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Trading Like Sperandeo: 1-2-3 Reversal and 2B Pattern

Author: Victor Gryazin

Dear Clients and Partners,

In this article, we will discuss the trading methods of a famous Wall Street trader Victor Sperandeo. A long-time experience of trading on exchanges and managing investments as well as several books on trading have brought Sperandeo the popularity he deserves.

How to draw a trend line?

According to the definition from tech analysis, a trend is a period when the price is moving mostly in one direction, either growing or declining. In other words, a trend is a price movement in one direction. A trend can be explained by economic, political factors or force majeure events.

Sperandeo singles out three types of a trend in terms of its length; they can be active simultaneously and move in opposite directions:

1. Short-term trend lasts from several days to several weeks, 14 work days on average
2. Mid-term trend lasts from several weeks to several months
3. Long-term trend lasts from several months to several years.

Any of this trends can be traded; traders usually aim at short- and mid-term trends while investors – on mid- and long-term ones. To trade reversal patterns, we need the market to move in an up- or downtrend.

An uptrend is a price move in which each next high is higher than the previous one and each next low is also higher than the previous one.
A downtrend is characterized by each next high and low being lower than the previous one.
An important aspect of trend analysis is drawing the trendline. When the price breaks out the trendline, it signals the beginning of a correction or a trend reversal. For drawing the trendline, the following rules are used:

1. The trendline in an uptrend is drawn on the chart through 2 points: the first point is the low preceding the absolute high of the trend; the second point is the first low the uptrend has started from. If the trendline crosses the chart, the second point (the farthest low) is transferred to the next closer low for the trendline not to cross the price chart.

Trend reversal 1-2-3

The rule of Sperandeo trend reversal 1-2-3 comes into force when the price chart breaks out the trendline. This is the first signal of a possible trend reversal, which may precede a 1-2-3 reversal. Below, we will discuss in detail the rules of formation of this reversal and trading it in an up- and downtrend.

A 1-2-3 reversal in an uptrend

1. Find an actual uptrend on the price chart and draw a trendline.
2. After the trendline is broken out, name the high preceding the breakout as point 1 and the low formed after the breakout – point 2.
3. After point 2 is formed, a new ascending impulse in the direction of the trend forms. A short-term exceeding of point 1 is possible (it is called a false breakout) – it must be followed by a strong pullback down. The new high is named point 3.
4. The 1-2-3 reversal comes into force if the price goes further down renewing the low in the point 2. Open an selling position, putting an SL above point 3.

We have described an original conservative way of trading a 1-2-3 reversal by Victor Sperandeo. Sometimes, I use a more aggressive way of trading – I trade right after point 3 is formed. The signal might be a false breakaway or some Price Action reversal pattern. This is less trustworthy because the reversal has not been confirmed yet (point 2 has no been broken out) but this method allows to enter the market with a smaller SL and a more profitable profit to loss ratio.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How Economic Recession Influences Investors' Behaviour

Author: Victor Gryazin

Dear Clients and Partners,

This overview describes what economic recession is and why it happens. We will analyse a case of global economic recession and see some advice concerning how to behave during a crisis.

What is economic recession

Recession is a serious and lengthy decline of economic activity, characterised by a decrease in production and employment that results in falling of income and spending of households. This phenomenon may last over several months and is usually followed by a decline of the GDP.

Experts from the US National Bureau of Economic Research (NBER) have given their own definition. They state that recession is a significant economic decline that starts at the high of preceding growth and ends at the low of subsequent falling.

The decline of economic activity must be quite deep and lengthy to have the right to be called recession. It may last just several months but it will take the economy years to get back to the previous peak.

Reasons for and signs of economic recession

Multiple economic theories struggle to explain why and how economy escapes a lengthy uptrend and starts falling. For example, abrupt and stable growth of oil prices due to a geopolitical crisis may lead to growth of spending at the global market and provoke a global economic recession.

According to the conclusion made by the US Congress Special Commission, the economic recession 2008-2009 was provoked by such factors as mistakes in financial regulations and in corporate management, excessively high debts of households, wide use of high-risk derivatives, and growth of non-regulated shadow banking.

Spread of COVID-19 in 2020 and quarantine restrictions are yet another example of an economic shock that can provoke recession. It might be just speeding up the process that could be inevitable due to other factors.

How US recession 2008 influenced global capital markets

The economic recession and crisis in 2008 followed a lengthy time of growth of housing prices and a boom of mortgaging in the US. The overall economic peak happened in December 2007,and the NBER considers this month the beginning of the recession. At the start, the decline of the economic activity was modest but sped up abruptly in autumn 2008 when stress in financial markets reached the top. The US GDP dropped from +2% to -2.6%, and the unemployment rate grew from 5% to 10%.

January 2007 through September 2009 large US and European banks lost more than $1 trillion on toxic assets and unsecured loans. A lack of confidence of investors in the paying ability of banks alongside loans becoming less affordable led to an abrupt decline of prices for goods and services. The crisis quickly turned into a global economic shock, making several large banks go bankrupt. Economy worldwide slowed down because crediting became tough and global trade went feeble.

This recession in the US became the longest one since World War 2 and lasted 18 months. The S&P 500 index started falling at the end of 2007 and, having lost more than 50%, began recovery only in the middle of 2009.



Global economic recession 2022

These days, the global economy is slowing down abruptly. War in Ukraine, growth of prices for energy carriers and foods alongside imbalance between the demand for them and supply provoke growth of global inflation. According to forecasts of analysts, a decline of the buying ability of households and toughening of the credit and monetary policy will bring down the growth of the US economy up to 2.3% this year and up to 1% in the next year.

In China, the slow-down of economic development turned out stronger than expected due to COVID-19 breakouts and imposed quarantine measures. In the Euro zone, growth dropped to 2.6% this year and will reach 1.2% next year. According to the forecasts of the IMF, inflation and the geopolitical crisis have already put the global economy on the verge of recession.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, RoboForex's project called ContestFX is waiting for everyone to participate in the following contests:

The 138th competition of "Demo Forex" entered its second week.
The 378th competition of "Week with CFD" has just kicked off.
The 512th competition of "Trade Day" will start on 14.09.2022 at 12:00.
The 426th competition of "KingSize MT5" will start on 15.09.2022 at 20:00.

It does not take much effort and time to participate in our competitions - all you have to do is to go through a simple registration procedure from your Personal Members Area on our website to get access to any of the contests you like.

Join us!

Sincerely,
RoboForex Contest

What You Need to Know to Make Money on the Stock Market?

Author: Andrey Goilov

Dear Clients and Partners,

Financial markets are a completely different world. If one manages to get comfortable here and learn how to choose instruments to invest in, then in the future they can get access to the things that all people strive for – freedom, independence, and a chance to work for themselves. However, in order to achieve and get all of this, one must learn a lot and work hard on themselves and their emotions. When trading on the stock market, it is possible both to earn good money and lose some of your own funds in case of wrong choice of companies.

Why do I need to invest?

Unfortunately, if your money doesn’t work and just lies in a jar, it takes a beating because of the high inflation. If we invest money in a bank, in most cases the interests we receive barely cover the inflation, while the fall in your national currency exchange rate may put even such seemingly reliable ways of saving money in jeopardy. The real estate market is not always attractive as well.



As a matter of fact, the stock market is one of the most promising ways to get profit provided that you have seed money. This factor is very clearly described in a movie called “Limitless”. The main character takes a new nootropic, which makes his brains extremely powerful. Using these abilities, the character earns a pile of money in a very short period of time. and the stock market is exactly the place where he accomplishes it.

Where to start?

Nowadays, people trade online, that’s why the first thing you need is internet access.

1. Decide on the investment amount. It’s very important not to risk big sums of money, loss of which may radically change your life. Another thing is that one should not trade with borrowed funds. Many authors from Europe and the USA recommend to start trade with the sum you won’t regret to lose.
2. Choose a broker to buy and sell stocks through. A good article How to Choose a Forex Broker was earlier published in our blog.
3. Choose a trading strategy. The method you choose will tell you what stocks to buy or, like professional traders and investors say, provide signals for buying and selling financial instruments. For example, one can try strategies for beginners based on Moving Averages. It’s a simple but at the same time efficient tool for analyzing stocks; an important advantage here is trading towards the primary trend.

Mistakes that beginners make

There is an opinion that in order to become a real trader and get permanent income on the stock market, one must gain experience that will help to avoid making mistakes in the future. Needless to say, that in the early going traders tend to “go to pieces” and take on real risk. Experienced authors can recommend something here as well.

1. Trading towards the primary trend is one of the key rules. If the stock price rises, it is believed that they should be bought, while in case of decline it would be better to get rid of them.
2. Don’t trade if you don’t see fair opportunities for that. We are recommended to stick to the strategy, which we must choose before starting to trade. If the strategy doesn’t provide signals at the given moment, it makes good sense to patiently wait for such signals and only after that start making decisions whether to buy stocks or not.
3. Let your profit grow and close your loss-making deals. If the stock price rises and your profit increases with each day, don’t be in a hurry to sell them – on the contrary, you should wait until your profit goes higher. However, if you see that stocks generate losses instead of profit, it will be wise to sell them in order to avoid more significant losses.
4. Trade with protective stop orders. Before opening a position, you should in advance set the price, at which the positions will be closed with a loss. Anything can happen on the stock market, that’s why it’s very important to estimate risks you are willing to take.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How to Use Margin Calculator on Forex

Author: Victor Gryazin

Dear Clients and Partners,

This article is devoted to margin on the Forex market: what it is necessary for, where to find it, and how to use a special calculator for margin on Forex.

What is margin

This term has several meanings. In business, margin is profit in percent minus expenses. In trading it means the money that an investor must deposit to the account of their broker or exchange to cover for credit risks.

Margin on Forex is finance used y a broker to cover for credit risks. Its size depends on the contract and leverage. In other words, margin is a necessary deposit for opening sustaining a position that allows for making trades with leverage for a larger sum than the trader has.

Margin crediting is provided by brokers so that traders with modest deposits could open substantial positions on Forex. Every broker has their own marginal requirements, and this issue should be cleared before the trader starts working with margin.

The idea of margin trading on Forex is that cash is not supplied factually. Trading implies making a profit on growth or falling of a currency pair. All trades in margin trading are two-sided: if a contact opens for buying, it is closed with a sale, and vice versa. As a result, the trader either makes a profit or suffers a loss.

Formula for calculating margin

The formula for calculating margin necessary for opening a position looks as follows:

Required margin = [(Base currency) / (Account currency)] * Position volume / Leverage

Where:

1. Base currency is the currency of the trading operation; it is number one in the abbreviation of the currency pair.
2. Account currency is the currency of the trader’s account.
3. Position volume is the volume of the trading position in the base currency.
4. Leverage is the size of the leverage used.

Example of calculating margin by formula

Imagine a trader needs to know what margin they need in USD to open a position sized 0.5 lot in GBP/USD with leverage 1:100.

