Forex Trading 7
Sabtu, 22 Desember 2018
How many Forex trades are in the world?
The Forex market has been particularly active since the 1970s. It has become the world’s largest financial market, with the average daily trading volume growing from around 1.2 trillion in 1995, to 5.1 trillion in 2016, according to figures from the Bank of International Settlements.
Although large financial institutions and banks are responsible for a substantial portion of trading in this market, modern technology has also made it accessible to a broader base of customers. Brokers have developed easy to use, online trading platforms that have simplified the process of trading, and made it available from almost anywhere in the world.
In fact, 9.6 million people around the world are now online traders: that’s 1 in every 781 people.
Where are the world’s online traders?
The industry is global, with many brokers obtaining permission from various regulators around the world, or taking advantage of pass porting arrangements to promote their services in jurisdictions outside of their country of domicile.
Although the UK and US remain by far the largest cent res of Forex trading activity, our modern trader report found that a third of online traders are based in Asia and the Middle East, which is over a million more than can be found in Europe and Northern America.
Online trading platforms have spread the focus away from the major financial centers, such as London and New York, and out to the far corners of the world.
Nowadays, all that is required is an internet connection for would-be traders to begin participating in the Forex markets. Personal computers are not even necessary, as many of the platforms can be accessed from a mobile phone.
The figures are even more staggering when people who do not use the internet are removed from the equation: with 3.8 billion internet users in the world2, that makes 1 in every 396 an online trader.
Our research shows that with 320 million internet users in the US, 1 in every 213 is an online trader. Research conducted by Aite Group in 2014 went as far as to suggest that up to a quarter of US adult internet users could be online traders.
In Europe, with 651 million internet users and 1.5 million online traders, 1 in 434 internet users trades online.
With 1.9 billion internet users, it is not surprising that the greatest number of online traders can be found in Asia, at 3.2 million. However, this means that a lower proportion of internet users are online traders than in any other region, equating to 1 in every 594 users.
Whereas in Africa, with 1.3 million online traders and only 388 million internet users, a high proportion of internet users trade online: 1 in every 298.
Remarkably, the proportion of online traders to internet users is the highest in the Middle East with 1 in every 152 of the 147 million internet users trading online.
The Middle East and North Africa have the highest proportion of online traders, yet these regions are both predominantly populated by Muslims. Why this presents a problem for Forex trading is that Riba, or gains made from trading, are not permitted by Islamic law. Forex accounts that have transactions open beyond trading hours are subject to fees similar to interest charges, either debit or credit depending on the position the account is in when the market closes. However this is seen as usurious, and therefore currency trading restrictions have been imposed to enable currency exchange to comply with Sharia law.
Many brokers have taken note of this and offer Islamic trading accounts. These accounts are not subject to interest, and buying and selling of currency is immediate. This enables Muslim traders to exchange foreign currency in accordance with their faith, and could account for the high proportion of online traders in these regions.
Traders in the UK and Europe
In the UK there are around 46 million internet users4. With more than 280,000 online traders, that means 1 in every 164 adult internet users in the UK is an online trader.
In fact, there are more online traders in Britain, than in any other European country as our study shows.
Why is trading so popular in the UK?
There have been some recent regulatory changes across Europe with regards to leveraged products, such as Forex and CFDs, which may be contributing to lower levels of traders registering for accounts. For example, in France and Holland, promotion of leveraged products is not permitted, and Belgium has banned leverage altogether. The Cyprus regulator, CySEC, have introduced controls whereby higher leverage is only available to customers who specifically request it and who can demonstrate their suitability and appropriateness.
In the UK, the Financial Conduct Authority (FCA) have consulted on tightening the controls around leverage, but have not yet enforced any changes. Traders in the UK could still be taking advantage of the fact that they can trade on margin, which means that they are able to magnify their exposure to currency movements using relatively small deposits. As over 50% of online traders in the UK earn a salary of less than £35,000, this can be particularly appealing.
Although, the German regulator (BaFin) have only implemented changes around negative balance protection, so this does not explain why their volumes of online traders are only just over half of those in the UK.
What is clear however, is that whilst trading has been opened up to a world of internet users, from a range of different backgrounds and faiths, for now the UK continues to be one of the central hubs for Forex trading.
Appendix A – The Number of Online Traders by Continent/Region
|Continent/Region||Approx. number of online traders|
What is the meaning of magic number in forex trading?
Magic numbers are especially useful when you are trading across multiple timeframes, using the same forex pair. For instance, you might wish to use two EAs, one that is tracking the EUR/USD on a one hour chart, while another that is tracking the same pair on a 15 minute chart. So, while one EA is trend following, the other is scalping. Can you imagine one EA trying to track a single trade across different time frames? You wouldn’t want to do that even to an enemy, and an expert advisor is your best friend in forex.
So, while trading across different time lines, you might want to manage the trades differently for each time line. This means that apart from the usual take profit and stop loss exits, you might want to run a channel stop for one trade and a trailing stop for another. In such situations, trying to identify trades using only the currency pair will make it chaotic, given that the currency pair is the same across the different trades, such as the EUR/USD in the example above.
This is where magic numbers come to the rescue. A unique number is assigned to each trade, when it is opened. The EAs now track trades by their magic numbers, simplifying the process. For instance, the trend-following EA might follow the magic number 214, while the scalping one follows 316.
To summarize, magic numbers can be used to separate orders across different strategies, separate orders across different timeframes for the same currency pair, and to separate orders across different EAs.
As if online trading doesn’t seem like magic enough, along came the MetaTrader platform that made it even easier to access the markets. Following that we have the magic of Expert Advisors that can help mitigate issues of human emotion or error. And it doesn’t stop there either, you also have magic numbers. Seems enchanting, doesn’t it? So, how do you use all this magic to your advantage?
A magic number on MT4 is a unique number that is used by Expert Advisors to track open positions. Just as a license plate allows you to track not only the state a vehicle belongs to but even the individual who owns it, an EA uses the magic number to distinguish trades that it has opened, as compared to those it has not. By the magic number, the EA knows which trades it needs to manage.
How to Find the Magic Number for an Open Trade
If a trade is opened manually, its magic number would be 0. However, trades opened by EAs are assigned unique magic numbers on MT4 that range from 0 to 2147483647. So, where can you find this unique number?
The MQL language uses a function called OrderSend to open a trade. This function is based on several parameters, of which one is the magic parameter. So, when an EA opens a trade with the OrderSend function, the magic parameter assigns a unique number to the trade. This function is called OrderMagicNumber. So, when you choose an order using OrderSelect, you can find the magic number for this specific order using the OrderMagicNumber function. Sounds too simple to be true, doesn’t it? Well, the truth is that it isn’t that simple, although as you do it repeatedly, it will become easier.
What you need to do is to run OrderMagicNumber in an order selection loop. Use OrderSelect to choose a trade, following which you can run the OrderMagicNumber function for the chosen trade.
The MQL code for this is:
mymagic = OrderMagicNumber();
mymagic = OrderMagicNumber();
Once you have the magic number of a trade, you can implement trade exits, using a simple “if-then” logic. For instance:
- if mymagic is equal to 214
- run a trailing stop
- if mymagic is equal to 316
- run a channel stop
MT4 is actually a very user-friendly platform. And while using its codes might seem overwhelming to a beginner, it really does become much easier as you use it repeatedly. The entire aim of using EAs and magic numbers is to make trading simpler for you, while maximizing the potential to profit.
If you liked this educational article please consult our Risk Disclosure Notice before starting to trade. Trading leveraged products involves a high level of risk. You may lose more than your invested capital.
What is the importance of social trading in a Forex brokerage?
Social trading is a relatively new concept in retail Forex trading and its popularity has grown substantially over the last few years. The concept that drives social trading—especially in Forex—is that the process offers an opportunity for Forex traders who trade online to retrieve information assembled from other retail traders and use their combined experience and knowledge to trade in their own accounts.
Social trading works along the same lines as other popular social networks, such as Facebook and Twitter, where individuals communicate directly with others on an ongoing basis from wherever they are. And as with these other social networks, there are advantages and disadvantages to their use.
