Technical Analysis - Crude Oil (2018-03-30)
Crude oil is now in the resistance area. From the Daily chart, we can see that this pair has created a double top and got the bearish sign in the resistance area. Now the price is on retrenchment. If it gets a bearish sign in the retrenchment area, hopefully, it will go down to the support. Previously also this pair went down from this area after getting bearish confirmation. The Weekly chart also shows that the price is now in the retrenchment area. We can notice a bearish sign there. Now the pair might go down.
Technical Analysis - GOLD (XAUUSD) (2018-03-30)
The GOLD price has got doji candlestick confirmation in a support area and after that a bullish candle. The pair was on a downside movement previously. Now the price needs to retest the support in the H4 chart. If it gets a bullish sign in the retesting area, it might go up. Or the price might break this support area. If it successfully breaks this support, then it will go down to the next support. We should not take any entry in this pair now.
Technical Analysis - EURUSD (2018-03-30)
EURUSD price is now following the uptrend (from the Weekly chart). The price is moving up for a long time. It has broken very strong support become resistance level in the long time frame. Now the pair is on retrenchment. If it gets a bullish sign in the retrenchment area, it might go up to the resistance level we have marked. Besides, the Daily chart shows that the price had created a double top and went down. Now it is again going up. Hopefully, the pair will go up to the next resistance level.
5 Main Characteristics of the Currency Futures Markets
Currency future is also known as forex futures or foreign exchange futures and is essentially a futures contract to buy or sell a specified amount of a particular currency at a set price and date in the future. Majority of the most popular futures markets are based upon currencies and are offered by the CME (Chicago Mercantile Exchange). There are various currency pairs offered for trading via futures contract and include: EUR - The Euro to US Dollar currency future, GBP - The British Pound to US Dollar currency future, CHF - The Swiss Franc to US Dollar currency future, AUD - The Australian Dollar to US Dollar currency future, CAD - The Canadian Dollar to US Dollar currency future, RP - The Euro to British Pound currency future, RF - The Euro to Swiss Franc currency future among others. Currency futures are in essence traded the same as all the other futures markets like index and commodity futures markets etc. Currency futures shift in increments known as ticks, and each tick movement has a value. The number of ticks made or lost on a trade determines the loss or the profit of the trade. The trader must have a set minimum amount of capital in their account to open a currency futures trade called the margin. There are several currency futures contracts to trade, and the specifications for each should be checked on the exchange website before trading it. Here are the 5 key characteristics of the currency futures markets: 1. Traded via Exchanges Currency Futures are futures contracts based upon currencies and have some significant differences from forex which is basically the currency markets. The main differences are whereas currency futures are traded via exchanges such as the Chicago Mercantile Exchange (CME) currency markets are traded via currency brokers. Currency markets are thus not as regulated as the currency futures. Currency markets are thus prone to some setbacks like currency brokers can trade against their clients and the pricing is also not centralized and is determined by the particular brokers although the minimum amount is set by the exchanges. 2. Only Trade in One Contract Position Size Currency futures trade in one contract size and so traders must trade in multiples. On the flip side, currency markets are advantageous in that it is much more flexible and allows the traders to access high leverage and trading in very specific position sizes. For example, buying a Euro FX contract means the trader is in actual fact holding say 125,000 Euros. In the actual forex market, a trader can trade in multiples of $1000, and can, therefore, adjust their position size to a much greater degree. 3. Settlement/Delivery is Usually in Cash and in the Underlying Currency Currency futures are based on the exchange rate of a currency pair and are settled in cash in the underlying currency. For example, the EUR futures market is based upon the Euro to US Dollar exchange rate, and its underlying currency is Euro. In the example above, When an EUR futures contract expires, the holder receives a delivery of $125,000 worth of Euros in cash and this only happens when the contract expires except for day traders. 4. Trading is for Speculation Day trading and a person trading currency futures for speculation/profit earn a profit based on the price difference between what they buy the contract at and the price they sell it at. It is also possible with futures, to first sell and then buy later and make a profit if the price drops. The profit on a trade in the currency futures is calculated as the difference between the entry price and exit price (in ticks), multiplied by the tick value, and multiplied by the number of contracts taken on the trade. For example, assume a trader buys a Euro FX contract at 1.2525 and then sells it at 1.2545. The difference is a 20 tick profit, and each tick in that contract is worth $12.50. Therefore, the profit is $12.50 x 20 and finally multiplied by the number of contracts the trader had acquired. Each currency contract may comprise a different tick value and it can be checked on the exchange website (CME). 5. Trades With a Margin The margin in Currency futures refers to the amount of money that the trader must have in their account in order to open one contract trade. This is different from currency markets margin/leverage in stocks or the underlying currency market. Final Word We hope this guide has offered you some valuable insights on currency futures trading.
