In 2015, the divergence in monetary policy among the world's central banks is expected to be a key theme. For now, the scorecard seems to be tilted toward monetary easing. In January 2015, fourteen central banks engaged in some form of monetary policy loosening, generally in the form of interest rate cuts or asset purchases.
Fig 1: Central banks actions calendar 2015.
Some of actions included Denmark's central bank aggressive slashing of interest rates four times in a three-week period and the European Central Bank (ECB) announced plans to step up its quantitative easing. Canada cut the benchmark interest by 25 basis points to 0.75% whilst the Reserve bank of Australia RBA followed with a similar 25 basis point cut to 2.25% in its February 2015 meeting.
Having witnessed all the action from across the globe the investing public anxiously awaits the next move from the US Federal Reserve (Fed), having ended the quantitative easing program in October 2014. This article looks at the state of monetary policy in the United States.
Sentiment is usually backward looking and is incorrect so frequently that it is used by professionals as a counter indicator of market direction. Daniel Loeb
The Forex Exchange market is the worlds largest financial market with an estimate daily turnover of over $5T, which is more than 25 times bigger than the US equity market. Although the FX market to some extent seems to be irrational because they don't follow the interest rate differential as expected. This could indicate that investor psychology plays a significant role in exchange rates fluctuations and there are consistently empirical evidence which suggest that sentiment may be the key to understanding this apparent irrationality.
Each and every trader will always have an opinion about where the market should go, and everyone will have their own explanation as to why the market is doing what is doing. Sentiment may drive trades however sentiment does not always translate into actual trades, so at times it can be deceiving.
It is what people actually did in the stock market that counted - not what they said they where going to do" Jesse Livermore
Inspiration for this article comes from my last month of participation in trader contest. My P&L during the whole contest month was full of up and downs and I haven’t reached my target of 400k USD. Worst thing is that I lost 300k + few times and I have finished with almost same balance as I start at beginning of the month. Do you want to see reason? Check this article.
I would like to share main idea of my previous article “Social trading - Fake or Future”. I have mentioned that ”We have to change our behavior“. This word “We” means all of us (traders, Investors and social trading provider). I don’t want just talk about it. Important thing is to make this change real because I believe that idea of social trading is one of the best ideas in financial industry ever. Let me explain how we can improve this environment and make things work.
First of all, we need to take some dose of criticism and face the reality. Let’s start with question. Do you know at least one person in our social trading environment who brought good results in long term? In this case I don’t want to criticize or analyze anybody else so I will do analysis of my own results. Let’s see my track record from past 45…
this is the third article my series Bollinger Band Strategy for Trending Markets. In the first article (December 2014) I described how you get in and out of the trade when we are in a trending market. In the second article (January 2015) it was all about managing stops and take profits.
In this one, it will be all about how to determine a sideways market. This is the time frame, when we don’t trade at all, since we have no underlying trend. Don’t underestimate this – staying aside and waiting for good opportunities is a big part in successful trading.
Te keep things simple and concentrate on the active trades I showed that you are in a trending market when the middle line of the Bollinger Bands is consistently rising or falling. When this middle line – which is just a moving average – is flat or directionless, we are in a sideways market.
This all is completely true, but we can do better: In standard Bollinger Band settings the middle line is a exponential moving average. The parameters don’t matter that much, the key is to keep them on a fixed level to get the feeling how they move.
Back to the middle line - there are numerous ways to alter that line. Jfore…
This article will help you become a better Forex trader in the year we have already stepped in. the new technologies and the new atmosphere is going to bring certain changes in every aspect of our life, so is going to happen with the forex.
People often get tired before reaching their goal in most of the things they do, and often it they are unaware how close they were. With traders, it is the same thing; many times you have been so close to getting a score, but maybe you missed something – even a minor step – simple that could lead you to a door of success. Knowing how to avoid such mistakes, well, not only small ones, but major ones too, are going to give you huge advantage towards your goal. And your goal is everybody’s – success. Learning is – some say – best from mistakes, preferably from other people’s mistakes, not your own. Some traders will dig and dig until they have something worthy, but some will give up after a series of unsuccessful attempts. The sad part is that you never know if you needed just another trade before turning your wheel of fortune towards your success. This article might help you overcome moments of impatience and help you recogn…
Are they any good? Yes and no. It depends on your expectations (what you want to use them for) and/or the EA's level of profitability. Just as "apps" are ever evolving for phones, EA's are continuously evolving for trading. Programmers, working alongside traders, are creating more sophisticated EA's to replace the need for manual trading. EA's can be programmed to perform a simple task, complex algorithms, or anything in between. An EA can alert you to a potential trade setup, take over a multitude of routine aspects of your trading, or fully automate your trading from entry to exit.
