The Impact Of Major News Releases On The Forex Market
Just before a major news release, it is common to witnesslower trading volumes, lower liquidity andhigher spreads, often resulting in big jumps in price.This isbecauselarge liquidity providers, much like retail traders,do not know the outcome of news events prior to their releaseandlook to offset some of thisrisk by widening spreads.
While large price movements can make trading major news releases exciting, it can also be risky. Due to the lack of liquidity, traders could experience erratic pricing. Such erratic pricing has the potential to cause a huge spike in price that shoots through a stop loss in the blink of an eye, resulting in slippage.
Additionally, the wider spread could place traders on margin call if there isnt enough free margin to accommodate this. These realities surrounding major news releases could result in a short trading career if not managed properly through prudent money management such as incorporating stop losses or guaranteed stop losses .
In general, major currency pairs will have lower spreads than the less traded emerging market currencies and minor currency pairs. Therefore, traders may look to trade the majors EUR/USD, USD/JPY, GBP/USD, AUD/USD and USD/CAD to mention a few.
Traders need to be well prepared ahead of time with a clear idea of what events they want to trade and when they occur. Its also important to have a solid trading plan in place.
Pick A Crypto To Invest In
Most active cryptocurrency traders allocate most of their capital to Bitcoin and Ethereum. These cryptos move more predictably than smaller altcoins, so trading with technical indicators can be easier.
Many crypto traders allocate a portion of their capital to smaller altcoins. Although small mid-market cap cryptos are riskier than large-market cap cryptos, they offer higher upside potential. Many small altcoins have risen over 1,000% in a matter of months, making them attractive investments for risk-tolerant investors.
Capitalcom Best Day Trading Crypto Platform For Newbies
Capital.com is another popular crypto day trading platform that is ideal for beginner traders. To open an account and get started with crypto day trading you only need a minimum deposit of $20!
The broker also has one of the largest cryptocurrency assets weve seen on top of being able to trade on other asset classes like stocks, forex, and commodities. You can find all of the popular cryptos such as Bitcoin, Ethereum, Ripple, Litecoin, and EOS as well as many others.
Capital.com is authorised and regulated by the FCA and CySEC providing strong security and safety of your funds. You can trade all of the 3,800+ instruments 100% commission-free on a very simple to use web-based trading platform.
While the platform is easy to use, it also comes with a lot of extra features such as news, sentiment indicators, and technical analysis tools. You can also open a demo account to check out the day trading crypto offering for yourself or open an account for free with zero deposit and withdrawal fees.
Your capital is at risk.
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Advantages Of Forex Trading
The forex market is incredibly liquid and it has an immense daily trading volume. This provides certain benefits for those who want to make money out of it. Of course, it is absolutely critical to understand that forex trading bears a significant risk warning and its best to consult with a professional before putting any of your money in.
The benefits of trading forex include:
Liquidity is a term used to describe the ability of an asset to be quickly converted into cash without any price discount. In terms of trading forex, this means that traders can move substantial amounts of money in and out of foreign currencies with minimal movement of the price.
Traditionally Low Transaction Costs
The tranasction costs of trading forex are typically incorporated within the price. There is a term for that its called spread. It refers to the difference between the buying and the selling price.
Traders Can Use Leverage
Forex brokers usually allow traders to use leverage. This is the ability to trade more money on the market in comparison to what you actually hold in your account. Imagine having $10 in your account and there is a leverage trading provided by your forex broker capped at 10:1. This means that you can trade $10 for every $1 you have in your account. In this case, youd be able to control a trade of $100 using only your $10 capital.
Risk warning is in place because leverage trading could see your account drained a lot quicker.
Gps Forex Robot Forex Robot Designed By Expert Trader
GPS forex robot has been designed by a trader with numerous years of experience researching and analysing the forex market. The robot is fully automated and claims to be highly profitable making a monthly gain about 30% to users. Although these claims are not backed up, their website does contain some screenshots and proof of live accounts becoming profitable through using this robot.
This robot is fully automated, meaning that once youve purchased and downloaded it, all you have to do is install it onto MT4 and let it trade on your behalf. Unfortunately, their website is short on information regarding the specific strategy employed however, it does showcase various customer testimonials, which are all positive. GPS forex robot can be purchased right now for $149, with a 60-day moneyback guarantee included in the deal.
There is no guarantee that you will make money with this provider. Proceed at your own risk.
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Forex Brokers Vs Cryptocurrency Exchanges
Numerous forex brokers including AvaTrade, eToro, and LiteForex do offer Bitcoin trading. However, many brokers are limited to offer contracts for difference . Considering CFDs are not allowed in the US, Americans should be heedful of the possible legal implications.
