Tag: forex for beginners

The London Breakout FOREX Trading Strategy

~ Vera J.

The London breakout FOREX trading strategy is used to trade the London trading session during the first few hours (1-3hrs) when the FOREX market opens in London.

You do not necessarily need any indicators for the London Breakout trading strategy, but you must be able to draw horizontal (support and resistance) lines on your FOREX chart. That is a very easy thing to do and you can learn all about it here.

Why Trade the London Session Breakout?

The London trading session is the biggest FOREX market mover as the most of the trading volume for currency trading is happening during this session.

What that means is that:

  • Whatever the trend direction during the first 1-2 hrs of London FOREX session is, determines what the trend would be for the remainder of the London session.
  • This trend might continue through to the New York trading session.

The volumes of trades and the amount of money that moves during the first few hours of the London FOREX market opening hours are HUGE, which creates some exciting trading opportunities.

So that explains the background of what and why of the London Breakout FOREX trading strategy. It’s all about catching the trendy moves to the upside or downside during the early hours of the London market opening.

Where and How to Place Your Breakout Orders?

The next thing you need to know is where to enter your trade order to trade the London Breakout.

Here is how to do that:

  • Identify the 3 previous candlesticks in the Asian session.
  • Find the high and the low of these 3 candlesticks because they form your breakout levels.
  • On the highest point of these three candlesticks draw a horizontal line. If price breaks above this line, it’s a buy signal.
  • On the lowest price point between these 3 candlesticks draw another horizontal line. If price breaks below this line, this is your sell signal.

See the image below as it makes it clear:

How To Close Your Trade

At the end of the London trading session you must close your trade, you don’t want to carry this position overnight. Even if it means you have a 10 pips profit or a 10 pips loss. Just do it. Never hang on your trade hoping for a few more pips in the New York trading session.

In FOREX trading Hope and Prayer have no place, you follow a system.
And also remember, there is always tomorrow.

Advantages of the London Breakout FOREX Trading Strategy

  • Very simple FOREX trading system.
  • No indicators needed and it’s a very simple price action trading system.
  • It’s a very easy trading strategy that even a stay-at-home mum or dad can do.
  • All you need to do is draw 2 horizontal lines based on the high and low of the previous 3 candlesticks in Asian trading session; they form your breakout levels on where you place your pending orders to catch a breakout.

Disadvantages of the London Breakout FOREX Trading Strategy

As usual, this is not a holy grail trading strategy. There will be times when the FOREX market may not move as expected and this can lead to trading losses.

Experience has shown that Mondays and Fridays are the worst days to trade FOREX, as the market usually is slow on Mondays and spiky on Fridays. You can either trade on these two days or avoid them, it’s up to you.

Happy trading!

Forex Trading – Safe Haven Currencies

~ Vera J.

Safe haven currencies are currencies that tend to retain or increase in value during times of uncertainty and market instability. Safe havens tend not to have a correlation with the performance of stocks and bonds. This makes them ideal for trading in the events of market crashes.Forex

WHAT QUALIFIES AS A SAFE-HAVEN CURRENCY?

When considering the question of what qualifies as a safe haven currency, the factors to bear in mind can relate to the currency itself. These include strong liquidity, as well as the wider economic climate in its issuing country. Think on a stable political system, economic growth and stable finances.

However, these factors are not always fully reliable as indicators of a safe haven currency. For example, the Japanese Yen is seen as a safe haven despite the country’s weak financial situation, which includes the highest government debt to GDP in the world.

Factors that actively undermine a currency’s safe haven appeal should be considered by traders. One of these is that governments can intervene to stop a nation’s currency becoming too strong. An example of this is the Swiss Central Bank, which has on numerous occasions flooded the country’s market with Francs to protect exports.

The Japanese Yen experiences a similar pattern; it tends to soar during periods of global risk-off sentiment. As the country is so reliant on exports, the rising Yen can be problematic. When exports become less competitive, Japanese businesses are less profitable and equities can fall. As a result, Japan’s government may sell Yen and buy US Dollars or, as in 2016, even adopt negative interest rates in an effort to maintain a depressed currency.

TOP 4 SAFE HAVEN CURRENCIES TO TRADE

The list of safe haven currencies includes the Japanese Yen, the Swiss Franc, the Euro, and the US Dollar.

