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  • Best Short-term Strategies: GBP/JPY Range

    Author: Andrey Goilov


    Trading GBP/JPY might be quite tricky because it is so volatile: its average volatility range exceeds 100 points. However, closer to the Asian trading session the market calms down and sometimes forms a range, pushing the pair out of it by the main trend.

    A short-term strategy called GBP/JPY Range uses no indicators; it includes pending orders which shortens your time in front of the terminal. Moreover, working by the strategy, the trader does not choose or forecast the market direction but simply follows the price.

    The article is devoted to the idea of this strategy, its trading principles, and to generally checking whether the authors of the strategy have managed to pacify such a volatile pair.

    Description of GBP/JPY Range

    For trading by the strategy, we use the M15 chart of the GBP/JPY pair. Stick to the closing time of the American and opening time of the Asian sessions. This is 23:00-02:00 terminal time.

    Draw horizontal lines through the high and lows of the price in the mentioned timeframe. Then place pending orders for breakaways a bit higher and lower than the drawn levels. If one order gets triggered, delete the second one. If none is triggered over 4 hours, delete both and try again on the next day.

    Note that the narrower the corridor, the less it is possible that a strong movement will develop. If the range is quite wide, it is unlikely that the movement will continue after the breakaway. In practice, higher volatility changes for lower, then for higher, and over and over again. It is important that we notice low volatility to catch higher volatility later.

    If the channel is wide, volatility is high, hence, there will be no movement after the breakaway. By the rules of the strategy, if the channel is over 70 points wide, you should not trade.

    Selling by the GBP/JPY Range

    As an example of a selling trade, let us take a breakaway of the channel downwards. We mark the beginning of the channel at 23:00 (11 p.m.); the low of the channel is at 152.74, the high is around 152.86. At 03:00 (3 a.m.) the lower border of the channel was broken, and the price went down. Place a Take Profit at the level of two ranges. This time, the movement was strong and triggered the TP at 152.50.

    https://blog.roboforex.com/wp-content/uploads/2021/08/Pic-1.png

    In this strategy, we need a Sell Stop pending order as it opens a selling position below the current market price. By the strategy, we must place it 2 points below the low of the range. In our case, it is 152.72.

    https://blog.roboforex.com/wp-content/uploads/2021/08/Pic-2.png

    Place a Stop Loss behind the high of our range to avoid random price movements against our position. Hence, we place it at 151.95.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Comment


    • How to Trade Morning Star and Evening Star?

      Author: Maks Artemov


      This overview is devoted to two reversal candlestick patterns: Morning Star and Evening Star.

      These two are definitely rare visitors to charts, yet they remain quite popular. Like other reversal patterns, the Morning and Evening Stars form at the highs and lows of the price and contain three candlesticks each.

      How does a Morning Star form?

      This pattern forms at the lows of the price chart. When a descending impulse is going to subside, the price makes a minor surge upwards, so that the candlestick opens and closes with a gap.

      Conditions required for the pattern to appear:
      1. A support or resistance level;
      2. The first candlestick has a long body of the same color that the current trend is – and small shadows.
      3. The second candlestick opens with a gap, has a small body and short shadows. It may be of the opposite color that the current trend is; in most cases, it has little significance anyway.
      4. The third candlestick opens with a gap and closes above the opening price. It must be of different color than the first candlestick.
      Open a position after the third candlestick closes. Place a Stop Loss at the low of the pattern. If you are trading an instrument with a large spread and on a small timeframe, you may add the average spread to the low to compensate for the error.

      You may place a Take Profit at the nearest resistance level or as 1:4 to the SL.

      A Morning Star looks as follows:

      https://blog.roboforex.com/wp-content/uploads/2021/09/Morning-Star-1-1198x630.png

      How does an Evening Star form?

      An Evening Star appears at the highs of the price chart, and its structure is totally opposite to that of the Morning Star.

