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[Vlad RF]

How and Why the US Government is Promoting Green Energy

Author : Eugene Savitsky

Dear Clients and Partners,​

Today we will talk about the government's economic stimulus packages for clean energy in the US. We will look at the American Recovery and Reinvestment Act signed by Barack Obama in 2009, and the Inflation Reduction Act signed by Joe Biden in 2022. Let's analyse the impact of these laws on the development of green energy in the US.

America’s Recovery and Reinvestment Act

The US economy was harmed by the financial crisis in 2008. By 2009, unemployment had reached 10.2%, which marked the highest level in 25 years. The US government needed to take urgent measures to jumpstart the economy and create new jobs. In response to the 2008 Great Recession, the American Recovery and Reinvestment Act (ARRA) of 2009 was drafted and passed by the US Congress.

This act provided for investments of 90 billion USD in clean energy. At that time, this was the largest investment in the energy sector in the history of the United States. This economic stimulus package laid the foundation for dramatic changes in the energy system, such as massive electrification of land transport and an increase in the amount of energy from renewable sources.

Electrification of the automotive industry

In 2008, Elon Musk's Space Exploration Technologies Corporation (SpaceX) and Tesla Inc. (NASDAQ: TSLA), which were on the verge of bankruptcy, were rescued by NASA contracts. In 2010, the US Department of Energy granted Tesla Inc. a USD 465 million loan to back it up.

It can be assumed that the active development and growth of this car company have triggered accelerated electrification of the global car industry. Many manufacturers have supplemented their model ranges with electric and hybrid cars. According to EV-Volumes, the number of environmentally friendly cars on the road has increased from a few hundred thousand to nearly 27 million units over the past ten years.

In 2010, Tesla Inc. was the only publicly traded company in the US that focused exclusively on electric vehicles. The return on investment in this corporation by 2020, before the COVID-19 pandemic-induced crisis, exceeded 5500%.

Promoting alternative energy sources

According to the Energy Information Administration (EIA), from 2011 to 2021 inclusive, wind power generation increased by more than 200% to 132,753 MW. Solar power generation increased 88-fold to 93,151 MW. In addition, solar photovoltaic modules, which are capable of producing 1 W of energy, have fallen in price from USD 2.15 to USD 0.27.

At the time of writing, the largest US solar energy companies by market capitalisation were Enphase Energy Inc (NASDAQ: ENPH), First Solar Inc (NASDAQ: FSLR), and Sunrun Inc (NASDAQ: RUN). They were valued at USD 33.4 billion, USD 18.7 billion, and USD 5.9 billion, respectively.

With energy-saving technology becoming widespread, the classification of household appliances according to their energy efficiency level has emerged. Fluorescent lamps, which were previously used mainly in industrial plants, were introduced for home use. Moreover, less efficient and more energy-intensive incandescent lamps were gradually replaced by more economical LED lamps.

Why a law to reduce inflation was passed

The situation in the US today is very different from what it was after the 2008 crisis: unemployment is at a low level and inflation is in positive territory – there was deflation in 2009. However, the government was now facing a new challenge: the likelihood of continued high inflation.

This has been facilitated by reduced investment in conventional energy sources, which has led to a reduction in hydrocarbon production and a substantial rise in the cost of hydrocarbons. With hydrocarbons being used to generate electricity and transport products and components, their cost constitutes a significant part of the cost of many products.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project, as usual, continues with the following competitions:

The 142nd competition of "Demo Forex" is approaching its end.
The 398th competition of "Week with CFD" has kicked off today.
The 532nd competition of "Trade Day" will start on 01.02.2023 at 12:00.
The 446th competition of "KingSize MT5" will start on 02.02.2023 at 20:00.

We remind you that all winners of our contests receive prize funds to their real accounts, and they can use them to trade on the Forex market instead of investing their own savings as the initial deposit.

If you want to be one of the winners, don't miss your chance!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How to Trade the "Day Movement" Strategy

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will look at the short-term strategy "Day Movement". It is based on identifying and trading a sideways price range (flat) formed before the start of the European trading session.

Description of the “Day Movement” strategy

The "Day Movement" strategy is based solely on technical analysis – it does not use any additional indicators. The main prerequisite for trading this strategy is the presence of a flat. The flat is a sideways price movement without a strict upward or downward direction. Local maximums and minimums of price fluctuations are located at approximately the same level, and quotes move within a limited range.

According to the rules of this strategy, it is necessary to wait for a sideways range to form on the chart before the start of the European session. The time of formation of the range is from 18:00 server time (GMT+2) on the previous day to 08:00 am on the current day. If the range is formed, two pending buy and sell orders are placed: Buy Stop and Sell Stop, 10 points above and below the limits of this channel, respectively.

In pending orders, it is possible to set Stop Loss and Take Profit values immediately or do this immediately after opening a position. The Stop Loss level for a pending buy order (Buy Stop) is set just below the bottom line of the price channel. The Stop Loss level for the order to sell (Sell Stop) is established a bit higher than the upper line of the side channel. The Take Profit is set twice as high as the distance to Stop Loss, but no more than 100 points.

