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Vlad RF

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What is Forex? Introduction to the Foreign Exchange Market

Author: Dmitriy Gurkovskiy



Dear Clients and Partners,

What is Forex?

Forex exchange market (name derived from FOReign EXchange) is an international market meant for broker companies, banks and investment funds trading currencies. Currency exchange market formed in the 70-s when the financial world passed from the gold standard to free currency pricing. The market works on the basis of free conversion of currencies without state interference and guarantees freedom of such transactions. At the same time, there is a number of rules and restrictions regulating relationship between traders and brokers.

Sometimes one might hear Forex called monetary exchange; however, this is wrong. Forex is an international non-stock exchange without a particular place for trading. One can trade via the Internet or using a telephone. Market players can make currency transaction from any spot on the globe. So long that Forex is a non-stock exchange, transactions may go without registration.

Though Forex players do not have to worry about the place of trading, their work still depends greatly on trading hours which vary in different parts of the world: in Asia-Pacific, in Europe and in North America.

Starting 1989 Bank for International Settlements (BIS) carries out a thorough analysis of the market every 3 years. Data shows that the daily turnover of Forex was 1.5 trillion USD in the year 2000 and reached 4.0 trillion USD 10 years later. BIS experts forecast the growth of Forex daily turnover up to 10 trillion USD by 2020. Part of this volume is provided by margin trading which implies contracting for sums substantially bigger than the actual capital of one transactor. Regardless of nature and the purposes of transactions, a large daily turnover guarantees high liquidity of the market. Another fact is that roughly 75% of transactions on Forex are conducted by American banks.

Forex Market Characteristics



The international exchange market Forex is of one of the most numerous types of financial markets existing at present. At the same time it is one of the largest markets. As other markets do, it attracts traders and investors offering them an opportunity to make a profit on the difference in exchange rates or just to exchange one currency for another. Every person making an exchange operation via a mobile bank application automatically becomes part of the scheme which connects the participants through various information systems and gives them access to currency exchange operations Monday to Friday 24 hours a day.

Forex has a number of advantages distinguishing it from other market types.

Availability

To become a Forex player and get an opportunity to make a profit on the difference in exchange rates, one has to open a trading account in a company providing such services. Then one has just to replenish their account and start trading. It is worth remembering that successful trading requires some experience and certain knowledge of chart analysis. However, almost any person can integrate rather easily into trader community.

Leverage

When buying or selling currencies a trader does not need to have a deposit covering the price of the whole contract. A leverage will help enhance one’s financial potential, because it allows for transaction amounting to much bigger sums than the trader possesses. On the one hand, this is an opportunity to earn a substantial profit with a modest sum on the account; on the other hand, risks grow accordingly. Thus, the risks are to be thoroughly studied and controlled. More information you can find in our posts What is Leverage and How to Trade with Leverage.

High volatility

Volatility means any changes in the price of an instrument. Forex is a market of high volatility. Exchange rates are particularly quick to change, and a trader’s aim is to make a profit on their volatility. That is why the bigger the changes are, the bigger is the trader’s profit, regardless of whether a currency is growing or falling in price, the latter phenomenon being yet another characteristic of the market. The truth is that traders can equally make a profit out of rises and out of falls of currencies. That is why high volatility together with leverage provides an excellent opportunity for earning money. However, risks are to be taken into account.

Forex market players

International inter-bank market Forex is a non-stock trading platform. In other words, the platform does not exist physically. All operations take place on the Net. Presently, major Forex players are national Central banks of different countries.

Most influential ones are the European Central Bank and the Federal Reserve System. Central banks of other countries also influence the volatility of currencies, their aim being prevention of steep surges in prices.

Commercial banks are also present on Forex. They can hardly influence monetary and credit policy of major players; however, they significantly enhance the liquidity on the market. Commercial banks make speculative influence, constantly manipulating exchange rates in order to make a profit and making lots of transactions. Commercial banks make profit out of spread which is the difference between buying and selling rates.

Apart from banks, other Forex players are brokers, broker companies and dealing services which contribute a lot to currency price formation as agents. What is more, they give access to the inter-bank market to individual traders and investors; trading via broker and dealing companies, individuals make the largest part of transactions on the market.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
RoboForex received two major awards in two nominations



Dear Clients and Partners,

Our team is constantly working on improving investment solutions and trading platforms to provide the company’s clients with the most comfortable conditions available in financial markets. We are therefore proud to be, once again, highly appreciated by the professional community of the industry.

RoboForex received two prestigious awards

The R StocksTrader platform developed by RoboForex was recognised as the "Best Multi Asset Trading Platform (LatAm)" according to the Global Banking & Finance Awards. Moreover, our investment platform CopyFX received the "Best Investment Products (Global)" award from the Global Brands Magazine Awards.


Trade in R StocksTrader
Best Multi Asset Trading Platform (LatAm)

The R StocksTrader platform satisfies the requirements and demands of the most sophisticated investors.
  • Easy start
    Start investing with just 100 USD.

  • 12,000+ instruments
    US Stocks, Forex, ETFs, CFDs on stocks, and other popular exchange-traded and OTC assets.

  • Best trading solution
    Unique platform with personal customization and a wide range of trading opportunities, algorithmic strategy builder.


Invest in Top Traders with CopyFX
Best Investment Products (Global)

The company's clients can copy successful traders’ transactions with competitive conditions on the CopyFX platform.
  • Thousands of participants
    Join a huge community of Traders and Investors.

  • Multifunctional control
    Control every stage of your investments and allocation of funds.

  • A wide range of platforms
    Trade via the most popular terminals MetaTrader 4/5, as well as via the exclusive multi-asset R StocksTrader platform.

Sincerely,
RoboForex team
 

Vlad RF

Member
RoboForex enabled access to CopyFX in R StocksTrader



Dear Clients and Partners,

From now on, investments using the CopyFX platform are available via accounts opened in R StocksTrader, the cutting-edge terminal for stocks trading.

R StocksTrader is a multi-asset trading platform with advanced tools for technical analysis and the industry's fastest financial charts. It allows carrying out financial transactions with over 12,000 advanced instruments, such as ETFs, Stocks, and others.

The CopyFX investment platform is RoboForex’s proprietary solution for copy-trading. When working with the CopyFX platform as an Investor, you get the opportunity to simplify the trading process by copying the strategies of successful Traders. As a Trader, you get to share your trading experience and attract subscribers (the platform’s Investors) to your strategies.

