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MongiIG

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  1. MongiIG
    - Reviewed by James Stanley, Nov. 24, 2021
    Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Being aware of these errors, can help traders become more efficient in their forex trading. Although all traders make trading mistakes regardless of experience, understanding the logic behind these mistakes may limit the snowball effect of trading impediments. This article will outline the top ten trading mistakes and ways to overcome them. These mistakes are part of a constant learning process whereby traders need habitually familiarise themselves with them to avoid repeat wrongdoings.
    The video included highlights six trading mistakes, however there will be more covered in the article below. It is important to note that trading comes with the inevitability of loss, but these may be minimised with the exclusion of human error/mistakes.
    Prior to committing to forex trading, consider these 10 widespread trading mistakes you must evade as they contribute to a large proportion of unsuccessful trades.

    MISTAKE 1: NO TRADING PLAN
    Traders without a trading plan tend to be haphazard in their approach because there is no consistency in strategy. Trading strategies have predefined guidelines and approaches to every trade. This prevents traders from making irrational decisions due to adverse movements. Devoting to a trading strategy is key because veering away may lead to traders plunging themselves into unchartered territory with regards to trading style. This eventually results in trading mistakes due to unfamiliarity. Trading strategies should be tested on a demo account . Once traders are comfortable and understand the strategy, this can be translated to a live account.
    MISTAKE 2: OVER-LEVERAGING
    Margin/leverage refers to the use of loaned money to open forex positions. While this feature requires less personal capital per trade, the possibility of enhanced loss is real. The use of leverage magnifies gains and losses, so managing the amount of leverage is key. Learn more on what is leverage in the forex market.
    Brokers play an important role in protecting their customers. Many brokers offer unnecessarily large leverage levels such as 1000:1 which puts novice and experienced traders at significant risk. Regulated brokers will cap leverage to appropriate levels guided by respected financial authorities. This should be taken into consideration when selecting a fitting broker.
    MISTAKE 3: LACK OF TIME HORIZON
    Time investment works hand in hand with the trading strategy being implemented. Each trading approach aligns itself to varying time horizons, therefore understanding the strategy will lead to gauging the estimated time frame used per trade. For example, a scalper will target shorter time frames whilst positions traders favour the longer time frames. Explore the forex strategies for varying time horizons.
    MISTAKE 4: MINIMAL RESEARCH
    Forex traders are required to invest in proper research to employ and execute a specific trading strategy. Studying the market as it should be, will bring light to market trends, timing of entry/exit points and fundamental influences as well. The more time dedicated to the market, the greater the understanding of the product itself. Within the forex market, there are subtle nuances between the different pairs and how they work. These differences need thorough examination to succeed in the market of choice.
    Reacting to media and baseless advice should be avoided without verification from the employed strategy and analysis. This is a common occurrence with traders. This does not mean these tips and media releases should not be considered, but rather investigated systematically prior to acting on the information.
    MISTAKE 5: POOR RISK-TO-REWARD RATIOS
    Positive risk-to-reward ratios are often overlooked by traders which can result in poor risk management. A positive risk-to-reward ratio such as 1:2 refers to potential profit being double the potential loss on the trade. The chart below shows a long EUR/USD trade with a 1:2 risk-to-reward ratio. The trade was opened at a level of 1.12698 with a stop at 1.12598 (10 pips) and a limit of 1.12898 (20 pips). An effective indicator to help identify stop and limit levels in forex is the Average True Range (ATR) which uses market volatility to base entry and exit points.
    Having a ratio in mind helps to manage expectations of traders, this is important because after much research by DailyFX, improper risk management has proven to be the number one mistake made by traders.
    EUR/USD 1:2 risk-to-reward ratio:

    MISTAKE 6: EMOTION BASED TRADING
    Emotional trading often leads to irrational and unsuccessful trading. Traders frequently open additional positions after losing trades to compensate for the previous loss. These trades usually have no educational backing either technically or fundamentally. Trading plans are there to avoid this type of trading therefore, it is imperative that the plan is followed closely.
    MISTAKE 7: INCONSISTENT TRADING SIZE
    Trading size is crucial to every trading strategy. Many traders trade unsuitable sizes in relation to their account size. Risk then increases and could potentially erase account balances. DailyFX recommends risking a maximum of 2% of the total account size. For example, if the account contains $10,000 then a maximum of $200 of risk is suggested per trade. If traders observe this general rule, the pressure of overexposing the account will be removed. The inherent risk of overexposing the account on a particular market is extremely dangerous.
    MISTAKE 8: TRADING ON NUMEROUS MARKETS
    Trading on a few markets lets traders gain the necessary experience to become proficient at these markets without scratching the surface of a few markets. Many novice forex traders look to trade on multiple markets without success due to lack of understanding. This is something that should be done on a demo account if need be. Noise trading (irrational trading) often leads traders to place trades without the proper fundamental/technical justification on varying markets. For example, the Bitcoin craze of 2018 sucked in a lot of noise traders at the wrong time. Unfortunately, many traders entered at the ‘FOMO or Euphoria’ stage of the market cycle which resulted in significant losses.
    MISTAKE 9: NOT REVIEWING TRADES
    Frequent use of a trading journal will allow traders to identify possible strategic flaws along with successful facets. This will enhance the traders overall understanding of the market and strategy for future. Reviewing trades not only highlight errors, but beneficial aspects as well which must be reinforced on a constant basis.
    MISTAKE 10: SELECTING AN UNSUITABLE BROKER
    There are numerous CFD brokers globally, so choosing the right one can be difficult. Financial stability and proper regulation are essential before opening an account with a broker. This information should be readily available on the brokers website. Many brokers are regulated in countries where guidelines are weak, to circumvent regulations in stricter jurisdictions such as the US (Commodity Exchange Act) and the UK (FCA).
    Safety is the primary focus; however, a comfortable platform and ease of execution is also central to choosing a broker. Becoming accustomed with the platform and costing should be given ample time prior to trading with live funds.
      FOREX TRADING MISTAKES: A SUMMARY
    Having the correct foundational base to trade forex is important before undertaking any form of live trading. Taking the time to understand the do’s and don’ts of forex trading will benefit traders in future. All traders will eventually make mistakes but minimizing them as well as eliminating repeat offenses must be practiced and become expected behaviour. The primary focus of this article is to adhere to a trading plan with proper risk management, and a suitable reviewing system.
    If you are new to forex be sure to get up to date with the basics of forex trading through our New to Forex guide. Our research team analyzed over 30 million live trades to uncover the Traits of Successful Traders. Incorporate these traits to give yourself an edge in the markets. Traders often look to retail client sentiment when trading popular forex markets. DailyFX provides such data, based on IG client sentiment.  
    Dec 22, 2021 | Warren Venketas, Analyst. DailyFX
  2. MongiIG
    Tritax Big Box REIT shares and Greggs shares could be two of the best FTSE 250 stocks to watch as the global economy reconfigures.
    Source: Bloomberg   Indices Shares Greggs Inflation Real estate investment trust Share  Charles Archer | Financial Writer, London | Publication date: Wednesday 23 March 2022  Over the past six months, FTSE 100 stocks have risen in value by 5.5%, while FTSE 250 stocks are down 12%.
    This could be due to a capital flight to safety. As inflation, interest rates, and Brent Crude soars, the FTSE 100’s big four banks and two oil majors are becoming ever more appealing.
    However, this might be leaving some of the best FTSE 250 stocks undervalued. And as the UK’s economy reconfigures, there are two in particular that could be primed to soar.
    Best FTSE 250 stocks: Tritax Big Box REIT
    Tritax Big Box REIT (LON: BBOX) is the UK’s ‘largest logistics-focused land platform,’ and predominantly invests in large-scale warehouses which it rents out to ‘the world’s leading companies,’ including the likes of Amazon and Tesco.
    Its share price recovered from its 105p March 2020 covid-19 pandemic low within three months and then soared to 249p by 31 December 2021. Having dipped slightly to 239p today, its land assets could see it hit further highs soon.
    In full-year results, Chairman Aubrey Adams boasted of ‘our strongest results to date with total accounting returns of 30.5%,’ boosted by ‘the long-term structural changes in our market.’ And encouragingly, it saw a 24.3% year-over-year increase in its portfolio value to £5.48 billion.
    Russia’s war against Ukraine, rising inflation, and the pandemic-induced supply chain squeeze have worked together to demonstrate the true risks of just-in-time supply chains. Currently, swathes of the world’s largest exporter China are in lockdown.
    The breadbasket of the world has stopped exporting. Over the past two years, retailers left with empty shelves have lost millions of pounds of potential revenue. And with no end in sight for the supply chain crisis, demand for warehouse space is only likely to increase.
    Moreover, this real estate investment trust allows potential shareholders to benefit from the property boom while enjoying this defensive quality in case interest rate rises cause a correction.
    However, it has in the past issued new shares to generate capital to buy more land. In the long term, this strategy has seen the share price increase, but it’s also caused short-term falls and periods of volatility.
    Source: Bloomberg FTSE 250 shares: Greggs
    Greggs (LON: GRG) shares peaked at 3,412p on 30 December, before falling to 2,206p by 8 March. However, they are now worth 2,470p apiece, slightly above their pre-pandemic value.
    In preliminary full-year results, the baker saw sales rise 5.5% to £1.23 billion compared to pre-pandemic levels. Accordingly, pre-tax profit rose to £145.6 million, a huge success compared to its 2020 £13.7 million loss and 2019 £108.3 million profit.
    And the FTSE 250 firm has recommenced colleague profit-sharing, promising to award 10% of profits, or £16.6 million in this instance to employees, while also paying out a total dividend of 97p for the year.
    In further good news, Greggs also opened net 103 bakeries last year and plans to open 150 annually for the foreseeable future. Outgoing CEO Roger Whiteside believes that ‘the opportunities for Greggs have never been more exciting. Our investment over recent years has left the business well-placed to move quickly as the economy recovers.’
    However, the CEO noted ‘cost pressures are currently more significant than our initial expectations…we do not currently expect material profit progression in the year ahead.’ Accordingly, the business costs are expected to rise between 6-7% in 2022 in line with staffing and raw ingredient cost increases.
    This has already ‘necessitated some price increases, which were made at the start of this year.’ Moreover, ‘further changes are expected to be necessary.’
    Third Bridge analyst Ross Hindle believes ‘Greggs has been able to punch above its weight thanks to a recipe of competitive pricing, clever location strategy, and their JustEat delivery partnership.’ Meanwhile, Brewin Dolphin’s John Moore praised it as ‘highly cash generative with a rock-solid balance sheet,’ but acknowledged the ‘tricky balancing act’ for cost inflation.
    But as consumers return to offices amid biting inflation, it’s likely to remain one of the best value offerings available. Greggs shares may not be so low for long.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
  3. MongiIG
    With double-digit yields, Rio Tinto and Persimmon shares could help investors generate passive income to protect themselves and their money from rising inflation.
    Source: Bloomberg   Indices Commodities FTSE 100 Dividend Inflation Office for Budget Responsibility  Charles Archer | Financial Writer, London | Publication date: Thursday 24 March 2022  A synergistic cocktail of inflationary pressures saw UK Consumer Prices Index (CPI) inflation increase to 6.2% last month, up from 5.5% in January. According to the Office for National Statistics, this is ‘the largest monthly CPI increase between January and February since 2009.’
    The UK supply chain, already suffering from the twin effects of Brexit and the covid-19 pandemic, is once again being hit by Russia’s war in Ukraine.
    The Office for Budget Responsibility (OBR) is predicting inflation could hit 8.7% by the end of the year, while also warning that the public tax burden is rising to 36% of GDP, its highest since the aftermath of World War II. Accordingly, British citizens are about to see the biggest drop in living standards since the Suez Canal Crisis.
    Chancellor Rishi Sunak has attempted to alleviate the immediate crisis with his Spring Statement. Fuel duty is being cut by 5p, while his shake-up of National Insurance rules is likely to benefit workers earning under £40,000pa.
    However, these measures are not going to prevent investors or their money from rocketing inflation. But these FTSE 100 dividend stocks currently generate returns on cash faster than it is inflated away.
    FTSE 100 dividend stocks
    Rio Tinto (LON: RIO) shares are worth 5,816p right now, with the UK-Australian dual-listed company currently boasting an inflation-busting 10.48% dividend yield.
    As the second-largest miner in the world, it produces iron ore, diamonds, gold, copper and uranium. And working across 35 countries, the miner is geopolitically safer than most. In addition, institutions own more than half of all shares, making it a relatively safe FTSE 100 dividend stock pick.
    Moreover, demand for its metals is soaring as the mining supercycle continues. Exports from Ukrainian-based iron ore miner Ferrexpo have all but ceased. Inflationary hedge Gold is at record highs. And demand for uranium is soaring as countries worldwide renew their nuclear energy efforts in the face of volatile Brent Crude oil prices.
    In full-year results, CEO Jakob Stausholm boasted of ‘record financial results with free cash flow of $17.7 billion and underlying earnings of $21.4 billion.’ And it paid out its ‘highest total dividend ever of 1,040 US cents per share, including a 247 US cents per share special dividend, representing a 79% payout.’ This $16.8 billion investor return was the second largest in FTSE 100 history.
    Source: Bloomberg Building wealth
    Persimmon (LON: PSN) shares are worth 2,227p each, after falling from 3,210p in mid-April last year. But with a 10.29% dividend yield, it remains the largest housebuilder in the FTSE 100.
    The company is comprised of 31 regional operating businesses that build houses in ‘over 250 prime locations across the UK.’ 2021 was a good year to be in real estate, with the average UK house price increasing by 10.8% to a record £275,000.
    Moreover, the OBR has doubled its 2022 forecasted growth, and now believes properties will rise a further 7.4% by £20,350 to £296,350 in 2022.
    Of course, this market is highly cyclical. Rocketing prices have historically been followed by sharp corrections — most recently in 2008 and 1992. Capital Economics Chief Economist Paul Dales thinks the bank rate ‘will be increased to 1.00% in May and will reach 2.00% next year.’
    And as interest rates rise amid the cost-of-living squeeze, Halifax is predicting only 1% price growth this year. But with supply far outpacing demand, and a government whose voter base is composed predominantly of homeowners, a major correction may still be some way off.
    In full-year results, Persimmon saw ‘strong demand through the year,’ with ‘average private weekly sales rate being c. 9% higher than 2020, a year significantly impacted by pent up demand brought about by the pandemic, and c. 22% ahead of 2019.’
    And it saw strong net cash generation of £1.21 billion on 14,551 home completions, nearly a thousand more than the year before. In addition, it spent £460 million on 20,750 plots of land in 2021, bringing its total landholding to 88,043 plots.
    Moreover, with an underlying pre-tax profit last year of £973 million and £1.25 billion in cash, the FTSE 100 dividend stock has the resources for further pay-outs.
    Rio Tinto and Persimmon are two FTSE 100 dividend stocks with the financial firepower to tackle inflation head-on.
    Of course, both are highly cyclical businesses. Dividends are never guaranteed.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
  4. MongiIG
    On the anniversary of the FTSE 100's covid-19 pandemic bottom, Rightmove shares and AutoTrader shares stand out for their market dominance in red-hot industries.
    Source: Bloomberg   Indices Shares FTSE 100 Price Profit Rightmove  Charles Archer | Financial Writer, London | Publication date: Monday 21 March 2022  Two years ago today, the FTSE 100 index closed at 5,190 points, after its 32% covid-19 pandemic-induced crash since 17 January 2020.
    But even as the Russia-Ukraine war rages, the UK’s premier index is back to 7,405 points, only slightly down from its 7,611 February high.
    And with oil, inflation, and interest rates rising, value investors are now turning to the FTSE 100’s oil majors, BP and Shell, and its bank stocks, HSBC, Barclays, Lloyds, and NatWest. Downtrodden IAG and Rolls-Royce are also popular for those banking on a travel recovery.
    However, the popularity of these high-volume stocks leaves them potentially exposed to overvaluation. It can pay to watch the lower volume choices.
    Best FTSE 100 stocks: Rightmove
    Rightmove (LON: RMV) shares hit a record 800p on 30 December 2021, as last year’s ‘race for space’ saw the average UK house price increase by an incredible 10.8% to £275,000.
    Correspondingly, the owner of the UK’s largest property website had its busiest year ever in 2021, as revenue hit £305 million, generating annual pre-tax profits up 67% to £226 million. Moreover, Rightmove’s average revenue per advertiser rose 53% year-over-year to £1,189 per month.
    And with a healthy operating margin of 74%, home browsers spent a record 18 billion minutes on Rightmove’s platforms last year. And despite a myriad of property portals, its only close competitor for market share is privately held Zoopla.
    Of course, rising interest rates are sparking fears for a housing market correction. Capital Economics Chief Economist Paul Dales thinks the bank rate ‘will be increased to 1.00% in May and will reach 2.00% next year.’
    And Rightmove believes ‘as the market normalises, we expect the number of transactions to return to pre-pandemic levels.’ But Lucian Cook, head of residential research at Savills, expects ‘the imbalance between fairly resilient levels of demand and the shortage of available stock on the market to continue to be the overriding driver of house prices.’
    Winkworth CEO Dominic Agace concurs, saying ‘it is likely these rate rises will slow growth but with a buoyant labour market and shortage of supply, I would expect positive price growth to continue this year.’
    Source: Bloomberg AutoTrader dominance
    AutoTrader (LON: AUTO) shares hit a peak of 740p on 31 December 2021, nearly doubling from their 372p pandemic low in April 2020. But they’ve since fallen to 676p as inflation and geopolitical pressures bear down on every FTSE 100 stock.
    In half-year results to 30 September, the company achieved its ‘highest ever six-monthly revenue and profits,’ with ‘consumer engagement and retailer numbers at record levels, our competitive position has strengthened and product uptake by customers has been strong.’
    Revenue rose by 82% to £215.4 million, while operating profit increased by 121% to £151.7 million on a 70% profit margin. Moreover, average revenue per retailer rose by £993 to £2,1999 per month. And it also returned £148.4 million to shareholders through dividends and share buybacks.
    Cross platform visits rose by 20% to 68.7 million per month on average. With its 633 million monthly cross platform minutes representing 75% market share, it’s grown ‘to be almost 9x larger than our nearest competitor.’
    And company research indicates used car prices are now at record highs. A typical second-hand car has risen in price by £4,000 to £18,929 over the past year, as the supply chain crisis creates huge delays for deliveries of new cars. The delays have become so bad, 21% of second-hand cars under a year old are more expensive than their brand-new equivalents.
    Moreover, as the Russia-Ukraine crisis sends semiconductor-critical Palladium and Neon to record highs, further supply chain issues and price rises seem inevitable. Autotrader could see higher profit, as it charges more to list higher-value cars.
    Autotrader argues that ‘consumer demand remains robust, as reflected in the 12 per cent increase in the volume of enquiries sent to retailers through the Auto Trader platform last month when compared to February 2021…what’s more, the speed in which used cars are selling has also accelerated significantly.’
    The company’s director of data and insights Richard Walker believes ‘any suggestion therefore of a bubble bursting is based on pure speculation, and not the data, which clearly points to very high prices remaining for quite some time to come.' In H1 results, physical car stock was down 9% to 436,000. And this was in September; shortages are likely to have worsened since.
    Both Rightmove and Autotrader are market-dominating FTSE 100 stocks trading an in-demand product. And both could soar as the index continues its recovery.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).
  5. MongiIG
    Reviewed by Nick Cawley on December 8, 2021

