Silver rises a little on Friday but doesn’t continue over $24.00. Bullish traders are favored by the technical setup, which also provides opportunities for further gains. The optimistic picture will be destroyed with a strong breach under trend-channel support.
In the Asian session on Friday, silver makes gains on the previous day’s decent recovery from the $23.15 region or a two-week low. However, silver finds it difficult to acquire traction or maintain it above the $24.00 level, and it has already partially given up some of its small intraday gains.
Technically speaking, the bottom end of an ascending channel that has been in place for more than a month served as support for the XAG/USD on Thursday. The following uptick indicates that this week’s decline from the $24.50 resistance area has reached its conclusion. Additionally, oscillators on the hourly charts have resumed their upward trend and barely manage to stay in the bullish zone on the daily chart.
The aforementioned technical situation favours the possibility of a continued upward movement, but aggressive bullish traders should exercise care given the absence of follow-through purchasing. The XAG/USD still seems prepared to retest the multi-month top, at $24.50, before attempting to overcome the trend-channel resistance. The latter is now valued slightly over the psychological $25.00 threshold.
On the 4-hour chart, the 200-period SMA at $23.55 guards against the near-term downside on the other hand. The overnight swing low, at $23.15, and the trend-channel support, in the $23.40-$23.35 region, are closely behind this. The XAG/USD pair will be more susceptible to weakness below the $23.00 level if there is a clear breach below the aforementioned support levels, which will be considered a new trigger for bearish traders.
Before the XAG/USD finally dips to the $22.10-$22.00 area, the following pertinent support is set around the $22.60-$22.55 region. The latter indicates a static resistance breakpoint and could, at least temporarily, serve to prevent any additional losses.
Gold’s price drops from a five-month high as the US Dollar somewhat recovers intraday. US Treasury bond rates are increasing, putting pressure on the XAU/USD and reviving USD demand.
Risks associated with the price of gold should be limited by bets on the Federal Reserve hiking rates less firmly. Gold’s price falls from the $1,810 area, or the five-month high hit earlier this Monday, failing to benefit from the intraday gain. The XAU/USD slips below $1,800 during the early part of the European session and is now perched on a potentially dangerous 200-day Simple Moving Average (SMA).
The slight US Dollar resurgence is putting pressure on the price of gold. Following an early dip, the US Dollar has only partially recovered from its lowest position since late June, which is anticipated to impact the price of gold denominated in US dollars. The US’s Friday release of solid monthly employment figures and a pleasant surprise in pay growth raised the possibility that inflationary pressures will increase further. This improves the position of the dollar and fuels speculation that the Federal Reserve will continue to tighten monetary policy.
The price of the XAU/USD pair is further hampered by rising US Treasury bond rates. The Federal Reserve’s chairman, Jerome Powell, also predicted that the peak interest rate would be higher than expected this week. Consequently, the price of US Treasury bonds rises throughout the day, which is seen as another factor supporting the US Dollar and pulling money away from the non-yielding Gold price. Further weighing on the XAU/USD is the recent optimism about easing COVID-19 restrictions in several Chinese cities, which has dampened demand for traditional safe-haven assets.
To limit losses, the Federal Reserve wagers on slower rate hikes. At its next meeting on December 13–14, the Federal Reserve is anticipated to increase interest rates by a relatively small 50 basis points, but the downside is anticipated to remain cushioned—at least briefly. In the event of any big corrective slump, this should continue to support the price of gold, requiring careful positioning. The US ISM Services PMI, announced later during the early North American session, is now being anticipated by traders for short-term possibilities.
Technical Gold Price Outlook
Technically, last week’s extended surge past the significant 200-day SMA was seen as a brand-new trigger for bullish traders. Thus, buyers are more likely to be drawn to the $1,783–$1,782 range in the case of a future slump. The price of gold should thus be limited in its upward movement to the support level that served as the horizontal resistance breakpoint between $1,761 and $1,760.
On the other hand, unless some follow-through buying happens beyond the $1,810 zone, bulls may want to delay placing further bets. The price of gold may then continue to increase, perhaps reaching the next significant obstacle on the road to the supply zone between $1,843 and $1,845 near the $1,830 region.