R StocksTrader with CopyFX

The integration of CopyFX into R StocksTrader comes with many advantages and opens up a wide range of opportunities for working in the financial markets.

You can now copy transactions on more than 1000 of the most popular trading instruments: Stocks, CFDs, FX, Commodities, Indices, ETFs. The same R StocksTrader account is used to trade on your own as a Trader or copy transactions from other Traders as an Investor. Copying of transactions is carried out instantly with guarantee of the same execution price for the Trader and the Investor.

Benefits for Investors and Traders

The launching of copy trading in R StocksTrader is to the advantage of both Traders and Investors.

For Investors

  • Source of passive income: once set up, copy trading requires minimal effort to use. Just control your risk.
  • Try out different Traders' strategies and choose the one that suits your trading style the best.
  • Time-saving: trading is a full-time job, but copy trading does not require constant participation of the Investor.
  • Subscriptions on different Traders can help diversify your portfolio and mitigate risks.
  • Removes emotion from the investment decision process.
  • Launching, stopping, and editing of your subscriptions happens instantly.
For Traders
  • Opportunity to form the basis for additional income. The higher your profitability in the platform, the better your investment rating in the listing of Top CopyFX Traders of the R StocksTrader platform.
  • Availability of detailed statistics concerning your trading strategy to enable you to assess changes in the state of your account, manage risks and improve your own results.
Specifics of copy trading on R StocksTrader

Are you ready to feel all the benefits of investing on R StocksTrader for yourself? You need to pay attention to the specifics of working with CopyFX on R StocksTrader accounts.
  • CopyFX controls (creating strategies and subscribing to Traders) can be found only in the mobile application and in the mobile version of the platform
  • Subscriptions are allowed only between R StocksTrader hedging accounts
  • Over 1,000 CFDs and stocks are available for copying
  • Investors can choose between "Proportional" and "Classic" subscription modes
  • Traders can only use the "Without commission" scheme, with additional commission options coming up in next releases
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Sincerely,
RoboForex team
 

Vlad RF

Member
Is It Important to Plan Budget

Author: Victor Gryazin



Dear Clients and Partners,

What is Forex?

In this article, we will touch upon the issue of budget: what it is, what it is used for and how to plan it. Moreover, we will try to explain why a well-planned budget is such important for work with finance. Also, we will show you the advantages of an accurate budget.

Why budget is important

Budget is a financial plan for a certain timeframe that accounts for planned income and expenses. As a rule, a budget is drafted for a month or year.

Planning a budget implies a detailed list of expenses that gives a clear understanding of what can and has to be left out for your financial goals to be reached faster.

Explaining the importance of budget, we should at once enumerate its advantages. Firstly, a budget helps to manage your monthly expenses, makes you more disciplined, gets you ready for overcoming some crises, and stops you from making unwise financial decisions.

What is the goal of budget

Your budget demonstrates how much money a country, company, family, or person has and how much is to be spent on obligatory expenses. It must be noted that a budget is not a list of monthly earnings and spending; even such a table would be useful, though it will not help in reaching financial stability.

The goal of a budget is planning expenses and earnings over a certain time and then comparing your plan to what you actually got. This comparison and analysis of your statistics answers the basic questions:
  • What have you spent your money on, and was it that necessary?
  • Why your actual expenses have exceeded your plan and on what goods and services?
  • How to follow your financial plan more accurately?
  • What to do to minimise negative deviations of your budget from your plan?
What types of budget there are

A budget can be equally planned for a country and an individual who wants more order in their expenses. This document must fully represent the state of finance of a family or company. This means that the plan must include absolutely all sources of income and types of spending. The information must be true, valid, and full.

The process of financial planning is called budgeting and belongs to one of the following types:
  • Personal budgeting is creating a budget for an individual for distributing income on spending, savings, and paying off debts. It accounts for previous expenses and debts. For example, a job is a source of income, while communal payments and rent are expenses. Here, we can also single out the category of assets: property, investments, and other savings or valuables that create a potential reserve for a budget deficit.
  • Corporate budgeting is making a financial forecast for the nearest future that unites prospective income and expenses of various departments. It is the key element of integrated business planning. The process of corporate budgeting normally calls for a lot of effort, involving several employees. The final decision if left for the financial director.
Why it is profitable to plan budget

Budgeting allows for balancing out your income and expenses and reaching your financial goals. The latter ones may be as ambitious as buying real estate, or more modest, like buying a smarphone. A budget will provide more accurate information about how to reach your goals fast.

Another reason for thinking about a family budget is creating a reserve for some emergency. It is recommended to save no less than 10% of your monthly income for a money airbag. It should last you 3-6 months in case you lose your source of income. This is one of the main rules taught on financial literacy courses.

Tracking all your expenses helps to find some possible sources of saving. And even is it seems that you have saved little today, imagine how this sum may grow with time if you stick to the plan.

Bottom line

A budget allows for tracking your income and expenses easily and in detail. A budget is the base for financial success and safety. It also helps to make difficult financial decisions.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
How Did George Soros Make His Money: Top 3 Trades

Author: Victor Gryazin



Dear Clients and Partners,

Today we will dive into the business of George Soros, a trader and manager who became a true legend. We will consider three Soros's trades with currency that made him a celebrity of the financial world.

Who is George Soros

George Soros is a trader, investor, and manager considered by many to be one of the most successful financiers of these days. For long he used to be the manager of the Quantum hedge fund that used to demonstrate stable annual profitability of 30% from 1970 through 2000. Also, he created a network of grantinh institutions known as the Soros Fund.

He was born in Hungary in 1930. After the World War II was over, he left for England to study at the London School of Economy. Upon graduating, he went to New York and began his banking career, later leaving for a broker company. Many years later, he formed the Soros Fund Management that became a part of the mentioned Quantum Fund.

Over the years of active work, Soros made several impressive trades and investments. He is one of the most famous investors in the financial world, known for making trades with currencies that are huge even for the global financial world. Soros's capital in 2022 was above 8 billion USD. Moreover, he donatef more than 30 billion USD on charity and political projects.

Legendary Soros’s trades with currencies

Let us take a look at threw Soros's trades with currencies that made him wealthy and famous.

British pound: George Soros and Black Wednesday for the Bank of England

Soros's Forex stake against the British pound is called one of the greatest currency trades of the modern world. Great Britain joined the European Exchange Rate Mechanism (ERM) in 1991, when inflation was high and interest rates were low. By this mechanism, the government planned to hold the exchange rate of the national currency at 2.7 German mark per pound.

