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In this session James will walk you through two of the most effective harmonic patterns: the 1 – 2 – 1 and the 5 – 0 pattern. These are advanced harmonic patterns that utilise a combination of Fibonacci ratios, symmetry and market structure to highlight patterns which, can offer powerful entry to the market points to help you enter into trends effectively and capture important reversals.
Why should you attend?
Learn about the effective implementation of advanced harmonic patterns.
Understand the importance of highlighting patterns and entry points to supplement your trading.
Find out how to identify where market reversals may be occurring.
Don’t miss the chance to begin using harmonic patterns effectively. Enhance your technical analysis trading skills with Orbex.
Attendance for this webinar is free, but registration is required.
Trading is a profession that demands extreme control over the mind. After all, precious money is involved, which could be lost in the blink of an eye. As much as trading depends on strategies, efficient and faster platforms and risk management; trading psychology is also an important aspect here.
Forex investors drive market activity; hence trading psychology also affects and is affected by the market. Every day, trader perceptions change, based on developments all around the world. Market sentiment is driven by such trader perceptions and emotions.
Common Emotions that Affect Trading Decisions
It is not that emotions are always harmful, but they should not get in the way of logical reasoning, or negatively impact one’s analytical skills. Markets see a range of emotions every day, such as:
Fear: Bad news or repeated losses can instill fear in even the most experienced trader, which is normal. Traders who are new to the market also experience fear due to their lack of experience. Some traders place stop loss orders too close to the opening price, as a result of which one sells out their position too early. Fear could also keep traders in a position for longer than required. Although it sounds ridiculous, some traders have fears about making money too. Either they become wary about expanding out of their comfort zone or fear that their money could be taken away by taxes.
Greed: Money and greed often go hand in hand. That is basic human nature. Investors often hang on to winning positions for a long time, which gets them blown out of a position. Greed also results in overtrading, sometimes beyond the maximum risk limits and time frames.
Euphoria: A series of successful trades is good, but what happens when it leads to over confidence? A feeling that could cause a trader to believe that they can’t lose or that there are no errors in the methods they follow can be dangerous.
Revenge: A series of huge losses can lead to anger. Overtrading comes next, to wreak vengeance. The market is a culmination of so many factors that there are no guarantees here. Such an emotion is self-sabotage.
The ability to understand the markets and identify patterns and trends is important for traders, but so is the ability to control these emotions.
Ability to Follow a Proven Method
Consistently profitable traders find an edge and repeatedly exploit it. They do not act randomly but follow a fixed path that has proven successful in the past. There is no place for impulsive decisions in the market, if you want to survive. If one strategy is proving to be a waste of time, you must design another strategy, taking all factors into account, which brings us to the final point.
Awareness is the Key
We cannot stress enough the importance of getting the facts straight. Assessing the global economy and its stability, keeping track of central banks and press releases, looking out for reports of large companies making deals that could create a breakout trend, focusing on a currency pair that is consistently performing well and so on. These are some of the factors you should be aware of, and those who do, possess the attributes of a good trader.
The oil market remains under pressure this week following the latest report, where OPEC raises oil supply forecast stating it expects supply to surge over 2018. While the group acknowledges that oil demand is set to rise over the year, it expected rising US output to cause a disproportionate rise in oil supply.
The latest OPEC report showed that production among the group was little changed over January as the group continues to keep a limit on output, as it struggles to counter the level of over supply in the market. Despite the groups efforts, Iraq, which is one of the main members, raised its output over January.
As OPEC raises oil supply forecast, production among the 14 member group is predicted to grow at around 1.4 million barrels per day, an increase of 250k barrels per day from the estimate given in the prior monthly report. Referring to producers outside of OPEC, the group expects this output to rise to 59.3 million barrels per year, up by 320k barrels from its last forecast.
US Oil Production Accounts For Over 50% of Supply
In terms of the breakdown of these forecast revisions, the US now accounts for over half of the supply figures, as OPEC raises oil supply forecast for 2018 by 150k barrels per day. Indeed, the latest government issued data reveals that US oil production topped more than 10 million barrels per day in November 2017, making it a bigger producer than Saudi Arabia, the top OPEC producer.
