How to Act on Volatility in Forex Trading

Volatile markets create trade setups, so you need to act fast when the opportunities arise. The Forex market is no different – Forex traders live on volatility. Still, many traders miss on this rapid and rewarding market movement by following very liquid currency pairs and ignoring important forex economic calendar events.
In addition, be prepared to trade wherever you’re – markets don’t sleep and neither should you. By using a trading software which runs on all computers, such as the MetaTrader5 web trading platform, you’ll be able to act fast and catch the price movement as soon as the volatility appears.
In this article, we’ll show you a few simple tips to stay ahead of volatile price movements which can be easily applied to your everyday trading.

Include Cross-Pairs and Exotics in Your Trading

If you follow the online Forex trading community, you may have noticed that a lot of attention is placed on the major pairs, which include the US dollar as either the base or counter-currency. Cross-pairs (which consist of two major currencies but exclude the US dollar) are relatively less discussed, and you won’t be able to find a lot of reference to exotic currencies.
The problem with this approach is that majors are usually significantly less volatile than cross-pairs and exotics. The reason for this lies in their liquidity – the more liquid a pair is, the more buyers and sellers are waiting to jump into the market at any given price-level, which in turn turns volatility down. Let’s take EUR/USD for example. Theworld’s most liquid currency pair hadan average daily volatility of only 75 pips in the beginning of 2018. Compare this to the average volatility of GBP/JPY (a cross-pair) of 218 pips, or that of USD/TRY (Turkish lira) which reached 377 pips, and you’ll see the difference.
By including cross-pairs and even exotic currencies in your trading, you’ll find that their volatility increases your profit potential significantly. However, pay attention to your risk tolerance – volatility may easily go against you as well.

Make Sure to Have Access to the Markets

How many times did you open a chart and missed a spike in the price? This is especially true in times of major news releases when the price can easily jump dozens or even hundreds of pips up or down. If you find a possible trading opportunity based on volatility, you need to act fast and enter the market as soon as possible. In case you’re not in front of your trading desk, you can use a web-trader such as the MetaTrader 5 Web Trading Platform. A web trading platform can be fired up on any computer with a web-browser, so you won’t miss any trades even when on the go.

Follow Major Calendar Events

By following Forex economic calendar events, you’ll be able to stay up-to-date on all major developments and reports in the market. And as we said above, those reports can generate many trading opportunities of which you otherwise wouldn’t be aware of. Each morning, scan the economic calendar for upcoming events that may impact your open positions. And if the actual release unleashes enough volatility to break major technical levels, fire up your trading desk and be prepared for the upcoming price-action.

Best Tips When Picking a Forex Brokerage Company

Forex brokers facilitate retail Forex trading. While you are preparing to invest in Forex trading, it is essential you know the information that you require to help you while picking a Forex brokerage company. Among things you need to know are the main types of Forex Brokerage Company that exists. Forex brokerage companies can be broadly classified into two: Dealing desk brokers and no dealing desk brokers.
How you determine the best Forex broker depending on your trading strategy. There are different methods of trading Forex. Each of these trading strategies has pros and cons. They also provide the trader with a different style of entering and exiting the market. For instance, some brokers offer tighter spreads. However, they charge commission, whereas other brokers provide broader fixed spreads, but they don’t charge commissions on each trade. All brokers offer their trader online trading platform to help them enter and exit trades, but they differ in the manner that the platform is organized.
Forex Brokerage

Top pieces of advice when picking a Forex brokerage company 

Picking a good Forex Brokerage Company can be tasking, but we have provided in this article, criteria that would guide your decision and choice. 

Location

You need to consider the office location of the brokerage company. It is better to register with a brokerage company that operates from your jurisdiction to make it easy for you to manage crises when they arise. What this implies is that it is better for traders in the UK, for example, to sign up with brokerage companies in the UK. This would make it seamless for you to transfer your fund to your account when the time comes and eliminate unnecessary legal protocols that you may be subjected to if you trade offshore. You may additionally make some profits out of exchange rate.

The brokers must have a good reference and reputation 

It is essential to check how reputable the broker is. As a result of the extensive reach of the Forex market, there are some scams out there. So, be wart when choosing a Forex broker and ensure you make a good choice. To check if a Forex brokerage company is a scam or not search for the company’s name attached to the word scam on Google browser.  Try to read through the pages to discover what others are saying about the Forex broker. You may as well visit the facebook of that particular broker to learn the feedback of its users and the response of the company to their comments. 

The registration credentials of the Forex brokerage company 

Some companies like UK, France, Germany, US, Switzerland, and Australia keep records of the Forex brokerage companies that operate in their jurisdiction. You will be able to find if a broker is registered by going through one of these databases. You will be able to find out also the reputation of the broker on such sites. 

Deposit and Withdrawal procedure

Another factor you need to consider is the deposit and withdrawal procedure of such broker. Trusted brokers would allow brokers to withdraw a small amount of money like 100 dollars to 300 dollars. If they require you deposit a large sum of money, take to your heels. 

The country the brokerage company is allowed to operate 

Many Forex brokers only allow traders from their country or selected countries. Ensure that the broker you decide to trade with accepts traders from your country. Try not to avoid opening an account with a broker that doesn’t operate in your state, go for other choices. 

