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  • Vlad RF
    replied
    How to Diversify Your Trading Portfolio? Basic Approach

    Author: Maks Artemov


    Trading in financial markets can bring profit and losses in turns. There are plenty of reasons for losing money, starting with unpredictable behavior of assets and through an unwisely collected portfolio. This article is devoted to the latter reason, discussing basic approaches to diversifying your portfolio for decreasing risks and getting the maximum from the market.

    We all know the saying: “Never put all the eggs in one basket”, and it perfectly describes the danger of undiversified portfolios. Putting all the eggs in one basket here means investing everything in one instrument and waiting for a profit. Practice shows that this strategy does not always work.

    What is diversification?

    In investment, diversification means distributing your investment capital among various financial instruments to decrease risks and increase profit. This approach helps to compensate for possible losses that emerge from a decline of one of your instruments by making a profit on your other instruments.

    Until the 1950s, diversification principles in the stock market were limited by fundamental analysis (Graham and Dodd’s theory): people chose investment options by studying the business of issuers, almost neglecting risks.

    In 1952, in the Journal of Finance there was published an article on collecting an investment portfolio by a young postgraduate Harry Markowitz. His ideas from the article and his PhD thesis became the base for the modern portfolio theory.

    Markowitz described a fully mathematical approach to forming an investment portfolio that allows choosing assets based on the profit/risk ratio. In 1990, he won the Nobel prize for his research.
    In this article, I will not describe Markowitz’s ideas or the statistical aspect of forming a portfolio because these are the topic for a different, much more detailed talk. Before starting such a talk, you will need to understand the basic principles of diversification to avoid putting all the eggs in one basket already at this stage.

    Basic diversification principles for an investment portfolio

    In the modern world, all the branches of the economy cannot be growing at once. Hence, investors need to distribute their capital in such a way that in the case of a slump of an asset or group of assets in one sector of the economy the portfolio still generated a profit.

    The basic diversification principle presumes distributing your investment capital among the shares of companies from different branches of the economy, as well as among various financial instruments.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    What Is Pairs Trading and How to Use It?

    Author: Victor Gryazin


    Pairs trading is a market-neutral trading strategy that implies buying and selling similar (correlating) trading assets simultaneously.

    This method is equally valid for the currency, stock, and commodity markets. The hardest part of this method is choosing the type of assets.

    In this article, I will tell you about the main principles of pairs trading, describe basic ways of choosing your instruments, and give examples of using the strategy in the real market.

    What is the gist of pairs trading?

    Pairs trading is a method based on trading two correlating financial instruments simultaneously in opposite directions.

    Correlation is a statistical link between two or more values (assets). It can be direct and inverse. In the first case, one asset basically repeats all the movements of the other one. If the correlation is inverse, the charts of two instruments are mirror-like.

    As an example of direct correlation, take the behavior of oil prices and stock prices of oil companies. When oil prices grow, stocks also grow. And vice versa: when oil prices are falling, correlation will stay in place, only in the opposite direction.

    However, each oil company will grow or fall in its own way, faster or slower. This temporary divergence of prices can be used for pairs trading.

    The strategy of pairs trading uses the principle of balance: it presumes that divergences of correlating instruments tend to return to their average values. Such divergences happen after some important fundamental events: changes in interest rates by Central banks, corporate events, etc.

    To trade by the strategy, find a highly correlating pair of financial instruments, one of which has grown/fallen compared to the other. We expect the correlation to restore with time, after which you will close the position.

    https://blog.roboforex.com/wp-content/uploads/2021/05/PairsTrading.jpg

    How to choose instruments for pairs trading?

    Choosing assets for this strategy implies using fundamental and technical analysis, as well as statistical calculations. On the whole, you can start to look for instruments for pairs trading among:
    • The stocks of companies of one market sector;
    • Contracts for similar instruments: Brent and WTI oil, gold and silver, etc.
    • Interconnected currencies.
    A popular way to evaluate interconnection of two instruments is Pearson’s correlation coefficient. The higher it is, the more it is possible that they will be moving in one direction. Also, we use the notion of cointegration, which is a statistical property of two or more variables that demonstrates the stability of their interrelation.

