Forex trading rules

If you are a novice you may want to utilize a Forex EA since even the most experienced traders can make errors when the market goes against common wisdom. In 2004/2005 The USD/ EUR kept rallying, going up from a low of 1.2000 to 1.3600 in a two month period. Experienced traders using the fundamentals couldn’t understand it, because all the signals pointed to a strong dollar. Some of them saw the coming shift but they reacted too early. In Forex trading even if you have the best fundamentals in the world and you miss the timing, your wrong and you lose money.

Because Forex is so heavily leveraged, the people took large hits because they kept thinking the trend would buck. If reality starts to tell you something your analysis is not agreeing with, a modest stop to avoid further losses is preferable.

Even though most people enter these accounts with the benefit of leverage offered by their broker, most people get educated about Forex analysis and hope to get The Big Score as if the analysis itself is a set of magic money making formulas. Say you violate the rule and decide to risk 50%. That particular day you lose $500 dollars, leaving you with $500 dollars in capital. You would have to make %100 return on the next trade just to break even. One more hit, and you’ve lost all your money. By Forex signals, or even by having someone more experienced use a Forex Trade Copier you can make money if you adhere to the 2% rule. Just like a %100 gain is near impossible, it’s also nearly impossible to lose 20 times in a row. However, even if that came true, by sticking to the 2% rule, you still have capital to ride through until the next gain.

While some of the following rules are self-evident with any trading practice it is good to have all ten in a quick list. Some of them are a bit specific to the industry and you need to work on them as try to enter the Forex Market. With all of these, it is a good idea to consult a Forex Broker to have them explained in detail.

Never Risk More Than 2% per Trade

Service is too expensive?

How many times you said “Service is too expensive, I can do it myself!” ?
Price is always the best excuse. It is understood that no one likes to pay. It’s mostly painful when something is to be paid!
The price of this service is nothing but an investment to help you make money on the market instead of losing it! This requires the formation of a genuine investor mentality and approach.

Of course, those hundreds of users who use our services did not come to us because they like to throw money…

In this business you can make the most progress if you find a good signal provider, someone who is already at the level that you want to reach. There is always a price that you have to pay in advance, so you can enjoy the freedom and quality of life that this activity can provide later.

Is the US Dollar heading towards turbulence?

The FOMC interest rate decision is to be released today and the market widely expects a rate hike. Currently, fed funds futures suggest that traders priced in a 98.7% probability for an increase by 25 basis points of the current interest rate of 1.25%, reaching the 1.5% level. The arguments for such a rate hike are based on strong US economic data such as a reduced unemployment rate as well as favorable economic forecasts for growth. Since the rate hike is already anticipated by the market, focus may not be on the decision as such but on the statement accompanying the decision, the dot plot of the Committee and the following press conference. Any comments about the forecasts and the economic outlook for 2018 will gain on interest as it may enable the market to predict further rate hikes. Media reports and various analysts currently suggest three, some even four interest rate hikes in 2018. We see the case for the Fed to issue a rather optimistic statement, however we also recognize the possibility that the Fed may to opt to issue an optimistic albeit more neutral statement as it may currently want to retain flexibility in anticipation of the incorporation of the new tax plan into its models. As for the actual rate hike our opinion aligns with markets anticipation of a 25 basis points interest rate hike today.

On the political stage Democratic candidate Dough Jones won the special Alabama election for the senate. This result would shrink the Republican majority in the Senate for the tax overhaul to 51-49, meaning that, should only one republican switch sides the tax plan could be in jeopardy.

EUR/USD fell yesterday and briefly tested the 1.1725 support level only to rebound and continue to trade at previous levels. Should the bulls take the reins the pair could break the 1.1820 resistance level and test for the
1.1880 zone. Should there be any negative surprises in the FOMC decision or statement, the pair could break the 1.1725 support level test the 1.1680 support territory and even aim for the 1.1550 support barrier. As for today’s other economic data, In the UK, the unemployment rate and the average weekly earnings excluding bonus data for October will be released during the European morning. The unemployment rate is forecasted to tick down while average weekly earnings excluding bonus are expected to remain the same. Data gets increased attention as it is being released one day ahead of the Bank of England’s interest rate decision and one day after the release of the slightly increased inflation data and may influence the cable.

Cable experienced increased volatility yesterday as the inflation data were released. The pair remained within the lower support level of 1.3300, which it tested briefly and the higher resistance barrier of 1.3400. Should the bulls take the driver’s seat, cable could break the 1.3400 resistance level and aim for the 1.3455 zone, while should the bears take the reins the pair could break the 1.3300 hurdle and test the 1.3260. From Germany we get the final CPI and HICP data for November which are not expected to change since their last reading.

We also get Eurozone’s industrial production for October which is forecasted to accelerate. From the US besides the FOMC decision today we also get the CPI and Core CPI rates for November. The CPI rate is expected to accelerate on a year to year basis by 0.2% while the core CPI is forecasted to remain the same. These rates may gain on importance as they will be released ahead of the FOMC decision. Later on, crude oil inventories will be released and they are forecasted to have reduced, however on a lower amount than previous week.