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The martingale strategy is based on probability theory. The martingale strategy was most commonly practiced in the gambling halls of Las Vegas casinos. It is the main reason why casinos now have betting minimums and maximums. In some cases, your pockets must be infinitely deep. A martingale strategy relies on the theory of mean reversion. Without a plentiful supply of money to obtain positive results, you need to endure missed trades that can bankrupt an entire account.
It's also important to note that the amount risked on the trade is far higher than the potential gain. Despite these drawbacks, there are ways to improve the martingale strategy that can boost your chances of succeeding.
The martingale was introduced by the French mathematician Paul Pierre Levy and became popular in the 18th century. The system's mechanics involve an initial bet that is doubled each time the bet becomes a loser. Given enough time, one winning trade will make up all of the previous losses.
The 0 and 00 on the roulette wheel were introduced to break the martingale's mechanics by giving the game more possible outcomes. That made the long-run expected profit from using a martingale strategy in roulette negative, and thus discouraged players from using it.
To understand the basics behind the martingale strategy, let's look at an example. There is an equal probability that the coin will land on heads or tails. Each flip is an independent random variable , which means that the previous flip does not impact the next flip. The strategy is based on the premise that only one trade is needed to turn your account around. Unfortunately, it lands on tails again. As you can see, all you needed was one winner to get back all of your previous losses.
However, let's consider what happens when you hit a losing streak:. You do not have enough money to double down, and the best you can do is bet it all. You then go down to zero when you lose, so no combination of strategy and good luck can save you. You may think that the long string of losses, such as in the above example, would represent unusually bad luck.
But when you trade currencies , they tend to trend, and trends can last a long time. The trend is your friend until it ends. The key with a martingale strategy, when applied to the trade, is that by "doubling down" you lower your average entry price. As the price moves lower and you add four lots, you only need it to rally to 1.
The more lots you add, the lower your average entry price. On the other hand, you only need the currency pair to rally to 1. This example also provides a clear example of why significant amounts of capital are needed. The currency should eventually turn, but you may not have enough money to stay in the market long enough to achieve a successful end. That is the downside to the martingale strategy.
One of the reasons the martingale strategy is so popular in the currency market is that currencies, unlike stocks , rarely drop to zero. Although companies can easily go bankrupt, most countries only do so by choice. There will be times when a currency falls in value. However, even in cases of a sharp decline , the currency's value rarely reaches zero.
The FX market also offers another advantage that makes it more attractive for traders who have the capital to follow the martingale strategy. The ability to earn interest allows traders to offset a portion of their losses with interest income. That means an astute martingale trader may want to use the strategy on currency pairs in the direction of positive carry. In other words, they would borrow using a low interest rate currency and buy a currency with a higher interest rate.
A great deal of caution is needed for those who attempt to practice the martingale strategy, as attractive as it may sound to some traders. The main problem with this strategy is that seemingly surefire trades may blow up your account before you can profit or even recoup your losses. In the end, traders must question whether they are willing to lose most of their account equity on a single trade. The task of an NDD broker is to bring transactions to the market, and the company's earnings are based on the commission that traders pay for placing transactions.
STP brokersThis type of broker belongs to the NDD system: the company does not participate in transactions, does not affect the size of quotations and does not set its own rules. The STP broker trades using a computer system. The system transfers orders to the interbank market, that is, transactions are carried out without the intervention of a broker, and customers receive direct access to liquidity providers.
The broker does not interfere in the trading process in the same way, traders get access to market quotes, and transactions are brought to the interbank level. However, unlike STP, which uses a fully automated program to withdraw transactions, ECN broker cooperates with a network of international banks and other liquidity providers directly, and its trading platform is linked to them.
This allows you to ensure the highest possible speed of execution of orders and also guarantees their accuracy. Read more: The history of the origin of the Forex marketWhat is an ECN accountActually, some brokers offer ECN accounts to clients, which allow them to take advantage of all the advantages of ECN order execution, namely, direct access to liquidity providers and fast execution of transactions.
This means that the ECN system will be available only on this account, and on others, a different way of executing transactions is used. Also, beginners should take into account that ECN accounts often have a higher minimum deposit level. Therefore, brokers who offer an ECN system and at the same time set a low deposit need to be carefully checked. It is enough just to find a company that offers ECN accounts.