If the price has not reached any of the pending orders by 15:00 (GMT+2), they should be deleted, or the expiry time should be set when the order is initially placed. The strategy applies to currency pairs such as EUR/USD, GBP/USD, and AUD/USD. The recommended time frame is H1. If the market is currently experiencing a strong trending movement, then this strategy should only be used in the direction of the trend.

How to buy using the “Day Movement” strategy

The conditions for opening a buy position:

1. A local sideways range (flat) should form on the H1 chart of the currency pair EUR/USD, GBP/USD, and AUD/USD. The time of its formation is 18:00-08:00 (GMT+2).
2. A pending Buy Stop order is placed 10 points above the top of the range.
3. The Stop Loss limit is set beyond the lower limit of the sideways corridor, and the Take Profit is set at twice the Stop Loss value.
4. If the price has not reached the Buy Stop order by 15:00 (GMT+2), it should be deleted or originally set for expiration at this time.

An example of buying by strategy

• On the H1 time frame of the currency pair GBP/USD, a sideways price corridor was formed between 18:00-08:00 (GMT+2) within the time frame set by the strategy, with the boundaries of 1.2253-1.2290
• A pending Buy Stop order is set 10 points above the top of the price range at 1.2300
• During the European session, quotations rise, breaching the upper limit of the range. A Buy Stop order is activated, and a buy position is opened. Stop Loss is placed beyond the lower limit of the range, and Take Profit is set at twice the Stop Loss.

How to sell using the “Day Movement” strategy

The conditions for opening a sell position:

1. On the H1 chart of the currency pair EUR/USD, GBP/USD, AUD/USD should form a local sideways range (flat). The time of its formation is 18:00-8:00 (GMT+2).
2. A pending Sell Stop sell order is placed 10 points below the lower limit of the range.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

Situational Vs. Systematic Trading: Which One is More Efficient?

Author : Andrey Goilov

Dear Clients and Partners,​

To be successful on financial markets, you need a neat trading system that will give you a clear understanding of how to enter and exit the market either with a profit or a loss. The rules of money management are also worth sticking to as they will psychologically prepare you for a series of losing trades as well as profitable ones.

Trading with a high-quality system is different from trading without one is also better in the sense that you do not need to think about whether the situation on the market is good enough to enter. You simply follow the rules and open or close trades, moving along the price chart.

Unfortunately, no one can tell if the current pattern will be executed or you will have to close it at the Stop Loss. To find out, you just have to trade the chosen method. Of course, you can use certain lifehacks and take measures to increase the probability of the execution of the signal, such as trading on a demo account until you receive two losing positions and only then moving to a real one. There are plenty of ways and methods of trading in the world, and every day millions of traders try to conquer the market.

In this article, we shall have a look at the pros and cons of both systematic and situational trading, discuss their differences, and speak about the practicability of each of them.

Systematic trading

Here, we are talking about a simple indicator-based system that will give the same signals to a dozen of different traders. As a rule, systematic trading does not allow for more than one opinion about the current market situation; the trader just needs to open a position and wait or to wait for a signal to enter the market.

In one of our posts, we spoke about the Ichimoku indicator. At first glance, it seems too complicated, but it boils down to trading the trend and waiting for the entrance signal to form. After that, we open a position and wait for the signals to form. For example, if the price breaks through the Ichimoku Cloud bottom-up, then you can buy.

If the price breaks through the Cloud top-down, the trend is likely to be descending, so you can sell. You do not need much time to make a decision, following the rules is enough.

Sure, in the times of a flat, you will be getting the breakaways all the time and either be opening and closing too many positions bringing no profit or suffering a series of insignificant losses. However, as soon as a trend begins, the market will be bringing the prices farther and farther from the entrance point. In such a case, you simply need to move the SL and hold the profit until the market reverses and closes your position.

Pros of trading along with the rules

It can often be heard that a good system is no more than 20% of success on the market while the remaining 80% is the ability to follow the rules of money management and stick to your own rules in the hard times, which will happen periodically.

As Victor Niederhoffer used to say: "In investments, as well as in life, the question is not whether you will be knocked down but when it will happen and whether you will manage to get up and keep fighting. The risk of failure is an essential part of human experience which is especially visible on financial markets dominated by speculation, which is the readiness to accept commercial risks".

A huge advantage of such an approach is the easiness of market analysis and decision-making. The lines have crossed — we sell, the lines have crossed back — we close the position and open a new one. If we hand the method to other traders, they will see the same crossings and will sell the same way due to the signal lines crossing. What is more, the trader feels less emotional pressure as he leaves decision-making to the system.

A drawback here is the behavior of the system in a flat. In such a situation, the prices remain in place, while the trader receives signals both to buy and to sell, constantly locking in losing positions.

Situational trading

This approach to trading and market analysis is different from the systematic one. In most cases, situational trading is graphic analysis where traders look for various patterns, such being, for example, Head and Shoulders, the Wolfe Waves, or any other pattern of technical analysis.