    In this article, I will try not to overwhelm you with mathematical calculations, opting for choosing the assets by graphic analysis. However, mind that this is just one way of choosing instruments for graphic trading, and not the most precise one.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Use MyFxBook for Trading in Forex

    Author: Andrey Goilov


    Not every trader analyzes their work, thus depriving themselves of a good way to improve their trading results. Experienced market players insist on scrutinizing every trade; however, this is hard to do without special programs.

    Unfortunately, even MetaTrader 4 does not store the whole history of trades, though it would be quite useful to assess your profitability month by month on different stages of the market. Many make substantial money on the growing market, for example, while the falling market yields them less success.

    MyFxBook is an online platform meant for mathematical and statistical analysis of the trader’s account. Results of analysis can later be shared.

    In this article, I describe the opportunities provided by MyFxBook, as well as explain how to add the service to your trading platform and analyze your results.

    Why is MyFxBook good for a trader?

    First of all, by analyzing their trading history with a vast range of MyFxBook functions, the trader gets:
    • An assessment of their overall profitability in percent. They can also assess their daily or weekly profitability depending on their needs, and set up a corresponding profitability chart.
    • A drawdown assessment in percent with a chart, representing the periods of the deepest slumps.
    • Additional indices of profitability, including average profit/loss of a period, the best/worst trade of a period.
    • Other mathematical values of their trading activity.
    After you register on the platform and log your trading account onto it, you may start analyzing trades. In your profile, you will see your daily and weekly profitability, the number of trades a day/week/month/year and their overall volume, the ratio of profitable and losing positions, your profit in points, etc.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Trade the GBP/USD Currency Pair?

    Author: Igor Sayadov


    GBP/USD (Great Britain pound vs US dollar) is a major currency pair, which means it is one of the main and liquid Forex assets alongside EUR/USD, USD/CHF, AUD/USD, USD/JPY, and others. There is evidence that it takes from 12% to 17% of the total market trade turnover.

    The base currency is the British pound and the quote one – the US dollar. This means that when the pair is growing, the pound is getting stronger while the USD is weakening.

    Many call the British pound one of the most aggressive currencies in the financial market, and this is what creates high volatility in the pair. The behavior of these quotations is often unpredictable; they create a lot of false breakaways of support/resistance levels on the chart.

    In this article, we will speak in more detail about the history of the pair, describe the factors that influence its behavior, and suggest a simple trading strategy.

    Short history of GBP/USD

    The full name of the British national currency is the sterling pound. The history of the currency dates back to the year 775. As long as the relationship between Britain and its colonies was developing, the necessity to pay for goods and overseas transportation emerged.

    One version of where the name “sterling pound” comes from the method of coinage at those times. They used silver, and 1 pound of silver produced 240 coins. They started being called “sterling”, and this term was officially accepted for the currency in 1694.

    As for the GBP/USD pair, its second non-official name – Cable – is derived from a real cable stretched along the bottom of the Atlantic Ocean for uninterrupted exchange of the pair’s quotations.

    Now let us switch from history to the meat.

    What does influence the GBP/USD quotations?

    The main driver of GBP/USD behavior is macroeconomic data and indices from Great Britain. However, there are two more factors
    • The general situation in the currency market
    • The difference between interest rates in Great Britain and the USA.
    The credit and monetary policy of the Central bank of England is the key element that forms the pound quotations in the world currency market. After Brexit, the CB took some measures for the stabilization and restoration of the GBP rate in the global market, which are still active.

    The main “leverage” of the BoE for controlling the GBP rate is the interest rate decisions. When the rate increases, the pound gets stronger. When the rate declines, the British currency weakens.

    Other economic events from the Foggy Albion influence the GBP/USD rate as well. Among them such things as:
    • GDP information, published once in 3 months;
    • The Consumer Price Index. It demonstrates the inflation rate that directly influences the decision on the key interest rate;
    • The number of unemployment claims;
    • The PMI.
    How to trade GBP/USD?

    To work successfully with the pair, you need to figure out and understand its peculiarities, including the period of its peak activity.

    The average daily volatility level is 100-140 points. Trade is most active during the American and European trading sessions.

    To trade GBP/USD, any type of analysis and signals will do – from simple fundamental analysis to technical indicators.

    The most passive period for the pair is the Asian session (because in Europe, it is night) – at that time, volatility remains within 30 points.

