Analysis
-
If we are trading a particular currency pair, I think it is logical to try to understand what other factors can influence its rate. In addition to strong correlations of certain currencies and equity markets, you should also remember about correlations of commodity markets with currencies of commodity nature because they move in strong interrelations - fluctuations in one market will certainly lead to changes in the other. It is necessary to see the whole picture. This will allow you to protect yourself from sharp, unpleasant fluctuations and also to make profit by taking advantage of trend trading. Oil - interest rates - commodity currencies Let us consider the interrelation of changes of quotes of certain currencies with the dynamics of interest rates...
Читать далее » -
Despite the fact that carry trade operations are available mostly to large market participants, their actions can become a pleasant surprise for us as well as a surprise, in case our trading instrument is a currency pair, which includes a funded currency. What is the profitability of carry trade operations? When the interest rates on bonds or deposits in some country begin to rise because of the actions of the Central Bank, hedge funds, currency dealers of corporations, asset managers and other participants of financial markets try not to miss the moment to take advantage of this fact. The most common are carry trade transactions. Carry trade transactions with currencies are loans of one...
Читать далее » -
Hello, dear traders. We continue our series of articles on "Price Action Trading Methods". This article, which is the second in a row, is dedicated to trend lines as an integral part of the Price Action system. What are trend lines and how to draw them correctly? The concept of a "trend line" is often treated ambiguously and inconsistently. However, it should be remembered that out of the many trend lines, only one is true. Fig. 1. Examples of trend lines of a beginning trader. Let's see what we see on the chart of the beginner trader. Figure 1 shows such "desktop" where we see a lot of lines that often cannot be called a trend line. Naturally, the principle "some or other line" works in such drawings.
Читать далее » -
"Quantitative easing", aka QE, aka quantitative easing (easing) - articles of economic publications, traders' forums and communities are full of this term. At its mentioning, it immediately comes to mind the Fed chief Ben Bernanke, a bearded man with sad eyes and a smart-eyed man. But if you ask anyone what "quantitative easing" is and what it does, only one in ten people will give an intelligent answer. This is not surprising, since even economists and financial experts disagree on its meaning, application and effectiveness. So what and with what is quantitative mitigation? Other articles of the master class "Be a Trader: Fundamental Analysis" Credit rating: do you have any...
Читать далее » -
There is an opinion that the fundamental analysis of the currency market is a work with news flow and trading on the news itself, but this opinion is wrong! In fact, trading on the news is catching volatility; you do not even need to analyze the values of this or that macroeconomic indicator. The Essence of Fundamental Analysis Most of what we see in the economic calendar is not necessary for intraday trading. To be fair, it should be noted that it is difficult to apply the findings of the fundamental analysis to intraday trading, rather this information will be useful for position traders, ie, those who trade on a medium- and long-term basis. In my opinion, the whole essence of the fundamental analysis comes to...
Читать далее » -
Articles in the economic media are full of the word "default," and the average reader with no economic education gets the impression that default is at least the local end of the world. And there is a widespread desire to urgently exchange the dollars (euros, Mexican pesos or Mongolian tugriks) stashed away for something that this "terrible default" will not touch. Let's find out what "default" really means. There are no shortage of defaults in the world First of all, we should note that the term "default" (Default) means any refusal to fulfill a debt obligation. In fact, default is the worst kind of bankruptcy. However...
Читать далее » -
With this article we conclude our brief tour of interesting and popular candlestick patterns for technical market analysis. The 31 patterns we showed in the three articles perfectly reflect the capabilities of candlestick analysis. With a little effort from this information you can put together a whole strategy, write an EA and trade quite successfully in intraday or medium term. Of course, we could not accommodate all the possibilities for trading based on a candlestick analysis, but we have tried to give you not only descriptions, but also market opportunities for using patterns. A slightly more detailed description can be easily found on the Internet, add it to the Money Management and test it. Go ahead! We are happy to answer your questions. Pivot Patterns.
