Trailing stop

A trailing stop is an order aimed to control stop orders or a number of pips by which a broker will move your stop loss order following a market trend. When you turn off your computer, a trailing stop order, unlike stop loss orders, is not executed anymore. When a trading platform is switched off, only a stop loss order set by the trailing stop can be active. A trailing stop order is frequently used on the forex market as well as on other exchanges and OTC financial markets. After placing a trailing stop order, for example, within the number of X points, we observe the following picture: 1. The MetaTrader platform does not do any action until an open position moves by X points. Now MetaTrader can set a stop loss order at a distance of X points from a current price. 2. Once a price is at a certain distance from a set stop order which is higher than the trailing stop value, MetaTrader sends an instruction to the server to change the level of this stop order that it will be at the trailing stop interval from a current price. Thus, a trailing stop order insures a trader against the situation when a price turns against them. The trailing stop monitors prices by moving a stop loss order along with their movement. If a price goes against a trader's position, the trailing stop will close it with a profit. However, remember that the trailing stop can be profitable only if you follow two basic rules: 1. A stop loss order is a maximum you are ready to lose in a single test of your strategy. 2. The stop loss should be placed only where you think there is the beginning of a steady counter-trend unprofitable for you. Read more: http://www.mt5.com/ms/articles/trailing_stop_system/

Organizing the trading process on Forex market

Both professional traders and novices who work on the financial market have to develop the most convenient and profitable for them trading system in order to be able to trade on Forex successfully. Working out the trading system one should select the most appropriate trading regime. There are various types of forex trading regimes but it does not mean that every trader can work with any conditions. Trader needs to choose the style which will save the time and fit the personality and financial capacity. The common mistake among traders is choosing a trading regime inappropriate for their personality. Many people regardless of their experience do not even think about such factor. One more reason of incorrect choice is lack of money and it probably plays the key role. Often traders have to choose the trading regime according to the minimum requirements for the initial deposit. Below we are considering different trading regimes. Intraday trading As a rule this trading style is used by newbies. Most of all, they are attracted by the market dynamics. There are some specifics of day trading: 1.Positions remain opened only within a trading day and must be closed by the end of the day or transferred to the next day with protective measures taken. 2.All deals have short-term character and are meant for taking only a small part of profit. 3.Great number of deals is accomplished during a trading day. 4.It does not require investment of big amount of money. 5.Working time on the market consists of M1 charts. There are pros and cons of intraday trading: Pros: Cons: Such regime fits traders with strong nerves, endurance and quick reaction. Week trading As a rule, adherents of this trading style are traders who are disappointed with the intraday trading. Week trading session does not show sharp oscillations which are obvious during day trading. Traders who just turn to the week trading may think that the market is dead. Specifications of week trading: Pros: Cons: Such trading style fits traders, who possess such qualities as thoughtfulness and deliberation as first time any trader needs to monitor positions 24 hours a day, analyzing all changes of the market behavior. Long-term trading Such trading regime fits patient traders because profit made from the deals which remained opened during several weeks will come to the pocket of a trader only after closing of the positions. Adherents of this style have more free time and suffer lower pressure. Peculiarities of this regime are: Advantages: Disadvantages: This type of trading will be convenient for traders who have enough funds to invest as well as patience and motivation. In case you are able to choose the strategy which fits your financial and emotional capabilities, you will achieve success trading on Forex very soon. •It requires small amount of money. •Trading can be stopped at any time. •Minimum risk. •Emotional pressure. •Much time needed for the rest and recovery. •Absence of free time during the trading session. 1.Position can long from 1 to ten days. 2.All deals are targeted on taking a great part of profit from the market movement. 3.A trading week may consist of one or two deals. 4.Money supply requirements for week trading is much higher than for day trading. 5.The working time consists of hours charts. •Low pressure on nerves. •High yield level. •Recovery does not take much time. •Trader has free time during the trading session. •It requires more funds than intraday trading style. •Trader can be outside the market during the trend correction. •There is no opportunity to stop trading at any moment. •Position must be opened 24 hours a day. 1.Trader analyzes day and week charts. 2.Position may remain opened during several months. 3.It requires much more funds that intraday or week trading styles. 4.Trader may be outside the market during the trend correction. •Much free time •Low emotional pressure. •No time needed for rest and recovery. •Absence of any actions. •No opportunity to stop trading at any moment. •Limited number of currency pairs convenient for long-term trading. Read more: http://www.mt5.com/ms/articles/organizing_the_trading_process/

Scalping and pipsing

Let us start with the definition of scalping and pipsing. These trading strategies are employed by forex traders for taking profit from intraday price oscillations occurring on the currency market. As a rule, deals remain opened during only several minutes. One position will not bring much profit but these strategies require a huge number of deals. A scalper or a pipser can execute about two hundred deals per day. However, no all deals are profitable. The result for a trader is positive summary of deals by the end of a trading day. The stop-loss level set as close to the opening price as possible enables a trader to achieve the positive result. Stop-loss is necessary for minimizing the risks in case a price moves in the opposite direction. It is well-known that Forex is the market with the highest liquidity. During the day a price is moving up or down in a certain period of time according to the cycle. If the price passes about 60 pips during the day the difference between high and low points will be much more. Chances of getting profit increase if to trade on the hourly price oscillations. It is the main reason why so many traders decided to employ such trading strategies as scalping or pipsing. Newbies may think that scalping or pipsing allows earning huge amount of money and the opportunity of reinvesting may turn it to the enormous sums. However, it is not that simple. There are several disadvantages of such trading methods. They are: • Setting the stop-loss level close to the opening price increases the risk of losses even during the insignificant price oscillations. Even if you succeeded to predict further direction of the price movement the possibility of losses are still very high if you incorrectly evaluate the back bullish or bearish force on the market. It is much easier to make a mistake determining the price movement direction for a short period of time (one-two hours) than for the whole day. • The decision can be the absence of order but in this case a trader has a risk to lose even more money after the unfavorable price movement when it goes so far that the pullback is impossible in the nearest future. • Emotional excitement and nervousness possessed by most traders who work with real money. As a rule all traders start on demo account because it allows testing the strategy with the virtual money. Consequently, trading on real account causes anxiety which is strengthening with every pip in case the market moves in the unfavorable direction. In general, scalping and pipsing are for experienced traders. Short-term trading as scalping or pipsing implies interruptive work in front of the screen which increases the risk of stress and leads to the inconsiderate acts. There is also one more evident disadvantage for traders – brokers do not like those who accomplish the great number of deals daily. Traders who open deals almost every second are asked to close their accounts or imposed the limits. Read more: http://www.mt5.com/ms/articles/scalping_and_pipsing/

