RoboForex - Forex Broker: overview and news

[RF roboforex]

Dear traders!

This week, a RoboForex project called ContestFX offers you the following competitions:

The 146th competition of "Demo Forex" has crossed its "Equator".
The 414th competition of "Week with CFD" has just kicked off.
The 548th competition of "Trade Day" will start on 24.05.2023 at 12:00.
The 462nd competition of "KingSize MT5" will start on 25.05.2023 at 20:00.

We would like to remind you that all winners of our demo contests receive prize funds to their real accounts, and they can use those funds for trading on the Forex market instead of investing their own savings.

Don't miss your chance to be one of the winners!

Sincerely,
RoboForex Contest

[Vlad RF]

Why Would Private Trader Become Manager?

Author : Vadim Kovalenko

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Dear Clients and Partners,

Coming to the world of trading and investments, beginners see reaching the desired profitability as their first goal. The only success that is considered truly decent is the situation when a person earns their living by just investments in financial markets.

I would like to remind you that trading is such an occupation that anyone can learn, yet it lacks a career ladder in its classical way. Success expresses itself in the quality of trades and the money you make. Even if you get the maximum from your trading talents, you might still earn less than you need for satisfying your basic needs. Hence, many face the question, what is next.

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One way is to start working with investors and attracting money for trust managing. Being a manager, one can increase their working capital several times, and profit will also increase several times in absolute values with the same profitability in relative values. This article is devoted to the correctness of the idea and the underwater rocks on your way to the long-craved financial freedom.

Trading on your own: pros and cons

Let us get started with finding out what means trading on your own, what peculiarities this process has and what conditions it requires. Here we set the rules ourselves, choosing the trading strategy, instruments, and acceptable risks. You only have your own money on the account, so no one will suffer from losses if you fail. Theoretically, your income is limited by nothing but your deposit and psychological peculiarities. This is mostly the main reason to become a financial market player.

Now – to the advantages and drawbacks of retail trading. The pros are:

• An easy start. To become a trader nowadays, you only need to register an account at a broker and deposit it upon verifying.
• A low entrance threshold. To start trading, even 10 USD might be enough. In this case, sure, there is little chance for earning your living.
• Making fast decisions. You do not need to consult or notify anybody of the decisions you make in the market.
• Profit. As long as you change your instruments and risk levels yourself, you are the one to reap the benefits of your work. Moreover, you also decide when to withdraw or deposit funds.
• Tax incentives. In certain countries with developing market economies retail investors have the right to pay lower taxes.

And here are the drawbacks of this job:

• Shortage of funds. A trader can earn up to 5% of their deposit; if the latter is 1,000 USD, you will hardly feel that you make any profit at all. To save a decent sum, you will need at least several years. If you are not employed, you will find yourself in real financial trouble.
• Time. You will spend several years to learn the theory of trading and drill your skills. Learning in this sphere is continuous.
• Commission size. As a rule, brokers provide individual conditions to VIP clients only. An ordinary trader has to trade on general conditions that do not always comply with their trading strategy.
• Psychological load. If your welfare depends solely on your trading, this will be a source of constant stress.

As you see, private trading has both pros and cons. Remember that for making a more stable profit and having a palpable income you need to operate sums starting 100,000 USD. Few traders have such a capital, hence, others decide to attract other people’s money for investments

Asset manager – an important stage of a trader’s development

Overcoming the difficulties of individual trading, a fresh-from-the-oven manager will start looking for money. You can find partners both on the Internet and offline.

Investment account

The majority prefer opening a special account at a broker with public statistics that investors can deposit. In this case, you can avoid personal contact with investors and work just via answering their comments online. To attract partners this way, you need to demonstrate your success and enter the top-10 rating of investment accounts. Money attracted this way are seldom over 5,000 USD.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[Vlad RF]

How Does Gold Influence on Forex?

Author : Victor Gryazin

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Dear Clients and Partners,

Gold is one of the first metals that people learned to mine, process, and use. First gold artifacts belong to the pre-dynastic period in Ancient Egypt, i.e. about 5000 B.C. Thanks to being beautiful, rare, and durable, gold has always been used as a universal exchange means, an analog of money.

