Category Archives: Guest Articles
Beginner’s luck: How to avoid common trading mistakes
You might not be based in the city, but that doesn’t matter anymore. In other words, trading has turned on its head over recent years, and whether you are stuck in pajamas in your bedroom, or dunning a grossly expensive suit in the city – you can all be part of the same game.
Of course, as we’re focusing on the beginner market today, there’s slightly more chance of you sitting in the former category. You’ve armed yourself with the appropriate software like MT4, and it’s now all about putting this to good use.
Sure, you are going to make mistakes, but the purpose of today is to help you avoid the so-called classic ones and boost your chances of turning a profit.
Be cautious with stock promoters.
One of the biggest temptations for a lot of new traders is to follow the so-called experts.
First and foremost, there are experts out there, but don’t take direct trading advice from anyone.
If everyone bought into the advice that these stock promoters provided, it goes without saying that the world of trading would be turned upside down. Not only that, but if their advice is so valuable, why aren’t they taking advantage of the returns?
Don’t let emotions get the better of you.
Another common mistake is to let your emotions get the better of you. The biggest example of this occurring is when you start to chase losses. Ultimately, it can become a never-ending, downward spiral and before you know if your trading career is upside down.
This is one of the reasons why trading just isn’t suitable for some personalities. It is volatile, and you need to learn to keep your actions stable when the going gets tough or even when you are riding a high.
Don’t rely on gut feelings.
The previous section leads perfectly onto this one about gut feelings. As you will have probably already expected by now, there’s just no place for them in the world of trading. Sure, some seasoned investors might rely on them from time to time but at least as a beginner, this is something that you shouldn’t be looking to replicate under any circumstances.
In your early days, logic is the only answer for you. If something doesn’t add up logically, don’t try and make some sort of other feeling take over. The problem with this is that you never really know why a trade has been successful or not – and your learning curve suddenly grinds to a halt.
Be ready to dedicate the time.
Contrary to what some e-books might promise, trading isn’t a get rich scheme. Sure, there are cases of some people turning huge pro(ts overnight, but these are few and far between. In general, you need to be ready to dedicate the time to your trading career. If you can only spend a few minutes per day, it’s going to be difficult. You’ll never be able to get a feel for the market, and ultimately understand what is and what isn’t going to help you turn a profit.
Will The Fed Tolerate A Stronger USD For Longer? – Credit Agricole.
Given that US financial conditions have tightened of late, investors will also want to know if the Fed will tolerate further tightening (eg, USD appreciation). The Fed should deliver a 25bp rate hike but may keep its economic and policy outlook little changed, opting to wait for more economic data and details on the upcoming Trump stimulus. At the same time, Yellen may signal willingness to tolerate further tightening in US financial conditions in view of the latest rebound in US inflation expectations and given the resilience of risk sentiment at home and abroad.
Given the latest USD underperformance, the bigger surprise for the FX markets could be indications that the Fed would tolerate higher UST yields and a stronger USD for longer, as well as any potential revisions to the 2018 dot-plot to reflect the recent drop in the unemployment rate below the Fed’s NAIRU.
This could help USD regain some lost ground vs commodity and risk-correlated G10 currencies if further tightening in global conditions starts eroding market risk sentiment. AUD could be vulnerable to potential disappointments from the upcoming data out of Australia and China. We keep open our short AUD/USD trade.*
The BoE, the SNB and the Norges Bank will also meet next week but should keep policy unchanged. That said, the MPC could see the latest disappointing UK data as confirmation of its cautious macro outlook and reiterate it will keep policy very accommodative in the face of surging cost–push inflation. This could keep the headwinds in place for GBP against USD. EUR/GBP could start consolidating after the recent sell-off following the Italian referendum and December ECB meeting.
Forex Volume Set To Rise. USD JPY To Stabilize – Credit Agricole.
Article Courtesy of Credit Agricole.
The views expressed in this article are the opinion of Credit Agricole FX market analysts. Please feel free to share.
The holiday season is in full swing and for some this may mean that markets will settle down as liquidity dries up in the coming weeks.
