Sell Eur/Jpy

Sell Eur/Jpy @110.45
T.p 70 pips
S.l 70 Pips

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A Volatile Market: A Blessing or A Curse?

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Volatility is the main feature of the Forex market where trading takes place non- stop throughout the week except for the weekend. It is by far the biggest market on earth and is bigger than all the other markets combined. The daily turnover of the market stands at a figure exceeding four trillion dollars and this will give you an idea as to its trading volume.

This highly volatile market is the arena where millions of traders and investors risk their money in the hope of making a profit. If there was no volatility there would be no trading. In this sense it is truly a blessing that many traders capitalize on. Volatility is brought about by markets that trade erratically swinging between highs and lows. Where there is no market movement in currency prices you will see no volatility and thus no trading will take place in such an environment.

It is fact that the volatility in currency trading moves by pips and a closer look will tell you that this movement is indeed extremely small. This is why leverage is considered as necessary by currency traders, as well as signals. In a highly volatile market losses can be augmented by leverage and at times like this it is best to trade lesser amounts so that losses are also kept to a minimum.

Although a volatile market can be a blessing you should control your trading in such a market. This is easily by using tighter stops so that losses are cut off at the outset. The exact placing of the stop will depend upon the currency pair being traded. Volatile market conditions often tempt traders to invest more than normal in the hope of collecting profits. However, this can be dangerous as the risk faced in a volatile market is higher than at other times. A trader should stick to his planned trading at all times and during times of extreme volatility this is even more essential.

Keeping up with fundamental indicators and news in general will ensure that you know the cause for the high volatility in the Forex market. This knowledge will help you to make better trade decisions in the longer run as you face volatility in the market. When you trade carefully adjusting leverage so as to reduce any potential losses you can still win in a volatile market.

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Why It's Important to Accurately Time Your Trade

Timing is everything in forex. Time it right, you win. Get your timing wrong, your money goes up in smoke.

In a fast paced market with periods of intense volatility like the forex market, timing is essential. There is a saying that “the trend is your friend till it ends”. I will say that the “trend is your enemy if you get in too late”.

Traders are advised to “trade fundamentally, enter technically.” This implies that traders are expected to follow the direction of a high impact news item. But in doing so, traders must use their technical analysis to enter at the right time.

What happens if entries are not timed properly? These are the scenarios that could occur.

1)      Some high impact news hits the news wires and it favors a long trade. You go long, but you discover that the market has spiked by almost 80 pips about a second after news release. Your entry is still pending, waiting for the broker to fulfill it. Too late. Prices are too far gone and you are asked to “REQUOTE”. Not wanting to miss out, you re-enter the market not minding the prices, and your order is instantly fulfilled. Suddenly, the price starts to retrace wildly, and you are stopped out, just in time for the price to resume its move northwards. It’s almost like the market maker was watching you to do you in.



2)      The second scenario is a bit like the first, but instead of a requote, your order is filled at a price so far away from market price, it will take a miracle move in the trade direction to break even, let alone make a profit. Slippage sucks.

Let’s explain the two scenarios. In a high impact news trade, the news feeds are received by the institutional investors before anyone else via premium news services like Bloomberg and Reuters, who charge thousands of dollars a month for this. A team of veteran traders will be waiting to analyze the news and hit the trade buttons fast. The sheer volume of such trades sends the currency price candlesticks spiking. Sometimes the spikes happen even before the retail traders get the same news. As such, any trade entered by a retail trader at this point will most likely not be fulfilled; requotes follow. If a trader enters the trade at this time, he will meet the institutional guys offloading their positions to take profits, and he will get hit by the unavoidable retracement that follows.

The two scenarios are a case of wrong timing at work.

How Can You Accurately Time Your Trades to Avoid Losses?

For news trades, it is pretty obvious here that you should not try mixing it with the big dogs. You will get blown out by the two scenarios I painted again and again. Only enter news trades when the initial madness has died down. Soon, the market will respond in a slower and more purposeful direction to the news trade, as we see here from the Non-Farm Payroll report of June 3, 2011.

Secondly, use pivot points in addition to your other technical indicators to determine if you are still within touching distance of a profit. If a long trade is closer to a resistance than a support level, the chances of that trading making a profit is lower than if the entry was closer to the support level.

There are many tips, but hang on to these two for now.

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Six Tips for Long Term Investment

The long term investor needs to follow a strategy that is compatible with long term investment success.

A long term investor requires that the investment is safe, that his capital is secure and that there is a reasonable risk free return on the investment. Banks offer a reasonably risk free investment however the interest rate is very low. The Stock market has much higher returns but there is an aspect of risk which deters some investors. For all this the stock market can proffer the long term investor the opportunity to invest with manageable risk and a good return.

Six Tips for Long Term Investment:

A key long term strategy for a long term investor is to diversify their investments into various instruments such as stocks, bonds, and mutual funds. Most investment advisors recommend that not more than 10% of an investment portfolio should have more than one stock or other similar investment. Investments should be spread over geographical areas of the world such as Asia, America, Europe and also emerging markets. In addition several market or industrial sectors should be used so as to avoid the risk of a sector collapsing and a huge lose of capital.