The difficult part here is that on D1 the Head and Shoulders pattern may be inversed, while on H1 it may be normal, and this is perplexing. What is more, if other graphic traders look at the very same chart, in the same lines they might see a Triangle or any other pattern, or simply say that it is not worth entering against the trend here.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the CopyFX project by RoboForex' invites you to take part in the following competitions:

The 143rd competition of "Demo Forex" and 399th competition of "Week with CFD" have just started.
The 533rd competition of "Trade Day" begins on 08.02.2023 at 12:00.
The 447th competition of "KingSize MT5" will start on 09.02.2023 at 20:00.

If you are visiting our website for the first time and want to become a participant of our demo competitions, you just need to create an account and upon completing a simple registration procedure you can participate in any of the contests you like with just a couple of mouse clicks.

We invite everyone to our contests and wish you all good luck!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How To Trade the Abandoned Baby Pattern

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will get acquainted with the candlestick analysis strong reversal pattern "Abandoned Baby". Let's look at the features of its formation, and the trading techniques for this pattern.

How the “Abandoned Baby” pattern is formed

The Abandoned Baby candlestick pattern is a rare, strong reversal pattern that forms on the local highs and lows of the price chart. It consists of three candlesticks. The first one has a normal body, and the second one is a doji candle (it has practically no body, the open and close prices being almost the same). The third one closes in the opposite direction to the first candlestick. The second candlestick should have gaps (price gaps) on both sides.

As noted by the guru of candlestick analysis Steve Nison, the appearance of a doji after a strong white candlestick indicates the current overbought state of the financial instrument. And vice versa: the appearance of a doji after a black candlestick indicates an oversold condition of the asset. In the "Abandoned Baby" pattern, a doji opens with a gap from the first candlestick, followed by a gap in the opposite direction, with the third candlestick closing thereafter to confirm the reversal.

"Abandoned Baby" is very similar to "Morning Star" and "Evening Star" in its formation principle, but differs in the appearance of a doji candlestick with a gap on both sides. "Morning Star" and "Evening Star" do not require the average candlestick to be a doji or have gaps on both sides, so they are much more common on price charts.

“Bullish” pattern “Abandoned baby”

This is formed during a downtrend, at the lows of the price chart. The first black candlestick appears first. Against the backdrop of negative market sentiment, the next trading session opens with a gap down, but the "bears" do not succeed, and a doji appears on the chart. Seeing the weakness of the sellers, the bulls seize the initiative: the third candlestick opens with a gap up and closes with a confident white body.

A bullish "Abandoned Baby" reversal pattern forms on the chart as a result. Buyers have managed to seize the initiative, and are ready to keep pushing the price up. If the "bears" fail to close the gaps and drop the quotations below the doji low, the "bulls" are likely to go on the offensive and initiate an upward correction or even a trend reversal.

How to buy on the bullish “Abandoned Baby” pattern

• During a downtrend, a bullish "Abandoned Baby" pattern appears on the local lows of the price chart
• It is advisable to open a buy position when the price rises above the maximum of the third white candlestick in the pattern. Stop Loss is set at the doji low
• To set Take Profit, you can be guided by Fibonacci retracement levels from the previous downtrend, significant support, and resistance levels

How to sell on the bearish “Abandoned Baby” pattern

• During the upward trend, a bearish "Abandoned Baby" pattern is formed at the local highs on the price chart.
• A sell position can be opened after the price decreases below the third black candlestick in the pattern. Stop Loss is set at the doji's maximum.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How to Choose a Timeframe for Trading?

Author : Victor Gryazin

Dear Clients and Partners,​

In this review, we will speak about choosing a timeframe for trading. This is an important part of your trading strategy.

What is a timeframe?

A timeframe is a time interval for representing the quotations on the chart. As a rule, price movement is represented on the chart as candlesticks (or bars) with the same period, corresponding to the chosen timeframe. The larger the timeframe, the bigger "volume" of the price movement is shown by each candlestick on the chart.

You may set up any timeframe for the price chart but normally traders use basic conventional timeframes:

• MN is a monthly timeframe, each candlestick shows the price movement during a month.
• W1 is a weekly timeframe, each candlestick shows the price movement during a week.
• D1 is a daily timeframe, each candlestick shows the price movement during a day.
• H4 is a four-hour timeframe, each candlestick shows the price movement during four hours.
• H1 is an hourly timeframe, each candlestick shows the price movement during an hour.
• M30 is a 30-minute timeframe, each candlestick shows the price movement during 30 minutes.

The timeframe is chosen in the trading terminal. In such popular terminals as MetaTrader 4 and MetaTrader 5, there is a table of active buttons for the main timeframes on the Instrument board. Left-clicking the buttons, you can quickly switch from one timeframe to another.

How to choose a timeframe?

To analyze the price chart, we normally use not one but several timeframes. Analyzing the price movements on several timeframes, the trader receives a vaster picture of the dynamics of the financial instrument. This helps to forecast price movements for different intervals depending on your trading strategy.