Trading Platform

The trading platform of the brokerage company needs to be intuitive and user-friendly enough to make it easy for you to enter and exit the trade. It must also not contain complicated features that would make navigation and trading extremely difficult. 

Excellent customer service delivery 

You will require the services of the brokerage company to ensure a smooth running of things while you trade. The trading platform must provide different means of communicating with customer service 

Conclusion:

Consider all these pieces of advice before picking a Forex brokerage company and try to stay away from a brokerage company that lacks any of these features.

How To Choose A Forex Broker That Is Best For You?

The foreign exchange market is the world’s largest decentralized financial market. It’s a way bigger than the all other capital markets of the world combined. Daily trading turnover is more than 5 trillion dollars. A trader must choose a forex broker to get access to the market. There are so many retail forex brokers out there and not all of them are good and safe. Choosing the Best Forex Brokers who are suitable for your trading style is very important. But this task could be tougher especially if you don’t know what you should be looking for. Let us guide you to filter and choose a good broker that will serve your requirements. There are a number of things you should consider before you pick the right one.
A book, B Book
Let’s find out how to choose a forex broker in three steps given below:

1. Regulations and Security: of the choosing broker

The first and foremost quality of a good broker is – it must be well regulated by trusted regulators. Different countries have different jurisdictions.
NFA and CFTC are for the USA. Financial Conduct Authority (FCA) of UK is very famous for its reputation which covers the risk up to £50000 for an account. Obviously this isn’t cover for your trading losses.
ASIC of Australia is well known and CySEC is also popular, which is from Cyprus (EU). There are few other FX authorities which worth to consider like JFSA of Japan, BaFIN of Germany, SFBC of Switzerland, AMF of Canada.
Only a registration with these authorities does not necessarily mean your broker is regulated by them. Make sure your broker is regulated by your chosen regulator, having a simple registration number is not enough.

What should I do if my country doesn’t have FX jurisdiction?

This is a very common question by traders from 3rd world countries like Bangladesh, India or other Asian and African countries. Actually, you can trade under an FCA, ASIC or CySEC regulated broker. FCA is my favorite however, ASIC and CySEC are fine too. They even offer better leverage which might be helpful for traders who have smaller funds.

What about the security of investing fund and personal information?

You should ask about the capital solvency of the broker if you don’t find it on their website. Ignore the low invested brokers. Check the financial ability every three months with your broker (once you’ve decided). IronFX (a former leading broker) recently started holding all withdrawals requested by traders due to financial insolvency. You don’t want to be a victim of such a situation. A legal battle in court might take years to reach a verdict and even then, the terms may not be favorable to you. Don’t forget to check the liquidity providers of the broker. A good broker always puts your funds segregated with different banks.
A broker often collects personal data like ID cards, credit cards, birth certificates, passports, bank solvency papers to verify the trading account. So, you must inquire about their server security. This is equally important. FXCM, Oanda and other few leading brokers got hacked more than once between 2010-2015.

2. Types of Retail Forex Brokers: MM or STP broker?

There are basically two types of retail forex brokers. 1. Dealing Desk broker or Market Maker (MM), 2. No Dealing Desk broker (STP, ECN) and but there is a modern version of MM broker called ‘Hybrid Broker’ let’s discuss each of them.

Dealing Desk Brokers: Not always a villain

A dealing desk broker makes money through fixed spreads, swaps and from losses of a trader. All market maker (dealing desk) brokers process trading orders manually or sometimes by a computer system which runs into their own trading environment. They trade against you. Don’t be scared by that. In forex trading, there is always someone taking opposite side of your trades. In a real trading environment, other traders trade against your positions. You only make money when someone loses theirs.
Experienced traders often chooses a good MM broker to trade, as they have no problem with the liquidity. They provide their own liquidity.
But most MM broker serves their own interest and they may manipulate the market price and spread. Due to artificial price quotes they often re-quote during higher volatility. Sometimes, they do few bad practices like wider spreads to hunt the Stop Losses, add extra pips while you close a position, negative slippage is very common. It means they hang your trade for a couple of minutes and they don’t give you any profit if the price goes with your trading direction during that extra period but charge you if it goes against you!
However, well regulated and reputed MM brokers have a better trading environment, as competition between MM brokers is high these days. We don’t recommend any Market Making broker to new comers.

No Dealing Desk Brokers:

A no dealing desk broker act as a bridge between traders and liquidity providers (interbank). Positions taken by traders are automatically transmitted straight through the interbank. They are called STP brokers.

STP Brokers: They might not give you the best trading experience!

STP Brokers are often known as good brokers. These brokers have variable spreads and prices directly come from liquidity providers. All executions are automatic and there are no re-quotes. You might have slippage but no re-quotes. And their slippage is actually different than an MM broker. Sometimes a delay in execution can happen but you always got the price you executed, so this type of delay doesn’t affect your profit! And they don’t take the other side of the trade. They either take a small commission on trading volume or add a markup with the raw spread. They get 1:100 leverage from Liquidity Providers. Few drawbacks for a new trader such as: No swap free account, minimum contract size is 10k or 0.10 (in MT4), no negative balance protection etc!

