Archive for the "Trading" Category

28.05.2010 Post in Trading

Popularity of Forex market is growing from day to day and due to development of the Internet and modern technologies currency trading became available for everybody. Thereby, many people with lack of experience and knowledge came to the Forex market. However, sooner or later every beginning trader faces the necessity of learning the basis of currency trading. So books about Forex will teach traders the essence of currency trading on the international currency exchange market Forex.

At present day, Internet carries a great number of literature on Forex trading – these are books on fundamental and technical analysis, books on the psychology of trading, books on capital management and so on. Thus, not only the beginning but also the experienced traders have a huge variety of literature on Forex to choose.

Below let us discuss a few categories of books on Forex, why they are useful and what every trader can find useful in them.

The books on fundamental analysis comprise the literature on economy, which dwell on different financial sides of not only Forex market but the whole global economy. Though not all books on the economy will be identically helpful, you should select only those who are destined for traders.

It is necessary to remember that in the process of trading not all traders keep to fundamental analysis. However, those traders who do, will have a handicap as due to the fundamental factors the international currency market starts to move more often. From the stated above it follows that even those traders who do not adhere to a based on fundamental analysis trade should definitely study the books on Forex fundamental analysis.

The books on technical analysis

The books on technical analysis are most popular among novices of the market. This happens because technical analysis is easier and in simple words deepens a trader into the principles of Forex trade. Exactly with reading these books the majority of traders begin their Forex work. Nowadays it is possible to find plenty of books on technical analysis in the Internet. Though there exists one disadvantage, connected with applying this analysis in trading process. Most part of the available books are too old, so a trader will not get the desired effect. Nevertheless it does not mean that technical analysis should be avoided, simply every trader using technical basis for operating on Forex should modify the applied strategies for himself.

The books on trading psychology

This type of literature should be read by absolutely every trader irrespective of his experience on the market. As it is psychology of a trader’s behaviour which can determine the traders correct actions and the correct schedule for the working day with no harm to health and your funds. Very often traders are making actions not in the accordance with the situation on the market but overwhelmed by emotions. The books about Forex psychology will teach you how to suppress your emotions without letting them into your trade.

The books on capital management

This section of Forex literature is very important and it cannot be omitted. Every participant of the market should study the books about managing the capital. These books help a trader to work out the maximally profitable and correct trading strategies. Moreover, this type of books is significant also because in the Internet there is not so much information devoted to capital management and reading it will not take much time.

Absolutely every participant of trade irrespective of his experience on the market should practice self-education. Analyzing Forex literature together with permanent practice will make your trading profitable and exciting.

Many of the described above sources of information can be found on the educational website of InstaForex Company – www.instafxeducation.com. This is the largest Forex library in pdf-files.

Added by Olga Vitkovskaya,
InstaForex Clients’ relationship manager

20.05.2010 Post in Trading

The Japanese technical analysis development was moving on during a lot of years. However, for a long time the Western world knew almost nothing about such popular technical analysis method as “Japanese candlestick charting” by means of which the Japanese traders and analysts have been running a financial analysis for more than 30 years already.

Opening the core of this kind of analysis worth saying that the Japanese candlesticks is a method which gives an opportunity to investigate the market condition for the present moment, in other words, consider the current state of the market. The Japanese candlesticks usage allows analyzing not only currency, but also stock and futures markets.

Methodically the analysis techniques based on the Japanese candlesticks is used above all for choosing the most suitable moment for making deals. However, if a trader has been practicing the Japanese candlesticks method for a long time, then the history of this method employment can introduce strategic changes into the general trading style of the trader.

Some experts of Forex market actively recommend to increase the Japanese candlesticks effect combining them with other indicators which are able to reflect the real financial markets situation strictly and clearly that will surely bring the highest results. But the analysis based on the Japanese candlestick charting can be a self-sufficient instrument for a trader. Actually, this method is more than autonomous and does not require additional “bells and whistles”.