AUD/USD gains momentum on Tuesday as new USD selling materializes. The Dollar is affected by bets on less aggressive Fed rate rises and a rebound in risk sentiment. The COVID-19 problems in China should stop the positive developments and hinder Australian efforts.
On Tuesday, there is some dip buying in the AUD/USD pair at the 0.6640 level, which stays in a purchasing mood into the early European session. Spot prices are back above the 0.6700 level thanks to the upward intraday movement, aided by the resurgence of new US Dollar selling.
The AUD/USD pair is given some support due to several variables hindering Greenback’s ability to profit from the goodish overnight recovery from the crucial 200-day Simple Moving Average (SMA). Market expectations for a modest 50 basis point rate increase in December were reinforced by a dovish evaluation of the November FOMC meeting minutes published last week. This weakens the safe-haven USD and helps the risk-averse Aussie, combined with a minor improvement in the global risk mood.
However, the deteriorating COVID-19 scenario in China should temper any bullish market movement and act as a drag on the Australian Dollar, which serves as a proxy for China. In reality, China recorded a record-breaking number of COVID-19 infections on Monday, and the enactment of additional restrictions sparked a wave of unrest in several places. This intensifies concerns about a further downturn in economic activity and might affect market sentiment in the future.
Furthermore, the overnight hawkish remarks from significant FOMC members should restrict the Dollar’s fall and further limit the AUD/USD pair’s gain. It is important to remember that James Bullard, the president of the St. Louis Federal Reserve, John Williams, and Lael Brainard, the vice chair of the Fed, all reaffirmed that there would be more rate increases. Thus, bold bullish traders should be cautious and take positions for future profits.
However, the AUD/USD pair seems to have ended a two-day losing trend and is still at the whim of USD price movements. The publication of the US Consumer Confidence Index by the Conference Board is currently anticipated by market players as a potential catalyst later in the early North American session. However, attention will continue to be on Wednesday’s speech by Fed Chair Jerome Powell and this week’s important US economic data, such as the NFP report on Friday.
For all beginning traders, it is essential to comprehend the fundamentals of going long or short forex. Whether a trader believes a currency will appreciate (go up) or depreciate (go down) in relation to another currency determines whether they take a long or short position. Defined, a trader will “Go Long” the underlying currency when they believe it will increase, and they will “Go Short” the underlying currency when they believe it will decrease.
Learn more about long and short positions in forex trading, as well as when to employ them, by reading on.
WHAT DOES A POSITION IN FOREX TRADING MEAN?
A person or business that owns a certain quantity of a currency and is exposed to that currency’s swings versus other currencies is said to be in a forex position. It may be a short or lengthy posture. Three qualities define a forex position:
The base currency pair
The path (long or short)
The size
Trades may be made in several currency pairings. They might go long if they believe the currency’s value will increase. Their account equity and the necessary margin would determine the magnitude of the stake they would take. Traders must use the proper level of leverage.
WHAT DOES IT MEAN TO HAVE A LONG OR SHORT FOREX POSITION?
In forex, taking a long or short position is betting on the value of a currency pair to rise or fall. The most fundamental part of dealing with the markets is deciding whether to go long or short. A trader who goes long will have a positive investment balance in an asset with the expectation that it will increase in value. When short, they will have a negative investment balance with the belief that the asset will lose value and be resold at a later date for a lower price.
WHAT IS A LONG POSITION, AND WHEN SHOULD IT BE TRADED?
A transaction that has been conducted with the expectation that the underlying instrument would increase is known as a long position. For example, a trader who executes a purchase order holds a long position in the USD/JPY underlying asset. Here, they anticipate an increase in the US dollar value relative to the Japanese Yen.
For instance, a trader who purchased two lots of USD/JPY has a long position in USD/JPY of two lots. The size is two lots, the underlying is USD/JPY, and the direction is long.
To enter long positions, traders search for purchase indications. Traders employ indicators to search for buy and sell signals so they may join the market.
The descent of a currency to a level of support is an illustration of a buy signal. In the graph below, the USD/JPY declines below 110.274 but repeatedly finds support. When the price falls to this level, 110.274, it acts as a support level and gives traders a buy signal.
