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Every so often, we post articles we think you might find useful and will help you grow as a trader.

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Market Hours
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Upcoming Holidays in May 2024
Fusion Markets


This May,  Labour Day (EU) - May Day (1st May), May Day Holiday (UK) (6th May), Ascension Day (9th - 10th May), Buddha's Birthday (15th May), Victoria Day (10th May), Waisak Day (23rd - 24th May), Memorial Day (US) (27th May) and Feast of Corpus Christi (30th May) are upcoming holidays that will affect standard market hours. Please take the following holiday hours into account and adjust your positions accordingly.


May Holiday Hours


Please note the following changes are based on MT4 server time (GMT +3).  



What does this mean for you? 


If you trade the markets above then you’ll need to be aware of the days the market is closed or if there are changes to opening hours. Additionally, please note that there will be reduced liquidity and some spreads may widen on some products during these periods. If these are not markets you typically trade, then these changes will not affect you and you can continue trading as usual.  

 

Do I need to do anything? 


The main thing you need to do is be prepared for changes in market hours and ensure you have adjusted your positions accordingly. You must also remain aware of the potential changes to liquidity and spreads during this time. Please make sure your account has been sufficiently funded. Log into your Client Hub here to fund your account. 

 

Questions? 


Don’t worry we will still be working around the clock, our support team is available 24/7, so please reach out to us if you have any questions or concerns. 
 
Thanks for trading with Fusion Markets. Happy Holidays and Happy Trading.


Holiday Hours
Trading Tips
Economic Events
01.05.2024
Trading and Brokerage
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Index CFD Dividends | Week 29/4/2024
Fusion Markets


Please see the table below for any upcoming dividend adjustments on indices for the week starting April 29th.


Index CFD Dividends | Week 29/4/2024

* Please note these figures are quoted in the index point amount

 

What is a dividend?


Dividends are a portion of company earnings given to shareholders. As indices are often composed of individual shares, an index dividend pays out based on individual shares proportional to the index’s weighting.


Trading on a CFD Index does not create any ownership of the underlying stocks, or an entitlement to receive the actual dividends from these companies.

 

What is an ex-dividend date?


An ex-dividend date is the cut-off date a share must be owned in order to receive a dividend. If an investor buys a share after the ex-dividend date, then they will not be entitled to earn or pay the next round of dividends. This is usually one business day before the dividend.

 

Do dividends affect my position?


Share prices should theoretically fall by the amount of the dividend. If the company has paid the dividend with cash, then there is less cash on the balance sheet, so in theory, the company should be valued lower (by the amount of the dividend).


Due to the corresponding price movement of the stock index when the ex-dividend date is reached, Fusion must provide a 'dividend' adjustment to ensure that no trader is positively or negatively impacted by the ex-dividend event.

 

How will the dividend appear on my account?


The dividend will appear as a cash adjustment on your account. If your base currency is different from the currency the dividend is paid out in, then it will be converted at the live FX rate to your base currency.

 

Why was I charged a dividend?


Depending on your position, given you are holding your position before the ex-dividend date, you will either be paid or charged the amount based on the dividend. Traders shorting an index will pay the dividend, whereas traders who are long the index will be paid the dividend.

 

Why didn’t I receive my dividend?


You may not have received a dividend for a number of reasons:


- You entered your position after the ex-dividend date

- You are trading an index without dividend payments

- You are short an index


If you believe the reasons above do not apply to your position, please reach out to our support team at [email protected] and we’ll investigate further for you.




Forex Trading
CFD Trading
Dividends
22.04.2024
Trading and Brokerage
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Inside the Mind of a Successful Trader: Understanding the Psychology Behind Forex Success
Fusion Markets

Forex trading, with its promise of financial freedom and independence, has captivated the minds of millions around the globe. Yet, beneath the surface of charts, indicators, and currency pairs lies a complex landscape shaped not just by market dynamics but by the intricate workings of the human mind.  

Success is not solely dictated by market knowledge or technical prowess but by the ability to master one's own trading psychology. This article delves deep into the psyche of successful forex traders, exploring the mindset, habits, and strategies that set them apart from the rest.  

Whether you're a novice trader taking your first steps into the world of forex or an experienced investor seeking to enhance your trading performance, understanding the psychological aspects of trading is paramount to achieving lasting success. Join us as we unravel the mysteries of the human mind and discover the keys to unlocking your full potential in the forex market. 



Contents 


Defining Success in Forex Trading

The Role of Psychology in Trading

Characteristics of Successful Traders

Embracing Emotional Intelligence

Developing a Winning Mindset

The Psychology of Risk Management

Learning from Mistakes

Conclusion




Defining Success in Forex Trading

The concept of "success" in forex trading is a bit of a hot topic. Some see it as being all about the money, while others argue it's more about staying consistent, managing risks, and growing as a trader. Plus, success means different things to different people, so what floats one trader's boat might not do it for another.

A “successful” forex trader possesses discipline, focus, determination and emotional resilience. This enables them to take a calculated approach to their trading, ultimately producing a consistent performance over the long-term.

Every trader will encounter losses. It’s how you manage your risk that will determine your outcome from these losses. In addition to managing your risk, having a psychological plan in place to prevent your emotions from taking control is also important. For example, some day traders have a daily loss limit that, if reached, results in them walking away for the day and trading the next day. Others might have a psychological limit of 4 losing trades in a row and so forth.

A successful trader is ‘successful’ over the long-term. Making profits is only one piece of the puzzle. You cannot be successful in profiting over the long-term without being successful in risk management and psychological behaviour.

 

The Role of Psychology in Trading


At the heart of successful forex trading lies the understanding of one's own trading psychology and the ability to manage emotions effectively. 

The psychology of trading encompasses a range of factors, including emotional intelligence, mindset, and behaviour. Successful traders understand the importance of emotional regulation and employ strategies to remain calm and focused during times of market volatility. By developing self-awareness and cultivating a positive mindset, traders can overcome psychological barriers and make rational decisions based on analysis rather than emotion.

Characteristics of Successful Trader


Successful forex traders share common traits that set them apart from the rest. These include discipline, patience, adaptability, and a willingness to accept losses as part of the trading process. They approach the market with a clear plan, stick to their strategies, and remain unphased by short-term fluctuations.

Discipline is the most critical characteristic of successful traders. It involves following a trading plan meticulously, adhering to risk management principles, and avoiding impulsive decisions. Patience is also essential, as successful traders understand that success in forex trading is a marathon, not a sprint. They wait for high-probability trading opportunities and avoid chasing after quick profits.

Adaptability is another hallmark of successful traders. They recognise that the forex market is constantly evolving, and they adjust their strategies accordingly to stay ahead of the curve. Whether it's adapting to changing market conditions or refining their trading approach based on new information, successful traders remain flexible and open-minded.

In addition to the above, there are other catalysts outside of trading that contribute to the success of a trader. On, of which, is maintaining a good sleeping habit. With the forex market trading 24/5, it’s impractical for most traders to stay away all day and night. Sleep deprivation can cause many issues in all forms of life, and trading is no different.

Embracing Emotional Intelligence 


Emotional intelligence plays a pivotal role in forex trading, enabling traders to recognise and manage their emotions effectively. Successful traders cultivate self-awareness, self-regulation, and empathy, allowing them to make rational decisions even in high-pressure situations. By understanding their emotional triggers, they can maintain composure and avoid impulsive actions. 


Self-awareness involves recognising one's emotions and their impact on trading decisions. Successful traders are attuned to their emotional state and take proactive steps to prevent emotions from clouding their judgment. Self-regulation is the ability to control impulses and maintain discipline in the face of temptation. Successful traders develop strategies to manage stress, anxiety, and other negative emotions that can interfere with trading performance. 


Empathy is also important in forex trading, as it allows traders to understand the perspectives and motivations of other market participants. By putting themselves in the shoes of other traders, successful traders can anticipate market movements and react accordingly. Empathy also helps traders build relationships with other market participants, fostering collaboration and mutual respect. 


Successful traders also have an understanding of cognitive and confirmation biases. We recommend all traders read our two-part series on the 10 hidden biases here: 


Top 10 Hidden Biases – Part 1 

Top 10 Hidden Biases – Part 2 


Developing a Winning Mindset


A winning mindset is essential for success in forex trading. Successful traders maintain a positive attitude, focus on continuous improvement, and view challenges as opportunities for growth. They approach each trade with confidence, knowing that setbacks are temporary and part of the learning curve.

A winning mindset is characterised by several key traits, including optimism, determination, resilience, and good habits. Optimism involves maintaining a positive outlook, even in the face of adversity. Successful traders believe in their ability to succeed and remain confident in their trading approach, regardless of short-term setbacks.

Determination is the drive to succeed despite obstacles and setbacks. Successful traders are tenacious in pursuit of their goals and refuse to be deterred by temporary failures. They view challenges as opportunities for growth and approach them with a sense of determination and perseverance.

Resilience is the ability to bounce back from setbacks and adapt to changing circumstances. Successful traders understand that losses are inevitable in forex trading and view them as learning experiences rather than failures. They remain resilient in the face of adversity, quickly recovering from losses and maintaining their focus on long-term success.

And finally, building good habits is paramount to becoming a successful trader. “It takes 21 days to form a habit and 90 days to form a lifestyle”. Understand what your identity-based habits are and how to build them to your arsenal of tools to conquer the market.

The Psychology of Risk Management


Risk management is a cornerstone of successful forex trading, and mastering it requires a deep understanding of one's risk tolerance and the ability to make calculated decisions. Successful traders prioritise capital preservation and employ risk management strategies such as setting stop-loss orders, diversifying their portfolios, and sizing their positions appropriately. By limiting their exposure to risk, they can protect their capital and avoid catastrophic losses.

Effective risk management involves several key principles, including diversification, position sizing, and risk-reward ratio. Diversification involves spreading risk across multiple assets or currency pairs to reduce the impact of any single trade or market event. Successful traders diversify their portfolios to minimise risk and maximise returns over the long term.

Position sizing is the process of determining the appropriate amount of capital to allocate to each trade based on risk tolerance and market conditions. Successful traders carefully assess the potential risks and rewards of each trade and adjust their position sizes accordingly. By sizing their positions appropriately, they can minimise losses and maximise profits while preserving capital.

Risk-reward ratio is the ratio of potential profit to potential loss on a trade. Successful traders seek to maintain a favourable risk-reward ratio on each trade, typically aiming for a ratio of at least 2:1 or higher. By consistently seeking trades with a positive risk-reward ratio, they can achieve consistent profits over time while minimising losses.

Learning from Mistakes


Mistakes are inevitable in forex trading, but successful traders view them as valuable learning opportunities rather than failures. They analyse their trades objectively, identify areas for improvement, and adjust their strategies accordingly. By embracing a growth mindset, they continuously refine their skills and adapt to changing market conditions. Every mistake becomes a stepping stone towards greater proficiency and success.

Learning from mistakes involves several key steps, including reflection, analysis, and adaptation. Successful traders take the time to reflect on their trades and identify any patterns or recurring mistakes. They analyse their trading journals and performance metrics to gain insights into their strengths and weaknesses.

Based on their analysis, successful traders adapt their strategies and techniques to address any areas for improvement. They may seek out additional education or training, refine their trading approach, or implement new risk management strategies. By learning from their mistakes and making adjustments, they can improve their trading performance over time and achieve greater success in the forex market.

Conclusion


In the dynamic world of forex trading, success is not solely determined by market knowledge or technical prowess but by the ability to master one's own trading psychology. By understanding the psychological factors that influence trading behaviour, traders can develop the mindset, habits, and strategies necessary for long-term success.  

Remember, that everyone faces the same challenges in the markets. Only those who can overcome the psychological barriers in trading end up succeeding over the long-term. Sometimes in bizarre market conditions, or on an off day, it’s better to take a step back and examine why we’ve been behaving and thinking as we have. 


Whether you're a novice trader or an experienced investor, cultivating emotional intelligence, embracing risk management, and maintaining a winning mindset are key to thriving in the competitive forex market. As you embark on your trading journey, remember that success is not just about profits but about the journey of self-discovery and growth. 


Forex
Trading Psychology
Mindset
12.04.2024
Pine Script
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How to Use Pine Script for Trading on TradingView
Fusion Markets


There are a number of ways to automate your trading with the programming language you use depending on the platform you trade on. For example, MetaTrader 4/5 traders use EAs coded in mql4/5, cTrader uses cbots coded in c#, and TradingView traders use Pinescript.  



Pine Script is a domain-specific language developed by TradingView that allows traders to create custom technical indicators and strategies, turning the platform into a powerhouse for market analysis.  



In this blog post, we will walk you through everything you need to know about using PineScript for Forex trading. 



Contents


What_Is_PineScript

Getting Started

PineScript Syntax

Conditional Statements and Loops

Developing Strategies

Backtesting Your Strategy

Common Pitfalls to Avoid

Conclusion



What Is PineScript



PineScript is a coding language developed by TradingView specifically for creating indicators and strategies on their platform. It is similar to other programming languages, but with its own unique syntax and functions tailored for trading analysis.  



Don't let the idea of coding scare you – the syntax is similar to other popular languages like JavaScript and C++, making it easy for traders with coding experience to pick up. Plus, with the large online community and resources available, you can easily learn and use Pinescript in a matter of days. 




Getting Started




To start using PineScript on TradingView, you will need a TradingView account. If you don't have one yet, go ahead and sign up – it's free! Make sure to connect it to your Fusion Markets account. Once you have an account, navigate to the "Pine Editor" tab on the top menu bar. 



Next, open the PineScript editor on TradingView and choose from a variety of templates or start from scratch. The editor also includes a preview function that allows you to see how your code will look on a chart in real-time. 



You will also need to have a basic understanding of coding concepts such as variables, functions, and conditional statements. If these terms sound foreign to you, don't worry – we’ve got you covered!  



 


PineScript Syntax



At the core of Pine Script's functionality is its syntax, which forms the building blocks of any script. Its power lies in its simplicity and flexibility, enabling users to craft a wide array of technical analysis tools.  


Here are a few main things that you should know: 



Variables and Data Types 


Variables in Pine Script play a crucial role in storing and manipulating data. They come in different types such as integers, floats, bools, strings, and series. Variables in PineScript are declared using the "var" keyword, followed by the variable name and an equal sign (=) before the value assigned to it. For example: `var myVariable = 10;`.   



Understanding these data types is fundamental. For instance, a series type is used for time series data, enabling the creation of moving averages, oscillators, and more. 


undefined



In this example, ` length` is an integer variable that stores the input value for the length of the moving average, and ma is a series variable that stores the moving average data. 

 



Functions and Operators 


Pine Script offers an extensive range of built-in functions and operators for performing calculations and executing specific actions. Functions in PineScript start with the "study" keyword, followed by the name of the function and parentheses. For example: `study("My Custom Indicator")`   



Functions like ` sma() ` (simple moving average) and ` plot() ` aid in technical analysis by computing indicators and displaying plotted lines on the chart.  



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Here, ` sma() `, ` stdev() `, and arithmetic operators (` + `, ` ` -) are used to compute Bollinger Bands by calculating the moving average, standard deviation, and upper and lower bands. 

 




Conditional Statements and Loops 



Conditional statements and loops are essential for decision-making and iterative processes. Using ` if-else` statements and ` for ` loops, traders can create dynamic conditions and repetitive actions within their scripts. 



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In this snippet, an RSI (Relative Strength Index) script displays the RSI values along with overbought and oversold levels. Conditional statements can be applied to trigger alerts or make trading decisions based on RSI levels crossing certain thresholds. 


 

Understanding variables, functions, conditional statements, and loops is pivotal for crafting effective indicators and strategies. With a solid grasp of PineScript syntax, traders can develop personalised trading tools, enhancing their analysis and decision-making in the financial markets. To learn more about the syntax, please refer to the PineScript language manual. 

 



Creating Custom Indicators 



One of the most popular uses for PineScript is creating custom indicators. This can range from simple moving averages to complex algorithms that incorporate various technical analysis tools. The possibilities are endless, and with some creativity and testing, you can come up with unique and effective indicators for your trading strategy. 



 

Now, let's walk through the process of creating a simple moving average (SMA) indicator using Pine Script. An SMA is a popular trend-following indicator that smoothens price data to identify the underlying trend. 



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In this script: 


  • We specify the title, short title, and overlay properties for the indicator. 

  • We create an input variable, length, that allows the user to customise the length of the SMA. 

  • We calculate the SMA using the sma() function. 

  • We use the plot() function to display the SMA on the chart. 

 


This is just a basic example to get you started. Why don’t we take it up a notch? 
 


Let’s create a strategy that uses the 200 Exponential Moving Average (EMA) as a basis for making buy (long) signals when the price crosses above this moving average. 



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Let's break down the code: 



  • Setting up Strategy Parameters: The script sets the strategy's title, short title, and indicates that it's an overlay on the price chart using strategy(). 

  • Calculating the 200 EMA: It defines a 200-period EMA (ema200) based on the closing prices. 

  • Plotting the 200 EMA: The script plots the 200 EMA on the chart in blue. 

  • Identifying EMA Crossover: It calculates the points where the closing price crosses above the 200 EMA using ta.crossover() and assigns these points to the variable emaCrossover. 

  • Strategy Entry Conditions: When the crossover happens (i.e., when the closing price crosses above the 200 EMA), the strategy generates a "Buy" entry signal using strategy.entry() with the condition when=emaCrossover. 

  • Plotting Buy Signals: The script uses plotshape() to plot small green triangles below the price bars where the crossover condition is met. 

 


Here’s how it looks on a chart: 


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EURUSD Weekly Chart 



Kindly be aware that the script provided above serves as an example, and it will require adjustments to align with your particular objectives. 

 

In summary, this script creates buy signals (represented by green triangles below the price bars) whenever the closing price crosses above the 200-period Exponential Moving Average. This strategy assumes that such crossovers might indicate a potential upward trend and trigger a buy action. 

 

As you can see, Pine Script is incredibly versatile, and you can create highly sophisticated indicators with complex logic to match your trading strategy.





Developing Strategies

Aside from creating indicators, PineScript also allows you to develop fully automated trading strategies. By combining different technical indicators and conditions, you can create a set of rules for buying and selling that can be backtested and optimised for maximum profitability. This feature is especially beneficial for traders who prefer a systematic approach to trading. 


 

Tips and Tricks 


  • Start with a clear and well-defined trading strategy: Before jumping into coding, it's essential to have a solid understanding of your trading approach and goals. A clear strategy will make it easier to translate it into code and avoid any confusion during development.  

  • Use proper risk management techniques: No matter how well-crafted a strategy is, managing risk is crucial in trading. PineScript offers functions for setting stop-loss and take-profit levels, as well as position sizing based on risk percentage. Utilising these functions can help minimise losses and maximize gains.  

  • Test and refine: Developing a successful trading strategy takes time, patience, and continuous testing. Backtesting with PineScript allows for this refinement process, where traders can analyse the results of their strategies and make necessary adjustments until it meets their expectations.  





Backtesting Your Strategy


Once you've written your Pine Script, it's time to test its performance in various market conditions. TradingView makes this process seamless. You can choose the time frame and historical data you want to test your strategy against. The platform will then run your script against that data, showing you how your strategy would have performed. It helps identify any flaws or weaknesses in the strategy and allows for adjustments before risking real capital. This can significantly increase the chances of success in live trading. 





Common Pitfalls to Avoid


While Pine Script provides endless possibilities for developing your strategies, there are common pitfalls to avoid: 



  • Over-Optimisation: Tweaking your strategy too much based on past data can lead to over-optimisation. Your strategy may perform well historically but fail in real-time trading. 

  • Neglecting Risk Management: Not paying enough attention to risk management can lead to significant losses. It's crucial to protect your capital at all costs. 

  • Lack of Patience: Don't rush into live trading. The more time you spend testing and refining your strategy, the better it will perform in the long run. 

  • Ignoring Market Conditions: Markets are not static, and what works in one type of market might not work in another. Keep an eye on market conditions and be ready to adapt. 





Conclusion


There's a saying in the world of forex trading - "The trend is your friend". And with PineScript, you can easily identify and follow market trends with custom indicators that suit your trading style. From simple moving averages to complex multi-indicator strategies, PineScript allows you to create and test different approaches until you find the one that works best for you. 


But PineScript is not just limited to forex trading. It can also be used in other markets such as stocks and cryptocurrencies. So, if you're a multi-asset trader, learning how to use PineScript can greatly benefit your overall trading strategy and performance. 


Furthermore, PineScript is constantly evolving and being updated with new features. This means that there's always something new to learn and experiment with, keeping your trading skills fresh and adaptable. 


And don't be intimidated by coding - embrace it with PineScript and see how it can enhance your trading. Who knows, you may even discover a hidden passion for programming along the way! 


Forex Trading
TradingView
Beginners
Trading Tips
10.04.2024
Trading and Brokerage
post image main
How to Trade on TradingView: Tips and Tricks for Forex Traders
Fusion Markets

For those familiar with the trading landscape, you’re probably already well aware of  TradingView. Founded in 2011 by brothers Stan and Constantin Bokov, this widely recognised platform was created with the aim of being an all-in-one platform for traders to connect, share ideas and learn from each other. Today, it is one of the most widely used trading sites on the internet - with over 50 million users worldwide. 



Now, picture this: Trading on the advanced charts on TradingView at some of the lowest costs available on the market. Sounds exciting, doesn’t it? By connecting your TradingView account with your Fusion Markets account, you now can. At Fusion, our mission has always been about making trading accessible to everyone by offer radically low costs and no hidden fees or catches. That’s why we’ve partnered with TradingView to make low trading at the highest quality even more accessible.  



This article will delve into what TradingView is, its key features, and a step-by-step guide on how to effectively trade on the platform. 




Contents


Getting Started

Navigating the TradingView Interface

Trading on TradingView

Managing Positions and Live Trades on TradingView

TradingView Strategies

Conclusion



Getting Started



Before you dive into the world of trading on TradingView, you'll need to set up an account. Here's how to get started: 



  1. Account Creation: go to tradingview.com and sign up for a free or paid account. The free version offers a wide range of features, while the subscription provides additional perks, such as more alerts, indicators, and the ability to use multiple charts. 
  2. Personalising Your Profile: Customise your profile by adding a profile picture and filling out your bio. This can help you connect with other traders on the platform and share your insights. 
  3. Selecting a Subscription: If you decide to upgrade, choose the plan that suits your needs best. You can compare the available plans on TradingView's website. 

 

You will also need to create a Fusion Markets’ account or login to the existing one. If you struggle with selecting whether to sign up for a Classic or Zero account, visit our Accounts Overview page. 

Once it is done, here’s what you have to do next: 



  1. Go back to tradingview.com and open a chart that you want to start trading from. 
  2. Click on ‘Trading Panel’ at the bottom and choose Fusion Markets;  
  3. Select your account type and click on ‘Continue’;  
  4. Log in using your Fusion Markets account;  
  5. Tick the accounts that you wish to use and click on ‘Allow’ when finished. 

 

You are all set!  




Navigating the TradingView Interface



After setting up your account, the next step is to familiarise yourself with the TradingView platform. The platform is intuitive and straightforward to navigate, with a wide range of features and tools neatly organised for ease of use. 


Homepage Overview: The homepage provides an overview of the financial markets. On the right-hand side, you'll find the news feed, watchlist, and trading panel. 


You can customise it by adding watchlists and widgets for specific assets or markets you're interested in. 


 

TradingView_Homepage



Charting: TradingView offers a wide range of technical indicators, drawing tools, and chart types. The platform offers flexibility in setting candle time frames, ranging from one second to one year. Indicators can be chosen from a drop-down list located in the top toolbar. For additional analysis such as annotation, measuring tools, and trendlines, the platform provides over 90 drawing tools accessible from the toolbar on the left-hand side of the chart.  


TradingView_AUDUSD


The TradingView platform facilitates the analysis of market data through a variety of chart types, conventionally categorised into two groups. 


The first category consists of traditional charts, constructed based on time, including: 


  • Bars 

  • Candles 

  • Hollow candles 

  • Columns 

  • Line 

  • Line with markers 

  • Step line 

  • Area 

  • Baseline 

  • High-low 



The second category comprises charts constructed solely based on price changes, such as: 


  • Heikin Ashi 

  • Renko 

  • Line break 

  • Kagi 

  • Point & figure 

  • Range 


Users can easily select their preferred chart type from the drop-down menu located on the top toolbar. 


TradingView_Charts



Indicators: TradingView offers a robust selection of over 100 indicators. You can add these to your charts to analyse price movements, trends, and other essential data. Popular indicators include Moving Averages, Relative Strength Index (RSI), and Bollinger Bands. Additionally, users have the flexibility to craft custom indicators in JavaScript through the platform's API. This API empowers users to design a diverse range of indicators, incorporating various plot types, styles, colours, and mathematical functions. 


Within the user interface, individuals can seamlessly integrate custom indicators onto the chart. Adjustments to specific indicator parameters can be made using the dedicated Indicators and Settings dialog. It's important to note that while users can add custom indicators and modify certain parameters through the UI, the platform does not allow the creation of entirely new indicators or the modification of existing code for pre-existing ones. 

 


Alerts: TradingView alerts provide instantaneous notifications when the market aligns with your personalised criteria. For instance, you can set an alert such as, "Notify me if Tesla surpasses $250." All users have access to various notification options, including visual pop-ups, audio signals, email alerts, email-to-SMS alerts, and PUSH notifications directly sent to your mobile device. 


You can also set alerts on indicators, strategies, and drawing tools and even customise your trigger settings. 




TradingView_Indicators




Drawing Tools: TradingView's drawing tools offer a versatile range of functionalities, allowing users to make annotations, insert comments, highlight trends and patterns, conduct measurements and forecasts, and calculate price levels. These tools are conveniently positioned on the left panel of the chart, providing easy access for users to enhance their analytical capabilities and visually communicate insights. Whether you need to jot down notes, emphasise specific points, or perform detailed analyses, TradingView's drawing tools allow users to interactively engage with charts and convey valuable information effectively. 



TradingView_Drawing_tools




Watchlists: Watchlists are located on the right side of the screen. You can create a new watchlist by clicking on ‘Create new list' or import the existing one to keep track of your favourite assets. Please note that the import option is only available for Pro accounts. To add assets to your watchlist, click on the '+’ or ‘X’ if you wish to remove it. 



TradingView_watchlist



Social Features: The ability to publish and share your trading ideas is a pivotal feature, facilitating collaborative learning. You can exchange trade-related information or engage in discussions about current market conditions with fellow traders who share your level of experience or interact with more seasoned traders.  



For a dose of inspiration, navigate to the "Community" section in the header menu and select 'Trade Ideas.' Here, you have the option to explore trade ideas by specific assets, follow the curated selections from editors, or delve into the trending ideas on the platform. 



TradingView_community



Every member of the community has a badge. Let’s go through them one by one: 


  • MOD - The red MOD badge is assigned to TradingView moderators, distinguishing them within the community. This badge serves as an additional layer of security for all members, enabling easy identification of moderators. In case you have inquiries or require assistance, this badge helps you discern who is a moderator and who isn't. 


moderator_badge



  • The BROKER badge, available in blue (platinum), gold, or silver, is designated for broker accounts on TradingView. Members adorned with this badge are exclusively recognised as official broker representatives. The broker page offers comprehensive details on Terms of Use and reviews from live-account owners. 



  • WIZARD - The green WIZARD badge is awarded to Pine Script™ Wizards, who are exceptional programmers proficient in Pine Script™—the language employed for developing indicators and strategies on TradingView. These Wizards make noteworthy contributions to the community by assisting numerous traders with their code-related queries. Read our blog to learn how to use PineScript for trading on TradingView.


  • TradingView official accounts, along with badges for TradingView employees, feature a distinctive blue badge adorned with a TV logo. This badge serves as a visual identifier to distinguish and authenticate the official presence of TradingView and its staff within the community. 



The conversations unfold in real time, allowing you to connect with individuals trading the same instruments as you. You can share links to your charts, articulate your trading concepts, and receive feedback and comments to foster mutual growth and prosperity in the trading community. The overarching goal is to enhance your trading and investing skills by gaining insights from the actions of others.  




Trading on TradingView




Understanding how to correctly place trades on TradingView is crucial. One of its standout features is Pine Script, a domain-specific programming language that allows users to create custom indicators, strategies, and scripts. Visit our blog [LINK] to learn how you can leverage PineScript for trading on TradingView. 


Once you have logged into your trading account, you'll notice four tabs at the bottom: Positions, Orders, Account Summary, and Notifications log. The Orders tab conveniently provides a filter for all possible order statuses. Each column in the Orders tab displays key values from the Account Summary, represented by a grey line. 



At the top-right of the Trading Panel, you'll find a menu containing main settings for trading, a button for disconnecting trading, and an option for selecting another broker. Your account ID is prominently displayed, and if it's a multi-account ID, a dropdown allows you to switch between sub-accounts.




TradingView_order

 



To place an order, you have several options. You can do so through the context menu on the chart or trading panel, the Plus menu on the chart, or by using the Buy/Sell buttons. The easiest way is to click on ‘Trade’ on the trading panel, and a new window will pop up.  




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When accessing your TradingView execution platform, the Buy/Sell buttons are prominently displayed directly on your chart. In the chart's centre, the market spread is visible, and on the right, you have the option to adjust the number of contracts. Initiating a Buy or Sell order opens the order execution window. 



order_window_TradingView




Order Placement: Upon clicking Buy or Sell, you initiate the opening of the execution window and gain the ability to adjust the parameters of your trade before finalising the execution. Let's guide you through each parameter individually: 


  • Account: If you have multiple accounts, you can seamlessly switch between them at this point. 

  • Side: Indicate whether your order is a buy or a sell order. 

  • Type: Select from the following order types: Market, Limit, Stop, or Stop Limit.  

    • Limit: This order triggers when the price reaches the specified limit or a better price. Note that in situations of imbalance between buyers and sellers, limit orders may not be immediately filled. 

    • Market: This order gets filled immediately at the best available current price. 

    • Stop: A stop order that converts into a market order once the specified price is reached. 

    • Stop Limit: Similar to a stop order, this type converts into a limit order after the specified price is hit. 

  • Duration: You have the flexibility to specify the duration of your order, and TradingView offers various options: 
  • GTC (Good Till Cancelled): The order persists and stays open until explicitly cancelled by the trader. 

  • GTD (Good Till Day): The order remains active until the specified date set by the trader.



time_in_force



  • Symbol: You can modify the symbol (market) at this point. 

  • Quantity: Adjust the quantity of contracts you wish to buy or sell. 





Managing Positions and Live Trades on TradingView



After executing a trade, the details of the trade become visible on your chart. TradingView displays the current Profit/Loss and the quantity of your position. 


Additionally, it provides options to reverse your trade, converting a buy trade into a sell trade, or to close your position with a single click. In the Trading Plan section at the bottom of the screen, you can monitor your current positions under "Positions" and access all your active trades with supplementary data. Closing positions can also be done conveniently using the X icon located on the right. 

 
When you enable the visualisation of past trades on TradingView, the platform will display red and green arrows directly on your charts, indicating the entry and exit points of previous positions. 


Moreover, you have the capability to view the number of contracts traded, accompanied by the execution date, providing a comprehensive overview of your trading history. 



TradingView_Strategies




One of the attractions for millions of retail traders to this platform is the assortment of specialised tools and user-generated strategies available for utilisation at any given time.  


Our immediate focus is on understanding how to employ strategies. Without delving into the intricacies of each strategy, let's elucidate how to leverage TradingView using a range of pre-established strategies conveniently accessible on the website. 


Follow this simplified step-by-step guide: 


  • Click on "Indicators" in the topmost menu of the TradingView terminal. 

  • Opt for "Strategies" from the tabs positioned above the list of indicators. 

  • Select the desired strategy from the new list provided. 


If you cannot find the strategy you're looking for, use the search bar for a quick and efficient search. 




TradingView_Strategies




It's as straightforward as that. As soon as you select a specific strategy, you will see its implementation on the price chart. Additionally, it's essential to understand how to employ multiple charts in TradingView. Some strategies may necessitate cross-comparisons with price data from other assets. 



To achieve this, simply click the plus icon next to the name of the primary viewed asset and choose the required asset from the list or use the search feature. This action will promptly overlay one chart over another, offering a more comprehensive view of the price in the context of its comparison against other assets. This feature proves particularly useful when dealing with futures and other derivatives. 

 

 


Conclusion 



Trading on TradingView is a dynamic and multifaceted process that combines technical analysis, strategy development, and community engagement. To succeed, you'll need to continually refine your skills, adapt to changing market conditions, and maintain a disciplined approach to risk management. 



Remember, no trading platform, no matter how sophisticated, can guarantee success. It's up to you to apply the knowledge and tools provided by TradingView to make informed decisions and build a profitable trading career. Whether you're a seasoned trader or just starting, TradingView can be a valuable resource on your journey to financial success in the world of trading. 



TradingView
Trading Tools
Risk Management
Beginners
26.03.2024
General
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Currency Pair Correlations: Enhancing Forex Trading Strategies
Fusion Markets


In the dynamic world of forex trading, understanding and effectively utilising currency pair correlations can significantly enhance trading strategies. For intermediate to advanced traders seeking to deepen their understanding and optimise their approach, delving into the nuances of currency pair correlations is essential. This comprehensive guide will explore the intricacies of currency pair correlations, their relevance in forex trading, and advanced techniques for leveraging correlations to enhance trading strategies.



Contents


Introduction to Currency Pair Correlations

Types of Correlations

Factors Influencing Correlations

Understanding Correlation Coefficients 

Utilising Correlations in Trading Strategies

Identifying Trading Opportunities

Monitoring Correlation Changes

Practical Examples and Case Studies

Conclusion



Introduction to Currency Pair Correlations


Currency pair correlations are a fundamental aspect of forex trading, providing valuable insights into the relationships between different currency pairs. By analysing these correlations, traders can diversify their portfolios, manage risk more effectively, and identify potential trading opportunities.


Currency pair correlations measure the statistical relationship between two currency pairs, indicating how closely their price movements are associated. These correlations can be positive, negative, or neutral, providing valuable information about the interplay between different currencies in the forex market.


Each currency is driven by its own fundamental factors. For example, both New Zealand and Canada are commodity-driven currencies. New Zealand is driven by a strong export of agricultural and dairy product exports, and Canada is heavily involved in oil production and exports and thus is often positively correlated with the price of crude oil. A trader looking for correlations would be smart to analyse the data and price movements of both types of commodities in order to determine if there will be a correlation between the two currencies.


