Archive for the "Trading" Category

16.12.2010 Post in Trading

Each Forex trader should track the dynamics of the US dollar rate and estimate its behavior against other currencies. Successful USD trading can be organized by using graphic models, observing fundamental factors and paying attention to the market sentiment.

When trading the dollar it is necessary to mind the current US economy state. It is natural that a stable economy attracts investments, creates the atmosphere of confidence and safety, and ensures capital inflows, which allows compensating the trade deficit.

The US economy is experiencing a trade deficit caused by the import prevailing over the export. However, advancing economic indicators of the country seem quite attractive for foreign investments, which provides a good opportunity to recoup for the trade deficit.

Let us consider the factors affecting the dollar value:

Demand and supply. According to the indicators, import exceeds export; therefore, the demand for the US currency on the international market is not supposed grow day by day. Then the government and major corporations start to issue bonds. They are bought by foreigners, which results in growing demand for the US dollar and the appreciation of its value. Foreign interest in the dollar has been increasing due to the economic growth and improving incomes of the US companies. Market psychology also influences the dollar value. For instance, rising jobless rate and other negative factors tends to provoke bonds and shares selling. This is how money is taken out of the dollar sphere and converted back to foreign currencies, which determines the decrease of the dollar value.

Besides, technical factors should be taken into account. The most essential of them are news and statistical data related to the economies of the countries. They can help determine short-term and even long-term market trends. Sometimes psychological factors and sentiments can dominate over economic indicators. In this case it would be wise to draw analogies to the market behavior under similar circumstances. Please, keep in mind that a certain situation can always reoccur on the market.

Each trader develops a trading strategy in accordance with his/her psychological type. A trader is guided by his/her personal considerations when making a decision to buy or sell the dollar. The best decision will be the one supported by several different factors. Proper allocation of priorities and adequate estimation of market processes will lead you to the successful trading.

Added by Tatyana Makhina,
InstaForex Clients’ relationship manager

08.12.2010 Post in Trading

Using the programming language by a trader brings him to a completely new trading level – autotrading. Today a trader has an opportunity to realize his ideas by means of application program – write an user-specific indicator, script for implementing one-time operations or create an advisor – automatic trading system. The advisor can work 24 hours without any outside interference – monitor all changes of financial instruments price, send e-mail messages, sms-messages to a mobile phone and make many other useful things.
This Forex instrument certainly attracts experienced traders and stimulates their success on Forex market. For the newcomers MQL programming language is some kind of a guide into Forex market, where certain streams are manageable.
The main advantage of applicable programs is an opportunity to carry out trading operations according to the algorithm set by a trader at his own discretion. Any ideas which can be expressed in the algorithm language can be inserted into the program and used in a practical trading afterwards.
Application programs composition for MetaTrader 4 trading terminal requires knowledge of MQL4 language allowing to create advisors, scripts and indicators by yourself bringing your ideas to life – profitable trading algorithms.
Using MQL programming language you can create:
• Scripts – sequences of commands, programs which are implemented only once on your demand. They can replace actions made by you daily during the trading.
• User indicators – technical indicators written as an addition to the indicators inserted in the terminal. They display graphs or any other visual information. In distinct from scripts they perform at each price changing.
• Advisors – mechanical trading systems attached to any financial instrument. Advisors as well as user indicators perform at each price changing.
• Libraries – set of functions for executing specific tasks.
If you want to become familiar with the programming language you have to spend quite much time for this purpose. The better you get wise to the whole received material the easier it will be for you to start trading with an automatic trading system.

Added by InstaForex Staff

01.12.2010 Post in Trading

The international foreign exchange market is increasingly popular mainly due to the fact that it is easily accessible:  to enter the market all you need to have is a computer connected to the Internet. Trading on this market does not require substantial funds and the very trading process can be run automatically with the help of advisors and almost no actions are necessary from the trader.

Beginners tend to lack essential skills and experience in Forex trading, so it takes time for them to start trading on their own. This is the reason for about 70% traders employing automated trading, forex advisors in other words. It helps them to prevent emotions such as panic or anxiety from affecting a trading process. All advisors are developed on the basis of many years’ experience of successful traders and professional analysts. But even though automated trading programmes fail to ensure 100% profit,  they enable you to start trading with no particular knowledge in this field.

Any forex advisor is  a mechanical trading system (MTS). Such systems function in compliance with a certain algorithm. All forex advisors are aimed at successful dealing. You can find Forex advisors and download them at any forex website. Yet, please, keep in mind, that not all of them are equally helpful.

Forex advisors have been employed by many traders for rather a long time. Each year there are increasingly more programmes of such kind, many of them are updated which boosts their practicality. Trading with modern advisors not only helps to derive profit, but also brings Forex closer to you and provides you with deeper knowledge of its basic principles, improves your skills and experience indispensable for successful trading.

Most advisors offered by forex companies do not require any special skills to start working with them.  Basically, all you need to do is downloading, installing and adjusting them. Once you did it you can begin to trade and be sure it will not take long to have visible results.

