Forex for Begginers -Forex Articles from NewForex

Bollinger Bands

Plenty of indicators are used by traders to analyse the market, however only a small part of them can help to estimate the volatility of market processes. The indicator «Bollinger bands» is considered as a secure instrument and is used in many graphic analitical programmes.

The indicator «Bollinger bands» was created in the 20th century by the financial analyst, the president of the company Bollinger Capital Management John Bollinger. Of course this indicator can not foresee the direction of the future price movement but it is able to prompt the moment when a strong price movement is expected.

The indicator consists of only three lines.The line in the middle is a simple moving average, as a rule with the period of 20. The upper and the lower line, they determine 2 bands of the indicator, have an equal distance from the middle one. This distance is proportional to the volume of the mean square price range, this indicator characterizes the market volatility. Consequently, we observe narrow lines during calm periods and when the market is unstable Bollinger bands widen.

There are drastic price changes when the bands meet during small and quite longstanding fluctuations of market prices. During this period the indicator will not prompt the direction of the future movement. Traders can outguess this direction by means of other instruments of technical analysis. If the price goes beyond one of the indicator borders, it might be a signal of the beginning of a new trend or the continuation of the previous trend after the correction.

In the picture one may see how after the shrinkage of bands the price breached the upper border, after that the growth quite sustainable

Fairly often the price forming a high or a low beyond the indicator lines returns inside the Bollinger bands. In this case the first target of the trader should be an average line.In the given picture there are a lot of examples. Thus, market extremums, which usually occur beyond Bollinger bands, indicate the change of market tendencies and the lines of the indicator represent strong levels of support/resistance and price consolidation. Due to this peculiarity of the indicator it can be a base for a really working trading system.

The efficiency of Bollinger bands becomes apparent together with other indicators and if they confirm signals of turnback or clearance, the probability that an open position will be profitable sharply increases. It is worth combining Bollinger bands with indicators of volume «MACD» or «Stochastic».

However, it is worth remembering that work with Bollinger bands requires from the trader sufficient experience and necessary skills acquiring which it will be possible to estimate the placement of forces in the market and take proactive decisions about the trades.

Can robots trade in Forex? (Part 2)

The question might seem controversial but if you study it in detail then you can give a positive answer and confirm that yes robots can trade in Forex market and bring profit to a trader.

Why do we have hesitations then? Although there might be no hesitations but plenty of questions regarding the usage of advisors. Advisors have gained in quite widespread popularity. A lot of traders especially beginners keep a close watch on this trend in trading.

And here it is worth thinking about “why it happens that 95% of beginners in trading as a rule lose”... An addiction to easy prey is typical of many people and the opportunity to get it by means of an advisor attracts a considerable amount of traders. People usually download from the Internet robot-champions or pay for super lucrative personal funds, however, in most cases it does not bring handsome profit.

In order to assure yourself of the hopelessness of these operations, a trader should ask himself or herself a simple question and find an answer on it. How long is the trader going to use a robot and what profit should it bring? If a trader is determined to work with a robot on a permanent basis, then it may be firmly said that this path leads to nowhere. One may get profit with the help of an advisor but it probably won’t last as long as it is wished by a trader. For instance, an advisor brings profit for two weeks, maybe two months but then the systems will definitely glitch and nobody know when it happens.

And nobody knows how hurtful it may be for the deposit. In this case a trader has only one way out — to trust the robot and become an onlooker who tries to predict if it will manage to find the right way or not. Thus, it might occur that instead of increasing your funds, the advisor may turn into a mechanism of destruction. Finally, it should be remembered that advisors are made by people and unfortunately people make mistakes.

Quite often people have a little bit wrong attitude to these programmes, especially beginners. It resembles the perception of information on the radio or TV by elderly people who take everything at its face value. This gullibility is sometimes used by advertisers with sticky fingers who distribute information about “magic pills” treating all deseases. The same happens with robots. Some believe that the fact of using it in the terminal says that it was developed by professionals and is a high-quality product. However, in reality it does not say anything. Nowadays almost everyone, who understands programming at least a bit, can create an advisor. That’s why it is important to understand who made this advisor. It might be a good trader but a bad programmer or vice versa. A great piece of luck is to meet a good trader and programmer in the one skin.

It is important to understand that buying an outside product a trader can not always rely on the fact that a software developer will come to assistance if an advisor starts glitching in trading. What might be the reasons of glitches? There may be plenty of causes for such kind behaviour of an advisor. In particular, it is wellknown that before becoming available for traders, every advisor passes a test on the quote history. But on the history one can see the behaviour of this or that pair in the past and how the advisor was working, however nobody can say how it will work in the future if the behaviour of the currency pair changes. It is very complicated for the developer to take into account all the nuances the appearance which can not be excluded. In this case you can face with a situation when an advisor works incorrectly with the trader’s deposit.

