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Date : 24th July 2014

 

EURUSD LOSING SOME OF ITS EARLIER GAINS AFTER THE US UNEMPLOYMENT CLAIMS DROPPED TO A 8-YEAR LOW LEVEL DURING THE LAST WEEK.

 

EURUSD dropped yesterday and closed at 1.3462. Earlier today the single European currency was boosted after positive PMI data from Europe and rebounded from the lows. The German Flash Manufacturing PMI rose to a reading of 52.9 in July. The German Flash Services PMI also rose in July reaching 56.6. The single European currency started to lose some of its steam after the better than expected Unemployment Claims data released from the United States in the afternoon. The Unemployment Claims dropped to a 8-year low level of 284K during the last week.

 

 

Investors are now looking forward for the New Home Sales data due from the United States.

 

Support for the EURUSD is seen at 1.3453 and resistance is seen at 1.3542.

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Date : 25th July 2014

 

EURUSD TRADING LOWER AFTER WORSE THAN EXPECTED GERMAN IFO BUSINESS CLIMATE DATA.

 

EURUSD traded sideways yesterday and closed at 1.3463. Data released yesterday indicated that German Flash Manufacturing PMI rose to a reading of 52.9 in July. Initially the single European currency gained against its US counterpart, but after better than expected jobless claims report and the potential new sanctions against Russia the Euro lost ground. Data released from the United States indicated that the Unemployment Claims dropped unexpectedly 19,000 to a reading of 284K during the last week.

 

 

Data released today showed that the German Ifo Business Climate dropped to a level of 108.0 in July. Investors are now looking forward for the Core Durable Goods Orders data due from the United States.

 

Support for the EURUSD is seen at 1.3440 and resistance is seen at 1.3505.

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Date : 28th July 2014

 

EURUSD TRADING NEAR THE 1.34 MARK IN THE EUROPEAN SESSION. US FUNDAMENTALS WILL DRIVE THE FX MARKET IN THE WEEK AHEAD.

 

EURUSD dropped on Frirday and closed at 1.3429. The business sentiment in Germany dropped for a third consecutive month to a reading of 108.0 in July. The European revealed in its monthly report that the private sector lending in the Eurozone fell 1.7 percent on an annual basis. The single European currency was also pressurized after the EU increased its blacklist Russian who are subject of sanctions. The ECB Vice President Vitor Constancio downplayed the speculations of different sources for potential new measures in the near term taken by the central bank against the low inflation. Data from the United States also boosted the US dollar. The Core Durable goods orders rose 0.7 percent on a monthly basis in June.

 

The week ahead will be driven mostly by the US fundamentals. The Pending Homes month over month release is due later today. On Wednesday we have the ADP Non-Farm Employment Change, the FOMC Statement and the Advance GDP data for the second quarter of 2014 due on the calendar. The top fundamental event on Friday will be the Non-Farm Payrolls release.

 

Support for the EURUSD is seen at 1.3424 and resistance is seen at 1.3485.

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Date : 30th July 2014

 

EURUSD IS UNDER PRESSURE AHEAD OF THE ADP NON-FARM EMPLOYMENT CHANGE AND THE ADVANCE GDP DATA FROM THE US.

 

EURUSD dropped yesterday and closed at 1.3407. The US dollar was boosted by the CB Consumer Confidence release which indicated that the consumer confidence in the United States rose to a 7 year high reading of 90.9 in July. Data from Germany indicated that the import prices rose less than expected in June recording a 0.2 percent rise. The ECB Governing Council Member and Bundesbank President Jens Weidmann welcomed a strong rise in the wages in Germany.

 

Data released today indicated that the Spanish Flash Consumer Price Index dropped to a level of -0.3 percent on an annual basis in July.

 

Investors are now looking forward for the ADP Non-Farm Employment Change Report and the Advance GDP data for the second quarter of 2014 from the United States. Later today the FOMC Monetary Policy Statement is due from the US.