Trading Signals service in MetaTrader 4 and MetaTrader 5

MetaTrader 4 and MetaTrader 5 platforms apart from their principal function of sending orders to a broker have a multitude of other features. In particular, the platforms support Trading Signals service which promotes trades’ copying in real time. Trading signals, as a rule, represent an updated information about currency operations. Any trader with the help of his trading platform can broadcast information about his trading results in public monitoring list and on the official website of the platform developer (http://www.mql5.com/en/signals/mt4). Everyone out of the hundreds of other traders worldwide can subscribe to any deal he considers successful. Trading Signals service enables traders to subscribe to any signals and automatically copy them to their accounts online. Meanwhile, you will have to pay a commission to Forex Signal Providers for their services. However, it concerns only those signals that are rendered on a fee paid basis. Every provider can determine the commission amount individually and specify it in the signals information. Internal payment system of http://www.mql5.com website automatically withdraws the required commission from the trader’s account, complied with the terms of subscription, and credits it to the provider’s account. To use Trading Signals system: download MetaTrader 4 or MetaTrader 5 to your computer or get an updated version of the platform; register with developer’s official website as a provider or subscriber; choose Community in Options section and specify your account data; open Signals in Tools section. Read more: http://www.mt5.com/ms/articles/trading_signals_service_in_metatrader/

Fractal analysis

Fractal analysis is the last word in currency and stock markets analysis. The founder of fractal analysis is Benoit Mandelbrot. Edgar Peters also made contribution to the development of fractal theory of the market. Fractal analysis implies that future prices are based on their past changes. It facilitates the forecasting of prices’ falls or rises, although this type of analysis is hard to understand per se. According to fractal analysis, today’s price has no relation with its all past readings. No long-term or short-term chart can give us an accurate prediction of a price dynamic at this or that moment of the time. Thus, it turns out that the market is almost impossible to predict. The data received with the help of fractal analysis is based on the wavy lines, which is quite reasonable since there is no specific market scenarios and falls and rises in quotes are inevitable. What is worth attention? First of all, pay attention to the factors that form the price at a specific period of time. In case the observations made in political, economic and social spheres match, it is possible to say that the price will repeat its move made some time ago. However, the fractal analysis requires sound analytical confirmation with an access to the latest reliable information on economic and market conditions. As a result, despite the time and money spent, your benefit is big as you are always one step ahead of the traders who are waiting for the real market move. How to use fractal analysis? First, you need to learn how to create small models based on a particular currency, commodity or stock. After that, you need to simulate a real market situation and find out whether the expectations were met. Otherwise, you need to decipher and analyze the moments that have not been considered. Once you are able to predict the future price moves, it can be safely assumed that forecasting dynamic is positive. Thus, you could have earned if you had taken this decision in live trading. Hence, you can start using this strategy on live account. Read more: http://www.mt5.com/ms/articles/fractal_analysis/

Trading strategies

To make money on the currency market, a beginner trader should learn to analyze the forex market and work out their own strategies on the basis of this analysis. Trading on Forex suggests that market participants should follow certain rules of the market. Among these rules is a trading strategy which turns an ordinary play into activity that brings money. Traders can develop their own strategies being the most suitable for them. Some market participants use only technical analysis, others prefer to go by fundamental factors. There are those who combine both types of analysis determining entry and exit points. There is a whole myriad of analytical tools helping traders understand all fluctuations and make complete market analysis. To become skillful and understand the tools, beginner traders are recommended to examine every analytical tool. Support and resistance levels are considered to be the basis of most trading strategies. Traders use these levels to determine a moment to enter or exit the market. Support is the lowest level touching which a price is likely to switch to an upward movement. The resistance level indicates the highest price at which traders prefer to close positions to avoid the risk of a significant decline. At support and resistance levels, trends are tested and confirmed. Breaches of these levels point to a stable price movement. Support and resistance levels can be determined through analysis of price charts of previous unbroken support and resistance levels for any period of time. The moving average is another instrument of trading strategy development. The simple moving average shows a price within a certain period of time. This tool is used to eliminate the short-term price fluctuations. It allows traders to see the overall market situation. Also, the moving average is used to indicate future price movements, whether ascendant or descendant. If price is above the moving average, the market is bullish and it’s time to buy an asset. The market is bearish if price is below the moving average; it’s time for selling. Traders can make a deep analysis of the forex market using several trading tools. When indicators signal the beginning of a market movement, it is the time to start trading relying on one indicator. The main principles of the fundamental analysis are the same. Developing a trading strategy, traders should remember that any strategy includes clear principles and rules of entering and exiting the market as well as a good analysis of the market movement in the nearest future. Read more: http://www.mt5.com/ms/articles/forex_market_trading_strategies/

Chaos Theory

When a rookie trader goes through troubles in trading, the first idea springing to mind is that forecasting a price dynamic is a “must know” for successful trading on Forex. However, after judging the actual situation, it is clear that a trader should be equipped with theoretical knowledge for a long-term forecast, in particular fundamental analysis. Technical analysis is needed for a short-term outlook. Assessing a situation, a trader notes that a market moves up and down with long cyclical waves during a long period. When we look at a chart, we notice that short-term patterns. Those patterns tend to repeat on a regular basis at peaks and dips. Thus, watching repeated patterns of various kinds enables a trader to reckon a profit which is possible only in case the right decision is made at the right time. Most beginners assume that Forex is like a mechanism operating in cycles. Logically, if a trader can absorb all patterns and cycles, he can easily gain big profits. So, to achieve this aim, a trader sets to study the forex market and digests all available literature. Importantly, 75%% of traders lose their deposits in full within the first year of operating on Forex. Speaking about a longer period, almost 95%% of traders lose their money. Only few of them are curious if there is an efficient theory that recurring periods of similar prices appear with an underlying order. Traders experience a failure because they created the illusion of Forex principles. Such traders find it difficult to clear up the misunderstanding. Hence, they are doomed to failure. To make things worse, the forex market operates in such a way that makes a trader even more confused. The chaos theory does not make it possible to study the market by mathematical and statistical methods. Besides, it disrupts a discovery that periods or cycles replay at a certain pace. The chaos theory is a mathematical concept of analyzing nonlinear dynamic systems, in particular markets. In practice, the chaos theory proves that market prices are usually shaped at random with minor dependence on a trend. A degree of trend impact is determined by a particular market and a chosen time frame. To explain chaotic systems, scholars use fractals, objects bearing a feature of self-similarity. In other words, their parts are similar to the whole object. Besides, another feature of chaotic markets is sensitivity to original conditions. It makes dynamic markets difficult to forecast. A lot of traders and Forex strategists believe that intraday trading is like random noise trading, which means a waste of time. Therefore, intraday traders inevitably end up losing their deposits. On the other hand, experts think that long-term price dynamic is not erratic. Market participants are capable of gainful trading on the grounds of daily and weekly charts if they follow a trend. The logical question arises here. Why are short-term price fluctuations erratic? Why do long-term dynamic consisting of short-term fluctuations on the same market follow a certain pattern? The answer is tricky. A system does not exist in a short-term period. But a system shows itself in the long run. There are no short-term periods and repeated short-term cycles which are meaningful for making a forecast. Related to financial markets, proponents of chaos theory believe that a price is the very last thing to change for a stock, bond, or some other security. Thus, the possibility to predict a future price in the short term using technical analysis is virtually close to zero. There is a scientific fact that intraday traders are initially doomed to failure. Likewise, those who reject this fact are exposed to financial losses. Does it mean that the forex market is chaotic and all traders will inevitably lose all their money? Of course, it does not. A trader can analyze a long-term market trend to gain a statistical advantage. Trend-tracking systems are designed to do it. It explains why good trend-tracking systems operating on diversified markets yield annual profits and why intraday traders incur losses in the long run. It is hard to foresee when exactly a trading system will bear fruit. A trader had better develop one’s own trading strategy rather than make it match it someone else’s. To avoid it, the same rules should be applied to all markets and a trading system should be tested on the utmost of trading floors. If a trading system makes profits on a variety of markets, it means that such a system is not a copycat. To increase chances for profits and curb risks, it would be wise to streamline a trading system, a content of an investment portfolio, and an account size. It is hardly possible to foresee for sure what market will have a perfectly clear trend in the nearest six months although there is a method of assessing a disposition of different markets to a trend from the historical point. To diminish short-term risks, it is important to diversify them. A trader should control a ratio of potential losses to a deposit size as an efficient method of diversifying risks. In most cases, traders do not know if their trading strategy will gain advantage. So forex participants use trading strategies which cannot be backtested in principle. They hope that information discovered from books is written by a renowned trader whose strategy has already proved its efficiency in practice. However, a trader should be aware that Forex could be a dubious business that might cause a serious loss without the right approach. Read more: http://www.mt5.com/ms/articles/chaos_theory_and_market_reality/

