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Pending orders: how to use it?What is a pending order? A pending order is a tool that allows you to open or close positions at the desired price automatically after the price reaches the set value. This is the main difference from a market order, which is executed at the current price immediately. At the same time, pending orders differ in that if the price has not reached the set value, the order will not be executed. Pending orders will help those who use technical analysis and do not want to constantly sit at the screen, waiting for the best entry price. With the help of pending orders, you can not only open, but also close positions. Stop Loss is an order that is placed in case the price does not go where the trader expected. When the price reaches this order, the position will be closed at a loss. Take Profit is an order that will automatically close a profitable position when the price level predicted by the trader is reached. Opening positions using limit orders A limit order is an order to open a position at the stated price or better. To make a purchase transaction, an order is placed below the current market price, and for sale – higher. Thus, limit orders are applied when the trader expects that the price will reach a certain level, and then turn away from it in the opposite direction. Such orders are used in situations when a trader expects a price rebound from strong levels. They are executed at a price no worse than the stated one. Execution is possible even at the best price if the value specified in the order falls into the price gap. Buy Limit Buy Limit is a pending order to buy (at the Ask price) below the current market price. This order is used by a trader when he expects the price to decrease to a certain value and wants to open a buy position there. For example, if the price of the GBP/USD currency pair is at 1.3880 and the trader wants to buy it from the 1.3800 level, he needs to set a Buy Limit order to this level (or maybe a little higher). Sell Limit Sell Limit is a pending sell order (at the Bid price) above the current market price. This order is applied if the trader expects the quotes to rise to a certain level and is going to open a sell position there. For example, if the quotes of the EUR/USD currency pair are now around 1.1750, and the trader wants to sell the asset when the price reaches the 1.1800 level, a Sell Limit order is placed at this level (or slightly lower). Opening a position on a stop order A stop order is a tool that allows you to open a position at the market price when the values specified in advance in the order are reached. A buy order is placed above the current price, and a sell order is placed below. Stop orders are used when a trader expects that the price, having reached a certain level, will continue to move in the same direction. Usually this type of orders is used in strategies based on the breakdown of levels. If there is an impulse in the market at the moment due to high volatility, there may be slippage and the order will open slightly worse than the value indicated by the trader. Buy Stop Buy Stop is an order to buy (at the Ask price) above the current market price. Activating an order and opening a buy position is triggered when the price rises to the specified value. Example: The quotes of the AUD/CAD pair are at 0.8940. The trader expects that the growth will continue if the price breaks through the resistance level of 0.8975. To do this, a pending Buy Stop order is placed just above this level (for example, at 0.8990). When the Ask price reaches 0.7160, a buy position will open. Sell Stop Sell Stop is a sell order (at the Bid price) below the current market price. When the price reaches the desired values, the order is automatically triggered and opens a sell position. Example: The quotes of the GBP/JPY pair are around 160.60. The trader expects that the pair will continue to decline if it breaks down the support level of 160. To do this, a pending Sell Stop order is placed slightly below this level (for example, at 159.85). When the Bid price reaches the value of 159.85, a sell position will open. Conclusion Thanks to pending orders, the trader has another, powerful tool that helps to use various strategies profitably, helping to increase the number of openings or closures of positions. It becomes possible not to monitor the market 24 hours every day, but to place orders in a planned place, with fixed risks. Trading becomes almost completely automatic.
Education
by Lingrid
9
BEFORE, ON TIME and AFTERHello everyone Today we will try to figure out what kind of thinking is correct during the opening, holding and closing of a deal. Any trader faces these three stages, but not everyone knows how to behave correctly and therefore mistakes are made. Go! Before opening a deal... Every time you find an entry point that matches the rules of your trading strategy, you should think about the following important points: • Determine the level to set the stop loss. It is not necessary to set a smaller stop loss due to greed. You should have a stop loss strategy that will be based on the highs or lows of the price, at the levels, because these values are really important and it will be much more difficult for the price to pass the level - this will protect your position and your stop loss from premature closure. • You must be able to accept losses. Before each trade, you should remind yourself that a trade can be unprofitable, since there is nothing 100% in the market. Remember this every day. Remember that setups don't always work, and then you won't lose more by rearranging the stop loss or not putting it at all in the hope that the setup will definitely work. • It takes time. The deal does not reach the goal in a minute. The market will move in different directions, and you should be able not to react to every movement and give the deal time. Many people forget about it, but due to the constant monitoring of the market and reactions to every movement, traders make mistakes, lose money. You need to be able to wait, understand this. Let the deal work and don't interfere. The position is open! The most interesting thing starts right here! And it is here that a huge number of unnecessary mistakes are made. • The market must prove you wrong. After opening a position, the set stop loss will be the level at which it will be clear that you were wrong. You should leave the open position alone and let the price prove you right or give you an erroneous opinion. Touching the take profit price will mean that you were right, there is no stop loss. • Constant monitoring of the situation. If you are still following every movement, most likely you will react to false price fluctuations and sooner or later you will close the position. You may just get tired of watching the price move and eventually make a mistake. You can check your deal once or twice a day, but no more. You must act according to your strategy, which gave the signal to open a position. Let the strategy work and don't interfere. Closing a position It does not matter whether the deal was profitable or not, it is important to rest after it, stop, put your thoughts in order. It is difficult, after closing a position, to return to the market for a new setup, especially if the transaction was profitable. After all, they lead to excessive self-confidence, which leads you to open bad deals in large numbers. After a losing trade, you always want to quickly return to the market to recoup. This is a big mistake. Opening deals that are based on the desire to win back what is lost is an abyss into the abyss. Emotionally, you run to open a deal, open on bad signals and lose even more, and so again and again. You have to understand that losing money in the market is normal, you don't have to run to win them back. Learn to accept losses. The only thing you should do after closing any position is to be disciplined and stick to the trading strategy. The easiest way is to just leave the market and get away from the chart for a while. It is very important to remember that you need to be able to save money. If you have earned something, withdraw some part at the end of the month, let it be your reward, which will give you self-confidence and you will become a calmer trader in the long run. Good luck!
Education
by DeGRAM
5
Dollar IndexHello everyone! There are many tools on the market to understand the general state of the economy or the company. As a rule, indexes are responsible for this. And today we will discuss the Dollar Index. A little history In 1973, the dollar Index (DXY) was invented and first introduced by JP Morgan. Level 100 is the base value of the index. If the instrument shows, for example, a value of 110, it means that the dollar has grown by 10% relative to the base value. As you may remember, in March 1973, the largest countries in the world introduced a floating exchange rate – this date was the beginning of the index. About the index With the help of the dollar index, analysts determine the strength of the dollar as a whole. This is a very simple analysis tool that almost every analyst uses and shows the index how strong or weak the dollar is relative to other world currencies. Method of calculating the dollar index The index consists of weighted components of the following currencies: euro (57.5%), Japanese yen (13.6%), British pound sterling (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%). As you can see, the currencies with which the dollar is compared are European countries, which is why DXY is called an "anti-European" index. Based on the number of currencies in the index, people believe that the US is compared with six European countries, which is incorrect, since the euro is officially the currency of 19 EU countries: Austria, Belgium, Germany, Greece, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Finland, France, Estonia. Add to this 5 more countries — Japan, Great Britain, Canada, Sweden and Switzerland and we get almost the entire civilized world. Although all countries are united by one currency, their economies are still different and therefore each currency of a separate country has a corresponding weight in the index. Dollar Smile One of the Morgan Stanley analysts noticed an interesting feature of the dollar – the dollar can strengthen in both bad and good economic conditions. This analyst was Stephen Jen and it was he who came up with the "dollar smile theory", the essence of which is that the dollar adheres to three scenarios: 1. "safe harbor" - investors believe that the economy is experiencing difficulties, so everyone is investing in less risky dollar assets. 2. When the US economy is weak, the dollar falls. The fall is strongly influenced by interest rates, as a result, everyone gets rid of the dollar, and the smile becomes wider. 3. Perhaps the easiest period to understand is the growth of the dollar due to the economic growth of the United States. People increasingly believe in the country and the currency, which contributes to a greater growth of the dollar. Thanks to this theory, it is easier to understand the market situation in general and the cyclical nature of the market. How to use the index The index is usually used to analyze currency pairs. The index helps to determine the relative strength of the currency relative to the dollar, at those moments when you trade currencies in which there is USD, for example, EURUSD, GBPUSD, USDCHF, etc. The index is also used to find discrepancies. If DXY falls and the dollar weakens, then you will see growth on the GBPUSD chart. If the dollar is the base currency, for example, USDJPY, then the index and the currency pair will move in the same direction. Often you will notice that the dollar index is growing, and the currency pair is standing still – this is the discrepancy, which is very profitable for an observant analyst. In addition to correlation with currency pairs, DXY correlates with oil. The fact is that the largest oil consumers are hedgers of dollar inflation. Hence the inverse correlation of these instruments. Professional analysts, before currency trading, look at the dollar index to understand the trend directions. Conclusions Thanks to the index, you can understand the state of the US economy. DXY is a great addition to your strategy, which helps you identify trends or find discrepancies on the charts. Using the index you will avoid mistakes and increase your profit.