 

Support for the EURUSD is seen at 1.3396 and resistance is seen at 1.3485.

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Date : 1st August 2014

 

EURUSD TRADING ABOVE 1.3400 AFTER THE US NON-FARM PAYROLLS RELEASE.

 

EURUSD dropped yesterday and closed at 1.3389. The inflation in the Eurozone continued to fall reaching its lowest level in almost 5 years coming at a reading of 0.4 percent in July. On the other side the Unemployment Level in the Eurozone declined to 11.5 percent from its previous 11.6 percent level. The Unemployment Claims release came out in line with the market expectations at a reading of 302K during the last week.

 

 

The key even of the way was the US Non-Farm Payrolls and Unemployment Level releases which were both released today. The US Non-Farm Employment Change came our worse than the market expectations at a reading of 209K. The Unemployment Rate in the US rose to a level of 6.2 percent. Following the releases the US dollar lost ground against most of its counterparts and EURUSD is currently trading above the 1.3400 mark.

 

Support for the EURUSD is seen at 1.3370 and resistance is seen at 1.3442.

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Date : 4th August 2014

 

LOW VOLATILITY AT THE START OF THE WEEK. ECB PRESS CONFERENCE AND MINIMUM BID RATE ON FOCUS THIS WEEK.

 

EURUSD rose on Friday and closed at 1.3430. The US dollar lost some of its gains against its European counterpart after the Unemployment Rate in the United States unexpectedly rose to 6.2 percent from 6.1 percent during the previous month. The US Non-Farm Payrolls also rose less than expected to a reading of 209K. In the Eurozone the Manufacturing PMI in Germany recorded a drop to a reading of 52.9.

 

Data released today indicated that the Sentix Investor Confidence in the Eurozone dropped to a level of 2.7 in August from the previous 10.1 level in July.

 

The main economic events of the week will be the ECB Press Conference and Minimum Bid Rate decision. Both are due to be delivered on Thursday.

 

Investors are now looking forward for the ISM Non-Manufacturing PMI due from the United States tomorrow.

 

Support for the EURUSD is seen at 1.3370 and resistance is seen at 1.3442.

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Date : 5th August 2014

 

EURUSD FLIRTING WITH THE 1.3400 LEVEL IN THE FIRST HALF OF THE EUROPEAN SESSION.

 

EURUSD dropped yesterday and closed at 1.3421. The Sentix Investor Confidence in the Eurozone dropped sharply to a reading of 2.7 in August marking its lowest level in 12 months. Data from Spain revealed that the unemployment level in the country dropped by 29.8K in July.

 

Data released from the Eurozone today indicated that the Final Services Purchasing Managers Index in the Eurozone remained steady in July coming at a reading of 54.2. Another report indicated that the Retail Sales in the EU expanded by 0.4 percent in June.

 

Investors are now looking forward for the ISM Non-Manufacturing Purchasing Managers Index release due from the United States.

 

Support for the EURUSD is seen at 1.3370 and resistance is seen at 1.3442.

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Date : 6th August 2014

 

EURUSD PRINTED NEW LOWS IN THE EUROPEAN SESSION ON POOR DATA FROM THE EUROZONE.

 

EURUSD dropped yesterday and closed at 1.3375. The Final Services PMI in the Eurozone expanded to a reading of 54.2 in July. The Spanish and Italian Services Purchasing Managers Indexes also expanded, but the report from the Italy was disappointing. The Retails Sales month over month came out in line with the market expectations at a reading of 0.4 percent in June. Data from the United States revealed that the ISM Non-Manufacturing Index rose to an eight year high level of 58.7 in July. The Factory Orders in the States also jumped recording a gain of 1.1 percent in June.

 

 

 

Data released today indicated that the German Factory Orders dropped to a reading of -3.2 percent in June. This combined with the poor preliminary GDP report from Italy which dropped to a reading of -0.2 percent sent to the Euro lower and the pair is currently trading near the 1.3340 level.