Basics of money management on Forex

To be a successful trader, it is not enough to open an account and deposit it with some money. A rookie trader might not start earning immediately. Before anyone launches into trading on Forex, it would be wise to develop a smart program of money management. Trading on Forex, control of a money flow in and out of a trader’s pocket is a “must know” to keep a trading account alive and make profits. It is a vital skill to keep an equal ratio between a profit amount and a loss amount per average trade. Only in this case trading will be a gainful business, but not a game of chance and luck. Let’s consider the main principles of money management. Every trader should have a reserve fund which is to be spent in case of emergency. An amount of a reserve fund should be at least half a deposit size. To avoid losing all money, it is advisable to invest no more than 10-15%% of the whole deposit in one market. A trade volume should not exceed 5%% of the total account equity. Otherwise, if a trader executes a losing trade, it is possible to face runaway losses. Every trader is focused on big earnings. However, everyone should be aware of potential losses. If you invest your capital in a market of a certain type, the whole margin should not exceed 20-25%% of the cash flow as markets of the same type move in a similar way. In this case, it makes sense to optimize investments. To be exact investments should be diversified. If one trade turns out to be a failure, a profit on another trade can offset that losing trade. A trader should determine to what extent one’s portfolio is diversified. Diversification of risks is one of the methods to hedge investments. A trader should always keep balance between concentration and diversification. If a trader opens several positions in parallel at least on 4-6 markets of different types, this strategy provides a quite safe allocation of one’s portfolio. Stop orders Please make sure you set stop orders while you are getting away from your workplace in front of the trading platform. It will enable you to avoid losses. Besides, take profit orders are used to lock in profits in case a trading instrument moves in a favorable direction. Profit/loss ratio In case a trend reversed in an adverse direction while a position is open, a trader should strike a balance between possible losses and profits. As a rule, the efficient profit/loss ratio is 3:1. Otherwise, it would be wise to avoid opening a trade. Trading several positions Let’s assume a trader enters a market opening three positions. So it would be useful to divide them into position trade and trend trade. Position trader holds a position for the long term setting rather flexible stop orders, which enable this trader to keep a position even when prices go through consolidation and correction. Position trading is the polar opposite of day trading when a position is restricted by rigid stop orders. This strategy is used for speculations within the same trading day. Rules of opening a position * A position should be opened only in case an indicator generates at least one signal. * Before a position is opened, it is essential to determine a market entry price, a price to close a gainful position, a price to close a losing position as well as time to hold a position open. * A counter-trend position should be opened with caution for a short time frame. * Similar things should be considered when trading on a sideway market. Rules of holding a position and partial closing before a time frame expires * A trader should hold a position open only if analysis confirms decisions made prior a market entry. * It would be wise to close a position partially when current losses have already exceeded estimated losses or when a price has reached the level which is expected to gain a profit. * A trader should make a pause if total losses are still below estimated losses, a price is holding flat, or a price has not approached a level calculated to make a profit yet. Rules of closing a position A time frame has expired. An estimated profit has been gained. A calculated loss has been reached. A position has yielded an utmost profit. Please always bear in mind that a properly elaborated strategy of risk diversification is a steppingstone to gainful trading on the forex market. Read more: http://www.mt5.com/ms/articles/fundamentals_of_money_management/

Exchange rate of the Russian ruble against the bi-currency basket

The bi-currency basket was introduced by the Central Bank of Russia in 2005 with the aim to outline the operational benchmark of the bank’s exchange policy. At the moment the bi-currency basket was put into action, it consisted of 0.1 Euros and 0.9 US dollars. Starting from February 2007 the figures have been changed, and presently the bi-currency basket contains 0.45 Euros and 0.55 US dollars. In order to balance the bi-currency basket the rate of the ruble was fixed on the level of 34 Rubles. However, the Bank of Russia did not imply the strict pegging to this level in order to make the exchange rate more flexible. That was suppose to allow the bi-currency basket to move within the admissible band of fluctuations. Till the middle of 2008, the Central Bank, managing the exchange rates, had intervened the trading very rarely. The Central Bank interfered in the exchange policy only in cases when the supply of the currency was extremely high and it was impolitic to admit the intense strengthening of the ruble, or vice versa, the demand for the currency was strong and it was no advantage to allow the ruble to fall strongly. In first case the Central Bank bought back the currency from the market and emitted the rubles, in the second case, the bank repurchased the rubles, giving back the foreign currency from reserves. Starting from May 14, 2008 the Bank of Russia has been holding the interventions within the range. Initially, the current basket was moving within the range +- 10 kopecks. However, in June 2007 the Central Bank widened the range by 0.5%, having strengthened the ruble against the bi-currency basket from the 29.93 level to 29.78. The next enlargement of the band took place in August 2007, when the basket rose from 29.76 to 29.67. Since September 2007 the lowest limit of the basket was near 29.6, and the range was +- 40 kopecks. In June 2008 the Bank of Russia expanded the exchange rate band several times, each time by 10 kopecks, which led to the strengthening of the ruble. Nevertheless, when in September-October 2008 against the background of the financial crisis the balance of the supply and demand of the currency on the market shifted towards the considerable advance of the demand for the currency, and the ruble started to weaken against the basket, the Central bank had chosen the rate of 30.70 as a support level and not the rate of 30.40. In November-December 2008 the band was widened several times by 30 kopecks to each side. January 2009 had also started with the extension of the band, the upper limit of the band moved to 41 Rubles; the floor was placed at the level of 26 Rubles. According to the official rates, the lowest level of the basket was fixed on August 5, 2008, and it was equal to 29.27. The highest level was recorded on February 6, 2009 – 40.93. In summer 2009 the bi-currency basket fluctuation range was set at 3 Rubles level and at present the bounds of the band are 35-37 Rubles. The Bank of Russia buys and sells the currency within the limits of the band, the volume of deals is 700 billion dollars, in this case the bands moves by 5 kopecks. In such a manner, the strengthening of the basket by 1 Ruble increases the volume of foreign reserves by approximately 14 billion dollars. Read more: http://www.mt5.com/ms/articles/russian_ruble_against_bi-currency_basket/

