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Online Forex trading

Online Forex trading is the exchange of one currency for another simultaneously, using a trading platform. Online trading platforms allow traders to speculate on the exchange rate between two different currencies. With online trading software, you can carry out a Forex trade in an attempt to make a profit directly from your personal computer. The foreign exchange market has more daily volume from traders and purchasers than all other financial markets in the world. In addition, the currency market is available 24 hours a day and trades 5 days out of the week. The reported volume of trades in the currency market is estimated to be $4.3 trillion globally. This enormous volume makes online Forex trading one of the most exciting investment opportunities available. Before online currency trading, central, investment and commercial banks were the primary participants in the Forex market. However, now that technology has allowed individuals to access this market, there are a fairly large number of individual currency traders.

Currency Pair Quotes

Currencies are always quoted in a pair like EUR/USD or USD/JPY. Currency that is listed first is referred to as the base currency and the second listed currency is the quoted or counter-currency. The base currency is currency on which the trade is based upon. For instance, if you purchase USD/JPY you have purchased JPY while you traded USD. You would open this trade with the hopes that the USD would appreciate compared to JPY.

How will CFD Trading be Effected by European Regulations in 2018?

How will CFD Trading be Effected by European Regulations in 2018

By their very nature, retail trading and vehicles such as CFDs (contracts-for-difference) represent risky business. After all, they tend to operate in low-growth consumer markets, while they also make it difficult for investors to enter into emerging marketplaces.

Retail trading is also likely to be significantly impacted by regulatory measures and compliance issues, which continue to change the landscape for investors and move the boundaries of best practice.

This is particularly relevant in the current climate, with European regulators keen on toughening standards in the retail trading market and protecting online traders.

In this post, we’ll ask how CFD trading in particularly will be affected by proposed regulatory changes in the year ahead:

An Extension of UK Plans – What does the Regulator have in Mind?

As part of a proposed continent-wide overhaul, the European regulators will strive to provide guaranteed loss limits to customers in 2018, while targeting specific products that are deemed to carry excessive and disproportionate risk. This follows a sudden UK crackdown last winter, which hit the capital hard and caused many market leaders to lose around a third of their share values.

The Causes Behind Oil Stock Fluctuations

Commodities, such as oil, gold, tea, and such are physical substances and thus are more susceptible to the various effects of the natural and man-made world on them. Commodity traders all understand that they will experience more fluctuations on the prices of their holdings than they would if they held bonds and stocks, but many will argue that greater risk (fluctuation) equals greater rewards.

Looking at oil specifically, there are plenty of factors that impact the value of oil stocks in international exchanges and markets. These are what we will be looking at here. Before diving in, it’s prudent to keep in mind that commodity prices obey the simple cardinal rule of supply and demand – what we’re looking at here are basically some of the factors that influence the levels of either of these two essential qualities, in no particular order of importance.

OK. Let’s get into it.

Organization of Oil Producing Countries (OPEC)

Historically speaking, it cannot be denied that OPEC is the most substantial determinant of the prices of oil stocks in the world. The organization was created in order to introduce some measure of coordination in the global oil industry by bringing together different oil producing countries so that they can regulate oil supply levels, thereby avoiding catastrophic collapses or unsustainable gains.

The 14 member countries are Angola, Algeria, Equatorial Guinea, Ecuador, Gabon, Iraq, Iran, Libya, Kuwait, Nigeria, Qatar, the United Arab Emirates, Saudi Arabia, and Venezuela. Combined, they have control over a whopping 40% of the world’s oil supply.

In keeping with their policies, or global market conditions, they are able to come together and decide whether to increase or decrease the supply of oil on the world market, effectively influencing the price of oil stocks. With the decreased reliance on Middle Eastern oil by the USA in the wake of their recent advances in oil extraction, OPEC nations have less ability to cause international oil market catastrophes on their own.

Trading Divergences of Forex Indicators

As you being to build experience and trade forex more frequently, it is common to engage with more advanced methods of trading. Top forex traders seek to eliminate the risk of trading as much as possible. This is done through extensive types of analysis which can reveal some key information as to the direction of a particular market. One such indication is known as a divergence. Noting such an event will act as a clear sign to an experienced trader that they should take some action to alter their market position.

Identifying Divergences Correctly

At their very core, a divergence is a movement in the price action away from the movement as shown by a technical indicator. This indicator can be any you care to use in your technical market analysis. The important point is that when the indicator and the price action show conflicting signals, this is a divergence.

With forex trading practice, the aim is that traders can use such divergences to their advantage in reading the early trend of the market. Ultimately, this allows those who are experienced trading forex to adjust their position and increase their chances of success. Common indicators which are used in the identification of divergences are RSI, MACD, CCI, or Stochastic Oscillator, although virtually any technical indicator will work for the purpose. Your forex broker should facilitate trading through a platform such as Metatrader 4 where all of these indicators, and more, are readily available.

Examples of divergence could be when price action is showing a higher high or a lower low than your technical indicator. For experienced traders, with enough practice and time spent viewing various market trends, divergence can be quite easy to spot and help them in opening trade opportunities.

How Does Inflation Affect Exchange Rate?

The attractiveness of a particular currency at the forex market is determined by many things. The economic strength of a nation relative to another, however, is the most important factor. The strength of the economy itself is also affected by issues like inflation.

There are many factors in the economy that change inflation and thus affect the affairs in the forex market. The exchange rate of a particular currency is heavily influenced by how economic affairs within a country are managed. While there are many factors that affect the exchange rate of a currency, none is quite as instrumental as inflation. Inflation directly affects the price of goods and this has a direct impact on the value of the currency as well. So how exactly does inflation affect the exchange rate?

 

It changes the level of demand for the currency

Inflation causes goods from a particular country to become more or less attractive. The world is connected through trade. When the prices of commodities in a country increases, its goods become less desirable to those outside its borders. All countries exchange their currencies for others so that they can be able to trade effectively with their global partners.

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