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How the Elections Could Affect the Markets and Online Forex Trading

The November US presidential election is likely to impact online forex trading through the impact on the US dollar. Traders need to ignore any market weakness.

Online Forex Trading Around Election Time

There is a possibility for markets to react with increased volatility on the days leading up to the actual election time. The November 8 election will determine the next US president, and volatility will go away the next day, no matter who wins. In the case of extended weakness in the US dollar, traders need to be careful. And to treat it with suspicion. Because any such weakness is very likely to lead to a surprise rally soon after the election. In any case however, volatility risk is a possibility, as all US crosses will be impacted. No matter how the US dollar reacts to pre-election uncertainty, it will later resume its major trend. Technically, the US dollar is already in a down trend of some sort. But the validity of the entire sell signal is already in doubt, because of the timing. Some confusion is likely to come about due to the election. And this means potential false technical signals in many US crosses. Other than that, the election will not have a major impact on online forex trading, in any way.

Trading the US Election

Forex traders should look for possible false breakouts and signals. And consider the US dollar to be in a likely bear-trap. Where many bearish traders will get trapped into a US dollar which will at some point skyrocket for no apparent reason. Even when day trading Forex live, traders should always keep the US dollar’s peculiar strength in mind. It is even likely, in the case of Trump becoming the next president. That the US dollar will surprise even more. Through some deceptive decline and some nonsensical rally. So it makes sense to be alert, and suspicious of US dollar weakness. And generally not to take short trades on the US dollar if it does continue to go down before and around the election time. The reason is purely geopolitical. With Trump as president, the US will be seen as stronger diplomatically, and the US dollar as more attractive. If you go on analyzing these events and learn Forex trading through the mindset of carry-trade forex investors, and foreign investors. You will see that many false technical and fundamental signals on currencies are caused by geopolitics. This is why the current weakness in the US dollar appears to be so deceptive.

Online Forex Trading Past the Election

Online forex trading is expected to benefit in the US, if Trump wins the election. And this expectation has to do with the natural evolution of the financial markets. And with the fact that republican governments are more business friendly. And are likely to help the financial industry in the US evolve better. US based forex traders may be allowed more privileges in the future, if Trump is elected. Such as higher leverage accounts. And even possibly access to CFD trading accounts. These are some very real possibilities that could change the forex financial industry in the US for the better. Because too many regulatory restrictions are not good for anyone.

How to Choose Your CFD Broker for Online CFD Trading

Generally, all online CFD trading is superior to non-CFD trading. The reason isn’t so obvious, but CFD brokers inherently best suit the needs of retail traders.

Online CFD Trading Means More Security

Unless you trade several $1000s per pip /market point etc, there is no reason to trade though direct market access. Retail traders tend to trade at less than $100 per pip /point, and CFDs are made for that. CFDs provide one way favorable market liquidity. Extra liquidity at critical market times, and all the liquidity that the small retail trader will ever need. This means security in trading, enhanced trading conditions, and best filling price. There are many good CFD brokers to choose from, but even average rated CFD brokers are still superior to non CFD ones. Moreover, the professional traders who trade through these CFD brokers are very demanding, and want the best of the best. And while welcome bonuses and incentives are welcome. It is actual trading in demanding conditions, where traders judge and rate brokers. Any CFD trading report written by serious traders is bound to be impartial, realistic, and provide specific details. These traders are very street-wise and rate all brokers very fairly. They have also been through the trading practices of older generation non CFD brokers, where issues such as frequent slippage and requotes were common. So nothing can escape their scrutiny for too long. The fact that these traders chose CFDs as their favorite trading instruments speaks volume about CFD trading in the real world. Where trade size matters, and where live trading has to be as dependable as demo trading is. But there are natural limitations, CFDs will deliver all their beenfits for trading up to $100 per point / pip. Which is an unreachable limit for all retail traders. One is bound to have made 10s of millions of dollars before reaching this limit.

Online CFD Trading is the Natural Evolution of Retail Trading

Online CFD trading is facilitated through various good CFD brokers. And it was only a matter of time for that to happen. Now all traders are demanding, and the excellent performance of CFD brokers is forcing all other types of retail brokers to also improve. The problem is a non CFD broker is limited in what it can do. It can never have the level of liquidity, linear pricing and enhanced trading operation that CFD brokers have.