However, there was no good reason for such a rate, firstly because inflation in Britain at that time was much higher than in Germany. Being an economist, Soros noticed that the pound was seriously overestimated against the German mark, and un summer 1992 started making stakes against the British currency via his Quantum fund. The total sum of the trade is evaluated as about 5 billion pounds.

To hold back the rate and attract investors, Great Britain increased the interest rates above 10% but this never helped. Alongside Soros, many market players started selling the pound against the mark and dollar expecting the exchange rate to drop.

Soon the British government realised that it would have to spend a lot of money due to the extremely high rates and the necessity to hold the rate of the pound that high. Apart from that, German authorities publicly announced possible reorganization inside the ERM.

On 16 September 1992, the British government decided to leave the ERM and unbind the pound, and this day got the name of Black Wednesday. As a result, the British pound abruptly dropped by 15% against the German mark and by 25% against the USD. By different evaluations, Soros made about 1 billion USD on this trade.



Quotes by George Soros about investments
  • It is not important whether you are right or not; it is important how much you earn when you are right and how much you lose when you are wrong.
  • Financial markets are usually unpredictable. So each one must have different scenarios. The idea that you can really predict what happens is against my understanding of the market.
  • The market is a mathematical hypothesis. The best solutions are elegant and simple.
  • I have created quite a general theory that financial markets are naturally unstable; that when we think about a balanced market, this picture is false.
  • Risk is painful. People are either ready to endure the pain themselves or try to pass it to someone else. There is nothing better than danger for focusing your mind; I really need the risk-provoked anxiety to think clearly. Accepting risk for me is an important part of a clear mind.
  • If investing seems entertaining, you must not be making any money. Good investing is boring.
Bottom line

George Soros is a trader who can easily be called an outstanding person. Some call him a genius, some say he is a talented manipulator. Thanks to his trades with currencies, Soros has made real money and has gone down to history as a financial legend of modern day.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
How to Trade in Forex if You Already Have a Job

Author: Dmitriy Gurkovskiy



Dear Clients and Partners,

This article is devoted to an issue that has always been topical for many traders: how to combine trading and employment? What does one need it for, and what can help one find time for trading if they are short of it?

Why would one combine trading and some other job?

Trading in financial markets and employment, such as office work, are, in fact, compatible. Not all traders in For example or other financial markets can just quit their jobs and focus on trading. First hand, this is true for beginners: one might need years to study all aspects of trading and start making a stable profit in the market.

Forex trading has never been simple, and only experts make money there consistently. To become a Forex pro, one needs to learn first, then practice hard, and then beat their emotions and stick to some discipline. All this requires time and finance. Not at all every beginner has a substantial capital that will let them stay unemployed, pay for their studies, and withstand initial losses for several years.

This is why combining employment and trading is so vital for many. Some stable income allows to pay one's bills and accumulate skills gradually. This said, combining job and trading is not easy because one's time that they can devote to trading is rather limited.

What allows combining employment and Forex trading?

I would single out several main ways of combining employment and trading. One's choice will depend, naturally, on their type of employment.
  • The trader works from home and has a constant Internet access, which allows checking charts several times a day;
  • The trader works part-time and can spend the rest of their free time on trading;
  • The trader only uses the mobile app at lunch.
Preparing a trading plan

A trading plan contain's the trader's ideas prepared beforehand. They plan promising trades based on their trading strategy. With a consistent plan, one does not need to monitor quotations constantly; they only need to wait for trading signals to appear in the area as specified in the plan.

I recommend analyzing the market and charts of your instrument before your day starts. Single out appealing trading ideas and create a trading plan. Then simply stick to it. You can open positions by pending orders or set up alerts that will notify you of the price reaching the values specified in the plan.

Setting up alerts

Alerts are good helpers to traders. An alert warns the trader of different market events. They are either sound alerts or text. This function helps the trader remain in course of market events even if they are busy doing some other job.

Alerts are available in various popular trading terminals and mobile apps. Apart from standard alerts, traders may use different expert advisors and indicators that have their own embedded alerts, i.e. they also notify the trader of a trading signal appearing by the specified algorithm so that the trader could decide whether to open a position or not.

Trading at a session at hand

Forex works 24h on weekdays. Hence, depending on their local time, the trader can fully use one out of three trading sessions: Asian, European, or American. We exclude the Pacific one because it is a hard trading option due to small movements.

In the European and American sessions, almost any instrument will do, both positional trading and scalping. If you have the Asian session available, pay more attention to active currencies, such as the yen, the Australian dollar, the New Zealand dollar. Always study the peculiarities of the currencies and influencing factors.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
Top 10 Trading Psychology Books

Author: Victor Gryazin



Dear Clients and Partners,

This article is about the Top 10 books on trading psychology. They accumulate the experience and knowledge that have helped many famous market experts to succeed.

The books will provide you with information on trading psychology and some advice that will help you realize what you need to become a successful trader.

1. The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management

Alexander Elder is a PhD in medicine, a professional trader and professor. He is the author of several masterpieces that have become modern classics for traders. Elder used to be a psychiatrist in New York and a professor at the University of Columbia. His experience as a psychiatrist gave him a unique understanding of trading psychology.

The New Trading for a Living teaches a calm and disciplined approached to markets. The book offers several templates for trading plans and estimation of your readiness for trading: all in all, you get knowledge and instruments for developing an individual trading system.

2. Trading in the Zone

Trading in the Zone helps to broaden a beginner’s understanding of work at the market. It provides a comprehensive view of problems that one might face upon accepting a challenge from financial markets.

According to Mark Douglas, the author, success in financial markets needs a special mind frame. Trading in the Zone is based on life-long trading experience of the author and his work as a coach in Chicago.

3. The Psychology of the Foreign Exchange Market

The book by Thomas Oberlechner on Forex psychology is revealing the psychological lining of the currency market. By the author’s theory, the market is not remote from traders; instead, it is their creation that reflects their thoughts, feelings, and ideas.

The author of The Psychology of the Foreign Exchange Market states that fundamental changes in stock markets happen not because of economic conditions but because of some alterations in the collective attitudes to the market.

The language of the book is scientific, with quotes enforcing its ideas. Thomas Oberlechner describes mutually dependent relationships between those who make financial decisions and newsmakers. He points out that the currency market is chiefly managed by the complicated market psychology.

4. Hedgehogging

This book is quite a rare chance to encounter some naked facts about financial markets behind the scenes, diving in the world of Wall Street with the author Barton Biggs.