 

Investors are now looking forward for the Trade Balance data due from the United States.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3413.

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Date : 7th August 2014

 

EURUSD TAKING A BREATHER AHEAD OF THE ECB INTEREST RATE DECISION IN PRESS CONFERENCE.

 

EURUSD rose yesterday and closed at 1.3381. Data released from the Eurozone indicated that the German Factory Orders dropped to a reading of -3.2 percent in June. Another report showed that the GDP in the third-largest economy in the Eurozone – Italy dropped to a reading of -0.2 percent in the second quarter of 2014.

 

Data from the United States indicated that the trade deficit in the largest economy in the world fell to 41.5 billion in June. The President of the United States Federal Reserve in Atlanta Dennis Lockhart stated yesterday that he sees the first interest rate hike in the middle of 2015 or later.

 

Investors are now looking forward for the ECB Interest Rate decision and the ECB Press Conference due today. At the start of the ECB Press Conference the Unemployment Claims report from the United States is due to be released.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3413.

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Date : 8th August 2014

 

EURUSD TRADING HIGHER ON FRIDAY AFTER THE SHARP DROP YESTERDAY.

 

EURUSD dropped yesterday and closed at 1.3362. The President of the European Central Bank Mario Draghi expressed his concerns about the sanctions against Russia stating that they could worsen the outlook for the economy of the Eurozone. Yesterday the ECB kept its interest rates unchanged at 0.15 percent. The central bank also left its deposit rate unchanged at -0.1 percent. Data released from the United States indicated that the Unemployment Claims dropped to a 8-year low level of 289K during the last week.

 

 

The US President Barack Obama has authorized air-strikes in Iraq to protect the American personnel.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3413.

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Date : 11th August 2014

 

EURUSD TRADING BELOW THE 1.3400 LEVEL ON MONDAY. LIGHT ECONOMIC CALENDAR TODAY..

 

EURUSD rose on Friday and closed at 1.3410. Data from the United States indicated that the Non-Farm Productivity in the largest economy in the world rose 2.5 percent in the second quarter of 2014. The Wholesale Inventories in the US rose 0.3 percent in June. The Industrial output in France recorded a gain of 1.6 percent in June. The German Trade Surplus dropped to 16.3 billion Euro in June.

 

eur-usd-blog.jpg

 

The Economic Calendar for the rest of the session is very light and we don’t expect much volatility on the market. Investors should be fully aware that potential high-impact data that’s not scheduled to be released may bring higher market volatility.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3410.

 

EURUSD-11-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 13th August 2014

 

EURUSD PUSHED ABOVE THE 1.3400 LEVEL AFTER WORSE THAN EXPECTED RETAIL SALES DATA FROM THE UNITED STATES.

 

EURUSD dropped yesterday and closed at 1.3368. Data released yesterday indicated that the ZEW Economic Sentiment dropped sharply to a reading of 23.7 in July. Additionally the ZEW Economic Sentiment in Germany also recorded a sharp drop to a reading of 8.6 from the previous reading 27.1 a month earlier. In the United States the Job Openings hit a 13 year high coming at 4.67 million jobs in June.

 

4.jpg

 

Data released today indicated that the inflation in Germany and France remains weaker. The Industrial Production in the Eurozone fell to a reading of 0.3 percent in June.

 

The Euro rose sharply today after the worse than expected retail sales data from the United States and its currently trading above the 1.3400 mark.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3416.

 

EURUSD-13-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 14th August 2014

 

EURUSD HOLDING BELOW THE 1.3400 LEVEL AFTER POOR GDP REPORTS FROM THE FRANCE AND GERMANY.

 

EURUSD dropped yesterday and closed at 1.3363. The Industrial Production in the Eurozone dropped to a reading of -0.3 percent in June. Data from the United States revealed that the Retails Sales in the US dropped in July coming at a reading of 0.0 percent making its lowest level since January 2014.

