Forex Trading Strategy : MACD + ADX Trading Strategy

 

This simple trading strategy can be applied to any instrument on any time frame. This strategy using two ocillator, ADX with 16 period setting and MACD setting of 3, 9, 16. Some say that a trend indicator alongside an oscillator is the most efficient combo.

Any of these three pair suits the strategy: EUR/USD, GBP/USD, AUD/USD. Experienced traders/investors stick to these ones because majors have more predictable behavior, and tech analysis works much better on them. Recommended time frame should be on shorter period.

To open a position, start by analyzing the activity of ADX with period 16. Make sure you choose correct settings when adding the indicator to the trading terminal.

Signals in the strategy do not differ from "classic" ADX signals. As you know, the author claims that a crossing of +Di and -Di as it is already gives a market entry signal. For example, if +Di crosses -Di from below, this is a signal to buy, and if -Di crosses +Di from above, this signals to sell.

+Di and -Di show the difference between today's and yesterday's high and low. So in the first case, when +Di goes up, the trend must be ascending because today's highs are higher than yesterday's. Hence, buying is the best option in such circumstances. Meanwhile, when -Di values go down, we can conclude there is a bearish impulse and get prepared for selling.

Read more MACD + ADX Strategy 

 

EURO Week forecast : Geopolitical Risks and an Increasingly Hawkish Fed, ECB on the Sidelines

 

EUR/USD 1 Hr Chart

The one-week implied volatility of the EUR/USD has reached its highest level since the middle of December, following reports last Friday that US intelligence suggested Russia could invade Ukraine this week. If tensions between the two countries continue to rise, the single currency may be vulnerable to a rapid selloff.

Markets dislike uncertainty, and the prospect of an invasion destabilising European politics and economic dynamics could cause traders to flee the eurozone. Crude oil prices are also rising as a result of supply disruption concerns between the West and Russia, which is also a key player in OPEC+. Higher oil prices could also pose a problem for the European Central Bank (ECB).

Since the ECB's February monetary policy announcement, ECB President Christine Lagarde has spent the majority of her time downplaying increasingly hawkish expectations. Earlier this month, this resulted in a brief 2-day surge in the Euro. Even one of the more dovish central banks has begun to acknowledge the global inflationary trend.

Nonetheless, the ECB President warned that if the central bank "acts too quickly now, the recovery may be weaker." She may make similar remarks during a European Parliament debate on Monday. This could further erode the Euro. Traders will also be looking at Eurozone GDP and industrial production figures. This week's speakers will also include ECB Chief Economist Philip Lane.

Traders should also keep an eye out for incoming FOMC minutes, which may echo the central bank's increasingly hawkish rhetoric. This could destabilise market sentiment and give the US Dollar a boost, leaving the Euro vulnerable. Loretta Mester, president of the Federal Reserve Bank of Cleveland, and James Bullard, president of the Federal Reserve Bank of St. Louis, will also speak.

Read more.....Forecast

#EURO #forexforecast 

 

How to Trade With Leverage in Forex

What is Leverage 

Leverage means the ratio between the money you own and that borrowed from the broker. Different brokers offer different leverage sizes, which also depend on the market you are trading. On Forex, you can easily find brokers offering up to 2000:1 leverage, and there's one that claims to offer unlimited leverage to its clients. In the stock market, meanwhile, you'd barely come across a broker that offers over 20:1 leverage. 

Leverage in Forex 

 Leverage got especially popular in Forex, as it is less volatile, and one needs to have their funds leveraged in order to boost the performance, and, subsequently, the profits. The EUR/USD, for instance, moved just 1.10% in May, which would have returned you a 1.10% profit without leverage (1:1). Over the same period, Tesla yielded 14% profit to the shareholders. This way, once the Forex brokers stop offering leverage, the gains in the market will get ridiculously small for the retail traders, and those will have to move the money elsewhere. 

How to Get Leverage 

 A broker will grant you leverage once you deposit your own funds on your account with that broker. Those funds are called margin, and they act as collateral for the loan money you get from the broker. Every broker has its own minimum deposit limit; in many cases, it is as little as $10. Some even don't require any: you just get a welcome bonus, 'free money' that acts as margin. 

Leverage and Expenses 

When trading with a broker, you as a trader always have to pay commissions on every trade you make. The commission or fee may be priced in spread or may be paid apart. Besides, when rolling a position overnight, you will have to pay the swap. Without leverage, those fees can be barely seen in the statement, but when you do use leverage, they become a few times larger. Let's assume you open a USD/JPY trade with a 1:1 leverage and a $1,000 deposit. With the smallest lot size, 0.01, and a spread of 1.90 pips, you get a ridiculous $0.17 fee. Once you have moved to a 100:1 leverage, however, you will be able to open a 1-lot position, and, considering this, the fee will increase to as much as $17.48. Thus, larger leverage leads to larger expenses. 

Advantages of Leverage 

Leverage is so much popular in Forex because, without it, you won't earn as much in Forex as in stock market over a certain time frame. Leverage increases the capital you can operate, thus boosting your performance and ROI. Look at the above example: suppose you opened a EUR/USD trade on May 1 and closed it on may 31; this would have yielded you 1.10% profit. With Tesla, you would have earned nearly 14 times more. That's why, if you don't use leverage in Forex, you don't want to trade Forex at all! 

