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EarnForex.com Monthly Newsletter
| | | | Welcome to the latest issue of EarnForex.com newsletter — November 2014. In this issue of EarnForex.com newsletter, I will remind you about the most important Forex-related events of the last month and will also show you the list of the site's latest updates. | | EDITORIAL: Assessing the Risks | | Entering a trade without a proper exit plan and risk assessment is a known pitfall in Forex trading. While it is usually easy to calculate the risk associated with a single position (for example, using our calculator), there are special cases that pose a serious threat to unsuspecting traders: - Even if you are going to close your trade manually at some point but do not set a "hard" stop-loss at that level, you are dealing with a position, which has almost unlimited potential for loss.
- In theory, buy-side no-SL trades are safer than their sell-side cousins, because there is a natural floor at 0 rate whereas upside growth of a currency pair's rate is unlimited. In reality, even small buy trades will cost you an enormous amount of money if the rate gets close to zero.
- Relying on hedged positions or pending orders (which will open a trade in a separate direction) is a definite way to limit losses and replace stop-loss, but you have to be aware of the stop-loss and take-profit levels that are attached to the orders used for hedging. If hedging order is closed by SL or TP, your initial trade remains naked and poses indefinite amount of risk.
- If you create too many orders for the same currency pair, each with its own stop-loss and take-profit level (common in some grid trading systems), it will become nearly impossible to assess the risk accurately. This is probably not a big problem if you are going to monitor them all manually, but it is a disaster brewing if left unattended.
| | Overview of the major currency pairs' performance in October | | EUR/USD — went up during the first half of the month and declined during the second one. It was at the maximum at 1.2886 on October 15, at its minimum at 1.2485 on October 31, finishing the month at 1.2519. GBP/USD — traded mostly sideways in October. The highest monthly rate was at 1.6251 on October 1, while the lowest — at 1.5874 on October 15. GBP/USD finished October trading at 1.5983. USD/JPY — soared significantly following a mediocre decline during the first half of the month. The pair rose to as high as 112.47 on October 31, reaching a bottom at 105.19 on October 15 and closing the month with the 112.31 rate. EUR/JPY — traded similarly to USD/JPY. The monthly high was at 140.78 on October 31, the monthly low — at 134.13 on October 16. Trading ended at 140.63 for this currency pair. GBP/JPY — demonstrated the same behavior as other yen pairs but with a bigger drop and smaller rally. The maximum level for this pair was 179.78 on October 31, while the minimum — 167.98 on October 15. The month's trading ended at 179.55 for GBP/JPY. | | Fundamental background of the past month | | The US dollar started October poorly, halting its rally. Yet the currency resumed its upward movement in the second half of the month, especially after the Federal Reserve ended QE3. Last month was not bad for the euro, which rallied against the yen and rose a little versus the pound, but with talks about quantitative easing it will be hard for the currency to hold ground. The Great Britain pound remained weak as policy makers demonstrated unwillingness to raise interest rates in the near future. The Japanese yen attempted to rally at the start of October after the Bank of Japan refrained from adding stimulating measures, yet the rally failed and the currency was falling in the second half of the month. The yen demonstrated a big slump at the last day of October as Japan's central bank surprised the market, announcing unexpected quantitative easing. The Swiss franc continued to move mostly in sync with euro as it has been doing since the Swiss National Bank instituted a cap on the currency, though the proposed changes for central bank's regulations can make it hard for the bank to keep the currency ceiling. The Canadian dollar was mixed, being under pressure from falling oil prices and low probability of an interest rate hike. The Australian dollar was weighed down by falling commodity prices but managed to hold ground, getting help from China's positive economic data. The New Zealand dollar consolidated in October following its previous losses but was demonstrating bearish bias after the latest monetary policy decision from the Reserve Bank of New Zealand. Gold followed the pattern that most currencies demonstrated in October: rising in the first half of the month but falling in the second, demonstrating especially big slump after the Fed decision. | | Interest rate changes in October | | Argentina | 9.00% | +4.00% | 13.00% | | Brazil | 11.00% | +0.25% | 11.25% | | Chile | 3.25% | -0.25% | 3.00% | | Poland | 2.50% | -0.50% | 2.00% | | Romania | 3.25% | -0.25% | 3.00% | | South Korea | 2.25% | -0.25% | 2.00% | | Sweden | 0.25% | -0.25% | 0.00% | | | Top 5 Forex brokers of the last month | | Two new Forex brokers have been added to EarnForex.com since the last issue of the newsletter: - TurboForex — a New Zealand company with offices around the world, it offers MetaTrader 4 and WebTrader platforms to its customers. Their minimum account size is $50, which yields a leverage of 1:500 on Forex instruments.
- FX Next — a company based in New Zealand. It provides multi-platform solutions to spot FX traders. They specialize in ECN and offer accounts starting from $100.
You can always view our full list of Forex brokers. | | There were the following important Forex industry news since the last issue of the newsletter: | | Until the next newsletter issue! | | That is all for the November issue of the EarnForex.com newsletter. If you have questions, comments or just want to see something else in the next monthly issue, please let us know. | | |
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