There are many factors affecting the medium and long-term trend of the FOREX market, including interest rates, gross domestic product (GDP), US non-farm payrolls (NFP), consumer price index (CPI), producer price index (PPI), durable goods orders, claims for unemployment benefits, industrial production index, trade balance, unemployment rate, retail sales, etc. Differences between published data and expectations will have different impacts on currency pairs.

The NFP of the US is one of the important factors affecting FOREX. Increases in NFP and average wages indicate that employment growth and potential inflationary pressure have increased. In many cases, the Fed will inhibit them by hiking interest rates, benefiting the US dollar. On the other hand, NFP’s continual decline would mean that the economy is slowing down to some extent, leading to an increase in likelihood of reduced interest rates and hurting the US dollar.

In addition, decisions of central banks’ in different countries on interest rates are another important factor that affects FOREX. In the US, for example, interest rates are determined by the Federal Open Market Committee (FOMC). Interest rate decisions are important because central banks in different countries will formulate monetary policy and interest rate decisions based on a combination of economic growth, domestic inflation and unemployment. Therefore, interest rate decisions determines a country’s path of interest rates for a period of time in the future.

If the central bank in a country decides to lower interest rates, future returns on cash deposits will fall, causing local currency funds to flow from banks to the market, encouraging investment and consumption, and boosting economic growth. At the same time, the market demand for the country’s currency will drop due to lower yields, increasing the currency’s depreciation pressure. In contrast, a rise in the interest rate will increase borrowing costs, and reduce the liquidity in the market. Therefore, it has the effect of suppressing consumption and curbing inflation. Meanwhile, higher yields will attract more money converted into the country’s currency, increasing the likelihood of currency appreciation.

There are a wide variety of FOREX currency pairs. To engage in FOREX trading, investors generally choose to start with major currency pairs. Major currency pairs refer to those involving the US dollar. The most popular currency pairs are EUR/USD, USD/JPY, etc.

This is because the countries represented by the currency pairs have great international influences and high trading volumes. The currencies are highly liquid in the market and have dramatic volatility. There are frequent major economic news and data releases (for example: NFP, inflation rate, and central bank policy) for investors to analyse currency trends. Therefore, it will be relatively simple for investors to start with these currency pairs.

Yes. FOREX trading refers to transactions in which the investor buys one currency while selling the other currency. Currencies are traded through agents or brokers in pairs, such as AUD/USD or GBP/JPY.

Take the NZD for example. NZ stands for New Zealand and D stands for dollar.

The currency pairs shown in the above chart are often referred to as “major currency pairs”, because they are most heavily traded.

Trading hours in the FOREX market are divided into four sessions: Sydney hours, Tokyo hours, London hours, and New York hours. Following is a schedule of the opening and closing hours for each market:

As the schedule shows, there are always some trading hours overlapping for two markets. These hours are the busiest trading time in a day with much greater trading volumes, as most investors choose to trade during such hours.

FOREX is quoted in currency pairs, such as GBP/USD or USD/JPY. In each of your FOREX trades, you buy one currency and at the same time you sell another. Take GBP/USD for example: GBP/USD = 1.51258

The currency to the left of the slash (“/”) is called the base currency (the pound in the example), and the currency to the right is the counter currency (the dollar in the example). The base currency is the “basis” on which you buy and sell currencies. If you buy GBP/USD, that means you buy the base currency and sell the counter currency, that is, you “buy pounds and sell dollars.” If you believe the base currency will appreciate relative to the counter currency (the exchange rate rises), then you should buy it. Conversely, if you believe that the base currency will depreciate relative to the counter currency (the exchange rate drops), then you should sell it.

Participants in the FOREX market mainly include commercial banks, which are the backbone of the FOREX market. Most large FOREX trades are executed at FOREX banks.

Finally, there are FOREX speculators, multinational corporations, central banks and FOREX administrative agencies engaged in FOREX trading.