Leverage Risks 

 Unfortunately, not every trade results in profit. Sometimes, you will certainly have losing trades, and in this case the leverage will magnify your losses. Say, you went long on EUR/USD with a $1.200 deposit, the price is 1.1200, and your lot size is 0.01 (micro lot), each pip thus costing $0.10. Then the price fell to 1.190, and in case you decide to close your position, your loss will be as little as one dollar! With 100:1 leverage, this would be a different story. You would have most likely gone one lot, and a 10-pip fall will now cost you as much as $100. Your profit and loss size, therefore, is strictly bound to the leverage size; with more leverage, you earn more and you lose also more! 

Conclusion

• Leverage allows you to trade with an amount, which is sometimes dozens or even hundreds of times larger than your deposit. 
• In order to get the leverage, you need to deposit some funds on your trading account, those funds being your collateral, or margin. 
• Using leverage increases your trading costs and expenses.
• With leverage, you can boost your performance and ROI drastically.
• When using leverage, you as a trader must be aware of the risks that may arise once the market starts moving against you.
  

 Read more Roboforex-trade-with-leverage

 

Forex Top 4 Currency Pairs Trading Daily In The Forex Market

This article provides a brief overview of seven important currency pairs traded on the Forex market. These are the most popular pairings among traders and investors, and they have great liquidity and low spreads.

EUR/USD (EURO vs Dollar)

The Euro (EUR) is a single European currency that was introduced in 1999 to replace all national currencies in the European Union. Given its status, the EUR is a reflection of the state of the European Union's economy and is highly sensitive to European macroeconomic figures.

The EUR/USD pair leads the Forex market in terms of daily trading volume, accounting for about 20% of total trading volume.

The EUR/USD rate depicts the current exchange rate between the currencies of the EU and the United States. If the pair is increasing in value, it suggests that the EUR is becoming more valuable against the USD, and vice versa. The EUR/USD rate is heavily influenced by economic and political news from these regions.

The EUR/USD pair began trading with a downward trend and eventually touched an all-time low of 0.8200. The pair rose steadily for several years following that, reaching an all-time high a little above 1.6000 in 2008.

                                EUR/USD Monthly Chart

Later, because of crises and other problems in Europe, the pair plummeted. The EUR/USD has a lot of liquidity, low spreads, and a daily volatility of around 80 pips.

GBP/USD

The British Pound (GBP) is the official currency of the United Kingdom. It is one of the world's oldest currencies, having first appeared in the twelfth century. The expansion of economic links between Britain and its colonies necessitated the creation of a trustworthy currency for settlements.

GBP/USD is a currency exchange rate between the United Kingdom and the United States. The pair accounts for 15% of the overall trading volume on the currency market. GBP/USD is referred to as "cable" in foreign exchange slang. The phrase stems from the days when currency quotes and other data were communicated via early telegraph cables that were laid between London and New York.

GBP/USD Monthly Chart

The base currency is the British Pound, whereas the quote currency is the US Dollar. If the pair rises, it indicates that the GBP is becoming more valuable against the USD, and vice versa.

The British Pound is seen as a risky speculative currency, resulting in high GBP/USD volatility of around 100 pips each day. The price charts frequently show a number of false breakouts of support and resistance levels due to pair fluctuations.

USD/CHF

The Swiss Franc (CHF) is the country's official currency, which first arose in the seventeenth century to replace a variety of coins that had previously been used for settlements.

The Swiss Franc is regarded as a "safe haven" asset in Europe due to its extremely trustworthy banking system and neutrality in European military wars. As a result, demand for CHF surges during times of crisis.

With a 5% share of overall trading volume, USD/CHF is among the top four most popular currencies on the Forex market.

USD/CHF Monthly Chart

The economies of the United States and Switzerland are compared in the pair dynamics.

The base currency is the US Dollar, while the quote currency is the Swiss Franc. If the pair rises, it suggests the US dollar is gaining strength against the Swiss franc.

Economic and political news from the United States and Switzerland influence the pair's movements. The pair tends to decline during global financial crises when the Swiss Franc becomes more costly, as it is a "safe haven" asset. High liquidity, low spreads, and daily volatility of 50-70 pips characterise this pair.

USD/JPY

The Japanese Yen (JPY) is the Japan country's official currency. As a result of the 1871 monetary reform, it became the most important currency unit in the nineteenth century. In Asia, the yen is regarded as a "safe haven" asset.

The USD/JPY is the third most popular currency on the Forex market, accounting for just under 15% of daily transaction.

The base currency is the US Dollar, while the quote currency is the Japanese Yen. If the pair rises, it suggests the US dollar is strengthening versus the Japanese yen, and vice versa.

JPY, like CHF, serves as a "safe haven" asset in times of crisis. As a result, when stock markets crash and JPY becomes more costly, USD/JPY tends to decline.

When stock markets rise, the pair usually rises with them. High liquidity, low spreads, and daily volatility of roughly 70-80 pips characterise USD/JPY.

USD/JPY Monthly Chart