Derivatives are said to have existed as far back as the ancient Greek and Mesopotamian civilisations. Of course, at that time, derivatives were merely verbal agreements, not as complicated as the ones we have today. Derivatives have gone through significant evolution, such that now you can trade almost any financial instrument using a derivative. Contracts for Difference (CFDs) and Futures are two types of commonly used derivative contracts, since their values are derived from various underlying assets. They enable traders to speculate on price fluctuations without actually owning the assets. They both are highly leveraged financial products, offering traders higher exposure with a small initial investment, equivalent to a small portion of the real value of the underlying asset. Futures A futures contract is an agreement to buy (long position) or sell (short position) a financial product, based on an underlying asset, for an agreed price on a predetermined date. These contracts include the exact quantity, location and date of sale/purchase of the physical asset, as well as the predetermined price. On the expiration of the contract, it might be settled in cash or by debiting or crediting money from the concerned party’s account or via physical delivery of the underlying asset. Futures contracts are traded only on specific exchanges, which precisely define the parameters of each trade. CFDs CFDs are agreements to exchange the difference in price of an asset between the beginning and the end of the contract or simply a transaction, based on fluctuations in prices of an underlying asset. The trader speculates on the price movement and if they conclude that the prices will increase, they take a long position, and if they believe prices will fall, they take a short position in the market. The party that gets their speculation right reaps the profit of the fluctuation in the prices. Futures vs CFDs: What’s the Difference? 1. Spread This is the difference between the buying and selling price of an asset. Both futures and CFDs are traded using spreads. However, the spreads tend to be small in the futures market. Often, CFD providers use the futures market to hedge their own positions and offer a larger spread to trade in the CFD market. 2. Standardisation Both are derivatives products, although they differ in terms of where they are traded. Futures contracts are traded in official markets, such as the NASDAQ Futures Exchange (NFX), Euronext, London Stock Exchange and more. This makes futures contracts highly regulated and standardised, with fixed parameters. Just the date of settlement differs from contract to contract. Contracts for Difference are over-the-counter (OTC) traded instruments. They are mostly not provided by official exchanges but by brokers who have their own terms and conditions. CFD providers organise a market for assets to trade and also create and disseminate prices in real time. 3. Contract Size Futures are traded on large exchanges and are created to be used by large investment institutions. So, these contracts have a large minimum size. For example, the minimum unit of crude oil contract at COMEX is 1,000 barrels. Comparatively, the size of one crude oil CFD is 10 barrels. Contracts for difference provide much more flexibility and are accessible to individual small traders, who cannot afford large exposure. 4. Flexibility of Leverage Leverage enables a trader to gain much higher exposure than they would be able to using only the amount in their account. The increased leverage can multiply the profit potential, although increased exposure would also mean higher loss potential. In the case of a futures, leverage varies from contract to contract, but it isn’t very flexible. The initial margin or the amount to be deposited to buy a futures contract is determined by an exchange or a clearing house. This margin is about 5% to 10% of the actual value of the contract. CFDs are created by brokers, giving power to the broker to set the initial margin of the contract. This provides a variety of options to choose from in terms of the initial margin for individual traders, based on their risk appetite. 5. Expiration Date In the futures market, there is a predetermined date for the expiry of the contract. This date, under the terms of the contract, determines when the underlying asset is to be delivered at the agreed upon price. The expiration date of the contract is set by the exchange, facilitating the trade. Most futures contracts are settled before the date of expiry, since traders enter into such contracts with no intention of taking the actual delivery. They just want to make a profit out of the fluctuations in the market. A contract for difference has no predetermined price or expiration date. A trader enters into the contract and liquidates it when the price of the underlying asset goes against the acquired position. The difference between the price at the beginning of the contact and the price at the termination of the contract is the profit or loss made by the trader. 6. Regulations There are fewer regulations when it comes to CFDs, as compared to futures, making it easier to open an account to trade CFDs. Futures contracts are highly regulated by the exchanges, making it a complex process to open an account. Less regulations also facilitate trading with much less capital in CFDs than futures. Conclusion Both futures and CFDs are mark to market, meaning they are priced on a daily basis. They have almost similar underlying assets, but futures backed by commodities are the most commonly traded. Futures come with high minimum commitment, but there is no such issue when it comes to CFDs. With evolving trading strategies and traders looking for quick results, CFDs seem a more viable option due to the flexibility this trading type offers individual traders, although these are high risk products. However, remember of regardless of what you are trading, having appropriate risk management strategies and market knowledge is key to long-term success.
High volatility in the market can be extremely nerve-racking and can put a trader’s skills to the test. However, this is what makes trading more exciting, as volatility presents more trading opportunities. A market that is characterized by strong and frequent price movements is more attractive for intraday traders, presenting numerous options to take positions. No wonder then that most strategies focus on identifying entry and exit points when there are distinct price movements in the market. But what happens when the market moves sideways? Intraday and day traders are often perplexed and a little frustrated when the market is quieter, either moving sluggishly in one direction or within a very narrow price range. It is during these periods that tunnel trading can help to identify entry and exit points. How to Use a Tunnel Trading Strategy Low volatility typically occurs when the market is waiting for important financial, economic or political news. Before the breaking of such news, traders are unsure which direction the prices might move in and to what extent. Many don’t place trades till after the market has responded to the news, while those who do place trades counteract each other, preventing large price fluctuations and resulting in the market moving sideways. Tunnel trading is suitable for markets experiencing low volatility. When prices move sideways, it’s possible to identify a section where the prices are concentrated. This is called a congestion zone. Tunnel trading involves drawing two horizontal trendlines on the congestion zone. The upper limit of the average price movement becomes the resistance and the lower limit of the price movement becomes the support level of the tunnel. So, it’s important to have an understanding of these concepts before using a tunnel trading strategy. Resistance is the level beyond which the price of an asset is unlikely to rise. This, therefore, becomes a point on the pricing chart where traders expect maximum sell off. It is always above the current market price. The possibility of the price rising beyond the resistance level, absorbing the demand for selling and then falling is high. Support is the level beyond which the price of the asset is unlikely to fall. Therefore, support levels are points on the pricing chart where traders expect maximum buyers for any asset. Whenever the price falls below the support level, they are expected to rise. This level is always below the current market price of the instrument. The possibility of prices falling up to the support level, absorbing all the demand and then rising again is high. Wait for Breakout Once the tunnel has been drawn, the trader waits for the price to break out of the range. When the support or resistance level of the tunnel breaks, it indicates the beginning of volatility in prices, providing opportunities to take positions. The price may break either the upper or lower boundary, and both present an opportunity to trade. However, the indication is stronger when the breakout occurs in the direction in which the market had previously been moving (in the direction of the overall trend). Less experienced traders may wait for the price bar to close outside the tunnel before taking a position in the direction of the breakout. In cases where the price breaks one trendline but doesn’t close outside the tunnel, and instead moves back into the range, it would be best to refrain from opening a position. Traders may need to draw another set of trendlines if this happens. Determining Stop Loss and Take Profit When the breakout occurs, apart from placing positions, traders would also need to know how to set stop-loss and take-profit levels. The stop loss can be set just behind the broken boundary of the tunnel made by the breakout, a few pips away. This allows the trade some space to move, if the price returns to the broken level again. Take profit orders can be set near the support or resistance level, depending on whether you are buying or selling the asset. Advantages of Tunnel Trading The main advantage of tunnel trading is that it’s very simple to use. One doesn’t need to use any indicator and the strategy can be used for trading any asset and in any timeframe. Sometimes, the price becomes extremely volatile after breaking a tunnel trendline, offering more attractive trading opportunities. New traders can wait for the volatility to subside a little before opening a position. The biggest advantage of this strategy is the risk/reward ratio. The stop-loss order is placed only a few pips from the currency market prices. So, even if a few trades turn out unprofitable, one profitable trade can more than make up for this. Disadvantage of Tunnel Trading Traders need to be cautious of false breakouts and possibilities of sudden whipsaws. There are a lot of trading strategies to choose from, making it difficult for beginners to find just one that works best for them. Trading is a process of trial and error, where you need to try out many strategies to find the one that is best suited for you. Experiment, change and improve. No strategy is perfect, but tunnel trading can undoubtedly help to maximise chances of success, if used and executed properly.