Education
by DeGRAM
3
Hartley PatternsHello everyone Today we will talk about another method of analysis that will help you bring significant profits. Let's go! Introduction H.M. Hartley in 1935 in the book "Profit on the stock market" for the first time revealed Hartley's patterns. Gatli patterns are used in technical analysis and are based on Fibonacci values. The patterns are reversal patterns and have clear rules and an excellent profit-to-risk ratio. Hartley patterns work better than most well-known graphic formations, which also use different Fibonacci levels, but not as clearly as in Hartley patterns. Designations Hartley decided to designate waves with 5 letters for simplicity: The letter X - is the beginning of the trend; The letter A - is the end of the trend; The letter B - is the first pullback of the trend; The letter C - is a rollback correction (not breaking through the level of point A); The letter D - is the target of the letter C. The zones for the letters B, C, D are determined using the Fibonacci ratio between XA and AB. Patterns are divided into types and have their own names, in addition, patterns work for any direction of the market. Let's take a closer look at the patterns. Bat Pattern formation: the price reaches the maximum/minimum of the XA wave and forms a point B at the Fibonacci correction level from 38.2 to 50%. Using the XA points, you can find the value of the D point, which usually tends to the Fibonacci retracement level of 88.6% relative to XA. In this case, CD is most often longer than the segment AB. Butterfly When wave B finishes its formation at the Fibonacci retracement level of 78.68%, they talk about the formation of a Butterfly pattern. At the same time, the target for wave D will be values beyond XA and will be 1.27-1.618 XA. Crab This pattern is formed when the price touches and bounces off the maximum/minimum of the XA oscillation and forms a point B at the Fibonacci correction level from 38.2-61.8%. The goal of point D is outside the original segment XA and is 1,618 XA Simplifying pattern identification With careful study of patterns, it can be noticed that the formation of patterns depends on the location of wave B in relation to XA. Apart from the drivers and 5-0 patterns, there is an easier way to identify the remaining patterns. Let's divide the values of wave B by Fibonacci levels. 1) 38.2%: Bat, crab 2) 50%: Bat, crab 3) 61.8%: Bat, crab, AB = CD 4) 78.6%: Butterfly 5) 88.6%: Deep crab. If you see one of these values, you can understand which pattern is being formed. For example, if you see on the chart that the price reaches the level of 50%, then you can expect a Bat or crab figure. To calculate where the point C will be, you can use Fibonacci levels relative to the point AB: on 38,2%, 50%, 61,8%, 78,6 % and 88.6%. Now let's define goal D. 1) Bat: 88.6% Fibo HA or 2,618 BC 2) Alternative Bat: 113% Fibo XA (below X) OR 2.0 BC 3) Crab: 161.8% Fibo (below X) OR 3.14 BC 4) Hartley: 78.6% Fibo HA or 1.27 BC 5) Butterfly: 161.8% Fibo (below X) OR 1.618 BC 6) Deep Crab: 161.8% Fibo (below X) OR 2,618 BC. How to trade? It is necessary to open a position at the level, on a confirmation signal or on an impulse breakdown, using pending orders at Fibo levels. Confirmation – in this case, you should wait for the reversal candlestick pattern at the Fibonacci level. Breakdown – in this case, the price bounces off the Fibonacci level and breaks through the trend line in the expected direction. It is worth paying attention to the following clarifications: trading on wave B goes in the direction of the trend, but with a limited purpose (on the letter C). Wave C trading is counter-trend trading, but with a good profit-to-risk ratio (with a goal on the letter D). Trading on the letter D can be considered as trading in the direction of the trend (very close to the support and resistance levels) and also with a good profit-to-risk ratio (the target can be the top in an uptrend, the bottom in a downtrend or any Fibonacci level of the CD segment). These patterns are quite common, and the success rate is quite high. Use the patterns correctly and they will bring you a lot of profit. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
11
ERRORS ON PIN-BARSThere are a large number of technical analysis figures, there are many different patterns, but as you know, they do not work 100% of the time. No matter what you trade, you should always pay attention to the market context and the pin bar is no exception. Pin bar is a very profitable pattern, provided that you trade it correctly. Beginners often make mistakes trying to trade every pin bar that is formed in the market. Today we will try to analyze the most common mistakes of beginners when trading a pin bar. 1. Trading pin bars in trending markets To begin with, every beginner should learn how to trade a pin bar in trending markets, because any pattern will work itself out if it trades in the direction of the trend. The trend is still our friend and we should use its strength to open positions. Look for an entry point on the pin bar in the direction of the trend and avoid losses. 2. Pin bar on daily charts A trader should be able to trade a pin bar on daily charts, because a daily chart is the best chart for trading. This is a fact. If you do not know how to trade a pattern on a daily chart, then you will not be able to trade it on smaller timeframes. As you know, the market is full of trading noise on low timeframes. That is why patterns are most difficult to work out there. In such noise, false signals appear that confuse beginners, but an experienced trader will be able to determine a really profitable entry point. 3. Market conditions It is very important to understand where to expect the right pin bar, which will bring profit. Pin bars can be found anywhere in the market, but this does not mean that each of them will bring you profit. No. The strongest signals occur near strong levels, it is at such points that it is worth looking for an entrance. 4. Stop loss Very often, traders trade a reversal pin bar, hoping to catch a trend change. If you catch such a movement, you can earn a lot, but it's difficult to do it. The price rarely immediately reverses after the pin bar, the market will fluctuate and if you put a stop loss too close to the position opening point, you may be knocked out. It is most correct to put a stop loss where the closing of the position will be correct, perhaps a little further than the opening point. No one wants to be knocked out of position ahead of time and watch the price go where we wanted, but without us. Conclusion The strongest signals simply cannot appear everywhere on the chart. You need to be able to filter out the signals correctly and use the most profitable ones. To do this, first study the theory, gain experience on older timeframes and only then practice more. Take your time. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
13
THE MAGIC OF COMPOUND INTERESTEach of us wants to get rich in order to fulfill our dreams: to fly around the world, buy a car or a house, and maybe even buy a plane. Investing can help make a dream come true, but not everyone has enough knowledge to make money trading. And what to do? Capitalization magic increases numbers to high values very quickly. Naturally, it also works with money, but a little slower. This is called compound interest, and that's what we can use now, no matter how deeply you understand investments. The most frequent advice in the financial sphere is to accumulate your funds and invest them as early as possible. When you start accumulating as early as possible, time is on your side, and the accrual of compound interest plays a big role in this. The best way to demonstrate compound interest in action is the following example. There is Louis and Jen, both 20 years old. They are given the opportunity to make a long-term investment with a starting capital of $ 5,000 at 10% per annum for the next 45 years. And they have to make a choice: 1. Annually collect the earned interest or 2. Reinvest interest income annually. Louis likes to get paid. He already has ideas on how to spend the first interest payment. However, Jen is looking to the future. She decides to reinvest them. Louis invests his funds and receives the same income of $500 every year. Louis is happy to take his $500 every year. After 45 years, nothing changes for him. He still has his original $5,000 and 45 years of interest spent. The power of capitalization Jen is obsessed with savings. She knows that over time, interest will bring her much more money. The first few years of capitalization are pretty boring, but Jen waits patiently, because every year her interest income is higher than in the previous one. Little by little, but the snowball effect is gaining momentum. Around the ninth year, the picture becomes fascinating. Jen gets enough interest income to double her first deposit. Soon, the interest income exceeds her initial investment amount of $5,000. And she gets a percentage of her interest. This is the power of compound interest. Imagine what Jen could have done if she had invested $5,000 in work every year for the same period of time. Currently, 10% look too optimistic, but let's take, for example, that she earned 6% annually on this money. At this interest rate, Jen's total income would be $1,196,363 (by the way, at a rate of 10%, her total income would be $4,318,429). Rule 72 Rule 72 is a simple way to estimate the time required to double an investment based on a fixed rate of return. If you divide 72 by the rate of return, you get an approximate number of years during which the investment will double. For example: if you invested $ 1000 at 4% per annum, then in order to turn your investment into $ 2000, you will need about 18 years (72/4 = 18). Using this formula, you can also determine the rate of return needed to double your money in 10 years: divide 72 by the number of years, 72/10 = 7.2%. Regardless of the investment instrument, whether it's bond yields or dividends, Rule 72 gives you an idea of how long it takes to double your money at a given interest rate. Don't let it work against you! No matter how good capitalization looks, there are 4 factors that weaken it and work against you: • Inflation. There are ways to avoid or reduce this risk; • Taxes. Taxes eat up profits, so use tax-advantaged accounts like IRA and 401k's; • Expenses. For example, taxes, fees and commissions also eat up profits. The less you pay them, the better; • Time. The longer you wait, the less profit is accrued to you under the compound interest system. The basics of mathematics do funny things with money over time. In the early stages, compound interest acts slowly and brings little income, and this is probably why many people ignore it in the early stages. But once it starts, it speeds up exponentially the longer you let it go. If you don't have a billion dollar idea in your mind, then compound interest is the best thing you can use to increase your funds and achieve wealth. Don't waste your time, be patient and use compound interest correctly.
