Category: Forex Education - Page 4

Stagflation – Definition and Effects on the Economy

Stagflation in a country is the combination of inflation and economic stagnation. This phenomenon unites these two concepts, which when they occur at the same time are devastating for the economy. In other words, stagflation arises when a country’s economy is stagnant, that is, it does not grow and, at the same time, the cost of living rises, motivated by … Read more

Exchange Rate Risk

by rcanessa

Exchange rate risk is the potential loss as a result of currency fluctuations. This potential loss occurs according to its volatility and position at a given time. It is also known as currency risk. The risk in the exchange rate refers to the possible changes in the price of one currency against another. So, depending on the position we have, … Read more

Euro vs dollar (EUR/USD): key concepts to invest in the foreign exchange market with CFDs

by rcanessa

In trading, there are many investment possibilities, one of them is speculation through CFDs in the Forex market, where the Euro vs. Dollar cross (EUR/USD) is one of the most valued now by traders and investors around the world.

The euro and the dollar are the most influential currencies in the market since they correspond to two great economic powers such as Europe and the United States. It should be noted that in Europe there are 19 countries that have the euro as their currency.

Before investing or trading, it is essential to be very clear about some concepts in order to follow the investment strategies in the best possible way and avoid risks to a greater extent, therefore, at ForexDominion we bring you all the information and basic concepts related to the Euro Dollar currency pair.

How to Measure a Trading System? – Ratios to assess your performance and risk

by rcanessa

When you design a trading system, or you are looking to buy an automatic robot on the market, you must make decisions according to your preferences. The first thing you should ask yourself is: what am I looking for?

It is clear that you are looking to earn a lot of money, yes… this is what we all seek. But after a few losses and disappointments you learn that in Forex and other markets there are no magic methods and that the perfect trading system does not exist.

So, the right question is: how can you evaluate and compare different trading systems according to their risk level and potential benefit to know if they are viable for your use?

In this article we are going to review different statistical metrics to assess the performance of an investment system.

Forex Currency Correlations Explained – Definition and Uses

by rcanessa

Have you ever noticed that when a certain currency pair rises, another currency pair falls? Or that sometimes when one pair falls, another pair seems to copy its movement and falls too. If the answer is yes, you have witnessed an example of a Forex currency correlation.

What is currency correlation?

In the financial world, correlation is a statistical measure of how two securities move relative to each other.

Bullish Harami Cross Candlestick Pattern

by rcanessa

Definition and identification

The candlestick formation Bullish Harami Cross is a trend reversal pattern that occurs in bearish markets, and indicates that there is a probability that a change from bearish to bullish trend will occurs. This pattern has a moderate reliability and can be identified as follows:

First a long candle is produced, which can be white or black.
A Doji is then formed in the next period, which is within the range of the previous candlestick.
The previous trend must be necessarily bearish.

Trend Continuation Patterns in Technical Analysis

by rcanessa

In this article we are going to focus on the topic of trend continuation price patterns. We will cover many topics related to technical analysis such as basic concepts, description of trend continuation formations, and tips on how to trade once the trend continuation pattern is found. In this way, we hope to answer the main questions on the subject, especially those related to the identification of these price formations and their use as technical tools to trade in Forex and other markets.

The three pillars of Technical Analysis

Technical analysis is based on three basic principles, which are known as the three pillars of technical analysis, and they are the following:

Price reflects everything.
Prices move in trends
The history repeats itself.

It is essential to understand each of them to really understand what technical analysis is and how it works. Let’s review each principle:

Binary Options on Currencies

by rcanessa

In recent years, in the community of financial markets many traders of all types (large and small) have chosen to trade with currency pairs in the Forex market for various reasons. Part of the appeal of trade in the Forex market, either through Forex spot market or traditional options on currency pairs, is that the prices of currency pairs are in constant motion. We currently live in an interconnected world where a change in the US economy, for example, not only have an impact on the US dollar but also in other currencies such as the euro, Australian dollar and Japanese yen.

If a trader makes the decision to trade binary options on currency pairs, it is important to develop a trading strategy which necessarily requires an adequate understanding of the interrelationships between currencies. For example, if we are trading with options based on the USD/JPY, it is important to have a clear idea about the yen sensitivity to changes in the dollar. Learning the basis of the behavior of the currency pairs in the Forex market is essential to maximize opportunities when trading binary options based on these instruments.

Market Facilitation Index (MFI) Indicator – Interpretation & Signals

by rcanessa

The Market Facilitation Index (MFI) is a technical indicator developed by Bill Williams which analyzes the change in the price of a financial asset in connection with its trading volume, ie analyzing the change in price for each volume unit.

In much simpler words, the Market Facilitation Index (MFI) is an indicator based on the trading volume in the market. The difference between the MFI and the traditional volume indicator is that it does not take into account variations in prices, it only takes into account the number of shares or contracts that are traded in a market. The market facilitation index goes further. That is, it takes into account price variations and, at the same time, the volume traded.

What is a K-shaped economic recovery?

by rcanessa

The outbreak of the COVID-19 pandemic brought an unprecedented slowdown to the world economy. Now, economists wonder what kind of economic recovery awaits us.

With COVID-19 spreading around the world and much of the world’s population confined, the economy stopped, global GDP fell sharply, and jobs were massively destroyed. With the world trying to return to a new normal and states trying to grease the economic machine, analysts are trying to explain what the economic recovery will look like.

Looking for a way to describe the resurgence of the economy, they have turned to the alphabet. This is where we speak of a recovery in the shape of U, V, W and L. But, the letter chosen by most economists to interpret the current economic outlook is K.

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