Understanding currency pair correlations is crucial for forex traders seeking to optimize their trading strategies and maximise profitability. By incorporating correlations into their analysis, traders can gain a deeper understanding of market dynamics and make more informed trading decisions.

 



Types of Correlations


Positive Correlations


Positive correlations occur when the price movements of two currency pairs are positively related, meaning they tend to move in the same direction. For example, the EUR/USD and GBP/USD pairs often exhibit positive correlations, as both currencies are positively correlated with the US dollar. Similarly, AUD/USD and NZD/USD are also closely correlated give that both their currency values are directly impacted by the US Dollar and China trade.


Positive correlations can be leveraged by traders to identify trends and capitalise on momentum in the market. By trading currency pairs with positive correlations, traders can amplify their returns and exploit opportunities for profit.



Negative Correlations


Negative correlations occur when the price movements of two currency pairs are inversely related, meaning they tend to move in opposite directions. For instance, the USD/JPY and EUR/USD pairs may display negative correlations, as the US dollar and Japanese yen often move in opposite directions. Another example of a negatively correlated pair is USD/CNY (US Dollar / Chinese Yuan) .


Negative correlations can be utilised by traders for hedging purposes and risk management. By trading currency pairs with negative correlations, traders can offset potential losses and diversify their portfolios to mitigate risk.


 

Neutral Correlations


Neutral correlations occur when there is no significant relationship between the price movements of two currency pairs. In this case, the correlation coefficient is close to zero, indicating that the price movements of the two currency pairs are independent of each other.


While neutral correlations may not provide immediate trading opportunities, they are still valuable for advanced traders seeking to analyse market trends and anticipate potential shifts in market sentiment.




Factors Influencing Correlations


Numerous factors can influence currency pair correlations, ranging from economic indicators to geopolitical events. Understanding these factors is essential for traders seeking to anticipate market movements and adapt their strategies accordingly.



Economic Indicators


Economic indicators, such as GDP growth, inflation rates, and interest rate decisions, can have a significant impact on currency pair correlations. For example, positive economic data from the US may strengthen the US dollar and lead to positive correlations between USD pairs.


Advanced traders should closely monitor key economic indicators and assess their potential impact on currency pair correlations. By staying informed about economic developments, traders can anticipate market trends and position themselves accordingly.



Geopolitical Events


Geopolitical events, such as elections, geopolitical tensions, and trade disputes, can also influence currency pair correlations. For instance, uncertainty surrounding Brexit negotiations may lead to increased volatility and negative correlations between GBP pairs.


Advanced traders should be vigilant about geopolitical developments and their potential impact on currency pair correlations. By analysing geopolitical risks and their implications for the forex market, traders can make more informed trading decisions and mitigate potential risks.



Market Sentiment


Market sentiment, including investor risk appetite and market volatility, can affect currency pair correlations. During periods of heightened risk aversion, safe-haven currencies like the US dollar and Japanese yen may strengthen, leading to negative correlations with riskier currencies such as the Australian dollar and New Zealand dollar.


Traders should monitor market sentiment indicators and assess their impact on currency pair correlations. By gauging investor sentiment and market dynamics, traders can identify trading opportunities and adjust their strategies accordingly.


 

Understanding Correlation Coefficients


Correlation coefficients provide a quantitative measure of the strength and direction of the relationship between two currency pairs. Advanced traders should understand how to interpret correlation coefficients and leverage this information to optimise their trading strategies.



Calculation and Interpretation


Correlation coefficients are calculated using historical price data for the currency pairs under consideration. A correlation coefficient close to +1 or -1 indicates a strong correlation, while a coefficient close to 0 suggests no significant relationship.


Traders should interpret correlation coefficients in the context of their trading strategies and market analysis. By analysing correlation coefficients, traders can identify pairs with strong correlations and capitalise on trading opportunities.




Visualisation with Correlation Matrices



Correlation matrices or charts provide visual representations of correlations between multiple currency pairs. These matrices allow advanced traders to quickly identify correlated and uncorrelated pairs and assess the diversification potential of their portfolios.


Advanced traders should utilise correlation matrices to visualise relationships between currency pairs and identify patterns or trends. By analysing correlation matrices, traders can make more informed decisions about portfolio diversification and risk management.



 

Utilising Correlations in Trading Strategies


Traders can incorporate currency pair correlations into their trading strategies to optimise performance and maximise profitability. By leveraging correlations effectively, traders can identify trading opportunities and mitigate potential risks.




Diversification and Hedging


Positive correlations between currency pairs can be utilised for diversification purposes, allowing traders to spread risk across correlated assets. Additionally, negative correlations can be used for hedging purposes, where positions in one currency pair are offset by positions in a negatively correlated pair to mitigate risk.


Advanced traders should assess the correlations between currency pairs and adjust their portfolios accordingly. By diversifying their holdings and hedging against adverse movements, traders can protect their capital and optimise their risk-return profile.




Correlation-Based Trading Strategies


Correlation-based trading strategies involve identifying and trading currency pairs with strong correlations. Pair trading strategies involve simultaneously buying one currency pair while selling another negatively correlated pair. Portfolio optimisation strategies aim to create diversified portfolios with uncorrelated assets to minimise risk and maximise returns.


Traders should develop robust trading strategies based on their analysis of currency pair correlations. By incorporating correlation-based strategies into their trading plans, traders can enhance their performance and achieve their financial goals.

 

 

 

Identifying Trading Opportunities


Traders can use correlations to identify trading opportunities based on the strength and direction of correlations between currency pairs. For example, if two positively correlated pairs temporarily diverge in price, traders may consider trading the pair that lags behind in anticipation of convergence.


Advanced traders should conduct thorough analysis of currency pair correlations and market trends to identify trading opportunities. By staying informed about market developments and leveraging correlations effectively, traders can capitalise on profitable trading opportunities.




Risk Management Techniques


While currency pair correlations can be beneficial for enhancing trading strategies, traders should implement proper risk management techniques to mitigate potential losses.




Position Sizing


Adjusting position sizes based on the correlation between currency pairs can help traders manage risk effectively. Traders may choose to reduce position sizes or avoid trading highly correlated pairs to minimise exposure to correlated market movements.


Advanced traders should carefully consider their risk tolerance and adjust their position sizes accordingly. By implementing appropriate position sizing techniques, traders can protect their capital and preserve their profitability.




Stop-Loss Orders


Using stop-loss orders can help limit losses and protect trading capital in the event of adverse price movements. Traders should place stop-loss orders based on the volatility and correlation of currency pairs to ensure adequate risk protection.


Advanced traders should set stop-loss orders based on their analysis of currency pair correlations and market conditions. By using stop-loss orders effectively, traders can minimise potential losses and preserve their trading capital.



Monitoring Correlation Changes


Currency pair correlations can fluctuate over time and in response to evolving market conditions. Advanced traders must consistently track correlation coefficients and modify their trading strategies to align with shifting market dynamics. By remaining attentive to changes in currency pair correlations and adeptly adjusting their trading approaches, traders can optimise their performance and effectively pursue their trading objectives.



 

Practical Examples and Case Studies


To illustrate the application of currency pair correlations in forex trading, let's consider some practical examples and case studies.



 Example 1: Diversification


A trader with a long position in EUR/USD may consider diversifying their portfolio by adding a short position in GBP/USD, which has a positive correlation with EUR/USD. This allows the trader to spread risk across multiple currency pairs and reduce exposure to adverse movements in the euro-dollar exchange rate.



 Example 2: Hedging

During periods of heightened market volatility, a trader holding a long position in AUD/USD may hedge their exposure by taking a short position in USD/JPY, which has a negative correlation with AUD/USD. This helps mitigate potential losses resulting from adverse movements in the Australian dollar-US dollar exchange rate.



Case Study: Correlation-Based Trading


A trader identifies a strong positive correlation between USD/CAD and crude oil prices due to Canada's significant oil exports. The trader takes a long position in USD/CAD and a short position in crude oil futures, anticipating that an increase in oil prices will lead to a corresponding appreciation of the Canadian dollar against the US dollar. This correlation-based trading strategy allows the trader to profit from the relationship between the two assets.




Conclusion


Currency pair correlations are a powerful tool for intermediate to advanced forex traders seeking to optimise their trading strategies and maximise profitability. By understanding the different types of correlations, analysing the factors influencing correlations, and leveraging correlation coefficients effectively, traders can enhance their performance and achieve their financial goals. Implementing proper risk management techniques is essential to mitigate potential losses and ensure long-term success in forex trading. By incorporating currency pair correlations into their trading plans and adapting to changing market conditions, traders can navigate the complexities of the forex market and achieve consistent profitability.


Currency Trading
Forex Trading
Trading Tips
18.03.2024
Trading and Brokerage
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A Beginner’s Guide to Trading Forex
Fusion Markets


Embarking on your forex trading journey might seem daunting at first, but fret not! We’ve put together all the information you need to get started. 


This guide is your friendly companion, packed with real-world examples, easy-to-grasp basics, newbie-friendly strategies, handy tips, and a step-by-step roadmap to kickstart your forex adventures.



Contents 


Introduction to Forex Trading

How the Forex Market Works

Getting started in Forex Trading

Developing a Strategy 

Practical Tips for Beginners

Resources for Further Learning



Introduction to Forex Trading


Foreign exchange trading, or forex trading, is the process of buying and selling currencies in the global financial markets. It is one of the largest and most liquid markets in the world, with an average daily trading volume estimated to exceed USD$7 trillion. Unlike traditional stock markets, forex trading operates 24 hours a day, five days a week, allowing traders to participate in the market at any time.


Understanding currency pairs


Forex trading involves the exchange of one currency for another at an agreed-upon price. This is done with the aim of profiting from fluctuations in exchange rates. Currencies are traded in pairs, where one currency is bought while the other is sold. The most commonly traded currency pairs, or ‘the majors’ as they’re more commonly referred to, include EUR/USD (Euro/US Dollar), GBP/USD (British Pound/US Dollar), AUD/USD (Australian Dollar/US Dollar), NZD/USD (New Zealand Dollar/US Dollar), USD/JPY (US Dollar/Japanese Yen), USD/CAD (US Dollar/Canadian Dollar), and USD/CHF (US Dollar/Swiss Franc).


Examples of other currency pairs, most often referred to as “crosses”, are AUD/JPY (Australian Dollar/Japanese Yen), GBP/NZD (British Pound/New Zealand Dollar), EUR/CAD (Euro/Canadian Dollar) and so forth.


And finally, less-traded currency pairs are referred to as “exotics”. Examples of these include USD/TRY (US Dollar/Turkish Lira), USD/HUF (US Dollar/Hungarian Forint). It’s important to note that exotic pairs tend to have wider spreads and higher volatility compared to major and minor pairs.


Uses of the forex market


The forex market is used by many players, for many different reasons. Retail traders aim at buying or selling a currency to take advantage of short-term fluctuations in price, whereas corporates who conduct regular international trade often use the forex market to hedge against their local currency weakening.


Large-scale players such as hedge funds or investment firms, will use the foreign exchange market to take advantage of divergences in interest rates between two nations in the form of a carry trade.


For more information on the types of forex trading, head to Part Four.


Reading Currency Pair Quotes


Currency pair quotes consist of two prices: the bid price and the ask price. The bid price represents the price at which you can sell the base currency, while the ask price represents the price at which you can buy the base currency. The difference between the bid and ask prices is known as the spread, which represents the broker's profit margin.


In forex trading, currency pairs are quoted in pips, short for "price interest point," representing the smallest possible price movement. For most major currency pairs, prices are quoted with four decimal points, indicating a change of 1/100 of one percent or 1 basis point. However, the Japanese Yen is an exception, trading with only two decimal points.


For instance, if the bid price for the EUR/USD pair is quoted as 1.19040, this breakdown refers to the five decimal places displayed on the market watch.


Pips EURUSD

How the Forex Market Works


In order to trade the foreign exchange market effectively, you need to understand the nuts and bolts of how it works.


The forex market is decentralised, meaning that there is no central exchange where all transactions take place. Instead, trading occurs over-the-counter (OTC) through a global network of banks, financial institutions, and individual traders. Some of the larger players in the forex market are Deutsche Bank, UBS, Citi Bank, RBS and more.


Prices are determined by supply and demand dynamics, with exchange rates fluctuating based on economic indicators, geopolitical events, and market sentiment.


How the system works


Market makers are key players in the forex world. They establish both the buying (bid) and selling (ask) prices, which are visible to everyone on their platforms. Their role extends to facilitating transactions with a diverse clientele, including banks and individual traders. By consistently quoting prices, they inject liquidity into the market. As counterparties, market makers engage in every trade, ensuring a seamless flow: when you sell, they buy, and vice versa.


Electronic Communications Networks (ECNs) play a crucial role in forex trading by aggregating prices from various market participants like banks, market makers, and fellow traders. They showcase the most competitive bid and ask quotes on their platforms, drawing from this pool of prices. While ECN brokers also act as counterparts in trades, they differ from market makers in their settlement approach rather than fixed pricing. Unlike fixed spreads, ECN spreads fluctuate based on market activity, sometimes even hitting zero during peak trading times, especially with highly liquid currency pairs like the majors.


Direct Market Access (DMA) empowers buy-side firms to directly access liquidity for securities they aim to buy or sell through electronic platforms offered by third-party providers. These firms, clients of sell-side entities like brokerages and banks, maintain control over trade execution while leveraging the infrastructure of sell-side firms, which may also function as market makers.


Straight Through Processing (STP) represents a significant leap in trading efficiency, transitioning from the traditional T+3 settlement to same-day settlement. One of its notable advantages is the reduction of settlement risk. By expediting transaction processing, STP enhances the likelihood of timely contract settlement. Its core objective is to streamline transaction processing by electronically transmitting information, eliminating redundant data entry and enabling simultaneous dissemination to multiple parties when necessary.


Market Makers Forex


Getting Started in Forex Trading


Choosing a Broker


When selecting a forex broker, it's essential to not only consider the fees, but also regulatory compliance, trading platform, and customer support. Look for brokers regulated by reputable authorities such as the Financial Conduct Authority (FCA) in the UK or the Commodity Futures Trading Commission (CFTC) in the US.


Here at Fusion Markets we’re dedicated to offering a quality service with an affordable fee structure. You can learn more about trading forex or view our licences. 


Setting Up Your Trading Account


Once you've chosen a broker, the next step is to open a trading account. This typically involves completing an online application, submitting identification documents, and funding your account. Forex brokers offer various account types to suit different trading preferences, including standard accounts, mini accounts, and demo accounts for practice trading.


Before risking real money, practice trading with a demo account to familiarise yourself with the trading platform and test your trading strategy in a simulated environment. Demo accounts allow you to gain valuable experience without the risk of financial loss. We also offer demo trading for those who want to test the water first.


Developing a Strategy


Identify Your Trading Style


Before developing a trading strategy, it's essential to identify your trading style, whether it's day trading, swing trading, or position trading. Your trading style will dictate the timeframe you trade on and the types of setups you look for in the market.


Below are the types of pros and cons of each trading style:


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Types of Analysis


Fundamental Analysis


Unlike technical analysis, which primarily relies on historical price data, fundamental analysis examines economic indicators, monetary policies, geopolitical events, and other macroeconomic factors to gauge the strength and direction of a currency's movement.


Central to fundamental analysis is the understanding that currency prices are ultimately driven by supply and demand dynamics, which in turn are influenced by broader economic conditions. For example, factors such as interest rates, inflation rates, GDP growth, unemployment levels, and trade balances can all impact a currency's value.


One of the key concepts in fundamental analysis is interest rate differentials. Central banks use interest rates as a tool to control inflation and stimulate economic growth. Currencies with higher interest rates tend to attract more investors seeking higher returns on their investments, leading to an appreciation in their value relative to currencies with lower interest rates. Traders closely monitor central bank announcements and economic reports to anticipate changes in interest rates and adjust their trading strategies accordingly.


Another important aspect of fundamental analysis is the assessment of economic indicators. These indicators provide insights into the health of an economy and can influence currency prices. For example, strong GDP growth and low unemployment rates are typically associated with a robust economy and may lead to appreciation in the currency. Conversely, high inflation or rising unemployment may weaken a currency.


Geopolitical events can also have a significant impact on currency prices. Political instability, conflicts, trade tensions, and other geopolitical factors can create uncertainty in the market and cause fluctuations in currency prices. Traders must stay informed about geopolitical developments and assess their potential impact on currency markets.


While fundamental analysis provides valuable insights into the long-term trends and direction of currency markets, it is important to note that currency prices can also be influenced by short-term factors and market sentiment. Therefore, traders often use a combination of fundamental and technical analysis to make informed trading decisions.



Technical Analysis


Technical analysis involves studying historical price data and using various charting tools and indicators to identify patterns and trends. Common technical analysis tools include moving averages, trendlines, and oscillators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). Traders use technical analysis to make short-term trading decisions based on price action and market momentum.


Technical analysis is a cornerstone of forex trading, offering traders a systematic approach to interpreting market dynamics and making informed trading decisions based on historical price movements and market statistics. Unlike fundamental analysis, which focuses on economic indicators and macroeconomic factors, technical analysis relies solely on price data and trading volume to forecast future price movements.


At its core, technical analysis is based on the efficient market hypothesis, which posits that all relevant information is already reflected in an asset's price. Therefore, by analysing past price movements, traders believe they can identify recurring patterns and trends that may indicate potential future price directions.


One of the fundamental concepts in technical analysis is that of support and resistance levels. Support represents a price level where buying interest is sufficiently strong to prevent the price from falling further, while resistance is a level where selling pressure is sufficient to halt an upward price movement. Traders use these levels to identify potential entry and exit points for their trades.


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Example of support and resistance areas on EURUSD Daily chart


Another key tool in technical analysis is chart patterns, which are formed by the recurring movements of prices over time. Common chart patterns include triangles, flags, and head and shoulders formations. By recognising these patterns, traders attempt to predict future price movements and adjust their trading strategies accordingly.


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In addition to chart patterns, technical analysts also utilise technical indicators to aid in their analysis. These indicators are mathematical calculations based on price and volume data and are used to identify trends, momentum, volatility, and other aspects of market behavior. Popular technical indicators include moving averages, oscillators like the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), and trend-following indicators such as the Average Directional Index (ADX).


While technical analysis is a powerful tool for forex traders, it is not without its limitations. Critics argue that technical analysis is subjective and prone to interpretation bias, as different analysts may draw different conclusions from the same set of data. Moreover, technical analysis does not account for fundamental factors such as economic news and geopolitical events, which can have a significant impact on currency prices.


Despite these limitations, technical analysis remains an indispensable tool for forex traders worldwide. By understanding and applying technical analysis principles, traders can gain valuable insights into market trends and dynamics, allowing them to make more informed trading decisions and improve their overall trading performance.

 


Risk Management


Setting Stop-Loss and Take-Profit Orders


Stop-loss orders are used to limit losses by automatically closing a trade at a predetermined price level. Take-profit orders, on the other hand, are used to lock in profits by closing a trade when the price reaches a specified target. By using stop-loss and take-profit orders, traders can manage risk and control their downside exposure.


Position Sizing


Position sizing involves determining the appropriate amount of capital to risk on each trade based on factors such as account size, risk tolerance, and the probability of success. A common rule of thumb is to risk no more than 1-2% of your trading capital on any single trade to preserve capital and avoid significant drawdowns.

 

Your Strategy


Once you’ve determine what style of trading would suit you best, you now need to develop a strategy. There are thousands of different strategies out there so you have the choice of learning one from someone else, or developing your own.


Regardless, some common strategies include:


Trend Following Strategies


Trend following strategies in forex trading involve identifying and capitalising on established market trends. Traders employing this approach aim to enter positions in the direction of the prevailing trend, whether it's upward (bullish) or downward (bearish), and ride the momentum for as long as possible. These strategies typically utilise technical indicators, such as moving averages and trendlines, to confirm the direction of the trend and determine optimal entry and exit points. The goal of trend following strategies is to capture significant portions of a trend's movement while minimising losses during market reversals.


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NZDUSD Daily Chart showing optimal entry points to go short during a bearish trend.



Range-bound strategies


Range-bound strategies in forex trading focus on exploiting price movements within defined ranges or boundaries. Traders employing this approach identify periods when a currency pair is trading within a relatively narrow price range, bounded by support and resistance levels. Instead of following a trend, range-bound traders seek to buy near support and sell near resistance, aiming to profit from the price being restricted to the range highs and lows.


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USDJPY 15min chart with optimal buy and sell signals for a range-bound strategy



Breakout Strategies


Breakout trading strategies in forex involve capitalising on significant price movements that occur when an asset's price breaks through predefined support or resistance levels. Traders employing this approach wait for a clear breakout from the established range and then enter positions in the direction of the breakout, anticipating continued momentum in that direction. Breakout traders typically use technical indicators, such as trendlines, moving averages, and volatility measures, to identify potential breakout opportunities and confirm the strength of the breakout. The goal of breakout trading strategies is to capture rapid price movements and profit from the subsequent price trend.


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Example of an opportune entry for a bullish breakout trade on EURUSD 4-hour chart


The key to developing a strategy that works for you is by studying the charts and thinking about what makes sense to you. If you think patterns make sense as they identify areas of consolidation which can lead to a breakout, then pattern trading could be a good fit for you.


It’s important for any trader to stick with their chosen strategy and not switch strategies every time they encounter a losing streak.


Practical Tips for Beginners


 

Maintain a Trading Journal


Keeping a trading journal allows traders to track their performance, analyse their trades, and identify areas for improvement. A trading journal should include details such as entry and exit points, trade rationale, risk-reward ratio, and emotional state. By reviewing past trades, traders can learn from their mistakes and refine their trading strategies over time.

 

Avoid Overleveraging


While leverage can amplify profits, it also increases the risk of significant losses. Avoid overleveraging by using leverage cautiously and only trading with capital you can afford to lose. A general rule is to keep leverage levels below 10:1 to mitigate risk effectively. The best position is cash. You should ensure you’re only taking the most high-probability set-ups that are in-line with your strategy.


Stay Disciplined


Maintain discipline in your trading approach by sticking to your trading plan and avoiding emotional decision-making. Avoid chasing losses or deviating from your strategy based on fear or greed. Consistency and discipline are key to long-term success in forex trading. Sometimes it’s best to walk away from the charts and come back the next day with a clearer head.


Manage Emotions Effectively


Trading can be emotionally challenging, with the potential for both euphoria and despair. Learn to manage your emotions effectively by practicing mindfulness techniques, maintaining a positive mindset, and taking regular breaks from the market. Remember that losses are a natural part of trading, and it's essential to stay resilient and focused on your long-term goals.


We highly recommend reading our article on the Top 10 Hidden Biases here.



Be realistic with your expectations


Trading can be very lucrative, but it can also be very costly. Traders should be realistic in their expectations – what % will you aim for each month? How much are you going to risk? Risking 20% of your equity per trade will be great on winning trades, but it won’t take long for you to eradicate your entire balance on a handful of losses. Whereas risking 1% equity per trade will allow you to conserve as much capital as possible, whilst still gaining 1%+ per winning trade.



Resources for Further Learning


To continue your forex trading education, consider exploring the following resources:


  • Books: "Currency Trading for Dummies" by Brian Dolan, "Japanese Candlestick Charting Techniques" by Steve Nison, and "Market Wizards" by Jack D. Schwager.
  • Online Courses: Investopedia Academy, Udemy, and Coursera offer a variety of forex trading courses for beginners and advanced traders.
  • Forums and Communities: Join online forums and communities such as Forex Factory, BabyPips and TradingView to connect with other traders, share ideas, and learn from experienced professionals.

 

Ready to get started?


Sign up for a free Demo account with us today.











Trading Tips
Beginners
Forex
Forex Trading
Trading Psychology
06.03.2024
Market Analysis
post image main
4th July Holiday Trading Hours
Fusion Markets
On the 4th of July, the United States will be observing their Independence Day as a national holiday. Due to this holiday, there are some changes to our standard market hours. Please take the following changes into account.



The following times are in GMT+3 (Server Time):

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What does this mean for you?

If you don't trade these particular markets where the hours are being changed, you can continue trading as per normal. However, please note that due to this holiday period, there will be reduced liquidity available and spreads may widen on some products.

If you do trade these markets, please take note of the session changes so you can manage your position accordingly.


Do I need to do anything?

As mentioned above, there may be wider than usual spreads due to the reduced liquidity so please make sure that your account has been funded sufficiently. Log into your hub here to fund your account.

Questions?

Don’t worry; we’ll still be working around the clock to answer any questions you may have.


Economic Events
Holiday Hours
01.01.2024
Trading and Brokerage
post image main
cTrader vs. MetaTrader: Key Differences and Similarities
Fusion Markets

In the fast-paced world of forex trading, having access to a reliable and efficient trading platform is paramount to your trading success. Among the titans of the forex trading platform world, two names stand out: cTrader and MetaTrader 4/5 (MT4 and MT5). These platforms have amassed an extensive user base and earned their loyal followings.

 

In this article, we'll delve into the intricacies of each platform, comparing their features, advantages, and limitations, to help you determine which platform is right for you.


Metatrader vs cTrader table of differences and similarities



Contents 


Genesis

User Interface and Customisation

Charting and Technical Analysis

Order Types and Placement

Algorithmic Trading and Expert Advisors

Mobile Trading



The Genesis of cTrader and MetaTrader


MetaTrader is the brainchild of MetaQuotes Software. The company introduced the first version, MetaTrader 4 (MT4), in 2005. Its successor, MetaTrader 5 (MT5), followed in 2010, bringing a host of new features and capabilities to the table.

 

cTrader was launched by Spotware Systems Ltd. in 2011, aiming to provide traders with a platform that offers a user-friendly interface and advanced functionalities. cTrader's main focus is on creating a seamless trading experience for both beginner and experienced traders alike.

 


User Interface and Customisation


One of the most significant factors in a trading platform's popularity is its user interface (UI). Despite MT4 being somewhat outdated compared to cTrader's modern design, both offer clean and intuitive interfaces, making them relatively easy for traders to navigate. However, they have different approaches when it comes to customisation.

 

cTrader takes the lead in UI customisation, allowing traders to personalise their workspace extensively. Users can arrange and resize various windows, add or remove trading indicators, and set up multiple charts on a single screen. This level of flexibility empowers traders to create an environment tailored to their specific trading needs.

 

On the other hand, MetaTrader, especially MT4, has a more rigid UI, with limited customisation options. While MT5 improved in this aspect, it still lags behind cTrader's superior customisation features. 

 


Charting and Technical Analysis


In terms of charting and technical analysis, both platforms deliver robust solutions. Traders can access a wide range of chart types, timeframes, and drawing tools on both cTrader and MetaTrader.

 

cTrader stands out with its intuitive charting package, providing more than 70 pre-installed indicators and a smooth drawing experience. It also offers Level II pricing data with its 3 depth of market (DoM) types (Standard, Price, VWAP), giving traders a greater insight into market depth and liquidity.

 

MetaTrader, however, remains a popular choice for technical analysis enthusiasts, thanks to its massive library of third-party indicators and analytical tools. This vibrant community-driven ecosystem ensures that traders have access to an extensive arsenal of tools to refine their strategies.


Let's dive into the specifics:


MetaTrader 4


Chart Types: MetaTrader 4 supports three fundamental chart types, namely Bar, Line, and Candlestick.

Timeframes: Nine distinct timeframes, spanning from 1 minute to 1 month.

Analytical Objects: 24 analytical objects, including lines, channels, shapes, arrows, and essential Gann and Fibonacci tools.

Technical Indicators: 30 built-in technical indicators. Furthermore, traders can explore over 2,000 free custom indicators and access 700 premium indicators available in the Code Base.

Chart Views: The platform allows traders to open an unlimited number of charts simultaneously. Moreover, traders can personalize their charts by creating templates that define specific attributes such as color schemes, chart types, scales, line studies, and applied indicators.


cTrader


Chart Types: cTrader comes with 8 chart types, but also includes additional variations such as tick and pip charts. These chart types include Bar, Line, Candlestick, Heikin-Ashi, HLC, Dot, Tick (configurable with 27 settings), Renko (with 19 settings), and Range-based charts (with 22 settings).

Timeframes: cTrader features 26 timeframes with the standard chart and over 50 timeframes and six zoom levels across all chart types (including tick and pip charts).

Analytical Objects: The platform boasts 33 analytical objects. 

Technical Indicators: cTrader offers 70 built-in technical indicators.

Chart Views: cTrader introduces Chart Views, allowing traders to detach charts and use them as separate tradable desktop applications across multiple screens. Additionally, ChartShot enables traders to share trading examples and strategies relatively easily.

 


Order Types and Placement


Now that we've got a comprehensive view of the differences in charting, let's delve into the nuances of order placement in MetaTrader and cTrader, highlighting their distinct approaches and functionalities:


Order Placement in cTrader


  • Weekend Order Placement: Traders using cTrader have the unique advantage of placing waiting orders during weekends, even when the markets are closed. This feature facilitates meticulous planning and analysis, allowing traders to prepare for the trading week ahead.

  • Specialized Order Types: cTrader goes a step further by introducing specialized order types like Buy or Sell Limit, adding an additional layer of risk management and trading versatility to the platform.

  • Click-and-Drag: Waiting orders, such as Buy Limit or Sell Stop, can be placed by selecting the order type and adjusting its position through an intuitive click-and-drag action directly on the chart.

  • Specialised Stop-Out features: Smart Stop-Out (partial closure while retaining entry) and Fair Stop-Out (full closure to maximize margin for active positions) give traders better risk management tools.


Order Placement in MetaTrader


  • Traditional Approach: MetaTrader employs traditional methods for order placement, necessitating traders to click directly on the desired spot in the chart to execute waiting orders.

  • Limited Specialized Order Types: MetaTrader has all the necessary order types needed for trading but lacks some of the more advanced features like cTrader's smart stop out.


Algorithmic Trading and Expert Advisors


The next significant aspect we need to consider is automated trading. In MetaTrader applications, both MT4 and MT5, traders can utilise Expert Advisors (EAs), which are manually coded programs designed for automated tasks, such as technical analysis of price data and executing positions on specific instruments.

 

When comparing MT4 to MT5, the primary difference between their Expert Advisors lies in the programming language they employ. Since MQL4 has been in use for a longer time than MQL5, there is a more extensive collection of pre-written scripts and codes available for traders to create their personal Expert Advisors, even if they lack programming knowledge. On the other hand, MQL5 is a simpler programming language, making it easier for traders to create new scripts themselves.

 

Regarding cTrader, it also offers similar programs known as cBots, which function similarly to Expert Advisors. As mentioned earlier, cTrader uses the widely recognised C# programming language, theoretically making it the most versatile among the three languages (MQL4, MQL5, and C#) with a larger consumer base. 

 

However, in reality, cBots are less popular than Expert Advisors (EAs), and the reason for this is that the online trading community supporting EAs is much larger than that of cBots. Consequently, there are more pre-existing templates available for MT4/MT5 compared to cTrader. 

 


Mobile Trading


Mobile trading has become an integral part of the modern trading experience. Both platforms offer mobile applications for iOS and Android devices, enabling traders to stay connected to the markets on the go.

 

cTrader's mobile app is widely acclaimed for its user-friendly design and seamless functionality. It provides real-time quotes, interactive charts, and order execution capabilities, giving traders full control over their portfolios from the palm of their hand.

 

MetaTrader's mobile app, too, is highly regarded and offers a range of features for on-the-go trading. It allows traders to access their accounts, execute trades, and monitor markets in real time.

 


Conclusion

 

In conclusion, both cTrader and MetaTrader are powerful trading platforms, each with its own set of unique features and strengths. cTrader shines in its user-friendly interface, extensive customisation options, and array of features. On the other hand, MetaTrader's widespread popularity gives traders a great pool of resources to draw on and stronger community support, while having all the tools needed to be successful in the markets.

 

Ultimately, the choice between cTrader and MetaTrader depends on individual preferences, trading styles, and specific needs. Traders should consider their asset preferences, technical analysis requirements, and whether they prefer a larger community-driven ecosystem or a more user-friendly interface with more features. Regardless of the choice, both platforms have significantly contributed to enhancing the trading experience for millions of traders worldwide.


Ready to Start Trading?


  1. Sign Up for Fusion Markets, Australia's Lowest Cost Forex Provider*

  2. Create Your cTrader or MetaTrader 4 or 5 Account.

  3. Download Your Preferred Version of cTrader (Desktop, Mobile - iOS and Android), MetaTrader 4 (Desktop, Mobile - iOS and Android) or MetaTrader 5.
    Or
    Trade With Your Browser with cTrader WebTrader, MetaTrader 4 WebTrader or MetaTrader 5 WebTrader.

  4. Fund Your Account

  5. Start Trading!



Trading Tips
MetaTrader
cTrader
09.08.2023
Trading and Brokerage
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Our Inter-Account Transfers are Now 60% Cheaper
Fusion Markets

Our mission has always been to bring low-cost trading to everyone, everywhere, and our newest upgrade is another way we're fulfilling that promise to you. In this blog post, we'll delve into the improvements we've made to our inter-account transfer infrastructure, and show you how to leverage these new features to optimise your trades.


Reduced Account-to-Account FX Transfer Costs


Part of our upgrade allows you to transfer funds from two different base currency accounts at a rate 60% cheaper than before. Our rates are essentially interbank rates, meaning that these are some of the best rates you'll find available, even from your own bank.

So when you're transferring funds from your USD account to your EUR account, you're getting close to the rate that banks will give when they trade with each other.


Seamless Transfers Between Trading Accounts


Transferring funds between your trading accounts is now a breeze. Access the convenient "Payments" tab within your Client Hub and click on "Transfer."


Effortlessly swap between accounts or create new ones to streamline your trading strategy and manage your funds with ease.


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Creating New Base Currency Accounts Made Simple


In addition to far superior exchange rates, you can also create new base currency accounts with a simple click.


To create a new account, all you need to do is select a currency in which you currently do not have a trading account.


Click on "Create an Account," set up your password and trading conditions, and you're ready to go.


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Instant Transfers for Immediate Trading


Recognising the importance of time in the fast-paced world of trading, we've ensured that transfers between your accounts are now instant. With prompt processing, you can create a new account, transfer funds, and dive into trading within a minute. Embrace agility and seize opportunities swiftly.


Have More Questions?


If you require further information or have any additional questions, do not hesitate to reach out to our support team - we're available 24/7. We're here to provide guidance and support, ensuring your trading success.


Happy trading!