Usually the developer adjusts the work of an advisor to the history of quotes which is available. Sometimes it happens without relying on any rules just by by trial and error. But the quality of such kind of adjustment is unknown even for a developer. Quite often a certain part from the history of the graphical layout is chosen and the work of the advisor is attached to it. But if you study the history, it will be very difficult to find identical parts of the graph, thus it becomes clear that a test activity takes into consideration particular cases which took place in the past.

However, when a beginner in trading gets an advisor he or she hardly ever thinks about it because this purchase seems a complete solution of all financial issues and hopefully forever.

And at this moment there comes up a strategy question which a lot of traders prefer not to think about and do everything to avoid this awkward question. Although having a creative approach to it and systematizing your work with the installed advisors tracking down on time those which glitch, loading those which work accurately and taking out of service advisors which do not work, the result will be much better. It is worth highlighting once more that it is not easy to tackle this problem, you should learn to think and study a lot.

Another efficient way of applying an advisor is the automation of the decision-making according to the personal strategy. This way of automation is considered as the most rational and correct one from the point of view of the closing gain. In this case a trader relies on the efficiently working strategy with an understandable algorithm of work which is fully or partially realised with the help of an advisor. An undeniable advantage of this decision regarding the automation of trading is that a trader completely realizes the working system of an advisor and can make alterations in its work at any time which is hardly possible with a purchased advisor as in most cases it is given as a black box.

Thus, making a conclusion to the conversation about advisors we would like to remind once more that money doesn’t grow on trees. Everone who wants to make money and increase the capital in Forex market should concentrate on permanent study and serious patient labour.

Forex market — a play or permanent work? (Part 1)

Why do people take up trading and come to Forex? - that is a question frequently asked in forums. There might be various answers to this question, although in most cases it’s a wish to achieve financial independence and to be self-employed and not to work for the boss. There are, of course, those who dream about making millions. Such intentions are undoubtedly great but setting such ambitious goals some people do very little to achieve them.

Every trader can ask himself or herself this question and the answer will probably coincide нахождениюwith the answers of other traders. But a more interesting question is: What am I doing in the market? Giving a sincere answer, a trader can compare it with one of the answers provided below.

The first variant

There are a lot of people who really work in the market keeping the situation under control. However, it does not mean that they spend days and nights at the terminal and follow the price movement. In fact it’s vice versa, traders have enough time to relax as well. Having a rest is a part of their trading strategy. Although they almost slave away keeping strictly to all the points of their trading strategy. It’s significat to point out that they really fulfill all the points of the rules, everything to the minutest detail including trading signals and money management. As a rule these traders achieve success. They gradually nurture their will power which contributes to feeling comfortable in the market conditions and finally brings profit. And time free from trading but nevertheless working time traders spend on improving their trading systems or getting new knowledge.

Exactly for these traders Forex trading turns into work. And it’s not a simple work but a permanent, hard but favoutire work. They are fans of the market because it’s endlessly interesting for them! The market usually likes educated, calm, hard-working and strong-willed people. And the market is ready to share its wealth first of all with these people.

Forex market - a play or permanent work (Part 2)

In the first part of the article it was highlighted how necessary it is for every trader to ask himself or herself a question: What am I doing in the market? After giving a really sincere and honest reply, compare it with one of the variants provided. The first variant of the the trader’s attitude to work in Forex was described before and now we are going to discuss the second one.

The second variant

There are traders who pretend that they are trading although they can insist on working in Forex market. The working hours of such traders are chaotic. They get up and go to bed when they want, they can afford to watch an exciting movie in the break, chat in social networks, in forums or simply play online games at odd times. And this “work” takes all day.

They can indulge themselves during the trading increasing risks. It might seem to them that the market situation is developing in the way that the trade must be 100% profitable.In this case they can take risks hoping to make profit right now rather than accumulate missed profit within few weeeks. Such traders treat some points from rules with certain negligence although they are inseperable parts of their trading strategy.

However, it is worth saying that such kind of traders can be in the martket for quite a long time. They usualy have trading experience of one-two years but they often consider themselves professionals and even experts in the shpere of trading. This overestimated approach leads to the situation when they allow themselves to change the system rules in the middle of the trade or completely neglect them. Traders might believe that they know qiute a lot and can feel the market adjusting to its requirements. They usually prefer to be in the process of trading and feel uncomfortable without an open trade. Probably this attitude to trading occurs as being outside the market they feel that they are wasting time. That’s why to open a trade at the first opportunity is a common situation for these people.