But not everything is so simple. In order for cooperation with a broker to be reliable and long-term, and work to be comfortable, when choosing a company, you should pay attention to the following criteria:Trading platformThe most common Forex trading terminals are MetaTrader 4 and MetaTrader 5. However, some brokers create their own platforms that differ in both interface and functionality. Therefore, when choosing an ECN broker, professionals are advised to proceed from personal preferences and take into account whether the necessary instruments are available in their own broker platforms.
Novice traders are recommended to choose brokers with MT4 and MT5 platforms. It's not just that their functionality is enough for both beginners and professionals. There are a lot of video and text materials on how to work on these terminals, while brokers' own platforms often remain without "instructions". InstrumentsTo trade with an ECN broker, it is advisable to choose instruments with sufficiently high volatility.
They give traders the opportunity to earn higher earnings, provided that they use the ECN system. Instruments with high volatility include currency pairs Forex , cryptocurrencies, CFDs and commodity futures. It is not necessary to use all these instruments, but it is desirable that the broker provides them.
Only a trader can determine which leverage to choose based on his trading skills. Beginners are recommended to set leverage of , professional traders choose higher leverage, up to In any case, it is worth remembering that leverage multiplies the amount of profit, but the higher it is, the greater the losses will be in case of an unsuccessful transaction. Minimum transaction volumeIt is impossible to trade micro lots 0. RegulationThis point is relevant regardless of which broker the trader wants to cooperate with: stock, Forex or any other.
When choosing a company, you should definitely pay attention to regulations. If a broker is under the supervision of one or more regulatory authorities and has a license to provide financial services, then you can safely cooperate with him. Regulators ensure that the broker fulfils its obligations to the client, and a license is issued only if the broker meets international or local requirements.
Checking the regulation, the trader initially weeds out all the "kitchens" — the companies of scammers. It is worth paying attention to the year of the company's opening and the site: "kitchens" do not bother with the interface, make the site simple and little informative, and they exist for no more than a year. Therefore, preference should be given to brokers who have been on the market for a long time. Liquidity providersAn important factor that will allow you to distinguish a real ECN broker from a Forex kitchen.
When choosing a company for trading, it is necessary to check which liquidity providers it cooperates with. Reliable brokers, as a rule, cooperate with global suppliers. If information about suppliers is not available on the site, and the support service responds with the message "this is confidential information", then most likely this broker has nothing to do with the ECN system. Read more: What is margin trading: pros, cons and risksSoftwareThe success of trading depends on the quality and speed of the software, or rather, the correct execution of orders.
Therefore, a trader, regardless of the type of trading strategy, should pay attention to the operation of the terminal. It is important that the program does not hang, does not crash, and does not give an error or requotes. This is especially important when choosing an ECN broker, because the ECN system is characterized by instant execution of transactions, and software problems only hinder this.
Minimum depositIt's worth starting with the fact that brokers with ECN accounts initially set a higher minimum deposit level. It is a rare case when the price of opening an ECN account is available to all users. The high threshold of the minimum deposit is one of the main reasons why it is not recommended to open such accounts for novice traders: a beginner will easily lose the entire deposit and will be left with nothing since he has no experience in trading.
Therefore, if you are a novice trader, think carefully about whether you really need an ECN Forex Broker. If yes, then choose companies in which the minimum deposit is relatively low, since the risk of losing all capital is quite high. These criteria are basic, both experienced traders and beginners can use such a checklist when choosing an ECN broker.
To make it easier for traders to navigate, we have collected ECN brokers in the rating, where the minimum deposit amount and regulatory authorities of each of the companies are indicated. Professionals should start from individual needs and wishes. When should I open an ECN account? There is no doubt about the popularity of ECN brokers: they are preferred by thousands of traders from all over the world.
But let's see if such companies can really be called universal, or if there are cases when it is unprofitable to open an ECN account. First of all, an ECN broker makes it possible to trade with liquidity providers directly. The trader does not depend on the broker, on quotes within the company or on other nuances. The broker is simply an intermediary. This means that the trader will get access to real market data.
And this condition is beneficial to all traders. At the same time, ECN brokers offer a floating spread. This condition makes trading more difficult and unpredictable because a novice trader will not be able to assess the market situation and understand when it is better to open a deal so that the commission is lower. Also, this condition is not suitable for clients who are actively investing with conservative risks, because it will not be possible to calculate the exact amount of the commission, its size is constantly changing.
