader you think you are! Don’t forget to like or share this video so other traders can benefit from it too. Your feedback can make a huge difference for someone else in our trading family! Happy Trading Mindbloome Trader
Education
by Mindbloome-Trading
Forex Portfolio Selection Using Currency Strength Index (CSI)Hello Traders, Today, I’ll share my portfolio selection approach in forex trading. This method helps identify the best forex pairs to trade based on their relative strength. The simplest and most effective strategy is to use the Currency Strength Index (CSI), combining the H4, Daily (D1), and Weekly (W1) cumulative strength. By analyzing this data, we can identify the strongest and weakest currencies at any given time. Once we have this information, the next step is to pair the strongest currencies with the weakest. Here are today’s portfolio selections: BUY Pairs: GBPUSD, GBPCAD, GBPNZD SELL Pairs: USDJPY, CADJPY, NZDJPY, USDCHF, CADCHF, NZDCHF The key benefits of this portfolio selection process are: A focused view on the most profitable currency pairs An objective approach to trading decisions Clear direction on which way to trade (buy or sell) Like, comment by letting me know what you think and follow me for more trading education. Happy trading!
Education
by Charts247TradingAcademy
Forex Trade Management Strategies. Techniques For Beginners I am going to reveal 4 trade management strategies that will change the way you trade forex. These simple techniques are aimed to minimize your losses and maximize your gains. 1. Trading Without Take Profit Once you spotted the market that is trading in a strong bullish or bearish trend, there is one tip that will help you to benefit from the entire movement. If the market is bullish, and you buy it expecting a bullish trend continuation, consider trading WITHOUT take profit. Take a look at USDJPY on an hourly time frame. The market is trading in the bullish trend, and we see a strong trend-following signal - a bullish breakout of a current resistance . After the violation, the price went up by more than 1000 pips, and of course, trading with a fixed target, most likely you would close the trade too soon. The same trade management strategy can be applied in a bearish trend. Above is a price action on GBPUSD. The pair is very bearish, and we see a strong bearish signal on an hourly time frame. The market dropped by more than 1000 pips then, and of course, trading with the fixed take profit, you would miss that bearish rally, closing the trade earlier. Even though the trends do not last forever, the markets may easily fall or grow sharply for weeks or even months and this technique will help you to cash out from the entire movement. 2. Stop Loss to Breakeven Once you open a trading position and the market starts going in the desired direction, there is a simple strategy that will help you to protect your position from a sudden reversal. Above is the real trade that we took with my students in my trading academy. We spotted a very bearish pattern on USDCAD and opened short position. Initially we were right, and the market was going to our target. BUT because of the surprising release of negative Canadian fundamental news, the market reversed suddenly, not being able to reach the target. And that could be a losing trade BUT we managed to save our money. What we did: we moved our stop loss to entry level, or to breakeven, before the release of the fundamentals. Trade was closed on entry level and we lost 0 dollars. Moving stop loss to entry saved me tens of thousands of dollars. It is one of the simplest trade management techniques that you must apply. 3. Trailing Stop Loss Once you managed to catch a strong movement, do not keep your stop loss intact. As we already discussed, your first step will be to protect your position and move your stop loss to entry. But what you can do next, you can apply trailing stop loss. Above is a trend-following trade that we took with my students on GBPCHF. Once the market started moving in the desired direction, we moved stop loss to breakeven. As the market kept setting new highs, we trailed the stop loss and set it below the supports based on new higher lows. We kept trailing the stop loss till the market reached the target. Application of a trailing stop will help you to protect your profits, in case of a sudden change in the market sentiment and reversal. 4. Partial Closing The last tip can be applied for trading and investing. Remember that once you correctly predicted a rally, you can book partial profits, once the price is approaching some important historical levels or ahead of important fundamental releases. Imagine that you bought 1 Bitcoin for 17000$. Once a bullish market started, you can sell the portion of your BTC, once the price reaches significant key levels. For example, 0.2 BTC on each level. With such trade management technique, you will book profits while remaining in your position. Even though, these techniques are very simple, only the few apply them. Try these trade management strategies and increase your gains and avoid losses! ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
4