Frequently Asked Questions and More
The FAQs section is a collection of questions and answers designed to educate our members and visitors regarding AFXANTS, FOREX, BINARY OPTIONS, BANKS, REGULATORY BODIES and BROKERS. If you can think of a question we have not included please do not hesitate to contact us.
One of the fastest growing investment arenas in the world is the foreign exchange market. The foreign exchange market is often referred to as 'FOREX', 'FX', 'Spot FX' or plainly 'Spot' and it is by far the largest financial market in the world, with over $5.3 trillion average daily volume.
It operates usually through an interbank system in which individuals, firms and financial institutions purchase one currency against another. It consists of so many participants that no single trader or investor, not even a large government, can completely control the long-term direction of the market. Therefore, many experts have named Forex Market as the top trading field around the globe.
Due to the advances in technology and the internet in particular, more people are trading online by simply downloading easy to use platforms on their personal computers, mobile devices etc. Just to get an idea of the sheer size of the Forex market, the New York Stock exchange has a daily volume of $25 billion per day and all stocks and futures markets combined only mount up to a third of the daily Forex market. Many people are regarding Forex as an excellent way of having an extra income, or even working full time from the comfort of their own home. The Forex Market is open and available to the public twenty - four hours a day, five days a week.
The Foreign Exchange Market, also known as FX Market or Forex Market, was formed in the 1970s when the International Monetary Fund (IMF) put an end to the Bretton Wood exchange system and chose a new exchange rate policy that would no longer be fixed. This resulted in worldwide currencies no longer being associated with gold but they were used to purchase other currencies. Thus, exchange rates fluctuated according to market forces.
Due to its large turnover, the Forex market is the largest and most liquid financial trading arena as it has a lot of currencies available to trade, traders and tools. Even though there are no headquarters in a specific location, there are financial markets such as Chicago Board of Trade, the London Stock Exchange, Bursa Malaysia and Bolsa de Madrid. Trading in Forex is executed electronically over the counter (OTC) from various interconnected marketplaces. This means that all transactions are executed through computer networks among traders worldwide. Forex market operates on a twenty-four hour basis from Sunday midnight, till Friday midnight.
Traders sell and purchase globally in the major financial centres of New York, Paris, Frankfurt, Zurich, Hong Kong, Tokyo, Singapore, Sydney and London - across almost every time zone. Because of the different time zones among different countries, traders can be active at any time of the day with price quotes continuously fluctuating. In addition to this, because of the enormous daily output, traders are able to open and close positions at any time without having to wait.
The price fluctuations that are observed in the Forex market are largely based on real monetary flows as well as forecasts. They take gross domestic product (GDP) growth, retail rates, inflation, unemployment, foreign direct investment (FDI), interest rates and other macroeconomic factors into account. Important news is made public, regularly on fixed dates; thus people can access this news at the same time from different part of the world. However, large banks have a big advantage as they can observe their client's order flow.
Simply speaking, foreign exchange trading is comprised by the purchase of one currency and the simultaneous sale of another. The widespread principle "buy low-sell high" is where Forex trades make their income. Only 5% of the daily transaction volume comes from real money exchange between companies and governments who buy or sell products and services to a foreign country. The other 95% of the daily transactions come from speculation.
It is the foreign exchange market that determines the value of one country's currency relative to another. The act of exchange of currencies is performed with the aim of making a profit. The primary reason the Forex market exists is to facilitate international trade and investment by giving businesses the ability to convert one currency into another. As an example, a German business can import goods from the U.S.A and pay in U.S. dollars, even though the business is based in Europe and operates in Euros. As a further trading example, traders who think that the rate of the EURUSD will go up they will buy, or go long, the EURUSD in the Forex market. If traders think the currency rate will go down they will sell, or go short, the particular currency pair they are interested in.
The simple answer is currencies. Forex transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. Simply said, one buys one currency and sells another currency and therefore currencies are always traded in pairs, such as EUR/USD, GBP/USD, etc.Forex transactions mainly go through a broker or dealer and currency pairs are quoted with a bid and ask price. The bid (usually lower than the ask price) is the price your broker is willing to buy at, thus the trader should sell at this price.
The purpose of trading is to buy low and sell high. The foreign currency market, FOREX, is no different. The products traded are rates of currencies of different countries. Due to the fact that, you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy for instance Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.
Currencies on the Forex exchange market are always traded in pairs, one against another. Each currency pair is a trading unit and is usually marked as AAABBB or AAA/BBB, where AAA and BBB are the ISO 4217 international three-letter codes of the traded currencies.
You must always remember that the currency that is presented first (to the left) is the base currency and that the value of the base currency is always set to 1.The first currency (AAA) is used as the base or primary currency and is quoted to the second currency (BBB). For example, the quotation EURUSD (EUR/USD) 1.2000 is the price of the Euro expressed in US Dollars, meaning that 1 euro = 1.2000 US Dollars.
The majors are those currency pairs that are comprised of the most important currency in the global markets-the U.S. dollar (USD)-crossed with one of seven other globally significant currencies-the euro (EUR), the Great British pound (GBP), the Swiss franc (CHF), the Japanese yen (JPY), the Canadian dollar (CAD), the Australian dollar (AUD) and the New Zealand dollar (NZD).
Everything is relative in the Forex market. The euro, by itself, is neither strong nor weak. The same holds true for the U.S. dollar. By itself, it is neither strong nor weak. Only when you compare two currencies together can you determine how strong or weak each currency is in relation to the other currency.For example, the euro could be getting stronger compared to the U.S. dollar. However, the euro could also be getting weaker compared to the British pound at the same time. The first currency is called the 'base' and the second is called the 'quote' currency. In the following example: EUR/GBP = 0.8550
This currency pair is formed by European Euros and Great Britain Pounds. The base currency (EUR) is always considered '1' and the quote currency shows how much it costs to buy one unit of the base currency. In this example, 1 European euro costs 0.85 Great Britain Pounds.
If you believe the euro is gaining strength compared to the Great Britain Pounds, you buy euro and sell Great Britain Pounds at the same time. If you believe the Great Britain Pound is gaining strength compared to the euro, you buy Great Britain Pounds and sell Euros at the same time. You always buy the stronger currency and sell the weaker currency.
By understanding the risks involved combined with a proved trading system a trader begins his journey on the correct path to become successful. If these are not used in a systematic way, a trader can become emotional when deciding and end up with severe losses.
Trading can be very stressful. This is why a definite set of rules to enter and exit the market is imperative. In addition, the instrument and timeframe has to be chosen to mirror the trader's personality and we refer to this as trading style.
The most common mistake that a new trader makes is choosing the wrong style for them, not realizing the potential for loss and applying wrong amount of capital to a trading float. This mixture of factors leads to an emotional journey for the newcomer and consequently leads to losses.One of the most deadly mistakes a trader may commit, one which can destroy any trading strategy, is when he/she (after already being down on a position) begins to think of excuses not to close the position - he/she thinks that perhaps the market will suddenly turn around and move in a favourable direction. The trader keeps thinking of this, and doesn't have the discipline to close the falling position. Don't wait until this happens.
The market does not do any favours for anyone. Eventually, the trader may be forced to close the position with much greater losses.
Losing the amount the trader was willing to lose using the original stop-loss level probably wouldn't hurt his/her opportunity to make up his/her losses. Losing 2, 3 or 4 times more in 1 trade can completely destroy any strategy. Not only will the trader lose more money than intended, but he/she will lose morale, as it's now much harder to make up the losses. He/she will also lose confidence in himself/herself and his/her ability.
- Traders do not accept the responsibility for losses and personal mistakes
- Over-trading and trading "obsession" can elicit greed especially at lower time frames.
- Excessive use of leverage and lack of managing their emotions effectively
- Poor trade management or simultaneously opening more than 3 positions
- Not mastering a proven successful method like the Breakout of Magic Levels
- Unrealistic expectations - traders know only the amount of money ready to be sacrificed and never mention the amount of profits they are willing to get.
- Forex scam - a lot of super traders exist out there wanting to cheat beginners in Forex trading
1. Spot the changes
The financial markets have only one thing in common, a fixed parameter, change. These sudden changes must find traders ready to face them and if possible to handle and profit from them. Investment in good Forex trading education is the No 1 key to success.
2. Spot the Trend and Go with It
The most important part in order to spot the trend is to define the difference between Trend and Momentum. Trend is the general price direction of Daily, Weekly and Monthly timeframes, while momentum is the general price direction seen at the four hours' charts till the one hour time frame.