As a rule such trades end up quite sadly. After wasting plenty of time and possible several big profits, traders inevitably reach the state when they get a Margin Call and finally lose their funds. Exactly about these traders it is said they play in Forex market.

Having discussed both variants characterizing this or that type of traders, every trader can look at himself or herself from the outside and realize what type they belong to. If it turns out that the answer is the second one and most of the enumerated features coincide with your type of trading, then it is necessary to change something. It might be recommended to try to organize yourself both in trading and on vocation, do everything possible so that the attitude to trading will comply with the first variant. Only in this case one may say that Forex market is a full-time job but not a play.

Rebate - what is it and how useful it might be for a trader

A lot of traders probably came across such a notion as «rebate». This notion is quite often used by brokerage offices. So what does it mean and why do brokerage offices pay a big attention to work with rebate?

A Rrebate is an amount paid by way of reduction, return, or refund on what was paid or contributed. One of the main tasks of brokerage offices is the client capture and rebate undoubtedly contributes to the solution of this task.

For instance, the brokerage office pays its client 10 dollars for every lot from the total amount of transactions. In this respect one might have a question if the income of the brokerage office is based only on spread, then why should it share its profit with a client? If we study this question more carefully, we may notice a veiled psychological trick used by the brokerage office. At the first glance everything looks wonderful. However, the subtle aspect implies that some traders may have the impression of having the opportunity to earn with a rebate. They try to make as many transactions as possible, overrating the volume of their open positions, thus contributing to the growth of income of the brokerage office but excessively increasing the risk of personal trading. As a result if the trader falls for this trick, the brokerage office will get its profit from every client’s closed transaction anyway. But the trader will have nothing to withdraw as this trading will be unprofitable for him/her and the rebate of the part of spread will definitely not compensate the losses.

The situation differs if the partial rebate of spread is offered by the partner of the brokerage office. In this case a trader does not have a direct replenishment until the end of a month’s time after which the partner of the brokerage office will transfer funds to the account. In such a circumstance the trader has the right to receive spare money which can be managed in the client’s discretion. Let us assume that a trader made some transactions within a month the total volume of which equals 20 lots. According to the affiliate program the brokerage office deposits the partner at least 50% from spread which in money terms is $300. Then the partner shares this money with the trader sending a half from the amount which was transferred by the brokerage office. In this situation the trader gets $150 for work and the partner of the brokerage office has its $150. It means that the trader becomes a partner of the brokerage office and gets income while making transactions without being bothered by various accruals from every transaction.

What is the difference between Forex market and the futures market?

The majority of traders-beginners quite often can not understand the difference between Forex and the futures market. This fact can lead to the wrong choice of the further trading platform. That is why before commencing your own financial activity and trading it is worth finding out the difference which exists between the futures market and Forex.

First of all it important to understand that the futures market performs some kind of trading platform for the execution of futures contracts. In this market parties usually make transactions to buy/sell some commodities and shares the price of which is fixed by the futures contract.

There is not a considerable difference between the futures market and Forex for brokers as irrespective of the type of sales they receive their interests from every transaction which finally brings them profit. As for traders there an obvious dfifference for them. If in Forex trading is performed in the single market, futures trading implies transactions only in the frames of a particular stock market with a certain contract. It is worth noting that one of the advantages of Forex market is its liquidity allowing to realize assets within the shortest possible time and with a big profit for the trader. Moreover, in the futures market there is not such a notion as spread, the market does not provide a leverage to the trader which clearly distinguishes it from Forex.

Forex market is the biggest trading platform in the world with the highest liquidity. The total amount of daily transactions made in the market reaches 1.5 billion dollars. In the futures market this turnover is considerably less and takes up around 25 mln dollars.

One more thing is that Forex works almost 24/7 without any restrictions for the traders which allows to make transactions according to the chosen strategy at the most convenient time. The futures market is not so flexible. One can make transactions only at clear-cut time. An obvious disadvantage of the futures market is the necessity to pay for different services via mediators which does not really satisfies traders. The plus of Forex market is that a trader has the opportunity to manage only the amount available on the account in contrast to the futures market where the transaction can be closed with negative positions followed by after-payment.Forex market can probably offer more opportunities to traders-beginners as it does not require a big capital to start trading. And finally the chance to improve and master new trading platforms will finally allow a trader to achieve a new, higher professional level and increase funds.

The importance of the technical analysis for a trader

Technical analysis is considered as a universally acknowledged approach to study the

financial market processes in order to provide a very precise, as far as it is possible, forecasting of the currency movement. Making a technical analysis a trader usually relies on the fact that the financial market has its own memory and consequently the future currency movement is under the influence of the objective laws of its behaviour in the past. On this basis specialists make certain conclusions.

