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.
How has the online trading landscape changed in 2020?
By Dáire Ferguson, CEO, AvaTrade
This year has been all about change following the outbreak of coronavirus and the subsequent global economic downturn which has impacted nearly every aspect of personal and business life. The online trading world has been no exception to this change as volatility in the financial markets has soared.
Although the global markets have been on a rollercoaster for some time with various geopolitical tensions, the market swings that we have witnessed since March have undoubtedly been unlike anything seen before. While these are indeed challenging times, for the online trading community, the increased volatility has proven tempting for those looking to profit handsomely.
However, with the opportunity to make greater profits also comes the possibility to make a loss, so how has 2020 changed the online trading landscape and how can retail investors stay safe?
Interest rates offered by banks and other traditional forms of consumer investments have been uninspiring for some time, but with the current economic frailty, the Bank of England cut interest rates to an all-time low. This has left many people in search of more exciting and rewarding ways to grow their savings which is indeed something online trading can provide.
When the pandemic hit earlier this year, it was widely reported that user numbers for online trading rocketed due to disappointing savings rates but also because the enforced lockdown gave more people the time to learn a new skill and educate themselves on online trading.
A volatile market certainly offers great scope for profit and new sources of revenue for those that are savvy enough to put their convictions to the test. However, where people stand the chance to profit greatly from market volatility, there is also the possibility to make a loss, particularly for those that are new to online trading or who are still developing their understanding of the market.
The sharp rise in online trading over lockdown paired with this year’s unpredictable global economy has led to some financial losses, but with a number of risk management tools now available this does not necessarily have to be the case.
Protect your assets
Although not yet widely available across the retail market, risk management tools are slowly becoming more prevalent and being offered by online traders as an extra layer of security for those seeking to trade in riskier climates.
There are a range of options available for traders, but amongst the common tools are “take profit” orders in conjunction with “stop loss” orders. A take profit order is a type of limit order that specifies the exact price for traders to close out an open position for a profit, and if the price of the security does not reach the limit price, the take profit order will not be fulfilled. A stop loss order can limit the trader’s loss on a security position by buying or selling a stock when it reaches a certain price.
Take profit and stop loss orders are good for mitigating risk, but for those that are new to the game or who would prefer extra support, there are even some risk management tools, such as AvaProtect, that provide total protection against loss for a defined period. This means that if the market moves in the wrong direction than originally anticipated, traders can recoup their losses, minus the cost of taking out the protection.
Not a day has gone by this year without the news prompting a change in the financial markets. Until a cure for the coronavirus is discovered, we are unlikely to return to ‘normal’ and the global markets will continue to remain highly volatile. In addition, later this year we will witness one of the most critical US presidential elections in history and the UK’s transition period for Brexit will come to an end. The outcome of these events may well trigger further volatility.
Of course, this may also encourage more people to dip their toes into online trading for a chance to profit. As more people take an interest and sign up to online trading platforms, providers will certainly look to increase or improve the risk management tools on offer to try and keep new users on board, and this could spell a new era for the online trading world.
By Paddy Osborn, Academic Dean, London Academy of Trading
Whether you’re negotiating a business deal, playing a sport or trading financial markets, it’s vital that you have a plan. Top golfers will have a strategy to get around the course in the fewest number of shots possible, and without this plan, their score will undoubtedly be worse. It’s the same with trading. You can’t just open a trading account and trade off hunches and hopes. You need to create a structured and robust plan of attack. This will not only improve your profitability, but will also significantly reduce your stress levels during the decision-making process.
In my opinion, there are four stages to any trading strategy.
S – Set-up
T – Trigger
E – Execution
M – Management
Good trading performance STEMs from a structured trading process, so you should have one or more specific rules for each stage of this process.
Before executing any trades, you need to decide on your criteria for making your trading decisions. Should you base your trades off fundamental analysis, or maybe political news or macroeconomic data? If so, then you need to understand these subjects and how markets react to specific news events.
Alternatively, of course, there’s technical analysis, whereby you base your decisions off charts and previous price action, but again, you need a set of specific rules to enable you to trade with a consistent strategy. Many traders combine both fundamental and technical analysis to initiate their positions, which, I believe, has merit.
What needs to happen for you to say “Ah, this looks interesting! Here’s a potential trade.”? It may be a news event, a major macro data announcement (such as interest rates, employment data or inflation), or a chart level breakout. The key ingredient throughout is to fix specific and measurable rules (not rough guidelines that can be over-ridden on a whim with an emotional decision). For me, I may take a view on the potential direction of an asset (i.e. whether to be long or short) through fundamental analysis, but the actual execution of the trade is always technical, based off a very specific set of rules.
To take a simple example, let’s assume an asset has been trending higher, but has stopped at a certain price, let’s say 150. The chart is telling us that, although buyers are in long-term control, sellers are dominant at 150, willing to sell each time the price touches this level. However, the uptrend may still be in place, since each time the price pulls back from the 150 level, the selling is weaker and the price makes a higher short-term low. This clearly suggests that upward pressure remains, and there’s potential to profit from the uptrend if the price breaks higher.
