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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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  6. #126
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    How Much Effect Does Oil Price Movement Have on the Forex Markets

    By: DailyForex.com
    The Forex market is probably the biggest market in the world because it is open 24/7 and it accommodates players from different part of the world. However, the global Forex market is dependent on many factors outside the core currency markets despite its massive size. The Forex market is currently facing headwinds from the global energy markets as crude oil prices continue to fall. This piece looks at how the current weakness in oil prices is exerting downward pressure of some of the world's major currencies.

    Crude oil prices remain depressed despite OPEC's best efforts

    Crude oil has crashed to a 10-month low after falling 3% in the third week of June. Brent Crude oil is down 16.4% and West Texas Intermediate is down 17.7% in the year-to-date period – crude oil hasn’t fallen this much in the first six months of the year since 1997. The international Brent benchmark has broken down below the $45 support to trade around $44.47 per barrel. U.S. crude in the West Texas Intermediate is now trading $42.13 per barrel.*
    The main reason behind the unchecked drop in crude oil prices is that the supply of oil in circulation is more than the demand.* OPEC is working hard to find a way reduce the supply of oil the market but the resilience of U.S. shale oil producers has almost rendered OPEC's efforts null and void.

    Interestingly, investors are worried that OPEC is only making a half-hearted attempt to reduce the supply of oil. Investors believe that OPEC needs to deepen its production cuts or go on a production freeze if its wants to end the supply glut. Lynn Roy, a Lionexo commodities analyst observes that "crude oil is slipping like a knife through butter now, I've never seen the outlook for oil look this bad and the end is not in sight."

    Here's how the continued weakness in oil could weaken currencies

    The decline in crude oil is depressing many currencies and the weakness is particularly obvious in commodity-linked currencies such as Norwegian crown and the Canadian dollar. For instance, the Canadian dollar is down to a three and half-month month low to C1.3165 to the dollar.

    The Norwegian crown declined to a 5-month low of 8.5456 crown to each dollar as crude oil continues to slide.

    The New Zealand dollar has declined 0.1% to $0.7332 and Australian dollar (AUD) declined 0.2% to $0.7562.

    The U.S. dollar index declined 0.05% against a basket of currencies to 97.699 to reverse some of the gains it made earlier this month. More so, the weakness in oil prices has caused U.S Treasury yields to suffer a massive drop. Weak crude oil prices as exerts downward pressure on inflationary trends to further dampen optimism on U.S yields.

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  7. #127
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    How to Understand Forex Signals

    By: DailyForex.com

    How to Use Forex Signals

    Each signal begins with a discussion of the prospect of any open trade that might have been generated by the previous day’s signal in the same currency pair. The piece then goes on to suggest the best times of day in which to open any new trade, and the position size that might be risked on a trade that day. The next section identifies likely support and resistance levels with an accompanying illustrative chart. Following the signal means taking note of these levels and watching during the recommended hours to see if the price reaches any of them.

    When the price reaches a resistance level after going up, you wait to identify a bearish turn in the price, which means you think it is going to go down. When the price reaches a support level after going down, you wait to identify a bullish turn in the price, which means you think it is going to go up. The big question is, how to identify such a turn in the price at the point where it has a high probability to become the best point to enter a winning trade?

    How to Identify a Price Turn

    It is my belief, derived from experience, that the best price turns take at least one hour to play out, and usually more. There is a trade-off between getting in early and achieving a high potential reward to risk ratio, and waiting longer to get a surer turn. For example, let’s say that the price is at 1.0950 and the level at 1.1000 is identified as resistance, and the price then rises to hit the 1.1000 level, forming a strong bearish pin bar reversal candlestick formation on the 5 minutes chart. This might be a great entry and maybe the price will drop strongly and not come back to 1.1000 for the rest of the day, but being so quick to press the trigger carries a higher risk of being wrong. That is why I recommend waiting for at least one hourly candlestick to form before entering a trade. A bearish pin bar reversal candlestick is a stronger indicator on the 1 hour chart than on the 5 minutes chart.

    I must admit that even if you are using a slower time frame such as the 1 hour chart, identifying an attractive turn is challenging and is something that takes practice. As a general guideline, what I recommend looking for in identifying a turn is a candlestick formation such as a pin bar, an inside candle, an outside candle, or an engulfing candle rejecting the level quickly and decisively. These tend to be the best trades. Once you have seen one of these formations form quickly, right after the level is first reached, it makes sense to enter a trade as described below.

