Блог Форекс Richart

También conocido como mercado de divisas, Forex es un mercado donde se intercambian las principales monedas de todo el mundo.

Asimismo, en términos más conceptuales, Forex es el acrónimo de Foreign Exchange Market, que en español suele traducirse como mercado cambiario o de divisas.

Para dimensionar el tamaño de este mercado, se estima que en Forex cada día se hacen operaciones por un monto equivalente a los 5 billones de dólares, igual a todas las transacciones que se hacen en Wall Street en un mes.

El mercado de divisas opera las 24 horas del día durante 5 días a la semana, con excepción de los sábados y domingos. Abre los lunes en la mañana, con la apertura de los mercados de Australia y Nueva Zelanda, y finaliza los viernes, con el cierre del mercado de Nueva York, Estados Unidos. 

¿Cómo funciona Forex?

Los intercambios de divisas o trading en Forex se realizan mediante contratos particulares entre las dos partes involucradas en un mercado libre no regulado o de carácter privado, conocido en inglés como "Over The Counter" (OTC). 

En una operación OTC, los términos y condiciones de una transacción son negociadas de forma bilateral entre quienes intercambian una divisa, en lugar de ser reguladas por un organismo independiente que garantice el cumplimiento del acuerdo.

Al haber un gran número de operaciones en Forex, el valor de las divisas suele variar bastante, por lo que es un mercado volátil para los inversionistas, es decir, hay mayores oportunidades de tener altos beneficios, pero también crece el riesgo de tener pérdidas considerables. 

El precio o valor de cambio de una moneda es determinado por la demanda del mercado. Es decir, si hay muchas personas que quieren comprar dólares estadounidenses, el valor del dólar incrementará. 

También influyen las noticias de actualidad que ocurren en todo el mundo. Por ejemplo, la invasión bélica de Rusia a Ucrania, más la respuesta de Estados Unidos, la Unión Europea (UE) y decenas de países más a este conflicto, centrada en eliminar a Rusia del sistema financiero mundial como presión para detener la guerra, provocó el desplome del precio del rublo, moneda nacional rusa, generando pérdidas importantes a los inversionistas que tenían activos en esta divisa. 

La compraventa de divisas se establece en un red global y descentralizada de bancos y bolsas de valores de todo el mundo, en ciudades como Nueva York, Tokio, Londres, Frankfurt, Hong Kong, Sydney o Singapur. 

Forex: ventajas, desventajas y riesgos

Algunas de las ventajas de invertir dinero en el mercado global de divisas son:

• Opción de invertir a corto o largo plazo. Es decir, prever que una divisa aumentará su cotización en un determinado momento para comprar o vender, según sea el caso.

• Rendimientos potencialmente elevados. Si se invierte conforme una estrategia bien estructurada (y se tiene algo de suerte, también hay que decirlo), puedes obtener beneficios mayores a otras alternativas de inversión.

• Alto grado de liquidez. Hay muchos operadores en Forex, además de una gran liquidez o disponibilidad de dinero para realizar transacciones.

Por otro lado, algunas de las principales desventajas y riesgos de invertir en Forex son los siguientes:

• Alto riesgo. Las cotizaciones son muy volátiles, por lo que los riesgos son mayores que los que se asumen con otras alternativas de inversión. 

• Incertidumbre. Es un mercado no regulado por alguna entidad oficial, algo que incrementa el ya de por sí elevado nivel de riesgo que implica este instrumento de inversión. 

• Pérdidas reales (y muy grandes). Si no se tiene el conocimiento y la estrategia adecuada para invertir en Forex, lo más probable es que pierdas tu dinero.

Las monedas que más se intercambian o venden en Forex

Las principales divisas que se intercambian en Forex son:

• USD: dólar estadounidense. 

Actualmente, el dólar estadounidense es la moneda que más opera en Forex, ya que el 88 por ciento de todas las transacciones de divisas involucra esta moneda. Le sigue el euro ( por ciento), el yen (23 por ciento) y la libra esterlina ( por ciento).

El peso mexicano es la décima moneda con más movimientos en Forex y la segunda entre los llamados países emergentes o con capacidad para tener economías desarrolladas o de “primer mundo” en el futuro.

Además, cuatro países concentran el 77 por ciento de las operaciones del mercado de divisas: Estados Unidos, Reino Unido, Singapur y Japón. 

Un dato curioso es que nueve de cada 10 inversionistas en Forex son hombres.

¿Qué son los pares de divisa y cómo se clasifican?

En Forex, un par de divisa se refiere a las dos monedas con las que se hace una operación de compraventa. También se le conoce como cruce.

En el mercado de divisas, un par se representa mediante el símbolo o abreviatura de las dos monedas que se van a intercambiar, más una línea diagonal. Por ejemplo: USD/MXN. 

Aquí, la sigla USD es la representación del dólar estadounidense y MXN es la abreviatura del peso mexicano. USD es la primera divisa o moneda que compras y MXN es la segunda divisa o la divisa que vendes.

En resumen, cuando vemos el ejemplo anterior, lo que significa es que es una transacción en la que se busca comprar dólares con pesos mexicanos.

¿Quiénes participan en Forex?

En Forex participa una amplia gama de entidades, grupos e instituciones; sin embargo, los actores más importantes son los siguientes:

• Bancos centrales. La moneda de un país es regulada por un banco central, que opera en Forex para controlar la oferta monetaria, la inflación y las tasas de interés de su divisa, así como para garantizar la estabilidad financiera de su nación. Los principales participantes de este tipo en Forex son la Reserva Federal de Estados Unidos (FED) y el Banco Central Europeo (BCE). En nuestro país, es el Banco de México (Banxico) quien opera en Forex.

• Bancos comerciales. Son las instituciones privadas que captan los recursos financieros del público en general y ofrecen productos como créditos, planes de inversión, etcétera. Los bancos comerciales participan en el mercado mundial de divisas como intermediarios de sus clientes, comprando monedas fuertes para obtener rendimientos. También especulan con el dinero para aumentar la riqueza de sus activos y de sus accionistas. 

• Bancos de inversión y gestores de fondos. Se especializan en administrar fondos y capitales de diversos clientes para invertirlos y obtener rentabilidad. A diferencia de la banca comercial, su segmento de mercado son empresas y personas con mucho dinero acumulado, a diferencia de la banca comercial, enfocada en los pequeños ahorradores.

• Empresas. En Forex participan esencialmente las compañías grandes con inversiones en varios países y que dependen del buen funcionamiento del comercio internacional. Estos negocios requieren fondos en moneda extranjera para realizar determinadas operaciones financieras. 

• Casas de cambio. Son negocios que permiten a las personas cambiar parte de su capital de una divisa a otra. Las operaciones suelen ser en efectivo. 