The OPEC report notes that “According to the most recent assessment, the steady oil price recovery since summer 2017 and renewed interest in growth opportunities has led to oil majors catching up in terms of exploration activity this year, both in the shale industry and offshore deep water”.
In terms of demand, OPEC noted that it now forecasts global demand to rise by around 1.6 million barrels per day, up over 60k barrels a day from the last forecast, putting total global oil consumption just shy of 100 million barrels per day in 2018 at 98.6 million barrels a day.
The reasons behind OPEC’s upward revisions include consistent growth in global economic activity, increase demand for transportation fuels and a booming petrochemical industry which creates chemicals from the by-products of oil and gas.
Investment bank Goldman Sachs believes that the recent high prices are unsustainable due to a number of factors, including the need for US producers to maintain discipline. Goldman Sachs believes that the failure of US producers to maintain discipline will deter investors from fully engaging in the sector, leading them to park capital elsewhere in other commodities.
With price having recently turned lower again, Oil is now back below the 2015 high around 62.42. While below this level, focus remains on further downside, with a test of the broken 2016 high around 55.42 the key area to watch. If this level can hold, we are likely to see another push higher, bringing the longer term resistance around 74.82 into focus.
As we previously explored the differences between trading stocks and forex, let’s now look into the difference between Stocks and Stock CFDs. Many MT4 forex brokers offer trading in stocks. In some cases these are also marketed as stock trading. However, on closer observation, the stocks that you see on your trading platform are actually quite different from the stocks that you would trade at an exchange.
Contracts for difference or CFD for short, is a derivative product. The contract for difference allows traders and speculators to make use of the instrument in order to speculate on the price movement of the underlying instrument or security.
There are many different CFDs, ranging from stocks to stock indexes, bonds and many precious metals and commodities. The pricing of these CFDs are derived from the underlying cash market instruments.
For example, if you were to trade the stock CFD for Apple, you are trading the derivative instrument of the stock (Apple) whose price is derived from the actual price of Apple stocks traded at an exchange.
Main differences between stock CFD’s and stocks
You do not own the actual shares when you trade CFDs
With stock CFDs you can be long or short on the instrument
Stock CFDs pricing is often marked up and also attracts overnight swap rates
Stock CFDs entitles you to a credit or debit of the dividends (depending on your position)
Stock CFDs are widely used as a hedging tool
Trading stock CFDs offers quite a few benefits, especially for those who do not have access to trading the stick directly or have limited capital. Stock CFDs or CFDs in general are leverage products. This is one of the main reasons why traders often prefer to trade stock CFDs for lack of other alternatives.
For example, if the share price for a stock is trading at $100, and you buy 10 shares, you would need to put up $10,000 in capital to purchase the stock. Whereas, if you were to buy the same stock as a contract for difference you would have to put up just $200 at 1:50 leverage.
This makes is very easy for the average speculator to pick up the stock CFDs rather than the stock itself. There is not much difference in the pricing between the stock CFD and the actual stock price itself. However, you can expect a mark up on the prices. A CFD is usually marked up higher by a few ticks or cents and the spread (the difference between the bid and ask price) which is also comparatively higher than the actual stock.
When you trade stock CFDs you do not own the actual shares of the stocks that you are trading. This is one big difference between the stock CFD and the actual stock itself. However, if the stock pays dividends, you do get paid these dividends as well.
Another factor that makes stock CFDs different from stocks is the fact that you can be long or short on the CFD. This is not easily possible when you trade stocks. Short selling stocks requires a bit of nack and is also considered unethical in some aspects. You can of course sell your shares you if actually own them, but short selling in the stocks is difficult compared to going short on the stock CFD’s.
In some cases, investors who have a long position in a stock can look to the CFD markets in order to hedge their long positions in the cash markets.
When trading stock CFD’s traders should also note that an overnight rate is applied to the position. This can depend on the stock that you are holding and the direction that you are in. In most cases, long positions in stock CFD’s attracts negative overnight or vice-versa. This is also referred to as a holding rate.
In conclusion, stock CFD’s have their own pros and cons. At the end of the day, it is up to the trader to know why they want to trade the stock CFD’s and whether it is the better solution compared to other ways of trading the underlying instrument.