Education
by DeGRAM
3
How to determine the real value of the national currency?The National Regulator openly manipulates the exchange rate to the benefit of the economy, undervaluing it when there is a trade deficit, thereby helping exports, and overvaluing it when there is a surplus, so that citizens and businesses can buy more imported goods. The real exchange rate of a nation's currency is determined by its purchasing power abroad. In theory, it is calculated through a sample of identical goods. It is enough to estimate how much a certain conditional consumer basket costs in the home country, and compare the amount spent in another country. --- --- --- Why do we need to know the exchange rate regime and the real value of the national currencies? If a country has a fixed or transitional exchange rate, a currency trader can determine the entry points with a guaranteed profit. For example, the yuan is strictly "locked" in the corridor of 2% on the stock exchange, which allows you to enter at the maximum deviations, knowing exactly what intervention of the People's Bank will soon follow. The peculiarities of such trading are described in our article about USDCNH trading. Knowing the pricing mode, you can determine the entry strategy on the border of the basket value. Examples of trading such currency pairs using currency corridors are presented below. Trading on the Boundaries of the Nominal Value of National Currencies in Fixed and Transition Modes UAE Dirham (AED) The USDAED currency pair is the easiest to trade because of its strongest peg to the dollar - the national central bank kept the exchange rate at 3.6725 dirham even during the 2008 crisis. As a result the UAE national currency chart looks like a series of candles with long tails, above and below which pending orders should be placed. The figure shows a weekly candlestick chart, where you can see the possible deal levels at a glance, but there are some subtleties in this kind of trading. Firstly, there are only two brokers who are ready to provide access to the USDAED pair; secondly, they ask for a minimum deposit of $10,000; thirdly, the maximum leverage for this currency is 1 to 5. --- --- --- Models for determining the real exchange rate There is no single ideal model in the Forex market that works out 100% of the signals for the differences between the nominal value of the currency. Just like any indicators, the presented formulas need a historical check, they are suitable for certain currency pairs with different accuracy and work in combination with each other. This is why we will try to examine the basic models and theories of exchange rates. The purchasing power of the national currency against any other currency is determined in four ways, which we will talk about below. --- --- --- The law of one price - comparing the cost of the same good in different countries The current price of a commodity in national currency units = The exchange rate of the currency pair* The current price of a commodity in a foreign currency. --- --- --- Absolute Purchasing Power Parity In the formula of absolute parity instead of the price of one product, the average price level of the same basket of goods for different countries is used as expressed in national currencies or minimum subsistence values. For example, in Australia the living wage was 600 AUD for 2017, while in the European Union it is equal to: in Germany - 1240 euros, in France - 1254, in Italy - 855. The euro is a common currency for 26 states, so the three largest EU economies were chosen to use the average value of (1240+1255+855)/3= 1117 in the formula. If 1117 is the average EU living wage and 600 is Australia's living wage, then solving this expression, we get 1117/600 = 1.86. In 2017, the EURAUD exchange rate was 1.38. As you can see from the graph of the currency pair, the arbitrage correctly predicted the trend of strengthening of the euro. --- --- --- Relative trade parity. Economists in their calculations use economic indicators that show the relative change in consumer prices. The difference between the current indicator value from the economic calendar and previous data is substituted into the formula. For example, the U.S. Consumer Price Index was 119.4 in 2012 and rose to 121 by 2013. During this period, the EU CPI showed values of 118.3 and 120.1. The EURUSD exchange rate changed from 1.30 to 1.36. Using the formula, let's calculate the real euro exchange rate by taking the 2012 value of 1.30, successively multiplying it by a fraction of the relative values of the U.S. CPI 121/119.4 and the European CPI 120.1/118.3: 1,3* (121/119,4) *(120,1/118,3) = 1,3374. As you can see from the formula, the euro was undervalued, which led to the collapse in 2014, where parity was equalized due to monetary measures taken by the ECB and the Fed. The consumer price index is essentially an indicator of inflation, which is the primary focus of central banks when making decisions on the size of the discount rate. In economic statistics, it is rare to see this indicator published in relative units; everywhere there is a percentage change, which can also be used in another model. --- --- --- Relative Inflation Parity When calculating the real value of national money relative to the currency of another country, a slightly modified formula is used. The current rate of a currency pair can be represented as equal to (1 + annual inflation of one country/1 + annual inflation of another country) * the current rate of the pair at the Forex market. Let's calculate the EURUSD exchange rate in 2015. At the end of that period, U.S. inflation was 0.73%, while in the Eurozone it was 0.08%. The real EURUSD exchange rate at the end of 2015 = (1 +0.0083)/(1+0.073)*1.0565= 0.992. EURUSD quotes at the beginning of 2016 were undervalued, and the rate hike policy adopted by the Fed did not immediately save the situation - the market saw values close to 1.02 before the value of the European currency began to rise. This formula can be used to forecast the exchange rate by fitting it with the future inflation that central banks calculate in the reports they publish at every monthly meeting. --- --- --- Sincerely R. Linda!
Education
by RLinda
14
How to study indicators?Hello everyone Today I want to talk about indicators. Every trader has used indicators at least once in his trading, but not everyone knows how they work and why they should be used at all. The best way to understand something is to look for answers to questions yourself. Below I will give you some questions that you will have to answer in order to understand the operation of the indicator. Problem Most beginners start their way of studying indicators with books or articles on the Internet, where it is told: buy here when this line crosses this one, when the indicator enters this zone, and so on. With such a study, the trader does not understand how the indicator actually works, which indicators are similar to each other and why the indicator gives these signals. By answering these and other questions, the trader will be able to understand for himself whether he needs this indicator. Our task is as follows: 1) find out how the indicator is calculated; 2) understand how this indicator reacts to changes in parameters; 3) to understand what all this means in the context of market data. Find answers to the questions If you really want to get into the essence of the work of this or that indicator, do the following: 1. To begin with, you can start by studying the history of this indicator. It is best to look for the original source to understand what the creator of the indicator put into this tool. Any information will be useful for understanding the tasks that were set before the indicator at the time. 2. How can the indicator help us or why is it more useful for us to use the indicator than just looking at the chart? 3. Which indicators are similar to this one? Of course, it will not be possible to study all the indicators, but it is not necessary. It is enough to observe and understand where the indicators give the same signals. Thus, we will remove unnecessary repetition of signals on the chart. 4. What exactly is taken into account when the indicator is working? For this work, you need to be able to calculate or program at least in general terms. You can use third-party special programs. The main goal is to understand the details of the indicator calculation. 5. Change the data tracked by the indicator to see how it reacts to controlled price changes. Examples are: a market in flat, where a trend begins to emerge, and then a second return to flat occurs; a game on trend strength; a flat with one subsequent large price jump; "ladder" markets; stable long-term trends and their reversals; fluctuations (for example, sinusoidal) with different periods. 6. Take the knowledge you have gained and look at the indicator on the price charts. Notice how it reacts to price spikes. Analyze this stage of information collection. Your goal is to see how this indicator works on a large amount of data, and not to dig deep. 7. Now find out how you can test what you see in paragraph 6. Is it possible to test this indicator manually, or will a software algorithm be required to test it. 8. Having received all the data and understood the work of the indicator, you should understand whether this indicator is needed in your strategy? It will be difficult to answer all the questions, but the benefits will be tangible. You may spend several days or weeks searching for answers, on the other hand, you will learn something that most traders do not know. You will be able to really understand the signals of the indicators and be able to use the right indicator at the right time – which most do not know at all. If you do not learn how to understand and use trading tools correctly, you simply will not be able to trade in a plus. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
6
Economic data that a trader should be able to understand.Part 3. Turnover or retail volumes, orders and inventories This type of data measures retail trade turnover. As a rule, the retail business is, in simple words, a place where you and I go to shop to buy basic necessities and luxury goods. It is important because it is an excellent indicator of consumer demand within a particular economy. In certain countries, especially in the G8 countries, retail trade volumes may account for two-thirds of all consumer spending. They are a key indicator of consumer confidence. If consumers are confident in their economic situation, additional demand for goods and services is created. Economists track the growth of trade turnover – it helps to determine whether the economy is doing well. If the trade turnover falls, things are bad in the economy. Turnover or volume of wholesale trade, orders and stocks This type of data measures the turnover of wholesale businesses. It is important because it is an indicator of consumer demand – which, as we know, is a serious thing. A decrease in wholesale sales or inventories may imply or confirm a decrease in business activity and retail demand. This means that there are free resources that are not currently being used, but they will be used if demand increases again. This type of data is not as important as retail trade volumes, but most economists believe that it is still worth keeping an eye on. Import of goods and services In this type of data, purchases of domestic companies from companies from abroad are measured. If, for example, you are a Canadian company that buys raw materials from China, then this is considered an import of goods to Canada. This type of data is important, since imports may eventually replace domestic production, which may cause tension in financial resources. For example, if everyone in the United States starts buying only German car brands, such as BMW and Audi, this will lead to a lack of demand for cars manufactured in the United States, such as Ford and GM. Which will have a negative impact on domestic car manufacturers in the United States. As a rule, a country imports those goods and services that it is not able to produce on its own. But, of course, this is not always the case. Often people and companies buy abroad because prices are lower there. Another reason is that there may be goods of the desired quality abroad that are not available at home. For example, if you live in the United States and have a strong desire to drive around in a Rolls Royce or Bentley that has just rolled off the assembly line, you will have to buy your car in the UK. Oil is often not taken into account in the US data, as it has developed that the states are always forced to import it – the country does not produce enough oil to meet domestic demand. However, thanks to the new drilling technology in the US, oil production is growing – there are chances that over time it will be enough to cover the demand. You may have to do a little independent research on this topic – it depends on when you read this material. Export of goods and services This type of data measures the country's trade turnover with other countries around the world. Simply put, this is the direct opposite of importing goods and services. It is important because exports generate an influx of foreign currency, which can have a good effect on economic growth. It happens that a foreign currency is more valuable than a local one – this creates additional profit in the balance sheet of a local company. For example, if a company from Canada sells its product to the UK, it receives British pounds as payment. This is a very attractive deal, since (at the time of writing this article) 1 pound can be exchanged for 1 Canadian dollar 75 cents. Export growth can boost GDP, which will have a positive impact on the economy. The higher the ratio of a country's exports to its GDP, the faster its economic output will grow. Trade balance, the balance of trade in goods In this type of data, the balance or the difference between all exported goods and all imported goods for a certain time period is measured. The main question is – what is more in the country, exports or imports? It is important because it is an indicator of a country's fundamental trading position in relation to other countries. Obviously, most countries prefer their exports to be higher than imports. A large foreign trade deficit may suggest to economists that there are difficulties with the supply – companies are unable to meet the demand coming from abroad. The trade balance reflects the ratio between national savings and investments of citizens and companies of the country in question. The deficit is an indicator that investments exceed savings in their volumes, and the use of real monetary resources exceeds the overall economic result of the country. Index of export and import prices, unit price of the product This type of data measures the prices of goods that one country trades with others. It is important because it is an indicator of pressure on prices, possible problems with the exchange rate and changes in competition. Economists compare export prices with price indicators on the domestic market to get an idea of the pressure on prices for foreign buyers exerted by domestic producers. Economists also monitor import prices to determine the level of external pressure on prices and evaluate these indicators. Manufacturer's prices and wholesale prices In this type of data, factory prices are measured – that is, how much it costs the manufacturer to manufacture goods without adding extra charges. It is important because it can be used as a leading indicator of price pressure affecting domestic production volumes. It should be borne in mind that during a recession, the industrial Price Index (Producer Price Index, PPI) may exaggerate the pressure on prices. On the other hand, during periods of inflation, PPI can downplay prices, because contracts and purchases of raw materials are usually negotiated in advance long before production and release of products. Price expectations: surveys The purpose of these surveys is to study the opinion of manufacturing companies regarding inflation. In simple words, this type of data sums up what company directors think about the impact of inflation on their business at the moment and in the near future. It is important because it allows you to look into the heads of people working in the trenches of production. It can serve as a warning about possible changes in prices. Economists, as a rule, track changes in the trend of this indicator in order to predict a possible increase or decrease in pressure on prices. Wages, labor income, labor costs Salaries and labor incomes give us an idea of how much people earn from their jobs. Labor costs are how much the labor of workers costs the manufacturer. All these indicators reflect labor costs and the impact on consumer incomes. They are important because they reflect the pressure on prices and demand within the economy. Salaries and incomes are closely related to the current phase of the economic cycle. If incomes are growing faster than consumer price inflation, it means that real spending is growing, which is an indicator of the health of the economy. Unit labor costs In this type of data, the cost of labor per unit of output is measured. In other words, how much the labor costs for the production of one unit of goods cost the manufacturer. It is important because it is an indicator of the competitiveness of businesses and pressure on prices within the country. For example, if a company is engaged in production in a country with cheap labor, and sells its goods abroad, these are large potential profits. Conversely, if a company's production is located in a country with expensive labor, then it probably will not be able to withstand competition with foreign companies using cheaper labor. This is a key indicator of labor efficiency. If unit labor costs decrease, it means that the same amount of products can be produced for less money, since manufacturers will need to pay their workers less for the output of each unit of production. Which, of course, makes the manufacturer more competitive. If labor costs start to rise, then this can pose a threat to the viability of companies, because the production of products will start to cost them too much. Obviously, companies need to earn money to stay in business, so cheap labor is always preferable. Consumer or retail prices This type of data measures the price of a basket of goods and services consumed by an ordinary family to maintain the current standard of living. It includes clothing, food, rent, transportation expenses, and so on. In general, everything you need for food, sleep and earning enough money to survive. It is important because it reflects the inflation experienced by a typical family of a particular country. Here you need to ask yourself this question – are ordinary goods in general more expensive or cheaper for consumers? Will the consumer have more money in his pocket at the end of this year than at the end of the previous one? The answer can tell us a lot about whether the standard of living is rising or falling and what part of the economic cycle we are in now. Conclusion As you can see, when it comes to publishing fundamental economic data, many key concepts have to be taken into account. If you have difficulty assimilating or remembering all this information – try not to overload yourself! Use all the information and then you will earn more than the rest! Good luck!