• Inversionistas. Cualquier persona puede invertir su dinero en el mercado mundial de divisas, pero por la complejidad y variabilidad de estas operaciones, lo hacen a través de intermediarios. Los más conocidos son los brókers, personas o compañías con autorización para poder invertir en Forex. Algunos brókers ofrecen al público plataformas en línea para poner su dinero en el mercado de divisas.

Historia y orígenes de Forex

El intercambio de monedas en todo el mundo tiene miles de años de vigencia, con reportes de las primeras transacciones de este tipo en el antiguo Egipto. Sin embargo, el moderno mercado de divisas y su actual funcionamiento tiene casi 50 años de vigencia. 

La adopción generalizada del papel moneda a partir del siglo 18 permitió la globalización de la economía y el comercio mundial que hoy conocemos. No obstante, más adelante surgió la preocupación de cómo respaldar el valor de ese dinero para evitar que los países decidieran imprimir billetes de más, generando crisis económicas.

En se consolidó el Patrón Oro, el cual consiste en determinar el valor de una moneda con base en la cantidad de oro que contiene. El motivo por el que se eligió este metal precioso fue porque es duradero y difícil de falsificar.

Sin embargo, la Primera y la Segunda Guerra Mundial hicieron tambalear este esquema, debido a que los países se endeudaron para pagar los costos de los conflictos bélicos, imprimiendo más moneda y mermando sus reservas de oro.

Por ello, en se firmaron los Acuerdos de Bretton Woods, en los cuales se fijó un nuevo patrón en el sistema monetario mundial. A partir de ese momento, los países del mundo fijaron el valor de su divisa respecto al dólar de Estados Unidos, que a su vez respaldaba el valor de su moneda con sus reservas de oro.

El sistema funcionó bien hasta , pero los elevados gastos de Estados Unidos en la Guerra de Vietnam provocaron que el entonces presidente de ese país, Richard Nixon, decidiera desvincular a su nación de los acuerdos de Bretton Woods y, por lo tanto, el dólar abandonó el patrón oro.

Con ello, las monedas del mundo dejaron de depender del oro o del dólar estadounidense para definir su valor. A partir de entonces, el valor de cada divisa se basa en las leyes de la oferta y la demanda, y los intercambios entre las diversas monedas ocurren en un mercado mundial de divisas: Forex.

Autor de la entrada:

Richard Dennis is a legendary trader famous for his trend-following approach to trading and his successful experiment with a group of novice traders known as the Turtles. This blog post will provide an in-depth overview of Richard Dennis&#;s trading strategy and explain how it works, including its fundamental principles, advantages, and disadvantages.

The Turtle Trading Rules and Strategy

The Turtle Trading System is a trend-following system that emphasizes position sizing, entry and exit rules, and risk management. The system is based on a set of specific rules and principles that are designed to identify and follow long-term trends in the market.

Let’s break down each trading principle. 

Richard Dennis Trading Principle 1: Trend Following

The Turtle Trading System is designed to identify and follow long-term trends in the market. The system uses a combination of technical indicators to identify trends and determine entry and exit points. The Turtles used a variety of technical indicators, including moving averages, to identify trends and decide when to enter and exit trades.

Let’s head to the charts and see a practical example of Trend Following. Here’s the weekly chart of Crude Oil below. 

In the above example, a simple trend-following strategy would be to Buy a weekly close above the day moving average (which you can see on the far left). 

From there, a trend follower would hold the position until a weekly bar closed below that same day moving average (middle arrow). 

There are myriad ways to skin the cat and develop your trend-following system. For instance, you could use monthly charts or daily charts. 

Additionally, you could use shorter-term moving averages for higher-frequency trading. The most crucial point is to find what works best for you, your personality/lifestyle, and your investment/trading goals. 

I prefer longer-term charts for trend following. It allows you to capture a more significant percentage of the move without getting stopped by random noise. 

For example, check out the monthly chart on Eli Lilly (LLY). Suppose we used a trend-following system that bought on a monthly close above the day moving average and held until a monthly closing below that 50D moving average. 

Look at that beast of a trade. A monthly trend following strategy had you buy in late early And most importantly, you’d still be holding the stock today! 

That’s the power of trend-following strategies!

Let’s move on to Richard Dennis’s second Trading Principle: position sizing.

Richard Dennis Trading Principle 2: Position Sizing

The Turtles used a position sizing method known as the &#;1% risk rule.&#; This rule states that traders should risk no more than 1% of their account balance on any trade. This means that if a trader&#;s account has a balance of $,, they should risk no more than $1, on any single trade.

The 1% risk rule is designed to help traders control their risk and limit their losses. By limiting the amount of capital at stake in any single trade, traders can protect their trading accounts and avoid catastrophic losses.

For example, using the 1% risk rule, a trader must take consecutive losing trades before blowing up. So even the worst trading programs aren’t that bad. That means the trader will always have some chips on the table to risk, enabling them to take another shot at making profits in markets. 

Position sizing is one of the most under-discussed concepts in trading and investing. But an excellent trading system with proper risk management will continue in ruin. 

We’re obsessed with position sizing at Macro Ops. It’s the bedrock of every trading strategy we use, and it&#;s a significant contributing factor to our outperforming the market over the last three years. 

Richard Dennis Trading Principle 3: Entry & Exit Rules

The Turtle Trading System uses a set of specific entry and exit rules to determine when to enter and exit trades. The system is designed to capture large trends while minimizing losses during market volatility.

The Turtles used a variety of entry and exit rules, depending on the market conditions and the specific financial instrument being traded. In general, the Turtles would enter a trade when the market broke out of a range and then use trailing stop-loss orders to lock in profits and limit losses.

We’ve already discussed the entry rules above (buying a close above a moving average, etc.). Next, let’s discuss exit rules. 

Common exit rules include selling once the trade falls below the low of the “signal” bar. The “signal” bar is simply the bar that closed above the moving average in our above example. 

Another exit rule is to put a stop-loss below a “pivot point” on the chart. A pivot point is a price level where if the stock trades below, it would signal a loss of price support from the market. Losing support tilts the odds of the stock falling further higher. 

Let’s use the LLY example from above. I’ve marked the two exit points in red.

A couple things to note. Exit #1 allows a trader to get a massive position size because the stop-loss (read: exit) is so close to the entry. The tradeoff is that there’s a higher chance of getting stopped out and exiting for a loss. 

Exit #2 is much farther away from the entry and will have a smaller notional position size. However, the tradeoff is that there’s a smaller chance of getting stopped for a loss due to random noise. 