In this article, we will discuss how the fluctuations of gold quotations influence the prices on Forex.

Gold standard

The gold standard is a monetary system that emerged as a result of the wide use of gold as a universal currency. The gold standard guarantees that all the issued money can be exchanged for the corresponding amount of gold on demand. In transactions between countries that use the gold standard a fixed exchange rate of the currencies is used, based on the standard.

The gold standard that was in force after WW2 was accepted at a conference in Bretton Woods. According to the international agreement, the USA was committed to providing for the gold standard of 35 USD per troy ounce of gold. Only countries represented by their Central banks got the right to exchange dollars for gold. So, at that time the USD was really supported by gold and acquired the status of the global reserve currency.

The epoch of the gold standard ended in 1971 when the USA abandoned the free exchange of the USD for gold. The main reason for the collapse of the Bretton Woods system is the excessive quantity of dollars issued by the USA that were not supported by gold anymore. Since then, the amount of dollars in the world economy keeps growing, currency rates are set by the market, while gold is growing more expensive every year, renewing all-time highs.

This year, gold set another record, rising above 2,000 USD per troy ounce. And the growth of gold is likely to continue because the USA keeps printing dollars and pouring them into the global economy.

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Which currencies are influenced by gold?

The price of gold can influence the rates of almost all currencies. Changes in the demand for and supply of gold affect the USD firsthand because the price of gold is usually given in the USD. Also, the dynamics of gold prices significantly influence those countries that produce the metal at a scale, important for their economies.

The US dollar

As long as the US dollar is currently the main global reserve currency, the price of gold is conventionally given in the USD. Gold and the dollar have inverse correlations: if the dollar falls, gold grows, and if gold falls, the dollar grows. Gold is often considered to be a means of protection from inflation: the former grows alongside the latter. The growth of the world gold reserve might drive the USD down.

The role of gold in crises

During economic and geopolitical crises, gold is likely to grow because trust in currencies decreases. Gold is, in essence, the oldest universal currency, not bound to any national currency. Gold is the most important indicator of global economic and political development.

Beginning crises usually entail a slump in the stock market. As a rule, this pushed gold prices upwards. Investors, getting rid of declining stock assets, buy gold to decrease the risks of their investment portfolio, and get protection from the falling of currency rates.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[RF roboforex]

Dear traders!

This week, the ContestFX project invites you to take part in the following demo contests:

The 146th competition of "Demo Forex" has gained "full speed".
The 413rd competition of "Week with CFD" has just started.
The 547th competition of "Trade Day" will start on 17.05.2023 at 12:00.
The 461st competition of "KingSize MT5" will start on 18.05.2023 at 20:00

To join the community of winners, all you have to do is to go through a short registration procedure just once, after which you will be able to participate in any of the contests you like with just a couple of mouse clicks.

We're looking forward to your joining in and wish you good luck!

Sincerely,
RoboForex Contest

[Vlad RF]

False Signals in Forex: How to Detect and Avoid Them?

Author : Maks Artemov

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Dear Clients and Partners,

Having opened a position, many traders ponder at the question: “Why did it close with a loss if I seemed to do everything right? Almost all signals by the strategy were there but in the end, the price went in the opposite direction”. The keyword in the question is “almost”. Sometimes the market makes movements that you cannot forecast or calculate, in which case indicators turn out virtually useless. What was the point? What went wrong? The answer is simple: the trading strategy gave a false signal, and the trade turned out losing.

Let us try to make it clear why such things happen and why false signals appear.

Why do false signals emerge?

News is, perhaps, the most frequent reason for false signals. As you know, the market accounts for everything, and before some news is officially published, the quotations react and start moving in a certain direction. Normally, if some preliminary results turn out better than expected (such as the GDP reports), the quotations will grow. However, practice shows that the quotations start growing before the publication of the news itself, and at the renewal of the data, the market makes an abrupt reversal and starts a steep decline.