The FX market has the benefit of trading almost 24/7. Because there is higher liquidity during extensive trading sessions like New York, London, and sometimes Sydney and Tokyo, some traders choose to trade during those periods.
WHAT IS A SHORT POSITION, AND WHEN SHOULD IT BE TRADED?
In many ways, a short position is the polar opposite of a long position. Trading participants anticipate that the price of the underlying currency will decline when they take a short position (go down). Shorting a currency refers to selling the underlying asset with the anticipation that its value will decline over time, enabling the trader to repurchase it later at a lower price. Profit is what separates the greater selling price from the lower purchase price. As a concrete example, a trader who shorts USD/JPY is selling USD to purchase JPY.
To enter short positions, traders search for sell indications. When the price of the underlying currency hits a level of resistance, this is a popular sell signal. A price level the underlying has had difficulty breaking above is referred to as a level of resistance. In the graph below, the USD/JPY rises to 114.486 and then struggles to increase. When the price hits 114.486, this level turns into a resistance level and provides traders with a sell signal.
Although if an opportunity arises, traders may execute their transaction essentially whenever the forex market is open, some traders choose to trade just during the big trading sessions.
Nobody enjoys losing, but success requires the ability to accept a loss. Just speak with a few of the most successful hedge fund managers in history. It isn’t about being correct, George Soros once remarked; it’s about how much money you earn when you’re right against how much money you lose when you’re wrong.
Stanley Druckenmiller, a very successful student of Soros, once said in an interview that he believes he is correct about 60% of the time. He is thus mistaken 40% of the time. Another billionaire macro icon, Paul Tudor Jones, has said that he is wrong approximately as frequently as he is correct, but he agrees with Soros that the sum of one’s wins is more important than the sum of one’s losses.
This implies that many of the world’s most successful hedge fund managers are often mistaken. And they don’t care since it is just crucial in terms of the game and not what is most important. What matters to them is risk management for their concepts and the asymmetry between their winning and failed ideas.
Accepting loss is, of course, easier said than done since it is human nature to loathe loss; thus, absorbing losses regularly may be difficult to swallow for many. However, it would help if you embraced it since it is a necessary component of the game and what will ultimately keep you playing. Additionally, you may move on to the next possible winner more quickly the quicker a concept reaches its breaking point.
Losses are not all made equal. When you consistently suffer losses or suffer losses that are too large in comparison to your victories, this should raise warning signs. A loss may result from market circumstances unfavorable to your trading strategy or style, or it may be a sign that you are not regularly adhering to your trading guidelines.
Take a critical look at what you are doing while going through a losing streak (drawdown). Check your transaction record and diary to evaluate whether you are trading according to plan or veering off course. Determine what you need to do to go back on track if you see that you are veering off course. Losing in this situation is unacceptable since it was your fault.
Although you should be adaptable to changing market circumstances, if you are following a sound, time-tested approach across many cycles, you should still be successful. This is especially true if you are following your plan and the market is not supportive of your strategy. Here, consistency is crucial, as is sticking with the plan despite setbacks.
Summary:
The company’s most delicate don’t emphasize being correct all the time and recognize that accepting losses is part of the game.
The most critical factors are asymmetrical win/loss ratios and minimizing the risk of winning versus losing ideas.
But not all losses are the same; you need to know when losing is due to changes in the market and when it results from straying from your trading strategy.
DOJI CANDLESTICK TYPES: THE PATTERNS EVERY TRADE SHOULD KNOW
A Doji candlestick indicates market uncertainty and the possibility of a shift in trend. Because they are among the simpler candles to recognize and their wicks provide significant indications for where a trader may put their stop, Doji candlesticks are well-liked and often employed in trading.
This article explains the formation of Doji patterns and how to recognize five of the most potent and often used varieties of Doji:
Standard Doji
Long legged Doji
Dragonfly Doji
Gravestone Doji
4-Price Doji
FORMATION OF DOJI CANDLESTICK PATTERNS:
When the price of a currency pair starts and closes at almost the same level throughout the chart when the Doji is present, a Doji is created. Although prices may have changed between the candle’s opening and closure, the fact that they are almost the same price shows that the market has been unable to determine which direction to take the pair (to the upside or the downside).
