Get started

Fundamental Analysis

Happy New Year 2024| Learn Our Methods | Read Description|Happy New Year Everyone 2024: Let's first talk about CHFJPY then we will talk about how you can improve and learn some tips. CHFJPY in last six or seven months price overbought heavily due to JPY poor performance and government's zero intention to interfere in the market. However, many reports suggests that JPY will likely to be rebound in first quarter of 2024 in this case we can see a strong shift in price characteristics. Our first entry indicates, that we should expect price to continue the bearish momentum and drop from current area of the price. However, as we will having NFP in the first week of the month, it is likely to see some unexpected movement in the market. Second entry, is when price fill the gaps in the market and then drop smoothly, we will keep you updated. We want all of you to succeed in the forex or commodities trading. Here how you can improve: Firstly find one or two pairs that suits you: meaning if you focus on every single instruments available to trade in the market, you will never succeed instead focus on one or two pairs and master them, know how and when these pairs move, what factors influence them in the market and trade swing highs and lows. Secondly, use longer time frames to have a better vision, have a longer vision which will help you catch the big moves, yes, it is time consuming but if you are beginner then focus first in this and then along the way you will learn intraday trading. Lastly, learn more about consolidation, accumulation and distribution: before the big reversal, price first will consolidate then accumulate and distribute, you should be looking to enter in phase of accumulation and take every enter when price consolidate which leads to a breakout. If you learn above information in details and practice, your chances of becoming a successful trade increase. There is no overnight success, it is all hard work, if you believe in your self and focus on above things you will one day be proud of yourself. Happy New Year and Trade Safe 2024. We wish all of you all the best. Team Setupsfx_
Education
by Setupsfx_
11
Market Algo or pain tradesI was reading another trading book today and much like watching the dumb money movie the other day, it prompted me to write another post. So, you may have heard the expression "the market is an Algorithm" whilst this is somewhat true, it's actually more a sequence, Ralph Elliott, Richard Wyckoff and Edward Jones knew this. In simple terms, the larger operators or what's known as sophisticated money - chase liquidity pools that are often areas Dumb Money have taken entries or placed stops. Now if it was as simple as this, you could simply write an indicator or be on the winning side 100% of the time. Unfortunately, there's a lot more to it! When I say the smart kids are taking the dinner money of the dumb kids, you need to appreciate the fact that winning whilst playing against retail traders is like putting the Patriots against your local under 12's side. Or like having the New Zealand All Blacks play against an old people's home in Pakistan. (I am not sure if Pakistan even have a 1st team in rugby). To gain some understanding, you need to appreciate there's such a thing as "pain trading". A "pain trade" refers to a situation in financial markets where a significant number of investors or traders find themselves on the wrong side of the market, leading to losses or discomfort. In other words, it describes a scenario in which the market moves in a way that causes the most amount of pain or financial losses to the largest number of participants. For example, if a majority of traders are positioned for a market to go up, a pain trade would be a sharp and unexpected decline in prices, catching those traders off guard and causing them losses. The term reflects the idea that markets often move in ways that inflict the most damage on the greatest number of participants. Understanding pain trades is important for investors and traders, as it highlights the potential risks of crowded trades and the importance of risk management strategies to mitigate unexpected market movements. Investors and traders often use various indicators, market sentiment analysis, and risk management techniques to try to avoid being caught on the wrong side of a pain trade. (Thanks ChatGPT for the summary). ====================================================== So take a company like Carvana for example... This type of move happens over and over again - creating cycles (But not always the same). In this image above you can see it's likely to have swept long stop losses and then rallied hard. You probably know about the Gamestop Saga. I wrote a post on that film recently. I talked about being on the wrong side - I can't get over how someone could be up $500,000 and still go broke? But it's all in the mindset. Liquidity is the name of the game. How do these things fit together? Well, Bitcoin is a prime example - retail mindset is "HODL, Buy the Dip, Diamond hands & Lambo" - whilst as a professional trader, it's enjoying your profits and buying/selling at the expense of the dumb money. These moves are shown as the last post, buy momentum. Here is the summary image from that post. Since we had a move up - retail seem to think it's up only, they seem to put all the eggs in the hope Blackrock and a halving will make them rich... I have read articles like this recently. After watching the Dumb Money film - you know where following the crowd goes. ----------------------------------------------------------------------- Why is this an important lesson? It's all to do with pain, where is the maximum pain? Retail sentiment would suggest pain comes in the form of little movement, grinding prices in up moves and fast aggressive drops. Some context from Blackrock themselves: What is Blackrocks Biggest ETF? So again, let's add a little logic. Where is liquidity sitting? If and it's a big if - Blackrock get an ETF approved and it's half the size of their biggest ETF to date, let's then assume Retail flood in and match it dollar for dollar. That market cap would still put us roughly at the current ATH, given coins in circulation. This again just amplifies, why we are simply - NOT READY, YET!!! The move I didn't want in 2022, looks to be the biggest liquidity grab we are likely to see in the Bitcoin chart. We are very, very likely still in an A-B move up for the slow pain of coming back to build sustainable momentum. Have a Happy New Year all! Stay safe and see you in 2024! Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
COINBASE:BTCUSDEducation
by Mayfair_Ventures
17
How to succeed in trading ✅From the experience I have in trading I have identified 3 pillars on which my success is based. I can't say that one is less important than another, so I try to combine all of them: 1) Psychology - is one of the most difficult aspects to master, which requires a lot of theoretical and practical knowledge, so I recommend first of all to study yourself, after you have managed to identify what kind of person you are, you will gain knowledge from books, videos, trainings that will help you control your emotions when trading. At the same time, this aspect can help you in your daily life. 2) Risk management - due to proper risk management, I managed to become funded. I also understood that in trading it is more important to tend to have a small risk, than a high profit, because greed for money can bring you into a less pleasant situation. I managed to take the account with a risk of 1% per trade and with an RR of at least 1: 2, which therefore showed me that even if I take 6 sls for 10 trades, I still remain profitable. 3) Trading plan - this is the aspect that motivates me to progress, once I have made a trading plan with well-defined goals, I tend to fulfill them. In addition to the purposes, a trading plan should contain the strategy applied, as well as the rules for entering / managing / exiting the transaction.
OANDA:XAUUSDEducation
by Snick3rSD
CHOCH vs BOS ‼️WHAT IS BOS ? BOS - break of strucuture. I will use market structure bullish or bearish to understand if the institutions are buying or selling a financial asset. To spot a bullish / bearish market structure we should see a higher highs and higher lows and viceversa, to spot the continuation of the bullish market structure we should see bullish price action above the last old high in the structure this is the BOS. BOS for me is a confirmation that price will go higher after the retracement and we are still in a bullish move WHAT IS CHOCH? CHOCH - change of character. Also known as reversal, when the price fails to make a new higher high or lower low, then the price broke the structure and continue in other direction.
OANDA:XAUUSDEducation
by Snick3rSD
4
What is Confluence❓✅ Confluence refers to any circumstance where you see multiple trade signals lining up on your charts and telling you to take a trade. Usually these are technical indicators, though sometimes they may be price patterns. It all depends on what you use to plan your trades. A lot of traders fill their charts with dozens of indicators for this reason. They want to find confluence — but oftentimes the result is conflicting signals. This can cause a lapse of confidence and a great deal of confusion. Some traders add more and more signals the less confident they get, and continue to make the problem worse for themselves. ✅ Confluence is very important to increase the chances of winning trades, a trader needs to have at least two factors of confluence to open a trade. When the confluence exists, the trader becomes more confident on his negotiations. ✅ The Factors Of Confluence Are: Higher Time Frame Analysis; Trade during London Open; Trade during New York Open; Refine Higher Time Frame key levels in Lower Time Frame entries; Combine setups; Trade during High Impact News Events. ✅ Refine HTF key levels in LTF entries or setups for confirmation that the HTF analysis will hold the price. HTF Key Levels Are: HTF Order Blocks; HTF Liquidity Pools; HTF Market Structure.
OANDA:XAUUSDEducation
by Snick3rSD
Market Structure Identification ✅Hello traders! I want to share with you some educational content. ✅ MARKET STRUCTURE . Today we will talk about market structure in the financial markets, market structure is basically the understading where the institutional traders/investors are positioned are they short or long on certain financial asset, it is very important to be positioned your trading opportunities with the trend as the saying says trend is your friend follow the trend when you are taking trades that are alligned with the strucutre you have a better probability of them closing in profit. ✅ Types of Market Structure Bearish Market Structure - institutions are positioned LONG, look only to enter long/buy trades, we are spotingt the bullish market strucutre if price is making higher highs (hh) and higher lows (hl) Bullish Market Structure - institutions are positioned SHORT, look only to enter short/sell trades, we are spoting the bearish market strucutre when price is making lower highs (lh) and lower lows (ll) Range Market Structure - the volumes on short/long trades are equall instiutions dont have a clear direction we are spoting this strucutre if we see price making equal highs and equal lows and is accumulating . I hope I was clear enough so you can understand this very important trading concept, remember its not in the number its in the quality of the trades and to have a better quality try to allign every trading idea with the actual structure
OANDA:XAUUSDEducation
by Snick3rSD
HOW TO IDENTIFY AN ASCENDING WEDGE AND A DESCENDING WEDGEThe wedge pattern is a popular chart formation that traders use to identify potential reversals in the markets. This pattern is formed from a series of higher highs and higher lows in an ascending wedge or lower highs and lower lows in a descending wedge. As the pattern narrows, the price action becomes more compressed, eventually leading to a breakout that can result in a significant move in the opposite direction. In this article, we will look at how to identify and trade this pattern. How to identify an ascending wedge and a descending wedge Rising wedge An ascending wedge is a bullish pattern that forms when price is sandwiched between an uptrend line and a horizontal or slightly upward sloping resistance line. To identify an ascending wedge: a. Draw a trend line connecting the lower lows. b. Draw a resistance line connecting the upper highs. c. The wedge should look like a symmetrical or slightly expanding formation. Downward wedge A descending wedge is a bearish pattern that forms when price is sandwiched between a falling trend line and a horizontal or slightly downward sloping support line. To identify a descending wedge: a. Draw a trend line connecting the upper highs. b. Draw a support line connecting the lower lows. c. The wedge should look like a symmetrical or slightly expanding formation. How to trade a wedge Rising Wedge When trading a rising wedge pattern: a. Place a buy stop order above the upper resistance line, aiming for a return to or beyond the initial point of the wedge. b. Place a stop loss below the lower trend line to minimize potential losses. c. Exit the trade when price reaches the target or when the pattern does not move beyond it as expected. Downward wedge When trading a descending wedge: a. Place a sell stop order below the lower support line, aiming for a return to or beyond the initial point of the wedge. b. Place a stop loss above the upper trend line to minimize potential losses. c. Exit the trade when price reaches the target or when the pattern does not break as expected. Risk Management Trading wedge patterns can be profitable, but it is important to manage risk effectively. Consider using a fixed percentage of your account for each trade and set strict stop loss orders to protect your capital. Also, remember that no pattern is foolproof and the market can sometimes give false breakouts. Conclusion When properly identified and traded, wedge patterns can provide valuable trading opportunities. By following the steps outlined in this article, you can improve your ability to identify these patterns and capitalize on them. However, always remember that trading involves risk, and a thorough understanding of market dynamics and risk management is essential for success.