Currency Exchange
Deposit Options
Forex
Payment Methods
Currency Trading
12.06.2023
Trading and Brokerage
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Unveiling the Power of Spreads: Trade Smarter with Fusion Markets' Spreads Tool
Fusion Markets

Are you ready to talk about spreads? Sure, you might think that there is nothing you have not heard before.  


John Wooden, an American basketball coach, said it best: “The eight laws of learning are explanation, demonstration, imitation, repetition, repetition, repetition, repetition, repetition.” 


So, hear me out. The spread is one of the most important concepts in forex trading, and understanding how it works can have a significant impact on your trading game. 

 

First things first, let's define what a spread is. In forex trading, a spread is the difference between the bid and ask price of a currency pair. The bid price is the price at which you can sell the currency, while the ask price is the price at which you can buy it.  

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The size of the spread can vary depending on a number of factors, including the volatility of the market, the liquidity of the currency pair, and the broker you are using. In general, the more volatile and illiquid a currency pair is, the larger the spread will be. 

 

Now, picture this: you have finally decided to dip your toe into the exciting world of forex trading. You have done your research, chosen a broker, and you are ready to make your first trade. But wait - what is this? The spread on your chosen currency pair is wider than the Grand Canyon. Suddenly, your dream of becoming a successful forex trader starts to feel like a distant memory. 

 

Okay, maybe that is a bit dramatic. But the point is, the spread can make a substantial difference in your forex trading experience. And when it comes to spreads, tighter is always better. 



So, why is it important to trade with tight spreads? 



For starters, tighter spreads mean lower trading costs. Some brokers might increase their spreads as part of their fee, which is why on some account types, the commissions are baked into the spreads. Remember that there are also several factors that might have an impact on the spreads. If the spread is wider, that means you are paying more in fees every time you buy or sell a currency pair. Over time, those fees can really add up, eating into your profits and making it harder to achieve your trading goals. 

 

But it is not just about the cost. Tighter spreads can also improve your chances of making a profit. When the spread is wider, it means there is a larger gap between the bid and ask price. This can make it harder to enter and exit trades at the price you want.  

 

For example, if you are trying to buy a currency pair, but the ask price is much higher than the bid price, you might end up paying more than you intended. Conversely, if you are trying to sell a currency pair, but the bid price is much lower than the ask price, you might end up receiving less than you wanted. These slight differences may not seem like a big deal, but over time, they can make a significant impact on your overall profitability. 

 

It is important to keep in mind that not all brokers offer the same spreads. Some brokers may advertise low spreads, but then widen them during periods of high volatility or low liquidity. That is why it is important to do your research and choose a reputable broker with consistent pricing.  




But how do you know if your broker is offering you competitive spreads?  



Of course, you want a broker who is open and honest about their pricing and fees, and who is willing to provide you with the tools and information you need to make smart trading decisions.  

 

And that is where our new tool comes in. At Fusion Markets, we are committed to providing our clients with the best possible trading conditions and that means being upfront about pricing and fees. That is why we designed our new Historical and Live Spreads tool.  


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This tool allows traders to view the historical spreads of a particular currency pair over a specified time frame, as well as the current live spreads. This information can be incredibly valuable in helping you make informed decisions about when to enter and exit trades. No more surprises, no more hidden fees – just transparent, competitive pricing. 

 

Think about it - with this tool, you can see how spreads have fluctuated over time, and get a sense of what a "normal" spread looks like for a particular currency pair. This can help you identify when spreads are wider than usual and avoid trading during times when you might be paying more in fees than you need to. 

 

And that is not all - the historical and live spreads tool also helps to promote transparency in the forex industry. We believe that our clients deserve to know exactly what they are paying in fees, and that is why we are committed to providing this information in a clear and accessible way. 

 

If you want to maximise your profits and develop a winning trading strategy, you owe it to yourself to check out our new tool. With its help, you can trade with greater confidence, knowing that you are getting the best possible pricing and keeping more of your hard-earned profits.  

 

So, what are you waiting for? Try out our Historical and Live Spreads Tool today and see how it can help take your trading to the next level. Trust us - you will not regret it! 

 

For more detailed information about our Spreads tool download our guide. 


DOWNLOAD GUIDE

Spreads Tool
Trading Strategies
Financial Markets
16.05.2023
Trading and Brokerage
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Revolutionising Forex Trading: How ChatGPT is Changing the Game
Fusion Markets


Getting an edge in Forex trading is the golden goose every trader pines for. While there have been many technological advances that have given traders an edge over the decades, FX traders are now looking toward what is fast becoming the biggest revolution in Forex: AI, and in particular ChatGPT. A seemingly magical AI that can produce articulate and human responses to almost any inquiry.  


It looks like ChatGPT is taking over the world, one chat at a time, and it can do anything you can only imagine (besides ordering pizza, but let’s not get too greedy). So, let's dive in and see how ChatGPT and AI are revolutionising forex trading, and how you can use this amazing tool to give you an edge in the markets. 

 


Unlocking the Benefits of Using ChatGPT 


So how can the chatbot improve your trading? Let’s take a closer look at what this Forex AI is capable of: 



  • Analysing Assets 


Now, I know what you are thinking. "How on earth can a language modelled AI help me analyse my assets?" Well, ChatGPT is no ordinary language model. It has been trained on massive amounts of data, including market trends, economic data, and news events. This means that it can analyse all the factors that affect the value of your assets and provide you with insights that can help you make better-informed decisions but be careful it only uses data up until 2021.  


  

The simple example above demonstrates what kind of information the chatbot can provide on the GBP/USD currency pair. Not bad, right? Well, why do not we try and get a little more advanced. 


 

 

 

How about even more granular? 


 

 

Now we are rolling. These are all simple 2-minute entries, but you can get as deep and detailed as you want - you are only bound by your own imagination!  
 

If you would like to learn more the GBP/USD, do not forget to check out Fusion Market’s article with a detailed overview of this asset. 

 


  • Creating Scripts 


ChatGPT has the potential to assist in the development of scripts that can be utilised by automated robots for trading purposes.  


While using the chatbot to generate an automated trading strategy, you have the liberty to employ more than one indicator.  


Graphical user interface, text, applicationDescription automatically generated

 

 

The script above retrieves historical data for AUD/USD from Yahoo Finance, calculates two moving averages (SMA10 and SMA50), generates trading signals based on the crossover of these moving averages, defines trading positions based on these signals, executes trades based on a simple position sizing strategy, and plots the trading signals and positions on a chart.  


Furthermore, although Python was used in this context, you have the option to ask for scripts in alternative programming languages like MQL4 and MQL5 for the MetaTrader platforms, or Pinescript for TradingView. 


But do not get carried away by the power of technology! Please note that this script is for educational purposes only and should not be used for actual trading without proper testing and risk management. 

 


  • Providing definitions and Explanations of Forex Trading Concepts 


Forex trading has a unique vocabulary that can be confusing for beginners. Chat GPT can provide definitions and explanations of forex trading terms and concepts, helping traders understand key concepts like pips, spreads, leverage, etc. 


However, one of the drawbacks of relying on the chatbot to clarify investing concepts is the difficulty in verifying the accuracy of its outputs. Since there are no credible sources listed or citations provided, users are left with no option but to rely on the correctness of ChatGPT's responses. That is why we highly encourage you to always verify the information through multiple sources. 

 


  • Sharing Forex Trading Tips and Strategies 


Chat GPT can provide forex trading tips and strategies that traders can use to improve their trading skills. These tips can cover topics such as risk management, technical analysis, and fundamental analysis. Traders can ask questions about specific trading strategies, and it can provide detailed answers based on its vast knowledge base. 


The example below illustrates how the chatbot broke down the fundamentals of a swing trading strategy and outlined the initial steps: 


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  • Offering Personalised Recommendations 


Chat GPT can provide personalised recommendations for traders based on their individual trading style and preferences. Traders can ask the chatbot questions about specific trading scenarios, and it can provide recommendations on forex trading strategies, risk management techniques, and other factors that can impact their trading success. 


And the best part? ChatGPT can work 24/7, providing traders with up-to-date insights and analysis at any time of the day or night. 

 

Now, I know what you are thinking. "This all sounds too good to be true. What is the catch?" Well, my friends, there is one catch. ChatGPT is not infallible. While it can analyse vast amounts of data and provide insights, it is not immune to the unpredictability of the market. Traders still need to exercise caution and make their own judgments based on ChatGPT's analysis. So, let’s take a look of what are the drawbacks of using this AI for trading. 

 


The Pitfalls of Trading with ChatGPT: 



  • Limited Understanding of Market Conditions 


While ChatGPT is highly proficient in language processing, it lacks the capacity to understand the nuances of market conditions. The market is highly complex, and there are numerous variables that can impact it. ChatGPT may analyse historical data and provide trading signals based on that analysis, but it may not be able to take into account current events that are influencing the market. This can result in incorrect trading signals and ultimately lead to financial losses. 


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  • Lack of Emotional Intelligence 


One of the advantages of trading with a machine is that it is not influenced by emotions. On the other hand, this lack of emotional intelligence prevents chatbots from the ability to assess the impact of human emotions on the market. For example, certain events can create panic and traders may make irrational decisions that can lead to a downward spiral in prices. AI may not be able to account for these emotional factors and provide incorrect trading signals.  

 

  • Dependence on Data 


ChatGPT is highly dependent on data. It relies on large datasets to analyse market conditions and provide trading signals. However, the data it uses may not always be accurate. The tool is only trained on data up to 2021, which means that there is a significant knowledge gap. Inaccurate or outdated data can lead to incorrect analysis and ultimately lead to financial losses. 

 

  • Lack of Flexibility 


ChatGPT operates based on pre-programmed algorithms. While these algorithms may be highly sophisticated, they lack flexibility. They are designed to analyse data and provide trading signals based on specific parameters. However, the market is constantly evolving, and these parameters may not always be relevant. Traders need to be able to adapt quickly to changing market conditions. ChatGPT may not always be able to provide the flexibility needed to make quick decisions. 


Traders need to understand the limitations of AI and supplement its analysis with their own research.  

 


Tips to Unleash the Power of AI: 



Here are some tips to help ensure you get the most out of your ChatGPT to improve your trading experience: 


1. Understand Your Risk Profile: Trading involves significant risk that should be taken into account. Chatbots can be an incredibly powerful tool in helping traders identify potential opportunities in the market, but they do not have a capability of predicting human reactions to certain events and the volatility of the market. Make sure you understand your risk tolerance before relying on AI for trading decisions. 


2. Follow the Trends: While Chat GPT can analyse vast amounts of data quickly, it is important to note that it may not always be accurate. Pay close attention to the trends and always double-check any decisions with additional research. 


3. Trade Strategically: Along with following trends, it is important to develop a trading strategy before relying on any chatbot for your trading decisions. Determine which timeframe you want to focus on and create an entry and exit plan that makes sense in your particular situation. You can also practice trading to develop your own style with Fusion Market’s Demo account. 


4. Keep Learning: As with any trading strategy, it is important to continue learning and staying up to date on market trends and news that may affect your trades. Chat GPT can provide great insights into potential movements but only those who stay abreast of relevant news will be able to make the most out of their investments.  

 

Conclusion  


Utilising software to assist traders is not a new practice, as algorithms have been around since the 1970s. However, Chat GPT offers a unique perspective. Its capacity to provide easy-to-understand, conversational responses to complicated questions implies that it may be advantageous for online traders in some instances. 


However, there are downsides to using Chat GPT for trading. The tool was not built to handle tasks requiring specialised knowledge or language capabilities that are often necessary for online trading. Additionally, the accuracy and reliability of its answers and information are largely untested, and concerns about bias, copyright, and the limited scope of training data still exist. 


These arguments have led to reservations about using Chat GPT in real-world trading environments. As a result, there is currently insufficient evidence to support the use of Chat GPT for online trading. 


Instead, traders should consider utilising brokers with machine learning and AI-enabled tools designed explicitly for online trading.  


At Fusion Market’s we understand how important it is to have the right tools to succeed in the world of Forex, so check out our TOP essentials tools for traders.  


Test out the full range of Chat GPT’s capabilities for Forex trading risk-free with Fusion Markets Demo Account today! 


AI
ChatGPT
Trading Insights
Trading Psychology
20.04.2023
Trading and Brokerage
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New Deposit Method with Interbank FX Rates
Fusion Markets

Interbank FX conversion rates are now at your fingertips. Our latest bank deposit method allows our clients to deposit 30+ different currencies and receive some of the best FX rates on the market. This means you’ll pay less when depositing your local currency into your trading base currency, putting the savings back into your trading bankroll.


See below to see the full list of the 30+ currencies accepted for this funding method.


How does it work?


To receive interbank FX conversion rates, login to your Client Hub and click “Bank Transfer” on the right of the screen.



bank deposit methods fusion markets


Select your trading account you’d like to deposit into (e.g. USD, GBP, AUD), and deposit into the bank address listed.


When we receive your fund they’ll then be converted to your base currency account at industry-leading FX conversion rates.  


Which Currencies Can I Deposit With?


Interbank FX rate Currency List



Can I still use old bank wire transfers?


Yes! Click on the icon on the left in your payments sections to see access to our older bank transfer methods. You still may want to use this method if your country has local bank funding options.


How long will it take until my deposit is processed?


Depending on your bank and region, your deposit can from 1-5 business days to process. You’ll receive an email from us once your funds are ready to trade.

 

Can I use this method to transfer funds from one base currency trading account to the other?


This functionality will be coming soon!

 

Can I also withdraw using this method?


This is something we’re looking to integrate in the future, at the moment, we’ll only be accepting deposits using this method.

 

I have more questions


If you’d like to know more, please contact our help team - they’re available 24/7.






Deposit Methods
Interbank FX Rates
Forex Transactions
Currency Exchange
Deposit Options
Foreign Exchange Rates
Payment Methods
Currency Deposits
18.01.2023
Trading and Brokerage
post image main
Top Forex Events In The New Millennium
Fusion Markets

Foreign exchange (FOREX) goes through ups and downs. Some events had stripped bare the possible volatility of the market, causing fear in the hearts of investors. Here are some top events since the year 2000 that caused chaos in the markets.


2013 Forex Probe


The Forex Probe of 2013 was a scandal that revealed how international banks had been working together for at least a decade to tweak Forex market exchange rates.  

 

Again, this event was all about investor fears of market manipulation as a result of bank collusion.  It wasn’t easy to trust the market again after such practices were revealed. 

 

Four major banks admitted involvement, but the 2013 Forex Probe remains one of the most impactful foreign exchange events since 2000, even though the banks paid up $6 billion in fines.  

 

Greek Debt Crisis


In 2013, the Greek economy revealed its fragility, although it already showed some cracks during the 2007 worldwide financial crisis.  


It looked like Greece was going into an irreparable downfall. Still, the European Union overextended itself by granting it a generous loan of £68 billion. While the EU might have saved Greece, this move would remain one of the top events in Forex history for such a large amount of money changing hands.  

 

The consequences of the crisis could still be felt as Greece’s debt problems reverberated in 2015. Because Greece couldn’t reach its deal, some currencies surged, such as the Japanese Yen and Swiss Franc found which found themselves on the rise.  

 

However, other currencies didn’t fare so well in 2015. The Euro plunged in the Asian trading session. The dollar also experienced a one-month low of 122.10 yen.  

 

Political uncertainty in one country can affect many other countries, and sometimes the impact lasts for years. That is why the Greek Debt Crisis of 2013 makes it to our list of the most significant Forex events in the new millennium.  

 

2016 Sterling Flash Crash

 

Since we have already looked at what a flash crash is about, we can go straight to how the Sterling Pound lost its value within seconds on the 7th of October 2016.  

 

A fat finger error was suspected, but the Bank for International Settlements ruled that there was no proof it was the case. Further investigations revealed that algorithmic trading programs had triggered the crash. The algorithm issue was paired with traders who didn’t want to take much risk.  

 

GBP/USD - Sep-Nov 2016 - Forex chart

 

British Pound/U.S. Dollar – Sep-Nov 2016

 

 

2016 BREXIT

 

Brexit 2016 caused panic in the European Union, especially when its economic effects were felt. Of course, it also had an impact on the foreign exchange market. 

 

The story of Britain’s breakup with the European Union was one of the top events in politics and Forex history. It went to show just how intricately related these aspects were.  

 

The UK’s unexpected move was what created the panic. Understandably, something so unprecedented had to affect the market. Right before the votes were out, the British pound sterling was moving in an upswing trend. However, it ended in a closing of 8% down for the GBP/USD pair on that day. 

 

A slide preceded the Brexit-caused slump for about a year.  

 

USD/JPY and AUD/USD Flash Crash of 2019


You may believe that Apple is mainly influential in the technology market. Think again. Its reaches have some effects on the foreign exchange market, as well.  

 

Apple’s statement in January 2019 that emphasised the Chinese economy’s struggle had several investors selling their most volatile currencies. 

  

When investors lose confidence in the Chinese economy, their trust in the AUD and JPY also fluctuates. After all, Australia is its most important trading partner.  

 

Therefore, a simple statement from Apple in 2019 has caused one of the most significant foreign exchange crashes of recent years.  

 

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U.S. Dollar/Japanese Yen – Jan 2019

 

Swiss Francs Crash 

 

In the same year, in February, the Swiss franc also suffered a crash. However, some considered this an inconsequential event.  

 

The Swiss Franc experienced a significant drop during the Asian trading session on the 10th of February. It dropped against the US dollar and other major peers.  

 

When the Japanese markets closed for National Foundation Day, the Swiss francs suffered from a lack of liquidity.  

 

Another critical Swiss franc crash happened a few years prior to this, in January 2015. The flash rally, as some call it, occurred after the Swiss National Bank announced that its currency would no longer be pegged at 1.20 against the Euro. Because of this, the franc went up by 20% against not only the Euro but also some major currencies.  

 

2020 Black Swan Event

 

The Black Swan event certainly caused a stir in the financial markets. Moreover, it points to the fall of the most popular of cryptocurrencies - Bitcoin. 

 

So, when the cryptocurrency fell to almost 4970 USD per coin, it caused sheer panic among investors. That was an 80% loss in value. For comparison, its 2017 value was at 19716 USD. 

 

Bitcoin was not alone in creating fear among investors, as Ethereum also dipped from 285 USD to 110 USD. COVID-19 was believed to be the cause of the plunge.  

 

Because the cryptocurrency crisis of 2022 was considered a Black Swan event, it affected other financial markets, including foreign exchange.  

 

The fear generated by black swans is especially fearsome due to their ability to wipe out entire accounts. Reliance on standard forecasting tools can fail to predict potential damages, and that is what makes black swan events so rare and devastating. 

 

Coronavirus Pandemic

 

The COVID-19 pandemic continues to make its effects known in various industries worldwide. During that crisis economic growth expectations were downgraded in fear that major economic sectors had to be shut down due to the increasing coronavirus cases. That uncertainty reduced the demand for local currencies and investment funds. In addition, it impacted exchange rates and the fluctuating value of the US dollar as a world reserve currency.  

 

As a result, economic and political measures created significant changes worldwide and left a mark in Forex history. 

 

Conclusion

 

While there may be more FOREX-related events in the past and the upcoming future that will affect the market, the above are the ones that still have tangible impacts in the past few years. It is crucial for forex traders to stay ahead of an ever-changing market, and one of the ways to achieve it is to understand its history. 

 

To access the world’s markets easier and at a lower cost get a live account with Fusion Markets. 



Forex Events
Financial Markets
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Currency Trading
10.01.2023
Market Analysis
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USD/BRL: An Overview
Fusion Markets

The forex symbol USD/BRL indicates the exchange rate value between the USD (US dollar) and the BRL (Brazilian Real)

 




Currency background


USD (US dollar)

 

The USD dollar is the United States of America’s official currency. Each dollar is made up of 100 cents. It is represented by US$ when differentiating it from other countries’ dollar currencies. However, they are more often just marked as $.

 

This currency has become the benchmark for other currencies because it is the most popularly used one. Even territories beyond the US have commonly used it as an unofficial currency.

 

Because it is often at the core of foreign-exchange trades, it has its own index – the USDX. It is regarded as the world’s most stable currency.

 

Brazilian Real (BRL)

 

The Brazilian Real (BRL) is Brazil’s official currency. Each Brazilian real is made up of 100 centavos. It is represented by the R$ symbol.

 

It was first used as the country’s official currency in July 1994. It replaced the cruzeiro real. The exchange ratio between the former and the current currencies are not 1:1, either. 1 real is equals to 2,750 cruzeiro real.

 

From 1994 to 1999, BRL was pegged to the USD as an attempt to maintain stability. As the largest Latin American economy, it is worth looking into. It is also the 9th largest in the world.

 

If you’re considering taking the USD/BRL pair, here are the things to consider:

 

Economic Conditions

 

Currency values depend on the economic conditions and public reception of their country’s stability.

 

Since the mid-twentieth century, the USD dollar has established itself as a powerhouse in the global economy. However, because it is a fiat currency, it is also affected by the United States’ economic outlook and activity.

 

Its strength may be good for the country itself. It can also be good for those who may be relying on its general strength to earn in foreign exchanges.

 

However, a powerful USD can be detrimental to countries relying on exports from the United States.

 

While the USD is obviously strong throughout, much can be said about Brazil’s economy as well. It is believed to be one of the strongest emerging economies due to its rich natural resources.

 

Its diversity in economy has spurred foreign investment to pour in. With an estimated $200 billion of direct investments, Brazil’s currency is doing great.

 

It wasn’t always the case. The currency faced several currency crises such as the Mexican currency one from 1994 to 1995, and the one with Asia and Russia in 1997 and 1999. Investors then didn’t want to have anything to do with the Brazilian real.

 

Supply and Demand

 

When the US exports more products, it triggers more demand for its currency because customers must change their money to dollars to be able to pay for the goods.

 

The US government and top American corporations may also issue bonds that can be purchased only with the US Dollar. Foreign investors must buy dollars to buy those financial instruments.

 

Because of the overall reliability and strength of the US dollar, a lot of investors will still buy the currency as a reserve.

 

Perception

 

Currencies depend on perception or market sentiment. For example, if people have been watching the news, finding out about a weakened US economy or increased unemployment, the tendency is to buy back their local currency. This will lower the value of the dollar.

 

The same goes with the BRL, but even worse since it is a less popular currency. While its economy is doing well and has it placed up there among emerging markets, political corruption could be its downfall.

 

Geopolitical Conditions and Global Risks

 

One of the factors that affect perception is geopolitical conditions. How are the politics in the country?

 

USD is a dominant global reserve. It may experience some lows, but it is always generally high in value. Recent events have this fiat currency on the rise, too. On the other hand, Brazil also started strong this year and has been pulling from Russian assets.

 

What can provide some volatility in the USD/BRL pair is Lula’s recent election as the President of Brazil.

 

How to trade USD/BRL

 

Now that you know the strength of the individual currencies, how do you trade the USD/BRL pair?

 

The value you get will depend on the exchange rate between the two.

 

While USD is a stable currency, Brazilian real is the currency of an emerging market. It means that Brazil’s GDP has been steadily growing from 2000. A similar trend is expected to continue.

 

You will earn a profit because an emerging market’s GDP tends to grow rapidly. However, you must be vigilant because it is also at risk of being negatively impacted by political instability and currency fluctuations. Weigh risks against rewards.

 

Pick the right time frame

 

Trade when the USD/BRL is at its busiest, and potentially at its most volatile. The 8:00 to 12:00 Eastern Time frame is also the time when USD details are more readily available.

 

It is when significant chunks of data have been released that a currency pair’s volatility increases. Be watchful at this time because you will have increased opportunities for profitable trades.

 

Conclusion

 

USD/BRL is useful if you want to diversify your foreign exchange portfolio. Your portfolio may see increased gains/losses when one of the fiat currencies in your portfolio is an emerging one.

 

Why?

 

Emerging currencies are more likely to display greater volatility. They have also been steadily rising since 2000. Though the previous formation is not a guarantee of future performance, the current strength of currencies like the Brazilian Real is reassuring.

 

Of course, you will be dealing with two currencies that can give you a lot of value. The USD is always strong. Meanwhile, BRL performs well because of the resources and commodities that Brazil can export. Exports can strengthen both currencies because they prompt investors to buy them.


Currency Trading
Trading Tips
USD
BRL
17.11.2022
Market Analysis
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USD/CNH (USD/CNY): An Overview
Fusion Markets

The foreign exchange pair USD/CNH (or otherwise known as USD/CNY) is the trading ticker symbol for the powerful but volatile pair of the United States dollar and Chinese Renminbi. Chinese Renminbi is the official currency of the People’s Republic of China, but each individual unit of currency is called Yuan. These two are considered as “exotic” or volatile pairs, mainly because a major currency, USD, is paired with that of an emerging nation, CNH.

 

While considered volatile and generally treated with higher liquidity, the USD/CNH pair is the combination of the world’s two largest economies. The unique relationship between the two countries of the two currencies makes the combination both potent and fascinating.


CURRENCY BACKGROUND


United States Dollar


The United States Dollar is the official currency of the United States of America and several other countries. It is popularly known as the “greenback” due to the bills’ predominantly green color.

 

The Coinage Act of 1972 paved the way for the introduction of the US dollar. The fiscal policy of the United States is under the control and supervision of the Federal Reserve System, which serves as the nation’s central bank as well.


Chinese Yuan


The Renminbi is the official currency of the People’s Republic of China. The Yuan is the basic unit of the Renminbi, but it is also used to refer to the currency in general, especially in an international context.

 

In 1948, or one year before the establishment of the People’s Republic of China, the People’s Bank of China (PBOC) introduced the Renminbi. As the new government of China expanded its hold on its territories, it began to steadily issue the Renminbi so as to have a unified currency in the land. Since then, the Renminbi, or Yuan, has been in circulation and has been the official currency of China.


IMPLICATIONS OF USD/CNH CURRENCY PEGGING


The US and China have always had a love-hate relationship that greatly affects not only their trade relations but that of the world as well. The past decades saw a series of pegging and de-pegging between the two currencies. Here are a few key periods that saw the biggest impact and highlighted the importance of currency pegging.


1995-2005


The US Dollar is freely convertible into all currencies of developed economies. On the other hand, the Chinese government is managing the Chinese Yuan’s value. From 1995, Chinese Yuan was at a “hard currency peg” at 8.38 against the US Dollar. For a decade this seems to be the case, and for this reason, it received wide criticism, mainly from the US government. The expectation that there should be a movement in the currency exchange of Yuan (given that China’s economy saw big growth) was not seen. This move by China is seen to protect its interest as, by artificially keeping the value of the Yuan down, Chinese importers were given a competitive advantage: a lower Yuan exchange rate reflects a stronger Chinese currency because you would need fewer Yuan to purchase one US Dollar.


2005


July of 2005 saw a revaluation of the Yuan by the People’s Bank of China by 2.1 percent. PBOC likewise announced a shift to a “soft peg,” which will allow the Yuan to trade more freely within a certain managed exchange rate range. While some criticized the change for being too “insignificant,” many economists praised the move and saw it as the first step towards a more flexible currency exchange system.


2010 - present


Since 2010, China continued its efforts of reforming its exchange rate system by giving the buying and selling forces in the market a freer reign in determining the exchange rate.


IMPORTANT THINGS TO CONSIDER WHEN TRADING USD/CNH IN FOREX


Federal Reserve and People’s Bank of China


Federal Reserve


The Federal Reserve, or most commonly known as The Fed, is the United States’ central bank. It is responsible for the monetary policies of the nation and sets the interest rates of the dollar investments eight (8) times in any given year. The Fed provides direction to strengthen the US Dollar and in maintaining its fluidity and stability.


People’s Bank of China (PBOC)


PBOC is China’s central bank. It has the duty of implementing monetary policies – even unconventional ones – to ensure that CNY remains competitive and afloat. PBOC likewise sets a daily midpoint rate, which serves as a basis in trading Renminbi or Yuan within 2% in either direction.


Trade Wars


Being major players in the international trading arena, trade wars in the form of imposition of additional tariffs and sanctions greatly affects the values of the currencies. In the 2018-2019 US-China Trade standoff, when Trump imposed a series of sanctions against China’s products and exports, China retaliated by lowering the exchange rate value of CNY below its USD peg.


CNY Depegging and artificial manipulation

USD/CNH Weekly - Nov 2017-2018



CONCLUSION


Is the USD/CNH worth the risk for your investment?

 

As a volatile combination, is it worth the risk to invest in USD/CNH?

 

While it seems counterintuitive, the pair remains to be one of the most popular, given that the combination represents two of the most powerful economies in the world.

 

The US Dollar is the world’s primary reserve currency, and remains to be the most widely used currency when it comes to international transactions. The Chinese Yuan represents the continuous and rapidly rising economy of China, the world’s largest exporter. Their advantages when taken individually could be the pair’s strength when taken cumulatively.

 


Currency Trading
USD
CNY
CNH
Forex
10.11.2022
Market Analysis
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NZD/CAD: An Overview
Fusion Markets

The Forex symbol NZD/CAD indicates the exchange rate value between the New Zealand Dollar (NZD) and the Canadian dollar (CAD).

 



Currency background

The New Zealand Dollar (NZD)

 

The New Zealand dollar has been New Zealand's official currency since 1967. It is also used by the Cook Islands, Niue, the Pitcairn Islands, and Tokelau.

 

Before NZD emerged as the country's official currency, New Zealand used the New Zealand pound. It should be noted that it differs from NZD and the sterling pound. The government researched using a decimal currency, eventually leading to the use of NZD.

 

When NZD was introduced, 27 million worth of banknotes and 165 million in coins were produced. The currency is also known as the kiwi, after the bird native to New Zealand.

 

The Canadian Dollar (CAD)

 

The Canadian dollar (CAD) has been Canada's official currency since 1858. It uses the typical dollar sign ($). You will sometimes see it as CAD, Can$, or even CA$. These variations are meant to distinguish it from other currencies that use the dollar name. Like other dollar denominations, such as NZD, it is a decimal currency.

 

CAD is pretty popular, holding the fifth most chosen reserve currency. Of course, USD dollar is at the top, followed by the EUR, GBP, and JPY. CAD is also the sixth most traded currency because the country has a lot to offer in terms of raw materials and natural resources.

 

Factors you need to consider in trading NZD/CAD

 

Most currency pairs depend on similar factors, such as economic trends and geopolitical factors. Your wins and losses will depend on the countries your currencies are from.

 

Here are some factors that drive the NZD/CAD dynamics:

 

Economic and geopolitical conditions are the most significant factors that affect NZD/CAD as a Forex pair.

 

Economic conditions

 

When considering the NZD/CAD Forex pairing, you may want to take special note of Canada's strong economy. It is a mixed one, with over 70% of it relying on the service industry.

 

It is worth noting that in 2020, the country was considered to have the world's ninth-largest economy, with almost USD 1.75 trillion in GDP. It even places third worldwide in terms of oil deposits. There are many other raw materials the country can also export.

 

Meanwhile, NZD has recently (at the time of writing) experienced a surge, with its economy rising faster than investors expected. The second quarter of 2022 has seen it grow by 1.7%. The rally did not last long, and more recent stats show it is now fizzling. However, considering the 0.2% drop during the first quarter, NZD is still headed in the right direction.

 

Because New Zealand is very close to Australia, observe how their economies are also closely interrelated. A lot of New Zealand’s exports may be going to its neighbour.

 

As a Forex pairing, NZD/CAD is reliable enough. It may not involve the ever-popular USD, but CAD is a reliable currency, and NZD is also proving its worth. One must, of course, at least show some predictable up-and-down motion for you to profit from this pair.

 

Because both Canada and New Zealand are known for their oil and other commodities, you may also want to do a lot of commodity price watching before you make a trade.

 

Geopolitical conditions and global risks

 

Canada does very well politically. It is known to have one of the least corrupt politics in the whole world. That fact makes it a steady country with a reliable economy.

 

Meanwhile, New Zealand is generally known as a peaceful country. Still, it is difficult to deny that current global tensions have affected the currency. NZD's value lowers as the tensions and the prices soar, an effect felt long after the COVID-19 lockdowns.

 

Despite NZD issues, local exporters benefit from lower NZD value.

 

Perception

 

How each of these economies is perceived also plays a role in how each performs. Traders want to invest in something they can trust and predict. For example, Canada is generally perceived to have clean and non-corrupt political practices. It also continues to deliver high-quality raw materials and natural resources. Both these factors play a big role in the currency's perception.

 

How to trade NZD/CAD

 

When trying to profit from this particular Forex pair, do so during the optimum times: from 13:00 and 17:00 (GMT). Why? It is at these hours that the NZD/CAD is at its busiest. Be careful. Trading when it is at its volatile is risky, while trading when it is not volatile will have you spending too much.


A number of other factors will also influence the volatility of this pair, for example, the CAD exchange rate can be affected by the US’s economic conditions. Meanwhile, the NZD is affected by Asian and Australian markets.

 

Conclusion

 

Is the NZD/CAD pair worth going into?

 

The NZD and CAD pairing does not involve the USD, the most sought-after currency. So, it does have that against it.

 

However, CAD is reliable enough. It is one of the world's most-held reserve currencies, coming from a stable country with perceptibly good politics and many resources. So, you can trade this pair with the knowledge that you can, at least, rely on the CAD.

 

The combination with NZD is near perfect because the New Zealand currency may be experiencing some issues, but it is still generally more reliable than many other currencies. It is the 18th most used currency, from a largely peaceful country. The ups and downs it is currently experiencing may ultimately benefit traders. After all, you want to profit from the trade and not work on a pegged, static currency.

 

So, it is worth checking NZD/CAD if you want to diversify your foreign exchange portfolio. You may still have another pairing with USD involved, but the NZD/CAD pair is worth checking out.


NZD
CAD
Currency Trading
Forex
01.11.2022
Market Analysis
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Trading in a Recession 
Fusion Markets

Volatility is opportunity and there is no better time to embrace volatility than in a recession. To improve your success trading in a recession we’ve compiled a short list that will cover the historical performance of different asset classes, a look into different recessions, and strategies that could be implemented during a downturn. 

 

  • Know your markets 

   Forex 
   Stocks 
   Commodities 
   Cryptocurrencies 

  • Know your recession and recession history 

   Global Financial Crisis 
   Covid-19 

  • Strategies 

 

 

What is a Recession? 

 

Before we dive further into the markets and strategies, let’s first understand the broad strokes of a recession and what it really means. 

 

The term “recession” is generally applied when two consecutive quarters of negative GDP growth are reported, dubbed a “technical recession.” However, this can often be myopic and not encapsulate the entire economic environment. Unemployment, consumer spending, and lending accessibility are just some of the other indicators that help convey when an actual recession has occurred. Overall, there should be a general decline in overall economic activity. 
 

