The foreign exchange market, better known as forex, is the most traded financial market in the world. Every trading day over $4 trillion worth of currencies are traded across the globe. Once only available to large banks and institutions, forex trading is now available through the advancement of technology and the Internet to retail traders. More people are joining the forex trading crowd every day to take advantage of the benefits the forex market has to offer, such as liquidity and being open 24 hours a day, five days per week. But these benefits also bring along the need to fully master the forex market and have constant access to trading instruments in order to be a consistent trader.
FXCM Inc. (NYSE: FXCM) is one of the largest global online providers of forex trading and has proven to be a good place to trade. It boasts multiple platform offerings including Trading Station II, Strategy Trader, MT4, and Active Trader, providing clients a variety of choices to trade based on their needs. For novice traders, there is a free demo account that enables new traders to try currency trading before they commit their money, risk-free.
To begin forex trading, it’s necessary to understand the market and to be able to analyze it. There are many ways to build forex trading strategies. There has been a constant debate on what methods have the best performance. The forex research team at DailyFX—an online provider of forex news, research, analysis, and trading tools—believes that a trader should always look to expand their knowledge of the markets and test strategies. It is practically unheard of that one strategy works all the time (what is referred to as the “holy grail”); so make sure that you and your strategy adapt to prevailing market conditions. We believe that this is the best path towards consistent trading.
DailyFX is the ultimate place for news, research, and analysis specific to the niche of forex trading. More than thirty articles are produced on a daily basis together with videos, webinars, and trading tools. The articles and videos can be one of the best ways to learn about what is going on in the markets and learning about possible forecasts. But the forex market is constantly influenced by many different factors, so the DailyFX research team won’t be able to cover the latest movements and their analysis in full immediately. Therefore, we have formed the real-time forex news section where the research team will post a short comment on what is going on in the forex market at that moment. If needed, they also provide links to the source article or charts. So if DailyFX readers are present on this page, they can find out about every topic in the market and, furthermore, interact with the DailyFX research team.
DailyFX+ is an all-in-one, free forex trading toolkit for all live FXCM clients, guiding them step-by-step through their trading journey, 24 hours a day. It doesn’t end with forex market news, fundamental/technical analysis, and beginner’s education. DailyFX+ takes forex trading education to a whole new level with Trading Signals, Speculative Sentiment Index, Technical Analyzer, and more.
The DailyFX+ Forex Trading Course is committed to providing traders with the very best educational tools and resources on the web. It is designed to introduce popular trading tools and techniques in a manner that both new and experienced traders can benefit. The course is designed to reach out to many different types of traders to help them become more educated. The course consists of sixty video lessons, spanning 15 trading subjects and over ten hours of live, instructor-led webinars each week.
The video lessons offer traders a choice of an in-depth comprehensive look or a short instructor take on forex trading. Regardless of the trader’s knowledge, there is something new they can learn through the course at their own pace. The course allows a trader the ability to create a learning plan around their personal schedule.
In addition to the videos and webinars, students can complete homework assignments and further their learning through course forum discussions. Information alone is not usually all that is needed. Most individuals also want a teacher, a coach, a mentor—someone to help them along the way. The live lessons offer traders a location for more than just trading ideas—they can see how those ideas are arrived
Since trading on technical analysis can apply to any market, coaching is also offered on CFD products like commodities, gold, and oil.*
The coaching received has a lasting impact on traders as they now have the tools to find the opportunities on their own. The curriculum’s “go at your own pace” and “learn what you want” format provides traders with the flexibility and freedom to focus on the subjects they want for as long as they want. The feedback through the videos, trading strategies, and live coaching has been outstanding.
An ideal scenario for a forex trader is to know exactly where the markets are moving based on trading signals that are right 100% of the time. As you may have guessed, this is not possible because there are countless factors influencing the currency markets. The only remaining way is to compare the most profitable signals and choose among them.
The DailyFX+ Trading Signals are designed to tell you when to enter a trade, when to take profits, or when to cut your losses. This user-friendly gadget offers trading signals that covers 12 currency pairs together with six different trading strategies, updated 24 hours a day.
With the DailyFX+ Trading Signals you can view the performance of each of the offered strategies over the past sixty days. You also have access to view the accuracy percentage for each strategy, which will tell you the percentage of trades that have been executed as instructed by the strategy with the profitable outcome. Please be advised that past performance does not guarantee future results.
How it works
The DailyFX+ Trading Signals offers six different strategies, using three trading approaches: range, breakout, and momentum.
• Range Strategies: Often work best when the market is moving sideways with defined support and resistance levels.
• Breakout Strategies: Often work best when the price action has broken these levels, and is making new highs or new lows.