Technical analysis is based on the following postulates:

The market takes everything into account and the price of this or that asset is the result and a through reflection of all forces that influence on market processes.

Price movement is characterized by certain tendencies. The market development dynamics includes periods of growth and fall in prices and the main tendency develops inside each of these periods the effect of which lasts until the price movement changes its direction into the opposite.

The market situation, which took place in the past, often has a high recurrence rate. In order to forecast what to expect in the future it is necessary to study the past. Studying price graphs one might notice that certain configurations appear quite steadily at different times and in different markets. This fact has quite a logical explanation: such kind of recurrences are the results of certain behavioral stereotypes which perform an inherent part of psychology of human.

Using evaluation data of the technical analysis one can forecast the market movement with a high degree of probability. Exactly this forecast is the most significat element of almost every trader’s strategy in Forex. On basis of the forecast a trader takes a final decision to open this or that position in the currency market, decides to buy or sell an asset, determines the most appropriate moment to make a transaction.

Technical analysis allows every trader to receive trustworthy forecasts of the price development in the currency market and it concerns almost any financial asset. However, it is important not only to have information but also to use it appropriately applying efficient trading strategies. In this case a trader can make the right decision which will allow to get a maximum profit from the transaction.

Thus, technical analysis is a very important aspect for every trader which helps to take right actions in the market, open positions investing personal funds in the right moment choosing the most efficient financial instrument. Having mastered the skills of the technical analysis, a trader may count on the profitable outcome of trading in the currency market and the risk of losses will kept to a minimum. Technical analysis undoubtedly contributes to a high probability of the trader’s success in Forex market.

For beginners of trading (Part 1)

Beginners of trading are probably in the most difficult situation among all the participants of Forex market. Quite often they have to pay for mistakes which they make because they are not aware of all the details of trading. That is why any beginner of trading might need some advice from experienced traders in order to get a better understanding of proccesses taking place in the currency market. Suck kind of advice is always helpful if you take it seriously, it can be useful, prevent from unnecessary risks and consequently undesirable effects.

At first a biginner of trading should focus on the detailed study of 2-3 trading systems, a pair of technical indicators and gradually deepening knowledge try to develop an indivudual trading system in the currency market. Making transactions to buy or sell some assets it is important to remember that the total amount used to open an initial position does not exceed 10% of the deposit. It is necessay to keep away from transactions which can lead to the loss of more than 5% of the deposit. The study of such instruments as «Take Profit» and «Stop Loss» can be quite efficient. In this case one should move these instruments only in the direction of descreasing loss and increasing profit. Although it is better not to be carried away by these movements as a sharp price bounce can easily take away a set Stop-Order which can lead to unplanned losses.

The development of the individual trading system is a necessary condition of success in the currency market trading and it should be taken by any trader for granted. The system of trading should be as easy as possible and go with conditions of the currency market. However, it is worth noting that success at trading with an individual Forex trading system is not always achieved by not only a lot of beginners but also experienced traders. The main reason of failures is the lack of discipline among traders, the failure to take into account all the signals of the system, react correctly without losing time to open and close trading positions. Poorly managed emotions, thirst for gambling, a wish to make quick money, fear can frequently destroy the trading system developed by the trader. Gambling is possible only within reasonable limits as undue risk too often brings to nought not only all the previous profitable transactions but also leads to a complete loss of funds. It is certainly important to come up with funds which a beginner brings to trading in the exchange market. Here it is recommended to follow the advice:

The amount of funds invested in trading should be within 50% out of the whole capital supposed to be used in Forex transactions.

The amount of funds invested into one market should not be more that 10-15% from the capital dimension.

The risk of one open position should not exceed 5% from the amount available on the deposit.

For beginners of trading (Part 2)

Let’s continue studying the experience of traders in order to give beginners a warning about a lot of mistakes.Thus, they exclude completetly unneccessary losses in Forex trading.

It is worth remembering that one should take risks of the amount of money the loss of which will not have a profound impact on the overall financial position of the trader. This is a core condition as otherwise the trader is at risk of constantly being under the psychological pressure and it will be quite difficult to take level-headed, sensible decisions.

One of the main laws determining Forex trading says:”It is necessary to allow the profit always grow” A professional trading implies not only certain profit-making but also a precise determination of the further price movement. Following this rule one might achieve impressive results. It is also worth recommending not to be afraid of taking risks of the profit that you already have in order to increase it. For instance, a market demonstrates the movement profitable for a trader, then in this case you shoud not be afraid of expanding the already open position. However, one should remember that this addition of the posiition should certainly be less than the previous one. Consequently, a short-term movement of the rate against the trader’s open positions will allow to avoid serious losses.

