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This is a discussion on Forex Articles within the General Discussion forums, part of the Trading Forum category; Hello Article Man. Your article gives me some ideas to rectify loss in the trading. But i have one doubt. ...

          
   
  1. #121
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    Hello Article Man. Your article gives me some ideas to rectify loss in the trading. But i have one doubt. As you said some telltale signs will let us to know the Market is going to change its direction. But it is not possible at every market turns. In these cases, whether there is any alternate way to prevent our assets?

  2. #122
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    You should read really a lot of articles before choosing a broker because it's not so easy. For example, once I've chosen the wrong broker (which was AlpariUK), that company became a bankrupt and I lost all my money.

  3. #123
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    Trading Gold and Silver

    Trading gold and silver has become increasingly popular over recent years. More and more Forex brokers are offering trading in gold and silver, as well as some other precious metals such as platinum and palladium, but gold and silver take up most of the speculative interest in this category. In addition to trading precious metals virtually, there are a lot of offers available to buy and sell gold and silver bullion and take physical ownership in the shape of coins, ingots and other collectables; but this article will focus on the online trading of gold and silver.

    Precious metals such as gold and silver have traditionally been currencies themselves, falling naturally in the “Forex” category being fully replaced by fiat currency over recent decades. Unfortunately, a lot of people lose their minds a little over precious metals, especially gold, forgetting that it is just another commodity to trade. There are two main reasons why people go crazy over gold: firstly, its unique position in most human cultures as the epitome of a store of value (i.e., it is considered a “safe-haven” asset); secondly, monetarists believe that due to the global fiat currency system, one day all currencies will collapse and precious metals will become enormously valuable, which is highly questionable.

    Gold and Silver Price Behavior

    To trade gold and silver successfully, it is important to put thoughts of the commodity itself out of your mind and just focus on the behavior of its price. Gold and silver prices are traditionally quoted in U.S. Dollars, but some brokers will price it in Euros and other currencies. If you do trade these metals against currencies other than the U.S. Dollar, do keep in mind that most of the world watches it against the U.S. Dollar, so keep an eye on what is going on there.

    One of the main reasons why trading gold and silver can be more attractive than trading Forex is that these precious metals usually move in bigger increments than Forex currency pairs. The major Forex pairs typically fluctuate in value by much less and have a greater tendency to revert to mean values. For example, at the time of this writing, over the past 1,000 days the four major currency pairs move by an average of 1.00% per day, while Gold in U.S. Dollars has an average of 1.40%, while Silver is even more explosive, averaging 2.78% per day.
    It’s important to consider that commodities generally move by considerably more than currencies, but minimum trading sizes in commodities other than gold and silver are typically much larger which can cause position sizing problems for retail traders with smaller sized accounts. When it comes to long-term price movements, gold and silver beat Forex hands down: while 30% moves within a year do happen from time to time in Forex, and rarely even by a little more than that, major currencies never move like Gold and Silver do, recent years have seen a 70% annual increase in the price of gold and a near tripling (200%!) in the price of silver, each denominated in U.S. Dollars. This means that even though you might need wider stops than in Forex trading, there is often much more potential profit on the table. However, leverage offered is typically considerably lower compared to Forex currency pairs, and overnight financing charges are typically higher.

    Gold and Silver Trading Method

    If you are reading this and thinking that trend trading gold and silver is the way to go, you are probably on the right track: as with Forex currency pairs, trading in the direction of the multi-month movement in price has been a profitable strategy in recent years, although over a somewhat longer-term time frame, with the six-month trend being most predictive overall. This result is arguably distorted, however, by the fact that the precious metals have generally been buoyant against national currencies, and here we get close to the hearts of those who believe that all non-convertible, fiat currencies are inevitably eventually debased against widely accepted stores of value such as precious metals. It is certainly true that it is hard to find a strategy which has been profitable in recent history over the long-term which is based upon shorting gold and silver against currencies. Time of day, contrary to popular myth, is not especially important.

    Gold or Silver?