Moreover, given that the worlds trusted forex trading platforms are not Bitcoin-based, they are most likely to go through a traditional cryptocurrency exchange. Subsequently, this raises the question of whether these brokers do anything other than allow users to trade Bitcoin through existing crypto exchanges.
Bearing these points in mind, it would be more beneficial for investors to trade Bitcoin using a traditional cryptocurrency exchange at least until forex brokers grow more prosperous in their Bitcoin offerings. Still, it is worth mentioning that not all crypto exchanges offer cheap trades.
For instance, Coinbase, which is the most recognized cryptocurrency exchange across the US, happens to be among the most expensive exchanges. Coinbase can charge a trader up to 3 distinct fees in a single trade. When comparing Coinbase with eToro in terms of fees, eToro turns out to be cheaper.
Trading Bitcoin In The Forex Market
In general, a trader can use Bitcoin to participate in the forex market in two ways:
- Trade Bitcoin as part of a currency pair.
- Deposit Bitcoin to fund a trading account.
Trading Bitcoin as part of a currency pair like BTC/USD is hypothetically similar to trading conventional forex currency pairs. In like manner, deals for buying and selling, stop loss, and take profit orders are placed.
However, due to Bitcoins intrinsic features and the fact that it has been around for a considerably short time, in certain areas, Bitcoin emerges to be different from traditional currencies.
For one, Bitcoins are created through mining and have a controlled supply which cannot be altered. This eliminates the possibility of a sudden increase in supply, which would decrease the value of a Bitcoin. On the contrary, fiat currencies are subject to the supply uncertainty originating from central banks.
Moreover, Bitcoins total supply is limited to 21 million, and its value is associated with the fundamentals of the crypto market not a specific country, economy, or central bank. On the other hand, currencies are largely reliant on central banks. Thus, a shift in monetary policy can cause notable swings in currency prices.
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What Are The Differences
Despite many similarities, key differences between these markets remain. One of the largest is the nature of OTC trading versus using exchanges but also how these markets respond differently to global economic pressures.
You& rsquo ve likely already picked up on many of these differences, and a major one is the nature of exchanges versus OTC trading. OTC trading offers global liquidity, but trades often must be facilitated by a broker, as mentioned before. It is possible to get an account that gives direct access to the market, but this is highly regulated. Going through a broker, however, is more straightforward for many investors and traders, but the broker is going to take a cut. How much will depend on many variables, such as the actual institutions involved, the trading pair you choose and current market conditions.& nbsp
Cryptocurrency is most commonly bought on exchanges. An exchange, much like a broker, acts as a middleman and will take a cut. Unlike brokers, though, the exchange acts as the singular authority over buying and selling and usually has a fixed rate that will always apply to trades. There is no negotiating there is just the exchange& rsquo s terms. Therefore, this can simplify the process for users in some ways, but it does mean that user activity will be under the watchful eye of a central authority.
Is Crypto Trading Just Gambling
Crypto trading is a little more than a decade old, and has gone through multiple stages. At one point, Mt. Gox in Tokyo was the only Bitcoin exchange in the world. Later, alternative coins appeared, making wild speculative gains. Over the years, crypto trading expanded and gained liquidity. There were highly suspect price moves suggestive of pump-and-dump arrangements, but the leading coins continued to deepen their liquidity and establish their dominance. Crypto prices are thus behaving in manners both similar to stock trading or forex markets.
The crypto market still does not have trading stops. For some types of decentralized exchanges, there is no market oversight and even no order books, as the trades depend on a mathematical formula and an algorithm. As such, the price moves on crypto exchanges are much more dramatic compared to forex markets. But this type of trading also produces data and patterns that can be used to create meaningful signals.
The addition of dollar-based stablecoins also means trading pairs are becoming more intuitive, with fiat-like price valuation to remove some of the complexity of the crypto market.
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Managing Risk When Trading News And Events
The importance of prudent risk management cannot be overstated during volatile periods that follow a news release.
The use of stops is highly recommended but in this case, traders may want to consider using guaranteed stops over normal stops. Guaranteed stops do come with a fee so be sure to check this with your broker however, this fee can oftentimes end up being insignificant in relation to the amount of slippage that can occur in such volatile periods.
Additionally, traders should also look toreduce their normal trade size. Volatile markets can be a traders best friend but also have the potential to reduce account equity significantly if left unmanaged. Therefore, in addition to placing guaranteed stops, traders can look to reduce their trade sizes to manage the emotions of trading.
Avatrade Best Day Trading Crypto Platform Using Metatrader
AvaTrade is another top rated day trading crypto broker. Not only are they authorised and regulated by 6 different global regulators they provide a range of different crypto trading accounts and platforms.
For example, you can access a CFD trading account, spread betting account, options account, an Islamic swap-free account, and many others. You can also access AvaSocial which is a mobile copy trading app so you can follow the trades of other profitable traders.