    WHAT IS A 200 DAY MOVING AVERAGE
    The 200 day moving average is a technical indicator used to analyze and identify long term trends. Essentially, it is a line that represents the average closing price for the last 200 days and can be applied to any security.

    The 200 day moving average is widely used by forex traders because it is seen as a good indicator of the long term trend in the forex market. If price is consistently trading above the 200 day moving average, this can be viewed as an upward trending market. Markets consistently trading below the 200 day moving average are seen to be in a downtrend.
    HOW DO YOU CALCULATE THE 200 DAY MOVING AVERAGE?
    The 200 day moving average can be calculated by adding up the closing prices for each of the last 200 days and then dividing by 200.
    200 Day Moving Average Formula = [(Day 1 + Day 2 …. + Day 200)/200]
    Each new day creates a new data point. Connecting all the data points for each day will result in a continuous line which can be observed on the charts.
    HOW DO YOU USE THE 200 MOVING AVERAGE IN YOUR TRADING STRATEGY?
    The 200 day moving average has gained in popularity as it can be used in many different ways to assist traders.
    Using the 200 Day MA as Support and Resistance
    The 200 day moving average can be used to identify key levels in the FX market that have been respected before. Often in the forex market, price will approach and bounce off the 200 day moving average and continue in the direction of the existing trend. Therefore, the 200 day moving average can be viewed as dynamic support or resistance.
    Below is an example of how price approached and bounced off the 200 day moving average on the EUR/USD chart:

    Traders will look to go long as price bounces off the 200 day moving average when the market is in an upward trend. Likewise, traders will look for short entries after price bounces from the 200 day moving average in a down trending market. Stops can be placed below (above) the 200 moving average in an uptrend (down trend).
    MA Crossovers
    Once the long-term trend is identified, traders often assess the strength of the trend. This is important because a weakening trend could signal a trend reversal and presents the ideal time to exit an existing trade.
    Incorporating shorter term moving averages like the 21, 55 and 100 day moving averages, allows traders to determine whether the existing trend is running out of steam because they track more recent price movements over a shorter time period.
    The GBP/USD chart below, shows how the smaller, faster moving averages signal that the uptrend may be about to reverse. The 21 day (green) moving average crosses through the 55 day (black) moving average and continues to cross the 100 (blue) and 200 (red) day moving averages to the downside. These are all bearish signals that appear before the 200 day moving average presents a bearish signal.
     
    Using the 200 Day Moving Average as a Trend filter
    One of the easiest strategies to incorporate with the 200 day moving average is to view the market in relation to the 200 day moving average line. Traders commonly do this to analyze the general market trend and then look to only place trades in the direction of the long-term trend.
    In the NZD/USD chart below, the market is trading above the 200 day moving average for a prolonged period of time. This means that the market is trending upwards and therefore, traders should only be looking for long entries into the market. The example below makes use of the stochastic oscillator however, traders should make use of an indicator or any other entry criteria they feel comfortable with.

    200 DAY MOVING AVERAGE INDICATOR: A SUMMARY
    The 200 day moving average is a widely adopted indicator showing the direction of the long term trend in any market. Due to its mass adoption, the 200 day moving average can often be considered a self-fulfilling prophecy. Traders use the 200 day moving average to filter trades in the direction of the long term trend and look for bounces off the 200 day moving average to inform trades. BECOME A BETTER TRADER WITH OUR TRADING TIPS
    The 200 day moving average is just one of many helpful indicators. Expand your trading knowledge by reading our article on some of the most popular technical indicators If you are just starting out on your trading journey it is essential to understand the basics of forex trading in our free new to forex trading guide. Moving averages are trend following indicators. Other trend indicators include the Ichimoku Cloud, Average Direction Index. Alternatively, trends can be identified with the use of trendlines.  
    Jan 27, 2022 |  Richard Snow, Analyst. DailyFX
  6. MongiIG