The Japanese candlesticks have similar scheme with a bar chart.  As a rule, the Japanese candlesticks are used on the daily charts, it is caused by the fact that initially this analysis method was created and used for analyzing the day timeframe.  The meaning of this method comes from correlation of opening and closing prices during the same trading day, and closing prices of the previous trading day and opening of the next one.

Usage of the Japanese candlesticks charting together with other technical indicators as well without them will let each trader determine more accurate the current market sentiment and behavior.

More details on the Japanese candlestick charting are given in the book by John H. Forman “Candlesticks for support and resistance” where any currency player will get nuances and trade secrets of using this kind of analysis. The book describes over 50 different candlesticks and their combinations, in addition, you will know which from the technical instruments can be used with the candlesticks for achieving the most significant result, and which conversely will “dry” the effect of the Japanese candlestick analysis.

In the book you will also get the answers to absolutely all questions concerning the Japanese candles, besides, learning the book you will carry yourself with the new bounds of a technical analysis and graphically see how the Japanese candlesticks can bring success and profit on the international currency market Forex. Regardless of your experience and which market you work with: futures, share market, bonds, goods and currencies, John Forman’s book studying and further usage of these skills will make you successful on the market.

One more competent author John L. Person considering the technical analysis aspects carried out a research of the Japanese candlesticks charting in his book “A complete guide to technical trading tactics”.

You can download the books by Forman and Person devoted to the Japanese candles and other books covered all trading aspects on Forex market in “Library” section of InstaForex Company educational portal.

Added by Alexandr Demkin,
InstaForex Chief clients’ relationship manager

14.05.2010 Post in Trading

Bollinger bands are one of the trading indicators’ type, which is targeted to generate signals about the increase or the decline of volatility on Forex market. This indicator is developed for a trader to observe the tendencies on the market– whether it is calm or stormy.  If the market is even, the bands are converging, if the market starts to move, the bands are diverging.

Bollinger bands’ chart consists of three lines: in the middle – a simple moving average (SMA), higher is the upper band (SMA+2) and below is the lower band (SMA-2 standard derivations).

In order to calculate the indicator it is needed to compute a doubled divergence with the movement within a certain period of time, thereafter up- and downwards from the chart one plots the dots according to these calculations. In the result, there should appear a graph, resembling an envelope. The volatility ascend on the market will make the chart look diverging, and correspondingly, the lowering of volatility will be pictured as a converging envelope.

Bollinger bans are often used to recognize the moment when the price is ready to expand into a trend or, on the contrary, when a flat should be anticipated.

Bollinger bands have a few peculiarities from the analysis viewpoint. When prices start moving horizontally, and on Forex market there is no vivid trend, the bands are converging. When a new trend is forming, the bands are diverging. Thus, if the bands have been in the horizontal channel for a long term, a strong breakthrough should be projected resulting in a new trend.

Bollinger bands work well in combination with other types of charts. Though, taking a decision to open or close a position one should not consider signals of a single indicator. All your actions should be confirmed by numerous Forex indicators.

Bollinger bands are becoming more popular among other indicators; every trader using the technical analysis for his trading strategy, should know the way to employ it.

However, this indicator provides no precise signals for opening or closing positions on the basis of a price crossing the lines, but they can determine the borders, within which the price fluctuations can be analyzed by additional indicators. As a rule, together with Bollinger bands such indicators as the relative strength index, the MADC and Money Flow are used.

Added by Alexey Skachilov,
InstaForex
Clients’ relationship manager

06.05.2010 Post in Trading

If a trader expects that working on Forex market can bring regular profit he needs to realize the economic laws according to which the market is functioning, as well as the peculiarities of the market.

This article dwells on the notion “market tendency”, or a trend. A trend and tendency both denote the general direction which the currency fluctuations follow at Forex market. Constant analysis, monitoring and estimation of tendencies and trends on the market allow a trader to open positions timely and gain profit. The majority of novices make the mistake as they do not pay attention to the overal trend direction while opening positions; this leads to opening false positions and a sequent loss of funds. Watching the dynamics of increases and downfalls a trader can see the dominating on the market tendency, its duration and can predict further advances.