      Conditions required for the pattern to appear:
      1. A support or resistance level
      2. The first candlestick is ascending; it has a long body of the same color that the current trend is.
      3. The second candlestick has a small body and opens with a gap. The color of the candlestick is irrelevant.
      4. The third candlestick also opens with a gap; its color is opposite to that of the first one, and the closing price is below the opening price.
      Place an SL at the high of the pattern. As with the Morning Star, you may compensate for the error by placing the SL plus the average spread. The TP belongs to the nearest support level or is at 1:4 ratio with the SL.

      Read more at R Blog - RoboForex

      Sincerely,
      RoboForex team

      Comment


      • What Is Stock Split and How Does It Influence Stock Price?

        Author: Victor Gryazin


        This article is devoted to such an idea as a split of stocks, its influence on the stock price and on how attractive they are for investors

        What is a stock split

        A stock split is an increase in the number of stocks of the issuer in circulation that entails a decrease in the stock price but not in the general capitalization. This is a wide-spread market practice, naturally supported by the company's desire to make their expensive shares more affordable to a wide range of investors.

        Many actively developing companies are interested in an in-flow of extra money that new investors can bring. However, not every investor can afford promising and expensive stocks.

        Hence, to make stocks cheaper and more affordable, the split procedure is run to. As a result, the number of stocks increases and their price drops proportionally. This makes the stocks more affordable to investors.

        For example, if a company increases the number of its shares five times, i.e. carries out a split of 5:1, investors can have 4 extra shares per each they already have.

        At the same time, the price of one share decreases proportionally: if initially a share cost $1,000, after the split it will cost $200. Hence, each shareholder of this issuer will have 5 times as many shares but their total price will not change.

        Critical points of stock splits

        The split coefficient that shows how much the number of stocks changes after the procedure, is normally anything between 2:1 and 10:1. In the split procedure, there are three main dates:
        • The day of announcement. To get started, the company makes a public announcement of its plans for a stock split and all the details that investors need to know. This information usually includes the split coefficient and the day when the split is to happen.
        • Register closing day: this is an important day when the list of the company's shareholders is settled. These people will get extra shares after the split.
        • The split day is the day when new stocks appear on the investors' broker accounts and start trading at the new price.
        What is a reverse split?

        There is another procedure known as the reverse split that also changes the number if stocks in portfolios. It is also called stock consolidation.

        By this procedure, the stocks that investors hold are changed by a proportionally smaller number of stocks. For example, a reverse split of 1:3 makes every three shares into one. This means that if you used to hold 30 shares of the company, after a stock consolidation you will have only 10 but the price of each share will grow three times.

        For example, if the stocks did horrible, trading low under a dollar, a reversed split can raise their price.

        How does a split influence the stocks and investors?

        On the whole, a stock split is interpreted as a good event for the issuing company, though it does not influence its capitalization directly. A split means that the company is developing, doing well, and the growth of its shares confirms it. Carrying out a split, the company signals that it wants to make its shares more attractive and affordable to private investors.

        A decrease in the price makes the shares more affordable to investors and more liquid. The history of splits shows that the growth of stocks after a split usually exceeds the growth of major stock indices. Hence, after a split, the portfolio of an investor can have a significant profit, if the shares keep growing.

        Read more at R Blog - RoboForex

        Sincerely,
        RoboForex team

        Comment


        • RoboForex wins prestigious awards in the financial sector

          We’ve always tried to maintain the high level of the services we provide and introduce pioneer products. Our efforts were not for nothing – they were recognised with prestigious awards of the financial industry: "Best Investment Products (Global)" at Global Brands Magazine Awards, "Most Trusted Broker – Global" according to International Business Magazine Awards, "Best Multi-Asset Trading Platform (LatAm)" and "Best Prime Trading Account (Asia)" at Global Banking & Finance Awards.


          Counting these awards, the total number of titles received by RoboForex has reached 30. However, the most valuable and precious award for us is the trust of our clients and partners, who has been choosing our company for cooperation for 11 years now. We truly appreciate your trust and are very thankful for the choice you made.