    Most often, the British pound behaves unpredictably and/or ambiguously: it might drop when everyone expects growth, and vice versa. The price might react to some news immediately but also might lag and do it gradually.

    Trading GBP/USD by fundamental analysis

    We have already discussed the main economic events that influence the currency pair. The trader only needs to check the economic calendar accurately and remain in course of the main economic events from Great Britain and the USA.

    The high volatility of the pair might further increase when certain economic news is published; at such times, be extra attentive and do not dismiss the idea of using Stop Losses. To trade GBP/USD by fundamental analysis you can use both short-term (intraday) and medium-term strategies.

    Example

    Check the chart of the pair at the moment when Brexit was announced on June 23rd 2016.

    https://blog.roboforex.com/wp-content/uploads/2021/05/pic-1-1200x534.png

    The falling started right after the referendum and lasted for 3 months. The market slumped by over 4,000 points.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    RoboForex: changes in trading schedule (Holidays in the USA and the UK)

    We’re informing you that due to public holidays in the USA, Memorial Day, and the United Kingdom, Late May Bank Holiday, several instruments will be traded according to the changed schedule*.

    MetaTrader 4 / MetaTrader 5 platforms

    Trading schedule on Metals (XAUUSD and XAGUSD), US indices (US30Cash, US500Cash, and USTECHCash), the Japanese index J225Cash, and CFDs on oil (Brent and WTI)
    • May 31st, 2021 – trading stops at 7:40 PM server time.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on US stocks
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on Russian GDRs
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.

    R Trader platform

    Trading schedule on US stocks and ETFs
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on German, Austrian, Danish, Norwegian, and France stocks
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on US stocks and ETFs
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on US indices (US500, US30, and NAS100) and the Japanese index JPY225
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on the UK100 index
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on CFDs on UK stocks
    • May 31st, 2021 – no trading.
    • June 1st, 2021 – trading starts as usual.
    Trading schedule on Metals (XAUUSD and XAGUSD) and CFDs on oil (WTI.oil, BRENT.oil)
    • May 31st, 2021 – trading stops at 7:40 PM server time.
    • June 1st, 2021 – trading starts as usual.

    cTrader platform

    Trading schedule on Metals (XAUUSD and XAGUSD)
    • May 31st, 2021 – trading stops at 7:40 PM server time.
    • June 1st, 2021 – trading starts as usual.
    Please, take into account these changes in schedule when planning your trading activity.

    * – This schedule is for informational purposes only and may be changed by the provider.

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Trade by Indicator-less Strategy From Pullback?

    Author: Timofey Zuev


    The “From Pullback” indicator-less strategy is based on quite a fair supposition that a price move, especially an impulse, will quite fairly continue in the same direction than change it. H1 is a suitable timeframe here, but if some other period is comfortable for you, feel free to use the strategy on it. The strategy applies to Forex, futures, and stock markets.

    A signal to buy by the strategy

    For an opening signal to emerge, the following conditions must be fulfilled:
    • A characteristic upward impulse move (for the chances for trade continuation to be maximal);
    • At least one pullback during the growth, followed by another impulse (this will be confirming the ability of the impulse to overcome pullbacks easily);
    • At the working timeframe, the candlesticks constructing the impulse in question must be more or less of the same size (because after one enormous candlestick an equally huge pullback might follow, and the end of such ones are hard to predict).

    When all these requirements are met, you can place a Buy Limit order. To find an optimum place for it, measure the distance from the High of the last candlesticks to the local low of the last pullback. Divide this distance by two and add a couple of ticks. Mark this distance from the High of the last candlesticks, and this will be the level that the pullback, which will appear sooner or later, can reach.

    If the price keeps growing but the pullback does not appear, repeat the calculations at the end of each period: if you are trading on H1, make calculations at the end of each new candlestick if its High is higher than that one you used previously. This is how you hunt pullbacks. Examples of signals to buy by the strategy:

    https://blog.roboforex.com/wp-content/uploads/2021/04/1-1-911x630.png

    As you can see, to find an entry point easier, I used Fibo levels with all values deleted except for 0.50% and 100%, dragging them between the necessary points; then I just placed the Buy Limit several ticks lower.