Richard Dennis Trading Principle 4: Risk Management

The Turtle Trading System emphasizes risk management, controlling losses, and preserving capital. The system uses stop-loss orders to limit potential losses on trades. This means that if a trade moves against a trader, they will exit the trade automatically when a specific price is reached, limiting their potential losses.

The Four Advantages of Richard Dennis&#; Trading Strategy

The Turtle Trading System has several advantages that make it an attractive trading strategy for many traders. There are four main advantages of Richard Dennis’ Turtle Trading Strategy.

Advantage 1: Potential For High Returns

The Turtle Trading System is designed to capture large trends in the market, which can result in significant profits for traders who can successfully identify and follow these trends.

Richard Dennis backed up this claim for high returns with his Turtle Students. According to OxfordStrat, the original Turtle Traders generated an average annual compound return of 80%. 

Advantage 2: Emphasis on Risk Management

The Turtle Trading System strongly emphasizes risk management, which can help traders avoid catastrophic losses and preserve their trading capital.

Most “modern” trading strategies barely leave for risk management. Instead, they market how successful you can be by trading this pattern or taking this signal daily. But what they don’t tell you is that profitable trading means taking a lot of losses. 

Legendary trader Peter Brandt often says his job is to be a good loser. To consistently take losing trades and not feel defeated. 

An emphasis on proper risk management helps a trader reframe their primary role. Away from profit-taking czar to monk-like loss taker. 

Advantage 3: Applicable to multiple financial instruments

The Turtle Trading System can be applied to multiple financial instruments, including stocks, commodities, and currencies, making it a versatile trading strategy that can be used in different markets.

This fits perfectly with our Global Macro Strategy. Trend-following strategies can go anywhere and trade any instrument without restrictions. If you can plot it on a chart, you can create a trend-following system. 

It doesn’t matter if you’re trading cow manure or Rolex watches. 

Advantage 4: You Can Automate Trend Following

The Turtle Trading System can be automated, so traders can use software programs to implement the system&#;s rules and principles automatically. This can help traders save time and reduce the potential for human error.

Automated trading systems are perfect for serious traders that don’t yet have the free time to commit to a more manually back-tested trading strategy. In addition, such automated programs are great for business owners or high-performing employees that want to eventually become full-time traders. 

The Three Disadvantages of Richard Dennis&#; Trading Strategy

While the Turtle Trading System has several advantages, there are also some potential disadvantages. Here are two drawbacks to look out for with Richard Dennis’ Trading Strategy. 

Disadvantage 1: Requires discipline and patience 

The Turtle Trading System requires traders to be disciplined and patient, as it may take time for trends to develop and for trades to generate profits. 

Traders who are impatient or impulsive may need help to follow the system&#;s rules and principles.

Disadvantage 2: Will miss short-term opportunities 

The Turtle Trading System is designed to capture long-term trends in the market, which means that it may miss short-term trading opportunities. 

Traders focused on short-term profits may find the system too slow.

Wrapping Up: Where To Learn More

Richard Dennis&#;s trading strategy is a trend-following system designed to capture large trends in the market while minimizing losses. 

The system emphasizes risk management, position sizing, and specific entry and exit rules designed to identify and follow long-term trends in the market. While the system has several advantages, including its potential for high returns and emphasis on risk management, it also has some potential disadvantages, including the need for discipline and patience and the possibility of missing short-term trading opportunities. 

Overall, the Turtle Trading System can be a powerful trading strategy for traders who can follow its rules and principles effectively.

Richard Dennis and William Eckhardt created the Turtle Trading Strategy in the s, teaching novice traders a systematic approach to success.

So are you ready to take your trading to the next level and join the ranks of Richard Dennis and his famous Turtle Traders? 

By clicking here, check out our free guide covering lessons from the greatest macro traders.

1. As above frontlineFX is prophetFX and they have been stating they are FCA Authorised / Regulated in forums - all the evidence is online - search prophetFX & Scam and its on page 1 of google.

managing client funds and then taking payment/fees for managing those funds is FCA authorised/regulated activity.

1. The FCA are absolutely useless - did you know one guy has submitted over scam companies to the FCA and only 12 made it to the warning list?
   The FCA warning list is so out of date and incomplete its a joke. The FCA are farcical.

Have a look at James Watts - hes been going for over 4 years and still isn’t listed on the FCA warning list - find any scammer thats been going for years and then report back as to whether they are all in the FCA warning list.
I know what the truth is because I have started compiling a scam list on my blog.
People now have so little faith in the FCA people simply don’t report - this creates an even bigger problem.

1. Promoting or creating documents as in the case of ProphetFX on Myfxbook is fraud.

2. I have to keep repeating myself to people like you - this is a broker affiliate scam. They create sales juice in the form of instasham lifestyles and pretty myfxbooks - its all a scam to get you to sign up as they get $ per sign up.

3. I doubt you have little experience in dealing with HMRC. Again, like the FCA, they are useless.
   If you look at Jack Harwoods companies no sizeable money has ever passed through any of them.

Have a look at the companies and people Jack Harwood was involved with on the money shed - he was involved with Binary options via opulence FX run by jacob Steggar/Maher - hes now part of ProphetFX.

I know you are trying to play devils advocate but your post is simply unhelpful and frankly naive - not sure why or where you are at with this after posts.

Further - you don’t have the evidence and haven’t read my blog.

There is a level of naivety on forums and over the past decade I have told people point blank with the evidence and people still believed the scammers.
I have shown evidence of scammers to people with over 20 years of retail trading experience and they still don’t “get it”.

People really need to do better in understanding and highlighting these scammers.

I have spent weeks investigating ProphetFX and you have no idea how difficult it is to get the FCA to take action.
I have a day job and I don’t get paid for doing this.
My blog intention was never to get involved in scams - it just happened. I am highlighting these scams because the FCA won’t and I want people to realise what a scamtrading retail Forex is.

I have spent 5 weeks on Prophetfx (FrontlineFX/Prophet Enterprise Limited), Ashley Richards & James Watts and Dan Legg - its clear what they are all doing. They have made hundreds of thousands of pounds out of their broker affiliate scam with IC Markets & BD Swiss.

Again, if you cannot see this lot are frauds then you deserve to lose all your money.

Sorry Tom but from past experience in how these conversations go I won’t be replying to you further - I don’t have the time.
The posts are clear and the evidence is on my blog/online for all to see.

Richard Dennis&#; a trader. He was a Systematic Trend Follower who trades the Futures market (during the 70s and 80s)

Richard Dennis&#; books include Market Wizards, which he famously talked about how he took a $ trading account and turned it into $ million.

He is also the founder of the Turtle Traders (came from a bet he made with his partner to determine if trading can be taught, or not).

