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Your Guide Towards Advanced Analysis for Forex Trading

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Forex Trading

The decision to enter a substantial financial market like Forex is indeed a noble and accurate choice. It is the world’s largest financial market, and one can proudly be associated with the same. But before you go ahead into this market, you need to realise a bunch of aspects. The market did not turn out to be so huge without considerable elements coming into the picture. Since these aspects are present, it would not be advisable to step in without taking the right form of measures. When these points come after thorough and advanced analysis, you can be assured of strong results. Hence, to shed more light on the same, here’s the essential guide that you need for Forex Trading.

Strategies

The need of the hour cannot be formulated into a specific term known as “strategies”. Yes, they are essential aspects that will curb your approach towards the market and help you head in the right direction. So to help you out, here are a bunch of strategies.

1. Hedging Forex

This is a unique strategy or method that helps to reduce the risk by taking both sides into consideration. It is known to be an easy way that can promote you to initiate a long and short position on the same pair. For this purpose, the kind of pairs that you choose also need to be looked into. Individual advanced traders tend to use different pairs to make the hedge, ultimately leading everything towards a complicated position. By all means, the best pair for this purpose would be anything involving the US Dollar.

Hedging Forex

2. Scalping

Scalping is another process that utilises short-term trades to earn a bunch of pips. It is majorly carried forward with a news release and other supportive technical conditions. This particular form of trade can either last for seconds or a few hours. Although it is a risky process, it manages to bring you favourable returns. One should only make an approach towards Scalping by keeping in mind their overall trading position.

3. Position Trading

Position trading is a strategy that does not share any form of similarity between Scalping. In other words, it tends to be associated with the long term aspects of trading and can last for months or years. Since positions are held for quite some time, only a patient trader can make matters meet with this strategy. Huge swings can also come your way, pushing you to leave everything aside. But an analytical approach can help you out.

Currency Pairs

Understanding the details and aspects of some major currency pairs is another move that is going to benefit you. So without further ado, here are few of the major pairs.

1. EUR/USD

This particular combination is a trader’s classic choice, and they all tend to hold on to the same. Since both these pairs also bring in a bankable economy, matters tend to gain a better form of clarity. With the Euro being the base and Dollar being the quoted currency, traders move ahead with this pair.

EUR/USD

2. AUD/USD

The Australian Dollar and the American Dollar is an interesting pair that you can depend on. Rates and aspects tend to reach a higher note as the Australian economy has shown positive signs. The US/China trade war does not come into the picture since Australia and China are trading partners. So whenever a trade gets through, or the relationship becomes more substantial, you can expect something good to arise from this pair.

3. USD/CHF

Yes, that’s right. The American Dollar and the Swiss Franc tend to form a considerable form of value. This particular combination manages to bring out benefits since the Swiss economy is something that you can depend upon. Throughout the past, it has shown different signs of financial dependency and thus, merging it with the Dollar makes absolute and complete sense. The lower risk pattern, which is visible throughout Switzerland’s markets is another sign indicating this pairing to be successful.

Recent Impacts

The Forex market tends to be affected by certain situations and decisions that have risen to global standards. So as a move to trade accurately, we need to take a look at these impacts and understand their implications.

1. Brexit

Brexit is far from being over, and its impact can be felt even today. The decision brought forward a sense of uncertainty and traders are left to make drastic choices.

2. Coronavirus

One of the biggest pandemics to affect humanity in recent times has to be Coronavirus. Apart from everyday life, the virus has also taken a toll on global markets and thus, has arrived at Forex trading. Currency pairs like USD/JPY and EUR/USD surged to lower points, making investors all the more anxious. The only outcome for the same would be to wait and watch.

The Best Forex Trading Tools

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Forex Trading

The importance of trading tools is a topic that we are all aware of. Different kinds of insights and market analysis tend to be efficient when you bring in some trading tools. Their requirement rate goes up as you enter markets like Forex. Trading currencies need a little touch of perfection, and these tools are the ideal ones that you need to tag along. But when you move forward to learn more about these tools, you will realise that they are everywhere. There is an abundance of these tools in the market, making it hard for people to differentiate between the good ones and the bad ones. So to help you out, here are some of the best Forex Trading tools.

1. MetaTrader 4 MetaTrader 5

These platforms include a vast set of tools that stand to define variety and effectiveness. Real-time trading combined with user-friendly approaches has set sail to create one of the most efficient tools out in the market. The aspect of technical analysis is another concept that makes matters all the more interesting. With this tool in hand, you can be assured of getting the right assistance that comes with a customizable interface.