In addition, there are importers and exporters and other FOREX suppliers and demanders. Importers and exporters are not only FOREX demanders (when they import goods) but also suppliers (when they export goods). Other FOREX suppliers and demanders refer to non-trade FOREX buyers and sellers, such as tourists.

They also include FOREX brokers who provide FOREX trading brokerage services. Usually, they must be approved by a local central bank branch. FOREX brokers generally do not trade FOREX. They only serve as a bridge between FOREX buyers and sellers on a handling fee or commission basis.

In general, FOREX trading does not entail commissions or fixed unit quantity, and trading costs are relatively low. It is only concerned with spread. The FOREX market is opened around the clock, so investors can trade at their preferred time. Unlike investors in mid-cap and small-cap stock markets, no individual investor in FOREX is able to dominate the FOREX market. In addition, FOREX trading is usually leveraged. Investors can control a very large amount of total contract value with a small margin. Leverage gives investors the ability to make high profits (but at the same time the losses are amplified). High liquidity, low barriers to entry, and the ubiquity of a variety of free tools on the market are also benefits of FOREX trading.

Please note: Margin FX trading carries a high level of risk and is not suitable for all investors. Please read our Legal Disclosure Documents carefully before choosing to start trading.

Trading commodities can protect investors from inflation, as inflation hurts ordinary investment products. In times of inflation, returns on ordinary investment products such as bonds are relatively low, while the performance of commodities is generally in direct proportion to inflation. This is because when the prices of goods and services rise, the value of the commodities needed to produce these goods and services will also rise. So if your portfolio includes certain commodities, you may be able to reduce losses owing to inflation.

Please note:Leverage trading carries a high level of risk and is not suitable for all investors. Please read our Legal Disclosure Documents before choosing to start trading.

Supply and demand are important factors that affect commodities. Taking oil as an example, if the supply of oil is expected to be strong, and market demand for it does not change much, then the oil price will fall. Often, tensions in the Middle East affect the stability of the oil supply, resulting in a shortage of supply in the market, and pushing oil prices higher due to expectations for demand surpassing supply in the short term.

Another important factor is inflation. When inflation rises, investors need more money in exchange for goods due to currency depreciation, which will also affect the price of commodities.

If you wish to trade commodities, gold and crude oil will probably be your first choices to start because gold is an important hedging tool in the market. When the world encounters political instability or economic downturns, people will worry about currency depreciation, and gold will often become one of the options against currency depreciation.

When an international emergency breaks out, the price of gold will experience large fluctuations. Unlike currency pairs, the price of gold is affected not only by the countries involved, but also by global factors. Therefore, gold provides investors with more investment opportunities.

With regards to crude oil, investors would easily understand the reasons for fluctuations in its supply and demand by reading international news. Like gold, oil prices are affected by global factors, which provides more opportunities for investors.

A stock index is a group of data on multiple stocks that reflects the value of the constituent stocks on the market. It is often used to show the common characteristics of the constituent stocks, such as stocks that are traded on the same stock exchange, belonging to the same industry, or have similar market capitalisation. There are mainly three types of stock index by the method of calculation. The first type is price-weighted index, such as the Dow Jones Industrial Index, which is formulated by calculating the prices of a few constituent stocks. The second is market-value weighted index, which is based on the market capitalisation of different stocks in the index, such as the Standard & Poor 500, and the Hang Seng Index. The third type is market-shared weighted index, which is calculated based on the weighted average number of shares instead of market capitalisation.

In contrast with the stock market, trading stock indices allow investors to enter the overall market without specific stock risks and to track the trend of the most active stocks. It is not the case that you may buy stock only when the market is predicted to rise. You may enter the market when it fluctuates in either direction, which increases your profit opportunities. Moreover, due to the high trading threshold, stock index trading usually requires a large investment amount, while stock index allow investors to trade smaller contracts, so they can buy a basket of stocks at lower costs and easily enter the investment arena.

