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AndaIG

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  1. AndaIG
    ‘FED PIVOT’ IN THE REAR VIEW MIRROR AS USD RETAKES THE DRIVING SEAT
    With euro fundamentals seemingly unchanged for now, markets turned their attention to a whole host of Fed officials as they remain united in the direction of future rate hikes but divided on the terminal rate.
    George, Kashkari, Daly and Bullard all had their say with Daly perhaps the most cautious in her message of not wanting to “overdo policy”, while Bullard remained true to his hawkish tag, stating that he is keen on 75 bps in September.
    European Central Bank (ECB) board member Isabel Schnabel was also interviewed by Reuters yesterday, where she expressed concern over the unchanged risks to the long-term inflation outlook and the depreciation of the euro. Typically, the ECB does not comment on forex levels but there are instances when a general trend of appreciation or depreciation can affect monetary policy objectives. Schnabel expressed concern regarding the weaker euro against the dollar as a large share of euro area energy imports are invoiced in US dollars – making those purchases more expensive when EUR/USD declines.
    The daily EUR/USD chart shows yesterday’s rather large drop in the pair, beyond the 1.0100 mark. This level seemed to prop up prices as the pair consolidated largely between 1.0100 and 1.0200. Now, the pair looks to have parity in its sights but a rather slow follow through from yesterday appears to be preventing such a move this week.
    Spare a thought for the seasonally lower liquidity experienced around the summer months particularly when considering major risk events towards the end of next week. Lower liquidity has the potential to facilitate short bursts of volatility so keep an eye out for scheduled and unscheduled risk events/themes.
    Support lies at 1.000 (parity), while 1.0100 remains the nearest level of resistance followed by 1.0180 and 1.0280.
    EUR/USD Daily Chart

    Source: TradingView, prepared by Richard Snow
    The 4-hour chart highlights yesterday’s move after we saw a number of upper wicks around that 1.0180 level (red dotted line) suggesting a rejection of higher prices.
    EUR/USD 4-Hour Chart

    Source: TradingView, prepared by Richard Snow
    MAIN RISK EVENTS FOR THE WEEK AHEAD
    The week starts off with a slew of PMI data then on Wednesday we have the final print of German GDP for Q2 and the 2nd estimate of US Q2 GDP which is forecast to have improved but still remains negative.
    However, the big-ticket item of US PCE inflation data is due on Friday and will be monitored with great interest after we saw a slightly cooler CPI print last week. Another softer print could see more short-term USD selling after the dollar more than recovered from its last dip.
    Not to forget that Thursday marks the start of the annual Jackson Hole Economic Symposium which has ben seen by some as a pseudo-Fed meeting as it has previously provided a platform for some of the world’s top central bankers to share their views. Jerome Powell is scheduled to speak on Friday the 26th of August.

    Written by: Richard Snow, Analyst Daily FX
    Source: Daily FX
  2. AndaIG
    HAT IS CONTRACTIONARY MONETARY POLICY?
    Contractionary monetary policy is the process whereby a central bank deploys various tools to lower inflation and the general level of economic activity. Central banks do so through a combination of interest rate hikes, raising the reserve requirements for commercial banks and by reducing the supply of money through large-scale government bond sales, also known as, quantitative tightening (QT).

    It may seem counter-intuitive to want to lower the level of economic activity but an economy operating above a sustainable rate produces unwanted effects like inflation – the general rise in the price of typical goods and services purchased by households.
     
    Therefore, central bankers employ a number of monetary tools to intentionally lower the level of economic activity without sending the economy into a tailspin. This delicate balancing act is often referred to as a ‘soft landing’ as officials purposely alter financial conditions, forcing individuals and businesses to think more carefully about current and future purchasing behaviors.
    Contractionary monetary policy often follows from a period of supportive or ‘accommodative monetary policy’ (see quantitative easing) where central banks ease economic conditions by lowering the cost of borrowing by lowering the country’s benchmark interest rate; and by increasing the supply of money in the economy via mass bond sales. When interest rates are near zero, the cost of borrowing money is almost free which stimulates investment and general spending in an economy after a recession.
    CONTRACTIONARY MONETARY POLICY TOOLS
    Central banks make use of raising the benchmark interest rate, raising the reserve requirements for commercial banks, and mass bond sales. Each is explored below:
    1) Raising the Benchmark Interest Rate
    The benchmark or base interest rate refers to the interest rate that a central bank charges commercial banks for overnight loans. It functions as the interest rate from which other interest rates are derived from. For example, a mortgage or personal loan will consist of the benchmark interest rate plus the additional percentage that the commercial bank applies to the loan to provide interest income and any relevant risk premium to compensate the institution for any unique credit risk of the individual.
    Therefore, raising the base rate leads to the elevation of all other interest rates linked to the base rate, resulting in higher interest related costs across the board. Higher costs leave individuals and businesses with less disposable income which results in less spending and less money revolving around the economy.

    2) Raising Reserve Requirements
    Commercial banks are required to hold a fraction of client deposits with the central bank in order to meet liabilities in the event of sudden withdrawals. It is also a means by which the central bank controls the supply of money in the economy. When the central bank wishes to reign in the amount of money flowing through the financial system, it can raise the reserve requirement which prevents the commercial banks from lending that money out to the public.
    3) Open Market Operations (Mass Bond Sales)
    Central banks also tighten financial conditions by selling large amounts of government securities, often loosely referred to as ‘government bonds’. When exploring this section, we will consider US government securities for ease of reference but the principles remain the same for any other central bank. Selling bonds means the buyer/investor has to part with their money, which the central bank effectively removes from the system for a long period of time during the lifetime of the bond.
     
    THE EFFECT OF CONTRACTIONARY MONETARY POLICY
    Contractionary monetary policy has the effect of lowering economic activity and lowering inflation.
    1) Effect of Higher Interest Rates: Higher interest rates in an economy make it more expensive to borrow money, meaning large scale capital investments tend to slow down along with general spending. On an individual level, mortgage payments rise, leaving households with lower disposable income.
    Another contractionary effect of higher interest rates is the higher opportunity cost of spending money. Interest-linked investments and bank deposits become more attractive in a rising interest rate environment as savers stand to earn more on their money. However, inflation still needs to be taken into account as high inflation will still leave savers with a negative real return if it is higher than the nominal interest rate.

    2) Effect of Raising Reserve Requirements: While reserve requirements are used to provide a pool of liquidity for commercial banks during times of stress, it can also be altered to control the supply of money in the economy. When the economy is overheating, central banks can raise reserve requirements, forcing banks to withhold a larger portion of capital than before, directly reducing the amount of loans banks can make. Higher interest rates combined with fewer loans being issued, lowers economic activity, as intended.
    3) Effect of Open Market Operations (Mass Bond Sales): US treasury securities have different lifespans and interest rates (‘T-bills’ mature anywhere between 4 weeks to 1 year, ‘notes’ anywhere between 2- 10 years and ‘bonds’ 20 to 30 years). Treasuries are considered to be as close as you can get to a ‘risk-free’ investment and therefore are often used as benchmarks for loans of corresponding time horizons i.e., the interest rate on a 30-year treasury bond can be used as the benchmark when issuing a 30-year mortgage with an interest rate above the benchmark to account for risk.
    Selling mass amounts of bonds lowers the price of the bond and effectively raises the yield of the bond. A higher yielding treasury security (bond) means it’s more expensive for the government to borrow money and therefore, will have to reign in any unnecessary spending.
    EXAMPLES OF CONTRACTIONARY MONETARY POLICY
    Contractionary monetary policy is more straight forward in theory than it is in practice as there are plenty of exogenous variables that can influence the outcome of it. That is why central bankers endeavor to be nimble, providing themselves with options to navigate unintended outcomes and tend to adopt a ‘data-dependent’ approach when responding to different situations.
    The example below includes the US interest rate (Federal funds rate), real GDP and inflation (CPI) over 20 years where contractionary policy was deployed twice. Something crucial to note is that inflation tends to lag the rate hiking process and that is because rate hikes take time to filter through the economy to have the desired effect. As such, inflation from May 2004 to June 2006 actually continued its upward trend as rates rose, before eventually turning lower. The same is observed during the December 2015 to December 2018 period.
     
    Chart: Example of Contractionary Monetary Policy Examined

    Source: Refinitiv Datastream
    In both of these examples, contractionary monetary policy was unable to run its full course as two different crises destabilized the entire financial landscape. In 2008/2009 we had the global financial crisis (GFC) and in 2020 the spread of the coronavirus rocked markets resulting in lockdowns which halted global trade almost overnight.
    These examples underscore the difficult task of employing and carrying out contractionary monetary policy. Admittedly, the pandemic was a global health crisis and the GFC emanated out of greed, financial misdeeds and regulatory failure. The most important thing to note from both cases is that monetary policy does not exist in a bubble and is susceptible to any internal or external shocks to the financial system. It can be likened to a pilot flying under controlled conditions in a flight simulator compared to a real flight where a pilot may be called upon to land a plane during strong 90 degree crosswinds.
    Written by: Richard Snow, Analyst Daily FX
    Source: Daily FX
  3. AndaIG
    The US Dollar remains fragile after US PPI eased in July. In a remarkedly similar response to soft CPI data the day before, markets extrapolated a less hawkish Federal Reserve going forward.
    This notion was once again shot down, this time by San Francisco Federal Reserve Bank President Mary Daly in an interview with Bloomberg television after the New York close.
    She said that a 50 basis point (bp) lift to rates is her base case at the September Federal Open Market Committee (FOMC) meeting. She didn’t rule out a 75 bp hike, saying that she was open to it.
    While she welcomed the latest CPI and PPI numbers, she made the point that there are many factors that the Fed will consider in their decision-making. A couple of favourable data points alone are not enough to convince the board that they have had a ‘victory’ over inflation.
    She sees the Fed funds rate at 3.4% by the end of the year. The next FOMC meeting will be in late September. There will be another set of inflation figures and jobs data between now and then, as well as a plethora of other economic data and the annual symposium in Jackson Hole, Wyoming. The gathering is often used as the venue to unveil the broad trajectory for policy in the coming year.
    Wall Street closed their cash session pretty flat across the main indices and APAC mostly followed that lead.
    Japan’s Nikkei 225 was the exception, adding over 2.5% to post a seven-month high. They have returned from yesterday’s holiday, and it appears to be a catch-up rally.
    Crude oil prices eased through the Asian session after an OPEC report said that they anticipate a supply overhang into the third quarter. The nearest to maturity WTI futures contract is under US$ 94 bbl, while the Brent contract is near US$ 99 bbl.
    In currencies, the New Zealand Dollar has been the best performer so far today, adding to overnight gains ahead of the RBNZ monetary policy meeting this Wednesday. The market is forecasting a 50 bp rate rise there. Gold is steady around US$ 1791 an ounce.
    After UK GDP and industrial production figure, the US will get some jobs numbers and the University of Michigan consumer sentiment index release.
     
