Wednesday, June 27, 2018

3 things to do by becoming financially free with trading

When you reach financial freedom through online trading, there are some things you can afford to do with benefits compared to other people who, for example, depend on a full-time job in business.


Spend more time with the people you love


Since you are financially free and do not have a boss, you are free to work whenever you want. This is an opportunity to do things that are important, spend time with the people you love and who love you, your family. The majority of individuals are employed full-time and are quite busy on the week with their professional schedule, however being independent through trading will allow you to adapt more easily to the availability of your loved ones but also to fully enjoy with them on weekends. since the markets are closed.



[caption id="attachment_1668" align="aligncenter" width="600"]financially free with trading financially free with trading[/caption]

Create complementary and passive sources of income


Earning enough money in the financial markets to reach financial independence can also allow you to maximize this independence, especially by creating additional sources of income. By earning enough money in the markets, why not invest in other projects with or without markets? Financing a business project up to a few thousand euros and collect interest such a shareholder could be possible for you, become a Business Angel and invest in startups could also be interesting since this kind of investment is passive and can yield big in case of project success.


Spend less money than you earn


It is serious to this ability that you will be able to achieve more the two previous points, enjoy life and strengthen your independence. Earning more money than you spend on living on a regular basis will give you financial freedom but also geographical, you will be able to work in the markets at your own pace and from anywhere in the world for example.

Trading is an ideal that many newcomers in the financial markets aspire to, and we understand why, in view of the benefits that this provides. Trading and living with passion is possible and independent traders do it. 

Thursday, June 21, 2018

Social Trading: Different Types and Styles

Forex social trading or binary options is a practice of copying the trade of other traders that the user finds through the online social trading community.


Such a trading community can be used as its own personal support system and as a place where ideas and strategies can be discussed. Social Forex trading involves a huge number of different ways of communicating with other traders, including forums, profiles, blogs, trading signals, brokers and certain platforms that provide the opportunity to copy transactions. These forms of social communication help traders of all levels to interact with each other and improve their trading strategies.


Social Forex trading provides a unique advantage for beginners or overly nervous traders - it allows them to follow others and adhere to the strategy of more experienced traders during the trading process. Social trading also offers clear advantages to more experienced traders, as it allows them to become trading leaders and to generate additional profits, attracting more and more subscribers. Regardless of whether you are a beginner or an expert, the use of various social proposals is a great way to increase profitability and make trading more interesting.


Here are a few popular types of social trading platforms:


 


Signals or tips


If you are taking the first steps in social trading, pay attention to signals and tips that will help you make the right decisions. They can be represented by simple sources, such as the trader's psychological indicator or the investor sentiment indicator on the broker's website, or they can be generated by modern computer systems. When using this kind of social trading, you will not encounter any kind of interaction and you may even not fully understand the whole meaning of the signals, since you will not have the opportunity to ask the trade leader. Signals and advice will give you a clear position in the market, and you will decide whether to follow it or not.



[caption id="attachment_1666" align="aligncenter" width="300"]Social Trading Social Trading[/caption]

Copy-trading


The essence of copy-trading is to copy the trade of other traders. There are trading platforms that allow a trader to copy the transactions of another trader and repeat his success. To do this, the trader selects a trader from the leaderboard, after which each of his transactions will be copied to your terminal. Your account is strictly controlled, so you do not follow someone blindly, but overall responsibility still falls on your shoulders. Copying trading is an excellent way to trade without stress when making your own choice, because all you have to do is select the most impressing trader and copy his trades.


Forums and profiles


Forums and profiles are very important for every trader who plans to become a serious social trader, moreover they add an aspect of the entertainment of your trade. Forums allow you to communicate with other traders, while profiles help you to find out all their "inside". The best platforms will provide in the profiles full biographical information, detailed data on the trading style, as well as open and closed transactions.


Most brokers offer forums for account holders and often, you can enter topics for discussion of more public forums. A good forum will have hundreds if not thousands of active users and you can join discussions on your choice, devoted to strategies, tools, tips and forecasts and much more.


Autobots


From a technical point of view, automated trading is not 100% social trading, since this type of trade excludes the social aspect of trade. Autobots are robots that open a deal when you call a particular strategy or pattern. While social trade requires that real traders carry out trade, auto trade does not require human control at all. The system generates a signal and then automatically executes it on your account. There is a mass of classical automatic systems, but there are also new upgraded versions that can interact with your computer and the account constantly and without failures. The advantage of Autobots is that you do not have to worry about the so-called human factor. The disadvantage, of course,



When choosing a social trading platform, always choose a method that allows you to strictly manage your account. Set the amount of profit and loss. Managing your funds is perhaps the most important aspect of trading for both beginners and experienced traders.


What is Social Trading?

You probably know technical analysis and fundamental analysis as the two learning schools of Forex trading. We also talk about quantitative analysis, which is based more on numbers than on graphs. However, recently, we are starting to see a new way of trading: social trading.


Remember, in the early days of Forex trading, when everything was happening in stock markets (like the good old Palais Brongniart in Paris), and that the only way to have information were phone calls and news to the TV. Subsequently, phones were replaced by instant messaging, and TV by Internet information flows. With the advent of Web 2.0, information sharing has never been faster and more efficient, and this is where social trading is going to play out.



[caption id="attachment_1663" align="aligncenter" width="310"]Social Trading Social Trading[/caption]

Trading 2.0


As the logic of Web 2.0 requires, traders/investors have moved from the opaque secrecy of their operations to totally transparent sharing. What is the point of revealing his secrets, will you tell me? Transparency! Investors' confidence can never be better than being transparent about what we do. And also emerges the community trading, which wants that by helping one another and by trading with others, one is always better.



So 2.0 traders share their business and discuss with other traders why or how they traded that way, and how they could maximize their profits. Beginners, meanwhile, can simply follow the list of real-time positions of more experienced traders, in order to take to learn by example.



eToro was the first broker to set up a social trading system, with the launch of the OpenBook in 2010. All traders of the platform can, therefore, share their trading activity in real time (open and closed positions, gains in percentages, earnings ratio ... without giving the amount of money invested and earned, these data are kept private, of course!). Other traders can then follow this flow of activity in real time, understand the reasoning of the guru and decide whether or not to follow his trading direction.


It is possible to follow a trader in a completely automated way on a social trading platform (all decisions will be automatically followed, but you set the amounts allocated), and you then become a spectator of the trader's performance on his capital, and then done, of your capital. But it is also possible to follow it manually by selecting its decision making according to your own judgment, and again, to allocate the sums you decide.


And what does it work


It may still be a bit early to say that social trading works better or worse than "traditional" trading. Professional traders with years of experience are of course not close to changing their habits. But for beginners, this is an interesting opportunity to learn to trade Forex by example. The novice trader can simply follow in real time the activity of an experienced trader, and even interact, chat and ask him questions.


eToro announces nice numbers, of course, with an average of 3% to 4% earnings per month on all traders who have adopted this strategy at home since the launch of their automated social trading (which is still not bad) , compared to a placement in the bank that would earn you 3% to 4% per year ). I think that social trading is worth it, especially because it opens the way for a new type of trading for a new type of investor: normal people like you and me.

The Feeling in Trading

Without ceasing, we bring down the same sermons, we must be methodical or even mechanical. But we must admit that from time to time, "we feel that the market will return" while no explicit data provided by the graph would allow us to say. It is this famous feeling of which we speak in this article.


How does it work?


It is good to "feel" the market, but, except explained by an esoteric theory, this intuition necessarily has a reason. Why do we feel that the market will reverse? It does not come from anywhere, it's information that we have unconsciously but it is difficult for us to formalize. This is the sum of empirical findings, that is to say, that by seeing graphics, you will systematically notice behaviors in certain conditions and you will save them.


Now, you may be confronted with particular configurations, the latter will look like the ones you have previously encountered. Thus, by unconsciously remembering the scenario, you will have the impression of having an intuition. It is rather what we could call "experience". By dint of seeing graphics we notice recurring relationships, we record them unconsciously and it resurfaces when the graphics remind us.