Please note:Leverage trading carries a high level of risk and is not suitable for all investors. Please read our Legal Disclosure Documents before choosing to start trading.

There are multiple factors affecting a stock index, chiefly in three macro aspects.

First, changes in market interest rates will have a significant impact on the stock market. Generally, pricing for a stock index rises as interest rates fall, and falls as interest rates rise. Therefore, interest rate levels and the relationship between interest rates and the stock market have become important indicators for investors to go long or short stock indices. Whenever the government announces a rate cut or a reserve requirement ratio (RRR) cut, the borrowing costs in the market will fall, and the stock index often rises in the short term. However, when a rate hike is announced, the stock index reacts to the contrary.

Secondly, inflation usually has a significant impact on the stock index. Modest inflation can stimulate the stock market, while severe inflation will weigh on it. Inflation occurs mainly because the central bank increases the money supply too quickly. Generally, the money supply is directly proportional to stock prices, i.e., a larger money supply will cause stock index pricing to rise. When the central bank tightens to suppress inflation by raising interest rates, the stock index will go down.

Secondly, inflation usually has a significant impact on the stock index. Modest inflation can stimulate the stock market, while severe inflation will weigh on it. Inflation occurs mainly because the central bank increases the money supply too quickly. Generally, the money supply is directly proportional to stock prices, i.e., a larger money supply will cause stock index pricing to rise. When the central bank tightens to suppress inflation by raising interest rates, the stock index will go down.

Thirdly, government fiscal policies will have an impact on the stock market. The government’s substantial tax cuts, increased public spending, etc., may stimulate expectations for corporate earnings, causing the stock index to rise in the short term.

Before choosing a stock index for trading, you should first understand the similarities and differences between different markets, basic economic conditions related to stock indices, national policy changes, monetary policy directions and other fundamental factors. You also need to understand technical changes in the stock index, bull and bear cycles, etc. If you are familiar with some stocks, or a country’s economic conditions, you may choose to trade the local stock index. Or you can assess which market is more suitable for yourself based on the average daily trading volume of the stock market related to the stock index.

As a stock certificate, a stock is a negotiable security issued to raise funds by a listed company to its shareholders. A shareholder is an investor that legally owns one or more shares of stock in a company and has the right to enjoy the assets and interests of the company. The company issues shares to raise funds from the public for business development, while the investor purchases shares to earn returns and diversify his/her portfolios.

Generally, stock prices have been fluctuating directly with supply-demand relationship, the company’s performance and profitability, and mainly with macroeconomic and political factors as well as market sentiment.

International political and trade relations, natural disasters and commodity prices have had a significant impact on stock prices.

Macroeconomics

In good times, share prices tend to rise, while in a recession, they may fall.

Interest rates are another important factor in stock prices. When interest rates fall, stock prices rise, as individuals spend more, which in turn leads to higher corporate profitability, and companies are able to finance operations, acquisitions and expansions at lower borrowing costs, thus boosting their profit potential. When interest rates increase, individual consumers may not consider buying goods with variable interest rates, such as houses and car, and it will indirectly result in a decrease in corporate income. In the meantime, corporations refuse an access to funds from banks at high borrowing costs, and are subject to a decrease in spending and the slowdown of growth, hence a negative effect on their performance in the stock market.

Corporate disclosure

(1) Financial report: the disclosure of a company’s annual report, semi-annual report and quarterly report often brings fluctuations to its stock prices because the reports contain the performance, profitability and prospects of the company within a specific period. If the reports indicate that the company is performing well or that its sector is expected to grow, investors are more likely to purchase its stock shares, demand for its stock shares increases, and the stock prices rise accordingly.

(2) Company announcement: It includes management changes; acquisition, merger and reorganization resolutions; stock repurchase; dividend payment; and other corporate actions.