    US DOLLAR (DXY) TECHNICAL ANALYSIS
    The US Dollar (DXY) index has held above an ascending trend line in recent days, and it may continue to provide support. It currently dissects at the same level as the previous low at 104.64.
    Further down, the prior lows at 103.67 and 103.42 might provide support. On the topside, resistance could be offered at the recent peaks of 106.93 and 107.43.
     

    Chart created in TradingView
    Written by: Daniel McCarthy, Strategist Daily FX
    Source: Daily FX
  4. AndaIG
    Crude oil is steady through the Asian session ahead of the all-important US CPI later today.
    This is despite the American Petroleum Institute (API) reporting that inventory of US crude increased by 2.2 million barrels last week, a large difference from the forecast 400k decrease.
    The increase in stockpiles may have been offset by news that a Russian oil pipeline to central Europe had been shut down last week. The WTI futures contract is near US$ 90 bbl and the Brent contract is above US$ 96 bbl.
    APAC equity indices are in the red today, with Hong Kong’s Hang Seng Index (HSI) leading the way lower, down over 2%. This follows on from a mixed day on Wall Street, with the Dow and S&P 500 little moved but the Nasdaq down 1.19% in the cash session.
    A higher interest rate environment creates headwinds for technology stocks and the sector wasn’t helped by news that Elon Musk sold US$ 6.9 billion of Tesla stock at the end of last week.
    US President Joe Biden announced a US$ 52 billion subsidy for domestic chips manufacturing.
    He said that China actively lobbied American business groups against the bill.
    The Chinese property sector remains in the spotlight with Beijing announcing a review into the US$ 3 trillion trust industry by the National Audit Office.
    It is being reported that part of the probe will focus on the US$ 100 billion that President Xi Jinping allocated toward developing chip manufacturing capabilities.
    Earlier today, Chinese CPI year-on-year to the end of July came in at 2.7%, instead of 2.9% and 2.5% previously. PPI over the same period saw 4.2% appreciation, rather than 4.9% forecast and 6.1% prior.
    Gold is steady, trading around US$ 1,790 an ounce and currency markets have been very quiet ahead of the much-anticipated US CPI later today, and the market is looking at a softer headline expected but a softer core appears to be in store.
    According to a Bloomberg survey, the market is anticipating headline year-on-year US CPI to be 8.7%.
    Treasury yields have been relatively calm going into today’s data with the most significant move being the inversion of the 2s 10s part of the curve as it approaches -50-basis points.
     
    WTI CRUDE OIL TECHNICAL ANALYSIS
    The 21-day simple moving average (SMA) is approaching the 200-day SMA.
    If it should move below it, this would create a Death Cross which may indicate bearish momentum is evolving.
    Support could be at last Friday’s low of 87.01 or January’s low of 81.90. On the topside, resistance might be at the break point of 92.93, which is just above yesterday’s high.
    Chart created in TradingView
    Written by: Daniel McCarthy, Strategist Daily FX
    Source: Daily FX
  5. AndaIG
    EUR/CHF made a 7.5-year low at the end of last month at 0.9699, moving below the previous low of 0.9804.
    Since breaking lower, the price has not managed to reclaim 0.9804 and it may continue to offer resistance. The 21-day Simple Moving Averages (SMA)is currently at that level, potentially adding resistance.
    Further up, the recent peak of 0.9957 might offer resistance ahead of the break point at 0.9973.
    In the last session, the price has crossed below the 10-day SMA and remains below the 21-, 55-, 100- and 200-day SMAs.
    A bearish triple moving average (TMA) formation requires the price to be below the short term SMA, the latter to be below the medium term SMA and the medium term SMA to be below the long term SMA. All SMAs also need to have a negative gradient.
    Looking at EUR/CHF, the criteria for a bearish TMA has been met and may indicate that bearish momentum could evolve further.
    Support might be at the recent low of 0.9699 or further down at the 161.8% Fibonacci Extension of 0.9638.
     
    Chart created in TradingView 
    USD/CHF TECHNICAL ANALYSIS
    USD/CHF has bounced off low made at the start of this month at 0.9470 to trade in a wide range of 0.9545 – 0.9650. These levels might provide support and resistance respectively.
    While the price is below all short-, medium- and long-term Simple Moving Averages (SMA), they have positive and negative gradients. This may suggest a lack of conviction for directional momentum that might see further range trading.
    Re-iterating this possibility is the price criss-crossing the 10-day SMA. Recent history has shown that when the price crosses the 10-day SMA, momentum in that direction continues. That is not the case over the last week.
    The recent low of 0.9470 may provide support ahead of the break point at 0.9460. On the topside, resistance might be at the break point of 0.9710 or the July peak of 0.9886.
     Chart created in TradingView
    Daniel McCarthy, Strategist Daily FX
    Source: Daily FX
  6. AndaIG
    Crude oil made a 6-month low overnight with the WTI futures contract trading as low as US$ 87.55 bbl. The slide follows on from data earlier in the week that showed a build-up of inventory in the US. It has managed a small bounce in Asia today.
    The EU, US and Iran are holding talks in Vienna in an effort to come to an agreement on Iran’s nuclear program and to bring their oil production back to global markets.
    Libya appears to have resolved domestic political tensions and is set to resume production that could bring up to a million barrels per day back to the global market.
    Going into the New York close the US Dollar was mostly lower against all the majors, with the exception of the Canadian Dollar and Norwegian Krone that were undermined by the lower oil price.
    Currencies have had a fairly quiet session in Asia, although the Japanese Yen and the New Zealand Dollar gave up some ground. Sterling is steady after yesterdays 50-basis point hike by the Bank of England, as anticipated.
    Gold has held onto yesterday’s gains, trading above US$ 1,790 an ounce.
    Cleveland Federal Reserve Bank President Loretta Mester joined the chorus overnight, singing from the hawk hymn book that other Fed speakers have been preaching from all week.
    The 10-year Treasury note is yielding just below 2.70% and the widely followed 2s 10s yield curve spread remains inverted at around -0.37%. Such an inversion is seen as potentially signaling that an economic slowdown is on its way.
    The Nasdaq is ignoring such a notion, adding 0.41% in the cash session and the futures contract is trading in the green into the European session.
    The S&P 500 and the Dow Jones index finished slightly lower but are both edging higher in futures pricing. Tesla shareholders approved a 3:1 stock split and CEO Elon Musk said that he sees a mild recession ahead.
    APAC equities have had a quiet day, reflecting the mixed lead from Wall Street. Japan have said that they believe China launched ballistic missiles that flew over Taiwanese waters.
    All eyes will be on US non-farm payrolls later today, as well as Canadian jobs data.
    CRUDE OIL TECHNICAL ANALYSIS
    The slide lower in crude oil paused ahead of the mid-February low of 87.46 to trade down to 87.55 overnight. Those level may continue to provide support. Further down, the January low of 81.90 might provide support.
    On the topside, resistance could be at the break points of 90.56 and 92.93.

    Written by: Daniel McCarthy, Strategist Daily FX
    Source: Daily FX
  7. AndaIG
    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.

    Written by: Tyler Yell ( Currency Strategist, Daily FX)
    Source: Daily FX
  8. AndaIG

    How to Manage Fear and Greed in Trading

    By AndaIG,


    Analyst piece
    MANAGING FEAR AND GREED WHILE TRADING: MAIN TALKING POINTS
    Fear and greed are two drivers that influence our everyday lives These influences carry over to trading and can be detrimental Traders can remove these drivers by looking at the big picture and planning ahead Fear and greed are often identified as the main drivers of financial markets. This is clearly an oversimplification, however fear and greed do play an important role in the psychology of trading. Understanding when to embrace or tame these emotions could prove to be the difference between a successful trade and a short-lived trading career.
    Keep reading to learn more about fear and greed in trading, including when these emotions are likely to surface and how best to manage them.
    THE TRUTH ABOUT FEAR AND GREED WHILE TRADING
    ‘Fear and greed’ can be commonplace among traders and can be rather damaging if not managed properly. Fear is often observed as the reluctance to enter a trade or the closing of a winning trade prematurely. Greed on the other hand manifests when traders add more capital to winning trades or over-leverage with the aim to profit from small moves in the market.
    There are numerous traces of the origins of these two drivers, but when analyzed logically greed and fear both stem from the innate human instinct of survival.
    What is fear?
    We know that fear is somewhat related to the fight-or-flight instinct that exists in each and every one of us. It is what we feel when we recognize a threat. Traders experience fear when positions move against them as this poses a threat to the trading account.
    Watching a position move against you invokes the fear of realizing that loss and so traders tend to hold on to losing positions for much longer than they should. In fact, this was discovered as the number one mistake traders make when DailyFX researched over 30 million live trades to unearth the Traits of Successful Traders.
     
    A second scenario where fear tends to get the better of traders is right before entering the market. Despite the analysis pointing towards a strong entry, traders may find themselves bogged down by the fear of loss and end up walking away from a well thought out trade.
    Fear is often present when markets have crashed and traders are reluctant to buy at the bottom. In this scenario traders often decide not to enter a trade out of fear that the market will drop further and miss out on the rise higher.
    What is greed?
    Greed is very different to fear but can easily land traders in as much hardship if not managed appropriately. It tends to arise when a trader decides to take advantage of a winning trade by devoting more money to the same trade, in the hope that the market will continue to move in the trader’s favor.
    Greed can also surface when traders experience a losing trade and decide to ‘double down’, in the hope that throwing more money at the problem will help the position turn positive. From a risk management point of view this is very risky if the market continues to move against the trader and can quickly turn into a margin call.
     
    Greed has appeared many times in the financial markets. one such time was during the dot-com bubble where individuals bought more and more internet stocks and inflated their value tremendously before it all came crashing down. A more recent example is bitcoin; investors piled into the cryptocurrency thinking it could only increase in value before it too came crashing down.
    Learn more about major financial bubbles, crises and flash crashes.
    HOW TO MANAGE GREED AND FEAR TO BE A SUCCESSFUL TRADER
    There are several ways to take control of your emotions and make sure fear and greed do not influence your trading decisions or overall success.
    1) Have a Trading Plan
    Traders should have a trading plan in place to avoid any emotional impulses that deviate from the plan. Some examples of this include: overleveraging, removing stops on losing positions, doubling down on losing positions.
    2) Lower Trade Sizes
    “One of the easiest ways to decrease the emotional effect of your trades is to lower your trade size” – James Stanley, DFX Currency Strategist
    This was one of the many good points made in our article focusing on managing the emotions of trading.
    Furthermore, the article continues to state that placing a large trade on a demo account will not result in any lost sleep, as there is no actual financial risk. However, traders will most certainly experience stress after witnessing price swings on a large live trade. Such stress has the potential to lead to bad decisions which may impact the trading account negatively, so it is crucial to keep these in check.
    3) Keep a Trading Journal
    Traders also need to be accountable to themselves when trading. The best way to do this is to create a trading journal. Trading journals assist traders to record their trades and make note of what is working and rectify strategies that aren’t. Its important to remove all emotion when evaluating the results of your trades and cut unsuccessful strategies.
    If you’re a currency trader, read our guide to keeping a forex trading journal.
    4) Learn From Others
    At DailyFX we set out to discover what had worked for traders in the past so that others may be able to benefit from those traits in the future. The result of this is the Traits of Successful Traders research.
    This research shows that emotion plays a significant part in trading, as it was found that on average, traders lost money even though there were more winning trades than losing trades. This was because the losing trades outweighed winning trades i.e. traders stood to lose more when the market went against them than they would receive if the market moved in the traders’ direction.
    Traders can look to tackle fear and greed in trading by instituting the thesis from this research, stated by David Rodriguez as:
    ‘Traders are right more than 50% of the time but lose more money on losing trades than they win on winning trades. Traders should use stops and limits to enforce risk/reward ratio of 1:1 or higher.’
    Written by Richard Snow (Daily FX, Analyst)
    Source: Daily FX
  9. AndaIG
    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 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 practices to mitigate the risk of a false breakout and ensure a positive risk to reward ratio is maintained on all trades. Written by: Richard Snow (Analyst, Daily FX)
    Source: Daily FX
  10. AndaIG
    DOW JONES, ASX 200, HANG SENG, RETAIL EARNINGS, TECHNICAL ANALYSIS – ASIA PACIFIC INDICES BRIEFING
    Dow Jones soars on rosy retail earnings as Wall Street aims for a strong week Traders brush aside softer US GDP figure, where internals are still encouraging ASX 200 and Hang Seng Index may rise, but will their breakouts last for long? THURSDAY’S WALL STREET TRADING SESSION RECAP
    Market sentiment notably improved over the past 24 hours. On Wall Street, futures tracking the Dow Jones, S&P 500 and Nasdaq 100 climbed 1.63%, 1.99% and 2.82% respectively. This means that on average, the stock market is heading for the best 5-day performance since March if sentiment holds up heading into the final 24 hours of the week.
    Taking a look at the sectoral breakdown of the S&P 500, it was very clear where the most optimism could be found. That was in consumer discretionary shares. During Thursday’s Wall Street session, a slew of upbeat views from retailers such as Macy’s (+19.31%), Dollar Tree (+21.87%) and Dollar General (13.71%) helped improve market sentiment.
    This was despite softer-than-expected US GDP data. Economic growth contracted 1.5% q/q in the first quarter versus the -1.3% estimate. That was the first decline since Q2 2020. However, the internals revealed that this was primarily driven by ongoing strength in US imports. Personal consumption, the heart of the US economy, gained 3.1% versus 2.5% in the first quarter.
    S&P 500 SECTOR BREAKDOWN 5/26/2022

    Data Source: Bloomberg
    FRIDAY’S ASIA PACIFIC TRADING SESSION – KEEP AN EYE ON SENTIMENT, AUSTRALIAN RETAIL SALES
    With that in mind, the upbeat mood on Wall Street is setting things up for some follow-through during Friday’s Asia-Pacific trading session. This could leave regional benchmark stock indices, such as Australia’s ASX 200 and Hong Kong’s Hang Seng Index, in a position to capitalize on ebbing volatility. Given the Reserve Bank of Australia’s increasingly hawkish pivot, traders will be closely eyeing local retail sales. Those are expected to rise 1.0% m/m in April from 1.6% in March. A stronger outcome could risk paring back the ASX if this leads to traders looking at an increasingly hawkish central bank.
     
    ASX 200 TECHNICAL ANALYSIS
    On the 4-hour chart, the ASX 200 appears to be trading within the boundaries of an Ascending Triangle chart formation. The direction of the breakout could hint at the next key move for the Australian benchmark stock index. To the upside, that would expose the 200-period Simple Moving Average (SMA). The latter could still reinstate the downside focus. Otherwise, breaking lower may see prices revisit the 6881 – 6912 support zone.
    ASX 200 4-HOUR CHART

    Chart Created in TradingView
    HANG SENG TECHNICAL ANALYSIS
    On the 4-hour setting, Hang Seng Index futures are attempting to break above a falling trendline from February. However, prices are pinned at resistance, around 20670. Pushing upward would place the focus on the 21202 inflection zone, perhaps raising prospects of retesting the April peak at 22670. Otherwise, a false breakout would shift the focus back towards the 19913 inflection point.
    HANG SENG FUTURES DAILY CHART

    Chart Created in TradingView
    Written by: Daniel Dubrovsky, Strategist for Daily FX
    Source: Daily FX
  11. AndaIG

    How to Control Greed When Trading

    By AndaIG,


    Analyst piece
    Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders.
    Greed can very easily turn good trades into bad ones and bad trades into worse trades. This article provides a number of tips to control greed and how to stop it interfering with your trading success.
    WHAT IS GREED IN TRADING AND HOW DOES IT IMPACT TRADER SUCCESS?
    Greed can be described as an intense desire for something and often manifests as the intense desire for wealth. This can easily get out of hand when the market moves against traders but is equally likely to negatively influence trading decisions on winning trades.
    Examples of greed when trading:
    ‘Doubling down’ on losing trades Adding capital to winning positions Over-leveraging Greed can alter your mental state, harnessing your focus to maximise utility/happiness/wealth. The desire for these things often results in traders placing trades they otherwise would never have thought of executing.
    Furthermore, greed poses a threat to the trading account. Doubling down, adding too much capital to winning positions, and over-leveraging can quickly result in a margin call or can deplete account equity.
    Top example of how greed impacts trading
    The chart below provides an example of the negative influence of greed. The chart shows a scenario where a trader enters a long position in EUR/USD (without a stop) after the large green candle, hoping that that market moves higher. The market moves lower and places the trader into a losing position. Greed may entice the trader to not only maintain the existing position but to open a new long position when the market shows signs of turning around (the second blue arrow).
    The idea of buying at this relatively low point and turning a losing trade into a winner can overwhelm traders. Furthermore, such greed can blind traders to the degree that it is possible to trade in the opposite direction to the trend without even noticing.

    Greed is often accompanied by other emotions, such as fear. Fear appears many times in a trader’s journey which is why it is essential to learn how to manage fear from the onset.
    HOW TO CONTROL GREED WHEN TRADING
    Fortunately, greed can be controlled and overcome like all emotions. With time and the necessary discipline, it is possible to execute trades without greed getting in the way.
    Greed can be seen as the opposite of discipline. Individuals that are disciplined very seldomly fall into the greed trap as they have some sort of plan and stick to it. Trading plans and trading journals are a great way to keep traders on the right path and not be tempted to enter trades that deviate from the plan.
     
    Traders should also consider setting strict stop losses and target a number of pips to the upside before entering a trade. This is referred to as the risk to reward ratio and was found to be the single most important trait of successful traders.
    It’s important to remember that managing and dealing with greed is not something that will be resolved over the next couple of trades. However, traders that are conscious of how greed can negatively influence trading and implement the above points as part of a trading regimen, will be taking positive steps toward the goal of “greed free” trading.

     
    Written by: Richard Snow (Analyst, Daily FX)
    Source: Daily FX
  12. AndaIG

    How to Manage the Emotions of Trading

    By AndaIG,


    Analyst piece
    Knowing how to control emotions while trading can prove to be the difference between success and failure. Your mental state has a significant impact on the decisions you make, particularly if you are new to trading, and keeping a calm demeanor is important for consistent trading. In this piece, we explore the importance of day trading psychology, for both beginner and more experienced traders, and give some pointers on how to trade without emotions.
    THE IMPORTANCE OF CONTROLLING EMOTIONS WHILE TRADING
    The importance of day trading emotional control cannot be overstated.
    Imagine you’ve just taken a trade ahead of Non-Farm Payrolls (NFP) with the expectation that if the reported number is higher than forecasts, you will see the price of EUR/USD increase quickly, enabling you to make a hefty short-term profit.
    NFP comes, and just as you had hoped, the number beats forecasts. But for some reason, price goes down!
    You think back to all the analysis you had done, all the reasons that EUR/USD should be going up – and the more you think, the further price falls.
    As you see the red stacking up on your losing position, emotions begin to take over – this is the ‘Fight or Flight’ instinct. This impulse can often prevent us from accomplishing our goals and, for traders, this issue can be very problematic, leading to knee-jerk reactions.
    Professional traders don’t want to take the chance that a rash decision will damage their account – they want to make sure that one knee-jerk reaction doesn’t ruin their entire career. It can take a lot of practice, and many trades, to learn how to minimize emotional trading.
     
    THE 3 MOST COMMON EMOTIONS TRADERS EXPERIENCE
    Some of the most common emotions traders experience include fear, nervousness, conviction, excitement, greed and overconfidence.
    Fear/Nervousness
    A common cause of fear is trading too big. Trading with improper size magnifies volatility unnecessarily and causes you to make mistakes you normally wouldn’t make if you weren’t under the stress of risking larger losses than normal.
    Another culprit for fear (or nervousness) is you are in the ‘wrong’ trade, meaning one that doesn’t fit your trading plan.
    Conviction/Excitement
    Conviction and excitement are key emotions you’ll want to feed off, and you should feel these in every trade you enter. Conviction is the final piece of any good trade, and if you don’t have a level of excitement or conviction then there is a good chance you are not in the ‘right’ trade for you.
    By ‘right’ we mean the correct trade according to your trading plan. Good trades can be losers just as bad trades can be winners. The idea is to keep yourself winning and losing on only good trades. Making sure you have conviction on a trade will help ensure this.
    Greed/Overconfidence
    If you find yourself only wanting to take trades that you deem as possible big winners, you could be getting greedy. Your greed may have been the result of doing well, but if you aren’t careful you may slip and end up in a drawdown.
    Always check that you are using proper trade mechanics (i.e. sticking to stops, targets, good risk/management, good trade set-ups). Sloppy trading as a result of overconfidence can end a strong run.
     
    DAILYFX ANALYST NICK CAWLEY ON LOSING DISCIPLINE

    Nick Cawley has more than 20 years’ experience in the markets and trades a variety of fixed-income products.
    "My worst trades - and there have been a few of them - have all been when my best laid plans are thrown out of the window when I lose discipline.
    ‘I didn’t use correct set-ups and stops; I thought I was ’better’ than the market; I doubled up when I was losing and lost more, and I put more money into my trading account to chase my losses.
    ‘I lost control of my emotions and traded when I should have looked without any emotion at my position and cut them and moved on. Easy to say, difficult to do, but a must for any trader who is looking for long-term success."
    HOW TO CONTROL EMOTIONS WHILE TRADING: TOP TIPS AND STRATEGIES
    Planning out your approach is key if you want to keep negative emotions out of your trading. The old adage ‘Failing to plan is planning to fail,’ can really hold true in financial markets.
    As traders, there isn’t just one way of being profitable. There are many strategies and approaches that can help traders accomplish their goals. But whatever is going to work for that person is often going to be a defined and systematic approach; rather than one based on ‘hunches.’
    Here are five ways to feel more in control of your emotions while trading.
    1. Create Personal Rules
    Setting your own rules to follow when you trade can help you control your emotions. Your rules might include setting risk/reward tolerance levels for entering and exiting trades, through profit targets and/or stop losses.
    2. Trade the Right Market Conditions
    Staying away from market conditions which aren’t ideal is also prudent. Not trading when you aren’t ‘feeling it’ is a good idea. Don’t look to the market to make you feel better; if you aren’t up to trading the simple solution may just be to step away.
    3. Lower Your Trade Size
    One of the easiest ways to decrease the emotional effect of your trades is to lower your trade size.
    Here’s an example. Imagine a trader opens an account with $10,000. Our trader first places a trade for a $10,000 lot on EUR/USD.
    As the trade moves at $1 a pip, the trader sees moderate fluctuations in the account. An amount of $320 was put up for margin, and our trader watches their usable margin of $9,680 fluctuate by $1 per pip.
    Now imagine that same trader places a trade for $300,000 in the same currency pair.
    Now our trader has to put up $9,600 for margin – leaving them with only $400 in usable margin – and now the trade is moving at $30 per pip.
    After the trade moves against our trader only 14 pips, the usable margin is exhausted, and the trade is closed automatically as a margin call.
    The trader is forced to take a loss; they don’t even have the chance of seeing price come back and pull the trade into profitable territory.
    In this case, the new trader has simply put themselves in a position in which the odds of success were simply not in their favor. Lowering the leverage can greatly help diminish the risk of such events happening in the future.
    4. Establish a Trading Plan and Trading Journal
    In terms of fundamental factors, planning for various outcomes in the runup to key news events may also be a strategy to bear in mind.
    The results between new traders using a trading plan, and those who don’t can be substantial. Compiling a trading plan is the first step to attack the emotions of trading, but unfortunately the trading plan will not completely obviate the effects of these emotions. Keeping forex trading journals may also be helpful.
    5. Relax!
    If you're relaxed and enjoy your trading, you will be better equipped to respond rationally in all market conditions.
    Written by: Ben Lobel (Markets Writer)
    Source: Daily FX
  13. AndaIG
    WHAT IS THE NUMBER ONE MISTAKE TRADERS MAKE?
    Big financial market volatility and growing access for the average person have made active trading very popular, but the influx of new traders has met with mixed success.
    There are certain patterns which may separate profitable traders from those who ultimately lose money. And indeed, there is one particular mistake that in our experience gets repeated time and time again. What is the single most important mistake that led to traders losing money?
    Here is a hint – it has to do with how we as humans relate to winning and losing
    Our own human psychology makes it difficult to navigate financial markets, which are filled with uncertainty and risk, and as a result the most common mistakes traders make have to do with poor risk management strategies.
    Traders are often correct on the direction of a market, but where the problem lies is in how much profit is made when they are right versus how much they lose when wrong.
    Bottom line, traders tend to make less on winning trades than they lose on losing trades.
    Before discussing how to solve this problem, it is a good idea to gain a better understanding of why traders tend to make this mistake in the first place.
     
    A SIMPLE WAGER – UNDERSTANDING DECISION MAKING VIA WINNING AND LOSING
    We as humans have natural and sometimes illogical tendencies which cloud our decision-making. We will draw on simple yet profound insight which earned a Noble Prize in Economics to illustrate this common shortfall. But first a thought experiment:
    What if I offered you a simple wager based on the classic flip of a coin? Assume it is a fair coin which is equally likely to show “Heads” or “Tails”, and I ask you to guess the result of a single flip.
    If you guess correctly, you win $1,000. Guess incorrectly, and you receive nothing. But to make things interesting, I give you Choice B—a sure $400 gain. Which would you choose?
        EXPECTED RETURN
    Choice A
    50% chance of $1000 & 50% chance of $0
    $500
    Choice B
    $400
    $400
    From a logical perspective, Choice A makes the most sense mathematically as you can expect to make $500 and thus maximize profit. Choice B isn’t wrong per se. With zero risk of loss you could not be faulted for accepting a smaller gain. And it goes without saying you stand the risk of making no profit whatsoever via Choice A—in effect losing the $400 offered in Choice B.
    It should then come as little surprise that similar experiments show most will choose “B”. When it comes to gains, we most often become risk averse and take the certain gain. But what of potential losses?
    Consider a different approach to the thought experiment. Using the same coin, I offer you equal likelihood of a $1,000 loss and $0 in Choice A. Choice B is a certain $400 loss. Which would you choose?
        EXPECTED RETURN
    Choice A
    50% chance of -$1000 & 50% chance of $0
    -$500
    Choice B
    -$400
    -$400
    In this instance, Choice B minimizes losses and thus is the logical choice. And yet similar experiments have shown that most would choose “A”. When it comes to losses, we become ‘risk seeking’. Most avoid risk when it comes to gains yet actively seek risk if it means avoiding a loss.
    A hypothetical coin flip exercise is hardly something to lose sleep over, but this natural human behavior and cognitive dissonance is clearly problematic if it extends to real-life decision making. And, it is indeed this dynamic which helps to explain one of the most common mistakes in trading.
    Losses hurt psychologically far more than gains give pleasure.
    Daniel Kahneman and Amos Tversky published what has been called a “seminal paper in behavioral economics” which showed that humans most often made irrational decisions when faced with potential gains and losses. Their work wasn’t specific to trading but has clear implications for our studies.
    The core concept was simple yet profound: most people make economic decisions not on expected utility but on their attitudes towards winning and losing. It was simply understood that a rational person would make decisions purely based on maximizing gains and minimizing losses, yet this is not the case; and this same inconsistency is seen in the real world with traders…
    We ultimately aim to turn a profit in our trades; but to do so, we must force ourselves to work past our natural emotions and act rationally in our trading decisions.
    If the ultimate goal were to maximize profits and minimize losses, a $500 gain would completely offset a $500 loss.
    This relationship is not linear, however; the illustration below gives us an approximate look at how most might rank their “Pleasure” and “Pain” derived from gains and losses.
    PROSPECT THEORY: LOSSES TYPICALLY HURT FAR MORE THAN GAINS GIVE PLEASURE

    Figure 3. Licensed under CC BY-SA 3.0 via Wikimedia Commons
    The negative feeling experienced from a $500 loss can be substantially more than the positive feeling experienced from a $500 gain, and experiencing both would leave most feeling worse despite causing no monetary loss.
    In practice, we need to find a way to straighten that utility curve—treat equivalent gains and losses as offsetting and thus become purely rational decision-makers. This is nonetheless far easier said than done.

    Figure 4. Licensed under CC BY-SA 3.0 via Wikimedia Commons
    A HIGH WIN PERCENTAGE SHOULD NOT BE THE PRIMARY GOAL
    Your primary goal should be to find trades which give you an edge and present an asymmetrical risk profile.
    This means your primary objective should be to achieve a robust “Risk/Reward” (R/R) ratio, which is simply the ratio of how much you have at risk versus how much you gain. Let’s say you are right about 50% of the time, a reasonable expectation. Your gains and losses need to have at least a 1:1 risk/reward ratio if you stand to at least break even.
    To tilt the math in your favor, a trader making money on roughly 50% of his/her trades needs to aim for a higher unit of reward versus risk, say 1.5:1 or even 2:1 or greater.
    Too many traders get hung up on trying to achieve a high win percentage, which is understandable when you think about the research we looked at earlier regarding loss aversion. And, in your own experiences you almost certainly recognize the fact that you don’t like losing. But from a logical standpoint, it isn’t realistic to expect to be right all the time. Losing is just part of the process, a fact that as a trader you must get comfortable with.
     
    It is more realistic and beneficial to achieve a 45% win rate with a 2:1 R/R ratio, than it is to be right on 65% of your trade ideas, but with only a 1:2 risk/reward profile. In the short run the gratification of “winning” more often may make you feel good, but over time not netting any gains will lead to frustration. And a frustrated mind will almost certainly lead to more mistakes.
    The following table illustrates the math well. Over the course of a 20 trade sample, you can see clearly how a favorable risk/reward profile coupled with more losers than winners can be more productive than an unfavorable risk/reward profile coupled with a much greater number of winners. The trader making money on 45% of trades with a 2:1 R:R profile comes out ahead, while the trader with the 65% win rate, but making only half as much on winners versus losers, comes out at a slight net-loss.

    Who would you rather be? The trader who ends up positive 7 units but loses more often than they win, or the one who ends up slightly negative but gets the gratification of “being right” more often. The choice appears to be easy.
    USE STOPS AND LIMITS – GOOD MONEY MANAGEMENT
    Humans aren’t machines, and working against our natural biases requires effort. Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading.
    A great way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. But don’t set them for the sake of setting them to achieve a specific ratio. You will want to still use your analysis to determine where the most logical prices are to place your stops and limit orders. Many traders use technical analysis, which allows them to identify points on the charts that may invalidate (trigger your stop-loss) or validate your trade (trigger the limit order). Determining your exit points ahead of time will help ensure you pursue the proper reward/risk ratio (1:1 or higher) from the outset. Once you set them, don’t touch them. (One exception: you can move your stop in your favor to lock in profits as the market moves in your favour.)
    There will inevitably be times a trade moves against you, triggers your stop loss, and yet ultimately the market reverses in the direction of the trade you were just stopped out of. This can be a frustrating experience, but you have to remember this is a numbers game. Expecting a losing trade to turn in your favor every time exposes you to additional losses, perhaps catastrophic if large enough. To argue against stop losses because they force you to lose is very much self-defeating—this is their very purpose.
     
    GAME PLAN: TYING IT ALL TOGETHER
    Trade with stops and limits set to a reward/risk ratio of 1:1, and preferably higher
    Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is, and again, as we stated previously, you should ideally aim for an even larger risk/reward ratio. Then you can choose the market direction correctly only half the time and still net a positive return in your account.
    The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as the volatility, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 points away from entry, you should have a profit target 40 points or more away to achieve at least a 1:1 R/R ratio. If you have a stop level 500 points away, your profit target should be at least 500 points away.
    To summarize, get comfortable with the fact that losing is part of trading, set stop-losses and limits to define your risk ahead of time, and aim to achieve proper risk/reward ratios when planning out trades
    Managing your risk in this way is a part of what many traders call “money management”. It is one thing to be on the right side of the market, but practicing poor money management makes it significantly more difficult to ultimately turn a profit.
    Written by: Paul Robinson
    Source: Daily FX
  14. AndaIG
    SENTIMENT INDICATORS: USING IG CLIENT SENTIMENT
    The IG Client Sentiment (IGCS) is unique, proprietary and potentially helpful to traders. The article will outline the following illustrative points:
    What is IG Client Sentiment (IGCS)? Sentiment Indicators IGCS as a Leading Indicator IGCS as a Technical Indicator: Summary  
    WHAT IS IG CLIENT SENTIMENT (IGCS)?
    IG Client Sentiment (IGCS) is a tool that traders can use in conjunction with a broader technical and/or fundamental strategy. IGCS incorporates retail trader positioning (long and short) to formulate a sentiment bias. This is represented in percentage form (see image below) which aids traders in identifying market imbalances which could lead to possible opportunities.
    IGCS on EUR/USD:

    SENTIMENT INDICATORS
    Sentiment indicators are few and far between. The two most well-known are open interest in options, which largely applies to stocks, and the Commitment of Traders Report (CoT). What sets IGCS apart is the large sample size of retail traders which deliver more usable data in terms of indicator readings, multiple market data sets (FX, equities commodities) and timely updates for these markets which are refreshed several times daily.
     
    IGCS AS A LEADING INDICATOR
    The use of IGCS as a technical indicator can allow traders to confirm or refute signals produced by their wider trading strategy. Both fundamental and other technical techniques are used to gauge trends, ranges, potential reversals etc. so incorporating IGCS provides another layer of data to help verify a hypothesis.
    IGCS can be considered as a leading indicator as it uses past and current data to project possible future price movements however, as IGCS (retail) covers only one component of the market equation, traders should not rely solely on the IGCS tool for trading decisions. Simply put, retail traders contribute only a certain percentage of market input so naturally other factors will have influence on the respective market.
     Source: Daily FX
  15. AndaIG
    April 13 (Reuters) - U.S. stock index futures edged higher on Wednesday ahead of earnings from U.S. bank JPMorgan Chase, which will kick off the first-quarter earnings season against the backdrop of surging inflation.
    JPMorgan Chase & Co (JPM.N) slipped 0.4% in premarket trading. Investors will be looking for commentary on the outlook for consumer spending and borrowing, net interest income, market volatility and M&A and IPO pipelines.
    Quarterly results from Wall Street banks are expected to show a sharp decline in investment banking revenue and first-quarter earnings overall due to companies pausing deals amid choppy equity markets.
    Nevertheless, analysts and executives are expecting trading to be a surprise bright spot for banks in the first quarter, after clients rejigged portfolios in response to Russia's invasion of Ukraine and interest rate hikes. 
    Other big banks Citigroup Inc (C.N), Wells Fargo & Co (WFC.N), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) and Bank of America Corp (BAC.N), which report later this week and next, rose between 0.2% and 0.3%.
    BlackRock Inc (BLK.N) inched up 0.4% after posting a nearly 22% rise in first-quarter profit as the world's largest asset manager benefited from investors pouring more money into its various funds. 
    At 06:23 a.m. ET, Dow e-minis were up 106 points, or 0.31%, S&P 500 e-minis were up 14.75 points, or 0.34%, and Nasdaq 100 e-minis were up 58.5 points, or 0.42%.
    Wall Street reversed earlier gains on Tuesday as Treasury yields rebounded on impending monetary tightening from the Federal Reserve, putting pressure once again on growth stocks.
    Investors will be focusing on producer price data at 8:30 a.m. ET, expected to have risen 10.6% in the 12 months through March after a 10% gain in February.
    Data on Tuesday showed consumer prices surged to a four-decade high in March, but underlying inflation pressures showed some signs of moderation, still putting the Fed on track for a 50 basis point rate hike in May. 
  16. AndaIG
    Gold prices have stabilized a bit following an aggressive selloff from last week’s highs above the $2000/oz figure. The ongoing Russian invasion of Ukraine seems to be the driving catalyst in play, with the decline probably echoing broader hopes for de-escalation after cautiously supportive comments from Moscow and Kyiv.
    Tellingly, the drop registered alongside a parallel narrowing of the spread between front- and second-month Brent crude oil futures. That speaks to easing supply disruption worries. The spread widened sharply as the conflict broke out since Russia is a top global energy exporter.
    This week’s FOMC monetary policy announcement did not seem to do much for the yellow metal’s trend development despite its usual sensitivity to interest rate trends. The widely anticipated 25bps rate hike on offer did not appear to materially alter investors’ appetite for anti-fiat store of value

    Gold price chart created using TradingView
     
    Looking ahead, Ukraine-related news flow is likely to remain at the forefront. Gold may face renewed selling pressure if ceasefire talks seem to be making a bit of progress. Signs of an understanding between US President Joe Biden and his Chinese counterpart Xi Jinping in a conversation later today might weigh as well.
    China has held back from joining Western efforts to counter Russia, but comments from key officials in recent weeks have struck a conciliatory tone toward the US even as they called for a diplomatic solution to the crisis. This implies that Beijing may be persuaded to deny Moscow a way around sanctions.
    This might compound pressure on Russian President Vladimir Putin to come to the negotiating table in earnest, an outcome the markets are likely to embrace. Breaking support at 1908.20 may expose 1870.75 next. Slipping below the $1800/oz figure seems necessary to establish a longer-term downtrend, however.
    Alternatively, gold may attempt a larger bounce if progress appears absent. Reclaiming a foothold above resistance at 1965.55 appears likely to set the stage for another foray north of the $2000/oz handle. Clearing the swing high at 2009.17 may target the 50% Fibonacci extension at 2040.16 thereafter.
    Written by Ilya Spivak, Head Strategist, APAC for DailyFX
  17. AndaIG
    With effect from 15:00 GMT on Tuesday 1 March, we are increasing margin rates on existing CFD and spread bet positions to 100% on certain shares with direct exposure to Russia. Please take note of the below:
     
    Should you wish to maintain your positions, please ensure you have sufficient funds on your account before 15:00 GMT Tuesday 1 March, otherwise positions on your account will be closed   No new positions can currently be opened on these shares Increased volatility can amplify the risk of rapid or large losses  As the situation continues to develop, IG may take further steps in relation to products with direct or indirect exposure to Russia, including limiting positions or increasing margin Where possible we will aim to give as much notice as we can, though in the circumstances that may be a shorter time frame than usual List of affected shares:
    Tigers Realm Coal Limited United Company RUSAL PLC Lukoil OAO - GDR (DE) Amur Minerals Corp Polymetal International PLC RusPetro PLC Ros Agro PLC En+ Group PLC Federal Grid Co Unified Energy System PJSC X5 Retail Group NV Globaltrans Investment PLC - GDR Hydraulic Machines and Systems Group PLC - GDR RusHydro JSC - GDR Lenta Ltd LSR Group VK Co Ltd MD Medical Group Investments PLC Magnit OJSC - GDR Magnitogorsk Iron & Steel Works - GDR Novorossiysk Commercial Sea Port PJSC Novolipetsk Steel OJSC - GDR Phosagro OAO - GDR Polyus PJSC Sberbank of Russia - GDR Surgutneftegas Public Severstal OAO - GDR Tatneft OAO - GDR Gazprom Neft OAO - GDR Lukoil OAO - GDR TMK OAO - GDR MMC Norilsk Nickel OJSC - GDR NovaTek OAO - GDR Gazprom OAO - GDR Rostelecom OJSC - GDR Rosneft OAO - GDR Sistema JSFC - GDR VTB Bank OJSC - GDR Mobile Telesystems OJSC - ADR Mechel - ADR Polyus Gold PJSC HeadHunter Group PLC NEXTERS INC
  18. AndaIG

    Imminent margin changes to FX positions

    By AndaIG,


    Product updates
    The situation in Ukraine and its global ramifications are fluid and fast-changing. We’re continuously monitoring developments in financial markets and shifting legal and regulatory obligations worldwide.

    In light of this, we’ve decided it’s appropriate to increase our margin rates on existing spread bet and CFD positions on all currency pairs which include the Russian ruble. This includes all positions in USD/RUB, EUR/RUB and RUB/JPY.

    Margin rates on these positions will change to 100% on Tuesday 1 March 2022 at 3pm (GMT).

    Please note that positions in your account will be closed if there are insufficient funds available at this time and your position in RUB remains open. No new positions can currently be opened on these products.

    We’d like to remind you that increased volatility can amplify the risk of rapid or large losses. As the situation continues to develop, IG may take further steps in relation to products with direct or indirect exposure to Russia. Please be advised that this could include us having to close client positions in currency pairs including RUB with limited or no notice.

    We may also limit positions or increase margin rates on other products. As always, we’ll aim to give you as much notice as possible, though we acknowledge that due to the circumstances, this may happen in a shorter time frame than usual.
  19. AndaIG
    Asian shares steady, dollar weak as traders await earnings

    HONG KONG, Oct 25 (Reuters) - Asian shares started steady on Monday ahead of a week packed with major quarterly earnings announcements, while the dollar hovered near October lows after three weeks of risk-friendly sentiment hurt safe-haven currencies.
    HSBC (HSBA.L) and Facebook (FB.O) will both publish quarterly results on Monday, in Asian trading and late U.S. hours respectively.
      Later in the week will be the turn of other benchmark heavyweights including tech giants Microsoft (MSFT.O) , Apple (AAPL.O) and Alphabet (GOOGL.O), and European and Asian financial behemoths from Deutsche Bank (DBKGn.DE) and Lloyds (LLOY.L) to China Construction Bank and Nomura (8604.T).
    "This week earnings take centre stage," said Chris Weston, head of research at brokerage Pepperstone in Melbourne, in a morning note.
    The results will be closely watched after a strong start to the U.S. earnings season for many companies, especially financials, helped both the Dow Jones Industrial Average (.DJI) and the S&P 500 (.SPX) touch record highs last week, though the Nasdaq (.IXIC) fell on Friday after Snap (SNAP.N) and Intel Corp's (INTC.O) quarterly results disappointed.
    MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) has also posted gains in the past three weeks, which if it can hold onto them this week, would make October the benchmark's best month of 2022.
      On Monday morning, the regional benchmark was flat with a 0.5% gain in Australia (.AXJO) balanced by a 0.6% fall in Korea (.KS11).
    Japan's Nikkei (.N225) lost 1% and U.S. S&P 500 futures shed 0.18%.
      Asian shares have largely lagged their U.S. and European counterparts in recent months mainly due to regulatory ructions and fears of slowing growth in China.
    In the latest announcement to worry some investors, the top decision-making body of the Chinese parliament said on Saturday it will roll out a pilot real estate tax in some regions. read more
      Analysts at Citi summed up the announcement as an "earlier than expected trial but later than expected national rollout; no devastating impact."
    However, the risk friendlier mood that supported equities has weighed on safe-haven currencies, as have rising energy prices which supported currencies like the Aussie and Canadian dollars .
      The dollar index was last at 93.667, hovering near its month low of 93.455 hit last week, and well off mid-October's 12-month high.
    However, analysts at CBA said it was more likely the dollar would rise than fall from here.
      "Dollar risks remain skewed to the upside," they wrote in a note citing rising expectations of inflation from markets, consumers and policy makers, meaning markets are pricing a more aggressive programme of interest rate hikes, which would support the dollar.
    Markets are still trying to position themselves for a widely expected tapering of the U.S. stimulus programme this year, and the possibility of rate hikes late in 2022
      Federal Reserve Chair Jerome Powell on Friday said the U.S. central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but should not yet touch interest rates. read more
    As tapering looms, U.S. benchmark yields have been rising and yields on 10-year Treasury notes hit a five-month high of 1.7064% last week. In early Asia they were last 1.6465%.
      Oil prices stayed elevated but just off recent multi-year peaks. Brent crude >LCOc1> rose 0.13% to $85.65 a barrel, while U.S. crude (.CLc1) rose 0.38% to $84.08 a barrel.
    Spot gold rose 0.06% to $1793.4 an ounce after posting gains for the past two weeks on rising inflation concerns.
      Bitcoin another asset oft-described as an inflation hedge was last at $61,080 after a turbulent week when it hit a new high of $67,016.
    Editing by Stephen Coates
    Available from: https://www.reuters.com/business/global-markets-wrapup-1-2021-10-25/
  20. AndaIG
    HSBC rides out China property storm with 74% profit jump, $2 bln buyback

     
    SINGAPORE/LONDON, Oct 25 (Reuters) - HSBC (HSBA.L) shrugged off concerns about pandemic-related bad loans and property problems in China on Monday with a surprise 74% quarterly profit jump and a $2 billion share buyback.
    The British bank's profit growth was mainly driven by the release of cash reserves set aside in anticipation of pandemic-induced defaults, with HSBC's finance chief Ewen Stevenson telling Reuters that the worst of that impact is likely past.
      "You should also look at the buyback as a measure of the confidence that we have at the moment that we are not unduly concerned about our exposures in China," Stevenson said.
    The Asia-focused bank said it had $19.6 billion in lending to China's property sector, where China Evergrande Group (3333.HK) is grappling with a $300 billion debt pile, stoking fears of further defaults and contagion risks.
      HSBC CEO Noel Quinn, who was confirmed in the role in 2020 just as the pandemic-induced economic crisis began, is betting on Asia to drive growth, by moving global executives there and ploughing billions into lucrative wealth management.
    The bank could spend up to $1.5 billion more on acquisitions in that business after buying insurer AXA's Singapore assets for $575 million in August, Stevenson said. 
    "While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us," Quinn said in a statement.
    HSBC posted pretax profit of $5.4 billion for the quarter to September, versus $3.1 billion a year earlier and the $3.78 billion average estimate of 14 analysts compiled by HSBC.
      Analysts at stockbrokers Goodbody said HSBC's revenue guidance and the reversal of expected credit losses "should drive earnings upgrades while the capital beat and the $2bn buyback will be pleasing to investors."
    HSBC's London-listed shares rose 1% to their highest in four months.
    INFLATION FEARS
    Despite the overall positive results, HSBC said its cost projections for 2022 had risen to $32 billion from $31 billion, due to global inflation pressures which would push up its $19 billion wage bill.
      Major companies worldwide have in recent weeks warned of the impact of rising costs driven by spiralling energy prices and supply chain disruption.
    "A little bit of inflation is good for us as it should drive policy rates higher," Stevenson said.
      "However, we have a cost base of $32 billion of which $19 billion is compensation... so it doesn't take much (to push up costs), 2 or 3% inflation on the cost base is $400 to $600 million of additional costs," he added.
    Set against those concerns, HSBC released $700 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the same time a year earlier when it took an $800 million charge.
      INVESTMENT BANK
    Another headache for HSBC is investment banking, where rivals such as Citigroup (C.N)are riding an M&A boom to record-beating profits.
      HSBC's investment bank saw income fall this year as it paid the price for its bias towards debt markets, which have been patchy amid low interest rates that crimped trading, while rivals' equities and merger-focused businesses have thrived.
    It is the second big British bank to post strong quarterly results, after Barclays (BARC.L) doubled profits on a strong performance by its investment bank advisory business.
      HSBC's results will set expectations high for Standard Chartered (STAN.L), which focuses on similar markets and reports on Nov. 2.
    Reporting by Anshuman Daga in Singapore and Lawrence White in London; Editing by Ana Nicolaci da Costa and Alexander Smith Available from: https://www.reuters.com/business/finance/hsbc-q3-profit-up-74-beats-estimates-announces-up-2bln-buyback-2021-10-25/    
  21. AndaIG
    WHEN DOES FACEBOOK REPORT EARNINGS?
    Facebook is set to release its Q3 financial results on 25 October, after the market closes. At the time of writing, expectations are pointing to a 32.1% increase in earnings per share to US$3.17, up from US$2.40 a year ago.
    FACEBOOK EARNINGS – WHAT TO EXPECT
    For the upcoming earnings release, the impact of Apple’s anti-tracking initiative on Facebook’s businesses will be closely assessed, as the management has previously cautioned of a larger impact of the iOS updates in Q3, compared to the previous quarter. To recall, Apple has previously implemented new privacy controls, which limit digital advertisers from tracking iPhone users for advertising purposes without their consent.
    While the dropout rate to allow data collection remains to be seen, the upcoming Q3 results may provide some clarity on the impact to Facebook ad effectiveness and switching from advertisers. Some resilience in the figures for average price per ad and number of ads delivered may aid to ease some concerns in that regard.
    The upcoming earnings into 2H 2021 may also reveal a lower base effect compared to a year ago, where Facebook saw a huge boost in sales in 3Q and 4Q 2020 from a strong recovery in business advertising spends. Sales and earnings growth may continue to normalise in the quarters ahead and the management’s outlook will be looked upon for guidance.

    Source: Facebook
    Facebook has also been weighed by recent negative news flow, coming from a whistle-blower on the harmful effects of Instagram for young users. The management may need to address these concerns and while debates around the issue may drag on towards year-end, subsequent platform and businesses’ processes adjustments by Facebook may ease such concerns in time to come. This may be reflected in previous instances of data breaches, where markets look past these near-term ‘noises’ and daily active users for Facebook’s ‘family’ of products continue to grow.
    A risk for Facebook share price, however, may be movement in the US 10-year Treasury yield. With 10-year yield having broken out of its period of consolidation since late September, further upside may be a likely scenario, which could keep valuation multiples of high-growth companies in check.
    FACEBOOK SHARES – TECHNICAL ANALYSIS
    Ever since its 50-day moving average (MA) failed to hold up prices back in mid-September, Facebook’s share price has been trading within a near-term descending channel. That said, while prices continue to trend downwards, the relative strength index did not reflect a lower low lately, suggesting that downward momentum may potentially see some easing. A retest of the 200-day MA was met with a bullish hammer candlestick, which will remain a key support MA line to watch. That may potentially lift prices to retest the near-term resistance at US$337.00, where the level has held down prices on previous three occasions.

    Source: IG Charts
  22. AndaIG

    EasyJet Rights Issue FAQ

    By AndaIG,


    Educational
    FAQs for Easyjet rights issue - (Sharedealing and ISA clients only)
     
    1.      What are the terms of the Easyjet rights issue?
     ·        Ex-Date - 13/09/21
    ·        Terms - 31 new shares for every 47 existing shares held on your account
    ·        Subscription price - £4.10p (the price at which the new shares will be booked at after pay date if you decide to take up the offer)
     
    2.      How do I take part in this rights issue and when will I get these new rights
     ·        If you hold a Easyjet position on the close of business 10/09/21 then we will book the new rights on your account on the Ex-Date 13/09/21
    ·        To take part please email corporate.actions@ig.com stating your intent to take up the offer.  Please stipulate your account number/ID on the email.
    ·        We will email you a confirmation that we have received your election, but as we will expect high volumes, please bear with us as it may take up to 48 hours.
    ·        There will be no option to take up Excess or more than your allocation on your account
     
    3.      How many new shares can I receive if I had 1000 Easyjet shares originally on close of business the day before Ex-Date
     ·        You will have 659 Rights booked on the account on Ex-Date 13/09/21
    ·        If you take this offer up you will receive 659 new Easyjet shares booked at an opening price of £4.10 (Subscription price) after pay date (28/09/21)
     
    4.      When is the deadline date and time?
    ·        21/09/21 4:30pm UK time - The Deadline date is the point where Sharedealing and ISA clients need to make sure the total available cash amount to take up the offer is available on their account.
     
    5.      What happens if my ISA is at the maximum allowance?
     
    ·        You will need to email corporate.actions@ig.com stating your ISA Account number/ID, the Sharedealing account number/ID, your wish to take up the offer and that you would like the new Shares transferred to this Sharedealing account.
    ·        Please make sure to fund the Sharedealing account by the Deadline Date & Time and make sure these funds are held on the account until paydate (28/09/21). We will not accept unsettled cash.
     
    6.      When can I trade the rights?
     ·        Ex-Date 13/09/21 to IG Deadline date 21/09/21 4:30pm UK time
     
    7.      Can I choose to sell my Rights?
     ·        Yes of course, please log into the platform and trade out of the position accordingly. You will not be able to trade out of the rights after the deadline date.
     
    8.      I have elected, but now want to sell my Rights.  Can I?
     ·        Yes, no problem.  The election will not be processed. No further action is required by you.
     
    9.      I missed the IG deadline, can I give my instructions now?
     ·        No, we have a strict deadline so any instruction given after the IG Deadline will not be valid.
     
     10.   I gave my instructions but I don’t have the funds.
     ·        Funds have to be in the account by the IG Deadline and no later than that. If funds are not in the account when the deadline comes around, the given instructions will be voided.
     
     11.   For Sharedealing and ISA clients, do I need to deposit funds and if so when do they need to be deposited?
     ·        Yes,  you need to have sufficient settled funds to cover the cost of the new shares by IG Deadline Date (21/09/21 4:30pm UK time)
    ·        Please make sure the relevant account where you are holding the Rights is adequately funded by Deadline date. The Corporate Actions department will not take an instruction to transfer cash between accounts and this will be the client’s responsibility.
    ·        If the funds are not available on the account at the deadline time, we will not process your election.
    ·        As long as we have received your email with your election preferences ahead of the IG deadline date and your account is funded on that date, then your election will be processed.
     
    12.   How do I know how much cash I need to fund my ISA or Sharedealing account by Deadline Date?
     ·        Use this simple equation – Rights on your account * Subscription price = Funds needed by Deadline date
    ·        Example 100 Rights * £4.10p = £410
     
    13.   Can I make a partial election?
     ·        Yes, that is ok. Please state clearly on the email reply the number of shares you would like to take up (The total share amount for Sharedealing and ISA accounts) and not monetary value (for example - £500 worth of shares, as this will not be accepted).
     14.   I have replied to corporate.actions@ig.com with my election, what do I need to do now?
     ·        The only thing left to do is make sure your account is funded accordingly to cover your new position by Deadline Date (21/09/21 4:30pm UK time) and not Pay date. We will email you a confirmation that we have received your election, but as we will expect high volumes, please bear with us as it may take up to 48hrs. As long as we have received your email with your election preferences ahead of the deadline and your account is funded then your election will be processed.
     
    15.   What happens if I have not elected and do nothing?
     ·        The Rights will lapse and be removed off your account after pay date (28/09/21) You may receive remuneration in the form of lapsed proceeds if this is part of the event, but this is not guaranteed.
     
    16.   When is the Pay date?
     ·        Pay date is the 28/09/21
    ·        IG should receive the new shares 1-5 business days after the pay date from our broker and this is when the rights are removed and Easyjet shares booked on clients’ accounts who elected to take up. Lapsed Rights proceeds are usually known 10 working days after deadline date and paid after pay date, if this is part of the event. An email will be sent when all bookings have been made.
     
    17.   What happens if I have a working order in a stock that’s having a rights issue on ex-date? 
     ·        All working orders will be deleted pre-market on ex-date. 
     
    FAQs for Easyjet rights issue - (Leveraged clients only)
     
    1.      What are the terms of the Easyjet rights issue?
     ·        Ex-Date - 13/09/21
    ·        Terms - 31 new shares for every 47 existing shares held on your account
    ·        Subscription price - £4.10p (the price at which the new shares will be booked at after pay date if you decide to take up the offer)
     
    2.      How do I take part in this rights Issue and when will I get these new rights
     ·        If you hold a Easyjet position on the close of business 10/09/21 then we will book the new rights on your account on the Ex-Date 13/09/21
    ·        To take part please email corporate.actions@ig.com stating your intent to take up the offer.  Please stipulate your account number/ID on the email.
    ·        We will email you a confirmation that we have received your election, but as we will expect high volumes, please bear with us as it may take up to 48 hours.
    ·        There will be no option to take up Excess or more than your allocation on your account
     
    3.      How many new shares can I receive if I had 1000 Easyjet shares originally on close of business the day before Ex-Date
     ·        You will have 659 rights booked on the account on Ex-Date 13/09/21
    ·        If you take this offer up you will receive 659 new Easyjet shares booked at an opening price of £4.10 (Subscription price) after pay date (28/09/21)
     
    4.      When is the IG deadline date and time?
     ·        21/09/21 4:30pm UK time
     
    5.      When can I trade the rights?
     ·        Ex-Date 13/09/21 to IG Deadline date (21/09/21 4:30pm UK time)
     
     6.      Can I choose to sell my Rights?
     ·        Yes of course, please log into the platform and trade out of the position accordingly. You will not be able to trade out of the rights after the IG deadline date.
     
    7.      I have elected, but now want to sell my Rights.  Can I?
     ·        Yes, no problem.  The election will not be processed. No further action is required by you.
     
    8.      I missed the IG deadline, can I give my instructions now?
     ·        No, we have a strict deadline so any instruction given after the IG Deadline will not be valid.
     
    9.      Can I make a partial election?
     ·        Yes, that is ok. Please state clearly on the email reply the number of shares you would like to take up (The total share amount for CFD accounts and the total Per Pt amount for Spreadbetters) and not monetary value (for example - £500 worth of shares, as this will not be accepted).
     
    10.   I have replied to corporate.actions@ig.com with my election, what do I need to do now?
     ·        Nothing. We will email you a confirmation that we have received your election, but as we will expect high volumes, please bear with us as it may take up to 48hrs. As long as we have received your email with your election preferences ahead of the IG deadline your election will be processed.
     
    11.   What if I have a short/sell position booked on my account, what happens to my position and what are my options?
     ·        As you are short you will have two options. The first is to trade out (buy back) of the rights before the IG deadline date to close the position. The second is to do nothing and risk your position being taken up automatically depending on the result of the offer. Doing nothing could mean having the rights removed around the pay date and potentially having a new short position in the stock booked at the subscription price.
     
    12.   I have a guaranteed stop on my position, what happens to my position?
     ·        If you hold a position with a guaranteed stop on the close of business the day before ex-date, this means the morning of Ex-date pre-market we will amend your position to automatically take up the rights or offer on your behalf. The stop, level and size will be amended to keep the monetary risk the same as pre event. This procedure will usually take place if the offer is in the money on ex-date, otherwise no action will be taken. There is nothing else for you to action on this event.
     
    13.   I have a non guaranteed stop and limit on my position, what happens to them?
     ·        Any non guaranteed stops or limits are amended accordingly by the terms of the event to take onboard the dilution of the price in the underlying stock.
     
    14.   What happens if I have not elected and do nothing?
     ·        The Rights will lapse and be removed from your account after pay date (28/09/21)
     
    15.   When is the Pay date?
     ·        Pay date is the 28/09/21
    ·        IG should receive the new shares 1-5 business days after the pay date from our broker and this is when the rights are removed and Easyjet shares booked on clients’ accounts who elected to take up. An email will be sent when all bookings have been made.
     
    16.   What happens if I have a working order in a stock that’s having a rights issue on ex-date? 
     ·        All working orders will be deleted pre-market on ex-date. 
     
     
     
     
  23. AndaIG

    GBP/USD Flattens After BOE-Induced Rally

    By AndaIG,


    Market News
    GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt, but the hawkish tone from the Bank of England sparked some optimism into the Pound pushing GBP/USD above recent resistance at 1.3720, with Dave Ramsden and Michael Saunders, two of the Monetary Policy Committee (MPC) members, voting for an early end to the pandemic stimulus.
    GBP/USD Daily Chart

    On the Dollar side, the hawkish FOMC meeting caused US 10-year yields to rise to their highest level since July, the biggest rise since February when inflation concerns were at the forefront of market drivers. The US Dollar has been picking up on the back of this but has lagged against the British Pound, so we may see the bearish reversal consolidate once again as GBP/USD catches up to the latest USD positioning.
    In the case that buyers are able to hold off the bearish momentum, GBP/USD faces an area (shaded in blue on the chart) where there has been a lot of price reversals in the past, which means possible resistance on and around the 1.38 mark.
    Retail trader data shows 63.58% of traders are net-long with the ratio of traders long to short at 1.75 to 1. The number of traders net-long is 22.87% lower than yesterday and 16.48% higher from last week, while the number of traders net-short is 28.14% higher than yesterday and 18.01% lower from last week.
     Written by Daniela Sabin Hathorn, Market Analyst
    https://www.dailyfx.com/forex/market_alert/2021/09/24/GBPUSD-Flattens-After-BOE-Induced-Rally.html
     
  24. AndaIG
    The US Dollar may catch a haven bid as US-China tensions gradually escalate amid widening disagreements on foreign policy. Political volatility may dampen risk appetite and put a premium on liquidity. Issues over trade, the South China Sea and Taiwan remain the biggest sticking points, with the latter drawing more attention following America’s pullout of Afghanistan.
    Sino-US tensions were expected to remain high even after former President Donald Trump left office. This is in part due to the structural changes China is implementing as part of its long-term strategy to eclipse the US as global hegemon by 2049. These competing priorities - and with so much at stake - will likely result in political disputes that will spark market volatility.
    CHINA’S CONFRONTATIONAL APPROACH
    Deng Xiaoping was famous not only for economically liberalizing China but also for putting into policy the notion of “[hiding] your strength and [biding] your time”. The current president, Xi Jinping, has taken a diametrically opposite approach with the cultivation of nationalism and the complementary use of so-called Wolf Warrior-style diplomacy.
    The latter is characterized as being far more confrontational and unyielding, something the new ambassador to the United States, Qin Gang, illustrated in a speech earlier this month. While he mentioned areas of cooperation such as climate change, friction over Taiwan and calls for investigations into the origins of COVID-19 are overshadowing these more constructive efforts.
    While the coronavirus continues to remain the biggest fundamental risk, politics may soon take the spotlight for investors. A sudden flare-up and sustained escalation on this front could put markets on the backfoot and push the haven-linked US Dollar higher at the expense of Asia-based emerging market assets.
    See my guide on how to trade geopolitical risks
    BELT AND ROAD INITIATIVE (BRI)
    China’s Belt and Road Initiative (RBI) is a long-term, economic-based foreign policy framework meant to weave economies together in a web with China at the center. It is an extension of the East Asian giant’s broader strategy of regional fortification as a mechanism to insulate itself against any blowback its actions domestically or abroad may elicit from the international community.
    China has also been expanding into Africa and parts of Europe as a means of securing key economic infrastructural nodes in high-commerce areas. This process had drawn criticism about debt-trap diplomacy, with Beijing accused of exhibiting predatory behavior. From Washington’s perspective, this strategy carries with it concerns about the building of a China-allied political bloc tuned to counter American interests.
     
    STRENGTHENING REGIONAL ALLIANCES
    For the US, this means diminished regional influence. Consequently, the pullout from Afghanistan, combined with VP Kamala Harris’ visit to key Southeast Asian economies shortly thereafter, seems indicative of a stronger pivot to Asia. This may be to Beijing’s dismay, especially as the Biden administration is convening the so-called “Quad” this week to discuss greater multilateral cooperation.
    On September 24, the leaders of Australia, India and Japan will all meet at the White House to discuss strategies for challenging China’s growing political ambitions. New Delhi and Beijing continue to fight over the disputed Kashmir region and also recently butted heads over the Regional Comprehensive Economic Partnership (RCEP).
    This is considered the largest trade agreement in history in that it would encompass 50% of the world’s population, and a third of its GDP. The China-led initiative intentionally left the United States out, signaling that it intends on further cementing its position as a regional hegemon.
    The common denominator of concern is China, and the multilateral approach to hampering Beijing’s regional aspirations may eventually result in punitive counter-measures by the Asian giant. Australia is an example of this. When Canberra called for an international investigation into the origins of COVID, tariffs - supposedly unrelated - were imposed and calls for boycotts ensued.
    While the cost of doing this to Australia is far less than to the United States, the precedent of the measure is alarming from a market-oriented perspective. Combined with a telling display of the new, more confrontational approach to diplomacy, this episode makes the case for the likelihood of greater policy friction yet to come. Markets may be caught off-guard.
     
    TAIWAN
    The US exit from Afghanistan initially sparked concerns - particularly from Taiwan - about Washington’s commitments to its allies and foreign political interests. Beijing has warned that in the event of direct military action, the United States would not protect the small island. Having said that, if Beijing truly thought that this is true, its encroachment would have accelerated.
    Regardless, tension here seems bound to escalate as China pushes ahead with regional expansion, specifically along the so-called Nine Dash Line. This is a demarcation of Beijing’s territorial claims in the South China Sea, Taiwan included. These are opposed by other regional actors too, including Vietnam, Indonesia and the Philippines, with the support of the US.
    A formal arbitration effort on the dispute was triggered by the Philippines under the auspices of the UN in 2013. It ruled against China’s claims. Not surprisingly, Beijing rejected the result, calling it “ill-founded”. As time goes on, escalation is likely to continue. As China doubles down on regional fortification, it simultaneously puts up a barrier that makes US involvement more cumbersome
     
    For financial markets, this could mean a boost to military-linked stocks and the US Dollar. Exposed regional currencies - such as the Thai Baht, for example - would almost certainly suffer amid a political flare-up. Geopolitical strain will continue for the months ahead, and growing efforts by China and the US to outbid each other in the region will be a source of friction to monitor.
    Written by Dimitri Zabelin for DailyFX
    https://www.dailyfx.com/forex/fundamental/article/special_report/2021/09/24/US-Dollar-Outlook-Bullish-on-Future-US-China-Tension.html

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