If You Are into Currency Trading, You Have to be Ever-mindful of Forex Fraud

Forex trading has come of age, as its popularity has soared over the past decade, but that does mean that we can turn a blind eye to the possibility of fraud, especially if it disguised within a cloak of bad business practices. The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) are the “policemen”, if you will, in this investment arena, providing regulatory oversight and administering a host of programs to protect and educate the average consumer/investor.

 

Retail forex trading is now a safer environment, indeed, due to the tireless work of these two organizations, but, despite many arrests and convictions, there will always be a criminal element within our society that attempts to prey on the unwary. As any security professional will tell you, your first line of defense against these thieves is awareness. Once you understand how you could be possibly duped, then it is up to you to be skeptical and ever mindful of where danger may be lurking. Listen to your gut, then be prepared to walk the other way.

 

A vast majority of the participants in the forex industry, however, are legitimate, but the Internet has lulled us into a false sense of security when dealing with the “unseen” business partner on the web, allowing our trust to be obtained rather easily. When you add greed to the equation, the fraudster can ply his various schemes with ease.

 

Your primary focus will be on your broker, but you must also be wary of fund managers, software and signal providers, and just about anyone with a clever marketing pitch that promises high rewards with very little risk. Here are a few tips to guide your protective efforts:

 

- Overseas Forex Brokers: There are plenty of them, and many got their start in London, the financial center of foreign exchange. Look for longevity, as a rule, and validate that they are in compliance with a good regulatory agency. Rules are not as strict as in the U.S., and a few brokers may cross the line occasionally. A safe broker will always segregate your deposits in a Tier-1 bank, far away from their operating offices. The favored fraud scheme is to promise large sign-up bonuses to get your initial deposit, but when it comes time to withdraw, you run may into a stonewall. Just remember that trying to exert your legal rights in a foreign jurisdiction is fraught with peril.

 

- Domestic Forex Brokers: Be careful here, too. Check with the CFTC for registration credentials and that they maintain the proper level of net capital. Experience counts, but review testimonials to validate claims made.

 

- High-Yield Investment Programs (HYIP): Beware any program that promises an easy path to riches or high returns with little risk. This tip applies to both brokers and all marketing types that wish for you to buy their management expertise, trading robot, system, or signal service. If it were so easy, why aren’t they off making millions instead of pressuring you for a few bucks? If it sounds too good to be true, it most definitely is in the forex world.

 

- Re-quotes, Slippage, and Stop-Loss Hunting: Market makers, as opposed to ECN/STP brokers, can be tempted to manipulate the bid/ask spreads offered. Good brokers do not do this, but if you notice a high prevalence of questionable executions of your orders, then it may be time for a change.

 

These are a few tips to help get you started, but the CTC website can help broaden your awareness, the key to fraud prevention.


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Posted By andrewdoherty : 06 October, 2020
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Take a look at the sample chart with the MACD indicator in the lower panel:MACDCalculationMACD Line12-day EMA - 26-day EMA)Signal Line:9-day EMA of MACD LineMACD Histogram:MACD Line - Signal LineThe MACD Line is the 12-day Expotential Moving Average(EMA) minus the 26-day EMA. Closing prices are used for these moving averages. A 9-day EMA of the MACD Line is plotted with an indicator to function as a signal line and identify turns. The MACD Histogram denotes the difference linking MACD and its 9-day EMA, the Signal line. The histogram stays positive when the MACD Line is above its Signal line and negative when the MACD Line is below its Signal line. The values of 12, 26 and 9 are the typical setting used with the MACD, but other values can be exchanged depending on your trading style and goals.InterpretationThe MACD is about the convergence and divergence of the faster and slower moving averages. Convergence occurs when the averages move towards each other. Divergence occurs when the averages move away from each other. The shorter moving average is faster and more responsive. The longer moving average is slower and less reactive to price changes. The MACD Line moves above and below the zero line – also known as the centerline. The direction, of course, depends on the direction of the moving average cross. A positive MACD is when the shorter moving average crosses above the longer moving average. As the shorter moving average moves further above the longer moving average (diverges) this means the stock price upside momentum is increasing. When the short moving average drops below the long moving average, it demonstrates that the stock shows a downward momentum.The yellow area shows the MACD Line in negative territory as the short line is below the long line. In this chart, the crossing occurred at the end of September (see the black arrow) and the MACD moved diverged further into negative territory as the short moving average moves further away from the long moving average. The orange area highlights the period of positive MACD values, which is when the short moving average moves above the long moving average. Notice that the MACD Line stayed below during this period (red dotted line). The red line means that the distance between the slow EMA and long EMA was less than 1 point, which is not a much of a difference.DivergencesDivergence forms when the MACD line moves away from the price line of the stock. Bullish divergence are formed when a stock’s price records a lower low and the MACD hits a higher low. The lower low for the stock confirms the downtrend, but the higher low for the MACD line shows less downward momentum. Downside momentum still outpaces the upward momentum as long as the MACD remains negative. When the downward momentum slows, it can foreshadows a trend change or a upside rally. The next chart uses a Google (GOOG) chart with a bullish divergence for Oct-Nov 2008. Notice that there were clear lower troughs as both Google’s price line and its MACD line bounced in October and late November. Notice that the MACD line formed a higher low as Google’s price line formed a lower low in November. MACD is signalling a bullish divergence as the signal line crosses over in early December. Google’s price line confirmed the reversal with a breakout.A bearish divergence forms when a stock price records a higher high and the MACD line forms a lower high as the faster MA crosses the slower MA. The higher high for the stock price is quite normal for uptrends but when the MACD shows a lower high, this illustrates less upside momentum. Even though upside momentum may have declined, upward momentum is still out performing downside momentum as long as MACD is positive. 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Even when upside momentum is not as strong, upside momentum still outpacing the downside momentum as long as the MACD line is above zero. We can see the opposite occuring when a strong downtrend begins. The next chart shows SPY which is the S&P 500 ETF. This chart shows four bearish divergences from Aug to Nov 2009. Despite the slower upside momentum, SPY’s price line continued higher because the uptrend was strong. Notice how SPY’s price continues a series of higher highs as well as higher lows. Remember, as long as MACD is positive the upside momentum is stronger than downside momentum.ConclusionsMACD is a special indicator as it brings together both momentum and trend in one technical indicator. This unique combination of trend and momentum can be used with daily, weekly and monthly charts. The standard moving average lines for MACD use the difference between the 12 and 26-period EMAs. Chartists that are looking for a more responsive indicator can use a shorter short-term moving average and a longer long-term moving average. A MACD(5,35,5) is far more responsive than the more standard MACD(12,26,9) and can be a better indicator for weekly charts. Chartists looking for a less sensitivity indicator can use lengthening the moving averages. A less responsive MACD will still oscillate above/below zero but the frequency of the crossovers centerline and signal line crossovers will decline. Finally, remember that MACD is calculated using the difference between two moving averages. This means that the MACD line is dependent on the price of the stock. For example, the MACD line for a $20 stock may move from -1.5 to 1.5 while the MACD line for a more expensive $100 stock can move from -10 to +10. You cannot compare the MACD charts for several stocks with far different prices. If you want to compare the momentum of various stocks you should probably use the Percentage Price Oscillator (PPO) rather than MACD.

