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Robust Forex Trading Strategies for Effective Trading

Are you looking forward to venturing into the forex trading industry? Every forex trader anticipates profit from forex trading but must be conversant with the following strategies to succeed in the industry. Range Trading Range trading is designed on the resistance and support approach. Resistance and support levels can be defined as the lowest and highest points that price strikes before a reversal towards the opposite direction. Both the resistance and support levels generate a joined trading range. When there is a trend in the market, price continues interrupting previous resistance positions developing a star-comparable resistance and support pattern. However, amid a ranging market price changes in a sideways design and remains connected between established resistance and support edge. Once price strikes the overbought resistance position, traders predict a reverse direction, indicating a sell signal. When price reaches the oversold position, it indicates a buy signal. When the price surpasses the established range, it could be an indication of an imminent new trend. Range traders hardly focus on predicting breakouts that occur during market trends. Instead, they target markets that fluctuate between resistance and support positions without trending towards one direction for prolonged periods. ·         Popular Range Trading Tools Range traders leverage resistance and support positions to determine when to exit and enter trades and the ideal positions to take. To achieve this, they often utilize banded momentum indicators like RSI and stochastic oscillators to determine oversold and overbought conditions. Position Trading Many forex traders use position trading to maintain…

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Appreciating Leverage in CFD trading

CFDs are a derivative traded on the financial markets around the world. Unlike traditional financial instruments such as stocks and bonds, CFDs have no backing by a specific asset. Instead, CFDs represent contracts that give you the obligation to buy or sell the asset at a pre-agreed price by a particular date. CFDs allow investors to trade on price movements of various assets, including shares, commodities, currencies, and indices. You may also trade CFDs on fixed-income products such as government and corporate bonds, as well as mortgage-backed securities. CFDs are leveraged products, which means that they offer investors the potential to earn high returns, but carry a high level of risk. Types of CFDs There are two main types of CFDs: cash CFDs and spread betting CFDs. Cash CFDs allow investors to buy or sell the underlying asset at an agreed price immediately. Spread betting CFDs allow investors to speculate on price movements of various assets, including shares, commodities, currencies, and indices. Spread betting CFDs are essentially contracts for difference, in which the investor may either take or make markets in the underlying asset. The benefit of spread betting CFDs is that investors don’t have to pay commission or stamp duty, which significantly reduces the overall cost of trading. Understanding Leverage A leveraged product is a security that derives its value from the assets of the underlying company. Assets can be actual property or underlying intellectual property. In addition, it can be anything that can leverage, such as a company’s…

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Comparing Spread Betting and CFD (Contracts for Differences)

Contracts for differences enable investors to trade the price flow of futures even though they are not futures contracts. CFDs do not come with an expiry date and comprise preset prices. However, they trade with sell and buy prices, as is the case with other securities. Contracts for differences trade over the counter via a chain of brokers who plan the market supply and demand for CFDs and develop prices accordingly. This article covers the similarities and differences between spread betting and CFDs How Spread Betting Works When traders spread bets, they choose whether a financial instrument or product’s price is likely to rise or drop and determine the amount to bet. The products, in this case, can be stock index, share, commodity, or currency pair. For instance, suppose an investor is spread betting foreign exchange, and the currency pair’s price fluctuates in their favor. To calculate their profit, they will need to multiply their initial share size by the total points the product has moved. If it moves against their preference, their loss will be calculated in a similar formula. It is worth mentioning that losses can surpass deposits. Understanding the Similarities Between Spread Betting and CFD Spread bets and CFDs are leveraged derivative instruments whose value comes from a fundamental asset. In these instruments, an investor does not own the underlying market assets. When trading CFDs, investors speculate on whether the underlying asset value will fall or rise in the future. CFD providers bargain contracts with the option…

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Is Forex Trading a Profitable Venture?

Most people who join the forex trade hope to make big profits in the tweak of an eye. However, the reality is that most average retail traders experience a rocky path to riches. Massive losses and potential penury mar this path. Nonetheless, hedge fund people with deep pockets or uncanny trading skills quickly make significant profits enough to make them wealthy.   About three-quarters of investors globally make net losses from trading currencies each year. While a quarter of them do not, it doesn’t mean that all of them get rich trading forex. Unexpected events could inflict massive losses that could render a forex trader broke or bankrupt.   This article examines seven risks you should know about as a retail trader before you invest in forex to get rich. Risks of Forex Trading Asymmetrical Risk Reward Most retail traders are unable to keep their losses small compared to seasoned forex traders. Experts in trading also know how to offset losses with sizable gains when they get profits. Most retail traders do the opposite. They hold on to a losing trade for longer than is necessary, thereby incurring substantial losses. At times these losses turn to be greater than their initial investment. Excessive Leverage There is a considerable risk of excessive leverage in forex trade. Real leverage has the potential to expand your profits as much as your losses. The greater the leverage on the capital you invest, the higher the risk of assuming it. While this risk is not…

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Technical Analysis Guidelines that Beginners can Benefit from

The first move to learning technical analysis is acquiring fundamental insight into the key concepts. By enrolling in online courses, reading books, or perusing through educational and informational websites, you can do so.   Understanding Technical Analysis Technical analysis in forex trading is a strategy traders use to predict the market price direction or the intensity of a trend by assessing previous market prices. Technical analysis trading relies on various technical indicators and charts for market prediction. The fundamental principles of technical analysis basics are: Market price action deducts everything, meaning where the market is currently trading is the fair market price. All market anticipations and emotions are integrated into the price.   Markets progress in trends. It takes the markets sometime before they can attain tangible results.   Market history recurs often. Market psychology can be overly predictable, and traders often react fast in the same circumstances. Remember, technical analysis strategies are not magic concepts that you can rely on to forecast every market fluctuation. Some traders have the misconception that they can leverage technical analysis to accelerate their richness which is not the case. Pick the Appropriate Approach You can view technical analysis through the bottom-up or top-down approach. Often, short-term traders opt for the top-down approach while their long-term counterparts choose the bottom-up approach. ·         Top-down Approach This approach is a macroeconomic evaluation that analyzes the general economy before targeting individual securities. A trader could first evaluate economies, sectors, and companies in the event of stocks. Traders who…

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Forex Trading Volatility Indicators

One of the terms often used to describe the state of the forex market is volatility, which is the measure of how drastic the prices change. Forex market liquidity plays the most significant role in influencing the market prices volatility. When liquidity is low, the market becomes more volatile, causing a drastic change in prices. When liquidity is high, volatility in the market is low with a less drastic market price fluctuation. Traders use market volatility to turn profits because it enables them to know about the price movements in the market. Using volatility indicators helps to make sense of the market volatility and capitalise on the finding to turn profits. In this article, we look at some of the most popular indicators that traders use because of their proven record of accomplishment and efficient results. 4 Volatility Indicators Bollinger Bands Bollinger Bands are some of the most commonly used, potent, reliable, and trusted volatility indicators in forex trading. Traders use them during the range moments to time entries and to read the strength of the trend.  Furthermore, they also identify market tops to turn profits by using the indicators. The Bollinger indicator adjusts to the current market situation and real-time price action by taking advantage of volatility. The bands, plotted in two standard deviations above and below the moving average or the market price, expand when the trends are strong with price fluctuations and contract during the downward momentum trends and sideways consolidations. Besides using Bollinger Bands by assessing…

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