The question now is whether "trading at the feeling" works. Difficult to answer in an obvious way, which is sure that it makes the decision-making process and the strategy unstable. We find a lot of beginners, opening positions to the feeling, which is a mistake. In my opinion, agreeing this type of action can only be reserved for experienced and seasoned traders.


The trap of easy trading


Some bad ideas conveyed on the web of the type: "one can win sustainably by trading at random" encourages to trade "the feeling" by saying: "at worst, it will always be a little better than chance". This behavior of the most erratic leads fairly frequently to high losses. Before venturing to make such conjectures, one must begin by being rigorous. One can open positions "feeling" by being rigorous.


What is most important in this type of approach is to be able to dissociate the emotional side of the rational side. In fact, intuition must not be anything but a desire to trade. Nor should this intuition be in opposition to classical analysis. Generally, after a series of losses, the trader will feel frequently hit by a form of "curse". From there, after an analysis, he will say "I will still be wrong", so he will have the intuition that the market will return the wrong way, and so may be tempted to do the opposite of this that he should have done. Certainly, this type of behavior is totally inept and seems surely impossible. Indeed, it does not often lead to reverse positions but very often the trader will not take a position while he will have an input signal subject to "felt" that the market would turn around. This clearly limits his earnings.


In conclusion, we will say what it is better to do. First of all, have a basic strategy and stick to it very rigorously. Then, by dint of seeing graphs, when one begins to have subjective indications (intuitions), instead of trading on them, one will rather try to rationalize them. That is, try to identify it solidly, put conditions on it. So we can incorporate it directly into the strategy already in place. This will avoid forms of overflow as well as cognitive risk.

Growth: is it a good indicator of a country's economic situation?

We talk about it every day, growth, or rather recession lately. According to the politicians, a good president is a president who will have mandated during a good phase of growth. By hammering it, one would end up thinking that the balance of a country resides only on that point.


Some explanations


Before going into details, we must start by situating things. That is, what is growth? Growth is the relative change in real GDP from one year to the next. This leads us to ask ourselves, what is real GDP? This is the amount of wealth produced by a country's economy for a year at a constant price (a reference year is used to set the price). In other words, growth is the additional creation of wealth from one year to the next. So when we say "growth of 1%", it means that this year, we will have produced 1% more than last year.


In addition to these generalities, the nominal GDP is only the quantities produced multiplied by the price of these. Sounds pretty light as an economic indicator, right? It does not take into account anything other than quantity. The best in this list are not necessarily the best, China, for example, the second world power. Yet per capita, it is the 93rd just ahead of Bosnia and Herzegovina according to the IMF. Despite strong growth for more than a decade, the share of wages in China's GDP is declining. This does not necessarily mean that they fall, but that they increase proportionally less quickly than the rest. As GDP is a rather vague datum, so is growth. It's just a speed, comparing the growth of China to France has no interest. We are amazed to see such figures in emerging countries when we find it difficult to find 2%, but these magnitudes are necessary to view the observed levels of inflation.


So, growth is a very generic term, widely used by politicians but ultimately not very much in itself. Because we do not know the other parameters that are for example inflation. Comparing levels of growth is useless in different economic structures, we can compare France and Germany, but it is inept to remain wide-eyed before the double-digit growth of emerging countries.



[caption id="attachment_1659" align="aligncenter" width="225"]Growth Growth[/caption]

The decay model


It is also very popular to be against the current system. We are of course thinking of the alter-globalist movements advocating, on every occasion, the model of degrowth. Today, a phase of the recession (negative growth = decline in the production of wealth from one year to the next) is perceived as a particularly harmful period. And for good reason, according to Okun's law, there is a negative relationship between the growth rate and the unemployment rate, that is to say, that the more the growth increases and the more the unemployment decreases. Which is rather a good thing? Conversely, during a recession, unemployment increases.


Another problem with the model is demographics. In fact, it is easy to conceive that in a country where there is less and less population, the creation of wealth decreases. But when the population of a country increases, it goes without saying that the creation of wealth must increase. Otherwise, per capita wealth will necessarily fall.


In conclusion, without looking very far, the model of economic decline seems rather unenforceable to the economy of the current countries. On the other hand, as a measure, growth or even GDP never really reflects the economic reality of a country. Many indicators have been developed in recent years, however, it seems that nothing can dethrone the indicator of GDP in the list of investors.

Is Gold a Safe Investment?

For several months, gold has continued to climb, and accelerating with every bad announcement. The latter has played its role of refuge in these difficult times. However, the last weeks have been marked by a fall in the price, we will see why and what prospects are to be expected for the next few months.


A bubble bursting


Beyond a simple drop, it is a collapse that has been found, in just one month, the price went from $ 1,900 an ounce (a historical high) to less than $ 1,550 ( shade in session). This brutal correction is explained by two reasons. We easily noticed that the rise preceding the break-up, was almost linear, almost no phase of decline. No doubt, it was not only the investors anxious to preserve their capital in this movement, a large part of the actors was of course speculators of all kinds. Difficult not to yield to such ease, the desperate situation in Europe or the loss of triple-A of the United States, are a blessing for speculators.



[caption id="attachment_1657" align="aligncenter" width="310"]Gold a Safe Investment Gold a Safe Investment[/caption]

Next, to the bursting of the speculative bubble, another reason explains this fall. Investors, not speculators, who had chosen gold as a safe haven, were forced to partially liquidate their positions. In effect, they need cash to cover losses on other assets or repayments. As a result, they may also be judged speculators in the sense that, not looking for gold only as a guarantee of value but also as a hope to get out of the situation with the acceleration. Reacting like speculators, it goes without saying that in wanting to obtain the highest value to cover their additional losses, they wished to cut positions at the highest.


In fact, in this context of doubt, what has happened is that at the slightest hesitation, the courts have totally tumbled. This seems quite logical in the sense that speculators were waiting for this to come out, this created a phase of hesitation over a few weeks. In normal times, the trend would have to resume, but it is nothing. Seeing the market consolidate, investors in turn (after a failed test of a higher) liquidated their positions, which had the effect noted.


Low competition in front


On the safe haven side, we can distinguish three types: metals (gold in particular), currencies and national bonds (claims of nations). It is clear that today, bonds are no longer a safe haven, especially when we think of the debt crisis in Europe. Indeed, by holding an amount in obligation, if the country fails, we lose everything. Then, in terms of currencies, the problem is that the prices are too volatile in time. In addition, monetary operations by central banks can hinder a long-term perspective (money can be duplicated at will). Faced with this, gold is a safe bet, no risk of default and supply is stable (we cannot replicate gold contrary to the currencies).


In addition, the stock of natural gold tends to decrease over time, making it a safe bet in the long run. However, there is still a lot of gold in the basement, but high-density sources are much rarer. It will, therefore, be necessary to treat low-density soils, and thus to increase the production costs, thus the price of the yellow metal.


Even though the price of gold has been up and down in recent times, it seems that in the long run, the trend is very likely to be bullish. However, the very powerful correction movement could continue. From $ 1500 an ounce, the yellow metal could become an interesting investment.

Wednesday, June 20, 2018

Have remedies for the crisis really been effective?

For more than three years now, the West has been in crisis. Faced with this, the political agents, agreeing rather little on the means, put in place different strategies to face it. Reform of the financial system, economic recovery, and now widespread rigor. Much praise and criticism from each party, however few objective findings.


The regulation of the financial system.


Finance, always placed on the dock since the situation becomes unstable. Thus, the anti-financial crisis measure of the twenty-first century was, of course, the limitation of bonuses for market operators. Supported by unites by the European states, Brussels voted in 2010 a law to regulate the often extravagant remuneration of traders. Quite generally, the premiums will be much less liquid than before, 50% of the bonus will be allocated in a conditional manner likely to be repatriated in case of banking difficulties. The idea being that in case of crisis, the trader will have to pay before the customer. Once again, a moral measure that fits poorly in the context of a highly globalized market finance.


