Posts Tagged ‘Trading’

26.12.2011 Post in Trading

After the gold standard was cancelled, the world economy switched to the floating exchange rates. Since then every currency price is the result of the free interaction between its demand and supply. The demand for the currency is formed under the influence of such factors as the necessity for goods import, investment attractiveness of the country, currency reliability, etc. The supply is determined by the national export volume, loans, etc. intervencia

However, it does not mean that there are no exchange rate regulation measures. Each country government is interested in maintaining their currency price on the acceptable level (to avoid the negative influence on the national economy). Previously IMF watched over exchange rate policy of counties in order to maintain the economy stability and consider common interests. Now this supervision has become less strict, so, when carrying out any intervention, counties should follow only several principles developed by IMF.

Currency intervention is a strong instrument of central banks. It is interference in operations on the exchange market in order to influence national currency exchange rate. It is usually a result of currency selling or purchasing. There are also coordinated interventions when banks are operating together.

Reasons and consequences of intervention can be absolutely different. Currencies are traded in pairs, so everything is interconnected on the market. When some currency appreciably loses or strengthens its position it influences other currencies. Sometimes sudden movements happen on the market because of some circumstances. In that case carrying out gradual adjustment is impossible and banks must give quick response to the market circumstances by making currency intervention.

Traders should take in account such events because interventions can contribute both to the investment capital growth and reduction. If there is a probability of intervention skilful traders can be ready for profitable positions opening and taking considerable profit.

When waiting for an intervention, sometimes it is necessary to act against the trend, and it is always a risk. That is why it is better to use a low leverage, put stops and remember capital management rules.

Very often interventions are sudden or hidden. Not always central banks divulge information about interference in Forex, sometimes such information is delayed. However, a trader has several instruments which help forecast intervention probability. The fundamental analysis and news tracking are necessary to be aware of the world economy events. Secondly, often international leaders hint at intervention possibility, so it is very useful to pay attention to their declarations. Thirdly, read analytical reviews and forecasts of professional analysts who represent large banks and companies. Finally, experts note that often banks vary out interventions when the price reaches the level of the previous intervention.

By the way, intervention can be carried out to curb or strengthen the trend. Interventions against the trend are not always successful because sometimes even banks cannot resist the market.

Added by Daniel Shchagin,

InstaForex Clients’ relationship manager

23.02.2011 Post in Trading

Further to our topic dedicated to successful women traders we would like to present the story of Cynthia Kase.

Cynthia Kase got acquainted with trading in August 1983 when she had to undergo a training program in the trading department of the company she was working in. It happened the same year when a contract for crude oil became available. Cynthia persuaded the company to install a compute in the trading room. Cynthia was experienced in computer technologies due to her technical education.

The first and the most important thing about trading realized by Cynthia was that in order to succeed on the market on should act separately from the crowd. Cynthia said several times: “You cannot listen to everybody. I think it is important to be focused, have enough sleep, stay calm and everything will fall into place. It is wrong to always be worried.”

At the moment Kase considers herself an absolutely technical trader, despite the fact that she has been a technical trader since 1985. Further Cynthia Kase starts to develop her own technical indicators that she offers to her clients. At present she is trading for herself and consulting about thirty corporate clients. Kase has developed and indicator – PeakOscilltor – that can use cross-comparison of markets and Dev-Stop – a technology of setting stop orders in accordance with market volatility. Kase has published three articles in Futures Magazine, where she described the technical indicators in details.

Since the first day on the market Kase has not employed intraday trading. Her average deal lasts for 3-10 days. Cynthia Kase prefers energy markets, at the same time she highlights that her technical indicators are suitable for all markets. She also favours physical futures over financial ones, since futures depend on unconditioned and political factors.

Besides, Cynthia Kase says that “There are three most important things. First, you should not listen to someone else’s advice. Second, there is no easy way. You cannot find the Holy Grail. Diligent work and persistence make a successful trader. And third, this should bring pleasure.”

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

27.10.2010 Post in Trading

Forex trade should be based on a sophisticated trading strategy. Of course, the main trading principle remains the same – buy cheap, sell expensive. Profitability of your trade depends not only on right predictions of a market movement, but also on your ability to work out an effective strategy. The strategy designed completely by the trader is the only kind of strategies that can effectively work for him/her. It implies accurately planned actions that rely on market trends.

There are 4 types of strategies – long-term, medium-term, short-term and supershort-term.

Medium-term strategy suits those traders who cannot permanently follow market changes. The longer the strategy period is the less risky it is, but the more money it requires to deposit.

Medium-term trading supposes positions being opened for the period from one day up to one week. Proper correlation of deposit and margin allows the trader to avoid almost any risk.

Medium-term trading is the most popular type of Forex strategy as it unifies Forex newcomers and
professional traders.

For successful Forex trading it is useful to carefully choose a trading strategy and stick to a logical and rational approach.

Added by Alexandr Kornilov,
InstaForex Clients’ relationship manager

16.09.2010 Post in Trading

Every beginning and experienced trader must know what does Forex rollback mean or in other words market correction. Market correction or rollback is the price movement in the opposite direction from the dominative market trend. Correction emerges in case of overbought or oversold financial instrument which is considered.

At the moment when the market participants find out that the financial instrument price is underestimated – the market is in the oversold condition and it starts to fix the profit of the orders opened earlier. That is how the upside market correction arises amid the downward trend. The downside market correction appears if the up-going trend is to take place. At this moment, the most traders see the oversold market condition and begin closing the “buy” positions opened before, as the financial price is overestimated.

Forex rollback is a strategy which completely depends on the changes taking place on the market. The major trends correction is average trends, short term – the average trends correction. The trends show the peaks and drops of the market as there are no frank trends on the currency market.

Experienced traders can predict and use corrections in their trading which open the previous trend by some percentage point. 50%-Forex rollback is the most well-known one. The core of this Forex rollback is that the price having overcome the range from 20 to 40 will surely drift back by 10 points more that will total to 50% before its uptrend restarts.

Forex rollback is a price feature which is proper for the trend extents. The price rollback always moves at least by one third from the preceding motion. The essence comprehension of rollbacks on Forex market affords an opportunity of choosing the time for buying or selling the currency.

For a potential currency purchase a trader has to determine during the upward trend where Forex rollback is fixed by one third from the previous movement, remember this level, after that it should be used as a starting point for a potential currency purchase. Forex rollback by one third determines a potential sale point within the down-going trend.

The levels of the upper and lower trends are of a great significance. Forex rollback amounts to two thirds very seldom when there is a correction. Due to a program software used by the traders in the work the Forex rollback rate can be determined by means of charts. The percentage rollback of Forex market can be: 33%, 38%, 50%, 62% or 66% and each trader sets the necessary level by himself.

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