3. Generate your strategy and confirm it with experts' results.
Beginners hear that a trader can benefit from both upward and downward market moves. As a result, they end up opening positions in any direction without a sign about the chosen direction. The final result is obvious, total loss or severe damage to their trading account. Having a trading strategy will minimize the emotional cost, too.
4. Know the people behind analysis
There are many companies conducting tests with several automated "trading systems" and selling them to greedy beginners or people who have lost their faith in their own unique powers. Before you buy or subscribe to any "trading product", please ask for a live demonstration and meet the people behind analysis. As a consumer you have the right to ask for the complete trading biography of your account manager or broker.
5. Test your "final" trading strategy and avoid trading signals on the cell phone.
Downloading a demo is the first step to learning how to use the trading tools offered to you and test your trading system. Double check the results given from several brokers for the same indicator at the same timeframe and for the same financial instrument. Make sure you can handle the shock. Do not trade, unless you are in front of the screen; in other words, if you do not watch the market never place a position given from a signal provider. You do not know their motivation to do so. It may completely go against your interests.
This double edge sword is the secret to unlocking a cautious money management strategy and avoid unnecessary risk taking. A basic tip is to learn the difference between account leverage, position leverage and margin requirements. Forex is not a "get rich quickly" scheme.
7. Learn the Turns and recognize the warning signs
The only proven method to managing this task is to study, study and study. In other words, the primary key to success is hard work and studying. Based on Jim Rohn quote: "Poor people have huge televisions, but rich people have huge libraries..."
8. Know the Warning Signs
The proper use of Stop Loss is one of the first steps to test your own emotions and trading strategy. Don't be afraid to use the stop loss order and learn to lose effectively. Be patient and develop the habit of reviewing your good and bad trades. Then you will have a better sense of what will work best in your future trades. Always have a solid reason to place a Stop loss at a specific price level.
9. Trading is a skill
Trading in financial markets is a skill that improves with experience and study. Always be a student and keep learning. A good start is from the "Behavioural Finance" field. Always remember that we will never know everything.
10. Price has no limits and it discounts everything
How many of us have sold the first rally in every bull market, saying that the market has moved too far, too fast. Just for your information, uptrend has no upper limit whereas downtrend has one, and it's zero. Avoid people and experts referring to financial instruments and just say the price of EURUSD is too high or too low. Low is 0 and high is infinite. Even if the price includes all the known and unknown information to the general public, history manages to repeat itself because human mentality never changes. The only part of life that has changed from ancient times till today is the human habits. Human beings have evolved from Greed and Fear emotions and if a trader wants to join the financial markets they have to learn how to control their own emotions first.
To begin with, the amount that should be invested is at least $1500, unless your money will be in an immediate danger of loss due to high exposure to risk. A starting capital between $1500 and $2500 is ideal for retail investors.
Remember: We never trade and/or invest an amount which will change our life stream in the worst case scenario of total loss.
Currency exchange occurs at every level of society. As an individual, you may have changed money when traveling on business or on holiday.
Foreign exchange or forex trading has another aim, nevertheless. When someone trades on the foreign exchange markets they are not buying another currency because they need it. They are buying it with the expectation that it will increase in value, so they can exchange it back and make a profit.
There are a lot of tips about currency trading that can help you become a smart trader or you can rely on professionals' advice in what is called trading signals, where they tell you when to place a trade and when to exit.
Forex trading began in the 1970s when the major currencies were deregulated so that their values were no longer fixed. The banks and large investors quickly saw the possibilities for making a profit from the fluctuating prices.
The major forex marketplaces are the great financial centres of the world. London has the highest activity with New York and Tokyo second and third respectively. Other important players are Sydney, Zurich and Frankfurt.
Initially, you had to be in one of those locations to trade money, or at least be in the position to connect with a broker who was there via telephone. It was very difficult for someone who was not on the spot to act fast enough in reaction to the sudden changes in price that can occur in the forex markets.
Nevertheless, contemporary advances in technology have changed all of that. Since the rise of the internet it has become possible to trade on your own account from anywhere in the world. This means that it has become much easier for anyone become active and gets a piece of the action.
The Forex market is a global decentralized financial market for the exchange of currencies. Since transactions are conducted between two counterparts, the FX market is an inter-bank, or over the counter (OTC) market.
Foreign Currency or Forex trading occurs via governments, large banks, central banks, and other financial institutions have traditionally dominated the Forex market. Additional market participation is geometrically increasing, and now includes international money managers, brokers, multinational corporations, institutional investors, options and futures traders, private investors, even travellers and tourists. All together form a marketplace for trading currencies on a 24/7 basis five days a week.It is a growing market, as more traders are turning to foreign currency trading with the help of the internet and many online trading options.
A Central Bank will intervene to buy or sell currencies, if they believe their official currency is substantially undervalued or overvalued and that it is having a negative effect on the economy. The national central banks play a key role in the foreign exchange markets as many central banks have very substantial foreign exchange reserves, thus their intervention power is significant.
Banks are licensed deposit taking institutions; they also support a variety of other services including foreign exchange. These banks will trade currencies among themselves as part of the system of balancing accounts. While exchange rates for their largest customers are extremely competitive, small and medium sized enterprises and individuals will typically pay a large premium when transacting foreign exchange with their local branch. The interbank market caters for both the majority of commercial turnover as well as enormous amounts of speculative trading every day. It is not uncommon for a large bank to trade billions of dollars on a daily basis.
This group comprises of companies who are involved in the 'goods' market, conducting international transactions for the purchase or sale of merchandise. Exporters are made up of a diverse range of companies exporting goods and services. Generally, exporters have a positive impact on the value of a country's currency. Importers use the foreign exchange markets to purchase foreign currency to make payments for the goods and services they have bought from other countries. They generally have a negative impact on the value of a country's currency.
Their trade sizes are mostly inconsequential to affect immediate moves in the market, given the large volume traded daily on the Forex market. However since a major key factor for long term trend of currency movements is the balance of trade, if taken as a whole, the capital flows arising from these corporations end up having a significant impact.
Their influence has increased significantly in the last few years thanks to the overall growth in their industry and abundance of funds at their disposal; however the net effect of this group depends on the investment decisions they make. With the growth of the FX industry they have been, where ever possible, investing heavily in foreign securities and other foreign financial instruments.
They can be classified into Interbank and Client brokers with the influence of the former declining in the last few years due to the shift of businesses to electronic trading systems. The advent of online pricing systems has revolutionized the operational capabilities of this market and changed the traditional role of brokers. But even in the past, most banks were unable to service the needs of small to medium sized organizations as well as commercial & private clients, with large corporations as their main targeted market. Thus keeping in mind the client's needs ability to invest a certain amount of minimum margin and still be able to trade on competitive spreads led to the advent of Online Broking Companies.
Given that the Forex market has high liquidity, a large amount of leverage and the 24/7 operational nature of the market, it has been an attractive playing field for speculators. The service provided by speculators to a market is primarily that by risking their own capital in the hope of profit, they add liquidity to the market and make it easier for others to offset risk, including those who may be classified as hedgers and arbitrageurs.
The full range of economic and political conditions influences currency pricing. It is generally believed that interest rates, inflation rates and political stability are top among significant factors. At times, governments participate in the forex market in order to affect the traded value of their currencies. These and other market factors such as very large orders can create extreme relative instability in currency prices. The utter size of the forex market stops any single factor from dictating the market for any period of time.Currency prices are influenced by a range of economic and political conditions, the most significant of which are interest rates, inflation and political stability. Moreover, governments sometimes participate in the forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as central bank intervention. Any of these factors, as well as large market orders, can cause high instability in currency prices. However, the size and volume of the forex market makes it practically impossible for any one entity to direct the market for any length of time.
Everyone refers to the U.S. dollar. But what does it really refer to when a trader considers action? The U.S. dollar can be an instrument for trading through the U.S. Dollar Index (USDX) traded on the New York Board of Trade. The USDX is recognized by hedge fund traders and worldwide as the instrument reflecting sentiment on the U.S. dollar. An additional way to trade the dollar is through any of the major currency pairs. The EUR/USD, the USD/CHF and other pairs with the dollar as part of the pair allows a trader to trade for or against the dollar but relative to the other pair.
The surprising facet to the composition of the U.S. Dollar Index is that it involves obscure currencies. It is composed of Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.
Prior to 1971, the Bretton Woods Agreement prevented speculation in the currency markets. The Bretton Woods Agreement was set up in 1945 with the aim of stabilizing international currencies and preventing money fleeing across nations. This agreement fixed all national currencies against the dollar, and set the dollar at a rate of $35 per ounce of gold. Prior to this agreement, the gold exchange standard had been used since 1876. The gold standard used gold to back each currency and thus prevented kings and rulers from arbitrarily debasing money and triggering inflation. Institutions like the Federal Reserve System of the United States have this kind of power.