• Momentum Strategies: Work when the market has a clear short-term direction.
DailyFX+ Trading Signals Page Sample
At the top of the screen, you have the alerts window that gives you access to a box where all the latest action by the six different strategies are displayed, including any recent trades, levels to take profits and losses, and updates on previous signals. The software will even alert you to new signals that are likely to hit soon.
The default view will show you alerts for all currency pairs, time frames, and strategies. You can place filters if you want to refine your search.
The Trade Details section is a user-friendly and easy-to-understand trading tool that visualizes a general picture of the selected pairs. You can see the current price, the trend direction, volatility (which shows how much the pair has been moving compared to the past two months), and volume index (which shows how much has been executed at FXCM compared to the past five trading days). Furthermore, the strategies that are currently showing signals in the pairs are shown by blue or red arrows. To make it even easier for traders to know how each strategy can be used, the possible actions are shown by green or red lights. The green lights indicate “enter now,” which means the trade is still good to enter at the current market price. The red lights mean “hold.” You should not get into a new trade with this signal at that time.
The Trade Details section also guides you to find out where to exit using each of the strategies. Right next to the “Action” column are the “Signal” and “Strategy” columns that show each strategy for the selected currency pair, where the system entered, and whether it was a buy or sell. Additionally, for each strategy, the levels to take profits and losses, and an indication of the real-time profit or loss (P/L) are shown.
Now that you have all the information for your trade, it is just the matter of opening the trading station and placing your trade. The DailyFX+ signals are offered in multiple languages.
It is important to mention, once again, that no one trading signal is going to work 100% of the time. We believe that, when used properly, the signals can be an invaluable trading tool.
Technical Analyzer: Hard Stuff Made Easy
Charts, technicals, and historical data are words that can make forex trading analysis sound difficult.
For those traders who don’t have the time to analyze every price movement and compare different scenarios to build a trading strategy, DailyFX+ Technical Analyzer takes the initiative to do all the hard work and provides insight on the most recent price movements with different trading strategy scenarios.
The Technical Analyzer provides the latest analysis in both a short summary and a comprehensive story for major currency pairs, gold, and crude oil. During active trading hours, the stories are often updated as frequently as every two minutes.
The Technical Analyzer offers tools such as short-term bias, medium term bias, change, and other insights about currency pairs. On the charts, the support and resistance levels are marked, and the arrows are helpful to let you know what the DailyFX analysts believe is going to happen in the movement of the selected currency pair on a day-to-day basis.
The Alerts section is another useful feature on the Technical Analyzer for traders who follow a number of technical indicators. This tool allows you to follow indicators such as the 20-day-moving average, the 50-day moving average, the cross-over between those two, the MACD, Bollinger Bands, and more all on one screen at the same time. The screen will tell you exactly what signal these popular indicators are giving at that moment.
The same set of products is also offered for candle sticks. Candle sticks are pretty complicated to actually quantify, and they can be subjective. The human eye is believed to still be more intelligent than program coding. However, this tool can be a support in recognizing the different types of candle sticks for different markets and indexes including forex, Dow Jones, Nikkei, S&P 500, crude oil, and gold.
To conclude, the Technical Analyzer is a friendly tool, digesting the difficult-looking forex technicals and presenting them as another ever-ready forex trading tool.
Speculative Sentiment Index: Forex Trading Cristal Ball
One of the most exciting tools offered by DailyFX+ is the Speculative Sentiment Index (SSI).
Most forex traders use fundamental and technical analysis to try to predict the direction of the forex market, and to time their entries and exits. In the futures market, traders have access to a third tool to help them accomplish these goals, which provides insight to what the other traders are thinking—sentiment analysis in the form of positioning data.
Because the futures market is centralized on an exchange, traders can see where other traders are positioned in reports such as the CFTC’s weekly Commitments of Traders report. Unlike the futures markets, the forex market is largely conducted “over the counter,” meaning that it is decentralized. This makes it difficult to find comprehensive volume or open interest data. But DailyFX has taken measures in an attempt to fill this gap by offering clients access to FXCM’s proprietary open-interest and positioning data. The SSI provides live FXCM clients a virtually unparalleled view of forex market sentiment. What’s more, the SSI is updated twice a day with current information on DailyFX+. This is in stark contrast to the weekly Commitments of Traders reports, which only shows data that has been delayed for three days.
The SSI reports provide information on how many FXCM accounts are short or long in each of the eight currency pairs. By following the SSI’s twice daily updates, you can see how many traders are entering or exiting the markets. Many FXCM clients use the SSI as a contrarian indicator and we believe that the SSI can be a reliable index to forecast the forex market.