    Stop Loss and Take Profit by the strategy

    In case of buying, place a Stop Loss below that very lowest low formed in the last pullback. In case of selling, place it behind the highest local high of the last pullback. The distance from the extremes is the same as you take from the middle you use for finding the entry point. If you are selling, do not forget to add the spread to the SL size.

    Transfer the positions to the breakeven at your own risk and by your own experience. If your trader’s principles require protection of your current profit, use the extremes that appear after the pullback, while the price is approaching the profit.

    As for the Take Profit in buying from pullbacks, take the High of the last impulse candlesticks you used for calculating your Buy Limit and mark a point as many ticks below it as you marked from that middle level when finding a place for the Buy Limit. In the case of sales, from the low of the last impulse candlesticks mark as many ticks upwards as you market from the estimated middle when finding a place for the Sell Limit.

    As a result, in this method, you have a roughly 1 to 1 proportion of the SL to TP. This is not the most attractive proportion, but alas, this is the peculiarity of the strategy. Of course, if you are sure that after the pullback the market will go in the correct direction, place the TP at a better point, but remember that this might decrease your chances for closing the position by the TP.

    Money management for Forex, futures, and stock markets

    As for the size of the risk, I agree with A.Elder who recommends never to risk more than 2% of the deposit. If you get three losses in a row, stop trading by the strategy and scrutinize your results. You will be able to continue after a thorough and frank analysis.

    In this article, I got you acquainted with another indicator-less strategy that has its advantages and drawbacks. Anyways, the author uses it in the market successfully. This does not guarantee your personal success; however, some will definitely like it for being so formalized, which is a rare case among indicator-less strategies.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    RoboForex adds extra servers for its clients

    Due to the expansion of the client base, we’ve added two new servers for the MetaTrader 4 platform. They will allow dividing the load and process trading operations quickly and without failures. It will help us to achieve the company’s primary goal, which is to provide our clients with quality services and comfortable access to trading.

    New servers are intended for cent accounts of the ProCent type, which are suitable for testing new strategies or Expert Advisors under real market conditions with the minimum financial investments. Advantages of ProCent accounts.
    Advantages of ProCent accounts
    • Cents as base currency units (US Cent, EU Cent, etc.). A deposit of 10 USD will be enough to receive 1,000 US Cents.
    • Floating spread – from 1.3 pips.
    • Maximum permissible leverage value – up to 1:2000.
    • Trading instruments – 36 currency pairs, Metals.
    • Deposits/withdrawals without commissions.
    Open a ProCent account

    and start trading with a reliable broker right now!


    Start trading

    Learn more about trading conditions


    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    RoboForex: changes in trading schedule (Whit Monday)

    We’re informing you that due to the Whit Monday in several European countries, there will be some changes in the trading schedule*.

    MetaTrader 4 / MetaTrader 5 platforms

    Trading schedule on CFDs on the German index DE30Cash
    • May 24th, 2021 – no trading.
    • May 25th, 2021 – trading starts as usual.

    R Trader platform

    Trading schedule on CFDs on GER30 and FRA40 indixes
    • May 24th, 2021 – no trading.
    • May 25th, 2021 – trading starts as usual.
    Trading schedule on CFDs on German, Austrian, Danish, Norwegian, and France stocks
    • May 24th, 2021 – no trading.
    • May 25th, 2021 – trading starts as usual.
    Please, take into account these changes in schedule when planning your trading activity.

    * – This schedule is for informational purposes only and may be changed by the provider.

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Trade the Harami Cross?

    Author: Victor Gryazin


    This overview is devoted to the peculiarities and trading method of the candlestick pattern called Harami Cross. This reversal pattern is not frequent but rather strong.

    How does a Harami Cross form?

    The Harami Cross belongs to reversal candlestick patterns and forms on local highs and lows of the price chart. It consists of two candlesticks: the first one has a chunky body while the second one is a Doji (it has no body at all, because opening and closing prices coincide). As a rule, the Doji opens with a gap against the direction of the first candlestick and must rest fully inside its price range.

    The Harami Cross is a special case of the Harami pattern that has its second candlestick small, with a modest body. The Harami Cross is thought to give a stronger reversal signal compared to the normal Harami because a Doji means that market players are doubting, which might entail a correction or a reversal of the current trend.

    Harami Cross types

    The pattern has the bullish and bearish types that form after a downtrend and an uptrend, respectively.

