Forex training

When analyzing the situation on the forex market, traders often use the so-called “fundamental analysis”. This article will try to find its essence and effectiveness of the market.

Fundamental analysis examines the effects of economic news and trends in the price movement of a country. Identify any figures with it does not work, but to determine the future direction of the trend or predict its end is the power of fundamental analysis. Use fundamental analysis mainly for medium-term forecasting and more. The exception is the trade on the news. Here, the trader works on kratkosroke within days. Let’s look at the highlights of fundamental analysis.

Major weaknesses of fundamental analysis – is its complexity. If there were several indicators, it would be easy on the basis of their data to build a forecast, but when they are about fifty, then to construct the analysis would have to spend a lot of effort. And the second reason is the need to have a large capital, since the analysis is designed to srednesrok, it is at least a weekly chart, the means for protection orders need not small. Basically, these two factors and lead to the fact that traders using fundamental analysis on different data from 10 to 20 percent.

Fundamental analysis, forex

The whole process of analysis is reduced to the analysis of the economy of a country or region, based on a news publication. All news can be divided into several categories. Having considered these categories, it will be clear about what the news, in principle, we mean when talking about fundamental analysis.

The first category – the news about what the likely demand for the currency of the country will on the part of campaigns dealing with import-export business. This group may include news balance. The trade balance, the balance of capital and current accounts, and of course the balance of payments.

The second group or category are indicators showing the status of country’s financial market. These data show how much cost-effective now and in the future to invest in assets denominated in local currency. And this in turn affects the demand for the currency. Court includes such indicators: the dynamics of the stock market, the dynamics of interest rates in the interbank credit market and the mortgage market, the yield on medium-and long-term government securities.

The next group of indicators shows the state of the economy. These include indicators: GDP, imports, exports, unemployment, personal savings, consumption and private investment, the volume of expenditures and revenues in the country, a deficit or surplus budget.

Fundamental analysis, forex rates of production and trade talk about the prospects of the relevant sectors in the country. These indicators show how much in campaign, and individuals are willing to spend money to show the level of industrial development and domestic demand for domestic currency customers. These indicators include indicators of the volume of commercial lending, loans, mortgages and consumer loans. Here, the industrial production index and the index of industrial facilities. Here is the volume of industrial orders and industrial stocks, orders for durable goods and retail sales.

In a separate group assigned indicators of labor statistics. LEDs indicate the status and development of the labor market, which in turn indirectly affect future demand for consumer goods and services. Court includes such indicators: productivity, the number of employed and unemployed, inflation, the index of industrial and consumer price indices of export and import prices, the average wage index and labor costs, the price of oil.

This group includes the most powerful indicators of influence on the currency. Indicators show the credit – monetary policy of the state. Court include the discount rate the central bank, the anticipated amount of settlement or foreign borrowing, repayment, or placement of government securities, the indicators M1 M2 money supply M3.

The next group of indicators based on other indicators of various economic sectors. The indices of optimism and activism show how people and companies are confident about their future, and this in turn affects the willingness to buy durable goods, take mortgages, grow your business, make investments. In the list of indexes of economic indicators, leading, coincident and lagging. Business optimism indexes of purchasing managers and business managers working in the service sector. And of course the index of consumer and business confidence.

The last set of indicators that the construction industry. These indicators are faster. The list of indicators include the number of homes sold and built, the number of received construction permits, the number of sold old houses, the construction costs.

Now let us consider in more detail a few news stories that influence the price in the short format. It should be noted that for the market right now, it is important not reading indicator, and its variation and difference from predicted. Almost everyone knows the phrase “Buy on rumor, sell on the facts.” That is the expectation of investors or forecast the indicator that this is a rumor. One of the strongest indicators kratkosroke this change in interest rates. If analysts will assume that there are preconditions for increasing the interest rate on a currency, it is a buy signal. And the market will go up to the news. If the news is confirmed, depending on how many are not yet willing to buy, or perhaps jump on up, if it’s all been waiting for, or continue to move, when traders start buying long. If the rate is increased, but not as expected, the price can move in flat or rolled back. But if the rate decreases, then begins the real panic.
Investors are generally shy people. And the market will observe a sharp drop in the currency. Here on this principle works important news. Another worth noting that the notion of the importance of news may be a relative. If today there is no important news, you can give a strong move pretty bad news, but that seems important for the rest.