Remember that trading in the direction of longer-term trends will often have a better likelihood. The best approach to trading a Doji is in the direction of the trend when it appears at the bottom of an uptrending retracement or the top of a downtrending retracement. The stop would be placed below the lower wick of the Doji in an uptrend and above the higher wick in decline.
TOP 5 DOJI CANDLESTICK PATTERN STYLES
The typical Doji pattern
A single candlestick known as a Standard Doji does not always mean much. Traders look at the price activity leading up to the Doji to determine what this candlestick represents.
Doji candlestick patterns should only be used as a starting point for trades. For instance, a Standard Doji inside an uptrend can show to be a component of the uptrend’s continuance. The chart below, however, highlights the need for confirmation after the occurrence of the Doji and indicates the reversal of an uptrend.
2. Doji with a long leg
The vertical lines above and below the horizontal line are longer on the Long-Legged Doji. This shows that, while price action swung substantially up and down within the candle’s period, it almost closed at the same level as it started. This demonstrates the buyers’ and sellers’ uncertainty.
The price has somewhat reversed after making a significant move to the negative at the location where the Long-Legged Doji appears (see chart below). A trader might then interpret the uncertainty and possible direction shift if the Doji indicates the retracement peak, which we do not know when it forms. Next, at the start of the candle that follows the Doji, seek to short the pair. On the Long-Legged Doji, the stop loss would be positioned at the top of the upper wick.
Pic Credit: Link
3. Dragonfly Doji
The Dragonfly Doji, which denotes the possibility of a direction shift, may show up at either an uptrend’s peak or a downtrend’s bottom. Prices did not increase over the beginning price because no line above the horizontal bar forms a “T” shape. At the bottom of a negative trend, a very long lower wick on this Doji is a strong positive signal.
Stone Tomb Doji
The Dragonfly Doji is the counterpart of the Gravestone Doji. It manifests when price movement begins and ends near the bottom of the trading range. Buyers successfully drove the price higher when the candle opened, but by the close, they had failed to maintain the positive momentum. This is a negative indicator at the peak of an upward movement.
5. Price Doji
The 4 Price Doji is only a horizontal line; there is neither a vertical line above nor below. Since the candle’s high, low, open, and closure (all four prices depicted) are identical, this Doji pattern denotes the utmost indecisiveness. The 4 Price Doji is a distinctive pattern that denotes hesitation or a calm market.
In this article, we have covered the highlights of global market news about the USD/CNH, AUD/USD, GBP/USD and USD/JPY.
USD/CNH Price Analysis: Fades off weekly support at 7.2000.
Early on Thursday morning in Europe, USD/CNH reverses the day’s loss from the record high despite recent inactivity around 7.1880.
As a result, the offshore Chinese yuan (CNH) pair bounces off a horizontal region made up of many lows noted since Monday while RSI remains stable (14). The pair’s upward momentum is hampered by negative MACD indications and the buyer’s failure to control the price above the psychological level of 7.2000.
However, it should be noted that any retreat movements below the indicated immediate support around 7.1460-50 are expected to be met with resistance from an upward-sloping support line from September 13 that is, as of the time of the press, near 7.1280.
The vicinity of 7.1125 on the 50-SMA level also functions as a downward filter.
The swing high at 7.1060 on September 22 and the psychological magnet at 7.1000 may serve as the final line of defence for the USD/CNH buyers even if the quote falls below 7.1125.
As an alternative, recovery advances must continue above the 1.2000 level in order to persuade buyers to go for the several obstacles close to 1.2500.
After that, attention will turn to the recently flashed record high at 7.2600 and the 7.3000 psychological magnet.
AUD/USD: Risk-aversion, weaker be fore the US GDP, Australian inflation sends bears to the sub-0.6500 zone.
As traders wait for new information to support recent retracement movements, the AUD/USD currency pair narrows intraday losses around 0.6490 after recently rebounding from daily lows.