    2021: The Year in Review

    By MongiIG,


    Market News
    2021: The Year in Review
    EconomyDec 30, 2021  By Peter Nurse, Liz Moyer, Sam Boughedda and Yasin Ebrahim
    Investing.com -- The year 2021 is rapidly drawing to a close, and while it has been a significant improvement, market-wise, to the previous year, there was plenty of volatility along the way.
    As we move into 2022, here's a look back at the year that was.
    First Quarter: Biden arrives
    January: The new year started as the old one had ended with the Covid-19 virus casting an ominous shadow over the global markets. The official global death toll breached the 2 million mark in January.
    Supporters of President Donald Trump stormed the U.S. Capitol in Washington, resulting in five deaths and Trump’s impeachment, the first time in history a U.S. President was impeached twice. President Joe Biden’s inauguration did proceed smoothly in the end, and he promptly unveiled a $1.9 trillion Covid-19 stimulus package.
    Markets found a new trading theme - inflation.
    The Covid-19 lockdowns contributed to supply chain disruptions and brewing inflation, and the stimulus deal amped up the pressure. The Federal Reserve said short-term price increases were not a concern, but traders began anticipating it would have to act. U.S. bond yields started to climb, and the dollar rose in tandem.
     After starting the year around $30,000, Bitcoin jumped to over $40,000 before slumping 10%.
    So-called ‘meme’ stocks were on the rise. Video game retailer GameStop (NYSE:GME) was central to this phenomenon. Professional short-sellers had positioned themselves for a fall in the stock given the videogame retailer’s lack of an online presence during the pandemic. Retail investors, helped by social media sites and cheap trading platforms, were eager to give hedge funds a bloody nose and rushed in. GameStop’s stock soared 400% in the last week of the month.
    February: Equity markets headed higher in February, as optimism that the mass rollout of Covid vaccines, including a new one by Johnson & Johnson (NYSE:JNJ), would mean a prompt return to normalcy.
    Jeff Bezos announced he was stepping down as CEO of Amazon (NASDAQ:AMZN) after 30 years, having grown the company from his garage to the largest U.S. e-commerce retailer by market capitalization.
    U.S. government bonds saw a sharp sell-off late in the month, with yields climbing sharply after tepid demand at a Treasury bond auction.
    Bitcoin jumped 50% through the $58,000-mark, claiming a market capitalization of $1 trillion, as heavyweight institutions such as Tesla (NASDAQ:TSLA) and Mastercard (NYSE:MA) embraced the cryptocurrency.
    Crude prices continued to recover on growing confidence that oil demand would rise sharply as vaccines helped global economies reopen. A major winter storm in Texas helped, shutting down supply.
    In politics, former President Donald Trump was acquitted in his second Senate impeachment trial as the Republican Party mostly stayed loyal. Mario Draghi, former head of the European Central Bank, was sworn in as Italian Prime Minister, while civilian leaders, including Aung San Suu Kyi, were detained in Myanmar after a military coup.
    March: The search for normalcy continued. The rollout of Covid vaccines, particularly in the U.S. and the U.K., helped equity markets rise.
    The U.S. S&P 500 index rose by over 4% in March whereas the Nasdaq 100 index gained just under 0.5%, as growth stocks continued to underperform their value counterparts. 
    In the European Union, a lack of vaccination logistics organization was exacerbated when AstraZeneca (NASDAQ:AZN) struggled to deliver as many vaccine doses as promised. Then a blood clot side effect problem created doubts about its viability. 
    Inflationary fears continued to unnerve bond markets with the U.S. 10-year yield climbing steadily, ending the month at 1.73%, after the passing of the $1.9 trillion stimulus package and with a substantial infrastructure plan in the works. 
    Bitcoin broke $60,000 for the first time, before pulling back in volatile trading.
    Crude prices pushed higher, with the global benchmark Brent rallying to $65 a barrel. Late in the month, a 224,000 ton container ship, owned by Evergreen Marine, got lodged in the Suez Canal, creating a traffic jam in one of the busiest waterways in the world.
    Second Quarter: Trust me, it’s just transitory
    April: Large-cap stocks got all the attention as the second quarter kicked off a period of strong earnings and economic data. The S&P rose 5.3%, while the Nasdaq rose 5.4% and the Dow Jones Industrial Average rose 2.8%. 
    The Federal Reserve stayed committed to keeping the stimulus spigot open a year after slashing rates to zero, holding fast to its view that any price increases would be “transitory.” Inflationary pressures that showed up in March seemed to calm a bit in April, with the 10-year Treasury yield easing back to 1.63%.
    By month’s end, about 100 million Americans had received their Covid shots, a hopeful sign that the economy could recover quickly. But unemployment remained elevated at 6% and 2 million or so Americans were still missing from the labor force compared to conditions before the pandemic erupted.
    U.S. job growth disappointed in April, but the full scope wasn’t appreciated until May, when the monthly jobs report for April showed 266,000 new jobs added in the period. Economists had expected 1 million. The weaker-than-expected number sparked debate about whether extended extra unemployment benefits were keeping workers from seeking jobs. 
    Bitcoin reached a high of $63,400 in April but then tumbled back to $50,000.
    May: The Dow Jones Industrial Average climbed another 2.2% for the month, and the S&P 500 rose 0.7% while the Nasdaq dropped 1.4%. Fears about inflation started to dig in amid talk of rising costs and labor shortages.
    Consumer and producer prices continued to surge. They weighed against labor shortages, rising wages, shipping delays and material shortages.
    President Biden set July 4 as the deadline to get at least 70% of American adults vaccinated with at least one shot. By month’s end, 135 million Americans were fully vaccinated, but a variant of coronavirus called Delta was surging in India and would land on U.S. shores soon enough.
    A late-month rally in stocks was a reaction to the minutes of the Federal Reserve’s April policy meeting, where officials signaled a shift in their thinking. The minutes said continued progress with the economy could make it appropriate for the Fed to start talking about the timing of its bond purchase taper, the first step in reducing the stimulus that flowed through the economy since the beginning of the pandemic. The 10-year Treasury fell back to 1.59% at month’s-end.
    Bitcoin traded above $59,000 on May 8 and then fell to a four-month low.
    June: Though a surge in coronavirus cases caused European governments to second-guess their reopening plans, stocks continued to climb. The Nasdaq rose 5.5%, while the S&P 500 advanced 2.3% and the Dow Jones Industrial Average was flat.
    By now, Fed officials were signaling the likelihood of two interest rate hikes in 2023. Chair Jerome Powell said substantial further progress would be needed to start the taper.
    Two-thirds of workers said employers had encouraged staff to get their vaccination, with half saying they got paid time off to get it or recover from side effects. In June, 25 states withdrew the extra unemployment benefits that had been going out to people since the pandemic, arguing the extra money kept people out of the workforce. The economy added 850,000 jobs that month, and the unemployment rate was 5.9% from 5.8% in May.
    Third Quarter: It’s infrastructure week, finally
    July: The lingering Covid-19 pandemic left concerns about whether the economic recovery would continue throughout the rest of the year, creating volatility.
    U.S. equities ended the month higher, as did U.K. and European equity markets. 
    China's regulatory clampdown hit Chinese U.S. listed stocks hard. Ride-hailing company and NYSE-listed Didi Global saw its shares close the month down 27%.
    The Fed said after its July meeting that the economy was making progress. However, it maintained asset purchases and said it is appropriate to keep the current target rate range until labor market conditions have improved.
    After moving mostly sideways since May, failing to break above the $41,000 mark after a couple of attempts, Bitcoin closed the month at $41,490.
    The Senate began debate on a $1 trillion bill to rebuild the nation’s infrastructure, including money for bridges, roads, rail and ports, and the build out of broadband and clean energy projects.
    August: The tech sector helped drive U.S. equities higher in August to touch new highs. Powell made dovish comments at the Jackson Hole Symposium but also said bond purchases could be reduced before the end of 2021.
    The benchmark S&P 500 rose for the seventh-straight month after a 3% gain, the Nasdaq 100 climbed 4% and the Dow rose over 1%. This was against the backdrop of supply chain challenges, inflation concerns, the spread of the Covid-19 Delta variant, and labor market shortages.
    WTI crude oil fell 7% in August, its worst month since October 2020, as demand concerns increased once again when Hurricane Ida forced the closure of U.S. refineries.
    The U.S. dollar hit a new high for 2021 in August, touching the 93.73 level before quickly retreating throughout the rest of the month. However, the decline wasn't enough to put it into negative territory. It closed out August over half a percent higher.
    After the breakout towards the end of July, Bitcoin gained some momentum in August, closing out the month over 13% higher.
    The Senate passed the infrastructure spending bill, but not without considerable debate over whether to pair its passage with a larger spending bill focused on social initiatives. The House wouldn’t pass it until November.
    September: September saw U.S. equity markets sell off, erasing the previous month's gains and staying true to the usual seasonal September decline. The S&P 500 fell 4.8%, the Nasdaq 100 closed September down over 5% and the Dow finished the month down 4.2%.
    The majority of FAANG stocks fell in September, with Meta (formerly known as Facebook (NASDAQ:FB)) down over 10%, Amazon down over 5%, Apple (NASDAQ:AAPL) 6.8% lower, and Google (NASDAQ:GOOGL) over 7% lower. Netflix (NASDAQ:NFLX) was the outlier, gaining over 7% during the month. Elsewhere, the energy sector rose 9% after spikes in oil and natural gas prices.
    There were significant concerns for the Chinese real estate market and Evergrande bondholders after the property firm ran short of cash in the face of mounting debts, an issue that is still ongoing. China also continued to impose stricter regulatory reforms — another concern for investors.
    In the Federal Open Market Committee Meeting, Powell said tapering could begin as soon as November. He also said that rate hikes would not start until the tapering was complete.
    A promising start to September for Bitcoin was short-lived after it failed to penetrate the $53,000 level and ended being down 7% for the month.
    Fourth Quarter: Focus shifts to inflation
    October: Stocks started the fourth quarter on the front foot as investors looked ahead to the quarterly U.S. earnings season to get a sense of how companies were holding up against rising costs.
    Corporate America duly answered the call, delivering its strongest quarterly earnings in more than a decade.
    Fears that surging costs from clogged-up supply chains would hold margins hostage quickly dispersed as firms were able to pass on costs to consumers.
    The S&P 500, Dow Jones, Nasdaq, and Russell 2000 all swelled to all-time highs. Tesla was one of standout performers of the month, racking up gains of 44% en route to a record high.
    Bitcoin leapt to record highs as the wider investment world cheered the coming of age of the moment for the popular cryptocurrency: A futures-based Bitcoin exchange-traded fund. 
    The Securities and Exchange Commissions approved the ProShares Bitcoin Strategy fund.
    The traditional fourth-quarter rally in Bitcoin and stocks appeared to be a done deal.
    Bond markets, however, kept some of the optimism in check, as the yield curve continued to flatten – a traditional doomsday sign.
    November: Investors were reminded that the pandemic continued to be a main market risk event as a new variant emerged from South Africa. Armed with the tools – via several mutations – to evade our most effective vaccines, Omicron sent shockwaves through markets.
    Europe was soon under siege. Covid lockdowns in parts of Europe were back in vogue.
    As investors awaited further data to assess the threat carried by the Omicron variant, they had to contend with another negative surprise: The ‘Powell Pivot.’
    Testimony from Powell before Congress, proved to be a monumental moment for monetary policy. Against the backdrop of U.S. inflation running at the hottest pace in three decades, Powell said it was time to delete the word “transitory” from our inflation vernacular.
    The Fed chief signaled that the pace of bond tapering would be accelerated to allow enough room to begin hiking rates.
    For the first time in a while, investors were forced to remove their Fed-tinted glasses. And they didn’t like the unknowns before them.
    Is the ‘Fed Put’ dead? How far behind is the Fed on the curve? How many hikes will it take for the Fed to catch up, and could that lead to recession as the Omicron impact threatens the recovery?
    Investors didn’t hang around for answers and uncertainty soon swept through markets, delivering a blow to risk appetite.
    The Bank of England reprised its role as the ‘unreliable boyfriend.’ It unexpectedly kept monetary policy unchanged.
    December: The final month of the year was characterized by wild swings in either direction as investors started counting down the days until the Fed’s last monetary policy meeting of the year, betting that the Fed would double the speed of its bond purchase tapering to $30 billion per month.
    The consensus on rate hikes was less than straightforward, as some were in the two hikes in 2022 camp, others were clinging onto one. 
    The Fed sprung a hawkish surprise, with members forecasting three rate hikes for 2022 followed by another three in 2023.
    In the press conference that followed the monetary policy statement, Powell delivered arguably his best monetary policy Q&A during his tenure as Fed chair.
    The chief acknowledged the threat of inflation, but also reassured markets that the economy was strong enough to deal with the Fed’s tightening plan.
    Markets rallied with tech delivering strong post-Fed gains. And talk of “Apple $3 trillion valuation,” was on the agenda once again.   Some on Wall Street had even harbored hope that the “Santa Rally” would make a late appearance.
    But the positive sentiment quickly faded as the economic threat of the Omicron variant lurked in the background.
  7. MongiIG
    As the Ukraine crisis escalates, Russia has approved 200 export bans in retaliation to Western sanctions. Nickel, palladium, and uranium could be next as these metals cannot easily be replaced by alternatives.
    Source: Bloomberg   Shares Commodities Uranium Russia Nickel Palladium  Charles Archer | Financial Writer, London | Publication date: Monday 14 March 2022  As the Russia-Ukraine crisis escalates, western sanctions have created ‘a completely new kind of crisis.’
    Some Russian institutions have been banned from Swift. The US, UK, and Australia have committed to an oil bar against the aggressor state, and others are strategizing how to wean themselves off Russian oil dependency. Meanwhile, Western corporations are abandoning the former Soviet state.
    In retaliation, Russian Deputy PM Alexander Novak has threatened to ‘impose an embargo on gas pumping through the Nord Stream 1 gas pipeline,’ warning that rejecting Russian oil could send Brent Crude to $300 a barrel.
    However, the United States does not import Russian gas, while only 8% of imported oil used in the US is from Russia. While the ban will hit the US economy, it’s unlikely to be an economic disaster.
    But Goldman Sachs' Jan Hatzius is predicting a 35% chance of a recession in the US over the next year, saying ‘rising commodity prices will likely result in a drag on consumer spending,’ with ‘a clear decline in consumer confidence since Russia invaded.’ Moreover, World Bank President David Malpass has called the war a ‘catastrophe’ for the global economy.
    And to truly hurt the US economy, Russia could soon bar the export of Nickel, Palladium, and Uranium, which cannot easily be replaced by non-Russian alternatives. This makes them some of the best commodities to watch.
    Source: Bloomberg Nickel
    Key to stainless steel and electric vehicle batteries, Russia accounts for 11% of Nickel ore and 20% of pure nickel production. Moreover, the country’s Nornickel is the largest supplier of battery-grade nickel in the world.
    Last week, the London Metal Exchange (LME) was forced to halt trading in the metal after it soared to over $100,000/tonne, up from around $20,000/tonne at the start of the year. With the Shanghai Futures Exchange also pausing trading on the metal, its current $48,226/tonne price will almost certainly remain volatile when trading reopens.
    The LME halted nickel trading ‘on orderly market grounds,’ saying only that it ‘will actively plan for the reopening of the nickel market and will announce the mechanics of this to the market as soon as possible.’
    ANZ Research analysts believe ‘Russia's dominant position in markets raises the stakes of any supply disruptions, and relatively low inventories held across market compounds,’ while Nomura analyst Yuji Matsumoto thinks that ‘as nickel supply from Russia is currently unstable, and inventories are low, we see the possibility that additional supply shocks could cause prices to rise further in the short-term.’
    Palladium
    Palladium has soared over the first quarter of 2022, rising from $1,617/oz on 15 December to $2,809/oz today. The metal is essential to car catalytic converters and semiconductors. Russia produced 40% of palladium globally in 2021, representing some 2.6 million troy ounces. Nornickel is also the largest palladium miner in the world, as palladium is a by-product of nickel production.
    TD Securities’ Bart Melek believes that ‘if we see a set of sanctions that reduce financing and free flow of the material to the rest of the world, we could see a…pretty significant rally’ for the metal. Goldman Sachs also expects ‘the price of consumed commodities that Russia is a key producer of to rally.’
    With the metal close to the record $2,967/oz it struck in May last year, any further sanctions by or on Russian mining could see new highs soon.
    Uranium
    The Uranium spot price is up to $59.75/pound, according to UxC LLC data, its highest since the 2011 Fukushima disaster. With Russia’s state-owned Rosatom accounting for 35% of global uranium enrichment, and Russia itself accounting for 16.5% of uranium imported into the US in 2020, any sanctions could see uranium soar.
    Uranium is an essential component for nuclear power generation, and the rising price of Brent Crude coupled with the Russian oil embargo is seeing resurgent interest in the renewable energy.
    Already meeting 10% of global energy needs, China is planning on building 150 new nuclear reactors over the next 15 years. In France, nuclear already makes up 70% of all energy needs. Germany is reconsidering its plan to close its nuclear plants, while Rolls-Royce in the UK is developing mini-nuclear reactors that could be the long-term answer to the UK’s energy needs.
    UxC President Jonathan Hinze believes that while ‘the prospects for future limits on Russian enriched uranium imports in the West remain high, it appears that this upward pressure on spot uranium prices is unlikely to let up.’
    And while Canadian and Australian producers could up output in the long-term, a short-term supply shortage, and therefore price increase remains a distinct possibility.
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  8. MongiIG
    As the Russian invasion of Ukraine intensifies, these three heavily affected FTSE 100 stocks have become excellent watchlist additions for March 2022 and beyond.
    Source: Bloomberg   Indices Shares Commodities Russia FTSE 100 Ukraine  Charles Archer | Financial Writer, London | Publication date: Tuesday 01 March 2022  The FTSE 100 index closed out 2021 at 7,385 points, before rising to 7,611 points by 17 January. A week later, it had fallen to 7,297 points as fears of tightening monetary policy hit shares worldwide.
    Then it rose to 7,672 points on 10 February, before collapsing to 7,207 points as Russia began its incursion into Ukraine. It’s now recovered to 7,413 points; and while more volatile than usual, passive investors have gained 0.4% in the first two months of the year.
    But index gains mask larger potential gains among the best FTSE 100 stocks to watch in March 2022.
    FTSE 100 defence stock
    BAE Systems (LON: BA) shares have risen 22.5% to 735p, after reporting full-year results on 24 February, the same day Russia began its invasion of Ukraine. With group sales rising 5% to £21.3 billion in 2021, CEO Charles Woodburn believes it's ‘well positioned for sustained top line and margin growth in the coming years.’
    And given the current crisis, defence spending could be set to escalate significantly. Germany has already committed to increasing its defence budget by €100 billion to more than 2% of GDP. The US had already voted to increase its defence budget by $25 billion to $740 billion, but a further increase now seems likely. And as weapons and defensive items pour from European nations into Ukraine, donor countries will need to increase defence spending this year to maintain equipment reserves.
    BAE is the largest defence contractor in Europe, and its two largest customers are UN Permanent Security Council members, the US and UK. Sadly, even if Russia chooses to de-escalate, NATO member defence spending will almost certainly see significant rises in the near future, and BAE Systems will almost certainly be a significant recipient.
    Source: Bloomberg FTSE 100 stocks: mining volatility
    Evraz (LON: EVR) shares began 2022 at 613p but have since collapsed 79% to 128p today. Despite nearly tripling its pre-tax profit to $4.2 billion last year, the miner has become a high-risk proposition as it warns of the potential impact of ‘economic uncertainty’ and the ‘risk of the imposition of sanctions.’ As Russia's second-largest steel company, it generates revenue by exporting the metal to predominantly NATO countries.
    Moreover, Russian oligarch, Chelsea football club owner, and close friend to Russia’s Vladimir Putin, Roman Abramovich owns a 29% stake in the company. But while CFO Nikolay Ivanov has insisted ‘we have no plans to delist from the London Stock Exchange at the moment. We are not considering this option,’ the company is still planning a secondary listing in Moscow.
    There’s a complex balance of risk for investors. On the one hand, despite its CFO’s protestations, the current political climate could see the miner delist from London shortly after its Moscow listing. However, the FTSE 100 stock’s dividend, already one of the largest in the index, could be higher than 50% of its current share price in 2022.
    Polymetal International (LON: POLY) shares are down 87% to 265p from its August 2020 2,028p high. And they were worth 1,098p just before Russia’s incursion last week, and have fallen 76% since.
    Like Evraz, the company has reported strong full-year results. FY21 gold equivalent production rose 2% year-over-year to 1,677 Koz1, and 24% year-over-year in Q4. And with FY revenue stable at $2.9 billion, CEO Vitaly Nesis reasons that ‘Polymetal beat production guidance, maintained solid safety track record, and paid record dividends… the Company remains on its path to consistent and significant long-term growth.’
    However, the precious metal miner is also highly exposed to the Ukraine crisis. Norway’s Sovereign Wealth Fund, a top 10 shareholder, is selling all its Russian investments. As investors abandon Russian-linked stocks, Berenberg analyst Jonathan Guy believes ‘there is a wall of sellers and very few buyers… it’s a crazy market.’
    Polymetal generates revenue selling gold to Russian banks, which then resell it on international markets. With many Russian banks now on the verge of collapse, Polymetal will be forced to rely on Russia’s central bank as its buyer of last resort. The bank has started buying domestic gold after a two-year hiatus and is sitting on a $153 billion 2,300 tonne pile, which accounts for roughly one-fifth of Russia’s financial reserves.
    However, most of Russia’s reserves are in unusable foreign currency, leaving sales of its gold reserves as one of few avenues left to raise funds. But it might struggle to find a buyer; China has warned it will not undermine NATO-led sanctions.
    Moreover, if Polymetal is perceived to be indirectly funding the Russian invasion of Ukraine, it could find itself delisted from the FTSE 100 and stranded at the Moscow equivalent. But any easement of current crisis could see this FTSE 100 stock soar.
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  9. MongiIG
    The FTSE 100 fell below 7,000 points earlier this month, before recovering. But the Russia-Ukraine war, covid-19 pandemic and tightening monetary policy could cause another market sell-off soon.
    Source: Bloomberg   Shares Commodities FTSE 100 Inflation Russia World Bank  Charles Archer | Financial Writer, London | Publication date: Tuesday 15 March 2022  The FTSE 100 has had a rollercoaster start to 2022. The UK’s premier index peaked at 7,672 points on 10 February, fell to 6,959 points by 7 March, and has now recovered to 7,126 points today.
    And a further market sell-off closer to its March 2020 low of 5,190 points remains a distinct possibility, as three synergistic pressures constrict the index's growth.
    FTSE 100 futures
    1) Russia-Ukraine war
    As the ground conflict rages, negotiators on both sides are attempting to broker peace. But there remains a vast gulf between what Russia is demanding and what Ukraine is prepared to accept. World Bank President David Malpass has called the conflict a ‘catastrophe’ that comes at an especially ‘bad time for the world because inflation was already rising.’
    With Russian and Ukrainian exports collapsing, markets are seeing multi-year price hikes for Brent Crude, Wheat, and metals including Aluminium, Palladium, Gold, Nickel, and Uranium. While the rising price of oil has benefited FTSE 100 oil majors BP and Shell, their divestment of Russian interests has left their share prices worse off than before the war.
    Moreover, the International Monetary Fund’s (IMF) managing director Kristalina Georgieva believes that as the Rouble collapses, the IMF ‘no longer think of Russian default as an improbable event,’ but is more concerned for the ‘consequences that go beyond Ukraine and Russia.’ World Bank Chief Economist Carmen Reinhart concurs that Russia is ‘mightily close’ to default.
    And in the first week of March, just nine M&A acquisitions worth £600 million were signed off in London. The week before, 36 deals worth £4billion were agreed, a strong signal that the days of rapid growth are over.
    2) Covid-19 pandemic
    The covid-19 pandemic saw consumer demand collapse for nearly two years. But with the global economy reopening, demand is rocketing at the same time as manufacturers are struggling to increase output. The result has been supply bottlenecks and soaring transport prices; the Drewry World Container Index is up 83% over the past year, with an average 40-foot container on a major supply route costing $9,412, up from the five-year average of $3,101.
    And while the Ukraine war was already worsening the supply chain pressure, the problem is being compounded by China’s ‘zero-covid’ policy. With 5,000 cases rocking Jilin province, the entire 24-million strong region has been placed into lockdown. This is the first time an entire province has entered lockdown since Wuhan and Hebei at the start of the pandemic. Multinationals including Toyota, Volkswagen and Apple-supplier Foxconn have all virtually stopped production.
    It's left China’s Shanghai Composite down 11.6% and tech-heavy Hang Seng index down 25.5% over the past month.
    In further worrying news, the new Omicron sub-variant, dubbed ‘Deltacron,’ is spreading across Europe. Epidemiologist and former World Health Organisation employee Adrian Esterman believes ‘we’re going to see case numbers skyrocketing,’ as the new variant’s infectiousness is ‘pretty close to measles, the most contagious disease we know about.’
    The original Omicron discovery saw the FTSE 100 fall from 7,310 to 7,044 points on 25 November. The impact on sentiment on FTSE 100 travel stocks IAG and Rolls-Royce could prove drastic, with both already suffering from the fallout of the Ukraine war.
    3) Rising inflation
    Inflation is no longer being described as ‘transitory,’ with the Consumer Prices Index now at 7.9% in the US and 5.5% in the UK. The Bank of England is set to increase the base rate from 0.5% to 0.75%, and potentially to 1% on Thursday. And Capital Economics predicts that the ‘low unemployment rate and high wage growth will prompt the Bank to raise rates to 2.00% next year.’
    Of course, increased interest rates could strengthen FTSE 100 bank stocks HSBC, Lloyds, Barclays, and NatWest. However, this positive effect could be wiped out by a wider economic correction.
    Meanwhile, TUC general secretary Frances O’Grady believes working people are ‘facing the steepest decline in real pay for eight years, and a cost-of-living crisis that will get worse… energy bills will rise at least 14 times faster than wages this year.’ Energy bills alone are rising by 54% next month, with further large increases in October are predicted.
    This worsening cost-of-living crisis could have a dual effect on FTSE 100 stocks, as individuals cut back on spending, harming growth. And if bills continue to outstrip wage rises, they could withdraw their money from the markets altogether.
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  10. MongiIG
    Earnings will take center stage in the week ahead as some of the largest U.S. companies from different sectors report Q2 2021 earnings. 
    As the U.S. economic recovery accelerates after the successful rollouts of COVID vaccines, investors will focus on inflationary pressures and whether they are squeezing corporate margins. Riding on earnings optimism, all three major U.S. indices continued their upward trajectory this year, with the S&P 500 and the NASDAQ 100 Index trading near their record levels.
    Below, we've short-listed three stocks from different sectors we’re monitoring as Q1 earnings season ramps into full swing:
    1. Netflix
    Streaming entertainment giant Netflix (NASDAQ:NFLX) reports Q2 earnings on Tuesday, July 20 after the market close. Analysts are expecting $3.1 a share profit on sales of $7.32 billion.
     