Key Information to Look for in the NFP Report 1. Employment Rate as a Percentage of the Overall Workforce The unemployment rate is defined as the number of people looking for a job. It is calculated as a percentage of the total labour force. It is the headline number of the report and a key part of the Federal Reserve’s evaluation of the US economy. It reflects the labor force that is not employed and its effects on the economy. A crucial aspect to note here is that the employment rate is not directly proportional to the NFP figures, since an increase in the number of jobs might not alter the unemployment rate. 2. Participation Rate Generally, it is assumed that a drop in the unemployment rate reflects that there are less people actively searching for a job in the country. However, this is not always the case, given that the unemployment rate is calculated as a percentage, rather than the total number of people looking for a job. Participation rate plays an important role here, as it provides the actual number of people who are in search of a job. These people are either underemployed or are completely out of work. This report doesn’t include the number of people who don’t want to work or are unable to work, such as a student or a stay-at-home dad or mom. 3. The Sectors Influenced by Jobs The NFP report provides information about an increase or decrease in jobs in each sector of the economy. It is useful for forex traders, since it provides insight into which sectors of the economy are growing and which are stagnating. 4. Average Hourly Wages Job gains can lead to an increase in wages. If the same number of individuals are employed but are being paid more or less for that job, it has the same effect as subtraction or addition of people from the labour force. 5. Revision of the Previous NFP Report This is an important aspect of the NFP report, which affects the prices in the market, as traders re-evaluate prices based on the numbers mentioned in the Revised report, particularly if the changes in the numbers are significant. Impact of NFP A high non-farm payroll figure is a good indicator of the health of the US economy. This is because an increase in jobs contributes to more robust and steady economic growth. Individuals with a job tend to spend more, leading to economic growth. Forex traders usually look for an increase of at least 100,000 jobs in a month. Any increase beyond this helps fuel the gains of the US dollar over other currencies. Here’s a look at some of the other impacts of the NFP: - An expected change in the numbers on the NFP report receives mixed reactions from the forex market. Forex traders expecting a change in the NFP report will analyse other sub-sections and items to gain insight or direction for their trading decisions. The unemployment and manufacturing survey payroll sub-sections act as key indicators. If the unemployment rate decreases or manufacturing payroll increases, forex traders tend to speculate a stronger position for the USD and growth for the US economy. If the opposite happens, traders will prefer other currencies over the US dollar. - A lower payroll number is harmful for the US economy. Like any other economic report, it has an adverse impact on the US dollar, affecting markets and trades worldwide. If the NFP report shows a decrease in jobs below 100,000 jobs, it indicates that the US economy isn’t witnessing growth. This will result in forex traders looking to move to other currencies, instead of the US dollar. There are many other key economic indicators, such as personal spending power, retail sales with PCE and CPI, that affect the movement of the capital markets. But the NFP report is the most important one, since it provides insight into inflation, sentiment and potential growth via an all-in-one report. The NFP report impacts most financial markets of the world, although the quickest reaction is witnessed on US indices like the S&P500, NASDAQ and major currency pairs like EUR/USD, USD/JPY, GBP/USD, and gold and oil prices.
Trading is all about making informed decisions, keeping emotions at bay. And yet, despite much effort, sentiments do end up affecting not just a single trader’s decisions but also the way the markets move. Investor behaviour has a considerable impact on asset prices and demand for specific financial instruments. Behavioural economics says that investment decisions are highly influenced by risk, emotions and future cash flows. Trading sentiment refers to the overall attitude of traders towards a particular financial market, asset or instrument. For instance, rising prices usually leads to a bullish trading sentiment, while falling prices would result in bearish sentiments. These sentiments play a vital role for investors, especially those who like to take positions in the opposite direction of the current market trend. Indicators to Determine Trading Sentiments The good news is that there are ways to analyze the mood of the market and the direction the market sentiment is moving in, to help to identify potential opportunities. Here’s a look at some of the key indicators that can help a trader determine market sentiment. 1. Commitment of Traders (COT) This provides details about how the biggest traders, such as banks, corporations and hedge funds, are positioned and how committed they are to the current trend in the market. If these traders shift their positions, it indicates that the market is going to experience some movement. 2. High/Low Sentiment Ratio This is one of the easiest ways to determine trading sentiment. It involves calculating the average and comparing assets heading to 52 weeks of highs to stocks heading to 52 weeks of lows. If the average direction of the market is close to the highs, then its bullish, and if the average direction of the market is closer to the lows, it is bearish. 3. Put/Call Ratio In this indicator, the number of put options is divided by the number of call options. If the ratio is above 1, it indicates that more investors believe that the market is going to be bearish. If the ratio is below 1, it indicates that more investors believe the market is going to experience a bullish trend. Factors Affecting Trading Sentiment · Macro-Economic Factors Macro-economic factors, such as interest rates, inflation and strength of the overall economy, influence investor behaviour. Studies have proven that inflation and money growth have significant impact on the returns generated from the stock market. · Herd Behaviour This refers to traders following a common path. If any seasoned trader invests in a particular asset, then others might follow the established trader’s lead and make similar investments. Herding can be based on the inclination of investors towards the same source of information, analysing indicators in similar ways and, therefore, increasing the chances of similar trading decisions. Small markets with low liquidity can also lead to herding, since it isn’t possible to execute trades without following other investors, due to a lack of options. · Risk and Cost Factor This depends on two features of investor attitude, stability of the market and high risk leading to high returns, if the trade is successful. Investor decisions are also affected by stability and good governance, and the belief that risks and returns are directly proportional. Impact of Trading Sentiment · Ambiguity Aversion This is a situation where an investor prefers to choose known risks over unknown ones. This behaviour was explained through the “Elisberg Paradox,” where people preferred to bet their money on the outcome of an urn with 50 blue and 50 red balls, instead of betting on the outcome of the urn with 100 balls but unspecified number of blue and red balls in it. · Familiarity Bias Here, people prefer investing in familiar portfolios from their own region, state and company. Some investors will avoid foreign or international assets, investing in domestic or local assets due to the bias, despite the return on investment. · Active Trading This trading strategy involves taking advantage of short-term price movements. It focuses mainly on financial instruments in high demand, such as stocks, currencies and derivatives. It could be focused on a specific industry as well. This type of trading involves continuous analysis of and speculation regarding market movements. Tips to Control Your Sentiments while Trading 1. Treat Trading as a Business Design a trading strategy, with specific, realistic goals and daily activities, to keep your sentiments in check. Stick to your plan despite the market conditions. This will help you prevent sentiments from colouring your trading decisions. 2. Use Candlestick Sharts Often, early entry and misinterpreted indicators lead to unnecessary losses. So, analyse candlestick charts to fully form before making any trading decisions. Mid-candle decisions tend to be impulsive. This will not only help you control your emotions but will also improve your performance as a trader. 3. Research before Investing Do not completely depend on trading sentiment, do your own research too. It might help you explore new opportunities for trading, while ensuring that your decisions are information based. 4. Paper Trade Use demo accounts and dummy trading tools to test new strategies, new indicators and new ideas before investing real money in the live markets. Focus on your strategies and work them through to figure out any loopholes. Use new strategies or try new assets only after you gain confidence through practice. 5. Educate Yourself There is always something new in the market to broaden the horizon of your trading. Learn about some new indicators, instruments, strategies or some advanced trading tools. With advancements in technology and internet penetration, today, you can easily access books, coaching academies, webinars, etc. This will help you assess and improve your current trading plan. The financial markets are influenced by emotions, providing trading opportunities. Understanding trading sentiment is key to making informed trading decisions. Analysing trading sentiment as part of your trading plan is only useful if you can utilise it to gain an edge in the market and take positions at the right time. How the market feels about the current scenario and how it feels about the future provide potential opportunities for traders. So, make sure you learn how to assess and analyse market sentiment and your own emotions to fine tune your trading decisions.