Education
by UnknownUnicorn15614419
2
SIX HABITS TO ADOPT IN 2024Trading in the financial markets can be both rewarding and challenging. However, it's essential to recognize and overcome certain bad habits that can hinder your success and well-being. In this article, we will discuss six common habits that traders should avoid and provide actionable steps to improve their mindset, performance, and overall happiness. 1. Quit Complaining – Embrace a Positive Attitude Successful traders do not wallow in self-pity or exaggerate their problems. If you find yourself complaining about your trading issues, seek help from a mentor or support group to resolve your concerns. A positive attitude will not only improve your trading results but also create a more positive atmosphere around you. 2. Monitor Your Vices and Indulgences Traders often resort to unhealthy habits, such as excessive alcohol consumption or overeating, as a way to cope with stress and disappointment. Be mindful of your weaknesses and replace harmful habits with healthier alternatives that promote well-being and mental clarity. 3. Focus on the Present Moment – Avoid Future-Tripping Fear often stems from worrying about the future. To avoid this trap, concentrate on the tasks and decisions at hand. Focusing on the present moment will give you a sense of calm, security, and fulfillment that will ultimately improve your trading performance. 4. Continue Learning and Growing Once you achieve success in trading, don't become complacent or stop learning. Continue developing your skills and exploring new trading strategies. Learning new techniques or refining existing ones will keep you engaged, motivated, and adaptable in an ever-changing market environment. 5. Cultivate Strong Social Connections As a full-time trader, it's easy to become isolated and withdrawn from social interactions. Make an effort to maintain and build meaningful relationships with family, friends, and colleagues. Strong social connections will provide emotional support, reduce stress, and contribute to your overall happiness and well-being. 6. Practice Gratitude and Kindness Traders who experience negative emotions, such as envy or resentment, can benefit from practicing gratitude and acts of kindness. By expressing gratitude, volunteering, or offering compliments, you will improve your own happiness while fostering a positive atmosphere around you. Conclusion By recognizing and overcoming these six common bad habits, traders can significantly improve their well-being, trading performance, and overall happiness. Embrace a positive mindset, maintain healthy habits, focus on the present moment, continue learning and growing, cultivate strong social connections, and practice gratitude and kindness. By doing so, you will be well on your way to achieving success in the financial markets and leading a fulfilling life. In 2024, may traders who have yet to find success in the market be blessed with the wisdom to learn from their mistakes and the courage to embrace new strategies. May they cultivate a growth mindset, forging strong connections, and practicing gratitude and kindness. As the year unfolds, let their resilience and determination guide them towards a prosperous and fulfilling future in the world of trading. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
10
THE ESSENCE OF WYCKOFF'S METHODRichard Demille Wyckoff is a trader whose career coincided with the famous traders of the time: Jesse Livermore, Charles Dow and JP Morgan, W. Gann and others. All of these men are widely recognized for their terrific trading books. Wyckoff became famous for his insight, his trading method. Wyckoff has been involved with the financial markets since he was a teenager, and this is what gave him an understanding of how the market works. To become a successful trader, it is not enough to have good theoretical knowledge. Experience is the key to your success. That is why Wyckoff recommended to follow the tape for weeks to intuitively understand what is happening on the market. THE ESSENCE OF THE WYCKOFF METHOD The essence of Richard Wyckoff's idea is that in order to gain a large position in the market and not to move the price with large orders, a professional market maker needs to balance supply and demand. The equilibrium is observed when the price is in a narrow range of consolidation. After a position is gained, the price is pushed out of the trading range. WYCKOFF'S THREE LAWS The trading method is based on three laws: Supply and Demand. Wyckoff believed that the price of each asset goes up or down only by an overabundance of one thing. For example, the price goes up if demand exceeds supply. Simply put, if a whole city decides to buy 10 tons of apple, and the apple is in limited supply from the suppliers, they will start to raise the price because of the high demand. Cause and Effect. When an asset starts to rise in price - this is the consequence, and the previous news or a small price range this is the cause. When the price is between support and resistance zones for the X amount of time (cause), then a trend will start in the short term (effect). Effort vs. Result. A large volume traded, for example, during one day is an effort, while a price change is a result. Example: If a large player has spent a lot of money buying up most of the sell orders, and the price is still standing, it means that the effort spent did not bring the expected results. ACCUMULATION AND DISTRIBUTION The basic principle of trading is to see the equilibrium of supply and demand in time. Consolidation (also called range, zone, rectangle, sidewall, etc.) is a trading range of prices where accumulation or distribution takes place. Wyckoff's method is the use of accumulation and distribution phases. Accumulation is the formation of a trading zone where orders for further movement (price reversal) are accumulated within a certain time. Here "smart" money keeps the price at approximately the same level, where they buy up most of the market orders in order to sell (distribute) them at a higher price. Distribution is the formation of a trading zone where orders are distributed for further movement (price reversal) within a certain time. Similarly, to accumulation, smart money sells out all its previously accumulated assets in order to benefit from it. Consolidation is the place where the previous movement with the outweighing force of demand or supply stops and relative equilibrium finally occurs. This trading zone is a great time to make money, because it is the place where preparation for an explosive bull rally or bearish fall takes place. Consolidation can be considered as a place of refueling for a car, if not refueled, there will be nothing to drive on - it is the accumulated force, the reason that creates the subsequent movement. The longer the refueling takes place, the farther one can go. Therefore, after a long trading range, we should expect an equally long upward or downward movement. On the way to move from one zone to the opposite zone, the price does not fall in one go, it always makes pullbacks and stops, which are called accumulation. After his death, Wyckoff left trading methods for such zones. The principle is quite simple: Before the formation of a sideways trading range, sales peak and the accumulation phase begins. During the whole time the price is in this range, a large player buys up most of the sell orders. The price goes beyond the support and resistance zones, then reverses and the growth phase begins. At the end of the growth phase, the buying peaks. Then it is the same for the distribution phase. ACCUMULATION In the accumulation phase, professional traders buy up sell orders from uninformed traders. Usually it happens on the news, from all channels they say that shares of some company will fall, it is waiting for almost bankruptcy, everything is bad, etc. In Forex, various negative news on unemployment and similar. At this moment people start to get rid of long positions, and traders start to short the instrument. Wyckoff supporters realize that it is worth waiting for the price drop to stop and they should get ready to look for an entry point to buy the asset. Phase A and phase E are trend price movements, the phases between them are the trading range, which is analyzed by the Wyckoff trading method. Horizontal lines are support (at the bottom) and resistance (at the top) of the trading range. Do not consider them as exact lines, they are approximate ranges, in which the big one turns the price back to sideways. DISTRIBUTION Everything is similar to buying in the accumulation phase, only now those assets bought earlier should be sold off. This is just the basis, the main rules of trading according to the Wyckoff method in trading. Richard Wyckoff himself applied it on stocks and on daily charts (although he did not use charts, only tape). But nowadays, the time of algorithms, you can trade on any timeframe and any instruments. The method works well on the minute. It should be understood that there can be many phase patterns, the trading range can be different, the culmination with large candles and small, the volume is high and not very high, tests after the exit from the zone may or may not be. It all depends on who the big player is, when the accumulation or distribution occurs, what instrument you are watching and what timeframe is on the chart. Trading will be quite successful if you strictly follow your trading strategy according to the Wyckoff method, written on paper, competently determine the level of risk and position size. Observe the chart, find consolidations, see what happened inside and where the price went. You need to analyze every step, every movement. Big money thinks everything through, every price action on the chart is not accidental. And remember that whatever the big money does, it always leaves its traces. Good luck in trading!
