Online trading costs

In general, a trader could incur the following costs and personal expenses:

1. Personal expenses: Your time, trading books, lessons, personal tutor, internet costs, computer depreciation, office costs, bots, etc...
2. Broker-based commissions, spreads and platform fees. 

Overnight and over weekend fees or refunds. 

Platform fees. Some brokers may charge a fee for using their platforms. Not very common these days though.

Slippage. Normally in volatile markets, the price may change from the moment you put in the order to open a position until the time it actually executed. Slippage can work in your favour or against you depending on the direction of price movement.

Commissions are payments to your broker generally as a percentage of your trade size and different trade sizes may incur different commissions, often referred to as tiers.

The spread is the difference between the broker’s buy and sell prices for any given commodity, stock or currency pair in pips. The buy and sell spreads are different; a complete list of spreads can usually be found on the broker’s website.

Missing on gaining interest by simply putting your money into a saving account.

To be successful in hedge trading

The correlation between different markets always changes. So we should review the charts constantly to see if the correlation changes or not.
Looking at the following picture, we will notice how nicely #Gold and #BTC have been correlating during the past few months.
To lern more about hedge trading please also read the following posts from this weblog:

The importance of correlation in hedging

Hedge Trading

Mental and Physical training for Forex traders

If you are a Forex trader, you probably made some choices that you regretted after. You can probably think of many examples when your thoughts or your emotions got in the way of your trading performance.

Imagine these situations:

1. You closed a position in loss and the price direction changed after.
2. You see a movement in price and open a position in a hurry which ends up losing a lot of money.
3. Closed a position in a little bit of profit, despite the fact that your analysis predicts more profit.
4. In case of copying other people, you stopped copying after a few losses and then that trader started making more profit.

And many other times that your emotions cost you a lot of money.

 If you want to increase your stress capacity, Mental training increases your trading performance potential. And like many other skills, you can be perfect by practising it.

Goals in mental training:

• Eliminate doubts and worries that might get you out early from a trade or lead you to move your stop loss when you do not need to.
• Increase your stress capacity.
• Healthier life.
• Increase in concentration.
• Manage your feelings pre, during and after trading.

To manage feelings of fear, anxiety and stress in regards to achieving the above-mentioned goals we can do the following exercises:

• Regulate your breathing. You can even download apps at the beginning to help your breathing techniques.
• Add Yoga to your daily routine.
• Schedule your trading hours and include some rest times.
• Give yourself some days off. Or simply do not think about trading during the weekends.
• Go to holidays to refresh your mind.
• Prepare a trading strategy and only follow that.

Link to video

The importance of correlation in hedging

Definition:

Knowing the definition of correlation can be very helpful in FX trading.

Correlation is a mutual relationship or connection between two or more pairs.

The value of a correlation coefficient ranges between -1 and 1.

The greater the absolute value of the correlation coefficient, the stronger the linear relationship will be.

The strongest linear relationship is indicated by a correlation coefficient of -1 or 1.

A positive correlation means that if one pair's price rises the other pair tends to rise and vice versa.

A negative correlation means that if the price of one pair rises, the other pair's price will fall.

Use of correlation in hedging:

Hedge traders use pairs with correlations to hedge fund against each other. This means that they open two positions which have a good absolute correlation at the same time.

This will reduce the risk but also reduce your chances of gaining more profit.

You can't find pairs with 100% absolute correlation. But there are many pairs with correlation very close to 100% (-1 or 1). If the correlation is high (normally above 80) and positive then the currencies move in the same way. If the correlation is high (normally above 80) and negative then the currencies move in the opposite way.

• Use of pairs with positive correlation:

If you want to use pairs with positive correlation for hedging, you should by a pair and sell the other pair.

• Pairs with negative correlation:

To get the advantage of hedging using pairs with negative correlation, simply buy or sell both pairs. This means if one pair goes up the other will goes down. 

Some of the pairs with negative correlations:
This may change, so always check the recent data and graphs.