He describes some features and details of investing, showing how he learned to find and use the best ways of making money. Each chapter of Hedgehogging generously offers dozens of storied from the life of different people who fell prey to their ignorance of trading psychology or arrogance and were punished by the cruel world of market trading.

5. Flow: The Psychology of Optimal Experience

This book by Mihaly Csikszentmihalyi suggests quite an unusual approach to a person’s emotional life. Though the book is not directly devoted to trading in financial markets, it will definitely be useful for traders.

The research of the Optimal Experience carried put by the author demonstrated that personal efficacy can by enhanced by living in the so-called Flow. People living in the Flow feel lots of pleasure, confidence, and creativity. The author suggests ways of controlling this state of mind.

Flow: The Psychology of Optimal Experience teaches its readers to sort out the incoming information and to develop their creativity. This book can improve your understanding of how you approach trading and your life.

Closing thoughts

Psychology is a vital intricate part of market trading. To succeed in trading, one needs to know psychology and make use of it. In the article, you can find a Top 10 list of popular books on trading psychology that can help you with it. Clearly, this is quite a subjective set of books, and each trader make have their own view of which books to consider the best.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
How can a Trading Style Depend on a Trader’s Temperament?

Author: Vadim Kovalenko



Dear Clients and Partners,

In their operations, both beginners and experienced traders often face psychological issues. Despite being rather subtle, this aspect of trading is extremely important. Market players try to improve their skills in technical and fundamental analyses, capital and risk management, but suffer losses nonetheless. Of course, post factum mistakes are clear. Most of them are the result of an early exit from the market, a late market entry, or a fear of opening a position in general.

A person makes decisions guided by not only logic but emotions as well. Sooner or later, traders come to a conclusion that they should work on improving both themselves and their psychology. The Internet is already full of advice on what habits one should build and how to discipline oneself but most of them offer to “break” yourself and change radically. As a rule, applying such advice in practice doesn’t result in any success. The reason for that is that a person has several natural dynamic behavior aspects, which build a temperament.

In this article, we’ll talk about temperament and how it can influence a trading style and susceptibility to risks and losses. If you see yourself in any of these descriptions, take it easy, and don’t try to change your attitude to trading right away. First of all, this material is intended for self-analysis and exploring your knowledge about yourself as both a person and a trader.

What is temperament?

Once I was involved in teaching beginner traders and watched them becoming who they wanted to be. It helped me to identify a certain pattern: the most emotional and energetic students tended towards scalping or day-trading, while quieter and calmer ones showed good results in mid-term deals. Tellingly, they did it unconsciously during their classes on demo accounts. I was intrigued by this, that’s why today we’ll talk about temperament. Let’s start with the definition.

Temperament is a set of individual aspects of human psychology, which defines a person’s “modus operandi” in any given situation. The keyword here is a “set”. If we want to define a personality type, we should take into account all responses and processes that form a disposition towards any given behavior model.

When it comes to trading, the most important processes are:
  • Emotional excitement – implies strength and speed of emotions induced by external stimulus.
  • Reaction speed – indicates how quick response is shown. It is often can be detected in the pace of speech.
  • Responsivity – shows how a person responds to external environmental factors.
  • Activity – implies a speed of interaction with the outside world.
  • Rigidity/flexibility – demonstrates a person’s ability to adapt to external influence.
How does a trading style depend on a trader’s temperament?

It’s very important to understand that it’s extremely difficult to find a “clear” temperament type in real life. Quite often, a person has a prevailing type and a slight mixture of others. This is one of the reasons why you shouldn’t consider the descriptions below as guidelines for action first of all, this article is for self-analysis.

Choleric traders

My observations say that choleric traders start trading on an M1 timeframe “ex improviso” without even being slightly prepared. For them, all timeframes longer than H4 are not worth paying attention to.

In the eyes of such traders, a financial market is a kind of gambling, although they often fail to realize that. They easily fall for false promises of win-win trading strategies. The key preference is scalping, while other strategies are not even considered.

In the early days, choleric traders do not consider losses as a reason for stopping and analyzing the situation. On the contrary, losses provide an extra incentive to continue pursuing easy solutions to get profit. More often than not, such pursuits lead to a loss of either interest in trading or a lot of money.

To achieve results, for these traders, it pays to focus on day-trading combines with swing trading. Short-term intraday deals will provide them with necessary adrenaline, while swing trading will help to compensate for losses incurred in ill-considered transactions. The strength of such traders is quick reaction and decision-making, while their weakness is impetuosity, which turns trading into another game of chance.

Sanguine traders

Just like choleric traders, they sometimes are be fascinated by scalping. On the other hand, unlike choleric traders, they are ready for changes and switch to intraday deals much quicker. Due to excessive emotional sensitivity, they may get carried away and spoil all they achieve their monthly results in a couple of days.

It’s difficult for them to maintain mid/long-term positions due to the lack of patience, although they are much more patient than choleric and melancholic traders. Such traders have no problems with swing trading, they often change trading instruments. Sanguine traders are acceptive to losses and failures but lack perseverance in self-improvement.

Phlegmatic traders

Scalping in their early trading days is not a thing for phlegmatic traders; it might be good for them after, let’s say, 5 years of active practice. False promises of fantastic profits may force them to waste time studying scalping strategies (luckily, they are very persistent) but their low response rate won’t let them make quick decisions necessary for this trading method.

Phlegmatic traders can find more success in swing trading and they can also make decent mid/long-term investors. As a rule, phlegmatic people are very good in this area.

Melancholic traders
Melancholic traders are recommended to avoid any active trading. A good option for them is to focus on long-term investments from 1 year. The key principle is to check the terminal as seldom as possible and spend more time on sharpening skills in macroeconomic analysis. Stresses are very harmful to melancholic traders and make them want to leave the market.

Such people are very sensitive to losses, can waste a lot of time in “drawdown”, and go up in smoke eventually. Therefore, their time on the market is rather short: after incurring a loss or losing their entire deposit, melancholic traders usually decide not to be engaged in trading activities.

Closing thoughts

Our psychological reactions to market events directly depend on our temperament type. Most people come in trading being adults when this part of their personality is impossible to change.

Consider a temperament type when choosing a trading strategy? Definitively yes. Define your future trading career using the temperament alone? No, for sure. Don’t forget that any strategies should be tested on a demo account first and only after that applied to real trading.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
How to Use Euronis: Settings and Testing

Author: Timofey Zuev



Dear Clients and Partners,

Today we will get acquainted with Euronis, a scalper that does not use averaging, but has some smart money management techniques. Euronis is a high-frequency trading algorithm that uses a popular technique such as "trading from price channel boundaries".