The first negative consequence remains the loss of competitiveness of financial institutions vis-a-vis their American or Asian counterparts. The reason is none other than the high elasticity experienced by the job market in the field of high finance. Another reaction, instead of reducing only the bonuses, the banks made up for the loss of this one, by an increase of the fixed salary. As a result, wages become much more rigid and can hinder the high flexibility of employment in the sector. In short, a very demagogic measure especially ... instead of reducing only the bonuses, the banks compensated for the loss of the latter, by a rise in the fixed salary. As a result, wages become much more rigid and can hinder the high flexibility of employment in the sector. In short, a very demagogic measure especially ... instead of reducing only the bonuses, the banks compensated for the loss of the latter, by a rise in the fixed salary. As a result, wages become much more rigid and can hinder the high flexibility of employment in the sector. In short, a very demagogic measure especially ...


Another measure, much more punctual, nevertheless not necessarily more effective so far, was to prevent the short sale on Cac40 banking stocks. In absolute terms, the idea may seem interesting, however, in practice, it turns out to be completely inept. Several times, recently, or during the 2008 crisis, the banking sector has been clearly jostled by speculative movements. Faced with this, many countries are choosing to prohibit short selling (a technique to realize capital gains on the loss of value of a security). Thus, no one could voluntarily engage or speculative purpose these titles in the turmoil.


The problem lies in the fact that in finance there are more ways to achieve one's ends than recipes for preparing a foie gras. Indeed, let's say that despite the ban, we wanted to short all the banking stocks, it would be enough to find a product reproducing the evolution of the Cac40 (CFD for example), to enter long on it, and also to short all the values that compose it apart from banking stocks. Thus we would benefit our positions from the difference corresponding to the evolution of banking securities, of course, this is only an example and many other methods can be used.


As regards the possible tax on financial transactions recently proposed jointly by Germany and France. We have already talked about it recently, but the measure is still more absurd than the two previous ones. As financial products are perfectly substitutable goods, the markets that supply them are completely competitive. In this sense, penalizing transactions on a market, all players will have other desires than to leave it to look elsewhere. Generating a tax on Euronext and on the secondary market will only have the effect of sharply reducing trade.


The method of printing money


We are of course talking here about the monetary strategy put in place by Ben Bernanke in recent years. Quite modernly, we call this "Quantitative easing", translate as "quantitative easing". Some time ago, we would have talked about printing money. It is a weapon that we could call the last resort.


Before applying this technique, the central bank begins by lowering its key rate. Given that borrowing and savings rates are indexed on them, normally a fall in this rate should encourage credit, further disadvantage savings and consequently encourage consumption and investment. The Federal Reserve has applied this well, currently, the rate is between 0 and 0.25%. The limit of this method is simply that we can not lower the rate below 0. From there, it is possible that the maintenance of the lowest rate is not enough. Despite this, US growth could not take off, so the Fed decided in 2008 to launch QE1, a massive buyout of bankrupt assets of banks to the tune of 1400 billion dollars. In addition,


The result is considered bad by many economists, however, we are not able to know the hypothetical situation in which the Fed would have done nothing (maybe the US would have known much more trouble to generate growth in which case). It is, therefore, necessary to qualify the opinions, strangely it is customary to blame the directors of current central banks, yet the only responsible for the crisis remains Alan Greenspan (successor to Ben Bernanke). What is certain is that QE1 and QE2 have helped maintain strong liquidity in the economy and thus avoid a deflationary cycle (which they experienced in 29). However, the blade is double-edged, monetary creation inevitably causes an increase in inflation that could be paid in the future.


The big loan


Good solution 80 years ago, worse for this decade. At one point, our current president has obviously felt invested by Franklin Delano Roosevelt, though with perhaps less lucidity. Feel it in a rigorous mood these days, it has not always been. A big loan, a kind of new deal in the French, as if the weight of the debt was not enough, we add ... The Keynesian plans, it is effective, but only when the State is in the ability to finance them. This loan will have cost a total of 35 billion euros, while today the state seeks to pick a dozen to reduce its deficit. The French government is sailing in the fog ...


And the rigor ...


This is a word we would not have known if Western governments had seriously steered their respective countries in recent years. This may be the best indicator of seriousness in politics. We have already spoken, but the rigor, as we know it, seriously affects growth. On the one hand, the state hopes to generate 0.3% annual growth with its large loan and another it does not give the impact on the growth of its phase of rigor. The moral idea (maybe even demagogic) of taxing tobacco, alcohol and sugary drinks is very good but in terms of consumption (and therefore growth), it is very bad.


The rigor, evident today, it should have been yesterday, what is a policy if it is not rigorously conducted. This is a quality, the politics of the cicada only pay when the winter is not too rough. Now, the states are of course in deadlock and therefore in the obligation to sacrifice a share of growth to ensure their signature.


In conclusion, as you can see, it seems to me that few measures have been effective during this crisis. Maybe the worst is yet to come, however, governments are already struggling to cope with storms, what will they do in the storm?

Does the golden rule deserve its name?

The right makes an evil a good, it seems that currently the liberal ideology feeds the worries related to the debt. As a result, Nicolas Sarkozy's program has a good chance of landing on a background of rigor. The measure that best embodies this ideology remains clearly the golden rule, mentioned a few months ago. We are nonetheless in a position to ask ourselves if this famous rule fits well into a serious policy or rather into a political maneuver.


The golden rule, what is it?


It is a constitutional bill that will aim to balance public finances in three years. The idea did not start today, the Prime Minister had already announced last summer that such a measure would be put on the table shortly. The main idea is to guarantee France a sovereign policy throughout the ages. In fact, since the risk of default by the States is no longer considered as zero, they are plagued by the diktat of the financial markets. In this sense, the governance of the affected nations must necessarily be aligned with the requirements of the lenders, in the event of failure, bond rates would have to rise. This principle of canceling the deficit would enable France to guarantee its signature in the long term.


This measure has a price, however, if the nation gains sovereignty, the parliament clearly loses power. If economic measures are enshrined in the constitution, there will necessarily be a form of disregard for parliament. Indeed, to force the assemblies on such measures is to consider them as incompetent, the legislative power will, therefore, be reduced. Thus, the constitutional council will be able to validate or not laws according to their compatibility with the public finances. In this way, the laws voted will be subjected to a subjective verification. In addition, this golden rule quite clearly limits exceptional measures, such as stimulus plans. If it had existed before, the state could not have helped the banks in 2008, as a result, the crisis would surely have been harder. We must not do excessive rigor.


This law would be a form of a framework that would encompass both the state's finances and those of social security. Revenue floors and expenditure ceilings are set, if a law goes out of the straitjacket, it can be censored by the constitutional council. Another principal will be included in the law, the government will have to commit in advance to inform the Parliament of its positions that can be held in Brussels. The law was passed in the National Assembly and Parliament on July 13. However, for this to be part of the marble constitution, three-fifths of the Congress should be agreed. This is obviously not the case at the moment in view of the socialist positions.


An economic reform yesterday, a political weapon today


Basically, this idea was born from a good thought, since it seems that the head of state uses it for purely political purposes. The idea is to place the PS in a tight grip, the goal is to put the socialist positions in contradiction with their words, which will have the effect of discrediting them. The trap is very well thought out, the goal is to put all the socialists out of competition for 2012. Even if this law limits the power of the parliament, that it hampers the emergency interventions of the State, the leaders of the UMP continue to hammer the motto of a measure of common sense calling for responsibility.


Continually and in various ways, the right calls the left to abound in its meaning. The PS was clearly in favor of reducing the deficit to 3% in 2013, albeit only informally. By refusing this law, they are in contradiction with their own program, some try to qualify this by passing their campaign as reducing all deficits (budget, social, cultural, ...). But it is very difficult for them to stay united in this regard.


The right tries repeatedly, to discredit the left at the European level. The Germans already have a golden rule, other countries are putting them in place as well. The refusal of the PS is likened to irresponsibility by the right. For Nicolas Sarkozy, it would surely be preferable that the law does not pass, indeed it could easily challenge the Socialists. In addition, he still has some cards to play. It is also very likely that the President of the Republic calls for a meeting of the Congress to vote the law, the event will, of course, be very media, in case of refusal from the left, the majority in place do not hesitate to berate them and accuse them of lightness.


In conclusion, this golden rule, based on a good moral background, remains today especially a political weapon used by the power in place. The main purpose of this program is to guarantee the long-term French signature on its debts. It is likely to considerably hamper the emergency measures that may be necessary in the event of a crisis. In France, unlike Germany, the candidate of rigor loses in general, the bet of the president remains very bold.