At this moment, Stop Losses trigger at the positions opened beforehand, and impatient market participants worsen the situation, craving for a swift and large profit. Several minutes after the publication of the news, the market calms down, and the price starts going in the correct direction.

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False breakaways of levels

In tech analysis, the most widespread false signals are false breakaways of levels. There are two options of trading support and resistance levels: to trade bounces off them or their breakaways. Here is where market players get mistaken.

Let us imagine trading bounces off the resistance level. The price reached the level, and the trade decided to open a selling trade. They placed the SL behind the level (in a safe zone) but the price broke the level away and close the trade by the SL.

What do impatient traders do in such cases? Normally, they open an opposite (buying) trade and get their position closed by the SL again. The conclusion is simple: impatience and hurry will never do you good in trading.

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How to avoid false signals?

As I have said above, you will hardly exterminate false signals altogether. But minimizing their number is available to almost any trader, just follow several rules:

When trading the news, check the history

Using fundamental analysis for trading, study the influence of some news on the market historically. Quite often, the market reacts to the same news in the same way, so you can forecast the reaction and make the right decision.

Do not hurry to open an opposite order

If your first position closed by the SL, do not rush at opening an opposite one. In most cases, the market will carry on in the direction of your initial position. Note that you usually open an opposite order not by the strategy but emotionally.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[Vlad RF]

How to Trade the “Base 150” Strategy

Author : Victor Gryazin

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Dear Clients and Partners,

In this review article, we will talk about the medium-term indicator strategy “Base 150”. We will explain how it works, how to set the indicators, and how the strategy can be used in trading.

How the “Base 150” strategy works

This indicator strategy uses four exponential moving averages (Moving Average, MA) – EMA (6), EMA (25), EMA (150), and EMA (365) – to confirm the trading direction and search for trading signals. This indicator has long been considered a simple and effective tech analysis tool, which helps determine trend movements and support or resistance areas on the price chart.

The name “Base 150” comes from the first version of the strategy, which used only one slow-moving average EMA (150). This trading approach was later improved to include one more moving average EMA (365), but the name remained unchanged. In this strategy, the Moving Averages not only serve as trend indicators but also as dynamic support/resistance levels, which are used to conduct trades.

How the “Base 150” strategy works:

• To find buy signals for a financial instrument, the quotes should rise above the slow EMA (150) and EMA (365), thereby confirming the uptrend. Next, the trader needs to wait for a downward correction until the price first touches one of the four moving averages, followed by an uptrend reversal – this will be a signal to buy
• To find sell signals for a financial instrument, the quotes should settle below the slow EMA (150) and EMA (365), thus confirming the downtrend. Then the trader needs to wait for an upward correction until the price first touches one of the four moving averages, followed by a downward reversal – this will be a signal to sell

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The “Base 150” strategy is primarily aimed at trading the EUR/USD, GBP/USD, USD/CHF, and USD/JPY currency pairs. However, it is versatile enough and can be used to trade other financial instruments. The recommended timeframes on the chart are H1, H4, and D1. Trades are made in the direction of the trend after the price rebounds from the Moving Averages. Risk management for this strategy implies that possible losses per trade should not exceed 1% of the deposit.

How to set up the Moving Average indicators

To set up the indicators on the popular trading platforms МetaTrader 4 and МetaTrader 5, follow these steps:

1. Open the terminal and log in to your account.
2. Select the chart of your desired instrument.
3. From the Main Menu, go to – Insert – Indicators – Trend, and then click on Moving Average.
4. In the settings window that appears, select period 6, the colour and width of the line, MA method – Exponential. Click OK to apply the parameters and close the settings window.
5. Repeat the actions above for the other three moving averages. In the settings window that appears, select the periods 25, 150, and 365, the colour and width of the line, MA method – Exponential. Click OK to apply the parameters and close the settings window.
6. As a result, the chart will show four Moving Averages – EMA (6), EMA (25), EMA (150), and EMA (365).