The current GBP/USD quote is 1.15 USD, which means the ratio of the base currency GBP to the account currency USD is 1.15. A standard lot on Forex is 100,000 units of the base currency.

Let us use the formula:

1.15 * 100000 * 0.5 / 100 = 575

This means that to open such a position the trader needs 575 USD on their account.

How to use margin calculator

All calculations of margin have long become automatic, which means the trader does not need to manually count it by the formula. There is a useful and comfortable instrument for it called margin calculator.

This universal instrument is also known as trading calculator, Forex margin calculator, and leverage calculator. It will be useful for market beginners and experts alike.

With this instrument traders can calculate parameters of trades online and choose the most efficient strategies before opening a position. As an example let us take a look at the Trading Calculator by RoboForex that can be found on the official website.

The calculator has four main input parameters:

1. Ticker of the currency pair
2. Lot size
3. Leverage size
4. Account currency

After the trader fills in the boxes and clicks Calculate, they get detailed information about the planned trade (according to the account type):

1. Size of the margin required for opening the position
2. Cost of changing 1 point of quotes by the position
3. Spread size (the difference between the buy and sell prices)
4. Swop (rollover) size for long and short positions – the sum that is deposited/withdrawn for transferring the position to the next trading day

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

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

The 138th competition of "Demo Forex" has crossed its "Equator".
The 379th competition of "Week with CFD" has just started.
The 513th competition of "Trade Day" will start on 21.09.2022 at 12:00.
The 427th competition of "KingSize MT5" will start on 22.09.2022 at 20:00.

Let us remind you that winners of our demo contests receive prize funds to their real accounts, and they can use them to perform trading operations on the Forex market.

Good luck to all traders!

Sincerely,
RoboForex Contest

Basic Finance Terms That Beginners Need to Know

Author:Victor Gryazin

Dear Clients and Partners,

In this review, we will discuss wide-spread finance terms that will be useful for new-comers to financial markets.

Financial terms

Assets

Financial assets are a specific non-physical form of property (something that a person or company owns) that is supposed to generate a profit. Such assets include bank deposits, stocks, bonds, cryptocurrencies, etc. Financial assets are more liquid than other types of assets.

Liquidity

Liquidity is a characteristic of how fast and easily a financial asset can be turned into money without significant losses of its cost.

Bull market

Bull market is a state of the market in which asset prices are growing, and market participants are optimistic.

Correlation

Correlation in finance is a statistical measure that shows the relationship between two assets. In other words, correlation is the ability of one asset to move in accordance with the movements of another asset.

Interest rate

Interest rate is the minimum interest under which the Central Bank of a certain company gives loans to commercial banks. The dynamics of currency markets are seriously influenced by changes in interest rates made by the leading Central Banks. These changes are an indirect reaction to other economic indicators and can provoke fast and strong movements in the currency markets.

Leverage

Leverage is the ratio of the loaned capital to the capital owned by the trader. The higher the leverage, the more money is used in trading, which increases potential profits and losses.

Margin Call

Margin Call happens when the broker requires to additionally deposit the trader’s account when the amount of money on it reaches some critical level. Margin Call and the trading account margin are a protective mechanism that controls the level of the trader’s money on the account and limits the broker’s risks.

Netting

Netting is an accounting system that allows for just one open position in one direction. The trader may not simultaneously open a buying and selling trade by one instrument; if they do, positions get mutually closed. Orders opened in one direction, however, are summed up.

Hedging

Hedging financial risks means making professional use of financial instruments or market strategies to compensate for any unwanted price movements. This accounting system allows for any number of open positions in different directions for one instrument.

Profit

In trading, profit is the net profit made on a trading operation or an investment. In other words, profit is earnings minus all expenses.

Quantitative Easing

QE is an instrument used by Central Banks for adding money directly to the country’s economy that needs to be livened up and freed from crisis. QE does not imply printing a lot of new physical money – the process goes by creating non-cash funds. The funds are spent on buying bonds in the private sector, also known as purchase of government debt. All these actions bring down the yield of state bonds and increase the overall quantity of money in the economy.

Volatility

Volatility is the range in which the price of a financial instrument changes over time (day, week, month, etc.). To put it simply, volatility shows how much the price of a financial instrument may grow or fall over time.

Closing thoughts

In this review, we have discussed several common terms used in financial markets. They are well-known by experienced traders and investors, and market beginners can use them to increase their erudition and professionalism and to enhance understanding of how financial markets function.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, the RoboForex company's project called ContestFX offers you the following competitions:

The 138th competition of "Demo Forex" is reaching its end.
The 380th competition of "Week with CFD" has started today.
At 12:00, 28 September 2022, starts the 514th competition of "Trade Day".
At 20:00, 29 September 2022, starts the 428th competition of "KingSize MT5".

No complicated actions are required for participation in our contests - you need to go through a simple procedure for registering an account on our website, after which you'll get access to any of the competitions you like in just a couple of mouse clicks.

We are waiting for everyone to register and wish you good luck!

Sincerely,
RoboForex Contest

What is Forex? Introduction to the Foreign Exchange Market

Author: Dmitriy Gurkovskiy

Dear Clients and Partners,

What is Forex?

Forex exchange market (name derived from FOReign EXchange) is an international market meant for broker companies, banks and investment funds trading currencies. Currency exchange market formed in the 70-s when the financial world passed from the gold standard to free currency pricing. The market works on the basis of free conversion of currencies without state interference and guarantees freedom of such transactions. At the same time, there is a number of rules and restrictions regulating relationship between traders and brokers.

