Trading CFDs carries considerable risk of capital loss. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
February 18, 2018
For those trading on forex it is essential to understand all the signals that the market offers daily. Technical analysis tools help the trader understand who is dominating the market: bulls or bears.
One of the most popular techniques are certainly the Japanese Candlesticks which, in addition to providing an immediate graphical feedback, are able to give forward-looking clues on the future price evolution.
Among the preferred price patterns we can find the so-called Engulfing Bars that can be both bullish and bearish.
The Engulfing bars are candles that show a greater top than the previous candle top and a lower low than the low of the previous candle; these candles are clearly represented with two different colours according to the bullish or bearish movement.
A bullish or bearish engulfing bar is in theory a sign of a possible reversal of the market trend. This pattern reflects the changes in the psychology of investors.
The following chart represents the UsdJpy cross on a daily time frame. At the end of the uptrend we can see the bearish engulfing figure with the circled candle which, with body and tails, completely incorporates the previous candle. This figure at the end of a very strong uptrend is quite significant as bears have clearly won against the bulls.
The first important element is the key resistance level set for the following sessions. We can immediately find it by looking at the right side of the chart. In July and October, UsdJpy tried to overcome the top of the bearish engulfing pattern without success.
The second consideration is concerning the strategy. The best one is based on the short entry on UsdJpy when the low of the engulfing bar has been violated downward, setting a top as a stop loss.
In May the order was placed below the low of the engulfing figure, resulting in a very profitable short trade.
The same figure can also be found in the opposite position, or on the market lows. In this case, a white candle like the one seen on AudUsd reverses the bearish trend by completely incorporating the previous black candle. The movement is even more significant because it allows AudUsd to return to an important level of support.
This strategy can be used on any time frame (weekly, daily, 1 hour, etc ...). Clearly, the strength of these signals are amplified when the patterns show up near significant support / resistance levels.
May 15, 2018
The volatility of the forex world is one of those factors that attract a huge number of beginner and professional traders.
April 13, 2018
What really drives the forex market? This is a question that is difficult to answer especially due to the complexity of the forex market and all the variables that influence the quotations of a currency.
April 02, 2018
At the beginning of April, we can expect a rise in rates of the Fed, in a very uncertain market moment, especially on the stock market.
March 01, 2018
A list of important events that can move the markets in March...
February 05, 2018
There are no appointments in the month of February with the two most important central banks in the world, ECB and FED.
January 20, 2018
Good traders always use a stoploss when they open a new trade. You can use a regular stop, but you can also use a trailing stop.
January 02, 2018
Last year closed with important performances that were not seen for a while, especially concerning Euro and Dollar.
December 18, 2017
Among the most relevant macroeconomic data for forex traders, inflation must absolutely be included, or even better all the data on production price trends (PPI) and consumption (CPI).
December 01, 2017
December is crucial for the currency market, but not just because of the important meeting of the Federal Reserve scheduled for the 13th.
November 21, 2017
Forex trading can create significant error margins and for this reason the combination of money management, continuous training and common sense is crucial to get the success you want.
November 02, 2017
November starts with the Federal Reserve meeting that should lead to the rise of rates in the month of December.
October 21, 2017
The Forex market allows each trader to operate not only on major currencies like EurUsd, UsdJpy or GbpUsd (the so-called majors), but also on the so-called exotic cross currencies.
October 04, 2017
The month of October is dense with appointments, especially with reference to the news that might come from Central Banks.
June 30, 2017
As always, the month of July represents the antechamber to the month of August, a usually volatile month for financial markets due to the low amount of trades and lower presence of institutional transactions.
May 21, 2016
What are the benefits of trading CFDs over traditional forms of trading?