And yes, he won the bet and Richard Dennis&#; Turtle Traders proved that trading can be taught.

However, not all stories have a happy ending.

According to sources, Richard Dennis’s hedge fund suffered huge drawdown (in excess of 50%) due to aggressive risk management, and he eventually shut it down.

However, there are valuable lessons you can learn from Richard Dennis&#; trading strategy and advices — which are still applicable today.

And I want to share them with you right now…

1. Whatever method you use to enter trades, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend.

If you think about it…

Breakouts are the only entries that will ensure you’ll catch every single trend — every single time.

And that’s why most Systematic Trend Followers trade breakouts as their entry method, including Richard Dennis&#; turtle traders.

You might be wondering:

“But what about pullbacks?”

I know pullbacks are psychologically easier to execute because you’re buying low and selling higher.

But it comes with a price — and that’s missing the entire trend because the market didn’t offer a pullback.

So if you want to be involved in every trend that comes along, then you must trade breakouts.

2. A good trend following system will keep you in the market until there is evidence that the trend has changed.

Here’s a fact:

There’s no way to predict how high the market will go.

So, the next best thing you can do is trail your stop loss as the market moves in your favor.

However, you don’t want to have a tight trailing stop loss as you’ll get stopped out on the retracement.

Instead…

Widen your trailing stop loss to accommodate the deep retracement that might occur — and you have the best chance of riding a trend.

And chances are if you get stopped out, it’s because the trend has reversed.

Pro Tip:

You can use indicators like Moving Average or the Average True Range to trail your stop loss.

3. When you have a position, you put it on for a reason, and you&#;ve got to keep it until the reason no longer exists.

This is the opposite of what most traders do — and it HURTS them big time.

Here’s why…

Most of you tell me you want to ride big trends.

And it’s no secret that the KEY to riding massive trends is to trail your stop loss (I covered that earlier).

However…

You have difficulty holding on to your gains because…

You see profits.

You see green.

You see money.

BUT…

You have the FEAR of losing those gains.

So, you exit your trade even though the market hasn’t hit your exit signal.

The end result?

Big losses and small winners.

So here’s the lesson:

If you want to be a consistently profitable trader, you must follow your rules and exit your trades ONLY when the reason no longer exists.

4. You should expect the unexpected in this business; expect the extreme. Don’t think in terms of boundaries that limit what the market might do.

Look at the chart below:

You’re probably thinking:

“Insane! The price is so high. I’m sure the market is about to reverse lower.”

And here’s what happens next…

BOOM!

The market exploded even higher.

I know it’s hard to believe the market can just continue to make new highs especially when it looks “overbought”.

So the lesson is this:

You can never tell if the market is too high to buy or too low to short.

Because what’s high can go higher and what’s lower can go lower.

Now if you want to discover my secret technique of buying high and selling higher, then check out this video:

5. If there is any lesson I have learned in the nearly twenty years that I’ve been in this business, it is that the unexpected and the impossible happen every now and then.

If you saw the earlier Bitcoin example, you might think that such “extreme” moves rarely occurs.

Wrong!

Here are more examples…

Now don’t get me wrong.

You shouldn’t expect these moves every week or month.

But chances are, you can find these trends once every few years (and they can last for YEARS).

The bottom line is this…

If you have the discipline to ride your winners, it’ll be a matter of time before you catch one of these “monsters”.

6. Trading decisions should be made as unemotionally as possible.

If you trade based on emotions:

You’ll buy at the highs when things are moving “fast”, hold onto your losses hoping they will rebound, trade larger hoping to make back what you’ve lost, and etc.

Clearly, you know that trading based on emotions is a recipe for disaster,

Instead, you’ve got to think, act, and trade like a machine!

Now the question is, how?

Here are a few tips to get you started…

1. Develop a trading plan with clearly defined buy & sell rules
2. Risk not more than 1% of your capital on each trade
3. Focus on executing your trading plan consistently (this is so important)
4. Don’t get swayed but the short-term results, think long-term

If you want to learn more, then go check out this trading guide: How to be a Consistently Profitable Trader within the Next days.

7. Trade small because that’s when you are as bad as you are ever going to be. Learn from your mistakes.

Let me ask you…

If you want to be a brain surgeon, will you immediately operate on a live human brain?

Of course not!

You’ll probably start off practicing on a “dummy” brain.

As you get better, you’ll work on a live human but only on a minor segment of it (so it doesn’t cause danger to the person).

Then as you level up, you’ll work on the major parts and finally, you have the confidence to do it on your own.

And it’s the same for trading!

You want to trade small because you’ll make mistakes — plenty of it.

So, why pay more in “tuition fees” to Mr. Market when you can do so at a fraction of the cost?

8. I could trade without knowing the name of the market.

You’re probably wondering:

“How is that possible?”

Well, that’s because you’re trading the price in front of you without concerning where the price is derived from.

It could be Soybean, Crude Oil, Copper, Rubber, or Cotton, who cares.

The only thing that matter is price, and nothing else.

Because the price is moved by an imbalance of buying & selling pressure which is based on emotions like fear, greed, hope, and regret.

These emotions or biases can last for a long time which in turn becomes a trend — something Trend Followers can capitalize on.

And that’s why you don’t need to know the name of the market.

All you need to know is…

1. Buy what’s going up
2. Sell what’s going down
3. Repeat

9. In the real world, it is not too wise to have your stop where everyone else has their stop.

Let me ask you…

Do you always get stopped out only to watch the market reverse back in your intended direction?

Because you put your stop loss where everyone else puts it (like below Support) — which creates an incentive for the “smart money” to hunt your stop loss.

So, how can you avoid it?

By setting your stop loss AWAY from the obvious market structure.

This means don’t place your stop loss smack under Support, or just above Resistance.

I cover in more details here: How to Avoid Stop Hunting While Other Traders Get Stopped Out

You could publish trading rules in the newspaper and no one would follow them. The key is consistency and discipline.

This is true for 99% of traders out there.

Most would not have the conviction to take someone’s trading rules and trade it consistently even though its profitable in the long-run.

Why?

Because when the drawdown comes (which all systems will have), they will abandon it and look for the next trading system — and rinse repeat this cycle again.

So, the question is…

How can you gain confidence in your trading strategy or even someone’s trading system?

There are 2 ways you can go about it…

1. Backtest the trading strategy

This allows you to understand how a trading strategy performs historically.

If it’s proven to work in the past, there’s a possibility it could continue to work in the future (although no guarantee since it could be curve fitted).

2. Understand the logic behind WHY a trading strategy works

Most trading strategy that works have an underlying logic behind it.

For example:

Trend Following works because human biases and emotions cause the market to trend.