    The bullish Harami Cross forms in a downtrend on the local lows of the price chart. The first large bearish candlestick of the pattern indicates that bears are advancing vigorously. But then a Doji forms, meaning that the bears are almost out of strength and in need of a pause. This entails an ascending correction that might later turn into a trend reversal. The beginning of the correction is confirmed by the growth of the quotations above the high of the first candlestick.
    A bearish Harami Cross appears on the top of an uptrend. The first large bullish trend demonstrates that bulls are actively pushing the market upwards. Then, however, a Doji appears meaning that buyers are already out of force, and bears have a chance to grab the initiative. When the quotations drop below the low of the first candlestick of the pattern, a descending correction starts or even a reversal becomes possible.

    The indicator is displayed in a separate window under the price chart; it consists of three colored lines: ADX, +DI, and -DI. The beginning of a trend is indicated by the ADX line going upwards and crossing the two Directional lines. If the growth of the ADX line is confident, this means the trend is stable, while the other two lines indicate the direction of the trend: ascending or descending.

    https://blog.roboforex.com/wp-content/uploads/2021/05/HaramiCross-en.jpg

    Recommendations on the pattern use

    To use the Harami Cross successfully, check the following issues.
    • The pattern must be preceded by a pronounced uptrend or downtrend; flat is useless here.
    • Use larger timeframes: from H4 and higher.
    • Trade liquid assets (currency pairs, gold, oil, liquid stocks, stock indices).
    • Always place protective orders (Stop Losses) and stick to your money management rules.
    • The second candlestick of the pattern — Doji — can be imperfect, i.e. its opening and closing prices can slightly differ.
    Closing thoughts

    The Harami Cross reversal pattern forms on the local extremes of the price chart in an ascending or descending trend (bearish or bullish Harami Cross, respectively). The probability that the pattern will work increases when it is used alongside tech analysis patterns, support/resistance levels, and trading indicators. Before trading for real, backtest the pattern and practice on a demo account.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    Top-7 Forex Trend Indicators

    Author: Victor Gryazin


    Trading indicators have long become reliable helpers to traders. This article presents seven popular indicators that help define the trend direction and find good entry signals.

    1. The Moving Average

    The Moving Average shows the changes in the average asset price during a certain period. This is one of the simplest and clearest trend indicators, frequently used as a part of more complicated indicators. There are various methods of calculating Moving Averages: Simple, Exponential, Smoothed, Weighted.

    A Moving Average is drawn automatically on the chart as a colored line (the color and width are customizable). Moderate growth of the Moving Average indicates an uptrend, while a decline points at a downtrend. If an MA with a large period (such as 200) crosses the price chart from below, this means a downtrend is changing for an uptrend; if the crossing happens top-down, this means an uptrend is reversing, becoming a downtrend.

    https://blog.roboforex.com/wp-content/uploads/2021/05/Top7-trend-ma-1011x630.png

    2. The Average Directional Movement Index (ADX)

    The ADX indicator helps you to see whether the market is trading in a trend or a flat. This indicator is based on two simpler ones: the Positive Directional Index (+DI) and the Negative Directional Index (-DI).

    The indicator is displayed in a separate window under the price chart; it consists of three colored lines: ADX, +DI, and -DI. The beginning of a trend is indicated by the ADX line going upwards and crossing the two Directional lines. If the growth of the ADX line is confident, this means the trend is stable, while the other two lines indicate the direction of the trend: ascending or descending.

    https://blog.roboforex.com/wp-content/uploads/2021/05/Top7-trend-adx-1017x630.png

    3. Ichimoku Kinko Hyo

    Ichimoku Kinko Hyo is a popular trend indicator designed by a Japanese analyst Goichi Hosoda, known under his pen-name Sanjin Ichimoku. The indicator consists of five lines with different calculation methods; two of them construct a so-called Ichimoku Cloud. Ichimoku is a trend indicator showing the direction and potential of the current trend.

    The indicator is displayed right on the price chart, its lines serve as support/resistance levels and give opening and closing market signals. The indicator is mostly recommended for daily and weekly timeframes, alongside candlestick analysis. However, you can set the indicator for smaller timeframes, such as H4 and H1.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Trade Commodities: Guide for Beginners

    Author: Andrey Goilov


    Speculating commodities is yet another opportunity for investors to make money. Such goods are most often resources that sustain the world economy, and any changes in the latter lead to commodity price fluctuations.

    Many traders are discouraged from trading commodities because trading principles are hard to perceive, while a simple habit of trading currency pairs is strong. If you do decide to take up trading commodities, from this article you will get to know what these goods are, what influences their price, and how to trade them.

    What are primary commodities?

    In this article, I am going to use primary commodities and just commodities as synonyms. Commodities are raw materials meant for further processing and producing some products. Commodities include the results of agricultural work, such as grain, or mineral resources, such as oil, gas, gold, and a much longer list of goods.

    This type of asset is characterized by lengthy trends. Currency pairs get into flats sometimes (which means the quotations demonstrate no clear direction), while oil demonstrates directed movements most of the time. This peculiarity is to be kept in mind when trading such assets. Experienced traders advise opening positions with at least a 6-months perspective.

    What commodities are there?

    All commodities can be split into categories, which are as follows.

    Energy

    Energy carriers are WTI and Brent oil, natural gas, fuel oil, gasoline, etc. Note that Brent has been in a stable uptrend since April 2020. At that time, the quotations were as low as 16 USD per barrel while by now they have reached 70 USD.

    https://blog.roboforex.com/wp-content/uploads/2021/05/Pic-1-brent-07052021-1107x630.png

    Economic stimulation during the coronavirus pandemic made oil prices grow all over the world. Large banks have already started talking about the renewal of a long-term cycle of oil price growth with the aim above 120 USD per barrel. If you are particularly interested in this commodity, I recommend an article devoted to it:

    Metals

    This group contains gold, silver, platinum, copper, and other precious and mined metals. In crises and turmoil, investors often put their money in gold because it is considered a protective asset.

    https://blog.roboforex.com/wp-content/uploads/2021/05/Pic-2-gold-07052021-1119x630.png

    This metal has, indeed, been growing since mid-2018, and in 2020 it renewed another all-time high. The world economy is now coming back to normal, which means oil prices have shrunk somewhat; the danger of a crisis has passed, but traders are still expecting another attempt of growth in the nearest future. We also have an article about gold in our blog, with examples and details:

    Closing thoughts

    Trading commodities is peculiar in several ways. Such instruments are characterized by strong trend movements and increased volatility. Quite probably, the analysis of commodity markets by Ichimoku or Simple Moving Averages will give you better entry ideas than graphic instruments of tech analysis.

    One point of gold or oil costs more than that in currency pairs, so it will be wise to start with a demo account and a strict system of risk management. However, risks are no reason for leaving these instruments unattended as you can always opt for a conservative trading option.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Use Bollinger Strategy for Trading in Forex, Stocks, and Futures Markets

    Author: Timofey Zuev


    Among the most popular indicators for stock trading, there are the Bollinger Bands. They are very sensitive to market volatility and might act as not only support/resistance levels but as target levels as well. The Bollinger strategy is based exactly on these peculiarities of the indicator. It is applicable to periods from M1 to MN, for any instrument in Forex, stock, or futures markets.

    A signal to buy by the strategy

    To use the strategy, you need two price charts:
    1. The first one reflects your working timeframe.
    2. The second one represents a TF 3-5 times larger than your working TF.
    Hence, the strategy can be used with such pairs of TFs as MN and W1; W1 and D1; D1 plus H4; H4 plus H1; H1 and M15; М15 plus М5; М5 and М1.

    The efficacy of the Bollinger strategy on timeframes smaller than H1 depends on the size of the spread in your instrument. For a signal to buy to appear, the following conditions must be fulfilled:
    • On the chart with the older timeframe, one of the two events must happen. The first option is a bounce off the middle Bollinger band of a widespread candlestick pattern (Pin Bar, Engulfing, etc.). The second option is the price crossing the indicator band and closing on the opposite side from that where it opened. Depending on the direction of the bounce/crossing of the middle Bollinger band, we set the direction of trading on the smaller TF. This trend is considered actual before it reverses, i.e. the Bollinger band gets crossed in the opposite direction. There are more special conditions: if, for example, the candlestick that is crossing the middle Bollinger line touches the upper line, do not start looking for a trading signal on the smaller TF.
    • After you detect the trend on the larger TF, look for a Bollinger trading signal on the smaller one. A direct signal to buy is a bounce off the middle or lower indicator line.

    Enter the market by a Buy Stop type order placed a bit above the high of the signal candlestick on the smaller TF.

    An example of a signal to buy

    https://blog.roboforex.com/wp-content/uploads/2021/04/1_EN-945x630.jpg

    Money management for the Bollinger strategy

    You should risk by a comfortable deposit/lot percentage. This is the rule of thumb. If you still feel uncomfortable, increase your TFs. Personally, I recommend to risk the same percentage of a fixed deposit in each trade; the percentage should be below 2%.

    However, as long as I do not have trustworthy statistics about the efficacy of the trading strategy, I strongly insist on backtesting. If you have never used this indicator before, train yourself on a demo account and feel the character of the Bollinger bands.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    How to Forecast Economic Crises?

    Author: Andrey Goilov


    The history of market development and the world’s economy shows that when it comes to an economic crisis, it never comes alone: one crisis will definitely be followed by another one, quite different from its predecessor.

    Analysts and politicians agree that this is a serious problem threatening all the countries of the world. Financial crises are so harmful because people rely on the work of financial institutions every day. Banks give loans and credit cards so that their clients could afford more and buy things with maximal comfort, while insurance companies protect homes and cars from accidents and stealth – but in crises, all these processes get paralyzed and fall apart like a house of cards, pulling along stock markets.

    In this article, I will speculate on the bright economic crises of the past and try to formulate the signs of an economic crisis that might happen in the future.

    Why do economic crises happen?

    In the market, you constantly see the dollar fall, or oil prices fall, and all this due to economic trouble in certain countries. There are plenty of reasons for another collapse to happen, and some of them seem absolutely absurd.

    One frequently raised example is the “tulip-mania” that happened in the Netherlands in 1636. While the price of bulbs kept growing, people spent all their savings on those bulbs. At some point, the price stopped growing and began an aggressive decline, which led to unbelievable losses and a general slow-down of the development of the country’s economy.

    The crisis of 2020, also called “the pandemic crisis”, was provoked by the emergence of the new coronavirus disease. Economic activity shrank all over the globe, unemployment sky-rocketed, while the earnings of people fell to record levels.

    In the first case, you see an example of the so-called “crowd effect” when private investors become euphoric about something, invest massively in this, and inflate a bubble that later bursts and harms the economy of the whole country. This is a good illustration of the saying: “When a shoe shiner starts buying stocks, it is time to leave the market”.

    In the second case, a very random reason made economies all over the world collapse, so that oil futures dropped below zero, which is a record decline in the history of the asset.

    How to forecast an economic crisis?

    There are several ways of making such forecasts, and some of them are already in our blog.

    Time cycles

    A collapse of the stock market and impressive growth of the USD happen every decade. After the Dow Jones index collapsed in 2008, a similar crash happened at the beginning of 2020.

    https://blog.roboforex.com/wp-content/uploads/2021/04/Pic-1-Dow-Jones-1029x630.png

    Hence, you can calculate the date of the next economic crisis with a minor time lag. Based on this version, we should expect the next major crisis somewhere between 2028 and 2030, while the present growth of the stock market must be just speeding up.

    Bottom line

    Unfortunately, economic crises have always been around and will happen in the future. Every next such event is likely to be different from the previous one. However, several types of signals warn you of an approaching crisis, so that an experienced investor can leave the stock market and start buying the USD and gold.

    One of the easiest ways to predict a crisis in advance is to analyze the bond’s yield: this chart predicted the two latest collapses of the Dow Jones and the stock market. This is an easy but informative and efficient way.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    Types of Corporate Actions Every Investor Should Know

    Author: Maks Artemov


    The stock value is influenced not only by economic, political, or geopolitical events but corporate as well. What are corporate events and which of them investors might find interesting?

    We should note that some actions from the list below can have a rather insignificant influence on the stock value, while the others, on the other hand, may force it to plummet or skyrocket.

    Financial statement release

    A Non-Fungible Token is a digital unit, which certifies the right of ownership and uniqueness of digital assets. An NFT can also be created for things in the real world.

    What is a distinctive feature of an NFT?

    Companies publish their financial statements over the previous reporting period. Statements are usually published in the morning before the trading session starts or in the evening after it is over. This is done to avoid significant surges in prices.

    After financial statements are released, investors and traders have enough time to prepare for trading and make decisions on their further activities. As a rule, trading sessions after financial statement releases are opened with a price gap. Periods for reports are the following:
    • Quarterly statements
    • Half year statements
    • Annual statements
    Financial statements published by companies influence their stocks in direct proportion to the profit they received. If the numbers are good, the share price starts rising and vice versa. In theory. In the real world though, it might happen in the opposite wave, and the reason is that companies try to overstate or understate their financial performance. They do it for different purposes and one of them is to attract investors.

    Meetings of the board of directors

    Just like financial statements, meetings of the board of directors also have a significant influence on stocks. During the meeting, a lot of important decisions are made, such as Ex-dividend date, dividend distribution, mergers and acquisitions, stock splits. Boards of directors discuss companies’ current state and their future.

    The date and agenda are usually reported at least 3 days before the meeting, while the results are published after 3 days it was finished.

    Dividend distribution

    On this day, traders or investors receive dividends payable to their accounts. The sum depends on the decision made during the meeting of boards of directors and is calculated based on the company’s financial performance. Dividends can be paid not only when the company performed well but also when its financial statement is negative.

    Closing thoughts

    It’s quite difficult to keep track of all corporate actions when looking for a company to invest in but one can choose the most important of them and focus on them. It often happens that the price of shares may rise or fall before the ex-dividend date or dividend distribution. Investors can monitor the payment schedules of different companies and make an investment decisions based on them.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:


  • Vlad RF
    replied
    What an NFT is and How One can Make Money on It

    Author: Eugene Savitsky


    The stock market is so dynamic that sometimes investors find it difficult to keep track of all tendencies. To avoid such an exhausting race, many of them turn to long-term investments but there are some who always crave adrenaline and try to jump into all possible reckless ventures.

    Last week, I wrote an article about SPAС, shares of which skyrocketed by hundreds of percent and now the time has come for Non-Fungible Tokens (NFT).

    What is a Non-Fungible Token?

    A Non-Fungible Token is a digital unit, which certifies the right of ownership and uniqueness of digital assets. An NFT can also be created for things in the real world.

    What is a distinctive feature of an NFT?

    Here’s an example: an artist is doing a painting, which can be later photographed and uploaded online. This photograph will be copied by other users in the same quality, in which it was initially uploaded. As a result, it will be difficult to see the difference between the original digital painting and its copy, and the original will be only the painting from the real world.

    An NFT allows the creation of a unique code of the painting, which can help to define its original and the true owner in both real and digital worlds. At the same time, an asset can be created in the virtual world without binding it to the same object in the real one.

    But there are some who took it a step further. They destroyed the original painting leaving only its digital copy. It’s difficult to accept but that’s the reality.

    Injective Protocol burned the original painting “Morons (White)”

    Injective Protocol bought a famous Banksy painting from the New York gallery Taglialatella Gallery for $95,000 converted it into an NFT, and then burned the original. As a result, only a virtual asset with a unique code is left. Now the painting doesn’t require any alarm systems, specific storage conditions, and other things to accompany it in the real world.

    A tokenized asset will continue its existence in the digital environment, all the people will have to do is to relocate into the virtual world and everything will fall in its place.

    Where can an NFT be used?

    As you have already understood, one of the applications of tokens is artwork-collecting. An NFT is created for originals of paintings and sculptures, and when the owner wants to sell a physical object, they can place an NFT on auction and it will be enough for proving the authenticity of the asset and the right of ownership.

    In online games, users often buy clothes, lands, weapons, characters, and other gaming accessories. Creating NFTs for virtual objects will allow arrogating the right of character ownership for example, and this right will be beyond the game developer’s power. Such objects could be exchanged or bought for real money. This might fuel further development of the gaming economy

    Personal identification can also be one of the areas of potential NFT usage. Passports, driving licenses, birth certificates, and other personal documents can be assigned with NFTs, which can be used for approaching different institutions in your country or outside it without personal attendance. Probably, the coronavirus may lead to the creation of COVID-passports using NFTs.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team

    Leave a comment:

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