 

 

Fotolia_31030712_XS1.jpg

 

Data from the United States indicated that the trade deficit in the largest economy in the world fell to 41.5 billion in June. The President of the United States Federal Reserve in Atlanta Dennis Lockhart stated yesterday that he sees the first interest rate hike in the middle of 2015 or later.

 

Data released today indicated that the German Preliminary GDP report for the second quarter of 2014 came out worse than the market expectations at a reading of -0.2 percent. The Preliminary GDP report from France also came worse than expected at a reading of 0.0 percent. The Eurozone’s Flash GDP dropped to 0.0 percent in the second quarter of 2014.

 

Data from the United States showed that the Unemployment Claims during the last week came out closer to the market expectation at a reading of 311K.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3416.

 

 

 

EURUSD-14-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 15th August 2014

 

EURUSD HOLDING LOWER AFTER WORSE THAN EXPECTED SECOND QUARTER FLASH GDP DATA.

 

EURUSD dropped yesterday and closed at 1.3364. The German GDP in the second quarter of 2014 drooped to a reading of -0.2 percent. The Flash Gross Domestic Product in the Eurozone dropped to a reading of 0.0 percent in the second quarter of the year. Market had expected a drop to a level of 0.1 percent. Data from the United States indicated that the Unemployment Claims rose slightly to a reading of 311K during the last week.

 

shutterstock_23355112.jpg

 

With the French and Italian bank holidays due to the observance of the Assumption Day today we are expecting the pair to be mostly driven by the US data due on the Economic Calendar. Investors are looking forward for the Producer Price Index and the Preliminary University of Michigan Consumer Sentiment releases due later today from the United States.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3416.

 

EURUSD-15-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 18th August 2014

 

EURUSD TRADING SIDEWAYS IN THE EUROPEAN SESSION. LIGHT ECONOMIC CALENDAR TODAY..

 

EURUSD rose on Friday and closed at 1.3398. The Michigan Consumer sentiment in the United States dropped to a reading of 79.2 in August marking its lowest level in 9 months. On the other hand the manufacturing output in the largest economy in the world rose 1.0 percent in July. That was the biggest rise since February.

 

shutterstock_101227957.jpg

 

The session ahead will light on scheduled economic events, but any potential market comments may bring volatility on the market. Investors are focus on the scheduled for tomorrow US headlines including the Consumer Price Index, the Core CPI and the Building Permits releases.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3416.

 

EURUSD-18-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 19th August 2014

 

EURUSD PRINTING NEW LOWS AHEAD OF THE US CPI AND BUILDING PERMITS DATA.

 

EURUSD dropped yesterday and closed at 1.3362. Bundesbank warned yesterday that the economy in Germany could struggle to regain momentum due to the negative outlook for the European economy. The Trade Balance in the Eurozone failed to meet the market expectation coming at a reading of 13.8B in June. Data from the United States revealed that the NAHB Housing Market Index rose to a reading of 55 in August marking its highest output in 7 months.

 

Fotolia_29088424_XS.jpg

 

Data released today indicated the Current Account in the Eurozone dropped to 13.1B in June, market had expected a drop to 19.3B.

 

Investors are now looking forward for the CPI m/m , the Building Permits and the Core CPI m/m releases due from the United States.

 

Support for the EURUSD is seen at 1.3336 and resistance is seen at 1.3416.

 

EURUSD-19-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 20th August 2014

 

EURUSD BROKER THE 1.3300 LEVEL MAKING ITS 11-MONTH LOW LEVEL AGAINST THE US DOLLAR AHEAD OF THE FOMC MEETING MINUTES.

 

EURUSD dropped yesterday and closed at 1.3319. The Current Account in the Eurozone dropped to a reading of 13.1B in June. On the other hand the releases from the United States were positive. The Building Permits in the largest economy in the world rose to 1.05M in July. The Housing Starts also recorded a gain in July coming at a reading of 1.09M.

 

Fotolia_25420966_XS1.jpg

 

Data released today indicated that the German Producer Price Index dropped -0.1 percent in July.