With AvaTrade, you can also access the worlds most popular trading platform MetaTrader 4 for desktop, web, and mobile. This platform allows you to access day trading indicators and tools, as well as algorithmic trading capabilities for the crypto algorithms.
Your capital is at risk.
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Cryptocurrency Trading Vs Stock Trading
Cryptocurrency trading is often seen as more high risk than stock trading, but it depends what stocks or cryptocurrency youre trading and how youre trading it. Trading penny stocks or trading options can be equally, if not more, risky than trading cryptocurrency.
Before trading cryptocurrency, you should be aware that you risk losing your money to the market. If you really believe in the future of cryptocurrency, holding your crypto assets for the long term may be more beneficial than trying to time the markets.
How Does Forex Trading Compare To Crypto Trading Check Out Our Look At Their Market Structures Exchanges Regulation And More
New ways of managing, transacting and investing our money continue to emerge as the financial world around us evolves. One major change seen in the last decade has come from the rise of cryptocurrencies digital currencies that lack centralized control but enable frictionless transacting and serve as a unit of account in a democratized financial system.
This compares to the traditional fiat financial system, which relies on central banks and governments to issue and regulate the money supply while also facilitating transactions through an orderly payments system, among other responsibilities. Most countries have their own fiat currency or one pegged to an international reserve currency like the U.S. dollar or euro. When you exchange the fiat currency of one country for that of another on decentralized, over-the-counter markets, you call this a foreign exchange .
There are clear differences and similarities as it pertains to using these currencies for buying and selling goods and services. The same goes for investing: forex trading shares some of the same traits as crypto trading, but there’s also plenty that makes each unique.
This article walks through the market structures and exchanges used in forex versus those used in crypto, as well as the differences in regulatory treatment and other aspects of trading.
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There Are No Wallets Required
One of the main gripes of trading cryptocurrencies is the complicated processes involved. One has to be technically savvy to understand how the blockchain works. This makes investing in cryptocurrency out of reach for many.
An investor would spend some time creating their wallet, saving their digital wallet information, including recovery phrases and keys. If you happen to lose your wallet information, then your cryptocurrency is locked out for good.
With cryptocurrency CFD trading, there is no such requirement. You can just start trading on the CFDs just as you would trade a forex currency pair.
How Does Cryptocurrency Work
Cryptocurrencies are digital assets that are powered on the blockchain. Blockchain technology stores a ledger of every transaction of the cryptocurrency on every node powering the blockchain. Nodes are computers that are connected to Bitcoins network to mine Bitcoin. If one of these miners tries to enter false transactions, it will be nullified by the correct ledger.
The correct ledger is determined by the majority of miners records. In theory, you could hack a blockchain by controlling 51% of the cryptocurrencys network in a process called a 51% attack. However, this process is economically infeasible and would require an extremely choreographed hack with billions, if not trillions, of dollars worth of computer hardware.
To transact with a cryptocurrency, you need to have a set of public and private keys. These keys are like passwords generated by your cryptocurrency wallet. Your public key is connected to your wallets address and allows people to send you cryptocurrency. Your private key is used to approve transactions being sent from your wallet only you have access to your private keys.
Contrary to popular belief, many cryptocurrencies dont have a finite supply. Bitcoins total supply is capped at 21 million coins, but many altcoins have a set inflation rate with no cap on total supply, like Ethereum.
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Etoro Overall Best Platform For Day Trading Cryptocurrency
eToro is by far the best overall platform for day trading cryptocurrency. The broker provides a wealth of services specifically aimed at cryptocurrency day traders. This includes access to the eToro Trading Platform which is one of the easiest and fastest platforms to use for crypto day trading.
The brokerage also provides access to the eToro Exchange which provides institutional-grade algo trading capabilities with a full suite of crypto assets and stablecoins to trade on, as well as a unique set of tokenized assets.
Furthermore, you can access the eToro Money Crypto Wallet which allows you to buy, sell, store, receive and transfer over 120+ cryptocurrencies. The wallet also gives you your own unlosable private key and on-chain address. You can also use the eToro staking service to earn more while you HODL.
With eToro, you can transact in physical cryptocurrency, as well as derivatives such as CFDs . This enables you to trade profit from rising and falling markets using leverage which amplifies your gains and losses.
Not only can you trade crypto pairs against fiat currencies such as BTC/USD but you can also trade crypto to crypto pairs as well such as ETH/BTC. More importantly, you can trade cryptocurrencies 100% commission-free!
eToro holds licenses from various financial regulators providing a high level of safety and security of your funds. The broker is authorised and regulated by the UK FCA, CySEC, ASIC, and FINRA.
Your capital is at risk.