What is ECN, True ECN, ECN+STP broker?

Electronic Communications Network (ECN) brokers are popular these days. They connect their traders to interact with other participants in the ECN network. The other participants could be a bank, retail traders or even hedge funds firms etc.
ECN brokers can offer much tighter spreads than everyday broker as they consolidate price quotations from different market participants. Their system is automatic and there are no re-quotes with the price. They can’t trade against their traders because they are matching trades for them with other participants. And they allow their traders to see ‘Depth of market’. ECN brokers usually charge fixed commission on trading volume.

Hybrid Model Brokers: Understanding “A book” and ‘B book”

You can call it an upgraded version of traditional MM brokers. It is very difficult to tell from the outside if a broker is STP or MM. Most MM brokers in modern days’ practice both MM and STP altogether by a hybrid model.
90% traders lose money and 10% earn. A broker can get massive revenue if they can identify those 10% traders and send them to the real market. They categorize traders and put them into an ‘A’ book and ‘B’ book.

A Book:

This is the actual STP market. Experienced traders, instructional traders, consistently profit making traders, traders with large investment usually get listed for A book. An MM broker doesn’t want to deal with them so they send the orders of these customers via an STP model to the market.

B Book:

New traders, traders with smaller funds, traders who use higher leverage with trades, traders who lost ~30% of the balance, traders who have more than 50% drawdown. Broker don’t pass their trades to the real market but keep them themselves. There is only one way to get rid of B book which is making a consistent profit. If you make profit consistently broker will automatically put you in the A book.
However, you will see the real face of B booking brokers if you have more than 50 percent floating negative positions. They will do everything to wipe your account (bad one). Pending orders are often misplaced, they will hunt your stop losses by widening spreads. Slippage that remains 5-10 minutes, sometimes even hours!

3. Internal broker information: Check list for choosing a broker!

Commission Cost and Spreads:

Check the details about the average spreads in normal time for major pairs as well as cross currency pairs. 1-2 pips for major pairs and 2-5 pips with the cross pairs are okay if a broker doesn’t charge commission. Make sure you understand the commission terms If the broker charges commission. A charge of $3-$10 for each standard lot are common among brokers.

Swap rates and rollovers/ Islamic accounts:

This is the most important thing to check if you are a swing trader. A swing trader might hold a position for weeks or even months. Higher Swap rates can eat a significant portion of your profit. Some brokers charge swaps rollover daily basis whilst some follow other time frames.
You should read and understand the conditions of an Islamic account if you need those. Most brokers offer conditional swap free for a limited number of days. Like 7 days, a month or something similar. And all currency pairs might not be swap free.

Margin Call and Big events interference:

You should ask how your trades will be closed if margin call happens (this is important if you are a new trader). All trades at once or one by one? (e.g. starts with larger volumes). STP brokers can’t offer less than 100% but MM broker can offer 20-30% margin for stop out!
Brokers often lower their leverage and increase the required margin ahead of significant events like fed rate hike, ECB major decisions, political events like Election on G10 countries by showing low liquidity cause. Ask them about it. Most often brokers provide 1:30 for the risk-related currencies, and 1:50 for others. Make sure you understand them when it happens.

Negative balance protections:

Forex trading involves high risk. A sudden and massive move against you can exceed your investment. The broker could file a lawsuit against you if you don’t clear the due payment. SNB’s floor ending decision for EURCHF caused a massive market move in few seconds in January 2015. No Stop loss worked due to heavy server load and people who had trades on the wrong side went into freefall and ended up with huge negative balances.
So, for your own safety, you should choose brokers who offer a negative balance protection so, your loss won’t exceed your investment. However, only MM brokers can offer this facility.

Deposit and withdrawal:

First, you should ask them the minimum deposit and withdrawal policy of the broker. And if there any fees during these process. Does the broker carry fees of the payment gateway?
Sometimes brokers accept digital wallet based currency for deposit but not for withdrawal (e.g. Axitrader). And there are other brokers they only allow you to withdraw your fund the same way you deposited. You should ask them how they process incoming and outgoing money.

B2B Transfers:

Sometimes it saves money and time if you can transfer funds between two brokers. Few brokers allow multiple B2B transfers, few one-time transfer, few are one-way transfer (only accept incoming). You should also ask if there any fees for that.

Trading platforms and Servers:

Make sure your preferred trading software listed with the broker you want to choose. I would say you to choose a trading platform that is available across the different operating systems like Windows, Mac, Android, iOS. The nearest trading server from your location would give you more accurate and faster trading experience.

Hedging:

Due to the regulatory body, not all brokers allow hedging practice. You make sure your broker allows that if you hedge in your trades.

Minimum Trading Volume / Contracts Size:

This is significant if your investment capital is smaller. Some brokers have different minimum contract size policy for their currency pairs and CFDs (S&P, Gold, Oil). Such as 1k (0.01 lot) with currency pairs and 10k (0.10 lot) with Gold (CFD). You should ask the support about their minimum trading volume policy. A true ECN broker can’t offer you less than .10 lot size, this is the minimum by most liquidity providers.