Events & News that Affect Forex Market

Working on Forex, you should know that any currency’s price is influenced by various economic factors. Also, the currency’s exchange rate depends on the macroeconomic situation of the country it is used in. To be successful, traders should always follow the information and understand reports published by regulators. The forex market immediately reacts to the economic news. Let’s see which economic events should be taken into account when analyzing the current situation on Forex. The result of any piece of news is the market’s reaction to it. It can be positive, negative, or neutral. The impact made by news primarily depends on investors’ expectations, which may meet or not the final data. If the released data is against the market trend, the reaction to the event lasts for several hours. If the data matches the trend, the latter will strengthen with a possibility of pullback. Economic news is revealed by the world’s leading news agencies: Reuters, Bloomberg, Financial Times, CNN, and CNBC. As a rule, they publish the time of the expected macroeconomic release on their official websites. Having the economic calendar at hand, you always can forecast the market movement relying on the statistic data. You also have an opportunity to react to the market changes in time. Below, you can find a list of the main macroeconomic indicators, publication of which directly affects the financial market dynamic. Gross National Product Importance: 1; Released by: the US Bureau of Economic Analysis (BEA); Due: 20th-30th of the month; Frequency: quarterly report (monthly revised); Volatility: medium; Comment: One of the most important economic indicators as it fully shows economic activity. Gross Domestic Product Importance: 1; Released by: the US Bureau of Economic Analysis (BEA); Due: 20th – 30th of the month; Frequency: quarterly report (monthly revised); Volatility: medium; Comment: One of the major economic indicators as it reflects total economic activity. Trade Balance Importance: 1; Released by: the US Bureau of Economic Analysis (BEA), U.S. Department of Commerce; Due: 15th – 17th of the month; Frequency: monthly; Volatility: moderate; Employment and Unemployment rates Importance: 1; Released by: the US Bureau of Labor Statistics, the United States Department of Labor; Due: 1st – 7th of the month; Frequency: monthly; Volatility: medium; Comment: The indicator makes it possible to forecast other economic indicators’ data. Industrial Production and Capacity Utilization Importance: 2; Released by: Board of Governors of the Federal Reserve System; Due: 14th – 17th of the month; Frequency: monthly; Volatility: low; Market reaction: The indicator has a slight influence on currency exchange rates that depends on the current economic situation. Retail Sales Importance: 2; Released by: the US Bureau of Economic Analysis, BEA, U.S. Department of Commerce; Due: 9th – 16th of the month; Frequency: monthly; Volatility: medium; Market reaction: Influence on the exchange rates depends on the economic situation. Comment: It is the indicator of the inflation rate. Producer Price Index Importance: 2; Released by: the US Bureau of Labor Statistics, the United States Department of Labor; Due: 9th – 16th of the month; Frequency: monthly; Volatility: medium; Market reaction: impact on the exchange rate bears on the economic situation; Comment: If it is released together with CPI, the importance of PPI raises to 1. It reflects the inflation rate. Consumer Price Index (CPI) Importance: 2; Released by: the US Bureau of Labor Statistics, the United States Department of Labor; Due: 15th – 21tst of the month; Frequency: monthly; Volatility: moderate; Market reaction: The effect on the exchange rate depends on the economic situation. Comment: If it is published with CPI the importance of PPI increases to 1. It is the indicator of the inflation rate. Personal Income and Consumption Expenditures Importance: 2; Released by: the US Bureau of Economic Analysis (BEA), U.S. Department of Commerce; Due: 22nd – 31tst of the month; Frequency: monthly; Volatility: moderate; Comment: Personal consumption is essential as it determines most of GDP. Car Sales Importance: 3; Released by: car producers; Due: first and third day after the period ends; Frequency: monthly; Volatility: medium; Comment: It is one of the first published indicators of the month. It is a leading indicator that shows future changes in economic growth. National Association of Purchasing Manager's Index (NAMP) Importance: 3; Released by: National Association of Purchasing Management; Due: 1st working day of the month; Frequency: monthly; Volatility: medium; Comment: The indicator estimates the whole manufacturing sector of the economy. Durable Goods Orders Importance: 3; Released by: the US Bureau of Labor Statistics, the United States Department of Labor; Due: 19th – 27th of the month; Frequency: monthly; Volatility: very high; Market reaction: weak. New Home Sales Importance: 3; Released by: the US Bureau of Economic Analysis (BEA), U.S. Department of Commerce; Due: 28th of the current month and 4th of the following month; Frequency: monthly; Volatility: moderate; Comment: It is the leading indicator. In winter, the indicators volatility goes up. Construction Spending Importance: 3; Released by: the US Bureau of Economic Analysis (BEA), U.S. Department of Commerce; Due: 1st working day of the month; Frequency: monthly; Volatility: high; Comment: The revised data may differ significantly. Factory Orders and Manufacturing Inventories Importance: 4; Released by: the US Bureau of Economic Analysis (BEA), U.S. Department of Commerce; Due: last days of the month; Frequency: monthly; Volatility: very high; Market reaction: weak. Read more: http://www.mt5.com/ms/articles/news_and_their_impact/

Currency pairs

Work on the foreign exchange market embraces purchase of one currency and sale of another. Forex market is the largest financial market worldwide; its daily turnover exceeds one of the stock market by many times. People trade on Forex 24 hours a day 5 days a week. All trading operations are carried out with the foreign currency. Currencies of different countries are traded on the market. The list of currencies contains the monetary units of most countries, which currency is convertible, i.e. can be exchanged for the monetary unit of another country. All the currencies on Forex are combined in pairs, because the rate of one currency is set against the rate of another. The international organization for standardization (ISO) assigned abbreviation to all pairs. It made trading convenient because traders should know which currency pairs are hidden behind the name of quotation. There are basic and quoted currencies in the pair. As a rule, basic currency is the US dollar. Most currency operations are executed with four main currencies: the euro EUR, the Swiss franc CHF, the British pound sterling GBP and the Japanese yen JPY. Examples of the currency pairs: GBP / USDBritish pound / US dollar- “Cable” EUR / USD Euro / US dollar - “Euro” USD / JPY US dollar / Japanese yen “Ninja” USD / CHF US dollar / Swiss franc “Swiss dollar”, or “Swissy” USD / CAD US dollar / Canadian dollar “Loonie” AUD / USD Australian dollar / US dollar “Aussie” EUR / GBP Euro / British pound “Chunnel” EUR / JPY Euro / Japanese yen “Yuppy” EUR / CHF Euro / Swiss franc “euro-franc” GBP / CHF British pound / Swiss franc “sterling-franc” GBP / JPY British pound / Japanese yen “Geppie” or “sterling-yen” CHF / JPY Swiss franc / Japanese yen NZD / USD New Zealand dollar / US dollar “New Zealand dollar” or “Qiwi” USD / ZAR US dollar / South African rand or “South African rand” ООВ/ USDSpot Gold SLV / USD Spot Silver Moreover, there is a division of the currency pairs. The commonly used one is Major group – 75%% of all trading operations on the market are settled with MAJOR pairs: EUR/USD, GBP/USD, USD/CHF, USD/JPY. Currency pairs which do not involve the US dollar are called cross-rates. They are: EUR/CHF, EUR/GBP,EUR/JPY, GBP/JPY, AUD/JPY, NZD/JPY. Every currency pair has its peculiarities and is influenced by different factors. The most important condition of successful trading on Forex is understanding of this fact by a trader. Read more: http://www.mt5.com/ms/articles/currency_pairs/

The euro exchange rate!!!