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How to buy with the “Base 150” strategy

• The market is in an uptrend, with the quotes and fast-moving averages EMA (6) and EMA (25) rising above the slow-moving averages EMA (150) and EMA (365)
• The trader waits for a downward correction until the price first touches any of these moving averages, followed by an upward price reversal. Further touches should be ignored as the trade is to be opened only after the very first touch
• For a more accurate entry when the price touches the moving average, a lower timeframe (e.g. H1 for H4 or H4 for D1) can be used to trace how quotes reverse upwards
• In case of an upward reversal, a buy position is opened. If there is no reversal, the signal is ignored, and the trader waits for other moving averages to be touched
• Stop Loss is set just below the local low formed by the correction. The expected Take Profit should be twice the Stop Loss amount

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[RF roboforex]

Dear traders!

This week, a RoboForex project called ContestFX will continue, as usual, with the following competitions:

The 146th competition of "Demo Forex" entered its second week.
The 412th competition of "Week with CFD" has just started.
The 546th competition of "Trade Day" will start on 10.05.2023 at 12:00.
The 460th competition of "KingSize MT5" will start on 11.05.2023 at 20:00.

We would like to remind you that all winners of our contests receive prize funds to their real accounts, and they can use those funds for trading in Forex instead of investing their own savings as the starting deposit.

We wish good luck to all of you!

Sincerely,
RoboForex Contest

[Vlad RF]

How to Trade the “Two Moving Averages + Fractals” Strategy

Author : Victor Gryazin

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Dear Clients and Partners,

In this overview, we will describe the simple medium-term swing trading strategy “Two Moving Averages + Fractals”. We will explain how it works, how to set the indicators, and how it can be used in trading.

What is swing trading?

Swing trading is a medium-term trading style that implies working with various financial instruments over the course of a few hours to a few weeks. As a rule, swing traders open trades in the direction of the current trend to catch the price movement momentum after the end of a local correction. In their search for trading opportunities, swing traders mainly use technical analysis.

How the “Two Moving Averages + Fractals” strategy works

The strategy uses two moving averages (Moving Average, MA) – the EMA (10) and SMA (30) – to confirm the trading direction and search for trading signals. The MA indicator has long been considered a simple and effective tech analysis tool, which tracks trend movements well. To pinpoint entry and exit points on the price chart, the strategy also uses Bill Williams’ Fractals indicator.

How the strategy works:

• To find buy signals, the trader needs a downward correction after an upward price impulse. The EMA (10) must be above the SMA (30), confirming the uptrend. During the correction, the price should fall to the SMA (30) and form an uptrend reversal with the formation of a lower fractal – this will be a signal to buy
• To find sell signals, the trader needs to wait for an upward correction after a downward price impulse. The EMA (10) must be below the SMA (30), confirming the downtrend. During the correction, the quotes must rise to the SMA (30) and form a downward reversal with the formation of an upper fractal – this will be a signal to sell

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It should be noted that the Two MAs + Fractals strategy is particularly suitable for trading various financial instruments. The recommended timeframes on the chart are H1, H4, and D1. Trades are made in the direction of the trend at the end of the correction.

How to install the Moving Average and Fractals indicators

To install the indicators on the popular trading platforms MetaTrader 4 and MetaTrader 5, follow the process below:

1. Open the terminal and log in to your account.
2. Select the chart of your desired instrument.
3. From the Main Menu, go to – Insert – Indicators – Trend, and then click on Moving Average.
4. In the settings window that appears, select the period 10, the colour and width of the line, MA method – Exponential. Click OK to apply the parameters and close the settings window.
5. Repeat the actions above but in the settings window select the period 30, the colour and width of the line, and the MA method – Simple. Click OK to apply the parameters and close the settings window.
6. Go to the Main Menu – Insert – Indicators – Bill Williams, choose Fractals
7. In the setting window that pops up choose the colour and size of the fractals; other parameters are set up automatically. Click OK to apply the parameters and close the setting window.

https://blog.roboforex.com/wp-content/uploads/2023/04/MAandFractals-2-1536x822.png
How to buy with the “Two MAs + Fractals” strategy

• The market Is in an uptrend, and the EMA (10) is above the SMA (30)
• During a downward correction, the quotes drop to the SMA (30) and form an upward reversal with the formation of a lower fractal
• The trader opens a buy position and sets the Stop Loss just below the local low formed by the correction
• The position is closed when the opposite upper fractal appears on the chart

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[RF roboforex]

Dear traders!

