6 Important Tips for Trading the Financial Markets

Posted by on 4:15 PM in Blog

Trading the financial markets can be a highly exhilarating experience; the rapid rise and fall in value of stocks has seen fortunes both gained and lost over the years, and will doubtless see the same in the future. In today’s globalised environment, traders have access to a wider range of trading opportunities than ever before; but that high level of accessibility comes with some potential pitfalls which it’s wise to be aware of. 1. If you’re looking for quick and easy profits, look elsewhere If trading were that simple, everyone would be doing it. There are many get-rich-quick sites out there which claim to have found guaranteed ways to make a profit from the markets, but as a general rule, if it sounds too good to be true, it probably is. No traders are right 100% of the time (even Warren Buffet makes some bad calls). It’s certainly possible to make a profit from trading, but one can also end up with significant losses if one isn’t careful. 2. Research Before Trading It’s definitely possible to make a profit from spur-of-the-moment trading. However, if you don’t really know what you’re doing, it can be easy to make mistakes, which can lead to decidedly negative results. Most people would take care to explore the different aspects of a product or company before making a direct investment in it. Why would online trading be any different? 3. Set Reasonable Targets and Know When to Call Time It’s human nature to hope that things will turn around, but such optimism can be a dangerous when it comes to trading – you may sometimes find that staying with a trade takes you from a bad position to an even worse one. Likewise, while ‘I can do even better’ is a popular sentiment, keeping a trade open in the hope that your position becomes even more profitable can be risky; if the market turns the other way, you may find yourself left with a loss when you could have taken profit. By deciding on a clear exit point before you enter a trade, you may be able to limit your losses in some trades whilst not missing out on profit in others. 4. Keep Calm and Focussed As in many areas of life, when one is upset, tired or angry it’s much harder to think in a rational manner and make logical decisions. Whatever the reason for your mood, it’s a good idea to think twice before trading in such a condition – if you’re not feeling at your best, you may find yourself making mistakes, and trading mistakes can prove costly. 5. Be Aware of Upcoming Data Releases If you know where to look, there are plenty of pre-planned financial announcements which have the potential to move the markets. However, it’s not clear until after the announcement as to which way the market will move. Nonetheless, being aware of the possibility of volatility in the wake of such announcements can help you plan ahead and possibly take advantage of subsequent movements. The world’s largest economies make announcements regarding macroeconomic data on a monthly or quarterly basis, whilst all publicly traded companies release their most recent results at the end of every quarter. Some trading brokerages provide their customers with information on upcoming releases,...

Dollar Hits Seven-Year High against Yen

Posted by on 9:10 AM in Blog

A strengthening US economy combined with a shaky Japanese financial climate has led to the Dollar reaching its highest level against the Yen since August 2007. A series of grim economic results have played a significant part in the Yen’s drop, and the Nikkei has strengthened considerably as a result of the Yen’s decline. The Inverse Correlation Between the Yen and the Nikkei Over the last month the Yen has dropped substantially against USD, going from a level of 1:106.405 on October 17th to 116.896 on November 18th. At the same time, the Nikkei has shot up over the last month, from a level of 14, 804.28 on October 21st to a level of 17,344.06 on November 18th. In both cases, these levels have not been seen since July 2007, just before the housing bubble in the US burst and precipitated the most recent recession. Why is this? The reason most commonly given is that a weaker Yen enables Japanese businesses – which are largely focussed on exports – to compete favourably abroad, strengthening earnings, which can lead to a boost in stock prices as well as to the Nikkei as a whole. ‘Abenomics’ The Prime Minister of Japan, Shinzo Abe, came into office in late 2012 on the strength of a financial plan which quickly became known as ‘Abenomics’. Abenomics incorporates a so-called ‘three arrows’ approach, the arrows in question being 1) Fiscal Stimulus 2) Monetary Easing and 3) Structural Reforms. The over-arching message was that significant and possibly painful measures were needed to combat the yawning chasm of Japan’s public debt. The Sales Tax Increase, Recession and Another Election Unfortunately, one of the measures introduced this year has caused a lot more discomfort than was expected. In April Mr Abe increased Japanese Sales Tax from 5% to 8%. However, this caused Japan’s GDP to drop significantly in Q2, and a further (though smaller) drop in Q3 means that the world’s third largest economy finds itself in the unenviable position of having officially entered a triple-dip recession. Given the current situation, Mr Abe has delayed plans for a further planned Sales Tax increase (this time to 10%) and on Tuesday announced that he will go to the polls in order to ensure continued support for his programme of reforms – the election is expected to take place in mid-December. If Abe is re-elected with a strong showing, it may help to give the Yen a boost, but equally it might cause the Yen to slump if Abe then pushes on with further tough economic measures. If Abe loses – or even if he wins by a narrow margin – it’s hard to see how things could improve for the Yen: is a tough financial plan that causes significant economic pain better than not having any sort of economic plan at all? Dollar-Yen in the Months Ahead Given that it’s difficult to see how things will get better for Japan in the near future, a wide variety of analysts are strongly recommending that traders buy Dollar-Yen, with the majority opining that the Yen’s decline still has some way to go. Of course the Yen could prove detractors wrong, though – or the US economy could halt and possibly even reverse some of its recovery, which might send the Dollar...