MetaTrader

2. Correlation Matrix

The change of exchange rates in one currency pair when compared to another pair is known as correlation. A set of these currency pair correlations make up a Correlation Matrix. The aspect that you need to understand in this manner is the behaviour of these currency pairs. Some of these pairs correlate strongly as they tend to have a common base current. Since most of them may or may not behave in this fashion, reviewing them will help you in so many ways. It will help you avoid establishing offsetting positions and make matters fruitful. Hence, a tool of this calibre provides the right support.

3. Trade Journal

At times, traders usually tend to forget to keep records of their trade. This moves ahead to bring in various kinds of errors in the future. So the best and the only solution is to keep a record of the same along with an explanation and signals of why and how it was initiated. For this purpose, Trade Journal comes into the picture and helps you examine mistakes, thereby preventing you from repeating the same. A paper journal, spreadsheet or even a trade journal will help you do the trick.

Trade Journal

4. Time Zone Converter

The difference that time zones bring in for the trade is not something too light to be ignored. Leading Forex trading centres tend to overlap sessions during specific periods of the day. These overlaps are the most liquid markets for particular currency pairs. For this purpose, it is quite essential to know what trading sessions are open and what times are the best for trading. Taking into consideration aspects like volatility, liquidity and trading volume, you can make the most out of the same. Thus, a tool like Time Zone Converter holds prime importance.

The Advanced Concept of Scalping in Forex

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Scalping in Forex

The guide to surviving in the Forex market tends to include a unique concept that has brought forward numerous benefits. Known as an advanced strategy, this particular concept has made investors happy by helping them tackle down a long list of problems. To avoid all the guessing work since it is clearly mentioned above, let’s cut to the topic and talk about Scalping in Forex. The advanced set of strategies that it brings to the table is required to help run aspects through the market and make you wealthy. Hence, let’s learn more about this advanced concept known as Scalping.

Forex market

The Introduction

In simple terms, Scalping is nothing but a strategy that works based on real-time technical analysis. When it gets mixed with Forex, the method moves ahead to make a large number of trades to produce small amounts of profits. This is achieved as the process does not hold a position for a long time. It tries to gain pips by holding a position for a couple of hours, days or weeks. Anything beyond that is not considered to be Scalping.

The Process

The practical application of Scalping for Forex tends to take place as traders scalp currency pairs by using a specific time frame. These periods last between 1-15 minutes. But the traders do not usually opt for the 15-minute time frame as they believe it to be less effective. As a result, the 1-minute and 5-minute time frames are the most common choices. These are known to bring out a profit of 5 and 10 pips per trade, respectively. But for this to scale through, you also need to pick a currency pair that is volatile and predictable.

Scalping strategy

The Decision

The decision to opt for Scalping is one that needs to be taken after some consultation. Soon after you understand the method, you need to think about the time that you’re willing to put into the trade because Scalping requires timings that can be related to a full-time job. Yes, that’s right. Constant analysis, placements and multiple orders tend to take hours, and at times they might even be stressful. Your predictions of the market is another aspect that is deemed to be necessary. Based on your analysis, you must quickly open and close positions that should not take more than a few seconds.

The Broker

Choosing is a broker for your scalping strategy is another step that you need to execute. For this purpose, you must cross out brokers who do no allow the process to take place within the system. According to the current market stats, numerous brokers are not supportive of the idea of closing trades. As a result, these brokers do not provide ECN execution systems and other tools that promote the strategy. Considering all these features, your list of brokers needs to get shorter until you find one that suits all your needs. Towards the end, when the factor of costs arrives, we believe that you would have made a decision.

All You Need to Know About Risk Management in Foreign Exchange

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Foreign Exchange

Foreign exchange risk, for those who are not really aware of what it means, can be referred to the losses incurred by an international monetary transaction owing to certain fluctuations in currency. Foreign exchange risk (FX risk), which is otherwise also known as currency risk, describes that the value of an investment might depreciate due to any change that might be observed in the relative value of the currencies involved in the transaction. This is, in a nutshell, the essence of foreign exchange. However, it would be puerile to restrict the domain to just the definition and provide no further insight into the topic at hand. Though, the entirety of foreign exchange might not be possible to wade through within the span of one article, there are a few essential points that you must understand to be able to understand the topic better.

An Insight into Foreign Exchange Risk:

As we have already stated at the beginning of the article, foreign exchange risk refers to the risk associated when there are significant losses incurred by an international financial transaction due to fluctuations in the currencies involved. Any kind of appreciation or depreciation in the base currency or the denominated currency will have an impact on the entire system of cash flow arising as a result of the transaction. The domain of foreign exchange affects several investors and business people who have to deal with international transactions on a daily basis. Therefore, understanding the inherent risks of foreign exchange is all the more important to these people, without which they could end up in a soup.

