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Love your mistakes

May 04
Posted by alex_wi in Forex Blog

It may sound odd, but now you will understand what I mean. On the currency market a trader can never be sure of the trade’s result. Mistakes are made indeed. No trading strategy can work flawlessly. Thus mistakes may point at the weak sides of your trading method so we must be very attentive to them.

Keep the notes on your trades in a special trader diary in order to analyze them later.

Give the full details of your trades including the emotions and thoughts you had then. I assure you that you will need this information if you want to increase the profitability of your work.

Count your wins and losses. If the most part of the deals are profitable, then you have already achieved much, and you can be proud of yourself. Just remember that Forex is not a free café.

To trade successfully you need experience. And getting experienced cannot go without making some mistakes.

You can even make a list of your main disadvantages and keep in close while trading in order to realize whether they influence on your decisions.

Always observe the money management rules, then your errors will not cost too much. If you see that you made a wrong forecast or the situation has changed despite your predictions – close the trade and just keep waiting for the next operation.

It is vicious to be emotionally ready as well. Stay calm and move on step by step.

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How to place stop orders correctly

Apr 13
Posted by alex_wi in Forex Blog

In my opinion, wise trading implies using stop orders. A stop order, or stop loss, limits your losses when price moves against your position. Place the stop loss in accordance with the amount you are ready to lose. How much are you ready to put at risk? If you have significant deposit, the ideal loss is 1-2% per trade. Not more! You should save your deposit even if you opened several losing trades. If you place the stop loss far from the current price, it will be ineffective. At the same time the stop order shouldn’t be close to the current price as your trades will be closed on the nearest market noise, and you will lose the opportunity to get the profit. To figure out where you should place your stop loss, analyze the market character: estimate the volatility, determine support and resistance levels. Some traders prefer placing stop loss close to the strong support and resistance levels, but they can be too far from the current price making the stop loss ineffective. The stop loss level also depends on the time period. The greater the time period is, the farther the stop loss should be from the current price.

Many traders suppose that the stop loss should be proved with the technical analysis and determined for every single trade.

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Why is gold more expensive than platinum?

Mar 28
Posted by alex_wi in Forex Blog

Why is gold more expensive than platinum? Sounds like a paradox, doesn’t it? Traditionally platinum is valued higher than gold as it is rare. This precious metal has an outstanding history. In the XVIII century platinum was even cheaper than silver because it was hard-processed and eventually useless.  The human discovered its unique properties and appreciated it later.

However, the market has its own rules. The prices comply with other rules – demand and supply rules. The precious metal prices as ones of any other financial instruments have their dynamics. Metal prices are correlated with the currency prices and depend on many economic factors.

Lately the precious metals market experiences the situation when gold costs more than platinum. There are several reasons for that. For example, the main field of platinum application is machinery. The global automobile output has decreased during the crisis, consequently, platinum demand also decreased.

Platinum market is very small compared to other commodity markets, so metal prices are even more sensitive to demand.

Gold price growth is related to the uncertainty of investors in the economic outlook and in major currencies, in particular, US dollar. Gold has been always considered as a safe haven for investors. In the conditions of unstable economic situation the gold prices usually increase as investors seek for the shelter for their assets.

At the beginning of March the platinum price exceeded that of gold but for a while. At the same time experts forecast increase of platinum prices in the medium and long-term prospects. The current appreciation can be explained by the investment interest, so platinum has a potential which means that there is an opportunity to make profit from its positive dynamics.

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Partial close

Mar 13
Posted by alex_wi in Forex Blog

Partial close is a standard function available on  the MetaTrader platform. I believe, every trader has at least once had an impulse to close a position not totally, but just partly. Traders also sometimes take advantage of a so-called reversal position, selling a greater sum than they bought. Let us consider an example of how to close a position partially and make a reverse.

You have bought 300,000 EUR versus USD at 0.5800 as soon as the rate hit the level of 0.5850. Then, you have decided to sell 150,000 EUR versus USD. Eventually, there is a position of 150,000 EUR bought at 0.5750 left! So, in this case, the profit from partial close has not been added to your deposit, but it has made the position opening rate more favourable for you.

Moreover, in the MetaTrader platform there is an option of closing just part of an open trade. You can set a lot size and an order for which you want to activate this option and your trade shall be closed at any moment as soon as your condition is met.

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What is Forex rebate?

Feb 22
Posted by alex_wi in Forex Blog

If you are engaged in trading you know that every time you open a position you pay spread to the broker. Spread or commission is a broker’s income. However, there are a lot of companies offering spread rebate. If you wish to get it all you need to do is to register with a rebate service, choose a broker and open a live trading account.

I am not going to describe you the reasons for brokers and services to do that. I will give you some tips on choosing the rebate company, working with it and prevent you from losing both rebate and profit.

There are a lot of rebate companies in the Internet but only a few provide real services. Undoubtedly, there are both fraudulent and reliable companies. Here is my way of choosing the rebate service and facts which I paid attention to. First of all, rebate service works only with regulated brokers. Secondly, to choose the service you need, analyze several popular rebate companies. Don’t chase after the free ride! If you see an ad telling you that this service will pay you 100% of spread don’t believe it. Such services are usually scams having partnership with scam brokers. What would have brokers and rebate services exist for, if they repay 100% of spread? Correct, they would exist for your losses and contribute to them.

And of course pay attention to the site. If you noticed that there are invested both material and intellectual resources, be sure this site won’t vanish tomorrow. Contact the technical support. I think that rebate service should have at least a live chat and skype besides the phone number. If all your questions were clearly and adequately answered register with this company.