When you put in a request to purchase or sell an asset, that order goes into a handling framework that puts in a few orders before others. Securities exchanges today are totally automated, kept running by PCs that do their work, depending on an arrangement of standards for handling orders. However, you have the freedom to choose the way in which your order is processed, based on the price you choose to trade at. You can execute your trade at market prices via market execution or give instructions to trade at a specific future price via a pending order. What is Market Execution? Market execution is the most basic type of trade execution and is used to buy or sell securities at the current market price. Trades are executed at the current ask and bid prices. The advantage of using market order is that it guarantees that the trade will be executed. If a trader wants to get into or out of a position, a market order provides the most reliable method to accomplish just that. But it can lead to the execution of an order at a less favourable price. A market with high liquidity provides viable opportunities for market orders, otherwise crucial slippage can occur in trades. Stop loss and take profit cannot be used in market orders. What is a Pending Order? This is an order to buy or sell securities at a desired price. In a pending order, a trader instructs their brokerage to buy or sell an asset at a pre-determined price. Pending orders are used to execute a trade at a position that will be achieved by the market in the future. There are 4 types of pending orders that can be placed for execution. 1. Buy Limit This involves the buying of a security at a specific future ask price, if that price matches the predetermined price. Generally, the current price of the asset is higher than the value of the pre-determined price. These orders are placed because the trader expects the price of the security to drop down to a certain level and then witness a bullish trend. 2. Buy Stop This also involves buying of a security at an ask price in the future, if and when the price matches the predetermined ask price. Here, the current price of the asset is usually lower than the pre-determined price. These orders are places when the trader predicts that the price of the security will reach a certain level and will keep rising. 3. Sell Limit It involves selling of a security at a bid price in the future, if the price matches the predetermined bid price. Generally, the current price of the asset is lower than the pre-determined price. These orders are placed when the trader anticipates that the price of the security will increase to a certain level and then will witness a bearish trend. 4. Sell Stop This involves selling of a security at a specific bid price in the future, if the price matches the predetermined ask price. Generally, the current price of the asset is higher than the pre-determined price. These orders are places when the trader expects the price of the security to reach a certain level and then continue falling. While placing pending orders, it is important to ensure adequate risk management through the use of Stop Loss and Take Profit orders. Stop Loss This is used to reduce losses if the price of a security starts to move in an unfavourable direction. If the price of the security touches the stop loss level, the position will be closed automatically. It is usually attached to a pending order or an open position. This order is always placed below the present bid price in a long position and above the current ask price in short positions. Take Profit This is used to limit the levels of profit if the price of a security rises to a specific level, to avoid losses if the market suddenly changes its direction. Take profit orders lead to the closing of a position and are always attached to a pending order or an open position. This order is generally set above the current bid price in long positions and below the current ask price in short positions. When to Use Market Orders When does the use of market order make most sense? If you are stuck in a position where the market movement is against you, a market order will help you get out of that position quickly. Generally, investors are worried about prices when entering or exiting positions, but there are times when buying or selling is more important than the price itself. You might wish to acquire or get rid of an asset quickly and this could prove risky. Therefore, it is important to make careful, informed decisions for market orders. Using Pending Orders There are some things that traders should keep in mind while using pending orders, such as: - Determining the Entry Point: The trader has to calculate the minimum and maximum price at which the trends will continue in a favourable direction. Sometimes, pending orders can be placed by assuming that resistance and support of a price range will break. Another way an entry point can be determined is to wait for the release of important news. The trader will need to analyse the timing of the news and place the trade accordingly. - Placing Take Profit: This depends on the speculation and goal of the trader, based on the current market situation. The trader will need to assess the size of the potential gain and the probability of loss if the market changes direction before placing an order. - Placing Stop Loss: Stop losses are placed based on the trader’s risk appetite and trading strategy. It is useful to define the terms of expiration to ensure that the pending order is executed according to guidelines set by the trader. Both market execution and pending orders are important to make the most of all types of market conditions. However, traders need to be careful to not allow emotions to colour the decision to implement one of the two types of orders. Instead, they should work on technical and fundamental analysis, charting tools and other tools at their disposal to make informed decisions.
There are many ways to approach or attack the market, different types of trading strategies and different ways of implementing such strategies. Some traders do breakouts of supports and resistances, others prefer to trade bounces off trendlines, others trade trend following strategies, others trade mean reversals. Whatever approach you take, as long as you’ve mastered your craft, you could use it to make money off the market. With this strategy however, we will be looking into taking trades based on bounces off of a dynamic support and resistance using a variation of the Bollinger Band. Bands and Channel Based Indicators Bollinger Bands are probably one of the most popular indicators that makes use of channels or bands although there are also other different band-based indicators. They may differ with the way the bands are computed and plotted, but they do work given the right parameters. Band based indicators are great because for many reasons, but what I find most interesting is that because of the outer bands that these indicators have, they tend to have dynamic supports and resistances that move along with the average price. These outer bands could be used in different ways but the most basic way of using the outer bands is as an area where we could consider price to be overextended and could therefore reverse to the mean or totally reverse the trend. Trading Strategy Concept Many traders are familiar with the Bollinger Bands and how to use it. With this strategy however, we will be making use of a variation of the Bollinger Band, the toptahlil_bollinger_and_atr_band custom indicator. This indicator has the regular Bollinger Band, but it also has a second set of outer bands, which is based on the Average True Range (ATR). This gives this indicator two outer band sets which we could use as an area of dynamic support or resistance. We will be trading bounces off this area whenever we spot a decent candlestick with wicks signifying a rejection of these areas. We will only be taking trades with long wicks because these candles signify a quick shift of market sentiment, a shift that takes place in just one period or candle. However, we will not be taking the trade immediately whenever a pin bar candle appears. We will be waiting for price to crossover the average price. The toptahlil_bollinger_and_atr_band doesn’t have a midline. For this reason, we will be using a different indicator as a basis for our average price, the TMA custom indicator. This indicator is a type of moving average which could be characterized as a smooth moving indicator. Although we are taking notice of a possible trade whenever price bounces off the outer bands of the toptahlil_bollinger_and_atr_band, if we take the trade too early, we could still be trading against the trend. Instead of trading right away as soon as price bounces off the outer bands, we will be taking the trade when the change of trend is confirmed by waiting for price to cross and close beyond the TMA custom indicator. Indicators - toptahlil_bollinger_and_atr_band: default parameters - TMA: default parameters Timeframe: 1-hour or 4-hour chart Currency Pair: any Buy (Long) Trade Setup Rules Entry - Price should be bouncing off the area of the lower toptahlil_bollinger_and_atr_bands - There should be a bullish pin bar candle or a candlestick with long wicks at the bottom, signifying price rejection - Wait for price to cross and close above the TMA custom indicator - Enter a buy market order at the close of the candle Stop Loss - Set the stop loss below the entry candle Take Profit - Set the take profit target price at 2x the risk on the stop loss Sell (Short) Trade Setup Rules Entry - Price should be bouncing off the area of the upper toptahlil_bollinger_and_atr_bands - There should be a bearish pin bar candle or a candlestick with long wicks at the top, signifying price rejection - Wait for price to cross and close below the TMA custom indicator - Enter a sell market order at the close of the candle Stop Loss - Set the stop loss above the entry candle Take Profit - Set the take profit target price at 2x the risk on the stop loss Conclusion Strategies that take bounces off the outer bands of a regular Bollinger Bands is a common strategy and many traders have been profitable doing that. However, there are many cases wherein the bounce off the outer bands isn’t just strong enough to reverse the trend. This could work if you are trading a simple mean reversion strategy which aims for just the middle of the Bolling Band or the average price. If you’d like to take trades with a bit more juice in it, you should be taking trades which actually results in the reversal of the trend. This strategy allows you to do this by having an entry after the cross of the TMA custom indicator, which is our average price. There will be many instances wherein price could start a strong trend and if you’d let the profits run, you could be earning more than twice your risk. If you feel a bit more aggressive and opt to aim for higher returns, instead of using a fixed take profit target, you could instead make use of a for trailing stop loss, or close the trade based on signs of a reversing price action. However, this would be a more aggressive route to take as price could also reverse on you or start to form a range, instead of totally reversing the trend. Happy trading!!!
Many successful strategies for trading forex exist, but not all of them are suitable for every trader. Select a strategy that best suits your particular situation, including your available time, personality type and risk tolerance. These are covered below based on the typical time involved, ranging from short to long term. 1. Scalping Scalping is a very short-term trading strategy that involves taking multiple small profits on trading positions with a very short duration. Scalpers need ultra quick reaction times because they usually enter and exit trades in just seconds or minutes. This very fast paced and a rather stressful activity that may not suit everyone. Scalpers also closely monitor price charts for patterns that can help them predict future exchange rate movements. They tend to use very short-term tick charts similar to that shown below for EUR/USD for analysis. Scalpers generally do best using a broker with tight spreads, quick guaranteed order executions and minimal or 0 order slippage. EUR/USD tick chart and trade entry box 2. Day Trading Day trading is another short-term trading strategy that is followed only during a particular trading session. Day traders generally do not take overnight positions, so they close out all trades each day. This helps reduce exposure to market movements when the trader is inattentive to the market. Most day traders use trading plans based on technical analysis on short-term charts that show intraday price action. Many day trading strategies exist, but a popular one, is known as breakout trading. Trades get triggered when the exchange rate moves beyond a given level on the chart for a currency pair and are confirmed when accompanied by an increase in volume. The 30-minute candlestick chart of GBP/USD shows a breakout below the level of the lower of the 2 converging trend lines of a triangle pattern drawn in red. Note that trading volume also increased when the breakout occurred, thereby confirming it. Triangle pattern breakout in GBP/USD 3. News Trading Some forex traders with deep pockets and a decent appetite for risk might use news trading strategies, although they are probably not ideal for forex beginners. These strategies can be based on fundamental and technical analysis and they generally benefit from the notable volatility often seen in the forex market immediately after key news releases. News traders typically need to monitor economic calendars for key data releases. They then watch the market closely before the event to determine key support and resistance levels so that they can react quickly after the event based on the results. News traders need to maintain strict discipline when managing their currency positions during such fast markets and often place stop-loss and take profit orders in the market. An example of an economic calendar and a data release event that a news trader might use is U.S. unemployment claims. This data was especially volatile during the COVID-19 shutdown in the U.S. and created considerable fluctuations in the forex market after its release. Although those jobs numbers were dismal, what mattered most to the market is how the result differed from the market’s consensus. In the situation below, the previous unemployment claims number was 3,176K, the expected number was 2,500K, and the result was worse than expected at 2,981K. This should have put pressure on the U.S. dollar after its release versus other currencies. Forex calendar showing a massive rise in U.S. Unemployment Claims data during the COVID-19 shutdown 4. Swing or Momentum Trading Swing trading, sometimes also known as momentum trading, consists of a medium-term trading strategy that aims to capture more market moves. Swing traders do this by trading both with major trends and also against them when the market is correcting, so they should be willing to hold overnight positions. Swing traders tend to focus on entering and existing positions based on momentum indicators that provide buy and sell signals. Traders use them to find overbought or oversold markets they can sell or buy. Swing traders might also buy ahead of support or sell before resistance levels that develop on the charts of the exchange rate for a currency pair. Some commonly used momentum indicators include the Moving Average Convergence Divergence (MACD) histogram and the relative strength index (RSI). The daily candlestick chart shown below for the GBP/USD exchange rate also displays the MACD and RSI in indicator boxes. Daily chart for GBP/USD with MACD and RSI indicators shown below 5. Trend Trading Trend trading is a popular longer-term forex trading strategy that involves following the prevailing trend or directional movement in the market for a particular currency pair. This strategy often involves buying on pullbacks in up trends or selling on rallies in down trends. After a trend trader has taken a position in the direction of the trend, you will probably hold onto it until the market reaches their objective or the trend starts reversing. Trend traders often use trailing stop loss orders to guard their profits if a significant reversal materializes. Many trend traders use technical analysis indicators like the Average Directional Movement Indicator (ADX) and/or moving averages that smooth out the price action so they can better identify trends. They might also use longer and shorter term moving averages and watch for crossovers to signal a potential reversal. The 4-hour candlestick chart for EUR/JPY below shows an upward trend in progress after a significant decline with a 10-day moving average shown in red and the ADX in the indicator box underneath. 4-hour chart for EUR/JPY showing a down trend followed by an up trend
Want to learn how to trade the spinning top and doji candlestick pattern? In this article, I will show you how to identify the spinning top and doji candlestick pattern, and how to trade them successfully. This article will be the first in a series of price action posts in which I will reveal to you guys everything that I’ve learned about trading price action candlestick patterns and other chart patterns. Doji candlesticks are those who’s opening and closing price is the same. They usually have relatively small upper and lower shadows, although there are exceptions. In the picture below, you can see some doji patterns. In the same picture, you will also notice some spinning tops. Spinning tops are similar to dojis, and in Forex they can be traded the same way. Spinning top candlesticks are those who’s opening and closing prices differ by only a few pips. They, like doji candles, also usually have relatively small upper and lower shadows. How to Trade the Spinning Top and Doji Candlestick Pattern Many misinformed traders treat the spinning top or doji as a reversal pattern. The fact is that, although a doji or spinning top may often be followed by a reversal in price, the only thing it tells us for sure is that the market is unsure about what direction price should be going. In the example above, price did reverse each time; however, often a doji or spinning top candlestick pattern signifies that price is simply slowing down at a level of support or resistance. Price could always continue in the direction it was heading. The most important thing you should take from the lesson is that dojis and spinning tops signify neutrality in the market – not a reversal in price. Dojis and spinning tops can be used to prepare for a possible entry, and you can use them to note areas of support and resistance; however, you should never make a trade decision based on a doji formation or spinning top candlestick alone. As with a few other price action techniques that will be taught in this series, multiple occurrences of these two candlestick formations increase the odds of a reversal in price. Keep in mind that the market can do anything at any time. The majority of my knowledge in price action and candlestick patterns came from Steve. He is credited with introducing the western world to candlestick charts. He is THE expert on price action. I’ve also studied Nial Fuller’s price action course and a few others, but I highly recommend Steve Nison’s courses. I hope you see how trading the spinning top and doji candlestick pattern can be useful to you. Learning these price action techniques is a great way to profit in the Forex market, especially when combined with another profitable trading system.