Our evidence suggests that Forex volume tends to go up in August, however, data releases and events can trigger renewed spikes of short-end vol across G10. It remains to be seen whether the combined effect of the multitude of idiosyncratic shocks will be sufficient to fuel a broader risk off move. Even so, we have added to our portfolio a long XAU/CHF trade as a risk-off hedge. Another interesting strategy is to identify cheap FX volatility to benefit from accentuated market moves on the back of event risks and thin market liquidity ahead.
Next week’s data calendar is laden with data releases like US non-farm payrolls, and events like the BoE Inflation report and the RBA policy meeting.
The BoE inflation report may struggle to exceed the dovish market expectations ahead of the August inflation report, and that could help GBP consolidate more broadly. We remain long GBP/CHF going into the release. Investors are looking for another solid US payroll and earnings data.
JPY should remain in the spotlight ahead of the announcement of Abe’s fiscal stimulus next week. We expect Japanese stocks to recover some more as a result and that should help USD/JPY stabilize.
Ahead of the RBA, markets see a greater than 50% chance of a rate cut. We also see a non negligible risk of policy action and stick to our tactical AUD/USD short. The FX options markets do not seem to be pricing in a significant scope for spot moves making AUD short-term gamma an interesting buy as well.
That said, we remain bulls on AUD/NZD over the longer-term, and expect the upcoming NZ unemployment and inflation expectations data to fuel rate cut expectations ahead of the August RBNZ meeting, and keep the cross supported. Potential disappointments from Chinese PMI data could keep both antipodean currencies under pressure against USD.
3 Critical Tips For Choosing A Forex Broker
The importance of choosing the right forex broker is often underestimated. New traders with dreams of getting rich quick often look for features that are not important, and can even do more harm than good. In this article, we describe the three most important things to look for when choosing a forex broker.
1. Choose a broker who is subject to strong forex regulation.
The importance of this cannot be understated. Unregulated forex brokers are able to take advantage of you in ways you do not even realize. A prime example is slippage. Slippage is the difference between the price your trade is executed at, verses the price that was quoted when you placed the order. Slippage is a normal part of trading, because prices fluctuate all the time, and can easily move in the short time between when you place an order, and when it executes. However, unregulated brokers can pass the unfavorable slippage on to you, but keep the favorable slippage for themselves. This increases your transactions costs, and the effect can be significant over time, especially if you are a scalper.
The CFTC & NFA have arguably the strictest forex regulation in the world, and they audit their brokers regularly to make sure that slippage practices are neutral. This is just one of many ways that forex regulation can protect you as a trader.
2. Choose a broker who obeys the law.
This may seem obvious. However, it may surprise you to know that as of May 2015 there are only two forex brokers left in the United States who have never been fined by the regulators. The rest have been fined or banned from doing further business. Even in the face of strong regulation and regular audits, forex brokers still try to get away with cheating their clients. Do you want this kind of broker handling your money? Of course not. If you screen for United States forex brokers from this broker review page, you can easily see which brokers have been fined, and which have a clean regulatory record.
3. Choose a broker with low transaction costs.
Transaction costs are a lot lower than they used to be, and you may think this does not matter much to your trading anymore. If so, you are mistaken, and the following example illustrates why:
Say your starting account balance is $20,000. You have a simple trading system with a 30 pip stop loss and a 30 pip take profit level. You leverage 10:1 and you win 55% of your trades. Broker A offers a spread + commission of 2.5 pips, and Broker B offers a spread + commissions on only 0.7 pips. You make 450 roundtrip trades per year, which is just under two trades per day. The following chart shows the results after one year:
The chart shows that with Broker A:
• 83% of your gross profits get lost to transaction costs
• Your net profit for the year would be $4,500 or 22%
With Broker B:
• Only 23% of your gross profits get lost to transaction costs
• Your net profit for the year would be $20,700, or 104%
In this example, you are clearly better off with Broker B. The difference in transaction costs will have the greatest impact to your trading if you trade frequently, or have a narrow trading edge.
This article was kindly provided by Forex Scam Alerts, who provide advice about the risks of forex trading and how to avoid scams.
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