Risk management is at the core of any good trading plan, without having a sound set of principles to follow a trader is doomed to fail. We outline rules and factors to consider when customizing a risk management game-plan right for you.

We understand the difficulties of trading, which is why we’ve put together a variety of guides designed to help traders of all experience levels.

Risk management is one of the most important aspects to successful trading, but far too often it’s overlooked. Job #1 for a trader is to always keep yourself in the game. A sound strategy and the discipline to follow it will go long way towards ensuring you stick around.

If you are in the learning stage, your objective is to keep losses very small until you figure out what you are doing from an analytical and strategy standpoint. Adhering to sound risk parameters early-on will go a long way towards building a foundation for later on.

For the more...

FOMO – Fear of Missing Out - is a relatively recent addition to the English language, but one that is intrinsic to our day-to-day lives. A true phenomenon of the modern digital age, FOMO affects 69% of millennials, but it can also have a significant bearing upon trading practices.

For instance, the feeling of missing out could lead to the entering of trades without enough thought, or to closing trades at inopportune moments because it’s what others seem to be doing. It can even cause traders to risk too much capital due to a lack of research, or the need to follow the herd. For some, the sense of FOMO created by seeing others succeed is only heightened by fast-paced markets and volatility; it feels like there is a lot to miss out on.

To help traders better understand the concept of FOMO in trading and why it happens, this article will identify potential triggers and how they can affect a day trader’s success. It will cover key examples and what a typical day...

Technical analysis of charts aims to identify patterns and market trends by utilising differing forms of technical chart types and other chart functions. Interpreting charts can be intimidating for novice traders, so understanding basic technical analysis is essential. This article reveals popular types of technical analysis charts used in forex trading, outlining the foundations and uses of these chart types.

The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. As a result, the ISM manufacturing, construction and services indicators can provide unique opportunities for forex traders, which makes understanding this data (and how to prepare for its monthly release) essential.

Talking points:

Copper prices took a hit early this week as the US Dollar surged. A broad risk-off move in global financial markets sent traders into the Greenback, which provides liquidity in uncertain times. The underlying cause for the broader move also has negative implications for the red metal specifically. Traders are bracing their portfolios against another wave of Covid, this one driven by the highly transmissible Delta variant.

Initially, traders were largely unfazed by rising Covid cases, both in the Asia-Pacific region and the United States. However, as lockdowns and social distancing measures ramped up as governments responded to the new threat, fears about an economic slowdown appeared to permeate into market sentiment. Lockdowns are particularly toxic for economic activity. China, Australia, and most recently, New Zealand have all come under lockdowns in the past couple of months.

China, a country that takes a strict approach to Covid outbreaks, reported some...

Gold looks primed to drop in the coming week when looking at its technical posture. XAU/USD recorded a second weekly gain, extending the yellow metal’s winning streak. However, momentum appears to be fading, and prices remain lower on the month. Moreover, a surge in the US Dollar DXY index is certainly providing no favors to the outlook.

XAU/USD’s intraday drop earlier this month pinged a downward channel's lower bound. Prices subsequently rallied. Upside energy faded shortly below the psychologically imposing 1800 level, however. The falling 50-day Simple Moving Average (SMA) -- oriented below channel resistance -- provided confluent pressure.

Speaking of moving averages, a bearish Death Cross formation sent an ominous signal to technical traders earlier this month. That said, an upside move will likely face prompt resistance from the aforementioned levels. Given the broader move lower, surmounting those barriers is unlikely after failing to break higher...

According to IG Client Sentiment (IGCS), retail investors appear to be increasing upside exposure in indices such as the Dow Jones, S&P 500 and DAX 30. IGCS is usually a contrarian indicator, especially in trending markets. If traders continue buying into recent price action seen in North American and European stock markets, then there may be room for further downside potential in prices.

The IGCS gauge implies that about 37% of retail traders are net-long the Dow Jones. Upside exposure has increased by 2.10% and 87.86% over a daily and weekly basis respectively. The fact that investors are still net-short suggests that prices may continue rising. However, recent shifts in positioning warn that there may be room for near-term losses in the Dow Jones.

Dow Jones futures may be vulnerable to a deeper turn lower in the near term. Prices have confirmed the formation of a bearish Hanging Man candlestick pattern. A drop through the 35000 - 34760 inflection zone...

The Canadian Dollar be may increasingly at risk of depreciating further against the US Dollar. USD/CAD has closed above the key 1.2748 – 1.2808 resistance zone, marking the highest point since February. Still, confirmation is lacking and negative RSI divergence is present. The latter shows that upside momentum is fading, which can at times precede a turn lower. On the other hand, a bullish crossover between the 50- and 100-day Simple Moving Averages offers an upside bias, placing the focus on the January high and beyond.

Global stocks are falling this Thursday morning as the Federal Reserve confirmed in yesterday’s meeting minutes that it is considering removing some of the monetary stimulus in the economy. There is no surprise in this statement as markets have been talking about tapering for months, but it seems like the official confirmation from the central bank brought some jitters to investors.