FXCM has one of the largest cross sections of forex traders in the world and, therefore, has a credible amount of client data from which to draw the SSI.
Here we conclude a sneak peak on some of the DailyFX+ gadgets. Taking advantage of this always-open forex trading toolbox is easy. If you already have a live FXCM account, simply log in to DailyFX+ and start taking advantage of all it has to offer. If you don’t have a live FXCM account but are interested in taking the course or trying out the other tools, sign up for any live FXCM trading account today and gain 24-hour, seven-day-a-week access to DailyFX+.
* Please be advised that CFD accounts are not available to residents of the US or its territories.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. DailyFX will not accept liability for any loss or damage, including, without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Cryptocurrencies: the new gold?
By Gerald Moser, Chief Market Strategist, Barclays Private Bank
Time to add to a portfolio?
There has been a lot of talk about bitcoin, and cryptocurrencies in general, being a “digital” gold. Similar to gold, there is a finite amount, it is not backed by any sovereign and no single-entity controls its production. But for bitcoin to be considered in a portfolio and to become an investable asset, similar to gold, the asset would need to improve the risk/return profile of that portfolio. This seems a tall order.
While it is nigh on impossible to forecast an expected return for bitcoin, its volatility makes the asset almost “uninvestable” from a portfolio perspective. With spikes in volatility that are multiples of that typically experienced by risk assets such as equities or oil, many would probably throw the cryptocurrency out of any portfolio in a typical mean-variance optimisation.
And while bitcoin’s correlation measures are relatively supportive, it seems to falter when diversification is most needed, such as during sharp downturns in financial markets. Looking at weekly return correlations since 2016 shows that bitcoin is not strongly correlated with any assets (see below). It is however only second to US high yield in its correlation with equities. US Treasuries, gold and US investment grade were better diversifiers than bitcoin when it comes to equities.
Furthermore, looking at global equity corrections since 2015 (see below), it is noticeable that bitcoin has performed even worse than equities over the last three corrections. And while gold and fixed income provided some relief during those corrections, bitcoin compounded the loss that investors would have incurred from equities exposure.
The fact that cryptocurrencies also fluctuate alongside equities suggests that investment in bitcoin is more akin to a bubble phenomenon rather than a rational, long-term investment decision. The performance of the cryptocurrency has been mostly driven by retail investors joining a seemingly unsustainable rally rather than institutional money investing on a long-term basis.
Several studies around market structure have shown that emerging markets with high retail/low institutional participation are more unstable and more likely subject to financial bubbles than mature markets with institutional participation. And while more leading financial houses seem to be taking an interest in cryptocurrencies, the market’s behaviour suggests that the level of institutional involvement is still limited. Another issue is around its concentration: about 2% of bitcoin accounts control 95% of all bitcoins.
In summary, difficulty to forecast return, lack of diversification and high volatility makes it hard to consider bitcoin as a standalone asset in a diversified portfolio for long-term investors.
An inflation hedge?
Another point widely quoted in favour of cryptocurrencies is that they provide an inflation hedge. This might be a valid point, if inflation stems from fiat currency debasement. As mentioned above, a currency’s worth comes from the trust economic agents have in it. If unsustainable amounts of debt and large money creation shatter belief in sovereign-backed currencies through spiralling inflation, cryptocurrencies could be seen as an alternative.
Regardless of its price, bitcoin’s production is set on a precise schedule and cannot be changed. If oil or copper prices go up, there is an incentive to produce more. This is not the case for cryptocurrencies. In a very specific and highly hypothetical scenario of all fiat currency collapsing, this could be positive. But other real assets such as precious metals, inflation-linked bonds or real estate usually provide a hedge against inflation.
Bitcoin’s technology should theoretically make it extremely secure. As there is no intermediary, each transaction is reviewed by a large number of participants which can all certify the transaction. However, there have been frauds and thefts from exchanges. Another point to consider is the risk of “losing” bitcoins. According to the cryptocurrency data firm Chainanalysis, around 20% of the existing 18.5m bitcoins are lost or stranded in wallets, with no mean of being recovered. As there is no intermediary, there is no backup for a lost bitcoin.
From a sustainability point of view, adding cryptocurrencies to a portfolio will make it less green. Mining and exchanging them is highly energy intensive. According to estimates published by Alex de Vries, data scientist at the Dutch Central Bank, the bitcoin mining network possibly consumed as much in 2018 as the electricity consumed by a country like Switzerland. This translates to an average carbon footprint per transaction in the range of 230-360kg of CO2. In comparison, the average carbon footprint of a VISA transaction is 0.4g of CO2.
