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
Monday, 10 October 2016
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
Greed vs Loss: How Take Profit Levels Can Help
The forex market moves fast — and so do emotions.
It can be difficult to separate your emotions from forex trading entirely; as everyone gets a little stressed when a trade is going poorly and a little too aggressive when a trade is going well. This is human nature. Your trading plan can quite easily be disrupted and turn into a battle of greed versus loss.
This is why take profit levels are vital. Take profit levels are often incorporated into forex strategies in order to defeat the natural human inclination to allow a trade to ride when it is performing well. Many traders will feel as though it’s best to wait while a trade continues to take the most amount of profit possible. But this can also lead to a situation in which profit is actually lost because of a sudden downturn.
Try reading: When to Demo Trading to a Live Account
Here’s everything you need to know about how take profit levels can help…
Setting Up Different Take Profit Levels
You may know what a “take profit” is, but what is a take profit level?
When you set a take profit, you set a specific price at which the trade should close. This is used to capture your profit automatically the second that the price hits that number. A take profit level is the price level at which a take profit action occurs. Take profit levels are multiple, staggered levels that are used to control a trade.
A single currency trade may have multiple take profit levels — usually done by creating multiple trades in the same direction. For instance, there may be a take profit action set at every increase at 20 pip intervals. These take profits are designed to capture profit as quickly and reliably as possible. The first take profit level will generally be initiated quickly, making the trade profitable early on.
Take profits are generally mixed with stop losses as well, so that there is more room for profit and less room for loss. All of this creates a reliable trade management strategy that completely removes emotion from the equation.
The Emotional Benefits in your Trading
Forex strategies need to be consistent if they are to be profitable. That being said, every trader occasionally has an emotional moment, during which they may either close a trade early or let it ride.
If you have an inconsistent trading strategy, there’s no way to improve upon it. Though you may be able to make money short-term, you won’t know what portion of your strategy is actually working or not. Eventually you will find that your strategy turns; it’s impossible to maintain consistent results with inconsistent trading.
Take profit levels completely remove the potential for an emotional impact on trading. Rather than having to make a snap decision regarding when you will take profit on a trade, it will already be set for you — all you need to do is avoid deviating from the plan and changing the trade itself. In fact, with the appropriate take profit and stop loss levels set, you don’t even need to manage your trading; you simply need to initiate new trades and work towards an even more profitable trading strategy.
The Market Benefit of Take Profit Levels
Take profit levels aren’t just about your emotional status. Some traders aren’t emotional and are more than able to control themselves when they’re dealing with the forex market. But there are some things that are simply beyond human ability.
Tracking the forex market in real-time can be one of these things.
The forex market changes very quickly and this can be even more true if you’re trading a currency pair during a time of particularly high volatility. It’s possible that a level of profit could be hit upon very suddenly and then lost entirely thereafter; in other words, the market can spike suddenly and then retreat.
If you’re relying upon your own reflexes, you’ll need to watch the market constantly and you’ll have to be able to react very quickly to the market change. You could potentially miss your chance and a profitable trade could become a losing one.
This can be avoided through the use of a take profit of course.
A take profit will capture your profit even if the take profit amount is only held for a brief moment. You won’t need to watch the market or your account 24/7; instead you’ll be able to trust that the trade will close exactly when you want it to.
A take profit level also enables you to use far more complex strategies. It can be impossible to track multiple currency pairs and multiple take profit levels, which means that you may have to take profit only once if you’re relying on yourself to close the trade.
By setting automated take profit levels, you streamline the forex marketing monitoring process and take the burden off of yourself.
Identifying Your Take Profit Levels
How do you determine which take profit levels you use?
It differs for each strategy. Most take profit levels are staggered, with three to four take profit levels focused on the lower limit and upper limit of what you believe the currency pair will hit. But the analysis that is generally used to determine a take profit can be quite complex, based on a variety of key performance indicators and strategies.
For instance, in a support and resistance strategy, the take profit may be set a little above the current market price, a little under the resistance price, and in between. This would secure profit just as the trade moved upwards and as the trade met its resistance price — in addition to the area between these two. Even if the trade never met its resistance price, at least two of the take profits may still be initiated. The stop loss would then be set to still ensure a profitable trade even in the event that this occurred.
See our guide on choosing a trading strategy for help.
Of course, it’s very difficult for traders — both new and accomplished — to determine their own take profit levels, even if they are very knowledgeable about analysis and strategy.
This is where forex trading signals often come in…
Live forex trading signals tell the trader exactly how to initiate their trade, including which take profit levels and stop loss levels they should use. These signals use a significant amount of analysis and past market behavior to determine the way that the currency trade will likely go. They are able to use their algorithms to find the most profitable trades, which includes both take profit levels and stop losses.
For many traders, live forex signals are the best way to trade without having to invest a significant amount of time into the process.
To put it simple, Use Take Profit Levels!
Regardless of what technical analysis and what strategy a trader may be using, take profit levels are an intelligent way to trade.
A take profit level ensures that the investor will be able to capture profit according to their plan. Many trading signals incorporate take profits for just this reason. Take profit levels free up an investor to step away from the computer and to trust that their trades are being closed as they should be.
Avoid the temptation of emotional and irrational trading by not engaging in the battle of greed versus loss. Start using take profit levels in your trading from today.
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Placing Take Profits is equally important as placing Stop Loss,
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