- Risk appetite – How much loss I am willing to take on my capital during my adventure in the forex markets. Risk should always be set out before taking a trade so that you can manage your account successfully.
- Read and read and read about markets – Contrary to what traders say about making losses first to earn profits later, I wish I had read more on daily happenings in the markets before actually trading markets. Reading gives you a sense of confidence and mental preparedness when taking on the markets. A good thing to study is the nature of each currency, their respective correlations and historical behavior patterns can lend insight into the currencies and what to look out for,
- Focus – In today’s world full of distractions, focusing can be a key quality when trading markets. A lapse of focus can open flood gates of losses, So FOCUS.
- Weekend Analysis – I wish I had religiously performed weekend analysis as this practice goes a long way in keeping your trading methodology glued. A good practice would be to read up on the upcoming news events for the week and ascertain which pairs you should be looking at in the week to gain an edge.
- Trading loss size – If losses scare you then you need to reduce you positions to an extent where they losses don’t scare you anymore, giving you the freedom to trade fearlessly. Managing losses and the risk reward ratio is one of the critical components in successful software management.
Black gold, as it was termed, was one of the most valuable and used resources, now an industry broken by the pandemic we face. The plunging demand for oil brought on by the Coronavirus pandemic coupled with a savage price war has left the fossil fuel industry broken and in survival mode, according to analysts.
Now facing its the gravest challenge in its 100-year history, analysts say, it will be one that will permanently alter the industry.
WTI oil security price resulted in a very rapid, deep, and volatile fall occurring within an extremely short time period. Some oil blends in Canada have fallen into negative territory and producers have to pay to give their barrels away. US benchmark WTI oil price closed at -$37.63/barrel in New York.
US crude prices plunged to their lowest level in history on Monday as traders continue to fret over a slump in demand due to the coronavirus pandemic. Starting at an already record low of below $5 late on Monday, the future contract prices started trading in the negative within the hour.
While WTI for May delivery was down by over 90 percent, June delivery was only down 10 percent. Brent on the other hand, which is already trading on the June contract, is down by less than 6 percent, suggesting that it is fears of U.S. storage capacity that are dragging on prices.
One of the main reasons for the sharp sell-off with the news of coronavirus is because of the mysticism tag attached with the disease.
The contagious nature of disease has been affecting the financial markets with every revision of the death toll and the number of people affected.
The fact that the virus has originated from China which is one of the financial powerhouses of the globe has added to the misery.
The trend since the last one week is Investor sell off in Asia and the markets re-bound and Europe and US.
Gold and US Dollar and to an extent JPY has been gaining from this fiasco.
So what currencies should one focus on to get the most out of the Volatility?
AUDJPY – has lost 200+ pips and opened this week on the downside with a gap. The forecast by the traders is that AUDJPY should settle down near 70 psychological level, considering the overall global outlook.
Bitcoin – surprisingly has jumped from $8000 to $9000 since the Coronavirus was announced.Investors have not shown so much interest in the yellow metal in comparison to the crypto asset. Bitcoin is reacting when safe havens are sought out.
China A50 index was badly affected due to the CoronaVirus epidemic dropping nearly 2000 points mostly in the Asian session.
Oil – The price of oil fell amid fears that the virus would dampen demand for fuel.China’s appetite for oil has grown at around 5.5 percent annually, making it an important buyer in the global market. The country has already imposed travel restrictions and any extension could further dampen demand.
The markets will be interesting to watch as the CoronaVirus fear spreads and we can use tools like volatility and volume to plan our next trade!
The Japanese Yen crosses are the most popular crosses among forex traders as they have fluid and sharp moves giving traders enough opportunity to make money on a daily basis. Let us explore these crosses and expand on their characteristics.
EURJPY has the highest volume of the JPY crosses according to the latest Triennial Central Bank Survey from the Bank for International Settlements.The pair can swing in reaction to Eurozone debt crisis announcements, economic data releases, policy decisions, and trends in market sentiment.
GBPJPY also known as Geppy or the beast is the most famous pair known for its volatility and big moves. Beginners are attracted to it because of its promised deliverance of pips.Also known as the driver of all the currencies, GBPJPY in recent times has become more wild and volatile due to Brexit, BOE statements and Japanese Bond buying announcements.
AUDJPY another star mover is the most famous cross known for its carry traders. The interest rate differential between AUD and JPY is big which makes the cross attractive in both Risk-on and Risk-off markets.
NZDJPY follows a similar carry trade pattern of AUDJPY but things heat up for this pair in the Asian session at the announcement of any NZ data. The Tokyo session also provides impetus for JPY volatility when combined with NZD data announcement make NZDJPY one of the most explosive pairs during that session.
There is 87% positive correlation between CAD/JPY and oil. Canada is the second largest owner of oil reserves and 99% of Japan’s Crude oil is imported.This makes for an interesting yet predictable pair movement.
The currency pair CHF / JPY is easy to forecast, and suits for beginner traders. The yen is one of the main reserve currencies; and the franc is among the most reliable ones.
Which YEN cross do you most frequently trade?
Commodity trading floors go back a long way and have been around for over a hundred years, even before currency trading.
Commodity trading head is in Chicago, when the Chicago Board of Trade and the Chicago Mercantile Exchange was founded. The purpose of the exchanges was to create futures markets to benefit both the buyer and seller and to avoid either party to manipulate and control prices. Commodity futures are used for the purposes for which they were developed; to help in stabilizing prices.
What makes commodity trading interesting is that we use commodities in our daily life.
