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

Is gold having a reversed USD direction once again?

In a time when uncertainty heightens due to the worsening US-Sino trade relationships and the instability of the Turkish political scene and economy, in a time when stock-markets drop one would expect the bullion to emerge as a safe haven, have increased demand as well as prices that rally. However that was not the case in the past few days. On the contrary, the price of the precious metal dropped by almost a 100 USD and set an 18 month record low price of 1160 USD.

So has the precious metal lost its shine, is it no longer to be considered as a safe haven? Analysts, saw a positive correlation between the S&P 500 and gold for the past few days. We would also share the opinion that there seems to be a negative correlation between the USD and gold at works in the past few days. If the USD strengthened due to the tensions of the US-Sino trade relationships, as well as the worsening Turkish-US relations, then one could interpret it as a sign that the market may be seeing the case for the US economy to be in an elevated position against its rivals and being able to overcome victoriously both fronts. It would be evident that as on Wednesday, the USD had reached one of its peaks, gold reached one of its lows, while on Thursday as the USD seemed to stabilize or even weaken somewhat during the Asian session, the bullion’s prices seemed to recover, as if it was confirming the negative correlation between the USD and gold once again.

Other analysts, also raised the idea that gold may have been for sale by central banks for emerging countries. An idea which could make some sense if they would try to monetize dollar reserves in order to support their currencies, as in the current situation. Also, analysts point out that gold’s nature may have changed over the years and may no longer be so sensitive to geopolitical changes, but feeds more on news regarding the actions of central banks, especially the Fed’s. In both cases, the arguments for the negative USD-Gold correlation could remain intact if not strengthen. Apart from theorizing, it should be noted that daily average trading volumes for gold in Turkey doubled recently and probably in face of the country’s ongoing crisis, we could expect an increase in demand for the precious metal, at least locally. Also uncertainty could be rising in gold mining as South African Unions have rejected the latest pay increases offered from four producers as negotiations were drawing to an end. Talks could resume next week however the outcome remains uncertain. Sticking to South Africa and gold mining, bear in mind that Gold Fields Ltd has to come up with another plan to save its massive South Deep mine and further negative headlines could influence gold’s prices. On another positive note for gold, on Wednesday Australia’s Perth Mint is about to launch a new gold backed ETF on the NYSE, practically testing the investor’s appetite for the bullion.

Gold tumbled in the past week, reaching the 18 month low of 1160 USD support line, however rebounced and tested the 1180 resistance line today. The precious metal’s price action remained below the downward trend line, incepted since the 10th of August and tested it with little success, three times, with its latest try being today. Hence, technically we retain a bearish bias currently, for gold’s prices and in order to lift in favor of a sideways movement or even a bullish market, we would first require the bullion’s prices to break the prementioned downward trend-line. We would also like to point out, that the RSI indicator in the 4 hour chart remains near the reading of 30, implying a relatively overcrowded short position. Should the bears continue to drive the market, we could see the pair breaking once again the 1170 support line aiming for the 1160 support barrier. On the other hand should the precious metal’s price direction be dictated by the bulls, we could see the pair breaking the 1180 resistance line opening the way for the 1192 resistance hurdle maybe even taking an aim of the 1208 resistance area.

PFXS news for week ahead

Since we do not expect any major releases during Monday, let’s immediately talk about highlights on Tuesday.

Tuesday – China is to release its Industrial Production which is expected to accelerate to +6.3% from previous reading of +6.0%. Also, we get China’s Retail Sales growth rate forecasted to remain on hold at +9.0%. As we already know, China announced new tariffs on US products and tripled its products. On other side, on European morning, we can expect the German GDP expected to move higher to +2.6% since previous +1.6%. We can also get the German CPI rate forecasted to remain on hold at +0.3%. Then we get the UK’s Unemployment rate for June who is expected to remain on hold at +4.2%. This highlight can affect to create volatility for GBP pairs. British Pound has weakened because of Brexit events and if this “No Brexit Deal” is confirmed we can expect GBP dropping even further. From the Euro-zone we can get the German ZEW Economic sentiment expected to drop from previous read of -24.7 to -19.1. (This happening can be very important and good news for EUR).

Wednesday – We get Australia’s Wage Price Index. The figure is forecasted to advance to +0.6% from previous +0.5% (Asian session). If this news happens, we could see the AUD and NZD strengthening. The main reasons behind a possible strengthening of the Aussie and the Kiwi, would be Australia’s wage growth continues to be low and stable across most industries in Australia. In statement in August 2018 we see a possible strengthening of the Aussie and the Kiwi, would be Australia’s wage growth continues to be low and stable across most industries in Australia. The UK Inflation data is to be released. The CPI figure is forecasted to increase from previous +2.4% to 2.5% (European session). The monthly figure is forecasted to drop to -0.1% from previous +0.4%. Also, we get the American Core Retail sales and the Retail sales both for July. The Core Retail sales are expected to remain on hold at +0.4%, and the Retail sales are expected to decelerate to +0.3% (US session). If the outcome is released as forecasted we could see a weakening of the USD. On the other side, we get UK Retail Sales which are expected to accelerate to +0.2% from previous reading of -0.5% (European session).

Thursday – We get Australia’s Unemployment Rate. The rate is widely expected to remain At +5.4% (Asian session). After that, we get the US Housing Starts for July. The indicator is expected to increase to 1.250 M (American session). The USD seemed to regaining some strength it lost at the beginning of the week. USD is superior over emerging market currencies! (Even we have actual trade war).

Friday – We can get Canadian Core CPI rate for July. Expected level is 0.1%.