Education
by DeGRAM
2
How to Become a Professional Trader!The Triad of Successful Trading: Strategies, Psychology, and Risk Management. Introduction: In the dynamic world of trading, achieving success is a multifaceted challenge that requires a comprehensive approach. While many enthusiasts focus primarily on trading strategies, it is crucial to recognize that a holistic approach, incorporating trading psychology and risk management, is indispensable for sustained success. This article delves into the three pillars of successful trading: trading strategies, psychology, and risk management. Trading Strategies (25 Marks): A robust trading strategy serves as the foundation of a trader's success. This section explores the importance of having a well-defined and tested trading strategy. Investors must understand that possessing the same strategy as others does not guarantee success; execution and adherence are key. Points will be awarded based on the clarity and effectiveness of the chosen strategy, as well as the ability to adapt to changing market conditions. Trading Psychology (35 Marks): Trading psychology plays a pivotal role in determining success or failure in the financial markets. This section emphasizes the significance of maintaining a disciplined and rational mindset. Factors such as emotional control, patience, and the ability to handle losses are crucial components of a trader's psychological makeup. The article will explore techniques to cultivate a resilient mindset, addressing the common pitfalls that novice traders often encounter. Risk Management (40 Marks): Arguably the most critical aspect of successful trading, risk management deserves the lion's share of consideration. This section delves into the methodologies and practices that traders should adopt to protect their capital. Key areas of discussion include position sizing, setting stop-loss orders, and diversification. The article will emphasize the importance of preserving capital and preventing catastrophic losses, assigning points based on the thoroughness and effectiveness of the risk management approach. Conclusion: In conclusion, the path to becoming a successful trader hinges on the harmonious integration of trading strategies, psychology, and risk management. While a strong trading strategy provides direction, a disciplined mindset ensures adherence to the plan, and prudent risk management safeguards against significant setbacks. Traders must recognize that neglecting any one of these pillars compromises the overall structure of their trading endeavors. By assigning marks to each component, this article underscores the balanced significance of these three elements and emphasizes their collective role in achieving success in the complex world of trading. I'm Shaw, a seasoned forex trader with 14+ years of success. Whether you're new or experienced, I'm here to help you achieve long-term profitability. Trending Hashtags: #TradingSuccess #TraderMindset #RiskManagement #TradingStrategies #FinancialMarkets #TradingPsychology #InvestmentStrategy #CapitalProtection #MarketDiscipline #ProfessionalTrader
FOREXCOM:XAUUSDEducation
by shaw42
The Phenomenon of Black Swans in ForexIn becoming a successful forex trader, understanding the impact of Black Swans in 2023 and beyond becomes crucial. Black Swan events, unpredictable and with significant repercussions, constantly reshape the financial landscape. This article delves into the essence of these phenomena, offering insights into their historical occurrences in forex and strategies to mitigate their unforeseen effects. Explaining Black Swan Events The Black Swan phenomenon refers to an event in financial markets that is completely unexpected, carries a major impact, and, only after it has occurred, is often inappropriately rationalised as predictable. Originating from Nassim Nicholas Taleb's work, this concept has since become a cornerstone in understanding market dynamics. In the realm of forex, just like in the stock market, these events shake the very foundations of trading strategies and economic forecasts. A Black Swan event in the stock market, for instance, could be a sudden geopolitical crisis or an unexpected economic policy shift that dramatically alters market values. These events are characterised by their rarity, extreme impact, and the widespread insistence that they were, in fact, predictable in hindsight. This phenomenon underscores the limitations of traditional market predictions and risk assessments. In essence, the Black Swan's meaning in the stock market and other types of markets extends beyond just defining unforeseen events. It encapsulates the human tendency to find simplistic explanations for these occurrences after the fact. This hindsight bias often overlooks the true complexity and randomness inherent in market systems. Historical Perspective of Black Swans in Forex The history of forex trading is marked by several Black Swan events, each reshaping traders' perspectives and strategies. To see how these events unfold, head over to FXOpen’s free TickTrader platform to access historical chart data. The 2008 financial crisis serves as a prime example, showcasing how unforeseen events can have far-reaching impacts. Triggered by the collapse of major financial institutions in the US, the crisis led to a massive flight to safety. This period was marked by extreme volatility and unpredictability in currency values, catching many traders and investors off guard. Another significant Black Swan event occurred in 2015 with the Swiss franc. The Swiss National Bank unexpectedly removed the cap on the franc's value against the euro, which had been in place to prevent excessive appreciation. This decision resulted in an unprecedented surge in the value of the Swiss franc, leading to substantial losses for traders who had positions betting against it. The rapidity and magnitude of this movement were unforeseen, making it a textbook example of a Black Swan in forex. Characteristics of Black Swan Events Black Swan events in the financial world are defined by three key characteristics: unpredictability, severe impact, and retrospective predictability. Firstly, these events are unforeseeable, arising from circumstances that lie outside the realm of regular expectations. No amount of historical data or market analysis can accurately predict their occurrence, making them a blind spot in investment strategies. The impact of a Black Swan on a portfolio can be profound. These events typically result in drastic changes in market dynamics, often leading to significant financial losses or gains. For instance, after a Black Swan, stock prices can collapse, catching investors off guard and leading to a swift devaluation of their portfolio. Finally, in hindsight, Black Swan events often appear predictable. After the fact, analysts and traders may claim that signs and signals were evident, as many did post-2008, leading to a false sense of understanding. This retrospective predictability, however, is misleading, as it ignores the inherent randomness and unpredictability of such events, underscoring the complexity of managing risks in financial markets. Risk Management Strategies in the Face of Black Swans In forex trading, effective risk management strategies are vital, especially in the context of Black Swan event trading. These strategies focus on minimising potential losses without hindering the opportunity for gains. Diversification is one of the key strategies to mitigate the impact of Black Swans. By spreading investments across various currencies and financial instruments, traders can reduce their exposure to any single market shock. This approach helps in cushioning the portfolio against unforeseen market movements. Setting stop-loss orders is another crucial tactic. In the event of a Black Swan, these orders can limit losses by automatically closing positions once a certain price level is hit. It's essential to set these orders at levels that balance between avoiding unnecessary triggers from normal market volatility and protecting from severe downturns. Hedging, using instruments like options and futures, can also provide a buffer against Black Swans. For example, purchasing options can help manage the risk of adverse price movements, providing a form of insurance against extreme events. Utilising a conservative leverage ratio is advisable. High leverage can amplify gains, but it can also magnify losses, especially during Black Swan events. Maintaining a lower leverage ratio can prevent the wiping out of capital when unexpected market swings occur. Finally, maintaining an emergency fund or reserve capital can be a lifesaver during market turmoil. This fund provides a financial cushion, allowing traders to weather the storm without liquidating positions at a loss. These strategies, while not foolproof, offer traders in the forex market a more resilient stance against the unpredictability and potential havoc wrought by Black Swan events. The Bottom Line In essence, Black Swan events serve as reminders of the importance of vigilance and adaptability. By understanding their characteristics and impact, traders can better navigate these tumultuous waters. For those looking to apply this knowledge practically, opening an FXOpen account can be a strategic step towards managing the unforeseen, offering diversification opportunities with hundreds of tradable markets. 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
Trading on Holidays: Liquidity and Spreads When trading forex, it's essential to check spreads, especially during holidays. Trading forex during holidays can be a bit more challenging due to reduced liquidity in the market. Liquidity refers to the ease with which assets can be bought or sold without causing a significant change in price. During holidays, liquidity can be lower as many traders and financial institutions take time off, leading to fewer participants in the market. Lower liquidity can directly impact the spread, which is the difference between the bid and ask price of a currency pair. In times of reduced liquidity, spreads tend to widen, meaning the difference between the buying and selling price of a currency pair increases. This can lead to higher trading costs for traders, as wider spreads require a larger price movement in the underlying asset before a trade becomes profitable. It's essential for traders to be aware of these potential spread increases during holidays to avoid unexpected trading costs. Additionally, wider spreads can also lead to slippage , where a trade is executed at a different price than expected. This can further impact trading results, especially during fast-moving markets with low liquidity. Therefore, checking spreads during holidays is crucial for forex traders to anticipate potential increases in trading costs and adjust their trading strategies accordingly. On TradingView, you can check the spreads in the top left corner. There you can find bid, ask prices and the spread between them. It's important to factor in the impact of wider spreads on profitability and risk management when trading during these periods. By staying informed about spread changes during holidays, traders can make more informed decisions and better navigate the challenges of lower liquidity in the forex market. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
4
TRADING PSYCHOLOGY: HOW TO OVERCOME YOURSELF?Hello forex traders! How much money have you lost because of emotions? How many losing trades have you closed because they went negative and it annoyed you? And how many times did the currency immediately reversed after you recorded a loss? As we all know up to 80% of success in forex trading depends on psychology. Money management is of great importance and only then strategy. Not everyone realizes it, but this is the harsh reality. How to defeat yourself? How to remain calm in any situation? How to protect yourself from negative emotions that cloud your mind? The Impact Of Emotions On Analysis When you are sitting in losses, you do not pay attention to what is happening on the chart. That is, your brain rejects the signals that indicate that the price will continue to go against you. On the contrary, your brain tries to convince you that the price is about to turn around, which, of course, does not happen. If you close the position and look at the market with a clear eye, you will realize that the situation in the market is not the same as it was in your head a moment ago. This distraction in the form of a minus on the position affects your attentiveness, and you do not notice the obvious. There is such a thing as analysis paralysis. That is, when some event literally knocks you out of the rut, after which you cannot adequately perceive the situation. This can be avoided with the help of reasonable sufficiency. That is, you stop looking for the perfect solution. Instead, you make the most correct and simple decision to close a losing position. Also, traders are often afraid of losing profit. But then again, how many times have you held a losing trade, hoping for a reversal, and it still went against you? It is the same with profitable trades. There is a constant feeling that the price is about to turn around and all the profit will be lost. As an option, in this case you can use a trailing stop. Then you will in any case know that in case of price reversal, the profit will not be lost. In principle, the cure for the influence of any emotions on the analysis is correct money management. That is, you just need to simply reduce your trading lot. The goal is to place such a lot, which would not cause you strong emotions. Until you are used to being disciplined in every situation, it is better to trade at a lot that you could forget about. For example, you could open a trade on the daily chart and forget about it (accidentally or naturally). At the very initial stages this approach is justified, as no open positions will not prevent you from analyzing the situation competently. At the same time, the very fact of a negative trade will not knock you out of your game. You Are Not Perfect Remember, you are not perfect. There is no person who, like a robot, does not get nervous about trades, who performs absolutely perfect trading and never makes mistakes anywhere and ever. All of us make mistakes, it is normal, and it should be understood. Let's say you read that you need to reduce the lot, not to be emotional, and you still make mistakes. The thought that "I am smarter" does not leave your head. But, in general, if you read the biographies of successful people in other areas, you will learn that they also made mistakes. Often, a person needs to make all possible mistakes only in order not to make them later. So, to speak, we learn from our mistakes. The average person believes that he is smarter than 80% of people. At the same time, there are always excuses for the question "why are you so smart, but so poor?" - something prevents you, you are too old, too young, your wife/husband prevents you, you were born in the wrong country and so on. Almost everyone thinks they are, so you don't have to worry, you are not the smartest. The Vicious Circle Of A Beginner Trader Searching for a system: you find a strategy that appeals to you. Trading: as a rule, this period lasts 1-2 days, at best a week if. First Losses: taking your first losses. It's usually down to the first few trades. Anger: naturally, there is a feeling of being cheated as the system did not deliver the promised profits; Blame: the system does not work; forex is a scam and the author of the system is a scammer. Someone is necessarily to blame, for example, the broker that closed the position a point later, but not the trader himself. And everything starts all over again. Exit From The Circle: Finding a system. Backtesting from the beginning to the end: the strategy should be either tested manually on the history or in a tester if the strategy is automatic. Absolute confidence in the strategy: when you have fully tested the strategy, know all the statistics, know all the pros and cons, you gain confidence in the chosen strategy. Good money management: further, you add a good money management. Now it is "your" trading strategy: the strategy should be completely yours. If you are not comfortable holding positions for 3-4 days, move to a smaller timeframe. Or, on the contrary, if you are too lazy to open trades often, choose a larger TF. That is, the strategy should suit your temperament and be customized for you. In general, all these pieces of the mosaic lead to the exit from the enchanted circle. You find a system, then trade, adequately perceiving losses. Accordingly, you further work with this system, solve problems with emotions, inputs and outputs, improve, tune-up and so on. A Little Bit About Our Brain The fact is that our brain compared to a computer has a very large hard disk, but a very small amount of RAM. Do you know the feeling when the brain is so overloaded that absolutely no information, even seemingly simple ones, can be stored in it? Of course, we cannot expand this memory, but we can control the number of simultaneously opened applications/programs. That is, we need to fight the so-called white noise. Remove social networks Facebook, messengers, YouTube, checking mail, and so on. This is all white noise that clogs your brain and prevents you from working adequately. There are many opponents and many supporters of meditation. Meditation is, in fact, nothing more than to lie/sit under calm music and go into a certain semi-trance state. Humans periodically need three states: being awake, sleep and a trance state. Usually after a certain mental effort, you start to get very dumb without doing any useful work. This is the brain signaling that you are lacking the trance state. 