When to use Euronis

The use of price levels in trading is one of the most popular tactics in trading and not only in the foreign exchange market. A price level is a certain price of a financial asset, which for one reason or another is considered important to the market or to a particular trader. With this level in mind he tries to enter the market.

Price levels can be calculated using an algorithm, formula or historical data. They can also be used in trading in different ways, either on a breakout or a rebound.

The idea behind Euronis is that it only trades on rebound levels and only during quiet times, i.e. during the Pacific session, when market fluctuations are minimal. During the night, it is less likely that the price will change sharply. This allows the price corridor boundaries to be defined more accurately and trades to be closed with profits more often.

The Euronis advisor can also be used at any other time, but the developer does not recommend it.

What are the technical features of Euronis advisor?

The initial deposit size can be chosen according to your trading style, so all other parameters should be adjusted according to your trading balance.

Leverage should be set as high as possible, usually from 1:100 and above. Such leverage will be needed in case of a drawdown, when Euronis will need all the funds to be able to trade further.

Both major currency pairs and cross rates are suitable for trading. The former are EUR/USD, GBP/USD, USD/CHF and USD/CAD, the latter are EUR/CHF, EUR/GBP, CAD/CHF, EUR/CAD, GBP/CAD and GBP/CHF. It is recommended to trade on the M15 timeframe.

Euronis has a very interesting feature that allows you to trade cross rates through the American dollar. For example, you set Euronis on the EUR/CHF pair and activate the "trade via USD" function. In this case, Euronis will open corresponding positions on pairs that have USD in them, namely EUR/USD and USD/CHF. This method saves a lot on spread, which is very important for scalping.

How to test and optimise Euronis

Fully testing and optimising all the copies of Euronis would have taken a long time, so we settled on the oldest version available to us.

Euronis has enough recommended instruments to trade, so to save time we tested only the major currency pairs.


Testing Euronis on EUR/USD

We can see that the pound was tested with the best result, although the euro is considered the most popular trading instrument. Therefore, we performed optimization on the same section of the chart, but we only touched those parameters, which are responsible for the trading algorithm - SettingsNumber, LowRiskSettingsNumber and TimeRiskFactor.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
RoboForex: upcoming changes to the trading schedule due to reverting to Standard Time



Dear Clients and Partners,

We’re informing you that on 30 October 2022, European countries will revert from Daylight Saving Time to Standard time. In the US, this will happen on 6 November 2022. Consequently, there will be some changes to the RoboForex trading schedule.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading CFDs on Metals (XAUUSD, XAGUSD)
  • From 31 October to 4 November 2022, trading on CFDs on Metals will be opened and closed one hour earlier than usual (server time).
    Trading session (server time): 12:05 AM - 10:59 PM
  • Starting 7 November 2022, CFDs on Metals will be available for trading within the operating range of the contract specifications
Schedule for trading CFDs on US indices
  • From 31 October to 4 November 2022, trading on CFDs on US indices will be opened and closed one hour earlier than usual (server time).
    Trading session (server time): 02:00 AM - 10:15 PM
  • Starting 7 November 2022, CFDs on US indices will be available for trading within the operating range of the contract specifications
Schedule for trading CFDs on oil (Brent and WTI)
  • From 31 October to 4 November 2022, trading on CFDs on oil will be opened and closed 1 hour earlier than usual (server time).
    Trading session (server time): 02:00 AM - 10:15 PM.
  • Starting 7 November 2022, CFDs on oil will be available for trading within the operating range of the contract specifications.
Schedule for trading CFDs on US stocks
  • From 31 October to 4 November 2022, trading CFDs on US stocks will be opened and closed one hour earlier than usual (server time)
    Trading session (server time): 03:31 PM - 09:59 PM
  • Starting 7 November 2022, CFDs on US stocks will be available for trading within the operating range of the contract specifications
Schedule for trading on currency pairs and CFDs on Cryptocurrencies
  • 4 November 2022, trading on currency pairs and CFDs on Cryptocurrencies will be closed at 23:00 server time.
  • Starting 7 November 2022, the above-mentioned instruments will be available for trading within the operating range of the contract specifications

R StocksTrader platform

Schedule for trading US stocks, CFDs on US stocks, ETFs, and CFDs on ETFs
  • From 31 October to 4 November 2022, trading will be opened and closed one hour earlier than usual (server time)
    Trading session (server time): 03:31 PM - 9:59 PM
  • Starting 7 November 2022, the above-mentioned instruments will be available for trading within the operating range of the contract specifications
Schedule for trading CFDs on US indices
  • From 31 October to 4 November 2022, trading CFDs on US indices will be opened and closed one hour earlier than usual (server time)
    Trading session (server time): 09:00 AM - 10:00 PM
  • Starting 7 November 2022, the above-mentioned instruments will be available for trading within the operating range of the contract specifications
Schedule for trading CFDs on Metals (XAUUSD, XAGUSD)
  • From 1 to 5 November 2022, trading CFDs on Metals will be opened and closed one hour earlier than usual (server time)
    Trading session (server time): 12:05 AM - 10:59 PM
  • Starting 7 November 2022, CFDs on Metals will be available for trading within the operating range of the contract specifications
Schedule for trading CFDs on oil (BRENT.oil and WTI.oil)
  • From 1 to 5 November 2022, trading on CFDs on oil will be opened and closed one hour earlier than usual (server time)
    Trading session (server time): 02:00 AM - 10:15 PM
  • Starting 7 November 2022, CFDs on oil will be available for trading within the operating range of the contract specifications
Schedule for trading on currency pairs and CFDs on Cryptocurrencies
  • 4 November 2022, trading on currency pairs and CFDs on Cryptocurrencies will be closed at 23:00 server time.
  • Starting 7 November 2022, the above-mentioned instruments will be available for trading within the operating range of the contract specifications

cTrader platform

Schedule for trading CFDs on Metals (XAUUSD, XAGUSD)
  • From 1 to 5 November 2022, trading on CFDs on Metals will be opened and closed 1 hour earlier than usual (server time)
    Trading session (server time): 12:05 AM - 10:59 PM.
  • Starting 7 November 2022, CFDs on Metals will be available for trading within the operating range of the contract specifications.
Schedule for trading on currency pairs
  • 5 November 2022, trading on currency pairs will be closed at 23:00 server time
  • Starting 7 November 2022, currency pairs will be available for trading within the operating range of the contract specifications
Also, please note that from 31 October to 4 November 2022, the bank rollover time will be from 10:45 PM to 11:15 PM server time This might lead to short-term interruptions in quoting and a significant widening of spreads.

