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A decision to buy or sell one currency against another when trading in the Forex market may be one of the most difficult decisions a trader faces, but when simplified, the decision is to determine the direction of long and medium term currencies through a simple news analysis. There are several factors to be aware of when analyzing currency movements.
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How can I identify trends in the Forex market through news analysis?
By examining the level of inflation, interest rates, employment reports and unemployment rates and assessing them well to determine the initial features of the direction of the currency in the long term, and always prefer to see the reports issued by the economic committees within the central banks, which will help the trader to determine the general trend. In these reports, economic plans that would reduce or raise the price of the currency are clarified.
Is it possible for a country to seek to reduce the price of its currency?
Certainly, most exporting countries are trying to reduce them to encourage other countries to import them by paying less value to their purchases due to the lower price of the exporting country’s currency. One example is China’s attempts to lower its currency and the US’s opposition to it because of the large share of China’s share of US exports and China’s share of US debt. That this reality does not apply to the economy of the Arab countries as most of the Arab countries are domineering and not exporting.
The situation of the labor market and its impact on markets?
The labor market has always had a significant impact on the price of currencies because it is linked to the movement of the economy or the natural course of movement of money in society from one person to another. For example, if the rate of unemployment increases significantly and no solutions or ideas are available to decision makers, Which will affect the consumer confidence in the economy and thus aggravate the recession due to the lack of movement of the economy, which will force institutions or services to close or reduce activities such as clubs, restaurants, cafes and other means of entertainment and entertainment, which will lead to lower income For people worldwide And try to reach only the minimum expenses. There are also countries that provide unemployment benefits to citizens who are unable to get a job opportunity to fight the problems that result from the increase in unemployment in society, which is a burden on the state and its treasury, which is a loss.
Let us conclude that there are economic events that Blazing Speed Trader Scam affect the state of the country’s currency. Therefore, it is necessary to read them correctly for the ability to analyze currency movements, which will facilitate the trader to seize opportunities on short price charts and take advantage of long-term price movements.
One of the most fundamental keys that a forex trader needs to understand is the relationship between leverage, margin and margin calling. Sometimes many novice traders lose money because they do not understand the negative or positive side of each of these topics.
When trading Forex using a portion of your capital, movements in currency pairs are so small that they will produce only the minimum gains and losses, making the trading process worthless.
In the past, only large institutions such as banks and investment firms with enough money to engage in trading and make profits deserved the effort. Since the advent of the leverage, ordinary traders have been able to trade like banks if they wish.
To do this, forex brokers provide a leverage, which is a multiplier of the amount the trader decides to deduct from his capital and use in the trading. It is not a cash transaction so there is no point in borrowing; the forex broker simply provides these multiples in exchange for price differentials, which is, in practice, the broker’s return against the risk of keeping the deal open. The broker’s leverage depends on the percentage of financing provided to the broker by the liquidity providers. Leverage ratios are higher outside the US, where US regulators have been concerned about irresponsible trading and thus set the leverage to a maximum of 50: 1, while outside of the United States, leverage could reach 1: 1000. The leverage is usually between 1: 100 and 1: 400. This means that a trader with a capital of $ 10,000 can execute a $ 4 million trading with a leverage of 1: 400.
To illustrate, if a trader is using a 400: 1 lever, then a $ 10,000 trading increase of 1% in the price of the currency pair would result in a profit of $ 40,000, a gain of 400% on the working capital. However, if the same capital is used but with a 1: 1 leverage ratio, a 1% increase will produce a profit of only $ 100.
In practice, margin requirements are the same as leverage, but in another name and form. The leverage ratio is the multiples provided by the broker to make the trading process worthwhile for customers, while margin requirements are the percentage of the amount that the customer must provide in order to execute a particular transaction. The amount of leverage offered by the broker determines the margin requirements that the customer must maintain. The leverage is inversely proportional to the margin, which can be calculated using the following formula:
Margin ratio = 1 / leverage
For example, the 50: 1 leverage ratio would be 1/50, which means a margin equal to 2%. A leverage ratio of 200: 1 will produce 0.5% as a margin percentage. The absolute value of the required margin value can be calculated using the following formula:
Margin = Margin Percentage (Transaction Size × Price)
For example, margin requirement of 0.5% on one share of EUR / USD, which is equal to EUR 100,000, at 1.1300 equals US $ 565.
Many emotional traders see the potential positive side of the leverage at a time when the downside should be evaluated first. In the example above, if the 1% increase is reversed to a 1% drop, the trader will lose four times his initial capital, or, in other words, only 0.25% is needed to erase his account completely. It is clear that the more reasonable trader will trade less (smaller trades) or set stop points to stop them. Forex brokers also do the same thing and place stop loss orders, but this is known as margin call. When the trader carries out a transaction in the currency market, the broker takes the risk by entering into the same transaction. So, while there is not enough money in the client’s account to keep the deal open for more time as a result of the floating loss incurred by the trading account, the forex broker must stop its loss and notify the customer of the margin call. A margin call is a notification received by the customer when the margin required for all open transactions reaches 100% of the funds remaining in the account. The client will either have to deposit more money into the account or close some losing positions.
Sometimes, the broker does not provide a margin call, but closes the deal at the final stop level, which is the percentage margin where the broker is forced to close all trades to reduce the risk of the client’s position and lack of funds. The level of the final stay is a guarantee for the Blazing Speed Trader broker so as not to lose the client more than the capital or funds available. Some brokers will call or send an SMS to their clients to inform them that their deals have reached the margin call, giving them the option of closing the transaction or adding more funds to keep them open. Authorized brokers must clarify margin requirements, margin level, and leverage when opening a Forex trading account.
Intelligent Bitcoin Code traders use only a small percentage of their capital for each transaction – sometimes less than 5%. In this way, they can benefit from the leverage offered while minimizing losses and margin appeal possibilities. It is also recommended that the client does not seek high leverage ratios if he is still a new Blazing Speed trader.