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Investing

Are you concerned about your trading capital?

Rookies in the trading business will always have tensions of losing their money. In the case of the traders who barely have any experience in trading, they are most likely to think about the profit potential of the business. But right after starting to trade the market, the concept will change. Because you will learn how it feels to trade the real market. From each trade, the traders will get new experiences and results.

According to a recent study more than 95 percent of traders are losing money. So it’s obvious, the rookies are inevitably going to lose their capital. But this doesn’t mean every trader will blow up their trading account. By following some simple strategies you can easily protect your trading capital. In this article, we are going to discuss some necessary concepts of ensuring money management is working to its full potential. With the best possible strategies, you can define the right control over the capital. At the same time, decent risk to profit margin can be ensured too.

Hold the excitement of earning profits

When you have no skills or knowledge on a certain topic, emotions tends to prevail strongly. That is why the novice traders think about the profit potentials from CFD trading business. After starting to trade the real market, they blow up the trading account. But most traders cannot effort to lose too much just to learn the process. They need some secure strategies to work with. To manage that, they have to control their excitement first. This is because disturbance from your emotions is prominent and it is not going to help you in real life trading.

You might think to risk 2% of your account balance at the initial stage but this is not how things work. You have to determine the risk exposure for each trade based on the quality of the trade setups and buy stocks at the right price. Emotions should never play a vital role and determine the lot size of risk factors in trading.

Developing your risk management policy

To run any business successfully, you need to think about risk management because it is a process to control all the costs associated with the system. But when it comes to Forex trading profession, things are little bit different. Here, you may not get the associated costs but the result of trading is highly dependent on money management skill. Think about following the same 2% risk management policy we mentioned earlier. The trading approaches will be much more subtle with simple market analysis. Your mindset will not hype for big profits. This will eventually help you to find high risk reward ratio trade setups.  It helps you to trade with proper risk exposure without compromising the quality of your trades. Try to embrace the idea of quality over quantity for your business.

Strictly follow a certain strategy

While you are following the plans made by yourself, it has to be maintained strictly. Drifting apart from your trading edge is not so helpful for the business performance. Being a rookie trader in Hong Kong, your mentality can fall for any expert’s policies or strategies at any instant. Though the style may be the same as yours, executing the trades with a random strategy will end with poor results. You can still take opinions from others but with proper testing. Use the demo account to testify what you get from others. If it ends up effective, place the live trades accordingly. At the same time try to adapt yourself with new ideas or plans. This is because without acceptance, it is very hard to improvise or modify a particular edge of an individual.

Investing

3 Effective Technical Indicators for Forex Traders

Entering the forex market by opening a trading account is only the beginning. Yes, you can start making trades and use existing systems or strategies to make money, but nothing beats understanding the market. You can grow your portfolio and maintain a more sustainable trading experience in the long run when you know how to analyze the market.

Fundamental analysis is important, but you cannot negate the fact that technical analysis can help you understand the market better. Through the use of technical indicators, you can understand where the market is going, how it is reacting to fundamentals, and the kind of trades you need to make in order to adapt to those insights.

So, which technical indicators should you use to fully understand the market? There is no definite rule to follow in this department. Every trader tends to rely on different indicators to analyze the market. There are, however, some technical indicators that are known to be very effective, and we are going to review them in this article.

Moving Average

Moving Average is the most popular technical indicator of them all. It is an indicator that virtually every trader uses to see the bigger picture while focusing on market prices. Moving Average, or MA, simply measures the prices of a forex pair across a predefined time period. A 200 MA, for example, usually represents the average price of the forex pair over 200 days.

When trading, you can use multiple MAs to indicate different things. Combining MAs of different time periods is useful for when you want to specifically measure market trends. The single Moving Average line can also be useful for identifying support and resistance points.

Earlier last year, EURUSD’s rally was stopped when it hit the 200 MA. This wasn’t the first time a strong rally stopped when it reached a certain price represented by the pair’s Moving Average. At the same time, you can measure resistance when the current price is above the longer Moving Average indicators. The simplicity of MA makes this indicator incredibly popular among traders.

Relative Strength Index, or RSI

Relative Strength Index, or RSI, is the next indicator on our list. Similar to Moving Average, RSI is also incredibly simple to use. It is basically an oscillator that depicts the general market trends and movement. It oscillates from one side of the equation to the other based on how the market moves. When the RSI hits a certain point – or breaks a barrier – you can expect a reversal or a correction.

Spend some time observing how RSI represents real market trends and you will immediately understand how easy it is to use this technical indicator. Even on a reversal, you will see the RSI oscillator going down to its lowest point, even when the market is relatively sideways.

Since RSI is very useful when combined with other technical indicators, it is one of the most sought-after indicators on the market. If you are comparing brokers you will need to read reviews. You can find a review of top names such as IC Markets here: https://investingoal.com/. You will notice that many of them list RSI as a must-have technical indicator.

