Due to the expansion of the client base, we’ve added two new servers for the MetaTrader 4 platform. They will allow dividing the load and process trading operations quickly and without failures. It will help us to achieve the company’s primary goal, which is to provide our clients with quality services and comfortable access to trading.
New servers are intended for cent accounts of the ProCent type, which are suitable for testing new strategies or Expert Advisors under real market conditions with the minimum financial investments. Advantages of ProCent accounts.
Advantages of ProCent accounts
Cents as base currency units (US Cent, EU Cent, etc.). A deposit of 10 USD will be enough to receive 1,000 US Cents.
Floating spread – from 1.3 pips.
Maximum permissible leverage value – up to 1:2000.
Trading instruments – 36 currency pairs, Metals.
Deposits/withdrawals without commissions.
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How to Trade by Indicator-less Strategy From Pullback?
Author: Timofey Zuev
Dear Clients and Partners,
The “From Pullback” indicator-less strategy is based on quite a fair supposition that a price move, especially an impulse, will quite fairly continue in the same direction than change it. H1 is a suitable timeframe here, but if some other period is comfortable for you, feel free to use the strategy on it. The strategy applies to Forex, futures, and stock markets.
A signal to buy by the strategy
For an opening signal to emerge, the following conditions must be fulfilled:
A characteristic upward impulse move (for the chances for trade continuation to be maximal);
At least one pullback during the growth, followed by another impulse (this will be confirming the ability of the impulse to overcome pullbacks easily);
At the working timeframe, the candlesticks constructing the impulse in question must be more or less of the same size (because after one enormous candlestick an equally huge pullback might follow, and the end of such ones are hard to predict).
When all these requirements are met, you can place a Buy Limit order. To find an optimum place for it, measure the distance from the High of the last candlesticks to the local low of the last pullback. Divide this distance by two and add a couple of ticks. Mark this distance from the High of the last candlesticks, and this will be the level that the pullback, which will appear sooner or later, can reach.
If the price keeps growing but the pullback does not appear, repeat the calculations at the end of each period: if you are trading on H1, make calculations at the end of each new candlestick if its High is higher than that one you used previously. This is how you hunt pullbacks. Examples of signals to buy by the strategy:
As you can see, to find an entry point easier, I used Fibo levels with all values deleted except for 0.50% and 100%, dragging them between the necessary points; then I just placed the Buy Limit several ticks lower.
Stop Loss and Take Profit by the strategy
In case of buying, place a Stop Loss below that very lowest low formed in the last pullback. In case of selling, place it behind the highest local high of the last pullback. The distance from the extremes is the same as you take from the middle you use for finding the entry point. If you are selling, do not forget to add the spread to the SL size.
Transfer the positions to the breakeven at your own risk and by your own experience. If your trader’s principles require protection of your current profit, use the extremes that appear after the pullback, while the price is approaching the profit.
As for the Take Profit in buying from pullbacks, take the High of the last impulse candlesticks you used for calculating your Buy Limit and mark a point as many ticks below it as you marked from that middle level when finding a place for the Buy Limit. In the case of sales, from the low of the last impulse candlesticks mark as many ticks upwards as you market from the estimated middle when finding a place for the Sell Limit.
As a result, in this method, you have a roughly 1 to 1 proportion of the SL to TP. This is not the most attractive proportion, but alas, this is the peculiarity of the strategy. Of course, if you are sure that after the pullback the market will go in the correct direction, place the TP at a better point, but remember that this might decrease your chances for closing the position by the TP.
Money management for Forex, futures, and stock markets
As for the size of the risk, I agree with A.Elder who recommends never to risk more than 2% of the deposit. If you get three losses in a row, stop trading by the strategy and scrutinize your results. You will be able to continue after a thorough and frank analysis.
In this article, I got you acquainted with another indicator-less strategy that has its advantages and drawbacks. Anyways, the author uses it in the market successfully. This does not guarantee your personal success; however, some will definitely like it for being so formalized, which is a rare case among indicator-less strategies.
GBP/USD (Great Britain pound vs US dollar) is a major currency pair, which means it is one of the main and liquid Forex assets alongside EUR/USD, USD/CHF, AUD/USD, USD/JPY, and others. There is evidence that it takes from 12% to 17% of the total market trade turnover.
The base currency is the British pound and the quote one – the US dollar. This means that when the pair is growing, the pound is getting stronger while the USD is weakening.
Many call the British pound one of the most aggressive currencies in the financial market, and this is what creates high volatility in the pair. The behavior of these quotations is often unpredictable; they create a lot of false breakaways of support/resistance levels on the chart.
In this article, we will speak in more detail about the history of the pair, describe the factors that influence its behavior, and suggest a simple trading strategy.
Short history of GBP/USD
The full name of the British national currency is the sterling pound. The history of the currency dates back to the year 775. As long as the relationship between Britain and its colonies was developing, the necessity to pay for goods and overseas transportation emerged.