While for the general analysis of your financial instrument you may use all timeframes at once, for making trades you need a "narrower horizon". In many trend strategies based on the main rules of tech analysis, we usually choose two timeframes:

Timeframes for long-term trading

Long-term trading normally means a relatively small number of trades that remain in the market for a long time - from several weeks to several months. This trading style is similar to investing: you choose an instrument that promises a substantial movement and make decision mostly based on fundamental analysis.

Criteria for long-term trading:

• Little time for trading: you spend less than 1/5 of your worktime on it.
• The deposit is large, you may enter the market with a large position for a long term, place big Stop Losses, and withstand deep drawdowns (from 50,000 USD).

As the main timeframe for long-term trading, on which you will define the main trend and its aim, the MN (monthly) and W1 (weekly) timeframes will be the best. As an additional timeframe for finding entry points, use D1. In the picture, you can see these timeframes in use:

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project will continue, as usual, with the following demo competitions:

The 143rd competition of "Demo Forex" has been running since last Monday.
The 400th competition of "Week with CFD" has just started.
The 534th competition of "Trade Day" will start on 15.02.2023 at 12:00.
The 448th competition of "KingSize MT5" will start on 16.02.2023 at 20:00.

We remind you that all winners of our contests receive prize funds to their real accounts, and they can use them to earn money on the Forex market instead of investing their own savings as the initial deposit.

Join us!

Sincerely,
RoboForex Contest

 

[Vlad RF]

Setting Up the "Support and Resistance Based on 240 Bars" Trading Strategy

Author : Andrey Goilov

Dear Clients and Partners,​

Today we will look at the medium-term Support and Resistance Based on the 240 Bars strategy. Support and resistance levels will be automatically plotted using the SF Trend Lines indicator as "bullish" and "bearish" channels. The strategy involves trading the pairs EUR/USD, GBP/USD, USD/JPY, USD/CAD, USD/CHF, and NZD/USD on the four-hour chart.

In this article we will explain how to add the indicator to the trading terminal, discuss the rules for opening and closing positions, as well as the subtleties of setting Stop Loss and Take Profit.

Setting up the SF Trend Lines indicator

• Download SF Trend Lines
• Add it to the installed trading terminal by opening the MQL4 folder and pasting it into the Indicators folder
• Add an indicator to the chart in MT4, working from the menu: Insert → Indicators → Custom → sf-trend-lines
• You can change the colour of the trend lines in the settings, but it is important to leave the number of bars at 240 unchanged

SF Trend Lines builds a price channel with the upper boundary acting as critical resistance, so a pullback is expected from it. The lower boundary of this channel is a critical support area, so an upward bounce is expected from it.

The indicator does not build the entire chart with channels; it builds only the actual channel, which means you cannot assess the quality of signals on the history of the chart – only in real time. There can only be one channel on the H4 chart.

How to Buy with Support and Resistance Based on 240 Bars

1. The price should reach the bottom of the uptrend channel on the SF Trend Lines indicator chart.

2. The Williams' Percent Range (Williams' %R) indicator can be used as a confirmation signal. Its values should fall below the -80 level.

3. Stop Loss can be set behind the lower boundary line of the SF Trend Lines channel. If the price has already fallen below this line and rebounded, then the Stop Loss should be set 5-10 points below the candlestick's low.

4. Take Profit is based on a 1:4 profit/loss ratio. If Stop Loss is 30 points, Take Profit is 120.

Support and Resistance Based on the 240 Bars Buying Example

• On the chart of the currency pair EUR/USD on 6 February 2023, after rebounding from the upper boundary of the "bullish" channel where there was a strong resistance level, the price fell and tested the support line of the indicator SF Trend Lines
• The Williams' %R indicator was below -80, indicating that the currency pair was severely oversold

• A long position was opened at 1.0786
• The stop loss was placed below the support line, at 1.0756. Its size is 30 points
• Take Profit was set at 1.0906 Its size is four times the size of the Stop Loss

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

RoboForex: upcoming changes to the trading schedule in view of Presidents' Day in the US

Dear Clients and Partners,​

We are informing you that there will be some changes to the trading schedule during the Presidents' Day in USA.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading on CFDs on US indices (US30Cash, US500Cash, USTECHCash) and Japanese index JP225Cash

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual

.
Schedule for trading on Metals (XAUUSD, XAGUSD) and CFDs on oil (Brent, WTI)

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual.

Schedule for trading on CFDs on US stocks

• 20 February 2023 – no trading.
• 21 February 2023 – trading starts as usual.

R StocksTrader platform

Schedule for trading on US Stocks, US ETFs, CFDs on US Stocks and ETFs

• 20 February 2023 – no trading.
• 21 February 2023 – trading starts as usual.

Schedule for trading on Metals (XAUUSD, XAGUSD), CFDs on Crude Oil (BRENT.oil, WTI.oil) and US Indices (US500, US30, NAS100)

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual.

cTrader platform

Schedule for trading on Metals (XAUUSD, XAGUSD)

• 20 February 2023 – trading stops at 7:40 PM server time.
• 21 February 2023 – trading starts as usual.

Please take note of the above trading schedule changes when planning your trading activity.

* – This schedule is for informational purposes only and may be subject to further change.

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, a RoboForex project called ContestFX will offer you the following competitions:

The 143rd competition of "Demo Forex" has gained "cruising speed".
The 401st competition of "Week with CFD" has just kicked off.
At 12:00, February 22nd, 2023, the 535th competition of "Trade Day" begins.
At 20:00, February 23rd, 2023, the 449th competition of "KingSize MT5" begins.

It does not take much effort and time to participate in our competitions - all you need to do is to go through a simple registration procedure on our website, and then you will get access to all of our contests in just a couple of mouse clicks.

Good luck!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How To Use the Rate of Change (ROC) Indicator in Trading

Author : Victor Gryazin

Dear Clients and Partners,​

In this material, we will introduce you to the Rate of Change trading indicator. We will consider the peculiarities of its work, the formula for its calculation, and the signals that can be used in trading.

What the Rate of Change indicator shows

Rate of Change is a technical indicator showing the magnitude and speed of price change over a specific period. It compares the quotation of the current time period with the past ones, indicating the percentage of change in the price. The obtained data helps to evaluate the current dynamics of the selected financial instrument. Rate of Change is like the popular Momentum indicator.

ROC helps to determine what kind of trend the market is currently in and whether it is accelerating or slowing down. The greater the growth of the indicator, the stronger the optimism of the market crowd and the higher the probability that prices will continue to rise. A drop in the indicator value indicates an increase in pessimism in the market and the likelihood that prices will continue to fall.

Rate of Change is plotted in a separate window below the price chart and is represented as one main calculation line and a horizontal 0 level. The ROC line confirms (or does not confirm) the breakdown and rebounds from the support and resistance lines on the price chart, and helps determine the direction of the current market trend:

• A rising ROC above 0 confirms that an upward trend is in force
• A below 0 and falling ROC confirms the presence of an active downtrend

The formula for calculating the Rate of Change

ROC = (Close(i) - Close(i-n)) / Close(i-n) * 100%

Where:

• Close(i) - the last closing price.
• Close(i-n) - closing price of n periods ago.
• n - is the period of the indicator.

This indicator in its classic version is used with a default period of twelve. It is always possible to experiment, evaluate its work with other periods on historical data, and choose the most suitable one for your trading.

Installing Rate of Change in the trading terminal

Rate of Change is not a pre-installed indicator, so to use it in the popular MetaTrader 4 terminal, you need to download and install the indicator file. The file can be found on the Internet or on the website of MetaQuotes Ltd.

To install the indicator in the MetaTrader 4 main menu, go to File, select Open Data Folder → MQL4 → Indicators, and copy the file to this folder. After restarting the terminal, ROC will be installed in the Custom Indicators folder.

Next, install it on the chart of the desired instrument through the main menu of the programme: Insert → Indicators → Custom → ROC. It is usually used with default settings (Rperiod=12), you can customise the colour and style of the main line.

Rate of Change trading signals

Rate of Change is not a pre-installed indicator, so to use it in the popular MetaTrader 4 terminal, you need to download and install the indicator file. The file can be found on the Internet or on the website of MetaQuotes Ltd.

To install the indicator in the MetaTrader 4 main menu, go to File, select Open Data Folder → MQL4 → Indicators, and copy the file to this folder. After restarting the terminal, ROC will be installed in the Custom Indicators folder.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How to Choose a Currency Pair for Trading in Forex?

Author : Victor Gryazin

Dear Clients and Partners,​

A beginner trader often asks themselves: which currency pair should they choose for trading? In this review, I will address the most popular currency pairs and enumerate the criteria for choosing the most suitable ones.

What is a currency pair?

A currency pair is the quotation of two different currencies that constitutes a currency rate and acts as an object of operations in Forex.

The standard view of a currency pair is:

Base currency/Quote currency

A trade operation means that the trader sells or buys the base currency against the quote currency.

The base currency is the one on the left – it is the currency that you sell/buy. The quote currency is the one to the right – it expresses the price of the base currency.

For example, look at the EUR/USD (Euro vs US Dollar) currency pair:

• EUR is the euro, base currency
• USD is the American dollar, quote currency
• The current exchange rate of EUR/USD is 1.1270. which means 1 euro costs 1.1270 US dollars.

Forex is the world's largest financial market, displaying the current dynamics of global trade. It features a huge number of currency pairs – from famous to exotic ones. The most popular currency pairs which constitute the biggest volume of world trade are called major pairs. They are most often used for trading.

The characteristics of major currency pairs

Major currency pairs in Forex and the pairs that consist of the most popular currencies of the world economy. Presently, such currencies are the USD, EUR, JPY, CHF, GBP, NZD, AUD, CAD. It would be logical to add the CNH, or the Chinese yuan, here, but the rate of this currency is controlled by the Central Bank of China, so the CNH is not traded that actively.