Interested in trading the hammer candlestick pattern? Pin bars, like the shooting star and hammer, are great for price action trading. Many traders use them incorrectly, so I’d like to show you how to profitably use these candlestick formations in your own trading. We’ve already gone over how to trade the shooting star candlestick formation earlier in my free price action course. The hammer is basically the opposite of the shooting star. Rather than go over the same material, we’ll quickly go over identifying a true hammer candlestick formation, and then add some depth to our understanding of how to trade these two pin bar formations. What is a Hammer Candlestick Pattern? The hammer formation is a Japanese candlestick that consists of a long lower shadow with a relatively small real body at or near the top of the range of the candlestick. The lower shadow must be at least 2x the length of the real body of the candlestick. The color of the real body (bullish or bearish) does not matter, and it should have a small upper shadow. Like the shooting star, this candlestick is a reversal formation. A hammer candlestick must be traded within the context of the market or trend, i.e., a true hammer formation only occurs after downward trending candles. Trying to trade the hammer or shooting star from a neutral/ranging market is a good way to lose your money. Trading the Hammer Candlestick Pattern In the picture below, you can see a good example of how trading the hammer candlestick formation can be very profitable. This hammer signal was followed by a nice rally in price. It formed on the Aussie (AUDUSD) market on the Daily time frame. As you can see, price reversed aggressively after this hammer formation. If you would have gotten into this trade at the 50% entry, you would have been risking about 80 pips. This swing in price has already moved about 828 pips from the 50% entry of that hammer, and could possibly go further. So, far this trade would have given you more than a 1:10 risk to reward ratio. I took this trade, but my take profit was set to a 1:2 risk to reward ratio, which was hit within three days. In retrospect, I would have done much better to close only half of my position when price reached 2x what I was risking. I could have let the remaining half ride up to 3x my original risk, and then closed half of that position, leaving the remaining half (one quarter of my original position) to ride the swing to the top. After moving the stop loss to break even, this becomes a free trade. The only risk in this trade, at that point, is risk to potential profit. Each time the upward trend made a new higher low, I could have moved my stop loss to just below the latest higher low – effectively capturing the majority of this swing in price (see the image below). Another piece of advice that you might consider is that these price action formations are more meaningful on longer time frames. I typically do not take any trades based on the price action of a chart less than 15 minutes; however, the 1 Hour chart is more meaningful, the 4 Hour chart is better, the Daily chart is even better, etc…. That being said, you will not see as many of these price action formations as you move up to higher time frames. That should be pretty obvious, because there are simply less candlesticks for any given amount of time on a higher time frame chart. This is true, not only for price action trading, but for any style of trading. There will always be a delicate balance of trying to get enough trading setups, while also trying to choose the most meaningful trade setups.
In the last addition to my free price action trading course, we went over the bearish engulfing pattern. In this article, we will go over trading the bullish engulfing candlestick pattern. The bearish and bullish engulfing patterns are considered fairly strong candlestick reversal signals. The bullish engulfing pattern is essentially the opposite of the bearish engulfing pattern. Like I previously stated, in my article, Trading the Bearish Engulfing Candlestick Pattern, these engulfing patterns are often misused. Rather than revisiting all the same points again, I’ll simply define the bullish engulfing pattern, and then we’ll try to expand upon our knowledge of trading these useful candlestick signals. What is a Bullish Engulfing Candlestick Pattern? The bullish engulfing pattern consists of a candlestick that opens at or below the close of the previous candle (almost guaranteed in Forex), and then closes above the open of the same [previous] candle. As I stated before, the most effective way of trading these signals is based on the price action of the real bodies (open to close) of the candles – not the total range (high to low). I’m defining a bullish engulfing candlestick pattern as one in which the bullish real body of a candle engulfs the bearish real body of the previous candle. In some frequently gaping markets, you may encounter cases in which a bullish candle engulfs another bullish candle. I don’t have experience with these, as I am purely a Forex trader. Effective candlestick patterns must be traded within the context of the market. Since this pattern is considered a bullish reversal signal, a true bullish engulfing pattern will only come after a bearish movement in price (consecutive lower lows). Note: Occasionally, you may find engulfing patterns occurring during periods of market consolidation that would have been effective, but we are only interested in what usually happens – not what occasionally happens. In the long term, you will lose more often than you win by taking these signals during consolidation periods. Trading the Bullish Engulfing Candlestick Pattern In the image above, you will see a small bearish movement in price, followed by a bullish engulfing candlestick pattern. You could have made a nice profit by entering a buy position at the open of the candle following the bullish engulfing pattern. Placing your stop loss at the bottom of the bullish engulfing candlestick, this trade would have been worth nearly 2x your risk. Like many of these candlestick reversal signals, trading the bullish engulfing candlestick pattern is usually more effective, or at least a higher probability trade, when it follows a sharp decline in price. The reason for this is pretty simple; market prices are driven by psychology. After a sharp incline or decline in price, traders lose faith that the market can sustain such a sharp incline or decline for long. While amateurs may try to chase price, the big players will start taking their profits or entering trades against a quick, volatile price movement (see the image below). Sharp price movements are not, however, a necessary precursor for trading these patterns. Many times all that is required is a small consecutive movement in price in one direction or the other, as you can see in the first image. As I stated in my last price action article, the relative sizes of the candles involved in these patterns are important. Some traders, for instance, will not trade an engulfing pattern unless the engulfing candle is much larger than the previous candle. I have not personally found that to be any better or worse in indicating how strong the potential reversal that follows will be. In fact, if the engulfing candle is too large, it can sometimes swallow up much of the price movement, and leave you with a poor potential risk to reward ratio. Final Thoughts The context in which these patterns occur is very important. You should never trade reversal signals from periods of market consolidation. That being said, these engulfing patterns, as well as other candlestick reversal signals, can be very effective after just a few candles have made consecutive higher highs or lower lows. Occasionally, the engulfing candle in one of these patterns will be very large. Many traders would say that a relatively large engulfing candle signifies a strong reversal ahead. However, a larger engulfing candle requires a larger stop loss in pips (obviously), and may lower your potential risk to reward ratio. Enter such trades with discretion. Typically, an engulfing candle that engulfs more than just the previous candle is an even stronger signal. The more candlesticks that are engulfed, the stronger the signal. Again, keep in mind that the larger the engulfing candle, the less likely it is that you will be left with a favorable risk to reward scenario. Since candlestick signals are only reliable in the short term, there is no guarantee that price will continue to move in the direction that is indicated by the signal. Lastly, any good trader will incorporate good support and resistance levels into their trading signals. Engulfing patterns that are bouncing off of relevant support or resistance levels are more likely to reverse. Previous swing points, obvious supply and demand levels, relevant Fibonacci levels, trend lines, dynamic support and resistance, etc… should be considered when taking these trades. Engulfing patterns can be very profitable, if you know when to take these signals and when to pass on them. Using a good trading system, especially one works well with candlestick signals, like the Top Dog Trading or Infinite Prosperity systems, can help you qualify the best signals to trade. After a little screen time with your demo trading platform, you should be trading the bullish engulfing candlestick pattern just like a pro.