Nevertheless, the Australian dollar was under pressure early on Thursday due to disappointing readings of Australia’s monthly Consumer Price Index (CPI) and the risk-off atmosphere. In order to support the previous day’s recovery from the two-year low, the same joined stronger US Treasury rates.
According to the Australian Bureau of Statistics’ (ABS) first monthly CPI statistics, headline price pressure decreased from 7.0% in July to 6.8% in August. The Reserve Bank of Australia (RBA) recently made some cautionary words in an effort to chastise AUD/USD purchasers after the publication of the data.
The risk-on sentiment of Wednesday and China’s measures to boost domestic markets in an effort to allay concerns about a recession seem to support the recent recovery in US Treasury rates as well as the US currency. The People’s Bank of China (PBOC) intends to issue 2.5 trillion yuan in government bonds in Q4 and may raise the onshore yuan fix for the first time in nine days along these lines.
GBP/USD trades sideways around 1.0800, with attention shifting to US/UK GDP figures.
In the Tokyo session, the GBP/USD pair is performing mediocrely. After falling from the important threshold of 1.0900, the asset has since turned sideways in a constrained range of 1.0782-1.0800. A failed effort to breach the barriers at 1.0900 caused the cable to correct, although a bullish impulsive advance after the end of a pullback cannot be ruled out.
The unexpected decision by the Bank of England (BOE) to implement a bond-purchase programme in an effort to stabilize the financial markets has begun to manifest its effects. It is important to note that risk-sensitive currencies are doing well right now since the US dollar index (DXY) has reached an erratic high of around 115. Sterling’s gains, nevertheless, remain modest when compared to those of other currencies.
To protect the economy from the financial instability, the BOJ would buy long-dated bonds totaling GBP 5 billion in a series of purchases over a 13-day period. Simply increasing liquidity might have a huge positive impact when people in the UK are already feeling the effects of greater price pressures and BOE officials are already working tirelessly to contain inflation.
USD/JPY Price Analysis: Inventory adjustment is underway, with the 50-EMA serving as a major support.
After falling to a level close to 144.00, the USD/JPY pair has now begun to recover. The asset is broadly probing the downward breach of the charted area, which is displayed in a constrained range between 144.40 and 144.90. The upward trend is showing clear and obvious signs of weariness, and the dollar bulls may soon relinquish control.
The major is auctioning in an inventory adjustment procedure on a four-hour scale, indicating a somewhat lengthier consolidation time. It is crucial to note that institutional investors are accumulating or distributing funds as part of the adjustment process. Given that the asset is showing symptoms of momentum loss, the odds are in favor of an inventory distribution.
The 50-period Exponential Moving Average (EMA), which is now around 113.80 at the time of writing, has served as a significant safety net for the supporters of the dollar. A volatile occurrence once interrupted the peace, but fortunately it was overstepped again. The dollar will decline if the 50-EMA continues to capitulate.
The long-term trend is still strong, as seen by the 200-EMA scaling higher at 141.20.
Please click herefor the Market News Updates from 28 September, 2022.
The duo slips and once again violates parity. On Monday, the dollar seems bought with rising US rates. Next up in ECB-speak is EMU Construction Output. At the start of the week, sellers take back control of the European currency and push EUR/USD down below the zone of psychological parity.
The EUR/USD will next find support near the 2022 low.
The weak performance in the risk complex and renewed purchasing activity around the dollar ahead of the Fed’s interest rate decision on Wednesday have caused the EUR/USD to reverse three straight daily advances so far and concentrate on the downside.
According to CME Group’s Fed Watch Tool, the likelihood of the latter is now hovering around 80%, while the likelihood of a 100 bps rate increase has recently lost steam.
The 10-year Bund rates on the German debt market are continuing their slow, multi-week uptrend and have so far flirted with the 1.80% range.
Construction Output in the Greater Euroland will be the sole release on the euro docket to be backed by statements by ECB officials E. Fernandez-Bollo, L. De Guindos, and A. Enria. The NAHB index due date is followed by the 3-month and 6-month Bill auctions in the US.
What should I look for in the EUR?