Read more: I got a margin call: we explain what it is and how to avoid itDo not forget about the high-speed execution of transactions. This condition seems attractive, but in fact, it is not suitable for all traders. High speed is an important criterion when it comes to scalping.
Traders with such a strategy really need to cooperate with ECN brokers, because the profitability of their work depends on the accuracy of order execution. Novice traders simply will not be able to take advantage of ECN technology. It is necessary to take into account the instruments with which the trader works. When trading cryptocurrencies, currency pairs and other assets with high volatility, the speed of transaction execution matters.
But if a trader chooses to trade instruments with medium or low volatility, then the speed of work does not play such an important role, because the price of an asset simply will not have time to change in one or two seconds. So, if the speed of execution of transactions is important to a trader and he works with highly volatile instruments, then it is definitely worth opening an ECN account.
In other cases, it is necessary to build on the trading strategy and the client's requirements for trading conditions. Is an ECN account suitable for beginners? Novice traders and investors, when choosing the first broker, often pay attention to absolutely all criteria in order to eventually choose the best of the best. This strategy can be understood because most traders want to choose a company for long-term cooperation, but there are criteria that are not so important for beginners.
These include the availability of ECN technology. This system really has a number of advantages over dealing centers, and many novice traders are captivated by it. But it cannot be said that the presence of ECN accounts is a mandatory criterion and when choosing the first company for trading, you should pay attention only to ECN brokers.
An analogy with cars would be appropriate here: to learn how to drive, it is not necessary to buy a Lexus or a sports car. Yes, they will surpass some Opel in terms of characteristics, but their functionality is redundant for a novice driver. To get basic driving skills, it's enough to start with driving an Opel.
Exactly the same principle works with ECN accounts: a novice trader can open them, but it is not necessary to do it at the very beginning when there is no experience in trading yet. After all, a beginner, having gained experience, can always change the type of account or broker. Read more: Who are Market Makers and what are they doing on the market? Advantages of ECN technologyECN brokers appeared not so long ago, in , but over these 20 years, they have become popular both among professional market participants and among those who are just taking the first steps in trading.
We can talk about the advantages of ECN brokers for a long time, but we suggest first highlighting three main advantages:Fast execution of transactions. No requotes. Low spreads. Often these three factors are enough for a trader to pay attention to companies with ECN technology when choosing a broker.
However, these are not the only reasons why it is worth choosing ECN brokers to work in the Forex market. It is equally important to understand how the broker earns. For example, the main difference between ECN companies is that their earnings consist exclusively of spreads - the commission that the trader pays for the execution of the transaction.
That is, the broker is not interested in clients "draining" their deposit. Also, ECN brokers do not participate in transactions. The company does not influence the trading process, does not set its own quotation indicators that would be beneficial to it, etc. There is no human factor in ECN technology, so customers get access to real market conditions, and the trader's transaction gets to the counterparty who currently has the most favorable quotes.
As we have already said, ECN brokers cooperate with the world's largest liquidity providers, therefore, the level of liquidity of instruments in such companies is very high. There is no option that a trader will buy an asset, and after a while will not be able to sell it.
In addition, ECN companies, as a rule, provide services at the international level and assume a large trade turnover, so you can trade with them at any time of the day. Another advantage of ECN brokers as intermediaries between the market and the trader is the absence of restrictions. What does it mean?
The ECN company is not involved in the trading process, and traders' trading strategies are not displayed in any way on the broker's earnings, so cooperation with the ECN company assumes that a trader can use any trading strategy, as well as a variety of instruments. ECN brokers often allow the use of Expert Advisors and other software to automate the workflow in trading. Separately, we need to talk about the high speed of execution of transactions. This factor becomes key if a trader is looking for a broker for scalping.
And ECN brokers in this case become unequivocal favorites, because the trader, in addition to being able to use a scalping strategy, gets the highest possible transaction processing speed and access to instruments with good liquidity indicators. Read more: Features of intraday trading on the Forex marketDisadvantages of ECN technologyWhen choosing a broker, it is important not only to pay attention to its advantages but also to know exactly what disadvantages it has.
ECN accounts are no exception, because, despite many positive aspects, they also have a number of disadvantages. These include:A high level of minimum depositECN brokers are often chosen by those traders who already have extensive experience in trading and who have built a trading strategy.
They understand that ECN technology provides many advantages, and are willing to pay for them. Moreover, ECN brokers do not set the most affordable minimum deposit for traders. Difficulties in tradingIt is not so easy to make transactions using ECN technology.