In the US, the National Bureau of Economic Research (NBER) is the authority in determining a recession. They define it as: “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” [1] Therefore despite the US reporting two negative quarters of growth in 2022, the Whitehouse issued a blog stating they are, in fact, not in a recession. [2] 

 

Regardless, when you see a general decline in economic activity, being prepared and able to adapt your strategy on the fly will largely determine your success as a trader when market conditions change. 


 

Business Cycle Phases

Overview of Business Cycle Phases (Source) 


So what does this means for the markets? 

 

Most know that in recession-like conditions, people become more risk-averse. We’ve seen this all throughout 2022. Risk-on assets like crypto, high-growth tech stocks, and speculative assets plummet, and safe havens currencies and assets rise. 

 

Tech Stock Declines 2021 to 2022

Selected Tech Stock Declines, Jan 2021 – Feb 2022   


BTC USD 2021 to 2022

BTC/USD Oct 2021 - July 2022 

 

In terms of forex, we’ll find that the demand for a currency will still largely be determined by the economic state of the issuing country/region. We’ll see strong economies and trusted currencies that the market believes can weather a recession rise or remain stable, and economies that are more susceptible to a severe fallout decline. 

 

Know Your Markets 

 

Most traders will not trade every market, so the first thing to understand in a recession is how your asset class has historically acted in an economic downturn. We all know that past performance is not an indication of future performance, but as the saying goes, “history doesn’t repeat, but it often rhymes,” so let’s first look at how different asset classes have historically performed. 

 

Know your markets: Forex  

 

Forex is not like other asset classes. Forex is to an economy as oil is to a car engine. It keeps the engine functioning but is not necessarily the gas that makes it go. Unlike an overall stock crash, in a recession we’ll see certain currencies shine. The main thing to look at is a country’s strength in a recession and how much it is seen as a “safe haven”. 

 

For example, in the first half of 2022, as recession fears were reaching a fever-pitch, we saw great strength in the USD. This is because most traders have greater trust in the US Dollar and confidence in the US economy, despite the US experiencing severe inflation and stagflation concerns. 

 

DXY 2021-2022

DXY Oct 2021 - Jul 2022 

 

Similarly, you’ll likely see emerging market currencies crash in a global recession as they are more vulnerable to economic downturns. This is further backed up by JP Morgan, who calculated that emerging market currencies drop by an average of 17% over a two-year period from the start of a recession. [3] Even G10 countries can be affected, as JP Morgan also estimated that the New Zealand dollar loses 7-8% in times of a recession. 


AUD USD Collapse in March 2020 Covid Recession

 AUD/USD collapse during COVID recession (March 2020)


In terms of the strongest currencies, these have traditionally been: 


  • US Dollar 

  • Swiss Franc 

  • Japanese Yen 

  • Singapore Dollar 

 

Putting a particular spotlight on the US dollar, as the world’s default currency, we’ll often find banks buy USD when they (and companies) deleverage. We saw this already in the DXY when recession fears were very much at the forefront of the market’s mind both in 2022 and 2008. 

 

DXY 2008-2009

DXY Nov 2008 – Mar 2009 


Chart, line chart Description automatically generated

 

It’s important to note that these are broad generalisations. Each recession will have its own intricacies and market movements. At the end of the day, macroeconomic data is still king and will trump any broad-stroke generalisation. Indicators and future forecasts of metrics like balance of trade (imports/exports), currency demand, employment figures, inflation, spending behaviour, and monetary policy will all have significant effects on the strength of an economy and subsequently its currency. Remember to keep up to date will the latest news, forecasts, and figures. One way to do this is by visiting Fusion Markets’ economic calendar.  

 

For instance, we saw weeks before that energy prices were coming down due to a number of factors (Libya’s lifted embargo, OPEC+ meetings, lower demand, etc.) - energy was a major factor in the US’s rising CPI in 2022. This combined with the Fed’s less hawkish stance on rate hikes, positive job numbers, and slowing inflation saw markets rally and embrace a higher risk appetite, further exemplified by the fall of the DXY. 

 

Know your markets: Stocks 

 

Overall, we’ll generally see indices crash in a downturn. This year we saw the S&P500 fall below the 20% threshold that stock traders use to determine a “bear market”. Similarly, from 2007-2008, we saw the S&P 500 fall from 1,527 (Sept. 2007) to 968 (Sept. 2008) and the FTSE 100 drop from 6466 to 4902 over the same period.  

 

That being said, not all stocks will plummet. While “growth” stocks will be hit the hardest, you’ll notice that “defensive stocks” may actually rise during this time. For example, McDonald’s Stock rose 5.8% in Sept 2007 to Sept 2008. Similarly, we saw Coca-Cola increase revenues by 12% quarter on quarter in 2022 Q2. 

 

Fidelity created a template (below) that outlines a rough guide of how different sectors perform at different stages of the business cycle. 

 

Fidelity’s Sector Rotation Chart (Source) 


Know your markets: Commodities 

 

Obviously, gold is seen as a safe haven to many, especially during a recession and historically has thrived in risk-off conditions. However, gold is not the only commodity that may see gains. Similar to stocks where staple companies rise, we often see other popular commodities used when times are tough such as corn and wheat also rise. Reversing this assessment, we’ll also find commodities in high demand in booming economic conditions like those used in infrastructure, such as copper, fall. 

 

Similar to stocks and forex, these are all broad strokes and real-time data will trump generalisations. Ask yourself questions about how commodity markets will be affected in an economic downturn such as: are there political hold-ups (sanctions, embargoes)? How will the supply chain look (what could reduce/increase supply)? Does the commodity have new uses/markets (e.g. EVs)? 


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Gold Price vs Recessionary Period 1968 - 2021 


LME Copper Future price vs Recessionary Period 1990 - 2020 


Know your markets: Crypto 

 

Crypto has not been around in a recession, so it can be difficult to determine how it will react in such conditions. However, it has been through several bear markets that can paint a telling picture of how the market behaves in a downturn. 

 

Obviously, crypto is in the basket of “risk-on” assets, so you’ll generally see falls across the board, even in deflationary crypto assets. The real question is, what kind of falls will you see? 

 

Historically, Bitcoin has been the gold standard and although it has dropped significantly in bear markets its crash has been less severe than altcoins (alternative coins) like Doge, Ada, and Stellar. Ethereum is also now considered a bluechip coin and may show the same resilience in an upcoming recession, but in the last bear market (2018 - 2020), it followed the same big crash blueprint of other altcoins, coming down from $1,396 USD to $84 at the bottom of the market. 

 

ETH/USD December 2018 – March 2019 

 

The other key factor you’ll need to consider is which altcoins have staying power. While it’s true Bitcoin will hold up better in a market downturn than altcoins, it is also true that Bitcoin will have less upside than altcoins that are able to survive through a bear market. In 2020-2021, altcoins that weathered the bear market (Ethereum included) saw mind-boggling rises that dwarfed the return of bitcoin. 

 

ADA/USD Nov 2020 - Sep 2021 

 

At the end of the day, it comes down to your risk appetite, your time horizons and your trading style. 

 

Know your history and recession 

 

What kind of recession is this and what policies are central banks enacting to soften the blow? If we look throughout history, we’ll see a variety of different recessions with varying lengths, severities and outcomes. So, while it’s important to know how asset classes generally respond, it’s also very important to know what is unique about the recession you’re experiencing.  

 

Let’s examine two past recessions. 

 

Covid-19 Recession (March 2020) 

 

The Covid-19 recession was unlike many recessions of the past due to the unique effects on supply chain, employment and the unprecedented QE response from central banks. While the markets had been on a significant bull run for some time, the downturn can only be described as abrupt and violent.  

 

Economic Declines in 2020

 

Following, central banks went into action and put the jets on stimulus and other economic incentives to keep their economy afloat. As a result, we saw unprecedented growth across risk-on assets, and assets affected by supply chain issues such as corn and timber. 

 

Coronavirus and stock market chart



Lumber prices in COVID

 

Central banks’ response also saw further economic hardships appear as inflation rose significantly, further affecting economic stability and has led to what many are predicting as a long, hard crash in the next recession. 

 

Inflation since 2020 world

 

 

Take Aways: 


  • Central Bank responses are paramount 

  • Look beyond the term “recession” - what are the actual aftermath effects of the recession-cause (e.g. lockdowns, supply restrictions, who stays employed)?  

  • How has previous market behaviour affected investor expectations and risk appetite (prior long-lasting bull market)?   

 

Great Financial Crisis/Great Recession (Dec 2007 - June 2009) 

 

The Great Financial Crisis (GFC) was a severe recession that affected economies across the globe. It was largely driven by financial deregulation in the US (repeal of Glass-Steagall) that allowed risky subprime lending and securitisation of toxic assets. As a result of the overheated mortgage-backed securities market, when the economy started to slow in 2007 it set off a chain of events that created chaos throughout the global markets, leading to global credit freezes.  

 

During this time the S&P500 fell 38.49% in 2008 (its worst year since 1937). In order to prevent a depression, governments began implementing quantitative easing (QE) policies, as well as a number of other measures to prevent further economic catastrophe. However, it still took roughly 4-5 years for the markets to fully recover. Similar to today, in the FX markets we saw USD act as a safe haven. 

 

Notable price market movements in 2008: 
 

  • DJIA -33.84% 
  • S&P500 -38.49% 
  • Gold Rallied +8.29% 
  • Oil plunged -53.5%  

 

2008 Stock market peak to recession end


Equity Index 2008 to 2009


History of Global Financial Crisis


Take Aways:

 

  • How does the recession affect lending?  

  • How did it affect consumer confidence? 

  • To what extent will central banks go to avoid severe downturns (bailouts, QE, etc.)? 

  

Embrace your strategy 


While you will be adapting your strategy in a recession, it’s still important to stick to your trading plan. Know your take profit levels, know your stop loss levels and know your time horizon. 

Are you an intraday trader or a swing trader? Can your strategy in a bull market be applied in a bear market with tweaks? Has your risk appetite changed? 

 

Let’s examine a couple of common CFD trading strategies: 

 

Hedging


Hedging is the trading strategy of mitigating your risk by taking an opposite position in the asset or related asset. As many people are often long-term stock investors, some traders may wish to offset their risk by taking an opposite position in stocks or indices. If you’re looking for a cost-effective way to implement this strategy you can use Fusion Market’s commission-free US Share CFD or Equity Indices trading. 

 

Position Trading


As you will know the market you’re trading (FX, Equities, Commodities, Crypto etc.), you’ll also have some rough ideas of where particular assets may move. Position trading is akin to buy and hold or sell and hold strategies. In that, you take a position and run with it until you hit your broader take profit or stop loss levels. 

 

Scalping


Scalping is the practice of buying and selling an asset quickly with the aim of making small and quick profits. It is often favoured by day traders. There are many scalping techniques with some even considering arbitrage as a form of scalping. Others may try to briefly catch a trend, while some traders may look to trade the asset when it is “ranging” (bouncing between clear support and resistance levels).  

 

Carry Trading


Carry trading is profiting from interest rate spreads between two currencies by borrowing in a currency with a low-interest rate and converting that to a currency with a higher interest rate. This is a popular strategy among forex traders. However, this strategy carries risks such as the currency pair you are carry trading substantially drops in value. This is why it’s important to know the latest macroeconomic data to ensure your loaned asset doesn’t break in the wrong direction.   

 

News Trading


This can be especially potent in an economic downturn as traders will be closely watching central banks and will react quickly to their decisions. For example, as inflation and recession fears were major concerns in 2022, central bank interest rate hikes had significant effects on the markets and the perceived economic outlook of a country. This type of trading can be both short or long-term, but to be successful you’ll need to know what the market already thinks. A common method for this is to look at futures data and other markets to gauge expectations. For example, you can see data on Fed fund rate futures to see what interest rate hikes the market expects from the Fed. How closely the Fed matches expectations will affect how the market moves on and after their announcement. 

 

These strategies, much like other information in this article are broad ideas, nothing is to be taken as gospel. Still, it is a useful way to get a better grasp of what happens in a recession and how to position yourself to remain profitable when the market falls. 

 

Let us know what you think and if you have any other things you believe we should have added. 

 

To be able to trade all your assets in one place with the lowest commissions forex broker, join Fusion Markets today and get access to over 250+ trading assets. With 37ms* executions and from 0.0 spreads, we’ve made trading easy. 

 

 

 

 

 

 

 

 

 

 

 

 


20.10.2022
Market Analysis
post image main
GBP/USD: An Overview
Fusion Markets

The forex symbol GBP/USD indicates how much the British Pound (abbreviated as GBP) is worth in relation to the US Dollar (abbreviated as USD). This article provides traders information on how much USD is needed to buy one GBP. Forex traders call an exchange of this pair as “trading the cable,” a nod to how New York and London used to transmit trading information.

 

The GBP/USD pair is among the oldest currency pairs traded in the world. It is also among the most popular pairs to trade and is considered a major forex pair.

 

If you’re considering trading this pair, read on for a quick dive into the history of these currencies, their dynamics, and how you can trade this pair.

If you want to read more articles about our pairs, check out our posts on: USD/JPY and EUR/CHF.

 

Currency background


The British Pound (GBP)

 

GBP is the official currency of the United Kingdom and its territories. Its history can be traced back to continental Europe. With over 1,000 years of history, it is one of the oldest, if not the oldest, currency still in use. In 1694, the Bank of England was established, and banknotes entered circulation shortly after.

 

The GBP’s importance goes beyond the UK and its territories. It used to be the dominant international currency before USD took over in the 20th century. However, it is still among the most widely used currencies for financial transactions worldwide, along with the USD and the Euro (EUR). Further, as of 2021, the GBP comprised 5% of official foreign reserves (i.e., share of currency reserves held by central banks).

 

The US Dollar (USD)

 

USD is the official currency of the United States, dating back to the 18th century. In 1785, the US adopted the dollar sign, which is now, perhaps, the most recognizable currency symbol in the world.

 

The USD plays a major role in the global economy, dominating international finance. It is the most active currency for international payments. It has also been the top international reserve currency since World War II, with an over 50% share of global reserves. In forex markets, almost 90% of all transactions involve USD.

 

The Plaza Accord

 

No background of these two currencies would be complete without mentioning the historic Plaza Accord.

 

In 1985, the US, UK, France, Germany, and Japan—then known as the G-5—agreed to jointly intervene in the currency markets to correct trade imbalances. The devaluation of USD was meant to reduce the increasing US trade deficits.


In a couple of years that followed the agreement, the USD declined in value by about 50%, while GBP and the other currencies appreciated by about 50%.

 

Factors you need to consider in trading GBP/USD

 

The GBP/USD pair is among the most liquid in the forex market, with smooth price movements as there’s enough volume of trade in the market.

 

Various factors move the prices of currency pairs in the forex market. For most currency pairs, prices are affected by economic trends and geopolitical circumstances, both locally and globally.

 

Here are some factors that drive the GBP/USD dynamics:

 

Economy

 

Both the US and the UK are among the largest economies in the world.

 

Due to its size and role in the global economy, the economic situation and policies in the US affect many economies and markets worldwide. In general, the GBP/USD rises when the UK economy grows more than US economy.

 

If you’re trading US-based pairs, you can keep up to date with US economy updates through government data releases and economic reports or Fusion's economic calendar, which includes data such as GDP growth, interest rate decisions and balance of trade.

 

Trade balance

 

The US is one of the three largest players in global trade, along with the European Union and China. The US is among UK’s major trading partners, accounting for about 10% of UK imports and receiving over 15% of UK goods exports.

 

The trade balance situation generates some volatility for GBP/USD. GBP/USD rises when current account balance (i.e., the balance of trade between the two countries) increases for the UK.

 

Central Bank policies

 

The Federal Reserve (Fed) sets the monetary policy in the US, a key determinant of currency strength, with the aim of stabilizing US prices and maximizing employment. In the UK, the Bank of England (BoE) sets the interest rate to maintain low and stable inflation. It reviews rates every 6 weeks.

 

A rule of thumb here is that the pair rises when the BoE interest rates rise more than the Fed rates.

 

As the USD plays an important role in international markets, movements in interest rates set by the Fed have a critical impact on the movement of many currencies worldwide, including GBP. In 2022, steep rate increases have strengthened the US dollar, causing other currencies to dive as investors rush to USD.

 

Geopolitical conditions and global risks

 

Like other currency pairs, the GBP/USD is also driven by political uncertainties and global risks.

 

The GBP took a hit following the global recession in the late 2000s. In 2016, after the announcement of Brexit, the GBP dived to its lowest against the USD, as UK’s decision created uncertainties to how its trade prospects would pan out.


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GBP/USD and GBP/EUR - 2014-2021


As USD is a global reserve currency, it serves as a haven at times of global uncertainties. During the height of the COVID-19 pandemic in 2020, the GBP/USD rate dropped by 12% as investors sold the GBP and rushed to the safer USD.

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GBP/USD and GBP/EUR - 2007-2010


Conclusion

 

Is the GBP/USD pair worth going into?

 

The US and the UK are among the largest economies in the world, with both USD and GBP playing important roles in international finance. The two countries share strong economic relations.

 

In forex markets, almost 90% of all transactions involve the USD. Post-1980, the pair has been less volatile, with extreme movements stemming from major global and regional events such as the Brexit and the COVID-19 global situation. The pair is one of the most liquid in the market.

 

If you’re new to the forex market, trading with highly liquid currencies such as GBP/USD could benefit you. This is because many strategists recommend trading in these currency pairs while you’re still improving your grasp of forex trading. You're also in luck, in that, Fusion Markets is the lowest cost regulated broker on the market. Start trading today!  


GBP
USD
Currency Trading
Forex Trading
14.10.2022
Market Analysis
post image main
EUR/CHF: An Overview
Fusion Markets

The forex symbol EUR/CHF indicates how much the Euro (abbreviated as EUR) is worth in relation to the Swiss Franc (abbreviated as CHF), and how many Swiss Francs you need to buy one Euro. The pair is nicknamed “Euro-swissie” in the FX market.

 

As a cross-currency pair, EUR and CHF are traded directly, without the need to convert to a base currency first. This is also commonly known as currency pairs that do not involve the US Dollar (USD). The EUR/CHF currency pair is among the most popular cross-currencies in the forex market.

 

In this article we breakdown the history of these currencies, their dynamics, and how you can trade this pair. 


For more currency pair breakdowns, check out our USD/JPY Overview.

 

Currency background


The Euro (EUR)

 

As of 2022, 19 out of the 27 member countries of the European Union (EU) use EUR as their official currency.

 

Since its debut in 1999 and entry into circulation in 2002, EUR has become one of the most widely used currencies for financial transactions worldwide, often second only (or at times at par with) USD.

 

Owing to its credibility, EUR has also, until recently, been a relatively stable currency. This stability has allowed it to extend its importance well beyond the EU. Over 50 other countries and territories globally have adopted the EUR as currency or have pegged their currencies to EUR. Furthermore, it accounts for over 20% of global foreign exchange reserves, second only to USD.


The Swiss Franc (CHF)

 

CHF is the official currency of Switzerland, as well as of Liechtenstein. In contrast to EUR, CHF traces its origin over a century back to 1850.

 

CHF is among the top ten most traded currencies globally. It has long been considered a safe-haven currency, owing to the stability of the Swiss economy and its political neutrality. However, unlike EUR, no other country uses CHF as a peg for their own currency.

 

What to consider in trading EUR/CHF

 

Compared to most currency pairs in the market, EUR/CHF experiences fewer price movements. The trends are typically slower and more stable.

 

Several factors affect the prices of currency pairs in the forex market. For most currency pairs, price movements are mostly tied to economic and geopolitical circumstances, both locally and globally.

 

Here are some factors that drive EUR/CHF movements:

 

Economy

 

The EU, as a single market, is one of the largest economies in the world and one of the three most prominent players in global trade. It is Switzerland’s primary trading partner, with the EU accounting for over 60% of Swiss imports and receiving over 40% of Swiss exports. The economic situation in the Eurozone has a history of affecting the Swiss economy, such as in the 2010s.

 

If you’re trading EUR-based pairs, you can keep up to date with happenings in the EU economy through European Commission economic reports, including economic forecasts and reviews, as well as Fusion's Economic Calendar. The European Central Bank also publishes economic bulletins that provide insights on monetary policy, a key determinant of currency strength.

 

Swiss policies

 

The Swiss National Bank, which issues CHF, has traditionally been non-interventionist. Several of its moves, however, have impacted currency markets. In 2011, it pegged the CHF to EUR, in a move to help Swiss businesses to increase their profitability. A few years later, in 2015, it abandoned the peg, stunning investors, causing market turmoil, and leaving a profound impact on the EUR.

 

EUR/CHF chart of Euro Peg and Depeg

EUR/CHF 2011-2015 Weekly Time Frame


Global risks

 

Investors on the move to mitigate global economic risks are drawn to CHF due to its solid reputation for financial stability. In the aftermath of the global financial crisis in the late 2000s, widespread buying of CHF saw a 20% depreciation of EUR to CHF.

 

Geopolitical conditions

 

Investors also turn to CHF in times of political uncertainty in the EU, such as during the Greek sovereign debt crisis following the 2008 financial crisis. Demand for CHF had also soared during the Brexit negotiations, with investors using it as a hedge for protection against Brexit.


Movements in USD

 

A distinct advantage of EUR/CHF is its independence from USD. As they can be directly traded with each other, the pair isolates traders from USD-related volatilities. 


Conclusion 


The EU is one of the largest economies in the world, with EUR used in a majority of global transactions. The EU and Switzerland are not only geographically close, but also share strong economic ties, such as trade relations.

 

The EUR/CHF as a cross-currency pair experiences fewer price movements, with less volatile trends compared to other forex pairs. Both currencies are credible, with CHF long considered a safe-haven currency. Even during the COVID-19 global pandemic, investors have trusted CHF.


If you're looking to trade EUR/CHF, you'll be able to get ultra-tight spreads and $2.25 commissions per lot with Fusion Markets. Don't wait on the sidelines, be part of the action.

 

 

 

 


EUR
CHF
Forex Trading
Currency trading
03.10.2022
Market Analysis
post image main
Overview and Analysis of USD/JPY
Fusion Markets

Extremely liquid and highly traded, the USD/JPY pairing is one of the major pairs of the foreign exchange market, being the second most traded pair by volume behind EUR/USD. Used to denote how much 1 US Dollar (the base currency) converts to Japanese Yen (the quote currency), the volatility, reserve-held status of both currencies, and liquidity have made it a popular trading pair among Forex Traders.


Historically the Japanese Yen has fared well against the US Dollar in times of market turmoil, as many investors view the Yen as a safe-haven currency. This was most apparent during the Global Financial Crisis (GFC) in 2008 and post GFC market rebound.


Yen during the GFC

USD/JPY from 2005-2015



What factors affect USD/JPY?


The USD/JPY pair is influenced by both the US and Japan’s monetary policies, in particular those related to treasuries and interest rates.


Differences in policies and interest rate decisions by the Federal Reserve (FED) and the Bank of Japan (BOJ) are often one of the key drivers of the pair, and have in the past correlated closely with USD/JPY movements.


These differences have further been compounded with Japan’s introduction of Qualitative and Quantitative Easing (QQE) with Yield Curve Control (YCC) in 2016.


Historically, when US treasury prices rise, the USD/JPY pair weakens. Similarly, when US treasuries fall, the US dollar strengthens against the Yen.


With bond yields being a key driver, factors that affect bond yields such as interest rate expectations and inflation can significantly affect the pair. For example, as rising interest rates lead to higher bond yields, it also subsequently leads to the USD/JPY strengthening.


Therefore, when the Fed or BOJ intervenes to control inflation, deflation or stagflation with changes in interest rates it affects USD/JPY.


While treasuries and interest rates are often seen as one of the core drivers of USD/JPY, similar to other Forex markets, a range of other economic factors also play a role in the movement of the pair.


Some other economic factors that have played a role in the past are: Japan’s import/export balance, natural disasters, GDP, CPI, unemployment rate and wage growth. Although these do not influence the pair as much as US treasuries and interest rates, they can create significant price movements depending on how unexpected the event is.


For example, following the 2011 Tsunami in Japan, the Yen surged against the US Dollar with pundits expecting that Japanese investors would have to repatriate to cover the cost of the damages.



USD/JPY March 2011



Why is the Yen weakening and USD/JPY soaring?


As mentioned above, interest rates and monetary policy are some of the biggest drivers of the pair. This was further magnified during the COVID-19 outbreak and the subsequent Quantitative Easing (QE) policies of countries worldwide with stimulus schemes issued by many governments including the US and Japan.


In the case of the US this was one of the major factors to its rising inflation. As such, the US has begun implementing interest rate hikes, and is expected to more aggressively raise interest rates throughout 2022 and 2023.


In comparison, the BOJ has opted to not introduce any interest rate hikes in the short term and instead plans to continue with their stimulus and subsidies packages. Japan’s history with deflation and negative rates makes this position understandable, but the weakening Yen has made Haruhiko Kuroda, the Governor of the BOJ, express concerns.


Japan’s plans to continue with their proposed stimulus has led to the Yen weakening not only against the US Dollar but other foreign currencies where central banks plan to increase interest rates, such as the UK and GBP.


It will be important to keep an eye on USD/JPY as the monetary policies of the FED and BOJ continue to diverge.



How do I trade the USD/JPY pair?


As Treasury bonds tend to affect the pair, looking at yields across different maturities can be a good basis to begin your analysis. This can help forecast the future of the pair, and overall provide a solid fundamentals-based foundation for other analysis.


Another useful indicator, as USD/JPY can represent market confidence, is the S&P 500, as it may provide early warning signs of overall market reversals.


In terms of when to trade the pair, 12:00 to 15:00 GMT (when the Tokyo market isn’t open) has been one of the most volatile and best times to trade the pair. Even though the Tokyo Market isn’t open yet, this period tends to have high volatility as it is when the London and New York markets overlap.


In terms of when not to trade the pair, you want to avoid “quiet” times in the market such as 21:00-24:00 GMT when the New York market is closed, London is sleeping, and the Tokyo market is yet to open. Similarly, 03:00-5:00 GMT is considered another quiet period as the Tokyo market is nearing the end of the day, and the London and New York markets are not open.


Another consideration is your trading strategy. A commonly cited reason that USD/JPY is favoured by some traders is due to Japan’s traditionally low interest rates. These low interest rates make it a good pair to consider for those who are implementing carry trade strategies.

To learn more about currency pairs, and the foreign exchange market sign up to Fusion Markets and keep up with all the latest macroeconomic events.   

Market Analysis
USD
JPY
Currency Trading
28.04.2022
Trading and Brokerage
post image main
The Benefits of Copy Trading Forex
Fusion Markets

In this article, we go through everything you need to know about forex copy trading and how you can gauge the benefits and drawbacks it offers to both beginners and experienced traders.

  

What is Copy Trading?


Copy trading is software that is used to duplicate the trading strategies of selected traders.  

 
While this may sound like “mirror trading” (a technique used to mimic another trader’s strategies), the key difference is in copy trading the copying trader has their account linked to the account of the trader being copied. This means that whenever the trader being copied opens, closes, or alters a position these actions are also applied to the linked account (the copying trader).  



What’s the Difference between Social Trading and Copy Trading?


Before we dive into more details about copy trading, it’s important to distinguish between copy trading and social trading, as they are often mistakenly considered to be one and the same. Since we have already made clear what copy trading is about, let’s go into what social trading is, and how it might differ from copy trading. 


In essence, social trading is a combination of social media and investment. In social trading platforms, you can directly communicate with other investors, and exchange information about what trades to perform in a given time. This allows more people to collaborate. 


The main advantage of this is that you can analyse the trades yourself, meaning in some cases, you can try to see if there are any errors in making the trades before you execute them yourself. 


In mirror and copy trading, traders are in most cases using automated software to mimic the strategies of selected traders. 


In both mirror trading and social trading, you are not directly following someone’s trades, but are instead either automating their strategy (mirror trading) or manually following their strategy (social trading). 


In contrast, copy trading follows the trades of the selected trader, including when a position is opened and closed, as the accounts are linked. 


While social trading involves a closer look at trades and is great for people who want to learn trading by experiencing it first-hand, it also includes investing more time in research on the terminology and strategies of the industry.  


It should also be noted that with social trading, you might still be solely responsible for the trades that you perform. You only gain information from other traders within the social trading platform, and you can't automatically execute the trades based on other traders, as copy trading platforms allow you to do. 


In a sense, the main difference is in the way people approach trading in the first place.  


For those who are keen on learning everything about trading, social trading is a fantastic place to start. They gain knowledge along the way as they perform trades themselves. They copy other traders but also do their own research in the process, because they want to know the reasoning behind those trades.  


Copy trading, on the other hand, is for people who want a hands-off approach to trading, who prefer not to have to constantly monitor their trades. It’s for people who would rather just trust their trades to an experienced trader or someone they know personally.  




   Manual Trading     Copy Trading       Mirror Trading      Social Trading  
Beginner Friendly     No     Yes     No    Yes
Fully Automated
     No    Yes     Yes    No
Algorithmic     No    No     Yes    No

 


Why Should I Learn About Copy Trading?


These days, when markets are monitored around the clock, a variety of strategies are called for and across various asset classes.  


Investors might favour some strategies they have applied for a long time and with good results, but there’s no guarantee that those strategies will always work in the future. 



History of Copy Trading


While popular now, the first iteration of copy trading goes back to 2005, when researchers found a way to create an algorithm that could replicate trading behaviours.  


This use of algorithms quickly grew in popularity as investors and brokers picked up on it. This became the birth of mirror trading. 
 

However, it wasn’t long until brokerages and popular traders used the popularity of mirror trading to instead allow investors to link to their account, and for a small fee, allow investors to get complete exposure to their positions and strategies. 


Copy trading has turned out to be a unique way of getting access to the financial markets. The innovation spread to others who wanted to invest in foreign exchange, crypto or stocks but didn't have the time to follow markets, analyse information, or devise strategies they weren’t even sure would work.  



What Are the Benefits of Copy Trading? 


Copy trading has several benefits. These fall under two main categories: Income and Learning.  


You Earn Passive Income


Copy trade forex allows for passive income. You only need to set up your account, find a reputable investor that has hopefully been investing or trading for many years and has a reliable track record with few bumps along the road in their performance. Ideally, they take less risk than the average investor by holding fewer drawdowns and accessing markets you wouldn’t either get exposure to (e.g., Forex, Commodities etc.).  


In a way, to copy trade forex is to ride the wave that the experienced investor is creating and profit from it. 


Of course, investing in this way is not entirely risk-free. That is what makes the other benefit category, learning, more significant if you’re a beginner trader. 


You Learn from the Experts


One crucial benefit of copy trading, which beginners should be aware of, is that it can save them tons of time learning the fundamentals of forex trading.  


Learning how to analyse market information and plan a strategy from scratch can take a long time. Copy trading helps shorten that learning process by following the market in real time with actual skin in the game.  


You can experience how seasoned traders approach trading and pick up ideas from them. Eventually, you may even make your own variations of their strategies.  


You Learn How Experts Handle Losses


That doesn’t mean you should blindly trust what an established investor is doing with their trades. Even experts make mistakes.  


In fact, good investors study their past losses to identify errors in their approach and make adjustments, intending to minimise future risk further. 


Among the things you can also learn from copy trading, then, is how to recognise these mistakes for yourself, despite an expert’s opinion or because of an expert’s mistake, when a trade will result in a loss. 


And from the expert traders’ example, you learn how to learn from your mistakes. 



What Are the Drawbacks of Copy Trading?


Like all other investment strategies, copy trading has its fair share of disadvantages across any platform.  


Even Experts Make Mistakes


As mentioned before, even professional investors can make mistakes. They might trade something they wouldn’t normally trade, or refuse to close a trade when they should have. These are common mistakes we can all make due to our hidden biases. It's best, therefore, to partially monitor your investments as well, and not passively hope for the best. Ideally, you’re following along and can understand the reasoning for why the trader you’ve followed has done what they’ve done.  


Investing Involves Costs 


For people keen on investing in high volume, the commission fee that professional investors take can sometimes add up if money has already been lost through a bad or missed strategy.  


With a copy trading platform like Fusion’s, you only pay fees for any positive performance. There are no hidden management fees or entry or exit fees. You simply agree to the performance fee when signing up and away you go.  



Dealing with Drawbacks


Like everything else, copy trading has its pros and cons. With careful decision-making, proper research, and intelligent risk management, you can maximise the benefits of copy trading and minimise its drawbacks.                                      



Final Thoughts 


There isn’t much difficulty to copy trading. All you're doing is finding someone you know with a decent track record which has steady gains with minimised risk and hopefully mimicking their strategies for trading in the markets.  


That can be done by looking at investors’ trade history and analysing their trade entry (both buy order for long positions and sell order for short positions). At least two years of history is a good place to start.  


Overall, copy trading can minimise the risk of capital loss if you have found the right trader. For professional investors already familiar with various strategies, copy trading is still a good option - it might get you access to an uncorrelated asset class they might not have traded before or sharpen their own skills by following and learning from someone else.  


If you’d like to get started with copy trading, Fusion offers a range of options for both beginner and seasoned traders. Fusion+ allows traders to copy trade some of the most successful traders in the financial markets.  
 

We also offer a copy trading service through our partner DupliTrade. For those who wanted more of a social trading experience we also provide that with our partner, Myfxbook Auto Trade. 


If you’d like to learn more, contact us and we’ll happily answer any questions you have about copy trading, Forex or CFDs.  




FAQs


What’s the main benefit of copy trading? 


The main benefit of copy trading is to automate the investors' trading and minimize risk. It can also prevent slippage in buy and sell orders because most copy trading platforms are fast and automated. 


How does copy trading work? 


It works by copying the strategies of other experienced investors and applying them to your portfolio. 


Can I use MT5 and MT4 for forex trading? 


You can use MT5 and MT4 for forex trading. While MT4 is explicitly designed for forex investments, MT5 has a range of other assets, both centralized and decentralized. 


What are the risks of copy trading? 


The main risk of copy trading is that even experienced traders whose strategies you might copy can make mistakes. You have to monitor your own investments to spot issues at once if something goes wrong. 


Thousands of brokers are ready to help you invest. Experience copy trading with MT4 or MT5. Sign up now! 


Copy Trading
Forex
Trading Strategies
Trading Benefits
22.03.2022
Trading and Brokerage
post image main
Fusion adds 50+ Commission Free US Equities
Fusion Markets

That’s right, we have more than doubled our US Equity product line to 110 US equities. We want to ensure that our traders have the best costs, spreads and range of products, so it’s important to us that the most actively traded equities on the US market are available at Fusion, with no commission.


