Author: rcanessa - Page 66

Rollover in the Forex Market

What is the Rollover?

Every time we trade in the currency markets, all positions must be closed within two business days. Despite this, every trader has the option to renew all his open positions easily without the need for physical delivery of the foreign exchange contracts with which he is negotiating.

For example, if a trader buys $10,000 on Monday is in the obligation to make delivery of those $10,000 no later than Wednesday of the same week, unless he want to renew the position, which is called Rollover. Currently, most Forex brokers include among their services to their customers the option of renewing their open positions automatically (the rollover is credited or debited automatically if the client does not close their positions before a certain hour) or manually, which is also known as tom/next swaps a trade for the next day of the position´s settlement.

Thus, rollovers or swaps involve the application of a credit or debit in the operator’s trading account, which is based on the positions that remain open in the market at precisely 17:00 pm EST and differentials in interest rates between the currencies that make up the pairs with which we are trading. In this case, if we have an open position in which we proceeded to sell the currency that has the highest interest rate, our trading account will be debited (the account will be charged with the difference in the interest rate applied on the total volume of the position). But if in that position the same currency was bought, the account will be credited by the broker (the money deposited in the account is equal to the interest rate differential applied to the size of the position).

Overnight Positions in Forex

by rcanessa

What is an overnight position?

These are open positions in the Forex market which are not closed at the end of the trading day in which they were opened. In the stock market an overnight position is considered at risk because it is common, for as long as the exchange is closed (after the trading session), that some events may occur which can negatively impact the price of the stock traded.

In the Forex market, which is an international financial market that operates continuously 24 hours, it has been set the 17:00 EST (00:00 UTC) as the final hour of the trading day. At this time, any position that is still open is considered an overnight position. This hour is strict. If you open a position at 23:59:59 UTC and close this same position at 00:00:01 UTC, it will be considered an overnight position.

Broker Plus500 get CySEC license

by rcanessa

The company Plus500, an online broker based in Israel and specializing in Contracts For Difference based on multiple assets like stocks, indices, currencies, commodities, ETF, and others, has received an additional license in the European Union from CySEC (Cyprus Securities and Exchange Commission) of Cyprus, which adds to the license that the company has with the FCA of UK. This increases the opportunities for customers of the broker and increases their confidence because now Plus500 has more control over its operations and services as a broker.

Plus500, through its subsidiary Plus500CY, has received authorization from CySEC to operate as a regulated investment firm. Now the company extends its coverage in Europe through the new licensee and is set as the second most popular broker in the sector in this region.

Plus500 CFD Broker

by rcanessa

Plus500

– A CFD provider which offers access to many financial markets

-Regulated by organizations such as the FCA and ASIC

Visit Broker Website

Plus500 Review – CFD online broker

Plus500 is a regulated CFD provider from Israel with various offices in different countries (UK, Australia, Singapore) that offers Contracts For Difference based on many different markets, including Forex, commodities, stocks, indices, ETF, and even cryptocurrencies. In 2013, this company was included in the London Stock Exchange (LSE), which means that the company shares can be bought and sold in the stock market.

It is a very versatile trading service that has its own trading platform.

In the following Plus500 review, we will present the main features and services of this online broker

Moving Average Convergence Divergence Indicator – MACD Definition

by rcanessa

The Moving Average Convergence Divergence (MACD) is a popular technical indicator used to identify changes in momentum, trend direction, and potential buy/sell signals for an asset. It was developed by Gerald Appel in the late 1970s and has since become a widely used tool by traders and investors.

The MACD is calculated by subtracting a longer-term exponential moving average (EMA) from a shorter-term EMA. The result is a signal line that oscillates around a zero line, which represents the point of equilibrium between buying and selling pressure. The most commonly used EMA periods for the MACD calculation are 12 and 26 days.

In addition to the MACD line, a signal line is typically plotted as a 9-day EMA of the MACD line. This signal line is used to identify potential buy/sell signals based on crossovers with the MACD line. When the MACD line crosses above the signal line, it is considered a bullish signal, suggesting that buying pressure is increasing. Conversely, when the MACD line crosses below the signal line, it is considered a bearish signal, suggesting that selling pressure is increasing.