However, the gold exchange standard had its own problems. Inevitably, economy's gold reserves would be run down due to imported goods from overseas. As a consequence, the country's money supply would shrink resulting in interest rates rising and a slowing of economic activity to the extent that a recession would occur.
Eventually, the recession would cause prices of goods to fall so low that they appeared attractive to other nations. This in turn led to an inflow of gold back into the economy and an increase in money supply which led to the fall of interest rates and the strengthening of economy. These boom-bust patterns prevailed throughout the world during the gold exchange standard years until the outbreak of World War I, which interrupted the free flow of trade and thus the movement of gold.
After the war, the Bretton Woods Agreement was established, where participating countries agreed to try and maintain the value of their currency with a narrow margin against the dollar. A rate was also used to value the dollar in relation to gold. Countries were prohibited from devaluing their currency to improve their trade position by more than 10%. Following World War II, international trade expanded rapidly due to post-war construction and this resulted in massive movements of capital. This destabilized the foreign exchange rates that had been set-up by the Bretton Woods Agreement.
The agreement was finally abandoned in 1971, and the US dollar was no longer convertible to gold. By 1973, currencies of the major industrialized nations were floating more freely, controlled mainly by the forces of supply and demand. Prices were set, with volumes, speed and price volatility, all increasing during the 1970s. This led to new financial instruments, market deregulation, and open trade. It also led to a rise in the power of speculators.
In the 1980s, the movement of money across borders accelerated with the advent of computers and the market became a continuum, trading through the Asian, European and American time zones. Large banks created dealing rooms where hundreds of millions of dollars, pounds, Euros and yen were exchanged in a matter of minutes. Today, electronic brokers trade daily in the Forex market. In London for example, single trades for tens of millions of dollars are priced in seconds. The market has changed dramatically with most international financial transactions being carried out not to buy and sell goods, but to speculate on the market, with the aim of most dealers to make money out of money.
London has grown to become the world's leading international financial centre. It is the world's largest Forex market. This arose not only due to its location, operating during the Asian and American markets, but also due to the creation of the Eurodollar market. The Eurodollar market was created during the 1950s when Russia's oil revenue, all in US dollars, was deposited outside the US in fear of being frozen by US authorities. This created a large quantity of US dollars that were outside the control of the US. These vast cash reserves were very attractive to foreign investors as they had far less regulations and offered higher yields.
Today, London continues to grow as more and more American and European banks come to the city to establish their regional headquarters. The sizes dealt with in these markets are huge. The smaller banks, commercial hedgers and private investors hardly ever have direct access to this liquid and competitive market, either because they fail to meet credit criteria, or because their transaction sizes are too small. However today, market makers are allowed to break down the large inter-bank units and offer small traders the opportunity to buy or sell any number of these smaller units (lots).
As a whole, retail trading is more structured than the Forex market. While Forex has been traded since the beginning of financial markets, modern retail trading has only been around since about 1996. Prior to this time, retail investors were limited in their options for entering the Forex market. They could create multiple bank accounts, each one denominated in a different currency, and transfer funds from one account to another in order to profit from fluctuating exchange rates; this was troublesome. The transaction costs incurred were large due to the small quantity of funds being converted relative to the size of the market. This transaction type was at the very bottom of the Forex pyramid.
By 1996, new market makers took advantage of developments in web-based technology that made retail Forex trading practical. The new companies felt that there was enough liquidity in the Forex market, and eventually within their own customer base, to guarantee markets under all but the most unusual market conditions. These companies also created online trading platforms that provided a quick and easy way for individuals to buy and sell on the Forex Spot market. In addition, the companies realized that by pooling many retail traders together, they had the size to enter the upper echelons of the Forex market, which reduced the size of the spread. As the business grew, the market makers were given better prices, which they then passed on to the customer.
Leverage is the artificial increase of purchasing power. Leverage is a powerful tool for currency traders. It can be defined in many different ways. Leverage is the ability to gear your account into a position greater than your total account margin or it is the % amount of money you are allowed to borrow from the broker when you open a position. In simple words, traders can open bigger positions with less money required as guarantee. When a trading account has leverage up to 1:500, it means that the trader can open a position 500 times his/her money. Maximum amount of leverage can be expressed as Available line or Available equity, too. The higher the leverage the fewer margins required to invest.
It is the necessary amount to have into your trading account in order to open relevant transaction. Leveraging a position involves putting down collateral, known as margin, to take on a position that is larger in value. Margin is the amount of money required to exist in the trading account in order to open or maintain a position. It is deposited as collateral to cover any prospective losses. Used Margin is the amount used in order to maintain an open position.
Free Margin is the available amount of money, which can be used to open new positions. If a trader's account falls below the minimum amount required maintaining an open position, he/she will receive a Margin Call. At this point, the trader has two options, either deposit more money into the trading account or close the open positions.Margin is the deposit or the collateral required to open or maintain a position, whereas free margin is the amount available to open new positions. Margin always is expressed as percentage. The higher the leverage the fewer margins required to invest.
Account leverage, 1:50, is the same as investing 2% of the contract value.
Account leverage, 1:400, is the same as investing 0.25% of the contract value.
The relationship between margin and leverage can be summarized by the following two formulas:
Margin = 1/Leverage or 1: Leverage
Leverage = 1/Margin = 100/Margin Percentage
Margin Requirement for Forex = (Quantity of Lots x Lot Size) /Leverage
For example, let's take a trader with $2,000 in his account.
Our trader buys 1 lot of EURUSD at a price of 1.3500 with the 100:1 maximum leverage.His margin requirement is 1,000 Euros, converted to account currency the Margin requirements is $1,350. If the position makes money, the gains are added to the equity in the traders account. Likewise if the position goes against the trader the losses are subtracted from the account's total equity.
If the price moves 100 pips in the trader's favour, then the trader would make a $1000 profit (at almost $10 per pip x 100 pips). The trader has effectively made a 50% return on his $2,000 account. Conversely if the position had gone at least 75 pips against the trader, his position would have been closed due to a margin call when his account equity dropped below his 1,000 Euros margin requirement (= the Margin call level differs among the brokers). The trader would have a loss of approximately $750.
Traders with accounts denominated in a base currency other than US Dollars should convert the above amounts into their base currency to calculate their margin requirements. For example, a Euro based account with an open 1 lot position would have a margin requirement of 1,000 Euros.
In the case of a British Pound based account, an open 1 lot position would have a margin requirement of approximately £895 British Pounds, if the current GBP/USD rate is 1.5100. (= 1,350/1.51 is £894.03) Since all conversions are done automatically by the trading platform the moment a new position is opened, your margin requirement will always be displayed in your account's base currency.
If a trader's account doesn't have enough money to support the trades that are open, he will receive a margin call. According to Forex Company a trader will receive a margin call when the level of his equity dropped to 20-30% of his initial balance. The trader has two options in that case, to make a new deposit in order to keep open his positions or to close his positions.
The price, which is the one you can buy a currency pair (the "Ask" price), is usually higher than the price at which you can sell a currency pair (the "Bid" price).A spread is the difference between the ask price (the price you buy at) and the bid price (the price you sell at) quoted in pips. If the quote between EUR/USD at a given moment is 1.3500/2, then the spread is 2 pips. If the quote is 1.35505/52, then the spread is 1.5 pips.
It is how brokers make money. Wider spreads result in a higher ask price and a lower bid price. As a consequence, you pay more when you buy and get less when you sell; making it more difficult to realize a profit Brokers don't typically earn the full spread, especially when they hedge client positions. The spread compensates the market maker for taking on risk from the time it executes a client trade to when the broker's net exposure is hedged (possibly at a different price).
Pip is used to calculate the fluctuation of a forex pair as well as your profit and loss in points. A Percentage in Point (pip) = 0.0001 (or 0.01 in Japanese Yen) is the smallest measure of price move used in Forex trading.
To calculate the value of one pip in a position you multiply the position size times 0.0001 (a pip) and you get the value of the pip in the term (second) currency. Then you can convert that value to your base currency.
Example is given for a standard lot of 100,000 EURUSD position.
100,000 * 0.0001 = 10 USD
For your convenience, all currencies with USD as "quote" currency have 10 USD value per pip in a lot. The others need a conversion regarding the accuracy of their pip value per lot.