The MACD Divergence indicator issues signals based on positive and negative divergences between the currency price and the MACD trading indicator. Red arrow means possible sell signal while green arrow below the main window means possible buy signal (going long). EUR/USD 5 Min Chart Example
The Aroon Oscillator indicator for Metatrader 4 oscillates between +100 and -100 . It provides buy and sell signals based on the Aroon formula (Aroon Up – Aroon Down). Trading signals: Bullish – Buy at the green dots. Bearish – Sell at the red dots. General Assumptions: - Price bullish above the zero line. - Price bearish below the zero line. - Strong uptrend above +50 - Strong downtrend below -50
The automated trend line indicator for Metatrader 4 draws two trend lines. The upper trend line is formed by connecting two highs (resistance line). The lower trend line is formed by connecting two lows (support line). Trading signals: Go long if price breaks and closes above the upper trend line with target price: Upper Projection Line. Go short if price breaks and closes below the lower trend line with target price: Lower Projection Line General Assumptions: - Price bullish above the resistance line. - Price bearish below the support line. - Place stop-loss above/below the breakout bar
The automated pinbar indicator for MT4 identifies pin bars on every timeframe and shows them on the chart. Pinbars can be extremely useful to find and trade possible reversals in the market. The indicators works for all currency pairs. This trading indicator is very popular among forex price action traders.
The Drive indicator for MT4 looks very similar to the popular ADX indicator developed by Welles Wilder. The main purpose of the indicator is to determine the strength of the current trend. The green line above the red line indicates an uptrend in the market while the red line above the green line indicates a downtrend may be underway. EUR/USD 1 Hour Chart Example
MIB Pro MT5 is a version for MetaTrader5 of Metal Index Boxer Pro forex robot. Fully automatic professional tool for trading metals and stock indices. The classic trading strategy of price levels breakout. Trading is carried out by pending orders taking into account the medium-term trend. Stop loss is always set. Dangerous strategies – grid, martingale, etc. – NOT used. Minimal number of parameters makes the use of this Forex Expert Advisor accessible even for inexperienced users.Not sensitive to account type and execution speed. Recommendations Broker and type of account – any. Timeframe – H1. Minimum recommended deposit – $ 100. Terminal – MetaTrader5. Expert Advisor with simple and effective strategy: Yellow If you want to trade in MetaTrader5: Yellow MT5 Hedge Parameters Hour to start searching price levels – hour to start searching trading levels.* Hour to finish searching price levels – hour to stop searching trading levels. At that moment pending orders are to be set. * Hour to delete all pending orders – hour, when all pending orders of current instrument are to be deleted.* Summer adjustment of broker – adjustment for daylight saving time (contact your broker for details).* TrailingStop in pips – trailing stop value in points. If 0 – disabled. ** AutoTakeProfit – if “true”, the EA will detect TakeProfit level by itself. ManualTakeProfit – value of TakeProfit, defined by a user, if parameter AutoTakeProfit=false.** AutoStopLoss – if “true”, the EA will detect StopLoss level by itself. ManualStopLoss – value of StopLoss, defined by a user, if parameter AutoStopLoss=false.** Range from “box” to set order – indent from important price level for pending orders.** TrendFilter – if “true”, pending orders are to set taking into account current medium-term trend. MagicNumber – “magic number” of this forex robot, which allows it to distinguish its positions from others. Must have different values for every instrument. Automatic lot estimation – can be set to “true” or “false”. When set to “true” the EA selects the lot size for trading depending on the balance value. Manually set of Lot size if Auto lot estimation=false – lot size is set by user, if the value of AutoLot is “false”. Risk level – percentage of the deposit, used for the automatic calculation of the lot. Max allowed drawdown – the maximum drawdown as a percentage of the balance, at which all positions on current trading instrument will be closed. Max Spread – maximal value of spread to set pending orders. AccountFillingType – type of order execution for this type of account. If the advisor does not open positions with default value of this parameter – select another type of execution. * – Recommended parameters for the terminal time GMT + 2 (winter) and GMT + 3 (summer) – in .zip-file with the EA.** – depending on the number of digits in instrument quotes used by your broker, the values of TrailingStop, ManualTakeProfit, ManualStopLoss parameters and Range from “box”, possibly, need to be multiplied or divided by 10, 100 or 1000. These parameters in set-files are for: Gold – 3 digits, DE30 – 1 digit, US500 – 1 digit. I will be thankful for your positive reviews and ratings – it inspires us for further improvements of our Expert Advisors.
Extended version for MetaTrader5 of famous Yellow Expert Advisor. The fully automated Yellow MT5 Hedge EA works on short-term trend changes creating the price channel set in the parameters. Trading is carried out at the external borders of this channel by opening positions in different directions with different lot sizes.The strategy is simple, but effective. With adequate money management, the probability of stable earnings is very high. Presence of a sufficient number of parameters allows trader to customize the advisor in accordance with personal trading style. Terminal – MetaTrader5. Account type – only Hedge. Yellow MT5 Hedge is intended for trading any currency pair on H1 timeframe. Not martingale, not arbitrage. Stable trend Expert Advisor: TFollower Parameters AutoLot – can be set to “true” or “false”. If “true”, the EA selects the initial lot size for trading depending on the balance value. TradingLot – initial lot size is set by a user, if the value of AutoLot is “false”. Risk – percentage of the deposit used for the automatic calculation of the lot. MaxLotSize – maximal allowed trading lot. Change this parameter only if you really understand what you’re doing. DD – maximum allowed drawdown. If reached, all positions on the symbol will be closed. To continue trading on that symbol its EAMagic parameter must be changed. TradingMode – selectable option for searching of market entering points. “Classic” – like in version for MetaTrader4. “New” – new entering points. TakeProfit – take profit in points. TrailingStop – trailing stop in points. AutoPriceChannel – can be set to “true” or “false”. If “true”, the EA automatically determines the trading price channel. ManualPriceChannel – value of the price channel in points for Yellow MT5 Hedge to open positions, if AutoPriceChannel=false. ZeroPositions – if “true”, the EA opens positions only if there are no other open positions on the trading account. SaveDeposit – can be set to “true” or “false”. If “true”, the EA will close order series with minimal profit ignoring TakeProfit parameter. TradeOnFridays – can be set to “true” or “false”. If “true”, the EA will open trades on fridays. SafeMode – can be set to “true” or “false”. If “false”, built in additional filter will be turned OFF. LotMult – lot multiplier for the next opened position. AccountFillingType – type of order execution for this type of account. If the advisor does not open positions with default value of this parameter – select another type of execution. CommissionFor1Lot – broker’s commission for 1 lot, in the deposit currency. If your account does not have a commission, set it “0”. CommentOfOrder – comment to orders. Can take any value. EAMagic1 – the magic number of the EA, that allows the advisor to work only with its positions. Must have different values for every chart. Recommended broker – any. Minimal recommended deposit – $300 for cent account (30000 cents) and lot 0.1. Account leverage – from 1:400 and higher. For the correct operation of the EA, the currency pair history for the H1 and D1 timeframe should be downloaded to the terminal. For that just switch your chart to D1 timeframe, and then – back to H1. This will be enough. Parameters are set as for 4-digits servers. They will be automatically recalculated for 5-digits servers. Do not update your terminal and do not move your currenct trading to another terminal, if there are opened current positions. It’s important. Backtest screenshots on different currency pairs are provided below.