In order to trade and make a profit, a trader needs to understand the principles of ECN, as well as navigate the market, be able to respond to trends and sharp price changes, take into account the news release and analyze the market situation as a whole. Technical analysis instruments can help with this, but they will not replace your own trading experience.
Therefore, novice traders are advised to choose the demo version of an ECN account in order to gain experience and not risk their money, and only then proceed to real trading. Read more: ECN Forex account: what is it? CommissionYes, ECN brokers earn income from spreads, but they can also include a separate, fixed commission per lot in the price list.
At the same time, spreads are floating, their size depends on the market, and it is impossible to calculate exactly how much you need to pay the broker for the execution of the transaction. At the same time, it is definitely impossible to say that a floating spread is a disadvantage.
Professional traders know how to use this factor for their own good and reduce the size of commissions, but it will be quite difficult for a beginner to deal with it. After all, spreads can both narrow and expand in certain market conditions. Whether to open an ECN account or not is not a rhetorical question at all.
To understand if there is a need for it, it is enough to define your trading strategy and understand what conditions are important to you in order to achieve maximum efficiency in working on the Forex market. May 18, IndexaCo. Practical advices on choosing a Forex broker for a beginner. The first task that every novice trader faces is choosing a broker.
There are many companies on the market, but not every one of them is suitable to start your way in trading. Brokers that are suitable for beginners can be determined by a number of criteria. We propose to analyze each of these criteria in order to learn once and for all how a novice trader can choose the first broker to trade on Forex. Broker selection criteria for novice tradersA novice trader should pay attention to the following criteria when choosing his first broker:reliability;deposit;types of accounts;instruments;methods of depositing and withdrawing funds;commissions;leverage;bonuses;training;support service.
Having correctly evaluated each of these criteria, any novice trader will be able to easily choose a broker. Read more: Forex risk hedging: why is it necessary? Reliability of a Forex brokerThis factor is equally important for both beginners and professionals.
Choosing a broker, first of all it is worth checking whether you can trust him. It is not difficult to do this - reliable companies have a license to provide services, they are registered and regulated by special authorities. The license can be either local issued on the territory of a particular country or international. To determine the country in which the broker is registered, it is enough to check the address of the main office: as a rule, it is in this country that the company is registered.
As for regulatory bodies, the more of them, the better for the trader. You can check the availability of a license, the registration address and the presence of regulatory authorities in the "About the company" section. Pay attention to the dates indicated in the last line: in most cases, you can use them to determine how long the broker has been providing services. The exception is brokers who have rebranded and changed the site address, but they are rare.
The longer the company exists, the more reliable it is. This information will help a novice trader distinguish time-tested companies from one-day scam brokers who receive money from clients, and then suddenly close, leaving the would-be trader with nothing. Talking about the safety of the client's capital. In order to avoid worrying about this, we recommend choosing companies with segregated accounts. What is a segregated account? This is an account registered with a bank or other financial institution in the name of a client to which the brokerage company does not have access.
Thus, the trader can be sure that all his money will remain frozen and the broker will not use it for personal purposes. So, to choose a reliable broker, a beginner should focus on the following factors:Availability of registration and license. Which authorities regulate the broker's activities. The term of the broker's work. Does the company offer segregated accounts. If you cannot find the information you need on the broker's website, we recommend contacting the support service and requesting the data you need before opening a real trading account in the company.
Broker's minimum deposit amountThe first thing that novice traders focus on is the size of the minimum deposit. In other words, this is the minimum amount by which a trader can top up his account to start trading. The lower it is, the more accessible the broker is. By the level of the minimum deposit set in the company, it is easy to determine whether the broker is suitable for novice traders. And this is logical - Forex trading involves risks, and the broker does not guarantee that the trader will earn and be able to "recapture" the invested funds.
It is for this reason that Forex brokers for beginners set a low deposit level. Each broker sets the minimum deposit amount independently. Read more: How much can you really earn on the Forex marketTypes of Forex trading accountsBeginners turn to this criteria much less often, and in vain: after all, trading conditions, in particular, the number of available instruments, services and free functions, may depend on the type of account.
However, it is not necessary for beginners to check the trading conditions for each of the accounts offered by the broker. At the beginning of the trading path, it is worth paying attention to two types of accounts:demo account;cent account. A demo account is a virtual account. With its help, novice traders can get their first experience in trading without risking their own money. It is worth noting that it will not be possible to make money on this account, its task is to give the trader the opportunity to practice and see the results of his actions, whether it is a virtual profit or a virtual loss.