Supply and demand

Stock prices are driven by such a variety of factors, but ultimately the price at any given moment is due to the supply and demand at that point in time in the market. Supply is the total amount of a specific stock that is available in a market, while demand is the total amount demanded in the market for that stock. Low supply and high demand will push up stock prices, whereas high supply and low demand produce a contrary result.

Corporate actions are the actions initiated at the corporate level having material impact on the issued securities, which mainly include dividend payout, stock splits, and partnerships.

Dividend payout

Dividend payout is to distribute a portion of a company’s profits to its shareholders. Generally speaking, dividends can be taken in cash or reinvested back into the stock. A stock dividend is paid to shareholders in the form of additional shares in the company, while a cash dividend is paid in cash. Dividends demonstrate good performance of a listed company and help maintain investors’ trust in the company. Typically, dividend-paying public companies tend to be more mature and have better reputations.

Stock splits

A stock split is a corporate action in which a listed company divides its existing stocks into multiple shares to boost the liquidity of the shares. For example, Apple did a 4-for-1 stock split, whereby one high-value Apple share was split into four low-value shares. As a result, total stock issue increases, but stockholders’ equity and the total market value of the company remain unchanged. When a company’s stock prices are extremely high or above that of a counterpart in the same industry, a split makes its stock affordable to more small investors and stimulates stock liquidity.

Stock consolidation

A Stock consolidation is an action by which a corporate reduces the number of shares held by each shareholder but increases the value of each share proportionally. Instead of directly affecting a company’s market value, it may signal that the company is in trouble.

Stock analysis is a method by which investors buy in or sell out stock shares after analyzing, evaluating and forecasting the company’s past data. Its basic strategies are fundamental analysis and technical analysis.

Fundamental analysis

It is the analysis of economic and financial conditions and other factors, trying to find the intrinsic value of the stock. Its ultimate goal is to attain the actual intrinsic value of the stock and compare it with the current stock price, so as to judge whether the stock is overvalued or undervalued. Investors tend to buy stocks that are undervalued and sell those that are overvalued.

Fundamental analysis includes qualitative analysis and quantitative analysis.

(1) Qualitative analysis is on the target company’s business model, market competitive advantages, management efficiency, corporate governance and market sentiment.

(2) Quantitative analysis is on the quarterly or annual financial statements of a listed company.

Often, fundamental analysts combine qualitative analysis with quantitative analysis to make a final investment decision. By stock analysis, a company’s financial status and the performance of its stock are the most important forces that move the actual intrinsic value of its stock. Common indicators used in fundamental analysis:

In addition to the above indicators, the company’s balance sheet, cash flow and operating indicators are the focus of fundamental analysis. But the operating indicators vary from industry to industry. For example, inventory turnover, sales per square foot, and customer retention are key indicators to measure business operations in the retail industry, while for companies that specialize in ordering businesses, the indicators include user average revenue, customer lifetime value, and user purchase cost. Most business information will be included in the annual and quarterly reports of public companies, so it is important for fundamental analysis investors to carefully read these reports and corporate announcements.

Technical analysis

It tends to study the historical data of stocks, such as stock price trend and trading volume, in a bid to analyze and predict future prices. Technical analysis is mainly done by technical graphics and technical indicators.

(1) Technical graphics

It is a major form of technical analysis in which traders attempt to determine support and resistance levels via specific charts. Technical graphics are mainly supported by psychological factors to predict whether a stock will rise above or fall below a certain price in a specific time. When a resistance level is breached, a significant increase in trading volume may ensue, thus pushing the stock higher.

c. RSI

It is a commonly used momentum indicator in technical analysis, which reflects the prosperity of the market in a certain period and evaluates the overbought or oversold state of a stock. Theoretically, no matter how the stock price changes, RSI always ranges between 0 and 100 and mostly fluctuates between 30 and 70. It usually considers a overbought position at 80 or even 90, at which point the stock price will fall back. When the stock price falls below 30, it is considered oversold, and the price will rebound.