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Most importantly you can easily trade the market with very minimum deposit and make a sequential profit by using the leverage efficiently.This has provided more opportunities for women to get into trading, and the results are revealing.It is well documented that the trading industry is still very much dominated by men, with just one female in every ten online traders in the UK and many more reports of gender imbalance in the professional trading sector. However, does this necessarily mean that men are better traders than women? Research would suggest that the contrary could be true: as more women enter the arena, growing evidence is mounting that indicates women could be the better traders.   An analysis of the evidenceIn their 2001 paper, behavioral economists Terrance Odean and Brad Barber found that men traded almost twice as much as women and that this aggressive trading behavior led them to drop 2.65% in net returns per year, compared with just a 1.76% drop demonstrated by women.Peter Swan, a professor of Finance at UNSW Sydney, and his colleagues, Lu and Westerholm, conducted an extensive study over a 17 year period on traders from Finland which thoroughly evaluated the trading performance of men and women. Again, the study demonstrated that men traded more actively, but that women were more successful in their trading strategies, adopting a calmer approach to trading, and picking up on movement patterns in the markets better than men. The 2017 paper asserts that women demonstrate greater trading intuition. Although they suffered short-term losses, buying when prices were falling, they made substantial and superior profits over the longer term.This notion is further supported by research carried out by a financial profiling company, Financial Skills. The study analyzed data collected from 326 investment bank interns that traded on the Financial Skills simulation software and found that women traded less and outperformed men.A study conducted by SigFig, an automated portfolio tracker, found that women returned 12% more than men and that women were 25% less likely to lose money on trades than men.Female trading preferencesMuch of the evidence suggests that overall, women take less risks in their trading strategy as they are more likely to take their time and not react hastily to price fluctuations. Indeed, there is much research that supports the notion that women are more risk averse than men.That said, they have been shown to demonstrate a preference for trading riskier financial instruments. In their report ‘The Modern Trader‘, Brokernotes.co profiled traders using the data from more than half a million website visitors. They found that Forex trading, day trading, and CFD trading were amongst the trading styles favored by women. They also found that nearly 42% of women classed themselves as experienced – a high proportion for such an under-represented gender.   Women in tradingA 2016 study by Adams, Barber and Odean attempted to answer why only 18% Chartered Financial Analyst (CFA) members were women. Their survey showed that the female members were more achievement driven, and less motivated by traditional family life. Their study suggests that fewer women may be found in demanding professional financial roles as time obligations outside of work still tend to be greater for women.Although there may be some truth in that for professional traders, many private traders are able to conduct trades around their commitments. Jane, who was featured in a BBC documentary about trading, worked as a nurse and looked after her three children, but despite being far from the stereotypical City trader, is a prime example of how women are entering the trading arena. Online platforms that can be accessed from mobile phones have facilitated the ability for traders to engage in the activity around their other tasks, increasing the appeal for women.Primary conclusions regarding female tradersSome of the primary reasons that have been observed in many of these studies are:1. Women appear to have a calmer approach to trading than men and are not as easily influenced by the hype and euphoria of fast moving markets.2. Women are less inclined towards risk taking, preferring to trade less and trade more carefully. Men, on the other hand, often trade aggressively, which can be detrimental to their performance and incur higher brokerage costs – adding to their losses.3. Women are more intuitive with their trades and are better at picking up movement trends and market patterns.Some of the leading hedge fund management companies are trying to redress the balance between men and women in their prominent roles and are actively seeking women to join the company at an early age. It is certainly clear from the wealth of research into this area why firms would want to recruit more women onto their teams.Of course, there are always issues with regards to definitively declaring that one gender is superior to the other. However, there are so many studies that support the case for women being the better traders, and very few in comparison to support the opposite conclusion. It is possible that this is due in part to our pre historic hard-wiring, but there are clearly lessons that can be learned by everyone. Anyone involved in Forex / CFD and other financial instruments trading can benefit from understanding why women repeatedly come out on top in such studies and try to adopt a similar approach.


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