    Which is a better investment, gold or silver? There’s no question that gold is favored more by traders than silver. This might be a mistake, as recent years have seen even larger moves in silver than have been seen in the price of gold. While one reason for this is psychological as gold looms large as a store of value in the human imagination. Another reason could be the total spread/commission charged in these instruments by gold retail brokers. At the time of writing, most brokers offering gold and silver typically charge about 50 cents on gold, which equals about 0.04% of the price, and 2 cents on silver, which equals about 0.10% of the price. It is possible to find brokers requiring high minimum deposits with spread/commission as low as half of these amounts, but even so, they are more expensive instruments to trade than Forex currency pairs. When you consider the larger movements though, it is easy to conclude that they are still worth trading.

    Gold and silver have a high positive correlation, i.e. they tend to fluctuate in value together. To give you an idea as to how this has worked in recent years, look at the chart below showing both against the U.S. Dollar.

    Forex Articles-xagusd-d1-metaquotes-software-corp.png

    This does not mean that you should not be prepared to trade both gold and silver, but what it does mean is that you should make sure that you do not have too much of both in the same direction at the same time. For example, instead of having 1 unit of long gold and 1 unit of long silver, it would probably be better to make sure you have about 1.25 units of both simultaneously as a maximum.

    Gold and Silver Trading Strategy

    Finally, how could you build a trading strategy for these precious metals? Trend trading strategies typically have produced the best results. Well, they both tend to move fast and quite explosively, so buying new highs in strong uptrends when the price is above its level from 6, 3 and 1 months back has been a successful method, especially when using volatility rather than candle-based stops. With commodities such as these, it has been very profitable to sit back and let winning trades run and run.

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  4. #124
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    Trading

    Quote Originally Posted by Santa View Post
    You should read really a lot of articles before choosing a broker because it's not so easy. For example, once I've chosen the wrong broker (which was AlpariUK), that company became a bankrupt and I lost all my money.
    Ya thankyou for conveying this message Mr. Santa.

  5. #125
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    Which Currency Pairs Should I Trade?

    By: DailyForex.com
    Which Currency Pairs Should I Trade?

    One of the biggest mistakes made by many Forex traders is not understanding that deciding correctly what to trade, and in which direction, is 90% of the battle to turn a profit. Unfortunately, too many traders focus on trying to perfect entry methods, not realizing that if you correctly pick what is going to up today, for example, then the exact entry method you use is not going to make a major difference to your trading results. You can become an expert in picking entries on the 5-minute chart, but if you don’t pick what to trade using a broader, higher timeframe perspective, it will be of little use to you. Why do traders make this mistake, and how can they decide which currency pair or pairs to trade each day in a more intelligent way?

    Why Traders Don’t Consider Pair Selection Carefully

    Most traders are eager to start making lots of money. The way to make lots of money quickly, so they are told, is to trade using smaller timeframes – this is at least theoretically true. Traders notice that some currency pairs have lower spreads (such as EUR/USD) and think they should pick such low-spread pairs to trade to save costs. Another common reasoning is that it makes sense to trade those currencies which are most active during the trader’s preferred hours of operation. A further argument says that each currency pair has its own “personality” and you should get a lot of experience trading a few pairs so you can get to know their personalities well, and in this way, trade them more successfully.

    These considerations are both rational and truthful, at least to some extent. The problem is, that they are very far from being the most important consideration that should influence which currency pairs you trade. I learned this myself the hard way some years ago when I decided that I would day trade, the EUR/USD and GBP/USD currency pairs full time. Over several months, these two pairs barely moved, while USD/JPY took off like a rocket and provided easy money to anyone trading it. Sure, I knew the personalities of EUR/USD and GBP/USD very well, had a great strategy which had worked extremely well on these pairs for years, and their hours of greatest activity fitted the time zone of my geographical location precisely. Despite all this, my linear thinking caused me to miss out on the only real trading opportunities of 2012, which came in the JPY pairs and crosses.