Trading is performed using pending orders on important price levels, that are detected by advanced adaptive algorithm A.P.L.D., that gives the opportunity to respond quickly to changes of market conditions. The A.P.L.D. algorithm provides 3 strategies of important price levels detection. They can be used either together or separately. Virtual StopLoss is always set. Two- levels adaptive TrailingStop for accounts with floating spread. “Dangerous” strategies are not used. Trading can be performed either with fixed lot or with automatic money-management system. Expert Advisor with simple and effective strategy: Yellow Broker and deposit Any 5-digit broker with low spreads and fast execution is suitable for trading. Minimum recommended deposit – $100. Currency pairs and timeframe Trading on EURUSD, USDJPY, USDCAD or on any currency pair with small spread is recommended. Trading on several currency pairs is not recommended, because of periods of drawdown. And if such periods match on several currency pairs at the same time, common drawdown of trading account can be noticeable. Timeframe – H1. Terminal – MetaTrader4. Parameters AutoLot – if “true”, the EA selects the lot size for trading depending on the balance value. Lots – lot size is set by a user, if the value of AutoLot is “false”. Risk – parameter for automatic lot calculation, if AutoLot value is “true”. AutoRiskReduction – if “true”, it provides reduction of possible risks in case of simultaneous using of all three strategies. DD – the maximum allowable drawdown. If reached all positions of this currency pair will be closed. Strategy1 – if “true”, the EA uses the first strategy. Strategy2 – if “true”, the EA uses the second strategy. Strategy3 – if “true”, the EA uses the third strategy. TakeProfitInPoints – take profit in points. AutoStopLoss – if “true”, the EA detects StopLoss level automatically. StopLoss – virtual stop loss in points, if AutoStopLoss=false. TrailingStop – trailing stop in points. TwoLevelTrailing – if “true”, the EA will use 2 levels of TrailingStop. The first – for order protection, the second – for earnings. VirtualTrailing – if “true”, the EA hides the modified StopLoss levels from the broker. CommissionFor1Lot – broker commission for 1 lot, in the deposit currency. If your account does not have a commission, set to “0”. OpenMode – if “true”, pending orders will be set only on the beginning of new bar. Delta – indent from important price level for pending orders. StartHour – hour to start trading. EndHour – hour to stop trading. All current pending orders will be deleted. SummerAdjustment – adjustment for daylight saving time. EAMagic – magic number of the EA, which allows it to distinguish its orders. There are two more hidden EAMagic parameters that are determined automatically. That is, for example, if you set EAMagic = 10, then the advisor reserves two more “magic numbers” – 11 and 12. Keep this in mind when simultaneously running several robots on one account. ShowInfoPanel – can be set to “true” or “false”. If “true”, the information panel will be displayed on the chart of the traded pair. Panel_Language – language of the information panel. TextColor – font color of the information panel. Recommended settings for EURUSD are set by default. By default, the StartHour and EndHour parameters are set for the winter terminal time zone GMT+2. If necessary, set these parameters according to the time zone of your terminal.
It is necessary to understand that testing this strategy in the MetaTrader4 tester is impossible, since the work is carried out simultaneously on several instruments, while the tester makes it possible to test only one trading instrument at a time. This Forex Expert Advisor implements the classic idea of correlating currency pairs, both direct and reverse. This allows, when opening a position, to protect it by simultaneously opening a position on a correlating currency pair. With a high level of correlation of currency pairs and a reasonable money management, this approach makes it possible to get profit with high probability and to avoid large drawdowns of the trading account. Presence of the DD parameter, which performs the StopLoss function, and built-in recovery system helps to keep the drawdown at a comfortable level for a user. When the level of correlation of currency pairs changes for already open positions, additional positions are opened either for the same currency pairs or for other unrelated ones, which provides additional security for trading. 2 trading modes are available: 1. With automatic selection of currency pairs – trading will be performed on 28 currency pairs: EURUSD, GBPUSD, AUDUSD, NZDUSD, EURJPY, USDJPY, AUDJPY, USDCHF, EURAUD, EURCAD, EURCHF, EURGBP, CADCHF, EURNZD, AUDCAD, GBPAUD, GBPCAD, GBPCHF, GBPJPY, GBPNZD, AUDCHF, NZDCAD, NZDCHF, NZDJPY, AUDNZD, USDCAD, CHFJPY, CADJPY. 2. With manual selection of currency pairs – they have to be set in parameters. Expert Advisor with simple and effective strategy: Yellow Expert Advisor for price levels trading: Level15 For the advisor to work correctly, the quotes of the used currency pairs are needed in the “Market Watch” window of the MetaTrader4 trading terminal. To do this: right-click in the window “Market Watch” – Show all. After that, you need to drag the Correlates EA to the chart of one of any currency pair, selected for trading. Recommendations: TimeFrame – H1. Trading terminal – MetaTrader4. Minimal recommended deposit – $500 for 0.01 lot on standard account. Or $50 (50000 cents) for cent-account with lot 0.1. Minimal recommended account leverage – 1:500. Parameters: AutoLot – can be “true” and “false”. If “true”, the EA chooses the lot size for trading depending on the balance. Lots – lot size is set by the user, if the value of AutoLot is “false”. Risk – part of the deposit in % used for automatic calculation of the lot. DD – maximum allowed drawdown, when reached all positions are closed. Performs the StopLoss function. CorrelationPeriod – the number of candles of H1 timeframe to calculate the correlation. TakeProfitInPercents – take profit in % of the account balance. MinimumCorrelation – minimum correlation value in % for opening positions. CorrelationStep – change in the correlation of currency pairs for which positions have already been opened, in % for opening additional positions. LotMult – lot multiplier for the following opened positions. CommonProfitClosure – can be “true” and “false”. If “true”, the advisor will close all positions with the minimum profit, regardless of the parameter TakeProfitInPercents. AllowNewPositions – can be set to “true” or “false”. If “true”, the EA will open new positions on other currency pairs. If “false”, the EA will only accompany positions that are already opened. AutoRecovery – can be set to “true” or “false”. If “true”, the EA will use the system of gradual recovery of unprofitable positions. DD of two symbols to start recovery – level of drawdown of two instruments. When reached, the AutoRecovery system will start working. EAMagic1….EAMagic8 – “magic numbers” that allow the advisor to work only with it’s positions. Must have different values. BrokerPrefix – if there is a prefix in the names of your broker’s currency pairs, it must be entered in the field of this parameter. If not to do that the error “zero divide” will be displayed. BrokerSuffix – if there is a suffix in the names of your broker’s currency pairs, it must be entered in the field of this parameter. If not to do that the error “zero divide” will be displayed. CurrencyPair1….CurrencyPair12 – currency pairs with which the advisor will work. It is necessary to indicate them without prefixes and suffixes. ShowInfoPanel – can be set to “true” or “false”. If “true”, the information panel will be displayed on the chart of the traded pair. Take in mind, that current information, displayed in the panel, may be delayed by 1-5 seconds.