Fundamental analysis, macroeconomic indicators thus consider the news, which usually gives good movement in short-term trading.

Non Farm Payrolls – Unemployment. The news shows the number of created new jobs outside the agricultural sector in one month.

One way to measure strength of the economy is creating jobs and the number of people who can not find a job. If the number of jobs increases, it means that companies are increasing their capacity to meet increased demand for goods or services. It is believed that the increase in the index jobs at 200K can prirovnyat to GDP growth by three percent. Change in the index at 40 K gives a strong movement in the currency market. It turns out the news on the first Friday and the average yields move about 120 points.

Next in importance is the news: FOMC Interest Rate Decisions – Decisions on the FOMC rate. At a committee meeting on operations in the open markets in the presence of the Federal Reserve Board and the presidents of Federal Reserve Banks decision on the rate change, or decide to leave rates steady. The dependence of the exchange rate of a line. If the rate increases, or is expected to increase, then there is an increase in demand for the currency. The average motion of the news is around 70 points.

Trade Balance – Balance of trade. This indicator shows the difference between imported goods and export. When a country sells abroad more than buying it for her good factor, as it allows to develop its economy at the expense of consumers in other countries. The positive balance of trade favorable effect on the currency. While the deficit is not a verdict for the country. If the country imports a lot, it does not mean that the economy has been growing poorly. On this news clearly can only speak for the increase or decrease the surplus is negative. The reaction to this news gives about 60 points of currency movements.

CPI – Consumer Price Index – Consumer Price Index. This index shows the cost of living. When the index rises, it is bad for the currency. But. Increase in the index leads to inflation, and the reaction of banks to inflation is higher interest rates. And this in turn leads to currency appreciation. So clearly predict the behavior of the market to increase in the index is difficult. The average price movement on the news 44 points.

Retail Sales – Retail Sales. The index shows the level of retail sales. If sales are growing, which means that increases confidence and economic activity. The news gives the change in prices of about 40 points.

GDP (Gross Domestic Product) – GDP (Gross Domestic Product). The index is an integral indicator of economic activity of the country and its level of wealth. GDP has a strong influence on the market. Its increase leads to a strengthening of the national currency.

Industrial Production – Industrial Production. One of the main indicators of the national economy. The index shows the change in industrial production and public services in the country. Index is heavily influenced by the market. With increase in the index domestic currency strengthened.

Consumer Confidence – Consumer confidence, willingness to spend. The last indicator, which will be discussed in this article. The index is designed to show a tendency to costs. It consists of two means. One shows the current value, the second shows the expectation. If the index rises, it affects a beneficial effect on the economy, and hence on the currency.

At the end of the article should be noted that the trading strategy that uses fundamental analysis is quite complicated and requires some training. The article deals with only a few indicators. And as noted above, a strong indicator may not give the big move, but unimportant news can provoke a new trend.

When analyzing any market, traders often refer to the numbers who studied Leonardo Fibonacci of Pisa, or. Leonardo himself was not the author of his famous series of numbers. The series was known long before him. Named in honor of Fibonacci, after having been investigated in the work “Book of abaca” (1202).

Born Leonardo of Pisa around 1170 in the Italian city of Pisa. He became the first major mathematician in Europe at that time. His father, often in cases happened in Algeria. There he studied mathematics and Fibonacci works of Islamic scholars. As a man of passionate, he was also acquainted with the works of ancient classical and Indian mathematicians. Fibonacci is a parent advocate and Arabic numerals, without which today anywhere. Using the knowledge and conducting their research and computing Fibonacci gives some of his works, among them “The Book of the abacus.” In which he actually posted his findings.

Consider a series of numbers that Leonardo explored. The series is infinite and is based on a simple principle: each successive number is the sum of the previous two. Example: the beginning of a series 0,1,1,2,3,5 … and so on. The further the series from its beginning, the more pronounced its laws.