          Sincerely,
          RoboForex team

          Comment


          • How to Filter Stochastic Signals?

            Author: Andrey Goilov


            We already have two articles about the Stochastic Oscillator describing in detail the indicator itself and the ways of trading by it. This is an oscillator, i.e. it demonstrates how much the price has fluctuated from the average; it works great in flats.

            If there is a strong, directed trend, such an indicator will give a lot of reversal signals, making the trader buy in the falling market and sell in the growing one. Hence, traders do not normally use Stochastic by itself: instead, they add other signals to it, enhancing the work of the indicator significantly.

            Today, I will try to step beyond the boundaries of normal trading by the instrument and show you how to filter its signals in order to make money on lengthy trends.

            Some history

            The necessity to track indices appeared as early as the 20th century. In 1925, at the International Conference of Labor Statisticians, certain rules of data collection, processing, generalizing, and presenting were adopted. The importance of such information was acknowledged by all the participants of the conference.

            Also, at the Conference, a universal approach to planning and regulating price policies of countries was worked out. Practically, these were the first steps towards globalizing international markets.

            The standards created that time were revised three times later: in 1947, 1962, and 1987. In 1962, at the tenth Conference, the term PPI was finally adopted. This is exactly the term used today.

            Moving Average

            I guess, the best way to improve signals from Stochastic is to add a Moving Average to it or several such lines. This combination lets the trader work by the current trend.

            https://blog.roboforex.com/wp-content/uploads/2021/09/Pic-1-1.png

            For trading, an H4 or H1 chart of any currency pair will be good. Add an MA with period 75: if the price is above the line, we look for a signal to buy from Stochastic. If the price breaks through the MA downwards, the trader needs a signal to sell from Stochastic.

            A signal to buy

            Let us have a look at an example with EUR/JPY. We see the price go above the MA(75), indicating an uptrend. In this case, we are not interested in signals to sell, because the Stochastic values may stay above 80 for a long time and quite often perform crossings for sale. Such signals must be ignored.

            https://blog.roboforex.com/wp-content/uploads/2021/09/Pic-2-1.png

            The best signal will be a decline of the Stochastic values below 20 and crossing of this area. In the marked area, there were two such signals, and both times the market kept growing.

            A Stop Loss in such a case must be placed 35-55 points away from the MA. As for a Take Profit, place it at least at the local high because the trend is ascending, and the price will easily renew it.

            However, if the price breaks through the MA downwards and the signal lines of Stochastic cross in favor of buying, wait for the price to get above the MA again and buy with the same risk of 35-55 points away from the MA.

            Bottom line

            The Stochastic Oscillator gives too frequent entry and exit signals by the crossings of its signal lines. To improve those signals, you can add other indicators, combine Stochastic with graphic patterns, or check for the confirmation of signals on different timeframes.

            Adding a Moving Average to the chart alongside Stochastic will let you trade the trend only. If you add a graphic pattern, you will avoid preliminary signals from the pattern itself. Combining various TFs gives you an extra Stochastic signal from a smaller TF.

            As you see, there are plenty of trading options with Stochastic. Just test them all on a demo account and always follow your money management rules, especially when you trade real money.

            Read more at R Blog - RoboForex

            Sincerely,
            RoboForex team

            Comment


            • How to Trade Linear Regression Indicator

              Author: Andrey Goilov

              The Linear Regression Indicator was designed and presented by Gilbert Raff. It happened quite recently, in the 1990s. So, this instrument can be called a rather new one as long as the majority of indicators have been created in the 1970s.

              The Linear Regression Indicator, or LRI, consists of three lines. These lines show the high, medium, and low of the current price movement, forming a price channel. The upper and lower borders of the channel demonstrate the extremes to which the price has deviated from the middle line.

              https://blog.roboforex.com/wp-content/uploads/2021/10/Pic-1.png

              You can see that the indicator somewhat resembles the Bollinger Bands, which consists of a floating channel on the chart that is from time to time broken through by the price up or downwards, after which the price returns to the medium level.

              https://blog.roboforex.com/wp-content/uploads/2021/10/Pic-2.png

              Regardless of the fancy name, the LRI is quite simple to use.