Beyond energy use, the mining process generates a large amount of electronic waste (e-waste). As mining requires a growing amount of computational power, the study estimates that mining equipment becomes obsolete every 18 months. The study suggests that the bitcoin industry generates an annual amount of e-waste similar to a country like Luxembourg.
Cryptocurrencies are here to stay
Innovation in digital assets continues rapidly and will likely drive increased participation, both from retail and institutional investors. The underlying blockchain technology behind bitcoin was meant to disrupt a few different industries. While results have not lived up to the initial hype, more sectors are investigating the use of the technology.
And with Facebook announcing a stablecoin, or a cryptocurrency pegged to a basket of different fiat currencies, central banks have accelerated the movement towards central bank digital currencies. Those could improve payment systems resilience and facilitate cross-border payments.
Energy stocks drag down FTSE 100, IG Group slides
By Shivani Kumaresan
(Reuters) – London’s FTSE 100 slipped on Thursday, weighed down by falls in energy stocks as oil prices slid after a surprise increase in U.S. crude inventories, while IG Group tumbled on plans to buy U.S. trading platform tastytrade for $1 billion.
The blue-chip FTSE 100 index lost 0.4%, while the domestically focussed mid-cap FTSE 250 index also slid 0.4%.
Energy majors BP and Royal Dutch Shell fell 3.2% and 2.5%, respectively, and were the biggest drags on the FTSE-100 index. [O/R]
“What is holding back the UK is a lack of tech stocks to capture the ‘rotation’ back into tech seen since Netflix results,” said Chris Beauchamp, chief market analyst at IG.
“Stock markets overall are much quieter today, looking so far in vain for a new catalyst for further upside.”
The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy and led to mass layoffs.
British Prime Minister Boris Johnson said it was too early to say when the national coronavirus lockdown in England would end, as daily deaths from COVID-19 reach new highs and hospitals become increasingly stretched.
IG Group tumbled 8.5% after announcing plans to buy tastytrade, venturing into North America after a stellar year for the new breed of retail investment brokerages.
Ibstock jumped 7.3% to the top of the FTSE 250 after the company said fourth-quarter activity benefited from better-than-expected demand for new houses and repairs.
Pets at Home Group Plc rose 2.2% after reporting an 18% jump in third-quarter revenue, boosted by higher demand for its accessories and veterinary services as more people adopted pets during lockdowns.
(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Mark Potter)
Wall Street bounce, upbeat earnings lift European stocks
By Amal S and Sruthi Shankar
(Reuters) – European stocks rose on Wednesday after Dutch chip equipment maker ASML and Swiss luxury group Richemont gave encouraging earnings updates, while investors hoped for a large U.S. stimulus plan as Joe Biden was sworn in as president.
The pan-European STOXX 600 index closed 0.7% higher, getting an extra boost as Wall Street marked record highs.
All eyes were on Biden’s inauguration as the 46th U.S. President, with traders betting on a bigger pandemic relief plan and higher infrastructure spending under the new administration to boost the pandemic-stricken economy.
Tech stocks rallied to a two-decade peak in Europe after ASML Holding NV rose 3.0% to all-time highs on better-than-expected quarterly sales and a strong order intake for 2021.
Meanwhile, Richemont rose 2.8%, after posting a 5% increase in quarterly sales as Chinese splashed out on Cartier, its flagship jewellery brand.
Britain’s Burberry jumped 3.9% after it stuck to its full-year goals, saying higher full-price sales would boost annual margins, while Asian demand remained strong.
The pair boosted European luxury goods makers that are heavily reliant on China, with LVMH and Kering gaining between 1% and 3%.
“Any sign that retail spending is picking up in China is going to be a boost to the Western markets and those heavily exposed to it,” said Connor Campbell, financial analyst at SpreadEx.
The European Central Bank is set to meet on Thursday. While no policy changes are expected, the bank could face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy.
“With the new round of easing measures fully in place and no new forecasts to be presented tomorrow, it should be a fairly uneventful day for the euro,” ING analysts said in a note.
Italy’s FTSE MIB gained 0.9% and lenders rose 1.6% after Prime Minister Giuseppe Conte won a confidence vote in the upper house Senate and averted a government collapse.
Conte narrowly secured the vote on Tuesday, allowing him to remain in office after a junior partner quit his coalition last week in the midst of the COVID-19 pandemic.
Daimler AG jumped 4.2% after its Mercedes-Benz brand unveiled a new electric compact SUV, the EQA, as part of plans to take on rival Tesla Inc.
Germany’s Hugo Boss added 4.4% after Mike Ashley-led Frasers said it boosted its stake in the company.
(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur and Kirsten Donovan)
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