You can then only imagine what may happen next week when the Fed meets at the annual Jackson Hole symposium to discuss all thins monetary policy, the date when most economists are predicting that the Fed will actually announce a stimulus reduction to take place later on in the year, which has caused an open debate about expectations of when the central bank would actually start to taper, either in September or December.

At the end of the day, tapering is not really stopping, it’s just taking your foot off the accelerator a little bit, and given the economic data has been showing...

The US Dollar (via the DXY Index) briefly pushed up to fresh monthly highs before the July FOMC minutes undercut price action. In breaking the July 21 and August 11 highs – both bearish outside engulfing bars, or bearish key reversals – the DXY Index has begun to clear out significant resistance that could pave the path back to its yearly high set in March. But, all is not well: US Treasury yields have started to pullback, even as the July FOMC minutes hinted at the possibility of an eventual taper later this year.

With US stock indexes giving up their gains following the release of the July FOMC minutes, the DXY Index’s gain is less about improving fundamentals and more about the greenback fulfilling its role as a liquid safe haven during times of market duress. Consistent with this perspective, USD/JPY rates gave up their gains late in the session, failing to sustain a move above the daily 21-EMA – throwing into question the likelihood that it is able to fulfill the...

EUR/USD fails to defend the 2021 range as it takes out the March low (1.1704), and the exchange rate may continue to trade to fresh yearly lows ahead of the Kansas City Fed Economic Symposium scheduled for August 26 – 28 as it extends the series of lower highs and lows from the start of the week.

Risk-Off Markets Benefit Safe Havens

A much more typical risk-off session with safe-haven currencies outperforming across the board, USTs bid and equities softer. As I alluded to earlier in the week sentiment had been increasingly fragile in recent sessions with virus cases picking up in Asia, while Chinese activity data showed signs of a slowdown. Another wall of worry stems from reports that the efficacy of vaccines fades quickly over time. Elsewhere, FOMC minutes released yesterday largely confirmed what we already know with the Fed gearing up for a taper announcement and given the plethora of Fed commentary since the meeting as well as the stellar NFP report, the minutes were largely outdated.

Daily FX Performance

Source: Refinitiv, DailyFX

Is this Equity Pullback Here to Last?

Interestingly, the sell-off across the equity space has yet again come ahead of the monthly OPEX, following a similar pattern to the past few months, which in turn...

Risk management is at the core of any good trading plan, without having a sound set of principles to follow a trader is doomed to fail. We outline rules and factors to consider when customizing a risk management game-plan right for you.

We understand the difficulties of trading, which is why we’ve put together a variety of guides designed to help traders of all experience levels.

Risk management is one of the most important aspects to successful trading, but far too often it’s overlooked. Job #1 for a trader is to always keep yourself in the game. A sound strategy and the discipline to follow it will go long way towards ensuring you stick around.

If you are in the learning stage, your objective is to keep losses very small until you figure out what you are doing from an analytical and strategy standpoint. Adhering to sound risk parameters early-on will go a long way towards building a foundation for later on.

For the more...

Trading bias is a predisposition or perspective of the financial markets whereby traders believe there is a higher probability of a certain outcome as opposed to any other alternate possibilities.

These trading biases are determined by technical and/or fundamental factors that support a specific outlook that explains market behaviour. This often relates to market trends being either bullish/bearish which signals appropriate trading strategy and style.

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Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price (the quote), it is essential to develop a sound understanding of how to read currency pairs.

The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA).The MACD displays a MACD line (blue), signal line (red) and a histogram (green) - showing the difference between the MACD line and the signal line.

The MACD line is the difference between two exponentially levelled moving averages – usually 12 and 26-periods, whilst the signal line is generally a 9-period exponentially smoothed average of the MACD line.

These MACD lines waver in and around the zero line. This gives the MACD the characteristics of an oscillator giving overbought and oversold signals above and below the zero-line respectively.

Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Being aware of these errors, can help traders become more efficient in their forex trading. Although all traders make trading mistakes regardless of experience, understanding the logic behind these mistakes may limit the snowball effect of trading impediments. This article will outline the top ten trading mistakes and ways to overcome them. These mistakes are part of a constant learning process whereby traders need habitually familiarise themselves with them to avoid repeat wrongdoings.

The video included highlights six trading mistakes, however there will be more covered in the article below. It is important to note that trading comes with the inevitability of loss, but these may be minimised with the exclusion of human error/mistakes.

Prior to committing to forex trading, consider...

There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Each major geographic market center can exhibit vastly unique traits and tendencies that can allow traders to effectively execute strategies at any time.

Although the forex market is the most liquid of all asset classes, there are periods whereby volatility is constant, and others subdued. Understanding these different forex session times can improve the reliability of a forex trading strategy.

In this article, we will explore each of these forex market sessions including their key characteristics – forex time zones and how they affect trading.

Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. This article will cover the shooting star reversal pattern in depth?and how to use it to trade forex.

Double top patterns are noteworthy technical trading structures to learn and integrate into a trader’s arsenal. Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature.

Double Top Pattern: Main Talking Points: