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.
May 15, 2018
The volatility of the forex world is one of those factors that attract a huge number of beginner and professional traders.
Since volatility creates opportunities for profits, obviously every trader appreciates those investment assets on which a greater price movement is present. There is also the possibility to go indifferently long and short and apply more or less consistent leverage, so this explains the reason for the great success of the forex market among traders.
After opening a Forex account and starting a daily trading, traders must clearly try to develop their own graphic software in order to have a constant feedback about the volatility of the traded currencies. Each cross makes history to itself (for example, EurChf has a completely different volatility from UsdMxn) and therefore each chart must be set according to the underlying asset. Among the many useful tools to measure the volatility, we can find the so called ATR, one of the most immediate and interesting ones.
The Average True Range (ATR) is a statistical indicator used to measure the market volatility created by Welles Wilder. In general, the ATR is a volatility meter and is the result of the moving average of the price amplitude of a given period.
The True Range is defined as the difference between:
The ATR is a good measure of the investor sentiment and by convention it is said that:
An example can be useful to try to understand this theory better.
From this point of view, what happened recently to EurUsd is exemplary. The 14-day ATR, from September to December 2017, began to fall until it reached a low at the end of the year, exactly when EurUsd was going to force the trend line that had been holding the exchange rate for a few weeks. This trend was the clear sign that the bull market was about to recover from a prolonged accumulation phase. Attending to resistance breaking movements with a progressively increasing ATR is a health signal of the current trend.
The trader, in addition to the classic oscillators such as RSI, MACD, etc ... must daily monitor the trend of indicators of the ATR to understand if a spike of volatility can be exploited in their favour. Having tools that can confirm or not a movement like the one seen above is also essential for the size of the operation. A corrective movement like that of EurUsd accompanied by the contraction of volatility is a good signal when the resistance is violated as effectively happened in this case. We are facing a classic accumulation phase that comes to an end when the market reaches great levels of tranquillity. And the surprise causes volatility and lots of potential earnings pips.
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 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.
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?