Please take note of the above trading schedule changes when planning your trading activity.

Sincerely,
RoboForex team
 

Vlad RF

Member
RoboForex became the Official sponsor of Club Cienciano



Dear Clients and Partners,

We are proud to announce that RoboForex became the Official sponsor of Club Cienciano in the 2022/23 seasons. This team with over 100 years of history was founded by a group of students of the National Science School of Cusco (Peru), and has gradually become a significant part of Latin American football.


Football and trading

Trading and football are similar in many aspects – the fast rhythm, the competitiveness, and the participants’ drive and determination to break new grounds and reach new heights. Just like football fans want to root for an ambitious team with great history, so do investors who look for a reliable broker with dynamically developing products.

RoboForex and Cienciano are experienced winners with many more new achievements to strive for.


Join the winners!


Sincerely,
RoboForex team
 

Vlad RF

Member
Three Indicators Trading Strategy: Detailed Description

Author: Andrey Goilov



Dear Clients and Partners,

Today we're going to talk about the Three Indicators strategy. It's based on the use of tools such as the Accelerator Oscillator, the Awesome Oscillator, and the Parabolic SAR.

The idea is to try to catch the beginning of an impulse, and earn money on this movement. Trading is done only on the major currency pairs, and on an hourly timeframe.

We will show you how to combine signals from the three indicators, in an attempt to catch the beginning of an impulse long before it forms a reversal on the price chart. We will study the intricacies of this procedure, and detail the rules for opening and closing positions.



How to set up the three indicators

The processing of signals according to the "Three Indicators" strategy could take hours or days. It all depends on the size of the potential profit: the bigger it is, the higher the risk and the longer the waiting time.

Now let's talk about the indicators:

1. The Awesome Oscillator is used with standard parameters. Traders note its similarity to the MACD indicator: it shows the difference between simple moving averages with periods of 34 and 5. It is represented by a histogram that changes colour when moving averages are crossed, with green indicating an uptrend, and red a downtrend.

2. The Accelerator Oscillator is also added with the standard parameters. It is calculated taking into account the values of the Awesome Oscillator and displays the acceleration and deceleration of the driving force. In most cases, traders trade in the direction of the histogram: if its colour is red – you should not buy, if it is green – do not consider selling.

3. The Parabolic SAR represents points that are above or below the price. The trend is said to be upward as long as the dots are below the price chart. If the price breaks through the indicator and a point appears above, then the trend changes downward, which means you should sell. Often traders use the Parabolic SAR to place a floating Stop Loss: if the indicator point is broken by the price, this means the market is changing direction, and the trade should be closed.

An example of buying with the Three Indicators strategy

Consider the situation on the EUR/USD chart on 3 October 2022. On a large bullish candlestick, the Parabolic SAR has positioned a point below the indicator chart. The Awesome Oscillator and Accelerator Oscillator histogram bars immediately became green on two indicators, so we mark the candlestick as the "signal".



We open the trade at the opening of the next candlestick at 18:00 at 0.9813. We set the Stop Loss below the level of the "signal" candlestick at the price of 0.9756. Take Profit is equal to the Stop Loss size of 57 points, and set at 0.9870. The profit made 57 points; the price reached this target within 16 hours.

If the second variant of trade closing had been applied, when it was necessary to wait for the Awesome Oscillator and Accelerator Oscillator histogram bars to change colour from green to red, then the trade would have had to be closed at the price of 0.9819. The profit would be only six points.

Example of a Three Indicator Strategy sale

Let's look at the EUR/USD chart for 26 January 2022. The price had been declining for some time, but could not leave the limits of the sideways correction. The support level of 1.1260 is broken and a signal from the Parabolic SAR is formed: a point appears above the price chart.

On the Awesome Oscillator and Accelerator Oscillator, the bar graphs have changed colour from green to red. Mark this candlestick as the "signal" candlestick. We can open a deal when the next candlestick opens at 1.1254 at 22:00 terminal time

]Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
How to Use Interest Compounding Calculator

Author: Victor Gryazin



Dear Clients and Partners,

interest calculator. Let's take a closer look at this tool. Let's find out what it is, where and how it is used, and look at examples of its use.

What is compound interest?

Compound interest in finance is interest income accrued on deposits or investments, taking into account interest previously accumulated for previous periods. Financiers use another term – capitalisation of interest. Although the field of application of compound interest is much broader than capital accumulation, it is still the most popular in this segment.

Compound interest on a deposit with capitalisation can be calculated daily, monthly, quarterly, and yearly. If not paid out, it can be added to the interest deposit amount to accrue a larger amount in the next period. Thus, the essence of compound interest is that the calculation base increases with time.

This scheme is also sometimes called "interest on interest". Compound interest multiplies capital at an accelerated rate. The longer the periods in which it is compounded, the greater the return. Combining compound interest with regular investments over a long period of time is a highly effective way of preserving and increasing capital.



Why use a compound interest calculator?

The calculation of compound interest (accruing income with constant reinvestment) is a complex mathematical operation. The formula for the calculation is as follows:

A = P(1+r/n)^nt

In the formula:
  • A is the future amount of capital, including accrued interest
  • P is the principal amount of the investment
  • r is the interest rate (decimal)
  • n is the number of interest accruals per period
  • t is the number of periods in which funds are invested
The formula is not the easiest to calculate, so if you want to avoid making a mistake, you'd better use a tool to help you: a compound interest calculator.

If, on the other hand, you're not afraid of errors and only need to calculate an approximate return on compound interest, the "Rule of 72" can help. We talked about it earlier in one of our articles.

Nevertheless, for an accurate and detailed calculation, it is recommended that you use the above tool. It is essentially an investment calculator that helps to calculate the potential return on investment. It can be used to calculate daily, monthly or yearly interest. This versatile tool can be used in many ways, including as a forex interest calculator.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
Scalping Strategy with EMA



Dear Clients and Partners,

This article is a review of a trading strategy based on a combination of moving averages under - "Scalping Strategy with EMA". Its tactics imply quickly closing profitable positions on minute and five-minute charts. For such active work we need tools with minimal spreads. Every point of profit is important, therefore the major currency pairs EUR/USD, GBP/USD, AUD/USD, USD/CAD are used.



The strategy will clearly show how to combine signals from three moving averages with different periods, the total number of which on the chart will be 38. We will detail the rules for opening positions, adding to the short term trend and closing options.