In the first week of May, the ContestFX project offers you the following demo contests:

The 146th competition of "Demo Forex" and the 411th competition of "Week with CFD" have just started.
The 545th competition of "Trade Day" will start on 03.05.2023 at 12:00.
The 459th competition of "KingSize MT5" will start on 04.05.2023 at 20:00.

If you have never taken part in our contests, all you have to do is to go through a simple registration procedure on our website and get access to any competitions in just a couple of mouse clicks.

Join us, it won't be boring!

Sincerely,
RoboForex Contest

[Vlad RF]

How Should a Beginner Prepare a Trading Plan?

Author : Victor Gryazin

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Dear Clients and Partners,

In this overview, we will discuss preparing trading plans. A trading plan helps evaluate the current market situation and make the trader’s plans come to life.

What is a trading plan necessary for?

A trading plan is something like a road map for traders. Based on the trading strategy that you use, a trading plan formulates existing trading opportunities and promising trades. Promising trades are those that have a high probability of a success; they are made in the right place, at the right time, with a moderate risk and a good potential profit.

A trading plan must describe your trading ideas, your analysis of the current situation in detail. It makes a “picture” of your view on the market on paper (or in a file). On the whole, successful analysis and a correct opinion about the market do not guarantee good trading by themselves, however, your current thoughts can show you the field where you can look for trading ideas.

Having a clear and easy-to-understand trading plan, a trader stops making chaotic emotional trades. They are no more a helpless wood chip on market waves. They set their sails and starts off towards their profit, finding and closing promising trades. Thanks to the plan their trading becomes more efficient.

Preparing the plan

The process of preparation can be split in several steps: technical picture, fundamental factors, additional signals (indicators), risk control, taking the profit. Active traders make trading plans every day in the morning, bringing it to life during the day with necessary corrections and amendments.

Step 1: Technical picture

To evaluate the technical picture in an instrument, we use good old tech analysis. Open the chart of your financial instrument, check several timeframes (starting with larger ones and going down to smaller ones), and mark all the important factors:

• Trend direction, trend lines
• Support and resistance levels
• Tech analysis patterns
• Additional signals: Fibonacci levels, candlestick combinations, Price Action patterns, various original methods.

After you have marked everything on the chart, find suitable entry points on it by your strategy. Choose signals based on which you will open your position: a breakaway of or a bounce off an important level, exiting a price range, a complete tech analysis pattern, etc. Mark all the entry points and confirming signals in your trading plan.

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Step 2: Fundamental factors

The main thing that pushes quotations in the market forward is fundamental news, such as decision on interest rates, publications of macroeconomic indicators, speeches of politicians, etc. Such news provokes volatility and gives guidelines for quotations.

To find out which news will come out and when, use an economic calendar. Open it in the morning and mark important events of the day. After some serious data emerges, a signal to open a position by your trading plan might appear – this is the gist of trading news. Or, on the contrary, you will have to close a profitable position or minimize risks (by pulling the Stop Loss closer) before some data appears.

Step 3: Signals from indicators

These days, there are plenty of indicators that help traders carry out holistic market analysis. Trading indicators are mathematical functions based on price or volumes. They not only help to analyze the market but can also give additional trading signals. Some indicators are good for trends, some – for flats, some are universal.

As a rule, traders use indicators as a supplement to tech analysis. Indicators can give confirming signals for opening positions; show the direction of the trend; give indications for placing Stop Losses and Take Profits. Write down the indicators you use and the opening and closing signal they give in the trading plan.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[RF roboforex]

Dear traders!

This week, the ContestFX project, as usual, is waiting for everyone to participate in the following competitions:

The 145th competition of "Demo Forex" has almost reached its final.
The 410th competition of "Week with CFD" has just kicked off.
The 544th competition of "Trade Day" will start on 26.04.2023 at 12:00.
The 458th competition of "KingSize MT5" will start on 27.04.2023 at 20:00.

