- A few days ago, the European Central Bank cut its benchmark interest rate to 0.25% from 0.5% that came as a surprise for the majority of analysts and experts, since the conditions for such a decision were too marginal. For example, it is moderate inflation, steady industrial production in the Old World, and other indirect signals, which, as a rule, determine future interest rates in the region. However, Mario Draghi and policy makers have agreed to take proactive decisions and not to wait for the mixed Q4 2013 (traditionally a high-growth period) and Q1 2014 (traditionally a low-growth period) indicators released.
What does so unexpected action of the ECB say us? First of all, it is a signal to banks, hedge funds and other financial institutions, which, let’s say, were not hit in the head with a shovel, but at least were given a cuff. It is a signal, in which Mario Draghi put his key idea of the recent years – not to keep money under the pillow of the regulator (the ECB), but invest funds in the real sectors of the economy via the issuance of corporate loans not forgetting the retail segment.
In fact, the European financial institutions have been instructed to invest and lend money efficiently, which is normal. So far, it is just an order and cuff, not a hit with a shovel and an ultimatum. However, if the European banks will continue to be amorphous under the ECB’s 0.25% hot-water bag, the regulator is understood to cut the key rate to even negative readings in 2014.
The ECB will simply penalize banks for being passive and keeping money on the regulator’s accounts, not openly of course. Thus, Europe would see an extremely unusual situation when the bank of banks does not simply refuses from its customers (banks), but chases them away. If a negative interest rate is adopted, the euro will decline. This fall won’t be rapid but safe. Every day, the euro will lose 1-2 or even a few basis points, till the time the eurozone economy starts to grow. Only in this case, money taken out of the ECB’s pillow will begin to appreciate. Then the regulator is likely to bring positive rates back. However, we look far out into the future, as obviously it will not happen in the first or the second quarter of 2014. The present situation is that no European bank or fund wants to give anything to anyone.
Almost all markets show a negative trend. Companies are restructuring and cutting costs. This all leads to the tightening of corporate underwriting, to an increase in the borrowing costs, and to constantly rising funds accumulated on bank accounts as well as on the regulator’s ones. That‘s why, Mario Draghi actions are understood: he wants to inspire the euro area economy. He has already begun to shake the ECB’s tree, but the fruits are falling down reluctantly, so he has taken quite a logical decision to limit watering to lower the key rate. However, it doesn’t guarantee that now money will be poured into the real economy sector. Perhaps, Mario Draghi will have to stop watering the ECB tree at all. We’ll see.
Meanwhile, the euro is advancing, and the European economy is worsening, while the U.S. economy, having spurred the greenback, is demonstrating stable development. As we know, money always goes to a better place. Maybe the ECB is the bank of banks, but its basic role is to develop and strengthen the European economy; it shouldn’t watch passively how the U.S. increases its export. Apparently, the EU struggle against the trade deficit is a hidden reason for the rate cut in Europe.
Posts Tagged ‘forex broker’
From October 12 till 13, a regular festival BimmerFest 2013 took place at the foot of fabulous temple Prambanan located in Central Java, Indonesia. This event gathered BMW fans from across the country and featured InstaForex and its regional Indonesia’s office in Surakarta as sponsors of BimmerFest 2013. Over 500 cars took part in the festival. 26 of them painted with InstaForex corporate look drove up Prambanan temple from Surakarta.
BimmerFest 2013 was held under the motto: “Legend goes on” which does not only suit the remarkable Bavarian car brand and majestic temple, but it also conveys InstaForex approach to running and developing its business. To become a legend on their particular markets, both BMW and InstaForex had to be in step with the time. Besides, they had to suggest something advanced, extraordinary, and unrivalled. Once, it was InstaForex who offered its clients to trade on live MT5 accounts, implemented inventive and absolutely groundbreaking PAMM system, and ForexCopy system that has become a true hot seller among Forex services.