Education
by DeGRAM
29
Economic data that a trader should be able to understand.Part 2. Hello everyone Today we will continue discussing the economic data that you may encounter in the economic calendar, the knowledge of which will help you to make more profit in the forex market. Business environment: Indicators and Surveys These indicators and surveys reflect observational data on the business climate. These surveys are interesting because they are conducted among businesses that produce goods and services within the economy. They are important because they can give advance warning of changes in the economic cycle. They are also important because this information comes directly from the companies providing jobs. The surveyed companies express their level of confidence, which can be used to determine their intentions regarding hiring and layoffs of employees. They provide important data on the economic opinions of manufacturers and their expectations regarding business conditions in general. Inventory Data The inventory data measures the level of stocks of manufactured goods stored by the manufacturer. They also measure the level of stocks held by distributors on behalf of the manufacturer of these goods. This type of data is important because it reflects the dynamics of demand for finished products. This dynamic takes the form of possible sales. If the inventory level is low, it may mean that demand exceeds supply. This is a good sign for companies, because it shows that the economy is in a growth phase, and they can start to increase production and, if they are lucky, get more profits. But it can also be a bad sign. Low inventory levels can also mean that producers are not optimistic about demand, and therefore produce less. Here you need to figure out the balance of supply and demand. It is best to use this indicator in combination with others to determine the strength or weakness of a particular economy. Economists study the ratio of stocks to sales. This helps to determine whether the low inventory level is due to the fact that production is not keeping up with demand or that manufacturers of goods are not optimistic about demand in the future. If the ratio is higher than usual, production and imports may be reduced until demand increases. And if the ratio is lower, products and imports are likely to grow until demand declines. Industrial and Mass Production In this type of data, the conditionally net production of manufacturing companies and mines for the extraction of natural resources is measured. It is important because it is an indicator of the current levels of industrial activity. Many economists believe that industrial production can be used as a general indicator of the state of the economic cycle for those countries in which the industrial sector is developed. All the currencies that we will track for our trading belong to countries with a developed industrial sector. Industries producing capital goods and consumer durables tend to suffer the most during an economic downturn. This is due to the fact that ordinary people stop buying things that are not necessary for survival. Which accounts for most of the spending in most of the world's major economies. In turn, this leads to an increase in the number of layoffs, which only exacerbates the problem. Capacity Utilization This type of data measures how actively factories and equipment are used to produce goods. All producers of the country participate in the measurement – this is necessary to obtain an average value of production efficiency. It is important because it is an indicator of the level of economic productivity – it can give us hints about inflation. Strong economic growth together with high utilization of production capacities implies rising inflation, because all the equipment in the country is used almost to the maximum. That is, simply put, companies work efficiently, and production cannot be increased without adding capacity and hiring more workers. If demand is expected to remain high and interest rates are low, then manufacturers can invest in new plants and equipment, which will also lead to an increase in inflation. Rising inflation is good (as long as it doesn't become excessive). Everything can be reduced to one question: are people and companies spending money, is production expanding? If yes, this is usually good news for the economic cycle, because it indicates a growth phase. Industrial Orders (Manufacturing Orders) This type of data measures the total number of new orders received by manufacturing companies over a specific time period. It is important because it can be used to make a conclusion about the economic result in the near future. In a short time, a high level of orders is an indicator of increased employment and production. This can cause an increase in inflation, provided that unemployment is already low, capacity utilization is high, and inventory data is low. It is best to use this indicator in combination with others. The order level can also provide advance warning of changes in the business cycle. An increase in orders can be a signal of the end of the recession, and its decline is a signal that the peak phase has come in the economic cycle. But it all depends on the current and recent state of the economy. The same indicator values may have different meanings depending on which part of the economic cycle we are in. Automotive industry (Motor Vehicles) The name speaks for itself. This type of data measures industrial activity related to the production of cars and trucks. It is important because it is an indicator of the industrial production of cars and trucks. Based on these data, conclusions can be drawn regarding the demand for expensive goods or durable goods. Car sales data are not unreasonably considered a leading indicator, because the growing demand for cars implies an increase in consumption. In addition, the production of vans and trucks is an indicator of business investment, because companies use large vehicles in their activities - for example, in order to transport and deliver their products. Orders for the construction of buildings and structures and results (Construction Orders and Output) This type of data measures activity in the construction sector. It is important because it is an indicator of new investments and possible future economic results in the form of new construction projects. Construction is very much subject to cyclical conditions, because, obviously, it is much easier to do it when there is not a foot of snow on the ground. Construction is very sensitive to interest rates and expectations about future demand. And all because positive expectations are exactly what people are buying new houses or apartments for themselves (usually on credit). High order numbers may mean increased demand for construction materials and more active use of labor in the coming months. Low levels mean the opposite. Number of new constructions (houses), completion of construction, sales (Housing Starts, Completions, and Sales) In these types of data, the number of new house constructions, their delivery and sale is measured (previously built houses are also taken into account in sales). They are important because they are an indicator of the level of activity in the construction sector and can signal an increase in industrial and consumer demand. Obviously, the more construction, the better the economic prospects in the country. Plus, it helps to spur inflation. New construction implies an increase in demand for raw materials and labor, without which a house cannot be built. Both are related to employment and interest rates. Renting houses implies sales. This may mean an increase in demand for mortgages in the future. If mortgages are already issued, this can lead to an increase in demand for durable goods, such as household utensils and cars. Good times! Sales are positively affected by the growth of personal income and lower interest rates. Low interest rates make buying homes more affordable because people can take out cheaper loans. What we don't want to see is a lot of construction completions – and a lack of sales. This may mean that many of the built objects have remained empty. This situation will have a negative impact on the real estate market, on banks issuing mortgages, and will cause an increase in unemployment. This is exactly what happened in the United States during the Great Recession of 2007. an overview of the rest of the economic data can be found in the next article. all the best.