Lot is the way to measure the position size or the volume of a trade. A standard lot in Forex is equal to 100,000 base units. For example, when a trader wants to open a 100,000 position at EURUSD is the same as buying 100,000 EUR and selling the relevant converted amount in USD.
The lot size is important to specify the performance, gained or lost, from each pip.
A standard lot size (= 100,000) causes an approximately $10 per pip gain or loss.
A mini lot size (= 10,000) causes an approximately $1 per pip gain or loss.
A micro lot size (= 1,000) causes an approximately $0, 1 per pip gain or loss.
Pairs with USD as a quote currency, like GBPUSD and EURUSD, have a fixed $10 per pip value at a standard lot position.
A position at a pair without USD as a quote has to be converted appropriately.
Usually, trading platforms are doing it automatically.
It's the interest added or deducted for holding a position open overnight. Its calculation is based on the overnight interest rate differential between the two traded currencies. It can be charged either in account currency directly or as swap points.
When a trader opens a buy (long) position, the Ask price is used. When a trader opens a sell (short) position, the Bid price is used.
When the trader wants to close the buy position, the Bid price will be used. When a trader wants to close the sell position, the Ask price will be used.
Short positions are taken when a trader sells currency in anticipation of a downturn in price. Making this move allows the investor to benefit from a decline. When we go short it means we are selling at the market price and so we want the price to fall so that we can then buy back our position at a lower price than what we sold it for.
Long positions are taken when a trader buys a currency at a low price in anticipation of selling it later for more. When we go long it means we are buying at the market price and so we want the price to rise so that we can then sell back our position at a higher price than what we bought it for. Making these moves allows the investor to benefit from changing market prices.
Intraday positions are all positions opened anytime during the 24 hour period after the close of FX desk normal trading hours, which is 5pm New York time (EST). Overnight positions are positions that are still on at the end of normal trading hours, that is 5pm EST. Traders pay or get paid an interest for keeping a position open overnight. This sum is called Rollover or Swap rates.
There are 2 ways to open a trade. You can either enter a Market/Instant Order or an Entry/Pending Order.
A Market Order/ Instant Order is a trade that will be opened immediately at the rate you select by clicking Buy or Sell. A market order is an order to buy or sell a specific currency, which is to be filled immediately at the currently quoted exchange rate. Market order trades are generally filled instantly in order to avoid hanging trades or delays.An Entry Order / Limit Order/ Future limit order is a trade that you choose to open at a rate in the future. You enter your details the same as you would for a Market Order but instead of opening the trade now you enter the rate you want it to open at in the future.
It is a type of order to be executed in the future, like:
Stop buy orders are useful when the investor believes e.g. with the help of technical or fundamental analysis that if the market reaches a certain level price which is above the current levels then it will go further up.
With this type of order the investor places a stop buy on EURUSD at 1.4000 (currently say trading at 1.3800). Once the market hits 1.4000 the order is activated and the investor goes long EURUSD.
The investor will profit if the market price for EURUSD continues to go up.
Suppose you are looking to buy 1 Lot of EURUSD if the price shows that it wants to go up. Assume EURUSD is currently trading at 1.3880 and you believe that if the price rises to 1.4000 or higher there will be continued upward momentum. You place a Buy Stop Order @ 1.4000 on EURUSD.Suppose EURUSD then proceeds to trade up to 1.4000. At that time, your order would become a Market Order to buy and your order would be filled at the market.
Stop sell orders are useful when the investor believes e.g. with the help of technical or fundamental analysis that if the market reaches a certain level price which is below the current levels then it will go further down.With this type of order the investor places a stop sell on EURUSD at 1.3300 (currently say trading at 1.3500). Once the market hits 1.3300 the order is activated and the investor goes short EURUSD.
The investor will profit if the market price for EURUSD continues to go down.
Suppose you want to sell 1 Lot of EURUSD and you are worried that if the price falls a few more dollars that it will trigger the beginning of a much larger decline. Assume EURUSD is currently trading at 1.3850.You place a Sell Stop Order @ 1.3800 on EURUSD. Suppose EURUSD then proceeds to trade down to 1.3800. At that time, your order would become a Market Order to sell and your order would be filled at the market price.
Limit buy orders are useful when the investor believes e.g. with the help of technical or fundamental analysis that if the market reaches a certain level price which is below the current levels then it will turn to go up.
With this type of order the investor places a limit buy on EURUSD at 1.3500 (currently say trading at 1.3600). Once the market hits 1.3500 the order is activated and the investor goes long EURUSD.
The investor will profit if the market price for EURUSD goes back up again.
Suppose you want to Buy 1 Lot of EURUSD, and it is currently trading at 1.3700. You would like to buy the EURUSD if the price drops to 1.3600 or less, as you feel the EURUSD current price of 1.3700 is slightly overvalued.
You place a Buy Limit Order @ 1.3600 on 1 Lot of EURUSD. Now suppose the price trades down to 1.3600 then your order would then be bought at the market price.
Limit sell orders are useful when the investor believes e.g. with the help of technical or fundamental analysis that if the market reaches a certain level price which is above the current levels then it will turn to go down.
With this type of order the investor places a limit sell on EURUSD at 1.3800 (currently say trading at 1.3750). Once the market hits 1.3800 the order is activated and the investor goes short EURUSD.
The investor will profit if the market price for EURUSD goes back down again.
Suppose you want to sell 1 Lot of EURUSD, and it is currently trading at 1.3800. You would like to sell the EURUSD and take your profits if the EURUSD price reaches 1.3850, as you feel the EURUSD price is not going to go much higher than 1.3850.
You place a Sell Limit Order @ 1.3850 on EURUSD. Now suppose the price trades up to 1.3850 then your order would then be sold at the market price.
Take Profit order is intended for gaining the profit when the security price has reached a certain level. Execution of this order results in closing of the position. Take Profit orders can only be executed for an open position and not for pending orders.
Stop Loss order is intended for liquidating the loss when the security price has reached a certain level. Execution of this order results in closing of the position. Stop Loss orders can only be executed for an open position and not for pending orders.
Example: If the trader above is long EURUSD at 1.3500, a stop loss order could be left at 1.3400.
As a rule, sell stops are filled on our bid, and buy stops are filled on our offer. This allows for the filling of client stop orders at the rate they requested in almost every case. In the rare instance that the market gaps over a requested rate, the stop is filled at the best available price. This is an important point for traders who are accustomed to being filled on sell stops when the offer reaches the requested order rate. For example, if a stop order is placed to sell USD/CHF at 1.45331, the trader will be filled when the bid reaches 1.45331 (i.e. the bid/offer is 1.45331/495).
What is the technical basis for locating a stop loss?
Stops should technically be where the trade no longer makes sense. If you're buying a currency pair, ask yourself at what point should you be selling it? Or if you're selling the pair, at what point would you be buying it? The answer is a good first approximation as to where the stop should be technically. Keep in mind that you should also consider the risk involved and money management.
Trailing Stop Orders
Trailing stop orders are another type of Stop Loss pending order. Stop Loss is intended for reducing of losses where the symbol price moves in an unprofitable direction. If the position becomes profitable it pays for the client to shift (or keep shifting) the Stop Loss to a break-even level. This process can be automated and itâ€™s knows as Trailing Stop. This tool is especially useful when price changes strongly in the same direction or when it is impossible to watch the market continuously for some reason.
To set the trailing stop, one has to execute the open position. The client has to select the desirable value of distance between the Stop Loss level and the current price in the list opened. Only one trailing stop can be set for each open position.
After the above actions have been performed, at incoming of new quotes, the system automatically checks whether the open position is profitable. As soon as profit in points becomes equal to or higher than the specified level, command to place the Stop Loss order will be given automatically. The order level is set at the specified distance from the current price. Further, if the price changes in the more profitable direction, trailing stop will make the Stop Loss level follow the price automatically, but if profitability of the position falls, the order will not be modified anymore. Thus, the profit of the trade position is fixed automatically.
One Cancels Other orders (OCO's) - OCO stands for One-Cancels-Other. It is an order type that simply attaches two entry orders such that when the first is removed or executed, the second will be removed as well.
If / Then Single - As the name implies, IF/THEN orders consist of two entry orders. If and only if the first entry order is executed, will the second entry order by placed. At this time, you will have a position in the market and a separate entry order that was placed.
If /Then OCO - This order is very similar to the IF/THEN order, except the â€śTHENâ€ť part of the order consists of an OCO order. This order is meant for creating an entry order, in which if it is executed, a stop and limit would be placed.
