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RoboForex - roboforex.com

Discussion in 'Broker Discussion' started by Andy, Apr 12, 2012.

  1. Vlad RF

    Vlad RF

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    How to Find Stocks for Short-Term Investments?

    Author: Eugene Savitsky

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    Dear Traders,

    There are several ways of investing in the stock market:
    1. You hold stocks for a long time, making a profit on dividends and the growth of the stock price. This is called long-term investing.
    2. You buy stocks and hold them for a short-term investing at making a profit on a future event in the company, such as the publication of quarterly reports. This is short-term investing.
    3. You speculate stocks during a trading session. This is called intraday trading.
    I have already explained to you how to find stocks for long-term investments, so today I will speak about short-term investing and how to pick up stocks for this.

    The idea of short-term investments

    Short-term investments mean waiting for a certain event that is expected in the nearest future. Depending on your idea, you may be holding the stock for any time between a day and several months.

    The time of holding an open trade in short-term investments is conditional; in this article, under short-term investments, I will mean holding your position for longer than one trading session and up to several months.

    I will say it again that there is no exact border between short- and long-term investing. It depends on how long it will take for the event to happen. Quite often, a short-term investment turns into a long-term one as the investor does not dare to sell the stock upon reaching the goal.

    The process of choosing a stock for short-term investing consists of two parts:
    1. Choosing the stock based on tech analysis.
    2. Choosing the stock based on fundamental analysis.
    In fact, it is a rare case that a stock is bought based just on one type of analysis. Sometimes the decision is influenced by technical analysis, sometimes by the fundamental one; anyway, if both types of analysis tell you the same, such a choice is perfect.

    Choosing stocks for short-term investments by tech analysis

    Let us discuss choosing stocks based on tech analysis.

    To make the right choice, you must be at least a beginner in tech analysis. The things you need to know are:
    1. The basic graphic patterns.
    2. How to find and use support/resistance levels.
    3. The basic technical indicators and how to work with them.
    The easiest way of choosing is by searching for graphic patterns. For this, you will need Finviz.com.

    In the stock scanner, choose tech analysis and mark the patterns you are interested in. In our case, we will look for a Triangle chart pattern.

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    Scanning stocks via Finviz.com

    The website uses special software to find the patterns, and the software does not always search correctly, so assess the offered variants yourself, checking at least three pages.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
    Forex Protect likes this.
  2. Vlad RF

    Vlad RF

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    Diamond: Trading Reversal Pattern

    Author: Maks Artemov

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    Dear Traders,

    Today, we will get acquainted with a tech analysis pattern called Diamond. Compared to other tech analysis patterns, the Diamond pattern appears rather rarely on the chart. This is the number one reason for its being unpopular among most traders. On small timeframes, the Diamond takes little time to form and might work off the signal by a couple of candlesticks. On larger timeframes, from D1 and higher, the pattern may take months to complete, which does not enhance its attractiveness for traders.

    Not every trader can afford to wait two-three months for the signal to form. However, the Diamond has its advantages: it works off the signal almost always and may bring a substantial profit.

    Conditions for and principles of the Diamond formation

    The Diamond is a reversal pattern which forms at the top of an uptrend or the bottom of a downtrend. It is easy to guess that it looks like a diamond.

    Diamond pattern forming at the top of a trend

    Forming at the top of the trend happens as follows. First, the price forms an expanding triangle: it may be isosceles or of a bit irregular shape. After the price reaches the highs, it starts fading, and on the chart, the amplitude of price fluctuations decreases. This is a decrease in the volatility in some sense, when most market players, especially major ones, have taken their positions and start waiting for other players to act.

    Then the second wave of players enters the scene: they have noticed the pattern and are eager to make money on the signal. The thing is that the work-off of the Diamond pattern is based on the greed of market latecomers; however, they cannot compete with the first wave of players and just buy at the place where the players of the first wave start selling (closing the positions that have already yielded some profit).

    As a result, the quotations start declining quickly, generating certain panic in the market so that the second wave of buyers also hurry to close their positions. Thus, Diamond shape forms at the top of the uptrend.

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    Diamond pattern at the top of a trend

    Diamond pattern forming at the bottom of a trend

    A similar situation may be seen at the lows of a downtrend, only market participants swap places. For a time, the market is dominated by bears provoking a downtrend. At a certain point, the price begins a sideways movement, expanding the amplitude (creating an expanding triangle), then volatility shrinks, and a second – converging – triangle forms on the chart.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  3. RoboForex Contest

    RoboForex Contest

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    Dear traders!

    This week project ContestFx invites everyone to participate in the following competitions on the demo accounts:

    112th competition just started in July "Demo Forex" and 266th "Week with CFD".
    08.07.2020 starts at 12:00 - 396th "Trade Day".
    09.07.2020 starts at 20:00 - 316th "KingSize MT5".

    If you've never been member of our trading battles, we invite you to join them. To take part, only once just go through the simple registration method, after that, you can connect to any competition in just a few mouse clicks.

    Join Now!

    Sincerely,
    RoboForex Contest
     
  4. Vlad RF

    Vlad RF

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    Using FFcal News Indicator in Trading

    Author: Victor Gryazin

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    Dear Traders,

    In this review, we will get acquainted with a useful news indicator FFcal. It tracts the publication of important news and reflects them directly on the price chart.

    Why is FFcal useful?

    The FFcal indicator was created for transferring information from the economic calendar of a well-known news portal Forex Factory to the MetaTrader 4 trading platform. Thanks to FFcal, you can see the publication time of important news, keeping your eyes on the price chart. The settings of the indicator allow filtering news by importance and switching on sound alerts, if necessary.

    The publication of important economic (and political) news is a driver for the Forex market. Many traders use the publication of strong news in trading as the mighty impulse of the news may bring a quick profit. The FFcal indicator is a good helper because it will remind you of the upcoming events.

    If the trader does not trade news (as such a type of work entails increased risks), knowing when certain data is issued is still vital. Meaningful news may provoke a mighty market movement and change the technical picture completely. Hence, better not enter the market before the publication of influential news and close the existing positions or minimize risks, pulling the Stop Losses closer.

    FFcal is displayed in the right upper corner of the price chart of your financial instrument (however, you may change the placement in the settings). Two nearest pieces of news are written in different colors; their importance, the previous and expected levels of the value are specified. The time left until the publication is counted down.

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    FFCal indicator

    Installing and setting up FFcal

    To install FFcal to the popular MetaTrader 4 terminal, download it by the link at the end of this article and copy the file to the Indicators folder. Then, via the Main Menu, open File – Open data catalog – MQL4 – Indicators; copy the file of the indicator and restart the terminal.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  5. Vlad RF

    Vlad RF

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    How To Make High Yield Stock Investments?

    Author: Eugene Savitsky

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    Dear Traders,
    I have already told you how to find promising stocks in Healthcare sector. In this article, I will tell you about how to choose stocks for high yield investments and give you particular examples of the stocks that may grow in price by dozens of percent in July.

    In this article, I will give you particular examples of the stocks that may grow in price by dozens of percent in July.

    How to find stocks for high yield investments?

    To make a high yield stock investments in a short time, look for stocks with a relatively low price. For example, a stock that costs 50 cents may rise to 1 USD per stock inside one trading session thanks to minor news. As a result, you will make a 100% profit. A stock that costs 100 USD may never show equal profitability in such a short time.

    The point here is the low price of the stock which allows investing even with a modest starting capital, while limited trade volumes make the price react to the smallest increase in the demand.

    All in all, for high yield stock investments with low risks and a holding the position for a short time, pay attention to cheap stocks which cost less than 5 USD. Let us try to find such stocks.