I'll break it down to the pros and cons, provide a few examples of practical applications, outline some considerations, and then let you decide for yourself.
Advantages of EA's
Accuracy and speed of execution
Removes human emotion
Strategy back testing capabilities
Disadvantages of EA's
When your computer system goes down, the EA stops working.
Creating customized EA's for complex trading strategies may be costly.
When platforms are upgraded, your EA may need upgrading too.
In the case of war or total economic collapse, which would be more valuable, oil or gold?
What is the average cost of producing an ounce of gold, a barrel of oil and printing a dollar?
Is gold a commodity, currency or Veblen good?
While days of the gold standard are behind us, gold still plays a role in day-to-day life, be it as a currency or commodity. According to World Gold Council, the Turks amassed over 3,500 tons of gold “under-the-pillow” by 2014 and Russia and China are stocking up. Is gold truly an investment or are people busy stacking “rocks” which could be another tulip mania?
Famous gold quote...
Gold Has Never Been Worth Zero
Gold investment advisers say when countries start stocking gold, it is not indicative of wealth but potential economic turmoil. They also say the accumulation of gold indicates what other nations and hedge funds think about the US dollar and the global economy. Others fall in the group of the British economist John Maynard Keynes and believe that “gold is a barbarous relic”.
The image below shows the rise of gold since 2001 and how gold reacts to economic events affecting the US dollar.
When most people discover the forex market for the first time, one of the things that come with this discovery is the “magical” phenomenon called “Expert Advisors” or “Forex Robots”. In truth, there is nothing magical about expert advisors; they are simply computer programs that have the ability to execute trades without the need for human intervention.
For traders using a Meta-Trader platform, these programs are called expert advisors, while the more general name for them is forex robots. Although over time, most forex brokers have provided platform tools that can be used in the easy development of forex robots on their platforms.
An example of such is the Visual Jforex strategy builder used in the Dukascopy community.
Some people refer to this type of trading as Algorithmic Algo trading, mechanical trading or automated trading using forex robots. With this type of trading, a specific set of entry and exit trading rules are coded into computer software; and this allows the software or program to execute trades automatically via a computer.
There are four main reasons why most people would opt to use a forex robot, rather than employ a human trader.
Currency markets have inherent levels on which selling or buying activity persists. Identifying such levels allows based on historic performance allows to sell or, respectively, buy from such specific levels. However, selling levels can be broken through once many attempts to test the level have been made and the amount of selling from the level decreases with time. Conversely, the same can apply to buying levels.
Reaction patterns on such levels reflect the amount of “firepower” on such levels. As the “firepower” dwindles, so will the possibility of recurrent selling/buying from such levels.
Selling/buying levels are not pip-precise. On the contrary, they have a certain leeway of 10-20 pip depending on the currency and only in very unique cases are actually pip-precise. Movement beyond the buying/selling level and return back are sometimes called “false breakouts”.
The key to understanding the movements towards the key buying/selling levels is the trading volume which leads towards the “significance levels”. If the volume leading towards the significance level is increasing and is significant, then there is a higher chance that the level will be broken, even if not immedi…
In this article I will be explaining about one of the popular candlestick pin bar strategy that has been used by thousands of traders over many decades. Sometimes perfect setup of this this strategy fails and make you lose the trade, but like every other trading strategy this pin bar strategy is not a holy grail of forex trading. With proper money management and discipline eventually all traders can become profitable.
What is a Pin Bar?
A pin bar is a candlestick pattern that has a long wick and small body. There are two types of pin bars: bullish and bearish pin bar. Pin bars are formed when prices are tested at the given price and then rejected from that price. The picture below shows what bullish and bearish pin bars look like.
Pin Bar strategy: Buy/Sell, Stop loss/ Take Profit
Buy or Sell:
This strategy is very simple.sell at the downtrend and buy at the uptrend. In the ranging market buy at the support and sell at the resistance
The picture above shows the formation of pin bars in the trending market and when to buy or sell. Pin Bars often formed at the end of a trend or at the end of a pull backs.
The picture above shows the formation of pin bars in the ranging mark…
Despite being technical analysis indicators, the powerful Fibonacci tools are widely used even by fundamental analysis traders. Unlike the common lagging indicators, they can predict future price levels . I leave the debate of whether this is a self-fulfilling prophecy or a bias toward a law in nature to others. Those tools will be explained in this article one by one.