    NFLX Weekly TTM  
    After rebounding strongly during the COVID-19 pandemic, Netflix stock is losing some steam as subscriber growth slows and competition in the streaming market heats up. In April, the Los Gatos, California-based company reported that the number of net new members during Q1 was 2 million short of its own forecast. 
    As of Friday's $530.31 close, Netflix's shares are down 2% this year, compared with the tech-heavy NASDAQ’s 12% expansion over the same period. This coming week’s earnings report will be crucial if the stock is to break this sluggish cycle and move higher.
    Netflix has to show it’s well-positioned to outperform its rivals even when the pandemic-triggered surge in user growth is cooling fast.
    2. Johnson & Johnson
    Global healthcare giant Johnson & Johnson (NYSE:JNJ) will be reporting Q2 earnings before the market opens on Wednesday, July 21. According to analysts’ consensus forecast, the company is forecast to report $2.29 EPS on sales of $22.5 billion for the period.
     
    JNJ Weekly TTM  
    Besides the quarterly numbers, investors will be eager to know more about the rollout of its COVID-19 vaccine and its efficacy in protecting against the fast spreading Delta variant.
    J&J’s shot has struggled to get broad traction amid production problems and after a brief pause in use as regulators investigated reports that some people suffered dangerous blood clots after receiving it. The pause was lifted after 10 days on Apr. 23.
    Despite the vaccine setback, J&J’s underlying business remains strong as the U.S. economy reopens and hospitals gradually increase elective surgeries after the COVID-19 disruption, which hurt the company’s device business in 2020. Shares of J&J are up 7% this year. They closed on Friday at $168.10.
    3. IBM
    International Business Machines (NYSE:IBM) will report its latest quarterly numbers on Monday, July 19, after the market close. Analyst consensus on IBM is for EPS of $2.32 on revenue of $18.29 billion for the quarter ended June 30.
     
    IBM Weekly TTM  
    Big Blue, which is in the middle of a major turnaround, is showing some signs that it is succeeding at bringing additional sales from its cloud business. IBM posted its first revenue gain in 11 quarters in April, driven by demand for cloud services. IBM also reported revenue from Red Hat—which it bought in 2019 for $34 billion—had increased 17% in the first quarter.
    Arvind Krishna, who took over as CEO from Ginni Rometty last April, is focusing on artificial intelligence and the cloud to revive growth. Krishna has reorganized the company’s business around a hybrid-cloud strategy, which allows customers to store data in private servers and on multiple public clouds.
    Shares of IBM, which closed Friday at $138.90, have gained 10% this year.
     
     
    By Investing.com (Haris Anwar/Investing.com) 18th July 2021.
  11. MongiIG
    With some of the largest U.S. companies reporting their quarterly earnings in the upcoming week, investor focus will likely be squarely on corporate America and the financial health of its most high profile corporations. 

    During the five-day period ahead, about a third of S&P 500 companies are scheduled to release their most recent numbers along with their outlook forecasts for the remainder of this year, including such tech giants as Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN) and industrial names, such as Boeing (NYSE:BA) and Caterpillar (NYSE:CAT).
    About 87% of S&P 500 companies that reported results so far this season have beaten Wall Street estimates, according to data compiled by Bloomberg, with investors betting a robust economic recovery will continue fueling corporate America—notwithstanding the threat of higher inflation. 
    During this crucial week for the Q2 earnings season, we will be focusing on three key tech mega caps whose earnings could help clarify whether they are still benefiting from the pandemic-driven demand surge that pushed their shares to record high prices in recent months:
    1. Tesla
    Electric vehicle maker Tesla (NASDAQ:TSLA) will report its second quarter earnings on Monday, July 26 after the market close. Analysts are expecting $0.94 a share profit on sales of $11.53 billion.
     
    TSLA Weekly TTM  
    With its shares still in a bearish cycle thus far this year, the Palo Alto, California-based EV manufacturer is facing escalating competitive threats from traditional automakers, signs of a potential sales slowdown in China, and an ongoing semiconductor shortage. TSLA shares closed on Friday at $643.38, down about 8% for the year.
    The short-term outlook for Tesla has brightened after the company reported last month that it produced more cars in Q2 than analysts expected. That shows the company has been succeeding at overcoming supply-chain issues which are hurting traditional automakers.
    The company’s sales forecast for the remainder of 2021, and the demand situation in China, will be important details that investors will be keen to be updated on. 
    2. Apple
    Apple (NASDAQ:AAPL), the maker of the popular and iconic iPhone, as well as computers and smart wearables, is scheduled to report its fiscal 2021, Q3 earnings on Tuesday, July 27 after the market close. Analysts, on average, project the company will post $1.01 a share profit on sales of $73.3 billion.
     
    AAPL Weekly TTM  
    Shares of Apple have continued to move higher this year after the stock produced a stellar performance in 2020. Strong signs that the sales of its flagship iPhone will remain strong this year are helping propel AAPL higher in 2021. During its fiscal second quarter, iPhone sales surged 66%. It was the first full period for the company's model 12 which supports 5G technology.
    Apple also rolled out new MacBook Pros, a Mac mini, MacBook Airs, new AirPods, new iPads, and updated Apple Watches this year to take advantage of the work-from-home environment which is boosting consumers’ technology needs.
    The stock gained more than 11% this year, following an 80% jump higher in 2020.  AAPL closed on Friday at $148.56.
    3. Microsoft 
    Another high-profile mega cap technology company, Microsoft (NASDAQ:MSFT), also reports its fiscal 2021 Q4 earnings after the market close on Tuesday. The software and cloud computing behemoth is expected to post EPS of $1.91 on sales of $44.13 billion, according to consensus forecasts.
     
    MSFT Weekly TTM  
    If the past provides any clues, Microsoft should show robust momentum fueled by a surge in technology investments and the strength of its cloud computing and core Office products lineup. The Redmond, Washington-based software and infrastructure company is benefiting from the increased demand for connectivity as people continue to work and interact socially from home.
    As well, investors expect businesses and governments will continue to spend on their transition to cloud computing—which has been a key area of expansion for the corporation in recent years. 
    Growth in that division jumped 50% in Q3 as corporate clients accelerated a shift to the cloud during the pandemic, where they can store data and run applications via the internet. MSFT shares closed on Friday at $289.67, after surging 30% this year.
     
    By Investing.com (Haris Anwar/Investing.com) 25th July 2021.
  12. MongiIG
    - Reviewed by James Stanley, Nov. 24, 2021
    TRADING EXIT STRATEGIES THAT ARE EFFECTIVE:
    Traditional stop/limit (using support and resistance) Moving average trailing stops Volatility based approach using ATR Traders focus a lot of their energy on spotting the perfect time to enter a trade. While this is important, it is ultimately where traders choose to exit trades that will determine how successful the trade is. This article hones in on 3 trading exit strategies that traders should consider when looking to get out of a trade.
    FOREX EXIT STRATEGY #1: TRADITIONAL STOP/LIMIT (USING SUPPORT AND RESISTANCE)
    One of the best ways to keep emotions in check is to set targets (limits) and stops at the same time the trade is entered into. This is a much better approach than entering without a ‘stop loss’ and having to wipe the perspiration from your brow as you watch losing trades consume the account equity.
    Through DailyFX’s research into over 30 million live trades we uncovered that setting a risk to reward ratio of at least 1:1 was one of the common traits of successful traders.
    Read the guide below for a summary of the main findings of this research:
    Before making the entry into the market, traders should analyze the amount of risk they are willing to assume and set a stop at that level, while placing a target at least that many pips away. If traders are wrong, trades will automatically be closed at an acceptable level of risk; if traders are correct and price hits the target, the trade is also automatically closed. Either outcome provides traders with an exit.
    Well-defined support and resistance in USD/JPY

    Traders looking to go long would look for price to bounce off support in conjunction with clear buy signals using indicators. Since price has broken lower than support temporarily, traders would look to place a stop slightly below the level of support. The limit can be placed at the level of resistance as price has approached this level multiple times. For short positions, this will be reversed and stops can be placed near resistance with limits placed at support.
    FOREX EXIT STRATEGY #2: MOVING AVERAGE TRAILING STOPS
    It has long been known that a moving average can be an effective tool to filter what direction a currency pair has trended. The basic idea is that traders look for buying opportunities when the price is above a moving average and look for selling opportunities when the price is below a moving average. However, it can also be useful to consider a moving average as a trailing stop.
    The idea is that if a MA crosses over price, then the trend is shifting. Trend traders would want to close out the positions once this shift has occurred. This is why setting your stop loss based on a moving average could be effective.

    The above chart depicts a long entry above a break of resistance, which is also above the 100 day simple moving average. The stop is places 220 points away at the moving average and the limit is placed 440 points away to ensure a 1:2 risk to reward ratio. As price rises, so will the MA and the stop should be moved to wherever the MA is. This creates a safety net in case price turns sharply.
    FOREX EXIT STRATEGY #3: VOLATILITY BASED APPROACH USING (ATR)
    This final technique uses the Average True Range (ATR). The ATR is designed to measure market volatility. By taking the average range between the high and the low for the last 14 candles, it tells traders how erratic the market is behaving, and this can be used to set stops and limits for each trade.
    The greater the ATR is on a given pair, the wider the stop should be. This makes sense because a tight stop on a volatile pair could get stopped out too early. Also, setting stops that are too wide for a less volatile pair, essentially takes on more risk than is necessary.
    The ATR indicator is universal as it can be adapted to any time frame. Simply set your stop slightly above 100% of ATR and set your limit at least the same distance away from the entry point.

    The ATR indicator for Brent Crude oil is shown in blue at the bottom of the chart and shows the highest average volatility experienced peaked at 135.8 pips. Therefore, when a trader places a short trade the stop and limit will be 135.8 pips away from entry, in a 1:1 risk to reward set up. Placing stops around the ATR essentially acts as a volatility stop.
    The chart makes it clear that in this case a 1:1 risk to reward ratio closed the trade prematurely. This emphasizes the importance of the risk to reward ratio as traders should be targeting more pips with minimal risk which results in a better risk to reward ratio.
    FOREX EXIT STRATEGIES: A SUMMARY
    Remember that forex trading is more than just getting good entries as the success of a trade will ultimately depend on where traders exit their positions. New traders can build confidence in trading by having a trading plan that implements a precise exit strategy to close out trades. Trading exit strategies are just one part of a complete forex strategy. Find out more about our top forex trading strategies.  
    By Richard Snow, Analyst, 14th December 2021. DailyFX
  13. MongiIG
    - Reviewed by James Stanley, Nov. 24, 2021
    Triangle patterns have three main variations and appear frequently in the forex market. These patterns provide traders with greater insight into future price movement and the possible resumption of the current trend. However, not all triangle formations can be interpreted in the same way, which is why it is essential to understand each triangle pattern individually.
    Forex triangle patterns main talking points:
    Definition of a triangle pattern Symmetrical triangles explained Ascending and descending triangle patterns Key points to remember when trading triangle patterns Test your knowledge of forex patterns with our interactive Forex Trading Patterns quiz
    WHAT IS A TRIANGLE PATTERN?
    A forex triangle pattern is a consolidation pattern that occurs mid-trend and usually signals a continuation of the existing trend. The triangle chart pattern is formed by drawing two converging trendlines as price temporarily moves in a sideways direction. Traders often look for a subsequent breakout, in the direction of the preceding trend, as a signal to enter a trade.

    This article makes use of line chart illustrations to present the three triangle chart patterns. Traders ought to familiarize themselves with the three technical analysis charts and figure out which one suits them best, although, most prefer using forex candlestick charts.
    SYMMETRICAL TRIANGLES
    The symmetrical triangle can be viewed as the starting point for all variations of the triangle pattern. As the name suggests, a triangle can be seen after drawing two converging trendlines on a chart.
    The difference between the symmetrical and the other triangle patterns is that the symmetrical triangle is a neutral pattern and does not lean in any direction. While the triangle itself is neutral, it still favors the direction of the existing trend and traders look for breakouts in the direction of the trend.

    Symmetrical triangle trading strategy
    Triangles provide an effective measuring technique for trading the breakout, and this technique can be adapted and applied to the other variations as well.
    The AUD/USD chart below shows the symmetrical triangle. The vertical distance between the upper and lower trendline can be measured and used to forecast the appropriate target once price has broken out of the symmetrical triangle.
    Its important to note that finding the perfect symmetrical triangle is extremely rare and that traders should not be too hasty to invalidate imperfect patterns. Traders ought to understand that triangle analysis is less about finding the perfect pattern and more about understanding what the market is communicating, through price action.

    ASCENDING TRIANGLE PATTERN
    The ascending triangle pattern is similar to the symmetrical triangle except that the upper trendline is flat and the lower trendline is rising. This pattern indicates that buyers are more aggressive than sellers as price continues to make higher lows. Price approaches the flat upper trendline and with more instances of this, the more likely it is to eventually break through to the upside.

    Ascending triangle trading strategy
    An ascending triangle can be seen in the US Dollar Index below. Leading on from the existing uptrend, there is a period of consolidation that forms the ascending triangle. Traders can once again measure the vertical distance at the beginning of the triangle formation and use it at the breakout to forecast the take profit level. In this example, a rather tight stop can be placed at the recent swing low to mitigate downside risk.

    DESCENDING TRIANGLE PATTERN
    The descending triangle pattern on the other hand, is characterized by a descending upper trendline and a flat lower trendline. This pattern indicates that sellers are more aggressive than buyers as price continues to make lower highs.

    Descending triangle trading strategy
    Below is a good example of the descending triangle pattern appearing on GBP/USD. A downtrend leads into the consolidation period where sellers outweigh buyers and slowly push price lower. A strong break of the lower trendline presents traders with an opportunity to go short. In this example, it doesn’t take long for the position to move in the opposite direction, highlighting the importance of setting an appropriate stop level.
    The take profit level is set using the vertical distance measured at the beginning of the descending triangle formation.