#EURAUD - #AUDJPY
#EURAUD - #AUDUSD
#EURAUD - #AUDCAD
#EURAUD - #SGDJPY
#EURAUD - #NZDJPY
#EURAUD - #USDSGD

#EURUSD - #USDCHF

Some of the pairs with positive correlations:

#EURUSD - #GBPUSD

#AUDUSD - #EURUSD

#GOLD and #OIL

Gold and Oil's correlation is different from the FX pairs.
Gold and Oil normally have a good positive correlation on longer timeframes like weekly time frames. The reason is that investors are looking at Gold as a safe haven in financial crises.

There is a reliable scenario: If the price of Oil goes high, the inflation goes high. During the high inflation, investors tend to invest more in Gold. This will cause the gold price to rise.

In shorter time frames we can not see any correlation between these 2 though. You may notice during a period of time they have negative correlation and on some other days no correlation at all.

Risk management

If a trader doesn't know the correlation he or she may increase the risk. Imagine someone opens 2 buy positions with 2 pairs which have a positive correlation. This means if one pair hits the stop loss the other pair also may hit the SL.

The stop-losses are an important tool in Forex trading to limit losses. You simply can’t be successful in the long run if you don’t limit your downside by using stop losses.

The hedging strategies work the same way like a stop loss order in terms of limiting losses. However, the advantage of hedging is that you can also make money on the hedge trade depending on the second trade selection. However, you need to take into account the carry on costs of leaving a trade open for a long time.

Important events for today #GBP #EUR

Yesterdays Corney's speech wasn't that much interesting.

Today we have 2 important events happening for GBP and one for EUR.
Let's see if these events can influence the GBP and EUR pairs.

At 15:30(GMT+8)📢  EUR ECB President Draghi Speaks in Frankfurt.
We can expect High volatility after Draghi's speech

At 16:30(GMT+8)👀 GBP Consumer Price Index (YoY) (APR) Normally High volatility after the results (Forcasted 2.2% Vs Previous 1.9%)
At 16:30(GMT +8)👀 GBP Core Consumer Price Index (YoY) (APR) Again High impact (Forecasted1.9% Previous1.8%)

Depending on what Draghi says and what will be the result of GBP events we can guess the price movements. At this stage we can only manage our accounts to not getting surprises.

Pairs from my portfolio that may affect by these events:
 #EURUSD #EURAUD  #EURGBP #GBPCAD  #GBPUSD and #EURJPY 

Fundamental Events

Fundamental analysis: 

Fundamental analysis is an analysis base on studying the global economic news and other news events which affect financial markets.
As a trader, no matter what kind of trader you are, fundamental analysis can help you on your way to success.

A Fundamenta analyser knows how important is following the news and important economy-related events. If the news from a country indicates economic growth, it's currency's value will start to rise. In many situations, economic news determines the start or continuation of a trend. Major turns on the chart often happen because of an unexpected news event or because expectations of news events are not met.

Based on which currencies or markets you want to trade you should establish which reports are important for you. Then the boring part starts, you'll need to watch the market's reaction to the numbers for a long time before you can confidently accommodate events in your strategy. 

Some important factors for event trading:

• See if your broker has a fix or variable spread during the events.
• Study the news for a few months before you start trading fundamentally. This is important as you can understand the effect of the news on a currency.
• Money management is a key factor during the news. be prepared, assess your risk factors, move the SLs and even add funds to your account if necessary.

It is important for technical traders to study economic news, especially in their money management.

Major economic events in Forex

There is much economic news around the world. The following list may help you to choose which one is more important for you.

1. Gross Domestic Product (GDP)
2. Trade Balance
3. Consumer Price Index (CPI)
4. The Producer Price Index (PPI)
5. Employment Indicators
6. Durable Goods Orders
7. Retail Sales Index
8. Housing Data
9. Interest Rates

Important event 16th May 2019

Today we have these important events:
Please manage your open positions carefully.
AUD Unemployment Rate (APR)  (9:30 GMT+8)

Shows the number of employed in Australia

AUD Employment Change (APR)  (9:30 GMT+8)
The Unemployment Rate is the most important indicator of the health of the labour market.