Education
by DeGRAM
7
Economic data that a trader should be able to understand.Part 1. No matter how well you use technical analysis, you should still follow the fundamental news. Fundamental news can push the market against you and destroy any pattern and even reverse the trend. Every professional trader uses an economic calendar for this purpose. Thanks to the data from the economic calendar, you can predict when the market may start behaving unusually, and with proper analysis of the reports, you will be able to determine the future price movement. Today we will talk about these reports, what they mean and what to do with them. Employment The employment data takes into account the total number of employees – both ordinary employees and self-employed citizens. Employment data are important because they are an indicator of the current potential of a country's economic productivity. The production of goods and services directly depends on how many people have the desire and opportunity to work. If all of them are employed, it means, obviously, the country is not able to produce more, because it has no unused labor force. Employment is highly cyclical because when demand for goods and services increases, companies tend to increase working hours instead of hiring new workers. When the economy begins to deteriorate, companies prefer not to reduce working hours, but to get rid of extra workers, because layoffs allow you to save on pension and other deductions, which are usually very expensive. Economists track the addition of working hours and the number of overtime hours, defining them as positive changes for the employment sector. If these indicators begin to fall, it may mean a slowdown in the economy or a potentially possible entry into the recession phase. Unemployment The unemployment data takes into account the total number of people who can and want to work if they have the opportunity, but do not have a job. Unemployment is highly cyclical for the same reasons as employment. They are opposites of each other. These data are important because they are an indicator of excess labor, which economists tend to regard as wasted resources. Unemployment is also called unemployment. There is a natural unemployment rate. Companies can only hire a certain number of people. At some point, the competition for employees becomes very high, because there are few vacancies. This, in turn, increases inflation, as hours worked and average hourly wages increase. People are starting to have more disposable income that they can spend inside the economy on expensive items such as cars and houses, which will cause inflation to rise. The inflation rate is of great interest to us, as central banks pay a lot of attention to it. Keeping inflation at the levels outlined in their policies and financial mandates is part of their job. Too high or too low inflation will force the central bank to intervene in financial markets. Personal income and Disposable Income In these data, the total income of the population after deduction of taxes to the state is taken into account. They are important because they are the basis for consumption and for personal savings within the economy. Personal consumption and spending account for about half to two-thirds of GDP in developed countries, which makes these indicators extremely important. When people's personal incomes grow, chances are high that they will start spending more money inside the economy. When there is a shortage of personal income, it is very unlikely that people will have a desire to spend the little money they have on goods that are not necessary for survival. Economists pay attention to the steady growth of real personal income. If it is too fast, it will cause a sharp increase in inflation. If it is too slow, it can lead to deflation, which is very bad for the economy (and for the positions of bankers of the central bank). By the way, we will devote a separate article to inflation and deflation, as this is a very important topic. Don't be afraid, we've got it all covered! Consumer and Personal Expenditure, Private Consumption In this type of data, total expenses are measured. In other words, how much each person consumes on average. They are important because they are a key component of GDP along with personal and disposable income, as they show how much money each person is ready to spend on goods and services at the moment – both necessary and just desired. Don't forget, spending is something very serious for developed countries. Economists track the dynamics of changes in real interest rates in order to adjust their views on the economy. For example, if expenses grow by 6%, and prices rise by only 4%, then real expenses have increased by only 2%. Positive and negative changes in spending on durable goods (for example, cars, washing machines, agricultural equipment) can be an early signal of changes in the economic situation. An increase in the number of purchases is regarded as a positive phenomenon, while a decrease in purchases is generally considered negative for the economy. an overview of the rest of the economic data can be found in the next article. all the best.
Education
by DeGRAM
9
Compounding (Course #2)The power of compounding is one of Warren Buffett’s success factors. Compounding is why you can make a lot of money over time. You MUST understand the power of it, and use it. That’s it. Compounding is basically reinvesting what you earned into earning more. Why is this so powerful? Because each time you earn a percentage, that earning is in fact percentage of the initial + a percentage of the previous gains. Then, as you go on, the sum of all the small gains is growing exponentially, making you earn more and more! Take a look below: Day 1, I trade $1,000 and earn 2%. This is $20. My total account balance is $1,000 + $20 = $1,020. Day 2, I trade $1,020 and earn 2%. This is $20.40. My total account balance is $1,020 + $20.40 = $1,040.04. Day 3 … again, 2% Day 4, … …. Day 30, my account balance is now $1,775.84. I earn 2%. This is $35.52. My final account balance is now $1,811.36. This is a $811.36 gain over $1,000. Or, it is a 81% gain. See the first picture - Not impressed? Check the second picture, doing it for 6 month. Compare this to the third one, not compounding your gains. You can see if you were not compounding your gains in the first month, you would make $600 (60%) instead of $800+ (80+%). Conclusion: Compounding should be a no brainer. You won’t get rich by trading high leverage a few times and make big bucks. Yet, you can get very rich by compounding your gains, steadily, day-in and day-out.
BYBIT:BTCUSD.PEducation
by Maddrix_club
IMPORTANT ABOUT PRICE ACTIONThe market is constantly in motion and constantly changing. Every new day is different from the previous one. At some point, the market movement stops, the sideways movement begins and people start losing money because they do not know how to switch from one market structure to another. At such moments, newcomers begin to doubt their strategy and blame it for losses, eventually abandoning it altogether. Such actions do not lead to good results. If a trader cannot keep his composure during a loss streak, then the market will beat him every new week again and again. At such moments, you should keep in mind the four truths related to Price Action and Forex trading. These truths can keep you afloat and keep you from going crazy. 1. Price Action is not a "system" Price Action is not a complete trading "system". This should not be forgotten. You cannot mindlessly believe every Price Action signal that appears, as it seems to you, on the chart. You have to think and choose the best entry opportunities. You should be careful, start trusting your intuition, which will start working correctly only when you get enough bumps, that is, gain experience. 2. Does Price Action work? Price Action appeared back in the 18th century, and it worked then, it works now and will work in the future. The thing is that Price Action is based on logical principles that work outside the market. At the same time, do not forget about the losses that are inevitable. Price Action is not the holy Grail. You must be disciplined, be able to correctly understand and use the signals that Price Action gives. Even the best traders have unprofitable positions, while professionals do not allow losses to destroy the entire account. Moreover, profitable positions cover losses, after which there is still money for life! 3. Candles and Price Action Many beginners, having studied the Price Action patterns a little, having learned the candlestick formations, run to trade and lose money. Price Action is not only candle formations, the main strength of Price Action is reading the entire chart and understanding the situation, understanding how the price moved before, how it is moving now and what is likely to happen in the future. You must learn to feel the mood of the market, not be afraid to look at the older timeframes, be able not to lose sight of the big picture. It is the poet who advises trading on higher timeframes in order not to lose sight of the movement of the main trend. 4. Persistence in trading Forex trading is not the easiest activity that requires you to improve yourself every day. If you decide to really become a profitable trader, you will inevitably begin to develop the best in yourself and destroy the worst. Trading will make you a disciplined, stressful person. You will treat losses correctly so that they do not lead you astray. You will take the time to plan not only your transactions in the market, but also your life in general. You will have to start doing all this, because otherwise you will not be successful in this business. Trading is a test of your stamina and mental capabilities. YOU should not go crazy with losses and should not lose your head when making a profit. You should not doubt your strategy at losses, you should analyze. Without all of the above, trading can destroy you and your account. Do work on mistakes, rest when you feel that you are losing control of the situation, develop and analyze removing harmful emotions away. You have to treat trading as a real job – seriously and responsibly, and then you will stop losing and start getting. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
14
Trader's DiaryHello everyone Today we will talk about what most traders avoid and underestimate - Trader's Diary. Traders believe that the Trader's Diary is a waste of time, but in fact the Trader's Diary directly affects the trader's income. Why keep a trader's diary? If you keep a diary honestly and impartially, over time you will gain a lot of statistics of inputs, outputs and emotions experienced when trading. This is a useful database that will help identify weaknesses and recurring errors, helping to fix and not repeat them again. What should I write in diary? Date and time of the signal occurrence. The chart at the moment of entering the market , for clarity, you can make notes justifying the actions of the trader. If the work is done on graphical analysis, then markup is needed. The result of trading. Regardless of whether the trade is closed by take profit, stop or ahead of schedule manually, it is advisable to attach a chart. Comment. The trader's thoughts on entering/exiting the market are briefly indicated here. It is advisable to record emotions, for example, "the signal complies with the rules, but there is a feeling that it is not worth entering" or "the graph has not reached the Fibo level a little, the volume has been reduced". This is the necessary minimum. You can also add the following items to the report: Maximum drawdown as a percentage and in the deposit currency. Volume. The state of capital after the position is closed. The duration of keeping the transaction open. Losses due to swap, spread. How not to keep a journal The key violation of the rules when keeping a diary is a frivolous attitude towards it. If you keep a journal only to comply with a formality, then it will not be of any use. With this attitude, important information concerning psychology and emotions is guaranteed to be missed. If a trader is lazy, does not accompany transactions with illustrations of the state of the market, forgets to make part of the transactions, the value of the report decreases. Analysis of trade and your emotions at the entrance When analyzing trading, the most difficult thing is to give your actions a sober assessment. If, for example, you put out a limit order in violation of the strategy rules, and this caused a loss, you do not need to explain your blunder by external factors. That is why it is extremely important at the time of entry to indicate not only the technical characteristics of the transaction, but also emotions. Nobody will control the correctness of keeping a diary, you need to learn this yourself. As for the analysis, after accumulating an array of statistics, first of all look for emotional losing trades. This is one of the most common mistakes of traders. I recommend starting the optimization of trading with this. Resume A trader's diary is a tool that indirectly affects the results of trading. It teaches you to work in a measured manner with a clear assessment of each entry point. Keeping a diary allows you to eliminate the emotional component from trading over time, and thereby improve results. I recommend getting used to keeping a journal from the very beginning, entering information on all transactions into it. Regular analysis will show weaknesses in trading, it remains only to eliminate them and continue trading. To facilitate the task, you can use auxiliary services that collect an array of statistics in automatic mode.