Customer support:

No services are perfect and therefore you must pick a broker that you could easily contact when you need. A 24/5 live chat or a call back customer support is good. Quick response from a support is crucial for me.
Last but not the least, choosing an online forex broker is not that easy. You should always prioritize your trading methods. A broker could promise the whole world when you ask them. But you should consider trading a demo account with them first and see how the trading environment actually is. I would suggest you choose two or three top brokers for demo practice and pick one from them for funding with real money to get the best for you.
To become a successful forex trader, you have to learn trading first. Only picking a good broker won’t make you profitable. You can learn forex trading for free and strategies those work on our website.
Wish you all the best.
Shaon Bhuiya is a price action trader, Fund Manager, Coach and Forex Blogger. He is highly regarded for his unique ‘Core Price Action’ trading strategy. Learn more about him here at FxTemper. Follow him at Twitter @Shaon77

Simple Ways To Develop Confidence In Trading

We all have confidence tucked away in us somewhere; we may use it for our day job, weekend sports or odd jobs around the house. So how can we develop confidence in trading?
I hear traders say to me all the time “ I’ll get confidence when I start making some profits” and every time I hear this I kindly let the trader know, you need confidence before you start making profits.
Can we start off by asking ourselves “are we naturally a confident person”? If not that’s OK, we can then ask ourselves what are we confident at doing in our day to day life, and how did we get to the stage of being confident in that aspect of our lives.
The oxford dictionary states confidence as “the feeling or belief that one can have faith in or rely on someone or something”
Develop Confidence In Trading
So we can break that down into trader language quite simply, “ do you trust your trading plan/system”
So let’s take a look at some key steps in gaining some confidence in your trading.

  1. Have you backtested your trades you are taking? We backtest our trades to gain some knowledge in the setup, and look for patterns we can use to our advantage in the future, this will also give us insight to why our trades fail. Backtesting your trades is by far the most boring part of trading and is overlooked by so many for this reason. No one wants to number crunch, but by doing this you will gain confidence in the trades you take. (pending the success rate of your trade of course)

Say you backtest your trade setup over the last two years, you winning strike rate is sitting at 70% (7 out of 10 times you have a winner) next time the trade setups, you know your trade winning strike rate over the last 2 years all you have to do is push the button. You will have confidence in doing this. Or you can sign up to a service that has proven FTSE signals. Make sure their results are published and verified.

  1. If you’re naturally a confident person, you need to know how to handle a loss.

Most confident people I know hate losing, and unfortunately, in trading, we will lose.

Losing can wreak havoc on our confidence, we need be able to handle a loss, simply putting it behind us and moving onto the next trade.

How will you handle a string of 4 -5 losses in a row, will you have the confidence in pushing the buy or sell button the next time your trade comes up? Your confidence will come from your backtesting as mentioned above, knowing that over the last 2 years of backtesting you found on 5 separate occasions your system experience a string of 5 losses in a row.

My mindset before entering a trade is that there is a possibility that this trade will fail, I guess I’m trying to condition my mind for the potential loss, that way when it happens I don’t feel so bad. Another good way of handling a loss is to leave the computer straight away, go for a walk, throw the ball to the dog, take your mind off it before it turns into multiple losses.

“The Market is always right”

  1. Working on you. Setting trading goals and completing them will give you some confidence in your approach to trading. Little goals like, I will only trade setups that I have backtested.

Stopping trading for the week after you have made 3%, following your trading plan, not breaking any trading rules. If you can complete goals similar to these, and you have backtested your strategy, there is no reason why you cannot gain confidence in your trading.

One last point, develop these steps into your trading and keep a journal of every time you place a trade, every time you exit a trade early (before you were supposed to) and every time you take a loss, write down how your feeling, are you tired, did you get woken up by your platform alarm, were the kids crying in the backroom. This will also help you in your quest of “why weren’t you confident”. And will also give you guides of what you need to improve on.

20 Things You Should Know About Forex

If you are forex trading and using the binary trading system, you have to be on the watch out and learn a few tricks of the trade. In this write up, we’ll try to find out the different points to be kept on top of the mind at the time of dealing in foreign exchange.

We are sure it will go a long way in helping to understanding the dos and don’ts pertaining to foreign exchange buying and selling.

things you should know about forex

1. Understand Your Broker

The first and foremost job is to have a clear understanding of the broker with whom you are dealing. If you have a good broker, you can be sure that your job is 60% done. You should be careful about the reliability and dependability factors of your broker.

2. Never Get In Without A Strategy

It would be wrong to believe that making money in forex is all about chance and luck. Unless you have a good and reasonably foolproof strategy in place, it would be better to wait still you have it.

3. Get Started Slowly And Then Gather Speed

It is extremely important that slow and steady wins the race in the forex market. Start with small goals, reach them and then move forward with higher goals. Hurrying through the process should be avoided.

4. No Place For Emotions

Forex trading is all about knowledge and logic rather than being driven by emotions. Gut feeling and sixth sense may be fine elsewhere but not in this market.

5. Take It Cool

Becoming stressed and tensed is not the way forward. You should learn to take it cool and move one step at a time.

6. Experience And Learn

No one has made it big in forex trading without learning and practicing. Even if you lose money, don’t give up and understand the importance of practicing.