Sometimes one might hear Forex called monetary exchange; however, this is wrong. Forex is an international non-stock exchange without a particular place for trading. One can trade via the Internet or using a telephone. Market players can make currency transaction from any spot on the globe. So long that Forex is a non-stock exchange, transactions may go without registration.

Though Forex players do not have to worry about the place of trading, their work still depends greatly on trading hours which vary in different parts of the world: in Asia-Pacific, in Europe and in North America.

Starting 1989 Bank for International Settlements (BIS) carries out a thorough analysis of the market every 3 years. Data shows that the daily turnover of Forex was 1.5 trillion USD in the year 2000 and reached 4.0 trillion USD 10 years later. BIS experts forecast the growth of Forex daily turnover up to 10 trillion USD by 2020. Part of this volume is provided by margin trading which implies contracting for sums substantially bigger than the actual capital of one transactor. Regardless of nature and the purposes of transactions, a large daily turnover guarantees high liquidity of the market. Another fact is that roughly 75% of transactions on Forex are conducted by American banks.

Forex Market Characteristics



The international exchange market Forex is of one of the most numerous types of financial markets existing at present. At the same time it is one of the largest markets. As other markets do, it attracts traders and investors offering them an opportunity to make a profit on the difference in exchange rates or just to exchange one currency for another. Every person making an exchange operation via a mobile bank application automatically becomes part of the scheme which connects the participants through various information systems and gives them access to currency exchange operations Monday to Friday 24 hours a day.

Forex has a number of advantages distinguishing it from other market types.

Availability

To become a Forex player and get an opportunity to make a profit on the difference in exchange rates, one has to open a trading account in a company providing such services. Then one has just to replenish their account and start trading. It is worth remembering that successful trading requires some experience and certain knowledge of chart analysis. However, almost any person can integrate rather easily into trader community.

Leverage

When buying or selling currencies a trader does not need to have a deposit covering the price of the whole contract. A leverage will help enhance one’s financial potential, because it allows for transaction amounting to much bigger sums than the trader possesses. On the one hand, this is an opportunity to earn a substantial profit with a modest sum on the account; on the other hand, risks grow accordingly. Thus, the risks are to be thoroughly studied and controlled. More information you can find in our posts What is Leverage and How to Trade with Leverage.

High volatility

Volatility means any changes in the price of an instrument. Forex is a market of high volatility. Exchange rates are particularly quick to change, and a trader’s aim is to make a profit on their volatility. That is why the bigger the changes are, the bigger is the trader’s profit, regardless of whether a currency is growing or falling in price, the latter phenomenon being yet another characteristic of the market. The truth is that traders can equally make a profit out of rises and out of falls of currencies. That is why high volatility together with leverage provides an excellent opportunity for earning money. However, risks are to be taken into account.

Forex market players

International inter-bank market Forex is a non-stock trading platform. In other words, the platform does not exist physically. All operations take place on the Net. Presently, major Forex players are national Central banks of different countries.

Most influential ones are the European Central Bank and the Federal Reserve System. Central banks of other countries also influence the volatility of currencies, their aim being prevention of steep surges in prices.

Commercial banks are also present on Forex. They can hardly influence monetary and credit policy of major players; however, they significantly enhance the liquidity on the market. Commercial banks make speculative influence, constantly manipulating exchange rates in order to make a profit and making lots of transactions. Commercial banks make profit out of spread which is the difference between buying and selling rates.

Apart from banks, other Forex players are brokers, broker companies and dealing services which contribute a lot to currency price formation as agents. What is more, they give access to the inter-bank market to individual traders and investors; trading via broker and dealing companies, individuals make the largest part of transactions on the market.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

RoboForex received two major awards in two nominations

Dear Clients and Partners,

Our team is constantly working on improving investment solutions and trading platforms to provide the company’s clients with the most comfortable conditions available in financial markets. We are therefore proud to be, once again, highly appreciated by the professional community of the industry.

RoboForex received two prestigious awards

The R StocksTrader platform developed by RoboForex was recognised as the "Best Multi Asset Trading Platform (LatAm)" according to the Global Banking & Finance Awards. Moreover, our investment platform CopyFX received the "Best Investment Products (Global)" award from the Global Brands Magazine Awards.



Trade in R StocksTrader
Best Multi Asset Trading Platform (LatAm)

The R StocksTrader platform satisfies the requirements and demands of the most sophisticated investors.

1. Easy start
   Start investing with just 100 USD.
   
   
2. 12,000+ instruments
   US Stocks, Forex, ETFs, CFDs on stocks, and other popular exchange-traded and OTC assets.
   
   
3. Best trading solution
   Unique platform with personal customization and a wide range of trading opportunities, algorithmic strategy builder.

Invest in Top Traders with CopyFX
Best Investment Products (Global)

The company's clients can copy successful traders’ transactions with competitive conditions on the CopyFX platform.

1. Thousands of participants
   Join a huge community of Traders and Investors.
   
   
2. Multifunctional control
   Control every stage of your investments and allocation of funds.
   
   
3. A wide range of platforms
   Trade via the most popular terminals MetaTrader 4/5, as well as via the exclusive multi-asset R StocksTrader platform.

Invest with RoboForex

Sincerely,
RoboForex team

Dear traders!

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

The 139th competition of "Demo Forex" and the 381st competition of "Week with CFD" have just started.
The 515th competition of "Trade Day" will start on 05.10.2022 at 12:00.
The 429th competition of "KingSize MT5" will start on 06.10.2022 at 20:00.

