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Forex-trading-signals

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 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
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