7. It Is A Lot Of Psychology

It must be borne in mind that every trader is a psychologist at heart. Each move you make while being in sync with market should have some psyche behind it. You should ensure that you are not acting out of frustration or in a hurry.

8. It Is Uncertain Out There

You also must understand that there is nothing such as guaranteed success in forex market. You have to be ready for a mixed bag and even the most experienced players do not win each day.

9. Patience Is Important

There’s a need to be patient without which you cannot make much progress. Success takes time and it is perseverance and being at it which pays in the long run.

10. Educate And Inform Yourself

Knowledge is an important attribute in almost every field and you must be ready to keep yourself abreast of the latest happening in this field. Analyzing, reading news and other such things can help.

11. Take Your Time

One of the reasons why people fail in forex is because they get overwhelmed by success and defeat. Staying cool and composed is a pre-requisite for being successful.

12. Keep A Watch On Trends

Watching the trends and learning from it without any doubt is a great way to be a successful forex trader.

13. Make Hay While Sun Shines

When you watch trends you will know when the weather will turn good. You should make us of the same and hit the rod when it is hot.

14. Plan Long Term

Planning ahead for the medium and long term is important. At the same time, it is important to have a plan B if plan A fails.

15. Do Not Go Overboard 

It also is important not to go overboard and end up overtrading. Overtrading beyond a certain point will certain lessen your chances of winning.

16. Know Your Limits 

Many people smell blood early and they go overboard and become plain and simple greedy. This should be avoided at all costs

17. Know How To Use Stop Loss Effectively

If you get in touch with good traders like CMC Markets, they certainly will teach you more about stop loss. It will help you to keep positions open till situations improve. Hence stop loss could eliminate big losses.

18. Look At History And Learn 

History teaches quite a few things and it is the same with forex trading also. You must learn to analyze past trades and learn a lesson or two from it.

19. Experiment A Bit 

One cannot have a straight jacket rule to play by when it comes to forex trading. Some bit of experimentation would be required.

20. Take Small Risks

You must know how to take small risks once in a while without which you may not break the initial barrier and move out to the next round.

How to Succeed in Forex Trading

Taming the volatile Australian Dollar – A great currency for beginner forex traders

You have your trading plan, your brokerage account is open and you’re excited to get started. The next step is picking the right forex pair to focus on.

Each forex pair has its own personality, with different market and economic forces at play in each market. Some pairs have a tendency to make clean-trending moves, while others tend to be more range-bound.

The Australian Dollar – AUD/USD – is a common starting point for beginning Forex traders. This market has a reputation for having friendly price action, and provides quite frequent trend-following opportunities.

About the AUD

The AUD is considered a commodity currency, due to Australia being a major exporter of products such as iron ore and wheat – this means the AUD price action is greatly affected by moves in the commodities markets.

The AUD is also extremely sensitive to economic growth and demand from China – Australia’s largest trading partner. China’s economic boom over the past decade was a large factor in pushing the AUD/USD up to a peak of around 1.10 in 2011.

With China’s slowing growth over the past few years, the AUD has gradually dropped to the low .70 area – this multi-year movement has provided a great long term trend-following opportunity for traders looking to short the AUD – this means placing a trade, looking to profit from a drop in the currency.

Trading Tips

The AUD has the reputation of providing clear price action, with the tendency for smooth trends, especially over the past few years. Here are some basic trade set-ups to look for in trending markets:

Pullbacks to the moving average

Pullbacks to the moving average

The pullback is perhaps the most classic of trading set-ups. A pullback set-up occurs when the market is making a move in one direction, then “pulls back” in the opposite direction – effectively setting up for the next leg in the overall trend.

Many traders look for the market to pull back to their chosen moving average, before opening a trade. For example, the 200MA is pointed downward, the trader could wait for the market to pullback to the 200MA before opening a short-trade position.

Breakouts
Breakouts
A breakout trade occurs when the market pushes through a previous key level. For example, if the market has turned around at a certain level – when the market approaches this level in future, and is able to push through it, this is considered a breakout.
A breakout is perhaps the simplest way to get on a trend following trade, but there is always the risk of no follow through occurring after you enter the trade – many traders manage this risk by combining multiple set-ups.
 
 
Movingaverage crossovers
Movingaverage crossovers
The moving average crossover signal is a very systematic trade set-up where a shorter-term moving average (e.g. 20MA) crosses from one side of a longer-term moving average (e.g. 50MA) to the other, indicating a potential trend in that direction.
 
 
 
Most forex traders look for a combination of trade setups or signals before entering a trade. For example, a trader may wait for a moving over crossover to occur, and then start watching the market closely, looking to enter on a pullback to the moving average.
AUD/JPY – Profiting from the carry trade
The carry trade is a slightly more advanced trading strategy. This is where a trader sells a currency with a relatively low interest rate and simultaneously purchases a different currency with a higher interest rate.
A trader using the strategy, captures the interest rate differential between the two currencies – depending on the amount of leverage used in the trade, the differential can add up to a substantial dollar amount – deposited into the trading account each day, just for holding the position.
The Australian dollar currently has a globally-high interest rate of 1.75%, while the Japanese yen sits on the other side of the scale with a globally low interest rate of -.1%. This creates a situation where the AUD/JPY is a favoured currency pair for forex traders focused on a carry trade strategy.
The real benefit of this strategy is captured when a trader looks for long-bias trade set-ups – allowing for profits from the movement of the AUD/JPY, as well as profits from the interest rate differential
All charts are courtesy of CMC Markets Australia.