When the trader has gained his first experience on a demo account, you can move on to real trading. In this matter, the best broker for beginners is a broker who has cent accounts. Their difference from a regular account is that the amount on deposit is calculated in cents. Accordingly, it is possible to trade on a cent account using tiny amounts, however, the amount of profit will also be small. A cent account is also considered a training account, however, unlike a demo account, it allows you to trade in real market conditions and monitor the psychological reactions of a trader to receive a real loss and profit.
Forex trading instruments and assetsThere are enough brokers on the market that offer a huge selection of instruments, but there are also companies in which the assortment consists of only assets. Which broker is better for a beginner?
Both the one and the other. The number of trading instruments is not a key criterion when choosing a company, but it is still worth paying attention to. The fact is that a novice trader needs not only to gain experience in trading but also to understand which instrument he likes to work with the most and to assemble his own "inventory". And this can be done only if the broker offers a fairly wide range of assets. This does not mean that you should choose a broker that will offer more instruments.
The question, first of all, is diversity - it is important that the company offers not only currency pairs but also, for example, stocks, indices and metals. We advise you to focus on these criteria when choosing a broker. When trading currency, a trader buys or sells the currency that is indicated in the first pair GBP while paying the second USD and earns on the price difference. There are both standard currency pairs and exotic ones, which include non-common currencies.
Cryptocurrency is an extremely popular instrument, the benchmark of which is Bitcoin. This is an electronic currency that is not tied to any country, and you can earn it in different ways. For example, buy and sell on the same day, or buy and wait for its price to rise in order to sell the cryptocurrency more expensive.
Metals - this group includes gold, silver, copper and other metals according to the standard. CFD is a more complex instrument. Its specificity is the ability to trade on the price difference. It works like this: a trader does not need to buy an asset to make money. CFD is a contract between a trader and the owner of an asset, in which a trader can make a profit if the asset price increases from the moment of purchase, or a loss if the asset price falls.
Indexes - this instrument includes several stocks, and its value is the average value of all its components. ETF is also called an exchange-traded fund. In order to earn income, a trader buys a part of a ready-made investment portfolio and receives an equal part of the income from it. Stocks - Traders can also trade stocks of various companies.
Such transactions are already carried out on the securities market, and not on Forex, and it is a little easier to predict their growth or fall. Options are the easiest instrument to understand, but they are not the most reliable.
Options trading is based on bets: in order to make money, a trader needs to bet on whether the price of the instrument will fall or rise. If the bet worked, the trader makes a profit, if not, a loss. Methods of depositing and withdrawing fundsAnother equally important factor that newcomers to the market need to take into account is the payment systems with which the broker cooperates. A wide choice of ways to deposit and withdraw earnings really allows you to avoid difficulties with transactions and choose the most convenient way.
However, payment systems are not only about a comfortable service. Much more important is the speed of crediting funds. Sometimes a trader needs to have more funds in his account to open a new deal that seems extremely profitable to him, and the only solution in such a situation will be the opportunity to make an instant deposit replenishment.
And the transfer speed directly depends on the payment system. For example, transfers through banking systems can take from working days, depending on the bank, so this option should not be considered for instant transfer. Cryptocurrency wallets also take time to process a payment, from 1 hour. But electronic payment systems allow you to top up your account in a short time. And the more electronic payment systems a broker offers, the more convenient it is for a trader.
In particular, an instant transfer makes it possible to start trading immediately after opening a real account. Forex broker's trading and non-trading commissionA novice trader should also pay attention to the commission when choosing a broker. It can be of two types: trading and non-trading. A trading commission is a fee that a broker charges for making a transaction.
It is also called a spread. The spread can be either fixed or floating. A fixed spread is a clearly defined amount that the broker charges, its advantage is the ability to calculate its commission costs. A floating spread is more suitable for professional traders since the amount of commission can either decrease significantly or increase, depending on the market situation. The non-trading commission is a fee for other actions of a trader, for example, account replenishment and withdrawal of funds, for lack of activity on the account, for account maintenance, use of the trading platform and delivery of quotes.
A non-trading commission is optional, a broker may not charge traders, but all brokers have a trading commission, and the only question is its size: the lower the commission, the more profitable it is for a novice trader to cooperate with the company.