Foreign Exchange Risk

A Few Foreign Exchange Risk Management Techniques:

Now that we have spoken about what a foreign exchange risk is, it is time to look into a few techniques in which these risks could be managed.

Risk Sharing-

Just as the term suggests, the parties involved in the transaction (for instance, the seller and the buyer), agree to share the burden of the risk associated with the transaction so that their relationship is not affected and depends solely upon the quality of the product and the reliability of the supplier.

Risk Sharing

Payments Netting-

This method proves to be beneficial to the companies that are exposed to transactions involving multiple currencies. The technique allows the companies to control the way the payments are dealt with since all the payments are netted to a singular transaction.

Natural Hedging-

This method of foreign exchange risk management offers the firm quite some protection from the fluctuations in exchange rates because the relationship between the revenues and costs of a foreign subsidiary body furnishes a natural hedge.

Conclusion:

The right implementation of one or more than one techniques can shave down the risk associated with the foreign exchange transaction and help a firm thrive. It is always crucial that you remember that transactions that involve foreign currencies have risks associated with them. But that does not mean that you have to give in the risks and suffer from the losses. You can always use the techniques mentioned above to hedge the risk and make a favourable transaction.

All That You Need to Know About Forex Options Trading

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Forex Trading
Businessman Analyzing Graph

Forex options trading is an important branch that many seem to be ignoring. The basic meaning and what it moves ahead to prove are essentials that traders need to be aware of. Be it the strategies or the methods that it proposes; everything tends to have a unique connection to the market and thus, it manages to be effective. So the question of utilization should not come up, and everyone needs to make an effort to try the same. Since that may not be possible without venturing further into Forex Options Trading, we are here to help you out. Hence, here’s all that you need to know about Forex Options Trading.

1. What is it?

Forex options are nothing but a bunch of derivatives that are based on specific currency pairs. Trading the same brings in a set of strategies that are immune to the Forex market. So the option to choose a particular strategy can be answered after looking into the type broker, the platform and the option that a trader selects. Once all these aspects align together, you will have a strategy. Since the market is a decentralized one, these options tend to vary in nature and character. They move forward to be unique and can be differentiated from the ones that are chosen for the stock market.

2. What you need to Remember

Due to the path within which these strategies move, certain things stand to be necessary. If you’re an investor planning on choosing Forex Options trading, then here is a list of points that you need to be aware of.

  1. Lacks Obligation – the options that you’re about to choose will not be having an obligation to deliver a physical asset. This is a common ingredient for Forex Options trading and investors usually amend their ways before opting for the same.
  2. Two Main Varieties – the Forex options tend to come in two main varieties, and there is nothing more to the same. These are known as Vanilla Options and SPOT Options. So the decision lies in your hands.
  3. Differentiates – as you move from one product to another, you will also realize that these options vary based on the entity that they are offering.

Forex

3. What are the types of Forex Options Trading?

The two types of options commonly available for retail Forex traders tend to be currency options trading. They mainly involve short-term trades of a currency pair that aims at future interest rates of the same pair. So, let’s look into these types.

  1. Vanilla Option – the Vanilla option also goes by the name of options contract and is considered to be the traditional call. With this option in hand, traders have the right to buy or sell currency at the agreed-upon terms and conditions but are not obliged to do so. These so-called terms and conditions include price and the date of execution. The basic process occurs when the buyer states how much they want to purchase and the price at which they wish to purchase, along with the date of expiration. On the other hand, the seller responds with a quoted premium. The date of explorations tends to revolve around European or American style options.
  2. Spot Option – SPOT stands for Single Payment Options Trading and is known as the flexible option out of the two. Digital and Binary options are few of the other names that used to describe this option. The process takes place when the buyer offers a scenario stating that a specific currency pair will break at a particular point within a set of days. Based on the probability of the same, they will receive premium quotes. If the so-called event takes place, then the buyer will earn a profit, and if it doesn’t, then they will lose the premium that they paid. These contracts cannot use premiums from traditional options since they need to be higher. After they reach a certain point, other points or if it does not reach at all, they will be written to payout. Since specialized options come into the picture, premium requirements tend to be higher when compared to the rest.

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Forex Trading

Your Guide Towards Advanced Analysis for Forex Trading

The decision to enter a substantial financial market like Forex is indeed a noble and accurate choice. It is the world's largest financial market,...
Forex Trading

The Best Forex Trading Tools

The importance of trading tools is a topic that we are all aware of. Different kinds of insights and market analysis tend to be...