What Is Going On?? Explaining 2016's Turbulent Stock Market Ride

If you follow the markets or financial news, it’s impossible to miss the doomsday headlines. 2016 has been the worst start to the year in a century. All the major indices (FTSE 100, Fortune 500, Nasdaq, etc.) have fallen nearly 10% since the 1st January. Some of the biggest companies have lost a combined total of over $100 billion. Ouch! So, what exactly is going on out there? Are we on the slippery slope to a recession? Or are there other factors at play? We’ve been following things carefully, and here’s what’s happening.
The price of oil
The big name in the 2016 stock exchange season is oil. Oil prices have crashed. And they’ve crashed fast! It even dipped below $30 per barrel last week. (Compared to a healthy $150 this time last year). There are lots of contributing factors here, but the main problem is supply and demand. The oil market is flooded, and Iran, Saudi Arabia and Russia refuse to stop producing. (That drives the price down). Meanwhile, demand is decreasing as China’s economy slows down. When supply increases and demand dries up, the price can only go one way. Down.
China
That leads us nicely to China. It seems every morning we wake up to bad news from China. Their major stock index, the Shanghai Composite, has fallen consistently since the beginning of the year. In fact, things were so bad at the start of the year, they had to close down the market for two days. Just to stop people from selling all their shares! The reason is simple. In the last two decades, China has focused on international growth, doing deals all over the planet. It became the second biggest economy on the planet doing so. Now, it’s looking internally to create a healthier domestic economy. (I.e. boost GDP, get its citizens buying lots to drive things at home). The switch in industry is a grinding process, and investors are running scared.
Interest rates
We won’t dwell on interest rates for too long because – well, it’s quite dense! In simple terms, the western economies put interest rates at near zero after the 2008 crash. It encouraged banks to lend money, and allowed the economy to breathe. (Because business could keep borrowing money, and mortgages were still cheap). In December, the US Federal Reserve decided the economy was finally strong again. So, it put up interest rates to 0.5%. Investors saw this as a good thing, (the economy is back on track!) Unfortunately, it had the reverse effect, and everything crashed. Clearly, businesses and individuals are not ready for higher interest rates yet.
Panic
The last, and perhaps most important factor, is panic. Casual investors, pension holders, and financiers are looking at this news, and they’re terrified. They’re putting two and two together, and getting five. Lots of investors see this as a new recession, so they’re jumping ship, and selling their shares. Which pushes the markets down even further. It’s a self-fulfilling prophecy.

How long will it continue? Well, time will tell. But, most analysts don’t believe this is a sign of recession. So hold on, and brave the stormy waters!

Making Profits At XFR Financial Ltd With Automated Forex Trading Software

Forex trading is an excellent way of investing – by performing an in-depth analysis of the current state of the market, you can notice trends and prevent the best times for buying and selling. However, in order to achieve nice results and large profits, it’s very important that you manage to look at things in a logical manner, without letting your emotions guide you into bad choices.

Getting emotionally invested in their trades is one of the major pitfalls which make inexperienced forex traders lose money – and even skilled XFR Financial Ltd veterans can do it, when high stakes are involved. This is one of the reasons why many traders decide to use trading software in order to maximize their profits and prevent losses.

What Are Advantages XFR Financial Ltd Offers

The major advantage of using automated software is the fact that it decides exclusively based on logic – following the parameters you’ve set. Basically, you will dictate what are the optimal conditions for buying and selling – and whenever the market looks like what you’ve described, it’ll perform the action you set it to perform.

This way, you can still use the strategies XFR Financial Ltd recommends – the program will only act when the parameters you’ve set are met, so it’s basically as if you were doing it yourself, except your judgment would depend exclusively on the data available, so it wouldn’t account for the occasional lapse of judgment.

Not only it’s perfectly logical and follows your parameter, trading software has the advantage of working without the need for human input. This means that you can simply go out and leave the computer on, and your profits will come even without the need for you to do anything.

Automated Over Manual Forex Trading

Another added advantage of automated trading over manual trading is that it can be done in multiple instances at the same time. For instance, an investor might set up various accounts and leave the program running on each of them – they can even use a different strategy in each of the accounts in order to determine which is the best option.

It’s incredibly hard to control your psychological state during trading, and even harder to concentrate on analyzing a large number of charts at the same time. Instead of trying to be extremely cold and logical in your reasoning, or paying attention to large amounts of market activity data, it’s much wiser to let a well-programmed machine working with your own algorithm do that for you.

Of course, you don’t need to provide your own algorithm for the software to work. Most of them come pre-programmed, so they’re a great option for a new investor at XFR Financial Ltd to learn more about trading strategy and getting a better understanding of how the market work – if the software has really good decision-making programming, even an experienced trader might learn and benefit from watching it work.

When you decide to start working with automated forex trading, it’s extremely important that you do extensive research in order to determine which is the best software for you to use. There is a large number of reputable applications which are used by thousands of investors – so make sure you find various positive reviews on the software you decide to purchase.