Читать далее » -
In the 97th issue of ForTrader.org we will continue to look at interesting candlestick patterns and technical analysis of the market. In our previous article we already discussed how to trade by means of the candlestick analysis, and how to use it in practice every day with profit, so we will not repeat it. Let's look at 10 more interesting patterns from the economic side of their appearance and practical application in trading, which you will be able to use today. New Patterns Before we begin, we'd like to address the question of whether you can find your own new patterns on the chart? We can say from our rather rich experience that yes,...
Читать далее » -
Markets have been waiting for more than a year for the U.S. Federal Reserve to raise the interest rate. The deadline for this event was set far away, but even they have not been fulfilled under the power of external circumstances. The world economy is shaking, the dollar exchange rate is actively growing, and the Central Bank of America is in no hurry to act. In this situation, we would like to approach this question from a mathematical point of view and find out if the markets are expecting the Fed to tighten its monetary policy for a reason. Is there a realistic case for it? Janet Yellen has repeatedly said that the U.S. Federal Reserve is not guided by some "mechanical rule" when deciding on the key interest rate. As we know, the central bank can influence mainly the...
Читать далее » -
As a rule, all discussions about trend reversal on the currency market are reduced to various tools of technical analysis: graphical formations and Japanese candlesticks, breakdown of trend lines and Fibonacci indicators. But is it possible to trace a trend change using fundamental analysis, you might ask? We answer: you can and should! Central banks are the "parents" of powerful trends If you look at the dynamics of currency trading from "great heights" it becomes obvious that all powerful trends are created by central banks. Regulators traditionally use monetary policy instruments to manage economic growth and inflation. The effectiveness of these measures can be viewed in different ways. For example, many economists believe that monetary authorities merely relieve the symptoms of disease, rather than...
Читать далее » -
Fundamental factors in the foreign exchange market can be compared to air currents, without knowledge of which no pilot will be able to get a plane from point "A" to point "B". Marking lines alone are not enough to steer an airplane, just as successful news trading requires not only technical levels, but also understanding of the global macroeconomic picture. Unfortunately, many traders do not take into account the pitfalls hidden in the fundamental analysis methodology, and therefore fail one after another. Today we will discuss the mistakes investors make when analyzing the economic background and trading on the news. Mistake 1. Trading on upcoming news So, most market newbies are interested in...
Читать далее » -
The "Baskerville Dog" trend continuation pattern was first mentioned by the financial markets legend Alexander Elder in his book "The Fundamentals of Trading". The figure is quite widespread and, in fact, is a failed "Head and Shoulders" trend reversal figure. In the technical analysis of the market it is accepted to consider the "Hound of the Baskervilles" as the figure of the trend continuation, although most market researchers do not include it in the list of classical figures of the trend continuation: flag, wedge, triangle, etc. How is the "Hound of the Baskervilles" figure built on As mentioned above, the "Hound of the Baskervilles" figure of technical analysis is a failed "Head and Shoulders" trend reversal figure. Head and shoulders" figure indicates the end of the uptrend, its reversal and, as a consequence, the opening of the...
Читать далее » -
Political events sometimes influence the currency market even more than economic events, because the economic dynamics is largely determined by the course chosen by the country's leadership. Let us find out what is the political risk in trading, what kinds of political risks exist, how they are reflected on the Forex market and how you can profit from them. Why does politics affect currency rates? In the classical sense of the term, political risk for any entrepreneur is the threat of reduction of profits or incurrence of losses as a result of state policy. First of all, it is connected with possible changes in the rate or the very composition of the government. However for traders and investors on the currency market political changes...
