GBP/USD Currency pair

n this article we consider the peculiarities of GBP/USD currency pair. GBP/USD is an abbreviation of British pound and US dollar currency pair. The currency pair quote indicates how much money it is necessary to pay in order to buy 1 British pound.
It is very popular trading instrument in Europe and, especially, in Great Britain. It stands third on the list of the most traded currency pairs worldwide, daily trading turnover reaches 12% of the total Forex market turnover. This currency pair is really unpredictable and has strong volatility. Its fluctuations are short-term and unstable. Due to such behavior in the market it was called Cable.
Daily fluctuations of the currency pair reach 130 points on average. Low liquidity of this pair is observed only in the Asian region (average movement is about 30 points). That is why novice traders are not recommended to start with this pair.
Many traders prefer EUR/USD to the Cable. As a rule, British pound moves in the same direction as EUR/USD, but not always.
Pound-dollar movement can be absolutely different from the same euro-dollar in the period when certain “cable” news is released. For example, the British Government changes interest rate through the Central bank. Pound movements are similar to the movements of euro and Swiss franc. One should always be careful trading with pound because nobody knows what surprise it will bring this time. Pound often moves against the news; even when everything seems favorable for the currency, its rate can fall down. Many traders choose this pair for swap trading because of a substantial difference in interest rates of pound and dollar.

Read More

What Is Hedging

Hedging denotes safety and security. Hedging is protection of client's funds from unfavorable currency rate fluctuations. Account funds are fixed at their current price through conducting trades on Forex. Thus, hedging helps to ease exposure to currency rate change risks, which helps to achieve result not influenced by fluctuations.

In fact, hedging presupposes using one instrument in order to lower the risk related to unfavorable market factors impact on the price of another one directly associated with it. More often, the notion ‘hedging’ means insurance from the currency price fluctuations, assets etc. Hedging can also be considered as a type of investment allowing to minimize the price movements risk in the market. The hedging cost should be valued with regard to possible losses in the event of refusal from it.

Hedging types on Forex

The first type is hedging the buyer’s money to lower the risk of possible increase of an instrument price. Another type is hedging the seller’s money in order to lower a price drop risk.

Hedging example

A trader, who imports foreign currency, opens buy trade with a currency on his trading account in advance, and when the real time of currency purchase comes in his bank, he closes the position. And a trader, who exports foreign currency, opens a sell trade with a currency on his trading account beforehand, and at a real moment of this currency purchase in his bank, he closes it.

There is a so-called hedging mechanism, which implies obligations balancing in the currency market (or securities market etc.) and the opposite futures market. To hedge capital losses from a particular instrument, the position is opened with another instrument, which can compensate financial losses.

Read More

What is Stop Loss

Stop loss is a widely used order aiming mainly at limiting the possible losses in case of negative market movements.
Stop loss is used only with open positions. When the market conditions are not favorable for a trader and the price has reached the level of Stop loss, the deal is closed automatically. Therefore, Stop loss helps the trader to control losses and in case of failures to keep safe at least the part of the deposit.
If a trader does not use Stop loss orders, the position is closed by the broker when the sum of losses is equal to the sum of the deposit.
There are 3 types of Stop loss orders: fixed Stop loss, sliding Stop loss and combined Stop loss.
Fixed Stop losses are set while opening positions. They cannot be replaced until the deal is closed. Sliding stop losses, on the contrary, can be replaced any time depending on the price movement. Another name for sliding Stop loss is Trailing stop that can be replaced either manually or automatically considering the traders settings.
Presently there are lots of discussions on whether it is necessary to use Stop losses or not. Some traders believe that Stop loss should be compulsory for trading, emphasizing the ability of Stop losses to prevent the loss of the whole deposit. If the price is rapidly moving in direction, which does not correspond to the forecast, the deal that has not been closed in due time can result in significant losses. The opponents of Stop loss believe that this order can limit not only losses, but profits as well. As the price movement is often unpredictable and unexpected, it can develop according to the trader’s expectations though with some periodic bounces crossing the Stop loss line. In this case the position is closed with losses though it was a possible to close it with profit.
As a rule, the decision on whether to use Stop loss or not depends on the individual strategy of a particular trader. Therefore, there is no single opinion on the necessity of using the limiting the losses.

Read More

Non-News Trading on Forex

Due to permanent improvement of the Internet and communication facilities for traders operating on Forex, the information becomes more accessible. That is why a lot of traders and investors consider that following the fresh news release, reading the analytical reviews and another similar information their chances of profit earning advance essentially. But it is not exactly so:
Staking on news may result in huge financial losses. Why does it happen? Without a detailed consideration of this issue the true cause of this will be hardly understandable. So let us make a close analysis:
Almost every beginning trader supposes that applying to news in trading will certainly turn out to be beneficial, but it is wrong.
The first thing said about news is that they reflect changes taking place in the market in full measure. But as a rule, such assertions are not approved and the currency`s reaction to them mostly differs from the expected one.
Certainly, the leading positions of supply and demand are not passed by in the market, at the same time there is no logics in their movements.
The main reason depreciating the news is the markets. That is why the news trading becomes almost unreal. Thus, knowing in advance when some news will be published and what influence it can put on the market the investors start acting. So when this news is given to public the market reaction can be hardly visible or there will be no any reaction at all, as everything is taken into account by the price. It is also worth paying attention to people`s character and the real picture showing the news "importance" will become clear.
One more reason impacting the trading during the news is human emotions violating a significant nuance in trading - discipline. Similarly, the analytics can be incorrect sometimes. In situations when an opened trade should better be closed the trader does not make it, as an active motion is predicted by analysts to start at that very moment.
At the same time, the news should not be ignored. It is widely known that the market peaks often emerge after the news with positive forecasts, and the lows to the contrary after unpromising news.
It can be concluded that for traders with big capital who operate with major pairs the right decision would be not to run a news trading and to apply to an order trading system instead. Because these news are already recorded by the system. They are also a part of technical analysis which is an irreplaceable component of any well-set trading system

Read More

Buy Usd/Cad

Buy Usd/Cad - 0.9895
Stop Loss - 0.9800
Take profit - 35 pips, 70 pips

Trade on Ur risk

Read More