Advantages of Forex Trading Online

Posted by on 9:15 AM in Blog

A Quick Guide to Trading Forex Online Forex trading can be overwhelming if you’re new to the concept, but it’s far less so once you have an understanding of how to trade Forex online, and the advantages of doing so. Trading Forex online has grown in popularity, for many reasons, and here at www.etxcapitalforextrading.co.uk we strive to make the process as transparent and convenient as possible, helping to resolve any issues that budding traders may have before they venture into the world of online Forex trading. The international Forex market is considered to be one of the largest markets in the world, with over $4 trillion being traded every single day. As a trader, you can speculate on which direction a currency will go, over the long or short term, watching for any appreciation or depreciation in value between currency pairs, such as the Euro versus the US Dollar.  Trading Forex online As technology and innovation have advanced, the Forex market has become more accessible than ever before, meaning that trading Forex online has seen unprecedented growth. With the Internet and brokers bringing a broad spectrum of individuals to the Forex market, FX trading isn’t only available to the heavy hitters – nowadays everybody has the opportunity to get in on the action, whatever their experience level. When choosing an online Forex broker, it’s a good idea to look for a firm that has had many years in the business. ETX Capital has over a decade of brokerage experience, so can offer its long-standing reputation and expertise, as well as assured quality care to you, as a trader. Trading online gives you access to competitive pricing and advanced technology to ensure you can analyse the market as accurately as possible. Using ETX as a broker gives you the option of four different platforms to suit your trading needs –  ETX Trader, ETX TraderPro, ETX MT4 and ETX Binary – meaning that whether you’re after trading adrenaline-pumped short term contracts or you wish to complete technical analysis on the MT4 platform, there’s an option to suit you. The advantages While it is possible to trade Forex offline, trading Forex online means that you can cut out the middleman. It opens up the market to independent parties, rather than just banks and corporate firms, and also offers exceptional liquidity. You can trade whenever you like, wherever you like, giving you access to the Forex markets without ever having to leave your chair. When you use ETX you can instantaneously buy and sell currencies, and depending on which platform you choose to use, you can join in some fast-paced trading (with ETX Binary, for example) or you could use trailing stops with a platform such as ETX TraderPro. The availability of different platforms, such as ETX Binary and ETX MT4, allows you to trade using your preferred method, and access to trends, analytics and news means that you can always keep well-informed. Depending on the brokerage you use, online Forex trading also allows you to trade on the move, with the use of mobile apps. The ETX apps – available on the iPad and tablet – and mobile site – available on the iPhone and Android phones – offer individuals the ability to trade whilst in transit. Another big plus for trading Forex online is...