FIBONACCI & THE FIBONACCI NUMBER SEQUENCE
Fibonacci was a thirteenth-century talented mathematician who described the numerical series now named after him. In the Fibonacci sequence of numbers, after 0 and 1, each number is the sum of the two prior numbers. Hence, the sequence is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610 and so on extending to infinity. Each number is approximately 1.618 times greater than the preceding number.
THE GOLDEN RATIO
This figure 1.618 is called Phi or the Golden Ratio. The inverse of 1.618 is 0.618. The golden ratio appears everywhere in Nature from the micro scale to the macro scale. Things that are based on this divine proportion are beautiful and shapely and things that do not contain it look ugly and seem suspicious and unnatural.
HISTORY Fibonacci (Fibonacci) Italian mathematician, 1202 in Pisa has published the work "Liber Abaci". This work has changed Europe - he Europeans began to use Arabic instead of Roman. This mathematician known for the fact that developed a sequence of numbers, which later became known as the Fibonacci sequence or the Fibonacci numbers.
NUMBERS The first number in a sequence of 0 and 1. The second sequence is developing in a way that the resulting number of the next added to the preceding one of the figure: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181 and so on. Eg .: 0 + 1 = 1; 1 + 1 = 2; 2 + 1 = 3; 2 + 3 = 5; 3 + 5 = 8; 5 + 8 = 13, etc. Leonardo Fibonacci discovered that the Fibonacci sequence and its ratio can be found everywhere, even in the natural world. This sequence applies to almost as a universal rule. This sequence has a number of interesting features: Any number ratio of the number which is the nearest number in the sequence after the first four numbers are close to 0,618 or 61.8% (the golden section ratio). For example: 34/55 = 0.618 Any number ratio of the number which is two places below, closer to 0,382 or 38.…
I wrote this article as a reaction to discussion below the community support blog with topic „Prize fund increase and turnover changes for 2015“.
I would like to share my personal view of social trading business model with all advantages and disadvantages. I will try to explain what problems we have to face it and I will offer a solution. As traders who are involved in this type of business we should have right outlook what is all about and what necessary components of social trading environment are. Key idea is very simple. Social trading is an exchange. The exchange where talented traders can bring their skills and sell them same way as a public company brings ideas for investors. Social trading provider creates environment as an exchange. He deserves revenue in the form of commission for offering this service.
The question is, why is this idea is so unique? Answer is efficiency. Costs you have to pay as an investor for over-performing assets are extremely low. If you compare social trading platform with similar investments as Pamm schemes or hedgefunds, then you can see huge difference. Investors receive 100% of performance with no high required investment. For traders is thi…
Hi all traders. If you click to Dukascopy community and "Forex article contest" you can see picture of William Shakespeare. He wrote many works and in one of them famous sentense: "To be, or not to be..." It is the opening phrase of a dialog in the "Nunnery Scene" of William Shakespeare's play Hamlet. This question is very analogous to traders every day question: "buy or sell"?
Is it easy answer? Of course not because trading is hard business. What can help? There is indicator Average true range in shortly ATR. What is ATR? ATR is a technical analysis volatility indicator originally developed by Welles Wilder. The indicator does not provide an indication of price trend, simply the degree of price volatility. The average true range is an N-day moving average of the true range values.
How can we use it for trading? Do not forget the main question for intraday trader is "buy or sell?" in actual day. Setup chart will not by daily time frame but lower time frame for example one hour. But intraday trader need daily time frame for answer his question. Why? Because daily time frame is setup chart for ATR indicator. This is very important information for intraday trader. Please look …
Currency traders are divided into two groups by their method of analysis; there are technical traders and fundamental traders. There is a lot of debate about which approach is better; and even though both sides have merits, the need to understand the fundamentals behind a currency cannot be over-emphasized.
Fundamental traders have an edge over technical traders; this is because they understand how economic policies affect economies. The performance of an economy in turn affects its currency. What the fundamental traders do not know however, is when the effect of the policies will take place. This is where Technical traders have the advantage; they are pure skeptics and trade only what they see. A technical trader will not take a short position on the EURUSD because the European Central Bank is planning a massive Quantitative Easing (QE) program; rather the trader waits till the move is confirmed or until a major support is broken.
Having a Fundamental Bias
It is necessary to have a trading bias before beginning any trading activity, and this bias should be based on strong fundamental information. Currencies fluctuate, but their fluctuations are anything but random. Their flu…