Advantages of social trading
Social trading offers significant advantages to all users, such as
- Additional income for successful traders from selling their trading signals
- Passive income for copiers from following successful traders
- Opportunity to follow other peoples trading results in real-time
- Open concept, where data on signal provider trades is disclosed automatically and losses can not be deliberately hidden
- Space for communication with other traders and listening to their forecasts and opinion
Disadvantages of Forex Social Trading
Social trading provides a free exchange of information to individual and small scale investors. And while this is certainly an advantage, it could prove to be a disadvantage. Since there are only a small number of traders who are consistently successful, by using social trading networks a trader can follow the wrong trader and end up with losses rather than the hoped-for profits.
One of the major disadvantages of social Forex trading is that it remains relatively challenging for a trader to select the right social platform. There is no shortage of networking platforms and this makes it difficult for a trader to make a choice. And although social Forex trading is not a scam, there are some social trading scammers that don’t play by the rules and an unsuspecting trader can be easily swindled. Choosing the right trading platform is the key to social trading but it is tricky and traders are not always savvy enough to decipher the good from the bad.
Social trading business models
The majority of social trading networks either have their own broker or have agreements with a number of different brokerages that can be connected to their platform. When a network is registered as a broker it makes money directly on spreads. When a social trading network has agreements with other brokers it gets compensation from brokers (brokers share part of their spreads with a platform with no extra cost for the traders). In this case spreads depend on a brokers, so it is important to check the list of supported brokers and see whether your broker is on that list or there is a more suitable broker for you — some of our partners offer spreads on EUR/USD from 1.5 pips. Joining a social trading networks which supports multiple platform may be more beneficial for a reputable signal providers as he can attract followers from all of the supported brokers. A third business model social trading networks offer is subscription, in this case both users and strategy providers are charged a fixed monthly fee for using the service plus additional fees for following each signal provider.
Social trading regulation
Social trading is still a fairly new concept and a lot of countries are yet to develop their final regulations. However, unlike some riskier assets, social trading and copy trading is considered an acceptable investing activity and is acknowledged by most regulators:
Social trading UK – The UK Financial Conduct authority has issued recommendations where it classifies automated copy trading and mirror trading as portfolio management. Social trading platforms must follow regulatory obligations for licensed portfolio managers. However, this only refers to social trading networks; signal providers are not obliged to carry a license. Therefore social trading is absolutely legal for UK signal providers and followers.
Social trading Europe – European legislation treats social trading and copy trading very similar to UK. The platforms providing social trading services must abide the same rules as portfolio managers. To comply with these rules, some copy trading networks that don’t pre-screen their strategy providers set different rules for EU (for example, all strategies must meet a certain risk/reward ratio prior to being shown to European traders).
Social trading Australia – After monitoring the market for two years Australian financial regulator ASIC has come up with clear guidance on copy trading services, that were published on August 30, 2016. The general conclusion stated that ASIC supports development of a healthy and robust digital advice market in Australia. Under new ASIC regulations platforms providing digital advice must specify that actual trading results may vary under certain conditions (such as speed of internet connection, etc).
Social trading USA – The US are known for their restrictive financial regulation, but that doesn’t refer to social trading. The copy trading itself is not forbidden, however some other regulations make it hard for US citizens to use copy trading services. Under US law traders are not allowed to hedge their trades by opening the same trade in both directions simultaneously (for example, one can’t have open BUY and SELL positions in EUR/USD at the same time). In addition, the “first is first out” rule states that if a trader has two open trades in the same assets in the same direction, he/she must close them in the same order as they were open. These new rules evolved after financial crisis and are aimed at protecting the US market from the next economic crisis. While it doesn’t restrict social trading directly it makes this process more complicated. When a trader follows two strategies or more he can not guarantee both rules will be met at all times. That’s why a lot of social trading networks don’t accept USA traders. However, there are platforms that allow US residents use copy trading and have developed special mechanism to follow the regulatory guidelines.
Social Trading vs Copy Trading
Social trading often goes hand in hand with copy trading. The key difference is that social trading focuses on opportunities to discuss market situation and interact with other users — at some platforms traders can send friend requests and exchange direct messages as in a regular social network. Copy Trading lets users follow other traders and copy their trades (copying process is completed automatically). All social trading networks offer copy trading services, as this is considered the main advantage of social trading.