Gold, Crude Oil, Natural Gas, Copper etc are a part of our day to day activities.
Contribution of speculators in commodity trading
Commodity markets in recent times have become the home to a third type of player: the speculator. Speculators don’t produce goods, and they don’t actually want those goods at delivery time. They are simply buying and selling these products mostly intraday to make a profit on the constant fluctuations in prices.
Speculators enter the futures market when they anticipate prices are going to change.
These savvy traders provide liquidity when either producers or end-users had no interest in trading at a particular price. They possess a deep understanding of the products and how to price these instruments quickly and accurately. Overall, they provide a valuable function to the daily activity on the exchange floor.
In short, speculators are the market participants who utilize short-term strategies in order to outperform traditional long-term investors.
What kind of trader are you, what questions do you have regarding commodities and how to trade them?
A commonly known fact, or should we say myth, is that most forex traders fail. This was probably true around 5 to 7 years ago, when retail forex trading was still a vary vague industry and data tools and analytics were not easily available.
Trader mindset over a period of time has gone through an evolutionary adaptation in surviving in Forex markets and over time these traders have matured in both thinking and utilization of analytics to fuel success.
Firstly, hard data is difficult to come by on the subject because of the decentralized, over-the-counter nature of the Forex market, so the 95% to 96% claims of traders losing is inaccurate and cannot be scientifically measured in this way.
The data that is available from Forex and CFD firms suggests that a lot of people are becoming successful traders than they were ever before.
The ones who continue trading persistently with smart tools and first hand knowledge tend to win more often than lose.
The reasons for a successful winning mindset is :-
- The availability of the information is the key factor which is helping forex traders befriend the markets and make money giving them the confidence to trade with accuracy and guidance.
- Cutting edge technology is helping decode the daily currency and commodity moves and helps in identifying critical market patterns.
- Easy transfer of funds has helped traders fund their margin calls and avoid account blow outs with no downtime.
- More trader participation in the markets promote to more liquidity which avoids the erratic moves and tighten the bid/ask spread.
The number of unsuccessful traders slightly outweighs the number of small winners, mainly because of the effect of market spread. So the percentage of successful Forex traders is not substantially smaller than the unsuccessful ones.
Knowledge of disciplined money management skills has overall improved trading styles. This combined with powerful analytic tools and a positive mindset makes for a successful trader.
Share your experience on the markets and how analytics helps shape your decisions in the comments below.
During the times of uncertainty and panic and events like Grexit, Brexit, Currency and trade wars, investors jump in and hoard on Japanese Yen and Swiss Franc.
Forex trading has received a lot of attention in last 5 to 7 years, even more so after events like Grexit and Brexit and even the US elections where Trump surprisingly came out on the top changing the global economic dynamics.
The volatility in the markets brought about new participants making the trading world even more exciting. Now the trading pit comprised of people from different backgrounds with different mindsets.
To align different mindsets and help traders trade successfully and profitably, our team started building cost effective and high quality forex tools to simplify the daily markets.
Our Forex tools focus on the core of trading eliminating unnecessary information. Our focus is mostly on Currency strength and weakness, movement of those currencies also known as volatility ,volume involved in trading those currencies an sentiment driving the direction of those currencies.
All our products key elements in trading and if used correctly can give wonderful results.
Mindset is another very important aspect in a traders life. Having a positive and clear mindset will help you analyze the data the tools provide and enable you to take the best decisions. Here are some tips on how you can develop a positive mindset
- Start your day on a positive note – Repeat positive affirmations and instill self belief from the early hours of the day will help put your mind at ease and enable you to think clearly
- Exercise and stretches – Getting fresh air and some exercise in puts everyone in a good mood. If you are tired and analyzing the markets you are more likely to take decisions that are incorrect. This is why our tools are designed to keep you engaged and happy with the vibrant colors and ease of use.
- Shake off any negativity – Replace any negative thoughts with positive ones, educate yourself so you are always trading from a place of confidence. We have various resources on our Youtube channel that you can explore to help familiarize you with the products we offer. Listen to soothing music and perhaps put up inspirational quote on your phone and laptop wallpaper.
What are the ways you begin your day, comment below and let us know!
During the times of uncertainty and panic and events like Grexit, Brexit, Currency and trade wars, Investors jump and hoard on Japanese Yen and Swiss Franc.
So why does this happen? In Risk-off markets why do JPY and CHF rally?
Let us explore the reasons below
The main reasons are current account surplus and low interest rates. Japan and Switzerland have always been exporting countries on a larger scale. Be it goods or services, both the net exporters trail blaze leaving little room for imports impact resulting in decades of net current account surpluses. As a result Japan and Switzerland have positioned themselves as a net creditor of the global economy.
Another reason is both the countries have maintained low interest rates spurring the economy with consumer spending. Investors tend to borrow both these currencies at lower to zero interest rates and invest in high yielding assets from other countries.
In times of panic, the investors unwind the trades and sell off high yielding risky currencies and go back to parking their funds in JPY and CHF.
Many other factors are responsible for creating the dynamic of buying JPY and CHF along with the two major reasons stated above.
While some of the factors make sense from a fundamental perspective, others are simply the result of speculation.
Now how can we utilize this information and adapt it to our trading?
Both these currencies when crossed with majors provide significant opportunities for trading. With the correct amount of leverage and getting the directional basis, you could see yourself in the green. With the trade wars looming , the US cutting rates and Brexit, these safe haven currencies will be interesting to look into and monitor performance.