30 minutes of trance a day is quite enough. Do Not Set Goals In Trading When you set yourself a specific goal, for example, to make 1% every day it doesn't work. You start looking for non-existent trades again, clouding your brain. Therefore, you should not set profit targets. On the other hand, it is possible and even necessary to set loss limits! Sometimes, there is a sudden unreasonable desire to open a trade. Although the system did not give a signal. As a way out of this situation, you can try to open two accounts, one for adequate trading, where you will open trades clearly according to the rules of the system. Another smaller one for aggressive trading, when you have an irresistible desire to open a trade. If it really "works", you will still get profit, though not so big. Bottom Line As you can see, strategy is often not the deciding factor in trading. Psychology is what ultimately makes you act in one way or another. It takes the right approach and practice to be unstoppable in trading. The rest comes with experience over time.
Education
by Lingrid
11
TILT IN TRADINGAs it is known, a trader on the market is under constant pressure, the market is a constant process, in fact it is a river, and a trader should dive in and out of it to earn money. It is difficult to stay on the shore, when there is an endless river of money flowing nearby, hence the constant desire, well and of course stress, because the market gives unlimited opportunities at the same risk. Everyone knows that the two worst emotions for a trader are fear and greed, although it is only fear, greed is one of the types of fear (fear of losing profit). Fear breeds many related behaviors that only bring financial pain and frustration in trading. Let's look at some of the groups of emotions that fear gives rise to. TILT IN TRADING What is tilt? Tilt comes to us from poker; it means the inability to perform reasonable actions while being at the mercy of emotions. Tilt is not a one-time process. First, there must be preconditions for its occurrence. Most often, it is a series of unsuccessful trades in a short period of time (scalping), after which the trader starts to lose control and, trying to recoup losses, goes all the way, forgetting both the rules of trading strategy and money management rules. The most interesting thing is that the same thing can happen during a series of profitable trades, i.e., tilt can be earned at any time; it is only necessary to let go of some emotion for some time. The worst thing (except for the loss of money, of course) is the acquisition of bad emotional habits, from which it is very difficult to get rid. Tilt can occur even on expectations, for example, the price is about to approach the level of trade open, and suddenly it turns around. Your finger froze over the buy/sell button and then it's over! And waiting for the next approach turns into a tilt. Market factors also provoke tilt in a trader, for example, increase of volatility during news, the price flies back and forth like crazy and pushes the trader to open a trade. SO HOW DO YOU AVOID TILT? The answer to this question is always right under our noses. It is discipline, and only discipline. The rules of the trading system and the rules of money management, and as few emotions as possible. Do not trade in an agitated, tired, and painful state; wait it out; the market will not run away from you. With the emergence of the crypto market, new concepts have appeared, but they already relate to the psychological manipulation of traders, and although they are based on the same fear, we will try to describe them separately. Besides, these concepts have always been there and apply to all kinds of markets, not just the cryptocurrency market. FOMO & FUD cycle FOMO (Fear of missing out) information throwing in the bright prospects of some crypto coin or crypto market as a whole, in order to provoke the purchase, often and densely along with Pump of a particular crypto coin. FUD (fear, uncertainty, and doubt) is a negative information dump to provoke sales. All the same, only sales and DUMP (sharp sale of crypto-asset), the purpose is to reset the price of the crypto asset, again, to make it attractive to the investor. No, what a concern for potential investors! Both pump and dump are reverse actions, and the goal is the same attractiveness for investing! The only difference is the timing. The topic of psychology in trading is big; we covered only a couple of psychological aspects: one is the trader's problem, and the other is the trader's provocation by the market and information space. In general, psychology accounts for 80% of all trading. You can memorize techniques, but it is very difficult to understand and change yourself in terms of psychology. To understand how the "crowd" acts, what will be the reaction of "big money"? All this is what you should strive for in your search for profit. Therefore, the trader's "holy grail" is patience, self-discipline, and as few emotions as possible. If you feel that you are about to lose it, just leave the terminal and go to your family, to the gym, or to nature. Do not sit at the terminal on an emotional tilt. Work on your emotions and you will be profitable.
Education
by DeGRAM
1
What is Fundamental Analysis in the Forex Market?Fundamental Analysis in Forex Trading: Factors that Affect Currencies READING TIME: 11 MINUTES Estimating future price movements in the currency market is challenging for many. Globally, the foreign exchange market commands the biggest slice of the financial ‘cake’, claiming an eye-watering US$6.6 trillion in global FX market turnover. Traders will use a variety of tools to assist them in predicting the price movement, most commonly technical analysis and fundamental analysis are methods that traders use to get a gauge of potential movement in the market. Fundamental Analysis Defined Currency pair in forex refers to, two currencies are paired together and quoted through a ‘base’ and ‘quote’ currency. The euro in EUR/USD (a major currency pair) is the base currency and represents one unit; the US dollar is the quote currency and provides the value of a currency: the euro in this case. Fundamental analysis studies economic developments of a country, events influencing the supply and demand of their respective exchange rates, either positively or negatively. Analysts employing fundamental analysis tend to approach markets using a macro-driven theme. Macro analysis, or top-down approach, focuses on broad economic factors. This involves a comprehensive assessment of the economy, evaluating aspects such as economic indicators—interest rates, growth and inflation—as well as central bank policy. Fundamental analysis is composed of three core elements: • Central bank policies • Economic indicators • Geopolitical events These three components working in harmony should translate to clearer market trends and present potential trading opportunities. If one of these areas is in disorder, interpreting a fundamental picture becomes difficult. Fundamental analysis essentially informs traders and investors why the market advances and declines, and provides a trade decision: to buy, sell or trade flat. Central Banks A country’s central bank is charged with the duty of regulating banking institutions and implementing monetary and fiscal policies. Well-known central banks: • United States Federal Reserve (or ‘Fed’) • European Central Bank (ECB) • Bank of England (BoE) • Bank of Japan (BoJ) • Reserve Bank of Australia (RBA) Everything begins with the central bank and they’re assessment of economic indicators. Traders and investors attempt to anticipate a central bank’s actions by evaluating economic indicators and reacting to the outcomes from the forecast (Actual versus Variance). The market projects a forecast for an economic indicator and subsequently responds to the actual figure released. Ultimately, trading opportunities present themselves when economic data harmonises with a central bank’s sentiment. This—coupled with a well-defined technical approach to fine tune entry techniques—delivers an overall trading picture to operate with. Central Bank Announcements: Major central banks meet every 4-6 weeks. The Fed and BoE meet every six weeks (8 times per year), while the RBA meets 11 times each year. Market trend, or ‘market direction’, is derived from the sentiment within the market, with the central bank acting as a stabilizer by using monetary policy. It is therefore crucial market participants recognise the arrangement of these central bank meetings and understand the terminology used. Central bank governors are the head of their respective central banks. The head of the US Federal Reserve currently is Jerome H. Powell; Andrew Bailey heads the Bank of England and the governor of the Reserve Bank of Australia is Philip Lowe. Central Banks: Why Are They Important? Central banks assess the current market sentiment at each meeting and consider whether any changes need to be made for the near-term monetary policy. The members will review data gathered over the last 6 weeks to assess on what measures need to be taken such as changing the current interest rates or using quantitative easing. A country’s central bank raising rates can be categorised by way of a ‘hawkish bias’; what they’re essentially doing here is talking up the prospect of raising rates. The prospect of cutting rates is also an option on the table for central banks, emphasising a ‘dovish bias’. Either a hawkish or dovish tone can translate into big price moves in financial markets. If economic conditions remain unchanged, the central bank is likely to adopt a neutral stance: no bias. Typically, the central bank meeting is accompanied by a statement and, of course, the interest rate decision. These are critical to understand. The statement is the primary avenue employed to communicate with investors regarding monetary policy (actions undertaken by a central bank): the outcome of the vote on interest rates alongside other policy measures and economic commentary. In addition, here you will find what the central bank’s forward projections are. A week or so later, the ‘minutes’ are available: a more comprehensive analysis of the statement and the talking points discussed in the meeting. See here for the latest US Federal Open Market Committee (FOMC) Statement. Out of the interest rate decision and statement, you’re looking for market sentiment—the direction provided by central banks and the core overall trends in the market. The first two weeks of every month is ‘usually’ clear in terms of central bank sentiment, following a fresh statement from the bank. Economic Indicators Economic indicators, as their name implies, are statistics—often on a macroeconomic scale—designed to measure economic activity. Traders and investors use these indicators to analyse the well-being of a country’s economy. Government organisations and private groups release several economic reports on a weekly, monthly and quarterly basis, each measuring activity in a particular segment of the economy. Widely followed indicators are employment/unemployment (payrolls), inflation (consumer price index), growth (or gross domestic product), retail sales, the stock market, industrial production (Producer Price Index) and housing figures. In terms of release schedules, approximately five key economic indicators are released each week. No single indicator provides a clear picture of the economy’s health. At best, each indicator provides a ‘snapshot’ of current conditions. But when piecing the economic indicators together, you should get a clearer picture of how the economy is faring. However, it is crucial to understand that some economic indicators are more important than others at certain points in time. Inflation, as of this article, is important. Significant indicators to watch can be found on the statements from central banks in their forward guidance. Economic Calendar An Economic Calendar is widely used among independent Forex traders and investors. High-impacting economic releases are marked red. Orange represents potentially medium-impacting events and yellow indicates a low-expected impact on price levels, or price action. We also have Previous or ‘Prior’, ‘Forecast’ and ‘Actual’ figures. Forecasts are generally a collection of economists’ views which are then averaged. New Forex traders might want to note what the Q/Q and Y/Y labels refer to. Geopolitical Events Geopolitical tensions can complicate technical analysis and fundamental analysis, distorting the general flow of key fundamental drivers in the market. However, absent of disruptive geopolitical events, trending markets become visible. Geopolitics events are divided into wars and conflicts, terrorist attacks and international tensions. US-China trade is a good example and the ‘Brexit’ situation (United Kingdom exit from the European Union). The announcements surrounding geopolitical issues are usually not scheduled, unlike the central bank announcements and economic data. As you can imagine, this may cause confusion in currency markets and make them difficult to trade. Conclusion To wrap things up, fundamental market analysis in the Forex market looks at three core components: the central bank’s ‘direction’, economic indicators to provide instant bias, and the geopolitical situation. To aid timing, we use technical analysis to fine-tune entries. Like technical analysis, fundamental analysis involves broad study and is beyond the scope of an article to detail each element. For that reason, the objective of this article is to provide a foundation in which to build from.