As a non-trading commission, it is taken into account whether the broker charges clients a fee for withdrawing earnings to their personal account. This commission may also be charged by the payment system, and not by the broker directly.
Keep this in mind when opening an account. Read more: Demo account with a Forex broker: is it worth using? LeverageWhen describing trading conditions, brokers specify such a parameter as the amount of leverage. What is it and does a novice trader need to take this criterion into account when choosing a company? Leverage is a function that helps traders increase the size of their deposits by using the broker's money.
How does it work? The use of leverage seems to be very profitable for beginners because with its help you can increase your profit, but not everything is so simple. Indeed, leverage can increase the income from the transaction, but it also increases the number of losses if the transaction turned out to be a failure.
Brokers set different maximum leverage values: from to and more. But this does not mean that a trader necessarily needs to use such a function. When opening an account and in its settings, the user can set the desired amount of leverage. Novice traders are recommended to set leverage of to avoid possible losses and practice trading at their own expense.
We recommend checking the use of leverage on a demo account to understand how it works and not to risk your own investments. Broker's bonus programsThe broker's bonus programs are a plus for a trader with any trading experience. The bonus is usually used only for trading purposes, in rare cases, it is available for withdrawal. The amount of the welcome bonus may vary depending on the conditions that the company sets for the bonus program.
It often depends on the amount of the first deposit to the account: the higher it is, the more the trader receives bonus funds to the account. In addition, companies may offer other bonus programs. Brokers also offer an affiliate program, for participation in which you can receive additional income to your trading account. According to the standard, a trader needs to invite new users to the company using an individual referral link.
For each of the attracted traders they are also called referrals , the trader receives a financial reward. Despite the fact that bonus programs allow you to earn additional income, you should not consider them the easiest way to earn money.
None of the bonus programs will give you experience in Forex trading, and you should use them only to get additional funds to your account. Read more: Copy trading or auto trading on ForexLearning the basics of the Forex marketThe best broker for a beginner is the one that provides opportunities for learning.
It is as simple as possible to check this criterion - just look at the main page of the company. Useful information is usually found in a separate section called "Training" or "Education". Often, the FAQ section, which contains answers to frequently asked questions from traders, is no less useful for beginners. But this information is more often related to the trading conditions and services of a particular broker, and there are no trading tips in this section.
Read more: Stock market Broker: how to choose it and how to work with itSupport serviceCommunication with the support service is another criterion underestimated by beginners. Trading conditions are undoubtedly important, but practice shows that at the stage of acquaintance with the Forex market, beginners have a lot of questions, which the customer support service helps to solve.
The trader's comfort largely depends on the speed of its operation and the availability of convenient communication methods. A call is one of the fastest ways to communicate, but when calling, it is worth considering whether the broker offers a toll-free number for communication.
It is worth sending a letter to email if the question is thorough for example, related to finances and not urgent since the answer to the email can come both within 15 minutes and within a day. Online chat is the fastest and most convenient way to solve any issue. The average response time in an online chat is no more than 10 minutes. The feedback form, as well as an email, takes time and is not suitable for solving urgent issues.
The callback function allows you not to spend money to call the company. Instead, the trader needs to leave a request, and the support service will contact the client itself. In addition to the speed of response, it is also worth paying attention to the professionalism and level of service of the broker's employees. This factor makes it possible to distinguish a reliable company from scammers, since proven brokers offer assistance in solving any questions, and the answers of the support service are correct and aimed at solving the problem.
While short and not informative answers often indicate that the broker is not interested in a long-term cooperation. Read more: Forex broker: how to choose a good brokerExpert opinion: what else to pay attention to when choosing the first brokerOf course, reviews play an important role in choosing a company: the more positive reviews about a broker, the higher the probability that he can be trusted.
At the same time, companies with a small audience should be avoided if possible. Before opening an account with any broker, it is also important to carefully read the user agreement: it specifies how the broker solves disputes with clients. It is important to know this so that, if necessary, the trader can protect his rights. Pay attention to the broker's website: the more specific information is indicated there, the more reliable the company is. The lack of important information is the first alarm call that it is better to bypass this broker.
Currencies are perfectly combined, complement and compensate each other: the franc gives the pair stability, predictability and pliability to any type of analysis both technical and fundamental work well , while the New Zealand adds volatility. Despite the absence of the US dollar, it still implicitly participates in the auction, since the conversion of one currency into another does not go directly, but through it.