Why Trade Forex with ETX Capital?

Posted by on 2:25 PM in Blog

As a trader, what should you be looking for when searching for a Forex provider? Favourable trading conditions are very important, as is the volume of choice available. Does account security play a part in your deliberations? It’s certainly something worth taking into consideration. We’ve compiled a list of different advantages that ETX gives you as a Forex Trader; Mobile Trading Forex is a volatile form of trading, and quick access to rapidly shifting markets can be crucial. Fortunately, ETX Capital offers mobile app. versions of its platforms, giving traders the ability to trade Forex whenever they want to, wherever they are. Your Trade, Your Choice Why limit yourself to one way of trading Forex? ETX Capital gives clients the choice of four different trading platforms – ETX Trader, ETX TraderPro, ETX MT4 and ETX Binary – and the ability to trade Forex on each of them. Worldwide Currencies Apart from major Forex pairs featuring USD, Sterling, Euro and Yen, Swiss Franc and Australian, New Zealand and Canadian Dollars, ETX Capital also offers traders a host of other FX currencies to trade on, including the following; the South African Rand, Czech Koruna, Hungarian Forint and Polish Zloty, Russian Rouble, Swedish Krona and Danish and Norwegian Krone. Spreads and Leverage The narrower the spread, the greater the opportunity to make a profit. ETX Capital has some of the tightest Forex spreads on the market, lower than 1 for Cable, EuroDollar, EuroYen, DollarYen, EuroSwiss and AUD/USD, as well as tight spreads for many other currency pairs. In addition, the availability of favourable leverage rates (up to 400:1 on the MT4 platform) allows traders to take significant positions with only a small initial deposit. Account Security: An ETX Priority When trading Forex there are no guarantees concerning the outcome; one may make profits or incur losses. However, when it comes to the security of client funds, ETX Capital has taken significant steps to ensure that customer money is kept safe. As a firm authorised and regulated by the Financial Conduct Authority, ETX makes daily checks to ensure that the company always has sufficient regulatory funds. Client funds are also kept completely apart from company money, in strictly separate bank accounts. Furthermore, the ETX Capital is part of the Financial Services Compensation Scheme, which ensures that individual client funds are protected up to a level of £50,000. ETX Trading School Are you new to the Forex markets? Or are you a seasoned FX trader? Whatever your trading level, ETX has educational opportunities for you, with seminars and webinars available on a regular basis, free of charge to ETX Capital clients. Furthermore, ETX offers customers an 8-hour trading course, followed by monthly sessions focussing on trading techniques – again, while the course is worth over £1000 on the open market, it’s completely free for ETX Capital customers. Think Forex Trading: Think ETX...

Market Events and Forex Trading

Posted by on 2:19 PM in Blog

Forex currency trading is not just the largest financial market in the world, it’s also among the most volatile, with numerous events affecting different currency prices. Many of these events are unpredictable in that no-one knows when they will occur. There are some events, however, which occur often, according to a set calendar. So although the results can be harder to predict, one knows that there will be results on that day and can thus plan accordingly. Macroeconomic releases fall into this latter category – in other words the publication of economic data related to a specific aspect of a country’s financial situation. Many of these events have a proven track record in causing volatility – and traders have the distinct advantage of knowing the exact date and time that such figures will be released; usually on a monthly or quarterly basis. Let us take a look at a few examples of important macroeconomic events which can have an effect on the FX markets; US Nonfarm Payrolls/ Unemployment Rate Usually released on the first Friday of the new month, this figure indicates the number of jobs outside of the farming sector which have been created in the previous month. The number is closely linked with the US unemployment rate figure, which is released at the same time. Both numbers when taken together give an indication as to whether the world’s largest economy is growing or not. Before the actual release there is an official prediction by analysts as to what the NFP figure will be. If the actual figure is better than expected, USD often strengthens against other currencies. If the actual figure fails to meet the prediction, the Dollar can often weaken against FX counterparts. Though other countries do not release a Nonfarm Payroll figure, they do release monthly unemployment figures, which can give an indication of the state of their economy and affect currencies accordingly. GDP Released on a quarterly basis, this figure gives an indication of a single nation or united economic zone’s financial health by calculating output and consumption values. An increase in GDP implies economic growth, whereas a decrease in GDP suggests economic contraction. Because this figure takes a significant amount of time to calculate, preliminary results are often published a couple of weeks before the full figures – they are known as ‘flash estimates’. By measuring a state’s economic health, GDP results can consequently have an effect on that country’s currency depending on the outcome. Interest Rate Decisions The central banks of each country (or economic zone) get together a number of times each year (usually monthly) to make a decision regarding interest rates. They can raise interest rates in an attempt to combat inflation, lower them to fight deflation, or keep them unchanged if they decide that’s the best course of action. Generally, raising interest rates is a sign of a flourishing economy whilst lowering them is a sign of a weak economy (though raising interest rates can be used as a means to reign in spiralling inflation and lowering interest rates can help to combat recession – and can be seen by the markets in that light). Markets always keenly watch the main central banks (especially the US Fed, the BoE and ECB) for an indication of changes to the interest...