Moving Average Convergence Divergence, or MACD

The Moving Average Convergence Divergence, or MACD in short, is an even more interesting oscillator than RSI, despite being less popular. A lot of traders – especially beginners – find MACD to be too complex to set up and use, when in fact it is incredibly intuitive and useful.

MACD adds another layer to market trend: momentum. It is a fantastic indicator for measuring how strongly the market is leaning towards a particular trend. It uses additional metrics like trading volume and multiple time periods to show you crossovers and potential milestones in the market.

Similar to the previous indicators, MACD is best used in conjunction with other indicators. You can combine MACD with indicators that represent support and resistance of a forex pair to develop a trading strategy based on market trends. The combination allows you to make the right decisions based on momentum and the support/resistance points that the market needs to break.

Other Indicators

As mentioned before, there are actually a lot of indicators that you can use to analyze the market. For example, stochastics is particularly effective in identifying pairs that are overbought or oversold, giving you a chance to enter (or exit) the market at the right times.

These indicators work even better when used alongside other indicators. You can combine technical analysis with fundamental analysis for a better market understanding too. As you try different indicators and you work towards finding the ones that work for you, you are actually in the process of developing your own trading strategy. The more you refine that strategy, the more (consistently) profitable you’ll be in the market. Considering how volatile the market is right now, you may be looking at complete financial freedom from trading alone.

Investing

The Basics of Stock Market Analysis

stock market

At times, the stock market can seem like an unpredictable, crazy world of fluctuating numbers. When looking to enter the stock market, you want to have at least a basic understanding of the process and what is happening to your money. This is where stock market analysis comes in. Whether you have been trading for two days or two years, understanding the basics of stock market analysis is vital for successful online trading.

Consider the Economic Environment

One of the first things to do when learning how to analyse the stock market is to look at the big picture. Consider the economic environment. Behind every increase and decrease in the market and in each stock are economic influences. These can include inflation rates, which include the Consumer Price Index (CPI) and the Producer Price Index (PPI), the Gross Domestic Product (GDP) rate of growth for the current climate and other economic news, such as employment statistics and Federal Reserve Bank predictions. Another important consideration when looking at the overall economic environment is to stay current with national and international politics. What are the superpowers up to, how are their economies stacking up, and how does this affect the Australian economy? Even world events like national disasters, mass strikes or liquidation of certain multi-national corporations can have a dramatic influence on the economic state and the stock market.

Over time, you will begin to gain a significant amount of knowledge and experience that you can incorporate into your trading.

Do Some Research

A little research can go a long way when it comes to accurate stock market analysis. Research the stock market from a historical point of view, watching trends and identifying what may have contributed to market fluctuations. Focus on researching stocks similar to those you would consider purchasing and research the company. Consider their history and future outlook and then compare this information to their stock performances.

Research the various industries, such as the mining, healthcare, finance, utilities and technology. Watch how each performs over time. This is one great way of finding out more about a specific company you may be thinking of investing in. You can tell a lot about the potential of a company’s shares simply by following other companies within the same sector.

Consider the Current Market

Look at the current stock market performance. Don’t just look at your stock market, but also consider those around the world. A keen trader looking to learn the stock market will review the stock market each day. There are various information sites available that offer accurate analysis of the major stock markets, summarising their performances over the day, month, quarter or year.

Depending on the types of shares you are considering investing in, the current market may refer to the previous quarter to date or it may refer to a longer or shorter time period. Each share is different and each sector acts and reacts differently.

Choose a Company

When analysing the stock market in terms of specific shares, it pays to do your research and analysis from the viewpoint of one or a few particular companies. Choose a company you may look to invest in or one that seems to be standing out above its competitors. Look into public financial information, reading annual and quarterly reports, taking particular note of quarterly growth and company balance sheets. If you want to compare similar companies you can easily do this by converting the financial information into per-share data. This way you get to accurately compare share market performances of one company to another.

Take a Technical Viewpoint

Technical stock market analysis is all about evaluating trends in share prices, the volume of shares and when they fluctuate. The stock’s moving average can tell you a lot about its performance over time, giving indications as to when it is likely to rise or fall again. It shows useful trends that can help you to confidently enter the market at any given time. Technical analysis takes much of the guess work out of when to buy and when to sell a certain share. Mastering this basic fundamental of stock market analysis will have you making confident investment decisions. 

About the Author: Margaret Knight has been a stock broker for 15 years and enjoys working with a range of clients from various backgrounds and with different levels of investment experience.

image source: http://www.123rf.com/photo_15357958_stock-market-chart.html

Investing

You are not in the magical world of money makings industry

This article is geared towards novice traders of the platform. That platform is none other than the Forex trading business. There will be a lot of time when traders will not be able to make some good performance happening. There is no single good way to make some good business. All of that is because of the poor intentions of maintaining a business in Forex. Most novice traders think about making money is the only thing on this platform. And thinking like that, the traders happen to fall behind with some good performance. With money intentions and greed, traders make some inappropriate moves in the trading process. Their trading mind does get good with the right control of the investment into the trades. Then there is some sort of problem with the market analysis. That does not let the traders be good with the proper management of the position sizes. All of those are important for the business and you are going to learn about them in the following of this article.

