Sometimes the reaction is the tell

Crypto bulls are not happy with me

Bitcoin technical analysis chart

The classic expression is that: “The bigger they are, the harder they fall”.

For markets, it might be “the harder they fight, the weaker they are.”

I’ve written about markets for more than a decade and often the articles that generate the most-surprisingly lively reactions are the when a market is weak and you say it’s going lower. Or write something negative about something that’s already beaten up.

It’s true that the most-ardent defenders of something are those who have suffered the most pain.

That brings me to something I wrote about crypto today. Bitcoin has been falling for a week and it’s down almost 25% in the past month and 41% since the June spike. The bulls are licking their wounds.

Today’s decline is probably just a continuation for the building bearish sentiment after the failure to break the 38.2% retracement of the Sept fall. Bitcoin is the most-technical market I know of; probably because there is a dearth of fundamental news.

Bitcoin

However I wrote about a tangential fundamental story today as US authorities used Bitcoin to bust 338 people who used it to pay for child porn on a South Korean website that was one of the largest of its kind. It highlights that people who were using Bitcoin thought they had some level of anonymity.

Was the news responsible for today’s 3% fall in Bitcoin and a similar decline in the larger crypto space? No one knows. It’s the same in every market. You can’t get into the head of every seller.

What was different? The post generated a surprising amount of anger. The bulls tell me that everyone knows Bitcoin isn’t anonymous. Well the 338 people who are in jail now certainly didn’t know. In addition, there are still many ways to make Bitcoin anonymous and crypto is used in illicit activities (so is the dollar, I know).

Without getting deeper into the argument, I think the takeaway is the reaction. it’s the kind of reaction you often see in a market that’s weak.

I’m going to take all the anger directed at me as a sign of growing FUD. I’m not writing anything that hasn’t been said before. The vitriol is probably a barometer of the jitters in the market, and weakness.

Watch out for a break of $ 7700.

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Ten mistakes all successful FX traders should avoid

Ten mistakes to avoid when trading FX

Ten mistakes to avoid when trading FX

If you aim to become a successful and profitable forex trader, there are a number of seriously damaging mistakes that you’ll want to avoid. It should go without saying that you will make some mistakes when learning how to trade.

It’s simply unavoidable. This is not necessarily a bad thing, as mistakes allow you to learn and grow. The ten mistakes that you’ll read about below are among the most common and as such, tend to be the most damaging when not noted and corrected.

1. Entering into too many trades at once

If you’re entering into multiple trades at once, you’re likely over-trading. Each trade deserves your full attention to help ensure that it is profitable. Dividing your attention among multiple trades will only decrease the odds of each of those trades resulting in profit. Less is more when trading FX and the sooner you realize this, the better off you’ll be.

2. Devoting too much time to analysis and trade planning

While trade analysis is necessary, it can take up too much of your time. You may even find that you’re spending way too much time in the planning phase and very little actually trading. There will only be a number of optimal entry points each day. Don’t miss out on too many of these by being locked into exorbitant trade planning.

3. Placing too much focus on short-term charts

Trading too frequently on the short-term charts can lead to over-trading and over-trading can lead to fast losses and a gambling-like approach to forex trading. Additional, critical data comes from higher time-frame charts such as those seen within the EagleFX platform, and these charts tend to be more important than lower time-frame charts. With higher time frames, you’ll receive more reliable signals and a reduction in your stress levels.

4. Bypassing the opportunity to trade on a demo account

One should never trade with real money before trading with mock funds using a demo account. Even if you’ve done your homework and are certain that you know how to trade, you need to see trades in action within a platform. EagleFX offers free, unlimited demo accounts to all. Visit them now to create a practice account and avoid this terrible mistake.

5. Trading solely based upon the news

Don’t assume that you know which way the market will move based solely on the news. Far too many traders have experienced serious losses due to making this mistake. You absolutely must carry out technical analysis with fundamental analysis on each and every trade.

6. Thinking that past “wins” guarantee current profits

So, you’re last ten trades using the same parameters and selections were all winners. Congrats! Now, don’t make the mistake of assuming that if you open yet another using the same selections that it too will be profitable. Yes, trading with the trend can result in a round of easy profits, but each trend has to end a some point. Always remember this.