Japanese Yen (JPY)

The Yen as a safe haven is driven by factors such as Japan’s strong current account surplus, positioning the country as the world’s largest creditor nation. Additionally, the Yen is a popular carry trade, meaning investors often borrow Yen from Japan, where interest rates are low, in order to buy currency in a country where interest rates are higher. This can push up the price of Yen during financial turmoil, as international speculators choose to unwind risky positions and pay back Yen loans.

In recent years, examples of the Yen’s appreciation include during the 2008 financial crisis, with the currency soaring against the British Pound and the US Dollar, the uncertainty of Brexit in 2015, and the 1998 near-collapse of the Long Term Capital Management Hedge Fund.

Since both, USD and JPY, are considered safe haven currencies, sometimes the USD/JPY market doesn’t move strongly, but a cross pair like GBP/JPY, AUD/JPY, and NZD/JPY often does.

US Dollar (USD)

The US Dollar’s safe haven status is maintained by the reliability of the US Treasury to pay its investors. Since the financial crisis, the received wisdom has been that, during times of market turbulence, investors sell risky assets and turn to US Treasuries and the US Dollar.

In recent years there have been instances when Yen and Euro have been the safe haven of choice over USD. Some analysts argue that there is little evidence that USD is being bought in meaningfully larger amounts than other safe haven currencies during economic difficulties.

Euro (EUR)

As with the US Dollar, disputes exist over the Euro’s safe haven status in today’s climate. The Euro has certainly displayed the hallmarks of a safe haven in past years. In 2015 analysts turned increasingly bullish on the Euro, driven by a positive outlook for selected European economies. Also, the low interest rates in major European economies led to expectations of the Euro acting like a safe haven.

However, in early 2018, following a plunge in US equities, the expected rush to buy Euros didn’t happen. It was business as usual for the Japanese Yen though, which did attract buyers.

Swiss Franc (CHF)

The safe haven status of the Swiss Franc is underpinned by a stable Swiss government and a strong financial system. This is coupled with low inflation and high levels of confidence in the country’s central bank, the Swiss National Bank.

One example of CHF demonstrating its allure was 2011, when US Dollars and Euros poured into the Franc as nervous investors flocked for protection against the debt crises on the other side of the Atlantic. This caused USD to slump against CHF from 0.9400 at the beginning of 2011 to 0.7900 by July, meaning one US Dollar could buy only 0.79 Swiss Francs. On the Euro side, in July 2011 EUR fell against CHF to around parity, from around 1.3000 at the start of the year.

As with the Japanese Yen, carry trade speculators like to leverage funds in Swiss Francs with no funding costs, paying back the loans when the position goes against them.

USING SAFE HAVEN CURRENCIES IN FOREX TRADING

When using safe haven currencies in Forex trading, traders should be aware that some currencies, react differently to market events than others. Also, there is not always consensus on what currencies qualify as safe havens.

For example, while some view the Norwegian Krone as a safe haven, citing the country’s lack of net debt and its current account surplus, others believe that it is not the best option as it lacks liquidity and is too correlated to commodity currencies.

As well as using currencies for safe havens, gold is a popular consideration for traders looking to protect against excess risk. Gold is seen as a safe haven because of its proven store of value, market utility and a price that generally isn’t influenced by interest rate decisions from central banks.

By Ben Lobel, Markets Writer

Source: Daily FX

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Forex Trading, Basketball & the Mindset of Winners

~ Vera J.

What separates a winning trader from a losing trader is their psychological mindset.

“JUST TRYING TO GET BETTER EVERY DAY…”

That was the late Kobe Bryant’s daily mantra. Bryant was hyper-focused in his pursuit of greatness. While it’s easy for people to point at masters like Bryant and remark that their talent is simply God-given, the reality is that even though some might have natural attributes or abilities, what distinguishes the ordinary from the extraordinary is the amount of work and dedication put into perfecting a craft. “If you want to be great in a particular area, you have to obsess over it and just try to get better every day,” said Bryant. And that’s exactly what he did and what you should follow in your trading journey.

TRADING MINDSET TRAINING. Just like in the game of basketball and in perfecting any craft, it takes lots of training, but mostly it takes “mindset training”.

 

Definition Of Mindset: The established set of attitudes and beliefs held by an individual.

 

There are 8 essential attitudes and beliefs that are essential in the development of a good Forex trading mindset.

COMMITMENT: You must be committed to the task set before you deciding that you will not quit and have the fortitude to do anything that is necessary to accomplish your goal. That includes working and developing your mindset, not just your trading skills.


PERSISTENCE: Becoming a profitable trader and maintaining a winning trading mindset is not going to be easy. Be ready for ups and downs; just keep moving forward and improving despite difficult times.