    The first stage of selection

    According to the scanner from the Finviz.com website, in the US stock market, there are currently 898 stocks that cost under 5 USD. Hence, you need to know in which sector to look for stocks and which events may push the price upwards.

    If you have already read the article mentioned above, you must know that the most promising sector is biotechnologies as this is the sector in which abrupt stock price growth happens most often. The main type of event is the decision of the FDA about some drugs or treatment methods undergoing tests.

    So, let us limit ourselves by biotechnologies. Here, Finviz.com selects 176 stocks.

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    Finviz scanner - Biotech companies
    Much better, but still too many. Now to the hardest part. Let us scrutinize the list and find the company that will fill our deposit with a good profit.

    The second stage of selection

    For the second step, let us think logically. If the decisions of the FDA influence the stock price, we need to have a look at the FDA calendar to find out, which drugs will be hearing the verdict in the nearest future.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  6. RoboForex Contest

    RoboForex Contest

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    Dear traders!

    This week, RoboForex's project called ContestFx traditionally continues with the following competitions:

    112th competition of "Demo Forex" started last Monday.
    267th competition of "Week with CFD" just started recently.
    400th competition of "Trade Day" will start on 15.07.2020 at 12:00.
    317th competition of "KingSize MT5" will start on 16.07.2020 at 20:00.

    Let us remind you that the winners of our demo account contests are presented with prizes, which allow them to start trading on the real Forex market without investing their own funds.

    Do not miss your chance!

    Sincerely,
    RoboForex Contest
     
  7. Vlad RF

    Vlad RF

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    How to Trade EUR/USD Currency Pair?

    Author: Victor Gryazin

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    Dear Traders,

    In this overview, we will discuss trading the EUR/USD currency pair. This is one of the most popular currency pairs in Forex.

    History of the EUR/USD pair

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    The euro (EUR) is quite a young currency, “born” in 1999. The common European currency replaced a whole range of national coins: the Deutsche Mark, the French franc, the Italian lira and many others. Hence, one of the peculiarities of the euro is its sensitivity not only to macroeconomic statistics but also to the news from various EU countries.

    The new currency started circulating without cash on January 1st, 1999; coins and banknotes appeared on January 1st, 2002. In terms of usage for international payments, the euro is second to just the US dollar. It is also the second popular (alongside the USD) world’s reserve currency. At the official start of trades, the EUR/USD exchange rate was about 1.1800.

    Since the beginning of trade in 1999, the rate has changed many times. For a couple of the first years, the perspectives of the euro remained vague, and the quotation was declining stably, reaching the minimum of 0.8200. Then the pair was growing for seven years, reaching its all-time high of 1.6000 in 2008. Later, the pair corrected significantly due to the banking crisis and various issues in the Eurozone. Currently, the pair is trading near 1.1300.

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    EUR/USD history price rate

    Characteristic features of the EUR/USD pair

    EUR/USD is a major currency pair, characterized by increased liquidity. This is in no way surprising because it unites two main reserve currencies – the dollar and euro. These currencies make most of the volume of daily trades in Forex (about 20% of the overall volume).

    The behavior of EUR/USD is some sort of an indicator demonstrating and comparing the economic situation in the US and Europe. If the US economy grows stably while the EU has some troubles, the EUR/USD pair falls. Conversely, if the USA slows down while the EU boasts good results, EUR/USD grows. Look at the main trading characteristics of the pair:

    Active trading time: 24 hours a day except weekend; most active during the European and American trading sessions: this is the time for the main part of trades and important changes in EUR/USD.
    Volatility: medium. At the publication of certain news, the EUR/USD pair still may swing by 100 points and more; however, on backtests, the average daily volatility of the pair is about 80 points.
    Spread: this is one of the main advantages of the EUR/USD pair. Thanks to super-high liquidity, the spread is minimal. On popular ECN accounts, spread normally remains under 1 point.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  8. Vlad RF

    Vlad RF

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    RoboForex: excellent conditions for Indices and a new asset, JP225

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    Dear Clients and Partners,

    RoboForex has expanded the list of instruments available for trading by adding a CFD on the major Japanese stock index called JP225. Indices rank among the most popular instruments of the OTC market, so don’t miss the opportunity to invest in them on attractive conditions.