One version of where the name “sterling pound” comes from the method of coinage at those times. They used silver, and 1 pound of silver produced 240 coins. They started being called “sterling”, and this term was officially accepted for the currency in 1694.
As for the GBP/USD pair, its second non-official name – Cable – is derived from a real cable stretched along the bottom of the Atlantic Ocean for uninterrupted exchange of the pair’s quotations.
Now let us switch from history to the meat.
What does influence the GBP/USD quotations?
The main driver of GBP/USD behavior is macroeconomic data and indices from Great Britain. However, there are two more factors
The general situation in the currency market
The difference between interest rates in Great Britain and the USA.
The credit and monetary policy of the Central bank of England is the key element that forms the pound quotations in the world currency market. After Brexit, the CB took some measures for the stabilization and restoration of the GBP rate in the global market, which are still active.
The main “leverage” of the BoE for controlling the GBP rate is the interest rate decisions. When the rate increases, the pound gets stronger. When the rate declines, the British currency weakens.
Other economic events from the Foggy Albion influence the GBP/USD rate as well. Among them such things as:
GDP information, published once in 3 months;
The Consumer Price Index. It demonstrates the inflation rate that directly influences the decision on the key interest rate;
The number of unemployment claims;
How to trade GBP/USD?
To work successfully with the pair, you need to figure out and understand its peculiarities, including the period of its peak activity.
The average daily volatility level is 100-140 points. Trade is most active during the American and European trading sessions.
To trade GBP/USD, any type of analysis and signals will do – from simple fundamental analysis to technical indicators.
The most passive period for the pair is the Asian session (because in Europe, it is night) – at that time, volatility remains within 30 points.
Most often, the British pound behaves unpredictably and/or ambiguously: it might drop when everyone expects growth, and vice versa. The price might react to some news immediately but also might lag and do it gradually.
Trading GBP/USD by fundamental analysis
We have already discussed the main economic events that influence the currency pair. The trader only needs to check the economic calendar accurately and remain in course of the main economic events from Great Britain and the USA.
The high volatility of the pair might further increase when certain economic news is published; at such times, be extra attentive and do not dismiss the idea of using Stop Losses. To trade GBP/USD by fundamental analysis you can use both short-term (intraday) and medium-term strategies.
Check the chart of the pair at the moment when Brexit was announced on June 23rd 2016.
The falling started right after the referendum and lasted for 3 months. The market slumped by over 4,000 points.
Not every trader analyzes their work, thus depriving themselves of a good way to improve their trading results. Experienced market players insist on scrutinizing every trade; however, this is hard to do without special programs.
Unfortunately, even MetaTrader 4 does not store the whole history of trades, though it would be quite useful to assess your profitability month by month on different stages of the market. Many make substantial money on the growing market, for example, while the falling market yields them less success.
MyFxBook is an online platform meant for mathematical and statistical analysis of the trader’s account. Results of analysis can later be shared.
In this article, I describe the opportunities provided by MyFxBook, as well as explain how to add the service to your trading platform and analyze your results.
Why is MyFxBook good for a trader?
First of all, by analyzing their trading history with a vast range of MyFxBook functions, the trader gets:
An assessment of their overall profitability in percent. They can also assess their daily or weekly profitability depending on their needs, and set up a corresponding profitability chart.
A drawdown assessment in percent with a chart, representing the periods of the deepest slumps.
Additional indices of profitability, including average profit/loss of a period, the best/worst trade of a period.
Other mathematical values of their trading activity.
After you register on the platform and log your trading account onto it, you may start analyzing trades. In your profile, you will see your daily and weekly profitability, the number of trades a day/week/month/year and their overall volume, the ratio of profitable and losing positions, your profit in points, etc.
Pairs trading is a market-neutral trading strategy that implies buying and selling similar (correlating) trading assets simultaneously.
This method is equally valid for the currency, stock, and commodity markets. The hardest part of this method is choosing the type of assets.
In this article, I will tell you about the main principles of pairs trading, describe basic ways of choosing your instruments, and give examples of using the strategy in the real market.
What is the gist of pairs trading?
Pairs trading is a method based on trading two correlating financial instruments simultaneously in opposite directions.
Correlation is a statistical link between two or more values (assets). It can be direct and inverse. In the first case, one asset basically repeats all the movements of the other one. If the correlation is inverse, the charts of two instruments are mirror-like.
As an example of direct correlation, take the behavior of oil prices and stock prices of oil companies. When oil prices grow, stocks also grow. And vice versa: when oil prices are falling, correlation will stay in place, only in the opposite direction.
However, each oil company will grow or fall in its own way, faster or slower. This temporary divergence of prices can be used for pairs trading.