• EUR/USD is the euro vs the US dollar. It is the most popular currency pair. The trade volume of the currency pair is maximal here, while the spread is small and volatility is average. It is most active during the European and American sessions and reacts vividly on the news in the Eurozone.
• USD/CHF is the US dollar vs the Swiss franc. Most often, it goes counter the euro/dollar pair; it moves calmly and has a small spread. The Swiss franc is a safe-haven asset, thus the pair may go down during crises. It is most active during the European and American sessions.
• GBP/USD is the British pound vs the US dollar. The currency pair has increased volatility and is popular among traders. It may demonstrate mighty movements of several patterns or trigger nearby Stop Losses by false breakaways. The pound reacts dramatically to political events and economic data in Britain. The pair is most active during the European and American sessions.

How many currency pairs do we use in trading?

Many traders wonder how many currency pairs they should use in trading. I think, there are two approaches to the issue depending on your trading style:

Minimum pairs

This approach is based on the fact that each currency pair is peculiar, and the nuances of its behavior may be studied if you focus on one or two pairs. Spending some time on mastering one pair, learning the factors that influence it (important news, macroeconomic statistics), you may get a certain advantage.

A wide range of pairs

This approach is based on the use of certain trading patterns, Price Action patterns, candlesticks, etc. Having learned to find some pattern on the price chart and having made sure of its efficacy, we may start trading. For this approach, using a lot of currency pairs is reasonable: you scan the charts, find patterns, and get started.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project is waiting for you to participate in the following demo competitions:

The 143rd competition of "Demo Forex" is approaching the final stage.
The 402nd competition of "Week with CFD" has just kicked off.
The 536th competition of "Trade Day" will start on 01.03.2023 at 12:00.
The 450th competition of "KingSize MT5" will start on 02.03.2023 at 20:00.

We'd like to remind you that all winners receive prize funds to their real trading accounts, which gives them an opportunity to join trading community without investing their own savings as the starting deposit.
Join us!

Sincerely,
RoboForex Contest

 

[Vlad RF]

Larry Connors' Double 7 Trading Strategy

Author : Victor Gryazin

Dear Clients and Partners,​

In this material, we will get acquainted with the "Double 7" medium-term trading strategy of the famous trader Larry Connors. We will learn what it is based on, and how it can be used in trading. We will consider its advantages and disadvantages and give an example of trading using this strategy.

How the Double 7 strategy works

The Double Seven is a fairly simple trading system that was introduced in the book “Short-Term Trading Strategies That Work”. It was written by the famous investment consultant and stock trader Larry Connors in co-authorship with the developer of trading systems Cesar Alvarez. The strategy was created for trading in the stock market, and the authors used it to trade major stock indices (S&P 500, Dow Jones) or index ETFs.

The Double 7 is based on the concept that when trading major market indices, an effective strategy is to buy on pullbacks in a major uptrend. A valid uptrend is defined as the price being above the 200-day Moving Average. A pullback is defined as a close below the lowest low of the last seven days, in which case a buy is opened. Once a buy is opened, one must wait for a new seven-day high to close the position.

After reading the trading rules, we can see that the "Double Seven" was developed for daily charts and is only used to open and close long positions in a rising market. That is, it works only in one direction – to buy the asset, shorts (short positions) are not used in this strategy and Stop Loss orders are not set. When tested by Connors and Alvarez, the system showed positive results on stock indices, ETFs, and highly liquid US stocks.

Setting the Moving Average indicator

This strategy uses the Moving Average indicator to determine the current trend. Moving averages are included in most modern trading terminals, plotted directly on the price chart. In the popular trading platforms, MetaTrader 4 and MetaTrader 5, you can install the Moving Average on the chart of the selected instrument through the Main Menu: Insert → Indicators → Trending → Moving Average. In the setup window that appears, select period 200, line colour and thickness, MA method: Simple.

How to trade the Double 7 strategy

The algorithm for using the strategy in trading:

1. The price chart should be above the 200-day moving average, indicating an uptrend.
2. We must wait for the day to close at the low of the last 7 days.
3. If points 1 and 2 are met, a buy position is opened.
4. The signal for exiting a position is to close the day at the seven-day high.

Advantages and disadvantages of the Double 7 strategy

Advantages:

• Works well in a rising market, giving entry points into an uptrend after small corrections. The strategy generates profitable trades, as long as there is a strong uptrend
• There is no "stop order" in high market volatility, as no Stop Losses are placed

Disadvantages:

• At the end of an uptrend and a downward reversal, the trading performance declines sharply
• There is no possibility of trading short positions (shorts) during a downtrend
• Lack of Stop Losses can lead to prolonged and significant drawdowns of the trader's deposit

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How to Beat Greed in Forex?

Author : Victor Gryazin

Dear Clients and Partners,​

The ability to control your emotions lies at the basis of your expertise as a trader. If a trader falls prey to their emotions, they lose control over their trading. This means breaking the rules of your trading system and, as a rule, ends in losing your money.

In this overview, we will discuss what is greed in Forex and how to beat it.

How does greed appear?

Many people start trading in the hope they will get rich in a short time. This misjudgment is supported by fantastic stories of success spread by the media. You might have heard of a young trader from the US Timothy Sykes who started trading in high school and earned his first million by the age of 21. Sounds amazing, doesn't it?