Choose a CFD Broker Based on Real Trader Ratings

You can safely choose your CFD broker based on ratings and feedback by real, demanding traders. The truth is out there. And this broker will also offer you a basic CFD guide for understanding the basics of CFD contracts, and help you brainstorm trading ideas. Just remember that the strength of CFDs is not in their leverage. Leverage is found in futures, options, spread betting, or any DMA broker offering margin accounts. Leverage is not big deal. The strength of CFDs is in that they can track market price very closely, enabling you to capture entire market moves, dollar for dollar. Futures, options and spread betting fail spectacularly to do that, because they have no linear pricing, And often, half the market move is missed. The result is getting a very bad filling price every time. But especially in tight range day trading, literally half the move is often missed. CFDs don’t have this problem. Then compared to DMA brokers, CFD brokers offer better liquidity still, and get around exchange-imposed restrictions. For example, when short selling restrictions are imposed, DMA brokers don’t allow you to short stocks, and yet at the same exact time, CFD brokers allow you to trade as normal and go short these stocks. When it comes to retail-size financial trading, there is no match for CFDs! Online CFD trading can get you above and beyond classic trading strategies.

Is the Economy the Biggest Factor in Online Forex Trading?

Various factors impact online forex trading, through obvious or complex mechanisms. The state of a country’s economy is a major factor in currency strength.

Online Forex Trading and the State of the Economy

Every national currency is impacted by the state of its country’s economy. The economy however works in complex ways, and the forex market may or may not have priced in anticipated impacts. Long before the actual events occur in the economy. Apart from this complexity, there is also geopolitics and the reputation of the country. All of these factors can impact a national currency in the medium to long term. In the short term, economic reports released to the market, simply create volatility. But no safe clues can be inferred about day to day market direction. The currency pair in question may rise or fall, depending on what traders’ perceptions are at the time. Online forex trading is impacted accordingly. And so it is not easy to make straightforward predictions. Based on simplistic and naive relationships between economic events. Rising inflation for example is a bad thing for an economy. But a rising inflation is bound to bring about rising interest rates later on. Which will attract carry-trade investors. And they will want to buy that national currency as a result. The question is where is the currency coming from, and where it is likely to go. Economic events, on their own, are not very useful. It is economic events, together with prior history and government policy, that are more useful. And even so, traders have to check the currency in question and its trading history as well. So as to determine if even valid, substantiated expectations have been already priced in by the market, or not.

Online Forex Trading Defies the Naive Approach to the Markets

Actual online forex trading always defies most traders’ expectations. Because these expectations are naive in nature. And they fail to address the serious long term issues concerning a particular country. During periods where the economy performs poorly. The government wants to stimulate the economy so as to be able to collect more taxes. If interest rates are set lower, economic activity will certainly rise. But the national currency may fall or may rise. It depends on the exact demand by global trade, and on the willingness of carry-trade investors to sell the currency. These two factors act in opposite ways, offsetting each other. If either one prevails, the market will reflect the reality. Finally, there is demand specific to commodity related currencies. Such as there is for USDCAD, which is inversely correlated to the price of crude oil. Because the Canadian dollar is directly, strongly and positively correlated to the price of crude oil. If crude oil price rises, the Canadian dollar will follow suit, regardless of the set interest rates. So basically, every country requires a unique approach, in assessing and predicting its currency. Generic analysis methods simply don’t work. And those who attempt to trade forex online on naive assumptions, end up losing their money. Only the patient, well prepared traders are successful.

Central Bank Interventions

Sometimes the central bank of a country may intervene to slow down the movement of the national currency. Central bank interventions cause large market fluctuations, lasting several days. And the market may move by 500-800 pips. These moves are very difficult to predict by the use of technical analysis. As all technical signals are defied by fundamentals. Only in-depth fundamental analysis on the economy may help predict these interventions. What makes them even more confusing is the fact that the trend does not actually change. An intervention only causes a slow-down effect on the existing trend. Through the short lived counter trend move. After which the market resumes its prior trend. You can’t learn forex trading effectively, without studying central bank interventions, big and small. As they are key in understanding the big picture on the relation between the economy and traders’ perceptions.

Scalping the Right Markets in Online Forex Trading

Online forex trading becomes almost directionless when one is doing scalping. The methods used in scalping are more about preparation than actual live trading.