7. Trading out of desperation

If you’re feeling a sense of urgency to trade, then you’re likely better off walking away. Terrible decisions come from trading during desperate times. Take a break, collect yourself, and make a new plan before trading again.

8. Failing to follow the process

Although each trader may use their own strategies, there are general steps that all traders should follow when trading. Skipping past some of these (particularly analysis) can result in losses. Follow the process laid out by the successful traders who have come before you if you want to have the best odds of being successful.

9. Making unplanned changes to live trades

Just because trading platforms such as the MT4 platform provided by EagleFX allows for changes does not mean that you should make them. No doubt, strong emotions can come from watching price movement during a live trade. Acting on these can cause problems though, so unless you are 110% positive that you’re doing the right thing, leave your open trades alone!

10. Entering the market after an optimal entry point has passed

Missed an optimal entry point? Move on. Never assume that you can jump into a trade soon after a missed entry using the same expected price movement and profit. Yes, it can sting to miss out on a great entry point, but others will come along.

What truly sets the best forex traders apart from the worst is that the best are those who have made mistakes such as the ones mentioned above, but took action to correct them going forward. Those who do not do this may end up making the same mistakes over and over again, eventually draining their trading account.

Select a top-tier broker such as EagleFX, establish a solid plan for trading, and make corrections when necessary. If you do these things, you can expect to come out on top.

This article was submitted by EagleFX.

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What you need to know about forex signals

Feel like it’s time to achieve your investment goal and boost your income?

LegacyFX 1

Every trader has its own unique reason for why he or she started trading in the first place. But at the end of the day, every trader feels disappointment and frustration when profits are not coming the way he or she hoped.

As every trader comes to realize – profits cannot be achieved without spending a sufficient amount of time following the market news and events, then reacting accordingly.

This reaction should: 1. Be correct, and 2. Be taken at the right time. But in reality, many of us either do not have this time or are unable to keep up with rapid pace of market events. 

This is when the signals are come in handy. Good trading signals can act like your trading partner, to be your “eye” and follow everything that’s going on in the financial market.

Signals are normally sent out relying on the market conditions. Signals can be sent out once throughout the day to the trader or several times.

The brokerage compensation is additionally constructed into the spread therefore the spreads aren’t provided by the signal’s supplier. The “ask” and also the “quote” quotes for the money set are only provided.

Forex signals must be executed as quick as possible because the currency markets are very fluid. The quotes alter on a second to second basis. These signals are sent out as short messages to the gadgets chosen by the trader.

These alerts could be sent to the email, mobile phones as well as various other interaction devices such as WhatsApp. As the currency market opens up night and day besides the weekend, the trader can constantly get the signals.

The signals will certainly additionally reveal the forex trader whether to purchase or market the pair relying on just how the quotes are going. Also, a 5-pip adjustment could mean quite a bit of earnings or loss for the investor using the signals.

A good signals provider will deliver signals about currencies, commodities, cryptocurrencies, indices, stocks and more. Forex signals are usually offered for 6 major currencies on the planet that are the United States Dollars, Canadian Dollars, Australian Dollars, British Extra pound, Japanese Yen and the Euro.

Investors should get the Forex signals for the money set that they handle. it’s additionally vital for the investors to keep in mind the political and the financial problems in each of these countries as it will result in the depreciation as well as the gratitude of the currencies.

This article was submitted by LegacyFX.
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What are forex signals, and do you need them?

A better understanding of forex signals

Forex signals

Forex trading can be overwhelming, especially for beginners. This is why trading signals are a valuable tool in your resource kit. Thanks to signals, you can make decisions about whether you should buy or sell a currency pair at a certain point in time.

Signals can be generated by way of fundamental analysis or technical analysis. Many factors work in sync with one another to generate buy/sell signals for you to act upon. Various Forex brokerages offer signals to their traders for a nominal fee or for free.

Entry and exit points can be determined when using Forex trading signals, and when done right you can successfully trade utilizing these signals.

Forex signals are used by all kinds of traders, not just those playing the foreign exchange market. Importers and exporters in particular, also need to pay attention to exchange rates so that selling and buying products and services could be done at opportune moments when money could be saved and the cost of trading cut.

Clearly, parties that have direct interests in the foreign exchange market also have it in their interests to closely monitor and otherwise make use of forex signals. Such parties obviously include currency traders, investment banks, central banks, and all varieties of institutions that have currency exchange interests.