Also keep in mind that it’s very unlikely that you’ll find a great application that’s completely free to use and download. You might find great software which comes with a free trial period, or a limited version you don’t have to pay to use – but in order to achieve the best profits you can, it’s very likely that you’ll have to invest in a good program.

Binary Options Candlestick Strategy

In binary options, traders trade the price movement of financial assets. The most important element for a trader, therefore, is the asset price. Candlesticks help traders study and interpret price action easily before making trading decisions in the market. For this reason, candlestick charts have become the most important as well as the most prevalent technical analysis tool used in binary options. Such is their popularity that most binary options brokers now use candlesticks as their default mode of charting. Applying a candlestick strategy can help traders identify great trading opportunities in the market.
Binary Options
The Information Contained in a Candlestick
A typical candlestick will form after a specific time period chosen by the trader. If a trader chooses to trade off a 1-hour chart, candlesticks will form every hour. Just like a traditional price bar, a complete candlestick will display an asset’s open, high, low and closing prices but in a visually more appealing way.
Candlestick
The real body will be green or red depending on the open and close of the price. If the close price is higher than the open, then the real body will be green, and if the close price is lower than the open, the real body will be red. The shadows show where the price reached during a particular time period (the high and the low).
As time and price moves, candlesticks usually form patterns that may give traders clues on future price movements. The patterns that form usually help traders understand market sentiment as well as the dominant emotions in the market. There are numerous patterns that can offer traders great trading opportunities. Traders need to understand the price action behind these patterns so they can accurately exploit the trading opportunities they present.
If you want to trade binary options effectively and accurately, it is vital to understand some of the common candlestick patterns. Some of the patterns that have proven very effective over the years include:
Ascending Triangles
Ascending Triangles
This pattern forms when the asset price is attempting to break a significant resistance in the market. The price continues to make a series of higher lows, denoting upward momentum ahead of a major resistance. The resistance is also tested multiple times.
When this pattern forms, traders should expect an upward price breakout. Traders can then seek to place Call orders in the market after the resistance level has successfully been breached. This can easily be done by using the trading platform of your binary options broker.
Descending Triangles
Descending Triangles
Descending triangles are the exact opposite of ascending triangles, and they form when there is a support level and the asset price is making a series of lower highs while testing the support multiple times. The lower highs indicate that price is gaining downward momentum.
When traders spot this pattern, they should expect a downward price breakout and the strategy should be to place Put orders with your binary options broker after the support has been successfully breached.
Symmetrical Triangles
Symmetrical Triangles
Symmetrical triangles form in the market when the asset price makes lower highs and high lows and converges to a point in the manner of a triangle. This pattern indicates that the price is consolidating and a breakout in either direction is about to happen.
When this pattern forms in the market, traders should watch out for a price breakout in either direction and seek to place orders in the direction the new trend. That is, if the price breaks to the upside, you can place a Call option trade while if the price of the asset breaks to the bottom, you can place a Put option trade.
Double Top
Double Top
A double top is a reversal pattern that forms after a period of strong and sustained upward movement. The asset price moves upwards for an extended period of time and forms a ‘top’. This price then retraces slightly before commencing an upward move again. This time, though, it fails to go past the top it posted earlier, indicating that the upward momentum is diminishing.
After failing to take out the initial top, the price falls to around the point it earlier retraced to. This point is known as the neckline. If the price breaks through the neckline, it would signal that a new trend (a downtrend) is now in place and traders should seek to place Put orders in the market.
Double Bottom
Double Bottom
This pattern is the opposite of the double top pattern. It is also a trend reversal pattern but it forms after a market has been trending lower for a long and sustained period of time. The double bottom pattern signals that downward momentum is diminished and a trend reversal is about to happen.
Like the double top pattern, when the double pattern is spotted in the market, traders should wait for the price to successfully break the ‘neckline’ before seeking opportunities to place Call orders on the trading platform of the binary options broker.
Head and Shoulders
Head and Shoulders
A head and shoulders pattern is a trend reversal pattern that forms when the asset price makes a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder). The neckline will then be a line drawn that connects the lowest price points of the two troughs.
When this pattern forms, binary option traders should wait for price to break the neckline, and then start looking for opportunities to place Put orders.
Reverse Head and Shoulders
Reverse Head and Shoulders
Like its name, this pattern is the opposite of the head and shoulders pattern and it occurs in a market that has been trending lower. It forms when price forms a ‘valley’ (shoulder), followed by an even lower valley (head), and then another higher valley (shoulder). The neckline will then be a line drawn connecting the highest price points of the valleys.
When this pattern is spotted, traders should wait for a successful break of the neckline before seeking opportunities to place Call orders in the market.
Tips for Successful Candlestick Trading
Knowledge of candlestick charts is vital if you want to trade binary options. When trading these strategies, traders should observe the ranges of individual candlesticks. A candlestick’s range is the distance between its open and close prices. Wider ranges imply high volatility whereas narrow ranges imply low volatility. Traders should also know that low volatility leads to high volatility and high volatility leads to low volatility.
When trading a ‘still’ strategy where you are waiting to determine the direction of the price breakout, traders should wait for confirmation before placing a trade. There is no room for prejudgement in the unpredictable binary options market.
Final Word
The candlesticks strategy is very effective in deciphering price action and market psychology. It can help traders identify and exploit high quality trading opportunities in the market.