 

The EURUSD broke the 1.3300 level making its 11-month low level against its US counterpart and its currently still holding below it.

 

Investors are looking forward for the FOMC Meeting Minutes due later today.

 

Support for the EURUSD is seen at 1.3274 and resistance is seen at 1.3366.

 

EURUSD-20-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 21st August 2014

 

EURUSD PRINTED NEW LOWS AFTER THE FOMC MEETING MINUTES. US UNEMPLOYMENT CLAIMS ON TAP.

 

EURUSD dropped yesterday and closed at 1.3258. The Producer Price Index in the Germany dropped to a reading of -0.1 percent in July. The German Chancellor Angela Merkel urged the leaders of the Eurozone to coordinate more close the construction flaws in order to overcome the debt crisis in the currency bloc.

 

shutterstock_80286730.jpg

 

During the FOMC Meeting Minutes the US dollar strengthened after the committee members noted the improvement in the labour market and the inflation getting to its long-term prospective. The minutes indicated that the future course of the interest rates in the largest economy in the world would be dependent on how the inflation and labour market conditions evolve.

 

Investors are now looking forward for the Unemployment Claims and the Philly Fed Manufacturing Index due from the United States.

 

Support for the EURUSD is seen at 1.3242 and resistance is seen at 1.3324.

 

EURUSD-21-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 22nd August 2014

 

SLOW MARKET AHEAD OF THE SPEECH OF THE FED CHAIR JANET YELLEN.

 

EURUSD rose yesterday and closed at 1.3280. The Manufacturing PMI in the Eurozone dropped to a 13-month low in August coming at a reading to a reading of 50.8. The Services PMI also dropped marking a 2-month low in August at a reading of 53.5. The Consumer Confidence in the Euro area also dropped to a reading of -10. In the United States the President of the Federal Reserve in Kansas City Esther George stated in an interview from the central bank symposium in Jackson Hole that there is steady improvement in the labour market in the US. The Unemployment Claims data released yesterday indicated that the number of people filling applications for unemployment assistance dropped to 298K during the last week. Another report indicated that the Philly Fed Manufacturing Index rose to 28 in August. The Existing Home Sales report was also positive at 5.15M in July.

 

 

Fotolia_21728245_XS.jpg

 

Investors are now looking forward for the speech of the Fed Chair Janet Yellen and the speech of the ECB President Mario Draghi at Jackson Hole.

Support for the EURUSD is seen at 1.3242 and resistance is seen at 1.3324.

 

EURUSD-22-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 25th August 2014

 

EURUSD PUSHED THROUGH THE 1.3200 LEVEL AT THE MARKET OPEN. US NEW HOME SALES ON TAP.

 

EURUSD dropped on Friday and closed at 1.3241. During its speech in Kansas city at the Jackson Hole annual conference the President of the European Central Bank Mario Draghi stated that ECB is ready to respond with all of its available tools if the inflation in the EU drops further. Market counted that as a signal of a potential further easing by ECB.

 

Fotolia_32973386_XS.jpg

 

Earlier today a report from Europe showed that the German Ifo Business Climate dropped for a fourth consecutive month to a reading of 106.3 in August.

 

Investors are now looking forward for the New Home Sales release due from the United States.

 

Support for the EURUSD is seen at 1.3184 and resistance is seen at 1.3291.

 

EURUSD-25-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 27th August 2014

 

EURUSD PRINTED NEW LOWS IN THE ASIAN SESSION. LIGHT ECONOMIC CALENDAR TODAY.

 

EURUSD dropped yesterday and closed at 1.3166. The Durable Goods Orders in the United States rose to a record level at 22.6 percent on a monthly basis in July. Market had expected a rise of 7.8 percent. The CB Consumer Confidence in the largest economy in the world rose to its highest reading since October 2007 coming at 92.4 in August. The Richmond Manufacturing Index also recorded a gain coming at a reading of 12 in August.

 

The Economic Calendar for the rest of the session is light, but potential volatility on the market is possible and can be witnessed.