However, many neglect the fact that Sykes achieved this by long and painful training, making mistakes, losing money, but perfecting his strategy, and coping with his emotions. Experiences traders know that trading provokes the strongest human feelings and passions that you need to bring under control. A bright example is greed that can lead to losses and depression if you let it rule.

Greed is an unstoppable desire to own more and more fortune. Some might say that this is all personal, and there is nothing reproachable in the craving for more. However, greed is usually accompanied by unrealistic expectations and hopes, and a lack of self-control. This becomes a large stumbling rock in the trader's way to success because they start breaking their trading rules, which leads to losses.

Also, greed increases stress and nervousness that nag on the trader throughout their work. This is a direct way to exhaustion that makes it difficult to think rationally about trading in financial markets altogether. Hence, you need to know how to detect greed in the early stages and fight.

Main symptoms of greed

Let us have a look at the main symptoms that signal the advent of greed.

• Unrealistic expectations

Ambitions are great when they are rational. However, when it comes to money, one's common sense often loses the battle to greed, especially if the first couple of trades was a success. Trading on a demo account, which is where most traders start from, is peculiar in the sense that there is no psychological barrier in it — the money is not real. On a demo account, trading is fun.

That is why many over-ambitious traders rush at switching to a real account. They think that if they made it on a demo, real trading will also go smoothly, so why to waste your time on sheer practice. Their expectations are too high, they imagine how they become millionaires in a week. However, real trading quickly sobers them, but the lack of due preparation and money-management skills leads to losses.

• Poorly based hopes

A poorly based hope for a profit must in no way be the moving force for a trader. Such hopes, having no real support, lead to increased risks. This feeling is characteristic mostly of beginners, who hope that their trades will for sure bring them a profit if they wait for a little.
A classic example: a trader opened a trade and waits for the price of the asset to reach the desired level. But the market goes another way, and the trader obediently watches their deposit melt. Nonetheless, they do not close the position hoping that the market will soon reverse in their direction. This does happen sometimes but most often, this hope never comes true, and the trader suffers a serious loss.

Ways to control greed

To control your greed and prevent it from harming your trading, you have several proven methods:

• Stick to your trading rules

The main instrument that helps traders beat greed is a reliable trading system. The latter is a set of certain rules that trading is based on. If a trader sticks to the rules, their greed is under control. They make trades based on clear signals, not the dream to become rich.

• Track your emotional state

You must always know what and why you are feeling. If you feel that you have lost emotional balance, pause for a while. It will be wise to stay away from the market for a short while after a series of losing or profitable trades. Such series can provoke strong emotions that might harm your trading. Hence, you should stop and calm down before carrying on with your work in your normal balanced state of mind.

• Control your risks

Risk control is an intrinsic part of trading. Money management is a way to manage your capital by a certain risk control pattern. In other words, this is a way to choose the part or share of your assets that you are ready to risk in each trade. Wise risk control helps you protect your deposit from greed and other emotions.

• Use pending orders

The use of pending Stop Loss and Take Profit orders decreases the influence of greed on your trading. A Stop Loss limits losses (and protects the profit) when the market turns against the trader. A Take Profit will lock in your profit when the price reaches the specified value. This order helps to close a trade in time near the levels from which the price might correct or reverse.

Closing thought

Greed frequently harms trading in financial markets. Uncontrolled greed makes you violate your trading rules and might lead to serious losses. Hence, you need to detect the symptoms of greed accurately and use proven ways of beating it.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project by RoboForex' invites everyone to take part in the following competitions:

The 144th competition of "Demo Forex" and the 403rd competition of "Week with CFD" have just started.
The 537th competition of "Trade Day" will start on 08.03.2023 at 12:00.
The 451st competition of "KingSize MT5" will start on 09.03.2023 at 20:00.

If you haven't participated in our contests yet, trust us, there is nothing easier: go through a simple registration procedure and get access to any of the competitions you like in just a couple of mouse clicks.

We wish you good luck in becoming one of pro traders!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How to Test a Trading Strategy

Author : Victor Gryazin

Dear Clients and Partners,​

Today we will explain how to test a trading strategy. We will begin by explaining what a trading strategy is, why it needs to be tested, and how to do this. We will also give you some important recommendations.

What is a trading strategy?

A trading strategy is a trader's main tool that gives them an advantage in the market. In other words, it is a set of trading rules that have been tested in practice. The strategy can be considered successful if the total result of all deals made by using it within a specific period (month, quarter, year) is positive, i.e., profitable.

A trader's failure to have a clear, understandable, and practically proven system when trading can lead to a loss of funds. Making profit from random unsystematic trades is possible, but it will mostly depend on luck rather than experience and knowledge. You can only be successful in the long run if you use a proven trading strategy.

Why test a trading strategy?

Backtesting is the process of assessing how well a trading strategy can perform under past conditions. It is a key component in developing an effective system. There are various possibilities to change strategy parameters, and the adjustments made can have a significant impact on the results. Such testing shows the overall performance of an idea and checks whether some trading parameters will work better than others.