Fibonacci, forex training uniqueness of this series in its laws. Let us examine them. If any number in the series, and divide it by the previous number to him, the result is close to the number of 1.618, but never reach. The farther away are the number, the more accurate and closer is the result. The second pattern is if we divide any number of rows on following it, we obtain the value of the inverse of 1.618. This is a unique phenomenon in the first case, the farther from the beginning, the closer the value to the number of 1/1.618 = 0.618. The next interesting fact is that the square of any number is the product of the numbers are before and after the test to the difference in the number of the unit. For example, a portion of (3,5,8) to be 5 * 5 = 3 * 8 + 1. The next series (5,8,13), we assume: 8 * 8 = 5 x 13-1. Moreover, the addition or grabbing the unit is in order.

The Fibonacci numbers occur in the parameters of the pyramids of Giza, the Mexican pyramids were built using the same number of 1.618. In nature, quite often you can see the numbers from the Fibonacci series. For example, the number of petals in flowers of different colors of iris at 3 and 5 in evening primrose, ragweed at 13 Aster 55 and 89 has a petal. All the beautiful things that we see is related to the Fibonacci numbers, regardless of whether we believe in it or not. Since the speculative markets are driven by human emotions, it is fair to assume the ability to analyze market conditions by using this series of numbers.

For the analysis of prices in the markets, traders apart from the “golden section” of 0.618 was taken 2 more value. If the number of the Fibonacci series divided by the number of standing on a single value, we obtain a coefficient of 0.382, but if you divide by the number located on a 2 characters, you get 0.236.

Fibonacci, forex training Thus, the simplest and most common way to use Fibonacci numbers is to calculate the levels of correction. Suppose uptrend is over, and the course starts to stagnate and to depart downward, then the next point, which will support, is at 23% of the last movement. If it is broken, the next support levels are at 38% and 61%. Traders added a pullback and the level of 50%. If the price has exceeded the level of 61%, then the chances of a trend reversal. It may happen that the price will stop, trample on the spot and continue its progress, in this case the indicator is removed and must wait for the next potential peak or trough.

Levels of correction are built automatically, but must press the appropriate button in the toolbar, and stretch it on a chart like the price trend line but not on the minimum or maximum, and the maximum to the minimum point in the fall and the minimum to the maximum with the increasing price. The resulting line on the graph work perfectly, as both the common support and resistance lines. If the price bounces off the 38% level then enter the purchase and closing at 23%. If the level breached, then open up to the breakdown and go to the level of 50%. The line is broken, when a new candle open and close the other side of the line. Than at the higher range is a grid, the stronger are the lines. As the levels increase, if the match with the existing lines of support or resistance.

Fibonacci forex trading analysis tools using Fibonacci numbers spend time analysis of the market. Knowing the starting point of an important, using the numbers we can define a point on the graph, which will be important events. Price they can expand or strengthen their movement. In the interim analysis of the first digits of the number should be omitted. If you do not have a tool to build something this vertical grid is not difficult. Selected on the chart two extremes one maximum and one minimum, or vice versa. Assume for simplicity that the distance between the minimum and maximum of 10 bars. Let me remind the numerical series 1,2,3,5,8 … Then our starting point at least, there is set the main line. The second point is our maximum, there have a second line, it would correspond to figure 1. Next, remember that one unit of our 10 bars, then the second vertical line set at a distance of 20 bars from the main. The third line is three units and is located at a distance of 30 bars of the main. The fourth line has a value of 5 means that the distance of the 4th line from the main will be at a distance of 50 bars. And the 5-th vertical line in this example will be located at a distance of 80 points from the main and so on.

Fibonacci forex trading analysis tools

Fibonacci fan lines. Fan lines are held at key points. Need one maximum and one minimum. Conducted in the same manner as the levels of correction. The lines plotted is stationary and if the second point will change the indicator to rebuild. The tool provides three lines, which are support and resistance lines. The ratio of these lines do not quite unique. Although the history and they show good results, but the trade to use them is not easy. The difference is that the stories we see the end of the trend and plot the right line, and the trade we learn about the end of the trend when the price goes over the line. If you recall the Fibonacci retracement levels are a trend change occurs after a penetration level of 61%. But this does not mean that it is impossible to trade. No one method does not give absolute confidence in the future movement.

Fibonacci Arcs. The arcs are constructed similarly. Getting from one extreme to the other and pull. Dougie plays the role of lines of support or resistance lines. Fibonacci arcs are good to use with Fibonacci fan.