As a rule, such an automated trading system is offered free of any charge with a detailed description of its functions attached, which sometimes does not coincide with their actual capacities. So, it is not recommended to make these the basis of your trading. Experienced traders with profound knowledge of all strategies prefer trading on their own, guessing currency trends within some little time periods.

Added by Dmitry Antipov,
InstaForex Clients’ relationship manager

22.11.2010 Post in Trading

Before starting the work on Forex each trader needs to elaborate his/her own, individual business plan that will help him to succeed in carrying out operations on the market.

We shall touch upon the most important points to be considered when elaborating an effective business plan.

1. Personal growth

Being optimistic is vital for a trader, since negative mood is a key hindrance to cope with.

It is a peculiarity of human psychology that one cannot succeed all the time – there are both ups and downs in any enterprise.

A negatively thinking person is fated to suffer losses and be incapable of taking steps towards success. Thus, a trader needs to set achievable goals. Only through accomplishing small subgoals will you reduce negative emotions’ effects and develop positive thinking.

A trader should seek to transform all his/her negative emotions into positive ones. More positive thoughts will help you to get rid of previous negative impressions. The victory over negative emotions is the first step towards success.

2. Figuring out the aim of trading

1.       Defining general priorities of activity.

2.       Calculating time expenditures and economic costs.

3.       Writing a plan.

4.       Methods of planning.

5.       Maximum hedging against possible losses.

6.        Profit and loss calculation.

Finding out the main priority of activity

Let us outline major priorities of a trader. If you strive for success on Forex, you definitely should:

–          invest in books, seminars and market researches;

–          cooperate with prosperous traders;

–          be open to new concepts and ideas.

A trader willing to gain constant profit should:

–          focus his/her attention upon price dynamics of a given short-term trading market;

–          make every attempt to ensure over 70%profit;

–          assist other traders in exploring Forex.

Calculating time expenditures and economic costs:

  • Economic costs:

Before becoming a trader one should define the amount of funds necessary to start with, including an initial deposit, computer software, a trading program, quotations, books etc.

  • Time expenditures:

These imply the time you are ready to spend for trading. Some traders work several hours a day, while others can trade as much as 16 hours daily. You need to decide which period is the most convenient for you and to keep an eye on what happens on the market.

Writing a plan

It is of crucial importance to chronologically record all the operations you carry out on the market. Write down all the deals you made in your trader’s notebook in order to analyze them at the end of your working day.

Methods of planning

A trader should choose the methods he/she will use for entering the market and be always prepared to react to slightest market changes. A trader should be able to clearly gauge a moment to close a deal whether it is profitable or unprofitable. Decide in advance on which ways of closing a deal you will employ.

Maximum hedging against possible losses

If you suffer losses deal after deal, there must be some drawback in the strategy you elaborated. Sticking to such style may well result in complete waste of the deposit. If, however, you are armed with a set of rules for this situation, you are sure to preserve you composure at watching your balance decreasing so that you will be able to restore profitable trading.

Profit and loss calculation

The last but not the least: a trader should define what profit he makes for a month taking into consideration all the trading expenses. Forex trading is in fact a sort of business which sooner or later yields profit. In order to make it maximum, elaborate your own trading plan and then be sure you will succeed on Forex.

Added by Evgeny Staroviborny,
InstaForex Development manager

10.11.2010 Post in Trading

The majority of totally green on Forex traders start their market experience with intraday or short-term trading.  Which can be easily explained, as there is no need in possessing a substantial initial capital for such type of currency market operating; in addition, a trader has a possibility to test the trading methods that he or she has chosen for working.

Basically, the structure of price movement is nearly identical on five-minute and on four-hour charts. Irrespective of the chart, there always emerges a market pattern with the impulsive correctional waves. In order to estimate the efficiency of the developed trading strategy, it will be more comfortable for a market player to analyze it on short time intervals. However, one should keep in mind certain features of short-term trade.

  • Macroeconomic news and speeches of high-ranking officials and politicians. A trader must consider these facts. Right after releases of key news, there emerge fluctuations. It extremely difficult to forecast climbing or falling. Though a trader that is working with a short-term chart should predict a possible price advance before the news release. The best way out is waiting for the news publication, of course, if there are no open positions on the account. If the deals bring profit, one should fix it, and the positions with losses need setting up the stop-losses.
  • A trader should make allowance for the trading session as well. Four trading sessions are known: the Pacific, the European, the Asian and the American. As the market is functioning 24 hours a day, one is able to conduct deals at any time in a 24-hour period. Nevertheless, during the night there can be either strong wobbles or, on the contrary, trading is slack. Consequently, it is essential to choose carefully the time of trading and the currency to work with.
  • Besides, the choice of the day for trading is also very significant. Here Monday and Friday perform the main role. On Monday, the trading week opens with gaps, in particular, if important events took place during the weekend. And at the beginning of the week traders start to observe the situation on the market. Friday, on the other hand, facilitates sharp price jumps. It is caused only by a trading session coming to an end. The majority of traders do not leave open the positions through the weekend, thus, by closing the deals they raise the price dynamics.

These are the general traits of short-term trading.

The interview was obtained by Anna Shubina ,
InstaForex Clients’ relationship manager