The course is displayed as standard up to 4 characters after the separator 0. Opening the long-term chart, you can see that in general, the price moves up and down with some frequency and a large amplitude in the range from about 0. The currency pair is flat most of the time and only occasionally there are strong bursts of activity up or down, as a result of which the price quickly passes hundreds of points, and then, as a rule, also quickly returns back.
This pair is not characterized by long trends that continue for many years in one direction. The overall volatility of the pair varies greatly from time to time, in some periods it becomes very active and overcomes pips per day, in others it fluctuates very slightly, falling short of a hundred. If we look at the intraday dynamics by the clock, it will be from to GMT in the Pacific session and at its overlap with the start of trading in Tokyo, Hong Kong and Singapore, as well as from to GMT in the European session, and especially from to GMT at the overlap with the American.
Despite the fact that this is a cross-pair, the presence of a "Swiss" makes it quite predictable, stable and well amenable to fundamental analysis, which greatly facilitates the preparation of a forecast. The dynamics of the pair is well predicted on both medium-term and short-term charts, despite the fact that during the trading day it may change direction 2 or even 3 times. Low liquidity forces brokers to set decent spreads on this financial instrument about points , which, coupled with not too high volatility, makes scalping on this pair unprofitable and difficult.
It is much more profitable to keep positions open for several days or even weeks, which, with a passing trend movement, allows you to earn more on swaps. Due to the fact that the pair is not widespread, it will not be easy to find ready-made analytics, but it is possible, for example, in thematic sections on trading forums. However, the undoubted advantage of this pair is its relative predictability and the ability even for an inexperienced trader, after a little research of the available data and the most important factors, to make his own forecast accurately enough.
New Zealand is a small island nation to the southeast of Australia, living by exporting services, oil, agricultural products and international tourism. Located in a mountainous area, it is surrounded on all sides by the European Union, but, nevertheless, it is not part of it itself. The country is divided into administrative units — cantons 20 and semi-cantons 6 , and has several official languages at once French, German, Italian, Retro-Romansh.
By sector, the Swiss economy looks like this:Services account for about International investments play a crucial role for the Swiss economy, and tourism plays an important role. Of the factors most affecting the dynamics of the New Zealand dollar against the Swiss Franc, it is necessary to highlight:the world price of gold;oil prices;trade balance of New Zealand and to a lesser extent Switzerland ;economic indicators of both countries, as well as the European Union, the USA and Australia;the volume of investments in the Swiss economy;Central Bank rates;change in the inflation rate;prices for agricultural products;weather and climatic conditions in the area of New Zealand to a lesser extent, but also relevant for Switzerland.
Features of the currency pairDespite the fact that the stability of the Swiss economy has significantly shaken in recent years, the franc still remains one of the most stable currencies in the world, and its presence in the pair makes it much easier to predict the exchange rate and fundamental analysis, since all the emphasis can be shifted to the study of factors affecting another currency.
Circumstances allow carry-trading on this currency pair because the difference between the refinancing rates of the participating countries is quite large 1. Today, the swap sizes are equal to: The values are not large at all, but nevertheless allow you to receive a small additional income under certain circumstances.
For professionals working on long-term timeframes D1 and more , Price Action indicator-free trading and its various varieties have proven themselves well. Since, as noted above, in the long term, the price moves up and down, almost always returning, potentially the most profitable, but at the same time the riskiest strategy will be martingale trading.
May 15, IndexaCo. The Canadian dollar to Japanese yen cross-pair is not one of the most popular tools among forex traders, however, due to some of its advantages, it has a certain number of fans who earn good money on it. The average volatility of the CADJPY chart makes it possible to get decent earnings without big risks in medium- and long-term trading. The exchange rate chart shows fairly long trends, which makes working with the currency pair quite predictable and stable.
In this pair, the dollar is the base currency, the dynamics of the currency pair directly depends on its exchange rate. The yen, as a quoted currency, affects the currency pair in the opposite direction, the growth of the Japanese monetary unit leads to a decrease in the value of the quotes of the currency pair. Since the Canadian dollar is purchased for yen, quotes for CAD JPY are displayed with an accuracy of two decimal places for example — Fans of long-term sessions are advised to analyze the situation during the European session the first half of the day in order not to be distracted by short-term dynamics.