Читать далее » -
"Cup with handle" in technical analysis is a trend continuation pattern. This pattern was introduced and popularized by the famous American trader William O'Neill and came to the foreign exchange market from the stock market. The appearance of this candlestick pattern is really reminiscent of a cup of coffee or tea, which probably every trader has next to the keyboard. It should be noted right away that the "Cup with a pen" is a continuation pattern only for an uptrend. Let's break down the conditions for the emergence of this candlestick analysis pattern, ways to use it in trading, as well as some features. The most important condition for the formation of a "Cup with a Handle" trend continuation pattern is the presence of...
Читать далее » -
A "bow tie" trend reversal pattern is not an ordinary pattern, as it is based not on a repeating stable price pattern with a predictable development, as in most widely used patterns, but on a model formed by technical indicators. More precisely, it is a pattern formed by the intersection of three moving averages. Exactly this feature gives the "Bow Tie" pattern one very important advantage - it's the ability to easily and unambiguously determine this pattern, which is especially important for beginners who do not have much experience with patterns. We can consider the "Bow Tie" pattern as an example of a trading strategy using moving averages. Rules of constructing "Bow Tie" pattern The "Bow Tie" pattern owes its name to the intersection of...
Читать далее » -
If you are new to trading and read analytical tapes, fundamental analysis can seem like a set of highly subjective conclusions and assumptions of analysts. Often experts hold diametrically opposed views on the same events, juggling information as they see fit to justify their own position. Meanwhile, an analysis based on clearly defined and verifiable rules can be called objective. Even if those rules are based on fundamental analysis, they can be objective and thus verifiable. For example, "buy when interest rates rise, sell when interest rates fall" is quite an objective rule, while the idea of technical analysis "buy on an uptrend and sell on a downtrend" smacks of subjectivity in...
Читать далее » -
Under normal economic conditions, rational investors choose assets that bring high returns, but in the era of instability the determining factor in choosing trading instruments is their reliability rather than profitability. This is why there are the following types of currencies on the currency market: shelter currencies and high-yielding currencies. Let us try to figure out what factors influence the dynamics of these types of currencies and how to predict them. Sanctuary currency for investment preservation Sanctuary currency, or in other words, a safety currency, is a type of currency that strengthens during periods of anxiety and market uncertainty, when investors seek to preserve their savings. Currencies of countries characterized by political and economic stability, low inflation and confidence in the central bank are considered safe...
Читать далее » -
Head and shoulders is a classic figure of technical analysis, which signals the reversal of the current trend. The Head and shoulders figure exists in two variants: "Head and shoulders" - for an uptrend, inverted or reversed head and shoulders - for a downtrend. It should also be noted that Double Top and Triple Top are the special cases of Head and Shoulders figures. It should be noted that in spite of the fact that this figure is a classic one, its formation is rather conventional. It means that different traders may build the same Head and shoulders a bit differently depending on chosen timeframe and their understanding of currency mechanisms.
Читать далее » -
Under the conditions of the global fall in quotations on stock exchanges and commodity prices, the attention of investors is increasingly attracted to the debt market, the dynamics of which has a direct impact on the change in exchange rates in the international market FOREX. To understand the mechanism of how government bond yields influence currency quotes, it is necessary to refer to the basics of fundamental analysis. State credit and bond yields The activity of any state in the financial sphere is characterized by budget deficit or surplus. In the first case, the country's expenditures for various purposes exceed its income in the form of taxes or non-tax payments, which forces the use of public credit in order to cover the difference between them. The main form of public credit in...
Читать далее » -
The economic calendar and planned economic events and news increase volatility on the currency market and often cause unfortunate failures for "technical" traders. We advise to follow the economic statistics releases even to the most ardent opponents of the fundamental analysis and trading on the news: forewarned is forearmed. Below you can find the most important economic releases during the month for the key currencies. Economic Calendar for the US Dollar (USD) America starts the month on the foreign exchange market with the manufacturing and non-manufacturing PMI from ISM (the first and third day of the month, respectively). The first Wednesday of the month is NFP by ADP (non-farm payrolls) .....
Читать далее »