What is Quantitative Analysis?

Of course we know technical analysis, an empirical predictive method based on the observation of graphs. Otherwise, the more cultured ones also try out the fundamental analysis. Starting from a hypothetico-deductive reasoning on the economic data, they manage to elaborate a future scenario for a sector, and from there, can invest. Besides, there is however a third type of analysis, a technique based only on mathematics, we are certainly talking about quantitative analysis.


How does it work?


This is a thorny question, as we said in the introduction, quantitative analysis is based on mathematics. Finance is not the only field on which this science is posed, it is a set of fairly generic methods for quantifying different non-measurable data. In finance, one must quantify the risks or in other words the probability of losses. Faced with this, the technical or fundamental analysis does not allow any quantification, it is always possible to advocate a scenario and its opposite, in quantitative analysis, it is impossible.


Without going too far into probabilistic concepts, financial mathematics is based on a fundamental hypothesis, a kind of axiom: courses follow a Brownian movement. We are now inclined to ask just what a Brownian movement may be. Also known as the Wiener process, this movement describes the displacement of a large particle immersed in a fluid consisting of many small particles. Here is an example of Brownian motion



[caption id="attachment_1650" align="aligncenter" width="581"]quantitative analysis quantitative analysis[/caption]

Difficult to deny the resemblance between the evolution of the price of a security or a currency pair and this graph. This modeling allowed Black & Scholes to find formulas to preach the different options and warrants, otherwise, the derivatives market would not exist.


How can we learn this?


Self-taught, it is almost impossible, finally, everything depends on the level of study already acquired but for someone who has not practiced mathematics in the higher, it seems difficult to envisage. However, for those who already have a good foundation or have the endless motivation, it is possible to get here and there, college courses in mathematics.


Quantitative analysis is a discipline associated with a very closed environment, it is extremely difficult to find courses in financial mathematics. In order to obtain such things, it is often advisable to contact university professors directly. Generally speaking, these people are quite generous in their knowledge and are happy to send their personal courses.


A particularly professional way


Already, the profession was developing strongly a few years ago, but the crisis of 2008 accelerated the dynamics. Indeed, risk management is now at the heart of all the trading rooms, the best in this area are of course the quantitative analysts. Financial institutions and especially banks are very fond of these people, you should know that in London, the vast majority of quantitative analysts are French. Indeed, in France, teaching in mathematics remains of good quality and allows a large number of students to find a good job in the Channel.



It will, however, be much easier for French students to be hired in the United Kingdom than in France, indeed, the Anglo-Saxon recruitment model allows formations of all kinds to try their luck in the field.



In conclusion, it is a closed way to the general public, it is almost impossible for amateurs to learn quantitative analysis. However, for those looking for a career in finance, it's a very good way to take, as much as it is necessary to appreciate a minimum the maths.

Tuesday, June 19, 2018

Do the rating agencies run the world?

Already last year, the European states rebelled against the repercussions caused by the brutal lowering of the ratings of the Mediterranean countries. Today, we thought the storm was over, but as we all know, recently Standard & Poor's did not let go of the United States.


Why is the note of sovereign states so important?


State or corporate debt ratings provided by rating agencies are used to assess credit risk. The lower the rating, the greater the risk of default. In this sense, the rating provides investors with an indication of objective reliability for their investments.


As we know, the risk is paid. The riskier the investment, the more it is paid, it is one of the basic principles of borrowing and saving: the cost of risk. Thus, the rating agencies have the role of quantifying this famous risk, the rating is the result. As a result, the lower the rating, the higher the risk, so the higher the interest. Of course, it goes without saying that countries prefer to borrow at the lowest rate, and therefore have the highest rating.


For the first time, we were able to experience the effect of too much debt in a struggling economy. The effect is noticeably disastrous, of course we are talking about the case of Greece. As agencies degraded the rating, long bond rates climbed. Hard to believe that these could have reached more than 17%, at this level we could rather talk about wear rates or just revolving credit ...


Another parameter to take into account is the residence of the debt holders in question. Indeed, if the national debt is heavily held by foreigners, interest rates will tend to fly much faster. For example, Japan has been in a very difficult situation for several years, its rating with S & P is only AA- and yet its bond rates are close to 0. In the same way, despite a very bad economic situation the rates of interest on the Italian debt did not react much because it is owned more than 60% by Italian residents.


Some criticisms concerning agencies and their image


Each month, the agencies degrade the rating of some states, everyone complains and governments on the front line. By discrediting the agencies, we try to minimize their impact. To believe the criticism, it would be necessary that each country of the world is equipped with a triple-A immutable. The agencies note, it is their work, they calculate almost nothing, they use the OECD or IMF figures to base their analyzes. According to Timothy Geithner, S & P was wrong by 2000 billion in its calculations, so it is the IMF that would have been wrong 2000 billion ...


Agencies are being caricatured, everywhere in the media, they become "the modern financial devil". Despite significant economic power and diversity, the situation in the United States is utterly deplorable. When analyzing the economic situation of a country, it is not enough to say that the United States is the first world power to say that the situation is good. We do not compare the countries, we compare the situation of a country today compared to yesterday, it is the very basis of the growth indicator. In this sense, we see that at this time, the nation of 50 states is really not good. Despite a very flexible monetary policy, the economy is not moving forward, unemployment figures are very clearly skewed (15% rather than 9% in reality) and bad at the same time. In addition, recent events show a political power that is disunited and unable to fight the debt. Standard & Poor's has lowered the rating, it seems to me that it could even have done before to the views of very passable statistics ...


A clearly black point for the agencies is the number of analysts. Standard & Poor's has just 100 analysts to rate 136 countries. The lack of qualified staff seriously affects the image of the agency, which has less than one analyst per country.


Another popular myth that is often heard these days is the speculative conspiracy. That is to say that the agencies agree to plunge at full speed a country and allow different funds to speculate down by different methods (CDS, ...). In general, agencies report downgrades at favorable times. For the United States, S & P chose the Friday night after closing to announce its degradation, if the agency wanted to make a real crash, she could have sent the news at 14:30 midweek. On the contrary, the one was careful not to send the markets by the bottom leaving the big leaders, the time to find solutions during the weekend ...


Rating agencies do not lead the world, they only show the results of the policies of each country. The nations of the world are still sovereign in relation to the agencies. In the case of a loss of reliability of the debt, if it is strongly foreign, then indeed the domestic policy loses its power. But the lost power is not given to agencies, it is to foreign investors that it comes, we must not be wrong, it is the lenders who exert the pressure, not the agencies.

How to find the best advice on Forex

For several years, advice on Forex prices or other financial markets is growing. Nevertheless, it should not be misunderstood, a council is not a signal. Let's see today how to find the best sources of forex advice.


Who gives the advice?


Many are the entities providing advice, the great nuance of the signals, the advice is usually free. To give some examples: brokers, financial newspapers, information and analysis sites, individuals via forums and blogs, ... In short, everyone can give investment advice.


What is a forex advice?


As noted above, despite a similar character, the board strongly dissociates itself from the signal. The signal is an instantaneous input information comprising all the parameters for the position taken, that is to say: entry threshold, stop-loss, take-profit and incidentally complementary indications such as the breakeven threshold. In addition, generally, the signals are characterized by short-term positions.


Faced with this, the council becomes in every way opposed, the latter is none other than an analysis embellished with a clear opinion on the evolution of the course of a pair. The author of the board chooses its degree of precision, but like the seers, the vaguer the information, the higher the success rate. In general, the content of advice does not exceed the meaning of the trend to come, and this often for an indefinite period.


How to know what credibility to bring to the suppliers of advice?
There are no rankings or statistics for the advice provided. In general, the sufficient bad faith of some is enough to tarnish the image of the whole community. It is also necessary to know how to dissociate the bad faith of the incompetence, many are those who think to help others whereas they do not reach even their level.


To be able to give a critical opinion, we have to separate the different entities. As far as brokers are concerned, the advice is often offered by professionals and therefore in essence, competent people. Nevertheless, we can still remember the famous conflict of interest that links market makers with customers. Indeed, if the broker does not cover himself in front of his customers, he will have every interest to lose them and thus to mislead them with bad advice. We must seek advice from brokers no dealing desk or so deemed serious.