Education
by DeGRAM
4
TOP 5 CURRENCIESHello! Today we will discuss the five most popular currencies. Currently, there are 180 currencies in active circulation in the world. Most of the transactions made in the foreign exchange market are made using only about half a dozen of these currencies. If you are familiar with the Pareto principle, then it applies very well in the real world. This article will provide you with an overview of the currencies currently dominating the foreign exchange market. The five most traded currencies in Forex are listed below, with reasons for their popularity: * US dollar: The dominance of the US dollar as a currency is undeniable. In truth, this currency has no serious competition. Such popularity is due to the long-term stability of the government and the economic dynamism of the United States. It has a very stable value due to the fact that it is not greatly affected by inflation over a long period of time. Many foreign governments literally hold on to dollars as a reserve currency, mainly because that currency is used for international transactions. Needless to say, the US dollar is on a pedestal and its status as a currency is unparalleled – or rather, not yet. * Euro: The US dollar as the main currency definitely needs a second currency. Surprisingly, this currency is one of the youngest, and it is considered the official currency from Finland to Portugal and from Slovakia to Slovenia. The Euro is the next most traded currency among all currencies in the world. Currently, there are about 500 million people in Africa and Europe who use this currency for trade. The value of the euro is likely to increase over time. *Japanese yen: The Japanese yen has become so important nowadays because its value has tripled. Because of this, Japanese firms have taken advantage to acquire several procurement-related positions from many institutions in the United States. Through these developments, the yen has gradually become one of the most important currencies used in the foreign exchange market. * British pound: The pound sterling has lost some of its glory. Decades ago, it was the second most widely used currency, but with the decline of the British Empire and the rise of the euro, the pound fell by the wayside. Today, the pound is used in only 6% of all foreign exchange transactions. If you're wondering why the pound suddenly dropped to number four, the best answer is that it's in a relative vacuum. The United Kingdom government has fixed its price against the dollar, and this is not good, because it no longer reflects the real value of the currency. * Australian dollar: This currency was created in 1966 as a replacement for the now obsolete Australian pound. Since then, it has become one of the most popular reserve currencies circulating throughout Oceania and the Asia-Pacific region. Gradually, it has become one of the most preferred currencies for trading. conclusions In the 21st century, foreign exchange is moving towards diversity. Investors pay attention to the stability and volatility of the currency. In addition, the reputation of the economy and the security of the state matter in the selection process. Finally, another factor that is taken into account is the extent to which the currency is used. Due to the high volatility, trading these pairs is faster, which can help you quickly win big or lose everything quickly. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
41
Forex Trader Career: Pros and consForex trading, which is often perceived as an easy career for making money, is actually quite difficult, although very exciting. Due to high liquidity, round-the-clock schedule and easy accessibility, Forex trading has become a popular profession, especially for people with financial education. Being your own boss and comfortably earning money using a laptop/mobile phone when it's convenient for you is sufficient motivation for both young graduates and experienced professionals to consider Forex trading as a career. Advantages of a Forex trader's career There are several advantages that a career as a forex trader, also known as a currency trader, gives. They include: Low costs Forex trading can have very low costs (brokerage services and commissions). In reality, there are no commissions – most forex brokers profit from trading stocks or other securities, where the brokerage structure varies greatly, and the trader must take into account such commissions. Suitable for different trading styles In the foreign exchange market, work all day, which allows transactions in its convenience, which is very beneficial for short-term traders who, as a rule, take positions for a shorter period of time (say, a few minutes to several hours). Few traders make trades outside of business hours. For example, daylight time in Australia is night time for the east coast of the USA. A trader from the United States can trade Australian dollars during business hours in the United States, since no significant developments are expected and prices for the Australian dollar are in a stable range during such non-business hours. Such traders use trading strategies with large volumes and low profits. They are trying to make a profit on a relatively stable duration of low volatility and compensate for this with large volumes of transactions. Traders can also open long-term positions, which can last from several days to several weeks. Thus, Forex trading is very convenient. High liquidity Compared to any other financial markets, the forex market has the greatest amount of price manipulation and price anomalies, thereby providing narrower spreads, which leads to more efficient pricing. There is no need to worry about high volatility during the opening and closing hours or about stagnant price ranges in the afternoon, which are typical for stock markets. If no major events are expected, similar price patterns (high, medium or low volatility) can be observed throughout continuous trading. There is no central exchange or regulator Since it is an over-the-counter market operating worldwide, there is no central exchange or regulator for the forex market. Central banks of various countries from time to time intervene as necessary, but these are rare events that occur in extreme conditions. Most of these developments are already perceived and evaluated by the market. Such a decentralized and deregulated market helps to avoid sudden surprises. Compare this to stock markets, where a company can suddenly declare dividends or report huge losses, which will lead to huge price changes. Such deregulation also helps to reduce costs. Orders are placed directly with the broker, who executes them independently. Another advantage of deregulated markets is the ability to open short positions, which is prohibited for some security classes in other markets. Volatility is a trader's friend Major currencies often exhibit strong price fluctuations. If trades are placed wisely, high volatility opens up huge opportunities for profit. Variety of pairs for trading There are 28 major currency pairs involving eight major currencies. The criteria for choosing a pair can be a convenient time, the structure of volatility or economic development. A forex trader who loves volatility can easily switch from one currency pair to another. Low capital requirements Due to the narrow spreads in points, it is easy to start trading on the foreign exchange market with a small initial capital. Without additional capital, it may be impossible to trade in other markets (for example, in the stock, futures or options markets). The availability of margin trading with a high leverage ratio (up to 50 to 1) is the cherry on the cake for Forex transactions. Although trading with such a high margin comes with its own risks, it also makes it easier to get more potential profits with limited capital. Ease of entry There are hundreds of fundamental analysis for long-term forex trading, which gives traders with different levels of experience a huge choice for quick entry into forex trading. Disadvantages of a Forex trader's career Lack of transparency Due to the deregulated nature of the forex market, which is dominated by brokers, they actually trade against professionals. Working with brokers means that the forex market may not be completely transparent. A trader may not have any control over how his trading order is executed, may not get the best price, or may have limited views of trading quotes provided only by his chosen broker. A simple solution is to deal only with regulated brokers that fall under the competence of broker regulators. The market may not be under the control of regulators, but the activity of brokers is under control. Comprehensive pricing process Forex rates depend on many factors, primarily global politics or economics, which can be difficult to analyze information and obtain reliable conclusions for trading. Most of the trading in the foreign exchange market takes place using technical indicators, which is the main reason for the high volatility in the foreign exchange markets. Incorrect technical assessment will lead to a loss. High risk, high leverage Forex trading is available with a high leverage, which means that it is possible to make a profit/loss many times exceeding the trading capital. Forex markets allow a leverage of 50:1, so you need to have only $ 1 to open a currency position worth $ 50. While a trader can benefit from leverage, the loss increases. Forex trading can easily turn into a nightmare with losses if a person does not have a clear knowledge of leverage, an effective capital allocation scheme and strong control over emotions (for example, willingness to reduce losses). Independent learning In the stock market, a trader can seek professional help from portfolio managers, trading consultants and account managers. Forex traders are completely on their own, with almost no help. Disciplined and continuous self-study is a prerequisite throughout your trading career. Most beginners leave at the initial stage, primarily due to losses incurred due to limited knowledge about Forex trading and improper trading. High volatility Having no control over macroeconomic and geopolitical events, it is easy to incur huge losses in an extremely volatile foreign exchange market. If something goes wrong with a certain stock, shareholders can put pressure on management to initiate the necessary changes, or they can turn to regulatory authorities. Forex traders have nowhere to go. For example, when Iceland went bankrupt, traders owning the Icelandic crown could only watch. Round-the-clock markets make it difficult to regularly monitor prices and volatility. The best approach is to set strict stop losses for all Forex trades and trade systematically using a well-planned approach. conclusion Forex trading has many pros and cons. You can easily earn large sums and just as easily lose them. The market has a great history, and you can learn how to make a profit on forex. The main question is whether everything that the market is ready to give is suitable for you?
Education
by DeGRAM
5
TRAILING STOPWhat is trailing stop? A trailing stop is a modification of a typical stop order that can be set to a specific percentage or dollar amount of the current market price. A trailing stop is designed to protect profits by allowing the trade to remain open and continue to make a profit as long as the price moves in the investor's favor. The order closes the trade if the price changes direction by the specified percentage or dollar amount. Understanding the trailing stop Trailing stops only move in one direction because they are designed to lock in profits or limit losses. If a trailing stop loss of 10% is added to a long position, a sell trade will be placed if the price drops 10% from its post-buy peak price. The trailing stop moves up only after a new high has been established. Once a trailing stop has moved up, it cannot go back down. A trailing stop is more flexible than a fixed stop loss because it automatically tracks the direction of a stock's price and does not require manual reset like a fixed stop loss. Trailing Stop Trading The key to successfully using a trailing stop is to set it at a level that is neither too narrow nor too wide. Setting a trailing stop loss that is too tight can mean that the trailing stop is triggered by normal daily market movement, and thus there is no room for the trade to move in the trader's direction. A stop loss that is too short will usually result in a losing trade, albeit a small one. A trailing stop that is too large does not work in normal market movements, but it means that the trader is taking on the risk of unnecessarily large losses or forgoing more profit than he needs. Although trailing stops lock in profits and limit losses, setting the ideal trailing stop distance is difficult. There is no perfect distance because markets and the way stocks move are constantly changing. Despite this, trailing stops are effective tools and, like every other method, there are pros and cons here. Real world example Let's say you bought Alphabet Inc. (historically pulls back 5-8% before moving up again). These previous moves can help set the percentage level that will be used for the trailing stop. Choosing 3% or even 5% can be too difficult. Even minor retracements tend to move more, meaning the trade is likely to be stopped out by a trailing stop before the price can move higher. Choosing a trailing stop of 20% is overkill. Based on recent trends, the average pullback is around 6%, with larger ones around 8%. A trailing stop loss of 10% to 12% is better. This gives the trading space room to move, but also quickly takes the trader out if the price drops more than 12%. A 10% to 12% drop is larger than a typical retracement, which means something more significant could be happening – basically, it could be a trend reversal, not just a pullback. Using a trailing stop of 10%, your broker will execute a sell order if the price drops 10% below your buy price. It's 900 dollars. If the price never rises above $1,000 after buying, your stop loss will remain at $900. If the price hits $1,010, your stop loss will move to $909, 10% below $1,010. If the share price rises to $1,250, your broker will execute a sell order if the price drops to $1,125. If the price starts to fall from $1250 and doesn't come back up, your trailing stop order remains at $1125 and if the price drops to that price the broker will place a sell order on your behalf. The ideal trailing stop loss will change over time. In more volatile periods, it is better to use a wider trailing stop. During quieter times or when the stock is very stable, a tighter trailing stop loss may be effective. However, once a trailing stop loss is set for an individual trade, it should be left as is. A common trading mistake is to increase the risk of a trade one time to avoid losses. This is called loss aversion and can quickly take a trading account down. Results Trailing stop is a very useful tool if you know how to use it. The tool can help you keep your profits on days when you can't follow the price and move the normal stop yourself. Adding such a useful tool will help improve your strategy and increase your profits. But do not forget about the correct setting of the trailing stop, the values ​​of which will be different for each instrument. To more accurately determine the values ​​for the trailing stop, it is worth knowing the average daily movement of the instrument, as in the example above. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
