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EarnForex.com Monthly Newsletter
| | | | Welcome to the latest issue of EarnForex.com newsletter — October 2016. 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: Is Forex Random? | | Proponents of the random walk hypothesis for markets believe that the charts of financial assets (including Forex) are completely random. This means that they cannot be predicted based on the past data. For traders, this is a very important question. After all, if Forex is random, then how can we trade it profitably? The assumption of randomness rests on two ideas. The first one is the efficient-market hypothesis (EMH), which tells us that all the information about an asset is already incorporated into its current price. This means that all the information we can read from a chart is already accounted for and thus is useless. The resulting price movement would appear random relatively to all the past data. The second idea is that randomly generated charts are indistinguishable from the real currency or equity charts. In several experiments, professional chartists were given charts to analyze, which they successfully did, coming up with some trading recommendations, to find out later that the charts were generated using a coin-toss or some other random process. Fortunately for financial, traders both ideas are at a disadvantage when used to prove the markets' randomness. The EMH simply lacks any substantial proof — even its very foundation (assumption that all market participants are rational) is obviously wrong. As for the random charts, indeed, Forex plots appear like they are random. However, Forex charts are results of non-random processes (fundamental events, traders' rational and irrational decisions, technical errors, etc.). Together they may appear random, but the resulting charts have a significant difference with the random ones - non-zero autocorrelation coefficients, which basically means that there is future rates' dependence on the past rates. The thing is that it is possible to simulate any chart by using some random process. For example, one could use a random process to simulate the sine wave of the alternating voltage, but it would not make the voltage random. It is also always worth remembering that the foreign exchange market is not limited to charts only. Many traders thrive by implementing fundamental strategies or by mastering sentiment analysis. | | Overview of the major currency pairs' performance in September | | EUR/USD — was consolidating inside a volatile symmetrical triangle. It was at the maximum at 1.1326 on September 8, at its minimum at 1.1122 on September 21, finishing the month at 1.1240. GBP/USD — was falling down in September. The highest monthly rate was at 1.3444 on September 6, while the lowest — at 1.2914 on September 23. GBP/USD finished September trading at 1.2973. USD/JPY — was also declining through the month but managed to recover somewhat during the final days. The pair rose to as high as 104.31 on September 2, reaching a bottom at 100.08 on September 27 and closing the month with the 101.31 rate. EUR/JPY — moved similarly to USD/JPY. The monthly high was at 116.36 on September 2, the monthly low — at 112.07 on September 21. Trading ended at 113.86 for this currency pair. GBP/JPY — was in a strong bearish trend. The maximum level for this pair was 138.82 on September 2, while the minimum — 129.62 on September 27. The month's trading ended at 131.44 for GBP/JPY. | | Fundamental background of the past month | | The US dollar ended September mixed. The currency remained driven largely by the outlook for an interest rate hike from the Federal Reserve. Fed officials were sending confusing messages, giving the currency no reason to go one way or the other. The major theme for the euro lately were problems of Deutsche Bank - Germany's biggest bank. Investors were concerned that a collapse of the bank may devastate the banking system of the whole eurozone. Yet now it looks like the danger is not as big as it seemed. The Great Britain pound was under pressure from prospects for monetary stimulus from the Bank of England as well as from reemerging fears of Brexit's impact on the economy of the United Kingdom. Market participants were not expecting Britain to start its divorce from the European Union so soon and were worried that the worst for the nation's economy is yet to come. The Japanese yen was very strong in September as traders were disappointed by the monetary decision of the Bank of Japan that did not expand stimulus. Promises of additional easing made by Haruhiko Kuroda did not convince them either, especially as experts were speculating that the bank may have little room to ease its policy further. The Canadian dollar got a strong boost from the surprise decision by the Organization of Petroleum Exporting Countries to cut its crude oil output. Yet analysts are skeptical about the ability of the organization to implement the decision and think that the rally of crude oil (and by the same token the Canadian dollar) may fade soon. The OPEC announcement was also beneficial to other commodity currencies, though the New Zealand dollar remained weak due to prospects for monetary stimulus from the Reserve Bank of New Zealand. The Australian dollar, on the other hand, was rather strong. Gold attempted to rally in September on uncertainty regarding timing of an interest rate hike from the Federal Reserve, and the passiveness of the central bank was beneficial to the metal. Yet bullion erased its gains by the end of the month, failing to keep upward momentum. | | Interest rate changes in September | | Mexico | 4.25% | +0.50% | 4.75% | | Russian Federation | 10.50% | -0.50% | 10.00% | | Turkey | 8.50% | -0.25% | 8.25% | You can see the current interest rates by the world's central banks in our interest rate table. | | Top 5 Forex brokers of the last month | | No new MetaTrader indicators have been added to EarnForex.com since the last issue of the newsletter, but one indicator received a major update: You can always view the previously uploaded Forex indicators. | | Two new Forex articles have been published on EarnForex.com since the last issue of the newsletter: You can always browse the previously uploaded articles. | | One new Forex broker has been added to EarnForex.com since the last issue of the newsletter: - Land-FX — a British broker with regulation by FCA and FSP (New Zealand). It is an MT4 broker. Their standard accounts start with $300 and their ECN accounts start with $2,000. The maximum FX leverage is 1:500 on the former and 1:200 on the latter.
You can always view our full list of Forex brokers. | | One new Forex VPS provider has been added to EarnForex.com since the last issue of the newsletter: - VPSServer.com — a European company with servers in the USA and minimum Forex configuration for $20/month.
You can always browse the previously added VPS companies. | | There were the following important Forex industry news since the last issue of the newsletter: - We have moved EarnForex.com to HTTPS protocol, making your interaction with our website as secure as possible.
- EXNESS acquired a license from the British Financial Conduct Authority.
- Easy-Forex has finally rebranded to easyMarkets as they seem to be diversifying from currencies to trading in other types of assets.
- TempletonFX rebranded into TempleFX.
| | Until the next newsletter issue! | | That is all for the October 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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