Following increased caution and dollar purchasing ahead of the FOMC meeting, the EUR/USD stays under pressure and falls below the parity level (Wednesday).
The Fed-ECB difference, geopolitical concerns, fragmentation issues, and market activity surrounding the euro are now anticipated to closely follow dollar dynamics.
Concerns about a possible regional recession are now on the rise, and these concerns for the single currency are exacerbated by indicators of confidence that are declining and a probable slowdown in certain fundamentals.
The ECB’s ongoing cycle of rate hikes is one of the pressing concerns on the back burner. late September elections in Italy. Risks of fragmentation exist when the ECB normalizes its monetary policies. Impact of the conflict in Ukraine and the ongoing energy shortage on the prognosis for inflation and growth in the area.
EUR/USD Levels To Monitor
The pair is now down 0.32 percent at 0.9979, and a break of 0.9944 (the week’s low on September 16) would lead to 0.9863 (2022 low on September 6) and eventually 0.9859. (December 2002 low). On the other side, the first resistance level appears at 1.0197 (monthly high September 12), then 1.0202 (high August 17), and finally 1.0310. (100-day SMA).
Human error is widespread in the forex market and often results in well-known trading blunders. These trading errors often occur, especially with new traders. Having an awareness of these mistakes might make traders more effective in their forex trading. Despite the fact that all traders, regardless of experience level, make trading errors, being aware of the reasoning behind them may help to stop trading obstacles from becoming out of control. The top 10 trading errors and solutions are listed in this article. These errors are a part of the ongoing learning process, and traders should get used to them to prevent repeating blunders.
Consider these 10 common trading blunders you must avoid before starting a forex trading strategy since they account for a large share of losing transactions.
MISTAKE 1: NO TRADE PLAN
Without a trading plan, traders’ approaches are often haphazard since their strategies are inconsistent. Trading strategies have established rules and methods for each deal. This stops traders from acting irrationally in response to unfavorable fluctuations. Sticking to a trading strategy is important since straying from it might result in traders entering uncharted waters in terms of trading style. This ultimately leads to trading errors brought on by unfamiliarity. Testing trading methods on a practice account is recommended. This may be used to a real account if traders are confident and comprehend the technique.
MISTAKE 2: EXCESSIVE LEVERAGING
The use of borrowed funds to establish forex trades is referred to as leverage or margin. This function reduces the amount of personal cash needed for each transaction, but there is a genuine risk of increased loss. Leverage amplifies earnings and losses, therefore controlling the amount used is essential. Find out more about forex market leverage.
Brokers are crucial to their clients’ protection. Many brokers provide excessively high leverage ratios, such 1000:1, which greatly increase the risk to both inexperienced and seasoned traders. Regulated brokers will restrict leverage to reasonable levels under the direction of reputable financial authorities. When choosing the right broker, this should be taken into account.
MISTAKE 3: INSUFFICIENT TIME HORIZON
The trading method being used and time invested go hand in hand. Understanding the strategy will enable you to determine the estimated time frame utilized for each transaction since every trading method adapts to different time horizons. For instance, whereas positional traders prefer the longer time periods, scalpers focus on the shorter time frames. Investigate the forex trading methods for various time frames.
MISTAKE 4: Insufficient Research
In order to implement and carry out a certain trading strategy, forex traders must make the necessary research investments. When markets are studied properly, fundamental effects, market patterns, and entry/exit timing may all be revealed. The more one understands the product itself, the more time is spent on the market. There are minute differences in how the various pairings operate inside the forex market. To thrive in the target market, these variations need to be carefully examined.
Avoid reacting to media coverage and unfounded advise without first checking the information with the approach and analysis you’ve used. This often happens to traders. This is not to say that these suggestions and press releases shouldn’t be taken into account; rather, it means that they should be thoroughly researched before being put into practise.
MISTAKE 5: BAD RISK-TO-REWARD RATIOS
Traders often ignore favorable risk-to-reward ratios, which may lead to poor risk management. A good risk-to-reward ratio, such as 1:2, means that the trade’s potential profit is twice as great as its possible loss. A long EUR/USD trade with a 1:2 risk-to-reward ratio is seen in the chart below. With a stop at 1.12598 (10 pip) and a limit of 1.12898, the trade was initiated at a level of 1.12698. (20 pips). The Average True Range (ATR), which bases entry and exit points on market volatility, is a useful indicator for identifying stop and limit levels in forex trading.