Investors tend to be lone wolves and don’t take advice easily however even though you might not take the advice at least listen to it some of it might make sense. Try and invest in the companies whose products you like. Try to analyze the companies you are interested in and see if you like their business strategies. There are many resources on the internet that can help you understand investments. Also although an investments past performance is no guarantee that in the future it will perform well it can be prudent to choose investments that have been strong performers over the last couple of years.

Another tip is to keep an eye on your investments. Don’t invest and then forget about them. Even if you are investing for the long term you need to make sure that you have investments that are performing as you had expected against the market indices. Don’t be tempted to sell investments that are doing well to take your profit; you are in it for the long term so investments that are doing well should continue to grow. On the other hand investments that are not doing well should be sold and replaced. Remember that it is better to lose a little rather than wait in the hope that the investment will do better when in fact it continues to do badly and you lose more money.

Don’t be tempted to cash in your dividends as the return on an investment is a combination of reinvested dividends and stock appreciation. The yields might seem small but over a period of years they can make a big difference. Part of the analysis of your potential investments is looking at stocks that have a history of regular dividends.

One of the golden rules of investing is that when the market is down then that is the best time to buy stocks and when the stock index market is high its time to sell the stocks that are not performing so well and reinvest the proceeds in other instruments such as bonds or real estate.

Finally as you are investing for the long term it is important that you don’t reduce your funds through unnecessary fees and commissions. Keep your trading down to a minimum so as not to incur fees that reduce your funds. When the markets turn down don’t make the mistake of panic selling. The economy goes in cycles so a market that is down will soon move up again. Always bear in mind that a market that is low presents a buying opportunity.

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Why Investors Fail [ Must Read ]

According to research more than 92% of traders close their accounts within 9 months and never come back trading again. This essentially means one thing – trading is not a get rich quick scheme. Yet, this should not be misinterpreted to mean that it is not a profession for newbies. Even the best traders lose money in their first months in the investment industry, and they made it big because they strived to overcome the challenges and went on to learn from their mistakes. Why then do so many investors fail? Here are a number of reasons:

1.    They trade for a quick buck. While traders can easily make money in the forex market, it can easily disappear. Many traders earn quick money but very few make it big because they do not fully understand how the market works. On the other hand, there are many others who end up broke because they failed to realize that forex trading is all about an properly timed trading strategy.

2.    They don’t have a plan. In any financial market, a trading plan (or strategy) is essential. Before an investor decides to trade real money, they must set specific amounts on capital they want to invest, and how much they are prepared to lose. Unfortunately, so many new traders do not realize the importance of this or they simply couldn’t be bothered.

3.    They don’t use stop losses. Not all trades will go well, and in this case, a trader must know when they can call it quits. By setting up stop losses, traders can prevent additional risk to their account and can limit their losses to a few hundred dollars.

4.    They do not test for entry and exit points. Trading works a lot like firing a missile – you have to test it so you can minimize the casualty. Random buying and selling just wont work.

5.    They get emotional. Most traders who profit in an uptrend will tend to keep their bets on that same position hoping to get a few more dollars. Unfortunately, at a time when information can be transmitted so fast, prices can change in just a few minutes and will cause a $1,000 portfolio to drop in value without notice.

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Forex and World Economic Crisis

World Economic Crisis is a burning issue not only for those dealing with finance but also for all social groups as everyone, one way or another, is influenced by economic cataclysms. Some are afraid of inflation rate and reduction of wages, the others are scared to lose their jobs.
So traders here are not the exception as their work is directly connected with finance and everything that is happening in the world of currency undoubtedly affects the exchange market. That is why, probably, at least once every trader wondered what would happen on Forex if another finance crisis takes place and how the members of the foreign exchange market should react to such major events.
Indeed, the World Economic Crisis leaves its mark on Forex with both positive and negative aftereffects.
Therefore it is very important for every trader to correctly react to financial cataclysms and try to elicit all the benefits out of such situation, still getting the profit.
First of all, there is no need to panic while monitoring a huge flow of world economic news. During the crisis period the amount of such news is getting much bigger than during peaceful periods. As soon as the financial situation loses stability, the currency rates undergo great changes: plummeting of exchange rates becomes a common thing for many national currencies which belong to the countries involved into crisis. While the newspapers headlines as well as on-line publications are full of information about the new world economic events, it becomes more complicated for a trader to deal with such a great amount of information, analyze the conditions in time as well as correctly predict the behavior of currency rates.
Nevertheless, together with the right approach and substitution of emotional breakouts for rational judgments it is possible to change things for the better. A trader can easily benefit from this event and multiply his/her capital while continue working confidently.
There is no need to be afraid of the raised market volatility - better to know how to get money out of it. As Forex trade is based first and foremost on buy and sell operations, the traders risk less to lose their job during the economic crisis.
The tools and methods that exist on the foreign exchange market will always allow to get the profit. If financial crisis involves some currency exchange rates falling, the quotes of other currencies raise automatically, which in case of competent analysis gives an opportunity for a trader to consummate a transaction with a benefit.
Undoubtedly the influence of World Economic Crisis on Forex is tangible. Yet, despite the traders’ disturbing expectations, financial turmoil cannot lead the exchange market to decay.