So, if a trader can cut his losses and ride his winners, he can capitalize on the long-term trend that comes about.

Or how about Value Investing?

It works because investors dump stock during “bad news” and that pushes the price of the underlying security below its intrinsic value.

This allows savvy investors to buy low (below the intrinsic value), and sell high (when the price increase back towards the intrinsic value).

There are lots more false breakouts, perhaps because there are more computer-based trend followers.

Here’s the deal:

Not all breakouts will work out.

In fact, half or more of your breakout trades are likely to fail.

However, it doesn’t mean trading breakouts is a losing strategy, far from it.

Remember, it’s not how often you win that’s important.

It’s how much you win when you’re right and how much you lose when you’re wrong — that’s what matters.

Also…

If you want to increase your odds of capturing a trend, you must trade across different markets.

This includes Forex, Indices, Energy, Metals, Agriculture, and etc.

If you want to learn more, then go read The Ultimate Guide to Trend Following.

It is misleading to focus on short-term results.

I’ll tell you this:

Your short-term results are random.

Because when you’re dealing with probabilities, anything is possible in the short run.

It’s only in the long run (after a large sample size of trades) that your results will align towards its expectancy.

Don’t believe me?

Then let me prove this to you…

Look at the performance of this trading system over the last 5 months&#;

Now, most of you would say this performance is crap and you’ll likely abandon this system after few losing months.

Now, look at this trading system below…

This looks like a much better system, right?

But guess what?

This is the same EXACT system as the one above.

The only difference is I’ve shared with you the results over the last 18 years instead of the 5 last months.

Do you see my point now?

In the short run your trading results are random but eventually, it’ll align towards it’s expected value.

You have to minimize your losses and try to preserve capital for those very few instances where you can make a lot in a very short period of time. What you can&#;t afford to do is throw away your capital on suboptimal trades.

Here’s the deal:

No matter which trading strategy you’re using, there will come a time where trading is so easy and it feels like you’re “printing” money.

But don’t be too happy just yet because…

There are also times where it sucks so bad you feel there’s no light at the end of the tunnel — and you just want to quit trading altogether.

So…

The “trick” is to minimize the damage during the bad times so you can survive and THRIVE during the good times.

This means:

• Have proper risk management in every trade
• No revenge trading even if you’re angry with the markets
• No over trading hoping you can make your losses back quickly
• Follow your trading system no matter how hard it is to pull the trigger

If you can do it, then you’ll likely overcome your drawdown and reach new equity high again.

I learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.

There are 2 ways to look at this…

If you’re a discretionary trader, then yes, it makes sense to put some time between your loss and the next trade (especially if you have sustained a series of losses).

Because as a discretionary trader, your trading decisions are based on your analysis of the markets.

If you are carrying emotional baggage, you won’t objectively analyze the markets which lead to sub-optimal trading decisions.

However, if you’re a systems trader, then things are different.

Because the more losses you face, the closer you’ll be towards your next winning trade.

So, if you have a proven system that works, the last thing you’d want to do is to skip your trades because you have the fear of losing.

Instead, you must trade your system consistently so you don’t “mess up” the results of it.

Trading has taught me not to take the conventional wisdom for granted. What money I made in trading is a testimony to the fact that the majority is wrong a lot of the time.

The reason why most traders fail is that they want to be spoon-fed.

They don’t want to put in the hard work to find out what works and what don’t.

They trust what “gurus” say instead of spending time and effort to figure things out themselves.

Now, is it no wonder that most traders never make it?

So here’s the deal:

If you want to succeed in this business, you must TEST everything.

Trust nothing but question EVERYTHING.

If you’re unsure, backtest it, forward test it, and use your brain to think about it!

 Almost anybody can make up a list of rules that are 80 percent as good as what we taught people.

You’re probably thinking:

“What? I could never come up with a profitable trading strategy.”

Here’s the deal…

Trend Following isn’t a difficult concept.

It’s basically…

1. Trade a broad basket of markets
2. Ride your winners
3. Cut your losses

And that’s it!

How difficult can it be to come up with a set of trading rules based on the above criteria?

Still, I’m going to spoon-feed you further.

Go read the book Following the Trend by Andreas Clenow.

This book provides you with the exact strategy and markets to trade — so there’s no excuse anymore.

But please do your own backtesting first before trading it live.

Now…

The difficult part isn’t formulating the strategy but the execution of it — especially when the drawdown comes.

Will you be able to execute your trades consistently when you’re down 10%, 20%, or even 40% of your trading capital?

I&#;ve learned that markets, which are often just mad crowds, are often irrational; when emotionally overwrought, they&#;re almost always wrong.

After many years of trading, the one thing I’ve learned is to NOT trade with the crowd.

For example:

Back in , Bitcoin was making new highs with a lot of attention from the media and the public.

To an astute trader, it’s a warning sign that the “party” is about to end.

Now, I don’t expect you to short Bitcoin because the market could continue to trend higher.

However, if you’re long, then you should tighten your stop loss and be prepared to BAIL OUT the moment the market show signs of reversal.

Because when the whole world has already bought, who’s left to buy?

Nobody.

And if there’s no one left to buy, the path of least resistance is DOWN.

Here’s a quote by Warren Buffet that says it best…

“Be greedy when others are fearful and fearful when others are greedy.”

Frequently asked questions

#1: How can a small trader like me with limited capital trade a diverse range of markets simultaneously?

You’ll probably want to trade with a broker who allows you to trade nano lots (as they are probably going to be market makers too).

#2: Hey Rayner, where are the results on point 12 from?

This is a systematic trend following system that I’ve developed.

Conclusion

The wisdom shared by Richard Dennis is still as applicable as they were decades ago.

Now, some of you might argue that Richard Dennis strategy doesn’t work anymore.

Well, the exact parameters used in Richard Dennis&#; trading strategy might not work anymore.

But the principles of Trend Following still works and is currently used by some of the biggest hedge funds in the world (like Winton Capital).

So, don’t get caught up by the specific tactics but look at the big picture and understand the concepts behind it.

Now it’s over to you…

What’s the biggest takeaway you had from Richard Dennis quotes?

Leave a comment below and share your thoughts with me.

Read this J.R. Bosanko book on your PC, Mac, smart phone, tablet or digital device or in paperback.

Risk Management for Forex Trading Beginners is for all beginning aspiring investors and traders who are just getting their head around doing the day trading and swing trading business. Everyone has their own ideas of what they think day trading and swing trading are and what it can do for them. Risk Management for Forex Trading Beginners is for people who want to start their own business and become investors and traders in today’s financial markets, but have zero experience and are looking for the best quality information to get them started.