A ratio in mind may help traders moderate their expectations, which is crucial since, according to extensive research by DailyFX, poor risk management has emerged as the most common error traders make.
Risk-to-reward ratio for EUR/USD is 1:2.
MISTAKE 6: TRADING BASED ON EMOTION
Trading decisions made out of emotion are often illogical and ineffective. After losing transactions, traders typically start new positions to make up for the loss. These trades often lack any technical or fundamental educational support. Since trading strategies are designed to prevent this kind of trade, they must be strictly adhered to.
MISTAKE 7: INACCURATE TRADING SIZE
Every trading strategy must take trade size into account. Many traders trade in sizes that are inappropriate for their account sizes. Thereafter, risk grows and account balances may be lost. DailyFX advises putting no more than 2% of the entire value of the account at risk. For instance, if the account has $10,000 in it, a maximum risk of $200 per transaction is advised. The strain of overexposing the account would be relieved if traders follow this basic guideline. Overexposing the account to one single market carries a very high risk.
MISTAKE 8: TRADING ON MULTIPLE MARKETS
Trading on a small number of marketplaces allows traders to amass the required expertise to master these markets without even touching the surface of a small number of markets. Due to a lack of knowledge, many newbie forex traders attempt to trade on various markets without success. If necessary, this should be carried out using a demo account. Trades without the required fundamental or technical reason are often made by traders as a result of noise trading (irrational trading) on a variety of marketplaces.
For instance, the 2018 Bitcoin mania attracted many noisy traders at the wrong moment. Sadly, a lot of traders joined the market at the “FOMO or Euphoria” period of the market cycle, which led to huge losses.
MISTAKE 9: FAILURE TO REVIEW TRADES
The regular usage of a trading log will enable traders to recognize both successful and potential strategy weaknesses. The trader’s general comprehension of the market and future strategy will improve as a result. Reviewing transactions reveals both mistakes and positive elements that need to be continually emphasized.
MISTAKE 10: CHOOSING AN UNSUITABLE BROKER
Choosing the best CFD broker might be challenging since there are so many of them available worldwide. Before creating an account with a broker, financial security and legal compliance are required. The broker’s website should make this information easily accessible. To avoid laws in more stringent nations like the US (Commodity Exchange Act) and the UK, many brokers are licensed in nations with lax rules (FCA).
Safety is the first priority, but selecting a broker also involves considering the broker’s platform’s comfort level and simplicity of use. Prior to trade with actual money, you should allow yourself enough time to get familiar with the platform and costs.
MISTAKES IN FOREX TRADING: A SUMMARY
Before engaging in any kind of live trading, it’s essential to have the appropriate theoretical framework for forex trading. Future traders will profit from taking the time to comprehend the dos and don’ts of FX trading. All traders will ultimately make mistakes, but it’s important to train and develop anticipated behavior in order to reduce errors and prevent repeat crimes. This article’s main emphasis is on maintaining a trading strategy with appropriate risk management and a workable reviewing mechanism.
In this article, we have covered the highlights of global market news about the Gold Prices, AUD/USD, USD/JPY and the Canadian Dollar.
Gold prices are in danger as FOMC wagers increase. U.S. retail sales could cause a crash.
During Wednesday’s New York trading, gold prices dropped under the 1,700 level, putting the yellow metal in danger of a potentially jarring decline. The US dollar and short-term Treasury yields were helped by the US inflation data, which also sent Federal Reserve rate hike bets soaring. The week will be concluded by the US retail sales report for August, which is due at 12:30 GMT on Thursday, and the September consumer sentiment report from the University of Michigan, which is due on Friday.
Those occurrences could be crucial for bullion prices because they will probably affect FOMC market pricing. A 100 basis point rate increase is one in four likely, according to Fed funds futures. If those odds rise, gold’s value as a financial asset will decrease. The Fed wants to achieve a soft landing, but it is more concerned with controlling inflation. However, a robust overall economy would mitigate the effects of higher interest rates. The FOMC would have more flexibility as a result.