 

Support for the EURUSD is seen at 1.3157 and resistance is seen at 1.3291.

 

EURUSD-27-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 28th August 2014

 

EURUSD TRADING LOWER AFTER THE 2ND ESTIMATE GDP FROM THE UNITED STATES CAME BETTER THAN THE MARKET EXPECTATIONS.

 

EURUSD rose yesterday and closed at 1.3192. The German Gfk Consumer Confidence fell to a reading of 8.6. The German Import Prices also recorded a drop of a -0.4 percent on a monthly basis in July. In an interview the German Finance Minister Wolfgang Schaeuble stated that the comments made by the ECB President Mario Draghi at Jackson Hole were over-interpreted which fuelled a speculation that the central bank is not so close to introducing additional stimulus measures.

 

Information about a potential Russian invasion in Ukraine brought some slight volatility on the market earlier today.

 

Data released today revealed that the second estimate GDP in the United States came out better than expected at 4.2 percent. The Unemployment Claims data also released today showed that the number of the people who filled documents for unemployment benefits during the last week is 298K which is close to the market expectation for a 299K.

 

Investors are now looking forward for the Pending Home Sales month over month release due from the United States.

 

Support for the EURUSD is seen at 1.3157 and resistance is seen at 1.3291.

 

EURUSD-28-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 29th August 2014

 

EURUSD HOLDING BELOW THE 1.3200 LEVEL AFTER THE CPI FLASH ESTIMATE REPORT.

 

EURUSD dropped yesterday and closed at 1.3181. The second quarter GDP report from the United States showed an expansion of 4.2 percent on an annual basis better than the forecasted 3.9 percent rise. A separate report indicated that the Pending Home Sales in the largest economy in the world rose 3.3 percent on a monthly basis in July.

 

Data released today indicated that the annual inflation in the Eurozone dropped to a level of 0.3 percent in August. Investors are now looking forward for the Chicago PMI report due from the United States.

 

Support for the EURUSD is seen at 1.3157 and resistance is seen at 1.3291.

 

 

EURUSD-29-August-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 1st September 2014

 

EURUSD TRADING NEAR ITS FRIDAY’S CLOSE. GERMAN FINAL GDP CAME OUT AS EXPECTED.

 

EURUSD dropped sharply on Friday and closed at 1.3131. The Unemployment Rate in the Euro area remained at 11.5 percent in July. The Retail Sales in Germany fell 1.4 percent on a monthly basis in July. Data from the United States revealed that the Consumer Sentiment Index rose to a level of 82.5 in July marking its 7 year high level. The biggest surprise on the market was the Chicago Fed PMI which came out at a reading of 64.3 in August. Market had expected a rise to a reading of 56.0.

 

Data released today indicated that the German Final GDP data came out in line with the market expectations at a reading of -0.2 percent.

 

The US banks will be closed today due to the observance of the Labor Day.

 

Support for the EURUSD is seen at 1.3118 and resistance is seen at 1.3217.

 

EURUSD-01-September-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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Date : 2nd September 2014

 

EURUSD TRADING NEAR ITS FRIDAY’S CLOSE. GERMAN FINAL GDP CAME OUT AS EXPECTED.

 

EURUSD rose yesterday and closed at 1.3127. The final release of the GDP for the second quarter in Germany showed a contraction to -0.2 percent in line with the market expectations. The Eurozone Final Manufacturing PMI contracted to a reading of 50.7 in August. The Spanish and Italian Manufacturing PMI also recorded a drop coming at readings of 52.8 and 49.8 accordingly. Prospects of potential further sanctions by the European Union leaders against Russia also flooded the market and pressurized the single European currency.

 

Data released today indicated that the Producer Price Index dropped -0.1 percent on a monthly basis in July.

 

Investors are now looking forward for the US ISM Manufacturing PMI due later today.

 

Support for the EURUSD is seen at 1.3109 and resistance is seen at 1.3191.