Why Do I Need Foreign Exchange?
There was a time in human civilization that money, whether in coins or in paper, didn't exist. When you needed something, you would have to give up one of your possessions for another's. For example, if a farmer sees a travelling merchant visiting their community to sell some precious and delicate china porcelains, he would have to exchange a portion of his rice for the merchant's china. Such an agreement is called barter where one thing is exchanged for another that were believed to be of the same value.
Of course, this hardly ever happens now as barter, except maybe for e-bay, as it could become a very complicated process in the large-scale. Money has become an effective tool to make businesses and ultimately, our daily lives, easy and simple. When you need a commodity or service, all you need to do is to have the right amount of money in order to have that thing you desire.
Because of globalization and with more countries opening up to the world, it is inevitable that we become more involved with each other. The young Koreans have found it important to see and travel the world with a certain fondness for the beaches in the Southeast Asia. The Americans travel all the time to France and Italy to see the latest fashion and the great landmarks. The Africans are selling their nicely-crafted home designs to the Europeans. All of these are indicative as to how we are all connected, one way or another. However, when you travel, you cannot bring your nation's money alone and expect to live on a foreign land. This is where foreign exchange becomes important to you.
Each nation is represented by its own national currency. The US has the American dollar while the Japanese has the yen, just to name a few. When an American travels to Japan, he would need to exchange his dollars to yen in order to buy things in that country. This is called foreign exchange. In order for him to have a benchmark as to how many yen his dollars could buy, he would need to now the current exchange rate in local banks or money exchange. If it says 1 dollar = 101 yen, it means that his dollar is highly valued and could already buy 101 yen.
If the exchange rate the following day changes and becomes 1 dollar = 100 yen, his dollar had depreciated against the yen and now could buy one yen less than the other day. A depreciation and appreciation of a currency indicates the strength of that particular currency and is always in reference to another currency.
Multiple countries are also doing business with each other and this is another situation where foreign exchange becomes important. When a Filipino exporter exports his mangoes to the US, he does not get paid in pesos but in dollar equivalent. Foreign exchange is an exchange of two national currencies, in this case, the peso and the dollar.
So now we have seen how foreign exchange works and how we are affected by it one way or another. It is not as complicated as how it looks like in the business papers. All you need to do is to have a clear grasp on how the exchange of money happens and you would do just fine.
Why should I join Forex?
Forex (Foreign Exchange market) – the world's largest financial market, where different currencies are exchanged against each other. Daily transaction volumes of the Forex market are, according to our estimates, as high as 3-4 trillion USD. Compare this to about 25 billion a day volume of the New York Stock Exchange.
The major participants of the Forex market are commercial and central banks, large corporations and hedge-funds. However, you do not need to have millions or thousands of dollars to start! Due to leverage and marginal trading, you can start trading with $100 or $500 and enjoy the same trading conditions as the large market players. There are even Microand Mini accounts that let you trade with as little as $1.
Unlike stock futures market, Forex is does not have a central location, where trading normally takes place. Banks and other market participants are connected to each other via electronic communications networks (ECNs). Forex trading continues 24 hours aday, 5 days a week from Monday to Friday. This decentralized structure allows traders to buy and sell currencies without extra fees and commissions. It also provides access to trading anytime and from anywhere in the world.
8 reasons to choose Forex:
High liquidity and best prices. In Forex there are always traders who are willing to buy or sell. The market never sleeps. An ECN Broker offers its clients the best quotes from major banks, other ECNs and liquidity providers. The Broker actually profits from providing the best quotes and the tightest spreads.
Access to trading 24/5 from anywhere . The market trades 24 hours a day, 5 days a week from Monday to Friday, and your broker offers you support 24 hours a day. You can choose when to trade – the European, US and the Asian trading sessions follow each other. When trading sessions in different time zones overlap, the available liquidity in Forex reaches its maximum.
You can trade with as little as $100! Starting deposits in Forex are considerably lower than in other financial markets. Leveraged (or marginal) trading used in Forex lets you operate funds many times as large as your margin deposit
And the broker is interested in your profits. In the ECN model, you trade with other market participants not against your broker. To execute your order, the ECN Aggregator will find a matching opposite order (same price and available volume) from another market participant. The broker charges a small commission for transferring your order to the ECN and finding a match for it. With this business model, the broker is not trading against you and does not profit when you lose. On the contrary, the broker receives more commission when you increase your trade volumes.