    Exclusive conditions for trading Indices at RoboForex:

    • Average spread for DE30Cash on ECN and Prime accounts – 0.5 EUR.
    • Fast order execution – from 0.1 seconds.
    • Minimum lot and volume step – 0.01.
    • Commission for the trading volume of 1 million USD – from 4 USD depending on the account type.
    Indices can be traded on MetaTrader 4/5-based Pro-Standard, ECN, and Prime accounts, as well as through our multi-asset terminal R Trader.

    Invest in DE30Cash, JP225Cash, US30Cash, US500Cash, USTECHCash, and other indices with high execution speed and the lowest spreads available.

    Sincerely,
    RoboForex team
     
  9. RoboForex Contest

    RoboForex Contest

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    Dear traders!

    This week, the ContestFX project will offer to your attention the following competitions :

    112th competition of "Demo Forex" has entered its third week.
    268th competition of "Week with CFD" just kicked off today.
    401st competition of "Trade Day" will start on 22.07.2020 at 12:00 .
    318th competition of "KingSize MT5" will start on 23.07.2020 at 20:00.

    To become a contestant of our demo competitions with real prize money for the winners is very simple - all you've to do is to go through an easy registration procedure only once and then access any competition of your choice with just a few mouse clicks.

    We're waiting for you on our website and wish you good luck!

    Sincerely,
    RoboForex Contest
     
  10. Vlad RF

    Vlad RF

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    How to Trade DAX 30 Index: Safe and Proven Methods

    Author: Maks Artemov

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    Dear Traders,

    Today, we will get acquainted with a stock index available for trading in many terminals - DAX 30 index.

    What is DAX 30 index?

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    DAX 30 index

    The DAX 30 index appeared on July 1st, 1988. It is calculated as the weighted average value of stock price capitalization, while the stock price capitalization, in its turn, is counted based on just flexible stock prices. The index also includes dividend profit from stocks with the expectation that it will be reinvested in securities. To put it simply, the index reflects the general profitability of the capital. This is the main difference between DAX 30 and other indices.

    DAX 30 peculiarities

    The DAX 30 index is tightly connected to the economy of Germany: if the economic situation in the country is getting better, the index will also grow. The index includes 30 largest German companies traded at Frankfurt Stock Exchange: BMW, BAYER, ADIDAS, etc.

    The list of companies included in the index is not fixed one and forever – it may change based on the capitalization of companies. If an enterprise is suffering serious losses, it may be excluded from the index; vice versa, if a company is gathering pace, increasing its profits and capitalization, it may be included in the index. The list of companies is corrected once in a quarter. The index is calculated during the working hours of the XETRA exchange from 9 a.m. through 5 p.m. CET.

    Now let us figure out how to trade DAX 30 and what strategies to use.

    How to trade DAX 30?

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    Main stock indices

    For many traders, indices are something outstanding, however, things are much simpler than they seem to be. You will get rid of any doubts if you compare the chart of any index to the charts of currency pairs or the charts of stocks.

    The charts of indices and other instruments, be it bars or Japanese candlesticks, will not differ too much, which means that, theoretically, any trading strategies that already exist or will appear soon apply to them. I cannot speak about all trading strategies in one article, so let us concentrate on those without indicators.

    Trading DAX 30 by graphic analysis

    As with any other chart, the chart of DAX 30 frequently forms various graphic analysis patterns. It is quite easy to find them provided that the trader is acquainted with them. Trend continuation patterns are most frequent. Meanwhile, keep in mind the timeframe you are looking at. An index, or, in our case, a CFD of DAX 30 (DE30), is not a currency pair traded 5 days a week without breaks – an index stops trading at the close of the trading session.