    TRADING WITH TRIANGLE PATTERNS: KEY THINGS TO REMEMBER
    Always be cognisant of the direction of the trend prior to the consolidation period. Make use of upper and lower trendlines to help identify which triangle pattern is being formed. Use the measuring technique discussed above to forecast appropriate target levels Adhere to sound risk management practises to mitigate the risk of a false breakout and ensure a positive risk to reward ratio is maintained on all trades. FURTHER READING ON FOREX TRADING PATTERNS
    Other popular continuation patterns include the rising wedge, falling wedge and pennant patterns. In contrast to continuation patterns is reversal patterns. These patterns often precede a reversal in the market with the top patterns including the Head and shoulders pattern, the Morning Star and Evening Star. If you are just starting out on your trading journey it is essential to understand the basics of forex trading in our free New to Forex trading guide.  
    Jan 20, 2022 |  Richard Snow, Analyst. DailyFX
  14. MongiIG

    3 Types of Forex Analysis

    By MongiIG,


    Analyst Piece
    Feb 27, 2019 |  Richard Snow, Analyst | DailyFX
    FOREX ANALYSIS TECHNIQUES TALKING POINTS:
    There are three general types of forex analysis traders use to anticipate market movements and analyse trends. Traders tend to use one or a combination of FX analysis methods to fit their personality and/or trading style. It can be useful to identify trades using the analytical approach in a forex practice account There are several different ways to analyze the FX market in anticipation of trading. Although categories of analysis may be plentiful, traders should keep the analysis simple enough to identify good trading opportunities.
    This article explores the three most common forex analysis techniques: Fundamental, technical and sentiment analysis, and how they help to shape a trading strategy. Thereafter, it is up to the individual trader to try find out what type of analysis suits there trading style.
    THE 3 MOST COMMON TYPES OF FOREX MARKET ANALYSIS:
    1) Fundamental
    Forex fundamentals center mostly around the currency’s interest rate. This is due to the fact that interest rates have a sizeable effect on the forex market. Other fundamental factors are included such as gross domestic product, inflation, manufacturing, economic growth activity. However, whether those other fundamental releases are good or bad is of less importance than how those releases affect that country’s interest rate.
    Traders reviewing the fundamental releases should keep in mind how they might affect the future movement of interest rates. When investors are in a risk-seeking mode, money follows yield (currencies that offer a higher interest rate), and higher rates could mean more investment. When investors are in a risk adverse mentality, then money leaves yield for safe-haven currencies.
    The DailyFX website offers a lot of assistance on identifying how a fundamental release could affect the value of the currency. Check out the economic calendar for events coming up this week.
    2) Technical
    Forex technical analysis involves looking at patterns in price history to determine the higher probability time and place to enter a trade and exit a trade. As a result, technical analysis in forex is one of the most widely used types of analysis.
    Since FX is one of the largest and most liquid markets, the movements on a chart from the price action generally gives clues about hidden levels of supply and demand. Other patterned behavior such as which currencies are trending the strongest can be obtained by reviewing the price chart. An example of this can be seen below in the GBP/USD chart where the US dollar is strengthening against the Pound Sterling.
    Other technical studies can be conducted through the use of indicators. Many traders prefer using indicators because the signals are easy to read, and it makes forex trading simpler.
    Technical versus fundamental analysis in forex is a widely debated topic. There is no right answer to the question of which type of analysis is better and traders tend to adopt one, or a combination of the two, in their analysis.
    3) Sentiment
    Forex sentiment is another widely popular form of analysis. When you see sentiment overwhelmingly positioned to one direction, this means the vast majority of traders are already committed to that position.
    Perhaps this can be better explained with an example. Let’s assume that an overwhelming number of traders and investors are bullish the Euro. They think the Euro is going higher. Since people vote with their trades, we can assess through DailyFX (which uses IG Client Sentiment) that the EUR/USD sentiment shows a majority of traders are buyers in the currency pair.
    Since we know there is a large pool of traders who have already BOUGHT, then these buyers become a future supply of sellers. We know that because eventually, they are going to want to close out the trade. That makes the EUR to USD vulnerable to a sharp pull back if these buyers turn around and sell to close out there trades.
    More astute traders will analyze retail sentiment alongside sentiment at the institutional level. Senior Analyst at DailyFX, Tyler Yell explains how traders can analyze the Commitment of Traders (CoT) report for clues on how the institutional market is positioned and how to implement this analysis into their trading analysis.
    Learn more about sentiment trading through DailyFX to provide trading opportunities based on IGCS.
    HOW TO APPLY FOREX TECHNIQUES TO YOUR TRADES
    Traders can utilize a mix of all three types of forex market analysis. This can be done by:
    Identifying long term trends with the use of fundamental analysis Pin-pointing ideal entry points using technical analysis and accompanying indicators Making use of client sentiment as the last check box before entering the trade. Keep reading for in-depth examples of how to analyse forex market trends with the three analysis techniques:
    1) Use fundamentals to assist in identifying a long-term trend:
    Analyzing a country’s GDP, interest rate and inflation rate provides insight on the strength of that country’s economy and by extension, their currency. For example, if the US begins an interest rate hiking cycle, the US dollar will look attractive. If enough investors/traders buy US dollars this will prop up the value of the USD.
    2) Apply sound technical analysis to spot entries into the market:
    Using multiple time frame analysis and an indicator like the MACD or Relative Strength Index, traders can spot ideal entries into the market.
    3) Consider client sentiment:
    Traders can analyze client sentiment either by observing the net number of traders long or short, or by trading the difference in net short/long movements. The main takeaway however, is that retail clients tend to trade against prevailing trends therefore, making client sentiment a contrarian indicator.
    FURTHER READING TO TAKE YOUR FOREX TRADING TO THE NEXT LEVEL
    If you are just starting out on your forex trading journey you can learn the basics with our free New to Forex guide. We also offer a range of trading guides to supplement your forex knowledge and strategy development. Our research team analyzed over 30 million live trades to uncover the Traits of Successful Traders. Incorporate these traits to give yourself an edge in the markets. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
    DISCLOSURES
  15. MongiIG
    As the Bank of England predicts inflation will hit 10.2% later this year, the FTSE 100 offers an excellent selection of defensive stocks.
    Source: Bloomberg   Shares Inflation Recession Economy Stock Bank of England
     Charles Archer | Financial Writer, London Last week, the Bank of England set in stone that which investors have been afraid to hear. Whilst increasing the base rate to 1%, it predicted that double-digit inflation will see the UK’s economy contract by 0.25% in 2023.
    While the country should avoid a technical recession (two consecutive quarters of falling GDP), Governor Andrew Bailey admitted that ‘it is a very obviously sharp slowdown in activity.’
    But MPC member Huw Pill has rejected the notion that the UK is headed for stagflation, saying ‘we are not headed in that direction.’
    However, Capital Economics expects the base rate to strike 3% next year, arguing that the ‘weakening economy won’t do the MPC’s job.’ And given the Bank’s inflationary track record, investors are understandably nervous about the economy’s future trajectory.
    Meanwhile, Chancellor Rishi Sunak is resisting calls to increase financial support for the economy despite poor local elections results.
    And as equities fall, the pound drops, and growth stalls, many investors are recalibrating their portfolios in favour of defensive stocks to combat the spectre of recession.
    FTSE 100 Defensive Stocks
    The widespread appeal of defensive stocks is that they usually outperform the market during recessions. Regardless of external events, their dividends, earnings and share prices usually remain comparatively stable, because they offer a product or service for which there is consistent demand. This could be because they hold a dominant market position, hold a reputation for value for money, or even provide the bare necessities.
    In investor vernacular, the best stocks within defensive sectors benefit from ‘inelasticity of demand,’ making them ‘safe havens.’ If they raise prices to tackle inflation, consumers will almost always still buy the product or service.
    And with UK growth grinding to a halt, increased investment in defensive stocks grants investors the ability to protect their wealth from inflation whilst minimizing their stock market risk.
    Source: Bloomberg Best FTSE 100 defensive sectors
    Happily, for UK investors, the FTSE 100 is packed with some of the best defensive sector stocks.
    First and foremost is Consumer Staples, which is the sector with companies that sells essential products and services. FTSE 100 examples include stalwarts like AB Foods, Tesco, Unilever, and British American Tobacco. Consumers will always purchase food, household products, and tobacco, regardless of financial means or the wider economic picture.
    Second is the Healthcare sector. There is consistent demand for medical treatments every year, as well as financial incentives to develop new drugs. And as a consequence of the covid-19 pandemic, there is strong political consensus that FTSE 100 healthcare companies are to be backed for future preparedness. Giants GlaxoSmithKline and AstraZeneca are excellent examples.
    Third is the Utilities sector. The risk-reward ratio is currently elevated as the global transition towards renewables amid climate goals and the rejection of Russian fossil fuels. But the need for electricity, gas, and water will never subside. FTSE 100 exemplars include National Grid and Centrica.
    Finally, telecommunication is an excellent defensive sector, as consumer demand for mobile phones and broadband services remains consistent. While some growth may now be found from the expansion into 5G and superfast internet, demand for connectivity means that titans like BT and Vodafone are unlikely to see weakened demand, even if recession strikes.
    Of course, there’s a strong argument that growth stocks, having taken a hammering so far in 2022, are now at excellent buy-in points. For example, the tech-heavy NASDAQ Composite is down 23% year-to-date. Both ARK Innovation ETF and Scottish Mortgage are in the doldrums despite previous years of outperformance. And there’s no knowing where the bottom might be.
    Moreover, FTSE 100 stocks like the oil majors BP and Shell, or mining giants Rio Tinto and Anglo American, currently offer far better returns than those in the defensive sectors. However, the cyclical nature of commodities does leave investors at the mercy of demand volatility.
    And as rising inflation and interest rates continue to increase the risk of a full-blown recession, the hallmark consistency of FTSE 100 defensive stocks becomes ever more appealing.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
  16. MongiIG
    Nearly two years into the Covid-19 pandemic, reported daily infections are rising again as the omicron variant spreads rapidly around the world, in countries ranging from the U.S. and the U.K. to South Africa and Australia.
    The World Health Organization labeled omicron a variant of concern. While much remains unknown about it, the WHO warned that the variant is spreading “significantly faster” than the delta strain and could change the course of the pandemic.
      Still, “2022 must be the end of the Covid-19 pandemic,” Tedros Adhanom Ghebreyesus, WHO director-general, said Wednesday.  
    Data on the pandemic — such as confirmed cases, hospitalizations and deaths — likely underestimates the actual situation owing to limited testing, frequency of reporting and quality of data collected.
    But based on available data, here are four charts that show the state of the Covid pandemic as 2021 comes to an end.
    Omicron is gaining dominance
    The omicron variant has been found in around 100 countries, said the WHO. The agency added that the number of Covid cases involving omicron is doubling every 1.5 to three days.
    The fast-spreading variant, which was first detected by South African scientists, has become the dominant Covid strain in the U.S. and parts of Europe such as England and Scotland.
      Omicron emerged at a time when many countries had relaxed or were easing restrictions. The rise in the number of reported infections has led some countries, including the Netherlands, Denmark and Ireland, to tighten measures to curb the variant’s spread.
    Cases are up, but deaths are down
    The omicron variant triggered a new wave of infections globally. In Africa, daily confirmed cases jumped from a seven-day moving average of around 3.14 per million people at the start of November to 26.67 per million on Tuesday, according to an analysis by online repository Our World in Data.
    Over the same period, the U.K.’s daily confirmed cases rose from a seven-day moving average of 603.38 per million people to around 1,280 per million people — a record high since the pandemic began, the analysis showed.
    Hospitalizations among infected people have also risen in several countries. The U.S., France and South Africa were among those that recorded a rise in weekly hospital admissions over the past month because of Covid-19, according to official statistics compiled by Our World in Data.
    But the average number of confirmed daily Covid deaths has been trending downward globally, an analysis by Our World in Data showed.
    Scientists are still studying the severity of infection caused by the omicron variant compared with previous Covid strains.
    Benjamin Cowling, an epidemiology professor at The University of Hong Kong’s School of Public Health, said omicron seems to cause “about the same severity” as delta and other variants.  
    “But if you’ve been vaccinated, if you’ve had an infection before, you’ve got some protection particularly against severe disease. And that means that omicron in reality looks milder,” Cowling told CNBC’s “Squawk Box Asia” on Monday.
    “It looks like a milder infection because of the immunity that we’ve built up, not because the virus is particularly different in terms of its natural innate severity,” he added.
    Vaccine inequality
    The threat of omicron — and future variants — has highlighted the importance of vaccination in preventing severe disease, said experts. But the distribution of Covid vaccines has remained unequal.
    In more than 30 countries, under 10% of the population has been fully vaccinated, according to figures compiled by Our World in Data. Many of those countries are low-income nations in Africa, the data showed.
    On the other hand, high-income countries are far ahead in vaccinating their people and rolling out booster shots, according to the data.  
    That gap could narrow over time with billions of doses of vaccines produced each year, said Jerome Kim, director general of the International Vaccine Institute.
    “We need to use the vaccines as best we can, we need to use boosters if those are indicated,” Kim told CNBC’s “Street Signs Asia” earlier this month.  
    “And then we need to use other methods including masks, distance and avoiding crowds and hygiene in order to reduce the total infection burden within a country.”
    WHO’s Tedros said that to end the pandemic in the coming year, every country must vaccinate 70% of its population by the middle of 2022.
    CNBC Health & Science
  17. MongiIG
    By Tyler Yell, CMT, Currency Strategist. 27th July 2021. DailyFX     When your forex trading adventure begins, you’ll likely be met with a swarm of different methods for trading. However, most trading opportunities can be easily identified with just one of four chart indicators. Once you know how to use the Moving Average, RSI, Stochastic, & MACD indicator, you’ll be well on your way to executing your trading plan like a pro. You’ll also be provided with a free reinforcement tool so that you’ll know how to identify trades using these forex indicators every day.
    Find the best trading ideas and market forecasts from DailyFX.
    THE BENEFITS OF A SIMPLE STRATEGY
    Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Traders often feel that a complex trading strategy with many moving parts must be better when they should focus on keeping things as simple as possible. This is because a simple strategy allows for quick reactions and less stress.
    If you’re just getting started, you should seek the most effective and simple strategies for identifying trades and stick with that approach.
    DISCOVER THE BEST FOREX INDICATORS FOR A SIMPLE STRATEGY
    One way to simplify your trading is through a trading plan that includes chart indicators and a few rules as to how you should use those indicators. In keeping with the idea that simple is best, there are four easy indicators you should become familiar with using one or two at a time to identify trading entry and exit points:
    Moving Average RSI (Relative Strength Index) Slow Stochastic MACD Once you are trading a live account a simple plan with simple rules will be your best ally.
    USING FOREX INDICATORS TO READ CHARTS FOR DIFFERENT MARKET ENVIRONMENTS
    There are many fundamental factors when determining the value of a currency relative to another currency. Many traders opt to look at the charts as a simplified way to identify trading opportunities – using forex indicators to do so.
    When looking at the charts, you’ll notice two common market environments. The two environments are either ranging markets with a strong level of support and resistance, or floor and ceiling that price isn’t breaking through or a trending market where price is steadily moving higher or lower.
    Using technical analysis allows you as a trader to identify range bound or trending environments and then find higher probability entries or exits based on their readings. Reading the indicators is as simple as putting them on the chart.
    TRADING WITH MOVING AVERAGES
    One of the best forex indicators for any strategy is moving average. Moving averages make it easier for traders to locate trading opportunities in the direction of the overall trend. When the market is trending up, you can use the moving average or multiple moving averages to identify the trend and the right time to buy or sell.
    The moving average is a plotted line that simply measures the average price of a currency pair over a specific period of time, like the last 200 days or year of price action to understand the overall direction.
    LEARN FOREX: GBPUSD DAILY CHART - MOVING AVERAGE
    You’ll notice a trade idea was generated above only with adding a few moving averages to the chart. Identifying trade opportunities with moving averages allows you see and trade off of momentum by entering when the currency pair moves in the direction of the moving average, and exiting when it begins to move opposite.
    TRADING WITH RSI
    The Relative Strength Index or RSI is an oscillator that is simple and helpful in its application. Oscillators like the RSI help you determine when a currency is overbought or oversold, so a reversal is likely. For those who like to ‘buy low and sell high’, the RSI may be the right indicator for you.
    The RSI can be used equally well in trending or ranging markets to locate better entry and exit prices. When markets have no clear direction and are ranging, you can take either buy or sell signals like you see above. When markets are trending, it becomes more obvious which direction to trade (one benefit of trend trading) and you only want to enter in the direction of the trend when the indicator is recovering from extremes.
    Because the RSI is an oscillator, it is plotted with values between 0 and 100. The value of 100 is considered overbought and a reversal to the downside is likely whereas the value of 0 is considered oversold and a reversal to the upside is commonplace. If an uptrend has been discovered, you would want to identify the RSI reversing from readings below 30 or oversold before entering back in the direction of the trend.
    TRADING WITH STOCHASTICS
    Slow stochastics are an oscillator like the RSI that can help you locate overbought or oversold environments, likely making a reversal in price. The unique aspect of trading with the stochastic indicator is the two lines, %K and %D line to signal our entry.
    Because the oscillator has the same overbought or oversold readings, you simply look for the %K line to cross above the %D line through the 20 level to identify a solid buy signal in the direction of the trend.
    TRADING WITH THE MOVING AVERAGE CONVERGENCE & DIVERGENCE (MACD)
    Sometimes known as the king of oscillators, the MACD can be used well in trending or ranging markets due to its use of moving averages provide a visual display of changes in momentum.
    After you’ve identified the market environment as either ranging or trading, there are two things you want to look for to derive signals from this indictor. First, you want to recognize the lines in relation to the zero line which identify an upward or downward bias of the currency pair. Second, you want to identify a crossover or cross under of the MACD line (Red) to the Signal line (Blue) for a buy or sell trade, respectively.
    Like all indicators, the MACD is best coupled with an identified trend or range-bound market. Once you’ve identified the trend, it is best to take crossovers of the MACD line in the direction of the trend. When you’ve entered the trade, you can set stops below the recent price extreme before the crossover, and set a trade limit at twice the amount you’re risking.
     
  18. MongiIG
    While FTSE 100 stocks rose by 1% in March, the resurgent covid-19 pandemic in China, protracted Russia-Ukraine war, and tightening monetary conditions could all conspire to see them fall next month.
    Source: Bloomberg   Indices Shares FTSE 100 BAE Systems Glencore Vodafone  Charles Archer | Financial Writer, London | Publication date: Thursday 31 March 2022  As the first quarter of 2022 comes to an end, a rising tide of bearish sentiment could be about to hit FTSE 100 stocks.
    But some may resist the trend.
    1) BAE Systems
    BAE Systems (LON: BA) shares are up 30% to 722p year-to-date, after it was boosted by sentiment over Russia’s invasion of Ukraine and encouraging full-year results which saw sales grow by 5% to £21.3 billion last year. CEO Charles Woodburn thinks the group is ‘well positioned’ for future growth; and with defence spending being reprioritised across the developed world, investors are anticipating new contracts for the largest defence contractor in Europe.
    In addition, Rolls-Royce shares spiked last week over speculation that BAE might put in a takeover bid. As the UK government maintains a golden share in Rolls-Royce over security concerns, BAE is one of the only companies that could successfully pursue the engineer.
    2) Scottish Mortgage Investment Trust
    Scottish Mortgage (LON: SMT) has fallen in value by a third since November. A toxic combination of the Omicron variant, rocketing global inflation, and the rising interest rates to combat it, are all hammering its tech-heavy holdings.
    It’s especially vulnerable to geopolitical tensions between China and the US, with its US-listed Chinese stocks NIO, Alibaba, and Meituan at risk both of being delisted in the States, and also of being caught in the crossfire of the Chinese ‘zero-covid’ policy that is seeing tens of millions returning to lockdown.
    However, the trust has made exceptional returns over the years. After falling to 835p earlier in March, its recovery to 1,030p today could represent a rare buying opportunity.
    Source: Bloomberg 3) SSE
    SSE (LON: SSE) shares are up 20% over the past year to 1,750p, as the FTSE 100 renewable energy stock benefits from the environmental focus brought on by the COP26 summit, and the volatility of Brent Crude caused by the ostracization of Russian oil.
    The operator is developing global wind farm operations from the USA to Japan. But its crown jewels are going to be Seagreen, the world's deepest, fixed-bottom wind farm, and Dogger Bank, the largest offshore wind farm in the world. Both are currently under construction.
    With the UK government likely to publish its National Energy Strategy in April, Business Secretary Kwasi Kwarteng already plans to quadruple offshore and double onshore wind capacity by 2030. SSE is investing £12.5 billion on its green investments by 2026, aiming to double its renewable capacity to 8GW.
    In February’s Q3 results, CFO Gregor Alexander exhorted the ‘significant bolstering of SSE Renewables' pipeline, the increased visibility we have over opportunities for greater growth.’ And since then, it’s already ‘adjusted earnings per share to be in a range of between 92 and 97 pence compared to previous guidance of at least 90 pence.’
    4) Glencore
    Glencore (LON: GLEN) shares are up 76% over the past year to 500p, as the FTSE 100 stock benefitted from the booming mining supercycle. The company’s cobalt, Nickel and Copper are essential for the EV revolution, with most western countries planning to phase out ICE cars long before 2040 hits.
    However, it faces a political battle in April over its stakes in Russian companies En+ and Rosneft. While BP and Shell have declared they will exit their Russian positions, Glencore has said it has ‘no realistic way’ to leave the country.
    However, it added it will ‘not enter into any new trading business in respect of Russian origin commodities unless directed by the relevant government authorities.’
    But continuing to own a 10.5% in En+ and a 0.57% stake in Rosneft could soon become a problem if the UK government continues to clamp down.
    5) Vodafone
    Vodafone (LON: VOD) shares are up 9% year-to-date to 126p, despite recent falls since mid-February. Notwithstanding declining revenue, the FTSE 100 stock has seen profits before tax increase from €2.7bn to €4.4bn over the past five years.
    But the mobile operator has a €73bn pile of debt that is only going to become increasingly expensive. It does expect free cash flow of €5.3 billion in this fiscal year, but is likely to want to spend this money on further expansion of its Africa-based MPESA mobile payments operation.
    Last month, it rejected an €11 billion bid for its Italian business, which controls 28% of the country’s market, by French operator Iliad. And it’s also in advanced discussions over the sale of its 21% stake in India’s largest mobile company, Indus Towers.
    With monetary policy tightening, Vodafone could soon be announcing sales of foreign interests to cut down its debt and weather the oncoming storm.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).
  19. MongiIG
    BP, Unilever, B&M, Persimmon, and IAG make the list for this month’s top UK stocks to watch.
    Source: Bloomberg   Indices Shares International Airlines Group Unilever BP FTSE 100  Charles Archer | Financial Writer, London | Publication date: Wednesday 01 June 2022  The FTSE 100 has been somewhat of a diamond in the rough so far this year, with the UK’s premier index up 1.4% year-to-date. Of course, it’s unlikely that index investors are popping champagne corks over the rise.
    But context is important. The NASDAQ Composite is down 23.7%. The S&P 500 has lost 13.9%.
    Australia’s ASX 200 has fallen by 5%, Hong Kong’s Hang Seng is down 8%, Japan’s Nikkei 225 has lost 6.9%, while France’s CAC 40 and Germany’s DAX have both been decimated.
    And plenty of the individual FTSE 100 stocks have further potential than the index average.
    Best FTSE 100 stocks
    1) BP (LON: BP)
    Chancellor Rishi Sunak’s ‘energy profits levy’ on North Sea oil and gas profits is expected to raise £5 billion towards the recent state interventions aimed at tackling the cost-of-living crisis. However, with the windfall tax now planned to last until either December 2025 or until ‘normal’ market conditions return, it’s far more aggressive than most expected.
    North Sea-dependent Harbour Energy is likely to exit the index tomorrow after its share price tanked. And Shell has argued that ‘the levy creates uncertainty about the investment climate for North Sea oil and gas for the coming years.’
    However, BP has taken a harder line. While CEO Bernard Looney had previously acknowledged that a short-term windfall tax would be unlikely to change BP’s investment plans, the company thinks the ‘multi-year proposal’ could force it to review North Sea exploration and development plans.
    Meanwhile, after Shell agreed to sell its Russian petrol stations to Lukoil for an undisclosed sum, investors became hopeful BP could recoup some of the loss associated with the ongoing exit from its 19.75% stake in Rosneft.
    However new Russian dividend regulations could eventually see the stake seized by Russia, with a BP spokesman stating only that ‘we're monitoring the situation but have no further comment on this. We are continuing to pursue our exit from the Rosneft shareholding.’
    Positively, Brent Crude is back up to $120 a barrel after the EU agreed a compromise deal to ban most Russian oil imports by the end of 2022.
    2) Unilever (LON: ULVR)
    Unilever’s share price rose by 6.7% today as it announced that activist investor and CEO of £5.9 billion Trian Fund Management Nelson Peltz is to become a board member.
    The investor now controls 1.5% of the company and has previously taken board seats at Procter & Gamble, Heinz, and Mondelez during activist campaigns. CEO Alan Jope is now under even further pressure after years of poor returns worsened by the ill-fated £50 billion bid for GlaxoSmithKline’s consumer health products arm.
    Peltz called Unilever ‘a company with significant potential, through leveraging its portfolio of strong consumer brands and its geographical footprint…we look forward to working collaboratively with management and the board to help drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders.’
    A push to break up Unilever’s vast operations to unlock imprisoned value could well be on the cards.
    Source: Bloomberg 3) B&M European Value Retail (LON: BME)
    B&M’s share price is down 38% year-to-date, accelerated by the announcement that long-time CEO Simon Arora, who has led the company for the past 18 years, will be stepping down in 2023, as well as lacklustre full-year results.
    Sales fell by 2.4% to £4.7 billion in fiscal 2022, while the company generated a pre-tax profit of £525 million.
    The CEO said ‘'the retail industry is facing inflationary pressures whilst our customers are having to cope with a significant increase in the cost of living, making spending behaviour in the year ahead difficult to predict.’
    However, he enthused that ‘we have seen before that during such times customers will increasingly seek out value for money, and B&M is ideally placed to serve those needs.’
    A key headwind going into summer will be the supply chain crunch; many of the company’s products are manufactured in China which is still reeling from the outsized impact of the Omicron variant. Shanghai, the biggest port in the world, is only just beginning to reopen for business.
    This leaves the value retailer with uncertain levels of both product supply and customer demand. Of course, there’s a chance both could swing in its favour.
    4) Persimmon (LON: PSN)
    Persimmon shares are now an interesting choice. While the UK housebuilding giant’s share price is down 25% year-to-date, its 10.8% dividend yield makes it one of the only FTSE 100 stocks outpacing the sky-high CPI inflation rate.
    Moreover, excluding the pandemic era, it has a strong history of paying above-average dividends. And in 2021, new housing revenue rose by 10% to £3.5 billion, while underlying pre-tax profit increased to £973 million.
    While it’s somewhat at the mercy of the cyclical housing market, the company holds £3.6 billion of net assets in reserve, which could give it the financial resilience to weather the potential storm. As interest rates inexorably rise, early warning signs of housing market correction are beginning to flash.
    Zoopla head of research Grainne Gilmore warns ‘the time to sell – the time taken between listing a property and agreeing a sale – is starting to rise across most property types in most locations…this measure will continue to rise during the rest of the year as buyer demand levels start to fall.’
    But according to ONS data, the average house price increased by 9.8%, or £24,000, over the year to March to £278,000. With demand strong for now, Persimmon’s current share price weakness could be a buying opportunity.
    5) IAG (LON: IAG)
    The British Airways and Vueling owner has pinned all hopes on a summer recovery. In May’s Q1 results CEO Luis Gallego enthused ‘demand is recovering strongly…we expect to be profitable from the second quarter onwards and for the full year.’ Further, he noted that ‘premium leisure continues to be the strongest performing segment.’
    And after suffering another loss of €731 million, the FTSE 100 airline promised to ramp up capacity to 80% of pre-pandemic levels in Q2.
    But with thousands of flights now cancelled, luggage missing, and queues stretching from Heathrow to Land’s End, half-term is becoming something of a PR disaster for the FTSE 100 company.
    Former IAG CEO Willie Walsh, who is now director-general of the International Air Transport Association, has blamed the gridlock on delayed security clearances for new staff.
    Walsh argues ‘you can’t start the training until you’ve got the security clearance. You offer them a job, they accept it, and then you have to go through this period of three months to get security clearance – they’re not gong to hang around. They’ll go and find a job somewhere else.’
    However, Transport Secretary Grant Shapps has censured IAG and its competitors, saying ‘despite government warnings, operators seriously oversold flights and holidays relative to their capacity to deliver. This must not happen again and all efforts should be directed at there being no repeat of this over the summer.’
    But while the majority of flights are departing as scheduled, UK airlines have cut 30,000 jobs since the pandemic began. With demand returning, these skilled staff are in all likelihood employed elsewhere by now. And IAG is now facing an uphill struggle to replace them in time for summer.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).
  20. MongiIG
    AstraZeneca, HSBC, IAG, BT and the FTSE 100 oil majors could all see increased volatility as summer approaches.
    Source: Bloomberg   Indices Shares Commodities HSBC FTSE 100 International Airlines Group  Charles Archer | Financial Writer, London | Publication date: Monday 02 May 2022  April saw the NASDAQ Composite fall by 15.1%, its worst monthly drop since the 2008 financial crisis. The S&P 500, widely viewed as a benchmark for the US economy, fell by 9.8%.
    France’s CAC 40 fell by 2.9%, Germany’s DAX by 2.9%, Australia’s ASX 200 by 2.3%, China’s Hang Seng by 6.3%, and Japan’s Nikkei 225 by 3.3%.
    But after two years of sub-standard performance compared to its international peers, the FTSE 100 is finally having its moment in the sun. It struck 7,670 points on 8 April, fell to 7,381 by 25 April, and then recovered to 7,545 points today. This means that the UK’s premier index has barely moved over the past month.
    Moreover, the FTSE 100 is up 0.5% year-to-date, while almost every other major index is freefalling. Some individual FTSE 100 stocks are even paying out record dividends.
    But all are subject to the rapidly changing political and economic landscape.
    5 best FTSE 100 stocks to watch in May 2022
    1) AstraZeneca (LON: AZN)
    AstraZeneca shares have risen by 29% since 4 February to 10,665p today. In last week’s Q1 results, the pharmaceutical giant revealed sales had soared by 60% to $11.4 billion, boosted by the strong performance of its cancer and diabetes drugs.
    With multiple late-stage trials in its pipeline, AstraZeneca is second only to Shell in terms of market cap. But CEO Pascal Sobriot is currently under fire after ending the non-profit status of its covid-19 vaccine. Despite expecting declining sales of the vaccine going forwards, AZN made $1.1 billion from its jab in Q1.
    It also made $469 million from Evusheld, a treatment designed for immunocompromised patients who cannot be vaccinated. Soriot has described it a ‘sad situation’ that the UK has not ordered doses, saying some patients are ‘really suffering,’ and further that ‘they also represent a pretty large proportion of the people who are hospitalised for Covid, so they do need access to this medicine.’
    With the US having already ordered 1.7 million doses, a UK order in May could be the gateway for further orders globally to offset diminished vaccine income.
    2) HSBC (LON: HSBC)
    HSBC’s Q1 results last month were a mixed bag; pre-tax profit was $4.17 billion, beating analyst estimates but down from $5.78 billion the year before. And revenue fell by 3%, which it attributed in part to Hong Kong covid-19 restrictions hitting investment product sales.
    Accordingly, it has pulled back proposed share buybacks. And with its core capital ratio down by 1.7 percentage points to 14.1%, HSBC also expects further capital falls when it accounts for a $2.7 billion loss from the sale of its French retail operations in H2.
    Roughly half of its revenue and two-thirds of its profits in 2021 came from Asia, and CEO Noel Quinn is investing billions more into the region, intending to build its wealth management business. CFO Ewen Stevenson argues HSBC remains ‘massive bulls’ on Asian growth.
    But Chinese insurance giant Ping An, which as HSBC’s largest shareholder owns 8.23% of the company, has called for a break-up of HSBC. It wants to cleave the Asian business away, arguing that the costs of HSBC’s global network outweigh any synergy savings.
    In addition, while HSBC has historically benefitted politically from its presence in both Western and Eastern markets, it’s now at risk of becoming a political football in the increasingly uneasy geopolitical relationships between China and the US. The pair are at odds over both regulatory issues and the Ukraine war. HSBC was even summoned to a meeting on 22 April to discuss how to protect its assets from any future US sanctions.
    3) IAG (LON: IAG)
    IAG reports Q1 results on Friday, and the picture is not looking rosy for the embattled airline stock. King of its brand portfolio is the iconic British Airways, but after months of travelling chaos caused by IT issues and lack of staffing, the hoped-for summer boom could already be over for the FTSE 100 airline.
    It was already battling with the cost-of-living crisis, rising jet fuel prices, the impact of the Russia-Ukraine war, and a resurgent pandemic. And now more than 1,500 flights were cancelled in April, with further disruption expected in both May and June. With reports that many customers are now booking elsewhere, BA CEO Sean Doyle is coming under increasing pressure.
    Refinitiv average analyst data expects IAG to post a loss of £462 million in Q1, while Peel Hunt has halved its annual profit forecast for IAG from £839 million to £416 million.
    4) BT (LON: BT)
    The FTSE 100 telecommunications stock began hiking prices by 9.3% for most customers at the end of March, following a ‘dramatic increase’ in data usage over the past few years.
    Managing Director Nick Lane justified that the price increases are ‘never popular but are sometimes a necessary part of business.’ This price hike may make BT an inflationary hedge, and noting this Berenberg Bank has upped its share price target from 200p to 225p. Of course, it could also lose hard-strapped customers.
    However, the inflation that justifies price rises is also causing margin pressure. And BT has a £22.8 billion debt mountain that will become increasingly expensive as interest rates rise. But long term, demand for high-speed internet through its Openreach network is likely to soar.
    After Q1 results on 12 May, any input from 18% stakeholder and activist investor Patrick Drahi could drive volatile share price fluctuations.
    Source: Bloomberg 5) BP/Shell (LON: BP and LON: SHEL)
    While these are technically two companies, both of the FTSE 100 oil majors are externally affected by many of the same fundamentals.
    Positively, Brent Crude remains above $100/barrel, which saw both BP and Shell generate record profits in 2021 and pay out record-breaking dividends. Even after their painful exits from their Russian interests, both are expected to declare further record profits in Q1 results due out this week.
    Key in May are the changing political winds regarding windfall taxes. Multiple Conservative cabinet ministers have argued that imposing a one-off tax on the UK’s oil majors to alleviate the energy bill crisis will hurt the case for increased investment in both renewables and further oil and gas development. This has become crucial, as the country plans to end its dependency on Russia by the end of 2022.
    However, high dividends and significant share buybacks over the years make this argument politically difficult to defend. With Business Secretary Kwasi Kwarteng and Chancellor Rishi Sunak apparently at odds over what to do, local elections on 5 May could tip the scales if too many seats are lost.
    Both FTSE 100 stocks could choose this week’s results to proactively announce increased investment at the expense of shareholder profits to ward off the risk.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
  21. MongiIG