5
FOREX TIMEFRAMESMost technical traders have come across the concept of multiple time frame analysis in their market education. However, it is a well established chart reader. Many market participants miss the larger trend, miss clear support and resistance levels, and miss entry and stop levels because they don't analyze the higher timeframes. Multiple Time Frame Analysis Multiple time frame analysis involves monitoring the same currency pair on different time frames. As a general rule, using three different periods gives a fairly broad view of the market, while using fewer can result in significant loss of data, and using more often provides overanalysis. When choosing three time frames, a simple strategy might be to follow the "rule of four". This means that you should first determine the medium-term period in which the trader is going to trade. From here, a shorter time frame should be chosen, which should be at least one-fourth of the interim period. Using the same calculation, the long-term timeframe must be at least four times larger than the intermediate one. In the long term, the current trend will be determined, in the short term, the ideal entry point, and the medium term will indicate how long you can hold the position and where the targets are. When choosing a range of three periods, be sure to select the correct timeframe. A long-term trader does not need to follow a minute chart, and a short-term trader does not need to follow a monthly one. Long term time frames With this method of studying charts, it is generally best to start with long-term time frames and move on to more detailed frequencies. Looking at the long term time frame, a dominant trend is established. Long-term price movement is influenced by fundamental data that a long-term trader should take into account in the analysis. It is important to consider interest rates, which are a major component in the pricing of exchange rates. Medium term time frames This is the most versatile of the three because at this level one can gain insight into both short and long term time frames. In fact, this level should be the most commonly used chart when planning a trade when a trade is active and when a position is approaching either its target profit or stop loss. Short term time frame As the smaller price action swings become clearer, the trader can better choose an attractive entry for a position whose direction is already determined by the higher frequency charts. Another consideration for this period is that the fundamentals again have a strong influence on the price movement on these charts, although in a very different way than for the higher time frames. Fundamental trends are no longer visible when the charts are below the four hour frequency. Instead, short-term time frames will react with increased volatility to the news. Often these jerky movements last for a very short time and as such are sometimes described as noise. Putting it all together When all three timeframes are combined to evaluate a currency pair, a trader will easily increase the chances of success for a trade, regardless of other rules applied to the strategy. Performing a downward analysis helps to trade with the trend. This alone reduces risk as there is a higher chance that the price action will eventually continue in the direction of the longer trend. Applying this theory, the level of confidence in a trade should be measured by how the time frames match up. For example, if the larger trend is up and the medium and short-term trends are moving down, cautious shorts should be entered with reasonable profit targets and stops. Alternatively, a trader can wait until the bearish wave ends on the smaller charts and try to go long at a good level when the three timeframes realign. Another obvious benefit of including multiple timeframes in trade analysis is the ability to identify support and resistance values, as well as strong entry and exit levels. The chances of a trade being successful are increased when it is tracked on a short-term chart due to the trader's ability to avoid bad entry prices, misplaced stops, and/or unreasonable targets. essence Using multiple timeframe analysis can greatly increase the chances of a successful trade. Unfortunately, many traders ignore the usefulness of this method when they start trading. As we have shown in this article, it may be time for many novice traders to return to this method, because it is the easiest way to know the direction of the trend and not go against it.
Education
by DeGRAM
8
Forex scalpingHi all! Today I want to talk about scalping. What is scalping? Scalping is the style of buying or selling currency pairs over a short period of time in an attempt to make a series of quick profits. A forex scalper aims to make a large number of trades using the small price movements that are common throughout the day. Understanding Forex scalping Forex scalpers usually use leverage, which allows them to open larger positions, so that a small price change equals a solid profit. Forex scalping risks Like all trading styles, Forex scalping comes with risks. Even if you risk a small amount on a trade, taking many trades can mean a significant drawdown if many of those trades end up losing money. This is a viable system, but sometimes a trader cannot exit due to a five pip loss. The market can drop through the stop loss point and they end up with a loss of 20 pips. Thus, they lose four times more than they expected. Some of these slippage scenarios can quickly deplete an account. Special Considerations Forex scalpers require a trading account with tight spreads, low commissions and the ability to place orders at any price. If the spread or commissions are too high, or the price at which a trader can trade is too limited, the chances of a forex scalper being successful are greatly reduced. Who is scalping for? Scalping may not be suitable for all traders. The profitability of each position opened by the scalper is usually small, and the profit is achieved by adding up the profit from each closed small position. The scalper must be able to wait until his labor brings profit. To become a successful Forex scalper, you need endurance, attentiveness and discipline. Scalping requires a lot more time and attention from the trader compared to other trading styles such as swing trading or trend following. A typical scalper opens and closes dozens of positions during a typical trading day. For some, this may be an overwhelming task, creating too much psychological stress. Advantages and disadvantages of scalping The main advantages of scalping The potential profitability of the strategy, both within one trading day and in the long term. There is no need to wait for the next trend to form in the market. You can scalp in any situation: with the trend, against the trend, in the sideways (Flat). More simplified market analysis. With the help of technical analysis and indicators, a short-term trend is assessed, fundamental factors are taken into account selectively. Suitable for trading on small deposits. Thanks to leverage, even on a small account, you can open significant positions and make a profit. The disadvantages of scalping are Difficulty in choosing the right broker. Scalping requires favorable trading conditions – minimum spreads and commissions, no critical slippage. Not every broker will be able to provide such conditions. Increased risk associated with the use of high leverage. When using leverage, even a small movement of the market against a trader can bring serious losses, so in order not to drain the deposit, it is necessary to apply risk control rules. Large expenditures of time and constant psycho-emotional stress during the trading day. The scalper makes a large number of transactions and this requires constant monitoring of the market. Such active trading consumes a lot of energy and is fraught with possible "burnout" of the trader. Limitation on the number of used trading instruments. Not all trading tools are suitable for scalping. To reduce costs with a large number of transactions, assets with minimal spreads are selected. conclusions Scalping is perhaps the most difficult type of trading that requires maximum concentration and self-control. This is because it is difficult to predict the future movement of the market, especially the Forex market. It is worth spending a lot of time to gain enough experience and trade steadily in the plus. Learn, try and you will succeed! Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
Education
by Lingrid
11
NFP REPORTSHello traders! Today I want to share with you interesting information that can bring you profit. Let's talk about NFP What is Nonfarm Payrolls? Nonfarm Payrolls (NFP) is the number of new jobs in the non-farm sectors of the economy over the past month. The released figures show the dynamics of changes (increase, decrease) relative to the previous period. These statistics cover about 500 sectors of the economy: construction, trade, business services, transport, logistics, financial sector, medicine, tourism, and so on. The calculations do not take into account workers in the agricultural sector, non-profit organizations and self-employed citizens. A change in the NFP value of 100-200 thousand jobs will lead to strong volatility in the quotes of world currencies in pairs with the US dollar, gold and stock markets. Long-term reaction to the growth of non-farms is the weakening of the US dollar against a basket of major Forex currencies; The short-term reaction is unpredictable due to a sharp jump in the rate, leading to the triggering of many pending orders and an unpredictable exit and infusion of huge amounts of money into the markets in a short period of time. Position search An example of looking for a trade setup would be to use 30 pips. It is not unusual for the EUR/USD pair to advance 30 pips within the first few minutes of the release of the report. The larger the initial movement, the better for determining the direction of the pair's movement. After the initial big move, there is usually a price pullback that signals an entry point. Using one-minute price bars, traders draw a trendline from the high of the initial move to the high of the one-minute price retracement (if the initial move was up). They buy when the price breaks above the trend line. If the initial movement was downward, then a trend line is drawn from the low of the initial movement to the low of the price retracement using the same criteria. Traders enter into a short trade when the price breaks below the trend line. Some traders like to wait 5 price bars before plotting a trendline, while others may have experience telling them less or more is better. It also helps to place a stop loss in case the price bar chosen was not the actual price pullback low. If a trader is using the 5 price bar method, then a stop loss should be placed one pip below the low of that move if a long trade is taken. If a short trade was entered, then the stop loss should be placed one pip (plus the size of the spread) above the high formed on the movement of 5 price bars. Profit target To determine an exit position, or profit target, traders use the difference between the opening price and the initial move. The difference is divided in half. The target price is this number. For example, if the initial move was 115 pips, then the profit target would be 57.5 pips. Risk Only enter a trade if your profit potential is at least 1.5 times your trading risk. Ideally it should be 2x or more. In the examples above, the profit potential is about 3 times the trading risk. Don't forget about risk control. Do not risk more than 1% of your capital. Practice Before Using the Method It is impossible to describe how to trade all possible variations of the strategy that may arise. That is why it is recommended to use the strategy on a demo version before real trading. Understand the principles and the reasons why they exist, so that if conditions are slightly different on a given day, you can adapt and not be bombarded with questions. If a profit target seems too bold, use a 3:1 reward/risk ratio target. The goal is to place the target in a logical and reasonable place based on the trend and volatility. The profit target method helps with this, but it is only a guide and may need to be adjusted slightly depending on the conditions of the day. EUR/USD will not behave exactly the same after every NFP report, so it will take some practice to see how these trade setups play out and be fast enough to jump in and trade them. Practice the strategy on a demo account until you show total profit after trading at least five NFP reports. Only then can you consider trading this strategy with real money. conclusions News trading is not easy. During such a period, the price moves quickly. It is worth gaining enough experience to confidently trade on the news, so it is recommended to practice on a demo account. Control the risks, follow the strategy and the profit will come to you. Good luck!