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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

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Market Makers

The participants of Forex currency market are divided into two groups by their activity and influence on currency rates: market makers and market users.

Market makers are large banks and financial organizations which determine the current level of a currency rate, owing to a significant share of their operations in a total volume of the world market. Market makers exercise a constant control of different trading instruments, and they also conduct trades with them. Market makers are market members providing liquidity of particular instruments, making buy or sell orders. These are big international banks and financial institutions, which run daily currency operations of buying or selling trading instruments for more than billions of US dollars. Every market has its own market makers. Similarly, every Forex broker has its personal market makers, the quoting rates of which are exploited by it and offered to its clients further on. Among the greatest market makers such as Deutsche Bank, Mizuho Bank, Barclays Bank, PBS, Citi Bank, Chase Manhattan Bank, Union Bank of Switzerland can be named. In order to define whether the organization is a market maker it is important to consider not only the size of a bank, but also its share in market operations and its capability to influence the market by setting a price policy.

As mentioned before, for a particular market there can be own market maker. Worth pointing out that for the USD/CHF trading instrument the main market makers are Credit Suisse Bank and Union Bank of Switzerland. For trading instruments comprising the Asian currencies the major market maker is the Standard Chartered Bank. As to the rouble instruments, here the top market makers are the International Moscow Bank and the Onexim Bank. The Central Bank of Russia can also play this role being one of the most active participants in setting up the quote rates of currencies vs. the rouble, making different currency interventions, if the rouble rate exceeds the regulated currency rate limits.

Market makers determine the current currency exchange rate by conducting trades with each other as well as with smaller banks, which are also market participants. That is the market makers who introduce quote rates to small banks, organizations and individuals. Thus, another notion emerges characterizing these participants - market users.

Market users are financial organizations, broker companies, small banks and individuals, who use the quoting rate set by market makers for their operations. Market users are not aggressive market players, though a total volume of their operations in the market can be significant, but the share of each one is minor. The role of small market users consists in either acceptance or not of the rates provided by market makers. Consequently, market makers make price and market users take it.

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Automated Trading

Today the high popularity of Forex is mainly caused by the fact that you can trade having a computer and Internet access, you do not need to invest large sums in order to start trading on the market, and also trader can use the advisors for automated trading.
People, who have just started their work at Forex, very often do not have the required experience and knowledge in order to begin trading themselves. That is why about 70% of traders use the automated trading – advisors. The usage of the automatic trading system helps to avoid the influence of the human emotions, panic, excitement, etc. on the trade process. The advisors are developed on the basis of long experience of the successful traders and professional analysts. However, even the programs of automated trading can not guarantee 100% profit; nevertheless, due to them you start trading at Forex market, having minimum of knowledge and experience in this area.
What is the Automated Trading, as known as the trading with the help of expert advisors?
Advisors are the special programs, including different modules, which are used when the charts, indices, received from the broker to trader, are processed and analyzed.
The programs of the Automated Trading were developed and are used by traders in trading for a long time, and every year the number of such programs grows, a lot of them are updated and become more perfect in the work. The trading with modern expert advisors allows to receive profit as well as to get familiar with Forex market and acquire skills and knowledge, which are needed in order to trade successfully.
The major part of advisors, provided by different companies for the automated trading, as a rule, does not require special skills to start work with them. You just need to download them and install, that is all, you can start trading, which very often gives a result immediately.
Most often the automated trading systems are provided for free, with the detailed description of program’s functions, but sometimes this description does not correspond to its real possibilities. That is why despite all advantages of advisors, you should not rely on them completely. Traders, who have enough experience and know much about trading strategies, start trading independently, guessing the movements of exchange rates on short time intervals.

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EUR/USD Currency Pair

The international currency market is built on principles of buying one currency and selling another. The daily market turnover is about 3 million US dollars. With the help of brokers and dealing centers one can trade almost any world currency.
In this article we consider one of the most popular currency pairs – EUR/USD. The euro-dollar currency pair appeared on April 7, 1989. The initial EUR/USD rate was 1.0445.
Statistics for 2007 confirms that 27% of all operations are executed with euro-dollar currency pair. To the present time EUR/USD pair has been the most traded and popular in the international currency market Forex. The pair is interesting both for professionals of currency speculations and absolute novices of trading. It is one of the most active pairs in the market and notable for insignificant volatility, attracting traders with different experience on Forex. EUR/USD pair movements are smooth, but during the day high activity can be noticed and used by the intraday and short-term traders for getting great profit.
Traders who actively work with the euro-dollar currency pair should be always aware of economic events in the USA and Eurozone. The pair adheres to the trend trading. Entering the market trader should estimate the current prices, draw a trend and find the historical levels of short trading prospect.
Every currency pair in the market has its own peculiarities and suffers from impact of different factors. Traders should realize these peculiarities and trade paying great attention to them.

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