Taking trading seriously you should not forget that it might turn into an occupation for many years. Hence, it is wrong to treat Forex market only as the way of immediate wealth accumulation. You should work seriously, gradually increasing the capital and getting moral satisfaction from what you are doing. The trader’s main aim should be the drive to learn to make efficient transactions achieving stable positive results.

An important detail to be remembered is cyclicality which is typical of many processes. Forex market is not an exception. Studying objective laws and taking advantage of them, a trader can achieve considerable success in Forex trading. Psychological aspect also requires study and analysis as quite often it has the major influence on the market behaviour. To achieve succes in Forex trading it is important to study the psychology of human in order to understand feelings and thoughts of the trader. This knowledge will be useful at work, will help to boost confidence while making trading decisions.

Hopefully the advice given in the article wil be practical for traders-beginners and will help to master Forex trading.

Mobile trading

Mobile trading allows to make transactions by means of portable devices. A lot of traders are not always able to sit at the PC. However, the market situation changes rapidly, even using an advisor requires to keep abreast of the events in forex market. For these traders the opportunity to work at the pocket computer, smartphone, iPad or iPhone is a wonderful way out. Thus, one can make transactions anywhere: on the road, on holidays, in the office.

The only condition to work in forex market is to install a relevant software on your mobile device. Any trader can download and install programmes on the corresponding page of NewForex site. It is completely free to download them.

It is convenient to work on the mini-platform like on the standard terminal. A trader can open any types of orders, use trading indicators, receive signals to open transactions. An obvious difference is a small size of the mobile screen which might influence on the efficiency of work. Although this parameter is not so significant while making simple operations, for instance, closing an order.

Programmes for forex market used on mobile devices are synchronized with PC. Consequently, the trader can open a transaction at home and then watch its development on the mobile device.

To work on Forex a portable device of the trader should meet the following minimal demands:

For devices on Android suitable are versions of Android 2.1 and further, 3G/WiFi.

For iPad and iPhone operational system iOS 4.0 and further, 3G/WiFi.

For Windows it is required to have Windows Pocket PC 2003, Windows Mobile 2003, Windows Mobile 5, 6 or 6.1.

For a flawless operation it is recommended to opt for a device with more upgraded technical characteristics.

Efficient market

Efficient market theory implies that any even inconsiderable information can influence on the price movement. In these respect the following questions arise:

How fast can information influence on the price?

How might the market react on this or that report?

It is possible to reply on these questions relying on the technical and news analysis.

What is the main point of these methods?

Technical analysis — involves forecasting the price movement usually with the help of computers and computer programmes. Graphs and other additional instruments are developed for the only purpose to find out the balance between support and demand in course of time. Although there are many ways of technical analysis they are united by two theses:

the history which is reflected in graphs is repeated;

the price involves all the necessary information.

The majority of technical analysis followers are in the constant search for appropriate instruments which could help to estimate more precisely the state of the market at the given moment and its possible dynamics.

News analysis. In comparison with the technical analysis which tracks down the interconnection between instruments and graphical figures, economic factors have a high priority in the news analysis, it might be the information about natural disaters, terrorist attacks, overall health and job placement of residents, etc. A considerable role play the announcements of politicians and representatives of financial structures. The analysis implies that the market instantly responds to the significant information. Consequently, those who have an eye for it and can foresee the possible sequence of events have a chance to make money.

The random walk theory

Biologists, physicists, mathematicians were trying to seeking a sense in the notion of randomness. Finally from the middle of the 20th century economists started to apply the idea of random numbers to stock quotes.

In the 1960’s Princeton University professor Barton Malkiel conducted an experiment. He asked his students to draw a graph of the share price movement provided that it was not a graph of a really existing share but a hypothetical one. In the beginning the share price was 50 dollars. Then a coin flip determined the further share movement. If there was heads, the price gained one dollar. If there was tails, the price decreased to the relevant amount.

As a result they got a graph resembling a real quote graph

After that the professor asked a technical analyst to make a market analysis and give recommendations but he did not say anything about the experiment. The analyst said that the shares should be immediately bought. This fact convinced professor Malkiel that it is impossible to differ the random graph from the real one by means of the technical analysis, consequently this experience gave another ground for the confirmation of the random walk theory. It is worth saying that the number of this theory followers is not decreasing but even increasing in spite of strong arguments of the random walk theory opponents.

