These are could influence in exchange rates although
trade what you see not what you think.
You can only trade what the market gives you.
What would you like to add?
You can also find more infographics at Visualistan
Showing posts with label Education. Show all posts
Showing posts with label Education. Show all posts
Tuesday, 11 October 2016
Monday, 10 October 2016
Too Late to Learn?
Trading does not have an age limit to learn to trade
as long as you 're willing to learn you can,
what's your excuse?
Source: Imgur
Sunday, 9 October 2016
The Importance of Forex Regulation
The Forex market is the world’s largest financial market so far. In a globalized economy, the importance of the Forex market to the everyday consumer cannot be underestimated. The rate a currency can be exchanged in the Forex market determines the price consumers pay for products, vacations, the interest rate on deposits and loans and the rate of the return of our investments. Despite the importance of the Forex market, it continues to be largely unregulated.
Forex transactions can be classified into two types – speculative and commercial. A speculative transaction is a transaction taken merely to make profit from currency moves. A commercial transaction is a transaction that is backed by underlying economic activities, such as loan to an overseas company or payment for an import.
In the Forex market, speculative transactions widely exceed commercial transactions and account for larger portion of Forex trading volumes over the years.
Online Forex trading by retail investors has expanded in the past years, with transactions contributing from about 125 billion USD to 150 billion USD in daily Forex turnover. Apart from the evident risks such as large losses due to excessive leverage and fraudulent activities, Forex investors must be familiar with the following risk factors:
Information disadvantage: Retail investors are succumbed to disadvantages in the unregulated Forex market since they do not have access to information about large commercial transactions which is available only to the big investors who dominate the market. This information lack of balance makes it harder for the average retail investor to gain advantage over the professional investors.
Heightened Volatility: The rise in speculative activity, in particular high frequency trading dominated by algorithmic trading, might result in higher currency volatility, which increases the risk of runaway losses for the small investor or trader.
While the Forex market regulation was almost nonexistent in the past years, the swift growth of Forex trading among retail investors has led to regulation by commercial bodies such as Commodity Futures Trading Commission (CFTC). The CFTC has jurisdiction over Forex transactions in the US, and it requires all Forex brokers to be registered and meet financial standards set by the National Futures Association (NFA).
The biggest risk in non-regulated Forex trading is that of fraudulent activities, which include boiler room tactics, excessive fees generated by churning trading accounts, Ponzi schemes and misrepresentation.
With almost 27,000 US traders having lost 460 million USD in Forex trading between 2001 and 2008, the growth in Forex fraud cases led the CFTC to set up a dedicated task force to deal with the problem.
Strict regulations introduced in the US IN 2010 in order to protect Forex traders have exterminated Forex fraud in the US to a large extent. However, in other countries the regulation status has remained mixed.
In Japan, the Financial Services Authority (FSA) proactively regulates Forex transactions. One of its achievements is lowering the maximum leverage that is available to Forex traders to 25:1 in August 2011, after cutting it to 50:1 the year before. In the UK and continental Europe, regulation is limited and leverage has few limits, with levels reaching as high as 200:1.
For institutional traders, local central banks regulate Forex market. However, there isn’t any global regulator for the worldwide Forex market. There are several reasons why institutional Forex regulation is necessary:
High Hedging Costs: Increased currency volatility caused by excessive speculation results higher costs incurred by corporations and other commercial players for hedging currency risks
Preventing Enrichment of a Few at the Expense of Millions: Exaggerated or unjustified currency transaction can adversely affect a nation’s economy. Even though such moves may be supported by underlying economic fundamentals in some cases, in many other cases temporary weakness in a currency can be brutally exploited by speculators, sending it into free fall. This may result in capital flight and a prolonged recession rushed by severely higher interest rates in order to defend the currency.
A regulatory levy such as the Tobin Tax may restrain wild Forex speculation by retail and institutional traders and may offset the costs of more Forex regulation. However, any suggestion to introduce regulation for the institutional Forex market is likely to meet opposition by major currency traders. As a business owner or investor, you may occasionally have a justifiable need to trade Forex to hedge currency risk for your business or investment portfolio. But be watchful of the risks of speculative Forex trading.
Do a diligence research before putting a Real Money on your Trading Broker,
what else do you want to include as a reminder?
Written by: Trading Growth
Saturday, 8 October 2016
Friday, 7 October 2016
Japanese Candlestick Charts Explained
A Japanese candlestick chart is a form of bar-chart used to plot price movements of a derivative, security, or currency over time.
Candlestick charts are believed to have been developed in the 18thcentury by Munehisa Homma, Japanese rice trader in the futures market.
In Homma’s book “The Fountain of Gold – The Three Monkey Record of Money”, which he wrote in 1755, he claims that the psychological aspect of the market crucial to trading success and that traders’ emotions can significantly influence on rice prices. In his book, he observes that this fact can be used to position oneself against the market when all are bearish, because at that specific time there is a likelihood that prices will rise (and vice versa).
Candlesticks are composed of the Real Body, which is black or white and represents the area between the open and the close, and an upper and a lower shadow (“wick” or “tail”) which illustrate price excursions above and below the real body.
The wick illustrates the highest and lowest traded prices of a security during the represented timeframe. The body shows the opening and closing trade prices. If the security closed higher than it opened, the body is white or unfilled, with the opening price at the bottom of the body and the closing price at the top. If the security closed lower than it opened, the body is black, with the opening price at the top and the closing price at the bottom.
Modern candlestick charts often replace the black or white of the candlestick body with colors such as red (for a lower closing) and blue or green (for a higher closing). In some East Asian countries such as Taiwan, China, Japan, and South Korea, the coloring scheme is reversed (red for higher closing, and green/blue for a lower closing).