The euro (EUR) is the official currency of the eurozone, which includes Germany, Austria, France, Italy, Spain, Portugal, Ireland, Belgium, the Netherlands, Luxembourg, Malta, Slovakia, Slovenia, Finland, Greece, and Cyprus. The euro is also a currency unit in 9 countries 7 of which are situated in Europe. Initially, the euro was planned to be the common currency for the European Economic Community. It was introduced in 1999 to replace the European Currency Unit ECU. Today, it is the world’s reserve currency along with the US dollar. The European Union is one of the world’s three most powerful economic forces. According to the latest data, the euro is one of the most traded currencies on Forex. It is used in more than 40%% of all deals. The main factors affecting the European currency rate are the following: The eurozone macroeconomic indicators Manufacturing production data GDP data Money supply Consumer price index International trading data Employment data Ifo data (Ifo Institute for Economic Research at the University of Munich) The US dollar rate fluctuation However, the European Central Bank has the most significant influence on the euro. The ECB implements and maintains the monetary policy in the European Union. It also executes foreign exchange transactions, keeps and manages the official foreign reserves of the member states. Thus, the announcements of the ECB’s representatives have positive or negative impact on the euro. That is why, while trading the currencies paired with the euro, traders keep finger on the pulse of the news releases. Read more: http://www.mt5.com/ms/articles/the_euro_exchange_rate/

US dollar exchange rate!!

Nowadays, more than 85%% of transactions on the financial market are connected with the US dollar, which is also used as a basis for the cross rates calculations. Thus, the US dollar dynamic affects most currency rates on Forex. That is why the US dollar is one of the most popular financial instruments among the market’s participants. The Federal Reserve Bank has the greates influence on the US dollar’s rate. The Fed serves as the central bank of the United States. The future economic situation in the country depends on the Fed. The main tools of the Fed’s monetary policy are reserve requirements, open market operations, and discount rate. Using these tools, the Fed impacts on the money supply. It manipulates the national currency rate by trading the securities on the open market of the Federal Reserve Bank of New York and changing the discount rate and affecting the funds of the US reserve system. The use of open-market operations are considered to be the most important tool to the monetary policy implementation. The Federal Open Market Committee, which takes all decisions concerning the US monetary policy, has the most significant influence on the national currency. The FOMC is responsible for decisions on the monetary policy including the announcement of the interest rate changes that occurs 7 times a year. Interest rate is another tool of influence on the US dollar. The Federal Funds Rate is one of the most important US rates at which banks borrow reserves from each other. As soon as the FOMC announces the decision to change the interest rates, the market starts to react by altering prices. Discount Rate is the second very important rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window. In most cases, the indicator is hardly higher than the Federal Funds Rate. The 30-year US Treasury bond is the major indicator of the market’s expectation of inflation and another fact that impacts the US dollar. The 30-year bond is also called the long bond or bellwether treasury. Its effect on the US dollar can be different depending on the economic cycle. If the inflation does not throttle the economy, the national currency will gain in value. However, if there is a threat to the economy, the bonds will be actively sold off and the US dollar may significantly fall. Recently, the amount of bonds has been reducing because the US Treasury department is buying its debt back. That is why the 10-year Treasury bonds replace the long bonds. The interest rate on 3-month dollar-denominated deposits held in banks outside the US also has an important impact on the national currency. It serves as a valuable benchmark for determining interest rate differentials to help estimate exchange rates. The US Treasury is responsible for the release of the information on the national debt and for decisions on the fiscal budget. It does not determine the monetary policy, however, its announcements concerning the US dollar have a large impact on the national currency exchange rate. The organization services the government debt. Also it takes decisions on the financing of the US budget. Read more: http://www.mt5.com/ms/articles/dollar_exchange_rate/

How to make money on Forex?

<div style="left: -99999px; position: absolute;">
If you are reading this
 article, you have certainly heard about Forex. Nowadays, Forex is the
youngest foreign exchange market; however its popularity is going beyond
 all the well-known currency markets. What is the secret of such
attraction? Forex advantages are obvious: it is liquid and it is
available 24 hours 5 days a week. Also traders emphasize such important
aspects as low deal price, absence of restrictions, margin-based
trading, a great deal of trading instruments, and high dynamics.

Most new traders starting operating on Forex think only about their
income. Due to the lack of experience they do not know how to operate
correctly and they do not want to spend a lot of time and money. It is
necessary to have an initial capital to make money on Forex. Moreover, a
 trader should have self-control. However, psychological stability will
not allow people to gain success if they do not have enough knowledge
and their own strategy. First of all, traders should learn to forecast a
 currency pair’s trend. They also should learn and apply different
methods of analysis: fundamental and technical analysis, the Elliott
wave principle, the candlestick analyses, and some others. Using one of
these methods, traders are able to forecast a currency pair trend.

If a person has decided to become a professional trader and wants to get
 income regularly, it is necessary to understand when it is better to
start and stop trading. Traders should not only make a correct forecast
but they also should not lose a good moment for short and long
positions. It is important to comply money management, which allows
traders to protect themselves from risks and losses and also disposes
human factor.

Summing up, the answer to the question why Forex is so popular is
obvious. On Forex all people have equal terms and chances for success.
However, only traders who are aimed at self-development and new
experience reach the highest awards, as Forex obeys to the market
economy laws. It is possible to get money on the foreign exchange market
 only receiving new knowledge and applying it in real trading. Following
 these rules, traders are able to not only increase their income, but
also to create their own strategy, which will bring stable revenue.<br /><br />Read more: <a href="http://www.mt5.com/ms/articles/how_to_earn_on_forex_market/">http://www.mt5.com/ms/articles/how_to_earn_on_forex_market/</a></div>

If you are reading this article, you have certainly heard about Forex. Nowadays, Forex is the youngest foreign exchange market; however its popularity is going beyond all the well-known currency markets. What is the secret of such attraction? Forex advantages are obvious: it is liquid and it is available 24 hours 5 days a week. Also traders emphasize such important aspects as low deal price, absence of restrictions, margin-based trading, a great deal of trading instruments, and high dynamics. Most new traders starting operating on Forex think only about their income. Due to the lack of experience they do not know how to operate correctly and they do not want to spend a lot of time and money. It is necessary to have an initial capital to make money on Forex. Moreover, a trader should have self-control. However, psychological stability will not allow people to gain success if they do not have enough knowledge and their own strategy. First of all, traders should learn to forecast a currency pair’s trend. They also should learn and apply different methods of analysis: fundamental and technical analysis, the Elliott wave principle, the candlestick analyses, and some others. Using one of these methods, traders are able to forecast a currency pair trend. If a person has decided to become a professional trader and wants to get income regularly, it is necessary to understand when it is better to start and stop trading. Traders should not only make a correct forecast but they also should not lose a good moment for short and long positions. It is important to comply money management, which allows traders to protect themselves from risks and losses and also disposes human factor. Summing up, the answer to the question why Forex is so popular is obvious. On Forex all people have equal terms and chances for success. However, only traders who are aimed at self-development and new experience reach the highest awards, as Forex obeys to the market economy laws. It is possible to get money on the foreign exchange market only receiving new knowledge and applying it in real trading. Following these rules, traders are able to not only increase their income, but also to create their own strategy, which will bring stable revenue.