              What is the essence of the LRI?

              As I have already mentioned, the Linear Regression Indicator consists of three lines.

              First, the middle line is drawn based on the price levels; it is also known as the trend regression line.

              The indicator adds two lines to the first one at equal distances from it. Traders say those are quality support and resistance levels, between which the price will be going for some time.

              Read more at R Blog - RoboForex

              Sincerely,
              RoboForex team

              Comment


              • RoboForex wins the “Best Affiliate Programme (Global)” award

                In autumn 2021, RoboForex received the “Best Affiliate Programme (Global)” award at one of the world’s leading events in the sphere of Forex and finance, “Global Forex Awards 2021 – Retail”. RoboForex’s Affiliate program was highly appreciated by users and got the most votes.

                RoboForex would like to thank everyone who voted for their trust. Such results inspire us and give us a reason for further development and improvement. RoboForex strives to provide traders with the most favourable trading conditions, including the ones that attract new clients to the company. Now it’s time for you to assess them:
                • 50% of the company’s revenue.
                • No restrictions on deals and payouts.
                • Daily payouts to your account.

                Sincerely,
                RoboForex team

                Comment


                • How to Trade “Tasuki Gap” Pattern?

                  Author: Victor Gryazin


                  In this article, we’ll discuss the rules and methods of trading the “Tasuki Gap” pattern. You won’t find it very often, but it’s a quite strong pattern of trend continuation from the candlestick analysis.

                  How the “Tasuki Gap” pattern is formed

                  The “Tasuki Gap” candlestick pattern is formed during an ascending or descending tendency and predicts its further development. The pattern consists of three candlesticks: the first two have the same body colour with a price gap between them; the third candlestick has an opposite body colour and returns the price into the gap (between the first two candlesticks).

                  The first two candlesticks of the pattern show the trend direction and confirm its strength – the gap between them is evidence of that. The third candlestick, which is closed in the opposite direction, is a correction towards the previous movement. This candlestick shouldn’t eliminate the gap with its closing price – if it happens, trading the pattern is not recommended.

                  Bearish Tasuki Gap

                  “Upside Tasuki Gap” is formed during a descending tendency: bears dominate the market and believe that the decline will continue. The black bearish candlestick appears on the chart. Later, under the influence of active sales on the market, the next candlestick is opened with a gap to the downside and closed with a black body candlestick.

                  After that, the price is forming an ascending correction, during which a white bullish candlestick appears and makes the price return to the gap. This gap is now a resistance level. Here, bears start selling again and if bulls couldn’t close the session above the gap, then bears are very likely to resume the downtrend and update the local low.

                  https://blog.roboforex.com/wp-content/uploads/2021/10/TasukiGap-en.jpg

                  Recommendations for trading the “Tasuki Gap” pattern

                  When trading this pattern, one should pay attention to the following:
                  • “Tasuki Gap” must be formed within an ascending or descending tendency, it’s better not to trade it inside a sideways channel (flat).
                  • The pattern’s third candlestick mustn’t close the gap completely with its body. In this case, a trading signal is cancelled.
                  • The pattern materialization probability increases in the combination with price patterns, support and resistance levels, signals of trading indicators.
                  • It is recommended to use H4 of longer timeframes.
                  Closing thoughts

                  The “Tasuki Gap” candlestick pattern appears during an ascending or descending tendency (bullish or bearish respectively) and predicts its further development. Excellent addition to the pattern is technical analysis.

                  Before using the pattern in real trading, one should learn past statistics and historic records and practice on a demo account.

                  Read more at R Blog - RoboForex

                  Sincerely,
                  RoboForex team

                  Comment

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