Once you’ve found a potential new trade set-up, the next step is to decide when to pull the trigger on the trade. However, there are two steps to this process… finger on trigger, then pull the trigger to execute.
Continuing the example above, the trigger would be to buy if the price breaks above the resistance level at 150. This would indicate that the sellers at 150 have been exhausted, and the buyers have re-established control of the uptrend. Also, it is often the case that after pause in a trend such as this, the pent-up buying returns and the price surges higher. So the trigger for this trade is a breakout above 150.
We have a finger on the trigger, but now we need to decide when to squeeze it. What if the price touches 150.10 for 10 seconds only? Has our resistance level broken sufficiently to execute the trade? I’d say not, so you need to set rules to define exactly how far the price needs to break above 150 – or for how long it needs to stay above 150 – for you to execute the trade. You’re basically looking for sufficient evidence that the uptrend is continuing. Of course, the higher the price goes (or the longer it stays above 150), the more confident you can be that the breakout is valid, but the higher price you will need to pay. There’s no perfect solution to this decision, and it depends on many things, such as the amount of other supporting evidence that you have, your levels of aggression, and so on. The critical point here is to fix a set of specific rules and stick to those rules every time.
Good trade management can save a bad trade, while poor trade management can turn an excellent trade entry into a loser. I could talk for days about in-trade management, since there are many different methods you can use, but the essential ingredient for every trade is a stop loss. This is an order to exit your position for a loss if the market doesn’t perform as expected. By setting a stop loss, you can fix your maximum risk on a trade, which is essential to preserving your capital and managing your overall risk limits. Some traders set their stop loss and target levels and let the trade run to its conclusion, while others manage their trades more actively, trailing stop losses, taking interim profits, or even adding to winning positions. No matter how you decide to manage each trade, it must be the same every time, following a structured and robust process.
The final step in the process is to review every trade to see if you can learn anything, particularly from your losing trades. Are you sticking to your trading rules? Could you have done better? Should you have done the trade in the first place? Only by doing these reviews will you discover any patterns of errors in your trading, and hence be able to put them right. In this way, it’s possible to monitor the success of your strategy. If your trades are random and emotional, with lots of manual intervention, then there’s no fixed process for you to review. You also need to be honest with yourself, and face up to your bad decisions in order to learn from them.
In this way, using a structured and robust trading strategy, you’ll be able to develop your trading skills – and your profits – without the stress of a more random approach.
Economic recovery likely to prove a ‘stuttering’ affair
By Rupert Thompson, Chief Investment Officer at Kingswood
Equity markets continued their upward trend last week, with global equities gaining 1.2% in local currency terms. Beneath the surface, however, the recovery has been a choppy affair of late. China and the technology sector, the big outperformers year-to-date, retreated last week whereas the UK and Europe, the laggards so far this year, led the gains.
As for US equities, they have re-tested, but so far failed to break above, their post-Covid high in early June and their end-2019 level. The recent choppiness of markets is not that surprising given they are being buffeted by a whole series of conflicting forces.
Developments regarding Covid-19 as ever remain absolutely critical and it is a mixture of bad and good news at the moment. There have been reports of encouraging early trial results for a new treatment and potential vaccine but infection rates continue to climb in the US. Reopening has now been halted or reversed in states accounting for 80% of the population.
We are a long way away from a complete lockdown being re-imposed and these moves are not expected to throw the economy back into reverse. But they do emphasise that the economic recovery, not only in the US but also elsewhere, is likely to prove a ‘stuttering’ affair.
Indeed, the May GDP numbers in the UK undid some of the optimism which had been building recently. Rather than bouncing 5% m/m in May as had been expected, GDP rose a more meagre 1.8% and remains a massive 24.5% below its pre-Covid level in February.
Even in China, where the recovery is now well underway, there is room for some caution. GDP rose a larger than expected 11.5% q/q in the second quarter and regained all of its decline the previous quarter. However, the bounce back is being led by manufacturing and public sector investment, and the recovery in retail sales is proving much more hesitant.
China is not just a focus of attention at the moment because its economy is leading the global upturn but because of the increasing tensions with Hong Kong, the US and UK. UK telecoms companies have now been banned from using Huawei’s 5G equipment in the future and the US is talking of imposing restrictions on Tik Tok, the Chinese social media platform. While this escalation is not as yet a major problem, it is a potential source of market volatility and another, albeit as yet relatively small, unwelcome drag on the global economy.
Government support will be critical over coming months and longer if the global recovery is to be sustained. This week will be crucial in this respect for Europe and the US. The EU, at the time of writing, is still engaged in a marathon four-day summit, trying to reach an agreement on an economic recovery fund. As is almost always the case, a messy compromise will probably end up being hammered out.
An agreement will be positive but the difficulty in reaching it does highlight the underlying tensions in the EU which have far from gone away with the departure of the UK. Meanwhile in the US, the Democrats and Republicans will this week be engaged in their own battle over extending the government support schemes which would otherwise come to an end this month.
Most of these tensions and uncertainties are not going away any time soon. Markets face a choppy period over the summer and autumn with equities remaining at risk of a correction.
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