A candlestick portrays the battle between Bulls (buyers) and Bears (sellers) over a given period of time.
In general, the longer the body is, the buying or selling pressure is more extreme. The longer the white candlestick is the close is further above the open. This suggests that buyers were aggressive and prices increased significantly from the opening price to the closing price.
On the other hand, short candlestick body shows less price movement and represents price consolidation. The longer the black candlestick is the close is further below the open. This suggests that sellers were aggressive and prices decreased significantly from the opening price to the closing price.
Marubozu candlesticks are candlesticks that do not have upper or lower shadows and the high and low are exactly the open or close. The name is derived from “close-cropped” or “close-cut” in Japanese. A White Marubozu indicates that buyers controlled the price action from the first trade to the last trade and is considered bullish. A Black Marubozu indicates that sellers controlled the price action from the first trade to the last trade and is considered bearish.
The upper and lower candlesticks shadows provide information about the trading session high and low.
The upper wick indicates the session high and the lower wick indicates the session low. Candlesticks with short wicks indicate that most of the trading action was close to near the open and close. Candlesticks with long wicks show that prices extended well beyond the open and close.
Candlesticks with a long upper wick and short lower wick indicate that buyers dominated during the session, and bid prices higher. However afterwards sellers forced prices down, and the weak close created a long upper shadow. On the other hand, candlesticks with long lower wicks and short upper wicks indicate that sellers dominated during the session and drove prices lower. However, buyers later bid prices higher close to the end of the session and the strong close created a long lower wick.
Spinning Tops are candlesticks that have small bodies with upper and lower shadows that are longer than the length of the body. Spinning tops signal market uncertainty. The small Real Body shows little movement from open to close, and the long shadows indicate that both bulls and bears were active during the session.
Doji Candlesticks are formed when a security’s open and close are virtually equal. Doji represents a sense of uncertainty or tug of war between buyers and sellers. Prices move above and below the opening level during the trading session, however close at or close to the opening level. This results in a standoff between bulls and bears.
Candlesticks do not show the sequence of events between the open and close. The high and the low are plotted, however candlesticks and bar charts do not show us which came first.
Written by: Trading Growth
It will be easier to read the charts,
what would you like to add on this?
Thursday, 6 October 2016
Ten Lessons I Have Learned in Working With Traders
When I sat down to write this article, I thought it would be challenging—but useful—to distill over 20 years of trading experience—and 25 years of specializing in brief therapy—into ten lessons that I have learned while working with traders (including myself!). In that time, I’ve written two books on trading and worked with dozens of professional traders at a proprietary trading firm. What has this taught me? Let’s break it down:
1. Trading affects psychology as much as psychology affects trading – This was really the motivating factor behind my writing the new book. Many traders experience stress and frustration because they are trading poorly and lack a true edge in the marketplace. Working on your emotions will be of limited help if you are putting your money at risk and don’t truly have an edge.
2. Emotional disruption is present even among the most successful traders – A trading method that produces 60% winners will experience four consecutive losses 2-3% of the time and as much time in flat performance as in an uptrending P/L curve. Strings of events (including losers) occur more often by chance than traders are prepared for.
3. Winning disrupts the trader’s emotions as much as losing – We are disrupted when we experience events outside our expectation. The method that is 60% accurate will experience four consecutive winners about 13% of the time. Traders are just as susceptible to overconfidence during profitable runs as underconfidence during strings of losers.
4. Size kills – The surest path toward emotional damage is to trade size that is too large for one’s portfolio. We experience P/L in relation to our portfolio value. When we trade too large, we create exaggerated swings of winning and losing, which in turn create exaggerated emotional swings.
5. Training is the path to expertise – Think of every performance field out there—sports, music, chess, acting—and you will find that practice builds skills. Trading, in some ways, is harder than other performance fields because there are no college teams or minor leagues for development. From day one, we’re up against the pros. Without training and practice, we will lack the skills to survive such competition.
6. Successful traders possess rich mental maps – All successful trading boils down to pattern recognition and the development of mental maps that help us translate our perceptions of patterns into concrete trading behaviors. Without such mental maps, traders become lost in complexity.
7. Markets change – Patterns of volatility and trending are always shifting, and they change across multiple time frames. Because of this, no single trading method will be successful across the board for a given market. The successful trader not only masters markets, but masters the changes in those markets.
8. Even the best traders have periods of drawdown – As markets change, the best traders go through a process of relearning. The ones who succeed are the ones who save their money during the good times so that they can financially survive the lean periods.
9. The market you’re in counts as much toward performance as your trading method – Some markets are more volatile and trendy than others; some have more distinct patterns than others. Finding the right fit between trader, trading method, and market is key.
10. Execution and trade management count – A surprising degree of long-term trading success comes from getting good prices on entry and exit. The single best predictor of trading failure is when the average P/L of losing trades exceeds the average P/L of winners.
Well, I’ve already hit ten and I have at least ten more I could jot down. Number 11 would be that successful performance mentors have content expertise in their particular domain. What I mean by that is that teachers of concert musicians themselves have experience as musicians; basketball coaches invariably have played the sport themselves. You learn trading by seeing your mentor trade and by having your mentor observe your trading. The right mentorship goes a long way toward shortening learning curves.
Figure it out: what proportion of baseball players, golfers, actresses, chess players, singers, or bicyclists can make a consistent living from their performance activities? Is trading really so much easier than those activities? The stark reality is that expertise in any performance field is the exception, not the rule, requiring dedicated practice and training. If you are emotionally prepared for the learning curve—and excited by the challenge—you are well ahead of the game. Start with finding the Three M’s: right methods, markets, and mentors. Those are the foundation of success, upon which you build skills and experience. Enjoy the journey!
Written by: Brett N. Steenbarger, Ph.D.
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Tuesday, 4 October 2016
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