    The #1 Factor to Use in Deciding Which Pair(s) to Trade


    So how should you decide which currency pair or pairs to trade? I’ll use an analogy to the world of gambling to simplify the issue: Let’s say you go into a casino to play a game where you need other players to risk money on the table to give you a chance to make profit, i.e. your winnings will come from their losses. This is a good comparison to the Forex market, which works the same way. So, which table would you go to? The busiest one, with the most players and most money on the table, or a quiet one in the corner with just a couple of players there? Obviously, it would make sense to choose the busiest table. So why should Forex trading be any different? You want to be trading the “busiest” currencies at any given time, you want to be where the action is. Are there any ways to determine that? Well, you could try reading the Forex news to spot the biggest things that are happening in the market now. There’s a place for that, but there are easier ways that can tell you where to begin to focus your search. Although Forex is “over the counter”, there are reliable statistics which tell us which currencies are traded the most, i.e. which currencies are exchanged in the largest volumes. The takeaway headline is that today, about 70% of all Forex trading is between the U.S. Dollar, the Euro, and the Japanese Yen only. The British Pound and Australian Dollar account for another 10%. The U.S. Dollar is by far the most dominant of all these currencies, so it makes sense to focus on each of the other currencies against the U.S. Dollar. You don’t need to open your trading platform and worry about 80 pairs and crosses or wonder whether the Canadian Dollar / Swiss Franc cross is what you should be trading today. It almost certainly isn’t, and if you ever hear anyone telling you about a support or resistance level in a currency cross like that, please ignore them – nobody is watching this cross or its levels!

    Narrowing Down the Field


    Now you know that it is only worth watching a few currency pairs, you will find it much easier to know which one or ones to be trading any day. The method to use to answer this question in detail, is which of these currency pairs are likely to have the most volatility? You need volatility, because if the price does not move, how are you going to make any money? You need to buy and sell at the widest price differentials you can possibly find, to make the greatest possible profit. There are a few ways to forecast where market volatility is likely to be, and if you apply the methods I outline below, you should get some good answers.

    The first thing to know is that statistically, in markets, volatility “clusters”. Suppose the average daily range of a currency pair is a movement of 1% of its value, taken over several days. Suddenly, one day it moves by 3% of its value. Volatility clustering research conducted by data scientists such as Benoit Mandelbrot tell us that this pair is more likely to move by something more than 1% tomorrow, quite possibly actually by an amount closer to 3%. So, when you see a currency pair move by more than its average volatility, that high volatility is more likely to continue than reverse over the short term. Another approach could be to calculate the average true range (ATR) of the past 5 or 10 days for EUR/USD, GBP/USD, and USD/JPY, and calculate these values as percentages of each pair’s price from the start of the period. Whichever has the largest value, is probably the pair it makes sense to focus on tomorrow.

    Another crucial factor is trend, or momentum (they are essentially the same thing). The major currencies such as the U.S. Dollar, Euro and Japanese Yen, have, in recent years, shown a greater probability to move in the direction of their long-term trends. One good rule of thumb in trading major currency pairs is asking yourself, is the price higher or lower than it was 3 and 6 months ago, and trading mostly or entirely in the same direction as any long-term movement, if it exists.

    If you are trading only during Asian business hours, you will probably find that your best opportunities will involve Asian currencies such as the Japanese Yen and Australian Dollar. I urge you to consider whether you can develop a method to trade longer time horizons, as otherwise you could be missing other opportunities while you are asleep, the same way I missed out on USD/JPY opportunities in 2012. If I had the wisdom to trade daily charts back then, I could have profited from that big movement in the Yen very easily, even at night while I was asleep, with traders in Tokyo doing the heavy lifting for me!

    Finally, if you watch an economic calendar to see when the major central bank or most important economic data releases are scheduled for the major currencies, you can see that if you are in a trade before those releases, those releases might provide you with the volatility you need to turn your trade into a big winner, or at least show you where some volatility is likely to appear.

    So, narrow your focus to the major pairs, and trade the currencies showing the highest volatility, and watch where the bigger long-term trends are. This should give you the best chance of success in Forex trading.

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