Read more: http://www.mt5.com/ms/articles/how_to_earn_on_forex_market/

Man vs Robot Forex Trader

Man vs Robot Forex Trader
List of Pros and Cons
Forex traders have always debated the trading method which is better: whether financial market trading manually or better using trading robots?
Many people may be very stubborn about this regardless on which side they choose, so before I give you the pros and cons of human traders and trading robots let me give you a few words as the big picture of the robot.
Trading robot I see not only the people that you may know, the people who provide benefits silly, and the people that you and I would call it a scam as soon as we saw the website. Yes, robots they exist and they seem to be popular, but this is because many people are looking for a shortcut to riches. So long as there is demand for these products will always be someone who tries to sell them.
But what I would describe as a perfect trading robot is one that you create yourself. You might be a programmer who menghabiskanberjam-hours, weeks and months to create a robot that works for you, or you can be a manual trader who has his own trading strategy that is programmed into the robot from a skilled professional programmer.
So in other words I see a trading robot as a computer software designed specifically for the requirements and follow your trading rules. So as another version of you, it's just automatic and all it does is analyze and trade in the financial markets 24 hours a day. You can also spend 24 hours a day, but obviously this will not last long.
And also have in mind that trading robots can be fully automatic or semi-automatic can. Robots can also be fully automated, but you can turn on and off whenever you feel the need to do so. It's like having an employee who never sleeps and never get emotionally and just do what you tell him to do.
Some might call trading robots as automated trading systems, some may call them expert advisors (term MT4), others just call them robots Forex-no matter what name you use to describe computer software that can be semi-automatic or fully automatic, they can be programmed to make your life easier.
Advantages of Automated Trading System (Robot)
Let's start with the advantages of using automated trading systems. Remember that each trader is different and what works well for other people you know in the business, now may work well for you. We all have to figure out their own ways of trading.
1 Operates on a set of rules without greed, fear, ego or prejudice.
Unlike humans, robot trading will never be misled by emotion, and is not affected by the psychology of traders. Transactions executed automatically after trading rules are met. It follows all the rules of your trading no matter the market conditions. It will not cause panic in the trading loss or revenge after a big loss. It's not going to jump back in the market after a big win to make more money. It plays your rules without blurring the trading process with emotion. Let's face it, as humans we are essentially emotional beings and it is not uncommon to get emotional as when we suddenly lost trading and this can affect our performance when we put the next trading, but with robot you can be sure that all the rules followed regardless of any previous transactions.
Automated trading is the best way to build trust on the market to prevent emotional and psychological problems of influence trading decisions.
2. Monitor the markets 24 hours a day.
Let's be honest here also because some people just do not have time to trade because of their busy schedules. Some of those same people look to robots for their trading because of the huge losses they face today.
You do not have to worry anymore if you have missed some trading opportunities for forex robot will do the monitoring for you. Automated trading system can take the trading day and night, and do not miss trading opportunities. He monitors the market for you every second without any intervention. You do not need to be glued to your screen and analyze appropriate chart close enough to the manufacture of a potential trade. Your EA gives you the power to monitor dozens of forex pairs at once with the ability to identify and react to trading opportunities. It can open and close of trading according to your trading strategy when you are involved in some other human activities. This is a great way for you to save time and perform business or other activities more profitable. Simply put, you do not need to be a slave trading metaphorically in order to gain some advantage.
3 Identify and react to opportunities faster.
Into or out of trading a few seconds earlier can make a huge difference in the outcome of the trade. A Forex robot trading in a split second to execute and profit from sudden market movements. He uses a computer to monitor the speed of the market and identify trading opportunities based on the rules of the code, and execute based on the rules in a split second. Once a position is entered, all other orders are automatically generated, including stop loss and profit target. You will see that you will never run out of trading opportunities.
4. Consistently doing trading plan.
It is true that the ability to stick to the plan make the difference between a profitable trader and the trader is not profitable. With automated trading, you are convinced that a robot really disciplined to stick to the plan no matter what the market conditions. Robot is designed to stick to the plan without exception. If you think you can not stick to the plan at any time, if you are using a robot, you do not have to worry any more about this because the robot expert with it.But this is also a big loss when very sharp market movements or trading style which does not correspond to current market conditions. We will discuss this more later, but make sure not to rely on the 'discipline robot' is too much.
5. Implement error free trade.
Even more remarkable when you use a robot is a robot will not only remain in a trading plan, but will always be trading right. Robots will not sell order when should buy order, the robot will not enter the lot is wrong and will not take into account any parameter stop loss and take profit. If you own trading there are times when you will make a wrong execution, but with robot you can avoid this.
Note: Sometimes the robot can be in an error.
6. Trading diverse.
If you are looking for ways and means in which you can maximize your trading potential in such a way so that you can trade more in a moment, then forex robots are the answer. Robot monitors dozens of currency pairs at a time and do it more efficient and convenient than manual trading. Robot has the ability to scan a wide range of trading opportunities in the market, generating orders and monitor trading. It also gives you the power to trade in multiple accounts or multiple strategies at a time. This may sound incredible to you, but for this robot could really be done.Advantages Compared Trading Automated Trading ManualAlthough automated trading has all these advantages, I can still say that we can not underestimate the advantages of manual trading because it is based on the innate human sense that robots do not have it. Here are some of the best points that you can consider as well.
1. Menantangan discipline and your psychology.
Like what I have pointed out earlier, automated trading programs offer several advantages over the human mind, especially in the field of trading psychology and emotional trading. However, the only major thing that belongs to human beings is to have a human trader pick the brains and robots. Basically means you can use your brain to learn trading all existing knowledge and using this knowledge. And, the robot is basically an idea that comes from the human mind.
2. Perform a perfect decision or near-perfect.
You should know that although the robots can perform tasks that are incredible, man can even do more than what the robot did. Where trading robot can only execute trades based on pre-defined conditions, people can take into account everything that happened, including the fundamentals that may occur suddenly, and process them all simultaneously. Robot trading is not read and interpret the news and this is an inconvenience because the news is part of a very important and plays a very important role in forex trading. Thus, you can actually use what you see on the news to your advantage because your brain is more flexible and can adapt to sudden changes like a robot programmed from scratch.
3 Some rules must be broken
Robots work by following the rules and systems and they also have the mindset if we can call it that, unlike the human brain could read a sign in more depth. This is the reason why humans can see if the market moves awkward, slow or too erratic and open trading. Most robots are mathematically based and works well in trending markets. Most vulnerable and being screwed themselves when the market becomes unstable or move sideways. So the robot has an inability to adapt well to the market.
4. The robot always lose "sixth sense"
Lastly, as a robot that does not have emotions, they do not have "intuition" as held by each trader because it includes important in the trade. Most of the Forex trading success is the element-feel, and it's really something that you need to develop.
Those that have this capability will not rely on the performance of the robot in trading. They are skilled traders who are accustomed to manually make a profit in the market. Some are using trading robots can get good profit if they traded with sound risk management and 'lucky' with their robot.
Trading Robot vs Manual Trading
I believe that forex traders have one thing in common and that is, finding the best way to maximize their profits. As a forex trader for many years, I have to try and see what works best for me through a series of trials and testing. Actually, no method is right or wrong of trade because it depends on each individual. Some traders say that trading robot has served them well, while others still prefer to trade manually because it is the most profitable for them. If you think deeper, traders have their own reasons why they use a particular method. After weighing the pros and cons, I finally found what I as the most profitable merchants and the creator of the software. To help you make the right decision and gives you a good idea about how to choose a trading method that works for you, here are some points that you can learn:
If you have never used a robot to trade, have you ever wondered why some traders use them? There is something really interesting about the use of robots. Basically, the convenience of using robots is what sets it apart from the trade manually. Many perceived difference between using a robot to open / close trading orders, and become an active human trader.Using robots to automate the trading process so much so that there's a particular platform allows traders to view other users' strategies. This is technically considered by some traders trading robots. User input is not required unless the user chooses to add to their portfolio strategy and then activate it. The software will then oversee the incoming signal from the strategy. When a person is detected through signals, trading opened on the account that match the signal account. Statistics for each of the strategies available for research purposes and the recent performance history is easily accessible. With this feature, you just need to decide what strategy to use and let the robot (or traffickers on the other side) to do its job.
That's what I did on Vavatrade. I sell trading signals generated my trading robot automatically.
Note: The great danger with this strategy is that, past performance does not guarantee future profits. Even if the signal providers or the robot has done well in the past, it does not guarantee profit in the future.
Trading robot can take into account the data of the technical indicators such as the stochastic oscillator types, the Moving Average Convergence / Divergence (MACD) histogram indicator, a key Fibonacci retracement level, support and resistance levels and pivot points. Seems to be no limit to how complex trading robot can succeed at the hands of a skilled programmer. In this way, forex trading robot is very flexible and can generate huge profits with minimal involvement from the merchants. If you want to trade but do not have enough time to do it yourself, it will be a lot (during the robot favorable course) will help you.
Although trading robot can be beneficial in some aspects, you must remember that the "coin has two sides" and this also applies in trading using the robot. Robots do not take into account the movement of funds in the account.Of Robots can be programmed to analyze price movements, but they were never going to do it in a way as can be done by humans. There is no trading robot that can see a graph like humans.
ConclusionHow much time can you Commit to trading? How much effort are you willing to put in? How much time you can afford to spend on trade? Many traders enjoy watching the charts, indicators of learning techniques and patiently wait for events big news or press releases. Using robot actually remove these factors for traders and therefore may not be suitable for everyone's preferences. If a trader looking to make money with no involvement, trading robot may be the right choice. However, if traders enjoy the process of searching for the trading and make a judgment call based on the information they see in the graph, the robot may seem boring to them.
It seems pretty clear that if you are the type of trader who does not mind spending a little time or even more and enjoy the process of analyzing the indicators and graphs, then the robot forex robot will not be any use to you. However, if you do not want to delve deeper into the trading process and would rather spend more time watching your favorite sports on TV while receiving a couple of wins and losses trading, forex robot may be that you just need after all this.

