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.

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

Pipsing and scalping

What do these two terms mean? This type of trading allows gaining profit from intraday currency fluctuations on the market. Such deals are not held opened but for a couple of minutes. A single pipsing or scalping deal would not provide you with much profit, that is why the main principle of these two trading styles is having as many positions closed as possible.
The number of deals carried out by pipsers and scalpers runs 200 per day. It is however imprudent to expect that all the deals will prove to be profitable. The result to strive for is a positive balance by the end of a trading day. To accomplish this aim one needs to set a stop-loss level close to an opening price rate. This will help to minimize a loss in case the price takes the opposite direction.
It is a well-known fact that Forex is the most liquid market in the world. Prices on Forex mix, falling and rising again, following the cycle. If a price passes approximately 60 points within a day, the gap between its high and low is rather substantial. Trading based on hourly price fluctuations (highs and lows) ensures even more profit. This is why pipsing and scalping are so popular with traders. The novices on Forex may think that through such trading incredible profit is possible to make, the sum fancied may even go beyond any real limits, taking into account an opportunity to reinvest. Such conviction is hardly truth, despite the Internet abounding in the stories of lucky traders who managed to boost their deposits manifold. In fact this strategy will not guarantee you any success. Let us investigate the reason for this.
First, a stop-loss level approaching a price rate increases a possibility to suffer losses at the slightest fluctuation if the strength of bulls and bears has been misestimated, even though further trend has been foreseen. It is far too easier to make a mistake in defining a direction for a short period of time (1-2 hours), than to define a price direction for the whole day.
The simplest way to escape the execution of the order with a risk of loss is not to have such an order, but then, there appears a risk of losing many sources after the strong movement is against you. This happens when the price moves far and is not probable to return to its preliminary positions in the nearest future. If a trader keeps the greater part of his deposit as a margin and does not set any stop-loss levels, he/she may well get a margin call and later to the loss of all the funds on the account.
Second, most traders grow nervous and anxious when dealing with real money. As a rule, such type of trading is tested on a demo account first, since there is no real money involved, consequently there is no risk to waste it. Thus, the emotional state of a trader handling a real account worsens with each pip in case the price moves in the wrong direction.
Pipsing and scalping imply that a trader is to be on the market constantly, which is a stress of course, leading to hasty and ill-considered actions.

Read More