Loading...
No results

Unveiling the Power of Spreads: Trade Smarter with Fusion Markets' Spreads Tool

Fusion Markets

post content image

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.  

undefined

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.  


undefined

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

We’ll never share your email with third-parties. Opt-out anytime.

Relevant articles

Trading and Brokerage
post image main
Index CFD Dividends | Week 13/5/2024
Fusion Markets


Please see the table below for any upcoming dividend adjustments on indices for the week starting May 13th.


Weekly Dividends 13/5/2024

* 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
Dividends
22.04.2024
Trading and Brokerage
post image main
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: 



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
Ready to Start Trading?
Get started live or get a free demo