SELF-AWARENESS: Self examination is critical to developing a successful winning mindset. The best way is to not be judgmental, critical, or emotional when things go wrong but rather acknowledge it, then create an action plan to improve on weaknesses.


PERFORMANCE METRICS: Build a list of performance metrics with goals to show whether you are growing or not. Analyze the results of your goal on a regular basis. Keep yourself accountable to analyze the results. Keep a trading journal. Sign up for a myfxbook account. Have an accountability partner. This is where persistence comes in. Be persistent in analyzing your performance metrics and implementing ways to improve.

POSITIVE ATTITUDE: A positive attitude does not deny the truth by saying everything is great no matter what. A positive attitude is where if something is wrong, you remain positive and try to fix it. You say, “Yes, I had a losing week,” or, “Yes, I didn’t follow my rules, but I am confident I will do better next time.” The opposite of this is having a negative attitude where people will find and attach blame for their problems and if they attach blame then they will not do the necessary steps required for self-growth.


HUNGER: Not hunger for achievement, but hunger for growth. A growth-mindset will keep you on the path to continual improvement like what we offer at Global Trading Army; a way to learn, earn and grow. As a trader, if you continue along this path, financial improvement will follow.


HUMILITY: Someone who has a winning trading mindset isn’t better than anyone else or smarter than anyone else. But they understand that growing is challenging and we need to stay humble and keep learning or we will start to decline.


OPENNESS: It is so hard to share our faults, especially those of us that are leading other people. If you are willing to share struggles and reach out for help then it keeps you growing. Some of our most greatest times of growth comes through some of the most painful circumstances. Everyone goes through those so we must be ready for them and share them. And luckily here at Global Trading Army, we have developed a supportive community to help you and be there when you are ready to share.

 

Being a Trader is not just about formulating better strategies and performing more extensive analysis, but is also about developing a winning mindset and be on a relentless pursuit of “just getting better every day.”

If you’d like to join others on this pursuit of being the Kobe Bryant of trading, join us in our community. Learn from our educational packages and be a part of our live trading sessions.

Trading is a difficult skill to master. Very few people become highly successful at it. However, it is possible for virtually anyone to become a master trader as long as they are willing to make the necessary effort.

Source: Sorena Maes

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The Art of “Feeling” the Forex Market

~ Vera J.

In Forex trading, one has to learn to gauge market sentiment, listen to what the charts are saying, and adjust accordingly.

More often than not, it’s also about getting the timing right. That’s why intuition plays a huge role. Not to be confused with taking impulsive trades based on gut feel. Forex trading demands a special type of intuition that many refer to as “feeling the market” or being “in the zone.”
Forex tradingIt’s that specific point in your Forex trading career. You have gained enough experience to label market behavior (trending, ranging, breaking out or consolidating). You know what trading setup you will take to tilt the odds slightly in your favor.

Examples:

You noticed that the market is trending, so you use moving averages.
You noticed that the market is retracing, so you use Fibonacci retracement levels.
You noticed that the market is ranging, so you mainly use support and resistance levels.
You noticed that the market is consolidating, so you wait for a breakout.

Did this just magically happen? Heck NO! Just like in any other art form, some are born with the natural talent while others acquire the skill. Either way, you arrived at this point because of constant refinement and deliberate practice.

Through these actions, you have learned to trust yourself and observe the Forex market in an analytical and “artful” way, and not merely by guessing.

You have found out that Forex trading is more of an art than an exact science. Also you have learned that there really is no clear “signal” or set of rules, that indicate that the market environment has changed.

Getting “in the zone” does not happen overnight. It takes time.

Just like in photography, where it takes tons of practice to get the perfect shot, Forex trading requires watching the charts every now and then, before you get to the point where you can instinctively “feel the market.”

This experience is necessary because it will help you understand why the market is behaving the way it is. It isn’t enough to go through the manual and learn all the technical aspects.

At some point, you need to put all this knowledge to work and try it out for yourself. By exposing yourself to the markets, you can gain the skills necessary to gauge market conditions and in the end, come up with your own conclusions.

By Dr. Pipslow

Source: BabyPips

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Forex Trading Newbie Tip

~ Vera J.

When you met your goal for the day… stop and smell the roses.
trading ForexRelax, take in your win. Demo trade if you must. Remember: this is a mental game. The market takes advantage of the greedy and feeds the patient. Also don’t forget to celebrate your victory.

Source: Scharlette Donald

 

 

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