In Forex, there is always a chance to earn. Stock markets can crash and securities may lose their value but when one currency is depreciating, the other will be gaining value and you can earn on that as well.
Market Analytics are easy to follow. There are only 4 major currency pairs in Forex. You can choose just one currency pair or several pairs to focus on. Monitoring news and market analytics for 4 currency pairs is easier than struggling to keep an eye on thousands of stocks.
Education and Training for Beginners You broker provides you with demo-accounts, training courses and workshops, video tutorials, news, charts and market analytics so that you can practice your trading skills.
Automated trading: You do not have to spend long hours in front of your computer studying charts and following all the price movements. With automatic indicators and signals you will be notified immediately of any important events or trend reversals. You can also take advantage of expert advisors, that are based on your own or somebody else's proven trading strategy. An Expert Advisor trades automatically without your participation.
What are stop loss and stop loss limit in the market?
There are two types of stop-loss orders.
1) Sell-stop orders protect long positions by triggering a market sell order if the price falls below a certain level. The underlying assumption behind this strategy is that, if the price falls this far, it may continue to fall much further, so the loss is capped by selling at this price.
For example, let's say a trader owns 1,000 shares of ABC stock. He purchased the stock at $30 per share and it has risen to $45 on rumors of a potential buyout. He wants to lock in a gain of at least $10 per share, so he places a sell-stop order at $41. If the stock drops back below this price, then the order will become a market order and get filled at the current market price, which may be more (or more likely less) than the stop-loss price of $41. In this case, he might get $41 for 500 shares and $40.50 for the rest. But he will get to keep most of his gain.
2) Buy-stop orders are conceptually the same as sell stops except that they are used to protect short positions. A buy-stop order price will be above the current market price and will trigger if the price rises above that level.
Stop-limit orders are similar to stop-loss orders, but as their name states, there is a limit on the price at which they will execute. There are two prices specified in a stop-limit order: the stop price, which will convert the order to a sell order, and the limit price. Instead of the order becoming a market order to sell, the sell order becomes a limit order that will only execute at the limit price or better.
Of course, there is no guarantee that this order will be filled, especially if the stock price is rising or falling rapidly. Stop-limit orders are sometimes used because, if the price of the stock or other security falls below the limit, then the investor does not want to sell and is willing to wait for the price to rise back to the limit price.
For example, let's assume ABC stock never drops to the stop-loss price, but it continues to rise and eventually reaches $50 per share. The trader cancels his stop-loss order at $41 and puts in a stop-limit order at $47 with a limit of $45. If the stock price falls below $47, then the order becomes a live sell-limit order. If the stock price falls below $45 before the order is filled, then the order will remain unfilled until the price climbs back to $45.
Many investors will cancel their limit orders if the stock price falls below the limit price because they placed them solely to limit their loss when the price was dropping. Since they missed their chance to get out, they will then simply wait for the price to go back up and may not wish to sell at that limit price at that point in case the stock continues to rise.
Benefits and Risks
Stop-loss and stop-limit orders can provide different types of protection for investors. Stop-loss orders can guarantee execution, but not price. And price slippage frequently occurs upon execution. Most sell-stop orders are filled at a price below the strike price; the amount of difference depends on how fast the price is dropping. An order may get filled for a considerably lower price if the price is plummeting quickly.
Stop-limit orders can guarantee a price limit, but the trade may not be executed. This can saddle the investor with a substantial loss in a fast market if the order not get filled before the market price drops below the limit price. If bad news comes out about a company and the limit price is only $1 or $2 below the stop-loss price, then the investor must hold onto the stock for an indeterminate period before the share price rises again. Both types of orders can be entered as either day or good-until-canceled (GTC) orders.