Education
by FPMarkets
BROADENING PATTERNSBroadening patterns are very unstable from a technical point of view. They are usually formed after the trend has already gained strength. It looks as if the battle between buyers and sellers is out of control, as the price starts to move in a wider and wider range. The situation is exactly the opposite of triangles, where the price shrinks to an extremely balanced state before the breakout. Broadening patterns are formed when three or more price waves expand so much that their highs and lows can be connected by two expanding trend lines. Just as there are two types of triangles, there are two types of broadening patterns. They are called the conventional (classic) pattern and the rectangular pattern. The last one can also be called an expanding pattern with a flat top or flat bottom. Conventional Broadening Patterns It consists of three trends where each high is higher than the previous high. The highs are separated by two lows, where the second is lower than the first. These patterns are more likely to indicate the completion of a rising market, rather than a breakout higher. The conventional broadening top is sometimes called an inverse triangle, because that is exactly what they are. In general, some patterns are just perfect for trading, as they mark by default the places where to place stops with low risks. A rectangular triangle broken close to the top is just a good example. But conventional broadening tops, however, alas, do not have this feature. Such patterns are extremely difficult to detect before the final top is formed. Besides, there is no obvious support line, the breakdown of which would serve as a convenient tool for us. The furious, emotional reaction of price and volumes reflects chaos and complicates the work with such patterns. Of course, it is not easy to determine the breakout in such conditions, but if the pattern is more or less symmetrical, there are options. It is a decisive movement under the descending trend line, which connects both lows or even a movement below the second low, which will serve as a warning of a future decline. Targets are not easy to determine either, however, the volatile price reaction during the extension indicates that the distribution phase is almost complete. Successful completion of such a pattern is usually followed by a proportional fall in price. But the rectangular expanding patterns, which we will talk about next, are another example.   Rectangular Broadening Patterns Most simply defined broadening patterns with a flat top or bottom are the easiest to identify. This is called a rectangular broadening pattern. Since the very concept of wild price movements implies an extreme degree of emotional involvement, it is difficult to add volume here. At market tops, though, volume is usually quite significant.These patterns also resemble a head and shoulders pattern, except that the "head" in an broadening pattern is the last element of the pattern. In this case, the bearish signal is activated with a decisive downward breakdown of the pattern. A broadening pattern with a flat top is an accumulation pattern, and it is important that the volumes grow on the breakdown. They are essentially head and shoulders in a situation so bearish (or bullish) that price simply does not have time to form a right shoulder. Psychological Perspective Of The Broadening Patterns From a psychological perspective, expanding patterns can be seen as a reflection of the changing attitudes and beliefs of market participants. As the pattern widens, it suggests that there is increasing disagreement among traders about the direction of the market. This can lead to greater volatility and larger price swings as different groups of traders try to push the market in their preferred direction. At the same time, broadening patterns can also be seen as a sign of indecision and uncertainty. Traders may be hesitant to commit to a particular direction, leading to a widening range of prices as buyers and sellers struggle to gain control. This can create a sense of tension and anxiety among traders as they try to navigate an increasingly complex and unpredictable market. Target Points To determine where the price can reach, you need to take the distance from the maximum (minimum) of the pattern and its horizontal line. Then the same distance is set aside in the direction of the breakout. Rectangular expanding patterns often show pullbacks like any other patterns. Since these patterns are very emotional and unstable, these pullbacks can be sharp and volatile. Fortunately, they don't live very long. In this case, the downside price target was reached on a downside breakout. Generally, a subsequent sharp reversal is a rare thing, as the price usually goes much farther than the price target. Failed Broadening Patterns Occasionally, such patterns fail to produce the expected result. Unfortunately, there is no super-reliable way to recognize that the pattern has failed. This will only become obvious when a small bottom or price top is formed after the breakout. However, we can protect ourselves from such situations by using the 50% rule, in which we measure half of the final price reaction in a pattern for a rise or fall. Which is shown by the dotted line, once reached, the pattern is considered a failure. Of course, sometimes there are patterns that work even after breaking through the 50% zone with a subsequent pullback. However, breaking such a line with a strong trend in most cases indicates that the pattern has failed. In any case, carefully use the patterns that predict the price movement in the direction of the trend that was previously the main one. In Summary Broadening patterns are a trading range after a trend, between two extended trend lines. At least two touches are needed. It will take imagination to draw, as the touches are not always accurate. However, this is true for many other patterns as well. The maximum depth of the pattern is put off in the direction of the breakout. Since these are very dynamic and volatile patterns, pullbacks are usually short but very fast. False breakout is difficult to detect: the signal can be a price rise above the previous low/maximum or a pullback of more than 50% against the breakout. Overall, broadening patterns can be a useful tool for traders looking to understand the psychology of the market. By analyzing these patterns and the underlying factors that are driving them, we can gain valuable insights into the attitudes and beliefs of other market participants. This can help to make more informed trading decisions and better manage their risk in a rapidly changing market environment. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
14
5 TRADING PROTECTION LEVELS - NB*REMEMBER Every trader needs 5 protection levels. Stop loss to stop yourself from furthering losses Time stop loss to get you out of non-performing trades Adjusted stop loss to lock in profits when the market moves in your favour. Risk % per trade to only lose a certain amount of your portfolio % of Drawdown before you HALT trading - when the market is not in a favourable environment to your strategy. These are the control factors to manage your portfolio with better direction and management. What other protection levels do you apply?
TVC:SA40Education
by Timonrosso
6 Practical Tips for Futures TradingIn derivatives trading, achieving success can lead to substantial profits, but it's crucial to trade carefully to avoid costly mistakes. 💜 If you appreciate our guides, support us with boost button 💜 Here are six simple and practical tips to help develop a strategy for successful futures trading. 1. Craft a Clear Trade Plan Before jumping into the market, take the time to plan your trades thoroughly. This involves setting not only profit goals but also establishing an exit plan in case the trade doesn't go as expected. A well-thought-out trading plan, including risk-management tools like stop-loss orders, can protect you from making impulsive decisions based on emotions like fear and greed. 2. Safeguard Your Positions Protect your investments by committing to an exit strategy. Instead of relying on mental stops, use stop-loss orders to set a predetermined point at which you will exit the trade. Consider using One-Triggers-Other (OTO) orders to automate the process, triggering a protective stop when your primary order executes. 3. Focus Wisely Avoid spreading yourself too thin by trying to trade too many markets. It's essential to concentrate on a few markets and dedicate time to studying charts, reading market commentary, and staying informed. However, don't put all your eggs in one basket either—diversification in futures trading can offer advantages. 4. Take It Slow If you're new to futures trading, start with a cautious approach. Avoid trading large quantities at the beginning, as this could lead to significant losses. Begin with one or two contracts, develop your trading methodology, and only increase your order size when you feel confident. 5. Think Both Ways Be open to trading opportunities in both rising and falling markets. While it's natural to want to go long, don't overlook the potential benefits of going short. This flexibility can broaden your trading opportunities and enhance your overall strategy. 6. Learn from Margin Calls A margin call may signal that you've become emotionally attached to a losing position. Instead of adding more funds or reducing positions to meet the call, consider it a wake-up call. Cut your losses, learn from the experience, and move on to the next trading opportunity. By incorporating these practical tips into your trading approach, you can navigate the futures market more confidently and increase your chances of success. Remember, a well-thought-out strategy and disciplined execution are key to achieving profitable results in futures trading.