In conclusion, it should be noted that the Fibonacci should be applied very carefully. The reasons for the application should be obvious to you and for others. Otherwise, the level will not work. Like any other type of analysis, analysis of Fibonacci should be used in conjunction with other analysis. Quite often it is used together with a candle and mathematical analysis. The general mood is determined by the Fibonacci sequence, and confirmation and entry points should I use for candle analysis, or indicators.

In any case but an idea and its realization should be able to properly manage the available funds in existence. In this paper we consider some important points that relate to money management when trading forex. In any normal book on forex, this topic is at the end of the book, and if the reader came to her, then looks at her just for show. And it is an important component of any business, not just forex. Money management is an art. That is what needs to be given maximum attention, but the analysis of price and its prediction is of secondary importance. You can trade successfully, without making any analysis, as they say to enter the market by “bulldozer.” From any losing trades can come up with a plus if resources permit. Because the actual lives and felt that the forex must come with a good capital. But let us all in order.

The first rule to keep in mind, it is also called the “golden rule”. Since Forex is an investment, it is generally Wealth Management says, “do not put all your eggs in one basket.” Let’s look at this moment does not last long. Of rules that should not invest all your money into one thing, but in many, but a little bit. The easiest option to implement this plan on forex, it’s open to a deal on one pair. Since most currencies are all pegged to the dollar, then the signal to enter on one pair of duplicated and others. But in this case, what may be the results? Suppose that we were wrong, then we make a mistake on all cylinders, and the money will go everywhere in the negative. All losses in one basket. In this case, it’s not something that usually asks. There is a second option, you can open two or more accounts and trade on different pairs. Then it will be more like the truth. But the ideal is, of course, different markets. You can open an account on forex and stock, while working with profitable orders can get a good profit. Even better would be if exchange trade is not the only source of income, I mean the return on investment. You can make contributions to other accounts, banks, credit unions (not advised) and profit from multiple sources. In this case, loss of money from one source will not have a catastrophic effect on your life.

Money management is the second rule applies directly to the risk of the trade. It is believed that the risk for comfortable operation of a deal should not exceed 3%, less is better. Let’s count. For example, you have a normal account with access to forex and is $ 10 000. Then the risk of 3% is $ 300. The price points under this account is $ 10 and a standard spread of 5 points. So you can enter the market with a stop at 25 points. If we consider that the price per day goes 100 – 150 points, then your transaction will take off just at the noise, I’m not talking about the kickbacks and the peaks of the news. This problem is solved in two ways. The first is to increase the size of the deposit. In our case, if we increase the deposit by 4 times, then it will install a stop at 115 points. This is a good chance that he stop and not fly off. A second option is to abandon the real forex and go to the broker, who will work on a mini forex lot with 0.1. In this case, the price point will be one dollar and $ 300 dollars you can put a stop to 300 points. And you can bet, and at about 100 points, bringing the risk of a deal to 1%. You can of course leave everything as is and put a stop to the tolerable 70-80 points. In this case, the risk for one trade will equal close to 10 percent. This means that if you at least 5 times wrong, then half of your deposit will be gone. The second half will be gone just because you start to twitch nervously, and enter into the market already, which came with fear and less to jump out of it.

Next I would like to write a few lines of the balance of risk and profit. It is recommended to take at least 1:2. This means that if your stop is 100 pips, the profit should reach 200 points or more. It should be noted that this praviloUpravlenie capital should be used without fanaticism. If you make a profit at 1000 points, then the price will not come to him immediately, but with setbacks and reversals that ultimately frustrate your protective stop. Therefore, you should choose a middle ground. And the ratio you want to save for the safety and profits to pick up. If the circuit protective stop, you do not care where your profit. Let’s work with numbers. Suppose the average volatility for the pair on the hourly chart 100. The probability that we will go up or down is very small, so you should expect 70-80 percent of the movement. For ease of calculation we assume the movement of currency per day for 120 points, and the working range of 90 points. Then, when entering the market, we need to put a stop to 30 points and diamonds, and a profit of 60. This calculation is shown as an example, I repeat, too little stop is a slow way to lose money.

Here we presented the main ideas and capital management, let us now analyze specifically the installation of protective stop. We remember that it should not exceed a certain value, but not always a good idea to use the full potential. If we can put MM stop at 300 points, there is no reason to do this and then 2 days to wait until the stop or run for a week until the price goes in the plus. Dwell on the fact that MM gives us the best possible protective stop.