The followers of this theory state that it is impossible to find convincing laws of the price movement in the market. Everything that happens is considered by supporters of the theory as pure randomness and the futher trading strategy is based on the ground of it. It is suggested to open positions, some traders even consider that the direction does not matter and wait for the result following only one rule of Money Management. With a sufficient number of attempts, the probability of a positive result increases. In these conditions the most significant thing in the transition of the price to a positive zone is to allow the profit to grow not forgetting that it is required to restrict possible losses. However, far from everyone agree with this state of business.

The regular market theory

The regular market theory offers to study macroeconomic data including not only regional data but also trading sector data. It includes data of: the state budget, production, sales, industrial capacity, food supplies, prices, credits, unemployment level, etc. Cause and effect relationship among the factors which form the base of the driving force are taken into consideration as well.

It is complicated to use this data during the day except for determining the possible

market sentiment. As a result the macroeconomic data is used in the long-term perspective. In contrast with the technical analysis which can provide quite an exact forecast with some deviations, the fundamental analysis has sometimes too many deviations and frequently it does not have clear-cut conclusions. Consequently relying only on the fundamental analysis, there is a high probability to make a wrong guess due to a big number of influential factors.

According to the results of surveys conducted in one of the US magazines, the economists who baased their forecasts on fundamental analysis dropped a bollock of four crises out of five.

This fact can be explained by a situation when following and analysing the interconnection within one economic sector of the region, there is always other data from another region which can influence on the market sentiment.

Thus, it is recommended to take into account both a fundamental and a technical analysis to achieve maximum profit and get help in forecasting the instrument movement on the trading platform.

What bonds are profitable for investment?

There was no doubt in the security of the U.S.Treasury bonds issued to discharge the debt of the country. Investment in treasury bonds seemed almost an equivalent of risk-free assets.

However, the recent events in the USA brought into question this truth. For a long time Congressmen couldn’t come to a final decision on the ceiling of the state debt, financial organizations faced a difficult choice — delay in payment or default. The complicated situation led to agio in the swap market with the security in the form of debt loans. As a result a few days before the Congress made a decision over the rise of the state debt ceiling, the price of swaps jumped in 3 times.

Investors who were absolutely sure in the American assets were at a loss. And taking into account that the worst scenario did not come true, a fair question came up: aren’t there any other bonds possible for investment except for the American treasuries?

According to the International Monetary Fund, the debt of the USA is 89% from the GDP of the country. The debt of Germany is 56%. The bonds of the country offer stable but not very attractive profit.

Among the global players it is worth paying attention to New Zealand and Australia, the pure debt of which is 29% and 13%, respectively. The interest rate of bonds in these countries is 4,6% and 3,9%.

It’s worth looking at Scandinavian countries — Denmark, Sweden and Norway. The debt of Denmark is just 9% from the GDP, although even this per cent is huge for Scandinavian countries who have proficit.

Norway is the leader of the construction of the state economic system. After oil boom the country took a decision not to spend the profit received from marketing hydrocarbon but to keep it in the fund of the country investing only a small amount in external assets. The current proficit of Norway in regards to its GDP is around 175.

These northern countries emit their state bonds exceeding their percentage of profit in comparison with similar bonds in the USA. Thus, the US ten-year bond has a yearly rate at 2,6%, but in Norway it is 3%, thereby it is certainly not under the threat of default.

Basic principles of Forex trading

Working on Forex implies the study of theoretic and practical base, otherwise there is no sense of peeking in the trading platforms. The construction of the personal trading platform will allow to earn sizeable sums as well as to make an optimal working schedule.

The scheme of Forex-business for a trader

The organizastion of a trading process in Forex market is based on the usage of finacial instruments. One of the main is the currency pair. The most popular is the pair euro/the U.S. dollar. The latter as the world reserve monetary unit is presented in a pair with the British pound, the yen and with the Swiss franc. The currency pair is indicated in the order. In order to get the first trading experience it is enough to use 1-2 instruments. In this case a training process will accelerate.

Having chosen the currency pair it is high time to choose the trading time. The main criteria is the convenience both for the trader and the currency pair. In such a case the basic principle operates which implies that the currency activity is defined by the time of its trading session. For instance, a high euro dynamics is possible only in the European market. If we take Moscow time, then a session in Frankfurt, Paris, Zurich starts at 10:00 and closes at 19:00. London stock market works from 11:00 to 20:00. Work with such currency pairs as USDJPY or USDCAD is preferable for those traders who have the opportunity to work in the evenings.

Financial, economic news in some way influence on the price positions and brokers’ behaviour, thus the trading tactics may vary depending on the fresh news. This fact determines the choice of the instrument.

Time interval plays a big role. A risky trading is based on short timeframes: punters (scalpers) using a massive financial leverage open and close positions in a very short period of time. Long time periods correspond to calm trading and this scheme has followers as well.