Binary options also known as digital options are relatively new financial trading products. Binary options have a fixed return on all trades. Investments pay out depending if it expires ITM (In the money), OTM (Out of the money) or an ATM (At the money/breakeven). Before every trade is placed, all risk and potential rewards are known. The goal of binary options trading is to forecast if an underlying assetâ€™s price will rise or decline within a set period of time. Binary Options allow you to invest in expensive stocks without having to own the stock.
Underlying Assets are the trading products which are traded in a financial market. Assets are generally categorized as commodities (metals, oil, and soy), currency pairs (Euro vs US dollar - EURUSD), stocks (Apple-APPL, Google-GOOG, or Microsoft - MSFT), stock indices (Nikkei, NASDAQ, Dow Jones, and FTSE) and bonds.Investors purchase options on assets on a fixed expiry time in order to profit from the price fluctuation within the underlying asset.
A strike price is the market price for an asset when an option is executed.
A Call Option is an option that gives the investor a profit when the underlying asset increases (goes higher) in price compared with the strike price.
A Put Option is an option that gives the investor a profit when the underlying asset declines (goes lower) in price compared with the strike price.
The expiry rate is the price of the underlying asset at the time of the predetermined expiration. This is the basis as to whether the option has expired in-the-money or out-of-the-money.
The expiration time is generally a chosen time and date at which an option expires.
The total risk is the initial investment amount. The amounts can vary, and can be tailored to your trading plan. The amount of the investment also pre-determines the investor's potential pay out and return of investment, at the time of the options expiration time.
AFXANTS is a web based informative portal, whose target is to inform as many people, traders and/or speculators as possible, about the financial and mostly forex market. We do NOT offer Investment advice. We are a team of market researchers and we share our knowledge, expertise, experience and vision with you. Our unique trading techniques have been proven to be successful and as a result we share them for those who wish to follow them. Our in-house developed techniques are the Breakout of Magic Levels and the Super trades. These techniques are not found anywhere else.
Our purpose is to provide traders with unbiased money market information and technical analysis in order to achieve the maximum possible return with the lowest possible risk. We do not offer investment advice but a new approach and way of thinking into money markets through extensive information selected with our trading experience and expertise. In other words, we seek to provide simple and easy to understand market information and analysis to our loyal members in order to end up with the optimum final trading decision.
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Being a trader is the optimum profession ever made. For our community the trader has the same meaning as independence and Freedom of knowledge and decision. This is actually the philosophy of our community. The ants are independent to choose, specialize and perform. At this point you might wonder the necessity to be part of the AFXANTS team. The AFXANTS community is the place, where you will get the necessary equipment and even more in order to create either your own trading strategy, or use our trading strategies or even better confirm yours with ours.
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The first step you will need to do is to create your account and then if you find it useful to make a subscription.Then you need to watch our Video Tutorials and read the 'Frequently asked Questions' part in order to solve as many trading concerns as possible.The daily trading routine from there and on starts with a short visit from our Economic calendar and Live Global Markets in order for you to know when, what and where to expect potential volatility caused from an announcement.
A short visit to these parts will give you the major fundamental information about the market before you proceed with the market analysis part.
Currently, we offer Binary options' tool, Scalping tool, Multi-timeframe analysis, which includes the so called "Magic Levels" as well as Ichimoku Kinko Hiyo directions. Super trades are an exceptional tool offered only by our team of experts. Read the guidelines given for the proper and efficient use of each and every tool. All tools are unique, robust and in-house developed.
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- Multi-timeframe trading
- Breakout trading
- Super – trades
- Scalping techniques
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In order to use each of our tools, you need to read carefully its individual instructions. Before proceeding with the trading instructions, please make sure to read, understand, recognize and calculate the following terms:
- Magic Levels and Magic Zone
- Time frame
We have noticed empirically that financial instruments have a tendency to converge or diverge from the direction of some other trading instruments. This parameter can enhance our trading decision but will never substitute the basic charts’ or price analysis.
EURUSD has been noticed to have a Negative correlation with USDCHF and a positive one with GBPUSD. What does this information mean? Will it last forever?Nothing lasts forever.
If EURUSD has a negative correlation with another trading instrument like USDCHF, then an upward movement on EURUSD will possibly cause a downward movement on USDCHF.
If EURUSD has a positive correlation with another trading instrument like GBPUSD, then an upward movement on EURUSD will possibly cause an upward movement on GBPUSD.
These empirical results do not constitute a definite reaction because if it was that simple then all the rest of analysis and information would simply be useless.Correlation is used in order to know the current establish relationships among trading instruments in order to rotate our attention and capital faster and smoother towards them.A good example offered in our community is the JPY (= Japanese Yen).We offer analysis for USDJPY, EURJPY and GBPJPY.
When Technical Summaries found at Multi-time frame analysis of all these three trading instruments are pointing in the same direction then there is a high possibility for JPY pairs to follow it. In other words, it means that when the 15 minute, 30 minute and 1 Hour Summaries are pointing UP or giving a BUY or a Bullish sentiment then the JPY is expected to become weaker against its major peers and vice versa.The same rationale is followed by USDCAD, GBPCAD and EURCAD pairs.
Correlations are supplementary tools and not a substitute of basic price analysis.
Unbiased analysis is the raw picture of the market with no amendments. The analysis provided without personal interest to negatively affect your decision or capital. We offer robust analysis in good faith in order to inform and help traders not to erroneously analyse the relevant financial instrument based on the most famous technical indicators. It's the analysis offered from the combination of pure technical analysis' Indicators and Moving averages, but not only.
After a long term research, we have ended up with the result that the majority, if not all, of trading platforms, informative portals, signal providers and forex forums do not use the correct technical analysis tools, formulae and indications. As a result, the Technical analysis' reports are usually incorrect, or even worse, harmful for the traders' portfolio and decision making. This is the point where we ended up creating the AFXANTS informative web portal.
We provide the so called UNBIASED market analysis report for the majority of important timeframes and financial instruments traded by millions of traders around the globe.
Simply the exit point, which has the smallest distance from Entry point it has directly more possibilities to be triggered, even by luck. You can test the above statement at a demo account and see that even without analysis, if you put a Take profit closer than Stop Loss then it will be triggered more times than the Stop Loss. We suggest Stop Loss to be minimum double the distance of the Take Profit. Volatility is the fluctuation of price and usually triggers the Stop Loss or Take profit unexpectedly. The level which is closer to current market price has more possibilities to be triggered. As a result, we combine the trend direction with volatility and we use higher Stop Loss than the Take profit. We use relevant techniques depending like 1:3 Rewards to Risk or simpler 20-30 pips higher Stop Loss than Take profit, if Take profit is 10 pips as indicated to Millionaire Plan table. The decision depends on your risk appetite. This is how volatility parameter is covered, too.
We recommend trading with maximum total trading account exposure 1:10. Maximum Position size must not exceed 1:5. I.e. if you have $2,000 into your trading account then do not open a position higher than 0.1 lots or 10,000 base units.
The answer is simple. Why don't you eat the same food every day? There is no BEST pair, commodity or metal. You must have a direct approach to every financial trading instrument and get the opportunities when they arise.
A successful trader has the unique ability, skill and talent to rotate his/her attention to profitable opportunities wherever and whenever they appear. Being a trader is a blessing and a power to change your present and future. It's not a daily task or job.
EURUSD and Gold offer are closely watched from brokers' dealing rooms and can be manipulated at any time. "Trading under the radar" of continuous dealers' surveillance is an ability of a successful trader.
Two simple reasons
1. Your broker offers analysis after you make a deposit and requests personal information, which can be very dangerous for even regulated brokers
At AFXANTS we provide a constantly FREE and unbiased view of the forex market, even if you do not have a paid subscription. We require only major contact information and NEVER your banking or Credit card details. The only case in which we ask Bank account details is after a personal communication for a bank wire payment to our Affiliates.
2. The majority of FX brokers (regulated or not) are "market makers" and they earn at least the major part of their profits when a trader loses his/her capital. "Market makers" offer "unknown and exotic fruit" to traders like STP and ECN, too. Why would they give you an unbiased and correct analysis?
We offer an unbiased view of the market analysis. We will benefit only if you are satisfied with our analysis and services. You will provide us your honourable vote of confidence via continuing to subscribe due to your maintained and profitable satisfaction.
Breakout of Magic Levels is an amazing trading technique. We have tested it and we share it. AFXANTS services are NOT offered in order to collect quick subscriptions fees like most of trading signals providers, Expert advisors etc. We are looking for loyal members in the long-term of any income status and from any country, where forex trading is allowed. In order for us to keep our loyal members satisfied we need to keep offering extraordinary services and knowledge at a reasonable price. Our scope is to inform and educate the traders around the globe about the Brokers’ sacred secrets "behind the scene".