Popular Forex Currencies

Forex currencies are the most popular financial asset traded in the binary options market. Traders love them because of their volatility and liquidity. They are also available for trading around the clock. Different currency pairs have different characteristics that traders ought to understand before trading them. In order to trade binary options currency pairs, a trader can simply sign up with a reliable and reputable broker, such as Option.FM, and make their trade.
Here are some of the popular forex pairs traded in the binary options market as well as their unique characteristics:
EURUSD
Among the major currency pairs, the EURUSD is the most popularly traded. It is also the most liquid and the most volatile. This is because the pair is made up of two of the most widely used currencies in the world; the euro and the US dollar. The euro is the official currency of the Eurozone whereas the US dollar is the official currency of the United States of America. These two currencies are the most actively used in the world economy.
Factors that Influence the EURUSD
The price of the EURUSD is usually affected by economic data as well as the policies of both the Eurozone and the United States. Announcements from both the European Central Bank (ECB) and the U.S. Federal Reserve Bank should be followed keenly by traders as they usually help traders understand the policy standing of both parties.
Political stability in the Eurozone also affects the value of this pair, as recent developments in Greece and their debt crisis have shown. The Eurozone is made up of 28 countries and 19 of them use the euro as the official currency. It is therefore important to be updated on what is happening on the major economies of the bloc in order to trade accurately.
The Best Time to Trade the EURUSD
Because of its liquidity, the EURUSD can be traded at any time, as long as the market is open. However, the best time to trade this pair is between 1200hrs-1600hrs, when both the New York and London markets are open. This is when the most activity on this currency pair occurs.
Brokers such as Option.FM provide a wealth of information on this currency pair so take the time to learn more about each currency and how the various market factors impact their movement.
USDJPY
The USDJPY is the second most traded forex pair. The Japanese yen has had a complicated political history and for years, it served as the bridge between Asia and the rest of the world. However, with the emergence China and other countries such as Singapore, its significance has continued to wane. Nonetheless, Japan continues to be a major player in the global markets with its status as one of the largest exporters of manufactured and industrial goods.
What Drives the USDJPY?
The USDJPY is mostly driven by the economic policy announcements of the US and Japan. The Bank of Japan (BOJ) especially plays an active role in controlling the value of the yen. To support its exports, the BOJ continues to lobby strongly to lower the value of the yen and to boost the value of the dollar. Traders should therefore keenly monitor BOJ announcements because they tend to spur significant volatility in this pair. Traders should also pay attention to manufacturing or industrial data which also impact price movement of the currency pair.
The Best Time to Trade the USDJPY
The USDJPY enjoys volatility around the clock. It can be traded during the whole of the New York trading session (1300hrs-2300hrs GMT). However, economic data relating to the yen is usually released when the Tokyo market is open (0000hrs-0900hrs GMT) so make sure to watch out for this information also.In addition, Option.FM provides their traders daily market news and this is an excellent way to keep updated with the latest financial news.
GBPUSD
The GBPUSD is the third most traded currency pair and it is particularly loved because of its volatility. Due to demographic reasons, the GBPUSD shares a positive correlation with the EURUSD. The Bank of England (BoE)has a lesser influence than the US Federal Bank but it still has a major impact on the value of the GBPUSD.
What Drives the GBPUSD?
The UK economy is mainly influenced by consumer spending. Traders, therefore, need to keenly follow economic reports such as employment reports, retail sales as well as housing sales data. This information can be found on an Economic Calendar.
The Best Time to Trade GBPUSD
Like the EURUSD, the ideal time to trade the GBPUSD is between 1200hrs-1600hrs when both the New York and London markets are open.
AUDUSD
The AUDUSD is the fourth most traded forex pair in the market. Australia is one of world’s largest exporters of gold and the major trading partners of China. The Reserve Bank of Australia (RBA) has always enforced regulation periodically to ensure that the value of the Australian dollar is weakened so that the country’s exports can perform well globally.
Factors that Influence the AUDUSD
The main factor that affects this currency pair is the Chinese economy. China is a major trading partner of Australia. The growth of the Australian economy can greatly be attributed to the high demand of mining as well as agricultural products from China. Economic data from China, such as GDP figures and manufacturing projections, usually have a significant impact on the value of the AUDUSD.
The RBA and US Federal Bank are also major players in the value of this pair. These two Central Banks usually have divergent policies. Generally, the Federal Bank favors a stronger US dollar whereas the RBA favors a weaker Australian dollar. Traders need to watch statements from these two institutions for clues on the direction of the AUDUSD.
The Best time to Trade the AUDUSD
The AUDUSD has smooth price action and decent volatility throughout. The pair can be traded in both the New York and Tokyo market. The New York market is open between 1300hrs-2300hrs GMT whereas the Tokyo market is open between 0000hrs-0900hrs GMT.
Final Word
Currency pairs are widely traded because they guarantee volatility and liquidity at all times. Understanding the unique characteristics of individual currencies can help traders trade the popular forex pairs effectively and profitably.