The character of trading depends on the deposit account holder. If he/she looks forward to fast gains, then traders fix on scalping. The holders of big amounts are not prone to taking risks, that’s why they prefer long trading.

Every earnest trader has a monetary holding, i.e. he/she transfers not all the sum to the broker but only a part of it. Such a manoeuvre protects a trader from bankrupcy. It is recommended to put into use not more than a half, even if you have 10 000 available.

Finally the trading strategy is defined by the capital stock. To save the funds and get profit it is advisable to follow the principle: do not make transactions which more than 10 times exceed an account. Thus, having 1 000 dollars it is better to trade with the volume that is equal to 0,1.

A beginner can construct a personal trading mechanism, however, trading in Forex demands a clear system. It is not recommended to change financial instruments and volumes too often. This inconstancy declines business efficiency.

How to use the indicator Simple Moving Average?

Moving Average is probably one of the easiest and the most popular indicators of the technical analysis (and in Forex market as well). As an indicator of the market analysis it performs curved lines which are on the price gragh. Their main purpose is filtering and smoothing price fluctuations for certain currency pairs in order to get the opportunity to indentify their movements in the future.

It is necessary to learn all the principles of making and calculating the curved lines of MA in order to develop and successfully apply the strategy with the usage of moving average.

Simple MA is made calculating the average price of the currency pair at a certain period of time. The majority of moving average is based on the price at the close of trading, however, other prices might be applied.

SMA (Simple Moving Average) is calculated summing up prices of the chosen currency pair for a certain period of time with the further division of this sum into the number of periods.

It is worth saying that all trading platforms which are used for trading on real or demo accounts make automatic calculation that is why there is no necessity to do it by hand. However, understanding the operation of the indicator allows to adjust and create various trading strategies during the change of the market sentiment. It is important to remember that as other indicators, MA operates with a delay. Consequently, it is required to take into consideration the average of the previous but not current prices for the calculation and we can observe on the charts only a general direction of the price movement at the recent time and a general direction of the short-term future price movement.

SMA provide the forecast of the currency price changes as they reflect a real price movement. If the SMA period is bigger, then the smoothing factor will be stronger and consequently the relevant curved line will be smoothier. At the same time one should bear in mind that if a curved line of SMA is smothier, it will react more slowly to the price change of the chosen currency pair. Thus, using this strategy where the moving averages are applied with big periods, a trader can miss a good opportunity to exit or enter a deal.

But on the other hand the shorter the period of SMA is, the weaker the smoothing factor is which leads to a less smooth curved line. The less smooth the curved line of SMA is, the faster it will react to the price change of the chosen currency pair. Although applying these strategies the trader can make an untimely decision to exit or enter a deal. In this case due to the fact that the indicator will not filter quite precisely steep short-term trend deviations, a trader may lose profit. Such kind of deviations happen in the currency market when unconfirmed economic and financial news appear. In these circumstances an inexperienced trader might decide to open or close a position by mistake too soon.

In conclusion it is important to point out that a simple moving average allows to identify the beginning of a trend. Moreover, it is used as a smooting base or factor in great numbers of other technical indexes of Forex market.

Charels Dow Theory

Charels Dow Theory

Charels Dow theory is the oldest and the most famous method of defining the main trends in the stock market. According to this theory the ascending trend is the trend with every next high or low higher than the previous one. When the trend is descending the opposite situation takes place, i.e. highs and lows are lower than the previous one.

The majority of technical analysts consider that opening trading positions in the trend is the most efficient way of trading. Trading against the price tendency involves risks.

Dow theory incudes six basic principles:

There are three types of trend: long-term, interim and short-term.

Long-term trends contain three stages or phases. The first stage implies buying a certain asset. The second stage means joining a big amount of traders to the forming trend. The third stage is the realization during which almost all other traders join in the market trend and the shrewdest ones close their positions. As soon as this stage ceases the price trend terminates.

The incoming information influences on the asset price, it might be any financial and economic news or event.

Share indexes should confirm a trend development. Initially this principle was related to Dow-Jones index, but today S&P 500 replaced it.

The analysis of trading volume indexes gives the opportunity to define the formation and the development of the price trend. If during the change of the trading volume the price changes, then it can be considered as the confirmation of the current trend development. According to this principle traders should take into account trading volume indexes.

The trend can be considered as terminated only when there is a clear-cut signal of its termination, any pullback should be considered as a termopary correction.

Price movement is subject to trends

The idea of a tendency or a trend is one of the most crucial in the technical analysis. Everything that occurs in the market is subject to tendencies. The main aim of making price behaviour graphs in future markets is to reveal a trend at earlier stages of its development and trade in line with its direction. Most of technical analysis methods are trend-following, i.e. their function is to render an analyst assistance in recognizing the tendency and following it during the whole period of its existence.

