Author: rcanessa - Page 55

Interest Rate Parity Model

The Model of Interest Rate Parity states that in the event that two different currencies have different interest rates, then that difference will be reflected in the premium or discount to the price in the future, in order to avoid arbitration without risks.

For example, if interest rates in the U.S. are 3% and the interest rates of Japan are 1%, then the U.S. dollar (USD) should depreciate against the Japanese yen (JPY) by 2% to avoid what is known as risk arbitrage. This price or future exchange rate is expressed in the price at future date (forward) indicated on the current date.

RoboForex Offers Free Coupons for MQL5 Signals Copytrading Service

by rcanessa

Free MQL5 Signals cuopons from RoboForex

For all traders interested in automated trading and copytrading, RoboForex is offering an interesting promotion during 2017. As of April 11, 2017, RoboForex Ltd with the support of MQL5.community (a service of MetaQuotes Software Corp., the creator of Metatrader 4 and Metatrader 5 platforms) will be carrying out a special offer for its customers, in which the company will award 2017 free coupons for the MQL5 Trading Signals copytrading service. Each of these coupons is valued at 40 USD.

-Period of validity of the offer: The promotion will be active until the 2017 free coupons expire. (At the time this article was written, there were 1935 coupons).

How to calculate the position size in Forex trading?

by rcanessa

Well, now that we know how to calculate the value of 1 pip, calculate the position size that will be used in a trade is really simple.

In this article we will not discuss about how much risk in a trade, which would be the subject of another article, so the first thing to calculate is the monetary amount you are willing to lose in the transaction.

Assuming for example that the size of our trading account is 2,000 EUR and we apply a monetary management in which we risk 1.5% of the account, it is easy to determine that the maximum loss we are willing to assume in a trade is 30 EUR (2000 EUR * 1.5%).

We assume also that the position opened will have a stop loss set in advance. Therefore, as the value of 1 pip is known, then would be easy to calculate the loss in the account in case the price reaches the stop loss for each contract involved in the transaction.

Let’s see some examples:

Indirect quotation and direct quotation in Forex

by rcanessa

Indirect quotes and direct quotes in Forex

What is an indirect quote?

Is the price of a currency pair expressed as amount of foreign currency per unit of domestic currency.

In other words, when an indirect quote is given, the exchange rate is expressed relative to a fixed amount of the national currency (1 unit), while the amount of foreign currency is variable.

For example, if we are in the United States, the indirect quote for the Canadian dollar would be 1.17 CAD = 1 USD, so the exchange rate of the indirect quotation is expressed as USD/CAD 1.17 because it is the expression that reports the amount of CAD per unit of USD which is the national currency (for 1 USD we can obtain 1.17 CAD). If we were in Canada the indirect quotation of the US dollar would be 0.85 USD = 1 CAD (CAD/USD 0.85 indicates that for 1 CAD, which is the national currency, we get 0.85 USD). As we can see, in an indirect quote the base currency of the currency pair is the national currency.

Forex Position Size Calculator

by rcanessa

A key aspect when an investor trades in financial markets like Forex is the application of appropriate monetary and risk management. This includes the use of an appropriate position size based on the total capital account, the risk level accepted by the trader, the level of leverage, the stop loss used, and the volatility of the instrument in which the … Read more

Demo Contest for cTrader accounts of OctaFX

by rcanessa

The Forex broker OctaFX (an ECN FX broker) offers a weekly trading competition for demo accounts using cTrader trading platform. It is a contest offering cash prizes to the top 5 places, ie the 5 traders that have the best performance for the duration of the competition. Because it is a competition for demo accounts, participants do not risk their money at any time and have the chance to practice their trading strategies and make money in the process.

-Duration of the competition: At the moment, competition takes place during every week and is valid for 2015 and 2016 or until OctaFX says otherwise.

Promotions of OctaFX for 2022

by rcanessa

During 2019 the Forex broker OctaFX (an ECN broker) offers a series of promotions for its customers, including bonuses for depositing funds and trading contests for demo accounts with cash prizes for the winners. For now, these promotions are valid throughout 2019-2022 and are available for all customers of the company, both new and existing.

OctaFX Review – Analysis of Forex Broker OctaFX

by rcanessa

OctaFX – Broker Review OctaFX is a regulated Forex broker which operated under an ECN business model. This company offers the possibility to trade with dozens of currency pairs in the Forex spot market and gold and silver spot. The customer can use any trading strategy including scalping and hedging. In addition, OctaFX provides many extra services to its clients, including various … Read more

Scalping trading system for 1 minute charts

by rcanessa

This trading system is ideal for traders who only have little time to trade in the market during each session. In fact, this is a strategy developed for traders who prefer to carry out short-term transactions in which they open and close positions in minutes and not hours. Usually these types of traders, known as scalpers, use one-minute charts to enter and exit their positions.

Intraday traders in the Forex market can take advantage of the small movements that occur in different currency pairs by watching the 1-minute candlestick charts.

Like any scalping strategy, it requires active monitoring and management by the trader as he must be alert to cut losses and take profits quickly.

As always, it is advisable to practice this strategy on a demo account before trading with real money.

DeMarker Indicator

by rcanessa

DeMarker – A good tool for market trends analysis

DeMarker indicator (DI) is a technical indicator (specifically an oscillator) created by Tom Demark and it is used to analyze the trend of the price of an instrument such as a currency pair (Forex) in the market. It can also be used to study the trends of other instruments such as stocks and commodities for example. It is an oscillator created to identify new buying and selling opportunities. In some way, is similar to the Directional Movement Indicators developed by Welles Wilder. In general, Demark goal was to create an indicator that overcome the problems normally associated with other technical indicators and tools used to identify overbought and oversold trading conditions in the market.

This indicator tracks the market sentiment of an asset by comparing the asset’s present price with the price of the previous period. The basic concept behind the DI is that it can be used to detect changing market interest in an asset and by doing so identify market highs and lows.

Demark designed this forecasting method to predict the beginning of a trend in the medium and long term, and is based on specially designed coefficients.

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