However, apart from the unique business approach, InstaForex also means a life-style. Some time ago, our campaign Trading on top gained the unprecedented popularity when two of InstaForex staffers had set the world record for the topmost trading. This campaign prompted lots of journeys around the world. Let us remind you of a pilgrimage carried out by a company’s partner to the Mayan temple Tikal in the legendary Mutul kingdom’s capital. Financial backing of BimmerFest 2013 is another step forward for InstaForex.
InstaForex is the legend that gets real!
IFX: Hello, Dmitri. How did you start up your trading career? What difficulties did you have to face at the beginning?
DG: Hello. My first trading experience dates back to 2005. I guess, like many other traders, I learnt about Forex via advertising. I was allured by the fact that Forex allows running into money without effort from home, according to the advertisement. So I began studies on my own. Luckily by that time a great amount of economic literature was available. As for the challenges at the very beginning, I can barely recall them. There were only some kinds of technical troubles as post-Soviet dealing centers just entered the market those days and were using scam methods. Over the years I blacklisted some of them, but other proved to be good to work with even now. The majority of the dishonest brokers ceased to exist due to their dishonest policy.
IFX: How much time did it take you to develop your personal trading system? Could you specify the major steps for creation of stable approach to trading?
DG: The basic principles emerged in 2007. However, I improve my trading system every year to adjust it to the Forex market changes. I would not go into particulars as it will take a lot of time. Moreover, successful traders with wide experience know about these nuances. And newbies should interact more with the professionals to gain experience and knowledge.
As for the major steps I had to go through during the development of a stable trading system, I can figure out the following:
1. Fundamental and technical analysis study.
2. Development of market forecasting methods which are the basis of a trading system.
3. Development and testing of an individual trading system on demo account for a year.
4. Trading on live account, system’s correction according to the activity on a real account.
I repeat that the system changes in real time. Hence, the basis is permanent. However, risk management strategy is to be revised annually. In any case, all the adjustments and corrections are a good practice as they help me to be among top traders for 6 years already.
IFX: What kind of financial analysis do you stick to: technical or fundamental? What is your primary target as a trader, what is important for financial asset analysis and what is not?
DG: I work with fundamental analysis solely. The medium-terms projections are all based on it. Only correct fundamental analysis can determine the future trend of a currency instrument. For the 6 years of my trading experience I was 100% accurate in my projections for the majors.
Taking my experience into account, I can say that technical analysis works for 50% of the cases. The market changes every year and yesterday’s patterns cannot give you the desired accuracy. The charts of the currency pair’s movements sometimes go regardless of any analysis. As the result, trading turns to a game, but not work. Money is not a toy though, which is why books on technical analysis are dusting on the bookshelves. However, even bad experience is vital, so I do not regret having it.
IFX: Dmitri, you are managing an international investment project. What is investment for you and how serious a trader should be to become a successful managing trader?
DG: I manage a rewarding D-Profit international investment project, the success of which reflects the level of responsibility and gravity of my approach to the investors. In this connection investment represents financial opportunities for me as for an investor. Six years is a long period for Forex market provided that every new trading day and closed deal is a test for reliability of responsibilities in front of our investors.
IFX: Dmitri, you are a partner with InstaForex. What are the principle factors in cooperation with this company from the point of successful partnership?
DG: I knew about InstaForex since the moment the company was founded. First of all, it was actively developing meeting the needs of its customers. I also liked the wide selection of trading instruments. Well, nothing was perfect at the beginning from the technical perspective, but as a result of great Customer Support Service work, all the problems were tackled easily. Eventually, everything was fixed and now InstaForex is the most powerful and effective trading platform on the Forex market. I would like to thank Partner Department in particular. The specialists demonstrate professional approach and try to solve all the problems in no time.
IFX: You did a go at the PAMM system by InstaForex. Why did you choose it? What are the advantages of the PAMM system in contrast to the trust management?