Why Scalpers Work Outside Online Forex Trading Active Hours

Online forex trading tends to be most active, in terms of volume, during particular time zones. And this is when most breakouts typically occur. But scalpers being directionless in their view of the markets. They only want to see flat trading action, where the market seems to be going nowhere. This ensures that the risk of a breakout is significantly reduced. Most wise scalpers use an online forex trading platform which offers maximum possible efficiency. And for wise traders this is always a CFD trading platform. Because only that can offer maximum possible liquidity, best filling prices, and linearity. Leverage helps magnify tiny market moves, of anything between 5 and 30 pips. And this turns tiny market moves into significant trades. But it is the linearity of CFDs that actually makes efficient scalping possible. Because CFDs follow the actual market very closely. So closely, that other trading instruments never can.

Online Forex Trading Becomes Profitable through Scalping

Online currency trading is very difficult for most beginners. Because they tend to get stuck on the losing side of the market for too long at a time. Resulting in heavy losses, and uncertainty about market direction. Moreover, beginners don’t know how to handle risk and properly assess their losing trades. Scalping is better in that regard, since the trader only has to trade small moves either in one or in both directions. But over the span of several hours, they are totally directionless. One hardly needs to fully learn forex basics when they engage in scalping. All the preparation for the scalping session is very basic to slightly complicated. So anyone can at least understand it fast. Basically, it’s all about identifying the few hours when a currency pair will be most inactive, and least volatile. This will be the out of hours trading time zone. So, someone wishing to scalp the EURUSD pair for example, can do so during the late US and early Asian trading session. Especially the Asian session best suits EURUSD scalping. But the same logic can be applied to many more pairs. The potential profitability of scalping is enormous, and in the case of CFD trading accounts, as much as $300 per scalping session. This figure is based on medium size, accounts of around $2,000 to $3,000, moderate leverage and careful day selection. The risk of a breakout is still there, but traders use stops to limit this risk. The losses from bad trades can be recovered very fast too. In actual trading tests conducted by average traders, it was possible to have 30 winning trades in a row. These were small winning trades, but they amounted to a very good monthly sum.

The Trickiest Part in Scalping is Determining the Price Baseline

Scalpers don’t have to worry abut market direction, that’s for swing traders and position traders to worry about. Scalpers only need to identify the most quiet days, and specific time zones. And to also determine the price baseline in any given scalping session. All losing trades in scalping arise from poor judgment of the baseline and overall expected volatility. As the market may seem to trade flat at a given level. But then it may jump higher, and trade the rest of the scalping session, flat at the new higher level. Believe it or not, it is possible to dig deeper into market data and assess both volatility and price baseline a lot better. Once the price baseline has been determined. The scalper then simply repeatedly sells rallies above the baseline, and buys dips below the baseline.

How to Avoid the Scams in Online Forex Trading

Online forex trading can be carried out in very safe ways. But as with all things in life, some scammers get involved and sell all kinds of snake oil nonsense.

Online Forex Trading is Honestly Presented Only through Full Risk Disclosure

Snake oil salesmen use all kinds of tricks and techniques, based on false consumer expectations. This is why misleading marketing works, for the most part. Scammers are involved in all kinds of businesses. Anything from the fine art market to real estate. And even car mechanics and doctors can sometimes be dishonest, so as to charge you the maximum amount of money possible. Luckily, in online forex trading, there are many seasoned traders capable of judging. And of impartially rating any forex product or service. Just by getting in online forex forums and getting into discussions with such traders, the truth is revealed in no time. Savvy traders are very hard to fool, that’s why their advice is priceless. Even in the far superior CFD trading forex liquidity pool, which is much better than anything else out there. Traders tend to mistrust the markets. Not that the markets are wrong. The markets are right and honest. But by their very nature, market moves can be deceptive to naive traders. Savvy traders trust reputable CFD brokers like they trust their wallets and bank accounts. But the markets themselves and the information going around, can all lead to the wrong trade. So suspicion on market moves and stories told in the media is always there. It’s the nature of traders to be suspicious. Especially when a market trend looks very convenient to follow. Savvy traders handle trades with extreme caution.