In the case of newspapers, very often we find investment advice on stocks but also on the Forex. It is customary to see advice directly on a currency and not on a cross. The tendency of financial newspapers remains to practice fundamental analysis, the indications are thus data of medium / long term. In essence, the newspaper will wish for the best possible success, so it will be necessary to expect vague recommendations that are prone to remain unchangeable in the consensus.


Turning now to the publications of specialized sites, clearly and before further supporting our remarks, it is certain that this is where the advice will be the best. In addition, it is necessary to rely on the advice offered by competent people. Therefore it is desirable to privilege sites recognized to avoid the advice of amateurs (which can, however, be very good). Many beginners in trading who, failing to win on the markets, embark on the creation of a website in order to generate affiliation gains. In this sense, it is necessary to learn about the skills of these people, because despite the crowd of beginners, there are enthusiasts who, before wanting to become rich want to share their knowledge.

Discretionary trading and automatic trading: which will it be right for the other?

Difficult to answer to this problem which animates many debates for several years. This is why we will support the different points of view in an objective way and thus be able to draw good conclusions.


We all already have a subjective opinion on the issue, the supporters of automatic trading will tell us that through a program, there is no psychological bias to take into account. Supporters of discretionary trading will argue that an expert advisor cannot easily adapt to different market conditions. The two opinions do not contradict each other, they are complementary. As a result, there is no point in putting one side or the other aside as both support their theory with broadly valid arguments.


Automatic trading


In recent years and more and more currently, we find a plethora of expert advisors for sale on the market. Nevertheless behind sumptuous backtests lies often deception. What many beginners frustrated with discretionary trading are unaware of is that it is possible to skew a backtest using optimization. In addition, the backtests offer only a limited vision of the performances of an EA. To validate these performances, it is necessary to analyze a live test (forward test).


Moreover, the automaton confers numerous advantages, in particular, that of not demoralizing itself in front of losses and to keep a constant behavior. It is also not subject to fatigue or absence, ... In short, if it is well built and regular, it can become a very relevant tool for people who do not fully enjoy their free time ( employees, students, ...). Notwithstanding, this constancy in the actions of the operator has a cost, that of not necessarily adapting well to unfavorable trading conditions. Clearly, if an EA is specifically designed to trade trend, it will be subject to strong successions losses in a market range.


The best way to ensure that an EA follows a strategy that is considered valid is to program it yourself. The task, although seeming obvious to the regulars, is no less important. Indeed there are quite a few tutorials on the net, the programming is not necessarily simple. The creation of a PLC also requires programming skills, sound knowledge of the financial markets, technical analysis and risk management.



In addition to the work of creation, the longest surely remains to test the automaton, first through the backtests and their analyzes, then by a long live tracking (live or forward) on different assets simultaneously.



Discretionary trading


Much more discussed in the discussions and affordable in practice, discretionary trading involves trading "manually". In terms of knowledge, it is not necessary to have a lot to get started. You just have to know how to manipulate a platform and some notions about the financial markets. Nevertheless, it takes a lot more to win, and especially experience. Trading is not just a matter of knowledge, it is a practice that gives rise to success.


Moreover, as we mentioned earlier, the trader will necessarily be confronted with cognitive factors, for example, loss aversion or risk aversion which are the two main problems of the novice trader or not. It is said everywhere that you have to "cut your losses quickly and let your gains run" is an important rule, but is rarely applied rigorously by traders. Many will tell you, that they trade with a big ratio, that is to say, that their earnings are always much higher than their losses. Nevertheless, the ratio remains constant, that is to say, that it certainly cuts its losses as it should, but we do not let fly the gains. "Let your gains run" means that the



Despite the clich├ęs, discretionary trading is not easy to understand. In short, it is necessary to know how to predict, to invest intelligently and to control oneself in order to hope to realize long-term capital gains.



In conclusion, we will compare two points of view. In summary, automatic trading is particularly well suited to people who do not have much free time during the day, or who do not want to hang around the computer all day. In return, you have to make the effort to learn to programme, then spend hours programming and testing strategies. It's a very long and often painful job but it can be very rewarding.


On the other hand, discretionary trading can also pay off. But in the same way, it is long to master and requires a lot of work on oneself that many traders do not do. So many of them find themselves quickly on the straw. In the end, it is very difficult to favor one approach over the other, because in all cases the work is necessary.


Although some predict that the machine will sooner or later overcome man, given the results of many commercial programs, this does not seem to be the case at this time. Nevertheless, some seriously constructed EAs produce very good performances. Difficult to decide, usually, trading enthusiasts try to master both. The perspectives offered by each are impressive.

Monday, June 18, 2018

What consequences on the price of a barrel?

Nobody will be able to ignore the social movements of the North African countries and the Middle East. Whether it is Tunisia, Egypt or Libya, authoritarian regimes are giving way to democracies.


Okay, but what economic impacts?


The main malaise is located mainly in the oil countries. It is hard to deny the importance of the stability of oil production in these regions. So far, only Egypt and Tunisia have succeeded their popular revolution, these countries do not really have a big importance on the market of the barrel. The worry that has shaken the financial markets in the last few days comes from the potential contagion. Indeed, recent strong movements are mainly due to fears of political instability in Libya. Unlike other countries in North Africa, Libya is rich in oil and an integral part of OPEC. A decline in production in this area would impact heavily the price of crude as well as other correlated assets like the dollar ...


According to experts, the market is still focused on Libya, and the protest movement does not seem to be weakening because according to Italian diplomacy, the eastern part of the country is no longer under the control of the authorities. Significantly, all ports are blocked, so no routing of crude is possible. Libya accounts for 2% of the world's oil production, it looks a little like that, but stopping the export would involve a rapid surge in prices.


Nevertheless, other OPEC member countries will normally be able to offset Libyan crude oil production. However, the quality would be, according to some less good specialists, as a result some refining plants would not necessarily be able to process a crude too rich in sulfur. In these conditions the price of crude would not necessarily be too much upward but that of derivatives (diesel, gasoline, ...) yes.


According to a JP Morgan analyst, Saudi Arabia promised that OPEC member countries would increase their production. Notwithstanding, in the absence of clear information on the variation of Libyan production, no decision can be taken. The direct consequence is the emergence of a phase of production delay between the current moment when Libya is reducing its production and the moment when other countries will try to compensate for it. Therefore a rise in the price of the barrel almost inevitable.



Even before the release of official figures, many oil companies have admitted to having temporarily halted their activities. This is the case of Total who decided to repatriate most of the staff, from Spanish Repsol or even from the Italian group ENI.



The Libyan crisis seems able, despite difficulties, to be regulated by overproduction of other exporting countries. The real concern is that these same countries are mostly located in the Middle East and are often under authoritarian regimes. If the crisis spreads to these and the productions are stopped in these regions then nothing could stop the price of a barrel ...


On the other hand, in the face of such a geopolitical tumult, economic indicators are losing their seats and the safe haven is resurfacing. This is the case of the Swiss Franc, which is rising against other currencies. In a rising background of violence, the Swiss currency has good upside potential.

Friday, June 15, 2018

Do you really know the Stop Loss in Forex Trading?

It is obvious that we must constantly repeat: the presence of Stop Loss on current positions for a trader is comparable to the presence of the parachute for a person who has just jumped from a plane: do not have can be fatal! Game over ...


You have all read, heard and perhaps even experienced that each open trade must be accompanied by a worst-case scenario, which is materialized by this famous Stop Loss. The worst happens when the stop loss is hit: not before or after! The whole game is the determination of this worst ...


These stop losses can therefore be set according to different modes. I will here classify them in a very subjective way, starting from the least desirable for you to the most preferable. This is only my opinion. Feel free to react if you have other techniques, if you disagree with mine or if the order of preference that I suggest is not appropriate for you.


No real stop loss and at best a mental stop loss


What is a mental stop loss ? It is a barrier that you have fixed in your head (ie it exists only in your mind and nowhere else) and that you may transform into real action when it is affected by lessons.


Come on, we all did it, right? And in most cases, it does not work, does it? Why ?