The strategy of pairs trading uses the principle of balance: it presumes that divergences of correlating instruments tend to return to their average values. Such divergences happen after some important fundamental events: changes in interest rates by Central banks, corporate events, etc.
To trade by the strategy, find a highly correlating pair of financial instruments, one of which has grown/fallen compared to the other. We expect the correlation to restore with time, after which you will close the position.
How to choose instruments for pairs trading?
Choosing assets for this strategy implies using fundamental and technical analysis, as well as statistical calculations. On the whole, you can start to look for instruments for pairs trading among:
The stocks of companies of one market sector;
Contracts for similar instruments: Brent and WTI oil, gold and silver, etc.
A popular way to evaluate interconnection of two instruments is Pearson’s correlation coefficient. The higher it is, the more it is possible that they will be moving in one direction. Also, we use the notion of cointegration, which is a statistical property of two or more variables that demonstrates the stability of their interrelation.
In this article, I will try not to overwhelm you with mathematical calculations, opting for choosing the assets by graphic analysis. However, mind that this is just one way of choosing instruments for graphic trading, and not the most precise one.
How to Diversify Your Trading Portfolio? Basic Approach
Author: Maks Artemov
Dear Clients and Partners,
Trading in financial markets can bring profit and losses in turns. There are plenty of reasons for losing money, starting with unpredictable behavior of assets and through an unwisely collected portfolio. This article is devoted to the latter reason, discussing basic approaches to diversifying your portfolio for decreasing risks and getting the maximum from the market.
We all know the saying: “Never put all the eggs in one basket”, and it perfectly describes the danger of undiversified portfolios. Putting all the eggs in one basket here means investing everything in one instrument and waiting for a profit. Practice shows that this strategy does not always work.
What is diversification?
In investment, diversification means distributing your investment capital among various financial instruments to decrease risks and increase profit. This approach helps to compensate for possible losses that emerge from a decline of one of your instruments by making a profit on your other instruments.
Until the 1950s, diversification principles in the stock market were limited by fundamental analysis (Graham and Dodd’s theory): people chose investment options by studying the business of issuers, almost neglecting risks.
In 1952, in the Journal of Finance there was published an article on collecting an investment portfolio by a young postgraduate Harry Markowitz. His ideas from the article and his PhD thesis became the base for the modern portfolio theory.
Markowitz described a fully mathematical approach to forming an investment portfolio that allows choosing assets based on the profit/risk ratio. In 1990, he won the Nobel prize for his research.
In this article, I will not describe Markowitz’s ideas or the statistical aspect of forming a portfolio because these are the topic for a different, much more detailed talk. Before starting such a talk, you will need to understand the basic principles of diversification to avoid putting all the eggs in one basket already at this stage.
Basic diversification principles for an investment portfolio
In the modern world, all the branches of the economy cannot be growing at once. Hence, investors need to distribute their capital in such a way that in the case of a slump of an asset or group of assets in one sector of the economy the portfolio still generated a profit.
The basic diversification principle presumes distributing your investment capital among the shares of companies from different branches of the economy, as well as among various financial instruments.
How to Trade with Bulls Power and Bears Power Indicators?
Author: Victor Gryazin
Dear Clients and Partners,
This article is devoted to using two indicators: Bulls Power and Bears Power – in financial markets. These indicators are meant for measuring the strength of trends.
How do Bulls Power and Bears Power work?
These indicators were created by a famous trader and the author of the book “Elder Triple Screen” Alexander Elder. They help estimate the current power balance of buyers and sellers and catch the moment when bears/bulls are getting weaker. The combination of these indicators is also known as the Elder Ray.
Bulls Power demonstrates the strength of bulls in the market. It compares the highs with the Exponential Moving Average. If the Bulls Power histogram is above zero and growing, this means buyers are holding the price above the EMA, and bulls are now stronger than bears. And vice versa, if the histogram is declining, dropping below zero, this indicates the predominance of bears.
Bears Power, in its turn, demonstrates the strength of bears in the market. It compares the lows with the EMA. If the Bears Power histogram is below zero and declining, this means sellers are holding the price below the EMA, and bears are now stronger than bulls. However, if the histogram starts growing and rises above zero, this means bulls are in control of the market.
In essence, Bulls Power and Bears Power are irregular oscillators. They appear in separate windows under the price chart. They look like bar histograms with the central line at zero. To determine the direction of the active trend, Elder recommends adding to the chart an EMA (13), drawn by close prices.
Installing and setting up the indicators
Bulls Power and Bears Power are included in many popular trading terminals. To install the indicator to the chart of your financial instrument in MetaTrader 4 or MetaTrader 5, go to the Main Menu: Insert/Indicators/Oscillators/Bulls Power and Bears Power.
The formulae of the indicators look as follows:
• Bulls Power = HIGH - EMA (13)
• Bears Power = LOW - EMA (13)