    6 advanced forex trading techniques

    By MongiIG,


    Analyst Piece
    Advanced forex trading demands fundamental and/or technical analysis skills to trade profitably. Explore some of the more advanced forex trading strategies to help you navigate this volatile market.
    Source: Bloomberg   Forex Price United States dollar Hedge Currency Euro  
    IG Analyst What’s on this page?
    1. What is forex trading?    2. 6 advanced forex trading techniques 3. How to trade forex What is forex trading?
    Forex trading is when you take a position on the price movements of currency pairs. Trading forex is done for practical reasons, but also to generate profits.Even experienced forex traders keen to learn about more advanced forex trading strategies need to ensure they’re familiar with the basics and have a solid foundation.
    When trading forex, you’ll always use a currency pair, which measures the exchange rate between two currencies.
    If, for example, you buy the EUR/USD pair, then EUR is the base currency and USD is the quote. You’ll buy the forex pair if you think the base currency will rise against the quote currency. You’ll sell if you think the opposite will happen.
    Continuing with the example above, you’d buy EUR/USD if you thought the euro would rise against the dollar and sell if you believed the opposite were true.
    At a simplistic level, it may appear the only job in trading is to pick the direction of a currency pair and collect the profit. However, there are some strategies on how to enter and exit a trade you can use.
    6 advanced forex trading techniques
    Hedging forex Position trading Ichimoku clouds Trading forex options Forex scalping Nonfarm payrolls (NFP) trading Hedging forex
    Hedging forex is an advanced trading technique that mitigates risk. You hedge your profits or losses from your open position. Note that while hedging enables you to reduce your potential losses, you won’t usually make a profit.
    Hedging involves selecting two currency pairs that are positively correlated, such as GBP/USD and EUR/USD, and then taking positions on both pairs but in the opposite direction.
    For example, say you’ve taken a short position on EUR/USD at the top of a recent price range, but the currency pair is looking strong, threatening to break upward.
    You could then decide to hedge your USD exposure by opening a long position on GBP/USD. If EUR/USD were to advance further, i.e. the US dollar fell, your long GBP/USD hedge would offset any loss to your short position. If the euro did fall against the dollar, your long position on GBP/USD would have taken a loss, but it would be mitigated by profit to your EUR/USD position.
    Note that the net profit of the two trades may be below zero while both your positions are open. However, you can make more money by timing the market just right – without closing the initial trade and only putting the offset currency pair position, in the above example GBP/USD, on, once you are in profit on the original position, thus in effect securing your profit until that point. Hedging can also be used to protect yourself against a big loss – much like an insurance policy against an expensive car accident.
    Position trading
    Position trading is when you ‘buy and hold’ a trade over the long term, such as over months or years, depending on your strategy. Based on the long-term nature of this type of technique, you’d use fundamental analysis, such as a country's economic data, central bank monetary policy and macro-economic outlook within your strategy.
    If you choose to trade long-term, you must ensure you’ve got sufficient funds in your account. These should cover swings in the short term and avoid margin calls.
    Position trading is based on your overall exposure to a currency pair. You’ll take a position on the price movement of the forex market using CFDs.
    There are several technical indicators you could use under this technique such as trend trading where, for example, moving averages are used to enter or exit a trade. Support and resistance in forex trading is also another technique to look at.
    Ichimoku clouds
    Ichimoku clouds are a technical analysis tool that combines multiple averages and looks at market trends, momentum and several other data points. You use this indicator by plotting these five calculated lines on a price chart:
    Tenkan-sen, which is the conversion line Kijun-sen, known as the base line Senkou span A, known as the Leading Span A Senkou span B, known as the Leading Span B Chikou span, known as the lagging span Once your software calculates and plots the lines, the chart reveals a ‘cloud’ that can be used as a technical indicator. It enables you to see at which point a price might find support or resistance. For instance, an uptrend would be confirmed when Leading Span A (Senkou span A) rises above Leading Span B (Senkou span B) and forms a bullish cloud. Similarly, a downtrend is confirmed if the Leading Span A is falling and drops below the Leading Span B, forming a bearish cloud.
    If you look at the position of the candlestick and it’s above the cloud, then the price will most likely move up. When the price is below the cloud, the trend is most likely moving downwards. On the other hand, if the price is inside the cloud, then the market is in a state of transition.
    The Ichimoku cloud technique is an advanced trading strategy that with practice, you’ll find tends to increasingly become easier to use.
    Trading forex options
    Trading forex options is a means of securing the right to purchase or sell a forex pair at a specified time and at a particular price. As opposed to you settling the transaction at the outset and paying the value across to a third party, forex options give you the choice to purchase or sell at a later date.
    In addition, you’re not obliged to ‘exercise’ your option - and thus put into effect the right to buy or sell the underlying forex pair specified in the options contract - if you choose not to. In this case you’ll only lose the ‘premium’ you paid for the option, i.e. your initial deposit, and your risk is capped at that amount.
    A forex option is an agreement to purchase a currency pair at a predetermined price in the future.
    You may take a long position on the EUR/USD pair at 1.20 but shortly afterwards worry that it may fall to 1.18 in overnight trading. Not wanting to risk too much of your capital, you can decide to place a stop loss at 1.1750, limiting the potential loss to 250 pips.
    Instead of using a stop loss you can purchase an option for the overnight hours with a strike price of 1.1750. If EUR/USD never touches 1.1750 overnight, the only loss would be the relatively small premium paid for the currency option compared to the profit your long EUR/USD position is making. If, however, EUR/USD were to fall to 1.1750, your 250 pips loss would be reduced by the profit you made on your option.
    Forex scalping
    Scalping in forex trading is a style involving you opening and closing multiple positions, lasting seconds or minutes, on one or more currency pairs over the course of a day. Rather than opening a position at the start of a trend and closing it at the end, when scalping you’ll open and close several positions throughout a trend’s course.
    There are several indicators that you can use as part of your forex scalping strategy. These include the use of the Bollinger Bands to indicate areas of market volatility, while moving averages enable you to spot common and emerging market trends. Another indicator is the stochastic oscillator, which compares a forex pair’s current value to its range over a recent period.
    Your objective is to gain just a few pips at a time, looking for multiple small gains rather than fewer larger ones. A ‘pip’ denotes a change in price at the fourth decimal place. For example, if the quoted price of a forex pair decreases from 1.3981 to 1.3980, it has fallen by one pip.
    Scalpers often use CFDs to trade forex pairs that are rising or falling in value. You’ll open a position to ‘buy’ (go long) if you think the price will rise and open a position to ‘sell’ (go short) if you think the price will fall.
    Leveraged products like CFDs enable you to open a position with a deposit, called margin. Your profit or loss is calculated upon the full value of the position, which can amplify your profits – but also magnifies your losses. Therefore, it’s important to have an appropriate risk management strategy in place, no matter which scalping techniques you’re using.
    Nonfarm payrolls (NFP) trading
    NFP is one of the most anticipated indicators of US economic growth in the global forex market. The NFP report shows the number of jobs created in the United States in the non-agricultural sector during the previous month.
    This nonfarm employment change report reflects the level of activity and health of the American economy, which is often factored in by people or institutions when deciding on whether to invest in US dollars vs other global currencies. When more people want to buy the US dollar, the value of the currency rises, and vice versa.
    The monthly NFP data release is important to forex traders as it often creates volatility and enables you to trade on the market reaction to the report, and to leverage your exposure with CFD trading. In doing so, you also have access to extended hours trading on US markets and can trade out of hours on over 70 key US stocks and indices.
    How to start trading using advanced forex techniques
    Open a CFD account to trade forex or practice on a demo account Pick the currency pair you want to trade Choose the way to trade your forex pair – futures, spot or options Place your trade Monitor your position With us, you can trade using advanced forex techniques via CFDs.
    Futures
    Trade futures with us by locking in current forex market prices until you exchange them at a set date via your CFD trading account. With us, you can take a position on the price of forex futures using leveraged products like CFDs.
    When trading with leverage, you’re relieved of any obligation to buy and sell the underlying forex since you won’t be taking outright ownership of the asset. Leverage will magnify your profit, but it’ll also amplify your losses which may exceed the initial deposit – manage your risk carefully.
    Spot forex trading
    Spot forex trading is buying and selling with the intention of taking delivery of the currency pair immediately or ‘on the spot’. It’s popular among day traders, as they can open short-term positions with low spreads and no expiry date.
    You can also trade the spot forex market using leveraged derivatives such as CFDs. In that case, you won’t take ownership or delivery of the underlying currency. But you can still benefit from real-time, continuous pricing that reflects the underlying market.
    You can open a position using a deposit – called margin – which, at the fraction of the underlying market, will increase your exposure to the full value of the market. Note that CFDs use leverage, which can potentially magnify your profits if the market price moves in your favour or amplify your losses should it move against you. Manage your risk carefully.
    Forex options
     
    Forex options are derivative products that enable you to buy and sell currency pairs without being obligated to adhere to an expiry date at a specific or strike price There are two forex option types – puts and calls. With us, you can trade forex put or call options.
    A put option is a contract that will give you as the buyer the right but not the obligation to sell forex at a specific price and expiry date. While a call option will give you the right but not the obligation to buy forex at a specific price and expiry date.
    The value of a put option increases if the asset's market price depreciates. The put option’s value will increase if the forex market price depreciates. On the other hand, a call option’s value appreciates if the forex market price increases.
    CFDs, as leveraged products, will require that you pay an initial deposit or margin to take your position and gain exposure to the forex market. Trading with leverage will amplify your profit or magnify your loss in excess of your initial outlay, remember to make use of our risk management tools.
    Advanced forex trading techniques summed up
    Forex trading is the act of making a prediction on the price movements of currency pairs Advanced forex trading is about having the ability to use multiple tools when you make a trade Advanced forex trading involves the use of a selection of the following techniques: hedging, position trading, FX options, Ichimoku clouds, NFP trading, and scalping Advanced forex trading is about using any of these techniques when placing a trade as an alternate way to make profits and control losses With us, you can trade using advanced forex techniques via CFDs
        This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  22. MongiIG
    Reviewed by Nick Cawley on December 23, 2021
    Traders with a strong understanding of technical indicators are usually better equipped to navigate the financial markets than those that lack this knowledge. While personal investing goals, risk appetite and trading style will help to determine a strategy and trading plan, knowing what technical indicators to use in your approach can help to determine possible entry and exit points.
    Hundreds of technical indicators exist, and clear signals can be identified using effective indicators as part of a strategy. This article will cover six of the most popular technical indicators for stock trading.
    BEST TECHNICAL INDICATORS FOR STOCK TRADING
    For traders looking for the most effective technical indicators, it is important to consider the objectives of the trading strategy as well as the current market condition. For individuals trading individual stocks, it is often beneficial to apply indicators to the stock index in which that share belongs to get a holistic view of the larger market as a whole.
    Below are six of the most popular technical indicators to use when analyzing stocks:
    INDICATOR NAME
    TYPE OF INDICATOR
    CHARACTERISTICS
    Client Sentiment
    Contrarian Indicator
    Shows client positioning of the market Indicates when markets are nearing extremes Leading indicator Useful in trending markets Relative Strength Index (RSI)
    Momentum Oscillator
    Plotted between 0 – 100 Indicates when the market is overbought or oversold Leading indicator Useful in trending markets Stochastic
    Momentum Oscillator
    Plotted between 0 – 100 Consists of two lines, %K and %D line Indicates when the market is overbought or oversold Leading indicator Useful in rangebound markets Simple Moving Average (SMA)
    Trend following indicator
    The SMA represents the average price of a security over a specified period of time Equal weighting is given to all points in the data set Used to confirm the direction of the current trend Lagging indicator Useful in trending markets Exponential Moving Average (EMA)
    Trend following indicator
    The EMA represents the average price of a security over a specified period of time with a greater emphasis on recent prices Higher weighting is given to recent points in the data set Lagging indicator Useful in trending markets Moving Average Convergence Divergence (MACD)
    Momentum oscillator
    The MACD measures both momentum and the trend Overbought and oversold signals occur above and below the zero-line Lagging indicator Useful in trending markets CLIENT SENTIMENT
    Client sentiment data is derived from a brokerage’s execution desk data, measuring live retail client trades to determine possible directional biases in the market. When sentiment is approaching extreme levels, stock traders may begin to see a reversal as more likely which is why it is seen as both a contrarian indicator as well as potentially having a leading component.
    Below is an example of the IG Client Sentiment Index, IG’s sentiment gauge derived from execution desk data, for the Dow Jones index (Ticker: Wall Street). Based on the data below, 64% of traders have short positions which means that majority of traders expect the price of Wall Street to drop. However, sentiment is seen to be bullish, meaning that based on this data the price of Wall Street may be expected to increase. Although it is not advisable to trade-off sentiment (or any individual indicator) alone, an individual who is trading a constituent of the DJIA could use this data as an informative tool before applying additional indicators.

    DailyFX provides client sentiment data which isderived from live IG retail client trades for forex, commodities, cryptocurrencies and major stock indices. Stock sentiment analysis is also available for individual shares on the IG platform where applicable or available.
      RELATIVE STRENGTH INDEX (RSI)
    The relative strength index (RSI) is a momentum oscillator that measures the magnitude of price movements to determine whether a market is overbought or oversold. A market is seen to be oversold when the RSI is below 30 and is overbought when the RSI is above 70. These are key levels could indicate a potential reversal, classifying the RSI as a leading indicator.
    The chart below shows the RSI being applied to the daily chart for Uber Technologies (Ticker: UBER). The RSI trades between 30 and 70 for some time before falling below the 30 level. Below the 30 level, the first signal is a false signal because although it looks like the trend is going to reverse to the upside, the price continues to fall. However, the second signal is present when the RSI is below 30 and turns towards the upside. However, the RSI only confirms the reversal by crossing above the 30 line the next day.

