Market Overview

Some Interesting Details about Capital Market Trading and Alfatrade



My name is Gregory Salerno and I’ve been working with Alfatrade for some 12 months now. The company provides indicators which I can use to increase my chances of having successful forex trades. We all know that the forex market can be volatile and chaotic at the same time.

Thus, even for veterans like me, I have to take advantage of what these indicators have to offer in order to help me with my financial growth. Forex indicators are like a compass which helps me navigate through the exciting and chaotic world of trading. These indicators are a welcome change to my trading life as these taught me how to ride out the “waves”. 

Indicator Tools to Work With

When you do forex trading, it is great to take advantage of indicator tools. As there are various tools available for different types of traders, it is imperative for traders like me to search for tools which will fit my requirements.

I take pride in associating with fellow traders who aren't selfish to provide information about indicators tools I can use with my transactions. These people tell me which tools to combine and when to use them.

There are trend following tools available which help me decide on my short and long term trades. Another tool that I use is the trend confirmation tool which helps me avoid forex trade pitfalls. If these two tools concur with each other, I usually follow it.

The trend following and trend confirmation tools help me when the forex market is bullish because I can confidently decide on long term forex trades. However, if the market is bearish, these tools help me decide to sell my forex positions.

News: The NZD Is In Vogue and the Dollar Is On Defensive Ahead Of Fed Meeting

The dollar suffered almost one-month lows against key currencies. Due to this overnight setback, investors became cautious before the meeting of the Federal Reserve.   According to a report (Wall Street Journal), the dollar was placed in a risky position. The Fed may argue altering its onward direction to aid hammer home its message. Traders sustain that this will keep rates down for a long span of time. The article provoked agitation, starting another signal to slow down about the dollar's Long arrangements. The meeting was considered a non-event, which now has all the attention," declared Kyosuke Suzuki. This person is the current director of FX at Societe Generale, Tokyo.

The dollar index slid above 0.6 %. It went from 81.681 to 81.624, something that has not happened since June 21. The fall terminated completely the dollar's tentative jump on Wednesday. It went back on a low trend on July 10. The Fed's meeting in June made investors think twice concerning the date of when   reducing stimulus would start.

The euro jumped till $1.3296 due to an improved weight on the dollar. The last time this happened was on June 20. The last stage was $1.3280. The dollar was down 0.4 % against the yen. It dropped from 98.84 to 98.75 for two weeks. However, there are a number of bids close to the strong support of about 98.75. Here it has the 90-day rolling average and the top of the Ichimoku cloud.

Against the Japanese currency, the euro was also down. After a two-month high of almost 132.74 set, it went for 131.32 yen on Wednesday.  The BNP Paribas analysts affirm that a firmer dollar in the 3rd quarter is still sensible, moreover because the Fed is expected to decrease this year the asset-buying program gradually.

However, the risk-return is not so attractive for long dollar headings into the following week. Some surprises from statistics, and a move in yield discrepancies in the dollar's favor is also expected. This will make the currency resume its upward momentum.  The BNP Paribas reported that Friday's data calendar is restricted to closing Michigan response in July. They supposed to be amended a bit lower compared to the initial reading of 83.9. This measure will continue to go back over the huge spike superior from May gradually.

A standout performer was the NZ currency. It jumped 1.1 % against the dollar and it reached $0.8105. This was the highest rate in six weeks. Last time, the currency traded at $0.8094, which means 0.4 % on top of its late U.S. After the Reserve Bank of NZ shocked the kiwi on Thursday, the investors warmed to it. The bank approached it with a somewhat hawkish announcement, even though it commits to maintain the cash rate at 2.5 percent low record until the end of the year.

 After almost five years, the kiwi reached its highest level against the AUD. The currency went down almost 10% from its March peak.

USD/Euro foreign currency pair is dropping but is expected to be stable and come out strong in a short time. USD/GBP, on the other hand, is on an upswing and is expected to be stable at more than 1.5270. Furthermore, USD/JPY is losing steam as is on a downtrend. If you’re new to forex trading, you’ll surely wonder what to do with the recent forex news. Are you going to buy or sell?

New players in forex trading may find it difficult to decide what to do with the available information. It is because the forex market is a volatile one. Sure, it can provide high return on investments but this occurs only to intelligent and experienced forex traders. But this fact doesn’t have to scare new players because there are available tools which new traders can take advantage of, like forex indicators.

The Indicator Used to Follow a Trend

If you want to find what the forex trend is, you can use a trend-following tool. Although it is still possible to make a lot of money by taking advantage of a countertrend, most forex traders follow the trend. By following the trend, traders make money when they take advantage of the trend. A trend following tool is used to decide whether you should take a long or short position. It’s not used as a separate forex trading system. The moving average is a common method used in trend following. The average closing price is taken in a specific range of dates. If a trend is visible, the indicator will inform the trader whether he should take a long or short position. It isn’t used to know when to enter or exit a forex position.

There are other indicators available which you can take advantage of when you trade foreign currency pairs. I will be discussing them in my future blog entries. I use the trend following indicator of Alfatrade and just as I’ve said in the previous paragraph, I don’t use it to time my forex trade transactions. I use the indicator as it is intended: to help me decide whether to trade long position or short position. You, too, can benefit from a trend following indicator. I had some great returns of investment because of it.