Adding Scalping Strategy Indicators with EMA

Only EMA indicators with different periods should be added to the chart. Traders usually use this tool to determine the trend on the market - if the price is above the EMA line, then the trend is bullish and a buy is anticipated. If the price is under the EMA line, then it is a bearish trend and you are supposed to sell.

The very crossing of the lines of the indicator will also give a signal to open positions, if the EMA with a smaller period crosses the EMA with a larger period downwards - it is a signal for the development of the downward movement. If there is a crossing of EMA with a smaller period and EMA with a larger period from the bottom upwards - it is a signal for an upward movement.

Often, even a test of the EMA line signals an imminent breakaway from it and the continuation of the existing trend. In our case, 38 lines of the EMA indicator will form support and resistance areas on the chart, the test of which the price will be a signal to open a position.

How to open a buy position on an EMA scalping strategy

The rules of the strategy imply several options for opening buy positions. For example, if a trend is developing, the tactic allows you to work in the direction of this trend, instead of just entering only at the beginning of its formation. This is a significant advantage of the scalping strategy, because you do not have to wait for the trend to change, just identify the trend and work according to the proposed rules.

Let's look at the basic rules for opening a long position on the M1 chart:

The first long position is opened when the purple EMA lines cross the green EMA lines from top to bottom.



Conclusion

The EMA scalping strategy is a unique tactic where 38 indicators are used at once. The entry rules are quite simple, although they differ from the usual use of moving averages. In this strategy, a sell position is opened when the fast EMA crosses the slow one from the bottom upwards. A buy position is opened when the fast one crosses the slow one from above downwards.

The strategy also provides an opportunity to work in the direction of the prevailing trend, which is a significant plus, because there is no need to wait for a trend change to open positions. On the downside, it should be noted that the size of the Stop Loss is somewhat disappointing, as it turns out to be larger than Take Profit, which is not always right from the risk management point of view.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
NYSE — Probably Main Stock Market



Dear Clients and Partners,

A stock exchange is a platform where market players can buy and sell securities and commodities. One of the oldest and largest stock exchanges in the US is the New York Stock Exchange (NYSE). It opened in 1792.

Today daily turnovers reach billions USD, and total capitalisation of securities is over 27 trillion USD. Some calculations say that more than 65% of all trades with stocks happen in NYSE.

Today we suggest finding out some interest facts from the history of the exchange and discussing why traders worldwide keep a close eye on its activities.

How NYSE appeared

The story of NYSE started with signing the Buttonwood Agreement by which 24 brokers formed an investing society with only 2 rules to follow. They had to trade only between each other and pay a small fee for each such trade.

The first kind of an office was a coffee shop called Tontine Coffee House. There they traded stocks but only by barter method. 25 years later, the society decided to let other players to their trades. All trades went to the exchange that goes on this way these days.

Main facts in NYSE history

In spring 1817 the New York Stock Exchange and its inner Exchange Council elected Anthony Stockholm as President of the organisation. Every morning he opened trades and showed the list of shares available for buying and selling: let me remind you that initially only five companies traded in the exchange.

The new stage of development began in 1837, when telegraph was invented. Brokers grasped at the idea fast and dragged the telegraph line everywhere possible. The goal was facilitating instant exchange of information for making trading decisions faster.

The first exchange ticket appeared in NYSE in 1867. An American Telegraph employee designed a special machine that emissed paper stripes with description of trades. These papers were sent by managers via pneumatic pipes to typewriters, and they sent the info to brokers by telegraph. Only after this process investors got valid share prices.

The first stock index — the Dow Jones Transportation Average — appeared in summer 1884. It included 9 main transport companies in the US, and calculations for the index were made by the Dow Jones company founder and Wall Street Journal editor Charles Dow. He used to analyse market behaviour actively and designed the theory that tech analysis is now based on.

During World War I that began in 1914 NYSE was shut down. Foreign investors were looking for money for military purposes and massively sold their assets in exchanges. At that time the Dow Jones index lost more than 12%, and trades were closed to avoid more crashing.

This was the longest shut-down in the history of the platform: it took about 4 months. On the opening day, the index dropped even lower. The shut-down did not save the idex from falling but we can only guess how much deeper it could have fallen.

This was not the last major falling of the stock major: on 19 October 1987 Dow Jones again lost more than 22%, and this day got the name of the Black Monday

How NYSE works

A part of trades is done not just by computers but also by people: up to 1,000 brokers work at the exchange every day. This hybrid method of work remained only there — on other platforms everything is automatic. Trade is open on weekdays, from 9:30 to 16:00.

An interesting tradition is the signal for closing trades: they ring a bell. Previously it was a large gong used for notifying brokers and dealers about the beginning of work but in 1903 it was replaced by an electronically controlled brass bell.

Ringing the bell in NYSE became a symbolic act. Representatives of companies that are just beginning to trade in NYSE get the honor to ring it.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
RoboForex's List of Awards Continues To Grow



Dear Clients and Partners,

We are happy to inform you that RoboForex received two new achievement rewards from the international expert community, Global Forex Awards - Retail 2022.

RoboForex is a double award-winner



The "Best Partners Programme (Global)" award is given to the best broker for supporting partners and providing them with the most comfortable conditions for cooperation.

The "Most Reliable Broker (LatAm)" title is given to the company with the best reputation in Latin America. We are delighted to receive this particular award and be recognised as experts in the industry.

We are encouraged to be so highly recognized in these prestigious nominations. Thank you for your support!

Join us and get profit: up to 84%

Become a RoboForex partner - earn up with Affiliate programme on the best conditions

  • High commission
    Earn up to 70% commission under the Affiliate programme.

  • 24/7 Support
    RoboForex Support is available to your assistance 24/7.

  • Loyalty programme
    Payouts start with $100 of the received commission and may reach 20%.

  • Convenient payouts
    No limits on the maximum payouts per month or per client. We automatically transfer the amount of the partner commission to your account on a daily basis.

Do you want to calculate your potential profit? Use our interactive Affiliate Calculator


Sincerely,
RoboForex team
 

Vlad RF

Member
How to Trade the Bat Pattern



Dear Clients and Partners,

In this review we will get acquainted with the popular harmonic pattern "Bat". We will learn how to find it on the price chart and what trading signals it gives. We will consider the rules and examples of its formation.

Description of the “Bat” pattern

The harmonic Bat pattern is a 5-point graphical pattern formed by taking into account certain Fibonacci ratios. It was introduced by Scott Carney in 2001. The figure has a similar structure to the Gartley's Butterfly, but they differ in Fibonacci ratios.