DG: The PAMM system by InstaForex is an automated modern tool of financial assets management which helps to derive maximum comfort from cooperation in the trader-broker-investor chain. The investments are accepted and returned automatically, so is the profit. In trust management a trader works with tens of trading accounts, whereas the PAMM system implies accumulation of all the investments on one account. The PAMM investment is beneficial for investors as well. They still control their assets having an opportunity to cancel their investment without a trader’s approval. All these features together with perfectly adjusted technical opportunities make the PAMM system so attractive. Thus, I have decided to open the PAMM account #1 in the D-profit project. As of today, more than 500 investors are in this project, the total amount of investments exceeds $400,000. The project exists for 2 years already. Great opportunities provided by the PAMM system are due in no small part to the project success.
IFX: Dmitri, some traders believe that it is better to trade your own funds without attracting investments. What do you think about it?
DG: Investments attraction is an international practice. The funds are flooded into construction, explorations, and management with the purpose to derive profit. Of course, it is better to earn $100,000 in a half of a year managing $1 million rather than possessing just $1,000. I started up with small capital of some hundreds, but now I operate big sums of money. However, trading somebody else’s money is a great responsibility. Hardly every trader can take it. Sometimes it is easier and more comfortable to trade your own money.
IFX: What is necessary to make an investment project successful? What traits of a managing trader are most important? What do you value in investors?
DG: I think stability is the main factor for any profitable investment project. And by this I mean both trading risks and stable profits. Talking about the main traits of a managing trader, I can define two directions. The first one is determined by the level of professional competence: knowledge of a trading platform, risk management, accurate analysis, etc. The second one focuses on personal qualities. No doubt, responsibility is the major characteristic of a managing trader, then comes self-possession, ability to control your emotions and view the situation objectively. As for investors, first of all I value their loyalty and patience as Forex carries high risks for profit-making. It often happens that opened deals are not profitable from the beginning. Sometimes a trader has floating expenses for months until the trades meet the targets and can be closed in the black.
IFX: What are the prospects of joining your PAMM system project? On what does the potential profitability of client’s investments depend?
DG: Investing funds into our D-profit project, an investor can get the following:
1. Stable profit exceeding the interest on bank deposits in case of long-term investment.
2. Low investment risks (not more than 30%) to which we are stick to for a couple of years.
3. Possibility of personal contact with the manager, consultations on investments.
4. The funds are transferred to the accounts of the largest and most reliable broker, we also use segregated accounts.
The investor’s profit depends directly on our trading performance. It should be noted that InstaForex contributes to investor’s earnings ensuring 6% of annual interest on invested funds. The rest of the profit is generated by the D-profit project. On average, an investor can get more than 20% of a profit. However, this statement is true for long-term investments as Forex is not stable and can be affected by economic crises and other events. That is why the profit is floating. For example, an investor’s profit totaled 25% for the first year, but dropped to 15% for the second. As the result, the income soared to 40% in two years. Once again, we base on the long-term investments which guarantee, above all, stable profit of our project in the future.
IFX: Can you say that when a trader switches from trading his own funds to investments, he professionally evolves? Or maybe it is just another way of trading when money is a trading instrument?
DG: Well it is not a professional evolution but rather a trader’s personal revolution. As I said earlier, investment management is a great responsibility to other people. A trader can work for more than a year but cannot decide on managing other traders’ funds. Indeed, losing your own money cannot be compared to the responsibility taken for the hundreds of traders. On the whole, investments attraction is a wonderful trading option which can bring good money.
IFX: Do you believe that it is possible to get stable long-term profit on the market? Does trading worth diving into it?
DG: As for me, trading is an inevitable part of my life. Thanks to my success, I have achieved a lot of targets. Is it worth trading? Of course yes!
Trading feeds my family and me. But I always try to find spare time for my relatives and friends and some time for rest. If a trader has tested a profitable system with low risks on practice, he can be successful in the long term. Meanwhile, in this case he does not need to spend 24 hours in front of the computer. On the top of that, automating the process of trading, you can devote several hours a day it. Now there are loads of technical opportunities to make it real.