    RoboForex offers exceptional conditions for trading Indices. The spread for the DE30 index is from 0. More detailed information on the conditions is available at this page.

    The algorithm of searching for graphic patterns

    The algorithm of searching for graphic patterns consists of the following steps.

    What timeframe to use for trading DAX 30 index?

    This is an important factor because the profit and Stop Loss size depends on it. On a smaller timeframe, there will be much more trading signals during a trading session than on a larger one; the size of the SL will be more acceptable, and signals will be worked off quicker.

    Trade intraday on M5 through M30; H1 is, to my mind, the maximum for trading intraday; H4 and higher will suit for trading on the medium term. Transferring your position to the next trading day, account for possible gaps at the market opening – sometimes they may impose certain inconvenience to the trader.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  11. Vlad RF

    Vlad RF

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    RoboForex adds 17 new methods for depositing funds

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    Dear Clients and Partners,

    For the convenience of our clients from Latin America, we’ve expanded the list of payment systems by adding 17 new ways of depositing funds to their trading accounts.

    New payments systems for depositing are available in the following countries:

    • Argentina: Pago Fácil and Rapipago.
    • Columbia: Almancense Éxito, Carulla, Davivienda, Edeq (Empresa de Energia del Quindio), efecty, and Surtimax.
    • Mexico: Banorte, BBVA Bancomer, OXXO, Santander Bank, and SPEI.
    • Peru: PagoEfectivo and Western Union.
    • Uruguay: Redpagos.
    • Chile: Servipag.
    These payments systems are already available in your Members Area and will allow our clients to transfer funds from 10 USD, which is very convenient for traders with cent and standard accounts. More detailed information about available payment systems can be found in the “Deposit & Withdrawal methods” section of our website.

    We’d like to remind you that all RoboForex clients can receive "Profit Share Bonus" and "Classic Bonus" when depositing funds to their accounts.

    [​IMG] [​IMG]


    Sincerely,
    RoboForex team
     
  12. Vlad RF

    Vlad RF

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    How to Trade Overbought and Oversold Areas?

    Author: Victor Gryazin

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    Dear Traders,

    In this review, we will discuss trading overbought and oversold areas. A trader may use special indicators that analyze the dynamics of price changes and show the overbought and oversold areas.

    What are overbought and oversold areas?

    The notions "overbought" and "oversold areas" in financial markets indicate short-term fluctuations of the instrument values from the average. These terms say that the price has gone quite far in a certain direction. An overbought state of the market means that the price of a financial instrument has gone too high, while the oversold state means it is too low.

    An overbought state is a significant increase in the price (in percent) in a short time or a lengthy series of several days in an uptrend. For example, oil price may become overbought if it leaps by 10-15% during two or three days or demonstrates pullback-free growth for several days.

    As a result of being overbought, the price forms new local highs on the chart. After the bulls have pushed the price rather high, making the asset overbought, a correction downwards may follow at any moment.

    When an instrument is oversold, local lows form on the chart. This means the bears have pushed the rate rather low, and an upward correction may start at any moment. Specially designed trading indicators may help the trader catch the overbought or oversold state of some asset. For this, an indicator has its window split in two areas: the overbought and oversold areas. Getting into those zones, indicators characterize the current financial situation of the instrument (whether it is overbought or oversold) and give certain trading signals.

    Popular indicators for trading in the overbought and oversold areas

    Stochastic Oscillator

    The creator and greatest fan of this indicator is a popular stock trader George Lane. The Stochastic is an oscillator that demonstrates the current position of the price in % of the previous price range. The Stochastic evaluates the ability of the bulls and bears to close the price at the achieved extremes.