All winners of our contests receive prize funds on their real trading accounts, and this money can be used for trading in Forex instead of investing the traders' own savings.

Don't miss your chance to be one of the winners!

Sincerely,
RoboForex Contest

[Vlad RF]

What is Price Action Analysis?

Author : Timofey Zuev

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Dear Clients and Partners,

Today we will talk about price action analysis, an important aspect of technical analysis on Forex. Price Action analyzes price behavior and patterns and can identify almost any market trend.

What is the subject of Price Action analysis, and how does it differ from graphic or indicator analysis?

The graphic analysis is meant to detect certain patterns on the chart that often reflect the interaction of demand and supply (buyers and sellers). For example, a Triangle, often emerging in the way of the trend, is normally a trend continuation pattern. In essence, a trader practicing graphic analysis need only to know this fact (that the Triangle is a trend continuation pattern) to make a decision. This simplifies analysis but creates additional limitations.

If the trader wants to figure out the reasons for the price movement, such an explication will not suffice – they need a more intricate understanding of market mechanisms. This need leads many traders to Price Action analysis.

Some say that Price Action analysis is just the analysis of simple candlestick patterns. Say, Rail or Pin Bar signal about an upcoming reversal, a breakaway of the inner bar signals to buy, etc.

In reality, such a simplistic approach to Price Action analysis will hardly be efficient: if you are eager to understand market processes from scratch, your analysis must become more complicated, not simpler. The number of details and factors that you must pay attention to will increase in a non-linear manner, and making decisions will become harder because the number of conflicting parts of the picture will grow (more signals and scenarios will appear for both buys and sales).

Of course, a trader does not need to see and understand everything: in the end, every market player chooses two or three trading styles and focuses on several types of events, such as breakaways of ranges or the appearance of trends two-three weeks long, etc. However, the understanding of Price Action frees the trader from a fixation on certain patterns – they start to operate principles and become able to find trading opportunities in virtually any market.

On the one hand, information becomes so plentiful that it needs filtration and specialization in a limited number of market situations; on the other hand, the abundance of information lets the trader see more in the market that forms no known-by-all pattern and gives no direct answers.

What does Price Action analysis consist of?

Understanding of patterns

A pattern is a figure on the chart that indicates some market process with a higher or lower probability. For example, if on the chart we see a candlestick with a large body and several other candlesticks that the first one incorporates, we may presume that the market is consolidating, and the following few hours, at least, the price will remain within the range. Why is this information helpful? For example, if we have decided to buy along with the trend, we should wait until the consolidation is over, or the price escapes the range. Similarly, we may see a 1-2-3 pattern that often indicates a beginning reversal.

However, just knowing the patterns is not enough: this alone will not give you any statistical advantage because the predictability of any financial market is quite low, no higher than 60% but normally lower. Forecasts seldom correlate with real events. Any forecast must be confirmed by price dynamics.

Watching price dynamics

This point is named like this for a reason: on history, charts look smooth and appealing, but in real-time, the market moves smoothly from point A to point B extremely rarely, if ever. Much more often, the market leaps abruptly in this or that direction, causing imbalance to traders. How could we use this information?

In fact, it is price dynamics that may indirectly indicate certain market processes. For example, increased aggressiveness and speed of market movements will most likely mean a lack of directed demand and supply (when the asset is accumulated for subsequent medium- and long-term positions) followed by a lack of a trend. A combination of sloppy price dynamics in consolidations with bolt-like breakaways in the direction of the trend will, on the contrary, most often indicate trend scenarios.

A bright example

Imagine an auction selling antiques. An auction house (best auction houses are usually English) puts something on sale for 1000 pounds but it turns out that no one wants to buy the thing for such a price. The auctioneer decreases it: 950 pounds, 900, 850, 800. AT last, a gentleman on the right is ready to buy. The auctioneer starts counting but an elderly lady offers 850 pounds. More and more participants get involved in the process, and the price soon overcomes 1000 pounds, where trading started, What has happened? Does the price not seem high anymore, or did auction players suddenly realize the value of the lot? In reality, the participants got involved in mass action, scared by rivalry or a probability to miss something important – anyways, the auction process has little in common with the real evaluation of a thing.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[Vlad RF]

Situational Vs. Systematic Trading: Which One is More Efficient?

Author : Andrey Goilov

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Dear Clients and Partners,

To be successful on financial markets, you need a neat trading system that will give you a clear understanding of how to enter and exit the market either with a profit or a loss. The rules of money management are also worth sticking to as they will psychologically prepare you for a series of losing trades as well as profitable ones.

Trading with a high-quality system is different from trading without one is also better in the sense that you do not need to think about whether the situation on the market is good enough to enter. You simply follow the rules and open or close trades, moving along the price chart.

Unfortunately, no one can tell if the current pattern will be executed or you will have to close it at the Stop Loss. To find out, you just have to trade the chosen method. Of course, you can use certain lifehacks and take measures to increase the probability of the execution of the signal, such as trading on a demo account until you receive two losing positions and only then moving to a real one. There are plenty of ways and methods of trading in the world, and every day millions of traders try to conquer the market.

In this article, we shall have a look at the pros and cons of both systematic and situational trading, discuss their differences, and speak about the practicability of each of them.

Systematic trading

Here, we are talking about a simple indicator-based system that will give the same signals to a dozen of different traders. As a rule, systematic trading does not allow for more than one opinion about the current market situation; the trader just needs to open a position and wait or to wait for a signal to enter the market.

In one of our posts, we spoke about the Ichimoku indicator. At first glance, it seems too complicated, but it boils down to trading the trend and waiting for the entrance signal to form. After that, we open a position and wait for the signals to form. For example, if the price breaks through the Ichimoku Cloud bottom-up, then you can buy.

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If the price breaks through the Cloud top-down, the trend is likely to be descending, so you can sell. You do not need much time to make a decision, following the rules is enough.

Sure, in the times of a flat, you will be getting the breakaways all the time and either be opening and closing too many positions bringing no profit or suffering a series of insignificant losses. However, as soon as a trend begins, the market will be bringing the prices farther and farther from the entrance point. In such a case, you simply need to move the SL and hold the profit until the market reverses and closes your position.

Pros of trading along with the rules

It can often be heard that a good system is no more than 20% of success on the market while the remaining 80% is the ability to follow the rules of money management and stick to your own rules in the hard times, which will happen periodically.

As Victor Niederhoffer used to say: "In investments, as well as in life, the question is not whether you will be knocked down but when it will happen and whether you will manage to get up and keep fighting. The risk of failure is an essential part of human experience which is especially visible on financial markets dominated by speculation, which is the readiness to accept commercial risks".

A huge advantage of such an approach is the easiness of market analysis and decision-making. The lines have crossed — we sell, the lines have crossed back — we close the position and open a new one. If we hand the method to other traders, they will see the same crossings and will sell the same way due to the signal lines crossing. What is more, the trader feels less emotional pressure as he leaves decision-making to the system.

Pros and cons of situational trading

It must be admitted that an experienced trader can show a better result in trading graphic patterns than someone who has just seen a pattern and is trying to use it. In other words, experience is critical here. If you practice situational trading, you will have to think a lot and sometimes make hard decisions, which is lacking in the systematic approach to trading on financial markets.

So, analyzing charts regularly on different timeframes and sticking to your own rules of trading, sometimes postponing open positions due to low volatility, may be very hard in the long run. What should the trader choose?

How to choose an approach for a trader?

If the trader is new to the market, systematic trading by strict rules might be the best option. It will spare them from excessive market entries without good signals as well as decrease emotional pressure during a series of losing positions. In the process of trading, the beginner will be moving along the stages of a trader's development to the top where they can use their experience for situational trading, getting rid of some strict signals of the system that has shown the worst results.