Education
by Vestinda
1
GBP Is Stronger than USD: Understanding the ReasonsGBP/USD is the third most actively traded currency pair on the foreign exchange market, after EUR/USD and USD/JPY. It is also one of the oldest pairs traded on forex. The British pound continues to cost more than the US dollar, despite the dollar overtaking it as the global reserve currency. Why is the British pound stronger than the US dollar? In this FXOpen article, we look at the GBP/USD pair and the factors that keep the British pound strong to help you understand how to trade it. What Is the GBP/USD Pair? Currencies are always traded in pairs on foreign exchange markets. GBP/USD refers to the value of the British pound sterling against the US dollar – specifically, how many US dollars traders need to buy one pound. For example, if the GBP/USD exchange rate is 1.28, a trader would need $1.28 to buy £1. How come the British pound is always stronger than the US dollar? The answer is rooted in history. A Brief History of the GBP/USD Pair Until World War I, the British pound was the global reserve currency, accounting for over 60% of the world’s debt holdings. It was valued at just under $5. After the war, the US dollar began to strengthen, and by 1944, when the Bretton Woods system was introduced, the pound was pegged at $4.03. The Bretton Woods system fixed the US dollar to the gold price and established it as the unofficial global reserve currency. After World War II, the value of the USD began to rise, and it overtook GBP as the primary currency used in international trade. The Bretton Woods system began to slowly collapse after 1971, and both the GBP and USD became free-floating, with the US dropping the gold standard. This has resulted in the value of the GBP gradually sliding over the following decades. The free-float rate made the GBP/USD pair highly volatile. The pound sterling reached a high of 2.08 against the dollar in 2007 during the global financial crisis, as higher UK inflation raised expectations that the Bank of England would raise interest rates. In June 2016, the UK’s vote to leave the European Union drove the value of the pound down to the 1.20–1.25 area overnight. That was its lowest level since the collapse of the exchange rate mechanism in 1985 and the largest one-day decline since the end of Bretton Woods. The GBP/USD pair has since largely traded between 1.20-1.40. A notable exception was the start of the COVID-19 pandemic, when investors flocked to the safe haven US dollar amid uncertainty about the economic impact, and the pound fell to 1.16 against the USD. COVID-19 shutdowns and the loss of European trade following Brexit have weighed on the prospects for the UK economy. At the same time, geopolitical tensions such as the US-China trade war and the Russia-Ukraine conflict have lifted the value of the dollar, as have rising interest rates. In 2022, the Bank of England was forced to intervene as the value of sterling fell close to a record low of 1.035 against the dollar in response to a crisis of confidence in the UK government, high inflation and unemployment rates, and concerns regarding the domestic economy. However, by April 2023, the pound had recovered and became the best-performing G-10 currency of the year. According to Forbes, the British pound is the world’s fifth strongest currency, while the US dollar is the 10th strongest. The GBP/USD pair has primarily been trading around 1.20-1.30 so far in 2023. Why is the pound still stronger than the dollar? Is GBP Stronger than USD? Why is the pound more expensive than the dollar? The value of the GBP against the USD in forex doesn’t solely determine the strength of the US and UK economies. Analysts consider other factors that can question the strength of the pound. Nominal Value A currency’s nominal value refers to its value against another currency in forex. As was mentioned above, the nominal value of both currencies changed significantly over time. Although GBP was always more expensive than the US dollar, this conclusion is relatively arbitrary. Also, it’s worth considering the lower number of British pounds in circulation, which is worth £81 billion, compared to $2.33 trillion US dollars, which contributes to the higher value of GBP as of May 2023. Relative Strength The strength of a particular currency against another at any point in time is also relative, as it could actually be weaker against other currencies. For example, GBP could rise in value against USD but fall against EUR, AUD and JPY, which would suggest that the relative value of the pound is weaker – just not as weak as the USD. This is because the relative strength is determined not only by the value of one currency against another but by economic data, including inflation, economic growth, and the trade balance, which determine the strength of the overall economy. To gauge a currency’s real strength, analysts track its value in relation to multiple currencies over time. For instance, the Dollar Index (DXY) measures the value of the USD against a basket of currencies from its key trading partners and competitors, as this is a more accurate measure of its value than a single pair. Quoting Conventions The use of GBP/USD as the quoting convention reflects the pound’s strength. For instance, a GBP/USD quote of 1.25 signifies that $1.25 is needed to buy £1. This quoting convention originated in the late 1900s during the British Empire when the UK had a larger economy than the US. Despite the subsequent shift in economic power, this convention has endured. Since World War I, the US economy has surpassed the UK economy in terms of size. Modifying quoting conventions is challenging, given how entrenched they are in the financial industry. However, the tradition of quoting GBP/USD in itself does not determine the value of the pound and the dollar. Purchasing Power Parity (PPP) While the GBP/USD trading value suggests the pound is stronger, the purchasing power parity (PPP) fluctuates. PPP indicates how much a currency is worth based on the value of a basket of goods. In these terms, the dollar can be stronger than the pound. The concept underlying PPP is that the exchange rate should equalise the purchasing power of each currency within its respective country. For instance, if a basket of items costs £100 in the UK with a GBP/USD exchange rate of 1.15, the PPP would suggest that the equivalent cost of the same basket in US dollars should be $115. In practice, exchange rates frequently diverge from their PPP levels. The degree to which a currency such as GBP or USD deviates from its PPP indicates its relative strength or weakness against another currency. Global Economy Although the US economy is stronger than that of Great Britain, sterling’s history as the former global reserve currency and political and economic power have contributed to its strength. The pound is one of the world’s oldest currencies, having been introduced in the 1400s. The UK remains a major global financial centre, and the Bank of England continues to participate in international economic developments. What Factors Affect GBP/USD There are several factors that affect the value of the British pound and US dollar: US Federal Reserve monetary policy Bank of England monetary policy Inflation rate, which has a strong impact on the interest rates Employment data, which influences government fiscal policy Geopolitical events Other economic indicators, including retail sales and industrial production Does It Matter If GBP/USD Falls Below Parity? A weaker sterling could support UK exports, but it would also increase the cost of imported goods and drive up inflation. The Bank of England would be forced to intervene to contain inflation. As seen in 2022, there is also a risk that a sharp drop in the pound’s value could become disorderly, which could create political and economic turmoil. However, if the value of the pound fell below the dollar, it would be a psychological milestone for the UK, but it would not have a major impact on the forex market. Conclusion The British pound sterling has traditionally maintained a higher value against the US dollar because of historical convention. However, the US dollar is stronger overall as it is the world's reserve currency and has larger trading volumes. The GBP/USD exchange rate has been in a long downtrend. Therefore, there are risks that GBP will soon lose its nominal premium. Understanding how the British pound is stronger than the US dollar can help you to form strategies to trade the GBP/USD forex pair. By observing economic indicators, you can take a view on how you expect the market to move. If you are looking to trade forex markets, you can open an FXOpen account. The TickTrader platform allows you to analyse live price charts and trade a range of currency pairs. 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
TIMING IS EVERYTHINGWhat is timing in simple words? Timing is the time when you SHOULD trade the market. It is very desirable to trade on the market when the market is active, i.e. there is increased volatility, which in turn is associated with any time factors affecting the activity of traders. Timing must be taken into account by almost any trading system, starting from scalping and ending with positional trading, meaning that timing is not the main period of displaying your chart, but the most effective for trading time that you spend in front of the screen. Even if you trade on a weekly chart, your timing will be Friday evening which is the closing time of the weekly candle. 🕕 TYPES OF TIMINGS So, the basic timings: • Intraday • By type of trading instrument • News • On days of the week • Periods (month / quarter / season) 📊 INTRADAY TIMINGS Intraday timings on Forex are related to the inclusion of the work of exchanges (sessions) in different parts of the world due to time zones. So-called European session, American and Asian, so in the language of traders denotes trading during the work of exchanges located in different time zones. European: from 07:00 - 16:00 (GMT). American: from 13:00 - 21:00 (GMT). Pacific: from 20:00 - 05:00(GMT). Asian: 00:00 -09:00(GMT). Although there are 4 sessions, but only 3 of them are taken into account, as the Pacific Exchange has a very small influence on the market due to small volumes. The most active are Europe and America, often going in opposition to each other, so intraday traders should take into account the time of inclusion of America, as it can confuse all the cards and turn intraday trends. Well, at night the harsh Japanese samurai come and make their own contribution and confusion. A lot of intraday systems are built precisely on turning on or off this or that stock exchange in the work, picking up the nuances of their influence. Intraday timings are also present on stock markets, the calmest time is the so-called evening session. But the mass introduction of trading bots even here can try to shake up the market and lure many traders into it. 📊 BY TYPE OF TRADING INSTRUMENT There are timings by type of trading instruments. For example, gold and oil are better to trade on the American session, and the main volatile pairs EURUSD and GBPUSD are better to trade in the European session. Of course, it is all rather conditional, but nevertheless, it is necessary to take into account. 📰 NEWS TIMINGS Everything is simple here. If it is scalping or intraday trading, then hands off the keyboard because the market shakes during the release of important news. But if you like to trade specifically on the news, then it's time, the most timing. 📅 TIMING BY DAYS OF THE WEEK It has long been noted that the market is volatile differently on different days of the week: Monday is sluggish and unclear, often markets open with gaps. Tuesday all are awake, pumped up and the market goes and runs. Wednesday and Thursday are active too, but on Thursday there are bank reports and, you can say, the banks, having made money, start to aim somewhere. Friday is the day of losing trades. Very often unpredictable in terms of the previous week's movement, on Friday short-term traders close their positions, which also brings its own turmoil. 📆 TIMING THAT OCCURS DURING A SPECIFIC PERIOD OF THE MONTH For example, this overlaps with news timing, non-farm peyrols (NFP), the economic news released every first Friday of the month. It is the second most important news after GDP. Be sure to watch the economic news release calendar. The impact of this news may well be spread out over the long term. 💼 QUARTERLY TIMINGS Directly related to the quarterly closings of futures contracts in stock markets such as the CME. Futures and currency pairs with the same name are considered to influence each other. This can also include the release of quarterly reports of various companies that have their shares on stock exchanges. 🍂 SEASONAL TIMINGS This is, for example, the New Year and Christmas. Also, the financial new year in Japan, which for some reason occurs in March, and in the U.S. in October. And futures on the same coffee, cotton and sugar should be considered taking into account the time of the year. In general, timing is one of the most important factors that must be taken into account in your trading system, starting from the stage of its development. When tracking trading statistics, be sure to look at what time your trading system is most effective and whether it is possible, for example, to increase risk at that time or not to trade at other ineffective times at all.