We now offer all equities in the NASDAQ 100 and more.


You’ll be able to find the entire list of newly added US Share CFDs in the table at the bottom of this page. For a complete list of all our trading products visit our trading product page.


How can I access these new equities?


When you open your MetaTrader 5 platform and log into your Fusion account, you should already be able to access the entire range of new US Equities. If you don’t see all products, you need to right click in the “symbols” tab of the “market watch” and select “show all”.


What are the trading times for US Equities?


Trading of US Equities on Fusion Markets follows the normal trading times of the US Equities market. This means trading hours are between 9:30 - 14:00 New York time, or for Australians, that translates to 01:30 - 08:00 Australian Eastern Standard Time (AEDT).


Will buying these US Equities be like buying a US Share?


No. It’s important to remember this is a Contract for Difference (CFD) and not a share. In a CFD you don’t own the underlying stock, but are instead trading on the underlying asset price.


We use CFDs as they are one the best financial products for traders to capitalise on the price action of an asset via leverage. This form of derivative gives traders the best opportunities to take advantage of movements whether up or down. If you believe an equity is overvalued, a CFD is an excellent way to enter a position that will profit if the equity price falls. Additionally, with a CFD you are also able to increase your position size with leverage.


Full list of new US Equities available on Fusion markets



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I still have questions about the new US Equities

We are available around the clock, so if you have any further questions you can check out our FAQ page (most questions are answered here) or visit our contact page to get more information.


Currency Trading
US
03.03.2022
Stuff that makes you think
post image main
Why You've Got a Bigger Advantage than Professionals
Fusion Markets

You’ll often hear in the media or from professional market participants that retail clients “shouldn’t try to compete with the professionals”.


Ignoring the condescension here for a moment (“the adults will take it from here”) it is my firm belief after ten years of trading that this isn’t always true.


Sure, any beginner will find it challenging at the beginning to trade successfully, but you can’t expect to play like Roger Federer after one match of tennis, can you?


Charlie Ellis, the man who oversaw the $24 billion Yale endowment fund in the US once, said “watch a pro football game and it's obvious the guys on the field are faster, stronger and more willing to bear and inflict more pain than you are. Surely you would say ‘I don’t want to play against those guys.”


But Charlie is wrong in a few ways.


Yes, professional traders and institutions have many advantages at their fingertips. They get news faster than you do. Their trades go more quickly than yours. They pay far less than you do. You get the picture.


But it’s not all doom and gloom. Here are a few reasons why:


Time


No, not in the sense that you have more actual time to trade than them.


You probably don’t.


You’ve probably got a full-time job.


You might have kids or ailing parents to look after.


Trading is like a side hustle for you.


BUT your time horizon is different from theirs.


You can hold a trade for days or weeks without a Manager yelling at you “Why the hell are you selling euros, you dummy… the market is going up”. You might enter a trade on gold and plan to hold it for months.


A professional fund manager or trader might not have that luxury due to quarterly reviews, investor pressure or whatever else.


Professional Risk


Professional or Career risk is one I picked up from famed value investor, Howard Marks. In his book “The Most Important Thing” (one of my favourite investing/trading books of all time – buy it!) he talks about how in the GFC there was so much pressure on investors to not look silly by calling the bottom of the market or “catching a falling knife”. No one wanted to be the guy in the office who was buying Citibank at $1 per share!


Similar to my time point above, you don’t have that problem.


You don’t have your colleagues questioning you why you’ve bought or sold some instrument. Or a boss that is screaming at you and putting you into an emotionally defensive position trying to justify your actions.


Will you lose your job for selling USDJPY? No.


Does a professional trader get fired for always missing targets or taking on too much risk? Yes.


You need to work out what you’re happy with in your trading goals and go for them.


It’s entirely up to you what you define as success. The Pros don’t have that luxury.


Benchmarks


Which brings me to my next point.


Most professional traders and investors have a benchmark. If you’re a fund manager you’ll send out your monthly report to your investors saying “here is how much we made/lost.. and here is what the benchmark did”.


If you miss that benchmark, get ready for investor withdrawals. As a professional, you’re judged on your performance. Simple as that. The more investors leave. The more you have to sell. The more you sell, the worse your performance!


What’s your benchmark? You get to set your own. Happy with 1% a month? Awesome.


What about $100 a month so you can buy your wife dinner? Happy days.


Or $5,000 a month so you can pay off your mortgage? Even better.


It comes back to autonomy and your desires. No one else decides that but you.


Fees and Expenses


Believe it or not, you do have a HUGE advantage here, especially if you’re trading with a low-cost broker (hello, Fusion!)


If you’re a professional investor/manager, you’ll often have a significant research team, a very fancy office with lovely views, staff bonuses, visits to various investment conferences etc.


Not to mention all that travel to see your clients and investors!


Putting that aside for a moment, if you choose a good broker, you’ll pay zero spread and a small commission that is not far off what the pros trade. They’ve got $100,000,000 though, you’ve got one thousand!


So, ignore the haters telling you to stay out of the market because its only for the big boys.


However, let me be clear.


I’m not saying trading is easy and (unlike some) and that you can soon retire on the beach. It’s not. Trading FX, in particular, is a highly challenging exercise.


But don’t just assume because there are so many professionals in this that you can’t succeed or you’ll never be good enough. You have to play your own game, and for me, that’s the best part. I set my own rules as to what I consider success. That’s something the pros will never get.  


If you’d like to start trading and use your advantages to outperform the pros, Sign Up to Fusion Markets and get your feet wet with our demo account. When you're ready start a live account to start making real-time trades.

Trading Strategies
Financial Markets
Retail vs Professional
Market Trends
24.02.2022
Trading and Brokerage
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How to deposit via PayID in your Fusion Hub
Fusion Markets

Using PayID is a fast and easy way currently available on the Fusion Hub for you to deposit your money into your account as quickly and easily as possible. 

PayID deposits are sent using your own unique PayID Email address for your Fusion account. This will be provided to you when you generate a new PayID Deposit Address via the Payments tab for AUD. When you are on this page, as shown below, you will be able to select the PayID deposit option and then generate this address here.  

 

 

Once you've received your unique Fusion PayID within the Hub, visit your internet banking and make a transfer using "PayID" and choose the option to send via the PayID "Email Address" option. Please note, an incorrect PayID Email will cause your deposit to be unsuccessful and create significant delays. 

 

 

 

To make a new deposit 

  1. Log into your bank 
  2. Create a new payment via PayID (or "pay someone using an email address") 
  3. Enter in the email address found on the deposit screen 
  4. You can enter anything you like in the reference field for your own records, this will not affect the transfer on our end 
  5. Finally, enter the amount you want to send and complete the transfer 


Bank Specific instructions 

Please note 

Although PayID is a fast way to deposit your funds, your bank may impose a limit on how much you can send - typically around the $1000 mark. If you want to deposit more than this limit, we suggest first depositing as much as your bank allows via PayID, then using another payment method for the remainder. 


Further Questions? 

If you have any further questions relating to your deposit, please don't hesitate to contact our friendly team via live chat. 


Currency Exchange
Forex Trading
PayID
13.01.2022
Trading and Brokerage
post image main
Introducing Soft Commodities
Fusion Markets

We are excited to launch Soft commodities on our MT4/MT5 platform now to help you succeed in the markets.

 
Commodities that are grown rather than extracted or mined are called soft commodities. Soft commodities are among the oldest futures classes known to have been traded actively. Products in this category include soybeans, cocoa, coffee, cotton, sugar, rice, wheat, and all types of livestock.

Our platform now offers the following products

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Happy Trading!

Commodity Trading
Trading Strategies
Market Analysis
08.12.2021
Stuff that makes you think
post image main
Ethereum Trading: All You Need to Know
Fusion Markets

What is Ethereum?  


You may have heard of Ethereum being compared to Bitcoin, but Ethereum isn’t actually the digital currency itself. Instead, Ethereum is the technology that can run various financial services like payment systems, identity software, security programs, and of course, cryptocurrency trading.  

But how does this technology work?  

Like Bitcoin, Ethereum also uses blockchain technology, but there are quite a few differences on the deeper, more technical side. Blockchain technology is the foundation that supports all of Ethereum’s services.  

The biggest feature of Ethereum is that it is a programmable blockchain. This means that you’re free to use the technology according to your own needs. Whether you need it for payments, software, or even Bitcoin, you’re free to do that!  


Some of the world’s biggest companies are using blockchain in various ways, which shows how flexible the technology is. BMW, the renowned automaker, is using the Ethereum blockchain to track materials across its supply chain.  

De Beers, the biggest diamond mining company globally, is using the Ethereum blockchain to track diamonds from mining to selling. HSBC is also using the blockchain to conduct foreign exchange trades on its FX Everywhere platform.  

The blockchain can be used on just about any technology that requires information to be logged and verified.   

But if you’re here reading this article, you’re probably more interested in investing in cryptocurrency or buying cryptocurrencies. That would be ETH or Ether.  

  

What is the difference between Ether and Ethereum?  


If Ethereum is the technology, then Ether is the cryptocurrency that runs on that technology. However, for most people, “Ethereum” and “Ether” are used interchangeably to refer to the digital currency instead of the technology.  

The shorthand for Ether is ETH, and just like Bitcoin, ETH is a form of decentralised finance or “defi.”  

This means that the digital currency is not centrally regulated by one authority. Instead, all the computers on the blockchain do the work of validating each and every transaction on the network.  

Ether is up there with Bitcoin as one of the most highly traded cryptocurrencies globally, along with Ripple XRP and Litecoin and others available on Fusion Markets’ platforms.   

  

The benefits of trading Ethereum  


As with any digital currency, the biggest benefit of trading Ethereum is the lack of centralised regulation because of blockchain technology. This means that making fraudulent transactions on the network is extremely difficult and almost impossible.  

However, one thing that makes Ether different from Bitcoin is that the supply of Eth is limitless.  

Let’s break it down a little bit.  

The way Bitcoin works is people are constantly “mining” for Bitcoin. However, there is a predefined limit for the amount of Bitcoin that can ever be in circulation. Once all the available Bitcoin has been mined, that’s all the Bitcoin that will ever circulate.  

The Bitcoin mining rate slows down over time, so the prediction is that the last Bitcoin will be mined at around 2140. That’s over a hundred years from now, but it’s still a definite time that will arrive.  

For most people, the problem with the limited supply of Bitcoin is that it can create issues like high inflation levels in the future.  

The supply of Ether does not have the same limitations that Bitcoin has. Thus, it can be more stable in its fluctuations, and this effectively works as a hedge against extreme inflation.  

Ether is also less volatile, at least when compared to Bitcoin. So if you’re looking to invest or trade in cryptocurrencies, but you want to minimise the volatility, Ether may be right up your alley.  

  

Risk Management when it comes to Ethereum  


Despite the lower volatility levels of Ethereum, it is still a cryptocurrency. This means that unlike more traditional investments like stocks and forex, its price is still quite volatile in comparison.  

So, when trading or investing in Ethereum, it’s essential to employ risk management practices.  

First, only use as much money as you’re willing to lose. This is a basic precept for investing or trading in general, and it applies to Ethereum as well. The price of ETH in 2021 may be high, and it may look like it will continue to rise, but no one can really predict the next price movement.  

Second, diversify. Don’t put all your eggs in one basket. If you want to trade cryptocurrency, make sure to allocate your funds across multiple digital currencies. That way, if the price of one plummets, you still have your holdings in other cryptocurrencies to rely on.  

Third, do your own research. Don’t rely on social media gurus or finance forum posts that tell you when to buy or sell. Cryptocurrency is a fairly new concept, and it’s pretty much still in its infancy stages.   

If you’re investing in ETH, make sure that you understand it, how it works, and what the technology behind it is.  

A good investment is one where you believe in the product you’re investing in.   

While it’s true that no one can really predict how the price of the cryptocurrency will move, it’s much safer to put your money in investments that you’ve done research in instead of just blindly following what you see on social media.  

Finally, make sure to monitor your own physical and mental health while trading cryptocurrency. The markets run 24/7, and you don’t want to be looking at charts all day while ignoring your own well-being.   

Taking care of your mind and body allows you to make better, more rational trading decisions, dramatically reducing the risk.  

Risk management is a fundamental skill that any reasonable investor or trader should have. There are plenty of risks when it comes to ETH and cryptocurrency in general. Risk is unavoidable, so the best thing we can do is to manage and minimize it.  

  

The Future of Ethereum  


Despite cryptocurrency being a new concept and Ethereum being fairly more recent than Bitcoin, its rise in the charts shows that it’s here to stay.  

The main selling point of Ethereum is how its blockchain technology compares to Bitcoin, and with the number of people investing in or trading ETH, it’s clear that there is widespread acceptance and trust for ETH.  

Will ETH keep its place as one of the top cryptocurrencies in the future? The truth is, nobody knows. Governments are still only beginning to recognise and regulate cryptocurrencies, so the future of ETH is, as a whole, uncertain.  

But for some people, that uncertainty is what makes ETH such a good investment. Hopefully, this article has helped get you started on the basics of trading ETH. 

 


Ethereum Trading Cryptocurrency
Education
22.10.2021
Stuff that makes you think
post image main
Beginner’s Guide to Cryptocurrency Trading
Fusion Markets

If you’ve hung around the Internet in the past five years, you’ve probably heard of the term “Bitcoin” or “cryptocurrency” being thrown about.

But what is cryptocurrency, and how does it work? How is it any different from the money we’ve grown used to over the past century? And how does cryptocurrency trading work?

People are talking about getting rich or blowing away their savings on this new technology, and it’s safe to say that cryptocurrency has taken the finance and tech industries by storm.

If you’re a little unfamiliar with cryptocurrency and you want to see what the hype has been all about, read on to get answers to your questions about cryptocurrency and cryptocurrency trading.

 

What is cryptocurrency?


In simple terms, cryptocurrency is a digital currency. It doesn’t exist in physical form and exists only in the digital world.

The main uses for cryptocurrency are “store of value,” currency, and as a traded item.

Cryptocurrency as a store of value is a fairly simple concept: you buy it and hold on to it while its value increases. This kind of use is why phrases like “investing in cryptocurrency” have popped up.

Since, for some people, the value of cryptocurrency will only increase as it becomes more widely accepted, they see cryptocurrency as more of a speculative investment than a commodity.

Whether or not cryptocurrency is a good investment will remain to be seen in the future, but it’s definitely true that the value of Bitcoin, the most popular cryptocurrency, has skyrocketed in the past years. Although with much volatility along the way to say the least.

As a currency, it works fairly like money, where you can use it to buy goods and services. A decade ago, you could use it to buy things only in the niche areas of the Internet. However, the acceptance of cryptocurrency is spreading more and more, and in some countries like El Salvador, Bitcoin has even become legal tender.

Like our typical currency (called fiat), the value of cryptocurrency also changes constantly. This is why there are markets for cryptocurrency trading available, and we’ll talk about that more later on.

 

What are the most popular cryptocurrencies to trade?


There are plenty of digital currencies around, and the most popular one, Bitcoin, is just one of many. There’s also Ethereum, Stellar, Ripple XRP, and Litecoin, which are some of the most traded cryptocurrencies around.

In more recent news, you’ve probably heard of Dogecoin as well. It’s a more niche meme that has gotten a lot of attention (Thanks, Elon!) as a cryptocurrency for trading, mostly because it saw a sudden increase in trading volume.

There are thousands of different cryptocurrencies out there, which just shows how versatile cryptocurrency is. If you want to trade cryptocurrencies, you can easily do so on platforms like Fusion Markets. These work very similarly to forex markets, where people buy and sell cryptocurrency regularly.

However, if you’re looking to trade cryptocurrency, it’s always important to do your research on which ones are good and which ones are not.

 

Benefits of cryptocurrency trading


For most traders, the biggest benefit of cryptocurrency trading is its novelty. Since cryptocurrency is still in its relative infancy, it has plenty of room to grow, and as it does, many believe that the value will only go higher and higher.

Another benefit is the fact that the cryptocurrency trading market is 24/7. Unlike trading individual stocks between 10am and 4pm (like in Australia), or even 24/5 like Forex, Crypto runs 24/7.

As long as people are willing to buy and willing to sell, the market will always run. This means that you don’t have to wait for market hours if you want to make a trade.

One more thing to note is the volatility. Cryptocurrency is volatile, much more volatile than forex and stocks. The prices of cryptocurrency can rise and plunge in a matter of seconds for seemingly no good reason, and for a lot of people, this volatility brings in a lot of excitement yet is not for the faint hearted.

 

Risk management


Of course, the things that make cryptocurrency trading the most exciting are also the biggest risks.

The volatility of cryptocurrency means that it can plunge just as easily as it rose. In fact, if you look at a price chart of Bitcoin, you’ll see that there have been multiple plunges that caused people to think that it was the end of crypto.

Additionally, the fact that the markets are open 24/7 means that the price can change significantly while you’re away, much like forex trading. It’s on you to make sure that you can trade while maintaining a good work/life balance.

 

Main differences between crypto and forex/fiat


While cryptocurrency is a digital currency, it doesn’t mean it’s the same as the money you have on a wallet such as PayPal.

Fiat currency like the US Dollar or the Euro is backed by physical currency. This means that for every dollar you have on your online account, there’s an equivalent physical form stored somewhere.

In contrast, cryptocurrency is purely digital. There’s no withdrawing it for cash, and the closest you can get is putting it in cold storage wallets instead of keeping it at an exchange, but that’s about it.

One more thing to note is that fiat currency is centralized finance, meaning that it’s regulated by the government that issues it. The US Government regulates and prints the US Dollar, for instance.

On the other hand, cryptocurrency is decentralized finance or “defi.” There’s no particular institution that regulates it. Instead, every single computer that’s on the network, or the “blockchain,” works to validate every transaction that takes place.

Basically, all computers monitor everything instead of trusting one institution (like a government) to do it for everybody. This aspect of cryptocurrency is the most appealing for many people because of its libertarian aspects since it’s free from government or bank control.

Additionally, the decentralized nature of the blockchain makes it so that it’s harder to commit fraud. Since all computers monitor the ledger of transactions, anyone who would want to make a fraudulent transaction would have to defraud all the computers on the blockchain.

That’s a lot of computers across the world.

 

There’s so much more to cryptocurrency, and we’ve barely scratched the surface of the technology behind it. We are witnessing a digital revolution in the making, so if this article has gotten you interested, and if you want to dip your toes in, it’s always best to do a lot of research and practice on a demo account first before spending your hard-earned money.

 


Currency Trading
Trading Tips
Bitcoin
Crypto Trading
Beginners
30.09.2021
Stuff that makes you think
post image main
Power of Identity-based habits for a trader
Fusion Markets

“It takes 21 days to form a habit and 90 days to form a lifestyle”. 


Most of us have probably heard of that quote already. It sounds simple, right? Who would have thought that you only needed three weeks to build a habit? 

Imagine how much better our lives could be after a year with plenty of good habits that we want to adopt.  


Whether you want to improve your physical health or performance in the financial markets, adopting good habits is the way to achieve it. 

Unfortunately, we’ve all heard the not-so-successful stories. A New Year’s Resolution falls off after three days, leading to an initially motivated person being the same as he was a year ago. 


There are 52 weeks in a year. If it takes three weeks to build a habit, you should have formed 17 good habits by then. If only it was that easy! 

 

Why is it important to build habits? 


Your habits are your small, everyday actions and decisions, and the sum of your habits defines your life. 


Good habits form the foundation for a good lifestyle. For example, exercising regularly and getting enough sleep are good habits examples. Conversely, bad habits build up to form a bad lifestyle. Eating junk food every day is an example. 


Who you are and where you are right now is simply the outcome of all your habits. Your overall health is the result of your eating and exercise habits.  

Your trading mindset and your performance in the financial markets are the results of your trading habits. 


You’ll notice that the most successful traders don’t just make good trading decisions; they have good trading habits that form the foundation for their decisions.  
 
But when you’re starting out, we think one simple habit to instill in yourself is one associated with your identity.  

 

What are identity-based habits? 


Identity-based habits are habits that are based on who we are or who we want to be.  

Imagine a circle with two other circles inside it, like an onion with layers. In this case, we have three layers. 


The outermost circle are outcome-based habits. In this circle, we focus on the what. What do I want to do? What do I want to happen? For example, an outcome-based habit could be, “I want to lose 5kg this month.” 


The middle circle is performance-based habits. Here, we focus on the how. So in the same weight loss example, a performance-based habit could be changing your gym routine, your diet, or how often your workout.  


The inner circle, the most important circle, is where identity-based habits are. Here, we focus on the who. Who am I as a forex trader? Who do I want to be? These are purely intrinsically based.  


A person who wants to lose weight would adopt an identity of, “I am a person who moves more,” or “I am a person with a healthy weight and a healthy lifestyle. This is what a healthy person does, so I will do this, too.” 

Identity-based habits go deeper than outcomes and involve your worldview, beliefs, and perception about yourself. 

All three kinds of habits are connected with one another. Your identity influences how you do things. This, in turn, affects what you achieve. 


The problem is, most of us are too concerned with outcomes. As a result, our habits fall off pretty quickly because we didn’t have the foundation. 

Remember the New Year’s resolution example? Those people don’t usually achieve their resolutions because they focus too much on the results when they should be focusing on their identity first. 

Identity goes far beyond just one’s lifestyle. Even politicians revolve their discussions around people’s identities (identity politics). 

Who you identify as affects not just what you do but what you believe in and how you see the world around you. 

 

How does having an identity benefit your trading? 


Having an identity forms a solid foundation for your actions and your habits. 

Imagine two forex traders with a fair amount of trading experience. For September, they set a target profit: $5,000. 

The first trader does not have an identity; he just cares about the outcome. He looks at the $5,000 profit goal and focuses only on that. He analyzes each trade carefully, but there is no real consistency to it.  


He gets frustrated every time forex trading results in a loss because it makes it harder to achieve his desired outcome. 

On the other hand, the second trader has an identity. He identifies as a good forex trader. The $5,000 goal profit is not the real goal because he knows that it’s something that good forex traders have. 


Instead, he focuses on being a good forex trader. He asks himself, “I am a good forex trader, and what does a good forex trader practice?” 

From here, he studies not just the financial markets but also the best traders. He adopts a good trading mindset and trading psychology and starts to build trading habits. He does this not because he wants to earn a $5,000 profit but because he wants to identify with what a ‘good’ forex trader does, he thinks more in terms of systems than outcomes.  


Who do you think will be more likely to reach their target? 


Of course, it’s trader #2. He goes beyond focusing on the outcomes. He actually lays the foundation by building good habits and adopting the proper trading mindset. He does all this because he has an identity, something which trader #1 does not have. 

 

Building identity-based habits for traders 


To build identity-based habits, the first thing you should do is look inward. Don’t worry about outcomes just yet. 

Instead of asking yourself, “What do I want?” You should ask yourself, “Who am I?” or “Who do I want to be?” 

Instead of focusing on a target profit, start with your identity. 


Do you want to be a successful forex trader? What do these people do that you can? 

Successful forex traders usually keep a journal to track their successes and failures. They also keep a balanced lifestyle, are aware of their biases, get enough sleep, and adapt to change. There are plenty of other habits, but these examples are good for a start. 


The best thing you could do if you’re starting out as a forex trader and reading this is to constantly ask yourself “What would a good forex trader do right now”? Would they be learning more about the markets or practicing on a demo or would they be watching Netflix? Simple questions to ask but the power of your life is determined by the power of the questions you ask yourself.  


It would be good to adapt all these too, but remember you’re not adopting these habits because of what you want. You’re adapting these habits because of who you are. 


Identity-based habits last longer and lead to more success because they involve a deeper part of you.  


When you inevitably encounter setbacks and make mistakes, you won’t get too frustrated with yourself and make emotional, impulsive decisions because you know that your habits are in the right place. 



Trading
Trading Psychology
Trading Insights
Trading tips
10.09.2021
Stuff that makes you think
post image main
Your New Secret Trading Weapon: Sleep
Fusion Markets

Sleepless nights are a common predicament for most traders. It is the only time you are not consciously screening the markets. As stressful as it can be to sleep with volatile open positions, it is extremely important that you beat the urge to make impulsive moves and that you give your brain some rest.


Since the forex markets run 24/5, most people barely get enough sleep while the markets are open. But this kind of lifestyle will ultimately lead you to make sub-optimal biased trading decisions.


Depending on which part of the world you’re in, the markets might move the most while you should be asleep. For those here in Australia, we are sleeping while the US is in their trading day, which, when you have large open positions active in the market, can make it even more difficult to get a good sleep.


But here’s the thing most traders are not thinking about. Getting a good night’s sleep every day is just as crucial as your fundamental and technical knowledge. Still, many of us tend to overlook a good rest, thinking we can survive on far less than we need. Let’s look at why sleep is essential for forex trading and how to cultivate a good sleep routine.

 

Why is sleep important for traders?

Sleep plays a big part in our mental wellness, which then affects our decision-making for the day.When you’re placing trades that involve vast amounts of money along with prices that change every second, you want the part of your brain that makes decisions (the pre-frontal cortex, if we’re being precise) to be in tiptop shape.


Ask any elite athlete what one of the most essential tools they have for recovery is, and it’s often sleep. Lebron James, for example, reportedly sleeps as much as 10 hours a night. Now I know what you’re thinking, “Well, I’m not an elite athlete and I’m certainly not Lebron”. But you are trying to obtain peak (trading) performance, right?


Trading involves competent risk management. Before you execute those trades, you want to have a clear picture of the risks and benefits so that you can make calculated and well-informed decisions. When you don’t allow your body and mind to rest well, your practical decision-making is overshadowed by restless behavior patterns.


Basically, good sleep keeps you sharp and productive. On the other hand, studies show that lack of sleep tends to impair decision-making involving complex factors and unexpected occurrences, which occurs quite a lot when the markets are open. By having good sleep regularly, you allow your brain to make unimpaired decisions compared to when you are sleep-deprived.


And speaking of the brain…  

What’s the science behind it?


First, let’s look at what goes on in your brain when you sleep.

Throughout the day, when you’re awake, the brain accumulates metabolic waste. You don’t even have to exercise or move around to accumulate it. Your body already expends energy by just keeping your basic functions running, like breathing and pumping blood.


In using energy, metabolic waste builds up in various parts of your body, your brain included. In time, the buildup can interfere with the peak functions of your brain. When you sleep, your brain sees the perfect opportunity to do some house cleaning. The brain has a built-in waste removal system which is called the glymphatic system.

Sure, the glymphatic system also works while you’re awake, but the cleanup process is at least twice as fast when you’re asleep. This is because your brain knows that there’s not much going on in your body, which allows it to focus on clearing up.


This is why you always feel refreshed and focused when you wake up after a good night’s sleep. And since mental wellness plays a huge part in your trading psychology and your trading mindset, you always want to be in this “clear” state whenever you’re trading. When you’re sleep-deprived, the part of your brain in charge of your fight or flight reactions — the amygdala — is far more stimulated than it would be when you’ve had a normal amount of sleep.


What does this mean for you as a trader?


Well, try to go back to the last time your fight or flight reaction (or amygdala hijack) got triggered. Maybe you were in a disagreement with a colleague or a friend, or you were in an emergency. Wasn’t it hard to stay focused because you felt like a thousand things were going on at once? Now think about how you feel when you’re sleep-deprived and a trade isn’t going your way and a new announcement means you need to think about the implications and what’s next for the market. Are you at your best cognitively at this point? Probably not.


A stimulated amygdala makes it hard to make logical decisions. It also cuts off access to your pre-frontal cortex, which is in charge of making logical decisions. And as forex traders, our trading mindset should always be governed by logical, not emotional, decisions.


Unfortunately, your brain is more likely to go into fight or flight mode with a lack of sleep. You aren’t thinking or seeing the market clearly. Maybe you’re paranoid about your trade, or you see things that aren’t there, or maybe you enter or exit the trade too early.
  

How does a good night’s sleep benefit your trading?

A good night’s sleep gives you good preparation for the trades you’ll be making the next day. Your brain is clearer, and your mind is sharper. When you look at the charts, you’ll be less likely to be influenced by sudden price fluctuations, which we know are all too common in financial markets, particularly in forex trading.


By consistently making good forex trading decisions, you’re more likely to see bigger gains in your trades.


In fact, one study  suggested that sleep-deprived forex traders had relatively lower returns because their decision-making skills were affected.


A good night’s sleep also promotes a healthy work-life balance. You may be a forex trader, but it’s also important to look into your personal health outside the financial markets. You feel more energized and alert when you are awake, allowing you to see new opportunities in the market that an otherwise tired trader might not. This could be your edge.  


Tips for sleeping better

Now that we’ve talked about why sleep is important, let’s talk about developing good sleeping habits.

First, reduce your screen exposure before bedtime. Blue light keeps our brains alert, and this is the kind of light that you usually see from your phones and your living room lights.


Put the phone down and shut off your computer. As hard as it is, that will mean trying to keep your eyes off the charts. Try having herbal tea (Peppermint, chamomile is best for relaxing), reading a physical book (to avoid more screentime), or doing something that relaxes you to get your brain ready for bed. If you really must check your phone or computer late at night, try using apps that make the screen appear “warmer,” giving it an orange tint or via “dark mode” starting from a couple of hours before your bedtime.


Orange lighting is less harsh compared to blue light, which makes it easier to eventually fall asleep.

Second, if you can afford it, separate your workspace from your bedroom. You want your brain to associate your bedroom with rest and relaxation so that as soon as you walk into the bedroom, your brain “gets” it and starts powering down. Playing on your phone or laptop in bed is likely confusing your brain.


Third, keep your room to a cool temperature. Ideally, between 18-20 degrees Celsius.


Finally, one of the worst things you can do is get up and check your phone or computer for what’s happening in the market. The screentime on your eyes, the adrenaline rush, and more will only cause you to make an emotional decision.


If it makes you feel better, a stop-loss or a take profit takes a lot of the unknowns out of the equation. Your trade will either have one of three things happen: It’s still open, it’s been closed with profit, or closed with a loss. By leaving the outcome to the market, you are more likely to think too heavily about it all through the night.


Forex trading is not all about the technical and analytical aspects. A sound body complements a sound mind. You should take care of both aspects to make sure you are at your best. In our view, a well-rested trader will likely exceed a sleep-deprived trader that’s not at peak cognitive performance.

Trading Psychology
Trading Insights
Trading Tips
26.08.2021
Stuff that makes you think
post image main
Why is MetaTrader 4 so popular?
Fusion Markets

Anyone who’s into forex trading will undoubtedly have heard of MT4, which stands for MetaTrader 4. It’s the most popular forex trading platform out there, and for good reason. 


Unusually for a technology platform, it is 16 years old and continues to stand the test of time with users around the world and with all sorts of different experience levels. In today’s article, we wanted to provide our thoughts on the reason it’s still so popular 


MT4 was developed and released by MetaQuotes Software in 2005. Throughout its years of existence, it has since grown and made a name for itself as the leading platform in retail forex trading. Nowadays, millions of forex traders around the world use it regularly. 

Foreign exchange brokers like Fusion Markets are also licensed to provide MT4 for their clients. 


While primarily used for forex trading, it also lets a broker easily plug-in the ability to trade indices, cryptocurrency, and other asset classes such as commodities. Brokers like Fusion are offering over 120+ products on MT4.  It’s more than just your everyday exchange platform, though. It’s got excellent built-in charts for those who use technical analysis and its secret weapon, expert advisors are the most popular feature.

Expert Advisors are 3rd party automated trading systems. Something close to 70% of trades executed on MT4 are automated trades and their popularity continues to grow. Add in mobile apps for all platforms, in-built news (or trade ideas like Fusion offers), trading signals and much more, all of this works together to give you a more holistic look into the market to make well-informed trading decisions.

 Here are just a few reasons MT4 continues to remain as popular as ever.


1. It has robots and automated trading

When people think of trading in the financial markets, most people tend to picture sitting around and watching the screen all day.  

Forex is different in that it runs 24/5.  If there is one thing that keeps traders from switching to other trading platforms, it’s the availability of self-developed or 3rd party robots and expert advisors, essentially algorithms that run trading strategies around the clock. This means that forex traders can use programming to automatically execute deals for them when certain conditions are present. Let’s explain a little bit.


Technical analysis of forex trading is a deep topic. There are many methods of analyzing whether a particular currency is worth buying or selling. Among these include moving averages, convergences, and chart patterns. We won’t go into technical analysis in this article but suffice to say that there’s a lot to consider if we want to confirm if a trade should be taken or not. Monitoring different currencies using multiple methods can be exhausting in the forex market, where global currencies are traded 24/5.


Manually monitoring multiple charts is also slow and cumbersome because humans have a limit on how fast they can read and analyze data. That’s where MT4’s automated trading comes in. Using predefined lines of code, the trading robots can scan thousands, of forex markets and check to see if the forex trader’s predefined buy or sell conditions are met. Bridgewater, one of the world’s largest hedge funds uses over 100 million data points. Good luck trying to beat that with just your brain alone. With automated systems like EAs, while those off the shelf are unlikely to have as many data points as Bridgewater, these will still be faster than any human could be.


In forex trading, prices can change in the blink of an eye. Thus, the traders who can execute a deal as fast as possible protect themselves from market fluctuations. Those who prefer to just rely on the wisdom and experience of the more seasoned forex traders can use MT4’s signal trading feature, which basically lets them copy all or some of someone else’s trading moves on the platform. It does this automatically.


Alternatively, you can utilise Fusion’s own copy trading platform, Fusion+. By using MT4’s trading robots, forex traders can just input their commands and let the algorithms/EAs do the heavy lifting.  


2. It capitalizes on the network effect.

Humans are innately social creatures. We want to do what others do, and we want what others have. It’s a convenient way to make ourselves feel secure and validated. If everyone uses a particular forex trading software, others will soon hop in. Network effects refer to technology platforms and refer to the concept that the more users that are on the platform, the stronger the platform becomes. Think about it. No one wants to use Facebook if there are no friends you know on there. Therefore, the more people that use MT4, the more trading groups, videos and resources there will be, the more robots that developers will build for the platform and so on.


According to MetaQuotes, the developer of MT4, the platform now has millions of users and continues to grow. A large part of this is thanks to existing network effects which can be difficult for other platforms to overcome. There are thousands of brokers out there offering MT4 to their clients. Again, the more brokers that offer it, the more newly established forex brokers feel like they have to. For any new broker looking to come into the business, MT4 is the first service they think of because the rest of the business uses it too. Even ‘legacy’ brokers from the 1970’s such as IG have launched a version of MT4. Basically, if a forex trader is not using MT4, they will at least have heard of it. This increases the chances that they will eventually use the platform themselves if speaking to other traders they know.