    Entering a Trade Upon a Price Turn

    When the candlestick completing the turn has closed, what you do depends upon whether you are entering a long trade where you want the price to go up, or a short trade where you are hoping for the price to go down. For a long trade, it makes sense to place a buy order 1 pip above the turn candlestick’s high, with the stop loss 1 pip below the lowest price that has been reached in the move. For a short trade, it makes sense to place a sell order 1 pip below the turn candlestick’s low, with the stop loss 1 pip above the highest price that has been reached in the move.

    For the trade to go ahead, the price must reach the level at which the order is set. Usually the best trades happen quickly. The longer the time elapses before the price is reached, the less attractive the trade looks – it “decays” over time. Therefore, I recommend that if the trade entry has not been triggered within 1 hour of the order being entered (i.e. during the next 1 hour candlestick), it usually makes sense to cancel the trade. Another reason to cancel the trade is if the price reaches the stop loss before the entry is triggered, as this also usually means that the support or resistance level has turned out to be unreliable. To do this properly, it is important to watch the screen from the time of entering the trade until the entry is triggered or until your time limit for entry expires so you can cancel the trade manually.

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    How to Pick the Best Trends

    By: DailyForex.com

    Defining a Trend

    It is surprising how much dispute there is over the question of how to define a trend. You can find a wide range of different opinions. One popular choice as a filter to determine trend is the 200-period exponential moving average. Another is the 50-period simple moving average having crossed above or below the 200-period simple moving average. If you search, you can find a lot of other technical, indicator-based definitions.

    In fact, the dictionary definition of a trend can be summarized as a consecutive series of higher lows and highs (an uptrend), or lower lows and lows (a downtrend). Unfortunately, that is rather difficult to define mathematically, although most traders who have put in a reasonable amount of time reading price charts can tell you whether an attractive trend exists just by using their own eyes. The question remains, is there a way to define the existence of any trend, which we can use to at least identify that some type of trend exists, before we try to apply filters to pick out the most useful, profitable trends? I believe there is a simple answer: a basic upwards trend exists if the price is above where it was 3 months ago, and downwards if below. In markets, the rise of fall of price over a relatively extended period such as this has been shown to provide an edge. As the Forex market is more mean-reverting than most liquid speculative markets, the optimal period to use is a little shorter than it is in other markets. Results can be improved by stipulating that the trend must also be above or below its level measured 6 months ago. A true upwards trend, for example, has the price above where it was both 3 and 6 months ago.

    Using the ADX Indicator as a Trend Filter


    The ADX indicator purports to show the “strength” of a trend. It does this by measuring the total amount of directional movement in a single direction over a given recent period. The value of the ADX indicator can range from 0 to 100. Typically, a trend is said to be strong when the value of ADX is 25 or higher. It seems like an appropriate filter to apply to our trend definition. I applied it to the most recent 3-month equivalent by using a period of 13 weeks (the “short term” component of our defined trends), and examined the results that would have been achieved by using ADX levels of 25 and 30 as filters, which were as follows:




    Both ADX levels improve the win percentage and average profit per trade, the latter increases considerably. Note that although ADX 30 produced a lower average profit, its win percentage was slightly higher than what would have been achieved using ADX 25.

    Using “Blue Sky” as a Trend Filter


    “Blue sky” is an area of price that has not been visited for a long time. An ancient belief of traders says that the price moves more quickly and directionally through price areas which have recently been empty. This is the theory behind breakout trading. After all, if the price makes a new 6-month high by breaking out about that level, by definition, it has not traded there for at least 6 months. Perhaps we can apply the following filter to our advantage: examine the weeks where the price made a new 3-month high or low price during the previous week. In other words, there was a breakout last week of the 3-month price channel in the direction of the prevailing trend. Here are what the results would have looked like:



    Interestingly, this “blue sky” filter would have given even better results than using strong ADX values as a filter. When both filters are combined, the results are even better.

    Conclusion


    The most reliable non-discretionary definition of whether a trend exists is the simple measurement of whether the price is both higher and lower than it was using a historical lookback. Three-month and six-month time periods have worked very well in Forex markets in recent years. Stronger trends produce more reliable short-term trading results than weaker trends, and the strength of a trend can be easily measured using the ADX (Average Directional Index) indicator.

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