The fact that the price movement is subject to tendencies implies that:

There is a high probability that the current trend will develop further and not reverse. It’s nothing but a periphrasis of Newton’s first law of motion.

The present tendency develops until the appearance of the movement in the opposite direction. In fact, all the trend-following methods are based on understanding that trading in the direction of the current tendency continues until the tendency shows signs of a reverse.

History repeats

A technical analysis and research of the market dynamics are closely connected with the study of human psychology. For instance, graphical price models which were distinguished and classified during the last one hundred years reflect significant peculiarities of the market psychological state. First of all, they indicate what sentiment bullish or bearish dominate in the market at the moment. And if these models worked in the fast, there are all reasons to assume that they will work in the future as they are based on human psychology which does not change for years. We can make our last assumption that history repeats using a bit different words: a key to understanding the future is in studying the past. Or in another way, the future is only the repetition of the past.

What’s the difference of the bonus “Welcome” from the demo account?

First of all, a bonus in the promotion “Welcome” is the real money transferred to real accounts serviced according to all the standards of currency dealing.

Secondly, trading on the bonus account you get the opportunity to form your trader’s statement before investing your personal funds and depositing your assets you increase the total deposit volume which leads to the growth of its investment potential.

What are the advantages of your $50 bonus?

Firstly of all, Clients who take part in the Promotion “Welcome” gain additional benefits in implementation of their trading strategies receiving wide margin opportunities which in their turn increase the trader's potential to gain profit.

For Clients who open their account for the first time in our company this bonus is the opportunity to test the support service of real accounts before investing personal funds making trades with real money prior to the trader's verification.

The following types of risk creditability can be distinguished:

1. Replacement risk appears when the clients of ineffectively acting banking structures run the risk of not receiving liquid replacement from the operating bank in case of a client’s personal account disbalance.

2. Geographical risk appears due to different time zones on continents. As a result the currency can be sold by central banks at different prices depending on the time of the day. At the start of an average trading day the Australian and the New Zealand dollars are sold, then the Japanese yen, the euro and the US dollar closes the day. It can cause prelimenary payments in favor of a party which is going to announce its bankruptcy in the nearest time or default over the duties taken earlier.

Creditability risks for currency instruments in organized markets might be cut down securing the creditability of its participants. Commercial and investment banks, trading and investment companies as well as bank clients should track carefully the financial sufficiency of trading partners. To avoid risks trade participants should estimate the potential price of currency and investment portfolios. The latter can be done by making a probabilistic forecast during the whole period of an open position.

Main market rules

Rule 1.The market is ahead. Incisiveness of all active and potential investors is usually bigger than of one person. Is it possible that others know what we do not know? We can never be sure about it. We have to agree that it is a hazardous task to be ahead of all market knowledge and not to take the market knowledge about prices beforehand.

Rule 2. The market is irrational. It can react swiftly to facts or might be subjective, emotional and conform to only one whim of changing trends. Sometimes prices may fluctuate depending on the financial state or investors’ interests wandering between mass hysteria and indifference rather than between asset rates. Consequently, attempts of a private investor to be sensible can turn out to be a completely irrational behaviour.

Rule 3. The situation is chaotic. Macroeconomic forecasts are too inaccurate to be of any value for an investor. It happens due to the constant influence of small, insignificant factors, which nobody can forecast or assess but they can change everything, on economic interaction. What’s more, the same concerns financial markets.

Rule 4. Graphics are self-actualizing. If a lot of people use similar graphic systems, their trades can bring them profit, regardless of whether they are right or not.

Investing looks like a game and to win this game we should understand these four rules.

Keys to success with exposure method

Patience? — spend some time to be completely relaxed before exposure, it’s very significant. Give yourself enough time.

Permanence? — a key to eliminating negative models is repetition. Apply relevant skills to problem scenarios again and again, in images and under real conditions which makes stress situations recognizable.

Gradation? — think about success starting with manageable cases of your problem model and imaginable exposure before moving to your main problem under real conditions.

Sequence? — short-term methods and their daily intensive and consistent application guarantees great results.

Realism? — exposure might break old problem models but it will not develop new models of success on its own. Nobody will replace experience and a market research!

What are the advantages of your $50 bonus?

Firstly of all, Clients who take part in the Promotion “Welcome” gain additional benefits in implementation of their trading strategies receiving wide margin opportunities which in their turn increase the trader's potential to gain profit.

 

For Clients who open their account for the first time in our company this bonus is the opportunity to test the support service of real accounts before investing personal funds making trades with real money prior to the trader's verification.

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