The learning curve in this business and it is a business can be long, brutal and very very expensive if you learn the wrong way. Risk Management for Forex Trading Beginners aims to tell you how do study it the right way the first time and greatly reduce the long learning curve.

My hope from Risk Management for Forex Trading Beginners is that you understand how important it is to have a competitive edge when putting your hard earned money at risk in the markets. Each day, the wealth from trader accounts is transferred from those without an edge into the accounts of those who have developed that all needed important winning edge. Which one do you want to be?

When you are done reading Risk Management for Forex Trading Beginners you will have an excellent basic explanation of what and what not to do before you even study anything or do any kind of education. The information in this book will put you on the fast track to becoming a successful self-directed investor and trader with very little money invested other than the cost of this book, learning it Harvard or Columbia business school would cost one hundred thousand dollars or more.

Risk Warning: Trading on financial markets carries risks. Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, CFDs may not be suitable for all investors because you may lose all your invested capital. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved and take into account your investment objectives and level of experience. Click here for our full Risk Disclosure.

LiteFinance Global LLC is incorporated in St. Vincent & the Grenadines as a Limited Liability Company with registration number LLC Registered address: Euro House, Richmond Hill Road, Kingstown, St. Vincent and the Grenadines. Email:

Liteforex (Europe) LTD is registered as a Cyprus Investment Firm (CIF) with the registration number HE and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license number /08 in accordance with Markets in Financial Instruments Directive (MiFID). All retail clients funds are insured by the Investor Compensation Fund (subject of eligibility). Email:

LiteFinance Global LLC does not provide service to residents of the EEA countries, USA, Israel, Russia, Japan, and some other countries.

Copyright © eunic-brussels.eu

The foreign currency exchange (forex) market is regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Under the U.S. Commodity Exchange Act (CEA), participation in retail forex trading activities is limited to certain regulated entities registered with the CFTC, including Futures Commission Merchants. Registered broker- dealers that are members of the Financial Industry Regulatory Authority (FINRA) are specifically excepted from the jurisdiction of the CFTC and NFA. As a result, many broker-dealers have sought to take advantage of the growth in retail forex market by offering forex trading in addition to their traditional securities or investment banking activities. FINRA has taken note of the increase in retail forex trading by member firms and recently published a Regulatory Notice outlining the applicability of FINRA Rules to such activities.¹

Notably, FINRA has stated that broker-dealers who participate in retail forex trading must comply with all applicable FINRA rules. In evaluating member firms&#; forex activities, it is possible that regulators may look to the applicable rules and regulations of the NFA for guidance. The Notice identified certain obligations of firms involved in retail forex, including: providing full and accurate disclosure of the risks associated with forex trading; disclosure of the nature of the relationship between the firm and the customer and associated conflicts of interests; performing the required due diligence on forex dealers or introducing brokers; and maintaining the books and records required of forex dealer members by the NFA.

Additionally, firms must comply with the more stringent FINRA rules governing supervision and communications with the public. FINRA&#;s supervisory requirements are comprehensive and firms engaged in forex trading must therefore &#;establish, maintain, and enforce written procedures to supervise the types of business in which it engages,&#; including procedures addressing the firm&#;s supervision of its forex activities.² Moreover, a member firm&#;s communications with the public must comply with Rule and therefore, any information about the forex market generally or the firm&#;s particular forex activities must be based on principles of fair dealing and good faith, and must not omit material information that would cause the communication to be misleading. This necessarily requires that member firms comply with the risk disclosure obligations and in addition to the content standards and filing requirements for communications with the public set forth in NASD Rule

FINRA&#;s recognition of the growth of the retail forex market and its concern over the increase of member involvement signifies that in reviewing membership applications and in performing routine inspections, regulators will closely scrutinize the forex activities of broker-dealers to ensure compliance with FINRA standards as set forth in the recent Regulatory Notice.

For any firm planning to engage in retail forex trading activities, it is of critical importance to ensure that all FINRA guidelines are followed and the relevant rules are fully understood in order to satisfy regulators that investors are adequately protected. For more information, please contact us at ()

Author: Michelle Jacko, Managing Partner, Jacko Law Group, PC (&#;JLG&#;). JLG works extensively with investment advisers, broker-dealers, investment companies, hedge funds and banks on legal and regulatory compliance matters.

For more information about this topic and other legal services, please contact us at () , [email protected] or visit eunic-brussels.eu Thank you.

This article is for information purposes and does not contain or convey legal advice. The information herein should not be relied upon in regard to any particular facts or circumstances without first consulting with a lawyer.

¹Retail Foreign Currency Exchange, FINRA Regulatory Notice (Nov. ).

² NASD Rule (b).

Appreciation - rise in value of one currency against another which has a floating rate.

Arbitrage - a type of trading with excepted risks, when opposite transactions are carried out simultaneously on the same trading instrument.

Ask - a price offered to a trader to buy currency.

Aussie - dealer’s slang for Australian Dollar.

Bank of Canada - the Central Bank of Canada.

Bank of England - the Central Bank of England

Bank of Japan - the Central Bank of Japan

Balance - total result of all completed financial operations on a trading account.

Balance of Trade (BoT) - difference between the volumes of exported and imported goods for a certain period of time in a country.

Bar Chart - is an instrument of technical analysis; a chart where prices are indicated with the help of bars or lines.

Base Currency - currency which goes first in the currency quote.

Bear - a trader whose trading tactics counts on the decline in the currency value.

Bear Market - a market which expects that currency rates will decline, "bearish market".

Beige Book - collection of the Federal Reserve reports which contains a review of the U.S. economic dynamics.

Benchmark interest rate - minimum interest rate which investors expect when buying securities.

Bid - price offered to traders to sell currency.

Bidder - buyer.

Big Figure - dealer’s slang to indicate currency pair movement by points.

Borrowing - borrowing of foreign currency at interest for a certain period of time in the financial market.

Break - rapid decline in price.

Breakout - breakdown of the price below support level or above resistance level; breakdown of the trend line.

Broker - an agent who implements investors’ orders to conduct currency selling/buying transactions.

Brokerage Company - a Brokerage, whose mission is to bring together a seller and a buyer of foreign currency.

Bull - a trader, whose trading tactics relies on the rise in currency price.

Bull Market - market that expects the rise in the currency rate.

Bundesbank - Central Bank of Germany.

Buy - currency purchase transaction.

Cable - dealer’s slang for the British Pound.

Cancel - traders’ order to cancel Stop-Loss and Take-Profit orders.

Cancel-Replace - order from a trader to a broker to cancel prior order with simultaneous replacement of the cancelled order with a new one.

Candlestick chart - tool of technical analysis, a chart where price is indicated with the help of "Japanese candles".

Capacity Utilization - economic indicator, which shows production capacity workload.