Because our imperfect and fallible human brain does not like to be wrong. What happens then, in most of the time, when the course will reach this level of mental stop? There is a very good chance that you will not really activate it because you will go into "hope" mode. Listen to the little voice that speaks to you: "You're not wrong, it's going back up, it's on ..."


The mental stop is a perilous technique, one must be aware of it. For example, this technique requires that you are ready to intervene as soon as the level is reached, whatever the conditions in which you are. In other words, at this moment, any failure is prohibited, whether it comes from you (your availability, your own mind or your will) or external conditions (your internet connection, your trading platform, your PC, ... ).


But it's better than having no SL at all, neither on the platform nor in the head ...


No formal Stop Loss defined in advance because you are in "Stop and reverse" mode


This mode makes you always in position and alternate according to an indicator. For example, you may decide that this will be the signal from the MACD that will serve as an indicator to follow (strategy not to do in reality, but that I give just to illustrate). You will thus open a position as soon as your signal is positive, and you will close this position and open a new one in the other direction simultaneously, when the signal becomes negative, whether your position is winning or losing.


Thus, with each passage of the MACD by zero, a stop loss or a take profit (as the case may be) is thus activated in this way of doing things.


Stop Loss only based on a level of risk


Say you have a capital of 10,000 euros, you want to open a trade of a lot, and you do not want to risk more than 200 euros (2% of initial capital). This requirement will set a SL at 20 pips for a standard lot (10 euros the pip), the calculation is simple.


What you have achieved is good, and this is often indicated in Money Management best practices. Only here, there is better ...


A Stop Loss determined technically by the reality of the courses


This will determine your SL level using technical indicators that will reflect the realities of the course, and then, depending on your Money Management, determine the size of your position.


This is very different from the previous point, in the sense that you do not fix your SL on a simple mathematical calculation (function of the capital, the risk and the size of position) but on a technical reality of the courses. Moreover, it must be emphasized, in terms of money management, that you take the same risks as in point 3.


For example, there are two indicators that I particularly like to set Stop Loss:



  • the Average True Range ( ATR ) which is an ultra-classic indicator that gives a good idea of price volatility. Taking between 2 and 3 times the ATR (average of 5 to 10 candles) usually gives good results (the course can breathe ...)

  • the last highest for a SELL (or lower for a BUY) with a margin of a few pips, to respect the famous principles of the Elliot waves (as long as the highest and the lowest are the highest, the trend is positive). It is enough that a lower one makes a lower for this tendency is questioned


It is also strongly recommended to check that these higher or lower correspond to supports or resistances of the course. If so, their SL function will be further strengthened.


This last way of doing things is, in my opinion, complete because it takes into account:



  • the reality of the market by taking volatility indicators or psychological thresholds (higher, lower, supports and resistances)

  • a serious money management, with the determination of the size of the position to be opened according to the calculated SL and the risk taken


Two things that it is wise to respect if you want to last on the financial markets!


And you, what is your experience in managing Stop Loss?

Management of doubt in trading

When an individual goes to the financial markets to invest actively, for example on the Forex, doubt can seize him at any moment, and this can, unfortunately, prevent him from taking the right decisions. It must be clear: Doubt is part of a trader's life, whether he has a month or ten years of experience.


Common doubt situations


Let us take some examples of situations where phases of doubt can arise (any resemblance to situations that really existed would be pure coincidence ;-)):



  • On which Forex pair today will I enter position? On which TimeFrame will I intervene? What strategy will I adopt?

  • The Forex pair on which I have positions is super calm. Do I have to close and go on another pair or wait for the squeeze phase?

  • I have position signals sent to me. Do I have to go now or do I have to wait for confirmation of these signals?

  • I have a winning position and a great potential gain. Should I close it and if so, fully or partially?

  • I have a losing position: should I close it partially to limit losses or do I have to wait until the Stop Loss is hit?

  • I'm not in shape today. Should I stop trading for the day?


Perhaps you have recognized yourself in this inventory ... All these questions are normal and legitimate; and people who say they have never asked such questions in trading can be suspected of big lie!


Fight the doubt


It is quite normal to doubt: trading is primarily a risk management and in difficult situations, doubt can easily invade the mind of the trader. Doubt, we can not escape! What we need to learn to do is to master it so that it becomes an important aid in risk management. There are several ways to do this:



  • Build convictions by testing these strategies in demo, in different types of situations, on virtual accounts and trying to capitalize a maximum of experience. Keeping a journal is an excellent practice

  • Have a proven and tested money management and risk management. This point is in my opinion the most important technical point, far from the control of conventional or esoteric indicators giving the input signals

  • Know yourself by working on yourself (psychology is a component of trading that is essential and yet is completely neglected by most private investors) and knowing when not to go to the markets

  • Learn to recognize mistakes to progress. "What does not kill us makes us stronger!" Said Nietzsche. In other words, for a trader, as long as there is capital, there is life, and therefore hope ...


The best way to not lose money in the markets is not to go! Now, if you want to be active in the financial markets, you have to tame these moments of doubt that will happen suddenly, so that they are a source of progress.

Monday, June 11, 2018

Guide to Time Series Forecast Indicator

TSF, Time Series Forecast is a technical analysis indicator showing the dynamics of the last point of the trend regression line at each individual time. It sounds complicated, but in reality, everything is simple. The resulting line of the Time Series Forecast indicator is a curve like the Moving Average. Each point of this curve is nothing but the last point of the regression line for a certain period. The set of these points is the TSF curve. This is why the forecast of the time series is often called the "Linear Regression Slip Line" and/or the "Regression Oscillator".



[caption id="attachment_1623" align="aligncenter" width="560"]Time Series Forecast Indicator Time Series Forecast Indicator[/caption]

The TSF line, the Time Series Forecast (Forecast of time series) is considered by the method of least squares. With this approach, the smallest deviation of the indicator line directly from prices is achieved.


Externally, the TSF is practically indistinguishable from the MA with a short period. However, the fundamental difference of this indicator from the Moving Average is that it is more sensitive to the current price, is more accurate in its forecasts. If MA is the average value of the price for a certain period, TSF is the adjusted (weighted) price indices for a certain period. In contrast to MA, the forecast of the time series follows the schedule without lagging or almost without it. That in turn opens the possibility of more accurate, timely signals to actions with the trading instrument. Due to its nature, TSF is extremely sensitive to prices and, in practice, does not miss significant movements, which makes it possible to earn money in the market.


The logic of his work lies in the title. Look again: The forecast of the time series. That is, the indicator predicts how the market will behave, based on calculations for a set period. If it turns around, then the market will go in the same direction. Naturally, this is an ideal situation, in practice, there will always be false signals. The truth is worth noting, if you work on a large timeframe (a day or more), false signals will be significantly less than if on a small one.


Adding Time Series Forecast Indicator to the MT


The forecast of time series (TSF, Time Series Forecast) is not included in the standard equipment of MT4 and MT5 trading platforms. In order to add it, you need to copy the indicator files to the appropriate directory on your computer.


If you have MetaTrader 4. Open C: \ Program Files . Then find the file folder of the trading terminal there and open it. Go to the ... \ MQL4 \ Indicators directory and copy the TSF file / files, Time Series Forecast.


If you have MetaTrader 5. Open C: \ Program Files . Then find the file folder of the trading terminal there and open it. Go to the directory ... \ MQL5 \ Indicators \ Examples and copy there the TSF file / files, Time Series Forecast.


After that, start the trading terminal. Click "Insert / Indicators / Custom" . A list of indicators appears. Select TSF, Time Series Forecast.


How to use Time Series Forecast Indicator?


Trading under the Time Series Forecast (TSF, Time Series Forecast) can be done in different ways. It's only in your imagination. The easiest way is from the most reliable to use TSF as a signal line in combination with either the second TSF line but for a longer period, or with the usual moving average.


Deal to buy:


1. The TSF line broke bottom-up Moving Average of the longer period, we buy;


2. Stop Loss put on 3-5 points below the previous local extremum;


3. Close the deal when the price closed below the "big" moving average.



[caption id="attachment_1624" align="aligncenter" width="360"]Time Series Forecast Indicator Time Series Forecast Indicator[/caption]

For a transaction to buy the reverse terms.


A few simple rules in conclusion


Remember, there are no indicators on Forex that are not mistaken. Forecast time series (TSF, Time Series Forecast), like any others, requires confirmation of their signals. When building your own trading system, use several indicators.


Observe Mani Management. Never in one transaction risk more than 2 percent of your capital. This approach protects you from ruin and will allow you to earn consistently in Forex using the Time Series Forecast (TSF).


Clearly follow your trading strategy. If you need to open a transaction based on the Time Series Forecast (TSF) strategy, open it, fix the result, fix it, and it does not matter if you are positive or not. Only following the rules of the TSF, Time Series Forecast ("Time series forecast") "from and to" will make it possible to earn.


Download Time Series Forecast Indicator


You may download Forecast of the time series (TSF, Time Series Forecast) for MT4.

Saturday, June 9, 2018

Training of the main functions of MetaTrader 4

The trading terminal MetaTrader 4 is the main working tool of the trader. It allows you to trade in Forex markets, CFDs for metals, indices, commodities, cryptocurrencies, futures (depending on the broker and the specification for connecting your account).


With the help of the terminal, you can not only conduct trading operations, but also conduct market analysis, use automated trading programs, monitor the most important news, test your own trading strategies, and receive trading reports.


Despite the simplicity of MetaTrader 4, learning the basic functions of the trading terminal can take some time. Below is a description of the most common functions and operations in the terminal.


metatrader 4


To start working with MetaTrader 4, learning its basic functions, you need to open a demo account, and to work with an existing account - connect it to the terminal.


You can do this by selecting "File - Open Account" or "File - Connect to Merchant Account" in the menu.


The terminal consists of several main working windows (sections):



  • Market Review

  • Navigator

  • Data window

  • Working area (graph display)

  • Terminal


Quickly manage the working windows from the toolbar.


toolbar-mt4


All windows are configured both in width and height. They can be completely closed and opened at any time.


In the MetaTrader 4 terminal, training is necessary first of all for mastering the basic functions of displaying charts, analyzing price movements, selecting tools and trading itself. The rest of the functions are used after understanding the basic ones.


The most commonly used tools can be divided into 5 groups (see the figure above).


Group 1.


mt4 graph


Displays the type of graph. Most often when displaying charts, Japanese candles are used. However, in some cases or because of the habit, traders use a bar chart or display prices in the form of lines.


Group 2.


Scale the graph ( ). It is important from the point of view of visual representation of trends or specific details of price movement. Too large scale does not allow to see the general picture, but too small - will not allow to see the current situation on a given time interval. Choose the optimal scale.


Group 3.


Tracking for current prices (mt4 tracking ). The auto-scrolling function is extremely useful if you follow the latest current prices. But when analyzing the prices of past periods (to the left of current prices), it's best to turn it off temporarily. The shift of the graph to the end allows you to instantly see the latest quotes.


Group 4.


It is an analytical block (mt4 analytical ). Here you can build support and resistance lines, trend lines, price channels, Fibonacci lines, and measure price movements.


Group 5.


Time ranges for displaying the graph, or timeframes (mt4 timeframemt4 timeframe ). Here you can set the time period for displaying the graph (from 1 minute to 1 month). The selected period will be displayed with a single candle, bar or dot on the chart.


The display tools also include chart templates (the "Charts - Template" menu). Templates are responsible for displaying the graphs, for example, a convenient color scheme. They also allow you to save all the analytical constructs for a particular tool. All templates are stored locally, so downloading them again will only work on the computer where you created them.


To analyze the price movement, you can use various indicators (the menu "Insert - Indicators"). One of the most popular indicators are moving averages (Moving Average).


The selected area is the working area for plotting. By default, 4 graphs are displayed. However, you can configure any number of graphs, including several graphs on the same instrument. This is useful when working on different strategies with the same tool.


Add a new schedule can be from the menu item "File - New Schedule". You can change graphics by dragging the desired tool from the "Market Watch" window to the workspace with the left mouse button pressed. You can change the size of windows at your discretion or organize them in the Window menu.


Working windows


The "Market Watch" window provides a quick understanding of the quotations of various instruments, as well as the size of the commission (spread) charged at the opening of the transaction.


The Navigator window allows you to switch between accounts, and also get quick access to indicators, advisers and scripts.


The data window provides brief information on the instrument, including opening prices, closing prices, maximums and minimums of the price, the number of contracts at the selected point. These data are also duplicated in the status bar at the bottom of the MetaTrader 4 window.


The terminal window (below) gives you access to your trading operations, account history, market news, buying robots and scripts, and terminal connections to the server.


Sometimes it's important to pay attention to the connection state (). The numbers in this window should change constantly, and the green-blue bars indicate the presence of the connection. Short-term connection ruptures are possible. But if red lines with "No connection" are displayed in the window, you need to check the connection to the Internet or restart the terminal.


Transaction execution


To complete the transaction, you must select the instrument by clicking and click in the top toolbar "New order" or the F9 key. Under certain conditions, you can make a transaction in one click from the chart window.


mt4 order


The Sell and Buy buttons allow you to place an order (order) for the broker to sell or purchase the relevant instrument. Volume is the number of contracts or parts that you conclude. Important items are Stop Loss (S / L) and Take Profit (T / P), when the values reach which your transaction will automatically be closed either with a planned loss in the first case, or with a planned profit in the second. When setting the S / L and T / P levels, you should pay attention to the spread and the current price, the changes of which may not allow you to set levels closer than the indicated spread. S / L will allow you to stop losses in time if the price goes the other way, and T / P - to fix the profit, if everything was in accordance with your expectations.


Detailed information about the operation of the Metatrader 4 terminal can be obtained in the terminal itself, by calling the help window with the F1 key.

Forex Trading as a source of income

Trading is trading in the international Forex market with currencies. While the main participants of the foreign exchange market are banks, anyone can trade with the help of specialized financial companies - dealing centers of professional participants of the securities market, in particular - forex dealers.


At the moment in Russia, forex trading is carried out through dealers.


At the heart of trading lies the classical principle of price difference. The trader - the one who trades - watches the information on the market, studies the dynamics of raising or lowering the value of various currencies, applies its knowledge of the economy and the world situation and makes transactions for the purchase and sale of one currency for another.



[caption id="attachment_1611" align="aligncenter" width="300"]Forex Trading money Forex Trading money[/caption]

For example, a trader analyzed the market and came to the conclusion that in the course of reforms in Japan, the yen rate will soon begin to strengthen, and, for example, the US dollar will weaken in the conditions of protracted debates on financial policy. In this case, he buys yen for dollars, while getting rid of the currency, which can lose in value, and buying one that, in his opinion, will strengthen.


If his forecast turns out to be correct, the trader will benefit - the yen in his account will rise in value, and from the weakened dollars he managed to get rid of before the price began to fall. In the future, a trader can withdraw his profit in the form of cash or a bank card.



Due to successful operations, the income from the foreign exchange market is formed: analyzing the situation and taking weighted decisions every day or even every hour (using Internet trading), a trader can correctly predict the development of the market and derive benefits from his forecasts.



Forex trading on the go or internet trading


All markets are subject to fluctuations, and financial - is by no means an exception. During the day, exchange rates on Forex change several times, responding to new information about the prospects for the economy in different countries of the world. Even just rumors of a major transaction could affect the exchange rate.


In this situation, any active trader is interested in the ability to immediately assess the situation and make a decision on a new deal. For this, solutions are developed for Internet trading, or currency trading via the Internet.


Internet trading is the accomplishment of trading operations in the foreign exchange market through a worldwide network. Functional use of the Internet does not affect the trading process in any way: trading is still carried out on the basis of statistical data and graphs, and all the same it is necessary to analyze the situation before making a decision.


At the same time, online trading has its plus: trading terminals are available for all platforms, including smartphones and tablets, which allows the trader to always be aware of the situation and be able to react to it. In fact, it eliminates the need to have a fixed workplace with a computer and the Internet.


On the other hand, do not forget about the purely technical aspect of Internet trading - at the time of loss of communication on tablets and telephones, the team can not go to transactions, which means that a good moment can be missed.


Trade in foreign exchange markets today has become accessible to all sources of income, which can be both basic and auxiliary. The availability of terminals, including on mobile devices, allows you to participate in trade wherever there is an Internet, and respond quickly to market changes. All this leads traders out of the category of narrow specialists and allows more people to try and succeed in this business.

Guide to Investments in the Forex market

Virtually everyone wants to increase their savings. When it comes to saving money, a bank deposit or simply putting money in a piggy bank for big purchases or for a "rainy day" comes to mind most often.


Despite the sufficient simplicity and reliability of such investments, such savings do not bring tangible income. Moreover, they are largely eaten up by inflation, that is, by rising prices. Simply put, the deferred funds in the future can be bought less than now. Bank deposit, as a rule, involves a low rate. Therefore, it will not be possible to significantly increase your savings. In conditions of mass "cleaning" of the banking sector in Russia, the reliability of such investments also causes some concern.


There are not so many alternatives to legal high-yield investments. They become even smaller when the investor has insignificant sums, and opportunities for earning are limited.


First of all, it is worth remembering that any high-yield investment is a risk. And it is from these positions that you need to consider investing in Forex.


The risks of investing in Forex


Like all investments, successful investing in Forex depends on three components: the reliability of the partner, the experience and knowledge, as well as the external conditions (most often the actions of the state).


The first two components of a successful investment in Forex entirely depend on you.


Investments in the Forex market


If you decide to invest in Forex, you should not rely entirely on advertising or the promises of unknown people when choosing a forex dealer, through which you will invest in Forex. Study its history and terms of service, read as many reviews about its activities, make sure you have the necessary licenses to work in the financial markets, see the ratings of forex dealers. Only after this, make a decision about investing in Forex with a specific forex dealer.


The acquisition of experience and knowledge in order to become a successful forex investor is entirely up to you. Knowledge is necessary in order to understand how to properly trade or invest in Forex. Experience is necessary in order to apply this knowledge and make a profit.


The external conditions do not really depend on your actions. But they need to be taken into account when investing in Forex.


Forex-investment. Investing in yourself


Strangely enough, the main obstacle to a successful forex investor is the investor himself, namely his emotions. Earnings in high-risk markets require analysis, which is necessary to minimize risks. Violent emotional reactions prevent us from assessing our actions on the market soberly, as well as the actions of other participants.


That is why in the Forex market investments are expressed not only in monetary terms, but also in the time that you invest in your training, the accumulation of experience and practice, the formation of your own rules and the discipline of their compliance.


All decisions must be made independently, and responsibility for their consequences should also be borne by you. Other people's recommendations and successes must be perceived through filters of their own experience and knowledge, testing them in practice.



If you want to earn, you need to learn how to accept and lose, that is, to gain experience even from negative cases of forex investment.



Analyzing together their positive and negative actions, as well as the positive and negative actions of other traders, taking responsibility for their decisions, you can succeed.


Opportunities for investing in Forex


The actual investment of financial assets in the Forex market can be carried out in several ways.



  • Trade yourself, which requires knowledge and experience, as well as constant market monitoring and news background. Here you decide everything yourself, accordingly, and the potential income can be higher.

  • With the help of a professional, create an investment portfolio that generates passive income if there is not enough time for self-trading. But this option may require a significant amount of investment. In addition, there is a risk of incorrect decision-making by a professional.

  • Transfer funds to the trust management of an experienced trader or investment company. This may also require significant financial investment at the initial stage. The manager must have a license to carry out this activity. With such investment of funds, an important role is played by the degree of trust in the manager. Here you should pay attention to a stable income. It should be borne in mind that this is a long-term investment, so do not expect quick returns and high incomes.

  • Use the services of copying transactions of successful traders. For the use of these services and the completion of transactions, as a rule, a commission is charged. Not all transactions can bring a positive financial result.

  • Rent a trading robot. Having adjusted the robot under the requirements, it is possible to carry out trade in an automatic mode. But it should be remembered that the robot algorithm may not take into account certain situations on the market (for example, news background). So completely trust the robot would be reckless.

  • Investing with PAMM-accounts. This is a kind of trust management. At the same time, trust funds are managed by several investors at once. The trader-manager commits transactions simultaneously both with his own funds, which are on the common account, and with the funds of investors. Despite protection from non-trading risks from the forex dealer, unsuccessful traders 'transactions are also reflected in investors' funds. There are also certain restrictions for such accounts, for example, restrictions on work in certain segments of the financial market. The activities of the manager should be licensed. However, this practice is not common in the Forex market. The investor also pays a commission to the manager for managing his funds.


In any case, no matter which method of investing in Forex you choose, you should closely monitor the market and the results of investments in order to minimize the risks of losing your capital.

Thursday, June 7, 2018

Guide to Donchian Channel Technical Indicator

Donchian channel is an indicator of technical analysis developed by Richard Donchian, a very famous trader from Wall Street. The indicator builds on the chart a classic channel for candle extremes for the period indicated in the indicator settings.


Donchian channel (refers to trend indicators: to build a reversal trading strategy on it, the idea is not very correct, it requires at least the presence of additional indicators in the system, for example, some oscillator. So, since we refer the indicator of Donchian to a family of trend ones, we will trade by the trend, that is, when the trend is growing, we will buy when the falling one is selling - the lines of the channel are some kind of levels or lines of support and resistance. a lot, but about everything in order.


 



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Note. In addition to drawing levels, the indicator also signals the volatility of the market! When levels approach each other - volatility falls, when they diverge - grows. This is important, because with low volatility there is a risk that soon there will be a sharp movement, and in any direction. It is not necessarily what is necessary to us, or to the one indicated by the indicator. Low volatility means that the market in the "thinking" phase, and usually after the market is determined (think as it should), a new movement will begin.


How can understanding the current volatility help us? It's very simple, we are trading trends, which means that when there is no trend, we do not trade. That is, when the volatility is low - there is no trend, then we are waiting. It's simple.


Adding the indicator of the Donchian Channel to MT


The Donchian Channel is not included in the standard equipment of the MT4 and MT5 trading platforms. In order to add it, you need to copy the indicator files to the appropriate directory on your computer.


If you have MetaTrader 4. Open C: \ Program Files. Then find the file folder of the trading terminal there and open it. Go to the directory ... \ MQL4 \ Indicators and copy the file / files to the Donchian Channel there.


If you have MetaTrader 5. Open C: \ Program Files. Then find the file folder of the trading terminal there and open it. Go to the directory ... \ MQL5 \ Indicators \ Examples and copy the file / files to the Donchian Channel there.


After that, start the trading terminal. Click "Insert / Indicators / Custom" . A list of indicators appears. Select the Donchian Channel.


Donchian Channel Indicator


Parameters of the indicator Donchian (Donchian Channel)


In the settings, you can select only the period by which the channel will be built. The higher the period you set, the wider the channel will be. Probably, do not increase it much, try to use the default settings first.


In consequence, based on your strategy, you can make more meaningful settings.


Simple trading system on Donchian channel


We will use two indicators: Donchian channel and moving average SMA (25)


Deal to buy:



  • The price touched the upper border of the channel, we wait until the candle closes above the maximum of the candle on which the touch occurred and at the opening of the next candle we buy;

  • Stop Loss put below the local extremum by 3-5 points;

  • We close the deal when the candle closes below SMA (25), at the opening of the next candle.



[caption id="attachment_1598" align="aligncenter" width="481"]Donchian Channel Technical Indicator Donchian Channel Technical Indicator[/caption]


For a sale transaction, the reverse conditions.


A few simple rules in conclusion


Remember, there are no indicators on Forex that are not mistaken. Indicator Donchian Channe), like any other, requires confirmation of its signals. When building your own trading system, use several indicators.


Observe Mani Management. Never in one transaction risk more than 2 percent of your capital. This approach protects you from ruin and will allow you to earn a steady income with the Donchian Channel.


Clearly follow your trading strategy. If you need to open a deal on the Donchian Channel strategy - open it, fix it, fix it, and it does not matter if you are positive or not. Only following the rules of the Donchian Channel "from and to" will make it possible to earn.


Download Donchian Channel Technical Indicator


You may download Donchian Channel Technical Indicator for MT4 from here


You may download Donchian Channel Technical Indicator for MT5 from here