If you manage to demonstrate your trading skills and become one of the winners of any of our contests, you will be rewarded with funds on a real trading account, which will allow you to earn in the Forex market without investing your own financial savings as an initial deposit.

Don't miss your chance!

Sincerely,
RoboForex Contest

RoboForex enabled access to CopyFX in R StocksTrader

Dear Clients and Partners,

From now on, investments using the CopyFX platform are available via accounts opened in R StocksTrader, the cutting-edge terminal for stocks trading.

R StocksTrader is a multi-asset trading platform with advanced tools for technical analysis and the industry's fastest financial charts. It allows carrying out financial transactions with over 12,000 advanced instruments, such as ETFs, Stocks, and others.

The CopyFX investment platform is RoboForex’s proprietary solution for copy-trading. When working with the CopyFX platform as an Investor, you get the opportunity to simplify the trading process by copying the strategies of successful Traders. As a Trader, you get to share your trading experience and attract subscribers (the platform’s Investors) to your strategies.

R StocksTrader with CopyFX

The integration of CopyFX into R StocksTrader comes with many advantages and opens up a wide range of opportunities for working in the financial markets.

You can now copy transactions on more than 1000 of the most popular trading instruments: Stocks, CFDs, FX, Commodities, Indices, ETFs. The same R StocksTrader account is used to trade on your own as a Trader or copy transactions from other Traders as an Investor. Copying of transactions is carried out instantly with guarantee of the same execution price for the Trader and the Investor.

Benefits for Investors and Traders

The launching of copy trading in R StocksTrader is to the advantage of both Traders and Investors.

For Investors

1. Source of passive income: once set up, copy trading requires minimal effort to use. Just control your risk.
   
2. Try out different Traders' strategies and choose the one that suits your trading style the best.
   
3. Time-saving: trading is a full-time job, but copy trading does not require constant participation of the Investor.
   
4. Subscriptions on different Traders can help diversify your portfolio and mitigate risks.
   
5. Removes emotion from the investment decision process.
   
6. Launching, stopping, and editing of your subscriptions happens instantly.

For Traders

1. Opportunity to form the basis for additional income. The higher your profitability in the platform, the better your investment rating in the listing of Top CopyFX Traders of the R StocksTrader platform.
   
2. Availability of detailed statistics concerning your trading strategy to enable you to assess changes in the state of your account, manage risks and improve your own results.

Specifics of copy trading on R StocksTrader

Are you ready to feel all the benefits of investing on R StocksTrader for yourself? You need to pay attention to the specifics of working with CopyFX on R StocksTrader accounts.

1. CopyFX controls (creating strategies and subscribing to Traders) can be found only in the mobile application and in the mobile version of the platform
   
2. Subscriptions are allowed only between R StocksTrader hedging accounts
   
3. Over 1,000 CFDs and stocks are available for copying
   
4. Investors can choose between "Proportional" and "Classic" subscription modes
   
5. Traders can only use the "Without commission" scheme, with additional commission options coming up in next releases

Get Started Read more

Sincerely,
RoboForex team

Is It Important to Plan Budget

Author: Victor Gryazin

Dear Clients and Partners,

What is Forex?

In this article, we will touch upon the issue of budget: what it is, what it is used for and how to plan it. Moreover, we will try to explain why a well-planned budget is such important for work with finance. Also, we will show you the advantages of an accurate budget.

Why budget is important

Budget is a financial plan for a certain timeframe that accounts for planned income and expenses. As a rule, a budget is drafted for a month or year.

Planning a budget implies a detailed list of expenses that gives a clear understanding of what can and has to be left out for your financial goals to be reached faster.

Explaining the importance of budget, we should at once enumerate its advantages. Firstly, a budget helps to manage your monthly expenses, makes you more disciplined, gets you ready for overcoming some crises, and stops you from making unwise financial decisions.

What is the goal of budget

Your budget demonstrates how much money a country, company, family, or person has and how much is to be spent on obligatory expenses. It must be noted that a budget is not a list of monthly earnings and spending; even such a table would be useful, though it will not help in reaching financial stability.

The goal of a budget is planning expenses and earnings over a certain time and then comparing your plan to what you actually got. This comparison and analysis of your statistics answers the basic questions:

1. What have you spent your money on, and was it that necessary?
2. Why your actual expenses have exceeded your plan and on what goods and services?
3. How to follow your financial plan more accurately?
4. What to do to minimise negative deviations of your budget from your plan?

What types of budget there are

A budget can be equally planned for a country and an individual who wants more order in their expenses. This document must fully represent the state of finance of a family or company. This means that the plan must include absolutely all sources of income and types of spending. The information must be true, valid, and full.

The process of financial planning is called budgeting and belongs to one of the following types:

1. Personal budgeting is creating a budget for an individual for distributing income on spending, savings, and paying off debts. It accounts for previous expenses and debts. For example, a job is a source of income, while communal payments and rent are expenses. Here, we can also single out the category of assets: property, investments, and other savings or valuables that create a potential reserve for a budget deficit.
2. Corporate budgeting is making a financial forecast for the nearest future that unites prospective income and expenses of various departments. It is the key element of integrated business planning. The process of corporate budgeting normally calls for a lot of effort, involving several employees. The final decision if left for the financial director.

Why it is profitable to plan budget

Budgeting allows for balancing out your income and expenses and reaching your financial goals. The latter ones may be as ambitious as buying real estate, or more modest, like buying a smarphone. A budget will provide more accurate information about how to reach your goals fast.