    The Stochastic Oscillator is drawn in a separate window under the price chart and consists of two main lines: %K, the fast line, and %D, the slow line. The indicator values vary from 0 to 100%; through the levels of 20 and 80%, signal lines are drawn, singling out the oversold (0-20%) and overbought (80-100%) areas.

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    Oversold and overbought areas - Stochastic Oscillator

    Relative Strength Index (RSI)

    This index pertains to the group of oscillators. It was created and propelled by J. Welles Wilder. The RSI assesses the position and dynamics of the current price related to the preceding period. The RSI is calculated in a separate window under the price chart.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  13. RoboForex Contest

    RoboForex Contest

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    Dear traders!

    This week, RoboForex's project called ContestFx will continue with these competitions on demo accounts.:

    112th competition of "Demo Forex" has entered the final stage.
    The weekly 269th competition of "Week with CFD".
    402nd competition of "Trade Day" will start on 29.07.2020 at 12:00.
    319th competition of "KingSize MT5" will start on 30.07.2020 at 20:00.

    Let us remind you that all winners of our trading contests will receive rewards in the form of prize money to their real trading accounts. They can start effective trading on the Forex market without investing their own financial resources.

    Good luck to all traders!

    Sincerely,
    RoboForex Contest
     
  14. Vlad RF

    Vlad RF

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    Providec Trading System: Simple Strategy for Beginners

    Author: Timofey Zuev

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    Dear Traders,

    The Providec trading strategy is one of the simplest Forex strategies that I have ever seen: just two indicators than never close the price chart. The trading strategy suits any currency pair or any other instrument featured by the MetaTrader 4 or MetaTrader 5 terminal, be it futures, stocks, of CFDs. The timeframe may vary from M1 to MN.

    If the timeframe is shorter than H1, open orders in the European or American sessions only. As soon as the American session is over, close all trades regardless of their results. Conversely, if you trade on H1 or higher, you may leave trades in the market for as long as you wish.

    The Providec strategy desktop

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    Providec strategy

    Description of the desktop:

    1. The Providec indicator that gives direct signals to buy or to sell by the strategy.
    2. The ProvidecTrend indicator that filters the signals of Providec.

    A signal to buy by the Providec system

    A signal to buy needs several conditions to be met:

    1. The Providec indicator must show a green arrow aimed upwards.
    2. The ProvidecTrend indicator must be green.
    3. The green arrow of Providec must be the first green line to emerge after ProvidecTrend changed from red to green.

    An example of a signal to buy by the Providec system

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  15. Vlad RF

    Vlad RF

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    How to Trade Nikkei 225 Index

    Author: Andrey Goilov

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    Dear Traders,

    Nikkei 225 is one of the most important stock indices reflecting the state of the Japanese economy and overall business activity in the country. It is considered one of the oldest indices in Asia. The stock index includes 225 stocks of companies trading directly in the Japanese market. The most famous of them are Sony Corporation, Canon Inc, Nissan Motor Company, and Honda Motor Company.

    Curiously enough, the index was named after an economic newspaper that used to calculate the instrument. It was first published as long ago as 1950 and was calculated as the arithmetical mean of the companies’ securities. A company’s weight in the index is calculated based not on the general market capitalization but directly on the stock price. The set of companies in the index is revised every September; in October, changes are accepted.

    By the way, RoboForex has just made Nikkei 225 available for trading. Moreover, the company has made trading various indices easier and more attractive by decreasing the minimal lot and step. Average spreads remain among the smallest; for example, an average spread for the De30Cash index is just 0.5 euro per contract.

    Tech analysis of Nikkei 225

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    Nikkei 225 differs from other stock indices, such as NASDAQ, Dow Jones, or S&P 500. If other indices are capable of mighty bullish trades and quick restoration after falls, Nikkei 225 had stuck in a wide flat since the beginning of 2017. Only this year, the quotations have dropped below the lower border of the range, almost reaching the level of 2016.

    However, the price returned into the channel quite soon, and the quotations are now getting ready for testing an important resistance level at 24200; a breakaway of this level will mean a perspective of further growth.