Exotic Currency Trading: Risks and Advantages

Exotic Currency Trading: Risks and Advantages
Forex market currencies generally classifies into three groups: major, minor and exotic currency. Currency Exotic is the term given to the currency in thin trading is not liquidated, less popular in market activity is consistent, and trade with a high markup costs in certain markets or dealer.
List of exotic currency pairs:
Due to the constantly changing trading patterns based on economic and geopolitical developments, exotic forex list can change from time to time. The following is an indicative list of exotic currencies forex:
AED UAE Dirham Argentinean Peso ARS BRL Brazilian RealCLP Chilean Peso Chinese Yuan Renminbi CNY CZK Czech KorunaEGP Egyptian Pound HKD Hong Kong Dollar HUF Hungarian ForintIndonesian Rupiah IDR ILS INR Indian Rupee Israeli ShekelIRR Iranian Rial Icelandic krona ISK JOD Jordanian DinarKRW South Korean Won Kuwaiti Dinar KWD MXN Mexican PesoMalay Ringgit MYR PHP Philippine Peso PKR Pakistani RupeePLN Polish zloty RUB Russian Ruble SAR Saudi Arabian RiyalSingaporean dollar SGD THB Thai Baht TRY New Turkish LiraTWD Taiwanese Dollars ZAR South African Rand Zimbabwe Dollar ZWD

All of these currencies shows the characteristics of thin trading, wider bid-ask spreads and limited trading interest by market participants.
Exotic currencies does not necessarily mean a weak currency or undervalued, but it shows the limitations and "all is not populeran" behavior in terms of trading activity. For example, Kuwaiti dinar (KWD) and Saudi riyal (AED) are two high-value currency, but they are still considered exotic because trade is limited.
Risks associated with Forex Trading Exotic Currencies: Due to low liquidity factors and limitations, the following risks associated with forex trading exotic currencies:
Apart from speculation, the price of forex is fundamentally determined by supply and demand trends follow "Purchasing Power Parity" and interest rate differentials. It would be very difficult to track and predict the development of the macro-economic factors such as for distant countries. Lack of awareness and challenges in tracking the deciding factor causing a higher risk.
Low liquidity makes forex trading more difficult exotic. Most transactions take place on the banks with a fixed interest rate predetermined for remittance or similar activities.
Analysis of historical daily data for all the exotic currency pairs will show profitable opportunities both in terms of price variations seen during a short period, medium and long term. However, the high cost of mark-ups charged by forex dealers can erode potential profits.
In some cases where there is political uncertainty in the country of origin of the currency, this leads to high fluctuation, making it difficult even for experienced traders to trade in the forex exotic. As an example of the wide spread has been observed in Russian rubles (RUB) 33.5 to 39 per USD in the short period from July 2014 until September 2014, because of a conflict of Ukraine. Another similar example is the Iraqi dinar investment schemes are very popular, where some investors have been waiting for years so that they can get the investment.
Advantages associated with foreign exchange trading for exotic currencies:
In addition to the risks already mentioned above, exotic currencies showed high volatility properties to the value of the high prices that move in the short term and long term, allowing the potential for huge profits.
Imagine if you are on the correct side of the above Russian ruble / US dollar exchange rate - in less than 2.5 months, you can get a gain of about 16.5% (possibly more with the use of leverage).In the long-term period between 2008 to mid-2013, US dollar (USD) against the Indian rupee (INR) exchange rate increased from about 39 to 69, a gain of 77%.Aside from directly buying the desired currency, there are few other investment options are to benefit from exotic currencies. Some look more complex deals such as currency futures, currency options and even a variant on the currency barrier option is available as an OTC product in selected markets. Each individual should be given the complex nature of these products, which further adds to the complexity of trading exotic currencies.
Profile forex traders to trade the exotic currencies:
Given the above factors, exotic currencies is not recommended for beginners, short-term traders, or traders with limited trading capital.
Market maker and experienced dealers who benefit from trading exotic currencies by utilizing high spreads, and the expense of other colleagues.
Exotic forex can be a good investment for long-term investors experienced, international investment managers or investors who are willing to add some diversification of their investments at the global level.
Ideally, an individual who has a consistent action on specific country (and certain currencies), with the potential for long-term investment, can try to monetize exotic currencies with a "set and forget".
Conclusion
Exotic trading is not for everyone. Short-term profit opportunities marred by the high cost of mark-up and the magnitude of the spread, while the long-term investment requires patience, knowledge of economic and geopolitical developments and their impact. An individual should consider exotic forex investing and trading with considerable experience and potential risks.