Education
by DeGRAM
1
The 12 Dangers of Trading DoubtDoubt is danger. It’s a big enemy for trading. And it’s something that is innate, which is hard to escape from. It leads to you to miss opportunities, destroys confidence, clouds judgement and keeps you stuck in a rut. When you are infected with doubt, this can infiltrate even the most experienced traders. This article delves into the various dangers of trading doubt and how to overcome its destructive effects. Missed Opportunities When doubt creeps in, traders often find themselves hesitating or second-guessing their decisions. Once you feel hesitation, you’ll miss great opportunities. Winners will be left on the table. All because you doubt it’ll go your way and that the markets are conducive. If you want to stop the doubt you need to act swift and make decisions within three second. 1, 2, 3 – ACT! Loss in Confidence Without confidence, you’re going to doubt. You’re going to question your skills, strategies, and abilities. As confidence dwindles, you’re going to feel strong fear, panic and worry. This will lead to irrational decisions driven by emotions rather than logic, rationality and sound analysis. Change Your System Even if you have a winning system. Doubt could cause you to abandon it. You might already be thinking of finding another. Looking for better parameters. Adding extra elements and variables. This constant tinkering will prevent you from fully realizing the potential of their proven trading strategy and approach. This is a time game. Not a week, not a month. Noth even three years. Your trading success will come from being consistent, persistent and consistently applying a well-defined strategy over time. Search for “Better” You might even doubt trading all together. You might have lost a bit of money and now you have this desire to make it back. So you’ll look into gambling, sports betting, Amway or any other scheme instead. But you’ll most likely be disappointed. Because everything worth doing well for reward, consists of elements of risk and time. Don’t Take the Trade Your finger could be between three stone walls. Or your finger could be 1 mm from the button. If you have doubt with your trades, this will paralyse you to enter a trade. This hesitation will lead you to: Miss trades Miss profits Interfere with the system Lose confidence Exacerbate panic and fear This will only set a precedent for you to do it again. It’s a bad habit that can destroy you as a trader. Don’t Follow Criteria Doubt can lead to a disregard your essential rules. You might: Get in at different levels Move your stop loss further away Close prematurely for tiny profits or Take a trade that does NOT match the criteria. If you question the trading validity of your criteria, this will turn you into an undisciplined and unsuccessful trader. Overtrading Once doubt sets in – so will mania. And to break away from doubt, you take on a dangerous path. In an attempt to overcome doubt, you might start overtrading or revenge trading. This is where you’ll enter too many trades in quick succession, without following any criteria. Emotional Roller Coaster Doubt is not just feeling lazy. It actually comes with feelings of frustration, anxiety, and self-doubt dominating their thought process. This emotional turmoil can cloud judgment and lead to reactive rather than rational decision-making. Analysis Paralysis When doubt takes hold, this is where you might go all out with indicators, parameters and price action elements. This will lead you to excessive analysis. You’ll continuously seek more information before making a decision. This analysis paralysis can cause a couple of issues. It can overcomplicate trading It makes back and forward testing almost impossible The variables can cause conflict with each other. Your charts will look like Christmas trees This can lead you to miss trading opportunities and an inability to take action. Inconsistent Results Consistency is key in trading success. Doubt-driven decisions can lead you to inconsistent results. You’ll have your journal with how the trades were SUPPOSED to go. Versus how you made them go. And this will make it challenging to gauge the effectiveness of a trading strategy over the long term. Psychological Toll Doubt is a constant battle. If you have this, it will infect your mind it will take a toll on your mental well-being. It can lead to stress, burnout, and even health issues if you don’t fix them. Loss Aversion Doubt can cause a psychological bias known as loss aversion. This is where traders become will focus to avoid losses rather than maximise their gains. This mindset can hinder traders from taking necessary risks to achieve substantial profits. Focus on cutting small losses and banking small profits and you’ll have a recipe for disaster. It’s time to build your confidence This will come from working on a trading journal, risking less and building a track record. Over time, the doubt will creep away and the certainty will override. Let’s some up the elements of doubt for a trader… Missed Opportunities Loss in Confidence Change Your System Search for “Better” Don’t Take the Trade Don’t Follow Criteria Overtrading Emotional Roller Coaster Analysis Paralysis Inconsistent Results Psychological Toll Loss Aversion
TVC:SA40Education
by Timonrosso
Forex: The Impact of (Geo)Political Factors.In the vast expanse of the currency market, where fortunes are made and lost in the blink of an eye, understanding the multifaceted risks is crucial. Beyond the charts and technical indicators lies a force often underestimated — geopolitical risk. In this exploration, we unravel the intricacies of geopolitical risks and delve into the political factors that cast a profound shadow over the forex market. I. Decoding Geopolitics: To comprehend the significance of geopolitical risk, one must first grasp the term "geopolitical." It involves the intricate study of how geography, political systems, and international relations intersect to mold global politics. Geopolitics explores the strategic importance of geographic spaces, resource distribution, and the influence of political power on a global scale. In essence, it is the lens through which we examine the interplay between geography and political dynamics to fathom how nations behave on the world stage. II. The Unseen Forces: Geopolitical Risks in Forex Geopolitical risks are potent influencers in the currency market, steering exchange rates and market sentiment. Several factors contribute to this influence: Political Instability and Unrest: Civil unrest and regime changes breed uncertainty, impacting investor confidence and currency values. Trade Tensions: Disputes between major economies create market uncertainty, affecting trade flows and currency values. Military Conflicts: Armed conflicts or geopolitical tensions can prompt currency depreciation as investors perceive heightened risk. Terrorism: Acts of terrorism introduce fear, potentially leading to currency depreciation in affected countries. Economic Sanctions: Imposing sanctions disrupts trade and financial transactions, influencing a country's currency value. Political Leadership and Policy Changes: Shifts in political leadership or policy direction induce currency volatility by impacting investor confidence. Natural Disasters: While not strictly geopolitical, natural disasters can disrupt economies and influence currency values. Global Health Crises: Pandemics impact global trade and currencies through measures like lockdowns and travel restrictions. Brexit-Like Events: Instances where countries contemplate leaving unions create uncertainty with repercussions for currency markets. III. The Forex Symphony: How Geopolitical Risks Conduct the Orchestra Geopolitical risks impact the forex market through a complex interplay of economic and political factors. Heightened geopolitical risk injects uncertainty, prompting investors to seek safe-haven assets. Currencies such as the US dollar, Japanese yen, and Swiss franc often benefit as investors flock to stability during times of crisis. Political dynamics play a pivotal role in shaping the forex market: Government Stability and Policies: Political stability and policy implementation influence investor confidence and currency values. Economic Policies and Reforms: Political decisions on economic policies impact a country's economic outlook and currency values. Political Events and Elections: Elections inject uncertainty, affecting market sentiment as traders anticipate political changes. Trade Policies and Agreements: Political decisions on trade policies influence currency values, introducing volatility to the forex market. Central Bank Actions: Central banks' decisions, influenced by politics, impact currency values as traders monitor monetary policy shifts. Government Debt and Budget Deficits: Political decisions on fiscal policies influence a country's debt levels and fiscal health, impacting the currency. Corruption and Governance Issues: High levels of corruption erode investor confidence, influencing currency values. Social and Political Stability: Broader stability in social and political realms influences the forex market and investor perceptions. Public Perception and Confidence: Political factors shape public confidence, impacting economic activities and currency values. In the sea of the forex market, geopolitical risks and political factors are the unseen currents shaping its course. Traders and investors must master the art of navigating these turbulent waters, understanding that beyond charts and algorithms, the geopolitical landscape and political dynamics are the true captains of the ship. In this ever-evolving arena, adaptability, foresight, and a keen understanding of geopolitics are the compasses guiding traders to success in the unpredictable world of currency trading. The geopolitical events stand as formidable forces capable of reshaping exchange rates and creating market volatility. From Brexit to trade wars and geopolitical tensions, understanding the historical impact of these events on currency markets is crucial for traders seeking to navigate the tumultuous seas of forex. This article explores notable geopolitical events that have left an indelible mark on exchange rates and provides strategic insights on mitigating the associated risks. Geopolitical Events and Their Impact: Brexit (2016): The UK's decision to exit the EU led to a sharp decline in the British pound, reflecting uncertainty about the economic consequences of the separation. GBP/USD sharp drop in 2016 US-China Trade War (2018-2019): Trade tensions between the US and China influenced exchange rates, with the Chinese yuan being particularly sensitive to developments in the trade dispute. European Debt Crisis (2010-2012): The sovereign debt crisis in the Eurozone led to fluctuations in the euro as concerns about the stability of the currency and the future of the EU affected exchange rates. EUR/USD fluctuations throughout 2010-2012 Russian Annexation of Crimea (2014): Geopolitical tensions and sanctions imposed by Western countries led to a significant depreciation of the Russian ruble. Arab Spring (2010-2012): Political uprisings across Arab countries caused volatility in currencies like the Egyptian pound and the Tunisian dinar. North Korean Nuclear Tests (2017): Geopolitical tensions resulting from North Korea's nuclear tests impacted currencies in the Asia-Pacific region, including the Japanese yen and the South Korean won. 9/11 Attacks (2001): The terrorist attacks had far-reaching consequences on global financial markets, influencing the US dollar over the longer term. Dollar Index after 9/11 US Invasion of Iraq (2003): Geopolitical events surrounding the invasion led to increased uncertainty and affected currencies in the Middle East, notably the Iraqi dinar. Mitigating Geopolitical Risks: Strategies for Forex Traders Stay Informed: Regularly follow reputable news sources to stay informed about political events, economic indicators, and policy decisions that could impact the forex market. Diversify Your Portfolio: Avoid overconcentration in a single currency or region. Diversification spreads risk and minimizes the impact of adverse geopolitical events on specific positions. Use Risk Management Tools: Implement tools such as Stop Loss and Take Profit orders to limit potential losses and secure gains. Setting appropriate risk-reward ratios enhances effective trade management. Monitor Economic Indicators: Keep an eye on economic indicators affected by geopolitical events. Understanding the economic fundamentals of traded currencies helps anticipate market reactions. Understand Correlations: Be aware of correlations between currencies and other assets, helping gauge potential spillover effects from other markets during times of geopolitical uncertainty. Utilize Safe-Haven Currencies: Allocate a portion of your portfolio to safe-haven currencies, such as the US dollar, Japanese yen, or Swiss franc, during heightened geopolitical uncertainty. Stay Flexible: Be prepared to adapt your trading strategy based on changing geopolitical conditions. Flexibility is key to adjusting your approach in response to evolving circumstances. Regularly Review and Reassess: Periodically review and reassess your trading strategy in light of changing geopolitical conditions. Markets can shift, and adjusting your strategy is crucial to remain relevant. Conclusion: In the dynamic world of forex trading, geopolitical risks are inherent, and their impact on exchange rates is undeniable. Traders armed with historical insights and proactive risk management strategies can navigate these uncertainties with confidence. While eliminating all risks is impossible, staying informed, diversifying portfolios, and employing risk management tools empower traders to weather the storms and emerge resilient in the face of geopolitical challenges. Embracing these approaches not only limits potential losses but also positions traders to seize opportunities in the ever-changing forex landscape.