On the whole, there are three types of trends on Forex:

The bullish trend is also called an uptrend or an upward trend. The peculiarity of this trend is that the lowest prices of market fluctuations start to increase gradually. The notion “bullish” appeared on the analogy with the animal ‘a bull’ who is tending to raise the enemy on his horns – or in case with Forex – the price.

The bearish trend is called a down-trend, or a downward trend as well. The characteristic is that prices start the declining movement. The name “bearish” emerged because of the connection with ‘a bear’, which as if pressurizes the price with all his heavy body.

Sideways trend or the flat market and the trendless market, denotes that there is no trend. A long-term flat demonstrates that in the nearest time there will be a strong break though on the market either directed to the bullish or to the bearish trend. The major feature of the flat is a lack of a clear price movement.

The basis of financial markets is the price. The result of any operation conducted at Forex currency market is fully dependent on the price. The price is very flexible and exposed to constant changes. Before conducting an operation on Forex, make sure that the trend is really up-to-date for the market and it is not a short-time recoil of the price in the opposite direction, this mistake is often made by traders with little experience, thus they are exposing their funds to a big unreasonable risk.

The most frequent mistake for a beginning trader is the wrong time of closing the position. A trader can make the incorrect market analysis, make a false determination of a market movement direction or even ignore the trend. This will inevitably lead to the situation when the position which could have brought profit, but was closed in bad moment will on the contrary bring significant losses. In order to define the trend on Forex market a trader can use numerous technical indicators and the market analysis.

If you are tending to achieve success on the international Forex market, do not forget about the important rule – a trend is your friend.

Added by Alexandr Demkin,
InstaForex Chief clients’ relationship manager

29.04.2010 Post in Trading

It is of common knowledge that money should be made use of, and not simply saved. The sense of money is to bring profit. There are different ways to gain money, although the international currency market Forex is the most profitable and attractive for yielding.

Statistics demonstrates that the number of clients, who allocate their assets using trust management, is increasing by 30-40% each year.   Below we will dwell on several types of trust management.

Individual trust management. In order to invest money one needs to find an experienced trader who is to have statistics of his operations on real trading accounts. You should find out the peculiarities of the trading platform applied by him on Forex. To get maximal security you should open the account for your real name. In this case the investor is only depositing and withdrawing funds whereas the trader receives the password to the trading account and an access to its management. Although it is advisable to comment on the details in the agreement accepted.

Collective trust management. This type of management appeals to those who do not have a big sum of money. Here you should analyze the guarantees as there is no legal regulation. In this situation the possible risks are significantly higher than with individual trust management, because the investor opens an account not for his name, he just allocates the funds.

Irrespective of form the trust management is at the same time a highly profitable and a partially risky investment of funds.  Remunerative – because you trust the funds to an effective Forex market participant, and risky – because you are not able to control everything, and be 100% sure of the trader’s professionalism. Nevertheless, to minimize possible risks of losses it is needed to describe all rights and liabilities for both parties in the agreement.

In this respect the third type of trust management is up-to-date, which is the participation in PAMM-system of a large and reliable broker. At the moment a line of the companies with a high status and rating offer a possibility to invest in their clients’ trading, or in managing traders, whose trading characteristics at Forex market show high yield.

There are two types of PAMM-accounts: PAMM-trader account and PAMM-investor account.

The peculiarities of these two types are that PAMM-investor account can only invest funds in PAMM-trader accounts and PAMM-trader accounts can only accept the investments from PAMM-investors.

PAMM-system has a few differences from trust management, and one of the major is that the managing trader trades mostly with his own funds and even when he accepts investments he cannot withdraw his own funds. Thus, he will always be working not only with investors’ but also with his personal funds.

An important feature of PAMM-system is risk diversification, investing funds of PAMM-investors in PAMM-accounts of various traders, which lowers the risks of losses.

For the present day, InstaForex Company offers the best by its options and conditions PAMM-system for managing traders and investors.

Added by Evgeny Galaev,
Chief Manager of InstaForex Client Relations Department