When the MACD crosses the signal line (usually the 9-Day EMA) upwards, it signals a bear market and indicates a possible sell opportunity. When the MACD crosses the signal line downwards, it signals a bullish market and indicates that the stock may be heading for an uptrend.

Typically, when the MACD is positive, it indicates that the 12-Day EMA is valued above the 26-Day EMA, and when they diverge further, the positive value increases, and it indicates that the stock is gaining upward momentum. In contrast, a negative MACD indicates that the 12-Day EMA is below the 26-Day EMA, and when they move further away, the negative value increases, and it indicates that the stock is gaining downward momentum.

b. MACD

It shows the relationship between two moving averages of asset prices and is calculated by the difference between a fast and a slow exponential moving average (EMA). “Fast” refers to the short term EMA (typically 12 periods), while “slow” means the long term EMA (typically 26 periods).

(2) Technical indicators

It is a technical analysis method that applies mathematics and statistics to stock prices and trading volumes. The most common technical indicators include:

a. Moving average

This indicator helps traders clearly identify market trends. This is generally considered a bullish trend when the short term moving average crosses and is above the long term moving average.

A “1%” leverage (or 1:100) means that a 1% change in the price of the asset will produce a 100% change in the price.
For example, a $1,000 balance with a 1:100 leverage ratio has a trading ability of $100,000, allowing traders to purchase financial products worth up to $100,000.

Take-profit and stop-loss orders can be set before opening a position, when placing an order, or when editing an existing position. These features allow you to set a specific price at which the position will be closed. This helps protect your profits in a take-profit order or reduce your losses in a stop-loss order.

*Please note that take-profit and stop-loss functions do not guarantee the exact execution at the specified price. During periods of high market volatility, the market quotes may skip over your predefined price. Your position may be closed at the next available price, which could be different from the price you set. This is known as “slippage.”

Examples:
The US30 bid/ask price is $22,916.66/$22,919.86.
You buy 10lots US30 and place the stop-loss level at an sell price of $22,896.50.
If the US30’s price suddenly drops from $22,916.66 to $22,886.40, your position will be closed at $22,886.40 instead of your original stop-loss price of $22,896.50.
It is because the placement of a stop-loss order does not guarantee that your position will be closed at that price. When the price suddenly falls below $22,896.50, the stop-loss order is triggered and the position is automatically closed at the next best closing price, which is $22,886.40 in this example.

Usually there are four types of pending orders: buy stop, sell stop, buy limit, and sell limit, all of which are available at Zooe. Stop orders (including buy & sell orders), in addition to the function of stopping losses in existing positions, can be used as a buy stop / sell stop strategy. Limit orders (including buy & sell orders) are usually used to buy at a price lower than the market price (buy limit) or sell at a price higher than the market price (sell limit).

Profits and losses of all positions (profit/loss + overnight funding)
Long: (current sell price – opening price) * trading lot * contract size + overnight funding
Short: (opening price – current buy price) * trading lot * contract size + overnight funding

The floating P/L of the remaining amount of the account after deducting the initial margin (the account balance that can be used for opening new positions or withdrawal)
Available balance = balance + unrealised total P/L of open positions + overnight funding for all open positions – total initial margin

Profits and losses of profit/loss of all positions (excluding overnight funding).
Long: (current sell price – opening price) * trading lot * contract size.
Short: (opening price – current buy price) * trading lot * contract size

There are many advantages to trading based on fundamental analysis. Most importantly, changes in a currency pair, a country’s economic conditons, or corporate earnings, are the core factors in determining the medium-term and long-term trend of the currency or stock index.

When you have enough knowledge about the industries and economic trending of a region (or a stock index or a firm), you may also choose to hold the relevant currency pair or stock index for a long time, without the need to trade tracking the daily quotes all the time. You may wait until your currency pairs or stock indices correct back or rally to go long or short.

A variety of fundamental changes will influence currency pairs. Out of these changes, interest rate expectations tend to have the biggest impact on the strength of a country’s currency, and investors can trade accordingly.

If a country’s released inflation data keeps surpassing the central bank’s target, the central bank will influence the local currency according to its own inflation target by raising or lowering interest rates.

Usually, the central bank will raise interest rates to reduce the amount of money in circulation and curb inflation. If the central bank wishes to increase the amount of money in circulation, it may do so by lowering interest rates. Generally, as the difference between a high-interest currency with a low-interest currency widens, hot money will tend to flow into the high-interest money market, driving the demand for money higher. This is one of the reasons for the rise in medium-term and long-term exchange rates, and investors may capture these opportunities to invest.

Fundamental analysis refers to analyzes the macroeconomic conditions of the country to predict the basic trends and exchange rate changes based on the driving factors of market fluctuations. Generally, when a country’s economy strengthens, its currency exchange rate will rise, and when the economy goes down, the currency exchange rate will decrease.

Because the US dollar is the world’s trade and settlement currency, the US dollar has an absolutely dominant position and advantage in the foreign exchange market. The economic condition of the United States is the main factor affecting the foreign exchange market. Therefore, Its economic data gets the most attention from forex investors.

According to statistical analysis, the effect of different economic data on the market in order from strong to weak is:

Interest rate resolution, unemployment data, GDP, industrial production, foreign trade, inflation rate, producer price index, consumer price index, wholesale price index, retail price index, purchasing managers’ index, consumer confidence index, business climate Indexes, construction data, factory orders, personal income, car sales, average wages, commercial inventory, leading economic index and more.

Of course, under different market conditions, the impact of data will vary. For example, when certain economic data has a larger difference than expected, its impact on the market will be magnified. For example, before the Monetary Easing changes, the employment data, inflation, and other data will be more concerned. During the period, important economic events, official speeches, and politician speeches will have a greater impact on the market.

In actual transactions, investors do not need and cannot analyze all the data one by one, but it is necessary to grasp the changes of the market focus and the market’s response to what changed. Of course, for a successful investor, predictions and judgments must be made before the indicators and data are released, and the trading strategies should be determined when the data is released.

Theoretically, price fluctuations should fully reflect all the valid information on the market. Unfortunately, for investors, that is not always the case. It is impossible for the market to simply and directly reflect all the information, because not all investors will place orders in the same manner. Sometimes we need to measure the market sentiment. Through various trading data and ratios of long and short positions provided by brokers and third-party market analysis organisation, we can effectively know whether the current market sentiment is bullish or bearish, which is very useful for analyzing trading trends.

Technical analysis has many advantages. Usually, in technical charts on different financial instruments, you can find more specific buy/sell points, which are easy for each investor to learn. Moreover, in most cases, technical analysis reflects all news changes in the market. After all, investors alone cannot always monitor the important factors affecting the global stock and FOREX market every day. Therefore, changes in technical analysis may inform investors in advance of the future or latest major news so that investors may be prepared for position risk management.

There are a wide variety of technical analysis applications, including universal indicators of RSI, MACD, KD, and moving average, and candlestick charts, which can help investors to assess the market, and make buy and sell decisions and implement take-profit/stop-loss strategies.

Take the Relative Strength Index (RSI) as an example. It is similar to the random oscillator. With a scale from 0 to 100, it also indicates whether the market is overbought or oversold. Normally, an RSI of under 30 means an oversold market, and an RSI of over 70 indicates an overbought market. You may make a buy strategy when a particular asset is oversold, or go short when it is overbought.

Technical analysis refers to predict future price trends by studying past price and transaction data. Technical analysis mainly relies on charts and formulas to estimate the market cycle length, and identify the buying/selling opportunities. Depending on the time span available, you can use intra-day (eg, minute, hour) technical analysis, or use weekly or monthly technical analysis.