At AFXANTS Ltd, we provide analysis for the following trading instruments:
|Australian Dollar VS Canadian Dollar||Euro vs Mexican Peso||New Zealand Dollar vs Japanese Yen||Swiss Franc vs Singapore Dollar||British Pound vs New Zealand Dollar||US Dollar vs Mexican Pesos|
|Australian Dollar VS Swiss Franc||Euro vs Norwegian Krone||New Zealand Dollar vs Singapore Dollar||Euro vs Australian Dollar||British Pound vs Polish zloty||US Dollar vs Norwegian Krone|
|Australian Dollar VS Japanese Yen||Euro vs New Zealand Dollar||New Zealand Dollar vs US Dollar||Euro vs Canadian Dollar||British Pound vs Swedish Krona||US Dollar vs Polish Zloty|
|Australian Dollar VS Danish Krone||Euro vs Polish Zloty||Norwegian Krone vs Japanese Yen||Euro vs Swiss Franc||British Pound vs Singapore Dollar||US Dollar vs Canadian Dollar|
|Australian Dollar vs Hungarian Forint||Euro vs Russian Ruble||Norwegian Krone vs Swedish Krona||Euro vs Chinese Renminbi||British Pound vs Turkish Lira||US Dollar vs Russian Ruble|
|Australian Dollar VS New Zealand||Euro vs Swedish Krona||Polish Zloty vs Japanese Yen||Euro vs Czech Koruna||British Pound vs US Dollar||US Dollar vs Swedish Krona|
|Australian Dollar VS Polish Zloty||Euro vs Singapore Dollar||Swedish Krona vs Japanese Yen||Euro vs Danish Krone||British Pound vs South African Rand||US Dollar vs Singapore Dollar|
|Australian Dollar VS Singapore Dollar||Euro vs Turkish Lira||Singapore Dollar vs Japanese Yen||Euro vs British Pound||Hong Kong Dollar vs Japanese Yen||US Dollar vs Turkish Lira|
|Australian Dollar VS US Dollar||Euro vs US Dollar||Turkish Lira vs Japanese Yen||Euro vs Hong Kong Dollar||New Zealand Dollar vs Canadian Dollar||US Dollar vs South African Rand|
|Canadian Dollar vs Swiss Franc||Euro vs South Africa Rand||US Dollar vs Swiss Franc||Euro vs Hungarian Forint||New Zealand Dollar vs Swiss Franc||South African Rand vs Japanese Yen|
|Canadian Dollar vs Japanese Yen||British Pound vs Australian Dollar||US Dollar vs Chinese Renminbi||Euro vs Japanese Yen||New Zealand Dollar vs Hungarian Forint||US Dollar vs Hungarian Forint|
|Canadian Dollar vs Norwegian Krone||British Pound vs Canadian Dollar||US Dollar vs Czech Koruna||Swiss Franc vs Norwegian Krone||British Pound vs Hungarian Forint||US Dollar vs Japanese Yen|
|Canadian Dollar vs Swedish Krona||British Pound vs Swiss Franc||US Dollar vs Danish Krone||Swiss Franc vs Polish zloty||British Pound vs Norwegian Krone||US Dollar vs Croatia Kuna|
|Swiss Franc vs Japanese Yen||British Pound vs Danish Krone||US Dollar vs Hong Kong Dollar||Swiss Franc vs Hungarian Forint||British Pound vs Japanese Yen|
- Euro Futures
- Japanese Yen Futures
- Australian Dollar Futures
- British Pound Futures
- Swiss Franc Futures
- Dollar Index
Spot Silver - EUR
Spot Silver - USD
Spot Gold - EUR
Spot Gold - USD
Spot Platinum - USD
Spot Palladium - USD
- mini S&P 500
- mini Dow
- mini NASDAQ 100
- NIKKEI 225 (Dollar)
- FTSE 100
- Euro Stoxx 50
- ASX SPI 200 Index
- CAC 40
- Light Sweet Crude Oil
- Natural Gas
- Brent Crude
|Alcoa, Inc.||3M||DuPont||Exxon Mobil Corporation|
|American International Group, Inc.||Merck & Co, Inc.||Walt Disney||Yahoo, Inc.|
|American Express||Microsoft Corporation||General Electric||Facebook Inc.|
|Boeing||Oracle Corp.||Home Depot, Inc.||Apple Inc.|
|Alibaba Group Inc.||Pfizer, Inc.||Hewlett Packard Co.||Google Inc.|
|Bank of America||Procter & Gamble Co.||IBM||Amazon.com Inc.|
|Citigroup, Inc.||AT&T, Inc.||Verizon Communications, Inc.||EBay Inc.|
|Caterpillar, Inc.||Travelers Companies, Inc.||Intel Corporation||Goldman Sachs Group, Inc.|
|Cisco Systems, Inc.||United Technologies Corporation||Johnson & Johnson||Wells Fargo & Co|
|Chevron Corporation||Wal-Mart Stores, Inc.||JPMorgan Chase & Co.||LinkedIn Corporation|
|McDonald's Corporation||Coca-Cola||Twitter Inc.|
|ANGLO AMERICAN PLC||GlaxoSmithKline PLC|
|Barclays PLC||HSBC Holdings PLC|
|BHP BILLITON PLC||LLOYDS BANKING GROUP PLC|
|BP PLC||TESCO PLC|
|BT Group PLC||VODAFONE GROUP PLC|
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Magic Levels are the most important price levels based on our in-house developed technique and they suggest relevant entry or exit points based on the Breakout strategy. They look as simple Support and Resistance levels but a more in-depth look will make you understand better the reason they're named this way. More details can be gained from the relevant FREE video tutorial.
They are generated ONLY from our company and cannot be found anywhere else.
Our strategy offers more than 95% accurate and successful trades, especially if combined with Multi-timeframe analysis.No matter what the possible direction during the week is, we trade the levels and we expect only to see BREAKOUTS to open a trade.
Read the strategy, memorize it and ask any question you have!
- The initial Capital = The starting Capital for each year
- Position Leverage = The average position size for example, 7.5 times the Remaining balance or 7.5 x 2000 = 15,000 units or 0.15 lot size for the Year 1
- Requested monthly performance (%) = Performance needed from the trader at the end of each month.
- Daily pips needed excl. Spread =The amount of pips we want during the day
- Monthly pips needed excl. Spread =The amount of pips we want during the month in order to get our Requested Monthly Performance
- Account Balance after 12 months with more than 50% performance withdrawal = every month we withdraw 50% of our monthly performance. The final result for the year is 298% more than our initial capital i.e. we end the year with an account balance 3 times larger than the initial capital.
- Total yearly withdrawals = every month we withdraw 50% of our monthly performance. The cumulative result is 117.5% compared to our starting capital for the respective year.
- Actual yearly withdrawals = Total withdrawals in order to round-up our starting capital for the next year
- Monthly results are cumulative
The table is describing with numbers why we have to be PRUDENT and not GREEDY!
With a starting capital of $2,000 you can end up in the 4th year with $48,000 in your bank account and with $35,000 in your trading account as a starting balance for the 5th year!!!
Average (monthly) income for the 3rd year is $1800 and the 4th Year $4000.
We reach this target with 7 pips per day, a constant 10% per month on the ending monthly balance and on the safe mode as soon as we do not open positions with high leverage!! Don't be GREEDY!
We insist that you have to learn how to get these 7 pips and you can do this only by trading the Breakouts of Magic Levels!
Trading is Analysis, Psychology and Money management!
We offer you everything you need in order to be successful!
Analysis in order to avoid wrongfully calculated technical indicators from Brokers' platforms; Money management in order to know how much you have to get and be satisfied combined with Risk management tactics, we remove so much psychological pressure from your trading!
When pairs are correlated then we expect to see a DOUBLE BREAKOUT in order to open a trade
If EURUSD breaks above a resistance either the Upper Magic Level or any level from other resistances and on the other hand USDCHF breaks below Lower magic level or below any Support Level then WE OPEN A TRADE with the table rules.
We never press the button to open Sell position above the Upper Magic Level and never press the button to open a Buy position below the Lower Magic Level.
We avoid the use of pending orders because the FX brokers can easily manipulate the extreme prices and trigger our positions with NO reason and before a BREAKOUT occurs!
We never open a trade when we are not in front of the screen.
We never trade an SMS signals.