How to Make Forex Trading Model

How to Make Forex Trading Model
Welcome to forex trading - a global market that runs 24/7, offering great opportunities for traders who are prepared to take risks.
This article discusses guidelines and outline to build a model of forex trading or currency trading. Also discussed relevant points about how forex trading is different from trading equities, as well as specific points that should be considered to build a model of forex trading.
Advantage of the market is the market can accommodate all sorts of theories (fundamental, technical, price movements, etc.), which opens great opportunities for market participants, which followed the variation patterns and principles for trade. It is a matter of time - nothing to lose or win at any given moment. When carefully done, building a trading model that is based on the conceptualization of a clear strategy that makes it possible to reduce whopping trade and increase the number of trading profits, thus enabling a systematic approach to benefit.
As a general thought and flow processes, building a trading strategy can be summarized in the following steps, as shown in this picture:
Picture1
However, certain inputs may be needed for certain forex trading, and the following discussion:
Why the different forex trading
Theoretically, the forex price is said to move in accordance with the two basic concepts - interest rate parity and purchasing power parity. The significant difference between forex trading and forex market trading is global, 24/7 and regulatory moves are limited. This causes variations that are very sensitive, unpredictable and vulnerable in forex price movements. Major driver of forex price including for example news statement issued by the government officials, geo-political developments, inflation and other macro-economic figures, etc.
Let's discuss the steps to build a model of forex trading.
Identify / conceptualizing trading strategy:
Build models require trade matching opportunities, which in turn involves the selection of each of the strategies set out, or a new conceptualization as a standard variant. Trading strategy is the core of every model of trade, because clearly define the rules to be followed, the point of entry / exit, the potential benefits, the duration of trading, risk management criteria, etc. For example, here are two popular forex trading strategies:
News: Irrational forex markets often move because of the news releases involving such official figures (GDP figures, employment figures, non-farm payroll, etc.). Terljadi usual effect immediately after the news release is a high degree of volatility which led to significant price fluctuations. However, approximately 15 minutes after the news release, the prices are often observed to move back to the previous level, which is maintained just before the news release. The model can be built to take advantage of all these opportunities.Breakout daytime: the daily patterns prevailing in the candlestick, in which the high and low price range is currently in a high-low range of the previous day, indicating lower volatility. There are several patterns during the day, showing a continuous decline in volatility and therefore significantly increases the chances of a breakout. Forex traders build models and strategies based on this concept.Identifying security to trade forex:
Forex trading requires a special strategy of choice - the following options:
Asset - will trade only involves trading currency notes, futures or forex trading, forex options or exotic forex derivatives more advanced (such as barrier options)?Currency decent pair traded in accordance with the strategy that has been identified (such as EURUSD, JPYAUD, etc.)Forex Currency groups - major currencies, secondary and exotic - select currency pairs forex, because this category indicate special characteristicsPlug-in specific parameters for forex:
After trading strategies and identification of tradable security, the next step to build a model of forex trading forex strategy is to introduce certain parameters which include:
Dependence news: Unless a very long-term investors, there is no forex traders will ignore the development of geo-political news, economic conditions, macroeconomic data related announcement, etc. The trade model must have consideration for entering into the news impact of trade - in whole or in part, manual or automatic - fitting into forex trading models.Trading hours: Model forex trading must take into account the dependencies of time, if any, as follows: take a position before the announced macroeconomic figures, trading forex currency pairs that have more volatility during the hours off - for example, Australian traders who trade EURUSD at night Australia, trading exotic currencies that lasts only during business hours in the designated banks and OTC marketTechnical tools, fundamentals and monitoring requirements: If the chosen strategy requires constant monitoring or Bollinger bands chart DMA ®, or calculations based on figures elementary / macroeconomic, forex trading model to be equipped to cover all the necessary tools for these requirements.
Establish the purpose of trading:
This step is mainly concentrated to incorporate the following basic features into trade models, with different values ​​to find which one is best and suitable:
The rate of profit (such as the movement pips)Loss levelManagement Budget: How much money is at stake on each trade, with a style that is like what the (fixed amount per trade, or the amount varies with the progressive change)Risk management and scenario analysis consideration, as applicableSomeone might start with a few assumptions, and refine them repeatedly performed to find the best and profitable manner.
Back-test models:
Each trading model developed by an individual reflects the characteristics, the process of thought, temperament and experience of traders who develop or that individual. Because it is limited by the knowledge or even ego or blind belief in a personal model of development, important aspects are sometimes overlooked by traders. It is important to test the model on historical data, to identify errors and to avoid such losses in the real world trade. Backtesting also allows the necessary adjustments in the objectives that have been set (target profit, stop-loss, etc.) to further customize the models and strategies developed, ensure the practical realization of maximum profit potential.
Model aIternatif analysis:
Develop a model of trade requires patient analysis, which includes various iterations repeated changes to the parameters of mathematics, as well as variations in the underlying theoretical concepts. This cycle helps to record the failure and success of the case, so take note of what works and what does not, which is useful for many years, even throughout the trading career.
Using a computer to automate the trade and the establishment of the model:
Nowadays, the trend is to try to automate everything. But remember - "The program is as efficient as the basic concepts and practical implementation built into it."
Computers can be used to find patterns in historical data that can be the basis for the development of new models. Backtesting can also be aided by computer programs that run against historical data.
Application freely available or paid, or the trader can make your own customized to their needs based on their familiarity with the computer programming system. Be sure to use a computer program with a full understanding and application of strategies that you choose yourself, to avoid the pitfalls that later resulted in the loss of actual trades.
Conclusions:
One of the major advantages of using trading model is that it can eliminate emotional factors and mental barriers when trading, known as the main reason for the failure and the loss of trade. Meanwhile, it is always interesting to trade through a model with pre-defined and systematic. Wise traders are always looking for the possibility of failure and customize continuously for further success, based on market developments. Pragmatic approach, with continuous monitoring and improvement can help profitable opportunities through a model of trade.