I am a firm believer of ECN forex systems. For my ECN forex trading requirements, I take advantage of the services provided by Alfatrade. As it is, a lot of new forex traders are clueless about it. I just want to share my knowledge so that our fellow traders will have an idea about the ECN forex trader and how it works.

The Role of ECN Brokers

If you’re a forex trader, you may want to try out the ECN forex system. To do so, you have to first select an ECN broker. An ECN broker is the one who matches your orders with that of the others. You and the other clients like investment houses, hedge funds, big financial institutions, big banks, and other individual forex traders are grouped as Tier-1 liquidity providers and form an interbank forex market. As a forex market, it provides the best rates but high volume transactions such that an individual trader like you may not be able to afford.

If you want to get the best rates, the interbank forex market is your best bet. Unfortunately, you need a credit line to be able to trade in this forex market. Thus, you need the services of an ECN broker as he will act as a bridge between you and the other Tier-1 liquidity providers. Through a protocol technology, the ECN broker is able to match your orders with the others. This means that you now have access to the best forex rates and that you deal directly with the other Tier-1 liquidity providers through your ECN broker.

What Is An Electronic Communication Network?

The Electronic communication network or ECN is your link to the forex market. It is actually software which is able to match your orders with the others in order to make a forex transaction. If you send your order, the ECN receives it and tries to match it with the other orders of the same quantity. If there is currently no matched order, it will be posted so that it can find its match later on.

If you trade through ECN, you must realize that you’re not trading with the network nor are you transacting with a single entity. In fact, you’ll never know who matches your order as the network is too large and there are so many liquidity providers. Also, the liquidity providers don’t know from whom the order came from.

I have a degree in Applied Mathematics and I’m fond of developing forex algorithms which I test using the Alfatrade trading platform.

Genetic Algorithms

A genetic algorithm is a method of problem solving which imitates the natural evolution process. It uses natural selection concepts to search for the most appropriate solution to a problem. Therefore, a genetic algorithm is an optimizer with adjustable parameters to either reduce or increase a feedback measure which results to a creation of an artificial neural network. It can also be used on its own.

In forex trading, a genetic algorithm is popularly used to search for the most appropriate combination values of constants in a forex trading rule. It can be used to create an artificial neural network model which can select foreign currency pairs and determine entry and exit points.

Using a Genetic Algorithm

Institutional quantitative forex traders often used genetic algorithms. There may be retail forex traders who use these algorithms with the help of software applications available in the market today. The software can be a standalone type of application. It can also be just a Microsoft Excel add-on to help additional hands-on forex technical analysis.

Forex traders who use a genetic algorithm can use some optimized parameters and historical data for testing. There are various software applications available which can optimize parameters and values. There are also applications which can optimize a fixed set of parameter values only.

Significant Optimization Tricks and Tips

Forex traders who use genetic algorithm must be wary of the potential risk brought about by curve fitting or the use of historical data as basis of the design of a forex trading system. They must ensure that the resulting forex trading system must be forward-tested before its implementation. The choice of parameters is also significant in the design process. As much as possible, forex traders must search for correlated parameters to forex price changes.

A genetic algorithm is a one of a kind way of solving complex forex problems by using nature’s powers. Forex traders, who use this method in predicting the price of foreign currency pairs, can determine the best parameter values to use for a given forex pair. However, because of the volatility of forex trading, this algorithm isn’t 100% guaranteed to bring in the much desired profits. As such, forex traders must be wary about selecting the correct parameters and not fall for curve fitting.

The Candlestick Chart

A candlestick chart is like a bar chart and shows the price changes of a currency in an interval. It’s actually a combination of bar chart and a line chart in one. Commonly used in forex technical analysis, it is widely known to be created by Munehisa Homma during the 18th century. The Western world came to know about candlestick charting in a book by Steve Nison. However, in Nison’s “Beyond Candlesticks”, he said that candle charting may not have been used by Homma but was created during the Meiji Period in the late 1800s in Japan.

Composition of a Candlestick Chart

A candlestick has a black or white body with a shadow or wick on both ends. The real body is that part between the chosen intervals. Shadows are those price excursions within the real body while the wick shows the highest and lowest prices of the currency within the period. If the foreign currency ends higher than its beginning price, the body’s color is white. It is black if the ending price is lower than the beginning price. Today, some countries use red for lower ending price and green or blue for higher ending price. In countries like South Korea, Japan, China, and Taiwan, the color scheme is reversed.

Candlestick Patterns

It may seem that the candlestick chart is very simple by nature. In reality, it is not. The candlestick chart is capable of showing very difficult and complex patterns. Aside from indicating a bearish or bullish forex market, the candlestick chart is also able to show the absolute values of each beginning, ending, low, and high price within a given interval. It is also capable of showing current prices in relation to past intervals’ prices. As such, forex traders can tell just by scrutinizing one bar if the price is lower or higher than the previous price. Because it is color-coded, traders don’t have difficulty analyzing the price changes.

A candlestick chart is an important tool for forex technical analysis. Forex traders who want to take advantage of it can rely on forex trading signals provided by Alfatrade. I’ve been using the services of Alfatrade for my forex trading transactions since I started trading a few years ago.

I hope that this post has helped you – if you have any comments or questions please post them below in the commenting section and I will do my best to answer you ASAP, Greggory.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


Related Articles

View Comments and Join the Discussion!