Robots and Automation Cannot Master Online Forex Trading

Robots are the biggest scam in online forex trading today. Because they are being sold under false or poor back-testing data. Moreover the buyers of these forex robots fail to realize that all forex robots fail miserably after a matter of several weeks of trading. And no such trading can really beat the market. And even if a commercially available forex robot is ever this good. The very act of making it commercially available would lead to the profit margins evaporating. Hence the trading edge would be lost very soon. All sales tactics that the vendors of these products use, are based on consumer psychology. And consumers do make unwise decisions all the time. But committed forex traders are not typical consumers. They are by nature becoming more and more street-wise and suspicious as they learn more about trading. Only manual, risk-embracing forex strategies can lead to long term profitability. And the street-wise traders know this very well.

Avoiding Scams and Gambling-Like Market Products

Apart from forex robots, traders are strongly advised not to buy training courses that lack sufficient ratings. And not to invest in 3^rd party forex funds. Traders are much better off trading their own funds, through their own retail size CFD forex accounts. Or through DMA accounts if they are very large size traders. Trusting investment money to 3^rd parties is very risky, because there is no way of validating their motives and accuracy of information, certainly never 100%. A forex fund may have faked trading history. Or even real trading history which is no longer relevant, as the strategy may have started to falter. Anything that fails to disclose risks to the full, or makes unrealistic claims, is likely to be a scam. Or even possibly a case of honest but delusional trader having unrealistic faith in themselves. Another big scam, for the most part at least, are binary options. Binary options are not well understoof by traders. And even though they are not a scam by legal definition (neither are casinos and slot machines).There’s a lot of misrepresentation, which ultimately makes them equivalent to a scam.

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What is the US Dollar Index and How Can it Benefit My Online Forex Trading?

Traders can use indices such as the US dollar index, to improve their online forex trading. It’s about chart patterns, high probability setups and geopolitics.

Wiser Online Forex Trading through Index Analysis

Online forex trading, especially on EURUSD, can be dramatically enhanced. Simply by taking into account the US dollar index, which is a measure of the US dollar against 6 other currencies. The US dollar index does provide chart patterns and technical setups from time to time. But when geopolitical factors are in control, they override all other signals. Even economic reports and fundamental analysis. The US dollar index can defy all popular methods of market forecasting, and do the impossible. Especially at times where it has been weak. It can rally sharply without any economic data supporting that rally. Traders who learn forex basics hardly ever learn anything about geopolitics. Since it’s an entire science on its own. But to EURUSD traders, the US dollar index is important, every single week. Just by learning the inner workings of the US dollar index, traders can do so much more. The US dollar index impacts many more currencies, not just the EURUSD pair. But by trading volume EURUSD is the biggest one out there.

Enhancing Online Forex Trading through the Use of the US Dollar Index

The US dollar index can be used to assess the validity of signals observed on EURUSD charts. Online forex trading becomes better when false signals are detected and avoided. And the US dollar index does provide valuable clues from time to time. Its actual daily trend however can be quite deceiving to new traders. It is possible for the US dollar to exhibit apparent weakness, and yet still be strong internally. In such cases, traders need to pay attention to uncertainty. As well as geopolitical factors causing such uncertainty. As always, markets go down when there is increased uncertainty. And markets go up when excessive uncertainty is removed. More often than not, the actual way of interpreting such data is counter intuitive. The market sees even bad news, as good news, as long as the negative impact is quantified. The moment an expected negative impact becomes known in magnitude, from previously being unknown. Markets regard the transition as good news, since uncertainty is actually removed.

Profiting from EURUSD and Other Dollar Crosses

EURUSD is quite interesting to trade, and the patterns observed on the US dollar index are also interesting. Both obvious ones, as well as less obvious ones. If for example the US dollar index is expected to remain flat for a week. And there are good reasons for this to happen. Then EURUSD will have limited upside potential. And depending on the exact chart patterns at the time, the day to day movements may become much easier to predict. For scalpers, it may also make it possible to get better, safer periods of time to scalp a particular pair, such as EURUSD. On the contrary, when the US dollar index is set to make a move, and there are no geopolitical risks counter to the movement. Then, EURUSD will move in the opposite direction, and conflicting signals will be overridden. This is why trading can be sop confusing. And this is why CFD trading forex strategies focus so much on avoiding or hedging false signals. Because if one approaches the markets with a naive mindset, they won’t be able to detect these false signals. In the case of the EURUSD, we have seen time after time, all experts appearing in the media, fail to predict it. Even investment bank analysts fail. Simply because they focus too much on economics, and not enough on geopolitics.

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