Another reason for thinking about a family budget is creating a reserve for some emergency. It is recommended to save no less than 10% of your monthly income for a money airbag. It should last you 3-6 months in case you lose your source of income. This is one of the main rules taught on financial literacy courses.

Tracking all your expenses helps to find some possible sources of saving. And even is it seems that you have saved little today, imagine how this sum may grow with time if you stick to the plan.

Bottom line

A budget allows for tracking your income and expenses easily and in detail. A budget is the base for financial success and safety. It also helps to make difficult financial decisions.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

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

The 139th competition of "Demo Forex" is gaining momentum.
The 382nd competition of "Week with CFD" has just kicked off.
The 516th competition of "Trade Day" will start on 12.10.2022 at 12:00.
The 430th competition of "KingSize MT5" will start on 13.10.2022 at 20:00.

Let us remind you that becoming a participant in our contests is very easy - you will have to go through a simple account registration procedure on our website and then you'll get access to any of the competitions you like in just a couple of mouse clicks.

Good luck!

Sincerely,
RoboForex Contest

How Did George Soros Make His Money: Top 3 Trades

Author: Victor Gryazin

Dear Clients and Partners,

Today we will dive into the business of George Soros, a trader and manager who became a true legend. We will consider three Soros's trades with currency that made him a celebrity of the financial world.

Who is George Soros

George Soros is a trader, investor, and manager considered by many to be one of the most successful financiers of these days. For long he used to be the manager of the Quantum hedge fund that used to demonstrate stable annual profitability of 30% from 1970 through 2000. Also, he created a network of grantinh institutions known as the Soros Fund.

He was born in Hungary in 1930. After the World War II was over, he left for England to study at the London School of Economy. Upon graduating, he went to New York and began his banking career, later leaving for a broker company. Many years later, he formed the Soros Fund Management that became a part of the mentioned Quantum Fund.

Over the years of active work, Soros made several impressive trades and investments. He is one of the most famous investors in the financial world, known for making trades with currencies that are huge even for the global financial world. Soros's capital in 2022 was above 8 billion USD. Moreover, he donatef more than 30 billion USD on charity and political projects.

Legendary Soros’s trades with currencies

Let us take a look at threw Soros's trades with currencies that made him wealthy and famous.

British pound: George Soros and Black Wednesday for the Bank of England

Soros's Forex stake against the British pound is called one of the greatest currency trades of the modern world. Great Britain joined the European Exchange Rate Mechanism (ERM) in 1991, when inflation was high and interest rates were low. By this mechanism, the government planned to hold the exchange rate of the national currency at 2.7 German mark per pound.

However, there was no good reason for such a rate, firstly because inflation in Britain at that time was much higher than in Germany. Being an economist, Soros noticed that the pound was seriously overestimated against the German mark, and un summer 1992 started making stakes against the British currency via his Quantum fund. The total sum of the trade is evaluated as about 5 billion pounds.

To hold back the rate and attract investors, Great Britain increased the interest rates above 10% but this never helped. Alongside Soros, many market players started selling the pound against the mark and dollar expecting the exchange rate to drop.

Soon the British government realised that it would have to spend a lot of money due to the extremely high rates and the necessity to hold the rate of the pound that high. Apart from that, German authorities publicly announced possible reorganization inside the ERM.

On 16 September 1992, the British government decided to leave the ERM and unbind the pound, and this day got the name of Black Wednesday. As a result, the British pound abruptly dropped by 15% against the German mark and by 25% against the USD. By different evaluations, Soros made about 1 billion USD on this trade.



Quotes by George Soros about investments

1. It is not important whether you are right or not; it is important how much you earn when you are right and how much you lose when you are wrong.
2. Financial markets are usually unpredictable. So each one must have different scenarios. The idea that you can really predict what happens is against my understanding of the market.
3. The market is a mathematical hypothesis. The best solutions are elegant and simple.
4. I have created quite a general theory that financial markets are naturally unstable; that when we think about a balanced market, this picture is false.
5. Risk is painful. People are either ready to endure the pain themselves or try to pass it to someone else. There is nothing better than danger for focusing your mind; I really need the risk-provoked anxiety to think clearly. Accepting risk for me is an important part of a clear mind.
6. If investing seems entertaining, you must not be making any money. Good investing is boring.

Bottom line

George Soros is a trader who can easily be called an outstanding person. Some call him a genius, some say he is a talented manipulator. Thanks to his trades with currencies, Soros has made real money and has gone down to history as a financial legend of modern day.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How to Trade in Forex if You Already Have a Job

Author: Dmitriy Gurkovskiy

Dear Clients and Partners,

This article is devoted to an issue that has always been topical for many traders: how to combine trading and employment? What does one need it for, and what can help one find time for trading if they are short of it?

Why would one combine trading and some other job?

Trading in financial markets and employment, such as office work, are, in fact, compatible. Not all traders in For example or other financial markets can just quit their jobs and focus on trading. First hand, this is true for beginners: one might need years to study all aspects of trading and start making a stable profit in the market.

Forex trading has never been simple, and only experts make money there consistently. To become a Forex pro, one needs to learn first, then practice hard, and then beat their emotions and stick to some discipline. All this requires time and finance. Not at all every beginner has a substantial capital that will let them stay unemployed, pay for their studies, and withstand initial losses for several years.

This is why combining employment and trading is so vital for many. Some stable income allows to pay one's bills and accumulate skills gradually. This said, combining job and trading is not easy because one's time that they can devote to trading is rather limited.

What allows combining employment and Forex trading?