Professional or novice traders do not particularly need any specialized technology in order to be able to receive or make use of forex signals.

However, for serious forex trading, there exists a wide variety of technology, most of it proprietary and some available online, that not only allows traders to receive forex signals, but also allows them to analyze better trends and movements so that more profitable decisions could be made more reliably.

The power to make use of the said signals in such ways was once the domain of large institutions. Now it can be said that such capabilities to exploit forex signals are well within reach of anyone with reliable internet access.

This article was submitted by LegacyFX.
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Video: Why weak business investment isn’t Trump’s fault (and why he can’t fix it)

Weak business investment isn’t about tariffs, trade or ‘uncertainty’

Central bankers worldwide are lamenting weak business investment.

They think it’s because of worries about global growth due to tariffs and the US-China trade war. They’re wrong. The reason is obvious, but it’s taboo to talk about.

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Learning point from BoE’s Saunders: When a hawk turns into a dove

FX lessons

   

Saunders

Learning point this am which we shouldn’t let pass. 

When a hawkish board member makes a dovish comment

This is what happened earlier. Bank of England’s Saunders is a hawk, but his comments about not delaying a necessary rate cut because of Brexit were dovish. See here for his earlier comments.

The reactions in the GBP were instant.  

   

hawk turns dove

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Goldman Sachs and Citi were on opposite sides of a USD/CAD trade. Who won?

A look back at two trade ideas

A look back at two trade ideas

On August 28, both Goldman Sachs and Citigroup issued trade ideas on the Canadian dollar. Let’s have a look at they did.

Goldman Sachs recommended buying USD/CAD with a target of 1.3600 and a stop at 1.3050.

“Unlike most of its G-10 peers, the BOC has not signaled a readiness to ease policy — but we think that shift will be coming soon,” strategists Zach Pandl and Karen Fishman wrote.

The BOC hasn’t made that shift. The September statement was surprisingly neutral and the market is now pricing in just a 14% chance of a cut in October and a 26% chance of a move before year end.

The trade made a bit of headway in the first three days, rising to 1.3380 briefly on Sept 2. But that was the peak and as the trade winds shifted towards a deal, the pair fell to 1.3134 — 84 pips from the stops.

Despite the moves, no limits have been hit and the trade is still open but with a 50 pip loss.

How about Citi?

They said to sell the pair at 1.3249 with a target of 1.3015 and a stop at 1.3375. Here’s what they said:

We continue to believe that CAD will outperform the rest of the G10 commodity bloc. Strong domestic fundamentals, ties to a healthy US consumer, and less trade exposure than its peers suggests that the market is overestimating BoC cut risks this year.

They were generally right. Canadian data continues to outperform and the Bank of Canada wasn’t as dovish as feared.

However they were stopped out on Day 4 of the trade in a brief rally to 1.3383 — 8 pips above the stop. The pair then fell 260 pips in six days.

What’s the lesson?

You can be right and still be wrong. And you can be wrong and get away with it.

Citi had a better read on the underlying fundamentals but they stop was too tight and they got taken out. Goldman’s trade was in the money for a few days and that was an opportunity to take profits. But even when it went against them, the stop was wide enough to fight another day.

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Watch Warren Buffett’s first ever television interview

What was Warren Buffett saying in 1985

Warren Buffett feels like he’s been around forever but he was far from a household name until the late 1990s.

His first television interview didn’t take place until 1985, when he was 55-years old. What’s incredible is that he was saying then is consistent to everything he’s said in the 34 years since.

It underscores that trading isn’t about information, it’s about process. It’s his same ‘circle of competence game’ that doesn’t include chasing what’s hot.

“I don’t have to win at every game,” he said. “There are no called strikes in this game, they just keep pitching, you don’t have to swing at any of them.”

Another interesting point for the long-term investor is that he was cautious of excess noise, something that the internet has brought everywhere.

Given all the changes in the world since this interview — and the remarkable outperformance of tech — it’s truly amazing (and telling) that he’s had so much success.