The whole platform ecosystem becomes like a flywheel and makes it hard for other platforms serving the same market to compete with. 

 
3. It’s easy, fast, and reliable. 

Despite being a forex trading platform, MT4 does a splendid job at making things simple and easy to learn for its users. Remember the trading robots we talked about? They can all be purchased in MT4’s own Market. Users don’t have to scour the Internet looking for the best trading robot because MT4 has thousands of available ones in their selection.

 

MT4 also offers many trading tools, like market orders, pending orders, and stop orders, which any trader can appreciate. The platform offers 23 analytical objects and 30 technical indicators, along with interactive charts and timeframes to give forex traders all the information that they’ll need right at their fingertips. There’s also mobile trading with MT4. By now, we already know that the forex market runs 24/5, but not all of us are in front of our computers all the time. When we’re out doing something else, the only “computer” we really have is our phone.


Finally, MT4 also gives users relevant alerts and financial news to prepare for unexpected price movements. Developing a platform can take years of hard work, mistakes along the way and more. With MT4 you get reliability more than anything else. The bugs have been ironed out and while

we know it’s not the best-looking platform on the market, it is rock-solid and runs on almost every device such as Windows, Mac, iOS, Androids and tablets.  


4. It’s a blank canvas 

It’s important to note that while many brokers offer this platform to clients, it initially comes as an empty shell. It is what the broker puts into it that makes it so exciting. You can put the equivalent of a Ferrari engine into it or a Hyundai.  

With Fusion, we have always tried to use the best from day one.  

We are obsessed with making your trading experience better than any other MT4 broker out there.  
 
We launched with strong liquidity providers to undercut our competition and provide a lower cost of trade than other brokers before us. We built tools to help manage your account easily and with a simple interface. For example, we spend a lot of our resources on building tools to make your trading life easier and provide a unique trading experience. Things like the ‘my performance’ feature, Fusion+ copy trading and more.   

 

Summing it up 

In essence, MT4 is like an all-in-one platform for accessing the world’s largest markets. Those interested in the markets can choose a low-cost broker with no minimum deposit like Fusion and be up and running within five minutes. Not sure how, what or when to trade? You can trade with robots and EAs, follow other successful traders via Fusion+, or if you’re keen to learn yourself, then gain access to more resources like videos and trading communities than any other platform available today.  

It’s no wonder that MT4 has reached the level of popularity it currently has. Fast, reliable, filled and filled with something for everyone, it’s no surprise so many people around the world are using it. It’s also hard to see when it might be knocked off the top spot.  


MetaTrader
Forex Trading
Trading Platforms
Algorithmic Trading
Technical Analysis
13.08.2021
Stuff that makes you think
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A Beginner’s Guide to Automated Trading
Fusion Markets

If you are a regular trader and you’ve realized that trading is taking up way too much of your time, you might want to look into automated trading.


For the uninitiated, automated trading involves inputting a set of commands that will automatically execute when certain conditions are met.


You can set your buying price and selling price in advance. When the stock or currency price meets the price you’ve set beforehand, trading software (like MetaTrader) will automatically execute your trade. For the more seasoned traders, you can also base the buying and selling points on conditions like moving averages or convergences. You can even go more complex with algorithmic trading, using complicated algorithms you write yourself to execute trades. This is where trading robots come in, and they can be pretty good at what they do.


The best thing about automated trading is that you don’t have to spend hours upon hours monitoring graphs and charts, waiting for the best time to trade. This is wonderful for forex trading, where the markets are open 24/5.


Additionally, automated trading gives you (or at least, your trading robot) the power to scan millions of different charts at a speed that no human ever could.


There are even features like Fusion+ copy trading, where you can set the program to automatically copy a trader’s actions. If there’s a forex trader you really trust, for example, then you can save yourself the hassle and just set the software to copy all their trades.


Of course, automated trading takes a little learning to get into, which is why we are providing this beginner’s guide to automated trading.

 

1)     Buy off the shelf to start


There are a number of platforms that offer automated trading software. There’s no need to build a trading robot from scratch, especially if you’re just starting out.


Trading platforms like MetaTrader4 — the most popular forex trading platform — have tools that allow you to get into automated forex trading. You can check out the “Market” tab in your trade terminal section within the platform and have a browse of a wide range of EAs/robots to purchase to get started.


Their platform lets you use trading robots built by others (there are paid and free versions) and if you want to start off with a small amount of capital just to see how it feels, this is the place to do it.


2)     Know the difference between a good robot and a bad robot


As with any software you plan to download and use, you should know if the robot you’re planning to use is a good one. After all, real money is involved here.


In forex trading, where markets run 24/7, you don’t want to waste your money on a trading robot that gives you losses.


First, you can consider the track record of the trading robot. This can be as easy as looking at the robot’s reviews on the website itself or looking it up on forex trading forums where you’re bound to find forex traders who regularly use robots.


Second, just look at the website itself. If it looks unprofessional or promises unrealistic returns, you’ll want to stay away. One of the primary rules in forex trading is that if a deal is too good to be true, it probably is.


Third, look at the price itself. Trading robots are complicated software that took a lot of work to make. You’ll be hard-pressed to find good robots that are cheap or even free. If you see a trading robot that’s a little too cheap for you, keep looking.


Finally, you can find plenty of third-party websites such as Myfxbook.com, Forex Peace Army, or the MetaTrader Market that let you find the most popular robots, reviews from real traders that have used the EAs. We recommend doing a lot of research on the sites above before you dive straight in.

 

3)     If building your own, know what’s involved.


As we said, trading robots are complicated software that run on immense lines of code. If you want to build your own, you’ll need the necessary coding and programming skills.


It can take months to build a successful trading robot, and it will take a lot of trial and error, along with plenty of frustration.


If you have an idea for what you want but want someone else to build your automated trading robot without getting into too many complications, you can look at possible vendors like TradingCoders or Robotmaker that can build them for you.


Automatic trading robot builders give you a clean interface where you can build and edit your trading robot without learning complicated programming from scratch.


Regardless of how you choose to build your robot, you’ll still need a lot of market and technical analysis skills to succeed, especially if you are entrusting others to build something for you. Study well beforehand and know exactly what you’re getting into.

 

4)     You’re going to need a virtual private server.


Again, the markets in forex trading are open 24/5. Good trading opportunities come and go in the blink of an eye. The last thing you want to happen is missing a good trade because you suddenly had connectivity issues.


By using a virtual private server like the vendors from Fusion Markets Sponsored VPS (Virtual Private Server), your trading terminal can be connected 24/7 on a virtual machine. You’re basically using a constantly connected server to give you more reliable connectivity so that you are always online and not missing out on trades.


A good VPS will give you not only consistent connectivity but also low latency and fast executions. In forex trading and algorithmic trading, every millisecond counts, so you might as well use the best available tools out there.


Automated trading can be a lot of work at first. Still, it can also be very rewarding once you’ve established your own system. Hopefully, we’ve given you enough information to get you started on your very own automated forex trading journey.



Trading Tips
Automated Trading
Beginners
06.08.2021
Stuff that makes you think
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Nine Simple Trading Rules You Need to Know
Fusion Markets


If you want to cross the line between being an investor and being a trader, there are some things you should keep in mind. The rewards are higher, but there is much more at stake. You could lose hundreds, if not thousands of dollars in a day. I have been trading on MetaTrader for years. I have watched people gain and lose fortunes multiple times. Throughout those years, I have come up with essential truths to always keep in mind when trading:  





1.   Trading is both easy and difficult.  


There is a misleading simplicity when it comes to trading. As long as you diversify, stick to your strategy, never go all in, and always secure your profits, you can stick around for very long. 

However, trading becomes difficult because of the human aspect and our hidden biases. We tend to get greedy and blinded by small gains or by big losses. We tend to abandon our long-term strategies because of what we see in the short term, and this is where Rule Number 2 comes in… 

 

2.   Psychology is everything   


Trading is not all about watching the charts and the news 24/7. There is a more significant, underrated aspect of trading: your mindset. How sure are you that you can stick to your strategy even though you just lost $4,000.00 yesterday? 

Forex trading will expose you to the highest highs and the lowest lows. Throughout all these, you have to keep a stable mentality and not let impulsive decisions take control. You can have the best strategy in the world, but if you can’t learn to handle your emotional state, you won’t go far.   

The better you are at controlling your emotional impulses, the more successful you will be in trading and finance in general.  


3.   Everything in moderation, including moderation   


The money you are trading should never comprise all your assets. As they say, only trade as much as you are willing to lose. In the world of trading, you will come across individuals with stories of overnight riches because they went all-in. But that can only last for so long.  

Try to resist the temptation of being greedy and remember that wealth is not built overnight. It requires consistency and time. 

Of course, there will be exceptions when you have to break this rule, especially if you see huge opportunities present themselves in the market. However, the general rule still stands; practice moderation in most things, including trading.  


4.   Risk and reward  


Trading is a high-risk, high-reward game. While you might get caught up in the rewards, it's also important to be grounded by the risks. 

The fact that you can make $10,000.00 in two hours also means that you can lose $20,000.00 in the same two hours. If you are a beginner, you might want to stick to low-cost trading for now so that you also risk less money. 

Once you begin gaining experience, you can then start moving to larger trade sizes or expanding into different asset classes.  


5.   Leverage is your best friend and your worst enemy  


To leverage means to trade using borrowed money. It can be your best friend because you can earn more than you ordinarily could if you get a good trade. However, it can also be your worst enemy because if you are on the wrong end of a losing trade, you end up losing more than you might be capable of paying. 


As a general rule, avoid leveraging yourself too hard (think 1:500 leverage), especially if you are a new trader. Most traders getting started should think between 1:30 and 1:100 to get the hang of it. 


6.   Understand what game you are playing  


By now, we’ve already established that trading has risks. Forex trading, while playing by slightly different rules, is no exception. No matter what kind of trader you are, you should always understand and mentally prepare.  

Before you even make your first trade, even if you are trading with low-cost brokers like Fusion, you have to accept that while you can make money, you can also lose money. 


Too many think that trading is a get-rich-quick scheme, and all they must do is sign up on MetaTrader or any Australian forex broker, make a few clicks, and watch the money roll in. These are the kinds of people who end up losing money in their first week. 

The truth is, trading may be quite lucrative for some, but it requires hours and hours of studying, just like if you’re training to be a pilot, you aren’t expected to fly the fastest fighter jet before getting some practice.  


There are complicated analytical methods like technical analysis and fundamental analysis that professionals use to determine the value of a stock or a foreign currency. This way, they know exactly when to buy or when to sell. 

If you really want to get into trading, be it stock trading or forex trading, you have to put in the work and start learning. Remember, real money is at stake here.  


7.   Be responsible for your own trading.  


You might come across plenty of gurus and recommendations online, but at the end of the day, the only person gaining or losing money, is you? 

Remember that whatever happens to your trades will only affect you. It will not affect anyone else's portfolio, so there is no use blaming others if you lose money. 

Similar to #6, remember that different players in the market play different games. Your friend Michael who introduced you to forex might be a scalper taking short-term trades, whereas you might feel more comfortable as a long-term trader, which doesn’t make one better than the other. You do need to know what game YOU are playing, though.  

If you take responsibility for your trades, it is more likely that you will treat your failures as learning experiences to do better next time. Failure is the best teacher, and that leads us right to Rule Number 8….  


8.   The best investment: Your own learning   


Indeed, the best investment you can make is in yourself. If you are beginning to dip your toes into the world of finance, you might want to stay away from the markets (for now) and start investing in books and learning materials to give you an edge. Or practice slowly with a demo forex account or a small live account to test.  

The gains you can make from trading and investing may last you a week or a month, but the gains you make from investing in your own education will last you a lifetime. 

The more knowledge and information you have when you trade, the more likely you will be making successful trades in the future.   


9.   Don't be crazy  


Trading will give you plenty of temptations. You might think that you can buy low now and sell at a really high price tomorrow, so you want to pour in your life's savings all in one go. 

Stop. 

Trading requires discipline, and there's no reason to go crazy all in one go because of speculation. There is much to learn in the world of trading. 

You will be in here for a long time, so take it slow and enjoy the ride.  

Trading Tips
Technical Analysis
Trading Insights
Trading Psychology
29.07.2021
Stuff that makes you think
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Leverage: the 9th wonder of the world?
Fusion Markets

Albert Einstein was once asked what the most powerful force in the universe was. After a thoughtful pause and not without a sense of humour, he replied that it was compound interest, which he would later describe as being the world's eighth wonder.


If we were looking for a candidate to fill the number nine spot on that list, we could easily pick another innovation from the world of finance; leverage.


If we look at a dictionary definition for the term, we find the following.


"The use of credit to enhance one's speculative capacity"


The concept of financial leverage is probably most familiar to us in a mortgage loan, a loan secured against a property.


To secure a mortgage, it’s normal for the buyer or buyers of the property to put down a deposit that acts as their “skin in the game”.


A bank or other lender finances the purchase price balance through a loan that runs over a fixed term, usually measured in 25-30 years.


This is made at a known or referenced rate of interest, which may be fixed or variable over the loan term. For example, the rate may be set at central bank base rates +X%.


The buyer of the property finances the loan through the payment of interest, which compounds over time to make the lender a healthy return on their loan, assuming all goes well.


The ever-present longevity of a mortgage and the nature of its commitment can be summed up through a literal translation of the word mortgage from the French, where it means “death pledge”.


Of course, that rather sombre definition only looks at the liability side of the transaction. It doesn’t take into account the opposite side of the coin, and that is the asset that the mortgage is taken out over.


All things being equal, the asset will have appreciated over the lifetime of the loan. And in modern times, it will have often done so to such an extent that its value now exceeds the loan's original value.


Under those circumstances, the death grip is loosened and may even be released completely if the property’s owners choose to sell it and repay the outstanding mortgage balance.


That’s all very interesting, but what has any of this got to do with trading and investing?


Well, just over 20 years ago, traders in London had the great idea to introduce leverage into OTC financial instruments such as CFDs and rolling spot FX.


This effectively democratised the availability of leverage in trading by providing it to the man in the street who could now gear up their trading account and speculate on the markets in a way that wasn’t possible before this point.


The availability of leverage in margin FX and CFD trading was a marketing team's dream. A whole new industry sprung up to offer these products (which had previously been the preserve of hedge funds) to retail traders.  


Eventually, competition for that business was such that brokers began to raise the levels of leverage that they offered to their customer base.


Put simply, that meant that traders could control an ever-larger parcel of stock, an equity index or FX pairs with a smaller and smaller deposit, which brings us to today.


It all sounds great. Because, of course, if your position was leveraged 500 times, then so was your P&L. A dollar profit became 500 dollars.


Well, not so fast because leverage is a two-way street that magnifies profits and losses.


And whilst leveraged positions in profits create equity in your account, leveraged positions that are in loss eat away at your account balance and ultimately undermine it completely.


Events in the spring of 2021 highlighted exactly why traders need to respect and control their use of leverage, and the consequences of not doing so could not be clearer.


Bill Hwang of Archegos Capital Management, a hedge fund turned family office with $20 billion in assets, effectively evaporated overnight thanks to a combination of risk concentration and excessive leverage.  


Put simply, the fund had too much money chasing too few positions.


You might have thought that having $20 billion to invest would mean that you wouldn’t need access to leverage, but Archegos Capitals strategy was to leverage that vast sum by as much as 7x times through a network of banks and brokers. The trick was that none of these banks knew just how much leverage the other parties had offered Archegos.


But no one, not even a hedge fund of that scale, is bigger than the markets, and when some of these positions fell in price and value, the fund’s brokers asked for additional margin to shore up its trading accounts.



By this stage, the banks were concerned about their own liabilities and whilst they were talking to each other about they should proceed, one or two of the banks started to try and close out the positions they held for the hedge fund.


Once word got out that this was happening, it became a free-for-all, and the stocks that Archegos held plummeted. And that, of course, created even larger margin calls that the fund had no hope of meeting.


Below is Archegos' biggest positions in their fund and how quickly things folded within a couple of days after the music stopped. ViacomCBS, a respected US media company, fell by over 50% in 2 trading sessions.




These events reinforced another lesson for traders - the one that says the end of the party is never pretty if everyone heads for the exit simultaneously.


It also reminded us of how an imbalance between supply and demand can influence prices (Gamestop or AMC, anyone?)


You probably haven’t got $20 billion, but you do have your nest egg and trading capital that you worked hard to build up. Please don’t blow it by leveraging and concentrating your risk in one or two big positions.


A disciplined approach to money management and risk is the key to successful trading and investing. When you don’t use that disciplined approach, it often goes horribly wrong, as the former Hedge Fund Archegos Capital found out.


Trading Tools
Trading Education
Trading Psychology
Leverage
17.06.2021
Stuff that makes you think
post image main
Why are we so terrible at selling?
Fusion

That’s a question that has dogged professional investors for years.

Picking investments or trades to buy is one thing but when it comes to selling and in particular timing a sale its a whole different ball game.


In retail trading circles, this can cause us to snatch at profits and to run losing positions beyond the point where our money management rules tell us we should have closed the trade, with predictable results. It's a clear form of loss aversion (a cognitive bias that we should all be aware of) that stops us from making the rational call to close the trade.

 

Success in trading comes from running profits and cutting losses to grow our capital base and the ability to do this repeatedly, over as long a period as we can manage.

 

Having trouble selling isn’t confined to private investors, however. It’s a real issue among professional traders and money managers, unlike the science of buying or investing, which has been scrutinised to death by academics, analysts, traders and other financial markets participants. The science (or should that be the art of selling or divesting) has had precious little coverage in comparison.

 

The widely respected Barons magazine recently highlighted the asymmetry in professional money managers' selling ability and why professional can vastly underperform the market benchmark.

 

A research paper written by a mixture of US academics and specialists who measure investment performance or “skill “ as they like to call it, looked at 4 million trades made by money managers between 2000 and 2016 across 800 portfolios that on average contained more than USD 570 million of assets (aka "smart money").

 

The researchers found clear evidence of skill when entering trades or positions on the money managers' part, but it was a completely different story when it came to exiting trades.

 

In fact, the research found that the money managers were frankly shockingly poor when it came to timing sales, selecting what to sell and when to sell it. The researchers estimated that this lack of selling ability cost the managers returns of 2% per annum. Whilst that might not sound like much in insolation, if we consider the effects of compounding over decades that underperformance becomes hugely significant.]


That point is further reinforced by research by asset managers at JP Morgan Chase in 2014.


The fund managers looked at the lifecycle of 3000 US stocks dating back to 1980 what they found was striking as the quotes below show.

 

Risk of permanent impairment

 

“Using a universe of Russell 3000 companies since 1980, roughly 40% of all stocks have suffered a permanent 70%+ decline from their peak value.”

 

Negative lifetime returns vs the broad market.

 

“The return on the median stock since its inception vs an investment in the Russell 3000 Index was -54%. Two-thirds of all stocks underperformed the Russell 3000 Index, and for 40% of all stocks, their absolute returns were negative.”

 

Trades have a finite life cycle, and for the vast majority of stocks (or choose your asset class), they will often have their moment in the sun, get too close to it, and then fall away, never to return to those levels again. Identifying trades at their peak or going past their “sell-by dates" couldn’t be more important to an investment portfolio's performance.

 

In light of this knowledge, what can we do?


As with all the biases and psychological blackspots in trading that we discuss in our articles knowing and acknowledging that they exist half of the battle because we can modify behaviour accordingly once we have done that.

 

As traders in cash-settled margin products, we have an advantage over the money managers and asset owners described above. Simply because we are used to going both directions, e.g. shorting, on asset classes such as currencies and metals.

 

We take a 360 degree or holistic approach to the markets and the skills we use to decide to short USDJPY or the US 500 index can also be used to determine when a long position has run its course. Conversely, the skill set we use to identify a trading opportunity on the long side should also tell us when a short position is running out of steam.


Most traders we know of at Fusion do not hold their trades for more than a couple of days. Due to the power of leverage, they often don't need to since the gains can be enormous (but so can the losses we leave to run far longer than any positive P&L).


At the same time, why not make use of take profits or trailing stops to make sure you can squeeze that little bit extra out of the profit on the trade or set your levels and stick to them, without checking your phone or platform every minute of the day as we all do.

 

By adapting our mindset and the trading skills that we developed around opening trades, we can become better sellers or closers of positions and that will help us get the most out of the trades we make and the positions we take.


You don't have to suffer the same fate as the rest of the market - don't be a bad seller!   

Trading Tips
Forex Market
FX Trading
Trading Psychology
Trading Education
05.01.2021
Stuff that makes you think
post image main
Anchors Away!

Or why we tend to rely heavily upon the first piece of information we receive.

 

Our minds can have an enormous impact on our trading and the returns that we generate from it. The way we think, act and behave when we trade or invest is at least as necessary if not more so than our trade selection, particularly in the kind of one-way markets that we have seen post the covid crash.  

 

A rising tide lifts all ships they say, and, in this case, the rising tide of the markets was provided by the printing presses of the major central banks along with the stimulus packages from national governments.

 

However, Central banks won't always be there to rescue us and we need to be aware of the kind of tricks that our brains can play on us if we are to avoid making the wrong trading decisions.

 

One of these tricks has a nautical moniker, anchoring, in which our brain subconsciously latches on to an idea, an assumption or a set of figures and uses that information in decision making, regardless of whether it's accurate or even relevant to the matter at hand.  

 

What's more, as humans, we tend to carry these impaired decision-making processes forward so that we end up using an inherently flawed system and often without realising it.

 

Behavioural psychologists have highlighted these tendencies in their experiments.  

 

In the case of anchoring American academic Professor Jay Edward Russo performed tests on 500 graduate students in which he asked them pairs of questions on history and general knowledge, but, unknown to the students, he had "salted "the questions with erroneous dates and figures.

 

The student's answers invariably reflected the incorrect numbers, which were varied across different groups of students within the experiment, highlighting a clear bias.

 

Professor Russo was effectively projecting those values into the student's subconscious, creating an anchor point.


When we become anchored to figures or a plan of action, we filter new information through that framework, which distorts our perception and decision making.  

 

This can even make us reluctant to change our plan or framework even if the situation calls for it.

 

There are few consequences if any when this happens in an experiment inside a university psychology department. Still, if it happens in the real world like in trading or investing, then there most certainly can be consequences.

 

Anchoring Bias has been described as one of the most robust effects in psychology, the fact that our decisions can be swayed by values not even relevant to the task (or trade) at hand.


Let's say we are negotiating the purchase of a house and I tell you it's worth $1,000,000, and I wouldn't sell it for less. You, as the willing buyer might have only had a price of $800,000 in your head. But all of a sudden, you now are anchored on my price. Not yours. The worst part is that the person who goes first in the negotiation tends to anchor the other party (remember this for the next salary negotiation you need to do with your boss!)

 

The studies even show that if you rolled a pair of two dice, gave the numbers (e.g. 10 and 19) to the study participant, that subconsciously, you would anchor them on these two numbers. Ask them what they would pay for a house, bottle of wine, or in one notorious study, the judges sentencing a criminal, these numbers are in and heavily influencing the participant's decisions whether they like it or not.

 

Anchoring always occurs in making our trading decisions, especially as it might help to explain our fixation with round numbers. E.g. EURUSD at 1.20. Gold at $2000/ounce. DJ30 - 30,000. Once we get hooked on the number, we always use it as a reference point in future, probably because it "feels right".  


Let's say in the past you might have successfully gone long EURUSD at 1.20 earlier in the year, and now whenever it comes back to that number, you will buy it again (the same thing happened to EURUSD at 1.10). You can't explain it, but you had past success with that number and you will gravitate towards it without understanding why.

 

Take a moment to consider some key support and resistance levels on your favourite instruments. Are they round numbers too? Why might that be? Could it be because people are anchored at Gold at $1900? And that every man and his dog has placed their buy orders at that level because it's "good value" or has spent time around that level in the past? Remember that the market is driven by sentiment and agreed upon narratives. Think what else could the crowd be anchored on that might be to your advantage knowing what you know now.


How do we avoid being anchored? 


Given that we don't completely understand the processes that cause anchoring to happen in the first place, we are unlikely to avoid it entirely.  

 

However, by being aware of its existence, we can revisit and retest our assumptions when making important decisions, to ensure that we are acting rationally and basing our decision on the situation at hand, not irrelevant inputs.

 

Perhaps the best way to avoid anchoring in trading is to treat every trade as an individual event and to judge a trading opportunity on its current merits. By doing this, you have a better chance to ignore any reference or prior interactions you have had with the instrument you are trading. It won't be easy to do at first, but it could prove to be a valuable discipline over time. As mentioned, this is crucial to comprehend for putting your stops and limits around key support and resistance levels.


Think about a time you have been fixated on a number. Was it buying a house? A pair of shoes? Trading? Now think whether that number could have been influenced by someone else, e.g. the seller, the shoe store etc.

 

Anchoring can certainly also play a part in other hidden biases and behaviours such as loss aversion (e.g. not wanting to close your open losing trade).

 

The next time that you are about to trade, take time to think about why you are fixated with that number for entering and exiting the trade, and how you reached the decision to pull the trigger. A few moments of reflection might make all the difference.


Trading
Trading Psychology
Forex Trading
Trading Tips
Anchors Away
29.12.2020
Stuff that makes you think
post image main
Would you rather be right or be rational?
Fusion Markets

In trading, as in life, we are faced with the need to assess complex situations and quickly make judgements or decisions. And in both cases, we can’t be certain what the outcome of those snap decisions will be. Though we have to deal with the consequences regardless, even if they don’t reveal themselves for some time.


I wonder how many of us look back at the choices we made and judge them solely by the outcome they achieved, be that good or bad, rather than looking at how we got to that endpoint?


Behavioural psychologists believe that if we look at events purely in terms of their results, we are under the influence of outcome bias and as such we are likely to have a flawed view on risk and reward.


That outlook has been famously summed up in the phrase “picking up dimes in front of a steam roller” which has been variously attributed to Nassim Taleb and or economists Martin Wolf/John Kay.


Whoever coined the term (no pun intended) got it just right, because if you are picking up those coins then yes you are acquiring money, but you can only afford to slip up once and then it will be game over, and in a very messy way.


Another renowned economist, John Maynard Keynes, wrote on the subject of risk-reward and outcomes, just over 100 hundred years ago, in his treatise on probability.


Where Keynes thinking differed from traditional schools of thought was that he believed that an event could be, what he called, objectively probable, even if it didn’t actually take place. And that it would remain so even if you were looking back at events at a future point in time.


For Keynes, it was more important to be rational in your decision making than to be right.


Keynes of course also famously said that “the markets can remain irrational for far longer than you can remain solvent “  


That is one of my favourite quotes on investing. It neatly sums up the practicalities of being rational versus being right, as far as a trader is concerned - Being right doesn’t necessarily make you money and in fact, even if you are right waiting for that to be proven could cost you a fortune.


Whereas being rational or pragmatic, and acknowledging that the market is “directionally right “ but for the wrong reasons (which is usually the sheer weight of money) is one thing. But then trading with the market until the point when the crowd realises their folly, is likely to be a more profitable approach in the long term.


After all, by adopting this approach you don’t have to time the market at all instead you just need to watch for the points at which the crowd turns. And to that, we can use momentum and sentiment indicators, which you can set up in advance.


In short, when it comes to trading at least, the process is more important than the outcome.


The British military has a saying which runs as follows: Failing to prepare is preparing to fail.


As a trader it’s hard to fault the logic in that statement, because if we believe that there is a symmetry between risk and reward, inputs and outputs, effort and results, and in trading where there must be a loser to offset every winner, why wouldn't you believe that?


Then if we don't prepare properly for each trade we make; we are not giving ourselves the best possible chance of making money.


We often say that a systemised approach to trading is the best one to adopt. What we mean is that we should have a framework of rules that we follow in each trade we make.


And we don't let our hearts rule our head or worst of all let our egos’ fools us into thinking that we have some special insight our secret trading sauce. Because in 99.9 times out of a hundred that won't be even remotely true.


Talent and luck will carry you only so far and many a sportsperson has built a successful career by recognising their own abilities and limitations, and then working hard to improve their technique and approach.


And in turn in recognising the weaknesses in their opponents game, which they can then exploit.


The opponents may still score against them but if they are reducing the rate at which they can score then they are doing something right, and they are slanting the odds of a positive outcome in their favour.


In trading, you won't win every contest but if you win more than you lose and have bigger wins and smaller loses, then, over the long term you will definitely come out on top.


Trading Psychology
Trading Insights
Trading Tips
Hidden Bias
28.10.2020
Market Analysis
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A quick guide to the sentiment tools in the hub
Fusion Markets

A wonderful client of ours named Jimmy from up north in Indonesia wanted to learn a little more information about the sentiment tools that we have on offer.  We love helping traders grow and your feedback so figured it deserved its own post.

Because the sentiment is based on advanced Natural Language Processing (NLP), an advanced form of Artificial Intelligence, we know it might seem daunting to look at on first glance, so hopefully, you find the below Q&A interesting.  


What is the sentiment chart telling me? Is there any significance to the “wave” itself?  

The wave line is the sentiment score. The wave effect was created to show that contrary to prices on the particular asset class, the sentiment is not a precise measure. It is more a proxy than anything else.  
 

What is the sentiment score? How is that calculated?  

The machine learning model creates a sentiment score by scouring all of the words in the sources selected (e.g. nouns, pronouns, adjectives) within the articles it scans each day. In a simplified way, it is the difference of the score of the positive words (e.g. good, very good, great) minus the score of the negative words (e.g. bad, very bad, awful) embedded within the article.  

The calculation is made on a 24h rolling window with a recalculation latency of 15 minutes.  

The usefulness of the current sentiment the score is relatively short term (1-3 weeks).  

 

What is the subjectivity score? How did it arrive at this number? What happens if it goes higher or lower?  

The subjectivity is calculated on the difference between the factual words and the emotional words embedded within an article. If there are a lot of words that fall into the “fear” lexicon for instance compared to factual observation, then the gauge will be more inclined towards subjectivity or irrationality. At 0% the gauge would tell you there is no irrationality from the crowd and any article published is based on factual elements. If the gauge is above 50% and close to 100%, it means the crowd is a bit irrational about the asset and the price of the asset is not a reflection of its fundamental value. This is a great tool to detect bubbles in asset classes like equities.  

 

What is the confidence index?  

The confidence index is a relative index. It looks at the history of the volume of news and will scan over a period of 24 hours. If the volume of news is greater than the average of news published over the last 7 days, it would give you an indication about the quality of the sentiment score and how much trust you should have on it. e.g. if the sentient score is very positive but the confidence is low, you should be sceptical of the sentiment. In summary, the more sources and the more information, the more accurate the AI will be in providing its level of confidence.  


Sentiment Tools
Forex Trading
Trading Tips
31.08.2020
Market Analysis
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Should trading be boring?
Fusion Markets

That’s a good question and is one that was posed by a man with many years of experience in the markets, Charley Ellis. Ellis, after a stint on Wall Street, founded Greenwich Associates in 1972 which grew into one of the world's most respected research houses. He said:

 

“Go to a continuous-process factory sometime — a chemical plant, a cookie manufacturer, a place that makes toothpaste. Everything is perfectly repetitive, automated, exactly in place. If you find anything interesting, you’ve found something wrong.

 

Investing is a continuous process, too; it isn’t supposed to be interesting. It’s a responsibility. If you go to the stock market because you want excitement, then sooner or later you will lose. Everyone who thinks the stock market is a game loses — everyone, to the last man, woman and child.

 

So, the purpose of an investment policy is simply to ensure that your continuous process never breaks down...

 

Benign neglect is the secret to long-term investing success. If you change your investment policy, you are likely to be wrong; if you change it with a sense of urgency, you’re guaranteed to be wrong.”

 

There is a lot of sense in those comments after all the key to successful trading is finding a system, trading style or approach that works for you, and does so consistently.

 

Developing or creating that approach gives you your edge, which is something that every trader needs if they are to succeed and grow their capital long term. Creating a viable trading strategy or trading edge is the exact opposite to the random and emotional trading that sees many new and aspiring traders come to grief early on their career.

 

When we read about great traders, we often wonder what makes them different to you and me and what it would take to follow in their footsteps. Let’s be honest we probably aren’t going to be the next George Soros, Ray Dalio or Jim Simons. However, what we can do is to emulate their systematic approach to the markets.

 

Systemising your trading is about creating a set of rules which describe your trading approach, the opportunities you look for, and the risk management ratios you apply.

 

Once you have written these down, you have effectively created your trading plan, and what’s more, you have laid the groundwork for creating an algorithmic strategy.

 

An algorithm or algo is just a set of rules that a computer can follow and execute. Of course, nearly all trading today is conducted electronically. Yet, as much as 70% of that business employs algorithms to improve trading efficiency, execution quality and anonymity. The latter can be beneficial in retaining your trading edge and not seeing it arbitraged away.

 

A report by Business Wire predicts that Algorithmic trading will experience a compounded annual growth rate or CAGR of 10% per anum between 2018-2026. Two years into that period, and there is no suggestion that the analysis is wrong.

 

Using a rules-based system to decide when you should buy and sell is the key to maximising your profitability. And perhaps just as importantly, minimising your losses. Leaving those decisions to our emotional selves is not a viable option for long term trading success.

 

As we have discussed before, our psyche contains biases, emotional responses and short cuts that are not suited to trading and they can actually hinder the process. It’s far better to use a systematic rules-based approach that can help us run winners and cut losses rather than the other way around.

 

To take your trading to the next level, you need to ask yourself a question, and that is...

Have you developed a system, or are you just having a punt?

Do you follow a set of trading rules and stick to them each time you trade? Think about your trade sizes, risk-reward ratios, the use and placement of stop losses. Consider the average profitability of your trades and how often and by how much do the results deviate from that average?

 

Much of this data will, of course, be available to your in trade history and statements that’s one of the great benefits of electronic trading. It should be possible to identify the products you trade well and the time of day (your peak). Not to mention those times you switch gears and try to trade something you’ve never done before. E.g. an FX Trader dabbling into commodities because it’s “hot”.

 

A very effective way to systemise your trading and improve its efficiency is not to trade in the instruments, and at the times of day that you do poorly on. And instead, focus on the most profitable areas of your trading. You will be amazed at just how much difference that simple change could make.

 

 

Finally, ask yourself, are you getting too excited about your trading and the individual positions that you take? Do you wake up in the middle of the night dreaming about your positions or checking them? If you are, then you are probably taking too much risk.