    STOCHASTIC
    The stochastic oscillator is another momentum indicator which is used to determine overbought and oversold conditions when trading stocks. Unlike the RSI which measures the speed of price movements, the stochastic measures current price in relation to its price range over a period of time.
    The %K line (the black line) is calculated by using the latest closing price relative to the lowest low and highest high over a specified period of time and the %D line represents the simple moving average of the %K (three period Simple Moving Average is the most common).With stochastics, a bullish crossover occurs when the %K line (the black line) crosses over and above the %D line (the red dotted line). Likewise, a bearish signal occurs when the %K line crosses under and below the %D line. The strongest signals will often occur when there is a bullish cross-coupled with a move above 20 from below and a bearish signal coupled with a move below 80.
    In the image below, the stochastic indicator is applied to the S&P 500 price chart (Ticker: US 500). As indicated on the chart, a bearish crossover occurs from above the 80 line, indicating that the trend may reverse to the downside. The reversal is then confirmed once the lines cross 80. Likewise, the bullish crossover occurs below 20 and the reversal is confirmed once the 20 line is crossed.

    SIMPLEMOVING AVERAGE (SMA)
    A simple moving average (SMA) is a lagging indicator which represents the average price of a security over a specified period of time. In a trending market, the moving average modulates short-term price fluctuations and allows stock traders to identify the trend in a simplistic way.
    As depicted in the chart below, in a rangebound market, it is also possible to use a moving average to identify support and resistance levels. By applying the 50 day MA to the Boeing price chart, it is clear that the 50-day SMA can also be seen as potential support even as Boeing is trading in a ranging environment.

    EXPONENTIAL MOVING AVERAGE (EMA)
    As with the SMA discussed above, the exponential moving average (EMA) is a lagging indicator which represents the average price of a security over a specified period of time. However, unlike the SMA which gives equal weighting to all data points in the series, the EMA gives more weight to recent prices, removing some of the lag found with a traditional SMA. This makes the EMA an optimal candidate for trend trading as it allows traders to get a holistic view of the market without missing out on opportunities with may be due to the lag of a simple moving average.
    MACD
    The MACD (moving average convergence/divergence) is a technical indicator that can be used to measure both momentum and the strength of the trend. The MACD displays a MACD line (blue), signal line (red) and a histogram (green) which shows the difference between the MACD line and the signal line.
    The MACD line is the difference between two exponential moving averages (the 12 and 26 period moving averages using common default settings), whilst the signal line is generally a 9-period exponentially average of the MACD line. These lines waver in and around the zero line, giving the MACD the characteristics of an oscillator with overbought and oversold signals occurring above and below the zero-line respectively.
    With reference to the chart below, featuring Apple, Inc. (Ticker: AAPL):
    A bullish signal is present when the MACD line crosses ABOVE the signal line from BELOW the zero line. A bearish signal is present when the MACD line crosses BELOW the signal line from ABOVE the zero line.
    TECHNICAL INDICATORS FAQ’S
    What is the difference between a leading and a lagging indicator?
    Although leading and lagging indicators are both derived from historic price data, a leading indicator is used to indicate expected price movements in the market while lagging indicators are used to provide entry and exit signals once the trend has been identified.
    Although similarities and differences exist between the two, both are equally important and it is often beneficial for traders to use both leading and lagging indicators simultaneously.
    FURTHER READING ON STOCK TRADING
    Learn how to apply stock market sentiment analysis Explore the differences between stock trading and investing Bookmark our guide to stock market trading hours  
    Dec 29, 2021 |  Tammy Da Costa, Analyst. DailyFX
  23. MongiIG
    - Reviewed by James Stanley, Nov. 24, 2021
    The video above focuses on the main aspects of the trading checklist and this article seeks to unpack further aspects of the trading checklist in greater detail.
    WHY YOU SHOULD USE A TRADING CHECKLIST
    Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. Maintaining a trading checklist presents traders with a list of questions that traders need to answer before executing trades.
    It is important not to confuse a trading plan with the trading checklist. The trading plan deals with the big picture, for example, the market you are trading and the analytical approach you choose to follow. The trading checklist focuses on each individual trade and the conditions that must be met before the trade can be made.
    YOUR TRADING CHECKLIST
    Before entering a trade, ask yourself the following questions:
    Is the market trending or ranging? Is there a significant level of support or resistance nearby? Is the trade confirmed by an indicator? What is the risk to reward ratio? How much capital am I risking? Are there any significant economic releases that can impact the trade? Am I following the trading plan? 1) IS THE MARKET TRENDING OR RANGING?
    Trending markets
    Experienced traders know that finding a strong trend and trading in the trend’s direction, has the potential to lead to higher probability trades.
    There is a well-known saying that trending markets have the ability to bail traders out of bad entries. As can be seen below, even if a trader entered a short trade after the trend was well established, the trend would continue to provide more pips to the downside than to the upside.
    Traders need to ask themselves if the market is exhibiting signs of a strong trend and whether ‘trend trading’ forms part of the trading plan.

    Ranging markets
    Ranging markets tend to see price bounce between support and resistance to trade within a channel. Certain markets, like the Asian trading session, tend to trade in ranges. Oscillating indicators (RSI, CCI and Stochastic) can be of great use to traders that focus on range trading.

    2) IS THERE A SIGNIFICANT LEVEL OF SUPPORT OR RESISTANCE NEARBY?
    Price action tends to respect certain price levels for a number of reasons and being able to identify these levels is key. Traders do not want to be holding a short position after price has dropped to the key level of support, only to bounce back higher.

    The same applies when price approaches a key level of resistance and typically drops lower shortly after. Trend traders typically look for sustained breaks of these levels as an indication that the market may start to trend. Range traders will on the other hand, look for price to bounce between support and resistance for prolonged periods.
    3) IS THE TRADE CONFIRMED BY AN INDICATOR?
    Indicators assist traders in confirming high probability trades. Depending on the trading plan and strategy, traders will have one or two indicators that complement the trading strategy. Do not fall into the trap of over-complicating the analysis by adding multiple indicators to a single chart. Keep the analysis clean and simple and easy to view at a glance.
    4) WHAT IS THE RISK TO REWARD RATIO?
    The risk to reward ratio is the ratio of the number of pips that traders will risk in the hopes of reaching the target. According to our Traits of Successful Traders research, which analysed over 30 million live trades, traders with a positive risk to reward ratio were nearly three times more likely to be profitable than those who do not. For example, a 1:2 ratio means that a trader risks half of what he/she stands to gain if the trade works out. The image below further depicts this principle.

    5) HOW MUCH CAPITAL AM I RISKING?
    It is essential for traders to ask this question. Often traders blow up their accounts by leveraging the account to the maximum when chasing “sure things”. One way to avoid this is to limit the leverage used on all trades to ten to one, or less. Another helpful tip is to set stops on all trades and ensure that the aggregate amount risked is no more then 5% of the account balance.
    Before placing a trade, ask yourself, “how much capital should I use?”
    6) ARE THERE ANY SIGNIFICANT ECONOMIC RELEASES THAT CAN IMPACT THE TRADE?
    Sudden market news has the potential to invalidate the “perfect” trade. While it is almost impossible to anticipate things like, acts of terror, natural disasters or systemic failures in the financial markets, traders can plan for economic releases like NFP, CPI, PMI and GDP releases.
    Plan ahead by viewing our economic calendar which highlights major economic releases from the top trading nations
    7) AM I FOLLOWING THE TRADING PLAN?
    All of the above is of very little use if it does not tie in with the trading plan. Deviating from the trading plan will result in mixed results and only frustrate the trading process. Keep to the trading plan and do not place trades unless the trading checklist has been completed and confirms the trade may be executed.
    TRADING CHECKLISTS: A SUMMARY
    Having a trading checklist does not automatically mean all trades will become winning trades. It will however help traders to stick to the trading plan, trade with more consistency, and avoid impulsive or reckless trades. At DailyFX we have dedicated a podcast to the trading plan and how to create one. Document your trades and stay accountable with the help of a trading journal. By Richard Snow, Analyst, 19th December 2021. DailyFX

  24. MongiIG

    A Guide to Trading Psychology

    By MongiIG,


    Analyst piece
    TRADING PSYCHOLOGY: BEYOND THE BASICS
    The psychology of trading is often overlooked but forms a crucial part of a professional trader’s skillset. DailyFX is the perfect place to learn how to manage your emotions and hone your trading psychology; our analysts have already experienced the ups and downs, so you don’t have to.
    Keep reading to discover their top tips, and to learn more about:
    What is trading psychology How to get in the mindset of a successful trader The basics of trading psychology Trading psychology tools and techniques Learn more about the realities of trading in our ‘Day in the Life of a Trader’ videos.
    Unsure of what trading style to employ? Discover your niche with our DNA FX Quiz!
    WHAT IS TRADING PSYCHOLOGY?
    Trading psychology is a broad term that includes all the emotions and feelings that a typical trader will encounter when trading. Some of these emotions are helpful and should be embraced while others like fear, greed, nervousness and anxiety should be contained. The psychology of trading is complex and takes time to fully master.
    In reality, many traders experience the negative effects of trading psychology more than the positive aspects. Instances of this can appear in the form of closing losing trades prematurely, as the fear of loss gets too much, or simply doubling down on losing positions when the fear of realizing a loss turns to greed.
    One of the most treacherous emotions prevalent in financial markets is the fear of missing out, or FOMO as it is known. Parabolic rises entice traders to buy after the move has peaked, leading to huge emotional stress when the market reverses and moves in the opposite direction.
    Traders that manage to benefit from the positive aspects of psychology, while managing the bad aspects, are better placed to handle the volatility of the financial markets and become a better trader.
    THE BASICS OF TRADING PSYCHOLOGY
    Managing emotions
    Fear, greed, excitement, overconfidence and nervousness are all typical emotions experienced by traders at some point or another. Managing the emotions of trading can prove to be the difference between growing the account equity or going bust.
    Understanding FOMO
    Traders need to identify and suppress FOMO as soon as it arises. While this isn’t easy, traders should remember there will always be another trade and should only trade with capital they can afford to lose.

    Avoiding trading mistakes
    While all traders make mistakes regardless of experience, understanding the logic behind these mistakes may limit the snowball effect of trading impediments. Some of the common trading mistakes include: trading on numerous markets, inconsistent trading sizes and overleveraging.
    Overcoming greed
    Greed is one of the most common emotions among traders and therefore, deserves special attention. When greed overpowers logic, traders tend to double down on losing trades or use excessive leverage in order recover previous losses. While it is easier said than done, it is crucial for traders to understand how to control greed when trading.
    Importance of consistent trading
    New trades often tend to look for opportunities wherever they may appear and get lured into trading many different markets, with little or no regard for the inherent differences in these markets. Without a well thought out strategy that focuses on a handful of markets, traders can expect to see inconsistent results. Learn how to trade consistently.
    “Trade according to your strategy, not your feelings” – Peter Hanks, Junior Analyst

    Debunking Trading Myths
    As individuals we are often influenced by what we hear and trading is no different. There are many rumours around trading such as: traders must have a large account to be successful, or that to be profitable, traders need to win most trades. These trading myths can often become a mental barrier, preventing individuals from trading.
    Get clarity on forex trading truths and lies from our analysts.
    Implementing risk management
    The significance of effective risk management cannot be overstated. The psychological benefits of risk management are endless. Being able to define the target and stop loss, up front, allows traders to breathe a sigh of relief because they understand how much they are willing to risk in the pursuit of reaching the target. Another aspect of risk management involves position sizing and its psychological benefits:
    “One of the easiest ways to decrease the emotional effect of your trades is to lower your trade size” – James Stanley, DFX Currency Strategist

    HOW TO GET IN THE MINDSET OF A SUCCESSFUL TRADER
    While there are many nuances that contribute to the success of professional traders, there are a few common approaches that traders of all levels can consistently implement within their particular trading strategy.
    1) Bring a positive attitude to the markets every day. This may seem obvious, but in reality, keeping a positive attitude when speculating in the forex market is difficult, especially after a run of successive losses. A positive attitude will keep your mind clear of negative thoughts that tend to get in the way of placing new trades.
    2) Put aside your ego. Accept that you are going to get trades wrong and that you may even lose more trades than you win. This may seem like all bad news but with discipline and prudent risk management, it is still possible to grow account equity by ensuring average winners outweigh the average losses.
    3) Do not trade for the sake of trading.You can only take what the market gives you. Some days you may place fifteen trades and in other instances you may not place a single trade for two weeks. It all depends what is happening in the market and whether trade set ups - that align with your strategy - appear in the market.
    “Trade decisions are not binary, long vs short. Sometimes doing nothing is the best trade you can make” – Ilya Spivak, Senior Currency Strategist

    4) Do not get despondent. This may seem similar to the first point but actually deals with thoughts of quitting. Many people see trading as a get rich quick scheme when in fact, it is more of a journey of trade after trade. This expectation of instant gratification often leads to frustration and impatience. Remember to stay disciplined and stay the course and view trading as a journey.
    TRADING PSYCHOLOGY TOOLS AND TECHNIQUES
    At DailyFX we have a whole library of content dedicated to the psychology in trading. Take some time to work through the following topics:
    Listen to our podcast on how to create a trading plan Learn how to create and maintain a trading journal Avoid the #1 mistake traders make by adopting the traits of successful traders Setting a stop loss instead of a mental stop loss is a great way to avoid runaway losses.  
    Dec 27, 2021 by Richard Snow, Analyst. DailyFX
  25. MongiIG
    The DXY is on the rise amidst ongoing debt ceiling negotiations; the Euro Area faces its own economic woes, further propelling the USD's value and China's slowdown fears are adding to the increasing support for the USD.
      Source: Bloomberg
      Forex United States dollar United States Euro China Debt
     Tony Sycamore | Market Analyst, Australia | Publication date: Wednesday 24 May 2023  Impasse in debt ceiling negotiations
    Last week’s optimism towards a debt ceiling deal faded overnight as another day of talks failed to deliver progress towards an agreement.
    While US President Joe Biden and House Speaker McCarthy have projected optimism and agreed that default is not an option, the market is now at the point where it wants a little less conversation, a little more action.
    Market reaction and dollar rise amid global economic concerns
    Specifically, the continued impasse is now viewed as bad news and overnight generated a traditional risk-off response of lower equities and a higher US dollar. Although we hasten to add, it’s not just the debt ceiling debacle and risk aversion that is driving the US dollar higher.
    The US dollar index (DXY) includes a 57% weighting of the euro. Earlier this month, the first cracks in the Euro Area growth story emerged as Euro Area industrial production fell by 4.1% m/m, the steepest drop since March 2020.
    The cracks deepened overnight as the Euro Area Manufacturing PMI fell to 44.6 in May, which, apart from the Covid pandemic in early 2020, was the weakest since July 2012.
    Impact of China's slowdown on the US dollar
    The US dollar is also receiving support from China slow down concerns. USD/CNY closed yesterday at its highest level since December. The Chinese currency, the yuan, has now given back all its gains and more since the China re-opening in early December.
    Should the slowdown in China and the Euro Area deepen, the anti-cyclical US dollar will continue to rise in the medium term.
    Short-term prospects of US dollar: Focus on FOMC meeting
    Looking ahead in the short term, aside from the impacts of the debt ceiling discussions, the US dollar's upward trajectory hinges on the forthcoming disclosure of the Federal Open Market Committee (FOMC) meeting minutes.
    Market participants are keenly interested in understanding the specifics that could prompt a hold or even a further tightening in monetary policy. Equally important is the committee's perspective on the Senior Loan Officer Opinion Survey (SLOOS) data.
    Another critical factor to consider is whether the Federal Reserve staff's expectation of a modest recession for this year is still valid.
    DXY technical analysis
    In 2023, the US dollar index, the DXY, tested and held support at 101.00/80 on three separate occasions, providing evidence of a base.
    After an encouraging rally in May, the DXY is now eyeballing downtrend resistance at 104.00, coming from the September 114.78 high.
    While it would be highly unusual to see a clean break of a significant technical level on the first attempt in these types of finicky markets, a sustained break of 104 would likely be the catalyst for the DXY to extend its rally towards significant resistance at 105.80/106.00 coming from the March 105.88 high and the 200-day moving average.
    DXY daily chart
      Source: TradingView
    EUR/USD technical analysis
    In our last update on the EUR/USD in early May here, we noted the struggle that the EUR/USD was having with monthly resistance at 1.1075/95ish coming from October 2000 .8231 low.
    Furthermore, a break of uptrend support at 1.0990/80 would indicate that a corrective pullback was underway towards 1.0800.
    With the bit between its teeth and EA and China growth concerns rising and after reaching the 1.0800 level noted above, the market will likely set its sights on the March 1.0516 low in the sessions ahead.
    EUR/USD daily chart
      Source: TradingView
    TradingView: the figures stated are as of April 24, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.  

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