Testing the chosen trading approach on past data allows you to assess its effectiveness without any real monetary investment. The basic logic behind such testing is the assumption that a system that has worked well in the past is likely to also be effective now. Correct backtesting on historical data and obtaining positive results increases the trader's confidence that the idea will work. If the backtest shows negative results, the parameters should be changed or the chosen strategy should be abandoned.

Ways to test a trading strategy

You can test your trading approach on historical data or real trading conditions, either manually or by using special programmes.

Manual backtesting

Manual testing with historical data is a rather time-consuming process. This method is used when automated testing cannot be used for one reason or another.

Manual test scheme:

1. A chart of the financial instrument is opened. All necessary indicators and tools for trading according to the strategy are installed. The desired timeframe and the period of interest in the quotes history are selected.
2. The strategy then searches the chart for setups (conditions) for trades.
3. When a strategy is detected, the trader records all parameters of the potential trade: date, entry point, direction, Stop Loss, Take Profit, trade result, and any other useful information.
4. After a careful examination of all the potential trades found, their individual results and the total are analysed. A conclusion is made as to whether trading on this system will bring profit or loss.

If the strategy works at a loss, it is abandoned, or adjustments are made to improve its effectiveness. After the changes have been made, the strategy is checked again, and the process is repeated until it achieves an acceptable result. Manual testing of a trading strategy on historical data takes time and discipline. Correctly performed testing creates the conditions for a more accurate understanding of the level of success of the chosen approach and allows you to improve the practical skills of identifying setups for trading.

Automated backtesting

Special software is used that finds trades that meet the strategy's criteria. It summarises profitable and losing trades to show whether the strategy has been effective over a certain period of time. There are many trading platforms that provide such testers nowadays.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

RoboForex: upcoming changes to the trading schedule due to reverting to Daylight Saving Time

Dear Clients and Partners,​

We are informing you that there will be some changes to the trading schedule due to reverting from Standard Time to Daylight Saving Time in the USA and European countries.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading CFDs on US indices (US30Cash, US500Cash, USTECHCash) and oil (Brent, WTI)

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
  Trading session (server time): 02:00 AM - 10:15 PM.

Schedule for trading CFDs on Metals (XAUUSD, XAGUSD) and CFD on the JP225Cash index

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
  Trading session (server time): 12:05 AM - 10:55 PM.

Schedule for trading CFDs on US stocks

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
• Trading session (server time): 03:31 PM - 10:00 PM.

Schedule for trading CFDs on futures (ESM23, YMM23, NQM23)

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
• Trading session (server time): 12:00 AM - 11:00 PM.

Please note that, on 17 and 24 March 2023, trading all instruments in all platforms will be closed at 11:00 PM server time. In addition, from 13 to 24 March 2023, the bank rollover time will be from 10:00 PM to 12:30 AM server time. Consequently, this might lead to short-term interruptions in quoting, and the significant widening of spreads.

R StocksTrader platform

Schedule for trading US Stocks, US ETFs, CFDs on US Stocks and ETFs

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
  Trading session (server time): 03:30 PM - 10:00 PM.

Schedule for trading CFDs on Crude Oil (BRENT.oil, WTI.oil)

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
  Trading session (server time): 02:00 AM - 10:15 PM.

Schedule for trading CFDs on Metals (XAUUSD, XAGUSD)

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
  Trading session (server time): 12:05 AM - 10:55 PM.

Schedule for trading all currency pairs

• From 13 to 24 March 2023, trading all currency pairs will be stopped for the 11:00 PM - 11:15 PM interval (server time).

Schedule for trading CFDs on futures (ESM23, YMM23, NQM23)

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
• Trading session (server time): 12:00 AM - 11:00 PM.

Please note that, on 17 and 24 March 2023, trading all instruments including Cryptocurrencies on all platforms will be closed at 11:00 PM server time.

cTrader platform

Schedule for trading all currency pairs

• From 13 to 24 March 2023, trading all currency pairs will be stopped for the 10:55 PM - 11:05 PM interval (server time).

Schedule for trading CFDs on Metals (XAUUSD, XAGUSD)

• From 13 to 24 March 2023, trading will be opened and closed 1 hour earlier than usual (server time).
• Trading session (server time): 12:05 AM - 10:55 PM.

Please note that, on 17 and 24 March 2023, trading on all instruments on all platforms will be closed at 11:00 PM server time. In addition, from 13 to 24 March 2023, the bank rollover time will be from 10:00 PM to 12:30 AM server time. Consequently, this might lead to short-term interruptions in quoting, and the significant widening of spreads.

Please take note of the above trading schedule changes when planning your trading activity.

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project will continue with the following demo competitions:

The 144th competition of "Demo Forex" entered its second week.
The 404th competition of "Week with CFD" has just started.
The 538th competition of "Trade Day" will start on 15.03.2023 at 12:00.
The 452nd competition of "KingSize MT5" will start on 16.03.2023 at 20:00.

Let us remind you that all winners of our contests receive prize funds to their real accounts, and they can use them to start trading in the Forex market instead of investing their own savings.

Good luck to all traders!

Sincerely,
RoboForex Contest