Forex Currencies: Majors and Minors

Posted by on 2:18 PM in Blog

Over 180 currencies are currently in global use, though only a few of these are traded in significant volume and with any deal of frequency. In this article we will discuss both major and minor Forex currencies, as well as the ‘big four’ – the four most widely traded currencies in the FX markets. Forex Major Currencies The most widely traded currencies are known as the Forex majors and they are as follows; US Dollar, Sterling, Euro, Yen, Swiss Franc, Canadian Dollar, Australian Dollar, NZ Dollar. Of these, the ‘big four’ in terms of daily percentage of trades are USD (87%), Euro (33.4%). Yen (23%) and Sterling (11.8%.) As all currencies are traded in pairs, percentages are calculated out of 200% Forex Minor Currencies Other currencies are referred to as ‘minors’ – the most important and frequently traded minor currencies are; Mexican Peso, Chinese Yuan, Russian Rouble, Hong Kong Dollar, Singapore Dollar Base and Counter Currencies Every currency pair has a base currency and a counter currency. The base currency is always the first currency in the pair and is the one that the counter currency is compared to. When it comes to Forex Majors there is an established order of precedence for base currencies, which is as follows; Euro, Sterling, AUD, NZD, USD, CAD, Swiss Franc, Japanese Yen This means that the Euro will always be the base currency when it is present in a pair, whilst Sterling will always be the base currency in the pair – unless the Euro is the other currency – and so on down the line. So, for example, if we look at three different Major currencies – Euro, Sterling and US Dollar – the following pairs we could form from these currencies would be as follows; EUR/GBP EUR/USD GBP/USD The Four Major Currencies US Dollar With the US being the world’s largest single economy, the country’s currency unsurprisingly has a global reach. USD is the world’s reserve currency, meaning that the majority of global foreign currency reserves are largely made up of the US Dollar. In terms of Forex, it’s the most traded currency in the world, present in all of the world’s most traded currency pairs. With many countries pegging their exchange rates to the Dollar, its position as the world’s foremost Forex currency is unchallenged. Euro Now in its fifteenth year, the Euro is the currency of many countries (though by no means all) within the EU, making up an economic bloc known as the Euro zone. Containing economic powerhouses such as France and Germany, the Euro zone as a whole has a larger GDP than the USA. Sterling Up until the mid-20th century Sterling was the world’s reserve currency. Despite being supplanted by the Dollar, Sterling remains an important global currency. London is still the global hub of Forex trading, with around 40% of Forex trades taking place in the UK’s capital. Yen Japan has one of the world’s largest economies and is a huge global exporter. Though China’s economy is far larger, Japan’s currency, though no longer what it was in the halcyon days of the 80’s, is still by far the most traded currency in Asia.   In the future we will talk more about other popular FX currencies, as well as up and coming currencies...