Car Sales - economic indicator of a number of sold cars, an index of consumer demand.

Cash Flow - cash flow of the capital as a result of trading activity over a certain period of time.

Cash Market - a market where transactions are carried out at the prices specified through cash payment.

Central Bank - a financial institution which regulates monetary policy of a country.

Change - difference between the price of the trading tool and its price on the closing session on the day before.

Chain Store Sales - an economic indicator, showing retail sales dynamics.

Channel - area on the trading tool chart within limits of which price movements take place.

Chart - price chart, displaying changes in price over time.

Chartist - a trader who uses charts and technical analysis indicators as tools to forecast market price movements.

Clearing - trade settlement process.

Close Order - the order closing procedure.

Collateral - trader’s insurance deposit

Confirmation - situation on the technical analysis price chart when one or several indicators confirm the results of another indicator.

Correction - rollback of the price from the level reached.

Convertible Currency - national currency which can be freely exchanged (converted) into another currency without special approval from the Central Bank.

Counter Currency - quoted currency which appears second in the currency quote record.

Cross Rate - a currency quote without direct involvement of the USD.

Currency Conversion - exchange of one currency for another, in a financial market.

Currency Convertibility - is the possibility of free exchange of one currency into another.

Currency Option - option contract which entitles a trader to buy or sell one currency for another at an agreed quote and within stipulated time frame.

Currency Pair - two indicated currencies which make up a quote at the financial market.

Currency Rate - price rate of one currency against another one.

Currency Symbols - letter symbols to indicate currency.

Currency Trading - trading operations to buy/sell one currency for another according to established rules.

Cycle - repetition of a certain pattern of price movement at time intervals.

Day Order - trader’s order to buy or sell which is valid until the end of the trading day and is cancelled automatically in case of non-performance on the day of issue.

Day Trader - a trader who trades at the market during one day session.

Day Trading - opening and closing of the same position within one trading day.

Dealer - market participant who deals with currency buying and selling on his own account.

Dealing - non-cash currency trading.

Dealing center - a company which provides access to financial markets by creating clients’ applications for opening currency positions.

Deposit - amount of money transferred to the trader’s account to cover further operations.

Divergence - a situation in technical analysis when charts of indicators differ from price chart.

Direct Quote - amount of foreign currency required to buy a unit of national currency.

Downtick - downward movement of currency price.

Downtrend - downward trend of currency price at the market.

Double Top - a pattern of technical analysis, displaying the situation when the rate goes up to a certain level twice and then descends.

Double Bottom - a pattern of technical analysis indicating the situation when the rate goes down to a certain level twice and then goes up.

European Central Bank - European Central Bank, ECB.

Economic Indicator - is a fundamental analysis indicator, which shows general trends in economy.

Efficient Market Theory - is a market theory, which reflects all factors, affecting changes in quotes.

Elliot Wave Theory - Elliot theory according to which prices movement has a waveform (5 waves upward, 3 waves downward).

Employment Situation - economic indicator of labor market.

EU - European Union.

EURO - Unified currency of the European Union.

European Central Bank (ECB) - Central Bank of the European currency Union.

Exchange rate - the rate of buying/selling one currency for another.

Existing and New Home Sales - macro-economic indicator of real estate sales at the secondary housing market.

Factory Orders - production orders (orders for durable and non-durable goods).

Federal Reserve Bank - Central Bank of the United States of America.

Fed, FRS (Federal Reserve System) - Federal Reserve System of the USA.

Figure - Dealer’s slang to indicate basic figures of the exchange rate value or points of the exchange rate movement.

Flag - is a pattern on a technical analysis chart indicating situation when currency price goes up significantly, and after that moves in a narrow range for some time, and then falls rapidly.

Flat - is a price which moves with no rises or falls.

Float Profit/Loss - amount of profit or loss on currently opened positions which is not fixed and is subject to change.

Floor Broker - a broker who takes part in trading on floor.

Forecast - Estimation of future trend of price movement, taking into account historical data of technical analysis and current macro-economic indicators.

Foreign Exchange - conversion operations of the foreign currency exchange.

FOREX - financial market where buyers and sellers carry out currency buying/selling transactions.

Foreign Currency - is a currency of any foreign country which can be used as a medium of circulation in another country.

Forward Market - "forward" currency market where currency transactions are concluded at the prices set today, but at a future time specified in the contract.

Free Margin - trader’s funds on the deposit which are not used as a pledge to open positions.

Fundamental Analysis - is a method of forecasting price changes which is built up on the analysis of the current economic situation.

G7 - are the most developed countries, including the USA, Japan, Great Britain, Germany, France, Italy and Canada, which meet periodically at summits to resolve the issues of the world economic development, "Big Seven".

Gap - is a break on the price chart of technical analysis which is caused by the difference in opening price of a new day and the closing price the day before.

Greenback - "Greenback", dealer’s slang for the U.S. Dollar.

Gross Domestic Product (GDP) - aggregate value of goods and services produced in a country in a certain period of time.

Gross National Product (GNP) - gross domestic product plus income, gained from investments or work performed overseas.

Hedging - strategy which is used to reduce investment risks when urgent selling/buying transactions are concluded.

Hedgeable - characteristic of a transaction when risk of changes in currency rate can be covered by hedging.

Hedge Funds - American Funds which use hedging instruments.

High/Low - respectively, the highest and the lowest currency prices during the current trading day.

Housing Starts and Permits - macro-economic index which shows the number of houses under construction and the number of construction permits.

IFO - business optimism index, calculated by the Institute of Economic Research in Germany.

Import/Export Prices - data on dynamics of prices for the U.S. imports/exports.

Indicator Only - quotes which contain information and which are not used for opening currency positions.

Indirect Quote - cost per unit of domestic currency indicated in the foreign currency units.

Indicator - data which gives information on the general state of economy or financial markets.

Industrial Production - is an economic index, indicator of industrial production, which shows total output amount of national plants.

Initial Margin - value of initial deposit which shall be invested as a guarantee for transactions in the future.

Interbank Rates - currency rates set by large International Banks for the other large International Banks.

Interest - is the payment for using the money borrowed as a loan.

Interest Rate - is a sum of money which is credited or paid to a lender by a borrower for the use of money. It’s calculated as the ratio of the payment for the use of money to the credit total amount. For instance, if a lender (bank) requires a client to pay $90 a year for the credit of $, the interest rate will make 9% (90/ * %). The interest rate can vary as a result of inflation or change of The Federal Reserve’s policy.

Intraday - currency trading during one trading day.

Instant Execution - technology of instant transactions execution when streaming quotes are available in the online mode.

Inflation - rise of the general level of prices.