1. Discover trends

Finding a dominant trend will help you see the overall market trend and give you more insight. Weekly and monthly chart analysis is best used to identify longer-term trends. Once you find the overall trend, you can find trading opportunities in the desired time span.

2. Support and resistance

Support and resistance positions are the points on the chart that experience sustained upward or downward pressure. When these points show a recurring trend, they are identified as support and resistance. The best time to buy/sell is near support/resistance levels that are not easily broken. However, once these positions are broken, they tend to become reverse obstacles. Therefore, in a bullish market, the broken resistance position may become support for an upward trend; however, in a bearish market, once the support position is broken, it will turn into resistance.

3. Trend lines and Channels

Trend lines is a simple and practical tool for identifying the direction of market trends. The upward straight line is made up of at least two consecutive low points, and the straight-line extension helps determine the path the market will move. Conversely, a downward line is drawn by connecting two or more points. To a certain extent, the volatility of trading lines is related to the number of connected points.

A Channel is defined as a trend line that is parallel to the corresponding trend line. The two lines can indicate the price fluctuation range of upward, downward or horizontal.

4. Moving Average

A moving average shows the average price at a specific time during a specific period. Because the moving average lags behind the market, it may not be a sign of a trend change. For this reason, moving averages are generally used by combining two averages of different time spans.

The buy signal usually is when the short-term average line goes up crosses the longer-term average line, and the sell signal is when the short-term average line goes down crosses the longer-period average line.

To effectively manage market risks, first of all, you must sort out your trading strategy before each trade, including your trading logic, stop-loss and take-profit levels, the ratio of trade size to your equity and, the ratio of leverage, etc. If you have managed these things well, in most cases a single trade in the context of market fluctuations will not cause a significant loss to your position. When a black swan event occurs leading to extreme market movements, great gaps may prevent your position from being closed at the stop-loss level. It is therefore important for you to keep sufficient funds in your trading account to control risks.

After a position is opened, you should constantly check whether your funds are above the maintenance margin and remain above it by a certain percentage. When the price goes in a direction unfavorable to your position, you must provide extra margin to maintain your current position. If you are unable to deposit additional funds, you will need to close one or more trading positions to reduce the maintenance margin required for your account.

In the event of insufficient margin, you must meet Zooe’s “Margin Call” requirements. If the requirements are not met, Zooe has the right to liquidate open positions.

In addition to market movements that will significantly impact your position, you need to be aware of operational risk. Your communication network, mobile phone, computer and other equipment being blocked or other external events may delay your trading. You should ensure that trades are carried out only when the network is secure and your trading equipment is configured properly.

Another common source of risk is exchange risk. As the currency in which your trading product is denominated is not necessarily the same as your national currency or the base currency, you will also face the risk of exchange rate fluctuations between the two currencies.

Before trading, each investor should consider “If the trade fails, how much do I wish to lose?”

If your stop-loss level is far from current price, you may have to endure a long period with a large floating loss before the stop-loss order is triggered. When stop-loss is reached, your account balance may drop significantly. So next day when you look at the loss of the previous day on the platform, your heart will sink.

If you wish to avoid a major loss in a single trade, you may place a stop-loss order before each trade. The best approach to risk control is, assuming that your trade fails, to find the price level that you would call a failed trade, and let it be the stop-loss.

With that in mind, you will start trying to set the initial stop-loss at a reasonable level. When the stop-loss price is reached, what you could do is only to wait patiently for the stop-loss to execute.

Before trading, each investor should consider “If the trade fails, how much do I wish to lose?”

Trading Guide for Beginners!

Two methods are recommendable. Firstly, with a strategy in which you have confidence, you may trade with relatively high leverage, while with a less credible strategy, you can deposit more funds in the account to improve account security. Secondly, you should set a margin-equity ratio for your overall position, and open a new position only when that ratio is not exceeded to avoid severe losses due to high leverage.