There are more things to do than just make profits

Actually, there are a lot of things to maintain in the currency trading business. The traders will have to manage their businesses with some good quality performance. When they are at it, there cannot be too much of investment into the business. The right performance is all about some quality trading with proper signals. Then there will also have to be some good concentration into the closing of the trades. While you are working for the trades, the trading mind cannot be too much disturbed either. So, the right trading methods will have to be selected by the traders. It is not so hard for the traders to manage that. All there is to do is select the right trading method which will give you a long timeframe for trading. The swing or position trading system will be good for all. It is clear, that traders will have to stay conscious about a lot of things in the business process.

Developing your trading skills from scratch

Novice traders often think without having a big sum of money it’s impossible to learn to trade. But if you visit Rakuten website you will be surprised to know about the free demo trading account. Use the free demo account offered by the Rakuten broker to develop your skills without risking any real money. Consider this as your arena of learning and you will see a dramatic improvement in your trading career.

The proper trading performance will need some good management

All of the traders will have to be right with the performance with currency trades. You will have to remember that you are a retail trader in the marketplace and doing such foolish planning is not good for your business. When you think about money making, that will be a foolish thing to do and the right performance in the business is all about managing the trades. It will also have to be tension free for the traders. So, there is no way for the traders to manage some good business with too much tension of the capital. For that, some proper management plan will have to be created to control the risk per trade. There will also have to be some proper control of the actual trading capital. Thus, the traders can reduce the amount of stress they are under.

Learn the perfect art of closing a running trade

Every time you will be thinking about a trade, there will have to be some sort of position sizing. This is a must for the trades because there is no way for the traders to save their investment into the business without any kind of protection against the unfortunate volatilities of the marketplace. The stop-loss, as well as the take-profit, will be the tools necessary for you to use.

Investing

Answering the question – Why should I trade CFDs?

According to one of the top financial analysts at Olsson Capital, CFD is a common term within the financial markets and you will come across it every time you research about the financial markets. CFD is an acronym of Contract for Difference, which is a form of derivative trading. CFD trading is a pervasive form of trading and one of the fastest growing industries after Forex.

 

What is the difference between CFDs Trading and Forex trading?

There are several similarities between Forex and CFDs like the fact that both involve similar types of trade executing process and both are traded on similar trading platforms with market pricing and charts being similar. Also, when trading either Forex or CFDs, you do not own the underlying asset. You only speculate how the exchange rates will change over time.

 

Forex has become a very common term among traders to the extent that they tend to think that every other trading is just Forex. No! Forex typically involves currencies from different countries and economic regions while CFDs involve trading other forms of contracts like indices, metals and energy. When trading CFDs, you only speculate how the prices of these securities will change in the future as a trader.

 

The most significant difference between Forex and CFDs trading it the factors that influence the two markets. The forex markets are affected by events around the world like political changes and rate of employment.  On the other hand, the CFDs markets are influenced by the demand and supply within the business sector since it involves real goods which are typically bought and sold across business entities across the world.

 

What are the benefits of trading CFDs?

With all said, what is the benefit of trading CFDs in relation to other financial trading ventures? Why should you opt to trade CFDs as a financial trader?

One, almost every financial broker offers CFDs trading securities and especially those brokers who provide Forex trading since the CFDs utilise the same trading platform as that of Forex and the process of executing trades is also similar to that of used in trading Forex. The instruments involved in the CFDs trading are fast moving goods and therefore the CFDs financial markets are relatively volatile. This makes them a very lucrative market for traders since they have large daily ranges which translate to huge profits when the trader places a trade. The prices of the indices, metals and energies are known to change as fast as the exchange rates of currencies although relatively slower.

Also, when it comes to CFDs trading, there are no trading commissions involved unless trading Shares CFDs, which is Contract for Difference derived from stocks markets. For all the other forms of CFDs, the only charges are the spread. The spread is the difference between the selling and buying price. The buying price is normally higher than the market price to create the spread which is usually the profit of your broker.

Since when trading CFDs you do not own the underlying asset, you will not be charged any stamp duty. However, you will be charged capital gains tax from the profits you make when trading.

CFD trading is usually done over the counter meaning that it is done over the internet through trading platforms offered by financial market brokers. Therefore, you can trade CFDs from the comfort of your home since the only thing that you require is a good internet connection and a good computer.

There are no academic qualifications required to become a CFDs trader. The only thing that you will have to do is to research and learn about how to trade CFDs, and you can do that online. There are lots of materials on the internet to help you sharpen your trading skills. In addition, most brokers offer demo trading accounts where trader practice trading before going to trade with their real hard earned saving.

CFD trading is one of the best ways of earning an extra coin in addition to what you get paid in your formal employment. And it doesn’t matter how busy you are because you can use automated trading strategies or even open a managed account to invest in the CFDs trading.