Investor - a holder of financial resources on whose behalf currency transactions are conducted at the currency market.

Jobless Claims - economic indicator, showing a number of the registered unemployed.

Kiwi - dealer’s slang for New Zealand Dollar.

Last - average value of the last bid and ask values; the price of the last transaction.

Leading Indicators - index of the leading macro-economic indicators.

Leverage - ratio between one’s own and borrowed money, used to conduct transaction.

Limit order - trader’s order to open short or long position when the price reaches the target level.

Liquidation - closure of a trader’s open currency position.

Liquid Currency - currency which can be bought or sold without restrictions at the world financial market.

Liquidity - is the ability to easily sell or buy security or currency.

Long Position - is currency purchase, when "buy" position is opened.

Loss - reduction in deposit amount due to losses.

Lot - is a position volume unit for the financial instrument purchased or sold. For example, when opening a EURUSD buy position of 1 lot, a trader acquires euros for dollars.

Maintenance Margin - minimum amount on trader’s deposit necessary to maintain his open positions.

Margin - is an insurance deposit which provides cover of possible losses of a marginal trade, and is used as a pledge.

Margin Call - a message from a broker to a trader saying that it is necessary to increase funds on marginal account.

Margin Level - an indicator showing the state of a trader’s trading account.

Margin trading - is currency trading supported by the margin pledge.

Market Maker - a large bank or financial company which has significant share of market operations and which exerts influence on the current level of currency rates.

Market Maker Spread - is a difference between the currency buying and selling price, established by a market maker.

Market order - an order which is not limited either by time period, or by price and which should be performed immediately at the best current price.

Market Place - physical market; a trading place.

Market Price - the last market price at which a transaction was conducted.

Market Users - medium sized bank or financial company which uses current quotes established by market makers, for currency operations.

Minimum Equity - minimum amount which a client has on his account.

Momentum - is a characteristic of a price movement; speed of change in currency price.

Net Factory Orders - macro-economic indicator which shows the increase in a number of industrial orders.

Net Position - total amount of currency for all open positions held by a trader.

Nonfarm payrolls - number of employees on the payroll (excluding agricultural sector).

Offer - is the price at which a buyer is requested to make a purchase.

Old Lady - is dealer’s slang name for the Bank of England.

Open order - orders for open positions which will be performed when a declared currency price is reached.

Open Position - a position where transaction results are not yet recorded.

Order - trader’s order to a broker to conduct currency selling/buying transaction at a specified price.

Oscillator - a technical analysis tool utilized by the market, to predict the future course of a currency.

Output Index - index of production volume output.

Overbought - a market situation which takes place after a rapid and significant currency rise.

Oversold - a situation in the market which happens after a rapid and significant currency decline.

Personal Income - economic data indicating changes in personal incomes of a country’s population.

Personal Spending - economic data indicating changes in spending of a country’s population.

Pips/Points - minimum movement in a currency price.

Position - a number of opened "long" and "short" positions held by a trader.

Pound - dealer’s slang indicating a Great British Pound (GBP).

PPI - index of producer prices (Producer Price Index).

Premium - determines the amount at which future prices will surpass spot prices.

Price Quotations - quotes of one currency price against another currency.

Profit - amount gained as a result of trading operations.

Program Trading - computerized trading system in which currency buy/sell signals are generated by a specially developed program.

Quotation - the price of one currency, indicated in the units of another currency.

Range - difference between two prices.

Resistance Level - a horizontal or inclined price level on the chart; upper limit of price fluctuation.

Retail Price Index (RPI) - an indicator showing changes of retail prices in Great Britain.

Retail Sales - an indicator of the retail sales volume.

Retracement - correction of a trend, rollback of a trend for a certain value to an opposite direction, after which original movement is resumed.

Roll-over - the way of transferring Stop-Loss orders to more favourable positions.

RSI (Relative Strength Index) - technical indicator, which specifies oversold and overbought zones.

Scalping - prompt strategy of gaining profit with the help of insignificant changes of the currencies prices.

Sell - currency selling operation.

Short - open selling position.

Short position - an open position for selling currency with the intention to buy it in the future at a lower price.

Spike - significant difference between subsequent quote and its previous value.

Spot - transaction which is carried out immediately but with the payment made within two days from the moment of its conclusion.

Spread - difference between buying and selling prices of the currency, indicated in points.

Square - result of trader’s transactions at which profit size is equal to the losses size.

Sterling - dealer’s slang for the British Pound.

Stop Order - currency buy or sell order when a specified price level is reached.

Stop Limit - pending orders; execution of the order is delayed by a dealer until the price at the market reaches the level, specified in the order.

Stop Loss - order to close positions to limit losses.

Support Level - horizontal or inclined price level on the chart; upper limit of price fluctuation.

Swap - funds that are retained or added to a trader’s account for rollover to the next day.

Swap points - points calculated in advance for transferring open position to the next day with the help of swap operation.

Swissy - dealer’s slang for Swiss Franc.

Take-profit - currency sell/buy order for the open position at a specified price to gain profit.

Technical Analysis - is a method of forecasting future price direction with the help of price charts examination.

Tick - minimum one time change of a trading tool price, in the financial markets.

Tick chart - price chart built on the ticks values.

Thin Market - market with low liquidity.

Today’s High - highest price of a transaction today.

Today’s Low - lowest price of a transaction today.

Trader - a person who buys and sells currencies from his personal account.

Trade Balance - trade balance is the difference between export and import values over a certain period of time.

Trading - securities or currency trading.

Trading platform - a set of software and hardware supporting trading in the market.

Trailing-stop - order to minimize losses.

Transaction - an operation of opening and closing of a currency position.

Transaction Cost - payment for buying or selling of a financial tool.

Transaction Date - the date of currency transaction operation.

Trend - a term of technical analysis, indicating general direction of the price movement.

Trend Line - straight line on a price chart drawn across the minimum values (in case of ascending trend) or across maximum values (in case of descending trend).

Unemployment - macro-economic indication which shows unemployment rate (in percentage against total number of able-bodied population).

Uptick - new price quote which is higher than previous price.

Uptrend - ascending price trend, "bullish" trend.

Value Date - the date when transaction terms are implemented.

Volatility - the speed at which price moves.

Volume - activity level of currency trading.

Volumes chart - is a bar chart that shows the volume of conducted transactions.

Wage - Index is a macro-economic index of data on wages

Wholesale Prices - is a macro-economic index of changes in wholesale prices.

Wholesale Trade - is a macro-economic index of changes in wholesale sales.

Yard - means a billion US Dollars, in dealer’s slang.

Yours - means "sold".

ZEW - The Center of European economic research – non-commercial research institute founded in, which is located in Hamburg.