 

EURUSD-02-September-2014.jpg

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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    • Date : 20th January 2020. Events to Look Out For Next Week 20th January 2020. *An important week is coming up with regards to economic announcements and central banks, as PBoC, BoJ, BoC and ECB rate decision are expected to take place although none are expected to shake the market. Meanwhile, reduced liquidity will define trading on Friday as the Chinese Lunar New Year holiday begins. Monday – 20 January 2020 * Interest Rate Decision (CNY, GMT 01:30) – The PBoC is expected to keep its interest rates at 4.15%. Tuesday – 21 January 2020 * Interest Rate Decision and Conference (JPY, GMT 03:00) – The central bank signaled its commitment to keep interest rates at current levels “for an extended period of time, at least through around spring 2020”. The BoJ Governor said in his last statement that cutting rates further is a possible policy option, adding that he doesn’t think that Japan is near the reversal rate. He also said that he doesn’t think the BoJ needs to change the forward guidance for now. Hence this is likely to remain the scenario in this week’s Monetary Policy Statement. * Employment and Earnings (GBP, GMT 09:30) – Earning growth excluding bonus is expected to have declined by 3.4% in November, below the 3.5% the previous month. The ILO unemployment rate (3M) for November could rise to 3.9% from 3.8%. * ZEW Economic Sentiment (EUR, GMT 10:00) – German Economic Sentiment for January is projected at 4.3 from the 10.7 seen last month, as the current conditions indicator for Germany turned negative. The overall Eurozone reading though is expected to decline further to 5.5 from 11.2. A lower than expected outcome ties in with the stagnation in market sentiment at the start of the month. Wednesday – 22 January 2020 * Consumer Price Index and Core (CAD, GMT 13:30) – The average of the three core CPI measures for December is expected to have come out slightly lower than last month, at 2.1% y/y from 2.2% y/y. The CPI backstops continue to back the BoC’s steady policy outlook. * Interest Rate Decision and Conference (CAD, GMT 15:00) – No change is seen in the current 1.75% policy setting, alongside an announcement and MPR that are consistent with steady policy through year end. Thursday- 23 January 2020 * Labour Market Data (AUD, GMT 13:30) – Australia’s recent employment report showed a slowdown in jobs growth also affected by the bushfires crisis. In December, the unemployment rate is anticipated to jump back to 5.3%  while the employment change is expected to fall to 14K from 39.9K last time. * ECB Interest Rate Decision and Conference (EUR, GMT 12:45 & 13:30) – The ECB is expected to keep policy on hold in January as policy review starts. The ECB kept policy on hold and re-affirmed easing bias at the December policy meeting. * Consumer Price Index (NZD, GMT 21:45) – The overall New Zealand CPI for Q4 should rise to 2.2% y/y from 1.5%. * Monetary Policy Meeting Minutes (JPY, GMT 23:50) – The BoJ Minutes report provides the BoJ Members’ opinions regarding the Japanese economic outlook and any views regarding future rate changes. Friday – 24 January 2020 * Chinese New Year’s Eve – Asia Markets closed * Markit PMI (EUR, GMT 09:00) – The prel. December manufacturing PMI was revised up to 46.3 from 45.9, still down from 46.9 in November. The manufacturing sector has been stuck in recession for eleven successive months. The composite PMI for January meanwhile is expected to be lifted to 51.0 along with a possible rise in services. * Markit PMI (GBP, GMT 09:30) – The prel. UK Services PMI for January is forecasted to register a downwards reading  to 49.4  after the upwards revision last week at 50.0. * Retail Sales (CAD, GMT 13:30) – Retail Sales should register a gain in November to 0.1%, after the -1.2% plunge to 0.1% in total sales values in October. * Manufacturing PMI (USD, GMT 15:00) – The Manufacturing PMI is expected to have decreased to 52.3 in January, compared to 52.4 in December. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • good news!! It seems you can make good money at forex Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair     Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. dont forget- like subscribe Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com     View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com
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