Choosing which type of order to use essentially boils down to deciding which type of risk is better to take. The first step to using either type of order correctly is to carefully assess how the stock is trading. If the stock is volatile with substantial price movement, then a stop-limit order may be more effective because of its price guarantee. If the trade doesn't execute, then the investor may only have to wait a short time for the price to rise again. A stop-loss order would be appropriate if, for example, bad news comes out about a company that casts doubt upon its long-term future. In this case, the stock price may not return to its current level for months or years, if it ever does, and investors would therefore be wise to cut their losses and take the market price on the sale. A stop-limit order may yield a considerably larger loss if it does not execute.
Another important factor to consider when placing either type of order is where to set the stop and limit prices. Technical analysis can be a useful tool here, and stop-loss prices are often placed at levels of technical support or resistance. Investors who place stop-loss orders on stocks that are steadily climbing should take care to give the stock a little room to fall back. If they set their stop price too close to the current market price, they may get stopped out due to a relatively small retracement in price and miss out when the price starts to rise again.
The Bottom LineStop-loss and stop-limit orders can provide different types of protection for both long and short investors. Stop-loss orders guarantee execution, while stop-limit orders guarantee price.
The Basics Of Currency Trading
The investment markets can quickly take the money of investors who believe that trading is easy. Trading in any investment market is exceedingly difficult, but success first comes with education and practice. So, what is currency trading and is it right for you?
The currency market, or forex (FX), is the largest investment market in the world and continues to grow annually. On April 2010, the forex market reached $4 trillion in daily average turnover, an increase of 20% since 2007. In comparison, there is only $25 billion of daily volume on the New York Stock Exchange (NYSE). The market may be large, but until recently the volume came from professional traders, but as currency trading platforms have improved more retail traders have found forex to be suitable for their investment goals.
How Does It Work?
Currency trading is a 24-hour market that is only closed from Friday evening to Sunday evening, but the 24-hour trading sessions are misleading. There are three sessions that include the European, Asian and United States trading sessions. Although there is some overlap in the sessions, the main currencies in each market are traded mostly during those market hours. This means that certain currency pairs will have more volume during certain sessions. Traders who stay with pairs based on the dollar will find the most volume in the U.S. trading session.
Currency is traded in various sized lots. The micro-lot is 1,000 units of a currency. If your account is funded in U.S. dollars, a micro lot represents $1,000 of your base currency, the dollar. A mini lot is 10,000 units of your base currency and a standard lot is 100,000 units.
What Moves Currency?
An increasing amount of stock traders are taking interest in the currency markets because many of the forces that move the stock market also move the currency market. One of the largest is supply and demand. When the world needs more dollars, the value of the dollar increases and when there are too many circulating, the price drops.
Other factors like interest rates, new economic data from the largest countries and geopolitical tensions, are just a few of the events that may affect currency prices.
The Bottom Line
Much like anything in the investing market, learning about currency trading is easy but finding the winning trading strategies takes a lot of practice. Most forex brokers will allow you to open a free virtual account that allows you to trade with virtual money until you find strategies that will help you become a successful forex trader.
Pairs and PipsAll currency trading is done in pairs. Unlike the stock market, where you can buy or sell a single stock, you have to buy one currency and sell another currency in the forex market. Next, nearly all currencies are priced out to the fourth decimal point. A pip or percentage in point is the smallest increment of trade. One pip typically equals 1/100 of 1%.
Retail or beginning traders often trade currency in micro lots, because one pip in a micro lot represents only a 10 cents move in the price. This makes losses easier to manage if a trade doesn't produce the intended results. In a mini lot, one pip equals $1 and that same one pip in a standard lot equals $10. Some currencies move as much as 100 pips or more in a single trading session making the potential losses to the small investor much more manageable by trading in micro or mini lots.
Far Fewer ProductsThe majority of the volume in currency trading is confined to only 18 currency pairs compared to the thousands of stocks that are available in the global equity markets. Although there are other traded pairs outside of the 18, the eight currencies most often traded are the U.S. dollar (USD), Canadian dollar (CAD), euro (EUR), British pound (GBP), Swiss franc (CHF), New Zealand dollar (NZD), Australian dollar (AUD) and the Japanese yen (JPY). Although nobody would say that currency trading is easy, having far fewer trading options makes trade and portfolio management an easier task.
: Forex Trading 7
: Isonego Isoneopo
: Forex Trading 7