I would single out several main ways of combining employment and trading. One's choice will depend, naturally, on their type of employment.

1. The trader works from home and has a constant Internet access, which allows checking charts several times a day;
2. The trader works part-time and can spend the rest of their free time on trading;
3. The trader only uses the mobile app at lunch.

Preparing a trading plan

A trading plan contain's the trader's ideas prepared beforehand. They plan promising trades based on their trading strategy. With a consistent plan, one does not need to monitor quotations constantly; they only need to wait for trading signals to appear in the area as specified in the plan.

I recommend analyzing the market and charts of your instrument before your day starts. Single out appealing trading ideas and create a trading plan. Then simply stick to it. You can open positions by pending orders or set up alerts that will notify you of the price reaching the values specified in the plan.

Setting up alerts

Alerts are good helpers to traders. An alert warns the trader of different market events. They are either sound alerts or text. This function helps the trader remain in course of market events even if they are busy doing some other job.

Alerts are available in various popular trading terminals and mobile apps. Apart from standard alerts, traders may use different expert advisors and indicators that have their own embedded alerts, i.e. they also notify the trader of a trading signal appearing by the specified algorithm so that the trader could decide whether to open a position or not.

Trading at a session at hand

Forex works 24h on weekdays. Hence, depending on their local time, the trader can fully use one out of three trading sessions: Asian, European, or American. We exclude the Pacific one because it is a hard trading option due to small movements.

In the European and American sessions, almost any instrument will do, both positional trading and scalping. If you have the Asian session available, pay more attention to active currencies, such as the yen, the Australian dollar, the New Zealand dollar. Always study the peculiarities of the currencies and influencing factors.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, RoboForex's project called ContestFX will continue, as usual, with the following competitions:

The 139th competition of "Demo Forex" has entered the third week.
The 383rd competition "Week with CFD" has kicked off today.
The 517th competition of "Trade Day" will start on 19.10.2022 at 12:00.
The 431st competition of "KingSize MT5" will start on 20.10.2022 at 20:00.

All our winners receive prize funds to their real trading accounts, and they can use them to earn in the Forex market without investing their own financial savings.

Good luck to all traders!

Sincerely,
RoboForex Contest

Top 10 Trading Psychology Books

Author: Victor Gryazin

Dear Clients and Partners,

This article is about the Top 10 books on trading psychology. They accumulate the experience and knowledge that have helped many famous market experts to succeed.

The books will provide you with information on trading psychology and some advice that will help you realize what you need to become a successful trader.

1. The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management

Alexander Elder is a PhD in medicine, a professional trader and professor. He is the author of several masterpieces that have become modern classics for traders. Elder used to be a psychiatrist in New York and a professor at the University of Columbia. His experience as a psychiatrist gave him a unique understanding of trading psychology.

The New Trading for a Living teaches a calm and disciplined approached to markets. The book offers several templates for trading plans and estimation of your readiness for trading: all in all, you get knowledge and instruments for developing an individual trading system.

2. Trading in the Zone

Trading in the Zone helps to broaden a beginner’s understanding of work at the market. It provides a comprehensive view of problems that one might face upon accepting a challenge from financial markets.

According to Mark Douglas, the author, success in financial markets needs a special mind frame. Trading in the Zone is based on life-long trading experience of the author and his work as a coach in Chicago.

3. The Psychology of the Foreign Exchange Market

The book by Thomas Oberlechner on Forex psychology is revealing the psychological lining of the currency market. By the author’s theory, the market is not remote from traders; instead, it is their creation that reflects their thoughts, feelings, and ideas.

The author of The Psychology of the Foreign Exchange Market states that fundamental changes in stock markets happen not because of economic conditions but because of some alterations in the collective attitudes to the market.

The language of the book is scientific, with quotes enforcing its ideas. Thomas Oberlechner describes mutually dependent relationships between those who make financial decisions and newsmakers. He points out that the currency market is chiefly managed by the complicated market psychology.

4. Hedgehogging

This book is quite a rare chance to encounter some naked facts about financial markets behind the scenes, diving in the world of Wall Street with the author Barton Biggs.

He describes some features and details of investing, showing how he learned to find and use the best ways of making money. Each chapter of Hedgehogging generously offers dozens of storied from the life of different people who fell prey to their ignorance of trading psychology or arrogance and were punished by the cruel world of market trading.

5. Flow: The Psychology of Optimal Experience

This book by Mihaly Csikszentmihalyi suggests quite an unusual approach to a person’s emotional life. Though the book is not directly devoted to trading in financial markets, it will definitely be useful for traders.

The research of the Optimal Experience carried put by the author demonstrated that personal efficacy can by enhanced by living in the so-called Flow. People living in the Flow feel lots of pleasure, confidence, and creativity. The author suggests ways of controlling this state of mind.

Flow: The Psychology of Optimal Experience teaches its readers to sort out the incoming information and to develop their creativity. This book can improve your understanding of how you approach trading and your life.

Closing thoughts

Psychology is a vital intricate part of market trading. To succeed in trading, one needs to know psychology and make use of it. In the article, you can find a Top 10 list of popular books on trading psychology that can help you with it. Clearly, this is quite a subjective set of books, and each trader make have their own view of which books to consider the best.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

How can a Trading Style Depend on a Trader’s Temperament?

Author: Vadim Kovalenko

Dear Clients and Partners,

In their operations, both beginners and experienced traders often face psychological issues. Despite being rather subtle, this aspect of trading is extremely important. Market players try to improve their skills in technical and fundamental analyses, capital and risk management, but suffer losses nonetheless. Of course, post factum mistakes are clear. Most of them are the result of an early exit from the market, a late market entry, or a fear of opening a position in general.