It is known that the Japanese economy, firstly, is highly dependent on raw material prices, and secondly, is largely export-oriented. Therefore, the Japanese authorities strictly monitor the exchange rate of the national currency, and even in the recent past, the famous currency interventions of the Bank of Japan took place. The Canadian economy is also largely export-oriented, where the main trading partner is the United States, but imports from Asian countries also take place, so Canada does not seek such a significant weakening of the national currency as Japan.
Both economies depend on the situation on the raw materials market, but Canada not only imports it for the needs of industry, but also exports it timber, wheat, oil. The land of the rising sun has very limited reserves of its own raw materials, which in no way can cover the needs of a developed industry, therefore it is forced to buy it in large quantities.
The influence of fundamental factors on this pair is very large, but it is better not to rely heavily on technical analysis especially in the long term. Today, economic news has a big impact on the pair, especially related to trade balances, oil prices and changes in Central Bank interest rates first of all, Canada, since the Central Bank of Japan has been holding a low interest rate up to negative for a very long time. At the same time, there is an economic recovery, both in Japan and in Canada, and the importance of US policy may be exaggerated.
Imports increased by only 0. In Japan, total exports grew by 5. The Canadian dollar is highly dependent on the US dollar. Two huge countries are trading partners, the collapse of the economy of one of them will certainly pull down the second. When analyzing the Canadian dollar, it is necessary to take into account the American economy.
Canada ranks 5th in the world in terms of popularity among tourists, so the tourist business significantly affects the local dollar exchange rate. Moreover, tourism in Canada is year-round, so it should always be taken into account. With a competent approach, you can make decent money on this. If the well-being of the citizens of the world's leading powers improves, then they have more opportunities to go on vacation to Canada, and the currency of this country is strengthening. Conversely, international crises and unrest worsen the quality of life of potential tourists, there are fewer guests in the country we are interested in, the CAD is weakening.
The indicator of the national currency reacts sharply to the dynamics of the cost of raw materials. Situation analysis also requires taking into account the weather conditions in the countries. Various elements negatively affect both currencies for completely different reasons. In Canada, the weather rarely deteriorates, infrastructure collapses even less often because of it, but any negatives cause an outflow of tourists, and hence income to the budget.
In Japan, the elements are raging more often, have serious consequences and can scare away large investors who want to contribute to the country's economy. Almost all major brokers host calendars of important financial events and news that will be a good help in trading and forecasting for this currency instrument. Since Forex trading takes place around the clock from Monday to the end of Friday, and a high spread will not allow scalping, there is not much point in talking about the dynamics of the exchange rate and the level of volatility in the context of specific trading sessions within the day, but if someone is still interested, then the main trades for this pair are conducted in the American session and to a lesser extent degrees in European London and Asian after the opening of the Tokyo Stock Exchange.
Fans of "trading for a breakdown" can enter the market at the opening of the American session at GMT or at its overlap with the European one. A significant spread caused, as in other cross-pairs, by double conversion Canadian dollars are changed to American dollars, and only then yen is bought for USD. The "piper" is unlikely to be able to recoup his trade at all, even despite the high volatility. The issuer is the Bank of Canada. It is a "commodity" currency unit, since the economy is dependent on exports of timber, energy and oil.
The Loonie is strongly influenced by the neighboring country of the United States and its economic component. JPYThe Japanese yen is the third largest trading currency in the world. Its issuer is the Bank of Japan. The "safe haven" currency got its nickname due to the low level of inflation, plus relatively high economic stability.
Low interest rates make it possible to maintain a low value in relation to other currencies. The monetary unit is often used in trading operations, especially in Asia. The government's support of a low exchange rate is a historical tradition that creates favorable conditions for exporters and contributes to economic growth. Like most other cross-pairs, this one also behaves quite unpredictably, and it is not known which is easier: to make a forecast yourself or try to find analytics on the network.
Let's figure out these difficult questions and find the answers. General characteristicsThe British pound sterling - Australian dollar is a currency pair that is not very common among most Forex traders. A significant spread in this, as in most other cross pairs, makes it little suitable for scalping, however, due to rapid and sharp price movements in both directions in a short period of time, intraday short-term profitable trading strategies are quite acceptable.
By strictly focusing on these eight countries, we can take advantage of earning interest income on the most creditworthy and liquid instruments in the financial. The forex market is primarily driven by overarching macroeconomic factors. These factors influence a trader's decisions and ultimately determine the value of a. Ever wonder how much the top forex traders make? We discuss in this article and review how you can earn more trading.