We should not forget that a good system is just 20% of the overall result: you have to master risk control and feel confident suffering losses and locking in profit. A sports car will not make a racer out of an ordinary driver; same way, for situational trading you need experience and knowledge.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

[RF roboforex]

Dear traders!

This week, a RoboForex project called ContestFX will continue with the following competitions:

The 145th competition of "Demo Forex" has been running since the beginning of the month.
The 409th competition of "Week with CFD" has just started.
The 543rd competition of "Trade Day" will start on 19.04.2023 at 12:00.
The 457th competition of "KingSize MT5" will start on 20.04.2023 at 20:00.

It does not take much effort to participate in our contests: all you need to do is to go through a simple registration procedure, and then any of the competitions you like will be available to you in just a couple of mouse clicks.

Good luck to all traders!

Sincerely,
RoboForex Contest

[Vlad RF]

How to Trade the Three Moving Averages + MACD Strategy

Autho : Victor Gryazin

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Dear Clients and Partners,

In this article, we will look at a medium-term indicator trading strategy based on using three Moving Averages and MACD. We will learn how to set these indicators on the chart and apply them in trading.

How the Three Moving Averages + MACD strategy works

The "Three Moving Averages + MACD" strategy, as the name implies, is a trading system based on the combined use of trend indicators’ Moving Average (MA) and MACD (Moving Average Convergence/Divergence) oscillator signals. These are popular and in-demand tools, which are often used in various trading systems. To trade on the strategy, three exponential Moving Averages (EMA) with periods of 5, 15, and 50, and the MACD with parameters 12, 26, and 9 are applied to the chart.

The Moving Average has long been proven to be a simple and effective tool for trend following. In this strategy, the slow EMA (50) is used to identify the direction of the current trend and acts as a guide to limit risk, while the faster EMA (5) and EMA (15) are used to identify points to enter the market.

The MACD indicator belongs to the oscillator group. It helps to determine the trend direction, strength and duration, price range, and reversal levels and to receive trading signals. The MACD is used in this strategy to confirm the priority trading direction.

How this strategy works:

• When the EMA (5) crosses the EMA (15) from bottom to top, there is a buy signal. The price chart should be above the EMA (50), and the MACD histogram should be in the positive zone (above 0)
• When the EMA (5) crosses the EMA (15) from top to bottom, there is a signal to sell. The price chart should be below the EMA (50), and the MACD histogram should be in the negative zone (below 0)

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How to use the strategy in trading

The Three Moving Averages + MACD strategy is primarily focused on the EUR/USD and GBP/USD currency pairs. Recommended chart timeframes - H4, D1. Recommended Take Profit (5 digits) for EUR/USD: H4 time frame - 1000 pips, D1 time frame - 2000 pips. Recommended Take Profit values (5-digit quotes) for GBP/USD: H4 time frame - 1250 pips, D1 time frame - 2500 pips. Stop Loss is set immediately after the EMA (50).

Three Moving Averages + MACD Buy Signal

• Prices begin to rise, EMA (5) crosses EMA (15) from bottom to top
• The price chart is above the EMA (50)
• The MACD histogram is in the positive zone (above 0)
• A buy position is opened, and the Take Profit value is set according to the above recommendations
• Stop Loss is set just below the EMA (50)

Three Moving Averages + MACD buying example

• On 17 March 2023, on the H4 chart of the GBP/USD currency pair, the red EMA (5) crossed the blue EMA (15) from bottom to top
• The price chart was above the green EMA (50) at this point
• The MACD histogram was in the positive zone (above 0)
• The buy position was opened at 1.21070, and Take Profit was set 1250 pips higher at 1.22320
• Stop Loss was set just below the EMA (50), at 1.20500

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Three Moving Averages + MACD Sell Signal

• Quotes begin to decline, EMA (5) crosses EMA (15) from top to bottom
• The price chart is below the EMA (50)
• The MACD histogram is in the negative zone (below 0)
• A sell position is opened, and the Take Profit value is set according to the above recommendations
• Stop Loss is set just above the EMA (50)

Read more at R Blog - RoboForex

Sincerely,
RoboForex team