Education
by DeGRAM
3
GOLD PRICEHello! In difficult times, investors become interested in gold, as has been done for a long time. But what factors affect the price of gold? Let's try to find out today. Reserves of the Central Bank Central banks hold fiat currency, but gold is also held in reserve. Ever since the US went off the gold standard, central banks have been building up their gold holdings. Overall, governments bought a total of 650 tons of gold in 2019, down from the 656 tons bought in 2018, and still at 50-year highs. US dollar value The strength of the dollar affects the price of gold. If the dollar is strong, then the price of gold is usually low. If the dollar is weak, the price of gold rises. As a result, gold is often seen as a hedge against inflation. As inflation rises, so does the price of gold. Global demand for jewelry and industry In 2019, jewelry accounted for more than half of the demand for gold, which was equal to 440 tons. In addition, 7.5% of demand is related to technology and industry, where gold is used to make equipment. These directions, their growth or decline, strongly influence the price of gold. Welfare Protection In times of crisis, gold has always been considered a "safe haven" for investors' funds. Time passes and gold is still being used, and even the arrival of bitcoin has not changed the situation much. When the expected or actual yields of bonds, stocks and real estate fall, interest in investing in gold may increase, causing its price to rise. In addition, it is believed that gold provides protection during periods of political instability. Investment demand In addition to the central bank, gold is owned by exchange-traded funds that issue shares available for purchase and sale to investors. SPDR Gold Trust (GLD) is the largest holding over 1,078 tons of gold in March 2021. In general, gold purchases from various investment vehicles in 2019 amounted to 1271.7 tons, which is more than 29%. of the total demand for gold. Gold production Major players in global gold mining include China, South Africa, the US, Australia, Russia and Peru. The production of gold in the world affects the price of gold, which is another example of supply and demand being met. The mine's gold production was approximately 3,260 tons in 2018, up from 2,500 in 2010. Every year it is more and more difficult to mine gold, and this also affects the price. conclusions Gold, after several centuries, is still used not only as jewelry, but also for investment. Every year, the price of production is growing, banks are accumulating gold in their reserves, crises and other factors are raising the price of gold. Using the data, you can predict the rise or fall of prices. In any case, nothing more expensive than information has yet been invented. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
Education
by Lingrid
11
8 MYTHS ABOUT TECHNICAL ANALYSISThere are many people and many opinions in the market. There are those who criticize technical analysis, calling it superficial and even useless. There are those who consider technical analysis (TA) the holy grail that can bring huge profits. Today we will try to debunk 8 myths about technical analysis. myths 1. TA is for short-term trading or day trading only. Many people think that TA is only suitable for short-term and computer-driven trading, such as day trading and high frequency trades. The history of TA actually goes back long before computers were invented, and many famous and profitable traders use it for long-term trading. Technical analysis is used by traders on all timeframes, from minutes to weeks and months. 2. Only individual traders use technical analysis. In fact, investment banks have dedicated trading teams that use technical analysis. High-frequency trading, which covers a significant portion of the trading volume of stock exchanges, relies heavily on technical concepts. 3. TA has a low success rate. To debunk this myth, all you have to do is read Masters of the Market: Interviews with Top Traders by Jack D. Schwager, which quotes many traders who profit solely from technical analysis. Traders with many years of experience have been making profits using technical analysis for more than a century. 4. Technical analysis is fast and easy. Novice traders open trades based on a simple TA, but this is not enough to be profitable at a distance. Success depends on continued study, practice, good money management and discipline. Technical analysis is just a tool, just one piece of the puzzle. 5. Ready-made technical analysis software can help traders make money easily. There are a lot of advertisements on the Internet that promise to give you a program for a small amount that will do everything for you and bring you profit - in fact, this is a scam. There are programs and indicators that can help you trade, but no program will give you guaranteed profits. 6. Technical indicators can be applied to all markets. Most often, yes, TA can be applied in all markets, but there are exceptions. Different asset classes move in their own way, with their own characteristics, and a trader must be able to adjust his TA for a particular asset. Don't make the mistake of applying technical indicators designed for one asset class to another. 7. Technical analysis can give very accurate price predictions. Beginning traders expect to see 100% accurate signals and accurate profit prices, reversals and so on from TA. This is simply impossible. Most often, TA helps to find the zone where the price can go, where it can reverse from and this is not a specific point, this is a zone and experienced traders understand this. 8. The winning percentage in technical analysis should be higher. If the first trader out of 5 made 4 profitable trades, and the second trader out of 5 made 1, who is more successful? You need to get more information to give an answer, it may be that the first trader earned $ 10 in 4 trades, but at the same time he lost $ 80 in one and then he will be in the red, and the second trader lost $ 40 in 4 trades , while in one transaction he earned $ 100. The right trading structure ensures profitability even with a small number of winners. It is not necessary to have many profitable trades, it is enough that the profit covers losses and something else remains, and sometimes one trade is enough for this. essence Technical analysis is not the holy grail, it will not give you 100% profit. It does not suit everyone and you need to study it before you understand whether it suits you or not. You need to gain enough experience to learn how to use technical analysis correctly. When used correctly, TA can give you a real opportunity for trading success. Good luck!
Education
by DeGRAM
7
Forex Fundamental AnalysisHello! Today I want to talk about a topic that is rarely discussed, but important at the same time - fundamental analysis of the forex market. News, GDP, interest rates - all this affects the market and everyone needs to be able to understand this. What is fundamental analysis Forex fundamental analysis is a way of analyzing a currency, making predictions based on data that is not directly related to price charts. There are two types of influence of fundamental indicators on the price : Short term. Fundamental information has an impact on the market within minutes or hours. Long term. Fundamental factors, the impact of which on currencies lasts from 3-6 months. Used for strategic positions. Several basic levels are used for conducting FA. The level of the national economy. Comprehensive analytics of economic and political indicators of the country. Industry. The volumes of supply and demand, prices, technologies, as well as production parameters are studied. Individual currency level. Financial statements, management technologies, business strategies, competitive environment are assessed. The classical scheme of fundamental analysis looks like this : An analysis of global financial markets, the presence of signs of a crisis and force majeure events, an examination of the situation in the economy and politics of the leading world powers is carried out. Economic indicators and the general level of stability of the region (industry), the analyzed currency or other instrument are assessed. The degree of influence of regional and world economic indicators on the dynamics of the selected financial instrument in the short and medium term is determined. Main fundamental factors When using FA directly to open trading positions, the following points will be decisive (in descending order of importance) : Interest rates of central banks (CB). Macroeconomic indicators. Force majeure situations, market rumors, news. Central bank rates According to the theory of macroeconomics, increasing interest rates cause currencies to rise in price, while falling interest rates make them cheaper. However, there are situations in the Forex market in which a decrease in the rate becomes the reason for the strengthening of the currency. Foreign exchange market interventions Currency interventions are an important tool in the analysis. Central Banks resort to such a measure very rarely, but you should not ignore this phenomenon. Macroeconomic indicators For any country without exception, there are data of constant importance: the level of GDP; inflation rate; trade balance. These reports are expected by the market. The approach of their publication dates gives rise to a lot of rumors that fuel the trading frenzy. Such an environment often creates situations in which the release of specific numbers does not cause almost any reaction, since the market has already beaten them in advance. However, as FA practice shows, this happens only when the existing trend is not subject to change. In the case when the published data differ significantly from the forecast, the market response can be very violent. This is especially true of the moment of the general reversal of the current trend. Important macroeconomic indicators In simple words, a macroeconomic indicator is expected news, showing up-to-date data on the main indices of the financial and economic state of the state. The advantage is that each trader can know in advance the moment of release of any data from the economic calendar. These indicators affect the rate in the short term and are suitable for trading on medium and short term timeframes. Types of macroeconomic indicators Trade balance. This indicator reflects the volume of exported goods to imported ones. A positive balance is called when exports are higher than imports. Assumes a strengthening of the exchange rate, due to the fact that rising exports increase the demand for the national currency of the exporting region. Discount rate of the National Bank. On its basis, interest rates on deposits and loans are formed. When the national bank rate rises, the currency strengthens; when it falls, it weakens. Gross domestic product. The volume of GDP is obtained by summing up the entire range of services and goods that were produced in the country per capita. However, an increase in GDP always leads to the strengthening of the national currency against other currencies. Inflation. The growth of this indicator leads to the depreciation of the national currency. Unemployment Rate. As a rule, an increase in the indicator is followed by a decrease in output, an increase in inflation and a negative change in the trade balance. For this reason, the data on unemployment has a strong pressure on currencies, and an increase in the figure causes a depreciation. Macroeconomic indicators One of the most common mistakes in trading is trying to trade on weak news. Therefore, you need to understand which data pertains to you. Macroeconomic indicators One of the most common mistakes in trading is trying to trade on weak news. Therefore, you need to understand which of the data are important. Important market data includes : money supply; balance of payments deficit (Balance of Payment Deficit); trade balance deficit (Balance of Trade Deficit); unemployment rate (Unemployment Rate); a significant fall or rise in the rate of inflation (Rate of Inflation); fluctuations in the volume of GDP; change in key rates; emergencies (natural disasters, unexpected events in politics or Second stage of analysis An assessment of the numbers predicted in the calendar for future data. Analysis of the market reaction to this event. This is done in order to understand the price behavior at the news release. For example, when the exchange rate of a currency dependent on news is growing steadily even before the release of figures and at the same time positive data is predicted, one should not expect sharp fluctuations in the exchange rate at the time of the release of the information. And if the forecast turns out to be wrong, then the market can react with a powerful reversal of the current trend. Decision-making. There are two options for entering a trade. The first is to use the situation to open an order on the current trend before the release of the news with constant trailing stops to protect the position. The second is to wait for the release of the data and make trading decisions according to the situation. Results Fundamental indicators certainly affect the price, but each in its own way. It is worth remembering this and not running to open a position just by seeing some news. Analyze, try to understand the possible reaction of the market to the news. Use all the information, be objective and then you will be better than most. Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
Education
by Lingrid
45