However, a report on retail sales that was stronger than anticipated would probably be bad news for gold prices. Analysts predict that the headline figure will show a 0.1% decline from July, but that is only because gas prices are declining. The figure to pay attention to is one that does not include gasoline or vehicles. According to the Bloomberg consensus prediction, the price will rise by 0.5% from July. The initial Michigan consumer sentiment index is anticipated to increase to 60.0 on Friday from 58.2 in August. Inflation expectations are also covered in the survey, with estimates for the next year and the next five to ten years tracking at 4.6% and 2.9%, respectively.
Even if those economic prints come in below expectations, the most likely outcome after the CPI is a 75-bps Fed hike, which puts gold in a difficult position. Treasury yields will remain supported as a result, limiting the potential for price increases. Lower skew means that the path of least resistance. As the likelihood of a 100-bps rate hike rises, it is likely that XAU will decline. A bearish catalyst may be set off once Fed funds futures reach a 50% probability for the large price hike.
On the back of the jobs report, the AUD rose as investors anticipated RBA action. AUD/USD: Will it Rise?
After today’s jobs report, the Australian Dollar initially fell before surging, and the likelihood that the RBA will raise interest rates by 50 basis points at their next meeting in October slightly increased.
In August, the unemployment rate increased slightly from the previously reported 3.4% to 3.5%.
Instead of the 35k expected, the overall change in employment for the month was 33.5k. While there was a 58.8k increase in full-time employment, there were 25.3k part-time job losses in August.
As anticipated, the participation rate came in at 66.6%, up from the previous reading of 66.4%.
The incorrect reporting of the statistics by Bloomberg was the cause of the unusual price movement right after the number. Someone there could have a difficult day. The initial flash had zero jobs added but the unemployment rate was correct at 3.5%.
Japanese Yen Gained After BoJ Hinted Intervention, What Could this Mean for USD/JPY?
The Japanese Yen gained 1.08% against the US Dollar on Wednesday, which is a notable achievement given JPY’s persistent depreciation since 2021. What was the cause of this move? Reports crossed the wires that the Bank of Japan conducted a rate check, opening the door to market intervention for the first time since 1998. Traders were spooked. Should they be?
Prior to this event, various Japanese government and monetary policy officials have been offering verbal jabs against the currency for some time. There was no physical activity. The BoJ continues to be in a very different position from its major peers at the end of the day. The central bank keeps up its ultra-loose monetary policy, which includes negative interest rates, ongoing quantitative easing, and yield curve control.
Nearly every other significant central bank has tightened policy in the interim. The Japanese Yen is probably under pressure due to this widening gap between them and Japan. To understand the story, all you need to do is look at the yield spreads on government bonds. The action on Wednesday might have been viewed as the next step by officials in their efforts to control the Yen.
Funny enough, a push for intervention could also be interpreted as a sign that the Bank of Japan might keep policy loose. Former board member Goushi Kataoka mentioned that at the earliest, a BoJ policy shift might come by the middle of next year. It seems that in the interim, the government may have to use other measures to help hold up the Yen.
Canadian Dollar Technical Analysis: CAD/JPY, USD/CAD Rates Outlook
The Canadian Dollar has turned lower over the past few days, in line with risk appetite more broadly. Rapidly rising Fed rate hike odds have pushed up the US Dollar (via the DXY Index) and US Treasury yields, while proliferating global recession concerns have weighed on energy prices. The net-result has been that USD/CAD rates are pushing their yearly highs, while CAD/JPY rates have dropped to their lowest level in over a week.
In the prior note at the end of August, it was observed that “continued deterioration in US equity markets, noted by rising US 2-year yields and an elevated VIX, could help pave the path for USD/CAD rates to retest their yearly high above 1.3200 in short order.” Since then, including today, the pair has traded above 1.3200 on occasions, but has not yet reached the yearly high at 1.3224. Having broken above ascending triangle resistance that’s been forming since April, the near-term bias appears to be to the topside.
Please click herefor the Market News Updates from 13 September 2022.