Now let's continue with some more details about the strategy:
Inside the Technical Analysis part you will find 10 numbers for each financial instrument (4 Magic Support Levels, 4 Magic Resistance Levels and the No Trade/Magic Zone)
No Trade/Magic Zone:
- We do not open a trade, while the price is found between these two levels.
- This ZONE creates a concrete and very difficult to be broken SUPPORT or RESISTANCE AREA
- If the candlestick closes above the UPPER MAGIC LEVEL, a BUY signal is generated. Always confirm signal via Multi-timeframe analysis.
- If the candlestick closes below the LOWER MAGIC LEVEL, a SELL signal is generated. Always confirm signal via Multi-timeframe analysis.
- Use of Magic Levels offered at Multi-timeframe analysis' can be used as Entry and Exit points i.e. Take Profit and Stop Loss levels
- For any questions, feedback and comments please let us know as soon as possible!!
The steps to follow are: (Examples in this part use 10-15 pips for 20% monthly performance)
Beginners are recommended to start from 7 pips per day and 10% monthly performance
- Check Price levels when the candlestick closes (For Daily the H1, for Weekly H4, for Monthly the D1)
- No need to place all the levels for all the Financial Instruments
- Select the instrument which is closer to its Magic levels
- Wait till the candlestick closes above a Magic Resistance or Below a Magic Support level, in order to open a trade
- Otherwise, check other trading tools and return later for Breakouts.
- Use of Magic Levels offered at Multi-timeframe analysis' part can be used as Entry and Exit points i.e. Take Profit and Stop Loss levels
- Forget what happened yesterday – we only care about what will happen today!
- The levels are valid from 22.00 GMT +00 till the same time next day (Adjust the time to your local time zone and Summer Daylight)
- Avoid opening a trade after 19.00 GMT +00 (Adjust the time to your local time zone and Summer Daylight)
- If a breakout occurs then a second breakout, of the specific price level is not valid - except if it takes place at the Upper or Lower Magic Levels.
- A second breakout, towards the same direction and at the same price level, indicates a stronger indication for the most probable direction.
- If the central levels are broken then do not delete them because a reverse breakout will give the exact opposite signal. Central - Crucial - Magic levels are the strongest levels to be broken so be careful as soon as the price is close to them. Reminder: If the market opens at a distance of 10-15 pips away from these levels then do not trade their direction.
- Use the levels and try to get between 10-15 pips every day to end your month with more than 20% performance! (From every trade we want an average of 10 pips and not more)
- You do not need more! Continue in this direction and end your year with more than 700% performance
- Over-extensive trading, trading mania and many positions simultaneously make our account overexposed to risk and severe losses can occur.
- Make your balance 7 times bigger than now. It's simpler than you think.
- The position size has to be a maximum of 10 times our balance i.e. if I have $1,000 then maximum position is $10,000. (Do not open 10 position of 1:10 - The total sum of simultaneously opened positions has to be 1:10)
- The targets are valid from 22.00 GMT+00 (adjust it to your time zone) and expire the same time next day
- If the price opens between Upper and Lower Magic Levels then,
- A breakout above Upper Magic Level generates a BUY signal
- A breakout below Lower Magic Level generates a SELL signal
A) If the price opens between R1 and Upper Magic Level
- We do not do anything
- It has to close above R1 in order to buy or
- It has to go down and close firstly below Upper Magic Level i.e. enter into No Trading Zone, and then close again above Upper Magic Level in order to generate a BUY signal
B) If the price opens between S1 and Lower Magic Level
- We do not do anything
- It has to close below S1 in order to sell or
- It has to go up and close firstly above the Lower Magic Level i.e. enter into No Trading Zone, and then close again below the Lower Magic Level in order to generate a SELL signal
- We never sell above the Upper magic level and buy below the Lower magic level. If the price starts between R1 and R2
- We only buy if the candlestick closes above R2 or
- If the price goes till either below Upper magic level or below R1 and turns back and closes above either the Upper magic level with TP target at R1 or above R1 with TP target at R2
WE ONLY TRADE WHEN A BREAKOUT REALLY EXISTS
Money management (= position size + entry and exit points) is the No 1 premise we have to follow. Prefer the use of Reward to Risk ratio 1:3 and maximum trading account exposure 1:10.
- It is NOT recommended to open new positions either during the first hour of the market opening, especially for Forex and Commodities on Sundays, nor the final two trading hours of closing on Friday.
- Even before you start trading, you should have a game plan that involves Trading Performance. Most traders lose money and will continue to do so because they skip this main part. As a trader you need to set a potential profit outcome, which should be a realistic profit and not try to reach extremes, for the week, month or year.
- Always set a Stop loss and Take Profit. It is also possible to use our Magic Levels as Exit points as well as Entry points. Do not change your Stop loss unless you drag it to keep profiting i.e. Manual Trailing Stop. Stops help avoid disasters, so always use them. Do not average down or up, if a position goes against you. If you do average up and down then get ready for a severe trading loss.
- Do not overweight your $$ into one position. It is a wise to maintain a minimal amount of $$ in one specific position.
- You should only start trading when you feel comfortable doing it, and at the same time, you are aware of the risk involved. Before trading, study and practice your tactics on a demo platform and only when you fell ready, start trading in the real world. Take your time. It is better to be safe than sorry.
Trades' opening is based on the technique you have chosen to follow. Exact Entry and Exit points are offered for any technique. Our scope is to make you learn and be flexible to use any technique suits more to your trading style and risk appetite. Trades' closing depends on the time frame you have chosen to trade.
Only the price movement of the forex market will judge the correctness of your trade. We DO NOT use robots, systems, EA's or other "scientific" indicators; just human intelligence, and yearlong experience. The final trading decision is always taken by the trader but our members will open a trade only when the parameters of the strategy they have chosen to follow are confirmed.
Remember: In order to open a trade we need at least 3 solid and valid indications.
We prefer not keeping positions available overnight and especially over the weekend because of low volatility, servers' errors and market gaps. We are trying to minimize the trading risk as much as possible.
Usually the distance is minimum double the one of Take profit plus the Spread. For example, if the take profit is set to 10 pips from Entry points and spread is 2 pips then Stop Loss must be minimum 22 pips.
There are trades all day long. There is not a fixed number of trades. Just select your trading style and you will find out that more than requested trades will be available.
Our trading techniques are offered for informative purposes, even if our results show more than 85% success rate. Your initial target should be limited to 5% per month and as soon as you feel ready you can ask for further assistance to increase your monthly expectations.
Every 4 hours minimum. We offer Magic Levels for the 4 Hours, Daily, Weekly and Monthly timeframe. You can find them all at Multi-timeframe market analysis.
This depends on your risk appetite but we do not recommend a position leverage of more than 5 times the nominal trading capital.
Leverage is a double edged sword. It can greatly improve profits, but also generate huge losses. The maximum position size should be 5 times of our account balance. The most frequent position leverage is 5 times our capital and if we are looking for 5% then we will need to catch 5 pips per day excluding spread.
There is no best time frame for entering a trade. Just use the instructions given at each tool independently. Understand them and select the trading strategy that covers your current trading needs.
The first session, which is the Tokyo Session, begins each week on Monday morning in the Asia-Pacific region which is Sunday evening in the Americas. Trading continues non-stop moving into the London Session and on to the New York Session until all markets close on Friday afternoon.
Forex is a 24/5 market from Sunday evening to the Friday close of the New York session. This does not mean that anytime is the best time to trade. The best time to trade is when the currency pair meets the conditions the trader has established for the trade. When a winning pattern appears, it's the best time to trade.
I am a trader and I need an additional $20,000 for my annual needs. How do I get it?
Examples are given in order to make your Profit calculations easier, simpler and faster than ever before.
$20,000 per year equals to
($20,000 divided by 12 months) = $1666.7 per month, which is equal to
($1666 divided by 4 weeks) = $416.7 per week, which is equal to
($417 divided by 5 days) = $83.4 per day.
The above mentioned results are a potential performance average in order for you to stay in line with your Performance plan, i.e. a trading week might end up with +$600 and the next one with +$200. OR a trading day might end up with +$400 and the next one with a loss of $200, therefore we have an average of $200 total profit or $100 per day for two days trading.
Let's assume that we start with a capital of $2000 and we use a constant position leverage of 1:10 i.e. we open positions 10 times bigger than our balance.
In this case we will open positions of 20,000 base units.
20,000 positions equal to approximately $2 per pip
In order to get the Annual target we will need 10,000 pips!
That's why we have The Five Year millionaire Plan!
Are you kidding me? Is it possible to earn a million dollars with 10 pips per day? This question tickles the brains of many and obviously we have a sound solution to it. You don't have to make big investments and you don't need to follow any high-risk strategies.