IFX: Can you describe a successful trader?
DG: Well, success is a relative notion in trading. For someone hitting a $1,000 jackpot in one deal is the success, while others prefer popularity in professional community to anything else. The thirds value years of working. Undoubtedly, all these are the component for success. For me personally, a successful trader is a professional who regards trading as serious and responsible work with sufficient for him trading result. It is a person who respects himself and others, who can analyze his faults, and develop his trading system.
IFX: Will you continue partnering InstaForex? What benefits do you see in cooperation with InstaForex from the trader’s and investor’s points of view?
DG: I think that we will work close together with InstaForex for a long time. If everything is perfect, why to change it? Besides, we plan to improve our collaboration in future.
Reliability and confidence are the benefits of working with InstaForex. By this I mean reliability in trading platforms, safety of funds on the company’s accounts, confidence in company’s employees. With such an effective company I am sure about my funds and funds of my investors. The money will not just vanish, the earned profit will always be eliminated. For the large investors the safety of funds is one of the most important conditions to invest money. As far as I am concerned, InstaForex was the first to introduce segregated account service which was a helping hand for the investors with the deposits above $100,000. To my mind, there is no better guarantee for the funds’ safety. If an investor does not want to trade by himself, he can invest his assets to the PAMM account of the D-project or the accounts of other managing traders, partners of InstaForex.
In conclusion, I would like to wish InstaForex to be successful and prosperous.
IFX: Hello, Yuriy. Congratulations on your victory in the Analyst of the Year contest held by InstaForex together with MT5.com international portal for traders. How do you feel about your victory?
YZ: Thanks a lot for the congratulations. Indeed, the contest is large-scale and captivating for everyone, I mean, for participants, traders, and onlookers. Firstly, the contest allures by its originality: for the time being of the market development I cannot recall an annual contest for the analysts. And I am very happy to be the winner.
IFX: Was it your primary target to win? Or was the participation itself more important for you?
YZ: Initially, I planned to enter the top three of the analysts. When I reached my goal, I analyzed my work more thoroughly and discovered the points to improve. I promoted my blog enriching it with analytical materials and soon it earned great popularity. Then I set another aim – to gain the first position.
IFX: What do you think, how do your analytical reviews differ from the others? Why do you think you manage to be the first?
YZ: Before being an analyst, I have spent years on trading: managed accounts of various individuals and legal entities via Russian and foreign brokers. Now I know pretty well what a trader needs. Above all, a trader requires fresh analytics which is published on time. In case of any delays, a trader gets nervous, refers to another expert which troubles convenient work with the materials of the well-known author. If the delays happen too often, a trader opts for another analyst.
I have ab ovo decided to publish the materials ahead of the others. After a week or two my strategy proved to be successful: the traffic of my web page profile and blog was the highest.
Well, of course some kind of simplicity and cogency of the materials presentation is important. When it was possible, I tried to give simple recommendations, to wit, today the market is going up… And quite often I was right. One of the traders figured out that I had 75% of correct predictions for the entire contest. If I, as the majority of the analysts, gave ambiguous explanations, I would have nothing to stand out.
Moreover, I was consulting traders by Skype and ICQ.
IFX: Yuriy, do you think that the functions of a trader and an analyst are the same? How could you describe a successful trader? What about a successful analyst?
YZ: I believe these are two entirely different notions. To make a prognosis, an analyst spends several hours. Finally, he presents a material that eases a trader’s work even if he can plan his working day by himself. A professional trader can just cast a glance at the forecast to estimate its value. So, is there a need to analyze a market individually if you always have information at hand? A trader just has to wait for the moment to enter the market or stay on hold.
Now let’s imagine the work of traders in investment companies or banks. A trader cannot open a position at his discretion; he sticks with the trading plan of a group of analysts. But a trader must close the position in case the situation changes dramatically. It is not about who is more intelligent, but rather about the sharing of responsibilities.