It has five points (X, A, B, C and D) and four price swings (XA, AB, BC and CD). The last point in the pattern is D, which is a potential reversal zone. Its appearance is seen as a signal to open buy or sell positions.

This chart pattern is formed on a variety of timeframes. Often it represents a correction area, after the end of which the preceding trend is likely to continue. For more reliable signals, this pattern can be used in conjunction with classic means of technical analysis - trend lines, support and resistance levels.



Rules for shaping the “Bat” pattern

Like many other harmonic patterns, the Bat is defined by Fibonacci ratios. There are automated ways to find this pattern on the chart - special indicators. But you can also determine it yourself, knowing the rules of formation:
  • XA is the first impulse of the price movement on the chart.
  • AB - correction from the first XA movement, ranging from 38.2% to 50%.
  • BC - can range from 38.2% to 88.6% of the wavelength of AB.
  • CD, the final wave, is an extension of 161.8% to 261.8% of the BC section and ends at about the 88.6% correction level of the XA wave.
  • The emergence of the D-point is the final stage of formation.
How a bullish Bat pattern is formed
  • Wave XA is formed as a result of an upward price impulse.
  • The price then reverses in AB and corrects from 38.2% to 50% of the XA segment.
  • On the BC section, price reverses again and rises to 38.2-88.6% of the AB wave.
  • In the final CD phase, the price reverses downwards and reaches approximately 88.6% of the first XA impulse.
  • After the formation of the pattern, quotes are expected to rise from point D.
Rules for trading the bullish Bat pattern
  • A buy position can be opened once the D-point has been formed and quotations have started to reverse upwards.
  • The Stop Loss should be placed just below the pattern low at point X.
  • The Take Profit can be based on the B point, the C point or the maximum value of the pattern at the A point.


Example of bullish trading in the Bat pattern

A pattern has formed on the H1 chart of the GBP/USD currency pair. After the start of the upward movement from point D, a buy position can be opened. Stop Loss is placed just below point X, profit taking targets are points A, B, C and higher if there is a strong upward movement.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Member
RoboForex: upcoming changes to the trading schedule in view of Thanksgiving holiday in the US



Dear Clients and Partners,

We are informing you that changes will be made to the trading schedule due to the Thanksgiving holiday in the US.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading on CFDs on US indices (US30Cash, US500Cash, and USTECHCash) and CFD on the Japanese index JP225Cash
  • 24 November 2022 – trading stops at 7:40 PM server time.
  • 25 November 2022 – trading stops at 8:00 PM server time.
Schedule for trading on CFDs on Metals (XAUUSD and XAGUSD) and CFDs on oil (Brent and WTI)
  • 24 November 2022 – trading stops at 7:40 PM server time.
  • 25 November 2022 – trading stops at 8:00 PM server time.
Schedule for trading on CFDs on US stocks
  • 24 November 2022 – no trading.
  • 25 November 2022 – trading stops at 8:00 PM server time.
R StocksTrader platform

Schedule for trading on US stocks and ETFs
  • 24 November 2022 – no trading.
  • 25 November 2022 – trading stops at 8:00 PM server time.
Schedule for trading on CFDs on US stocks and ETFs
  • 24 November 2022 – no trading.
  • 25 November 2022 – trading stops at 8:00 PM server time.
Schedule for trading on CFDs on US indices (US500, US30, and NAS100)
  • 24 November 2022 – no trading.
  • 25 November 2022 – trading stops at 8:00 PM server time.
Schedule for trading on CFDs on Metals (XAUUSD and XAGUSD) and CFDs on oil (WTI.oil, BRENT.oil)
  • 24 November 2022 – trading stops at 7:40 PM server time.
  • 25 November 2022 – trading stops at 8:00 PM server time.
cTrader platform

Schedule for trading on CFDs on Metals (XAUUSD and XAGUSD)
  • 24 November 2022 – trading stops at 7:40 PM server time.
  • 25 November 2022 – trading stops at 8:00 PM server time.
Please take note of the above trading schedule changes when planning your trading activity.

Sincerely,
RoboForex team
 

Vlad RF

Member
Is the Interest Rate Growth Cycle Coming to an End?



Dear Clients and Partners,

Market participants expect that the US Federal Reserve (Fed) monetary policy tightening cycle is coming to an end. The US inflation rate eased to 7.7% in October, further strengthening the belief that the regulator's head, Jerome Powell, will soften his rhetoric. Against this background, the S&P 500 index (US500) is up 15% in two months.

Is there really any reason for optimism? In this article, we will try to analyse what is happening to the US economy now, what parameters Mr. Powell is focusing on, why the inflation rate fell in October, and whether there is a chance that this dynamic will continue in the future.

What parameters does Jerome Powell monitor?

After the COVID-19 pandemic crisis, we saw a sharp rise in inflation. At the time, many investors were saying that it was time to raise the interest rate, otherwise, it would not be possible to control inflation with monetary means.

In his speeches, Jerome Powell said that inflation is temporary, there is no need to rush to tighten the monetary policy, and the interest rate hike will start after unemployment has fallen to 2019 levels.

In March 2022, the unemployment rate fell to 3.8% in line with pre-crisis levels, and the Fed started a cycle of interest rate hikes already in April.



Many market participants are now wondering when the Fed will bring its monetary policy tightening cycle to an end. On 3 November, Jerome Powell said: "Before rates peak, we need to see a sustained decline in inflation and a series of declining monthly figures will be good evidence of that. Continued rate hikes will be needed to have a sufficiently restrictive effect on the economy and bring inflation back to the Fed's 2% target."

This means that one month's data would not change anything, while all the attention of the head of the regulatory body is currently not on the labour market, but on the inflation rate.

Has the US economy suffered from the Fed’s actions?

A further interest rate hike could bring down the US economy – this is the view increasingly being relayed by the media. If we look at the rate increase, it has risen from 0.25% to 4% in 7 months. Such an increase was only seen in the 1970s during the economic crisis, which was accompanied by high inflation.

The first thing we will look at when seeking to find out whether the US economy has been hurt by the Fed's actions is the labour market. Yes, large companies – like Meta Platforms Inc. (NASDAQ: META), Tesla Inc. (NASDAQ: TSLA), and Snap Inc. (NYSE: SNAP) – have reported layoffs, but if we take a look at the number of layoffs in the country, we can see that the figure has been declining since 2021.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

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