You may wonder how to do it. The thing is that each month profits are capitalized, which means that they are added to the existing assets on the account and get involved in further operations. The profit on these investments is calculated by the compound interest formula.
In order to see how it works you can follow the steps below.
We will have to set an initial capital of $2,000 with a position leverage 1:10 and a potential 20% performance per month on a cumulative basis. (In our example, we withdraw once a year, i.e. after 12 months of the starting dates.In our examples, we will use the 2 year trading performance plan.
We start with $2000 balance, 1:10 position leverage and Monthly performance requested 20%. The Amounts of pips needed on a daily basis excluding Spread are 10 and the monthly amounts of pips needed are 200. Each pip is equal to approximately $2 because we open positions of 20,000 base units.
The First month ends up with $2400 balance and we start the 2nd month with $2400 initial balance and we continue in the same mode i.e. 10 pips excluding spread per day. The Second month we end up with $2880 and so forth.The 12th month or the month of 1st withdrawal we have an account of $17,800.The final result is based on 10 pips per day with 1:10 position leverage and 20% requested performance for every month’s initial capital.
The trading secret lies at the "habit" of getting 10 pips per day and being satisfied to stop trading till the next day. Your initial target has to be the generation of a 10 pip profit day. We know that somewhere here you will laugh but actually if you check the 12th month performance in percentage you will be astonished. $17,800 final balance compared to $2000 initially invested is equal to 890% performance.
Now we start the second Year with $8000 initial balance i.e. we have withdrawn $9,800. You can still start the second Year with a higher or lower initial capital but, in our opinion you have to enjoy at least half of your profits as a reward of your previous year effort.So, we start with $8000 and with 10 pips per day target in order to reach the 20% per month performance.The pip value becomes $8 and the position leverage continues on the 1:10 basis.The cumulative basis of 12 months' time period will give us a return of $71,000
In other words, the day 1 we started with $2,000 and the day 730 i.e. in 2 full calendar years, the 10 pips per day routine gave us the astonishing result of $71,000.
There is no meaning of referring to performance percentage because you have just learnt how to convert $2000 in $71000 with reasonable risk in 2 full calendar years or 730 days.20% is an obtainable performance per month and if you speak with your friends referring to 10 pips per day, most probably they will laugh at you because they will respond with "Only 10 pips. I can get them in a blink of an eye!"
These are the guidelines we follow in our own trading and if you wish to have a similar performance you just need to contact us and request any additional information.
The Monthly Rules are:
Position Leverage 1:3, for example, if we have $2000 in our trading account we open a position of 6000 base units or the trading account balance x 3.Daily candlestick needs to close the spread distance above a Resistance Level or below a Support Level, accordingly.
The first signal is the strongest. If a second signal is given before the first one triggers the Stop Loss or the Take Profit, then it doesn't count as a signal. The candlestick, which triggers the Stop Loss doesn't count as signal generator but the candlestick which triggers the Take Profit is a signal generator.
Do not trade the DAILY close of Thursday. We never open a trade on Friday, unless it has been opened earlier during the month.If a breakout occurs on Friday, then we open a trade on Monday → 1 hour after the market opens.Do not open a trade Above Magic Resistance 2 or Below the Magic Support 2, because of overextended prices with high risk.Fixed Stop Loss for Forex is 70 pips; $15 for Gold and for Indices varies.If an Index value is higher than 10,000 then Stop Loss is 140 Index Points,if an Index value is higher than 5,000 but less than 10,000 then Stop Loss is 90 Index Points, if an Index value is less than 5,000 then Stop Loss is 55 Index Points.
Never open a trade the last 3 trading sessions of the month.
Deposits and withdrawals time
Usually the deposits are ultra-fast but withdrawals are delayed. The reason is simple- forex brokerage companies do not want you to withdraw because they will miss the amount of money counted as potential profit for them and a potential loss for you. For your benefit and convenience, it is important to choose a forex broker that offers quick and easy deposits and withdrawals. Do not deposit an amount more than $100 in order to test a forex broker. Additionally, do not state your financial background to anyone contacting you from a forex brokerage. The reason is simple. If you do so, your account will enter into the Urgent category and your transactions either the trading or the funding will be served at an exceptional manner till the point you deposit a bigger amount and get trapped at the brokers’ game. Ask for the deposits and withdrawals process before you fund your trading account and find yourself in an inconvenient place. The funds are yours and no-one has the right to abuse them in any way. Do not accept unreasonable excuses and do not hesitate to report your event to a relevant regulatory authority.
Account verification and basic safety solutions
Earlier we mentioned the tactics the majority of forex brokers follow: The trader must lose and the company will make a profit. Most of the forex brokers especially those regulated ask for the KYC documentation. The KYC documentation is the abbreviation for Know Your Customer and it’s a basic premise for AML or Anti-Money Laundering. Make sure that you send your personal documents to an actually regulated forex broker. The use of Internet based credit cards without overdraft is essential in order to increase the safety of your funds. Change your passwords on a frequent basis. A lot of account managers enter your trading account illegally in order to open positions and get paid from the generated trading volume. Make sure to remember your trading account balance.
Demo accounts have to be provided for FREE, unless you do not deposit a penny to the specific broker. Be careful, the demo accounts are "demonstration" of the premium account trading conditions and not those actually faced in live trading environment. Remember the reason for opening your demo trading account. Don't be misled by fake advertisements of $100,000 free account etc. A demo account is the same as Practice account. The majority of Forex brokers try to show an amazing picture of their company and the trading conditions which exist in their home through their demo accounts. If you do not want to be irritated from unwanted promotional material and constant phone calls telling you to deposit, then it's preferable to use false information till you anonymously test the trading environment offered by the specific company.
Variety of Trading Instruments
A variety of trading instruments give the opportunity to the trader to rotate his attention to profitable opportunities easier and faster. Choose a forex broker offering the Major currency pairs, the Minors, the Exotics, precious metals like Gold, commodities like Crude and other trading instruments like Global Indices. Make sure your forex broker is licensed to offer the specific financial instruments from the regulatory authority mentioned at the bottom of its website.
We all know Forex Brokers manipulate prices and spreads. How do they do it? Why doesn't someone stop them?
It may surprise you that the Forex market is not as transparent, regulated and authorized as its counterparts like Stocks and Options market. Unlike those markets, it is not centralized or regulated in a similar way, hence exchange rate of any given currency can differ between brokers. The main liquidity providers are the big banks and hedge funds, which are known as Interbank Market. Keeping this in mind let's look at how ECN and Market Maker brokers fits into the picture. Forex market is not regulated till 2015 because the products are provided via the form of structured OTC Contracts of Difference. Don't be fooled by licenses and awards. Most of the licenses are not valid and all the presented awards are bought via sponsorships and huge advertising campaigns.
MARKET MAKER BROKERS
As the name suggests they formulate the price, as in change the Bid and Ask value. Say for example they receive 1 pip spread from Interbank Market on EURUSD, but instead for us they display 3 pips spread (spread is the difference between Bid and Ask). Brokers can vary this from time to time and sometimes even show tighter spreads on Demo accounts but when you open live account it is another story completely.
Every time you open and close a trade you lose the spread. This accumulates to a considerable value if you trade frequently. Not only this, but the market maker brokers are also notorious for creating spikes. They do this in order to take out customers' stops. Some market maker brokers also freeze their platform during news announcements or increase spreads by 20-30 pips, something which is not uncommon. Because Forex is not strictly regulated as other markets there is not much that the NFA or similar organizations can do.
ECN Brokers simply provides the best possible price to fill available orders via offered liquidity usually provided by banks. The price on their platform comes straight from the interbank market and there is not significant manipulation of the spreads. Spreads as you know are the bread and butter of market maker brokers. Since there is no mark-up on spreads by ECN brokers, the only way they can make money is to charge the quoted spread or commissions / fees. This fee is no different from what you pay when buying or selling stocks. From my personal experience the commissions are negotiable and you can bid one broker against another to quote you the lowest commission rate. Also paying commission works out economical than higher spreads on market maker platform. I have traded on several occasions when there was no spread at all (BID=ASK)
ECN vs. MARKET MAKER
ECN brokers win hands down. There is no better way of trading. Having said that, they may not be suited for everyone, for those specifically who choose to start with less amount of funds and prefer higher leverage.
It's more than essential to know who to contact if you suspect a fraudulent act or malpractices from a regulated forex broker or investment firm.
Most companies decide to come to a solution when solid evidence exists.
We present you with the relevant regulatory authorities and web places to express your complaints on a global scale.