5 Ideal Reasons for Investing in Utility Stocks
Utility stocks are stocks of companies that deliver essential services such as water, gas, and electricity among others. Utility stock is an ideal conservative option for investors looking for steady higher dividends. You can invest in utility stocks companies through a brokerage firm by buying individual utility stocks, mutual funds that are specialized in the utilities sector or as ETFs that include the select sector SPDR-utilities.
8 Best Stock Investment Apps for Beginners
Investing is a daunting task and sometimes could be confusing especially for a beginner. In the past, an investment process began by making a call to a brokerage firm to obtain an advisor who would advise the investor throughout the process. However, the technological advancement has made it easier for beginners who want to start trading. Now, they can just download an app on their PC or Smartphone and use it to trade securities. Different apps offer automation, low cost and high-security measures to make investing easy and exciting for all.
5 Common Types of Financial Swaps
A swap is an act of exchanging one thing for another. In finance, swaps are derivatives wherein two counterparties exchange financial instruments. The swaps can involve an exchange of a series of cash flows of one party’s financial instrument for those of the other party’s financial instrument over a specific period of time. Swaps are mutual agreements that are easy to design and customize over the counter. They offer great flexibility that leads to many swap variations with each serving a given purpose.
Top 5 Forex Risks Traders Should Consider Before they Invest
Forex exchange market is a global decentralized or over the counter market that facilitates the trading of currencies. Just like in a stock exchange, the traders’ goal is to make a profit by buying low and selling high. Forex markets are highly liquid assets due to the high trading volumes. Some of the most common forex exchange trades include spot transactions, currency swaps, and options, forwards, and foreign exchange swaps. Forex trades face plenty of risks that can result in substantial losses. Here are the top 5 forex risks that every trader should consider before they dive into forex trading: 1. Leverage Risks In forex trading, traders require a small initial investment called a margin which is used as leverage in forex trading to gain access to substantial trades. Price volatility can result in margin calls where the investor is required to commit an additional margin. In highly volatile market conditions, aggressive use of leverage by traders can result in massive losses over initial investments made. 2. Interest Rate Risks Interest rate affects countries exchange rates. If a country’s interest rates rise, the currency strengthens. Investors flood the country as they invest in the country’s assets. In essence, a stronger currency means better returns. On the other hand, if a country interest rates fall, the currency weakens as investors begin to withdraw their investments. Interest rate changes can thus have a dramatic effect on forex prices. 3. Transaction Risks The difference or gap between when a contract is initiated and when it settles poses a transaction risk which is an exchange rate risk. Forex trading usually takes 24 hours, and exchange rates can drastically change any time before a trade settle. Currencies also trade at different prices at different times during the trading process. The greater the gap, the higher the transaction risk. The exchange risk that traders face during the trading hours increase the transaction costs. 4. Counterparty Risk The company that provides the asset to an investor in a financial transaction is called the counterparty. There is a risk of default from the dealer or broker in any particular transaction which refers to the counterparty risk. Spot and forward contracts on currencies do not get a guarantee by an exchange or a clearing house and thus pose a counterparty risk to an investor. The counterparty risk can occur in spot currency trading in the event the market maker end up insolvency. The counterparty can refuse or can be unable to oblige to contracts in highly volatile market conditions. 5. Country Risk An investor must assess the structure and the stability of the issuing country before they invest in currencies. In a majority of developing countries, the exchange rates are pegged to a particular world leader currency such as the US dollar. Central Banks in those countries must sustain sufficient reserves to help maintain good exchange rates. A balance of payments deficit can lead to devaluation of the currency and result in a currency crisis. It can consequently have massive effects on forex prices and trading. Investors can also begin to withdraw their assets if they suspect the currency is likely to decrease in value. It results in further devaluing of the currency. Currency crisis aggravates liquidity and credit risks as the currency devalues the assets become illiquid. The Bottom Line An investor should consider the various risks and losses associated with foreign exchange trading before they invest. While forex assets have the highest trading volume, the risks can lead to massive losses.
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