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Hedging on Forex

Jan 23
Posted by alex_wi in Forex Blog

Hedging is a method of covering potential losses on Forex market. Normally, hedging is used by exporting companies to protect contracts from losses. Although there are a lot of talks about currency hedging on Forex, some private traders use this method. In hedging, a trader intends to reduce potential losses rather than get extra profits.

On Forex, risks are usually hedged by opposite positions. It means that if you buy or sell an active, you open a position opposite to the first one. Possible losses from one position will be covered by profits from the other. You can also open a position on any instrument that correlates with the basic pair. However, there is no consensus on which pairs may hedge each other. Some traders menrtion EUR/USD and USD/CHF, or EUR/USD and EUR/JPY.

Options are used in hedging as well. An option gives the right, but not the obligation, to buy or sell a contract at a fixed price. With a put option, a trader may cover risks of a price fall.

I consider it to be difficult for private traders to hedge risks, especially when it comes to currency correlations. Lack of stability on Forex and different volatility of currency pairs provides no risk coverage but doubles risks. Therefore, it is better to hedge on stock market where interrelations are more obvious.

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Trading on the volatile markets

Jan 03
Posted by alex_wi in Forex Blog

Volatility is one of the most important parameters of the international foreign exchange market. It shows the price change dynamics. If there are frequent and significant fluctuations, analysts say that the market is volatile. Opening and closing positions, trader should keep in mind the market volatility and decide whether a currency pair is worth trading. Low volatility would unlikely allow taking much profit. High-volatile trading instrument would be much more efficient if you succeed to determine the market mood. However, sometimes volatility is very intense, and it becomes dangerous to trade this instrument. High volatility can help make much profit but can cause losing everything to the last penny. When the market is extremely volatile, the risk rate doubles or triples as it is difficult to predict the situation. High volatility is usually observed during the economic turmoil and currency interventions.

On the volatile market trend develops ambiguously, and it is a very complicated task to choose the correct entry point. High volatility is the most dangerous for the short-term traders as a trend can temporarily reverse, respond to market expectation, etc.

If you are experienced trader, you have a chance to take profit on the volatile market. At the same time high market volatility requires vigilance and protective measures such as stop-loss and take-profit orders, otherwise, trading is pointless.

When the market situation is undefined, private trader may have some difficulties coping with the market jumps and plunges. According to the statistics, trading the volatile instruments traders suffer significant losses more often than make fantastic profits. Only after you learn how to analyse the market thoroughly, you will become able to conquer the volatility. Beginning traders should rather prefer calm currency pairs.

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Does gold always carry a good price?

Dec 20
Posted by alex_wi in Forex Blog

The price of gold has been constantly increasing for many years. It has reached some 1900 dollars per ounce in 2011. Not only traders but states have recently decided to make money out of gold.

This prolonged gold rush can be easily justified. It is assumed that the price of gold spikes on the back of economic instability. Therefore, gold is rather a promising investment object.

Recent crisis has not formed the factor that brought popularity to gold: back in 2006, its price was still 600 dollars per ounce after a price fall in 2001. The price of silver has also escalated. However, the real growth of silver has been seen in recent two years after world economies had started recovering from the crisis. Wide usage of silver in industrial sector adds no investment attractiveness to this metal. Therefore, while the economy grows, no other precious metal strengthens as much as silver does.

Jumps in prices make investments in precious metals less safe. The price of silver fluctuates following changes in world economy. Gold, however, will never lose its investment popularity. Instability in its price simply gives strength to gold.

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Midpoint trading

Dec 14
Posted by alex_wi in Forex Blog

The midpoint trading system is based on the price midpoints. This trading method can be referred to the trend models. It means that a trader will deal with the price movement within a trend. To determine a trend direction, a trader uses special indicators or their combinations. Information on the midpoints enables trader to determine the trend and follow it. Midpoint is also called simple moving average.

Perhaps, it is the first method of the technical analysis. It is often used by both novice and professional traders. Referring to my experience, I can say that midpoint trading is more stable in the trend market and brings more profits than other traditional systems. I use midpoints to get rid of the market noise and determine the trend. The simplest way of using this method is to buy when the price is above the simple moving average and sell when the price is lower than the simple moving average.

The drawback of midpoint trading is delay in determining the midpoints in relation to the current price. We should always remember that the longer averaging period we consider, the clearer market situation we see, and the older information we receive. Reducing the averaging period, we receive the entering signals earlier, but we get more false signals.

At the same time, the system is totally useless at flat. Anyway, it suits newbie’s needs because of its simplicity and visual effect.

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Trading Platforms for Mac

Nov 30
Posted by alex_wi in Forex Blog
Congratulations! You bought a nice, smart and elegant Mac book. Launched it to trade on Forex, BUT! Turns out, it’s not that easy to find a broker or a dealing center with trading platforms for a Mac. From now on, you are on the island of Mac owners in the sea of Windows fans, and traditionally, trading platforms do not support islanders. Sad, it is so sad.
Any Mac owner who simply wants to trade should be ready to seek for, download and install special software.
For many times I have seen “need helps” like this one: i bought a mac…nice machine… wanted to trade…i cannot! Experienced users advise to launch a virtual Parallel Desktop. Sounds OK, but have you ever found it? I have not. Still I remember a saying:  “Those who seek will find”. Come on, comrades!  Join my quest for this magic app!
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