You see a trader should largely ambivalent about individual positions, because if he or she has systemised their process, then trades will be a bit like riding the tube in London, that is, another one will be along in a minute.

 

What will or should be of concern to them, however, is whether they are making the most out of every trade that comes by. Better to be focused on the process and the system and not the individual trade outcomes. Transitioning from one way of thinking and approach to the other will very much put on the right route for trading success.


Trading
Trading Psychology
Trading Insights
Trading Tips
26.08.2020
Market Analysis
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Some things will never change

That's just the way it is
Things will never be the same
That's just the way it is
...Some things will never change

2pac - Changes

In modern life, our focus is often on change. We quickly assess something as either Good changes or bad changes.

 

Change is also the lifeblood of the financial markets which would, of course, be pretty dull if everything remained static and prices never moved.

 

However, the opposite is true in these days of computerised and algorithmic trading.

Prices are rarely static and fluctuate throughout the trading day, which blends seamlessly into the next business day across the working week, which may eventually extend into the weekend as well, but I digress.

 

As much as our lives are driven by or focused on changes, they are underpinned by many constants, things that don’t change over time no matter how much the world and our everyday lives do.

 

Information

 

One of the constants today is information, inside thirty years, the internet and world wide web have become an integral part of our lives. To the extent that we can overload ourselves with information on almost any subject imaginable in seconds.

 

However, there is a big difference between having that information at our fingertips and understanding a subject or topic thoroughly, and it's very easy to conflate one with the other.

 

You can feel like an expert when in fact you may have missed the point entirely. Reading between the lines is often what's most important, and we need to recognise that we don't know as much we think we do and be comfortable with reconciling ourselves to that.

 

In trading, even in the information age, we can only ever hope to see a fraction of the big picture. The only comfort is it's exactly the same for almost everybody else.

 

If you think you really can understand the exact reason the market has gone up or down, think again. The financial media will say the market went up or down for the same reason. Could they ever admin something like: “There’s no story we could slap on this for why the market went up today. It just did”. No.

 

Greed and fear

 

Another constant in trading is the role of Greed and Fear these are the two primary drivers of investor behaviour, particularly when we are looking at that in aggregate.

 

That is, when we consider the trading crowd. The crowd has always been with us, journalist Charles Mackay wrote about them in his 1841 work Extraordinary Popular Delusions and the Madness of Crowds.

 

In the book, Mackay looked back to events in 1720, the South Sea bubble, and the Dutch Tulip mania of 1637, to highlight just how crowd behaviour, driven initially by greed and subsequently by fear, leads to the creation and bursting of investment/trading bubbles. If those bubbles become big enough then they can not only affect the markets but also the real economy too.

 

Speculation is as old as the hills and financial crises are nothing new. In fact, in modern times they have become cyclical, occurring around once every 10 years or so, for example, we had the 1987 crash, the Russian default and Asian currency crisis of 1998 and the subsequent dot com crash. That was followed in turn by the Credit Crunch and Global Financial Crisis of 2007/8 and more recently the COVID crash.

 

A decade is enough time for a new generation of traders to enter a market and each new generation believes that “this time it’s different” a phrase which is often described as being the four most dangerous words in trading.

 

Traders make the same mistakes and fall foul of the same biases and behaviour as their forebears did. It’s just that now there are scientific labels for it (we do love to put a label on something).

 

If you read trading books like the Reminiscences of a Stock Operator by Edwin Lefevre (first published in 1923) you instantly recognise patterns of behaviour regularly seen among market participants today.

 

Too much risk

 

One of those behaviors is taking too much risk or over-trading, relative to your capital base. That's often brought about because markets move in one direction for an extended period. People climb on board the trend, and the longer it goes on the more they believe it won't end and the greedier they get.

 

They don't deliberately mean to do this but one of the characteristics of bubble behaviour, because that's what this is, is the participants inability to tell that they are in a bubble. The narrative simply changes. When you’re inside the bubble you will cut off contact with or ignore those on the outside looking in or who have a different viewpoint or opinion.

 

Market aphorisms or sayings are grounded in the truth and experience of history they may sound quaint, but they are there to teach us a lesson, and none more so than

 

 “It's only when the tide goes out that you see who’s swimming naked”

 

In this case, the tide going out is the market changing direction and those swimming naked are the overleveraged and overlong bulls in the bubble. Markets crash because the trading crowd wakes up to the existence of the bubble simultaneously, and everyone heads for the exit at the same time, as greed turns into fear.

 

A good trader knows not to outstay their welcome, and that it is always better to leave the party before the end.

 

We’re not saying that markets don’t change and evolve over time and that a strategy you use will work forever, but the same fundamental principles like we’ve tried to highlight such as greed and fear never will.  Some things will never change.

 

 


Trading Psychology
Trading Insights
Trading Tips
Algorithmic Trading
17.07.2020
Market Analysis
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Our Top Five Most Used Tools

Hi Traders,


By popular demand, we wanted to share our top five most used tools and features that are provided to you for free in our client area.


These are a bit like my Top Five Tools for Traders, but these are a little different as they're all internal rather than other websites or companies. 

Here are 5 of the most popular tools (in order) our clients are loving:

#1 - Analyst Views by Trading Central. This is my personal favourite. You can view it in the hub now, download it and use it as an indicator on MT4 desktop (in "Downloads on Hub) or visit your "News" tab in MT4 where it's constantly updated too.

#2 - The Economic Calendar is a must too. Are you using this already? If you're trading and don't know what announcements are coming up, you could easily be blown away by a big move and have no idea why. My favourite is that it will show you the historical price impact of previous announcements. You can even save the future events as a calendar invite!

#3 - News Tab - Knowledge is power. You know that already. You might already have your own news sources which are cool, but with Fusion's news tab, you can create a personalised feed (e.g. only show me EURUSD) or see what's most popular for others. Don't be an uninformed trader.

#4 - Sentiment - I love the idea of knowing what the crowd is bullish or bearish on. What are people talking about? Why are they talking about it? Check out our post on why this is important.

#5 - Technical insight is excellent if you'd like to go into a deeper dive on technical analysis on Forex and Indices. I prefer these charts over MT4 truth be told and want to know short, medium and long term outlook for each trade I'm considering.

That's it for now. We've built these for you and believe they'll truly help you excel as a trader.


#6 – Historical and Live Spreads Tool - with this tool, you can see how spreads have fluctuated over time, as well as the current live spreads. This information can be incredibly valuable in helping you make informed decisions about when to enter and exit trades. No more surprises, no more hidden fees – just transparent, competitive pricing. Read our blog post to learn how spreads actually affect your trading costs. 


To start using these tools now, create a Fusion account.

Trading Tools
Forex Trading
Forex Market
Forex
Trading Tips
14.07.2020
Trading and Brokerage
post image main
When the time comes to buy, you won't want to

Much of what we write about in these articles is about the mindset and behaviour of traders and trading. The reason for this is quite straight forward; it's because it's the decisions that we make and take that will ultimately determine how we perform as traders.

 

Yes, of course, price changes in the markets will play their part but, in the end, it's our decision whether to get involved or not and that determines how much capital we commit to trade, how long we hold the position for, and what the ultimate outcome of the trade will be.


Hidden costs

When we examine the costs of trading, we tend to focus on commissions and spreads and our PnL, but there are other costs, costs that we don't consider when really, we should.

 

These are the costs of inactivity and indecision, the costs of listening to outside influences more than to your own inner feelings and intuition. They are the costs of missing out, what economists call "opportunity costs".

 

Self-doubt among traders is not unusual, and in truth, it's better to exercise a degree of caution than to be 100% confident about everything you do. Hubris has been the downfall of many traders, and we certainly advocate being prudent with your risk. That said, It's always worth testing your thinking and assumptions and checking that they are still valid before you trade.

 

The problem comes when you start to talk yourself out of the trade entirely. After all, trading is a risk and reward business. There can be no profit without the possibility of loss.

 

A trader's job is to try and ensure that the risk that they take is in proportion to the potential rewards they could make. Not taking that risk could be limiting your potential as a trader which in turn may be limiting your rewards or returns.

 

Moments of clarity


Sometimes as a trader or investor, you will enjoy a moment of clarity, a moment of pure thought and insight, in which you can see exactly how a market setup or situation will playout. Moments when you just know you are right

 

If that moment of clarity coincides with significant moves in the markets, then that can be a very valuable situation indeed. But only if you act on it.

 

Allow me to tell you a personal story. During the great 2020 downturn in oil (where a Saudi/Russia price war caused prices to go NEGATIVE), I found myself holding oil from $30 a barrel and riding it all the way down watching in sheer horror. I kept buying the dip. How much lower could it go, I thought? I ignored every rule and everything I've written in the past about this. I didn't put a stop loss on. I told myself it was a long-term trade that I would stay in forever. Prices surely couldn't go below $20. That's madness. Then… The unthinkable happened in the futures price – it went negative.

 

Thankfully, Fusion's price didn't go negative (we use Spot Crude oil) but with spot prices at $15, I was sitting watching Netflix on my couch, and my heart raced as I saw it go down like World War III just started. The news sites told me nothing new had happened (funny how we search for any narrative to make sense of it all). Here it went. $14. $12. $11. Back to $12. Back to $11. $10. $9. Thoughtful me knew these prices were unsustainable. I told myself I would hold until it hit $0 if it had to. My account was down 70%. I'd never suffered such steep losses. I felt sick. I then couldn't sleep. I woke up, and it was still down a lot but had recovered from $7.


Watch out for the narratives.

 

I started to read more about what others were saying. What the hell was going on? Would this happen again? Yes, there was nowhere to store the oil (so the narrative went) but surely rationality would prevail. Seriously, how could you have negative prices? It was impossible to find anyone bullish in the media or otherwise. People assume if something just happened, it will occur again Goldman came out and said to expect more negative pricing. But I just couldn't believe it was so cheap. I knew it was time to buy more!

 

But then I didn't buy it. I waited for another opportunity for when I knew "the worst was over" I was so sure things would bounce back, but I didn't have the guts to buy one more time, and the opportunity passed me by forever. I let the external narrative cloud my previous judgement. But I was just so worried I couldn't think properly. Within days, it had doubled back to $15 a barrel. Then it was $20 a week later. At the time of writing it is $40 a barrel. By the time you read this, it might be $60 a barrel. Who knows? All I knew was fear and too much outside influence completely warped my view, and I failed. I just wanted to survive the calamity. While I survived to write you this, I did not do as well as I could have.


Self-belief


People often talk about having the courage of their convictions, but in trading, it's not really about courage, it's about belief, belief in yourself and your ideas and be prepared to back them, rather than talking yourself out of them, or allowing yourself to be talked out of them by others.

 

We all like to take advice and read and hear the opinions of so-called experts. But the absolute truth is that nobody really knows what going to happen next in the markets.

 

For example, nobody was predicting that an 11-year bull market in equities was going to end and end so abruptly in Q1 2020. Or that US unemployment would spiral to +14.7% in a single month.

 

Do not get me started on the rebound from the lows in March. To be bullish on the markets in April and May of 2020 was to look like you had lost your mind given the narratives surrounding COVID.

 

So-called "market legends" like Druckenmiller and Buffett told everyone it was not the time to buy. Sadly, so many would have listened.

 

Let's not forget Yogi Berra's famous saying "It's hard to make predictions, especially about the future" which is why it's best to take these so-called forecasts with a grain of salt. The best that any expert can do is to make a prediction or forecast about the future. And the longer the time frame that the forecast is over, or the more unusual the circumstances under which it is made, then the more significant the room for error and the higher the chance that they are simply wrong.


Loss aversion

As humans, we are subject to subconscious emotional biases that can cloud our decision making. One such bias is loss aversion.

 

Loss aversion can hamper a trader in two distinct ways. It's most commonly associated with the practice of running losses, ignoring stops and breaking money management rules when a trader can't or won't accept that they were wrong and refused to close a losing position.

 

The other way that loss aversion can muddy the waters is in our initial decision making. You see as species we are poor judges of risk and reward; we don't calculate probabilities very well, and the upshot of this is that we do not like uncertainty.

 

To the extent that when we are faced with situations that have a series of potential outcomes, we tend to favour the outcome with the highest degree of certainty. Even if that outcome is the least beneficial to us financially. Which, of course, is the exact opposite of the risk versus reward culture that we spoke about earlier.


Fortune favours the bold.


Though we might not like to admit it, our subconscious is often trying to talk us out of taking risks. Outside influences from the media, fear, our aversion to loss and a preference for certainty may often be our worst enemy as traders.

 

As Howard Marks said, "If you're doing the same thing as everyone else, how do you expect to outperform them"?

 

There have been several once in a generation trading opportunities over the last six months. I wonder how many of us were bold enough to seize the day and take advantage?

 

 

 

 

 

 

 

 

 

 

 



Trading
Trading Psychology
Trading Insights
Forex
Trading Tips
16.06.2020
Trading and Brokerage
post image main
Getting Sentimental

We believe that wherever possible, we should remove emotions from our trading psychology and try to act logically and systematically when making trading decisions. That’s because there are facets of our emotional selves that are just no good when it comes to making money. Impulses that encourage us to snatch at profits, make rash trades and run losses can be detrimental to our wealth in the same way that running out into a stream of moving traffic could be very detrimental to our health. We could go so far as to say that there is no room for sentiment at all in trading, but if we said that we wouldn’t be entirely correct. Because while it’s true that we want to remove sentiment and emotion from our own trading, we should be quite happy to take advantage of other people’s sentiments.


Picking the right wave

Trading is effectively a three-way competition. First, you compete with yourself and your psyche, of course, you also compete with the market in the same way that a surfer competes with the ocean. That is reading the changes in the swell and the wind in order to pick to the right waves. However, you are also competing with other traders, because in forex for every winner there is a loser, and to make money, you need to try to ensure that other traders and not you are on the losing side, more often than not. To succeed, we need to follow a rules-based trading strategy that helps us back only the best trading opportunities that the market presents to us. We also need to try and develop an edge over our competition, that is other traders.

Of course, we don’t and can’t know who these other traders are, and even if we did it wouldn’t do us much good, because there are millions of them spread out across the globe trading away at any one time. However, the fact that there are so many competitors out there can work in our favour. Why? Because a crowd that big leaves a trail that we can follow and that can provide us with an edge.


Tracking the markets thinking

One of the methods that we can use to gauge what the rest of the market is thinking and doing is to look at what they are buying, selling and saying. That is measuring the sentiment towards the markets, and doing that in aggregate.

 

There are several ways in which we can do this. For example, we could study the weekly Commitment of Traders reports that are produced by the US CFTC which track changes in positioning in listed futures contracts (including FX majors) among key investor and trading groups. However, these reports are released three days in arrears, late on Friday afternoon in the USA. What’s more, they are not exactly user friendly in terms of their layout or the way that the data is presented or in the ease of interpretation (the CFTC is not known for its beautiful charts!).

 

Perhaps a more simplistic way to track trader sentiment is to look at what’s happening to the prices of safe-haven assets such as gold, the Japanese yen and Swiss franc and government bonds. If these instruments are rising in price, then that’s a sign of Risk-Off sentiment among traders.

 

If those safe-haven assets are strengthening when risk assets such as equities and Emerging Market currencies like the South African rand, Brazilian real and Turkish lira etc. are weakening, then you will know it’s risk-off. Of course, if we see risk assets appreciating while safe-havens are falling in price, that’s an indicator of Risk-On sentiment among market participants.

 

However, there are quite a few items to monitor the strategy outlined above. Since we are trying to gauge the aggregate sentiment of the crowd, it would be good if we had an indicator to gauge sentiment across a wide range of assets as well.

 

True we could try to use the VIX and other volatility indices, volatility is a measure of the rate and severity of price changes within an instrument or market. It tends to rise sharply as markets become fearful and trend lower when fear subsides and greed re-asserts itself. But once again, this would mean monitoring multiple items from different sources, to which we may have varying degrees of access.


A single gauge of sentiment?

Instead, what if we had one indicator that could tell us what others in the markets were thinking?

 

Fusion Markets has partnered up with some very talented engineers to simplify this even further.

 

Using cutting-edge artificial intelligence techniques known as Natural Language Processing (NLP), we can use machines to take in hundreds of thousands of data points across the web to gauge sentiment.

 

Are people talking about the Aussie dollar? What are they saying exactly? Are they positive or negative?

 

What about Gold? Is the crowd bullish or bearish?

 

To do this, yourself (e.g. scour hundreds of thousands of sources across the web) would be impossible. That’s why we always say there’s never been a more exciting time to be a trader (at least with Fusion anyway) and have these tools available that were previously only available to the world’s best hedge funds and asset managers.

 

We’ll leave it to you as to whether or not the crowd thinking it is highly bullish is a good signal to trade or a bad one and the strategy here (if you’ve read our views previously, you will know the answer!). Still, while it is not the holy grail as a single strategy, we believe this is a handy weapon to add to your arsenal to get an edge over others.


To start using our Sentiment tool now, create a Fusion account (it's free and there's no obligation to trade).

Sentiment Tools
Trend Analysis
Trading Tools
Market Forex
Trading Tips
09.06.2020
Trading and Brokerage
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วิธีล้างพอร์ตภายใน 5 วัน หรือน้อยกว่านั้น
Thai Team

ง่ายๆ ถ้าคุณต้องการให้เงินในบัญชีเทรดที่คุณเพิ่งฝากไปหยกๆ หมดไปอย่างรวดเร็ว เพียงแค่คุณทำตามขั้นตอนต่อไปนี้



1. พยายามหาอินดิเคเตอร์ ที่สามารถใช้ได้ในทุกสถานการณ์ – และเมื่อคุณคิดว่า อินดิเคเตอร์ของคุณแหล่มกว่าใครๆแล้ว ให้คิดว่าอินดิเคเตอร์ตัวนี้จะผลิตเงินให้คุณได้มากมาย ให้คุณทรด Volume ใหญ่ๆ เทรดเยอะๆ และคิดว่าบัญชีเทรดของคุณจะมีแต่ บวก บวก และก็บวก!

2. เมื่ออินดิเคเตอร์ของคุณบอกคุณว่า ตอนนี้มัน Oversold แล้ว ให้ เข้า BUY ได้เลยทันที ไม่ต้องคิดอะไรอย่างอื่นแล้ว ไม่ต้องคิดว่าจะมีข่าวใหญ่ๆกำลังจะออกหรือไม่ อินดิเคเตอร์นี้ชัวร์ที่สุดในโลก!

3. ไม่ต้องสนใจสถานการณ์เศรษฐกิจไม่ต้องดูปฏิทินข่าวใดๆทั้งนั้น - เรื่องพวกนี้มันน่าเบื่อมากจริงๆ อย่าไปสนใจมันก็ได้ ดูกราฟเฉยๆ เดี๋ยวก็มีจังหวะที่อินดิเคเตอร์ของคุณบอกเองว่าถึงเวลาเข้าตลาดเพื่อทำกำไร

4. เชื่อการวิเคราะห์ของคนอื่น - ให้เข้าไปดูในกรุ๊ปต่างๆที่คนพูดเกี่ยวกับการเทรดฟอเร็กซ์และอ่านไปเรื่อยๆจนคุณเจอความคิดเห็นที่คิดเหมือนคุณเป๊ะเลย ให้เชื่อเขา และทำตามที่เขาบอก คนคิดแบบเรามีน้อยจังแฮะ เราและเขาคนนั้นจะรวยไปด้วยกัน

5. เข้าไปดูคนอื่นแสดงความคิดเห็นเกี่ยวกับวิธีการเทรดของเขา และลองทำตามดูเลยทันที ไม่ต้องหาข้อมูลอะไรเพิ่มเติมเลย ทำตามเขาไปเดี๋ยวก็ได้กำไรแบบเขาเอง

6. ไม่ต้องวางแผนการเทรด ถ้าเห็นจังหวะปุ๊บ ให้เข้าเทรดปั๊บ ไม่ต้องคิดเยอะ
7.ให้คิดถึงแต่ว่าคุณจะเทรดได้เงินเท่าไหร่ ไม่ต้องคิดว่าโอกาสในการขาดทุนมีเท่าไหร่ เพราะเรามั่นใจว่าเรามีแต่จะได้ กับได้ !

8. ไม่ต้องเซท Stop loss คนเก่งๆเค้าไม่ต้องมีหรอก Stop loss คนอย่างเราไม่มีวันแพ้

9. ใช้อารมณ์ในการเทรดมากๆหน่อย เห็นกราฟแล้วรู้สึกว่าต้องเข้าได้แล้ว มันเป็นจังหวะที่ดีมากๆ เห็นแล้วเข้าเลย

คำแนะนำ
ทำตามวิธีการเหล่านี้ให้มากที่สุดเท่าที่ทำได้ อีกไม่นานเท่าไหร่ บัญชีเทรดของคุณจะต้องเกือบเป็นศูนย์ (หรือติดลบ) แน่ๆ
แต่.....ถ้าไม่อยากให้บัญชีเทรดขาดทุนมากๆ คุณน่าจะรู้ว่าสิ่งเหล่านี้คือสิ่งที่ไม่ควรทำ



27.05.2020
Trading and Brokerage
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Why Trading Costs Matter So Much
Fusion Markets

Fusion Markets prides itself on its low-cost approach to trading, but have you ever wondered why access to low-cost execution is important and what part it might play in your long-term success as a trader?

 

You might not even link the two things together, and I can see why. After all, a few pips of spread, or dollars and cents of commission paid, is small potatoes when you are trading in tens of thousands of dollars worth of currencies and other instruments daily.

 

But not so fast because these costs make a difference in the long-term, and that is the timescale that Fusion wants to be your partner in the markets.

 

Let’s look at some numbers and imagine that you are a moderately active trader with a strategy that you deploy across five instruments daily. On average, you make 20 trades per day. Let’s call you Trader A. You have a friend who deals with another broker using a similar strategy, but they don’t offer Fusion Markets low commission rates. Let’s refer to them as Trader B.

 

You pay our low commission rate of USD 2.25 per trade whilst Trader B pays $5.00 per trade. You both trade 20 times a day, five days a week. That means that you, Trader A, pay $225 per week in commission while your friend, Trader B, pays $500 in commission per week. That’s $275 more than what you pay.

 

Now let’s scale that up...

 

Over a month, that’s a difference of around $1,100 commission, and over the course of the year, Trader B pays an additional $14,300 dollars more in commission than you for the same or similar trades.

 

That means that Trader B will pay away an astonishing $71,500 of additional commission over five years of this type of active trading.

 

Not only does Trader B pay those additional costs, he or she also “pays” the opportunity costs of not having that money available to them. Money that could have been saved or invested or that could have helped pay off the mortgage, the car loan or a nest egg for your kids that much quicker.


All that before we even consider the possibility of compound growth on that money over time.

 

Tighter spreads matter too.

 

Now not only do lower commissions benefit your trading and finances so do tighter spreads. After all, some brokers charge astronomical amounts in spreads.  

 

Spreads are the difference between the bid and ask prices in the market, the prices at which you can buy or sell a financial instrument like a currency pair or equity index.

 

Each time we buy or sell an instrument at the market price, we are said to be” crossing the spread” or if you prefer incurring the cost of spread in our trade.

 

The spread is seen as a cost because we have to make it back before our trade moves into profit.

 

Think of it like this: Instrument A is priced at 100-101. We can sell at 100 and buy at 101.

If we buy a unit of instrument A at 101, we incur an immediate running loss. That’s because our trade is valued at the price that we can sell the unit of instrument A for, and in this case, that’s 100.

 

In making the trade, we have incurred the spread as a cost. To make those costs back, we need to see the price of instrument A move up to 101-102 or higher. If it does that, it means that we now can sell our unit of instrument A at the price we paid for it. That is, we are now at breakeven on the trade.

 

And if the price of instrument A moves to 102-103, then we have a running profit on our trade because the bid price of Instrument A is now above our trade entry-level.

 

Spreads in FX trading may appear small but don’t forget that trade sizes are typically larger here.  Remember that a standard FX lot is US$100,000 of notional value.

 

What’s more, FX trading is leveraged, meaning that clients can gear up their account and at the maximum available leverage of 500:1 (30:1 if you're a retail client with ASIC), that means that a deposit of just US$ 2000 could control 10 FX lots or US$ 1,000,000 worth of a currency pair.

 

Even a small value like the spread in EURUSD grows pretty quickly when you multiply it by another 6 or 7 figure number. So, the difference between a 0.1-0.2 pip spread, that you typically find at Fusion Markets, in this most active of currency pairs, and a 1-2 pip price that you might well find elsewhere, quickly becomes material (in your head, you can do the math - 10-20x the figure is a LOT).  Our Historical and Live Spreads Tool is designed to allow you to see how spreads have changed historically, discover our average, minimum and maximum spreads and, consequently, make better informed trading decisions. 

 

Quite simply, the narrower or tighter that the spread you pay is, then the more chance you have of your trade moving into profit and doing so more quickly. Which, in turn, means more of your trades are potentially viable. Of course, you still have to do the leg work and get the direction of your trade right, but tighter spreads also mean that if you are wrong, and you cut or close the position. Then you are doing so at a more advantageous price, which can help keep your trading losses to a minimum.

 

Think of trading like an Olympic hurdle race. With a low-cost broker, you have a tiny hurdle to jump over in the form of lower costs. Your friend at Broker B has a giant hurdle he has to jump over every time he enters a trade. Who has the better chance of success here? Do you want to jump over a 1 ft hurdle or a 6 ft hurdle?

 

Successful trading is not a get rich quick scheme. It’s about finding and honing a style or system of trading that works for you and applying that to the markets over time. Successful traders often talk about slanting the odds of success in their favour, and they try to do this not just for the trade that’s in front of them now but for all of their trades during the months and years they are active in markets. Having a trading cost base that works in your favour can play a key part in this. It means the margin for error can be 10x lower than what your friend pays at Broker B.


So, isn't it time you stopped paying too much to trade?


Trading Costs
Forex Trading
Trading Economics
07.05.2020
Trading and Brokerage
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Your reptile brain is hurting your trading

These are unprecedented times for all of us. Not only have we seen the financial markets crash, moving from an 11-year bull market into a bear market, with a -33% correction (only to see it bounce back up 25%!), in less than a month, but we have also seen the oil price collapse, thanks to a price war between two of its biggest producers and an oversupply. On top of which we have the small matter of the Coronavirus and associated lockdowns and isolation to contend with. What a time to be alive! 

 

Life has changed dramatically in the space of just a few weeks and things we took for granted can no longer be relied upon.

 

If you watched the way the financial markets have been performing over recent weeks you will have experienced a rollercoaster of emotions that has matched, if not exceeded the peaks and troughs of the market. What kind of market are we in? General fear and greed? Are professional Investors rushing to cash and dumping everything they can? Algorithms? Passive Investing/ETFs exacerbating moves? Everything and anything is being put on the table but these moves are unprecedented.


 If you're not confused, you're not paying attention. 

 

You‘ve probably been conflicted, part of you may have wanted to bury your head in the sand and hope it all goes away. Another part of you may have wanted to sell everything and “head for the hills” except (literally speaking) of course you can't because you are under lockdown.

 

Let’s be clear these are stressful times. Even hard-nosed professional traders who have seen market crashes before are in unchartered territory at the moment and are trying to work out what to do next.

 

And just like you, they have been behaving a bit like a rabbit caught in the headlights. That is, not sure whether to run or stay put.

 

Before we can decide what to do next, we need to take a step back and examine why we’ve been behaving and thinking as we have.

 

Firstly, we need to realise that it's not personal or unique to us. Everyone is stressed at the moment, they are out of their routine and under immense pressure. concerned for the wellbeing of families, friends and finances.

 

At times like these our everyday decision-making processes take a back seat and the way our brain and body operates undergoes subtle but important changes.

 

When we are severely stressed our blood chemistry changes dramatically, adrenalin, noradrenaline and cortisol are produced by and pumped around our bodies.


These chemicals increase our heart rate, our pace of breathing. and ready our muscles for action. Without us being aware of it we are preparing for fight or flight.


Why does this happen?

Well, the truth is that a prehistoric part of our brain is taking control of our actions. There are "Two-yous" in your brain. A rational, deliberate, thoughtful you. And an emotional, fast-thinking you.

 

The frontal cortex of our brain, which is the part of the brain that we normally use for decision making, becomes less active and a part of the brain that's sometimes referred to as our reptile mind, called the amygdala, takes over.

 

The amygdala is an almond-shaped cluster of neurons and nuclei buried deep in our brains, frankly, it’s a “throwback”.  It has its own independent memory systems and it deals with our emotional and physical responses to stress and fear.

 

The amygdala evolved to make us alert to danger and to keep us alive if, for example, we came face to face with a large predator. These days, for most of us, confronting a large predator, is a remote possibility.

 

However, the amygdala's response to heightened levels of stress and stressful situations have become baked into our brains thanks to millions of years of evolution. Such that it’s become part of our subconscious, and something we are only faintly aware of and are not able to control.

 

So if you have been watching the markets or financial TV recently and have felt your heart pumping, your brow sweating, your muscles tensing and have found yourself only able to focus on the screen, even ignoring someone who is speaking to you, in the same room, you are not alone or to blame. You only need to watch five minutes of television or visit a news site to see blaring counts of the death toll, economic shutdown and other news that puts your amygdala in the driver's seat.

 

When our reptile brain takes over our decision making becomes short- term and driven by fear and our long-term strategic thinking goes completely out of the window.

 

That's why it's so dangerous to make financial decisions under stress at the heat of the moment if you will.  A few rash decisions or actions that are taken then can easily undo years of hard work.

 

So how can we try and counteract these primaeval forces in our brain and psyche?

Well, the first thing to do is break the cycle, so walk away from the source of stress be it the TV or the computer screen and gather yourself. If you can get into the garden or get some fresh air for a few minutes that will help.

 

Having removed yourself from the situation you can try to re-impose some order.

 

Think about the timescales you are investing or trading over. If you are trading FX you may be taking short term positions, but they are likely to be part of a longer-term plan. Perhaps you can re-appraise this as a once in a generation buying opportunity?

 

Remind yourself what your investing goals are and over what time scales were you trying to achieve them.

 

I very much doubt your plan was about weeks or even months was it?

 

Your plans were probably conceived to play out over several years, weren't they?

 

It also helps to think about who you are investing and trading for and why.


Perhaps it's for you and your family or other loved ones, thinking about these long-term goals can help you centre yourself once more. When I'm investing or trading I think about 65 year old me retiring and ask myself "Will I care about today's trading result then? Or even in one year?"

 

If you do need to make a decision or take action on your portfolio, try to make that decision when the markets are shut and you are free of distraction. You will find that you can think a lot more clearly in those circumstances. That clarity is only likely to benefit your finances over the longer term. Take a minute to take some deep breaths.


Remember, this too shall pass.

 


Trading Psychology
Trading Insights
Trading tips
20.04.2020
Trading and Brokerage
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Why not be a passive FX trader?

New and novice traders spend a lot of their time worrying about how they will recognise and spot trading opportunities as they occur, and what will be the best way to exploit them when they do. They can spend hours researching and reading, looking at charts and trying to apply technical or fundamental analysis to the current market setups.

 

That investment of time and effort on their part is commendable, but all too often it's time and effort wasted!

 

It may seem harsh to say that, but here at Fusion Markets, we believe in telling it like it is.

 

We say that it's time and effort wasted because, despite all the research, reading and studying of charts, many newbie traders will still put the wrong trade on and more to the point not realise they are doing so.

 

Driven by sentiment

Financial markets are primarily driven by sentiment and momentum, which itself is created by crowd behaviour. That's something that was identified and put into print as long ago as 1841 and though the technology of trading has changed considerably in the intervening 179 years, the psychology of trading hasn't. 


We could go as far as to argue that while there is no longer a physical crowd on a trading floor or exchange these days, there is, in fact, a much bigger crowd whose voice and actions are amplified by modern communications. Real-time information through social media, for example, can enable the instantaneous exchange of information, prices and views across the globe.

 

The transfer of information 

There have always been communication channels between markets and their end customers, of course. But it is the speed of modern networks that differentiates today's trading from what went before.

 

Flags and telescopes on high towers, carrier pigeons and messengers all played their part in the transfer of information. Those methods were superseded by the telegraph, which in turn was replaced, at least partly by the telephone. The internet, the world wide web and the rise of mobile telecoms have ushered in a new age of high-speed data that can reach almost any corner of the globe, at the same time.

 

The net effect of all this is that the trading crowd is much larger, better informed and able to act and react much quicker than ever before.

 

Weight of money 

In trading, the majority rules, in that markets move in the direction that has the most impetus. If most of the crowd is bullish, then demand outweighs supply and prices will rise until fresh supply (sellers) are attracted into the market. This is why people go on about what the “Smart money” is doing. While we don’t necessarily agree with them being “smarter”, they certainly have more capital!

 

Conversely, if supply outweighs demand, that is there are more sellers than buyers to satisfy them, then prices will fall as new buyers are drawn into the market.

 

If these price changes persist for any length of time, they form what is known as a trend which is nothing more than a series of continuous, repetitive movements in price.

 

It's not only modern communications that have amplified crowd behaviour and sentiment.


The rise of tracker funds, ETFs and other passive investment vehicles have also played a role. These types of investment don't try to beat the market. Instead, they aim to match it.

 

Trillions of dollars have flowed into these trackers over the last decade and a half, and indeed you could argue that they have become so successful and so large that ETFs are now capable of creating the market's trends rather than just following them.

 

In fact, the world's largest fund manager is also one of the world's biggest passive investors (Blackrock).

 

Passive FX trading  

The influence of tracker funds is not as prominent in FX, as it is in say, equities or bonds; however, the principles are the same. The crowd dictates the trends in the markets and those trends tend to stay in place until new information emerges and cause a change in sentiment, which in turn can cause a change in those market trends.

 

Now the big mistake on the part of newbie traders that we mentioned at the start of the article was putting on the wrong trade, typically by opposing the prevailing trends in the markets.


The more entrenched the trend, the more likely new traders, are to try and oppose it. Ever heard the saying “trying to catch a falling knife”?


How can we become passive traders?

The most obvious way to be a passive trader is to follow the existing trends in the FX market, which occur in even the most widely traded pairs. Nevertheless, here's a few ways you can become more passive. 

 

For example, EURUSD trended lower for almost two years between February 2018 and February 2020. You didn't have to stay short of the rate (that is, have sold the Euro and bought the Dollar) for two years to benefit from that move. As long as that downtrend was in place, it was pointing you in the direction of least resistance and with that being the case why would you oppose it?