A person makes decisions guided by not only logic but emotions as well. Sooner or later, traders come to a conclusion that they should work on improving both themselves and their psychology. The Internet is already full of advice on what habits one should build and how to discipline oneself but most of them offer to “break” yourself and change radically. As a rule, applying such advice in practice doesn’t result in any success. The reason for that is that a person has several natural dynamic behavior aspects, which build a temperament.

In this article, we’ll talk about temperament and how it can influence a trading style and susceptibility to risks and losses. If you see yourself in any of these descriptions, take it easy, and don’t try to change your attitude to trading right away. First of all, this material is intended for self-analysis and exploring your knowledge about yourself as both a person and a trader.

What is temperament?

Once I was involved in teaching beginner traders and watched them becoming who they wanted to be. It helped me to identify a certain pattern: the most emotional and energetic students tended towards scalping or day-trading, while quieter and calmer ones showed good results in mid-term deals. Tellingly, they did it unconsciously during their classes on demo accounts. I was intrigued by this, that’s why today we’ll talk about temperament. Let’s start with the definition.

Temperament is a set of individual aspects of human psychology, which defines a person’s “modus operandi” in any given situation. The keyword here is a “set”. If we want to define a personality type, we should take into account all responses and processes that form a disposition towards any given behavior model.

When it comes to trading, the most important processes are:

1. Emotional excitement – implies strength and speed of emotions induced by external stimulus.
2. Reaction speed – indicates how quick response is shown. It is often can be detected in the pace of speech.
3. Responsivity – shows how a person responds to external environmental factors.
4. Activity – implies a speed of interaction with the outside world.
5. Rigidity/flexibility – demonstrates a person’s ability to adapt to external influence.

How does a trading style depend on a trader’s temperament?

It’s very important to understand that it’s extremely difficult to find a “clear” temperament type in real life. Quite often, a person has a prevailing type and a slight mixture of others. This is one of the reasons why you shouldn’t consider the descriptions below as guidelines for action first of all, this article is for self-analysis.

Choleric traders

My observations say that choleric traders start trading on an M1 timeframe “ex improviso” without even being slightly prepared. For them, all timeframes longer than H4 are not worth paying attention to.

In the eyes of such traders, a financial market is a kind of gambling, although they often fail to realize that. They easily fall for false promises of win-win trading strategies. The key preference is scalping, while other strategies are not even considered.

In the early days, choleric traders do not consider losses as a reason for stopping and analyzing the situation. On the contrary, losses provide an extra incentive to continue pursuing easy solutions to get profit. More often than not, such pursuits lead to a loss of either interest in trading or a lot of money.

To achieve results, for these traders, it pays to focus on day-trading combines with swing trading. Short-term intraday deals will provide them with necessary adrenaline, while swing trading will help to compensate for losses incurred in ill-considered transactions. The strength of such traders is quick reaction and decision-making, while their weakness is impetuosity, which turns trading into another game of chance.

Sanguine traders

Just like choleric traders, they sometimes are be fascinated by scalping. On the other hand, unlike choleric traders, they are ready for changes and switch to intraday deals much quicker. Due to excessive emotional sensitivity, they may get carried away and spoil all they achieve their monthly results in a couple of days.

It’s difficult for them to maintain mid/long-term positions due to the lack of patience, although they are much more patient than choleric and melancholic traders. Such traders have no problems with swing trading, they often change trading instruments. Sanguine traders are acceptive to losses and failures but lack perseverance in self-improvement.

Phlegmatic traders

Scalping in their early trading days is not a thing for phlegmatic traders; it might be good for them after, let’s say, 5 years of active practice. False promises of fantastic profits may force them to waste time studying scalping strategies (luckily, they are very persistent) but their low response rate won’t let them make quick decisions necessary for this trading method.

Phlegmatic traders can find more success in swing trading and they can also make decent mid/long-term investors. As a rule, phlegmatic people are very good in this area.

Melancholic traders

Melancholic traders are recommended to avoid any active trading. A good option for them is to focus on long-term investments from 1 year. The key principle is to check the terminal as seldom as possible and spend more time on sharpening skills in macroeconomic analysis. Stresses are very harmful to melancholic traders and make them want to leave the market.

Such people are very sensitive to losses, can waste a lot of time in “drawdown”, and go up in smoke eventually. Therefore, their time on the market is rather short: after incurring a loss or losing their entire deposit, melancholic traders usually decide not to be engaged in trading activities.

Closing thoughts

Our psychological reactions to market events directly depend on our temperament type. Most people come in trading being adults when this part of their personality is impossible to change.

Consider a temperament type when choosing a trading strategy? Definitively yes. Define your future trading career using the temperament alone? No, for sure. Don’t forget that any strategies should be tested on a demo account first and only after that applied to real trading.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

Dear traders!

This week, the ContestFX project is waiting for everyone in the following competitions:

The 139th competition of "Demo Forex" is approaching its end.
The 384th competition of "Week with CFD" has just kicked off.
The 518th competition of "Trade Day" will start on 26.10.2022 at 12:00.
The 432nd competition of "KingSize MT5" will start on 27.10.2022 at 20:00.

If you haven't participated in our demo account contests yet, it is very easy to join them - just spend a few minutes registering an account, after which you'll get access to any of the competitions you like in just a couple of mouse clicks.

We're looking forward to your joining in and wish you good luck!

Sincerely,
RoboForex Contest