The MACD can also be used to identify divergences between the indicator and the price chart, which can signal potential trend reversals. For example, if the price is making higher highs but the MACD is making lower highs, it may suggest that the bullish trend is losing momentum and a bearish reversal may be imminent.

Overall, the MACD is a versatile indicator that can be used in a variety of ways to help identify potential buy/sell signals, trend direction, and changes in momentum for an asset. As with any technical indicator, it is important to use the MACD in conjunction with other forms of analysis and risk management strategies to make informed trading decisions.

Skydive Trading System: A Lowry System Variation

by rcanessa

Introduction

The Skydive System is a trading system based in the strategy created by Scott Lowry (see the Lowry System), an American psychologist and trader that regularly speculate in the Futures market. Basically, this trading technique is based on the intersection of three exponential moving averages as shown in the image:

In the same way as happens with other similar trading strategies based on moving averages, in markets with low volatility and without a defined trend, the Skydive System often produce false signals. For that reason we can include a filter based in indicators like the MACD or the Williams %R.

This is a simple trading technique based in moving average crosses. It is based in the famous trading system developed by Scott Lowry, so is basically a trend follower strategy. For that reason is no recommended in markets that are moving in a range without a clear trend.

Harmonic Patterns in Trading

by rcanessa

Chart patterns known as harmonic patterns are undoubtedly one of the classic patterns which have been studied by many traders throughout their training within technical analysis. By mastering these types of price patterns, the use of this type of technique can provide early entries with a minimum of risk very near to price levels where there are trend changes. Harmonic patterns can be observed in any market.

For the short term, day traders can use this type of pattern in an effective way to buy and sell when the price touches an area of daily highs or lows. Gartley, the discover of this patterns, stated in his work that to buy or sell properly within a pattern of the type “AB = CD” (the best known among us) the market must be on a strongly established trend.

A change in a market trend or a strong correction may not always follow this pattern but you can even make profits by trading this price formation with proper money management and risk management in each trade, which requires some experience.

Capital Index Broker

by rcanessa

Capital Index-Broker Review Capital Index is a regulated Forex and CFD broker from United Kingdom (is regulated by the FCA) that offers a lot of services and markets to trade from Forex to financial spread betting. It is an ECN/STP broker with multiple services for its clients. It is a company that provides financial services to both novice traders … Read more

Williams %R Indicator – Definition, Calculation and Uses

by rcanessa

Williams %R indicator is an oscillator of technical analysis, for which it works better in lateral trending markets that in those with a strong trend. Basically what it does is measure how close to the maximum or minimum of a certain period of time the prices have closed during the last trading session or during any other time frame chosen by the trader. Remember that like other indicators, it can be used to analyze different periods of time from few minutes to hours, days, weeks, etc.. It was developed by Larry Williams.

To apply this indicator the trader must select the time period, which is usually 14 periods (but that depends of the trader´s needs). In this case 14 is one of the most common value of this parameter but it be changed if the trader believes that he will have better results with other values. If the trader is analyzing the market development over a period of 1 or more days, the Williams% R indicates if the closing price of the last session is close or not of the maximum or the minimum of the last 14 sessions.

The idea is that when asset prices are analyzed in a market that is moving in a sideways trend (a trend with no clear direction), the fact that during the last session the closing price is near the maximum or minimum of the last 14 days may be an indication that is approaching the moment when the market could change its direction and go up or down. In short, if the market is in a sideways trend and the closing price of the last session is near the maximum of the last 14 sessions, probably the price will fall and if the closing price is near the minimum, there is a high probability that the price is going to rise.

Average Directional Index (ADX) Indicator

by rcanessa

The ADX is an oscillator-type technical indicator that fluctuates between 0 and 100 and whose value is based on the true range of movement (TR, true range). The ADX was developed by Welles Wilder in order to obtain information about the strength of the current trend and determine if the market is in a clear trend or in a range. Additionally, the ADX also serves to inform the trader about the prevailing trend of the market through the positive/negative movement indicators (+ DI and -DI).

The ADX is the abbreviation of the name Average Directional Index. When this indicator is applied to a chart we can see three lines:

The line + DI (Positive Directional Indicator).
the line -DI (Negative Directional Indicator).
The ADX line.

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