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A risk management plan to follow

Risk management 101

risk management

This article is for you if you want a starter on risk management that is practical and simple to follow. I have written recently on the attitude required to manage money. See this article here on talking about the M-word. I have also written previously on the use of leverage and how using too much leverage is the bane of many traders accounts: 5 trading mistakes to avoid: Mistake#1 over leveraging. This article combines those two principles into a practical guide to follow. In order to get the most of this article it will help if you have read the first two. This article is primarily aimed at those starting FX trading or those who have never laid out a risk management plan. I will make three points in this article all of which are designed to help you preserve your capital:

  1. Decide to trade with little leverage
  2. Decide when you will stop trading: The 10% rule
  3. Decide how to use your FX funds for the maximum benefit.

Some starting assumptions

Before we get into the point above, I want to outline two assumptions I have made.

Assumption #1

I am assuming that you want to manage your account in a way that allows you to grow that account so that you are trading a significant sum for yourself.

Assumption #2

I am assuming that you are wanting to responsibly manage your risk, so that you can make changes to your trading once certain parameters have been hit

With those two assumptions aside, let us look at a hypothetical example of a trader who has 10,000 units of currency in their account.

1. Decide to trade with little leverage

Leverage is simply the ability to trade a position sizes larger than your account size. Think of your account size vs your account size.If you have a 10,000 size account then trading without leverage will involve trading a lot size that is equivalent to your account size. So, if your account size is 10000 then trading without leverage will involve trading a mini lot of 0.10 See screenshot below for an example of a non-leveraged trade on a 10,000 account.

trading pyschology

The less leverage you use, the easier it is on your trading psychology. So, do yourself a massive favour and de-leverage. I personally trade without leverage and only leverage up on the highest conviction trades, e.g interest rate surprises on major central banks. Furthermore, I rarely have more than two positions open at the same time on different pairs.

2. Decide when to stop trading: The 10% rule

Take this rule from me, it will save you money. So, let’s say you take this lesson on board that you are trading without leverage on your account and your account keeps going down. When do you stop trading and realise that you are not quite ready to trade? Don’t wait until you have lost 50%+ of your account. You can know that something is wrong when you have lost 10% of your account. This is the point where you say, ‘Ok, I am trading without leverage and I have lost 10%, so I need to reassess what I am doing’. Take an FX trading course, pay someone to mentor you, just stop doing what you are doing as you need more practise.

3. Decide how to use your FX funds for the maximum benefit.

This is when you can make leverage work for you. Say you have put aside 10,000 units of currency for trading and you are trading without leverage. In this instance there is no need to put all of your trading balance in with your broker. Instead, why don’t you put aside some of the money into another investment. A good example in the UK would be to invest in premium bonds. You could put 8,000 units in premium bonds with no risk of devaluation (aside from inflation) of your investment and a chance of outperforming, but you can access your funds quickly if you needed to pull them across into your trading account. It is a good balance between offering a chance of growth vs safety and accessibility. I have bought premium bonds as a place to put my annual tax contributions before I have to hand them over to HMRC and had two winning bonds since April this year. Including one while I was on holiday, nice bonus on money that would otherwise be doing nothing.

can I make money trading forex

Answering some common objections.

Objection #1 : But I won’t make much money trading without leverage?

This may be true in the short term, but medium to longer term you will make money. If you can generate double digit returns over the course of a year you will be right up there with the best of them. Also, if you can prove to yourself that you can manage money responsibly you will have much more confidence adding extra capital into your trading account. You don’t want huge equity swings in large accounts as they are not acceptable or practical for your trading psychology.

Objection #2 : But I don’t want to stop trading if I lose 10% of my account?

Trading can be addictive, so don’t get hooked. Why not take 3 months out of your trading to stick to demo trading. Then, after 3 months of profitable demo trading, get back onto your live account

Objection #3 : But I like the thrill of the market by using high leverage

The 90/90/90 rule is that 90% of new traders lose 90% of their account in 90 days. Even experienced traders can succumb to the pull of the markets. You are never above needing to manage risk. The moment you think you are above the ‘rest of them’ is often the final thought before a fall. The number one cause of trading disasters is using too much leverage. If you want to keep enjoying the thrill of the market in an irresponsible way you need to budget for it in the way that you would budget for a holiday or household expense. In other words, it is money that you should already considered as spent. You are also establishingterrible habits that will prevent trading ever becoming a full time business for you as you will be unable to either attract investors or safely manage larger personal funds. Finally, the thrill can be addictive and may end up in you losing way too much money and that impact will overspill in other areas of your life impacting your relationships which you cherish and your own mental well being.

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