    As for an important support level, it is at 20000. As you may see, upon testing this level upwards, the price tested the support level three times and demonstrated a good bounce upwards.

    On the whole, the instrument is quite technical: many levels and patterns work off quite well. Even now, we can single out an inverted Head and Shoulders pattern forming. Inside the pattern, we may expect a decline and test of 20005, where the right shoulder of the pattern will be complete.

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    Tech analysis of Nikkei 225

    As a rule, most traders who use graphic patterns for trading, buy at the right shoulder. The general goal of the growth is 30985. The growth will not happen if 16255 is broken away – this will cancel the pattern and potentially indicate a further decline.

    A simple strategy for trading Nikkei 225

    Not all traders enjoy using classical tech analysis for trading because it requires constant thinking and drawing different levels and patterns. A significant disadvantage of the analysis is it being subjective: some will think a pattern not regular enough, others will see a Triangle instead of, say, a reversal pattern. Let us have a look at a trading strategy for trading Nikkei 225 that is not subjective.

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
  16. RoboForex Contest

    RoboForex Contest

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    Dear Traders!

    As always, this week the ContestFX project continues its competitions, such as:

    The recently started 113th competition of "Demo Forex" and 270th competition of "Week with CFD".
    At 12:00, August 5th, 2020, starts the 403rd competition of "Trade Day".
    At 20:00, August 6th, 2020, starts the 320th competition of "KingSize MT5".
    All our participants get complete access to any of the competitions they like right after passing a simple registration procedure. If they win, they will receive prize money to their real trading accounts and use it in trading operations on the Forex market without investing their own funds in the initial deposit.

    Join and win!

    Sincerely,
    RoboForex Contest
     
  17. Vlad RF

    Vlad RF

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    False Signals in Forex: How to Detect and Avoid Them?

    Author: Maks Artemov

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    Dear Traders,

    Having opened a position, many traders ponder at the question: “Why did it close with a loss if I seemed to do everything right? Almost all signals by the strategy were there but in the end, the price went in the opposite direction”. The keyword in the question is “almost”. Sometimes the market makes movements that you cannot forecast or calculate, in which case indicators turn out virtually useless. What was the point? What went wrong? The answer is simple: the trading strategy gave a false signal, and the trade turned out losing.

    Let us try to make it clear why such things happen and why false signals appear.

    Why do false signals emerge?

    The news

    News is, perhaps, the most frequent reason for false signals. As you know, the market accounts for everything, and before some news is officially published, the quotations react and start moving in a certain direction. Normally, if some preliminary results turn out better than expected (such as the GDP reports), the quotations will grow. However, practice shows that the quotations start growing before the publication of the news itself, and at the renewal of the data, the market makes an abrupt reversal and starts a steep decline.

    At this moment, Stop Losses trigger at the positions opened beforehand, and impatient market participants worsen the situation, craving for a swift and large profit. Several minutes after the publication of the news, the market calms down, and the price starts going in the correct direction.

    [​IMG]

    False signals - The news

    Errors in the calculations of indicators

    Another reason for the appearance of false signals is errors in the indicator calculations. Many traders tend to forget that after abrupt market movements the data they receive is heavily distorted, and their indicators make mistakes. Impatient traders decide that this is an entry signal and get a losing position.

    [​IMG]

    False signals - Indicator errors

    False breakaways of levels

    In tech analysis, the most widespread false signals are false breakaways of levels. There are two options of trading support and resistance levels: to trade bounces off them or their breakaways. Here is where market players get mistaken.

    Let us imagine trading bounces off the resistance level. The price reached the level, and the trade decided to open a selling trade. They placed the SL behind the level (in a safe zone) but the price broke the level away and close the trade by the SL.

    What do impatient traders do in such cases?

    Read more at R Blog - RoboForex

    Sincerely,
    RoboForex team
     
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