Based upon my experience, I think that the criteria for being a successful trader or an analyst are different (by the way, I really like this question). A prosperous trader is a bundle of nerves. He must wait for the right open signal to be formed, enter a deal, and then close it. It seems to be so easy, isn’t it? But if a trader has three successive losing trades and he is not affected by them, does not strive to play everything back, then he is a valuable person for an investment company. On the whole, I would define a successful trader by a stable monthly revenue. If the profit is not big, a trader does not risk, but implements the risk management strategy, which proves that he is self-possessed.
The success of an analyst can be defined by the accuracy of his forecasts. Many analysts became famous for their predictions of a crisis end or beginning. Well, it is not success in broad terms, but still popularity. In this case, the success is in stability as well.
IFX: What is the major type of analysis for you and which one is the minor?
YZ: I started out as a technical analyst, later I studied fundamental analysis which increased the accuracy of my analyses in defining the market trends and reversals. Now I prefer complex analysis.
IFX: In your analysis published on InstaForex website you employ your own methods of technical analysis. Do you think the creation of your own indicators and methods of analysis is obligatory? Or maybe it is enough to handle common norms and principles of analysis to trade successfully?
YZ: Yes, it is enough to operate backtested methods of analysis. However, an analyst is creative by his nature. There comes the time when he gets a craving to broaden the horizons and advance his basic system.
IFX: Yuriy, do you think that a trader should have a trading system? Is it useful for decision making or does trading on modern financial markets resemble a random walk? And as for the results, can the success be achieved but with no stable profit?
YZ: A trader must have a trading system. Moreover, until he finds one that suits his psychology and spirit, he is a would-be trader.
My system was developed out of random walk hypothesis. Plot a chart on a piece of paper, and I will show that even a random chart can be described by traditional instruments of technical analysis. The result is fitting: if the trader is not in a hurry, he waits for the moment, then he will earn a stable income.
IFX: How do you imagine your future as a financial analyst? Do you want to learn markets you are not working with now?
YZ: Getting in touch with futures and options markets, I saw how the authors of the books described the instruments that rule the markets, that are groundbreaking. They did not stint on the buzzwords. However, I still stick to the opinion that the currency market is self-sufficient, it is growing in volumes from year to year and it barely changes. I feel comfortable, and now I do not want to try another market.
IFX: Yuriy, could you please tell, an analyst, either technical or fundamental, should trade markets according to his own forecasts? Or maybe the main goal is to provide up-to-date information about further price movements for traders who could make their own decision basing on this information?
YZ: Not obligatory, but a good thing to do. Trading himself, an analyst is more vulnerable to his projections and does not go soft.
IFX: Are you planning to partake in the Analyst of the Year contest once again?
YZ: Not this year again, I guess. Unending consultations during the contest without rest and weekends used me all up. But next year, I will probably struggle again.
IFX: What could you wish to those who have just started trading financial markets?What is the best way to start studying methods of financial analysis, to your mind?
YZ: The only thing I can wish is patience. The path of financial trading is rough and long. And it is better to start it in the classy way. All computer indicators, graphics, and trading methods are based on the principles described in classic books. Having understood them, a trader can master the novelties easier.
IFX: What is your projection for the currency market, say, in the nearest couple of years?
YZ: In the course of a couple of years, I think, nothing will change globally. However, the world is inevitably getting globalized. New supranational currencies will appear and they can greatly affect the market. As a result, new mechanisms of the market regulation can emerge.
IFX: Hello, Stanislav. Let me congratulate you on the victory in the Analyst of the Year award by InstaForex and the international portal for traders МТ5.com. What do you feel after your triumph?
SP: Thank you. I’m very glad that my work was appreciated by the MT5 portal followers, because it was them, who voted for me. And it is very pleasant. That is why I would like to thank those traders and wish them profitable Forex trade.
