Category: Forex Education - Page 8

Gaps in Forex – Definition and Main Gaps Types

Do you know what a GAP is in Forex? The foreign exchange market has a range of fluctuations in its transactions, which can be predicted through chart analysis and other market analysis tools. However, this fluctuation can cause sudden “jumps” in the price of a currency, without giving opportunity for transactions between one price and another. This is known as gap in Forex.

Therefore, we can define a price gap as a breakout in the continuity in the price line with respect to time. It occurs when the price experiences an upward or downward movement without any transaction between the previous price and the current price.

Time is also relative for markets

by rcanessa

The use of moving averages that take time in the form of days, hours, minutes and other time frames as a unit, is an arbitrary construction that can also have risks. Is there another way to calculate moving averages without having to depend on the passage of time? This article will explain an original and more effective way. The time … Read more

What is a limit order in Forex trading?

by rcanessa

What a limit order?

A limit order can be defined as a trading order given to the broker or dealer to buy or sell an asset at the specified price or better.

As a limit order is executed only at the specified price or better, a limit buy order will be executed only at the specified price or at a lower price, while a limit sell order will be executed only at the specified price or at a higher price. In both cases, a limit order is only executed if the market price reaches the limit price (price specified in the limit order) or passes it, which means that a limit buy order is accepted only if the limit price is less than the current market price and will be executed if the price falls to the limit price or to a lower price. A limit sell order will be accepted only if the specified limit price is higher than the current market price and will be executed only if the market price goes up to that limit price or up to a higher price.

What is the stop hunting?

by rcanessa

Stop hunting is called the practice that consists in forcing the positions of retail traders, causing a movement in the price action, up or down, until the price reaches the levels where stop-loss orders have been placed. This leads to stop losses being executed in such a way that retail traders are expelled from the market while another investor benefits from it. It is a strategy used mainly by large financial institutions that have enough capital to buy and sell and influence market prices.

The fact that traders place their stop loss levels at key points such as supports or resistances, relevant moving averages, Fibonacci levels, or integer figures, allow the stop hunting to be carried out.

In other words, the large market participants extend the price considerably with the sole purpose of activating the automatic protection closures (Stop Loss Orders) of retail traders.

Exotic Financial Options

by rcanessa

What are exotic options?

The OTC markets (Over The Counter) are a constant source of financial innovations that are trying to adapt the characteristics of the different instruments to the specific needs of hedge of different economic agents such as traders. In the case of financial options, one of the most interesting innovations that have emerged in recent years is the exotic type, which can be subdivided into four types:

Compound options or options on options.
Options with dependent value on the historical evolution of the underlying asset (path-dependents).
Conditional Options.
Options based on several underlying assets.

Risk Free trading – dealCancellation of EasyMarkets

by rcanessa

The Forex and CFD broker EasyMarkets (regulated by ASIC and CySEC) now offers a new tool called dealCancellation, which allows its clients to carry out risk-free trades. With this resource, the client can cancel his losing transactions up to a maximum of 60 minutes from the moment the position is opened. In other words, with dealCancellation it is possible to cancel a losing trade that was opened in a period of less than one hour and get back any loss incurred.

The dealCancellation tool can be applied under the following conditions:

When the trader feels insecure about market conditions and considers the result of his trades to be uncertain.
During major market events, such as the publication of important economic indicators or announcements such as Non-Farm Payrolls, where the market presents excellent opportunities to obtain great benefits but the level of risk is also very high.
During periods in which the market has higher levels of volatility than normal, in which it is more difficult to predict the behavior of prices, and risks are higher.
When the trader performs transactions in which he is trading with higher volumes than normal. In these transactions, a trader can apply dealCancellation to limit the risk and avoid large losses in case the market moves against his position and at the same time have the opportunity to obtain higher profits with high volume trades.

– Period of validity of the promotion: This promotion has no deadline as it is an active service of the broker EasyMarkets for all its customers.

Channel breakout system with retracement for Forex

by rcanessa

This trading system was primarily designed to trade in extended time frames (4 hours later). It is based upon the breakout of a dynamic price channel which is calculated through the highs and highs of the price bars. In this sense, the strategy seeks to enter the market after two events occur:

The bullish or bearish breakout of the price channel.
A retracement movement of the price after the channel breakout. After this setback, the trader must open a position in the same direction as the breakout.

How to use stop loss orders? – Definition and main uses

by rcanessa

The stop loss is a trading order placed in the broker to sell or buy a currency pair (or any other asset in a financial market) conditioned on the price reaching a certain value. It is mainly used to close an open transaction in case the price direction turns against it, hence its name. For example, if we have a buy position in the EUR/USD and put a stop loss at 50 pips below the entry price, our possible losses in case the price falls will be limited to 50 points (see how to calculate the value of a pip).

Differences between a bull market and a bear market

by rcanessa

When we begin to analyze financial markets, the first thing to be clear about is that prices basically move in two trends. On the one hand we have the bull markets and on the other hand the bear markets. Each type of market offers specific characteristics and requires a different way of trading. In this article we will analyze this.

In fact, trading in bull markets is usually the most common, but there are also those who use the bear markets to find the best opportunities. Markets in general are very volatile and quite irregular. So much that it often seems complicated to predict the fluctuations of the assets that are listed on financial markets.

Next we will analyze both types of markets to distinguish the characteristics that each one has and check which market can best adapt to us, according to our investor profile. Pay attention to the following and you can choose with criteria which market is best for you to get a better return on your capital.

Trading Using the Simple but Effective Rule of 2 Candles

by rcanessa

This trading technique that can be found for free on forums and websites like this has the advantage of requiring no more than a few minutes a day so it is perfect for traders with many occupations and with no time to see charts and analyze the market all day. Furthermore, the procedure of The rule of the two candles is not complicated and can be learned very quickly.

Basically, this strategy is based in the identification of an “Inside Bar” as shown in the following image:

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