Money Management Setting the protective stop is an art and this is probably the hardest thing in stock trading. What can we say clever books on this subject? The books say, place a stop at a barrier. If the transaction for the purchase, the stop should be placed after the last minimum plus 2-3 points. If the transaction to sell, to put a stop to the last maximum, respectively. You can also place stops at or lines of support over the lines of resistance. And there are a lot of advice. Let’s think, and how much it is rational.

If there are prerequisites to buy and close a minimum, the idea of ​​clever books, under this minimum should be a protective stop. Naturally think this way, all newcomers, and there they will place their feet is mandatory. But these books to read, and perhaps are the authors of major financial institutions, and they naturally assume that the minimum order is a lot of defensive stops. And since they have good facilities, even without collusion, they all have their own intelligence, their task is not complicated. They need to drag the price up to these stops, they actually do. Then start to operate the foot of traders, pushing prices down further, then these investors and close short positions and buy a cheap financial instrument. Well, after simpler, the market recovers, sdvinuvshis slightly upward, and these rich uncle close their positions on the purchase. Thus, controlling large capital displacing the market for a short distance, they earn good money. When such things happen in the market are seen false breakouts. So, based on the above was written we can conclude that to put a stop where it put the rest is not necessary. Protective stop should be located either near or place it where it will not reach market noise and random signals.

I should add one more common mistake is the transfer of protective stop in the direction of increasing risk. Here a purely psychological reason, nobody wants to suffer losses. But when the price approaches the stop, the trader under psychological pressure and decisions are not weighted. If you have already set foot in a certain place, it means that this was the cause. Stop can be moved only in passing in the transaction plus. But here, we should not forget about the noise. It may happen that the pullback will give you your 5 points and then turn around and go in your direction. However, the trader is always balancing between potential losses and gains.

And at the end of the paper touch the last item of capital management, it is not important in terms of survival in the market, although there may be to argue, but it is important for earnings. We did not come into the market to survive, the main goal is to earn money deneg.Upravlenie Suppose our transaction profit, profit, we have put on 150 points, we now have 60. Of course you can sit and enjoy, if you run for profit, we’ll get your 150 points and be happy. But here we have a chance to build a winning position at 60 doubling the amount of the transaction, and moving in the middle of a two foot between orders. If we do so, the protective order would be in a position bezubytka. When triggering stop orders both cancel each other out, but if the profit going to work, our profit will be 150 +150-60 = 240 points. This technique can be performed an unlimited number of times the main ensure that the stop was far enough away from the price and brought it to fire a minimum of zero. This is a dangerous technique, it is dangerous because it stop all the time is approaching and the price instead of 150 pips and you can get a zero. Here the trader decides he should try to squeeze out of the market in excess of profit or not worth it.

Capital management The second method is more dangerous than the first. It is called the averaging of the transaction. They should use very carefully, and remember that it can lead to loss of money. But he has, and plus, it will turn into a lucrative money-losing deal. Consider a simple example. Let’s say we bought at a price of 1.50 euros, while its price fell to 1.40. In this case, intelligent book recommended to get out of the deal and look for another entry point, but there is another option. You can strengthen our trading position and buy the same amount at a price of 1.40 euros. Then, knowing that the market does rollbacks, and rollback of 50 percent is very realistic, we put the profits of both orders equally between the two transactions and rollback, and activation of both the profit of the transaction offset each other, the result will be zero. It was possible to strengthen the position of a double volume, then the zero profit approach and roll back 30 percent give the same zero, and the rollback of 50 percent will return. I repeat, this method is very dangerous, but it will give you the opportunity to get rid of the stops protecting. Here, each trader must decide for himself, however, as always. History knows of cases where traders lose their money and without averaging, using only the feet. There still should be noted that in the beginning of the crisis, the fall rate was for one day a few thousand points, and all who have not used the foot, and averaged, lost their money. You can certainly mix and, to put a stop to the maximum possible distance, and before its onset can be averaged to try and come up with a profit. We should not forget that the average transaction volume is growing and triggering stop loss will be greater.

In conclusion, we noted a moment. Some people believe that the art of money management makes a losing strategy for profitable, then maybe you should not spend time on the prediction of currency movements, but should simply learn to use the money? Everyone should himself answer this question.