IFX: What is the difference between your analytical reviews and the ones of your colleagues? I mean, why users of mt5.com gave their votes particularly for you?
SP: I think that my analytical reviews differ in its simplicity. I do not use complex methods of market analysis that could be misunderstood by newcomers. All the analysis techniques that I use are well-known and well-tried, and what is the most important, are completely understandable to all the traders regardless of their experience on Forex.
IFX: What are the principles of financial analysis that you stick to? What is the secret of the successful forecasting?
SP: There are a lot of factors that influence the currency pairs and other financial instruments movements. The situation on Forex market is quite unstable, so you are supposed to timely react and make some changes to the analysis. Thus, the major principle is to be constantly online. I mean, you should watch the trend of the chosen instruments and not leave the open positions to chance, especially for a long period of time.
IFX: Stanislav, are there any foreground strategies of technical analysis? What are the ones that you would not recommend to use on the today’s financial markets?
SP: There are a lot of types and methods of analysis, indicators, and trading schemes. Every technique is useful in its own way. However, there is no method or indicator that could forecast the market behavior with 100% probability. Therefore, to get more comprehensive and clear picture of what is happening on the market, you should use the package approach containing several types of analysis.
IFX: Was your participation in the Analyst of the Year award the first experience of international analysts’ contests? Are you going to take part in the award one more time?
SP: Yes, that was my first and, as you can see, quite successful experience. I’m very glad. I will participate in the Analyst of the Year award next year for sure.
IFX: What is the key factor determining the successful trading on the financial markets? Do you see eye to eye on the fact that the trader’s success is based on the trading psychology, accurate set of strategies, and way of thinking?
SP: Yes, I’m pretty sure that the key factor is trading psychology. Nevertheless, it is useless without special knowledges and skills. First of all, every trader should be well-versed in at least several types of analysis that he is going to apply. Besides, a trader should be self-disciplined and learn from the mistakes. Self-discipline lies in sticking to the rules of the trading system work. To learn from the mistakes means to analyze the failed deals in order to avoid such mistakes in future.
IFX: Do you have your own role models among traders?
SP: No, I do not. I have learned almost everything that I know by myself, so I keep improving my own skills and abilities and discovering something new.
IFX: Stanislav, are a trader and financial market analyst the same or different?
SP: Most of the people trade on their own trading account for themselves. In this case a trader is an analyst at same time. There are also groups of people that cooperate in order to trade on Forex. Such groups are divided into analysts, who analyze the current situation on the market, and traders, who make decisions on trade deals.
IFX: How long does it take a trader to start earning by trading? Is it possible to receive steady income?
SP: A steady income is possible, of course. The most important thing is to understand what do you want to get. It is a commonplace for a trader to dream of making millions from the beginning. Attempts of such a person usually fail and he or she tells all the friends that it is next to impossible to gain with Forex. Trader is a profession, just like engineer or banker. To become a qualified engineer one needs to study at university for about five years. Thereafter he or she will get a job and some more years later gain required experience. Hence, a trader will start receiving a regular income in 3-5 years.
IFX: If someone expresses a desire to become a trader or financial analyst, will you support the idea or try to dissuade?
SP: I will support that person for sure. The trading on the currency market may bring an additional earnings and later become a main source of your income.
IFX: You are one of the best analysts of 2012. Did the cooperation with InstaForex predetermine your success? How does the level of broker’s service affect the successful trading on financial markets?
SP: Working in a serious company with highly-qualified and responsible people always fosters your personal development. High-level service, which is crucially important in any field, usually determines your choice of the broker company. I am glad that I cooperate with InstaForex, which has an irreproachable reputation and professional attitude to every client and employee.
IFX: What are your predictions concerning the Forex development for the next couple of years?
SP: Ten years ago just a few people knew about Forex. To date, the number of its newcomers have been rising every year, so, I think that the amount of new traders will do nothing but increase.