Level15 automatic Expert Advisor is based on classic trading from price levels. No technical indicators are used to determine trading levels. Only current volatility of a currency pair matters. Trading is provided by a series of orders: initial positions are opened in order to “study” the current state of the market and factors that influence it – with a high probability these positions will immediately give profit. If market factors turned out to be unfavorable, the Level15 Expert Advisor opens opposite positions. DD parameter executes StopLoss function. Expert Advisor with simple and profitable strategy: Yellow Stable trend Expert Advisor: TFollower Broker and account type Broker – any. Account type – any with leverage from 1:400 and higher. Timeframe and deposit Timeframe – H1. Minimal recommended deposit: – for cent accounts – $300 (30000 cents) for 0.1 lot. – for standard accounts – $3000 for 0.01 lot. Currency pairs and terminal Trading on any currency pair except metals and indicies is recommended. Terminal – MetaTrader4. Parameters EAMagic – “magic number” of the EA, that allows it to work only with its positions. Must have different values for every chart. AutoLot – can be set to “true” or “false”. If “true”, the EA selects lot size for trading depending on account balance. Lots – lot size is set by a user, if the value of AutoLot is false. Risk – percentage of the deposit used for the automatic calculation of the lot. DD – maximum allowed drawdown in % of balance. If reached, all positions on that symbol will be closed. CommentOfOrder – comment to orders. Can take any value. TakeProfitInPoints – take profit in points. TrailingStop – trailing stop in points. LotMult – lot multiplier for next opened position. StartHour – hour to start trading. EndHour – hour to stop trading. TradeOnFridays – can be set to “true” or “false”. If “false”, the EA will not open new order series on fridays, but will continue to accompany previously opened order series. SaveDeposit – can be set to “true” or “false”. If “true”, the EA will close order series with minimal profit regardless of TakeProfitInPoints parameter. ShowLevels – can be set to “true” or “false”. If “true”, the EA will show current price levels in the beginning of next trading hour. ShowInfoPanel – can be set to “true” or “false”. If “true”, the information panel will be displayed on the chart of the traded pair. Panel_Language – language of the information panel. TextColor – font color of the information panel. Recommended settings – default and on testing screenshots. Parameters are set as for 4-digits servers. They will be automatically recalculated for 5-digits servers. Once a month it’s recommended to check that account history (history of previous trades) is downloaded to MT4 terminal. It’s important.
USD/JPY tilted lower in Asian trade off October 20 highs ahead of US data today and amid a lack thereof from Japan. As of 06:58 GMT, USD/JPY fell 0.13% to 104.38, with an intraday low at 104.35. From the US, house prices are expected up 0.8% in September, slowing down from 1.5%. US Richmond manufacturing index is expected down to 20 from 29, while the consumer confidence index is expected down as well to 97.7 from 100.9. The General Services Administration in the US just announced Joe Biden's win in the 2020 presidential elections, succeeding Trump as the 46th president of the US. Biden intends to choose former Fed Chair Janet Yellen as his Treasury Secretary, becoming the first woman to do this role. The World Health Organization has so far reported 58.43 million global cases of Covid 19 with the death toll at 1.385 million.
The British pound rose against the US dollar on Monday, following the release of strong economic data in the UK. Data showed Britain's services PMI rose to 45.8 in October, beating analyst's forecasts of 43.2 points. The manufacturing PMI rose to 55.2 points in October, also better than analyst's forecasts of 50.5 points. British Prime Minister Boris Johnson stated that his government is preparing to ease the Covid-19 lockdown restrictions due to the upcoming Christmas celebrations, as the French government prepares to take the same step. AstraZeneca said that its vaccine, developed in collaboration with the University of Oxford, may reach 90% efficacy in preventing Covid-19. As of 21:13 GMT, GBP/USD rose 0.3% to 1.3319, after the pair hit a high of 1.3398 and a low of 1.3265.
The US dollar rose on Monday, erasing its early losses, following the release of positive economic data and news about AstraZeneca's Covid vaccine. The US manufacturing PMI rose to 56.7 points in October from 53.4 points in September. The US services PMI rose to 57.7 in October, beating analyst's forecasts of 55.8 points. AstraZeneca said that its vaccine, developed in collaboration with the University of Oxford, may reach 90% efficacy in preventing Covid-19. The British firm added that it will be able to provide 200 million doses of the vaccine by the end of this year. The dollar index rose against a basket of currencies by 0.1% to 92.5 points as of 18:31 GMT, after it hit a high of 92.8 and a low of 92.02.
The Australian dollar fell against most of the major currencies during trading on Monday, despite positive news about Covid-19 vaccines. AstraZeneca said that its vaccine, developed in collaboration with the University of Oxford, may reach 90% efficacy in preventing Covid-19. AstraZeneca added that it will be able to provide 200 million doses of the vaccine by the end of this year. This comes after Pfizer announced last week that its vaccine was effective by 95%, and Moderna's vaccine reached 94.5%. Otherwise, Australia's manufacturing PMI rose to 56.1 points in October from 54.2 in September, and the services PMI rose to 54.9 from 53.7. As of 17:05 GMT, AUD/USD fell 0.4% to 0.7275, after hitting a high of 0.7338 and a low of 0.7265.
The US dollar fell on Monday to its 12-week low, resuming its losses after taking a pause on Friday, due to a strong market sentiment following successive positive news about the coronavirus vaccines, and ahead of the release of major US data for November, which are key indicators of the economic impact of the second Covid-19 wave. The dollar index fell 0.4% to the lowest level since September 1st at 92.02 points, after opening at 92.39, and hit an intraday high of 92.39. The index gained 0.8% on Friday, in its first daily gain in 6 days, and took a pause from a broad losing streak. The greenback also lost 0.4% during the past week, in its second weekly loss in 3, due to the weak demand following successive positive news about the Covid-19 vaccines. The British pharmaceutical giant AstraZeneca said on Monday that its vaccine, developed in collaboration with the University of Oxford, was about 70% effective in preventing Covid-19, after an interim analysis of clinical trials third phase. A top official in the US government virus vaccine effort said on Sunday that health care advisors have recommended that the first Covid-19 vaccines can begin to be used within a day or two after the regulators' approval next month. The US Food and Drug Administration (FDA) will grant the approval in mid-December to distribute the vaccine produced by Pfizer and BionTech, which will be the largest vaccination campaign in US history. The US Treasury Secretary Steven Mnuchin calmed markets on Friday that the Federal Reserve and Treasury Department have many tools to support the economy, after a decision to suspend several federal lending and aid programs by the end of this year. Investors awaited the release of major data on the performance of the US manufacturing and services sectors during November, which are key indicators of the economic impact of the second Covid-19 wave. At 14:45 GMT, the flash manufacturing PMI reading is expected to reach 52.5 points in November from 53.4 in October, and the flash services PMI is expected to reach 55.8 from 56.9.