Education
by FOREXN1
1
Decoding the NFP Report: Trading Strategies.In the dynamic world of forex trading, strategies that cater to the ever-changing market conditions are invaluable. While fundamental analysis is widely embraced in stock trading, its effectiveness in the forex market is often questioned. Unlike the stock market, where financial statements can significantly impact individual stocks, the forex market is influenced by a myriad of factors, including central bank policies and political leadership. In this article, we explore the limitations of fundamental analysis in the forex market and delve into an intriguing momentum trading strategy centered around a key macroeconomic indicator—the Non-Farm Payrolls (NFP). This strategy harnesses the unpredictable yet powerful market reactions triggered by the release of NFP data, offering traders a unique opportunity to capitalize on momentum. Fundamental Analysis in Forex: Fundamental analysis, a staple in stock trading, faces challenges in the forex market due to its limited impact on currency exchange rates. Forex stability relies not only on economic indicators but also on the nuanced decisions of central banks and political leadership. Despite these challenges, successful forex trading doesn't necessitate rigid adherence to a specific scenario. Traders can leverage price momentum and increased liquidity to execute effective impulse trading strategies. Non-Farm Payrolls Trading Strategy: The Non-Farm Payrolls (NFP) trading strategy capitalizes on the release of crucial U.S. economic data—the Non-Farm Payrolls report. This multicurrency strategy is applicable to all currency pairs involving the U.S. dollar, allowing traders to explore numerous assets simultaneously. The primary objective of this strategy is to capture price momentum, making it adaptable to various time frames. Non-Farm Payrolls: Predictable Unpredictability: The NFP report, published every first Friday of the month, serves as a linchpin for speculative traders. It provides insights into the strength and growth of the U.S. economy, consequently influencing the value of the U.S. dollar. The report focuses on the non-agricultural sector, which contributes significantly to the nation's GDP. The sheer importance of the NFP report lies in its ability to reflect the health of the U.S. economy. The release of this data sparks maximum market volatility, with prices witnessing rapid fluctuations, often ranging from 100-200 points in a short period. However, interpreting the aftermath of the news poses a unique challenge due to the simultaneous release of unemployment statistics, which can sometimes contradict each other. Despite the inherent unpredictability, the NFP trading strategy capitalizes on the strong price spikes triggered by the news release. While predicting post-news price behavior may be challenging, the strategy offers a systematic approach to navigate and profit from the volatile market conditions that follow the NFP announcement. Rules of Non-Farm Payrolls (NFP) Trading Strategy: Stay Informed with an Economic Calendar: Use a reliable economic calendar to stay informed about upcoming NFP releases. The economic calendar will help you track the scheduled date and time of the NFP report. Check for News Release Postponements: Understand that postponements of data releases are common in economic calendars. Monitor the calendar regularly to stay updated on any changes to the scheduled release time of the NFP report. Utilize a Trusted Economic Calendar: Choose a reputable economic calendar platform to ensure accurate and timely information. The provided link www.tradingview.com can be a valuable resource for tracking economic events. Prepare for High Volatility: Recognize that the release of the NFP report triggers significant market volatility. Prepare for rapid price movements and be cautious about entering trades during the initial moments following the release. Focus on the Non-Agricultural Sector Employment Data: Prioritize the non-agricultural sector employment data within the NFP report. This indicator is crucial for gauging the strength of the U.S. economy and can have a substantial impact on currency pairs involving the U.S. dollar. Monitor Unemployment Statistics: Simultaneously track unemployment statistics released alongside the NFP report. While the primary focus is on non-agricultural employment, an understanding of unemployment trends can provide additional context for market reactions. Be Cautious of Contradictory Data: Acknowledge that data within the NFP report, especially non-agricultural employment and unemployment figures, may occasionally present contradictory signals. Exercise caution during such instances, as market predictability diminishes. Wait for Initial Volatility to Subside: Post NFP release, wait for the initial surge in volatility to subside before considering trade entries. Initial reactions can be impulsive, and waiting allows for a more informed decision-making process. Consider Multiple Currency Pairs: Since the NFP report influences the U.S. dollar, the strategy can be applied to various currency pairs involving the dollar. Explore multiple pairs simultaneously to identify the most favorable trading opportunities. Implement Risk Management: Prioritize risk management strategies to protect your trading capital. Set stop-loss orders and determine the appropriate position size based on your risk tolerance and account size. Practice on Demo Accounts: Before implementing the NFP trading strategy in live markets, practice on demo accounts to familiarize yourself with the dynamics of the strategy and refine your execution. Continuous Learning and Adaptation: Stay informed about changes in market conditions and continuously adapt your strategy. The forex market evolves, and traders need to adjust their approaches based on ongoing developments. By adhering to these rules, traders can enhance their effectiveness when employing the Non-Farm Payrolls trading strategy and navigate the unique challenges posed by this high-impact economic event. Traders often seek strategies to capitalize on this volatility, and one popular approach is the Pending Orders strategy. In this article, we'll explore the intricacies of the Pending Orders strategy , shedding light on its advanced nature and its application by both novice and experienced traders. 1 ) Pending Orders Strategy: Set Buy Stop and Sell Stop Orders: Minutes before the NFP publication, set two pending orders: Buy Stop and Sell Stop. These orders are strategically placed 25-30 points away from the current price to avoid simultaneous triggering due to heightened volatility. Manage Triggered Orders: When the price reacts to the news release, triggering one of the pending orders, promptly delete the other as a non-operational scenario. This prevents both orders from activating simultaneously. As observed in this image, during the latest NFP event on Friday, December 8, 2023, the price exhibited a robust bearish impulse immediately after the report release at 5:30 pm. This triggered our sell stop pending order, shifting our trade into a profitable position. Following the bearish movement, the strategy aims to close the buy stop position (the opposite direction). At this juncture, traders should take proactive measures to manage the open position. Stop Loss Considerations: Place a Stop Loss in the opposite order or opt not to set it at all, provided the second pending order remains intact to limit potential losses. This ensures that the remaining order acts as a safeguard against adverse market movements. Trailing Stop for Profit Maximization: Implement a Trailing Stop to secure profits. Continuously adjust the Trailing Stop as the price advances, allowing you to capitalize on the maximum price momentum. This dynamic approach helps lock in gains while navigating the evolving market conditions. As depicted in the image, the price, after experiencing a bearish movement, rebounds upward. What could be the reason behind this? The Non-Farm Payroll (NFP) report assesses the percentage of the total workforce that is unemployed and actively seeking employment in the previous month. For this specific event, the forecasted unemployment rate was 3.9%. However, the actual percentage revealed in the report was 3.7%, indicating a lower number of individuals unemployed and actively seeking employment in the preceding month. This positive deviation from the forecast serves as a favorable signal for the USD, prompting an upward movement in its value following the event. In currency markets, an 'actual' percentage lower than the 'forecast' is generally considered beneficial for the respective currency. By the way, Short-term trades had the opportunity to secure a few pips in gains after the activation of the Sell Stop order. Strategy N.2 Meanwhile, in this other image, I have marked a vertical line at the recent NFP event. Additionally, I've incorporated a 20-period Simple Moving Average (SMA) to illustrate the short-term trend. After the release of this significant economic news, you can observe an increase in volatility. This could serve as a component of a monthly strategy where the release of such news acts as a trigger. This second scenario or strategy, especially for beginners, is considered much safer. By analyzing the NFP report results, understanding economic dynamics, and gaining insights into the potential continuation of the trend or a possible pause for a reversal, traders can make informed decisions. In conclusion, it's essential to backtest the presented strategies and conduct a forward backtest in a demo account. Your thorough understanding and application of these strategies are crucial. Thank you for taking the time to read my article.
Education
by FOREXN1
3