 

1) Check your charts.

 

Sometimes you will be able to follow existing trends, but there will be other times when individual instruments or markets are ranging or moving sideways, checking your charts and knowing your levels can aid you here.

 

A chart can speak a thousand words. It contains loads of useful information that's conveyed visually to the viewer. Get to know where the key support and resistances (watch for breakouts too) are situated over daily or weekly timescales; shorter-term charts are too noisy (I’m looking at you, 5-minute chart!).

 

2) Know where key levels and moving averages are.

 

The way that price reacts when it meets moving averages, or support and resistance can dictate the direction of the next trend. Knowing when and where this can happen will put you on alert to "jump" in once a new trend is confirmed. Fusion puts out trade ideas and analysis on Telegram and Facebook.

 

3) Look for clues about trends in sentiment tools

 

Tools that track what traders are thinking and doing are incredibly useful.

 

Given what we said above about retail traders opposing market trends, the passive FX trader uses these sentiment reports as reverse indicators.

 

We quite like FX Blue’s sentiment indicators which you can find here

 

The rule of thumb is that the more biased retail trader sentiment is in an instrument, the more likely that the market will move in the opposite direction.

 

A passive trader wouldn't preempt that move, but they would be prepared for it when it happens, or join it if it's already begun. 

After all, one of the most famous quotes in the markets is "the trend is your friend"... So don't fight it.  

 

Trading Tips
Forex Market
FX Trading
Trading Psychology
Trading Education
26.03.2020
Trading and Brokerage
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Why you don't want to be lucky

On Why making money on your first few trades may not be the best outcome

 


“The potential for temporary success by pure luck beguiles people into thinking that trading is a lot easier than it is. The potential for even temporary success doesn’t exist in any other profession.

 

 If you have never trained as a surgeon, the probability of your performing successful brain surgery is zero.

 

 If you have never picked up a violin, your chances of playing successful solo violin in front of the New York Philharmonic is zero.

 

It is just that trading has this quirk that allows some people to be successful temporarily without true skill or an edge—and that fools people into mistaking luck for skill”

 

- Quote from "What I Learned Losing a Million Dollars" by Jim Paul and Brendan Moynihan

 


Luck or skill?

The quote above, which is from the true story of the rise and fall of Jim Paul, sums up trading. It’s an occupation that you don’t need any specific qualifications to pursue.

 

However, unlike most “unskilled“ roles, the potential rewards in trading are substantial. In fact, they are open-ended or without limit if you prefer.

 

Of course, the key word in that sentence is potential because until they are realised those rewards will remain out of reach, tantalisingly close but just beyond our grasp.

 

Realising those rewards and doing so regularly will usually require hours of dedicated study and application, combined with the ability to follow a set of rules and the discipline to apply them every time you trade.

 

There is an old saying among traders and gamblers that they “would rather be lucky than good”, but this is wrong because as Messrs. Paul and Moynihan point out, people are very quick to mistake luck for skill.

Falling into a trap


To do that is to fall into the trap of outcome bias that is judging the success of an event or action purely on the results generated, rather than the journey taken to get to that endpoint.

 

Annie Duke, the famed poker player and author of “Thinking in Bets” calls this “Resulting”.

 

Yes, trading is about making money, but more importantly, it’s about making money without taking on excessive risk. It's all well and good picking up nickels and dimes you find in the street, but you wouldn't (or shouldn't) want to do this in front of a steamroller.

 

The ability to recognise, measure and quantify risk is a key skill for any would-be trader. Unfortunately, it’s a skill that must be learned the hard way, which in trading means losing money.

 

Harsh lessons

Losses are a fact of life in trading. They are part and parcel of the job description, and the trader must come to terms with that, and the sooner the better.

 

Here's the thing. In an ideal world, those new to trading should experience several consecutive losing trades. They should feel the pain and disappointment of seeing their money disappear and their ideas going up in smoke, however, by learning from their experiences, they should go on to be a better trader.

 

This may sound harsh, but there is no substitute for having skin in the game and losing money. It focuses the mind like very little else.

 

If we have correctly approached the markets from the outset (that is, conservatively), we should be risking only a small portion of our capital on any one trade, and only having a limited number of trades open any one time. Then these losses will be akin to scratches and scrapes and not mortal wounds.

 

 

A biased picture

 

Therein lies the crux of the dilemma we face as traders. If you are lucky and you make money straight away from your first few trades, you can develop a false sense of security.

 

You will overestimate your own abilities and fall victim to another bias, that of anchoring.

 

When our mind tricks us into anchoring, we carry an incorrect assumption or set of assumptions forward into future decision making. In turn, this can lead to availability bias where you make decisions and form opinions, based solely on the information in front of you, rather than considering the bigger picture.

 

To put this into context, let's imagine that you start trading in the live markets and you are fortunate to have US$ 10,000 in your account.

 

For your first trade, you take a “flyer” by going long two lots of an FX pair (that's US$200,000 of underlying notional value) You trade without a stop loss and then you head off for nine holes on the golf course.

 

By the time you return to your desk, the markets have shifted after a key central bank announcement.

 

By complete chance, because that's what it is, the markets have moved in your favour and you close out your position for a tidy profit.

 

That might sound like a good day's work, but it’s a disaster or at least a disaster in the making simply because you broke so many rules around money and risk management.

 

You didn't consider the leverage involved in the trade, the relative size of the position to your account balance and by not having a stop loss on the trade, you put all your trading capital at risk.

 

Finally, you didn’t check the calendar to see if any key data was due out and you left your position unattended while you played golf.

 

Make money but in the right way

We are not saying that we want you to lose money, on the contrary as your broker we would like your account to grow and for you to recommend us to your friends and family.


Ideally, as your partner in the markets, we want you to make money in a sustainable, systematic and thoughtful fashion, one that rewards best practice and encourages good habits, not bad. A trader placing small trades across ten years is worth far more than an easy-come easy-go trader who treats it like a visit to a casino.

 

A little discomfort in your first few trades can go a long way to achieving just that.

 

Trading
Trading Psychology
Trading Insights
Forex Forex
Trading
Trading tips
25.03.2020
Market Analysis
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Why Your Stop Losses Are (Probably) Wrong

When you start to learn about trading, you'll come across plenty of material about minimising risk and money management, because they're two of the most critical areas of the business. 


Learning to manage risk and preserve trading capital is fundamental to a successful trading journey. 


One area the literature focuses on is the use of stop losses. A stop loss is simply a price level beyond which you choose not to run an unprofitable or losing trade.


But for me, stop losses are one of the most misunderstood tools in a trader's arsenal, and I wanted to offer a different perspective than what is usually found in the research.  


I'll give you a hint; it's in the name!


Knowing your risk

It's important to know the risk you are taking on any given trade, this can be calculated by multiplying the distance of your stop loss, from the entry-level of your trade, by the notional size of your trade.  


In theory, this simple calculation determines the maximum risk or loss that you face on a given trade. I say in theory because that risk figure is not cast in stone.  


Firstly, if the stop loss you use on a trade is just a mental one, i.e. a figure that you have chosen, (but will watch rather than attach to an order), then it will be down to you to monitor price action and trade it. That's a sure recipe for looking like a maniac checking your platform or mobile app every second you get.


Systemise your process

Rather than rely on them being in front of the screen to close a trade (which in a 24/5 market is not that realistic), many traders will place a stop loss to an open position. This is essentially creating an instruction to close the position should the price of the underlying instrument reach a pre-set level.


In doing so, traders are systemising this part of their trading. On the face of it, that sounds like a good idea doesn't it? 


But what if that automated stop loss level was defining the loss you make on a trade and eating away at your trading capital, not protecting it?  


The use of a stop loss should be what its name suggests – the prevention of a loss, not the realisation of losses as 90% of traders currently use their SL for.  


Crowding together

Here's the thing. Traders of all sizes fall foul of "clustering" which means they place their stop losses in the same areas, at the same time.  


For example, at or around round numbers, (e.g. USDJPY 110) just above or just below a moving average or indeed close by the same support or resistance levels everyone else is keenly watching.  


The market is aware of this behaviour and is often on the lookout for these clusters of stop losses. When they are, it's known as a stop hunt.  


But what exactly does that mean? 

Well, a big bank (a price "Maker") might see on their books that they have a cluster of orders around 1.10 on EURUSD, and then be willing to commit large sums of capital to "hunting down" that stop loss level. They do this by moving the underlying price towards it, in a selfish way, to reward themselves, rather than because of natural order flow (and they wonder why they have bad reputations!).  


As an aside, a broker such as Fusion Markets, that typically services "retail" clients, e.g. mum and dad investors, often get accused of doing the same thing, despite the fact we are a price "Taker" not a price "Maker", and have no control over the prices coming through to you, as a client.  


Think about it if the market can find these groups of stop losses and trigger them, then that's easy money for the banks and traders who have the opposing view and positions.  


Remember that in FX trading there is a winner for every loser and vice versa. A successful trader endeavour's to be on the winning side of that relationship more often than not.


A different approach to stop losses

Are we saying then that you should trade without a stop loss? No, we are not! 


But what if we took a different approach to stop loss placement? Instead of lining up to provide a free lunch for the banks, what if we placed our stop losses above our entry price rather than below it?   


Of course, that means that we'd have to risk-manage our trades in a different way.


For example, employing less leverage and taking smaller positions relative to our account size. But that is really what we should be doing anyway. And of course, we would have to monitor performance closely in a trade's early stages, as we should.  


However, if the trade we have taken is the correct one, then our position will soon be on-side, and once we have a buffer between the current price and our entry-level. Then, our stop loss can be locking in profits rather than minimising (or realisation of) our losses.  


Trailing a stop-loss behind a profitable position is something of a holy grail in trading it's often talked about, but rarely seen in the markets. By not acting like the crowd, maybe we can turn the tables on the stop hunters.  


What are you waiting for? Why not stop your losses in the way they're supposed to be stopped? 





Risk Management
Trading Strategies
Trading Tips
Forex Trading
Market Volatility
Trading Education
23.03.2020
Trading and Brokerage
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The Seven Most Common Mistakes I’ve Observed Traders Make
By Phil Horner

 I’ve been in this industry for over a decade now and have been in a very fortunate position to learn a lot by watching others. I’ve seen the good, the bad and the ugly by watching tens of thousands of traders across various brokers.


Let me start off by saying that I am by no means perfect and I have (even recently) done quite a few of these myself. But knowledge is power, so I wanted to provide my observations of where things can start to go wrong, based on my own experience of sitting on the sidelines.  


1.      Ignoring Basic Risk Management aka Trading too big for their accounts


I have to start with risk because I believe it’s THE most important concept.


"Risk is what's left over when you think you've thought of everything" 


Unfortunately, risk management is not sexy, however. It makes people fall asleep when you hear someone talk about risk management.


Risk can mean many things, but it’s especially prescient when it comes to Forex Trading due to the leverage that’s involved. Unfortunately, it’s a gift and a curse.


I always tell traders that leverage is like driving a fast car. It’s nice to know you’ve got that power if you want to use it. And most of the time you don’t want to (nor should you) drive 100km/h on a busy street.


That is how I best describe the use of too much leverage.


It’s great that you have the flexibility with it if you need it, but you shouldn’t be maxing out the margin on every trade. It gives you less flexibility if the trade goes against you and kills way too many traders too soon.


I’m not a big fan of martingale systems and have seen this ruin many traders; however, depending on the circumstance, I do enjoy averaging into a trade. After all, if I liked buying EURUSD at 1.1000, wouldn’t I also like it at 1.0960 where I’m getting a lower average entry?


Many forex education providers will advise you never to risk more than 1% on any trade, and this can be good advice, yet I’d say more than half of traders I’ve seen will routinely trade at least 10x that. Some will even come close to margin call triggers on the first trade. Frankly, this can just be like lighting money on fire.


It might not be as “fun” to trade when it’s so small. But if you’re getting too excited by it all, maybe you’re taking on too much risk.

 

2.       Too many trades/ Trading outside of the area of competence


A close cousin of too much risk is taking too many trades, or branching out into other areas.


There’s a reason that doctors specialise in one area. You’d probably be scared if you saw an eye doctor have a go at performing surgery on the brain.


Stick to just a handful of products at the time (I’d say a maximum of five, preferably three). If there is a correlation between them, that’s fine but don’t assume your knowledge of the yen will mean you’re a great trader of the Turkish Lira.


In most investment banks back in the day when they had large proprietary desks, traders would only stick to a few currency pairs. You’d be on the “yen” desk or the “sterling” desk. That makes much sense as there’s only so much information you can absorb.


If I see a client that is successful trading in currencies who then makes a jump to the Indices it often is a sure sign of trouble ahead.

 

3.      Getting caught up in FX Headlines/Mainstream Media


Many will disagree with me on this one, but following the same headlines as everyone else in forex trading can sometimes lead you astray.


Yes, you need to be informed about what’s going on. You shouldn’t stick in your head in the sand.


Howard Marks said it best when he remarked: “You can’t do the same things others do and expect to outperform”.


If you’re reading Bloomberg headlines saying so and so thinks EURUSD is heading to 1.10, then every man and his dog is reading the same thing. Ask yourself what do you know that isn’t already baked into the price? How can you have the edge over someone else? Is it really by consuming the same news like everyone else?


Being contrarian in life might make people think you’re strange, but in the financial markets, I find it invaluable. The markets are (mostly) efficient, and a lot of what you see is already factored into the price. You need to think differently to the market if you want to get ahead. Remember the GBP after Brexit? Analysts were calling for parity against the USD. You’d be crazy to buy it people said. Fast forward, and it was probably one of the best trades you could’ve made once the negativity died down.

 


4.      Not using a Demo


This is a pretty standard one, but if you’ve started trading without using a demo first then you’re asking for trouble.  


Do think you can be a pilot after a day of flying lessons? Then when you’re risking your money, you can't be expected to perform well in the markets without doing some practice first.


It takes a lot longer than people think to master their craft at trading and many mistakes on the way.


That being said, you can also spend far too much time on a demo and never understand the psychology of a real trader with real money and emotions on the line. So do practice, but just like when you learn to ride a bike, you will need to take the training wheels off at some point. That’s why we recommend having a demo and a live side by side (and Fusion offers unlimited demos for funded accounts)

 

5.      Moving Stops and Limits


Ah, the old “Greed and Fear” comment. Lots of people will talk to you about how two things kill a trader/investor, and that’s greed and fear.


Good trading is about good entries and exits.


Traders I’ve seen have spent much time setting up the perfect entry, but then they don’t have an exit plan.


The trades go well for them and then all of a sudden, the greed sets in. Suddenly, their take profit has been bumped up just a little bit higher to capture that extra drop of profit. Then boom! All of a sudden, the trade has reversed, and their profits have disappeared faster than you can say margin call.


Trading without stops and limits is also just as bad. You never know what “black swan” can happen while you’re away from your platform or are asleep. Having protection in the form of stops and limits can help minimise your risk. You can also try to use “trailing stops” which move up as the price moves in your direction. Ask me how if you need a hand with these.

 

6.      Ignoring the important of Psychology


You might’ve read my other posts about biases and psychology. But my personally believe that life is 80% psychology, 20% strategy and I believe trading is no different.


If you can master your trading psychology, you’ll be a far better trader for it.


This is everything from being too afraid to enter a trade, to being too greedy to close it to learning even more about all the biases we have and how to prevent them.


 7.     Not having a strategy 


Yes, I believe trading is 80% psychology. But you still need the 20% that comes from a strategy.  


What is your strategy? Why would (or should) that give you an edge? How long has the strategy been successful for? Is it technical or fundamental based?


You know the quote – if you to fail to plan, you plan to fail. You can’t show up and hope for the best. You’ll get killed. That’s where testing comes in whether that’s via a backtest of an algorithmic strategy or if it’s just applying the strategy on a demo. Or even just starting small with micro-lots.


You need a strategy if you’re going to succeed.


Sure you might get lucky for a little bit, but it won’t last forever.

 

Overall, this isn’t a definitive list and unfortunately, following it blindly is no guarantee for success in the markets.


We all make mistakes. I know I do – all the time. But I hope that the above is useful for you as I’ve had a window into watching traders for a long enough time.


Did I miss any? Was there something you thought was even more important? I’d love to hear from you.

 

 


Trading
Trading Psychology
Forex
Trading tips
Common Mistakes
16.03.2020
Trading and Brokerage
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That which does not kill us

“That which does not kill us makes us stronger” – Friedrich Nietzsche.


It’s a cheesy quote to start with, I know. Bear with me here.  


It turns out it might be true when it comes to professional success as well.


In a recent paper published in the journal Nature, researchers found out that early-career setbacks can result in a stronger career in the long term – stronger even than people who never had a setback.


To sum up the paper in just a few lines, the experiment compared two groups of scientists: a group that scraped over the line in getting a grant from the US government and compared that to a group that had just missed out on a grant (one that just made it, one that just missed out).


Ten years later, the group that had not received the grant went onto have more successful careers than the team that had won the government grant.


So those who’d experienced some pain early on in their careers went onto come back stronger than those who didn’t fail.


I couldn’t help but think of how that pain would’ve fuelled their success in later years and how that so encapsulates what I’ve seen in over ten years of trading and watching hundreds of thousands of traders.


Why early successes in trading could hurt you


You may have seen my thoughts on Overconfidence bias before and it got me thinking how much this could spill over into early successes trading.


I’ve seen this far too many times in traders before.


It’s like the story of the tortoise and the hare. It’s the slow and steady trader that wins the race.


The traders I’ve seen who are new to trading will open their accounts, ignore basic risk management and trade gigantic positions on their account and make huge profits on their first few trades. While I love to see it, often they lull themselves into unbelievable amounts of overconfidence and a feeling of invincibility.


They’re the stories you read like “one man makes $1,000,000 trading options on first trade” or “this is how much you would’ve made investing $1 in Google shares since 2004” or “my friend just made $15k betting on AUDUSD” or other financial “junk food” as it should be labelled.  


Because it is too easy in their eyes, they’re always chasing the same early successes they had. 


What I took away from the Nature paper is that the easier we think something is, the more we can fool ourselves into believing something which isn’t true.


Taking the pain


Let me be clear. I’m absolutely not saying that you must lose big to win big. Nor am I saying making money early is bad.  


I’m saying that in my experience, my firm belief (now backed up by some solid research in a different field) is those that suffer early setbacks in their trading are like those who just missed out in their professional lives. In the same vein, if it’s too easy at the start, you can hurt yourself and trick yourself into thinking you’re better than you are.


It’s more like you need to hit some minor lows to hit the highs, but don’t ruin yourself. Call it a bloody nose.


Trading is not some easy game that can be won in the first week or month. Just like you wouldn’t expect to be a pilot after one week of flight training (though you can certainly have the goal!), the same is true for trading.


It’s hard. Very hard. There’s so much to take in and digest. The market is constantly evolving. That’s why you’ll hear statistics like 40% of traders don’t make it. Most people expect too much and give up too soon.


But real success in trading is more like a way of life.


It involves hard work, true grit, hours upon hours of learning and the ability to look and feel wrong many, many times (and often in painful ways both mentally, financially etc).

If you are just starting and you’re shooting the light outs, then maybe that’s not such a good thing. And if you’re struggling, know that you’re not alone.


Far better for you to see it as the challenge that it is. That a little pain is part of the journey and that if it were so easy, everyone would be doing it.


Trading
Trading Psychology
Trading Insights
Forex Forex Trading
Trading tips
17.02.2020
Stuff that makes you think
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Top 10 Hidden Biases Part II
Phil

Part II – Hidden Biases in your trading

In Part One, we covered Confirmation bias, recency bias, the endowment effect, the groupthink bias and the gambler’s fallacy.


Today we’ll cover our final five, and I’ll provide you with a handy checklist so you can take 60 seconds and potentially stop yourself from rushing into something catastrophic.


6)    Hindsight bias

You could also call this one the “I knew it all along” effect. How many times have you heard someone say those words in life (not to mention in trading)?


I just knew Euro would fall after the ECB meeting.


Argh, I meant to go long on gold but didn’t get time. I knew it was going up.


We tend to believe that (of course much later than the event itself) that the onset of a past event was entirely predictable and obvious, whereas during the event we were not able to predict it.


Due to another bias (which we will not cover today) called “narrative bias” we tend to want to assign a narrative or a “story” to an event that allows us to believe that events are predictable and that we can somewhat predict or control the future. It allows us to try to make sense of the world around us.


How to overcome: Just stop pretending like you knew what was going to happen. If you didn’t put skin in the game, then you didn’t think it was going to happen!

 

7)    Overconfidence effect


Overconfidence as a trader allows us to believe that we are superior in our trading, which ultimately leads to hubris and poor decision making.


Whether it’s overconfidence on when to trade, what to trade (telling ourselves “sure I could normally trade AUDUSD, but why couldn’t I also be good at trading the South African rand?”) and how to trade a certain product.


We trade larger than we should, hold losers for longer than we should, relax our own risk management policy, become arrogant or complacent in our trading and this all leads to capital losses.


How to overcome: Ask yourself “What could I be wrong about” or “What makes me think I am far superior to all the others out there with this information”? The market will humble you eventually of course, but why not try to do it yourself before you shoot yourself in the foot?


8)    Anchoring


The first bit of information we hear is what we focus on.


If you ever need to negotiate with someone, you’ll be amazed at the power of anchoring with your first offer (Do try it sometime, just not with your friendly forex broker though ;-))


The same applies to trading. We hear a talking head on TV telling us about how the euro is overvalued and is heading for some drastic number that is streets away from today’s price. We can’t get that number out of our head even if we try.


Or let’s say we buy AUDUSD at .7100, close it at .7300 for a decent profit, happy days! The next week, it’s back at .7100 and we immediately are tempted to do the same again, because why not? It’s cheap again and we can repeat history. We rush into it, ignoring the technical break it’s just had or the negative sentiment on Australian Economic Data. We practically feel it’s a bargain at those levels.  


What do we do? The worst part is that we’re usually not even aware of how strong the influence is.


That’s the power of the anchor. We become attached to that information.  


How to overcome: This one is tough to overcome because studies show it can be so hidden in our subconscious without us knowing. Perhaps add to your trading checklist “Was this trade a result of an unknown anchor that I saw or heard?”


 

9) Consistency Bias

Like the sunk cost fallacy, we want to be consistent in our actions.


We’d hate for someone to say to us that we weren’t being fair or that last week we had said we’d do X and now had changed our minds.


Politicians do it all the time as they rigidly stick to a poor policy idea. They’d rather go down with the ship.


Traders are worse because our own desire to be consistent costs us money.


If I am known as a USD bear, and it’s rallying hard – I don’t want to look stupid or inconsistent. That’s why I keep staying bearish despite being 1000 pips from being right! It’ll come back we say. Everyone else is being stupid.


In 2009, 2010, 2011 and probably countless years since the financial crisis, people were always calling for the “double-dip” recession. I fell for it myself personally by believing them in 2009 and 2010 and staying too cautious when I should’ve thrown the house at buying stocks!


We want to feel in control. We want people to see our conviction, even if we’re wrong. Because this is a byproduct of confirmation bias, we’re not likely to seek disconfirming evidence of what we believe. We see what we want to see.


Why? Because sadly consistency is often associated with our intellectual and personal strength. Good traders should be seen as flexible. Open to the idea that they are probably wrong. Yet society thinks an inconsistent person is flaky, confused or a ‘flip-flopper’ on issues – even though we could all benefit from being open-minded to new ideas and opinions!

 

10) The Halo Effect

Last but not least - The halo effect is the final bias we’ll talk about today.


The halo effect means we let our overall impression of someone influence our thinking too greatly.


“But he’s so smart we say”


We idolise the opinions of the legendary hedge fund manager, Ray Dalio or the great investor of our time, Warren Buffet.


We see them on TV or in a Bloomberg article saying now is a buying opportunity or that it’s risk-off and we need to sell.


“If Buffet/Dalio/ is buying/selling now, I’ve gotta too,” we say in our head.


But how smart is that a strategy, really? What might he know that I don’t? What are his investment objectives versus mine? More important – how many times has he said this and actually been wrong?


We don’t know and we shouldn’t try to know. The halo effect blinds to sticking to our own plan and staying in our lane. The more we’re influenced by others, the harder trading becomes.


How to overcome: We must take the opinions of the so-called “Masters of the universe” with a grain of salt. They have different plans than we do. Information that we do or don’t have and so much more. Just because they’ve said this doesn’t make it come true. If only trading were that easy!

 

What do I do now?


OK, so I might have scared you. You are now jumping at shadows and questioning your own trading decisions, believing you have all these secret, hidden disadvantages that you didn’t have until 10 minutes ago.


Do not worry, biases can never be completely avoided. But we can work hard on challenging our opinions in order to make us more successful. Sometimes it’s just taking the time to stop and think.


To help you along the way, we’ve created a possible checklist for making better decisions in your trading.


So, stop, take a breath and ask yourself these 7 questions before you place your next trade.


What’s the rationale for taking this trade? List 3 for and 3 against.


How strong is the evidence behind my decision to trade?


What are the possible unknown unknowns?


Has the recency of information I’ve learned influenced my decision? If so, how much?


 Is this trade following the consensus of the crowd? If so, is that a good thing?


Did I hear this from a famous market commentator/investor? Why is that important?


 If none of questions 1-6 apply, then could any of the other biases above be at work?


 


Trading
Trading Psychology
Trading Insights
Forex
Forex Trading
Trading Tips
Hidden Bias
27.01.2020
Stuff that makes you think
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Top 10 Hidden Biases Part I
Phil

Your first reaction as you read the subject was thinking: “Yeah, but I’m not biased”

Of course, that’s what you would say!

The biggest problem with biases is that we never think we have any.

Biases are what everyone else has.

What are they and why are they important?

Biases are like shortcuts for your brain. They can have an unusually large impact on how you make decisions in your everyday life, but particularly when it comes to your trading.

To put it simply, your brain has a way of conserving energy by making fast decisions or mental shortcuts in what is known as ‘heuristics’.

The problem is, we often don’t even know that we have them. Even if we know about them, when it comes to trading, we must work hard to challenge our reasoning behind making our decisions.

As common as these biases are, we specifically want to focus on what is called “cognitive” and “emotional” biases.

Because these are so crucial to your trading, we’ve split this guide in two. This is part one.
Biases have been studied across psychology, economics and now into the mainstream of what is called “behavioural” finance. In fact, Richard Thaler, a notable behavioural economist recently won the Nobel prize for his work on the topic!

The sad part is that I know more about this topic because of my own mistakes in trading and so I try to be hyper-aware of rushing into trading decisions without considering the biases below.

The million-dollar question becomes, how many of these have you been a victim of and what can you do to try to prevent them yourself?
 
1)     Confirmation bias

This one is a doozy and for me, the most important of all of them.

If you take nothing else from today, it should be an awareness of confirmation bias.

Confirmation bias means we tend to seek out information only that we agree with.

Ask yourself this question: How many times have you placed a trade then sat there and watched it go against you? Sure, this happens almost every time, but then how often have you then gone out and sought information, headlines or “expert” advice about that currency pair which tells you why you were right and to just stick with it?

I remember many years ago, when I first started trading, I placed a fairly large trade on oil (don’t ask why I made this trade. I had no idea what I was doing and it was too big for my account... Forgive me, I was just a beginner!) but as soon as it went against me I frantically typed “Oil” into Google, and just like that I was looking for any reason to support my original opinion on why oil was due to go through the roof.

To my joy, there was some analyst from ABC Fund manager comforting me with a view that supported my own opinion or perspective. They talked about an undersupply in the market and that oil was sure to go higher. It was 2 am and I was sitting in my lounge room by this stage as I watched my whole account go into jeopardy. This valuable advice that I sought helped to nurse me back to sleep.

I, of course, deviously chose not to click on any article that might tell me I was wrong – I only sought out the information I wanted to hear or see.

Let’s just say that the oil trade I placed went as well as a parachute made of concrete! (Oh and my account was completely wiped out!).

How to overcome it: Stop, ask yourself a question – What information could you be missing about the rationale for this trade? What do the opposing arguments and research say?

2)    Recency bias aka availability heuristic

The “recency bias” or “recency effect” essentially tells us that our recent experience can become the baseline for what is going to happen in the future.

This might mean our recent trade performance such as a recent win or loss impacting us heavily. It might also mean a certain piece of news or information that we recently heard forming the basis for our decision making.

This can have seriously dangerous consequences for us as traders as it undermines our ability to form an objective decision on a trade. Why? Because of our lazy brain only recalling recent information. Whether that’s on our most recent trade or information we found as a barometer for how the next trade will go.

Let’s say you had a losing trade whereby you promised you’d never risk such a great amount of your capital again. You might be a little shy and dial back the risk a bit too much, or you could be the opposite and think you’re George Soros, betting the whole house on the next trade since you just went so poorly on the last. Your thinking is this would get you back to where you were prior to your last trade.

The other way it can creep into your trading is through recent information impacting your decision on why to take a new trade. It might be that you see a brief news headline stating ABC bank’s research on “why the dollar is going to dive this week” earlier in the day and tend to argue with yourself later that night why you think it’s a good idea to follow that trade. I know what you might be thinking: “It’s just a headline… I’d never let this happen to me”. However, our brain likes to take shortcuts to conserve energy. It will do its best to take what it knows and ignores the rest (as we have learned above).

We also have a tendency of the fear of missing out (FOMO as it’s popularly known today) and with this new information, we feel we must put something into action!

How to overcome the bias: As difficult as it may be, you must stop, count to three and ask yourself a few questions.

These could be “why am I making this trade?”, “Does it fit in with what I know?”, “What am I missing here?”, “Have I read something recently about this?”. Better yet, build yourself a checklist with these questions on it!

3)     The Endowment effect / Sunk cost fallacy

The endowment effect means we tend to value something more after we’ve owned it for a while.
In a now-classic study featuring Richard Thaler and Daniel Kahneman (both Nobel prize winners), students were given a mug and were asked how much they would sell it for an equally valued pen as an alternative. The experimenters found that the median price for which they would sell was TWICE as much as they were willing to pay to acquire the mug.

Because of our aversion to losses (also known as prospect theory – another big bias which I’ll cover later), this can have a drastic effect on our trading success. We place a trade on AUDUSD, with a target profit or loss of only 50 pips. Yet when the trade starts to go against us, what’s the first thing we often do? Move our stop loss further out because we “just know it’s going to turn around.” We tell ourselves stories like “The euro is cheap here, it’ll definitely turn around.”

Because we are committed to this trade (and this is somewhat related to the confirmation bias) we value it more just because we own it and because we have already invested in it, it becomes a “sunk cost”.

How to overcome: Fairly obvious advice to start; keep your stop losses and targets where they are. Be more mindful about why you’ve put them at these levels. If it helps you, write down the reasons why you’ve placed your stop and profit there and you can take comfort in understanding your own reasoning.

4) “The Gambler’s fallacy”

The gambler’s fallacy is where we believe that future probabilities are altered by previous events, when in fact, they’re unchanged.

It is called the “gamblers fallacy” due to the often-watched scene of any table game at the casino (e.g. roulette) as it continues landing on black over and over. People see this and think ‘it couldn’t possibly do that again’ and try to bet against it.

Being contrarian is great, don’t get me wrong.

However, as traders and human beings, we tend to believe that if something happens multiple times, it couldn’t happen again. We ignore simple probability.

Let’s say the S&P500 has rallied five days in a row. We place a trade in the belief that “it must be due for a correction” only to watch it rally and stop us out of our position.

How to overcome: It is important to look at the original thinking that led you to this trade. Just because something has moved up or down in a continuous fashion, it does not mean the market will immediately reverse its behaviour and go the other way. Just try catching a falling knife and you’ll know why.

5)     The Groupthink Bias

The “groupthink bias” is our inclination to do or believe things just because others do the same. Also known as the “bandwagon” or “herd behaviour”, it can lead to having a serious trading hangover; ask yourself an odd question like “why on earth did I go long the EURCHF last night?”

After all, you can’t do the same things others do and expect to win.

A recent example was after the US Presidential election. Everyone thought if The Donald got in, it would be a huge negative for the markets and the economy. Stocks fell initially and hard.

If you cashed out then and there because you thought it was going to lead to Armageddon, you made a very expensive mistake!

How to overcome: Sometimes it pays to be contrarian. If everyone is saying it’s going up, consider if going the same way will lead to riches. If everyone is saying it’s going down the toilet, consider if they could be wrong.

Be careful of those bandwagons!

So, which of the above are you most guilty of?

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My Top Five Tools for Traders
By Phil Horner

One of the questions I'm frequently asked is "How do you follow the markets? So, I thought it was time to compile a list of tools I use nearly daily that help me become a better trader.


These are for various experience levels. Oh, and they also happen to be completely free.



Here they are:


1. Babypips.com – Depending on your trading experience, their free forex school is second to none. It covers from beginners to advanced. In fact, these resources are so comprehensive that most brokers I’ve worked for make any new employees do the course from front to back!


2. Forexlive.com – handy website that I personally use and love! It has the most important (and live) news in the currency markets (hence the name). I remember during the Brexit vote that we were glued to their analysis of the markets.


3. Tradingview.com – If you love your charts and technical analysis (fun fact- something like 70% of traders do!) – then TradingView is for you. They have over 4,000,000 users, and the users are all very passionate! It’s not just for currencies either - you can pull up currencies, commodities, indices are more. While I’m personally not TOO much of a tech analysis guy, all my clients rave about TradingView.


4. John Authers' Commentary – To understand the forex markets, you need to understand the bigger macro picture. John is a must-read each day for me. I look forward to his email every day around the EU open. It covers stocks, bonds and what's catching his eye. If you read no other newsletter each day, make it this one.

5. Fusion Markets Economic Calendar– This is the only time we plug ourselves in our post. We used to have Myfxbook in there but we worked hard on finding a really slick calendar for you. Why a calendar? Knowing what big events are happening in the markets is critical. You don’t want to wake up and see the USD has made a 200 pip move and not known there’s been a US interest rate (FOMC) meeting. The Fusion economic calendar will be your friend. You can save the event to your calendar, view the results in real-time and can even see historical price movement and more. 

That’s it for now.

Why so short? The last thing you want is the “analysis paralysis” which comes from digesting 20+ resources. You will get overwhelmed and give up.

Believe me, it was hard for me to get it down to five, but these are my go-to resources, even if you asked me what the best paid subscription-based services are.

There is so much value in these resources, so please use them! Just because they’re free doesn’t mean it’s not great content. As I said, I use this every day myself (except Babypips – I like to think I’ve got the basics down pat) and I hope you do too.

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